Future of Retail Performance Monitoring Metrics
Reform value realization and capture metrics.
- Omnichannel retail is driving the development of new operating models. Leaders are under tremendous pressure to implement new performance monitoring metrics and capture value as the enterprise develops its channels and enhances customer experiences.
- Implementing and delivering real-time monitoring is the most challenging responsibility at an enterprise level and requires retailers to monitor rapidly changing consumer demands.
- Retail CIOs need a comprehensive strategy to formulate and measure value and improve core service metrics.
Our Advice
Critical Insight
As enterprise becomes increasingly integrated, there is an undeniable flow of information linking individuals, channels, communities, and ecosystems. While retail endures to evolve and adapt to changing consumer models, processes, and new technologies, it is more and more critical to develop more relevant metrics to accurately measure the value generated for the retailers across the customer touch point by evolving functional execution.
An omnichannel integrated customer-centric retail business needs to recognize:
- In what way the customer experience vs channel engagement works to draw customers and convert them to effective sales.
- Exactly how the advanced customer analytics tools combine customer interactions and transaction data from each touchpoint to know what the customer experienced and, therefore, help understand customer loyalty behavior.
- Emerging technology that combines dashboards, business activity monitoring, and real-time data infrastructure to track enterprise KPIs with precise performance metrics on a real-time basis.
Impact and Result
- Identify opportunities across your channels and functions to capitalize on monetizing real-time key customer insights.
- Realize the effects of new functions and operating models that are being felt on all entities of the physical and digital retail ecosystem.
- Learn how the best-in-class retailers are now reaping best practice KPI variants to leverage across retail sub-sectors.
- Visualize the future state of retail performance monitoring metrics for maturity realization with the opportunity to design a list of initiatives to integrate into the IT strategic plan.
Future of Retail Performance Monitoring Metrics Research & Tools
1. The Future of Retail Performance Monitoring Metrics Guide – Use this guide to reform value realization and capture metrics.
Evolving business models reshape value realization and drive the need for advanced capture metrics.
The Future of Retail Performance Monitoring Metrics
Reform value realization and capture metrics.
Analyst Perspective
Evolving business models reshape value realization and drive the need for advanced capture metrics.
As enterprise becomes increasingly integrated, there is an undeniable flow of information linking individuals, channels, communities, and ecosystems. While retail endures to evolve and adapt to changing consumer models, processes and new technologies, it is more and more critical to develop new, more relevant metrics to accurately measure the value generated for retailers across the customer touchpoint by evolving functional execution.
An omnichannel-integrated customer-centric retail business needs to recognize:
- The need for customer experience vs channel engagement work to draw customers and convert them to effective sales
- Exactly how the advanced customer analytics tools combine customer interactions and transaction data from each touchpoint to know what the customer experienced and, therefore help understand customer loyalty behavior.
- Emerging technology that combines dashboards, business activity monitoring and real-time data infrastructure to track enterprise KPIs with precise performance metrics on a real-time basis.
Rahul Jaiswal
Principle Research Director, Retail
Info-Tech Research Group
Executive Summary
Your Challenge
- Unified omnichannel retail is driving the development of new operating models. This places leaders under tremendous pressure to implement new performance-monitoring metrics and capture value as the enterprise develops its channels and enhances customer experiences.
- Implementing and delivering real-time monitoring is the most challenging responsibility at an enterprise level and requires retailers to monitor rapidly changing consumer demands.
- Retail CIOs need a comprehensive strategy to formulate and measure value and improve core service metrics.
Common Obstacles
- Retailers are reluctant to implement and execute the future-state retail performance monitoring metrics for value realization, which is the key to measuring the success of the retail organization's strategy and operations.
- Most retailers don't know how to begin. They have not taken a structured approach to execute value capture metrics for each channel of line function.
- The right metrics, KPIs, and monitoring system are integral to the successful ongoing performance of the enterprise
Info-Tech's Approach
- Identify opportunities across your channels and functions to capitalize on monetizing real-time key customer insights.
