One on One with Accenture Strategy’s Chris Donnelly

ART225219_ChrisDonnellyA lot has been said and written about digital disruption, and few industries have felt that disruption as acutely as retail. Nowadays a cohesive retail strategy involves much more than a functioning e-commerce app or website, the changes also have to be adapted to internally and at all levels. Accenture recently acquired Kurt Salmon, a mainstay on Consulting’s Best Firms to Work For list, to bolster its retail practice in a time that the industry is rapidly changing. Consulting recently caught up with Chris Donnelly, Senior Managing Director of Accenture Strategy’s retail industry practice to talk about the nuts and bolts of the acquisition, the new landscape of retail, and the consulting opportunities it presents.

Consulting: What made Kurt Salmon an attractive acquisition target? 

Donnelly: They’ve been around over 80 years, and they are specialists in retail consulting and retail strategy. We’ve collaborated with them in the past, we’ve seen them as competitors and we’ve work with many of the same clients. What’s always been impressive about them is their depth of expertise in retail. When we looked at our retail business, we would argue it’s one of the largest in the world if not the largest, but there are still opportunities. It’s a growing segment, there’s a need for more depth of expertise, more talent. Kurt Salmon has spikes of expertise that complement ours and vice versa, so we think the fit is great. It’s primarily a talent play. We see a number of clients where both Kurt Salmon and Accenture are present, which to us indicates there’s a little bit of a gap on both sides; neither of us is able to cover the full suite, and we see that as an encouraging sign that we can do that now. Many of those clients have actually been very strong proponents of what we’ve done with the acquisition, even coming to us afterwards and saying we’ve been working with both of you separately and we love that you’re coming together to really help us as a combined entity in even better ways.

Consulting: What’s behind the timing of the acquisition?

Donnelly: There’s nothing unique about the precise timing, opportunities come up when opportunities come up. I would say broadly a couple of years ago we were looking at various industries and segments that we thought had a great opportunity for growth, that there was a lot of demand in the marketplace and areas we thought might grow faster than other sectors. Retail was one of the ones we identified. So I’d say we’ve been sort of on the lookout for the right opportunities in retail for the past couple of years. A year ago last June we bought a group called the Javelin Group in the UK focused primarily on digital retail strategy. Then this year the opportunity with Kurt Salmon came up and we thought it would be a great fit and made a lot of sense.

Consulting: How has retail been disrupted by the digital revolution?

Donnelly: Retailers have been on this path and have been investing and dealing with how to manage digital for a long time. That said, what’s interesting to us now is a lot of people, both inside and outside the industry, say of course digital is disrupting retail because everybody’s got a website and people are buying stuff on their phones. That is true, but I think we’re seeing subsequent waves of disruption in retail because digital is now causing a few other things. New business models are being created; things like the sharing economy, things like subscription services, things that were difficult before. It’s not just ordering stuff online, now we’ve got these additional business models. I think retailers are also starting to realize that there’s being digital outside which is having a website and an app, but there’s being digital inside, which is starting to rethink how my internal operations work. Am I really taking advantage of robotics? Am I really taking advantage of internal productivity tools? Am I really enabling my store employees? Have I thought about how my supply chain can integrate better? That’s where we see more interest and opportunity, with retailer moving beyond digital commerce, that’s the disruption they’re going through now. If they can’t figure it out, they’re not going to be competitive. It’s a full reconfiguration of your company.

Consulting: What are some of the retail consulting opportunities to arise?

Donnelly: You have to think about it across three dimensions. Sometimes you see one at a time, other times you see all three. One area where we see a lot of interest is this idea of how do I reconfigure my organization and rethink my internal processes. Most retailers are saying they can’t afford to make all of these investments they’ve historically made and add on top of it all the new investments they have to make in the digital world. Retailers can’t afford to go from an average of 1.5 percent (industry average) of their sales investing in IT, so the question becomes how am I rethinking my business. A decade ago being digital was bolting on something. It was opening a digital center in Silicon Valley or opening an e-commerce distribution center. Now to really be competitive not only on the capabilities you offer but also to be cross-competitive you have to look at how to completely reconfigure your enterprise to be more fully-integrated and also take advantage of digital productivity internally.