Retail 101

My first “real” job was in a retail store: running a register, stocking, cleaning shelves, picking up cigarettes outside. Anything it took to keep the store cleaned and maintained to serve our customers.

I quickly rose through the ranks; running the same store at the age of 17 over the summer school break. I had to ensure someone was over 18 on staff to sell alcohol, because the “manager was too young”.

As I’ve grown in retail through multiple roles the term “Retail 101” became a popular phrase.

Retail 101, in the course you will learn the basics it takes to run a retail location:

  • Stocked shelves
  • Clean floors
  • Clean restrooms
  • Replace broken fixtures and light bulbs
  • Warm greeting
  • Fast checkout
  • Make sure someone is over 18 to sell alcohol…

I’ve worked with countless field leaders and we can all agree you know a well-run store when you walk into it. “You almost feel it.” As one SVP of Operations told me.

Forbes posted an interesting article that reminded me of the same issue, “Retail 101”, with some interesting facts to why retail is struggling today. Sometime “Retail 101” is not the problem. These issues go straight to the top, well above the operations team. The retail space continues to be pressured with cost controls:

  • Marketing spends to acquire new customers is going up
  • Margins are thinning
  • Minimum wages or other labor law compliance
  • Trying to control costs

Many retailers turn to their workforce to manage these costs. At times eroding the capability to perform “Retail 101”. The good ones will find tasks they can remove from a store, but even in those cases it is hard to complete the basics. I’ve seen where the business decided to stop cleaning the floors seven days a week, three is good enough. The worst offenders don’t give options they just hold the store to a number.

This why I love working in this space and especially with Connors Group. Instead of cutting things to the bone and ultimately ending up like one of the closing retailers. Let’s be thoughtful of what your customer expects in their shopping experience. Let’s remove those task that don’t bring value, help control costs, but more importantly find things that increase revenue.

Let’s be thoughtful and ensure our operations is passing Retail 101 with an A+

5 Ways Mobile Apps and Tools are being used by “Empowered” Employees

As the economy nears full employment, retailers are finding it more and more challenging to hire for open positions and retain existing employees. And while traditional methods for attracting employees are still effective, (pay rates, work environment, etc.) retailers are now starting to sell themselves as an employer of choice through new means.

One of these new means is providing employees greater control of their schedules and work-life balance.

There are many new tools and apps that cater to this new means…And many employers are embracing these apps and granting employees greater control over their schedules.

Here are 5 ways mobile apps and tools are being used by “empowered” employees:

  1. Swapping and/or or trading shifts with other associates
  2. Looking for additional shifts in neighboring stores
  3. Adjusting their availability/schedules
  4. Accessing schedules more than 1 week in advance.  (In some areas, this is becoming the law, but other retailers are preemptively doing this.) 
  5. Bidding and/or selecting preferred days/times

The bottom line…

Work-life balance is one of the most-important factors in employee satisfaction.  And nothing outdoes the benefits of truly allowing and empowering employees to take control of their schedules.

The Challenges and Importance of Maintaining and Managing Inventory Accuracy in Omni-Channel Retail Stores

As retailers move to expand their omnichannel strategies to allow customers to easily purchase products both online and in store, inventory accuracy is critical to maintaining customer satisfaction.

Retailers effectively look to drive sales through initiatives such as BOPIS (buy online pick up in store), SFS (ship from store) and even customers just finding the products they desire during their in-store shopping experience. Having the right products at the right time when the customers want them is a challenge that all retailers struggle with.

Here are some of the key issues, expectations and consequences of maintaining and managing inventory accuracy in the retail omni-channel:

  • When store inventory falsely posts product availability retailers not only run the risk of lost sales but also an impact on customer loyalty.
  • When customers place an online order, they expect their order to be filled and they expect it to be filled fast. If their demand cannot be met than they will move to the next retailer that has what they are looking for.
  • When retailers are forced to send an apology email stating that the customer order cannot be completed, it shows that they don’t truly know their inventory levels. This will erode customer confidence.

However, there are many areas where retail stores and store Associates can help control, maintain and manage accurate inventories.

For example,

  • Accurate physical inventory counts. Retailers traditionally utilize third party vendors to periodically conduct physical inventory counts across their stores. Recently, some retailers have begun taking this process over and are now performing their own physical inventory counts with the hopes of better controlling the accuracy of the count.
  • Implementing an effective cycle counting program to update inventory on an ongoing basis.
  • Establishing a well-defined process and implementing associate training for proper product handling (receiving, replenishment, marked out-of-stocks, etc.).
  • Employing loss prevention strategies to minimize inventory inaccuracies due to theft.
  • Maintaining well-organized back-stock storage locations.

The bottom line…

If done well, a retailer may experience higher sales and increased customer traffic. If not, retailers run the risk of wasting labor looking for products that may not exist, ultimately leading to a negative impact on the customer experience.

Is Artificial Intelligence Necessary in the WFM Space?

Which do you think is faster in processing data?

The world’s largest super computer or the human brain?

It might be a surprise, but the human brain is faster, but at what speed?

I’ve read where it would take a super computer 40 minutes to process what the brain can process in a second. So, with all this processing power upstairs why would we need Artificial Intelligence (AI) or its subset Machine Learning (ML)?

Every day, we are hearing about and often experiencing new developments in AI…

Walmart just recently launched an intelligent store to gather insights on shelf stock, customer patterns, associates patterns and many other data points. With all the AI sensors, it is processing 1.6 Terabytes of data every second! That’s like listening to 3 years’ worth of music in the same amount of time. This type and amount of information and data will enable Walmart to provide an enhanced customer experience, while improving their bottom line through inventory and labor controls.

What about the Workforce Management space?

Currently all the major players claim to have a form of AI or more specifically ML to help their client provide the best solution for their locations. The most common space is in the forecasting algorithm.

Examples:

  • One vendor recently informed me, they were able to determine alcohol sales in a Nashville bar based on the type of music played in a local venue. If it is country music, sales will go up; while if it is rock n’ roll, sales will remain flat.
    • How could information like this impact your business?
  • In a specific client they were able to find with pinpoint accuracy the increase in traffic based on weather patterns, specifically snow. Not just any snow, but the 1st, 2nd and 3rd in a given season.
    • Are you measuring seasonality accurately?

Even more cutting edge are the vendors that are starting to interpret business decision made by managers or associates as it relates to coverage, request time off, or absenteeism. This functionality still has a way to go, but this will eventually be part of every offering in the WFM space.

AI is helping retailers, food service, and other industries forecast with greater accuracy the associate or workforce need to ensure customer expectations are met.

How are you using or going to use AI to better meet the needs of your business?

CNBC Gets It Wrong About Bricks vs. Clicks

CNBC.com recently published an article titled “Online Shopping officially overtakes brick-and-mortar for the first time ever.” By Kate Rooney. Obviously, I was intrigued enough to read the article which quoted data from the Department of Commerce and analysis from Bespoke investment Group. They looked at the penetration of sales to determine that for the first time ever, online sales were more prominent than traditional brick-and-mortar retail, as illustrated in the graph below. At first glance, this made perfect sense. We have all been hearing for years that traditional retail is dead and that an apocalypse is imminent for stores. The time is at hand!

Then I noticed that the total penetration of what the article defined as “bricks” was essentially the same as it had been in 1992. With the meteoric rise of non-store sales, this made me question where the market share was coming from, prompting me to visit the Commerce Department website and downloading the supporting data to see for myself.

I was disappointed to discover, once I started to look at the data, that the analysis was flawed. There can be no debate that online shopping is growing at an astronomical rate. There can also be no argument that this is largely at the expense of traditional online retailers. However, the assertion that online (“clicks”) is now bigger than traditional in-store shopping (“bricks”) is just wrong.

