Organizational Patterns of a Retail Business

What you'll learn to do: Describe the organizational patterns of a retail business

Varying sizes of retail businesses utilize different organizational patterns and organizational charts. Each level of a business from executive to floor staff of a retail business need to have a job description, and clear outline of the duties.

From the smallest local store to national chains and diversified retailers, insuring clear job descriptions and hierarchy are imperative to an effectively running business.

Organizational Structure and Employee Activities

As with any business, the organizational structure of a retail chain will depend considerably on the type of store and its size.  Retail stores generally have numerous types of employees who do a multitude of jobs. Starting at the top of a national chain’s organizational structure a Chief Executive Officer (CEO), also sometimes called the President of the company, makes the major decisions for the business such as what wholesalers to buy from and where new stores should be built.  “The role of the chief executive officer (CEO)… consists of planning, organizing, staffing, directing, coordinating, reporting, and budgeting is arguably the most important and influential in an organization.”^[13]

The next level of hierarchy in the organizational structure of retail, who report to the CEO, is management.   In the management sector general manager, assistant manager and regional manager are a few of the types of management titles held within the retail organizational structure.  “The top managers of an organization will develop social capital through a variety of personal relationships with their suppliers, customers, competitors, trade associations, government's political institutions and community organizations. This capital can then be used for the benefit of their organizations.”^[14]

Organizational Structure Determines Employees Activities

The organizational structure of a retail store greatly determines what the daily activities and tasks that specific employees will perform. If the retail chain is for instance, a furniture store, then human resource personnel would want to hire warehouse workers who are physically fit enough to lift and move heavy or large merchandise.  Although warehouse personnel’s jobs characteristically have no set educational requirements they are an integral element of the structure of a retail business. “With the rise of e-commerce, while these “traditional” retail job numbers (cashiers, store clerks and stocking crews) are indeed shrinking, there is an accompanying rise in “non-traditional” retail jobs, like warehouse personnel and delivery drivers.”^[15] While a warehouse employee would not be expected to file tax forms on behalf of the company or report on profit sharing, such as a CEO would, it is a vital sector of the organizational structure.

Other general titles which are interchangeably used within a retail setting are cashier and customer service representative.  Cashiers, merchandising and floor personnel would need to be personable and capable of dealing with the general public as their jobs consist of conducting point of sale transactions and assisting costumers.  Just as one would not expect a warehouse worker to perform the duties of a CEO, you would not expect a cashier to explain a personnel handbook to new employees as expected from the human resources division. A cashier’s daily duties are to greet customers, operate cash registers, bag merchandise, use scanners/scales and handle the types of transactions one would experience at a checkout counter such as returns, the loading of gift cards, etc.  This requires accuracy and some basic math skills, for that reason, when hiring for cashiers these are characteristics a retail manager should look for in a prospective employee. Thus, retail managers rely on the organizational structure of their company to determine which employees will fit cohesively into each particular job position.

Retailer Structures

As mentioned in the previous section, the organizational structure of a retail business will greatly depend on the type of store and its size. Generally the logistics of a retail store are determined when a business plan is set into place. At the outset, retailers typically attempt to employ an organizational structure that is alluring to their consumers and the particular market they are attempting to sell to. The three types of retailers we will examine in this section are the single-store retailer, diversified retailer and national chains.

Single-Store

A single-store retailer has a smaller scale of organizational structure in comparison to national chains and diversified retailers. The typical structure for a single-store retailer may consist of the owner performing CEO and manager duties or even a cashier stocking merchandise because the inventory as well as the profit margins are smaller so there is significantly less need for these types of individual employees. “A small specialty shop may have all of its employees under one category called Store Operations. . . . Even if you only have a small staff, everyone should be tasked with specific duties, so that things don't fall through the cracks.”^[16]

Many national chains and diversified retailers start out as single-store retailers. One such national chain was Wal-Mart. “On July 2, 1962, Sam Walton opened the first Wal-Mart store in Rogers, Arkansas. Sam's competitors thought his idea that a successful business could be built around offering lower prices and great service would never work. As it turned out, the company's success exceeded even Sam's expectations.”^[17]  Wal-Mart’s ultimate success provided for international expansion eventually leading to the single-store retail business becoming a national chain and even building stores in other countries such as Canada and Mexico.

