Blog: Retail through and through
Some of the retail industry’s most successful leaders started life as entrepreneurial traders. Chris Dawson, who now runs The Range, worth £585 million, started out selling fish from a van with his father. Philip Green and Richard Branson are two more famous names in the frame. But while many top retail leaders still need to have a passion for selling, there are signs that this is beginning to change as new requirements and skills come into play.
The DNA of the Retailers of Tomorrow, a collaborative report between Green Park, World Retail Congress, Planet Retail and TrueStart, reveals a race for transformation has already begun, with forward thinking CEOs changing their customer propositions, internal capabilities and resourcing strategies to future proof their enterprises.
What recruitment development programmes are organisations implementing to ensure they have the right CEOs in place to keep the plates of a modern retail brand spinning, while continuing to delight customers with the best and most relevant offers? Can a non-retail background deliver fresh insights from outside the industry?
Retail leaders have traditionally grown up in the industry, indeed there is a veritable merry-go-round of CEOS especially in the FTSE. However, the huge growth in retail technologies and need for brand differentiation in a commoditised marketplace where there is fierce competition means firms are increasingly looking outward at other industries when considering new C-suite appointments.
Retail CEOs of the future are set to experience many of the challenges faced in other industries where technology is being introduced that will lead to labour force reductions. Amazon’s Go concept store sees checkout free shopping, using sensors and computer vision to record purchases, rather than people serving on the checkout. If this model is rolled out across the sector, while some employees will be redeployed in other roles, there is likely to be shrinkage in shop floor employment. Retail CEOs can therefore expect a potential clash with unions and labour force activists in future, with negotiation skills invaluable to avoid damaging industrial action.
The sector also faces a challenge as the capital investment in technology required to modernise is huge, but at the same time retailers need to cut costs to remain competitive. How can retailers balance their investment in transformation, particularly around technology, whilst also keeping their shareholders happy? In many cases shareholders are impatient for dividend payments and short term performance improvements. Retail leaders seeking to hold back monies from the city for capital intensive projects that will hopefully deliver long tail benefits will need to articulate a clear business case. In addition, they will need to look at the skills set across their business to see if it is capable of delivering the transformation agenda and have robust processes in place to ensure projects such as IT systems migrations run on time and on budget.
The sector is ripe for the next phase of technological innovation, online and App sales have long been a conventional part of the sales strategy, so the question is what comes next? CEOs will need to understand how their businesses can use big data effectively to drive value. Customer segmentation into discrete niche groups will continue, with the need for far more complex targeting and retargeting. Differential pricing strategies are also likely to grow as retailers turn away from traditional uniform pricing to attract new demographics into their sales channels. To successfully meet these challenges retailers will need to expand their investment in data analysts and designers of IT architecture and systems.
Research from Green Park amongst a global panel of retail experts found 45% of retail CEOs will not be fit for purpose when it comes to technical skills in the future. Those appointing to the C-suite may look to other industries to ensure they have these skills within their operations. While they need not be technical experts themselves, the retail leaders of tomorrow will need to demonstrate they have worked in organisations where technology has been used to underpin a change agenda.
A passion for retailing, a desire to challenge conventional wisdom and an ability to spot market opportunities before competitors will remain vital components of the DNA of future retail CEOs. However, an understanding of technology, data driven business and the digital environment will also be crucial. Consumers will expect the same brand architecture and service across all channels, with seamless integration across all platforms. The future of retail leadership is incredibly exciting, it is an industry posed for innovation and change.