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The retail landscape has changed significantly over the past few years, and if retailers aren’t willing to embrace smart technologies, many will fall behind those that do, says Steve Baggi.
The UK retail sector has been rocked by a series of recent announcements: planning applications for new shops have fallen to an eight-year low and the number of full-time retail jobs fell 3.3% in the second quarter of 2017. But it shouldn’t come as a surprise to anyone following the retail sector.
In 2016 every bank worth its salt wanted to be a fintech company. To recruit the right tech people and deliver the systems and processes customers expect, banks needed to portray their brands as cutting edge. Now it’s the turn of retailers.
Retailers need to evolve into technology companies to compete in a changing world and attract in-demand tech professionals. There’s a dawning recognition that code is the currency of the future for retail.
Retailers need to apply smart technologies to better understand customers’ evolving preferences and behaviour. They can utilise advanced data analytics to create a personalised shopping experience.
Artificial intelligence and robotics will form part of that story. You only have to look at recent announcements from retailers to see where the world is moving to.
Amazon doubled the number of robots used in its global warehouses to 45,000 between 2016 and 2017. Tossed opened the UK’s first cashless restaurant in 2016, replacing manned tills with self-service kiosks.
Lowe’s OSHbot helps visitors to its hardware stores find products and even greets customers at the door.
It’s clear that there are going to be less people required in the retail sector of the future, perhaps 50% of the current workforce.
Retail jobs will disappear especially at a junior level and are unlikely to be replaced.
For smart tech companies, demand will continue to grow is for smart tech people. Some online brands we work with already have as many as 2,000 in-house tech people and continue to build their teams. A successful CTO or CIO can work anywhere in the world within almost any sector, much of technology is industry agnostic.
A tech leader will need a huge incentive to join a mid-sized UK retailer with a traditional board that still views IT as part of the plumbing, rather than an enabler of commercial success.
Retail brands need to concentrate on three priorities: decide how they will deal with market disruptors, find the best people to help them do it and build a brilliant proposition enabled by technology.
Recent news stories show how retailers are responding in very different ways to the ongoing upheaval in traditional retail.
Who is right? Is the chasm between value, customer experience and service getting wider? Do retailers need to follow one path, blend two or three together? What happens to the ‘squeezed middle’ retailer that fails to follow any one of these paths?
In my view, there is no place for the squeezed middle retailer that continues to do what they have always done. Retailers need to decide on a strategy for how they will move from the old world to the new and execute it relentlessly.
There are three broad strands to consider when doing this: understanding customers and their changing needs, adapting your operating model and maintaining a strong internal people culture. Attracting the best people who can make all of this happen and matching the skills pipeline with business strategy will be two of the biggest challenges retailers face in the next five years.
This article was published in Retail Week on September 8th, 2017. To read the article on the Retail Week website, click here.