By Austre DeHaro and Brandon Pemberton, Point
B
Store experience is an essential element of success, particularly as
retailers lose market share to assortment and price players like Amazon and
Walmart. In 2017, retailers announced nearly 7,000 store closures, with more
announcements expected in 2018.
Yet, not all the news is bad. Retailers such as Ulta, Sephora, Target and
Nordstrom are opening more stores. What are they getting right? They deliver
differentiated experiences and have re-imagined the function of their physical
space.
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Retailers are delivering
differentiated customer experiences through
investment in store technology, people and process. Specifically, technology
development and execution pose the most complex challenges and the greatest
area of risk. Executives know that “disruptive technology” is on the 2018
agenda but often don’t know how to execute.
To remain
competitive, avoid gimmicks and integrate the right technology into your store
experience to deliver a cohesive brand strategy, and follow these four core
principles.
Assess The Value Proposition And Current State
Knowing which
in-store technologies to deploy and when requires a deep understanding of the
brand, a hard look at the current in-store experience and a realistic
understanding of new capability requirements. A company’s value proposition
articulated through store experience becomes the product. Understanding this allows companies to select
technology and amplify brand. It must be
authentic and not a reaction to exciting technology.
Understanding the
current in-store experience provides valuable information about what should
remain and where to fill gaps for differentiation. Make the difficult decisions
around whether technology will heighten the experience and whether the consumer
will embrace change. Cross-functionally integrate new technology and processes
into existing operations to mitigate development risk.
Set Up The Right Model
Seek to define and
deploy new capabilities that bridge aspiration with execution. Start with a
clear definition of success and frame outcomes in terms of business objectives,
not technical requirements. According to a Point B “Program Success” study, 90% of failed programs have weak leadership driving the vision. Position
for success with clear goals that are meaningful to executive leaders.
Align the operating
model to realize benefit from the investment. 75% of failed
programs have incomplete or partial planning for business readiness. Enable readiness by adapting store operations
and process to take advantage of new capabilities and re-aligning performance
metrics to promote adoption.
Test-To-Learn And Iterate
The cornerstone of
successful execution is a test-to-learn approach baked into the development
process. Successful new technology execution requires a test-to-learn mindset
that builds key hypotheses about the experience and the impact of this
experience on the company. Testing these hypotheses requires time and
iteration. Exercising the organizational discipline to change course and learn
from testing can reduce execution waste.
Establish An Enduring Capability
The capability to
continuously assess, identify, test and deploy should be enduring. Customer
expectations and the technology landscape will evolve. The skills and
capabilities to continuously assess strategy, understand new technologies and
enhance the experience likely do not exist today. Focus on building the
long-term capability in parallel with the initial minimum viable product (MVP)
to create the experience. The result is organizational learning that will support
a continuous improvement capability.
Store experience is
becoming a retailer’s most valuable asset. The deployment of technology can be
a powerful tool to develop this asset. Successful transformations feature
technology — and execution — that is authentic to the brand and delivered with
precision. Continual assessment and new capability maturation can position
retailers to realize long-term benefit.
Brandon Pemberton and Austre
DeHaro are retail consultants with with Point B, an integrated management consulting, venture
investment, and
real estate development firm.
