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3
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Unit 3 assignment: Analysing the issues and proposing responses for key issues faced by ELAr Sports.
Introduction
In this assignment I have set out to respond to the following tasks:
- Analyse the information provided and identify key issues faced by ELAr Sports
- Propose how ELAr Sports should respond to change
I have made use of the data provided, my prior studies in class and my knowledge of Retail to create the following report.[GJ1]
Section 1: Analysis of ELAr Sports and identification of key issues faced by the business[GJ2]
In this section of the assignment I will be analysing different areas of the business, relating the position of ELAr Sports to theoretical models. I have broken this down into sections looking at specific parts of the business.[GJ3]
Section 1.1: Functional areas
When we refer to a functional area in Retail Business we mean how employees or processes are grouped into areas based on the task they perform in relation to accomplishing one or more business tasks. A business may refer to functional areas as department. E.g. someone working on promotional material for the business would be grouped in the marketing department. [GJ4]
I would expect a retail business, such as ELAr Sports to divide their employees and processes into the following functional areas:
A.Sales
B.Warehousing
C.Customer Service
D.Marketing
E.Administration
F.Finance
G.Human Resource
H.ICT and systems operations[GJ5]
Section 1.2: Role of functional areas[GJ6]
- Sales – The role of the sales department is to sell goods or services to customers. Staff working in this functional area will usually be given sales targets, identifying how many units they need to sell in order to meet the aims of the business.
In the case of ELAr Sports, the staff are selling products, however the selling in itself is a service. They will need to listen to the customers’ requirements, asking suitable questions, to ensure they guide customers to purchasing the most suitable items.
Given the specialist nature of the business, a high level of service will be required of sales staff as the business is likely to charge a high price than competitors. Customers will be willing to pay a higher price for the products so long as they receive high levels of customer service from well informed and knowledgeable sales staff. A good salesman will not just be looking to make one sale, but want a customers to come back and buy from them over and over again, i.e. customer retention.[GJ7]
B.Warehousing(Would ELAr Sports have a ware house? Who is responsible for ordering and looking after the stock room?)
C.Customer Service(Who is responsible for customer service at ELAr Sports?)
D.Marketing(Ela is responsible for marketing at ELAr Sports but are other employees involved too?)
E.Administration(What sort of admin would ELAr Sports generate and who is responsible for dealing with it?)
F.Finance(What financial work, documents etc., would ELAr Sports generate and who would undertake these tasks?)
G.Human Resource(What HR tasks would be required by ELAr Sports and who is currently responsible for undertaking them?)
H.ICT and systems operations[GJ8](What ICT and systems requirements would ELAr Sports have and who would be responsible for undertaking those tasks?)
Section 1.3: Employee rights
While at work all we are all protected by law, these are called statuary rights. Employees may also be protected further by their contract of employment. Together these legal protections are called ‘rights’ and are in place to ensure the wellbeing of every employee during the course of their working day.[GJ9]
A – Hours of work and holiday entitlement(how many hours can ELAr Sports empolyees work before they are entitled to a break? What holiday should they get?
B – Health & Safety in the workplace(What are the key areas of H&S that concern ELAr Sports? What would you expect to find in the store to ensure they were meeting H&S requirements?)
C – Pay, wages and other benefits(What are the pay requirements for ELAr Sports? Consider the minimum wage)
D –Equality at work[GJ10](How can ELAr Sports be seen to ensure their practice is ethical? Male/female, disabilities, etc.
Section 1.4: Employee responsibilities
While at work employees have responsibilities to their employers, customers, colleagues and themselves. There are certain legal requirements, often cited as ‘implied terms’ in a contract that are required of the employee. They may have additional responsibilities set out in their contract of employment known as ‘express terms’.[GJ11]
A - Health & Safety(who has what responsibility for H&S in retail, how do you think this would effect ELAr Sports?)
B – Equalities(Who and how can ensure equality in the workplace?) how do you think this would effect ELAr Sports?)
C – Contracts and company policy(What would a contract set out on terms of employee responsibility? What would you expect to see from ELAr Sports contracts?)
D – Implied terms[GJ12](What are the implied terms in contracts of employment? Which would be most relevant for ELAr Sports?)
