Assignment-1

Of Retail Management

Submitted by:

Submitted to:

Amarnath MBA 4th Sem Roll no 47

Mr. Samarth Singh

Q1 Write short notes on : a) b) c) d) e) Ans. a) Ethical issues in retailingEthics relates to retailers moral principles and values. Retailers have realized the advantages of reflecting an ethical sense in business operations. The organizational environment plays a major role in the kind of ethical sense the employees possess. Retailers are trying to ensure that their employees behave ethically. Though there are many laws influencing the business environment of the retailer, there are many more aspects that come under the purview of ethics. These aspects concern the merchandisebuying and selling practices in the firm. Retailers also need to be socially responsible and environmentally concerned. They often undertake activities that are beneficial to the society. Retailers are also taking measures for waste reduction, trying to recycle the materials used and are switching over to environment friendly packaging materials. Ethical Challenges Ethical Challenges fall into three interconnected categories: Ethics Social Responsibility Consumerism Social Responsibility- A retailer exhibiting social responsibility acts in the best interests of society as well as itself. The challenge is to balance corporate citizenship with a fair level of profits for stock holders, management, and employees. Consumerism- Consumerism relates to the activities of government, business and other organizations that are designed Ethical issues in Retailing Methods of CRM practiced in Retailing Retail Life Cycle Privacy strategies in retail Online retailing

to protect individuals from practices infringing upon their rights as consumers. 1. Methods of CRM practiced in retailing-

CRM may reveal that this manager is losing profits on this sale. Customer relationship management (CRM) software is crucial to increasing sales and profitability of any small business. However, retail operations have a different set of concerns than small businesses which do not operate in a storefront environment. 1.Targeting Retail CustomersMost small businesses have contact information for all of their customers to generate invoices, maintain contacts with the customer over the lifetime of the sale, and provide future services. Retail stores do not have these luxuries, because the nature of the interaction is in person, and your customers are less likely to be willing to divulge contact information. When it is possible to uniquely identify a customer to a sale, it will then be easier to manage your sales processes to determine what techniques are working, and which is not. Give your customers

incentives to provide their contact information, and you'll be able to target them after the sale with your retail marketing. This information also can be used in CRM software, to segment your customer base by demographic indicators and sales histories. 2. Data CaptureAs you try new strategies for increasing your sales, or focusing your customers on the items with the highest profit margins, determine methods of isolating these strategies in your sales data. For example, if you try a new retail display case, you want to know when the display case causes an increase in sales, vs. a newspaper advertisement you may have run over the previous weekend. Such information can be determined through observation of your customers during the sales process, and your staff can enter this into your point-of-sale terminals when the transaction is completed. 3. Data miningOnce you've begun capturing your new retail sales data, you can begin mining this information in your CRM software to correlate which sales initiatives are relating to the most profitable techniques. It is unfortunately very simple to accidentally believe that there is one process driving your sales and profitability, when it is really something else. For example, a store selling cold drinks may offer one-day discounts if the manager believes that high temperatures correlate to higher sales. If the correlation is actually related to heat and humidity, rather than temperature alone, this manager is losing the opportunity to make higher profits when his product is most in demand, and to focus discounting when customer impulses are genuinely lower. b) Retail life cycleThe concept of product life cycle is also applicable to retail organizations. This is because retail organizations pass through identifiable stages of innovation, development, maturity and decline. This is what is commonly termed as the retail life cycle. Attributes and strategies change as institutions mature. The Retail Life Cycle is a theory about the change through time of the retailing outlets. It is claimed that the retail institutions show an s-shaped development through their economic life. The s-

