A Powerful New Way to Discover Unrealized Value in Retail Chains

Post by FieldStack
February 8, 2024
A Powerful New Way to Discover Unrealized Value in Retail Chains

The retail industry is constantly evolving. And retailers everywhere are struggling to operate profitably while keeping up with increasing customer demands.

Fortunately for well-informed investors, the potential to optimize and scale exists within underperforming retail chains (even profitable chains have room for improvement!). Beyond knowing which ones to invest in, uncovering specific opportunities for value creation is challenging. Ultimately, private equity dealmakers have a lot to consider when selecting their next investment.

But looking through a vast pool of prospects for the hidden gems is easier said than done.

The only way to know is within the data, and specifically looking at data at a micro level within the context of a fully unified and optimized omnichannel retail operation. In this post, we'll share how this crucial data is now available to PE firms through our new accelerated service offering: Lean Retail Assessments.

First, we’ll share what Lean Retail is and how it relates to our latest offering. Then, we’ll introduce our new Lean Retail Assessments, explain how they help investors quickly discover unrealized value in prospective retail chains, and why now is just the right time to unveil this new opportunity and its benefits for investors. Plus, we’ll share how unified technology can be leveraged to implement the opportunities uncovered.

  • What is Lean Retail?
  • How Lean Retail Principles are Applied to Real Retail Chains
  • Introducing Lean Retail Assessments for PE Firms
  • Why Now: The Need for Change in the Retail Industry
  • Benefits of Lean Retail Assessments for Private Equity Firms
  • Leveraging Unified Technology as a Catalyst for Industrywide Change
  • How to Maximize the Profit Potential of Your Next Retail Investment

Additionally, we go into more detail on our new offering for private equity investors in our latest white paper – "Unrealized Value in the Retail Sector: Leveraging Advanced Analytics to Predict the Profitability & Hidden Growth Potential of Private Equity Retail Deals."

What is Lean Retail?

Before we introduce our latest offering, you should understand what Lean Retail is. After all, it’s the foundation of our new Lean Retail Assessments and our entire unified commerce platform.

Originating from Lean Manufacturing principles, Lean Retail is a concept that traces its roots back to Toyota in the mid-twentieth century. The Toyota Production System drastically improved the assembly line process, increasing efficiency and allowing for a wider variety of offerings. The success of Lean has driven adoption across manufacturing and beyond to sectors including construction, logistics, healthcare, services, and of course, a transformative new approach to retail.

Today, Lean Retail is known as the data-driven method of running a retail chain centered around adding customer value — sometimes by removing activities that do not provide value, and often by shifting resources toward higher-value activities. Lean Retail improves the flow of information and products to deliver customer value. In turn, Lean Retail software (like FieldStack’s unified commerce platform) enables retailers to transform their chains into customer-centric, data-driven operations to optimize efficiency and improve the customer experience.

How Lean Retail Principles are Applied to Real Retail Chains

You might be thinking that Lean Retail sounds great in theory, but how does it apply to retail in real life?

The answer lies at the core of our software. Our retail platform is based on Lean Retail principles and powered by our Lean Retail Analytics Engine. The engine refers to the real-time data and advanced analytics that flow throughout the core retail systems within. These analytics allow for real-time actionable insights and game-changing automation.

Additionally, this engine is capable of ingesting massive amounts of historical and real-time data to simulate a unified view of a prospective retail chain investment. Which leads us to how our new Lean Retail Assessments work...

Introducing Lean Retail Assessments for Private Equity Investors

Beyond the scope of most retail solutions, our Lean Retail Analytics Engine lets us plug massive amounts of data into our platform and easily identify the growth and profit potential of a retail chain – even for those currently operating with disconnected systems. The output of this analysis is a report called the Lean Retail Assessment.

With our Lean Retail Assessments, we work collaboratively with investors to provide insights needed to make informed investment decisions, leverage operational strengths, and discover unrealized value.

This report provides opportunities for value creation demonstrated by modeling scenarios, including:

  • Revenue growth potential
  • Profit improvement
  • Increased cash flow

Lean Retail Assessments represent a paradigm shift in how investors assess and optimize retail chains with a focus on value creation. Lean Retail Assessments take a holistic approach that goes beyond conventional evaluation methods and considers operational efficiency, customer experience, and the role of unified technology.

The key principle behind Lean Retail Assessments is the identification and elimination of inefficiencies in the retail chain, from supply chain management to customer engagement and everything in between.

Investors can expect a 4-step (collaborative) process and a timeline of 4 weeks from start to finish with a Lean Retail Assessment. However, we understand that some deals require swift action, and we can accelerate the timeline as needed.

To learn more about our 4-step Lean Retail Assessments, download our latest white paper.

Why Now: The Need for Change in the Retail Industry

So, why introduce Lean Retail Assessments now?

Well, it's all about recognizing the current state of the retail world. From rising interest rates and inflation to the newest slew of struggling retail chains declaring bankruptcy across segments, the retail industry is constantly evolving. Unfortunately, too many retailers can’t keep up – delivering unremarkable shopping experiences in an increasingly competitive industry.

