Retail profits are shrinking*; covid-forced closures, the impact of disruptive competition and escalating wage, property and supply chain overheads are all taking their toll.
Traditional retail is adjusting to its younger digital native competitor who have never been constrained by space, location or legacy mindset.
Herald the Digital Transformation. Successful transformations require bravery and it’s often lacking until the last resort. These changes are wholescale, fusing data and new technologies throughout the business to grow sales and profit.
Delivered well, a transformation can return/ propel a retailer towards profitable growth. Delivered badly and they leave deep scars to leadership, culture, finances and stakeholder trust. To this point Digital Transformations often failed to deliver real value creation because those driving change lacked conviction. They were too limited in their approach and scope.
Applying the lessons from the early adopters will unlock incredible value across three areas:
Customer:
Digital brings customer and product development closer together; drawing upon multi-origin data to produce behaviour and trend insights to make better buying decisions that will help to acquire and retain customers and maximise life-time value. Sales and profit upturn can be gained quickly.
Speed to Market:
End-to-end digital transformation can compress the calendar by upto 40%** Technology tools can improve; communication, reduce waste, improve controls, and speed up supply chain through the workflow process of product development. The proposition will be more relevant than ever before.
Next level Efficiency:
Standardised workflows and automated processes free people to focus on the value-creating activities they do best – focusing on the key assets of Stock, Cash, labour and space then applying tech and data to improve productivity.
The Trading division is a great place to kick start. Working capital efficiency improvement is at the heart of great retailers. Transforming a product journey from end-to-end through the supply chain attracts follow-on actions throughout the business.
Success Hinges On How Well You Manage Five Key Elements:
A ‘future fit team:
– people are critical to transformation and purpose is critical to people. The best leaders articulate purpose encouraging their followers to devise the process steps and actions.
– re-structuring and re-skilling; make brave decisions where success would be compromised, be fair and clear and the team will accept
– draft support; external partners play an important role in, aligning change, agile problem-solving, keeping momentum, supplementing effort, and managing stakeholders.
The new target operating model (TOM):
– the blueprint that translates purpose and strategy into actions, structures, and processes.
– it addresses current inefficiencies, improves customer centricity and improves process with digital and technical innovation at its core.
– the model is clearly detailed reference map that should be referred to regularly along the change journey.
The scale of change:
– it must be value creating to customer and business. Product divisions work well here.
– a meaningful chunk of the business from end-to-end.
– don’t try to separate and pilot test you have to ‘go all in’ in-order to reap the rewards.
– be prepared to refine from real time learnings. Be agile and flexible but stick to the plan.
Impeccable master data:
– quality data is the foundation of any transformation. Quality decisioning relies upon it.
– this is a business challenge, automate as much as possible to help ensure it’s accurate, complete, timely and relevant.
– design data to be easy to enter by a team who realise its importance with controls for quality and consistency.
Phased implementation:
– simplify the change effort by breaking it down into discrete phases that will demonstrate progress that can be celebrated and help you to sustain progress.
– start with quick wins and built outwards from their- don’t try for a ‘big bang’.
– think; agile, sprints, test and learn, and watch for change fatigue.
A solid and scalable tech stack:
– for your technology to be up to the job it needs to be flexible, modular and scalable.
– establish a single data source for product, customer and process.
– develop the tech skills and recruit the best talent to secure expertise.
Conclusion:
Digital transformation draws upon a complex mix of; strategic vision, resource planning, change skills, support, communication, training, and controls. Stamina, tenacity and resilience.
Managed effectively and the business can secure its market position.
‘Fortune favours the brave’ – you cannot afford to hold back now! Grab the digital lifeline before it’s too late.
Julian Grindey can be contacted on 07969 397916 or at juliangrindey@aol.com
Source:
*O. C. & C. Report; Global retail Trends EBITDA 2019.
**B.C.G. research, published Jan 2020.
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