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Whether it is an international retail brand or a local supermarket chain, operations management must be at its best fitment. Business owners and managers should be certain of every aspect of operations. The scope of leaving things to uncertainty should be at its lowest possible level. This is possible only in a planned operations set-up. Planning also allows enhancing efficiency and effectiveness in operations. And with a certainty of workflows and assurance of efficacy via planning, there is greater confidence in the element of control for course corrections and improvisations.
The necessity here is to have an organised approach to deal with retail operations management. This blog highlights and explains the four fundamental focus areas in retail operations management – people, processes, technology, and physical infrastructure. The objective is to help retail brands and businesses manage their operations with more efficacy, certainty, and control.
People
We are not in that age yet where technology can execute all business operations by itself. Only time will tell whether such a complete takeover happens or not but for now, businesses continue to remain dependent on human problem-solving and decision-making abilities to a large extent. For example, in the event of any change, adjustment, or emergency response, it will take human intervention to give the desired effects. Again, technology may be used but it will require human directions and inputs. So, whether it is operations planning or execution of processes, employees play a crucial role in retail operations.
Even with technology and automation, a large majority of retail enterprises are dependent on their employees for a plethora of routine activities like inventory management, merchandising, packaging, deliveries, housekeeping, HR, finance, etc. In commonplace retail, technology is still only a facilitator or assistant in the execution of business processes. For example, today’s AI-powered analytics solutions are quite powerful. However, what is made out of those analytics for final use – calls for human judgment and acumen. So, without the role and intervention of human efforts combined with business process management, technology cannot deliver its targeted outcomes.
In retail stores, employees directly deal with customers, help create conversions, and execute the human part of completing the sales process. The knowledge, training, and experience of sales staff directly affect in-store customer experience. This also applies to employees engaged in customer support services. Therefore, operations carried out by employees that have immediate ramifications on customers and customer experience cannot be allowed to run without addressing the people-related aspects involved in it. For example, a retail chain may have a brand voice and tone it tries to use while communicating with customers to convey the right brand image. How will employees know this in executing front-line business operations? The forthright call is training.
Process
Defining processes is a certain way to ensure that operations are executed in a premeditated and methodical manner towards realizing the intended process outputs. Since business processes tend to be extensive and complex, store operations management in retail cannot dodge adhering to the fundamentals of BPM.
Without deliberate workflow design, operations management in retail stores can easily go out of order. Having defined and definite workflows helps ensure that operations move in the desired direction towards achieving the desired operational outputs.
Being process-oriented helps attain regularity and standardisation in operations. It allows achieving consistency in operational results across time and place in areas where maintaining this standard is critical in retail like in inventory management, QC and QA, HRM, and financial management. Process orientation also helps bring clarity and transparency in dealings for all stakeholders including employees, suppliers, and customers.
Another important reason to focus on the element of process is to minimise or eliminate losses or inefficiencies in operations. Over time, the attention to small details in reducing inefficiencies helps save business resources.
Efforts put into building robust SOP-based business processes also carry ramifications on operational preparedness for growth and expansion in the future. Making a decision on replicating a business process that stands tried and tested is much easier. Minor improvisations may be warranted but the foundational ground to work on would already be there.
The operations framework ultimately lends its shade to the overall performance of an enterprise. Stock refill is a stark instance of this. If the inability to replenish stock on time becomes chronic or goes unaddressed, one of the worst outcomes is damage to customer confidence and brand reputation. Inventory management software applications may have the feature of creating alerts and sending reminders but how it behaves and what happens after reminders are sent is defined in process definitions.
Technology
As experienced retail operations consultants, YRC underscores that technology has become one of the foundational pillars for store operations in retail management. Today, technologies like AI and automation have endowed retail brands and businesses with far-reaching capabilities.
Inventory management is one such field where technological advancements have left a big impact. AI-powered algorithms can make more accurate demand forecasts by analysing extensive and complex sets of data – both structured and unstructured. With the use of RFID sensors and AI, it has become possible to access real-time inventory statuses from almost anywhere in the world. Improvements and upgrades in automation technologies have made stock replenishment more accurate and timely with very little human intervention as compared to the previous decade. These leverages have made it easier and simpler to streamline and optimise inventory management in the retail industry.
From legacy solutions like POS systems to modern-day infrastructure like eCommerce platforms and shopping apps, technology has considerably enhanced the quality of customer experience and the nature of shopping itself.
