Leveraging retail operations to drive in-store profitability

Today one of my retail fraternity members Vijay Mahesh asked me a very thought-provoking question, the question was:

“How can we optimize retail store operations to impart better customer experience and increase overall profitability?”

Though the question sounds simple but believe me it is one of the most complex questions wherein multiple factors come into play whether it is the merchandise in-store, sales conversion, average sales per salesperson, or the number of staff dedicated to assisting the customers.

My suggestion to my friend was to review the following metrics of your store and try to address each one of them individually to improve the current stats.

Metrics like:

1. ?Total sales?(Like for like /organic)
2. ?Sales by store (if you run multiple locations)/ sales by category i.e. category contribution % to sales.
3. Sales per square foot
4. Gross margin return on investment (your profit return on the amount invested in inventory)
5. Top-selling items
6. Worst-selling items
7. Average sales per employee
8. Inventory turnover rate
9. Conversion rate
10. Cost of goods sold?(you may get this figure from the buyer or finance team member)
11. Aging analysis of the stocks in store (itemize listing so that you could plan immediate markdowns with your Merchandise planner).
12. Most important- review your out-of-stock products per category and see if you divert the customer to your online store to purchase those out-of-stock items on the floor so that you don’t lose the sale and customer. Bring Omni channel experience to your store business.

Action points (sales team focus)

1.?????Check if each and every member on the floor knows his daily sales store target (which is broken down from the monthly targets)

2.?????Check if the “Go- backs” from the fitting rooms are being allocated to designated areas or shelves (in case you are in a fashion apparel business). Review, why the people are selecting the garment for trials but do not end up purchasing it. This important insight needs to be discussed with the buyer or merchandise planner.

3.?????Are you celebrating achievements in the store every night upon achieving your daily sales or weekly sales targets?

4.?????Does your sales staff, and the in-store visual merchandising team feels excited about your store concept? Are you listening to them on daily basis, their suggestions, complaints, etc?

5.?????Are your customer sales reps addressing the returns complaints as per the SOPs? Are you speaking to the customer for their feedback on the service satisfaction?

I had previously penned down an article on retail operations wherein I had interviewed one of the retail stalwarts?& my friend Pradeep Chechani

Read the article at your convenience here.

https://www.retailritesh.com/2019/06/store-operations/

I encourage my retail fraternity to feel free to ask their questions and I shall try to answer them through my blog post or videos.?

I believe in growing knowledge & learning every day by sharing each other experiences.

Retailers who want to grow and scale their businesses and need a helping hand to make their vision into reality may reach out to me directly by mailing me at?[email protected]

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