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Industry News - May 30th 2014



Top 3 Rules to Optimize the Last Mile of Service

For years a retailer's success was based on its ability to adapt store operations to the market and customers. With today's speed of disruption, even the agile retailers are having difficulty keeping up with the pace of change to stay ahead of the curve to avoid losing market share. RIS' recent report, Next-Gen Store Ops: Optimizing the Last Mile of Service, explores how retailers can leverage service, execution and systems to provide the last mile that customers have come to expect.
As customer expectations increase, the stakes for next-generation stores are higher than ever. Mobile, e-commerce, workforce management platforms and flexible fulfillment are all key pieces to the customer satisfaction puzzle. Retailers that respond by offering more products in more ways must also be prepared to manage greater operational complexity while delivering a seamless customer experience. The increasing number of options available in today's retail environment put immense pressure on retailers to adapt yesterday's brick-and-mortar stores to today's retail environment.
The challenge CEOs today face is to determine how to manage the elevated expectations while continuing to deliver a consistent brand experience. The shifts in consumer behavior, preferences and expectations are forcing retailers to completely transform their businesses, reevaluating the in-store customer experience, fulfillment options and how best to manage the workforce. Here are three rules retailers can follow to deliver the last mile of service:

  1. Service: Front-line employees are not only the face of the brand, but also a significant expense. It's important to remember that a retailer's reputation and financial well-being is directly tied to the performance of its in-store associates. Today, retailers are moving away from a product-centric focus and shifting to a customer-first mentality, which requires upgrades to WFM systems to keep pace with the changing philosophy.
  2. Execution: Retailers recognize that consumers want to be the ones calling the shots. To keep up with customer expectations, retailers are focusing on using mobile to enhance the shopping experience — both inside and outside of the store — by providing rich content about products and pricing.
  3. Systems: To handle the omnichannel reality, retailers need a real-time view of inventory, such as flexible fulfillment. This is becoming a competitive advantage for retailers and a must-have for those committed to selling across channels, helping to cut down markdowns and drive foot traffic to brick-and-mortar locations.
As customer demand continues to rise and the number of shoppable channels continues to increase, retailers must create the next-generation store and have the operations to support it in order to accommodate the service, delivery options and store experience that customers demand. The retail industry will see more transformation this year than it has in previous, and it will be interesting to see how the next-generation store evolves.

Data Indicates North American Hotel Sector Poised for Growth

The hotel industry continued on its positive growth trajectory in the second quarter 2014 and for the next 12 months, showing gains in both occupancy and average daily rate (ADR), according to data from the May 2014 TravelClick North American Hospitality Review (NAHR). Both the transient (individual business and leisure travelers) as well as the group segment are seeing steady, healthy growth.
“Similar to last month, TravelClick’s data is showing that leisure travel is one of the main drivers in making the hotel industry thrive right now,” said Tim Hart, Executive Vice President, Business Intelligence, TravelClick. “However, the numbers are strong across the board, and our projected outlook for the next 12 months suggests that the whole market is positioned for growth.”
12 Month Outlook (May 2014 – April 2015)
For the next 12 months (May 2014 – April 2015), overall committed occupancy* is up 4.9 percent when compared with the same time last year. ADR is up 3.4 percent based on reservations currently on the books.
Transient bookings are up 5.2 percent year-over-year and ADR for this segment is up 4.8 percent. When broken down further, the transient leisure (discount, qualified and wholesale) segment is showing occupancy gains of 4.5 percent and ADR gains of 5.6 percent. The transient business (negotiated and retail) segment is up 6.0 percent with an ADR increase of 3.9 percent. Group segment occupancy is ahead by 4.7 percent and ADR is up 0.7 percent, compared to the same time last year.

Hart added, “As we get further into the second quarter, we come up on the summer months where leisure demand is often critical for a hotel’s performance. For this reason, it’s particularly great to see that the numbers for the leisure segment are already so healthy. Hoteliers can look forward to a strong summer season.”
The May NAHR looks at group sales commitments and individual reservations in the 25 major North American markets for hotel stays that are booked by April 27, 2014 for the period of May 2014 to April 2015. 

Reaping the Retail Data Dividend

US retailers are no strangers to big data — in fact, they’re drowning in it. From searching to purchasing, transactions constantly generate data. This data deluge could swamp retailers — or buoy them.
According to a recent IDC study commissioned by Microsoft, retailers worldwide could gain $94 billion in value over the next four years by improving their synthesis, analysis and use of the data they collect — we call this the “data dividend.” 
It used to be that to analyze significant amounts of business data, retailers needed a data scientist using specialized tools — and creating jargon-heavy reports. But with the business software available today, retailers can start small to plumb their data for better insight. Virtually any store manager can import, drag and drop data to analyze their displays, stock management, customer engagement and more.   
Small projects are quicker to execute than large initiatives, so retailers can see immediate results — and dividends.
There are several ways retailers can leverage existing data and tools:

  • Cross the streams. Start by identifying your data silos — such as sales category data, supply data or campaign results — and find ways to bring them together. How do specific product line sales compare across locations? How do loyalty card sign-ups correlate with preorders or returns? Assessing your data helps you formulate smarter questions about your business.
  • Zoom in. Broad demographic segmentation is giving way to microsegmentation — using more factors to create richer, more individually detailed target groups. Instead of a vast category of women 18 to 35 who earn $75,000 to $99,000 per year, microsegmentation can give you women 25 to 29 who live in specific ZIP codes, listen to country music, shop five times per month, and drive one-third of sales for your top product. Such detail helps businesses personalize offers and service to increase sales.
  • Go public. Supplement your proprietary data with public data, much of which is available for free in formats that can be imported directly into spreadsheets or other applications. Weather data from the NOAA plus daily sales by store can reveal how weather influences shopper behavior. Census data shows which customer segments are growing fastest in different parts of the country. And data from Twitter and Facebook can reveal customer sentiment and give early insight into trends — especially for new technology or product categories for which your past sales data simply can’t offer guidance

Gartner Ranks the Top 25 Supply Chains

Gartner's annual assessment of the supply chain leaders revealed that front-runners in the space are expanding the demand-driven concept and leveraging their best-in-class supply chains to better serve customers.

The Supply Chain Top 25 rankings are comprised of two main components: financial and opinion. Public financial data gives a view into how companies have performed in the past, while the opinion component provides an eye to potential and reflects future expected leadership.

Gartner analysts derive a master list of companies from the Fortune Global 500 and the Forbes Global 2000, with a revenue cutoff of $10 billion. Gartner then pares the combined list down to the manufacturing, retail and distribution sectors, thus eliminating certain industries, such as financial services and insurance. Total composite scores are based on a 10-point scale.

Among the vertical examination of supply chain, five retailers were named to the top 25:

Apple. The tech giant claimed the top spot for the seventh year running. Apple's ability to keep both its e-com and in-store channels in-stock is accomplished through constant investment in its supply-chain infrastructure. The retailer's recent expansion into China has put its supply chain to the test. Composite Score: 8.85.

Amazon. Amazon claimed the number three position for the second year in a row. It is no surprise that the online leader is atop any supply chain list — the entire enterprise is built on getting products to customers as quickly as possible. While futuristic plans like delivering packages via unmanned drones may grab the headlines, it is the e-tailer's everyday commitment to supply chain efficiency that makes it a leader. Composite Score: 6.08.

Nike. The athletic shoe and apparel manufacturer and retailer climbed two positions year-over-year to finish 12th on Gartner's latest list. The company experienced impressive 57% growth in e-com in Q3 2014 and ramped up its supply-chain infrastructure to accommodate the increase in demand. Operating overhead grew 15% reflecting investments in infrastructure, supply chain capabilities, DTC and digital. Composite Score: 3.89.

H&M. The fast-fashion retailer finished in 13th position — up four spots from its 2013 finish. H&M's ability to rise in the rankings is impressive considering its supply chain underwent a major upheaval less than a year ago when it went live with e-commerce in the US. Composite Score: 3.83.

Walmart. The big box retailer dropped one position to 14th place in this year's rankings. Having built its reputation on everyday low prices and being a one-stop shop for everything shoppers need, Walmart can ill afford to suffer supply chain hiccups. When the retailer experienced disruptions in its chain during the winter's harsh weather, Walmart responded by incurring incremental expenses for third-party transportation services and overtime wages to keep product flowing. Composite Score: 3.52

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