Retail Operations: Definition, Functions and Job Opportunities

Updated June 30, 2023

The retail industry offers professionals a wide range of career paths with the potential for advancement. Becoming a sales or operations professional in a retail setting can help you develop your leadership skills and advance to a managerial position. If you're interested in pursuing a career in retail, learning about retail operations can help you choose a professional path that fits your skills and professional goals.

In this article, we define retail operations, describe some key functions of retail operations strategies, explain how to automate retail operations and list some career paths in this field.

Key takeaways:

Retail operations refer to the day-to-day activities and responsibilities of retail employees as they work toward meeting customer needs and expectations.
The operational strategy of a retail store or chain comprises several components, which typically include inventory management, order fulfillment, payment processing, customer service, logistics, store design and facilities management.
To pursue a career in retail operations, you can become a retail manager, inventory manager, coordinator or director of operations and logistics specialist, among others.

What is retail operations?

Retail operations is a term that describes the daily tasks of employees within a retail store or chain. While retail marketing and business development focus on attracting new customers, operations focus on serving the needs of the customer when they enter an establishment or visit a retail website. An effective retail operations strategy ensures that customers have an enjoyable purchasing experience, which can encourage them to return or recommend the store to their family and friends. It can also keep the store running efficiently, which saves overhead costs and increases revenue.

Functions of retail operations

A retail store or chain's operational strategy might depend on its target customer and the product they sell. Here are some common components of retail operations:

Store design

For retail stores in a physical location, retail operations include the store's layout. An operations specialist or manager might use organizational elements like shelves, display cases and aisles to make items easy to find. When customers can access the products they need by themselves, they don't need as much support from sales representatives. The representatives can use their time to help other customers decide between products or return purchases. Retail chains or franchises often have layout designs created by operations specialists in the corporate headquarters, which store managers follow when they open a new location.

Inventory management

A retail location's inventory is the number of goods they have available for customers to buy. In physical stores, retail operations employees might display some of their inventory in the main room of the store and keep extra products in a backroom or closet. That way, they can restock products when consumers empty a shelf or display case. Often, retail store managers keep the bulk of their merchandise in a warehouse and schedule regular deliveries to the store. Online retail businesses might store all of their products in a warehouse or fulfillment center.

Logistics

In retail, logistics refers to the processes and skills used to move merchandise between manufacturing facilities, warehouses and stores. Retail operations professionals might research different means of transportation, like trucks, barges and trains, to create a transport plan that fits the needs of the consumers and any product requirements. For example, retail operations professionals for companies that sell beauty products or cleaning chemicals might consider temperature-controlled methods of transporting products. Depending on the product, logistical procedures might also include different ways to unload products and add them to the warehouse or store.

Order fulfillment

In e-commerce, fulfillment is the process a company uses to deliver products to customers who order them online. In some companies, operations and inventory staff package and ship products. Larger companies might have dedicated fulfillment departments or use a fulfillment service. Fulfillment includes the shipping options and return options a company might offer to customers. Retail operations managers and specialists might research different mail carriers to find shipping options that save the customer money while delivering their products quickly. They might also develop packing and shipping protocols for delicate products, like glass bottles or electronics.

Customer service

While some companies have customer service departments that are independent from the operations staff, many companies combine these two business functions. For example, many retail employees perform operations tasks, like stocking inventory, and customer service duties, like helping customers find merchandise in the store. Other customer service tasks a retail operations professional might perform include looking in the inventory stock to find certain product models and responding to customer complaints. A retail operations manager might also manage the customer service staff who work in the store or corporate office.

Payment processing

In both traditional stores and e-commerce businesses, customers might have several options to pay for their merchandise. Retail operations professionals might research types of payments, including credit cars, smartphone payment apps and cash, and decide what kinds to accept in the store. They might also meet with representatives from payment processing companies to discuss processing machines and plans. In stores, a retail operations associate or manager might close out payments at the end of the workday and compile receipts to reconcile against the inventory count.

Returns

When customers need a different size or color of a product, they might return to the store to exchange it for a different item. Retail operations staff often help customers get the correct item or request a refund. Larger stores might have dedicated returns staff, but smaller ones might give this responsibility to an inventory manager, cashier or customer service associate. Senior retail operations professionals, like managers or directors, might develop the store's return and refund policy, which might explain how long after purchase a customer might return an item or which items are ineligible for return.

