Online stores continue to gain market shares, making it crucial for brick and mortar stores to defend their piece of the cake. An exceptional customer experience and store operations excellence are two promising strategies to keep customers coming despite more convenient channels.

This article is about the operational excellence of brick and mortar stores in times of digitalisation, and why technological innovation will not suffice when it comes to providing an outstanding customer experience.

There is no one single definition of what store operations consist of. This very much depends on the retail format, number of stores, local concentration and organisation of the retailer, which other sales channels are served and how headquarters are organised. Essentially, it depends on the division of labour between the individual stores and the central or local headquarters and excellent teamwork between all parties involved – including vendors and other service providers.

Store Operations: Definition & Scope

Store operations comprise all processes, functions and systems needed to operate a brick and mortar retail store.

Store Operations Excellence is a matter of teamwork (Photo: Pixabay_Alexas_Fotos) While the term is now also used for online stores, this article focuses on store operations excellence of brick and mortar retail stores. The major processes subsumed under the term store operations are:

• Staff Management (hiring, on-boarding, training, scheduling, empowering and motivating store staff, evaluating and reviewing individual staff performance, promoting, incentivising and developing store staff, etc.)
• Inventory Management (sourcing/buying, stock-intake, security tagging, labelling, pricing and mark-down handling, merchandise handling, stock maintenance on the shop floor and in storage, stock taking, handling returns, claims and complaints, etc.)
• Visual Merchandising (attractive presentation of merchandise, shop layout, lighting, POS-Material, combination of articles and colours, defining location for each article in store and sync with presentation in other sales channels like online stores or social media, in-store and window decoration, lighting, maintenance, etc.)

Store Ops – Sensory Overkill in a Bavarian Bakery (Photo: Heike Blank)

• POS Marketing (execute local promotions, sync with other sales and advertising channels, sync with centre or city management, inform and train sales staff accordingly, adjust VM, pricing and decoration, etc.)
• Store Maintenance (repairs and replacement of fixtures, equipment and other materials, ensure cleanliness and tidiness, organise consumables, etc.)
• Store Administration (reporting, store opening, daily closing, cash handling, admin cooperation with centre management, etc.)
• Fraud Prevention (installation and maintenance of security systems, tagging merchandise, understand fraud trends and frequently train sales staff, review internal process to identify and prevent unusual transactions from store staff, surveillance, strict guidelines for staff sales, handling of discounts and returned items, daily closing, cash handling, strict credit card verification measures, loss prevention teams, 3rd party theft prevention, etc.)
• Omnichannel Services (click & collect, click & reserve, return in store, ship/pick from store, curbside pick-up, pick & go, endless aisle, clienteling, etc.)

and most importantly:

• Customer Service, i.e. any interaction between store staff and customers with the purpose to build a trustworthy relationship that helps customers meet their needs and wishes and,  hopefully, make a purchasing decision. (consulting, informing, serving, entertaining, helping and supporting customers, executing check-out, loyalty programme and promotions, packing purchases, handling returns, claims and complaints, executing omnichannel services, etc.)

The retail industry loves technological innovations that help bring store operations to a new level of excellence. However, store operations excellence is not a matter of technological superiority, but a matter of carefully selecting what technology makes sense from your customers’ point of view and what helps your staff spend more time with customers.

Store Ops – Staff Management (Photo: pixabay)

Staff Management: Why Old-school Low Tech Dominates Trends

Excellent staff management is key to operating a well-performing retail store. Having the best educated, most enthusiastic and highly motivated store staff in the right numbers at any time is what retailers dream of – a team that will build lasting and loyal customer relationships by convincing customers that they just experienced the best possible service.

Definition: Staff management in retail stores includes all processes, tools and functions to enable employees to run and operate a retail store based on its retail strategy and customer service concept. It is about hiring, on-boarding, training, scheduling, empowering and motivating store staff, evaluating and reviewing individual staff performance, promoting, incentivising and developing store staff.

These are the most important tasks of store managers, supported by their area managers and headquarters’ retail management.

Store operations, staff scheduling by quinyx (Source: quinyx)

There are many tools, technologies and gadgets to help reduce ‘unproductive’ tasks (such as administrative efforts, stock intake and handling, reporting etc.), increase transparency, improve training, knowledge and capabilities of staff, facilitate and improve staff scheduling, optimise staff cost, support staff motivation and facilitate daily decisions by providing appropriate KPIs and other relevant information.

Staff scheduling tools translate strategic goals into daily ones. They forecast traffic and workload to provide individual daily target KPIs, provide customized KPI’s and data for a fair evaluation of team performance, or give indications about team motivation, and interface with payroll and other HR tools.

