RSR Research: Localize, But Not Empower? The Role of Today’s Store Manager
By Brian Kilcourse,
Managing Partner
Through
a special arrangement, presented here for discussion is a summary of
a current article from Retail
Paradox,
Retail Systems Research’s weekly analysis on emerging issues facing
retailers.
At a technology
event last week, one “retail focused” CIO panel discussed advances in
retail business intelligence (BI), and as usual the conversation was
about empowering merchandise planners, financial analysts, and other “home
office” types
to gain visibility into the farthest reaches of retail operations. But
when the CIOs were asked about making “actionable information” available
in something approaching “real
time” to store managers, the CIOs were in agreement; to paraphrase the
collective sentiment, “We don’t want the store manager to get distracted
from his job on the sales floor.”
But what precisely
is that job? There can be no question that in the past 30 years, the
role of the store manager as merchant has been minimized; retail companies
sought to gain economies of scale and, as a result, developed centralized
product-oriented strategies. For many retailers, this meant dumbing down
the store manager function to the tasks of managing the workforce and
executing the merchandising plan “just like the picture.”
To be fair,
the track record for average and under-performing retailers in executing
the centralized model isn’t exactly heartening. For example, fractured
planning processes are a perennial top challenge identified in every
merchandising study RSR has run since our inception – and that is a home
office issue. The good news is that the needle is moving in the right
direction. In RSR’s just released study Retail
Merchandising – Buckling Down In A Tough Economy,
we note that “While it [fractured planning] remains the number
one merchandising business challenge, for the first time since RSR began
tracking this metric, less than 50 percent of aggregate respondents selected
it as one of their top three.” But the report goes on to note that “the
best merchandise planners and optimizers cannot be successful unless
support functions like supply chain and store operations bring the right
product into the customers’ hands.” That’s where the store manager comes
back into the picture.
As RSR noted
in its June 2009 study, Walking the Razor’s Edge:
Managing the Store Experience in an Economic Singularity,”in
today’s world, retailers want to emphasize the local relevance of their
products and services as a way of winning customer loyalty. The store
manager becomes the local customer satisfaction manager in this new environment.
To that end, retailers see ‘more specific/localized direction to store
managers’ and ‘improve(d) performance reporting to store management’
as important opportunities.
As the CIOs
in the BI panel discussion alluded, the problem is that store managers
shouldn’t be tied to a computer in the back office. That’s where mobile
devices could come in handy, and as one might expect, the importance
of delivering real time business intelligence to managers in the form
of KPIs (Key Performance Indicators) and alerts via mobile devices has
definitely risen in importance. (In RSR’s 2009 store study, overall responses
rate “KPIs and alerts to store managers on mobile devices” as “very valuable” 31
percent, up from 22 percent in 2008.) But this enabler has a long way
to go to gain favor. It’s clear that retailers have yet to grasp the
importance of the empowered store manager.
Discussion
Questions: How do you see the role of the store manager evolving?
What are the pros and cons of delivering key performance metrics
to store operators in near real-time?
This makes an interesting discussion alongside yesterday’s topic: the increasing role of market-sensitive merchandise content among national retailers. The question is whether store managers ought to be the drivers of that content (as in the old days of JCPenney) or whether those content tweaks need to be driven by central management and smart information systems.
If you believe in the latter model, then today’s store manager needs to be focused on good execution as long as the appropriate market-specific product is in the store. This means getting out of the office and getting one’s nose out of reports. The winning retailer will deliver more customer-centric results if the store management team is paying attention to the nuts-and-bolts of replenishment, checkout efficiency and other front-of-the-store experiences.
I think the ‘dumbing down’ of the store manager is why so many are disconnected from ‘merchant mentality’. How can a manager be sensitive to local needs and wants when everything is spoon fed to him or her?
Retail is one of those industries where change is constant and many retailers would be in better shape now if they had managers who were constantly looking for opportunities. Reaction time has always been a critical factor in successful retail operations and when you have an SOP binder that is 24 inches thick and 9 directors above you that need to hear/see your idea before you can execute, adapting to changing landscapes and environments doesn’t come quickly.
That said, there is no pros and cons to delivering information in real time. It’s absolutely vital to the success of the operation!
“Why do it the simple way when the complex way will work?”
Did anyone else feel the energy drain from their body just reading this piece? Maybe it’s just me. I can’t imagine what it must be like to live in the world being described. Leadership (and store management) is about focusing and aligning energy. I know that sounds a little out there but I offer it for consideration.
Everything has energy as we all know–the store environment, the merchandise, the floor personnel, the store manager, and of course, the customers. We seem to insert everything we can to make sure that energy doesn’t flow. When one piece lacks energy the other pieces have to make it up. After a while, that can’t be done. Too much bureaucracy, structure, policies, technology, and information creates the very things we fear–like disconnection with the customer. So ask yourself whether these attempts to control outcomes actually add–or drain–the energy from what you’re trying to do. If the answer is “drain,” you’re shooting yourself in the foot.
