26 November 2009

James Gurney, director of solutions consulting at Ideaca Knowledge Services explains how effective back office systems free up managers time for better front of house contact and customer service. 

Amidst the discussion of global retailers adopting sophisticated multi-channel strategies, a significant number of mid-size and large regional retailers continue to encounter growing pains of their own. Increasing levels of competition, relentless price pressures, little market differentiation and declining customer loyalty have made it clear that customers no longer have the time or inclination to reward less than stellar service at the storefront. Imperative to improving this customer experience are enthusiastic store managers with the time available to cater to customer needs in order to ensure necessary product or resources are in place to retain their loyalty.

This must be achieved while ensuring administrative elements to support the deployment of targeted promotions, new products or product bundling are maintained. Whether in a corporate-owned or franchise model scenario, it is this multi-dimensional balancing act of corporate needs, storefront interests and keeping customer service top of mind that is the challenge faced by many medium and large regional retailers today.

In the absence of effective centralised merchandising systems, the administrative burden of reporting sales and inventory data to satisfy corporate data demands competes directly with the storefront objective of being on the sales floor and focused on the customer. Managers cannot afford to work double duty as bookkeepers and accountants, but need to focus their energies on generating positive customer experiences, whether through personalised service, training and coaching associates through examples, or helping associates recover after a busy period. Ultimately, more time on the sales floor translates to greater visibility into the pulse of the store and staff. While the degree of this conflict between corporate and storefront varies according to the sophistication of the retailer, the mere presence of conflict results in customers getting caught in the middle.

In our experiences at mid- to large-size retailers, the inefficiencies of manual back office tasks not only detract from customer focus but are also prone to error. Inefficient tasks can be greatly reduced with a centralised merchandise system that lays the foundation of a successful partnership to meet competing demands. From a corporate perspective, a centralised application enables retailers with multiple warehouses, offices and retail locations to effectively manage stores through centralised replenishment, assortment planning and supply chain management, ensuring the right product is in the right place at the right time. Users can quickly and efficiently determine the daily turnover at each store, have a better insight into network-wide inventory to help reduce stock-outs of best sellers and determine slow movers that potentially should be promoted or discounted to sell-through. With enterprise-wide aggregation of transaction data, corporate business users are provided with the ability to analyse data, enabling timely and informed decision-making that drives sales effectively and helps reduce costs. With this information in hand, an integrated system can then expedite product launches and ensure consistent application of store policies across the retail network. Examining the retail network as a whole, the analysis can also be used to identify and focus on stores that either require attention or are profitable and are good candidates to leverage their success across the network.

For the store manager, benefits do not simply end with the reduction of the administrative burden, as the implementation of centralised merchandising systems can streamline the sales auditing process, support site-level bookkeeping for a franchise-owner and enable better store level decision making. The use of tools like role-tailored dashboards with relevant key performance indicators and data related to product sales, cashier analysis and promotion effectiveness are key contributors to ensuring store success. Managers can expect more efficient store operations through automated exception reporting, and actionable reports that can reduce shrink and identify staff training deficiencies using real-time data from their POS systems to highlight voids and other transaction errors.

By reducing the administrative burden and introducing performance management tools delivered through the implementation of a centralised merchandising system, the corporate and store-front demands can be balanced and bear substantial fruit. Consider this example. When the effectiveness of store managers is improved in an adequately incented system, they can then expect to receive higher rewards and recognition. From a corporate perspective, streamlined access to information coupled with the ability to quickly and consistently introduce new products, pricing and promotions deliver key operational benefits to the organisation.

Strategic initiatives can also be realised – top-performing managers can quickly be identified and leveraged across multiple locations, encouraging further regional growth. A win-win situation is formed quickly in affected retailers as rewards to both parties are enabled by a fully integrated system. In the absence of such systems, realisable competitive advantages within the retail network will remain deadlocked, creating a difficult choice for store managers of risking customer satisfaction to complete administrative back-office functions.

This article first appeared in the Retailspeak Partner Guide 2010

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