FEBRUARY 2013 - HCL Technologies...HCL’s Next Gen FEBRUARY 2012 3 2013 T Pr Author Executive Summary The Consumer’s expectation from the Retail Stores today is very different from

FEBRUARY 2013

HCL’s Next Gen Store Management | FEBRUARY 2012

2 © 2013, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

Executive Summary 3

Retail Stores Management – 4 Trends, Business and Operational Challenges

Applying the Right Technology solutions 8 for Next Gen Stores Management

A Fully Loaded Service Line 10 for Next Gen Stores Management

Conclusion 12

About the Author 13

About HCL 14

TABLE OF CONTENTS



Executive Summary

The Consumer’s expectation from the Retail Stores today is very different from what it used to be a decade ago. The rate at which progress in technology is driving hardware obsolescence, benchmarked by consumer technology products, is making the store infrastructure out of tune with the times. New solutions, ideas, and concepts like Mobility, Social Media, and Cloud are driving the boundaries of possibility beyond what the Retailer has ever known before. In addition, loads of data is available, but the leverage it can provide is still largely untapped.

All the above changes have dramatically changed the way a consumer shops today – the consumer’s buying journey today may neither start, nor end with the Store, nor may it involve the Store at all – however, Stores do remain an important buying channel for the consumer today, and the possibilities of leveraging all the other channels to direct the consumer towards the store, or to influence the buying either from the store or any other of the Retailer’s channels has considerable implications and potential value for the Retailer.

Let us have a quick look at the Global Retail scenario today – the traditional retail sales growth is muted at about 3% per year while the online channel has shown a phenomenal growth rate of about 20% per year in the last 3 years. But the relative spend on the online (both e-commerce and mobile) channel still remains a modest 4.4% of the overall Retail Sales which highlights the importance of store retailing and the need for the Retailers to continue the focus on stores management. Reference: U.S. Department of Commerce. (Source: http://www.census.gov/retail/)

The Retail Solutions team at HCL has been diligently following these trends in the Retail for the last few years and we believe that the Stores is and will remain the most important channel to attract, convert, and retain the consumer – at least for the next decade for most categories. We also believe that there exists significant ROI potential for technology investments to modernize the Stores infrastructure and systems – the Stores of the future will not only focus on getting the customer in, and selling an optimized basket to the customer once he is inside the store, but also have the capability of reaching out to other channels, warehouses and stores to fulfill needs that for some reason cannot be met within the store at that point of time.



Given this background, we have focused on creating a suite of offerings around “Next Gen Stores Management” which encapsulates our understanding, expertise and thought leadership on how to leverage the ever changing technology scenario to meet and exceed consumer expectations.

We believe that Retailers need to drive transformation in stores under the three broad umbrellas:

a) Optimizing stores management and operations

b) Leveraging cutting edge technology to drive consumer experience and operational excellence, and

c) Providing a mechanism to integrate the stores holistically to the other channels by providing a common version of the products and inventory, creating a mechanism to pull and push merchandise across the diverse channels, and potentially use a common set of processes and best practices to drive retail operations across formats and channels

Our offerings, highlighted in this paper, are focused towards addressing these three main solution needs.

Retail Stores Management – Trends, Business and Operational Challenges

Influencing Trends

The Store has been the core of Retailer’s business for decades and it continues to be the same for majority of the retailers across the world. Management of the store sales, service and operations forms the major element of retailer’s costs. Evolution of the retail industry has steadily increased the scale and complexity of the Store Management activities. In addition to this, changes in macroeconomic scenario and changing consumer expectations are putting the retailers under constant pressure to optimize the store operations while improving in-store customer experience and maintaining store profitability.

Let’s look at the some of the key industry trends affecting the ways and means of managing physical stores today:

1) Personalized Store: Consumers increasingly want personalized shopping experience, tailored assortments and good customer service in store.

2) Store formats are not what they used to be: Shoppers today are doing more quick trips and fewer stock ups, retailers are experimenting with various formats customized to the local demography.

3) Globalization & Localization: Global market access to the consumer and at the same time demand for customizing market models and product offerings to meet local needs and preferences.



