Retailers have always been at the forefront to meet consumer needs. Successful retailers know their markets intimately and have adapted to meet new customer trends. Being consumer-dependent, retail has transformed its branding over and over from Burma-Shave road signs to the metaverse.

Everything Old Is New Again

To move forward, it often takes perspective. Trends can be cyclical, so what used to work, then didn’t, can now work better than before. Why? Nostalgia is one explanation. But what’s truer is the fact that while the circumstances of life change, people’s values don’t. Constants in our lives are:

• People still want to connect with others.
• They need to engage, have experiences, explore, and learn.
• They want to be entertained.
• They need to establish their position and identity within society.

What we are seeing post-pandemic/quarantine is that there is a renewed interest in physical engagements over digital. This can’t be surprising since so many of us were stuck at home, isolated from friends, family, and shared experience. An unintended consequence of the lock-down has been a renaissance of print marketing, direct mail. and catalogs.

Direct Marketing

From the first days of the Sears catalog, marketers applied the simple science of identifying where their customers were and how to best get their products/services in front of them. Catalogs came directly into your living room and were designed to bring products to consumers who were in remote/rural areas. Pre-Walmart and other anchor stores, retailers were mostly based in urban, densely populated areas/cities. So, direct mail brought the stores to customers who lived outside of that market radius. As populations started to migrate from cities to suburbs, retailers followed suit and reshaped local main streets and communities with shopping centers. Much later, with the birth of the internet and ecommerce, retailers reversed course and brought their goods from the stores directly back into customers’ homes. With history repeating itself, the digital front door became the portal to the store.

Cost Centers

Digital marketing initially made catalogs archaic. With paper costs, sustainability concerns, postal increases, mail clutter and limited personalization capabilities, the use of catalogs to produce an ROI/ROAS became challenging. No surprise, retailers turned to the digital space, which was fast, customized, highly measurable, price responsive, cost effective and offered exponential reach and inventory exposure. And just like that, direct mail became so last year.

But not so fast. After many years of drowning in digital data, heavy investing in video advertising, mastering social platforms, optimizing search, launching ecommerce websites, facing more restrictive privacy regulations and dealing with email fatigue, catalogs are making a comeback.

Page Turners

Catalogs are predictable. They create anticipation and expectations for the customer. They showcase brands and reflect their personalities. Catalogs fuel aspirations and trigger engagement with the consumer whenever they turn a page. They can have a shelf life well beyond a fleeting digital ad and provide a more personal experience with the shopper much like a book or magazine.

And catalogs are measurable. Using sophisticated metrics, when a catalog drops into a home retailers/brands know exactly when to expect sales. In best practices, retailers/brands have a 10-day strong selling window with a predictable bell curve model that allows them to time product deliveries. They can also predict accurate inventory levels based on space and presentation in the catalog. And the selling window also enables them to gear up customer service accordingly.

Unified Commerce

Similar to ecommerce, catalogs/direct mail also create ROI synergy from multichannel marketing and advertising. Shoppers who engage with a brand through multiple channels convert more often, spend more money, and become more loyal than shoppers who only hear from their brands via one medium. The magic combination originated with radio + print/direct mail, but now it’s digital platforms + broadcast + print/direct mail as a multiple touchpoint media plan.

Poster Children

Who’s doing it well today? In addition to legacy catalog companies like LL Bean, Vermont Country Store and Garnet Hill, direct mail/catalogs are being elevated to an art form merging product displays with content and special experiential offers by Bergdorf Goodman, RH, J McLaughlin, and Anthropologie. Even Amazon is leveraging a catalog to promote seasonal retail during the holidays.

Why the change in strategy? It’s all about the race to omnichannel, both in distribution and marketing. As retailers strive to meet their consumers wherever they are and whenever they want to shop, they need to build multichannel, multi-touch engagement points. Both mature shoppers and digitally savvy next gens like to engage with print as a break from the screen. Catalogs are narrative devices, and everyone likes a good story.

Designing the Mix

Catalogs are not a panacea. Retailers need to ask themselves how they can best reach their audiences in ways that drive attention, represent their brand, engage, sell, and build loyalty through value, promise and service. Regardless of media platform, your most recent buyers are most likely your next buyers. And your loyal customers are more valuable and less costly to keep than acquiring new customers.

The entire customer relationship may look like a funnel to marketers, but it is more of a bullseye in the lens of actual consumers. The center, of course, is them. The concentric marketing circles around the bullseye will vary by brand; some may rely more on print, others on digital and still others, on brick and mortar. This cycle may change by audience segment and remix over time.

