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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.


Store Management

Customer Service

Layout, Design and Visual Merchandising

Managing the Store


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


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


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


Responsibilities of Store Managers Undertaken by Store Managers

Steps in Employment Management Process



Recruiting and Selecting Employees

Undertake Job Analysis Prepare Job Description Find Potential Applicants

Select Employees

Screen Candidates


Job Analysis


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


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


Sources of Information for Screening Applicants

Application Forms References Testing Providing a Realistic Job Preview

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


Interviewing Questions


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


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

Americans with Disabilities Act (ADA)


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


Motivating and Managing Employees

Setting Goals

Providing Incentives to Achieve Goals

Measuring Performance

Providing Feedback


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


Types of Leaders

Autocratic Democratic Transformational

Digital Vision

Which Type of Leader Is the Most Effective?


Setting Goals

How High? How Easy to Achieve?

Get Participation of Employees in Setting Goals



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



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


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


Evaluating and Providing Feedback to Employees

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


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


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


Compensating Employees
Compensation - Type Straight salary Straight commission Quota bonus - Setting quotas - Individual vs. group incentives

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


Incentive Compensation
Has high motivating potential

Has more variable cost Relates compensation to productivity


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


1/3 Salary 2/3 Incentive


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



Labor Scheduling System


Calculating Shrinkage
Accounting Record Sales Actual Inventory

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



Sources of Inventory Shrinkage

Shoplifting 31%

Mistakes and Inaccurate Records 17% Vendor Errors 6%

Employee Theft 46%


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


PhotoLink/Getty Images


Spotting Shoplifters


Use of Security Measures by Retailers


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.