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Paula Rosenblum Managing Partner Retail Systems Research
Julie Huffman Senior Human Factors Engineer NCR
Debbie Hauss Editor-in-Chief Retail TouchPoints
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The 21st Century Store: The Search for Relevance A REVIEW OF REPORT FINDINGS
PAULA ROSENBLUM, MANAGING PARTNER
RETAIL SYSTEMS RESEARCH, LLC.
JUNE 2011
Agenda
• Report Overview & Methodology • Business Challenges • Opportunities • Organizational Inhibitors • Technology Enablers
• BOOTstrap Recommendations • What it Means for Retailers
7
Report Overview & Methodology
8
A group of retail industry veterans providing: Insight into business and technology challenges facing the extended retail industry Thought leadership and advice on navigating these challenges for specific companies and the industry at large
Our research products include technology adoption benchmark reports, custom research, and comparative personal benchmarks.
Nikki Baird Paula Rosenblum Brian Kilcourse Steve Rowen
First: Who/what is RSR?
Our BOOT Methodology
They sell more “stuff” but! they also think and act differently than their competitors.
Retail Winners: Year-over-year comparable store sales outperform inflation.
Business Challenges Opportunities Organizational
Inhibitors
Technology Enablers
10
Top Line Findings • The Store has to evolve – we have no choice • Customers demand a more relevant / differentiated experience • What is relevance?
• Don’t try to sell me what you want to sell, offer me what I want to buy, and make it personal
• Retailers, especially Winners understand the importance of a more convenient in-store experience
• What is convenience? • Educated employees • Cross-channel consistency • “Shoppable” layout • Rapid check-out
• Technology and training to drive productivity all required to facilitate the necessary change
11
Better-Educated Employees a Must
12
Source: RSR Research, June 2011
11%
22%
30%
37%
36%
57%
35%
67%
20%
26%
26%
29%
32%
39%
51%
69%
Help us keep up with the competition (avoid competitive disadvantage)
React quickly to changes in the business environment
Create competitive advantage and new sources of revenue generation
Help the company win new customers and retain current customers
Put actionable information into the hands of managers
Increase revenue while holding down operational costs
Make our employees “smarter” and better informed
Maintain and/or improve the customer experience
Top Three (3) Uses of In-store Technologies 2011 2010
The Post-Walmart World
A Stabilizing Payroll to Sales Ratio
13 Source: RSR Research, June 2011
25%
40% 36%
30% 33%
38%
24%
51%
25%
Increased Remained the same Decreased
How Have Payroll to Sales Ratios Changed? 2009 2010 2011
Technology the Key to Education
14 Source: RSR Research, June 2011
11%
8%
8%
18%
49%
5%
14%
3%
8%
70%
No plans
Project planned, not yet budgeted
Budgeted project
Less than 1 year
Longer than 1 year
How long has your company been actively involved in adding technology-enabled touch-points for employees in your
stores? 2011 2010
Getting the Store Manager Back on the Selling Floor
15
Source: RSR Research, June 2011
36%
15%
7%
22%
12%
32%
14%
9%
23%
14%
22%
22%
3%
28%
25%
No plans
Project planned, not yet budgeted
Budgeted project
Less than 1 year
Longer than 1 year
How long have you been actively involved in adding Mobile technology-enabled touchpoints for Store Managers within your store?
