How to increase Store Productivity

RIS THOUGHT LEADERSHIP SERIES Building the Foundation for Store Productivity 2015

RIS Thought Leadership Series

Building the Foundation for Store Productivity 2015

The store productivity and operations challenges retailers face today

will only grow more intense by 2015. The acceleration of omnichannel

shopping and the accompanying increase in non-linear, multi-touchpoint

paths to purchase has already forced many retailers to rethink the roles

stores play in the customer experience. Improving productivity will

require not just smart use of technology but a re-evaluation of the store

workforce: how it’s equipped, trained, measured and managed. Store

productivity solutions are also becoming increasingly sophisticated.

They include role-based task management solutions delivered to store

associates’ mobile devices, and advanced traffic tracking that uses video

analytics to help managers fine-tune store staffing in response to real-

time events. In addition, location-based technology that makes in-store

personalization both possible and cost-effective will be part of the

productivity toolkit as we enter the second half of the decade.

INS IDE :

4 Use Tech to Integrate Store and Digital

Experiences

5 Priorities for Next-Wave Mobile Deployments

6 Tailor Engagement to Customer Comfort Levels

8 Optimize Task Management to Enhance

Productivity

Sponsored by

RISThoughtLeadershipSeriesIApril2013I2


The store productivity and operations challenges retailers are fac-ing today will only grow more intense as 2015 marks the start of the second half of the decade. The acceleration of omnichannel shopping and the accompanying increase in non-linear, multi-touchpoint paths to purchase has already forced many retailers to rethink the roles that their stores will play in the overall cus-tomer experience.

Shoppers are coming to expect the same rapid, intuitive access to information in stores that’s available online or via their smart mobile devices. Consumers, particularly Millennials, will quickly grow impatient if the store environment isn’t capable of showing them which specific shades of green this shirt is also available in, how to use the power tool they’re considering purchasing, or whether the ingredients in a box of baking mix are locally sourced and animal products-free.

Customers who started their shopping journey in an online chan-nel will expect to be able to seamlessly pick up at the point where they left off when they enter the store. Continuously up-dated order and transaction status data will need to be made available to store associates and/or customers, both to facili-tate increasingly popular functionalities such as buy online/pick up in-store and to streamline returns processes while mitigating fraud and other security risks.

In addition, while stores will continue to operate as a primary sales channel – one where 90% or more of transactions still take place – they are increasingly serving as omnichannel fulfillment nodes. Industry leaders including Macy’s, Walmart and Urban Out-fitters have all discussed both the challenges and benefits of store-based fulfillment, and both Google and eBay are testing same-day delivery offerings in concert with other major retailers including Target, Toys “R” Us and Walgreens.

“Some people predicted the rise of digital commerce would mean the death of the store as we know it, but the truth is digital com-merce is a set of functions that expands the stores’ role,” says Joe Skorupa, group editor-in-chief, RIS News. “The challenge for retailers is to add these new functions to stores through the use of smart technology, a common set of customer analytics and real-time inventory visibility, to supercharge the ability to save in-store sales when products are not on shelves.”

Incentivizing FulfillmentIn some cases, retailers are finding it necessary to adjust salaries and incentives of store employees as their responsibilities change. Urban Outfitters’ recent adoption of store-based fulfillment for

selected online orders raised a question many omnichannel re-tailers have faced: how to allocate labor and motivate workers for product sales that don’t accrue to the store’s credit.

Asked whether store-level incentives were needed to encourage personnel to pack and ship popular items for online customers, Urban Outfitters Group president Ted Marlow credited a combina-tion of payroll management and incentives. “The store team did a very good job of creating an incentive system related to the ful-fillment of orders, and the people are incented to fulfill and that can complement perhaps a downside exposure in regard to sales performance,” said Marlow during an analyst conference earlier this year, adding that stores offer quarterly bonus opportunities tied to sales performance.

The extra effort involved in using a single inventory pool for fulfilling direct-to-consumer orders from stores is worth it for the enterprise as a whole, according to Marlow: “We can have the inventory in the store with a chance of sale as opposed to sitting in a DC, and leverage the total investment to the downside and I think get more productivity, and I would hope and think reduced markdown exposure.”

Tailored Task ManagementRetailers are also turning to increasingly sophisticated task man-agement systems, part of many of today’s advanced workforce management (WFM) solutions. These systems can deliver tailored, role-based lists of tasks to individual associates via mobile devices.

As the associate begins performing a task, the system time-stamps the action, allowing the retailer to record not just that the task is being accomplished but also whether the associate

T A K E A W A Y

Integrate Stores into a Seamless Customer Experience: Consumers will expect stores not to disrupt their non-linear paths to purchase, providing real-time order and transaction data from other channels.



Integrated task management systems can also build in excep-tion-based alerts that escalate to a store manager’s dashboard if a critical task is not handled within a specified amount of time. For example, investigating a refrigerator temperature that has reached a dangerously high level is a task that requires immedi-ate attention. If the problem isn’t fixed, items in the refrigera-tor need to be moved to another unit or thrown away to avoid dangerous spoilage.

Newer task management systems also provide associates with the flexibility to respond to immediate needs. An associate may be engaged in a task that the store’s labor standard says should be accomplished within 10 minutes, such as restocking a shelf. But the store’s policy is for associates to answer customer queries and, if the shopper is seeking a particular item, to take them

is performing it within the parameters of an already established labor standard, when the associate marks the task as completed and moves on to the next.

T A K E A W A Y

Incentivize Omnichannel Activities: Store-based fulfillment of online orders and cross-channel returns soak up store resources but can be good for the enterprise as a whole.

Source: RIS News, September 2012

Store associates are tasked with helping shoppers find the products they want by a majority of retailers.

Which Customer-Facing Associate Responsibility is your Store-Level Priority?

Figure1

Resolving shopperissues while inthe store

12.5%

Helping shoppersfind the products

they want

55%

Helping shoppersmake purchase

decisions

32.5%

I N D u S t R y I N S I g h t


Q: how are changes in the roles that stores play in the omnichannel shopper’s journey affecting retailer’s priorities?

COREy gALE: The biggest impact is that now, and certainly by 2015, there will be much more emphasis than there has ever been on saving the sale in the store environment. Keeping the ‘lost sales’ number down to practically nothing will be one of the most important KPIs for retailers, because not only does that mean the retailer makes more money, it means they will have a happier, more loyal customer.

Q: What are some effective ways to save the sale?

gALE: One way is to have really good clienteling that’s coor-dinated with the retailer’s digital offerings, and is offered in the store on mobile devices. Mobility in general hugely improves productivity, like our mobile POS solution that’s delivered on the same iPad devices as our clienteling solution. When there are long lines and you want to keep people from leaving the store, line-busting is a simple step to take.

Of course, you also need to train your store associates to en-sure they know how to do these things properly. It’s really a sea change in behavior. One of the trends we see is that with the Millennial generation both shopping in and working in stores, there will be a higher comfort level with the use of handhelds and tablet devices. Demographic research shows that this age group may not be comfortable looking at each other, but they are comfortable looking at devices together. And the retailers should be happy as well, because in this case it means the associates are doing their job.

Q: What other types of store technologies do you see being important by 2015 and beyond?

gALE: In-store technologies that already exist in markets out-side of North America, such as talking signs that address custom-ers by name, could make their debut – although there’s a bit of fear of the ‘freak-out’ factor, so these would have to be opt-in only. However, if it is an opt-in program, that also means the

retailer knows more about the shopper and can learn more during their interaction.

There will also be more omnichannel coordination on the back end. We already use a shared services model, which simplifies the management of different parts of our solution set – POS, e-commerce, order management – by putting them all in one place, in the cloud. This provides retailers with a common set of tools for things like implementing a promotion.

There will also be greater use of shared analytics. With our full commerce platform, we’re able to take all of a customer’s ses-sion data from e-commerce and put it into our CRM solution on a dashboard that shows store sales. Then the retailer sees that a customer’s Web session wasn’t four hours online that didn’t result in a sale; it was actually a Web-influenced sale that resulted in the customer buying a flat-screen TV in the brick-and-mortar store.

