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For Retail, the Next Big Shakeup Is Organizational

Technology shifts force structural changes

January 26, 2017 | Retail & Ecommerce | Technology

Retailers are waking up to the reality that the way they traditionally structured their businesses may no longer work.

Technology Executives Worldwide* Who Are Involved in Select Customer-Focused IT Initiatives, Sep 2016 (% of respondents)

"The single biggest priority for us is to think about how we structure our organization," said Staples Chief Technology Officer Faisal Masud in an interview with eMarketer. "We are moving to a single ownership structure where one person owns both the idea generation and the execution of the product. It's imperative. You should have one single owner for every key product domain for your business, whether it's mobile or search. Technology has to sit with the business."

Masud, who was promoted to his current role in December after heading the office-supplies giant's global e-commerce business, is now in charge of both Staples' e-commerce and global technology business units and reports directly to the company's CEO and President, Shira Goodman.

Traditionally, the company's product management team and the engineering team were separate and its mobile team, for instance, was distributed across three teams and reported to different leaders, he said.

"The traditional matrix structure creates a lot of collaboration challenges," Masud said. "Just imagine how many people you are touching to do one thing. It's unsustainable. You are going to see this across retail. The buck stops with that owner. Ownership and accountability are joined together."

The widening scope of the CIO is hardly limited to retail. In many companies, the impact of technology means that technology executives are involved in product design, marketing, sales and customer experience.

"The role of CIO 20 years ago ... you might say was the order taker or someone who is focused on pure service to support the growth of business," said Rich Stefani, VP of information technology at LA-based regional supermarket chain Smart & Final. "All of a sudden, technology has enabled a lot of information. How do you unlock that to share with other parts of organization? You really get the confusion that can happen in the retail space as to who owns what and who's developing the strategy or is it co-developed. That's one of the challenges."

Crate & Barrel Chief Operating Officer Michael Relich has lived that challenge. Starting his career as a programmer before moving on to becoming a CIO and now COO, Relich said he makes sure the tech managers he hires are also fluent in business terms.

"When I was CIO, I hated to be branded just as a tech guy," Relich told eMarketer. "I tried very hard to be a business guy. Now having a technology background is a huge benefit because technology is ubiquitous. But all managers I hire have communications skills. You need a CIO who can tune in to the business and speak in business terms."

(Subscribers to eMarketer PRO can read the full interview here.)

Organizational change is also being driven by the adoption of omnichannel strategies, which require retailers to change the way they credit sales.

"You need to align incentives and organizational structure to really match omnichannel," Relich said. "A lot of companies' ecommerce businesses developed independently (of stores). A lot stores don't want ecom sales because when a customer returns something, that'll depress store sales. Internet influences store purchases and store influences internet purchases. You need to include all sales there."

—Andria Cheng

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