Comic: A day in the life of an Agile store manager.
When we talk about an 'Agile store', what do we actually mean? What's different for your store staff, and what's the effect on your...
Even before the pandemic ever hit, retail was in the midst of the biggest transformation it has ever seen. As the digital revolution disrupted, retail found itself grappling with four new realities:
Addressing any one of these themes would be a once in a generation task for many executives. Coupled with a pandemic, they are giving rise to the type of volatility which is threatening but a potentially huge opportunity. As new markets are made, so too are the opportunities to capture market share for retailers who can best adapt to them.
78% of people alive today were born before the iPhone came into existence 13 years ago, yet it’s invention has transformed the lives of almost all of them. With information, access, collaboration, and inspiration in everyone’s pocket, whole industries have been transformed and none more so than retail.
Whereas 99% of goods would have been both bought and delivered to you in store ten years ago, the mobile device has allowed shopping from anywhere with enough phone signal. And yet ecommerce is becoming far bigger than just appending a website: it’s now about understanding the impatience of consumers to have their goods delivered and enjoyed in ever more flexible, frictionless, personalized ways. The complexity of selling goods in multiple channels, physical and digital, and offering multiple delivery and return options (in store, BOPIS, last mile) is now the norm.
And competitors are no longer limited to other retailers: competitors are emerging beyond ecommerce players. Social media companies, like Facebook and Instagram, now have shops. Delivery companies, like InstaCart and DoorDash, are now becoming retailers.
The rise of mobile asks fundamental questions about the role of stores, the relationship with suppliers (direct-to-consumer becoming increasingly prominent), and optimal organizational design. Mobile is applying an evolutionary pressure to retail that makes it a volatile and exciting sector to play in.
Most people look at Amazon in the wrong way. They see it as a competitor that is out to eat their lunch, Jeff Bezos’s shadow lingering over boardroom discussions with constant undercutting them and impossible-to-replicate fulfillment options.
What every retailer needs to now realize is that this is not the competition: it’s the universal commodity standard. It’s also a universal standard that consistently sees ways in which it can provide better value and convenience to the customer. If you cannot provide a better blend of quality, value, or convenience to your customer than Amazon, your retail model is not differentiated and no better than this commodity. The key is understanding the areas of differentiation.
There has been a general theme that “experiential retail” is the appropriate response to Amazon. Yet creating experiences is not the only lever there is also areas like quality of service, value, and ongoing relationships – just ask any luxury retailer or successful independent store. This is not just about looking to the future, but also focusing on what has made retail successful in the past. Creativity, pride, and entrepreneurial spirit used to be at the heart of being a shopkeeper. Sam Walton’s’ first success as an independent merchant was to put a candy floss maker outside his store to drive footfall.
The new universal standard demands that retailers discover how they can rapidly and sustainably create differentiated products and experiences, so that their offering is indispensable and delightful to customers.
From its position of stability, most retailers have reacted to a changing landscape by adding new departments. Themes like omnichannel, store of the future, and data analytics have risen up over the last few years to answer changing customer behavior.
In some cases today you see stores with separate ops and ecommerce teams, tasked with different activities under the same roof, reporting into two different people. While this may have made sense as these trends were starting, retail’s evolution today demands a less siloed and more collaborative approach between departments. Customers have shown themselves to be fickle, and an individual coming to the store is just as likely to also require delivery or seek BOPIS. Different preferences, different times.
The Frankenstein approach to retail is preventing companies from providing a uniform and coordinated approach to customers. Words like omnichannel and digital now seem outdated – these are just the norm now as simple modern retail.
Over the course of the last 20-years, retail has looked to increasingly reduce store labor, unable to pass on rent and wage inflation to customers. The standard model has been a push for centrally-decreed consistency and uniformity across stores. Workers have felt like robotic task compliance agents, and retail has lost its luster as a place where you can grow a career. The next decade will be a time of rapid change and volatility, often differentiated at local levels. The frontline is the frontier of any retailer’s relationship with their customers, and thus key for cultivating your brand and learning what changing dynamics need to be supported. Therefore, when a workforce becomes disengaged, it inevitably prevents lasting customer relationships from being built and stops retailers from being able to adapt and learn their way to future success.
The common themes throughout are increasing volatility, more competitive threat, and a need to radically simplify and engage workforces. Agile has been the organizational success story of the last two decades, with its focus on customer value, small teams working in rapid growth cycles, and aligned collaborative organizations. It allows businesses to offer both the dynamism and personability of a small independent boutique, with the stability and scale of a large enterprise. Retailers no longer have to make a trade off between flexibility and reliability.
The most valuable and fastest growing companies in the US – Apple, Amazon, Microsoft, Facebook, Google – operate under Agile values and principles. Top retailers like Walmart have also adopted these ways of working, and many more are planning to. As it gives companies such an advantage over competitors, it’s not even an option for the remainder: go agile, or go bust.