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.

Fix Operations Before Fixing the Labor Hours

Retailers in today’s climate are wrestling with the “right” amount of labor to supply to their stores to drive the experience and returns expected.  This too often becomes a paradox between what stores really need to fulfill the brand promise and what the company can afford. Comparing top down financial labor budgets and bottom up operational based budgets is and apples to oranges activity. Attempts to reconcile the dichotomy are often compounded by operational problems at the store level.  Most companies are unable to articulate the root cause and associated impact of what is driving the disconnect, which leads to addressing the wrong issues. 

 Top down financial budgets are primarily calculated using historical data, such as labor as a % of sales (with some store specific influences), most often compounded by some arbitrary improvement goal.  Financial budgets tend to not only ignore the actual labor required, but also do not provide operators with insights into how they should spend their labor. Bottom up labor is calculated based on the actual task work that occurs in the workplace and are rooted in the service expectation levels defined by the brand promise. Bottom up labor budget models too often tend to be raw labor, and the full picture of required labor hours is not revealed until scheduled shifts are applied and staffing factors kick in (minimum shift lengths, wage rates, meals and breaks, utilization, etc.). This causes many bottom-up labor budgets to be understated, which further complicates the comparison to financially-driven budgets.

 Where most retailers come up short is ensuring that the stores are not only funded correctly, but also that they are doing everything they are supposed to be doing with the labor. It’s often an effectiveness question, rather than a quantity question. If stores are performing poorly, increasing their labor budget will not necessarily have a positive impact on their results. But reducing their labor hours when they perform poorly certainly increases the problem. 

Forcing store managers to determine how to apply labor cuts, when they too often are struggling to be effective with enough labor, yields unpredictable results. The first activities to be “cut” are usually the ones that are least tangible; customer service, cleaning and visual presentation…However, the decision on what to “cut”, when left up to the store managers to decide, will be highly inconsistent and dependent on personal priorities and experiences. The darkly ironic impact of these decisions is that they almost always degrade the top line, which only forces the company to exert more pressure in the next round of budgets.

This is the danger in starting with technology and engineering without addressing the execution element first. Chronic underfunding, without guidance on which operational standards to relax, will deteriorate any returns that are expected from fixing the funding. After stores have become accustomed to managing their operations in a constrained labor environment, if relief is provided it will not go where it is intended because stores have become used to a “new normal” and often don’t recognize where the relief is needed. Applying a mathematical “fix” by giving stores increased labor budgets, even when founded on an activity-based labor model rooted in engineered labor standards, may only compound underlying execution problems.

The most-successful retail leaders are taking a step back and understanding that transforming their operations first — then building their labor model on top of this now solid foundation – is the only way to effectively recapture the customer experience and deliver the brand promise that made them successful in the first place.

RILA 2019 Link Conference Recap

On February 24-27, 2019 The Retail industry Leaders Association (RILA) held their annual conference in Orlando, Florida. As a first-time attendee, I found that the conference delivered on its promise of engaging topics. There are a couple of themes and three specific sessions that I found particularly impactful.

In terms of themes, the one topic that was on top of mind in most sessions was labor. This manifested itself in conversations around sourcing, developing, managing and retaining labor in an era of extremely low unemployment.

Gary Maxwell, from Dollar Tree, laid out a simple yet effective strategy for combating the recruiting challenges experienced by those in the Supply Chain and Warehousing industries.

He recommended:

  • Expanding the recruiting pool by going after non-traditional workers
  • Connecting jobs to a higher purpose to combat some misconceptions about the quality of the work
  • Selectively automating functions to reduce the physical demand of the job

In a panel session, Chris Bright VP, Supply Chain Operations for Nordstrom highlighted the need for companies to consider the cost of attrition when planning their labor needs. He drew the analogy between a labor model and a car, where technology provides the power, engagement is the fuel, but culture is the transmission that allows all the potential to become reality. He also emphasized the need to focus on people to achieve operational goals.

There were numerous wonderful discussions and presentations from Dick Johnson of Footlocker, Arthur Valdez of Target, and Dean Carter from Patagonia among others…But, the presentation that stood out the most for me was from Barbara Kahn of The Wharton School of Business.

Barbara spoke on the Shopping Revolution and outlined a model to help explain, among other things, the emergence of Amazon as a world power. She outlined four strategies for differentiation, and showed how successful companies dominate one, leverage it to become a leader in another, then maintain a “good enough” position in the other two. The four quadrants in her model break down between product benefits and customer experience on one axis and increasing pleasure versus eliminating pain on the other axis.

