retailmanagement-1232195275918231-2

RETAIL MANAGEMENT

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.


Retailer is customer focused, not Product –focused.

Manufacturer may reach customers through:

Dealers Company showrooms Super / HypermarketsManufacturers will decide on Retail

Distribution: Intensive Selective Exclusive

RETAIL MANAGEMENT ..1ORGANISED 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 ..1ORGANISED 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 ..1RETAILING CONCEPT“Retaillier” French for breaking bulkRetailer links Producers to CustomersRetailer is a person, agent, agency,

company or organisation reaching the Goods or Services to ultimate consumer

Retailers perform specific activities: Anticipate customer wants Stock product assortments Acquire market information Finance Retail business

RETAIL MANAGEMENT ..1RETAILING CONCEPTRetailing may take place through: Retail Store Mail Direct Internet Sales Door-to-doorRetail services like Restaurants, Hotels,

Parlour, Health Services, car rentals, Travel

In USA Retail generates $3 trillion through 23 mil. Employees. Wal Mart generates $245 Bio. sales through 1 Mio.nationally and .3 Mio. Foreigners.

RETAIL MANAGEMENT ..1 Strong economies have a strong

Retail sector Entry in retail sector is easy, hence

results in fierce competition Retail must perform its primary role

of catering to customer satisfaction Retail earns modest profits of 9-10% Retail stores of different sizes face

distinct challenges. Their sales volume influences:- Merchandise purchase- Promotion & - Expenses Control

RETAIL MANAGEMENT ..1Last decade has seen tremendous

changes in Retail Business – from made to order to ready to wear, from counter sales to self service, emphasis on value addition and cost reduction.

Family run retail business giving way to modern professional retail.

Retail improving inventory management through systems – faster turnover, better profitability, fast changing customer preferences for assortment of goods and services. BETTER CUSTOMER CARE


GLOBAL RETAIL INDUSTRY1. Retail sales driven by Ability

(disposable income) and willingness (consumer confidence)

2. Worldwide retail sales Est.$7 Trio.3. Expenditure on Household

Consumption increased by 68% between 1980 and 1998

4. Top 200 retailers account for 30% worldwide demand

5. Over 50 of the Fotune 500 and 25 of Asian Top 200 are Retailers


ORGANISED RETAIL FORMAT1. By 2006 - 200 Shopping Malls – Up

from 25 in 20032. Expect by 2006, to develop 40

mio.sq.ft. quality Retail Space3. 6 A Grade cities Delhi NCR, Mumbai,

Bangalore, Hyderabad, Chennai, Kolkata will have 34 mio. and non metros Pune, Ahemadabad Ludhiana, Chandigarh, Jaipur, Lucknow, indore, Cochin 6 mio.

4. Delhi NCR will have 26 mio., Mumbai another 5 mio.


RETAIL CHARACTERISTICS1. Direct End-User Interaction2. Platform for Promotions & POP

displays3. Lower unit sales4. Retail location critical5. Services as important as Core

Products6. Large number of Retailers to meet

geographical coverage and population density


RETAIL EVOLUTION THEORIES

Four theories of evolution are:1. Wheel of Retailing Cyclical2. Accordion theory Theories3. Dialectic Process Evolutionary4. Natural selection TheoriesCyclical: Begin with one state and

return to that state at some time in future

Evolutionary: Changes similar to biological evolution


Wheel of RetailingWheel represents phases through which

some types of Retailers pass:Retailers attract customers – low price, low

serviceExpand market – More expensive

merchandise, More services, open More convenient locations. Trading up process increases costs & price of their merchandise, creating opportunities for new low price retailers to enter e.g. Discount stores & category specialists

Some Retailers don’t begin as low price, low service entrants, e.g. Upscale fashion specialty stores.


THE ACCORDION THEORYRetailers fluctuate from strategy of offering wide merchandise with shallow assortment to offering limited categories with deep assortment

In rural markets, Retailers sell many categories under one roof: shoes, cosmetics, foods, cloth, medicines. However the assortment is shallow and customers have limited choice.

Department stores have both width and depth of merchandise

Speciality stores carry special categories with deep selection


DIALECTIC PROCESSAn evolutionary theory based on premise

that retail institutions evolve.The theory suggests that new Retail

formats emerge by adopting characteristics from other forms of retailers in much the same way as the child is the product of the pooled genes of the parents.

