Managing the Store Transformation Process: Why it’s imperative to transform your physical store
This White paper explores how a new empowered customer experience can be achieved. It also addresses the second essential step, the transformation plan and metrics that will be used to measure success. This key step enables the creation of the store transformation strategy, vision and roadmap.
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Managing the Store Transformation Process: Why
it’s imperative to transform your physical store
For decades the physical in-store shopping experience has largely
remained unchanged, yet the world we live in has continued to
evolve. This is having a massive impact on the way retailers deliver
customer experience in the store. Retailers are challenged by never
ending pressure to increase margins and store sales, escalating
labor costs, customer demand for improved service, as well growing
competition from discounters to pure play e-tailers. While at the
same time, retail customers have been exposed to an explosion of
new service offers and information through technology-enabled
solutions.
Societal influences are impacting the way customers live and
how they shop.
1. Use of social sites for shopping insights and networking
2. Proliferation of digital engagement tools in all areas of their lives
3. Ability to shop anywhere, anytime
4. Concerns about privacy and safe-guarding information which
needs to be clearly communicated and addressed.
Unless retailers awaken to the reality
that this is not just a matter of
enabling new ways to shop, but a total
shift in service philosophy, they will
incur a higher cost of sale, struggle
to stay relevant, and miss meeting
customers’ expectations of self-
empowerment.
This paper explores how a new
empowered customer experience
can be achieved. It also addresses the
second essential step, the transformation plan and metrics that will
be used to measure success. This key step enables the creation of the
store transformation strategy, vision and roadmap.
• Increasing pressure
to boost margin and
store sales
• Escalating labor
costs
• Rising customer
expectations
• Growing
competition from
discounters and pure
play e-tailers
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Why create a frictionless experience?
A persistent challenge for many retailers is that they lag behind their
customers’ expectations of what makes a good service experience.
New standards and expectations are being set by the likes of Apple
retail stores and Amazon. Store transformation is about challenging
and changing ingrained perceptions about what a customer
experience is and should be, and transforming the end-to-end
shopping experience.
The evolving customer service experience is bringing brand promise
and technology together.
The consumerization of retail has had
a large impact, and it continues to
shape the future of retail. Customers
don’t think about channels when they
shop, they just want to shop with a
retailer anywhere, anytime and have a
consistent, seamless experience.
The customer experience in the
physical store needs to be as flexible
and seamless as it is on-line. Expecting
customers to continue the chase for
the right queue to join or undertake the olympian race of packing to
keep up with the cashier’s pace will not meet expectations and will
further push customers to find alternatives.
Simply adding more labor to differentiate the store experience is
an attempt to build success on an unsustainable foundation—and is
surely a recipe that will fail to meet customer expectations.
The customer experience
in the physical store needs
to be as flexible and
seamless as an on-line
shopping experience.
Average wait time is
4.2 minutes.
Source: http://www.hrpub.org
The experience of the
customer is bringing brand
promise, technology and
operational capability
within the store together.
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Why focus on the physical store experience?
While all channels are important to the retailer, the physical store still
remains a critical element in connecting and engaging with customers
as well as facilitating their ability to buy.
Even with the growth in on-line retail, many purchases are still made
within the physical store. While the percentages vary by format, about
90% of grocery purchases are still completed in the physical store and
in many countries this would be nearly 100% of all purchases.
We believe it is critical to have a dual transformation strategy
that ensures equal focus and attention on both the on-line and
physical stores.
Retailers who are further along in their store transformation
journey are now using new ways to serve customers as a competitive
advantage and offering service experiences that their competition
cannot easily replicate.
Speed up the
checkout process
Enhance personalized
service/sales assistance
Empower associates
with mobile tools
Provide flexible
fulfillment options
Improve mobile
shopping experience
Increase customer loyalty
Optimize the
customer experience
Create a seamless
experience across channels
Top 3 Customer Experience Priorities
51%
51%
44%
36%
29%
24%
18%
16%
Source: 2016 Customer Experience/Unified Commerce Survey (Boston Retail Partners 2016)
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Key Considerations
In mature markets, digital touchpoints now influence up to 49% of
retail sales, so understanding how many customers ‘pre-shop’ on a
retail site or visit a store as a result of a marketing email is critical to
more accurately value the eCommerce channel.
