Tasks performed at the store level Store Administration and management of premises Receiving & Providing customer displaying Recording sales goods shopping Experience Managing alliance and partnerships
Significant Areas Of Retail Operations1. Customer Service and Accommodation.2. Retail selling Process.3. Store Staffing & Scheduling.4. Retail Floor & Shelf Management.5. Stores Administration & Facilities Management.6. Warehousing & Supply Chain Management.7. Loss ( Shrinkage ) Prevention.8. POS/ Cashiering Process.9. Visual Merchandising and Displays.
Areas of Retail Operation covered• Check out Management• Stores Administration & Facilities Management• Loss ( Shrinkage ) Prevention.• Visual Merchandising and Displays.
Stores Operating Parameters To Evaluate Day to day operations of Stores , Dip stick parameters are used to measure retail performance. They enable retailers to find out health of specific area of operation. Parameters• Customer Transactions• Stocks• Space• Employees
Stores Operating Parameters - Customer Transactions• Customer Conversion Ratio Number of Transactions ------------------------------- * 100 Customer Traffic This reflects retailer’s ability to turn potential customers into buyers .• Returns to Net Sales Total Return & Allowances ----------------------------------- * 100 Net Sales This reflects customer’s satisfaction by showing value of returned goods and allowances as a percentage of net sales
Stores Operating Parameters- Customer Transactions• Transactions per hour No. of transactions ----------------------------------- No. of hours This helps retailers to keep track of the no. of transactions they are carrying out per hour , day ,week or season.• Sales Per Transaction Net Sales ------------------------------------- No. of transactions This measure gives the rupee value of average sales, net of returns and allowances
Stores Operating Parameters- Customer Transactions• Hourly customer traffic Customer traffic in ----------------------------------- No. of hours This is used to track total customer traffic per hour, day, week or season
Stores Operating Parameters- Stocks• Avg. Selling Price Total value of goods sold ÷ Total Qty. Sold• Avg. Stock Price Total value of goods in stock ÷ Total Qty. in stock• Stock Turnover/ Inventory Turnover Ratio Net Sales ÷ Avg. Retail value of inventory• Percentage Inventory Carrying Cost (Inventory Carrying Cost ÷ Net Sales) * 100
Stores Operating Parameters- Stocks• Gross Margin Return on inventory Gross Margin ÷ Avg. Value of Inventory• Mark Down Goods Percentage (Net Sales at Mark Down ÷ Total Net Sales) * 100• Shrinkage to Net Sales (Actual Inventory – Booked Inventory) -------------------------------------------------- * 100 Net Sales
Stores Operating Parameters- Space• Occupancy Cost per Sq. Ft. Selling Space Occupancy Cost ÷ Sq. ft. of Selling Space• Sales Per Sq. Ft. Net Sales ÷ Sq. ft. of Selling Space• Stock Per Sq. Ft. Net Stock ÷ Sq. ft. of Selling Space• Percentage of selling space (Selling space in sq. ft. ÷ Total space in sq. ft.) * 100
Stores Operating Parameters- Employees• Net Sales per full time employee Net Sales ÷ Total no. of FT employees• Space Covered/ Customers Saved per FT Employee ( Total Retailing Space /No. of customers served ) ÷ Total no. of FT employees• Labor Productivity Total Labor Cost ----------------------- * 100 Net Sales
Stores Operating Parameters- Employees• Gross Margin per full time employee Total Gross Margin ÷ Total no. of FT employees• Suppliers /Quantity or Value purchased per buyer Total Suppliers /Quantity or Value purchased ÷ Total no. Buyers
Check out Management Traditional Methods• Minimum Cash at cash counters• Cash balance to be updated by Computer• IT/Skill Management• Keeping eye on cashier from distance• No authority to cancel• Change( Chiller) Management
Check out Management Cash Register Express Cash Register Express (or CRE) is a cost-effective computerized cash register that keeps your inventory costs down, reduces theft and makes more money! CRE is Windows-based POS system exclusively for retail and video stores. Features : Easy to use: Fast lookups by barcode or name Built-in help system Bar-code ready Credit card processing with IC Verify Built-in backup Salesperson tracking Time clock Handles multiple clerks Handles multiple cash drawers Password protection
