Retail is Changing Faster Than the Speed of Thought

By Bill Scott

IT’S A FACT! Everyone does not need a university degree. In fact, pushing our kids into colleges could be a huge mistake. Not only that. In some cases, higher education can backfire on you. Sometimes I think education focuses too much on the past, and the past doesn’t last as long as it used to. Our kids graduate unprepared to cope with the real world. New technologies are living and dying so quickly, the majority of us have not, nor will we ever become aware of them.

Life Is a Terminal Condition
I have always been fascinated at how we manage the inevitability of death. Most of us go about our business refusing to acknowledge the fact that we will die someday, even though the facts are irrefutable; and we go through our entire lives as if death is something that happens to others. I can understand why we don’t go around worried about the absolute certainty that a huge asteroid may blow up our planet any day now, but even so, the denial of our own deaths is somewhat interesting.

The reason I am bringing this up, is there is another inevitability that we will likely refuse to accept, and it is knocking on our doors right this minute. In fact, it will begin to be a real concern within the next three years.

What is this ominous prediction I speak of?

The certainty of future zero employment. I won’t even bring up the certainty of leaving our bodies one day and taking our place inside a supercomputer the size of the sun; but, there are children being born this very second whose Grandchildren will never know what it was like to have a job… or to even want one.

The speed in which robotics and artificial intelligence is progressing is mind-boggling. Even if we were to become die-hard Luddites and attempt to stop it now, it would be a futile exercise to be sure. A world of zero employment is absolutely guaranteed.

In the face of this inevitability, I have always liked the adage that when the All Mighty closes a door, he (or she) will open a window. Likewise, in the face of this ominous prediction, there will be opportunities for the current generations that will likely amaze us. Take heart—to be sure, these opportunities will be temporary, and likely to produce a flood of bonanzas that will literally blow your mind.

Wealth Cannot Be Destroyed
The law of conservation of mass, or principle of mass conservation, implies that mass can neither be created nor destroyed. It can only be taken apart and redistributed. It cannot be subtracted from or added to.

Wealth is no different. The wealth of the planet we see today has always been here. Gold, silver, oil and gas and natural resources will not leave this Earth anytime soon. They may change shape and be swapped around for other things, but wealth is here to stay… at least until we can figure out how to dispose of it permanently.

Wealth will continue to go through a massive redistribution phase. Wealth is not created, we simply accumulate it from others who give it away or lose it, either voluntarily or by force. Some of the greatest losers in this current redistribution process will be retailers like Walmart, Best Buy, and Target. Not so much because these behemoths lack the knowledge and/or the education to deal with change. Their problem is that they are just too darn big to react fast enough to stay on top. And as “Big Box” retailers begin to disintegrate, the money they lose will find its way into someone else’s pockets.

Is it absurd to imagine that wealth will simply be there for the taking?

We need to start thinking about the future, and to position ourselves to be in the right place at the right time, but that too is fungible, and if you sit down to rest for too long, someone else just might run off with the spoils.

Replacing management with the new, upgraded version will not be easy. There will be screaming and hollering and gnashing of teeth. We can no longer run our retail stores the way our fathers and mothers did. There is an old saying that goes, “If IBM doesn’t eat its own children, someone else will eat them for them.” Meaning IBM management should have dumped their line of personal computers before they even started. Management never liked them, didn’t want them, and struggled like the devil to make Bill Gates a Billionaire to avoid involving themselves in the changes that were imminent.

Blockbuster was like a ‘deer in the headlights’ when they saw Netflix bearing down on them. Amazon is giving movies away to Prime members for free. I got a call today from AT&T trying to convince me they had the best deal. I laughed in their face. Does AT&T really believe they are invincible?

The problem with management is that most manager’s thinking goes back to the stone-age. They fear change, because they fear losing control, their shareholders, their positions, even their jobs.

Procurement & Receiving
How we go about ordering and receiving inventory into our stores is ridiculous. I’m sorry, but suppliers and retailers are operating in an environment that is unsustainable at best, and leading to a total disaster at worst. Retailers went to suppliers and said, “Keep my stores filled.”

Consequently, that’s what suppliers try to do. I’m not saying that suppliers are innocent from operating in this way. There is more than enough blame to be shared by everybody. If suppliers are guilty of anything, it is how they react to the fear of displeasing customers. 65% of supplier invoices reek with errors, and most of the time the mistakes are in the retailer’s favor, but the cost of dealing with these errors is more than $400 for each mistake, and that costs is being shared by everyone, including the poor consumer who is totally blameless in this situation—well mostly.

Suppliers sell cases and cartons to retailers, and retailers sell singles, and sometimes cartons. The UPCs, the only real numbers that absolutely identifiy an item seems to be a mystery to everyone as the value of arbitrary identifiers being supplied by suppliers ends when the product lands on the retailers’ shelves. A book could be written on this subject alone. Retailers do not know what they are selling, have little or no knowledge of what they are being charged, how long it has been in their stores, and the worst mistake… not knowing the actual costs or the turn rates of the products themselves. This just can’t last forever.

Not everyone is scanning sales, and you can’t really blame them, because the cost of keeping track of the new UPCs that hit the store on a regular basis are too much for the retailer to handle by themselves, and if the supplier doesn’t take the responsibility, who will?

I suggest teaching the store employees to get involved in the auditing process, not by category, but by item. One time, that suggestion put a mid-level manager of stores into hysterics. “Why, if they know what’s in the store, they will steal it.” To which I responded, “Then how do they know when they are out?”

Really, this myth that employees will steal if they know what’s on the shelves needs to be buried with a stake driven through its heart. There is a program that involves much more than what’s on a store’s shelves, it will end 99% of the theft going on in stores today. It’s a complete reinvention of how the stores and outside contractors work together to solve this problem, but if we can’t get past the idea that convenience store employees are an incorrigible band of thieves to begin with, we will never get anywhere.

A Career in Retail
Imagine that? Do you have a hierarchical infrastructure in your retail stores? Is there a real path for advancement? When a store employee is assigned to a store, is there a plan for their future? Employees are our greatest assets. It cost far more to replace a trained employee than you could ever spend by keeping one. Untrained and unprepared employees are going to be more worthless to you than they have ever been. The proper infrastructure, one that is built on advancement is critical today, and imperative if you plan to remain in the race in the coming years.

As we move into an imminent future of zero employment, electric cars, with everything being automated, it’s not going to happen all at once. We are going to need our employees to help us get there, and the opportunities that will come and go will require an incredible new plan.

Data Collection and Analysis
Without a method in place for the collection of the minute details of ever sale, procurement, and audit, your analyses and your forecasting is best done with a crystal ball. We are being blinded by old advice and even older assumptions. Retail is changing, and the changes are just beginning. If we are going to stand out above the fray, we need to look deep into our own environments for the answers.

So here we are, talking about the future and living in the past, while we haven’t even begun to accept the present. The little window of time you had to catch up in the past is getting smaller. Someday, that window is going to close. I just hope you are not one of the ones standing on the outside waiting for it to open again, because most likely it will be shut, locked, and erased forever. Someone will get the message shortly and do something about it, while the rest of us will sit around wondering what happened.

Bill Scott is the author of two retail books, a convenience store retailing consultant and speaker and president at StoreReport LLC.


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