In the recent past, shoppers have been moving increasingly to making purchases online. But whether an e-commerce store or brick-and-mortar shop, retailers need to move quickly to be ready for the next wave of customer trends. Ambitious retail businesses will look for ways to improve efficiency and timeliness, as well as give customers a greater experience to compete with their rivals.
What are Retail Operations?
Retail Operations refers to the daily functions of a retailing business. The activities provide a shopping experience for consumers to access and make purchases. These functions include the layout and design of stores (both online and physical locations), inventory management, order fulfillment, customer service, sales, accounting and returns.
It encompasses many processes that happen after customers hit the ‘buy’ button. These processes are directly linked to customer experience.
Large or small, all retailers will want to have systems in place to improve their operations. Depending on the company, many variables will affect what works best for them and their bottom line. Businesses must define their own strategy, but the overall aim is to stay competitive in an evolving marketplace.
One part of Retail Operations is procuring products or services and storing them in an orderly fashion. From there,the product or service is made available to the customer. This includes activities directing the customer to the store, such as marketing. Once the customer has made it to the homepage or physical shop, the customer needs product accessibility. Finally, a system and form of payment must be available to complete the purchase.
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What are the Functions of Retail Operations?
Regardless of size or domain, businesses will need the same basic functions to operate in the retail sector. For larger businesses, some functions may be in their own departments, residing outside of Operations. These might be departments such as accounting, IT, and marketing. And in medium-sized or growing businesses, many of these functions may be done by a few people or even a single individual.
For an e-commerce retailer, nothing is more important than having a shop with a domain that is easy to find online and navigate. Good SEO and good design can go a long way in making a sale. Customers need an easy path to find what they are looking for and proceed to the checkout page.
You want to give the customer a pleasant experience. Orderly laid out stores or online shops give the customer a seamless and consistent shopping experience. This includes how products are categorized and by what department. Each retailer will want to arrange their shop so that customers can quickly find what they are looking for.
Businesses can opt to use planograms to guide merchandising decisions. Part of Retail Operations is giving customers a complete shopping experience. The aesthetics of visuals, music, and other ways to warm the senses improve the store environment for staff as well as customers.
For your webshop, the first step is to choose the right e-commerce platform to build your store on, which allows your business to grow freely. Then, you will need proper SEO, ads, and affiliate links in the right places to increase site traffic. Physical signage in high traffic areas can help potential customers to make it to brick and mortar stores in the same way.
Current retail trends show that good customer service will be more important than ever to stay competitive. Especially for medium-sized businesses and those looking to challenge better-established rivals.
Virtual or in-person, the customer experience should begin with a greeting. Offer a promotion or free gift to new visitors to your e-commerce site. Regular online customers should have a way to be recognized via cookies and user account information. Personalization can be a major factor in retaining future customers. Better retention leads to greater customer lifetime value (CLV).
The checkout process is all part of the customer experience. Retailers need to make checkout quick and easy. Cart abandonment has many causes and is a major issue in e-commerce. Operations must find ways to track and improve the customer checkout experience.
Post-purchase services like delivery, returns and refunds are also a critical part of the customer experience. Deficient post-purchase services often lead to negative online reviews, which are harmful to brand reputation. 77% of poor online reviews are directly related to issues shoppers have after clicking ‘buy’. So it’s crucial for retailers to offer their customers a frictionless post-purchase experience, including fast deliveries, instant delivery notifications, hassle-free returns and rapid refunds.
For omnichannel retailers, customer service should be seamless between channels. This means consistency in terms of product prices, inventory levels, order status, and so on. Customers should be able to access the same quality of assistance no matter whether they approach you online, in-store, or through another platform.
Payment, security, and internal controls
Operations also involve what forms of payment are accepted. As well as how those payments are handled at checkout. These days, retailers who have a physical store will be using some form of Point-of-Sale (POS) system. The good thing is that not only will most POS systems process payment, they will also aid in inventory management.
To minimize human error, standard operating procedures (SOPs) will be in place for all handling of cash and card payments. Supervisors and managers will need to ensure all staff are aware of, and competent with, company SOPs.
