Retail Operations Module from the Retail Management Workshop conducted by Udyam Consultants

1. RETAIL & STORE OPERATIONS
RETAIL MANAGEMENT WORKSHOP 29.12.12

3. What is Retail Operations
 Retail Operations involves managing the day-to-day
functions of retail establishments .
 Retail Operations professionals manage retail
establishments on a daily basis, and are responsible
for maximizing store profits – For the regions and for
the geographies

4. COMPONENTS OF RETAIL OPS
 STORE OPS
 BD
 LOCATION
 CAT / SUB CAT
 PLANNING
 MIS
 LOGISTICS ?

5. COMPONENTS OF STORE OPS
 ADMIN
 VM
 IT
 HR
 SECURITY
 MERCHANDISING
 MANTN.
 POS/CHECK OUT
 INV.
SALES

6. TYPES OF STORES
 Mom & Pop Stores
 Dept. stores
 Discount Stores
 Speciality Stores
 Factiory outkets
 Super Markets
 Malls

7. LOCATION
Location! Location! Location!

8. Tradeoff Between Locations
There are relative advantages and
disadvantages to consider with
each location.
Rent
Traffic

9. Unplanned Retail Locations
 Freestanding Sites – location for individual store
unconnected to other retailer
 Advantages:
 Convenience
 High traffic and visibility
 Modest occupancy cost
 Separation from competition
 Few restrictions
 Disadvantages:
 No foot traffic
 No drawing power The McGraw-Hill Companies, Inc./Andrew Resek, photographer

10. Unplanned Retail Locations
Merchandise Kiosks – small temporary selling
stations located in walkways of enclosed malls,
airports, train stations or office building lobbies.
Kent Knudson/PhotoLink/Getty Images

11. City or Town Locations
Gentrification is bringing population back to the cities.
Advantage to Retailers:
•Affluence returned
•Young professionals
•Returned empty-nesters
•Incentives to move provided by cities
•Jobs!
•Low occupancy costs
•High pedestrian traffic
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

12. Central Business District (CBD)
Advantages
 Draws people into areas during business hours
 Hub for public transportation
 Pedestrian traffic
 Residents
Disadvantages
 High security required
 Shoplifting
 Parking is poor
 Evenings and weekends are slow
Spike Mafford/Getty Images

13. Main Streets vs. CBDs
 Occupancy costs lower
than CBDs
 They don’t attract as
many people
 There are not as many
stores
 Smaller selections offered
 Not as much
entertainment
 Some planners restrict
store operations

14. Inner City
Unmet demand tops 25%
in many inner city
markets
Inner city retailers achieve high sales volume,
higher margins and higher profits
Inner city customer wants branded merchandise

15. Shopping Centers
Shopping Center Management Controls:
•Parking
•Security
•Parking lot lighting
•Outdoor signage
•Advertising
•Special events for customers
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

16. Types of Shopping Centers
 Neighborhood and Community Centers (Strip Centers)
 Power Centers
 Enclosed Malls
 Lifestyle Centers
 Fashion Specialty Centers
 Outlet Centers

17. Neighborhood and Community Centers
Managed as a unit
Advantages
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
Convenient locations
Easy parking
Low occupancy costs
Disadvantages
Limited trade area
Lack of entertainment
No protection from weather
Attached row of stores
Onsite parking

18. Power Centers
Shopping centers that consist primarily of
collections of big-box retail stores such
as discount stores , off-price stores
warehouse clubs, and category
specialists
 Open air set up
 Free-standing anchors
 Limited small specialty stores
 Many located near enclosed malls
 Low occupancy costs
PhotoLink/Getty Images
 Convenient
 Modest vehicular and pedestrian traffic
 Convenient
 Modest vehicular and pedestrian traffic
 Large trade areas

19. Shopping Malls
 Regional shopping
malls (less than 1
million square feet)
 Super regional malls
(more than 1 million
square feet)
The South China Mall in Dongguan, China
7-19

20. Advantages and Disadvantages of Shopping
Malls
Advantages:
Many different types of stores
Many different assortments available
Attracts many shoppers
Main Street for today’s shoppers
Never worry about the weather
Comfortable surrounding to shop
Uniform hours of operation
PhotoLink/Getty Images
Disadvantages:
Occupancy costs are high
Tenants may not like mall management control of operations
Competition can be intense

