I am inundated with top ten lists (or top 12 lists) of retail giants that couldn’t hack it in the modern world. Blockbuster, KB Toys, Tower Records, and Borders seem to be the 4 horsemen of the retail apocalypse. They are the harbingers of retail death that foretell of a world in the near future where you will no longer be able to stop in and grab a gift for your nephew on the way to his birthday party (I hope you’re better at planning ahead than I am). In an interview with Sarah Lacy of pando.com, Marc Andreessen stated, “Retail guys are going to go out of business and ecommerce will become the place everyone buys. You are not going to have a choice.” Clearly the end is nigh.
Are these soothsayers correct? Is it the end of shopping as we know it? I don’t think so, and here’s why:
1. This isn’t a zero sum game: There is no rule that segregates traditional commerce from e-commerce. Best Buy, for example, reported a 15 percent growth in online sales in 2013 and expects to reach $4 billion by 2016. Wal-Mart did $10 billion in online sales last year and expects that to grow by 30% this year. On the other side of the coin, online retailers such as Bonobos, Etsy, and eBay are opening brick and mortar stores to enhance customer experience. Even Amazon CEO Jeff Bezos has expressed an interest in physical store locations.
2. E-commerce is expensive to operate: Online sales channels are operating at a disadvantage in the modern “I want it and I want it now” world. In order to get your fancy new Galaxy S5 cordless battery charging case to you in a reasonable amount of time, companies like Amazon need to operate very huge and very expensive fulfillment centers and they need to offer their wares at rock bottom prices in order to convince you to wait the two days. As a result, Amazon typically has around a 1% operating margin, as opposed to the 6% - 10% margins that traditional retailers tend to operate at. Furthermore, even with the low margins, they do not beat out retail on prices a good portion of the time. A recent study by Kantar Research found that a basket of goods purchased at a Wal-Mart supercenter came in at 16% cheaper than the same mix of products at Amazon.com.
Despite Mr. Andreessen ‘s doomsday prepping, retail giants and strip malls aren’t going away any time soon, but that doesn’t mean that brick and mortar giants can sit on their laurels and continue the status quo. To successfully ride this wave of disruption and remain relevant to consumers, brick and mortar retailers are going to have to develop new business models that deliver online customer experiences that meet or exceed buyer expectations. This includes pricing, product descriptions, reviews, secure payment, customer service/support, etc. Opening these new ecommerce channels while keeping the physical doors open and lights on will require an increased awareness and visibility into what they have, where they are, what they need, and where they want to go. Somebody’s going to have to ask the question “How are we going to reconcile the existing legacy system with the new ecommerce requirements?” Just as important – somebody is going to have to answer that question. Does your organization have the means to define the current state as well as lay out options to achieve the future state?
The 4 horsemen of the retail apocalypse do not foretell the end of retail, but they do serve as a warning to others about what happens to those who ignore the digital revolution. Of course, there are going to be risks when entering any new market. Success isn’t guaranteed. But if we can visualize the necessary steps to bridge the gap between where we are and where our customers are going to need us to be, while understanding the risks along the way, we can take control of our destiny. Personalized and interactive shopping experiences, as well as a melding of the physical with the digital, will dominate the future.
What are you doing to prepare your organization?
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I worked my way through college as a waiter at one of those identic chain restaurants with kitschy bits of Americana haphazardly strewn upon the walls. As I was new to the food service industry, things did NOT go well at first. I would run to get the young couple at table five drink refills, then come back to the family at table seven asking for more mustard, then come back to the businessmen at table three asking for their check so they can make a meeting. I’d wear myself ragged running back and forth, making separate trips for each request, and ending up with unhappy customers. All the while, I would observe more experienced servers cruise through their shifts with much less effort while far outpacing me in customer satisfaction and tip money. What was I missing? I’m moving faster than these people. I’m taking fewer breaks. I’m beating myself up, so how are they beating me?
One night, a seasoned manager pulled me aside and gave me a bit of advice. “Instead of trying to cater to individual needs one-at-a-time”, she said, “treat all of your tables as one.” This made a lot of sense to me. Instead of fielding individual requests, I started doing everything at the same time. I’d pile food for three tables on my tray, grab a cloth to wipe down a dirty table, and pick up a condiment caddy on the way out of the kitchen. Things got even worse. I was overwhelming myself by trying to do too much at once, causing sloppy work, customers who did not feel attended to, and the occasional dropped tray of food. There must be a better way.
The answer to my servitorial shortcomings, oddly enough, came from the Classical Philosophy course I was taking that semester. Aristotle argued that virtue comes through a mean between two extremes. One who retreats from all confrontation is a coward. One who mindlessly charges into battle with no caution is reckless. The virtue of “bravery” comes from the mean between these two extreme examples; someone who approaches battle cautiously and does what needs to be done despite his or her own fears. This doctrine is better known as the “golden mean”. With this in mind, I developed a more level headed and balanced approach to my duties as a waiter. I looked at what needed to be done as a whole, logically grouped those tasks together, and executed in an iterative manner. Step 1: Clean all dirty tables, Step 2: Get all drink orders, Step 3: Deliver food to tables three and five, etc. With this new balanced strategy, I went on to become one of the highest earning waiters at the restaurant.
I have since graduated college and moved on from food service, but the lessons I learned there stick with me to this day. When I arrive at new client sites, I very often see the same types of mistakes that I encountered back at the restaurant. Many companies will attempt to “boil the ocean” when they begin a new architecture project. They will attempt to model every aspect of their operation all at once, and inevitably get tripped up in the sheer volume of work, causing the whole project to collapse like an overloaded tray of food. For instance, many organizations are currently focused on taking their business digital. A bank may decide that they want to develop an app where customers can take a picture of a check and it’s immediately deposited into their account. This requires changes to the operating model as well as the infrastructure that supports it, and also requires a specific skillset.
To deliver the quickest ROI, we want to ask the following questions:
What is the goal of this specific project?
Do we have the skills and resources required to achieve this goal?
What changes will need to be made to deliver success?
Focusing architecture activities on information related to these specific questions will help keep the scope of your work on target.
On the other extreme, some companies will focus too intently on one single aspect of their architecture. This approach generally fails to produce enough value to the enterprise as a whole, causing the project to eventually sputter and die. We don’t want to just keep modeling for the sake of modeling. What do we need to move forward? Get that into the architecture, then move on.
My advice to organizations that are guilty of either extreme is always the same; “look to Aristotle and remember the golden mean.” If you look at your architecture from a high level, group it into logical chunks, and attack those chunks in turn, you will achieve a much higher level of success for your project over less “virtuous” extreme approaches.
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Hello, Stephen Dorr here; your friendly neighborhood Excelsius guru. What version of MEGA are you running? SP4 is not capable of supporting Excelsius without Advisor running first. SP5 should not have a problem running your dashboards stand-alone. If you take a screen shot of your setup page, I can try to diagnose your problem.
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