Depending on the size of the business, precautions need to be in place to prevent fraud. This could be simple like a visible security guard or camera in a shop, or behind the scenes with complex systems in place. For e-commerce, AI and cloud security can establish and eliminate potential threats with blazing speed.
Inventory and warehouse management
Inventory management begins with ordering from the supplier. Purchasing staff needs to anticipate customer demands. This can be as simple as having enough winter coats in stock for Christmas or having the computing resources to handle peak service hours.
Once the product has been ordered, a retailer must decide how it will receive it. Once received, the product will need to be recorded, handled, and stored properly.
An effective inventory operation can help with forecasting customer needs. With an integrated inventory demand planning software, businesses can perform data-driven demand forecasting based on their chosen KPIs.
Today, most retailers will be using some form of inventory management system. Either through the use of spreadsheets or inventory management software, the stock must be accurately kept.When a retail business grows or expands into multiple channels, new technology is likely to be added. This could include a new:
- Order management system
- CRM (customer relationship management) solutions
- Purchasing and accounting software
- POS (point of sale)
These technologies should be seamlessly integrated with the inventory and warehouse management systems. For fast-growing retailers who look for operational agility and flexibility, a complete retail-tailored Digital Operations Platform may be a good choice, avoiding any disjoint or glitchy integrations.
Administration functions involve a lot of activities that are behind the scenes. The best maintenance of a shop or e-commerce website is done before problems arise. Customers must get a consistent and efficient shopping experience with every visit. Any bad experiences such as dead product links or payment failures can leave a bad taste in a customer’s mouth.
Staff training must be carried out to a standard of excellence. Whether it is recording the receiving of stock or handling cash, there needs to be a uniformity in daily operations. Training procedures and checklists must be utilized and continually monitored. Customer-facing or online help desk staff must be given service training and be familiar with SOPs.
IT infrastructure and data management will involve optimizing and integrating many technology tools. This can include a working POS system, barcoding, online user account data, and a customer relationship management (CRM) platform.
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The Challenges Retailers Face in Retail Operations
Shoppers in 2020 accelerated the ongoing trend of moving the buying experience online. And with many disruptions still ahead, people are looking for flexibility. They want to be able to work at any time and from anywhere, for instance.
Consumer’s buying habits from retail stores are evolving, too. Shopping is done when convenient. Consumers want the best prices and money-back guarantees, but they also want their purchases as soon as possible.
Retailers must evolve with their consumers. And this can present several challenges.
As more shopping moves online, competitive pricing is as important as ever. Operational costs are usually a key factor in determining retail prices and margins. Giants like Amazon and Walmart have efficient supply chains allowing them to lower their operational costs. In order to compete, e-commerce brands must optimize their operation workflows and cut costs down too.
Today, shoppers are placing a higher priority on the buying experience alongside product and price. One of their expectations is more personalization and customization. Customers expect a tailored shopping experience with relevant purchase recommendations and targeted promotions. But they also expect to have more options for customizing the product to fit their needs
Retailers must come up with ways to recognize and reward repeat customers. But they also need to make new customers feel special. Retailers must stay on top of customization trends.
Retail Operations in bricks and mortar stores are directed by the store Retail Management team. The store operations manager will take a long-term view of the business goals. They will monitor metrics like KPIs related to daily sales. Store managers guide daily operations in a dynamic environment. Dealing with changes to keep the business on course.
For management to be successful, they need to recruit and hire the right people. And need to fit employees into the right roles. They must pick the right leaders and lead by example. Management will conduct employee reviews and any form of discipline, including termination.
Managers will have the final decisions on sales forecasts and total budgeting. They will work with other stakeholders to ensure SOPs are being followed. Management will provide oversight for the internal controls involving security and loss prevention.
Operations leadership will work to maintain and improve all aspects of customer service. Regular training and observations can be used to guide front of house staff and educate. Management will oversee policies for communication within the company. And also communication best practices in business to business dealings.
The responsibilities of governance and legal compliance will also fall to Operations management. Operations must keep a watchful eye on daily activities to ensure minimal liability for the company in all areas. Areas such as security, customer safety, or employee break periods.
