Productivity is rising up the retail boardroom agenda. Retail Week gathered retailers to discuss how to drive greater efficiency.
When John Lewis announced it had created a new board position dedicated to productivity across the group, it was an inescapable sign of the times.
The retailer, generally considered an early mover on new trends, had made a clear statement about one of the main challenges of retail today: that winning sales is only part of the battle.
The news from the John Lewis boardroom might have grabbed headlines, but it is by no means an issue confined to the department store chain.
Customer habits have changed dramatically, as has the technology they’re using, creating a dilemma that all retailers will know well: how to satisfy shopping patterns when consumers have the power, while keeping productivity and profitability high.
In light of John Lewis’ appointment, and Retail Week’s advisory board of leading chief executives identifying productivity as the most critical strategic consideration of 2016, Retail Week, in partnership with Fujitsu, invited key decision-makers from some of the UK’s best-known brands to a think tank in London.
The brief: to discuss the big question of productivity, how retailers are approaching it and how technology is enabling new best practice to emerge.
“Productivity has always been a really high priority for retailers,” says Fujitsu managing director for retail and hospitality Rupal Karia, “but it’s even more so, and more overtly so now. It’s such a vital part of how you keep yourself competitive, and it’s really interesting to see how productivity varies from business to business.”
Productivity: What should retailers be asking themselves?
• How can you improve staff productivity throughout your business?
• Should you appoint designated people to boost productivity?
• How do you set a productivity strategy?
• How can technology boost productivity?
To find out exactly how the concept of productivity varies between retailers, Retail Week gathered a cross-section of the industry. From representatives of ecommerce to the grocery and fashion sectors, the conversation revealed some telling insights.
One of the retailers described the journey their company had been on in order to change the way it thought about productivity in every aspect of the business. “We had a big shift a few years ago, in thinking about the whole customer journey rather than just what happens at the tills,” the retailer said.
“We had a big task in hand. We shifted our focus and changed the way we measured outputs and inputs. We looked at all of the various roles and tasks that our managers had to carry out, and we had to convince the board that we needed to bring in a whole new workforce system.”
With the phenomenal success of ecommerce, a new reality has dawned: shoppers have gained the upper hand.
“Productivity has become more customer-focused than it ever was in the past – it’s about getting that retention of customers and ultimately getting people to come back to the shop. It’s about how you make a difference to the customer journey”
So much choice online, and often little brand loyalty, combined with the growth of the value retailers and the seemingly never-ending culture of discounting, have presented customers with more opportunities to call the shots than ever before and made the job of ensuring acceptable margins harder as time has gone on.
To be competitive, and productive, in this brave new world, retailers are having to put the customer first.
As one retailer said: “Productivity has become more customer-focused than it ever was in the past – it’s about getting that retention of customers and ultimately getting people to come back to the shop. It’s about how you make a difference to the customer journey.”
To fulfil this need, all the retailers agreed, is impossible without the right staff and the right systems in place.
As one retailer said: “We’ve put a lot more control back in the hands of our store managers and we’ve let them have more say over how they run their own stores.
“That’s all for the benefit of the customer and productivity. It’s about how you fulfil the needs of the customer, and how you make the best use of people. It’s a question of knowing when to upsell and where to downsell, and where you place people in your stores for the highest productivity.”
But this, another retailer observed, is not always straightforward. Store staff may be competing with slick online platforms, but they must not lose the human touch in the process.
The retailer said: “There’s a fine line between expecting someone to have a level of productivity in store and letting them have that time and space to spend five minutes talking to a customer.
“That might be the reason why that customer keeps coming back into your store and you can’t let that go; you don’t want to stress people out and reduce it all down to a number. It’s not just about efficiency, it’s about effectiveness.”
Productivity in the UK
• The UK is the second least productive G7 country
• Output per hour worked in the UK is 21% lower than the average for the other six members of the G7 – the US, Germany, France, Italy, Japan and Canada.
Source: Office for National Statistics
If there was one fact that united the retailers around the table, it was the potential that technology offers in boosting productivity.
From the supermarket chains to boutique fashion houses, emerging digital technology is revolutionising the retail business both on the shopfloor and behind the scenes.
And, as one retailer said, by no means should the technology conversation be “divorced from the customer service debate”.
“There are ways that you can make the customer journey much better and much more personalised with technology”
They added: “One of the ways we can increase productivity is to show customers what they could really do with technology. There are ways that you can make the customer journey much better and much more personalised with technology.”
The technology is undoubtedly there, but retailers will already know that new ways of doing things need to be executed tactfully to keep customers on side.
As one said: “When it comes to technology, we’re going to have to find a way of working out exactly what the customer is comfortable with.
“There’s a push and pull between new technology and what customers are comfortable with. I don’t think all customers are ready to embrace all the technology available to us.”
And with all the power that technology brings, there is still a fine line that retailers will need to explore in their own businesses: the line between personalisation and intrusion.
Karia observes: “The question of how you use your resources in the best way you can and get rid of inefficiencies in your business is definitely being answered by technology. But there is a balance to be struck. It’s all about a good connection between people.”
As leaps in the amount of data retailers are able to collect and store continue, and mobile technology allows shop staff to actually detect the previous habits of customers when they walk through the door, the possibilities for increasing productivity are obvious.
But less clear is where retailers should draw the line, and what shoppers will put up with.
“There is the capability for staff to know so much about the shopper when they come through the door,” says Karia.
“That personalised connection is no longer about the person that’s been working in a store for years, it’s about the technology you have and the information you have”
Rupal Karia, Fujitsu
“That personalised connection is no longer about the person that’s been working in a store for years, it’s about the technology you have and the information you have, and there’s a question about the amount of data you have on people.
“If it’s done in the right way then people will be happy with it and you will have a lot of power at your disposal.”
Having this kind of power will be invaluable to retailers during a transformation period. As technology moves faster than customers’ attitudes, it is likely to be a generation before the type of ultrapersonalisation that Karia describes is fully embraced.
But with productivity now top of the agenda and solutions being sought in earnest, the future of retailing is approaching fast.