An_Analysis_of_Three_Operational_Activities_Within_the_Bournemouth_Branch_of_Republic

An analysis of three operational activities within the Bournemouth branch of Republic Prepared for Barry Surman By Laura Buthlay 15th December 2010 Contents Page Executive Summary Page 1 Introduction Page 2 Analysis Page 3 Proposal Page 4 Customer Service Page 4 Store Appearance Page 5 Stock Availability Page 5 Conclusion Page 6 Recommendations Page 7 References Page 8 Appendix A Page 9 Appendix B Page 10 Appendix C Page 10 Appendix D Page 11 Appendix E Page 12 Executive Summary This report aims to identify the perceived strengths and weaknesses within Republic, a national company in the Fashion Retail sector. The main focus of this report is to review the current offering and to suggest three operational improvements that have been demonstrated to be of key importance and are proven to contribute to sales and productivity. The findings of the Primary research revealed that three key areas could be easily and cost effectively improved: * Customer Service The findings were that the staff in Republic appeared not to be customer-focused but instead focused on administrative work at the tills, re-stocking and tidying of goods. Staff were not pro-active in offering assistance and when assistance was asked for the help given fell short of the service quality expected. Recommendations detailed in this report include staff training in the short term and potentially re-evaluation of the recruitment process in the long term. * Store Appearance The store appearance was identified as the main area of weakness within Republic. This is due to a badly planned layout and overstocked floor space. This report suggests an improved layout plan to create wider aisles to improve accessibility and customer flow and re-siting the till points to the front of the store to improve staff visibility. * Stock Availability Research revealed that the store appeared to be over-stocked for its size. The general confusion was added to by poorly organised displays. Customers are left bewildered as to availability of goods and staff were unhelpful in sourcing the correct goods. By implementing the suggested improvements to these three operational activities the Bournemouth branch of Republic have an exciting opportunity to improve customer satisfaction and experience, which will drive increased sales and profitability in the future. Introduction Retail Operations managers are constantly seeking new ideas to improve their store with a view to increasing their profits. Operations Management can be defined as “The management of the operational aspects of a retail business that seeks to maximise the efficiency of these resources. Operations management converts resources into sales and profits” (Dunne et al 2002, p.60). This report aims to identify perceived strengths and weaknesses within an existing retail organisation’s operational procedures, report the findings and then suggest relevant recommendations for improvement using academic underpinning to support these proposals. The store chosen for this assignment was Republic, a nationally recognised multi branded high street fashion retailer which has continued to expand over the years. This report will look at three different operational activities proven to be key areas that contribute to sales and profitability within a retail store, these are Customer Service, Store appearance and Stock availability. Analysis Primary research was conducted on a Saturday afternoon to study key areas and services you would experience in that particular retail store. (See Appendix A for completed document). The findings were then evaluated to assess the three most important aspects which needed to be addressed. In addition to the primary research, undertaken to identify strengths & weaknesses within the store, a SWOT analysis was carried out to assist in the decision making process and to enable strategies to be developed in order to accomplish objectives. (See Appendix B). An evaluation of the SWOT analysis identifies that Republic's strengths are its unique brand, excellent market position and good high street locations, but the weaknesses, discussed above, identified in the Bournemouth store, could deter customers. These weaknesses therefore need to be addressed in order to improve profitability and customer service. Proposal Based on the analysis of the previous section of the report, the three operational activities chosen for this assignment are: * Customer Service * Store Appearance * Stock availability Each activity will be evaluated and improvements and recommendations for the store will be put forward. Customer Service Research suggests that ‘The Feel Good Factor’ is a key element of providing excellent customer service. Johnston & Clark (2005, p.106) state that customer service is about two main objectives, "delivering the promise, dealing well with problems and queries and, wherever possible, providing a personal touch and going the extra mile". Customers who receive informed, courteous and personal attention are more likely to return and to recommend the store to others. “If standardisation is the cornerstone of retail excellence, then customisation is the key to retail differentiation” (Fernie et al 2003, p.220). Fernie et al discuss that customisation, i.e. personal attention to the customer's needs, creates retail differentiation and a better customer experience. This is where Republic could improve by training its staff to spend more time on the shop floor, interacting with customers and listening to their requirements in order to provide a more bespoke service to create a competitive advantage. Leppard & Molyneux’s positioning matrix on consumer quality perception indicates where a retailer may be positioned, based on their provision of the quality of the package the customer receives and the ‘feel good factor’ (See Appendix C). After studying the Matrix in Appendix C the writer feels that Republic would fall into the category, ‘honest striver,’ as the quality of the basic package is there but the current ‘feel good factor’ is low. In order to improve the ‘feel good factor’ in an organisation the