At the NRF Big Show, the thing that always strikes me is; how too many solution providers evangelise technology as the only path to retailing nirvana. At worst most of the technology implemented in retailers is a shortcut to creating an easily copied process, while at best your tech competence is an immense amplifier of brands built around differentiated product and experience. What a wide range of potential outcomes.

Technology doesn’t replace merchant skill – and it is great traders, customer advocates, disciplined execution, and capital allocation that create significant and lasting retail businesses.

Throughout the week it was refreshing to see leaders acknowledging the role of people inside their company once more, and how many retailers have made it too difficult for talented merchants to scale their impact across today’s fragmented consumer marketplace.

“You take all that complexity, and create the simplicity in your training programs to help your store associates make sense of how they manage the customer experience of your business”. – Greg Foran, Walmart

In short, great retailing is about enabling your people to become merchants again.

Why now? Why has this become a problem?

Retailing at it’s best is a simple business – create products people want, wrap those products in an experience that generates desire, price your goods well, and create an efficient distribution model to capture the demand as profit.

However, standing in the way of this is that over the past ten years the internet, and the broader digital ecosystem, has transformed industries, consumer behaviour, and society as a whole – this has created significant complexity.

In fact, for many people working inside retailers today, it feels like a firehose. Through the entire value chain of product development, buyers, merchandisers, marketing, finance, store associates and supply chain – there are now many paths to the customer, significant extension and localisation of ranges, complex global sourcing practices, not to mention customer experience touchpoints and modes of product distribution. Inside retailers, the spreadsheet and memo reign, and are multiplying at a frightening pace.

This complexity is stopping innovation and greatness emerging from all levels of retailers. For all of the investment we are making in customer experience, product availability of supermarkets and fashion businesses globally remains well below consumer expectation – complexity is winning.

Moving the conversation from ‘back to basics’ to ‘enabling merchants’

Much of the narrative has centred around being more focused as a retailer – going ‘back to basics’ if you will. It’s true that focusing on your core customer, the unique elements of your brand offer and top notch execution is the path to success.

With ever increasing complexity – driven by customer demands and the global playing field – the answer may not be to return to the tools of the past.

While your merchandise planning team is manually extracting BI reports, updating spreadsheets, sending emails and holding meetings – modern competitors have suppliers generating sales forecasts for their business, delivering digital content, 3D store planograms and market data to drive their buying cycle.

So what is the solution?

Define the Experience of your Best People & Partners

For the past 5–10 years, the best retailers have become more adept at using customer experience management to map their customer journey, eliminate pains, or create new product and service opportunities to solve more jobs within the lives of their consumers.

It’s time to adapt and grow these skills from a focus solely on customer touchpoints, to start to define and improve the experience of buyers, suppliers, store associates, and supply chain team members.

Capturing your end-to-end service design, and the challenges experienced by your people in executing a modern retail experience will accelerate your ability to put in place the changes needed for all your people to become great merchants again.

Fight back through your in-store experience

Often the most neglected part of the experience can be the interface between your sales associates, and the support office – where emails and memos with different instruction, complexity, and a lack of clarity rule the day.

Many global retailers including Adidas, Nike, Sonos, and Apple have invested significantly in providing unique experiences for customers within their physical stores – fighting back

To enable this, they have focused on providing their staff with modern tools to provide in-store customisation, same day delivery, community and social management, wireless headsets, mobile point-of-sale and role clarity between sales and back of house ‘runners’.

Tools that, in many cases, Australian retail staff would barely recognise – but with transformative potential for most retail shopping experiences.

Automate the value chain, not just the supply chain

For many years retailers have become adept at automating many of the functions throughout the supply chain, from warehouse picking operations to order allocations.

The best global retailers are investing significantly in understanding how machine learning technologies will transform business processes across their entire value chain, from price management, on-shelf availability, markdown cycles, customer service, curation, and personalised marketing.

The effective introduction of machine learning is starting to help businesses such as Walmart, GAP, and others to address the expanding complexity of business processes – reducing the time invested in executing a repetitive process and providing new opportunities for retailers to focus on product range, partnerships, and creativity to engage their customers.

