Store Considerations in a Revenue Anywhere World


What it really means to be revenue agnostic

While retailers and analysts have recognized the fundamental change in the path to purchase, understanding the impact is a bigger challenge.
So, what does the term omnichannel really mean and how is the store impacted?   For years retailers were measured on their ability to drive traffic into stores through promotions and advertisements. Once the traffic was in the store, the focus was on service and conversion.  Sales per Associate Hour (SPAH), conversion, wage percentage and other performance metrics helped retailers determine the profitability of each store, region and district. These traditional measures and incentives rely on a managerial accounting approach which does not address the new revenue anywhere world.  Everyone (in-store or not) who adds value to the customer experience should be rewarded.
With omnichannel in the mix, what other metrics are important and how can retailers adapt? In Thomas Lee’s article, Sephora deftly integrates technology into its store experience, he notes, “Long before augmented reality and Beacons, Sephora installed interactive screens in stores to help consumers determine which combination of the 15,000 store items could produce a desired look. Shoppers can even use a smartphone’s camera to identify face shape and specific areas to apply makeup.” Clearly, Sephora understands the value of converting prospective buyers in whatever environment enhances their experience.
Retailers should blur the physical lines of the store, the offerings, the staff and the experience within it.

Engaging in a revenue anywhere model

Procter and Gamble coined the phrase the First Moment of Truth (FMOT) which referred to the older path to purchase. Google retail referred to the online path to purchase shift and influence as the Zero Moment of Truth (ZMOT). The ZMOT is the time consumers spend consulting social media, search engines and friends before coming to a full or partial decision to buy. While this is true, a key finding from the A.T. Kearney Omnichannel Shopping Preferences Study is that physical stores continue to be customers’ preferred shopping channel and where the most significant consumer and retailer value is created. If you want to maximize ADS and conversion, you still need to have engaged employees that are ready to get involved at the Final Moment of Truth, which is the in-store consummation of the transaction – whether purchase, pick-up, or pack and ship from store.
Unfortunately, many retailers have still not figured out the proper reward structures for the revenue anywhere world.

How managerial accounting affects employee engagement

One of the biggest obstacles to being revenue agnostic is changing accounting practices.  Much research has gone into managerial accounting practices and the relationships among an organization's environment, structure and information system.  However, in many retail operations it does not appear that the organization's information system and structure are significantly related to each other.
The managerial accounting system must change to support this revenue anywhere model and to impact revenue agnostic behavior.  Many retail organizations have still not re-assessed how they account for, compensate (through incentive plans and bonuses) and measure productivity in the store, regardless of where the demand (sales) originated. 

Revenue anywhere and accounting to impact employee engagement

Stores need to change to reflect the new environment, no matter what the cost or what they leave behind.  While many retailers are using social media and apps to drive more online conversion,  few have restructured their incentive programs and accounting for store participation -- the core engagement elements necessary to drive new revenue-anywhere behavior. To begin the process,   integration and incentive plans need to be in place.  Only then will retailers truly engage, measure and reward employees for their contribution and value in the “Omni” environment and growth of overall revenue.
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