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Insights from Retail Success Stories of the
Late 2000’s and how the are applicable
today
Navigating the 2024
Slowdown:
Jeff Kluth
Senior Principal
North America – Consumer Package Goods, Retail and Logistics
© Infosys Consulting 2024
2
Contrasting the financial crisis of 2008 and its impact on retail vs. retailers operating in
2024 and the headwinds facing them today
Introduction
As the world emerges from the dual economic crises of the late 2000s financial meltdown and the COVID-19 pandemic, retailers find themselves at yet another
critical juncture in 2024. The financial crisis of 2008 served as an initial wake-up call, exposing vulnerabilities in outdated retail business models. But if that was the
fire drill, the 2020 pandemic was the five-alarm blaze - utterly disrupting supply chains, operations, and consumer behaviors.
In the aftermath of these shocks, successful retailers made strategic shifts in several key areas to survive and reposition themselves. During 2008, many
implemented drastic cost-cutting, slashing inventory, renegotiating leases, and streamlining operations. This laser-focus on efficiency created leaner organizations
better able to maintain profits, a mindset that cannot be abandoned even as the pandemic wanes.
The 2008 crisis also highlighted the need for robust multichannel integration, as consumers demanded seamless digital and physical experiences. This evolved
into an existential priority during COVID-19 lockdowns, when e-commerce became the primary retail channel. As we look ahead, multichannel integration is table
stakes - retailers must predict and adapt to the next frontiers, whether mobile-utility, IoT, AI and or other unimagined technologies.
Supply chain fragilities were exposed in both 2008's economic downturn and the pandemic's disruption of global manufacturing and logistics. Retailers able to
nimbly adapt sourcing avoided crippling shortages and delays. Building resilient local and decentralized supplier networks is crucial to avoid future catastrophic
breakdowns from pandemics, conflicts, or other black swan events.
While the specific crises of the late 2000s/early 2020s may differ from tomorrow's challenges, the lessons remain invaluable for preparing retailers in 2024 to
deliver results that exceed earnings expectations and deliver shareholder value. Morale of the story, act “As If” and don’t get too comfortable.
A Retrospective
2008
© Infosys Consulting 2024
4
Quickly implemented strategies anchored on important business domains, and as a result,
emerged from the recession stronger
Some Retailers in 2008
Case Studies – Deep Dive of Deployed Strategies During
This Time Period
Those Who Won & How…
© Infosys Consulting 2024
6
Recession Key Focus Areas: Cost Leadership, Expansion of Private Label & Investment in
Technology
Wal-Mart
Strategies & Actions:
Cost Leadership: Walmart reinforced its position as a low-cost leader by aggressively negotiating with suppliers to lower costs and passing those savings on to
customers. This attracted budget-conscious consumers during the recession.
Expansion of Private Labels: Walmart expanded its private label offerings under brands like “Great Value” to provide customers with more affordable options,
leading to higher margins compared to national brands.
Investment in Technology: Walmart invested heavily in technology to streamline its supply chain, including implementing RFID technology to improve inventory
accuracy and reduce losses.
Quantitative Value Levers Impacted:
Revenue Growth: During the recession (2008-2010), Walmart’s U.S.
segment saw its revenue grow from $255.7 billion in 2008 to $259.9 billion
in 2010.
Market Share: Walmart increased its grocery market share significantly,
becoming the largest grocery retailer in the U.S. by the end of the
recession.
Qualitative Levers Impacted:
Customer Perception: Walmart was perceived as a go-to destination for
value, as reported by customers who appreciated the availability of low-cost
essentials during tough economic times.
Operational Efficiency: The investment in technology and supply chain
efficiency allowed Walmart to maintain low prices and high stock availability,
which was crucial during periods of economic instability.
© Infosys Consulting 2024
7
Recession Key Focus Areas: Product Differentiation, Private Label Expansion and Enhanced
Shopping Experience In-Store
Target
Strategies & Actions:
Product Differentiation: Target differentiated itself by focusing on a “cheap chic” image, offering stylish and affordable merchandise in collaboration with
designers such as Isaac Mizrahi and Michael Graves.
Expansion of Private Labels: The expansion of private label brands like “Archer Farms” and “Market Pantry” helped Target offer exclusive products at
competitive prices, boosting profitability during the downturn.
Enhanced Shopping Experience: Target invested in store redesigns and improved customer service to enhance the shopping experience and attract more
affluent customers who were looking for both value and quality.
Quantitative Value Levers Impacted:
Revenue Growth: From 2008 to 2010, Target's revenue increased from
$63.4 billion to $67.4 billion.
Gross Margin: Despite the recession, Target managed to maintain a
healthy gross margin of around 30% by focusing on higher-margin private
label products.
