The Five C’s of Digital in Retail
By Pat Dermody, president, Retale
This is not a lecture about embracing digital. Chances are you have already heard that, read that, maybe even repeated it to yourself. If not, you had better hurry up.
All you have to do is look to see those who have failed when they refused to address the changes that digital technology has brought forward. Failing to at least interrogate, if not choosing to act on every front, is like asking to find yourself on the wrong side of the proverbial divide. But telling you that you need to embrace digital would be like your dentist telling you that you need to floss more. Instead, I offer you a simple framework in which to evaluate and embrace your digital future.
Whether you are in merchandising, supply chain, marketing or store operations, you need a consistent construct so that you can make informed decisions about which opportunities to resource and develop. Without a simple, strategic framework against which to evaluate your potential opportunities, confusion will reign, resources will be wasted and costs will be untethered. It is too easy to be seduced by technology and the “cool factor” and forget that the purpose is to harness that technology to drive enduring profitable growth for your business. Alternatively, it is even easier to keep moving through your analog life believing that digital is now confined to the e or m commerce spaces. Nothing could be further from the truth. What is true is the following:
1. Customer: All roads begin and end with the customer. Your task is to surprise and delight them, capture their hearts, minds, enduring loyalty and the lion’s share of their transactions. This has not changed since retailing was born and is never going to change no matter how much new technology shows up on your door. True in some ways, it is harder to reach today’s consumer than back in the day when you could run an ad in your local newspaper, or on one of your three TV networks and reach 60% of all households — but at the same time digital technology has made communication easier as well. You can email your customers, hear from them via social media and reach them more efficiently using data [collected digitally] as your guide. However, you still need to sell each one of them something and depending upon your scale, you need millions of customers to buy from you every day.
So the questions you should ask yourself or your teams when presenting new digital ideas: how will this improve the experience for our current customers and prospects? Will it make us faster, more convenient, more accessible, more in keeping with the customer needs and wants? What meaningful trends are we seeing amongst customers that would indicate that this is a good idea?
2. Costs: The other side of the seesaw where the customer sits is cost. Cost reduction is a more-than-legitimate driving force behind the adaption of digital technologies, although, you must be prepared that the cost benefits may come years after an installation that actually increases expenses. That’s not a surprise to most of you as we all know that deciding which transformative initiatives to resource can spell the difference between long-term success and failure. See No. 1 for guidance.
Those are indeed the two pivot points (save governmental edicts) upon which you pursue digital technologies. They are inextricably related and very, very basic but can all too often get lost in the “what ifs” and “what’s possible” in embracing digital.
With that said, there are three other C’s that are worth mentioning which might help you better mobilize your organizations in executing a streamlined and productive digital roadmap.
3. Confluence: By now, most retailers either have or are actively recruiting digital talent. Many have already been ensconced in e-commerce groups or m-commerce groups or product development teams. Some have their own merchant groups, their own infrastructures, systems and P&L’s. That’s all well and good but it often forgets one important element: the customer. The customer doesn’t know or care about the ecomm group or the mobile group. If they want to buy something off their phone and swing by on their way to pick it up, they don’t really care that ecomm purchases use another DC. They care that you are there to help make their lives better. As an organization, you need to make sure that you force the worlds to come together around a singular customer value proposition that fits your business. I guarantee you that too often good ideas get lost or money gets wasted when groups operate independently or the digital people think that the offline people just don’t get it. They get it; they have been selling for years, building scaled retail businesses along the way. Likewise, the digital experts bring forward more in-depth understanding and a perspective on how the technology can improve the enterprise. An organization that fosters a shared understanding and a shared purpose between the specialist groups will be better for it in the long run.
4. Champion: If you agree with No. 3, chances are you will need a skilled and experienced champion who can traverse across internal constituencies without fear or reservation. That champion needs to vet the initiatives against customers and cost, driving buy-in and implementation across the house. This is probably more true in larger organizations where the factions are well-developed, but in any case, an idea which turns into a project and becomes part of a philosophy needs a champion to keep it alive. That champion must see the big picture and understand how the digital opportunity affects both the customer and the cost, and what role it can ultimately play in the profitable growth of the empire.
5. Commitment: This is probably the most difficult C of them all, especially when faced with a challenging business climate. Without it though, you may avoid ideas or abandon initiatives that can have a direct and quantifiable impact on your business if they are squarely aimed at the customer or your cost structure. The other trap here is to fall too quickly into the grip of the need for immediate gratification and ability to quantify an ROI.
The data delivered by many digital platforms is like a siren, causing many to castaway that which can’t be measured by the ROI of a single encounter. Sometimes great ideas take time to develop, although admittedly, some are bad ideas that will never come to fruition.
If you have carefully screened against the first four C’s, and given an idea enough time to take root, you should find success in the new digitally enabled retail marketplace.
Pat Dermody is the president of Bonial Enterprises North America at Retale, a mobile application for shoppers that digitizes retail circulars. She is the former VP of marketing services for Sears Holdings.