Changing Consumer Behaviors are Re-Casting the Role of the Store Associate

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1 RETAIL PERSPECTIVES: Store Associates Become Cross-Channel Salespeople Changing Consumer Behaviors are Re-Casting the Role of the Store Associate Introduction Today s shoppers are more selective, more demanding, and more likely to enter a store knowing exactly what they want to buy. They want to surf the Internet, find products they want, read reviews, compare prices, and check availability before they drive to a store. Because customer behaviors are changing, the role of the store is changing, too and so is the role of store associates. Contents Introduction 1 Engaging the New Shopper 2 Execution is the Key to Cross-Channel Success 2 What to Expect 3 Implications for Store Associates 3 Implications for the Retail Organization 3 Technological Implications 3 Adopting Selected DC Best Practices 4 Staying Connected Throughout the Store 4 Motivating Store Associates 5 Store Associates: The Vital Link Between the New Shopper and the Supply Chain 5 As retailers respond to these changes with cross-channel retail processes, the character of a store begins to change. No longer is the store used solely as an end point to consummate sales with walk-in customers. There is now an opportunity to use the store as an operational node for many transactions. To make this happen, the retail store needs to function with much tighter internal inventory controls and a much better perspective of how much inventory is available in the store, neighboring stores, and the supply chain. In short, this means the store will need to have the infrastructure in place to operate more like a distribution center. Now, connect the dots from the consumer to the store to the store associate. The enterprise wants to capture more sales in an environment where the consumer has more options and more freedom. That means the store associate must become as much of a supply chain navigator as an aisle navigator. She will need to be supported by processes and technologies that guide her on inventory availability, alternative inventory sources, and fulfillment options. Instead of just stocking shelves and helping customers find merchandise, she will be involved in a broader range of activities that reach out to vendors, distribution centers, carriers, other stores and other channels, such as e-commerce website, kiosks and catalogs. 1 The Supply Chain People

2 Most brick and mortar has become boring and the retailers who can figure out how to bring the excitement of Web shopping to the store are going to win big. Jim Dion, Retail Consultant Engaging the New Shopper Customers want to shop their way, not your way. And their way usually begins with planning purchases while in the home, not in the store. Consumers routinely begin to transact business outside the four walls of the store, even if they intend to complete their purchase at the store, states a report from Retail Systems Research ( RSR ). In fact, according to a recent survey by Forrester Research, more than half of consumers who buy in local stores begin their research process online. As the Internet becomes a ubiquitous shopping tool, more brick-and-mortar retailers are trying to embrace the trend to cross-channel shopping or blended channel experience, as it is sometimes called. The ideal is straightforward: Get the sale by any means possible. Enable the new shoppers to browse, shop, and buy in any channel they wish, whenever they wish. At its core, cross-channel retailing is a save-the-sale strategy that seeks to elevate the goals of the enterprise over the goals of individual stores. Ideally, orders can be fulfilled in a way that fits the customer s needs and still maximizes profit for the retailer. But the stakes go beyond the immediate transaction. Ultimately, the real payoffs are greater customer satisfaction, market share and brand loyalty. However, RSR notes, the move to cross-channel operations creates a paradox for retailers. To make life simpler for their customers, they necessarily burden themselves with complex new challenges. Cross-channel initiatives must deal with a host of issues throughout the organization. True cross-channel retailing requires a consistent approach to pricing, product mix and customer information in all channels, regardless of how and where the customer chooses to shop. For stores, an added challenge is to restructure the role of the store associate to adapt to the new shopper. For many retailers, developing policies and incentives for the cross-channel environment will be akin to sailing across uncharted waters. New questions and new problems will arise constantly. Staples, a leading retailer of office supplies, set up a Cross Channel Help Desk to deal with problems and respond to all inquiries from store associates. Members of the team are fully empowered to make decisions that provide creative solutions for Staples and its customers. Execution is the Key to Cross-Channel Success The foundation of a multichannel strategy is superior execution of inventory management and order fulfillment processes. To gain visibility into these areas, the store manager should have one go to source of information a single, easy-to-use platform that operates hand-in-glove with the enterprise s supply chain systems. To leverage their stores potential to become fulfillment nodes for many transactions, retailers must build strong inventory controls at the store level. Each store needs accurate visibility into where inventory is in the store, in neighboring stores, and in distribution centers. 2