Digital Influence Factor
Mature Markets
Digital
market
leader
cohort
Middle
cohort
U.K.
Netherlands
Germany
Australia
Canada
U.S. 49%
41%
40%
30%
30%
28%
Source: Navigating the new digital divide: Global edition, Deloitte, February 2016
Typically 80% of a
retailer’s business comes
from 20% of its customers.
Identifying those most
valuable customers and
understanding their
shopping habits is critical
to cultivating loyal,
brand enthusiasts.
“The customer journey can be simple or complex, and is
different for each customer and individual purchase hence the
need to challenge ingrained thinking on what is good customer
service. The purchase journey may begin or end in the store
or on-line, and along that path it often has tie-ins to social
media activity. Retailers have the opportunity to optimize and
enhance this experience to drive increased customer loyalty
and service differentiation. This is why ‘start anywhere, end
anywhere’ cross-channel capabilities are so important, like
enabling a unified or shared shopping cart across channels.”2
2
“UPS Pulse of the Online Shopper,” June 2015
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As this trend continues, the following will become key
considerations:
• Understand cross-channel behavior
• Focus on creating easy, useful and enjoyable experiences
• Understand impact—measure eCommerce user behavior before
and after they purchase from each channel, not just one channel
• Personalize the experience—one size fits all will seem archaic
• Ensure absolute transparency
• Create a seamless experience
How do we provide the expertise?
So, how do retailers bridge this gap between ever-changing customer
expectations and pressure to meet business objectives?
We believe the answer is Customer
Experience (Cx) Retailing:
Cx Retailing puts your customers at
the core of every decision you make,
every product you sell, every process
you have, and every way you reinforce
your brand. To achieve this, retailers
are transforming their businesses
and changing the way they connect,
interact, engage and transact with
their customers.
As part of this paper we would like to share a framework that
highlights three main components to evolve towards Cx Retailing
and to create successful customer-focused shopping experiences for
your customers—where customers are at the hub (or the heart) of
everything you do.
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Customer Experience (Cx) Retailing Components
1. Unified Commerce: Unified Commerce goes beyond omni-
channel; it includes all the retail functions required to serve
customers how, when, and where they choose and integrates
these shopping channels throughout the supply chain to drive
efficiency, service, and profitability. It goes beyond having
multiple shopping options for your customer (On-line, mobile,
in-store) and creating the operational excellence to deliver a
superior experience by understanding your customers, being
able to offer the right balance of products and pricing to deliver
value, and to provide a safe and secure environment for your
customers and their data.
2. Actionable Insights: We focus on helping retailers have the
right data, at the right time to make better decisions. Break
down silos across your organization, and between your business
partners, so that information is leveraged as an asset, not an
afterthought. It also means having a deeper understanding of
your customers, and of the little things that can make your retail
operations even more successful—ensuring profitable growth
and happy, loyal customers.
3. Store Transformation: Is about providing customers with a
seamless empowered experience and no longer “guessing” what
makes a good customer service experience. Providing solutions
that meet and exceed customers expectations. Changing the
service model to provide the operational excellence to ensure
customer experience meets expectations and overall delivers a
more efficicent service model.
We see Cx Retailing as the key to
delivering a frictionless customer
experience across all channels to truly
meet customer expectations
and stay relevant today and tomorrow.
While there are 3 key areas to Cx
Retailing, this paper is focused
specifically on Store Transformation.
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What is our vision for delivering customer
store transformation?
A key part of successful store transformation is the vision and strategy
of how the customer experience will look and be enabled. As part of
our approach, we help retailers create and develop their vision and
strategy for their future customer experience, in essence—creating the
framework strategy for: Reimagining Your Customer Experience for the
Physical Store.
We then translate the transformation strategy into working prototypes
that give life to the process. Our decades of experience in business
consulting and store transformation enables us to simplify a complex
service business into a comprehensive and streamlined user experience.
