Driving Improved Store Performance
Operational performance in stores is a mixture of:
1. Maximizing Customer Service
This graphic shows many of the things that make up excellent customer service.
All of these are important but the one that matters most is being in stock. Great service is of no value if shoppers can’t get the product they want in your store. And that is all about inventory management. Much of inventory management is a Buying Office responsibility and sometimes a Supply Chain responsibility too, but stores do have a role to play.
An old survey sponsored by Proctor and Gamble showed that 45% of stockouts on shelves occurred while there was still product in the store stockrooms. Systems improvements since this survey was conducted may have reduced the percentage, but the problem still exists.
2. Maximizing Sales
The chart below shows a tried and tested retail formula. To maximize sales, we need to:
But stores make their contribution through:
3. Minimizing Expense Costs
The four biggest expense costs in retail are:
Store Labour
Churn averages 40% a year in stores and is getting worse.
In the current market, stores can’t always recruit the staff cover they need. Of the 40%+ that leave in their first year, more than half leave in the first three months. Hence, many retailers minimize training costs as far as possible, until they know that workers will stay long enough to be worth it.
4. Maximizing Asset Productivity
Occupancy costs include all costs associated with the space, including:
These costs are controlled at headquarters by the Property or Real Estate Department. Stores are measured by the yield from that space, measured as sales per square foot and gross margin per square foot.
5. Reducing losses through bookkeeping errors, damage, and theft
The bulk of inventory management tasks are managed by the Buying and Merchandising Division. Some are managed by Warehouse Management and some by stores.
Stores are responsible for: