OPERATIONS

Survey: Retail execs embrace omnichannel

BY Dan Berthiaume

New York — Looking to better respond to increasingly online and mobile customers, 70% of retail executives said their organizations have adopted an omnichannel strategy to link the consumer’s in-store experience with the company’s website, mobile device application and social media platforms. This strategy, according to the 2014 Retail Outlook Survey of 100 retail executives by KPMG LLP, will help create a seamless shopping experience for the consumer.

According to the survey, 53% of executives in the retail sector feel that they are ahead of their peers when it comes to omnichannel adoption. When asked which three channels they have increased spending on in 2014, executives cited their company website (67%), physical/permanent stores (47%) and social media platforms (46%) as the most important areas.

Adopting an omnichannel business strategy may be costly, however. Fifty-three percent of retail executives surveyed stated that the cost and complexity of technology upgrades were one of the main challenges their organizations faced.

Cyber security is also a rising issue. Currently, 77% of executives surveyed say that their companies share customers’ personal and payment information across their channels to make for a more seamless shopping experience.

Also, 70% of executives identify customer retention as the most significant driver of revenue growth during the next one to three years. Forty-two percent of retail executives say that operational efficiencies and applicable technology updates have consumed and will continue to consume the most time for senior leadership in 2014. Nearly three-quarters of the executives surveyed have increased spending in their technology capabilities and new products or services.

According to the survey, an overwhelming majority of executives agree that they are at least on par with risk management in comparison to their peers (87%). Despite this, however, there are many pressing challenges that retail executives have identified as obstacles for the remainder of 2014 and beyond.

Forty-one percent of executives cited the Affordable Care Act as a high-priority compliance area that their organization has begun to address and will continue to address in 2014. Thirty-four percent stated payment card industry compliance is the next highest priority, followed by federal and state tax changes (29%).

Forty-one percent of executives surveyed stated that losing share to lower-cost competitors is the top threat to their organization’s business model. In relation to lower-cost competition, while 36% said that discounting and other sales incentives have had and will continue to have the greatest negative impact on their company’s profit margins during 2014.

"Consumer preferences have evolved, and the omnichannel approach has become an imperative for organizations to provide their customers with the shopping experiences they demand," said Mark Larson, KPMG’s U.S. and global retail sector leader. "Organizations that have adapted well to the rise of e-commerce, customer mobility and other technological disruptions of the last decade are showing some early signs of breaking away while others are still near the starting line. Regardless of where they are in the process, one thing is clear – retailers have acknowledged the shopping habits of today’s consumer and they are making transformational changes to embrace them."

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Costco pays fine, will fix refrigerant leaks to settle Clean Air Act charges

BY Marianne Wilson

San Francisco — Costco Wholesale Corp. agreed to pay a $335,000 in penalties federal Clean Air Act violations, according to a settlement announced Wednesday by the U.S. Environmental Protection Agency and U.S. Department of Justice. In addition, the retailer will fix refrigerant leaks and make other improvements at 274 of its stores, which EPA estimates will cost about $2 million over the next three years.

“Because of this settlement, Costco will cut its future greenhouse gas emissions equivalent to nearly 200 million pounds of carbon dioxide, supporting our efforts to cut greenhouse gases nationwide,” said Jared Blumenfeld, EPA’s regional administrator for the Pacific Southwest. “Investing in better equipment and maintenance to stop wasteful refrigerant leaks is good for our environment and good for business.”

Costco violated the Clean Air Act by failing to promptly repair refrigeration equipment leaks of the refrigerant R-22, a powerful ozone-depleting hydrochlorofluorocarbon, between 2004 and 2007, the EPA said, and also failed to keep adequate records of the servicing of its refrigeration equipment to prevent harmful leaks.

The settlement requires Costco to retrofit or replace commercial refrigeration equipment at 30 of its stores to reduce ozone-depleting and greenhouse gas emissions. Costco must also implement a refrigerant management system to prevent and repair coolant leaks and reduce its corporate-wide average leak rate at least 20% by 2017.

In addition, Costco will install and operate environmentally friendly glycol refrigeration systems and centrally monitored refrigerant leak detection systems at all new stores. 

Today’s settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions.

The Clean Air Act requires owners or operators of commercial refrigeration equipment that use over 50 pounds of ozone-depleting refrigerants and have an annual leak rate over 35% to repair all leaks within 30 days.

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Chute Gerdeman names Brian Shafley as CEO, expands exec team

BY Marianne Wilson

Columbus, Ohio — Chute Gerdeman, a global design consultancy, announced an expanded executive team, including the appointment of Brian Shafley as CEO.

“We are in one of the most productive and innovative periods of Chute Gerdeman’s 25-year history,” said Chute Gerdeman Co-chairman Denny Gerdeman. “With these promotions, we have assembled a highly-talented leadership team that is building on the exciting opportunities at hand.”

As CEO, Brian Shafley will lead Chute Gerdeman’s executive team and guide the company’s evolution. Shafley is a 23-year Chute Gerdeman veteran and has been president and chief creative officer for the past nine years.

In addition to Shafley, chief marketing officer George Nauman and executive VP account management and COO Wendy Johnson will continue to serve on the executive team. Joining them are:

Jim Crawford, Chute Gerdeman’s chief experience officer, who will serve key client relationships with his expertise in customer experience technology and retail strategy. Crawford came to Chute Gerdeman last year from Taberna Retail, where he served as principal and founder. Prior to Taberna Retail, he worked as a retail analyst at Forrester Research and Retail Forward.

Jay Highland, who has been promoted to chief creative officer, will bring a strategic perspective to all CG creative efforts, providing account leadership and creative oversight.

Gary Yoko, who joins the leadership team as executive VP development. Yoko comes to Chute Gerdeman from HMSHost, where he was senior director of design.

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