Using the web to keep stores executing the same plans at the same time
By Paul Demery
The more stores a retailer operates, the more opportunity for increased sales, broader product lines, widespread market testing, insurance against regional downturns—and mistakes in store merchandising that can undermine all of the above. Despite the best merchandising and marketing strategies devised by executives, results depend on translating plans from headquarters into action at each store.
And that’s easier said than done.
“Retailers are wonderful planners, but what separates the men from the boys in retail is execution,” says Paula Rosenblum, research director in the retail practice at research and analysis firm AMR Research Inc. “And execution happens at the most granular level in the store. I’d rather see a grade B planner who executes at a grade A, than a grade A planner who executes at a grade B.”
A direct line
Among the biggest challenges facing retailers since they began spreading out into chains a century ago is transferring the big ideas from those at headquarters who dream them up to the people who carry them out at each store. Little had actually changed over those 100 years—until now. The ubiquity of the Internet today is smoothing the flow of plans and ideas for some retailers who are pioneering web-based planograms. One of those pioneers is The Home Depot Inc. “Using the Internet helps with everything, because it’s a direct line into our stores,” says Shannon Roh, a director in Home Depot’s store merchandising operations.
Getting mounds of paper documents to each store is a huge chore in itself, especially when senior executives expect each store, regardless of how far-flung, to receive and carry out marching orders at the same time. A merchandising gurus’ best plans for product assortments, displays, pricing and promotions can wind up in the liquidation bin of ideas if store personnel don’t receive their instructions on time—or fail to carry them out correctly and in a timely manner. In retailing, lost time in executing store plans amounts to lost sales and lost revenue, with the risk of lost customers as well.
Retail’s heavy reliance on a frontline workforce that turns over rapidly each year adds to the challenge of getting stores to comply with instructions from headquarters. In addition, the ongoing struggle to meet sales quotas and adhere to seasonal demands and promotions frazzles many employees. Any improved communication from headquarters can provide a more organized and pleasant shopping experience for customers and a more rewarding environment for employees and managers. “Retail often comes down to an interaction between a high school student employee and a harried housewife,” Rosenblum says. “Anything that helps with that situation helps the retailer.”
$2 million in one year
And so a few retailers are adopting web-based planograms. “It’s an early-stage business,” notes Srikant Vasan, president and CEO of StorePerform Technologies Inc. But an indication of its potential comes from Sears, Roebuck and Co.’s announcement last month that it is deploying StorePerform technology to all 870 stores, after piloting it for a year. In addition, StorePerform has received $10 million in venture capital funding. The company has been marginally profitable, Vasan says, but sought outside funding to accelerate development.
In addition to Sears and Home Depot, which uses the web-based Task Management application from Reflexis Systems Inc., such national chains as diverse as Dunkin’ Donuts Inc. and Staples Inc. are adopting web-based store planning. And StorePerform claims four of the top 10 retailers, although it won’t name names beyond Sears, as customers. Retailers who have adopted the technology say that not only are in-store merchandising plans acted on more accurately and quickly, but related costs are down, employee morale is up and headquarters now has a way to more easily verify that orders were carried out by all stores.
Dunkin’ Donuts, a unit of U.K.-based Allied Domecq PLC, reports saving $2 million in the first year of operating the web-based Task Management store planogram system for about 9,000 locations, notes Raju Sharma, director of marketing for Reflexis. The savings come in the elimination of paper-based forms, the time it takes to fill out and send these forms and the reduction of data-entry errors. “Now if there’s a new coffee flavor added to the menu, it can all be done instantly online, without having to print out thousands of forms,” Sharma says.
Likewise, office products retailer Staples expects to save millions of dollars a year by using Reflexis’s Task Management system as a means of improving communications with stores, Sharma says. Once a new merchandising program is launched, store managers across the country are able to view program details, while corporate managers and field supervisors can check the same system at any time to monitor program status in each store.
