Final Assignment

Submitted to: Ms. Moon Pradhan

Submitted By: Mr. Surya Narayan Shrestha

CH-9 TRADING AREA ANALYSIS

1. Comment on this statement: A good location may let a retailer succeed even if its strategy mix is mediocre. Is it always true? Give examples. Location is generally one of the most important factors customers consider while choosing a store. A bad location may cause a retailer to fail even if its strategic mix is excellent. On the other hand, a good location may help a retailer succeed even if its strategic mix is mediocre. A great location can drive clients through your doors and keep them coming back for more and a bad location can doom your business even before it opens. A good location does not always mean that it has to be in the midst of a thriving marketplace to get instant footfalls but the location must at least be a place where the customers can have an easy access of the their demanded products near to their house, the transportation facility, ), parking facility must also be provided. Besides location, the retailers should find out what value-addition they can provide to the customers. You may have a great location in terms of Accessibility, Customer walk-ins, other amenitites like, food court etc. but in case if your product is not suitable for that particular segment then therell be no use of having all those. You cannot have a cheap clothing shop in a high end mall so the retailer should first be fully aware about the clients. Say for an example if you have a product which is targeted at the lower middle class you cannot really open a store in a really posh area, not that people won't come to your store but you won't have your target audience coming to your store as the lower middle class people would generally avoid going to a posh location to shop.

2. What is trading area overlap? Are there any advantages to a chain retailers having some overlap among its various stores? Why or why not? A trading area is a geographic area containing the customers of a particular firm or group of firms for specific goods or services. Similarly, a trading area overlap is the area where the same customers are served by two firms. In other words, it is an intersection, cross between two companies locations where both serve the same customers. In having the overlap of its stores or outlets, it has advantages, I. II. III. IV. Its regular consumers will not go to other stores that are nearby the stores. The total profit of the company will increase. Increase in the overall customers in both outlets. According to book, total revised sales of existing store + sales of new store total previous sales of existing store, from this formula the profit will increase in its overall outlets. V. Increase in market share of the goods or service. Example of trade overlap: A retail store of Nepal that is, bhat bhateni of naxal of Kathmandu and its trading area was up to Chakrapath or above it but the retail open its oulet in Chakrapath. Now Bhat Bhateni has all of its customers in the area and the profit too. 3. Use Huffs Law to compute the probability of consumers traveling from their homes to each of three shopping areas: square footage of selling space Location1, 5,000; Location 2, 8,000; Location 3, 10,000; travel time to location 1, 12 minutes; to Location 2, 18 minutes; to Location 3, 25 minutes; effect of travel time on shopping trip 2. Explain your answer. Given: Square footage of selling space location 1 (S1) = 5000 Square footage of selling space location 2 (S2) = 8000
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Square footage of selling space location 3 (S3) = 10000 Travel time to location 1 (T1) = 12 min Travel time to location 2 (T2) = 18 min Travel time to location 3 (T3) = 25 min Effect of travel time ( = 2 No of shopping location (n) = 3 To find, the probability of consumers travelling from their home to 3 different locations i.e. P1, P2 and P3 We have Huffs Law: Pj =

P1 = (5000/122) / [(5000/122) + (8000/182) + (10000/252)] = 46.04% P2 = (8000/182) / [(5000/122) + (8000/182) + (10000/252)] = 32.74% P3 = (10000/252) / [(5000/122) + (8000/182) + (10000/252)] = 21.22% Hence, if 100 people live 12 min from location 1, 46 people will shop there. Similarly, if 100 people live 18 min from location 2, 33 people will shop there, And, if 100 people live 18 min from location 3, 21 people will shop there.

4. If a retail area is acknowledged to be saturated, what does that signify for existing retailers? For prospective retailers considering the area? A saturated trading area has the proper amount of stores to satisfy the needs of its population for a specific good or service and to enable retailers to prosper. To the above question, if the existing

retail area have saturated area then its doing profitable business of the flow of people is good and it can satisfy the people needs and wants in the particulars goods and service. For example, a book supplying area that has saturating trading area then it can supply various books to its customers according to their needs. For the new comers for the existing saturated area the retailer should take into account that if I come to this place will my business do well or the profit will be enough to handle my business. Because an addition of extra store in the place will distribute the profit and some of the store has to cut and gives it to the entrance one. Other thing that might happen is that many stores might go into loss and have to leave the business. Or the new one which is going to start a business in this might not be in stable, they might get into loss. So before thinking of starting a business in saturated area you will have to take into account that will I be in profit in long run or not.

