Forget the doom-mongers; the future of retail looks bright. I know that runs counter to much you’ve read. But stick with me: Retail’s not dying — it’s just evolving.
Take the long view: People will always be buying and selling things. Indeed, the concept of mutually advantageous transactions goes back to prehistoric times.
But, let’s please stop talking about brick-and-mortar stores or e-commerce. Retailing, online and offline, is one ecosystem, at least with general merchandisers.
Walmart and Walgreens don’t care if a shopper is buying from them in one of their stores or on a mobile device — after all, people are price-checking items on their phone while they are in the store. All that retailers should care about is that people are buying from them.
Retailers who can’t see this ongoing evolution to total commerce and who aren’t modernizing and investing in new models already are in trouble and need a survival strategy — fast. Here’s what they should be thinking about it now.
Investing in systems: First, they need to ask themselves whether they are willing to change and make the needed investment to make it happen. Near-term, it’s going to be painful. Healthy parts of the organization will need to starve a little bit, while the nascent parts get fed like a budget-eating beast.
Selling the change internally: How will they make sure their employees understand the effects during this transition to anytime-anywhere commerce? It is critical that the narrative remains positive internally or at least focuses on the future goals. The message needs to be: This is how consumers are choosing to shop. We need to be there in whatever way they want us to be. In particular, it is important that store-level employees do not adopt the mindset that the online team is taking away their sales. That’s not productive. The consumers and the shoppers are dictating what’s happening to the environment — not the individual teams within a company.
Focusing on metrics: Disassembling the old and moving to the new requires a balancing act. How are these companies going to measure the impact of what they are doing to their core business? Are they willing to enact change, or are they just talking? And how fast do they want to go? Change is disorienting. Metrics will provide the milestones and measurement capabilities that signal progress and keep everybody focused on the transformation.
Finding the right people: Beyond morale and metrics, you need the team. Retailers need to find and retain the right kind of talent. Any industry going through technology disruption needs talent that cannot only build software and programs, but also people who know how to use technology. A lot of traditional companies have struggled with this and have opted for partnering with those that enable a transformation. And what about their partners? Are they the right ones? Will they compete against them in the long term? How will they mitigate that?
Funding the transition: Will the company’s shareholders and board be patient while this process plays out? Does the executive leadership have a vision beyond saying the company will be competing in all channels? Is the vision differentiated, focused and prioritized?
If it is, the shareholders and the board should be clear that they understand that this is going to take time. Leadership should communicate that there is going to be a little bit of pain involved too. The message should be that it’s tough but that the path ahead is compelling.
Bottom line: Success in the evolving retail environment is not about this quarter or the next — even if investors don’t immediately see it that way. It’s about next year and the years to come.
Companies need to think about getting the most lifetime value out of their customers as opposed to the most near-term value, and depending on the model this may mean a new way of looking at business investments and margins.
It’s a mix: A mindful balancing of the skill and technology to address the new reality versus the short-term needs of the business. The transition needs to be built into all plans, as well as organizational understanding of the puts-and-takes needed to ensure those plans don’t go awry.
No one wants to be the person responsible for selling the company’s very last product for the maximum amount of margin. If you don’t balance the near- and long-term or have a survive and thrive strategy — driven by the consumer’s expectations — that’s where you may end up.
Doug Straton is the chief digital commerce officer at Hershey Co., in Hershey, Pennsylvania.
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