driving profit and growth through store operations … profit and growth through store operations...

Driving Profit and Growth Through Store Operations Excellence

Adam Pressman Partner [email protected] Mobile – 773.251.1667 www.atkearney.com

mailto:[email protected]

http://www.atkearney.com/

A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1 2

Why is store operations important?

The top 25 retailers in the U.S. spend ~$100 billion on store labor

In the U.S., retailers lease or own over 14 billion square feet of retail space

For a typical retailer, every $10MM in store operations improvements is worth more than

$100-$150 million in market value


Common Questions

■ “How do I ensure my store operations drive improved customer experience?”

■ “Am I getting the maximum productivity from the store team?”

■ “How can I achieve better compliance across my store network?”


• Overview of AEROTM survey

• Overview of survey findings and our insights

• Next steps for retailers


Survey Overview

Source: A.T. Kearney 2013 AEROTM Study

AEROTM Survey

Scope Strategy, tactics and execution

Outputs Benchmarking, leading practices

Size ~100 questions

Format Online, secure survey

Sectors Multiple retail sectors

Geography Over 20 countries

Confidentiality All company-specific data strictly confidential

E

R

O perations

A chieving

xcellence in

etail


Participation from a wide range of retailers

2013 AEROTM Participation by Sector (%)

17%

17%

20%

36%

3%7%

Apparel

Health/ personal care

Cash & Carry Food/ grocery

Electronics

Mass Market/ Hypermarket



Deliver Core Store Value Improve efficiency and

effectiveness inside the four walls of the store

while delivering a superior customer experience

Communicate and Adopt Change Driving lasting change through the store network in a consistent and practical way

Enable Store Value Use customer and market insights to set strategic direction

Drive Store Value Optimizing capital and

operating expenses through the store life

cycle to reduce total cost of ownership and improve

return on investment

AEROTM Framework

Merchandising/ Supply Chain Interfaces

Store Operations

Field Leadership

Stores Business Planning

Channel Strategy

Voice of the Customer

Store Technology

Operating Expense Control

Real Estate Lifecycle Management

Change Management & Communication



Lessons from AEROTM

Measure, Analyze and

Act

Unleash field leadership

Enable with technology

Don’t leave the front line behind

1 2 3 4


•Know your customer

•Leverage your employees

•Invest in tools and skills


Co

mm

un

ica

tio

n

Merchandising/ Supply Chain

Interfaces

Store Operations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Man

ag

em

en

t


Limited use of customer data sources

1. Frequency of use of data ranges from less than 25% of respondents (“rarely”) to in excess of 75% of respondents (“common”) Source: A.T. Kearney 2013 AEROTM Study

Frequency of Use of Selected Customer Data (percentage responses)

Rarely Commonly

POS Transactions,, Units

Survey Customer Surveys, Focus Groups, Intercepts

Loyalty Loyalty Program data

External Industry Research, Vendor-Led

On-line Social Networks – Corporate and 3rd Party

Product Review Products Reviews

Examples

Contact Center Contact Center data

Store Employee Store Employee generated insights

In-Store Traffic, Conversion Rate, Traffic Flow

Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Ma

na

ge

me

nt


Social network data not valued

66%

40% 35%

8%

3rd party Domains

Company Domains

Very Important Collected

Customer Data Collected versus Importance for Generating Insights (percentage responses selected; percentage responses indicated “very important”) C

om

mu

nic

ati

on


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Ma

na

ge

me

nt



Direct contact with customers not widely leveraged

Customer Data Collected versus Importance for Generating Insights (percentage responses selected; percentage responses indicated “very important”)

57% 50%

70%

40%

Store Employee-generated Customer Data

Call Center Contact Data

Very Important Collected

Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Ma

na

ge

me

nt



Those that invest in enabling store employee feedback put it to use

Use technology to enable employee feedback

None 38%

Limited 21%

Neutral 3%

Somewhat 17%

Extensively 21%

Technology-enabled Store Employee Feedback (% respondents)

Prevalence of Analyses of Store Employee Input (% respondents)

20%

-70%

Moderate use of

technology

to enable employee

feedback

Extensive use of

technology

to enable employee

feedback

66%

Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Ma

na

ge

me

nt



Over half still do not mine loyalty data regularly

Frequency of Loyalty Data Analysis (% respondents, 2009 v 2012)

Barriers to Increased Consumer Insights from Loyalty Data (% respondents)