- Realize the effects of new functions and operating models that are being felt on all entities of the physical and digital retail ecosystem.
- Learn how the best-in-class retailers implement and deliver best practice metrics and KPI variants to leverage across retail sub-sectors.
- Visualize the future state of retail performance monitoring metrics for maturity realization with the opportunity to design a list of initiatives to integrate into the IT strategic plan.
Info-Tech Insight
Enterprises need to prioritize investment in real-time monitoring platforms and analytics tools that combine dashboards, business activity monitoring, and real-time data infrastructure to track retail KPIs using precise performance metrics on an actual basis for measuring strategic priorities and improving their competitive advantage.
Unified omnichannel in retail is bringing businesses closer to the customer by understanding their needs
| Omnichannel |
Business |
Increased Reach (Customer Ecosystem) |
|
|
|---|---|---|---|---|
| Operational Efficiency | ||||
| Drive Sales and Traffic | ||||
| Integrate Digital Touchpoints | ||||
|
Customer |
Seamless Experience |
|
||
| Across Channels | ||||
| Improved Engagement | ||||
Source: Infotech Research Group Analysis
With customers using numerous channels, digital & physical are being increasingly viewed as one channel, forcing retailers to respond accordingly
Retailer outlook
- Business concerns
- Unified omnichannel management across the organization and marketplaces
- In-store picking
- 360-degree view of customers. Integrated pick-up.
- Customer support and personalization for customer retention
- Omnichannel principles for loyalty management and execution
- Omnichannel Returns
- Integrated re-stocking and inventory optimization
- Technology concerns
- Cohesive product information and order management systems
- Integrated distributed order management systems and real-time inventory
- Cohesive enterprise order, supplier management system
- Unified and context-aware CRM systems
- Dynamic pricing/ promotion management systems
- Auto replenishment and fulfillment systems
Source: Infotech Research Group Analysis
As a retailer develops their channel, the functions required by their IT and business increase in complexity
- Integrated automated processes and information systems to realize a seamless and consistent consumer experience across all digital and physical channels.
360-degree view of the customer and transactions. - Multichannel retail offer consumers two or more channels that usually run as separate entities.
Inconsistent customer experience. With a focus on engagement tactics, retail enterprises can reach out to different customer segments. - Web-centric propositions offer a consumer the site, content, web service, or enhanced web features as well as exactly how that links to the overall product or service.
- A traditional commerce retail usually has a single channel format.
Mainly focused on growing sales order value and conversions.
Source: Infotech Research Group Analysis
The future-state retail performance monitoring metrics for maturity realization
Awareness and readiness
Even though several traditional commerce metrics remain pertinent to the integrated retail ecosystem (such as sales, margins, EBIT, ROI, NPS etc.), there is a strong focus on customer engagement and experience.
Integrated omnichannel retail needs to:
- Recognize how the seamless transition between channels within the same transaction provides that personalized connected experience.
- Ensure purchases are delivered to customers where and when they want, keeping product prices and promotions consistent.
- Establish a measure of customer long-term and short-term relationships.
- Understand how the personalized customer omnichannel experience works to attract and retain loyal customers.
Best practice KPI variants to leverage across retail sub-sectors
Strategy |
|
|---|---|
|
Marketing |
|
|
Merchandising |
|
|
Supply chain |
|
|
Ecommerce |
|
|
Store operations |
|
|
Partner management |
|
|
Information technology |
|
Source: Infotech Research Group Analysis
Awareness and readiness
In our view, there are three fundamental guiding principles to effective performance management.
- Focus on making critical long-term business decisions.
- Ensure these decisions are driven by the correct data and insight.
- Establish a management drumbeat of decision-making that involves the right people with the correct information at the right time.
Once the top-level KPIs are agreed upon, cascading these through the enterprise is critical to aligning behavior.
Real-time business intelligence presents the best opportunity to help retailers monitor rapidly changing consumer demands
Source: Infotech Research Group Analysis
Awareness and readiness
Key tools :
Real-time monitoring platforms :
Emerging technology combines dashboards, business activity monitoring, and real-time data infrastructure to track KPIs using precise performance metrics on a real-time basis.
