HCL's Next Gen Store Management

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1 HCL's Next Gen Store Management white paper TABLE OF CONTENTS Executive Summary 2 Retail Stores Management 2 Trends, Business and Operational Challenges 3 Applying the Right Technology solutions 4 for Next Gen Stores Management 5 A Fully Loaded Service Line 6 for Next Gen Stores Management 7 Conclusion 8 About the Author 9 About HCL 10 white paper

2 Executive Summary The Consumer s expectation from the Retail Stores today is very different from what it used to be a decade ago. The rate at which progress in technology is driving hardware obsolescence, benchmarked by consumer technology products, is making the store infrastructure out of tune with the times. New solutions, ideas, and concepts like Mobility, Social Media, and Cloud are driving the boundaries of possibility beyond what the Retailer has ever known before. In addition, loads of data is available, but the leverage it can provide is still largely untapped. All the above changes have dramatically changed the way a consumer shops today the consumer s buying journey today may neither start, nor end with the Store, nor may it involve the Store at all however, Stores do remain an important buying channel for the consumer today, and the possibilities of leveraging all the other channels to direct the consumer towards the store, or to influence the buying either from the store or any other of the Retailer s channels has considerable implications and potential value for the Retailer. Let us have a quick look at the Global Retail scenario today the traditional retail sales growth is muted at about 3% per year while the online channel has shown a phenomenal growth rate of about 20% per year in the last 3 years. But the relative spend on the online (both e-commerce and mobile) channel still remains a modest 4.4% of the overall Retail Sales which highlights the importance of store retailing and the need for the Retailers to continue the focus on stores management. Reference: U.S. Department of Commerce. (Source: The Retail Solutions team at HCL has been diligently following these trends in the Retail for the last few years and we believe that the Stores is and will remain the most important channel to attract, convert, and retain the consumer at least for the next decade for most categories. We also believe that there exists significant ROI potential for technology investments to modernize the Stores infrastructure and systems the Stores of the future will not only focus on getting the customer in, and selling an optimized basket to the customer once he is inside the store, but also have the capability of reaching out to other channels, warehouses and stores to fulfill needs that for some reason cannot be met within the store at that point of time. Given this background, we have focused on creating a suite of offerings around Next Gen Stores Management which encapsulates our understanding, expertise and thought leadership on how to leverage the ever changing technology scenario to meet and exceed consumer expectations. We believe that Retailers need to drive transformation in stores under the three broad umbrellas: Optimizing stores management and operations Leveraging cutting edge technology to drive consumer experience and operational excellence, and Providing a mechanism to integrate the stores holistically to the other channels by providing a common version of the products and inventory, creating a mechanism to pull and push merchandise across the diverse channels, and potentially use a common set of processes and best practices to drive retail operations across formats and channels Our offerings, highlighted in this paper, are focused towards addressing these three main solution needs. Retail Stores Management Trends, Business and Operational Challenges Influencing Trends The Store has been the core of Retailer s business for decades and it continues to be the same for majority of the retailers across the world. Management of the store sales, service and operations forms the major element of retailer s costs. Evolution of the retail industry has steadily increased the scale and complexity of the Store Management activities. In addition to this, changes in macroeconomic scenario and changing consumer expectations are putting the retailers under constant pressure to optimize the store operations while improving in-store customer experience and maintaining store profitability.