customers’ needs and expectations should be considered carefully. “A customer-focused retailer should encourage customers to complain when they are dissatisfied. This is because it is a good way of finding out what customers think of the service offered. By listening to customers, retailers can improve their operations and service” (Fernie et al, 2003). Republic could implement Fernie's suggestion by moving the till-points to the front of the store and by installing a "Customer Service" point at that location. In order to identify the perceived needs of customers and assist companies to prioritise and improve their service quality, Parasuraman, Zeithaml & Berry produced the ‘SERVQUAL MODEL’ (see Appendix D) which is used widely within service industries, and which can also be used internally to understand employees perception of service quality with the intention of achieving service improvement. This model is an invaluable tool to companies seeking to understand what it is a customer is looking for and furthermore, how to achieve it. Store Appearance “The layout of an operation means how its transformed resources are positioned relative to each other and how its various tasks are allocated to these transforming resources” (Slack et al 2010, p.179). Slack highlights the importance of the visual and practical layout of the store. A store layout should provide appropriate space for display and browsing and include prominent locations for promotional items and impulse items within the store. Retailers employ various strategies to encourage consumers to spend more and to distract them from the original point of their visit. The well-known phrase ‘eye level is buy level’ demonstrates that retailers place premium goods at consumer eye-level in order to encourage impulse buys. Ambience can also differentiate a store i.e. fashion retailers usually have bright lighting in order to show the clothes at their best and play the latest music to create an upbeat atmosphere. Republic uses a typical free-form layout (see Appendix E), the tills are located at the back of the store and are barely visible from the entrance. The aisles are cramped and untidy which means the products are not being displayed to their full potential. McGoldrick (2002, p.468) states that although this approach is more visually appealing, a free flow layout allows for a less intensive use of space, is cost intensive and, if the merchandise is not presented in a co-ordinated manner, then the overall effect may be of confusion. Although Republic is in a good position with regards to its USP, something needs to be done to make the customer experience a good one and to meet expectations of service and delivery. Stock Availability Upon entering Republic it is immediately obvious that there seems to be a huge amount of stock for a store of its size and, the fact that it is not grouped well, leads to confused flow patterns, customer queues and ultimately dissatisfied customers leaving the store because they were unable to find what they came in for. Lockyer and Wynne (1988, p.66) state that “excess stock-in-store is not only a wasting asset; it is both an interference to information flow and a cost generating burden. It has to be housed, counted and controlled.” They discuss that removal of excess stock will allow attention to be placed where it is needed most and will release space which can be used profitably. Whilst there is a wide range of stock available to the customer in Republic, the amount of stock on display can be overwhelming. This could create a negative effect on the customer as there is insufficient room to browse. Reverting to Locker & Wynne’s quote above, overstocking causes retail operations managers to waste valuable time counting and controlling the stock when their time could be used more profitably. A store needs to be able to provide a welcoming and inviting atmosphere to entice customers into the shop and then retain their interest once they are there. A retailer’s aim is to keep a customer in their store for as long as possible and to provide them with maximum product exposure. “On the one hand items held in stock could deteriorate, become obsolete or just get lost, and, furthermore they take up valuable space in the operation. On the other hand, they provide some security in an uncertain environment that one can deliver items in stock should customers demand them” (Slack et al 2010, p.340). Slack demonstrates in the quote above the dilemmas Retail Operations Managers face in relation to stock, particularly in the current economic climate, which makes it impossible to predict stock levels and demand patterns. The temptation for the retailer is to display all stock, both current and sale stock, on the shop floor but as demonstrated above this can result in the store looking tired and overfull. Conclusion From the analysis of Customer Service, Store Appearance and Stock Availability within Republic, it is evident that improvements could be made immediately which would increase customer satisfaction and improve perceived expectations within the store. Thereafter a long term strategy using the suggestions detailed could be implemented to drive sales and profitability going forward. Although Republic is currently seen as an ‘honest striver’ it needs to implement strategies and change in order for it to become a ‘winner’. “Education and training have an important part to play in motivating all staff towards seeing improvement as a worthwhile activity” (Slack et al 2003). Slack et al believe that staff training is key to these changes and implementing a training strategy will increase staff motivation, as although the staff when approached in Republic seemed knowledgeable, the communication levels were basic and they did not go the extra mile to ensure product and service delivery. Staff failed to present sufficient information to satisfy consumers' purchase decisions which could dissuade them from making an immediate decision to purchase. My research revealed that customers who required assistance in the store had to approach the staff. This failure to pro-actively approach customers could lead to loss of sales as some customers are not inclined to seek out help because of time constraints. Referring to the earlier point concerning store lay-out, customers entering the store to browse may not be so readily dissuaded by the layout but customers with a specific purchase in mind, could be deterred by the ‘maze like’ layout and may decline to navigate through the store from one set of products to another. In summation with staff training, a well thought out lay-out plan and better displayed, properly sorted stock, Republic could improve its current offering and ultimately increase sales and profits. Recommendations Upon studying the findings of the research implemented, short term improvement recommendations would be to devise and implement a staff training programme to: * Increase product knowledge. * Increase staff confidence and willingness to pro-actively approach and interact with customers, to enhance customer experience by building a personal rapport, encouraging customer loyalty. * In the long term Republic could consider their recruitment process and ongoing staff training to ensure the right staff are selected and that there is a training process in position from the outset. Reducing the amount of stock displayed on the shop floor would: * Improve the overall appearance of the store * Create a more efficient layout * Improve customer experience * Reduce staff administration time. Careful evaluation of which product lines are selling best and then attractively displaying those product lines to make the best use of the space provided is also recommended. The main recommendation for Republic is to consider the layout of the store as follows: * Widening aisles, especially in the womenswear section * Creating a main aisle from which customers can branch off to browse stock would not only improve the appearance of the store, but would increase the flow of traffic and create a sense of direction. * Moving the till points forward from the back of the store to ensure staff are more visible. Customers will feel more re-assured if they can see staff on hand to help. Word Count: 1,885 References Dunne, P., Lusch, R., and Gable, M., 1992. Retailing. 2nd ed. South-Western Publishing Co. Fernie, J., Fernie, S., and Moore, C., 2003. Principles of Retailing. Oxford: Butterworth-Heinemann Johnston, J. and Clark, G., 2005. Service Operations Management. 2nd ed. Harlow: Pearson Education Limited. Leppard, J. and Molyneux, L., 1994. Auditing your customer service : the foundation for success. London: Routledge. Lockyer, K.G., and Wynee, R.M., 1989. The Life Profile of stock as a control measure. International Journal of Operations & Production Management, 9(1), 57-66. Available from: http://www.emeraldinsight.com [accessed 6 December 2010]. McGoldrick, P., 2002. Retail Marketing. 2nd ed. London: McGraw-Hill. Slack, N., Chambers, S., and Johnston, R., 2010. Operations Management. 6th ed. Harlow: Financial Times Prentice Hall. Zeithaml, V., Parasuraman, A., and Berry, L., 1990. Delivering Quality Service. New York: The Free Press. Appendix A Primary Research: Republic Store Assessment | Findings | SECTION A: Welcome | | Number of customers in shop: | 21 | Number of staff visible: | 5 | Acknowledged with a smile or greeting' | No | What were the staff doing' | Restocking shelves / at the changing rooms / at the tills | Did a staff member approach' | Only came into contact with staff at the tills and changing rooms | First impressions of shop: | Busy, cramped, lack of visible staff | How was the layout / display' | Layout made it difficult to navigate around the store, too much stock on shop floor | SECTION B: Selling Skills | | Did the staff ask questions to clarify needs' | No | Did staff listen & respond to answers' | Yes but not very helpful | Were you presented with a choice of items to consider' | No other items offered | Did the staff have good product knowledge' | No, on one occasion I asked if an item could be machine washed and they did not know and on another occasion I asked if they would be getting any more of an item in and they said they didn’t know & I would just have to keep checking back | Did staff handle objections and suggest alternatives' | No other items offered | SECTION C: Customer Service | | Did the quality of service make you want to return' | Quality of service was a lot less than expected. | Did the staff say good bye' | Impersonal goodbye said at till without eye contact. | What aspect of the visit impressed you the most' | Store atmosphere – lively & bright | What aspect of the visit disappointed you the most' | Customer service especially staff interaction, and ability to find what I was looking for. | What one thing would you change about the store or the service' | Definitely the layout. | Appendix B SWOT Analysis Strengths * Good high street location * Unique ‘house of brands’ model sets them apart from the competition * Recognised name | Weaknesses * Confusing layout * Customer service * Does not appeal to all * Stock levels | Opportunities * Staff training * Promotions & advertising | Threats * Rapidly changing consumer tastes * Possible loss of staff due to economic climate | Appendix C Leppard & Molyneux’s positioning matrix on consumer quality perception SHAM | WINNER | LOSER | HONEST STRIVER | High ‘Feel Good Factor’ Low Low High Quality of the basic package Appendix D Past experience Needs Word of mouth Customer Expectations 1 Providers’ perceptions of customer expectations 2 The Gap Service is specified 4 3 Service is delivered External comms. Perceived service Key: (1,2,3,4) = A GAP Service Quality Delivery – Perceived Gap Model Parasuraman, Zeithaml & Berry – Delivering Quality Service Perceived service quality shortfall produces ‘The Gap’ consisting of: * Gap 1 - the difference between management perceptions and what customers expect. * Gap 2 – the difference between management perceptions and service quality perceptions. * Gap 3 – the difference between service quality perceptions and actual service delivery * Gap 4 – The difference between service delivery and what is communicated externally Appendix E Free flow layout similar to Republic Changing rooms Window Entrance Stock room Window