Advanced customer analytics tools :
Advanced analytics tools combine customer interactions and transaction data from each touch point to understand what customers experienced and, therefore, help understand customer behavior.
Business impact :
- Greater customer satisfaction and loyalty
- Higher conversion rates
- Reduced returns
- Increased basket size
- Competitive differentiation
- Positive brand association
- Personalization for customer segments
Delivering and monitoring real-time customer experience is the most challenging responsibility at an enterprise business level
Most challenging customer experience tasks at enterprise organizations
Based on a November 2019 survey of 314 marketing and customer experience professionals at global organizations with $500M+ in annual revenues
Source: Ring Central, CSG; Published in MarketingCharts.com in May 2020
Awareness and readiness
Offer "optimal shopper experience" through real-time convergence of sensors, advanced analytics monitoring tools, and mobility.
Sensors
InfraRed, Grid EYE IR-based occupancy, iBeacons, NFC Tags, QR Codes, in-store video cameras, thermal, temperature, pressure sensors, intelligent display experience suites and IoT Gateway
Mobility
Retailer App M-Commerce
Platforms
New-generation cloud-based platforms are easily extendable, enabled by AI/ML, encourage innovation, and form the foundation on which retailers can offer a personalized, highly relevant experience and help build consumer loyalty while tracking process performance.
One in four retailers have implemented practices involving data engineering, machine learning, and DevOps
Data usage in consumer products and retail industry
Based on an August 2020 worldwide survey of 1,004 respondents; technical and business executives from 100 CP & Retail organizations
Source: Statista, Nov 2, 2021; May 2021 A global survey from Capgemini
Awareness and readiness
The analytics as a service (AaaS) model is estimated to grow almost 4X from 15 billion U.S. dollars in 2021, and expected to reach approximately 59 billion U.S. dollars in 2027 by providing access and customizable data analysis solutions in the cloud.
AaaS refers to providing business operations and analytics software via the internet. Since customers only pay for the service if they use it, this (AaaS) service model is expected to become more commonly used.
It is used in sectors such as retail, wholesale, insurance and IT services etc.
The prominent players in the market are Google, IBM, AWS, and HPE.
Case Study: IRi harnessing the power of data to drive retention and revenue
IRi Growth Delivered
IRi provides information, analytics, and business intelligence solutions to leading retail and CPG players. The IRI Liquid Data® technology platform seamlessly integrates and aligns all enterprise sales, frequent shoppers, media and other data sets to quickly find the insights and action steps its clients need to take for their brand and/or retail store.
The COVID-19 pandemic has initiated a seismic shift in channel migration developments. A large grocery retailer approached IRI to understand precisely how shifting trends impact its precious shoppers and help them foresee how post-COVID actions will play out across the omnichannel marketplace.
Solution
By extracting the retailer's frequent shopper program (loyalty) data, IRI segments shoppers by fulfillment preference.
The IRi group looked at the behavior and spending of in-store-only shoppers, as well as shoppers who started shopping online after the start of the COVID-19 pandemic.
The group further segmented to identify which shoppers had become more regular users of online fulfillment against those who attempted it once and then returned to in-store behaviors.
IRI discovered that the grocery retailer's repeat e-commerce shoppers spend approximately twice what in-store-only shoppers spend.
Results
The e-commerce program with the retailer remains, with the IRI group and the retailer team connecting to take a granular view of impact throughout departments and aisles.
The E-commerce part of sales is relatively steady across departments, with an average of more than 6%. The top growing products are all basket staples.
The tracking process equips the retailer with the insights to rapidly and accurately pivot in-store and e-commerce strategies to continue in lockstep with changing buyer behaviors.
The right metrics, KPIs, and monitoring system are integral to the successful ongoing performance of the enterprise
Metrics/ KPI lead to a performance-driven enterprise
- Start at the top of the enterprise; metrics and KPIs are driven by the enterprise's strategic intent.
