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The Ostrich Strategy and Canadian Retailers

by Jeff Frazer

The notion that an ostrich buries its head in the sand is a myth – what it actually does is “lay low” and hope that a predator won’t see it. While crouching down, the massive bird positions its head and long neck flat against the ground in front of its body, remaining perfectly still in this position until it senses that the danger has passed.

While the hiding in plain sight strategy might be effective for ostriches, it’s not an option in the business world. And for Canadian retailers facing increasing aggressive competition from larger players south of the border, laying low and hoping they won’t be noticed is a recipe for disaster.

Let’s consider recent – and for Canadian retailers, ominous – developments: Moving to fill the void from rival Target’s ignominious retreat from Canada, Walmart is spending $340 million to open 29 new super stores. Lowes, meanwhile, announced plans in July to open 14 new Canadian stores. Domestic retailers, on the other hand, are retreating. Loblaw will close 52 unprofitable stores by the middle of next year, while Quebec-based Rona has closed 11 stores in Ontario. And grocery retailer Metro has reorganized its network to close or convert stores and buy out unionized employees.

In this environment, as giants such as Walmart and Lowe’s leverage global efficiencies and economies of scale, what can Canadian retailers do to level the playing field? One approach is to drive operational improvement through business process transformation. This can comprise creating modern, technology-enabled shared services functions and taking traditional “store” processes into a shared services model.

A more aggressive approach – and the best hope, perhaps – lies in leveraging the great equalizer of emerging technologies such as Robotic Process Automation (RPA), data analytics and mobility.

Specifically, RPA is driving transformational operational efficiency improvements in terms of IT infrastructure, security and supply chain management. RPA is also enabling significant gains in traditional areas of retail such as customer service, complaints and returns.

The combination of automation and data analytics, meanwhile, allows retailers to more effectively analyze customer buying patterns and preferences. Based on such analyses, retailers can develop more targeted marketing campaigns and loyalty programs.

Mobility completes the picture by offering the in-store delivery and communications channel.

Top-performing retailers globally are already investing heavily in these technologies and reaping benefits in both operational efficiency and business effectiveness. That’s the good news – the catch is that the transformational journey can be perilous. After all, they’re called “disruptive” technologies for a reason.

Perhaps the biggest risk is around managing the organizational change resulting from RPA, which involves not only automating many tasks traditionally performed by humans, but also fundamentally redefines the work that humans do and creates a new set of touch points between automated tasks and human activities. Getting it right requires executive level buy-in, a clearly articulated business case with a detailed roadmap and effective communication with all stakeholders, including – especially – those directly affected by the change. Getting it wrong can lead to limited benefits, alienated employees, unanticipated consequences and, at worst, operational nightmares.

Are traditionally conservative Canadian businesses ready to assume these risks and pursue an aggressive transformational strategy through the adoption of disruptive technologies? A better question might be, what’s the alternative?

About the author

Jeff has more than 20 years of experience helping clients solve diverse business issues and create transformative Business Process Outsourcing (BPO) solutions.