Actionable Insights From APT's Retail Practice

The Human Ingredient: Reducing Turnover and Managing Labor Costs

November 29th, 2011 | Posted by retailblogadmin in Labor & Operations - (Comments Off on The Human Ingredient: Reducing Turnover and Managing Labor Costs)

Despite McDonald’s well-chronicled hiring of 62,000 new employees on its April 19th “National Hiring Day,” surveys of restaurant human resources departments and recruiters, summarized in the People Report Workforce index, continue to indicate increased pressure on restaurant employment in Q4. After rounds of drastic cuts during the recession – resulting in more hours, heavier workloads, and reductions in performance-based incentives – restaurants are once again recognizing the need to invest in labor.

Operators increasingly concerned about recruitment, retention and management of their workforce must deploy a combination of strategies to address a few key questions: (more…)

A touch-screen “Fries with that?”

November 29th, 2011 | Posted by CCorman in Restaurants - (Comments Off on A touch-screen “Fries with that?”)

With iPad2 sales soaring and the Kindle Fire poised to be a bestseller this holiday season, it’s clear that mainstream consumers have become comfortable with mobile touch-screen shopping. For restaurant chains toying with the idea of adopting tech-forward ordering interfaces, now might be the time to strike.

Menus on spill-proof, drop-proof tablet computers are spreading from independent restaurants to chains like Umami Burger, and major fast-food companies have begun to invest aggressively in self-ordering consoles, touch-screens, and mobile ordering. After experimenting with self-serve kiosks for years, McDonald’s has launched an arsenal of them in 7,000 of its European locations. Subway, betting on the convenience payment by mobile devices, has pledged to accept payment by the Google Wallet app.

Purveyors of new restaurant technology—like Rajat Suri of E La Carte—claim their devices can increase revenue, reduce dining time, and improve customer experience. But will rolling out new ordering devices help your company? Can the “cool factor” of new tech draw more sales than the classic benefits of personal interaction?

Since devices are developing so quickly, the wrong bet will leave restaurants with an expensive system that’s already become obsolete. Making the right decision requires confidence about the technology and willingness to test customers’ response to it. The time-tested teenager-in-a-visor model of fast-food ordering has sold a lot of French fries, and might be more lucrative than you think. The best way to figure out which ordering model will work for your business is to test it in a subset of your chain before rolling it out.

Thirsty for More?: How Restaurants Can Combat Declining Drink Sales

November 29th, 2011 | Posted by Jatin Atre in Restaurants - (Comments Off on Thirsty for More?: How Restaurants Can Combat Declining Drink Sales)

As commodity costs rise and restaurant margins are squeezed further, many restaurants were hoping that consumers would continue to be thirsty for high-margin drinks. Unfortunately, in 2011, consumers purchased 846 million fewer carbonated soft drinks; in the past five years, overall drink orders are down by 5%. Restaurants are trying a variety of techniques quench their patrons’ thirst: introducing new drinks, adding table signage, promotions, encouraging servers to cross-sell, etc. As restaurants try to boost ailing drink orders, they should analyze three key questions:

(1)    How do we successfully introduce new drinks?

While the overall drink trend is headed downwards, new items such as smoothies, iced tea, and premium coffee are reporting increases in sales. As restaurants introduce new items, they need to carefully analyze how the addition of a new drink changes both total check margin and operational effectiveness. The introduction of items such as smoothies may lead to increases in preparation time and corresponding decreases in guest satisfaction and added labor cost. These operational problems in new drinks are particularly acute in QSRs where people are waiting in line for their orders. Restaurants need to carefully understand the all the dimensions of introducing a new drink before rolling it out to their network. (more…)

Are Banks the Villains and Wal-Mart the Hero?

November 21st, 2011 | Posted by retailblogadmin in Financial Services | Uncategorized - (Comments Off on Are Banks the Villains and Wal-Mart the Hero?)

The New York Times published an article last week about Wal-Mart gaining traction for its banking services because of customer dissatisfaction with bank fees. If you missed it, it’s available here.

A banker reading the article must have thrown up her hands in disbelief. Wal-Mart, the company everyone usually loves to irrationally bash, is lauded for offering a debit card for a $3 monthly maintenance fee, while Bank of America is teetering on a Congressional inquiry for its $5 monthly fee! Moreover, customers love the $3 fee per check cashed that Wal-Mart charges. We can only imagine what would have happened if B of A announced that same fee.

How could banks see such a maelstrom for the same fees that Wal-Mart and other entities would charge? More importantly, what should banks do about it? (more…)

American Greetings Confirms Consumer Appeal

November 17th, 2011 | Posted by CLepine in Retail | Uncategorized - (Comments Off on American Greetings Confirms Consumer Appeal)

Consumer Goods Technology covers how American Greetings uses testing to “push innovation and explore new areas” in a recent article.

