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Manageme
nt
ISB&M
Retail Management
Wholesal
er
Retail
er
Final
consum
er
Brand A
customers
Wholesaler
Retailer
Wholesaler
Brand B
customers
Brand C
customers
Brand D
customers
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Retail Management
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Retail Management
Retailer-Supplier Relationship
Retailers are part of distribution channel, so manufacturers (wholesalers) are concerned
about:
Caliber of displays
Customer service
Store hours
Retailers reliability as business partners
Retailers are also major customers of goods & services for resale, store fixtures,
computers, management consulting ,& insurance.
Retailers and supplier have different priorities on:
Control over distribution channel
Profit allocation
No. of competing retailers handling suppliers products
Product display
Promotion support
Payment terms
Operating flexibility
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Retail Management
Retailer-Supplier Relationship
contd..
Channel Relations
Exclusive Distribution
Suppliers make agreements with one or a few retailers that designates them the only one
to carry certain brands/products in a specific geographic region.
Both parties work together to maintain an image, assign self space, allot profits & costs, &
advertise.
This is the smoothest channel relationship.
Intensive Distribution
Suppliers sell through as many retailers as possible.
This maximizes suppliers sales & lets retailers offer many brands & product versions.
Retailers may assign little self space to specific brands, set high price on them, & not
advertise them.
This is most volatile channel relationship.
Selective Distribution
Suppliers sell through a moderate no. of retailers carrying some competing brands.
This combines aspects of Exclusive & Intensive Distribution
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Retail Management
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Retail Management
Key to success
Growth-oriented objectives
Appeal to prime market
Distinctive company image
Focus
Strong customer service for its retail category
Multiple points of contact
Employee relations
Innovation
Commitment to technology
Community involvement
Constantly monitoring performance
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Retail Management
Retailing
concept
Retail Strategy
Value- driven
Goal
orientation
Customer orientation - The retailer determines the attributes & needs of its customers &
endeavors (take action) to satisfy these needs.
Coordinated effort - The retailers integrates all plans & activities to maximize efficiency.
Value-driven - The retailer offers good value to the customers, whether it be upscale
(expensive) or discount i.e., appropriate pricing for goods & customer service.
Goal oriented - The retailer sets goal & uses its strategy to attain them.
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Retail Management
Ownership
Independent
Chain
Franchise
Leased department
Vertical marketing
system
Consumer
cooperative
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Store-based
retail strategy
mix
Nonstorebased retail
strategy mix &
nontraditional
retailing
Convenience store
Conventional
Direct marketing
supermarket
Direct selling
Food-based
Vending machine
supermarket
World wide web
Combination store
(WWW)
Box (limited line) store
Warehouse store
Specialty store
Variety store
Traditional department
store
Full-line department
store
Off-price chain
Factory outlet
Membership club
Flea (louse) market
Retail Management
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Retail Management
Independent Retailer
An independent retailer owns one retail unit.
Advantages
There is flexibility in choosing retail formats, location, assortment (variety), prices, hours etc.,
& devising strategy based on the target customers.
Investment costs for leases, fixtures, workers, & merchandise can be brought down. There is no
duplication of stock or personnel function. Responsibilities are clearly delineated (defined)
within the store.
Independents frequently act as specialist in a niche of the particular goods/services category.
They are then more efficient & can lure (attract) shoppers interested in specialized retailers.
Independents exert strong control over their strategies, & the owner-operator is typically on
the premises. Decision making is centralized & layers of management personnel are minimized.
There are certain image attached to independents, particularly small ones, that chains cannot
readily capture.
Independents can easily sustain consistency in their efforts because only one store is operated.
Independents have Independence. No meetings, union, stockholders & labor unrest etc.
Entrepreneurial drive.
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Retail Management
Independent Retailer
Disadvantages
Less bargaining power with the suppliers as they buy less quantity.
Cannot gain economies of scale (i.e. cost advantages that a business obtains due to expansion) in
buying & maintaining inventory. Transportation, ordering, & handling costs are high.
Operations are labor intensive.
They are limited to certain media for advt. because of financial constraints.
Family-run independents is overdependence on the owner. It is difficult to keep it up &
running.
Limited time allotted to long-run planning, since owner is intimately involved in day-to day
operations.
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Retail Management
Chain Retailer
Chain retailer operates multiple outlets (store units) under common ownership. It
usually involves in some level of centralized purchasing & decision making.
Advantages
Many chains have bargaining power due to their purchase volume. They receive new items
when introduced, have orders promptly filled, get sales support, & obtain volume discounts.
Chains achieve cost efficiencies when they buy directly from the manufacturers & in large
volumes, ship and store goods, & attend trade shows sponsored by the suppliers to learn about
new offerings. They can sometimes bypass wholesalers.
Efficiency is gained by sharing warehouse facilities; purchasing standardized store fixtures;
centralized buying & decision making etc. Headquarters have broad authority for personnel
policies & for buying, pricing, & advt. decisions.
Computerized ordering merchandise, inventory, forecasting, sales, & bookkeeping. This reduces
overall costs.
Take advantage of variety of media from print to electronic.
Detailed & clear responsibility for employees with available substitute incase any employee is
retiring or quitting.
Spend considerable time in strategic planning. Opportunity & threat are closely monitored.
