By Chris Doerschlag
The X-Factor, as defined by the Oxford English Dictionary, is "an indefinable but important element, esp. one that sets something or someone apart."
Applied to the retail industry, it's worth asking: What sets certain store brands apart? For Walmart, it's everyday low prices (“Save Money, Live Better.") At Target, a high-style brand with low prices ("Expect more, pay less.") At Urban Outfitters, you find a lifestyle retailer ("Dedicated to inspiring customers through a unique combination of product, creativity, and cultural understanding.")1 And so on. Everything is defined and known. Such a cursory rundown reflects the conventional wisdom: Retailers must stake out a defensible position in an (increasingly) competitive landscape.
But don't be fooled. Positioning is not the X-Factor. Old-school brand positioning exercises aren't enough anymore.
As the OED makes clear, an X-Factor isn't definable. Such careful sorting and calibration of tag lines and mission statements might have long determined success and failure in key retail categories, but positioning operates in the world of knowns. What matters today is what sets a retailer apart in the future, and that often remains an unknown. The traditional guardrails around once seemingly immutable brand standards are being dismantled at a dizzying pace. How does a brand keep up not only with the competition but ever-shifting consumer expectations?
How, after all, can any retail brand position itself rationally against a competitor set to swallow an entire industry whole by being everything to everyone? How do you hedge against "Earth's most customer-centric company"?2 Amazon wants shoppers to find and discover anything they want to buy online. There's no position capable of neutralizing that positioning. Try and stake out a space against such a catch-all offense and you'll quickly lose what's definable (and indefinable) about your own brand. The only defense is knowing what is indefinable about your brand. And that means you need to manage at all costs the true X-Factor setting your brand apart: expectations.
If you run a retail brand with a bricks-and-mortar store presence, you might be asking yourself: How do I figure out my X-Factor? And that's the right place to start.
So let's begin with a basic truism. The X-Factor is always about consumer expectations. Always. That's what makes it indefinable, after all. The X-Factor is a constantly moving target, an ever-changing variable a brand must meet and often exceed to stay relevant. Consumer expectations always operate within a fluid continuum. Applied to the wily and uber-competitive world of our disrupted and ever-disrupting industry, consumer expectations are changing at a pace unheard of in the history of capitalist culture and commerce. That's why understanding how to calibrate, measure, maintain and manage said X-Factor is one of the key functions of retail success and survival today.
But first a little secret: The distance between what a consumer expects from your brand and where it is now might be closer than you think. For example, does your shopper really want Omni-channel retailing? Digital retail integration? Or even artificial intelligence to transform his / her shopping experience? Are you sure?
Before diving head-first into what are sometimes balance sheet-busting tech initiatives, it's critical to know first what your shopper expects of your brand. Presumptions or competitive assumptions can be fatal.
Does the Urban Outfitters shopper expect a bevy of digital tools? Of course not. He / she wants to come hang out with friends, listen to an indie band, and spin some vinyl. Does the Walmart customer expect this mass-market store to look like a copy-cat of Whole Foods? No. (Although maybe soon enough—so keep asking her.) What she expects when she goes to the world's largest retailer is to find every single consumer brand she might possibly want, from Colgate to Tide to Kellogg's. What is likely not changing soon is how she expects to feel walking out of a Walmart: Confident she got the best price for everything in her cart. If a Walmart suddenly looked like Whole Foods, would she still feel that way? If it did, something indefinable about Walmart, it's X-Factor, could disappear overnight.
Another example: does the typical Amazon Prime customer expect Amazon to show up at the door and install a TV (ala Best Buy)? Probably not. But to the 40 to 50 million people in the United States who use Prime, the expectation is constant technological innovation and some crazy announcement every other month about something like instant drone delivery or talking robots in your kitchen. Or, as the Amazon executive behind Prime who helped expand it to 49 cities in seven countries, describes Prime member expectations: "Do you have what I want, and can you get it to me when I need it?"
Does the Forever 21 customer base expect drones to make home deliveries? No, she only wants racks of cheap, washable sweaters and paper-thin dresses to go clubbing on Saturday night. Or put another way: She wants fashion without the financial consequences. A Saturday afternoon outing to the mall with her friends when she splurges on cheap threads. That's her expectation. Full stop. Why spend more on tech innovations when she's spending without them?
At Target, does a shopper want BOPIS (buy online pickup in store)? Sure. But at Victoria's Secret, not so much. She expects to browse, be seen, and see the latest styles live and in person. At Sephora, does a shopper want in-store tech, including color-matching on touchscreens? Considering a trip to Sephora is often a social event—and one with high-touch interactions with makeup artists in the store, then yes! But when that same customer goes to Walgreens, she probably just wants to buy her lifelong deodorant brand, favorite cotton swabs, a bag of chocolate, and be on her way. In other words, if you’re 7-Eleven, you don't need to worry about nailing some esoteric, difficult-to-execute Omni-channel strategy that probably won't work anyway. If you're Dollar Tree, it's not the time to start investing in drones or even online shopping. That's never going to be their X-Factor.
Despite this, as an indefinable variable, the X-Factor in retail increasingly has the most significant impact on a shopper's interaction with your brand. It's something you just have to measure and understand at all times.
So how do you go about making expectations work for your brand? We've outlined four key guidelines to finding and keeping your X-Factor a positive force:
Forget the trend, nail the expectation first. Social media. Online shopping. Mobile commerce. The upheavals keep coming one after the other. And fast. Although strategic flexibility remains critical to remaining competitive today, chasing trends and shiny objects can send a company on many a fool's errands. Just ask Macy's. Before you undertake any new initiative, measure its value against your shopper's expectations.
Commit to a clarity of focus on shopper expectations. Surfacing the unadulterated, unfiltered, unbiased and unending truth about what your shopper expects of you. Listening to your consumer constantly and organically as she shops and lives within the environment of your brand is tantamount. This is a time that calls for more ethnography and one on ones than simple aggregate, generational (see also: Gen Z) consumer surveys. Although helpful, you can't rely on some simple profiles or demographic panels. It doesn't matter what Prime customers want. Or what your closest competitor's customers want. What matters most is what your customer expects of you. Are you meeting those expectations? What does she expect next?
You can never change or evolve a store positioning without a crystal-clear handle on your expectations. Retail brand positions do change, albeit typically slowly over time. But expectations change first. And without a firm handle on them, you've got no guide for recalibrating your brand's position over the long-term. You can control your brand positioning; it's definable, after all. But good luck finding a way to control your brand's direction without digging deep into whether or not your shopper's expectations are shifting.
Constantly ask what is definable about your brand (positioning) and what is indefinable (X-Factor). We live in an age when almost everything imaginable is becoming possible technically; added touches that once required real human beings to execute are now managed through the automated actions of algorithms and artificial intelligence. There are so many things you can do. So many ways to spend precious resources. But does doing so enhance the indefinable essence of your brand or subtract from it?