Qualitative Levers Impacted:
Brand Perception: Target’s brand equity increased due to its ability to offer
high-quality, stylish products at affordable prices. Customer surveys
indicated high satisfaction with the value and aesthetics of Target's product
offerings.
Customer Loyalty: Enhanced customer experience and exclusive product
offerings led to increased customer loyalty, with repeat customers
accounting for a significant portion of revenue growth during this period.
© Infosys Consulting 2024
8
Recession Key Focus Areas: Omni-Channel Strategy, Cost Reduction Initiatives and
Customer Service Improvement - (Services)
Best Buy
Strategies & Actions:
Omni-Channel Strategy: Best Buy developed a robust e-commerce platform and integrated it with its physical stores to create a seamless shopping experience.
This included initiatives like “Buy Online, Pick Up in Store” (BOPIS).
Cost Reduction Initiatives: Best Buy implemented significant cost-cutting measures, including store closures, staff reductions, and operational efficiencies to
reduce overhead costs and improve profitability.
Customer Service Improvement: Best Buy focused on enhancing customer service by introducing the “Geek Squad” for tech support and improving in-store
assistance to provide a better customer experience and differentiate itself from online-only competitors.
Quantitative Value Levers Impacted:
Revenue Growth: Despite the economic challenges, Best Buy's revenue
increased from $40 billion in 2008 to $49 billion in 2010.
Online Sales Growth: Best Buy’s online sales grew by 20% in 2009 and
continued to grow, accounting for a significant portion of overall sales by
2010.
Qualitative Levers Impacted:
Customer Experience: Surveys showed a notable increase in customer
satisfaction due to the improvements in service quality and the convenience
of the omni-channel shopping experience.
Brand Loyalty: Enhanced customer service and the integration of online
and offline channels led to stronger brand loyalty, with customers
appreciating the consistent and reliable service across all touchpoints.
© Infosys Consulting 2024
9
Key strategies and actions taken by retailers that thrived during the recession
Summary of Success Factors
2007 – 2010
Sampling of Who Lost…
© Infosys Consulting 2024
11
The demise of once beloved retailers that closed during this time
Some of the Losers
3 Main Contributing Factors – Applied to All
A Look at Q1 2024 Actual Performance +
Forward Looking Q2 Guidance
US Retail Economics
© Infosys Consulting 2024
13
Even the best retailers will have to fight for every dollar and closely manage expenses
Q1 2024
Retailers will need to
react differently from
how they did during
the 2008 recession
in light of the
substantial shifts in
customer behavior,
technology, and
market dynamics, as
evidenced by the
actual lackluster
growth in the first
quarter of 2024.
In order to adapt to
the new and
evolving technology
and economic
context, retailers will
need to implement
updated strategies
based on
comparable ideas
that raise enterprise
maturity.
LSEG – Q1 2024 US Retail Scorecards
© Infosys Consulting 2024
14
So far, 183 retailers have reported Q1 2024 earnings; of this group, 105 mentioned inflation
Q2 2024 Forward Looking Guidance
“Looking ahead to Q2 2024, 24 retailers issued negative preannouncements, while six issued positive EPS guidance so far. Of those retailers offering
revenue guidance, 26 warned of disappointing results, while fourteen said revenue might be better than previously expected.
”
LSEG – Q1 2024 US Retail Scorecards
© Infosys Consulting 2024
15
Sampling of the current industry sentiment for retailers in 2024
The Climb To The Top Will Be Tough…
Key Capability Areas For Consideration in 2024
Developing A Strategic
Plan
© Infosys Consulting 2024
17
Linked and informed by APQC / PCF Framework
Developing a Pragmatic Capability Plan
1. Leverage
Advanced
Technology
and Data
Analytics
2. Embrace
Omni-Channel
Strategies
3. Focus on
Flexibility and
Resilience
4. Prioritise
Customer
Experience
and
Engagement
5. Emphasize
Value and
Affordability
6. Innovate
with
Experiential
Retail
7. Adopt
Sustainable
and Eco-
Friendly
Practices
Your organization's readiness to handle the retail headwinds in 2024 should be guided by leveraging the seven critical capabilities listed below.
We can utilize the APQC (American Productivity & Quality Center) Process Classification Framework (PCF) to map each of the pertinent Level 1
to Level 3 (L1-L3) capabilities that must be enabled. APQC provides a thorough model for managing and organizing business processes across
several domains and businesses. The following capability areas below have contextualized in this model specifically for the retail industry.
