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It's not what you know ... it's what you don't know that could be hurting your business.
As a retail consultant for the past three decades, I am continually called upon to provide answers. Retailers want to know what the "best practices" are, and how to "fix" their business. At a minimum, clients expect a consultant to be able to provide analysis and intelligence to make them more profitable. The more I study failures in retail, the more I find that they simply did not ask the right questions. They were solving for the wrong thing. The Chicago Tribune recently posted 100 Great Questions discovered through experience by top business leaders. Retailers would be well advised to draw from this list to develop their top 10 questions to survive.
Classic case of wrong questions: The demise of Circuit City
I am old enough to have experienced both the rise and fall of the US electronics retailer Circuit City. Circuit City was one of the great retailers in the US built upon the technology revolution of bringing the television into the American home. They were the premier electronics retailer before there was even a Best Buy. Circuit City is a case study in Jim Collins' book "Good to Great," so I will not attempt to highlight all of their success factors here. Suffice it to say, they were at the top of electronics specialty retailing.
So, what went so horribly wrong? Why did they go bankrupt? In a word, change. The consumers changed. They changed where they shopped and how they shopped. And, without being too simplistic, Circuit tried to "expense themselves to profitability" when they encountered declining traffic and falling sales. Rather than change the questions to focus on consumers, Circuit tended to focus on how to cut staff costs, reduce inventory and salvage operating profits. At the end of the day, you as consumers voted with your wallets and Circuit was out of business before they had time to focus on customer experience.
Traditional store-based retailing is very operationally driven by its very nature. There are a lot of moving parts required to purchase inventory and get it to the shelf at the moment of purchase by the consumer. In a product-centric world, bigger assortments and low cost operations were critical success factors that enabled the biggest box retailers like Walmart to thrive and crush the competition. Even Walmart is no longer invincible. It is under intense pressure from the disruptive change of e-commerce and omni-channel evolution.
I've said it before and will repeat it many times: What is changing the face of retail is the consumer, not the retailer. There has been more change in the last three years of retail than the previous three decades. Today's consumers shop any time and everywhere. They expect a seamless experience, and unlimited choices from an "endless aisle" of virtual inventory. If traditional retailers remain focused on costs and operating efficiency, they are not asking the right questions that will lead to profitability with today's omni-channel consumer.
Asking the right questions
What makes innovators so successful? The short answer is that they see the world differently because they ask different questions. Instead of trying to focus on incremental improvements and fixing the "knowns," successful entrepreneurs ask great questions of themselves and their business. Success in a disruptive marketplace requires focus beyond the typical business components and benchmarks. And, given the number of retailers that have recently gone out of business, and the number of store closings in electronics retailing, now is definitely a time of disruptive change and the need for great questions.
The Chicago Tribune recently published 100 questions that business leaders should ask themselves. They developed this list as composite questions posed by some of the most successful business leaders and entrepreneurs. You can scan the entire 100 here. What is immediately apparent is that many of these questions are not focused on business operations or efficiency … they are focused on the consumer and how to differentiate value.
Retailers do not need a list of 100 critical questions to survive. But, they would do well to model late night host Dave Letterman's Top 10 List. As I attend business reviews and meetings with members of the retail "C-Suite," I am struck by how few truly are asking questions about consumers, their employees and culture.
I would strongly argue that it's not just retailers, but any business would do well to develop a Top 10 list of Great Questions. Based on the Chicago Tribune's list, here are my Top 10 for retailers in today's disruptive marketplace:
BONUS QUESTION:If our customer were my grandmother, would I tell her to buy what we're selling? - Dan Pink, author
(Photo by Joe Loong.)
Chris H. Petersen, PhD, CEO of Integrated Marketing Solutions is a strategic consultant who specializes in retail, leadership, marketing, and measurement. He has built a legacy through working with Fortune 500 companies to achieve measurable results in improving their performance and partnerships. Chris is the founder of IMS Retail University, a series of strategic workshops focusing on the critical elements of competing profitably in the increasingly complex retail marketplace.