Are Your Stores Firing on all Cylinders? | Report | FTI Consulting

Are Your Stores Firing on all Cylinders?

Retail & Consumer Products

November 9, 2015

Smarter shoppers and intense competition are putting more pressure than ever on traditional brick and mortar retailers to fine-tune their operations or potentially risk irrelevance. At one time, brick and mortar retailers dominated the retail landscape and had a customer’s undivided attention when they were shopping. Today, a customer shopping in their store aisle has probably researched the product they are shopping for, read online reviews, polled their friends on Facebook, scanned the bar code with a smart phone app to see competitors’ pricing and might finally choose an onlineonly seller who will ship it for free in two days. Welcome to retailing in the 21st century.

Technology has significantly lowered barriers of entry into the retail marketplace and niche online-only companies are taking market share and pressuring margins. This trend is apparent in the marketplace as retailers’ sales growth and EBITDA margins have been declining for two years running (Exhibit 1 and 2), and more are closing stores and trying to shrink their footprint (Exhibit 3). This has put an added burden on brick-and-mortar retailers to make sure their stores are operating as efficiently and cost effectively as possible.

In our experience, conducting a store operations review can yield significant cost savings, improve employee retention and satisfaction, and improve customer service levels, ultimately helping to generate incremental sales. This article will provide our approach to a store operations review and highlight some key areas that can yield significant results. However, before a company can begin to take on this project, it must first consider how it influences its store operations.

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