Note: Effective linkages to capabilities should be tied to the Enterprise Strategic Plan. Example: Enterprise “Company” Goal: Drive Customer Satisfaction. Capability impacts listed from above (1,2, 4, 5,
6 and 7) could be applied. Factoring capability contribution, capability action plans and KPI’s would also need to be established against your company's baseline prior to measurement. This also, can be
achieved through “Value Realization Methodology” and or other similar measurement techniques.
Capability Areas:
© Infosys Consulting 2024
18
And Data Analytics | L1 – L3 Process Areas
1. Leveraging Advanced Technology
L1: Develop and
Manage
Information
Technology
L3: Define and Manage IT Strategy
• Implement AI and Machine Learning (L3): Deploy AI and machine learning
solutions for predictive analytics, customer personalization, and demand
forecasting.
• Optimize IT Infrastructure (L3): Ensure robust IT infrastructure to support
advanced data analytics and automation tools.
L2: Develop and Manage IT
Strategy and Enterprise
Architecture
L1: Develop and
Manage
Information
Technology
L3: Manage Data and Analytics Infrastructure
• Big Data Analytics (L3): Develop infrastructure to collect, store, and analyze large
datasets.
• Real-Time Data Processing (L3): Implement systems for real-time data
processing to enable timely insights and decision-making.
L2: Develop and Manage IT
Infrastructure
L1: Develop and
Manage Products
and Services
L3: Develop and Manage Products and Services
• AI Powered Customer Service (L3): Implement AI chatbots and virtual assistants
to enhance customer service efficiency.
• Dynamic Pricing Strategies (L3): Use predictive analytics to optimize pricing
based on market conditions and consumer behavior.
L2: Develop and Manage
Service Offerings
© Infosys Consulting 2024
19
L1-L3 Process Areas
2. Embrace Omni-Channel Strategies
L1:Market and Sell
Products and
Services
L3: Manage Online Digital Sales Channels
• Enhance E-Commerce Platforms (L3): Invest in improving user experience on
digital sales channels.
• Integrate Mobile and Social Commerce (L3): Develop capabilities for mobile and
social media sales integrations.
L2: Develop and Manage
Sales Channels
L1:Market and Sell
Products and
Services
L3: Develop and Manage Omni-Channel Marketing
• Seamless Customer Experience (L3): Provide a consistent experience across
digital and physical channels.
• BOPIS and Curbside Pickup (L3): Implement systems for efficient order
management and fulfillment across channels.
L2: Market and Sell Products
and Services
L1:Deliver
Products and
Services
L3: Manage Omni-Channel Fulfillment
• Integrated Inventory Management (L3): Synchronize inventory across online and
offline channels.
• Flexible Delivery Options (L3): Offer diverse delivery and pickup options to meet
customer needs.
L2: Deliver Customer Orders
© Infosys Consulting 2024
20
L1 – L3 Process Areas
3. Focus On Flexibility and Resilience
L1: Develop and
Manage Business
Capabilities
L3: Implement Flexible Operations
• Dynamic Staffing (L3): Develop flexible staffing models to adapt to demand
changes.
• Agile Project Management (L3): Use agile methodologies to respond quickly to
market changes.
L2: Develop and Manage
Operational Capabilities
L1: Develop
Financial
Resources
L3: Implement Financial Flexibility
• Flexible Budgeting (L3): Implement rolling budgets and forecasts to respond to
changing economic conditions.
• Cost Management Strategies (L3): Develop strategies to optimize and control
operational costs.
L2: Plan and Manage
Financial Performance
L1: Develop and
Manage Supply
Chain
L3: Enhance Supply Chain Agility
• Supplier Diversification (L3): Develop diverse sourcing strategies to mitigate
risks.
• Real-Time Supply Chain Monitoring (L3): Use IoT and analytics for real-time
supply chain visibility.
L2: Manage Supplier and
Partnership Relationships
© Infosys Consulting 2024
21
Engagement | L1 – L3 Process Areas
4. Prioritize Customer Experience and
L1: Understand
Markets and
Customers
L3: Develop Personalized Customer Engagement
• CRM Systems (L3): Implement CRM systems for personalized customer
interactions.
• Customer Feedback Integration (L3): Collect and analyze customer feedback to
enhance service quality.
L2: Manage Customer
Relationships
L1: Deliver
Products and
Services
L3: Enhance Customer Support
• AI Customer Support (L3): Implement AI-driven support tools for efficient
customer service.
• 24/7 Support Availability (L3): Provide round-the-clock support to enhance
customer satisfaction.
L2: Provide Customer
Service
L1: Develop and
Manage Products
and Services
L3: Personalize Product Offerings
• Customized Product Recommendations (L3): Use data analytics to personalize
product recommendations.
• Loyalty Programs (L3): Develop loyalty programs to reward and retain customers.
