Retailing involves a direct interface with the customer & the coordination of the business activities right from

the concept or design stage of the product or offering, to its delivery & post delivery service to the customer It implies first hand transaction with the customer

Consumer Pull (liberalization & consumer calling the shots) Rising Incomes Explosion of Media Change in Consumer Behavior (increased literacy rates, convenience, all under one roof) Rural Market Entry of the Corporate Sector Technological Impact (inventory management, customer data base, toll free helplines; teleshopping & net shopping)

Retailing aimed @ actual or ultimate consumer Retailing involves selling for personal consumption
Wholesaler does not sell to an actual consumer Retailers or Institutional buyers buys from wholesaler Not for personal consumption

Margin is defined as the % of mark-up at which the inventory in the store is sold. Turnover is defined as the number of times the average inventory is sold in a year.
Retailer must be strong in at least one of these parameters, to be successful. Depends on the nature of the products/items handled.

High Turnover Low Margin -High Turnover High Margin-High Turnover

Low Margin
Low Margin-Low Turnover High Margin-Low Turnover

High Margin

Low Turnover

Low Margin -High Turnover Assumes price is the most important determinant Stores price their products below the market Price emphasis in all the market communication Low quality of service Customers BUY rather than store SELLING Stock a wide variety of fast moving items Eg: Big Bazaar, Food Bazaar

High Margin -Low Turnover Assumes service, distinctive merchandise & sales approach are the most important factors Products priced above the markets Emphasizing of merchandise strength in all communication Stores located in the best areas Sales happen on the basis of expertise of salesman & reputation of the outlet Eg: Ritu Kumar fashion boutique

High Margin-High Turnover Stock a narrow line of items, which turn over rapidly Most of the cases concentrated on a particular product Category Charge high prices due to premium positioning of store Expertise of salesman high Charge high prices due to lack of volume Eg: Shoppers Stop, Croma, E-zone, Hometown, Pantaloons

Low Margin-Low Turnover Forced to maintain low price due to competition Do not sell a high volume may be because of poor location, or incompetent management Candidate for bankruptcy Total disaster Eg: (May be a Local Corner Store)

Retail Planning and Management Model

Competitive Environment: Behavior of Consumers, Competition and Channel Members Strategic Planning

SWOT Strengths Weaknesses Opportunities Threats

Mission

Goals and Objectives

Social and Legal Environment: Socioeconomic Environment, State of Technology, Legal System, Ethical Behavior

Retail Planning and Management Model

Competitive Environment: Behavior of Consumers, Competition and Channel Members Management
Retail Marketing Strategy Target Market(s) Location(s) Retail Mix Merchandise Pricing Advertising & Promotion Customer Service & Selling Store Layout & Design Operations Management Buying & Handling Merchandise Pricing Advertising & Promotion Customer Service Administration of Resources Man Management

Profit
High Performance Retailing

Social and Legal Environment: Socioeconomic Environment, State of Technology, Legal System, Ethical Behavior

3 generic retail strategies. A. Operational Excellence

B.

Product Differentiation
Customer Intimacy

C.

A.
B. C.

Operational Excellence Operating processes well defined Customer satisfaction in a cost effective manner Ensuring a quick delivery process Product Differentiation Product Innovation Unique characteristics of merchandise Eg: high price designer wear store
Customer Intimacy Stickiness with the store Repeat customer visit Eg: Shoppers stop running loyalty prog; The Big Sale @ Shoppers is 3 days prior for privileged customers

Market Penetrationselling more in current customer markets without changing products; adding new stores in current market areas; improve advertising; pricing; store presentation Market Development Product Development (Eg: MNC fast food joints customizing to Indian needs) Diversification

Choosing a store location Sourcing & Buying Merchandising/ Visual Merchandising Sales promotion Store positioning & building the store as a brand Achieving Efficiencies

A.
B.

Choosing a store location Attractiveness Convenience Proximity Depends on the Margin-Turnover framework
Sourcing & Buying Buying in bulk, thus making good margins Passing benefits to the customers Eg: Big bazaar running prog Sabse saste 4 din & Shubh Mahurat

C.

Merchandising/ Visual Merchandising Ability to decide which items will go on shelves Should be best suited to grab customer attention Art of suggestive selling by display & presentation Communication of features & benefits of the merchandise besides the in store promotion
Sales promotion Essentially through media Best offers to customers

D.

E.

Store positioning & building the store as a brand High value-high price positioning Discounted store positioning Value pricing positioning Lifestyle store positioning
Achieving Efficienciesmargin turnover, investment productivity, employee productivity etc.

F.

PRICE HIGH MEDIUM LOW

Q U A L I T Y

HIGH

1) Premium Strategy 4) Overcharging Strategy 7) Rip Off strategy

2)High value strategy 5) Medium Value Strategy 8) False economy Strategy

3) Super value Strategy (lossleader) 6) Good value strategy 9) Economy Strategy

MEDIUM

LOW

Central business location (High Street Location) An unplanned shopping area around the geographic point where all public transportation systems converge; it is usually in the center of the city and often where the city originated historically.

