Sluggish store traffic, intense competition from online retailers, dynamic pricing strategy and evolving consumer spending patterns are the headwinds plaguing the retail sector.
But some brands are continuing to take the leap by investing in their growth plans despite the challenges faced by the retail industry. From understanding the core customer to keeping up with the latest trends, what’s driving them to make the decision and why now?
Tackling Prevailing Hurdles with a Digital Core
As many as 4,000 brick-and-mortar stores closures in the United States created the “retail apocalypse”. However, this provoked retailers to relook at their understanding of growth and investment in the digital economy.
The main takeaway from the floundering retail chains was that retail as a business can no longer be just about products. It must be about customers. By extension, this means retailers can no longer make profits by only optimizing their product-driven processes.
They must harness the power of constantly evolving digital technology to build new experiences, new processes and new capabilities; and the agility needed to do this cannot occur without a strong digital platform.
Example: Tapestry
Tapestry has quickly amassed a collection of modern, luxury, lifestyle brands with Coach, Kate Spade and Stuart Weitzman. Following the one-year anniversary of establishing a new corporate identity, the company made substantial investments in digital technology for growth and acquisitions.
In fact, the company recently marked the successful deployment of the first phase of their SAP S/4HANA® ERP implementation. They spent two years designing, building, testing, and migrating global finance functions for Tapestry, Coach, Stuart Weitzman, and Kate Spade to the real-time ERP system.
The CEO also revealed that the company is using their experience as a multi-brand holding company to their advantage by identifying further opportunities to streamline their organizational structure, fuel innovation, and grow globally, leveraging S/4HANA as the core.
He added that the company expects these incremental efficiencies along with a return on their brand investments to support their goal of double-digit operating income growth in fiscal year 2020.
Reframing Growth Strategy in a Digital Economy
The list of potential pitfalls of not making the transition from product-centric to customer-centric is endless. One constant is that bad technology can cripple a company’s strategic growth.
While digital infrastructure is critical to business success, many companies are unable to break the shackles of legacy systems and accelerate digital-first strategies. Too many companies are still formulating their growth strategies based on traditional thinking, protecting their existing organizational structure from radical change, and taking limited steps towards building an insight-driven culture where technology is valued as an enabler.
With the uncertainty that characterizes this new digital economy, traditional strategies have reached the end of their shelf life. They just won’t get you where you want to be.
Today, progressive businesses view technology along with customers and strategy as crucial to long-term success. Nowhere is this more important than in retail, an ever-evolving ecosystem with changing consumer behaviors at its core.
In the current context, forward-thinking retailers that are placing technology at the heart of their strategies are the ones making positive waves. Most importantly, retailers can’t get there by doubling down on defensive strategies, and protecting existing organizations, processes, or even technology investments.
Takeaway
Companies need new strategies in a world of digital disruptors. Failing to invest in employees, customers, and the technology needed to serve those people means taking the backseat to your competition.