Do retailers need to pursue change and transformation
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Do traditional retailers need to pursue change and transformation?

Published 13/09/2019

Do traditional retailers need to pursue change and transformation?

The digital revolution of the last 20 years has unleashed a tidal wave of change and disruption on the retail sector. The consumers of today can choose from a vast range of products online, compare prices between different brands and retailers and expect next-day, if not same-day, delivery of their purchases. This poses an existential threat for traditional retailers anchored in shopping centres and on the high street – and, coupled with the financial crisis of the last decade, has already seen a slew of big names going under



Disadvantages for traditional retailers

Retail chains suffer several key disadvantages compared to ecommerce brands. First is the expense of maintaining real-world retail space – which adds to the cost of goods and limits the amount of inventory available. Second is the disconnect between purchases and consumer data, faced with online disruption. Many retailers are now becoming multi-platform vendors and incorporating ecommerce into their offering.


Retailers adapting

'Showrooming' (inspecting items in a store before purchasing them online) is only problematic, after all, if the customer then buys the item from another retailer. Loyalty cards and online ordering can also contribute to closing the data gap – mapping consumer buying habits and allowing brands to make targeted recommendations based on data. The most important thing, though, is to serve consumers' expectations.

“All retailers must adapt and change based on the growing demands of our customers,” says David Coleman, Accountable Lead: Omni-Channel Transformation, for the Co-op and Director of Purple Squirrel Consulting. “Across all channels, our customers want to be able to find products quickly, at the right price point, with a frictionless checkout experience and a delivery at a time and place that suits their needs. If you are not servicing these and many more of their needs, then transformation and change must take place quickly before the competition overtakes your business.”

What other retailers have done

David recalls working with House of Fraser and notes that while its site delivered a great user experience and interface, “the business did not transform quickly enough” – which ultimately led it to fall into administration. He also describes the experience of working with growing home furnishings retailer, Dunelm. “Perhaps it’s easier for a ‘newer’ retailer in the market to undertake the transformation journey as more of an expansion than transformation,” he notes. “However, in my opinion Dunelm are doing all the right things across all channels and technology decisions to continue meeting their customer’s needs.”

David believes that there's more to the future than ecommerce, though. “[It] must be managed in a cohesive omni-channel strategy... Do you ever see many spaces at the growing retail parks?” Real-world retail comes with the benefits of brand recognition, brand loyalty and a larger shop floor on which items can be exhibited, in contrast to the limited scope of a mobile or desktop computer screen. What's more, given the fluidity of online ordering, it remains to be seen whether online retailers can compete with Amazon – or whether it will ultimately stand alone.

Optimising the supply chain

It should also be highlighted that Amazon is opening up real-world stores. Consumers consistently say that self-service is good service, and Amazon's outlets take this a step further by removing checkouts entirely by scanning customers' goods as they browse and automatically billing them when they exit the store. The online giant's purchase of the Whole Foods brand also points to the significance of having a real-world retail chain when it comes to making local deliveries.

Of course, another major area of innovation led by Amazon is in process optimisation across its supply chain – cutting delays, waste and inefficiency. By following a similar programme of analysis and improvement, traditional retailers can achieve similar benefits; deploying AI, meanwhile, can help further advance this, enabling brands to predict demand and to minimise costly over-ordering and the consequent stockpiling of goods. This is certainly not an easy change, but it will be a crucial point of competitive differentiation where margins make all the difference.


Transformation isn't just about the adoption of new technology, though. Customer expectations have been transformed over the last 20 years and retailers should first look to how they can better serve consumer needs rather than pursuing innovation for its own sake. There's also the fact to consider that transformation is an ongoing process rather than a one-step project. As David notes, "Great systems that aren't operated and maintained and enhanced by a capable, supported team do not deliver results".


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