In the past, I have worked in the retail and wholesale industries learning about product development, sourcing, logistics and pricing. Once you work on the wholesale side, you understand the retail side, and you become a retail junkie, visiting stores (or as we called it, “shopping the market”) to see what is new and interesting to entice shoppers from both the product and presentation viewpoint.
As we all know, retail has been struggling, and having worked for two companies that filed for bankruptcy, I can tell you it's easy to see how it can happen. In one case, the organization failed to transition. Operating in a U.S.-based business model limited product assortment and made products cost more. While there are many people wanting to buy American made, there was not enough of an offset from the people who wanted a low price.
For our product category, we had great quality, but again, the public was more concerned about price. It had become a commodity business due to other more innovative and attractive designs that were available in the market and sourced from overseas. We saw it and tried to make the transition, but we started too late. We were behind the competition who had solidly established themselves, and we were running to catch up to them. Management stuck to the current model and either resisted change or did not anticipate the direction of the market leaving us in the dust as competitors got the business.
The failure to change haunts many companies as we see them trying to stick to old models. The “if it ain’t broke, don’t fix it” syndrome is less than ideal in the quickly changing markets we encounter across all industries. Operating successfully today requires constant change and improvement, with proactive leadership on the lookout for advancements that will affect their future.
- Blockbuster did not survive Netflix.
- CDs and DVDs gave way to streaming (although not totally)
- Brick and mortar retailers have exited and others suffer greatly without an integrated website/store experience.
The stress and ultimate failure comes from refusing to change or not knowing that they should be changing. The most recent retail failure is Toys 'R' Us. As Greg Satell noted in his Harvard Business Review article, “Toys ‘R’ Us Might be Dying buy Physical Retail Isn’t,” it’s all about understanding what your customers care about and not sticking to what you want. Making an awesome dial phone isn’t going to draw people back when they have moved onto a smart phone.
“So, what can we learn from Toys R Us’s failure to adapt is that the answer to disruption is not to double down on a failing model or try to get better and better at things people care about less and less,” says Satell. “It’s to shift your efforts to something they want more. Value never disappears – it just moves to another place.”
I recently read in U.S. World and News Report that standard transmissions are being offered on fewer and fewer models of cars. With technological improvements to the automatic transmission, the old reasons for a standard (more efficient, more control, faster shifting) have been replaced by “fun to drive” and “deterrent to theft.” Car companies offer standards on fewer models as sales have declined to support that feature. Why continue to make a spectacular standard car if people don’t want it?
This whole idea of sustaining success by offering value hinges on refining your business model to reflect current technological innovation. We have seen Amazon leapfrog back into storefronts, but with less inventory and no cash. They have a store with a twist – making it attractive for the shopper who goes to the mall.
In any industry, recognizing the need for change is imperative to make a business competitive, successful and efficient. Time and money-saving technologies empower companies to work smarter and make the value they offer even more appealing to the customer. Customers see the value when a company has acted and made internal changes to their operations.
- The patient who gets a tablet at the doctor’s office and sees pre-filled fields smiles and relaxes knowing that there is no mountain of paper forms to complete. Better customer service = value.
- The vendor who submits electronic invoices gets paid on time by the company with smart capture technology and workflow automation guiding that submission quickly through accounts payable. Maintaining good vendor relations = value.
- Auditors get electronic documents within a three-day window when organizations have digitized their records and are able to search and retrieve only the documents they need through content management solutions. Staving off audit phobia = value.
Operational value is clear when efficiencies through content management and workflow automation eliminate manual processes and paper-heavy departments. Records that are digitized and searchable give companies no worries about lost documents or destroyed files that epic flooding or unpredictable fires can bring.
The time to act is not when it is too late. Standing still while innovation passes you by is not a sound strategy. Recognizing the value of change has to be anticipated because deciding to digitize your paper records when Hurricane Irma is upon you is too late. For Toys 'R' Us, it could be too late to change their model too.
So, how about you? Have you been lax in looking at your operations or are you in the situation that you are running to catch up? As recent AIIM research showed, companies that thought standing still was okay were giving their competitors the edge.