Why Won’t Retailers Talk Up Tech Solutions?

In the vendor world, there is a perennial problem: retailers don’t want to go on the record as owning or in any way endorsing vendors. This is particularly a problem for small vendors who don’t have a large client base. It’s something of a catch-22 because retailers in those situations often claim that the solutions are so valuable they want to enjoy a window of exclusivity and differentiation that they can use against their competition.

But if those retailers love their solution providers so much, at some point they need to come out as using the solution so that the vendor can establish credibility and a track record in the market. Otherwise, if the vendor can’t win more clients, they’ll likely not be able to improve the product and may even face the bleak future of going out of business.

Why are retailers, in general (there are definitely exceptions), so unwilling to admit to owning and using technology solutions? There are a couple of reasons.

One, what you admit to, may be used against you. When I ran marketing for StorePerform, we managed to get Borders to speak for us in a Big !deas session at the NRF Big Show. I can talk about this now since both of these companies pretty much no longer exist. I don’t even remember the name of the person from Borders who agreed to speak, someone from Store Operations, that’s all I remember. He got up and talked about how he was using StorePerform and how awesome it was and everything was great.

But then he took a question from the audience around whether freeing up employee time in the store to spend time with customers really translated into more sales. And he said that they had done a study on specifically that, and found that if employees could, on average spend at least 10 minutes with each customer, they could improve store sales by 6%.

The headline the next day? StorePerform increased Borders’ sales by 6%. Which, for me in marketing, was plenty fine. It was definitely the first time we’d gotten any of our customers to own up to specific hard benefits, even if the admission wasn’t quite exactly related to StorePerform directly. The problem was, Borders was a public company. And the guy from Borders had said something he shouldn’t have. So in trying to help us out, and honestly, not even doing that, just innocently answering a question, he got in big trouble back at the corporate office. And then Borders stopped wanting to do store tours for us or give us access to store operations people.

It was not our fault a careless reporter spoke to a company employee, thrust into a spokesperson role without any corporate training as to what you should or should not say. But our best reference vaporized, just like that. And is there anything you can really do about that as a vendor? Nope.

So that’s one reason why retailers may not be so willing to speak. But I have a theory about more of the general landscape of unwillingness. Call it “Nikki’s Theory of Retail Reticence.” I developed this theory a long, long time ago, back in my consulting days at PwC. Since StorePerform, I haven’t had much occasion to roll this theory out, but I happened to bring it up on a call just last week, and received a strong (positive) reaction to the idea, so I thought it was worth bringing up in this newsletter.

“Nikki’s Theory of Retail Reticence.”

Retail is a very public business. In order to understand a retailer’s strategy, or at least how they’re executing against a strategy, all you have to do is go to one of that retailer’s stores. Or shop online. Or, increasingly, see how much ranting and raving is happening on the retailer’s Facebook posts. If you see a lot of complaints, you know customers aren’t very happy. If you see a lot of love messages, you know they are.

The point is, it’s hard to hide anything differentiating in retail. The minute you get an edge, anyone can see it, see it at work in a store or online. And by “anyone” I mean competitors. Any differentiation is doomed to last about how long it takes an electron to travel to the next server on the internet.

As a result, even though it’s irrational and can potentially even be self-defeating, retailers hold on to any “private” advantage even more tightly than anyone else in any other industry. They live with so much of their business strategy on display that when they have a chance to keep something private, they cling to that opportunity like a miser might cling to his last penny.

Is there some kind of lesson to be learned here? I don’t know. I think most vendors are fairly savvy to the idea of “investing” heavily in their first customer of a new product in exchange for endorsements. And of including promotional considerations as part of the contract, so that a retailer is legally obligated to provide a certain number of references and public appearances and case studies and webinars (once implementation goals have been met, of course). And hopefully most retailers are aware that if they shut a vendor down too much they’re taking a risk that the vendor may not be able to be successful in the market long term which, as I said, seems pretty self-defeating.

I guess it comes down to this: retailers aren’t just being selfish or short-sighted when it comes to public vendor endorsements. But vendors are very heavily dependent on those endorsements in order to drive future success. Some sort of compromise or accommodation would help both sides live more successfully in the tech world.

Knowing, in this case, may be half the battle.