In the past month we have been shook by the incredibly costly mistakes and missteps of The Warehouse. But at the same time, in the same market, we see other retailers flourish. Performance success relies on a few key strategic ingredients and there are a few power plays that are making the difference for retailers in our backyard and around the world.
At the core of this success is adaptability. Retailers that thrive are those that innovate with a clear focus on their customers, streamline their operations, and form strategic partnerships to broaden their reach. By leveraging technology, deepening customer relationships, and expanding through well-selected partnerships, these retailers not only weather market challenges but also outperform their competitors, proving that adaptability is the ultimate power play in today’s fast-moving retail environment.
The strategic importance of focus: Learning from The Warehouse
In retail, straying from your core strategy can be a costly mistake. New Zealand’s iconic discount chain, The Warehouse, provides a cautionary tale. Once known for its everyday essentials and great value, The Warehouse shifted its strategy in an attempt to compete with a broader base of retailers and to ensure it wasn’t reliant on just one brand for all its success. The result? A staggering $54M loss, as the company alienated its loyal customer base by failing to deliver on the value and bargains they expected. This misfire highlights a critical point: adaptability doesn't mean abandoning your core proposition—it means refining and evolving it to meet current demands without losing sight of what made you successful in the first place.
There are many missteps but one I have been highly critical of is the use of AGILE in a corporate retail context. Retail operates at a much faster pace, with trends and customer expectations changing daily. Agile’s fixed cycles does not provide the immediacy that retail requires, where rapid adjustments and real-time decision-making are critical. Agile depends on stable cross-functional teams, not a constant musical chairs of teams and participants who need to reform and change constantly. It’s a wonder anything ever got done. Well as the results demonstrate – keeping an eye on the customer didn’t. Read my deep dive here
Retailers must ask themselves: are we adapting to trends in a way that enhances our brand, or are we drifting away from what our customers love? Are these innovations or opportunities enhancing our strengths and ensuring our strategy stays aligns with our customers' needs and market changes?
RFID as a gamechanger for retail performance
One of the most exciting technologies enabling adaptability is RFID (Radio Frequency Identification). RFID is revolutionising the way retailers manage inventory, streamline operations, and enhance the customer experience. RFID is now being used to take self-checkout technology into new realms, such as change rooms, allowing customers to "try then buy" with ease.
Kmart is currently trialling RFID (Radio Frequency Identification) technology in specific stores in Australia as a way to enhance the in-store shopping experience, especially in the context of self-checkout and change rooms. This trial allows customers to use RFID-enabled self-service features in change rooms, where they can scan the items they are trying on, and then request different sizes or colours without needing to leave the room.
This "try then buy" concept takes the convenience of self-checkout to another level, allowing customers to complete their purchases directly from the change room, with a contactless, streamlined process. The RFID system eliminates the need to manually scan barcodes, as the tags embedded in the clothing items are automatically read by the technology. This reduces friction in the shopping process, as it helps customers avoid common frustrations like waiting in line at checkout or leaving the fitting room to search for different sizes.
This trial is part of Kmart’s broader effort to test how this technology can improve the in-store customer experience by offering more convenience and personalisation, while also optimising store operations and inventory management.
RFID’s ability to provide real-time inventory accuracy—up to 98%, according to recent reports—also means retailers can drastically reduce out-of-stock scenarios, ensuring they always have the right product at the right time. This level of efficiency not only improves customer satisfaction but also boosts sales, proving that technology like RFID is a gamechanger for performance.
Connecting with customers in new, innovative ways: The rise of TikTok
As technology continues to evolve, so do the ways retailers connect with their customers. Social media, particularly platforms like TikTok, has become a powerful tool for engagement—especially among younger consumers like Gen Z. Retailers that understand how to leverage these platforms are finding new ways to connect with shoppers, creating viral moments and driving real-world sales.
One of the most compelling examples is the rise of FoodTok, a TikTok community centred around food trends, recipes, and meal prep inspiration. Supermarkets and food retailers are using FoodTok to engage with younger audiences, creating content that taps into viral trends and inspiring shoppers to recreate dishes at home. In the UK, supermarkets that have embraced FoodTok have seen increased sales as customers flock to stores to buy the ingredients featured in popular TikTok recipes.
Supermarkets and food retailers are increasingly turning to TikTok’s community-driven trends to connect with this tech-savvy generation. Two prime examples illustrate how these brands are successfully integrating social media engagement into their broader retail strategies.
