At the WWD Apparel & Retail CEO Summit, David Bassuk, Global Retail Practice Leader, and Sonia Lapinsky, Managing Director at AlixPartners, compared the experience of the retail industry during the pandemic to driving a roller coaster – describing an initial ascent, anticipation of big falls and multiple loops.
The “madness”, they said, is not over. However, looking through the different stages of the pandemic, what’s different about the current stage is that the industry now knows that the disruption – and the resulting changes in consumer behavior – Are here to stay.
“For anyone who works in retail, it can feel like you’re stuck in an endless loop,” Bassuk said. “But there is also the positive: We have learned valuable lessons and now we know how to better prepare for these continuing disruptions. Retailers who embrace AgilityEQ will be in a much better position to face those unexpected turns and come out of the race feeling exhilarated.
AgilityEQ is the term coined by AlixPartners to refer to its “quantifiable and actionable metric that enables a business to measure and understand its ability to respond… and to truly operate with agility”.
“We’ve been looking at this for a number of years, not only studying it, but we are working with companies and are in there and see how it works for a number of years,” Bassuk said. “And we did it by talking to hundreds of executives, separating the data from many retailers, and helping to really understand what works and what doesn’t. What we’ve seen is that there are many aspects of agility where many companies in the industry have really gained ground and there are a number of other areas that were very insufficient and we are not succeeding.
For each retailer, the mix of behaviors needed to cope with ongoing challenges appears different. To unlock real performance for navigating this new consumer, AlixPartners’ AgilityEQ takes a look at three different columns that break down twelve different behaviors. The three categories of AgilityEQ are: Breaking Silos, Embracing Speed, and Accelerating Knowledge. Each category has four possible options or codes. In total, there are over 20,000 combinations of agility suits, but there is a unique answer for every retailer.
“Finding the winning combination that is right for their organization based on their competitive positioning and target consumer is critical for retailers,” said Lapinsky. “Determining the right mix of behaviors starts with a thorough, company-wide assessment and setting a baseline. After landing on your unique winning combination, you need to relentlessly focus and integrate behaviors across the organization.
Plus, she said, “You can’t and shouldn’t implement something that has worked for someone else if the solution isn’t right for you. We’ve seen many retailers trying to copy other retailers – for example, trying to emulate Amazon’s promise of free shipping in one or two days – and this can be a very expensive and very unsuccessful strategy.
While the market was pretty clear before the pandemic, there is no looking back. Even in phase three of the pandemic, the consumer’s journey was changing and new consumption behaviors appeared.
“It’s surprising how many retailers will focus solely on information about customers looking back and, therefore, are unprepared for what’s to come,” Lapinsky said. “These are retailers who have invested in the technology and the capabilities that help them integrate customer information. But they’re not investing in the right mix of capabilities.
At the same time, knowing what the industry now knows about the disruptions, Lapinsky said that “retailers should use predictive analytics to help determine where the customer is going in the future. If you don’t know where your consumer will be tomorrow, you won’t be able to deliver the right product at the right time and on the right platform. Of course, ideas must go hand in hand with action. Once you know where you need to be, use custom speed models for your particular situation.