Retail Operations Management

Technology has not yet reached a stage where it could operate a store all alone by itself. Such a takeover may or may not happen in the future but as of now, retail enterprises remain heavily dependent on the role of humans i.e. employees. Businesses need employees to execute their routine operations like managing inventory, stocking shelves, packing orders for home deliveries, and housekeeping. Employees also play a key role in driving sales and generating revenue. How they guide customers, explain products and services, present recommendations, and resolve their queries significantly influence the purchasing decisions of customers. Employees are the vanguard representatives of enterprises. Their personality and professional approach while dealing with customers at any stage in the shopping journey leaves a subtle but strong impact on how customers perceive a business.

Most retail enterprises do not even realise that they are under-investing in their human resources. Quality people come at a higher value.

Identifying who is the right candidate is another undermined challenge – not just in retail but everywhere. The number of job applications could be two or two hundred but if the hiring manager does not know what they are looking for, hiring will always be challenging – let alone being able to hire the right candidate.

Organisations also need people to manage people and systems. Without a proper internal structure and design of roles and positions, maintaining the established business systems, policies, plans, and strategies gets difficult.

Processes help ensure that activities are carried out in a planned and systematic manner towards achieving the intended output. In business, operational activities tend to be long and complex. Store operations management in retail cannot escape this principle.

Without planning and certainty of workflows, operations management in retail stores can go haywire. Having well-defined processes helps ensure that operations go in the intended direction towards the intended results.

Processes help secure consistency and standardisation in operations. It allows retail enterprises to create consistent results at all times across all places in all departments – inventory procurement, quality control, stacking and shelving, staff management, financial discipline, and so on. This consistency and standardisation in operations is important for business owners, employees, suppliers, customers, and other stakeholders for better management, and transparency and clarity in dealings.

Processes are designed to minimise or eliminate losses or inefficiencies in the execution of operations helping retail enterprises save on resources and achieve higher operational efficiency and effectiveness.

Processes lay down the foundation of robust operations for future scale and expansion. Processes tested and proven over time can be replicated with more confidence about their performance and results.

The quality of business processes eventually leaves its imprint on the overall business performance. A simple instance of this is the inability to replenish stock on time resulting in lost revenue. Software may send alerts and reminders but it is process definitions which tell the software when to send those reminders.

Veteran retail operations consultants would agree that striking the right balance between efficiency and experience is a critical challenge in designing business processes in retail. Processes too rigid may scare customers away. Mistakes or omissions in process definitions can convert into big gaps in cross-channel shopping journeys defeating the essence of omnichannel.

As experienced retail operations consultants, we maintain that technology has become the bread and butter for store operations in retail management. It has allowed businesses to achieve capabilities which might be a far chase for humans on their own.

One area where technology has made a big impact in the retail industry is inventory management. Because of technology, today it is possible for retail enterprises to make complex demand projections more accurately, have access to real-time inventory updates, and easily automate stock replenishment functionalities. The end result is a more streamlined and optimised inventory management.

From traditional technologies like POS systems to contemporary solutions like eCommerce platforms and smartphone applications, technology has significantly boosted the ability of retail enterprises to deliver high-quality customer experience.

Last but not least is the technology-endowed leverage of using analytics to come up with sharper strategies. With increasing complexities in defining customer segments vis-à-vis predicting demand trends, analytics (including paid services) help retail brands and businesses keep track and stay insightful of consumer/user behaviour. With advancements in the field of AI and ML, analytics are projected to become more resourceful in the future.

Some of the challenges faced by retail enterprises in technology adoption and upgradation are in the areas of costing, finding the right solutions, integrating modern technologies with legacy systems, shifting to omnichannel capabilities, and SOP-IT integration.

The physical infrastructure of a retail enterprise constitutes the element of physical space (strategizing and management) from where business operations are conducted. Broadly, it includes offices, stores, and warehouses/fulfilment centres. The quality of strategies and management governing this physical infrastructure of retail enterprises has enormous implications for their retail operations. Think of it like a physical sports facility for professional sportspersons.

