GROUP 2

CHAPTER 6 RETAIL LOCATIONS

Extant Law- Known as Reillys law of Retail Gravitation (Reilly, 1931), which states that in the absence of a
known major advantage, consumers will shop closer to home. Perhaps, in this age of climate change and Global
Warming, consumers will prefer to shop in a mall which is not only closer to home but also equipped with an
efficient air conditioning system.
 Sari-Sari Store- Plays a vital role in the growth and development of our economy, it is an aid to Filipino
people inside the community. It has variety of commodities that peovides our primary needs.
 Retail Store location- Most important decision that a retailer will make, because of high cost and long
term commitment.
 First, location is typically the prime consideration of a customer.
 Second, Prime location may be a source of the retailers sustainable competitive advantage
 Third, among 4Ps, Place or location is the most difficult and costly, harder to find, especially in the age of
shopping centers and the global shopping mall phenomenon. Place in the 4Ps stands for Channel Management which
is significant and crucial in marketing as it provides convenience to customers.
 Relevance- Big retailers provides all sorts of gimmicks and amenities, and all types of customer services
to shoppers so they would not go else where once they entered their premises.
 Shopping Centers- From 1970’s to 1980’s to the present, suburban shopping centers have evolved from
mere strips or pockets in a city into shopping malls generally occupying a large area with adequate parking space for
customers who shop in the air conditioned mall.
Strip Shopping Centers 2 advantages
1. Parking space directly in front of the store.
2. Relatively low rents for retailers

2 disadvantages
1. There is no protection from weather
2. They offer less assortment of products and entertainment options for customers.
2 Types of Strip Shopping Center
1. Traditional Strip Center- A shopping center designed to provide general merchandise and convenient shopping for
the daily needs of consumers in the immediate neighbourhood.
2. Power Center- Pertains to a shopping center that is dominated by several large anchors like category killers,
warehouse club, and only a minimum number of small specialty tenant
Advantages of Shopping Malls
1. They feature different types of stores offering a wide array of merchandise assortments, and enable people to
combine shopping with entertainment.
2. They serve as hang out for people of all types of ages.
3. Shopping mall owners plan the important mix, such as the number of different types of retailers.
4. The malls management take of the upkeep and maintenance of common areas.
5. Since most shopping malls are enclosed, customers are protected
from the weather.
Disadvantages of shopping malls
1. Mall rents are generally higher than those in other locations
2. Some tenants may not like the mall manager’s control of their operations
3. There is stiff competition within the shopping malls.

Shopping Center Definition

1. The establishments are owned by a firm
2. Stores are organized and well-planned generally adjacent to each other, conceptualized as a one-stop shopping
location
3. Uniform store operation hours, security provisions
4. Normally, stall or store space rental fee high
Other Retail Location Strategies
 To avoid the pitfalls of renting or leasing store spaces in shopping centers.
 The retail location analyst has one basic homework and
that is to make sure that the retailers’ target markets will patronize the location
 To achieve this, the retail analyst must consider several factors when evaluating the attractiveness and
viability of a particular site.

 TABLE 10. SHOPPING CENTER DEFINITIONS

Nu T
T C mbe y
y o r of p
p n Anc e
e c hors
e o
p f
t
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n
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h
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

 Table 11. Other Retail Locations Strategies
Ot Concept
he
r
R
et
ail
lo
ca
ti
on
str
at
eg
ie
s
This is the traditional downtown business area in a
C city or town; business activity draws many people
en into the area during business hours. Example:
tr Makati, Greenhills, and Ortigas Center. It is also
al the hub of public transportation, with high level of
B pedestrian traffic.
us
in
es
s
Di
str
ict
s(
C
B
D
)
C This is typically a high- density urban area
B consisting of apartment buildings populated
D primarily by ethnic groups. Example: Quiapo,
- Manila
In
ne
r
Ci
ty
L
oc
ati
on
Located in the traditional shopping area of smaller
C towns, or a secondary business district in suburb or
B within a larger city. Example is Wilson St. In San
D Juan City, or Banawe St. In Quezon City. Share
- most of the characteristics of the primary CBD, but
M cost are generally lower
ai
n
St
re
et
L
oc
ati
on
Combine several different uses in one complex,
M including shopping centers, office, towers,
ix universities, hotels, residential complexes, gasoline
ed stations, civic centers, and convention centers.
- MXDs bring additional customers/shoppers to
U their stores;they use space productively.
se
D
ev
el
op
m
en
ts
(
M
X
D
s)