CH 10: SITE SELECTION

From the retailers perspective, compare the advantages of locating in unplanned business districts versus planned shopping centers. Unplanned Business District Retailers can own more than one similar stores in this area Have limited flexibility Have higher flexibility Sharing of utilities bills which might No sharing of utilities bills which might make costly to the retailers like electricity, water, advertisements, etc make costly to the retailers like electricity, water, advertisements, etc so that cost is reduced Planned Shopping Centers Only one store is open in this site.

 Higher thefts rates. Guards are kept for night duty.

Low thefts rates. Guards are kept for night duty.

No need of membership in a merchants association which may be of less or of no value. People do not value such store much so more better advertising as well as strategy mix is required

Need of membership in a merchants association which may be of less or of no value People enjoy shopping in such centre so less cost is incurred in advertising and its strategy mix

Differentiate among the central business district, the secondary business district, the neighborhood business district, and the string. Central Business District It is the hub of retailing in a city and synonymous with term downtown Secondary Business District Is a unplanned shopping area in a city or town that is unusually bounded by the intersection of two major streets Neighborhood Business District It is unplanned shopping area that appears to the convenience shopping and service needs of a single residential area Is unplanned shopping area comparing a group of retail stores, often with similar or compatible product lines, located along a street or highway Exists where Exists in the Exists on the Exists in less String

there is a greatest density of office building and stores Located in major and big trading areas of city Size of store is big

intersection of two major cities

major streets of its residential area

populated area

Located in small trading area

Located in lesser trading area

Located in least or no trading area

Size of store is comparably small than CBD but big than Neighborhood and String

Size of store is small than CBD and SBD

Size of store may be bigger or smaller as per investment

Provide varieties of goods and services with varieties of prices

Provide varieties of goods and services but sells higher proportion of convenience oriented items with a little higher prices

Provide limited varieties of goods and services with high prices

Provide least variety of goods and services with very high price

Have higher access to public transportation and high level of pedestrian traffic

Have less access to public transportation and low pedestrian traffic than CBD Low rent and taxes than CBD and little higher

Have lesser access to public transportation than CBD and SBD Have lower taxes and rent than CBD and SBD

Have least access to public transportation

Have very high rent and taxes and less advertising cost

Have very low rent and taxes but highest ad costs

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ad cost

but high ad cost

Explain why a one-hundred percent location for Pizza Hut may not be a one-hundred percent location for a local pizza restaurant. Every retailer stores have its own formula of evaluating the location where they have to keep their outlets. Some might give focus on parking area, traffic, flow of people, etc. at here the location for pizza hut optimum site is different than the local pizza restaurant. It is because pizza hut is a multinational company which sales pizza to every type of customers. The location for pizza hut might be on the high street areas where flow of people might be high, have to have lots of parking area, etc. But for local pizza restaurant, they might focus on the people nearby and stop and have pizza, where they might need less parking area, high transportation availability and other things.

How do the parking needs for a dentist, a TV repair store, and a shoe store differ? Dentist: Required high area space because the people who come to dentist have at least motor bike / scooter / 2 wheeled vehicles and some might have car or 4 wheeler vehicles. TV repair store: The parking area need for TV repair might be moderate or no parking area. The one who have facilities to repair in home doesnt need parking area and the one who have to fit the television in the office need small area for parking. Shoe store: required moderate area for parking because all type of people comes to buy the shoes, from the person who have cars to the person who comes in public bus. So, parking areas needs for a dentist, a TV repair store and a shoe store are different.

Ch 11 Retail Organization and Human Resource Management

Cite at least five objectives a small independent furniture retailer should set when setting up its organization structure. The 5 objectives a small independent furniture retailer should set when setting up its organization structure are: a. Outlining specific tasks to be performed in a distribution channel Specific tasks include buying, shipping, receiving and checking, pricing, and marking merchandise ;inventory control ;display preparation; facilities maintenance; research; customer contact and follow-up and a lot more. b. Dividing tasks among channel members and customers- These tasks may be divided among retailers, manufacturers, wholesalers, specialists and customers. c. Grouping tasks into jobs--Tasks are next grouped into jobs, such as sales personnel, cashiers, inventory personnel, and management. d. Classifying jobs-Then jobs are arranged by functional, product, geographical or combination classification.

