Retail Operation Management and it Dimensions: Dr. Gopal Thapa

1. Operations Management &
Its Dimensions
Dr. Gopal Thapa

2. Operations Management
 Operations management is the efficient and
effective implementation of the policies and tasks
that satisfy a retailer’s customers, employees, and
management
 Berry Berman & Joel R. Evans
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3. Operational Decisions
 What operating guidelines are used?
 What is the optimal format and size of a store?
 What is the relationship among shelf space, shelf
location, and sales for each item in the store?
 How can personnel best be matched to customer
traffic flows?
 Would increased staffing improve or reduce
productivity?
 What impact does self-service have on sales?
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4. Operational Decisions
 What effect does the use of various building
materials have on store maintenance?
 How can energy costs be better controlled? How
often should facilities be renovated?
 How can inventory best be managed?
 How can the personal safety of shoppers and
employees be ensured?
 What levels of insurance are required?
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5. Operational Decisions
 How can credit transactions be managed most
effectively?
 How can computer systems improve operating
efficiency?
 Should any aspects of operations be outsourced?
 What kinds of crisis management plans should be
in place?
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6. Operating A Retail Business
 Operations blueprint
 Store format, size, and space allocation
 Store maintenance
 Inventory management
 Store security
 Insurance
 Personnel utilization
 Energy management, and renovations
 Credit management; computerization; outsourcing;
 and crisis management.
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7. Operations Blueprint
 An operations blueprint systematically lists all
operating functions to be performed, their
characteristics, and their timing.
 When developing a blueprint, the retailer
specifies, in detail, every operating function from
the store’s opening to closing—and those
responsible for them.
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8. Operations Blueprint
 Who opens the store?
 When?
 What are the steps (turning off the alarm, turning
on the power, setting up the computer, and so
forth)?
 The performance of these tasks must not be left to
chance.
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9. Operations 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.
 Whenever a retailer modifies its store format or
operating procedures (such as relying more on
self-service), it must also adjust the operations
blueprint(s).
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10. Store Format, Size, and Space
Allocation
 With regard to store format, it should be decided if
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 and layouts.
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11. Store Format, Size, and Space
Allocation
 A key store format decision for chain retailers is
whether to use prototype stores, whereby multiple
outlets conform to relatively uniform construction,
layout, and operations standards.
 Such stores make centralized management control
easier, reduce construction costs, standardize
operations, facilitate the interchange of employees
among outlets, allow fixtures and other materials
to be bought in quantity, and display a consistent
chain image.
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12. 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, and too little creativity.
 Some chains use rationalized retailing programs to
combine a high degree of centralized management
control with strict operating procedures for every
phase of business.
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13. Store Format, Size, and Space
Allocation
 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
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14. 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 some metropolitan markets.
 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.
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15. 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, retailers drop merchandise lines
because they occupy too much space.
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16. Store Format, Size, and Space
Allocation
 With a top-down space management approach, a
retailer starts with its total available store space
divides the space into categories, and then works
on product layouts.
 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.
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17. Store Format, Size, and Space
Allocation
 These are among the tactics that some retailers use
to improve store space productivity: Vertical
displays, which occupy less room, hang on store
walls or from ceilings.
 Formerly free space now has small point-of-sale
displays and vending machines; sometimes,
product displays are in front of stores.
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18. Store Format, Size, and Space
Allocation
 Open doorways, mirrored walls, and vaulted
ceilings give small stores a larger appearance.
 Up to 75 percent or more of total floor space may
be used for selling; the rest is for storage,
restrooms, and so on
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19. Store Maintenance
 Store maintenance encompasses all the activities
in managing physical facilities.
 These are just some of the facilities to be
managed:
 Exterior—parking lot, points of entry and exit,
outside signs and display windows, and 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
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20. Store Maintenance
 The quality of store maintenance affects consumer
perceptions, the life span of facilities, and
operating costs.
 Consumers do not like stores that are decaying or
otherwise poorly maintained.
 This means promptly replacing burned-out lamps
and periodically repainting room surfaces.
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21. Store Maintenance
 Thorough, ongoing maintenance may extend
current facilities for a longer period before having
to invest in new ones.
 At home centers, the heating, ventilation, and air-
conditioning equipment lasts an average of 15
years; display fixtures an average of 12 years; and
interior signs an average of 7 years.
 But maintenance is costly
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22. Store Maintenance
 How often are renovations necessary?
 What areas require renovations more frequently than
others?
 How extensive will renovations be at any one time?
 Will the retailer be open for business as usual during
renovations?
 How much money must be set aside in anticipation of
future renovations?
 Will renovations result in higher revenues, lower operating
costs, or both?
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23. Inventory Management
 A retailer uses inventory management to maintain
a proper merchandise assortment while ensuring
that operations are efficient and effective
 Some Issues:
 How can the handling of merchandise from
different suppliers be coordinated?
 How much inventory should be on the sales floor
versus in a warehouse or storeroom?
 How often should inventory be moved from non-
selling to selling areas of a store?
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24. Inventory Management
 What inventory functions can be done during non-
store hours?
 What are the trade-offs between faster supplier
delivery and higher shipping costs?
 What supplier support is expected in storing
merchandise or setting up displays?
 What level of in-store merchandise breakage is
acceptable?
 Which items require customer delivery? When?
By whom?
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25. Store Security
 Store security relates to two basic issues: personal
security and merchandise security
 Many shoppers and employees feel less safe at retail
shopping locations than before, with these results:
 Some people are unwilling to shop at night.
 Some shoppers believe malls are not as safe as they once
were.
 Parking is a source of anxiety for people who worry about
walking through a dimly lit parking lot.
 In response, retailers need to be proactive.
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26. Store Security
 Uniformed security guards provide a visible
presence that reassures customers and employees,
and it is a warning to potential thieves and
muggers
 Brighter lighting is used in parking lots, which are
also patrolled more frequently by guards.
 These guards more often work in teams.
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27. Store Security
 TV cameras and other devices scan the areas
frequented by shoppers and employees
 Some shopping areas have curfews for teenagers.
This is a controversial tactic.
 Access to store backroom facilities (such as
storage rooms) has been tightened.
 Bank deposits are made more frequently—often
by armed security guards
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28. 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.
 Insurance decisions can have a big impact on a
retailer
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29. Insurance
 To protect themselves 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.
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30. Insurance
 These programs include no-slip carpeting,
flooring, and rubber entrance mats; more
frequently mopping and inspecting wet floors;
doing more elevator and escalator checks; having
regular fire drills; building more fire-resistant
facilities; setting up separate storage areas for
dangerous items; discussing safety in employee
training; and keeping records showing proper
maintenance activity.
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31. Any Queries?
Thank You
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