Graham Wallace, senior business strategist at software company Esri UK, says retailers’ failure to set clear goals is why so many innovation and technology projects do not deliver the required results.
Retail is widely seen as being in the vanguard of using technology to drive commercial success.
By moving away from manual ways of doing business and automating their end-to-end processes, retailers can reduce operational costs, increase sales revenues, and deliver sustainable competitive edge in a crowded marketplace. The potential benefits are clear – but the reality is a little more complex.
There is a case for suggesting that retailers’ failure to make optimum use of technology is starting to translate into sizeable write-downs in their property portfolios. Over the past decade we have seen store closures, property write-offs and deals to sublet surplus space driving down shareholder value across the sector. In the last few months alone we have seen a number of announcements that leading retailers plan to close stores, or sublet excess space. These include Tesco’s decision, announced in January, to close 43 stores and the subsequent announcement of a £6.38 billion pre-tax loss for the year 2014/15; Sainsbury’s intention to re-allocate and sublet some 1.5 million sq ft of floorspace and Morrisons’ announcement, in March, that it is to close 33 unprofitable stores.
The investment decisions these retailers need to make are complex and difficult, of course. But location analytics technology, which facilitates the analysis of location-based data can provide retailers with the key insights they need to support investment decisions, covering everything from where new and existing customers are based to where competitors are planning to develop new stores.
So how can retailers best deploy systems that drive enhanced profitability or cost-savings and deliver business advantage?
The first thing they need to do is be clear about what they are aiming to achieve. Failure to set clear goals is one of the main reasons why technology projects fail to deliver desired results. Today, there is a polarisation of the retail sector, with organisations typically either focused on delivering value add like Waitrose or Marks & Spencer, or focusing on price like Lidl or Aldi, creating pressure on those businesses occupying the middle ground. Tesco’s recent issues highlight the potential dangers of being caught between two stools.
Retailers certainly need to take a definite stance about what they want technology to achieve for them. Is it to deliver cost efficiencies or to generate added value for customers? And this needs to be consistent with their overall positioning. It’s equally critical to ensure they don’t dilute their focus by giving way to business ‘pressure groups’ looking to incorporate pet projects to the company’s agreed schedule of IT investment.
To create business advantage, retailers need to make optimum use of new technologies. This increasingly means understanding location-specific customer demand, having key information at their fingertips including, where their customers live, store performance data and the likely impact of new competitor outlets. The insight that comes from this kind of location analytics – supported by simple-to-use mapping and data dashboards – will enable retailers to deliver planned sales growth, control costs and support required return on new investment, thereby protecting shareholder value and building customer loyalty.
Get project teams onside…. and don’t leave out the doubters!
Retailers, and the IT consultants they may be working with, should aim to engage closely with all the key project stakeholders right from the beginning and they need position these individuals as advocates for the technology. It is vital to get full buy-in from senior decision-makers before the project is cascaded down to the next tier of employees. It is important to invest time with each new group engaged with to make sure they are also onside with the process – the best advice is listen, get feedback and act on it.
At the pilot stage, there is a natural tendency to want to engage with people who are going to embrace the pilot scheme and get the programme over the line. It is however, a mistake to leave out the sceptics at this stage. Retailers need to get them involved from the very beginning and to address any issues before they move to planning and delivering the roll-out.
These sceptics are often passionate about the business – and that passion can be a huge advantage if these individuals can be turned from doubters into committed advocates. To do this effectively, the project team needs to make the case for change and to personalise it by explaining how the planned programme will benefit the organisation, customers and staff.
Build a real understanding of the benefits
Instead of using the technology to make slight tweaks to existing process, the team needs to put the necessary time in to work out how IT programmes can be used strategically to drive added value and to reduce costs. A combination of pilots, trials and monitoring the market provide a cost-effective method to test what’s available, whilst maintaining an open approach to technological innovation.
Ultimately, any successful project needs to support the business strategy and to embrace change, integrating new processes that drive profitability, helping to reduce costs and to create business advantage. Technology can deliver streamlined workflows or value add solutions, but the clarity of vision and a sponsor focused on delivering business benefit is vital in the search for sustainable competitive advantage.