28%

10%10%

51%

19%

11%

22%

48%

0

5

10

15

20

25

30

35

40

45

50

55

Continuously/ Monthly

Rarely/ Never

Every 1 to 3 years

Quarterly/ Semi-

Annually

2012 2009

27%

43%

60% Technology

3%

Legal Restrictions

Workforce Capability

Lack of Perceived Need

Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Ma

na

ge

me

nt



•Integrate your multi-channel strategy

•Prioritize supporting technology investments

•Align metrics to drive results

Multi-Channel Strategy

Co

mm

un

ica

tio

n


Interfaces

Store Operations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Man

ag

em

en

t


Consumers expect to use both physical and digital channels in their journey

How Consumers Shop?

After Sales Experience

Product Pick-Up / Delivery

Purchase Trial / Test Research Product

Description • Discovery of products

• Customer considers various product/ service options

• After making a preliminary selection, customer verifies that it is the right product

• Customer obtains and pays for product

• Customer obtains products purchased (pick-up in store or delivery)

• Customer satisfaction is maintained post-purchase (including returns)

Increasingly Common Behaviours / Expectations

• Read dozens of 3rd party reviews online

• Influenced by social media

• Visit product in store to test / trial / try-on products researched online

• Purchase in-store but have shipped to home; “Select and Ship” stores

• Order product online and pick-up in store same day

• Return items bought online or in-store and vice versa

Source: A.T. Kearney Future of Stores Survey

45%

55%

19%

81%

24%

76%

24%

76%

17%

83% Online

Stores

Cross-Channel Capabilities in Consideration

• “Customers Like You Also Purchased…”

• Shipping samples to home (lengthy trials)

• Triggered by targeted offer

• Beacons / micro-location targeting

• Order online for “drive-up” pick-up

• Share / post purchases (e.g., Twitter)


Strategically, retailers should define desired customer experience at each journey step, by channel, and across channels

Acquisition Service & Relationship Management

Customer Lifecycle

Discussion Points

Experience at each step: Companies must define the desired customer experience at each lifecycle stage… and by channel

Economics: Companies must understand the economics of each lifecycle stage by channel in order to guide business process decisions

Segmentation: Leading companies may further define experiences for distinct customer segments… and align processes and costs accordingly

Overall experience: An ideal experience (at the right cost) can be defined by following the customer journey and defining flows between channels

Source: A.T. Kearney


Consumers go to stores to fill immediate needs, try out new products, and to spend time with others

What Drives Consumers To Stores?

Top Stated Reasons

Note: n=2400; Survey question: What are the top 5 reasons you go to STORES as opposed to shopping another channel (online, by your mobile phone, or by catalogue)? Source: A.T. Kearney Future of Stores Survey

• Survey respondents highlighted immediacy, and experiential factors (e.g. product touch/feel) as motivators for in-store shopping

• Essential for retailers to convert trial/test to purchase and to manage inventory to ensure products are in-stock and available for purchase

• A trip to the store remains a social occasion with consumers going to stores to spend time with friends and family

Store Shopping Drivers

7%

9%

13%

15%

24%

To trial/test (try on)

products

To fill an immediate

need

To find promotions & special

offers

To compare prices

To spend time with

friends/family

“I like the instant

gratification of taking

an item home “

“I like the

personal touch

of a store”

“Stores that treat me

like a person and not

a number get my

business.”

“Like being able

to get items right

away, trying it

out”


The key is to understand the role of the store…for your industry…and your customers


Customers report that Online, Mobile, Social and Self-Service Kiosks show growing usage

Net percent change in channel usage versus prior year (2013 over 2012)

Source: A.T. Kearney 2013 integrated Channel Engagement Survey

Though the online channel reported the highest increase in usage, channel growth is slowing when compared to 2012’s study

Discussion Points

Physical Stores:

Net contracting usage, according to consumers

Loyalty data, script pickups, and or credit card data should indicate trends in number of visits

Online + Mobile: Additional evidence of the urgency to position for on-line and mobile as customers report significant growing use

Experience: While use of given channels is rising / falling, an overall integrated experience across channels is increasingly expected by consumers


16%27%

42%62%33%

33%

35%

25%38%

31%

18%12%12% 10%1%

Occasionally

Often

Never

Seniors

Rarely

Baby Boomers

5%

Gen X Millenials

Customers engage organizations through multiple channels simultaneously…and do so increasingly

1. Millennials: 1980-present; Gen X: 1964-1980; Baby Boomers: 1946-1964; Seniors: 1946 & before Source: A.T. Kearney 2013 integrated Channel Engagement Survey

30%

35%

Total Respondents

2013 2012

Using Multiple Channels Simultaneously

Year over Year Comparison 2013 ICE Survey Responses by Generation

35% avg.

