Back From The Future

The retail landscape has seen more change in the past 20 years than in the hundred years before. This new dynamism demands a reinvention of how we shape retail growth strategies. 

With sales data streaming in by the day, or even by the hour, it’s little wonder that retailers pour so much energy into the here-and-now moves that move the needle — efforts like optimizing offers, honing operations, and courting customer loyalty.

The mantra of ‘win the week’ or ‘win the season’ is an understandable obsession. As one retail COO recently put it, “A good year isn’t complicated. It’s just a whole lot of good weeks.”

But forward-looking retailers know that, in parallel with this here-and-now urgency, they need to wrap their heads around a higher order question: ‘How to win the future?’

As pillars of old world retail crumble, this question that once was too easy to defer is taking on the urgency once reserved for short-term questions like ‘How can we make our quarter despite that epic blizzard?’

The tumbleweed blowing through near-empty malls, the incursion of costly last mile services, the revolving door of industry executives, and the margin-crushing march of e-Commerce are all markers that the development of robust growth strategies has never mattered more in retail than it does right now.

For those bearing the brunt of unforeseen disruption, winning the future is just a fancy way of saying ‘how do we stay in business?’ But in the long haul, growth and survival are one and the same.

Growth Strategy 1.0

Relative to other lines of business, retailers historically had an enviably simple growth playbook. It typically hinged on three core plays, often rolled out in this order:

1. Opening new storefronts;

2. Adding new categories; and

3. Embracing omnichannel

Along the way, each retailer tended to carefully benchmark these plays against their peers — aiming to be a bit better than other guys who were just like themselves. Growth strategy and benchmarking became deeply intertwined.

The Disruption Gap

Fast-forward and today we can see that this fixation with peer group benchmarking left a perilous blind spot: how to win against next-gen competitors — companies whose assets, capabilities, ambitions, customer experience and path to scale look nothing like yours.

And as the pace of change continues to accelerate, the only thing more futile than benchmarking likes vs. likes is assuming that next-gen competitors five years out will look like they do today.

There’s a tough reality here. Many of the retailers feeling a world of hurt (or at least a lot of anxiety about a shifting landscape) aren’t in this position because the world changed. They’re here because the benchmark-obsessed approach to growth strategy left them completely vulnerable to a new breed of competitor.

A Better Approach

There’s a better way to think about and build the kind of retail growth strategies that disruptive times demand.

This new model starts not with obsessing over peer companies that look a whole lot like you, but rather with defining your future state competitor. What you’re describing — which requires a blend of analytics and forward-looking imaginative synthesis of ways that emerging trends and technologies will play out in the years ahead — is a company purpose-built to exploit new possibilities in technology, customer experience, org structure, business model and supply chain.

With a new competitive archetype in hand, the next step is to work through these seven pivotal strategic questions. These questions hold the keys to your growth strategy:

1. What competitive advantages will these next-gen competitors have over me, and what can I have over them if I mobilize now?

2. How do my org structures have to change to beat back that future competitor before she eats my lunch?

3. What new capabilities will I need to beat them back?

4. How should my offerings and value proposition to the marketplace evolve to endure and thrive in the face of changing customer expectations?

5. What kind of customer experience differentiators will separate winners from losers in the future competitive state?

6. With the finite resources I have in hand today, how do I prioritize and drive the initiatives that will matter most to winning in the future?

7. How can I define a more flexible and dynamically adaptive growth strategy, knowing assumptions will evolve or be outright replaced by new ones in the years ahead?

With change coming at you at an unprecedented pace, it’s time to stop inching forward from your past and present, and start building your growth strategies back from the future.

Mark Payne is the co-founder and president of Fahrenheit 212 – an innovation consultancy based in New York, London and San Francisco. Fahrenheit 212 is engaged by many of the world’s great companies to frame innovation strategies, to co-create new products, services, experiences and businesses, to build innovation capability, and to accelerate innovations down the path to market. He is a principal architect of his firm’s unique “Money & Magic” philosophy and practice. His insights on innovation’s past, present and future have been featured in Fast Company, Fortune, Bloomberg Businessweek, Esquire and CNBC, in speaking engagements at MIT, Harvard Business School, the Royal Society of the Arts, HEC, Columbia and Wharton, and in his book How to Kill a Unicorn, published by Penguin Random House in 2014. Fahrenheit 212’s clients include Samsung, The Coca-Cola Company, IKEA, Virgin, Prudential, Nike, Citi, Wells Fargo, Marriott, Nestle, Diageo, Buffalo Wild Wings, Tyson, Bain Capital, Toys R Us and Lowes.