EX­PERT TALK RE­THINK­ING RE­TAIL: SHIFT FROM STATIC TO AG­ILE

Images Retail - - CONTENTS - – By Do­minic Twyford

The world around us moves at a re­lent­less pace. Change is con­stant and while it can some­times be scary, it isn’t go­ing away.

t isn’t sur­pris­ing to find that the word ‘Ag­ile’ is in vogue. Ev­ery­where you look, busi­nesses are look­ing to re­de­fine them­selves by in­cor­po­rat­ing the Sil­i­con Val­ley ap­proach of ‘fail first, fail fast, learn and it­er­ate.’

IE­volve or Die

Com­par­ing the For­tune 500 com­pa­nies in 1955 to the For­tune 500 in 2014, only 61 com­pa­nies ap­pear in both lists. In other words, over this pe­riod, 88 per­cent of com­pa­nies from 1955 have ei­ther gone bank­rupt, merged, or have sim­ply fallen from the top tier of busi­nesses.

Why? Pos­si­bly, suc­cess leads to com­pla­cency, con­cen­trat­ing on short term tri­umphs in­stead of long term plan­ning. Th­ese com­pa­nies were def­i­nitely not ag­ile or keep­ing pace with a fast-chang­ing world. Busi­nesses ma­ture, and when that hap­pens, they tend to plateau.

In March this year, CNBC re­ported that the num­ber of US re­tail­ers fil­ing for Chap­ter 11 bank­ruptcy pro­tec­tion is head­ing to­wards the high­est an­nual num­ber since the Great Re­ces­sion. As you can see, some­thing is clearly wrong. Another proof point that com­pa­nies who are not ag­ile fade out and lose rel­e­vance in chang­ing times.

So, who’s do­ing it right? Sur­pris­ingly, it is one of the most es­tab­lished re­tail brands that is pi­o­neer­ing ag­ile re­tail think­ing, Tar­get. How? It has re­mained open-minded and learned from the likes of Story, a re­tail new­comer. Story pre­sents it­self like a mag­a­zine, mean­ing every month or so, stores com­pletely rein­vent them­selves from en­vi­ron­ment to mer­chan­dise. In­spired by this, Tar­get has de­vel­oped a cap­sule line with Story and cre­ated in-store labs where ideas can be fast-tracked and tested with real cus­tomers.

Another ex­am­ple is Open House, Tar­get’s play­ground for un­der­stand­ing how to sell the con­cept of smart homes to cus­tomers. It is a space where cus­tomers can ex­per­i­ment with and pur­chase prod­ucts to learn about the fu­ture of their home. In the evenings, Open House turns into a dif­fer­ent kind of space that hosts events and pre­sen­ta­tions.

Re­tail­ers like Tar­get are lead­ing the way by em­brac­ing trends and cre­at­ing en­vi­ron­ments that can re­act to trends and rein­vent them­selves. It is im­per­a­tive that the In­dian re­tail sec­tor also re­de­fine its think­ing.

Is Cus­tomer Ex­pe­ri­ence Enough?

It is easy enough to be­lieve fo­cus­ing on cus­tomer ex­pe­ri­ence is the an­swer to the is­sue. Af­ter all, much is made of the im­por­tance of re­tail­ers cre­at­ing cus­tomer ex­pe­ri­ences.

The word ‘ex­pe­ri­ence’ is bandied around with great ease but with lit­tle thought. Look­ing around us here in In­dia, apart from high pro­file brand con­cept stores, do re­tail brands re­ally de­liver a unique and own­able ex­pe­ri­ence?

For sure, some do, but the truth is, most don’t. To com­pli­cate mat­ters fur­ther, while re­tail­ers still grap­ple with the mean­ing of ex­pe­ri­ence, the fu­ture is not go­ing to be about mere ex­pe­ri­ences, but about agility too.

