The Journey to Growth and Profitability

Business growth within the retail industry means constantly analyzing multiple aspects of the company in order to transform day-to-day operations into end-to-end capabilities. The retail organization must look at several variables in order to gauge where they are in the life cycle of sustainable business success.

Successful change leadership first and foremost involves knowing where your business is in terms of your vision of growth and your current priorities, and includes your current and most immediate challenges. Once you are able to identify these aspects, it is just as important to know where you want to go based on your growth goals and performance KPI’s, and what are the ideal outcomes of these growth goals, like sustainable margin expansion.

The difficulty with keeping track of these business aspects resides in the fact that business processes are always evolving and changing as the retailer and industry change around it. Therefore, any solution that is to be implemented must have the ability to evolve and scale with the retailer. To alleviate this difficulty, I suggest that retailers utilize a maturity model that is easy for the business to recognize, understand, and use.

Specifically, retailers should evolve through a 5-stage maturity framework that reflects their current state of performance improvement culture, allowing them to select the right solution at the right time to solve the most pertinent issues. While enabling this detailed focus, the framework should also provide the realization that any solution is only part of the journey, and that it must mature with the organization. This 5-stage framework should move along the journey from simple reactive fixes, to realizing the integrative nature of process solutions, to finally reaching the end goal of a learning network of value-driven processes that lead to margin expansion.

Precisely speaking, the 5 stages are defined below:

• Stage 1 – Event based; reacting to the problem of fraud or lost revenue opportunities after the fact
• Stage 2 – Project based; expert led projects to resolve common problems such as inventory distortion, on shelf availability, shrink, waste, or damage
• Stage 3 - Integrative process based; functionally integrated process solutions such as analytics and event management, and broader risk analyses
• Stage 4 - End-to-end process based; strategic end-to-end culture change where any loss is now seen as margin and profit erosion and the business focuses on margin and profit protection and growth
• Stage 5 – Profit amplification based; strategic value-driven processes across the business that focus on profitability and margin enhancement as a capability and source of business agility; it is a learning network, a culture of innovation and sharing of production know how

One of the most critical requirements with this model is ensuring that any solution the retailer may implement will scale and evolve with the business as they move through the framework. The profit amplification solution represents scalability as it will help guide the retailer through each stage, recognizing which maturity stage they are in and ensuring each stage is completely understood before moving forward. Following this maturity framework will provide personnel with the right business expectations at the right time, assuring the retailer is prepared for sustainable growth. Doing so will ensure that sustainable profit margins are achieved through excellence in the ordinary.

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