Chapter 2
Location Selection and Human Resource Management
Learning Objectives
Factors affecting the location of retail outletRetail location research and techniquesImportance of human resource managementRetail organization designs and structures
Learning Objectives
Developing employee’s skills & commitment andMotivating employees
Factors in The Location of Retail Outlet
Search for good Location siteAssessment of the viability of the siteAssessment of other Micro Factors
Details of Actual /Potential Customers
Numbers by demographicsEarnings through income/employment by occupation, industry, trends, purchasing powerPattern of spendingDemography in terms of population growth , density and trendsLife style trends
Accessibility factors
Visibility of sitePedestrian flowsBlspontaneouslyarriers in the from of railway tracks, rivers etcType of location zoneInfrastructure such as road conditions and network linkParking facilities
Competitors’ issues
Amount and level of competitionNumber of competitors and types of competitionSaturation indexProximity to competitors, traders, market and brand leaders
Cost factors
Building costsRental costsRates payableDelivery costsInsurance costsRates of labor
Retail Location Research and Techniques
David Huff’s Model and Centre of Gravity SimulationComputerized Simulation ModelsTrade Area AnalysisMultiple regression method
David Huff’s Model and Centre of Gravity Simulation
This method is suitable for taking decision related to locating a single warehouse or retail siteAbove method is based on Newton’s Law of Gravity
Center of Gravity Model
Huff’s Model- FormulaPij = Sj÷Tij
b
n ∑ j=1 Sj ÷Tijb
Where,Pij = Probability of a customer at a given point of origin
‘I’ will travel to a particular shopping centre jSj = Size of the shopping centre jTij =Travel time taken from customer’s starting point to
the shopping centreB= An exponent to Tij reflecting the effect of travel
time on different kinds of shopping trips
Evaluation of Huff’s Model
Model can be used by retailers to define their trade areas and forecast salesIts is best suited when the number of stores with obtainable data are smallIt takes into consideration the ‘ issues of competition and customers’ distance time to the shopping store
Suitable in situations involving a single warehouseThis model is not designed to cope up with the difficulties involved in determining how many warehouses should be used and where they should be lactated in distribution system
Limitations of Huff’s Model
Computerized Simulation Models
To overcome the problem of identifying the locations of multiple warehouses, a computer simulation approach will be required.Only a computer simulation approach can be used to process the large amounts of data for each of the many possible configurations of numbers and locations of warehouses
Trade Area Analysis
Analyzing the addresses of credit card holdersShopping centre intercept surveyTrade are data can be used by retailers in order to communicate or create mailing lists, evaluate a store’s market positioning, measuring competitive customer bases, identifying the market potential etc.
The Analog Approach -Steps
A. Define the current trade are by using the customer spotting technique
B. Matching the characteristics of the current store with potential new store location to determine the best retail site
Not always each to find analogous situationsThe weaker the analogy, the more tough will be the location decisionThe approach cab be used by a retailer having fewer number of outlets
The Analog Approach –Limitations
Multiple Regression Method
1. Select appropriate measures of store performance such as per capital sales or market share
2. Select a set of potential and prediction variables
3. Solve the regression equation and use it to project performance for future sites
y = a =b1x1 + b2x2+…….+bmxm+bm+1Xm+1+….bnxn
Where, y= store salesX’s = independent variables concerned
with the characteristic of each store and characteristics of the trade area (population and competition)
Multiple Regression Method
Meaning of Human Resource
“the total knowledge, skills, creative abilities, talents and aptitudes of an organization’s workforce, as well as the value, attitudes and beliefs of the individual involved.”
“the planning, organizing, directing and controlling functions for the purpose of employing , developing and compensating human resources leading to the creation and development of human relations within the organization with the intention to contribute proportionately to the individual, organizational and social goods.”
Meaning of Human Resource Management
Competitive advantage through effective HRM
Cost advantagesIncreased motivation and effortGood customer serviceHigh job satisfaction less employee turnover
Employee Productivity
E.P. = Retailer’s Sales or ProfitTotal no. of employees
Employee Turnovercan be expressed at the rate of change in
the employers of retailing firm during a definite period
Merchandise Management
Buying merchandiseControl merchandisePricing merchandise
Store Management
Recruit, select and train store personnelMaintain stores, locate and display merchandiseRepair and alter merchandiseTake physical inventoryPrevent inventory shrinkages
Operations Management
Carry out promotion activitiesManaging human resourcesDistribution of merchandiseFinancial control technique
Strategic Management
Develop retail strategyIdentify the target market and workout retail formatIdentify location siteDesign suitable organization structure
Retail Organization Structure
Determine the tasks to be performed by the retailing firm
1. Strategic management2. merchandise management3. Store management4. Operations management
Considerations of Organization Design
Focus on specializationMatching authority and responsibilityWork out the reporting relationshipsMatch organization structure to retail strategy
The extent or degree to which the decision making is to be centralized Approaches used to co-ordinate merchandise and store management activities when they are divided into different organizations within the firm
Specific Organization Design Issues
Benefits of Centralized decision making
Reduction in costCompany achieves lower prices from suppliersBest people to make decision for the entire teamUse of standard policies and guidelines across stores
Limitation of Centralized Decision Making
Difficult for retailer to adopt local market conditionsSlow response to local competition and labor markets
Co-ordination of Stores and Merchandise Management
1. Increase buyers contact with customers2. Increase customer contact and
communication3. Involve employee to be responsible and
assign the job of coordinating buying and selling activities
4. Improve coordination between by buying and selling activities
Motivation
“Motivation cab be defined as an unsatisfied need which creates a state of tension or disequilibrium, causing the individual to move in a goal directed pattern towards restoring a state of equilibrium by satisfying the need.”
Organization Culture
A set of values, traditions and customs in the form of unwritten guidelines which are passed on by older employees to newer onesvalues such as quality, customer orientation, commitment, discipline, integrity, learning, transparency, respect, customer orientation etc.
Firms’ Policy and Supervision
Written policies clearly indicating what employees have to do and also have supervisors enforce these policies
E.G. Most of the retailer have a written policy clearly specifying that good once sold cannot be return or exchanged and circumstance when such goods could be taken back by the retailer
Developing Employee Skill and Commitment
Develops employee skill through selection and trainingEmpowering employeesDeveloping partnering relationships with employees
Emerging Trends in Retail HRM
Diverse workforceCultural awareness Interpersonal skillsSupport groupTechnology to replace time consuming monotonous job
Building the HR Scoreboard
1. Clearly articulate the business strategy2. Build on the strategy map3. Link HR strategy map to the overall
corporate strategy
Employee Behavior and Organization Benefits
Summary
The factors which affect the location decision making process are search for good location site, access the viability of site and micro factors such as pedestrian flows etc.The various retail location research techniques include David Huff’s Centre of Gravity Simulation, Computerized simulation model, Multiple regression method etc.
Summary
The strategic objective of HRM is to match the capabilities and behaviors of employees with the goals of the retailing firmUsage of HR scorecard can help HR professionals and the retailing firm to translate corporate strategy and execute it by creating HR initiatives and systems
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