Home Retail Rethinking Retail: Shift from static to agile

Rethinking Retail: Shift from static to agile


The world around us moves at a relentless pace. Change is constant and while it can sometimes be scary, it isn’t going away. Constant flux is the new normal and India’s retail industry must evolve to establish new forms of relevance.

Rethinking Retail: Shift from static to agile
In March this year, CNBC reported that the number of US retailers filing for Chapter 11 bankruptcy protection is heading towards the highest annual number since the Great Recession

It isn’t surprising to find that the word ‘Agile’ is in vogue. Everywhere you look, businesses are looking to redefine themselves by incorporating the Silicon Valley approach of ‘fail first, fail fast, learn and iterate’.

Evolve or Die

Comparing the Fortune 500 companies in 1955 to the Fortune 500 in 2014, only 61 companies appear in both lists. In other words, over this period, 88 percent of companies from 1955 have either gone bankrupt, merged, or have simply fallen from the top tier of businesses.

Why? Possibly, success leads to complacency, concentrating on short term triumphs instead of long term planning. These companies were definitely not agile or keeping pace with a fast-changing world. Businesses mature, and when that happens, they tend to plateau.

In March this year, CNBC reported that the number of US retailers filing for Chapter 11 bankruptcy protection is heading towards the highest annual number since the Great Recession. As you can see, something is clearly wrong. Another proof point that companies who are not agile fade out and lose relevance in changing times.

So, who’s doing it right? Surprisingly, it is one of the most established retail brands that is pioneering agile retail thinking, . How? It has remained open-minded and learned from the likes of Story, a retail newcomer. Story presents itself like a magazine, meaning every month or so, stores completely reinvent themselves from environment to merchandise. Inspired by this, has developed a capsule line with Story and created in-store labs where ideas can be fast-tracked and tested with real customers.

Another example is Open House, Target’s playground for understanding how to sell the concept of smart homes to customers. It is a space where customers can experiment with and purchase products to learn about the future of their home. In the evenings, Open House turns into a different kind of space that hosts events and presentations.

Retailers like Target are leading the way by embracing trends and creating environments that can react to trends and reinvent themselves.

It is imperative that the Indian retail sector also redefine its thinking.

Is Customer Experience Enough?

It is easy enough to believe focusing on customer experience is the answer to the issue. After all, much is made of the importance of retailers creating customer experiences.

The word ‘experience’ is bandied around with great ease but with little thought. Looking around us here in India, apart from high profile brand concept stores, do retail brands really deliver a unique and ownable experience?

For sure, some do, but the truth is, most don’t. To complicate matters further, while retailers still grapple with the meaning of experience, the future is not going to be about mere experiences, but about agility too.

India’s Retail Industry Must Be Responsive, Experimental

A report from the United Nations in 2014 concluded that India has the world’s largest youth population of 356 million 10-24 years olds, and that this number is set to grow. India’s retail sector needs to take note.

Generations Y & Z are underwhelmed with old-school retail. They shop while in a constant state of partial attention and their lives are lived at a frantic pace, switching between the real and digital worlds.

It is time to accept that the store can no longer stand still or act in a passive way. We have reached a tipping point where Indian retailers need to shift their thinking.

All too often, retailers in this country fear experimentation and innovation, and instead, choose to follow tried and tested retail formulas rather than developing new ones.

In the face of massive disruption from brands entering the retail sector, this attitude is no longer valid, and India’s retailers have to be responsive and experimental. This is the definition of agile retail.

To put it another way, agile thinking is protection against disruption.

Rethinking How Retail Operates

Let’s look at the lifecycle of traditional retail.

The current lifecycle centers itself on stores; they are like boxes made out of bricks-and-mortar, and filled with product. Every three to five years they are updated, often because a direct competitor has redesigned its stores and there is a compulsion to react for fear of being left behind. The truth is, this approach to retail has never really changed.

The creative process is equally staid – developing a ‘new’ concept, prototyping it; value engineering it (in the process probably losing the interesting elements), and then finally rolling it out across retail estate. This period of roll out can take months, even years, so the fresh new concept is dated from day one of implementation. On occasion, retailers will decide to refresh their brand, but this is only the equivalent of a fresh coat of paint.

This creates a scenario where following the initial spike due to the stores newness; the store experience slowly deteriorates as initial interest turns to familiarity, then boredom, and finally indifference. There are many weaknesses in this model; it is resource and financially intensive but it is also rigid, not allowing for changes in shopper behaviour or allowing the brand to react quickly to new opportunities.

So between this new kind of customer and new market entrants like , , and  who each have disruption hard wired in to their DNA, the lifecycle of traditional retail needs to be torn up.

Live in Beta

One of the worst aspects of this long-tail approach to retail is repetition. The approach is completely at odds with the new generation of shopper that is the future of the industry here in India.

Rather than static store visits, customers expect to be able to interact with and create with the brand. It is no longer about ‘what I can buy from you’, but ‘what I can achieve with you’.

Despite this restless dissatisfaction, even the most established retail brands can be a pioneer of agile retail thinking, as Target has proven.

Indian retailers have a real opportunity to put agile at the heart of their businesses, shifting the mantra from speed to market, to a market based on speed.

Given India’s demographic dividend, the sector has little choice.