“Since 2000, fully three-quarters of retail sales growth has occurred through online channels. That’s an eye-catching statistic, yet not quite the whole story.”

I wish I’d written that. I could have. But these smart people beat me to it. They also beat me to the punch line. After stacking up the facts on online’s rise (with addressable market penetration that outpaces GDP growth) they drop the bomb:

“We’re not sure it matters anymore.”

Quite a thing for PWC’s “Bricks’n’Clicks” strategists to say. But they’re on to something. As online and mobile commerce play a growing part in the e-commerce experience, it’s evolving a pretty interesting – and surprising – relationship with in-store retail.

Turns out that the brick and mortar business once “lost” to digital is coming back in big ways. The mobile edge once scared retailers who stayed tethered to their core business props. Yet today that edge is pushing new value to the core.

What a surprise: mobile, it turns out, is helping the best retailers create innovative models that grab the best of both worlds – and enjoy the wins.

I think about this stuff a lot. I’ve watched the industry change and seen what’s possible when established businesses embrace new models. When we launched Warner Bros. retail stores, WB brands (Batman, Superman, Looney Tunes, Scooby Doo, Harry Potter, etc.) benefited tremendously. This required huge investment: those were bricks and mortar years.

Today brands can achieve that same exposure (or more) through digital assets that reach beyond the boundaries of physical stores. This can create benefits across the chain (partners, vendors, etc.) while reducing risk and exposure to the corporation.

Throughout my career I’ve watched the customer claim increasing control over value propositions. More and more, the magic happens on their terms and their turf: not on the retailers or other sellers who once held that power. Businesses who have honored that reality have surged forward. Those trapped by it have not.

One way retailers have done this is by getting close to the edge of change: in the places where their customers choose to do business. We all know “mobile” is increasingly that place. Partnering with innovators – often rising tech firms with specialized capabilities enabling some aspect of ecommerce, targeting, or social engagement – has helped smart retailers outpace competitors without overburdening core business needs. With time, these retailers have picked the best from that edge and brought it closer to the core, where those winning hybrid models PWC talks about probably took root.

Retail isn’t the only world that proves this. Forbes contributor Michael Skok shares the example of enterprise innovator Unidesk’s relationship with DELL: how it’s created new revenue for the big guy while sparking gains for the newcomer. Win-wins, as Skok explores in his Game Changing Business Models talk at Harvard Innovation Lab. Worth your time.

My world spans retail and entertainment, so I can’t look at this new reality without applying all we learn in one realm to what we’re missing in another. As I notice the ubiquity of mobile and app use in every coffee line, music or sporting event, and plenty of places we should probably set our phones down, I increasingly see how edge innovations are needed to catalyze new value at the core of long-standing entertainment business models. To me, that’s even more obvious bridge to mobile than retail has been: much of entertainment is, after all, visual (not physical) in nature.

But it’s not really happening yet. And a lot of us feel the heat. A remedy? Can we look to retail – and enterprise – and follow the models that work? Building on PWC’s retail advice:

“Invest in digital technologies with a clear understanding of how they can enhance the in-store experience.”

  • Change “in-store” to “viewing” and find ways to bring core entertainment value to the viewer on her or his terms: mobile first (maybe even mobile only), on the viewer’s where and when (not yours), and with continuity however they want it. What might that satisfaction do to connect the viewer to other edge experiences, or even to the core?

“Offer a convenient one-stop-shopping experience that responds to the shoppers’ path to purchase.”

  • Replace “path to purchase” with “path to viewing:” again, we’re talking about the viewer’s terms. If all this does is expose you to new audiences, you win. If it increases immersion and satisfaction for existing audiences, even better: there are many ways to win. Data, ad revenue, reach: the benefits of defining the experience on users’ models are obvious. As a licensing guy, of course I think of the longer-view value of these relationships, but that’s an article for another day.

“Rigorously examine resource allocation.”

  • Sure, retailers, entertainment groups, and lots of others talk about starting internal innovation units or think tanks. Consider that for sure – but be realistic about the commitment, risk, and timelines innovation demands. As the DELL example shows, getting the edge fast can prove business value faster than an internal think tank can bake it. Test and validate at the edge. Learn what works best and draw it in, mixing it with core capabilities to build new business models (or add life to old ones).

With the rise of mobile, retail has reinvented itself practically before our eyes. Now it’s entertainment’s turn. We need to get out of our comfort zone and push to the edge, where new models are waiting, ready to bring new value and durability to our core assets and practices.

As in enterprise, partnerships get us there faster and with less risk.

 

Dan Romanelli

Dan Romanelli

Dan, a respected driver of innovation in entertainment and retail, brings unique "digital Hollywood" perspective to his work with AerNow.
Dan Romanelli

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