Storeoperations

SUBMITTEDBY:

SUBMITTEDTO:

Vipin(53)

Mr.ShashankMehra

PGDRM2A

FacultyofMarketing

Research

CenterforRetailManagement

FDDI

Storeoperations
Theretailstoreistheplacewherethecustomerstakeadecisiononthepurchaseofthe
productsofferedbytheretailer.Thestorealsoinfluencestheperceptionthatcustomers
formintheirmindsaboutthestore,theproducts,servicesandstaff.Fromthe
managementspointofview,operationsofthestoreandamajorelementofthecost.As
aconsequence,thestoreitselfbecomesacriticalassetoftheretailbusinessanditis
imperativethattheoperationsaremanagedwelltoachieveandsustaincustomer
satisfactionandbecosteffective.Managingstoreoperationsforasmallretailbusinessof
anysizeorcomplexityfromtheneighborhoodgrocertothenationalretailchainisa
challengingtask.Itrequiresintegrationamongvariousfunctionswithinthestore.When
allthefunctionsareperformedinanintegrationmanner,thestoreoperationsrun
smoothly.

KEYROLESINSTOREENVIRONMENT
Theretailstoreisofprimeimportancetotheretailorigination,fortworeasons.

Theretailstoreistheprimarysourceofrevenuefortheretailerand

Itisthepointwherethecustomeractuallyinteractswiththeretailstoreandits
offerings.

Theprimaryresponsibilitywithintheenvironmentofaretailstorelieswiththestore
manager.Thestoremanagerhastoplayadualroleinretailenvironment.Ononehand
heisresponsibleforthevariousmembersofthestaffandteamwhoreporttohimand
enablethesmoothfunctioningofthedaytodayoperationsofthestore.Ontheother
handhealsohastoensurethatthepoliciesandtheguidelinesaslaiddownbythe
management,areadheredtobythestoreandallemployeeswithinthestore.typically,
thestoremanagerisresponsibleforalltheactivitiesthatareconductedwithinthe
environsofthestoreandwouldincludetheopeningofthestoreontime,schedulingof

staff,cleanliness,ensuringadequatestockonthefloor,closingofthestoreandalso
dealingwiththecustomergrievancesandcomplaints.Whilethestoremanagermaynot
personallyperformallthesefunctions,hewouldberesponsibleforthetasksbeing
performed.Thustheremaybeotherindividualswhohandlethesetasks,buttheoverall
responsibilityofensuringthattheyareperformedaspertheguidelineslaiddownbythe
company,restswiththestoremanager.Thus,ifoneweretoenliststheresponsibilitiesof
thestoremanager,theywouldinclude:

BUDGETINGANDPLANNING
Ensurethatthegoalsaremetthroughappropriateplanningand
organizationofstaff,inventoryandexpenses,forshortandlongterm
success.
Monitoralosspreventionproagramtoprotectthecompanysinventory
andassets.
Developandmonitorthecapitalexpensesbudgettoensurethatthestore
isproperlymaintainedandupgradedsoastomeetthehighmaintenance
standardsthatreflectstheprofitableimage.

COMMUNICATION
Communicationwiththeregionaloffice/headofficeasperthe
requirementslaiddownbytheorganizationwithreferencetosales,
targetcustomerservice,eventsandlocalissues.
Holdstaffmeetingstoboostemployeemoraleanddriveforachievingthe
resultsneeded.
Ensurethecompanypolicyandproceduresarecommunicatedina
mannerandadheredtostrictly.
Motivateanddevelopstaffinordertoencouragetheirprofessional
development.

 CUSTOMERSERVICE
Instilltheemployees,themeaningandimportanceofcustomerserviceas
outlinedintheretailphilosophy.
Promoteandmonitorthequalityofserviceamongthestaffthrough
trainingandbyactingaspositiverolemodel.
Bepersonallyavailabletoallthecustomerstocommunicateandindentify
theirneedsandtoaddresstheirquestionsorconcerns.

PERSONAL
Inspireemployeessothateachpersoncontributestotheproductivityof
thestore.
Delegatetheworkloadappropriatelyandeffective.
WriteperformanceevaluationandgoalassessmentsfortheAssistant
StoreManager.

LEGALCOMPLIANCE
Ensurethatthestoreisincompliancewithemploymentlaws,including
thoseregardingwageandhour,humanrightsandequalemployment
opportunities.
Maintainsafeworkingconditionsfortheemployeesandcustomers
cominginthestore,resolveanysafetyconcernsquickly.
Ensurestoresecurityfrominternalandexternaltheftandgettoknowthe
properapprehensionandprosecutionproceduresforyourstate.

TheotherimportantpositionwithintheretailstoreenvironmentisthatofaCashier.The
Cashierintheretailstoreisapersonwhobasically,isresponsibletransactingthe
exchangeofthemoneyorcreditwiththecustomersinreturnformerchandiseor
services.Thecashierinaretailstoreisresponsibleforbilling,collectionofcash,credit
card,foreigncurrency,andtravelerschequesoragiftvoucher,asmaybeapplicable.

ELEMENTS/COMPONENTSOFRETAILOPERATIONS
Inordertoensureasmoothflowofoperationsatthestorelevel,itisnecessarythatthe
managementdefinesprocessesandhasthepeopleandtheresourcestoimplement
them.
Thetaskstobeperformedandtheprocessesareusuallydefinedinastoreoperations
manual.Thisdocumentliststhetaskswhichneedtobecarriedoutatthestorelevel;it
statestheresponsibilityandthetimeperiodinwhichthesetasksneedtobeperformed.
Awellpreparedoperationsmanualorblueprintisthestartingpointofefficientstore
operations

Typicallyinaretailstore,thefollowingtasksneedtobeperformed.
1. Storeadministrationandmanagementofthepremises
2. Managinginventoryanddisplay
3. Managingreceipts
4. Customerservice
5. Managingpromotions,events,alliancesandpartnerships.

1. STOREADMINISTRATIONANDMANAGEMENTOFPREMISES

Managementofpremises
Managingtheoperationsofaretailstorestartsbydetermininghowthetaskspertaining
tothepremisesaretobeperformed.Firstly,thedurationofthehoursforbusinessneed
tobedetermined.Itisalsonecessarytospecifywithwhomtheresponsibilityofopening
andclosingthestorelieswith.
Someconsiderationswhichneedtobetakenintoaccountwhiledeterminingthe
businesshoursare:thetargetaudienceforthestoreandthekindofproductswhichare
toberetailed.Forexample,asupermarketsellinggrocerieswillneedtohaveearly
openinghoursascomparedtoalifestylesecondfactorwhichaffectstheworkinghours
ofaretailstore,isthestorelocation.Afreestandingstorecanoperateathoursthatit
choosesto,whilestorewhichisapartofashoppingcenterormallwillneedtofollow
thehoursdecideduponbythemanagementofthemall.
Securityofthestorepremisesandofthemerchandiseinthestoreisequallyimportant.
Thesizeoftheretailstoreandthelevelofoperationsdeterminethelevelofsecurity
required.Asmallindependentretailermaynotreallyneedsecurityforhispremises,but
alargedepartmentstoremayconsideritnecessary.Securityofthepremisesisnecessary
inordertoensurethatmiscreantsdonotspoiltheretailstore.Securityofmerchandiseis
neededtoensurethatpilferageofmerchandiseorshrinkageasitiscommonlytermed,is
minimal.Inventoryshrinkagemayariseduetotheftbyemployees,customersorbyerror
onthepartofthestoreatthetimeofreceivingmerchandise.

