Retail Business Operating issues - Report Example

Introduction Running your own business is always considered as one of the most challenging aspects of a person. Managing many tasks at the same timealways requires business acumen and skill because in retail business, owner often operates as the manager of the firm also. Right from hiring of employees to the ordering and sale of merchandise, a retailer has to take active part in various activities. Having a retail business is considered as essential in order to develop the brand loyalty and name in the market. As the business grows and develops, this is considered as important for the long term success of the business. However, it requires relatively professional management of overall affairs of the store. Understanding merchandising, hiring and management of employees as well as other critical issues require active participation from the owner of the business. (Newman & Cullen, 2002) Retail operations include the activities which are often performed in order to keep the store functioning and running. These activities ranges from placement of inventory on shelves, replenishing them, management of cash received, safety and security of the merchandize as well as other activities involved. Similarly, it is also important to understanding and identifying the customers which will normally be involved in the clear segmentation. Site evaluation as well choosing an optimal location for the store also plays an important role in the success of a retail business. This paper will discuss the operations of retail stores and how being the owner, one can effectively manage various activities to successfully run the retail business. Daily Operations Management There are various activities which need to be performed in order to effectively manage a retail business. The daily operations management activities are diverse in nature and owners must be actively involved in the management of all the required tasks to successfully run the business. (Barry, 2009) The basic operational management activity involved is the ordering of right kind of inventory and managing its adequate level in the store. A retail owner must ensure that all the required inventory is present in the store and is adequate quantities to ensure that customers are served throughout the selling period. One of the key operational management activities to be performed and managed is to ensure that store has a certain environment and ambiance. It is important to create a pleasant shopping experience for the customers and to achieve this it is critical to ensure that store does not give a cluttered look. Merchandises are properly placed and inventory is clean and in good condition. Cash handling is also another operations management activity which involve effective sorting of the cash, ensuring that change is available at the store counters, debt and credit card machines are properly working and a proper system is in place to track daily cash flow activities and ascertain the profit and loss on daily basis. Prevention of shoplifting as well as safety and security of the merchandise is another important activity. Customer services and ensuring that customers find their required products, handling of refunds etc are also some other operation management activities performed daily. Identification and understanding customers Retailers are often considered as poor at identifying and understanding their customers because small retailers often lack the ability to record and analyse the customer data. One of the keys to understanding and identifying the customers therefore is to record the data and ask for some information from the customers to fill in. By getting that information and analyzing it properly, retailers can actually be able to identify who their customers are and understand their consumption patterns. Location can also serve as one of the key indicators for identifying the customers and understanding them. For example, a retail store near a locality would indicate that customers belonging to particular locality and having a particular life style and income levels can be the potential customers. Gathering information Obtaining personal information at checkout points is one of the key methods to gather the relevant information. Asking customers to fill in personal information forms at the checkout points, opening a loyalty program as well as offering free takeaways can actually also entice customers to provide their information. This information can be processed through tabulating the data according to various criteria and then sifting through the required information. It is also important to note that a retailer can also source information from external agencies. Various firms in the market also provide information required for a retailer to devise its overall segmentation strategies. However, obtaining information from external sources may be expensive. Site Evaluation and Characteristics of Trading Area Defining characteristics of trading area and site evaluation is important tasks because it is not only costly but also requires time to design it properly. Retailer has little flexibility once the site has been selected and evaluated because of the related factors. Retailers therefore have to take great care in evaluating the site because it directly affects the retailers’ strategy. One of the key characteristics of trading area is the size and characteristics of the population around the location. Since local population serve as the potential customers with higher repeat business therefore understanding its size and characteristics is the key to determine how big the store should be and what is the optimal location of the same. Level of competition at the store site is another factor to