For a handful of years after Banana Republic was acquired by the Gap in 1983, the retailer's performance was stellar. Although it's hard to imagine there was ever a time when safari fashions were in vogue, the Gap grew the brand from a $10-million regional into a large national chain through rapid expansion.
But the market for adventure-travel wannabes dried up, and Banana Republic struggled for many years. Then, it underwent a top-to-bottom makeover in brand image, store concept and product assortment. Today, it is a $2.3 billion retailer of upscale casual apparel and a poster child for successful change management.
Other examples of successful makeovers include Target (I mean Tar-jay), Abercrombie & Fitch (also a former adventure-travel outfitter) and JCPenney.
But there is another group of retailers that comes to mind -- CompUSA, Bombay and Levitz Furniture. All three recently closed their doors after many years of success followed by long periods of struggle. Although each one failed in a unique way, a common thread runs through all -- they were slow to change.
Change for change's sake is pointless, but creating a corporate culture open to change, embracing it and executing it quickly, smoothly and effectively is essential in the modern retail enterprise.
And make no mistake about it, change is difficult. It is a skill set that needs nurturing, refining and perfecting. It involves training, planning, restructuring and business-process re-engineering.
It also requires steady and heavy investment in IT infrastructure, which is the secret ingredient behind successful retail makeovers. But it is the most neglected.
Retailers have been characterized as the cheapest SOBs on the planet when it comes to IT investment, typically under-spending other industries as a percentage of revenue by a factor of two or three. Investment in IT is often viewed as a necessary evil instead of as crucial to survival.
The problem is that technology can't move on a dime. Marketplace changes may occur in six to 12-month intervals, but it often takes that long for CIOs to scope and build new IT systems.
The solution is for retail enterprises to make steady and appropriate IT investment to enable CIOs to collapse the time needed to foster and implement change. Instead of forever playing catch up, CIOs need to be given the tools to help a retailer jump on a fast-moving bandwagon before it's too late.
What's the alternative? Well, if you don't like change you're going to like irrelevance even less. RIS