The four quadrants are:

  Product Benefits Customer Experience
Increase Pleasure Brand (i.e. Zara) Experiential (i.e. Sephora)
Eliminate Pain Points Low Price (i.e. Walmart) Frictionless (i.e. Amazon)

Suffice it to say, I am excited to read her book, The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption.

I found the RILA 2019 Link conference to be of tremendous value and cannot wait to go back next year. I would highly recommend it to anyone who is looking for a fresh perspective on the current state of the Supply Chain industry, who enjoys networking with other senior executives going through similar challenges, or for anyone with an inquisitive mind who just enjoys learning.

Click and Collect, BOPIS and Curbside

Click and Collect, BOPIS and Curbside

It’s been two years since Grocery Dive published this article. Chris Kelly, one of our Connors Group Directors is quoted and much of what he said then is still relevant today.

READ IT HERE

Some Key takeaways that still hold true:

  • Digital retailing is crowded. What once was viewed as a promising new revenue stream, is quickly becoming as complicated as brick-and-mortar.
  • The concerns over labor costs, competition and slim margins are still at the top of Executive’s minds.
  • Convenience for the consumer comes at a price for the supermarket.
  • To move into the black, retailers need to draw in new customers and get existing ones to make more of their purchases with them.
  • Risk eroding the in-store experience e.g. workers crowding the aisles as they pick out products.
  • For consumers loyal to one retailer, e-commerce can encourage them to build bigger baskets by recommending products, running digital ads, saving past orders, among a host of other features.

What personal experiences with Click and Collect, BOPIS and Curbside resonate the most?

Leave your comments/thoughts below.

Connors Group Announces Partnership with Former Giant Eagle Executive

Canonsburg, PA – CONNORS GROUP, a market leader in productivity improvements through people-centric labor and process optimization, is pleased to announce a partnership with EWT Consulting, Inc.; Gene Tommasi, President of EWT Consulting, Inc., will serve as an Executive Advisor to Connors Group. 

Tommasi, formerly the Executive Vice President of Retail Operations and Supply Chain at Giant Eagle, brings over 35 years of experience and industry insight to Connors Group. While with Giant Eagle, Tommasi was instrumental in spearheading hundreds of successful initiatives where he oversaw corporate retail operations, wholesale sales, distribution, real estate and construction.

“We are excited to welcome Gene onto our team”, said Jeff Peretin, President of Connors Group.  “EWT and Connors Group are natural partners given our complimentary methods to helping clients improve their businesses through the daily pursuit of operational excellence.”

Tommasi emphasized that “Partnering with Connors Group is a great opportunity for me to leverage my experience in the retail and wholesale industries to help clients meet the needs of their customers through the implementation of optimized operations, distinguished customer service, and a highly engaged workforce.”

About Connors Group

Connors Group was formed in 2008 with the mission of helping our clients achieve real, measured and sustainable operational improvement.

As a proven management consultancy specializing in workforce performance and productivity improvement, we help our clients achieve long-term operational success through proven methodologies and extensive field experience.

About EWT Consulting, Inc.

Founded in 2018, EWT Consulting, Inc. provides clients continuous improvement through operational excellence, work design development, distinguished customer service and cost elimination. EWT Consulting works within all industries, but specializes in retail operations, manufacturing and supply chain.   ed0 Smart

Wrapping up #NRF2019 with Our 3 Key Takeaways

The NRF Big Show is the world’s largest retail conference and expo. And while the official numbers aren’t in yet, in years past, the show has boasted over 37K attendees, 16K Retailers and more than 800+ exhibitors from 99 countries.

The sheer volume of new ideas, technologies and companies we experienced this past week was incredibly inspiring. And while we could create a top 50 or even 100 list, we’ve settled on 3 key takeaways from #NRF2019:

  1. Associate Engagement
  2. Retail Analytics and Customer Insights
  3. Machine Learning and AI

Associate Engagement

The daily pursuit of continuous operational improvement shouldn’t come at the expense of a companies most-valuable asset, it’s employees. As a people-centric organization, it was great to see that there were many new technologies and platforms focused on improvements in task management and employee communication. Tools and apps like those focused on shift-swapping are quickly becoming organically adopted by employees, which in-turn is garnering the interest of management. There is a clear win-win when associate engagement and morale are improved.

Retail Analytics and Customer Insights

Pulling disparate information sets together, like online sales, instore sales, CRM and traffic data is challenging. There were many offerings from organizations promising a more holistic view of the customer. Queue management, shopping patterns, dwell time, and getting employees where they need to be at the right moment were also topics and focal points for a variety of dashboards and data aggregation tools promising the holy grail of actionable consumer insights.

