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GT Nexus

What Are Retail CEOs Doing to Achieve Operational Excellence in a Consumer Driven World?
Leela Rao, GT Nexus


The National Retail Federation (NRF) held its annual show in New York last month. The consensus was that retail is evolving at a faster rate than ever before. Hot topics included private label, global expansion, and the latest in digital innovation. A particularly riveting session focused on the concerns of today's retailing CEOs - what keeps them up at night? Forbes recently published a survey conducted by Price Waterhouse Coopers to take the pulse of over 400 retail CEOs, revealing top-of-mind concerns for 2014.1

Under Pressure to Deliver
Of the 409 CEOs surveyed by PWC, 53% came from the Global 1000 and 27% came from the Global 50. Items that ranked high on the CEO's list of concerns included margin erosion/cost cutting, attracting and retaining customers, and increased competitive threats, mostly fueled by the technology revolution. While some CEOs are optimistic and see technology as an opportunity, others do not. "Technology is driving faster change than retailers can face," says Rich Karlagaard, Publisher for Forbes Magazine. This catalyst has driven retailers' biggest strategic priorities for 2014: Keep customers coming back, leverage the internet, and utilize all channels as a single-channel. Retailers are looking to remove the silos of current channels and gurus have coined the term "death of channelization" as the next crucial step in effective inventory management. Only 34% of CEOs see omni-channel as a threat, while the majority see these various touch points as brand awareness generators and more opportunities to drive purchases. Interestingly, the survey revealed that only 17% of CEOs claimed to have optimized supply chains and most retailers ranked supply chain as low on their list of priorities.

 

The Omni-channel Race
Technology is driving faster change than retailers can keep up with. Consumers have harnessed smartphones, social media and the web to take the upper hand in the retail environment. In today's omni-channel world, retailers have spent time and money engaging consumers with zealous advertising and broad promotions, which have altered consumer expectations for delivery and service. This has left a huge gap between consumer expectations and the reality of today's shopping experience. Customers know more than ever before. They know what they want and they want it all: colors, sizes, patterns, varieties. They want the product right now. They demand options with regard to how to purchase: Google Wallet, PayPal, layaway, etc. Competition has changed. It used to be brick-and-mortar only, but now it's different channels and other countries. Retailers are finding price-fighting and promotions are not enough to win the battle anymore. Rather, they have to create differentiation in the form of customer experience. This comes in all forms - from entertaining websites to in-store animation and product education to building online communities and designing customized pieces.

Customer Centric Supply Chain
So how can CEOs improve customer experience in stores and online, meet all different customer expectations around shipping and omni-channel, while maintaining a profitable business? One area that has been greatly overlooked is the omni-channel supply chain.

Ken Hicks, CEO of Foot Locker, Inc. states "20% of loyal customers drive 80% of the margins" for his business and he has put in measures to create that loyalty. For example, Foot Locker arms its sales associates with scan guns to check out inventory while with the customer as well as access to tablets to look up any product information without having to leave the customer's side. Being able to provide customized inventory and information right away is a consumer expectation, making the supply chain even more crucial. Thomas Storck, Chief Merchandising and Multichannel Officer at Galeria Kaufhof pointed out during NRF, "Yesterday supply chain was important. Tomorrow it will be mission critical."

Tomorrow's winners will be retailers who operate their global business as a network – connecting trading partners across the supply chain and breaking down silos within the organization to deliver complete visibility. The ability to know where all inventory resides - in store, at the DC, with suppliers, on ship - sets the stage for retailers to make smarter decisions, enabling them to better meet consumer demand.


[1] http://www.scdigest.com/experts/Brewer_14-01-23-1.php?cid=7779


Leela Rao is Retail Marketing Manager for GT Nexus. She has more than 10 years of experience working with fashion brands/labels including Levi's, Sephora, Estee Lauder, and L'Oreal Companies focusing on global product development, international channel execution and luxury products. Leela helped integrate Sephora's loyalty program, Beauty Insider, into Sephora in JCPenney stores. She later joined Levi Strauss and Co. where she partnered with wholesale and retail partners such as Dillards, Macy's, and Kohl's to deliver heritage programs to Levi's enthusiasts. She has also developed marketing strategies for new market entrants Yellow Brick Coffee and Amyris. Leela received an MBA in Marketing and Finance from New York University's Stern School of Business.

 
 
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