3 The Web is in the Store According to a November 2008 story published by Retail TouchPoints, the Internet plays a positive role for the retail store. Online experiences and expectations are driving store events in a big way, wrote the author, Paras Goel. A survey by Forrester Research, he noted, found that twothirds of Internet shoppers rank traditional stores as their preferred channel. That s just one reason why store managers should view the Internet as an alley, not a foe. Other benefits to the store: Most retail websites help shoppers locate stores, learn about store events, and obtain store hours. Many retailers use the online channel as the test store and transfer lessons learned to their conventional stores. The shopper who comes to a store via other channels often prefers self-service techniques and requires less attention from store associates. What to Expect The full impacts of cross-channel retailing are in embryonic stages. For the foreseeable future, behaviors of the new shopper will reverberate throughout the retail world. Here are some of the implications of this powerful trend: Implications for Store Associates Customers, in many cases, will know more about the products they seek than the store employees. Retailers can compensate by redirecting associate skills to the needs of the new shopper for execution excellence having goods in stock, helping customers use in-store informational resources such as kiosks, and selecting the best fulfillment options to meet customer preferences. The transformed role of sales associates calls for technologies that simplify tasks and provide rules-based decision-making. Cross-channel retailing may require new incentives (see the Motivating Store Associates section), upgrades of some job descriptions, divisions of responsibilities, higher level of hiring selectivity, and heavier emphasis on training. Implications for Retail Organization The store is being re-engineered into an unfamiliar territory. As RSR noted, An asset that has been designed to support making the sale is no longer being used just for that sale. Adopting cross-channel retailing concepts to save sales and build loyalty will require careful modification of budgets, reward programs, staff incentives, mentoring and training, and compensation plans. Programs must be consistent and channel-agnostic. In the retail store channel, this means all store employees, from store associates to store managers, are motivated to win the sale and please the customer regardless of what channel is used for fulfillment. The ability to capture customer data for cross-channel use in loyalty programs will enable retailers to increase store traffic and reduce customer acquisition and retention costs. According to a March 2010 report by Aberdeen Group, Adoption of a truly integrated cross-channel approach to loyalty is a necessity as customer channel preferences and affinity continue to evolve. Technological Implications In-store supply chain execution capabilities are essential for true crosschannel retailing; store gateways will give stores WMS-like capabilities. Nearly 75 percent of U.S. workers are now mobile. As store associates inevitably become integral members of the supply chain, they will need to rely on technologies that enable and encourage mobility. Store technologies will require integration with simple processes that minimize decision-making. Distributed order management capabilities will gain traction. Business intelligence and loyalty solutions can help retailers identify brickand-mortar sales that resulted from other channels. Stores increasingly rely on workforce automation systems to match associate skills, interests and availability to customer needs. Eighty-two percent of top performing retail organizations have a formal store-level workforce optimization program in place for more than two years, wrote Greg Belkin of Aberdeen Group. 3

