Retail Operations

Chap 3
 Meaning
• Retail Operations refers to the daily functions of a
retailing business. The activities provide a shopping
experience for consumers to access and make
purchases. These functions include the layout and
design of stores (both online and physical locations),
inventory management, order fulfillment, customer
service, sales, accounting and returns.
 Elements Of Retail Operations
The operational strategy of a chain or retailer may vary depending on the type
of merchandise sold and the target audience.
The following are some typical elements of retail operations:

1. Physical Store Layout

Retail operations include the store’s layout for brick-and-mortar retail businesses.
Businesses use shelves, display cases etc, to make products easier to find.
It becomes easy for the consumer to choose the product without help and
make quick decisions.

2. Logistics
Logistics in retail refers to transporting goods between production sites, storage
facilities, and retail & customer locations. Retail operations specialists may
consider multiple modes of transportation, such as trucks, planes and trains, to
develop a transport strategy that satisfies customer expectations & saves
logistics costs.
3. Inventory
Retail operations staff may exhibit a portion of their goods in the store’s
main area. Retail store managers frequently keep most of the stock in a
warehouse and schedule regular delivery to the store and customers
accordingly.

4. Customer Service
Good customer service plays a vital role in attracting customers by
providing them with a delightful and exceptional customer experience.
Also, promotional offers and freebies help. Personalisation may also have a
significant impact on future client retention. A higher customer lifetime
value is the outcome of a higher retention rate.

5. Mode Of Payment
Customers may have a variety of payment alternatives in both offline and
online stores. Exploring different payment methods, such as credit cards,
mobile payment applications, and gift cards can help retail operations
experts make the purchase process quick and easy for customers.
6. Return/Exchange Request
Customers may return to the store to exchange a product for another if
they need it in a different size or colour or for multiple other reasons.
Retail operation staff assists consumers in getting the correct item or
making a refund request if the customer requirement is not fulfilled.

Conclusion
All the mentioned elements can help optimise retail operations, but must
be used carefully to achieve the best results.
 5 S of Retail Operations
The term 5S comes from five
Japanese words:
1. Seiri
2. Seiton
3. Seiso
4. Seiketsu
5. Shitsuke
In English, these words are often
translated to:
1. Sort
2. Set in Order
3. Shine
4. Standardize
5. Sustain
1 Sort:
The first step is sorting and organizing all store or warehouse items. This
involves removing any items that are not needed, disposing of or donating
items that are damaged or obsolete, and grouping similar items together.

2 Set in Order:
Once all items are sorted, the next step is to set them in order. This involves determining
the most efficient and effective layout for the store or warehouse, grouping items by
type or category, and labeling and assigning locations for each item.
3 Shine:
The shine step involves thoroughly cleaning and maintaining the store or
warehouse to ensure a safe and pleasant environment for customers and
employees. This includes sweeping floors, dusting shelves, and maintaining
equipment.

4 Standardize:
Once the store or warehouse is organized and clean, the next step is
establishing standard procedures and guidelines for maintaining this
state.
This involves creating policies for storing and labeling items, scheduling
regular cleaning and maintenance, and training employees on proper
techniques.
5 Sustain:
The final step in retail operations jobs is to sustain the improvements
made by continuously monitoring and maintaining the system.
This involves regular audits and reviews to ensure that the store or
warehouse still functions efficiently, addresses issues, and constantly
improves processes and procedures.
Important factors influencing location of a
Retail Store
1. Your customer and the population

Before deciding on a city or state to open a

retail store, doing an extensive research on the
area.
Read the local papers and talk to other local
small businesses.
Consult the local library, chamber of commerce,
or the Census Bureau for demographic
information on the area.
From any of these sources, you can find
information about the region’s population,
income groups, and median age.
Know who your clients are, so choose a place
close to where they live, work, and shop.
2. Traffic, visibility, and accessibility

