Supermarket / Grocery Store Operations Improvement


Over the years the members of our consulting team have created and/or refined operating procedures for the majority of food retailers with annual sales over $500 million. That process was very successful, and very valuable, for the retailers who engaged us. In continuation of that tradition, we continue to offer Supermarket / Grocery chains superior customer service and our deep experience base.

Our approach to working with a client organization is focused on partnering. We see our role as one of a coach, guiding and teaching our client teams to function more effectively. We measure our success by their ability to function better after we have departed, having benefited greatly from our presence.

Our grocery consulting team is staffed by experts who have decades of deep operational consulting experience and industry leadership experience. We believe that the food segment of retail is sufficiently unique to warrant specialists who know food operations intimately. Our team has that specific knowledge.

Typical food (store operations) projects begin with a detailed Assessment for senior management. In this Assessment we identify and explain all of the opportunities we believe exist for a client. Our approach gives our clients all of the detail they would need to make positive change happen in their stores. Most of our clients are so impressed with our depth of understanding that they have asked us to also test and/or guide implementation of the agreed upon opportunities for them.

We can assist you to improve your food retail effectiveness with various types of consulting assistance including:

  • Operational Best Practices Implementation
  • Operational Benchmarking
  • Operational Training Programs
  • Management / Leadership Skills Training
  • On-floor Associate Service Behaviors
  • Customer Experience Assessment
  • Customer Service Strategies
  • Optimal Front-End Procedures
  • Front-End Supervision
  • Front-End Service Behaviors
  • Price Integrity Improvement Programs
  • Inventory Management / SKU Rationalization
  • Backroom Inventory Reduction
  • Backroom Layout and Utilization
  • DSD Procedures / Vendor Negotiation
  • Cycle Count Procedures               
  • Production Planning Techniques              
  • Optimal Night Crew Procedures               
  • Efficient Re-Order Practices
  • CRM / Loyalty Programs               
  • Cash Office Procedures
  • Pharmacy Productivity Improvement
  • Labor Standards Development
  • Scheduling System Implementation / Testing
  • Operational Procedures Documentation
  • Operational Analysis
  • Operating Metrics
  • Shrink Control Programs
  • Category Management
  • Vendor Labor Utilization
  • Organizational Re-Alignment
  • Store Systems Assessment
 

Our Operational Improvement Programs typically include:

  • Operational Analysis
  • Model Store selection
  • Applicable Best Practices Recommendations
  • Implemented Solutions for testing
  • Performance Metrics and measurement
  • Revised Procedures Manuals
  • A Transfer Methodology for Chain-Wide Roll-Out
  • Train-The Trainer transfer preparation


Our extensive food operations experience permits us to rapidly identify opportunity areas for our clients and recommend specific improvements that are both implementable with the skills we will teach your team and valuable in that they will reduce your operating expense and better permit your organization to optimize sales.

 
Sample deliverables that you could expect include:

  • Revenue increase
  • Store payroll improvement of 50 – 100 basis points
  • Improved service environment
  • Faster operational task completion
  • Improved awareness of operational productivity
  • Lower cost per unit to perform operational tasks
  • Improved sales floor/stockroom in-stock condition
  • Refined / updated operational procedures manual

We suggest that your senior operations management give our services serious thought. If you have an interest in learning more, please feel free to contact Pat Fitzpatrick at 770-754-5008.

 

 

Optimizing Existing Store Operational Procedures


Over the years the members of our consulting team have created and/or refined operating procedures for the majority of retail firms with sales over $300 million. That process was very successful, and very valuable, for the retailers who engaged us. Over time, however, the performance lift gained will decline unless the retailer continually trains their operational staff. This decline typically occurs because of natural turnover, ineffective internal trainers, lack of understanding of how to manage productivity, other “operational fires”, and ineffective performance coaching.

Employee training performed by many retailers is typically insufficient and ineffective. With the elimination of most retail training departments, only limited training staff exist in many retail organizations, if any, and these people are tasked with the daunting challenge of training masses of employees - as best they can. The training approach typically employed today is self-directed E-Training with limited or no follow-up by management.
 
Given this scenario, Atlanta Retail Consulting has developed a unique approach to assist our retail clients to re-gain, or surpass, the performance levels once achieved by re-training your operational supervision to improve your operating procedures. The approach we are offering is based on the premise that you already have reasonably productive operational procedures and labor standards that approximate Best Practice. This approach is unique in that rather than suggesting a re-do of your procedures, we suggest a focus on re-training your operational team Supervisors and Managers to re-establish a deep understanding of productivity, task organization, and performance coaching utilizing your current procedures and labor standards.

