Clicks for bricks

31 July 2012

Richard Singleton takes a tour of the particular issues facing FMs with a retail portfolio to manage, and believes that technology can help balance demands, particularly for maintenance provision.

The retail sector is finding itself in the middle of a media storm. The high street, often the barometer of disposable income and thereby a visible measure of GDP, has been paraded across our screens as the embodiment of how much tougher the economic situation has become over the last few years. Notwithstanding the obvious impact of the economic downturn, the retail industry is seeing the shift in sales from ‘bricks to clicks’ with over 10% of all retail sales (excluding fuel) made on line (according to the Office of National Statistics in February 2012).

This is not the time to throw our hands up in horror at the possible loss of physical stores. Internet sales are last years’ phenomenon, the latest trend is m-commerce or transactions using a mobile device. Mobile commerce has merged the convenience of online shopping with the benefits of visiting a physical store. Not only does it enable consumers to shop on impulse wherever they are, but they can use their mobile device while in-store to go online and to compare prices, purchase heavy items online with free delivery, or find items that might be out of stock. Savvy retailers are using this new technology to help integrate online and traditional shopping – driving consumers to the physical store. All is not lost. The physical presence of the brand is being recognised as an important channel for engaging customers, just not the only one.

Managing retail properties from an FM and property perspective has always been challenged by the marketing-led approach to fit out. These are spaces that trade through their space so decisions are made based upon consumer appeal and brand standards. The result is that the FM provision has to be nimble and adjust to changing trading conditions and seasonality. However the biggest challenge is managing and tracking cost, and service delivery on what can be a diverse and sometimes unpredictable estate.

The portfolio
Units can range from the small to several thousand square metres spread across a wide geographic area. They can also be in different types of locations, for example on the high street, in a shopping centre, an airport or other travel hub, or on the edge of town. Similarly, they can be in the salty air of the coast, a windswept hill, or a congested town centre. This diversity and scope creates a headache for the property team as there can be no one solution applied across the estate. Take stores within airports as an example. Every member of the maintenance team will require airside and landside passes. These supplementary security checks and training are not required on the high street for example, whilst those in shopping centres may have certain aspects of maintenance covered by the in-centre service charge.

Not only does the diversity of location require a maintenance schedule that reflects those different needs but there is also the individual store strategy to consider. Most retailers establish a hierarchy of stores based on profitability, criticality to the brand, length of lease on the store and the condition of the estate. From that a maintenance plan is drawn up that establishes parameters around budget allocation, and level of maintenance required to operate within the strategy. The maintenance schedule is all about balancing short term need with the life cycle cost of running that particular store. Most important is to ensure that the brand is protected. For most stores the benchmark is compliance and protecting customers within the store, but take into consideration that a failed light fitting or dirty walls can affect brand perception and will add those as priority tasks.

Life cycle management
When it comes to life cycle management the situation is complicated for retailers by the fact that planning to stay in a particular location is often difficult to do beyond a 10 or even five-year period. The standard calculations of balancing the reactive maintenance costs over a 25-year period against spend on new capital equipment just doesn’t stack up. The chances are that the retailer will go for equipment that may be reliable over a shorter period of time and as a result more cost effective as they do not need to consider the long term performance. The only new consideration is the energy efficiency. As equipment becomes dated energy usage increases. As with many businesses some retailers will be considering the impact of increased energy use within the context of the CRC whilst others will be considering the impact on the bottom line.

When equipment is critical to the retailers business, for example air conditioning for chemists to keep the drugs at temperatures below 25 degrees or freezers for food retailers the life cycle argument has to take into account lost sales due to breakdown, as well as the cost of repair. This often results in regular replacement of equipment as the impact on sales can be too costly to risk non-performant equipment. It is essential that any service provider working with the retailer understands the core business so that the proposed life cycle management plan reflects the trading priorities.

There is undoubtedly a logical approach to both planned preventative maintenance and life cycle management for retailers. However managing the programme without a robust IT system can make the job unwieldy, not just because the manager of the store who reports the requirement is unlikely to hold the budget or have the authority to authorise the work, but because reporting and understanding costs and budgets in real time are essential in what is a fast moving and dynamic environment.

The key is technology
Using an IT infrastructure that reduces duplication and creates a more efficient management process can provide the retailer with not only operational transparency, but more importantly data and analysis of cost and service performance with which to make decisions. Priorities for each store including spend thresholds and authority levels can be pre-programmed so that when requests come through they are either processed quickly or held until further budget or authorisation is available. Of course this means that the groundwork in setting up the system can be quite extensive but the reward is that once in place the system supports the needs of the business in a comprehensive way.

The system is in effect the engine for the help desk so that requests are centralised but audited to point of origin. This is essential for the reactive requests that are the most diverse as they come from different locations. On the other hand the planned maintenance requests can be requested from a single source yet they need to be aligned to the asset register for each store. The system pulls all of these requests in to one central location and then is able to generate reports based on the total picture of reactive and planned maintenance.

On the subject of helpdesks, the nature of the interface between on site customer and the central team is changing. As access to the internet pervades, requests for maintenance can be made on-line. As with shopping itself, maintenance tasks can be requested in more than one way. At SGP we have taken the step of creating a maintenance request system for store managers called fixmystore.com based on a system SGP developed with another client for their pubs. A new skin, which was jointly developed with a large retailer, provides the look and feel appropriate for the business. The questions relating to the job-raising process are tailored to the specific requirements of the retail managers and the in-house property team. These questions are asked to allow the system to pinpoint the selection of the appropriate supplier and Service Level Agreement (SLA). The on-line tool which is designed to reduce the time spent by retail management in managing maintenance requests. Retail managers can review which jobs are logged and where they are in the process as well as easily escalating an issue if required all in real time. The net result is a smoother more reliable and efficient process.

As with every other sector there are challenges for retailers to remain competitive. From a property and FM perspective there is a wealth of possibilities to supporting those retailers to become leaner, more efficient businesses. The philosophy of clicks to bricks can be applied not just for consumer shopping but to maintenance management of those physical stores.

Richard Singleton is Commercial Director, SGP Property and Facilities Management