Retail Dogma

Retail Audit

Retail audit is the process of checking if the store is in compliance with the company’s standard operating procedures (SOPs). The retail store gets graded based on an audit checklist, and given a score (in percentage) that indicates its degree of compliance/non-compliance.

Retail Audit Methodology

Audit visits are usually done without pre-announcements (i.e surprise audits).

A D V E R T I S E M E N T

The retail auditor visits the store before the opening time, and goes through all the points of the audit checklist one by one, by observing the operation at the store and giving a rating for each point.

Some points might need clarification, and in this case the auditor requests more information or paperwork from the store manager to give a fair rating for those particular points.

After the process is finished, the auditor holds a brief discussion with the store manager, in case there are further clarifications or justifications needed. After that, a final audit score is given for that store.

Based on the score, the store is given a color grade (Green, Amber, Red), which indicates its degree of compliance.

A D V E R T I S E M E N T
COLORCOMPLIANCE
GreenCompliant
AmberNeeds Improvement
RedNon-compliant

Usually a score of 85% and above is compliant (green)

The Retail Audit Checklist

The retail audit checklist is divided into sections, and each section is then divided into specific points for checking and grading.

Retail Audit Checklist

The sections and points are dependent on the specific SOP of the company, but here are common section examples

A D V E R T I S E M E N T

Audit Checklist Sections

  • Cash Verification
  • Cash Storage & Security
  • Credit Notes & Refunds
  • Manual Invoicing
  • Banking and DSR
  • Safe & Store Key Handling
  • Handling Customer Complaints & Feedback
  • Pricing
  • Security Tagging
  • Price Overrides & Discounts
  • Visual Merchandising
  • Inventory Management & Receiving
  • Housekeeping & Maintenance
  • Health & Safety
  • Fitting Room Management
  • Loss Prevention
  • Click & Collect Orders & Online Returns
  • Staff Feedback & Whistleblowing Mechanism

Risk Assessment

Not all checking points on the retail audit checklist represent the same degree of risk.

That’s why, each point is assigned a risk degree (High, moderate, low), and based on that is given a certain weightage in the final calculation. The types of points that are lost or won therefore affect the final result.

For example, losing few high-risk points can lead to a non-compliant result, while loosing more points that are low-risk can lead to a green result.

Based on the results of the final audit report, the store manager then creates an action plan to address the areas of non-compliance and work on them.

A D V E R T I S E M E N T

Typically, a store gets more than one audit visit per year, and the average of all scores are calculated to give a yearly compliance score.

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