 
 
The core functions we suggest for this re-training effort typically include:
  • Receiving
  • Processing
  • Merchandising / stocking
  • Recovery and
  • Price / signage maintenance.

Other functions (e.g. P-O-G maintenance, cycle counts, RTV, special orders/rain checks, etc.) could be added at the retailer’s discretion.

The training flow would include process planning/organization, proper layout, best use of resources/equipment, employing Best Practice procedures, utilizing performance standards, and giving appropriate positive performance feedback.
 
 
Deliverables that you could expect from a properly organized re-training effort include:

· Renewed focus on operational excellence

· Faster operational task completion

· Improved awareness of operational productivity

· Lower cost per unit to perform operational tasks

· Improved sales floor/stockroom in-stock condition

· Improved sales floor condition (recovery/signage/fixture placement, etc.)

· Refined / updated operational procedures manual

We suggest that your senior operations management give this approach significant thought. Our team members who would assist you are individuals who have decades of retail training experience and have assisted retailers of all formats to improve their operational performance.
 
If you have an interest in this approach, please feel free to contact us for a more in-depth, no obligation, discussion at 770-754-5008.
 

 



 

 

Atlanta Retail Consulting Releases New Corporate Website - Press Release


Atlanta Retail Consulting Inc has announced the release of their new 2012 corporate website. Pat Fitzpatrick, President & CEO of Atlanta Retail Consulting stated; “We are very proud of our new website. The new site design is better able to highlight our significant capabilities in the retail consulting arena and the update reflects the growth in our product offering. Since inception, our practice has been very well received in the industry. Each year we have continued to broaden our skill-set and offer an increasingly comprehensive array of services.”

Atlanta Retail Consulting provides strategic insight, innovative customized business analysis and operational improvement to retail and consumer products clients, permitting them to increase sales revenue, decrease operating cost, and increase operating margin. A key practice differentiator we possess is the breadth and depth of experience that our retail consultant team has accumulated while working in virtually every retail format. Our retail consultant team boasts over two full centuries of successful retail consulting and retail leadership expertise.

Category Management

In today's highly competitive retail environment, retailers must work harder than ever to differentiate
themselves in the minds of consumers as well as determine and procure the best offerings for these consumers in an efficient and timely manner. Retailers who act now to effectively exploit existing and developing consumer data technology will be those leading the industry into the next century.

Category management is a strategic tool which allows you to harness today's resources to gain a larger part of tomorrow's market share. Implementation of category management improves your
productivity through:
  • Focusing on consumer needs
  • Aligning categories into strategic business units
  • Integrating key business functions
  • Exploiting new technology
  • Developing strategic business alliances
  • Creating proactive business processes

Category management is more than the application of technology and information tools - it is a business philosophy focused on asset management which facilitates your ability to:
  • Maximize both sales and profitability
  • Optimize shelf space, inventory movement, and customer traffic
  • Reap the benefits of the retail industry's (ECR) efficient consumer response initiative

Our recommendation for retail involves the people, processes and systems of your organization. We suggest that you focus on the following components of the category management process:
  • Development of an overall identity for your company
  • Development of an organizational model with clearly defined roles for buying and merchandising (category managers and replenishment buyers) and built-in accountability
  • Assessment of corporate financial goals
  • Analysis of activity-based costing (ABC) and direct product profit (DPP options
  • Selection or improvement and application of customer and retail data technologies, both hardware and software, as well as training
  • Definition and assessment of categories within the framework of the corporate gameplan
  • Development of strategies, tactics, goals and objectives for category segments
  • Creation-of comprehensive category performance measures and scorecards
  • Category Management Training Programs for buyers/merchandisers and store operations personnel
  • Forging or improving partnerships with other players in your logistics pipeline to reach category sales and profit goals

Effective category management is reliant upon teamwork and cross-functional communication. Our team works in conjunction with yours in developing and executing plans, as well as measuring your performance and refining your approach accordingly.

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Managing Retail Pricing Integrity

It's no secret that retailers are struggling with price integrity. Unfortunately, determining the cause of pricing errors isn't easy. The entire process - from buying to selling - needs to be examined.