The first example is Tesco, which has capitalised on TikTok’s healthy eating trends by launching in-store salad creation bays inspired by the platform’s viral food content. Introduced in May, these salad bays, are located in the produce aisle and divided into three sections: a base, a builder, and a topper. This setup allows customers to easily customise their salads by choosing from a variety of fresh ingredients, all while aligning with TikTok’s emphasis on health, wellness, and convenience. By promoting these bays through TikTok videos, Tesco has tapped into the growing #FoodTok community, creating a buzz that encourages shoppers to visit stores and try the healthy meal options themselves.
Another standout example is Aldi, which has embraced TikTok’s fun, quirky side with its #AldiFanChallenges. Aldi encourages its customers to participate in creating light-hearted, user-generated content, such as budget meal challenges and creative uses of Aldi’s own-brand products. This initiative not only creates engagement but fosters a sense of community among its younger customers. The campaign has strengthened brand loyalty by making shopping at Aldi feel interactive and accessible, while reinforcing its core message of value.
AI in action in HiFi
We all know a standard search bar is no longer the fastest path to purchase, rather as retailers we must use technology to adapt to customers’ individual preferences and needs. That makes this the one to watch as Walmart wants to create a unique homepage for each shopper and is accelerating its “Adaptive Retail” strategy to create immersive shopping experiences across its stores, apps and virtual environments.
Walmart has set a new standard for customer-centricity with its Wallaby initiative, a powerful application of Artificial Intelligence (AI) and large language models (LLMs) to create deeply personalised shopping experiences. By leveraging its internal data and advanced AI to anticipate customer needs Walmart should be able to deliver a level of personalisation that goes beyond what most retailers currently offer. The Wallaby initiative allows Walmart to process vast amounts of data—such as customer purchase history, preferences, and even local store inventory—in real time, providing highly relevant recommendations and tailored experiences both online and in-store.
Walmart has also created an AI-powered Content Decision Platform that tries to predict what customers want to see on its website to create unique homepages for every customer based on their interests. The updated website is expected to launch in the US by the end of next year.
What sets Wallaby apart is its focus on being more than just a data-driven tool; it aims to seamlessly integrate personalisation into every aspect of the customer’s shopping journey. By using AI to predict what customers are likely to need or want next, Wallaby can recommend products, suggest reorder reminders, and even optimise store layouts based on shopper behaviour patterns. This creates a shopping experience that feels intuitive, personalised, and frictionless.
In an industry where many retailers are trying to catch up with omnichannel strategies and customer personalisation, Walmart’s Wallaby initiative positions it as a leader in customer-centric retailing.
The power of two
Retailers can differentiate themselves and expand their reach through strategically selected collaborations, allowing them to tap into new markets and enhance brand visibility without overextending their own resources. My favourite standout example of this approach (yes I love a donut) is Krispy Kreme’s partnership with McDonald’s, where the iconic doughnut brand supplies fresh products to McDonald’s locations in Chicago as part of a trial. This venture is a key component of Krispy Kreme’s revamped business model, which shifts away from building more retail stores and focuses instead on using production hubs to distribute fresh doughnuts daily to thousands of partner locations, including grocery stores, gas stations, and restaurants.
This model not only boosts Krispy Kreme’s presence across various sectors but also allows it to reach customers who may not have access to a standalone Krispy Kreme store. Collaborations like this create a win-win situation: McDonald’s can attract more foot traffic and increase sales by offering a new, beloved product, while Krispy Kreme benefits from expanded distribution and brand exposure.
Such partnerships allow retailers to innovate and grow their customer base by leveraging the strengths of their collaborators. By teaming up with complementary brands, retailers can reach new audiences, enhance convenience, and offer customers a more diverse product range, enabling retailers to scale without the need for significant infrastructure investments, while simultaneously boosting brand awareness and loyalty.
As the retail landscape continues to evolve, the retailers that succeed will be those that intimately know and understand their customers. Adaptation is key, but it must be done with a clear eye on knowing your brand’s reason for being. Retailers who maintain focus on their core proposition while embracing new technologies and platforms will outperform those who lose sight of their mission in an attempt to chase every trend.
The Warehouse serves as a cautionary tale of what happens when a retailer strays too far from its positioning and its core customer. By moving away from its identity as a value-driven provider of everyday essentials and WOW bargains, The Warehouse lost touch with its core customer, resulting in significant financial losses. In contrast, brands like Walmart, Kmart, and McDonald’s have successfully adapted by staying true to their core values while innovating around the edges.
Are you finding it challenging to drive growth or stand out in today’s increasingly competitive market? If you're ready to explore new ways to grow and differentiate, perhaps it’s time we had a chat. Let’s work together to identify opportunities and tailor a strategy that fits your unique business needs. Juanita@rxgroup.co.nz or +64 274 768 073
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