The start of this trend can often be seen packaged up as robotics – such as the Chloe robot, allowing Best Buy to provide local fulfilment points, reducing inventory handling costs in store, and enabling their business to trade 24/7 out of their physical locations.

Have we reached the age of artificial intelligence yet? Not quite. However, retailers who experiment with and embrace modern tools have the best understanding of where complexity is transformed into simplicity.

Invest in continuous learning

With the pace of change generated from Omni-channel retailing, automation, personalised relationships with customers, and expanding product choices – how do we create the merchants of the future? Where will they come from?

Greg Foran, CEO of Walmart US, believes you will find them within the merchants of today, stating that “You take all that complexity, and create the simplicity in your training programs to help your store associates make sense of how they manage the customer experience of your business”.

Terry Lundgren, CEO of Macy’s highlighted the role of investing in updating the skills of their current employee base, expressing the feedback he hears from his people, “My goodness, there are so many career opportunities within my company – Making sure that the team are exposed to all of those different functions is important for retention”

If you want to ensure your best people remain, great merchants, not only must you provide them with the best process and tools for delivering on the promise of your brand; you must ensure they can use these to be the most compelling modern retailers they can for your customers.

It is up to our industry to take all that is complicated about our businesses and to make it accessible to everyone down to the shop floor, through excellent communication and a focus on continuous learning.

What does it mean for Australian retailers?

For Australian retailers looking to become modern global retailers, the biggest trend I can offer you out of NRF is to take a look at your best people – and challenge whether you are enabling them to focus their time and energy on being great merchants for your customers. Or are out of date tools, processes, data or technology stopping them from driving product and offer differentiation.

It’s by enabling this core that will see your brand continually rise to the challenge of delivering a profitable and differentiated modern retailer.

This article first appeared in Inside Retail on the 8th February 2017. You can see the original here.

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Retail is about people was originally published in The Curious Retailer on Medium, where people are continuing the conversation by highlighting and responding to this story.

One of the things I wanted to improve through 2017 was the amount I was writing. I’ve always been more into collaborating with others, or presenting, than writing — life is a journey though, and I’m committed to getting better.

I wanted a quick place to store many of the interviews I’ve done, articles written, or media appeared in — so what better than to stick it here.

My aim has been to publish at least an article a month, I’m not sure I’m going to make it — I’m sure in any case the challenge will give me some focus.

Future of Food

The Stomach Wars are on (2017) — Technology has changed many industries over the past 10 years, and over the past 12 months the pace of change in food retailing has been accelerating. Recently we partnered with Raconteur to publish this piece in the Sunday Times (UK). Have a read of it here.

Feeding the future (2017) — During July I was lucky enough to be able to speak at a number of events in the UK to senior folk in the Co-op, Tesco, Waitrose, McDonalds and Jamie Oliver Media about the future of food retailing.

Changing consumer habits, and technology businesses are changing the traditional store-focused grocery model, with some changes placing pressure on profits and customer relationships faster than others. This is my take on explaining what is happening, and how to think about responding.

Read the summary on ThoughtWorks Insights here.

Winning the stomach wars e-book (2017) — As part of our focus on food through 2017 I have worked with a number of people across the food and technology industry to publish an eBook. If you’re interested in the future of food, take a look here.

Retailing

Higlights from the NRF Big Show (2017) — I regularly travel overseas to spend time with our global clients, teams, and to gather the latest consumer insight. This was an article I penned with Retailbiz on the highlights from this years event. See the article on Retailbiz here.

Retail is about people (2017) — Through my career I’ve been very lucky to have been mentored by some great retailers, including Greg Foran, CEO of Walmart US. Many retailers seem to have forgotten the importance on using technology to allow their best people to focus on being great merchants. I’m a big believer in continuous investment in your people — Read the article in Inside Retail here.

For Australian retailers looking to become modern global retailers, the biggest trend I can offer you out of NRF is to take a look at your best people — and challenge whether you are enabling them to focus their time and energy in being great merchants for your customers. Or are out of date tools, processes, data or technology stopping them from driving product and offer differentiation.

Digital Strategy & Platforms

Platforms for Growth (2016) — Through 2016, I had the pleasure of collaborating with my wonderful colleagues to translate digital strategy into technology architecture and building product management capability in retail. This is a snapshot of a series of events Giles Alexander and I spoke at. See the article on ThoughtWorks Insights here.

