Retail Audit

What is Retail Audit

• Systematically examining and evaluating a firm’s total retailing effort or specific aspect of it.

• “ is a evaluation tool, which systematically examines and evaluates the firms total retailing effort or a specific aspect of it.

Why ??

• It’s vitally important to know what’s happening inside the retail environment. - Have Point of Sale displays reached the store? - Is the retailer presenting your products properly? - Is the pricing correct?

What is Retail Audit ??

• Study of selected samples of retail outlets.• May be continuous.• May be discrete(Limited Usefulness ).

Purpose

• To Study- What retailer is presently doing?- Appraise Performance- 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

Retail Audit Process

• Determination of who does the audit

- Company specialist

- Department Managers- Outside Auditors

• When Audit is Conducted• - End of Calendar Year• - Middle of the Year

• Areas to be Audited

- Customer Satisfaction

- Retail Strategy Mix

- Customer Service

- Merchandise Assortments

• Development of Audit Form

• Conducting the Audit

• How Long should audit take?

• Should employees be notified in advance?

• Is audit be disguised or non disguised?

• Should audit occur while retailer is open or closed?

• Reporting the results of audit to management

• Management response to the audit

Undertaking an audit

• Who does it?• When and how often its done?• Which areas to be audited?• What audit forms will be used?• Conducting the audit.• Report to management

Customer Analysis (who are your target customers and what are they seeking from you?)

1. Have you profiled your customers by age, income, education, occupation, etc.?

2. Are you aware of the reasons why customers shop with you?

3. Do you ask your customers for suggestions on ways to improve your operation?

4. Do you know that goods and services your customers most prefer?

Organization and Human Resources

1. Are job descriptions and authority for responsibilities clearly stated?2. Have you an effective system for communication with employees?3. Do you have a formal program for motivating employees?4. Have you taken steps to minimize shoplifting and internal theft?

Operations and Special Services

1. Do you monitor every facet of your operations in terms of specific goals?

2. Do you provide time-saving services for greater customer convenience?

3. Do you have policy for handling merchandise returned by customers?

4. 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 by 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. Do you have a merchandise budget (planned purchases) for each season that is broken down by the department and merchandise classification?

2. Does it take into consideration planned sales, planned gross margin, planned inventory turnover, and planned markdowns?

3. Do you plan exclusive or private brand programs?4. Do you take advantage of cash discounts and allowances offered by your vendor/supplier?

Pricing

1. Have you determined whether to price below, at, or above the market?

2. Do you set specific markups for each product category?

3. Do you know which products are slow-movers and which are fast?

4. Have you developed a markdown policy?

Promotion

1. Are you familiar with the strengths and weaknesses of various promotional methods?2. Do you participate in cooperative advertising?3. Do you ask customers to refer your business to friends and relatives?4. Do you make use of the community projects or publicity?

Audit of EnvironmentalIssues

• – Is the store recycling plastics ?• – Does the store sell reusable shopping bags?• – Does the store have receptacles for the Customer to recycle bags and batteries?

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?

Responding to an Audit

• Strengths – capitalize on them• Weakness – revise the strategies to overcome this

Constraints in conducting an Audit

• Costly• Quite time-consuming• Employees may feel threatened & may not co operate• Incorrect data/Insufficient data• Management – not responsive to the findings