Specialty stores with high margins, low turnover plush operations

Discount stores with low margins, high turnover low operations

Both the above were synthesized to form category specialist stores.


NATURAL SELECTIONThose Retail Institutions Succeed whichadapt to changes in customers,

Technology, competition and legal environment.

Department stores have tried to combat specialty stores by opening specialty counters within the stores.

Interest in physical fitness and increased number of women in workforce have made salad bars in grocery stores successful.


RETAIL BUSINESS CLASSIFICATION1. Ownership Business:

Proprietorship, Partnership, Limited liability company

2. Operational Structure: Independent Trader,

Chain Of Stores, Franchising,

Consumer Cooperative3. Width & Depth Of Merchandise:

Specific Product CategoryWide Range


4. Type Of Pricing:Low pricing, minimum ServicePremium Merchandise, High ServicePremium pricing, distinctive Image

5. Consumer Interaction:Direct interactionMail OrderTele-SellingVending machinesDoor-to-doorMobile Vending

RETAIL MANAGEMENT ..2 GROCERS - Major business is grains,

provisions, spices, edible oils. Grocers may be dealing in many other items.

GENERAL STORES - Deal in items Daily needs and stocking number of categories, is identified as a general store.

CHEMIST- Deal in Ethical Pharmaceutical Products. Require a license and a Qualified Pharmacist. Such outlets also deal in diverse FMCG products.

RETAIL MANAGEMENT ..2 MODERN FORMAT STORE –

a) Part of a chain of stores with self-service facilitiesb) Part of a chain, but does not have self-service Facilitiesc) Stand-alone (not part of a chain) with self-service facilities

FOOD STORE : Deal mainly in food products - milk, beverages, tea, coffee, squashes, ketchup, jams, chocolates, biscuits, bakeries etc.


TOBACCO KIOSK : Deal in tobacco products like Paan, Cigarettes, etc. are called Pan Bidi shops. Many of them also deal in packaged consumer products like toilet soaps, toothpaste, washing soaps, biscuits, confectionery, batteries etc.

COSMETIC STORE : Deal in Ladies Personal care products / Cosmetics, General toiletry products, Men’s toiletry products, Baby Care Products.


RETAIL CONCEPT Customer Orientation:Attributes & Needs satisfaction Coordinated Efforts:Maximize Business Efficiency Value driven:Good Value for Money Goal OrientationAchieve Goals

RETAIL MANAGEMENT ..2RETAILING CONCEPT Communication with Customers Identify Customers Needs Provide Products and Services to

Satisfy Customers Elicit Feedback to Improve

Services – Word Of Mouth

RETAIL MANAGEMENT ..2RETAILING CONCEPTCustomer Service approach: Create a conducive environment Listen to your Customers Direct mail Relationship Marketing – Long

Term Rewards for Regular Customers


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 Industry employs 17-20% Workforce that drives the Economy.

Retail trends often mirror trends in a nation’s overall economy.

Retailers add value by Providing the Right Product at The Right Place at the Right Time.


ENVIRONMENT 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.


New Concepts & Trends1. 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)

2007

13,2452,8972,6302,3742,232

9169791,068

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

US AGermaChina

UKF ranceIndia

Rus s iaB raz il 2012

15,3544,197

3,1982,6482,470

1,4091,3041,369

- 5,000 10,000 15,000 20,000

US AC hina

GermanyUK

F ranceIndia

R us s iaB raz il

2017

17,0316,341

3,5132,9532,761

2,1191,6881,789

- 5,000 10,000 15,000 20,000

US AC hina

GermanyUK

F ranceIndia

R us s iaB raz il

2022

19,7519,229

3,7663,2513,0853,128

2,1032,282

- 5,000 10,000 15,000 20,000 25,000

US AChina

GermanyUK

F ranceIndia

Rus s iaB raz il

US$ Billion

US$ Billion

US$ Billion

US$ Billion

India is expected to be comparable with UK & France in GDP by 2022

*GDP figures are in real terms with base year as 2007

Rapid Transformation Anticipated

Current Size & Future Projections for Indian Retail Market

336 376 421 471 527 590

1011

12 17 29 51 74 97

282

0

200

400

600

800

1000

1200

2007 2008 2009 2010 2011 2012 2017

US

$ B

illion

Total Retail Organized Retail

28% share

Reach a share of 28% by 2017

9.0%

6.8%6.0%6.0%

5.6%5.2%

6.4%6.6%

5.4%

9.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%19

97

1998

1999

2000

2001

2002

2003

2004

2005

2006

Projections of 8% sustainable real GDP growth rate till 2020 promise high growth potential for Indian Retail

HIGH GDP GROWTH

Radical Transformation Anticipated In Indian Retail

Country Share of Organized

Retail

Years taken to reach the level

from < 5%

China 20% 10

Poland 20% 8

Brazil 36% 15

Thailand 40% 18

US 85% 50

India 17% (estimated)27% (estimated)

510

India looking at rapid GROWTH compared to other countries

Growth Of Indian Retail …

Indian Retail expected to grow close to 12% p.a. in the next 10 years

*Projected

Source: Technopak Analysis, CSO & Other Sources

RETAIL MANAGEMENT ..3WITH HIGH PRIVATE CONSUMPTION Private Consumption US $568 Bn

(62%) Retail US $352 Bn (62%)

Urban US $158 Bn (45%)Rural US $194 Bn (55%)

Non-Retail US $358 Bn (38%)• Public Spending +Gross Capital

Formation 38%


Rural India consists of 720 Million consumers across 627,000 villages

17% of these villages account for 50% of the rural population and 60% of the rural wealth implying reaching out to almost 100,000+ villages to address even 50% of this rural opportunity WITH HIGH PRIVATE CONSUMPTION

RETAIL MANAGEMENT ..2RAPID TRANSFORMATION Investments in the range of US$ 20+

Billion expected in the next 5years in Retail & its Supply Chain alone

Size of modern retail likely to touch US$ 74+ Billion by 2011

At least 2.5 Million additional direct jobs likely to be created in the next 5 years

Hyper-competition is expected to set in by 2008-9.

RETAIL MANAGEMENT ..3TRADITIONAL RETAILERS Retail market is growing from US$ 336

billion to US$ 590 in 2012 That means an additional market of

US$ 254 billion Even if the modern retailing can go

from US$ 12 billion to US$ 74 billion in 2011Still US$ 180 billion is left to be addressed by traditional retailers

The growth of modern retail will be more in urban as compared to rural


BOOKS FOR REFERENCE

1. Retail Management By Chetan Bajaj2. Retail Management By Berman &

Evans3. Retail Management By Levy & Weitz

RETAIL MANAGEMENT ..3CASE STUDY:

Facts Of the Case – No assumptions

Key Issues List alternatives Evaluate alternatives Recommend Course Of Action

RETAIL MANAGEMENT ..2TOTAL RETAIL EXPERIENCE Merchandising & Display Brands and Quality Of Goods Inventory Carried Customer Service Pricing Support Functions: Parking Create Customer Excitement

RETAIL MANAGEMENT ..2TOTAL RETAIL EXPERIENCEPossible Pitfalls:Discount stores – Ample StockNeighborhood Store – Overly

Trendy ProductsFull Service Store – KnowledgeableTheme Restaurants – Novelty wears

off, food so-so, Prices highMEET CUSTOMER NEEDS


OPPORTUNITIES:

Management –Raise capitalPurchaseUse MIS to Control OperationsEmploy for Sales Counters,

Stores and Cash CountersUndertake Marketing Activities

Entrepreneurial Opportunities

RETAIL MANAGEMENT ..3RETAIL STRATEGY

OVERALL ACTION FRAMEWORK Mission Goals Consumer Market Overall Activities Feedback and Control Mechanism

RETAIL MANAGEMENT ..3Forward Retail Planning – FOCUS

Analysis Of Requirements Of Business Set realistic Goals Differentiate Itself for Target

Customers - Benchmarking Knowledge Of Business Environment –

Legal, Economic, Competitive Synergize efforts Reduce Business Risk – Feedback and

Control


MISSION

Commitment to A Business – Business Decision

Around Goods and Services sold or around Consumer needs.

Specific or Generic approach


Distinctive Role In Market – A Leader or a FollowerLeader – Unique strategyFollower – Emulate standard Practices with better execution than competitor.

Market Scope – Customer Base Dynamic Decision In Sync. With

Retail Environment


Ownership 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.


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.


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.


Types Of Retail Goods & Services Durable GoodsFurniture, Electrical Appliances,Hardware, Timber, Jewelry,Automotive and Spare Parts Non-DurableApparel – Cloth, Garments, Food

Group – Green Grocers, Packaged Foods, General Merchandise, Eating Places, Petrol Stations, Chemists, Stationery


Service Establishments Personal Services Dry Cleaning, Health Care,

Photographic Goods, Barber Shops, Amusement Services, Movie Theatres, Clubs, Amusement Parks, Game Arcades

Repair ServicesAutomobile, Electrical Gadgets, Watch & Jewelry, Electronic Gadgets


Hotel ServicesHotels, Resorts

Professional ServicesLawyers, Doctors & Surgeons, Chartered Accounts, Stock brokers, Real Estate Agents

Potential Retail Business Owners Aptitude for a Particular Business


Personal AptitudeKnowledge, Experience, Qualifications,Inborn Skills and Acquired Skills

Financial ResourcesLand and Building, Fixtures, Equipment

Time DemandsOwner’s Availability

PersonnelSales People, Inventory, Cashiers


RETAIL OBJECTIVES – STRATEGY Sales – Growth, Market Share Profit – Level, ROI, Efficiency Satisfaction – Total Retail Experience Positioning – Up-market, Mid-Priced,

Discount Oriented, Mass Market, NicheValue Scale-Quality, priceFashion Scale-Fashion, Style, AssortmentImage Projected


Target Market – Customer Group To Be Attracted and Satisfied.

Mass – Broad Spectrum of CustomersConcentrated – Specific groupDifferentiated – Two or more distinct

Groups with Different Retail Approaches


TARGET MARKET TECHNIQUESSTRATEGY MASS MARKET CONCENTRATED DIFFERENTIATED

LOCATION Near LargePopulation

Near SmallMedium Pop.

Near LargePopulation

RETAILMIX WideAssortment,Medium Qual.

DeepAssortment,High/ LowQual.

Distinct Goodsfor TargetMarket

PROMOTION Mass Advtg. Direct mail DifferentMedia forTarget Groups

PRICING Popular High or Low High, Mediumand Low

STRATEGY LargeHomogeneousGroup

SpecificStrat.Directed atSpecific Gr.

Strategiesdirected atHeterogeneousGroups


CONTROLLABLE VARIABLES

RETAIL STRATEGY

UNCONTROLLABLE VARIABLES

Store Location Consumers

Managing a Business

Competition

Merchandise @ Pricing

Technology

Communicating Economic Conditions

Seasonality

Legal Restrictions

RETAIL MANAGEMENT ..3 Mission Situation Analysis Ownership Goods/Services category Sales Objectives Profit Customer satisfaction Image Mass Target Customer Concentrated Differentiated Controllable Overall strategy Uncontrollable Short Term Specific activities Competition Evaluation Control Adjustment


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


MARKET SEGMENTATION- TARGET MARKETSex, Age, Family Size -Type, Marital, Status, Socio-economic Class, Occupation, Geographic: Metros, large TownsPsychographic: lifestyles, Personality, Values

Services: Advertising, Displays, Special Offers; Delivery, Gift Wrapping, Returns, Tailoring, Installation; Cheque Cashing, Parking, Restaurants, Rest rooms


Pricing: High Profit %, Low Volume & Low Profit %, High Volume

Loss Leader, Discounts -Clear MerchandiseEDLP Every Day Low pricing vs. Discounts Promotion: Frequent Shopper Rewards,

Coupons, Sampling, Ads. Location: Sales effectiveness –

Number of people pass by - % Enter – % Buy- Average Amount per Sale

CASE STUDY – CONVENIENCE STORE


MERCHANDISE MANAGEMENT: A Key Strategy: Develop & Implement

Merchandising - Plans Of Proper Assortment Of Goods & Services As In Demand, make them Available at Places, Times, Prices & Quantity to Satisfy Target Customers

Merchandising Decisions dramatically affect Performance.

Investments in Merchandising Skills & Talent produce Better results than Investments in Technology or other Skill Specialties. 70 -80 % Results Depend on Merchandisers.


MERCHANDISING PLAN: All Merchandising Decisions Based on

Plans-1. Needs Of Target Market2. Type Of Retail Business3. Marketplace Positioning: Mass - Wide & Deep Assortment – Broad Customer Market:Niche –Specific Market Segment – High Customer Loyalty – Shields against Conventional Competitors


4. Defined Value Chain – (Trends )- Expected: Hygiene, Timely Service,

Knowledgeable, Stock Popular Products, Returns/ Redressal

-Augmented: Special Services, Differentiated Brands, Loyalty Prog.-Potential: Elements not yet Perfected or Opportunities not yet exploited.5. Product Trends


Merchandising Plans will drive Decisions:Product Lines to CarryShelf Space to Allot to Different ProductsInventory TurnoverPricing – Across Categories & WithinPromotionsAssortment – Breadth: Narrow or Wide

Depth: Deep Or Shallow

RETAIL MANAGEMENT ..5 Scope Of Responsibility for Personnel:Full Merchandising Functions – Buying & Selling: Selection Of Merchandise, Pricing Displays, Customer Transactions.

Separate Buying & Selling Functions.Micro Merchandising – Shelf space Basis Demand Pattern

Cross Merchandising – Carry Complimentary Goods & Services

Water, Soda, Soft Drinks, Juices, Ethnic


Merchandise Plan - Forecasting : Staple Merchandise – Regular Daily Need

Products, Stable Sales – List Of products, Inventory Level, Colours, Brands, Style Size

Assortment Merchandise – Apparel, Furniture, Autos. Variety Of products to enable Customers a Selection. Demand Varies, Forecast difficult. Decision On Product Lines, Styles Designs & Colours. Model Stock Plan - Colour, Size, Qty.

RETAIL MANAGEMENT ..5 Fashion Merchandise – Cyclical sales due to Changing tastes and Life Styles

Seasonal Merchandise – Seasonality In Sales – Summers Cottons, Winters Woolens – Forecasting for Season

Fad Merchandise – High Level Of Sales In a Short Time. Toys, Games are short lived Fads. Extended fads – Residual sales Continue for longer Periods. Never Out List – Always in stock


PRICING STRATEGY IN RETAILING:Retailer Prices Goods & Services to:

- Achieve Profitability- Satisfy Customers- Be Consistent with Overall Image, Sales, Profits, ROI

Pricing Options:- Discount Orientation- At-the-market Orientation- Average Pricing- Upscale Orientation

RETAIL MANAGEMENT ..6 Discount Orientation:- Low pricing as competitive advantage- Low status Image, Fewer shopping frills, Price based customers, Low operating costs, High Inventory T/O.

At-the-market Orientation:Middle Class shoppers- Offers excellent service, Good atmosphere


- 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,


Distinctive Services & Product Offerings, High unit Profit marginsPROVIDE 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.


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.


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


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.


- 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 attract more customers.

- - Predatory Pricing: Seek to Reduce Competition by selling at very low Pricing


Unit Pricing: Indicate Pricing at a unit, e.g., per Kg – to enable quick comparisons by customers.

Sharp Practices:Bait and Switch Advertising:Lures customer with exceptionally low prices. On contact customer informed of stock-out and offer another product.


Conflicts In Pricing:Manufacturer Wholesaler

RetailerCo. Price Distributor’s Price (a-b%)

Wholesale Price (a-w%)

Price To Retailer (a)Price To Consumer (a+ c%)Gray Market Goods: Imported Goods at Lower Prices.


Market Pricing: High Competition, customers seek lowest pricing. Price increase leads to brand switching.

Administered Pricing: Strong product Differentiation, Control by retailer on Price charged. For customers Image, Assortment, Personal service more important than Price, e.g. Fashion apparel stores, upscale restaurants.


PRICING OBJECTIVES:Market Penetration – Achieve large revenues by setting Low prices and sell high unit volumes – an aggressive strategy to discourage competition

Market Skimming – Profit is Objective.Charge Premium Prices and attract Customers seeking Service, Assortment & Status. Does not maximize Sales. ROI or early Cash Recovery Objectives met.


Selling Pr. Demand Sales Av .Cost Op. Exp. Tot. Cost

9 114000 1026000 7.6 104000 970400

10 104000 1040000 7.85 94000 910400

11 80000 880000 8.25 88000 748000

12 60000 720000 8.75 80000 605000

Selling Pr. Tot. Profits Markup % Av. Inv. Hold Inv. T/O R O Inv.%

9 55600 16 12000 9.5 61

10 129600 22 13000 8 127

11 132000 25 14000 5.7 114

12 115000 27 16000 3.8 82

Unit Sales Sales Goal ROInv. %

Profit Profit/Unit


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.


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.


PLANNING & CONTROLRetailer 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


- 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


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


Example: Movie tickets cost –weekdays vs. weekends and matinee vs. evenings

Toy store orders for holiday season basis last year’s 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


Retailer’s 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 Information System – RISEnvironment Mission, ObjectivesCompetitors, Economy

Strategic Plans(a) DATA COLLECTION INFORMATION(b) DATA STORAGE+ ANALYSIS CONTROL RETREIVALINTERPRETATION CENTRE © UPDATING

DATAFILES

FEEDBACK Retail OperationIMPLEMENTATION


Performance results are fed to ICC and compared with objectives set. Regular and Exception reports ( Giving reasons for deviation) generated and sent to Operational Managers for necessary action.

Building RISHow active RIS role – Reports in routine or as-and-when


Internal or Out-sourced- Some Specific Researches can be out-sourced.Cost Of RIS – 0.5 to 1.5% of revenueQuanta of Data – Edit raw data and share interpretationFrequency of Data dissemination – who receives which reportData Storage – Easy retrieival, adequate Longitudinal analysis (Period to Period)


RETAIL PROMOTIONAll communication that informs, persuades and reminds the target market about marketing mix of the Retail business.

Objectives of Communication:- Increase customer Flow- Increase Purchase BY Target Market


- Increase sale of Specific productor Product Category- Develop Store Image

Communication Promotion Mix:- Advertising- Sales Promotion- Publicity- Personal Selling


Department or Large Stores manage through Promotion department of the store. Small Retailers pool resources with manufacturers for Promotions.

Advertising – Paid Communication using Impersonal mass media: Print – news papers, magazines, direct mail and AV media like TV, radio.Local, vernacular language Print media used by small retailers.


Cable TV is also used by small retailers.Large retailers use a combination of media.

Sales Promotion is a paid Impersonal communication offering additional value to customer. Encourages customer visits and Promotes trial and repeat Purchase of focus Products or Services Special events, In-store Demonstration, Contests

RETAIL MANAGEMENT ..9Publicity -Un-paid form of Communication that provides Information about the retail through media.

A Powerful Business strategy evolves through knowledge of Target Customers, Clarity of Business Objectives. Effective selection of media for Promotion Strategy.

Major shift to Nuclear families in ’90’ s have shifted focus on to kids in Promotional strategies

RETAIL MANAGEMENT ..10ATMOSPHERICS & RETAIL SPACE MANAGEMENT

REFERS TO THE PHYSICAL CHARACTERISTICS OF THE RETAIL STORE LIKE EXTERIORS, INTERIORS, LAYOUT PLANNING AND VISUAL MERCHANDISING.

PLAY A SIGNIFICANT ROLE IN ATTRACTING CUSTOMERS AND RETAINING

THEM IMPROVING QUALITY OF SERVICE EXPERIENCE POSITIONING THE RETAIL OUTLET OPTIMUM RETAIL SPACE UTILIZATION


DIMENSIONS OF ATMOSPHERICS: PRESENTATION LIGHTING STYLING COLOUR PLANNING DESIGN USE OF WALLS/ MATERIALSAPPEAL TO CUSTOMERSEXTERIORS – STORE FRONT, DISPLAY

WINDOWSINTERIORS – LIGHTING, COLOUR, FACILITIES

ENHANCES DISPLAY & PROVIDES RELEVANT INFORMATION


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 ..10ATMOSPHERICS ROLE IN RETAIL STRATEGY ATTRACTS NEW CUSTOMERS CREATES A USP FACILITATES EASY MOVEMENT INSIDE THE

STORE FACILITATES ACCESS TO MERCHANDISE

INSIDE THE STORE ENSURES OPTIMUM SPACE UTILIZATION ENSURES EFFECTIVE & DESIRED

PRESENTATION INSIDE THE STORE REDUCES PRODUCT SEARCH TIME INSIDE

THE STORE


CHOICE OF FIXTURES, DÉCOR, SIGNAGE ENABLE CUSTOMERS PERCEPTION. PROPER PLACEMENT OF SIGNAGES INDICATING PRODUCTS OFFERED INCREASE EFFECTIVENESS. CUSTOMERS NECESSITY TO ASK QUESTIONS INCREASE STRESS LEVELS. UNIFORMS WORN BY STORE EMOLOYEES ALSO REDUCE CUSTOMER STRESS AND ANXIETY TO ASK QUESTIONS.

QUALITY OF STORE FIXTURES SIGNIFY A RETAILER CUTTING CORNERS OR MAKING LARGE PROFITS.


SIGNAGE, LAYOUT AND FURNISHINGS ADD TO AMBIENCE AND EFFECTS STORE-BROWSING COMFORT OF CUSTOMERS.

IN STORE ELEMENTS SUCH AS COLOUR, LIGHTING AND MUSIC MAY AFFECT PURCHASE DECISIONS MORE THAN POP AND DISPLAYS. TO IMPROVE IN STORE ATMOSPHERE, PERFUMES GET DESIRED EFFECT – ESPECIALLY TO GET RID OF CERTAIN ODOURS. IF THESE ARE COMPLEMETARY TO THE STORE, THE SERVICE QUALITY EXPERIENCE IMPROVES.


MUSIC PLAYS AN IMPORTANT ROLE IN ENHANCING CUSTOMER’S TIME SPENT IN THE RETAIL OUTLET – ESPECIALLY SOOTHING MUSIC, NOT THE FAST PACED.

STIMULATE RETAIL ENVIRONMENT PLEASURE EFFECT: CLASSICAL HINDI MUSIC ENHANCES SHOPPERS’ ENJOYMENT

AROUSAL EFFECT: SLOW INSTRUEMENTAL MUSIC RESULTS IN SUBDUED ACTIVITY IN SERVICE SETTINGS LIKE RESTAURANTS.


DOMINANCE: CUSTOMERS FEEL DOMINANT ( IN CONTROL). ENVIRONMENTAL ASPECTS - COLOUR OF INTERIORS, HEIGHT OF CEILING DETERMINE CUSTOMER DOMINANCE. FURNITURE AND FIXTURES MAY IMPACT THE DURATION OF TIME SPENT IN-STORE.

PHYSICAL ENVIRONMENTSTORE LAYOUT/DESIGN EMOTIONS SHOPPINGMERCHANDISE DISPLAY BEHAVIOUR MUSIC AROMA CUSTOMER’S

SENSES


KEY COMPONENTS OF RETAIL ATMOSPHERICS

EXTERIOR ATMOSPHERICS INTERIOR ATMOSPHERICS STORE LAYOUT VISUAL MERCHANDISING


EXTERIOR ATMOSPHERICSSTOREFRONTMARQUEEENTRANCESDISPLAY WINDOWSSIZE OF BUILDINGACCESSIBILITYVISIBILITY


INTERIOR ATMOSPHERICSFLOORING LIGHTINGODOUR/ AROMAFIXTURESWALLSTEMPERATUREAISLESCONVENIENCES/HYGIENE


STORE LAYOUTSHOPPING FLOOR SPACETRAFFIC FLOWDEPARTMENTS LOCATIONSPACE / MERCHANDISE CATEGORY

SIGNAGE


VISUAL MERCHANDISINGASSORTMENTTHEMEENSEMBLERACKS AND SHELVESCASH COUNTERS

RETAIL MANAGEMENT ..11CONTROL RETAIL STRATEGYRules to stay Competitive:Commitment – Enthusiasm in BusinessShare – Staff Involvement in Decision makingListen & Communicate – Customers and StaffAppreciate – Good efforts Celebrate – Good AchievementsMotivate – Challenging goals and rewards for

High performersExceed – Deliver more than promisesControl – Operating CostsSwim Upstream – Evaluate Competition and

do something Different.


INTEGRATING RETIAL STRATEGY Situation Analysis Objectives

Strategy Target Market

Specific Activities

Control

RETAIL MANAGEMENT ..10OPPORTUNITY ANALYSISOverall Direction & Goals: Top DownMiddle Level: Inputs from Internal and External Sources. Generate Ideas early.

Generate Specific Plans with Deadlines.S ALES OPPORTUNITY GRIDRates the promise of New and Established Goods, Services, Store outletsRETAIL PRICE, FLOOR SPACE, DISPLAY COSTS, OPERATING COSTS, MARKUP; SALES ESTIMATES, GROSS AND NET PROFITS IN Rs. AT FIRST, SIX AND 12 MONTHS.


DEFINING PRODUCTIVITYEfficiency with which a Retail Strategy is

carried out. Reach Sales and Profit Goals keeping Operating Costs under control.

PERFORMANCE MEASURESCriteria 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 ..11RETAIL INSTITUTION BY OWNERSHIPRetail Institution refers to basic format or

structure of a Business.

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