Finding it hard to see the wood for the trees? Key themes for the future of Retail Store Operations.

Written by James Woodward , Matt Turner , Karl Truett

Unless you have been living under a rock for the last 5 years, you will have noticed that retail has been going through a challenging period.?First Covid-19 and the rapidly changing trading conditions that brought; then the changing consumer behaviours (hokey-cokey approach to moving to on-line purchases); and now tough economic conditions globally driving retailers’ cost optimisation programmes of unprecedented proportions (especially in store operations).

But there is light at the end of the tunnel….

Many of the technologies that have been teasing scalability over the last decade are now starting to emerge as serious options, and more beneficial still, is that many of the main players are beginning to join the dots on these different capabilities to mean business cases are beginning to stack up for those willing to invest.

But therein lies the problem, how to decide when to go and when to stay, when to lead and when to follow, and which technologies are right to invest in, in the short-term, praying that they don’t cause long term tech debt and further complexities.

And so... to try and help you ‘see the wood for the trees’, we have picked out 5 key areas that should be at the top of the list for all retailers to be focusing on:

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1.??????Digital Shelf Edge

Talk to any hardened retail transformation manager and the mention of the words "electronic shelf edge labels" (ESELs) can draw a sharp intake of breath and the odd inadvertent twitch. ?However, the landscape has changed significantly here, and most serious vendors are now describing an ecosystem of capabilities for the shelf edge, rooted in either ESELs or cameras, but importantly drawing on the economies of scale of combining all the different use cases (over 20 at the last count) at the shelf edge.?Which type of tech or use case any given retailer leans into first will depend on their unique circumstances, but the promise of bolstering the ROI (Return on Investment) with multiple sources of both savings and revenue generation should mean that this is one of the top areas of focus on any retailers 3-year plan.

2.??????Frictionless Checkouts

In truth, this is going to be more ‘less friction at the checkouts’ for most retailers over the next decade rather than frictionless.?Customers will (already do) expect to be able to be able to check out in the method that works for them, be that SCO (Self Checkout), or on their personal device, or through the plethora of versions of C&C (Click & Collect).?Therefore, introducing better ways to do this and reducing friction across both old and modern technologies makes complete sense.?But in all the excitement to reduce friction at the checkouts, retailers should not lose sight of the proportion of their current and future customers who prefer the interaction of a person at the checkout and the impact on their service perceptions (still a key metric for choice of retailer and brand loyalty) this can have. Winners will balance reducing friction, improving service and optimising the volume of labour involved in delivering service operations.

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3.??????Radio Frequency Identification (RFID)

Over the last 10 years RFID has become a staple when it comes to how stores manage inventory in most clothing retailers. Other than counting and using the data to talk to ordering systems, retailers are starting to ask the question, “What else can I do with RFID to get the most out of my investment?” Having done arguably the more complicated part (i.e. enable millions of RFID tags across the product catalogue), a broader, more eco-system led approach to including use cases is becoming more common.?RFID is now able to give clothing retailers complete transparency across their Supply Chain and Store Operations and connect these capabilities to help provide a seamless in-store experience through RFID checkouts, endless aisles, and other technologies.?

4.??????Data Driven Replenishment

Traditionally store replenishment has been one of the hardest areas of the cost base to address, given such a large proportion of it is driven by functional decisions further up the value chain (and we all know how easy these are to change in retail, right?).?But the increase in data, or more accurately the improvement in the ability to capture and use the data that (mainly) already exists, is going to allow a forensic approach to replenishment that has been hitherto very difficult, if not impossible.?By taking this detailed approach and challenging the value of all steps within the replenishment process, retailers may find that a significant proportion of their replenishment cost base becomes ‘very’ addressable indeed.

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5.??????Task Management

Talk to 10 different retailers about task management and you may find you get 11 different definitions…?To some this is no more than a central communications platform, to others this is a dynamic AI driven task engine that all but replaces the need for human leadership.?The truth is, given long enough this could be anything and everything. In the next 5 years though, to any retailer serious enough to invest in this strategically, this could be optimised task prioritisation, improved task execution (e.g. using continual feedback and machine learning) and end to end value visibility and maximisation.?Forget the potential to save 10% or more of your cost base (which it could be, by the way), what if you could make 100% of your labour cost 50% more effective at delivering tangible value…

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Whether you are thinking about some, all, or none of these areas currently, your next store operations strategy paper should include what you want to do on each of these, or why you are going to consciously choose not to.?As with anything that involves technology, there will always be a reason to wait; followers’ advantage, cheaper and more reliable products etc.?None of what we have mentioned in this article is designed to send retailers down the path of a specific product, solution, or vendor.?Simply, we have tried to suggest that whether it’s at strategy, 3-year plan, POC/ trial/ rollout, or any stage in between, all retailers need to be thinking very consciously about how they weave these opportunities into their plans in the way that is right for them, and in ways that mean they complement each other, because the successful retailers in 5 years’ time will have done exactly that.?

Don’t find yourself still looking for the wood and only seeing trees…

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If you like what you’ve read and want to find out more, please get in touch. You can find the other articles in the Future Store Operations series below:

1. Key Themes for the Future of Retail Store Operations
2. Digital Shelf Edge
3. Frictionless Checkout
4. RFID
5. Data Driven Replenishment
6. Intelligent Task Management
7. The Intelligent Store of the Future (22 September)