Describe the greatest similarities and differences in the organization structures of small independents, chain retailers, and diversified retailers. Small independents use uncomplicated arrangements with only two or three levels of personnel, and the owner-manager personally runs the firm and oversees workers. There are few employees, little specialization and no branch units. Many tasks are performed relative to the number of workers. Chain retailers mostly use a version of the equal store organization. Unlike in small independents, there are many functional divisions, such as sales promotion, merchandise management, distribution, operations, personnel and information systems. But the overall authority is centralized. Store managers have selling responsibility. Many operations are standardized. An elaborate control system keeps management informed. A diversified retailer is a multiple firm operating under central ownership .Like other chains, a diversified retailer operates multiple stores; unlike typical chains, a diversified firm is involved with different types of retail operations. Interpersonal control is needed with operating procedures and goals clearly communicated. Resources must be divided among different divisions.

Present a plan for the ongoing training of both existing lower-level and middlemanagement employees without making it seem punitive. In order to provide training to both existing lower-level and middle level management employees without making it seem punitive, firstly they should be thanked through speech and personally if possible before the start of the training and tell them that they all are equally responsible to bring the organization to the current position. Next they will be empowered i.e. self responsibility for the job will be given to all the employees so that they feel that they are the part of the organization. And lastly, they will be provided training showing that they are lacking these sort of skills during there empowerment and this will make them feel good and make them think that they are being noticed and cared by the organization.

How would you supervise and motivate a 19-year-old super-market cashier? A 65-year-old cashier? 19 years old: The best way of motivating the young people is increasing work responsibility, job rotation, job enlargement etc. At this age they want to do everything they can and want to try anything. But we should supervise them and suggest them every time. Other aspect can be giving them holiday package. 65 years old: The best way of motivating old people in the organization is that giving more decision making power, empowerment in the job they do and have authority in the resources that they use. Other aspect can be having great respect to elderly employee in the organization. And finally increasing their salary and giving them pension fun to them.

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Chapter 14: Developing Merchandise

Q. What are the advantages and disadvantages of a centralized buying organization? Answer:

Advantages of a centralized buying organization

There is integration of effort

Disadvantages of a centralized buying organization

Inflexibility

Strict control on the merchandise Consistent image

Time delays Poor morale at local stores

Proximity to the top management

Excessive uniformity

Staff support

Volume discounts

Q. Under what circumstances could a retailer carry a wide range of merchandise quality without hurting its image? When should the quality of merchandise carried be quite narrow? Answer: The merchandise that wants to keep wide range of merchandise quality without hurting its image, when it wants to make the customers more satisfaction and provide them full range of choice in the product. The merchandise that wants to keep narrow will focus on the special product and specific one only, for which they want to have a specialist image in the customers and make differentiate with the competitors.

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Q. What are the trades-offs in a retailers deciding how much to emphasize private brands rather than manufacturer brands? Answer: The trade-offs in a retailers decision to emphasize private brands rather than manufacturer brands could be: Line up suppliers Arrange for distribution and warehousing Arrange sponsors and ads Create displays Absorb losses from unsold items.

Q. What is the basic premise of category management? Why do you think that supermarkets have been at the forefront of the movement to use category management? Answer: The basic premise of category management is that a retailer must empower specific personnel to be responsible for the financial performance of each product category. Category is keeping same type of goods or product in a space where the customer can easily get all the goods or product they wants. Supermarket is forefront to keep its product in category because there are hundreds and thousands goods that need to be kept in selves so it will be easy for the supermarket to keep its product and it will be easy for customers to get its products.

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CHAPTER 15: IMPLEMENTING MERCHANDISE PLANS

Cite the advantages and disadvantages associated with these merchandise sources for your regular supermarket. How would your answer differ for a local deli? a. Company-owned b. Outside, regularly used Outside, new a. Company-owned: Advantages: Low merchandise costs and can make more profit High quality of supplies

Disadvantages: Cannot acclaim insurance as they have to bear the loss themselves Takes time to build good image in the public

b. Outside, regularly used Advantages: Can have merchandise on credit Can acclaim insurance if any losses occur

Disadvantages: Is little costly than owning self They may demand higher price due to their bargaining power c. Outside, new Advantages: Can provide merchandise in lower prices to attract retailers Retailers have bargaining power on them

Disadvantages:
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Takes time to build good image in the public Quality of the merchandise may or may not be good

Under what circumstances should a retailer try to charge slotting allowances? How may this strategy backfire? A one-time payment by a manufacturer or vendor to a retailer in order to ensure shelf space in the retailer's stores or in its warehouses. A retailer should try to charge slotting allowances when the product is completely new to the market or for new higher priced product that are risky for the retailer to carry. For retailers they complain that if they do not charge up front as a means of self insurance, they end up holding the bag-losing money on products their customers dont want when they could have stocked the same space with something else their customer does want. This is why the strategy may backfire.

