McGraw-Hill/IrwinRetailing Management, 6/e

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 17

Managing the Store

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Store Management

Managing the Store

Layout, Design andVisual MerchandisingCustomer Service

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Store Managers Run a Business

“This is your business. Do your own thing.

Don’t listen to us in Seattle, listen to your

customers. We give you permission to take

care of your customers.”

James Nordstrom, the CEO of Nordstrom’sJames Nordstrom, the CEO of Nordstrom’s

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Strategic Importance of Store Management

Opportunity to Build Strategic Advantage– Difficult to Have Unique, Compelling

Merchandise– Customer Loyalty Often Based on Customer

Service

Difficulty of Store Managers Job– Managing Diverse Set of Unskilled People– Increasing Empowerment and Responsibility

to Tailor Merchandise and Presentation to Local Community

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Store Managers’ Responsibilities

Varies Dramatically By Type of Retailers– Specialty Store vs. Department Store

Entrepreneur– P & L Responsibility– Manage People

Responsible for Two Critical Assets– People Sales/Employees– Space Sales/Square Foot© Digital Vision

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Steps in Employment Management Process

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Job Analysis

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Job Description

The activities the employee needs to perform

The performance expectations expressed in quantitative terms

A guideline for recruiting, selecting, training and evaluating employees

Steve Mason/Getty Images

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Approaches for Locating Prospective Employees

• Look beyond the retail industry

• Use your employees as talent scouts

• Provide incentives for employee referrals

• Recruit minorities, immigrants and older workers

• Use your storefront creatively

Jack Star/PhotoLink/Getty Images

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Sources of Information for Screening Applicants

• Application Forms

• References

• Testing

• Providing a Realistic Job Preview

The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

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Suggestions for Questioning Applicant

• Avoid asking questions that have multiple parts

• Avoid asking leading questions like “Are you prepared to provide good customer service?”

• Be an active listener. Evaluate the information being presented and sort out the important comments from the unimportant.

repeat or rephrase information

summarize the conversation

tolerate silence

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• Equal Employment Opportunity Commission (EEOC)

• Age Discrimination and Employment Act– Disparate Treatment– Disparate Impact

• Americans with Disabilities Act (ADA)

Legal Considerations in Hiring and Selecting Employees

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Socializing and Training Employees

Orientation Program

Training

Where, when, what

Structured vs. unstructured

Classroom vs. on-the-job

Analyzing Successes and Failures(c) image100/PunchStock

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Motivating and Managing Employees

Setting Goals

Measuring Performance

ProvidingIncentivesto AchieveGoals

Providing Feedback

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Leadership

Process by which one person attempts to influence another to accomplish some goal or goals

Leader Behaviors– Task-Oriented

– Group Maintenance

C Squared Studios/Getty Images

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Types of Leaders

AutocraticDemocraticTransformational

© Digital Vision

Which Type of Leader Is the Most Effective?

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Setting Goals

How High? How Easy to Achieve?

Get Participation ofEmployees inSetting Goals

Royalty-Free/CORBIS

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Why Set Goals?

Employee performance improves when employees feel:

• That their efforts will enable them to achieve the goals set for them by their managers

• That they’ll receive rewards they value if they achieve their goals

Royalty-Free/CORBIS

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Individualized Motivation Programs

Impact of Goals Differs Across People

Different People Seek Differ Rewards

– A La Carte Reward Programs

– Selection of Compensation Plans Steve Cole/Getty Images

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Maintaining Morale

Meetings before store opening to talk about new merchandise and hear employee opinions

Educate, set sales goals and have a pizza party when goals are met

Divide charity budget and ask employees how their share should be used

Print stickers - auto detailed by Rob”

Give every employee a business card with the company mission statement printed on the back

Pando Hall / Getty Images

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Evaluating and Providing Feedback to Employees

Evaluation

Who, when, how often?

Feedback

Performance outcome vs. process

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Jim Taylor’s Six Month Evaluation

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Common Evaluation Errors

Strickness

Leniency

Haloing

Recency

Contrast

Attributions

Ratings unduly negative

Rating unduly positive

Using the same rating on all aspects of the evaluation

Placing too much weight on recent events rather than evaluating performance over the entire period

Having the evaluation of a salesperson unduly influenced by the evaluation of other salespeople

Making errors in identifying causes of the salesperson’s performance

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Rewards

• Extrinsic Rewards are rewards provided by either the employee’s manager or the firm such as compensation, promotion and recognition.

• Intrinsic Rewards are rewards employees get personally from doing their job well like doing their job well because they think it is challenging and fun

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Compensating Employees

Compensation

Type• Straight salary

• Straight commission• Quota bonus

Setting quotas

Individual vs. group incentives

Royalty-Free/CORBIS

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Advantages and Disadvantages of Straight Salary

Straight Salary Incentive Compensation

Offers flexibility in assigning employees Has high motivating potential

to activities

Builds stronger employee commitment Has more variable cost

Is easy for employees to understand Relates compensation to productivity

Is easy to administer

Allows for better performance of non-selling activities such as customer

service

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Designing a Compensation Plan

Determine Appropriate Compensation

Decide on Percent of Incentives

Use Average Sales Per Employee to Set Incentive Rate

$12/Hour 1/3 Salary2/3 Incentive

Sales/Person - $150 5.33% Commission $4/Hour Salary

$4 = 5.33% x 150 = $12

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Controlling Costs

Costs Controlled by Store Managers

Labor

Maintenance

Inventory Shrinkage

EnergyHeatingLighting

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Labor Scheduling System

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Calculating Shrinkage

Accounting Record – Actual Inventory

Sales

$1,500,000 - $1,236,00 = 6.7%

$4,225,000

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Sources of Inventory Shrinkage

Employee Theft 46%

Shoplifting 31%

Mistakes andInaccurateRecords 17%

Vendor Errors 6%

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Preventing Shoplifting

Store design

Employee training

Good customer service

Security measures

Dye capsules, TV cameras

EAS

Prosecution PhotoLink/Getty Images

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Spotting Shoplifters

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Use of Security Measures by Retailers

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EAS Tags

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Reducing Employee Theft

Trusting, supportive work atmosphere

Employee screening

Honesty, drug testing

Security personnel - mystery shoppers

Policies and procedures

Employee theft is an HR problem.