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How technology can help

retailers boost productivity

Productivity is notoriously difficult to measure. But for retailers, it’s vital for the wellbeing of their business.

In a commercial environment where profit margins continue to be squeezed, and new players are constantly emerging, productivity is not only a key performance indicator but a potential game-changer in terms of retaining competitive advantage1.

The digital revolution is largely responsible for blurring the lines when it comes to measuring productivity. This is because the customer path to purchase is no longer linear and can be difficult to predict.

Because they can use a wealth of communications channels and digital media, every customer journey is different and is difficult to anticipate or map.

As a consequence, most of the traditional KPIs for measuring productivity are becoming obsolete.

Simply calculating turnover or gross value added per employee or hour may no longer be relevant in a world where sales are often virtual and involve no physical interaction or store experience at all.

This means that, from a productivity assessment point of view, many retailers are struggling to understand what KPIs make sense in the digital world.

The retail sector already had one of the lowest productivity rates of any industry. The evolution to multichannel shopping then added far greater complexity, making it near impossible to accurately measure and thus optimise employee output. So, it’s not surprising that many are frustrated by digital.

However, in reality, the opposite is true. New technologies have the potential to improve productivity across the supply chain and in store.

Technology can give retailers the tools and insight to drive greater operational efficiencies and achieve more from every worker – whether through automation, process improvement or data analytics.

Every product, process and person creates its own ‘data trail’, which can be recorded and analysed with a focus on service optimisation.

Over time, this results in real, actionable insights that can directly improve productivity across the board. Indeed, the British Retail Council has included productivity as a measure on its Retail 2020 Dashboard.

They may be challenged by it, but retailers must embrace the digital era and make it an integral part of everything they do.

Article How technology can help retailers boost productivity

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TECHNOLOGY: A CATALYST FOR PRODUCTIVITY

So, how can technology – and digital transformation specifically – solve this productivity problem?

Firstly, it’s important to understand that although there is huge potential for improving efficiency and customer service, there is also almost no room for mistakes.

In such a competitive sector, with so many technological developments on offer, the retailers that fare best will be those who take time to understand digital and harness its full capabilities to benefit their business. It is therefore essential that retailers properly engage with and understand the technology available to them.

What’s more, any new technology deployment should be performed with considered and appropriate strategic direction, to ensure that it delivers maximum return in the least possible time. It is this philosophy that is most at odds with existing retail models.

Many retailers still distrust technology, and see digital transformation as a barrier to progress, a disruptor to efficiency. Actually, a complete shift in thinking is required, businesses must consider digital as an invaluable partner, a core element, rather than a problem.

DIGITAL TRANSFORMATION IN ACTIONMany retailers are already addressing this evolution, by innovating to transform their operational models and reap productivity rewards in the process. The majority of these are looking to e-commerce and data analytics to provide these gains.

These provide a more granular and constructive overview of shopper behaviour and crucially deliver real-time data at the point of purchase which means that changes can be made immediately for greatest impact.

This, in turn, enables a more personalised shopping experience on an individual level, which increases satisfaction and helps build loyalty – all while reducing costs by improving productivity.

Shop Direct is one such organisation that is taking advantage of real-time analytics. By tracking shoppers’ product interests, their behaviour and browsing habits, it takes proactive decisions to improve the online shopping experience based directly on these observations.

Ultimately, it aims to offer every shopper their own expert personal online assistant, backed up by 24/7 support. This is the apex of a happy marriage between high productivity and exceptional service levels that all retailers seek to achieve. This kind of innovation can occur anywhere in the supply chain.

In logistics, although many media headlines tend to focus on brand new technologies like delivery drones, there are in fact many other sizeable productivity gains to be made in all areas of operations. WHSmith is one great example.

By studying automation and implementing it in key processes such as voice-picking technology and conveyers, it has succeeded in improving efficiency as well as the speed and quality of its in-store customer experience.

Meanwhile, Kingfisher’s in-store innovation focuses on improving productivity with a direct benefit on overall customer experience. Its digital transformation solutions have included enabling customers to pay for their goods using handheld, automated terminals in the store aisle without requiring any intervention from staff, and providing employees with in-store access to real-time stock levels and product information.

This also has ‘knock-on’ gains: because time-consuming and unproductive tasks such as queuing have been removed, and employees are spending less time in the back room, they can instead be on the shop floor interacting with every customer and ensuring that they enjoy the very best experience.

AUTOMATING AND ANTICIPATING

Outside the physical store, several retailers have created online apps to achieve productivity gains both internally and externally.

For example, customers can book appointments with product specialists before they visit a particular store – meaning they don’t have to wait when they get there, and also that the specialist already knows who they are, what they want to discuss and their purchase history, before meeting them.

Apps can also be used to alert Click-and-Collect teams to the imminent arrival of customers so that they can prepare goods for pick-up at the moment they arrive.

Technologies like smart shelving and RFID tagging enable store workers to know when particular product lines are running low, so they can avoid popular items selling out and disappointing customers.

What’s more, the apps can record which items have been touched, tried on and sold, and automatically request restocking where needed.

John Lewis recently launched an advanced app as part of a £4 million digital initiative across its organisation. 8,000 shop-floor staff were given an iPhone with a pre-loaded app which allowed them to quickly help customers with information about products, stock availability and placing orders.

All information can be accessed via the app, on demand, anywhere in the store.

An associated ‘Partner App’ is designed to put an end to customers waiting for store staff to check information at tills or go to stock rooms to see whether a product is in stock. Everything is instead in the palm of their hand, which should save considerable time and effort.

SUCCESS DEPENDS ON A STEP-CHANGE

We have seen the seismic differences that digital technology can make to retail productivity – by empowering employees, streamlining processes, automating operations and improving customer service. Many retailers are already deploying these innovative strategies in their businesses, to great effect.

However, for true transformation to occur, and make a demonstrable difference to the UK retail sector, we must accept and embrace the digital revolution at every level of the sector, and with a considered, strategic approach to its implementation in every specific size and type of organisation.

Ultimately, every retailer must ask itself if it genuinely hopes to compete without investing in technology. The signs are clear: the digital age is directly linked with creating productivity gains, where it is integrated intelligently. Of course, there is no cast-iron guarantee that simply digitising processes will automatically convert to greater productivity.

But the evidence suggests that done right, it increases the chances of retailers succeeding in an evermore challenging environment.

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Article How technology can help retailers boost productivity

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SOURCES:

1. Retail Week

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