shaped development curve has been classified into four main phases: Innovation: A new organization is born, it improves the convenience or creates other advantages to the final customers that differ sharply from those offered by other retailers. This is the stage of innovation, where the organization has a few competitors. Since it is a new concept, the rate of growth is fairly rapid and the management fine tunes its strategy through experimentation. Levels of profitability are moderate and this stage can last up to five years depending on the organization. Accelerated Growth: The retail organization faces rapid increases in sales. As the organization moves to stage two of growth, which is the stage of development, a few competitors emerge. Since the company has been in the market for a while, it is now in a position to pre-empt the market by establishing a position of leadership. Since growth is imperative, the investment level is also high, as is the profitability. Investment is largely in systems and processes. This stage can last from five to eight years. However, towards the end of this phase, cost pressures tend to appear. Maturity: The organization still grows but competitive pressures are felt acutely from newer forms of retailing that tend to arise. Thus, the growth rate tends to decrease. Gradually as markets, become more competitive and direct competition increases, the rate of growth slows down and profits also start declining. This is the time when the retail organization needs to rethink its strategy and reposition itself in the market. A change may occur not only in the format but also in the merchandise mix offered. Decline: The retail organization looses its competitive edge and there is a decline. In this stage, the organization needs to decide if it is still going to continue in the market. The rate of growth is negative, profitability declines further and overheads are high. c) Privacy strategies in retail-

Trial: This technique involves identifying products believed to have strong potential, sourcing a small quantity of the product, determining a trial market and testing product sales. This simple technique hinges on the selection of an accurate trial market(s) that enables the retailer to properly extrapolate sales and conduct a proper analysis. Because small quantities of product are being purchased, the retailer places less emphasis on cost negotiations during the trial. Results are analyzed, and only then does the retailer make product commitments, adjusting product design, specifications, order quantities, distribution, etc., as appropriate. The primary advantages of this technique are the limited capital needed to implement the pilot and the ability to change any aspect of the product based on the results of the trial. The biggest disadvantage of the trial technique is the time delay between the trial test and ultimate rollout, due to the fact that no commitments to materials or factory time have been made in advance. Pilot: In this technique, retailers ship in early a small quantity of a product to which they have already committed mass quantities to gain intelligence for use during the primary selling season. The pilot enables retailers to optimize gross margins and flowthrough by pinpointing those markets and customers that will support the most sales and, importantly, to validate pricing decisions. The primary advantage of the pilot is the immediacy with which its results can be applied inmarket to the greater distribution. The disadvantage of this technique is that there are limited changes that can be made to the productpricing and distribution. Domestic/Import Variable Sourcing: In recent years, retailers have applied smart sourcing parameters, where a product can be sourced in more than one import country to handle localized issues, such as increases in the cost of raw materials and labor wages, political instabilities and weather or other acts of God. The problem is, this smart sourcing was generally not dynamic enough to handle changes or improved knowledge within the season. A unique fixture in the U.S. manufacturing landscape is emerging: the import manufacturer. With its shorter lead times, domestic sourcing has a place in today's retail environment, particularly when it comes to midseason

replenishment. The scenarios typically work as follows: pre season or earlyseason shipments are sourced from offshore to maximize profit, and mid and lateseason shipments are sourced domestically to shorten lead times to stores. Domestic/import variable sourcing requires a more sophisticated IT approach than traditional sourcing. d) Online retailing- Online shopping or e-shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over theInternet using a web browser. Alternative names are: e-web-store, e-shop, e-store, Internet shop, web-shop, web-store, online store, online storefront and virtual store. Mobile commerce (or mcommerce) describes purchasing from an online retailer's mobile optimized online site or app. An online shop evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or shopping center; the process is called business-to-consumer (B2C) online shopping. In the case where a business buys from another business, the process is called business-to-business (B2B) online shopping. The largest of these online retailing corporations are Alibaba, Amazon.com,and eBay.[1] Retail success is no longer all about physical stores. This is evident because of the increase in retailers now offering online store interfaces for consumers. With the growth of online shopping, comes a wealth of new market footprint coverage opportunities for stores that can appropriately cater to offshore market demands and service requirements. Q2. Discuss GAPs Model of customer Service in Retailing .What Strategies are used to bridge these gaps. Ans. The Customer Gap: The Gap between Customer Expectations and Customer Perceptions The customer gap is the difference between customer expectations and customer perceptions. Customer expectation is what the customer expects according to available resources and is influenced by cultural background, family lifestyle, personality, demographics, advertising, experience with similar products and information available online. Customer perception is totally subjective and is based on the customers interaction with the product or service. Perception is derived from the customers

