Published December 17, 2019
It’s that time of year again. We all rush to find that special gift for that special person to show how much we love them. Retailers are beginning this barrage earlier and earlier each year. This year, holiday decorations started arriving in stores as early as mid-October.
NRF predicts total U.S. retail sales will climb 3.8 percent to $1.008 trillion, making it the first-ever trillion-dollar holiday season. The U.S. retail e-commerce uptrend is expected to continue with an additional 13.2 percent increase to $135.35 billion. With a strong economy, I thought it would be fun to step back and pay homage to some of the great traditions we celebrate during this time.
The 12 Days of Christmas
One of the most beloved songs during the holiday is “The 12 Days of Christmas.” The song we sing today is a derivation from a 1909 arrangement of a traditional folk melody by English composer Frederic Austin. While there are many different interpretations of the song, let’s look at how the 364 gifts given in this popular carol can be applied to the retail environment.
Day One: A Partridge in a Pear Tree
In retail, this would be the customer and the recognition that retail does not exist unless the purveyor listens to the voice of their customers.
Day Two: Two Turtle Doves
Today, retail has manifested itself into two distinct channels: digital commerce and traditional brick-and-mortar. As digital commerce continues to expand, it often leverages the foundation of its legacy infrastructure to deliver value. Recognizing the symbiotic relationship between these two channels is critical to understanding the benefits a business can have by encouraging the evolution and coordination of each.
Day Three: Three French Hens
In retail, the three French hens are symbolized in service, price and positioning. A retailer must know who their customers are and deliver the products and experience they expect or they will lose their patronage.
Day Four: Four Calling Birds
We can equate these four birds to the four major players that have impacted the retail environment the most and evolved over many years. The first would be Marshall Fields, the entrepreneur who evolved a single site into a chain of stores-acquired by Macy’s in 2005-where a customer could enjoy the same assortment and experience in other major towns in the U.S.
Woolworth Co. evolved the experience of product picked from behind a counter to a self-service environment, which would be considered the second calling bird.
The next major leap came with Sears, where people shopped from a picture in an online catalog versus touching and feeling the item in-store, enabling rural America to purchase products without the burden of travelling to the city. This third calling bird would be the single largest evolution the retailer-customer relationship would experience.
The fourth calling bird was Amazon, which evolved the advantages reached by Wal-Mart and created the ultimate shop-on-demand experience. This evolution created the ideal store where customers could purchase any item from around the world at competitive prices with rapid, efficient delivery.
Day Five: Five Golden Rings
For day five, we picked the following five law-defining retailers: Macy’s, Sears, Wal-Mart, Victoria’s Secret and Amazon.
Macy’s developed a relationship with its customers to deliver a high-end customer experience. It recognized the need to give back by sponsoring events and activities (e.g. parades) to position itself with its customers. It defined the role of traditional retail.
Sears evolved retail by engaging rural America through its catalog. It was the first to develop its own branded product and reach every American, enabling purchases without requiring physical interaction.
Wal-Mart defined supply chain efficiency and the impact it can have on driving consumption. Its “everyday lowest price” ensured the optimal capital usage and best profit. It changed shoppers’ expectations of experience and price.
The first major category killer, Victoria’s Secret, defined branding and category optimization. It redefined the expectations of price to one of experience, and in doing so, provided the balance between customization and mass merchandising for a category.
Finally, Amazon has changed customer shopping and service expectations. It has taken retail to a global level and leveled the playing field for consumers, allowing them to shop anywhere without leaving their homes.
Day Six: Six Geese a-Laying
In creation stories, the world was created during a six-day sequence of steps. The first exchange of goods for money, where people created handmade goods and sold them to others, would create the retail environment.
The second day represents the market where goods could be sold from a physical location versus a neighborly exchange. This evolution into a “professional” retail location was important in establishing the retail economy.
On the third day, we saw handmade goods evolve to mass-produced goods, enabling sellers to make produce more units without the physical limitation of human labor.
The fourth day brought the evolution of mass customization. In this market, goods could be made to customer demands but in an efficient, cost-effective manner. This provides the collective advantage of craftsmanship, cost efficiency and optimal customer responsiveness.
The fifth day represents the use of the sea in support of retail. Offshore manufacturing and the use of lowest-cost labor to create goods evolved the nature of retail from a local business to an international one. This changed the concept of what could be created and enabled the importing of goods from around the world at competitive pricing.
On the last day is the advent of micro marketing and the recognition that a business could create multiple brands, enabling it to take advantage of all revenue sources and position the company for all customers.
Day Seven: Sevens Swans a-Swimming
The swan has often been used to symbolize grace, beauty and love. For this generous gift, we look at seven essential virtues that all smart retailers must exude, which include wisdom, understanding, counsel, fortitude, knowledge, piety and fear.
Wisdom is represented in brand loyalty. Smart retailers recognize the power of their brand and do everything they can to connect with consumers to ensure they are their first choice when goods are needed.
Understanding is connected to the concept of sell anywhere or endless aisle. Consumers today want to shop 24/7 from the convenience of their home and get the best price and service. Smart retailers recognize this requirement and have developed an approach to deliver on these needs.
