When Retailers Can’t Afford to Be Strategic

Opinion: A prototype drive-through supermarket and an experimental Wal-Mart robot illustrate what’s wrong with retail technology today. Let’s call it a customer-non-centric strategy. (CIOInsight.com)

There are tons of practical definitions of how using technology in retail is strategic versus tactical.

One definition were fond of is quite practical: Using technology to truly help your customer is strategic, in that it will make those customers more likely to repeatedly come back and spread favorable word-of-mouth endorsements. Using technology to address a short-term problem—or to help your bottom line but not the customers—is tactical in that it is unlikely to improve revenue or profits for the long-term.

Such platitudes are easy to say for most verticals—and especially easy to say for a columnist, who gets paid to blather on about such things—but how easy is it to execute in a business with razor-thin margins such as retail?

I bring this up because Ive been thinking recently about a drive-through supermarket prototype being built in New Mexico. The idea was straightforward enough: create a supermarket that eliminated the most unpleasant parts of shopping, including finding the (constantly relocated) items; pushing around a squeaky shopping cart; and standing in line to pay for it all, bag the items, refill the shopping cart with the bags and then repack all of those bags into your car.

But what turned the drive-through shopping mall from a good idea into a revolutionary idea is also what may prevent the idea from being an economic success. Namely, it completely flips the business model of the typical grocery chain.

Regardless of how non-intuitive it may seem, the typical grocery store today is not designed to cater to its paying customers. On the contrary, its entire business operation caters to the businesses to which it pays money: suppliers. After the suppliers comes the retailers bottom line. Customers rank a distant third.

Customers dont want merchandise to frequently shift locations. Retailers and suppliers do, so that consumers have to be tempted by new items as they scan myriad aisles searching for the Scotch tape dispensers. Parents dont want candy in the self-checkout line to tempt children; candy makers do. Nor do those parents want sugar-laden cereals at their kids eye-level in the breakfast food aisle.

Read the full story on CIO Insight: When Retailers Cant Afford to Be Strategic