3 Let s look at the some of the key industry trends affecting the ways and means of managing physical stores today: Personalized Store: Consumers increasingly want personalized shopping experience, tailored assortments and good customer service in store. Store formats are not what they used to be: Shoppers today are doing more quick trips and fewer stock ups, retailers are experimenting with various formats customized to the local demography. Globalization & Localization: Global market access to the consumer and at the same time demand for customizing market models and product offerings to meet local needs and preferences. Stores as brand ambassadors: Stores are increasingly playing a role of brand ambassadors for retailers and are becoming show rooms for the touch and feel experience that can t be provided by other channels. It s a mobile world: Consumers are in a continually evolving mobile world equipped with readily available information and shopping tools on hand: a. Not just to browse, research or compare but to Pay & Shop virtually from anywhere b. Click n Shop is fading fast into Touch n Shop and soon it might be Wave/ Gesture n Shop Cross Channel Commerce is becoming a norm: a. Multiple Channels complementing each other rather than competing with each other in terms of sales, service and marketing is the new mantra for driving the consumers to shopping destinations and boosting the revenues. b. Stores are increasingly leveraged as cross channel fulfillment & service centers Social Media: Increased influence of social media on consumer behavior and shopping experience Gen Y Customer Journey An Illustrative Scenario Store has become a part of the journey and is no longer the only final shopping destination SOCIAL MEDIA Improved Revenue? Gen Y Customers Hears about Retailer s products CONSUMER MOBILITY Customer enquires sales associate on promo and checks product ENTERPRISE MOBILITY PHYSICAL STORE Visits store to try the product OPEN Personalized promo alert on mobile Store Associate Offers assortment tailored to customer based on previous purchases Handle cross channel Product Returns / Service Requests as applicable E-COMMERCE Checks the competitor s price on mobile in store OPEN Customer visits store for purchase or pickup Help customer on product availability at nearby stores / online, if required Product delivered at home. Customer pays on delivery. IN STORE HELPDESK Online product reviews and price comparison Order online vs. pick-up at nearby store based on convenience and price offer On-floor sale completion through mobile device Place home delivery order from other stores / channels as required Challenges and Key Focus Areas Industry trends mentioned above and the associated consumer demand to scale up to the trends has brought in a unique set of business and operational challenges to the physical stores and has already started showing effect in certain retail segments even to an extent of closing down a number of stores across the regions. Listed below are some of the key challenges faced by today s retailers on managing sales, service and operations at stores:

4 Continuous pressure on profitability and an equal focus on improving the customer experience Pressure on physical stores to offer the same or superior experience as offered by web/mobile channels or show the differentiation to continue attracting the consumers into physical store As the Retailer s strategic investments are shifting away from stores they are under pressure to lower operational expenses and improve the operational efficiencies Ability to provide Cross Channel Fulfillment & return services at stores: buy online pick up at store, return at store for an online purchase, home delivery of an online purchase made within store, etc. Challenges in enabling retail and stores systems to anticipate customer needs, provide a tailored assortments based on customer preferences and finally to have the customer information on hand to service them better. Need for re-innovation and tailoring of in-store processes as per the changing expectations of consumers and provide a consistent Store Execution Need for Physical stores to include elements of virtual world as the customer demand for integrated experience across channels grows. Need for transforming the utilization of store space to provide a customer with personalized experience and serve as a brand ambassador for the retailer. Massive churning of workforce particularly in the front-end functions leading to challenges in training and efficiency Challenges in reinforcing knowledge and skills of sales associates to meet the demands of increasingly tech savvy customers. Need for effective training and workforce management to support consistent store execution. Lack of Funds for new Initiatives coupled with Locked capital in legacy infrastructure (real estate, systems) is preventing retailers from transforming the rapidly aging infrastructure in a world with faster technology obsolescence. Need for Agility to rollout right changes at the right time Need for ways and means of cost effective up gradation of aging store systems Peak and Lean time work force availability challenges Peak and Lean time IT Systems support and scalability challenges While it is important for Retailers to address most or all of the challenges and needs to stay ahead of the game, it is also important for them to understand the key focus areas so that right investments can be done in right places to realize the maximum benefit. A benchmarking study by RSR on the Retail Stores shows the top three focus areas for in-store technologies (Figure: 3). The study indicates maintain/improve the customer experience, Increase revenue while holding down operational costs and Put actionable information into the hands of managers as the top three focus areas for technology investments. What are the TOP THREE (3) uses of in-store technologies? What are the TOP THREE (3) uses of in-store technologies? Maintain and/ or improve the customer experience 52% 69% Put actionable information into the hands of managers Help the company win new customers and retain current customers Increase revenue while holding down operational costs Create competitive advantage and new sources of revenue generation 32% 29% 30% 26% 43% 41% 41% 39% Make our employees smarter and better informed React quickly to changes in the business environment 29% 24% 26% 51% We view in-store technologies as utilities like light and heat it s just part of the cost of doing business 14% 8% Help us keep up with the competition (avoid competitive disadvantage) 10% 20% Source: RSR Research, May 2012

