From our work with a wide selection of leading Australian and New Zealand multi-store retailers, we get the opportunity to observe and understand what drives success. Common themes and practices emerge from the best performers, the ones doing things differently. This year, we’ve termed a new breed of high-growth retailers: The Informed Retailer. Rather than solely relying on instincts and ‘creative flair’, Informed Retailers use real-time, unified data to guide strategic and tactical business decisions. Recent research by McKinsey shows that data-driven businesses are 23 times more likely to acquire customers, 9 times more likely to retain customers, and 19 times more likely to be profitable as a result. They don’t dismiss the need for creativity, intrigue, and surprise; but rather use it in combination with science. The two disciplines, art and science, together make for a powerful combination that sets up solid market positioning and growth.
Through an in-depth and focused understanding of the market and consumer, Informed Retailers are able to design their business model, operational structure and product and service offerings as well as design their store on facts and research. This allows them to have a holistic understanding of their target audience and use performance data and feedback to measure their effectiveness. As a result, Informed Retailers become more relevant, unique and more efficient in how they run their business. Informed Retailers have embedded the following into their everyday practices:
- Multi-store consistency and optimisation
- Sophisticated business rhythms
- Shared business objectives
- Turning data to insights
- A unified channel approach
- Customer focus
- Partner and supply chain collaboration
- An innovative mindset
1. Multi-store consistency and optimisation
As a customer, you expect a consistent level of service and experience from a retailer, whether that be online or in store. This is the uniformity that builds a successful brand. It is, however, easier said than done. The ability to manage and control multi-store business operations will always diminish as more stores are added. The greater the number of stores, the harder it becomes to encourage collaboration and control inventory. Whilst there is always room for innovation and creativity, consistency is key and Informed Retailers know that this comes from systemised, operational practices and strategy, which are needed to generate profits to reinvest into growth.
2. Sophisticated business rhythms
Informed Retailers use systems and processes that guide employees on how to operate the business to fuel growth. Retailers can adopt and implement the following practices:
- Identify the best and worst performing stores using a measurement tool and a range of KPIs.
- Employ auditing and benchmarking across all business divisions.
- Test and measure practices across all stores
- Standardise proven practices
- Ensure all stores and employees can access the same information
- Use a company-wide planning calendar
3. Shared business objectives
It’s always said that things are better done collaboratively than alone. Sharing business objectives across management, owners and employees of the business ensures that everyone understands what success looks like, is able to review progress daily and has goals to work towards. Informed Retailers structure data, metrics and reports into 3 categories:
1. Product – product mix, inventory, stock and sales
2. People – staffing, productivity, training, customer demands and fulfilment
3. Places – sales channels, store locations, staffing, transactions and promotions
4. Turning data into insights
Informed Retailers consistently use data-driven insights to fuel decisions, practices and processes. Making sense of data requires expertise, intelligent systems and visual reporting in order to quickly identify actionable insights that business leaders can implement. Informed Retailers continuously analyse data to identify opportunities to minimise operational waste, maximise efficiency and better understanding customers. The result of this is higher profitability, fuelling investment and expansion.
5. Customer focus
While customer focus has always been a key player in retail, Informed Retailers have moved away from a singular focus on a short-term purchase, to maximising lifetime value. Understanding lifetime value can lead to appropriately forecasting acquisition and retention budgets. To quantify lifetime value, Informed Retailers have invested in ongoing research, monitoring and analysis to identify groups of customers with common buying behaviours and traits. This allows them to understand how, when and where their customers engage as well as the attitudes and intentions behind their decisions. Informed Retailers are able to connect on a deeper level and personalise the experience.
6. A unified channel approach
Informed Retailers continuously strive to connect all assets, channels and departments to create unified business operations and shopping experiences that keep customers loyal and profitable.
7. Partner and supply chain collaboration
Informed Retailers share real-time data and analytics with their supply chain partners to encourage collaboration and long-term planning.
8. An innovative mindset
Informed Retailers take note of past performance but do not let traditional, proven systems and processes hold them back from investing in change. They are constantly experimenting, refining and reinventing. Informed Retailers also take note of what’s happening outside their own industry, taking inspiration from the successes of disruptors in other markets.
Score your business in each of the critical areas of practice to identify strengths, weaknesses and potential blind spots.