Each day, you have a laundry list of tasks to complete as a retail business owner. Talk to customers, tidy the store, schedule staff shifts for the coming week… the list goes on. These tasks fall under the category of retail operations.
Retail operations describe the regular tasks, processes, or procedures that keep a retail business running smoothly.
The real question is: How do you ensure efficient retail operations across both online and physical store locations? This guide shares the answer, including the things to include in your operations strategy and tips for maintaining a successful retail operation.
What are retail operations?
Retail operations are the daily activities, systems, or processes that allow online and physical stores to function efficiently and effectively. The aim is to enhance the customer shopping experience and lower the retailer’s costs.
At a glance, retail operations include:
- Supply chain/logistics management
- Cash operations
- Store layout (both online and physical locations)
- Customer service
- Order fulfillment
- Physical inventory management
- Master data management
- Promotions and pricing
- Employee management
- Store safety and security
- Financial management
Retail store operations examples
Customer service
Store associates at physical locations have a unique opportunity to personally interact with each customer. This part of your retail operations focuses on improving customer satisfaction through:
- Omnichannel help and support
- Quick deliveries
- Easy refunds and returns
- Fast resolutions to customer complaints
- Gathering customer feedback
- Inputting data into a customer relationship management tool
Today’s customers expect digital and in-person channels to deliver a personalized shopping experience. This can feel like a tall order for brands with both a digital and physical presence. How do you ensure consistency for both online and in-store shoppers? How do you achieve personalization if you’re experiencing rapid growth?
Shopify creates unified customer profiles whenever a customer shares their email address or phone number. Any first-party data you’ve collected on customers—whether that’s their order history (both online and in-person), loyalty points they’ve earned, or conversations they’ve had with support—feeds back to this unified profile.
Spice retailer Pepper Palace uses this feature to gather insight on who its customers are, regardless of whether they shop online or at one of its 100+ retail locations. Since adopting the platform, the retailer has grown its customer base by 900% and lifted monthly gross merchandise volume by 127%.
“Moving to Shopify was critical to us growing the brand to where it is today” says Paul Budonis, president and COO. “We’re able to open stores quicker, operate them with less overhead, and efficiently acquire customers who continue to support the brand online well after their first visit.”
Store management
Retail stores need to be accessible to all shoppers, easy to navigate, and well-staffed by knowledgeable team members. Think about how your hiring and training policies help team members feel prepared to deal with shoppers. The layout, music, and aesthetics of your physical store should add to the shopping experience.
Shopify POS offers a modular and extensible system that adapts to your business needs as you grow. While many essential retail functions are built into the platform, Shopify POS seamlessly integrates with a wide network of third-party apps, allowing you to expand your store management capabilities without any complex customization.
For example, apps for employee scheduling, customer relationship management (CRM), and advanced reporting can easily plug into Shopify’s POS, helping you manage staff, inventory, and customer interactions all in one place. This extensibility improves your store's operational efficiency by reducing manual processes and centralizing data across all your tools.
Inventory management
Retailers need to be online to maximize their sales, but it’s hard to maintain consistency across all channels, processes, and people. You may find it challenging to distribute inventory correctly across all channels. For example, customers may prefer to purchase small items at your physical location and order bulky items online.
Knowing your customers’ preferences can help you distribute your inventory better. That’s why accurate data on customer purchasing habits is important.
Inventory management is the system you create to organize inventory throughout the supply chain. It includes everything from ordering goods to properly storing items. An efficient inventory management system enables your business to maintain the optimal level of inventory.
Retailers can avoid costly overstocking and stockouts by adopting inventory management software that syncs real-time data from both online and physical stores. This ensures better customer satisfaction and cuts unnecessary storage costs and prevents lost sales. Automating purchase orders based on low-stock alerts can further streamline the supply chain and improve operational efficiency.
💡Tip: Install the Stocky app to manage inventory from your Shopify POS dashboard. Generate inventory reports, track product performance, and replenish low stock with automated reordering features.
Payments and order processing
Retail operations include the payment methods you accept and how you process them at checkout. Most retailers have a point-of-sale (POS) system that enables them to serve customers, take payments, issue receipts, and keep track of sales.