Becoming a platform-enabled retailer (2017) — Understanding how technology is driving change in the retail value chain, and consumer behaviour is an important part of establishing the right strategy to modernise your business model. I spend a lot of time coaching people to understand how traditional models are being unbundled, and the impact on profitability and strategic options. This was a bit of an attempt to put this into words — See the article on Thoughtworks Insights here.

The Modern Retailer’s Holy Grail (2016) — I collaborated for a piece with Inside Retail on the considerations required of a modern digital retailer. I’ve always found that a brand needs to be clear on their point of differentiation, and the connection they have to their customers, before thinking about channel strategy — great technology and digital tools amplify what you stand for, they don’t create it.

Modern ways of working help brands to continue to innovate their business model, create seamless experiences that drive customer loyalty, bring data together to enable their teams and to give value back to their customers, and optimise the deployment of capital (inventory) — but they don’t give great consumer brands purpose.

“The only reason you need to call it ‘digital strategy’ is that your business strategy has fallen out of fit with the way your customers are using technology and the way technology can enable new experiences around your brand,”

— See the article by Inside Retail here.

“The best retailers globally actually get that there’s not just a single cookie cutter strategy to open a website, start a social media channel and work on your e-influence. It has to be something that fundamentally reinforces what the brand is about.”

Loyalty

Woolworths loyalty program to cost $500 million a year, says Deutsche Bank (2015) — I’m often asked for expert insight into customer experience, retail strategy, loyalty, and technology. — See the article by the SMH here.

Which supermarket loyalty points get you a better deal: Coles or Woolworths? (2015) — See the article by the AFR here.

Customer loyalty comes at a price (2015) — See the article by the SMH here.

Building customer loyalty and not reward programs (2015) — I’ve spent a large part of my career using strategy, operations management, and technology to drive customer experience as a retailer, but it’s important to never lose site of the fact that margin originates from your customers and your team members being emotionally connected to your brand and your product. With some talented colleagues we’ve helped a number of retailers build out modern loyalty strategies, and this is a distilation of those efforts — See the article in ThoughtWorks Insights here.

Mobile

Dick Smith Launches Mobile Site (2011) — Back in 2011 while I was leading the digital business for Dick Smith we were one of the first to build a mobile capability for our customers, one that was built around the unique experiences customers were looking for — See the article by PowerRetail here.

Absolute Customer Delight — Winning Online Retailer of the Year (2011) —Before I left Dick Smith the team and I launched the first Click & Collect capability in Australia, operating across around 300 stores. We were all quite proud to be recognised as the best Multichannel Retailer, and the Online Retailer of the year — See the article by PowerRetail here, or the Case Study here.

Click & Collect, and Online channel growth

Big W introduces in-app transactions and lay-by (2012) — See the article by the Daily Telegraph here, or Cnet here.

“There is a good percentage of customers who choose to shop online at toy sales but it is also used to help their shopping experience in-store”

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Media was originally published in The Curious Retailer on Medium, where people are continuing the conversation by highlighting and responding to this story.

Tonight I spent some time at York Butter Factory, Melbourne. I was speaking to an audience of startups, entrepreneurs, and retailers — along with a small group of panelists on retail technology innovation.

Given it’s now 10pm, and as I don’t blog quite as much as I should, I thought I’d put together a rough outline of what was spoken about — hopefully it is useful to some.

It was a bit of a free form conversation, and in the organisers own words it covered:

• What sort of retail tech startups do you see in the market often?
• What works? What doesn’t? What solutions do retailers actually want (Gaps) & Why?
• How should startups think about retail tech in general?

So Dan. What are the answers?

Well because I’m often engaged to help retailers develop their innovation agenda, and define how they manage portfolios of bets (experiments) that could scale into more radical change… I’ll answer with a set of options.

In short, you can be successful at almost any startup idea that you have. Below is my pick ‘n mix of lenses to help you get started.

