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Experience Counts

BY Marianne Wilson

In retail, as in life, experience is everything. Whether it’s online, on a smartphone or in the store, it really doesn’t make a difference. A bad experience will turn off customers, while a good one will build brand advocates. It’s always been like that, of course. But today’s technology-enabled shoppers have changed the rules of the game by upping the stakes considerably.

The important role experience plays in today’s retail environment is brought home in our annual State of the Industry Report. It’s the centerpiece of this issue, and it couldn’t be more relevant. Or interesting.

Prepared by Interbrand Design Forum, the report is entitled “Experience is Everything,” and it’s focused on the innovative experiences that are redefining retail. I’m happy to say that a good deal of the innovation is occurring on a brick-and-mortar level. It’s not that I have anything against digital retail — I appreciate the convenience and vast inventories of online as much as anyone. But for me, the physical store remains the heart and soul of a brand. It’s where the brand comes to life. And it’s satisfying to see that savvy retailers — both online and traditional — are once again embracing the promise of brick-and-mortar.

What’s so interesting is that e-commerce deserves much of the credit for waking retailers up to the promise of the store experience. The report details both online retailers, including Warby Parker and BaubleBar, that have made the leap to physical retail, and several traditional retailers (Johnny Cupcakes is my fave) that are all, in their own way, challenging the conventional way of doing business. And delighting customers in the process.

And for retailers that are still catching up, the report offers some timely advice, starting with “Forget the Gondolas.” Thinking outside the gondola energizes the brand. Looking at the accompanying photo of a Camper store, it’s hard to disagree.

The State of the Industry Report is full of insights, photos and commentary. It’s a must-read for anyone interested in where retail is heading.

So is the CSA Top 100, our annual listing of the nation’s largest retailers, which is part of the report. The ranking is based on total annual net sales for each company’s most recently completed fiscal year.

The retailers that make up the Top 100 reflect the evolving nature of an industry in which the search for omnichannel integration has become the Holy Grail.

From Walmart with its Scan & Go pilot to Macy’s and its commitment to RFID, retailers are investing in an array of new solutions that allow for more fluid experiences across digital and physical channels. At the same time, they are exploring new formats, new markets and new concepts.

There’s a lot going on in the retail space. And don’t expect things to settle down anytime soon.

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Cool Technologies

BY Marianne Wilson

H-E-B is thinking green — and out of the box — when it comes to refrigeration. The company is the first U.S. retailer to deploy a propane refrigeration system in its refrigerated display cases.

The Hussmann-designed system is in place in H-E-B’s new 83,000-sq.-ft. store in Austin, Texas, which is part of the redevelopment of an old airport site in the city’s Mueller neighborhood. The entire project is focused on sustainability and energy efficiency. So is H-E-B.

“It’s just the way we operate our business. said Bill Triplett, senior VP strategic design, H-E-B. “Our vision is to move faster, save energy and be sustainable. HC refrigerants have my attention. I want to move H-E-B in a different direction away from CFCs.”

The San Antonio-based retailer had four requirements with regards to the refrigeration design: energy efficiency, simplicity in the design and install, sustainability and reliability. The goal with the project was a 70% energy reduction from all store systems, according to Charlie Wernette, director of engineering, H-E-B.

“We believe that a R290 hydrocarbon (propane) system will achieve approximately 50% energy reduction compared with our typical store refrigeration load,” he said. “In addition, we wanted to find another natural refrigerant alternative as we are not convinced that CO2 is the long-term solution for H-E-B.”

H-E-B worked with Hussmann in the development, design and installation of the alternate refrigerant source for the store. It identified the design criteria and specifications to use propane for the majority of the refrigerated display cases.

“We think this system achieves our energy and sustainability objectives,” Wernette said. “In addition, we believe that because of the design, we may realize other cost-saving benefits, such as collapsed construction cycle time resulting in our ability to get new stores on board more quickly than ever before.”

Using the propane system required that H-E-B’s cases have doors. Other than that, Triplett added, the case design is very much like the retailer’s typical case selection.

Hussmann worked closely with H-E-B and several U.S. government and safety agencies in developing the regulations and approval processes to enable the safe use of propane in a supermarket application.

Norm Street, Hussmann’s director of new technology development, believes the use of propane as a natural refrigerant alternative will gain traction with other U.S. food retailers.

“Propane is a natural refrigerant with a low GWP and is more efficient than current R404a systems,” he explained. “Most U.S. food retailers have sustainability and energy-efficiency objectives, and this system will help them achieve those goals.”

Based on the tests and analysis conducted to date, H-E-B believes that the actual sustainability and energy reductions of the propane system will far exceed any measurement used today by LEED and GreenChill. What is the chain hoping the biggest advantages of the system will be?

“A 90% reduction in the amount of refrigerant in the store,” Triplett said. “A significant reduction in long-term maintenance expense/ cost. Fewer, if any, losses due to refrigeration failures (leaks) — should a system go ‘off-line,’ only a very small amount of refrigerated product is ever affected.”

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Staffing Up For The Holidays

BY Barbara Thau

Let the games begin.

Retailers are gearing up for the Super Bowl of the holiday-selling season, when stores generate up to 40% of their annual sales and boost their staffs in light of the heightened shopping spree.

