Retail Audit Help Reduce Costs
31.08.2011 11121

Retail Audit Help Reduce Costs

If you want to keep costs down and monitor compliance with your retail standards, then it makes sense for you to use a tool like retail outlets audit. Alexey Baranov, General Director of Retail Solutions, tells how and when to hold it.

The benefits of auditing

Retail audits are most often needed in three cases.

Firstly, to developing retail operators with still unrealized growth potential. Usually they are interested in optimizing the retail space, increasing the efficiency of personnel, reducing costs, improving work with stock.

Secondly, a stagnant retail business. Usually these are small (up to 8-10 stores) retail chains with a limited administrative apparatus. Most often, they need help in restructuring stocks, staff motivation and quality control of the retail presentation.

Thirdly, large retail chains. They are usually interested in assessing the quality of staff work (sellers, merchandisers, administrators), working with KPI (average check, service ratio, visitor acquisition rate, sales per sq. M of area), the quality of brand representation in retail outlets.

Audit process

Depending on the needs of the company, a list of those retail areas that need to be modernized is compiled. To get a complete picture of what is happening in a particular store or chain, it is necessary to investigate all the main processes: from purchases (pre-order and work with free warehouses - methods, use of matrices, analysis of sales history) to planning routes in the store, effective arrangement of equipment and customer loyalty system.

Audit methods

In the audit process, as a rule, two methods are used - work with documents and work with people.

Firstly, the analysis of financial, managerial, warehouse and other reporting. Secondly, in-depth interviews, interviews with senior officials in each of the areas. Thirdly, visits to quality control of retail outlets (the “mystery shopper” method) or working with a check list. Fourth, personnel certification (identification of competencies, skills, development potential).

Audit Results

As a result of the audit, clients receive:

- pre-order matrix, dimensional grid for specific silhouettes, the optimal order structure for the seasons and its budget, based on the required stock, the remains of previous seasons and the capacity of presentation and warehouse equipment;

- an action plan for the effectiveness of working with current stock balances, getting rid of illiquid assets, improving the collection sellability;

- recommendations on pricing, especially during periods of peak sales and sales;

- analysis by category, KPI and product placement in the store with suggestions for optimizing product categories, presentation places, cross-merchandising;

- a strategic plan for working with suppliers that allows you to most effectively build long-term relationships with the most interesting trading conditions;

- a reporting and operational control system for all areas of the store or the network, allowing easy and understandable work with data arrays. In addition, a system of fines and incentives is being developed to maintain the system;

- conclusions on personnel with a description of personal qualities, competence, skills. Making career development plans for employees;

- recommendations for the promotion and direct advertising of outlets.

Audit practice

Here is one of the successful examples of the use of retail audit conducted by Retail Solutions.

Given: multi-brand stores (located in Moscow - in Mega-3 and Arbat).

Purpose: to increase the net profit of the retail part of the business, increase revenue compared to last year, build an internal reporting system, develop a system of motivation and certification of sellers, change the appearance of stores to an intuitive, redevelopment of retail equipment.

What was done?

To begin with, work was done with warehouse reports and pre-order forms, an interview was conducted with a buyer to identify the principles that he uses when doing pre-orders, standards for working with the current warehouse, an examination of the existing base of developments was made, and supply chains were built.

Then, a self-written analytical system was optimized and joint preparation of a “boxed” product was carried out for further sale to retailers and online stores.

After this came the turn of sales staff - certification, development of motivation aimed at personal sales, creating career plans for employees and training. For administrative staff, a schedule of mandatory procedures was drawn up during the working day.

Then, changes were made in the store itself - the interior of the fitting rooms changed, the most selling and dead places were allocated, low-liquid goods were removed, additional equipment was installed, a more efficient presentation of best-selling silhouettes was made, accessories were allocated in a separate area.

All changes were supported by the marketing plan.

As a result, sales of the complex as a whole compared to the previous year increased by 43% (in the Arbat), sales of accessories increased by 80% - due to the fact that they were allocated a separate place and built internal navigation. The cost of additional equipment, which amounted to about 60 000 rubles, paid off in less than two months. Average bill increased from 1450 rub. up to 1790 rub. The storefront capture ratio (the number of shoppers entering the store relative to the number of shopping center visitors) increased by 17%.

If you want to reduce costs and establish control over compliance with your retail standards, then it makes sense for you to use a tool such as audit of retail outlets. About how and when ...
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