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Why Speed (or the Lack of) is Killing the Retail Industry

As an industry, retail has come to rely on well-known, familiar tools like Microsoft Office technology to navigate the supply chain process. However, these technologies are dated and do not allow brands to keep up with the habits of the modern consumer. Today, people are all about connectivity and ease of access—requiring retailers to upgrade the current tools they’re comfortable with to ones that streamline the back-end—getting the job done faster and more efficiently.

The business as usual mantra that many have sworn by for years is the No. 1 enemy of today’s retailers. The lack of interactivity and immediacy is causing many millennials to reconsider a career in retail and is shining a light on the hurdles to speed. Closing the gap between comfort and the demands of a new generation should be the top priority for the retail industry. 

Change or fail

Perhaps no area of retail better represents the current state of affairs than the multi billion dollar department store business. Due to outdated processes and systems, products take so long to hit the market that planners are rightfully concerned that collections will be off trend by the time they arrive on shelves.

The typical creation and development process as it currently stands takes too long. Do we really need 90-120 days for design followed by another month plus for supplier input? The goal should be to take advantage of trends, not deliver product on the back-end and miss the primary buying time. Retailers must think about shortening the overall cycle to get inventory to stores quicker and more efficiently.

Based on current timelines, the system is clearly broken and needs to be addressed.

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Everything and the kitchen sink

One industry known for managing this process well is the approximately $350 billion home improvement products business. The companies in this space are frequently recognized as having the most modern processes and solutions of retailers around the world. Take Home Depot, for example. The company stocks approximately 35,000 products in each location, which requires highly integrated and efficient supply chain and inventory management technologies. High volume retailers like those in the home improvement space depend on frequent communication, strong supplier relationships and digital, streamlined technology to manage the product development and delivery process.

Traditionally, supply chain problems have stemmed from managing huge volumes of product options. A typical overseas buying trip would consist of booking supplier meetings six to eight weeks out. However, due to the sheer volume of products sold, the lawn and garden section alone could require visiting more than 40 suppliers over a two-week period and viewing more than 1,000 samples.

Under the current mechanism, even the best are struggling to be more efficient and expedite time to market. 

Forging a new path forward

Everyone agrees that the industry needs a reboot. To continue down the current path is a slow march toward irrelevance and extinction. However, knowing you need to get somewhere and actually achieving it are two different things. Based on experience working with thousands of retailers across all different segments, the following three principles can serve as a guide to your own retail revolution.

  1. Motivate—Our brains process images 60,000 times faster than text. So, if motivating our teams is the goal, digital is the way to go. This is also a perfect example of why Excel doesn’t scale. You can’t cross a chasm in baby steps. Incremental changes like moving from Excel to a product lifecycle management (PLM) solution can get you halfway there, but halfway across a deep and ever widening gorge is a scary place to be. The key difference between success and succumbing in an Amazon-dominated world comes down to motivation— not just to change but to transform.
  2. Evaluate—To make forward progress, you must first understand the financial and operational impact of your decisions and processes on your partners. It’s critical to have intelligent technology in place to dynamically evaluate the impact of a new strategy for the entire community. Leverage feedback from suppliers, franchisees, international customers to balance inventory risk against speed and quality demands. Understanding costs at a very detailed level, not just by color, size, design but also by process, transport mode, market and sub-market is critical to your success.
  3. Collaborate—No one entity has all the answers, so collaborate with partners, suppliers and customers whenever possible. The best way to solve a complex problem is usually to keep the solution simple. By equipping internal teams’ partners and suppliers with the right social and digital tools, they will be able to leverage trend observations and local demand in real-time, allowing your team to quickly address changing market conditions.

Getting out of your comfort zone and fundamentally changing the way you do business can be a scary proposition. However, with the retail industry facing significant challenges in the Amazon era, something must be done to avoid the extinction of traditional retailers. Streamlined technology must be implemented in order to allow teams to collaborate on creation ideas, and get products to market at the appropriate speed.

A veteran of the tech startup world, Sue Welch is the founder and CEO of Bamboo Rose, a B2B digital marketplace. Welch is committed to bringing the world of product development and sourcing to par with how consumers shop for goods through a collaborative platform that enables digital sourcing and is driven by trade engines. Follow Sue at @SueWelch and Bamboo Rose at @GoBambooRose.