Check out ManagementBroad compatibility Microsoft Access compatible Quickbooks compatibleHelps manage customer accounts Detailed customer history Customer quick search Promotions for preferred customers Family memberships Coupon plans Gift certificates Mailing labelsManagement flexibility Flexible pricing Flexible taxingSophisticated reporting Detailed inventory reports Management reports Financial summaries
Radio Frequency Identification (RFID)• Short for radio frequency identification, a technology similar in theory to bar code identification.• With RFID, the electromagnetic or electrostatic coupling in the RF portion of the electromagnetic spectrum is used to transmit signals.• An RFID system consists of an antenna and a transceiver, which read the radio frequency and transfer the information to a processing device, and a transponder, or tag, which is an integrated circuit containing the RF circuitry and information to be transmitted.• Used for inventory management, IT asset tracking, race timing, passports, mobile payments, transportation and logistics, animal identification, museums, libraries etc.
Differences between RFID and barcode• It has for each individual product a unique number, whereas barcode labels have the same serial number for all identical items.• More than one RFID tag can be read at a time and can be read from quite long distance from the reader, whereas barcodes can be read just one time for each item and have a low reading distance from the reader.• Barcodes have fixed numbers and each figure does not necessarily write to the computer when scanned if the computer loses this figure. Silicon chips make the RFID system much more flexible to be re-programmed when necessary
Benefits of RFID• For instance, Wal-Mart stores manage to save $600 million annually by applying an RFID system.• A recent study at Wal-Mart stores shows that the RFID system is more successful in replenishing out-of-stocks by 63% than stores without RFID . Furthermore, it is emphases the fact that there was a reduction in out-of-stock by 16 percent in this period. Also, the study shows important profit on investment by increasing the sales made.• Increased focus on selling.• It can reduce the waiting time of the shoppers inside a shopping queue and allow goods to be checked immediately and automatically
Benefits of RFID• RFID tags can also be used to fight counterfeiting (Traditional production devices such as holograms and chemical tags are now being copied by counterfeiters.). The counterfeiting business makes up 5-7% of world trade and costs retailers more than 500 billion Euros a year. GlaxoSmith, is tagging some drugs like Trizivir to reduce fraud• The smart tags allow retailers to monitor products’ availability on the retail shelf especially during high selling seasons/perishable products. Because the retail shelf space is limited, RFID tags assist the retailers by enabling smart inventory management between the retail shelf and backroom stock• In addition, RFID tags are useful for retailers with smart shelves that have inbuilt RFID scanners to organize the products that are placed on the wrong shelf as well as satisfy customers demand
RFID- Challenges• The cost of tags can be a barrier to retailers in adopting RFID technology, particularly at the individual item level but the cost are coming down . For example, in 2000, the price of tags cost from $1 to $100 based on the type of the tag, but in 2006 they cost from 20 cents to $20• Lack of internationally agreed RFID standards-However, in June 2004 EPC global developed agreed protocols on the type of tag that concentrated on the read rate and the frequency of tags.• Privacy concerns from civil liberties groups - RFID could be used to allow retailers to gather information from customers. This kind of information allows the retailers to control the consumers’ behaviour• A security concern : For example, when the RFID tag is designed to read at a distance of one foot, attackers have the ability to read this signal in the region of 100 feet with the use of this special equipment. Solution for this is in attempting to kill the tag. A simple solution can be making a small change in the information that is on the tag.• Wrong billing of some previously purchased item