L2: Develop and Manage
Product and Service
Offerings
© Infosys Consulting 2024
22
L1 – L3 Process Areas
5. Emphasize Value and Affordability
L1: Develop and
Manage Products
and Services
L3: Expand Private Label Offerings
• Private Label Development (L3): Develop cost-effective private label products to
offer value to customers.
• Affordable Product Lines (L3): Create and manage affordable product lines to
cater to budget-conscious consumers.
L2: Develop and Manage
Product and Service
Portfolios
L1: Market and Sell
Products and
Services
L3: Implement Dynamic Pricing
• Dynamic Pricing Models (L3): Use dynamic pricing to adjust prices based on
demand and competition.
• Promotional Strategies (L3): Develop targeted promotions to drive sales and
provide value to customers.
L2: Manage Pricing and
Promotions
© Infosys Consulting 2024
23
L1 – L3 Process Areas
6. Innovate with Experiential Retail
L1: Develop and
Manage Manage
Products and
Services
L3: Enhance In-Store and Online Experiences
• AR and VR Integration (L3): Use AR and VR to create immersive shopping
experiences.
• Interactive Store Displays (L3): Develop interactive displays and experiences to
engage customers in-store.
L2: Develop and Manage
Customer Experiences
L1: Market and Sell
Products and
Services
L3: Develop Experiential Marketing
• Event-Based Marketing (L3): Host in-store events and workshops to engage
customers.
• Virtual Shopping Events (L3): Conduct virtual shopping events to attract and
interact with online customers.
L2: Manage Customer
Engagement
© Infosys Consulting 2024
24
Practices | L1 – L3 Process Areas
7. Adopt Sustainable and Eco-Friendly
L1: Develop and
Manage Products
and Services
L3: Eco-Friendly Product Development
• Sustainable Sourcing (L3): Source materials and products sustainably to reduce
environmental impact.
• Green Product Lines (L3): Develop and promote eco-friendly products to appeal
to environmentally conscious consumers.
L2: Develop and Manage
Sustainable Product
Offerings
L1: Manage
Environmental and
Social Governance
L3: Develop Sustainable Initiatives
• Waste Reduction Programs (L3): Implement programs to reduce waste and
improve recycling.
• Energy Efficiency Measures (L3): Develop and implement strategies to improve
energy efficiency in operations..
L2: Implement Sustainable
Practices
L1: Develop and
Manage Business
Capabilities
L3: Monitor Environmental Impact
• Sustainability Reporting (L3): Develop systems for monitoring and reporting on
environmental impact.
• Carbon Footprint Reduction (L3): Implement measures to reduce the carbon
footprint across the supply chain.
L2: Manage Environmental
Impact
© Infosys Consulting 2024
25
Advancing organizational effectiveness
Summary & Next Steps
In summary, the APQC model allows for a
structured approach to enhancing retail
capabilities in response to potential
headwinds in 2024.
The key is to leverage modern
technologies, focus on customer-centric
strategies, and maintain operational
flexibility and resilience.
Retailers that integrate these capabilities
will be better equipped to navigate
economic challenges and position
themselves for long-term success.
Closing Remarks
© Infosys Consulting 2024
27
In Closing
As a seasoned retail executive with two decades of experience, I have witnessed firsthand the evolution of the retail landscape through
numerous economic cycles. As you navigate the complexities of 2024, it's clear that the industry faces significant challenges, from economic
uncertainties and supply chain disruptions to shifting consumer behaviors and intensified competition from e-commerce giants. However, these
challenges also present opportunities for strategic innovation and growth.
By conducting a comprehensive assessment of your current state and defining clear objectives, you can build financial resilience,
optimize supply chain operations, and align with the growing demand for sustainability. Investing in advanced technologies will not only
enhance customer experiences but also fortify your organizational agility competencies. Strengthening your online presence through robust
omnichannel strategies will allow you to compete effectively in an increasingly digital marketplace.
To ensure the success of these initiatives, it's crucial to establish a continuous improvement framework that includes cross-functional
collaboration, ongoing training, and agile implementation. Regular monitoring and adjustment based on real-time data will keep you
responsive to market changes and emerging opportunities.
The journey ahead requires you to be proactive, resilient, and innovative. By strategically linking your capabilities to your overarching
goals and rigorously measuring your progress, you can not only weather the potential economic slowdown but emerge stronger and more
competitive. Harness these challenges as catalysts for growth and drive your organization towards a prosperous future.
If you are looking for guidance or partnership to navigate these challenges, I would be delighted to discuss how we can collaborate to
achieve your strategic goals. Please feel free to reach out to explore how we can work together for a prosperous future.
