What’s Holding Back Retail? Top 3 Barriers to Closing the Store Performance Gap

AUGUST 3, 2017

A retail brand is only as good as its worst performing store. Finding the factors that contribute to poor performance can be highly resource intensive when your enterprise has hundreds to thousands of locations. So, when Forrester Research asked 105 corporate retail store operations decision makers the question, “what are the top barriers to improving a store’s performance?” they found three consistent pain points:
  1. Identifying operational issues across stores
  2. Driving change through stores, or change management
  3. Measuring and analyzing the success of programs or initiatives

Retailers who find solutions to narrow these gaps are more likely to meet their customer’s expectations and improve overall store experience. While these three barriers may present themselves in a variety of ways, understanding how these pain points limit improving performance will provide retailers with the insight needed to overcome them.

IDENTIFYING OPERATIONAL ISSUES ACROSS STORES

In a perfect world, an initiative will carry the same expected results across all stores in an enterprise with little deviation. Anyone in retail will tell you this is far from reality, as an enterprise expands across a variety of localities, each with their own regulations, resources, and challenges. In our report, “identifying operational issues across stores” was a major blocker or barrier to improving store performance, and notably directors were 16.55% more likely than average to identify it as a barrier.

This was an alarming discovery, as the director position works to organize their departments and delegate essential tasks. When a director fails to recognize an operational issue, it can greatly undercut the effectiveness of new programs or lead to missed issues that snowball into larger ones.

A director’s inability to identify operational issues is a technical one, as modern stores utilize a spectrum of technologies to provide them with the right information fast. Retailers who are experiencing these issues should look to their technology systems and find more streamline, data-to-action solutions that enable directors to find and act on new opportunities.

DRIVING CHANGE THROUGH STORES

The retail industry has seen big changes in recent years as trends accelerate, technology booms and wanes, and customer expectations grow. With the industry under growing stress, brick and mortar stores are looking to adapt and stay competitive. Of the stores that participated in the research study, the ones that reported struggling the most with enabling change were larger brands—those that made more 5 billion in yearly revenue. Specifically, they were 11.19% more likely than average to pinpoint this as a barrier. When you consider the difference in complexity between a store that generates more than 5 billion in revenue and a store that generates 1 billion, the struggle is clear.

Stores that generate more than 5 billion in revenue are operating at a larger scale logistically, and they often require large, specialized teams under a multi-tiered management system. Communication between these roles can be increasingly difficult as information must be relevant, actionable, and timely. Investing in an infrastructure that accommodates these complex needs can be expensive, as challenges scale with growing data management and corporate communications.

MEASURING THE SUCCESS OF INITIATIVES

With flash deals and competitive prices being a single keystroke away on most hand-held devices, outstanding customer service is critical for modern brick-and-mortar retail. These stores are facing the ever-growing challenge of keeping customers engaged while at the same time turning mountains of data into actionable information. Like identifying operational issues, the ability to analyze the success of initiatives is a technical one.

Stores that generate between 1 billion to 5 billion in revenue are 10.65% more likely than the average of all stores to struggle with measuring and analyzing the success of their programs than all other revenue brackets. Stores in this revenue bracket have grown too large for their legacy systems and might benefit from implementing newer systems that can scale to their needs. Strategies and goals aim high, but the means of recording data and scaling initiatives are too limited. An update of legacy systems can better accommodate their needs as they sustain their growth.

Improving the performance of your stores across a retail enterprise requires an inward look at the departments, roles, and operations that need to most help. Download the Close The Gap Between High- and Low-Performing Stores report by Forrester in partnership with Square Root to learn more about the key factors that are holding low performing stores back.

ABOUT THE AUTHOR:
As our demand grand marshal, Sarah leads the marketing team in creating meaningful connections between our company and our audience. After almost a decade in marketing for SaaS companies, she is inspired by finding creative, streamlined ways to communicate complex topics. Her appetite for curiosity pushes her to learn new things that will guide our brand and lead to bigger and better things for Square Root. In her spare time, Sarah enjoys singing in rock and roll bands and exploring Austin in her relentless pursuit of the best burger, taco, sushi, etc. Sarah graduated from West Virginia University with a bachelor’s degree in business administration.