Mobile training sessions, detailed product information and comprehensive inventory transparency support customer interactions and endless aisle services to make sure that customers get what they are looking for – even if the store does not stock the desired item.

Staff Managment for Butlers by Atoss (Graphic: Atoss)

Shoe brands Converse and Kurt Geiger use workforce.com for staff planning and scheduling, interior design retailer Butlers has implemented Atoss to manage staff planning for more than 100 POS. Lifestyle department store Breuninger cooperates with Atoss for its 13 department stores to plan staffing based on traffic and to deliver premium customer service, while Mannheim’s local hero department store Engelhorn uses Atoss as well for their logistics workforce.  Decathlon, Swarovski, Boots or Gant use quinyx.com, an easy to install, intuitive app-based staff management tool.,

But staff turnover remains one of the biggest challenges for retailers, and none of these tools have succeeded at reducing it. Store staff is normally underpaid. When offered better pay elsewhere, you will loose store staff and unfortunately the good ones will leave first. And financial remuneration isn’t the only issue. Even more important is how the store manager, the area manager and any other senior management treat your staff.

Store Ops, sometimes it just takes a mouthwatering product to make your store staff happy (Photo: Läderach)

Store and area management are typical sandwich positions, squeezed from above by top management when things go wrong, and challenged by staff with expectations regarding facilitating processes and tools that reduce workload and stress and allow them to have more and better customer interactions. Unfortunately, very often store and area managers pass the pressure from senior management down rather than fighting for their team and their stores.

High staff turnover is a tangible consequence of such unhealthy environments. Fortunately, we see increasing recognition that customer service is the key reason for consumers to shop in brick and mortar stores rather than online. Hence the importance of top educated and motivated sales staff becomes more and more obvious even to self-service and discount formats which typically do not offer the best customer service.

Motivated sales staff (Photo: Shutterstock)

4 Low Tech Options to Keep Staff Turnover at Bay and Store Operations Excellent

1. True appreciation of good performance, fair treatment, honest feedback, appropriate support when needed, open handling of problems, backing up your team when problems arise and passing on appreciation and recognition from top management are just a few things that help to form true teams and keep them from falling apart easily. Leading by example might be an old-school management principle but it remains very effective!
2. Give sales staff more freedom in how they approach and connect with customers, allowing them to use their individual strengths rather than parroting pre-defined phrases out of a customer service folder. It’s authenticity that makes sales staff successful and happy, not uniformity. In the beginning this may require frequent and open feedback and on-the-job training, but it’s worth it!
3. Recognition in terms of higher wages that allow sales staff to interact with customers on an equal footing will also help.
4. Another way to retain motivated staff  is to let them participate in the company’s success, making it their company. This can be achieved by the means of direct shareholdings or an employee-owned trust as is common in the UK (prominent examples include John Lewis, Richer Sounds  or Riverford Organic Farmers).

Richer Sounds owner distributes shares to employees (Video: RicherSounds)

Visual Merchandising and POS-Marketing

There has been a long debate about the delimitation between Visual Merchandising (VM) and Point-of-Sale (POS) Marketing. And yes, the boundaries are rather fluid. While VM is clearly one of the most effective POS-marketing tools to engage and inspire consumers in a brick and mortar store, POS-marketing also appeals to all other human senses. This can be by auditory means like music or ambient sounds, announcements or a targeted customer approach by sales staff. Or it can involve fragrances and physical experiences (e.g. while testing a product) and interactions with staff and/or other customers during in-store events. Another option are extended experiences using virtual and augmented reality tools.

Engaging VM for a commodity product at Henri Willig (Photo: Heike Blank)

VM comprises any means and tools to attract visual attention, help consumers to find what they are looking for, and increase chances of a purchase.

All sales promotion activities carried out at the POS where consumers get in contact with goods and sales staff to make a purchasing decision are part of POS-marketing.

There is a debate on whether online or mobile visibility of a brick and mortar store (e.g. through google maps or google shopping) and google local inventory ads are a part of POS-marketing or not. We are convinced that it forms an integral part of integrating store operations of brick and mortar stores into an omnichannel customer journey, as the consumer interaction for these services happens before they ever visit the store. I will therefore tackle this part of marketing in one of my upcoming articles about the omnichannel integration of store operations.

Visual merchandising at its best at Zhongshuge Bookstore (Photo: mustsharenews)

What makes VM so important is the so-called visual dominance when it comes to information processing of the human brain. While baby brains show auditory dominance, adult brains process visual information faster and show better memory performance for visual information (Robinson & Sloutsky). Presenting your store and its merchandise in an appealing, surprising and tempting way is the first step into hearts and memories of your targeted consumers.