Retail locations that are not connected to other

Fr retailers, although many are located adjacent to
ee malls. Retailers with large space requirements such
- as warehouse clubs and hypermarkets, are often
St free- standing. Example: SM Hypermart along C5;
an Shopwise along East Libis.
di
ng
Si
te
s
Ai To cater to plane passengers
rp
or
ts
R To cater to the captive customers of resorts
es
or
ts
H To cater to patients and their relatives ad guests
os
pi
tal
s
Large store or chain retailers like SM
St accommodate small retailers and service providers
or like banks , Internet cafes, film processors, d video
es outlets.
wi
th
in
a
st
 or
e
CHAPTER 7 PEOPLE MANAGEMENT
PMAP- Personnel Management Association of the Philippines
-Has recently changed its name to People Management Association of the Philippines.
Critical Assets- Such as locations, merchandise inventory, stores and customers.
Michael Porter- Classifying Human Resource ( HR) as one of the
‘’Secondary’’- activities in business management
‘’Primary’’- activities according to him are anchored in manufacturing and marketing.
HR AND THE FIRMS SUSTAINABLE COMPETITIVE ADVANTAGE
 First- Labor cost account for a significant portion of a retailer’s total expenses
 Second- The unique experience customers have with a retailer is determined to a large extent by the efforts
of employees who meticolously select merchandise assortment, provide information and assistance, and do sales
promotion, stock displays and shelves.
 Third- You can copy products, pricing, store layout, and marketing approaches, but you cannot copy or
clone peoples’ talent and competencies

HR MANAGEMENT OBJECTIVES
1. To promote the mission, vision, values, and objectives of the firm to the employees
2. To align the capabilities, attitudes, and behaviors of employees with the goals of the retail firm.
 Promoting the mission, vision, values, and objectives of the firm start from the,
 Recruitment
 Training
 Hiring stages
TRENDS IN RETAIL HR MANAGEMENT
1. Proactive and empowered work force
2. Increasing work force diversity
3. High turnover and growing legal restrictions on HR policies and practices
4. Increasing use of technology
 Proactive and empowered workforce- It pertains not only o the ability to make things happen, but also t
being circumspect, orally, analytical, risk-taker, and action-oriented
 Being proactive- is one critical requisite a person must develop to make that big leap from dependence to
independence.
 Retailing personnel- From the lowest level to the top most position must be encouraged to become
proactive.
 Empowerment- maybe operationally defined as the process of managers sharing power and decision
making authority with employee
 When the employees have the authority to make decisions, they are more confident in their abilities, have
greater opportunity to provide customers, and more committed to the firm’s vision and mission
 Increasing workforce diversity- This does not pertain to the ethnic or racial diversity , but also to
differences in the levels of skills and competencies, and overall demographics ( age, sex, educational attainment,
region, etc.) of retail management.
 High turnover and growing legal restrictions on HR policies and practices
- affect productivity
- Growing legal restrictions, on the other hand, are the usual points of friction and conflict that affect the
harmony and productivity in the work place.
 Increasing use of technology
-Technology is a two-bladed weapon
-Technology like POS cash register is a born to present day retailers, as it facilitates accurate inventory management
such as monitoring and control.
RETAIL ORGANIZATION STRUCTURE
Differs according to the type of retailer and the size of the firm.
The firm grow in size, but still dwell on:
 Planning
 Organizing
 Leading
 Control
ORGANIZATION STRUCTURE- Defines supervisory relationships and employees’ duties and responsibilities
THE FOUR PRIMARY GROUP OF TASKS IN RETAILING MANAGEMENT ARE:
1. Strategy formulation by the corporate officers
2. Administrative tasks by the corporate staff
3. Merchandise Management by the buying organization
4. Store management
BUILDING EMPLOYEE MANAGEMENT
 Is crucial in retailing because high turnovers has a major impact on profitability
THREE METHODS TO MOTIVATE THEIR EMPLOYEE’S ACTIVITIES
1. POLICIES AND SUPERVISION
2. INCENTIVES-
2 types of incentives
 Commissions
 Bonuses
3. ORGANIZATION CULTURE- Is the set of values, traditions, and customs in a company that guides employees
behavior
LEGAL AND REGULATORY ISSUE IN HR MANAGEMENT
 Compensation
 Labor relation
 Sexual harassment
 Employees safety and health

