You are on page 1of 40

Chapter 9

Human Resource

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Retailing Strategy

Retail Market & Retail and

Financial Strategy Site Locations
Chapter 5, 6 Chapter 7,8

Structure &
Human Resource
Chapter 9

Information and Customer

Distribution Relationship
Systems Management
Chapter 10 Chapter 11

■ In what way does the management of human resources

play a vital role in a retailer’s performance?
■ How do retailers build a sustainable competitive
advantage by developing and managing their human
■ What activities do retail employees undertake, and how
are they typically organized?
■ How does a retailer coordinate employees’ activities, and
motivate them to work toward the retailer’s goals?
■ What are the human resource management programs
for building a committed workforce?
■ How do retailers manage diversity among their

A study of Sears’ employees found a 5%
increase in employee satisfaction resulted
in a 1.3% increase in customer
satisfaction. This led to a 0.5% growth in

Gaining Competitive Advantage through
Human Resource Management

Why does human resource management give a

sustainable competitive advantage?
■ Labor costs account for a significant percentage
of a retailer’s total expenses
■ The customer experiences are determined by
the activities of employees (selecting
merchandise, providing information and
assistance, etc.)
■ These potential advantages are difficult for
competitors to duplicate

Objectives of
Human Resource Management

■ Short Term
 Increasing Employee Productivity
 Productivity = Sales/ Number of Employees

■ Long-Term
 Employee attitude  customer satisfaction and loyalty
 long-term performance
 Increasing Employee Satisfaction  Reducing Turnover
 Employee turnover

= # of employees leaving their job during the year

# of positions
Human Resource Management
Challenges in Retailing
Work Environment Employees
■ Open Long Hours ■ Unskilled
■ Peak Sales Periods ■ Part-Time
■ Emphasis on Cost ■ Diverse Backgrounds

High Turnover

Downward Performance Spiral

Human Resource Triad

Special HR Considerations Facing
■ Need for Part-Time Employees
■ Demand on Expense Control
■ Changing Employee Demographics
■ International HR Issues

Increasing Workforce Diversity

■ Workforce employing more

minorities, handicapped
people, and the elderly
■ Older workers are more reliable
than younger workers
■ Cost effective as training and
recruitment costs are low


Strategic Issues
Facing Retail HR Professionals

■ The design of the organization structure for

assigning responsibility, and authority for tasks
to people and business units
■ The approaches utilized coordinate the activities
of the firm’s department and employees, while
motivating employees to work toward achieving
company goals
■ The programs used to build employee
commitment, and retain valuable human

Designing the Organizational Structure

Organizational structure
Identifies the activities to be performed by
specific employees, and determines the lines of
authority and responsibility in the firm

Tasks Performed in a Retail Firm

Strategic Management Tasks
Performed in a Retail Firm

■ Develop a retail strategy

■ Identify the target market
■ Determine the retail format
■ Design organizational structure
■ Select locations

Merchandise Management Tasks
Performed in a Retail Firm

■ Buy merchandise
 Locate vendors

 Evaluate vendors

 Negotiate with vendors

 Place orders

■ Control merchandise inventory

 Develop merchandise

 Budget plans

 Allocate merchandise to stores

 Review open-to-buy and stock

■ Price merchandise
 Set initial prices

 Adjust prices

Store Management Tasks
Performed in a Retail Firm

■ Recruit, hire, and train store personnel

■ Plan work schedules
■ Evaluate performance of store personnel
■ Maintain store facilities
■ Locate and display merchandise
■ Sell merchandise to customers
■ Repair and alter merchandise
■ Provide services
■ Handle customer complaints
■ Take physical inventory
■ Prevent inventory shrinkage

Administrative Management Tasks
Performed in a Retail Firm

■ Promote the firm, its merchandise

and its services
■ Manage human resources
■ Distribute merchandise
■ Establish financial control

Assignment of Responsibility for Tasks

■ Strategic – Top Management, Board of Directors

■ Merchandise Management – Merchandise Division
■ Store Management – Stores Division
■ Administrative – Corporate Specialists

Organization of a Small Retailer

Organization of Macy’s Florida

Merchandise Division Organization:
Macy’s Florida

What does a Buyer do?

A buyer is responsible for:

■ procuring merchandise
■ setting prices and markdowns
■ managing inventories
■ building and maintaining relationships
■ attending trade and fashion shows
■ negotiating with vendors on price,
quantities, assortments, delivery dates
and payment terms © Digital Vision

■ specifying private label merchandise

What does a category manager do?

