The pandemic taught leaders some valuable lessons about what consumers want (even as those things changed); it forced agility and adaptability in the most traditional companies and created cohesion among employees. Ultimately, it was a great test of resilience, which will become an essential quality among leaders as they grapple with further disruption and unpredictability.
Leaders have witnessed large shifts in how people want to live, work, shop and engage. As they consider how best to serve their customers, whose behaviours, demands and expectations will continue to evolve, they will face tough decisions about e-commerce, multichannel and direct-to-consumer investments. They will need the flexibility to respond in real time and the courage to make quick, data-driven decisions, while taking account of the impact those decisions will have on their growing band of stakeholders.
Aligning stakeholder interests
The principle of customer-centricity remains at the core of successful retailing, but it now has to be understood in the broader context of stakeholder capitalism. The pandemic taught an important lesson that reprioritising stakeholders in the short term can lead to greater stability and resilience that enhances shareholder returns over the long term. For example, many leaders prioritised the safety of employees above the needs of customers for a period of time.
While retail leaders should seek to create a culture in which the customer’s needs are viewed as paramount, in future the pressure on them to drive sustainable growth means that they will have to consider multiple stakeholders. Today leaders are accountable to customers both online and in store, to employees from the frontlines to the meeting rooms, to partners in the supply chain and to the community at large. Each of these stakeholders has high expectations, not just of a company’s products and services, but of the workplace itself. Indeed, retailers are being judged not just for the experiences they enable, but how they contribute to the greater social fabric. Inevitably, there will be trade-offs from time to time.
Moving from shareholder primacy to creating value for all stakeholders in a sustainable, responsible way can be a major point of differentiation for retailers today, as well as a source of growth. However, if they are to fully capitalise on changing consumer needs leaders will have to continue investing in digitally capable ecosystems. This means building teams with broader skillsets such as AI and data science expertise and having the soft skills to ensure that knowledge sharing and collaboration across functions is the norm. Done well, this can boost creativity and innovation.
For retailers to survive they must continue to innovate – they cannot rely on what has worked in the past. Leaders used to a top down, command-and-control style of leadership must instead create a culture of experimentation and learning. As one CEO told us recently, leadership is there "to guide and not impose."
This shift towards an agile, decentralised approach to leadership – in which authority is delegated to smaller teams who are empowered to make decisions – will require sensitivity, empathy and humility. It will mean being clear about purpose and vision, putting the right people in place, and helping them rise to the challenge.
This article was first published in Retail Week magazine.