Last but not least are the increasing capabilities of the latest analytical applications in processing complex data and generating more insightful perspectives. This has empowered retail brands and businesses to analyse operations in great details with enhanced data collection, complex integration, the use of AI and ML, real-time updates, etc. Training AI models for improvement in customer chat support operations serves as a good example here.
Some of the common difficulties encountered by retail brands and businesses in technology adoption and upgrade emerge in the form of costing and budgeting, identifying the right technological solutions, integrating new tech solutions with older platforms, omnichannel adoption, and SOP-IT integration.
Physical Infrastructure
Physical infrastructure is simply the element of physical space where operations are given effect to. In the context of our discussion, we will be discussing the significance of the strategies for shaping the physical infrastructure and its management for retail enterprises. The physical infrastructure for retail enterprises broadly constitutes offices, stores, warehouses, and fulfilment centres. The underlying strategies and the management of these physical locations have far-reaching consequences on retail operations.
Think of it like a movie theatre. There are aspects of customer experience involved. Safety and security standards must find their due place. Then ease of navigation must also be ensured. The requirements for cleaning and upkeep are also there. Moving outside, there are factors like parking, food arena, ticket counters, etc.
Speaking of physical infrastructure, one of the crucial areas of strategizing is the locationing of stores and warehouses. The criteria for ‘what is a suitable location’ must first be figured out and established. Some of the key factors here are the ease of findability and access, proximity to target segments, supply chain considerations, presence of required infrastructural capabilities, ease of doing business, brand and market positioning, etc. It is important to note that here the considerations are purely internal to business and do not concern what is available where. Think of it like a job specification i.e. what is required in a potential candidate and not what talent is available in the job market. Once you know what you want, the task of finding becomes easier.
The next big factor in physical infrastructure is the layout planning for stores and warehouses/fulfilment centres. The store layout has repercussions on:
- Brand Positioning
- Customer Experience
- Customer Service
- Space Optimisation
- Visual Merchandising and Planogram
- Safety And Security
- Shelf Management
- Navigation
- Operational Efficiency
- Checkout
With so many variables in the equation, going to the detailing of store layout planning often turns out to be a complex and time-consuming task.
Wrapping Up
Having an organised approach is crucial in dealing with the intricacies of retail operations management. This blog presented one such approach – highlighting and explaining the four fundamental focus areas in retail operations management – people, processes, technology, and physical infrastructure.
People: A significant majority of retail brands and businesses across the world continue to remain dependent on human problem-solving and decision-making abilities. Technology is still only a facilitator or assistant in the execution of retail operations. And most importantly, it is employees who directly deal with customers in stores, via customer support, and now, via delivery channels. Outsourced or not, these people who come in direct contact with customers leave the biggest of imprints on customer experience.
Process: Since retail business processes tend to be extensive and complex, store operations management cannot afford not being process-oriented if they want to achieve operational excellence. Without process definitions, operations management in retail stores can easily go out of order. Processes also help bring regularity and standardisation to operations. Process orientation inherently demands the minimisation or elimination of losses or inefficiencies in operations. Defining processes using SOPs also creates the operational preparedness for growth and expansion in the future.
Technology: Technologies like AI-powered algorithms, RFID sensors, automation, IoT, cloud-based eCommerce platforms, smartphones, mobile-based applications, and data analytics are revolutionising the way retail operations management is conducted. Technology is drastically changing how retail businesses handle information and what they make out of it to improve their operations.
Physical Infrastructure: The underlying strategies and the management of the physical locations wherefrom retail operations are carried out have far-reaching consequences on the latter. One of the key areas of focus is the tactical positioning of stores and warehouses. The criteria for ‘what is a suitable location’ must first be figured out and established. Once you know what you want, the task of finding becomes easier. The second big factor is the layout planning for stores and warehouses/fulfilment centres.
About Your Retail Coach
YRC is a team of retail & eCommerce consulting experts with budding international presence. With over ten-plus years in business, YRC has worked with 500+ clients in over 25 verticals with a success ratio of over 94%.
To share your business issues confidently with an experienced retail operations consultant, feel free to let us know and someone from our team will reach out to you via official channels.
FAQs
What is the best way to forecast demand for my retail business?
