Evolution of Customer Experience : Retail

One of the oldest business of the civilised society, what all changes it has seen in terms of customer experience.
“The Shopping is no fun” Experience:

Historically this business started with small shops catering to different needs. For a customer there was no fun being in these shops why?
1) There used to be only one narrow counter where all the customers have to line up. Most of the time counters were designed in a way so that customers have to stand outside the shop.
2) One or two attendants serving customers for whole day so in rush hours customers have to make extra effort to draw their attention.
3) Customer used to receive only what he asks for, all the brands, sizes, shapes could not be placed on display shelves.
4) Shops used to cater only a particular need , there were different shops for grocery, cloths, footwear’s etc.
Overall it was a tiring experience for the customer, he felt happy to get out from the shop as early as possible.
“Delighted to be ” Experience:

By 1862 seeds of organized retail had started germinating, this was the year 3 players who would change the future of retail industry started their operation. Kmart, Walmart & Target , there is not much to discuss about K mart but it is interesting to see how walmart and target decided to provide very different kind of experience to the customer in the same retail business. First of all let’s see come commonalities which they brought
1) First time customer can experience the satisfaction of seeing & feeling almost all major brands and before taking any decision , as larger shelf space made sure that all prominent brands for the same category are displayed at one place.
2) Customer could walk at his own ease in privacy; he did not have to ask someone to give him the merchandising; however reps were few meters away whenever there was a query.
3) Now it was time to make sure that customer does not waste much time on counter waiting in queues for transaction to be processed.
4) The shop floors were huge which meant customer can come with entire family or friends and shop.
5) As these stores received discount from vendors on volume, they passed their savings to customer. Which gave customer feeling of getting value for their money?
6) Advanced point of sales systems made checking out easier, it not only gave a sense of comfort to customers but also helped retailers in maximizing customer’s time spend on the floor shopping merchandising rather then waiting on POS.
So some of the common experience enhancements were: Sense of independence, A better ambiance, Satisfaction of having checked all available brands, I can shop at ease and my own pace, value for money.
“Shop till you drop” Experience:

Late 90s and early 20’s started seeing altogether a different side of retail , customers were now being spoilt, not only by the choice of merchandising but also by providing various facilities in the store.
Food joints: Some of the retailers leveraged on amazing combination of having food joint inside the shop, Shoppers Stop, bigbazar , spencers, Trent and many other retailers were now giving no excuse to customer to go out of the shop.
Child care : Many retail outlets started having special children zone where trained employees take care of younger ones while their parents shop. This is amazingly relaxing for mothers who can not leave kids alone at home .
Not only this , lifestyle retailers in particular have been spending a lot on their ambience which has given birth to various shop interior consultancy firms who claim to know art and science of shop interior.
WalMart here also broke all the records and started keeping photo labs, dry cleaners, optical shops and hair salons in its super stores in early 90s
The experience was of complete peace of mind , shopping in an environment where one does not have to worry about anything.
“From my couch” Experience:

After satisfying all kind of sense in the shops, retailers started driving sales by technology. As the new generation started getting tech savvy, retailers knew its time to take the store the house.
Several have tried their fortune in online retailing or e-tailing but not too many success stories. Tesco remains international leader because of following
1) Ease of shopping online: Online shopping can be a very complex business hence the focus has to be bringing simplicity in customer experience which Tesco & Amazon have done quite well with the help of good technology and customer data.
2) Personalization: This facility of offering you items which may be of your interest could have never been a possibility in a brick and mortar business of several hundred square foot but in e-tailing this is the vantage point. Tempt customer with her interest , giving him a personal experience of being cared.

Doing ordinary in EXTraordinary way

"There are no superstars in Wal*Mart we are an organization of ordinary people , overachieving"
David Glass, CEO, Wal*mart

Recently I was watching a story on discovery about kuchipudi dance, the performer who dresses like demon need to have red eyes and continuously blinks them during the performance. This is something which can be achieved by makeup and conscious effort (blinking eyes) but the performers have an extra ordinary way to perform it , they put a small mustard seed inside both eyes for entire performance , this seed is painful enough to turn eyes
into dark red ( and of course continuos pain does causes blinking). What an extraordinary way to achieve an ordinary goal.

One small story comes from BestBuy, It was expanding big time in 90's to the extent that same day it had opennings of many stores. One day it had openning of a store in Chicago and just few hours before stripes were painted in parking area , there was no way they can be dried by the time of openning . But if there is no way then make one by yourself, BestBuy store team got a helicopter flying few feet up from ground , just to dry the paint in parking area !!! and ofcourse it worked extraordinarily well!

Same is true specially for knowledge workers . Imagine today knowledge economy is run by millions of people , can every one get a chance to have something very challenging or work on simply outstanding extraordinary projects, I guess no ( plus every one does not have calibre to perform extra ordinary tasks).Above that ordinary works are also
need to be carried out for running the show. These ordinary works can be carried out very simply in a routine way but at the same time their is huge opportunity to go to that extra step which will create the difference.

When we took over a large project from European bank for managing their middleware infrastructure services , there were 12 servers to be managed. Every day by 10 AM we will get mail alerts from all 12 servers , each mail need to be openned and checked for any error before our taking lover all of the senior executives used to open all the mails and verify status by themselves . Our team decided that one person on shift would check all the mails
and club all the status in one other mail having subject " MMS Server Status" , effectively this meant now checking only one mail for every one else.

All senior executives now waited for this status mail which gave them snapshot . One day my senior was on the shift , after 3 months with the system he must have realised these are production servers and it is very rare that something goes wrong with them , most of the time they will be ok so from that day he changed the subject line of the mail " MMS Server Status - All OK " , so whenever every thing was OK a mail with this subject used to come and bingo , just looking at the subject line everyone knew they need not bother to open the mail for today's status , its going to be a sunny day ahead with lesser critical issues. I was in a meeting with client manager when he got this mail for the first time on his black berry and he shouted with
sheer joy , showing me he asked why didn't we think this before. While he couldn't stop grinning on this idea , I was also asking the same question to me what a brilliant way to perform a simple task. Someone not only identified the criticalness of the system but also identified the level of ease which can be provided to business users , what an extraordinary way to do a very ordinary task.

Many of Such small operational innovations gradually take their place in industry best practices and standard operating procedures , improving the entire chain of activities.
All one has to do is remember few things while at work
No task is small task.
Drill down deep on whatever you do.
Never stop improving and innovating.

What Retail Quotes

Walmart and Target are the pioneer of the retailaing industry , both are so different in thier management and expansion styles yet very same when it comes to following business ethics and treating customer well. Both organizations show that it was the strong foundation pillars laid by founder members and then management by some of the best brains that took them to peak of Retailing and to the depth of consumer's heart

Sam Walton was a firm believer in the potential of small towns , because of his philosophy Walmart served small town customers very well and created a strong entry barrier for others.

Following statements shows the priority for Mr Walton was providing better services in the existing stores before expansions.
I always wanted to be the best retailer in the world but not necessary the biggetst : Sam Walton ( The walmart decade)

Sam's style was Management by walking around was the
I have always had soul of an operator, somebody who wants to make things work well , then better and then the best they possibly can : sam Walton

Stock it , price it right , Show the value , Take the money : Tom Coughlin , VP, COO Walmart ( Walmart decade)

Drapper put the foundation stone for target , he was initially into banking , mortgage and lending business where he always made sure to lend money to people who are strong in character , sending interests to investors much before time and doing business with complete integrity and honesty.
Buiness integrity is doing things as you agreed to do them. doing things when you agreed to do them. doing things you ought to do. George drapper dayton , Target ( from on Target).

