FIBRES Guest Blogger Ilkka “Ile” Puikkonen, CEO, Inzites ltd, is sharing thoughts about importance of strategic planning process and strategic questions affecting retail industry. Ilkka has a vast experience on strategic business planning, holds digitalization close to his heart and is currently studying his eMBA degree.
Through the Door
I have followed with some concern and wonder (surely among many others) the Finnish department store Stockmann’s struggles. Stockmann is one of the strongest (and oldest) brands in Finland, and it is currently facing big challenges (economical). The causes for the problems have been pointed out to be a mixture of EU sanctions against Russia, heavy organization structures, bad management, competition brought in by digitalization, and so on… suspected reasons are a many. And the problem solving has mostly turned inward. “Is our strategy, or our strategic targets, wrong?” “Are we leading and managing the company wrong?” “Do we have the right kind of people working for us?” “Are the investments done wrong?”
My personal opinion is that all the above are the results from the root cause: the customers have simply stopped buying from Stockmann – ”We don’t see the door swinging like it used to”.
One must look for reasons within a changes in business environment, in the market, consumer behaviour, changes in brand loyalty – these must be taken in to strategic planning process and then execute the changes throughout the organization. Step by step. Do it early enough. Preparations for changes in the market and consumer behaviour must be taken into notice when the first weak signals (and the first signs of phenomena) are emerging. Weak signals can grow into fast spreading trends quickly, and if organizations are not prepared for them at all, it might catch the organization completely by surprise. Use foresight rather than just reacting!
The Strategic Questions?
”The doors are opening” in the digital world now. Also Stockmann has its online store available. But what’s the problem then? Where are the clients? Where’s the revenue? Just having an online store isn’t enough. Competition has gone global. Those who can offer the winning customer experience – are the true winners. ’Brick & mortar’ stores are forming into ‘providers of experiences’ and ‘show rooms’, but the actual purchases are mainly done online. Based on research up to 93 % of purchase processes are started online (Ostovallankumous, Aminoff, Rubanovitsch 2015). Gartner reports that up to 70 % of purchases are done without an interaction with the sales persons.
Then why isn’t the Stockmann’s online store reaping the same kind of reputation and success than its department stores have done in the past? After all, everyone in Finland knows the brand. These are ‘the questions’ I have bumped into while looking and searching out on background material for my eMBA thesis (online selling of the human work):
- Is it so that the conventional idea of department-store-like webshop just isn’t working?
- Do people prefer buying items from a niche store, a store specialised to sell certain category of items?
Online purchasing is easier in many ways; one doesn’t need to walk from store to another in a search of an item. By just ”google’ing it” and you’ll find it in a fraction of a second. With all the price information available.
Let me carry on;
- For example, do people rather buy the Gant’s products from Gant’s online store, or from an online store offering also other brands? Are the Fiskar’s scissors (very famous in Finland) bought from Fiskars’s own online store, or from a Stockmann’s online store?
- What does this mean the value chain of retail?
- Is it so, that converging department stores into online stores isn’t even possible?
These are some the strategic questions that must be puzzling the management of retail shops and department stores. The weak signals aren’t so weak anymore. Department store BHV has decentralized their departments as (luxyry) boutiques* to the one of the busiest streets in Paris, France. Will we see “Stockmann street” occupied with Stockmann’s boutiques (departments) instead of Aleksanterinkatu in Helsinki, Finland someday…
(* Link to M&M-paper, in Finnish here discussing BHV especially.)
Stay tuned for more…
Writer is an “insighter” and CEO, Inzites ltd. Digitalization enthusiast, strategist, business designer, eMBA student and hockey coach.
Motto: “life is too short for bad client experience”
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