Advantages

Disadvantages

Easy access to public transportation. Wide product assortment. Variety in images, prices, and services. Proximity to commercial activities. Array of retail stores in small sizes

Inadequate and usually expensive parking. Older stores. High rents and taxes. Traffic and delivery congestion.

LO 2

Freestanding retailer

Advantages

Disadvantages

Locates along Lack of direct Lack of drawing power from major traffic competition complementary stores arteries and does Lower rents Difficulties in attracting not have any customers for the initial visit Freedom in operations adjacent retailers to and hours Higher advertising and share traffic. promotional costs Facilities that can be adapted to individual Operating costs cannot be shared Eg: Initial needs with others development of Inexpensive parking Stores may have to be built rather Pheonix mills/ than rented Strategy also May not be a commercial retail followed by area at all Shoppers Stop
LO 2

Advantages of shopping centers

Disadvantages of shopping centres

Heavy traffic resulting from the wide range of product offerings Cooperative planning and sharing of common costs Access to highways and available parking Lower crime rate Clean and neat environment

Inflexible store hours Medium to High rental costl Potentially too much competition and much of the traffic is not interested in a particular product offering

LO 2

The following 6 elements meets physical & emotional needs of the customer 1. Employee type & density 2. Merchandise type & density 3. Fixture type 4. Sound type 5. Odour type 6. Visual Factors

SKU (lowest level of a merchandise unit) Division: Apparels/ Supermarkets/ Electronics Dept: Mens/ Ladies/ Kids wear Category: Shirts/ Trousers Sub category: Full sleeves/ half sleeves Brand: Arrow/ Van heusen/ Zodiac Options: size-40,42,44, 46 colorblack, white, blue priceRs 650, 750, 1000

Markup= percentage of margin calculated on the cost added to arrive at maximum retail price Markup%=(diff between mrp & cost/cost) x 100
P)Mark up% for a dress that costs Rs. 200 & retails for 400?? S) {[400-200]/200 }x 100= 100%

Mark Down is the amount reduced on mrp to arrive at new retail price Markdown%=(diff between old & new mrp)/old mrp) x100 P) Mark down for the dress whose original MRP is Rs. 400 & new MRP is Rs. 200?? S) {[400-200]/400} x 100 =50% Markdowns are done when Product sale is low Season draws to a close Product line needs to be cleared from the shelves Product has a manufacturing defect

GMROI-total margin earned by average inventory held during the period GMROI=[Margins(Turnover @ mrp-cost of goods sold)/Avg inventory holding]x100
P) GMROI for a store if its margin earned is 30 lakhs & inventory held during the month is 2cr?? S) (30 lakhs/ 2cr)x 100 = 15%

Product Offerings Place Price-Mrp, Promotional pricing, Loss leader pricing, Odd pricing, Price bundling, Edlp, Premium Pricing, Price skimming, Promotions & Events People Presentation

Point Of Sales (POS) advertising Sales promotion Publicity Personal selling

Point Of Sales (POS) advertising POS materials like posters, banners displayed Activities like display contests, shelf on hire Very cost effective Eg: 5x reward points for Amex cardholders : Provogue & Zodiac points in Shoppers Stop promoting their brands

Sales promotion Done with special communications & display Media advertising Used to attract immediate customer attention Can involve price-offs Promotion may also be for a new product line or a new category to hit the store Eg: sale ads in newspapers shubh mahurat (in Big Bazaar)

Publicity Non paid advertising mileage Specialized PR firms Write ups in media about the stores latest arrivals or sales promotions New launches get great deal of publicity via PR firms

Personal selling Well trained sales personnel communicate the value proposition & brand value of store/products Helps in cross selling & up selling to customers More personalized selling observed in a high end store

Principle objective of SCM-satisfy the customer at the right time with right product at right cost all the time Challenges Huge SKUs Seasonal variation of product lines Changing consumer demands SCM comprises of Vendor Management, EDI, Warehouse Management & Goods Received Note (GRN)

A.

Vendor Management Involves selecting right vendors giving right quality of merchandise, adhering deadlines Delivery in right quantity Helps eliminating backlogs in delivery Vendors directly managing a retail organization is an effective solution
Electronic Data Interchange (EDI) Establishes efficient information flow on stock movement Vendors get to know of sales & inventories instantaneously

B.

C.

Warehouse Management Receiving the ordered stocks Checking for right quality, quantity & price Transporting the merchandise Sending returned merchandise back to the vendors for refining
Goods Received Note (GRN) Is prepared when merchandise is received from vendors/ suppliers after checking Leads to authorization of payments to vendor by the accounts department

D.

1.
2. 3.

4.
5. 6. 7.

Connect with the customer Probe needs subtly Presenting merchandise Handling objections & Indecision Recognize buying signals Trial close (up selling, cross selling & suggestive selling) Close the sale

1)Marketing Management--V S Ramaswamy & S Namakumari 2) Retail Management--Gibson G Vedamani]