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Location Selection & Human Resource Management

This document discusses the factors influencing the location of retail outlets and the significance of human resource management within retail organizations. It elaborates on various location research techniques such as David Huff’s model and multiple regression methods, and highlights the strategic aspects of human resource management to align employee capabilities with retail goals. Additionally, it covers the importance of employee motivation, organizational culture, and the implementation of HR practices to enhance overall retail performance.

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Chapter 2 Location Selection and Human Resource Management
Learning Objectives Factors affecting the location of retail outlet Retail location research and techniques Importance of human resource management Retail organization designs and structures
Learning Objectives Developing employee’s skills & commitment and Motivating employees
Factors in The Location of Retail Outlet Search for good Location site Assessment of the viability of the site Assessment of other Micro Factors
Details of Actual /Potential Customers Numbers by demographics Earnings through income/employment by occupation, industry, trends, purchasing power Pattern of spending Demography in terms of population growth , density and trends Life style trends
Accessibility factors Visibility of site Pedestrian flows Blspontaneouslyarriers in the from of railway tracks, rivers etc Type of location zone Infrastructure such as road conditions and network link Parking facilities
Competitors’ issues Amount and level of competition Number of competitors and types of competition Saturation index Proximity to competitors, traders, market and brand leaders
Cost factors Building costs Rental costs Rates payable Delivery costs Insurance costs Rates of labor
Retail Location Research and Techniques David Huff’s Model and Centre of Gravity Simulation Computerized Simulation Models Trade Area Analysis Multiple 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 site Above method is based on Newton’s Law of Gravity
Center of Gravity Model
Huff’s Model- Formula Pij = Sj÷Tijb n ∑ Sj ÷Tijb j=1 Where, Pij = Probability of a customer at a given point of origin ‘I’ will travel to a particular shopping centre j Sj = Size of the shopping centre j Tij =Travel time taken from customer’s starting point to the shopping centre B= 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 sales Its is best suited when the number of stores with obtainable data are small It takes into consideration the ‘ issues of competition and customers’ distance time to the shopping store
Limitations of Huff’s Model Suitable in situations involving a single warehouse This 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
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 holders Shopping centre intercept survey Trade 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
The Analog Approach – Limitations Not always each to find analogous situations The weaker the analogy, the more tough will be the location decision The approach cab be used by a retailer having fewer number of outlets
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
Multiple Regression Method y = a =b1x1 + b2x2+…….+bmxm+bm+1Xm+1+….bnxn Where, y= store sales X’s = independent variables concerned with the characteristic of each store and characteristics of the trade area (population and competition)
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.”
Meaning of Human Resource Management “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.”
Competitive advantage through effective HRM Cost advantages Increased motivation and effort Good customer service High job satisfaction less employee turnover
Employee Productivity E.P. = Retailer’s Sales or Profit Total no. of employees Employee Turnover can be expressed at the rate of change in the employers of retailing firm during a definite period
Merchandise Management Buying merchandise Control merchandise Pricing merchandise
Store Management Recruit, select and train store personnel Maintain stores, locate and display merchandise Repair and alter merchandise Take physical inventory Prevent inventory shrinkages
Operations Management Carry out promotion activities Managing human resources Distribution of merchandise Financial control technique
Strategic Management Develop retail strategy Identify the target market and workout retail format Identify location site Design suitable organization structure
Retail Organization Structure Determine the tasks to be performed by the retailing firm 1. Strategic management 2. merchandise management 3. Store management 4. Operations management
Considerations of Organization Design Focus on specialization Matching authority and responsibility Work out the reporting relationships Match organization structure to retail strategy
Specific Organization Design Issues 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
Benefits of Centralized decision making Reduction in cost Company achieves lower prices from suppliers Best people to make decision for the entire team Use of standard policies and guidelines across stores
Limitation of Centralized Decision Making Difficult for retailer to adopt local market conditions Slow response to local competition and labor markets
Co-ordination of Stores and Merchandise Management 1. Increase buyers contact with customers 2. Increase customer contact and communication 3. 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 ones values 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 training Empowering employees Developing partnering relationships with employees
Emerging Trends in Retail HRM Diverse workforce Cultural awareness Interpersonal skills Support group Technology to replace time consuming monotonous job
Building the HR Scoreboard 1. Clearly articulate the business strategy 2. Build on the strategy map 3. 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 firm Usage 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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