4) Stores as brand ambassadors: Stores are increasingly playing a role of brand ambassadors for retailers and are becoming show rooms for the touch and feel experience that can’t be provided by other channels.

5) It’s a mobile world: Consumers are in a continually evolving mobile world equipped with readily available information and shopping tools on hand:

a. Not just to browse, research or compare but to Pay & Shop virtually from anywhere

b. Click n Shop is fading fast into Touch n Shop and soon it might be Wave/Gesture n Shop

6) Cross Channel Commerce is becoming a norm:

a. Multiple Channels complementing each other rather than competing with each other in terms of sales, service and marketing is the new ‘mantra’ for driving the consumers to shopping destinations and boosting the revenues.

b. Stores are increasingly leveraged as cross channel fulfillment & service centers

7) Social Media: Increased influence of social media on consumer behavior and shopping experience

Figure 1: Changing role of physical store in Consumer Shopping Journey

On-floor sale completion through mobile device

Visits store to try the product

Customer visits store for purchase or pickup.

Personalized promo alert on mobile

Store Associate Offers assortment tailored to customer based on previous purchases

Product delivered at home. Customer pays on delivery.

Checks competitor’s price on mobile in store

Hears about Retailer’s product

Gen YCustomers

Gen Y Customer Journey – An Illustrative Scenario“Store has become a part of the journey and is no longer the only final shopping destination”

Customer enquires sales associate on promo and checks product

Online product reviews and price comparison

Order online vs. pick-up at nearby store based on convenience and price offer

Help customer on product availability at nearby stores/ online, if required

Place home delivery order from other stores/ channels as required

Social Media

e-Commerce

ConsumerMobility

EnterpriseMobility

In Store Helpdesk

Handle cross channel Product Returns/Service Requests as applicable

Physical Store



Challenges and Key Focus Areas

Industry trends mentioned above and the associated consumer demand to scale up to the trends has brought in a unique set of business and operational challenges to the physical stores and has already started showing effect in certain retail segments even to an extent of closing down a number of stores across the regions.

Listed below are some of the key challenges faced by today’s retailers on managing sales, service and operations at stores:

• Continuous pressure on profitability and an equal focus on improving the customer experience

- Pressure on physical stores to offer the same or superior experience as offered by web/mobile channels or show the differentiation to continue attracting the consumers into physical store

- As the Retailer’s strategic investments are shifting away from stores they are under pressure to lower operational expenses and improve the operational efficiencies

- Ability to provide Cross Channel Fulfillment & return services at stores: buy online pick up at store, return at store for an online purchase, home delivery of an online purchase made within store, etc.

- Challenges in enabling retail and stores systems to anticipate customer needs, provide a tailored assortments based on customer preferences and finally to have the customer information on hand to service them better.

- Need for re-innovation and tailoring of in-store processes as per the changing expectations of consumers and provide a consistent Store Execution

- Need for Physical stores to include elements of virtual world as the customer demand for integrated experience across channels grows.

- Need for transforming the utilization of store space to provide a customer with personalized experience and serve as a brand ambassador for the retailer.

• Massive churning of workforce – particularly in the front-end functions leading to challenges in training and efficiency

- Challenges in reinforcing knowledge and skills of sales associates to meet the demands of increasingly tech savvy customers.

- Need for effective training and workforce management to support consistent store execution.

• Lack of Funds for new Initiatives coupled with Locked capital in legacy infrastructure (real estate, systems) is preventing retailers from transforming the rapidly aging infrastructure in a world with faster technology obsolescence.

- Need for Agility to rollout right changes at the right time

- Need for ways and means of cost effective up gradation of aging store systems



- Peak and Lean time work force availability challenges

- Peak and Lean time IT Systems support and scalability challenges

While it is important for Retailers to address most or all of the challenges and needs to stay ahead of the game, it is also important for them to understand the key focus areas so that right investments can be done in right places to realize the maximum benefit. A benchmarking study by RSR on the Retail Stores shows the top three focus areas for in-store technologies (Figure: 3). The study indicates ‘maintain/improve the customer experience’, ‘Increase revenue while holding down operational costs’ and ‘Put actionable information into the hands of managers’ as the top three focus areas for technology investments.

