SRM/U5 Topic 1 Setting up Retail Organization
Process of setting up a retail organization
Process of setting up a retail organization is outlined below:
- Identify the specific task to be performed in retail distribution channel – The tasks in a distribution channel should be identified and provided for the adopted strategy mix i.e. Buying merchandise, shipping merchandise, receiving and checking merchandise etc.
- Dividing the task among channel members: However the task mentioned above does not needed to be performed by the retailer. It can be divided among the retailer manufacturer or whole seller etc. The task should be carried out only if desired by the target market and should be done by the member of distribution with best competence.
- Grouping the retailer task into jobs: The jobs are grouped after determining the task to be performed. It is important that the jobs must be clearly structured. For an example displaying merchandising and customer handling could be the job of sales personnel.
- Classifying the jobs – Here jobs are broadly classified into functional, product, geographic or combination.
- Developing an organizational chart – It is important to design the format of retail organization in an integrated, coordinated way. Taking the following into consideration a retailer devises organization chart, which graphically displays its hierarchical relationship.
The process of setting up a retail organization is divided into five steps. These are discussed as follows:
(1) Tasks to be performed:
The general tasks in a retail organization vary from organization to organization and size to size but these are some common retail activities that are usually applicable to all sorts of retail distribution channel.
(i) Arranging and buying merchandise for the retailer;
(ii) Receiving merchandise and check for its quality;
(iii) Determination of prices i.e., price setting/labeling;
(iv) Marketing the merchandise;
(v) Inventory management and control including stores;
(vi) Classifying merchandise and window displays;
(vii) Store maintenance;
(viii) Customer research and development cell;
(ix) Customer complaint handling;
(x) Customer contact (e.g. personal selling, advertising);
(xi) HR management;
(xii) Facilitating shopping (e.g. short checkout queue, convenient site);
(xiii) Customer billing section;
(xiv) Management of receipt and date recording;
(xv) Payment operations (e.g. cash, credit, etc.);
(xvi) Gift wrapping;
(xvii) Coordination between various activities;
(xviii) Returning damaged, rejected or unsold goods to vendors;
(xix) Sales forecasting and budgeting;
(xx)Repairs and after sale service.
The effectiveness of above mentioned activities are necessary for effective retailing to occur. Yes, retailer can give priorities to various activities but cannot get rid of any one.
(2) Division of tasks among channel members and customers:
Although the above mentioned various activities take place in a retail channel but a retailer is not supposed to accomplish all the tasks. Some of these activities are usually performed by the manufacturer, wholesale professional, customer or retailer itself.
(3) Grouping tasks into responsibilities:
After considering and finalizing various retail activities necessary to be performed in a store, a retailer groups these activities into job profiles those will be handled by a particular employee/group of employees. To make the retailing successful, various activities must be defined and properly grouped.
(4) Classification of jobs:
After grouping tasks into jobs, next step in setting up a retail organization is to classify the jobs under functional, products, geographical, or combination classification system. Under functional classification, jobs are divided in terms of various retail functions, like sales promotion, customer care, inventory management and store operations.
Under products classification, jobs are divided on the basis of nature of goods and services. Thus a retail store recruits different employees for apparels, vegetables and fruits, furniture, electronics, grocery food and so on. Product classification is based on the concept that employees’ requirement in terms of experience, age, look, qualification, etc. varies from product to product.
Under Geographical classification, jobs are classified according to spread of the organization in various cities and states. Therefore, job locations are assigned in such a way that employee to the extent possible should work in or nearby home town. As he/ she is aware about the locality, its preferences and buying behaviour. For example, if recruitment is done by head office and two shortlisted selected candidates belong to Garhwal – a hilly area then these two candidates should be offered job to a store which is nearest to Garhwal region.
Under combination classification system, stores use more than one classification. For example if a branch retail store of luxury items like Jewellery, gold, diamond and platinum recruits its own staff for selling goods, but buys employees for each product line from head office and controlled by head office, then it will be a combination of functional, geographical and product formats.
(5) Developing an organizational chart:
This is the last step of organizing a retail firm. For the purpose of understanding the concept, various organizational patterns are given as under:
Mixed Organizational Pattern:
As the very name implies, these types of organizational patterns involve two or more organizational patterns available. Thus, they have the features of various organizational patterns. These are used when the store is expanded in terms of branches, customers and variety of merchandise.