5 Based on the industry trends, business and operational challenges, the key imperatives for physical store retailers can be narrowed down to the below three focus areas: Lower Stores Operational Costs while improving operational efficiencies. Providing the ability to locate and sell merchandise from anywhere in the organization Keeping the In-Store Customer Experience relevant and vibrant in current multi-channel world Applying the Right Technology solutions for Next Gen Stores Management Having understood the key imperatives, next it s important to look for the right solutions and right technology investments. Given below is the HCL s point of view on key technology solutions, implementing these in combination with the right processes and right investments in people would enable the Store retailers for successful management of Next Generation Stores. Managed Store Operations: Over the past decade, most retailers have already invested in a number of technology solutions related to POS, Workforce management, Visual Merchandising and other Stores technologies to help improve store productivity and operational efficiencies. In order to further optimize the store operations and improve efficiencies, now the retailers need to focus on streamlining the operations support processes, improving the visibility and control, optimize the usage of infrastructure components, etc: Adopt a Stores Operating model(s) with end to end stream lined processes around stores application, infrastructure and business services support Consider Shared Services support model to manage the peak and lean period support Invest on store lab set up to mitigate the risks related to Peak season support, Compliance, Change rollouts, etc. Reduced Operations Costs & Improved Efficiencies Enhanced In-Store Customer Experience Locate and Sell Merchandise from anywhere Stores Multi-Channel Integration In-Store Mobility Solutions Managed Store Operations Multi-Retailer Store Support Cloud Computing for Stores Stores Business & Operational Performance Monitoring NexGen Store Stores Workforce Optimization Agile Change Rollouts & Deployments Store Associate Collaboration & Training Business & Knowledge Services Application Services Infrastructure Services Industry Technology Partners

6 Store Business and Operational Performance Monitoring: Real time actionable information is the need which will equip retailers to ensure smooth functioning of store operations and take appropriate timely actions to take care of business needs. This can be achieved through: Near-time view of the IT health of their entire retail store estate including Stores IT Infrastructure and Application Software Monitoring and Reporting the Stores IT health in terms of impact on key store operational and business KPI Real time information and alerts to Stores Managers on key stores parameters Real time alerts & indications for preventive and proactive maintenance of IT infrastructure In Store Mobility Solutions: Enabling the stores Infrastructure for mobility, e.g., Set up Wi-Fi at Stores Suite of Mobile apps for Store Associates, Store Managers for customer experience and productivity enhancements, e.g., mobile POS that helps a store associate to complete an inquiry and sale on the floor, mobile workforce management app for store manager, etc. Suite of Mobile apps for Consumers to improve in store customer experience and to create awareness on Retailer and Retailer products. These can include, personalized in-store mobile promo alerts, product information on mobile, etc. Store Multi-Channel Integration: Assuming that the backend Retail Information systems and business processes are upgraded to support Stores Multi-Channel Integration, following solutions can be considered for enabling cross channel retailing at stores: Upgrade POS systems to provide cross channel Inventory, Customer and Sales Visibility Upgrade In-Store Customer Service Center for supporting Cross Channel Sales & Service requests. Enable Online or Social Channels to drive customers to stores: Online Store Locator, Online Store Product Inventory, Social Media marketing about Physical Store, Store Only offers, etc. Cloud Computing Solutions for Stores: Improve Operational Efficiencies by Cloudifying Stores Infrastructure and Application Software. Centralizing the Store Infrastructure and Application Software through Cloud Computing Enable Stores Infrastructure and Application software on cloud to serve as fall back option for uninterrupted store operations Enable Select Store Functionalities on cloud to serve as add on services to the existing store systems. Retail Associate Collaboration and Training Solutions: A collaboration solution for Store associates across the retail organization for empowering them with the latest information, to improve communications and thereby improve overall quality and productivity. A robust employee training solution possibly integrated with the above collaboration platform Agile Change Rollouts and Deployments: Given the pressures on modernizing aging store systems in a timely and cost effective manner, it s important for store retailers to look for right technology solutions which can help retailer to plan and implement: Right changes to stores at the right time Minimizes disruption to store trading and operations during store change rollouts Lower the TCO

