Stores Management

Anindo
Scope
• Store managers are responsible for increasing the productivity of two
of the retailer’s most important assets: the firm’s investments in its
employees and its real estate.
• Labor productivity is improved by effectively recruiting, selecting,
training, and managing store employees so that they perform at high
levels.
• In addition to increasing labor productivity, store managers affect
their stores’ profits by controlling costs.
Store Management
Responsibilities
 Maintaining the Employee Morale
• Store morale is important in motivating employees.
• Typically, morale goes up when things are going well and employees
are highly motivated.
• But when sales aren’t going well, morale tends to decrease and
employee motivation declines.
Approaches to build morale
• Holding storewide or department meetings before the store opens, during
which managers pass along information about new merchandise and
programs and solicit opinions and suggestions from employees.
• Educating employees about the firm’s finances, setting achievable goals, and
throwing a party when the goals are met.
• Dividing the charity budget by the number of employees and inviting
employees to suggest how their “share” should be used.
• Creating stickers that tell customers that this sandwich was “wrapped by
Roger” or this dress was “dry cleaned by Sarah.”
• Giving every employee a business card with the company mission printed on
its back.
 Evaluating Store Employees and Providing Feedback

• In large retail firms, the evaluation system is usually designed

by the human resource department.
• But the evaluation itself is done by the employee’s
immediate supervisor—the manager who works most closely
with the employee.
• Effective managers supplement formal evaluations with
frequent informal ones.
Factors Used to Evaluate Sales Associates at a Specialty Store
Six-Monthly Evaluation of a Sales Associate
Reducing Inventory Shrinkage
• An important issue facing store management is reducing inventory
losses due to employee theft, shoplifting, mistakes, inaccurate
records, and vendor errors.
• Examples of employee mistakes are failing to ring up an item when it’s
sold and miscounting merchandise when it’s received or during
physical inventories.
• Inventory shrinkage due to vendor mistakes arises when vendor
shipments contain less than the amount indicated on the packing slip.
• Although shoplifting receives the most publicity, employee theft
accounts for more inventory loss.
• In developing a loss prevention program, retailers confront a trade-off
between providing shopping convenience and a pleasant work
environment, on the one hand, and preventing losses due to
shoplifting and employee theft, on the other.
• The key to an effective loss prevention program is determining the
most effective way to protect merchandise while preserving an open,
attractive store atmosphere and a feeling among employees that they
are trusted.
• Loss prevention requires coordination among store management,
visual merchandising, and store design.
Calculating Shrinkage
• Shrinkage is the difference between the recorded value of inventory (at retail
prices) based on merchandise bought and received and the value of the actual
inventory (at retail prices) in stores and distribution centers, divided by retail sales
during the period.
• For example, if accounting records indicate that inventory should be $1,500,000,
the actual count of the inventory reveals $1,236,000, and sales were $4,225,000,
the shrinkage is 6.2 percent [($1,500,000 - $1,236,000)/$4,225,000].
• Reducing shrinkage is an important store management issue. Retailers’ annual loss
from shrinkage averages about 1.6 percent of sales. Every dollar of inventory
shrinkage translates into a dollar of lost profit.
 Spotting
Shoplifters
Store Designs
Grid Layout
• The grid layout, has parallel aisles with merchandise on shelves on both sides of the aisles. Cash
registers are located at the entrances/exits of the stores.
• The grid layout is well suited for customers who are primarily interested in the utilitarian benefits
offered by the store. They are not interested in the hedonic benefits provided by a visually exciting
design. They want to easily locate products they want to buy, and they make their purchases as
quickly as possible.
• Most supermarkets and full-line discount stores use the grid layout because this design enables
their customers to easily find the product they are looking for and minimize the time spent on a
shopping task that most don’t enjoy.
• The grid layout is also cost-efficient. There’s less wasted space with the grid layout than with other
layouts because the aisles are all the same width and designed to be just wide enough to
accommodate shoppers and their carts. The use of high shelves for merchandise enables more
merchandise to be on the sales floor compared with other layouts. Finally, because the fixtures are
generally standardized, the cost of the fixtures is low.
• One limitation of the grid layout, from the retailer’s perspective, is that customers typically aren’t
exposed to all the merchandise in the store because, due to the height of the shelves, they see only
products displayed in the aisle they are in. Thus the layout does not encourage unplanned
purchases.
Racetrack
Layout
• The racetrack layout , also known as a loop , is a store layout that provides a major aisle that
loops around the store to guide customer traffic around different departments within the store.
Cash register stations are typically located in each department bordering the racetrack.
• The racetrack layout facilitates the goal of getting customers to see the merchandise available in
multiple departments and thus encourages unplanned purchasing.
• As customers go around the racetrack, their eyes are forced to take different viewing angles rather
than looking down one aisle, as in the grid design.
• Low fixtures are used so that customers can see merchandise beyond the products displayed on the
racetrack.
• Because the store has multiple entrances, the racetrack layout places all departments on the main
aisle by drawing customers through the store in a series of major and minor loops. To entice
customers through the various departments, the design places some of the more popular
departments, like juniors, toward the rear of the store. The newest items are featured on the aisles
to draw customers into departments and around the loop.
• To lead customers along the racetrack, the racetrack is wider than other aisles and defined by a
change in flooring surface or color. For instance, the aisle flooring in the store is marble like tile,
whereas the department floors vary in material, texture, and color, depending on the desired
ambience
 Free-Form
Store Layout
• A free-form layout , also known as boutique layout , arranges fixtures and aisles
in an asymmetric pattern. It provides an intimate, relaxing environment that
facilitates shopping and browsing.

