Moving Retail Operations from the Stone Age to the Digital Age

Jun 24, 2009 12:46 AM  By

A multipronged marketing strategy can only be executed as fast as your slowest retail channel. Do you know which channel is preventing your organization from moving as fast as it should be?

For most retailers, it’s their brick-and-mortar stores whose merchandising processes and technologies have not been able to keep pace with new retail mediums.

In-store execution is critical to the success of any retail operation. Consider the AMR report, “Bridging the Merchandising and Store Operations Divide,” which highlights this issue.

Retailers know that 85% of purchasing decisions are made at the shelf, therefore optimizing merchandising and promotional strategies are critical. Despite this fact, only 37% of retail merchandisers are confident in the ability of store operations to execute these strategies.

Retailers frequently coordinate merchandising execution across hundreds or thousands of unique storefronts using outdated processes and technologies that create waste and confusion. Because of this, there is a high level of non-compliance. AMR reported that 89% and 75% of retailers are using the phone and fax, respectively, as their primary communication methods to stores.

The result is inaccurate in-store execution and merchandising, slow time to market and a broken marketing process. The incorporation of e-commerce into the retailers merchandising strategy has highlighted the inefficiencies of in-store marketing.

A retailer’s Web channel can launch campaigns with the click of a button and have complete visibility into what the consumer is viewing to provide customized offers based on the visitor’s past behavior.

While physical limitations prevent stores from being as fast as the Internet retail channel, multichannel retailers have taken steps to speed up their brick-and-mortar operations by implementing three key strategies: merging merchandising processes to one platform; opening visual two-way communication channels with store employees; and leveraging business rules to automate the process of delivering more localized campaigns.

1) Create single platform for merchandising process. Most retailers today muse a number of different systems to execute in-store merchandising and data collection. As a result, the cross-functional teams trying to collaborate have an ill-defined set of tasks and little means to hold one another accountable for moving the process forward. Data silos are created and teams make decisions based only on the data available to them.

A single platform also enables retailers to extend the reach and relationship with their product suppliers, giving them insight into the merchandising process. This is becoming more important, as brands are demanding proof of execution–particularly as they make decisions about whether to allocate their marketing budgets to in-store or direct-to-consumer digital channels.

Given the complexity of executing campaigns, retailers need to offer stakeholders a unified platform where all campaigns, assets, tasks and messages are stored. Having this single view ensures everyone is on the same page. We’ve seen a migration to this type of approach be successful in many other business processes, such as sales force, supply chain and marketing automation.

2) Implement visual two-way communication. Retailers communicate merchandising and store changes to retail teams with written instructions that are generally lengthy and not completely applicable to their unique storefront.

Most retail store employees execute more precisely with visually oriented instruction that targets exact changes to be made in the store. It’s no surprise that merchandising campaigns get executed so poorly.

Retailers should focus on visually communicating with their store employees. This means giving store teams images of how they want displays to be set up and where in the store they should be placed. Store employees can in turn provide faster feedback when a campaign has been executed, so corporate has a clear understanding of compliance and the impact an accurately executed campaign has on sales.

3) Leverage business rules for localized campaigns. The Internet is gradually delivering on the promise of personalized offers for consumers, generating exciting opportunities for those that embrace enabling technologies. However, a significant percentage of these Internet consumers are actually Internet researchers planning to make a brick-and-mortar purchase. The brick-and-mortar channel must be coordinated with the e-commerce channel.

Many savvy retailers understand this, but too often leave such localization decisions solely up to the “gut-feel” of local store managers. While these managers do play an important role in the process, retailers must better leverage the data they already have by automating the localization process. The result will be a stronger, more targeted connection with the customer.

You’re only as fast as your slowest retail channel. By executing your merchandising campaigns in a single environment, communicating more effectively with store teams and automating the localization process, no longer will your retail locations force you to move at a snail’s pace.

Dan Wittner (dwittner@rbmtechnologies.com) is chief customer officer at RBM Technologies, a provider of in-store visual merchandising management systems.