Study: Retailers need to empower their workforces, realign skills to succeed
The increasingly digital customer is impacting the evolution of new, distinct store formats.
As stores transition to new concepts by 2020 and beyond, so will the roles of store associates, according to new research from Avanade and EKN Research. Avanade surveyed 161 global retail executives across various retail segments to understand the driving factors of digital and workforce transformation in the industry.
As digital retailing evolves, there will be significant shifts required to create a digital workplace if retailers want to stay relevant. Yet, retailers appear to be lagging behind in getting their workforce ready for what lies ahead, with most indicating very little change in how store activities will be allocated in the next few years, the report revealed.
For example, 60% of retailers believe stores will transform from a focus on traditional sales to more theme-based stores focused on attracting specific customer segments, with 56% expecting stores to perform as online fulfillment centers. The main factors impacting this evolution were identified as changing customer expectations, continued negative same-store sales and the exponential growth experienced by digital channels.
Despite these anticipated changes, retailers expect employees to work much the same as they do today. However, this is a stark contrast between retailers' vision and their ability to realize it. For example, retailers do not plan to have store employees increase their emphasis on customer-facing activities in the next few years even though they foresee a push toward more theme-based retail concepts.
"Retailers must rethink store activities and seek technologies that improve the customer experience and enhance their workforce," said Barry Givens, retail solutions lead at Avanade.
“For example, 52% of retailers plan to use augmented reality and robotics in their stores in the next one to two years, and it's important to understand the impact of those technologies on the workforce,” he said. “Digital tools that help train staff and provide personalized employee experiences are just as important as those that engage the customer.”
Respondents did note that a more prepared, empowered and engaged workforce could improve consumer satisfaction, stock availability, online and in-store sales, and store operating margins. Meanwhile, transitioning to a true digital workplace will increase employee engagement and productivity, particularly as millennials become a bigger part of the talent pool.
This will require retailers to provide fast, agile training to maximize performance, especially among the growing temporary workforce. They must also adopt automation at store level — and not just smartphones. They also need smart merchandise, wearable devices, augmented reality, POS tablets, among other solutions, the report said.
Tiffany shines on demand from Asia
A strong performance in Asia helped Tiffany & Co. beat fourth quarter expectations even as sales as its U.S. stores sagged.
The luxury jeweler reported net income of $157.8 million, or $1.26 per share, for the quarter ended Jan. 31, compared with $163.2 million, or $1.28 per share, in the year-ago period. Adjusted for asset impairment costs, per-share earnings were $1.45, beating the per-share earnings of $1.37 that industry analysts had expected.
Total revenue in the quarter rose 1% to $1.23 billion, just ahead of analyst projections.
In the Americas, total sales in the quarter fell 3% to $587 million, and same-store sales declined 2%. For the full year, total sales declined 5% to $1.8 billion and same-store sales declined 6%. Management attributed the results to lower spending by U.S. customers and foreign tourists.
In addition, sales at Tiffany’s New York flagship store, where traffic has been impacted by security barricades around Trump Tower, declined 11% in the full year and 7% in the fourth quarter, and represented less than 10% of worldwide net sales in both periods.
"We attributed a portion of the softness in the U.S. throughout the year on local customers, which we believe was tied to macro market and political uncertainties," said Tiffany VP of investor relations Mark Aron on the company’s quarterly earnings call.
On the call, Tiffany forecast mid-single-digit percentage growth for full-year earnings per share, excluding some items.
“Despite macroeconomic and geopolitical challenges in the past year that we believe will continue in 2017, we strongly believe that Tiffany’s strategies are sound and that we have meaningful growth opportunities,” said Michael J. Kowalski, chairman and CEO. “Our management team is focused on accelerating the execution of our strategies to deliver extraordinary products, communications and experiences that will delight our customers around the world. Through strong leadership and this accelerated execution, we believe we are well-positioned to deliver attractive total shareholder return over the long-term.”
At January 31, 2017, Tiffany operated 313 stores (125 in the Americas, 85 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in the UAE), versus 307 stores a year ago (124 in the Americas, 81 in Asia-Pacific, 56 in Japan, 41 in Europe, and five in the UAE).
Penney details stores marked for closing
The ax has fallen: J.C. Penney has released the list of 138 stores it plans to close.
On Feb. 24, the retailer announced it would close 138 stores, along with one supply chain facility in Lakeland, Fla., as it looks to cut costs and focus on growing sales at its best-performing locations. Texas, with nine stores slated to close, and Minnesota, with eight, were the states hit with the hardest. While most of the stores closing are in smaller market, the list includes several higher-profile locations, including the Penney at Palisades Center in West Nyack, New York, and the one at King of Prussia mall, in King of Prussia, Pa.
"We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers,” Penney CEO Marvin R. Ellison said in February. “It is essential to retain those locations that present the best expression of the J.C. Penney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns.”
Most of the stores will close in June, Penney said on Friday, and the liquidation process in most will start on April 17.
Approximately 5,000 positions will be impacted by the closings. Penney said is trying to relocate certain “leaders” and will provide outplacement support services for eligible associates.
To see the list of store closings click here.