Does store operations have a seat at the digital transformation table?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
At a recent dinner where a group of executives talked about the challenges facing stores, the conversation started much the same as it does everywhere in retail these days.
How many people at the table are part of an internal effort addressing digital transformation in some way? Yep, check, almost the whole table.
Next question: how many people at the table have extended that strategy or discussion to stores? Nope. Not yet. For a lot of retailers, it is such an open question they will readily admit they don’t know where to start.
Even worse: how many at the table were from store operations? Three. And they were all from the same company. One attendee said, “We seem to have this attitude internally about doing things to stores, rather than with them.”
So, obviously, there are a lot of problems with this state of affairs. But it is certainly not surprising. Stores do not move at the same speed as the rest of the business. The reality is that user experience design and the process of rolling out software (and hardware) to stores is just not that smooth, and it may never be.
And that means stores will always be slower than the rest of the enterprise and are just getting passed by. Digital transformation is leaving stores in the dust. And stores are responding by trying to skip the hard work of defining what they want the customer experience to be and moving straight on to implementing technology – apparently for technology’s sake, rather than in support of a strategic customer experience.
When retailers get to this point, here’s what happens next: stores lose their strategic imperative.
When I can get cases of Diet Coke delivered to my front porch for practically free, stores have to be about more than “selling stuff.” But if you take away an objective of “selling stuff,” what’s the purpose of stores? Too many retailers have no good answer to that question. And when you don’t have a good answer, everything else you do – all the tactics, the technology – amounts to scattershot efforts at an ill-defined problem.
Worse yet, if digital transformation continues to leave stores in the dust, are they ever going to see the starting line?
Discussion Questions
DISCUSSION QUESTIONS: Why is the digital transformation still largely missing from the physical store experience? Are stores even able to move fast enough to keep up with the speed of today’s retail customer?
Poll
BrainTrust
Jon Polin
Cofounder and President, StorePower
Marge Laney
CEO, Alert Tech
Leaving store operations out of the conversation is a mistake. So much of the digital transformation is ultimately unfolding in the stores, from shelf replenishment to personalized customer offers to e-commerce pick-and-pack, etc. The best strategy and the most cutting-edge technology will not matter if the place where the final execution happens, i.e. the physical store, is not involved throughout the process. If store operations can’t seamlessly deliver a great experience driven by the digital transformation, then the digital transformation backfires.
Nikki’s article very accurately illustrates what I also see with many retailers. The role of stores and frontline staff need to be a central and critical consideration in any discussion about store experience instead of being treated like an afterthought. Stores are where the brand interacts with its customers — where the brand is built and strengthened or tarnished and abused. Stores are able to move fast enough, but leadership needs to make it a priority and provide store personnel with the tools and training they need to deliver.
Digital transformation is about leveraging digital technology to enhance operational business processes as well as creating new ways to improve customer interaction in ways that generate new revenue for the business. It seems counterintuitive that retailers are leaving stores out of this equation and denying store ops management a seat at the table to execute the business’ digital transformation.
While it’s true that executing new technology in the store isn’t easy, it won’t get any easier if store ops and IT groups don’t work together from the beginning phases of a digital transformation. One of the key elements often forgotten/neglected is something I’ve written about many times before — ensuring existing digital infrastructure can support new initiatives before the deploying new technology. This is especially true with “unsexy” components like back-end servers, inventory management systems and the store network (including Wi-Fi). All of these are systems maintained by IT but they directly affect store operations. Digital transformation requires leadership from the top levels to bring marketing, operations and IT together to execute any changes to the store successfully.
Having spent my life in retail, it is sad to see that the stores are still being left out of the planning sessions. After all, the store is what the consumer sees and interacts with so how is retail transformed without the stores? Yes, I know, any transformation eventually makes it to the store but I learned many moons ago what a mistake it was for us to design a solution without store participation and then try to roll out said solution only to find the store couldn’t work with it or it didn’t meet the real need.
Now the question asked, can stores move fast enough? In today’s digital environment and with the tools and technology we have access to? Sure they can. And even better, we have all become such digital creatures that we can adapt very quickly … especially the younger folks that actually work in the stores. So let’s bring the stores to the planning table and get it right this time. We need to!
For my 2 cents.
Retailers pushing for omnichannel solutions (BOPIS, ship-from-store and so forth) absolutely have to involve store operations. There is no way to plan the costs of these services (especially in payroll hours) without field management at the table. And store management has a responsibility to speak up when pushed to “do more with less” — otherwise the costs of omnichannel programs erode the customer service that brick-and-mortar shoppers still expect.
