Fear of Change Could Cost You Customers
In a recently announced report by my company and Retail Systems Research, we wrote:
“Retail customers have been through a lot in the past few years. Lockdowns, social isolation, difficulty finding products due to supply chain woes: All have a cumulative effect. Rising prices have consumers on edge, and retailers are incredibly sensitive to this fact. As a result, 29% of retailers are fearful that any change in prices could bring about a negative reaction from customers.”
Hear that? About a third of all retailers are fearful to make any change during these inflationary times, although autonomous price technologies are available to meet the present and future pricing needs of shoppers. For a number of reasons that I will outline here, this widespread conundrum reminds me of the late Harvard Business School professor Clayton Christensen’s “The Innovator’s Dilemma,” the business book classic that has helped leaders across many industries better understand how to prepare for and manage disruptions.
- The research that Christensen and his many cohorts conducted indicates that the best-managed companies often stumble during disruptions by failing to prepare themselves for future customer demand. As Christensen noted, these companies – including iconic brands such as Xerox and Sears Roebuck – failed not because they were not well managed, but because “the very management practices that have allowed them to become industry leaders also make it difficult for them to develop the disruptive technologies that ultimately steal away their markets.” In another passage, Christensen asserts that these companies have become “hostage” to their top customers.
- At the same time, the pace of technology disruption and the threat to market leaders might come faster than one thinks. The great futurist Ray Kurzweil has often observed that it is difficult for most people to predict the pace of change, because we are wired to project the future linearly, when in fact technology accelerates exponentially. Remember when Tesla launched? At the time, the automobile industry could not foresee how quickly the startup would grow, and how soon the market as a whole would need to adapt to the new electric and hybrid demands of consumers.
- As noted, by remaining hostage to one’s best customers today, retailers fail to allocate adequate resources to future-proof their business, while they have little understanding of how fast customer needs will change. This puts pressure on “late adopters” to react to those changes and adapt their service architecture to meet future needs.
The time may have come for retailers of all sizes to reassess their customer strategies. Because of the extraordinary disruptions that retailers and consumers are facing today – the persistent problems caused by the pandemic, growing inflation worldwide, and, most recently, threats to the global food and energy supply – the next milestone in retail innovation is closer today than it has been for a long time, at least since the advent of e-commerce. AI-powered, autonomous pricing technology – which was once the exclusive domain of retail industry giants such as Amazon, Walmart and China-based Alibaba – is fast becoming a must-have, not a nice-to-have. It is also a clear signal that consumers want precise and relevant pricing. Both Walmart and Amazon have used advanced technology to build brands based on best competitive pricing. Why can’t this be the brand foundation for any retail company that has a strategic path to compete on this value?
At first glance, this sounds easier said than done. But there are several ways that retailers – regardless of where they sit on the adoption curve – can organize themselves for success rather than failure and – for some – their ultimate demise as past icons:
- First, retailers can and should invest in data science that can better help them understand what customers actually want.
- Second, a clear understanding of what customers want and expect can enable a retailer to devise a customer-centric strategy for automating the execution of pricing decisions that are notoriously imprecise because of manual methods and human bias. As I noted earlier, the technology has been democratized; my company, DemandTec, recently rolled out a platform for autonomous pricing. It is no longer a capability exclusive to retail giants.
- Third – though by no means the last for retailers – investing in autonomous decision-making and execution can be extended to other retail functions that have been hampered by biased manual processes, such as inventory management – a big concern in a market made volatile because of kinks in the supply chain – and promotions programs, which increasingly are becoming more AI-powered.
In the end, it may be some retailers themselves that are most averse to change. But if fear is a motivator, I suggest that retailers take a moment to reflect on the danger of just standing in place and missing out on an opportunity to improve their position in the market and with consumers. Many thoughtful, well-managed retail companies are standing before a train – to use Clayton Christiansen’s metaphor – that has been gaining momentum for the past two decades. They are not just standing in the way of progress, they are positioning themselves for a collision. Fortunately, retailers both large and small now have options. But with two-thirds of the market alert to those innovative opportunities and taking action, you can’t afford to wait much longer.
About Anis Hadj-Taieb, General Manager, DemandTec by Acoustic
Anis brings a unique understanding of the retail landscape, along with extensive experience leading sales team for AI-enabled pricing and optimization solutions, to DemandTec. With more than 20 years of leadership experience in client management, revenue generation and team management, Hadj-Taieb has specialized expertise in deploying analytics and optimization in the retail and FMCG industries.
Hadj-Taieb joined DemandTec from GreyOrange, where he was global VP of sales, responsible for nearly doubling the global sales team while exceeding sales targets. Prior to GreyOrange, he was SVP of sales at Revionics and SVP of retail and customer success at Eversight. Hadj-Taieb also held executive-level roles at such software companies as PRGX, Infor Global and Oracle. He earned a master’s degree in applied mathematics and computer science from the National Institute of Applied Sciences, in France.