Meanwhile, organizations are very rarely designed to engage consumers across channels in a consistent fashion simultaneously


Few truly integrate channels

Types of Multi-channel Offerings (% respondents)

50%

40% 37%

17%

Buy from other channel and

return to store

Buy on-line and pick up in store

Ship from store to home

Competitive price checks

Store inventory visibility through other channels


58% cite technology as greatest barrier

Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t

57%


Only 14 % make field managers accountable for non-store channel

Performance metrics do not support multi-channel results

21%

13%

11%

5%

5%

Demand Fill Rate

Returns Rate

Sales Growth

Sales

Inventory Turns

Cross-Channel Performance Metrics in Use (percentage of respondents)


Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


•Balance your performance scorecard

•Be more forward looking, longer horizon

•Increase granularity


Co

mm

un

ica

tio

n


Interfaces

Store Operations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge

Man

ag

em

en

t


Employee and operational dimensions underweighted

Employees 4%

Operations 23%

Customers 31%

Financials 61%

Only half measure all four performance dimensions

Average Weighting of Performance Dimension (percentage of responses)

Important Very Important Most Important


Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Store-level plans often exclude key inputs

100%

83%

62%

45%

38%

10%

Above + Demographic

Above + Economic

Above + Competitive

Above + Promo Plans

Historical Store-level

All Inputs Included in Store-level Business Plans (percentage of respondents)


Above + Weather

Co

mm

un

ica

tio

n


Interfaces

StoreOperations

Field Leadership


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Field Leadership

•Enable increasing spans

•Prioritize field manager activities

•Enable informed decision-making

Co

mm

un

ica

tio

n


Interfaces

Store Operations


Channel Strategy


Store Technology



Ch

an

ge

Man

ag

em

en

t

Field Leadership


Field leaders managing more stores

38%

57%

56%

47%

42%

26% Level 0 (Store)

Level One

Level Two

Level Three

Level Four

Level Five

Increase in Average Number of Stores per Management Level (percentage of respondents)


Co

mm

un

ica

tio

n


Interfaces

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t

Field Leadership


More time spent on administration than customers and team

Management Time Allocation (mean percentage of responses, selected activities)


Co

mm

un

ica

tio

n


Interfaces

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t

Field Leadership

Store Management Field Management

• Customer service

• Customer complaints

• Customer satisfaction analysis

• Management reporting

• Planning & scheduling

• Purchasing (operative)

• Trainings

• Target setting

• Performance reviews

• Implementation of corporate initiatives

• Controlling of compliance

• Assessing feedback

Tasks

To be

reduced

7%

20%

38%

4%

Corporate compliance

Customer interaction

Coaching direct reports

Administration

11%

18%

19%

34%


Leaders provide HR and finance training

43%

67%

HR skills

Financial skills

Training Provided to Field Management (percentage responses)


Co

mm

un

ica

tio

n


Interfaces

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t

Field Leadership

89%

89%

Others Leaders


Varying levels of store manager autonomy

Store Manager Degrees of Autonomy (percentage of respondents)

Labor Scheduling

11% 50% 32%

Hiring 15% 11% 67% 7%

Customer Complaint Resolution

31% 50% 19%


Limited Decisions Own Decision within Guidelines Own Decision Headquarters

Co

mm

un

ica

tio

n


Interfaces

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t

Field Leadership


Merchandising/Supply Chain Interfaces

•Detail inputs for out-of-stock performance

•Measure to reduce shrink

•Enable local merchandising…

•…But check compliance

Co

mm

un

ica

tio

n

Store Operations


Channel Strategy


Store Technology



Ch

an

ge

Man

ag

em

en

t

Field Leadership Merchandising/ Supply Chain

Interfaces


Out-of-stock: SKU-level goals improve performance

Store/Category/ Sub-Category Level

68%

SKU Level

32%

7.5%

4.0%

Average 7.3%

-47%

All Others

Level at Which In-Stock Goals Are Defined (percentage of respondents)

