Retail Operations and Online Retailing

RETAILING
MANAGEMEN
T
UNIT - 4
PRESENTED BY
K.BALASRI PRASAD

BBA/MBA 5 year Integrated Course III Year - V Semester
Paper – 5.1: Retailing Management
Unit – I: Introduction:
Definition and Scope of Retailing; Retailing Scenario – Global; Retailing Scenario-
India; Prospects of Retailing in India’s; Trends in Retailing; Retailing formats; Retail
Strategies.
Unit – II: Store Planning:
Store planning; Design and Layout; Retail merchandising; Supply Chain Management
in Retailing.
Unit – III: Retail Marketing and Advertising:
Retail Marketing Strategies; strategic Positioning; retail marketing mix; customer
relationship management; direct marketing; micro marketing in retailing, and adverting
in retailing.
Unit – IV: Retail Operations and e-Tailing:
Store Operating parameter; using strategic resource model in Retailing; Designing
performance programme; online retailing, and online retail categories.
Unit – V: Retail Management Information System and Retail Research:
Retail Technology and Automations; Retail Technology and CRM; Human resources
and Executive information systems; Developing a research Methodology; Retail audit.
References:
1. Cullen & Newman, 2007, “Retailing, environment and operations”, Thomson. 2. Levy & Weitz, 2005, Retailing, TMH.

Unit – IV
Retail Operations and e-Tailing:
Store Operating parameter;
Using strategic resource model in
Retailing;
Designing performance
programme;
Online retailing, and
Online retail categories.

Store Operating parameters
Operations includes many aspects, such
as store design, display placement,
customer service, money and credit
handling, shoplifting prevention, premises
maintenance, staff management, inventory
optimization, and dealing with the entire
supply chain that leads to having products
in the store.
Retail Operations can encompass
everything about how a store operates
each day.

Responsibilities of retail store
operations:
1.Store Design
2.Customer Service
3.Cash, Fraud, and Internal
Controls
4.Product Inventory
5.Administration
6.Store Management

1. Store Design
Store location
Store design and layout
Creating departments within a
store
Visual merchandising and display
Store atmosphere/Ambience
Signage(In store/Out store)
Store space management

2. Customer Service
How are customers greeted when they enter the
store?
Is there a familiarity with repeat customers?
Is personal service offered? At what point?
If the store doesn’t have what the customer
wants, how does the store handle that? Is it
willing to say who else might have the item?
Does the store offer helpful guidance - after
really listening to the customer?
Is loyalty rewarded, such as through loyalty
programs?

3. Cash, Fraud, and Internal
Control
Handling cash and credit
Shoplifting and fraud prevention
Internal controls
Safety and security
4. Product Inventory
Ordering merchandise
Receiving stock
Using an inventory system
Pricing

5. Retail Administration
Managing the premises
Training of employees
Managing of promotions and events
Data management and use of technology
6. Store Management
Hiring, firing, training, and managing of employees
Forecasting sales and budgeting
Oversight of inventory(Auditing) and loss prevention
Oversight of all internal controls, such as for cash
handling
All aspects of customer service
Internal and external communication

Standard Operating
Procedures(SOP’s)
and
Checklists for Store Operations
1. General Store Opening and Closing
Employees assigned to open the store should
arrive early to prepare the store for its opening
to the public.
The store should be opened to the public on
time, indicated with signs or lights as
appropriate.
Employees should begin preparing at a

The store alerts customers at a specified
time, such as thirty minutes before and
again ten minutes before, that the store
will be closing. Staff may pull gates,
change the lighting or perform other steps
to alert customers.
All cash is counted, reconciled, checked
by a manager, and locked. All keys go to
the person in charge of that. The
procedure should define in detail how
important matters like this are carried out.
Opening and closing work is subject to

2. Store Staffing
Employees should be interviewed, hired,
onboarded, and trained in a prescribed manner.
Job descriptions should be clear and regularly
updated to reflect responsibilities.
Employee reviews should be done consistently,
with regular feedback and follow-up.
Employee work hours should be accounted for
through a system, especially with variable part-
time work or overtime.
Compensation should be spelled out, as well as
determine when and how payment is made in
the case of bonuses, such as sales incentives.