Some brands, like Soft Surroundings, have built their business on the catalog that represents most of the company’s total revenue compared to brick-and-mortar stores. Fashion retailers and other categories may see the complete inversion of this business model. And then there are brands like Warby Parker who is a true multi/omnichannel marketer. They started as a digital native offering five eyeglass frames delivered by direct mail to shoppers. Their only store was the showroom in their corporate office. Their website evolved with the technology that allowed for 3D and augmented reality virtual try-ons. Brick-and-mortar expansion followed as did their catalog business. All their bases are covered, circle complete.

Catalog Conversion

So why doesn’t everyone hop on the catalog bandwagon? Cost is still an issue as are limitations with dynamic pricing and promotional elasticity. Stores and websites can take immediate markdowns while catalogs have fixed printed retail values associated with items. But layering direct mail and catalogs into the marketing mix may be something every brand can benefit from.

Consumers are poised to engage with physical extensions of brands which may explain why unboxing is so endearing to consumers. Whether it’s the luxury tissue paper and ribbon from upscale retailers or the sleek, modern packaging from Apple, the anticipation of opening the box is a meaningful experience.

Like anything else in business, knowing when and how to use various levers to reach, engage and convert consumers takes more than a large budget. It takes a deep understanding of customers supported by metrics, attribution methodology and technology/systems to execute on the promise of a brand experience across all touchpoints. Catalogs are a new and fresh option… again.

Note: Columbus Consulting is a TRR Collaborative Partner

There are a few significant advances in technology that exponentially transformed how we live and work. The personal computer, the mobile phone, remote meeting platforms, the internet/ecommerce and now the metaverse, just to name a few. Much of the conversation around the metaverse , however, has been around gaming, brand engagement and the news headlines about Mark Zuckerberg. But recent innovations being pioneered by Meta and Google are making virtual reality closer to real. Couple this technology with commerce giants like Amazon and you have all the ingredients for a new retail recipe.

The Journey to Immersive Tech

Augmented reality was the first step into multidimensional retail when brands expanded into 2D. The home furnishings category led the way with ecommerce features to see how items looked in homes and applications that allowed consumers to decorate their spaces with paint colors and patterns at a touch of a screen. Apparel companies followed suit and quickly leveraged the technology to create virtual closets and try-on services hoping to expand the physical experiences of stores onto their ecommerce sites. Grocers, however, had yet to explore the possibilities of multidimensional retail, at least until now.

And similar to other marketplace business models, grocers could align seamlessly with specialized food providers like farm to table, sushi/fish, regional delicacies, desserts, wine and flowers all of which could be purchased in the same virtual trip and shipped/delivered directly from the source (no middleman).

High Tech on Aisle Three

Contactless shopping and home delivery services were thrust upon the grocery industry in response to pandemic health and safety concerns. As consumers quickly adjusted to the new convenience of shopping for food at home and having an abundance of new delivery options like Grub Hub, Uber Eats, Instacart, Door Dash and more, grocers had to pivot to transition these “temporary” offerings to mainstream in their business models.

The U.S. food industry ($1.5 trillion annually) continues to make news with supply chain shortages and inflationary pricing, which has resulted in consumers becoming more savvy then ever in comparing prices and demanding more from their food retailers, including healthy, fresh, fast and convenient options/services. Add to all that labor challenges, increasing operating and energy costs and supermarkets, and local grocers are looking for the next big idea to fast track the industry into the digital marketplace

Enter Amazon

Amazon has been nipping away at the grocery industry segment for years, looking for more innovative ways to tap into the frequency and volume of the U.S. food market. The acquisition of Whole Foods was soon followed by Amazon Fresh, Just Walk Out technology and pricing optimization for home delivery services (although they just increased their threshold basket size for free delivery). These initial tests were designed to support their vision to build and own the omnichannel grocery segment. With that mission, how can regional and local grocery brands and supermarkets compete going forward?

Enter 3D Retail

Imagine sitting on your couch (potato is optional), engaging with 3D enablement technology and bringing a customized food shopping experience right into your home. You would have access to personalized merchandising displays, curated assortments, preferred meal ingredients from prior recipes, real time/in stock inventory choices, AI generated basket add on recommendations (need a shake with those fries?) and a clean, contactless interaction all with one-click checkout and preferred delivery or local pick-up zones from designated regional stores. Whoa!

Now imagine the benefits of this experience for grocers as well. No overhead, no labor, no restocking, better freshness control and minimized stock loss from theft and spoilage; digitized pricing optimized to comparative offerings, instant CPG and advertising digital media platform/coop revenue, virtual chef demonstrations, product placement tie-ins (think cookware and other merchandise recommendations), and an endless ability to differentiate your brand without physical expense and brick-and-mortar overhead. Another whoa!

And similar to other marketplace business models, grocers could align seamlessly with specialized food providers like farm to table, sushi/fish, regional delicacies, desserts, wine and flowers all of which could be purchased in the same virtual trip and shipped/delivered directly from the source (no middleman).