Machine Learning and AI

According to this NRF session summary, by 2021 75% of retailers will be using AI /Intelligent Automation for supply chain and demand forecasting, consumer intelligence, and marketing campaign management. And while we agree that adoption is and will continue to occur, much of the hype around AI and Machine learning is very reminiscent of the “Big Data” and “Cloud” buzzwords and phrases we’ve been seeing and hearing now for the better part of over 5 years. That said, industry giants like IBM, Google, Microsoft and Salesforce will continue to lead the charge, while many will take the wait and see approach. Either way, it’s here and not going away, but right now it still feels like there are currently a lot of half-baked solutions out there looking for problems to solve.

What were your takeaways?

7 Success Factors for Labor and Workforce Optimization in 2019

Many of our clients are making Workforce Optimization and Labor Management a top priority in 2019.  Our experience has shown the following 7 factors to be critical for success in any type of workforce productivity initiative.

  1. Build from the Bottom Up – Companies that adopt a Lean / Continuous Improvement culture first, have better overall success and adoption when implementing technology platforms like Labor Management (LMS) and Workforce Management (WFM).  The key is to have a solid operational foundation before adding technology.
  2. Lead from the Top Down – Leading change and improvement needs to be modeled from the Executive level down. The Executive team should establish a cultural foundation for improvement in order to demonstrate its importance to the associates.
  3. Succeed and Sustain from the Middle – Ultimately Operations needs to own the day-to-day program and be supported by Engineering, IT, HR, and Training. A grassroots Engineering effort cannot sustain long term cultural change without operational support.
  4. Engage Early and Often – Transparent communication and Associate / Supervisor involvement is critical for buy-in of the program.  Demonstrating the connection to the customer needs to be addressed early and communication that the cultural and operational improvements are bigger than the individual.
  5. Make it Fair – The confidence and success of the entire program relies on fair and equitable performance expectations.  Engineered Labor Standards (ELS) are the foundation of accurate performance expectations.
  6. Train, Train, Train – Front line Management (Supervisors) are being asked to deliver more today than ever before.  Best-in-class companies are providing extensive training for Supervisors to aid in improving their leadership and soft skills along with Lean and technical skills needed to succeed in a Labor Management environment.
  7. Celebrate Success and Reward – When results are achieved, reward and celebrate successes Make it fun and provide motivation for the entire team.

Are there other factors that have been crucial in your continuous improvement journey of Labor and Workforce Management?

We’d love to hear from you!

Current Trends and Business Challenges in Supply Chain Labor – Part 2: Optimizing the Workforce

Last week, we explored the business challenges and trends in supply chain labor. In part 2, let’s take a deeper look at how companies are addressing those challenges.
Best-In-class supply chains are addressing workforce challenges by taking a comprehensive approach to their labor strategy…

When observing workforce optimization in warehouse and distribution centers, we can typically refer to three areas that comprise the building blocks of effective Employee Engagement.

Experience shows that best-in-class companies take a Crawl – Walk – Run approach to the implementation of workforce optimization strategies. The overall journey typically requires a cultural transformation within an organization, but the benefits outweigh the efforts with improvements in employee engagement, retention and bottom-line results
If we take a closer look at the three areas, here is what’s working:

Lean Warehousing:

  • Process Standardization works because it produces documentation for processes across all shifts, reduces variability, makes training of new employees more effective, increases safety and provides a baseline for continuous improvement.
  • Establishing a Baseline for Measurement is important, because it can reveal how much improvement has occurred through incremental changes.
  • “Walking the Floor” is an ideal way to engage employees in real-time and provide opportunities for coaching and learning.
  • Process Improvement is continuous, effective, necessary and is at the core of Kaizen
  • Recruiting and Hiring Best-Practices are the hallmarks of any successful business with a people-first culture.
  • Eliminating Waste across all aspects of the business enables investment in additional resources.

Workforce Performance:

  • Establishing productivity, quality and safety targets is an effective way to set a reference point for expectations.
  • Engagement and Education is a favorable way to encourage positive behavioral change in employees.
  • Reinforcing desired work habits is a positive way to reiterate the goal of continuous improvement.

Workforce Staffing and Planning:

  • Utilizing Technology to establish Engineered Labor Standards with software products like LaborPro™ is an effective way to better manage ever-changing labor models.
  • Performance Reporting is imperative to highlight the effectiveness or shortcomings of established and agreed upon goals and targets.
  • ROI Analysis confirms that all efforts point to improvement to the bottom-line.

Final take…

The challenges in supply chain labor will continue to evolve, just as trends will continue to change. By Staying nimble and relying on tried and true Lean Principles and Performance Goals, best-in-class companies will not only endure but will also thrive in today’s challenging environment.