This document discusses key considerations for operating a retail business. It covers developing an operations blueprint to outline all store functions and responsibilities. Store format, size, and space allocation are also important decisions regarding prototype stores versus tailored local stores. Maintaining the store, managing inventory, ensuring security, and purchasing appropriate insurance are also essential operational aspects covered. Centralized control while allowing flexibility and adapting to local needs are important challenges for retail management.

1. Operating a Retail Business
Dr. Gopal Thapa
Tribhuvan University
Kathmandu,Nepal
Email:thapazee@gmail.com

2. Operating a Retail Business
 Operations blueprints
 Store format, size and space allocation
 Personnel utilization
 Store maintenance, energy management, and renovations
 Inventory management
 Store security
 Insurance
 Credit management
 Computerization
 Outsourcing
 Crisis management

3. Operation Blueprint
 An operations blueprint systematically lists all the operating functions to be performed,
their characteristics and their timing.
 While developing a blueprint, the retail specifies, in detail, every operating function
from store’s opening to closing – and those responsible for them.
 E.g. who opens the store? When? What are the steps?
 The performance of these tasks must not be left to chance.

4. Operation Blueprint
 A large or diversified retailer may use multiple blueprints and have separate blueprints
for such areas as store maintenance, inventory management, credit management and
store displays
 When a retailer modifies its store format or operating procedures, it must also adjust the
operating blueprints.

5. Store Format, Size and Space Allocation
 With regard to store format, it should be determined whether productivity can be raised
by such tactics as locating in a planned shopping center rather than in an unplanned
business district, using prefabricated materials in construction and applying certain
kinds of store design an layouts.

6. Store Format, Size and Space Allocation
 A key store format decision for chain retailer is whether to use prototype stores
whereby multiple outlets conform to relatively uniform construction, layout, and
operation standards.
 Such stores make:
 Centralized management control system easier
 Reduce construction costs, standardize operation, facilitate the interchange of employee
among outlets
 Allow fixtures and other materials to be bought in quantity and
 Display a consistent chain image

7. Store Format, Size and Space Allocation
 Yet, a strict reliance on prototypes may lead to:
 Inflexibility
 Failure to adapt to or capitalize on local customer needs
 To little creativity
 Together with prototype store, some chains use rationalized retailing programs
to combine a high degree of centralized management control with strict
operating procedures for every phase of business.
 Most of these chains’ operations are performed in a virtually identical manner
in all outlets.
 Rigid control and standardization make this technique easy to enact and
manage and a firm can add a significant number of stores in a short time
 They operate many stores that are similar in size, layout and merchandising

8. Store Format, Size and Space Allocation
 Many retailers use one or both of two contrasting store-size approaches to be distinctive
and to deal with high rents in urban areas
 At the same time, some retailers believe large stores are not efficient in serving
saturated or small markets
 They have been opening smaller stores or downsizing existing ones because of high
rents

9. Store Format, Size and Space Allocation
 Retailers often focus on allocating store space
 They use facilities productively by determining the amount of space, and its placement,
for each product category
 Sometimes, retailer drops merchandise lines because they occupy too much space
 With top-down space management approach, a retailer starts with its total available
store space, divide the space into categories and then works on product layouts

10. Store Format, Size and Space Allocation
 In contrast, a bottom-up space management approach begins planning at the individual
product level and then proceeds to the category, total store and overall company levels
 Tactics to improve store space productivity:
 Vertical display, which occupy less room, hang on store walls or from ceilings.
 Formerly free space now has small Point-of-sale display and vending machines

11. Store Format, Size and Space Allocation
 Sometimes, product displays are in front of stores
 Open doorways, mirrored walls and vaulted ceilings give small stores a large
appearance
 Up to 75% or more of total floor space may be used for selling
 The rest is for storage, rest rooms and so on
 Scrambled merchandising (with high profit, high turnover items) occupies more space
in stores, in catalogs, and at web sites than before
 By staying open longer, retailers use space better

12. Store Maintenance
 Store maintenance encompasses all the activities in managing physical activities
 These are just some of the facilities to be managed:
Exterior:
 Parking lot
 Points of entry and exit
 Outside signs and display windows
 Common areas adjacent to a store (e.g. sidewalks)
Interior:
 windows, walls, flooring, climate control and energy use, lighting, displays and signs , fixtures and ceilings

13. Store Maintenance
 The quality of store maintenance affects:
 Consumer perceptions
 The life span of facilities
 Operating cots
 Consumers do not like stores that are decaying or otherwise
poorly maintained
 This means promptly replacing burned-out lamps and
periodically repainting room surfaces
 Thorough, ongoing maintenance may extend current facilities for
a longer period before having to invest in newones

14. Store Maintenance
 At home centers, the heating, ventilation, and air conditioning equipment lasts an
average of 15 years
 Display fixtures an average of 123 years
 Interior signs an average of 9 years
 But maintenance is costly
 In a typical year, a home center spends $10000 on floor maintenance alone

15. Inventory Management
 A retailer uses inventory management to maintain a proper merchandise assortment
while ensuring that operations are efficient and effective
 Some operational issues in retail inventory management
 Handling of merchandising from different suppliers
 Size of inventory on sales floor, warehouse and storeroom
 Movement of inventory from non-selling to selling areas
 Trade-offs between faster delivery and higher shipping costs
 Supplier support in storing merchandise or setting up displays
 Acceptable level of in-store merchandise breakage
 Items require customer delivery: which, when and by whom

16. Store Security
 Store security relates to two basic issues: personal security and merchandise security
 Many shoppers and employees feel less safe at retail establishments, than they before,
with these results:
 Some people are unwilling to shop at night
 Some people age 60 and older no longer go out at all during the night
 Shop shoppers believe malls are not as safe as they once were
 Parking is a source of anxiety
 In response, retailers need to be proactive
 Eg. Camera surveillance, security presence

17. Store Security
 Uniformed security guards provide a visible presence that reassures customers and
employees.
 It is a warning to potential thieves and muggers.
 Undercover personnel are used to complement uniformed guards
 Brighter lighting is used in parking lots, which are also patrolled more frequently by
guards in team
 TV cameras and other devices scan the areas frequented by shoppers and employees
 Some shopping areas have curfews for teenagers (controversial tactic)
 Bank deposits are made more frequently
 Access to stock backroom facilities has been tightened

18. Insurance
 Among the types of insurance that retailers buy are workers’ compensation, product
liability, fire, accident, property, and officers’ liability
 Many firms also offer health insurance to full time employees.
 Sometimes they pay the entire premiums; other times, employees pay part or all of the
premiums

19. Insurance
 Insurance decisions can have a big impact on a retailer
 In recent years, premium have risen dramatically
 Several insurers have reduced the scope of their coverage( do not cover all aspects, they now
require higher deductibles )
 Insurance against environmental risk
 To protect them financially, a number of retailers have enacted costly programs aimed at lessening
their vulnerability to employee and customer insurance claims due to unsafe conditions as well as
to hold down premiums
 E.g. No-slip carpeting, flooring, rubber entrance mats, separate storage area, frequently mopping
and inspecting wet floors, doing more elevator and escalator checks, building more fire-resistant
facilities