If all of this seems decades away, think again. The technology is here and the need for grocers to transform their business models is real. Walmart and Target have already eaten into market share; Amazon’s strategic initiative is food, so it is only a matter of time before they transform supermarkets into digital marketplaces. The couch potatoes are eagerly awaiting.

Note: Columbus Consulting is a Robin Report Collaborative Partner

Over the last three years retailers and brands were faced with both opportunistic initiatives and post-pandemic obstacles. The industry unilaterally and almost instantaneously became aware of how the overall business model was changing. Consumer behaviors and demands have forced a re-examination of how retailers and brands operate, creating a fundamental shift from product to consumer centricity. As a result, retailers are currently focused on evolving their people, processes and platforms.

Columbus Consulting has a special vantage point because we see firsthand what retailers are looking for and then we evaluate their needs and find the right solutions that drive tangible and scalable results.

What’s Commanding the C-Suite Conversation?

Based on our extensive experience with retail leaders, we have used that expertise to reveal what the industry is focused on for 2023, based on 2022 experiences. There are five key priorities:

1. Digital transformation across the organization
2. Omni-centric processes and systems enablement
3. Supply chain shift from macro to micro
4. End-to-end integrated planning
5. The new retail organization

1. Digital Transformation

When we talk about digital transformation, we are not strictly speaking about the technology and its capabilities. We focus on how retailers are transitioning their business operations from physical touchpoints to digital/virtual interactions. This shift requires technology and integration but, more importantly, requires organizations to fundamentally adapt to new ways of working. And that involves informing, training, and getting buy-in from the workforce. Digital transformation can get derailed without people supporting the process. This transformation can take place in any function at any level. For instance, in the product development stage of lifecycle management, digital transformation has been inserted into 3D designs, virtual fittings, augmented reality sampling and remote team alignment. Once enabled, transformation will result in faster, cheaper, better processes that yield cost savings, margin improvement and even speed to market.

2. Omni-Centrism

While we have all been barraged by industry lingo with multi-channel, digital commerce, omnichannel and consumer-centric terminology, the true conversation in 2023 will be about the fundamental pivot from product to consumer as the driver of business process. Here’s the traditional sequence: Workflow starts with an idea for a product improvement. The product is then designed, sourced, priced, sold. Everything around this pathway is driven from the inside out. Today, the process is flipped, driven from the outside in. Consumer and market demand is determining what, where, when and even how much of anything should be delivered. This pivot has impacted retailers based on their organizational maturity curve. In simple terms, legacy retailers are now setting up processes and systems and redefining roles and talent needs around the customer, not the product. They are no longer separating digital from physical and are streamlining transactions and consumer experiences. This transformation is beyond cross channel services like BOPIS; it is an optimization that is invisible to the customer, shifting from linear to circularity across functions to be agile and more predictive.

3. The Reinvented Supply Chain

The recent supply chain conversation was not just a temporary media moment. The supply chain has always been at the core of retail, but it has shifted to the need for a more holistic strategy. Retailers and brands conventionally had siloed teams sourcing materials, working with factories, merchandising the products, determining the inventory levels, managing the shipping, and receiving and overseeing the sales channels. It took a global pandemic to unveil the vulnerability of those processes and reveal the complete lack of visibility of what was actually happening along the chain. The fact that the supply chain literally and metaphorically broke down should not have been a surprise. What was a surprise was that retailers didn’t know they had a problem until they had the problem. When scheduled goods did not show up at the docks or at the warehouses or, ultimately, at the stores, it took the industry off guard. Why? Because operators did not have a micro view of the steps throughout the process and were unable to be nimble and quickly change factories, shift materials, or build into available goods.

4. End-to-End Integrated Planning

When retailers speak about planning, they often reference the term as it relates to their specific business discipline. Merchants are looking at the product lifecycle, inventory and forecasting; finance is looking at the fiscal calendar, profits, quarterly reporting needs; marketing is looking at campaign flights, omni-channel product presentation and performance KPIs. These views have traditionally been done in hindsight, with a look to LY or YOY trends to determine a forward view. Much like everything else post-covid, however, retailers quickly learned that historical views were not sustainable and that historical methodologies could not account for unforeseen variables. Savvy retailers and brands immediately pivoted to more predictive and exception-based models to determine consumer demand and business opportunities. This shift required a re-establishment of the business process, calendarization and cross-functional alignment across finance, marketing, merchandising, supply chain, operations and planning. This is now resulting in teams working collectively with one plan, one view of the calendar, one view of the data and unified goals regardless of the business area within an organization.