Working on the physical infrastructure begins on an important note of identifying a suitable store location. The location of a store affects how easily customers can access and shop comfortably with peace of mind. Given the surging shortage and price of commercial real estate properties, getting hands on a place that is good both for business and budget has become a rare find.

Store layout planning is the next big aspect. The internal layout of a store has implications on critical areas like overall customer experience, customer service, space optimisation, visual merchandising and planogram, safety and security (for people, inventory, and assets), shelf management, navigation, operational efficiency, checkout, and brand positioning. With so many variables at play, solving the equation of store layout planning often makes retailers park many details for the future. Emphasis is also required on storefronts and parking facilities.

Organisation Structuring

A well-conceived organisation design and structure help in the process of planning and maintaining streamlined operations and achieving increased operational efficiency. The internal organisational framework of an enterprise also leaves imprints on customer experience. This structure regulates the stream of work and communication. A carefully designed organisation design and structure is more capable of embracing adjustments in business and supporting growth and expansion.

On the other hand, poor quality organisation design and structuring can lead to a wide range of small and big consequences not limited to interdepartmental or inter-functional conflicts, uneven workload allocation, informal communication taking over formal channels, disruptions in change management, and hindrances in implementing policies and decisions at an enterprise-wide level.

With adherence to the management fundamentals of organisational design and structuring, our team of retail HR experts aims to deliver the following results:

• Recommend the best-fit organisation structure type
• Identify the departments and roles with their functionalities defined
• Mapping the inter-relationship between departments and roles
• Define the ideal size of departments and teams
• Clarity in defining roles and responsibilities
• Establish the chain of command and authority-responsibility relationships, reporting lines
• Sketch the expanses of training and control
• Charting the formal streams of communication and flow of work
• Identify the points of contact/communication for all stakeholders including customers
• Process-orientation and rule-based conduct
• Impetus to productivity and professionalism in work culture
• Systematic encouragement to innovation and feedback
• Room for flexibility and change
• Highlight scope of career progression for employees

Defining Job Descriptions (JDs) and Key Performance Indicators (KPIs)

Having planned and documented job descriptions plays a big role in the effective management of all employee-related aspects in organisations. For starters, job descriptions make it easier to identify the knowledge, skills, competencies, and experience required for each role leading to more effective and efficient hiring. The understanding of these requirements provides vital directions for shaping fair salary structures. JDs also serve as a foundation for determining training and development needs. And most importantly, from the perspective of streamlining retail operations, JDs provide clarity and transparency to duties and responsibilities.

Bigger business or departmental goals and objectives are achieved with the contribution of employees – as individuals as well as teams. Every employee has a part to play, and some results to be achieved. Key Performance Indicators (KPIs) are the definitions of what these required results or performance in quantifiable terms. KPIs are quintessential to gauge and keep the performances of employees and teams on intended lines.

Our service vision in formulating job descriptions and KPI solutions is to help retail enterprises remain in sight and control of the roles, responsibilities, and required routes of results for every position and team in their organisation structures. This clarity and control are critical to streamline operations and bring operational efficiency at an enterprise-wide level.

Processes provide consistency and predictability to operations and results. An important part of developing processes is also to eliminate execution bottlenecks and unnecessary steps. This leaves a positive impact on operational efficiency. With clarity of workflows, the scope of errors and omissions also goes down – further contributing to operational efficiency and over time or at a larger scale, also favourably affecting enterprise-wide profitability. Running business operations based on defined processes widens the scope of improving the latter. Processes tested and proven over time can be replicated with higher confidence in the events of scale. Even in the assessment of training needs, process documents provide valuable inputs to make training programs more practical and effective. The quality of business process management can lead to cost savings emanating from streamlined workflows, reduction of wastes and redundancies, and reduced scope of conflict and confusion. Last but not least, process-defined operations give better control to management.

We seek to integrate these benefits of being process-focused in developing our business process solutions. We define retail operations processes using Standard Operating Procedures (SOPs) – one of our core capabilities. Our expert team of retail business process consultants develop customised SOP solutions following robust principles and proven methodology in a time-bound manner.

