Retail Store Operations: Execution and Excellence
The store still has a bright future, but no one can deny that the current trading environment is a lot tougher and the future less predictable than in the recent past. So it is more important than ever for retailers to ensure that their stores are performing optimally, which means adopting practices and technologies designed to achieve operational excellence.
Retail operations is the term used to describe all the activities that keep the store functioning well. It includes people management, supply chain, store layout, cash operations, physical inventory, master data management, promotions and pricing, and so on.
Operational excellence means achieving a sustainable competitive advantage through the optimization of retail operations. Put simply, operational excellence means being consistently better than the competition in organizing, optimizing and integrating the various tasks performed in a store.
How to achieve operational excellence?
There is no standard formula for achieving operational excellence but the chart (right) shows some of most common areas where retailers can perform improvement actions.
- Digitize time-consuming internal tasks.
While most progressive retailers have already embraced IT in a big way, there are newer solutions that take efficiency and quality improvements to a whole new level by dramatically reducing manual and error-prone tasks.
For example, NFC based payments systems speed up the payment process considerably, and do away with queues.
Another example is item-level RFID. One retailer that has made a big bet on item-level RFID is Decathlon, an Openbravo customer. Around 85% of Decathlon products now come with RFID tags, which are used to track products throughout the entire supply chain, from factories to the distribution centers and stores.
Once shipped to the store, products can be easily located using a handheld RFID reader, which enables staff to perform shelf inventories five times faster than with the former systems and technologies. Read more about Decathlon and item-level RFID.
- Automate key business processes
Many retailers are still running a collection of legacy systems designed for a particular function. They may not communicate well with other systems which makes it difficult to achieve end-to-end integration, which is essential if you are to fully automate your business processes. So, while you have may have different programs to handle tasks like inventory control, filling out employee timesheets, invoicing, financial management and POS transactions, they do not communicate well with each other. You can improve efficiency, reduce errors and save costs by integrating and fully automating these processes.
- Personalize customer experiences
Successful retailers always strive to create high-value, personalized interactions with customers. The first step towards achieving this goal is to understand the customer’s preferences and requirements. This is easy to do on your website of course, but not so easy to do with store visitors. Nevertheless, personalization is now of paramount importance if you want to keep customers loyal and ensure they keep visiting your stores. For more on this topic, read what Openbravo CEO Marco de Vries has to say on personalization in fashion retailing and check out our blog post on how to take personalization to the next level.
- Integrate physical and digital worlds
As we know, omnichannel is all about making commerce frictionless across channels to deliver a unified customer experience. This is particularly important in areas like fulfillment and payments. If a customer buys an item online and has it delivered to their home but then decides to return it, how frictionless is that process? Do you insist that they wait at home for a courier to come and pick up the item — like Amazon does — or do you let them return it to their nearest store, which is possibly more convenient. And if they return it to a physical store, can you also do the refund in store?
Learn how Openbravo helped Bassols, a Spanish textile retailer, integrate the online and offline worlds.
- Optimize merchandising
Retailers do not make money by stockpiling inventory. The inventory has to sell, so when new product, smart retailers ask pertinent questions such as “How many do we plan to sell?” “Can the store make money selling the product?”, and so on.
Having introduced a product, a retailer’s prime focus is to optimize the inventory; the ordering processes has to be streamlined by identifying the most best order-quantity and should be integrated with the sales forecast to eliminate stock-out and overstock situations. A good, inventory management suite automates all these processes, boosting efficiency and reducing costs.
- Optimize the workforce
Retailers need staff in their stores to do a wide variety of tasks: help customers, process POS transactions, handle new shipment arrivals, arrange merchandise and take inventory. Automated algorithmic-based labor scheduling tools can optimize staff at peak hours and ensure they remain at their productive best.
Organizations that are leaders in operation excellence tend to have one thing in common: highly efficient, automated processes supported by sophisticated information systems.
If you would like to go deeper into the topic of operational excellence, watch our free on-demand webinar, Optimize your Stores for Operational Excellence and Omnichannel Success.