Based on the industry trends, business and operational challenges, the key imperatives for physical store retailers can be narrowed down to the below three focus areas:

• Lower Stores Operational Costs while improving operational efficiencies.

• Providing the ability to locate and sell merchandise from anywhere in the organization

• Keeping the In-Store Customer Experience relevant and vibrant in current multi-channel world

Figure 3

20%

8%

26%

51%

26%

39%

29%

32%

69%

10%

14%

24%

29%

30%

41%

41%

43%

52%

2011 2012

What are the TOP THREE (3) uses of in-store technologies?

Maintain and/ or improve the customer experience

Put actionable information into the hands of managers

Help the company win new customers and retain current customers

Increase revenue while holding down operational costs

Create competitive advantage and new sources of revenue generation

Make our employees “smarter” and better informed

React quickly to changes in the business environment

We view in-store technologies as “utilities” like light and heat it’s just part of

the cost of doing business

Help us keep up with the competition (avoid competitive disadvantage)

Source: RSR Research, May 2012



Applying the Right Technology solutions for Next Gen Stores Management

Having understood the key imperatives, next it’s important to look for the right solutions and right technology investments. Given below is the HCL’s point of view on key technology solutions, implementing these in combination with the right processes and right investments in people would enable the Store retailers for successful management of Next Generation Stores.

Managed Store Operations: Over the past decade, most retailers have already invested in a number of technology solutions related to POS, Workforce management, Visual Merchandising and other Stores technologies to help improve store productivity and operational efficiencies. In order to further optimize the store operations and improve efficiencies, now the retailers need to focus on streamlining the operations support processes, improving the visibility and control, optimize the usage of infrastructure components, etc:

• Adopt a Stores Operating model(s) with end to end stream lined processes around stores application, infrastructure and business services support

• Consider Shared Services support model to manage the peak and lean period support

• Invest on store lab set up to mitigate the risks related to Peak season support, Compliance, Change rollouts, etc.

Figure 4

In-Store Mobility Solutions

Industry Technology Partners

Reduced Operations Costs & Improved Efficiencies

Locate and Sell Merchandise from anywhere

Stores Workforce Optimization

Cloud Computing for Stores

Business & Knowledge Services Application Services Infrastructure Services

Stores Business & Operational Performance Monitoring

Managed Store Operations

Store Associate Collaboration & Training

Multi-Retailer Store Support

Enhanced In-Store Customer Experience

Stores Multi-Channel Integration

Agile Change Rollouts & Deployments

NexGen Store



Store Business and Operational Performance Monitoring: Real time actionable information is the need which will equip retailers to ensure smooth functioning of store operations and take appropriate timely actions to take care of business needs. This can be achieved through:

• Near-time view of the IT health of their entire retail store estate including Stores IT Infrastructure and Application Software

• Monitoring and Reporting the Stores IT health in terms of impact on key store operational and business KPI

• Real time information and alerts to Stores Managers on key stores parameters

• Real time alerts & indications for preventive and proactive maintenance of IT infrastructure

In Store Mobility Solutions:

• Enabling the stores Infrastructure for mobility, e.g., Set up Wi-Fi at Stores

• Suite of Mobile apps for Store Associates, Store Managers for customer experience and productivity enhancements, e.g., mobile POS that helps a store associate to complete an inquiry and sale on the floor, mobile workforce management app for store manager, etc.

• Suite of Mobile apps for Consumers to improve in store customer experience and to create awareness on Retailer and Retailer products. These can include, personalized in-store mobile promo alerts, product information on mobile, etc.

Store Multi-Channel Integration: Assuming that the backend Retail Information systems and business processes are upgraded to support Stores Multi-Channel Integration, following solutions can be considered for enabling cross channel retailing at stores:

• Upgrade POS systems to provide cross channel Inventory, Customer and Sales Visibility

• Upgrade In-Store Customer Service Center for supporting Cross Channel Sales & Service requests.

• Enable Online or Social Channels to drive customers to stores: Online Store Locator, Online Store Product Inventory, Social Media marketing about Physical Store, Store Only offers, etc.

Cloud Computing Solutions for Stores: Improve Operational Efficiencies by ‘Cloudifying’ Stores Infrastructure and Application Software.

