All sold out
Shoppers may have a fine time sifting through buys and grabbing their wares, but what goes on behind the sale? Find out more about the retail industry from the management point of view.
By Melody Tan
Retail is not just about selling or the salespeople you see at stores and cashier tills. Much action and coordination goes behind the scenes to get products on and off the shelves.
For example, logistics and distribution plays a key role in retailing as the products have to move from the manufacturer to the retailer. Other considerations that retailers have to think of are store locations, stock levels and finances. Marketing is also involved as retailers have to attract the target audience of the product. To make sure all the processes run smoothly, there is a need for retail management.
What is retail management?
Retail management is managing the retail business to achieve the desired retail goals and objectives. It can be divided into three areas: managing the supply chain, managing retail operations and managing the consumer.
Managing the supply chain
There needs to be knowledge of the particular products and their supply markets, before money can be allocated to the products. Enough stock has to be available to meet anticipated sales, but at the same time, there cannot be too much stock tied up with the retailer as there is inventory cost as well as the risk of products becoming obsolete. This is especially so for fresh produce or high-fashion goods.
Logistics is crucial in transporting stocks to the retail outlet. Arrangements have to be made for deliveries from suppliers through the retail supply chain, which involves transportation, warehousing and sorting. In some supermarkets selling fresh produce, the merchandising and logistics departments may be merged because the logistics of food supply are vital to the success of the product.
Managing retail operations
This involves seeing to the day-to-day operations, such as monitoring performance of the products, so decisions can be made on the right mix and amount of products to appeal to customers. It also includes implementing marketing tactics, allocating space to promotion items, overseeing price amendments and raising awareness of marketing campaigns with those directly involved with sales.
Funding the products entering the business and receiving income from sales is also the backbone of a retail business, and essentially determines the cash flow of the company.
Financial management is thus necessary to make sure that resources are deployed efficiently. The fixed costs of running the store, the salaries of the staff as well as merchandise-ordering forecasts, have to be balanced with sales targets, revenue and profits earned.
The retail business is “people”-oriented and is heavily reliant on people to make it work. This means that human resource management is important as managers have to ensure that the training needs of the staff in every department are met, and that their performance is monitored.
Managing the consumer
The retailer has to communicate with customers, to make them aware of the offerings available, and to stimulate their desire for the products.
This can be done through advertising, sales promotions and public relations. Everything the retailer does communicates something to the customer, so the exterior of the store, window displays, interior design and layout, all combine to communicate a store’s personality and to add to the store’s image.
This even includes colours, lighting, music, width of aisles and interior displays. The image is further reinforced by the number and quality of services that are available to the customer.
Strategies adopted have to be consistent with the defined image. For example, price discounts would not be suitable for a store gunning for an upmarket image.
The retail industry in Singapore
In Singapore, 135,000 workers were employed in about 20,000 retail establishments, according to the Ministry of Manpower’s Labour Market Survey in June 2004. This was about 6.3% of the total employment in Singapore at that time.
In particular, departmental stores and supermarkets were the largest employers, followed by motor vehicles and accessories, then apparel, footwear and bags subclusters. The retail sector contributed about $3 billion or 1.9% to the GDP. The retail sector also registered the highest sectoral growth rate of 14.6% in 2004.
The government is also spear-heading the Retail 21 plan, which is a 10-year strategic plan launched in March 2001 to grow and expand the retail sector in Singapore through higher efficiency and standards of retail establishments. With the economy looking up, shopaholic Singaporeans will fuel the retail sector’s growth.
That means more people will be needed to keep the drive in the relatively large industry to improve service standards.
There are many careers available in the retail industry to satisfy the different functions needed. These range from advertising, public relations, to personnel and warehouse management. While being IT and computer-savvy used to be a plus for retail candidates eyeing a managerial position, today it is a necessity to monitor inventory, control supply chain management, keep track of finances and conduct sophisticated marketing research.
The creation of skills and career advancement routes is needed to raise the professionalism of jobs and improve customer service and retail productivity. This will make the retail industry an attractive long-term employment option.
More courses have been offered in various institutions to cater to this need. More notably, The Retail Academy of Singapore, officially opened in March 2004, was established to support retailers and shopping centres by providing training programmes that will help raise the capabilities of their workforce at all levels. Courses include the MBA in Retailing and the Diploma in Retail Management, as well as other courses in retail finance and merchandising.
The Singapore Retailers Association also holds courses on Retail Supervisory Management, Basic Retail Security and Loss Prevention and Customer Handling Skills. Based on focus groups conducted by the Workforce Development Agency (WDA) in 2004, skill gaps among operational employees are mainly in the areas of customer service and product knowledge skills. Training could also be enhanced in managerial skills for supervisory and management employees.
WDA offers a Retail National Continuing Education & Training (CET) Framework to develop competency-based training programmes and certification pathways for the retail industry, under their Worforce Skills Qualifications initiaitive. These courses range from handling merchandise display, selling products and services, to training and assessing staff. Polytechnics like Temasek Polytechnic and Singapore Polytechnic also offer specialised diploma courses in Retail Management, with necessary hands-on experience on the shop-floor level.
The future of retail
Consumer is king, and this cannot ring more true in today’s retail climate. Retailers need to have improved consumer understanding while providing higher standards in service and quality, taking care of both tangible and intangible benefits. Also, more emphasis has to placed on brand, image and positioning, especially in an environment where there are more choices both on and offline.
Most importantly, competent retail managers are needed to coordinate all aspects of the retail process, from supply management to merchandising, to financial accounting and allocation, as well as marketing, design and management of a store.