DIGITAL LEADERSHIP IN RETAIL

Experiences and Behaviours of Digital Leadersand Key Retail Decision Makers

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The business objective of a company is to create and keep customers.

Nowhere is this simple idea, espoused by management guru Peter Drucker,

more apparent than in the cut throat world of retail—the place where

customers and companies most directly connect.

Whether they are selling sausage rolls and party pies for a few bucks in a corner shop or four-wheel drives in a car dealership business for tens of thousands of dollars, brands need to focus keenly on this connection with the customer. Specifically, they need to determine how they can best:

For retailers that is the contemporary challenge—making, keeping, and growing connections with profitable customers at a time when customer expectations and competitive pressures make it harder than ever to do so.

For many retailers, perhaps even more so than for most other industries, this is a time of massive change, much of it enabled by digital technologies.

Retain themAcquire customers Encourage them to broaden their relationship with

the brand and buy more frequently

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These include the consolidation of big brands, the growth of niche brands, and the blurring of online and physical retail channels, plus the adoption of marketplaces and subscription business models.

All these factors together serve to lower barriers to entry, but they also contribute to confusion and complexity regarding the operating environment. Externally, marketers operate in an increasingly fragmented media landscape. Internally, significant cultural and structural questions need to be addressed. If, for instance, experience is the brand and the product is increasingly the customer journey, then who in the organisation is responsible for its success?

Another important trend is the empowered shopper and the unrelenting consumer demand for convenience, immediacy, and exceptional experiences, based often on service levels they receive in other categories. Dealing with this can require a rethink of every part of a retailer’s business model — from supply chain, marketing, and product to the performance of staff on the phone or in the store.

Also significant is the continually evolving inter connected relationship customers have across digital and physical retail channels. Many marketers may still be baffled by how consumers think of the relationship and how they want to engage with different channels across the customer journey. That raises another issue: the pace of technological change. This is about not only the introduction of new ways of working, but also the pace of the adoption of those innovations. At first, it can be difficult to identify which will actually impact the business at scale. So, where should you place your bets when it comes to time and money?

A number of factors contribute to this disruption

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Cisco and the International Institute for Management Development in Europe jointly researched and developed a model that suggests digitally adaptive organisations strive to excel across three dimensions:

Hyper-connectiveness

The ability to make informed decisions

Faster execution

Voice seems to be demonstrating a sustained growth in adoption across major markets. It has significant applications but also significant implications for retailers and product manufacturers. At some point, the question becomes how to survive and even thrive in an environment in flux. Often, responses fall into one of two buckets.

One approach is to build a resilience to change but this can create fixed mindset, geared more towards withstanding or enduring change rather than embracing it.

Alternatively, companies can respond by evolving to become more adaptive to change. Companies that do so are adopting a growth-oriented mindset. Indeed, at Adobe we find many of the brands we partner with are focusing their transformation efforts on building just such a culture.

Cisco and the International Institute for Management Development in Europe jointly researched and developed a model that suggests digitally adaptive organisations strive to excel across three dimensions. The first is a hyper-connectedness within their operational and competitive environments, particularly the intimate connections they have with customers.

The second dimension is the ability to make informed decisions, which they do by democratising access to data and insights and creating and fostering cross functional collaborative environments. An important part of this is removing roadblocks and friction in the business.

The third dimension is faster execution, which is typically enabled through agile and flexible resource allocation. This involves the digitalisation of processes across the organisation, fast innovation and tolerance for experimentation and failure.

Take voice, for example

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2xas likely to identify their organisation

as digital first

Adobe embarks on a number of different research programmes throughout the year, designed to help us to understand our customers’ priorities and how they are achieving these.

For instance, Adobe’s global Digital Trends report, now in its eighth year, helps unpack the behaviour of the high performing experience leaders.

This year for the first time, we are able to pull out a segment of “high performing experience” organisations and analyse how their behaviours differ from those of the mainstream. From this group—about 10 per cent of respondents—we drew three key insights.

First, these companies were twice as likely to identify their organisation as digital first not only in how they make investments, but also in how they plan and go to market.

Next, this group is about two and a half times more likely to commit to significant experiments with artificial intelligence across their marketing investment programs. In other words, members of this segment are early adopters.

Finally, they were three times as likely as other businesses to have made significant progress in the implementation and adoption of some form of cloud based, integrated technology stack in support of their experience delivery programs.

On further examination, we discovered in APAC that high performing experience leaders are about 50 per cent more likely than their North American counterparts to be making progress on this point and almost twice as likely as their counterparts in Europe. So, the message is clear that the bar for technology implementation and progress is set quite high.

High Performers How do 'high performing experience' organisations behaviours differ from the

mainstream?

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2.5xmore likely to commit to significant experiments

with artificial intelligence

3xas likely as other

businesses to have made significant progress in

the implementation and adoption of some form of cloud based, integrated

technology stack

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To further test these ideas, we recently held a senior leadership panel in

Melbourne, Australia, for an audience of retail marketing and IT executives.