■ A category manager
 Is responsible for a set of products that are viewed as
substitutes by customers (Ex: all pastas – fresh,
frozen, packed, or canned)
 Is evaluated on the profitability of category
 Is motivated to eliminate “me to” products and keep
essential niche products
 Is used primarily by supermarkets, big box retailers

Allocator vs. Planner

Allocator – responsible for allocating the merchandise

and tailoring the assortments in several categories for
specific stores in a geographic area.

Planner – responsible for the financial planning and

analysis of the merchandise category. They develop
the budget plan and monitor performance

Stores Division:
Organization of Macy’s Florida Store

Corporate Organization of Macy’s Inc.

Activities Performed at the Macy’s Inc.
Corporate Office

■ Support services and counsel to operating divisions

■ Conceptualizing, designing, sourcing, and marketing
private label and exclusive merchandise sold at Macy’s
and at Bloomingdale’s
■ Overall strategy, product development, merchandising
and marketing of home-related merchandise
■ Logistics, distribution, and operations functions
■ Services all proprietary and VISA credit card accounts
■ Performance of most other non-store services for
customers and employees
■ Development of distinctive sales promotions
■ Provision of an integrated electronic commerce, and
data warehouse systems

Retail Organization Design Issues

■ The degree to which decision making is

centralized or decentralized
■ The approaches used to coordinate
merchandise and store management

Centralization vs. Decentralization

Advantages of Centralization Disadvantages of Centralization

■ Reduce costs (overhead ■ It is difficult for a retailer to

falls with fewer adapt to local market
managers) conditions
■ Coordinated buying ■ It may have problems
achieve lower prices from responding to local
suppliers competition and labor
■ Opportunity to have the markets
best people make ■ Personnel policies make it
decisions for the entire hard for local managers to
corporation pay competitive wages
■ Increases efficiency
Methods for Coordinating
Buying and Store Management

■ Improving buyer’s appreciation for store environment

■ Buyers making store visits
■ Assigning employees to coordinating roles

Royalty-Free/CORBIS 9-31
Winning the Talent War

■ Retailers are engaged in a “war” with their

competitors for talent – for effective employees
and managers – who can effectively deal with
the incased complexities of retail jobs (the use of
new technologies, increased profit & loss
responsibilities, increased global competition, a
diverse workforce).
■ Develop programs to attract, develop, motivate,
and keep talent

Attracting Talent – Employment Marketing

Employment marketing (branding)

Marketing programs that

attract “best and brightest”
potential employees
 Starbucks – “Love What You Do”
 Southwest – “Free to Actually
Enjoy What You Are Doing”

Attracting Talent – Employment Marketing

To build its employment brand, JCPenney uses

the tagline “A Perfect Fit” on all correspondence
and advertising directed toward potential

Developing Talent –
Selection and Training

■ Selective Hiring:
 Recruit “the right people”
 Simply seeking the best and the brightest may not
always be the most effective approach
■ Training:
 Increasing investments in management training
programs and developing leaders
 Increasing attention to college graduates - Generation Y

Motivating Talent – Aligning Goals

■ Policies and Supervision

 Indicate what employees should do

 Behavior Enforced by Managers

■ Incentives
 Commission, Bonus, Stock Options

■ Organization Culture
 The set of values, traditions, and customs of a

firm that guides employee behavior

 Behavior enforced by social pressure

Use of Incentives

■ Aligns Employee and
Company Goals
■ Strong Motivating Force

■ Employees Only Focus
on Sales
■ Less Commitment to

Developing and Maintaining a Culture

■ Stories
 Nordstrom – Hero Service Stores
 Ritz-Carlton – “wow story” reading
 Whole Foods – working in teams and
using its employees in the hiring
 Wal-Mart – Saturday Morning Meeting
■ Symbols
■ CEO Leadership

Keeping Talent –
Building Employee Commitment
■ Empowering Employees
 Empowerment is the process of managers sharing power
and decision-making authority with employees
• Gives employees confidence
• Provides greater opportunity to provide service to
• Employees are more committed to firm’s success
■ Creating Partnering Relationships with Employees
 Reducing Status Differences
 Promotion From Within
 Balancing Careers and Families
• Flextime, job sharing
Issues in Retail Human Resource Management

■ Managing Diversity
 Diversity Training
 Support Groups and Mentoring
 Career Development and Promotions

■ Growth in Legal Restrictions on HR

 Equal employment opportunity
 Compensation
 Labor relations
 Employee safety and health
 Sexual harassment
 Employee privacy
Keith Brofsky/Getty Images

■ Use of Technology to Increase

Employee Productivity