Diversified

Diversified retailers provide products and/or services that are completely unrelated to what is being sold or offered in their other stores.  Another way a retailer may become diversified is by acquiring another company or by merging with it. Acquiring or buying out other companies happens often in retail because it provides a means for eradicating competition. When one hears the name brand General Electric (GE) they might automatically think of kitchen appliances, but might not know that GE also produces medical devices such as ultrasound and x-ray equipment.^[18]

Because diversified retailers have such a broad range of specializations they have a more complex organizational structure in comparison to single-store retailers or national chains.  For example, Disney conducts various types of commerce from theme parks and film production to retail stores. One of the primary roles of management in a diversified retail business is to delegate authority because there is such a huge range of operations in various sectors of the company being conducted daily.

National Chains

National chain retailers are largely competitive.  For this reason, like diversified retailers, national chains tend to have an organizational structure intricate in comparison to a single-store retailer. “A large department store may have a complete staff consisting of a manager, assistant manager, and sales associates for its Sporting Goods department, Home and Garden, Bed and Bath, and each additional department.”^[19] National retail chains will have multiple divisions with an array of personnel who are designated to do various jobs within the company. Regardless of what type of retail store you work for upper management should be detail oriented and capable of making quick and ethical decisions on behalf of their company.

Divisions of a Retail Business

Larger stores, such as national chains, will have multiple sectors where daily operations are handled. Depending on the retail organization, the exact terminology for each division and title held by each individual employee may vary but are typically similar in nature from store to store.  “Titles demonstrate the importance of the business functions, either internally or externally.”^[20]  Executive, finance, operations and sales are integral parts of a large retail organizational structure.  The executive level deals with preparation and planning. Finance would handle the bookkeeping and accounting aspects of the retail store.  Sales, also called store operations, would be responsible for merchandising or customer service and regular procedures implemented within the store itself.  Operations, also sometimes called regional operations consist of warehousing and transporting the merchandise.

Executive

As established in earlier this module, the CEO (or president) of a large retail company is the primary decision maker for the company. As with larger businesses the CEO reports to the shareholders and is the company’s principal decision maker. “Quick thinking, an ability to react swiftly to changing circumstances, knowing what to do immediately when faced with a challenging situation. What company can afford to have a CEO who does not fit that description?”^[21]  The executive division of a retail store will also consist of management and in the largest of companies’ corporate recruiters who are responsible for recruiting the top-level executives. These roles within a retail organization which handle planning and hiring are sometimes termed Central Operations.^[22]

Finance

In many national chain and diversified retail markets the organizational structure may consist of a finance department.  This department would house bookkeepers, accountants and sometimes tax attorneys who keep records of the financial dealings of a company. Accountants would record profit margins and losses as well as inventory costs. Tax attorneys would assist in financial planning, navigate complex tax codes and laws, handle disputes before the Internal Revenue Service (IRS) and oversee tax planning to legally minimize tax burdens.^[23] Bookkeepers would also do a variety of tasks including print checks and keep track of employees’ hours in order to pay them their wages.

Operations and Sales

Operations consist of warehouse and distribution. A Warehouse Operations Manager might be one of the titles you would find in this sector of a retail organization. Not only do these types of managers oversee the housing and transport of merchandise but they also make decisions with regard to planning such as which software best functions for their warehouse operations.^[24] Sales is another sector which deals with the day to day operations and functions of a retail store. In larger retail stores a Corporate Sales Manager (CSM) heads this division of a retail organization. CSM’s oversee the sales force which works within a retail business.  These types of managers would spend time on the sales floor as well as behind the scenes in the office of a store.

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