Having attended the NRF Big Show for many years now, the thing that always strikes me about these conferences – is how much technology is pushed by solution providers as the path to retailing nirvana. In reality, at worst it is a shortcut to rolling out undifferentiated business process, and at best it is an extraordinary amplifier for a brand promise built on differentiated product and experience. What a wide range of potential outcomes.
Technology doesn’t replace merchant skill – and it is great merchants, customer advocates, disciplined execution, and capital allocation that create great and lasting retail businesses.
Throughout the NRF Big Show it was refreshing to see most retail leaders starting to openly acknowledge the role of people inside their business, and how many retailers have made it too difficult for talented merchants to scale their impact across today’s fragmented consumer marketplace.
In short, great retailing is about enabling your people to become merchants again.
Why now? Why has this become a problem?
Retailing at it’s best is a simple business – create products people want, wrap those products in an experience that generates desire, price your goods well, and create an efficient distribution model to capture the demand as profit.
However, standing in the way of this is that over the past 10 years the internet, and the broader digital ecosystem, has transformed industries, consumer behaviour, and society at large – this has created significant complexity.
In fact, for many people working inside retailers today, it feels like a firehose. Through the entire value chain of product development, buyers, merchandisers, marketing, finance, store associates and supply chain – there are now many paths to the customer, significant extension and localisation of ranges, complex global sourcing practices, not to mention customer experience touchpoints and modes of product distribution. Yet inside, retailers the spreadsheet and memo reign, and are multiplying at a frightening pace.
This complexity is stopping innovation and greatness emerging from all levels of retailers. For all of the investment we are making in customer experience, product availability of supermarkets and fashion businesses globally remains well below consumer expectation – complexity is winning.
Moving the conversation from ‘back to basics’ to ‘enabling merchants’
Much of the narrative has centred around being more focused as a retailer – going ‘back to basics’ if you will. It’s true that focusing on your core customer, the unique elements of your brand offer, and top notch execution is the path to success.
With ever increasing complexity – driven by customer demands and the global playing field – the answer may not be to return to the tools of the past.
While your merchandise planning team is manually extracting BI reports, updating spreadsheets, sending emails and holding meetings – modern competitors have suppliers generating sales forecasts for their business, delivering digital content, 3D store planograms and market data to drive their buying cycle.
So what is the solution?
Define the experience of your best people and partners.
For the past 5-10 years the best retailers have become more adept at using customer experience management to map their customer journey, eliminate pains, or create new product and service opportunities to solve more jobs within the lives of their consumers.
Now is the time to adapt and grow these skills from a focus solely on customer touchpoints, to start to define and improve the experience of buyers, suppliers, store associates, and supply chain team members – capturing your end-to-end service design, and the challenges experienced by your people in executing a modern retail experience will accelerate your ability to put in place the changes needed for all your people to become great merchants again.
Fight back through your instore experience
Often the most neglected part of the experience can be the interface between your sales associates, and the support office – where emails and memos with conflicting instruction, complexity, and a lack of clarity rule the day.
Many global retailers including Adidas, Nike, Sonos, and Apple have invested significantly in providing unique experiences for customers within their physical stores – fighting back
To enable this they have focused on providing their staff with modern tools to provide in-store customisation, same day delivery, community and social management, wireless headsets, mobile point-of-sale and role clarity between sales and back of house ‘runners’.
Tools that many Australian retail staff would barely recognise – but with transformative potential for most retail shopping experiences.
Automate the value chain, not just the supply chain
For many years retailers have become adept at automating many of the functions throughout the supply chain, from warehouse picking operations to order allocations.
The best global retailers are investing significantly in understanding how machine learning technologies will transform business processes across their entire value chain, from price management, on-shelf availability, markdown cycles, customer service, curation, and personalised marketing.
The effective introduction of machine learning is starting to help businesses such as Walmart, GAP, and others to address the expanding complexity of each of these business processes – reducing time invested in executing repetitive process and providing new opportunities for retailers to focus on product range, partnerships, and creativity to engage their customers.
The start of this trend can often be seen packaged up as robotics – such as the Chloe robot, allowing Best Buy to provide local fulfilment points, reducing inventory handling costs in store, and enabling their business to trade 24/7 out of their physical locations.
Have we reached the age of artificial intelligence yet? Not quite. However retailers who are experimenting and embracing these modern tools are those with the best understanding of where complexity can be transformed into simplicity.
Invest in continuous learning
With the pace of change being experienced, from omnichannel retailing, automation, personalised relationships with customers, and expanding product choices – how do we create the merchants of the future? Where will they come from?
Greg Foran, CEO of Walmart US, firmly believes you will find them within the merchants of today. It is up to our industry to take all that is complex about our business, and to make it accessible to everyone in our business down to the shop floor, stating that “You take all that complexity, and create the simplicity in your training programs to help your store associates make sense of how they manage the customer experience of your business”.
Terry Lundgren, CEO of Macy’s, went even further to talk about the process of continuous learning, highlighting the role of investing in updating the skills of their current employee base, by expressing the feedback he hears from his own people, “My goodness, there are so many career opportunities within my own company – Making sure that your team are exposed to all of those different functions is important for retention”
If you want to ensure your best people remain great merchants, not only must you provide them with the best process and tools for delivering on the promise of your brand; you must ensure they are able to use these new tools to be the most effective modern retailers they can for your customers.
What does it mean for Australian retailers?
For Australian retailers looking to become modern global retailers, the biggest trend I can offer you out of NRF is to take a look at your best people – and challenge whether you are enabling them to focus their time and energy in being great merchants for your customers. Or are out of date tools, processes, data or technology stopping them from driving product and offer differentiation.
It’s by enabling this core that will see your brand continually rise to the challenge of delivering a profitable and differentiated modern retailer.
Daniel McMahon will be speaking at Inside Retail Live – a celebration of Australian retail to be held at the revamped ICC in Sydney. Visit: insideretail.live.