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Chapter 17 Managing the Store

McGraw-Hill/Irwin Retailing Management, 6/e

Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

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Store Management

Customer Service

Layout, Design and Visual Merchandising

Managing the Store

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Store Managers Run a Business


This is your business. Do your own thing. Dont listen to us in Seattle, listen to your customers. We give you permission to take care of your customers. James Nordstrom, the CEO of Nordstroms

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Strategic Importance of Store Management Opportunity to Build Strategic Advantage


Difficult to Have Unique, Compelling Merchandise Customer Loyalty Often Based on Customer Service

Difficulty of Store Managers Job


Managing Diverse Set of Unskilled People Increasing Empowerment and Responsibility to Tailor Merchandise and Presentation to Local Community

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Store Managers Responsibilities


Varies Dramatically By Type of Retailers Specialty Store vs. Department Store Entrepreneur P & L Responsibility Manage People Responsible for Two Critical Assets People Sales/Employees Space Sales/Square Foot

Digital Vision

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Responsibilities of Store Managers Undertaken by Store Managers

Steps in Employment Management Process

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Recruiting and Selecting Employees


Undertake Job Analysis Prepare Job Description Find Potential Applicants

Select Employees

Screen Candidates

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Job Analysis

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Job Description
A guideline for recruiting, selecting, training and evaluating employees The activities the employee needs to perform The performance expectations expressed in quantitative terms

Steve Mason/Getty Images

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Approaches for Locating Prospective Employees Look beyond the retail industry Use your employees as talent scouts Provide incentives for employee referrals Recruit minorities, immigrants and older workers Use your storefront creatively

Jack Star/PhotoLink/Getty Images

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Sources of Information for Screening Applicants


Application Forms References Testing Providing a Realistic Job Preview

The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

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Interviewing Questions

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Suggestions for Questioning Applicant


Avoid asking questions that have multiple parts Avoid asking leading questions like Are you prepared to provide good customer service? Be an active listener. Evaluate the information being presented and sort out the important comments from the unimportant. repeat or rephrase information summarize the conversation tolerate silence

Legal Considerations in Hiring and Selecting Employees

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Equal Employment Opportunity Commission (EEOC) Age Discrimination and Employment Act
Disparate Treatment Disparate Impact

Americans with Disabilities Act (ADA)

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Socializing and Training Employees


Orientation Program Training
-Where, when, what -Structured vs. unstructured -Classroom vs. on-the-job
(c) image100/PunchStock

-Analyzing Successes and Failures

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Motivating and Managing Employees

Setting Goals

Providing Incentives to Achieve Goals

Measuring Performance

Providing Feedback

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Leadership
Process by which one person attempts to influence another to accomplish some goal or goals Leader Behaviors
Task-Oriented Group Maintenance

C Squared Studios/Getty Images

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Types of Leaders

Autocratic Democratic Transformational


Digital Vision

Which Type of Leader Is the Most Effective?

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Setting Goals

How High? How Easy to Achieve?

Get Participation of Employees in Setting Goals

Royalty-Free/CORBIS

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Why Set Goals?


Employee performance improves when employees feel: That their efforts will enable them to achieve the goals set for them by their managers That theyll receive rewards they value if they achieve their goals

Royalty-Free/CORBIS

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Individualized Motivation Programs


Impact of Goals Differs Across People Different People Seek Differ Rewards A La Carte Reward Programs Selection of Compensation Plans

Steve Cole/Getty Images

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Maintaining Morale
Meetings before store opening to talk about new merchandise and hear employee opinions Educate, set sales goals and have a pizza party when goals are met Divide charity budget and ask employees how their share should be used Print stickers - auto detailed by Rob
Pando Hall / Getty Images

Give every employee a business card with the company mission statement printed on the back

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Evaluating and Providing Feedback to Employees

Evaluation - Who, when, how often? Feedback - Performance outcome vs. process

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Common Evaluation Errors


Strickness Leniency Haloing Recency
Ratings unduly negative Rating unduly positive Using the same rating on all aspects of the evaluation Placing too much weight on recent events rather than evaluating performance over the entire period Having the evaluation of a salesperson unduly influenced by the evaluation of other salespeople Making errors in identifying causes of the salespersons performance

Contrast Attributions

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Rewards
Extrinsic Rewards are rewards provided by either the employees manager or the firm such as compensation, promotion and recognition. Intrinsic Rewards are rewards employees get personally from doing their job well like doing their job well because they think it is challenging and fun

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Compensating Employees
Compensation - Type Straight salary Straight commission Quota bonus - Setting quotas - Individual vs. group incentives
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Advantages and Disadvantages of Straight Salary


Straight Salary
Offers flexibility in assigning employees to activities Builds stronger employee commitment Is easy for employees to understand Is easy to administer Allows for better performance of non-selling activities such as customer service

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Incentive Compensation
Has high motivating potential

Has more variable cost Relates compensation to productivity

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Designing a Compensation Plan


Use Average Sales Per Employee to Set Incentive Rate Sales/Person - $150 5.33% Commission $4/Hour Salary $4 = 5.33% x 150 = $12

Determine Appropriate Compensation

Decide on Percent of Incentives

$12/Hour

1/3 Salary 2/3 Incentive

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Controlling Costs
Labor Energy Heating Lighting Costs Controlled by Store Managers Inventory Shrinkage

Maintenance

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Labor Scheduling System

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Calculating Shrinkage
Accounting Record Sales Actual Inventory

$1,500,000 - $1,236,00 $4,225,000

6.7%

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Sources of Inventory Shrinkage

Shoplifting 31%

Mistakes and Inaccurate Records 17% Vendor Errors 6%

Employee Theft 46%

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Preventing Shoplifting
Store design Employee training Good customer service - Security measures - Dye capsules, TV cameras
- EAS

Prosecution

PhotoLink/Getty Images

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Spotting Shoplifters

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Use of Security Measures by Retailers

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Reducing Employee Theft


Trusting, supportive work atmosphere Employee screening
- Honesty, drug testing

Security personnel - mystery shoppers Policies and procedures Employee theft is an HR problem.