Being Hyperagile the Key to Future Retail Success
If developments like Apple's iBeacon or the rise of online marketplaces are any indication, the retail industry is in the midst of a significant digital evolution. These leaps in technical innovation present major opportunities for retailers willing to embrace change and equally significant threats to those that stubbornly hold on to status quo.
Envisioning the Future
Digital interaction has reshaped — and is continuing to reshape — the retail sector. It's shifting the balance of power towards consumers, who are more demanding and less loyal than ever before. It's altering the relationship and leverage between retailers and suppliers/manufacturers by lowering the barriers for entry to direct-to-consumer channels. It's changing the way retailers use their brick-and-mortar spaces. And it's accelerating the shift from mass marketing to personalized marketing.
Extrapolating these trends, we can begin to envision the store of the future. It remodels/transmogrifies areas quickly and often to offer fresh looks and concepts. It tracks consumers before a visit as well as in-store (subject to opt-in and privacy agreements, of course) to influence their experience. It makes consumers feel "special" by delivering an in-store experience that's less about buying products and more about services that customize those products to unique needs. And to complement product customization, it offers personalized pricing, promotional offers and services.
Paving the Path to Transformation
While it's impossible to predict the "winning" retail formula a decade ahead (or even whether there will be a "right" formula for all), we can predict a key characteristic of tomorrow's winning retailers: They'll be "hyperagile" organizations that respond and transform their operations quickly and effectively.
Becoming hyperagile will require simultaneous focus on five areas:
1. Shopping experience: Retailers will need to extend their traditional offering to deliver a "wow" effect. One way to do so is through entertainment and new services — e.g., gaming zones with digital devices or experimentation areas such as dedicated terrain tracks located near car dealers that enable buyers to experiment in extreme conditions before making a purchase.
2. Supply chain dexterity: In a market that increasingly expects near-instant fulfillment, retailers must improve supply chain dexterity, particularly with respect to stock availability and quick delivery options. This means developing reliable, real-time stock levels; creating better predictive capabilities; improving integration and collaboration with vendors; and establishing new partnerships that enhance last-mile delivery.
3. Human resources organization: Implementing change quickly involves people. Training sales associates to act more like personal assistants can help bring commercial competencies back into the store. However, training alone won't produce transformation. There will have to be other organizational changes — e.g., bringing salespeople back onto the sales floor, empowering them to respond to competitive situations, and rethinking commissions to encourage cross-channel sales.
4. Data operations: Enhanced shopping experiences, ultrapersonalization and predictive offers require deep knowledge of consumers’ needs and expectations. Retailers, therefore, must mature their data operations, establishing agile information systems that build insights from various sources and increase the precision with which they segment customers.
5. Channel integration: Finally, retailers will need new, fully integrated performance models that consider both organizational aspects (e.g., channels, business units, flows, products) and technology. They'll also need more effective measurement tools to aid decision making.
How ready is your organization to evolve in order to survive and thrive as the latest phase of retail transformation advances? A good first step is to consider the maturity of these five areas.
West Monroe Partners and BearingPoint explore the future of retail and strategies for transforming and thriving in an evolving marketplace (among other topics) in the book, "Darwinism in a Consumer-Driven World" (Pearson, 2014).
Kyle Hutchins is the director of customer experience at management and technology consulting firm West Monroe Partners.