Pick ‘n mix number 1. If you think about the changing consumer, you will see hundreds of ideas that could be successful:

• Consumers who are time poor, love brands, and are failing to stay connected in the face of media fragmentation. Give them an aggregation of all of the content a brand creates. Curate it. Scale the best bits out to new potential customers. Welcome to MarTech.
• Worried about the ageing population, and the growing digital divide between those under-45, and the over-45s. Help brands reach across the digital divide without duplicating effort.

I could go on, however there was a lot more to cover from the night.

Pick ‘n mix number 2. If you think about the ways in which technology is rapidly creating new possibilities for society. Wow.

Most people with limited exposure to many of these technologies significantly underestimate the complexity of developing the core technology into a novel, useful, and executable commercial solution. Alternatively, they mistake the level of readiness in their target market.

Sensors are amazing. However even with sensor costs reducing by many maginitudes they are still complex to integrate into physical environments. They fail, there is often a signal-noise problem, and they require smart people to turn sensor data into actionable insight — So can you solve these problems, or can you utilise sensors in a novel way to transform retail?

If you combine #1 and #2 there are many interesting spaces to play. Although consumers won’t generally go out of their way to protect their privacy, giving it up information routinely for convenience… they are incredibly sensitive of surveillance. So why not combine privacy, with space analytics — develop the capability to manage loss prevention, customer conversion, and sales proficiency through change rooms like the folks at density.io — using laser scanning to build an anonymous picture of how people are using retail space.

Pick ‘n mix number 3. Finally, the retail ecosystem is complex. There are a variety of ways to enter it — transforming suppliers, transforming retailers, building a retailer & consumer platform etc.

One of the things I have seen regularly during the early stages of product development, is to shape the product in a way that forces you to bite off too much of the retail value chain to deploy your product.

Generally the more successful early stage startups build their product strategy to deliver for a specific retail function, or retail touchpoint. It is much easier to engage and implement dealing with marketing, operations, or merchandise in isolation.

As you mature, you can extend into supporting an entire channel, which now might require collaboration between marketing, operations, and technology. Having the right stakeholders — such as CDOs that are used to cutting across the organisation can be critical here.

If the value of your product is predicated on delivering an end-to-end experience, or driving transparency across the entire retail supply chain — then you better be prepared for a significant degree of retail knowledge, deep consulting expertise, great connections and the ability to run a sophisticated business development process. With the corresponding capital to sustain these capabilities as you build.

Orchestration across an organisation is hard. Treat it with the respect that it deserves in the early stages of your business.

What about retailer size?

Which brings me to the size of the retailer and the sector. The Australian market is small. If you are solving a problem experienced by ‘Discount General Merchandise retailers looking to move high volumes of inventory to their customers’ you are looking at around 4–6 companies. Your product maturity, pricing model, timing and connections all play into whether you can break into these retailers.

Could you pivot, and take the inside learnings of high-volume retailing and make them accessible to the local newsagent, guaranteeing increased returns from their store inventory. Chase it. There are 1,000s of suitable businesses to test and learn with. Globally, there are millions of SMBs, and buying groups who can gain great value from getting access to sophisticated retailing skills through technology.

Finally?

My final tip — Get great advisors. I’d suggest someone with intimate knowledge of the consumer trends, how retailers operate, and a successful set of tools for selling to your potential targets. Not always found in the one person, diversity here is powerful.

Open Questions

There were a wide range of open questions from the audience, the Q&A went for some time. Below are a couple of the unique ones I captured.

Are there opportunities to innovate in product? Are we too focused on technology innovation?

I thought this was a great question. The answer is ‘yes’, and ‘yes’. I personally believe there is a significant amount of upside in focusing on product innovation. I’m sure there are an infinite number of possibilities, however I see 3 immediate ones:

1. The design process inside most fashion retailers isn’t data driven. Many retailers are connected with global fashion trends, build mood boards, design garments, and gather evidence from around the office before finalising designs for large production runs. Online players such as Threadless have perfected the art of gaining community feedback on a wide variety of designs rapidly before moving to prototyping. The car industry has used various techniques to test millions of variations before cutting clay. 99 designs generates a wide variety of concepts from the community. These ideas might be terrible — however the design process hasn’t changed for most retailers in years. It’s ready.
2. There is a genuine exit path for startups who develop new grocery concepts. Local examples are Carmens, and Thankyou. However globally there are 100s of startups raising capital, building brands that resonate, and selling their product into grocery. P&G and other large FMCG conglomerates are finding it harder to innovate — and they are acquiring. At high-valuations, and regularly. Building a food product, and being acquired by a large FMCG player who can scale your brand is a legitimate, and profitable exit.
3. Don’t wait to be de-bundled by another startup. De-bundle your own offering — use mass customisation. We are very fortunate to work with Domino’s Pizza Enterprises as one of ThoughtWorks wonderful retail clients. They are amazing. When confronted with wanting to improve pizza quality, they could have gone down a number of paths. Instead, they debundled the pizza offer — allowing customers to customise their pizza with extra toppings, or to design their own pizza. Now quality is in the customers hands, and they operate a very successful casual fast food business.

How do you approach innovation in supply chain, and what is the role of technology?

The potential upside in most retailers supply chain is immense. Moving product from design, development, sourcing, planning, ordering, manufacturing, transporting, warehousing, allocating to channels, and store merchandising is a complex business. One many retailers amplify by over-complicating their range and/or supplier base.

With that said, in my experience, technology is rarely the thing that solves these problems.

The best solutions come from a disciplined process improvement approach, and bringing together a smart group of cross-functional team members and suppliers, including those who do the work. Preferably something like Toyota Lean.

Where technology does play a massive role, is in making process change stick.

So, you’re a startup, and want to change the way innovative product makes it’s way to a customer. You want more innovation, and less waste. Awesome.

Think about — should you be building tools to help retailers more rapidly understand waste, innovate improvement, and scale the improvement through software — both organisational (people) and technology (code)? Or do you design a flexible solution to be deployed once waste has been reduced to automate and scale the solution. It’s your startup, so it’s up to you.

What is the one startup idea that you get pitched regularly that you wouldn’t like to hear about anymore?

This was an interesting question to get the perspective of Fabio — who is the Head of Innovation at Kmart. Fabio had the view that there were too many startups pitching ‘analytics’ solutions.

I’d have to agree with him. It isn’t because we don’t see value in analysis, being data driven, leveraging data science, or deploying algorithms — quite the opposite. It’s because it’s hard. It needs deep context of the business or the problem space, the data model, and in the best cases, it needs to be co-developed with those currently performing the task — without these things it is rarely more than a fancy dashboard, or a simple product masquerading as data science.

Onto my pick. I went with the first world “What’s for dinner problem”. For similar reasons to the above, this is a hugely valuable problem to solve brands — dinner is a chore in most households. It often lacks inspiration for consumers, it is inconvenient, and too many time poor people knowingly make bad life choices (I write, as I eat a late-night quarter pounder).

Ripe for disruption.

Except technology hasn’t proved to be the answer. It has probably had more venture capital invested in it than any other retailing problem, and all that is left to show for it is a food publishing business still going broke, and a sole unicorn in Blue Apron.

The purpose of this blog post isn’t to deep dive, so I won’t. This is a difficult problem, with a complex set of variables — like the constantly shifting and irrational taste preferences of a household.

If you think you have it solved in a way that has any chance to scale — I want to help you. I will be an investor. I will go to the ends of the earth to help you raise funding. But don’t pretend it is easy.

I am in {large corporate x} and I can’t get people to focus enough on the future when they see so many things that need to be done today. What do I do?

In my experience this comes down to a small number of factors.

1. Does the organisational culture value ‘doing’ over ‘learning’? In my experience both of these things belong in the ‘doing’ category.
2. Does the organisation have a disciplined approach to experimentation? Does it understand the purpose of experiments? Does it regularly experiment at low cost?
3. Are there wins from the above 2 points? Are they communicated clearly and linked to the success of initiatives that are trialed and scaled. In my experience retailers want to celebrate success — it takes a while to move past the scepticism of new ideas, however when people see signs of success retailers are quick to double down.

It’s hard though. Most people don’t understand how to scale down experiments. How to focus on rapidly learning, and how to engage stakeholders so that their perceived risks, assumptions, and dependencies can be designed as experiments to overcome future objections.

Doing this successfully though is the key to moving toward an organisation with an effective innovation engine. The pain is worth it.