Pricing Errors
There are several types of pricing errors, each with varying causes and solutions.
  • Scanning Errors occur when shelf prices and register prices are not consistent.
  • Controller Errors arise when register prices do not match host prices, often because increases are not updated to the store POS controller.
  • Not On File (NOF) Errors occur when items are not in the computer file

Ramifications
  • Diminished customer confidence - Consumers are demanding more than enhanced service. They are more price and value conscious than ever before. Incorrect and inconsistent pricing procedures adds to shoppers' discontent.
  • Lost revenues - Grocers, for instance, are losing an average of 5+ cents per pricing error. In addition, a common overcharge policy is to give the first item to the customer at no cost. Less obvious losses stem from an unproductive use of time, such as balancing underrings and overrings
  • Increased regulation - As a result of consumer litigation, standards are being developed by various state and federal agencies, including the National Conference on Weights and Measures
  • Regulatory fines - Civil penalties, due to price integrity violations, are increasingly impacting retailers nationwide.

In order to help your organization deal with this challenge we recommend that you evaluate existing pricing systems, sample pricing in select locations, determine the depth and cause of the errors,
and develop a process to correct these errors. This should be accomplished through:
  • Store visits
  • Pricing audits
  • Interviews with store managers and pricing coordinators
  • Operational observations; as well as
  • Operational data collection and analysis

This process should include an examination of several areas to achieve optimal
results. These include:
  • The Price Coordinator Position - Review job responsibilities, performance standards and
  • training materials
  • Store Reports - Ensure they are user-friendly and contain pertinent information
  • Pricing Cycle Timing - Implement adequate lead times for various tasks
  • Operating Policies - Ensure they are up-to-date and in use. If not, policies are refined for efficiency and practicality.
  • Communication Process - Establish effective communication between all levels
  • Buying - Review policies and procedures for new item set-up, price changes, DSD, special deals and ad breaks
  • Distribution - Identify and correct unauthorized items and inaccurate UPC codes before products arrive at the store
  • Systems - Evaluate file synchronization on store price files. Review time cycles for new items and item corrections from buyer to store. Determine system gaps.
  • Management Philosophy - Determine if and how each employee is responsible for price integrity

Typical improvements that retailers experience from properly addressing this challenge include:
  • A 98 percent pricing accuracy
  • Establishment of training procedures and performance standards for the store price coordinators
  • More user-friendly reports that provide useful and actionable information
  • Enhanced communication throughout the organization
  • A price integrity corporate focus that leads to better customer service and enhanced profitability


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Shrinking Shrink

The bad news? Retail shrink is on the rise and cost the industry $37 billion in 2010, according to preliminary results of the National Retail Security Survey released at NRF’s 2011 Loss Prevention Conference. The good news? Retailers can control, and often reduce, the percentage of shrink eating away at profits. In fact, retailers with a serious shrink problem can increase the bottom line by 0.5% -1 %.

The key elements of shrink - internal and external theft, vendor and carrier fraud, inaccurate accounting charges -- haven't changed much. However, with the advancement of retail systems, some new elements are appearing - pricing integrity, store polling accuracy, UPC management, and others. Therefore, the way retailers are attacking shrinkage is changing. Traditionally, shrink was considered a store-level problem. But no more. Retailers are finding out that shrink can originate at all levels - from buying to distribution to selling. That's why they're turning some of their attention to non-store activities, such as buying, information technology, and accounts payable.

Where Retailers Rank
Shrinkage was divided into employee theft (43.7%), shoplifting (32.6%), administrative error (12.9%) and vendor fraud (5.4%). The remaining shrinkage resulted from unknown causes. Companies reporting in the NRF Study indicated that 18.7% of employee theft cases involve collusion between internal and external sources. Retailers with lower-than-average shrink include office supply stores, home furnishings stores, and entertainment and media gaming stores. Retailers with higher-than-average shrink include supermarket and grocery stores, specialty accessories stores, and furniture stores. (Much of grocery stores’ shrinkage comes from spoilage according to the NRF,
which is not an issue that many traditional retailers have to deal with.The shrink numbers from drug and pharmacy stores doubled over last year.

Root Causes
Sources of shrinkage vary Widely and include such variables as:
  • Lack of pricing integrity in the POS system
  • Inaccurate capture of all price adjustments
  • Inaccurate physical inventories due to poor
  • Cutoff errors in distributing merchandise to stores
  • Inaccurace charging of interstore transfers
  • Duplicate or overpayments made to vendors
  • Lack of reconciliation of charge backs to vendors
  • Refund and void fraud
  • External theft by organized gangs

Getting on Track
While shrinkage is difficult to identify and correct, the results are worth the effort.
Following are best practices that should be a part of your improvement plan:
  • Review policies and procedures for new item set-up, price changes, DSD, special deals and ad breaks
  • Identify and correct unauthorized items and inaccurate UPC codes before products arrive at the store
  • Establish a thorough IS audit program
  • Adopt cycle inventories to provide more frequent information on changing trends
  • Establish a quality program to monitor accuracy of intracompany shipments
  • Utilize electronic article surveillance tags on high-theft items
  • Utilize exception reporting at the associate level for sales clerks and cashiers
  • Implement associate awareness and training programs (a very effective component)
 
 
For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Business Transformation - You Can Make It Happen

Retailers are transforming their businesses by examining their industry and market position while assessing the objectives of the total organization. The transformation process determines where functional objectives and supporting human and cultural elements may have created gaps between the optimal and actual operating structure and results. The process touches all aspects of the organization -- both internal and external-- to design comprehensive solutions.
 
