By Christopher Stevenson, Principal Partner, CityGate, LLC
Sometimes in retail leadership, it feels like all roads lead to operational efficiency—cutting costs, managing inventory, and delighting customers. While essential, operational efficiency is only part of the puzzle.
Leaders who truly thrive cultivate a strategic mindset—not just thinking long-term but sharpening your ability to anticipate the next wave of change.
As Paul J.H. Schoemaker and George Day point out in their landmark work on scanning the periphery for strategic advantage, one of the most overlooked tools in a leader’s arsenal is the ability to recognize weak signals—small indicators of change that hint at coming trends.
In retail, where change is the norm, paying attention to weak signals can help you get ahead of the curve.
What Exactly Are Weak Signals in Retail?
Weak signals are subtle indicators of shifts that may later snowball into major trends. They’re often dismissed or overlooked because they don’t seem important at first glance. Some examples may include:
- Social Commerce. Apps like Whatnot blend social media engagement with shopping and cater to niche markets like collectibles. Unlike eBay, on Whatnot, during auctions, sellers interact with potential customers via live video. Customers can ask questions and sellers can respond to questions immediately to convince customers to buy.
- AI-Driven Personalization. Companies like Angara use AI tools to allow customers to design their own jewelry, personalizing the shopping experience.
- Supercharged Convenience. Walmart has updated its returns process for its Walmart+ members, allowing for customers to return purchases from home. No repackaging or trips to the post office or store. Walmart comes to the customer.
While none of these examples is a definitive example of a future trend, they are data points for what may be coming down the pike. Leaders who learn to recognize and act on signals can steer their organizations toward opportunities their competitors may overlook and respond to potential threats before they eat away at market share.
Why Should You Care About Weak Signals?
Weak signals predict trends. Post-pandemic, many of us use online grocery shopping, but before COVID, the earliest adopters were busy professionals in urban settings. The retailers who spotted the signal—shifts in purchasing behavior among busy people—got a head start on the e-commerce logistics required to deliver on the promise of online grocery when the global health crisis began. The rest were scrambling to catch up.
Weak signals don’t just point to opportunities, they also indicate potential threats to your business. You’ve probably heard the stories of how Blockbuster ignored Netflix or Kodak overlooked digital photography and suffered the consequences.
Organizations that successfully identify the signals can respond, mitigate risk, exceed consumer expectations, and build sustainable competitive advantage.
Shifting to a Strategic Retail Mindset
This may all sound great. We’ve seen retail companies like Sephora capitalize on the consumer’s desire for personalization with AI-powered virtual try-ons and Amazon respond to the call for convenience through cashier-less brick-and-mortar retail stores.
But how can we, as retail leaders, incorporate weak signals into our strategy?
Get Comfortable with Ambiguity
Identifying emerging trends isn’t simple. Some really cool ideas will fail, and things that seem boring may thrive. Consider grocery delivery. There’s nothing flashy about it, and previous iterations—from the milk man to the Schwan’s truck—have faded away.
Yet through the confluence of technological advancements and the pandemic, grocery delivery is projected to be a $250B business in 2024.
Instead of trying to predict winners and losers, embrace the unknown and for each potential trend ask:
- What if this grows?
- What would this look like at scale?
Pay Attention to What Customers are Saying
Use customer surveys, focus groups, and even casual conversations with friends and family to learn more about what people are enjoying and using. Also engage your teams—store associates, marketing associates, and warehouse managers. Stay curious and ask questions like:
- What are customers asking for that we don’t offer?
- What trends are you seeing?
- What customer requests have surprised you?
Start Small
Weak signals, by definition, are not sure things. Test innovative ideas with experiments.
- Test a limited run of a product that reflects a niche trend.
- Pilot emerging technologies, like augmented reality virtual fitting rooms, in select locations.
- Refine your approach based on customer feedback.
Practice Scenario Thinking
Think through “what-if” situations to prepare for multiple futures. For example, consider how your business would be affected if:
- Your top competitor offers same-day delivery?
- Amazon integrates artificial intelligence that dynamically predicts consumer needs, pre-fills virtual carts with items based on behavioral patterns, and enables seamless checkout-free stores?
- Big box retailers implement dynamic pricing models that adapt in real-time based on inventory levels, competitor pricing, and consumer demand.
How would you respond? What strategies would your organization need to implement to thrive with the added pressures?
Retail isn’t just about selling goods—it’s about staying relevant in the face of constant change. Leaders with a strategic mindset don’t wait for trends to hit them like a freight train; they learn to hear the distant rumble and respond.
A strategic mindset is a skill that can be nurtured and developed. If you’re looking for resources to help you grow your strategic mindset as a retail leader, consider personalized coaching, professional development programs, and self-assessments.
Christopher Stevenson is Principal Partner of CityGate, LLC, which provides leadership development, coaching, and consulting on learning and development to credit unions, associations, and other not-for-profit organizations. A certified coach, Stevenson has over 20 years of experience in leadership development and adult learning. Prior to founding CityGate, Stevenson served as Chief Learning Officer of CUES, developing industry-leading education for credit union board members, executives, and future leaders. He was also responsible for leading research into the trends that shape the credit union industry.