How can companies avoid the seven deadly sins of retail laggards?

Discussion
Photo: RetailWire
May 04, 2017
Laura Davis-Taylor

Through a special arrangement, presented here for discussion, is an excerpt of a current article from the Platt Retail Institute’s Quarterly Journal of Retail Analytics.

For years we’ve talked about the train coming that is now steamrolling some of our country’s most iconic retail brands. I blame the leaders at the top of every company that is spiraling into oblivion. They were warned and they didn’t listen.

Having been in these trenches for a very long time, here are my observations on the seven deadly sins of retail leadership:

Arrogance. It’s the only path that they know, thus the only path that exists.

Selfishness. Retirement is coming and the short-term balance sheet is all that matters to get that bonus and get out while there’s still time. To them, this storm is someone else’s problem.

Complacency. It’s too late. The ship is too huge, as are the problems. The time to start changing how they think, work together, plan their offensive moves, reward brave thinking, and evolve was years ago.

Incest. A systematic belief that talent should always be cultivated and elevated from within based on an outdated set of leadership screeners and company “fit,” rather than subject matter expertise, vision and the guts to challenge norms. As a result, everything remains the same.

Narcissism. Rather than caring about the customer first and foremost, decisions are based on the retailer’s image, their needs, what they want from the customer and how to get it from them for their own purposes — regardless of the true cost.

Apathy. They are unable — and unwilling — to get inside the shoes of their customers, to listen, to understand, to respond and to create checkpoint methods for success. Also, they have an innate inability to grasp that this as an ongoing, iterative process.

Ignorance. Looking at what is happening from a narrow four Ps (product, price, place, promotion) and transactional perspective, instead of the wide-angle lens of what is happening in the world, within culture, at retail as a whole and throughout their category. Thus strategies and decisions are uninformed by critical influencers and easily disrupted by competition.

DISCUSSIONS QUESTIONS: Do you agree that old-school leadership practices, short-term views and other issues have prevented retailers from changing in response to the major shifts affecting the industry? Does digital retailing present a bigger psychological hurdle versus past shifts?

Braintrust
"Those who adapt may thrive. Those who don't will wither away."
"SUICIDE is the answer. Going back over 100 years, every retailer that has disappeared (or is about to disappear) has suffered from the same problem."
"“Sin” is a bit much but I would say I don’t envy anyone leading a retail brand these days. The way forward simply isn’t clear."

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27 Comments on "How can companies avoid the seven deadly sins of retail laggards?"

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Jon Polin
BrainTrust

These seven deadly sins are all symptomatic of one overarching management challenge: It’s easier to do what has always been done than to do things differently. Those who adapt may thrive. Those who don’t will wither away.

Charles Dimov
BrainTrust

Jon, you hit it on the head. Getting over the hurdle of “the way we have always done it” is the greatest challenge in retail today. The technology is there. The consultants, systems integrators and vendors are ready to go and hand-hold through the entire process. However, it means being open to being pushed out of your comfort zone, being open to making some mistakes and having an open mind about adapting to the customer’s new expectations. Those who get it AND do something about driving that change will thrive. Those who don’t will simply become a memory of once-upon-a-time in retail.

Sterling Hawkins
BrainTrust

Testing new concepts and technologies can make a retailer look as though innovation is present, but without organizational commitment to doing things differently, it remains superficial. Incrementally adding technologies to everything that’s always been done is a trap.

Dick Seesel
BrainTrust

The article paints today’s retail leadership with an overly broad brush. Every retail CEO and leadership team is different and every retailer faces different challenges — some of them external, others self-inflicted. You can argue that J.C. Penney under Ron Johnson was guilty of a completely different set of “sins” with disastrous consequences — until a couple of old-school retail execs managed at least to stablize the company.

The author is correct that the pace of change has run away from retailers’ ability to manage it, but some of these changes (e-commerce, the recession, Millennials’ spending habits) happened to everybody. Not all of the retail execs struggling with change turned overnight from geniuses to idiots.

Tom Dougherty
BrainTrust

Oh my. I agree with EVERYTHING (most unusual for me). Leadership IS to blame.

Holding onto a failing model … well, Steve Jobs once quoted Apple’s leadership before he returned to power as saying “The ship is sinking and we need to turn it around.” Nope. You need to fix the leak.