Disorganization
In the past, the production of cumbersome paper reports—difficult and costly to modify and re-send once they were printed and on the way to stores through courier services—hampered efforts to coordinate tasks for stores. These reports would be followed by additional instructions via a mixture of phone, fax and e-mail communications. “Store managers would have to check how the latest instructions fit in with earlier instructions, but the messages were disorganized in different means of communication,” Sharma says.
Moreover, relying on phone, fax and e-mail made it more difficult for headquarters to distribute promotional materials as well as instructions on a one-to-many system that would enable headquarters to simultaneously and economically distribute materials to hundreds or thousands of stores. “There really was nothing that did this,” Rosenblum says. “You could’ve made a stretch and put this into Microsoft Project Central, but that’s only a one-to-one distribution, not a one-to-many relationship that connects headquarters with hundreds of stores.”
The ability of Home Depot and other retailers to significantly improve headquarters-to-store communication emerged in the past couple of years along with the rise of web-based task management systems from Reflexis and StorePerform, AMR says.
Last year, Sears identified problems in getting its more than 870 full-line stores to carry out merchandising and promotional initiatives distributed by headquarters in a paper-based Action Planner. It found inconsistency in the way different stores executed plans, for example, and a lack of an effective way for headquarters to monitor store compliance. After completing the rollout earlier this year of an intranet-based StorePerform Workbench store planner system, it realized several improvements, including a 10% reduction in the time required to execute store promotions. “The Workbench enabled us to throw away paper-based store planners, and made it far easier to distribute policies, monitor compliance and take timely action to address distribution problems throughout the chain,” said Michael Buxton, vice president of operations.
The Reflexis and StorePerform applications are designed to operate on the web or a corporate intranet or as a portlet within a web portal. By providing browser access to all parties, the applications facilitate communication among executives and stores, where personnel can print out electronically distributed promotional materials. Store managers, department managers and others check the application for assigned tasks, then enter information to indicate when the task was completed. “It allows us to track verification of projects in stores,” Roh of Home Depot says.
Headquarters can also supplement distributed planners with electronic alerts to a store manager’s desktop or laptop computer or handheld device. The store manager can then manage in-store usage of the planner by forwarding alerts and other instructions to appropriate store personnel.
Alerts can also work in reverse. By setting a completion time for a particular task, executives at headquarters can receive alerts to their computers or handhelds about whether a task was finished on time once a store manager or employee clicks a button in the task manager to indicate completion. Regional managers can then focus on stores that have not completed tasks on time, relying on store managers and disciplinary policies to assure that received verifications are authentic.
No more ambiguity
In addition, store managers can enter information in the task management system regarding time spent on spontaneous tasks—helping customers or working out problems with store deliveries, for example—to provide regional managers an overall view of time spent by store personnel.
The electronic store planners can support more personalized one-to-one communications as well as one-to-many. As regional managers or auditors visit stores to check for compliance, they can enter notes onto a handheld device, such as PC Tablets used by Home Depot or PDAs used by Dunkin’ Donuts, regarding what adheres to policy and what doesn’t. The auditor can then send immediate alerts to store managers in cases of significant discrepancies as well as enter instructions into distributed store planners regarding common oversights.
The system is designed to remove ambiguity in central office and store communications. “It removes the variability between what headquarters intends to happen and what actually happens,” says Rob Garf, AMR analyst. “There can be a lot of interfaces between headquarters and stores, and a lot of plans change, so there can be a lot of confusion in the store.”
This can be a major help particularly with promotions, which rely on coordination of pricing and merchandising instructions with the delivery of materials like aisle end-cap displays. “In the past there was no easy way to confirm whether or not, say, Sears stores in a certain region, had received their materials,” Garf says. “Then you’d get calls from stores to headquarters and go through an ad hoc process to carry out a promotion.” But with the ability to instantly check confirmations online that each store has received its promotional materials and instructions, a retailer can remedy oversights by sending whatever stores still need in time to meet promotional schedules, he adds.
