Reinventing requires reallocating and reassigning - Buyers & Sellers - Editorial

Discount Store News, May 15, 1995 by Don Longo

As the articles in this issue's special report advocate, the key to success for retailers is their ability to reinvent themselves. The most successful companies are constantly renewing themselves, changing their work processes and organizational structures as often as they change their merchandise mixes.

Unfortunately, few retailers, indeed few corporations anywhere, practice this idea of continuous reinvention. Some retailers wait too long to attempt transformation: Meijer dragged its feet getting into the membership club business and had to close its Sourceclubs; Stuarts probably should have pursued its Stuarts Too family soft lines-only concept sooner; Rose's, which just came out of Chapter 11, may finally have the opportunity to expand its promising home products and entertainment superstore concept.

Others, like Sears, almost hit bottom before reawakening. JCPenney, Montgomery Ward and Tandy Corp. were once staid retailers with outdated concepts. Now they are three of the better-positioned retailers. Tandy, in particular, broke the mold from small, mall-based stores selling high-priced accessories to large superstores selling a broad range of electronics to the mass market by introducing its hot, new Computer City and The Incredible Universe chains.

Kmart almost waited too long, but at least it is moving in the right direction now. Wal-Mart's success at toppling sales barriers that other retailers could not overcome is directly attributable to its ability to constantly reinvent itself. Wal-Mart's genius is its recognition of the changing wants, needs and desires of its customers.

The theme of this issue is that discount retailers must embrace change and be willing to transform every aspect of their businesses. That's easier said than done, especially by smaller companies that know they have to change but don't believe they have the resources to invest in new technological systems, new training programs, new store fixtures or remodeling programs.

Ultimately, the need for these retailers to reinvent themselves is even greater than it is for the giant chains. It may require reallocating sources from "sacred cows" and applying them to new ideas.

Jobs may change. Buyers may become category managers. General merchandise mangers may become heads of a "concept" team that directs all products related to a particular theme. Regional managers may oversee stores that vary by type of shopper instead of geography. Store associates will become company sales reps that put the customers' expectations above all other duties. Human resources personnel may have broader input on business strategies. The store manager's job may change from being an operations manager of a building to an entrepreneurial, local business manager.

Even the vendor's relationship with the retailer may change so that the supplier is managing all business processes that it can do better and more efficiently than the retailer. In turn, the retailer will have greater impact on product development.

Consolidation has been a fact of life in retailing. The "reinventors" will be the fittest to survive.