Leading retailers are much better than other retailers at collecting data, measuring activities, acting on their insights, and measuring again to see the results according to a new study by A.T. Kearney. The company calls this recommended approach as Measure, Analyze and Act.
The A.T. Kearney 2013 Achieving Excellence in Retail Operations (AERO) Study is a research project that looks at how companies approach store operations and provides retail executives with tools to better adapt to the fast-changing, technology-driven market.
Another insight from the study was that even with the proliferation of technology and vast quantities of store and customer data, retailers also need to focus on the core principles of retailing – employees, customers and the interactions among them. The study found that retailers that most actively engaged their employees and customers were the most successful.
The study also revealed that there are many underutilized sources of customer data. While leading retailers were gaining from the use of customer data sources, less than half of the retailers in the study collected social network data from third party domains, and just 8 percent thought it made an important contribution to generating insights.
Joel Alden, A.T. Kearney partner and co-author of the study, commented, “Leading retailers encourage measurement of the right data, invest in the skills to gain insights from that data, and use those insights effectively to frame future actions.”
The study also reported on how retailers were managing the multichannel environment. "In this new environment, customers will often return products to a store that they ordered online, or ask a store employee to order an out of stock item through another channel. When employees are not measured on the success of non-store channels, they have little incentive to encourage the growth of those channels."
Another store operations issue that the AERO study analyzed was the importance of field managers. The study findings show that across the board – at the district and regional level and above – managers are overseeing more stores than in the 2010 study. Retail field managers are spending too much time on administration and not enough time in the field.
The AERO study also addressed the importance of front-line staff. These employees interact with customers all day long, gaining valuable insights into customer needs, but few retailers take full advantage of these insights. Adam Pressman, A.T. Kearney principal and co-author of the study, commented, “The problem today is a lack of formal requirements or processes to gather these employee insights. Leading retailers create formal pipelines that capture and use these insights.”
Dean Hillier, A.T. Kearney partner and study co-author, commented, “With all of the moving parts, retail leaders dedicate resources to effectively drive and manage change. This includes focused and measured pilot efforts, tailored communications and communication channels based on messages and employee groups, and a focus on continuous improvement, not just one-and-done mandates.”