This article was written by Melissa Kirby, Head of Melbourne, Q5, for the December/January issue of C&I Retailing magazine.
It is important for retailers, to own the change and not let the change own you. Some of the greatest advancements have happened for retail business in difficult times, and while dealing with uncertainty may well present hurdles to clear, it also allows opportunities to re-strategise and open the door to new opportunities.
There is no doubt across Australia, retailers’ resilience has been tested to the brink– a cocktail of rising inflation, increasing interest rates, labour shortages, a hike in the minimum wage and the highest food costs in over a decade. Coupled with these hurdles, the Australian Bureau of Statistics has just released figures showing workers’ absences due to illnesses was double that of previous years this winter period. As the warmer months come, along with it, we may get a lighter view of the pressures facing the industry and some brighter solutions. Employers are hopeful there is some relief not far away with workers returning in greater numbers to their jobs to help lead the way out of uncertainty to certainty.
The pandemic, supply chain woes and food shortages have shown us that if anyone can thrive in a crisis, it is retailers. However, the sheer number of factors contributing to the current economic uncertainty suggests that retailers looking to ‘thrive not just survive’ in the next 12 months need to consider sustainable structural change. By structural change, I mean the way they are set up, but also in their deep-rooted way of operating when it comes to investment in employees and project delivery.
Here are three tactics to re-strategise and plan for this next phase in the retail sector.
- Make it easier to deliver value to your customers
So, what should retailers do? Firstly, they need to identify how they generate value for their customers. This isn’t just value in terms of ‘dollars and cents’ based on what customers buy, it is value in terms of what customers value in their experiences. Once this is clear, they must understand how their teams are arranged to deliver that experience, what factors facilitate better experiences and what is causing points of friction. This often triggers a review of how the organisation is designed; how do you best organise your capabilities to deliver exceptional value.
It is worth noting that pulling this picture together requires a strong tripartite relationship between organisation design, data insights and change management capabilities, which are often in scarce supply in retail organisations.
- Invest in your employees
Investing in people while under considerable economic pressure might sound counterintuitive but hear me out.
The cost to replace an employee ranges anywhere from 30-400 per cent of their salary. This is due to a combination of time to hire, lost productivity and time to upskill a new employee to the same standard. Throw high performers into the mix with estimates that they can deliver approximately 400 per cent more productivity than an average employee, and you’ve got a very strong business case for not only retaining but investing in your existing people. Look after those already employed.
- Do it once and do it well
Many Australian retailers have been forced into considerable technology and systems investments, with the pandemic highlighting cracks in legacy systems falling short of customer expectations. With this has come a tidal wave of capital spend, and some of the biggest projects retail organisations have ever needed to deliver.
Retailers are brilliant at delivering quickly, and due to their ‘daily trade’ mindset and shareholder reporting, oftentimes need to favour short-term over long-term thinking. These additional realities make multi-year programs of work anomalies in a retail environment. For this reason, retailers should carefully consider the real timelines to deliver these projects in upfront planning, and the associated investment to support these timeframes. In addition, they must consider the scale of changes beyond getting the system in place – to realise the full potential of benefits they require behaviour change, culture change, redefinition of processes and upskilling in new ways of working. Retailers need to ensure they invest in the right capabilities (beyond systems implementation expertise) to ensure these big programs of work are delivered once and delivered well.
The retail sector faces challenges that calls for them to understand how they deliver value, and how they can think differently to forge organisational resilience in the face of uncertain times ahead.