“The wheeze you hear from the average store retailer is profit decline brought about by shop-keepers themselves, as they relegate every aspect of retail to become subservient to price. As margins decline and costs rise the wheeze gets louder.”
I like this quote that I stumbled upon recently on the Sydney Morning Herald because it speaks to business fitness – in my mind at least.
Perhaps another analogy is simply to look at retailers trying to adapt to this new order of retail, carrying excess weight into a race demanding a lean and razor sharp approach. It speaks to the latest bout of FTA syndrome – failure to adapt.
The key to growth in this new order of retail may not be to be the biggest, per se, or even the best, but rather the most able to adapt.
It is this adaptation to the evolving marketplace that is the single most important business fitness characteristic.
Look into the great retail business case studies over the years from Wal-Mart, Topshop, Apple, Zara, to the many others we could nominate and you see one single common attribute highlighted is one of adaptation.
This adaptation from brand refinement, distribution footprint, integration of channels, consumer insights to simply delivering consistently relevant retail always delivers the consumer what they want. The truly centric consumer-led adaptive organisation has its CEO and board just one heartbeat away from its customer.
The converse applies to the retailer which doesn’t adapt – look through the chronicles of retail business cases both in expansion and implementation that have failed and you see consistent cases of FTA syndrome.
According to our friends at Dun and Bradstreet, failures in the retail sector rose 11% for the quarter and were up 115% for the year (2012/13)
How many of these businesses falling over would have just escaped with a small grazing or better still unblemished by simply seeing the winds of change, having the vision and influence to affect change and to adapt to our rapidly changing consumer psyche and behaviour?
Perhaps this relevant and appropriate dissertation by Robynne Berg is as much a commentary on Australian retailers suffering from the FTA syndrome as it is a telling snapshot of the speed of change we are engaged with and the need for retailers to adapt:
“The next few years will unquestionably be the most daunting, exciting and transforming years for Australian and international retail since the nascence of chain stores and departments stores in the mid 1800s.
“The convergence of technological advances and social change will continue to completely shift the retail landscape – a shift now being witnessed and deeply felt by those in the retail industry. Over coming years we will see the birth of spectacular retail stores that offer experiences that right now are beyond the limits of our imagination.
And we will no doubt see the demise of some of our best known and most loved retail institutions.
The key determinant as to who will flourish and who will die will have nothing to do with market fluctuations, competitors or national economies. It will have everything to do with a retailer’s vision and ability to innovate.(and we would suggest adapt to the changing environment) It will not be dependent on a store’s history, legacy, prior success or brand recognition.
The determinant of success (and survival) will rest with the stores who are able to restructure their business model to meet the new retail paradigm, and those who successfully embed a culture of innovation, adaptability and flexibility.”
It is commonly assumed that online retail will be the cause of the demise of bricks and mortar retailing.
We believe that it is this is not the case, rather, that online retailing is an indicator of changing consumer behaviour. Online retailing is an avenue for customers to purchase how and when they want. And it’s not just online where retailers are showing signs of FTA.
In order to survive and prepare for future growth, retailers must break away from the assumptions they have placed around their industries. They must view their business, their industry and their market through a new lens; one that debunks deeply held beliefs. Beliefs which, if maintained, will ensure the ultimate demise of many retailers.
I leave you with a quote from one of my preferred authors who understands the FTA syndrome better than most.
“All failure is failure to adapt, all success is successful adaptation.”
Brian Walker is the managing director of Australasia’s leading retail consultancy, Retail Doctor Group.