5. The New Retail Organization

Perhaps the most critical trend in 2023 will be the rebuilding and reorganizing the retail workforce. This reinvention has been triggered by digital transformation, remote labor, the necessity for new skills, and the productivity of leaner more analytically-driven teams. Many businesses are relying on AI/ML to drive their transformative initiatives, but AI alone cannot deliver sustainable and scalable results. The real transformation needs to be built on an evolved organizational foundation. Roles and responsibilities, cross-functional and channel process integration, and new team members blended with experienced talent are all key ingredients to the new retail recipe for success.

It’s All About Continuous Evolution

While there are always seeds being planted for long-term industry reinvention, more often than not, systematic evolution is the key to improvement. At Columbus Consulting, we predict the industry will reevaluate (more likely overhaul) their internal processes, systems, resources and data. Retailers and brands will embrace new ways to operate, collaborate and evolve their digital integration, fully support consumer-centric/omni-shopping behaviors, refine supply chain touch points, build end-to-end planning models, and look to their new retail organization to retain and acquire the right talent for the future.

Note: Columbus Consulting is a Robin Report Collaborative Partner.

For decades talent, past sales and gut instinct drove retail assortments. Gurus who could interpret the market and build a merchandising strategy ruled fashion alongside of visionary designers. Key business inputs came down to three basic questions:

1. Who is the customer?
2. What are they buying?
3. Why do they purchase?

Now, in the new era of retail, the industry is fueled by data not just by intuition. Data driven by artificial intelligence and findings driven by machine learning have become best friends to merchants and are integrated into every role within savvy organizations. Smart retailers have now pivoted to a philosophy of “facts not feelings” and are embracing a new way of working, making decisions and running their businesses. But the path of digital transformation is neither smooth nor straight. So how are retailers balancing art with science? And how is AI actually transforming business and improving the customer experience? Our recent online forum, “A Playbook on How to Choose and Use Data,” digs into digital transformation and how to master the process.

Analytics as Assets

Like anything new, change requires initial understanding and patience and, ultimately, sustained acceptance and support by all stakeholders. Introducing artificial intelligence-driven analytics to an organization has two key pillars to make it successful: people and data. Both need to be addressed, equally. People need to understand how AI can help them work, not replace them as workers. When digital transformation is initiated, people need to be trained to develop new skills and encouraged to embrace change without resorting to old methods. AI is a tool, not a silver bullet, and it should be used to augment operations, alleviating the workforce from mindless, repetitive tasks.

Talented merchants will always play a key role in a successful retailer, along with marketers and customer service teams. What has changed is that AI can actually free up time to do more of what humans are good at—relating to other humans. AI does not have sense or sensibility, so it cannot touch and feel and determine if something tastes good or feels soft (at least not yet). It can, however, create a story based on systemized data pulled from all customer sources across platforms and locations and combine them with product attributes and market information to create a story and reveal predictive opportunities.

Talented merchants will always play a key role in a successful retailer, along with marketers and customer service teams. What has changed is that AI can actually free up time to do more of what humans are good at—relating to other humans.

AI is a retailer’s friend. It can be applied at every step of the customer and product journey and applied with speed and accuracy. AI can take complicated data feeds at granular levels and process findings and KPIs that can be used to improve performance and customer experience. By predicting customer preferences, AI can help ensure that shoppers are presented with the right assortments; it can be used to create more accurate forecasts so items are in stock; it can localize assortments by location and season and identify local trends; it can allow for suggestive selling with relevant products that are personalized at the shopper level and even assist allocation and replenishment strategies to optimize selling by location at the style, color, size levels.

Is Privacy Killing Data Collection?

Retailers are now understanding that unrestricted data, customer information and selling/transactional behaviors can be used for good not evil. But has digital transformation been fettered by privacy rules and increased regulations? A little. But not really. In a cookie-less world, brands are now pivoting to mining their own proprietary data, not relying on third-party data. The emergence of loyalty programs and memberships like Prime and Walmart+ are driving data acquisition. Use of transactional data and even subscription services and third-party partnerships like Uber and Grub Hub delivery can be opportunities to gain data access to your customers with permission. Owned data is better and sidesteps the new privacy protocols. Customers can choose with whom they want to build deeper relationships and how they want brands to interact with them. Retailers are in the powerful position with first-party data to focus their efforts on engaging with more qualified, more loyal consumers. A win-win.

Who Owns AI??

In a nutshell, everyone in an organization owns AI. It does not live independently and cannot be optimized without cross-functional acceptance. A data rich strategy requires that nearly every role at every level in a company embraces and executes against it. While the information systems, data analytics and retail systems teams initiate and drive many of the components of AI and digital transformation, long-term, scalable acceptance of ML findings cascades from the C-suite down. This elevates the immediate need to educate an organization in every function about what AI is and how ML can be applied. It also requires an understanding of how it can benefit them in their roles and the profitability of the company and the satisfaction of the customer. A holistic view of an intangible, sophisticated function can be translated to everyday application.