Alargenumberofretaileracrosstheworldusespeciallydesignedtags,whichare
attachedtoproducts.Thesetagsaresensedbytheelectronicdevicesspeciallydesigned
todetectthemandareusuallyplacedatthestoreentrancesandexits.Ifanattemptis
madetotaketheproductoutofthestorewithoutremovingthesetags,analarmgoes
off,thusalertingthestorepersonnel.Theotherdeviceusedformonitoringthe
movementofcustomersandstaffisvideocameras.Someretailstorealsoprovide
separateentrancesandexitsforthestorestaff,sothattheycanbecheckedeachtime
theyleaveandenterthestorepremises.

Transactionperhour
=numberoftransaction/numberofhours
Thishelpretailertokeeptrackofthenumberoftransactionthattheyarecarrying
outinanhour.Hourlyvariationinsalesactivitycouldbeimportantforsetting
storehoursandforstaffschedule,particularlyforcashier.Theinformationcanbe
gatheredwithcashregisters,whichkeeptrackofthetimeofthesalesorby
havingperiodicallyrecordthenumberoftransactionatselectedperiodoftime.

Salespertransaction
=netsales/numberoftransactions
Thismeasuregivestherupeevalueoftheaveragesales,netofreturnand
allowancesthisisusedtostudysalestrendsovertime,incombinationwithother
measures,decideahighvolumeofsalesismoreimportantthanahighrupee
valueoneachsales.


Hourlycustomertraffic
=customertrafficin/numberofhours
Aretailerusethismeasuretotracktotalnumberofcustomertrafficperhour,
day,weekorseasonthiscanbeappliedtoaentirestoreortoasingle
departmenttoschedulehoursandestablishstafflevel.Unlessthereare
automaticcountingmechanisms,periodicsurveysofcustomerstrafficare
requiredtoarriveatarepresentativefigure.

STOREADMINISTRATION
Storeadministrationdealswithvariousaspectslikethecleanlinessofthestorepremises,
maintenanceofthestorefaadeandthedisplaywindowsetc.Administrationisalsobe
responsibleforutilizingthestorepersonneleffectively.Timekeepingforthestorestaffis
important.Itisalsonecessarytokeeptrackofholidaysandtheshiftsthatthestaffmay
berequiredtoworkfor.
Thepremisesofthestoreneedtobemaintainedasperthestandardsdecideduponby
themanagement.Thisinvolvesthetaskofcleaningthestoreandarrangingthe
merchandisebeforethefirstcustomercanwalkintothestore.
Asimportanttaskofadministrationinvolvesensuringthatalltherequiredpermissions
andlicensestorunaretailestablishmentareprocuredfromtherightauthorities.Itis
alsonecessarythatthehealthandsafetynormsasrequiredbythelawoftheland,are
metwithandsatisfied.


Stock
Inordertodeterminethestrengthofyourstockholdingyouneedanswerstothis
questionwhatistheaveragesellingprice(averagesellingpriceiscalculatedbydividing
thetotalvaluesoldduringadayoraperiodbythetotalquantitysoldduringthesame
dayorperiod)comparedtotheaverageprice(averagestockpriceiscalculateddividing
thevalueofthetotalmerchandiseinstockbythetotalquantityinstock).Itsanideal
situationifbothhappenstobearoundthesamevaluethismeasurehelpretailersfind
outiftherestoreisoverstockedorunderstockedinanycategoryoreveninanSKU.

Averagesellingprice
=totalvaluesofgoodssold/totalquantitysold

Averagestockprice
=totalvalueofgoodsandstock/totalquantityinstock
Turningstockaroundefficientlyyieldsbetterprofits:themoretimestheretailers
turnhisstockthemorehismarginsare.Thiscanbefoundforanycategoryorany
SKUanytimebycheckingthepercentagesoldfromthestockofaspecified
categoryorSKU.

2. MANAGINGINVENTORYANDDISPLAY

Thetaskofallocatingthemerchandisetothevariousstores,usuallyrestswiththe
merchandisemanagementteamorthecategorymanagerasthecasemaybe.Asthe
store,thestorestaffmanagesthisinventory.Toenablethemtoworkefficiently,the
completeprocedureforthehandlingofmerchandiseatthestorelevelneedstobe
documented.