 
Identifying Opportunities
There are several key indicators that alert retailers of potential challenges to overcome through business transformation:
  • Higher than average industry SG&A ratios
  • Declining and/ or flat sales results
  • Top performing functional areas coupled with high overall expense rates
  • Below industry inventory productivity
  • Companies in distress

Approaching the Challenges
We recommend a tried and true business transformation approach. First, conduct a comprehensive
review of all practices and productivity levels across the organization. Next, design
reengineering efforts to drive newly defined company goals. Finally, focus on:


Merchandising
  • Leverage merchandising information systems to enhance forecasting
  • Establish micro-merchandising capabilities
  • Establish strategic supplier partnerships
  • Reduce overall inventory costs
  • Review organizational structure of merchandising areas
  • Implement effective merchant goals
  • Develop measurement standards.

Sales & Customer Service
  • Develop a consistent and accurate Customer Service Index
  • Create employee recruiting and selection criteria
  • Implement recognition and reward programs.

Finance & Administration
  • Improve performance in all back office, financial and paper processing areas, including accounts payable, sales audit, general accounting, credit and collections, headquarters and administration
  • Implement productivity measurement, goal-setting and feedback.

Organizational Renewal
Link each of the above areas, as appropriate, with analysis and enhancement of cross-functional processes. The development of operating strategies to support the mission and vision turn concepts into results.

Culture Change & Integration
  • Seek commitment from management
  • Set clear and specific goals
  • Measure and quantify results
  • Coach, reward, and recognize employees.

Realizing Results
Retailers can expect to achieve anywhere from $5 million to $50+ million in savings as a result of a
business transformation project. One $550 million specialty retailer achieved
a 3 percent to 5 percent sales increase over trend, approximately $3 million in reorganization
savings, and $3.2 million in inventory cost of funds. In another instance, a $612 million drug-store chain reduced payroll by $2.5 million, increased same store sales by 5 percent, and improved in-stock rates by 15 percent.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Creating a Pure Customer Environment

Retailers want to deliver a shopping experience consistent with customers' expectations of the
environment, products and employees found in their stores. But too often associates concentrate
on non-selling tasks when customers are in your stores. Associates need to be refocused on the
customer. Sounds simple enough, but many of today's foremost retailers are not effectively and
consistently achieving this focus in all of their stores.

Turn your managers into leaders
Managers are in a unique position to set the tone on customer satisfaction in each and everyone of your stores. You can help your managers by streamlining administrative and non-selling tasks so that they can help associates set selling priorities. The emphasis should be on an active approach to selling.

Develop a customer service vision for the entire organization
A clear vision is the driving force of an effective customer service strategy. The vision should be more than a slogan --it should be a vital, living, changing culture. Everything at your company should be aligned with this vision. And keeping the vision simple will allow consistent execution by all employees, creating satisfied, repeat customers.

Involve the whole organization
Your service vision should be a company­wide effort that sends the message that, "This is a great place to shop and a great place to work." You must first and foremost convey the company standards to your staff because these are the people who will convey the message to your customers. The company standards must be carefully defined and thoroughly understood by your staff -- so that the desired attitudes and behaviors can be reflected in their actions and interactions with customers. In the end, actions alone will make a lasting impression on your customers.

Vision and Training are not enough
A well-defined vision and thorough training won't guarantee success. Employees must embrace the ideas before they can practice the techniques and communicate the vision to customers. Many programs fail because they're viewed by employees as another "flavor-of-the-month" program, a cardboard priority that will bend or crumble during the next expense crunch. The program needs commitment -- not lip-service -- from top management.

Consistency is the key to commitment
Everything from labor scheduling, training, store policies and performance reviews must be aligned with the vision and applied consistently. Only the program's consistent application can develop the managers' and associates' complete commitment to your customers.

Remember the program is conveyed first from associate to associate and then from associate to customers. Many departments never deal directly with customers, but they do deal with other associates. By ensuring that internal customers are treated with the same vision as external customers, the needs of your external customers will be met.

