Intalytics Commentary: Experimental Store Formats

As the saying goes, “Necessity is the mother of invention”.

Despite the gradual easing of stay-at-home restrictions, capacity limitations and social distancing practices will remain commonplace for the foreseeable future. Retail and restaurant operators have responded by implementing measures intended to keep both employees and customers safe. Many are simple precautionary standards such as cashier shields, line-spacing and “no shirt, no shoes, no mask, no service” policies. Relatively speaking, enhanced delivery, curbside pick-up and BOPUS services are easily accommodated and a bare minimum expectation from the consumers’ perspective.

Now that the immediate shock and mandatory store closures are (hopefully) behind us, organizations must refocus attention on growing revenue and maximizing margin in a drastically different operational environment. This will force the retail and restaurant industries into a period of ingenuity. The best innovators – or arguably the bravest CEOs – will unveil creative initiatives to differentiate themselves and attract consumers.  Many ideas will flop, but the winners may be evolutionary.

One such example is the adaptation of store/restaurant formats into more experimental prototypes. Expect to see more ‘express’ concepts emerge in the coming weeks and months. While the general idea is not all that new or unique, timing is everything.  This month, Buffalo Wild Wings opened their first “GO” location, an 1,800 square-foot carry-out and delivery only facility. The format includes heated lockers from which customers can pick-up orders, free of any employee interaction. This format is unrecognizable from the BWW restaurants I have patronized over the past 15+ years.  In theory, the concept is nimble and capable of increasing margin while appealing to customers’ cautious mindset.  Win-Win? Time will tell.

Unfortunately, time is exactly what senior management does not have as they face pressure to adapt strategic programs.

Our clients look to us to support these decision-making efforts and provide honest guidance with regards to data evaluation and modeling effectiveness in a new reality. Measuring the effectiveness of any new initiative is extremely challenging, and modeling “business-as-usual” is quite different than modeling “what-if-I-do-this-thing-I’ve-never-done-before, during a global pandemic”. However, the fundamental impact drivers of Intalytics models are sound and unlikely to change (e.g., customers prefer convenience, behavior is influenced by occasion, etc.).  We believe that forecasting models should be flexible enough to allow for input data & assumptions to be changed and that they should be supported with regular reviews and modifications as conditions or insight deem it necessary.

We will be keeping a watchful eye on all the new industry innovations over the coming months and look forward to helping our clients bring speed-to-insight.