We’re inches away from being able to do this, and it will be much more common by 2015. To a large degree this level of analytics has been an e-commerce trend, but it’s moving to the store 100%. We enable our customers the ability to order at any touchpoint and have it delivered or pick it up at any store. We absolutely disagree that the brick-and-mortar store is dying. Per-haps it’s changing, but it’s not going anywhere.

Corey Gale, Director of Marketing, MICROS-Retail

Use Technology to Tightly Integrate Store Shopping with Digital Experience

“With shared analytics, the retailer sees that a customer’s Web session wasn’t four hours online that didn’t result in a sale; it was actu-ally a Web-influenced sale that resulted in the customer buying a flat-screen tV in the brick-and-mortar store. We’re inches away from being able to do this, and it will be much more common by 2015.”

—CoreyGale,DirectorofMarketing,MICROS-Retail



With automated task management systems tied to mobile technol-ogy (either devices issued by the retailer or the associate’s own technology incorporated into a Bring Your Own Device solution), associates can put their tasks “on hold” while they help shoppers. This ensures that they are not personally penalized for taking too long to accomplish their task, and the automated time stamps also maintain the accuracy of the retailer’s labor standards.

Retailers believe task management will be more important in the second wave of associate mobile device deployment, i.e. by 2015 and beyond. While only one in four respondents to a Sep-tember 2012 survey identified task management as a first-wave mobile functionality, 58.3% chose it as a second-wave priority – the highest percentage of any choice in this category. (See Figure 2.)

Mobility’s Immediate ImpactThe increasingly popular trend of providing tablets and other

to the area of the store where it’s located. A majority (55%) of retailers responding to a recent RIS News survey said “helping shoppers find the products they want” is a priority for their as-sociates’ customer-facing responsibilities (see Figure 1, page 3).

Source: RIS News, September 2012

Task management is the most popular choice among next-generation mobility functions for associates.

Which Mobile Functions Should be in a Mobile Device Project for Associates in the First and Second Waves of Deployment?

Figure2

T A K E A W A Y

Use Automated Role-Based Task Management: WFM solutions with task management modules increase productivity and ensure critical tasks are accomplished within established labor standards.

First WaveSecond Wave

Stock status checking

Price checking

Receiving

Real-time messaging with manager

Mobile POS

Auditing

Store associate scheduling

Task management

Visual merchandising

75.7%

70.3%

57.1%

41.7%

33.3%

28.6%

26.5%

25%

20.1%

16.2%

13.5%

25.8%

33.3%

44.4%

41.7%

35.3%

58.3%

38.2%



Q: What are the most important new KPIs for retail-ers seeking to improve store productivity levels?

tED BEAIth: Now that stores are becoming just one facet of omnichannel retailing, there’s a whole new set of metrics emerg-ing about how well they perform as part of an overall shopping experience. Many of these metrics are concerned with how stores manage inventory and labor to optimize their evolving roles.

There are also new customer-centric analytics, measuring things such as the conversion rate of targeted coupons that are deliv-ered to shoppers in store, identifying the impact that has on store travel and on market basket patterns. It’s very powerful to be able to send a real-time coupon and tell within minutes what impact it had, and also to apply rich analytics in addition to the quick response. Many retailers are also using the new technology tools to measure traditional KPIs at a much more granular level.

Q: What are some of the new things retailers can now discover about their customers, particularly about their behavior in stores?

BEAIth: Most retailers have a goal of expanding their knowledge and relationship with their customer, and using this to be able to separate out the frequent, valuable customer from the ‘cherry picker’.

Retailers are also challenged with finding each customer’s com-fort level with the myriad types of engagement now available. For example, there’s the fashion retail scenario where a sales associate recognizes a customer, looks up their purchase history and says ‘I know you bought a jacket six months ago from this

designer, and now their summer line is in.’ For some customers that’s great customer service; for others it might be perceived as intrusive. Retailers need to find the balance and tailor their ap-proach to individual customers.

