Retail Management

Those in the retail industry know that good business practices can affect success. When you’re running a chain of retail stores, whether online or offline, there’s a lot that you need to do to ensure your business stays on the right track.

Good retail management helps your business gain efficiency, boost customer experience, and streamline your processes.

In this article we will cover the following:

• What is retail management?
• Importance of good retail management?
• Key operations involved in retail management
• How to gain efficiency in retail management

What is retail management?

Retail management is the process of running and overseeing the daily business operations of retail stores, whether online or offline. This includes ensuring the right inventory levels, managing your sales, delivering orders to your customers, improving customer loyalty, tracking financials and making decisions to drive growth.

If you sell on more than one single channel, more operational complexities may be involved in the retail management process.

The ultimate goal of a retail business is to boost profitability. To do so, companies need to focus on customer experience. Studies show that customer-centric companies are 60% more profitable than companies that don’t focus on customers. And a seamless customer experience only happens when all the operations involved in retail management are optimized.

Importance of good retail management?

1. It improves customer satisfaction

Streamlined retail management improves customer satisfaction. When you have happy customers, they’re more likely to come back and spend with you again. In fact, 93% of customers are likely to buy again from companies with excellent customer service.

Many businesses will agree that good customer experience is paramount. When asked what their top 5 priorities were, here’s how retail businesses responded:

Image: Gartner

As you can see, just behind digital initiatives and business growth, customer experience is the third most common priority in retailing.

2. It boosts business growth

When core operations in your retail management process are optimized, your business is more agile and flexible to scale. Retailers are often held back by time-consuming retail operations like inventory management, order fulfillment, accounting, and customer management.

Shifting your focus from back office operations to growth strategies is the way to unlock growth.  As a result, your customers will be happy that their orders are arriving quickly, and your employees will feel motivated thanks to help from automation, so growth here is very much possible.

3. It optimizes the whole order-to-cash workflow

Get the right retail management system in place, and you can optimize your whole retail sales order-to-cash workflow. That’s all those critical operations that take place ‘beyond the buy button’, including – but not limited to – order fulfillment, warehousing, inventory management, picking, and packing.

Shipping and delivery can also be optimized via robust retail management. The correct system with integrated shipping functionality makes it easier for your business to provide the delivery options that consumers want. It might, for instance, allow you to integrate with Amazon FBA (fulfillment by Amazon). This is when Amazon packs and ships your orders for you, great for if you’re in a period of rapid growth.

4. It improves staff efficiency

Whether you operate from one warehouse in the United States or several across the world, there are core operations that underpin your success (or otherwise, if you get them wrong). Things like inventory management, order processing, purchasing, and invoicing must work seamlessly if you’re going to deliver the kind of customer experience expected of you.

With a retail management system in place, you can automate many of those operations. Rather than expending staff hours on updating inventory, raising purchase orders, and other repetitive tasks, your system can take the strain. That frees up team members to work more in other business-critical areas, like social media customer service or visual merchandising – either online or in a physical store. It also removes much of the danger of human error in the warehouse, your accounts, or elsewhere from costing your business dearly.

Image: Financesonline

It’s clear to see from this graph that, from a supply chain officer’s perspective, a key priority is to improve internal cross-departmental systems and process collaboration. When you use retail management systems, this can easily be done – especially when using one that allows for automation. With a unified system that eases the pressure on your staff, both collaboration and labor efficiency can skyrocket.

Key operations involved in retail management

In order to achieve effective retail management, there are several key operations involved. Here’s a look at some of the most crucial ones:

1. Customer service

The rise of e-commerce stores and online shopping means customer expectations have shifted. Customers are now used to getting what they want, when they want it. They’re no longer content with waiting. The amount of time people are willing to wait for free shipping has dropped from 5.5 days in 2012 to 4.5 days on average in 2018. Ensuring high-quality levels of service both in delivery and product quality is a key part of retail management for customer service.

Positive, personalized customer experiences can shape your business, and allow you to stand out among competitors. When you’re an e-commerce business, customer service can differ from traditional in-store methods. Instead of offering a friendly smile, you have to think of new and innovative ways to greet customers – like welcoming them to your site and offering them 15% off for enrollment in your loyalty program.

Using a CRM (customer relationship management) solution can help business’s improve customer retention. As well as providing personalized service, you can use the data gathered to get rid of bottlenecks and improve efficiency.

This figure shows exactly how supportive loyal customers are:

Image: peertopeermarketing

It’s evident that when customers are satisfied, they’re likely to recommend you to friends, join your loyalty programs, and crucially, spend more. 39.4% of customers said they would spend more on a product even if it was cheaper elsewhere. That says a lot about customer loyalty and how it can benefit your brand.

2. Inventory optimization

Inventory management is an important operation in retail management, both in e-commerce and physical stores. Customers will grow impatient and switch to a competitor if the products they are searching for are constantly sold out.