Getting this part of retail operations right is two-fold: You’ll need a tech stack that makes it easy to process orders and regular staff training. Shopify POS, for example, offers POS hardware (think barcode scanners, receipt printers, and card readers) that are incredibly easy to use. Anyone with the appropriate user permission can jump onto the POS system and ring up orders—no heavy lifting required.
Implementing an intuitive POS system can reduce the time employees spend at checkout, improving efficiency and allowing them to serve more customers faster.
Promotions and pricing
Modern consumers are more price sensitive than ever. While inflation has dropped, 57% of shoppers still say that rising prices and inflation are among their concerns.
The promotions and pricing aspect of retail operations is a way to drive customers into your store. To make promotions effective, consider the following aspects of your retail ops strategy:
- Market research and competitor price analysis
- Pricing strategy—i.e., the discount or promotion customers are most likely to respond to
- Implementation, including the terms of the discount code and when it’s active
- Tracking sales data to evaluate success
Austin-based pet food retailer Tomlinson’s previously found it difficult to offer sales and promotions consistently. Customers could enroll in its loyalty or trade membership programs online, but when they tried to redeem their rewards in-store, cashiers were forced to jump through hoops—an issue that elongated checkout queues and hindered retail productivity.
Tomlinson’s migrated to Shopify to unify its POS and ecommerce systems—and almost halved the number of taps required at checkout.
“Our customers can log into their online portal and see all their previous purchases, which wasn’t possible before,” says owner and operator Kate Knecht. “Their Pet Club Membership program is seamlessly managed through Shopify, allowing us to track memberships, apply discounts automatically, and provide a smooth experience for customers and staff.”
Supply chain management
The retail supply chain is the flow of products you’re receiving from suppliers. This part of retail operations is perhaps one of the most important—you can’t generate revenue without inventory to sell.
The supply chain management aspect of retail operations involves tasks like reordering new stock once inventory levels drop below your minimum threshold, confirming that receiving inventory meets quality control standards, and maintaining strong relationships with suppliers.
Order fulfillment
Order fulfillment is the final part of the supply chain process. It describes how you’ll get products from your stockroom to your customers.
The traditional retail model makes this easy. Most often, customers will come into your store, pick a product off the shelves, and head to your checkout desk with their credit card in hand.
However, there’s not always the need to stock all of your sellable inventory on the shop floor. Keeping some products in the stockroom or at a separate storage facility (such as a shipping warehouse) allows you to keep the store clutter-free. It’s the equivalent of a retail showroom that customers can visit to get a taste for your products in-person.
Your retail operations strategy needs to define the different ways orders can be fulfilled and how these are managed. That might include:
- Buy online, pick up in-store
- Curbside pickup
- Ship to home
- Ship to store
Home furnishings brand Parachute uses Shopify’s unified capabilities to offer these hybrid fulfillment options. Customers can see inventory levels at their nearest store, and pay for orders online to later collect at their nearest location. It’s proven a popular option: Parachute has increased BOPIS revenue by 5x in just four years—all without having another system to operate.
“With Shopify POS, we now have a single point of truth for our inventory, which makes everything flow much more smoothly,” says founder Ariel Kaye.
Employee management
This aspect of retail operations covers the practical and legal side of managing employees—from recruiting new employees to onboarding and training them. It also includes rota scheduling and ensuring that health and safety procedures are being followed.
Shopify apps like EasyTeam make this aspect of retail operations easier, without having to mentally schedule employees and text their weekly shifts. EasyTeam integrates with your POS system so you can see staff availability, let employees clock in and out, and offer commission on sales they make—all in the same system you use to manage other aspects of your retail operation.
💡Get inspired: Learn how Monos reduced POS training time to just half-day.
Financial management
Do you know how much profit your store is making? How much it costs to operate? What your bestselling products are, and the margins of each? These questions aren’t just nice to know—financial management is critical for retailers of all sizes. It helps you stay in the black, maximize sales, and turn a profit.
Financial management covers components such as:
- Forecasting: Calculating how much revenue you expect to generate over the coming year. Consumer shifts, market trends, supply chain disruption, or upcoming sales and promotions can impact this figure. Use AI demand forecasting tools to form more accurate projections.
