Retail Store Lifecycle Management

By Gil Castle

In mid-December 2001, Greg Girard authored a seminal "Alert on Retail" article for AMR Research ( article argues "Traditional functional organization structures and management processes break Store Lifecycle Management (SLM) into sub-optimal parts..." Essentially, retailers need to better coordinate the activities of all departments involved in one or more phases of the entire lifecycle of a store.A given retailers' site selectors, store designers, construction crews, staff-and-stock managers, merchandisers, advertisers, asset managers, etc., should no longer perform their tasks in a sequential, isolated manner.

One reason is the recognition that each department's actions profoundly affect all other departments.For example, a site that is a dream purchase from a real estate perspective might be a nightmare for the human resources person charged with recruiting store employees.

Another salient reason is that consumer-purchasing behavior can change quickly, and stores need to respond rapidly to those changes.If a new video game is suddenly a hot item, for example, the internal arrangement of a store might need to be immediately modified - not only to ensure that customers can easily find the product, but also to steer the customer traffic past other complementary products to encourage spontaneous purchase decisions.Such an accommodation might not be possible if the lease negotiated by the real estate department has certain prohibitive terms, or the architects of the internal spaces created too many fixed walls, or no mechanism exists to alert the advertising department that glossy ads in next Sunday's newspaper should identify which stores have an ample supply of the game, and on and on.

Especially in these ever more competitive times - as recently evidenced by the Kmart bankruptcy - retailers must optimize wherever they can.To again quote Girard, "We think there's a lot of value to be created by SLM...application vendors and professional services are beginning to think seriously about supporting their clients with end-to-end SLM capabilities."

End-to-end SLM capabilities
End-to-end SLM capabilities have several key technology-related characteristics.The first is creating convenient-to-use, up-to-date, comprehensive communication opportunities between departments.Girard cited a solution by our company as providing a shared electronic platform for all the internal and external databases, analytic models, work flow collaboration tools, presentation templates, etc., needed throughout SLM.Additional benefits accrue from an ASP approach, that is, having the enterprise wide solution hosted on an external server, readily available to all authorized users anytime and anywhere via standard browser access to the Internet.

Publish-and-Subscribe The second characteristic is adhering to a publish-and-subscribe system rather than an all-things-to-all-people approach.The analyst responsible for forecasting sales revenues for a proposed site, for example, does not need to have a complex analog store model resident on the shared electronic platform; the analysis can be performed offline, and then post only the bottom line result on the platform.Similarly, only the construction group needs access to a sophisticated critical path management (CPM) program, but the current estimate of when construction will conclude is a date of great interest to many departments, and accordingly should be posted on the shared platform.

System Integration
As a corollary, the third characteristic is system integration.With very few mouse clicks the revenue forecasting analyst should be able to download all the current operating store financials, trade area demographics, competitors, and other information she/he needs to run the analog store model - and then post her/his findings with another mouse click.This ability to easily obtain all requisite inputs and post all relevant findings holds true for the construction manager as well, and all other SLM participants.Consequently, real-time import/export linkages will be needed between the shared electronic platform and various corporate databases, department-specific software applications, and even external systems (e.g., granting write-only access to real estate brokers for automated submittal of candidate properties).

A final characteristic is that a corporate commitment to the above types of SLM capabilities is comparable to implementing a Siebel system for sales management, PeopleSoft for human resources, SAP for accounting, etc.The front-end configuration costs and ongoing subscription fees are substantial - but the return on investment is many times greater.In the near term only relatively large and aggressive retailers are willing to make this type of investment.Over time, retailers of all sizes will have to embrace SLM optimization to remain competitive.

Published Wednesday, April 10th, 2002

Written by Gil Castle

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