What’s more, retailers need to constantly monitor pricing. Pricing should be based on supply and demand, seasons, offers, and other factors – including the competition.

Balancing supply and demand can be challenging. Investing in clever inventory management software that can send alerts when your products are running low on stock can help things run smoothly.

3. Purchasing and supplier management

Managing the supply chain is another key operation in retail management. It’s about ensuring the process of sourcing and purchasing your products from supplies is as smooth as possible. There are a range of supply chain challenges that most retailers are familiar with:

Image: WSJ

The right retail management system can help you rise to these challenges. Such a system, for instance, will give you ready access to customer data and information on sales trends. That makes demand forecasting and knowing when to reorder from suppliers much simpler. Automated inventory management as part of your system, too, should keep out of stock situations to a minimum.

4. Accounting

Serving customers and fulfilling their orders is obviously essential to a retail company. E-Commerce brand owners and store managers, though, can also never afford to lose sight of the bottom line. Retail accounting, then, is another integral and crucial operation within effective retail management.

From the value of inventory to the latest sales figures, and tax requirements to landed costs, retailers have a lot to stay in touch with. A retail management system with integrated retail accounting can make it a breeze. It gives you real-time financial insights that help you make informed decisions to drive your business forward.

5. Warehouse operations

Retail management also involves overseeing warehouse operations. Most medium-sized to large businesses have their own warehouse which needs to be managed and maintained to ensure it’s running efficiently. Organizations utilize warehouse management software nowadays, but this still needs to be monitored daily. This software can:

• Automate many processes
• Minimize costly human errors
• Give an overview of inventory
• Provide inventory analytics
• Offer efficient returns management

By automating processes such as barcoding scanning and product picking, you’re saving time that can be better put to use elsewhere.

6. Order fulfillment

Getting the right products to the right customers, when they expect them, is fundamental to e-commerce success. The process of order fulfillment – like the buying process, itself – then, is another key operation of retail management.

Managing order fulfillment at scale is a challenge faced by many brands. You simply can’t manage, pick, pack, and dispatch thousands of orders from multiple sales platforms without the right system in place. Workflow automation can optimize order fulfillment, whilst integrating a retail management system with 3PL providers can help you exceed customer expectations.

7. Analytics and business intelligence

So far, most of our key operations have related to the day-to-day. Retail managers and business owners, though, must also think of the future. That’s where accurate analytics and business intelligence come in.

Almost all of the other key processes within retail management can be supported and bolstered by analytics. If your retail management system provides you with robust product and customer insights you get a better overall picture of your business. That lets you pinpoint both weaknesses to fix and opportunities to seize. Managers need then only show the leadership skills required to make the necessary changes.

How to gain efficiency in retail management

Now that you’ve got an idea of what retail management is and the key operations that come with it, it’s time to look at how to gain efficiency in retail management. Here are just some of the ways you can make retail management more efficient for your business:

1. Invest in powerful software

The right software will enable you to automate many business processes involved with retail management. For instance, a Digital Operations Platform like Brightpearl lets you manage your inventory, process thousands of orders daily, and automate complex order fulfillment. Using a platform that can do all of this means your business can become the most efficient version of itself. It also makes retail management easier, especially when you’re operating across a number of stores.

Consolidated data

Retail management software also provides valuable insights into your operations. Tools like Brightpearl can integrate with your entire business to give you an overview of your business operational performance, covering aspects like inventory, sales channels, suppliers and customers.

2. Have your employees on the same page

As we’ve already seen, there are many operations and branches of retail management. In larger businesses, these are often handled by different departments. Operationally, this just makes sense. Where the problem arises, though, is if those departments are using siloed systems.

If sales only has access to sales data and the warehouse can only view inventory information, nobody has a 360-degree view of business performance. That means the type of retail management decisions that can improve things for everyone, simply can’t get made. You must unify and integrate your systems, if you want to optimize all your core operations.

3. Conduct market research

Often, good retail management software can save you money as you’re centralizing a lot of your business processes. Where you’ve saved money in one area, you can also spend it in another area – marketing.

Market research allows you to find out more about your target market, including the industry, and your target audience’s spending habits. You can use this data to gain a better understanding of how your product will work within the market.

Gather information about your customer’s needs and preferences, such as their average spend and why they may choose a competitor over you. There are many ways you can get more information from customers, such as through surveys or reviews.

You can also conduct competitor research to identify who your competitors are, and what they are doing that you’re not in order to gain new customers. Retail managers can then act on this information and work with employees to deliver an improved customer experience.

4. Use the right KPIs

Key Performance Indicators (KPIs) are used by many businesses to make data-driven decisions. Clear KPIs can help to monitor performance and understand customers .  Some examples of KPIs may relate to:

These KPIs are used as benchmarks to determine how well the business is doing in relation to its goals. For example, if the business’s goal is to generate a 10% increase in profits this quarter in order to meet its yearly target, you can use KPIs to determine whether it’s on track.