- Cost control: Scrutinize every part of your retail operation to figure out where you’re overspending and how you can cut back. For example, you could negotiate better terms with suppliers for ordering in bulk, or cut down labor costs by balancing staff schedules with customer demand.
- Accounting and taxes: From reconciling bank statements to filing tax returns by their deadline, accounting is a key aspect of retail operations. It keeps your store on the right side of the law and avoids any late filing penalties.
Store safety and security
This aspect of retail operations prioritizes safety—not just of your employees and customers, but of your inventory. Put loss prevention measures in place to prevent shoplifting or fraud from sabotaging your profits.
There are procedures you can implement to do this:
- Share opening and closing procedures. This can include inspecting the outside for signs of a break-in, checking the security cameras are on, and enabling the store’s alarm system when closing.
- Give thorough staff training. Teach cashiers how to detect counterfeit notes, the signs of a shoplifter, and what to do if they notice suspicious behavior in your store.
- Buy commercial insurance. General liability insurance tends to cover any issues that arise if a customer is injured in your store or your property is damaged.
- Protect your tech. Choose a POS system and payment processor that keeps customer data safe, give staff their own POS login, and require store manager approval for certain transactions—such as refunds or exchanges.
How to automate retail operations at your store
Automate where possible
Although it’s tempting, tracking inventory with lengthy spreadsheets can get out of hand quickly. It’s time-consuming and puts you in danger of human error and poorly informed business decisions that cost your business. Instead, integrate all your POS and inventory management systems and let them do the tedious work for you.
When you automate your inventory management with high-quality software, you get access to helpful features like low-stock alerts, automated purchase orders, and inventory reporting. It’ll speed up your day-to-day admin, make it easier to accurately track your inventory, and help inform future purchasing decisions.
The best inventory management software accurately syncs your data in real time as stock is sold, received, or returned. Shopify, for example, collates inventory data from every sales channel—including your retail locations and ecommerce shipping warehouse—so you’ll always know how much inventory you have on hand.
Unify online and offline selling
Customers like to view goods in person before completing their purchase online. And they spend more for the luxury of doing so: omnichannel shoppers make purchases 70% more often, and spend about 34% more than consumers who only shop in-store.
Your toolstack directly influences your ability to offer these omnichannel experiences, without putting strain on your resources.
The traditional approach was a mixture of fragmented systems, patchy APIs, and middleware to stitch together a system that looked great for customers, but wasn’t so pretty to manage. Shopify solves this problem by unifying POS and ecommerce on the same platform. Order, customer, and inventory data flows from a single backend—an approach that a recent EY POS Market report found:
- Offers a 22% lower total cost of ownership.
- Improves productivity to save the equivalent of 0.4 full-time employees per store location.
- Increases omnichannel gross merchandise value by as much as 150% year-over-year.
Alexandra McNab, COO at Bared Footwear, says: “With Shopify, we have a unified commerce platform that makes the holistic experience we want to offer customers possible without burdening our team with clunky workarounds or high-risk situations.”
Offer experiential retail
Shoppers are craving live in-person experiences—something you can offer by focusing on customer-centric interactions. These could be:
- Interactive product demos
- Workshops or classes
- Try-before-you-buy events
- Community-based events
- Pop-up showrooms
Experiential retail encourages customers to spend more time with your brand. For example, lingerie brand LIVELY offers free fitting sessions to help customers find the right bra size and style.
The strategy has helped LIVELY capture customers with a 60-80% higher average order value. As founder Michelle Cordeiro Grant says: “It’s much easier to repeat a purchase online once you’ve come in, done a fitting, and know your bra size.”
Optimize inventory management
Access to accurate real-time data is key for optimizing your inventory management. Be prepared to adopt new technology to make your existing inventory infrastructure more efficient.
RFID (radio frequency identification) tags enable you to better search, identify, and track items. Unlike traditional line-of-sight barcodes, RFID tags can be read at a distance and from any orientation for quicker inventory processing. This gives you better inventory visibility with the potential of more frequent updates.
Start performing quarterly inventory counts in cycles. Instead of counting everything at once, break it down into sections. Spend one cycle counting one area or type of inventory and the following counting period on another item type or section in your warehouse. These inventory counts will help reduce the chance of costly overstocking or frustrating stockouts.
