4 Key Considerations in the Next Stage of Retail Organisational Change

The article is a practical and psychodynamic perspective written by Wong Mei Wai, Founder, CEO & Chief Change Catalyst.

By the Year-end of 2020, despite the festive period, globally stores and brands have continued to close or reorganize - many already moving to the next phase of change
. Aside from the impact of organisational change to the teams, retailers and the knock-on effect* on brand owners and manufacturers, these retail changes have unconsciously impacted many consumers, touching them on an emotional level – triggering fond memories of stores that represent a link to their life milestones (often spanning generations). One such example was the closure of 162 years old Robinson’s in Singapore and Malaysia recently, which saw passionate conversations and speculations by commentators.  

Click to watch the knock-on effects of Change

Many in the retail industry would have been aware that  challenges faced by the retail industry existed way before the appearance of pandemic headlines like “Robinsons To Close Stores” or “Fashion retailer Brooks Brothers files for bankruptcy”, “ Zara owner to close up to 1,200 stores globally after first-ever loss; plans big online push”. The pandemic exacerbated and accelerated those changes to and closure of retail organisations that had weaker foundations, fundamentals and/or relevance and financials– as a result of the general stress caused by the impact of lockdowns. This includes the pressure of store overheads and unpreparedness for the shift that took place in eCommerce - moving from ‘experiential convenience’ to an urgent necessity.  Yet, the ones who had digital models and platforms were able to sustain or grow in revenue, riding on their eCommerce model accelerated by 11.11, Black Friday, Cyber Monday and festivity shopping.

Hence, below are 4 key considerations for change for Retail Organisations that have existed over generations and had built legacies: 


(1) Review What Worked or Did Not Work during and Prior to the Pandemic - Swiftly Make Bold Changes. 

Retailers have already started to look to the next phase of Change because what was working initially in response to the pandemic (with the minor tweaks) was not sustainable – especially with the uncertain nature of the pandemic. 

Hence, retailers needed to do thorough strategic review of the significant shift of the environment and implement bold changes - in some cases, through reviewing and reimagining their existing business like they were starting from “scratch” to ensure it does not carry any “baggage” that can hold it back from Change. For example, in Asia, family-owned retailers (as part of their conglomerate business) have been heavily impacted despite short term changes made to shorten their supply chains to become efficient. It remains difficult to compete with the lower price segment- now available on eCommerce and delivered with speed and refreshing merchandise seasonally. These challenges exist despite setting up their eCommerce platform. 

These retailers had continued to follow a model based on “the good old days” when their iconic retail legacy brand names flourished because they brought accessibility to foreign brands (both luxury and mainstream) to consumers who attribute value to such brands and cherish the “one-stop-shop” retail experience. However, as the multi-brand/ departmental brick and mortar store started to lose relevance to direct models over the past few years –  that retail model also became less relevant as consumers can access such brands directly without the “middle man” -  resulting in  increasing closures as such retailers realise that they are sitting on a “ burning platform” and that they require to Change boldly or die. 

Despite that, such retailers continue to find it challenging to depart from their old business model that their founder had built. In particular, retailers who had not differentiated their brands or merchandise by now e.g. by building their own in-house brands or labels - instead of just offering the physical experience access to an amalgamation of global brands across different departments.  These retailers stand limited chance to effectively  compete with the growth of the digital market place due to the lack of differentiation as consumers today prefer to buy direct from the brands/ market place on-line hence making the traditional retailer irrelevant (i.e. “the death of the middleman”).

Therefore, unless such retailers look at re-strategising from scratch including how they  deliver a true omnichannel digital integrated experience or significantly transform into a digital market place- they will continue to rely on heavy promotions and remain unprofitable. 

In addition, standalone branded and luxury retail stores need to continually relook the balance of the role of the Experience Store with on-line selling. For instance there are many who have continued to create outstanding experience stores and integrating that closely with eCommerce during the pandemic despite safe-distancing queues.



(2) Strengthen your “Outside” Digital Brand Change and ensure you build your “Inside” foundations

With retailers and marketplace spending most of 2020 adapting to new and emerging consumer needs on e-commerce - there are still many organisations that have not addressed their other “Inside” brand and digital change issues. Some retailers have had to close due to their inability to align their “inside” change over the last few months while focusing on “outside” change and not permeating the change to the “Inside” areas.   

For example, weak merchandise and delivery fulfilments will be exacerbated with the demand during 11.11 and Black Friday, Cyber Monday or Christmas. Consumers tend to not be forgiving when they have a poor experience on an eCommerce platform or store whose service is disrupted by COVID-19 - this includes the merchandising and delivery fulfilments. Hence, with the festive shopping season possibly pushing carriers’ delivery networks to overcapacity, means that retailers and carriers must examine and implement strategies swiftly to avoid late or missed deliveries. Otherwise the brand reputation will be negatively impacted.  

For Digital Transformation in retail and consumer products to succeed, it requires “inside” brand change which includes the backing and alignment from the CEO and all the functional heads e.g. IT team.  There  needs to be an integrated and agile structure for the omni-channel. While paying attention to “ Outside “ changes like the brand and marketing, there is a need to ensure the integration of data analysis to review the real time analytics, technology to track inventory, supply chain fulfillment, customer service  and an aligned culture. Only with this integration can the probability of success to deliver the business and brand objectives be achieved.


(3) Reorganise the Leadership and Talent Pool to align with the New Channel Needs 

There is increasing realization that technology development should be adequately resourced with the right change leader to drive the innovation process, test market /trials with the corresponding organisational restructuring (taking into account the roles and capabilities of new and legacy teams). More importantly there is a need to align and progress the culture of the organisation to embed the Change and manage the psychodynamic aspect of such a Change including any unconscious change barriers which could be caused by the anxiety of learning or anxiety due to survival leading to defensive behaviour patterns – these are issues that training alone will not be able to address. Instead an aware and equip Change leader, through support, can nurture a positive environment of natural learning where there are both emphasis on well-being and psychological safe space with feedback, positive relationships and interaction.  


(4) The “Global Tilt” towards China should not be underestimated  

The impact of the “global tilt” towards the purchasing power of Mainland Chinese branded consumer goods cannot be underestimated. Pre-COVID19 they were purchasing goods mostly while traveling outside of the Mainland, but that trend reversed after COVID-19 began. With some price harmonization and a wider range of available goods on the Mainland, Chinese consumers seem now more comfortable buying locally.  Although we understand with maturity, consumers tend to become locavores, which, again, is helped by prices, trust, and retail infrastructure. Hence, Global brands are capturing opportunities during this period- aside from the continuous store and concept experiences opening in China, new retail are opening including the French department store chain Galeries Lafayette which has signed an agreement with HLC Commercial Estates Group to open a store in Dolphin Plaza in Guiyang. 

Conversely, for those managing a luxury business outside of China, they have to now cater to local consumers far better than before as the locals are not travelling out to spend in other countries. 

Planning for borders reopening after COVID-19 is already commencing, as Chinese consumers will likely start purchasing abroad again. Hopefully, if COVID-19 comes under control in other parts of Asia, we can expect more travel corridors to be established that would allow more Chinese consumers to travel to places like Singapore, Hong Kong, Macau,  Korea, and Japan.