Earlier this month, an article by Amy Merrick in The New Yorker titled What Retail CEOs Don’t Understand, questioned whether retail CEOs were prepared to handle the challenge of technology that faces them: in particular, the huge data deluge that is now a part of all retail businesses, thanks to deployment of retail technologies – and the consequences of mismanaging that data, such as the data breach at Target (one of America’s largest and reputed supermarket chains) last year that affected over 40 million customers, their credit/debit card information, and data on shopping.
The article stated: “The cyber hacking that hit Target –and that, with bugs like Heartbleed, is ravaging the Internet – wasn’t something that his [Target CEO Gregg Steinhafel’s] experience had prepared him to handle. It’s a weakness shared by many retail CEOs: the problems that they’ve spent decades learning to solve are not the problems that they face today.”
The New Yorker article brings to surface a point that may be a legitimate concern for many of our CEOs and other members of staff in retail companies. There’s no denying that deployment of digital technologies in retail and consumer sectors is growing at a phenomenal rate, and it has become imperative for CEOs of retail companies to gear up to face this challenge. This not only means coming up to speed with the changes themselves, but also to train existing staff on digital technologies as well as hire staff already familiar with digital technologies.
Then, there’s the task of re-orienting the supply chain and distribution functions to embrace them within the new system. And, for shareholders of retail companies, it’s critical to hire the right CEO to manage their company and keep it safe from cyberhackers and lawsuits… or losing their tech-savvy consumers to competitors. What this means is that retail and consumer companies, globally, need to re-think their business practices and corporate cultures to arrive at strategies that would not – and would never – lose sight of the changes brought on by this digital revolution that is now a part of our everyday lives.
The good news, according to PwC’s 17th Annual Global CEO Survey – Key findings in the retail and consumer goods industry, dated February 2014, is that CEOs arevery much aware of the changing times brought on by the digital revolution. Their survey key findings (PDF) enlighten us with the following:
“Technology has the potential to transform retail and consumer goods businesses.
Eighty percent of retail CEOs said that “technological advances” is the global trend that will transform their businesses most over the next five years. As for consumer goods CEOs, 67% said the same. On the other side of the coin, just 34% of consumer goods CEOs and 38% of retail CEOs see the speed of technological change as a concern, compared to 47% of CEOs overall.
Why technological change is viewed as such a positive by these CEOs, given the daunting investment it takes to develop and deploy the latest enterprise-wide and consumer technologies?
Perhaps because it makes the world smaller and potentially puts products in the hands of millions of additional consumers. Take online shopping. In this year’s PwC Total Retail survey of global consumers, 41% of global shoppers bought products using tablets, compared to 28% in 2012, and 43% of respondents purchased products through smartphones, compared to 30% in 2012.
That’s tech-savvy customers using technology to improve and expand their buying experience – a boon for consumer goods companies and their retail partners.”
The presentation sums up PwC’s survey findings with “For retail and consumer goods CEOs, technology is a conduit to new consumers.”
Another survey of CEOs by the knowledge institute of an international search firm presents an equally optimistic picture of the global retail industry. In the Executive Summary of What’s in store – The forecast for global retail (PDF), reports:
“A leading international executive search firm interviewed 66 retail CEOs and board members from around the world to investigate the critical question: how are leadership talent issues impacting on the delivery of the organization’s strategic business objectives?
The results suggest that those heading many retail companies are overly optimistic about their ability to attract, develop and retain executive talent.
The economic downturn presented a comparatively easy period for recruiting and keeping senior executives. A shift is underway, however. There is now a mismatch between retailers’ belief that they can continue to meet their leadership talent needs with ease, and market forces combining to make this much more challenging to achieve.
Many retail leaders acknowledged that they expect a larger-than-usual number of their senior and high-potential executives to leave over the next several years. At the same time, they remain surprisingly confident of their ability to find, develop and hold onto “best-in-class” executives.
Their confidence is doubly misplaced. More dynamic market conditions certainly will increase competition for talent and executive mobility — both factors that can impinge on long-term commercial success. At the same time, the survey clearly identifies the ability to innovate as being the skill set most in demand across the retail sector. Yet the research in this area has shown that innovation is one of the competencies most difficult to develop.
In summary, retailers are about to be in fierce competition with one another to secure skills that are in short supply. Putting strategies in place now to retain and develop existing leadership talent is critical to future commercial performance.”
What these survey reports confirm is that the digital revolution has forced, and continues to force, a new thinking upon the retail sector. The sooner retail companies and their CEOs respond with new strategies to manage their businesses, the greater the chances of their success.