Retail Transformation - Trials and Tribulations

All retailers are becoming involved with some form of "Retail Transformation" and have been doing so since the early days of bartering goods and services. The earliest form of retail transformation that I can identify is the advent of money which, in the main, replaced bartering. Although metal coins were first used around 2,700 years ago, they were not widely used in Britain until they made their way over from mainland Europe. However, banknotes first became more widely used, initially in Sweden, some 350 years ago when the Bank of England was created in 1694 and started issuing notes in return for the deposits.

Since those early days, both coins and notes became more widely used by the general public. But then another major Retail Transformation occurred with the advent of the credit card. To keep in chronological order, however, it is worth noting that Western Union invented the first international money transfer service and thereby effectively e-money, when it started offering customers to send money via telegram in 1860.? It was about eight decades later that John Biggins launched the first credit card, known as a ‘Charg-It’ card.?

American Express made the first plastic credit card in 1959 and the very first appearance of credit cards here in the UK was the UK in 1966 with debit cards in 1987. The first contactless bank cards were introduced in the UK in 2007, making card transactions even more convenient.

Interestingly, as a footnote, there are some parts of the world, where cows are still being used as a form of payment. In South Sudan, which has been in a civil war since 2013, cows are currency. The population uses cows for any large purchase such as buying a house or when the groom has to pay his bride’s father a dowry.?

Let us not deviate from our Retail Transformation journey here in the UK and identify that the next major milestone, I would consider, was the advent of the Electronic Point of Sale (EPoS) which enabled cash and stock data to be collected at the checkout and then processed by head office computers on their large IBM and ICL mainframes which, eventually, produced various printed cash and stock reports. This IBM system brought EPoS hardware into the digital era in 1973 when they introduced the IBM 3650 store system. It is worth mentioning that there were early attempts to use machines with punch cards to produce reports, leading to the mainframes of the 1970's and early 1980s using punch cards on mainframes that delivered data to tapes.

The introduction of bar codes then enabled this stock data to be collected more swiftly in retail stores along with many other benefits.

These latter innovations, I would consider, of EPoS, bar codes and mainframe computers, together with faster networks, are really the start of retailers' Digital Transformation, a journey that continues with the advent of online shopping and the whole digital supply chain digitisation.

At each stage of any of the above retail transformation innovations, in order to remain relevant as a modern business, retailers must rethink their strategies. Many retailers who resisted digital transformation and focused instead on EPoS strategies now find they need to catch up. When I talk to CEOs of major retailers of both grocery and non-grocery companies, I keep getting the comment that their I.T department simply does not understand "Retail" in its true sense. Whilst, at the same time, their I.T departments tell me that the Operations people neither realise the difficulties they encounter designing and implementing systems, nor the benefits that I.T could provide if senior operational departments would only listen to them! When I undertake strategic advice consulting to these companies, I usually feel that I have to be the "glue" between these two groups. This confrontation of views can be a major stumbling block on retailers' digital transformation journey, slowing down development as well as dramatically increasing costs and losing out on potential benefits of increased market share, revenue and profits.

Now back to the title of this article which, according to the dictionary meaning of "Trials and Tribulations" is "Unpleasant experiences that put one's endurance and strength to the test." I would argue that it is important to ensure that those everyday events, that would be tiresome or redundant to recount, are not dismissed as no longer required but are tackled head on by senior management. It is only by the commitment of senior management and all retail divisions, partners and stakeholders, that this digital transformation can provide the benefits required in order to say in business.

At the top of any such transformation is the customers' desire for a personalised experience for, without technological adaptation, traditional businesses will soon be considered irrelevant or uninteresting which will be a threat to retailers' very existence. Lack of investment, poor management including the arrogance often shown by main board directors, as well as a lack of will to implement change throughout a retailer's organisation, always will have the inevitable result - death on the high street - a subject on which I have regularly discussed on LinkedIn and in the wider media. Typical examples are so many to recount here but Allders, MFI, Body Shop, Lloyds Pharmacy and most recently, Ted Baker, all companies that have failed by not listening to customers. Although many retailers realise that they need to adopt the latest technologies that would allow them to provide seamless experiences for their customers in order to remain relevant and re-think their strategies, many retailers who have resisted digital transformation and focused instead on point-of-sale strategies now find they need to catch up and their journey is perceived as unattainable.

So much for the past and present, but what about the future for those either on or considering embarking on their digital transformation journey? The one piece of advice that I will offer is not to attempt to go on this journey alone. I have come across so many retailers who, for example, have hired many hundreds of I.T. staff for various functions whilst removing staff from stores only to see their "bricks and mortar" estate crumble and die, whilst failing to develop and implement new systems that will attract and retain customers to generate retail sales/profits. My advice to these retailers is always the same: "Go back to basics - you are a retail company and not a technology one. Get proper advice and consultants who know what they are doing and who have done it before." Of course this advice is often disregarded as I watch in horror as a retailer attempts to develop its own financial system or even omnichannel systems - and fail to delivery the required results.

Admittedly, most consulting firms will either strategic and even detailed advice and then "walk away," whilst other firms, often from overseas, will pour multiple consultants and technicians into a retailer. This approach may sometimes work. The difficulty (some call it "challenges") is that this is generally now driven from the senior management and does not have the "buy-in" of staff, particularly the retailer's own I.T. staff. However, firms that can offer such strategic advice and plans plus follow-through with full implementation, working closely alongside the retailer's own team, are few and far between.

As an independent retail consultant I have to be careful not to promote or sell a particular firm or firms, just as I have not, in this article, mentioned the names of those retailers struggling with the digital transformation journey. However, I do have to mention Publis Sapient which states that they are a retailer's digital business transformation partner powered by AI. As such they aim to harness technology and data to drive innovation, elevate customer experiences and create meaningful impact. Those client references that I have checked out are quite impressive and they do a have long-term active relationship with their customers throughout and beyond their initial brief. It is very important to build an agile organisation for digital success. I say "agile" because it is so important to keep up with the pace of technological, societal and cultural change and whilst also while meeting the ever-evolving demands and expectations of their customers.

The success of every retail business depends on how soon you can deliver, how quickly you can gather insight from data and how accurately you can predict consumer behavior. This is why it is crucial to have a solid digital transformation strategy and delaying to do so is not an option.