During a recent strategy meeting with retailers and manufacturers, the major question posed was, "What new business model will we need to introduce during the next two years to guarantee sustained growth and profitability?"
Several critical initiatives were examined, and three major conclusions gained general consensus:
1. To change the traditional mindset of how business has been conducted in the past, we must be committed to taking educated, calculated risks in affecting change.
Countless new concepts are being created in technology, category management, product development, shopper insights, etc. But we often are reluctant and slow to incorporate these change vehicles into our businesses.
We strategize, prepare sound plans, develop tight budgets and time-and-event schedules, and then we justify various reasons why the benefit of these changes might be too risky.
2. Innovation is absolutely critical as we continue to reinvent our industry. This is a practice that we've fine-tuned extremely well during the past 30 years. Consider Efficient Consumer Response (ECR), Total Quality Management (TQM), and Just-In-Time inventory control. But outside of supply chain improvements, and exceptional cost containment programs, where are the current, game-changing, high-impact innovations?
The biggest innovation has been the success of niche retailers serving the interests of highly demographic-identified shoppers. These retailers provide the products and consumer experience for local interests and lifestyles. Store sets, social marketing awareness and product differentiation can improve consumers' perception of price/value for these retailers–and their profit shows it.
3. Increasing revenue and speed-to-market of innovation will be determining factors of relevance and success in the future. Understandably, management is committed to short-term profit. For real growth to occur, however, companies need to find the balance between a focus on short-term profitability and true innovation.
The best revenue opportunities for retailers and manufacturers are to match regional buying practices to their geographic demographics, to establish a clear and compelling value proposition and to exhibit a strong point of difference in the marketplace.
To accomplish this, decision-making must contain a certain amount of risk and a measure of trial and error.
Finally, decisions must be made swiftly and executed in the marketplace at a much faster pace. This is essential because of the incredible speed by which today's society has access to information.
These are the "Big Trends" impacting the future of our industry. How do they compare with your new business model?
For real growth to occur, however, companies need to find the balance between a focus on short-term profitability and true innovation.
President and CEO, Stagnito Media