Free Subscription

  • Access 15 free news articles each month

Professional

Try one month for $5
  • Unlimited access to news,insights and opinions
  • Quarterly and weekly magazines
  • Independent research reports and forecasts
  • Quarterly webinars with industry experts
  • Q&A with retail leaders
  • Career advice
  • Exclusive Masterclass access. Part of Retail Week 2021

Contending with the transformation imperative

(Source: Supplied)

In last month’s article, we talked about the mega factors which are driving the urgency of transformation for retail customers:

Those four factors were:

  1. Rapidly increasing customer expectations for low friction/high utility interactions. 
  2. Burndown Curve – retail businesses forced to invest in revenue models that they know are in atrophy because they need to maintain cash flow.
  3. Wave of Temporal Advantage – competitors (often digital natives) who have a capability that predicts shifts early, enabling them to invest early and manage incremental innovation in a cost-effective way.
  4. Shift in Core Competencies – the failure to recognise shifts in core competencies early enough. 

These four factors combine to force businesses to act quickly, often without adequate information or capability, thereby over-capitalising to reach a par position with the market and often compromising customer experience at the same time. 

So how do you contend with and avoid these pitfalls?

Increasing customer expectations

To stay on top of shifting customer expectations, businesses must develop competency in market scanning. This means commercial and technical resources dedicating time to learning about advances in retail and technical strategy that may give the business a unique advantage. It must undertake experiments in personalisation as an ongoing requirement and needs to realise that influencer commerce is now a thing.  It must develop Martech capability and figure out that to be competitive it will need to influence customer intent. It may also need to acknowledge that a physical presence may have a negative impact on the value of the business.  

The Burn Down Curve

The way to avoid it is to have a competency in incremental innovation and to understand how technology architecture underpins commercial strategy. The business must actively remove technology debt and consistently look for ways to reduce cost-to-serve without compromising CX. A certain portion of the budget must be given to experimentation in new modes of CX as well as innovations aligned to core (leveraging core infrastructure and processes) and abstracted from core (not leveraging core infrastructure, or processes or even the existing customer base) revenue models. Ruthlessly pursuing low friction and high utility customer experiences, seeking to solve customer problems and managing cost-to-serve without compromising the first two are key to avoiding burndown.   

Wave of Temporal Advantage (WoTA)

The WoTA is about developing an articulation, capability, and mindset for innovation. The business will need to be good at running low-value experiments on a Monday and having them in scalable format in a product by Sunday. I am accelerating the timeline here (!) but successful retail businesses are the ones that are good at trying new things, collecting the data, making the required changes, and then getting them to market. This results in a much longer period of return on investment, and it also means the business is in a stronger position to incrementally innovate again and again at rational cost. 

Shift in Core Competencies 

The issue with not recognising the shift in core competencies is that businesses kneejerk to bring on new capabilities that employees do not understand and the business as a whole might not understand, thereby actively inhibiting both from delivering on their goals. 

Examples of this are the shift to e-commerce, the requirement for both SEO and competency in SEM, analytics capability, data science support, machine learning capability, AR / VR and so on. So, if you are a grocery business and do not have a personalisation capability that assists me to check out in less time than I can with your competitors then you are going to lose an advantage to these companies and be forced to quickly try and add this capability when the pressure becomes too great to ignore. 

Often big brands with big physical presences think they are immune to these CX shifts but they are not. There are very few services in the world that can sustain a great deal of friction and continue to be the service of choice. Disruptors look for these friction points as reasons to launch a better offer and history shows us that many of these services become global offerings in timeframes that no one would have believed possible 20 years ago.  

If you are seeking an advantage in retail and want to have a spirited debate with someone who has enabled innovation and growth strategies for retailers around the globe, please contact Anthony Mittelmark at anthony.mittelmark@fujitsu.com