STORE OPERATIONS

AIM:
1. Understand the meaning, definition and scope of store operations
2. Understand the roles and responsibilities of a store manager.
3. Understand the strategic framework for store operations.
INTRODUCTION
We can define retail store as a place where customers decide which products they want to buy
from the retailers offering. So the question is What is a store without customers? For
customers, nowadays, a retail store is not only a place to fulfill their daily needs but also a
place to take a break and meet friends. Hence, managing a store day-to-day to satisfy a
customer is the primarily job of a store to ensure their returning back to the store.
Many big retailers even documented the tasks (SOP) to be done by their employee or staff to
ensure customers satisfaction. Some of them are:
1. Store administration and facilities management
2. Managing inventory and visual display (operations).
3. Customer service, managing operations, events and partnerships (marketing).
4. Managing the staff (human resources).
5. Recording sales and managing receipts.
Standard Operating Procedure (SOP): A SOP is a set of written instructions that
document a routine or repetitive activity followed by an organization. It is developed by the
firm for each and every function in a retail outlet. These should be reviewed and reengineered regularly to achieve efficiency. The development and use of SOPs are an integral
part of a successful quality system as it provides individuals with the information to perform
a job properly, and facilities consistency in the quality and integrity of a store.
Human Resources: HR plays a very crucial role in retail. They manage the needs and the
organizations of all employees, right from CEO to a CSA. The role of the HR manager must
be parallel to the needs of companys changing to be more adaptable, resilient, quick to
change direction and customer-oriented.
Retail Selling Process: It involves connecting with the customer, probing the needs of the
customer, presenting the merchandise, handling objections, recognizing buying signals and
closing the sale.
Store Administration and Facility Management: A facilities department in retail stores is
in charge of maintaining all the facilities of the stores. These activities include both internal
as well as external facilities. Since it is not the core competency of the store or the retailer,
hence it is outsourced. But it is standardized through SOPs.
Operations: Operations is a summary of all the activities required to be carried out by the
stores operations in the retail outlet. The activities that are related primarily to the stores
operations are store staffing and scheduling, retail floor and shelf management, store
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administration and facilities management, warehousing and Supply Chain Management

(SCM), loss prevention, POS (Cashiering process), and visual merchandising and displays.
Marketing: The main responsibility of marketing is to span the boundaries between the
retailer and its (potential) customers, like: increasing the customer base, maximize customer
loyalty, increasing order frequency, increasing order volume, and increasing trial rates
cross/upsell.
STORE OPERATIONS
A store operation is the activities that a store manager has to perform on a day-today basis, and it includes sales, human resources, administration, store planning, etc. Store
operations are the individual profit center of the retail organization. Dr. RamKishen Y.
Again we have to remember the idea of a store to attract customers to come and become loyal
in order to stay in the competition and win it in the future. By performing the store
operations, it will lead to some advantages like:
1. Smooth Flow of Operations: One of the key roles of the store manager is to ensure
the smooth flow of the retail operations on a daily basis, especially during periods of
peak sales.
2. Maximize Returns: The major role is to ensure that the overhead expenses are
minimized and the Gross Margin Return on Inventory Investment (GMRII) is
maximized in return to ensure profitability and the sustenance of the store in the years
to come.
3. Ability to cope with competition: Store operations give first-hand information about
competition and also the likes and dislikes of customers, thus helping retailers to
prepare strategies and be a step ahead of the competition.
4. In-sync with the Retailers Objective: Store operations can have its own set of
objective like increasing sales by a certain percentage, increasing customer walk-ins,
or providing good customer service etc. However, apart from this, they also need to
cater to the overall objective or the retailer like improving the customers in-store
experience etc.
5. Potential for More Growth: Store operations provide a platform for the future
growth potential of the retail business. This is done by ensuring more footfalls.
Some challenges faced in store operations:
1. Possibility of Stock Outs: Customers will turn away from a retailers stores when
they do not find the required products on the shelves.
2. Lack of Coordination among Employees: There should be a clear hierarchy to
avoid confusion among the sales staff especially whom to report to and where to take
instructions from.
3. Lack of good Leadership skills: A store manager should be able to motivate
employees.
4. Shrinkage: A research conducted by Checkpoint System Inc. on the highest
shrinkage (as a percentage of sales) in the world is India (3.1%), Mexico (1.59%),
Thailand (1.59%), South Africa (1.59%) and Malaysia (1.53%). The lowest shrinkage

