As Head of the HR Practice at Executive Search firm EO Executives, and having worked in the HR space for over 10 years, I have seen many industry trends come and go. However, retail is one of the key spaces I am (as are a vast majority of my network) seeing the most exciting changes in terms of transformation and hiring trends.
In the press, we are hearing about the great retail success stories from distributors such as Boohoo, Missguided and Farfetch. So, just how are these brands achieving this in a market that has proven to be volatile for other retailers like Jaeger and BHS?
It is clear to see that in a tough economic environment, things are set to become more challenging as market leading retailers expand their global reach and become more competitive. As a result, if businesses fail to keep up and innovate, competitors both old and new will be ready to surpass them.
What needs to be done?
As we have seen with the brands mentioned above, once they have been overtaken it’s hard to catch up. Standing still is not an option and retail business leaders are all too familiar of the direction the industry is heading. We are now seeing a retail world that demands:
• Brands without physical stores now making the greatest volume of sales in the world.
• Visits to retail websites via mobile devices has overtaken desktop traffic for the first time.
• In the US, Europe and Australia online shopping continues to grow at a much faster rate than the retail market generally.
With the growing accessibility of smartphones and faster technologies, consumers have access to internet shopping at their fingertips. Digital technology has extended the retailer's reach by eliminating the need for shoppers to enter a bricks-and-mortar environment.
1. Physical stores will see a demand for change
Inevitably, consumer buying behaviour will continue to change as a rise in e-commerce will cause retailers to refine their stores. As a result, store closures are expected across the retail market as businesses no longer require as many physical stores and as categories move online there is the expectation that store size will also change.
As we see more activity moving online and click and collect becoming more appealing, stores are going to become as much distribution and fulfillment centres as they are full-fledged shopping experiences.
2. Omnichannel retail will remain dominant
Consumers are becoming increasingly comfortable adapting to digital technology in the shopping environment and presumably will judge a retailer on how well it supports this change.
The last few years have been extraordinary as to how technology has deconstructed the retail industry. These days, the customer decides how they interact with a retailer, whether that’s in-store, over the phone or on mobile, tablet or desktop. This ability to hop between sales channels is what defines omnichannel retail and it looks as though omnichannel will be the dominant strategy in 2017.
3. Shopping as an experience
With competition to attract customers, retailers need to focus on high quality shopping experiences and new loyalty program benefits.
Shopping is as much about entertainment and engagement as it is the actual purchasing. From virtual changing rooms to in-store selfie competitions, brands are becoming more intent on creating a shopping ‘experience’ to remember and to ensure repeat business.
In a market where click and collect has overtaken home delivery in popularity, consumers widely expect one-click purchases, fast delivery, in a personalised and perfectly memorable experience.
4. Social media
Social media is more than a platform for information and brands have leveraged this as a key selling tool. Successful brands understand the power social media can play in influencing shopping decisions and are reallocating resources to support social media efforts. Sites such as Facebook, Twitter and Instagram can now be used to target a specific consumer market based on their buying/search habits.
5. All the above create supply chain implications.
Obviously, there will be fewer physical stores, less inventory and a multi-channel model. Leading retailer, Boohoo states it adds up to 100 products on its site every day, simply by investing in a small number of inventory per item. If demand is low, the items sell out and disappear but if demand is high, Boohoo doubles down in its investment of a particular trend.
As a result, customers are continuously checking back for new styles, sifting through up to 20,000 products live on the site at any time. However, this results in a strain on existing operating systems and the people that operate them.
Now, the challenge for retail companies is how well they manage decisions on new technology. The leading retailers will leverage new technologies to enhance their supply chains, while identifying efficiencies and cost effectiveness as critical components to competitive advantages.
6. Significant organisational implications
As more organisations see less demand for store presence and a stronger requirement for digital capability, the expectation of store closures and changing Target Operating Models is expected.
New skill sets will be demanding to keep up with the adoption on new technologies and an online focus that entices consumers through a memorable shopping experience. These skill sets are however in extensive demand and not only will HR need to think about how to entice talent, with more transactions occurring in the digital space retailers will need to ensure that their revenue recognition policies and practices are appropriate and supportable.
The future is now
Retailers will no longer rely on opening stores to fuel growth. Instead they have to keep costs down, revamp their existing stores to make them more profitable, and seek new customers through avenues like digital. Either brands understand that and make the changes themselves, or they don’t and they leave themselves open to activism or M&A.
The challenge for retailers continues to be their capacity to sharpen their systems and processes to ensure that the customer experience is a seamless one.
If you’re looking for solutions around how to hire top talent in a competitive market, feel free to get in contact for a confidential discussion at: email@example.com.
In the meantime, these extra resources may be of interest: