Retailers need to reorganize like a 21st century business

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Jul 27, 2020
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Through a special arrangement, what follows is a summary of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.

With the onset of the coronavirus crisis, terms that many retailers were just starting to explore — dark stores, micro fulfillment center, automation — became part of everyday conversations.

Dark stores are appealing to customers. A recent WD Partners’ survey of U.S. consumers found 47 percent open to purchasing from a dark box store, 49 percent from a dark restaurant and 40 percent from a dark grocery store.

Micro-fulfillment centers allow brands to increase margins while decreasing fulfillment costs.

Automation can counter the major labor challenges faced by the global logistics industry resulting from the current e-commerce boom. Fully automated systems are promising to reduce warehouse-related labor costs by up to 65 percent and logistics-related spatial use by up to 60 percent while increasing the maximum output capacity.

With the efficiency brought along by warehouse tech, a natural next step is a hybrid fulfillment store solution.

Yet the traditional way companies are organized doesn’t allow them to match the speed of the new customer experience. For instance, does e-com, IT or ops and design own BOPIS? When disciplines are siloed, leaders only focus on their area of expertise rather than the customer journey in total and how best to meet their needs whether in-store, online, in their car or on their phone.

Our recommendation: reorganize around the consumer. Take those key moments of distribution and consumer interaction and carry them across your traditional departments.

By adopting and integrating technology you’ll create new points of interaction and synergies for both your company and your consumers. Start by placing less emphasis on specific disciplines and more on the holistic solutions. Organize sideways and horizontally, bringing teams together to execute on innovations. Instead of pulling someone from each vertical function or silo, bring together an entire new team — one that’s empowered from the top to execute.

The acceleration of retail is real.

For now, temporary adjustments to help fulfill online orders and to serve curbside customers will help retailers maintain operational status, but future growth depends on thinking completely differently — like a 21st century business.

DISCUSSION QUESTIONS: How should traditional retail organizations be restructured to accommodate the many new disciplines required to tackle increased omnichannel offerings and accelerated online growth? What would you add or subtract from the organizational structure proposed in the article?

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"I’ve always preached that the CXO needs to be empowered to lead the charge, and I believe that now more than ever. "

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19 Comments on "Retailers need to reorganize like a 21st century business"


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Suresh Chaganti
BrainTrust

Investments that were expected to happen over few years are now planned to complete in a year or less. The biggest elephant in the room is the ability to fund these investments. The revenue models, costs, margins, and lifetime values are all going for a massive recalibration. Physical retailers already stretched because of revenue loss will find it hard to shore up funds for these new initiatives.

So my advice is simple. Before thinking about how to execute and the best practices around execution, marketing and operations leaders should check with the CFO and these initiatives should keep the CEO/CFO as active participants.

Laura Davis-Taylor
BrainTrust
The points made here are spot on, and frankly should have been acted on years before this pandemic hit. Wasn’t the emergence of the CXO to help all internal teams “reorganize around the customer”? It was the right plan, but these efforts (in most cases) became innovation experiments or glorified research. I’ve always preached that the CXO needs to be empowered to lead the charge, and I believe that now more than ever. This person and their team must live the customer and the brand so profoundly that everything exists to understand them and serve them uniquely. However they must also tie all efforts to sound, irrefutable data points that the C-suite can understand and further empower. The systems and data tools exist to do this. The platforms for taking quick action on things like BOPIS are out there. The talent to take it on is out there (most often not within internal teams, but that’s another challenge). What we’re missing is the leadership to support this kind of shift in power to one rooted… Read more »
Ananda Chakravarty
BrainTrust

The retail organization is complicated as it is and each one is unique with its own needs, so broad generalizations on what to drive towards are difficult to build out. Holistic thinking and customer-centric thinking should have been part of the makeup of retailers long before the current scenarios of COVID-19. Chief digital officers are a strong bet, especially as you’re transitioning to digital-specific technologies and curbside. If there had to be one restructuring factor that should be taken that would be the CEO or person in charge providing full executive support to newly adopted (especially digital) initiatives. The CEO needs to throw their full weight as a leader behind the initiatives so they become more than just graphics on a Powerpoint and instead something that the entire organization is driving towards – it needs to be part of the executive vision and not just a reaction to current times.

Lisa Goller
BrainTrust

Yes, successful retail restructuring will involve knowing and delighting consumers.

Customer-centric restructuring invests in the customer experience, digitization and risk management.

  • Customer experience: A desire to know consumers more intimately on an individual basis needs to permeate the company, not just the customer service department. These rich insights can shape marketing, assortment and loyalty strategies to maximize lifetime value per customer.
  • Digitization: Automating, integrating and streamlining retail processes by evolving from manual effort boosts efficiency and cost savings. Gaining real-time data visibility across a supply chain can help companies promptly solve bottlenecks and track items.
  • Risk management: 2020 is an epic case study in agility that proves global trends affect more than the C-suite. Now companies are creating cross-functional risk management teams to continuously monitor global trends and proactively devise supply chain strategies to adapt to disruptions.
Ryan Mathews
BrainTrust

Retailing in general — with obvious exceptions — is about 20 years behind the times and, far worse, probably 40 years behind the consumer. Things changed a long time ago. “Future Shock” – Alvin Toffler’s warning about how acceleration, or as he put it, “change in the rate of change,” was already impacting daily life was written literally 50 years ago. So it really shouldn’t have taken COVID-19 to wake folks up. I’m not sure that structural change is needed as much as behavioral change. Organizations have to be flattened and agile — but that ought to be old news. What is desperately needed is an authentic consumer-first orientation; the addition of social scientists to C-suite teams and — if I dare say it — futurists, not to tell people what is going to happen but to help people develop processes that can address whatever happens. Even the idea of a traditional CEO is outmoded since it’s hard to imagine a single individual with the skill sets needed to effectively direct an organization.

