The Importance of Store Manager Autonomy in Retail and Beyond

I've engaged with numerous current and former retail executives over the past few months to discuss the topic of store manager autonomy. As anticipated, this is a complex and nuanced issue that remains a priority for many retailers and extends its relevance to various other industries, including supply chain, distribution, and life sciences. Professionals across these sectors are eager to explore and discuss this topic.?

From my extensive research and years of experience in retail, I've learned that there is no one-size-fits-all solution.?

The level of autonomy granted to store managers must be tailored to the specific business model and attributes of each organization. Let’s outline some of the most impactful factors to consider when determining the appropriate level of autonomy for store managers.

Context and Insights?

Before diving into these attributes, here are a few direct quotes from my interviews that help set the context:

• "We found that the more entrepreneurial the store manager was, the more they hustled. They were better at knowing the right merchandise and how to feature it in their stores, but it was harder to replicate their success in other stores."
• "I like some form of human intervention—corporate should centralize 80-90% of the work, but there should still be some level of human intervention."
• "Many managers in stores today don’t know how to relate their workload to making a profit in their store. They can’t relate financials to how they run the business. The ones that understand the P&L and financials know how to make money."
• "It's tough because managers can't do everything. They have to deal with the workforce, customers, their internal constituents, and their community—they wear a lot of hats and need a lot of skills."

Key Considerations

Who Are We?

The type of retailer and the desired customer experience are crucial in determining the level of autonomy for store managers. For example, Dollar Tree is different from Lowe’s. At Lowe’s, a manager needs employees who can assist professional contractors, make keys, mix paint, and perform other specialized tasks. In contrast, a Dollar Tree manager focuses on keeping the store stocked and ensuring that checkout lines move quickly.

The best manager at Dollar Tree might not be able to walk into a Lowe’s and excel on Day 1. Without formally working with these two retailers, it's evident that a Lowe’s store manager would benefit from more autonomy than a Dollar Tree manager. The Lowe’s manager, for example, might need to provide a specialized experience for their largest professional contractor customer, which requires more decision-making power.

Factors such as store size, type of merchandise, number of roles, customer service requirements, and product specialization all play a role. Discount stores with simple merchandise selections aim to keep shelves stocked and facilitate a quick shopping experience, requiring less customer service. Conversely, more specialized retailers necessitate greater autonomy for store managers to serve customers effectively.

Who Do We Hire?

Hiring the right store manager involves considering the complexity of the store and the skills required. A big-box store that carries groceries and general merchandise requires staff to manage diverse product categories like cold food, apparel, and electronics—necessitating specialized knowledge and training. In contrast, a smaller store that sells only shoes, hats, or mobile phones requires less product knowledge and specialization.

Attributes to consider when hiring or promoting managers include multitasking, people management, creativity, previous experience, entrepreneurial desire, and compensation. It's crucial to be thoughtful and deliberate in defining the manager profile; a poor fit can lead to high turnover. Considerations include progression plans, promotion opportunities, retirement plans, and backfill strategies.

How much of the hiring process is luck vs. an intentional system? How do you maintain a pipeline of great hires? Finding the right person who will stay in a challenging role for a long time is critical. The goal is to avoid "golden handcuffs" and ensure the job remains enjoyable rather than feeling like a trap.

What Skills Are Involved in Operating?

Running a typical retail store requires knowledge of merchandising/selling, operations, financial management, and customer service. A great store manager doesn't need to be an expert in all these areas but should know enough to influence and lead others to drive success. Retailers should implement intentional plans to upskill and build knowledge in these areas within their teams.

I’ve learned firsthand that different personas exist in the store manager population. Some people ascend to that level through great work at increasing sales through merchandise and inventory strategy and knowledge. Other folks are great operators and better at managing the costs and big picture while pushing the retailing and selling to their staff.? Others are even just great people leaders and push it all to their staff. Regardless of which persona the store manager has, can they upskill or learn enough about the other areas to be able to effectively lead the store overall?

Objective Evaluation of Store Managers

How do you know if a store manager is doing well? It's not always clear or easy to identify which KPIs are most applicable to a great running store. There are the obvious KPIs such as sales and profitability. But underneath those two KPIs lie other critical sub-KPIs that can make the measurement more objective than subjective.

One example is shelf integrity: If a district manager is coming to tour the store, there are many ways to hide underlying issues. Before the visit, the store might be rushing to make the store look great and might “fake out” where product is out of stock by moving over product from the next facing. If this isn’t caught later, the stocking team might not realize the fake-out and fail to replace the area with the correct item. The correct item might then sit in a case in the backroom and not sell for weeks before someone figures out the mistake.

In this case, subjectively the store looked great and full when the district manager visited; objectively, this operational practice adversely affected the sales of an item. This can have both upstream and downstream implications: inventory management might order less of the item for the next buy, the supply chain becomes impacted, and the item might incur markdowns or go to clearance without a chance to be sold. The store manager subjectively might be looked at as excellent based on the full aisle of merchandise. Objectively, this store manager allowed a practice that negatively impacted the overall assortment sales.

Given the critical nature of this element—how best to objectively measure the performance of a store manager — I'll be diving further into this topic in my next article.

Conclusion

Store manager autonomy is a multifaceted issue that requires careful consideration of various factors—including the type of retailer, the hiring process, and the skills involved in operating a store. By understanding and addressing these components, retailers can tailor the level of autonomy granted to store managers, ultimately enhancing their ability to serve customers effectively and drive business success.

Further reading in the series

The Unsung Heroes of Retail: The Art and Science of Mastering Store Operations

Memorable retail experiences often result from well-managed operations, where smooth staffing and scheduling ensure a frictionless customer experience. Retailers rely on centralized planning and local manager autonomy to balance labor needs, but effective store operations hinge on skilled, well-trained managers who navigate unpredictable factors like customer behavior and local events.

Mastering Retail Store Management: Key Areas for Success

Retail success relies heavily on skilled store managers with strong leadership, hands-on experience, and holistic business acumen across operations, merchandising, customer relations, and financial management. While technology supports operations, continuous training and real-world experience are crucial for effective management, with AI enhancing future capabilities.