In order for physical stores to be relevant to digitally empowered shoppers, the entire operational status quo of the store must be re-engineered. Simply adding digital elements to the existing format doesn’t work. The entire being of the store must be examined, questioned and transformed. Installing a digital sign, a tablet with an app or a mobile payment solution are all putting lipstick on the digital transformation pig — these upgrades do not address the root problem. The entire operational and media workflow must be transformed. For example, retail is a consignment business! Get over it! Implementing new technologies and operational workflows can dramatically increase profits, reduce (and eliminate) out-of-stocks, provide a better shopping experience, enhance the retailer/vendor relationship and let vendors carry both risk and reward. This can be done today if operations are at the table with the merchants and vendor partners. Wake up retailers before it’s too late!
Store operations is where the rubber meets the road and if this critical point of the retailer’s digital transformation is overlooked, do not be surprised if the results are not what you expected. All of the back-office and executive level transformation initiatives are responses to the changing dynamics of the way people shop however, as we all know, approximately 90 percent of all retail purchases are influenced by the brick-and-mortar store.
The customer’s interaction with the retail brand could be negatively or permanently impacted by a disappointing in-store experience. The execution and customer-facing aspect of retail is where companies need to empower their associates to be evangelists of the brand, to be digitally and socially connected and to drive a superior customer experience.
When stores are doing well, retailers focus on opening more stores. When stores are not doing well, retailers still concentrate on opening more stores. It’s a huge mistake. Retailers should be catching their breath and looking at what technology is not only right for them but what technology is going to enhance their in-store shopping experience. Unfortunately, some companies are too busy playing catch-up on other issues and others just have their head in the sand. Part of the problem is the way today’s retail works with the people at the helm being there only for a few years earning very high compensation, with many of them focusing only on today’s growth because it impacts their bottom line and not long-term strategy that will benefit the business. As this practice continues, it’s going to be very hard for many retailers to connect with today’s shoppers’ needs and implement the right technology. Eventually those retailers that survive will have no choice. They will get there, but I don’t see it happening too quickly.
In my work providing line-free checkout capabilities there is lots of collaboration with store operations, so my perspective is based on the experience of working with ops in both the sales and implementation phases. My take is that store operations is typically tasked with keeping everything running smoothly, and that imperative comes above all else (including, and sometimes especially, innovation). For that reason it’s reflexive to resist any kind of innovation, even without knowing about it, because innovation always includes some level of disruption as the store adapts. Ops’ best contribution is therefore not in the “WHAT” phase but in the “HOW” phase.
It’s imperative for store operations to be included in the technology discussions that impact the stores, especially the customer experience. Lots of technology solutions are hatched in labs where techies imagine the solution working in the real world. No matter how good the lab environment, it still cannot simulate a live store environment.
Most retail customer service tech is simply too complicated and requires constant attention from store staff and often slows down or adds clumsy steps to the process they are trying to facilitate. But keeping it simple isn’t sexy and without store ops’ input, management often goes after the solutions with the most bells and whistles.
Bottom line — technology must solve real problems that are best identified by store staff. Additionally, retail is a game of seconds. Any solution that slows the velocity of the customer experience without measurable return on investment should never be implemented.
This problem isn’t only common for retailers, it is also common in so many other industries that rely on a non-desk workforce. Front-line employees need to have a seat at the table because they are the ones that interact with customers on a day-to-day basis. They know what customers respond well to, what their complaints are and they have great ideas for how to improve — but they’re rarely heard. In-store employees double as brand ambassadors and need to be informed with corporate’s strategy for digital transformation. The best way to gather intelligence from front=line employees and include them in the conversation is by adopting an internal communications platform that allows for bottom-up communication as well as top-down.
Customers need to see, hear and feel one singular perspective from retail brands. Anytime contact with the retailer appears disjointed between online and brick & mortar to a consumer, you risk appearing dated, tired, and out-of-touch with consumer demands.
Physical stores should be able to move fast enough, or at the same speed as online retail functions if they are included in planning. At this stage, if operations is not part of the digital commerce discussion, the retailer is at a disadvantage.
Generally, the toolsets for operations are positioned as lower priorities because they do not directly touch the Customer Experience and aren’t deemed “sexy.” But this a HUGE mistake. Digital Transformation is the end result, not the ACTIVITY.
ALL forms of retail technology should form the ecosystem that supports the Customer Experience, and if back office, back end or store associate technology doesn’t extend the brand into the physical store, then the store shopping and the overall shopper experience WILL suffer (and is).
Well, sadly I’m going to provide a grim view of operations’ involvement in the physical store. The reality is that the store operations are (as they should be) being replaced by technology. Yes of course stores still need their people, but we are at an intersection now where the technology is eclipsing the pace of retail stores so quickly that there is no possible way to keep up. That being said, the store’s transition, while it should take the operations into account, really needs to be centered around how customers are using technology, how they prefer it to play into their shopping experience and finally having a super subtle integration directly with the store.
The execution of this does come in large part from the data obtained by talking and listening to customers first, developing and MVP and testing this to then reiterate and re-release. It is now the operating system for a store we must be concerned with and, unfortunately, people are becoming less a part of that. If you want proof look at Amazon Go stores, no people — just pick and walk.