Streamline checkout
In retail, the online shopping cart abandonment rate sits at around 70%. Streamlining your checkout process means you’ll make it easier for shoppers to click buy and follow through on their orders.
In your physical locations, using a mobile POS system enables store staff to take payments anywhere in the store and virtually eliminates lineups to pay at checkout. This line busting tactic gives customers an efficient checkout experience.
Optimize returns and exchanges
Total returns account for $890 billion in annual lost sales for U.S. retailers. But returns don’t need to represent the end of the customer journey with your business.They’re an opportunity to deepen your understanding of your customers’ requirements.
BORIS (buy-online-return-in-store) offers the chance to meet and convert customers personally. Use the opportunity to learn more about the exact product specifics your customer is looking for and help them find it.
To encourage customers to shop with your brand again, offer a return to gift card option so they can choose to buy something else at a later date.
Challenges in retail operations
Retail operations have many moving parts, which presents challenges:
- High operating costs. It costs money to keep your business running. Whether it’s a specialist operations manager or technology or CCTV systems that protect your business from theft, these fixed costs can inflate operating costs. Double down on the financial management aspect of your operations to find ways to cut costs and remain profitable.
- Employee turnover. Retail operations are most effective when staff follow procedures you’ve set. This is challenging when employees leave—you have to replace each employee and bring them up to speed with your policies and procedures. This is made easier with documentation and structured onboarding programs.
- Siloed data and systems. POS systems, order fulfillment tools, inventory management apps—your retail operating system can span different tools, which inflate costs and require more staff training time. Shopify solves this problem by building POS and ecommerce natively on the same platform, with a growing App Store of over 8,000+ integrations to power your retail business from a single operating system.
Do I need to hire a retail operations specialist?
Sometimes, managing the day-to-day running of a retail store is too much for one person to handle. It’s why many store owners hire a retail operations specialist to take ownership of processes and procedures, giving you more free time to spend on higher impact tasks that will grow the business.
Indeed suggests that the average salary for a retail operations manager is $111K. Their responsibilities are generic—they might record inventory one day and create a loss prevention strategy another. But at a high level, it’s this person’s job to:
- Record inventory and restock when required
- Implement health and safety procedures in-store
- Follow opening and closing procedures
- Train retail employees on how to follow procedures
- Suggest new retail technology (and own the implementation of it)
- Experiment with new sales techniques
Improve retail operations at your physical location
Now that you know the core elements of retail operations, you’re ready to put in place these tactics to improve your retail operations. Whether you’ve just set up your first online shop or are expanding to a physical store, these strategies will help your business succeed.
Shopify POS has all of the features you’ll need to manage retail operations, whether you’re a one-store brand or a retailer with multiple locations. From inventory management to staff scheduling apps, try the best-in-class POS system with essential features baked in as standard.
Read more
- How To Empower Retail Employees With Technology
- How to Increase productivity and identify productivity killers
- HR Chatbots: How AI Can Help Onboard and Train Your Retail Employees
- Commercial Insurance: What Retailers Need to Know When Shopping for Coverage
- The 5 Most Expensive Payroll Errors—and How to Avoid Them
- Concrete Ways to Maintain Work-Life Balance as a Retailer
- Why Going Paperless Can Help Your Retail Business (And How to Do It)
Retail operations FAQ
What is the meaning of retail operations?
Retail operations are the day-to-day activities involved in operating a brick-and-mortar store. It can include inventory management, payment processing, store security, customer service, and managing the supply chain.
What is considered a retail operation?
A retail operation is any business that sells products in person. Examples of retail operations include department stores, pop-up shops, grocery stores, warehouses, and mobile food trucks.
What does a retail operations team do?
It’s a retail operations team’s job to manage the day-to-day operations of running a retail store. This might include managing inventory levels, offering excellent customer service, scheduling employee shifts, optimizing the store layout, and maintaining store safety.
What are the 5 S's of retail operations?
The five S's of retail operations are systems, standards, stock, space, and staff. The best strategies encompass all five.
What are the types of retail operations?
The main types of retail operations are inventory management, customer service, store design and layout, supply chain management, promotions, employee training, and budgeting.
