I don’t remember the exact phrase, but it goes something like this: when a butterfly flaps its wings in China, it rains in Ohio. Now it goes something like this: When a Chinese school girl posts on Weibo, a fad is born in Ohio.
Globally, we’re still separated by distance and time zones and sometimes language. Our immediate and most-used connections are close to us, physically and mentally. But increasingly, six degrees of separation can lead around the world, instead of just around the corner.
The ease with which global connections can be made struck me on my recent visit to Australia. I made a video recording of a teen band called Dirty Sherbet, playing at a free concert on Bondi Beach in Sydney on a Sunday afternoon. I shared that video in Denver with my son, who is sixteen, plays guitar, and has several friends who are trying to make a go at being in a band. I thought he’d like their music, and would appreciate what’s bubbling up as popular in a country far, far away. Note: it’s not that different than what his friends play.
Just like that, a teen band in Sydney can end up with a following in Denver. That following is possible because of Instagram and Spotify (though, I should note that Dirty Sherbet does not yet have songs up on Spotify, but you can find them on YouTube. They should probably fix that.).
And just like that, a beauty brand in South Korea can have – and deliver to – a fan base in New York.
And just like that, a retail experience in Los Angeles becomes a base expectation for retailers in Melbourne.
All of this connectedness changes the game for how retail grows. Where retailers once grew by saturating their home market, and then using that as a base for tackling the rest of the world, now, retailers and brands would do better to find a niche of passionate customers, and then find all the places where those customers congregate. It has long worked that way for luxury retailers – when you’re selling $2,000 hand bags you kind of have to go to where the money is. But when you’re a beauty brand selling skin cream for $80 a jar, you need to go where all the passionate beauty consumers are, and thanks to social media, you can find those people wherever they live, all over the world. And you don’t necessarily have to have a physical presence in all of those places in order to reach them.
Brands and retailers that mature in this environment, where they go global first and then grow out from there, are going to be hardier than the brands that came before. Operating a global supply chain and marketing effort is complex, and it’s going to have a very different economic model than a company that completely saturates a home country before expanding across borders. In some ways it offers protection, because economic events in one country won’t easily take down success everywhere else, whereas a company operating only within one country’s borders has some outsize exposure to that country’s economic health.
In other ways, the risks are higher because newer companies won’t have the scale of operation to support taking the risk of striking out into a new territory, where the unknowns of culture and preferences might yield some unexpected (negative) reactions to a brand’s value proposition or communication. Theoretically, communicating to a “tribe” of fans, like people passionate about skin care, for example, reduces some of that risk. They’re already a tribe, you’re just tapping into it. But the risks are still there. And for a small company, one mistake can be enough to kill the future.
So, when I find myself talking to people around the world about retail, I often get something like, “Oh, the American market is so much more mature. It’s going to take years for trends at play there to come here.” And when I look at the connectedness of consumers, and the future avenues of growth for retail, I think to myself, I don’t think that’s true at all. In the past it may have been the case that it took a while for expectations to cross oceans. But now it really only takes an Instagram post. Or a YouTube video.
I met with a few retailers in Australia, and talked to several consumer brands as well. The challenges I heard were no different than the challenges I hear in the US. Change is coming faster than ever. It’s challenging to keep up. Past technology investments are becoming the things that hold us back, not the things that enable our future. We can’t afford the transformation that’s required, either in time or money. Consumers want it their way at the price they want to pay, which is too low. They increasingly have the power in the market and we don’t know what to do with that.
I also consistently hear: consumers want to engage with brands that are actively making the world a better place. As a company we have to have a purpose and values. Value – being cheap to buy – is not a value. But it is a core expectation. We have to earn the trust of our customers every day. We have to be genuine and authentic – we have to live our values every day.
And, we have to enable buy anywhere/get anywhere capabilities as quickly as possible. And we can’t protect our supply chains any longer from the implications of buy anywhere/get anywhere. Digital has to be the core starting point of customer engagement. But the store is still extremely important, and relevant.
I don’t think it’s a stretch to say that all of these things are pretty much true everywhere. They may manifest as different priorities – if you want to do business in Asia, Alibaba and Tencent are forces to be reckoned with, and that means dealing with the mobile apps that are at the center of their consumer value proposition. If you want to do business in North America, a mobile app is not the place to start, probably not even Facebook’s mobile app.
But the idea that if you want to be successful in retail in the 21st century, you have to be technology-enabled, and technology-driven is universal. And that’s one thing that is not going to change.