The Department of Commerce classifies its data from a voluntary survey every month of statistically representative companies that are anonymized and classified according to the nature of their business and represented by NAICS codes. In the article, the author equates “bricks” to NAICS code 452, which is defined as General Merchandise. This code essentially represents department stores, but the author attributes it to the entirety of traditional store retail in asserting that online shopping is bigger than “traditional” retail. It ignores the fact that there are four other distinct codes that are also explicitly “traditional” retail:

NAICS Code Description
442 Furniture and home furnishings stores
443 Electronics and appliance stores
448 Clothing and clothing access. stores
451 Sporting goods, hobby, musical instrument, and book stores
452 General merchandise stores

Collectively, these codes, along with a portion of code 453 (Misc. Stores Retailers) that represents office supplies (sub-code 4532) make up a classification known as GAFO. GAFO stands for General Merchandise, Apparel and Accessories, Furniture and Other Sales and the definition for this designation is officially “firms which specialize in department store types of merchandise.” In other words, this is the official designation for what would otherwise be known as “traditional retail” or “bricks”. When comparing this classification to NAICS code 454 (Non-store Retailers) we see a different picture:

It is important to note that the overall trend is that non-store retail is taking share from traditional GAFO-defined retail, and the trend has been accelerating since 2016. It is not true, however, that online is bigger than brick-and-mortar; “clicks” as defined in the article are still barely half the size of traditional retail.

It is also interesting to see where the share loss has been concentrated in recent years:

The Office Supplies, Electronics and Sporting Goods sectors lost share at double-digit rates since January of 2016. All other sectors included in the GAFO category also lost share over this time period, but at more moderate rates.

The other element that rang falsely in the article was the use of NAICS code 454 as a proxy for online sales. While purely online retailers like Amazon are a threat and putting pressure on retail, code 454 also includes sub codes 4542 (Vending Machine Operators) and 4543 (Direct Selling Establishments). It also omits the fact that all “traditional” retailers today have a significant online presence of their own. Therefore, the Department of Commerce publishes a separate quarterly report on eCommerce.

Looking at the latest quarterly report from the Department of Commerce and their full definition of “Retail” and “E-commerce” we get a different picture:

Again, e-commerce growth is outpacing traditional “Stores” growth. However, the point here is that “stores” are still growing and have been since the “crash” of 2008. The difference between the misinterpretation of the NAICS codified data and the “official” e-commerce data can be attributed to the fact that e-commerce and traditional stores are extremely difficult to separate. No retailer today can be classified as purely “stores” or purely “online”. Even Amazon is recognizing the importance of brick-and-mortar, although not yet in a financially material way.

There are some definite implications from the exercise of examining the data:

  1. Stores are still relevant. As seen in the data from the e-commerce quarterly reports, stores are still growing. The stores that are failing are the ones who were late to understand the changing role of physical stores and evolve their value proposition. It is no longer enough to house a breadth or depth of products in the store. No physical venue can ever match the internet. Therefore malls, and especially their anchor tenants, are failing. The value proposition of convenience and selection is no longer valid in the consumer mind.
  2. E-commerce growth will continue to outpace store growth. The rapid growth in penetration of e-commerce as a percentage of total retail will continue. Retailers should have a hard look at what products can be “digitized” and try to get ahead of the curve. What began with books, music and movies will continue. Retailers can either resist and become increasingly irrelevant or get ahead of the game by beating the competition to the punch.
  3. A new approach to physical stores is necessary. The difficulty is balancing the shift from current model, which still has relevance to a large (though decreasing) portion of the population, to the future model. For every Best Buy that is successfully making the transition, there is a Sears that is not. Sears is a tragic example of vision not being adequate. Eddie Lampert accurately prophesized the e-commerce shift years before the market yet did not successfully translate that foreknowledge into action. This Illustrates that in order to successfully navigate, retailers must intimately understand their customer, and more importantly the trends impacting their customers.

The author of the CNBC article is negligent in their definition of both the numerator (“bricks”) and denominator (“clicks”) in their comparison. Their assertion is, at best, several years premature. At worst it is a gross misinterpretation of the facts to match a catchy headline. However, we must not throw out the baby with the bathwater. The message remains valid. E-commerce is increasingly important. Successful retailers must be relentless in applying this lesson to transform into a truly “omni-channel” experience for their customers. “Which channel is most important?” is not the question. “How can I best satisfy the various needs of my customers?” is.

ProMat 2019 Takeaways

ProMat 2019 is where manufacturing and supply chain innovation comes to life, in person and in action.   

As the trend towards eCommerce and direct-to-consumers continues to increase, so does the attendance and size of ProMat.  This year was a record breaking 45,000 attendees. 

ProMat was the place to see all the current trends and technological advancements in hardware, software, robotics, AI, machine learning, and the automation of manufacturing and warehousing processes.  Which, some are calling the Fourth Industrial Revolution…

ProMat was a great way to spend the week with our customers and partners. We also gained valuable insight and takeaways from the show:

  • Everyone was talking about the labor shortage.  We’ve seen this trend building over the past few years, but it is an officially legitimate fear about how to address a problem that will continue to get worse.
  • Everyone is jumping on the labor trend and building a story around how their product / service will improve or address the workforce shortage issue.  In the past years there were always a few sessions geared towards productivity and the workforce. But, this year there were over 20 different sessions focusing on the topic.  A very noticeable increase!
  • Talking with our clients, the looming labor shortage has companies pushing aside traditional and acceptable 2-3-year capital ROI’s for large MHE and automated solutions that sometimes wont pay back for 2-3x’s that duration.  It is hard to imagine that anyone knows what the supply chain will look like in ten years, but companies are taking the plunge on these massive investments. 
  • Goods-to-Person style robots are becoming increasingly popular and affordable.  In 2012, Amazon purchased KIVA securing for itself virtually the entire large-scale robotic logistics market all at once.  There was an almost instant void in the marketplace.  Since then, patents have expired, and companies have built their own versions to compete, and in many cases, exceed the KIVA systems.  These were on full display at ProMat.
  • The Automate Conference, which is full of next generation robots and pure automation, continues to grow.

Final Take…

The ProMat show was a great place to experience new advancements in technology. Many of the companies we spoke with are realizing that their long-term supply chain solution will continue to be a balanced blend of technology and their workforce.  We look forward to seeing how these trends evolve at MODEX next year. 

Connors Group Announces Two New Hires

Canonsburg, PA – CONNORS GROUP, a market leader in productivity improvements through people-centric labor and process optimization, is pleased to welcome two new Directors to the team: Bruce Dzinski and Jim Malafronte.

Bruce Dzinski joined Connors Group as a Director and brings 13 years of consulting experience and over 35 years total industry experience; including executive leadership in Distribution, Logistics and Transportation. Bruce’s areas of expertise include DC design and process improvement, transportation and network evaluation, facility capacity, store operations, labor management, e-commerce and omni-channel fulfillment, retail and wholesale fulfillment and operations. Bruce will be in the Philadelphia area where he resides with his wife Donna and keeps active by watching and participating in sports as well as maintaining a vigorous community and social schedule with friends, family and their three Aussies (Zephyr, Miles and Maizy).

Jim Malafronte joined Connors Group as a Senior Director and has over 30 years’ experience in retail and consulting, both with big four and boutique firms. Jim’s areas of expertise include retail operations, workforce management, process reengineering, customer experience, and in-store retail technology. Jim will be working out of the Connors Group Atlanta office and enjoys physical fitness, watching college football, and music.

 “We are very excited to have Bruce and Jim join Connors Group. We are experiencing tremendous growth and their expertise will be invaluable to our clients,” said, Jeff Peretin, President of Connors Group. “The fact that we were able to attract industry experts like Bruce and Jim, speaks volumes about our culture and the level of work we are producing for our clients.”

Top 3 Reasons for Mobile Device Adoption in a Retail Environment

This is the second in a series of blogs – in which I will be reviewing and discussing a variety of technologies that are redefining how some retailers operate their stores.    

Mobile Devices

Given how ubiquitous mobile devices are in our personal lives, and the amazing benefits and usefulness mobile devices provide in our personal lives, I’m always surprised by the number of retailers, particularly “bigger” box retailers that have not fully-adopted mobile devices within their stores…

The benefits of equipping Store Associates or at least Store Managers are vast in a retail setting.  Years ago, I could understand and appreciate the hesitation to invest in mobile devices due to cost or concerns about device reliability.  However, those two major roadblocks are largely gone – mobile devices continue to rapidly drop in price and the stability of today’s operating platforms is fantastic.

To further the argument for mobile device adoption, here are the top 3 reasons that I’ve seen span across all retail verticals and are typically the foundation for any ROI analysis done by a retailer when investing in mobile devices…

Top 3 Reasons for Mobile Device Adoption in a Retail Environment:

1 – To Save the Sale:

Store Associates equipped with mobile devices can quickly and easily play defense by offering customers in-store ordering options for out-of-stock or specialty items. Perhaps even adding on-the-spot incentives, like additional discounts and/or free shipping for ordering in-store, as opposed to leaving and either going to another retailer or visiting an online competitor.

