As we begin a new decade, I’d like to offer up a handful of resolutions every retail executives may want to adopt:
1. Resolve to reflect on the implications of the exponential growth of technology every day.
We have hit the inflection point on the exponential growth curve of computer processing power. Tech-fueled innovation is getting faster, more pervasive, and more noticeable. We have all grown up in a world of much slower, more linear change, and that mindset is what makes adjusting to a new world of exponential change so challenging. Retail executives must remind themselves every day that new capabilities change the very nature of competition and what’s possible. Tomorrow may no longer resemble today.
2. Resolve to make innovation a process within your organizations.
The historical slow pace of change has caused many retailers to view deploying new capabilities as discrete projects, get one done, and then move on to the next. That approach no longer works in a world of increasing change across every part of a retailer’s operations and even across the supply chain. Innovation must be viewed as a process, a process that must get continuously faster to keep up with the growing pace of change.
3. Resolve to make the discovery and awareness of new capabilities part of your innovation process.
Retailers have historically relied on going to trade shows, or vendors bringing in some new capability, to learn what’s new. That approach is no longer effective when there are hundreds of new capabilities entering the industry each year. To provide some sense of scale, the CART team reviews well over 1,000 new solution providers entering the retail industry each year, and the number is growing—fast.
4. Resolve to innovate faster.
Retail organizations must adapt to this new world of constant, increasing change by learning how not only to discover but also evaluate, test, and deploy new capabilities at an ever-faster rate. Trying to get your existing people and processes to move faster just won’t work. Retail must invest in new training, education, and even organizational structures to succeed going forward. Culture change is not easy, especially for large, unwieldy retail organizations, but it is necessary. Training and education must be reinforced through new measures of success and new compensation structures.
5. Resolve to be strategic, not reactive.
Retail is tactical, execution of operations all-important in remaining successful in a high-volume, low-margin business. This focus on tactical operations has worked for many successful retailers in an era of slow change. But that’s no longer the world we live in. Strategy and clear road maps are vital to success. I’m not talking about the fabled five-year plan; in today’s world of ever-faster change, five-year plans can be irrelevant before the ink dries. Instead, focus on what is NOT going to change and expend resources in that direction. Amazon CEO Jeff Bezos is noted for saying that the one constant in retail is the customer, and we can all see how a focus on the customer has helped his company.
6. Resolve to understand that new capabilities can change the very nature of retail competition.
New capabilities, especially real-time customer-cognition platforms and AI models of customer behavior, are already changing retail competition from a century of product-driven practices to a new world of customer-focused competition. Consider what changes when you measure success by customer share of wallet and customer lifetime value instead of category and department sales. This is where Amazon and other new competitors have a real advantage, not having to overcome decades of product-first thinking.
7. Resolve to develop customer cognition.
Nearly half of the top 50 grocery retailers lack any meaningful amount of customer-identified transaction data. And even those retailers with customer data, frequently gathered via loyalty programs, struggle with data silos that prevent a clear, comprehensive, and meaningful understanding of each of their shoppers. Make 2020 the year to gain customer cognition, bringing together in one platform all sources of customer-related data that powers true customer-first retail.
8. Resolve to provide shoppers a truly seamless, cohesive digital experience.
A growing number of retailers are realizing that it’s time to bring together the disparate digital experiences they have today to provide shoppers a seamless, comprehensive experience. Retailers understand that online shopping is only one activity in a larger world of digital customer engagement and that the digital opportunity now extends into the physical store.
9. Resolve to provide contextually relevant, real-time marketing to the individual customer.
As I addressed in my latest book, “Retail in the Age of i,” the world is increasingly becoming tailored to each of us individually, and retail is no exception. Shoppers today expect even demand, contextually relevant marketing from the merchants they do business with. Doing this successfully requires customer cognition, AI-powered marketing capabilities, and real-time platforms.
10. Resolve to lead, not follow.
Given the thin margins retail works on, most retailers have been content to let others have the pain and cost of deploying new capabilities and then following once the new is proven successful. This was a successful strategy in yesterday’s world of slow-paced innovation. Still, today, this “follower” approach can lead to disaster as leaders implement new capabilities that open up growing performance gaps that can be difficult, if not impossible, to overcome. This is especially true with the use of (real) AI-powered capabilities in critical areas such as demand forecasting, customer cognition, and marketing relevancy.
Written by: Gary Hawkins, founder, and CEO of the Center for Advancing Retail & Technology (CART)