Stores Administration & Facilities ManagementIt includes• Cleanliness of stores• Maintenance of Store Facades & displays• Time Keeping of staff• Required Permission & Licenses• Health & Safety Norms• Store Security• Insurance
Stores Administration & Facilities Management - LicensesLicense Subject Issuing For Retail Authority formatRegistration Under Shops & BMC Ward Supermarket/Certificate Establishments Office Department Act StoreTrade License Edible Oil, Ready BMC Ward Supermarket made ice creams , Office sweets & chocolatesDairy License License for cow, Public Health Supermarket buffalo milk Deptt of BMCLicense for License for items Market & Supermarketfrozen items like fish, Slaughter Deptt mutton,etc of BMC
Stores Administration & Facilities Management - LicensesLicense Subject Issuing For Retail Authority formatLicense for For retail sales of Deptt of Civil Supermarketrationing pulses, food-grains, Supplies sugar,etcLicense for License for weighing Inspector- Supermarket/Weights & machines Weights & DepartmentMeasures Measures StoreCentral Registration under Sales Tax Supermarket/Sales Tax Central Sales Tax Office DepartmentRegistration StoreVAT / Registration under Sec Sales Tax Supermarket/Mumbai 22/22A of Mumbai Office DepartmentSales Tax sales Tax Act StoreRegistration
Stores Administration & Facilities Management- InsuranceInsurance against theft, fire, floods, riots, earthquake, etc.Policy to be carefully formalized to cover all potential risksInsurance – for 3 things• Building & Infrastructure• Inventory• Cash ( In store & banking)
Shrinkage PreventionCategories of theft - worldwide• Health & Beauty products• Jewellery & Compact discsCategories of theft - India• Chocolates• Cigarettes• Blades
Shrinkage PreventionProportion of shrinkage –• International – 0.6 to 1.5%• India- 0.7%
Shrinkage PreventionWays to prevent• Personal Monitoring by Security Personnel• Cameras to monitor• Use of source tagging –Small anti-theft labels are hidden inside a product or packaging by manufacturer
Shrinkage Prevention- RFID• RFID provides improvement of security. The use of RFID tag to expensive items can provide an outlet with increased security and can drastically reduce shrinkage through theft .• It also helps to do a quick and exact inventory account for the items and this significantly reduces the time and labor costs associated with inventory• RFID tags can alert security guards if a stock has been suddenly removed by shoplifters• Furthermore, security can be enhanced through RFID readers that automatically charge items in a customer trolley to a credit or debit card, thus reducing theft when items are concealed.
Visual Merchandising & Displays• Known as Silent Salesman• Art of suggestive selling by display & presentation
Visual Merchandising & Displays Profits In- store Sales 20% Big Spender 40% SpenderLoyal Shopper Browser 80% 15% Passer by 100 % The Customer stickiness Progression Model
Visual Merchandising & Displays- Role• Planning the VM theme and creating displays• Arranging props for displays• Arranging display fixtures and lighting• Setting up store before opening• Working with floor plan and stores requirement• Training personnel on sales floor to create display• Organizing merchandising units such as racks and shelves
Displays• Window Displays- Exclusive windows (closed backdrop with a theme and seasonal motif Open windows ( Without backdrop and passerby can see interior of store) E.g. Apparel & Related accessories
Displays• In store Displays Live display-Live models used, e.g. Kids Kemp in Bangalore using Cartoon characters to attract kids Marqee Display- Example –Gillette Mach 3 stalls at Malls
Displays• In store displays Free Standing/Island displays – Inside the store at the entrance to announce new arrivals /special offers –E.g. Pantaloons –Denims kept at entrance Counter displays – For jewellery and watches
DisplaysBrand Corners- For display ofexclusive brands or devotedspace in shelves or gondolas . Ex.Arrow / Zodiac at Shopper’s StopEnd Cap Displays – At terminalside of gondolas – both at entryand exit . Used in book storesCascade & Waterfall display – Ex.for Blazers, Jackets ,etc.