The Evolving Role of the Store
By Dave Bruno, Director of Product Marketing, JDA Software
Fast-evolving digital technologies, including mobile devices, social networks, apps and other forms of e-commerce, have forever changed how consumers shop. It is not uncommon today to find a consumer in a store examining a product while using a smartphone or tablet to scan barcodes to compare prices, check product reviews online, or get advice from their social networks. Much of this new in-store digital activity has been driven by Millennials, the generation known for its tech-savvy and inherently social behavior. It is estimated that Millennials, who represent more than 80 million consumers in the U.S., will spend $1.4 trillion annually by 2020. This startling fact has many retailers adapting their operations — and augmenting the store environment — to cater to this new, digital-native consumer.
Attracting the Millennial Consumer
Many leading retailers are rethinking how they can change the format of their stores to better attract the millennial shopper. In fact, 74% of retailers agree that a more engaging in-store experience will be critical to their business in the next five years. They are adapting their stores into social and entertainment destinations, adding cafés, video and live entertainment, fashion shows, product demonstrations, and other events to heighten the experiential nature of a store visit. To accommodate these additions, retailers are implementing endless aisle kiosks and employing save-the-sale techniques as a way to offer wider assortments while reducing the associated inventory costs.
Additionally, retailers are leveraging their stores as fulfillment centers for online orders. In-store pick-up options are being offered as a way to support consumers' desire for convenience and increase the possibility of additional in-store purchases. Some retailers are also shipping online orders from stores, instead of a distribution center, as a way to speed customer delivery and move slow-selling merchandise before it has to be marked down. Currently one in three retailers leverage their stores as fulfillment centers for omni-channel orders, and this trend is expected to increase to three in four retailers by 2015.
Assisting Consumers on the Path to Purchase
Staffing this new store format will require associates to broaden their skill sets. Because a sale may not begin or end in the store, associates will need to hone their customer service skills to better assist consumers on their path to purchase. This is a more difficult task than it seems. Today's consumers often enter a store armed with smartphones or tablets, giving them immediate access to more product and pricing information than the store associates typically have. In fact, 61% of retail managers believe shoppers are better connected to product information than store associates.
To get ahead of this trend, retailers must staff their stores with associates and managers who are empowered to manage the entire shopping ecosystem, engage with the consumer and close the sale. For some retail segments, this may mean granting managers and associates new authority to negotiate prices, offer free shipping, provide alternate fulfillment options or make other loyalty-enhancing decisions. However, this will not be possible without ensuring that the right store associates are equipped with the right tools to convert in-store shoppers into buyers and loyal customers. Associates will need:
• Visibility into product features, comparative pricing, where inventory is located across the network, customer feedback and promotions.
• Tools for price negotiations.
• Access to customer data such as past purchases, brand preferences and delivery choices to create a superior shopping experience.
• Customer outreach tools to gauge satisfaction after the sale, promote additional items, services or warranty information, or invite high-value customers to special events.
Retailers will also have store associates handling non-selling tasks such as product demonstrations, as well as fulfillment for online orders or save-the-sale transactions from other stores. Since these tasks are ones for which they may not receive sales credit, different motivation and compensation may be needed.
Managing New Labor Requirements
It is estimated that store managers currently spend 29% of their time on administrative and merchandising compliance tasks, and only 34% of their time interacting with customers. Adhering to labor laws and regulations, such as the new Affordable Care Act, which has led many retailers to employ more part-time workers, adds another layer of complexity and effort. Advanced automated scheduling systems that consider traffic, tasks, associate preferences, labor laws and work rules will be necessary to help store managers effectively match labor resources to the work at hand.
Managers will also need to be able to anticipate demand for both products and services, including labor, and segregate demand by store or cluster. This requires a more advanced forecasting capability that can plan and schedule traffic- and task-based labor jointly. This is an essential requirement for two reasons. First, both types of labor are often performed by the same associates at different times, so to forecast them separately would provide a distorted view of demand.
Second, both types of labor typically come from the same store budget, so they must be balanced against each other to meet store labor budget constraints.
Modern workforce management systems that are integrated with the latest mobility tools can enable managers to automate these tasks, so that they can move from the back office to the sales floor, coaching associates and assisting customers. Store managers can leverage these systems to:
• Plan and schedule associates to meet demand across all stores, tasks and services.
• Balance workloads between selling and non-selling roles to support the greatest profit potential.
• Manage on-the-moment staffing tasks and changes — without leaving the sales floor — by using advanced mobility apps.
• Establish performance measurement and compensation systems that motivate associates involved in both selling and non-selling tasks.
Embracing New Opportunities
While the future of the store is yet to be determined, there is no doubt that it provides retailers with a unique opportunity to influence the consumer's path to purchase if leveraged properly. By enhancing the store environment and empowering store associates and managers to better serve customers, retailers have a tremendous opportunity to drive in-store conversion and build customer loyalty. Of course, this will require retailers to adopt new methods for hiring, training, managing, compensating and motivating their associates and managers. If this sounds like a tall order, it is. However, with the right systems and knowledgeable partner, retailers can attract and win an even larger share of the consumer's wallet.