Change is constant, as they say, and we’ve all seen a lot of that, especially in the past few years. But as I look 10 years into the future, I think we’re actually in the early days of not just more change, but wholesale revolution, too. “Revolution” is a strong — and possibly overused — term. Why are the next 10 years different? Fundamentally, our customer has changed more in the past three years than in the past 30 and the pace of change is poised to accelerate in the coming decade.
Change has always been a key part of conversations within the retail industry. Changing fashions and shopper preferences drive decision-making around product assortments, merchandising and store design. Personnel, strategies, marketing campaigns, supply chains and information systems are also in a constant state of change as retailers understand success in this industry is an endless journey rather than a destination.
In anticipating a truly seamless shopping experience regardless of platform, location, time of day or any other constraint, the expectations of our 21st-century customers are stretching and testing retailers’ capabilities and flexibility. The main issue is that most retailers still operate 20th-century organizations that are designed to pivot around the brand, the product or even technology itself — rarely the customer. All too often, I see retailers whose merchandising teams are still divided by channel, marketing teams that are similarly divided and in the process create different views of the same customer, and IT teams that think first in terms of risk management, rather than providing their expertise to impact the customer experience. As for the digital team, this group has to develop connections to every part of the retail organization, but all too often is still silo-ed itself.
The Shop.org Think Tank recently put significant thought into the retail organization of 2023. Some of our thoughts on what will set apart retailers who are successful 10 years from now include the following:
The successful retailer in 2023 will follow a “customer first” strategy. We’d all like to think of ourselves as “customer-led,” but let’s face it, examples such as customer-centric Nordstrom and LL Bean are far from the norm yet. These companies have always been known for customer service and have been at the task of transforming themselves for some years now, but even their work is not finished.
Retailers must focus on further developing four core competencies: customer experience, brand, operations and administration. Keep in mind that these are areas of expertise, not a model for an organizational structure. However, today’s setup of marketing, merchandising, store ops and other traditional teams likely won’t deliver on customer expectations for an integrated shopping experience and retailer relationship. Retailers need to examine each of these competencies in light of their own business. For example, take customer experience. In concrete terms, what does a terrific customer experience mean to your customers? And how does that ultimately contribute to your bottom line?
Retail organization revolution will happen via a set of bridge strategies and tactics. Revolution in retail won’t (and shouldn’t) happen overnight — after all, retailers still need to make money and grow their businesses to get to 2023 at all. Bridge strategies get retailers to start thinking about the future now and continue to weigh all short term future strategies against long term-2023 future strategies. Furthermore, bridge strategies pose retailers with the immediate question, "What would be the first and second executive changes you would make if you were starting this journey?" In this vein, several retailers such as Saks Fifth Avenue and Belk have started their journeys by adding omnichannel management infrastructure to propel their organizations to better serve the omnichannel expectations of their customer. However, retailers must remember that bridge strategies are just that — bridges, not long-term solutions. For example, by 2023, “omnichannel” no longer will be a separate infrastructure or set of roles, but instead simply be the way that successful retailers operate. It will be a philosophy solidly baked into all roles throughout the organization as the norm, not the exception.
Clearly, in all of these conversations human resources will be a key partner to the rest of the business in identifying, cultivating, and developing talent for both the near and mid-term as well as the future state of the business. Their bridge strategy is to increase their knowledge of the technical and digital needs of the company, and be well versed in how to address and support them.
Take a look at the new Think Tank article on the Shop.org web site, “The Retail Organization of 2023: The Customer is King (For Real).” What does your path look like to become a successful retail organization in 2023?
Vicki Cantrell is executive director of Shop.org, the digital division of the National Retail Federation.