• Centralizing the Store Infrastructure and Application Software through Cloud Computing



• Enable Stores Infrastructure and Application software on cloud to serve as fall back option for uninterrupted store operations

• Enable Select Store Functionalities on cloud to serve as add on services to the existing store systems.

Retail Associate Collaboration and Training Solutions:

• A collaboration solution for Store associates across the retail organization for empowering them with the latest information, to improve communications and thereby improve overall quality and productivity.

• A robust employee training solution possibly integrated with the above collaboration platform

Agile Change Rollouts and Deployments: Given the pressures on modernizing aging store systems in a timely and cost effective manner, it’s important for store retailers to look for right technology solutions which can help retailer to plan and implement:

• Right changes to stores at the right time

• Minimizes disruption to store trading and operations during store change rollouts

• Lower the TCO

Following solutions can be considered for enabling Agile Store Change Rollouts and Deployments at Stores:

• Store Change Rollout and Device upgrade monitoring tool kit

• Holiday Readiness Verification Tool kit

• New Store cycle process management tool kit

• POS & Store Device Testing tool kit

• Store Security and Regulatory Compliance Took kit

• New store provisioning tool kit

A Fully Loaded Service Line for Next Gen Stores Management

In alignment to the retail industry needs and current consumer trends, HCL Retail and Consumer Services group has invested in developing a focused solution and service offerings for retail stores management.

HCL’s Fully Loaded service line for Stores Management offers an integrated suite of solutions, services, frameworks and processes; specifically packaged keeping the Next Gen Stores Management needs in mind.



The benefits of HCL’s Fully Loaded Service Line for ‘Next Gen Stores Management’

It provides a customized suite of solutions, frameworks, processes and services for stores management which can result in the following benefits to the store retailer:

• Reduced run the business costs of store systems IT by 15%-25%

• Reduce implementation costs and lead times of store rollouts, upgrades, hard ware refresh, etc. by 15%-20%

• Improved In store Customer Experience – which can increase revenue by up to 5%

• Higher workforce productivity – which can lower operating expenses by 5%-7%

• Higher capacity utilization – which can increase the return on assets by 5%-10%

An overview of service line components, key solutions and service offerings is given below

Figure 5

  Store Assessment Framework   MStoreIT for Ops support   MyStore Dashboard for Ops

Monitoring   Store Lab Set up Tool Kit

Store Ops Management

Enablers

Stores Business and

Operations Monitoring

Store On Cloud

Agile Store Change

Rollouts & Deployments

  Assessment Framework & Tool Kits   Implementation Framework & Tool Kits   KPI based Benefits Realization Framework   Service Accelerators   Solutions

Service Component Key Offerings

Fully Loaded Service Line for ‘Next Gen Stores Management’

Service Component Key Offerings

  Stores Business Performance Reporting Solution

  Stores Systems Performance Reporting Solution

  Cloud Readiness Assessment Framework for Stores

  Store on Cloud solution

  Integrated Stores Refresh Framework   Integrated Stores Provisioning

Solution

  Mobility ROI Assessment Framework for Retail stores

  Retail Connect –- A mobile apps suite for stores

  Stores Wi-Fi Solution

Stores Mobility

Solutions

Stores Multi Channel

Integration

Store Collaboration

& Training

Stores Workforce

Optimization

  PoS Modernization   Omni Channel Customer Experience

Assessment tool   Store Cross Channel Sales & Service

enablers

  Retail or Stores Workforce Collaboration solution

  Integrated MeMe for Stores with Saba – A workforce training solution

  Partner enabled Stores Workforce Optimization solution

  Stores workforce assessment framework

  Alliance/Partner led solutions  Resources: People, Software, Licenses   Best Practices   Standardized Process Flows

  Integrated Service offerings:   Business Services   Infrastructure Services   IT Application Services



• Improve visibility and control of store operations

• Improve communications and overall quality of stores workforce

The key differentiators of HCL’s ‘Next Gen Stores Management’ service line are:

• Integrated suite of stores management offerings across application software, infrastructure and business functions in one package. For e.g., Stores Change Rollout solution provides not only application and infrastructure upgrade solutions but also provides in-store hands and feet support.