CHAPTER 8: ICT AND SUPPLY CHAIN

MANAGEMENT
Rene Descartes once said, ‘’ Cogito ergo sum!’’ Literally, it means, ‘’ I think therefore I am!’’ in Today’s
ICT World, it means, ‘’ I point and click, therefore I am !’’ The sources of economic power today are not the
owners of land and machine, but those who have access to the information.
My Out-of-the box thought- Globally outside of the political + economic factors, there are two other factors that
have driven the phenomenal growth of retailing industry.
1. information + communication technology (ICT)
2. supply chain management
Example of electronic point- of – sale machines (POS Scanners) in retailers outlets.
 Linked to the main offices computerized inventory system
 HR management other supervisory + administrative functions.
 Scanners speed the check out process
The personal computer revolution and the advent of the internet era have, in significant ways, diminished the
importance of national boundaries and subverted the barriers of time and space.
Besides ICT, supply chain management, which includes Logistic Management, has likewise become a crucial tool
for achieving a sustainable competitive advantage for a retail firm. Specifically, in efficient and effective methods of
distributing merchandise creates an opportunity to reduce expenses and improve customer service levels in an era of
cut-throat competition or economic slowdown. An out-of-stock situation is a ‘’no-no’’ in a retail business.
Al Rises and Jack Trout say that marketing is war; if indeed it is, then effective management of logistics will help a
retailer win that war.
Retail ICT- When you buy a bagful of household items at SM Hyper mart, your transaction triggers a series of
information flows that result in merchandise replenishment.
Logistic management-
Logistics- part of the supply chain process that plans, implements, and control the efficient, effective flow and
storage of goods, services, and related information from the point of origin to the point of consumption in order to
meet customer’s needs.
Logistics Management in Marketing
Maybe defined as a marketing activity that covers planning, implementing, and controlling the movement of law
materials and products from the point of origin to the point of consumption.
Just-in-time and quick- response systems are examples of inventory control programs used in a wide variety of
industries.
BENEFITS OF SUPPLY CHAIN MANAGEMENT
2 Strategic advantages
 Improve product availability- To meet the specific needs of a wide variety of customers, vis-a-vis an
equally wide array of product- options in the market, retailers have to carry adequate quality of stock-keeping units
( SKUs).
 Improve Return on Investment- One important measures of retailing performance is the ability to generate
a target return investment ( ROI). Efficient Supply chain management and information system increase net profit
and net sales, while at the same time reduce total asset.
Net sales can increase by providing customers with better merchandise assortment.
Net profit can increase by either raising gross margin or lowering expenses.
Understanding the supply chain management principles, the Philippine experience. According to Bautista (2006),
over the past decade we have seen in the Philippine industries, the convergence o what were once fragmented
discipline residing in the- office departments of many enterprise, o what is today a form of management science in
itself- often called ‘’Supply Chain’’ or logistics management.
Oaur Country’s Logistics Terrain
Negotiating our way around the Philippine terrain reminds us of an obstacle course- the traffic. Natural calamities,
truck ban.
Sea freight is still the most common means of inter island transport, despite the high cost of shipping in the
Philippines.
Optimizing Logistics Network
To what extend can we centralize?
Establishing the extend to which we can centralize our logistics network also depends on a particular industry’s
market profile and the costs of moving products from source to consumer.
 Benefits of supply chain management
- There are at least two strategic advantage that can be gained through supply chain management
- Improved product availability and improved return investment.
 Improved product availability - an efficient chain management could translate to fewer stock out and
merchandise assortment that add value for customer’s which in turn could result in greater sales, higher inventory
turnovers and better profit.
 Improved return on investment – is to reduce your expenses, you don’t have to increase your sales or raise
your prices. To improved the return on your investment this way, divide your expenses in overhead and production
cost to help you better expenses reduction opportunities.

