Essay on market evolutions, social changes and the speed of technological transformation.
This essay is the result of a personal reflection, based on numerous meetings with pears, one-to-one-exchanges with captains of retail and industry, store visits worldwide, interactions with academics (Oxford University, University of Rotterdam), learnings from international retail conferences (e.g. NRF, Global DIY Summit), and my personal international network during the last three years and lots of professional lectures.
This document is drawn as a framework to motivate anyone involved in the Home Improvement industry — wherever operating on this planet — to contribute to the future development of the HI industry, and in particular to invest in the most optimal concept of the future stores.
No doubt that most actors in the Home Improvement Industry are more than ever before aware that the business model for their current physical store no more remains in correlation with the pace of change. Three main factors have a tremendous impact on the role, the function and the mission of the future Home Improvement store; especially regarding shopping, buying and consumer patterns:
- Fundamental societal changes: e.g. the structure of the households
- Fundamental evolutions in the market place: from physical to digital, from E-Commerce to Collect & Drive, from Instore service to Home Installation
- The speed of the technological transformation: from IoT to Humanoid Robots
Moreover, Covid 19, revealed worldwide, a key and ‘essential’ aspect of DIY activity as a ‘healing activity.' This had a therapeutic and wholesome effect on countless people during the lockdown, including the need to express and share feelings, the need to connect, the need to belong, the need to get things again under control, the need to help others.
It is important for Captains of Retail and Industry in the HI Universe to better be aware of what truly is impacting all these changes in terms of transformation. As a matter of fact following parameters are actually affecting the current business model:
- The ‘Ability‘ to DIY due to the loss of skills and technical deftness (younger generations)
- The ‘Fun Factor‘ of DIY… which no more is the case… DIY has lost its ‘sexiness’…
- The economic reality… as HI is directly depending on the house and building market.
- The competition with ‘Leisure Time’ vs. DIY in general, and digitalization in particular (potential DIYers prefer to spend their money at other issues than caring about their homes and prefer instead to spend their time behind a screen or any mobile device).
The tomorrow’s store needs to be articulated around 4 concepts, all driven by smart technology:
• Hospitality: by offering an environment focused on ‘bringing people together’
• Education: by putting the emphasis on ‘learning curves‘,‘sharing experiences’ and by extension the pedagogical role of retailers and vendors towards their customers
• Co-creation: by offering formulas to interact with others which enhance the ‘involvement and cross-polination factor’
• Gamification: by allowing customers to experience the usage of innovations and by being part (as an actor) of product and service demonstrations which all together will enhance the ‘fun factor’
The factor ‘Hospitality’ will require an extend training program for store staff to better master the values of taking care of customers whom more than ever before require attention. Three dimensions of customer care need to be extra pointed out since Covid 19: creating a safety environment, offering a natural and warm connection, putting the emphasis on human fulfillment (a full sense of satisfaction).
Once these 4 concepts are entirely integrated in the store process, then we can build further on the future model of the HI store. Ideally, by then, maybe we can transform the term Home Improvement into… Home Indulgement?
The Store of the Future may remain the physical construction of walls and a roof. On the other hand, the indoor concept of that building needs to become a ‘Community Platform’ for sustainable encounters between service providers and end users. Customers will buy their products online, combined, or not, with collect & drive.
The HI Store of the future will fullfill a similar function as an ‘amusement park’ for kids and adults, offering several creative interactions, among which:
• thematic workshops for kids with their grandfather, for women, for active, retired people;
• pop-up concepts focused on more convenience in the DIY arena;
• platforms for start-ups.
In this renewed store landscape the product centricity will shift to the service centricity which will put the focus entirely on providing solutions for future lifestyles. The major challenge will be to harmonize the high tech with the high touch with an extreme sense for convenience, self-orientation, self-management.
The competitive advantage will shift from a primary ‘brand positioning’ to a superior ‘all round service positioning’ where customers will select on the ‘scale of likeability’ instead of the brand equity.
The store of the future can not remain ‘a box moving’ environment. All stakeholders will need to create together the conditions to appeal future generations to find pleasure in maintaining, repairing, renovating their homes, indoor and outdoor. Therefore the operational model needs to shift from a pure transactional activity of merchandise and money to an extended service model.
The store of the future obviously will be a ‘phygital’ and ubiquitous concept, a symbiosis of online and instore services. From a pure structural aspect, most of the store surface will be attributed to a multitude of service aspects including Collect & Go / Drive, Return / Exchange of merchandise.
Last but not least, the HI store of the future will be integrated in the local and urban community which will request the ability to conceive a ‘proximity’ store model for the neighborhood.
The path to the HI store of the future invites for new, re-invented alliances in the spirit of the ‘Sharing Economy’
Already a couple of retailers and manufactures are taking the right options to evolve in the right direction. It will require tremendous ability and agility.
Just a few examples to illustrate this point:
• Bunnings (Australia) with its Kids DIY project;
• Lowe’s (USA) with its ‘Total Home Strategy;'
• Hubo (Belgium) with its Plafomat concept;
• OBI (Germany) with its Create! by Obi test case in Köln-Marsdorf;
• The strategic Power for All, by Gardena and Bosch;
• The Home reparation service offered by Kärcher in joint venture with its partner All Fields;
• And of course the worldwide concept of Maker Fair.
There surely remain numerous examples of other interesting initiatives worldwide.
My profound, personal wish is that this essay may inspire all HBSDealer readers and members to lay their first corner stone ‘en route of the Home Improvement Store of the Future’. That turnaround undoubtedly will require a mental switch in attitude: taking risks, making choices, accepting the new roles of cooperation.
So, get started, pursue your efforts, remain safe and blessed. Good luck and… please keep me posted!