How long did it take for the Horse & Buggy to be replaced by the car?  It took 5 years from 1910- 1915 and in that time, road transport changed for ever. For people who built buggies and bred horses they thought the good times would never end, based on the previous 1,900 years of success.

In 2019 do we stick with the horse & buggy (traditional retail) or choose the red Ferrari? (New Retail)

In 2019, retail is facing its own horse and buggy moment where consumers are changing the way they shop.  In the USA last year, 85% of consumers product searches were via Amazon (50%+), Google and other search engines and 15% via the retailer and this 15% was in decline. This trend makes sense for most geographies also, as Amazon, Alibaba, We chat,  Google, Facebook, Instagram, Twitter, eBay and the like dominate our marketing $ spend and consumer searches.

As a retailer moving forward, to successfully grow my business I will need to be proactive in the search engine & Amazon/Alibaba Channel to attract new customers, to promote my brand and sell my products. The consumer will then choose whether they shop in store or online, of course bricks & mortar will still play a dominate role moving forward, the difference is that growing foot traffic will depend on your success at marketing into this channel.

Jack Ma, CEO of Alibaba termed the phrase “New Retail … as the integration of online, offline, logistics and data across a single value chain”. The implications for retailers is that in 2019 they will need to adopt the “New Retail “  structure, roles and processes to run a successful retail business. Those who stick with traditional retail model (the horse & buggy) will be left behind by those who adopt the “New Retail” Model (the Red Ferrari).

New & Changed Retail Job Roles:

Let’s look at 5 key roles in retail and how they will change.

CEO:  The Chief Marketing Officer (CMO) becomes the de-facto CEO much like in a Consumer & FMCG business. I have worked with 3 Global Consumers Businesses, 2 from Europe and one from the US and the CMO essentially runs the business. Ecommerce & social media gives retailers perfect insights into their customers. Using this data analytics and AI/Machine Learning allows the CMO to understand the customers preferences to drive decision making, marketing & innovation.

Retail Operations Director: In the past retail growth was generated by new store openings. In the future the primary role of the Retail Director will be ensure the in-store experience delivered via retail sales associates is consistent and is of a high standard comparable to the online experience of say an amazon. The key attributes of this role will be motivator, psychologist, data analyst, human capital expert and AI expert, a far cry from the role today.  

Chief Merchandise Director: While the CEO/CMO role drives consumer insights from customers interacting with your brand on your ecommerce site and social media, the Chief Merchandise Manager will use these insights to develop category management strategies based around innovation (which grows a category) now with the help of AI and machine learning. In addition, retailers will need to get closer to key suppliers that are innovative. In the USA the 4 retailers that apply best practise with Joint Business Planning with suppliers are Amazon, Walmart, Target and Home Depot. In a number of markets the relationships tend to be more adversarial and we will need to adopt a partnering model with the most innovative suppliers. In Fashion we may want to seek innovative ideas from store teams who are close to the customer & trends – this mirrors the Zara Innovation Model.

Learning & Development Manager: Training of staff will be crucial to enhancing the customer experience however the majority of training will be on the job via eLearning, apps and face to face mini modules for continuous learnings. Typically learning and development managers will report directly to the Retail Operations Director and will be responsible for continuously improving the digital learning experience. On a positive side budgets will increase however less will be spent on face to face training other than for store management and senior roles.  

Human Resource Director/Manager: The primary role shifts to recruitment, talent selection and development as more HR administration tasks are digitised. HR will deploy less recruiters and use assessment tools to improve selection and retention. For example, the recruitment of the key in-store role of store manager would be greatly enhanced if an assessment tool was deployed. We have used an assessment tool on over 1,000 store managers across 4 national retailers and on average 30% do not have the capability to effectively manage a store. The quickest and most effective way to improve productivity and enhance the customer experience is to replace these 30% with high performing store managers. Traditional methods of recruitment of interview/resume/reference check have a low level of accuracy and success at around 25%. The selection process will be greatly enhanced with the addition of an assessment tool as well as cut costs.

Summary:

The retail world is changing so quickly that it’s hard to keep up. If we look at the 5 roles above we should recognise that most retailers do not have people in place with the capability to effectively carry out these roles without a substantial upgrade in their skills and mindsets.

The question is do we upskill or replace? The answer we believe is a combination of both. A good example is the marketing role where often the Marketing & Digital Marketing Roles are carried out by younger marketing professionals that sit below the executive level. In a Consumer/FMCG Company the CMO comes with an MBA and is an expert in multiple disciplines including strategy, product innovation, marketing of course, consumer insights, category management, pricing, commercial policy, analytics and so on. The CMO may need to be recruited from outside.

The challenge is that most retail management will feel threatened if they are not involved in and supported through the change. This starts with developing a “New Retail” Strategy driven by the CEO and outside experts that can challenge traditional retail thinking.

Henry Ford is often quoted in terms of evolution and innovation as saying “If I had asked people what they wanted, they would have said faster horses.”  I am amazed at how many retailers are currently doubling down on trying to save costs on their horse feed and buggy.

As a Retail Executive I would recommend you try the red Ferrari.

Author: Bill Rooney – CEO of 6one5 Retail Consulting Group – a retail strategy consultancy & digital training business.

Email: bill.rooney@6one5.com

Mobile: +61417362073                     “