What are the benefits of quick response inventory planning? What do you think are the risks? The benefits of quick response inventory planning are: 1. It reduces inventory cost since it minimizes the space required for storage (retailers). 2. Suppliers/Manufacturers can gain an insight into the sales of the product. It will benefit the supplier/manufacturer by increasing or reducing the amount of product being produced and subsequently the product returns/obsolescence. The risk can be 1. If there is no good relationship with supplier or shipments then the inventory may not be refilled on time 2. There might be strike or some other factor that may delay the fulfillment of the store 3. Sometimes damaged pieces might be put on sale without knowing that there is damage 4. Sometimes mistakes may happen in advanced ship notices.

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Present a seven item checklist for a retailer to use with its reverse logistics. Under what conditions are customer returns accepted by the retailer and by the manufacturer? What is the customer refund policy? Is there a fee for returning an opened package? What party is responsible for shipping a returned product to the manufacturer? What customer documentation is needed to prove the date of purchase and the price paid? How are customer repairs handled? To what extent are employees empowered to process customer returns?

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CHAPTER 16: FINANCIAL MERCHANDISE MANAGEMENT

Which retailers can best use perpetual inventory system based on the cost method? Explain your answer. For my opinion the retailers who have higher assortments of goods and high turnover of the inventory and with low average prices can best use perpetual inventory system. The retailers having departmental stores or the retailers that sell food items, clothing, furniture, etc will be more benefitted by using perpetual inventory system. As they have to sell a lot of varieties of products and this might confuse them or make some mistakes in calculation of sales or cost. So to prevent it if they use perpetual inventory system i.e. book keeping, then it would be easier for them to calculate their sales and their bearing costs. Also this will help them out to find out the stock shortages due to breakage or theft from customers or the employees so that they could be aware and implement some technologies to stop stock shortages. And also they dont need to spend their valuable time on counting their stocks to find out the number of sales they made as it will be already recorded on their record. Hence, perpetual inventory system would be beneficial to the retailers that have high assortments of goods and high inventory turnover.

The FIFO method seems more logical than the LIFO methods, because it assumes the first merchandise purchased is the first merchandise sold. So, why do more retailers use LIFO? LIFO accounting assumes that the last unit entering inventory is the first unit sold or used. Conversely, FIFO assumes that the first item entering inventory is the first unit sold or used. LIFO method tends to be more common in industries where inventories are large and cost tends to increase each year. Because LIFO generally results in higher cost of goods sold and therefore lowers taxes.
A retailer has a beginning monthly inventory valued at $60,000 at retail and $35,000 at cost. Net purchases during the month are $140,000 at retail and $70,000 at cost. Transportation charges are $7,000. Sales are at $150,000. Markdowns and discounts equal $20,000. A physical inventory at the end of the month shows merchandise valued at $10,000 (at retail) on hand. Compute the following: a. b. c. d. e. f. Given, Total merchandise available for sale at cost and at retail Cost complement Ending retail book value of inventory Stock shortages Adjusted ending retail book value Gross profit

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Beginning monthly inventory (at retail) Beginning monthly inventory (at cost) Net purchase during the month (at retail) Net purchase during the month (at cost) Transportation charges Sales Markdowns and discounts Physical inventory at the end of the month (at retail) A. Total merchandise available for sale: At cost $35000 70000 7000 $112000

= $600000 = $35000 = $140000 = $70000 = $7000 = $150000 = $20000 = $10000

Beginning inventory Net purchases Additional markups Transportation charges Total merchandise available for sale

At retail $60000 140000 $200000

B. Cost compliment: Cost compliment = Total cost valuation / Total retail valuation = 112000/ 200000 = 0.56 or 56% C. Ending retail book value of inventory: Merchandise available for sale Less: Deductions:Sales Markdowns and discounts Total deductions

$200000

150000 20000 170000 $30000

Ending retail book value of inventory D. Stock shortages: Ending retail book value of inventory Physical inventory (at retail) Stock shortages (at retail)

$30000 10000 $20000

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E. Adjusted ending retail book value: Adjusted ending retail book value = Physical inventory at retail = $10000 F. Gross Profit: Sales Less: Cost of goods sold Total merchandise available for sale (at cost) Adjusted ending inventory (at cost) Cost of goods sold Gross Profit 112000 10000*0.56 106400 $43600 $150000

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