Why a Responsible Reset Will Drive Retail’s Reinvention on the Path to Growth
Retail has faced many twists and turns over the past couple of years. They are used to hearing that their industry is in a perpetual state of flux. That doesn’t make it any less true. Or anything easier to deal with. The business outlook remains highly uncertain, with supply chain and workforce disruptions in particular keeping executives up at night.
Boardrooms need to get used to a period of significant and rapid change with no end in sight. As such, the challenges facing their businesses look very different than they did a few years ago.
For retail leaders, the list of priorities continues to pile up. Right at the top, there is the need to launch the next phase of sustainable growth. This means accelerating the adoption of digital, data and artificial intelligence capabilities – with the cloud at the core – and finally achieving full integration between digital and physical sales.
It also means orienting the entire business around more sustainable operating models and a sustained commitment to environmental and social responsibility. This blend of responsive, technology-led, unified experiences and operations requires a deep transformation that affects nearly every aspect of a retail business.
Use the forces of disruptive growth
Those business leaders would be forgiven if they wished otherwise. Right now, their industry is facing multiple macroeconomic competitive pressures and a highly unpredictable operating environment.
From geopolitical conflict and global supply chain disruption to persistent inflation and tightening consumer wallets, not to mention the pandemic’s long-term impact on talent sourcing, simply maintaining profitability is challenge enough, let alone ensuring growth. cloud.
This is why some may be tempted to dive in and wait for stability to return before pursuing transformation. But they can wait a long time.
Far better to embrace the forces of disruption and use them to reinvent and reposition the business for growth. In doing so, there are six areas, in particular, to address:
The number 1 consumer offers
Staying relevant to today’s consumers means aligning retail offerings with their purpose, in ways that are authentic to the brand. This means looking beyond a purely transactional relationship and engaging and understanding customers in a different way.
In part, it’s a matter of data—knowing who and how to engage with the consumer. But it’s also about strengthening consumer “buy-in” for the brand by developing hyper-relevant, hyper-local offers and experiences.
The rise of live streaming from retail stores is a great example. For example, Nordstrom’s Livestream shopping experience offers interactive retail events on everything from beauty and fashion to home decor.
#2 Unified experiences
Today’s explosion in consumer channels calls for retailers to develop consistent hyper-personalized unified experiences that blend online and offline into an integrated and coherent whole. Doing so while ensuring operational efficiency will require creativity, resourcefulness and a willingness to experiment.
Diving platforms are a key growth area to keep an eye on. While the hype surrounding the Metaverse can make it difficult to distinguish concrete opportunities from hopeful speculation, retailers have been some of the most active early movers in the already existing virtual spaces. Examples include Burberry’s Olympia handbag experience inspired by classic art and experiences like Vans World on Roblox.
With inflation rising and customer expectations still rising, finding more efficient fulfillment models is increasingly vital. Many retailers are turning to local fulfillment (either by themselves or with partners) which is regional, community, neighborhood and even street-based. A combination of predictive analytics capabilities and agile supply chain and store network design is critical to making this work in practice.
Just look at how Hema, Alibaba’s supermarket chain, dedicated about half of each of its locations to fulfillment, while the other half of each location is divided into mainstream retail spaces and in-store dining experiences. Customers living within a 3km radius receive free 30-minute delivery on in-store items; they can also receive next-day delivery for an expanded range of 20,000+ products from a traditional distribution center. Hema uses real-time data to inform what and where it stores its goods.
Reshaping the way business sources products and raw materials will be essential, not only in maintaining supply chain resilience in an uncertain world, but also in allowing business to balance greater environmental and financial sustainability.
The focus should be on developing data-driven capabilities such as scenario modeling (“what if”), predictive analytics and real-time supply chain transparency, as well as rebalancing the mix of local, nearshore and offshore suppliers open.
Given the continuing challenges of the post-pandemic labor market, one of the most pressing priorities now is attracting and retaining a motivated retail workforce. This is the ideal time to reinvent the retail workplace, ensuring it is truly supportive and flexible, that employees feel heard and have the skills, tools and autonomy to thrive in their roles and progress in their career.
Digital technology has opened up all kinds of new options here. Amazon’s WorkingWell, for example, is an employee-developed program that offers workplace wellness and healthy eating tips easily accessible on the go via a user-friendly mobile app.
As is clear from the above, a mature approach to data and analytics (including artificial intelligence) underpins almost every aspect of the retail recovery. Most retailers understand this, but achieving data maturity in practice often remains a stubborn challenge.
The ambition should be not only to get the right data, but to ensure that its insights are reliable, accessible and actionable by the entire business. This has implications for the operating model and employee training and learning, as well as the organization’s core digital infrastructure.
Rebuild responsibly for greater growth
Given today’s pace of change and retailers’ intent to drive growth in the coming years, retailers must be ready to reinvent all of the above and more. It won’t be easy, of course, but nothing is ever worth doing. The current environment is ripe for innovation and by embarking on a responsible reset – business will be better positioned to lead the race for future growth.