Character is a matter of slower growth but the reward is certain : George Drapper
Target has always been particular in store decoration and putting stylish merchandising arrangements.
Capture the customers imagintion with array of goods and earn loyalty with generous merchandising policy : George Nelson

The concet of integrity and honesty in these houses is so strong that it keeps going on at the same pace with new management , always.

In retail there are lots of ways to be marginally crooked and we decided we weren't going to do that : Norman McMillan , VP, Strategic planning Target
Here is how target proposes building up talent for business
You want a good manager , put him under a good manager and let him run the business : Flyod Hall, Target CEO Retailing is detailing : On target

Similarly both corpoarte houses are extremely careful on customers services .

It does not matter whether customer is right or not what matters whethe she thinks she is right - Dayton , On Target

Taking the Path to BPR

A company which has started couple of years back and growing at very fast pace would not need any business process re-engineering. The focus here will be entirely on growth , the volume handled by various processes should be farely low. So rather thn thinking about BPR such organization should directly adopt the best practices available in the industry since very beginning.
In other case BPR is very relevant for an organization which has been functioning for a decade , it has a matured stable growth rate, data handled by processes are of reasonable volume and outer business environment has changed significantly to advocate and support BPR. Many times processes for older organizations are not updated regularly which means after significant time these processes will be very good candidate for re-engineering as they would have various redundancies and the technology to support them would have enhanced multifold.

1) Have processes codified : Every organization does have a standard operating procedure for the entire range of processes carried out , these SOPs are formed at the very early stages of organization and supposed to be updated frequently but their are two main problems 1) People find out thier own way of doing things by passing the standard procedures given to them , this is true specially in cases where lateral hiring happens.

A person coming from different organization will be comfortable in doing the same work in different way , he may have used altogether a different technology so he will be building his own way of executing tasks which can be contagious after some time and spread across the team.

2) SOPs are not updated periodically : With time various changes happen in oraganization structure , technologies used and the way business is performed but all of these updates don't go to SOP as frequently as they should be going , so after some time SOP itself becomes obsolete.
So it is manadtory to know " As Is" Process for the organization and document them for refernce and benchmarking during BPR.

3) Management Support: Head of only one department or any manager alone will never be able to complete BPR ,there are many people & management
issues then we can ever imagine. Departments don't want to share thier data and decision making factors , people think it is yet another way to waste
time , People do not see any value add in contributing to this process , the information given may be a top level view and the list goes on.
This all can be eliminated if and only if we have a buy out from top management so that smooth communication can happen across all the departments
and they are forced to cooperate.

4) Conduct POC: The best way to get buy in from departments and management is to pick up a much smaller function in any of the department and conduct POC of BPR . If this POC could successfully bring some of the pain points showing the scope of improvement which can be braught in the processes then your task will be much easier

ABC of Creative Costing

In traditional costing system it was a simple method because it was made for a simple era , imagine why would Mr Ford need to worry anything in traditional costing after all , he had to produce only one thing and that was black cars . Ford wasn't changing any model in earlier days , forget about model he wasn't even changing colors of the cars and in such a case traditional costing made perfect sense where all the overhead and other costs were proportioned equally to the number of units produced . there was hardly any confusion or apprehension about costing .

No one would have imagined in those days that a process as simple as finding out cost of labor , material , sales and administration and allocating it to number of units will become so creative in coming days. Very soon days of monopoly and cost plus were on their out from industry , it was time to produce more and with various varieties . ( just after one decade GM would have near 8000 model of cars in its portfolio). Then started the problem , not all the product needed same kind of materials neither were they produced by similar processes . Some of them were simple and needed easily available materials but some were specific which needed expensive material and special treatments. In fact Cost differentiation started much before manufacturing , In case of motherboard , chips or other research extensive electronics product research and design also contributed to the cost and determined the way these products need to be produced during manufacturing.