Having been there, I am a firm believer in Management By Walking Around. Any store manager who is absent from the sales floor for too much of the day won’t last long. He/she needs to be current on four areas: employees, products, conditions, and customers, which is certainly the most important. However, to attempt to pull responsibility for products out of the store does not make sense, no matter how real-time the data are.
One of the biggest challenges for today’s store manager is hours of operation. Gone are the days when the hours before the doors opened could be used for planning, preparing, and back-office time in general. Some HQ execs may have forgotten how many things go on in a store all at once. Time to organize and plan is an investment that even they might benefit from.
Real-time data about shelf conditions–stock-outs, or impending stock-outs–would definitely be awesome. However, is that really the store manager’s job?
The role of the store manager continues to evolve. Depending on the company and its internal policies and procedures, some managers were given a great deal of leeway with the items that they carried and, in some cases, the prices they charged. They were definitely a–if not the–decision makers.
As the ability to gather and analyze data has grown, the balance of art and science within marketing has shifted more towards science and with it, the latitude store managers have, for the most part, has diminished. Their role has shifted; it’s execution rather than development of the marketing/merchandising plan. This should not be seen as diminishing their role but simply changing it.
Delivering KPIs to the store manager can be a good thing, but only if they have the ability to then make a decision based on the information provided. If not, why do it?
There are two instances of push and pull here. The first is a payroll issue. My experience has been that companies often say they want store managers who have the competency to analyze and take action on operational plans. However, when it comes down to cutting the check, they’re not willing to pay the salaries required to get the right people into the role.
The second struggle is that information received in real-time is only useful if it’s actionable in real-time. The reality of retail is such that this just isn’t often possible.
Some of the most important data is walking around on two legs in the store. I think managers need to be a lot more focused on consumers and less on real-time reporting.
The history of the supermarket business has shown a trend to ever larger, ever more complex stores. Today, there is more square footage and more items, more hours, more staff and more customers per store than ever before. And, with those increases, managing the store has become more complex.
The store manager must manage the processes in his or her store, not the tasks. Real-time info suggests stopping whatever the planned process is and reacting with a task. This type of management only confuses and creates inefficiency. It doesn’t matter if this is a supermarket or a factory floor. The same practices apply.
Not making a store manager a slave to real-time data is not a matter of dumbing down. It is a matter of being a good manager. Today’s store managers better be smarter and more experienced then their counterparts years ago. If, and that could be a big if, actionable, real-time data exists, provide it to those individuals who should be reacting to it.
Well, I wrote a piece in here a year or so ago about the problems with store managers being nowhere to be found as customer service issues were percolating all over the store, which (as with almost all customer service-related pieces on RetailWire) drew a large number of comments.
I will add to this piece these quick thoughts: it seems in every industry sector and functional business area that CIOs in general always espouse a “centralized” model. Here, we are not even talking about bits of software not under the lock and key of the central IT castle, but just whether a poor store manager might actually be able to use some of that data to make some decisions for his or her store not sent from the big HQ in the sky.
The real question, I guess, is whether the centralized plan is always right, or rather, since it can’t be everywhere, whether some flexibility at the store level can lead to greater total sales then the centrally dictated plan.
This isn’t a new question, and the reality is, in part, that the ability to dictate everything from the top is made easier every day by software and communications advances.
But the fewer degrees of freedom you give a store manager, my guess is the lower the talent you will see move into this career path.
There are a great number of ways in which to “empower” employees. One of the most useful is to provide them with information, train them on its use, and let them think through how to best implement it at any given time. Pushing that “localized empowerment” down through the organization leads to greater customer satisfaction, happier and more productive associates, and a growing, trusting retail organization.
This type of practice needs an organization that believes in the importance of “leadership,” as well as “management.” If they can get to that belief stage, they are ready to permit localized empowerment.
Store managers either have or will have access to sales data specific to their store. Store managers either have or will have access to sales data of consumers or households in their area. How does that data distract them from doing their job of selling product?
Big retail home offices need to let go of the strangle hold they have on information. Store managers need to be given enough data to feel connected and see the fruits of their labor. I’ve heard many managers lament that the home office gives them little information on a regular basis and only lets them see weekly or monthly data, and often in the context of a conference call were they are left to defend their performance and have little time to drill through the data.
I agree that store managers should be on the floor and not in the back room poring over reports, but I think a simple dashboard displaying data that reflects how well their store is executing would go a long way to facilitating small adjustments, instead of allowing bad patterns to become entrenched. If they are held responsible and can make changes within their store, they should have access to performance data. It’s the manager’s report card. If the manager never gets the data, they will never be aware of the success or failure of their actions.
Good grief! I don’t know whether to laugh or cry after reading this.
