Release notes January 2023
Standardization in Retail
25.08.2022
Discuss,Retail
How many times have we witnessed a ‘too big to fail’ bubble burst? There is an ever growing list of brands that lost the trust and loyalty of their consumers and then faded out of the market. Most of us will have experienced that let-down feeling when our favoured brand fails to deliver. The most successful and enduring retail companies are well aware that standardization of all processes, in all geographical locations, is critical.
More branches, more problems
Paradoxically, growth requires expansion, but expansion can sometimes mean the beginning of the end for a company. The qualities that made a company legendary among its followers, can be lost once the chain starts to grow. Consistency among all stages of the customer journey is essential, if a retailer is going to increase its market share.
Rather than focus on what goes wrong with expansion, let’s consider what happens when things go well. The obvious example to choose is McDonalds. The rags to riches tale of this iconic brand does not need retelling, but love it or loathe it, the one thing that McDonalds excels at is standardization. Walk into any McDonalds restaurant, in any city, in any country and the customer experience will be as near identical as it is possible to achieve on a global basis. Arguably, it is this uniformity that has contributed to the continued success of the brand. The products, restaurant environment, customer service and operational systems are uniform across its branch network. It is undeniable that McDonalds were pioneers of their time in their ability to understand that digitalization was the key to ensuring standardization of every store in every location.
Standardization Resulting from Digitalization
Customers are now accustomed to the McDonalds’ type of standardization, and expect to have the same retail experience in any branch of a chain operation, regardless of the product or service type. Customer service departments exist largely because the chain has failed to meet these expectations. Customers feel disappointed if the product or service doesn’t meet the standards they are accustomed to when they use the brand, and very often, as a result, they will decide to switch to an alternative.
Following a McDonalds standardization strategy ensures that customers remain loyal to the company and each interaction meets their expectations. It is, in fact, very hard to imagine how this level of standardization could be achieved without digitalization. Only digitized systems can eliminate the opportunity for human error which can affect the uniform quality of the end product. Quite clearly, one of the main factors that could disrupt this uniformity would be human error. McDonalds were quite astute when developing their standardization strategy as they minimised human intervention in areas where digitalization would work more efficiently, and installed trained staff at the points where human interventions would be more effective.
Standardization and staffing
One of the key factors influencing customer loyalty in the retail sector is the standard of service provided by staff. Customers will stay loyal to a brand for many years, if they feel they are valued and respected, however, it takes just one negative event to change their opinion. Retailers need to understand that staff compliance to company standards is essential, and that their staff must be seen as ambassadors for the brand.
Digitalization can have a significant impact on ensuring uniformity of standards across all locations and in the performance of all staff. In-store monitoring systems can provide a continuous real time assessment of cleanliness, time-keeping and task completion in every location. It supports area management functions by providing an objective update of the performance of each staff member, eliminating the possibility of inaccurate reporting or unfair bias.
Standardization of non-customer facing operations
One of the most impressive aspects of McDonalds’ operation is its attention to detail. Take a look in their kitchens and you will find a clear commitment to health and safety standards. Too often retailers forget that non-customer facing areas are just as important as the customer environment, in terms of impact on product sales. Broken or old equipment can have a significant impact on how an outlet performs and its profitability. Providing consistency across all company operations inevitably has an impact on standardizing the quality of the end product or service.
A fully automated system will synergize all business areas, so that departments and branches are no longer stand-alone components but are integrated into a cohesive unit. Digitalization can improve efficiency in the maintenance of equipment, as all items in each location are monitored by the system. Routine maintenance is automatically scheduled so that all machinery is regularly checked. Any breakdowns are immediately flagged on the system and an engineer is allocated the job. In this way, continuity of operations is ensured and the quality of the products and services remains constant.
Standardization of the software used for back office operations is essential in a network retail operation. Unless all administrative departments are linked into the same software systems, it is virtually impossible to synchronize and collate information. This can result in information gaps and inefficiencies affecting task completion, and difficulties in the analysis and comparisons of area operations. Implementing a software system that integrates the functions of each location brings significant benefits, serving to improve efficiency and reduce costs.
Standardization Resulting from Data Collection
Customer data is a precious commodity and retailers have many opportunities to collect statistics. But data can’t produce coherent results, if it just gets dumped into a silo, only a fully automated system can efficiently collate and analyse the data so that it can be used to inform business decisions.
In-store and point of sale data collection is crucial for the continued success of a retail operation. By comparing the data collected from each branch, the company is able to ensure standardization across all locations, and identify any outlets where this is not occuring. Analysis of this data is also invaluable as a means to identify consumer trends and direct marketing and purchasing strategies.
Point of sale data plays a significant role in improving stock flow and can potentially eliminate the possibility of shortages. It also ensures products are constantly evaluated in terms of popularity and profitability. Analysis of POS data helps to maintain optimum sales pricing and influences marketing and purchasing strategies.
Data collected from marketing and surveys is an effective way for the company to understand its customers’ needs. By analysing data gathered from the various touchpoints and interactions with their customers, retailers can identify the brand’s strengths and weaknesses. As a result, companies are better able to make decisions on improving strategies to increase ROI.
Standardization needs an integrated solution
The economies of scale are clear, however, arguably the larger the operation, the greater the need for standardization. Left unchecked, standards can begin to vary from location to location which inevitably impacts on the company’s reputation, and ultimately on its sales. Digitized standardization can play a major role in ensuring uniformity across all locations, thus increasing market share and encouraging brand loyalty
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