Responsibilitywithrespecttomerchandiseatthestorelevelinvolvereceivingandin
wardingthegoods.Oncethemerchandiseisreceivedatthestore,thequantityand
otherdetailslikecolor,style
Andsizeshavetobecheckedwiththedocumentaccompanyingthegoods,todetect
anydiscrepancies.Inthecaseofmostlargeretailers,usingahandheldscanner,the
merchandiseisscannedandthesystemupdatedforthestocksreceived.Proper
documentationalsoneedstobedonewhenreturninggoodstothevariouslocations
asandwhenrequired.

Astheintegralpartofmanaginginventoryatthestorelevelisdisplayingitcorrectly.
Thebestmerchandisemaylieunsoldifitisnotdisplayedinamannerthatisappealing
andconvenientforthecustomer.Forexinasupermarket,if15ltrpacksofvegetable
oilareplacedonthetopmostshelf,itmaybeinconvenientforthecustomertopick
oneupandcarry,consideringthefactthatmostofthecustomeratasupermarket
wouldbewomen.Incasetheretailerisrunninganythemepromotionorcampaign,
theproductsonofferneedtobedisplayedcorrectly,andreplenishedoncesold.

Stockturnover/inventoryturnoverrate
=netsales/averageretailvalueofinventory
Expressedasnumberoftimes,thisrationindicateshowoftenthe
inventoryissoldandreplacedinagivenperiodoftime.Someretailers
alsousetheratiocostofgoodssolddividedbyaveragevalueofinventory
atcost.Bothcanbecalculatedforanytimeperiod.Wheneitherofthese
ratiodeclinesthereisapossibilitythatinventoryisexcessive.

Percentinventorycarryingcost
=(inventorycarryingcost/netsales)*100
Theimportanceofthismeasurehasincreasedinrecentyearswiththerise
ininventorycarryingcostduetohighinterestrates.Thismeasureisalso
importanttoreducestockobsolescenceandtopreventblockageof
workingcapital.Retailersusethismeasuretotrackthepercentageoftheir
netsalesrepresentedbythefixedcostofmaintaininginventory.

Grossmarginreturnoninventory
=Grossmargin/averagevalueofinventory
Expressinrupeeterms,thegrossmarginreturnoninventory(GMROI)
comparesthemarginonsalesontheoriginalcostvalueofmerchandiseto
yieldareturnonmerchandiseinvestment.Inventorycanbevaluedat
retailoratcostbutformanyretailersinventoryvaluedatretailismore
accessiblethatthevalueatcost.However,usinginventoryvaluedatretail
maynotgiveanaccurateindicationofinvestmentcost.GMROIcanbe
dramaticallyalteredbychangesininventoryturnoverandgrossmargin.

Space
Spaceproductivityiscriticaltosuccessfulretailing,henceitisimperativetohave
parametersthatmeasurespaceproductivity.Thetopoftheminddipstickmeasuresare
salespersquarefootperdayandmarginspersquarefootperday.Theperformanceof
thestoredependsonthegrossmarginreturnonfootage(GMROF).
Asretailingisallaboutoperatingwithinagivenspace,itsproductivitycanbemeasures
accordingtoanyofthevariousretailelements,beitemployees,stocks,customersor
eventhestoresfacilities,besidessales.

Occupancycostpersquarefootsellingspace
=occupancycost/squarefeetofsellingspace
Expressedinrupees,thismeasuretranslatesoccupancycostintorupee
valueperunitofsellingspace.Itgivesanestimateoftheamountofthe
grossmarginrupeeeachunitofspaceemployedforretailsellingmust
generatetocoveroccupancycosts.Foramultiunitretaileritisahelpful
measureforcomparingtheperformanceofunitsatdifferentlocations.It
canbecalculatedforanytimeperiod,suchasayearoramonth.

