Wholesale businesses reaching out to the retail space should be seen as an aggressive; growth-oriented strategy. There are several positives that arise for a wholesale business when it ventures into the retail space and increases its foothold further down the supply chain reaching closer to the customers. With a presence in retail, wholesalers get access to better data to better understand customers’ needs and preferences. This information can be used for product development and improving customer services. With the removal of intermediaries, wholesalers get more control over the prices and margins. Last but not the least, by coming to the front stage retail, wholesale businesses can improve their overall branding.
When a wholesale business ventures into retail, it faces a critical task of integrating its wholesale and retail operations. Several business processes involved in wholesale and retail operations will be interdependent for business decision-making and smooth flow of overall business operations. For example, merchandising is a retail process but is also connected to the inventory process which is common to both retail and wholesale for the fulfilment of supply requirements. Standard Operating Procedures (SOPs) can play the bridge through which these businesses can integrate their wholesale and retail operations. The transition from wholesale to retail is difficult but it can be made smooth by applying SOPs. In this article, we’ll try to highlight certain areas in which wholesale brands can benefit from SOPs when they make a foray into retail.
Inventory Management
For both wholesale and retail businesses, inventory management is a critical function. For wholesale businesses starting their own retail operations, it is understood that the supply requirements will be mostly fulfilled internally. The entire inventory process may have to be redesigned keeping in mind both the retail and wholesale functions. For example, while stock purchase may continue as a part of the wholesale business, the stock acquisition will emerge as a new operation for the retail business part. This also implies that a new operation (stock acquisition for retail) will be added to the inventory process of the overall business. Since it is very likely that the retail stock requirements will be fulfilled internally and this is not possible without human intervention, employees in charge of the inventory or store need to be provided with the guidelines on the what, when whom and where of retail procurement. This procedural roadmap can be made possible by developing standard operating procedures with the help of which employees can execute their routine duties in the inventory process covering both wholesale and retail operations.
This procedural roadmap can be made possible by developing standard operating procedures with the help of which employees can execute their routine duties in the inventory process covering both wholesale and retail operations
Staff Management
If a wholesale business is expanding to retail operations under an organic COCO model, it will not only increase the strength of its workforce but will also introduce a completely new set of jobs in the organization. These new jobs and positions in retail will have to be filled with people whose skills, knowledge and competencies are likely to be different from those engaged in the wholesale operations. This will affect the recruitment process which now has to be guided according to the specific manpower requirements of wholesale and retail operations. For example, if a wholesale company was earlier hiring employees with a background in logistics, now the same company will have to look for employees with the retail-specific background like merchandising, store management, POS and cash handling, retail sales etc to fill up its retail positions. This necessary change in the recruitment strategy will have a direct bearing on the recruitment activities of the company. At the executive level, HR employees will need to know whether the requirement is for wholesale or retail, whether they have the job analysis report for the vacant position(s), where should they look out for the potential candidates, which platform should they use to advertise the vacancies, what criteria should they use to screen the incoming job applications etc. The answer to streamlining these operational activities lies in SOP development with which HR/Recruitment staff can be provided with a procedural roadmap to carry out these activities in a step-by-step and systematic manner to ensure that the right candidates apply for the vacant jobs and are screened and lined up for the selection process.
These new jobs and positions in retail will have to be filled with people whose skills, knowledge and competencies are likely to be different from those engaged in the wholesale operations
Similarly, many other HR processes (like performance management, training and development etc) will be affected by these kinds of business expansions and the necessary changes can be infused into these processes through SOPs.
Customer Relationship Management (CRM)
Whether wholesale or retail, any professionally managed company will try to maintain a strong CRM foundation with their clients and customers. However, retailer clients are different from retail customers as their priorities are different. While retailer clients may focus more on the physical elements like timely delivery of their bulk orders, safe transportation, proper packaging etc, modern day retail customers, along with the physical elements of retail merchandise, will also seek for a delightful and convenient shopping experience at the retail store or with the e-commerce channel provided by the retailer. In many ways, customers’ experience is the product in the retail space which is why CRM strategies and operations assume greater significance here. After extending its operations to retail, it becomes important for a wholesale brand to revisit its CRM strategies and introduce the necessary changes in the operations of its CRM process to suit the requirements of the retail environment. For example, grievance redressal for retailer clients may not be one of the topmost priorities for a wholesale business. But after venturing into retail, this has to change and customer grievance redressal has to be treated as a priority operation of the CRM process as it has a direct bearing on the experience of the customers. With the help of SOP procedures, employees can follow the standard protocols and procedures in the grievance redressal cases. For example, employees may first have to verify the purchase, ascertain if the store policies support the complaint/grievance, send the product for inspection, issue necessary invoices to the customer, ensure adherence to service deadlines etc.
After extending its operations to retail, it becomes important for a wholesale brand to revisit its CRM strategies and introduce the necessary changes in the operations of its CRM process to suit the requirements of the retail environment
For a wholesale brand venturing into retail signifies a business expansion of big leaps. Now it can ‘Buy Wholesale Sell Retail’ and improve their margins exponentially. And this business expansion can be smoothly carried out only when the necessary business processes are introduced and integrated with the existing ones. Operational activities are the building blocks of these business processes. With SOPs, these operational activities can be realigned and mapped in an objective, step-by-step and systematic manner which can immensely help the employees embrace a transitional phase.
Benefits of Standard Operating Procedures (SOPs)
YRC is an “Expert Service Division” of Mind-A-Mend Consultancy Pvt. Ltd.
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