Creating a balanced organisation, flexible process flows, and a culture for change will benefit you little, unless you channel these attributes correctly into the brightest opportunities.
Every retailer will have different opportunities that will depend on the product and service sectors that they inhabit, the markets in which they operate, their level of ambition and current delivery, and their business strategy. Some opportunities will be common to all.
The first astute strategy consideration is not to focus your attentions on product functions, but to think beyond your internal divisions. Internal divisions can soon become isolated silos, and a focus on specific initiatives by silo will only increase the divisions within your business. This is not a good thing.
Deliver strategies for your customers, not for yourselves
Deliver precise strategies for your customers. Strategies that will make you essential, indispensable and irresistible to them. The benefits of your strategy outputs should primarily be for the customer. The strategies will generally be delivered cross-functionally. They will benefit those functions and the ways they integrate their thinking, principles and processes. Everyone benefits when strategies are not retail function focused.
Do not define strategies by ‘I need to make my buying process more streamline.’ Articulate the strategy as ‘I need to make my products closer to what the customer wants!’ The project resulting from these ambitions may well will involve streamlining your buying processes and include benefits to integrated processes across related functions.
The Best 6 strategies for 2022
Apply your ambitions and energy to the things that really add benefit and make a difference to the customer.
Your channel strategy including collaborations, your product and service proposition, assortment plan and structure, your supply partners. Add into that your shop location strategy, your customer communities, your sustainability initiatives, the people in your business, and your ethical values as a business – environment, sustainability and governance – ESG.
1. Touchpoint & Location Strategy: ‘Taking it to the customer’
The relationship is shifting from distinctive channels to a continuously changing number of touchpoints. These touchpoints cut across digital and physical channels. They are used by the customer as they please, often with little predictability.
The touchpoints are used by the customer in two fundamental ways. For inspiration and communication with the retailer, and to buy from the retailer. The customer flits across these touchpoints as and when they please.
With such freedom and choice, it is now time for retailers to be proactive, and to ‘take it to the customer.’
Before attacking the complexities of channel and touchpoint integration, it must first be the priority to ensure that all your touchpoints are independently, as efficient, as reliable and as engaging as possible. That they are working.
The choice of touchpoints is myriad, but the one that the customer is currently using is always the most important to them. Make sure that no touchpoints disappoint. Remember to never allow the customer to fail, by failing the customer yourself.
2. Product Assortment Strategy. ‘The Crowning of the King’
‘The Product is King’ or so the old-adage goes.
It seems strange to doubt this statement. After all, retail is the process of bringing the product and the customer together. Product is still at the heart of retail, of course, but its role as ‘absolute king’ is changing. Whilst in some businesses it is still everything, in others it is just a part of a variety of services, collaborations and subscriptions that make up the commercial proposition. What the product ‘really’ is, now has a wide range of interpretations from the physical, the digital, to the virtual.
Selling generic products has become a fight to the bottom, where lowest price is often the only differentiator between retailers. In such brutal fights there is generally only one winner. For all other retailers, a range of more sophisticated product weapons needs to be employed to survive and to flourish.
As retail brands we need to build assortments that are distinctive and desirable. The products must reflect our vision and our values, our taste, and our aesthetics. The need to constantly evolve our assortments is a priority. In dynamic, disruptive markets it is essential.
We need to enrich our product. We must embellish, enhance, and adorn our products to add value to them. Ultimately, our products must have an emotional connection with the customer, as much as a physical one. The glory must be restored to our product assortments.
3. Supply Chain Strategy. ‘In the same boat together!’
The relationship with suppliers has never been so important. The COVID lockdown exposed the dangers of weak supplier integration, whilst the move to remote digital communications highlighted the opportunities for technology applications across new supply chains.
Trust between some suppliers and retailers hit an all-time low as orders were cancelled and payments frozen. The repercussions of such actions will set back the industry, unless proactive action is taken to re-build relationships and increase safeguards for suppliers.
Retailers wishing to evolve supplier relations would do well to begin with opening new dialogues and taking measures to personalise individual relationships as far as possible.
Customers no longer separate in their eyes the practices of the retailers they buy from, and the suppliers selected by the retailer. It is important for retailers to take an ever-more active role in the monitoring and implementation of human rights, employee conditions, and sustainable initiatives in those suppliers.
Evolving a better relationship will have a variety of commercial benefits from increased efficiency and reliability to a better collaboration on the quality of product sample standards and checking procedures, and the added-value of the final product.
The enrichment of relationships will also help to add genuine value to products through the consistent additions of high-quality adornments and embellishments, in the battle to produce non-generic products. The development of exclusive supplier relationships with formal safeguards on both sides would stimulate a richer exchange of ideas, deeper understanding of customers, worker cultures and skill-sets.
The COVID lockdown and the need for flexibility has also accelerated the development of relationships with local suppliers who can deliver shorter lead-times, as well as bespoke and responsive products. Local supplier physical adjacencies will also facilitate and inspire closer working relationships and collaborative working.
4. Physical Shop Strategy: ‘Places in our hearts & minds‘
COVID was supposed to be the death knoll for physical shops. It was of course immensely damaging and resulted in many shops closing and businesses folding. Customers naturally migrated to digital channels, some permanently and others temporarily.
Despite the whole channel being closed, the physical shop, in its best incarnations has already continued to bounce back. Despite everything, it is still the major channel for many customers, across most sectors, in the majority of markets, across the world.
However, what has survived the seemingly impossible, will not be the same as before. It never will, and why should it be?
This is the year of the ‘Retail Hub.’