3. Cash Management
Front-end cash procedures ensure proper
handling at the POS. This includes how and
when to take cash to the back office, and how to
reconcile cash and credit against sales.
Back-office cash procedures are usually a
bigger-picture accounting function, making sure
the store is on track and carrying out its internal
controls to prevent loss and pilferage. They
catch cashier mistakes or possible fraud.
Cash refunds to customers should be consistent
with store policy. Sometimes a store may
choose to only give a credit on a credit card, or

Some important practical
terminology
Flow through(FT) SKU’s: Orders automatically
based on the sales.
Non-Flow Through(NFT) SKU’s: Duty Manager
have to order based on forecasted sales.
PFA norms: Prevention of Food Adulteration
PO: Purchase Order
GRN: Goods Received Note
PRN: Purchase Return Note
RTV: Return To Vendor
NRTV: Non Return To Vendor

Some important practical
terminology
Impulse Products
Ticker (Used to count foot falls)
F&V Dump
FIFO
UDL (Uniform Distribution Load in shelves)
Ethylene generating Vs Ethylene sensitive
F&V
Average Bill Value = Total Sales/No. of
Bills

Ticker
Electric Fly Control Stackable Bins
Stall
Bins
slotted-angle racks Alligator-bin-rack

Designing Performance Programme
Meeting shopper’s needs extends from the front end
to the back office, making it more important than ever
to have the right talent available.
Effective performance management can drive more
customer-centric service and better store
performance, aligning employee goals with the
business priority for exceptional customer service to
deliver better retail therapy.
Having processes in place to support performance
practices, identify top performers, and quantify the
development needs of the workforce is crucial.
Retailers effectively use performance management to
deliver higher levels of service and motivate the
entire workforce from the hourly employee to

Ways to maximize the performance management
process
1. Have Good Data
Different sales environments require
different types of expertise. So it's critical to
know what skills you have access to and how
they can be leveraged.
For example, individuals on the sales floor at a
electronics store should be well versed in the
features and benefits of different devices to help
consumers make the right purchase decision.
Having accurate data can help organizations
understand who their best resource is and

2. Connect the Customer Experience to
Performance
If better customer service is a business priority,
measuring sales volume or amount sold may only
indicate that the employee is completing
transactions—but not necessarily providing better
service to customers.
Surveys can be used to gain insight into
customer expectations as well as how well an
associate met their needs.
Then, share that feedback with employees to
make the connection between their performance
and customer satisfaction.
Setting goals and having a consistent process for

3. Train Employees to Go the Extra Mile
Building a culture of success requires
understanding the attitude, behaviors, and skills
necessary to excel and providing regular
feedback so employees understand how well
they're delivering on those expectations.
For example, an aggravated customer may be
looking for an empathetic ear and quick
resolution to their issue.
Helping employees develop that skill set can be
the difference between a customer who
continues to patronize a retailer despite an
issue and one that takes their business

4. Simplify Performance Management
Make sure performance management processes are
easy to execute.
The right talent management system can help align
talent with strategy and ensure employees and
managers are spending time on what matters most:
conversations that power performance—not
managing a performance appraisal process.
Ultimately, consistent and outstanding customer
service cannot be wholly driven by processes in a
training handbook.
At least part of it comes naturally from employees who
are in the right roles to match their skills, who are
engaged and involved with their work, and who
understand the success metrics—including customer

To find success, retail managers must continue to
motivate their employees:
1) Transform their organizational culture
2) Define incentive criteria by each specific role
3) Tailor plans to the organization’s situation and
circumstances
4) Solidify the incentive calculation framework and
process
5) Promote incentives on an ongoing basis
1) Transform the organizational culture
 Retail managers must enable their employees with
the skills they need to complement and add value
to the in-person experience.
 While they no longer need to be product

2) Define incentive criteria by role
Organizations must first define the criteria that
relates to the area of responsibility for each
role.
3) Tailor plans to the organization's situation and
circumstances
Programs should be tailored to each
organization’s situation.
For example, some retailers pay their selling
staff an hourly rate plus incentive.
With the increasing minimum wages in India
and increasing living expenses, we may see a

4) Solidify the incentive calculation framework and
process
Retailers should consider how they calculate
their incentives.
Are the plans administered in Excel or do you
have an Incentive Compensation
Management platform to calculate and report
payments, and automate sales compensation
management.
With increasing challenges in the sector,
including demand volatility, labor management,
and hiring demands, more and more retailers
are investing in Incentive Compensation

5) Promote incentives on an
ongoing basis
To be effective, employee incentives
should be promoted on an ongoing basis,
particularly in retail, and must adapt to
the new profile of your sales people
and your buyer.
The entire sales force is shifting.
The way new talent learns, engages,
and executes their jobs now is, and will
continue to be, completely different from

Online Retailing
Online shopping is the process whereby consumers
directly buy goods or services from a seller in real-
time, without an intermediary service, over the
Internet.
Online shopping emerged with the development of
the internet.
Entrepreneurs saw the potential in online shopping
and sprung at the chance to make virtual storefronts,
so that consumers could shop without leaving their
homes.