Hanging onto an old model hoping for a different result is not just suicide. It’s ignorance.

Paula Rosenblum
BrainTrust

I think the root cause of the problem is actually the daunting prospect of turning around a mammoth steamship. There are so many enormous retailers. They say “this is the way we’ve always done it” because it’s the only way they know HOW to do it.

Trade-offs are made when companies get very large. Those trade-offs include departmentalizing/silo-ing their enterprises, focusing on procedure rather than innovation or creativity (United Airlines comes to mind) and physical separation between executives and teams.

So to me the real question is, “How does a top-tier retailer foster an environment of change and innovation?” It’s not so easy. It’s easy to say what’s wrong — it’s just not so easy to fix it.

Brandon Rael
BrainTrust

I couldn’t agree more with these broad-stroke seven deadly sins. While it’s certainly very applicable to the current challenges that retail corporations are facing, this is extremely relevant to each and every corporation and organization.

Leadership and the ability to steer the ship out of stormy waters comes from the top of every organization. Once leadership becomes complacent and stuck in their ways, for a multitude of reasons, then perhaps the inevitable downward spiral begins. I am sure that we all can admire Jeff Bezos’ philosophy and leadership for keeping Amazon innovating, thriving, growing and relevant. In simple terms, “it’s always day one.”

“Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.”– Jeff Bezos, 2016 Letter to Shareholders

Art Suriano
BrainTrust

This article hits home with many retail leaders today. Of course there are exceptions. But I too have experienced on many occasions the retail leader at the top being more interested in the status quo because he or she was guaranteed another year at the helm and a bonus.

Short-term solutions rather than long-term strategy have been the norm for many of these poor and ineffective leaders. What I see changing, though, is many of these leaders will be retiring or moving on. I think the big changes will come from the new players on the block, the e-commerce companies who are opening and will continue to open retail stores like Amazon, Warby Parker, Bonobos and Blue Nile to name just a few. These stores will offer new experiences for customers with very innovative concepts. Moreover, these new stores will force many retailers to catch up quickly or face extinction. Many of today’s retailers will fail if they keep their “only concerned about me” leaders but the companies with real leaders who do want to survive and succeed will find their path to success.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Great list of retail sins Laura. In the 12th century “apathy” was somehow removed from the list of declared deadly life sins, now considered as pride, anger, greed, lust, envy, sloth and gluttony. “Apathy” became a manifestation of “sloth” despite the broader application of apathy. And somehow, our science-focused culture has never labeled “interia” as a sin, though it certainly applies as a sin in retail and other commerce. Since my context for this comment is biblical, I’ll note that the Bible (in any version) often references the importance of newness and renewal, an attribute that can right existing wrongs. Loved your short post Laura. Hats off to the Platt Retail Institute and RetailWire for publishing it. Let our human capacities for improvement prevail!

Harley Feldman
BrainTrust
As in every business, when company leadership stops responding to their customers’ needs, they begin to fail. The change in trends in retail has been going on for many years. It started with the transformation in shopping habits that drove department stores toward having more store-within-a-store brands instead of just offering the retailer’s brand. Amazon and the rise of mobile devices have driven the face of retail to a place that did not exist 10 years ago with online purchasing, more intense competition and omnichannel expectations. The retail leadership that catches these trends and customer needs with appropriate actions will survive; those that don’t, won’t. Digital retailing is a new big hurdle. Store-based retailers have typically grown through expanding store locations and items. The digital revolution has changed the game markedly. Customers can order online and have their orders fulfilled without ever coming into stores. This should cause the leadership to re-think what it means to present their items for sale to the consumer, how to close a sale and how to fulfill that sale quickly and efficiently. Walmart seems to be figuring all of this out with its recent acquisitions of several online-only companies and the major efforts and… Read more »
Gene Detroyer
BrainTrust

Going back over 100 years, every retailer that has disappeared (or is about to disappear) has suffered from the same problem. Consumer trends change, but retailers refuse to.

The answer is that leadership must have a willingness to take charge of the destruction or disruption. It will be a sea-change in what they do. And if that is not the answer, close up, sell off assets and make the best return possible for the stockholders.

