tighten up your back end: productivity evolution in retail and harnessing every dollar
TRANSCRIPT
Productivity Evolution and Harnessing Every Dollar
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Brandon Wetzstein
Lead Business Partner- Order Pickup Planning and
Implementation
~20 Years in Retail
Target
Best Buy
Audio King
Improviser
Beginning blacksmith?
Linkedin.com/brandonwetzstein
Twitter @curiousbrando
1950’s – Post WWII – increased specialization and DIY- Home Improvement centers-auto parts and tire stores- expansion and growth of the supermarket- Notably the TV Dinner
1960’s – Apparel rebellion (think tie-dye), Big Box hit’s the scene, Discounting becomes a thing.
1970’s-Office Retailers, Restaurant growth, Discounting theme continues, discount clubs
1980’s- Rise in fashion and designer styles, Brand names, more office services and discount clubs. Home shopping network (new channel) – computer use start to lend efficiencies- Hardware growth, Decade of the chicken wing, fast casual born, premium grocery
1990’s- Internet retailers, comfortable casual, prescription filling computer system, Growing fast casual and gourmet coffee, grocery mergers and superstore
2000’s- Fashion all over the place (crocs), tech disruption, organic healthy and on te go. Grocery merges
Today: Tech everywhere, omni-channel flexibility, personalization, Save time, recommendation engines.
2From Chain Store Guide's "Through the Ages” series.
Basic measurement- very similar to ROI
In retail, expressed in sales dollar per labor hour (or employee in a sales role)
Ideally, should increase over time
Store labor is largest component of SG&A Expense (For Big Box Retail)
To oversimplify- Footsteps and Touches (Maximize here!)
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3 Steps
1.5 Seconds each way
5 pots/day
$8/hr
$12.17/yr
7-Eleven
8273 stores
Coffee Filter
Fetching Cost = $100,654
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Assortment Complexity (Specialization & Localization)
Shortened product lifecycle (technology, seasonal, trend)
Product touches
Footsteps
Wage Rate (increases over next 5 yrs)
Inventory & Supply Chain
Accuracy
Availability
Turn
Fulfillment
Cube (holding)
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Increased selection
Localized product
Immense variety
Decreased product lifecycle time
Technology
Increased trends in non traditional trend areas
Sriracha Ketchup?
Cannibalization of the core
More products = more facings = more touches
Increased inventory risk
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Omni-channel fulfillment
Inventory accuracy is key- but challenging
Stores as fulfillment centers
Shipping from stores
Shop online- pick up in store
Buy online- ship to store (expanded assortment)
Hard to find items (clothing – jorts)
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Expected spikes in minimum wage rate over the next 5-10 years
Some Retailers have already expanded wages
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19.1%18.9%
19.2% 19.2%
20.1%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
23.0%
0
100
200
300
400
500
600
2012 2013 2014 2015 2016
Walmart
Rev SG&A Percent
20.1%20.3%
20.2%
19.8%
19.5%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
23.0%
0
10
20
30
40
50
60
70
80
2012 2013 2014 2015 2016
TGT
Rev SG&A Percent
20.2%
21.1%
19.7%
18.8%
19.3%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
23.0%
0
10
20
30
40
50
60
2012 2013 2014 2015 2016
BBY
Rev SG&A Percent
22.7%
22.1%
21.1%
20.2%
18.8%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
23.0%
0
10
20
30
40
50
60
70
80
90
100
2012 2013 2014 2015 2016
Home Depot
Rev SG&A Percent
Source: Marketwatch.com
Technology- RFID, ESL, Self Checkout
Localized predictive analytics (Machine learning)
Precise allocation of resources based on Return on Labor (ROL)
Knowledge sharing and interdepartmental cooperation
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RFID- Inventory Accuracy, Location accuracy
ESL- quick price change ability (dynamic, accurate pricing)
Self Checkout
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Combine location with historical sales and promotional info
Dive into location events, news, weather (open data)
Football games
Political rally’s
Delegate/plan labor appropriately-
Plan smart localized promotions
Machine learning to truly understand variable impact
Combine with qualitative EXPERTISE!
Crowdsourced employee info?
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Not quite productivity- but valuation on ROI by labor dept
Minimum bases that need to be covered- Cashier,
Customer Service
Putting product away,
Open and close the doors
After base levels are met, determine best ROI per labor dollar spent by store Assortment changes
Promotion management
Clearance price management
Example: $100 of labor to spend in a day-
$60 is table stakes, where does the remaining $40 go? The same place as last year?
Divided by department?
OR does it go to the best possible resource available?
In December, service in electronics yields the best return
In June, It should be applied to assortment change
In February, it should be applied to additional clearance markdowns16
Connecting usually unrelated departments to find internal synergies
Marketing and operations?
Call center and product development?
Synergies exist, they just need to be found.
Example?
Cartwheel
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