satisfaction of the specific product or service and the quality of service delivery. The customer gap is the most important gap and in an ideal world the customers expectation would be almost identical to the customers perception. In a customer orientated strategy, delivering a quality service for a specific product should be based on a clear understanding of the target market. Understanding customer needs and knowing customer expectations could be the best way to close the gap. The Knowledge Gap: The Gap between Consumer Expectation and Management Perception The knowledge gap is the difference between the customers expectations of the service provided and the companysprovision of the service. In this case, managers are not aware or have not correctly interpreted the customers expectation in relation to the companys services or products. If a knowledge gap exists, it may mean companies are trying to meet wrong or non-existing consumer needs. In a customer-orientated business, it is important to have a clear understanding of the consumers need for service. To close the gap between the consumers expectations for service and managements perception of service delivery will require comprehensive market research. The Policy Gap: The Gap between Management Perception and Service Quality Specification According to Kasper et al, this gap reflects managements incorrect translation of the service policy into rules and guidelines for employees. Some companies experience difficulties translating consumer expectation into specific service quality delivery. This can include poor service design, failure to maintain and continually update their provision of good customer service or simply a lack of standardisation. This gap may see consumers seek a similar product with better service elsewhere. The Delivery Gap: The Gap between Service Quality Specification and Service Delivery This gap exposes the weakness in employee performance. Organisations with a Delivery Gap may specify the service required to support consumers but have subsequently failed to train their employees, put good processes and guidelines in

action. As a result, employees are ill equipped to manage consumers needs. Some of the problems experienced if there is a delivery gap are: Employees lack of product knowledge and have difficulty managing customer questions and issues Organisations have poor human resource policies Lack of cohesive teams and the inability to deliver The Communication Gap: The Gap between Service Delivery and External Communications In some cases, promises made by companies through advertising media and communication raise customer expectations. When over-promising in advertising does not match the actual service delivery, it creates a communication gap. Consumers are disappointed because the promised service does not match the expected service and consequently may seek alternative product sources. Strategies used

Purpose The purpose of this paper is to serve as a reminder to all managers that they must understand their customers, from the customers' perspective, and not make assumptions about customer needs. Design/methodology/approach Customer value discovery workshops are held with undergraduate on-campus students and academic staff at Nottingham Trent University to identify customer values and irritations. Library staff participate in the workshops and vote as they expect their customers to vote. The gaps identified between staff assumptions of customer perceptions of service importance and performance serve as a catalyst for staff engagement in the change process that is necessary to deliver on the value propositions and reduce customer irritations. Findings Library staff assumptions of customer perceptions are not always accurate. The gaps identified help to engage staff in the change process that is necessary to improve perceptions of value and to reduce irritations. By explicitly addressing the value

propositions with the aims of adding value and reducing irritation, student satisfaction with library services, as measured by two independent satisfaction surveys, improves considerably. Research limitations/implications The research is based on two customer segments of oneuniversity library. The research should be repeated after a gap of three-four years to check if the value propositions and irritations have changed in that time. If so, the goals of the library's operational plan would have to change to reflect the new value propositions. Practical implications A comparison of the Customer Value Discovery methodology with LibQUAL+, which is used internationally, and the Rodski Research Group's method, used in Australia and New Zealand, is given. Originality/value The Customer Value Discovery methodology is most often used in thecommercial sector. This paper explores its potential in the not-for-profit sector in the context of a university library service. Q3. What are the emerging trends in Retailing in India Ans. EMERGING TRENDS IN RETAIL SECTOR IN INDIA In this section, some of the significant trends that are likely to emerge and gain prominence in the future have been highlighted below 1. Tier-II Phenomenon Small towns with a population of 0.5 1 million are witnessing a defined increase in disposable income coupled with high aspirational levels leading to enhanced spending on consumer goods along with lesser aversion to credit. With consumption in metros like Mumbai, New Delhi, Bangalore, Hyderabad, Kolkata and Chennai already being exploited, manufacturers and retailers of products such as personal computers, mobile phones, automobiles, consumer durables, financial services etc are increasingly targeting consumers in these Tier-II cities and