When I started out as a store manager I had
1 – One Personnel Manager
2 – One Customer Service Manager
3 – Three Merchandise Managers
4 – Eight or ten Department Managers
Sure, maybe that was overkill but I had the time to actually effectively manage a large store. Since then, I do not believe I have become dumber.
Today’s store manager is the personnel manager and the customer service manager, has no merchandise managers, and is lucky to have department managers. Yet they are responsible to everyone above them that can send an email. They rarely have the time to completely focus on one issue, and fix it; they are constantly being pulled in different directions by today’s latest report.
Store managers’ biggest challenge is actually finding time to manage. And now some [CIO] thinks that: “Store Managers shouldn’t be tied to a computer in the back office. That’s where mobile devices could come in handy, and as one might expect, the importance of delivering real-time business intelligence to managers in the form of KPIs (Key Performance Indicators) and alerts via mobile devices.”
As I said, good grief! Now store managers must have a Blackberry so they can be constantly on the floor and constantly pulled in umpteen directions? Honestly, what a load of hooey.
I must say I found the reported consensus of the above-mentioned CIOs sad and disheartening. As a result, this discussion begins with a “centralize, command and control” mentality and descends from there.
Store managers are an essential decision-making resource for retailers, not cogs in the machinery. To the extent that we isolate them from retailers’ larger merchandising and performance objectives, we ensure performance mediocrity.
I agree it is insane for managers to be trapped in the back office answering hundreds of headquarters emails and “feeding the beast” of tech applications rather than being a visible, problem solving presence on the sales floor.
For this reason, and many others, it is imperative that store managers be empowered to monitor and affect compliance within their own stores. Hand-held devices are a useful enabler for this, but only if they are used to deliver a sound merchandising performance management system.
As I’ve said numerous times in this forum, if 20 years of centralization, consolidation and false economies of scale were really working, retailers would be way more profitable by now. Store level performance is the next frontier. Merchandising complexity is the enemy. Store managers are our lieutenants on the ground for this effort. We had best equip them with the weapons they need to contribute to success.
Although this conversation centers around supermarket store managers, many of these issues are applicable to other retail formats. We can also learn from what other format managers do to accomplish these tasks. The only exception is that you rarely see a department store manager on the floor. Also, having been a supermarket manager in the past, I can definitely agree with the amount of tasks pulling the manager onto the floor. If we give more admin tasks to them, that would be defeating their purpose. I agree that handheld technology can be and is used by effective store managers.
The big issue is how much autonomy to give the store people. Sure the company can merchandise locally. However, the store strategy needs to remain largely executed at corporate to ensure consistent operations across the company.
As Urban Outfitters was awarded the “Retailer of the Year” at the latest IRDC conference last month, one of their executives told fellow retailers to “localize your stores by empowering someone local to run your business–‘localizing’ is an operational issue.” Considering all aspects of retail, I could not agree with him more.
This is really about the ongoing tension between the economies of scale that come from centralization versus the opportunities that come from localization. In the former, the store manager’s role is to be sure that everything is executed to standard. In the latter, the store manager’s role necessarily reverts back to being more of a merchant. You cannot capitalize on the opportunities of localization without granting a meaningful amount of discretion to the local manager.
As I wrote yesterday, I think the jury is still out on whether the chains will actually give up some of the economies that come from centralization in order to pursue the opportunities they believe they have identified through localization.
I love the idea of the local customer satisfaction manager. Many retail innovations give the manager an excuse to be off the store floor, and have caused them to be in a back office poring over reports. The answer to what the customer needs isn’t buried on page 132 of a report. The answer is out there on the store floor, trying to find the product, trying to use an in-store service, or queuing to pay.
Listening to the voice of the customer brings the manager back into the relationship. They can make a unique contribution, they can nurture the customer’s needs in a way that cannot be dictated from a corporate office. If customers aren’t emotionally engaged any differently from making an online purchase, then guess what–that’s where they will spend their money. Insight from retail solutions has to be timely, it has to be actionable, but most of all, it has to tailored to the unique customer DNA of the store and managed locally.
One of the real challenges that retailers face when leveraging customer data to improve the experience is that the data can only be leveraged to personalize online and through direct-to-consumer communications. Providing insight to the retail floor is usually forbidden. The managers have enough to do without spending time with customer data, traditional thinking goes, and if you “confuse them with data” then sales will drop.
Well, Best Buy proved that incorrect. By providing store managers with KPI information in real-time during the day and also contributing customer insight data, Best Buy is able to teach the store managers how to teach their retail teams about customer segments and the best ways to market to them.
I have been very involved recently in working with marketing to stop doing things “to” the sales force and starting to work “with” a pilot group of sales people and retail managers to better understand the data and figure out TOGETHER how to best optimize it. Finally results are not in, but early results are very promising.
Retail managers are like the rest of us, they want to succeed, but definitely do not want to be kept in the dark about what the company knows, just because it might “confuse” them. Treat them with dignity and respect and the results will prove out, every time.