Dave Nixon
BrainTrust

“Consumer-First Orientation…” Great insight, Ryan. You’d think this would have been the obvious place to start, eh?

Ryan Mathews
BrainTrust

You would, wouldn’t you Dave, but apparently not.

Laura Davis-Taylor
BrainTrust

You’ve always preached this narrative Ryan — I wish more had been willing to listen.

Gene Detroyer
BrainTrust

The first thing retailers must do is try to imagine what shopping will be like in 2030, 2040 and 2050. If you want to imagine the future, consider how things have changed since 1990. Now consider the increase in speed of change, even not related to COVID-19. How long will it take for the future to look nothing like today?

While COVID-19 has opened eyes to change, the projections are still straight line trends — faster changes, but still straight line. There are more points of disruption coming. It is called disruption and not projection, because it jumps off that trend line.

I agree. Re-organize around the consumer. Only with that focus will a retailer understand where the shopper is going.

Ananda Chakravarty
BrainTrust

@Gene — love the reference to straight line trends. That’s exactly what people keep missing when they look for the hockey stick curves. It’s linear growth, not exponential, and pandemic trends have only pushed the line a little closer, not converted it into an exponential growth trend.

Doug Garnett
BrainTrust

There is change coming among retailers — and much of it will end up being economically healthy for them.

But I’m concerned with the idea that “micro fulfillment centers” will reduce costs. It’s economically illogical to associate small with lower cost. Perhaps there’s a new way to group smaller fulfillment centers (a la Walmart’s initial innovations) that could be effective. But Walmart succeeded because their version of small stores allowed them to enter communities where they had no major competition.

Perhaps underlying this article is an assumption that “free shipping” is the way of the future. Let’s use this opportunity, instead, to set up a rationalized retail — where consumers pay for premium services instead of having them thrown at them for free.

jesse@metroclick.com
Guest

On the new points of interaction mentioned, this is a great opportunity to reshape the in-store experience and bring the brands digital footprint to the retail front. The interaction points, which can be kiosks, digital signage or even beacons, share info to smartphones, and can share promotions and other customizable messaging similar to the recommendation engines shoppers are used to online. This may very well be one of the few silver linings for retailers in the pandemic that last and changes the dynamic the retail environment moving forward.

Phil Rubin
BrainTrust
2 months 22 days ago

There is only one way for retailers to be organized and — in a majority of situations — reorganized, and that is around the customer. Full stop, and now more than ever. As others aptly point out, this is not a new idea but sadly, it’s new for way too many retailers. And for some, it’s too late, whether they realize it (e.g., Ascena, Stage Stores) or not (JCP, Macy’s and others).

For any retail leader who disputes this, please read “Day One” from Amazon.

Ralph Jacobson
BrainTrust

Look at the most successful businesses, inside and outside of retail, and see how they manage the customer experience from start to finish. Learn from them and structure your business in much the same way… from top to bottom.

Dave Nixon
BrainTrust

One of the fundamental reasons that we could never achieve “omnichannel” was that retailers were silo’ed in separate teams (store, web, email, mobile, eComm, etc.). It still exists today, even 10 years later.

The retailer should be organized around phases in the lifecycle of the Customer Journey versus “channels.” (Attract, Engage, Convert and Support.)

This is the only way to achieve harmony across the CX.

Kim DeCarlis
BrainTrust

Digital expertise needs to be woven into every aspect of the business, not siloed in a “digital” group. It’s also important for retail leaders to understand that with digital transformation comes risk transformation. As more business includes a digital component, the need to appropriately secure websites and web applications becomes paramount.

Brian Numainville
BrainTrust

Simplify. Start thinking like a customer. How do you want to shop when you shop? Your mom or dad? Your siblings? Your spouse? When a shopper interacts with a retailer, it should be a fully integrated experience whether it is online, in-store, click and collect or delivery. Shoppers simply look at the brand or banner, not all of the exceptions or differences between how they are shopping on a given occasion.

Sterling Hawkins
BrainTrust

It’s easy to recommend that companies reorganize around the consumer and probably pretty straightforward for retailers to do, but it will make incremental differences at best. Legacy thinking and legacy culture inside a new structure is still legacy thinking and legacy culture. Any gains brought by the re-org would almost certainly be washed away like a sandcastle built too close to the beach.

Structure is important, but more important is the culture itself. Are people defensive of their roles, or are they focused on doing what’s best? Do people embrace different opinions, or does majority rule? Does something have to be perfect, or is a culture aimed at getting things done.

The cultural speed of most retailers has remained stagnant while the pace of technology and change is only accelerating. To keep up, cultural changes are the only answer.

Gene Detroyer
BrainTrust

Insightful and perfect understanding of the retail mentality. “Legacy thinking and legacy culture inside a new structure is still legacy thinking and legacy culture. Any gains brought by the re-org would almost certainly be washed away like a sandcastle built too close to the beach.”

wpDiscuz
Braintrust
"I’ve always preached that the CXO needs to be empowered to lead the charge, and I believe that now more than ever. "

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