To deliver Store Transformation, we provide innovative solutions
that redefine engagement and ensure flexible shopping options for
customers both inside and outside the store by:
• Redesigning the physical footprint of the store to make
shopping easier, more efficient and more enjoyable
• Creating an environment where the right amount of service
points can be open all the time
• Offering multiple purchase points inside the store so customers
can choose the method that’s right for them
• Having the same (or similar) digital engagement points inside
the store that have become common on-line
• Offering mobile solutions that help customers shop,
research, and experience your brand—with relevant
and personalized information
• Including alternative fulfillment options—for both on-line and
in-store purchases, including home delivery, alternate locations
(lockers) and more
• Deploying solutions that support mobile or wearable
technologies to better enable store associates to support,
manage, and service customers
• Empowering staff and customers to deliver and experience
seamless checkout
• Creating a best-in-class framework to support
customer adoption
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Store transformation
No matter what new innovations or technologies are introduced to
enable multiple channels within retailing, the physical store remains at
the heart of the retail experience, and it isn’t going away. In fact, over
90% of global retail revenue came from in-store purchases and is not
predicted to drop significantly over the next few years. Source: Emarketer
Dec 2015
But what will the store of the future look like? The way customers
begin and end their shopping journey in the store will change, and
because of this, the purchase experience of the future
will look very different from what it does today.
A seamless checkout—enabling retailers to offer in-store customers
the same ease of checkout that you do on-line. This means rethinking
the traditional point-of-sale (POS) and how you can make it fast, easy,
flexible and convenient by empowering your customers. A flexible
seamless checkout enables an “always open” checkout model. It
empowers store associates to deliver service the way the customer
wants, creating a customer driven experience.
Store transformation is about
evolution, not revolution. The pace at
which customers will adapt and adopt
new store experiences needs to be
carefully monitored and considered.
Continually checking the voice of
the customer and addressing poor
customer experiences is imperative.
By taking the Cx Retailing approach
to store transformation, we ensure
that the customer remains at the heart
of what is enabled.
Map customer behavior
Understanding and
mapping your customers’
purchasing habits and
decision-making processes
is absolutely crucial.
Forget about the in-store
experience.
The shopping experience
has to be one fluid
experience, where
shoppers can move
from laptop to tablet
to smartphone to store
without missing a beat.
DO
DON’T
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Here are some innovations that form the cornerstone of a
transformed store experience that are being enabled today…
• Assisted self-checkout for increased efficiency and service
• High-velocitycheckouttoaddresslargebasketsandtoreducequeues
• Flexible checkouts—creating a flexible “always open” checkout
environment to address peak periods and optimize labor scheduling
• Self-service pay stations for items that were self-scanned or
ordered on-line and collected in store
• Digital self-service item ordering
• Mobile shopping (scan-as-you-shop) to provide customers a
unique checkout experience—digitizing the shopping list
• Personal shopping for click and collect, home delivery or
in-store orders
• Dispersed service points to provide customers greater choice and
flexibility of when and where to checkout
• Collection points—offering choice in fulfillment beyond
curbside pickup
Provide engaging visual
experiences
Omni-channel is all about
blurring the lines between
the digital shopping
experience and the in-store
shopping experience.
DO
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Here are a few examples of our near term vision for innovative
checkout experiences:
• Image-based solutions to assist customers and store associates
with item recognition, such as produce, to improve the
experience, simplify checkout and reduce the risk of shrink
• Support for Digimarc imperceptible bar code technology to speed
throughput, increase accuracy, and opening the way to greater
item information
• Convertible checkout to enable a fully-flexible front end
that can easily adjust to peak periods to optimize labor and
reduce queues
• Hybrid solutions, like high velocity checkout, to address large
basket sizes and empowering the store associates to serve
customers the way they would like to be served whether that’s
help with unloading, scanning, packing or the entire process
• Data analytics to help aid store associates and management
with best-in-class service delivery
• New security solutions that go beyond just measuring and
monitoring item weight
• Adaptive security to automatically lower security settings for
‘trusted’ customers and embracing alternative integrated asset
protection models
• Actionable data to aid store management in managing a
fully-flexible service environment
• Innovative cash and coin recycling capabilities to remove the
physical need to manage cash while reducing cash inventory,
handling and management costs
• Enable ease of customer identification, coupon redemption
and payment
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How to transform your physical stores
to embrace and over deliver on your
customers’ expectations?
Understanding the equal importance of your physical stores to
your other channels and the reality of ever increasing customer
expectations, creates acknowledgement of the need for change.