21. Challenge to Malls
 Time pressured society makes it impractical to wander malls
 Fashion apparel sold in malls experiencing limited growth
 Malls are getting old and rundown – unappealing to shop
 Anchor tenants are decreasing due to retail consolidation
 Strategies?
 Make shopping more enjoyable (e.g., sofas, children’s playing areas)
 Great food destination (fast food and full-service restaurants)
 Tailor make its offering to cater to changing demographics (e.g.,
repositioning older shopping centers for Hispanic markets)
 Mall renovation and redevelopment

22. Lifestyle Centers
Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center
Attractive to specialty retailers

23. Lifestyle Centers
■ Usually located in affluent
residential neighborhoods
■ Includes 50K sq. ft. of upscale
chain specialty stores
■ Open-air configuration
■ Design ambience and amenities
■ Upscale stores
■ Restaurants and often a cinema
or other entertainment
■ Small department store format
may be there

24. Fashion Specialty Centers
 Upscale apparel shops
 Tourist areas/central business
districts
The McGraw-Hill Companies, Inc./Lars A. Niki, photographer
 Need not to be anchored
 Décor is elegant
 High occupancy costs
 Large trade area

25. Outlet Centers
These shopping centers contain mostly manufacturers and retail outlet stores
Courtesy of Beall’s, Inc.

26. Theme/Festival Centers
 Located in places of
historic interests or for
tourists
 Anchored by restaurants
and entertainment
facilities

27. Larger, Multi-format Developments:
Omnicenters
 Combines enclosed malls, lifestyle center, and
power centers
 Larger developments are targeted
 to generate more pedestrian traffic and longer shopping
trips
 To capture cross-shopping consumers

28. Mixed Use Developments (MXDs)
 Combine several different
uses into one complex,
including shopping
centers, office tours,
hotels, residential
complexes, civic centers,
and convention centers.
 Offer an all-inclusive
environment so that
consumers can work,
live, and play in a
proximal area

29. Other Location Opportunities
 Airports
 Resorts
 Store within a Store
 Temporary or pop-up stores

30. Alternative Locations
Airports
Airports: Why wait with nothing to do?
Rents are 20% higher than malls
Sales/square ft are 3-4 times higher than malls
Best airports are ones with many connecting flights
Kim Steele/Getty Images

31. Alternative Locations
Resorts
Captive audience
Well-to-do customer
Customers have time to shop
7-31
Royalty-Free/CORBIS

32. Alternative Locations
Store within a Store
 Located within other, larger stores
 Examples:
 Grocery store with service providers (coffee bars, banks,
clinics, video outlets)
 Sephora in JCPenney

33. Alternative Locations
Hospitals
Patients cannot leave
Gifts are available
7-33
Royalty-Free/CORBIS

34. Matching Location to Retail Strategy
The selection of a location type must reinforce the retailer’s
strategy
be consistent with
 the shopping behavior
 size of the target market
 The retailer’s position in its target market
 Department Stores  Regional Mall
 Specialty Apparel  Central Business District, Regional
malls
 Category Specialists  Power Centers, Free Standing
 Grocery Stores  Strip Shopping Centers
 Drug Stores  Stand Alone

35. Shopping Behavior of Consumers
in Retailer’s Target Market
 Factors affecting the location choice
 Consumer Shopping Situations
 Convenience shopping
 Comparison shopping
 Specialty shopping
 Density of Target Market
 Ex. Convenience stores in CBD; comparison shopping stores
next to Wal-Mart
 Uniqueness of Retailing Offering
 Convenience of locations is less important
 Ex. Bass Pro Shop

36. Convenience Shopping
Minimize the customer’s effort to get
the product or service by locating store
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
close to where customers are located

37. Comparison Shopping
Customers have a
good idea of what
type of product they
want, but don’t
have a strong
preference for
brand, model or
retailer.
Typical for furniture,
Competing retailers locate appliances, apparel,
Near one another consumer electronics,
hand tools and cameras.
Ryan McVay/Getty Images

38. Category Specialists
Offer the benefits of comparison shopping
Consumers can see almost all brands and models in one
store
Destination stores
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

39. Specialty Shopping
Customers know what they want
Designer labels
Convenient location matters less
7-39
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

40. STORE OPS

41. STARTEGY FORMULATION
 Defining a primary task
 Core Competency
 Assessing core competencies
 What does the firm do better than anyone else?
 Positioning the firm
 How will the firm compete?
 Cost
 Quality
 Speed

42. OPS STRATEGY – WAL MART

43. OPS ROLE IN CORP. STRATEGY
 Operations provides support for a differentiated strategy
 Operations serves as a firm’s distinctive competence in
executing similar strategies better than competitors

44. VISION AND STRATEGIC GOALS
FORMAT IN STORE
TARGET POSITIONING EFFICIENCY
TYPE
CUSTOMER
MARKETING CATEGORY
SERVICE
MIX MIX
LEVEL

45. Important Aspects of store operations
 CUSTOMER SERVICE
 Leads to Loyalty
 ON SHELF AVAILABILITY
 Revenue
 IN STORE PROCESSES
 Reduce Costs
 STAFF PLANNING
 STAFF MOTIVATION

46. DAY TO DAY CHECKS

47. STORE MANAGER
 Responsibilities of a store manager may include:
 Human Resources, specifically: recruiting, hiring, training
and development, performance management, payroll, and
schedule workplace scheduling
 Store business operations, including managing profit and
loss, facility management, safety and security, loss
prevention (also called shrink), and banking
 Product management, including ordering, receiving, price
changes, handling damaged products, and returns
 Team Development, facilitating staff learning and
development
 Problem solving, handling unusual circumstances

48.  Sales generation
 Safety and security
 Division of responsibility
 Hiring, training and development
 Visual merchandising and inventory control

49. P&L
 INCOME

50. P&L
 EXPENSES

51. P&L

52. CUSTOMER ENTRY
 Approach
 Parking
 Valet
 Greeting
 Store Directory
 VM
 Signages
 Baggage Counter
 Walk In
 Entries

53. MERCHANDISE SELECTION
 Section Hygiene
 VM
 Product
 Ease of Selection

54. POS / CHECK OUT
 BILLING
 Discount
 Cash / Card
 Tender
 Checkpoint

55.  Checklists

56. Operations
 Contact initiated by an employee increases
likelihood a shopper will buy something
 The most important factor in determining a
shopper’s opinion of the service he receives is
waiting time
 Adding sound, light and color to the register area
can ease customers from the anxiety of the
financial transaction

57. Customer Segments
 When shopping, men:
 Move faster, spend less time looking
 Look at price tags less often and can be more easily
upgraded to a more expensive item
 Get a thrill from the experience of paying
 Hate asking for directions

58. Customer Segments
 When shopping, women:
 Spend more money when shopping with other women
 Are more demanding of the shopping environment
 Older shoppers:
 Must have easy to read signs
 See a lot more black, white and red, and a lot less of
other colors
 Need brightly lit stores

59. Customer Segments
 Children
 If stores are not child friendly, parents will be deterred
to enter
 Make merchandise reachable
 Childproof the store
 Be able to divert the attention of a restless child
 Design a good area for children
 Generation X
 Are attracted to the specialty-store environment if the
merchandise is up-to-date

60. KPI

61. RETAIL KPI
Sales/Square Feet
Sales/Employee
Inv. Shrinkage/sales
Average Transaction (sales/# of transactions)
Items Per Ticket (total items sold/total transactions)
Conversion Rate (total transactions/total traffic)
Total Sales
Sales compared to last year (or any other period)
Wage Cost
Average Sale per Customer/Transaction

62. RETAIL KPI
Sales per Hour (for store or associate) – selling
hours only:
Sales per Hour (for store or associate) – total labor
hours:
Sales Per Hour
Average Sale
Inventory Turn
Average Gross Margin
Customers per day/week
Items per customer

63.  Sales compared to last year (or any other
period):
 Sales per Square Foot:
 Wage Cost:
 Average Sale per Customer/Transaction:
 Units per Customer/Transaction:
 Conversion rate:
 Sales per Hour (for store or associate) – selling
hours only:
 Sales per Hour (for store or associate) – total labor
hours:
 Time Spent in the Store:

65. QUESTIONS
abhinav@udyam.in
+9611809279

66. THANK YOU