VIJEESH MOHAN

Module-III
Retail Operations Management
Retail Operations management is the efficient and effective implementation of the
policies and tasks that satisfy a retailers customers, employees, and management (and
stockholders, if it is publicly owned)
Retail operations management requires an understanding of merchandising, logistics
and cost control in order to move items from stores or production facilities into the hands of
consumers.
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
Store Operations applications includes the following:
Inventory Management
Price Management
Store Maintenance, Energy Mgt., Renovations
Customer service
Insurance
Credit Management
Outsourcing
Crisis Management
Order Picking and Staging
Put away
Replenishment
Store Transfers
Guided Selling
Computer Assisted Ordering
Employee Training
Task Execution
Managers Workstation (Task Management)
Mobile POS with PCI Compliance
Line / Queue Busting
Receiving
Returns
Stock Management
Competitive Shopper
Consumer Shopper
Gift Registry
Store Security and Security Monitoring Video

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Elements of Retail operations Management

Elements of Retail operations Management includes,
1. Budgeting
2. Resource allocation
3. Store format and size decisions
4. Store layout and space allocation
5. Store security aspects
6. Credit management

1. Budgeting and Planning

Budgeting for retail involves balancing incoming funds with outgoing expenditures. A
retail budget should coordinate the rhythm of paying for inventory purchases and overhead
costs, such as rent, as well as other essential expenditures, such as payroll and taxes, and
balancing these payments with incoming revenue.
It includes developing and monitoring the capital expenses budget to ensure that the
store is properly maintained and upgraded so as to meet the high maintenance standards that
reflects the profitable image.
And ensure that the goals are met through appropriate planning and organization of
staff, inventory and expenses, for short and long term success. Monitor a loss prevention
proagram to protect the companys inventory and assets.
Steps in retail budgeting
1. Create a cash flow projection for your retail store. Use a spread sheet format and label the
columns according to the months of the year
2. Fill in the fields on your spread sheet with the amounts that you expect to earn and spend
in each category during each month of the upcoming year
3. Review your cash flow projection to determine when you expect your business to come
up short of being able to meet its expenses.
4. Develop strategies for making it through these lean periods, such as having credit lines
available or negotiating with vendors for longer payment terms.
5. Look for expenses that you can cut, but always be scrupulous about having enough
inventories on hand to make it through periods when customer demand is strong, even if
you have to borrow money to do so.

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Working Capital
Working capital refers to the cash a business requires for day-to-day operations, or,
more specifically, for financing the conversion of raw materials into finished goods, which
the company sells for payment. Among the most important items of working capital are
levels of inventory, accounts receivable and accounts payable.

2. Resource allocation
Resource allocation is used to assign the available resources in an economic way. It is
part of resource management.
In retail project management, resource allocation is the scheduling of activities and
the resources required by those activities while taking into consideration both the resource
availability and the project time.
Effective retail resource management entails having enough resources to leave the
business operating efficiently, but on the other hand, also not having too many so that
resources go unused.
Plan Resource Allocation
As a retail manager or storeowner, your first goal is to maximize productivity. In a
retail environment, you deal with a range of employees, including part-time and seasonal
workers. The hours are long, with busy spells and lulls throughout the day.
Plan how and when you will use resources to get the most from them. For example, if your
store is busiest from Thursday to Sunday with peak trading taking place during the late
afternoon, schedule additional part-time employees for these days and times. If you schedule
your workforce evenly across the trading week, there will be times when some have nothing
to do.
Scheduling additional employees for peak times improves customer service delivery
and stops your workforce from feeling harried, overworked, and disgruntled.

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Evaluate the Effectiveness of Resource Allocation Plans
Evaluating existing and past resource allocation plans is as important as formulating
these plans in the first place. Periodically, review all of your resource allocation plans, and
make changes if you need to do so.
For example, review departmental budgets, reducing and increasing the money
available for staffing and equipment in specific areas if required. If your sales patterns
change, adjust your staffing schedules. Stay informed about changes in the business, and
adjusts your planning to meet new requirements as they arise.
Human Resources
In a retail environment, your employees are one of your most important resources.
Develop this resource through staff training and the implementation of individual
development plans.
Focus on product and business knowledge, ensure that everyone in the store is aware
of company policies and procedures, teach people new skills, and allow them to expand the
knowledge they have. Do not focus on developing each employee's job role only. Train
people in all aspects of the business to allow them to work in different departments if needed
and to find their niches in the company.
Time management
Time is a finite resource that is easy to waste or underutilize. Learn how to manage
your time effectively to maximize your own productivity as well as that of your employees.
Delegate repetitive tasks, prioritize your daily workload, and set aside time for
meetings and emails at specific times of the day. Include time management in employees'
individual development plans and annual assessments. If necessary, provide time
management training for managers and supervisors.

