Store Operations

Management

Utilization of Personnel
Store Maintenance
Energy Management
Store Security
Insurance
Credit Management
Crisis Management

Chapter Objectives
To describe the operational scope of store
operations management
To examine several specific aspects of
operating a retail business: personnel
utilization; store maintenance, energy
management, and renovations; store security;
insurance; credit management; and crisis
management

13-2

Overview
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)

13-3

Operational Decisions
What operating guidelines are used?
What is the optimal format and size of a
store? What is the relationship among shelf
space, shelf location, and sales for each item
in the store?
How can personnel be matched to customer
traffic flows? Would increased staffing
improve or reduce productivity? What impact
does self-service have on sales?

13-4

Operational Decisions (cont.)

What effect does the use of various building
materials have on store maintenance? How
can energy costs be better controlled? How
often should facilities be renovated?
How can inventory best be managed?
How can the personal safety of shoppers and
employees be ensured?

13-5

Operational Decisions (cont.)

What levels of insurance are required?
How can credit transactions be managed
most effectively?
How can computer systems improve
operating efficiency?
Should any aspects of operations be
outsourced?
What kind of crisis management plans
should be in place?

13-6

Personnel Utilization
Labour costs are high-one half of operating cost
High employee turnover means increased
recruitment, training and supervision costs
Poor personnel may have weak sales skills,
mistreat shoppers, missing transactions, and
make other errors
Many retailers are labour intensive Labour
scheduling is often subject to unanticipated
demand. They can be under or over staffed
There is less flexibility for firms with unionized
employees
13-7

Tactics to maximize Personnel

Productivity
Careful screening of candidates during the
hiring process
Workload Forecasts- for each time period the
no. and type of employees are pre-determined.
In doing workload forecasts, costs must be
balanced against the possibilities of lost sales if
customer waiting time is excessive
The key is to be efficient and effective.

13-8

Tactics to maximize Personnel

Productivity
Job Standardization and cross training- Job
Standardization ensures jobs are uniform at
similar levels in different departments. Cross
training ensures learning multiple skills
Employee performance standards- each worker
is given a clear goal and is made accountable to
them. Eg: cashiers are judged on transaction
speed

13-9

Tactics to maximize Personnel

Productivity
Compensation- Financial remuneration,
promotions and recognition that rewards good
performance help to motivate employees
Self-service- costs are reduced but requires
better displays, avoid feeling of understaffed
and ensure cross selling
Length of employment- Full time workers are
more productive than part-time ones

13-10

Store Maintenance
Store maintenance encompasses all the
activities in managing physical facilities:
Exterior - parking lot, points of entry and exit,
outside signs and display, windows and common
areas adjacent to a store (sidewalk)
Interior - windows, walls , flooring, climate
control and energy use, lighting, displays and
signs, fixtures and ceilings

13-11

Store Maintenance
The quality of store maintenance affects
consumer perceptions, the lifespan of
facilities and operating costs. Customers
dont like decaying stores :
Replace burn out bulbs
Repaint room surfaces

13-12

Store Maintenance
Heating, ventilation, air-conditioning
equipment lasts an average of 15
years
Display fixtures- 12 years
Interior signs 9 years

13-13

Checklist for Store Maintenance

Level of responsibility in maintaining
outside facilities?
Store maintenance activities be done by
retailers personnel?
Emergency repairs?
Frequency of store maintenance?
Seasonal variation?
Usage duration of stores?
Performance standards for each element?
13-14

Energy Management
Use better insulation in constructing and
renovating stores
Adjust interior temperature levels during
non-selling hours
Use computerized systems to monitor
temperature levels
Substitute high efficiency bulbs and
fluorescent ballasts for traditional lighting
Install special air conditioning systems
that control humidity levels sp. In freezers
13-15

Store Security
Personal security
Merchandise security

13-16

Personal Safety and Security

Many consumers dont feel secure
shopping especially at night
Most older adults do not shop after dark
Retailers need to be proactive and do
what is needed to make the shopping
experience safe and enjoyable

13-17

Personal Safety and Security

Uniformed security guards- visible presence
Undercover personnel- complement
uniformed guards
Brighter lighting in parking facilities
TV cameras and other devices
Curfews for teenagers..?
Limited access to backroom facilities
Frequent bank deposits to minimize cash on
hand
13-18

Insurance
Workers compensation, product liability,
fire, accident, property and officers liability.
Many firms also offer health insurance

13-19

Impact on Retailer
Premiums have risen
Many insurers have reduced the scope of
their coverage or require higher deductibles
There are fewer insurers servicing retailers
today
Insurance against environment risk is more
imp due to govt. regulations

13-20

Retailer Protection Measures

No-slip carpeting, flooring and rubber entrance mats

Frequent mopping and inspecting wet floors
Doing more elevator escalator checks
Have regular fire drills
Building fire-resistant facilities
Setting up separate storage areas for dangerous
items
Discussing safety in employee training
Keeping records that proper maintenance has been
done
13-21

Credit Management
The retailer must weigh the ability of
credit to increase revenues against
the cost of processing paymentsscreening, transaction and collection
costs plus bad debts

13-22

Operational Decisions to be
made in Credit Management
What form of payments are acceptable?
Who administers the credit plan?
What are customer eligibility
requirements for a check or credit
purchase?
What credit terms be used?
How are late payments or non-payments
to be handled?
13-23

Debit Card System

The retailers risk of non-payment is
eliminated and its costs are reduced with
debit rather than credit transactions where
the purchase price of goods/services are
immediately deducted from the account.
More retailers prefer this payment mode
For traditional credit cards monthly billing is
employed

13-24

Other operational issues

Non-store retailers have less protection against
credit card fraud than store retailers that secure
written authorization
Credit card transactions on the web must instantly
take into account different sales tax rates and
currencies

13-25

Other operational issues

Retailers have to carry both credit + debit cards for
Master card and Visa
Non-store retailers have less protection against
credit card fraud than store retailers that secure
written authorization
Credit card transactions on the web must instantly
take into account different sales tax rates and
currencies

13-26

Crisis Management
In-store fire or broken pipe
Access to a store blocked due to picketing by striking
workers
Car accident in the parking lot
Burglary
Sudden illness by employer
Storm knocking out power
Unexpectedly high or low demand for a good or service
Sudden increase in suppliers prices onions
Natural disaster like flood

13-27

Principles of Crisis Management

Crisis management must handle unexpected situations
as smoothly as possible
Contingency plans need to be in place and information
communicated to all staff members
Essential information should be communicated to all
affected parties- police, fire etc as soon as crisis occurs
Cooperation and not conflict among the involved parties
Responses should be swift
The chain of command should be clear and decision
makers should have adequate authority

13-28

Operations
Blueprint
An operations blueprint systematically lists all
the operating functions to be performed, their
characteristics, and their timing.
The retailer specifies, in detail, every operating
function from the stores opening to closing
and those responsible for them.

13-29

Inventory Management Decisions

13-30

How can handling of merchandise from different

suppliers be coordinated?
How much inventory should be on the sales floor versus
in a warehouse or storeroom?
How often should inventory be moved from nonselling to
selling areas of a store?
What inventory functions can be done during nonstore
hours?

Inventory Management Decisions

13-31

What are the trade-offs between faster supplier delivery

and higher shipping costs?
What supplier support is expected in storing
merchandise or setting up displays?
What level of in-store merchandise breakage is
acceptable?
Which items require customer delivery? When? By
whom?