• Business Aligned IT solutions where the Stores technology elements and operational processes are aligned to the business outcomes.

• Comprises of cutting edge technology solutions which take care of both improved in-store customer experience as well as improving store operational efficiencies. For e.g., ‘Retail Connect’ solution provides a suite of mobile apps aimed at improving in-store customer experience and stores workforce productivity, similarly ‘Store on Cloud’ solution is aimed at improving store operational efficiencies.

Conclusion

The changing consumer expectations, evolving technology trends in Mobility, Social business, Cloud computing, Analytics and Cyber Security and increased pressure to reduce operational costs are forcing today’s retailers to re-shape their strategies on Stores Management. It has become an imperative for retailers to carefully analyze the trends, understand the key challenges, identify the focus areas and identify the right technology solutions in conjunctions with appropriate investments in right people and right processes to keep up the physical store in alignment with current and future needs. Investments in the areas of Enterprise Mobility, Cross Channel Sales & Service Enablers, Stores Business and Operational performance monitoring, Agile Store Deployments and Cloud Computing will enable the retailers for a successful Next Gen Stores Management.

While there are a number of store products and solutions available in market, many of the retailers today are struggling to find the right mix of solutions those not only take care of improving in-store customer experience but also helps the retailer to improve stores operational efficiencies and reduce operational costs.

HCL’s Fully Loaded Service line of ‘Next Gen Stores Management’ is specifically designed for Store retailers which can result in significant benefits in terms of improved store operational efficiencies, reduced operational costs, improved customer experience, improved sales and improved service quality. It’s a unique offering that provides retailers with a comprehensive business aligned IT solutions powered by HCL’s best-in-class Managed Services framework integrating Business, Knowledge, Application, and Infrastructure right-sourced Services with industry leading processes, tools and frameworks.



About the Author

Aditya Kuppireddy currently works as a solutions principal in HCL’s Retail & CPG vertical solutions team. He has experience working with Global Consumer Industry Organizations in driving business and technology solution initiatives and his areas of expertise include Ecommerce, Store Operations, Retail Distribution & Transportation and Vendor Operations. He has conceptualized HCL’s Fully Loaded service line on ‘Next Gen Stores Management’ – an integrated suite of solutions and services catering to the needs of store retailers.

Pradeep is a Retail Business consultant currently working with HCL’s Retail & CPG Vertical Solutions team. He has executed many business consulting assignments in retail and CPG industry. His experience has been in Supply Chain, Store Operations, Merchandize management, fresh item management, Point of Sale, store back office and e-commerce areas. He has conceptualized, developed and deployed solutions addressing business requirements and pain points of retailers across the globe.

Rajiv currently works with HCL’s Retail & CPG Vertical Solutions team. He has experience in Program Management, Business Analysis, Solutions building and Consulting. He is responsible for creating domain offerings and frameworks for Retail and CPG Organizations.

© 2013, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

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BUSINESS PROCESS OUTSOURCING About HCL Technologies

HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on ‘transformational outsourcing’, underlined by innovation and value creation, and offers an integrated portfolio of services including software led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 26 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Consumer Services, Public Services and Healthcare. HCL takes pride in its philosophy of ‘Employees First’ which empowers its 85,194 transformers to create real value for customers. HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 4.4 billion (Rs 23,499 crores), as on 31 Dec 2012 (on LTM basis). For more information, please visit www.hcltech.com

About HCL Enterprise

HCL is a $6 billion leading global technology and IT enterprise comprising two companies listed in India - HCL Technologies and HCL Infosystems. Founded in 1976, HCL is one of India’s original IT garage start-ups. A pioneer of modern computing, HCL is a global transformational enterprise today. Its range of offerings includes product engineering, custom and package applications, BPO, IT infrastructure services, IT hardware, systems integration, and distribution of information and communications technology (ICT) products across a wide range of focused industry verticals. The HCL team consists of over 90,000 professionals of diverse nationalities, who operate from 31 countries, including over 500 points of presence in India. For more information, please visit www.hcl.com

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FEBRUARY 2013 - HCL Technologies...HCL’s Next Gen FEBRUARY 2012 3 2013 T Pr Author Executive Summary The Consumer’s expectation from the Retail Stores today is very different from