Silos Belong on Farms
June 15, 2018
The key threat to retail in the near term is not e-commerce, physical store attrition or even Amazon—the key threat to retail in the next months, years and decades is stagnation. It’s that business leaders won’t get out of their own way and allow their teams to innovate effectively. It’s that CEOs will continue to wrangle boardrooms and Wall Street, instead of leading as retail visionaries. The threat is that retail will be a follower and even worse—a laggard—instead of an industry that leads innovation.
I recently returned from the Retail Innovation Conference in New York, where a diverse mix of brands, retailers, innovators and makers met to learn and discuss the future of retail innovation. The tone for the conference—and for the heart of retail today as we know it—was stated very clearly by the first keynote speaker, shopping behavioralist Ken Hughes. He said that the “phygital” age of retail is upon us (physical + digital), and that retail today has to be here, be there, be everywhere the customer is. “Forget omnichannel—retail needs to be omnipresent,” he said. Rather than fearing an innovation-led future, retail needs to embrace the changing tides and dive straight in to a more omnipresent, customer-centric future. “We have to view changes as opportunities, not threats,” he added.
Steve Dennis, president of strategic advisory firm SageBerry Consulting LLC, reiterated the need for retail to think outside the box when it comes to integrating their go-to-market strategies of physical with digital. “Retail has to break down the silos,” he said. “Silos belong on farms.” In his view, within retail organizations there should be no e-commerce department and stores department—it should all just be retail. And it should be everywhere.
For this to happen, the C-Suite not only has to buy in, but also has to lead, initiate and direct the implementation downward. “Innovation cannot be grassroots,” said Clay Johnson, CIO of Walmart Stores Inc., during his keynote speech. “Our CEO Doug McMillon leads our Transformation Development Team.” He stated that Walmart’s innovation efforts are “people led, tech empowered,” meaning the company has found a healthy balance of integrating new technologies and systems that work for the people (both customers and associates) that they will directly impact. This mindset has enabled a company as large-scale as Walmart to experiment and invest in AI (artificial intelligence), ML (machine learning) and RPA (robotic process automation), in addition to computer vision and natural language processing.
Common themes from the conference also included:
1. There is no apocalypse—it’s a false narrative. (Total retail sales were up $232 billion in 2017.)
2. Retail is not dying…boring retail is dying. Many are still drowning in a sea of sameness. Winning retailers are reimagining both the store and customer experiences, from first interaction to final payment (and the mix of online and offline channels that are touched along the way).
3. The multipoint, omnichannel consumer (i.e. someone who shops online, in-store and on mobile) is a much more valuable customer than an online-only customer (three times as valuable). This is why we are seeing digital native pure-play brands begin to open brick-and-mortar stores at a feverish pace.
4. Customers today have more access than ever. Feed into that, rather than fear it.
5. We need to ignite a culture of experimentation in retail—test, learn, iterate and fail fast.
There is a true transformation happening at retail right now. Don’t be a laggard; help lead the innovation forward. A Chinese proverb quoted by Dennis: “The best time to plant a tree was 20 years ago. The second-best time is now.”
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