An Introduction to

Retail Management
&
Marketing
 Book 2
Managing
Retail Stores
 Introduction to Book 2
 Session 2: Aspects of a retail manager's role

 Session 3: Managing the workforce

 Session 4: Managing customers

 Session 5: Managing a retail store

 Session 5 Managing a retail store
Outline
1. Day-to-day operations
2. Visual merchandising, space productivity & replenishment
3. Stock management: The management of replenishment by
supplier-employed specialists
4. Framework for the assessment of retail shrinkage
5. Technology in retail stores: data & customer relationship
management
6. Conclusion
 1. Day-to-day operations
• Retailing is an ever-changing business with
tasks and priorities often changing daily.
• Responsibility for the day-to-day operations of
a store lies with the store manager.
• A store manager's duties extend well beyond
the management of staff
 a. Duties of the store manager

• A manager working for a multiple retailer must put

into full & effective operation in branches at all

times the company's policies and procedures

• Day-to-day operations of the branch must be

organized & directed to its full trading potential.

• Sales promotions: Carry out company sales
promotions policy & execute local sales promotions
in agreement with the area manager.
• Staff: Ensure by interview & selection that branch is
properly staffed & control staff training
• Premises: Protect & maintain building, machinery &
equipment
• Administration: Carry out procedures & observe
legislation that surrounds retailing
• Communication: Establish & maintain means of
communication within branch company's objectives
b. Measuring a manager's performance
Store manager's performance is measured on trading &
management skills.
• Trading skills : Spot opportunities within retail
business environment in order to maximize store
profits.
• Management skills: Maximizing resource under
manager's control.
• he has to balance D of customers & store capacity
 Managing store assets to achieve best performance at
an optimum cost under :
Customers/merchandise/store workforce/store
 c. Measuring store productivity
• Most effective way of measuring productivity is to
calculate ratios of resource to results, ex; profit per
square meter of selling space.
• Then compare ratios with budgets

• Some of ratios used to measure performance are so

well established that it is possible to compare
productivity levels to industry norms.
– How is particular store performing against similar
stores across the retail industry?
 Table 5.2 Measures of productivity
Area of the business-------------Performance measure
Sales -------------------------------Sales per hour
Sales per employee --------------Labor cost per activity
--------------------------------------Staff cost as a percentage of sales
--------------------------------------Average wage cost per hour
Customers-------------------------Sales per customer (by value, nb of
items)
Merchandise-----------------------Items per time period
Space-------------------------------Sales per meter of selling space
General management-------------Gross margin return on investments
---------------------------------------Gross profit margin per square meter
---------------------------------------Net profit per square meter
---------------------------------------Reduction as a percentage of sales
 2. Visual merchandising, space
productivity & replenishment
• Merchandise display: the way in which products presented
for sale are displayed in-store.
• Visual merchandising: 'activity which coordinates effective
merchandise selection with effective merchandise display'.
• Visual merchandising management function: layout,
furniture, product selection, presentation & packaging.
• Classification of visual merchandising into three areas:
1. Architectural, building-based elements
2. Point-of-sale displays (at till-points for example)
3. Merchandise display.
+Amount of space allocated to a given P
• Visual merchandising is more important in some
retail sectors than others (ex: fashion)
• Visual merchandising responsibility may be part of
corporate marketing or a separate role at board level
• Adv & Dis of a centralized teams: retail brand
identity controlled across all outlets vs. prevent
retailer from reflecting local themes & preferences
• Sometimes multi-outlet retailer may use a team of
regional merchandisers who travel between retailers'
stores within a given area.
 Merchandising for brand impact in
women's fashion retail concessions