In turn, AI requires a balance of both data scientists and human interpreters who can translate the findings and apply them to the business. The commerce + art balance reimagined. This further defines the nature of the future workforce, and the skills organizations need to find or cultivate from within their talent. New core competencies of retail organizations will include the ability to: understand data, apply/use data effectively, pivot and embrace an agile work environment and the willingness to embrace change. And if employees are to be more technologically savvy, technology will need to be more user friendly and intuitive so that they can succeed. A quid pro quo of sorts.

Mistakes? You’ll Make More than a Few

Like any transformative experience, creating an AI/ML-driven business model will not be an overnight success. One of the biggest missteps organizations make is underestimating the intimidation factor that employees may have and not proactively educating them and facing early concerns. As referenced earlier, adaptation of any key initiative requires vision, alignment, focus and prioritization. And we will add, consistency. Digital transformation must be a long-game play. Leaders need to fully understand the maturity of their organizations and the tolerance of the workforce to change before they engage them. They also need to instill change management leaders/champions and help remove obstacles and mind blocks from employees in order for them to embrace the new without feeling threatened.

Now What?

Launching a digital transformation initiative is a strategy to transform a business model. To help make it sustainable, starting with smaller progressive steps will prevent organizational fatigue and the feeling of being overwhelmed and defeated. Change requires people + process + technology to evolve and adapt in unison. Showing tangible successes and sharing the wins throughout the organization will facilitate transformation and build a stronger foundation from which to grow.

The not-so-good news is that once your organization has fully embraced the integration of AI/ML into how they work, a new technology will have emerged. The one thing we do know is only change endures, and evolution is inevitable. What exists and works today will not be around forever. Data-driven analytics is just another step into the future. That said, once an organization has shifted its mindset to accept emerging technologies and has a system in place to facilitate it, it’s on the road for systematic reinventing and transformation to respond to a marketplace in constant flux. For more on this topic, watch “A Playbook on How to Choose and Use Data” here.

Note: Columbus Consulting is a Robin Report Collaborative Partner.

Anjali Burkins is a retail strategy advisor at o9 Solutions. She helps prospective and current clients on their journey to digital transformation and delivering business results. She has held several Merchandising positions at notable brands including Tommy Hilfiger, Coach, and Saks Fifth Avenue.

Each fall the retail industry and news networks chime in with Q4 predictions. This year, especially with looming mid-term elections, continued post-pandemic pressures and rising global energy/supply chain costs, the predictions are even more vital. Industry reports commonly predict a 3-5 percent increase in retail sales YOY, but with 8+ percent inflation rates, experts are conflicted on how the consumer will respond this holiday season and are pushing back on actual growth.

Predictions for the Future and Beyond

With 300+ leading global clients and over 20 years of transforming the industry, Columbus Consulting is well-positioned to share our insights and highlight what is most top-of-mind for retailers. Here are five key trends and observations for this holiday and onward to 2023:

Continued Consumer Trade-Off and Debt Growth.

Early inflation and cost increases across the supply and food chains have yet to significantly curb consumer spending, but we are seeing a reduction in savings and an increase in debt. We are also seeing consumers trading off from brand shopping to private label and promotional shopping. Certain categories are less susceptible to losing market share but as consumers get more squeezed, this trend will continue, and everyday low pricing and strong margin options will benefit. As will buy-now, pay-later providers.

Wrong Inventory in the Wrong Places Equates to Early Promotions and Intelligent/Selective Pricing.

Inventory is a dramatic case of the best and worst of times in a collision course. During the pandemic inventory levels were low and slow. Now, with past bottlenecks now flowing through the pipeline, retailers are seeing out of season and out of fashion — or even expired goods entering into their distribution channels. This has created a glut of goods that is forcing retailers to resort to an infrequently and often discouraged inventory strategy known as “pack and hold” (holding out of season product in a distribution center until a future time when it is deemed more seasonally appropriate) or to mark them down and take a loss to their profit margins. The latter choice will drive earlier and more aggressive promotions and will motivate retailers to apply automated competitive pricing models to best protect profits throughout the season.

With looming mid-term elections, continued post-pandemic pressures and rising global energy/supply chain costs, holiday predictions are even more vital. With 8+ percent inflation rates, experts are conflicted on how the consumer will respond this holiday season and are pushing back on actual growth.

What does this mean? You probably won’t see store- or site-wide promotions, but there will be more frequent, targeted category or item discounting. The most sought-after products and brands will less likely participate in deep promotional activity, but the less desirable clearance items will flood the market soon.