Counsel is connected to developing a closed loop process to monitor social media and understand how the marketplace feels about their goods and services. They recognize the power of the “network” and do all they can to ensure that this impromptu network works to their advantage. There is no greater way to gain a new customer than through a recommendation from a friend or family member they know and trust.
Fortitude includes taking on the mission to deliver to all locations, within hours of products being requested. This requires business leaders to challenge traditional paradigms of retail and put them into today’s expectations. Working outside of the traditional comfort zone is critical to winning in today’s quick-paced, instant-gratification marketplace.
Knowledge is linked to business intelligence optimization. Every organization has more data than they can ever mine. Developing automated processes to ferret retail trends and turn them into executable actions is critical in gaining a competitive advantage and ensure optimal profit generation.
Piety in retail is having faith in your team and their ability to forecast demand. Teams should have the faith to trust their analytical tools and use their learnings to adjust them to be more predictive as opposed to ignoring their insight.
Fear equates to developing robust programs to manage working capital. Ensuring funds are used in a systematic and planned manner is critical to ensuring they produce maximum return.
Day Eight: Eight Maids a-Milking
For the eighth day of Christmas, we look at eight blessings retailers can bestow upon the industry and their customers. These fundamental principles include: 1) Value your customer, 2) Have a strong social conscience, 3) Manage your brand, 4) Be fair in your pricing, 5) Offer discounts to the less privileged, 6) Ensure a strong business ethic culture, 7) Treat all people like family, and 8) Set corporate bylaws and standards that are morally sound and socially unbiased.
Day Nine: Nine Ladies Dancing
In retail terms, this represents the nine factors shoppers appreciate and reward when managed properly. They include love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control. Focusing on each of these is critical to brand and experience management.
Love, or charity, is a result of a socially conscious business. Gaining financial success positions a business to be able to give back in ways a non-financially sound business cannot. A business with a strong moral compass will embed social giving as part of their core fabric.
Joy relates to the environment and service a retail business delivers. Setting a culture where the customer is the show is paramount to delivering a robust business.
Peace comes from understanding your competitive position and acting with clear focus and direction on how to go to market. A lack of clarity will cause organizational churn that your customers will sense.
Patience in retail comes in two forms. The first is the willingness to take whatever time your customers need to make their final decisions. A patient retailer is seen as a kind and caring retailer. Pressure may close a quick deal, but it leaves the customer feeling taken advantage of. The second is a clear management vision on your strategy and a willingness to patiently wait for it to take hold.
Kindness and goodness require you to define your core values and make sure your actions reflect them regardless of the situation. In retail, a business must define its core value structure and engage with its customers to understand-and deliver on-their true needs. These values need to reach deeper than dollars and cents and give the customer a reason to want to engage with the business.
Faithfulness, or trustworthiness, is sacred in all relationships. In retail, customers will be loyal to a brand that is trustworthy and dependable. Often, they will pay a premium for products and services that are aligned to an accepted standard.
Gentleness is often interpreted as showing weakness. Executed properly, gentleness is a recognition of one’s power and a willingness to contain it to ensure the recipient is dealt with respectfully and tactfully. A gentle business is a customer-focused business.
Self-Control in the retail world would be exuded by a business being willing to bend its policies when it is in the best interest of the customer. It recognizes that while the business may have the “right” to deliver a certain action, it is willing to work with the customer and find an acceptable balanced solution.
Day 10: 10 Lords a-Leaping
For the 10 lords a-leaping, we have identified 10 commandments-or directives-that must be followed in retail to ensure success:
- Thou shalt not focus solely on profit. In this commandment, we recognize that the long-term relationship and value it can deliver is more important than the short-term profit one may make. Take the time to develop a relationship with your customer and the fruits will appear.
- Digital commerce is your friend…embrace it. Customers have always wanted to shop at their convenience. In the past, the infrastructure was not in place to make this happen. In today’s world of digital commerce, information and goods can be available instantly. This changes the entire dynamic of the retail environment.
- Give employees time off during the holidays. While the shopping journey can occur 24/7, that does not mean that employees must. Make sure you take care of your people and give them the time they need to connect with their loved ones during the holidays. We have learned that there will always be a balance between brick-and-mortar and digital commerce. Do not let your pursuit to take care of your customers overwhelm your need to take care of your employees.
- The customer is your partner, not your buyer. Successful retail is based on a trust between you and your customer. If the business takes the time to listen, it will learn what its customers truly want. Do not get so focused on your revenue needs that you forget to engage your customer.
- Physical retail sites will always be needed. We have all heard about the rash of store closings occurring across the country. The fear that all stores will go away is extreme. While the market needed some pruning, we recognize today that we will reach a balance of physical stores and digital marketplaces that satisfies customer needs. With that said, delivery service levels must be critically managed to ensure customers receive products when, where and how they want. Deploying a distributive logistics model helps deliver on this requirement at the lowest cost.
- Cross-industry knowledge infusion helps evolve business. Corporate HR teams must evolve their approach to inject creative talent into the business. Rather than finding someone who has done the open role before, HR teams must understand the critical talents needed to evolve the role and look across industries to find the right resources.
