“After a year like no other …” is how the Retail Speaks, Seven Imperatives for the Industry [https://www.mckinsey.com/industries/retail/our-insights/retail-speaks-seven-imperatives-for-the-industry] report starts. We can all agree on that – it has been quite a year! Published by the Retail Industry Leaders Association and McKinsey & Company, the report kicks off with some dramatic figures from this year of change: buy online and pick up in-store service increased by 40%, 75% of shoppers tried new shopping channels, and online shopping grew more in the first quarter of 2020 than in any of the previous 10 years.
The pace of change isn’t likely to let up: the “US retail industry faces a still uncertain future” is one of the report’s key themes. More importantly, while the retail industry has seen “more innovation in the past year than in the prior decade”, the results were not uniform across the industry.
Organizations that we’re able to adapt and make changes were at the top of a K-shaped recovery. To address the situation, the report’s authors canvassed US retailer executives and outlined seven “imperatives for rethinking retail” that every retailer will need to tackle to find success.
This report is one indication that this is a good time to take stock of how the industry can respond and the tools and approaches available. On May 19th, Shan Muthuvelu, President and CEO of UCBOS, and Kimberly Reuter, Chief Advisor at CSG Consulting, will be joining Scott Luton and Greg White of Supply Chain Now to release the Podcast “Top 3 Supply Chain Transformation Barriers Impacting Top Line and Bottom Line”. The Retail Speaks report outlines what retailers will be facing in the future and details new ways of thinking about customers and the systems that interact with them. Shan and Kimberley will be discussing some of the barriers that could be holding them back and new ways to tackle these tough problems.
Of the Retail Speaks report’s seven imperatives for retailers, two that highlight the need for system and process rethinking are: Become omnipotent at omnichannel, and This time (and all the time), it’s personal.
Omnichannel Retail – the ability for customers to seamlessly move between digital and physical for any stage of the buying process – is, according to two-thirds of the respondents, “the most significant trend affecting the industry”. As an indicator of the growth of sales channels, E-commerce is expected to represent between 25-40% of all purchases in the post-COVID era. According to the report, the consequences can be dramatic: “consumers will choose retailers based on ease and richness of end-to-end experience”.
These changes go hand in hand with the other big shift: personalization. According to the report, “76% of consumers changed stores, brands, or channels” in 2020. In the past, retailers that had strong, data-driven personalization capabilities were able to retain their customer connections. In this new world, the report finds that implementing cross-channel personalization is a “top-five priority”.
For many retailers and many other organizations, these changes are hard to deliver. In the report, McKinsey finds that only 15% of retailers have actually delivered on key areas like omnichannel personalization.
What’s holding everyone back? Much of the retail segment find itself in the same situation: they have, over time, acquired and collected two or more ERP and supply chain management systems. These systems, from big-name vendors like SAP, Oracle, Manhattan Associates, and many more (including the recently acquired Blue Yonder), are not designed to work well together.
According to Kimberley Reuter of CSG Consulting, retailers need to think beyond the front-end experience. “To succeed in today’s hyper-growth eCommerce world, retailers have to build integrated solutions leveraging ERP, fulfilment, and warehouse software – in weeks and months, not years and decades.” Connecting these systems is critical: the “lack of holistic visibility of inventory is the biggest hurdle to success in today’s market”. “Retails of all sizes are struggling to manage inventory across, wholesale, retail, eCommerce, and returns. Leaving millions of dollars on the table in backorders cancelled orders and markdowns,” But they also need to take new approaches as traditional solutions. “Multi-year RFPs and implementations are a thing of the past. Retailers need solutions that can be executed today.”
The Retail Speaks report also clarifies that the usual enterprise system approach won’t deliver on the key imperatives for retailers. Becoming Omnipotent at Omnichannel takes access to real-time digital and physical trends, flexible product assortment, and rapid product testing, all driven by “real-time data, not just historical performance”. To deliver this time (and all the time) its personal vision, retailers need to link the “often siloed systems and marketing technology stack” and build “better data and insights on customers”. And they also need to ‘prioritize data privacy” to “reinforce customer trust”, no matter where the data is coming from.
Shan Muthuvelu, President and CEO of UCBOS, says the key is to take a different approach and “focus on business challenges that impact top-line growth and place the precedence on ecosystem convergence, business agility, and business outcomes”. For UCBOS customers, this means taking a new no-code composable approach to “create systems that deliver access to real-time data and enterprise visibility across the value chain” and enabling organizations to “perform what-if scenarios and prescribe models without a single line of coding” while putting it all in place “in days and weeks, not month and years”.
Join the UCBOS team on May 19th and hear, first-hand, how they are helping retailers tackle these tough problems, deliver on the Retail Speaks imperatives, and help shape the future of retail.