Out of Stock Performance (Average percentage of respondents)


Performance based SKU Level

Goals

Co

mm

un

ica

tio

n

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Interfaces


Shrink: Set targets by category

Shrink Management Approaches (percentage respondents indicating “extensive” or “somewhat”)

38%

54%58%

65%65%

81%85%

Establish shrink

targets by category

Use financial incentives

Establish shrink targets

by store

Shrink is a key performance

metric

Use technology to

manage shrink

Formal process in place

Well documented

strategy

Leading Practice


Co

mm

un

ica

tio

n

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Interfaces


Local merchandising: Limited degree of local influence

High Degree

15%

No Influence

21%

Low Degree

64%

Portion of End Caps/Aisles

All End Caps

50%

7%

Store Influence on Assortment (% responses)

Autonomy over Merchandise Display (% responses)


Co

mm

un

ica

tio

n

StoreOperations


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Interfaces


Merchandising compliance: Variable focus

Store Team

Corp Staff 18%

3rd Party 18%

Field Merchandisers

36%

57%

Above Store Manager

93%

31%

17% 10 hrs

to 22.5 hrs

5 hrs to 9.5 hrs

0 to 4.5 hrs

Approach to Assessing Merchandise Compliance (% responses)

Weekly District Management Time Spent Auditing Stores (average hours, Level One)

Co

mm

un

ica

tio

n

StoreOperations


Channel Strategy


Store Technology



Ch

an

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an

ag

em

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t


Interfaces


52%


Store Operations

•Dedicated resources to process improvement

•Measure in-store operations

•Plan, communicate and measure for peak performance C

om

mu

nic

ati

on


Channel Strategy


Store Technology



Ch

an

ge

Man

ag

em

en

t


Interfaces

Store Operations


Revenue/training per store employee increasing

Store Revenue per Employee

62%

Avg Training Hours per Employee

52%

% FT Employees 11%

Management Turnover

35%

Employee Turnover

35%

15%

16%

30%

31%

38%

Increasing

Operations Trends Over Past Two Years (percentage responses indicating “large/slight increase” and “large/slight decrease”)

Decreasing

Co

mm

un

ica

tio

n


Channel Strategy


Store Technology



Ch

an

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an

ag

em

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t


Interfaces

StoreOperations


Significant Somewhat


Expert field resources drive continuous improvement

83%

18%

-78%

All Others Leaders

100%

77% -23%

All Others Leaders

Formally-trained Field Process Improvement Team (percentage of respondents)

Store Teams Expected to Drive Continuous Improvement (percentage of respondents)

Co

mm

un

ica

tio

n


Channel Strategy


Store Technology



Ch

an

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ag

em

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Interfaces

StoreOperations



Many key metrics not measured

Merchandising Compliance

65%

Planogram Compliance

31%

Non-Customer- Facing Processes

35%

Customer Wait at Service

24%

Customer Wait at Checkout

15%

Frequency of store performance measurement (percentage of respondents) C

om

mu

nic

ati

on


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations

Daily/Hourly Semi-Weekly/Weekly



Variable recruiting practices

Tests for Store Hiring (percentage responses)

89%

82%

57%

46%

14% Drug Testing

Standardized Written/ On-line Test

Structured Q&A Interviews

Customer Experience Skills Testing

Background Check

Two-thirds of leaders test for customer experience skills

Co

mm

un

ica

tio

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Channel Strategy


Store Technology



Ch

an

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Interfaces

StoreOperations



Leaders are more aggressive in peak period management

18%

45%

57%

% Increase Revenue

% Increase Labor Hrs

4

2

4

1

7

# Weeks to Ramp Down Labor

# Hours Training to Seasonal Staff

# Weeks In Advance Begin Hiring

Seasonal/Peak Performance Data (Average Percentage/Number of Weeks) C

om

mu

nic

ati

on


Channel Strategy


Store Technology



Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations

All Others Leaders




•Continually work the real estate portfolio

•Detail plans and align incentives to manage cost overruns

Co

mm

un

ica

tio

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Channel Strategy


Store Technology

Operating Expense Control C

han

ge

Man

ag

em

en

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Interfaces

Store Operations



Store Footprint Growth

Operations and

Maintenance

Fit-out

Construction

Location Identification

Design and

Specification

Store Footprint Evaluation

4-Wall Cash Flow

An

nu

al

Re

ve

nu

e

Fix or Close

• Lease Negotiations

• Downsize

• Sub-let

• Close

Protect & Grow

• Maintain cost

structure

• Monitor and adjust

to local market

conditions

Improve

• Control operating costs

• Improve customer service

• Battle local competition

Real Estate portfolio represents opportunities

Co

mm

un

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tio

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Channel Strategy


Store Technology


Ch

an

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an

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Interfaces

StoreOperations


• Consider future demographics

• Lock in low occupancy costs – retain flexibility

• Use advanced sourcing techniques to lower cost of supply for building services, fixtures, on-going maintenance


