Workday Podcast: The Keys to Successful Retail Transformation

Jeremiah Barba: Transformation is an easy buzzword to toss around these days and especially in a space that's gone through as much change in the last few years as retail. But what does transformation really mean for retail, and how can it become more than just a word to put on the first slide of a presentation? I'm your host, Jeremiah Barba, and my guest spends his days working with retail leaders to make transformation a reality with the focus on the power of data analytics and insights.

Sam Ganga is a partner and national consulting leader in consumer and retail at KPMG. Thanks so much for joining me, Sam.

Sam Ganga: My pleasure. Great--

Barba: Wonderful.

Ganga: So---to be here, Jeremiah.

Barba: Great. So glad to have you. So before we dive in, just tell me a little bit about yourself and your role at KPMG.

Ganga: Great. Like you said, I'm the national consulting leader for consumer retail at KPMG. I help our clients through digital transformation, looking at data, technology, the functions, etc., and really helping deliver value. My background is actually in technology. I started my journey and my career as a programmer. And then when I started my first company, I was forced to sort of learn the business side of things and that stuck. Ever since, I've lived at the intersection of technology, digital, and business, and I'm loving it.

Barba: That's great. Started from being a programmer. That's so interesting to have that background. You know what it's like to be on the ground floor. That's wonderful. So let's set the scene a little bit. To say it's been an interesting and difficult few years for retail is definitely putting it lightly. You spend a lot of time with retail leaders. What is at the top of their agendas as we are emerging into what I would call, quote-unquote, more "normal times?"

Ganga: Yeah. that's a great question. And these are very fluid times for us, right? You know, we read a lot about economic uncertainty. It's very much top of mind for our retailers, but there are some---this is called an underpinning trend that they have to deal with. These are real, about what's happened in the pandemic where online growth has really took off. And now they're looking at situations where people want to come back into stores. So that's a trend that they were sort of hoping for but also not completely prepared for. So that's one aspect of the business that they're dealing with. While they over-indexed on their investments in the online area, now they have to deal with more foot traffic coming into the stores than during the pandemic. One of the other areas is that retailers are really trying to take advantage of the fact that they've got a physical footprint. And they're trying to provide better options to their customers to be able to-- enabled better fulfillment. And that takes the shape of buy online, pick up in store, direct store delivery. That's not an easy thing to do because this is an area where you got two channels-- I don't want to say competing with each other, but you really want to take advantage of the fact that you've got two channels that are going to work together symbiotically. And that's something that they have to work on.

Barba: For sure. As a consumer, right, we have now this expectation that we can place an order online, easily get it at the store we want to get it, get it in the way that we want it delivered, and it's funny having been in supply chain marketing a little bit before, now I have this background to say, "well, it's actually not that easy," right? We have so much of an expectation for that customized experience, but it's not always that easy, right?

Ganga: No, it, it isn't. You know, it seems like a simple shift on the surface, but there's a lot of work that's happening underwater, right? You have to make sure that you have the right staff available at the stores. You have to make sure that there's enough inventory available on the digital shelf as well as the physical shelf. That puts a lot of  stress on your supply chain, on your scheduling, staffing, store labor management. That's not an easy problem to solve, especially for those that have large physical store footprints.

Barba: So as a follow-up to that, how are they solving that issue? As you're talking to retail leaders, how are they figuring out a way to fulfill those orders to keep customers satisfied?

Ganga: A lot of it has to do with - again, I use the word fluid - you know, their ability to shift weight and lean into the channel that is working for them. And during season, that might be online. Off season, it might not be online. And you have to basically shift your weight one way or the other to be able to do business with the customer where the customer wants to do business. And I think that's easier said than done, because if you have more inventory in store, and you don't have, physical, digital model that works effectively, you know, a person's going to walk into a store and not find the right inventory, whether it's the size of the shirt or, the color that they want. So you just have to react to it and be much more nimble when you react to those kinds of things. It does put a lot of pressure on the business to be able to do the right thing.

Barba: Sure. I've had experiences even, which I don't remember before the pandemic - maybe it happened, but maybe it's a result of the supply-chain issues - where I've placed an order on a website, and then hear back that, "actually, we didn't have it."

Ganga: Yeah.

Barba: That type of experience is, it's new, and it kind of seems like the supply-chain issue has become the buzzword. But it's definitely an effect that seems to just be filtering through so many aspects of retail and isn't going away any time soon.

Ganga: It's not. And, you've heard stories about lack of inventory. Now there's overstock of inventory. And then you got to deal with --- the problem is do you have to have it in the right place at the right time. This is not an easy problem to solve for. But with the right technologies to solve for labor requirements and staffing in stores. With the right technology to be able to solve for supply chain, inventory placement, you're going to make some significant progress, and that's where I think the rubber meets the road.

Barba: That's a great segue into the next topic, which is something that I know you're passionate about. A lot of your work focuses on the role of data analytics and insight in retail transformation. So could you unpack what that looks like, practically, and maybe share a few examples?

Ganga: It's actually pretty simple. I'm going to say that if you don't use internal, external data, macro, micro data, to run your business more efficiently, make the right decisions of the efficacy and efficiency of the business, using data, you're going to lose out. You're going to be left behind. And I think that's where organizations are beginning to really think about a new paradigm, a new way of running their business, data-driven decision-making as opposed to making decisions based on gut. That's not an easy transition to make for a business at large. There are episodic successes with improving decision-making in certain areas of business. an area that I hear a lot about in talking to our clients, and retailers is about, price elasticity models, right, to determine how to price products in a inflationary environment. That's one of the most common asks we have. More sophisticated your model, the more macro, micro, internal, external data you put into the model, the better your results. And of course you have to make a decision at the end of that. But it's not happening enterprise-wide. You're solving for what people usually call use cases in a narrow manner. But to solve for it enterprise-wide requires you to change the way you think about using data fundamentally as a part of your business. Doesn't have to be the domain of just executives. What we're seeing is the ones that are actually making it a part of their fabric of decision-making are the ones that are actually doing very well in the marketplace.

Barba: And again, a great transition because I want to talk a little bit about decision-making. So it's definitely a key goal, these transformation projects, right? No one's going to tell you, "I don't want to make great decisions." Everyone's looking for better decisions based on better data. So how are retailers finding their way to that, making those better choices based on better data?

Ganga: Yeah, that's a little bit of a loaded question. So I'll try and take a step back and sorta set the stage a little bit, right? Retailers have invested a lot of time, money, energy into solving for the data-driven decision-making data problem, as most people will call it. And really it's not a data problem. It's about data analytics and insights. And I'll admit it's not an easy problem to solve. But those that are successful have focused on a particular area of the business, really got into the details of it. An example would be merchandising for a retailer. It's an age-old problem, but merchandising decisions are enriched by the right data at the right time. And also, decision-making is enriched by the fact that you use the data to have better insights about what's working and what's not in the stores that you have or online or what have you. So focusing on merchandising has been one of the examples we've seen. But beyond just merchandising, you actually have to focus on a role that you're going to really help be successful. In this case, it would be a merchandiser. What can you do to help a merchandiser make better decisions? And we've seen various sort of paths through using data to be more effective. The ones that actually are successful are the ones that actually focus on a persona, on a role, and say, "What can we do to make that role more successful?" At KPMG, we call it human-centric design, right, focusing on human-centric design. And it's a common industry term. Well, when you do that, you really are helping this individual be much more successful at their job by using everyday tools. And that's the way to think about making this a little bit more naturally fit into your everyday work as well as, frankly, scale it as well to other areas of the business by going from persona to persona to persona that matters. And you're making an individual successful at their daily job, if you may.

Barba: Right. And when you focus on making that individual successful it can't but have a waterfall effect, right?

Ganga: Yeah.

Barba: It's going to continue. That's great. So let's talk a little bit about the difference between two terms: systems of record and systems of insight. How is that playing out for the retail leaders that you are spending time with?

Ganga: Most retail leaders understand that they need to have good systems of record that provide clean data in order for you to have strong systems of insight. And the difference is really, you're taking data from multiple sources, multiple systems of record in order to create insights for your business. And like I said before, this is not an easy problem to solve because not all systems of record are built the same way, right? Your financial systems of record, as opposed to your supply chain systems of record, are built very differently. They could be based on legacy systems. Some systems could be new. So rationalizing this is become the first sort of battleground to get to systems of insight. But systems of insight really focus on the value that you can generate from data. And it becomes a much more natural way of thinking about insight as opposed to data. Data is only a means to an end. Insights is really where the difference is. And insights that are provided as recommendations to a merchandiser, using the previous example, is a big deal. A merchandiser doesn't care about the data. He cares about the veracity of the data. He cares about the quality of the data but ultimately cares about what insights are provided to that merchandiser so that she or he could make a better decision about what to stock in a particular store or in a region, based on certain macro trends. Like, there's a flu spreading in the Midwest, and so now you need to make sure that you're stocked with the right flu medication or whatever the case might be. That's really where you're going to have to move the, the conversation to --- not about data but about insights.

Barba: Those are great practical examples. Let's move into our final question here---if you could give one piece of advice to a retail leader that's focusing on transformation, say in the next 12 months or so, what would it be?

Ganga: If you ask me for one piece of advice, I would say focus on adoption and change management on things that are going to have people really change the way they do their day-to-day jobs. If you create tools based on technology and make it available to somebody who's already working 60 hours a week, 50 hours a week, 80 hours a week, they're not going to take the time to go leave their day-to-day activity, go into something different and run a query or look at data. It's just not going to happen. I think you have to get the data right. You have to use the right technology, but the focus is more on business transformation, business decision-making, enriching that individual's job function so that they can have better decision-making tools. That's easier said than done, at the end of the day. But the focus has so far been around, creating technology and technology enablement that's completely necessary, but it's not sufficient. And so the focus and the shift has to go to adoption, and change management and helping an individual to be more effective at their jobs.

Barba: Wonderful. That is great. Again, thanks so much for being with me today, Sam. I'm so glad that this worked out.

Ganga: Thank you for having me.

Barba: Of course. We've been talking about retail transformation with Sam Ganga from KPMG. Be sure to follow us wherever you listen to your favorite podcasts. And remember, you can find our entire podcast catalog at workday.com/podcasts. I'm your host, Jeremiah Barba, and I hope you have a great workday.