RE-INVENTION DRIVES LOYALTY – AND SURVIVAL – IN OUR AGE OF DISRUPTION
Not long ago my colleague, Wendy Culpepper, and I shared a presentation at Kobie’s Annual OnPoint Conference where our focus was on retaining customer loyalty in the age of disruption. We addressed some of the most visible disruptors – Uber, Amazon, curated subscription businesses in the fashion, dining, beauty and other sectors – and how competitors are reacting to the revolutions in their verticals.
Some of the key strategies we identified that are being employed by successful marketers include:
- Diversifying channel strategy to be where the disruptors are
- Adopting key elements of disruptive competitors to level the playing field
- Re-inventing the fundamental business model
One retail category that has undergone a sea change in recent decades is the office supplies industry. How are marketers responding to dramatic changes in a once-ubiquitous industry whose relevance has declined with the rise of 21st century technology?
A brief history of a dull business
So first, let’s get one thing out of the way: office supplies may be one of the least interesting product categories out there.
Paper, filing supplies, ink, pencils and paper clips traditionally have been viewed as commodities. Back in the day, independent stationers competed for business with price, service and relationships being more important than quality or brand (does anyone really care about the brand of their paper clips)?
Big box stores changed that; like independent booksellers, stationery stores became an endangered species.
Then things got worse for the office supplies industry, as technology made much of the infrastructure for a paper-based world obsolete. Few businesses became totally paperless, but most are now pretty close.
After hitting a high point of nearly $25 billion in 2000, office supplies sales in the U.S. had dropped to less than $15 billion by 2016.
This once-vital industry began a contraction resulting in today’s world where there are only two major U.S. office supplies retailers (plus Amazon). And they are both in trouble, re-purposing acres of retail floor space, closing stores and searching for a relevant role in a disrupted world.
Adapt and adopt
Like virtually all retailers, Office Depot/OfficeMax and Staples had to deal with the Amazon effect. Quickly the brick-and-mortar retailers went online where their new competitor – and increasing hordes of their customers – were.
They had to adapt to the consumer-directed e-commerce environment, adopting fast free shipping, auto replenishment and other features that disrupted the traditional model. Amazon Prime is a very potent loyalty program, creating a powerful attraction that Staples and Depot/Max may eventually be unable to counter.
Simply being in the same channels as your disruptive competitors and matching their service and pricing may not be enough to save a dying industry. To borrow a metaphor from one of my mentors, no matter how creatively buggy whip manufacturers tried to compete, once cars replaced carriages, no one needed a buggy whip.
There are several creative re-invention strategies being tested in the office supplies industry; each could be an effective tool to retain share of wallet and build engagement and loyalty.
Both Staples and Depot/Max are testing transforming their brick-and-mortar stores into destinations, creating workspaces where merchandise was once displayed. With wifi, cafes and support services, the retailers are trying to maintain customer loyalty by providing a complete work environment instead of simply selling tools for work. This is a pretty logical strategy, but of course, the devil is in the execution. It will take some creative thinking and innovative design to turn a sterile retail space into an inviting workspace.
And then there is another player turning this conservative commodity business on its head. It’s called Poppin. Their tagline is, “work happy,” and their manifesto is, “inspired design for inspiring workspaces.” Poppin has re-imagined normal, everyday items like staples, staplers, desk organizers, filing equipment, office furniture and accessories. Unique design, bright colors, myriad opportunities for customization, all serve Poppin’s strategy of making everyday office supplies fun, fashionable expressions of individuality.
I think Poppin is tapping into some serious emotional needs of workers today – especially women. Working from home is increasingly prevalent for employees, contractors and sole proprietors. Pinterest and other sites teem with posts sharing how home-based workers customize their workspaces, making them fun. And for workers who live their lives in cube farms, their desk space is one of the few opportunities for individuality. This could prove a fun and engaging way to build emotional loyalty.
Innovation will drive loyalty in our age of disruption
Today, established business models – indeed, entire industries – are vulnerable to disruption and even extinction. How each business responds will determine its long-term viability.
Loyalty strategies can only go so far; to be successful, programs must be built around a business model that provides value and relevance to consumers. No extrinsic program can succeed without an intrinsic value proposition that matters to the customer.
We can’t know yet if the innovations being tried in the aging office supplies category will ensure the survival of Depot/Max and Staples, and the growth of Poppin. But, if these players are to survive disruption – and turn themselves into disruptors and change agents – the creative thinking they are doing today could be the reason.
Wherever you are in your loyalty journey, Kobie can help your company maximize its results. Email us at firstname.lastname@example.org to learn more.