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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to sell more physical books than ever. But it is important to distinguish between distraction and disruption. Too many technology services providers and vendors pitch products that don't really solve pressing retail problems. And too many retailers make investments in features like faster shipping without making decisions that drive profit to offset the costs of those expensive programs. There is no shortage of pain points in retail — vicious price competition, parking, long lines at checkout, out of stock products, and inconsistent store associates. The path to survival in retail means effectively solving at least a few of those problems while also finding new revenue streams. The retail survivors of the future will unused rooftop space. It has converted 50 of its stores to solar farms, which reduce the energy needs of those stores by 30 percent. I'll use the example of Gamestop again: Gamestop now dis- tributes Game Informer magazine to 9 million loyalty program members. That in turn gives Gamestop advertising revenue it wouldn't oth- erwise have. While not a retail example, Four- square realized that there was little revenue to be gained from B2C marketing. As a result it has recast itself as the B2B location backbone for other apps. Andy Grove, the legendary founder and CEO of Intel, was known for the expression 'only the paranoid survive.' If that is true, retail is toast. ▶ CHALLENGING RETAIL ORTHODOXIES. Retail has many challenges: static pricing, finite and expen- sive inventory in stores, excessive markdowns, painfully long lead times for manufacturing (see chart). Changing any of those would be enormous for the industry. Amazon, Etsy, Farfetch, and many others have broken the inventory ownership and assortment challenge with third-party market- places where companies sell huge assortments without taking inventory risk. Few of the biggest retailers in the U.S. do that (or if they do, to a far lesser degree), but I expect it will become com- monplace in the future because it is such a cost-ef- fective means of selling products. That's scary for traditional merchants and planners because it could make them obsolete, but it's a necessary innovation in 2017. Another disruptor is the com- pany Softwear Automation, which has "Sewbots" that purportedly can make everything from jeans to bath mats far cheaper and faster than any other means of production within a domestic market. This could help retailers break their dependency on slow, distant overseas factories. This isn't to say that investing in one's core business isn't essential. Even Apple grew its core PC business more than threefold since 2000, and Amazon continues need to see what now constitutes 90 percent of their rev- enue becoming 50 percent or less of their revenue in the decades to come. METHODOLOGY Retail Executive conducted a survey of retail executives during the summer of 2017. Forty-seven retailers re- sponded. Thirty of the survey respondents were C-lev- el executives within their companies (e.g., CEO, CMO). Respondents were from a variety of sectors including grocery, fashion, automotive, books, and others. Eleven of the respondents were with companies having 500 or more stores, seven were with companies with 50-500 stores, 17 were with companies with one to 50 stores, and 12 were internet pure plays. R SUCHARITA MULPURU-KODALI serves eBusiness & Channel Strategy Professionals at Forrester. She is a leading expert on e-commerce, multichannel retail, consumer behavior, and trends in online shopping. She is also a noted authority on technology developments that affect the online commerce industry and vendors that facilitate online marketing and merchandising. In her research, Sucharita covers such consumer-oriented topics as e-commerce forecasting and trends, merchandising best practices, conversion optimization, and social computing in the retail world. Prior to Forrester, Sucharita was the director of marketing at Saks Fifth Avenue, and she held management positions at Toys R Us and Walt Disney Company. She has written two nonfiction books and has contributed to BusinessWeek Online. Sucharita holds a B.A. in economics from Harvard University and an M.B.A. from the Stanford Graduate School of Business. RETAILEXECUTIVE.COM NOVEMBER/DECEMBER 2017 25

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