Five for Fifteen
It seems hard to imagine that we are already 4 months into the year and the pace of change in retail continues to be relentless; so just how is 2015 shaping up and what are the standout trends we should be watching?
1. The customer relationship
The power shift towards the consumer. Mobile, social, smartphones apps all place more power and influence in the hands of the consumer and this continues to be very evident. Retailers may try to influence and control this but the resistance to this fundamental shift will be fruitless; much like trying to prevent and discourage showrooming. Those who do so will be deemed old school and no longer relevant. Those who actively encourage consumer participation in the brand – typically through product development, merchandising, promotion etc. – will outperform the competition.
2. The role of the retail CIO
The role of the CIO undoubtedly continues to evolve, impacted by the increasing power & influence of the CMO and CDO. The retail CIO is at a pivotal point which, given the right strategy could take them to the centre of the retail organisation however there is growing evidence that they are slowly being marginalised by the digital transformation their colleagues, most notably the CMO and CDO, are driving. Should this continue, the role of the CIO will be no more than custodian of the organization’s data. They will largely be charged with the ‘run’ function and for operationally keeping the lights on but (digital) innovation will be driven from elsewhere within the organisation.
3. Evolving business models
Putting the customer at the centre demands that online & offline converge into one. A customer centric approach will affect all parts of the retail organisation in ways never before conceived. As availability becomes an ever more critical part of the operation, so the supply chain will need to become far more responsive and agile. This is putting huge strains on retail operations to deliver.
4. Customer engagement models
Customer & brand engagement roles will assume greater importance as the customer is put at the centre of the business. The traditional structure and culture of retail organizations where command and control driven by sales figures is viewed as paramount will be eroded. This will be replaced by a much more inclusive, customer driven model where the customer interaction and engagement is at the heart of and drives the rest of the retail business. Retailers will slowly begin to shift from a sales driven culture to one where sales are seen as the desired outcome of great customer engagement and experience.
5. The role of the store
Perhaps the most significant trend which is now dominating is the question: what role do the stores have to play in an Omni-channel world? And the different strategies being played out by different retailers; some feeling the strain of too much space and closing unprofitable stores, others seeing expansion of the estate as the way forward. Either way, one thing is for sure, the store will be the pivotal value proposition in promoting the brand. Online – especially mobile – sales continue to grow but still represent a relatively small % of total sales and whilst growth in online will continue for some time to come it will eventually find a point of equilibrium whereby online and offline become one with the online experience more and more found in store.
How these trends emerge and develop during 2015 will in itself be interesting to observe but one thing is certain: the pace of change within retail will continue to accelerate.
Andrew Busby is Retail Business Head at Zensar Technologies