Concession retailing in a store is interesting

because concessionary brand retailers have to
present their merchandise distinctively within a
cluttered retail environment of a store, which
also accommodates the store's own-branded
merchandise
• Aspects of visual merchandising that have most
influence on consumers' purchasing intentions:
– Color
– Presentation style
– Awareness of fixtures (e.g., the creation of a high-
quality image through the use of wooden hangers)
– Sensory qualities of the materials
– Lighting
3. Stock management: management of
replenishment by supplier specialists
• Information-based sales & stock-planning systems
are used everywhere
 Promise sales performance improvements through
better on-shelf availability
• Sophisticated computer used to calculate
replenishment stock required
• However, data on which this replenishment is based
& which is used to calculate sales forecasts & orders
- is wrong if store stocks are provided ineffectively
 4. Framework for the assessment of
retail shrinkage
• 'Shrinkage’: reduction in inventory through factors such as
shoplifting, employee theft, paperwork errors & supplier fraud
• It increase retail costs & threaten sales
• Clarity & consistency are required when measuring shrinkage
• G not accounted for identified where there is a discrepancy
between book stock & physical stock
– Book stock: record of those goods held by company
– Book stock = Results from the last physical stock count + net '
movements
– Net movements = (purchases + incoming transfers) - (sales + outgoing
transfers)
• Discrepancies between book stock & physical stock will come to
light following a physical audit of a company
Shrinkage problems have been linked to:
– Particular P (e.g., razor blades, alcohol)
– Locations
– Processes (e.g., goods receipt, self-checkout)
– Types of people (e.g., employees, shoplifters, suppliers)
– Times (e.g., store closure, early morning).
• Gathering data about shrinkage is itself costly
• Thus, three major areas on which retailers might
concentrate data measurement & comparison in
order to reduce shrinkage:
1- Stewardship & performance improvement 2- Cost
reduction & sales improvement 3- Local effects of
systemic issues
 1- Stewardship & performance
improvement
• Retail store needs to make a conservative estimate
of the value of G it sells. This may be the lower of
either the purchase cost or the net realizable value.
• Performance improvement implies a change to
maximize business returns.
– Retail store needs to highlight profit lost as a
result of any shrinkage & focus on sales value of
P that have disappeared.
-Stewardship: safe & conservative running of

in-store operations along prescribed lines.

-Net realizable value: amount which assets can

be sold for, minus the costs involved in selling

2- Cost reduction & sales improvement
• Reducing cost of shrinkage may enable profit to be
increased.
• Costs of dealing with shrinkage include:
oCost of measuring shrinkage itself
oCosts of installing & maintaining security
equipment
oPaying store detectives & security guards
oProviding security-tagged products
Table 5.3 Opportunities for reducing shrinkage & improving sales
 3- Local effects of systemic issues
• Shrinkage a symptom of a range of issues.
• Ex: bottle is dropped in the store.
– Taken in isolation, shrinkage may result in employee who
dropped the case.
– From a systemic perspective, this incident is a consequence of
several factors- employee was in a hurry as they had been called
away from shelf replenishment to serve on the busy checkouts-
• Management ability to evaluate incident mean that
subsequent shrinkage losses could be reduced.
 This broader view might require attention to corporate
policies on P design, replenishment quantity, layouts &
staff discipline.
• Technology has a huge role in monitoring shrinkage.
 5. Technology in retail stores: data &
CRM
a) Customer relationship management (CRM)
• Technologies help retailers develop sophisticated CRM

CRM: management of a mutually beneficial relationship

between customer & supplier & may be viewed as a
continuous process, which enables retailers to use data to
select & develop long-term relationships with most
profitable customers.
• Retailer needs to invest in resources (capital
equipment, HR, etc.) to meet changing needs (CRM)
a) Customer relationship management (CRM)

• If right resources modify how they respond

towards customers by anticipating needs change
• Effective CRM system needs to gather intelligence
about current & potential customers
• Then, reshape organization & employees' behaviors
towards customers
• 'build knowledge' at ≠stages along supply chain
from manufacture to consumption maximize sales
through development of close relationships
• CRM = philosophy, which enables retailer to
establish & develop strategies to encourage
customer loyalty & long-term relationships
• The lifetime customer value: value of a customer to
retailer based on how much money they will spend
in store over all visits during lifetime against cost of
keeping that customer, is an indicator of value of
customer relationships.
• Customer lifetime value is more than 1
transaction i.e. It is an ongoing relation beneficial
for both parties
In order to implement a successful CRM system there
are many considerations, but perhaps the most
important factors are to:

• have a customer focus, which then guides the development

of the CRM system
• have a common database - an integrated information system
that allows all the staff involved in dealing with the
customer to have access to the customer information
• have an information system which is flexible, so that it can
meet changing requirements both from operational and
strategic perspectives.
 b) Sustainability & ethics
• By using databases, IS & technology, retailers are
becoming expert at gathering, analyzing &
interpreting customer data
• This helps them to devise effective CRM strategies.
• Loyalty cards allows retailers to transform data on
consumer behavior into warm relationships & into
honest customer loyalty founded on mutual trust.
 Reflecting on ethics of a loyalty scheme
 There are financial rewards for both buyer & seller.
 A loyal customer returns regularly to same store &
rewards retailer by making regular purchases, in
return retailer may provide tailored discounts
 Quality of relationship is fundamental to the overall
success of retailers' CRM initiatives.
 Trust & commitment are important to developing
long-term relationships
 trust only exists when one party has confidence in
an exchange partner's reliability & integrity.