Salespersquarefoot
=netsales/squarefeetofsellingspace

Stockpersquarefoot
=netstock/squarefeetofsellingspace

Expressedinquantityorvalue,thismeasurecanbeusedtocompare
alternativeusesofspaceinvolvingdifferentproductlines,ortocompare
theperformanceofdifferentdepartmentsorstoresusingacommon
standard.Thisratiowillvaryaccordingtothetypeofmerchandiseand
merchandisingmethodsused.

Percentageofsellingspace
=(sellingspaceinsquarefeet/totalspaceinsquarefeet)*100
Retailersusethismeasuretocalculatethepercentageoftotalspaceused
forsales.Thisratiovariesaccordingtothetypeofmerchandiseand
merchandisingmethods.

3. MANAGINGRECEIPTS

Managingreceiptsinvolvesdefiningthemannerinwhichtheretailerisgoingto
receivepaymentforthesales.Themostcommonmethodforreceivingpaymentsfor
goodssoldinIndiaisbycashorbycreditcard.Whilemostofthelargeretailstores
wouldaccepteitheroftheaboveformsofpayment,asmalllocalretailstoremay
acceptonlycashpayments.Othermodesofreceivingpaymentarebywayofcheque
oradebitcard.Somestoresalsohaveacobrandedcard,whichcanbeusedfor
payment.

TheuseofcreditcardsinIndiaislargelyanurbanphenomenon.Mostlarge
departmentstoreshavestartedacceptingcreditcardsasamodeofpayment.The
creditcardchargespaidbytheretailerdependonthevolumeofbusinesstransacted
bytheretailerandtheratenegotiatedonthebasisofthefuturebusinesstransacted

bytheretailer.Theprocedureforacceptingpaymentbywayofcreditcardsand
collectingpaymentfromthebankneedstobeclearlyunderstoodbythestaff
responsibleforthisfunction.

4. CUSTOMERSERVICE

Thecustomerservicepolicytobeadoptedbytheretailerisdecideduponthetop
management.Thisisactuallyputintopracticebyeverypersonworkingwithinthe
retailstore.Customerservicedoesnothavetobeginandendatthecustomerservice
counterintheretailstore.Eachpersonontheflooroftheretailstorecanensurethat
thecustomercomesincontactwithhimorheriscomfortableandhasapleasant
shoppingexperience.Thisissomethingwhichhastobeimbibedinthem,andthishas
tobeatopdownapproach.
Animportantaspectwhichaffectsacustomersperceptionoftheretailstore,itsthe
experiencethathehaswhilebillingtheproductspurchasedbyhim.Whileacustomer
mayspendhourschoosingtheproductthathelikes,hedoesnotlikewaitingforalong
timeatthetimeatthetimeofpayment.Longqueuesmayresultinsomedisgruntled
customers.Storeoperationsneedtobegearedtohandlesuchasituation.Many
stores,infact,traineachmemberofthestafftohandlethecashcounter.Many
supermarketsandotherretailershavealsointroducedexpresscheckoutsfor
customerswhohaveboughtalimitednumberofproducts.Thisensuresthata
customerwhoneedstobuyonlyoneortwoproductsdoesnothavetowaitinthe
samequeueasapersonbuyingalargenumberofitems.
RetailersinIndianeedtobesensitivetotheissueofefficiencyofbillingattimeswhen
thenumberofpeoplebuyingfromthestoreincreasessubstantially.Specificdaysof

theweekmayshowatrendofincreasedbilling.Thismayalsohappenduringa
discountsale,diwali,Durgapuja,Christmas,NewYearandothersuchoccasions.

Customerconversionratio
=(numberoftransactions/customertraffic)*100

Thispercentagereflectstheretailersabilitytoturnapotentialcustomerintoa
buyer.Itisalsoknownasthepercentageyieldrateorthewalktobuyratio.A
lowfiguremeansthatpromotionalactivitiesarenotbeingconvertedintosales,
orthattheoverallsaleseffortsneedtobeaccessedafresh.Unlessautomatic
countingmechanismsarerecordingcustomertraffic,periodicsurveysof
customertrafficarerequiredtoarriveatarepresentativefigure.Informationon
transactionscanbegatheredfromcashregistertapeswhichkeeptrackofthe
timeofthesale,orbyhavingstaffrecordsthenumberoftransactionsfor
selectedoftime.