By having larger stores nearby, smaller

establishments may benefit from foot traffic.
Along these lines, a few things that retailers should
think about are:-
How many people pass by the place walking or by
car?
Is public transportation well-served in the area?
How easy is it for consumers and delivery vehicles
to enter and exit the parking lot?
Is there sufficient parking?
When assessing visibility, take the customer’s
perspective into account.
In many cases, the more accessible your retail store
is, the less advertising you need to run.
It will be more difficult to promote a specialist retail
establishment located six miles outside of town
than a shopping center.
3. Zoning, signage, and planning
Make sure you understand all the rules, policies,
and processes that apply to your retail shop site
before signing a lease.
For information on signage laws, contact your local
authorities.
There may be restrictions on the size and signage
you can use to promote your business.
Inquire about any restrictions that may apply to
your retail operation, as well as any prospects that
may alter traffic patterns, such as highway
construction. Zoning
There are three main areas in
the sales room:
- entrance area;
- cash desk area;
- The main customer flow area.
4. Neighbors and competition
Other local businesses in your potential
location can help or hinder your retail store.
Check to see if the types of businesses in
the area are appropriate for your store. for
example, If next door is a budget variety
store, a high-end designer boutique will
have challenges competing.
To get the best results, put it near a
manicure or hair salon, which tends to
attract the same demographic of clients.
5. Costs of the location
Consider all location-based expenditures when
choosing a retail store location, including the
base rent such as:-

Who is responsible for maintenance and security?

Will you need to paint or alter the space to make
it suitable for your needs?
Will the retailer be liable for real estate taxes?
The place you can afford now may differ from
what you can afford later.

Making sales predictions for a new firm is tough.

One way to figure out how much rent you can
afford is by finding out how much sales similar
retail shops make and how much rent they pay.
6. Personal aspects
Consider work-life balance issues such as
the distance between your store and your
house, as well as other personal
considerations, if you plan to work in your
store.
If you spend so much time going to and
from work, the benefits of becoming your
own boss may be overshadowed by the
commute.
Furthermore, various constraints imposed
by a landlord, management company, or
community on a tenant can limit a retailer’s
independence.
7. Final points to consider
When it comes to choosing your retail store
location, you may need to take extra
precautions.
Make a list of any unique aspects of your
company that need to be addressed such
as:-

Will the store necessitate special lighting,

fixtures, or other hardware?
Are there restrooms for both employees
and customers?
Is the neighbourhood adequately
protected by fire and police?
Is there any sanitation service?
Is there a canopy over the building that will
provide shelter if it rains?
Are there any limits on Sunday sales?
Market Area Analysis
Components of Market Area Analysis
1

4
Importance of Market Area Analysis
1

4
Trade Area Analysis
Components of Trade Area Analysis
1

4
Importance of Trade Area Analysis
1

4
Rating Plan Method
 Steps in Rating Plan Method
1

4
Importance of Rating Plan Method
1

4
Site Evaluation
 Components of Site Evaluation
1

4
 Importance of Site Evaluation
1

4
 Retail Operations
 Stores Layout and Visual Merchandising
 Stores designing
 Space Planning
 Inventory Management
 Merchandise Management
 Category Management
Stores Layout and Visual Merchandising
A retail store layout (whether physical or digital) is the strategic use
of space to influence the customer experience. How customers
interact with your merchandise affects their purchase behavior.

Store layout Conflicting objectives:–

 Ease of finding merchandise versus varied and interesting layout
 Giving customers adequate space to shop versus use expensive
space productively
 Free Flow Layout
•Free-Flow Layout is a type of store layout in which fixtures and
merchandise are grouped into free-flowing patterns on the sales floor.

Advantages Disadvantages
1. Allowance for browsing 1. Loitering encouraged
and wandering freely 2. Possible confusion
2. Increased impulse 3. Waste of floor space
purchases 4. Cost
3. Visual appeal 5. Difficulty of cleaning
4. Flexibility
Best suited for:

 Fashion stores.
 Boutique shops.
 Stores with a
limited product
range.
 Grid Layout
•Grid Layout is a type of store layout in which counters and fixtures are
placed in long rows or “runs,” usually at right angles, throughout the
store.
• Efficient use of space
• Simple and predictable to navigate • Focal points at aisle ends

Advantages Disadvantages
1. Low cost 1. Plain and uninteresting
2. Customer familiarity 2. Limited browsing
3. Merchandise exposure 3. Stimulation of rushed
4. Ease of cleaning shopping behavior
5. Simplified security 4. Limited creativity in décor
6. Possibility of self-service
Best suited for:

Supermarkets
 Discount stores
 Drug stores.
 Other
businesses with
large
inventories.
 Loop Layout
•Loop Layout is a type of store layout in which a major customer aisle
begins at the entrance, loops through the store, usually in the shape of
a circle, square, arrectangle, and then 37 of a circle, square,
arrectangle, and then returns the customer the front of the store.
Advantages Disadvantages
1. Exposes customers to the greatest amount 1. As the layout concentrates on
of merchandise predetermined pathways, it can lead
2. Encourages customers to make impulse to congestion in the high-traffic areas
decisions as the customer follows the of the store.
predetermined pathway for shopping. 2. Certain types of products may not
3. Enables easy navigation for customers as the work well with this layout as it may
products are displayed in a circular or loop restrict movement around the store
structure. freely.
4. Even for a store with a large number of 3. Since the layout is followed throughout
products, the loop layout can help the store, it can be difficult to choose
efficiently organize the store structure. the right product placement strategy
or decide which product should go
where.
Best suited for:

 Grocery stores.
 Department
stores.
 Large retail
stores.
 Spine Layout
•Spine Layout is a type of store layout in which a single main aisle runs
from the front to the back of the store, transporting customers in both
directions, and where on either side of 42 both directions, and where
on either side of this spine, merchandise departments using either a
free-flow or grid pattern branch off toward the back aisle walls.

Advantages Disadvantages
1. Easy for customers to navigate through the 1. Works best in larger stores than in small
store and find what they are looking for. ones due to the requirement for big
2. Ideal for stores with a large product range, space.
allowing for effective product placement. 2. The central aisle can become
congested and crowded in high-
traffic areas of the store.
Best suited for:

 Supermarkets.
 Hardware stores.
 Stores with a large
product range.
 Angular Store Layout
•An angular store layout is simply a variation of the spine store layout.
Instead of having a spine aisle, there are multiple aisles arranged at
an angle to create a more interesting shopping experience.

Advantages Disadvantages
1. The angled aisles create a more unique and 1. The angled aisles can create
creative shopping experience for customers. confusion amongst customers,
2. The angular store layout allows retailers to especially while navigating, leading to
maximize their available space, even with more difficulty in finding out what they
limited products.. are looking for.
Best suited for:

 Home improvement
stores.
 Fashion and lifestyle
stores.
 Electronics stores..
 Boutique Store Layout
•A boutique store layout is similar to a free-flow store layout that you
commonly see in smaller stores. This layout doesn't follow a specific
structure and is designed in a way that the products are displayed
and arranged aesthetically for a warm and inviting shopping
experience.

Advantages Disadvantages
1. A boutique store layout encourages 1. This layout won't work for stores with a
customers to explore the store due to its large product range as it may lead to
pleasing aesthetics. cluttered displays.
2. The open layout allows retailer store owners 2. The boutique store layout may not
to create creative product displays that appeal to all customers, as some may
attract customers. prefer a more structured shopping
3. The boutique store layout is ideal for smaller experience.
stores as it creates the illusion of a larger
space.
Best suited for:

 Small fashion stores.

 Independent boutique
 Specialty stores.
 Diagonal Store Layout
•A diagonal store layout features aisles arranged diagonally
throughout the store. It creates an open and more inviting space by
breaking the monotony of straight lines while keeping customers
interested. This kind of layout is used by modern stores.

Advantages Disadvantages
1. The diagonal aisles in this layout create a 1. The diagonal aisles could lead to
more interesting shopping experience for confusion amongst some customers,
customers. making it difficult to find what they are
2. The diagonal layout is ideal for stores with a looking for.
large product range for effective product 2. Organizing products in this layout
could be difficult.
Best suited for:

 Department stores.
 Fashion and lifestyle
stores.
 Grocery stores.
 Large retail stores with
diverse range of
products.
 Geometric Store Layout
•A geometric store layout features a variety of shapes and angles
throughout the store, creating an interesting and unique shopping
experience.
The placement of products and other elements in the store is in specific
angles or shapes.
It aids in the easier finding of products they are looking for.

Advantages Disadvantages
1. The unique patterns and angles create a 1. The unique shapes and patterns may
unique shopping experience for customers. confuse some customers, making it
2. This type of store layout allows you to display difficult for them to find what they are
and showcase your product creatively. looking for.
3. It works well for stores with a small to medium 2. The geometric store layout may not be
product range, allowing for effective suitable for stores with a large product
product placement. range as displaying them in different
shapes and angles could lead to the
cluttering of displays.
Best suited for:

 Fashion and apparel

stores.
 Boutiques.
 Specialty stores.
 Hybrid Store Layout
•A hybrid store layout is a retail store design that combines two or more store
layouts or multiple layout elements to create a unique and personalized
shopping experience for customers.

The hybrid store layout is most often used by retailers who want to provide a
one-of-a-kind experience within their stores for the customers or reflect their
brand identity distinctively.

Advantages Disadvantages
1. The hybrid store layout enables retailers to 1. Creating a hybrid store layout or
create a unique shopping experience combining multiple layouts can be
through various elements. challenging and requires careful
2. Combining different layouts allows for planning and execution.
creative product displays that quickly gain 2. The hybrid store layout may not be
customers' attention. suitable for smaller stores, as it requires
3. The hybrid store layout is ideal for stores with a lot of space.
a large product range due to the large floor
space.
Best suited for:

 Large department
stores.
 Grocery stores with a
diverse product range.
 Large retail stores.
 Store design
Store design is the architectural character or decorative style of a store that
conveys to the customer “what the store is all about.” Stores vary so much in kind,
size, and geographical location that it is difficult to generalize about design.
The architecture of the store’s exterior creates an initial impression..
The first step of store design is the development of a comprehensive plan
for the overall requirements of the store. Based on market potential (the
sales estimate and money received per square foot of selling area),

1 Customer Focus

2 Store Image

3 Holistic Approach

4 Technology and Planning

1 Customer Focus:

∞The focus of a store design should always be the customer.

∞If the store design and layout are appealing, the customer will also form
an appealing image.
∞It is easy to get into the technical aspects of store design and forget that
the retailer’s reason for existence is the customer.
∞The design should be focused on forming and maintaining an image,
while at the same time making the layout as accessible as possible for
shoppers.
∞Management must determine the overall image that would best
differentiate the store and attract the target market.
2 Store Image:

∞A store design serves two, often opposing, functions.

∞When customers enter a store, they want the displays and departments
to tell them all about the store.
∞The image the store is attempting to project should be immediately
obvious to potential customers.
∞If the store wants price as the predominant image, departments
emphasizing this aspect should be placed near the entrance.
∞Managers should give the best space to the departments that say to the
customer, “This is what I am”.
3 Holistic Approach:

∞A store’s design should match the store’s character, i.e;. consideration

should be given to the type of store image the merchant hopes to
project.
∞It includes exterior design and interior arrangements for selling and non-
selling activities.
∞The design should match with that of other stores around it; it should also
enhance the salability of the merchandise within the store and be in
good taste.
∞The store design should have a single theme or image throughout.
∞Attempts to create several images often lead to greater competition.
∞This is because the retailer is no longer competing against stores within a
single image category, but instead with stores in several categories.
 4 Technology & Planning:
∞Store designs are becoming more complex as new formats evolve.
∞For this and efficiency reasons, it is becoming more common to rely on
technology to assist in developing a store layout design.
∞Computer-aided design (CAD) helps plan stores that are more space-efficient.
∞Planning can be done quickly and changes are easy to make.
∞In the store itself, new combinations of interactive and multimedia technologies
will change the way retailers design for direct customer contact and information
assistance.
∞For example, a self-service concept store may be developed where kiosks
replace sales associates, providing product information and updates on
availability of merchandise.
∞Retailers will likewise be exploring creative linkages between participation in
electronic home shopping channels and in-store selling.
∞By interactive technologies, consumers will be able to view merchandise &
Purchase from home.
 Objectives of Good Store Design
Design should:

1 be consistent with image and strategy

2 positively influence consumer behavior
3 consider costs versus value
4 be flexible
5 recognize the needs of the disabled
 Store Front Design
Storefronts must:–

1 Clearly identify the name and general nature of the store

2 Give some hint as to the merchandise inside
3 Includes all exterior signage
4 In many cases includes store windows
an advertising medium for the store –window displays should be changed
often, be fun/exciting, and reflect merchandise offered inside
Important Elements in Retail Store Design
1 Traffic Flow
2 Lighting
3 Displays
4 Checkout Area
5 Style
6 Shelving and Racks
7 Leave Retail Store Design to the Experts
Traffic Flow Lighting

Disorderly aisles can leave customers Lighting might not seem like an important
feeling overwhelmed, cramped, and consideration in retail store design, but it
unsatisfied with their overall shopping can be crucial for highlighting products
experience. and impressing customers.

Interior fitout specialists can assist with shelving, rack, The best lighting can assist with good
and table placement for maximum customer moods and even help eliminate the dark
convenience while also prioritising that all-important corners of your store that might limit your
decompression zone that customers need to get sales potential.
their bearings when entering a business.
Natural lighting is one of the best forms to
show off your products in all their glory,.
Displays Checkout

Arrangement of displays can significantly It’s easy to assume that the checkout
impact customers’ shopping experience. doesn’t matter as customers are already
However, there’s no one-size-fits-all lined up with goods to buy.
approach to store layout, and many However, it’s much easier to lose a sale if
different options might suit your unique a customer is uncomfortable with their
business model. checkout experience.

Avoid overcrowding the space and keep

clutter to a minimum so that customers
can space themselves out.
Style Shelving and Racks

Improving store image might provide a more The shelving and racks for display of goods
memorable shopping experience by are just as crucial as the high-quality
prioritising features that reflect the branding. products offereds.