Chains Try Charity, But Not All Shoppers are Grateful

November 16th, 2011 | Posted by Dan Schreff in Retail - (Comments Off on Chains Try Charity, But Not All Shoppers are Grateful)

Piggybacking on the just-beginning season of consumer consumption, efforts to drive charity are ramping up.

Retailers are electing to raise funds for causes by asking for small donations at the point of sale. The practice has social critics and marketers debating the merits.

Is the retail checkout a good time and place to ask shoppers for charitable gifts? (more…)

Mobile apps and your business this holiday season

November 14th, 2011 | Posted by Hking in Uncategorized - (Comments Off on Mobile apps and your business this holiday season)

Imagine this scenario: a shopper with a half-filled basket perusing the aisles of your store stops for a moment to inspect an item. She pauses, pulls out her smartphone, and, using one of many apps available for this purpose, scans the barcode pulling up a price comparison that spans both your nearby brick-and-mortar competitors, as well as online retailers.

Depending on what she saw, she may opt to buy out the stock, or, at the other extreme, walk out of the store, leaving her basket behind. Likely, she will simply not buy that item if the price differential is too high and her desire for immediacy too low.

While some shoppers have always compared prices, with nearly 70 million U.S. consumers armed with smartphones and a plethora apps, never has the barrier to price comparison been so low. As of July 2011, smartphone penetration hit 40% of the mobile market, while RedLaser, a popular barcode scanning app, has been downloaded an estimated 12 million times. (more…)

Wawa’s Approach to In-Market Testing

November 8th, 2011 | Posted by Marek Polonski in Retail - (Comments Off on Wawa’s Approach to In-Market Testing)
Washington D.C. – Retail executives face a complex and diverse set of challenges. Changing consumer tastes require constant innovation through new products, store “look and feel,” and marketing. Internal profit objectives demand consistent increases in the productivity of space, merchandise, and labor. On top of all this, exogenous forces, like the economy and weather, buffet performance, adding noise and confusion.
In this chaotic environment, the key to success lies in knowing the true incremental benefit of any action. Most sophisticated grocers and convenience retailers are evaluating their ideas using in-market tests (vs. gut feel or even focus groups). To learn the most out of these tests, retailers also need the right analytical tools. A recent article in the CFO Magazine has great examples from Wawa, as well as other retailers, on their approach to in-market testing. Chris Gheysens, Wawa’s CFO, talks about the benefits of a rigorous test evaluation process using a series of examples from Wawa’s recently completed tests: new flatbread breakfast, adding and subtracting labor hours, marketing, etc. He also discusses the advantages of APT’s Test & Learn analytical approach, how it allowed Wawa to substantially advance its decision-making process by eliminating noise and also led to a more targeted recommendations for its stores.

Avoid Being the Netflix of Banking

November 7th, 2011 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Avoid Being the Netflix of Banking)

This past week, after significant backlash and immediate customer response, Bank of America announced that it will cancel its plans to charge monthly debit card fees. Several other banks with similar plans quickly followed suit.

There was no way to predict the magnitude of this outcome.  Banks have been increasing checking account fees, and while there has been some negative reaction, the response was not even close to what was seen with debit card fees.  The new fees also seem logical and defensible.  Banks have always provided this service for free but can no longer do so now that debit card transactions are unprofitable with lower interchange fees.

But the response was larger than most expected, and it will be very difficult to win back customers after they have left.  To see an extreme example of the cost of making just one bad decision, take a look at Netflix.  In a short amount of time, the decision to split the DVD and streaming business resulted in three million customers (over 10% of subscribers) leaving.

It is essential to de-risk the decision making process by trying new ideas in a very limited subset of the network.  JP Morgan Chase and Wells Fargo both tested new debit card fees in just a few markets before making any sweeping changes.  They decided not to roll out the new fees and have emerged largely unscathed.

Banks will continue looking for ways to plug revenue holes.  Some new tactics will work, while others will have drastic consequences.  These decisions are too important to be unsure of their precise impact before putting the business at risk.

What retailers can learn from Jim Collins: the genius of AND over the tyranny of OR

November 6th, 2011 | Posted by Jatin Atre in Uncategorized - (Comments Off on What retailers can learn from Jim Collins: the genius of AND over the tyranny of OR)

Recently, I had the pleasure of reading Jim Collins’s new book, “Great by Choice,” which prompted me to re-read his classic, “Good to Great.” In re-reading “Good to Great,” I noticed that many of the ideas that Mr. Collins espouses are applicable to retail organizations today.

One idea, “the genius of AND over the tyranny of OR,” is particularly timely.  A common refrain from senior leaders is that in today’s chaotic environment, there’s not enough time for structured decision-making; there’s not enough time for a test to complete before deciding on roll-out; there’s not enough time.  To survive, leaders quip, we are forced to react quickly. In other words, executives often settle for “we can be fast OR data-driven … but right now, we just have to be fast.”

This idea strikes me as poor thinking in two ways.   (more…)