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Building the retail organization of 2023

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Shop.org has devoted a lot of thought and research this year to the subject of retail’s organizational structure – specifically, where all things “digital” fit into today’s retail organization. Our January study, “Organizational Structure for the Future of Retail: The Digital Effect,” showed there is no silver bullet retailers should adopt to facilitate digital integration. The many – and varied – approaches retailers are taking reveal factors such as culture, people, heritage and whether each model is led by merchants, brand, technology, or possibly, the customer.

In its latest article, “The Retail Organization of 2023: The Customer is King (For Real)”, Shop.org’s Think Tank group projects what the retail organization will look like in 10 years. Given how rapidly the customer has evolved in just the past three years, plus ever-higher expectations for seamless service across touch points, the Think Tank suggests that a successful retailing organization of the future must operate very differently from today. The mandate to retailers: devote significant time and investment now to consciously build on the modern retail organization. Specifically:

Successful retailers in the future will be customer-led. Many retailers today are organized around what is essentially a 20th century operation while trying to serve the 21st century customer. In many cases, internal merchandising teams are divided by channel, marketing teams are carved into areas that ultimately create disparate views of the same customer, IT departments focus on managing risk rather than the impact to the customer, and a digital division is too often silo-ed itself. Going forward, retailers must organize all operations around the customer first – an objective that will take time, resources, investment, flexibility and patience. Nordstrom is one retailer which serves as a prime example of an evolving, customer-led organization.

The retail organization of 2023 will be anchored in four core competencies. To achieve this customer-led organization model, retailers need to develop areas of expertise in:

  • Customer experience: This includes areas such as user experience, product management, customer relationship management, store operations and customer service among others.
  • Brand: Creative, product selection, media buyers.
  • Operations: Supply chain, inventory planning and allocation, employee tool technology, shipping.
  • Administration: Executive team, finance, human resources.

These competencies should not be confused with a blueprint for an organizational structure. But cultivating expertise in these areas now will allow retailers to evolve as a company with a structure and common focus centering on the customer – rather than the brand, product, or even technology.

10 years of “bridge” strategies ahead. Becoming a customer-led organization won’t happen overnight – nor should it. Over the next 10 years, retailers should spend time assessing competencies, shifting and integrating current teams, revising titles and roles at all levels and the talent needed for those, setting and re-setting objectives and incentives, and putting systems and processes in place to develop the organizational structure that is “right” for them. Bridge strategies will be a key – this set of measures will help retailers move from one organizational evolutionary stage to the next while keeping the business growing. One example of this is that several organizations have announced “omnichannel” titles and divisions in the past year, an important bridge step to move the organization forward for now. But this should not  be confused with the future retail organization where omnichannel is not a structure but rather a characteristic and philosophy embedded in the organization overall.

The latest Shop.org Think Tank article is now available for download from the Shop.org site. How do you envision the retail organization of 2023? We’d like to hear your thoughts.

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