Jeff Kluth
Infosys Consulting | North America
Consumer Packaged Goods, Retail and Logistics (CRL) Practice
(E) jeff.kluth@infosys.com (C) +1.623.229.5949
Helping you connect the dots
in today’s digitally-connected world
@InfosysConsltng
/company/infosysconsulting/
InfosysConsultingInsights.com

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Part 2 Deep Dive: Navigating the 2024 Slowdown

  • 1. Insights from Retail Success Stories of the Late 2000’s and how the are applicable today Navigating the 2024 Slowdown: Jeff Kluth Senior Principal North America – Consumer Package Goods, Retail and Logistics
  • 2. © Infosys Consulting 2024 2 Contrasting the financial crisis of 2008 and its impact on retail vs. retailers operating in 2024 and the headwinds facing them today Introduction As the world emerges from the dual economic crises of the late 2000s financial meltdown and the COVID-19 pandemic, retailers find themselves at yet another critical juncture in 2024. The financial crisis of 2008 served as an initial wake-up call, exposing vulnerabilities in outdated retail business models. But if that was the fire drill, the 2020 pandemic was the five-alarm blaze - utterly disrupting supply chains, operations, and consumer behaviors. In the aftermath of these shocks, successful retailers made strategic shifts in several key areas to survive and reposition themselves. During 2008, many implemented drastic cost-cutting, slashing inventory, renegotiating leases, and streamlining operations. This laser-focus on efficiency created leaner organizations better able to maintain profits, a mindset that cannot be abandoned even as the pandemic wanes. The 2008 crisis also highlighted the need for robust multichannel integration, as consumers demanded seamless digital and physical experiences. This evolved into an existential priority during COVID-19 lockdowns, when e-commerce became the primary retail channel. As we look ahead, multichannel integration is table stakes - retailers must predict and adapt to the next frontiers, whether mobile-utility, IoT, AI and or other unimagined technologies. Supply chain fragilities were exposed in both 2008's economic downturn and the pandemic's disruption of global manufacturing and logistics. Retailers able to nimbly adapt sourcing avoided crippling shortages and delays. Building resilient local and decentralized supplier networks is crucial to avoid future catastrophic breakdowns from pandemics, conflicts, or other black swan events. While the specific crises of the late 2000s/early 2020s may differ from tomorrow's challenges, the lessons remain invaluable for preparing retailers in 2024 to deliver results that exceed earnings expectations and deliver shareholder value. Morale of the story, act “As If” and don’t get too comfortable.
  • 4. © Infosys Consulting 2024 4 Quickly implemented strategies anchored on important business domains, and as a result, emerged from the recession stronger Some Retailers in 2008
  • 5. Case Studies – Deep Dive of Deployed Strategies During This Time Period Those Who Won & How…
  • 6. © Infosys Consulting 2024 6 Recession Key Focus Areas: Cost Leadership, Expansion of Private Label & Investment in Technology Wal-Mart Strategies & Actions: Cost Leadership: Walmart reinforced its position as a low-cost leader by aggressively negotiating with suppliers to lower costs and passing those savings on to customers. This attracted budget-conscious consumers during the recession. Expansion of Private Labels: Walmart expanded its private label offerings under brands like “Great Value” to provide customers with more affordable options, leading to higher margins compared to national brands. Investment in Technology: Walmart invested heavily in technology to streamline its supply chain, including implementing RFID technology to improve inventory accuracy and reduce losses. Quantitative Value Levers Impacted: Revenue Growth: During the recession (2008-2010), Walmart’s U.S. segment saw its revenue grow from $255.7 billion in 2008 to $259.9 billion in 2010. Market Share: Walmart increased its grocery market share significantly, becoming the largest grocery retailer in the U.S. by the end of the recession. Qualitative Levers Impacted: Customer Perception: Walmart was perceived as a go-to destination for value, as reported by customers who appreciated the availability of low-cost essentials during tough economic times. Operational Efficiency: The investment in technology and supply chain efficiency allowed Walmart to maintain low prices and high stock availability, which was crucial during periods of economic instability.