Avoid mismatching displays, which can

For example, a sustainably focused store
make a shop look cluttered, and ensure all
might have more natural materials like
display tables, shelves, and racks, are
bamboo, wood flooring, and plenty of green
consistent in their measurements and
and natural colours.
materials.
A luxury goods store may have high-end
materials like chrome and precious metals Display consistencies can enhance the
might also be worth your consideration. professionalism and style of a business.

Style should be consistent throughout the

store, so the customers can remember their
shopping experience for all the right reasons.
Leave Retail Store Design to the Experts

Appoint an interior design to build fitout specialists to work with

you and transform your retail business from ordinary to
extraordinary.
 Retail space planning
Retail space planning refers to the idea of designing a retail store layout that
influences a customer’s shopping experience
Importance 0f Retail Space Management

#2 Customers can easily find the products they need

 By organization, your store properly and by allotting proper space
to each product and placing them at the right place on the shelf
will help your customer to find them easily and without getting
frustrated.
Importance 0f Retail Space Management

#3 It is helpful in controlling the rush in the peak hours

 Choosing an effective layout for a store is important as it will not
only help keep the store well organized but will also keep the rush
moving during peak hours of a day.
 Inventory management
Inventory management is the process of tracking and controlling the
quantity, cost, and location of inventory, helping businesses identify how
much stock to order at what time. It’s a crucial part of the supply chain
process, ensuring that the right amount of product is available at the right
place and time.
Inventory management
2. Outline Your Purchasing & Receiving Procedures
 Purchase order or PO: To purchase inventory, place orders with suppliers
based on your requirements, including delivery and payment terms.

 Material Received or MR: After placing an order with a supplier, you will
receive materials or products based on the purchase order. You may receive
the materials fully or partially.
2. Outline Your Purchasing & Receiving Procedures
 Purchase Bill or BL: Create a bill based on the materials received (MR).

 Purchase Payment: Make payments to suppliers based on the bill received

for the materials or products purchased.
2. Outline Your Purchasing & Receiving Procedures
 Sales Order or SO: Create an entry order based on the specific requirements of
the customer for the products or services they have requested.

 Material Issue or MI: Release or dispense the products from the inventory or
store based on the sales order received from the customer, ensuring that the
correct quantity and specifications are provided.

 Delivery Order or2. DO: Generate

Outline a delivery
Your Purchasing order Procedures
& Receiving to arrange for the
transportation and delivery of the issued products to the customer, ensuring
that the order is fulfilled accurately and promptly.

 Invoice or IN: Create an invoice based on the delivery order, accurately

reflecting the products and services provided to the customer, as well as any
applicable taxes and fees.

 Payment Received or PR: Receive payment against the invoice, ensuring that
the payment amount matches the invoiced amount and that all payment
details are accurately recorded.
2. Outline Your Purchasing & Receiving Procedures
 Return Product: Return the product to your supplier (in the purchase process) or
receive product returns from your customers (in the sales process).

 Credit Note: A credit note is a financial document for the returned product.

 Refund or use for future payment:

Refund the amount based on a credit note for returned products in the purchase
process or provide2.money
Outline back to your customer
Your Purchasing & Receivingin the sales process.
Procedures
Alternatively, the balance can be used for future purchase payments in the
purchase process, or customers can use it to buy products from you in the sales
process.
4. Stock Transfer:
 In case of multiple locations or warehouses, there is a need to transfer stocks
from one location to another to meet customer demand fluctuations.
 It’s important to rearrange stock levels in different locations based on trends
and demand to ensure optimal inventory levels.

Stock transfer is a simple process in a retail store.

 Transfer Issue: Issue products
2. Outline based on&demanded
Your Purchasing location’s requirements.
Receiving Procedures

 Transfer Order: Make a Transfer Order based on issued products.

 Transfer Received: Receive products at the demanded location.

5. Production:
 The production process is the process of converting raw materials into finished
products. It includes all the steps from acquiring raw materials to delivering the
finished product to the customer.

 Bill of Materials(BOM): A bill of materials or product structure is a list of the raw

materials, sub-assemblies, intermediate assemblies, sub-components, parts, and
the quantities of2.each needed
Outline to manufacture
Your Purchasing & Receivingan end product.
Procedures

 Production Order: A production order is a document that tells a manufacturer

or other production facility what to produce, how much to produce, and when
to produce it.

 Purchase, Sale, Return, Transfer, and Production are the five basic inventory
tasks for retail inventory management.

 That’s why knowledge of inventory management is very important for retailers.