Your back of house might not be as exciting as your storefront or front of house. It might not get the recognition it deserves either. But that doesn't mean it's not essential. After all, fail to organise it correctly, and you could see the rest of your retail business suffering.
Understanding your back of house
Before we take a look at how you can organise your back of house, it’s worth taking a look at what we mean whenever we mention it. The reason is that if you search this exact phrase online, the majority of results that come back will point you to restaurants and the hospitality business.
However, it’s not the only industry that has a ‘back of house’.
Retailers, quite obviously, have a back of house too. And, similar to a restaurant, which applies it to their kitchen area and other areas not seen by the customer, for you, it refers to all the aspects and activities that happen behind the scenes.
Of course, the enormity of that appears intimidating so let’s break that down: in the context of retail, it usually refers to your receiving and delivery room as well as your stockroom and all of the activities that go on within it.
You could expand on the above further still. For example, for your receiving bays, you would need to among other things, optimise its layout, keep track of your invoices, and have specific checks and balances in place for receiving goods.
Meanwhile, for your stockroom, you would need to cater for breakages and returned goods while managing your storage space and keeping a record of how you pack your products so that your staff can find what they're looking for quickly.
What makes this that much more intimidating is that any small mistake can have disastrous consequences. But if you can get it right, and keep it organised, you have every chance of increasing your chances of long-term success.
How organising your Back of House leads to retail success
Offering the right product assortment as well as presenting it accordingly so that your customers can find what they want may be significant. That said, you could argue that you would experience little to no success if you don’t first organise your back of house.
The converse is true: better organisation can lead to retail success. But how exactly? Below, we touch on what organisation means for your store as well as a few approaches you can take to organise your space better.
1. It reduces the risk of you running out of stock
Out of stocks are an occupational hazard that you and any other retailer would do well to avoid. That much is obvious - we’ve even dedicated an article to the damage it can do to your retail brand.
The unfortunate reality, though, is that it happens. But, since managing out of stocks essentially comes down to better organisation, it stands to reason that having control of what is coming in and out of your business will help you to reduce this risk.
Likewise, if it’s chaotic, there is every possibility of you losing control of your inventory.
So how can you organise your space better? And how does that lead to success?
One way would be to invest in a robust inventory management system that can track your sales and the minimum stock required for your stores. Another is to organise your stockroom so that each department has a dedicated space.
Depending on the size of your stockroom, it would also be prudent to have more than one person monitoring it. In an ideal world, you’d ensure that for each department, you’d have one person to look after it.
What’s more, that person should also have sound product knowledge so that the stock stored also mimics the way it is on the shelf.
2. It reduces your overheads and helps you to prevent overstocking
Depending on how you use your space, you can approach it as either an asset or an expense. Use it effectively, and it becomes an asset that can assist you to maximise your sales and see long-term success. Use it poorly, however, and it can quickly become a liability.
Let’s say that you find yourself overstocking on a product. It is a clear indication that you’re offering too much of the wrong product, which means your space has become a liability.
Fortunately, there is a straightforward approach you can take, which can help you regain control of your space. It’s a case of considering your historical sales data and overlaying that with any current market trends and then adjusting where necessary.
It would help if you also considered conducting just-in-time stock-taking, which will assist you in keeping track of your stocks without going overboard. This is again where an inventory management system can help you so that your money isn’t tied up in stocks.
Of course, some circumstances could prevent you from becoming organised. The most obvious is not investing in a stock inventory system or investing in the wrong one; a system that isn’t automated.
Failure to invest in an automated system means there is a higher chance of overordering. More than that, you could expect other mistakes around your invoicing, receiving goods and could even miss breakages.
3. It can help you to foster and boost customer loyalty
One of your goals as a retailer is to please your customers and stocking the right products at the right time can help you achieve that.
Let’s say a customer walks into your store looking for a product and you don’t have it on the store floor. But a sales assistant can find it quickly in the storeroom because firstly, you’ve invested in a stock management system and secondly, you’ve arranged your stockroom so that it’s easy to find.
The result is that you can foster customer loyalty because you’ve pleased them. And it doesn’t matter so much that the product isn’t on the store floor. While that is first prize, in this instance, it’s more about proper stock management and customer service. Can you find the product quickly enough to prevent the customer from becoming irritated and wanting to leave?
Now, let’s consider that your stockroom was disorganised. While your system indicated that you had a product, you can’t find it anywhere. The result is an unhappy customer who will probably leave and not return. You also run the risk of that customer bad-mouthing you to their family and friends. But that’s the consequence of not organising your back of house effectively.
It’s also worth pointing out that a better organisation will also ensure that items are received in the correct quantities and at the right time and place, which allows you to place it onto the shop floor in time for customers to buy.
4. It can lead to increased happiness among your staff
As much as having better control of your back of house is primarily about ensuring that you have enough stock to meet customer demand, that is not the only reason why you should strive to provide it. Having more control also leads to increased happiness among your staff.
Let us explain:
Your sales staff are positioned in your store to sell products and increase your profits. That’s their primary role. However, that job becomes increasingly difficult to complete if your stockroom is disorganised and cluttered.
Of course, there are many instances where your staff could adapt and strive to offer outstanding customer so that the shopper doesn’t leave frustrated. But there are also moments where you could expect too much of them.
For example, you have one salesperson who you expect to fulfil the role of multiple people at the same time. A customer walks in asking for a product, and they visit the stockroom to find it. Meanwhile, another two or three customers walk in, see there is no one on the floor room and after a short while, walk out because no one is available to assist them.
It certainly won’t help if your sales staff work on commission because if they can’t find a product that a customer requests quickly enough, they lose out on potential income. And not just from those customers who walk in and then out. The first customer might also decide they’ve waited too long.
If you want to prevent this from happening, you need to consider a stock-keeping process that allows you to conduct daily or weekly stock counts depending on the size of your store and range of products. It’s also worth considering employing someone specifically to monitor and oversee stock counts.
5. It can help you to improve shelf replenishment efficiency
As mentioned above, it’s best practice to merchandise your inventory in your stockroom according to the department, or as similar as possible to how it is on your shop floor. That’s to ensure your staff can complete any replenishment exercises as quickly as possible.
The benefit of doing this is that it would make it easier for you to not only conduct stock takes, regardless of its frequency, but you’ll also know when your stock runs low so that you can make a plan. Of course, this can’t happen if you’ve failed to organise your stockroom correctly.
Zero to none stockroom control as well as a disorganised back of house not only prevents your staff from replenishing your shelves efficiently, but it also leads to gaps on your shelf, thus creating out of stock situations.
Another approach is to introduce a replenishment system that monitors your stock on hand in relation to your available space and informs you of how to space it out appropriately. That’s to achieve optimal space to stock ratios.
Conclusion
DotActiv Lite, Pro, and Enterprise are all different versions of our category management software that allows you to optimise your shelf, floor and storeroom space. You can visit our online store here.