2011 2010 2009
Business Challenges RETAILERS UNDERSTAND WHAT’S IN FRONT OF THEM
16
Observations
• Improving customer service while holding the line on costs remains a top concern, but has been joined by pressures to improve integration across channels and combatting price transparency
• The uncertain economy remains a persistent challenge – particularly to laggards
• Retail Winners retain the “luxury” of focusing on a better customer experience
• Economy taking a toll on under-performers
17
Price Transparency and Integration
18 Source: RSR Research, June 2011
22%
12%
7%
27%
16%
37%
45%
49%
19%
19%
20%
26%
31%
37%
37%
43%
Store managers lack information they need on the selling floor – too much time spent in the back room
Need to reduce shrink
Customer dissatisfaction caused by lack of integration between the store and other selling channels
Price is re-emerging as an important customer concern
Consumers know competitor prices for the same products
Uncertain economic conditions
Need for more consistent store execution
Need to improve customer service while holding the line on payroll costs
Top Three (3) Business Challenges Faced in Stores 2011 2010
2010 was “the Year of Price Transparency”
As Always, Winners More Focused
19 Source: RSR Research, June 2011
58%
25%
38%
44%
27%
50%
Uncertain economic conditions
Need to improve customer service while holding the line on payroll costs
Business Challenges Vary Significantly by Performance Retail Winners Average Performers Laggards
Unrelenting pressure
Opportunities NO SHORTAGE OF WAYS TO IMPROVE
20
Observations
• Retailers continue to see opportunity in making in-store experience more convenient
• A growing sense that making employees better informed and more productive will help generate sense of convenience, as will reducing out-of-stocks by providing stores with the ability to locate and ship merchandise from other parts of the company
• Retailers’ have got religion around mobile interactions with consumers
• 87% of respondents now see value in the smart phone driving traffic TO the store vs. 65% last year
• 67% now see value of using the customer’s smart phone WITHIN the store, vs. only 52% last year
21
Productivity and Technology Hold Retailers’ Interest
22 Source: RSR Research, June 2011
38%
39%
42%
49%
58%
50%
73%
28%
29%
54%
56%
57%
58%
68%
Provide more specific/localized direction to store managers
Improve performance reporting to store management
Provide ability to locate and sell merchandise from anywhere in the company
Educate and empower our in-store employees using technology
More personalized attention from our employees
Find ways to make our employees more productive
Focus on a more convenient customer experience
Opportunities with "A lot of Value" in Improving the In-store Experience
2011 2010
Mobile Engagement: Profound Uptick
23
Source: RSR Research, June 2011
20%
31%
45%
56%
35%
13%
2010
2011
Smartphones' Value in Driving Traffic TO the Store
Lot of Value Some Value No Value
Organizational Inhibitors FINDING THE MONEY, GETTING SPONSORSHIP FROM THE TOP
24
Observations
• Persistent economic uncertainty deterring investment • Overall capital requirements continue to plague retailers • Trumps ROI as an issue
• Positive sign: Retailers recognize there is no way back to simpler times
• Evidence overwhelming, change must be driven from the top
• Managed services gaining traction as an alternative
• Absence of wireless infrastructure serious impediment to forward progress with a wireless consumer
25
Less Budget, but Better Projects
26 Source: RSR Research, June 2011
32%
12%
28%
43%
50%
66%
40%
15%
22%
32%
39%
49%
54%
61%
We are trying to simplify our in-store technology, not make it more complex
Management believes stores should be able to just “do what we tell them”
The TCO of in-store technologies makes it hard to justify many of the newer technologies
We generally don’t want to be an early adopter of new technologies
The existing technology/infrastructure is preventing us from moving forward with new solutions
Hard to quantify technology return on investment
Overall Capital Requirements – we never even get to the subject of ROI
Top Three (3) Organizational Inhibitors
2011 2010
Persistent Economic Uncertainty Taking its Toll
Positive Sign
Senior Management Driving Change
27 Source: RSR Research, June 2011
3%
11%
16%
16%
18%
30%
32%
34%
34%
45%
58%
70%
50%
65%
43%
45%
58%
57%
45%
50%
39%
39%
35%
30%
47%
24%
41%
39%
24%
14%
24%
16%
26%
16%
8%
0%
Operating leases
Managed services for hardware
Managed services for home office / store network
Managed services for roll-out and/or maintenance
Managed services for software
Start with smaller projects, buying basic system functions, and
Gain sharing programs with vendors
Merchandising vendor funding for in-store projects
Asking vendors to provide success stories and references
The customer is demanding it – we have no choice
Pilot programs in specific stores or regions
Senior management championing the project
How important are each of the following to help your company overcome the inhibitors you selected above?
Very Important Somewhat Important Not Important
Mobile Opportunities Cannot Be Realized without a Mobile Infrastructure
28 Source: RSR Research, June 2011
8%
30%
38%
25%
12%
27%
30%
30%
Wireless available for customers
Wireless available throughout the store for performance management, POS and product related
tasks
No wireless network available in store
Wireless available only for receiving and other inventory control related tasks
Which of the following statements best describes the technology your company uses to support wireless
networking in the store?
2011 2010
Along with the obvious, this constrains placement of new devices
Technology Enablers SIGNIFICANT SHIFTS IN TECHNOLOGIES HOLDING RETAILERS’ INTEREST, BUT POS STILL BREAD AND BUTTER
29
Observations
• Perceived value of in-store technologies shifts significantly in the past year
• “Bread and butter” applications like modern POS hardware and software, and in-store rewards and coupons important
• New trends have emerged
• Now see a lot of potential value in cross-channel initiatives that support the store, and in delivering information to both company- and customer-owned phones and PDAs
• Retail Winners most apt to embrace value of newer technologies • RSR troubled by lack of meaningful Key Performance Indicators
(KPIs) used to track value received from in-store technology investments. Better metrics needed.
