More Than A Simple Retailer
2009-09-01 | Andrew Blatherwick
How many times have you heard retailers say that they are just simple retailers who do not need all the smart technology and solutions that the IT industry dreams up?
Most heads of retail ventures come from the merchandising, buying or operations side of the business. Many also come from finance but rarely or never from the IT sector. After all, this is a retail business we are talking about not an IT business. So-called experts can provide all the knowledge in that area and they have little or nothing to contribute to the actual running of the business.
I am not advocating that retailers should go out and find IT people to run their business. What I am advocating is that retailers stop trying to kid themselves that they are “simple retailers” who can ignore the powerful advantages and competitive edge technology can bring.
It is widely understood that one of the main drivers Walmart has employed in their rise to dominate the retail space in America is the use of technology in their retail and supply chain environments.
A Gartner analyst recently commented to me that Walmart see themselves as a technology-leading business. They have used technology to drive down costs, improve the speed to market of products and reduce inventory and shrinkage. All of this has improved the bottom line profitability and allowed Walmart to drive on to increasing dominance of the sector.
Amazon, as another example, do not even claim to be a retail company – they are a technology company and have used that technology to develop a business model that has supported them to become one of the largest and most successful retailers in the world. They have seen that technology can make retailing simple for the front line operational and supply chain teams. The business itself is not simple but technology can be used productively to enable a simple picture and empower staff in a way they could not manage without it.
Over the past few years the only sector of retail that has grown consistently is the online sector. This has been the saviour of many retailers and the scourge of others who have not got involved with this change in shopping patterns. Today’s generation of online, savvy shoppers can compare prices, browse ranges and get the best deals without leaving their own homes. Even if they enjoy the experience of shopping in person, many of them will also buy online as well.
The well-known concept of multi-channel retailing is now seen as the only way for retailers to survive, yet how many of them are multi-channel as opposed to many-channel retailers?
Many retailers have moved into online retailing alongside their traditional store-based sites. They have not, however, integrated their operating systems and supply chain systems to work as a multi-channel retailer should – offering the customer a seamless and coordinated experience. They are running different channels to market for their store base and other channels for their online business.
Not only is this not customer focused, it provides a less than perfect customer experience, It is inefficient and complex, which ultimately detracts from optimal profitability. This leaves them open to better organised competitors who truly understand and embrace technology and provide an overall better operation of their business.
Many retailers have created partnerships with Amazon or other players who understand the online part of their business that is not “simple retail”. But is this the solution or is it just avoiding the problem?
Let’s be very clear – technology is not going away and is unlikely to change back to earlier models. A retailer today needs to really understand what is available and how they can improve their business by utilising that technology. This is not suggesting that you should be on the “bleeding edge”, with high-risk new ideas. But the further behind the “leading edge” you are, the less you will be able to survive as the consumer market picks up.
Some retailers have used the recession as a reason for not investing. If you have no money and you are trying to survive, then you cannot invest. However, this approach ignores the dangers of falling behind the competition. Also, take a look at why you are struggling to survive when others are prospering. It might just be because you did not invest when times were good. As the economy starts to pick up, the great retailers who have seen the opportunity to gain competitive edge during the hard times will quickly gain market share and it will become ever more difficult to catch up.
A new breed of retailers who are technology-aware is beginning to shift the competitive ground – and being a “simple retailer” is becoming a tough place to be.