Could Sears, with its reputation on tools and home improvement, have been Home Depot today? I show my students pictures of the the old Sears catalogue. I ask them what that reminds them of. The answer is always the same … Amazon. Shouldn’t Sears have been a leader of e-commerce by starting 25 years ago?

Adrian Weidmann
BrainTrust

The challenge lies in balancing the short-term expectations of Wall Street and the true requirements of re-architecting the solutions needed for brick-and-mortar stores to survive the seismic shift in expectations of digitally-empowered shoppers. Too many people — regardless of their position in the organizational chart — from the chairman of the board to the entry-level stocking position are content to collect a paycheck and stock options(!) rather than risk the challenges and consequences of holistic change. There isn’t a personal reward for standing up and taking responsibility for changing the status quo. It takes constant hard work, determination, resolve, criticism — all of which are thankless and not rewarded. How many people at Sports Authority, Gander Mountain, Bebe, RadioShack and others knew that stores would close and didn’t do anything about it other than cash their paychecks and stock options while seeking a new job?

Pavlo Khliust
BrainTrust

In my recent article, I also try to define the role of technology in the retail industry. Who follows whom? The main thing for a retailer to succeed nowadays is to realize that technology is leading. Technology is the cause of the dramatic shift in the retail industry and digital customers demand digitally-attuned retailers. What a pity, though, that some of the CEOs refused to listen. Times changed and “that-is-how-we-usually-did-it-and-it-worked” models turned into ashes.

Of course there are old-school leadership practices to blame, but it’s never too late to advance the situation if retail dinosaurs are ready to confess the sins. To deliver advanced value to customers, retail has to be flexible. This flexibility vs. historical stability battle will be the biggest hurdle to overcome.

Ralph Jacobson
BrainTrust

There are countless examples of retailers falling victim to any or all of these “sins.” I don’t think these have all too much to do with modern sales channels and newer technologies. It’s all about the culture. Bottom-line, get your head outta the sand, wake up and innovate!

Ed Rosenbaum
BrainTrust

There is an old saying, “if you do what you always do, you will get what you always got.” Unfortunately, management believes they know more and are better than those companies that failed.

Peter Charness
BrainTrust

Another version which I think is more applicable today. If you continue to think what you have always thought you will continue to get…. Today it’s not just the doing — there’s a need for a full thought process reset.

Jeff Hall
BrainTrust

The majority of legacy brick-and-mortar retail brands suffer the effects of one or more of the seven deadly sins in two ways: 1.) The systemic inertia inherent in leading an established retail brand makes innovation and adjusting to competitive market realities incredibly difficult and makes it much easier to simply do things the way they’ve always been done and 2.) Many retail executives tend to move from brand to brand, bringing with them the learned preference to maintain the status quo. Start-up retailers aren’t nearly as constrained by these forces and are therefore much more nimble in avoiding the sins of the laggards.

Jasmine Glasheen
BrainTrust

All seven deadly sins can be summed up in one word: stagnancy. Retail is so fluid right now — brands that don’t move are going to be bowled over in the tides of change. (I’ll admit I got carried away with my own metaphor there, but I digress.) To succeed, brands need to walk the fine line between innovation and trying too hard. The answer? Authenticity and fresh blood.

Bob Phibbs
BrainTrust

“Sin” is a bit much but I would say I don’t envy anyone leading a retail brand these days. The way forward simply isn’t clear.

I agree with Paula and say many have abandoned being brilliant on the basics to chase a lot of “innovation” which chokes off the money to pay for the innovation. That and “first-to-market” — like Amazon — is always tough to beat.

Ricardo Belmar
BrainTrust

We can summarize all of these deadly sins this way — change is hard. It’s not only hard to execute, but it’s very hard to recognize the NEED for change. How many retailers looked within their business, saw growth and felt they had the “right way to do things” mastered? Along came e-commerce, then mobile, followed by cultural trends led by Millennials and younger generations that completely altered both the required pace of change and the need for change as the perception of retail by consumers developed into something completely new. Younger, successful modern brands across segments have quickly recognized this and flourished whether in sales or at least in name recognition with a loyal following. Successful examples? Amazon, Rebecca Minkoff, Apple and many others. Failures? Sears, RadioShack, Whole Foods, Bebe, Wet Seal and so many more.

