Retail Audit
V alue alue
Value from suppliers Value to customers Value to retail«.
V alue alue
Value from suppliers Value to customers Value to retail«.
What·s
retail audit?
Systematically examining and evaluating a
firm¶s total retailing effort or specific aspect of it.
Purpose
To
study 1. what a retailer is presentl y doing 2. appraise performance 3.make recommendations for the future.
What
does a good audit include?
Regular
audits In-depth analysis Systematic analysis of data Unbiased perspective Willingness to uncover weakness Strengths that can be exploited
How to perform a Retail Audit? To
perform a retail audit the marketer should keep the following views in mind. Psychographics of consumers- To Draft Retail value chain Brand Portfolio ±To fill retail value chain draft with brands and products Retail Format- To fill the retail value chain draft with resources. Service blue prints- Connect the resources and brand/products in a retail value chain.
Psychographic
of Consumers
What is life style of your consumers? How much time they plan for shopping? What is the key driver for shopping (passing time, Money)? What is their disposable income? Are they brand, Price or value conscious or a subset of it (BPV Analysis)?
Brand
Portfolio
It defines the brand /product span that we have to click the consumers. Ever y retail product line must have a combination of products for serving the two basic strategic purposes. Penetration
builders Profit builders
Retail Format
main objective of retail format should be to make consumers¶ process of shopping ver y cozy. The factors which affect the process are:
People
The
involved System Involved Infrastructure ( Show Room space, Parking space, interiors, sitting arrangement )
Service Blue
Prints
It connects the brand or product with the resources for accessibilit y to consumers. Service is not onl y inside the show room but also outside (parking facilitating and others ).
Retail
Audit Process
Retail Audit Process Determination of who does the audit Com pany spec ialist s
Depart ment manag ers
Outside auditors
When Audit is Conducted End of Cale ndar Year
End of Fisca l Year
When Under taking Physical Inventory
Development of Audit Forms
Conducting the Audit
Areas to be Audited
Hori zont al
Verti cal
How long should audit take?
Should employee¶s
be notified in advance?
Reporting
Is audit to be disguised or non disguised?
Should
audit occur while retailer is open or closed?
the results of audit to management
Managements response to the audit
How is the final report to be prepared?
Who
does the audit
Internal audit company audit specialist company department manager External audit
Auditing time and frequency
Logical
timing : End of the calendar year End of the retailer¶s annual reporting year When physical inventor y is conducted Same period (s)- so that comparison can be easy
Areas to be audited
Strategy
Operations
Identif ying strengths and weakness
Types
of audits
Horizontal retail audit : Overall performance ie goals, customer satisfaction, retail strateg y mix, implementation Vertical retail audit : firm¶s performance in one area ± credit function, customer service, merchandise assortment, interior displa ys
Audit Forms
Planning 1.
2.
3.
4.
Have you thought about the long-term direction of your business? Have you developed a realistic set of plans for the year¶s operations? Do your plans provide methods to deal with competition? Is there a system for auditing your objectives?
Customer
Analysis (who are your target customers and what are they seeking from you?) 1.
2.
3.
4.
Have you profiled your customers by age, income, education, occupation, etc.? Are you aware of the reasons wh y customers shop with you? Do you ask your customers for suggestions on ways to improve your operation? Do you know that goods and services your customers most prefer?
Organization 1.
2.
3.
4.
and Human Resources
Are job descriptions and authorit y for responsibilities clearl y stated? Have you an effective s ystem for communication with emplo yees? Do you have a formal program for motivating employees? Have you taken steps to minimize shoplifting and internal theft?
Operations 1.
2.
3.
4.
and Special Services
Do you monitor ever y facet of your operations in terms of specific goals? Do you provide time-saving services for greater customer convenience? Do you have policy for handling merchandise returned b y customers? Do you get feedback through customer surveys?
Financial Analysis and Control
Do your financial records give you the information to make sound decisions? Can sales be broken down b y department? Do you understand the pros and cons of the retail method of accounting? Have you taken steps to minimize shoplifting and internal theft?
Buying 1.
2.
3. 4.
Do you have a merchandise budget (planned purchases) for each season that is broken down by the department and merchandise classification? Does it take into consideration planned sales, planned gross margin, planned inventor y turnover, and planned markdowns? Do you plan exclusive or private brand programs? Do you take advantage of cash discounts and allowances offered by your vendor/supplier?
Pricing
Have you determined whether to price below, at, or above the market? 2. Do you set specific markups for each product categor y? 3. Do you know which products are slow-movers and which are fast? 4. Have you developed a markdown polic y? 1.
Atmospherics 1.
2.
3.
4.
Are the unique appeals of your business reflected in your image? Have you figured out the best locations for displays? Do you know which items are brought on ³impulse´? Do you use signs to aid your customers in shopping?
Promotion 1.
2.
3.
4.
Are you familiar with the strengths and weaknesses of various promotional methods? Do you participate in cooperative advertising? Do you ask customers to refer your business to friends and relatives? Do you make use of the community projects or publicity?
Audit of Environmental Issues
± Is the store recycling plastics and noncontaminated cardboard? ± Does the store sell reusable shopping ± Does the store have receptacles for the Customer to recycle bags and batteries?
bags?
Conducting the audit How long to conduct the audit? Should they inform their employees ? - disguised audit - non disguised audit When to audit? - when the retail is open? - when the retail is closed?
Reporting Audit findings & Recommendations to Mngt
Audit report ± formal/informal, brief/long, oral/written Mngt should treat each and ever y point of the audit result seriousl y.
Type
of reports
± Top Finding Reports ± Score by question ± Score by section (Cash, Front-end, Food Safety)
Responding to an Audit
Strengths ± capitalise on them
Weakness ± revise the strategies to overcome this
Constraints in conducting an Audit
Costly Quite time-consuming Employees may feel threatened & ma y not co operate Incorrect data/Insufficient data Management ± not responsive to the findings
Example
EPICOR
R ET AIL - AOM
AOM processes transactional data to enterprise system AOM gives control over all operations and enhances business decision AOM is designed to meet challenges in multichannel retail chains 100 retailers- 20,000 stores and $50 billion annual transactions
Data
solution for retail environment
Integrity of data flowing to an enterprise Improve accuracy of all applications Strengthen company¶s bottom line profitabilit y Monitor store operations
Data
Management Applications
Sales audit
Loss
prevention Voucher management Employee productivity and commission Credit settlement
Video Case
Retail Dashboard
MetricStream
Benefits of the MetricStream Solution
Recent
regulations and growing losses due to shrinkage and other operational inefficiencies have placed dependable audit program as a ke y component in a business¶ success. The MetricStream solution enhances existing audit process by providing capabilities that cater to the present day retail challenges such as real time monitoring and access to actionable data, increased frequency and accuracy of audits making it a best in class solution.
Features«
Automatic: Data is entered in web-page audit forms
minimizing the scope of error. These audit forms are automatically synced up with the centralized audit database to maintain a repositor y of findings and results. Connectivity: Data captured off-line can be automatically uploaded into the audit system when the auditors connect to the network. Reports and Metrics: Analytical reports and metrics like Audit Summar y Report, Audit Detail Report and Audit Scorecard are available to the managers with the provision of generating reports in MS Word.
Features«
Cost
Effective: More accurate and frequent
audits are conducted with same resources. Security: All the data transmission, storage and login process is encr ypted limiting the user access to authorized resources. Alerts: Detects errors and deviations, and alerts mangers in case of excessive loss including shrink%. It has integrated corrective action and incident tracking s ystem with automatic alerts.
Features«
Data Repository: Audit
database records all historical analytics, trend-analysis, and root cause analysis on inventor y losses, safety and quality incidents. Real-time Access: Access to actionable information in real time helps reduce losses and implement corrective and preventive actions. Standardized Process: The solution can be used at multiple sites simultaneously, standardizing the audit process across various branches of the chain.