2 – To Improve Efficiency:

The labor crunch is on in retail.  Retailers are scrambling to look for ways to make their Store Associates more productive.  Like in our personal lives, our smartphones can largely eliminate the need to use our computers.  The same holds true in a retail setting. Instead of forcing Store Associates to make countless, non-value-added trips to the back room to use the “office computer”, mobile devices allow Store Associates to act without leaving the sales floor.  Looking up prices, checking task manager, printing signage, responding to email – the list goes on and on.  Simply put, a mobile-equipped Store Associate is significantly more efficient and is better positioned to deliver customer service – a true win-win.  

3 – To Speed-Up Communication:

Retailing is fast paced.  and that creates challenges. Store Associates often need to react very quickly.  For grocery retailers, reacting quickly to recalls can literally mean the difference between life and death. For mass retailers, reacting quickly to a price change or out-of-stock notification can mean millions of dollars. Regardless of the situation, relying on traditional forms of communication – email, phone call, intranet posting, etc – to notify Store Associates of these situations simply does not cut it anymore.  Reactions in retail need to be near real-time and the best way to achieve that is by equipping Store Associates with mobile devices.

Bottom Line…

 Mobile is now a fundamental retail technology that should be deployed by all retailers, given the ever-reducing price point of the technology and the immediate, tangible benefits.

Retail Evolves into Instagram

In a recent press release, Instagram announced the ability to sell products directly through a post. At first, the new functionality will be tested and only available for a select number of brands. If Instagram’s test proves successful and expedites the buying process (which has been proven to increase sales conversions), we could see an influx of brands and “influencers” rushing to take advantage of this new form of Frictionless Commerce.”

Of course, for retailers there will be multiple questions to consider:

  1. With all the data breach concerns (Facebook is the parent company to Instagram), how will they ensure the personal data of their customers is safe?
  2. How will brands need to adjust their manufacturing to ensure they can meet customer demand?
  3. How will brands manage logistics as customers have grown accustom to getting shipping for free and delivered in less than 2 days with Amazon?
  4. The biggest question still lies with Brick and Mortar locations. Will this continue to move sales to be more online away from retail locations? Or could this evolve to allow pick-up in store through an Instagram purchase? 

As retail continues to evolve and the desire for customers to buy what they see, it is imperative for brands to stay ahead of the curve. In this case, retailers will need to ensure they are dedicating the time need or bring in the proper resources to ensure they are getting the most out of these or any new/disruptive solutions.

Cash Wrap Improvement and Throughput Considerations

Customers hate to wait. And, according to M.I.T. operations researcher Richard Larson, widely considered to be the world’s foremost expert on lines, their perceived wait time is longer than actual wait time by as much as 36 percent…

To remedy this, retailers have employed many tactics over the years to reduce customer wait times and perception.

For example, …

  • Moving from multi-queue to single-queue
    • This eliminates that frustrating feeling that we all have experienced at the grocery store when the person in front of us seems to be paying with pennies and fumbling with their coupons
  • The move towards self-checkout to provide customers with a do it yourself, you are in control experience
  • Adding the merchandise throughout the queue to distract customers with the added hope of incremental sales via impulse buys
  • Mobile checkout options

And while these tactics can help, many retailers are taking it much further by looking to  simple Industrial Engineering concepts that can save seconds and to impatient customers, seconds add up…

  • Cash Wrap:
    • Verifying that every cashier has the supplies and items they need to effectively process transactions
  • Process Improvement:
    • Improving or eliminating existing transaction process steps
  • Workflow:
    • The order that the customer transaction is processed and the sequence of customer prompts to drive desired behaviors
  • Technology / POS Updates:
    • A more logical flow of screens and steps within the POS or the reduction of button presses.
  • Labor Standards:
    • Know the cashier expectations
      • Manage to those expectations and track Cashier performance

Since the Cash Wrap is the last experience the customer has with the retailer; retailers need to consider the value of seconds…Not just as a freed labor opportunity, but as an opportunity to increase the customer throughput and reduce lost sales due to line abandonment.