Why I Don’t Believe in Unicorns

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By Pete Catoe - 03/17/2017

This should be the most obvious business logic put forth in some time; nevertheless, it needs to be said. The trend I’ve noticed over the past few years is where large, medium, and small brick & mortar retailers actually invite the Internet’s “Unicorn” du jour right through the front door of their business, placing the Unicorn between their own brand and their consumers. The investment community defines a “Unicorn” as any start-up with a valuation of $1 billion or more that does not have an established performance record. I define Unicorns a bit differently – they are predatory, trendy, notgonnahappen.com tech companies that are:

  • Bloated with more investment equity dollars than brains.
  • Determined to control the world, your data, and your customers' experience.
  • Eager to commoditize what your store sells.
  • Operating with a “here today, exit tomorrow” mentality.
     

Their Sales Pitch

Unicorns have a rather self-centered view of the world; they’ll give you an “insta-fix” to your web-based business woes, in exchange for control over your customer experience and ownership of your data. Basically, you lose and they win. By the way, don’t bother to question their logic – they’re the smartest people in the room. Their go-to pitch: “Just sit back and relax, we’ve got this special secret sauce approach to solving all of your problems.”

Unfortunately, many grocers have signed on, and now the Unicorn lies within the inner walls of the retailer’s fortress. It’s the Unicorn’s brand that’s front and center and not the retailer’s. These retailers have been relegated to the mere role of backend facilitator in their own business. But what happens if the Unicorn doesn’t perform? Who’s in charge? Who owns the customer experience? More importantly, who owns the customer?

Consumers form habits, and they tend to stick to what they know. When you decide to drop the Unicorn, or worse yet, the Unicorn decides to drop you, how will you direct customers back to your business? They've already adopted the Unicorn’s 3rd party e-commerce application as their habit. Better question still, what about all of the “ghost” customers – those who buy through the Unicorn, but, because you have limited data, you have no idea who they are.

To let a 3rd party become the critical middleware between you and your customers is a clear and present danger to your brand identity. In order to meet your customers’ shopping needs, you are forfeiting your own brand experience, the very thing that cements the relationship with your customers. But you can’t blame the Unicorn for filling a need that should have already been provided, nor the grocers who have been forced to use them.

How did we get here, and who's to blame?

So, what happened? Why have so many grocers decided to abdicate their customers’ transaction experience to the Unicorns? My sense is that these grocers are so busy dealing with outdated, bloated, and inflexible store systems (developed eons ago by the familiar “you’ll never get fired for buying” technology providers – aka “Big Techs”), they just can’t imagine adding yet another layer of complexity.

Most grocers simply have too much technical debt. That is, the technical debt incurred over years of continuing to use outmoded, expensive transaction systems, poorly developed and limply supported by their Big Tech providers. It’s a real catch-22: these grocers are too busy dealing with old Big Tech problems to attack new opportunities; stuck like a hamster in a running wheel, burning mounds of IT budget dollars with each spin. But placing a Unicorn between you and your customer isn’t simple. You still have to transact, and now you’ve added another friction point to an already expensive, complex, albeit decaying and brittle, system. 

So here the grocery industry finds itself, with nearly every major grocer using the same basic outdated store systems, with hacked-up (and, in some cases, soon to be abandoned) code, paying premium prices to the Big Tech providers, who think they can solve every problem by buying up yet another itching-to-exit tech competitor. They just slap lipstick on that pig, and let the PowerPoint presentations roll. Unfortunately, grocers will find little comfort in another PowerPoint slide deck, especially when you consider that large online retail competitors, like everyone’s “rainforest” friend, are delivering fast, friction-free transactions, and have suddenly taken a very aggressive interest in the grocery industry. Do they smell weakness?

The Big Tech guys are hoping if they can just keep you focused on their latest and greatest shiny new pitch, you won't notice the truth; that they have no idea what they’re doing, and if they once did, they’ve lost their way – focusing more on stock options than on those stocking the shelves, losing sight of their vision, if they ever really had one. These Big Techs have placed their trusting grocery retailers in a most precarious position; one of carrying massive technical debt as they face a totally new demand for technology. But the weight is simply too much to bear and no longer sustainable in this age of digital transformation, where consumers require a seamless, shop anywhere / buy anywhere transaction experience. To sum it up, the lack of vision and execution by the Big Techs has placed these grocers in the unenviable position of treading water, at the deep end of the digital transaction abyss, with the sharks circling. 

Enough is Enough

Just remember this: if nothing changes, nothing changes. So maybe it’s time to develop a plan to kick the deadweight Big Tech provider out the door and explore other opportunities. Start by finding a US-based, developed, and supported transactional technology partner with vision and staying power; one who’s focused on making you tech-crushing competitive and your customers delighted to shop with you, online or in person.

Over the next year you will hear a lot about the concept of shared / unified transaction logic. It’s not the hot buzzword of tomorrow – it’s a simple business fact, and it’s not going away. Let me explain this concept. Your digitally-obsessed customers are demanding the same transaction experience online as when they buy from you in person. Loyalty rewards, dynamic discounts, tax exemption, price levels – basically all that crazy complex stuff you do at the point of sale – you will have to execute on your grocery e-commerce platform. For example, allowing your customers to view their last wine purchase online, even if they purchased the wine in your store location three months ago.

Unicorns can’t do that, nor would you want them to. If they could, they would completely own your customer experience. The Big Tech can’t do it either. Somehow, after spending hundreds of millions of dollars on vaporware and/or a glorified 1990’s customizable cash register, they still have no solution for what is clearly a critical inflection point for all grocers – the ability to execute with unified transaction logic.

I believe that local and regional grocers can leverage this inflection point to capture the very best consumer transaction experience, over their larger, more sluggish national and multinational competitors. After all, it’s a good deal easier for a regional or local player to replace an outdated transaction platform, than it is for lumbering giant players to make the same transition.

It’s time to make the move to a modern unified commerce platform, built from the ground up for the digital age. Reject the Unicorns, the naysayers, and the Big Tech do-nothings. Never again let them get between you and your most precious asset: your customers. And when you make that move, be prepared to become the local or regional grocery insurgent in this brave new digital retail world.

About the Author

Pete Catoe

Pete Catoe

Pete Catoe is Founder and CEO of ECRS®. In 1989, as a young entrepreneur, he began a journey that would lead to what ECRS is today – an award-winning, innovative retail automation company with thousands of installations throughout the U.S., Canada, and the Caribbean.  Read More

About ECRS

ECRS brings together retail software, hardware, and services to create the only truly holistic, unified retail automation platform on the market. By developing a framework of optional plug-and-play modules that work seamlessly with our core applications, ECRS’ CATAPULT gives customers the freedom to choose as much, or as little, automation as their business enterprise demands. Retailers can easily expand their automation framework as their business grows. Exhaustive research, intelligent design, and rigorous pre-market testing ensure that ECRS products integrate smoothly into existing retail environments. By providing retailers with automation tools that put real-time actionable enterprise data at their fingertips, ECRS empowers them to compete and expand their business in an increasingly competitive marketplace. Find out more at www.ecrs.com.

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