30
Massive Shifts in Perception
31 Source: RSR Research, June 2011
25%
26%
42%
25%
52%
43%
21%
30%
50%
38%
43%
43%
43%
52%
55%
57%
62%
70%
KPI’s and alerts to store managers on mobile devices
Distributed Order Management (buy in one store, fulfill in another)
In-store rewards and/or coupons
Personal scanners, self-service scales, product information kiosks, employee product information training
Modern POS Hardware and Software
Employee selling tools on the sales floor
Deliver information to store-owned cell phones and PDA’s
Deliver information to customer-owned cell phones and PDA’s
Cross-channel customer and inventory synchronization through real time updates
Potentially Very Valuable Technologies to Support Opportunities
2011 2010
2010: The Year of Multi-channel and Mobility
Actual Value is ‘Bread and Butter’
32 Source: RSR Research, June 2011
18%
22%
35%
13%
32%
28%
30%
41%
38%
30%
59%
40%
48%
48%
41%
40%
35%
28%
28%
25%
22%
Deliver information to customer-owned cell phones, tablets and PDA’s
Software that schedules the right mix of labor for employees
Distributed Order Management (buy in one store, fulfill in another)
Employee selling tools on the sales floor
Cross-channel customer and inventory synchronization through real time updates
In-store rewards and/or coupons
Modern POS Hardware and Software
Actual Value Achieved from Technologies
A lot of Value Somewhat Valuable Little to No Value
Growth in value
Modern POS the Linchpin
33 Source: RSR Research, June 2011
30%
39%
27%
38%
33%
38%
41%
44%
34%
52%
54%
50%
53%
60%
18%
21%
36%
29%
36%
39%
36%
32%
45%
30%
28%
36%
33%
31%
52%
41%
36%
32%
30%
24%
24%
24%
20%
18%
17%
15%
15%
9%
Self-check-out
Dual displays at POS
KPI’s and alerts to store managers on mobile devices
Deliver information to store-owned cell phones and PDA’s
Software to assign actions in response to underperforming KPIs
Personal scanners, self-service scales, product information kiosks, etc.
Cross-channel customer and inventory synchronization through real time updates
Distributed Order Management (buy in one store, fulfill in another)
Deliver information to customer-owned cell phones and PDA’s
Customer facing self-service touch points in the store
In-store rewards and/or coupons
Employee selling tools on the sales floor
Software that schedules the right mix of labor to complete all activities and tasks
Modern POS Hardware and Software
Status of In-store Technologies and Future Plans Installed Budgeted/Planned No Plans
BOOTstrap Recommendations FUNDAMENTALS REDEFINED
34
What Does it Mean for Retailers?
• Redefine / differentiate the In-Store experience • Use Location-based social network promotions to drive
differentiation • Look at physical design of check-out area to maximize
value of modern POS • Make a wireless decision now
• Don’t make promises your Employees can’t keep
• Ensure store blends with other channels
35
Thank You!
Paula Rosenblum
305-757-1357
www.rsrresearch.com to download this and other reports
36
Upgrade Your Customer Experience by Fine Tuning Your Checkout
Julie Huffman Senior Human Factors Engineer
NCR Customer Experience Consulting
38 NCR Confidential
NCR Global Customer Experience Consulting
Integrating People, Process and Technology To Improve Performance and Service
Usability and Design
Baseline Transaction Operations
Self-Service Optimization and
Blueprint
Enhancing Consumer Experience Capacity
Analysis
Technology Optimization
39 NCR Confidential
Agenda
Leverage Time in Queue
Coupons / Promotions
Tender Processes
40 NCR Confidential
Leverage Time in Queue
Benefits • Increased basket size / revenue • Improve product awareness • Educate and engage your customer
Requirements for success
• Proper design/integration of checkstand & surround • Optimal mix and placement of impulse merchandise
41 NCR Confidential
Time in Queue Case Study
Customer Behavior While in Queue:
Did Not Notice Look Touch/
Replace Touch/ Purchase
Legacy Checkstand Design
Store A 89.0% 6.0% 4.0% 1.0%
Store B 83.0% 12.0% 2.0% 3.0%
New Checkstand Design and Impulse Layout
Store A 47.7% 29.8% 14.4% 8.0%
Store B 60.1% 17.5% 13.9% 8.5%
Store C 55.8% 28.0% 7.0% 9.2%
Newest Checkstand Design and Impulse Layout
Store A 47.3% 25.2% 13.0% 14.5%
42 NCR Confidential
Time in Queue Lessons Learned
Integrated impulse merchandise racks • 10–15% customers make an unplanned purchase
Customer behavior • Go directly to point of sale • Look at one impulse display • Scan the middle to upper shelving
Customer interaction • Impulse display parallel to queue • Cooler integrated with impulse display and queue • End-cap impulse display
43 NCR Confidential
Within the front end/queue • Be consistent across lanes • Select items based on sales and margin • Strategic items in the mid to upper shelves
End cap • Vary item selection to display greater variety • Offer small, low cost general merchandise • Gift cards
Counter • Avoid excessive clutter • Designate an impulse display area • Differentiate the color of the counter • Utilize a tiered display
Merchandising Display Lessons Learned
44 NCR Confidential
Time in Queue Digital Signage
Goal is to engage customer in store • At point of transit • At point of wait • At point of sale
Considerations • Right message at right time • Dwell time • Placement
45 NCR Confidential
Benefits of effective coupon and promotion processing • Enhance customer service and satisfaction
• Improve associate productivity
• Reduce shrink
Requirements for success • Application and process design
• Associate training
Coupons and Promotions
46 NCR Confidential
In a recent survey, participants were asked how likely they would be to use coupons during a recession. The following responded as much more likely or somewhat more likely.