- Private label is the juice that is worth the squeeze. As retail businesses look to compete in the tough marketplace, they will find their pot of gold by developing a robust private label program. By getting back to basics, they can create the products people want through the designs they deliver.
- Manage your brand, not your competitors. The worst thing any business can do is to look behind them and track those following. You must be aware of their approach, but myopically focused on your strategy to ensure you take the right approach. By having your eyes firmly planted on your customer, you can develop solutions that meet their needs.
- Innovation distinguishes between a leader and a follower. Retail at its core is all about the free exchange of goods and services. If your team stops innovating, you are losing ground to those who are. Focus on new products and services and the riches will come to you.
- Celebrate the success of the industry, not just yours. Everyone wants to be a part of the win. Take time to recognize the industry changes and your response to these changes. Recognize the little wins each day as you fight the retail battle. Provide a sense of accomplishment to the team so they get energized to take the next hill.
Day 11: 11 Pipers Piping
In retail, we have witnessed 11 businesses that have made the industry what it is today. Let’s look at the impact these 11 significant players have had on the marketplace and how their solutions, concepts and business approaches still impact the environment today.
Macy’s: Macy’s was the original department store master and that leadership position continues today as the stalwart that is the iconic department store brand. It continues to lead the pack in the department store arena and was one of the first to provide a private label e-commerce site.
Amazon: Amazon continues to show true industry leadership through its focus on the customer and the evolution of the distributive space to a customer-centric model. Its recognition of the endless aisle and always being open has driven the retail revolution.
Chick-fil-A: Based on strong principles, Chick-fil-A has consistently demonstrated its core values and developed a cult following by providing the industry’s best service. Its customer-centric approach has revolutionized the treatment of customers and shown that we can deliver “down-home” politeness even in today’s me-focused culture.
JDA: JDA has for decades provided the base systems to analyze and run the retail business. It provides the base infrastructure to collect, manage, analyze and use data to unite the retail team.
Wal-Mart: Wal-Mart has preached that supply chain efficiency is the winning element more than any other. It evolved the concepts and supply chain design, price elasticity and the need to move products at a defined and predictable cadence. Its attention to detail was the foundation of many inventory planning and supply chain network design efficiencies.
USPS: As far back as 1775, the United States Postal Service has delivered mail to every community. Its tireless effort has become expected. Its delivery network is the backbone of many next-day services.
Microsoft: Microsoft took early advances in systems and developed them into a collective platform that forms the foundation of a large proportion of retail business decisions. Its web-based solution suite evolved the business software approach and is now a formidable solution set. Its latest subscription-based pricing model places a monthly tax on the business unit. It is its faithful service, however, that renders its tax as unobtrusive and welcomed in all retail settings.
IBM: Over the years, this technology giant has had a major impact on the retail business. Whether it be the retail point-of-sale solutions, the bar code or the business solutions, IBM has been an industry leader in changing the face of how retail operates.
Many do not recognize that Microsoft, JDA and several other business solutions were incubated in the IBM business. It continues today to lead with its IT hardware and cloud-based and consulting solutions. While it has doubted its own role in running business solutions as a business, it has played a critical role in launching many impactful businesses that have changed the face of the retail marketplace.
AT&T: AT&T’s impact is shown through the communication solutions it delivers to make the exchange of information possible. Often forgotten about, without a strong communication infrastructure, digital commerce would never have evolved.
NRF: The National Retail Federation (NRF) provides the free sharing of information and learnings that is critical to help develop future leaders and evolve the industry. Founded in 1918, the NRF does more to promote the retail industry than any other organization.
Sears: If you stop to understand the breadth and scope of Sears Holdings, you will understand the extent to which they changed the way retail was approached. It created Allstate Insurance, private label brands (e.g. Craftsman, Kenmore, etc.), Discover Card, Coldwell Banker, Dean Witter, and the Sears catalog to name a few. Its pioneering spirit demonstrates its powerful vision for diversification.
It has only been in recent years where the business has lost its focus on the customer and fallen from grace. If it could regain its customer relationship, it could regain its powerhouse position.
Day 12: 12 Drummers Drumming
The song closes with the 12 drummers drumming, where we define the 12 principles critical for retailers to live by to ensure a strong, successful future:
- I believe in the customer and that they know what they want
- The endless aisle and business hours customers desire
- Which was developed on private label brands and born from localized marketing
- Suffered the wave of mass merchandising, was altered, streamlined and changed
- Evolved into digital commerce and arose from the weight of too many stores
- Managed through the e-commerce conversion
- Made anew providing high service at a low cost
- I believe in distributive logistics
- The power of same- and next-day delivery service
- The need to provide “down home” customer care
- The resurgence of brand management
- And in everlasting existence
As we roll through the 2019 holidays, we should all take time to recognize all of the advancements we have seen, the richness of offerings we have to choose from and the truly worldwide marketplace that exists today. We must remember to embrace the balance of digital commerce in all of its forms. While the market works to flush out its excess retail space, we should appreciate the robustness of the supply chain solutions offered today and our ability to shop when we want, where we want, as we want.