towns. Retailers are introducing contemporary retail formats such as hypermarkets and supermarkets in these new pockets of growth. Prominent Tier-II cities and towns, which are witnessing a pick-up in activity, include Surat, Lucknow, Dehra Dun, Vijaywada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi, and Ludhiana etc. The retail boom, 85% of which has so far been concentrated in the metros is beginning to percolate to smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20 25%. Mall development activity in these small towns is also picking up at a rapid pace, thereby, creating quality space for retailers to fulfill their aggressive expansion plans. Keeping in view the relatively smaller size of the market, the average size of a retail mall in Tier-II cities ranges between 100,000 120,000 square feet in comparison with the larger metros where a number of malls measure over 500,000 square feet. 2. Changing Social Trends Social trends of a country have impact on the scheme of growth of food retailing in a country. India is country that is vast geographically and diverse culturally. This has taken its toll on food retailing with retailers having to adapt to the local cultures and palates of the area in which they have established or plan to establish. This is a major reason for many or most retailing chains restricting their operations to a certain part of the country. But the trends now are slowly moving towards cultural integration where people of all states and diametrically opposite cultures tend to try out foods and materials of other states and communities. This movement towards social integration would make it very feasible in the near future for retailing chains and erstwhile local chains to spread across the country. Increased income levels and more women willing to make use of their education by joining work has increasingly affected the shopping pattern that is moving towards fulfilling the need of convenience shopping in the form of Supermarkets (now graduating to Hyper format) home

deliveries. Indian consumer is quality and price conscious and this awareness would drive the retailers to rework their supply chain relationships. A recent analysis shows that countries go through a distinct food consumption evolutionary pattern. In the first stage the focus is on obtaining basic dietary inputs, the second stage focuses on improving and building basic foods, before moving to the third stage of adding premium food to the diet. Most of urban India has already moved to the third stage and it is a great avenue for food retailers, if they could slowly introduce the rest of India to it. The future would witness creation of specific models/formats one for the upwardly mobile urbanite and the other for the rural markets. 3. Entry of International Players With global players knocking at the door, waiting for the government to open up the floodgates, all the big Indian organized retail companies are feeling the heat. The fight is now not between Big organized retail stores (3%) and Unorganized Kirana Shops (97%), but its between global giants like Wal-Mart, Tesco and Shoppers Stop, Pantaloons Entry of these global players will impact not only Indian businesses but also the society in a big way. As much as it will change the way India Retailers operate, it will also change the way Indian consumers live and do their shopping. They will no longer be just dependent on their local Kirana shop for their everyday needs. They could just shop once a week or once a month at comparatively cheaper rates and remain hassle free. Indian retailer will also need to quickly come to terms with the market realities. On one hand they will fighting size factor and on the other hand great efficiencies. 4. Price Correction Fallout of the surge in mall development activity shall be that developers will be forced to offer retailers prime real estate spaces at costs lower than those prevailing today. In a scenario where the space required by retailers to fulfill their expansion plans is