• Age: • 71% ages 18-34 • 68% ages 35-54 • 63% among those 55 years and above
• Geographic Location: • 70% of Midwesterners • 69% of Westerners • 64% of Northeasterners • 62% of Southerners
• Income: • 68% of those earning less than $50,000 a year • 67% for those earning more than $50,000
Why are Coupons and Promotions important?
Information and Communication (ICOM) Survey of 1,529 US consumers
47 NCR Confidential
Coupons Case Studies
Retail Segment: Grocery Specialty store #1
Specialty store #2
Specialty store #3
Mass Merchandiser *
Scanning coupon (in seconds) 1.9 - 2.2 2.7 N/A 3.0 4.5
Keying in coupon (in seconds) 6.2 - 7.4 17.3 11.6 12.9 16.1 - 26.3
Manual override 4% 1.30% N/A 6.50% 24%
* Self Serv Check Out; all others were assisted checkout
48 NCR Confidential
Coupons Lessons Learned
Avoid coupon key entries
Avoid search for item price
Establish guidelines and empower associates
49 NCR Confidential
Promotions Case Study – Specialty Store
Database issue • Manual price override
• 2.1% of transactions, averaging 7.3 seconds
Application and data base issue • Manual price override and authorization code
• 1.3% of transactions, averaging 10.1 seconds
The key is that these issues: …add time to the transaction
…require associate training and intervention …jeopardize customer service
50 NCR Confidential
Promotions Lessons Learned
Ensure that database is up to date
Ensure all items that are part of a promotion, sale or clearance…
• Are processed correctly via the point-of-sale terminal
Ensure all discounts are automatically calculated
51 NCR Confidential
Tender Processes
Benefits of effective tender processing • Enhance customer service and satisfaction • Reduce overall transaction time • Reduce paper waste
Requirements for success • Integrated application and process design • Associate training
52 NCR Confidential
Cash Tender • Dynamic Tendering
• Case Study: application and process enhancement, 0.5-2.5 seconds savings
Credit Tender • Eliminate signature for transaction amount
less than $25.00 • Case Study: application & process enhancement, 8-10 seconds savings
• Customer activity: Eliminate need to verify amount
• Case Study: application and process enhancement, 2 seconds savings
Tender Case Studies and Lessons Learned
53 NCR Confidential
Credit and Debit Tender • Utilize signature capture & pin pad for customer to process tender
• Swipe card & respond to prompts (i.e. enter pin number or sign for credit) • Case Study: technology & app. enhancement; 13- 20 seconds savings
• Enable swipe card during item entry and pre authorization • Case study: application enhancement, 2 second savings
• Default the type of card & amount once customer swipes their card • Case study: application enhancement, 1.5-2.1 second savings
• Ensure time to authorize is less than 5 seconds
Debit Tender • Enable consumer to enter amount of cash back and verify total
• Case study: application enhancement, 3-4 seconds improvement
Tender Case Studies and Lessons Learned
54 NCR Confidential
Two sided thermal printing • Less roll changes during peak periods • Green initiative - use up to 45% less
receipt paper • Print custom color messages, promotions
and/or coupons
Email receipt option • Leverage loyalty program to enable
customers to establish preference for paper or electronic receipt
• Leverage electronic payment to link/ store email address with customer account
Tender New Customer Service Enhancement
55 NCR Confidential
Thank you
Delight
Engage
NCR Global Consulting Services
Come partner with us
Transforming your customer interactions into amazing experiences
For more information please contact:
Greg Smith, 678 808-6881
Julie Huffman, 770 623-7396
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Paula Rosenblum Managing Partner Retail Systems Research
Julie Huffman Senior Human Factors Engineer NCR
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