VIJEESH MOHAN

3. Store format and size decisions

The retail format is the store package that the retailer presents to the shopper. A
format is defined as a type of retail mix, used by a set of retailers1. Store Formats are formats
based on the physical store where the vendor interacts with the customer. It is the mix of
variables that retailers use to develop their business strategies and constitute the mix as
assortment, price, transactional convenience and experience
Retail stores physical characteristics are referred as atmospherics of retail store. This
will appeal customers and encourage them to buy more things. Physical structure can broadly
be classified exterior, interior, store lay out and visual merchandising (display).
Exterior refers to aspects like store front, display windows, surrounding businesses,
look of the shopping centre etc. It is considered important to attract new customers. The
interior atmospherics refers to aspects like lightings, colour, interior decorations etc.
Exterior atmospherics
Store exterior include
Store entrance
Main board marquee windows
Lightings
Height of the building
Size of the building
Visibility
Sign board
Uniqueness
Surrounding stores
Parking facilities, etc.
Interior atmospherics
Interior atmospherics refers to all aspects of the physical environment found inside the
store. Interior atmospherics affect sales, time spent in the store, approach / behavior of target
segment, some of the important interior atmospherics are

Flooring
Music
Interior design
Level of cleanliness
Lightings

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Types of retail store format

4. Store layout and space allocation

Store layout is ease of user movement through the store to provide maximum
exposure of goods and attractive display (Marketing Glossary, 2007). A store layout is the
design in which a store's interior is set up.
This includes doors, merchandise placement, shelf orientation, music, check-out
counters, interior decorating, staff attitude, lighting and location of the loading facilities.
Store layout is a critical factor driving consumer elaboration and response in retailing.
The layout of a retail store has been found to significantly impact a retailer's overall
performance through its influence on information processing, purchase intentions and attitude
towards the retail establishment. Retailers store layout results in greater consumer
elaboration and more positive consumer outcomes

VIJEESH MOHAN
Store layout refers to the interior retail store arrangements of departments or grouping
of merchandise. A retail store layout is often designed to make customers spend more money
than they planned to.
It is important for retailers to evolve a customer friendly layout. This involves paying
adequate attention to factors such as expected movements of customers, visiting the store and
space allotted to customers to shop, and making adequate provision for merchandise display.
Customer friendly layout is likely to motivate the shoppers to move around the store
and shop more than what they had planned for.
Store layout planning involves decisions about allocation of floor space, product
groupings and nature of traffic flow, which can take the form of straight or gird traffic flow,
free form flow (curving) or racetrack flow
Types of store layout
1. Grid
It is a commonly used system followed by conventional grocery stores as it facilitates
planned shopping behaviour so that customers can easily locate products on their shopping
list.
Kirana and drugs store owners commonly employ the grid type layout. Grid
arrangement is not very aesthetic, but it ensures smooth shopping trips of shoppers within the
store.
The grid design is best for stores in which customers are expected to explore the
entire store, such as grocery stores and drugstores.

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2. Free form / boutique layout
It offers convenient during shopping. It also shown that it increases the time that
consumer are willing to spend in the store. It is mainly used for large department stores. It is
also known as boutique layout.
Free-form designs are usually found in small specialty stores and within large stores
departments.

3. Race track layout / loop layout

It offers an unusual, interesting and entertaining shopping experience while also
increasing impulse and promotional purchase. Retail units with multiple departments opt for
racetrack layout in order to attract shoppers to each department. It is also known as loop
layout design.
Racetrack designs are more common in large upscale stores like department stores

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4. Storeyed layout
This is a very common variant of store layout design among Indian independent and
leading retail chains in the organized sector. This type of layout not only provides the best
utilization of floor area, but also permits the retailer to set separate sections for different
product categories.
Signage and graphics help customers locate specific products and departments,
provide product information, and suggest items or special purchases. In addition, graphics,
such as photo panels, can enhance the store environment and the stores image. Digital
signage has several advantages over traditional printed signage, but the initial fixed costs
have made the adoption of this technology slow. Feature areas are areas within a store
designed to get the customers attention. They include freestanding displays, end caps,
promotional aisles or areas, windows, cash wraps or point-of-sale areas, and walls.