Section 1.5: Effects of legislation on retailers
Legislation refers to a group of laws. There are many laws which affect retailers and the way they do business. There will be separate laws that govern how a retail can behave in all areas of the business.[GJ13]
A - Health and Safety(what laws govern H&S, e.g. the health and safety at work act, and which are most relevant for ELAr Sports?)
B - Consumer Protection(Which laws are there to protect customers when buying products and services? Which are most relevant for ELAr Sports?)
C – Security(Are there any relevant laws in place that require ELAr Sports to ensure the security of the business?)
D - Equality and Diversity(what does equality and diversity mean? What does the law say in this matter and how will it affect ELAr Sports?)
E - Age restriction laws (What are the age restriction laws that retailers need to be aware of? Are any of relevance for ELAr Sports?)
Section 1.6: How retailers encourage sales
In retail customer retention is key, it is fine to make a sale once but to succeed in the long term you needs to sell products to the same customers over and over again. As well as establishing a loyal customer base, a retailer must encourage customers to spend more money in their establishments, i.e. part your customers with more money than they had intended to spend and make them happy about it.[GJ14]
A - Signage
Signage is the signs that the retailer create to make the customers aware of where the products are within the store. Labelling of Children’s clothes, the different signage for promotions and sale items.
B - Customer Flow
The number of customers in a store and the pattern of their movements around the store
C - Product Mix
The different range of products that the organisation sells within the company. This helps the business to increase the number of customers. McDonalds selling a range of different meals for a range of different customers.
D - Product Location
The location of the products within the store of the business which allows the business to increase their sales. Tesco locating chocolate and drinks near the tills to increase the impulse buys from the customers.
E - Loyalty Cards
The process of the customers being rewarded for the shopping within an organisation. Tesco Clubcard points, Costa Coffee, Hilton Hotel.
F – Promotion
The ability to increase the number of sales the organisation makes by making the customers more aware of the products/services that the company sells.
G - Services Provided
The different services that are provided by the organisation in-store or online. House of Fraser offer a number of services such as personal shopper, click and collect
H - Link Sales Linked
Linked sales are the sales that are made in addition to the original product that was purchased. E.g. selling the shirt and tie that match a suit.
I - Up-selling
Purchasing more, i.e. a greater volume of products or services for a little increase in cost. E.g. in the cinema you can get a medim drink and popcorn deal for £5.50 or for just another 49p you can have a large.
J – Discounting
This simply means to lower the price from its RRP (recommended retail price), however retailer often use this in conjunction to another sale. E.g. when you buy a new mobile phone the retailer will sell you the case to go with it for 50% discount. [GJ15]
Section 1.7: Technology in retail
Technology is ever evolving, it is important for retailers to stay up to date with the technological trends in their industry to ensure they continue to offer the customers what they want in the most efficient, cost effective way possible. [GJ16]
A - Mobile Applications(What is this, why is it important to retailers and how does it link to ELAr Sports?)
This is a mobile app on any smart phone which allows you to access the store’s website and purchase items
B - Internet (What is this, why is it important to retailers and how does it link to ELAr Sports?)
This is the ability to interact with customers over the internet through the use of store websites, adverts. This is the system which is used by management to collect information regarding…
C - Management Information Systems(What is this, why is it important to retailers and how does it link to ELAr Sports?)
Essentially MIS is a computer program and database that allows a retail manager or owner to better organise, evaluate and efficiently manage functional areas of their business
D - Digital Media(What is this, why is it important to retailers and how does it link to ELAr Sports?)
Digital Media is the use of videos to interact with the customers. The use of media to advertise the company products through the digital media such as TV adverts.
E –Electronics(What is this, why is it important to retailers and how does it link to ELAr Sports?)
The different electronics that can be used within stores to interact with customers. Examples could be Adidas and the interactive electronic displays that they use.[GJ17]
Section 1.8: The importance of seasonality in retail
When were refer to seasonality in retail, we are talking about the impact the following has on various areas of the business:
Seasons of the year and their corresponding weather/ climatic impact (Spring, summer autumn & winter)
Calendar events such as Easter, Christmas, school holidays, etc.
