When you hear the term “changing face,” what springs to mind? Putting on make-up? Dawning a mask? A metaphorical alteration of circumstances? The term generally refers to changes, transformations, modifications or the evolution of something. And the retail sector has certainly been changing, transforming, and evolving over the past few years. I was surprised to learn there is another definition for the term “change face.” According to Collins English Dictionary, to “change face” means “to rotate the telescope of a surveying instrument through 180° horizontally and vertically, taking a second sighting of the same object in order to reduce error.” When things aren’t going according to plan, it’s always a good idea to look at challenges from a new perspective — in other words, to change face. Executives in the retail sector have been forced to reimagine what retail will look like in the future, which has required them to change face and to understand the changing face of the business landscape. N.K. “Trip” Tripathy, leader of Kaufman Rossin’s CEO, Board & Shareholder Business Advisory Services practice, observes, “Retail was undergoing a transformation even before the COVID-19 pandemic, and the events of the past year have only accelerated this trend, increasing pressure on business leaders to shift their strategic focus to the future.”[1]
Omnichannel Operations are Now the Norm
As the light at the end of the pandemic tunnel brightens, malls are starting to see more foot traffic and physical stores are preparing for the return of customers. CNBC correspondent Silvia Amaro (@Silvia_Amaro) observes, “The future of physical stores has been called into question by the coronavirus pandemic, but experts believe the key to survival will be reinvention. For some time now, retailers have tried to attract customers by creating experiences in store, but they now need to get creative as shopping habits change and customers become more demanding.”[2] Two of the biggest changes in consumer behavior, brought on by the pandemic, have been an increase in online purchasing and an appreciation for touchless shopping, including options like curbside pickup. Most retailers now understand the importance of have a strong omnichannel strategy.
Journalist Ray Schultz (@rayschultz) observes, “In retail, consumers do not anticipate giving up the online shopping habits they have developed — at least 20% plan to continue shopping online. But those who are vaccinated plan to buy in-store more often.”[3] Jesus Mantas (@jmantas), senior managing partner, IBM Global Business Services, told Schultz, “Habits formed during the COVID-19 pandemic have raised consumers’ expectations of digital engagement, especially in service industries like retail, travel & transportation. … [Moving forward, businesses should] accelerate their digital evolution with AI and Cloud based solutions to help remain competitive. Investing in hybrid physical and digital experiences can help provide a more personalized experience.”
Tripathy notes, “Business leaders who are not focusing their strategic work on evolving their operations and business model to meet the demands both of current and future customers are already falling behind. And those who fail to adapt may not survive.” Adapting business models to align with current and future customers is not as easy as it sounds. Despite promising indications that consumers will return to shopping in physical stores, many customers remain unsure themselves about their future shopping habits. As a result, Tripathy asserts, “To survive and thrive, retailers need new business models, new operational models, and possibly even new revenue streams.”
New Retail Business Models Explored
Tripathy isn’t alone in his belief that retailers need to explore new business models. Mike Robinson, head of retail operations at The Eighth Notch, insists the shopping process will be different in 2021. He says executives at physical retail stores are asking: “How can stores reassure people that it’s safe to return to congregating in places again? How can consumers trust that the store is doing the right thing from a cleanliness perspective?”[4] Robinson states, “Nobody has definitive answers, but at least they’re asking.” Analysts from Oracle add, “Adapting to a new world means being open to new ideas. Business leaders ready to transform a company have to rethink everything: business models, product development, marketing processes, fulfilment, and success metrics.”[5] Tripathy suggests retailers reexamine and be open to new ideas in five areas. They are:
1. Consumer delivery model. According to Tripathy, “The retail industry’s biggest challenge has typically been figuring out when a particular consumer delivery model is changing, but recent data shows more consumers are shopping and buying online while brick and mortar continues to be an important part of the customer journey for many brands. Omnichannel is here to stay.” He suggests one way to keep ahead of emerging trends to ask the following questions: “How and where will consumers want to shop for and purchase the products we sell? How much and what type of information and assistance will consumers want during the shopping process? Where will consumers want to actually receive their products?”
2. Shipping and delivery to consumers. “Knowing that purchases are increasingly likely to be delivered directly to consumers,” Tripathy writes, “you should consider shipping and delivery part of your customers’ experience.” Again, he suggests asking a couple of questions: “Should we invest in our own shipping and/or delivery systems, rather than using third parties? How can we rethink our delivery and shipping model to improve the customer experience and cost effectiveness?”
3. Supply chain. Tripathy insists, “This is an area of your business that likely needs reinvention.” He suggests beginning the reinvention process by asking three questions: “How must our supply chain change to get products to customers when they expect them? How might future global events affect our supply chain, and how can we minimize potential disruptions? How will ‘conscious consumerism’ movements change the information consumers want about our products?”
4. Brick-and-mortar store experience. A survey conducted by Oracle found a majority (57%) of retail executives are going to concentrate on providing their customers with better experiences in the coming months. Tripathy notes, “Although you can expect far more buying and shopping to take place online, brick-and-mortar locations will still play an important role in the retail industry. However, physical locations will likely look and function very differently in the coming years.” He suggests retailers ask the following questions: “If we need brick-and-mortar locations, just how many will we need in the future? What type of unique experiences can we offer in our stores to make them must-visit destinations? Should our stores become order-fulfillment centers or retail/order-fulfillment hybrids?”
5. Management and executive talent. As I pointed out at the beginning of this article, to “change face” can mean getting a different perspective on things. Tripathy notes, “Retailers tend to hire management and executive talent from within the retail industry, but new business models may demand a different set of skills, experience and competencies. It’s time to expand your view of what you’re looking for in senior talent.”
Concluding Thoughts
To understand how the retail landscape is changing, retailers need to gather and analyze data. Vaibhavi Tamizhkumaran, a Digital Marketing Executive at Indium Software, writes, “The retail industry is constantly changing and will continue to evolve, from concentrating efforts on website growth and online retail to needing faster shipping speeds. With all of the changes in the retail environment and the continued shift away from conventional technologies, cognitive computing in retail is becoming increasingly important.”[5] Cognitive computing solutions, like the Enterra Supply Chain Optimization System™, can provide retail and supply chain decision makers with valuable insights. Oracle analysts note, however, that cybersecurity risks are a special area of concern. They explain, “To offer customers better, more personalized experiences, retailers need to collect more data to analyze, opening them up to more risk of a data breach.” They add, “As cyberattacks get bolder and more frequent, retailers have to contemplate how to protect their data, starting with preventing credit card fraud.”
Footnotes
[1] N.K. “Trip” Tripathy, “Retailers: It’s time to move beyond outdated business models,” Retail Dive, 20 April 2021.
[2] Silvia Amaro, “Retailers look to innovate and tempt customers back to physical stores,” CNBC, 13 April 2021.
[3] Ray Schultz, “Some Consumers Are Ready To Shop In-Store, But Will Continue Their Digital Habits,” MediaPost Email Marketing Daily, 9 April 2021.
[4] Oracle staff, “New business models, big opportunity: Retail,” MIT Technology Review, 12 April 2021.
[5] Ibid.
[6] Vaibhavi Tamizhkumaran, “Is Cognitive Analytics Reinventing A New Landscape For Retail Sector?” Indium Blog, 7 April 2021.
