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Retail Trends

A Conversation with Mark Hurd, President of Oracle Corporation

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Mark Hurd, who joined Oracle in 2010, brings more than 30 years of technology industry leadership, computer hardware expertise and executive management experience to his role with the company.

Before joining Oracle, Hurd served as chairman, CEO and president of HP. Prior to that, he spent 25 years at NCR Corporation, where he held a variety of management, operations, sales and marketing roles, ultimately serving as the company’s CEO and president and leading a successful effort to improve operational efficiency, strengthen the product line and drive growth.

Today, Hurd oversees the corporate direction and strategy for Oracle’s global field operations, including marketing, sales, consulting, alliances and channels, and support. He focuses on strategy, leadership, innovation and customers.

Susan Reda, editor of STORES Media, had the opportunity to chat with Hurd at Oracle’s recent CrossTalk event.

In what ways does the retail vertical parallel other verticals, and in what ways it is different?
Retail has historically been differentiated on a few things. One is the ability to get the right merchandise to the right person at the right time through the right channel. Achieving that, despite the relatively thin margins the industry operates on, can lead to loyalty. And it’s the quest for shopper loyalty that sparks continuous retail innovation.

Online retailing, for example, has been a blessing and a curse for retailers. The blessing is having another channel to get goods in front of the customer. The flip side is that retailers face new challenges in inventory management. It also adds complexity when it comes to extending customer relationships and loyalty.

I’ve always considered retailers to be aggressive when it comes to embracing and rolling out technology. When you look at some of the tools that have been developed in the last decade in particular -- software created to process the atomic levels of data that now exist -- that really started in the retail industry. Processes like market basket analysis and inventory optimization emanated from the retail industry; one of the reasons the retail industry is so innovative is that companies have to be efficient and at the same time drive loyalty. Inside the retail industry rivalries are strong, and therefore innovation is high.

There’s a lot of discussion about enabling business transformation by means of IT transformation. Why is that so critical?
Most companies have a strategy and they build a business model around that strategy. Then they build processes that support the business model, and it’s the job of IT to automate the processes. IT for IT’s sake is just not that interesting. The fact is that recent transformations in this industry follow some of the biggest secular trends such as the meteoric growth of mobile smartphones. Multi-tasking by means of multiple devices is now the norm. I don’t know what we did in 1995. How did we get through the day?

In this world of instant gratification, uncertain brand loyalty, price comparison and showrooming, there’s a level of innovation required to keep up with the customer. That’s where we’re seeing companies investing. It’s about delivering on the promise of commerce anywhere -- making it convenient and meeting the shopper on her terms.

How long is it going to take before a majority of retail companies actually get to critical mass in the journey toward seamless integration?
It’s going to take some time before we see critical mass, but … we’ve seen some very compelling case studies from retailers operating here and outside the U.S. What I do see is pockets of leadership, pockets of excellence in this industry, and as those take root, we’ll see rapid progress.

Let’s be clear on one thing. I can show you two companies -- two retailers that have the exact same tool sets -- yet they achieve very different results. It’s much bigger than just the technology; it’s corporate culture, leadership, aligning processes around technology, customer centricity -- the list goes on.

Every retail company recognizes the need to keep track of what Amazon is up to. How can more traditional retail companies compete?
No question, competing against Amazon is a challenge. Traditional bricks-and-mortar retailers have to house inventory and deal with the costs of a supply chain to get the right inventory to the right place for the right consumer. Then a shopper comes through the door and as they’re walking the aisles they can use Wi-Fi to search the web for whatever they may be looking for and buy from somebody who has none of the costs of a multi-store retailer.

I think it comes down to the need for companies to compete by means of a differentiated product mix and a relevant relationship with the customer. Customers will buy from the retailer who offers a premium level of service; it’s becoming more and more important to provide a differentiated experience.

As Millennials gain prominence and spending power, how will their impact be felt at retail?
This is a big deal. This country’s going to face a sort of a barbell effect. On one end there’s a big set of baby boomers … they’re living longer. They’re retiring with significant wealth and they have an opportunity to influence trends and buying. On the other end are the Millennials -- they’re beginning to make money and they’re digital natives. They love to shop but they spend less time in stores than the generations that preceded them. They also know how to get information and they do things more quickly than older folks.

Depending on their strategy and their customer base, retailers are going to have to continue to cater to both groups as both will continue to be significant buying forces. At the same time, they’ll have to do so in a way that captures the interest and the loyalty of each, and that’s going to be a challenge. Both already expect seamless integration across channels; that’s not going to change. It’s going to be about using data to be more relevant and more personal and being sure that the lines of communication are always open.

Social media presents retailers with a new level of complexity. How do you anticipate retailers will address this new order?
It’s a difficult objective because we’ve all grown up with business metrics on customer satisfaction and delight, and those KPI’s imply that if you get it right, good things happen. Social media runs the risk of destroying all of those concepts; 98 percent of customers could be satisfied and happy, but the 2 percent who are dissatisfied could cause real problems. If they take to Facebook and Twitter and share a negative story, the negative ripple effect can be enormous.

Retailers have to up their game from a customer service and a response perspective. There’s a lot of debate about whether a company should debate with a consumer via social media. The fact that a customer complains using social media also means the response is in full view to others.

A lot of questions are swirling around. I think it will still be some time before we can figure this all out. The key thing is that customer satisfaction rates are going to have to go up. Companies make mistakes. People make them. We’re never going to change that. The issue is going to be the speed and how we deal with it, because it’s now in the public domain as opposed to a private setting and, by definition, it’s going to increase the risk.