is Japan, Austria and Switzerland (all 1.01%), Germany (1.10%) and Denmark
(1.20%).
5. Huge Overhead Costs: The store manager has to make sufficient profits to cover the
entire overhead costs (like electricity and salaries among others) in order to avoid
store into losses and shutting down of the store.
Unlike manufacturing or service companies where a manager is handling only one
department, a retail manager is handling every department just like a CEO. Hence the roles of
the store manager are as follows:
1. Staff: Since customers want fast, friendly service on their terms every time they come
into store, it is on the hand of store manager to match the quantity and quality of store
staffing with customer traffic and needs.
2. Merchandising: is the planning and control of the buying and selling of goods and
services to help the retailer realize its objection. Merchandise budget is a plan of
projected sales for an upcoming season, when and how much merchandise is to be
purchased, and what markups and reduction will likely occur.
3. Merchandise Management: is the analysis, planning, acquisition, handling, and
control of the merchandise. The store manager is responsible for checking the stocks
(merchandise assortment) to make sure it is updated on a monthly and regular basis to
check for any shrinkage and also no stock-out situation occurs. But it doesnt mean
he/she has to stock as many as possible because he/she also has to ensure the
operations are efficient and effective.
4. Merchandise Presentation Techniques: Store layout is vital to maintaining the
proper flow of traffic and making merchandise visible through the store to enhance
customers intention to return back to the store.
5. Security: Retailers should take precautions to be better prepared and make the
shopping experience as safe and enjoyable as possible.
6. Administration: Administration deals with various aspects of a retail store like the
cleanliness of the store premises, maintenance of the store faade and display
windows tracking the staff holidays, shifts etc.
7. Pricing and Cost Management: Store level pricing is manipulated to get footfalls
and reach sales targets. Cost management involves overhead costs and salaries for
employees on a contractual basis. This cost has to be minimized to maintain
profitability.
8. Sales and Marketing: Marketing involves creating a positive interest in the store and
its products and services, to increase the store brand and improve the positioning of
the store, profiling customers and understanding buying behavior, using the retail
marketing mix effectively, and managing customer relationships and loyalty. Sales
activity is strongly connected with Customer Service Associates because they sell the
products of the store.
9. Customer Services: Consists all of those activities performed by the retailer that
influence (1) the ease with which a potential customer can shop or learn about the
stores offering, (2) the ease with which a transaction can be completed once the
customer attempts to make a purchase, and (3) the customers satisfaction with the
transaction
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10. After Sales Services / Posttransaction Services: are services provided to customers
after they have purchased merchandise or services like complaint handling,
merchandise returns, merchandise repair, servicing, delivery, and postsale follow-ups.

Strategic Framework for Store Operations Management

Staff
Presen
tations

After Sales Service

Merchandising
Customer Services

Sales and
Marketing

Role of
The Store
Manager

Merchandise
Management
Presentations

Merchandise
Presentation
s
Pricing and Cost
Management

Security
ns
Administration

Questions for Practice

1. Define the store operations and explain the tasks performed in store operations.
2. Mention the role of a store manager. Explain with an example.
3. What are the advantages and challenges faced in store operations?
CASE: The Perfume Store
Smellz Corp is a holding company that operates through its subsidiary companies. One of
their subsidiary companies is Parfum, an international styling perfume store. Parfum
operates in 45 countries mostly in South East Asia. The rationale behind having several
stores in South East Asia is that most of the nations are islands, people tend to sweat a lot
because of the humidity. Body deodorants would not work in these markets. The stores
only stock mid-to premium-priced perfumes for men and women. The store also carries
its in-house brands of Arabian perfumes. Most of the stores also operate as shop-in-shops
in reputed malls like Mall of China, Aeon Mall, Mall of Emirates, Coex, etc.
Smellz Corp is a registered company in Saudi Arabia with its headquarters at Riyadh. The
company was founded by Aslam Sheikh whose family was engaged in the manufacture of
perfumes (attar) for the past 40 years. Earlier, they were contract manufacturers. It was
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Aslam who came up with the idea of forward integration and setting up stores in entire
South East Asia by taking his company to public.
The companys growth strategies were to selectively expand their channels of distribution
in important markets across Asia without compromising on the long-term value of the
Parfum trademark. They also aimed to increase their control over product supply and
achieve improved profit margins through direct raw material sourcing and internal
perfume manufacturing, which would ultimately enhance customer awareness through
marketing and public relations and provide customer service that assures a superior
shopping experience. Parfum has more than 1,000 employees across Asia.
The store initially sold a wide variety of perfumes. Smellz Corp has since opened stores
in major cities all over Asia. As part of its branding, the company is strongly associated
with Ocean Blue fragrance, which is a registered trademark.
A Date with Perfumes