Retail leadership has a responsibility to recognize trends, recognize the need for change and adapt. What’s really made this difficult for so many long-term brands is the speed at which they now must adapt or be forgotten.

Camille P. Schuster, PhD.
BrainTrust

Saying that a company puts the consumer first doesn’t mean anything unless significant organizational, training, reward, and technology changes are made in addition to developing a collaborative approach to trading partners. In our 2004 book, “The Consumer … Or Else!” Don Dufek and I said that companies not making the change were headed for the graveyard.

Min-Jee Hwang
BrainTrust

Like so many before have stated, those who fail to adapt, fail to survive. Over the past decade many of the retail giants of the past have fallen victim to the changing times and new giants have risen in their place. Gene brought up an interesting point with his students identifying the Sears catalog as the Amazon of the past. They could have pivoted to become the new Amazon, but failed to adapt. It’s hard to predict how technology will evolve and what will become the next big thing. Only way to find out is to try new and different things.

Craig Sundstrom
Guest

Although I don’t disagree with Ms. Davis-Taylor per se, I wonder if a retailer accused of one of these “sins” might not have a different response.

Arrogance > We’re going with what works

Selfishness > I’d love to go long-term but look at what happened to XXX when they came in under-plan for two quarters….

A lot of times “leadership” has to choose between alternate and very different versions of the future, with imperfect information. Sometimes they choose wrong. Whether or not this humanity means the lofty salaries are unjustified is a valid concern, but separate question — and of course there are just plain, bad decisions. But the seeming implication of this article’s title, that every failing business could have been saved if only management had followed some certain path, I don’t think I agree with.

Sean Wargo
Guest
Well said, Craig. As I read the article and your comments, I find myself wrestling with the notion that leadership makes decisions based upon the information they have available at the time. Thus one could say this falls into the category of ignorance by not seeking out more data, more input, or more perspective. That may be true, but at a certain point a decision has to be made, even if its a “bad” one over the long term. All of this reminds me of a particular local retailer in my area who sold high-end home entertainment solutions. As prices for technology, in particular TVs plummeted thanks to online sales and low-end providers, this company got into panic mode. Next thing you know they had a sign on their roof saying they offered the best prices on flat panel TVs. This from a company who sells high end and a custom solution. You can guess what happened — they closed within a year, unable to truly compete on price. But that’s just it. They made the decision to compete in a way they couldn’t and shouldn’t and so paid the ultimate price for it by closing their doors. It’s something… Read more »
William Hogben
BrainTrust

When retail businesses fail to adapt it’s typically the responsibility of dozens of decision makers over many years, so it’s unlikely that any of these personality factors will play a major role on balance.

My contention is that businesses go into a tailspin when they get too busy to adapt and experiment. If they are addicted to their quarterly numbers then when they start slipping, instead of taking the time to reinvent themselves they begin applying quick-fix after quick-fix, in pursuit of those quarterly numbers — all the while too busy to zoom out and look at the real problems.

Bart Foreman
Guest

Harsh, but spot on presentation. We are doing business in a harsh and unforgiving marketplace. Period. I believe there are two additional sins to consider:

BLINDERS – management only sees what it wants to see so they avoid looking around and deliberately avoid seeing pattern shifts impacting the business.

DEAFNESS – goes hand-in-hand with blinders. See no problems, hear no problems.

There’s a cadence in the market and for ALL of the sins above, not feeling it will result in failure.

Bill Hanifin
BrainTrust

There are clearly some well-embedded mindsets that need to change. It is safe to say that similar mindsets can be identified for criticism in grocery, banking, and CPG. I would not be as harshly critical of leadership as there are outside influences (board members, investors, stock analysts) that should share the blame for their contributions to perpetuating broken mindsets.

If the ultimate impact of evolution in the brick and mortar retail industry is the contraction of their physical presence, I wonder what the commercial real estate industry should expect in the next 5 years?

wpDiscuz
Braintrust
"Those who adapt may thrive. Those who don't will wither away."
"SUICIDE is the answer. Going back over 100 years, every retailer that has disappeared (or is about to disappear) has suffered from the same problem."
"“Sin” is a bit much but I would say I don’t envy anyone leading a retail brand these days. The way forward simply isn’t clear."

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