Store operations improve when managers present

Dubai: A new study by management consulting firm A.T. Kearney, the Achieving Excellence in Retail Operations (AERO) Study, shows when field and regional managers spend more than 75 per cent of their time in the stores, employee turn-over falls by 10 per cent and stores are more likely to conform to initiatives.

The study also found 88 per cent of leading retailers pilot more than 50 per cent of their new initiatives, and that these leaders pilot for a much shorter duration than other retailers (typically a short burst of four weeks). Piloting more programmes allows retailers to focus on implementing "high potential" initiatives. When implementing new initiatives, leaders concentrate on ensuring the correct training methods are in place and they concentrate on fewer initiatives to ensure programme execution effectiveness. Thirty eight per cent of leading retailers use an official set of pilot stores to optimise new initiatives prior to store roll-out compared to only 18 per cent of other retailers.

Dean Hillier, A.T. Kearney partner and AERO study leader, said: "Store operations issues are always important, but in the unprecedented economic conditions experienced over the last 18 months, these issues become critical to survival."

The AERO study included a comprehensive survey completed by 53 leading retailers in the apparel, electronics, grocery, hard goods, do-it-yourself (DIY), drug, health and beauty, and mass market and hypermarket sectors. Retailers from around the world participated in the survey.

Study areas included: banner strategy and business planning; store operations; field leadership support; real estate and facilities; operating expense control; store technology, and initiative roll-out practices.

Hillier said: "The study looked at what retailers are already doing well, and identifies considerable opportunities to achieve peak performance and lasting results. The study provides retailers with a blueprint for achieving an operational competitive advantage."

The survey found five critical factors emerged for retailers setting in-stock goals — product gross margin, sales velocity, sales variability, product cost, and product value to customers. The study showed that retailers that consider all five factors are able to lower their out-of-stock percentage by 27 per cent.

In the area of employee satisfaction, those retailers that regularly communicate with store employees about store objectives, and those that recognise high performing employees have lower turnover rates compared to other retailers.