Keeping Up with Change
The most frustrating part of my job in informing, and exhorting, the retail industry to make those changes is about as difficult as rooting for the Chicago Cubs to play in a World Series.
After a recent string of individual meetings, and attending conferences and trade shows, I came away with the continued conclusion of why change is so difficult.
Our industry is literally transforming at light speed. Executive management is trying to alter long-term approaches in the areas of strategy and multiple channels; in operational disciplines such as supply chain, and in-store activities; the new world of technology, including data metrics, analytics, and insights; and in overall marketing.
The obvious challenge, and conclusion, is with today's overwhelming amount of available information, much of it conflicting, and the singular goal of increasing profitability, our historic (and current) business model is extinct.
Which begs the critical question running through all of these activities: What are the basics of the new business model that will bridge these areas to result in a more innovative, productive, efficient, and profitable industry?
I won't even attempt to go into substantial detail with the limited space I have in this editorial, but consider some fundamental facts and trends:
Concerning Supply Chain. With the sheer volume of data being managed, there is a basic structural problem that needs improvement. There are too many touch points, and procedures, during the process that affect the smooth and orderly handling of products from manufacturer/supplier to the consumer. Category and shelf replenish plans go through several applications of fulfillment with different goals and action points. The result is erratic forecasting, order management and disjointed results. According to research from the Aberdeen Group, "The percentage of out of stock for normal demand items is still running about 8 percent, and for promotional items, about 10 percent to 15 percent." One fundamental major solution is to improve total product process collaboration among all concerned.
Concerning Technology. It's time for top management to get plugged into the new world of information. It simply isn't enough to get briefed by IT and financial analysts. We are in the middle of a predictive intelligence revolution, surrounded by an insights generation. And senior management, in all areas of the c-suite, must be able to sort out this distilled information in order to strategically create growth plans.
Look at these facts: 90 percent of retailer insights data has been created during the past two years. The industry must link and standardize the same data to be usable. And this is where management comes in. Retailers must understand how the data specifically relates to their stores. It's only valuable if it can effect change for shoppers. Data must be tied to purchasing patterns, and behavior alteration. Only management can determine the real value of this data.
Concerning Marketing. The only thing that matters is revenue. All marketing must drive revenue–from shopper demographics, to brands, categories, geographic decisions, and distributor/wholesaler/broker relationships, everyone must focus on revenue. The world of singular decision making through an organization is giving way to internal collaboration among every management discipline. To accomplish this shift in responsibility and accountability, each management group is being forced to collectively understand key financial, distribution, technology, and marketing inventions, and to perform as one cohesive consortium to overcome the challenges, and to take advantage of the opportunities these industry changes provide.
Who said keeping up with a modern, progressive world was easy?
"The obvious challenge, and conclusion, is with today's overwhelming amount of available information, much of it conflicting, and the singular goal of increasing profitability, our historic (and current) business model is extinct."
President and CEO,