Geraldine Davys, Director of Marketing, NISSAN MOTOR CO., and Steven Eyears, Head of Strategy, Innovation and Business Development at 7-Eleven, appeared on stage for a panel discussion.

Five key issues drove the conversation:

Customer-driven Disruption

Consumers are more empowered than ever and more able to research and make informed decisions. And they can do so anywhere, anytime. Brands need to be able to accommodate this new consumer behaviour and to recognise that they need to meet information needs across all channels, including mobile and desktop as well as traditional retail outlets.

Retail is a broad sector and even within segments, the level of digital maturity can vary dramatically. However, some broad trends are consistent. For instance, consumers are taking more personal control in their buying research and have a hunger for self service. To meet this need brands need to ensure their content is engaging, relevant and up to date.

Retail leaders also stress the importance of better understanding the customer journey and their customers. Often, the most significant part of the journey precedes the consumer’s arrival at a traditional outlet. This is an area rich with opportunity.

Retailers need to think more broadly about their relationship with consumers and to understand exactly the kind of needs the consumer wants fulfilled.

We know some of the trends. Consumers are now going to dealerships 1.4 times instead of 4 or 5 times.Geraldine Davys Director of Marketing, NISSAN MOTOR CO.

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Trust

Trust is a critical issue for retail brands of all types, and where trust exists, the relationship can be extended. Digital leaders understand that where trust is strong, they are able to engage with customers more deeply and in many different ways.

It is also important for retailers to understand that the issue is not simply that consumers have changed, but that they have been liberated by digital technologies to do things and behave in ways they have always wanted to. Consumers have always wanted more control and more information, and now they have both plus the ability to easily share it with family, friends and peers.

Digital maturity

The retail sector is huge and ubiquitous, and it is too simplistic to accept that all retailers are transforming at the same pace. Each organisation needs to respond to its own set of unique circumstances, and those whose leadership and boards have a strong entrepreneurial culture that is supportive of change will do well.

It is important to expose the leadership and the board to the potential of digitalisation. To do this effectively, managers need to tell that story in the language of leadership, including dollars and cents.

Digitalisation is both transformational and incremental, and in both cases, a critical successful factor is ensuring that the foundational technology can support all the aspirations of the business. There is a temptation to quickly chase the latest and fastest growing trend. However, retailers need to get the basics right, and that includes a commitment to investing in analytics to ensure effective customer insight.

We are just finding that our brand has a lot more extension than we probably originally thought.Stephen Eyears Head of Strategy, Innovation and Business Development, 7-Eleven

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Data Alignment

Data alignment is critical in an age when customer experience is the key competitive touchpoint. Brands need to have a deep understanding of their customers and consumers, which simply is not possible without a robust data architecture.

Few companies are doing it well yet. It is a challenge everywhere. For every Amazon in the market, there are hundreds of others still struggling to get the basics of their data architecture right.

Customer Expectations

Not only is customer experience the key competitive advantage these days, but the expectations around those experiences are not static. On the contrary, they are ever rising.

A strong focus and adherence to customer retention is important since keeping customers is cheaper and more effective than getting new customers. For brands that means always thinking about how the experience can be improved.

Every customer has a different experience and takes a different journey, retail executives say. And each customer responds based on their own needs. Do they want to be moved through the sales journey quickly, do they want personal attention, are they motivated by convenience or do they want to really dive deeply into the product?

Understanding these needs and personalising the experience of each consumer is essential in the world of modern retailing.

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Studies have indicated that more than half of the most turbulent quarters of the last 30 years have occurred during the last decade, according to researchers at Boston Consulting Group. That is powerful evidence of the speed at which business is transforming and of the impact of the rising tide of customer expectations.

To ensure they continue to create and keep customers better than their competitors, retailers need to focus on building the best experiences. They need to do that in both the physical and virtual world and at the point where those worlds interconnect. The most successful retailers personalise experiences and do so at scale.

And to do all this, they need to get their data story and their technology foundations in order.

Four Dimensions

So how are retailers responding to these challenges? Four approaches in particular stand out.

The first revolves around redesigning stores and physical spaces to become or

support more of an experiential shopping outcome. The experience of both retailers and mall operators alike demonstrates that consumers value in store experiences more than physical retail spaces. Today’s retailers are focused on creating a physical environment that supports a richer shopping experience.

The second approach requires optimising the customer

experience across screens and other digital touchpoints. Retailers have indicated to Adobe that one of their top priorities is to make experiences fun and valuable as a way of setting themselves apart from the competition.

The third approach is all about scaling personalisation. It is one thing to

build pilot projects that seem to suggest a successful way forward, but it is another thing to roll them out across the enterprise while still capturing all that new value.

The final approach, and perhaps the most fundamental and important,

centres on the retailers’ ability to take back control of their data. Increasingly, retail marketers recognise that data is becoming the most competitively valuable and important asset they possess.

10AUGUST 2018 | Transforming Customer Experience with Personalized Communications

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