As technology reshapes the retail landscape at a dizzying pace, it’s also advancing the art and science of aligning sales and traffic patterns with in-store labor — particularly crucial during the make-or-break winter selling period.

These days, bringing one’s “A” game calls for retailers to take a more fine-tuned approach to forecasting their scheduling and staffing needs, while addressing an increasingly multichannel shopper.

Here’s a look at how workforce management solution providers Ceridian and Kronos are helping retailers boost their sales and margins this coming holiday season with new technology solutions built to better maximize in-store labor.

Multichannel shoppers: The rise of shop online, pick-up-in-store options is upending traditional buying patterns — and no more so than during the holiday season, according to Liz Moughan, director of the retail and hospitality group for Kronos, which counts national chains such as Family Dollar, The Container Store and Forever 21 among its clients.

And as the practice is popular with Millennial shoppers, who are expected to outnumber baby boomers in sheer size and buying power by 2020, attention must be paid.

Nonetheless, retailers still largely forecast their staffing and scheduling needs based on historical sales transaction and traffic data. This is generated by “what happens within the four walls of the store, not accounting for any demand that starts outside of the four walls, [meaning] shoppers who have bought online and will pick up in store,” Moughan explained.

With in-store pickup of Web purchases expected to reach a new tipping point this holiday season, retailers can no longer afford to ignore sales that originate online; if so, they’ll be understaffed. Indeed, holiday 2012 tells the tale of two retail approaches that each fell short, Moughan said.

Some merchants opted to ignore potential traffic from Web-generated consumers in anticipating their staffing needs, while others “threw a ton of payroll” at them without forecasting demand “to the point of diminishing returns.”

To help its retail clients address the omnichannel shopper, Kronos partnered this year with Manhattan Associates, provider of supply chain management software, to incorporate the new “Online Order Pick Up” driver into its forecasting planner. The new driver from Manhattan Associates uses historical and real-time data to gauge staffing needs just as it would for a brick-and-mortar store. The difference is that it forecasts labor needs generated by Web shoppers.

Simply factoring in that Web-originated shopper could mean a windfall for retailers. The online shopper is predisposed to outspend the traditional brick-and-mortar consumer, as she’s already made a purchase, Moughan said.

“She hasn’t come into the store to price match, browse or showroom. Why not try to take advantage of that? The opportunity to upsell and to increase the average transaction is huge,” she said.

Launched this summer, the feature enables retailers to schedule their most productive employees during the busiest times, integral to unlocking the sales potential of Web-originated consumers, Moughan said. It’s designed to work in tandem with Kronos’ new Schedule to Skill functionality.

“By matching your most productive employees to your most opportune selling time, it allows retailers to take advantage of a consumer who has already shown that they are going to purchase within your store, and allows you to further increase the average transaction value.”

Guitar Center: Specialty retailer Guitar Center bumps up its 5,600-unit sales force by only 1% during the holiday season.

But like most retailers, the chain’s sales and foot-traffic patterns change dramatically during the make-or-break selling period, when so much rides on “the magic of trying to anticipate when the peak holiday traffic is going to hit,” said Chris Salles, director of store and labor for Guitar Center’s 250-plus stores.

When Dec. 25 falls is the biggest indicator of the rhythm of the selling season, according to Salles.

“Whether the 25th falls on a Saturday, Monday or Thursday drives very different traffic patterns,” he said.

For more than a decade, Guitar Center had been tracking its holiday transactional data, which includes sales, margins and average basket size, in 15-minute increments to determine its demand curve: the labor it needs at any given time to serve customers.

The ability to analyze the demand curve of prior holiday seasons that mirror one that’s coming up is key to making informed staffing and scheduling decisions.

But Guitar Center had been making those calls “with mostly intuition and a little science, relying on raw data sources and bright people with spreadsheets,” Salles said.

Store managers were faced with making sense out of that raw data, comprised of “millions of lines of information” representing sales transactions for Guitar Center’s various departments — from guitars and drums to keyboards and pro audio.

In late 2009, Guitar Center turned to Ceridian to replace its outdated, manual-scheduling system with Dayforce HCM solution, a state-of-the-art, cloud-based workforce and human capital management system.

The system is able to forecast Guitar Centers’ staffing and scheduling needs based on historical transaction patterns and pinpoint peak-sales periods by departments in 15-minute increments.

“We feed Dayforce HCM those millions of lines of information and using predictive modeling, it comes up with a labor demand forecast of what we can expect within the next few days, weeks, months,” Salles said.

It can also more precisely optimize the talent of its top-performing sales staff, scheduling them when Dayforce HCM predicts sales transactions will spike and providing a better experience for customers, he said.

“Guitar Center has many different departments that offer retail products and services, education, consulting and the like that make a transaction more complex — as each may have different combinations of retail sales and service by many different [sales associates] with different skills,” Salles said. “The Dayforce solution allowed us to better plan for these varying levels of coverage in a more accurate manner than ever before.”

The retailer expects to reap cost savings from Dayforce HCM this holiday season, according to Salles, who noted that, with the solution, “we’ve been able to be more efficient with labor dollars spent without sacrificing top-line sales.”

Barbara Thau is a New York City-based business writer.

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