Retail companies are striving to keep the modern and sophisticated consumer happy and loyal. The industry climate is complex where the consumer is acting in multiple channels and needs to be continuously stimulated. Specifically, retail businesses have to ensure that the needs of returning consumers (e.g. Loyalty Card holders) are fully met.
This situation is forcing retail companies to rapidly adjust and be innovative in shop planning, diversifying assortments and analysis while making sure that the brand identity is kept. At the same time, the leading retail companies are expanding in a number of stores, new geographical areas and assortment content.
This introduces challenges with communication and follow-up within the existing workforce and with the increasing number of suppliers, who are essential as they may own the relevant product information.
Additionally, sustainability requirements and increasingly stringent government regulations result in complex business processes and traceability procedures to be implemented. In light of those challenges, it is obvious that retails are searching for ways to make better business decisions and maximize consumer satisfaction.
Experiences from retail companies show that one key prerequisite in order to meet business challenges in the retail industry is to ensure that the innovation process is controlled, measurable and is as efficient as possible. The innovation process is referring to single products, assortments, and campaigns, all from idea to realization.
Unfortunately, the everyday reality at retail companies is quite the opposite.
Product-related information is not managed effectively. But instead as “information islands” between different departments followed by unstructured and cumbersome communication, both internally and externally, with suppliers.
Additionally, no evident assortment planning may be used. Priorities and process ownership are not always clear. Aggregated information is hard to analyze and compose (e.g. list of products including a dangerous substance). Difficulty to prioritize tests and follow-up quality parameters. Difficulty in identifying consumer patterns and follow-up claims.
One major result of this situation is that the expansion effort is becoming over-expensive and in some cases is not possible.
One solution approach to address the business barriers is to establish an information platform for the innovation process that will act as an infrastructure for expansion and quality.
A suitable approach for that kind of platform is called Product Lifecycle Management (PLM). PLM was originally developed by the aerospace and automotive industries and is currently being adopted by an increasing number of retail companies.
PLM stands for simplification by digitalization – a platform where all product-related information is found, managed and followed-up in one place that is globally available for all (HQ departments, sourcing offices, chosen suppliers etc.).
In PLM the innovation process is managed from idea to realization while minimizing internal inefficiencies and replacing existing Excel, mail and file folders.
Do you agree with Arik? Are these problems common in retail businesses? Do you experience anything else? Please share your thoughts by leaving a comment!