Retail audit: Triggering quantum business growth

With the business environment becoming more dynamic and competition more intense, marketing has assumed an important role in retail businesses. There is, therefore, a need for a good dosage of irreplaceable inputs. Ashwin Merchant explains how a third dimension is required in the system for an independent and objective analysis 'Customers have a relationship with the retail outlet; simply not with its sales staff' Retail, today, is getting to be a big business opportunity, particularly due to the increase in the consumer's buying power and growth of market size. So, whether it is a shop, departmental store, specialty retail boutique or chain of stores, it is always important to identify, understand and fulfill the customers' expectations, and not limit it to product quality and price. Though, while attracting a customer, product quality and price is essential, these are usually taken care of by the retailer in the best possible way. In today's ever-changing scenario marketing is critically important in making an impact on a retail business. The customers have become more demanding, marketing environment has become more dynamic, and competition has become more intense than ever before. Uncertain business environments have opened up unprecedented challenges and opportunities, wherein unorganised retail companies will only be trying one or the other way to be successful in their business. Marketing is a science that sets targets in numbers, but may not necessarily review performance in simple numbers. Marketing values the brand and customers, and seeks to understand their needs in the overall business process. That is why it possibly needs a good dosage of irreplaceable inputs like creative strategy and experience. If the top management has to fulfill its corporate role of making marketing management a responsibility for everyone, does it not need to add a new dimension to its feedback system? While reviews from customers, non-customers and mystery customers constitute the first dimension, performance, adding a perspective laterally, makes up the second dimension. The need now is to add a third dimension in the form of an independent audit which would provide the classical benefits of a detached, non-emotional and objective analysis. This new dimension is 'retail audit', a comprehensive, systematic and independent process. Retail audit as a toolbox Retail audit is a major welcome and must addition to the top management toolbox. Audit, as a concept, is variously understood and interpreted by the management practitioner the world over, but is rather new in developing countries. Audit, as a progressive management tool, helps top management in exercising strategic control, and providing the necessary multi-dimensional depth. Retail audit provides opportunity for triggering action for quantum improvement. However, it often invites criticism for its lack of sensitivity towards, and perception of, ground realities. Retail audit incorporates 11 different, and most significant parameters which are widely visible in successful retail outlets the world over. It looks into issues like footfalls mathematics and economics, in-store C/S issues, location/neighborhood analysis, counter staff contribution in increasing C/S ratio, reality check for branding and gap analysis as well as standards set for customer satisfaction. Focus on such issues helps in increasing the business beyond existing customers, in in-store customer management for more C/S ratio, in finding UBP, in reviewing product mix (value/price criterion) for futuristic retail promotional strategy, and in receiving professional inputs for smart retailing. Some related offshoots of retail audits are as follows: Multi Store Retail Audit: This is a very special kind of retail checkup for each outlet of the group company. Here, audit observations not just provide an outlet audit in an absolute form, but also a comparative study of different outlets of the company, and benchmark with the most ideal retail outlet in the network as well as with the competition. Retail Outlet (External) Audit: This incorporates auditing of the emerging market, emerging customers and emerging opportunities before making any investment, and also involves caution checks on competition. Retail Outlet (Internal) Audit: This comprises in-store aspects entirely culled from the selling and buying experience between the outlet and its customers. It helps in retrospection and introspection for corrective action. It also provides useful data regarding historical trends and future trends. Retail Outlet (ROI:M) Audit: This involves cost-benefit analysis for short- term and long-term gains. The costs that a retail outlet incurs can be due to existing customers, potential customers, existing products, emerging products, distribution, merchandising, employment, promotion and advertisement. Expenses incurred are also of different varieties, like fixed expenses, variable expenses, productive expenses, supportive expenses, direct expenses, indirect expenses, budgeted expenses, non-allocated expenses - all to cater for key activities, supportive activities, policy activities and, not to forget, wasteful activities. In general, retail audit checks the value the customer assigns to the asset (product), brand cost, expenses or valuation as an asset, and depreciation of brand value over a period of time. The major benefit of retail audit is that it helps improve the overall status of the business, and its adoption by the top management puts it on the fast track.