New store openings were expected to outpace closings and consolidations for 2013, but this will vary by sub-sector

Domestic Real Estate Activities (% responses indicating “very high” and “high priority”)

Resizing 43%

Renovations 68%

New Stores 80%

Consolidations 23%

Closings 29%

Relocations 38%

Co

mm

un

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tio

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Channel Strategy


Store Technology


Ch

an

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an

ag

em

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Interfaces

StoreOperations



High Very High


Sustainability considered, when coupled with financial benefit

Importance of Green and Sustainable Construction (percentage of responses)


Only 17% have LEED certification

Co

mm

un

ica

tio

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Channel Strategy


Store Technology


Ch

an

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an

ag

em

en

t


Interfaces

StoreOperations


4%4%

38% 54%

Not Important

Number One Priority

Important Consideration

Incorporated Into Design When Financial Benefit


A rigorous “bottoms-up” process tied to metrics reduces cost overruns

45%

32%

33%

17%

0%

Exterior Construction

Interior Décor

Fixturing

Lighting

Cost Overruns Experienced By Category (percentage of responses) C

om

mu

nic

ati

on


Channel Strategy


Store Technology


Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations



All Others Bottoms-up & Construction Team Metrics



•Support skilled, center-led procurement

•Go-to-market regularly

•Manage demand

Co

mm

un

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tio

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Channel Strategy


Store Technology

Ch

an

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Man

ag

em

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Interfaces

Store Operations




Store Signage

Light Bulbs

Store Supplies

Retail Bags

World-Class Processes

Tools & Techniques

Skills & Training

• Strategic Sourcing

• Center-led procurement organization

• E-RFX and auctions tools

• Should cost analysis and fact-based negotiations

• Analytics, research, supply market dynamics

• Negotiations training

Untapped opportunities


Facilities Management

Co

mm

un

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tio

n


Channel Strategy


Store Technology

Ch

an

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an

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em

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Interfaces

StoreOperations




Opportunities exist to drive greater focus on store expenses

Store Security

14%

Store Supplier

18%

Energy 20%

Store Marketing

23%

Store Maintenance

34% 32% Store

Maintenance

28%

Store Security

55%

Store Supplies

32%

Energy 50%

Store Marketing

Retailers Procuring Indirect Spend at Store Level (percentage of responses)

Frequency of Go-to-Market (percentage of responses)


Co

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un

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tio

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Channel Strategy


Store Technology

Ch

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Interfaces

StoreOperations



Every 2-3 yrs Every 4+ yrs Never


Rigorous demand management can contribute to cost containment

Demand Management Practices for Store Supplies (percentage of responses)

44%

36% 36%

Usage Policies

Pack/Package Optimization Ordering Policies & Restrictions

Only 10% of retailers employ all 3 demand management practices


Co

mm

un

ica

tio

n


Channel Strategy


Store Technology

Ch

an

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an

ag

em

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Interfaces

StoreOperations




Store Technology

•Assess customer-facing technologies

•Prioritize operational-efficiency technology

Co

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un

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tio

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Channel Strategy


Ch

an

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Man

ag

em

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Interfaces

Store Operations



Store Technology


Digital levers for better targeting consumers and increasing sales

Build rapport and brand loyalty

Engage through self-service

Offer recommendations; track customer contacts

Improve convenience, access to information and product choices

Maximize brand; “Segment of one”

Technology influences purchasing decisions

Social Media

Kiosk Mobile Digital Levers

Source: A.T. Kearney

Co

mm

un

ica

tio

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Channel Strategy


Ch

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Interfaces

StoreOperations



Store Technology


Two-thirds of respondents feel they have as good or better access to mobile capability and information as store staff