Both strategies (pack and hold and deep discounting) come with a cost. Pack and hold has inventory carrying costs, both financial and operational; and promotions erode profit margins in the short-term, and risk damaging the integrity of the brand in the long-term.

Ecommerce Growth Levels Off.

Ecommerce has grown exponentially year over year is now 20 percent of all retail business (although varies by sector depending on the business and merchandising models). Not only has digital commerce grown in relationship to its own base, but it has become the predominant tool to drive unified customer experiences like BOPIS and BOPAC (buy online pick up in at curb). With the pandemic closing many/most brick-and-mortar stores and disproportionately shifting consumer spend and behavior to the virtual space, how much can ecommerce grow post-pandemic? Digital brands will need to post positive “comp store” like trends and drive growth — not by default, but by faster, more accurate business practices. The industry predicts ecommerce growth to 23+ percent of total sales, but many categories will level off and have growth rate declines even with the sales expansion.

Malls Get More Exclusive.

The death of the shopping center has long been predicted, but the truth is that we will still have clusters of shopping destinations, only fewer of them with more defined assortment/merchandise mixes. This is a case of the strong/best getting stronger and better and the weak fading away. Look for signs of transition in Q4 and throughout 2023.

Developers used to adhere to a tenant mix of entertainment and restaurants blended with high- to low-end retail and some services sprinkled in between. This one stop shopping is no longer applicable as consumers have redefined how, where, and why they will make a trip to a physical store. Even grocery stores and food anchors are no longer sacred. Developers are now re-examining their portfolios and redefining the shopping center model. More commercial spaces/distribution centers and mixed living/lifestyle centers are emerging in luxury-focused centers. More local shopping options and targeted mall assortments will squeeze out the once popular strip centers.

Winners and Losers.

There will be two clear paths forward: one, the continued growth of localized brands and proprietary concepts and, two, digital marketplaces with one-pay processing and single day delivery options. With gas prices still at pre-pandemic highs, consumers will gravitate to “free shipping,” local shopping, and more destination-driven, intentional buying.

Who’s Doing It Right?

• We like what health-oriented retailers are doing. For example, one leading chain refocused their mission to health, changed their name, shifted to more profitable proprietary brands in categories with less brand loyalty, layered on automation, repositioned the store as a community healthcare provider for in-person mild medical needs.
• Clubs and bulk retailers, especially those that are using grocery and gas pricing strategies for memberships and subscription models are getting it right.
• Athleisure fashion brands that are firing on all cylinders with a focus on both men’s and women’s businesses, unified commerce operations and strong merchandising strategies that drive store visits.
• Third-place retailers who are reimagining their spaces. Once struggling with pandemic restrictions, third-place retail (think coffee shops) are still impacted by the work from home trend which virtually eliminated their out-of-home reason for being. Brands that are transforming their physical environments to cater to parallel services like partnering with Amazon or others are creating a new lane for themselves. Couple these new service benefits with some value “inflation/recession-worthy” offerings and you have a new win-win.

Want more? Stay in touch by following us on LinkedIn https://www.linkedin.com/company/columbus-consulting-international or visit us  www.columbusconsulting.com for leading content and more insights. Plus, check out our video insight series: The Columbus Circle for our holiday outlook session and other timely topics. https://www.columbusconsulting.com/columbus-circle/

Note: Columbus Consulting is a Robin Report Collaborative Partner

Like everything else in retail, the role of the Chief Information Officer has transformed over the years. What was once a focus on managing information technology and systems has evolved into an active cross-functional management and leadership role that touches all aspects of the retail organization. As technology continues to advance and the overall consumer experience becomes even more reliant on digital platforms, it has become imperative that the CIO role transitions to meet the demands of today’s unified commerce.

The CIO Role

The role of today’s CIO hasn’t changed from pre-pandemic periods. However, the CIO has become responsive to the increasing demands and reliance on technology. What used to be back of house systems support has become front-end operations from supply chain to consumer. The other major recent pivot in the position was the shift to leading the supply chain with automation. The last two years taught the industry that they need to have a more granular, real-time view of the entire supply chain. Knowing where things are and how to directly communicate with suppliers can allow for retailers to react more efficiently.

In the recent past, CIOs would be creating long-term solutions and planning investments in the business, but today they are also more short-term oriented, seeking to enhance existing systems and not totally replacing them.

Modern CIOs need to touch on nearly every aspect of the business. In addition to having a high-level role in managing cross-functional disciplines like supply chain, the CIO also needs to be involved in driving cost reduction and productivity improvement. Technology plays a critical role in optimizing both top and bottom-line improvements. Another area that the CIO should be playing in is in understanding and applying how technology is important to today’s consumer. Shoppers are totally digitized now and rely on systems to enhance the user experience, from ease of returns to inventory location at the store and fulfillment levels. Lastly, today’s CIO needs to be more educated on the competition. What used to be a build from within and scale mentality, has become a competitive landscape mindset, against which the CIO needs to benchmark her or his own businesses.

