Driving Profit and Growth Through Store Operations Excellence Adam Pressman Partner Adam.Pressman@atkearney.com Mobile – 773.251.1667 www.atkearney.com
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 2 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
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?” 3 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
• Overview of AERO TM survey • Overview of survey findings and our insights • Next steps for retailers 4 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Survey Overview AERO TM Survey Scope A chieving Strategy, tactics and execution Outputs Benchmarking, leading practices E xcellence in Size ~100 questions Format Online, secure survey R etail Sectors Multiple retail sectors Geography Over 20 countries O perations All company-specific data strictly Confidentiality confidential 5 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Participation from a wide range of retailers 2013 AERO TM Participation by Sector (%) Cash & Carry Food/ grocery 3% 7% Apparel Electronics 36% 17% 17% Mass Market/ Hypermarket 20% Health/ personal care 6 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
AERO TM Framework Enable Store Value Deliver Core Store Value Use customer and market Improve efficiency and Voice of the Customer insights to set strategic effectiveness inside the direction four walls of the store while delivering a superior Channel Strategy customer experience Stores Business Planning Merchandising/ Supply Chain Store Field Leadership Interfaces Operations Communicate and Real Estate Lifecycle Drive Store Value Management Adopt Change Optimizing capital and Driving lasting change operating expenses through the store through the store life Operating Expense Control network in a consistent cycle to reduce total cost and practical way of ownership and improve return on investment Store Technology Change Management & Communication 7 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Lessons from AERO TM 1 2 3 4 Don’t leave the Measure, Unleash field Enable with Analyze and front line leadership technology Act behind 8 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
• Overview of AERO TM survey • Overview of survey findings and our insights • Next steps for retailers 9 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Voice of the Customer Voice of the Customer Channel Strategy Stores Business Planning • Know your customer Merchandising/ Store Supply Chain Field Leadership • Leverage your Operations Interfaces employees Change Management Real Estate Lifecycle Management Communication • Invest in tools and skills Operating Expense Control Store Technology 10 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Limited use of customer data sources Frequency of Use of Selected Customer Data (percentage responses) Voice of the Customer Channel Strategy Stores Business Planning Merchandising/ Store Supply Chain Field Leadership Interfaces Operations Rarely Commonly Examples Change Management Real Estate Lifecycle Management Communication Operating Expense Control Store Technology POS Transactions,, Units In-Store Traffic, Conversion Rate, Traffic Flow Survey Customer Surveys, Focus Groups, Intercepts Loyalty Loyalty Program data External Industry Research, Vendor-Led Social Networks – Corporate and 3 rd Party On-line Contact Center Contact Center data Store Employee Store Employee generated insights Product Review Products Reviews 1. Frequency of use of data ranges from less than 25% of respondents (“rarely”) to in excess of 75% of respondents (“common”) 11 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Social network data not valued Voice of the Customer Channel Strategy Customer Data Collected versus Importance for Generating Insights Stores Business Planning Merchandising/ Store Supply Chain Field Leadership Interfaces Operations Change Management Real Estate Lifecycle Management (percentage responses selected; percentage responses indicated “very important”) Communication Operating Expense Control Store Technology 66% 40% 35% 8% Company 3rd party Domains Domains Collected Very Important 12 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Direct contact with customers not widely leveraged Voice of the Customer Channel Strategy Customer Data Collected versus Importance for Generating Insights Stores Business Planning Merchandising/ Store Supply Chain Field Leadership Interfaces Operations Change Management Real Estate Lifecycle Management (percentage responses selected; percentage responses indicated “very important”) Communication Operating Expense Control Store Technology 70% 57% 50% 40% Call Center Contact Store Employee-generated Data Customer Data Collected Very Important 13 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Those that invest in enabling store employee feedback put it to use Voice of the Customer Channel Strategy Stores Business Planning Merchandising/ Store Supply Chain Field Leadership Interfaces Operations Change Management Real Estate Lifecycle Management Communication Operating Expense Control Store Technology Technology-enabled Store Employee Prevalence of Analyses of Store Feedback Employee Input (% respondents) (% respondents) Extensively 21% 66% Somewhat 17% Neutral 3% Limited -70% 21% 20% None 38% Extensive use of Moderate use of Use technology to enable technology technology employee feedback to enable employee to enable employee feedback feedback 14 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Over half still do not mine loyalty data regularly Voice of the Customer Channel Strategy Stores Business Planning Merchandising/ Store Supply Chain Field Leadership Interfaces Operations Change Management Real Estate Lifecycle Management Communication Operating Expense Control Store Technology Frequency of Loyalty Barriers to Increased Consumer Insights Data Analysis from Loyalty Data (% respondents, 2009 v 2012) (% respondents) Legal Restrictions 55 Lack of 51% 3% 48% Perceived Need 50 45 27% 40 35 60% Technology 28% 30 25 22% 19% 20 15 11% 10% 10% 43% 10 Workforce 5 Capability 0 Continuously/ Quarterly/ Every 1 Rarely/ Monthly Semi- to 3 years Never Annually 2009 2012 15 Source: A.T. Kearney 2013 AERO TM Study A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Multi-Channel Strategy Voice of the Customer Channel Strategy Stores Business Planning • Integrate your multi- Merchandising/ channel strategy Store Supply Chain Field Leadership Operations Interfaces • Prioritize supporting Change Management technology investments Real Estate Lifecycle Management Communication • Align metrics to drive Operating Expense Control results Store Technology 16 A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
Consumers expect to use both physical and digital channels in their journey How Consumers Shop? 55% 76% 76% Stores 81% 83% Online 45% 24% 24% 19% 17% Research Product Pick- After Sales Trial / Test Purchase Product Up / Delivery Experience • Discovery of • After making a • Customer obtains • Customer obtains • Customer Description products preliminary and pays for product products purchased satisfaction is selection, customer (pick-up in store or maintained post- • Customer considers verifies that it is the delivery) purchase (including various product/ right product returns) service options • Read dozens of 3 rd • Visit product in store • Purchase in-store • Order product online • Return items bought Increasingly Common party reviews online to test / trial / try-on but have shipped to and pick-up in store online or in-store Behaviours / home; “Select and products researched same day and vice versa • Influenced by social Expectations Ship” stores online media • “Customers Like You • Shipping samples to • Beacons / micro- • Order online for • Share / post Cross-Channel Capabilities in Also Purchased…” “drive - up” pick -up home (lengthy trials) location targeting purchases (e.g., Consideration Twitter) • Triggered by targeted offer 17 Source: A.T. Kearney Future of Stores Survey A.T. Kearney 82/29951/5ert4rQlkR01QQI0R1
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