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. More announcements are expected in 2018.
It’s not all bad news. 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. These new leaders are part of the 89% of companies that see customer experience as the key customer retention driver.
Retailers are funding initiatives to deliver differentiated customer experiences, achieved through investment in store technology, people and process. In particular, technology development and execution pose the most complex challenges and the greatest area of risk. Executives knows that “disruptive technology” is on the 2018 agenda (and why) but often don’t know how to execute.
Point B's Perspective
To remain competitive, avoid gimmicks and integrate the right technology into your store experience to deliver a cohesive brand strategy. Increase your probability for a return on investment by adhering to four core principles.
- Knowing when and where to make investments is challenging. Build a portfolio of technology investments that aligns with enterprise strategy, is supported by clear success metrics and informed by required capabilities.
- Increase the probability of successful execution with strong executive leadership, business readiness, resource planning, stakeholder engagement and thoughtful deployment plans.
- Remain flexible to change direction. Use a “test to learn” implementation approach to minimize sunk costs. Make data-driven decisions to re-direct with confidence.
- Don’t treat these initiatives as “one and done." Build an enduring capability to assess store experience. Develop solutions to enhance and execute with speed and precision.
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 a 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
Defining and deploying new capabilities bridges aspiration with execution.
- Start with a clear definition of success. 90% of failed programs have weak leadership driving the vision. Define outcomes in terms of business objectives not technical requirements.
- Align the operating model to realize benefit from the investment. 75% of failed programs¹ have incomplete or partial planning for business readiness. Adapt store operations and process to take advantage of new capabilities. Re-align performance metrics to promote adoption.
- Establish an execution function that drives excellence with enabling methods and governance. 75% of failed programs experience delivery issues in the form of vague project plans, poor resource planning and ineffective dependency management. Building cross- functional delivery teams will mitigate issues.
Test-to-learn and iterate
The cornerstone of successful execution is a test-to-learn approach baked into the development process.
- Companies often lose discipline in execution. They rush new concepts to market and test-to-launch. 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.
The Bottom Line
Store experience is becoming a retailer’s most valuable asset and 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.
¹ Point B “Program Success” Study