Special events such as the world cup or the Olympic games
Each of these could play a part in the retailer’s performance and hence the impact should be considered.[GJ18]
A – Staffing (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
The staffing requirements of the organisation will be affected by the different seasons, calendar and special events. Organisations increase the number of staff on the shop floor during the build up to Christmas to deal with the increase of customer flow to buy the products for family and friends
B - Opening hours (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
The changes in the opening hours in regards to the operations of the business due to the changing events. The store opening longer during the build up to Christmas.
C – Promotions (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
Seasonality affects the type of promotion that the organisation produces. The organisation increases their promotion in the build up to Christmas to make all customers aware of the different range of products that the company are selling.
D - Product Range (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
The change of the product range within an organisation due to the different calendar events. The change of the products for Easter, Christmas or Mother’s Day
E - Health and Safety (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
Due to the changes in the operations because of seasonality and the different calendar and special events the organisations need to be aware of the health and safety requirements of the organisation. Due to the increase in customers the business will need to make sure there are more staff available to deal with any issues.
F - Customer types (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
There are various types of customers. Loyal customers. They represent no more than 20 percent of our customer base, but make up more than 50 percent of our sales. Discount Customers: They shop our stores frequently, but make their decisions based on the size of our markdowns. Impulse customers. They do not have buying a particular item at the top of their “To Do” list, but come into the store on a whim. They will purchase what seems good at the time.
G - Services provided (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
Delivery, Gift Wrapping, Shirt Printing,
H - Customer expectations (how will seasonality affect this area of the business? Is this especially important for ELAr Sports?)
Customer expectations vary between customers. Price is often an indicator of a customer’s expectations. Cheaper products tend to be thought of as lower quality. Sports shops have different prices of for examples trainers.[GJ19]
Section 1.9: Dealing with unexpected situations in retail
In retail, sometimes things happen that you did not expect or prepare for. When working with the general public, employees, technology and third party business you can never be sure what will happen and you need to put measure in place to cope with the unexpected.
A – Forecasting. Although we may never know what is going to happen in retail we can make an educated guess based on data from previous years as well as staff knowledge and experience and predict what you expect to happen. An example of this is ‘cash-flow forecasting’ when you predict the expected cash in and out flow of your business to help ensure your business stays profitable.
B – Contingency plans. This is a strategy of risk management where by you make plans for the unexpected or unlikely. Therefore in the unfortunate even where your retail business strays off track you already have a plan in place for how you will deal with the situation.
C – Troubleshooting. This is an action a retailer can take following an unexpected event. It will not stop the unexpected even from happening but it does allow the retailer to understand when it happened and either prevent it from happening in the future or put a contingency plan in place in case it does happen again.[GJ20]
Section 1.10: Identification of key issues faced by ELAr Sports
From the information provided, I can clearly see that ELAr Sports is facing issues that must be overcome if it is to remain a profitable retailer. I have identified the key issues that concern me below and explained why they are an issue for the business.
A – Small town (lack of footfall / customers)
B – Two floors (access for disabled)
C – Specialist market of martial arts (number of customers locally, will people travel to store?)
D – Weapons (licence and age restrictions)
E – Opening hours (too shorts)
F – Ela’s time in the store (too short)
G – Responsibilities of functional areas (including medical and key holders)
H – Staffing (staff overworked and not getting enough breaks)
I – Store layout (appendix A0
J – Delays in serving customers
K – Untidy and cluttered store
L – Recruitment (Ela’s reluctance to recruit)
M – Seasonality (Christmas and sporting events)
N – Online sales and staff IT skills[GJ21]
Section 2: proposals for how ELAr Sports should respond to change
In this section of the assignment I will be addressing the issues the business faces, as identified in section 1.10, discussing why they are issues and making suggestions for how these issues could be overcome by ELAr Sports.
ELAr Sports is not a chain, but rather an independent retailer. It will therefore not be able to compete head-to-head with larger businesses already established in this retail sector, most noticeably Sports Direct. These competitors will carry far larger lines of products and are likely to have economies of scales that allow them to make profits at lower prices.
ELAr Sports should, in my opinion, focus on its USP of martial arts clothing and equipment and secondly offer a higher standard of customer service that it’s larger competitors. Finding customers in the local area who desire this USP is unlikely to drive enough footfall into the store, hence I would suggest greater use of the company website allowing customers to make online purchases, there by opening up the market worldwide (shipping dependant) and giving customers access to the store 24/7.