Amazon’s recent move to trial convenience stores, on the back of its foray into bricks and mortar bookstores, has reignited the debate about the long-term prospects of instore vs. online retail channels. Has the threat to instore retail been overestimated? Will we see a move back to shopping instore?
These complex questions are the core subject of my book, ‘Retail’s Last Mile’. In the book, I draw on the work of Harvard professor Clayton Christensen who asserts that almost everyone misses a crucial step when considering the future structure of retail channels - we need to understand the specific ‘jobs’ customers need done. This information will pinpoint which jobs are best done online and instore; thus, helping predict how different retail sectors will evolve over time.
Identifying jobs-to-be-done is different from the traditional approach of looking at customer characteristics like age, income and products bought. One customer can have several jobs-to-be-done, depending on their situation. Let’s consider the case of buying clothes.
If I reflect on my own needs, there are several situations in which I need to buy clothes:
- I know in advance exactly what I want to buy. Perhaps I'm looking for a repeat purchase of a brand and size, for example, socks, jeans or a work shirt.
- I urgently need a replacement. To use a real example, my trainers were recently stolen, and I needed a pair to attend a gym class.
- I’m looking for inspiration for an outfit for a special event such as a wedding or party. I want to be confident I’ve made a good choice and would like to try a few outfits and get feedback from people who have more style sense than me.
- I’m looking to refresh my wardrobe, maybe for a change of season or a holiday. I know roughly what I need, and I’m not fixed on particular brands, items or colours.
Some jobs-to-be-done lend themselves naturally to an online purchase and home delivery. For example, if I already know what I want and there's no urgency about when I get it, it will likely be more convenient to get it delivered to my home. Over time, as innovation enables home delivery to become more efficient and convenient, these sorts of simple repeat purchases will increasingly be made online. This alone would cause a huge shift in many sectors. Equally, it seems less likely that I will choose to shop online for a special occasion outfit where I need to be certain it will fit and look right—while looking for some style advice.
Much of the confusion about the potential for online retail arises because we don’t break the problem down to this level of detail. This is key to understanding the instore vs. online debate. Amazon’s move into local convenience stores, to cater for "jobs" where a local presence works best for its customers, highlights why there is a need for both instore and online channels. Over time each channel will evolve to reflect the optimal place for customers’ jobs-to-be-done.
Questions to reflect on
1. What are customers' jobs-to-be-done in your sector?
2. Does your strategy reflect changes in the way customers' jobs-to-be-done are being met?