Using data to better understand what makes your consumers buy is the current trend in VM and POS-marketing. Formal wear brand Hugo Boss is currently investing in a tech hub in Portugal to provide data not only to support product development but also to predict and identify the optimal way to address consumers with marketing messages.

Digital signage for POS-marketing (Graphic: Heike Blank)

Omnichannel marketing automation is another significant trend. It syncs marketing messages and execution across all sales and communication channels and gathers and provides a comprehensive view of individual customers. What began with automated online marketing campaigns is increasingly used in brick and mortar stores too, for example with digital signage in windows, on displays, shelves, shopping carts and even on product labels, through tablet based detailed product, brand or styling information, use cases, inspirational visuals or videos, endless aisle services and many others.

Digital signage reduces the execution effort of POS-marketing campaigns, as the next marketing message is just a click away. But it can also contribute to reducing innovation and creativity. Digital signage requires high initial investments in hardware and its installation at the POS and has to earn its investment through continuous long-term use. Thus, while visuals and messaging can change, the installation as such is likely to remain where it was originally placed for a long time.

Burger Kings’ ads created by AI – beautiful disasters (Video: Burger King)

However, it gets really interesting when we add AI and deep learning into the equation, Burger King uses AI to display individual product recommendations while the customer orders on a touchscreen menu board at the POS. Thus, no more beverage recommendations if the customer has already put one in his shopping cart, unless they order food for two but just one drink. The system predicts what the customer will order (a hot or cold drink, a single burger or a large meal), saving preparation and execution time thus offering a better customer experience. Burger King already experimented with ads created by artificial intelligence in 2018. But although these, as Morgan Sung described them, beautiful disasters, gained their very own fanbase, the company stated that the jobs of marketing agencies are not at stake, at least not yet!

Smart Fitting Room by detego (Photo: detego)

Unfortunately, AI empowered shopping recommendations are not transferable one-to-one to other retail contexts. In a fashion store, for instance, this would imply using technologies like RFID to let the fitting room ‘see’ which styles the consumer has preselected. To complicate the matter further, the fitting room also needs to understand the relevance of the selected items (as in “yes, this is going to be mine” vs. “no, this looks awful on me”). This would be a prerequisite for showing relevant complimentary product recommendations on digital signage/mirrors, enhancing cross selling and increased ATV (average ticket value), and offering to shop out-of-stock products through other channels.

But there are still some significant challenges preventing a fully fledged roll-out of smart fitting rooms: e.g. the high number and variety of simultaneously moving items, an uncontrollable way of carrying items by consumers, unpredictable moving patterns of consumers in store, inappropriate store layouts, overlapping ‘readings’ due to insufficient shielding between fitting rooms, and high investments to overcome all those obstacles with hard- and software components.

Back to Burger King who benefits from customised product recommendations for each and every customer during the process of ordering at any POS. The customer as such remains anonymous. Imagine the potential if the system were able to identify the consumer, check whether they are a member of the loyalty programme, provide sales history and preferences, e.g. for seasonal specials, or understand the customer’s search history.

Store Operations Excellenc through In-store Beacons (Photo: Uberall)

A seamless customer identification in brick and mortar stores remains one of the biggest challenges in making comprehensive use of CRM-tools and POS-marketing. For quite a while the industry hoped for a widespread implementation of geo fencing and in-store-beacons  to identify and communicate with consumers near or in the store. But there are major obstacles that still prevent the breakthrough of both technologies.

Consumers need to download the app first, enable permissions for the retailer to use the technology, have their Bluetooth and Wi-Fi options enabled, and consent to a data security sheet. European consumers are increasingly aware of data protection and their privacy. And as geofencing can gather more personal data of an individual than intended by the app owner, users are especially careful when encountering it. Overall it’s unsurprising that only 22 % of US retailers using beacons are actually happy with the outcome of proximity marketing enabled by beacons, while another 23 % are disappointed enough to intend getting rid of it.

Fortunately, other means of customer identification are available to brick and mortar stores. We will look into these options as an essential part of a  seamless omnichannel customer experience in a future article  in my store operations series.

Tech-savvy employees and consumers will appreciate the latest developments in VM and marketing tools using XR (extended reality), natural language processing, image recognition and processing or deep learning for developing marketing and VM-concepts based on sales and marketing targets. These technologies integrate with marketing activities from other communication and/or sales channels, can be tailored to each store, provide platforms for real-time communication with store and field teams, track performance, and measure compliance of individual store execution.

https://www.youtube.com/watch?v=eYvLdgLqYZE

Visual Merchandising and POS Tools and Platforms

Most of these tools and platforms are specialised or have proven especially useful for particular industries or specific company and retail structures.

