Smaller Retailers Do It Better: Why Larger Retailers Should Take Notice

NOVEMBER 8, 2017

Connecting the working parts of large retail brands can be quite a challenge. Doing so means making sure your company:
  • Distributes critical information across internal networks.
  • Coordinates efforts between Store Leadership and corporate.
  • Ensures all products, promotions, and services are where they need to be.
  • Sets measurable goals and tracks progress.

The larger the brand, the more working parts, the bigger the challenge. Walmart, for example, sees around 140 million shoppers a week at their stores.1 That is a lot of customers, products, and employees to keep organized. In a survey we conducted alongside Forrester consulting, we found smaller brands (defined as brands generating under 250 million in revenue) have better practices when it comes to sharing information with Store Leadership.

“The larger the brand, the more working parts, the bigger the challenge.”
Larger brands (defined as brands generating more than 5 billion in revenue) can’t leverage the same strategies used by smaller brands and expect the same results. One major roadblock is simply size; there are more middle-departments and quality checks to go through. They are working at an exponentially larger scale with even larger revenue expectations and higher pressure from stakeholders. However, there are plenty of strategies larger brands can learn from their smaller counterparts.
MORE MONEY, MORE PROBLEMS

When key retail managers were asked about the challenges of improving store performance, nearly half of all larger brands had a harder time identifying operational issues across their stores. This is a significant difference when compared to smaller brands. Only a quarter of this group reported operational issues across stores.

A large brand has more locations, additional tiers of middle management, and simply more people managing projects at a larger scale. It’s a lot like a game of telephone; Information must go through several more layers before reaching its final destination. With this, there is a higher risk that information will get lost—even critical information about operational issues at stores.

In some instances, the information isn’t received at all. Sometimes a team member decides it’s irrelevant to their department, or they may have left it for another department to tackle. For example, a large retail store with multiple departments is struggling with major shrink issues. After almost six months of working on zone coverage and employee honesty, it suddenly became clear that the issue at hand was missing shipments. Someone thought that little piece of information was somebody else’s job—but, it impacted everyone at the store.

SIMPLIFY THE INFORMATION PROCESS
Information is only useful when it’s timely. Identifying operational issues and putting out small fires before they rage into an inferno means having a reliable network. But when you’re operating within a network of thousands of stores, discerning between what is relevant and irrelevant information becomes overwhelming.
“But when you’re operating within a network of thousands of stores, discerning between what is relevant and irrelevant information becomes overwhelming.”

In an ideal scenario, Store Leadership teams can speak directly with corporate about issues and corporate can roll out resources to improve in-store effectiveness of programs and promotions. Unfortunately, this isn’t possible when an enterprise has locations in the thousands, around the world. Brands that struggle to identify and communicate store hotspots should look to their information infrastructure and analyze how information travels throughout their network. With the right infrastructure and systems in place, it’s possible to simulate this direct flow of information to a similar effectiveness as the smaller retailer.

CONNECTING THE RETAIL ENTERPRISE WITH TOOLS AND DATA

Point-of-sale transaction reports, inventory management software, store portals, and intranets can all streamline communication. Yet, our study shows only 20% of all large retailers are using their infrastructure and integrated in-store systems to improve poor performing stores. When we looked to smaller brands, nearly 60% used their infrastructure and systems to improve poor performing stores.

Connecting a large enterprise with a complex chain of command can be resource intensive. Sometimes, systems aren’t compatible as they display information in conflicting formats or require a manual process to turn loose data into actionable information.

To help bring data together into personalized dashboards, our store relationship management platform, CoEFFICIENT®, uses machine learning to understand your business and its complexity. It delivers metrics that turn data into actionable information—giving your disparate teams the right information at the right time. Brands with a complex command chain can also customize the level of information accessibility, ensuring that all recipients will see only the information that is most relevant to their goals.

Brands that use their information infrastructure to their full potential are better equipped to identify and impact operational issues across their stores. To learn more about the study, read our report, Close the Gap Between High- and Low-Performing Stores, by Forrester Consulting and Square Root.
ABOUT THE AUTHOR:
Mary loves creating engaging copy that expresses the best story possible. As a member of our marketing and communications team, Mary works hard to communicate the value our products and Square Root’s mission with a positive attitude and a quick wit. Inspired by solutions and products that make people’s lives easier, she is fulfilled by knowing her work makes the world a better place one way or another. She holds a bachelor’s degree in political science and master’s degree in communication both from the University of Arkansas.