A physical shop was originally designed to sell, and nothing else. Its space was viewed in terms of capacity. The space segmentation decisions were limited to how much space was required for the stockroom, and how little space we could give to our shop teams, to sit, to eat and to function as sales assistants. Those times are finished.
Today’s shop must be a combination of a traditional physical shop, a dark-shop storage area for collections, an eBike parking place for deliveries, a space for colleagues to relax and stretch, a space to demonstrate product for zoom customers, desk space for local managers and regional managers, and offices for local meetings and community.
Storing, and shopping, are the equal and opposite reasons why physical retail will survive.
5. Sustainability Strategy: ‘Making more from less‘
Time has long passed, from when a sustainable initiative was not much more than a smart marketing strategy. Sustainability has now irreversibly developed into something essential to establish commercial traction with many customers.
Responsibility for sustainability has also shifted, from the marketing department to every department across a business. Products are being held up as icons of the sustainable age, and so too are the businesses that produce and sell them. Shaming of exploitative businesses and the wasteful products they sell has gained a momentum that is not going to slow.
For our commercial, as well as our existential security, it is essential that retail embraces every aspect of sustainability.
The process of evolution begins with education. Increasing the awareness of colleagues, customers and suppliers about sustainable materials & processes is the minimum first level of achievement.
A ‘quick-win’ overhaul of the complete buying & merchandising process is simply not going to happen. Superficial changes make little difference to either the business credentials of the retailer or the actual impact on the environment, and genuine sustainability.
Fundamental change requires the un-picking of existing process principles and collaborations, whilst additional sustainable alternatives are also explored. This takes time, however it does not mean that the buying teams cannot move relatively quickly to selecting more materials that are recyclable or recycled, wherever possible. This begins with education.
Buyers can also evolve further the development of individual products, ranges and capsule collections that are completely re-cyclable, or re-usable. Moving forwards one step at a time can accelerate into a sustainable pace for change across the entire assortment.
Customers are also realistic enough to know that every change cannot be made in an instant. However, they are fully aware of the ‘greenwashing’ of businesses claiming to be on the road to sustainability, whilst still clearly driving along the exploitation super-highway.
Marketing campaigns, internal sustainability schemes, charitable collaborations and donations, as well as the harnessing of colleague lifestyle initiatives are all important in communicating to customers that at the very least, the intent to change is a reality within the business.
6. Retail People Strategy: ‘Making the shopkeepers of today‘
Overall, there is a growing appreciation of colleagues at every level of organisations, being driven by the new wave of retailers who have a different outlook on how to manage their employees, to nurture loyalty and productivity. And from the evolution of many HR departments who are now introducing different cultures into the traditional retail sector.
Regarding shop personnel there is also a new awareness of the importance of human interactions with the customer. The outpouring of warmth towards ‘key workers’ and those essential to the fabric of society during the COVID crisis, has been echoed to various degrees by retail boards, and their reaction towards their own ‘key-workers.’ Those colleagues who kept shops open and stocked in the most difficult of circumstances, and those who kept the brand light shining, even in the most desperate of corporate environments.
For some retailers, the current bar for shop colleague management is set very low, the practices a product of years of personnel neglect and cost-cutting. This does mean, however, that significant gains can be made just from firstly re-establishing good levels of communication with teams and individuals. The setting up of feedback sessions, team building workshops and individual mentoring can go along way to achieving normal relations.
A good HR team, of which there are many, strives to know and understand their colleagues through personal interaction. It is the restrictions to their own resourcing and time availability, that usually limits the level of understanding and empathy.
In head office and in shops, career paths should be the result of consultation and not just internal hierarchies, retirements, and maternity leaves. Good people are adaptable and respond to new responsibilities. Good people bring ideas and enthusiasm to new positions of trust. But good people need to be discovered, through being asked about their ambitions, passions and innovative ideas for themselves and the business.
Beyond the role of HR , the balance and equality within the organisational structure are key to instilling a successful ‘people culture.’ It is important that every function and team, at every level, are valued as part of the wider corporate approach. What is believed and demonstrated at the top table, for better or worse, usually sets the standards further down the business. The board must be enlightened as to the importance of diversity within the employees of a business.
The improved engagement and mutual appreciation is of course a two-way process. But it is rarely the case that a genuine and considered investment in people is not returned with a positive impact on productivity and profit. It is rare for colleague focused initiatives, at individual and team levels, not to contribute to a happier working environment. This is always a good place to start for efficiency and productivity.
Technology is all pervasive
More than anything, I would also consider that the application of technology across every area and function should be a focus of your astute strategies. But don’t work with technology as a function. It is possibly the worst discipline to regard as a function and to isolate. But the fact is, it is so important, so pervasive to every element of retail, that it cannot always be considered just as a facilitator of other strategies. But it must always be viewed in the widest sphere of application, facilitating and bringing functions together, rather than looking at functional technological processes in isolation.
Improving your internal team
For all astute strategies, prioritise the likely benefit impact depending on your overall business strategy, and the current levels of practice and skills excellence within your business.
For a new businesses, particularly from non-retail origins, product propositions may be a big opportunity. Brands born on the crest of a wave of disruption, initially thrive through energy, and the novelty of innovation, but will quickly need to learn and incorporate some fundamentals of retail buying & selling. Conversely, the need to expand, to capitalise on new channels, collaborations and market disruptions, may well be the priority for established businesses.
Enrichment of current practices is an opportunity for all. It has the capacity to transform established processes, whilst adding commercial stability to disruptive ones. Enrichment has the potential to bring together the functional ‘nuts and bolts’ with emotional innovation and energy.