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In this series, we examine how decades of survive-and-advance decisions led to the current state of store operations, and we detail how grocers can begin to course-correct across labor, processes, and store support — even as modern challenges add to the complexity facing store teams.
Underinvestment in stores comes at a cost, and for most traditional grocers, the bill is coming due. Grocers have fundamentally changed what they ask of stores — expecting year after year that they will do more with less — but have neglected to fundamentally change their operating model. Now thousands of stores are on the brink, and the next wave of disruptions may push them over.
To restore stores from survival mode, grocers must assess how they should change their operating models not only to prepare stores for emerging external challenges but also to deliver stores from longstanding internal pressures that have continue to intensify with time.
Legacy challenges for store operations
#1 — Overwhelm at the store level.
It’s rarely understood that the better value proposition is the one that is easier for stores to deliver. Too often the “air traffic control” function between headquarters and stores is weak or nonexistent, and corporate issues directives freely. When stores are constantly inundated with requests from different departments, execution overall is mediocre at best.
#2 — Isolation from other departments.
Store operations typically receives two mandates: execution and efficiency. They’re often not asked for input on initiatives being developed by other departments, and this disconnect invariably leads to them being charged to execute ideas that are too complex, take too much time, or just don’t work. When departments don’t integrate store operations into their strategy and planning, operational efforts tend to be incremental rather than transformational.
Because store operations is responsible for the execution of all initiatives, its leader (COO, SVP of stores, etc.) should be the most connected person in the organization: communicating about the capacity of the store teams, listening to corporate requests and testing them for alignment with organizational priorities, setting boundaries, etc. Too often that’s not the case, and opportunities are missed as a result.
#3 — Reduction in resources.
Nearly every cost-cutting endeavor includes taking labor hours out of stores. The extreme can-do attitude of operators makes this approach feel acceptable, but the constant pressure to meet rising standards with less support takes a toll. When leaders are preoccupied with making their numbers for a given week or quarter or fiscal year, they find it difficult to justify more labor hours because the value of them often isn’t immediately or fully reflected in sales numbers alone. Stores bear the brunt of these decisions that prioritize short-term survival over greater strength in the long term.
Modern challenges for store operations
#1 — Fulfillment of online orders
Assembling and fulfilling an ever-increasing number of online orders requires new tasks and processes, and they have to be done in a way that doesn’t compromise the experience of in-store shoppers. Online sales also create a new set of customer touchpoints: text conversations about substitutions, greetings during pickup and delivery, sampling or marketing materials added to orders, phone calls with customer service about missing items or quality concerns, and more.
With fulfillment options ranging from ship-to-home to in-store pickup to curbside pickup to owned delivery to third-party delivery, how grocers get product to customers has become infinitely more complicated.
#2 — More demanding customers
The bifurcation of the consumer means that some shoppers prioritize price and availability, and others prioritize experience and inspiration — but all of them carry high expectations for the value drivers that matter most to them. Most traditional grocers will have both these shoppers, meaning they will feel pressure to optimize to keep prices competitive and shelves fully stocked but also to deliver creative merchandising and engaging service.
Shoppers’ rising standards are informed by not only the vast array of choices available to them but by real-time visibility into the whole competitive landscape. It’s a tough reality for regional grocers that all a shopper needs to do is pull out their phone to compare prices or check stock levels against those of Walmart or Aldi.
#3 — Competition for talent
As alternative channels like big box, club and discount have grown, grocers face much steeper competition for talent. These formats haven’t only raised the bar for consumers in the respective areas in which they specialize; they have also raised the bar for associates. Generally, discounters and clubs deploy labor with more precision than traditional grocers, and they invest in technology to automate low-value tasks so that associates spend more time on activities that matter.
Because these other retailers can generate more value from every associate than traditional grocers, they can pay more — and they do. These organizations also tend to be better at giving employees a structured career path, with training and opportunities faster to arrive. This dynamic makes the best talent harder for traditional grocers to find and more expensive to hire when they do.
Where grocers go from here
With both external and internal challenges in mind, grocers should reexamine each pillar of store operations — core processes, labor, and store support — and make the upgrades that are needed for stores to support the business as it exists today, not the business that existed 20 years ago.
Core processes — Grocers must create standards, train to those standards, and measure against those standards. To maintain standards once they’re established, grocers need real-time visibility on which stores are meeting expectations and which stores need help. Standards that serve grocers well simplify the work of associates, limit low-value tasks, and keep priorities consistent.
Labor — The labor model should be tailored to the activities of the store. Schedules should take into consideration the traffic patterns and online order fulfillment needs of each location by day of the week and by daypart; which behind-the-scenes roles and customer-facing roles need to be filled; and what mix of full-time and part-time associates will best accomplish those activities.
Because most traditional grocers need associates that specialize in different areas — as opposed to discounters where efficiency is the straightforward goal across roles, for example — the training of those associates should be treated as an investment instead of a cost. It shouldn’t be viewed as an optional benefit to the associate; it should be viewed as a way to make talent more productive.
Similarly, because turnover is exceedingly expensive, grocers need to be intentional about retaining strong talent. Focus on their growth should be ongoing, with skills training, leadership development, live feedback loops, recognition programs, and structured career paths.
Store support — As the connection point between strategy and operations, store support must evaluate corporate directives through two lenses: organizational priorities and the capacity of stores to execute. Store support must understand when to push back on corporate, when to push back on stores, when to take a hardline stance, and when to be flexible. Store support should also take point on developing nuanced views of what’s working and what isn’t working based on the combination of data and operational, store-level insight.
The essential decision: What matters most?
The trend of the last two decades has been to strip experience in the pursuit of efficiency, but for traditional grocers, an incrementally more efficient organization isn’t necessarily a more effective one. For discounters and specialists, the choice is straightforward; the discounter prioritizes efficiency across the board, and the specialist prioritizes experience — but a “multi-specialist,” which a traditional grocer should be, needs a hybrid model.
Rather than trying to balance between efficiency and experience in every area, traditional grocers should go all-in for one or the other depending on how the activity relates to the customer experience. If cutting fresh produce happens in the backroom, the process should be optimized so there’s no wasted movement. If cutting fresh produce happens at a station on the sales floor, the time allotted to that task should be padded to allow for sampling and conversation with shoppers.
Setting stores up for success
Both the competitive landscape and consumer behavior continue to change, and stores will need to change, too. After decades of underinvestment, many aren’t currently in a position of strength. Grocers can change that, but they’ll need a strategic reset of their operating model to do so.
Stay tuned for the next piece in this series, which will focus on how the emerging disruptions we described in this piece will impact labor specifically.
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