21%

45%

34%

Staff has better information & capability

66%

I have similar or better capability than staff

Respondent’s Mobile & Information capabilities

We have about the same

I feel the staff has better tools / information than me

I have better tools / information than the staff helping

Perceived capability compared to staff Implications

• Consumer Experience: Today’s consumers need to feel that the store is a destination, to give the consumer an experience above and beyond the digital experience – up-scaling

• Re-think Product Info: Physical store does not need to monopolize all stages in the process to be effective in generating sales

• Staff Capabilities: Staff needs to be digitally minded, in a compelling way to help shoppers navigate product catalog and buy online any items not stocked in store

• Supply Chain Integration: With potentially endless aisles, new supply chain processes will become necessary

Source: A.T. Kearney 2013 integrated Channel Engagement Survey, A.T. Kearney Future of Stores Document Summary, 2013


Customer-facing store technology deployment is limited

19%

Mobile POS

QR-code-Enabled

Information

In-Store Mobile Apps

Free WI-FI Digital Marketing Displays

Smart Carts

Digitial Price

Displays

Self-Serve Order

Terminals

58% 53%

58%

38%

50%

8%

59%

Customer-Facing Technology Deployment in Store (percentage of responses)

74% consider technology to be “very important” to store operations strategy


Co

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un

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tio

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Channel Strategy


Ch

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Interfaces

StoreOperations



Store Technology

Currently in place Considering adding


Retailers not convinced of effectiveness?

38%

19% 17%

15% 15%

8% 7%

QR-code-Enabled

Information

Digitial Price

Displays

Free WI-FI Mobile POS

Mobile Apps

Digital Marketing Displays

Self-Serve Order

Terminals

Effectiveness of Customer-Facing Technology (percentage of responses indicating “highly”) C

om

mu

nic

ati

on


Channel Strategy


Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations



Store Technology



Increased adoption of operational-efficiency technologies

Deployment of Operational-Efficiency Technology in Store (percentage of responses)

46% 50%

62% 62%

73% 77%

Hand-held Scanner

for Inventory Management

Tablets/ Devices

Labor Scheduling Application

Time & Attendance Application

Free WI-FI Customer Traffic Flow

Technology


Co

mm

un

ica

tio

n


Channel Strategy


Ch

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ag

em

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t


Interfaces

StoreOperations



Store Technology

Considering adding Currently in place


Clearer benefit for operational-efficiency technology investment

Degree of Effectiveness of Technology (percentage of responses indicating “highly”)

58%

50% 47%

44%

39%

15%

Labor scheduling application

Free WI-FI Time and attendance

solution

Tablets / Devices

Customer traffic flow

technology

Hand held scanner for inventory

management

Co

mm

un

ica

tio

n


Channel Strategy


Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations



Store Technology



Tablet investment expected to grow

48%

Time & Attendance Application

61%

Tablets/ Devices

69%

Labor Scheduling Application

71%

Customer Traffic Flow

Technology

91%

Hand-held Scanner

for Inventory Management

69%

Investment Trends Expected for Operational Efficiency Technology (percentage of responses) C

om

mu

nic

ati

on


Channel Strategy


Ch

an

ge M

an

ag

em

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t


Interfaces

StoreOperations



Store Technology


Significant Increase Moderate Increase

Free WI-FI


M-commerce tools and self-serve terminals lead the trend for customer technology

Smart Carts

26%

Digitial Price

Displays

58%

Free WI-FI

70%

Digital Marketing Displays

77%

91%

Mobile POS

87%

QR-code-Enabled

Information

89%

Self-Serve Order

Terminals

Mobile Apps

95%

Investment Trends Expected for Customer-Facing Technology (percentage of responses) C

om

mu

nic

ati

on


Channel Strategy


Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations



Store Technology


Significant Increase Moderate Increase


The goal should be to address customer and business needs, not just to deploy technology


Change Management and Communications

• Listen to your employees

• Pilot most, roll-out fewer

• Build in change management

Co

mm

un

ica

tio

n


Channel Strategy


Ch

an

ge

Man

ag

em

en

t


Interfaces

Store Operations



Store Technology


Merchandising Supervisor

Conflicting messages strain in-store merchandising decisions

Store Manager

Weekly Ads Vendor Deals

Weekly Merch. Kit District Manager

Central Merch Team

Co

mm

un

ica

tio

n


Channel Strategy


Ch

an

ge M

an

ag

em

en

t


Interfaces

StoreOperations



Store Technology

Standard Operating

Procedures


Emerging communications channels yet to be leveraged

Twittter

8%

Voicemail

8%

Facebook Pages

19%

Mobile Device

25%

Intranet/ Employee

Portal

77%

Email

92%

Through Supervisor

96%

Frequency of Employee Communications via Channel (percentage of responses)

