AI in Retail: Beyond The Hype and Into Reality for Store Operations.
The Top 10 AI use cases that Retail Operators at every level told us would transform their daily work. AI for Retail Operations is...
Chris Walton is CEO and Founder of Omni Talk, one of the best retail blogs and podcasts out there. Previously he was VP of Target's Store of the Future.
Chris Richardson is VP Store Operations for Party City. The +900-location, multi-billion dollar, US retailer.
Chris Taylor has over 40 years of retail experience, from Store Manager all the way up into the C-Suite, including Chief of Staff at Marks & Spencer.
When you think about the four Agile values, and the way you have applied them to retail, you look at it and think, how is that not what we were always shooting for?` I think a lot of people discovered Agile almost by accident in 2020, because they had to, and they will eventually learn how much more it can be.`
I think the reason Agile wasn’t such a big catalyst and a lot of people didn’t really, really, truly adopt it was because the pace of change was still quite slow.
Online was going to grow and stores were going to drop. You could see all this happening, but it was happening at a pace that wasn’t critical to your business. You lost a bit of market share, lost a bit of profit, maybe. And you had plans to address it, but you thought you had 2-3 years to address it. Obviously, the events of 2020 meant that it all suddenly twisted and you had three weeks to address it. So all of a sudden Agile became a real catalyst for people that they genuinely had to adopt.
When you look at what you’re espousing with Agile theory, it’s, you know, how do you keep people more engaged? How do you put more value on actions over insights, networks, over-centralized control, learning and adapting over following a plan.
I think what’s so critical is stores need to become more and more customer-focused, right? So you need to push decision-making down to the frontline, to the person who’s dealing with the customer.
From my background, as a Store Manager, you don’t see those types of things in a retail store operation. You don’t see that in a retail box. It’s not set up to be handled like a piece of software, but there’s no reason it can’t be.
My favorite saying, I think it comes from IDEO, is that enlightened trial and error succeeds over planning every time.
From a store and a retail standpoint, a big part of our journey at Party City is making sure we’ve got a good strong foundation from which to anchor. If we look at the four values that you’ve translated, you’ve got to have anchor points to that. So making sure that roles and responsibilities are clearly defined, that you can deliver a consistent experience, that you have the ability to find the balance and that your pendulum isn’t constantly swinging from one side to the other… that’s really where I think we are in our journey.
And what’s super exciting to me is to be able to see the opportunities that are on the horizon, not just for Party City, but I think for retail in general. It’s about learning and opening the minds of our associates and our leaders in our buildings to really fulfill this potential. The great thing about Party City is that our real purpose is to help people celebrate life.
For the companies we’re working with we’ve instituted what we call ‘short bursts’ against key initiatives. So for example, appointment scheduling. We’re going to have one week where we test it in a few stores, the second week we’re going to address and adapt based on what worked and what didn’t and the third week roll it out. So it’s having these groups come together to focus on solving a problem, test the problem, react to that problem, and then solve it and roll it out.
What retailers are trying to do is improve the speed of decision making. They’re trying to look at how do we make quick, fast decisions without the risk that we make too many wrong ones and cause chaos. I think people are genuinely trying true delegation, proper delegation, not abdication, or basically giving them a to do list and saying, “Hey, we’ve delegated, you’ve got no room to maneuver it.”
We have to be careful to filter out all the pandemic related noise and overassessing how well people are doing. However, I actually think Amazon’s doing great. They’re not getting talked about enough versus the traditional players. Look what Amazon’s done even during the pandemic. They now have 30 Amazon Go stores, they’ve got incredible delivery and pickup services at Whole Foods.
Even though they are the big, bad wolf, you have to admire Amazon. They just ramped up staffing, warehousing, vans…they took all the non-exceptional stuff off their sites, they were incredibly effective.
I think for me, the one that really sticks out is Best Buy. The fact that they actually were able to be nimble and Agile enough to capitalize. Both from an inventory standpoint and then, most importantly, from the buy online pickup in store. They were relentlessly customer-focused in terms of how they executed that.
I think Best Buy has given a masterclass in the Scientific Method in terms of how to improve yourself as a retailer. They shut all the stores down and they said, we’re going to go to curbside pickup and experiment. They learned that they kept 70% of their sales volume, even when their stores were closed. How many retailers got the chance to know that? Right? They did. They thought about it. And then what did they do? They went to appointment scheduling. Okay. You know, how much volume can they keep when they start bringing these people into stores, but they do it in a really specific way. And so they got an understanding of that by geography. And now not surprisingly, what did they announce in the late fall? They’re going to start turning their stores into fulfillment hubs, because they have better data about how to serve their customers.