 VALUE OF IN FORMATION
- Maximum price one should pay for knowing the actual value of an uncertainly before deciding on a cause
of action.

tion
 CHAPTER 9

THE RELATILING BUSINESS MODEL BY

PROFESSOR JOSIAH GO

Retailing - considers an interface between the

producers and ultimate users.

TEN PROPOSITIONS IN TWO INTERAACTING

EQUATI0NS

There are two interacting equations in retailing:

Marketing - one has to consider location, cost,

brand, service and experience to attain differentiation.

Finance - involves the 5S’s of retailing profit

(spread, speed, space, save, and support) that can help

maximize a retailer return of investment or ROI.

Part 1- marketing

Proposition on location – location is the most

fundamental differentiation that allows a retailer to

attract customers.

HBC- its chain consists of nearly 100 air-conditioned

convenience stores specializing on personal care

products and catering mostly to the masa crowd.

Walter mart – established in 1993 as part of the

abenson group of companies, Walter mart caters to the

masa market, first in the E. Rodriguez Ave. warehouse

type store. It then discovered its niche by using the first

mover advantage in provincial areas.

Proposition on cost

The final acquisition cost for products of a retailer is

dependent on the extent of how the retailer can help

achieve his/her its supplier business objectives. Costs

refer the cost doing business. They are expenses

necessary to build the business.

Proposition on brand

Stores can always be constructed, but a strong retail

brand cannot be imitated as it represents the

relationship between consumers and a retailer. Brand

identity consists of positioning plus personality. But it’s

not just imaging alone, because the product must be

available in breadth and depth and must work.

Proposition on service

Service is an attitude. It is the ability to

inconvenience yourself for the convenience of others.

Service refers to the intangible of a purchase it also has

stages, such as pre ( location, parking, valet, restrooms,

play area, and ect.) During ( store hours, breaking, bulk,

do demo, answer question, fitting rooms, do

alternations, credit cards, bridal registry, community

prayers, ect) or post ( baggers, gift wrapping, delivery,

ect.)

Proposition on experience

There is a level of service that merely creates

customer satisfaction. There is a higher level of service

 that creates customer involvement leading to customer

loyalty for particular market segment experience means

beyond service because the customer is involved.

The Man smith 5S’s of retail profit sources:

 Spread
 Speed
 Space
 Save
 Support

Proposition on spread

 The ability of the retailers to increase their earnings is fundamentally based on the
classic “buy low, sell high” concept.

Proposition on speed

 The ability to manage inventory turns significantly improves the retailers profitability.
Proposition on space

 As consumers become more sophisticated and market becomes more mature,

category management will increasingly be used for managing retailers shelves to
address the disparity between demand and supply of space.
Proposition on save

 The control function of retailer becomes even more important when there is no room
for inefficient in a competitive marketplace. However the control function must never
be allowed to interfere with customer satisfaction.
Proposition on support