Only 35% of retailers assess store employee communications and work to evolve their approach


Co

mm

un

ica

tio

n


Channel Strategy


Ch

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ag

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t


Interfaces

StoreOperations



Store Technology

Daily Weekly Monthly & Less Frequent


Leaders pilot prior to roll-out

15% of retailers use the same sample set of stores for every pilot

Percentage of Initiatives Piloted Before Roll-out (percentage of responses) C

om

mu

nic

ati

on


Channel Strategy


Ch

an

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an

ag

em

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t


Interfaces

StoreOperations



Store Technology


Leaders All Others

20%

30%

5%

45%

Nearly All Majority Some Very few

100%


• Use designated ‘learning stores”

• Complete pilots quickly (approximately one month)

Leading Practices

69% complete pilots in less than 2 months

Average Length of Pilot (percentage of respondents) C

om

mu

nic

ati

on


Channel Strategy


Ch

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an

ag

em

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t


Interfaces

StoreOperations



Store Technology


4%

23% 23%

8%

More than 6 months

3 to 6 mos. 1 to 2 mos. 2 to 4 weeks

Less than 2 weeks

42%


Leaders quickly discontinue initiatives if objectives not met

Percentage of Initiatives Discontinued After Pilot (percentage of responses) C

om

mu

nic

ati

on


Channel Strategy


Ch

an

ge M

an

ag

em

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t


Interfaces

StoreOperations



Store Technology


• Establish clear metrics and targets to define success at pilot

• Terminate initiative if success metrics not met

Leading Practices

22%

9%

13% 13%

16% to 20% 11% to 15% 6% to 10% Less than 5%

More than 20%

43%


Less than half assess 6 months after roll-out

Compliance Monitoring (percentage of responses)

35% of retailers believe they achieve 100% compliance


74% 67%

48% 48%

37%

For 6 months post-

implementation

On-going annual basis

For 12 months post-

implementation

At completion

During implementation

Co

mm

un

ica

tio

n


Channel Strategy


Ch

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ag

em

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Interfaces

StoreOperations



Store Technology


Attention to change management is lacking

96%

85% 81%

73%

27% 19%

Follow up success

measurement

Clearly defined metrics

Employee certification

Dedicated change management

program

Dedicated team

Employee training

Approaches to Initiative Rollout (percentage of responses)

“Lack of dedicated project resources” and “too many initiatives at one time” most often cited as barriers to successful change


Co

mm

un

ica

tio

n


Channel Strategy


Ch

an

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Interfaces

StoreOperations



Store Technology


Four elements to robust change management

A.T. Kearney Change Management Framework

Lead top-down; Set the mandate

and organizational need for change

Establish ecosystem and controls needed to sustain the change

Align underlying cultural principals and change behavioral norms

Drive adoption bottoms-up; Shifting

individual ownership of the change

Cultural & Behavioral Norms Awareness & Inclusion

Ownership & Adoption Permanence

ALIGN

SHIFT

LEAD

SUSTAIN

Source: A.T. Kearney FIT TransformationTM

Co

mm

un

ica

tio

n


Channel Strategy


Ch

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ag

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Interfaces

StoreOperations



Store Technology


Change management practices lead to more successful implementations

Success Achieving Change (percentage of respondents)

Limited Successful

Somewhat Successful

Very Successful

All Others Leading Practice


Leading Practice Approach

• Success metrics defined

• Dedicated initiative team

• Store shares accountability

• Compliance measured at 12 months+

50%

35% 33%

55%

17%

11%

Co

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Channel Strategy


Ch

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Interfaces

StoreOperations



Store Technology


Final thoughts from AEROTM…


• Holistic continuous improvement

• Turn over every rock

• Never be satisfied with status quo

• Trial and focus…and enable adoption


For more information www.atkearney.com

Please contact me with any questions

Adam Pressman Partner [email protected] Mobile – 773.251.1667

mailto:[email protected]

driving profit and growth through store operations … profit and growth through store operations...

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