11 Aug 11 Optimizing the retail store operating model

Stiff competition from the industry and increasing demands from consumers are forcing retailers worldwide to re-evaluate their strategies and operating models. The typical knee-jerk reaction for most retailers is heavy capital investment and augmenting their staff. With the help of specialist providers for the retail industry, a few of these companies are avoiding this route and taking long-term, scalable and sustainable paths to ensure profitability and higher customer satisfaction.

Challenges – In which aisle do I find these items?
Modern retail companies face one or more of the following business challenges:
– Delivering products efficiently and profitably – Stocking and delivering the right product to customers from retail stores requires skills such as retail store space management, training and deployment of well-trained staff and enhancing the delivery supply chain.
– Customer focus – Tracking customer demand and developing new customer-focused retail formats to exceed their expectations is critical in the cut-throat world of global retail.
– Scalability of operations – Retailers are always on the look-out to scale their operations by opening new stores in the right locations and enhancing their overall organizational capabilities by investing in technology, people and processes to monitor and plan for future action.

Addressing these issues requires a comprehensive set of retail BPO solutions along all components of the retail value chain. These solutions will encompass all aspects of the retail model, from smaller discrete processes to a holistic organizational level shakedown in strategy.

Solutions – How can BPO help?
Service providers for the retail domain have developed industry domain expertise and now offer a complete framework of solutions ranging from conceptual design to actual execution in retail stores. Key BPO solutions for the retail industry include:
– Sourcing and Procurement
– Operations support
– Demand and supply planning
– Inventory management
– Consumer and Retail Analytics
– Marketing support
– Training and Development

There are various approaches to deal with these challenges as highlighted in the following exhibit:

Improving the retail optimization model sp_nl - retail store - 11 aug 11_img1-1.jpg

partnership to ensure faster results and improved deployment of products
Companies in the retail space need to enter into strategic partnerships with specialists in this field to plan and implement processes to their stores worldwide. Depending on the complexity of the entire operating model, key stakeholders are identified who will be responsible for a particular activity in the retail value chain. New initiatives are introduced based on the approaches mentioned in the previous section and careful monitoring is done to measure results gained over time. For processes which involve significant change, an integrated outlook needs to be taken in which effects and changes on other processes are noted as well. Retailers who have undertaken these partnerships have benefited immensely with a direct positive impact on sale and a reduction in operating and inventory costs. Other benefits include higher customer satisfaction, scope for innovation in diverse markets and a standardized operating model for the entire organization’s value chain.

ValueNotes Research
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