CIOs traditionally have been measured for their own and their team’s performances. But the modern CIO should be held accountable to four main performance metrics: profit, cost, margin contribution and driving more advantageous SLAs (service level agreements).

Enterprise Resource Planning

ERP is the integrated management of a business’ main processes, often in real time and mediated by software and technology. In its simplest form, ERPs pillar on efficiency, cost reduction, quality and decentralization. CIO’s have always had their finger on the pulse in these areas, but today it is more of a requirement that they prioritize and focus on things like sourcing and procurement, asset management, supply chain and sales performance over analytics, reporting, and service/project management. In the recent past, CIOs would be creating long-term solutions and planning investments in the business, but today they need to also be more short-term oriented, seeking to enhance existing systems and not totally replacing them. As with any other expense, it is becoming harder and harder to justify high ticket items with significant, scalable return on those investments. In addition to driving and not just supporting the business, CIOs today are much more central to helping the stores’ ability to directly fulfill transactions at the customer level. Leveraging technology to provide visibility to immediate inventory availability has become much more critical.

Security and the Metaverse

Although many things keep a CIO up at night, there are really three key things, and at the top of the list is security issues. Not just at the server level but at the network access level that allows entry to the consumer information, point of sale system, online transactions and even mobile and social data. With data comes data breach risk, so managing risk is imperative today. The other two concerns are the Metaverse, not really knowing what it will bring from a security standpoint as well as from a systems integration and consumer experience standpoint. And I’d be remiss not to mention the current economic pressures. How inflation and approaching recession impacts the business, prices, promotions and overall profit.

Note: Columbus Consulting is a Robin Report Collaborative Partner.

Today, retailers are facing complex challenges from supply chain, logistics, and product sourcing to shortages of labor and growing costs. In addition to the economic issues, consumers continue to place demands on retailers focused on their DEI and sustainability strategies. Among these new challenges for retail brands has been the expectation from employees to create a new hybrid workplace that provides a more balanced work/life experience, but still drives creativity and collaboration. The hybrid workplace has created new opportunities including how talent is sourced, but it has also created new challenges including how to maintain productivity and culture. As retailers transition back to the office, reestablishing work norms, developing solutions to drive productivity, and creating new cultures is paramount. There is no roadmap to success: The hybrid work environment is truly a new path forward.

The Challenge

Prior to the pandemic, organizations were already exploring more flexible work environments including flex hours, working remotely. and shorter work weeks. With the onset of the pandemic, the world quickly shifted to Zoom meetings and Microsoft Teams presentations. Within days, entire organizations were working remotely and learning how to make decisions by reviewing information in online meetings. Over time, as the pandemic shifted and vaccination rates grew, employees began to return to the office. Office occupancy rates contracted and expanded from as low as 15 percent in April 2020 to approximately 40 percent in March 2022. The return of employees to the office has varied across the U.S. with the occupancy rate in San Francisco still hovering in the low 30s and rates in Texas approaching 60 percent. Now, retailers need to navigate a complex environment – developing a new hybrid work culture that fosters creativity and productivity while maintaining its brand culture. An environment that satisfies the needs of employees across generations and roles, but still fosters talent development and equity.

The world of remote work and digital platforms have enabled retailers to transcend their old physical limitations to expand the universe of talent and ideas. Most retailers have been hiring talent outside their local market and deeper relationships are being created through technology.

Leading a Hybrid Environment

Consider an organization that thrives by driving creativity, collaboration, and benefits from a high-performance culture. Now, imagine that organization with individuals working from remote locations at different hours and collaborating through technology vs. in person. Retail organizations need to identify how they will replicate a branded, creative, collaborative, and productive experience for an organization whose employees are not in the office at the same time. For retailers to maximize a hybrid experience, leaders need to address everything from office space and employee needs, to the impact of varying schedules on the production calendar. With a new roadmap, retailers should begin by focusing on five key issues.