 The higher the number of branches and the greater the strategic importance to ye
supplier, the higher the support which can be expected by a retailer beyond the
traditional profit margins.
CHAPTER 10
MERCHANDISE ASSORTMENTS MANAGEMENT
PLANNING MERCHANDISE ASSORTMENTS
Planning merchandise assortments begins with the firm’s vision/mission, values, and objectives, in other words,
with company’s desiderata or very simply, what the retailers desires to be. These serve as guides in the buying
process by categories, setting merchandise financial objectives, and developing an assortment plan.
CATEGORY MANAGEMENT
This is the process of managing a retail business with the objectives with of maximizing the sales and profits of a
category.
Category- is an assortment of items that the customer sees as reasonable substitutes for each other. Body soap, body
cologne and toothpaste are categories. Each of these categories as similar characteristics. For example, body soap
are purchased from a set of vendors that are similar to each other, likewise, the merchandise is priced and promoted
to appeal to a similar target market.
Category captain- some retailers turn to one favored vendor to help them manage a particular category. This
supplier forms an alliance with a retailer to help gain consumer insight, satisfy consumer needs, and improved the
performance and profit potential across the entire category.
The buying organization
Let us now understand the buying organization the category fits. Standard merchandise classification scheme may
consist of the following: merchandise group, department, classification, categories, and stock keeping unit (SKU).
Merchandise group
This is the large classification level, the merchandise group. It is managed by the senior vice presidents of
merchandise, also called general merchandise managers or GMMs these merchandise managers are responsible for
several departments.
Department
The second division of classification scheme is the department. These departments are managed by divisional
merchandise managers who report the voice presidents. Each divisional merchandise manager is responsible for a
department.
Classification
This is the third level in the classification scheme. Each divisional merchandise manager is responsible for a number
of buyers or category managers.
Categories
Are the next levels in the classification scheme. Each buyer purchases a number of categories
Stock- keeping unit (SKU).
Is the smallest unit available for keeping inventory control
Merchandise planning process
3 critical aspects of merchandise planning process.
1. Objective of the plan
2. sales forecasting
3. assortment plan
Top management takes a macro view
1. defines the target market
2.establishes performance goals
3. Decides which merchandise emphasis, based on general trends in the market place.
Buyers and merchandise planner take a more micro view when they
1. Study their categories historical performance
2. Look at market trends
3. Project (forecast) the assortments for their merchandise categories for the coming season.
-merchandise plan tells the buyer and planner how much money to spend on a particular category of merchandise in
each month so that the sales forecast and other financial objectives are set.
Financial ratios for measuring merchandising performance.
The financial ratio used is a return on investment measure called gross margin return on investment ( GMROI)

GRMOI- Gross margin percentage x sales- to- stock ratio

Gross margin X net sales
GMROI net sales average inventory
Advantages of rapid inventory turnover
Include increased sales volume, less risk of obsolescence and markdowns, improved sales persons morale, more
money for market opportunities, decreased operating expense and increased asset turnovers.
Increased sales volume
Rapid inventory turnover increases sales volume since fresh merchandise in available to customers.
Less risk of obsolescence and markdowns
For examples, the values of fashion and perishable like fruits and vegetables start declining as soon as this one place
on display.
Improved salespeople morale
Salespeople do not like sell or shopworn merchandise. With rapid inventory turnover and the fresh merchandise that
ensues, the morale of salespeople remains high.
More money for market opportunities
When inventory is high, money previously tied up in inventory is feed to buy more merchandise which can translate
to tremendous profit opportunities
Decreased operating expenses
Increased in turnover may also mean that a lower level of inventory is supporting the same level of sales.
And lower inventory means lower inventory carrying cost which is an operating expenses.
Increased asset turnover
Since inventory current asset
Assets decreased and sales stay the same or increased then asset turnover increases
Assortment planning process- the fundamental strategic question faced by retailers is the type of retail format (or
mix) to pursue in order to maintain a sustainable competitive advantages.
Variety- pertains to the number of different merchandising categories within a store or department.
Assortment- refers to the number of SKUs within a category.
Product availability- product availability is also invariable term as the level of support or service level
CORPORATE STRATEGY AND POSITIONING TOWARD THE ASSORTMENT
*How do retailers make the tradeoff between variety, assortment and product availability?
*The decision depends on the marketing strategy that the retailer likes to pursue.
*Variety is the most strategic
*Variety is the most important in defining the retailer in the customers eyes.
*Corporate strategy towards the assortment helps the buyer determine then number of styles and color to purchase.