The best way for demand forecasting depends on many factors. Here are three broad approaches to demand forecasting every retailer should be aware of:
Quantitative Forecasting (Data-Driven)
- Uses historical data and statistical models
- Requires large volumes of past data
- Time series and regression analysis, Artificial Intelligence (ML)
Qualitative Forecasting (Judgment-Based)
- Market research
- Delphi method
- Inputs from field sales
- Jury opinion and consensus
- Scenario planning
Hybrid Approach
- Any suitable combination of quantitative and qualitative approaches
How to avoid overstaffing in my retail business without hampering services?
Varying levels of footfall over a given period of time often make it difficult for retailers to maintain the desired staff strength in their stores. To avoid overstaffing in retail, here are some ideas for consideration:
- Maintaining a basic staff strength without overburdening
- Deploying manpower on a shift basis to accommodate peak and off-peak demand. Additional shifts/working days may require payment at higher rates.
- Maintaining a database of potential candidates
- Hiring temporary staff
- Using technology for automation (e.g. stock measurement, checkout)
- Promoting self-help (e.g. use of proper signboards/digital signages as a part of layout planning)
· Using Standard Operating Procedures for retail stores for streamlining and optimising operations
What are the best practices for maintaining cleanliness in retail stores?
Speaking of cleanliness and hygiene in retail stores, it is important to keep certain factors as guiding light. These include health and medical standards, safety and precautionary standards, and regulatory compliance from the perspective of retail stores being workplaces, shopping centres, and law-abiding bodies of societies – all at the same time. Here are some commonly found practices for maintaining cleanliness and hygiene in retail stores:
- Creating cleaning schedules (hourly/daily/weekly/monthly/any other periodical) mentioning areas/zones/assets to be cleaned
- Developing SOPs and checklists (cleaning processes for different areas/zones/assets, cleaning materials to be used, safety standards, accountability, reporting, supervising authority, cleaning time/frequency, maintenance of supplies, etc.)
- Promoting cleanliness as a part of work culture, could be linked to PMS or part of any reward/recognition program
- If external agencies are hired for housekeeping – clearly communicating and establishing business requirements and service standards required to be maintained, terms of accountability and responsibility, methods of performance measurement, reporting mechanisms, SPOC, terms of billing and payment, contract renewal terms, etc.
- In the case of internal hiring, it is important to hire professionally and provide specialised training. Basic cleanliness and hygiene training is necessary for all employees.
- Conduct periodical audits and improve the systems if necessary
- Other focus areas – waste management, spill management, safety and security, first aid, regulatory compliance, etc.
How can I ensure consistent customer service quality across all staff members?
Here are some of the solutions we often recommend as retail business process consultants for maintaining consistency in customer service standards at enterprise-wide levels:
Recruitment – You will have to be mindful of the qualities you seek in your employees at the time of hiring. You will have to ascertain the quality of knowledge, skills, and experience possessed by candidates. You should have the job analysis reports at your disposal for framing interview questions for different positions. You should know in advance what skills and qualities you are looking for and how you are going to find that out through your hiring process.
Training – Training helps to fine-tune skills and knowledge to the specific business requirements for each job position or role. It fills the gap between hiring and fitment. OJT is an effective approach but prior to that, some kind of theoretical training is advisable. It should be made clear at the time of recruitment and selection that going training is mandatory.
Linking to Performance Appraisal – Even after the right hiring and training, it is common to see motivation and morale fizzling out after a few weeks among frontline employees in retail. This can be partially addressed by linking desired performance (in this case, maintaining the established quality standards in customer service) with performance appraisal. But the distance between effort and reward should not be very long. Certain specific aspects of performance appraisal could be also carried out on say – a monthly basis.
Monitoring – In addition to making customer service quality linked to performance, regular monitoring is also immensely helpful in this regard. Those in the managerial or team-leader positions should be assigned the responsibility and accountability for the same. But monitoring and feedback have to be constructive and should not result in the creation of veils between layers in organisational structures.
Use SOPs – SOPs help ensure that nothing important is missed out in executing customer service operations or any operation where elements of customer service are involved. SOPs make it easier for employees to follow the established procedures and if they can do that, the chances of maintaining the laid-down standards of quality in customer service also stand to remain high.
Audit and Control – It would be naïve to assume that planners and think tanks cannot make mistakes in decisions pertaining to customer service or customer experience. If they had made the original sins, those mistakes might have also percolated to operations planning and execution as well. Such deeply-rooted flaws in the strategies and systems can be revealed via well-planned retail audits.
Author Bio
Rupal Agarwal
Chief Strategy Officer
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