Retail operations must work at a consistently high performance to deliver good results in today’s competitive marketplace. Defining a retail operating model is critical to be able to ensure that you can deliver what your ideal customer wants. But also deliver it in an efficient and effective way. In this episode of the Retail Transformation Show, join Oliver Banks to discover how to take your purpose or vision and translate that into a real, live operation.

Why do you need a retail operating model?

We know retail is in a challenging spot right now. It’s not the apocalypse but it is a moment of significant change. 

Retail businesses need to have their operations firing on all cylinders. The operation needs to be a finely oiled machine capable of turning the fuel that is all provided by all other parts of the business into power and forwards drive. 

Last episode, we discussed the importance of having purpose in what you do. You should have a clear purpose to help you to stay relevant with customers. But, if you can’t realise this. If you can’t execute the intention then, at best, all you have are empty words. At worst, you have broken promises, missed expectations and degrading trust. 

So, it’s essential to build an operating model to take that purpose and make it a reality.   

How to take your purpose and make it real

Being able to clearly decide on a purpose will help to keep you relevant in today’s competitive retail marketplace. However, you must be careful that your purpose doesn’t just end up as a set of empty words. Instead, you must make your purpose a reality. So, to make it a reality, you must define a retail operating model, then deliver it.

There are 4 steps to define and deliver your operating model:

  1. Finding your purpose
  2. Define the customer proposition
  3. Translate into an operating model
  4. Execute the operating model into reality.

1. Finding your purpose

You must check out episode 25 where I dive into the importance of being clear on your purpose.

Go to episode 25

2. Define your customer proposition

A customer proposition is essential to bring your purpose to life. Plus, it’s the crucial stepping stone to be able to define a retail operating model that is focused on making that purpose a reality.

Your customer proposition should be a blend of the products and services that you’ll offer. In addition, you should include the customer experience that you’ll offer. This should include how your experience will be differentiated and engaging.

Finally, you must ensure that your customer proposition is underpinned by a sensible commercial or business model. This business model must work for customers and the business. In turn, you’ll be able to set your pricing in a way that is market competitive but also profitable.

3. Translating into a retail operating model

Your operating model should be a blend of the ways of working and the organisation that you create to deliver those ways of working. You will also need to define how you will measure and track performance of your operating model. 

Essentially, your purpose is your why. Your customer proposition is your what. In turn, Your operating model is how you do what you do and who does it.

The key here is simply to ask how, repeatedly. 

There is no single operating model that will work for all companies or or all categories. Each operating model should be flexible and should perfectly suite the overall retail strategy and ultimately, the purpose. 
 

An example of successfully using operating models: Tesco

Tesco are a great example of successfully using operating models. By clearly defining their operating model, they were able to quickly expand internationally. Here is a graphic to explain how Tesco view the operating model. This became known as “Tesco in a box” and helped made their world class processes and systems easy to deploy to new stores and new markets. 
Tesco Operating Model

Source: Tesco PLC website (https://www.tescoplc.com/media/1740/operating_model_updated_-_europe_2011.pdf)

4. Executing your operating model into the real world

This can be a tricky part. However, once you have defined a retail operating model, it’s essential to be able to make it happen.

This will of course be dependant on your organisation. But, once you know the processes and procedures, you can ensure that the organisation and commercial business model makes sense. Soon, you’ll have the right number of people with the right skills, scheduled at the right time to serve your customers in the right way. 

Check if your retail operating model matches your purpose

Here are 3 questions you can ask yourself to see if you need to review and refresh your operating model. 

Do you have a defined retail operating model?

If not, it’s going to be tricky to stay consistent across the estate. Plus, it’s going to be hard to stay consistent over time too.

Is your purpose or your customer proposition new (or newly defined)?

If you’ve recently updated your purpose or your proposition, it’s essential to review your operating model. It could be that your operation is excessive – it does far more than you aim to do. This will be wasteful and confusing for customers. However, it could be insufficient, meaning that your operation doesn’t do enough to successfully deliver your proposition or purpose.

Is there a difference between your forecast and your performance?

Finally, if you are experiencing a difference between your forecast and performance, you’ll need to assess if your operating model needs reviewing or if your execution needs to be improved. Basically – do you have the right operating model and are you actually delivering that operating model. 

A quick ask

If you enjoy listening to the Retail Transformation Show, I’d really appreciate a quick review. It only takes a couple of minutes and you can do this on itunes. Alternatively, email in your review to oliver.banks@obandco.uk. Thanks for your time in advance.

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