In this article we cite an excerpt from Alexander Shubin's book “Business Model of a retail company: how to compete with giants”
Here I would like to share another important operating tool for a retail company — checklists, which are probably already used in your companies. However, you can find useful ideas to improve them. What is remarkable about this tool? There are a lot of small actions going on in a modern store: layout of goods, printing and parting of price tags, packing, cutting the product at the request of the buyer, changing the tape in scales, washing floors, checking the goods at the cash desk, etc., these details are a big part of the store's revenue. Of course, these processes and operations are repeated day after day, and it would seem that they should be performed automatically. Unfortunately, a person remains a human being, and often there is an opposite effect: automatic actions loosen attention, and some operations may remain unfulfilled, for example, the packages for customers are not laid in time, or the labels on the scales in the zone of fruits and vegetables is not replaced and the sale of these products depends very much on these labels. Another factor contributing to the instability of processes in stores is the high staff turnover: new employees do not always know exactly what is critical and what to pay attention to.
The approach of checklists, which is widespread not only in retail, but also in medical institutions, construction, aviation, can solve the problem of “forgetfulness” and instability of business processes. Olga Naumova, CEO of the Pyaterochka retail chain, at the time of writing, the fastest growing retailer in terms of the number of store openings, a member of X5 Retail Group, in her interview to the Kommersant newspaper, noted the technology of mobile audit of stores based on checklists as one of the five technologies that ensure the operational success of the company. Mobile technology and the right checklists are key to the success of the checklist. Often, when creating checklists, systematic development is not given due attention, and as a consequence, many checklists are a fragmented set of questions, simply reflect the frequent problems in the field of cleanliness, availability of goods, etc. When drawing up checklists, it is important to remember that any question should reflect the control point, which may relate to one of the two main areas of store control and inspection:
for example, the entire store can be divided into zones and include equipment for the audited object;
business processes and operations, such as replenishment and ordering of suppliers, customer service, sales area display, etc.
The state of the object or the execution (non-execution) of the operation may lead to various types of operational risks, for the prevention of which the corresponding control points should be set — correctly and unambiguously formulated questions in the checklist. The following is an excerpt of the daily audit issues by store areas and key business processes.
- Surrounding and entrance area.
- Surrounding area is clean, no garbage (in winter — snow is removed, approaches and entrances to the shop are free).
- Store front is clean, without damage, inscriptions, extra ads.
- At night, the sign is illuminated, if technically possible, during the day the sign is switched off.
Trash cans are clean outside and around. Fill of trash cans:
- a) before opening — empty;
- b) in the daytime — filled no more than 1/2;
- c) during the rush hour — filled no more than 2/3.
- Advertising banners during marketing campaigns are placed on the facade.
- Vestibule is clean, the air compartment is clean, in good condition.
- Rugs are clean, no cardboard or rags are used in their place.
- Doors are in good condition.
- Condition of the customer's storage — crates are clean inside, doors are in good condition, locks are in working condition, keys are available.
- Sales area (floors, windows, walls) and commercial equipment are clean (racks, prices).
- Sales area lighting is in good condition, lights are clean and are on.
- Temperature and ventilation in the sales area is normal, air doors and air conditioners are in good condition.
- Departments and goods are arranged according to the layout. Placement of promotional equipment of the suppliers is agreed with the commercial department.
- No unpleasant odors.
- Infrastructural condition of the sales area meets the requirements. If necessary, a request for repair has been made.
- Cleaning schedule. ToR compliance.
- Only promotional goods not more than 4-5 SKU are placed on the promotional tables.
Fragment of checklist questions on key store processes
- Replenishment of stocks and orders to suppliers in stores.
- Application schedule is up to date and in an accessible and prominent place.
- Orders are formed before 14:00 of the current day, all orders for the TOP 300 are formed, the quantity of ordered goods is calculated taking into account the dynamics of sales and current balances.
- When an auto-order is in operation, the auto-order monitor is used to generate the order.
- The goods arrive in accordance with the order, the goods not ordered are not accepted.
- Consignment notes are credited on the day the goods arrive.
- Goods are recorded by samples.
- Returns are processed and made on time; acceptable number of goods accumulated for return.
- Invoices attached to the relevant order, orders are closed in accounting program.
- The book of reviews and suggestions is located in a visible and accessible place for the customer, corrective actions are taken, and the responses to complaints and suggestions of the buyers are noted.
- Sellers greet buyers, smiling, involved, trying to make conversation.
- Employees of the store answer customers questions, help to find the right product in the sales area, personally escorting the customer to the right shelf.
- At the cashier's desk, the employees say the existing promotions script and unobtrusively offer a 7-step product for those buyers, who have bought related categories (e.g. sauce from active sales for pasta).
- There are no more than 3 people in the queue at the cashier desk during rush hour, all cash desks are open
- At rush hour, there is an employee (including assistant manager or manager) in the sales area that can help a customer.
For the development of properly working checklists the following tasks should be solved:
- Identified objects and business processes of control.
- Compiled a list of common problems and risks.
- Control points for each of the objects and control operations are formed, their value is calibrated to obtain the correct integrated assessment.
- Control points have been reformulated into questions that are clearly understood by the auditors.
- Checklist filling was tested, optimized and questions were corrected.
Correctly structured checklists allow to accumulate statistics and obtain integrated estimates on individual elements: business processes and store areas. For example, we can see how things are going in the Fruit and veg area or individual business processes, how a separate store looks like against the general background (see figure), see the dynamics of the improvements.
An important issue in the use of checklists is the frequency of audits and the time it takes to fill in the checklist. Some control points can be audited once a week, but some need to be checked every day. Of course, you don't have to turn the checklist filling into an end in itself. For a supermarket of up to 1000 sq. m. the audit can take about an hour by one territorial manager, and for a store of 200 sq. m. up to 25 minutes, which is standard.
Many companies already use checklists, but the majority of executives in these companies see it as a paper job that nobody needs. And they are right, because using checklists on paper often discredits the idea itself, because of too long processing and lack of prompt feedback. If your checklist contains a check for the cleanliness of the floors, then the feedback after a day is already too late. However, fortunately, at the current level of technology, this problem can be solved through the use of mobile technologies, when the filling of checklists is carried out on a mobile device, with the automatic sending of the task to the store manager, in case if the inspector answers “no” on the question in the checklist, he sends a photo and comments of the problem. Using mobile solutions, such as MD Audit, you can get instant feedback, close the management cycle, and turn checklists from a control to a management tool.
You can purchase “Business model of a retail company: how to compete with the giants” on the PBK Management website.