Industry
Retail
Omnichannel CX and Intelligent Innovation – The Future of Retail
Solution
Consulting
TCS Consulting Services to Achieve Success in the Digital Era
Highlights
- In the retail industry, all aspects of implementing change are crucial to maintaining customer interest, driving sales, and ensuring stores remain fresh and exciting.
- However, retailers often face challenges due to the lack of a coordinated, end-to-end vision and approach to planning and implementing change.
- They must adopt the right collaboration processes and measurement practices to execute the overall change strategy and realize value.
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Price of innovation and change
Delivering meaningful change in retail can often fail at the final stage, resulting in a failure to create value for customers or retailers.
Whether it is the strategy teams ensuring that the overall proposition remains up to date with global innovation, or marketing and pricing divisions seeking new ways to communicate brand value to customers – each team plays a vital role in implementing change. Likewise, product development and buying teams introduce fresh products to the market, while store operations teams enhance shelf replenishment and customer service, collectively propelling change to enhance business outcomes.
All aspects of implementing change are essential to maintaining customer interest, driving sales, and ensuring stores remain fresh and exciting. However, one common challenge that retailers often face is the lack of a coordinated, end-to-end vision and approach to planning and implementing change. Repeatedly, activities occur in business silos, with a narrow perspective of what constitutes successful improvement or change to the proposition. Development teams may enthusiastically emphasize intrinsic quality but might not be cognizant of commercial or operational factors. Similarly, buying teams may prioritize maximizing gross margins but often overlook the downstream effects of their decisions.
Retail operating teams are often left juggling priorities to implement changes in stores. Many a time innovation falters at this final hurdle as stores struggle to execute changes according to the agreed-upon plan and timeline. All these steps represent significant costs to a business, prompting the question: is it all worth it? How can retailers determine which changes are effective, and which ones have the potential to be, but aren’t?
Change for good?
Change and innovation are cornerstones of modern retail, integral to continuous growth and adaptability.
However, given the high costs and limited budgets, it is more important than ever that every activity adds demonstrable value and resonates with the customers in the right way.
The right collaboration processes and measurement practices are crucial to delivering the overall strategy and realizing value. For example, focussing solely on carbon reduction metrics for a sustainability team, without considering other teams metrics may result in unnecessary retrospective reviews of product packaging, formulation, and sustainability credentials. Embedding a broader set of criteria at the outset should reduce or eliminate rework. Similarly, developing a new product without considering its impact on transport, distribution, and replenishment can lead to suboptimal outcomes. All too often, the right key performance indicators (KPIs) are not considered at the right stage in the end-to-end product lifecycle.
Introducing shared KPIs, along with collaboration and supportive governance processes, can significantly assist retailers in achieving strategic objectives while ensuring value is realized across the entire operation. By reviewing all metrics in balance, some change activities may be accelerated, while others deemed non-value-adding may be removed entirely from change programs or paused in favor of more impactful change initiatives.
It is also important to incorporate robust qualitative measures along with quantitative ones. Many initiatives may appear promising on paper but fall short in reality. This is especially true in the case of range and space changes. For instance, while data may suggest a logical business case for adjusting adjacencies and layouts in stores to reflect customer shopping patterns, executing such changes without assessing the potential impact on customer satisfaction could lead to neutral or negative returns because the impact of disruption and customer irritation has not been assessed. Algorithmic tools allow retailers to analyze performance and predict the impact of changes, such as assortment or price optimization, without physical implementation. Additionally, virtual trials allow for testing potential layouts and displays with customers, allowing retailers to gather feedback before a change takes place.
It is all about making sure the juice is worth the squeeze. It could cost a large retailer the equivalent of several million dollars in payroll alone to execute a category reflow and get no return. The same is true of regular range changes. Therefore, it’s imperative for retailers to have the right systems to review range churn over time and determine the impact on sales and operating margins. This allows retailers to assess the categories that should have the precious payroll invested in change and those that might be best left alone outside of one-in-one-out range updates. It is very important such strategies are data-driven, qualified, and centrally managed.
Platforms that offer end-to-end visibility can assist teams in reviewing data points and KPIs through the product lifecycle. Such platforms can significantly reduce workload, eliminate manual handoffs, and crucially, create the visibility required to govern and manage the entire change process. In the context of large retailers, there is not a single solution, and creating the seamless links and interfaces between systems is key to ensuring timely delivery of change.
Aligning activity
Ensuring all activity is adding true value is the start of this journey.
Strategically reviewing and aligning activity further assists in reducing implementation costs and, crucially, disruption in stores for customers.
Taking a longer-term view on aligning activities is also essential. By bringing together strategic plans with property change schedules for new stores, extensions, downsizing, refreshes, and refit works, retailers can execute broader changes in flows and adjacency, department rebalances, and business partnerships. This comprehensive approach not only reduces costs but also minimizes disruptions. Ensuring that the latest data- driven changes are executed in these stores is imperative. While there can be a tendency to try new concepts in such stores, this can lead to a disparate and eclectic mix of solutions across a retailer’s estate. Alternatively, pre-trialled and proven new concepts can be cost-effectively rolled forward though these programmes where the number of stores planned is sufficient.
Outside of the property schedule, the retailer’s range change schedule can be a highly effective delivery vehicle for executing change, extending beyond mere adjustments in range and space. Where a level of disruption is taking place in a category, cross-functionally aligning plans can deliver significant value. For example, aligning new concepts, equipment design, marketing campaigns, replenishment solutions into one unified change limits repeated disruption for both customers and stores, and crucially reduces implementation costs.
To achieve such alignment, central governance is essential, combined with strategic cross-functional business planning. This approach can enable retailers to triage priorities, accelerating some and deferring others, to deliver meaningful, unified change. When executed effectively, this not only creates excitement among customers, but also fosters loyalty, ultimately leading to increased sales and profit.
Optimizing execution
With activity aligned and governed, it is possible to optimize the number of hours invested in executing change in stores.
Once a change schedule is established and activity limited to specific windows, activities within these timeframes can be analyzed further. For example, many retailers will allocate store hours based on rudimentary data, such as the type and scale of change. However, the actual scale will vary wildly by change type, macro and micro space allocation in the specific store, and the number of physical changes taking place at a product level. Overlaying equipment movement, marketing requirements, shelf edge label changes and all activities associated with the change then gives a true read on the investment required to deliver it.
The benefits of this analysis are twofold. Firstly, it ensures the right number of hours are allocated to deliver the planned change, significantly increasing compliance. Secondly, large numbers of hours can be harvested in leaner change periods and either saved or reinvested in value-adding activity. It is possible for less experienced retailers to reduce costs by half and deliver more change than before, with better compliance and feedback from customers and colleagues.
The way forward
Evolving and optimizing the customer proposition will require retailers to execute change effectively.
It is a fundamental part of a broader ecosystem that encompasses the full product lifecycle, seamlessly connecting processes from ideation through to launch and ultimately clearance and exit.
However, to ensure changes land effectively and efficiently, retailers must execute them in a thought-through, balanced programme encompassing people change, process change, and technology solutions, all of which underpin the delivery. To make this possible, retailers need to pull some fundamental levers, including:
- The right organizational design that facilitates collaboration
- Critical paths and key milestones that can measure progress and performance
- Supportive governance that helps get things done, does not constrict creativity, and facilitates nimble change
- Systemized product flow at every stage, with systems of engagement where multiple solutions are in use to provide end-to-end visibility
Ultimately, integrating multiple work programs and dismantling business silos while connecting teams will help retailers deliver aligned and optimized changes for customers and stores, resulting in increased returns at reduced costs.