Store Space allocation

The Space allocation is the process in Space Planning technique, of determining the
position and size of several elements, according to the input specified design program
requirements, mainly topological and geometric constraints, and the positioning of openings
Space management
Space management involves two decisions:
(1) The allocation of store space to merchandise categories and brands
(2) The location of departments or merchandise categories in the store
Some factors that retailers consider when deciding how much floor or shelf space to
allocate to merchandise categories and brands are
1. The productivity of the allocated space (When evaluating the productivity of retail space,
retailers generally uses sales per square foot or sales per linear foot)
2. The merchandises inventory turnover
3. The impact on store sales
4. The display needs for the merchandise.

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The location of merchandise categories also plays a role in how customers navigate
through the store. By strategically placing impulse and demand/destination merchandise
throughout the store, retailers can increase the chances that customers will shop the entire
store and that their attention will be focused on the merchandise that the retailer is most
interested in selling. In locating merchandise categories, retailers need to consider typical
consumer shopping patterns.
Retailers utilize various forms of atmosphericslighting, colours, music, and scent
to influence shopping behaviour. The use of these atmospherics can create a calming
environment for task-oriented shoppers or an exciting environment for recreational shoppers.

5. Store security aspects

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VIJEESH MOHAN

Retailers can overcome security challenges to protect their bottom line

An in-depth security strategy is the key, and it starts with establishing a culture of
security and speed.
Users must be educated in effective password creation, safe network use and
monitored while on corporate networks.
Companies must also have a broader security plan in place, one that contains elements
to effectively contain a breach
Assess the damage, remove the vulnerability and then communicate responsibility to
the public
A speedy response can help mitigate total damages and minimize the loss of
consumer confidence.
Store security measures

i.

Anti-Theft Store Security Devices

An anti-theft system is any device or method used to prevent or detect the

unauthorized appropriation of items considered valuable. Anti-theft devices come in a variety

of ways, from security cables, motion sensors, counterfeit money analyzers, and alarms. Antitheft devices can stop the amateur thief and slow down the professional.

ii.

Crowd control store security devices

Suitable for banks, fast-food restaurants, theaters, and any other facility where

pedestrian control is necessary. Crowd control posts and ropes let the crowd know what to
expect while in line. There is a wide selection of crowd control posts and store
security velour ropes that come in many finishes and styles.

iii.

Store security door alarms or door chimes installed at your place of business.
Door alarms are the ideal solution for being notified of visitors, customers or couriers.
Simply mount the transmitter above or beside your entry door and be alerted in another
room or building of someone approaching. Perfect for small business, warehouses or
homes.

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VIJEESH MOHAN

iv.

Store security mirrors .

Protect your merchandise and profits! Add additional security features to your store,

with strategically placed, realistic looking, security Mirrors and Domes. A great, and
inexpensive, way to make your store just that bit more unattractive to potential store security
thieves. Their presence is a valuable deterrent to would-be thieves.

v.

Simulated store security cameras are an economical way to have the look of "video
surveillance" without the expense of a real system. Protect your store with these great
store fixtures. It is a real camera--there's just nothing inside. The simulated camera
reduces shoplifting by making potential shoplifters believe they are being watched on
store security camera.

6. Credit management
Credit management is the process of controlling and collecting payments from
customers. A good credit management system will help you reduce the amount of capital tied
up with debtors (people who owe you money) and minimise your exposure to bad debts
It

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control credit policies that

increasing collections,

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to creditworthy customers, and developing competitive credit terms.

Credit management tips
It is best to minimise the likelihood of bad debts through good credit management practices.
Prepare your own policies and procedures for credit management (terms and
conditions, invoicing promptly and monitoring)

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VIJEESH MOHAN
Terms and conditions

Clearly state in writing your terms and conditions of trade and your credit policy in
writing.

Draft terms and conditions that suit your business.

It is advised you seek legal advice before finalising the document to ensure it has
internal consistency and covers all the key issues.

Ensure the document does not contain any illegal terms and can be relied on in the
event that court action is necessary to recover a debt.
Include your terms on all quotes, estimates, contracts, agreements, purchase orders,
and related documentation.
Clearly specify what will be supplied, when the work will be done, and when and how
payment is to be made.

Obtain a written acceptance of the agreement along with written approval of any
variations to the original agreement.

Visual merchandising / Display

It is the presentation of products in order to sell them. Good display shout to the world
that the retailer cares about his image and merchandise and most importantly, about
entertaining, informing, and educating his customers.

Benefits of effective display

Entertains, informs and educates the customer about the product / service in an
Effective and creative way
Encourages a customer to wander about to discover novelties
Re-affirms the store image
Arranges merchandise for easy access
Draw attention of the customers
Highlights merchandise to promote its sale
Introduces and explains new products

Encourages customer to enter the store.

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