Embarking on this change program requires organizational
commitment. While the introduction of new processes and technology
can drive organizational change, the CMO (Chief Marketing Officer) or
Business Owner must provide a substantial contribution towards the
business and customer requirements and objectives.
In building a successful store transformation program, we have
identified the factors that can justify making a significant, structural
change to your existing business model. Our consultants can provide
you with a set of strategic questions that will help to determine the
impacts and benefits of this change. It’s essential to make a realistic
assessment of the market you operate in, the business you operate,
and your ability to undertake a successful change process.
We can highlight the necessary changes to your business and identify
key areas and obstacles that are present.
It is important to remember successful store transformation is not a
one-off activity, but a journey. It’s an ongoing commitment to evolve
with changing customer needs and expectations.
So how do you get started on the path to change your in-store
service delivery and redefine the total customer experience? That’s
how we can help—NCR can partner with you to analyze your
customers’ journeys and help transform your store layout and
delivery to best meet the needs of your customers, aligning this to
your overall vision and strategy. Then we help build a customized
blueprint for success that will help guide you in the gradual
evolution of your stores and a phased, prioritized approach to
reaching your vision and objectives.
Omni-channel retailers
are reporting 89 percent
average customer
retention rates—compared
to just 33 percent for
traditional retailers.
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Our “Paper Pilot” based approach, aligns to your vision and helps
define a roadmap for the pilot with a focus on understanding customer
needs, adoption and operational fit. This approach provides insight and
conclusions to proceed further, based on real store experiences.
Evolving to a dynamic service model requires the alignment of
customer shopping missions and preferences to store transactional data
to create an optimized, flexible service model.
Through our proven transformational approach, we facilitate:
• Visualization on the need to change within the retailer’s organization
• Visuals on how this new customer experience will look
• Insights on what different enabling elements of the change could
look like based on our TOUR (Target Optimized Utilization for
Return on investment) modeling and associated methodology
• Recommended configurations to achieve optimal service capacity
and customer adoption
• Creation of a technically and operationally‑optimized solution
• Evaluation and quantification of key performance indicators
(KPIs) that enable measurement of successful transformation and
quantification of return on investment (ROI)
• Solutions built on operational requirements and functionality to
meet successful customer adoption and benefit realization
• Centers of excellence to ensure store associates are empowered
with training to help them transition into the new role of a
customer service associate
• Process transformation to streamline operations and create
transparency that promotes accountability and engenders better
decision making at every level of the organization.
• A solution ecosystem that provides a framework to support both
the customer and the associate-enabled technologies
• A store transformation roadmap that includes both solution and
operational enablers
• An ability to monitor customer experience to ensure expectations
are being met
• Proven best practices that enable the organizational areas that
need to be changed to own and support customer adoption
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Summary
Retailers who continuously transform their business and processes
achieve new levels of operational excellence. They benefit from
reductions in transaction costs and transaction time, while also
increasing the quality of the customer experience. Over time,
unnecessary processes are eliminated and the remaining ones are
automated, and ultimately, integrated.
Taking the initial steps with the easy, less complex aspects of store
transformation builds a successful framework and ensures the critical
elements of organizational adjustment, commitment, and customer
adoption are achieved.
While tech savvy consumers have a higher expectation of technology
enablement to assist them while shopping, they are also equally
frustrated and intolerant of poor delivery or experience.
For for many decades, the retail service model has largely remained
unchanged. The time is right to change the retail service paradigm,
but to be successful the new service model must empower both
customers and store associates to ensure the physical store remains
relevant and the hub of the shopping experience.
By working in partnership, we help retailers to align vision to a
customer empowered store experience building a prioritized roadmap
that creates the evolving store service vision of today, through to 2020
and beyond.
Written by
Kalyna Stiles—NCR Global Retail Business Solutions Director
Source References
2016 Customer Experience/Unified Commerce Survey (Boston Retail Partners 2016)
UPS Pulse of the Online Shopper, June 2015
RetailToday 02/02/16 Accenture: Mobile retail not advancing quickly enough
Retailers’ Mobile Capabilities Lag Customer Demands, Accenture Research Finds—
February 02, 2016
FORRESTER: The Retail eCommerce Metrics that Matter, March 2016, Forrester Research
BRP: 2016 customer engagement survey