Retailing - Maximising operational excellence ... Retailing – Maximising operational excellence 3

Retailing

Maximising operational excellence

Retailing – Maximising operational excellence

 An introduction to Collinson Grant 2

 Typical ‘headaches’ for retail managers 5

 Aligning the buy side and sell side 10

 Finding opportunities to improve the supply chain 11

 Finding opportunities for savings at head office 13

 Finding opportunities for savings in procurement 15

 Making it happen – programme management 17

 Our skills and expertise in retailing 20

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Contents

Page

Retailing – Maximising operational excellence

An introduction to Collinson Grant

Our approach

Collinson Grant focuses on sustainable results

We work on

Real insight

Client’s close involvement

Pragmatic approach

Organisation

Acquisition, business integration, restructuring, organisational design, roles and accountabilities, and employee relations

Costs

Direct costs, overheads, supply chain and operations, working capital, procurement, and managing complexity and performance

Business Process

Business process re-engineering, managing change programmes, Lean and Six Sigma, exploiting ERP, and installing business controls

Small teams

Seasoned consultants

General managerial perspective

Economic Value

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Retailing – Maximising operational excellence 3

What we do – the varying scope of our work

1 Improving service at lower cost by using Lean, Six Sigma and good managerial practice throughout supply chain operations

2 Cutting costs and applying good practice throughout the supply chain, designing better processes and contracting out

3 Making changes to the business model by defining the customer proposition, restructuring operations, and supporting acquisitions

C Improving productivity

Reducing complexity

Reducing the number of sites

Optimising distribution

Restructuring the organisation and reducing overhead cost

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Defining and developing the customer proposition

Retailing – Maximising operational excellence

Our consultants’ experience in retailing

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Retailing – Maximising operational excellence

Emptier high streets – 14% of

shop space is vacant

5

Typical ‘headaches’ for retail managers …

Excess stocks and obsolete inventory

Increased risk, deteriorating

performance by customers and

suppliers

Deteriorating terms from suppliers

Inaccurate forecast and demand

planning

Lack of ownership and accountability

for profit performance

Expansion of ‘value retailing’

Managing complexity across

products, channels, and formats

Lack of transparency on contribution of indirect staff

Rising property and staff costs

Proliferation of stock keeping units

Internet eliminates former ‘category

killers’

Deteriorating working capital

metrics

Deteriorating customer service

Slowing stock turn More, not less, regulation

Lack of connectivity

between online and store trading

strategies

Falling productivity from store space

Proliferation of suppliers

Retailing – Maximising operational excellence

Revenue

Costs

Working capital

Fixed capital

Shareholder value

Profitability

Invested capital

- The shareholder value tree -

Cost of goods sold (COGS)

Asset productivity

Cost of business operations

Manufacturing, conversion and sourcing costs

10 - 15% costs

Inventories of raw, part-finished and finished products

Order-to-cash cycle time

10 - 20% inventory

Physical assets – plants, warehouses, trucks, office and support locations 10 - 20%

assets

Market share

Gross margins

Customer service

Fewer lost sales

1 - 2% margin

-Typical targeted benefits -

- Supply chain impact -

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Driving up shareholder value

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Retailing – Maximising operational excellence 7

Defining the retail offer

Number of customers

Amount purchased by each customer

Number of stores

Store locations

Store layout

Product adjacencies

Price points

Reducing stockouts

Trading format

Merchandise assortment and variety

Merchandise assortment and variety

Promotions

Reducing purchase risk

Trade-up merchandising

Loyalty programmes

Changes to the range

Pricing policies

Merchandise presentation

Trading hours

Product information

Price positioning

Brand positioning

Space allocation

Selling skills

Cross merchandising

Impulse purchases

Promotions

Retention programmes

Promotions

Merchandise assortment and variety

Remote shopping

Seasonal merchandising

Pinpointing activities that add value

Retailing – Maximising operational excellence 8

Making it happen - turning the retail offer into reality

 Often, the attributes of the stores do not support the personality the retailer hopes to convey

 The visioning pyramid is a way of capturing all the main elements of a personality and tying them together to highlight gaps, inconsistencies and relationships

Proud to wear the T-shirt

Personality

Customers’ values

Rational benefits

Emotional benefits

Attributes

Build customers’ confidence

Fun

Service that flexes to customer needs

Inspiration

Meet customers’ needs

Feel staff really care

Provide solutions

Ease of shopping

In-store excitement

Stimulated to buy things I didn’t know I wanted

Customers consider us their tutor

Depth of range

Good relationship between price and quality

Always in stock

No-quibble return policy

Interactive in-store displays and demonstration areas

Post-sale service

Ease of paying

A place to bring the family

Store recognised as best service provider in the UK

Store laid out around projects

Trade and customer balance

Easy to find products

Proud to tell people I got it here

Where dreams become real

Retailing – Maximising operational excellence

Defining requirements for staffing – the rules we apply

 Specific skills required in each department

 Number of experts and customer advisers

 Number (and percentage) of full-time and part-time employees

 Expected salary ranges for given skills

 Expected ratio of staff cost to sales

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Clarifying the offer and delivering the goods

Retailing – Maximising operational excellence

Supply

Source/buy Move/store

Suppliers (tiers 1-n) Wholesalers Distributors

Logistics providers

Transform

Manufacture Assemble

Move/store

Contract manufacturing Co-packers

Manufacturing plants Logistics providers

Deliver

Move/store Order fulfillment Final operation

Customer segmentation

Channel partners Logistics providers

Distributors

Customer service and support

Break/fix/repair Spares logistics

Managing returns Reverse logistics

Channel partners Logistics providers

Third-party maintenance

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Supply chain execution and visibility

Demand and supply management

Buy side Sell side

New product development P

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Making it happen – aligning the buy side and sell side

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Retailing – Maximising operational excellence 11

Finding opportunities to improve the supply chain

An understanding of the competitive landscape

+ Insight into the retailing business

+ Knowledge of best practice in th