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CASE STUDY – UNDERSTANDING PERFORMANCE IN RETAILING: The case of Omega Supermarkets
Background
Omega is a successful company and one of the largest supermarket chains in the UK, employing a large number of staff in stores across the country. Although the industry has seen very little growth in recent years, Omega has successfully increased its market share through a policy of lowering prices (the company claims to have reduced prices by 7.5 per cent between 2004-2009) and improving customer service. It currently holds a dominant share of the UK market in its core business and is growing rapidly in related areas. The company plans to continue expanding in the UK, opening up new stores on brownfield sites in regeneration areas.
The organisation underwent a considerable change in the mid-2000s, in order to improve its competitive position, with a much greater emphasis on a customer facing culture. As a senior human resource manager remarked, ‘2005 saw the evolution of a customer-focused business. With quality and price being very much the same across the sector, people and our service were seen as a differentiator’. One of the many changes introduced at this time was the balance scorecard approach (Kaplan and Norton, 1992) which helped define the business more strongly and bring about this cultural change. The scorecard has four quadrants - people, finance, customers and operations and each store’s performance is measured against specific targets in each area. In the people quadrant, for example, targets include recruitment, development, retention, labour turnover, absence and staff morale (taken from the staff attitude survey usually benchmarked against results from the previous year’s employee satisfaction survey) Although the four quadrants are not weighted, one retail director interviewed during a recent research study conducted on Omega, considered the people quadrant to be the most important, as he explained ‘if we can recruit, retain and develop
Background
Omega is a successful company and one of the largest supermarket chains in the UK, employing a large number of staff in stores across the country. Although the industry has seen very little growth in recent years, Omega has successfully increased its market share through a policy of lowering prices (the company claims to have reduced prices by 7.5 per cent between 2004-2009) and improving customer service. It currently holds a dominant share of the UK market in its core business and is growing rapidly in related areas. The company plans to continue expanding in the UK, opening up new stores on brownfield sites in regeneration areas.
The organisation underwent a considerable change in the mid-2000s, in order to improve its competitive position, with a much greater emphasis on a customer facing culture. As a senior human resource manager remarked, ‘2005 saw the evolution of a customer-focused business. With quality and price being very much the same across the sector, people and our service were seen as a differentiator’. One of the many changes introduced at this time was the balance scorecard approach (Kaplan and Norton, 1992) which helped define the business more strongly and bring about this cultural change. The scorecard has four quadrants - people, finance, customers and operations and each store’s performance is measured against specific targets in each area. In the people quadrant, for example, targets include recruitment, development, retention, labour turnover, absence and staff morale (taken from the staff attitude survey usually benchmarked against results from the previous year’s employee satisfaction survey) Although the four quadrants are not weighted, one retail director interviewed during a recent research study conducted on Omega, considered the people quadrant to be the most important, as he explained ‘if we can recruit, retain and develop