Additionally, there’s a major disconnect between retailer perceptions of the omnichannel experience they provide versus how consumers perceive it. In fact, a recent survey revealed that 91% of retailers think they offer a convenient online experience, but only 21% of consumers agreed.

Underperforming retail chains (whether or not they are aware of it) are being restricted by traditionally disconnected retail systems, disparate data, and a lack of automation. Many face stagnant growth or bankruptcy as a result. Even those operating profitably have the potential to further optimize and scale with the right technology in place.

In short, retail chains everywhere are struggling, and customer expectations are only getting more demanding. The need for transformative change in the retail industry is urgent. And private equity firms are in just the right position to be the catalyst for this much-needed industry-wide change.

This is where Lean Retail Assessments come into play.

The Benefits of Lean Retail Assessments for Private Equity Firms

Lean Retail Assessments offer a strategic advantage for retail investors. By providing a comprehensive view of the prospective retail chain, investors can discover hidden value, make informed decisions, and maximize the profit potential of their investment.

Specific recommendations will vary by company, but Lean Retail Assessments tend to uncover significant opportunities within (but certainly not limited to) the following areas:

  1. Customer experience and loyalty
  2. Labor efficiency and optimization
  3. Inventory optimization
  4. Operational efficiencies
  5. Pricing and promotions
  6. Resale profitability

The insights in each specific area can then be turned into immediate and ongoing improvements across the operation as a whole. Here are just a few of the benefits investors can expect by focusing on value creation in the key areas above:

  • Streamlined Operations: Lean Retail Assessments identify operational bottlenecks and streamline processes, leading to cost reductions and increased operational efficiency. By optimizing supply chain management, inventory control, and other operational aspects, investors can enhance the overall performance of the retail business.
  • Enhanced Customer Satisfaction: In the increasingly competitive retail industry, customer experience is a critical differentiator. Lean Retail Assessments focus on understanding and improving the customer journey, leading to increased satisfaction and brand loyalty. Satisfied customers are more likely to become repeat buyers, contributing to sustainable revenue growth.
  • Strategic Risk Mitigation: By evaluating the entire retail operation, Lean Retail Assessments help identify potential risks and vulnerabilities with the chain. Investors can proactively address these issues, reducing the likelihood of disruptions and ensuring the long-term stability of their investments.

Leveraging Unified Technology as a Catalyst for Industrywide Change

When investors choose to act on the opportunities revealed by Lean Retail Assessments, unified technology allows a seamless transition from analysis to action.

Of course, as mentioned above, there is no obligation to use FieldStack software beyond the assessment. However, for investors that are ready to take action, our platform offers a way to quickly implement the changes through the same technology that uncovered the opportunities.

And there are plenty of benefits to unified technology beyond the investment being analyzed. Customer expectations are reshaping the way retail chains must operate to be successful. A customer-centric approach is more important than ever before. Unified technology has the power to help retailers create great customer experiences, achieve omnichannel excellence, and profitably grow their businesses.

With so many underperforming retail chains failing to meet expectations while simultaneously fighting disconnected retail systems, there’s an urgent need for transformative change. Unified technology can deliver this change.

Here's how unified technology contributes to the success of Lean Retail Assessments and retail operations as a whole:

  • Data Integration and Analysis: With unified technology, retail systems are 100% connected and built to work together. This allows for the aggregation of data from disparate sources across the organization. Cohesive data enables a more comprehensive analysis, providing investors with a clear picture of performance metrics, customer behavior, and operational efficiency.
  • Real-Time Visibility: Unified technology gives real-time visibility into nearly every aspect of the retail operation. This visibility is crucial for making timely decisions, responding to market changes, and adapting strategies to meet evolving consumer demands.
  • Omnichannel Integration: In today's retail landscape, consumers expect a seamless experience across every channel. Unified technology ensures a consistent and cohesive experience for customers regardless of their interaction points with the brand.
  • Automation for Efficiency: Automation is a key component of running Lean, and unified technology enables the implementation of automated processes. Whether it's simplifying inventory management or streamlining order fulfillment, automation reduces manual errors, increases efficiency, and frees up resources for higher-value activities.

We've only scratched the surface of unified technology and its role in transforming the retail industry for the better. Interested in learning more? Download the white paper for a more in-depth look at the advantages of unified tech for retail investments.

Maximize the Profit Potential of Your Next Retail Investment

In conclusion, as the retail industry undergoes constant evolution and retailers grapple with profitability amidst increasing customer demands, private equity investors face the challenge of identifying not just promising retail chains, but specific opportunities for value creation. The introduction of Lean Retail Assessments comes at a pivotal moment.

This new service offering presents a game-changing approach by leveraging the power of unified technology. By delving into Lean Retail principles, unveiling the details of Lean Retail Assessments, and emphasizing the need for change in the industry, this post has shed light on how private equity investors can proactively manage risks and uncover unrealized value in underperforming retail chains.

For a deeper dive into this transformative approach, we invite you to explore our latest white paper, "Unrealized Value in the Retail Sector: Leveraging Advanced Analytics to Predict the Profitability & Hidden Growth Potential of Private Equity Retail Deals." Download the paper to discover the strategic advantage of Lean Retail Assessments for private equity investors.

Post by FieldStack
February 8, 2024