Facts and Logic in Management

“Sales” in retail is a function of customer counts multiplied by average purchase per customer; and profitability is a function of margins derived from sales minus all costs. Mathematically, the equations appear straightforward, and simple. Consequently success in retail is simply a function of keeping existing customers happy and loyal, driving happier and additional loyal customers to retail outlets plus encouraging customers to buy more retail offerings coupled with driving operational excellence to reduce costs. However, in doing so many complex questions arise: Should the corporation be centralized or decentralized to better serve the customer and simplify and optimize logistics? Should existing bay design be altered? Should store’s format be redesigned? Should the product mix be changed? Should a new customer loyalty program be created? Should the bottom 10% of employees be fired? Should the price structure be changed? Should management incentives be increased? Should corporate budget be reallocated with more funds towards human resources, logistics, marketing, merchandising, store operations, store design, globalization, technology, or diversification? These are just a few of the countless decisions retail executives face every quarter and every year. Answering such questions takes more than overall bottom-line measures and standard corporate scorecards.

Taking into consideration traditional retail success factors such as employees, merchandising, inventory and product mix, store environment, marketing, logistics, operations, and organizational effectiveness with their intrinsic interconnectivity, dynamics, and complexity, Pfeffer’s and Sutton’s (2006) suggestions to consider scientific rigor, better and deeper logic, and employing facts while considering specific related factors seems to be critical not only because evidence-based management can weave and execute solid plans but also because it can determine the right executable decision at the right time for the relevant opportunity or threat.