Retailers need to limber up if they want to keep up. That’s the word from Accenture, which unveiled research showing “inflexible operating models” are holding retailers back when it comes to staying competitive and growing their businesses.
The consultancy surveyed 700 executives across 13 industries and nine regions about the process of creating “cost-competitive operating models and reinvesting in growth.”
Accenture said, “The findings highlight the need for retailers to become more agile — constantly learning about their customers and flexing to deliver relevant, engaging and useful interactions with consumers.”
Although the report didn’t name any specific companies, there are plenty of fashion players working to remake their approach, from Ralph Lauren Corp. and its new “Way Forward” transformation initiative to Burberry and the new setup atop its corporate ladder.
Eighty-eight percent of retailers are focused on getting leaner and freeing up funds to invest in growth, largely by pouring money into the digital area and by entering new markets, according to the study. “This is consistent with where industry analysts see growth opportunities,” Accenture said. “Just over half of retailers (52 percent) strongly feel their businesses are investing in innovation in order to gain a competitive advantage, with primary areas of focus being expanding into new geographies (cited by 60 percent), digital technologies (54 percent) and enhancing customer experiences (52 percent).”
Courtney Spitz, managing director in Accenture Products’ Retail Practice, said the industry is changing quicker than ever, opening up opportunities.
“Digital — when part of the overarching business strategy — can simultaneously enhance flexibility and reduce operating costs as well as contribute to growth in new markets and channels,” Spitz said.
And retailers know the fix they’re in.
“Retailers see inflexible operating models as a core challenge, with only 17 percent (compared to 25 percent of other industry respondents) saying they have an agile operating model that can adapt to consistently deliver on strategy and execute activities that drive value for the organization,” Accenture said.
But change is tough, and 46 percent of the retailers surveyed see technology as a barrier, while 42 singled out the cost of transformation and 42 percent pointed to the experience to lead the transformation as a hindrance.
Accenture had three suggestions for retailers wanting to be more adaptive:
• Rethink the operating model and digitize operations to help reduce lead times.
• Make sure that digital is infused in “core business strategy to help reduce operating costs and increase agility.”
• Align leadership to get everyone onboard since “success boils down to leadership support, change management and governance.”