The velocity of change in the retail market has been increasing for quite some time now and is only showing signs of increasing both volume and the velocity of the change cycle. This is really related to the opportunities afforded by the connectivity and flexibility of the Internet, mobile technology and increased network capabilities that have all come together to deliver increased speed of delivery and also expansion of the parties involved in the change cycle. The change cycle is permanently changed by the methods of delivery and also the types of changes delivered. The days of monolithic change are definitely over and have been replaced by a continuous change cycle of incremental changes that allow for adjustment and speed to market to meet the increased velocity of demands that are encouraged by the Internet players such as Amazon.
There is an old phase that is particularly fitting in this retail market - ‘Change at the speed of life’. This reflects the current reality very clearly and explains the velocity of change as well. The velocity of change is increasing because the change cycle is quickening and the changes are actually building on each other. These factors are then related back to the improvements in consumer technology and network capabilities. Consumers are actually driving the change now as a result of their embrace of technology and the improvements in consumer technology. Add to this mix Internet retailers and service providers that are encouraging these changes and you can see the reasons for this increase in velocity.
This new reality puts many of the larger retailers in a bind to meet the increased velocity because the standard practice for these large retailers has been to bundle changes into larger releases that require more time to deliver. This practice puts them squarely behind the curve and constantly chasing the changes causing lost customers and lost sales. Even the reaction to the changed model, increase capabilities through acquisition, has caused the retailers to remain behind the curve.
These large retailers must now revise their change cycle to implement smaller, incremental, releases to deliver change in a more frequent and iterative manner. The large releases provided major enhancements to features and functionality however it also allowed the market to change during the period of development of these large releases, thereby increasing the risk of delivery either too late to take advantage of the market or no longer required by the market. Large retailers must focus on a flexible and extendable framework that supports quick incremental change in addition to the acquisition of new companies to support the changing demands. I think that the greatest impact of Amazon in the retail market is their focus on the velocity of change through incremental changes that build on each other.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?