- Move across and down the enterprise, business units and teams, then define supporting KPIs. This results in a hierarchy of KPIs cascading down from the corporate strategy.
- Selecting and tracking metrics and KPIs is a dynamic process.
- Strategize: Build a bridge between longer-term strategies and tactical execution by identifying the "one big thing" to accomplish, and defining a common thematic goal supported by detailed objectives, metrics and KPIs.
- Measure: Define and measure key business activities and process outcomes that need to improve to deliver the "one big thing".
- Innovate: Leverage and foster process insights and energies by democratizing innovations.
- Propagate: Deliver changes quickly throughout the enterprise with agile architectures, development methods, and governance.
- Engage: Create a culture that continuously improves performance by decentralizing authority, promotes cooperation and competition, and ensures real-time, transparent performance feedback.
Retail CIOs must climb the maturity ladder to help CEOs drive growth
Based on benchmarking data, the retail industry's IT departments are at the "Trusted operator" level on Info-Tech's IT maturity ladder (at right). CIOs at this level can play a role in digital transformation by improving back-office processes but should aim for a higher mandate.
CIOs at the "Business partner" level can help directly improve revenues by improving customer-facing products and services, and those at the "Innovator" level can help fundamentally change the business to create revenue in new ways.
IT innovation leadership, business applications, and client-facing technology are considered underrated services due to low importance and satisfaction metrics. Furthermore, from an IT staffing perspective, being heavily focused on infrastructure demonstrates that the industry has stagnated on the IT maturity ladder as a trusted operator. By leveraging digital transformation technology tools to enable new omnichannel capability components and focusing more on applications and strategy, your retail operations will have the opportunity to demonstrate the value of IT and provide greater satisfaction. Ultimately, your IT department can establish credibility with business stakeholders and expand as a transformational or evolutionary innovator.
Overarching IT risks – Improve core services metrics
Capabilities to unlock retail omnichannel
Data and analytics
Analytical capability – Satisfaction with effective standard reports, custom reports capability, and the ability to generate business insights.
Data quality – Put policies, processes, and capabilities in place to ensure that appropriate targets for data quality are set and achieved to match the needs of the business.
Info-Tech benchmarking insight – Business stakeholders must understand the value of data and analytics in making the right decisions. Satisfaction must be improved as personalization and understanding shopper uniqueness will require automation and real-time data and analytics to maximize the customer experience.
IT security and network
IT Security – Satisfaction that organizational devices and data are properly secured.
Network & Infrastructure – Satisfaction with the reliability of communication systems and networks.
Info-Tech Benchmarking Insight – Implementation of retail technologies will require superior IT security and network services and will increase the importance of IT security and network to the business. Depending on IT's maturity, this could positively or negatively affect business stakeholders and customer satisfaction.
Info-Tech resources
Related Info-Tech research
Retail Industry Business Reference Architecture
- Leading organizations require business reference architecture techniques such as strategy maps, value streams, and capability maps to design accurate blueprints of retail operations.
- Assess your initiatives and priorities to determine if you are investing in the right capabilities. Conduct capability assessments to identify opportunities and prioritize projects.
The Future of Omnichannel Retail
- Identify: Strategic foresight flows from the identification to clustering the signals.
- Prioritize: Further customize the scores by tailoring the generalized weightings to your organization and determining the relevancy and timing to your operations.
- Align: After establishing what trend and technology to prioritize, establish its benefits that closely align and promote the success of your business' goals.
The Retail Store of the Future
- Understand how the retail store is transforming to meet customer needs.
- Realize the effects of omnichannel that are being felt on all entities of the store ecosystem.
- Envision infrastructure components, cost and competitive advantage creators in unison.
- Identify opportunities across your shopping journey to capitalize on the blockchain, digital twinning, infrastructure, and virtual environments to monetize key customer insights.
- Learn how retailers are already reaping business benefits from adopting technology demands with the Metaverse Journey Map. Visualize consumer, services, operations, and technology components for your enterprise to design a list of initiatives to integrate into the IT strategic plan.
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