Retailers: Build a Future-Focused Board
To survive and thrive, a retailer must be focused on the future of its business model, operational model, and possibly even revenue streams. One of the important tools in getting you there is a future-focused board. A future-focused board will, as McKinsey Global Surveys have found, “go beyond fiduciary responsibilities to take a more active role in constructively challenging and providing input on a broader range of matters.”
Retail companies need boards that do more than provide financial and compliance oversight. They need boards that can help them navigate a volatile, uncertain, complex and ambiguous (VUCA) business environment.
Omnichannel retail and experiential retail are here to stay, offering opportunities to turn new generations into hyper-loyal customers. To do this, retailers must up their game with innovations in technology for inventory management, online shopping, customer experience, shipping and delivery, and payments, among other areas.
At the same time, legacy retailers are closing brick-and-mortar stores, while online-only brands are opening physical showrooms. Consumer delivery models, which were already changing before the COVID-19 pandemic, have radically shifted. As online shopping continues to surge, demand is growing for same-day delivery, curbside pickup and buy-online-pickup-in-store models. Add to that supply-chain disruptions and conscious consumerism movements, and retailers have a lot to plan for.
How a future-focused board can help your retail company
Whether you’re a publicly traded company or closely-held private company, one of a board’s most important roles is to help you get a high-level view of your business and industry, and plan for your future. For retailers, many of which have been focused recently on surviving and staying profitable in the present, this is especially important.
A good board can “see the forest for the trees” because usually most members are not involved in the day-to-day running of the business. It should be made up of people with experience in a variety of industries outside of retail – offering perspectives that management may not have.
A future-focused retail board should:
- Push company management to think about the future.
- Bring up worst-case scenarios management hasn’t thought of and insist that management plan for those scenarios.
- Alert the company to opportunities it may not have noticed.
- Make management aware of and help them plan for potential changes in regulations, technology, customer needs, shopping trends and more.
- Help the company define a forward-thinking agenda that will enable it to thrive for years, rather than overly focusing on maximizing short-term profitability.
The competencies of a future-focused retail board
The experience, competencies and mindset that today’s retail board needs are different from what was required historically. Certainly, a retail board may continue to include members with financial and retail expertise, and with experience in key markets.
However, the backgrounds and knowledge that have traditionally been considered desirable for board directors may not be enough to help retailers survive and thrive in the future.
Future-focused retail boards might add members with expertise in:
- Technology – to push retailers forward in online shopping, digital user experience, inventory management and automation
- Hospitality – to help retailers create amazing, immersive customer experiences online and in stores, as well as to help strategize about destination-retail locations
- Data analytics – to guide retailers in how customer, product and sales information can help shape long-term strategy, day-to-day operations and customer experiences
- Supply-chain contingency planning – to give retailers the big-picture planning expertise to anticipate potential future disruptions and opportunities, and help reduce supply-chain risk
- Payment technologies – to share trends in consumer payment technologies and help retailers understand and create a framework for mitigating risk around new payment technologies
- Environmental, social and government (ESG) issues – to help retailers assess their performance through these lenses, plan for a future where ESG plays an increasingly important role in consumer decision-making and address long-term risks in these three areas
- Transformation and process design – to set direction for successful business transformations that will keep a retailer operating efficiently and performing strongly
- Risk management – to help minimize the impact of crises, design risk-management policies, and check that management is adhering to risk-management, compliance and similar policies
A future-focused board can be a retailer’s secret weapon. The most effective retail boards combine the right mix of competencies among directors, a collaborative attitude towards working with management and a focus on long-term business sustainability. Of course, to take advantage of this secret weapon, management needs to be willing to have their thinking challenged and to be pushed to focus on the future.
Contact me or another member of Kaufman Rossin’s Business Consulting Services team to learn more about how your board can evolve to help your company prepare for the future of retailing and capitalize on the opportunities it presents.