Strategy execution has never been easy in the retail environment, yet on the back of a changing landscape and several disruptive trends that have entered the equation, successful strategy roll-out has become even more so an uphill battle. With front-end engagement for customer journeys demanding increased back-end complexity, and with brand trust now in the online review, retailers need to work with some new truths that change how they execute and excite customers about their value propositions.
For decades now, underperforming strategy execution has been a theme that dominates the world of management and human resources. Overall, the message is clear: there is a clear gap between strategy setting and excellent execution – a recent research from the Economist Intelligence Unit for instance reveals that over 60% of the senior managers feel that their organisations struggle to bridge the gap between the formulation and implementation of strategy. While there are differences in track record across companies, regions and industries, fact remains that strategy implementation (too) often does not live up to its expectations. As a result, value added is squandered before, during and after a programme’s implementation, a cost that typically runs into millions at a company level, and into billions at an industry wide-level.
To understand more on the status of strategy execution in the retail industry, consulting firm Boxwood recently conducted research into the strategy implementation landscape. The report, titled ‘Execution Excellence’, draws on survey results involving 50 interviews with managers, case studies and the firm’s long standing track record in retail and with change management engagements. The advisors find that doing a good job in strategy execution has in recent times become considerably more difficult, according to Boxwood the consequence of a changing economic and cultural environment, with six factors at the heart of the trend:
Complexity – One of the difficulties faced by retail businesses is the increasingly complicated expectations of consumers. With the consumer today expecting an ‘omni-channel’ experience, with a recent Forrester survey highlighting that 56% of respondents have used their mobile device to search for products at home, 38% have used a their mobile device to check the availability of stock on their way to the store, while 34% have used their mobile device for in-store product research. Businesses are hard pressed to provide the complex back-end for the simple front-end.
Trust – Companies have lost considerable ground in defining the value of their brands, with research conducted in 2013 by Dimensional Research showing that 90% of customers say buying decisions are influenced by online reviews of the products and services themselves.
Technology – With big data and a move to mobile the business environment is open to various new interfaces that change how business interact with customers, as well as changes to internal models. As a result, the capabilities a business requires to survive and thrive have fundamentally changed.
The global recession – With the global recession businesses have been placed in a stress position, with often depleted resources, companies are not well positioned to go through the steps required to achieve the practical goals of excellent strategy execution.
Game changing competition – With new ways of interacting through online channels as well as different forms of snagging customers through new forms of discounting, the expectation for convenience of customers has forever changed the retail landscape.
Millennial mind-set – The new generation of front-line retail workers has different expectations about what constitutes fair, meaningful and respectful employment, which has a corresponding effect on their loyalty; requiring that they are adequately challenged, fulfilled and rewarded.
With strategy execution becoming more important, yet at the same time also harder, retail managers find themselves in a challenging situation. To help them in moving toward ‘execution excellence’, Boxwood conducted further research into the critical success factors of implementing new strategies. The consultancy finds that when it comes to execution excellence there are four essential elements that hold the keys to success:
These elements are by no means new, acknowledges Boxwood, stating “they have always been important when it comes to excellent execution.” However, the authors highlight that within the four dimensions, success factors and focus areas have shifted, requiring new approaches and/or techniques to deliver a consistent customer experience (Boxwood calls these the ‘New Truths’).
Customer value proposition
While the product remains a central value to any retail engagement, the importance of being customer centred continues to shape the retail experience, now with the added kicker of needing to understand and meet highly demanding, perhaps even sometimes unreasonable needs (such as instant delivery). The new truth is however that with the advent of social media, the way in which brand messages and product value is passed on is through social media by customers themselves – businesses therefore need to win over brand advocates that spread the value of a businesses within existing communities or through the creation of community spaces in which the value of a brand or product can be championed.
As Liz Evans, CEO of Oasis and Warehouse, says “To succeed great product is a given, it always has been… but today to win you have to also deliver a service proposition that’s second to none.”
While having a vision that brings together staff and customer experience is still fundamental, the need to engage staff to implement successful customer journeys continues to be an important element of wider leadership. The ‘new truth’ however is that successful staff engagement requires giving over a certain amount of autonomy to staff – thereby empower staff to take accountability for executing the customer value proposition consistently and effectively.
Keep complexity on the outside, but don’t over-simplify: you need the capability to cope with the right amount of complexity to deliver customer expectations. Recognise the volume and power of data and employ people with the ability to harness it, to enable you to find new ways to anticipate, excite and entice customers.
By staying ahead of market trends with a focus on leveraging data, businesses can make decisions that are keenly focused on what is needed with the resources available. The change in business environment is changing so rapidly that businesses too need to consider agility over 5 year plans.
The authors conclude with: “One size does not fit all. The greatest strategy is one that can be implemented effectively. We believe that there are four essential elements to execution excellence: 1) An ever-evolving, relevant Customer Value Proposition 2) Inspirational leadership 3) An effective operating model 4) Agile change capability.”