Last Thursday, at IT's in the mix, a retail event, I heard the story of a trendwatcher. Perhaps you know those stories by now: the world is changing faster and faster, innovations follow each other at breakneck speed and it will all get much worse in the future. This trendwatcher predicts that soon every product in any shop will be equipped with technology, that 3D or 4D printing will be a disaster for retailers and that within five years, following the example of the taxi market (Uber) and hotel market (Airbnb), many more business models will completely change. The message may be clear: established businesses - retailers in this case - are threatened in their existence if they do not change quickly.
Suddenly I don't believe it anymore - that those established retailers can still change. We now know plenty of examples that prove this: Free Record Shop, Schoenenreus, De Harense Smid, Polare, Mexx, Halfords, V&D, Miss Etam. They have all been overtaken by time. If not by the changing zeitgeist, then by the fast-growing online competition. Prénatal's supply chain manager summed up the problem of established retailers well during an earlier presentation: they have to focus on profitability, while online competition is only focused on gaining market share. So those can afford to take much more risks, an unequal fight.
I look around me in the auditorium of the Architecture Park in Houten. I wonder if the current management of established retailers is capable of change. The trendwatcher also wonders. He argues that every ceo should have someone aged 25 to 30 next to him. Those who don't have that should be ashamed of themselves. But even if management - with or without someone from the new generation - has a good grasp of what change is needed and has developed a new strategy, the question is whether it succeeds in getting the large, unwieldy organisation to go along with it. This requires convincing everyone of the new strategy and the need for change, at least as far as the team leader in the distribution centre and the branch manager in the shop. That is precisely where the challenge lies: with the people who for years have been used to operating in the same way, and who now suddenly have to implement a new strategy.
Change is necessary, even in logistics. In the past, retailers only had to put their stock in the shops. Customers automatically came to pick up the items one day. Now they have to be shipped to the home address or set aside if customers have reserved them online. Moreover, as in-store sales are declining, the return on stock is falling. This forces us to make choices: stock in shops must be reduced, but what do we take out of shops? And how do we ensure that the items not in stores are still available to everyone? Many retailers have trouble enough generating a reliable overall view of all stock at all stock points at all times, let alone making the right choices.
I would say to all those retailers: stop it, with all those attempts to make changes. Sure, you can open a webshop and still take what you can get. You can install a screen in your shop to order unavailable items and you can install a counter for online orders and returns. But don't be under the illusion that you can transform the existing organisation into a dynamic company with the culture of a start-up. For that, the historical ballast is simply too big. So just keep milking the existing shop formats to the last drop. And then don't forget to pull the plug in time.
Marcel te Lindert - Journalist logistics and supply chain