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

GateKeeper On Duty

Now more than ever, retailers are moving toward that philosophy as they appoint gatekeepers to filter and funnel communications and workload from regional and corporate offices to the stores. If executed properly, the gatekeeping function can save time and money while improving execution
at the store level. The concept is rudimentary, yet many retailers are overlooking the possibility. Others may not be using the function to its fullest potential. That's why retailers are encouraged to return to the basics. By revisiting elementary retailing elements, retailers are discovering missed opportunities.
 
 
Expected Role
Gatekeepers are responsible for filtering and funneling information to the stores in a timely, efficient manner. Specifically, the gatekeeper: 
  • Receives and reviews all information and workload that needs to be communicated, including price changes, plano grams and much more
  • Determines what should be communicated, how it should be distributed, and when the organization should be informed
  • Stays focused while working with merchants and headquarter's departments to make "smart" decisions concerning seasonal layouts, price changes, etc.
  • Creates a budget for communications and activities, and ensures the organization remains within it

Ideal Candidate
Retailers should appoint a director-level person to handle the gatekeeping function. To be effective, gatekeepers should possess several characteristics and traits, including:
  • Knowledge of the organization's strategies and priorities
  • An understanding of store operations
  • Leadership and teamwork qualities to overcome adversity
  • Strong written and verbal skills

Benefits
There are numerous advantages to implementing a gatekeeper and utilizing the function effectively. For instance:
  • Communication is clearer
  • Standard of execution is heightened
  • Costs decline
  • Labor hours are used more efficiently
  • Customer satisfaction improves

Case in Point
At a large mass merchant, the gatekeeper function was instituted in conjunction with a store effectiveness program. The result was a markedly higher level of execution across the chain with a net reduction of 7 percent in store labor costs.

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

  

Suppliers: Friend or Foe?

Retailers are faced with an ever-growing and ever-changing list of challenges. They are suffering from falling profit margins and flat or reduced market growth. They are plagued by consolidation, increased competition and high standards set by industry leaders. We're not telling you anything you don't already know. You live through these critical issues every day. But you may not realize that closing the gap with suppliers can significantly reduce costs and boost revenues. It is imperative for retailers to develop "Partners" outside of the organization, rather than just suppliers of products or services. Retailers can achieve this by focusing efforts on developing partnerships with the right suppliers and also by understanding the value a supplier brings to the organization.


Segmenting the Supplier Base
The objective of segmentation is to identify suppliers that reflect the retailer's strategic vision. This ensures an improved focus of time and effort on high-value, primary suppliers, yielding closer relationships, increased revenues and reduced costs.

Unfortunately, not everyone will agree on which suppliers should have primary status because each area of the business has different needs. For instance, merchandising might measure suppliers on gross margin and sales volume. Stores and warehouses may measure delivery accuracy and the amount of pre-retailing done by suppliers. Neither are wrong, but a partnership can only start if your organization has similar views on the supplier.

Another tool helpful to understanding a relationship with the supplier is to know the current value to the organization.

Measuring Suppliers' Value/Contribution
A true representation of net contribution to the business is achieved by examining all aspects of the business, and assigning costs and incomes to each. However, most retailers do not have this information at hand. They must invest Significant time conducting research and holding extensive discussions with suppliers.

Information technology can help greatly in this area, but it is important to have an open and honest dialogue with suppliers to understand the costs and incomes of both parties. Discussions also reveal duplication of work and other inefficiencies.

Making a Case
A department store chain client needed to enhance supplier alliances. Specifically, the retailer was plagued by several challenges, including:
  • Too many suppliers, resulting in a lack of focus and a dilution of relationships
  • No formal process to monitor and control the number of suppliers
  • High-volume suppliers that were not cooperating with the retailer's vision

The retailer created a supplier segmentation model to begin its measurement and improvement process. Specific criteria included:
  • Gross sales
  • Uniqueness of product
  • Brand image,
  • Electronic Data Interchange
  • Logistic capability (lead time, hold stock, delivery window)
  • Pre-retailing capability (ticketing, hanging, store allocated vs. bulk shipment, bar coding.)
  • Exclusivity

After segmenting suppliers, establishing performance goals determining alternative actions and holding numerous discussions with suppliers, both the retailer and its suppliers benefited. Specifically, there was a reduction in cost of approximately 5 percent, quicker response times,
as well as increased availability, productdelivery, accuracy and quality. The long-term benefits include decreased mark-downs, improved product innovation and enhanced promotion strategies.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc