Why now is the time for retailers to pivot from crisis mode to strategic growth planning
2020 will be a year not easily forgotten by the retail industry, as shops and businesses of all sizes were affected by the challenges of UK lockdowns and restrictions then capped off by the ambiguities of Brexit. Uncertainty of what the future brings has been by the far the biggest challenge for businesses across all industries.
The restrictions placed on retail businesses has created winners and losers based on various sectors and mode of operation. Grocery and home improvement chains saw some good times and online retailers have in many instances seen strong growth. As we look to the next phase of recovering from the pandemic, retailers may be eyeing the return of footfall and customers with pent up demand. Many businesses have also pivoted to offering online shopping and a key to strategic growth planning will be to maintain and creatively integrate this channel with any physical enterprise.
The ending of lockdown and the future of consumer behaviour is a new uncertainty. Managers and leaders can use various tools to explore potential trends and plan for their organisation’s responses. For me, it is better to be proactive and lay the groundwork for several strategic planning options so you can quickly adapt as the fog of uncertainty clears in the next two quarters.
Strategic scenario planning
Most retail businesses have experience with scenario planning on a micro level. Customer service often includes training staff for a range of uncertainties: what if a customer asks for a competitor’s product by name, what if the manager gets ill and has to leave unexpectedly, what if there is a fire. You cannot examine every eventuality, but by helping staff understand a range of possible encounters you build their resilience and provide a tool kit to address novel scenarios in a positive manner with helpful procedures and plans.
Leaders need to use strategic scenario planning to examine industry and market level what if scenarios. With a glimmer of light at the end of the tunnel of our current lockdown state, retailers should be exploring the range of what if scenarios related to the possibilities a new landscape of online and physical retailing will look like in the future. This will challenge you to examine fundamental business assumptions, some of which may be: Will customers prefer to shop online for our product? Will customers return to our physical stores? Are physical stores, direct revenue sales centres or more of a marketing expense? These answers and many others will be different based on your specific business. So how can leaders get help to explore the range of options that may be needed in the future?
The best way to explore a wide range of options is to speak with your team at all levels, geographies, and functional areas. The customer service team may have a different idea than those working on the supply chain. Take the time to hear all of the perspectives and then work together with your senior management team to prioritise solutions for these different scenarios. It can also be helpful to think both the big and small picture, what are the day-to-day challenges and what does the future look like for retail as an industry, will then shift to online be permanent or will we see a revival in high street shopping?
Use data to help prepare your workforce for future challenges
One of the positive aspects of the past year has been watching many businesses adapt and thrive in the face of unprecedented challenges. We have seen the true resilience of organisations as delivery options were enabled at lightning speed and online sites were created and expanded to meet demand. As with any crisis, there was a significant shift in business needs and priorities. Unfortunately, this also means challenges around staffing. In most retail cases these new operations do not need to have the same number or type of staff that was required for pre-pandemic operations.
Maintaining staff and workforces has been one of the biggest concerns for retail leaders. This is where data will become your best tool in preparing for the next phase of retail. Most modern HR teams will have a skill set database with information on your employee’s current and past experience, and this data will be extremely helpful when retailers are trying to restructure and organise for the new environment. Use this time to search the data for different skills that are relevant to the new business strategy so that you can train and place employees in new departments, could an experienced floor manager from a physical store be upskilled to work within the online customer service team which is struggling under the additional demand for online service? It may also be a good time to refresh your employee skills data through a survey, as many workers have used the lockdown to explore passions and upskill their abilities in a variety of ways. By identifying the skills, you need and may need in the future, you can re-prioritise your staff and their roles. The talent you need for the future may be in house already just hiding in a different role currently.
Think beyond crisis mode
The recent announcement of the UK roadmap out of lockdown has provided retail businesses with a tentative timeline. 2020 was all about adapting to the crisis at hand and ensuring your business can survive during this period. Although times are by no means easier, it is no longer productive to remain in crisis mode. Now is the time to think about future growth. This entails making estimations about what that future may look like, crises remind us that progress is not always linear. Disruption is also a time of opportunity for those ready to grasp them.
Alongside your strategic scenario planning, I think it is helpful to look back at the key changes you made to your business model during the last year and analyse whether they are changes you want to make permanent. What role will physical and online channels play in your business once both are possible again? What should be outsourced or brought in house to maximize value as we unlock? Who are your customers going to be tomorrow? These are the big questions retail leaders should be asking themselves and their teams right now.
The opening act of 2021 has already been a rollercoaster for the retail industry and I’m sure the path ahead is going to be full of unexpected bumps. However, I am optimistic and hopeful for the future of retail. It is one of the most resilient industries that has faced many challenges before this pandemic, and I’m sure with the right planning in place we will see yet again how quickly it can adapt to the new environment.
By James Berry, director of the UCL MBA