7 About HCL Enterprise Following solutions can be considered for enabling Agile Store Change Rollouts and Deployments at Stores: Store Change Rollout and Device upgrade monitoring tool kit Holiday Readiness Verification Tool kit New Store cycle process management tool kit POS & Store Device Testing tool kit Store Security and Regulatory Compliance Took kit New store provisioning tool kit A Fully Loaded Service Line for Next Gen Stores Management In alignment to the retail industry needs and current consumer trends, HCL Retail and Consumer Services group has invested in developing a focused solution and service offerings for retail stores management. HCL s Fully Loaded service line for Stores Management offers an integrated suite of solutions, services, frameworks and processes; specifically packaged keeping the Next Gen Stores Management needs in mind. An overview of service line components, key solutions and service offerings is given below Fully Loaded Service Line for Next Gen Stores Management Service Component Key Offerings Service Component Key Offerings Store Ops Management Enablers Store Assessment Framework MStoreIT for Ops support MyStore Dashboard for Ops Monitoring Store Lab Set up Tool Kit Stores Mobility Solutions Mobility ROI Assessment Framework for Retail stores Retail Connect - A mobile apps suite for stores Stores Wi-Fi Solution Stores Business and Operations Monitoring Stores Business Performance Reporting Solution Stores Systems Performance Reporting Solution Stores Multi Channel Integration PoS Modernization Omni Channel Customer Experience Assessment tool Store Cross Channel Sales & Service enablers Store On Cloud Cloud Readiness Assessment Framework for Stores Store on Cloud solution Store Collaboration & Training Retail or Stores Workforce Collaboration solution Integrated MeMe for Stores with Saba A workforce training solution Agile Store Change Rollouts & Deployments Integrated Stores Refresh Framework Integrated Stores Provisioning Solution Stores Workforce Optimization Partner enabled Stores Workforce Optimization solution Stores workforce assessment framework The benefits of HCL s Fully Loaded Service Line for Next Gen Stores Management It provides a customized suite of solutions, frameworks, processes and services for stores management which can result in the following benefits to the store retailer:

