Study recommends that retailers invest in technology and skills to gain better insights from data, butaddress core retail principles first
Effectively measuring, analyzing and acting on all data sources, from voice of customer to employees to core operations,is crucial for global and regional retailers alike.
Although the new wealth of technologies and available data is a great boon, often the most productive uses of it are in addressing core and familiar challenges such as shrink, out-of-stocks or category management.
The increase in internet users in the GCC urges retailers to integrate information across multiple channels as customers become channel savvy.
AERO 2013 Findings
One of the key findings of the 2013 Achieving Excellence in Retail Operations (AERO) Studywas that, globally, leading retailers are more disciplined about collecting data, measuring activities, acting on their insights, and measuring again to see the results. A.T. Kearney refers to this principle as Measure, Analyze, and Act.
Even with the proliferation of technology and vast quantities of store and customer data, retailers need to focus on the core principles of retailing - employees, customers and the interactions among them. The study found that retailers that most actively engaged their employees and customers were the most successful.
An interesting insight from the study was how retailers globally manage a multichannel environment. In this new environment customers will often return products to a store that they ordered online or ask a store employee to order an out of stock item through another channel. When employees are not measured on the success of non-store channels, they have little incentive to encourage the growth of those channels. Regional players too need to evaluate integrating effectively across multiple channels, considering the exponential internet growth witnessed in the GCC, with internet users increasing by more than 2000% from December 2000 to June 2012 and customers becoming more channel-savvy.
On the employee front, the AERO study analyzed the importance of field managers. The study findings show that across the board - at the district and regional level and above - managers are overseeing more stores than in the 2010 study. Retail field managers are spending too much time on administration and not enough time in the field. On the flip side, the front-line staff who interact with customers all day long, gaining valuable insights into customer needs, are often now leveraged enough by retailers. Adam Pressman, A.T. Kearney principal and co-author of the study commented, "The problem today is a lack of formal requirements or processes to gather these employee insights. Leading retailers create formal pipelines that capture and use these insights."
Given the decidedly attractive retail opportunity in GCC and thrust on growth and expansion, those thinking about strengthening their core retail capabilities now are expected to capture a bigger share of the retail pie in the near future."Rising consumer expenditure in categories like communication and durable goods in the GCC urgesretailers to invest in category management skills to capture growth, especially in a market where suppliers, in most instances, dictate assortment decisions. On the other hand, retailers in historically large but slow growing categories like food and grocery need to constantly think about operational excellence, beyond store openings, to ensure sustainability of business in the long run" explained Dr. Martin Fabel, Partner at A.T. Kearney Middle East.
Commenting on AERO, Dr. Fabeladded"Similar to global retailers, players in the region too do not sufficiently embrace the Measure, Analyze, and Act principle to improve operational performance. This is quite apparent considering that Out-Of-Stockwhich is a regular retail metric globally, is not even tracked by many retailers and wastage-shrinkage at 2-4 percent is much higher than global benchmarks of 1 percent."
Dean Hillier, A.T. Kearney partner and study co-author commented, "Retail leaders dedicate resources to effectively drive and manage change. This includes focused and measured pilot efforts, tailoring communications and communication channels based on messages and employee groups, and focusing on continuous improvement, not just one-and-done mandates."
To access the full report go to www.atkearney.com.
About the Study
A.T. Kearney's Achieving Excellence in Retail Operations (AERO) study provides insights into how retailers around the globe can improve their operations. With more than 100 questions, the survey probes the strategy, tactics and execution of retailers in more than 20 countries. It covers multiple sectors, including apparel, health and personal care, mass-market and hypermarket, electronics, food and grocer, and cash and carry. The study is based on A.T. Kearney's Store Operations Framework. This framework, which was also used to pioneer the 2010 study, breaks operations into categories that set strategic direction, deliver core value, optimize expenses, and drive lasting change.
A.T. Kearney www.atkearney.comis a global team of forward-thinking, collaborative partners that delivers immediate, meaningful results and long-term transformative advantage to clients. Since 1926, we have been trusted advisors on CEO-agenda issues to the world's leading organizations across all major industries and sectors. A.T. Kearney's offices are located in major business centers in 39 countries. From our Middle East offices in Abu Dhabi, Bahrain, Dubai and Riyadh, A.T. Kearney supports both private and public sector clients as well as nations to excel and prosper by combining our regional expertise and global business insights to achieve results. For more information, visit www.middle-east.atkearney.com
© Press Release 2013