Q: how can retailers use these insights to improve the in-store experience?

BEAIth: Mobility is proving to be a big enabler, both for the customer and store associate. For example, the associate’s ability to access customers’ online orders and see their current status – to have an omnichannel view of customer, inventory and order management data – is becoming an expectation rather than a competitive differentiator.

We’re also seeing a lot more use of GPS and video technologies, to understand conversion rates and consumers’ activities in the store. By studying traffic patterns and dwell times, retailers can rearrange stores based on markets and product affinities, and this can now be done on a store-by-store basis.

Another example is stores offering free WiFi that allows them to determine which Internet sites customers are visiting. Retailers can use this information to determine whether the consumer is showrooming, or looking up additional information such as warranties and buyer reviews, by determining whether custom-ers are visiting the retailer’s online site, a competitor’s site or a vendor’s site.

Q: What big challenges still stand in the way of im-proving productivity?

BEAIth: Retailers need to ensure that their business processes and analytical reporting catch up with the technology. There are tremendously powerful tools out there, but ultimately they have to be integrated into the retailer’s identity, and what’s efficient for their staff to execute. You now have access to an immense amount of information, from POS, CRM, RFID and social media, and retailers need to determine what’s actionable within the store environment. Transforming that data into information is becoming the new threshold. Some retailers are very good at it, and you can see it in their industry results. They know their customers, they know how to integrate with them, and how to be efficient doing it.

Ted Beaith, North American Retail Practice Leader, MicroStrategy

Tailor In-Store Engagement to Customer Comfort Levels

“the associate’s ability to access customers’ online orders and see their current status – to have an omnichannel view of customer, inventory and order management data – is becoming an expectation rather than a competitive differentiator.”

—TedBeaith,NorthAmericanRetailPracticeLeader,MicroStrategy



An inexperienced manager or one new to running this store, how-ever, would need a recommendation based on the store’s traffic pattern and transaction histories. This would tell her the average amount of time between shoppers’ entering the store and check-ing out. Solutions that also provide recommended actions would tell this manager the optimal number of point-of-sale stations that need to be open in order to handle this traffic “bump.”

The rise of geofencing and other location-based solutions capa-ble of identifying individuals who are in a given area also opens up opportunities to personalize the store shopping experience. Either through a retailer’s mobile app or via WiFi tracking, high-value customers who have opted in can be provided with person-alized attention when they enter the four walls of a brick-and-mortar store. These types of alerts can be added to a manager’s dashboard via incorporation with WFM and CRM solutions.

The integration of a clienteling system can arm the associate help-ing this high-value shopper with customer-specific information delivered to them via a mobile device, enriching the customer en-gagement and improving conversion rates and market basket sizes.

Measuring conversion rates – how many shoppers entering a store end up actually making a purchase – will become an increasingly important productivity metric as the decade progresses. “Retail-ers will need to adjust their scorecards and measure customer conversion,” said Frank Zarrello, planning specialist with Retail Systems & Services. “Grades from the past, like store-by-store increases, will have to change. If you can figure out the stimuli – what the shopper likes and why she bought what she bought – you can keep fulfilling toward that.”

smart mobile devices to both store associates and managers also increases the flexibility and responsiveness of the store as a whole. WFM dashboards on managers’ tablets can be equipped with exception-based alerts, e.g. when time-sensitive tasks are not completed. Mobile communications allow managers to learn when an eagerly awaited delivery has finally arrived, and to send the ap-propriate personnel to the receiving area to unload the truck and get the merchandise onto the store floor as quickly as possible.

As traffic counting and video analytics tools grow more sophisti-cated, they will allow store managers to be more proactive in as-signing workers tasks in particular areas of the store. For example, if traffic movement analysis shows that customer dwell times are down in a department that is normally popular at a given time – say the toy department on a Saturday afternoon – it’s probably not because children have suddenly stopped being interested in toys.

