There was an almost sinister feeling of relief in the boardroom. Until a firm voice cut through the silence with a final question: Well done fleet review team. But which 5 stores are the most productive, which are the 5 least productive and why?
A Shattering Feeling of Paralysis During the Fleet Review Meeting
I was hardly breathing as I looked around, my eyes meeting those of senior retail leaders desperately sifting through their KPI (Key Performance Indicator) report for an answer. This magic table holds all performance numbers for all stores worldwide. Yet no one was able to answer this seemingly simple question.
The otherwise very successful meeting suddenly had a big dark cloud hanging over it. Did this mean we hadn’t truly heard the voice of shoppers and didn’t understand how to drive future growth?
We are all familiar with the tension in the room when challenged with a question we should know the answer to. What kept puzzling me after the meeting was: If all the data needed to answer that question were right in front of us, why was no one able to do so?
This article shares a powerful approach to store insights that helps answering this and related questions in a flash.
Are You Suffering from Analysis Paralysis?
My first step was to analyse the existing fleet review report. It struck me that there was no logic to the sequence of KPIs. Providing some ‘retail math logic’ to the report might make finding answers much easier. A retail math report was created, this is a simplified version with made up numbers:
Martin Birać from StoreDNA decided to come along on my journey, and we started implementing the retail math report. While it made it easier to recite history in internal reports, it also led to analysis paralysis and only rarely drove performance-enhancing actions. If your store performance report looks anything like this, scrap it! One of my biggest learnings was that the human mind doesn’t understand numbers – it’s looking for patterns and comparisons instead.
Imagineering the ‘GPS of Business Navigation’
Visualising all KPIs in a way the mind can make sense of and act on seemed like a mission impossible. One day I was driving home from work and in a moment of revolt, I attempted to beat the GPS, which resulted in taking my own route home and spending an additional 75 stressful minutes in the car. This made me think about just how powerful and actionable GPS insights are. What would it take to Imagineer a GPS for business navigation? It seemed like the most important principles for store insights would be:
- Knowing the purpose: Why is it important to continuously evolve stores to better connect with shoppers?
- Understanding the rules of navigation: What shopper behaviours do we need to interact with?
- Visualisation of actionable insights: How do we provide powerful guidance to making the right decisions?
Retail Is a Relationship-building Game
Retail is an infinite game of building consumer and shopper relationships. Building relationships to the level of loyalty relies on the continuous strengthening of relationships through the way we connect emotionally (perceptual accept) and transactionally (behavioural accept):
From a retail store perspective, the building of perceptual accept mainly happens through brand-building before the shopper enters the store. Behavioural accept is mainly influenced by the in-store experience. This is oversimplified, but it made me think about how important it is to understand shopper behaviours from the moment they think about the need-case until they start using the product. The purpose of retail is to build long-term relationships, but how does that translate into actionable insights?
The Moment(s) of Truth
There is a three-second window in which the brain decides what new information to store before it moves on. These short windows translate into the moments of truth we must win. We translated the relationship-building moments of truth into a general shopper relationship funnel and broke it into two main parts, store attraction and in-store experience:
This not only helped us understand the key to building relationships. The shopper relationship funnel became part of the foundation for developing powerful retail strategies. If you didn’t already map it for your business, it’s worth considering as it’s a powerful path to understanding relationship building in a smarter way.
If You Can’t Feel It, You Can’t Manage It!
It was key to sense shoppers and visualise insights in a way that makes it possible to feel what action to take next. We had to move away from a paralysing ‘sea of metrics’ to design a dynamic action triangle. We introduced two new metrics, each capturing one of the major parts of the shopper relationship funnel:
Shopper Flow (store attraction): Enables the comparison of the relative “attraction power” across a fleet of stores.
Shopper Spend (in-store experience): Captures the full impact of in-store experiences.
The feeling that the mapping of stores finally speaks the voice of shoppers was a bit of a eureka moment.
‘StoreStrat’ mapping of shopper flow and shopper spend not only enabled us to understand where to focus for driving productivity growth. It also allowed decision-makers to feel what shoppers feel and act accordingly. With changeable criteria for bubble colours and sizes (productivity, growth, GM% etc), the StoreStrat map becomes a GPS for business navigation.
Answering pressing boardroom questions becomes easy, and the discussion can instead focus on how to drive relationship-building actions.
Get in the Game of ‘Moving Bubbles’
Identifying the strategic focus for each store is the foundation for understanding whether relationships need to be strengthened through shopper flow or shopper spend. We went one step further and translated the shopper relationship funnel into retail drivers in support of flow and spend respectively:
It can be difficult to measure performance for some drivers. But experience has shown that challenging them in a systematic way for each store can unleash improvement. The StoreStrat map has enabled major improvements in several areas, for example:
- Targeting of initiatives driving store traffic
- Optimisation of sales staff
- Location selection for new stores
- Improved store navigation
- Understanding which stores to refurbish
I’ve experienced great impact using this approach, and it has always led to improved shopper relationships with gains in revenue and profitability as nice side effects.
Feel free to reach out if you feel inspired to create your own GPS of business navigation or explore www.storedna.co for more exciting store insights and visualisations.
About the Author:
Torben Valsted is an international “Business Imagineer” focused on building growth-unleashing relationships in symbiosis between commercial understanding and consumer-centric insights. Torben has been a transformational leader and growth architect for Nike, Nestlé and Carlsberg. He is a true believer of Phil Knight’s (founder of Nike) wisdom; “it can be a gift not knowing anything about a new job because it’s preventing any ideas copying what has already been done”. His extensive commercial experience from leadership roles in Trade Marketing, Sales, Marketing, Planning, Business Development, Retail and Analytics, is a living testimony to this belief. Read his work here or connect with him on LinkedIn.