In the News: Retailers face widening gap between where they are and where they should be, study finds ahead of IRX 2017
Retailers across the world are aware a threatening combination of transforming forces – driven by customer service, personalisation and mobile – are disrupting their industry, with 98% of executives recognising that the sector is set for fundamental change.
However, less than a third (31%) of retail leaders are repositioning their long term business model, with 40% simply optimising the performance of their current operations. A quarter (24%) of firms in the retail industry are primarily focussed on turning round short term issues rather than long term planning.
These are the initial findings from a ground-breaking new global study, The DNA of the Retailers of Tomorrow, commissioned by Green Park and the World Retail Congress with Planet Retail RNG, TrueStart and EY.
They also find that transformation progress is currently extremely limited: while 80% of retail executives say their organisation understands the need for transformation, this awareness falters before it turns into action. Although plans are in place for 61% of global retailers to transform their businesses, less than half (44%) have identified the capabilities needed to transform, and less than one in four (24%) say they know what transformation looks like on a day to day basis.
The report’s initial findings have identified an ‘action gap’ between awareness of the need to change and the implementation of new operational processes. When asked how mature their organisation’s transformation currently is, nearly two thirds (62%) of retail leaders say they have not even started or are at the beginning of the process. Just 7% of global retailers has completed their transformation.
The DNA of the Retailers of the Tomorrow will be launched at the World Retail Congress in Dubai on April 4th 2017. Green Park and World Retail Congress have collaborated with TrueStart, Planet Retail RNG and EY on the second study in their Retail DNA Series, which is overseen by an advisory board of influential senior retail leaders and based on a comprehensive survey with over 150 Chairs, CEOs and senior executives from across the world.
Steve Baggi, Co-Founder and Head of Retail & Consumer at executive search firm Green Park, explains: “This is the most challenging time in history to be a senior leader in retail. CEOs and their boards are battling massive headwinds caused by changing customer behaviour and disruptive challenger brands. There is no doubt that radical change is required. If leaders want to ensure their companies survive in a brave new world of digital retailing they will need to identify the key building blocks underpinning successful transformation and produce a new framework to understand and benchmark their progress.”
He continues: “The ‘action gap’ is dangerous because the drivers creating the need to transform will only accelerate. Having a strategy is an excellent first step, but having the confidence to deliver on it is vital. Retailers need to be brave and invest in new models underpinned by technology that deliver the goods, services and experiences that customers’ want. If they fail to change, change will be imposed upon them.”
Mike Tattersall, Partner at TrueStart – one of the bodies driving the Innovation Hub at Internet Retailing Expo this week – comments: “The industry finds itself at a pivotal moment and there is an ever-present opportunity that will inform a real step-change in the way that organisations view – and act on – transformation, and that is through leveraging innovation. By identifying, adopting and investing in the best technologies and consumables commercially relevant to its business needs, a retailer can gain that all-important inside track and develop a transformative mind-set that will not only benefit its business operations, but its offering to the industry’s most important stakeholder: the customer.”
The report reveals that meeting changing customer behaviours and needs is the biggest strategic driver behind the need for transformation. Nearly half (47%) ranked this as the most important reason to change and it is the challenge that they felt most confident addressing. By contrast, they felt less able to deal with an increasingly competitive environment full of new entrants and the need to increase market reach globally.
Anand Raghuraman, EY Americas Strategy Leader, Consumer Products & Retail, says: “Shoppers are expecting connected, seamless and consistent experiences across channels. They presume retailers will have an integrated view across the end-to-end customer experience. Retailers must transform their businesses to meet their customer needs in a profitable and sustainable way. The 10 DNA blocks are the key areas leaders need to get right to achieve the scale, depth and pace of transformation that success now demands.”
Digital and technological understanding has overtaken building brand strength as the key area for building operational capabilities. Developing digital and technological capabilities was ranked by 80% of retail leaders as one of the most important areas where they need to develop operational capability. The research also revealed retailers feel they have a large deficit in leveraging data analytics strategically to help their successful transformation.
Lord Stuart Rose, Chair of Ocado Group plc; Fat Face Group Limited and Majid Al Futtaim Retail, and member of The DNA of Retailers of Tomorrow Advisory Board concludes: “The initial findings of this study highlight a troubling lack of core capabilities and awareness within the retail industry and among its leaders, however it effectively identifies the key areas retailers need to prioritise in order to succeed.”
This article was published by Internet retailing on April 3rd, 2017. For the Internet Retailing article click here.