The last 10 months have been exceptionally challenging for many retailers. What have these turbulent times revealed about what it takes to survive and even thrive? PMC Founder and Chairman, Paul Mason, examines this issue and some related questions.
What are the common behaviours and choices which mark out successful retailers, and missed opportunities that have left others struggling?
It would be tempting to focus on the winners and losers in a very simplistic way; the essential retailers have cleaned up because their shops have remained open are the winners and the non-essential retailers who have been closed for months are the losers. Easy, right? Clearly, essential retailers have enjoyed a very significant, temporary advantage. But that doesn’t tell the real story. The true winners will be judged by more than just their sales numbers during periods blighted by lockdowns.
Retail has been undergoing systemic change for twenty-five years as customers have embraced the proliferation of internet-enabled technology and raised their expectations of their favourite retailers. They have been demanding an engaging, personal experience that works for them whenever and wherever they want to interact with the brands they love and trust.
The pandemic hasn’t redefined the changes in our industry but it has accelerated the pace of change exponentially. Weak retailers have not gone to the wall because their shops have been closed but because they haven’t invested in meeting their customers’ expectations. Dunelm didn’t post fabulous growth numbers for the quarter to December because they were managing the pandemic well. It was because they have been investing – for years – in digitising their business and delivering the experience their customers want. Contrast that with other brands that are, sadly, no longer with us that have been taking care of their owners’ needs rather than those of their customers.
Why is it important for retailers to build new capabilities and create new IT systems functionality as a means to survive and thrive in the face of unprecedented change?
Everyone knows by now the importance of the omnichannel customer experience and the digital transformation required to deliver it. The buzzwords are imprinted on our brains! Every retailer’s transformation is different because they all started from a different place and the customer experience they are aiming for is specific to them.
What’s important to get your head around is that the transformation never ends and the requirement for innovation, agility and above all, pace, is permanent. CEOs need to accept that the “dreaded IT” is one of their key levers and make sure they hire CIOs that can define and deliver what they need – over and over again.
What can we learn from retailers who have overcome the constraints of legacy IT systems by embracing new platforms and solutions to create greater flexibility?
The old days were about going round in a cycle of replacing epos, ERP and ecommerce platforms. Long, expensive, single-threaded programmes that often failed to deliver the promised benefits. In today’s world, spending three years changing out the ERP system just isn’t going to cut it.
Successful retail CIOs understand that success comes from mastering the art of the hybrid systems world. They are stripping down their big platforms; keeping the engine room parts that “just work” and using microservices to couple them up with smaller, faster-to-implement point solutions that deliver their new customer and colleague experiences.
It is this approach that has seen the winners deliver clienteling solutions in weeks that are actually powered by twenty-year old epos systems. Or launch a tablet epos driven by ecommerce platforms implemented a decade ago.
They are also working ever closer with their business colleagues to deliver simple but effective customer experiences. Hence the likes of John Lewis offering video consultations with their home specialists and Hugo Boss offering their customers the opportunity to browse in-store ranges from their phones. It’s not just the big boys who are doing it. The other day I noticed the Cotswold Company have launched something similar.
These CIOs have a powerful – but very simple – operating model; think/trial/pilot/deploy/repeat. However, in order to deploy it successfully and at pace, they need the right team around them. It goes without saying that the internal team needs to be first class. A team that can embed itself with the business, think clearly and then conceive and deliver change fast.
But the successful CIO also needs the right partners in place. Some who can take the heavy lifting of making sure the right, agile, secure infrastructure is always in place and is always working. Some who can make sure the ever more complex hybrid applications landscape is always up and working in concert.
This is essential when processes and experiences can be supported by multiple systems spread across multiple platforms, technologies and infrastructures. Others who come with tools and methodologies that simplify the inevitable challenges of integration. And, finally, some who can bring cost effective, agile resourcing solutions to bear, to keep the pace of change going.
The real winners in the long run - who are thriving not just surviving despite the pandemic - are the retailers that have been doing this stuff for years. These are the businesses who were in the right position to change gear on the right things at the right time.