A more likely explanation is that there are too few staff members there to help the volume of customers, or that the store shelves have been emptied of a popular toy, or some combination of similar factors. In any case, managerial intervention and store associate movement are needed to restore customer satisfaction levels – and not incidentally increase conversion rates and sales.

Proactive Staffing TechniquesOn a more macro basis, traffic counting and predictive analytics can head off problems before they occur. If a busload of shop-pers enters an outlet store, an experienced store manager would know that the majority of these shoppers will be ready to check out within 30 minutes, and she would alert three more cashiers to open their registers within that time period.

T A K E A W A Y

Manage with Advanced Traffic Analysis Tools: Traffic counting and video analytics tools allow managers to fine-tune staff assignments in response to real-time events.

T A K E A W A Y

Make Conversion a KPI: Determining how many customers entering a store actually end up making a purchase will become an increasingly important metric for overall store productivity.



Q: how do you see metrics changing as retailers seek to boost store productivity in 2015 and beyond?

StEVE RASEMAN: Key Performance Indicators (KPIs) such as conversion rate and transaction size will continue to be relevant, but there are possibilities for KPIs that could be tied more closely to associates’ activities within the store – particularly with the advent of new low-cost mobile devices that make it cost-effective for more associates to use them. Retailers tell us that they spend a lot of time developing labor standards, but they lack feedback mechanisms that show whether they work in the real world.

Q: Do you see mobility’s impact continuing to increase in this area?

RASEMAN: Yes, certainly. Using mobile devices to facilitate task management means that not only would retailers be able to provide tasks to employees, they would also be able to time-stamp more elements of each task. You would know what time Jennifer was assigned a task and how long it took her to com-plete it. Or let’s say someone was working on restocking pet food, and she’s interrupted when a customer asks her a question. The associate would press a single button on their Motorola SB1 Smart Badge to automatically create a “customer help request task”. She would not be penalized for the five or six minutes it took to help the customer and would then resume the re-stocking task. Mobile technology makes it reasonable for associates to record this data automatically, rather than retroactively fill in a time card to account for exactly what they did during the course of their shift.

Q: What are some other important emerging technol-ogies for improving store operations and profitability?

RASEMAN: Retailers can make greater use of video analytics (VA). Let’s say the VA solution shows a large group of customers entering the store. Based on this data and using previous history, the retailer would know that they will need to station an addi-tional two cashiers within 22 minutes’ time. Or if analytics shows customers dwelling in certain areas of the store, sending more associates there could improve conversion rates – particularly if it’s a high-profit department.

Conversion rates could also be improved if the retailer uses data they have about individual customers. If I know that Jane, a platinum-level customer, has entered the store, and I have access to her customer data and know her preferences, I could alert a concierge-level associate to work with her.

Location-based technology will certainly become more impor-tant, used both for employees and customers. Retailers can ben-efit from appropriate use of location technology, working within established privacy requirements, to match up shoppers with store and workforce resources.

Q: What kinds of tools are available to manage these more complex solutions?

RASEMAN: The Motorola Mobile Workforce Management so-lution offers a software framework that aggregates tasks from multiple sources, such as traditional corporate workforce man-agement systems, buy online/pick up in-store applications, video analytics and in-store sensor technologies. The framework is also aware of who is logged in as working at that time and what their skill sets and abilities are, so it’s able to assign the task out to the best person, track their progress and apply the appropriate metrics. I think it’s a game-changer to directly deliver a task to the mobile device-equipped associate that is best suited to com-plete that task, track it through to completion, and then have a manager equipped with an on-device dashboard so they really know what’s happening in their store.

Steve Raseman, Mobile Workforce Management Product Manager, Motorola Solutions

Optimize and Measure Task Management to Enhance Store Productivity

“I think it’s a game-changer to directly deliver a task to the mobile device-equipped associate that is best suited to complete that task, track it through to completion, and then have a manager equipped with an on-device dashboard so they really know what’s happening in their store.”