8 Reduced run the business costs of store systems IT by 15%-25% Reduce implementation costs and lead times of store rollouts, upgrades, hard ware refresh, etc. by 15%-20% Improved In store Customer Experience which can increase revenue by up to 5% Higher workforce productivity which can lower operating expenses by 5%-7% Higher capacity utilization which can increase the return on assets by 5%-10% Improve visibility and control of store operations Improve communications and overall quality of stores workforce The key differentiators of HCL s Next Gen Stores Management service line are: Integrated suite of stores management offerings across application software, infrastructure and business functions in one package. For e.g., Stores Change Rollout solution provides not only application and infrastructure upgrade solutions but also provides in-store hands and feet support. Business Aligned IT solutions where the Stores technology elements and operational processes are aligned to the business outcomes. Comprises of cutting edge technology solutions which take care of both improved in-store customer experience as well as improving store operational efficiencies. For e.g., Retail Connect solution provides a suite of mobile apps aimed at improving in-store customer experience and stores workforce productivity, similarly Store on Cloud solution is aimed at improving store operational efficiencies. Conclusion The changing consumer expectations, evolving technology trends in Mobility, Social business, Cloud computing, Analytics and Cyber Security and increased pressure to reduce operational costs are forcing today s retailers to re-shape their strategies on Stores Management. It has become an imperative for retailers to carefully analyze the trends, understand the key challenges, identify the focus areas and identify the right technology solutions in conjunctions with appropriate investments in right people and right processes to keep up the physical store in alignment with current and future needs. Investments in the areas of Enterprise Mobility, Cross Channel Sales & Service Enablers, Stores Business and Operational performance monitoring, Agile Store Deployments and Cloud Computing will enable the retailers for a successful Next Gen Stores Management. While there are a number of store products and solutions available in market, many of the retailers today are struggling to find the right mix of solutions those not only take care of improving in-store customer experience but also helps the retailer to improve stores operational efficiencies and reduce operational costs. HCL s Fully Loaded Service line of Next Gen Stores Management is specifically designed for Store retailers which can result in significant benefits in terms of improved store operational efficiencies, reduced operational costs, improved customer experience, improved sales and improved service quality. It s a unique offering that provides retailers with a comprehensive business aligned IT solutions powered by HCL s best-in-class Managed Services framework integrating Business, Knowledge, Application, and Infrastructure right-sourced Services with industry leading processes, tools and frameworks. About the Author Aditya Kuppireddy currently works as a solutions principal in HCL s Retail & CPG vertical solutions team. He has experience working with Global Consumer Industry Organizations in driving business and technology solution initiatives and his areas of expertise include Ecommerce, Store Operations, Retail Distribution & Transportation and Vendor Operations. He has conceptualized HCL s Fully Loaded service line on Next Gen Stores Management an integrated suite of solutions and services catering to the needs of store retailers.

9 Pradeep is a Retail Business consultant currently working with HCL s Retail & CPG Vertical Solutions team. He has executed many business consulting assignments in retail and CPG industry. His experience has been in Supply Chain, Store Operations, Merchandize management, fresh item management, Point of Sale, store back office and e-commerce areas. He has conceptualized, developed and deployed solutions addressing business requirements and pain points of retailers across the globe. Rajiv currently works with HCL s Retail & CPG Vertical Solutions team. He has experience in Program Management, Business Analysis, Solutions building and Consulting. He is responsible forcreating domain offerings and frameworks for Retail and CPG Organizations. CUSTOM APPLICATION SERVICES ENTERPRISE TRANSFORMATION SERVICES ENGINEERING AND R&D SERVICES IT INFRASTRUCTURE MANAGEMENT ENTERPRISE APPLICATION SERVICES BUSINESS PROCESS OUTSOURCING About HCL About HCL Technologies HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on transformational outsourcing, underlined by innovation and value creation, and offers an integrated portfolio of services including software led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 26 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Consumer Services, Public Services and Healthcare. HCL takes pride in its philosophy of Employees First which empowers its 85,194 transformers to create real value for customers. HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 4.4 billion (Rs 23,499 crores), as on 31 Dec 2012 (on LTM basis). For more information, please visit

10 About HCL Enterprise HCL is a $6 billion leading global technology and IT enterprise comprising two companies listed in India - HCL Technologies and HCL Infosystems. Founded in 1976, HCL is one of India s original IT garage start-ups. A pioneer of modern computing, HCL is a global transformational enterprise today. Its range of offerings includes product engineering, custom and package applications, BPO, IT infrastructure services, IT hardware, systems integration, and distribution of information and communications technology (ICT) products across a wide range of focused industry verticals. The HCL team consists of over 90,000 professionals of diverse nationalities, who operate from 31 countries, including over 500 points of presence in India. For more information, please visit or Visit Hello there! I am an Ideapreneur. I believe that sustainable business outcomes are driven by relationships nurtured through values like trust, transparency and flexibility. I respect the contract, but believe in going beyond through collaboration, applied innovation and new generation partnership models that put your interest above everything else. Right now 105,000 Ideapreneurs are in a Relationship Beyond the Contract with 500 customers in 31 countries. How can I help you? TM

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