These complexities gave birth to a new comprehensive and creative way of costing , Activity based costing where no longer the cost was a simple function of direct labour , direct material with equal distribution of overhead to all the products . In ABC each phase of product lifecycle was divided into various activities and cost incurred in each activities was calculated , this obviously gave a clearer picture rather then a generic overview.

What were some of the basic points to consider while deciding between ABC and traditional cost.

Disillusionment : At times traditional cost created illusions , lets take a very bookish example which is there in almost all costing books . If a car manufacturer is manufacturing cars of two types one is standard cars which are made in assembly line and completely automated whereas another types of cars are competing head on with Maybach ( Remember these high end cars in which entire interiors is done by hands) and after making these two kind of cars he is simply dividing the total cost incurred in making them by number of units produced , obviously he would now find that the margin for his standard cars have decreased .....
traditional costing created this kind of false illusions for management which may lead to disastrous decisions like closing down production of standard cars or increasing the price of these cars . ABC helped management in such situations by providing them precise information

Hitting right on the correct problem : In earlier days when major portion of motherboard fabrication was done by hands in HP , they found that over all cost for motherboards was high and the obvious blame was on manufacturing . What they missed is two things
1) How will the device be manufactured is decided much earlier in design phase
2) Manual fabrication is much costlier then automated manufacturing.
These are typical example where either a product need some special treatment or one of the process in product development is eating larger chunk f resources then other processes . In such case we need to concentrate only on those pain areas.

Traditional costing could have never detected these issues , it was again ABC which came to the rescue .

Importance for service industry : Traditional costing could have never done justice to service industry . In service industry there is no tangible product to be delivered , every service is simply combination of activities . To find out which activity is costliest you need to apply ABC and once you have done so , you can decide on next strategic move , whether you should keep such activity with you or outsource it to some third party vendors.

Similarly there is one very crucial question which traditional costing will never be able to answer and that is which customer is causing more cost or which is the most profitable customer.
In short here ABC can help you providing right set of services to right set of customers

Kautilya's 7 pillars of organzation .

The ancient wisdom which Chankaya had passed to us is amazing , It penetrates two main areas of any orgaization 1) Finance ( Arthshashtra) and 2) Organizational structure and Roles and Responsibilities.
Here is an example of what chanakya's opinion was about organizational structure. In one of the verses of Arthshastra he quotes
Swami , Amatya , Janapada , Durg , Kosha , Danda , Mitra , Iti Prakariyet.
These are the seven main componenets of any organizations
AS par kautilaya shastra it is very important for any kingdom to keep all of these 7 factors intact for smooth functioning of the nation . Following are the 7 pillars mentioned by Chankaya.
Internal constituents :
following 5 internal constituents are important for an organization
(a) Swami: The master or king of the nation who rules the nation and has complete control , he is not involved in day to day activities of the nation . Swami is responsible for building long term strategic plans for growth of the nation
(b) amatya : bureaucracy, often loosely described as ministry, They work directly under Swami and control all functioning on his behalf .
(c) durga: fort, often identified as city (pura),
(d) artha or Kosha : treasury or finance of the nation . Kosha is accumulated earning from the janapada which is used for several purposes.
(e) danda : army of the nation. Danda is the workforce of the kingdom which is instrumental in any key implementation and execution of the task

External constituents :
As per chanakya there are two external constituents which affect any organization
(a) Janpada : Rrural hinterland, Can be translated as the end users or stakeholders who are directly affected by what is done by Kingdom.
(b) Mitra : friends of the nation who can help them in the crisis situation .

In todays organizations , these can be compared as given below
1) Swami is represented by the CEO of the organization
2) Amatyas are represented by different managers of the oranization
3) Durg is the headquarter of organization
4) Kosha is the reserves with organization
5) Danda is the workforce of the organization
6) Janapada is the market which organization serves
7) Mitra are partners and other allies of organization

Any activiy or problem of organization can surely be fit into one of these seven pillars and then can be solved accordingly !!

Based on a discussion with Mr Radhakrishnan Pillai , Management evangelist and strategic consultant