• However, creating this pleasing shopping environment is costly. Because there is

no well-defined traffic pattern, as there is in the racetrack and grid layouts,
customers aren’t naturally drawn around the store, and personal selling becomes
more important to encourage customers to explore merchandise offered in the
store. In addition, the layout reduces the amount of merchandise than can be
displayed.
 Visual Merchandising & Retail Atmosphere

• Visual merchandising is the presentation of a store and its merchandise in ways that will attract
the attention of potential customers.
• A retailer’s image depends heavily on its “atmosphere,” the psychological feeling a customer gets
when visiting that retailer. It is the personality of a store, catalog, vending machine, or Web site.
• For a store-based retailer, atmosphere (atmospherics) refers to the store’s physical characteristics
that project an image and draw customers. For a nonstore-based firm, atmosphere refers to the
physical characteristics of catalogs, vending machines, Web sites, and so forth. A retailer’s sights,
sounds, smells, and other physical attributes all contribute to customer perceptions.
• When a retailer takes a proactive, integrated atmospherics approach to create a certain “look”—
properly displayed products, stimulating shopping behavior, and enhanced physical environment
— it engages in visual merchandising. This includes such factors as the in-store layout, the type
of fixtures, store display windows, and aisle width—as well as how merchandise is visually
organized, the types of lighting, in-store signage, the choice of background music, the paint on
walls and graphics, the type of flooring, and the use of videos on in-store screens— that encourage
the target customer to shop longer. The goal of visual merchandising is to increase the sales per
square foot
Elements of Atmospherics
Types of
Fixtures
• The straight rack consists of a long pipe balanced between supports in the floor or attached to a
wall. Although the straight rack can hold a lot of apparel, it cannot effectively feature specific
styles or colors. All the customer can see is a sleeve or a pant leg. As a result, straight racks are
often found in discount and off-price apparel stores.
• A rounder , also known as a bulk fixture or capacity fixture , is a round fixture that sits on a
pedestal. Although smaller than the straight rack, it’s designed to hold a maximum amount of
merchandise. Because they are easy to move and efficiently store apparel, rounders are found in
most types of apparel stores. But, as with the straight rack, customers can’t get a frontal view of
the merchandise.
• A four-way fixture , also known as a feature fixture , has two crossbars that sit perpendicular on
a pedestal. This fixture holds a large amount of merchandise and allows the customer to view the
entire garment. The four-way is harder to maintain properly than is the rounder or straight rack,
however. All merchandise on an arm must be of a similar style and color, or the customer may
become confused. Due to their superior display properties, four-way fixtures are commonly
utilized by fashion-oriented apparel retailers.
• Gondolas are extremely versatile. They’re used extensively, but not exclusively, in grocery and
discount stores to display everything from canned foods to baseball gloves. Gondolas are also
found displaying towels, sheets, and housewares in department stores. Folded apparel too can be
efficiently displayed on gondolas, but because the items are folded, it’s even harder for customers
to view apparel on gondolas than it is on straight racks.
 LIGHTING

 Highlight merchandise
 Structure space and capture a mood
 Energy efficient lighting
 Downplay features

The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

 COLOR

 Warm colors (red, gold, yellow)

produce emotional, vibrant, hot,
and active responses
 Cool colors (white, blue, green)
have a peaceful, gentle, calming
effect
 Culturally bounded
 French-Canadians – respond more
to warm colors
 Anglo-Canadians – respond more
to cool colors

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

 MUSIC

 Control the pace of store traffic, create an

image, and attract or direct consumers’
attention
 A mix of classical or soothing music
encourage shoppers
 to slow down, relax, and take a good look at the
merchandise
 thus to stay longer and purchase more
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
 Music (Continued)

 J.C. Penney – different music at different times of

the day
 Jazzy music in the morning for older shoppers
 Adult contemporary music in the afternoon for 35-40
year old shoppers
 U.S. firm Muzak supplies 400,000 shops, restaurants,
and hotels with songs tailed to reflect their identity

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

 SCENT

 Has a positive impact on

impulse buying behavior
and customer satisfaction
 Scents that are neutral
produce better perceptions
of the store than no scent
 Customers in scented
stores think they spent less
time in the store than The McGraw-Hill Companies, Inc./Gary He, photographer

subjects in unscented
stores
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
 HOW EXCITING SHOULD A STORE BE?

 Depends on the Customer’s Shopping Goals

 Task-completion:
 a simple atmosphere with slow music, dimmer
lighting, and blue/green colors
 Fun:
 an exciting atmosphere with fast music, bright
lighting, and red/yellow colors

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

 WEB SITE DESIGN
(NON-STORE ATMOSPHERICS)

 Simplicity Matters
 Getting Around – Easy Navigation
 Let Them See It
 Example: Lands’ End My Virtual Model

 Blend the Web Site with the Store

 Prioritize

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

 Web Site Design (Continued)
 Type of Layout
 When shopping on the Web, customer are interested
in speed, convenience, ease of navigation, not necessarily fancy
graphics

 Checkout
 Make the process clear and appear simple
 Enclose the checkout process
 Make the process navigable without loss of information
 Reinforce trust in the checkout process
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.