Sears department store
When you ask someone to picture a shopping center, the image of an American mall often comes to mind, with the iconic blue letters of the Sears logo standing tall. Once the largest retail giant in the country, Sears revolutionized shopping with the launch of its catalog in 1888. Growing to over 1,000 pages, the catalog, dubbed “the consumers’ bible,” gave customers in remote areas access to a vast inventory through a single call or letter. Fast forward a century, and the retailer known for its innovative thinking filed for bankruptcy.
There are valuable lessons retail leaders can take from Sears, not least the importance to continuously adapt and innovate to drive competitiveness and growth. However, that’s only possible when they have the financial capacity to do so.
The productivity challenge
In the past, traditional productivity efforts have focused on cost-cutting and efficiencies. And, while that strategy worked for a long time, the results ultimately weren’t sustainable.
And despite significant investments in technology, many retailers have yet to see the productivity payoff. That’s according to Accenture analysis that shows retail productivity has grown by only 0.3% per year over the past decade, and 54% of retail companies are experiencing negative growth.
What productivity means today
Traditionally, productivity in retail has been about cost management, with business leaders asking, where can we increase efficiency? Can we save on facilities? Are we duplicating work? But today, this mindset is no longer enough.
Accenture’s analysis found that the top 25% of retail companies are growing their productivity by more than 4.5% annually. They are doing this by shifting the conversation to focus on cost inputs as one part of a bigger equation.
The Sears of the 1880s understood this shift. By introducing its glossy catalog, it reimagined both its day-to-day work and how it delivered value to customers, making it easier for them to access inventory and capturing market share in the process. Today’s retail leaders should adopt a similar mindset: long-term growth comes from reinvesting in the organization and in people to build skills, increase technology fluency and expand knowledge across the business.
According to Accenture, for every 1% increase in costs, high-productivity companies are seeing an approximately 1.3% revenue gain. One European retailer took the step of analyzing its organizational structures and processes to then pinpoint 100 possible opportunities where it could positively impact its productivity. It used those findings to then invest in its supply chain, warehouses and new delivery options, and is now seeing a significant boost in productivity.
Generative AI’s role in shaping productivity
The transformational power of generative AI (gen AI) is creating massive opportunities for retailers of all sizes to significantly boost productivity. Accenture’s latest Pulse of Change survey reveals C-Suite retail executives are already making moves, with nearly all (84%) planning to increase their investment in gen AI in the year ahead.
The question becomes: where to direct time, resources and investments to succeed in being productive? There are three steps to consider.
It starts with redefining productivity. It’s not just about cutting costs; it’s about creating more value with every dollar spent. This means investing in technology and people to foster a culture of continuous learning and innovation.
Next, retailers must focus on the gen AI multiplier. By integrating gen AI into their operations, they can reduce the time spent on repetitive tasks and improve the quality of their outputs. For example, gen AI can reduce the time spent on retrieving information from emails and knowledge-sharing platforms by 30%, writing business plans by 37%, and assisting customers by 14%. These time savings—now table stakes given gen AI’s ability to also improve work—can be reinvested in more strategic and creative work, leading to higher productivity and better customer experiences.
Lastly, retailers need to think about gen AI as a partner in growth. That means prioritizing the people who will be driving this change. Highly productive retailers will be those most likely to focus on ongoing training and upskilling, recognizing that the best results come from combining human expertise with gen AI. By integrating their teams into this process through training, they’re also building trust, which is crucial when faced with change.
Learning from the past to shape the future
Just last year, Sears reopened two of its stores, possibly a sign of what’s to come for a giant that once reshaped the shopping experience for many. As industry stalwarts and emerging players consider how to increase their competitiveness moving forward, they must apply the new formula of productivity across their business.
In many ways, when faced with challenging economic headwinds and constant business disruption, it is easy to understand why some retailers may be tempted to cut back on investing in future growth and innovation.
Before doing so, they should remember the lesson of Sears’ failures to adapt in the 2000s. Instead, they can look to the Sears of the 1880s, where it boldly invested in its future, disrupted the status quo with innovations in customer service and retail architecture that we still see others use today.
The future of retail belongs to those who are willing to embrace change. By redefining productivity, investing in technology and talent, and fostering a culture of continuous learning and innovation, retailers can not only survive, but thrive.
