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Digitizing your store

Digitizing your store? Why you’ll need strong change management

by Mary Freeman

Industries Subject Matter Expert

4 change-management strategies for retail executives.

One of the most neglected aspects of the digital transformation process is the change management that helps make it possible. Not only does digital transformation alter the way you approach technology in your retail business, but it also requires a different way of looking at data, roles, and systems. While the tech shifts are significant, it is actually the people in your organization who are affected the most.

To make digital transformation work for your retail company, it can’t just be an IT project. From the store floor to offices at headquarters, if individuals are reluctant, confused, or unsuccessful in their transition, the digital transformation itself will be less successful. Several studies of business executives indicate that change management programs fail at a rate of about 70 percent.

On the other hand, the benefits of thoughtful cultural changes can even reach your shoppers – in fact, customer experience remains the top driver of digital transformation. Fifty-five percent of leaders responsible for digital transformation enact those programs to better meet evolving customer behaviors and preferences. What’s more, 41 percent of those executives have witnessed an increase in market share, and 37 percent have observed a positive impact on employee morale. [1]

For example, one apparel store in New York recently saw its net promoter score (NPS) increase to the high 80s, from the 30-50 range, thanks to better communication with sales associates throughout its transformation into an online business.

What is change management?

Change management is the administration of new cultures or developments within a business or similar organization. Overall, employees can be resistant to change, but may also be very good at it with proper support and motivation. Through good change management programs, you can help your teams successfully transform by understanding how they experience change and what they need to change successfully. It also requires knowing what people need to hear and from whom, how to coach them to demonstrate new behaviors, and what will help these changes last for the long term. Driving successful individual transitions in turn helps to drive organizational change.

Larger retailers need to create change on an organizational level, supporting often hundreds or even thousands of individuals affected by the digital transformation. A flexible, powerful, step-by-step program ensures that impacted personnel receive the awareness, coaching, and training they need. McKinsey expands this idea into the “digital factory,” an approach that helps organizations incubate a digital culture and operating model. [2]

The next step is to understand how to transform the entire enterprise, creating a core competency that differentiates your stores in the ever-evolving world of digital transformation. Based on consistent and effective change management processes applied across roles, structures, processes, and projects, leaders can guide their teams through every kind of change, while also helping employees know what to ask for in order to be successful.

Major benefits of strong change management:

  • Giving your stores the ability to thrive in an ever-changing world
  • Keeping associates productive while minimizing turnover
  • Helping employees contribute to the company’s return on investment
  • Mitigating business risk and security breaches
  • Increasing the likelihood of digital transformation success

4 Key Aspects of Change Management for Retailers

In well-planned change initiatives, individuals embrace change more quickly and organizations are able to respond faster to market forces. Let’s look at four major areas of change management:

1. Gain executive buy-in across the board

The first step in managing change as part of a digital transformation is to achieve broad executive buy-in, as teams that are left out may raise issues later. Retailers need to create a business case exercise that will rationalize the investment, training, and costs associated with the change. More deeply, however, it can also recognize the long-term impact of the digital transformation on the company’s brand, reputation, and capabilities moving into the future.

For example, Cisco recently helped to implement a successful digital transformation project for a restaurant chain. The CIO led the transformation, but it hadn’t occurred to anyone that the public relations department should be brought on board early on. As a result, even as the company took a quantum leap forward in sales revenues, labor management capabilities, and operating expenses, PR leaders were slow to recognize the opportunity to promote the organization’s new direction.

2. Take a programmatic approach

As described above, it is important to take a programmatic approach to managing your digital transformation, from driving adoption to launching the program. From the top down, every team member needs to understand what steps will be taken, why, when, and what the expected business outcomes will be. By empowering employees, sales associates, IT teams, and management with better tools and consistent information, your company will gain return on investment across the organization.

However, a Forbes study showed that only 35 percent of leaders regularly share the challenges they face that have led to the digital change management initiative. [3] When even the newest rookie sales associates understand the company’s strategy, they are more likely to engage with the project successfully.

3. Don’t neglect training

According to McKinsey, 33 percent of change management efforts fail because "management behavior does not support change," and 39 percent fail because employees are resistant to change. [4] Therefore, no step is more important than consistent, supportive training for affected employees. By establishing a trainer for each branch or team, training the trainers (including providing scripts and updates), and constantly updating information, team members feel part of the overall project. One of the most valuable aspects of digital transformation is the opportunity to use new technologies to train and motivate your high-performing associates.

4. Consider incentives

Providing incentives as part of the training process is almost always a major motivator. If you’re adding new mobile apps to a retail store branch, for example, they can include tools such as a sales associate dashboard that tracks metrics and goals: How many customers did you serve? How many sales were made today? How many sales were saved when a product is out of stock? By gamifying the process, workers can be motivated to drive their numbers, earn bonuses or discounts, and achieve recognition.

Employees can also be motivated by changes in store capabilities. For example, Cisco partner Tulip Retail recommended that a customer add iPads in each store for workers to use and help them do their jobs better. Employees started coming in early ust to use the tablets each day, and their job satisfaction scores rose.

Making it work

Change management helps take the chance out of change. By minimizing the variability that comes with transition, a good change management plan serves as a guidebook that allows you to set up milestones, deliverables, and activities over the course of the digital transformation. Supporting your teams and leadership throughout the project gives them the preparation and skills they need for the company to transform your business and move it to the next level. 

Related Links

Sources

  1. 2016 State of Digital Transformation, by Brian Solis
  2. "Scaling a Transformative Culture through a Digital Factory," By Rohit Bhapkar, Joao Dias, Erez Eizenman, Irene Floretta, and Marta Rohr, McKinsey & Co. (May 2017)
  3. "This Chart Shows Why So Many Change Management Efforts Fail," Forbes, by Mark Murphy (July 2016)
  4. "70% of Transformation Programs Fail - McKinsey, https://www.slideshare.net/aipmm/70-26633757

Mary Freeman

Mary Freeman is the Retail & Hospitality subject matter expert for Cisco in the Americas, where she helps to define, articulate, and set the vision for how digital technologies can improve performance, transform operation models, and take industry businesses to the next level.

Mary has served as a consultant for SAP, Microsoft, Oracle, and other major technology leaders, developing books, papers, and other resources to help companies understand how disruptive technologies will impact the retail and guest experience. She also spent a number of years in the retail industry working for major retail chains.

“This is an unbelievable time to be a retailer or hospitality operator,” Mary says. “The entire nature of the guest experience is changing, transforming into a half-virtual, half-real series of interactions that is making how we work with businesses and other people a completely different experience.”

Mary has a BA from the University of California at Berkeley.