likely to be lesser than what developers have to offer, the latter will have to accept a cut in their rental accruals in order to woo retailers to move in to their mall. Hard bargaining and renegotiating are expected to become the order of the day as the market undergoes a process of correction, especially in markets where supply outstrips demand. A correction in rentals due to competition could result in a more structured retail real estate market that would allow retailers a higher margin on their real estate investments, thereby enabling them to expand faster. Further, the relatively over-served cities could witness higher activity, as real estate space becomes more affordable, thereby, reducing the break-even period for retailers. Moreover, underserved markets could provide enough margins to retailers to compensate for loss of margins in some of the over-served markets. 5. Traditional Retailers in Malls The abundant supply of retail space would provide retailers with the leeway to experiment with newer formats and product categories. In fact, even traditional retailers like Benzer, Study by Janak, Mehrasons Jewellers etc would be pushed to modern retailing formats like shopping malls occupying 8,000 12,000 square feet of retail space. Mall developers shall have sufficient incentive to operate on a revenue-sharing pricing model as many of these traditional retailers can generate higher sales per square foot as compared to the larger-format department stores, which shall translate into higher revenue realizations for developers. 6. Likely Transformation of the Supply Chain: To counter the unbeatable advantages of convenience of a hop, skip and a jump access and home delivery, organized retailers seem to have just one option - offer attractive prices to the consumer. A successful retailer's winning edge will therefore come from sourcing - how best it can leverage its scale to drive merchandise costs down, increase stock turns and get better

credit terms from its vendors. There are obvious and hidden areas where costs can be pruned and the benefits of this lower cost of retailing can be passed on to customers as lower prices, which in turn should fuel demand. One way of trimming costs is if the pressure points in the long, often unnecessary, supply chain for produce and staples can be identified and suitably dealt with. The supply chain in India is full of inefficiencies - a result of inadequate infrastructure, too many middlemen, complicated laws and an indifferent attitude. Q 5. Why is Human resource more important in retailing than in manufacturing? Ans. 1. Human Resource Management is especially important in retailing due to the simple fact that it involves such a vital aspect of any and every retailing organization-the employees! What is a retailing business without people working for it, with it, and toward the productivity goals and company objectives? Employees play a huge role in performing the critical functions of any business, which is why HR management is more important in retailing than in manufacturing firms, where capital equipment such as machinery, computer systems, and robotics are often utilized to perform the jobs employees once did. Retailing, along with service businesses stay the same in their tendency to be labor focused and intensive. Retailers depend on PEOPLE to perform the basic retailing activities, such as buying, merchandise displaying, and providing service to customers. Designing the organization structure for a retail firm identifies the activities to be performed by specific employees as well as decides the lines of authority and responsibility in the firm. The four main categories include strategic, merchandise, store, and administrative management. In retail firms, the main operating managers are involved in merchandise management, and store management. The design of the organizational structure must coordinate with the firm's retail strategy, for example, a singlestore retailer has little specialization, because the number of

employees is limited and they have to perform a wide range of activites. Q 4. What are the different approaches used by retailers to identify their customers and catogerize in different catogeries. Ans. The different approaches areStore Location A retailer has several store location decisions to make. The initial one is whether to use a store or non store format. Then, for store-based retailers, a general location and a specific site are determined. Competitors, transportation access, population density, the type of neighbourhood, nearness to suppliers, pedestrian traffic, and store composition are considered in picking a location. The terms of tenancy (such as rent and operating flexibility) are reviewed and a build, buy, or rent decision is made. The locations of multiple outlets are considered if expansion is a goal. Competition There is often little that retailers can do to limit the entry of competitors. In fact, a retailers success may encourage the entry of new firms or cause established competitors to modify their strategies to capitalize on the popularity of a successful retailer. A major increase in competition should lead a company to re-examine its strategy, including its target market and merchandising focus, to ensure that it sustains a competitive edge. A continued willingness to satisfy the target market better than any competitor does is fundamental. Technology Computer systems are available for inventory control and checkout operations. There are more high-tech ways to warehouse and transport merchandise. Toll-free800 numbers are popular for consumer ordering. And, of course, there is the Web. Nonetheless, some

advancements are expensive and may be beyond the reach of small retailers. For example, although small firms might have computerized checkouts, they will probably be unable to use fully automated inventory systems. As a result, their efficiency may be less than that of larger competitors. They must adapt by providing more personalized service.he different approaches are