Sometimes the only way to meet internal and external demands is through fundamentally changing the business.
On June 10, 2015, natural and organic grocer Whole Foods Market introduced the official name for the newest member of its family. The name, 365 by Whole Foods Market, “celebrates our belief that fresh healthy foods can be readily available to more people in an affordable way every day…365 days a year,” Jeff Turnas, president of the new unit, wrote that day on Whole Story, the retailer’s blog. “It also tips our hat to our popular 365 Everyday Value brand, which our shoppers seek out for quality, transparency and great value—the same attributes to come with our smaller store format.”
CARE BEFORE TRANSFORMATION
Change of some kind, of course, is always necessary in a retail environment. But retailers must take care before instituting truly transformative changes, experts stress.
“Change can be good, but radical change in a brand can be problematic,” cautions consultant Steven Platt. Case in point: J.C. Penney’s push to move away from sales and into an everyday low price format alienated the company’s core customers, Platt notes.
That’s why thoughtful planning before any restructuring is so important, Bishop says.
“Start the process before you have a problem—that way, there is no panic, no pressure,” Bishop says. “The industry is changing so fast that you have to be monitoring changes regularly and examining what they mean to you.”
That monitoring should reveal where vulnerabilities in relation to your customers exist, and where your customers want to go that they’re not able to go. “Step in so you will be the answer,” Bishop advises.
“My advice would be to ensure that any major changes be firmly grounded in a clear understanding of consumer needs, and a sober assessment of competitive dynamics and internal competencies,” echoes Dustin Longstreth, senior vice president and strategy group director at CBX, a New York City-based full-service branding firm. “This will focus resources towards the areas where you truly have a right to win.”
Being specific about how a restructuring initiative will help you will do better is a second important step, Bishop says: “You have to nail a clear strategy before you start doing things, or you will end up redoing them.”
Finally, accepting the sometimes hard reality that investing in new assets while divesting of old ones has to be part of any restructuring plan.
“Get rid of assets that don’t have profitability,” Bishop says. “For example, you might want to keep a marginally performing, 35,000-sq.-ft. store. But given the distraction [it causes], and the challenge of allocating scarce resources, you might have to get rid of it. Part of the restructuring process is letting go.”
Daniels sums up the steps retailers who are exploring restructuring should take even more simply:
“Understand how consumers are shifting; embrace technology; and focus on taking the cost out of the business,” he says. “Price and service are big issues, and will continue to be.”
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Photo courtesy of Whole Foods