Recent Issues Affecting Retailing - Essay Example

RECENT ISSUES AFFECTING RETAILING By: Course: Tutor: University: 6th March 2014 Recent Issues Affecting Retailing Retailing is a business practice that refers to an essential aspect of the supply chain of finished goods and products. Simply, the practice denotes the sale and distribution of goods and consumer products to end users or consumers by business people known as retailers. These consumer products and commodities are derived straight from the manufacturers and producers. Retailing is thus abusiness process that links end users of certain commodities and products with those who are involved in the manufacture of these very commodities and products. There are many issues that face a number of retailing business. In this paper, three of the essential issues shall be discussed; Human Resource Management issues, (employee turnover or compensation based incentives), Logistical issues (Supply Chain Management) and finally Out of Stocks (Stock outs) issues. Under the Human Resource Management Issues, employee turnover greatly affects retail shops in America.Employee turnover refers to the rate at which an employer is losing his/her employees in a business venture or company. A relatively high rate of employee turnover could mean a very unstable and loss making business organization, while a relatively low employee turnover could mean the exact converse. A relatively high turnover of employees could extremely hurt retail businesses, by reducing their productivity and general operations. This is especially if the employees who are leaving the retail business are highly skilled in what they do. The biggest cause of high employee turnover is always rooted in the unhappiness of employees with their work or the compensation (CNBC, 2012). Another reason for high employee turnovers can be the lack of safety at the business place, or even work conditions that are capable of harming the health of employees. Yet again, another reason as to why may retail stores face high employee turnovers is due to the lack of opportunities and positive work challenges that increase the productivity of employees. An example is Ascena Retail Inc., a retail business company that operates in the US and deals in the distribution of women and girl’s apparel and clothing. Due to a combination of business factors, the company has experienced an increasing employee turnover, possibly resulting from working conditions such as long work hours. In my view, to reduce high rates of employee turnover, American retailers need to implement a number of key steps, chief of them being compensation and wages based incentives. Furthermore, improving the work conditions and even safety, as well as work hoursat the retail stores will be able to reduce the rate at which employees leave a particular retail business. American retailers also need to train their employees continually, as well as fostering professional development, which equips employees and can open more opportunities to them (Hay Group 2012). Under Logistical Issues, the management of the supply chain greatly affects the operation s of American retail businesses. Supply chain management is a business concept that implies the management of the movement of finished products, goods and commodities. It starts all the way from the producers and manufacturers, through the retailers and suppliers, up till the products reach the consumers. Managing effectively a supply chain is always aimed at achieving a sustainable advantage as well as maximizing the customer value, so that product sales are high. Supply chain management is also an effective tool that facilitates information flow between the manufacturers and the end users of products manufactured. Through it, essential information on the rate of demand of a given product as well as the speed of supplies can be gauged, leading to better decision making for both the manufacturers as well as the retail businesses. As such, the role of the American retailer in this complex process is very important, as retailers are a key part of the supply chain. This is because they are the ones in direct contact with the end users and consumers of various products. If a mistake happens at the retail level, the manufacturers and suppliers up the supply chain can incur very heavy financial losses (Kaminsky & Simchi 2007). Out of Stocks or a stock out, is a business phenomenon that arises when a given retail store has sold all the goods, products and commodities available in its inventory. As such, there is no more stock available for further sale, and the retailers must restock their supplies in order to continue selling consumer products and commodities to their customers. Most stock outs occur to retail business due to the fast moving nature ofconsumer products and commodities in the present world market (Gruen & Daniel 2008). Some of the sources of stock outs include poor internal practices within a retail business organization. Some of these internal practices affect the replenishment of retail shelves that are supposed to be filled with consumer products and commodities. Another reason why out of stocks does affect retailers is a shortage in up the supply chain. This implies a shortage in the products and commodities being manufactured by various producers. This shortage flows down the supply chain to the retail stores all over the country. One of the main impacts of stock outs is suffering losses on both the retailers as well as the manufacturers. Stock outs also negatively impacts on consumers who shop for different retail goods, as stock outs of some of their favorite goods always causes a lot of dissatisfaction and frustration with the particular retail business. This causes indirect losses to both the retail stores as well as to manufacturers and producers (Zin & Liu 2008). A good example of a retail business store that faced stock outs in recent years is Walmart US. Walmart had out of stocks for a number of products back in 2011. Walmart was thus forced to implement different measures to restock some of their shelves and regain some of the customers lost. To do this, the retail giant resorted to various advertising strategies as well as in-store signage signaling the return to shelves of some consumer products. This has helped to boost sales over the past three years for Walmart US.Other recommendations for any retail business that suffers from stock outs is the performance of shelf audits within the retail store to determine the levels of stock remaining at a particular time (Hay Group 2012). This will allow the retail management to have sufficient date on when a stock out of various consumer products may occur. Consequently, the retail management can pursue steps to remedy an oncoming stock out of goods and products, by either going back to the manufacturers and producers, or even seeking alternative substitute products to offset any potential out of stocks. Furthermore, using the data from the inventories at the retail business can enable the retail management to follow the depletion of their stock on the shelves and make necessary adjustments and arrangements to be able to offset any impending stock out of goods and products (Supply Chain Digest 2013). In conclusion, of the many different issues that face and affect American retail businesses, human resource issues, logistical issues as well as stocks and supplies issues have the greatest impact. When a retail business experiences a high rate of employee turnover for instance, it is not a good sign and both the retailer and the manufacturers may incur heavy losses. When also there is a problem in the supply chain of finished commodities and goods, especially at the retail level, the supply chain can be disrupted, affecting the flow of good from manufacturers to consumers. Finally, the depreciation of goods stocks in the shelves of retailers is always a problem, which indicates a disruptive supply chain, or poor management of retail stores. References List CNBC 2012. A Good Sign for the Economy? Retail Turnover on the Rise. CNBC.Com. Web. Viewed March 6 2014, Gruen, T.W. and Daniel C.2008. A Comprehensive Guide to Retail Out-of-Stock Reduction in the Fast-Moving Consumer Goods Industry, Grocery Manufacturers of America. Washington, DC. Halldorsson, A. Kotzab, H. Mikkola, J. H. & Skjoett-Larsen, T. 2007. Complementary theories to supply chain management. Supply Chain Management: An International Journal, Vol. 12 Issue 4, pp. 284-296. Hay Group 2012.Hay Group study finds employee turnover in Retail industry is slowly increasing. Hay Group.Com. Viewed March 6, 2014, Rajaram, K. & Tang, C.S. 2001. "The impact of product substitution on retail merchandising." European Journal of Operational Research. Vol. 135 no. 3, pp. 582-601. Simchi-Levi D. Kaminsky P. & Simchi-levi E. 2007.Designing and Managing the Supply Chain.3rd edn. Mcgraw Hill. New York. Supply Chain Digest 2013. Supply Chain News: Walmart US Chief Says Sales are Suffering Because Of Challenges in Keeping Stores Shelves Stocked. Viewed March 6, 2014, Zinn, W. & Liu, P.C. 2008. "A comparison of actual and intended consumer behavior in response to retail stock outs." Journal of Business Logistics, Vol. 29 no. 2, pp. 141-59. Read More