The retail industry is a difficult one to peg. Just a few years ago everyone decried the end of brick-and-mortar. Yet today, many retail chains are thriving. Customers have also gone from “showrooming” to “webrooming”. Though retail has bounced back in recent years, it doesn’t mean it is the same business it was before. Retail industry changes require new leadership skills and a new approach to the business.
Per KPMG’s Global Retail Trends 2018, “Despite the notion of the demise of brick-and-mortar stores, physical retail isn’t actually dead, but boring retail is. Store closures in certain countries hit all-time highs in 2017. The list of long standing retail brands that shut their door is too long to list. Often overlooked is the fact that many stores opened as well. We will see a similar pattern in 2018. By January 2019, 90% of all retail will still be done in physical stores. Iconic retail brands like Apple, Sephora and Costco continue to succeed, despite relying mainly on brick-and-mortar stores.
KPMG notes two primary drivers of their trends, customer expectations and technology.
In-store customer experience is affecting the traditional retail model. Per KPMG, “Traditionally, the primary measure of retail performance has been sales per square foot. However, as stores become experience hubs as well as points of sale, retailers are thinking differently about the metrics they use to measure performance.”
Another change is the savvy nature of millennials. They are more concerned with authenticity and transparency, “Today’s customers have a well-developed sense of what is authentic and what is solely intended to drive sales. This has led to a rise in consumers who make values based judgements about what to buy and where to shop.”
From a technology perspective, the ability to capture and use data with machine learning algorithms enables retailers to deliver more personalized experiences and provide better in-store service. Additionally, the use of chatbots on digital platforms provides potential customers with real time service.
If you’re not offering an omnichannel experience that includes real time accessibility you could be losing customers without even knowing it. Salesforce recently reported, “64% of consumers expect companies to respond to and interact with them in real time.”
Alliance Data’s Retail Trends Report 2018 notes many of the same trends as KPMG. They also mention the need for partnerships, “Brands are using strategic alliances to adapt in an ever shifting retail landscape. By moving beyond one-off collaborations and in-the moment engagements, they are forming unexpected partnerships to create unique value and exclusive benefits for demanding customers.”
What does this mean for executive hiring? In the past, retail has seen a high level of turnover at the executive levels, with roughly 60% of CEO’s leaving during a five year span. And historically successors are identified from a small set of industry competitors. With the contraction of the industry over the last decade, the pool of candidates is far smaller.
As noted above, the traditional skill sets are no longer enough to successfully lead a retail organization, you need leaders who understand technology as well as consumer behavior. Creating a singular omnichannel customer experience requires vision, collaboration, and execution skills.