Retail Audit

Value

 Value from suppliers

 Value to customers
 Value to retail….
What’s retail audit?

 Systematically examining and evaluating a

firm’s total retailing effort or specific aspect of
it.
Purpose

 To study
 1. what a retailer is presently doing
 2. appraise performance
 3.make recommendations for the future.
What does a good audit include?

 Regular audits
 In-depth analysis
 Systematic analysis of data
 Unbiased perspective
 Willingness to uncover weakness
 Strengths that can be exploited
How to perform a Retail Audit?

To perform a retail audit the marketer should keep the

following views in mind.
 Psychographics of consumers- To Draft Retail value

chain
 Brand Portfolio –To fill retail value chain  draft with

brands and products

 Retail Format- To fill the retail value chain draft with

resources.
 Service blue prints- Connect the resources and

brand/products in a retail value chain.

Psychographic of Consumers

 What is life style of your consumers?

 How much time they plan for shopping?
 What is the key driver for shopping (passing
time, Money)?
 What is their disposable income?
 Are they brand, Price or value conscious or a
subset of it (BPV Analysis)?
Brand Portfolio
 It defines the brand /product span that we
have to click the consumers.
 Every retail product line must have a
combination of products for serving the two
basic strategic purposes.
 
 Penetration builders
 Profit builders
 
Retail Format
 The main objective of retail format should be
to make consumers’ process of shopping
very cozy.
 The factors which affect the process are:
 
 People   involved
 System Involved
 Infrastructure (Show Room space, Parking
space, interiors, sitting arrangement)
Service Blue Prints

 It connects the brand or product with the

resources for accessibility to consumers.
 Service is not only inside the show room but
also outside (parking facilitating and others).
 Retail Audit Process
Retail Audit Process
Determination of When Audit is Areas to be
who does the audit Conducted Audited

End
Com Depart End When
of Under
pany ment Outside of Horiz Verti
manag auditors Cale taking
speci Fiscal Physical ontal cal
ers ndar
alists Year Inventory
Year

Development of Audit Forms

Conducting the Audit

 Should audit
Should Is audit to How is the
How long occur while
employee’s be disguised final report
should audit retailer is
be notified or non to be
take? open or
in advance? disguised? prepared?
closed?

Reporting the results of audit to management

Managements response to the audit

Who does the audit

 Internal audit
company audit specialist
company department manager
 External audit
Auditing time and frequency

 Logical timing :
 End of the calendar year
 End of the retailer’s annual reporting year
 When physical inventory is conducted

 Same period (s)- so that comparison can be

easy
Areas to be audited

 Strategy
 Operations
 Identifying strengths and weakness
Types of audits

 Horizontal retail audit :

Overall performance ie goals,
customer satisfaction, retail strategy mix,
implementation
 Vertical retail audit :
firm’s performance in one area –
credit function, customer service,
merchandise assortment, interior displays
Audit Forms
Planning
1. Have you thought about the long-term direction
of your business?
2. Have you developed a realistic set of plans for
the year’s operations?
3. Do your plans provide methods to deal with
competition?
4. Is there a system for auditing your objectives?
Customer Analysis (who are your target customers
and what are they seeking from you?)

1. Have you profiled your customers by age,

income, education, occupation, etc.?
2. Are you aware of the reasons why
customers shop with you?
3. Do you ask your customers for suggestions
on ways to improve your operation?
4. Do you know that goods and services your
customers most prefer?
Organization and Human Resources

1. Are job descriptions and authority for

responsibilities clearly stated?
2. Have you an effective system for
communication with employees?
3. Do you have a formal program for motivating
employees?
4. Have you taken steps to minimize shoplifting
and internal theft?
Operations and Special Services
1. Do you monitor every facet of your
operations in terms of specific goals?
2. Do you provide time-saving services for
greater customer convenience?
3. Do you have policy for handling
merchandise returned by customers?
4. Do you get feedback through customer
surveys?
Financial Analysis and Control
 Do your financial records give you the
information to make sound decisions?
 Can sales be broken down by department?
 Do you understand the pros and cons of the
retail method of accounting?
 Have you taken steps to minimize shoplifting
and internal theft?
Buying
1. Do you have a merchandise budget (planned
purchases) for each season that is broken
down by the department and merchandise
classification?
2. Does it take into consideration planned sales,
planned gross margin, planned inventory
turnover, and planned markdowns?
3. Do you plan exclusive or private brand
programs?
4. Do you take advantage of cash discounts and
allowances offered by your vendor/supplier?
Pricing
1. Have you determined whether to price
below, at, or above the market?
2. Do you set specific markups for each
product category?
3. Do you know which products are

slow-movers and which are fast?