4 Adopting Selected DC Best Practices In-store inventory controls will never be as tight as those found in distribution centers but some DCs best practices are worthy of emulation. Most DCs have tightly controlled regimens for receiving, stocking, replenishment and shipping. A warehouse management system keeps track of every task and every movement of inventory. At any time, DC managers can see exactly what is coming in, what is going out and how much stock is on hand. Distribution centers generally have accurate labor standards, too managers know precisely how long it should take to unload a truck, to pick an order and to prepare an order for shipping. Rare is the store manager who has anything close to that level of knowledge and control. Entry-level employees and part-timers, often college students or high school graduates in their first jobs, may be doing much of the receiving, stocking and inventory tasks. More often than not, the processes and controls over these tasks are inadequate. For example, in many stores, associates assume incoming shipments are complete and accurate. This spawns all sorts of inventory problems. The resulting low confidence in the store s perpetual inventory is a major roadblock to fulfilling orders, undermining any initiative to make the store an effective fulfillment node. Thanks to new technologies that have been purpose-built for a retail environment, stores can adopt DC-like processes. Store managers can achieve much higher levels of control than they have now, without being forced to use practices impractical for stores. Staying Connected Through The Store At its core, cross-channel retailing is a save-the-sale strategy that seeks to elevate the goals of the enterprise over the goals of individual stores. Ideally, orders can be fulfilled in a way that fits the customer s needs and still maximizes profit for the retailer. Most control issues can be eliminated when appropriate managers and associates have mobile functionality for inventory management, inbound receiving tasks, and order fulfillment. A best-practices solution has three key components: Sound processes The latest supply chain gateway technologies for stores Handheld devices with full or occasional wireless connectivity New retail gateways help on-the-go store managers and associates instantly and accurately identify available inventory anywhere in the supply chain. With easy access to information, the store personnel can display key metrics and quickly drill down to any necessary details to make fundamental business decisions. For example, when key items are out of stock, a store associate can readily determine if other inventory exists in the back room or at a neighboring store to save the sale and satisfy the customer. 4

5 Don t underestimate the importance of your store associates in cross-channel selling. Prepare them for success help them step up and embrace their key role in linking the supply chain to the cross-channel customer. Better inventory management also increases visibility into scheduling labor. If a large shipment is expected, for example, a manager can line up staff for overnight restocking. On the fulfillment side, managers and associates can see what orders have been placed, whether they have been picked, packed and shipped, and by whom. They can also view which orders remain to be packed and which parcel carriers provide the best rates for timely deliveries. Associates can be empowered to accurately perform a variety of on-the-go, ground-level supply chain tasks. For example, they can scan inbound deliveries, make ad-hoc adjustments to inventory, pick orders, print outbound shipping labels and documentation, and ship fulfilled orders all without retreating to a wired desktop. Motivating Store Associates At the simplest level, people do what they are paid or incented to do. Retailers need to be creative in transforming the roles of sales associates and motivating them to be enthusiastic participants in cross-channel initiatives. Individual or team rewards and incentives can be tied to a variety of milestones and key performance indicators, such as training achievements, responses to satisfaction surveys, obtaining customer addresses, and getting customers to join cross-channel loyalty programs. Store Associates: The Vital Link Between the New Shopper and the Supply Chain Competition is heating up for the loyalty of the new shopper. He s smarter, he s shopping harder for value before he drives to your store, and he s also looking for convenience. So you want to be in the forefront of delivering a satisfying, consistent crosschannel experience that keeps him coming back. Don t underestimate the importance of your store associates in cross-channel selling. Prepare them for success help them step up and embrace their key role in linking the supply chain to the cross-channel customer. Arm your store associates with the tools and processes that put information at their fingertips enabling them to look across relevant areas of the supply chain to find the answers the new shoppers need. 5

6 About Manhattan Associates, Inc. Manhattan Associates continues to deliver on its 21-year heritage of providing global supply chain excellence to more than 1,200 customers worldwide that consider supply chain optimization core to their strategic market leadership. The company s supply chain innovations include: Manhattan SCOPE a portfolio of software solutions and technology that leverages a Supply Chain Process Platform to help organizations optimize their supply chains from planning through execution; Manhattan SCALE, a portfolio of distribution management and transportation management solutions built on Microsoft. NET technology; and Manhattan Carrier, a suite of supply chain solutions specifically addressing the needs of the motor carrier industry. For more information, please visit Learn more about Manhattan Associates and our solutions: North & South America Global + 44 (0) Manhattan Associates, Inc. All rights reserved. Changing Consumer Behaviors Are Re-Casting the Role The of Supply Store Associate Chain People