  • 7. © Infosys Consulting 2024 7 Recession Key Focus Areas: Product Differentiation, Private Label Expansion and Enhanced Shopping Experience In-Store Target Strategies & Actions: Product Differentiation: Target differentiated itself by focusing on a “cheap chic” image, offering stylish and affordable merchandise in collaboration with designers such as Isaac Mizrahi and Michael Graves. Expansion of Private Labels: The expansion of private label brands like “Archer Farms” and “Market Pantry” helped Target offer exclusive products at competitive prices, boosting profitability during the downturn. Enhanced Shopping Experience: Target invested in store redesigns and improved customer service to enhance the shopping experience and attract more affluent customers who were looking for both value and quality. Quantitative Value Levers Impacted: Revenue Growth: From 2008 to 2010, Target's revenue increased from $63.4 billion to $67.4 billion. Gross Margin: Despite the recession, Target managed to maintain a healthy gross margin of around 30% by focusing on higher-margin private label products. Qualitative Levers Impacted: Brand Perception: Target’s brand equity increased due to its ability to offer high-quality, stylish products at affordable prices. Customer surveys indicated high satisfaction with the value and aesthetics of Target's product offerings. Customer Loyalty: Enhanced customer experience and exclusive product offerings led to increased customer loyalty, with repeat customers accounting for a significant portion of revenue growth during this period.
  • 8. © Infosys Consulting 2024 8 Recession Key Focus Areas: Omni-Channel Strategy, Cost Reduction Initiatives and Customer Service Improvement - (Services) Best Buy Strategies & Actions: Omni-Channel Strategy: Best Buy developed a robust e-commerce platform and integrated it with its physical stores to create a seamless shopping experience. This included initiatives like “Buy Online, Pick Up in Store” (BOPIS). Cost Reduction Initiatives: Best Buy implemented significant cost-cutting measures, including store closures, staff reductions, and operational efficiencies to reduce overhead costs and improve profitability. Customer Service Improvement: Best Buy focused on enhancing customer service by introducing the “Geek Squad” for tech support and improving in-store assistance to provide a better customer experience and differentiate itself from online-only competitors. Quantitative Value Levers Impacted: Revenue Growth: Despite the economic challenges, Best Buy's revenue increased from $40 billion in 2008 to $49 billion in 2010. Online Sales Growth: Best Buy’s online sales grew by 20% in 2009 and continued to grow, accounting for a significant portion of overall sales by 2010. Qualitative Levers Impacted: Customer Experience: Surveys showed a notable increase in customer satisfaction due to the improvements in service quality and the convenience of the omni-channel shopping experience. Brand Loyalty: Enhanced customer service and the integration of online and offline channels led to stronger brand loyalty, with customers appreciating the consistent and reliable service across all touchpoints.
  • 9. © Infosys Consulting 2024 9 Key strategies and actions taken by retailers that thrived during the recession Summary of Success Factors
  • 10. 2007 – 2010 Sampling of Who Lost…
  • 11. © Infosys Consulting 2024 11 The demise of once beloved retailers that closed during this time Some of the Losers 3 Main Contributing Factors – Applied to All
  • 12. A Look at Q1 2024 Actual Performance + Forward Looking Q2 Guidance US Retail Economics
  • 13. © Infosys Consulting 2024 13 Even the best retailers will have to fight for every dollar and closely manage expenses Q1 2024 Retailers will need to react differently from how they did during the 2008 recession in light of the substantial shifts in customer behavior, technology, and market dynamics, as evidenced by the actual lackluster growth in the first quarter of 2024. In order to adapt to the new and evolving technology and economic context, retailers will need to implement updated strategies based on comparable ideas that raise enterprise maturity. LSEG – Q1 2024 US Retail Scorecards
  • 14. © Infosys Consulting 2024 14 So far, 183 retailers have reported Q1 2024 earnings; of this group, 105 mentioned inflation Q2 2024 Forward Looking Guidance “Looking ahead to Q2 2024, 24 retailers issued negative preannouncements, while six issued positive EPS guidance so far. Of those retailers offering revenue guidance, 26 warned of disappointing results, while fourteen said revenue might be better than previously expected. ” LSEG – Q1 2024 US Retail Scorecards
  • 15. © Infosys Consulting 2024 15 Sampling of the current industry sentiment for retailers in 2024 The Climb To The Top Will Be Tough…
  • 16. Key Capability Areas For Consideration in 2024 Developing A Strategic Plan