The first Parfum catalogue as Ocean Blue Book, was published in 2000.
In 2002, Smellz Corp supplied exclusive and customized perfumes to the royal
monarch of UK and the Sultan of Brunei
They made the worlds biggest perfume bottle, which can hold about 100 liters of
perfume and displayed it near The Palm, Dubai, and eventually entered into the
Guinness Book of World Records for their feat.
The worlds largest perfume manufacturer Lomani prides itself as the largest
vendor of Parfum.
Parfums flagship store is located as a shop-in-shop format in the Mall of
Emirates, Dubai. The polished marble exterior is well known for its tiny window
displays. The store has been the location for a number of films including Dinner
at Parfum, starring Drew Barrymore and Tom Cruise, and My best Friends
Wedding, starring Cameron Diaz, Dermot Mulroney and Julia Roberts.
Smell Corps second Parfum store opened in Kuala Lumpur, Malaysia, at Pavilion
Kuala Lumpur in September 2002, which coincided with the opening of the
shopping mall. The store covers 1,500 sq ft of retail space and features the same
dcor elements as its flagship store in Dubai.
Smellz Corp celebrated their silver jubilee by opening a store in Mumbai in a
prominent hotel in October 2006.

Parfum boasts of the following merchandise: fragrances for everyday wear, gifting, wedding,
special occasions, religious occasions and contemporary styling.
The Challenge
Michele Fernandez, the store manager of the elegant Parfum brand of fragrance stores located
as a shop-in-shop in Mall of Emirates, is in a tense mood as she had to decide what to do
about customer service associate Asif Khan.
Asif Khan, a young man of 26 with movie-star good looks and a personality to go with it, had
come to the store with excellent references. He was previously selling for two other perfume
stores and both his supervisors had said he was the best salesman theyd ever had. He sold
average of 100 thousand dirhams a day on weekdays and 150 thousand dirhams on weekends.
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Everyday he was beating all the more experienced people hands down. Customer service
associates at Parfum were paid 5% of the sales turnover. Normally, a good commission
salesperson would earn about 250 thousand dirhams per annum.
The average longevity of the staff was 10 years. The average age of selling staff was 25
years. Asif Kan was putting all the other employees to shame, and Michele was not sure
whether this was best or the worst thing that had ever happened to Parfum. His techiques
were quick and slick. He would stand near the front door and greet incoming shoppers with a
cherry welcome, saying Hi, Im Asif. When youre ready to make your purchase, please give
me a call. He even had business cards with his name printed, at his own expense, and he
handed them out liberally. Sometimes hed give one to a shopper who was walking out and
say, Next time, be sure to ask for Asif. Naturally, other people in the department resented
Asifs method, but they had to acknowledge that his sales techniques were superb. Moreover,
he looked and dressed the part.
Overall, store sales were up since he joined the store but nowhere near 50%, which meant
that he was, in effect, stealing some of the other mens business.
Michelle had heard complaints from some of the others. Another salesman Jacob said, I
admire that guy. I watch him go about his job and learn something new each time. But hes
eating into my commissions, and I dont like that. I have a family to feed.
Steven Jones, who was less complimentary, said, That little rat is stealing my customers
my customers. He doesnt give them a chance to come and say hello. He just grabs them.
Whats worse is that theyve started listening to him. Asif had been with the store for a year
now and he was due for a review. Michele had to talk to him, but she was not sure whether to
praise or to let him go as a trouble maker.
Questions
1. What should Michele Fernandez, the store manager, do with respect to Asif Khan?
2. Exemplify the role HR department plays in store operations.
3. How can Fernandez motivate other staff members to work as a team with Asif Khan?

References
Guswai, C. F. 2013. How to Operate Your Store: Effectively yet Efficiently. 2nd Ed.
Jakarta: PT Gramedia.
Lusch, R. F., Dunne, P. M., and Carver, J. R. 2011. Introduction to Retailing. 7th Ed.
South Western: Cengage Learning.
RamKishen. 2011. International Retail Marketing Strategies: Theory, Case Studies,
Concepts &Examples.3rd Ed. Mumbai: Jaico Publishing House