Retailer change cycles must change to become shorter and focus on incremental change in order to keep up with consumer demands. This is a dramatic change to the historic view of change in the market and I believe the only way to increase the velocity of change for larger retailers. Velocity in the retail market is the result of a continuous cycle of incremental changes that confirm assumptions and move the needle forward as it relates to meeting consumer demands. This is an implementation of a classic continuous improvement program (PDCA cycle). While this may sound like a simple thing to enact, the difficulty lies in the execution and especially in the continuous nature of the execution. It is easy for the cycle to be broken as a result of diverted attention, this is why the success of the program depends on the embrace and encouragement of leadership.
The large legacy retailers have worked in what I would call a monolithic development cycle, the changes are planned and coordinated together into major event releases that require significant development time and significant change management. A good example of this is the ERP implementations that produced significant benefit to the business at a significant disruption. Granted, after the significant event there follow a period of time where enhancements are performed until the next significant major release of the software. This approach works well for back office type applications and has served the legacy retailers to support a consistent platform across the many locations in the chain.
The Internet changed all of this because of the change in the shopping capabilities and practices. Shopping and interaction with consumers require continuous change to the ‘store front’ in order to encourage consumers to return and purchase. The large retailers have always continuously changed their product displays for season or special events or holidays and the eCommerce channel requires the same level of change in order to maintain a fresh view. This approach and model has then extended into consumer offers and sales and purchasing capabilities as a result of the market opening up to social networks.
Amazon has perfected a model of incremental change to increase the velocity of market change to disrupt the omni market. This model allows and encourages experimentation with features in quick cycles of trial and error and Amazon has even extended this model into their product development and offerings. This change, and the disruption produced, is the velocity of the incremental change and the speed of disruption that this model produces. This is the shift that the large legacy retailers must make, they can do this by changing their culture to focus on incremental storefront improvements and building a flexible integration layer back to the back office systems.
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?