Multi-store and omnichannel shopping
It’s no secret that a key to a retailer’s success is getting in on the e-commerce market share, ideally through omnichannel retailing. With consumers moving online with shopping, those with poor or no online presence will be left behind. Even the smallest businesses will want to make use of multiple sales channels. Physical shops that ignore online consumers do so at their own peril.
Multiple retail locations and channels can offer several benefits. But businesses reaching for those gains will also be experiencing new challenges. Maintaining consistency becomes difficult, the more channels, processes, and people are involved in operations.
Just like consumers, employees today expect more. Retail sales associates can be on the lower end of the pay scale. The retail industry has one of the highest employee turnover rates. While store managers are expected to hire the right people, that is only the beginning.
Employees are more likely to stay with a company when they are engaged. Every individual will be motivated by different things, but nobody wants to work on easily-automated, repetitive tasks that don’t generate much value. It can be difficult for management and HR to be effective at engagement. They must find the right initiatives to improve staffing and employee retention.
How to Streamline Retail Operations
Amazon seems intent on world domination. But large and medium-sized retailers alike will need to find ways to compete with the behemoth. Each retailer will need to make a strategy for improvement. Businesses need different solutions depending on their size, market, and other factors. The following, though, are some of the areas for improvement common to most retailers.
Inventory and warehouse layout
Whether it’s keeping an item on the shelf or offering next day delivery, a larger retailer will want to have a well laid out warehouse. One idea is to have more frequently purchased items closer to packing and processing stations. This may seem intuitive but is often overlooked.
Management should work with warehouse supervisors and staff. Employee suggestions will help management glean input for time and labor-saving layouts. Even smaller businesses will benefit from a well organized and maintained stockroom.
Improve store layout
Keep best-selling items at the top of your product pages and search queries. Brick and mortar shops can follow suit by mirroring such considerations with their store layout. Use sales analytics to maximize potential cross-merchandising. For e-commerce, this may be easier with the wealth of user data at hand. Brick and mortar shops will need to weigh cross-merchandising against overall shopping convenience.
Know your repeat customers
Make use of loyalty programs and online account metrics to keep track of your customers. Make sure to customize offers and rewards based on information regarding each individual’s buying habits. Send customers personalized messages via social media, email, and SMS for promotions.
Get orders to your customers quickly
With the rise of next-day delivery from companies e-commerce giants like Amazon, customers expect their purchases quickly. Businesses need to offer fast and frictionless deliveries in order to compete. Automating order processing and fulfilment workflows can help speed up the process, as well as reduce human error. You might be reliant on the postal system, but you can reduce the time taken at your end as much as possible.
Make returns and refunds easy
If you want to compete with the big boys, make sure to show the same trust to your customers. Increase customer retention with a clear returns policy and an easy return process.
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How to Automate Retail Operations
We’ve mentioned that one of the best ways for retailers to improve Retail Operations is via automation. Automation adoption is becoming approachable for even smaller retailers. But not everything works for every business. Here are a few ways you can look toward automation to increase efficiency in Retail Operations. And also, automation to improve the customer experience.
Use an Inventory Management System
Inventory management systems will help your business have real-time and accurate inventory updates. Some advanced systems also offer inventory demand planning functionality. This allows you to make data-driven demand forecasting and replenish the right products at the right time. By having inventory management and accounting in one single system, you can also have real-time views on your financials.
Automate your omnichannel operations
Make use of a Digital Operations Platform adapted to omnichannel selling like Brightpearl for operations workflow optimization. Besides inventory controls, you can automate activities like ordering, shipping, invoicing, purchasing and accounting across all sales channels. This will save your team lots of time and let them focus on customer-facing activities.
Business can make use of consolidated products, sales, customers and suppliers data. You can get valuable insights on your business performance in real-time. That enables data-driven decision making. By using a management platform, your retail business will stay agile in a changing environment.
When it comes to staying competitive in a changing market, there is no time to lose. Discover which solutions fit your company and its operations. Smooth over the rough edges of your Retail Operations and cut the fat. But most importantly, deliver a high-value customer experience and improve profitability.