1. Understand what different generations and employees at varying levels of experience want and need from their workplace going forward. Surveys and workshops will be an important part of gathering data to make thoughtful and effective decisions regarding the “go forward” culture. Diversity, equity, and inclusion conversations must play a key role in determining new social norms and work strategies. Being fair and equitable will be more complex as different roles work in different ways.
2. Develop an office plan. Office space, particularly in urban corridors, is a significant expense for any business, but the challenge for a hybrid workplace is understanding how much space is needed and when and where people will want to work. A retailer might find that they want most people in the office Tuesday through Thursday to drive collaboration, but this means that they cannot take advantage of downsizing their space. Companies are exploring having support functions (finance for example) and individual contributors work remotely frequently. These decisions regarding space and working environment have long-term implications and retailers need to be thoughtful regarding the impact to the company’s culture and financial budget.
3. Define and implement a hybrid schedule that works across design, merchandising, marketing, store operations, and the balance of functions. Determining how collaborative roles – design, merchandising, buying, retail, and wholesale — will work together in a hybrid format and the impact on the product lifecycle calendar is imperative. Technology including virtual reality should be considered and leveraged to create new efficiencies. Roles and responsibilities may need to be redefined. Job descriptions and annual goals may need to be reexamined.
4. Focus on ensuring fairness and equity across all employees. Ensuring that those who are in the office three to four days a week are not considered for promotions over those that are in the office one to two days a week. Evaluating if employees “at the table” have more influence over decisions vs those “on the phone”. After work events, hallway conversations, and impromptu meetings create new challenges when the team is not all in the office together.
5. Find and retain talent in a difficult environment. Retailers will need to determine how to attract talent across multiple generations. They will also need to ensure that new hires feel part of the brand, are clear on their development paths and that succession plans are implemented fairly for all employees. Human resource teams will need to think through on boarding and developing new hires, advancing mid-level managers, and challenging and elevating leaders.

Organizational Efficiencies

It’s true that during the pandemic some functions and activities became more effective and worked better remotely, but there were others that struggled. Support functions such as Finance, Allocation, and Store Communications, and teams that had prior experience operating remotely such as IT adopted quickly. Creative teams including design, sourcing and merchandising found remote work more difficult. Activities such as Product Development, Line Building, and Merchandising were more challenging. The ability to feel fabric, layout product, review color and collaborate cross-functionally was impacted. Digital solutions and emerging technology were implemented to accelerate the product development process and protect sourcing strategies. The remote working experience challenges how various operating functions collaborated when solving problems. Leaders need to be more deliberate – more intentional — when scheduling strategic discussions. These experiences may challenge the design of the future physical space including which functions should be aligned. For example, the Allocation and Replenishment may work best if seated near the distribution and logistics team vs merchandising and planning. Creating more flexible work arrangements such as these will enable the business to work better.

Talent Scouts

The world of remote work and digital platforms have enabled retailers to transcend their old physical limitations to expand the universe of talent and ideas. Most retailers have been hiring talent outside their local market and deeper relationships are being created through technology. As hybrid work environments become part of a retailer’s culture, organizations will need to address operating challenges including product development calendars, merchandising calendars, office and physical space design, and travel budgets so teams can collaborate effectively. But it will also create new opportunities such as expanding new product innovations leveraging open-sourced design platforms and enabling merchants to spend more time interacting with customers.

The Future Role of Technology

Retailers rapidly turned to technology during the pandemic to drive sales, communicate with employees, and develop product. From QR codes and RFID to supporting new paths to purchase (BOPIS, BORIS), retailers responded to consumer’s needs to protect sales and create a frictionless experience. They implemented Zoom, Teams, Google Docs, Slack and Jira to share ideas and communicate employee information. Platforms like Concrete and Yoobic improved store communications informing staff of changing hours and guidelines. To create product and foster collaboration across channels and roles, retailers investigated and invested in virtual reality, 3D development tools, and other product development software to protect product deadlines. In a compressed timeframe, retailers became technology adopters in a way not seen in the past.

As we look to the future, retailers will need to continue to invest artificial intelligence, virtual reality, and additional software to support the development of product. Technologies including 3D-Fit, Printing, Imaging will be critical to gaining a competitive advantage. Consumer facing technology supporting frictionless experience, inventory visibility and payment terms will also be key investments. As technology enables efficiency and speed, the product lifecycle calendar will need to be reevaluated to reflect greater speed to market. These benefits will take time, cost, and waste out of the manufacturing process. In addition, we can expect that the accelerated evolution of these technologies will impact the ecommerce space changing the way products are sold online by both expanding the types of digital touchpoints as well as site merchandising.

To Be Continued

Today, retail organizations are navigating new workplace demands. The hybrid work environment requires retailers to be focused on organizational structures, new social norms, brand and culture, and talent acquisition and retention. Retailers need to listen to their employee’s feedback across generations and roles. They need to evaluate roles, responsibilities, talent development/succession planning, and how to foster a branded collaborative environment. These new paths will include starts and stops as retailers travel uncharted paths. In the end, the hybrid environment is here, and retailers will need to transform to navigate the road forward. To hear more on the topic, tune into “The Workplace Is About to Change” podcast.

Note: Columbus Consulting is a Robin Report Collaborative Partner. For more information, contact Rich Pedott.