by Jarek Matschey, Director Retail, VMware EMEA Retail is in a state of reinvention. More than 85,000 retail jobs were lost in the UK alone in 2019 and a third of FTSE 350 CEOs changing, according to Accenture – and trends not specific to the UK. The point is, retailers need everything in their armory […]
by Phil Le-Brun, Enterprise Strategist, Amazon Web Services (June interview)
We have invited our industry partners and collaborators to present their views as part of our ongoing spotlight series on the retail sector.
Who actually believes in buzzwords? We say we don’t and yet they permeate everything we do. We hear phrases like ‘digital transformation’, ‘agile organisations’, and ‘paradigm shift’ all the time. With the impact of COVID-19 on the world, we can now add another: ‘the new normal’.
While much has changed and continues to do so in retail, the new normal is, in many ways, more of a wake-up call rather than an event that will just pass. We know the most successful companies, including those in retail, aren’t so because they just quickly react to the latest trend, technology or pandemic. In some ways it’s simpler than that. It’s about humbly understanding the customer, pure and simple. It’s something that hasn’t changed since trading began. In my experience, there are six key areas businesses need to be considering when it comes to being brilliant, adaptable, and future-proofed organisations. I won’t claim any brilliance myself for these ideas as they have mostly been true for many years, and yet in our day to day busy-ness we can often forget what is really important.
- The currency of social care
In the last few months we’ve seen great examples of companies that have genuinely understood what their customers wanted and needed, such as many of the supermarkets. It’s obvious that this should be the number one focus for businesses, and yet sometimes we get distracted. Set aside the fact we all need food and drink to survive (and copious amounts of loo roll apparently), the reason for supermarkets’ success has been that these organisations have a culture of knowing their customer through innovations such as personalised loyalty programmes, replacement products in online orders, and tailored deals.
As a result, they have been able to reach those that needed deliveries proactively, often ahead of governments. A premium has been placed on companies exhibiting a currency of social care: going beyond transactions and demonstrating a genuine care for their customers. It’s not time to sit back and celebrate success though. Now that customers have experienced some of what is possible, they will clearly have higher expectations.
However, you don’t have to look far to find the antithesis to this service. The news is rife with examples of companies in every sector from hospitality through to travel who have are proving difficult to contact and even hard to extract refunds from. Eventually, these problems will be resolved but customers won’t forget the businesses that treated them badly in a hurry.
- It’s good to talk
The speed and scale of this pandemic has underlined how capable organisations are in delivering information to customers. Which brings me to my second point: the need to understand different customers’ preferences for different forms of communication. An analogy for this is the debate about whether we will ever become a cashless society. Any customer-centric company will understand that it is not their decision. My previous company, McDonald’s Corporation, understood this. Even when automation such as self-order kiosks were introduced, there was a deliberate decision to ensure that this did not alienate customers who wanted to pay cash. Our role is to provide customers the journey they want, not to force them into a stereotype we have defined.
For years, many have considered call centres dying concept. There is a perception that anything can be done online but that simply is not the case. There’s a large portion of the population who still want to pick up the phone and speak to somebody, especially when they’re confused, under pressure, or in need of reassurance. Consequently, we’ve seen companies in sectors as diverse as banking, retail, and travel massively scale call centre capabilities to handle the customer call volume this crisis has brought about. Why? They know what their customers want and need, and don’t assume that one size fits all. Not only that, but these companies are spinning up these capabilities in 24 or 48 hours. Compare this to the BC (Before Corona) era where the same decision would likely have taken months or years.
- Only the agile will prosper
The one thing that connects all successful companies is the ability to adapt to change. Outside the bubble of COVID-19, the world is experiencing political and economic turmoil, social upheaval, evolving workforce demographics, and massive cultural shifts that all point to the same message for businesses: it’s the agile that will survive. In reality, this has little to do with the current pandemic but what it has done is underline that the customer is in the driving seat more than they’ve ever been. Agility is not just about responding to customers, but also being resilient in the face of unexpected events.