You can also use software to collect customer data and create an overview of what the average customer journey looks like. Analyze this against your KPIs to see whether their experience meets your expectations.

5. Identify pain points

In order to truly gain efficiency in retail management, you need to identify your pain points.

Consider:

If you answer ‘no’ to any of the above, contemplate action you can take to turn that around. For instance, imagine that you performed an employee survey and found that your employees would prefer to automate business administration processes in order to save time. You could then invest in software that will do this for you.

Retail management is all about making your business as efficient as possible to ensure your customers are happy and satisfied. So, remember these key points in gaining efficiency in your retail management and you’ll be on your way to a smooth-running operation.

Frequently asked questions:

1. How do you provide good customer service in retail?

Good customer service is all about ensuring your customers feel well looked after. Here’s a few tips on how to provide great service:

• Ensure staff are well-trained and that staffing levels are sufficient
• A friendly smile goes a long way
• Ensure you have excellent product knowledge
• Provide 24/7 customer support where possible
• Improve the checkout experience

Although the above points are all vital in providing good customer service, investing in software such as Brightpearl that can automate processes is perhaps one of the most important things you can do to keep customers happy.

Customers may grow frustrated and switch to a competitor if your item is out of stock. This technology can alert you when an item is low on stock, allow you to order items straight to the store, and provide you with accurate statistics to help you invest in the right products.

2. What are the key roles in retailing?

In this age of technology and e-commerce businesses, new roles have been made within retail. From Social Media Executive to Digital Content Creator, there are a growing number of departments and roles to suit the change in consumer shopping behavior.

More and more retailers are going online as well as maintaining physical stores. That means the job of retail management is expanding. Consistency is a big part of omnichannel store operations, that is, making sure that in-store and online blend together. In order to keep both online and offline stores running, there are key roles to fill, including:

• Retail manager
• Sales assistant
• Human resources officer or specialist recruiters
• Visual merchandiser
• Buyer
• Store manager
• Inventory control specialist
• Cashier

Each role plays a key part in keeping the business running smoothly. Take visual merchandising, for example. This is important for attracting new customers, and creating a certain business image.

The same visual merchandising graphics and products should be displayed online. Retail management software can also help with this, as it allows you to manage the customer experience across all channels, including in-store.

3. What skills are needed for retail management?

As part of retail management, it’s vital that staff are allocated properly online and offline. Retail management staff need to possess a number of skills relevant to the industry.

Here are the most important skills for retail management:

• Leadership
• Communication
• People management
• Organization
• Customer service
• Adaptability
• Sales experience

A good measure of if an individual possesses those key skills is if they hold an industry-specific qualification. A retail management certificate, for instance, is an accreditation that you’ll only get by displaying all those traits.

When hiring in retail, consider the size of your company, how many employees do you need, and what is the split between online and in-store? 73% of consumers use multiple channels to shop. Customers can grow frustrated if they feel their concerns aren’t being addressed online or if there aren’t enough cashiers at the check-out.

4. How do you efficiently manage the supply chain if you’re both manufacturing and selling finished goods?

Managing the supply chain is another key operation in retail management. It’s about ensuring the process from manufacturer to shelves is seamless. To do this efficiently, you should be utilizing retail management software.

Software such as the kind that Brightpearl offer, will allow you to control your orders, which can be useful when you’re both manufacturing and selling finished goods. You can manage your inventory and place orders with your factory for raw materials using this technology, with the materials being tracked the entire journey. When the raw materials reach you, your team can then get to work on manufacturing your products.

The same technology can also be used when the orders are shipped out to the customers. A good retail management platform should provide options, such as allowing you to integrate with Amazon FBA (fulfilment by Amazon). This is when Amazon packs and ships your orders for you, great for if you’re in a period of rapid growth.

Issues with the supply chain can have a detrimental impact on an organization. Good retail management involves understanding and being prepared for these possible challenges.

For large businesses in the retail industry, it can be challenging to optimize your internal processes when you’re not using the right systems.

Retail management aims to help your business run like clockwork. From ordering merchandising with the back-office system to receiving the stock, this process can be tracked and forecasted using automation.

5. Should I put more budget into front end retail operations or back end?

The key is to make your back office as efficient as possible. For many retailers, money is tied up in back-end processes, from inventory operations to order management. Using multiple pieces of software or simply manually completing tasks can slow things down, and reduce productivity.

This costs time and money that could be spent elsewhere – like your front end retail operations. For example, you may operate from one warehouse in the United States or several across the world. Synchronizing your warehouse management system with your other business practices is vital when you’re operating on such a large scale. When you’re using the latest automation technology, running your back office can feel much easier.

So, when you invest more into automatic solutions to make your back office operations more seamless, you can have more money to spend on front end operations such as marketing and growth plans.