Thanksgiving in the US, Ramadan in the Middle East, Christmas, or simply next Saturday: high traffic days define the brand store operation winners. Here’s how UGG does it.
Brand store operation is not a complicated job. As a sales clerk in lifestyle retail, it comprises three core processes: 1. receiving and displaying merchandise, 2. serving customers and 3. removing goods from the shelf to make room for the new season.
At a closer look, however, these three core brand store processes break down into 120 sub-processes at which you can either become very efficient or remain average.
Brand Store Operation in an Online World
So if you are the manager of 100+ stores, brand store operation turns into one of the most complex jobs. Store opening hours are mostly fixed throughout the year. But store footfall per hour varies more than 10-fold during any given week. Your key challenge is to secure an appropriate number of qualified full time and part time staff in an environment where customer numbers are about as predictable as the weather.
‘Online and cross-channel services bring 30 additional processes to stores’. – Rudolf Bartels
And as if that’s not challenging enough, the growth of online sales brought an increase in store workload and 30+ new cross-channel store operation processes while personnel hours have not increased and sales drop. Millennial Consumers begin their brick and mortar store visits online, reserve the merchandise to pick up in store (click & collect), or return merchandise bought online in store.
How do you ensure excellent customer service in such a challenging environment, especially at peak retail times?
Footwear Retailers Face a Bigger Than Average Challenge
If you remember the last time you shopped for shoes, you will recall that footwear creates different service needs than other fashion shopping. While in fashion the assortment is usually available on the sales floor in all available sizes and colors, footwear is often on display in only one size/color (partially merchandised). If you want to buy a shoe, backroom customer service is a prerequisite and potential bottleneck, especially at times when the store has many visitors.
Depending on the time of your store visit, the store footfall, the distance of the backroom location and the availability of staff, you may have to wait more than 5 minutes before you can try your first shoe. And if it’s the wrong size, or you want to try another pair, it may take you 20 minutes (which feel like 40 minutes) before you approach the cashier.
Now imagine that process on Black Friday, and imagine how many sales you can potentially miss or win over it.
Planning for the Super Bowl of Brand Store Operation
Ecco, Aldo, Timberland, Clarks or UGG all compete for the same locations in the best shopping malls. And all these locations have one thing in common: the rent is high and the next tenant is already waiting to take over the lease in case a brand can’t achieve high enough space productivity. In this environment, Footwear brands can’t afford to frustrate customers or miss sales during high traffic hours.
When footwear retailers plan their operation, they have to plan for the Super Bowl brand store operations. Stores need highly efficient processes and a maximum of customer service, at any given time. Peak hours have to be served with many extra part-timers who need to be nothing short of excellent. And now imagine that you want to make 10% of your annual sales within just one day out of the year. You better make sure that one day turns out 100% perfect, which is what UGG has been working towards for years.
UGG Optimizes Brand Store Operation for One Day
UGG is a California-born footwear brand that is part of the Deckers Outdoor Corporation. The brand started with own retail in 2006 and currently reports over 150 stores worldwide. UGG’s core sales derive from its iconic sheepskin winter boot.
This means that a few days in autumn and winter can seal the fate of UGG’s annual sales. As a result, Deckers has to excel at preparing for seasonal peak days, or else consumers leave without a purchase because they are frustrated waiting for service.
While many retailers address this challenge by hiring additional personnel and stockroom, the UGG retail team took a different path. The breakthrough came around 2010, when UGG started to work on customer service efficiency by reducing consumer choices.
|The Art of Choice|
|Sheena Iyengar of Columbia University conducted a study on the Art of Choice (1995).
In a California gourmet market, the researchers had set up a booth of jam samples. Every few hours, they switched from offering 24 jams to offering only six jams. On average, customers tasted two jams, regardless of the size of the assortment.
Unsurprisingly, 60% of customers were drawn to the large assortment, while only 40 % stopped to look when the smaller selection was on display. But 30 % of people who sampled from the small assortment decided to buy jam, while only 3% of those confronted with two dozen jams purchased a jar.
That study, and others to follow, ‘raised the hypothesis that the presence of choice might be appealing, but consumers find more choice to actually be debilitating.’.
If you envision that an average UGG store offers consumers 250 styles to chose from, a family of four can easily spend an hour on making a decision. And Black Friday retail productivity is melting by the minute, like an ice cream in the summertime.
When UGG reduced consumer choice on Black Fridays by placing low turnover items in the stock room and thus providing more space for bestsellers, their sales per hour increased significantly. Additionally, more consumers left happy after making faster decisions. Conversion rates went up and the average lead time to serve the next customer became faster.
Improvements Continue With a Store Design for One Day
In the early years, UGG’s perceived positioning as a mono-product brand was an advantage. But over time the assortment became wider, and the internet led to larger expectations for UGG stores. In recent years, then, UGG has continued to finetune their Black Friday store operation with additional features.
One of the outstanding new processes is to ‘prepare’ customers for the store visit, while they are queuing in front of the store.
When lines outside the UGG store become too long, store managers send out experienced retail associates with tablets to guide consumers towards faster decisions once inside the stores. The tablets help advise on the available merchandise and its location in the store. And customers get to experience great service on a day when they normally expect the worst.
Other Black Friday improvements include a new generation of store designs with built-in space features that increase in-store holding capacity by 30% on peak days, special shelves created to hold more merchandise in store when it’s needed the most.
The Ugg Way of Best Practice
UGG doesn’t report its retail profits, but last year’s investor presentations report an average space productivity above $ 1,000/sqf., a performance that places the brand in the top 5 of US premium brands. This is even more impressive considering that the majority of sales is achieved in just a few days.
UGG’s outstanding performance is not the result of one single feature but of a dedication to processes, tools and structures that create best practice over the years – on peak days as well as every day.
Your Black Friday is Every Saturday
Whether you sell footwear or not, the dependency on a few months, days or hours is the reality for most lifestyle brands. Remember that consumer traffic varies by nature, throughout the world, throughout the day, the week, and the year. It may be Saturdays between 2-4 p.m. that you grow or melt your productivities like ice cream.
A brand’s store productivity is as much ‘average’ as there is an average temperature if you have your head in the oven and your feet in the freezer. Brand store operation is at best practice when optimized for the high as well as the low season and UGG shows how to achieve flying productivities in both high and low footfall situations.
About the Author
Guido is a brand strategy coach with 20+ years of industry experience. He has worked on 20+ brand projects engaging to improve retail performance. To discuss this post or how to improve your own store operation you can best reach him via email or read more from him here