be considered because if other suppliers are already in the market and are larger in size can give more competition. It is therefore important to understand the level of competition. Cost of property as well as lease terms are also important characteristics of the trading area. Site evaluation requires understanding accessibility, location advantage as well as the legal consideration. Retailer should carefully evaluate the terms of the lease and ensure that the store location will be available for periods longer than required in case store becomes successful. Further, terms of occupancy should also be evaluated in order to ensure that terms are favorable for the organization and may not create problems in future for the store. Recruiting and training plan 1. Managers must first identify the need for particular staff in a store. Requirement identification therefore will be the first step towards recruitment of the staff. 2. Managers must also evaluate the set of skills required to fill the job. It is the responsibility of floor manager to actually identify what critical skills set are required to complete any job. 3. Floor managers will evaluate the requirements and forward the same to the store manager to advertise the position. Store manager must first always look for internal placement of the vacancy and preferences shall always be given to the internal staff to move to the next position. 4. All advertisements shall be advertised in-store and preference shall be given to the local community. Since we rely on community, it is important that we must take active participation in the community and provide first chance to the community for recruitment purposes. 5. For training purposes, each manager is required to rotate the staff on various positions in order to provide on job training to existing staff. Rotation policy should be implemented every six month and each employee will be given enough opportunity to develop on job skills for various jobs. 6. Customer services training, merchandising as well as inventory management skills will be upgraded through training from external training sources. Every year, employees engaged in those functions will be sent for training to learn about new technologies and industry practices to implement the same in the store. Important Financial Dimensions One of the key dimensions to manage is the cash flows of the store since store need to be liquid in order to manage itself properly. Since it is a retail business with most of the sales taking place on cash basis, it is therefore critically important that cash flows should be managed optimally. In order to manage the cash flows, store need to ensure that cash collection on the tills is error free and all tellers shall deposit the cash on counter to the central location in order to pool. Store shall also make arrangements with the local bank to deposit access cash in remunerative as well as current accounts to optimize the use of cash. Another important dimension of financial management is the management of working capital i.e. management of receivables, inventory as well as creditors of the store. Store should focus on management of inventory and creditors in more effective manner and keep most of the sales on cash. Inventory management should be optimized and inventory should be stored in such a manner that it optimizes the cost of holding and storing the inventory. (Wrice, 2004) Firm also need to ensure that its creditors are optimized too and in order to effectively manage its cash flows it should obtain favorable credit terms from its creditors. Getting favorable terms from creditors can provide spontaneous financing source for the store and it can sell the inventory and pay it for later and manage its cash flows in most optimal manner. Merchandising Plan 1. Overall merchandising will be divided into four distinct components of buying, assortment, pricing and communication. Overall, the focus will be developing expertise in each component with more focus on buying and assortments according to the overall requirements of the store. (Varley, 2006) 2. Merchandising buying will be distributed according to the type of merchandise i.e. staple and fashion merchandise. Buying for both types of merchandises will be done by two separate buying managers and each manager will be setting up his own targets by analyzing sales trends and other factors. 3. Inventory management shall be separately performed by each member and each manager will be devising adequate back up inventory to meet the demand. 4. Effective inventory management along with real time tracking of the inventory shall be ensured. 5. Vendor selection will be central in nature with main negotiations with the vendors will be done by the owners along with the managers of the store. Conclusion The report discussed some of the most important elements required to run the store and outlined various factors which need to be taken into consideration while successfully running and managing a retail store. Some of the most important factors include daily operations management activities, cash flow management, inventory and merchandising, recruitment and training of employees and other related activities. In order to successfully run a store, it is critical for the store owners and managers to manage all the activities perfectly in order to deliver a better shopping experience. Bibliography Barry, B. (2009). Retail Management: A Strategic Approach. New York: Pearson Education. Newman, A. J., & Cullen, P. (2002). Retailing: Environment & Operations. London: Cengage Learning EMEA. Varley, R. (2006). Retail Product Management: Buying And Merchandising. London: Routledge. Wrice, M. (2004). First Steps in Retail Management. Sydney: Macmillan Education AU. Read More