—SteveRaseman,MobileWorkforceManagementProductManager,MotorolaSolutions



penetration can vary widely in different retail verticals, from highs of 34.2% and 28.8% in office supply and books/magazines respectively to less than four percent in the furniture/appliances and CPG categories.

The Accenture model, shown in Figure 3, requires retailers to look at both the types of products they sell and their customer base. For example, while younger shoppers have not abandoned store shop-ping, they are certainly more likely than older consumers to do a higher proportion of their shopping online or via mobile devices.

Undoubtedly, stores will change – in their look, feel, and in the experiences they provide – by 2015 and throughout this decade. But just as surely, store retailing itself is in no danger of disap-pearing. Paul Roth, president of retail sales and service at AT&T Mobility and the keynote speaker at the 2013 RIS Retail Technol-ogy Conference, said it best as he discussed the company’s flag-ship store on Chicago’s Michigan Avenue: “Retail stores will remain relevant as long as the need for instant gratification exists.” •

Tough Choices AheadEven with these and other productivity tools as well as stores’ en-hanced importance to omnichannel operations, brick-and-mortar locations do face limitations. Retailers will need to take a hard strategic look at their store footprint in the context of their overall brand and their ability to reach and service customers – both those they already have and those they would like to acquire.

“Retailers have traditionally grown by scaling up – buying new companies or expanding their real estate,” noted Leslie Hand, research director at IDC Retail Insights. “Now it’s more important to get into the head of the individual customer. When you can do that, sales just naturally happen.”

Accenture provides a formula for assessing the vulnerability of various store models in “Overstored: How Retailers Can Retain a Profitable Physical Store Network in the Face of Growing Mi-gration to Digital Channels.” The 2012 report notes that online

Product vulnerability

Customervulnerability

+ =

Store model vulnerability

Easily comparable/commodityNon-exclusive“Digitizable”

Not time sensitive or replenishment-orientedLow service requirement

YoungerHigher educatedHigher incomePrice sensitive

Less socialTech savvy


H

LHL

Moderate

Extreme


Low

Source: Accenture, 2012

Strategic decisions about stores require retailers to assess characteristics of their vertical, business model and customer base.

Assessing Store Model Vulnerability

Figure3



A b o u t M I C R O S - R e t a i lMICROS-Retail is a global leader in technology solutions for retailers, offering a seamless omni-channel experience to their customers. MICROS-Retail’s omni-channel platform provides the functionality that allows retailers to successfully engage their customers; with point of sale, eCommerce, mobile, loyalty and CRM, loss prevention, distributed order management, inventory management, and mer-chandise planning solutions. Services include platform implementation and integration, strategic business consulting, design services including creative and user experience, hosting, and managed services. Over 2000 retailers around the world rely on MICROS-Retail to strengthen their businesses and deliver results across all consumer touchpoints: store, web, direct and mobile. For more information visit www.micros-retail.com.

A b o u t M i c r o S t r a t e g yMicroStrategy was founded in 1989 and has grown to become a leading independent public business intelligence software vendor (NAS-DAQ: MSTR). With direct operations in 26 countries worldwide and over 3,500 employees, MicroStrategy is a leading global provider of enterprise software platforms for business intelligence (BI), mobile intelligence, and network applications. With over 25% of our work-force and nearly $100M annually dedicated to R&D, we have over 80 patents issued. MicroStrategy is proud to serve millions of business users at nearly 4,000 companies across 20 industries around the world. For more information:http://www.microstrategy.com/download/files/solutions/byindustry/MicroStrategy-mobile-transactions-retail.pdf

A b o u t M o t o r o l a S o l u t i o n sIn retail, the shopping ‘experience’ is a retailer’s biggest differentiator. With shoppers more connected than ever, the right technol-ogy at every point of interaction is the opportunity to better understand them. To engage this connected shopper you need associ-ates as informed as they are, and more connected – to your store, your site, your merchandise, and to each other. By connecting with shoppers, enabling associates, and empowering IT, it’s how browsing becomes buying, customers become brand advocates and retailers influence the purchase path. To learn more, visit us at: www.motorolasolutions.com/retail.

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How to increase Store Productivity