4. Have you developed a markdown policy?
Atmospherics
1. Are the unique appeals of your business
reflected in your image?
2. Have you figured out the best locations for
displays?
3. Do you know which items are brought on
“impulse”?
4. Do you use signs to aid your customers in
shopping?
Promotion
1. Are you familiar with the strengths and
weaknesses of various promotional
methods?
2. Do you participate in cooperative
advertising?
3. Do you ask customers to refer your business
to friends and relatives?
4. Do you make use of the community projects
or publicity?
Audit of Environmental
Issues
 – Is the store recycling plastics and non-
contaminated cardboard?
 – Does the store sell reusable shopping bags?
 – Does the store have receptacles for the
Customer to recycle bags and batteries?
Conducting the audit

 How long to conduct the audit?

 Should they inform their employees ?

- disguised audit
- non disguised audit
When to audit?
- when the retail is open?
- when the retail is closed?
Reporting Audit findings &
Recommendations to Mngt
 Audit report – formal/informal, brief/long,
oral/written
 Mngt should treat each and every point of the
audit result seriously.
Type of reports

 – Top Finding Reports

 – Score by question
 – Score by section (Cash, Front-end, Food
Safety)
Responding to an Audit

 Strengths – capitalise on them

 Weakness – revise the strategies to
overcome this
Constraints in conducting an Audit

 Costly
 Quite time-consuming
 Employees may feel threatened & may not co
operate
 Incorrect data/Insufficient data
 Management – not responsive to the findings
 Example
EPICOR RETAIL - AOM
 AOM processes transactional data to
enterprise system
 AOM gives control over all operations and
enhances business decision
 AOM is designed to meet challenges in
multichannel retail chains
 100 retailers- 20,000 stores and $50 billion
annual transactions
Data solution for retail environment
 Integrity of data flowing to an enterprise
 Improve accuracy of all applications
 Strengthen company’s bottom line profitability
 Monitor store operations
Data Management Applications
 Sales audit
 Loss prevention
 Voucher management
 Employee productivity and commission
 Credit settlement
 Video Case
Retail Dashboard
MetricStream
 Benefits of the MetricStream Solution
 Recent regulations and growing losses due to
shrinkage and other operational inefficiencies have
placed dependable audit program as a key
component in a business’ success.
 The MetricStream solution enhances existing audit
process by providing capabilities that cater to the
present day retail challenges such as real time
monitoring and access to actionable data, increased
frequency and accuracy of audits making it a best in
class solution.
Features…
 Automatic: Data is entered in web-page audit forms
minimizing the scope of error. These audit forms are
automatically synced up with the centralized audit
database to maintain a repository of findings and
results.
 Connectivity: Data captured off-line can be
automatically uploaded into the audit system when
the auditors connect to the network.
 Reports and Metrics: Analytical reports and
metrics like Audit Summary Report, Audit Detail
Report and Audit Scorecard are available to the
managers with the provision of generating reports in
MS Word.
Features…
 Cost Effective: More accurate and frequent
audits are conducted with same resources.
 Security: All the data transmission, storage
and login process is encrypted limiting the
user access to authorized resources.
 Alerts: Detects errors and deviations, and
alerts mangers in case of excessive loss
including shrink%. It has integrated corrective
action and incident tracking system with
automatic alerts.
Features…
 Data Repository: Audit database records all
historical analytics, trend-analysis, and root cause
analysis on inventory losses, safety and quality
incidents.
 Real-time Access: Access to actionable
information in real time helps reduce losses and
implement corrective and preventive actions.
 Standardized Process: The solution can be used
at multiple sites simultaneously, standardizing the
audit process across various branches of the chain.
Work by….

 Nivethitha.N
 Narmadha.N
 Dinesh.J
 Subjith Dash
 Vijaya Kumar.P
 Ganesh
 Vidhya.R
 Somasundaram