How to Conduct a Retail Compliance Audit
Looking to improve in-store execution? Learn how to ensure frontline teams are following directives in every store.
In retail, corporate leaders envision how stores should operate and what (and how) things get sold and positioned in-store. Frontline teams do the groundwork to bring that vision to life. And field teams follow up—either in-person or through retail compliance audit software—to ensure directives get followed correctly.
It can be tricky to keep everyone on the same page, especially across dozens or hundreds of stores. That’s why—whether it’s to ensure merchandising, shelving or displays are set up correctly, or store teams are following COVID-19 workplace guidelines—retail compliance audits are necessary to keep everyone accountable and working towards the same goals.
Properly conducting audits can lead to smoother store operations, improved employee relations, better customer experiences, and increased sales.
But before we get into how to conduct a retail compliance audit, let’s do a quick refresh of the basics and why different types of retail audits are essential to reaching compliance in-store.
What is Retail Compliance?
Retail compliance refers to meeting corporate and/or regulatory standards at either a store or brand level.
For example, store compliance would encompass displays, promotional signage, store layout, cleanliness, and safety procedures, as laid out by corporate offices. Brand compliance, meanwhile, would include directives from a specific brand, such as display instructions from a particular designer in an apparel store.
In both cases, compliance is reached when stores have implemented the assigned directives to HQ or the brand’s satisfaction.
What is a Store Audit?
A store audit is a detailed inspection designed to determine what policies, procedures, and practices are working effectively and where employees can make improvements at the store level.
Due to the scope of retail operations (i.e., everything from building maintenance to cash handling procedures to inventory organization), it’s best to select specific targets for each audit.
Common retail audits include market audits, merchandising audits, loss prevention audits, health and safety audits, and retail operations audits.
But, for our purposes, when it comes to retail compliance, the audits to focus on are merchandising, health and safety (especially during COVID-19), and retail operations.
Merchandising audits mainly consist of planogram and visual merchandising compliance checks (ensuring that product placement and displays are in line with corporate and brand standards) and making sure that the store is set up in a way that looks appealing and makes it easy for customers to shop in.
Health and safety audits ensure that stores are safe for employees and customers by checking for any hazards and taking proper preventative measures. (During the ongoing COVID-19 pandemic, this includes sanitization routines, mask-wearing protocols, and store capacity limits.)
Retail operations audits can cover a wide range of policies and procedures like cash handling and returns/exchanges, but a good place to start is with daily routine compliance like opening and closing procedures.
How Do Retail Compliance Audits Benefit Stores?
As a brick-and-mortar retailer, your goal is to sell products and deliver a memorable customer experience. To do this, you want to make sure that the store is visually appealing, staffed with engaged associates, and stocked with products that people want to buy. Compliance audits help ensure that these happen.
Merchandising audits can tell you what products are selling well, which products need to be restocked frequently, and which areas of the store get the most traffic. By using this data to adjust in-store set-up, promotions, and visual merchandising techniques, retailers can drive further sales.
Health and safety audits, of course, keep everybody safe and eliminate any unnecessary risks to employees and customers. They can highlight things that do or don’t work well, such as the placement of hand sanitizing stations, signage about mask-wearing, and techniques for symptom screening upon entry.
Operational audits ensure that staff are all up-to-date on training and equipped to do their jobs successfully. They can establish a step-by-step routine that can be updated as needed to ensure that standard operating procedures are thorough, productive, and get followed.
Audits can also be a great training and resource tool for associates, teaching them how different aspects of retail are connected, familiarizing them with products and stock levels, keeping them engaged on the job, and developing skills necessary for future managerial, field team, or corporate roles.
Additional benefits from store audits include:
- Identifying maintenance issues
- Ensuring previous audit recommendations have been implemented
- Developing best practices
- Determining where additional training is needed
Now that you know why retail compliance audits are important, let’s go through the best practices for conducting a retail compliance audit, step by step.
How to Conduct a Retail Compliance Audit
Step 1: Schedule a Time for the Audit
Set aside a time to conduct the audit, ideally when the store will be quiet (think mid-morning or early afternoon, depending on when your store opens each day). Audits can also be done before or after store hours but keep in mind that if you schedule staff to help, it may not be as cost-effective.
Step 2: Set Clear and Realistic Goals
Determine what kind of audit you will conduct (e.g., merchandising, health and safety, or general store operations, as mentioned above) and create a list of what you will look at and what you hope to find. This list will guide you through the audit, and you can check items off the list as you inspect the store.
With a health and safety audit, for example, you will want to look at any potential structural hazards, test fire alarms, and take note of any potentially dangerous equipment in-store, as well as COVID-19-specific checks like ventilation, social distancing markers, hand sanitizing stations, and PPE for staff.
In this case, the goal is to eliminate risk and take steps to make the store environment as safe as possible for everyone, but each audit will have different end goals and results.
Step 3: Take Note of What Needs to Be Changed
As you’re going through each item on your list, be sure to take notes on what needs to be changed or improved (i.e., instead of just marking that a lightbulb isn’t working, note that a replacement bulb needs to be installed). This will provide you with the list of actions and next steps that need to be taken.
For instance, if during a merchandising audit, you note that items on a shelf in the back corner of the store are not selling well, make a note to move products closer to the entrance or to enhance the display to make the products stand out more.
Step 4: Assign Tasks to Store Teams
Once you’ve determined the issues that need to be addressed, it’s time to delegate tasks to managers and associates.
How you assign the tasks is up to you—it can be beneficial to use audits as a training opportunity for newer staff, or if you’re in a time crunch, you can have more experienced team members power through the tasks at hand.
Retail task management software can be particularly helpful, allowing all relevant parties to see what needs to get done, track task progress, complete a task, and receive instant feedback (should any changes need to be made), so stores can reach compliance faster.
Step 5: Follow Up and Provide Additional Feedback
After a specified amount of time given to complete the tasks, follow up to ensure that all the necessary changes have been implemented and that they are making the intended improvements. If not, store teams may need some extra advice.