Stores Right Now: The Snapshot
In our most recent Store Report, it’s clear that retailers recognize the importance of the store, both now and in the future. Surprisingly few plan to reduce their store counts. Rather, they see opportunity on the horizon. While over-performers are more eager to move forward, even their more poorly performing counterparts recognize that a renaissance is afoot. Retailers believe they can leverage their digital assets to make the store more convenient, personal and inviting. And over-performers in particular recognize the importance of technology in creating this renaissance.
At a high level, retailers’ biggest problem is money and time. Modernizing stores is expensive. Every expense is subject to what we call the “store multiplier factor.” Even seemingly small expenses grow large when multiplied by the number of stores in the chain. And the larger the store footprint, the more endpoints are required to support activities. This “store multiplier effect” creates a lot of pressure to demonstrate rapid Return on Investment for every initiative.
Adding to their challenges, consumer price sensitivity continues to place downward pressures on gross margin, leaving the pool of funds available for improvements somewhat limited.
But retailers’ biggest opportunity comes from using technology to empower store employees with technology. And they know it, with 50% believing getting technology rolled out to stores as their greatest opportunity, even within current cost constraints. Bringing the best aspects of online into the store promises to make the in-store experience more entertaining, efficient and convenient.
The sheer volume of technologies required to modernize the store, whether Cloud-based or on the premises is a daunting task. So along with battling metrics that may not tell the whole story of technology’s value in the store, retailers also have to grapple with Change Management: they report stores already have too much to do, adding new technologies and processes on top of existing tasks is a gating factor.
Finally, legacy expectations for in-store technology spend rates still sit in the minds of Wall Street investors. It takes a brave management team to stand up to investors and say “We are going to over-invest in new technologies until we get up to speed”. There are now genuine proof points that tell us this attitude bears fruit – even sooner than expected. We have the example of Walmart, whose CEO warned “the Street” of exactly that about eighteen months ago. Doug McMillon was clear in earnings calls that the company’s short term technology investments were going to exert downward pressure on earnings. As of this writing, the company’s most recent quarterly results demonstrate that those investments have already borne fruit. Comparable sales improvements of 5.5% for a company the size of Walmart are nothing short of astounding.
Looking at the details within the report itself, it contains 18 charts of hard data and 23 pages of deep insights based on our findings: if you’d prefer a condensed version, we offer an eBook, as well.
There’s a lot to read and understand, and we hope you read the full report.