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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)
Location Selection & Human Resource Management
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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Location Selection & Human Resource Management

  • 1. Chapter 2 Location Selection and Human Resource Management
  • 2. Learning Objectives Factors affecting the location of retail outlet Retail location research and techniques Importance of human resource management Retail organization designs and structures
  • 3. Learning Objectives Developing employee’s skills & commitment and Motivating employees
  • 4. Factors in The Location of Retail Outlet Search for good Location site Assessment of the viability of the site Assessment of other Micro Factors
  • 5. 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
  • 6. 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
  • 7. Competitors’ issues Amount and level of competition Number of competitors and types of competition Saturation index Proximity to competitors, traders, market and brand leaders
  • 8. Cost factors Building costs Rental costs Rates payable Delivery costs Insurance costs Rates of labor
  • 9. Retail Location Research and Techniques David Huff’s Model and Centre of Gravity Simulation Computerized Simulation Models Trade Area Analysis Multiple regression method
  • 10. 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
  • 12. 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
  • 13. 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
  • 14. 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
  • 15. 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
  • 16. 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.
  • 17. 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
  • 18. 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
  • 19. 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
  • 20. 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)
  • 22. 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.”
  • 23. 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.”
  • 24. Competitive advantage through effective HRM Cost advantages Increased motivation and effort Good customer service High job satisfaction less employee turnover
  • 25. 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
  • 26. Merchandise Management Buying merchandise Control merchandise Pricing merchandise
  • 27. Store Management Recruit, select and train store personnel Maintain stores, locate and display merchandise Repair and alter merchandise Take physical inventory Prevent inventory shrinkages
  • 28. Operations Management Carry out promotion activities Managing human resources Distribution of merchandise Financial control technique
  • 29. Strategic Management Develop retail strategy Identify the target market and workout retail format Identify location site Design suitable organization structure
  • 30. 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
  • 31. Considerations of Organization Design Focus on specialization Matching authority and responsibility Work out the reporting relationships Match organization structure to retail strategy
  • 32. 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
  • 33. 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
  • 34. Limitation of Centralized Decision Making Difficult for retailer to adopt local market conditions Slow response to local competition and labor markets
  • 35. 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
  • 36. 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.”
  • 37. 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.
  • 38. 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
  • 39. Developing Employee Skill and Commitment Develops employee skill through selection and training Empowering employees Developing partnering relationships with employees
  • 40. Emerging Trends in Retail HRM Diverse workforce Cultural awareness Interpersonal skills Support group Technology to replace time consuming monotonous job
  • 41. 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
  • 43. 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.
  • 44. 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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