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PROF. R.MATHUR
RETAIL
MANAGEMENT ..1
INTRODUCTION
CONCEPTS, ROLE & ENVIRONMENT
RETAILING Business activities involve Selling
Goods and Services to Consumers for
their Personal, Family or Household use.
Every sale of Goods and Services to final
consumer Food products, apparel,
movie tickets; services from hair cutting
to e-ticketing.
Retailing is the Last stage in Distribution
Process- Wholesale is an intermediate
where Goods and services are sold to
Business customers.
RETAIL
MANAGEMENT ..1
Retailer is customer focused, not
Product focused.
Manufacturer may reach customers
through:
Dealers
Company showrooms
Super / Hypermarkets
Selective
Exclusive
RETAIL
MANAGEMENT
ORGANISED ..1
RETAILING
In India Organised Retailing is 2%
Retail sector highly fragmented
Retail chains like Wal Mart, Sears,
McDonalds brought Rapid Growth
and consolidation of Organised Retail
Rapid rise of Income levels and
accompanying changes in lifestyles
greatly contributed to growth of
Organised Retail
RETAIL
MANAGEMENT
ORGANISED ..1
RETAILING
In India, increase in Disposable income,
Purchasing Power of growing Middle
Class conducive conditions for growth of
Organised Retail
Indian Retail environment different from
that of western countries:
- Cities congested, large population in
rural areas
- Smaller purchases, limited household
space
RETAIL
MANAGEMENT
RETAILING CONCEPT ..1
Retaillier French for breaking bulk
Retailer links Producers to Customers
Retailer is a person, agent, agency,
company or organisation reaching the
Goods or Services to ultimate consumer
Retailers perform specific activities:
Anticipate customer wants
Mail Direct
Internet Sales
Door-to-door
Achieve Goals
RETAIL
MANAGEMENT
RETAILING CONCEPT
..2
Communication with Customers
Identify Customers Needs
Provide Products and Services to
Satisfy Customers
Elicit Feedback to Improve
Services Word Of Mouth
RETAIL
MANAGEMENT
RETAILING CONCEPT..2
Customer Service approach:
Create a conducive environment
Direct mail
Term
Rewards for Regular Customers
RETAIL
MANAGEMENT ..2
ROLE
Consumer spend their money at
Retail which drives the economy.
Retailers realize Revenue when
Consumers buy products or
Services from them.
The revenue passes up the
Consumer Goods distribution chain
viz. to Wholesalers, Distributors
and Manufacturers.
RETAIL
MANAGEMENT ..2
Retail Industry employs 17-20%
Workforce that drives the Economy.
Retail trends often mirror trends in a
nations overall economy.
Retailers add value by Providing the
Right Product at The Right Place at
the Right Time.
RETAIL
MANAGEMENT
ENVIRONMENT ..2
Retailing is a Dynamic field with very
Competitive Environment.
Retailers act as Filters Strong lobby
for success or otherwise of a Product
or Services.
Companies create Retailer Value and
Consumer Differential Advantage to
improve success rate of their Brands.
Constraints Multiple Brands and
SKUs for each category, Shelf Space,
funds available, Turnover of
Merchandise.
RETAIL
MANAGEMENT
New Concepts &..2
Trends
1. Vertical Retail Concept: Traditional stores
and Shop-in-Shop concepts mixture of
system and individuality, e.g. Sale of
Non-food items like newspapers,
magazines with snacks, beverages
2. Consumption Related Trends: Increasing
Consumers with Purchasing Power &
More Migrant Consumers Demand for
Broad selection of Products Demand for
Good quality Products e.g. Honest,
Original and Green Products
Indian Economy GDP Projections Through 2022 (2007
Prices)
US$ US$
Billion Billion
US$ US$
Billion Billion
*Projected
Goals
Consumer Market
Overall Activities
Commitment to A Business
Business Decision
Around Goods and Services sold or
around Consumer needs.
Specific or Generic approach
RETAIL
MANAGEMENT ..3
Distinctive Role In Market
A Leader or a Follower
Leader Unique strategy
Follower Emulate standard
Practices with better execution
than competitor.
Market Scope Customer Base
Dynamic Decision In Sync. With
Retail Environment
RETAIL
MANAGEMENT
Ownership ..3
and Management:
Sole Proprietorship Individual
accrues Profits, Risks, Costs. Is
Liable for Legal Claims. Limited
Capital and Expertise.
Partnership Share Profits, Risks,
Costs. Owners Liable for Legal
Claims. Better Capital Investments
and Capabilities.
RETAIL
MANAGEMENT ..3
Corporation Incorporated under
law. Funds through Sale of Stocks.
Ownership Transfer is easy. Private
Limited Company Limited number
of Individuals with Limited Liability.
Public Limited Company Open to
Public to Invest In Stocks. Profits
and Dividends attract Taxes.
Managed by professional managers.
RETAIL
MANAGEMENT ..3
Business:
Start A New Venture Flexibility of
retailing Factors
Buy an Existing Business Balance
Of Advantages should be Positive
weigh the negatives carefully
Become A Franchisee Combines
Enterprise with Known Brands.
Brand also puts a number of rigid
Quality and Business Restrictions.
RETAIL
MANAGEMENT
Types Of Retail Goods &..3
Services
Durable Goods
Furniture, Electrical Appliances,
Hardware, Timber, Jewelry,
Automotive and Spare Parts
Non-Durable
Mission ..3
Situation Analysis Ownership
Goods/Services category
Sales
ObjectivesProfit
Customer satisfaction
Image
Mass
Target Customer Concentrated
Differentiated
Controllable
Overall strategy Uncontrollable
Short Term
Specific activities Competition
Evaluation
Control Adjustment
RETAIL
MANAGEMENT ..4
RETAILERS MARKETING DECISIONS:
-Target Market: Focus resources & Retail Mix
-Product Differentiation Strategy: Product
Assortment Breadth & Depth
-Services: Pre-purchase, Post-purchase,
Ancillary
-Price: Target market, Product Mix,
Competition
-Promotion: Promote & Reinforce Image
-Location: Vicinity of Target market
RETAIL
MANAGEMENT ..4
MARKET SEGMENTATION- TARGET MARKET
Sex, Age, Family Size -Type, Marital, Status,
Socio-economic Class, Occupation,
Geographic: Metros, large Towns
Psychographic: lifestyles, Personality, Values
Services: Advertising, Displays, Special
Offers; Delivery, Gift Wrapping, Returns,
Tailoring, Installation; Cheque Cashing,
Parking, Restaurants, Rest rooms
RETAIL
MANAGEMENT ..4
Pricing: High Profit %, Low Volume & Low
Profit %, High Volume
Loss Leader, Discounts -Clear Merchandise
EDLP Every Day Low pricing vs. Discounts
Promotion: Frequent Shopper Rewards,
At-the-market Orientation:
Middle Class shoppers
- Offers excellent service, Good
atmosphere
RETAIL
MANAGEMENT ..6
- Profit margins > = Moderate
- Quality > = Average
- Price Range Difficult to Expand as
Competition from Discount Stores or
Prestige Stores Squeezes the Range
Upscale Orientation:
- Prestige Major Competitive Edge
- Smaller Target Market, Higher
Operating Costs, lower Inventory T/O
Means Customer Loyalty,
RETAIL
MANAGEMENT ..6
Distinctive Services & Product
Offerings, High unit Profit margins
PROVIDE A GOOD VALUE IN
CUSTOMERS MIND FOR THE
CHOSEN PRICE ORIENTATION.
CUSTOMER NOT NECESSARILY
LOOKING FOR THE BEST PRICE BUT
FOR GOOD VALUE REAL &
PERCEIVED -FOR MONEY.
RETAIL
MANAGEMENT ..7
Research on price In Buying Decisions
reveals Different Motivations for
Different market Segments.
CONSUMER PURCHASE & PRICING:
Price Elasticity Of Demand
Sensitivity to Price Changes. Small %
Change in Price Substantial %
Change in Demand High Price
Elasticity. Urgency to purchase is low
or acceptable substitutes exist.
RETAIL
MANAGEMENT ..7
Large % Change in Price Small %
Change in Demand Demand In-
Elastic. Urgency to purchase is high
or there are no acceptable
substitutes. Occurs with Brand or
Retailer Loyalty.
Unitary Elasticity - % Change in Price
directly off-set by % Changes in
Quantity Demand
RETAIL
MANAGEMENT ..7
In Retailing computing Price Elasticity is
Difficult due to other factors of Product
Mix also interplay. Demand hard to
predict. Price Sensitivity varies by
Market Segment based on Shopping
Orientation:-Economy: Shop around for
Lowest Price. Segment Growing rapidly.
- Status: Perceive Retailers as different,
Look for Prestige Brands and customer
Service.
RETAIL
MANAGEMENT ..7
- Assortment oriented: Seek Retailers
with Strong Assortment in Product
Categories and look for Fair Pricing
- Convenience Oriented: Shop only when
they Must at nearby locations with long
hours. Prepared to pay higher Prices.
- - Loss Leaders: Price below cost to
Profit Profit/Unit
RETAIL
MANAGEMENT ..7
Prestige Pricing:
Premium pricing to convey exclusive
image for the product or Service.
Evoke perceptions of Quality and
Prestige. Habeebs Parlour, Delhi Golf
Club, Luxury hotels.
Odd Even Pricing:
Odd Pricing to indicate lower Good
deal.
Even Pricing to indicate higher quality.
RETAIL
MANAGEMENT ..7
Bundled Pricing:
Offering two or more Products or
Services at one price.
Fixed & variable Pricing:
Variable pricing for highly
differentiated or unbranded
products. Fixed pricing for Branded
products.
RETAIL
MANAGEMENT ..8
PLANNING & CONTROL
Retailer forms a New Strategy or
Adjusts an Existing one, gathering
and analyzing feedback reveals
effectiveness of Operation.
Feedback can be obtained for:
- Attributes, Buying Behaviour
- Alternative Store location
- Inventory Planning
- Product Mix Offering
RETAIL
MANAGEMENT ..8
- Pricing
- Promotion
- Store image
Research efforts related to risk involved:
- Higher risk : Store Location
- Lower risk: Introduction of New
Product Line
Information Gathering and Processing is
ongoing for Feedback & Control
RETAIL
MANAGEMENT ..8
Non-systematic or Incomplete ways
of obtaining information due to
constraints of Time, Costs or Lack
of Research Skills:
- Using Intuition: Gut feel
- Assuming Past Trends to Continue
and follow past practices
- Copy Competition
- Devising a Strategy based on few
individuals perceptions
RETAIL
MANAGEMENT ..8
Example: Movie tickets cost weekdays
vs. weekends and matinee vs. evenings
Toy store orders for holiday season basis
last years demand +. Research
indicated higher optimism and desire to
gift. Stock-out before peak, unable to
get delivery of extra stocks.
Chain Store in new Location doing 40%
of expected business. Research shows
Store name and Image unknown, ad
media choice incorrect
RETAIL
MANAGEMENT ..8
Retailers Objectives direct Strategic
Planning some Routine. Non-
routine require careful evaluation
Strategy outlined, new data required
for its operation acquired and files
updated or retrieved from storage,
analyzed and interpreted. All this at
Information Control Centre.
Decisions made and put into
operation.
RETAIL
MANAGEMENT ..8
Retail Information System RIS
Environment Mission, Objectives
Competitors, Economy
Strategic Plans
(a) DATA COLLECTION INFORMATION (b) DATA
STORAGE+
ANALYSIS CONTROL RETREIVAL
INTERPRETATION CENTRE UPDATING DATA
FILES
APPEAL TO CUSTOMERS
EXTERIORS STORE FRONT, DISPLAY
WINDOWS
INTERIORS LIGHTING, COLOUR, FACILITIES
ENHANCES DISPLAY & PROVIDES
RELEVANT INFORMATION
RETAIL
MANAGEMENT ..10
ATMOSPHERICS PLANNING RELEVANT FOR ALL
RETAIL SET-UPS, ESPECIALLY:
- PLANNED SHOPPING CENTRES
- LIFESTYLE STORES
A TIDY WORK ENVIRONMENT ATTRACTS A HIGH
STORE PATRONAGE
ATMOSPHERICS PLAY AN IMPORTANT ROLE:
- CREATE POSITIONING FOR RETAIL OUTLET
- ATTRACT NEW CUSTOMERS
- ORGANIZE STORE AND MERCHANDIZE
- ENRICH SHOPPING EXPERIENCE
RETAIL
MANAGEMENT ..10
ATMOSPHERICS ROLE IN RETAIL STRATEGY
CREATES A USP
EXTERIOR ATMOSPHERICS
INTERIOR ATMOSPHERICS
STORE LAYOUT
VISUAL MERCHANDISING
RETAIL
MANAGEMENT ..10
EXTERIOR
ATMOSPHERICS
STOREFRONT
MARQUEE
ENTRANCES
DISPLAY WINDOWS
SIZE OF BUILDING
ACCESSIBILITY
VISIBILITY
RETAIL
MANAGEMENT ..10
INTERIOR ATMOSPHERICS
FLOORING
LIGHTING
ODOUR/ AROMA
FIXTURES
WALLS
TEMPERATURE
AISLES
CONVENIENCES/HYGIENE
RETAIL
MANAGEMENT ..10
STORE LAYOUT
SHOPPING FLOOR SPACE
TRAFFIC FLOW
DEPARTMENTS LOCATION
SPACE / MERCHANDISE
CATEGORY
SIGNAGE
RETAIL
MANAGEMENT ..10
VISUAL MERCHANDISING
ASSORTMENT
THEME
ENSEMBLE
RACKS AND SHELVES
CASH COUNTERS
RETAIL
MANAGEMENT ..11
CONTROL RETAIL STRATEGY
Rules to stay Competitive:
Commitment Enthusiasm in Business
Share Staff Involvement in Decision making
Listen & Communicate Customers and Staff
Appreciate Good efforts
Celebrate Good Achievements
Motivate Challenging goals and rewards for
High performers
Exceed Deliver more than promises
Control Operating Costs
Swim Upstream Evaluate Competition and do
something Different.
RETAIL
MANAGEMENT ..11
INTEGRATING RETIAL STRATEGY
Situation Analysis Objectives
Specific Activities
Control
RETAIL
MANAGEMENT ..10
OPPORTUNITY ANALYSIS
Overall Direction & Goals: Top Down
Middle Level: Inputs from Internal and
External Sources. Generate Ideas early.
Generate Specific Plans with Deadlines.
S ALES OPPORTUNITY GRID
Rates the promise of New and Established
Goods, Services, Store outlets
RETAIL PRICE, FLOOR SPACE, DISPLAY COSTS,
OPERATING COSTS, MARKUP; SALES
ESTIMATES, GROSS AND NET PROFITS IN Rs.
AT FIRST, SIX AND 12 MONTHS.
RETAIL
MANAGEMENT ..11
DEFINING PRODUCTIVITY
Efficiency with which a Retail Strategy is
carried out. Reach Sales and Profit Goals
keeping Operating Costs under control.
PERFORMANCE MEASURES
Criteria used to assess effectiveness and
setting standards for each performance.
Measures used: Total Sales Turnover,
Average Sales per store, Sales by Goods/
Service Category, Gross Margin/ ROInvst.,
Op.Income, Inventory T/O, Financial ratios,
Profitability
RETAIL
MANAGEMENT
RETAIL INSTITUTION..11
BY OWNERSHIP
Retail Institution refers to basic format or
structure of a Business.