Managing Retail Warehouse Operations: 4 Special Considerations and Best Practices

A retail warehouse is a brick-and-mortar retail location that also functions as a warehouse-style inventory storage facility and may also operate as a fulfillment center for online eCommerce orders. Many of the world’s largest retailers operate stores in a retail warehouse format, including Costco, IKEA, and Home Depot.Combining inventory storage, retail sales, and online order fulfillment in a single location can help retail businesses increase operating efficiency, drive down costs, and deliver reduced prices for customers. But to realize those benefits, retail warehouse managers must carefully orchestrate warehouse operations while overcoming challenges and constraints that simply aren’t present in dedicated distribution/fulfillment centers or other warehousing facilities.[caption id="attachment_7293" align="aligncenter" width="1024"]

Managing Retail Warehouse Operations: 4 Special Considerations and Best Practices[/caption]Managing retail warehouse operations have some unique challenges. Let’s explore the key features and benefits of retail warehouses, special considerations and best practices for retail warehouse operations management, the role of technology, and how a Lean Six Sigma approach can help warehouse managers streamline operational processes, reduce waste, and drive profitability.

What is a Retail Warehouse?

A retail warehouse is a single building operated by a retail company that serves as a warehouse-style inventory storage space, a brick-and-mortar retail space, and a fulfillment center for eCommerce orders.Common features of retail warehouse facilities include:

• Industrial Real Estate - Retail warehouses are usually housed in a large building with a big parking lot and a sizable plot of land. For example, the average Home Depot store has 105,000 sq-ft of retail space and an additional 24,000 sq-ft of outdoor garden space, while the average Costco warehouse covers an area of 147,000 sq-ft. Retail warehouses need a large operating space to store/display a wide assortment of inventory and accommodate a high volume of customers.
• Warehouse Aesthetic - Retail warehouse facilities usually have an industrial warehouse aesthetic with features like high ceilings, gray concrete floors, wide aisles, and metal storage racks.
• Bulk Merchandise - Retail warehouses often purchase and store inventory in large quantities. As a result, customers can usually purchase items in larger sizes or quantities at a retail warehouse than they could at a traditional retail store.
• Wide Product Selection - To capitalize effectively on their large retail space, retail warehouses typically offer a wide range of products across multiple product categories like furniture, housewares, outdoor living, groceries, electronics, appliances, home improvement supplies, clothing, and toys.
• Vertical Storage - Retail warehouses implement vertical storage to make the best use of their available storage space. Many retail warehouses use ceiling-high pallet racks where the bottom level is used to display products for sale and upper levels are used to store pallets of excess inventory.

[caption id="attachment_7295" align="aligncenter" width="616"]

Retail warehouses use vertical storage to maximize space utilization, storing bulk inventory until it’s ready to be stocked in retail displays.[/caption]

Managing Retail Warehouse Operations: 4 Special Considerations and Best Practices

1. Optimize Your Retail Warehouse Layout for In-Person Shopping

Warehouse layout refers to the physical arrangement of operational zones in a warehouse facility, including shipping/receiving areas, storage areas, and the configuration of storage racks, shelving, and other warehouse infrastructure. In most warehousing operations, site managers customize the warehouse layout to optimize space utilization, streamline the movement of inventory, and enhance operational efficiency. But there’s one crucial factor that takes precedence when it comes to layout design for retail warehouses: in-person shopping.Because retail warehouses have in-person shoppers, the layout of a retail warehouse should be designed to optimize the in-person shopping experience - even if doing so reduces efficiency in other areas. A warehouse distribution center might function best with its major operational areas (e.g. receiving, order picking, etc.) in the middle of the building, minimizing the average distance to storage locations. But a retail warehouse will usually hide those areas in a back room to keep a tidy aesthetic in the retail area and avoid distracting customers from their shopping experience.

2. Optimize Inventory Slotting in Your Retail Warehouse

In a dedicated warehouse fulfillment center, the best approach to inventory slotting is to strategically position fast-moving SKUs in the warehouse to accelerate order picking times and maximize process efficiency.But in a retail warehouse with in-person shopping, inventory slotting can’t just be optimized for fulfilling online orders. Instead, retail warehouse managers should follow visual merchandising best practices when determining where and how to display inventory in the store. These include practice like:

• Deploying Signage - Large signs helps streamline the shopping experience, making it easier for customers to find the products they want, especially in a large retail warehouse. Signage near the customer’s entry point can deliver information about promotions and can help guide the shopping experience.
• Strategic Product Placement - Organizing the retail warehouse by product category further helps streamline the shopping experience. High-margin or special promotion products should be positioned at eye level, at or near the ends of storage aisles to maximize their visibility.
• Imagery - Product images and images of product consumption impact consumer behavior and can be deployed in retail warehouses to entice customers.
• Cross-Selling Opportunities - Positioning similar items close together in the retail space (i.e. stocking the hammer near the nails) is a cross-promotion strategy that improves the customer experience and drives revenue.

