This document discusses key considerations for operating a retail business. It covers developing an operations blueprint to outline all store functions and responsibilities. Store format, size, and space allocation are also important decisions regarding prototype stores versus tailored local stores. Maintaining the store, managing inventory, ensuring security, and purchasing appropriate insurance are also essential operational aspects covered. Centralized control while allowing flexibility and adapting to local needs are important challenges for retail management.
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Operation blueprint
1. Operating a Retail Business
Dr. Gopal Thapa
Tribhuvan University
Kathmandu,Nepal
Email:thapazee@gmail.com
2. Operating a Retail Business
Operations blueprints
Store format, size and space allocation
Personnel utilization
Store maintenance, energy management, and renovations
Inventory management
Store security
Insurance
Credit management
Computerization
Outsourcing
Crisis management
3. Operation Blueprint
An operations blueprint systematically lists all the operating functions to be performed,
their characteristics and their timing.
While developing a blueprint, the retail specifies, in detail, every operating function
from store’s opening to closing – and those responsible for them.
E.g. who opens the store? When? What are the steps?
The performance of these tasks must not be left to chance.
4. Operation Blueprint
A large or diversified retailer may use multiple blueprints and have separate blueprints
for such areas as store maintenance, inventory management, credit management and
store displays
When a retailer modifies its store format or operating procedures, it must also adjust the
operating blueprints.
5. Store Format, Size and Space Allocation
With regard to store format, it should be determined whether productivity can be raised
by such tactics as locating in a planned shopping center rather than in an unplanned
business district, using prefabricated materials in construction and applying certain
kinds of store design an layouts.
6. Store Format, Size and Space Allocation
A key store format decision for chain retailer is whether to use prototype stores
whereby multiple outlets conform to relatively uniform construction, layout, and
operation standards.
Such stores make:
Centralized management control system easier
Reduce construction costs, standardize operation, facilitate the interchange of employee
among outlets
Allow fixtures and other materials to be bought in quantity and
Display a consistent chain image
7. Store Format, Size and Space Allocation
Yet, a strict reliance on prototypes may lead to:
Inflexibility
Failure to adapt to or capitalize on local customer needs
To little creativity
Together with prototype store, some chains use rationalized retailing programs
to combine a high degree of centralized management control with strict
operating procedures for every phase of business.
Most of these chains’ operations are performed in a virtually identical manner
in all outlets.
Rigid control and standardization make this technique easy to enact and
manage and a firm can add a significant number of stores in a short time
They operate many stores that are similar in size, layout and merchandising
8. Store Format, Size and Space Allocation
Many retailers use one or both of two contrasting store-size approaches to be distinctive
and to deal with high rents in urban areas
At the same time, some retailers believe large stores are not efficient in serving
saturated or small markets
They have been opening smaller stores or downsizing existing ones because of high
rents
9. Store Format, Size and Space Allocation
Retailers often focus on allocating store space
They use facilities productively by determining the amount of space, and its placement,
for each product category
Sometimes, retailer drops merchandise lines because they occupy too much space
With top-down space management approach, a retailer starts with its total available
store space, divide the space into categories and then works on product layouts
10. Store Format, Size and Space Allocation
In contrast, a bottom-up space management approach begins planning at the individual
product level and then proceeds to the category, total store and overall company levels
Tactics to improve store space productivity:
Vertical display, which occupy less room, hang on store walls or from ceilings.
Formerly free space now has small Point-of-sale display and vending machines
11. Store Format, Size and Space Allocation
Sometimes, product displays are in front of stores
Open doorways, mirrored walls and vaulted ceilings give small stores a large
appearance
Up to 75% or more of total floor space may be used for selling
The rest is for storage, rest rooms and so on
Scrambled merchandising (with high profit, high turnover items) occupies more space
in stores, in catalogs, and at web sites than before
By staying open longer, retailers use space better
12. Store Maintenance
Store maintenance encompasses all the activities in managing physical activities
These are just some of the facilities to be managed:
Exterior:
Parking lot
Points of entry and exit
Outside signs and display windows
Common areas adjacent to a store (e.g. sidewalks)
Interior:
windows, walls, flooring, climate control and energy use, lighting, displays and signs , fixtures and ceilings
13. Store Maintenance
The quality of store maintenance affects:
Consumer perceptions
The life span of facilities
Operating cots
Consumers do not like stores that are decaying or otherwise
poorly maintained
This means promptly replacing burned-out lamps and
periodically repainting room surfaces
Thorough, ongoing maintenance may extend current facilities for
a longer period before having to invest in newones
14. Store Maintenance
At home centers, the heating, ventilation, and air conditioning equipment lasts an
average of 15 years
Display fixtures an average of 123 years
Interior signs an average of 9 years
But maintenance is costly
In a typical year, a home center spends $10000 on floor maintenance alone
15. Inventory Management
A retailer uses inventory management to maintain a proper merchandise assortment
while ensuring that operations are efficient and effective
Some operational issues in retail inventory management
Handling of merchandising from different suppliers
Size of inventory on sales floor, warehouse and storeroom
Movement of inventory from non-selling to selling areas
Trade-offs between faster delivery and higher shipping costs
Supplier support in storing merchandise or setting up displays
Acceptable level of in-store merchandise breakage
Items require customer delivery: which, when and by whom
16. Store Security
Store security relates to two basic issues: personal security and merchandise security
Many shoppers and employees feel less safe at retail establishments, than they before,
with these results:
Some people are unwilling to shop at night
Some people age 60 and older no longer go out at all during the night
Shop shoppers believe malls are not as safe as they once were
Parking is a source of anxiety
In response, retailers need to be proactive
Eg. Camera surveillance, security presence
17. Store Security
Uniformed security guards provide a visible presence that reassures customers and
employees.
It is a warning to potential thieves and muggers.
Undercover personnel are used to complement uniformed guards
Brighter lighting is used in parking lots, which are also patrolled more frequently by
guards in team
TV cameras and other devices scan the areas frequented by shoppers and employees
Some shopping areas have curfews for teenagers (controversial tactic)
Bank deposits are made more frequently
Access to stock backroom facilities has been tightened
18. Insurance
Among the types of insurance that retailers buy are workers’ compensation, product
liability, fire, accident, property, and officers’ liability
Many firms also offer health insurance to full time employees.
Sometimes they pay the entire premiums; other times, employees pay part or all of the
premiums
19. Insurance
Insurance decisions can have a big impact on a retailer
In recent years, premium have risen dramatically
Several insurers have reduced the scope of their coverage( do not cover all aspects, they now
require higher deductibles )
Insurance against environmental risk
To protect them financially, a number of retailers have enacted costly programs aimed at lessening
their vulnerability to employee and customer insurance claims due to unsafe conditions as well as
to hold down premiums
E.g. No-slip carpeting, flooring, rubber entrance mats, separate storage area, frequently mopping
and inspecting wet floors, doing more elevator and escalator checks, building more fire-resistant
facilities