A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

Management And Measurement Of Brick-And-Mortar Retail Locations

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

Operational Excellence Drives Brick-And-Mortar Success

Ninety percent of retail sales are transacted or fulfilled in stores.1 The quality of a customer’s in-store experience influences key
performance metrics like footfall, conversion, and average order value, and can have an impact on the brand as a whole. For retail
operations leaders, this means measuring and managing hundreds to thousands of store locations for consistency and excellence
across the brand. Failure to do so will result in a brand damage and rapidly declining profit – which could lead to store closures.
Sound familiar?
Retail operations leaders use a variety of legacy applications to monitor their most important metrics. These tools can’t keep up with
the velocity, variety, and volume of modern, omnichannel retail. To achieve a full view of store performance, retailers need new,
specialized performance technology to drive each store to achieve its full potential in delivering a compelling store experience. This
research benchmarks retail operations leaders’ progress to date in upgrading store performance to meet elevated customer
expectations. Forrester Consulting conducted the survey on behalf of Square Root and characterized the respondents as follows:

Demographics Number of physical, Title Industry

Custom survey of 105 customer-facing locations › 37% Managers 100% Retail
professionals involved with › 29% 1,000-plus › 30% Directors
corporate retail store locations › 37% 500 to 999 › 33% VP or C-level
Region: US only › 34% 250 to 499

1Source: “Tool Up For Digital Store Operations,” Forrester Research, Inc., July 13, 2015.

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

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Financial KPIs Are A Top Priority For Retail

Operations Leaders
We asked store operations executives in the survey how they
measure store performance. Key performance indicators (KPIs)
that closely affect profit rose to the top of the responses. Beyond
those, respondents also track and measure operating margins,
average inventory shrinkage, and sales per employee hour.
Planogram, or store layout, and shopper value were among the
bottom three priorities. KPIs around promotions were also ranked
low by retailers: Only 14% use price and promotion compliance and
sales per promotional investment to measure store performance.
The list of KPIs is long, and in today’s fast-paced retail world, it can
be challenging to gather and analyze them across the enterprise.
How do retail operations leaders in the survey do it?

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

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Legacy Systems Measure Store Performance

Survey respondents currently measure store performance via
inventory management, point-of-sale systems, and/or corporate
intranets. These legacy systems are focused on gathering specific
metrics at their point of focus — like inventory and point of sale —
within a specific location. They are not often used for collecting,
integrating, and reporting across all stores with a concentration on
consistent operational excellence.
How do retail operations see performance in a consistent way across
stores? What issues do they encounter? How are they planning to
improve?

While most large retailers are

embracing omnichannel
fulfillment, we expect more
retailers to adopt technology in
every aspect of their business
— from customer acquisition to
product development — as they
seek to improve customer
experiences and margins.2

2Source: “It’s Only The First Inning Of Omnichannel Retail,” Forrester Research, Inc., February 11, 2016.

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

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Tackling Performance Across Stores

Store operations executives in the survey were asked about their
biggest challenges to improving store performance. Along with
expected cultural and organizational issues, two key, systemic
issues emerged as top barriers: 1) driving change through stores
and 2) identifying operational issues across stores. Both of these
issues rely on technology to provide the right information fast.
Dedicated store performance solutions streamline the data-to-action
process and enable stores to move faster, drive continuous
improvement, and anticipate new opportunities. If these are truly
important to retail operations leaders, why aren’t they making an
investment to overcome these barriers?

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

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Ways To Narrow The Gap

The study found that management systems that offer data-driven
insight play a critical role in closing the gap between store
experience and customer expectations. It is also vital to empower
store managers to make decisions on their own, as they have the
clearest picture of the challenges and needs of their location.
Forrester’s research indicates that store operations leaders should
abandon fragmented legacy store performance systems in favor of
solutions offering the data-driven insight to drive consistently
superior customer experience (CX) across all stores.3

3Source: “It’s Time For Retail Stores To Open Their Doors To The Digital Org,” Forrester Research, Inc., February 3, 2017.

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

1 2

Investments In Customer Experience Are

Tied To Top Store Performance KPIs
Retail operations leaders need to raise the performance of subpar
stores to improve customer experience, conversion, retention, and
average order size. Survey respondents plan to move quickly to
implement a customer experience strategy and invest in enterprise
technologies that use comparative store metrics and customer data
to prescribe improvements for stores that perform below their
potential. In the age of the customer, retail operations leaders cannot
afford to lose track of their shoppers or to take their loyalty for
granted.

Key performance indicators used

to measure a store’s performance:

40%
Customer experience scores

28%
Customer loyalty

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

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Aligning Store Performance Provides A Range of Benefits

Sixty percent of survey respondents believe improved CX is the top benefit of aligning store performance. Consistency will also help the
bottom line by reducing operational costs, improving productivity, and turning over more inventory. Retail operations leaders have long-
monitored store performance in comparison with past periods (“same-store comparison”). They also compare revenue between similar stores
by demographics or customer behavior. Being able to monitor more granular, C-focused performance measures consistently across stores is
the rising tide that lifts the performance of failing stores, and helps make the most of a retailer’s investment in merchandise, staff, store space,
and marketing.

Which of the following are the top business benefits to aligning poor-performing stores?
(Select top three)

60% 47% 44% 36%

Improve customer Reduce operational Improve employee Improve inventory
experience costs productivity turnover

Base: 105 corporate retail store operations decision makers

Source: A commissioned study conducted by Forrester Consulting on behalf of Square Root, February 2017

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A Custom Technology Adoption Profile Commissioned By Square Root | May 2017

Close The Gap Between High- And Low-Performing Stores

OVERVIEW SITUATION APPROACH OPPORTUNITY CONCLUSIONS

Conclusion
Today’s demanding, hyperconnected customer can share views at light speed. Retail brands cannot
afford the negative impact of highly variable performance from one store to another. Uniform metrics and
a consistent, customer-obsessed organization will provide a compelling, personal value proposition to
customers who have virtually unlimited choices. Legacy systems are costly to brands, as they deny them
effective data insights. They need data-driven insights to help them identify improvement opportunities. In
a race to win, serve, and retain customers, there is no time to lose in implementing applications that
empower employees to deliver a compelling customer experience that drives customer loyalty and
advocacy.

METHODOLOGY
› This Technology Adoption Profile was commissioned by Square Root.
› To create this profile, Forrester Consulting conducted a custom survey of 105 corporate retail store
operations decision makers. Respondents come from manager to C-level roles.
› The custom survey was completed in February 2017.

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