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Common practice in retail warehousing is to display inventory near ground level and use the upper shelves of pallet racks for bulk storage of the same SKUs. This makes it faster and easier for warehouse merchandising teams to restock depleted retail displays.[/caption]

3. Scheduling Warehouse Operations Outside Retail Hours

The average warehouse fulfillment center can put away inventory, pick and pack orders, or run cycle counts at any time of day. But in a retail warehouse, it’s generally considered unsafe for merchandising or putaway teams to drive forklifts around into the storage area while it’s jam-packed with shoppers during business hours. Instead, warehouse operations that could endanger or inconvenience customers are usually completed late at night or early in the morning while there are no customers in the store. Here’s how one retail warehouse does it:

• 4:00 pm - A truck arrives carrying new inventory. The inventory is unloaded through a shipping door into a receiving area inaccessible to customers. A busy store might receive 7-15 shipments of new inventory each week.
• 8:30 pm - Retail hours end for the day. Warehouse employees clean the storage area and remove any debris to ensure safety for warehouse workers operating heavy equipment.
• 9:00 pm - Putaway teams use forklifts to put away new inventory in the warehouse storage area. Order picking teams use a batch picking strategy to pick online orders. Once picked, the orders are packed, labeled, and prepared to ship in the morning.
• 12:00 am - Putaway and order picking teams go home.
• 4:00 am - Merchandising teams arrive. They will spend several hours restocking inventory displays, facing products, and cleaning the retail warehouse before the store opens to customers in the morning.
• 6:00 am - Shipping carriers arrive to collect orders that were picked/packed the night before.
• 9:00 am - Merchandising teams go home and the retail warehouse opens to the public for business. During the day, shoppers will deplete inventory displays, more inventory will arrive in trucks, and the daily schedule will repeat.

Scheduling warehouse operations after business hours gives warehouse teams ample time to complete critical tasks without inconveniencing customers or risking their safety. However there’s still room for flexibility and some retail warehouses will stock continuously on the busiest days to avoid out-of-stock situations that negatively impact the customer experience.

4. Ensuring Customer Safety and Avoiding Liability

Safety is already a major concern in the warehousing industry, where it’s estimated that 5% of workers will be injured on the job each year. The challenge for retail warehouses is that in-person customers could be exposed to some of the safety hazards that create the greatest risk for workers. Retail warehouse managers must take extra precautions to ensure customer safety and minimize the potential for injury liability, including things like:

• Keeping forklifts and heavy equipment out of the storage area during business hours
• Installing secure doors or safety barriers with prominent signage to prevent customers from accessing restricted areas where heavy equipment might be in use
• Keeping all areas accessible to customers clear and free from debris, garbage, excess packaging, etc.
• Maintaining floors and addressing uneven surfaces or cracks that might cause a tripping accident
• Ensuring that only employees are permitted to use ladders or step ladders to access shelved products

A Lean Six Sigma Approach to Optimizing Retail Warehouse Efficiency

Lean Six Sigma is an approach to driving continuous improvement in warehouse operations by optimizing processes and eliminating waste. When it comes to managing and improving retail warehouse operations, there are three major potential sources of waste that should be evaluated:

Inventory Waste

Inventory waste happens when a retail warehouse orders surplus inventory that exceeds customer demand. When demand for a SKU is low, surplus inventory may have to be returned to the manufacturer or sold at clearance to free up stock space. There’s also an opportunity cost, as the unwanted inventory occupies valuable retail space that could be filled by other products. Retail warehouses can reduce inventory waste by implementing software-based inventory control systems to more accurately project customer demand and support a data-driven ordering process.

Motion Waste

Motion waste refers to the unnecessary movement of people and equipment in the warehouse when completing tasks like putaway, order picking, or inventory counting. Excess movement wastes time and generates worker fatigue, negatively impacting productivity and increasing the risk of injuries.A common source of motion waste is in the warehouse order picking process. Order pickers often consult a digital checklist that tells them what to pick. If the pick list is accessed on a stationary workstation, order pickers will have to walk back and forth to that workstation many times in the process of completing their picks. This creates motion waste that significantly increases average pick times.[caption id="attachment_7297" align="aligncenter" width="1024"]

DTG’s battery-powered Problem Solver carts can be customized for any use case in your retail warehouse.[/caption]Motion waste kills productivity in the warehouse, but retail warehouse managers can fight back by equipping their order picking and restocking teams with battery-powered mobile computer workstations. Battery-powered mobile workstations bring people and technology together at the point of task, cutting down motion waste and helping order pickers and restock teams operate more efficiently and meet deadlines to ensure customer satisfaction.

Waiting Waste

Waiting waste refers to process bottlenecks that slow down operations and prevent warehouse teams from doing their jobs efficiently. Process bottlenecks have a variety of causes, including poor warehouse layout, unclear or poorly optimized processes, time-consuming manual data entry, and equipment downtime. Retail warehouse managers can reduce manual data entry by implementing barcode or RFID systems to help with inventory tracking. Barcode or RFID systems and technology can be mounted on mobile workstations and deployed to the point of task, streamlining order picking, putaway, cycle counts, and other critical processes. Mobile workstations can also be powered by hot-swappable rechargeable batteries to ensure 100% uptime and maximize worker efficiency.

Optimize Your Retail Warehouse Operations with DTG Mobile Workstations

Our mission at DTG is to help our customers eliminate process waste and optimize operational efficiency with customized mobile solutions. Efficiency is especially vital in retail warehouse operations, where relatively small efficiency gains, multiplied across many workers, across multiple locations, can have a huge impact on a company’s bottom line.We start by analyzing your warehouse operations from a Lean Six Sigma perspective, identifying potential sources of waste and opportunities to increase process efficiency. From there, we leverage our in-house design and manufacturing capabilities to build customized mobile computer workstations for your warehouse. Our rugged and ergonomic mobile warehouse powerstations can be equipped with computers, barcode scanners, label printers, or any powered device you need to streamline operations in your warehouse.Finally, we power your mobile workstations with MPower battery systems, the cleanest, safest, and most reliable battery systems with hot swappable capabilities that deliver 100% uptime.

Ready to learn more?

Schedule a FREE Demo with our team to start a conversation about process efficiency in your warehouse and discover why warehouse industry leaders like Amazon and Best Buy trust DTG’s mobile workstations and battery systems.