Retail and sales management

1. Retail and sales management Session 15

2. Learning from the session • Store management/operations management

3. Store management/operations management • Four major factors involved; managing employees, controlling costs, managing merchandise presentation and providing customer service Managing employees: • 1. Recruiting and selecting store employees: Job analysis and job description

4. Store management/operations management • Job analysis to be done to determine the qualifications of potential employees • Job description includes activities the employee need to perform and the performance expectations

5. Managing employees: • 2. Socializing and training new store employees: Helpful in introducing the employees to the firm and its policies • Orientation programs and formal training of store employees • Training store employees: Consists of structured program and on- the job learning experience

6. Managing employees contd…: • 3. Motivating and managing store employees: • Setting goals or quotas • Maintaining store morale • 4. Evaluating store employees and providing feedback: • Based on various criteria such as customer service, efficiency in day-to-day store operations and compliance to the rules of the firm and with other colleagues

7. Managing employees contd…: • 5. Compensating and rewarding store employees: Extrinsic and intrinsic rewards • Extrinsic rewards: Rewards provided by either the employee’s manager or the firm eg. Compensation, promotion and recognition • Intrinsic rewards: Rewards employees get personally from doing their job well • Job enrichment could also be an intrinsic reward

8. Compensation programs • Aimed at attracting and keeping good employees, motivating them and rewarding for their effort • Straight salary compensation, incentive compensation plan, quota bonus plan and group incentives • Incentive compensation plans: based on sales productivity of each employee

9. Compensation programs Incentive compensation plans • Straight commission: Sales person’s income is based entirely on commission • Incentive plan with fixed salary plus a commission on total sales or commission on exceeding the sales target

10. Incentive compensation plans contd.. • Drawing account: Sales people receive weekly check based on estimated annual pay package and commissions are credited against the weekly payments • Quota bonus plan: Provides bonus to sales associates when they exceed their quota • Group incentives: Additional compensation for all the employees who work in a store when it exceeds the sales target for a month or quarter

11. Controlling costs • Through labour scheduling and store maintenance • Labour scheduling: Determination of the number of employees assigned to each area of the store • Done based on customer traffic • Legal aspects also impact labour scheduling • Labour scheduling if done efficiently, can reduce staffing cost

12. Store maintenance • Activities involved in managing the interior and exterior facilities associated with the store • Exterior facilities: Parking lot, entrance to the store, signage outside the store • Interior facilities: walls, floors, ceiling, display and signs • Store maintenance has an impact on sales generation and operational costs of the store

13. Reducing inventory shrinkage • Significant issue in store management • Inventory shrinkage happens due to employee theft, shoplifting, mistakes, wrong billing, vendor errors • Development of inventory shrinkage reduction program involve a trade-off between provision of shopping convenience and pleasant work environment on one hand and preventing losses due to shoplifting and employee theft on the other hand

14. Calculation of inventory shrinkage • Difference between the recorded value of inventory based on merchandise bought and received and the value of the actual inventory in store divided by retail sales during the period Inventory as per records = 1,500,000 Actual inventory after stocktaking = 1,236,000 Sales during the period = 4,225,000 Shrinkage = 1,500,000- 1,236,000 = 6.7% 4225000

15. Detecting and preventing shoplifting • Store design, employee training and special security measures are used

16. Store design • Merchandise which is probable to be stolen easily such as jewelry should never be displayed near the entrance • Maintain open sight lines to entrances and exits for thorough monitoring by employees • Trial room entrances should be monitored by employees

17. Employee training • Employees should be trained to detect potential shoplifters through role plays • Various techniques used to identify shoplifters

18. Security measures • CC TV • Mystery shoppers • Electronic article surveillance systems (EAS)

19. Reduction of employee theft • Screening prospective employees: Using honesty tests and reference checks • Using security personnel • Establishing security policies and control systems: eg. Random search of trash cans, locker rooms etc