What Is Retail's Most Potent Weapon?
Tuesday, January 29, 2019

What is Retail’s Most Potent Weapon?

There are a number of different strategies and tactics that retail can follow. From pure eCommerce, to Click and Collect, to pop-up stores. The choices and directions are endless. And, making the right choice here is essential. In fact, in the Jan-Feb 2019 HBR article “Retailers are Squandering Their Most Potent Weapons” Marshall Fisher, a Professor at Wharton School of Business, highlights the importance of getting retail right. He points to the importance of getting physical retail working well. The importance comes from citing a recent UBS study. This research predicts that 30,000 – 80,000 U.S. stores will close by 2025. So, with this hanging over retailer heads and an arsenal of options, the question is: what is retail’s most potent weapon?

Decimation of Retail

Four wooden board game pawn piecesDespite the store closures, Fisher concludes that retailers should “recognize that store employees are one of their best weapons in the battle for consumers’ business.” He also states that “instead of viewing salespeople as an expendable cost, store managers should tread them as an asset in their battle with e-tailers.” All told, retail’s most potent weapon is still the in-store employees, and a ship from store strategy is an important part of this equation.

Case for Staff Balancing

The article provides a retailer example of over 800 stores. It makes the case for balancing the right level of employees across a retailers’ various stores. In the example, 300 stores needed associates, 300 had too many, and 200 were at the right labour level. Rebalancing staff across a number of test stores resulted in revenue growth of 5.1%, with the control group remaining flat (no change). Even more importantly, operating profits in the test stores increased by close to 6%. Again, this case shows retail’s most potent weapon to be in-store associates.

How About Omni-channel Retailing?

“When retail workers have stable schedules, sales and productivity go up.”Omni-channel retailing is all about using the various sales and marketing channels cohesively. It is about bringing together digital channels (online, mobile, voice, text…) and physical retail (offline channels). This done such that the customer experience is seamless. They can order on one channel and receive their product or service on another – without hiccups.

To achieve this vision, employee training counts. In this light, Fisher points out that “associates drive sales not only in stores but also on the web.” As an example, associates encourage shoppers to create online accounts with the retailer.

And Ship from Store…

Ship from store isn’t a new concept. It has been around for a while. It is part of the omni-channel retail playbook. But, for most retailers, this concept is out of reach for one reason or another. The Omni-2000 research, which scanned 2,000+ retailers, found that only 37.6% offer Click and Collect services worldwide. (Click and Collect is also known as Buy Online Pick Up In-Store or BOPIS). That’s not the same as operating ship from store. However, it is indicative. Perhaps less than half of Click and Collect retailers actively run ship from store services. That leaves us with only 15% – 20% of retailers actively using one of retail’s most potent weapons. Empirical research may even suggest the figures above to be optimistic.

Ship from Store as Part of the Equation

How to avoid being among the 30,000 – 80,000 stores comes down to using your resources well. Getting to the right number of in-store associates is important. Training them well on your products and processes is important. Also, doing so on how to educate shoppers about omni-channel is equally crucial. Yet, a third aspect is leveraging stores and their in-store staff on in-store fulfillment.

Today’s retail model means some stores are larger, while others might be pop-up shops or pickup points only. So ship from store will not apply to every location. Yet, it is an important part of the retail mix. It leverages existing facilities. The workforce is distributed geographically. It also boosts store inventory turn, sales, and fulfillment. Fulfilling from stores also means staff can help with the pick, pack and shipping. Especially, during non-peak times. Ship from store keeps employees engaged. It also helps employees manage regular schedules. Other HBR research highlights that “when retail workers have stable schedules, sales and productivity go up.” (Williams, Kesavan, McCorkell, March 2018). Ideal results all around.

Retail’s Most Potent Weapon

A wooden board game pawn pieceRetail’s most potent weapon is certainly the store associates. Together, there are three aspects to using retail’s most potent weapon. No surprise, training sales staff is a critical component. Training them on educating shoppers about the retailer’s omni-channel capabilities is a big boom to a retailer. Consumers are going to shop online. Face it and make sure they are shopping on your digital stores, instead of the competitor’s. Overall training for top-level employees increased sales by 1.6%. It benefits those in the second tier by 4.2%, but had no effect on the bottom tier.

Balancing to provide stores with the right level of in-store associates is the next key. Having the right number of employees in-store means fewer consumers will not walk out in frustration. Think big box hardware stores, where each in-store associate has a line of customers with questions. Clearly, this situation screams out for additional staffing.

Finally, to leverage retail’s most potent weapon you need to focus on your geographic distribution of stores and your resources. Using ship from store as a fulfillment method means using your resources effectively. Not only does it result in quicker shipping and lower shipping costs, but it also helps the workforce. Helping the workforce helps you the retailer.

Blending Physical and Digital Retail

Retail is a hypercompetitive business. Digital and physical retailing will balance out. But, the winners will be those which capture the best of both worlds. Part of that equation is using retail’s most potent weapons. These being balancing your people and physical presence in co-operation with digital retail.

 

Author: 

Charles Dimov, VP of Marketing at OrderDynamics

Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

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