NZ retailer Warehouse Group adopts agile to drive digital transformation

Does digital transformation require an entire organisational restructure—moving from ‘chain of command’ hierarchy to the agile methodology’s tribal model, where tribes and chapters replace divisions and departments? It might not be mandatory, but the Warehouse Group Chief Digital Officer Michelle Anderson believes it has greatly assisted with the retailer’s technology overhaul.

“I think the teams are feeling empowered because they can deliver faster, they’ve got a degree of autonomy, and productivity is improving. It’s not the slow, traditional development life cycle that takes a year or more to get a solution out,” she says.

Why agile is better for IT

According to Anderson, the Warehouse Group—which includes the brands The Warehouse, Warehouse Stationary, Noel Leeming, and Torpedo 7—is the first multibrand retailer in the world to “put agile into our support office operation, so it was a pretty big step for us.”

The switch to agile six months ago was closely scrutinised, with the company noting on the NZX it was necessary to improve speed to market and productivity. The company looked globally for examples of organisations that had ‘gone agile’, consulting with banks and telcos in Europe, as well as Silicon Valley tech companies such as Google and Netflix which, Anderson says, “are born natively this way”. It also talked with Spark, the telco that switched to the agile model a few years back when it was undergoing its own transformation.

“Agile is a methodology where you can adopt the principles and then as an organisation you really need to shape it and make it your own in what works for you,” she says.

At the Warehouse Group, tribes are centred around the customer journey and mission; for example, customer strategy, customer engagement, and customer fulfilment. Within each tribe are squads that are made up of chapters, and within these are a range of traditional skill sets. As CDO, Anderson sponsors the digital and ecommerce chapters, those practitioners around e-commerce, marketing, tech, digital media, personalisation, and search engine optimisations. She is also cosponsor of the data tribe, home tribe, and customer fulfilment tribe.

From an IT perspective, in the Warehouse’s agile model, disciplines such as devops are embedded in squads across the tribe. “It brings what traditionally would have been a back-office function, such as dev and the operation side, much closer to the rest of the organisation,” she says.

“You don’t get that breakdown, the classic ‘here’s what I want to build and here’s what came out the other side’. You are working together, you are building an MVP [minimum viable product], testing, and learning. You are iterating your way there with all the different skillsets coming together.”

Online and physical stores transformed by digital

Personalisation and seamless customer experience are key concepts for Anderson, who says they are both enabled by digital, regardless of whether a customer shops online or in store. “Customers see brands and not channels, so we can’t think of digital in isolation.”

The Warehouse Group is moving three brands—The Warehouse, Warehouse Stationery, and Noel Leeming—off their individual web platforms and onto the Salesforce commerce cloud. Salesforce is the primary technology for Warehouse Group’s marketing and customer care operations, and it makes sense to integrate customer data across the group, Anderson says. “What creating a single customer view within a brand, and then at a group level, does is unlock a wealth of data to us. We can use the insights from one brand to drive an experience on another brand.”

The team uses AI technology in the Salesforce stack to drive customer engagement and relevance by offering tailored content and offers. “If you’ve interacted with a product on a website, how can we give you suggestions around something else that’s in that range that might be similar, or accessories that might work with the product of service that you’ve looked at?”

Anderson says good data governance is crucial when dealing with customer data. “You need to be open and transparent, get consent appropriately, and behave in what is 100% the appropriate way when you are using that [customer] data. It comes from a foundation of trust.”

The introduction of the new Privacy Act in December 2020 didn’t necessitate any changes, but Google’s plans to remove third-party cookies in the Chrome browser next year (following the lead of all other major browsers) will be challenging. Anderson says its likely first-party data (such as emails for subscriber newsletters) will be a way to help “personalise the customer journey”.

Why the rise in ‘click and collect’ is a digital challenge

The COVID-19 pandemic has seen a rise in customers’ digital adoption. During the lockdowns, online sales increased by 55% and app use by 96%, and it seems customers habits have been irrevocably changed. The trend to ‘click and collect’ has also been accelerated and now accounts for 40% of all orders across the Warehouse, Warehouse Stationery, and Noel Leeming.

Customers’ behavioural changes are prompting a rethink around the fulfillment strategy, which is currently delivered via a mix of national distribution centres, main street stores, and a ‘dark store’ for the Warehouse in Christchurch. “I think New Zealand is tricky because geographically we’ve got water between our islands, and we’ve got a lot of places that we need to stretch to,” she says.

The current delivery is two to four days, but what would it look like if that was cut to one day? And what if customers were happy to wait longer if it meant delivery cost less? “It’s about building a suite of options for the customer across delivery and click and collect, and letting them choose what works for them. But our networks need to be able to deliver that,” Anderson says.

Currently, robotics is not on the supply chain roadmap, but Anderson says the Warehouse Group is looking at other technologies in the back end, such as using robotic process automation (RPA) to validate incoming data from suppliers.

Keeping up with tech trends—and increasing women’s representation

Anderson is constantly scanning markets overseas to find out what new trends are in retail technology, and how they can be adapted to the New Zealand market. She says adopting a ‘test and learn’ mindset means they can keep up with—and in some cases help lead—initiatives that their international suppliers are undertaking.

“Retail is exciting to be in because it’s changing so much and moving so fast, and then you put technology on it and I can’t think of where else I’d like to work,” says Anderson.

Her own career path has seen her become the CDO via senior marketing roles, and Anderson says that it makes sense when you consider that “marketing is technology now”. As a result, more women—who traditionally have been well-represented in marketing but underrepresented in IT—are becoming technology leaders within organisations. “You always hear that the CMO and the CIO need to be joined at the hip to move the organisation forward. That’s part of the reason why we are seeing more females in IT roles.”

Women may also be learning to speak up more for what they want, to express their ambitions for the leadership roles. Anderson, who mentors aspiring leaders in her organisation, says, “I think we [women] have got to learn to ask for what we want and back ourselves.”