Change is a familiar force in the retail industry.
Today, however, the pace of change has accelerated exponentially. As advances in technology, business models, disruptive startups, and shifts in consumer preferences have propelled the industry forward at breakneck speed, traditional retailers have struggled to keep pace.
Navigating the treacherous and always-changing industry terrain requires retail organizations and their leaders to become agile and adapt to short-term challenges without losing sight of long-term vision. Coaching is the ideal tool to help leaders rise above the day-to-day grind, to remain resilient, lead strategically, and ensure the ever-changing customer experience serves as a north-star.
An era of seismic shifts and unceasing aftershocks
In his seminal Harvard Business Review article on the future of shopping, Darrell Rigby shared how the retail sector has undergone a major disruption and transformation every half-century beginning with the advent of the urban department store, followed by the spread of suburban shopping malls, which were then eclipsed by discount chains— Walmart, Kmart, and Target, among others—and big-box category killers such as Best Buy and Barnes & Noble.
Over the past few years we have been witness to the rapid collapse of iconic department stores such as Sears and big-box giants including Radio Shack, Sports Authority, and most recently the liquidation of more than 800 Toys “R” Us stores across the U.S.
Even as legacy retailers struggle to stay solvent, online marketplaces and direct-to-consumer brands are booming. Online sales represented 49% of growth in retail sales last year. Amazon.com is becoming more dominate by the day, composing half of e-commerce sales and five percent of total U.S. retail sales this year. And, with its $13.7 billion acquisition of Whole Foods, the digital giant is once again shaking up the landscape, mixing digital with physical, and bridging the web-to-store with one of the world’s fastest-growing membership models — Amazon Prime.
Meanwhile, direct-to-consumer brands have disrupted categories from fashion to mattresses and men’s grooming, changing consumer’s expectations for transparency and convenience. And as traditional retailers finally begin to find their footing online, the most successful of these disruptive brands are following Amazon’s lead into the physical, partnering with traditional retailers to showcase their products or opening their own retail locations. Warby Parker is a case in point. Having disrupted the eyeglass sector through its unique online business model, they recently invested $100 million USD to open brick-and-mortar stores. As their CEO Neil Blumenthal recently remarked, “We think the presentation by retail experts of ‘either [online] or [offline]’ is a false choice,” Blumenthal said. “It really is the intersection of the two. … And we are trying to approach retail expansion in a very deliberate manner, where we are testing and learning.”
This blending of on- and off-line retail has dramatically shifted consumer expectations. As stated in a recent article in Forbes, “consumers now expect a more convenient, tailored omnichannel shopping experience, whether they are online or in-store. The new face of retail involves consumers engaging with a brand seamlessly across their e-commerce, brick-and-mortar, social media and every other channel to create unified, consistent encounters.” Accordingly, retail organizations must shift their mindset away from maximizing transactions to fostering long-term relationships and brand loyalty by providing outstanding customer service and experience.
The Challenge for Retail Leaders
As outlined above, the challenges retail organizations face are increasingly complex, and disruption frequent. Beyond the macro changes to the industry are countless micro trends present in the endless bytes of available industry, store, and consumer data. To remain relevant, retail leaders must separate signal from noise to identify and adapt to important micro trends.
Through our experience working with thousands of leaders spanning nearly every vertical in the sector, we have found that retail leaders, especially those who rise from the sales floor, tend to be especially pragmatic. This characteristic makes them adept at identifying seasonal trends, opportunities for cost savings, and how to enact incremental change to squeeze out better margins.
Incremental advances and a tactical mindset, however well it worked in the past, is not the recipe for success for tomorrow’s retail market leaders. The old mindset, focused on margin and costs, was, in fact, a primary reason why the iconic retailer Sears recently closed hundreds of stores and filed for Chapter 11 bankruptcy.
Executive coaching can help retail leaders and their organizations avoid a similar fate. Experienced coaches like those in the AIIR Global Coaching Network bring decades of business experience to the table. They challenge leaders’ status-quo thinking and provide valuable experience from outside the organization and even the retail industry.
Skilled executive coaches help leaders slow down to speed up. In doing so, they enable retail leaders to step back from tactical problem solving and tap into the bigger picture. Doing this both reduces complexity while providing an incubator for new and innovative solutions to address the strategic and sometimes existential challenges their organizations face.
Helping Retail Leaders Manage Stress
At a personal level, leading through constant flux puts retail leaders under enormous stress. This constant strain puts leaders at greater risk of career derailment than their peers in other industries. According to a study of CEO succession, the rate of announced CEO changes in retail companies rose to 23% last year, more than double the 11% average across industries. Beyond the C-suite, turnover among retail executives is costly, and the loss of institutional knowledge with each departure is detrimental to retail organizations’ ability to execute on long-term strategy.
A survey of retail CEOs found that communicating a strategic vision in a way that motivates the workforce and drives results, is the most critical competency for success in an unsure and competitive landscape. Working within a proven coaching methodology, AIIR executive coaching engagements include a rigorous assessment phase can provide leaders with an unmatched understanding of their strengths, derailers, and how those characteristics are likely to show up under pressure and undermine retail executives’ ability to motivate employees and produce results. Building on this self-awareness, executive coaches can provide leaders with clear techniques for managing stress, and help them leverage their strengths to both overcome organizational challenges as well as stay focused on the customer experience.
Change is the New Constant
The pace of change in the retail sector has accelerated exponentially over the past decade. As technology becomes faster, cheaper, more versatile, and more integrated with physical brick-and-mortar, and as consumers demand more of their retailers, the rate of disruption in the retail space shows no signs of slowing down. Retailers and their leaders will have to adapt to the changing environment or risk extinction. Executive coaching can provide retail leaders with the insight, resiliency, and adaptability they need to survive, and thrive, in this new environment.