Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research's weekly analysis on emerging issues facing retailers.
In the early 2000s, as the retail world reeled from the impact of Walmart, I found myself quoting one book with some frequency. That book was The Discipline of Market Leaders by Michael Treacy and Fred Wiersema. Most of you are aware of the model by now. In a nutshell, there are three potential areas of market leadership: Operational Excellence, Product Leadership and Customer Intimacy. Companies must be competent in all three, but the best companies pick one of the three to target as their "core". (Apologies for an oversimplification, but for our purposes today, this is close enough.) Walmart was clearly the leader in operational excellence. Its mass and super-efficient supply chain made it the low cost provider.
Most of my writings and speeches in those days exhorted retailers to stop trying to compete with Walmart on those terms, and to stake out one of the other two areas for their own. In fact, I believed product leadership was attainable by a rare few, so retailers would be better off focusing themselves on customer intimacy. This was my recipe for success in what I called "The Post Walmart World."
Last week, as I listened to yet another person cite the Treacy/Wiersema model, I was struck by how much times have changed. The omni-channel phenomenon has rendered it obsolete. Walmart remains operationally excellent, yet its comparable store sales have been flat for more than two years. When we look at the Apple phenomenon, it's hard to cite an area where the company does not excel. Great products, an excruciatingly efficient supply chain, and customer service that boggles even this pain-in-the-neck customer's mind. And so I wonder if in fact all three disciplines have been reduced to table stakes.
In an age of social networks, price transparency, and cross-channel shopping patterns, what are the right disciplines for market leaders? What should our new technologies be supporting? I like my RSR Research partner Nikki Baird's model: the five C's of omni-channel retailing:
Content: This is all the content that a retailer or brand can bring to bear to influence, enhance or shape the purchasing decision.
Community: All the people that a customer might involve in the purchase decision, whether known or strangers.
Commerce: All the power that a retailer or brand can bring to bear to grab the consumer's product selection and monetize it — make it a transaction.
Context: Context is all about relevancy. It's a function of where the customer is in the buying process, and physical proximity to a location where commerce is possible.
Customer: This fifth element is central and, as such, is the big difference between the old discipline of market leaders and the new one. All activities performed by today's brand managers and retailers must must be focused around the customer.
And the best retailer will excel at all five.
All this is by way of saying I'm retiring my old slide deck. It's a new world.