The other one that kind of stands out is Dick’s Sporting Goods. They did not have curbside pickup. They had a pretty robust buy-online-pickup-instore program, but the curbside was new, although maybe they had been testing it before. Watching them move from, “Hey, we clearly just set this up and we’ll run stuff out to your car” to getting it more process-driven, something that could be consistently delivered to the customer – that was really impressive.
I think everybody knew before 2020, how big omnichannel was becoming. But in March 2020 it went overnight from, yes, it’s important, to it’s critically important.
You’re now serving the customer seamlessly – where, when, and how they want it. And ultimately it has to become seamless to the organization as well, because in order to serve the customer seamlessly, you have to be seamless inside as well.
Getting to the omnichannel ethos of everything means you need to leverage the store as a node within the network, so accuracy actually really starts to matter over time.
I think the place to rethink for me, when I look at Store Ops, is really around inventory management and accuracy in the store.
Inventory, inventory, inventory. I mean the age-old problem, and it’s even more complex now. Because not only do you need to figure out how much inventory you’re going to need against customer demand, but now you’ve got to know is my inventory in store? Is it in the warehouse?
I think what a lot of the time people don’t realize, is that your inventory accuracy in your stores is usually no better than 70%, whereas in an actual fulfillment warehouse, you’re usually in the mid- to high-nineties.
So all this stock is wandering around the system. If it’s not in a depot to send to a customer online, or a store that somebody wants to buy it from, it’s dead money.
And if it takes a week to get back from a customer back into circulation, that’s a week’s tied-up cashflow. About a week’s worth of lost sales.
I always think about the intersection of technology on the total retail experience, but especially the blend of the physical and digital.
There are probably four areas that I’m excited about. I think one is the evolution of cloud commerce. Specifically, the day-to-day foundational things that drive our data understanding. So the order management systems, the point of sale systems, what products and people are doing, how they’re moving, exchanging, through space and time, I think is really interesting.
The other thing I’m watching really closely because of the work Amazon’s doing is computer vision. I think computer vision is going to be important technology as we look forward, for how in store operations work, how ecommerce operations work, even how social media and our mobile interactions with the world work. I keep advising companies to continue to invest and look into that. Start your experimentation.
Thirdly, I think micro fulfillment, in terms of how you use the stores as a network, how to use robotics and automation within those setups at the store level to give you better inventory accuracy, to pick and pack faster and more efficiently.
Lastly, how people work together. How do we create more of a networked Agile mentality in terms of how we operate? Day in and day out because that’s what gets us excited. Most importantly, from a business model standpoint, it’s also what helps us to find the efficiencies in what we’re doing to find the cost savings, to drive sales, but to do it in a more productive way.
I think what technology is going to allow us to do is to provide for more in-store, tactile customer experiences. Taking tasking away from store teams, so that they can focus on the customer experience.
I think retail by nature is still a people-driven business. I think there’s always going to be that desire for interaction. We kind of see that. People start to get weary of the lockdowns and they want to reconnect with people. People still went to stores. Even when they were locked in their homes.
So I think people are always going to be there. I think the technology is always going to be a support mechanism to the people-first connection.
I think, from a retail in general standpoint, convenience is one of those values that is at the top of the list. We’ve got to meet our customers where they want to be. We’ve gone through this whole thing, talking about agility. I’ll use the word nimble just to be a little different. The ability to make quick shifts and know that it’s going to be continual. I really struggled with the third one, but I’m gonna say consistent. That’s a little bit of a counterbalance to the nimbleness, but to the customer, the consistency has to be seamless behind the scenes. The act of being able to change quickly can become consistent and can be a value that you live by.
Number one in my head is and always will be trust. Customers have to have trust in your brand, in your people. Your people have to have trust in your sustainability. They have to have trust in your products. They have to trust in your reporting, your efficiency.
Second is accountability. I think too often, accountability is quite vague. When you do something, who is accountable for the good result or the bad result? And where is it reported and is it clear?
The third one would be innovation. I think you’ve got always to be looking at what’s the next product? What’s the next customer service? What’s the next offer? What’s the offer that they don’t even know they want? What’s the new channel? Who could we merge with?
And then Agile.
And they all then empower those stores to be action-oriented.
I like mnemonics a lot. So I’m going to give you my three A’s.
When I think about the three most important things. One is Agile. I’ve long been a proponent of that.
The second I think it’s agnostic. You have to be agnostic to the channel to how the consumer wants to consume.
And then the last thing I would say is accepting. Accepting that things are going to change and you’re not going to get it right. And you’ve got to learn as you go. And that’s fundamental to making yourself better.