Retailers wage a daily battle between efficient store execution and store chaos. It’s a relentless battle with no definitive winner because even the best laid plans for such everyday functions as promotions, price changes and seasonal resets often go astray.
Store chaos comes in many forms including missed deadlines, failure to restock promo products during peak periods, and poor in-store merchandising execution. When these errors pile up across stores, the result can be a loss of millions of dollars to the enterprise and real damage to customer satisfaction and brand image.
In the Targeted Research report “Store Execution Versus Chaos Battle Plan” we identify store execution problems and uncover the cost they have on individual stores and the overall financial health of the enterprise. To download a copy of the report click here.
Complexity Opens the Door to Store Problems
Complexity opens doorways to inefficiency. When things go right, everyone is happy and the headquarters’ plan hits (or surpasses) its financial goals. When things go wrong, no one is happy and financial performance struggles.
Diving into the complexity problem is a major feature of the report. Here are a few highlights:
- The top store execution problem areas in terms of timeliness and consistency are: stockout replenishment, overall compliance with headquarters’ goals, promotions, and merchandising resets.
- The top obstacle that contribute to these problems is heavier associate workload due to an increasing list of omnichannel activities required at the store, such as in-store pickup and return of online orders, shipping from the store, online lookup of inventory and order status, and checking the status of a shopper’s loyalty program offers or rewards.
- More than three quarters of retailers (77%) say they give mobile devices to regional or field managers while only 57% give them to store managers. Just 33% give them to associates.
- The highest frequency rate of 2.5 times per day for communication between headquarters and store managers occurs through e-mail. This is followed by text messages and phone calls, both of which occur at a frequency of 1.5 times per day. Other headquarters applications, including task management, are used about once per day.
- The top store-execution function that can be measurably improved through better communication methods is making price changes. This is followed by merchandising, marketing campaigns, product launches, promotions and training.
- When the unexpected occurs, stores are too often slow to respond. The best response occurs for weather-related events, however its rating is only 6.7 on a scale where one stands for lowest ability to respond and 10 for the highest ability. Near the bottom of the ability-to-respond list are two critical omnichannel functions – click-and-collect and ship from store – both of which were rated at 5.6.
With so much complexity to deal with in stores and so many opportunities for things to go wrong, a natural question to ask is: What would happen if everything went right? Retailers told us that if strong compliance for headquarters initiatives was achieved through excellent store execution in a timely and consistent way sales would increase an average of 3.7% per store.
For a retailer with a billion dollars in store-based revenue this would amount to increasing sales by $3.7 million. Looked at another way, it would amount to a recovery of $3.7 million in losses that slipped through the cracks because of non-compliance with headquarters initiatives.
Despite expecting the unexpected, most retailers still find stores repeat such common errors as missed deadlines, failure to restock promo products during peak periods, and poor in-store merchandising execution. For national or large regional retailers these errors result in the loss of millions of dollars and do significant damage to customer satisfaction and brand image.
The proliferation of omnichannel functions, ranging from click-and-collect to in-store shipping to mobile sales-floor services, are major contributors to ongoing problems. The study identifies two of these functions, click-and-collect and ship-from-store, as major contributors to store inefficiency.
One of the major findings in the study is that if retailers invest in improving store-execution by focusing on the problem areas uncovered in the report, they can achieve a same-store sales increase of 3.7%. This represents a significant amount of money for retailers of any size and low-hanging fruit waiting to be seized.
For a complete set of the report’s datapoints, charts and analysis click here.