McDonald’s had a reputation of taking years to build and deploy new ideas, partly due to the franchised, federated model of the business. The running joke was that we had more pilots than United Airlines. Yet, in January 2017 when the CEO made clear he wanted to see Delivery in 8,000 restaurants by the end of that year, the technology was in place after only four months. The approach of paralysis by analysis was replaced with empowering and trusting people coupled with a crystal clear business outcome definition. Speed and trust replaced indecision and bureaucracy.
This is very much VMware’s core story: being able to create, run, manage, connect and protect any application and deliver to any device, simply and at speed. Having one platform to build, run and manage all the things – as well as innovate.
- Understanding that you don’t understand
Technology powers a lot of companies, but technology itself is just a (powerful) tool. While there has been a lot of contention over the last 20 years on what proportion of transformations fail to achieve their originally cited benefits – whether it’s 70% or even higher – a significant contributory factor has continued to be a lack of C-Suite engagement, a lack of a clear vision, a lack of change management, and lack of focus on reskilling employees. Building a website is not going to change a retailer and drive new business alone.
Going back to McDonald’s, there were periods historically where sales started to flatline. On one occasion, a Wall Street stock analyst was raving about the technology around delivery, self-service systems, kiosk and table service and curb side pickup, pointing to the fact that digital was behind the renaissance of the business. As happy as I was to have a positive public performance review, it wasn’t entirely true. While the obvious manifestation of change in McDonald’s was the technology, the reality was that these innovations represented a cultural change within the company, a recognition that we were listening to customers better. So, we got serious about understanding the customer and delivering what they wanted. Too often our ‘alpha leadership’ desire for certainty kicks in and we assume that we understand customers, rather than work with customers to test and scale ideas.
- Friction-free retail
Many companies launch websites or apps in the hope that technology will solve problems with their brand, pricing, or product range. Fundamentally, it doesn’t work. Success is not doing digital, it’s “being digital”. It’s about making retail friction-free, a pleasurable experience from the customer’s perspective. Technology is a wonderful enabler, but arbitrarily inserting technology into a customer’s journey and expecting a great outcome is rarely a path to success. Walking in customers’ shoes or, better still, walking with customers will do far more to highlight the many little friction points that add up to a bad experience. Businesses have to be methodical about that. I don’t think most companies deliberately ignore their customers, but it is so easy to justify away their concerns or make excuses why a particular change that is obvious should not be made. Academics have proved this repeatedly over the years: the greatest technology is of no use if not adopted by the end user.
Friction-free goes beyond the normal customer journey. The technology has to work even in times of extreme demand. For instance, it’s fine for companies to declare themselves as a cloud company, but if half its ecommerce system is still on premise, it is probably not going to be able to scale. Conversely, there are companies that have been forced to cut costs, like fashion retailers or travel companies, but have been limited by their reliance on fixed data centres, an “asset” they are wed to for the length of their depreciation schedule without any elasticity to be able to address variable customer demand or company liquidity issues.
- Supply chain enabled
It should go without saying that now, more than ever, the way in which goods and services move through the supply chain is being stretched, disrupted, pressurised, and critiqued. Even before this pandemic there were serious questions being asked about the environmental impact and resilience of global commerce. This brings me on to my final point: businesses must be agile, adaptable and assured in their supply chains.
I’ve been an Amazon customer for years and have always been impressed about how its supply chain can flex, whether in response to new customer-centric services such as Prime next day delivery service, or when faced with unprecedented demand as we have seen recently, being able to ramp up staffing to continue to live up to its mission of being “Earth’s most customer-centric company”. Times of crisis have just accentuated capabilities that were built and practiced over many years.
So we are back to where we started this blog. We need to ensure that our organisations are resilient to the many disruptive factors and events that have, and will, happen. Agility is a key enabler for this resilience. In that sense, there is no new normal. Just a blend of brilliant businesses doing brilliant things and those that aren’t.
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Category: News & Highlights