In­dia’s Re­tail In­dus­try Must Be Re­spon­sive, Ex­per­i­men­tal

A re­port from the United Na­tions in 2014 con­cluded that In­dia has the world’s largest youth pop­u­la­tion of 356

The world around us moves at a re­lent­less pace. Change is con­stant and while it can some­times be scary, it isn’t go­ing away. Con­stant flux is the new nor­mal and In­dia’s re­tail in­dus­try must evolve to es­tab­lish new forms of rel­e­vance.

mil­lion 10-24 years olds, and that this num­ber is set to grow. In­dia’s re­tail sec­tor needs to take note.

Gen­er­a­tions Y & Z are un­der­whelmed with old­school re­tail. They shop while in a con­stant state of par­tial at­ten­tion and their lives are lived at a fran­tic pace, switch­ing be­tween the real and dig­i­tal worlds.

It is time to ac­cept that the store can no longer stand still or act in a pas­sive way. We have reached a tip­ping point where In­dian re­tail­ers need to shift their think­ing.

All too of­ten, re­tail­ers in this coun­try fear ex­per­i­men­ta­tion and in­no­va­tion, and in­stead, choose to fol­low tried and tested re­tail for­mu­las rather than de­vel­op­ing new ones.

In the face of mas­sive dis­rup­tion from brands en­ter­ing the re­tail sec­tor, this at­ti­tude is no longer valid, and In­dia’s re­tail­ers have to be re­spon­sive and ex­per­i­men­tal. This is the def­i­ni­tion of ag­ile re­tail. To put it another way, ag­ile think­ing is pro­tec­tion against dis­rup­tion.

Re­think­ing How Re­tail Op­er­ates

Let’s look at the life­cy­cle of tra­di­tional re­tail.

The cur­rent life­cy­cle cen­ters it­self on stores; they are like boxes made out of bricks and mortar, and filled with prod­uct. Every three to five years they are up­dated, of­ten be­cause a di­rect com­peti­tor has re­designed its stores and there is a com­pul­sion to re­act for fear of be­ing left be­hind. The truth is, this ap­proach to re­tail has never re­ally changed.

The cre­ative process is equally staid - de­vel­op­ing a ‘new’ con­cept, pro­to­typ­ing it; value en­gi­neer­ing it (in the process prob­a­bly los­ing the in­ter­est­ing el­e­ments), and then finally rolling it out across re­tail es­tate. This pe­riod of roll out can take months, even years, so the fresh new con­cept is dated from day one of im­ple­men­ta­tion. On oc­ca­sion, re­tail­ers will de­cide to re­fresh their brand, but this is only the equiv­a­lent of a fresh coat of paint.

This cre­ates a sce­nario where fol­low­ing the ini­tial spike due to the stores new­ness; the store ex­pe­ri­ence slowly de­te­ri­o­rates as ini­tial in­ter­est turns to fa­mil­iar­ity, then bore­dom, and finally in­dif­fer­ence. There are many weak­nesses in this model; it is re­source and fi­nan­cially in­ten­sive but it is also rigid, not al­low­ing for changes in shop­per be­hav­iour or al­low­ing the brand to re­act quickly to new op­por­tu­ni­ties.

So be­tween this new kind of cus­tomer and new mar­ket en­trants like Airbnb, Uber, Ama­zon and Alibaba who each have dis­rup­tion hard wired in to their DNA, the life­cy­cle of tra­di­tional re­tail needs to be torn up.

Live in Beta

One of the worst as­pects of this long-tail ap­proach to re­tail is rep­e­ti­tion. The ap­proach is com­pletely at odds with the new gen­er­a­tion of shop­per that is the fu­ture of the in­dus­try here in In­dia.

Rather than static store vis­its, cus­tomers ex­pect to be able to in­ter­act with and cre­ate with the brand. It is no longer about ‘what I can buy from you,’ but ‘what I can achieve with you.’ De­spite this rest­less dis­sat­is­fac­tion, even the most es­tab­lished re­tail brands can be a pi­o­neer of ag­ile re­tail think­ing, as Tar­get has proven.

In­dian re­tail­ers have a real op­por­tu­nity to put ag­ile at the heart of their busi­nesses, shift­ing the mantra from speed to mar­ket, to a mar­ket based on speed.

Given In­dia’s de­mo­graphic div­i­dend, the sec­tor has lit­tle choice.

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