Fashion brands like Tommy Hilfiger, Adidas, Speedo or ETRO use visualretailing.com, one of the pioneers in automating VM and planning for the fashion and lifestyle industry. The platform integrates buying and planning, cluster creation, space planning, creates VM-guidelines integrating any POS-marketing material and shares them with all stores. It provides a product range analysis and helps you understand which product is likely to sell best at what placement in your store. It also identifies gaps in the collection at an early product development stage by checking its visual presentation in a virtual mock shop.

Supermarkets, electronic retailers like Bestbuy or telecommunication companies like T-Mobile and Vodafone use onedoor.com. This tool offers a merchandising cloud that captures all store information, allowing the automated creation of individual, localised planograms for each store. It locates every individual item in any store, providing all available information, and generates quantitative orders for fulfilment and supply chain partners. And it visually guides store associates through their in-store execution, increasing the transparency of VM execution for every fixture and display.

Industries using simplifield.com (Graphic: Heike Blank)

H&M, Asos and Walmart use form.com, a tool that specialises in VM execution, integrating store-related reporting and providing team benchmarks. LVMH, L’Occitane, Starbucks, Asics and Acne Studios use simplified.com, a fully integrated mobile platform for retail operations, communications, workflow automation, and advanced performance analytics. Food and cosmetic brands such as L’Oreal, Nivea, Carlsberg or Nestlé tend to use ivymobility.com. And that’s just a few examples of what’s currently available.

Visual Merchandising and POS-marketing Execution

The split of responsibilities between headquarters, vendors and store staff often makes the VM and POS-marketing execution subject to discussions and delays decisions. Retailers need to decide who executes what area of VM and POS-marketing based on the complexity of the task, cost and time, the availability of experienced staff, and the desired level of control. There are in general two options and a variety of combinations.

Option 1: In-house Execution

In-house execution means using your own employees to execute VM in stores. If size and leverage permit, most companies prefer specialised employees with the appropriate education and experience, a good sense for aesthetics, ingenuity, a talent for improvisation and lots of creativity. However, such employees are hard to come by, which is why many companies opt for a service provider instead.

Option 2: Service Provider

Specialised service providers offer the procurement of props and POS-materials, window-installations, shelving (replenishment) etc. Full-service providers develop VM-concepts based on marketing concepts and your calendar, procure props and POS-materials, organise the delivery to stores, execute the installation, organise the disposal of used materials, train store staff in day-to-day maintenance, and provide detailed reports.

Combinations of these two options are also available. For example s.Oliver, Puma, Douglas, Nespresso or Mont Blanc work with designplus.org  to develop window concepts and procure props and POS-materials. But installation and maintenance are handled internally. Other vendors just offer the production and procurement of props and POS-material as well as delivery to stores, but no installation or dismantling services.

8 Low-tech Success Factors of POS-marketing Execution

Whichever combination you opt for, these principles help a POS-marketing campaign succeed and boost your store operations excellence:

• Carefully select the marketing message you want to convey. Too many messages lead to information overkill and strain customer attention.
• The message needs to stand out but also fit into the overall store design and VM concept.
• Coordinate the marketing campaign with VM planograms and product availability. Make sure there is enough of the promoted product available.
• Sync content, look and feel of the message with other sales and communication channels.
• Ensure local proximity of the message and the promoted product (e.g. window follow-up).
• Integrate and train sales staff, provide and gather timely feedback.
• Allow a test-and-improve period and test high-impact campaigns in one or a few stores before rolling it out widely.
• Measure success to understand what worked and why, and what to improve for the next campaign.

Whatever your POS-marketing and VM concept and however you execute it, make sure you understand how it affects the customer experience of your consumers and adjust if necessary!

The second instalment of this store operations excellence series will tackle merchandise and inventory management, fraud prevention, and store administration and maintenance. And a third instalment will shed light on omnichannel services and the all-encompassing customer service for a unique and unforgettable customer experience.

Our thanks and the credit for the featured image goes to: Kellepics who generously provided this image royalty-free viaPixabay

About the Author:

Heike Blank has worked for big organisations such as VF Europe and s.Oliver but also for niche brands such as Ecko Unltd. and Zoo York in top executive positions. Her extensive experience with opening and managing own retail, partner stores, concessions and shop-in-shops in 23 countries in Europe, the Middle East and Asia make her an expert in expansion into new markets through own and partner stores and in retail store operations. Get in touch with her here and read more  of her work here.