NRF: Retailers’ Organizational Structures Vary

The differences in organizational structure — including how employees are compensated — between retail companies were discussed by a panel at the National Retail Federation's Big Show in New York City this week.

The panel included Brad Brown, senior vice president of e-commerce and direct sales at Recreational Equipment, Inc. (REI); Ivy Chin, senior vice president of e-commerce at Belk; Jeffrey Liss, senior vice president and general manager, e-commerce and CRM at Charming Shoppes; and Jim Okamura, managing partner, Okamura Consulting.

At REI, for example, store managers in multistore markets receive compensation for sales in the physical stores in their market as well as local online sales. “We just felt that from an inventory perspective, this approach makes sense," said Brown.

For Charming Shoppes (parent company of Lane Bryant, Fashion Bug and Catherines) and Belk, however, this approach hasn't yet taken hold, even though it's a goal for both companies.

“We're still figuring out how to change our store managers’ and store associates’ behaviors to understand that digital can be their best friend," said Liss.

Added Chin: “We're just beginning to understand the right metrics and reinforcing the behavior we really want.”

How mobile fits into each company’s organizational structure was also a topic discussed.

At REI, mobile began as an independent entity, but now the department interfaces with all groups, including e-commerce, stores, marketing, etc.

"We have to start thinking about user interactions and customer experience as if every consumer is interacting with REI on a mobile device,” Brown said. “If it’s not true now, it will be in the future.”

For Charming Shoppes, mobile initiatives are driven by the e-commerce group, even though mobile stretches across several additional departments such as marketing and branding. While there have been no real organizational changes around integrating mobile among these departments just yet, “all of our teams are working together to try to figure out how it should be organized," Liss said.

For Belk, mobile initiatives were originally under the purview of the marketing group, but now stem from a group that includes Chin (from e-commerce), an IT lead and a store lead. The group meets regularly and works together to determine the priorities for mobile and omnichannel.

“There's not one person making a decision, but more of a committee,” Chin said.

These retailers’ experiences mirror the findings of a Shop.org report released at the event called Organizational Structure for the Future of Retail: The Digital Effect. The report was sponsored by DataStax and undertaken with research partner Okamura Consulting.

Two key findings from the study were that there’s no single path or best practice in retail organization design, and the key to the right organizational structure depends on the maturity of the e-commerce business and its readiness to integrate digital skills and teams into the full business.

The study draws upon interviews this past fall with 40 retail executives, including heads of e-commerce, chief information officers, chief marketing officers, HR leads and CEOs. Additional insights from the study include the following:

• While semi-integrated organizational structures currently tend to dominate, the key for a semi-integrated organizational structure to succeed is for senior leadership to transform processes and internal partnerships. The rise of the “digitally fluent” CEO in the future will further bolster success with this structure.
• At present, integrated merchant teams are the norm, although the study found that an integrated team risks having an underallocation of e-commerce resources.
• Marketing organizations are either semi-integrated or highly integrated. While being integrated benefits marketing coordination and provides a consistent brand voice across customer touchpoints, companies still need to strike a good balance between store and e-commerce marketing.

“As retailers roll out an expanding array of cross channels, the right metrics will drive capital decisions and, most importantly, motivate the diverse workforce characteristic of modern retailing,” said Okamura, in a Shop.org press release.