  • 17. © Infosys Consulting 2024 17 Linked and informed by APQC / PCF Framework Developing a Pragmatic Capability Plan 1. Leverage Advanced Technology and Data Analytics 2. Embrace Omni-Channel Strategies 3. Focus on Flexibility and Resilience 4. Prioritise Customer Experience and Engagement 5. Emphasize Value and Affordability 6. Innovate with Experiential Retail 7. Adopt Sustainable and Eco- Friendly Practices Your organization's readiness to handle the retail headwinds in 2024 should be guided by leveraging the seven critical capabilities listed below. We can utilize the APQC (American Productivity & Quality Center) Process Classification Framework (PCF) to map each of the pertinent Level 1 to Level 3 (L1-L3) capabilities that must be enabled. APQC provides a thorough model for managing and organizing business processes across several domains and businesses. The following capability areas below have contextualized in this model specifically for the retail industry. Note: Effective linkages to capabilities should be tied to the Enterprise Strategic Plan. Example: Enterprise “Company” Goal: Drive Customer Satisfaction. Capability impacts listed from above (1,2, 4, 5, 6 and 7) could be applied. Factoring capability contribution, capability action plans and KPI’s would also need to be established against your company's baseline prior to measurement. This also, can be achieved through “Value Realization Methodology” and or other similar measurement techniques. Capability Areas:
  • 18. © Infosys Consulting 2024 18 And Data Analytics | L1 – L3 Process Areas 1. Leveraging Advanced Technology L1: Develop and Manage Information Technology L3: Define and Manage IT Strategy • Implement AI and Machine Learning (L3): Deploy AI and machine learning solutions for predictive analytics, customer personalization, and demand forecasting. • Optimize IT Infrastructure (L3): Ensure robust IT infrastructure to support advanced data analytics and automation tools. L2: Develop and Manage IT Strategy and Enterprise Architecture L1: Develop and Manage Information Technology L3: Manage Data and Analytics Infrastructure • Big Data Analytics (L3): Develop infrastructure to collect, store, and analyze large datasets. • Real-Time Data Processing (L3): Implement systems for real-time data processing to enable timely insights and decision-making. L2: Develop and Manage IT Infrastructure L1: Develop and Manage Products and Services L3: Develop and Manage Products and Services • AI Powered Customer Service (L3): Implement AI chatbots and virtual assistants to enhance customer service efficiency. • Dynamic Pricing Strategies (L3): Use predictive analytics to optimize pricing based on market conditions and consumer behavior. L2: Develop and Manage Service Offerings
  • 19. © Infosys Consulting 2024 19 L1-L3 Process Areas 2. Embrace Omni-Channel Strategies L1:Market and Sell Products and Services L3: Manage Online Digital Sales Channels • Enhance E-Commerce Platforms (L3): Invest in improving user experience on digital sales channels. • Integrate Mobile and Social Commerce (L3): Develop capabilities for mobile and social media sales integrations. L2: Develop and Manage Sales Channels L1:Market and Sell Products and Services L3: Develop and Manage Omni-Channel Marketing • Seamless Customer Experience (L3): Provide a consistent experience across digital and physical channels. • BOPIS and Curbside Pickup (L3): Implement systems for efficient order management and fulfillment across channels. L2: Market and Sell Products and Services L1:Deliver Products and Services L3: Manage Omni-Channel Fulfillment • Integrated Inventory Management (L3): Synchronize inventory across online and offline channels. • Flexible Delivery Options (L3): Offer diverse delivery and pickup options to meet customer needs. L2: Deliver Customer Orders
  • 20. © Infosys Consulting 2024 20 L1 – L3 Process Areas 3. Focus On Flexibility and Resilience L1: Develop and Manage Business Capabilities L3: Implement Flexible Operations • Dynamic Staffing (L3): Develop flexible staffing models to adapt to demand changes. • Agile Project Management (L3): Use agile methodologies to respond quickly to market changes. L2: Develop and Manage Operational Capabilities L1: Develop Financial Resources L3: Implement Financial Flexibility • Flexible Budgeting (L3): Implement rolling budgets and forecasts to respond to changing economic conditions. • Cost Management Strategies (L3): Develop strategies to optimize and control operational costs. L2: Plan and Manage Financial Performance L1: Develop and Manage Supply Chain L3: Enhance Supply Chain Agility • Supplier Diversification (L3): Develop diverse sourcing strategies to mitigate risks. • Real-Time Supply Chain Monitoring (L3): Use IoT and analytics for real-time supply chain visibility. L2: Manage Supplier and Partnership Relationships
  • 21. © Infosys Consulting 2024 21 Engagement | L1 – L3 Process Areas 4. Prioritize Customer Experience and L1: Understand Markets and Customers L3: Develop Personalized Customer Engagement • CRM Systems (L3): Implement CRM systems for personalized customer interactions. • Customer Feedback Integration (L3): Collect and analyze customer feedback to enhance service quality. L2: Manage Customer Relationships L1: Deliver Products and Services L3: Enhance Customer Support • AI Customer Support (L3): Implement AI-driven support tools for efficient customer service. • 24/7 Support Availability (L3): Provide round-the-clock support to enhance customer satisfaction. L2: Provide Customer Service L1: Develop and Manage Products and Services L3: Personalize Product Offerings • Customized Product Recommendations (L3): Use data analytics to personalize product recommendations. • Loyalty Programs (L3): Develop loyalty programs to reward and retain customers. L2: Develop and Manage Product and Service Offerings
