In today’s fast-moving retail environment where company needs and in-house capabilities vary widely, the most important asset any vendor possesses is not a product or prototype, but the ability to have a conversation that brings them to a proper understanding of a retailer’s business needs.
This year at EuroShop one major supplier of retail infrastructure and logistics services didn’t have a single product in their booth – an incredibly unusual move at a trade fair where competition for the most impressive product offering is usually intense. Instead, they had a number of tables with chairs spread across their booth. The idea was that retail managers would come into the booth and have a conversation about the problems they faced, and together you would devise a specific solution.
Many of the other booths were also light on prototypes and heavy on conversations. This wasn’t by accident or a design choice. The central nervous system of the retail industry is undergoing a fundamental reorganisation, away from one-size-fits-all product-led offerings, towards a holistic, tech-driven, solutions-focused approach to how retail is done.
Companies supplying retailers are increasingly like IT companies in the way they interact with their customers. In the same way as the IT industry has changed over the past 20 years to deliver software, maintenance and infrastructure as ongoing services, retail suppliers are transforming their business to be solutions-led.
Loss prevention companies would traditionally show security gates, RFID readers and cameras. Now they’re showing off holistic models. Their sales pitch is no longer centered around the effectiveness of their product, but on the accuracy of their insights. Suppliers are touting their ability to look at where your losses are occurring, analyse the data from your store and their existing customer base to determine exactly how they should be prevented and implement a solution that is specific to your problem.
Checkout technology providers have pivoted from displaying machines that allow customers to scan their own goods to having discussions with retailers about how they can institute true self-service for their existing customer base, working with current behaviours and protocols. What was previously product-led has become solutions-led where the vendor’s sales pitch not about the efficacy of a device but their ability to engineer a customer experience where staff interaction is entirely optional for the customer.
The same is true of shelving suppliers. Traditionally a supplier of shelving for fit-outs would custom-build and deliver their product according to a retailer’s specification with a 12- to 16-week turnaround. As retail becomes more agile, pop-ups are increasingly common and re-fits are in demand, that timeframe has to be truncated.
This shift towards a full solutions approach is being driven by two things – a relentless appetite for efficiency from retailers and a burgeoning technological sector.
Vendors are selling into a tight retail environment where disruption is the new normal, to retailers who have already pulled many of the levers they can reach to lower overheads and improve bottom line. Nobody can afford the leakage and slippage that accompanies an attempt to squeeze existing operations around a one-size-fits-all product – let alone wearing the consequences of a poorly-executed purchase.
The result of this shift will be an acceleration in the accumulation and deployment of institutional knowledge from vendors, and the persistent “downstreaming” of technology that’s developed in the back-of-house part of our industry into stores.
There is a reason that store-in-a-box services are so valuable to first-time retailers. They are leveraging the industry experience of people who have solved their problem 1,000 times before. As vendors instituting solutions-led services become ever more intimately acquainted with different and developing facets of their customers’ operations, they will generate solutions faster, more completely and more creatively.
We are already seeing solutions that used to only exist in warehouses become miniaturised and installed in consumer-facing storefronts – think dispensers for a particular supplier’s medication in pharmacies that are modelled on large picking infrastructure that exists in their factories. A comparable process is occuring with the applications of technologies and processes developed by logistics suppliers being implemented in home-delivery services in the grocery segment.
As the implementation of technologies develops, the amount of data available to refine those technologies increases, and the convergence of back- and front-of-house continues, we will see more suppliers applying innovative solutions developed in their own operations as novel bespoke solutions to retailers’ business-specific problems.
Craig Padoa is managing director at Wanzl Australia