You Are What You Eat

You Are What You Eat
 

We were told as children to eat our vegetables because they were good for us. More times than not, our parents said that to be healthy we had to eat the right foods. The truism of “you are what you eat,” however, has applicability far beyond the dinner table. For children it was about carrots; for business it is about data.

It is cliché to say that data is a company’s lifeblood. We may pay only lip service to data, but often that is all we pay. Data management in all its forms is too often underfunded, understaffed and misunderstood. It is important to be talking about this as we enter the season of strategic planning and budgeting.

Too many retailers, wholesalers and brands are predisposed to cut programs like data management for short-term budgeting imperatives, but fail to appreciate the long-term impact of their actions. Programs like Master Data Management can be viewed as expenses to be cut, rather than contributors to sales and profitability. Invariably over time, these choices have revealed to be a false economy.

Avoid the empty calories of poor data
Very often we fail to distinguish between data volume and data quality. Data quality requires ownership of the responsibility for data completeness that many companies overlook. CIOs routinely assure their organizations that they can deliver every piece of data that the company would ever need, but this is an assertion often made without context.

For example, take the assertion that the company has an email address for every customer in its transaction data. This may be true from the CIO’s perspective, as a data field exists within the transaction set. Though the data field for customer email may exist, it fails to account for the very low occurrence of customers providing their personal information at the point of sale; thus making the data at best incomplete and at worst deceptive.

A healthy business depends upon using fresh information
Data must be defined by how it is used. This is the responsibility of the entire organization, not just the technical team. Unfortunately, if the enterprise defaults on this, the IT organization is left with no alternative but to treat the data as though it were fixed, missing the critical aspect that data is dynamic, constantly evolving, and being shaped by competitive influences and customer expectations.

For many years, the retail business has struggled to adapt to the day’s complex and competitive landscape because its data model has been starved by a store-centric mentality. The rapid adoption of e-commerce by consumers has brought into stark relief the difference between retailers, separating those who could adapt their data model from those that could not. The fates of these short-sighted retailers that fail to improve their data practices should serve as a cautionary tale for all.

Who’s in Charge Here?

Who’s in Charge Here?
 

In earlier writings, we’ve talked about the need to frame transformation strategy around the customer — understanding who they are, how your offering distinguishes you from your competitors and how you will create lasting relationships. You’re confident you have answered the pertinent marketing questions, thus completing your exercise of strategy development and market identification and you’re good to go, right?

Maybe not.

The first path too many brands and retailers go down is an ill-fated effort to fit their digital transformation exercise into the existing infrastructure, with process and culture left largely unaltered. This in effect says “Yes, we’re going to be different, but not change.” The contradiction inherent in this messaging diminishes the chance for success right out of the gate.

Two roads to meet the customer
Brands and retailers first need to develop an approach that recognizes that transformation begins internally before you ever engage a customer. Digital transformation is about changing how you interact with a customer, moving from pushing information to having a conversation. The Chief Digital Officer must play a pivotal role here — evangelizing, educating and guiding the organization. The Chief Marketing Officer’s primary responsibility is to articulate how the brand or retailer will have that customer conversation. Too many brands and retailers fail to understand and foster this role delineation.

The CDO ensures the organization infrastructure, tools and training are all aligned and mutually reinforcing a culture where collaboration is central to both strategic and tactical planning. This requires deliberate change management efforts to shift away from established patterns and adopt new behaviors and technologies.

Data is not a relationship
An inflection point that illustrates this is the CRM solution, how it is employed and the associated marketing programs that draw on this as a primary information source. Customer Relationship Management software was developed to be — and is still viewed as — the primary repository of information about the customer.

It does nothing to promote a customer conversation. But instead is often the source of customer irritation. Inboxes are flooded with promotional offers, based upon past purchases, that are simply deleted, unread. Communication remains largely one-way, impersonal and as such not a promising start to any conversation. Internally, updating the database becomes a dispiriting end in and of itself, with resources dedicated to monitoring completeness and chasing data rather than being used to engage in true customer exchanges.

