Retail and sales management Session 15

Learning from the session Store management/operations management Store management/operations management

Store management/operations management Four major factors involved; managing employees, controlling costs, managing merchandise presentation and providing customer service Four major factors involved; managing employees, controlling costs, managing merchandise presentation and providing customer service Managing employees: Managing employees: 1. Recruiting and selecting store employees: Job analysis and job description 1. Recruiting and selecting store employees: Job analysis and job description 

Store management/operations management  Job analysis to be done to determine the qualifications of potential employees  Job description includes activities the employee need to perform and the performance expectations

Managing employees: 2. Socializing and training new store employees: Helpful in introducing the employees to the firm and its policies 2. Socializing and training new store employees: Helpful in introducing the employees to the firm and its policies Orientation programs and formal training of store employees Orientation programs and formal training of store employees Training store employees: Consists of structured program and on- the job learning experience Training store employees: Consists of structured program and on- the job learning experience

Managing employees contd…: 3. Motivating and managing store employees: 3. Motivating and managing store employees: Setting goals or quotas Setting goals or quotas Maintaining store morale Maintaining store morale 4. Evaluating store employees and providing feedback: 4. Evaluating store employees and providing feedback: Based on various criteria such as customer service, efficiency in day-to-day store operations and compliance to the rules of the firm and with other colleagues Based on various criteria such as customer service, efficiency in day-to-day store operations and compliance to the rules of the firm and with other colleagues

Managing employees contd…: 5. Compensating and rewarding store employees: Extrinsic and intrinsic rewards 5. Compensating and rewarding store employees: Extrinsic and intrinsic rewards Extrinsic rewards: Rewards provided by either the employee’s manager or the firm eg. Compensation, promotion and recognition Extrinsic rewards: Rewards provided by either the employee’s manager or the firm eg. Compensation, promotion and recognition Intrinsic rewards: Rewards employees get personally from doing their job well Intrinsic rewards: Rewards employees get personally from doing their job well Job enrichment could also be an intrinsic reward Job enrichment could also be an intrinsic reward

Compensation programs Aimed at attracting and keeping good employees, motivating them and rewarding for their effort Aimed at attracting and keeping good employees, motivating them and rewarding for their effort Straight salary compensation, incentive compensation plan, quota bonus plan and group incentives Straight salary compensation, incentive compensation plan, quota bonus plan and group incentives Incentive compensation plans: based on sales productivity of each employee Incentive compensation plans: based on sales productivity of each employee

Compensation programs Incentive compensation plans Incentive compensation plans Straight commission: Sales person’s income is based entirely on commission Straight commission: Sales person’s income is based entirely on commission Incentive plan with fixed salary plus a commission on total sales or commission on exceeding the sales target Incentive plan with fixed salary plus a commission on total sales or commission on exceeding the sales target

Incentive compensation plans contd..  Drawing account: Sales people receive weekly check based on estimated annual pay package and commissions are credited against the weekly payments  Quota bonus plan: Provides bonus to sales associates when they exceed their quota associates when they exceed their quota  Group incentives: Additional compensation for all the employees who work in a store when it exceeds the sales target for a month or quarter

Controlling costs Through labour scheduling and store maintenance Through labour scheduling and store maintenance Labour scheduling: Determination of the number of employees assigned to each area of the store Labour scheduling: Determination of the number of employees assigned to each area of the store Done based on customer traffic Done based on customer traffic Legal aspects also impact labour scheduling Legal aspects also impact labour scheduling Labour scheduling if done efficiently, can reduce staffing cost Labour scheduling if done efficiently, can reduce staffing cost

Store maintenance Activities involved in managing the interior and exterior facilities associated with the store Activities involved in managing the interior and exterior facilities associated with the store Exterior facilities: Parking lot, entrance to the store, signage outside the store Exterior facilities: Parking lot, entrance to the store, signage outside the store Interior facilities: walls, floors, ceiling, display and signs Interior facilities: walls, floors, ceiling, display and signs  Store maintenance has an impact on sales generation and operational costs of the store

Reducing inventory shrinkage Significant issue in store management Significant issue in store management Inventory shrinkage happens due to employee theft, shoplifting, mistakes, wrong billing, vendor errors Inventory shrinkage happens due to employee theft, shoplifting, mistakes, wrong billing, vendor errors Development of inventory shrinkage reduction program involve a trade-off between provision of shopping convenience and pleasant work environment on one hand and preventing losses due to shoplifting and employee theft on the other hand Development of inventory shrinkage reduction program involve a trade-off between provision of shopping convenience and pleasant work environment on one hand and preventing losses due to shoplifting and employee theft on the other hand

Calculation of inventory shrinkage Difference between the recorded value of inventory based on merchandise bought and received and the value of the actual inventory in store divided by retail sales during the period Difference between the recorded value of inventory based on merchandise bought and received and the value of the actual inventory in store divided by retail sales during the period Inventory as per records = 1,500,000 Inventory as per records = 1,500,000 Actual inventory after stocktaking = 1,236,000 Actual inventory after stocktaking = 1,236,000 Sales during the period = 4,225,000 Sales during the period = 4,225,000 Shrinkage = 1,500,000- 1,236,000 = 6.7% Shrinkage = 1,500,000- 1,236,000 = 6.7%

Detecting and preventing shoplifting Store design, employee training and special security measures are used Store design, employee training and special security measures are used

Store design Merchandise which is probable to be stolen easily such as jewelry should never be displayed near the entrance Merchandise which is probable to be stolen easily such as jewelry should never be displayed near the entrance Maintain open sight lines to entrances and exits for thorough monitoring by employees Maintain open sight lines to entrances and exits for thorough monitoring by employees Trial room entrances should be monitored by employees Trial room entrances should be monitored by employees

Employee training Employees should be trained to detect potential shoplifters through role plays Employees should be trained to detect potential shoplifters through role plays Various techniques used to identify shoplifters Various techniques used to identify shoplifters

Security measures CC TV CC TV Mystery shoppers Mystery shoppers Electronic article surveillance systems Electronic article surveillance systems (EAS) (EAS)

Reduction of employee theft Screening prospective employees: Using honesty tests and reference checks Screening prospective employees: Using honesty tests and reference checks Using security personnel Using security personnel Establishing security policies and control systems: eg. Random search of trash cans, locker rooms etc Establishing security policies and control systems: eg. Random search of trash cans, locker rooms etc