  • 22. © Infosys Consulting 2024 22 L1 – L3 Process Areas 5. Emphasize Value and Affordability L1: Develop and Manage Products and Services L3: Expand Private Label Offerings • Private Label Development (L3): Develop cost-effective private label products to offer value to customers. • Affordable Product Lines (L3): Create and manage affordable product lines to cater to budget-conscious consumers. L2: Develop and Manage Product and Service Portfolios L1: Market and Sell Products and Services L3: Implement Dynamic Pricing • Dynamic Pricing Models (L3): Use dynamic pricing to adjust prices based on demand and competition. • Promotional Strategies (L3): Develop targeted promotions to drive sales and provide value to customers. L2: Manage Pricing and Promotions
  • 23. © Infosys Consulting 2024 23 L1 – L3 Process Areas 6. Innovate with Experiential Retail L1: Develop and Manage Manage Products and Services L3: Enhance In-Store and Online Experiences • AR and VR Integration (L3): Use AR and VR to create immersive shopping experiences. • Interactive Store Displays (L3): Develop interactive displays and experiences to engage customers in-store. L2: Develop and Manage Customer Experiences L1: Market and Sell Products and Services L3: Develop Experiential Marketing • Event-Based Marketing (L3): Host in-store events and workshops to engage customers. • Virtual Shopping Events (L3): Conduct virtual shopping events to attract and interact with online customers. L2: Manage Customer Engagement
  • 24. © Infosys Consulting 2024 24 Practices | L1 – L3 Process Areas 7. Adopt Sustainable and Eco-Friendly L1: Develop and Manage Products and Services L3: Eco-Friendly Product Development • Sustainable Sourcing (L3): Source materials and products sustainably to reduce environmental impact. • Green Product Lines (L3): Develop and promote eco-friendly products to appeal to environmentally conscious consumers. L2: Develop and Manage Sustainable Product Offerings L1: Manage Environmental and Social Governance L3: Develop Sustainable Initiatives • Waste Reduction Programs (L3): Implement programs to reduce waste and improve recycling. • Energy Efficiency Measures (L3): Develop and implement strategies to improve energy efficiency in operations.. L2: Implement Sustainable Practices L1: Develop and Manage Business Capabilities L3: Monitor Environmental Impact • Sustainability Reporting (L3): Develop systems for monitoring and reporting on environmental impact. • Carbon Footprint Reduction (L3): Implement measures to reduce the carbon footprint across the supply chain. L2: Manage Environmental Impact
  • 25. © Infosys Consulting 2024 25 Advancing organizational effectiveness Summary & Next Steps In summary, the APQC model allows for a structured approach to enhancing retail capabilities in response to potential headwinds in 2024. The key is to leverage modern technologies, focus on customer-centric strategies, and maintain operational flexibility and resilience. Retailers that integrate these capabilities will be better equipped to navigate economic challenges and position themselves for long-term success.
  • 27. © Infosys Consulting 2024 27 In Closing As a seasoned retail executive with two decades of experience, I have witnessed firsthand the evolution of the retail landscape through numerous economic cycles. As you navigate the complexities of 2024, it's clear that the industry faces significant challenges, from economic uncertainties and supply chain disruptions to shifting consumer behaviors and intensified competition from e-commerce giants. However, these challenges also present opportunities for strategic innovation and growth. By conducting a comprehensive assessment of your current state and defining clear objectives, you can build financial resilience, optimize supply chain operations, and align with the growing demand for sustainability. Investing in advanced technologies will not only enhance customer experiences but also fortify your organizational agility competencies. Strengthening your online presence through robust omnichannel strategies will allow you to compete effectively in an increasingly digital marketplace. To ensure the success of these initiatives, it's crucial to establish a continuous improvement framework that includes cross-functional collaboration, ongoing training, and agile implementation. Regular monitoring and adjustment based on real-time data will keep you responsive to market changes and emerging opportunities. The journey ahead requires you to be proactive, resilient, and innovative. By strategically linking your capabilities to your overarching goals and rigorously measuring your progress, you can not only weather the potential economic slowdown but emerge stronger and more competitive. Harness these challenges as catalysts for growth and drive your organization towards a prosperous future. If you are looking for guidance or partnership to navigate these challenges, I would be delighted to discuss how we can collaborate to achieve your strategic goals. Please feel free to reach out to explore how we can work together for a prosperous future. Jeff Kluth Infosys Consulting | North America Consumer Packaged Goods, Retail and Logistics (CRL) Practice (E) jeff.kluth@infosys.com (C) +1.623.229.5949
  • 28. Helping you connect the dots in today’s digitally-connected world @InfosysConsltng /company/infosysconsulting/ InfosysConsultingInsights.com