Digital convergence in retail is requiring executive leadership with new skills sets.

It has never been a greater time to be a customer, and more difficult to be a retailer.

The retail ecosystem is evolving beyond recognition. The rise of online has lowered barriers to entry and stimulated new market entrants, including digitally native businesses, direct-to-consumer brands, pure plays and marketplaces. All combine to alter our consumer landscape in unprecedented levels of change, which are not over yet. With the initial wave of disruption over, we can already see more clearly exactly how technology has created new rules of engagement.

First and foremost, customer empowerment and connectivity are altering consumer behavior, and to be competitive in this increasingly crowded market, retailers and brands clearly require the right leaders to navigate these new market dynamics successfully.

It is a known challenge that the retail industry has not (traditionally) been an environment that has attracted innovative and visionary technology leaders. But it is going to have to find them, as industry-changing technologies that have been widely vaunted are entering a new era of adoption. The potentialities of augmented and virtual reality, robotics, artificial intelligence, voice, and visual search to reach new customers and to sharpen the competitive edge are impossible to ignore.

Data mining and analytics — and AI — are at the heart of this transformation. Most retailers and brands understand that data is key to boosting sales, increasing margin and enhancing the customer experience. But not all organizations know how to use this ever-increasing amount of data effectively and even fewer know how to use it to enable a change in strategy.

Forward-thinking retailers might now have a chief data officer to assimilate the data to change ways of working and drive operational efficiency, but the recent hiring of Katia Walsh as chief strategy and AI officer at Levi Strauss & Co. has raised the bar even higher, by the deliberate scoping of her role as expressed in her title.

Alongside these long-term trends, challenging market conditions increase the need to accelerate the pace of change and to stay ahead of the game, but hiring from within the industry against this background is not enough to move the dial.

What seems like an unusual hire can often be the catalyst required to stimulate new ways of thinking. Successful recruitment strategies will target those industries, companies and individuals who can provide the right expertise, insight and challenge. So, when Levi’s looked to the market for their first c-suite AI leader they sensibly hired expertise from other big already-disrupted industries: telco and financial services.

Does this talent strategy carry inherent risks? In a word, yes. There is a need for the balancing of technology developments with existing brand values, product awareness and customer insight. The fast pace of retail must be acknowledged and its lean, cost-conscious operating environment that does not easily absorb those from other industries, or where their instinctive solutions do not naturally win hearts and minds. To be truly effective, data and AI leaders need to connect their technology with the business drivers. The creation of cross-disciplinary teams that break down traditional silos and build an innovative environment that fosters courage and risk-taking from the business operators is crucial because it goes with the grain of the commercial mission and desired culture for the business.

Although retailers have long failed to compete with technology giants, or indeed other business sectors, in attracting best-in-class technology talent, this is beginning to change.

While still struggling to compete with the compensation levels of these global technology players, crucially, retailers are offering the opportunity to be part of a transformation agenda which can yield tangible and visible results, in a relatively short timeframe. This can be a step-change, career-enhancing move for key executives aiming for the top which demonstrates the executive’s particular competitive edge and wider abilities.

Alongside the talent agenda, increasing numbers of retailers and brands are also investing in incubators to develop and test new technologies, which can challenge their larger parent organizations with new ways of thinking. For companies such as Walmart, Target and Foot Locker, this is a powerful pull to the rising talent they wish to attract.

The fast pace of technological change for consumers has created multiple touchpoints for modern retail to connect with the customer. The rapid rise of mobile commerce has driven the development of visual and voice search, making buying ever easier and intuitive.

In addition, networks such as Pinterest, Instagram and Snapchat were quick to spot the potential of social commerce. Pinterest looks to connect positive online experiences to offline as it transforms itself into a storefront using shopping-related technologies. Not only does technology enable retailers to gather insights and data points from in-store experience, but understanding how an integrated model works is invaluable to new retail models such as direct-to-consumer brands and social commerce.

This has led to people movement in the other direction: Pinterest’s recent hire of Jeremy King draws upon his recent experience at Walmart where he drove the digital strategy, leading the e-commerce team (where sales grew 40 percent last year), and heading the innovation arm Walmart Labs. The fact that Jeremy is also well versed from Walmart in navigating organization complexity and governance, as Pinterest (like Levi’s) gears up to an IPO, only adds to his value.

However, while online growth continues to create headlines, physical retail still accounts for 85 percent of global consumer sales and is continuing to grow, albeit more slowly. Driving this growth effectively involves understanding both the customer’s online and offline journeys.

In time, of course, the very profile of a retail ceo will evolve, if they are to be authentic and credible leaders of these new fully integrated, data-driven organizations. It is only a matter of time before we see this new breed of executives leading our retailers and brands. They will not be siloed functional specialists, but broad-gauge executives comfortable with data, technology and disruption. To succeed, they will still need to bring the product and brand innovation, creativity and intuition that will remain at the heart of good retailing, but the faces of our future ceo’s will be changed forever.

Melissa Reed is retail and consumer partner at H.I. Executive Consulting.

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