Pros/Advantages of Online shopping
Shop 24/7
Comfort of own home
Comparison Shopping easier
Discount coupons available online
Privacy
Don’t have to drag kids out
Save Time
More payment options
Customer reviews

Cons/Disadvantages of Online Shopping
Takes long time, if you have a slow connection
Errors in Billing
Inability to touch and try
Card details privacy
Returns more difficult
Shipping and Handling Costs
Insecurity
No bargains
Difficult to Examine the quality of Product

Motivators for online shopping
Faster Delivery
Cash-on-Delivery/ Try & Purchase
Return back policy
Content
Customization
Convenience
Cost Reduction/Deals & Discounts
Choice/Access to branded products at one
place

Advantages of online retailing
Easy access to market: Online
marketplaces allow anyone to set up a simple
online shop and sell products within minutes.
Reduced overheads: Selling online can
remove the need for expensive retail premises
and customer-facing staff, allowing retailer to
invest in better marketing and customer
experience.
Potential for rapid growth: With a good
digital marketing strategy and a plan a scale up
order fulfillment systems, retailer can respond

Widens the market / export: The ability
expand market beyond local customers very
quickly. Retailer may discover a strong demand
for their products in other countries which you
can respond to by targeted marketing, offering
website in a different language, or perhaps
partnering with an overseas company.
Customer intelligence: Ability to use
online marketing tools to target new customers
and website analysis tools to gain insight into
your customers' needs.

Disadvantages of online retailing
Some negatives of online retail include:
Website costs: Planning, designing, creating,
hosting, securing and maintaining a professional e-
commerce website isn't cheap, especially if you expect
large and growing sales volumes.
Infrastructure costs: Retailers need to think
about the costs of physical space for order fulfillment,
warehousing goods, dealing with returns and staffing
for these tasks.
Security and fraud: The growth of online
retail market has attracted the attention of
sophisticated criminal elements. The reputation of

Legal issues: Getting to grips with e-
commerce and the law can be a challenge and
retailer need to be aware of, and plan to cope
with, the additional customer rights which are
attached to online sales.
Advertising costs: Online marketing
demands a generous budget. This is especially
true if retailers are competing in a crowded
sector or for popular keywords.
Customer trust: It can be difficult to
establish a trusted brand name, especially
without a physical business with a track record

Online retail categories
APPARELS
CONSUMER ELECTRONICS
FOOTWEAR
FOOD, HEALTH & BEAUTY SUPPLEMENTS
JEWELLERY
BOOKS
MOBILE PHONES
FASHION ACCESSORIES
HOME DECOR ITEMS
KITCHEN WARE AND HOUSEHOLD

TOYS AND GAMES
SPORTS GOOD AND FITNESS
EQUIPMENT
PROVISIONS
BABY CARE PRODUCTS
COMPUTER HARDWARE, SOFTWARE,
AND ACCESSORIES

TOP ONLINE RETAILORS IN INDIA
FLIPKART
AMAZON
SNAPDEAL
HOMESHOP18
FIRSTCRY
JABONG
PAYTM

Strategic Retail Model:
A model based on the concept of the
marketing mix, but from a strategic perspective
within the fashion retail context.
This implies that all four elements of the
marketing mix have been redefined or
replaced.
 The strategic retail model consists of four
constituents similarly to the 4Ps but where price
and promotion have been abandoned in favour
of two constituents: service and technology.
 Service has been added due to the
differentiation factor, as many consumers

The technology constituent has been
added due to the digital revolution and
increasing importance of incorporate
technology in retailing.
This model have incorporated the importance of
capturing the full potential of all divisions of
an organisation by integrating transparency
throughout the strategic retail model.
A high level of transparency facilitates the
ability to achieve authenticity of the
company offering.
The technology constituent has been

Product
Product, originates from the necessity of having a
product as a central role of the business, as the
product is the ingredient in which the entire company
should operate around the product constituent is
anchored in the understanding of creating
experiences around the product.
Service
A retailer, providing services is of equal importance
as providing products.
Similarly to the product constituent is the importance of
understanding the creation of experiences and
expectations through service solutions.
Service constituent in the strategic retail model, gives the
importance of creating excellent service experiences

Positioning
 The positioning constituent addresses online and offline
positioning.
 How clusters emerge, and how the future store platform
will appear.
 By including positioning in the strategic retail model, the
understanding of choosing appropriate sales channels
in relation to the target group can be discussed.
Technology
 Originates from the digital revolution and the
understanding of new technologies and devices for
today´s consumers.
 The technology constituent is important in order to
understand the development of technology in retail.
 By including technology in the strategic retail model, the

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