Facilities management

In retail companies with physical stores, the retail operations staff keep the facilities clean and safe for employees and customers. Facilities managers or operations coordinators might clean the location daily or contract with an external cleaning service, who might clean multiple locations for a company. If an accident or emergency affects a retail location, the operations manager or director might lead the response team to minimize damage to facilities and merchandise. For example, if a store experiences a leaking pipe, a retail manager might call a plumber and cordon off affected areas.

How to automate retail operations

Here are some ways retail operations staff might automate a company's processes:

1. Use an inventory management system

Tracking inventory digitally can reduce the number of times an operations employee might perform manual inventory counts. Some companies use a barcode system, where each unit has a specific code. When a sales associate or other employee removes the unit from the shelf, they scan the order into the inventory management system. Inventory management programs can use time stamps from the scans to detect trends in purchasing and send automated alerts to the inventory manager when the stock is running low. Using a program with operations analytics can ensure that the store always remains stocked to meet consumer needs.

2. Contract with a fulfillment center

Fulfillment centers can be effective tools for e-commerce companies because they allow the company to outsource their inventory and shipping tasks. Mid-sized companies might use these services if they have more orders than they can fulfill with their existing staff, but not enough orders to justify an internal fulfillment team. These companies often have large warehouses, where they store merchandise for multiple client companies. When customers place orders on a client company's website, the fulfillment center receives a notification with information about the order. Fulfillment center employees then package the order and send it through a carrier service.

3. Offer self-checkout options

In traditional stores, consumers often bring their purchases to the cash register, where a sales associate completes the transaction for them. In busy stores, operations managers might install self-checkout kiosks, where customers can scan and pay for their purchases without an associate. Typically, one store associate monitors the self-checkout kiosks and responds to customer questions or equipment issues. Using these devices can free a store's staff members to help with returns or exchanges, reducing the time a customer might wait for help and improving their experience in the store.

5 retail operations jobs

Here are five positions in retail operations. For the most up-to-date salary information from Indeed, visit indeed.com/salaries.

1. Retail manager

National average salary: $46,515 per year

Primary duties: Retail managers supervise store employees and ensure that a retail location's daily operations run smoothly. They might perform a range of retail operations tasks, like arranging the store layout, checking inventory counts, helping with returns or refunds and checking the receipts daily. Usually, these professionals also hire and train staff, lead performance reviews and handle salary questions. They might report to a business owner or general manager, depending on the size of the company.

2. Inventory manager

National average salary: $54,601 per year

Primary duties: Inventory managers monitor a retail company's inventory of merchandise. They might work for an individual store, but most inventory managers work in a corporate office or warehouse, where they arrange shipments of products to stores. Their responsibilities might include counting inventory, using an inventory management platform, shipping pallets of merchandise and tracking the frequency of inventory requests. They might also research cost-effective ways of storing and shipping large amounts of merchandise.

3. Logistics specialist

National average salary: $60,644 per year

Primary duties: Logistics specialists monitor and improve the logistic processes of a company. They might work in a range of industries, including manufacturing and retail. These professionals typically work in a warehouse or corporate office, though they may also work remotely for some or all of their work hours. Their duties include training employees on procedures for requesting and shipping materials, researching cost-effective transport options, using data analytics to evaluate the efficiency of a company's current shipping and stocking processes and supporting the operations director.

4. Operations coordinator

National average salary: $68,057 per year

Primary duties: Operations coordinators assist operations managers and directors, often in larger retail companies. They typically work in a retail company's corporate headquarters or main warehouse, though they might also travel to a company's different retail locations. These professionals perform logistical tasks, like coordinating inventory transport and developing supply chain processes. They might also create training documents, audit operations procedures and coordinate corporate events.

5. Director of operations

National average salary: $87,633 per year

Primary duties: Operations directors are often the senior operations professional at a retail company. They typically work at a company's corporate office, but they might travel to individual store locations to evaluate the operational efficiency of the store. Their responsibilities may include developing operational processes, deciding where to open new locations, managing operations and inventory staff and responding to supply chain or logistics issues. Many operations directors start their careers in entry-level management or logistics positions.