Here is where the CDO and CMO collaboratively drive transformational changes, starting with the customer and working back through the organization.

Focus on digging better, not digging deeper
Relationship management cannot be synonymous with database management. As more sales move from a purely transactional model to a more consultative approach, every element of the customer relationship needs to respond in new ways. Retailers and brands need to reimagine how they interact with their customers and how they can partner with them to preserve long-term relationships that are sufficiently dynamic to sustain their strength and value through time. This is the first step. It also begins the internal conversation between leaders of organizations. A well-crafted comprehensive digital strategy requires consideration of and input from all corners of the organization, not simply IT.

From here, the CDO is pivotal in ensuring that the operational and technical infrastructures throughout the organization are aligned to support marketing’s vision. The technology strategy, operational processes and organization then enjoy a common point of reference from which to build.

In our next post, we will talk about some options and pitfalls of infrastructure transformation. So, we’ll finish this post as we did the first, with some questions.

You’ve defined your customer. Now what do you want to know about them? What do you want to say to them? What do you want them to tell you? What do you need to understand about your competitors? New markets? Trends? How will you want to break down the data? What information do you want the data to yield? How will the data be collected? By whom? How often?

Answers to these questions begin the transformation of your digital infrastructure.

What’s Next for the Changing Retail Landscape?
The Choice is Act or React

What’s Next for the Changing Retail Landscape?<br>The Choice is Act or React
 

For hundreds of years, competition among retailers was driven by activity on the sales floor. Retailers differentiated themselves based on product assortment, merchandising, customer service and store operations. Macy’s versus Gimbels is a classic example of this bygone model.

In the last two decades, however, competition moved from the sales floor to the supply chain, where process optimization became the new mantra. Process optimization — with its philosophy of continuous improvement — was the new approach to drive sales and maximize profit through incremental change.

Target, Walmart and other industry giants have been leaders in process optimization by employing supply chain programs like Collaboration Planning Forecasting and Replenishment (CPFR) and Just-in-Time inventory (JIT), supported by a rigorous program of data collection and analysis.

Supply chain optimization has been followed by the era of online retailing as the industry’s new field of competition. This channel offers vast product assortments, ease of use, convenience and a level of service that was abandoned by store native retailers. But it was met with skepticism by these legacy retailers, who discounted the degree and rapidity with which consumers would embrace this new level of convenience. Their initial dismissal has resulted in playing catch-up ever since.

Safety over convenience in the age of COVID  

The COVID-19 pandemic has infused the need for safety into the concept of convenience. As recently as 12 months ago, the thought of consumers intentionally not venturing out to shop was incomprehensible. Suddenly, customers were forced to change well-established shopping habits with breakneck speed, and a new normal set in.

Responding to COVID’s impact has proven particularly difficult in the grocery sector. Legacy grocery store operations were constructed on the assumption that the final assembly of an order would be done using the free labor provided by the customer as they shopped in store. Additionally, the shipment of the customer’s order to its final destination was done using the same free labor and free transportation provided by the consumer as they returned home. Now, grocery store consumers consider multi-channel options for safety as much as convenience, and parse their purchases based on perishability.

It is reasonable to anticipate that in a post-COVID economy the desire for this convenience will remain, despite reduced concerns over safety. Just a few months ago, consumers perused aisles in the supermarket — making frequent trips often lasting 40 minutes or longer. Consumers continue to think that the best place to shop for their perishables and frozen items is at the grocery store, but even that is not a given. The emergence of rapid home delivery services have proliferated in the past few months, making possible the safe delivery of perishables. In addition, customers have already started to change the way they buy all their non-food items. Everything from pet food to paper towels can be easily delivered to their front door.

Consumers are also venturing out to shop less frequently due to safety concerns. Trips through the store are completed in significantly less time. Now, the farthest that consumers want to travel is the store’s parking lot to pick up the order they created virtually.

