Changing Minds, Business Models: Can the Consumer Products and Services Industry Sell Its Vision to the Workforce?

Rick Childs, Managing Director Consumer Products and Services Industry Leader

Technology was, by far, the star of this year’s National Retail Federation “Big Show” conference in January – from smart shelves fitted with real-time inventory trackers to mobile checkout apps and robots that promise to drive costs and errors out of the supply chain.

Retail automation is a trend we touched on in a blog post on mobile payments back in May of last year. Already, advances in mobile payments and smart stores connected through the Internet of Things (IoT) are creating a frictionless shopping experience that could previously only occur in science fiction, along with opportunities to boost customer loyalty.

Where industry leaders see opportunity, however, employees often see a threat, particularly retail workers in repetitive or transactional roles – cashiers and stockroom personnel, for example. Change creates uncertainty, which manifests as reluctance to adapt. For those caught in the crosshairs of automation, it’s only natural to resist. This resistance to change, and the cultural concerns associated with it, were top of mind for industry leaders in a recent survey, Executive Perspectives on Top Risks for 2018, from Protiviti and North Carolina State University’s ERM Initiative.

Personally, I wasn’t too surprised to find out that the number-one risk concern for consumer products and services industry leaders in 2018 was resistance to change, given the opportunities to transform business with new technologies (“Resistance to change might restrict our organization’s ability to make necessary changes to the business model and core operations”). Executives classified this as a risk with the potential for “significant impact.”

Within days of the NRF show in New York, Amazon opened its first checkout-free grocery prototype, Amazon Go, to the public in Seattle. A week later, Kroger expanded its scan-as-you-go “smart cart” experiment to 400 stores nationwide. Apple Stores have allowed customers to pay with their iPhones since 2011. And, as I mentioned in May, some clothing retailers are experimenting with a “showroom” model that converts brick-and-mortar locations into browsing galleries, with all purchases made and fulfilled online.

These are significant changes, and the amount of organizational resistance to them is closely tied to organizational culture, on one hand, and the organization’s ability to attract top talent, on the other. For example, it can be difficult to enlist the help of rank-and-file employees to help identify and escalate risks as they arise if those people perceive change as a threat, or if they don’t feel that the company supports open and honest communication. On the other side of resistance is the risk of losing out on top talent in the market – people with those hot programming or automation skills who are seeking innovative and stimulating companies with bold visions and dynamic, forward-looking cultures.

These three concerns – resistance to change, talent, and culture – were the big three in this year’s survey. Rounding out the top five concerns for consumer products and services companies are the fear of disruptive innovations outpacing the organization’s ability to compete or manage risks accordingly and the ever-present concern about cyber attacks. As thieves are becoming increasingly adept at locking up operations for ransom and stealing customer information and regulators are becoming less patient with each data breach, boards and executives are once again listing data security as a high priority.

The direction of the industry is clear. New technologies, a race to reduce costs and a fierce competition for ever-more-picky and mobile customers with many options at their fingertips are driving the change. The business models must evolve or the business will become irrelevant – and executives know it.

For a more detailed analysis of survey responses pertaining to the Consumer Products and Services industry, you can download the industry summary from our website. The full survey with cross-industry results is available here.

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