In defining retail operations processes using SOPs, our service vision is to help businesses become process-oriented enterprises from the core and bring home overall operational excellence over a journey in which we seek to deliver:

• Result-oriented workflows defined to granular details
• Operational standards of performance and results, input and output at/for every step
• Clarity of duties and responsibilities,
• Accountability and responsibility,
• Adherence to the chain of command,
• Encourage communication via formal routes,
• Smooth interdepartmental coordination,
• Improved employee productivity,
• Enhanced customer experience, and
• Making compliance easier
• Improved control
• Baseline for identifying areas for improvement in retail operations processes

We, at YRC, understand the broad role and strategic significance of technology for today’s operations management in retail stores. Today, technology affects nearly every area in the retail business – inventory management, logistics, demand forecasting, personalisation, omnichannel, customer support, pricing, staffing, order fulfilment, and financial decision-making.

Technology is something that cannot be imposed upon a business; it must align with and enhance a business. What good is a raincoat under clear skies! To make technology deliver its best, a strategy and an execution-maintenance plan is required. This is the broad picture of what we seek to deliver via our technology consulting services and technology integration services.

In technology consulting for improved management of retail operations, we assist businesses in formulating the technology strategy for their businesses, identify the best-fit IT solutions that could meet the operational and overall business requirements, and execute the technology implementation and maintenance project plans. There is a crucial task involved in this process which is technology integration. When a new technology has to be implemented, it must be aligned with business processes and integrated with the existing technological systems. We achieve these objectives with our SOP-IT integration services and working closely with vendors for data migration and delivering final ready-to-use solutions.

Given the significance of physical-infrastructural aspects in the management of retail operations, we provide expert solutions in two critical areas – location strategy and layout planning – for both stores and warehouses.

In location strategy and analysis, we begin with a thorough study and analysis of target demographics and market conditions. We do this to correlate the suitability of a location with buyer personas and overall target demographics. In determining locational feasibility, we also take into account the dynamics of accessibility for both customers and business operations. We reckon that the factor of visibility is also important in evaluating store locations. Traffic conditions and parking facilities during different hours of the day also cannot be ignored. However, location strategy is not a one-way street where decisions can be made without considering competition and saturation levels in markets. Opening a store where direct or indirect competitors are already present could be turned into a favour but an overdose of it has negative fallout. Then there are important factors like branding objectives, real estate costs, availability of desired spatial requirements, severity of compliance, safety and security, distance from warehouses, and supply chain prerogatives.

From the perspective of improving the quality of retail operations, the location factor has many direct and indirect implications. For instance, it directly affects how easily suppliers can reach a retail store or its warehouse for stock replenishment. An example of indirect impact of location on operations would be the presence of too many commercial establishments in the vicinity making parking difficult for customers and resulting in reduced footfall during busy hours.

In formulating layout planning solutions, we undertake a rigorous process of evaluating a wide range of factors which are not just fundamental to the subject but also curated to meet the unique business requirements of clients. An abridged list of these factors is highlighted below with the relevance of each in short:

• Customer Experience – Accessibility, visual appeal, navigation, decompression zone, product visibility and discoverability, engagement and interaction, and checkout
• Localisation – Market size and catering to targeted footfall
• Assortment – Nature of products and spatial requirements for display
• Zone Classification – Lending a systematic and organised view and shopping experience
• Space Optimisation – Optimising display volume and room for varying footfall levels
• Motion Analysis – Determining display tactics, handling busy sections and aisles
• Support to inventory management – Stacking and re-stacking of display shelves, movement of staff and inventory, back-stage stock rooms
• Safety and Security – Emergency exits, prevention of potential pilferage, first-aid, avoidance of risky structures
• Checkout – Reduced waiting times, payment privacy, availability of packaging materials

As can be seen from the above list, layout planning has several implications for retail store operations management. For every factor listed above, a retail enterprise must curate its operations to meet the stated objectives. For example, a trimmed-down layout plan for a store in a location with a reduced anticipated footfall has immediate consequences on its staffing requirements – thereby affecting operational budgets and the management of retail operations.