Eliminating the need to go out at all is also gaining in popularity. Home grocery delivery has been accepted with great enthusiasm, assuring its continuation as safety issues abate. But how to execute the activities formerly done by the customer — at scale and profitably — is the challenge that began in grocery but has set consumer expectations for every retailer to meet.

A new playing field

Competition will now be played out in the reimagining of both logistics and store operations. This challenge must define how the physical store will be configured, merchandised and operated. The reimagining extends to all aspects of operations, including employee roles and responsibilities throughout the organization — not just to customer-facing activity.

Six COVID-Proof Constants for Responding to Change

Six COVID-Proof Constants for Responding to Change
 

We have all seen children jumping rope in the school yard or park. We may have even asked if we too could join in. As adults we are appreciative, if not envious, of the dexterity that children display. As we watch, we become aware that participation is actually less about dexterity and more about timing. While dexterity remains critical, the ability to master the timing for jumping rope is the component that determines success or failure.

More amazing still is jumping “Double Dutch,” where two ropes are spun in opposite directions. This new complexity makes the game seem impossible. To even begin to consider getting into the game demands immediate adaptation.

This analogy speaks to where retailers, wholesalers and brands find themselves today. Those who have recognized the new complexities of doing business have at least given themselves the chance to respond to change. Those that have not are found tangled in the ropes and out of the game.

Like jumping rope, there are some fundamentals that are undeniable. Though dexterity and timing are important, retailers, wholesalers and brands must not be distracted from six tenets that are constants.

1. Understanding the customer
The customer may be the same, but the way they want to interact has expanded far beyond the traditional trip to the store. Critical to retailers and brands is responding to the customer with options to make a purchase as convenient as possible, and cultivating a meaningful two-way dialogue. Retailers and brands cannot expect to be effective at finding new customers until they mastered the art of meaningfully engaging with the ones they already have.

2. Understanding the competition
While each retailer and brand are working to provide options to their customers, they must be vigilant in understanding how their competitors are doing the same. In the age of instant information, consumer expectations are changing all the time. The bells and whistles from competing products and services — virtual assistance, for example — become your customer’s new expectations.

3. Managing within constraints
Undertaking any initiative takes resources. The pace of change today is such that it is unrealistic to think that any organization has the luxury to take on projects one at a time. Organizations have no alternative but to execute multiple initiatives simultaneously. The competition for priority and resource availability can be debilitating if not planned and managed deliberately.

4. Culture and communication
Culture must reflect in both word and action an understanding of the customer. Messaging must be crafted in such a way as to drive both operational consistency and inclusivity for employees and customers alike. The degree to which this is achieved will determine the level of engagement of both employees and customers.

5. Adapting to a data-centric world
We live in a data-centric world, but it is imperative that we not get lost in thinking that the data itself is the end game. With all the data we have and the efforts that go into collecting, cleaning and analyzing it, we lose sight that data is just the raw material that we have to work with to understand our business. Data need to serve the business, not the business serving the data.

6. Capitalizing on the power of data
Before we can capitalize on data, we first need to define how it is to be employed. Data in and of itself has no value until it is utilized to craft a response to business challenges. Doing this requires a knowledge of both the raw data and the business objectives to formulate metrics that govern operational performance.

Like jumping rope, there are some fundamentals that are undeniable. These are the touchstones of transformation. You won’t get it done if you don’t get it ALL done.

COVID has brought enormous pressures to an already weakened industry, leaving retailers, wholesalers and brands desperately trying to survive. Surveys and industry articles suggest that a lot of jobs at retailers and brands are going to be lost forever.

The hard truth is this was going to happen anyway, irrespective of the pandemic. The path forward is not one of recovery but adaptation. That said, the challenge then becomes understanding how these touchstones must be adapted to retail’s new reality. Failure to do so will serve only to exacerbate the destruction of those who resist.