Barbara E. Kahn - The Shopping Revolution

Praise for The Shopping Revolution

Barbara Kahn has captured what is at stake for those of us who serve customers: As retailers compete for their attention, their expectations will continue to increase, and meetingnot to mention exceedingtheir expectations will become an ever-higher bar that many will fail to reach. Fortunately, in The Shopping Revolution , Kahn reveals what has enabled todays most successful retailers to thrive in the face of these challenges. An essential read for anyone who wants to keep pace with their customers and anyone who wants to understand the massive changes underway in retail.

Neil Blumenthal, co-CEO and co-founder, Warby Parker

In The Shopping Revolution , Barbara Kahn zeroes in on how a few formidable retailers have gained ascendance and offers advice to retailers on how to develop their own winning strategies. This is relevant for anyone who wants to compete with the retail superpowers of today and earn loyal customers. How retailers and brands engage with customers is undergoing a profound transformation and The Shopping Revolution provides a thoughtful framework on how to innovate in the new world of retail.

Oliver Chen, Managing Director, Cowen and Company

As Barbara Kahn powerfully argues, it is possible to compete in the era of rapidly changing shopping behavior. In The Shopping Revolution , Kahn dissects the strategies of leading retailers and offers powerful examples of how success can be achieved. A must-read for anyone who aspires to reach customers todayand tomorrow.

Marc Lore, CEO, Walmart eCommerce US

A masterful storyteller, Barbara Kahn expertly unpacks the strategies of todays seemingly unbeatable retailers. In the process, she shares their successes and failures and offers easy-to-implement takeaways. The Shopping Revolution is an indispensable guide for anyone who has a product to sell in the retail world.

Stuart Weitzman, Founder, Stuart Weitzman LLC

The Shopping Revolution is a comprehensive and fascinating read on the challenges facing retailers in these disruptive times. Sharing the stories of successful companies, Barbara Kahn offers a framework to structure strategic thinking and set the path for success. Highly recommended for anyone who wants to understand how to compete in retailnow and in the future.

Pierre-Yves Roussel, Member of the Executive Committee, LVMH (Louis Vuitton - Mo t Hennessy)

The Shopping Revolution is ideal for those who want to gain insight into the dynamically changing retail industry. This great read covers the mechanics at play in a straightforward manner and will help readers understand the direction retailers must take to succeed.

Al Sambar, Managing Director, Kurt Salmon, part of Accenture Strategy

The disruptive forces bearing down on retailers leave little room for error. Yet those very forces have created a vibrant marketplace filled with opportunities. In her new book, The Shopping Revolution , Barbara E. Kahn reveals how leading retailers are generating strong growth and offers strategies for competing in an ever-shifting marketplace. I highly recommend The Shopping Revolution to anyone who wants to understand the changes in retail and learn how to outperform the competition.

Thomas Kingsbury, CEO, Burlington Stores

BARBARA E. KAHN

THE SHOPPING REVOLUTION

How Successful Retailers Win Customers in an Era of Endless Disruption

2018 by Barbara E. Kahn

Published by Wharton Digital Press

The Wharton School

University of Pennsylvania

3620 Locust Walk

2000 Steinberg Hall-Dietrich Hall

Philadelphia, PA 19104

Email:

Website: http://wdp.wharton.upenn.edu/

All rights reserved. No part of this book may be reproduced, in any form or by any means, without written permission of the publisher. Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners.

Ebook ISBN: 978-1-61363-087-7

Paperback ISBN: 978-1-61363-086-0

I dedicate this book to my husband, Bob Meyer, who patiently and lovingly supported me through the book writing process, and to my children, Alyssa and Tim, who are always endless sources of inspiration.

Contents

Introduction: Disruption in the Retailing World

C all it an apocalypse. Call it disruption. Call it a revolution. Whatever you call it, it is sweeping through retail, destroying old established brands and changing the very experience of shopping. In 2016 Sports Authority shut down 460 stores, Walmart closed 269, Aeropostale closed 154, Kmart/Sears closed 78, Ralph Lauren closed at least 50, and Macys closed 100. The wave of destruction accelerated in 2017 with more than 8,000 store closings announced.

And its not just chains reducing the number of outlets: Major retailers are disappearing from the landscape. Bankruptcy filings by US retailers nearly doubled in 2016, and in 2017, 20 more major retailers filed for bankruptcy protection, including such prominent players as Toys R Us, hhgregg, Gymboree, and RadioShack. Predictions for the near future suggest more retailers will follow suit.

It is clear that retail as we know it is changing, and with it, the very experience of shopping. Retailers face a radically transformed marketplace that poses some very significant challenges if they are going to be able to continue to competeand if they are to avoid the vicious cycle of store closings and bankruptcy.

What is causing all of this disruption? What forces are responsible for the revolution in retail? I see seven major disruptive trends, beginning with the gorilla in the room, the game-changing dominance of Amazon.

7 Forces That Are Transforming Retail

There is no singular dynamic at play here. Rather, there are many different factors converging to change the face of global retail.

1. The Game-Changing Dominance of Amazon

The advent of Amazon has completely changed consumers expectations about shopping. Beginning in 1997, Amazon introduced 1-Click shopping, which eliminated the need for shoppers to reenter payment information every time they purchased. This started a long history of innovation where Amazon systematically removed the pain points in the shopping process. It introduced free shipping, unconventional return policies, dynamic pricing, and personalized recommendations and reviews.

Amazon also offered the endless aisle, a very broad assortment with more than 1 million SKUs available online. It accomplished this by making it easier for small third-party sellers to sell online through Amazon Marketplace. In 2005 Amazon introduced Amazon Prime, the ultimate loyalty program, which now has tens of millions of members around the world. In 2006 the company launched Amazon Web Services (AWS) to allow small retailers to compete with bigger competitors by providing server capacity. Today the profitability that comes from AWS and fees from Amazon Marketplace allow Amazon to tighten margins even further in its retail business. Finally, Amazon continually innovates, from investments in robotics and drones to devices such Amazon Echo.

2. Omnichannel Shopping

There are also significant changes happening to the actual shopping process. People are buying more online; current estimates are that online shopping is about 30% of total retail. Mobile commerce has also grown, with some estimates suggesting an increase from 2% in 2012 to about 31% in 2016 in the United States.