10 Apr, 2023, 12:22 AM
Retailers are coping with a profound industry restructure that will see many build a valuable and sustainable model. Many too will fail and go out of business, get taken over, or at best, materially diminish their value.
In Australia, the combination of Northern Hemisphere retailers entering the market, the electronic retail phenomenon, and the developing power of our consumers has disrupted our industry and will continue to do so in the years ahead.
Understanding the key drivers of future success in the industry is essential for our development, and possibly, even our survival.
There are 5 key drivers to ensure growth and sustainability.
- CULTURE AND CAPABLE PEOPLE
- This has always been central to effective retailing, but today, it is the single most important capability of a retailer. This component relies on smart people, who are well led and open to change. It does not simply rely on experience, as the pace of change can make experience obsolete.
- Great companies are vision and values driven, with feet firmly on the ground with every member of staff playing their part. They do not dwell on what is wrong with their company, but focus on what is right and what they can do to fix things that are sub-standard in their field of control.
- These companies value innovation, with reasoned risk taking rewarded. Ideas that do not work are quickly discarded without punitive action.
- Their people are outward looking and take a cross business view of how to build and retain compelling relationships with their customers.
- They practice effective delegation and responsibility, with decisions made at the lowest reasonable level in the company.
- They are energetic and performance oriented, rewarding achievement, not just hard work.
- They recognise that they need to be chosen by outstanding people to sustain their performance and culture.
- They equally weed out people who do not respect their culture.
- A DIFFERENTIATED BRAND
- Great retailers have an acute understanding of who their customer is and do everything in their power to be respected and chosen by their targeted customer.
- Based on this, great retailers have a strong and well aligned 5 pillar brand proposition:
- The first pillar is that they buy product on behalf of their customers, choosing product, prices, quality and choice predicated by customer preferences, needs and wants.
- The second is that they provide service that recognises the time-poor nature of consumers today, makes choice easy for them and is well aligned with the product that they sell.
- The third pillar is to provide a store ambience comfortable to their chosen customer, including décor, equipment, layouts and added value services, always aligning with their product and striving to make each shopping experience pleasurable and not a task.
- The fourth is that they communicate regularly and personally with their customers, focussing on providing individually compelling and useful communications.
- The fifth and final pillar recognises that customers want to support ethical and community minded retailers who deploy social programs that give back to the community.
- They carefully and consistently align each of these pillars to create a cohesive essence of their brand for their customers.
- Great retailers have built a compelling omni-channel capability as part of their brand. They set up their stores, their online facility and their social channels in a way that allows customers to treat with them exactly when and how they wish.
- The key purpose of a retail brand today is to be chosen by both customers and excellent staff.
- A DIGITALISED BUSINESS MODEL.
- Great retailers do not see online and social media as simply a series of channels. The see themselves as a digital entity, that happens to have a strong brick and mortar component.
- They drive the electronic alignment of their relations with various service and supply partners to facilitate productivity and speed.
- Their capacity to effectively manage their human resource in terms of record keeping, remuneration management, training and communications augments labour productivity.
- Electronic planning and management of leasing enhances property productivity.
- The electronic management of supply contributes to inventory productivity.
- The electronic tracking of customer activity across a retailer’s various channels allows effective operators to understand the total relationship with that customer and to customise communications with them.
- STRONG SUPPLY PARTNERSHIPS.
- Great retailers know that unique product is essential to success and no longer easy to source. Building long term relations with supply partners who share your vision positions retailers to be distinctive and to have fluid supply.
- Given consumers can rapidly view new product and fashion through the internet and the Northern Hemisphere retailers now competing in our market, speed to market of such product is an essential component of effective retailing. Working with supply partners to maximise planning, delivery and logistic solutions pays substantial competitive dividends.
- Equally, price parity today on any product is simply a given, so working with suppliers who see you as a long-term partner will lead to the removal of unnecessary cost. There is shared value available in this approach, rather than simply screwing reduced prices.
- The choice of suppliers with similar values to your company, and working with them in partnership is an essential component of truly great retailers.
- EFFECTIVE END TO END PROCESSES AND SYSTEMS.
- Great retailers focus on ensuring that the 5 core processes of retail are well serviced by systemic support, are kept simple and intuitive and support the alignment of process activity across their entire operation.
- Importantly, great retailers are exploring and implementing the benefits of artificial intelligence and robotics.
Australian retailers who develop their capability in these 5 areas, will position themselves for growth in terms of value and market share and create a sustainable long term future.
Those that do not, will fail, lose their business, or at the very least, sub-optimise their potential.
Which one do you choose to be?
AUTHOR: Peter Wilkinson
- Peter is a past managing Director of Target Australia, Myer Stores, The Just Group and David Jones.
- He has chaired the Audit and Risk Committee at Vita Group and Forever new.
- He has held roles as the President of the Australian Retailers Association and The Intercontinental Group Of Department Stores.
- He has held directorships of Target, Myer, The Just Group, David Jones,
Forever New, Vita Group, Coles Myer Limited, The Retail Financial Services Group. He has been on the global Advisory Board of Sonata Software.
- He is currently Chairman of Forever New, and advisor to Reveal International, a company advisor, a public speaker through ICMI and acts as a management mentor.