The system is also geared to improve how central policies affect the workforces in each store. Rather than ordering tasks through a less flexible and less frequent paper document, Home Depot can adjust employee workloads to match changing demand. “We eliminate overload of things to do for employees, so they can concentrate on the most important tasks for serving customers,” Roh says.
The system also saves time for field managers responsible for checking stores’ compliance with policies. “They don’t have to call on all the stores to see if they’re in compliance, they only follow up with stores not in compliance as noted in the system,” Sharma says.
Roh adds that Home Depot set up its own employee training system, which entailed showing workers how to enter a portlet, click on task messages and send back verifications of completed tasks. “It’s very user friendly,” she says. To support its training exercise, Home Depot distributed a training video through its task manager system to 1,500 stores.
But to realize the benefits of these web-based store-planner systems, retailers cannot rely on the software applications alone, AMR’s Rosenblum says. Senior management must still communicate to store employees the importance of using the new web-based systems as a tool for more effectively carrying out store merchandising plans and promotions. “A governance policy for promotion management, much like IT governance policies, must be put in place and taken seriously by senior management before the benefits promised by these applications will be achieved,” she says.
The benefits of web-based store-planners can result in a return on investment within six months, Rosenblum says. “This is relatively inexpensive if you already have the infrastructure for operating in a web environment,” she says.
Although store planograms are at the heart of new web-based task management systems, they’re designed to work best as part of a broader system, experts say. Operating as part of company’s web portal or intranet, they can complement other applications used to communicate with a retailer’s store network, including workforce management/labor scheduling applications.
Broader enterprise applications, including enterprise resource planning systems, could be configured to support electronic distribution of store planograms, but they won’t offer the same functionality of a Store Perform or Reflexis system, Rosenblum says. “Most ERP software has workflow, but where it breaks down is in one-to-many relationships,” she says.
AMR notes that several software vendors that specialize in one-to-many workforce management systems—including Radiant Systems Inc., Timera, Workbrain Inc. and Workplace Systems PLC—have begun building store-planner applications into their technology suites. In addition, ERP vendors will start integrating this into their offerings as the market proves itself. “We’re now seeing other vendors come at this space from different angles,” Rosenblum says.
Providing improved headquarters-to-store communication on planograms along
with applications like labor scheduling will further enhance the ability of
individual stores to comply with central office directives, AMR says. “We’re
seeing the emergence of how executive management relates more directly to labor
scheduling,” Garf says. “Those aligning workforce resources with prioritized
store tasks can better assure store compliance.”
paul@verticalwebmedia.com
Potential planning and execution errors
Cumbersome communications from headquarters to stores often cause problems.
Among the most common:
— Space not available for planned promotions
— Inventory not available for planned promotions
— Signs not displayed
— Displays put up late
— No time for employee coaching on promotions
— Lack of feedback to headquarters about execution
Source: AMR Research Inc.
Planning better stores at Sears
To improve communications between headquarters and its 900 stores, Sears,
Roebuck and Co. completed a chainwide rollout of the web-based StorePerform
Workbench task management system in March 2003. It recently reported the following
performance results based on a survey of 1,000 employees who use the system:
— Store management time on sales floor increased by 2.92 hours/week
— Monthly planning process time reduced by 35 days
— Time to execute store promotions improved by 10.1%
— Time spent reviewing reports was reduced by 1.9 hours/week
— Number of e-mail corrections received by stores decreased by 15.4%
— Time to execute markdowns improved by 7.9%
More than 70% of the surveyed Sears employees said they realized:
— Increased store compliance rate on field/home office requests
— Significantly reduced time spent identifying issues and increased time spent
addressing those issues
— Reduced need to call home office for assistance
— Increased ability to delegate and prioritize tasks
— Increased accountability to the district, store and associate levels
Source: Store Perform Technologies Inc. and Sears, Roebuck and Co.