Employees

Employeeproductivityisusuallymeasuredintermsofsales.Measurement
parametersincludetotalsalesperdaypersalesperson.Totalnumberofcash
memos/customershandledbyasalespersoninthecaseoffreeaccessretailing(the
criteriaappliedforoverthecounterretailingisdifferent).Itisagainthegrossmargin
returnonlabouremployed(GMROL)thatmatters.

Netsalesperfulltimeemployee
=netsales/totalfulltimeemployees

Expresseitherinquantityorrupeevalueterms,thismeasurerepresentsthe
averagesalesgeneratedbyeachfulltimeemployee.Itisusedtosetperformance
targetsforsalespersonnel.


Spacecovered/customersservedperfulltimeemployee
=totalretailingspace/numberofcustomersserved/totalfulltimeemployees

Expressedinsquarefeet,thismeasurementrepresentsthespacecovered/
numberofcustomersservedbyeachfulltimeemployee.Thisisextensivelyused
bylargefreeaccessformatretailerslikedepartmentstores.

Labourproductivity
=(totallabourcosts/netsales)*100

Thispercentagemeasurelabourproductivitybytrackingthelabourcostsincurred
toachieveagivensalesvolume.Thismeasurecanalsobeappliedsolelytosales
employees.

Grossmarginperfulltimeemployee
=grossmargin/totalfulltimeemployees

Expressedinrupeevalue,thisratioindicatesthegrossprofitgeneratedper
employee,andcanbeusedtogaugeasalesemployeesperformance.Though
thisshouldntbetheonlymeasureofanemployeesperformance,itcanprovide
astartingpointforcloserexamination.Thismeasurecanbeadaptedtoapplyto
allemployeesorsolelytobuyers.

Suppliers/quantityorvaluepurchasedperbuyer
=totalsuppliers/quantityorvaluepurchased/totalbuyers

Thismeasuregivesanaverageofthenumberofsuppliersorthequantityor
rupeevalueforeachbuyerinastore.Thereisnoidealnumber,butby
comparingtheworkloadofindividualbuyersthroughthismeasure,management
canseehowwellthebuyingloadisbeingdistributedamongpurchasingstaff.
Researchindicatesthatanaveragebuyersabilitytomakeappropriatedecisions
aboutbuyingdeclinesasthenumberofsuppliersincrease.Thismeasureshould
belookedatinconjunctionwiththenumberofSKUstheaveragebuyerhandles,
aswellaswiththereplenishmentcyclesinvolved.

5. Managingpromotions,events,andpartnership

Eventsandpromotionsareverymuchpartofretailmarketingscene.Inorderto
enablethesuccessofaneventorapromotion,itisnecessarythatthestorewherethe
actionistotakeplacebegearedforthesame.Thismayrequirehiringofadditional
staff,workingexistingstaffinshiftsandrunningshorttrainingprogrammeonthe
featuresofthepromotion,thehoursandthespecialityofthemerchandise.

Thecomplexityofmanagingaretailstorealsodependsonthetypeofretailstoreand
theproductsretailed.Whilethemerchandisesoldinadepartmentstoreorahigh
fashionboutiquechangesfromseasontoseason,theexpertiserequireforthe
operationsofthesupermarketisverydifferent.Andintegralpartofmanaginga
supermarketcomprisesofunderstandingthetemperaturesatwhichmeatneedstobe
frozen,storedanddisplayed.Therequirementsofabakeryanddairyproductsare
againdifferentandneedtobeunderstood.Controlofperishableandsanitationare
twoimportantaspectsoftheoperationsofasupermarket.