Retail Executive

NOV/DEC 2017

Retail Executive is the trusted advisor to top retail executives from the industry’s most profitable retailers. We help retail executives succeed in their job role and grow their business via exclusive, actionable, peer-driven content.

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Why, you may ask, is radical transformation so im- portant? The simple answer is that in any industry where there is massive disruption (which is the case in retail because more shoppers are buying online and what they buy online often costs them less than in stores, which means share is shifting to pure plays AND the pie is shrinking), companies need to look beyond their current businesses. Look to technology companies as examples of companies that have em- braced transformation which ultimately led to long- term growth: ▶ Technology investments haven't leapfrogged the industry. Companies appear to be confusing table stakes with transformation. While many retailers say they invest in technology, the spe- cific types of investments are often "upkeep" ex- penses such as investments in web platforms or upgrades to software such as POS or order man- agement systems. When asked what strategic investments they were making, the most com- mon responses by retailers were e-commerce or omni-channel efforts. THE TOP REASONS FOR OPTIMISM We have a strong brand We have loyal customers We constantly innovate We invest in technology to help improve the business We have a great management team We invest in our people to improve the business We have products people want 24 19 19 17 15 15 14 Only 11 retailers surveyed said they have considered pivoting into new growth areas in retail (e.g. food, education), and 10 retailers said they have considered mergers and acquisitions as a way to sustain or grow their business. ▶ Few retailers are diversifying their current of- ferings. Most retailers continue to "stick to their knitting." Only 11 retailers surveyed said they have considered pivoting into new growth areas in retail (e.g., food, education), and 10 retailers said they have considered mergers and acquisi- tions as a way to sustain or grow their business. Seven said they actually completed a merger or acquisition of some sort in the past. ▶ In 2000, Microsoft generated 80 percent of its revenue from Office and Windows. Now it is a conglomerate nearly 4 times larger, and it generates a significant double digit share of its revenue from cloud services, hardware, and social networking (through LinkedIn). ▶ Apple generated 80 percent of its revenue from Mac devices in 2000. Apple now generates 10 times as much revenue, but only 10 percent comes from PCs and laptops. RETAILEXECUTIVE.COM NOVEMBER/DECEMBER 2017 23

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