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Retail Management
Chain Retailer
Disadvantages
Flexibility may be limited. Consistent strategies on pricing, promotions, & product variety must
be followed throughout all units which may be difficult to adapt to local diverse market.
Investment is high due to infrastructure & store as multiple store has to be stocked.
Managerial control is complex due to geographically dispersed branches.
Limited independence to the personnel.
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Retail Management
Franchising
Franchising involves a contractual arrangement between a franchisor (a
manufacturer, wholesaler, or service sponsor) & a retail franchisee, which allows the
franchisee to conduct business under a established name & according to a given
pattern of business.
The franchisee pays an initial fees & a monthly %age of the gross sales in exchange
for the rights to sell goods & services in an area.
A franchisee operates autonomously in setting store hours, chooses a location, &
determines facilities & displays.
Three structural arrangements dominate retail franchising
Manufacturer-retailer A manufacturer gives independent franchisees the right to sell goods &
related services through licensing agreement. (Eg., Auto/truck dealers like GM, Petroleum
products dealers like IOC).
Wholesaler-retailer
Voluntary - A wholesaler sets up a franchise system & grants franchises to individual
retailer. (Eg., Auto accessories stores, Consumer electronics stores).
Cooperative A group of retailers sets up a franchise system & shares the ownership &
operations of a wholesaling organization. (Eg., Food stores).
Service sponsor-retailer A service firm licenses individual retailers so they can offer specific
service packages to customers. (Eg., McDolands).
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Retail Management
Franchising contd..
Advantages of Franchisees
They own a retail enterprise with a relatively small capital.
They acquire well-known names & goods/services lines.
Standard operating procedures & management skills may be taught to them.
Cooperative marketing efforts (like national advt.) are facilitated.
They obtain exclusive selling rights for specified geographical territories.
Their purchases may be less costly per unit due to the volume of the overall franchise.
Disadvantages of Franchisees
Oversaturation could occur if too many franchisees are there in one geographical area.
Due to overzealous selling by some franchisors, franchisees income potential, required
managerial ability, & investment may be incorrectly stated.
They may be locked into contracts requiring purchases from franchisors or certain vendors.
Cancellation clauses may give franchisors the right to void agreement if provisions are not
satisfied.
In some industries, franchise agreements are of short duration.
Royalties are often a %age of gross sales, regardless of franchisee profits.
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Retail Management
Franchising contd..
Advantages of Franchisors
A national & global presence is developed more quickly & with less franchisor investment.
Franchisee qualification for ownership are set & enforced.
Agreement require franchisees to abide by stringent operating rules set by franchisors.
Money is obtained when goods are delivered rather than when goods are sold.
Because franchisees are owners & not employees, they have greater initiative to work hard.
Even after franchisees have paid for their outlets, franchisors receive royalties & may sell
products to the individual proprietors.
Disadvantages of Franchisors
Franchisees harm the overall reputation if they do not adhere to company standards.
Lack of uniformity among outlets adversely affects customer loyalty.
Intra-franchise competition is not desirable.
The resale value of individual units is injured if franchisees perform poorly.
Ineffective franchised units directly injure franchisors profitability.
Franchisees, in greater number, are seeking to limit franchisors rules & regulations.
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Retail Management
Leased Department
A leased department is a department in a retail store usually a department,
discount, or specialty store that is rented to outside party.
The leased department proprietor is responsible for all aspects of its business &
normally pays a %age of sales as rent.
The store sets operating restrictions for the leased department to ensure overall
consistency & coordination.
Advantages (from the stores prespective)
The market is enlarged by providing one-stop customer shopping.
Personnel management, merchandise displays, & reordering items are undertaken by lessees.
Regular store personnel do not have to be involved.
Leased department operators pay for some expenses, thus reducing store costs.
A %age of revenue is received regularly.
ISB&M
Retail Management
Leased Department
Advantages for Leased department operators
Stores are known, have steady customers, & generate immediate sales for leased departments.
Some costs are reduced through shared facilities like security equipment & display windows.
Their image is enhanced by the relationships with popular stores.
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Retail Management
Type of channel
Independent system
Partially integrated
system
Manufacturers & retailers are
large
Selective or exclusive distribution
Unit sales are moderate
Company resources are high
Greater channel control is
desired
Existing wholesalers are too
expensive or unavailable
Fully integrated
system
Firm has total control over its
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strategy
Channel Functions
Manufacturing
Ownership
Independent
manufacturer
Wholesaling
Independent wholesaler
Retailing
Independent retailer
Manufacturing
Wholesaling
Retailing
Manufacturing
Consumer Cooperative
A consumer cooperative is a retail firm owned by its customer members.
A group of customers invests, elects officers, manages operations & share profits.
They account for tiny piece of retail sales.
Cooperatives are formed because they think they can do retailing function,
traditional retailers are inadequate & prices are high.
They have not grown because consumer initiative is required, expertise may be
lacking, expectations have frequently not been met, & boredom occurs.
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Jaipur
Pune
Bhopal
Mumbai
Bangalo
re
Chennai
Delhi
Bhubaneshwar
Hyderabad
Indore
Kolkata
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Chandigarh
Nagpur
Gurgaon
Noida
Udaipur
Retail Management
Retail Merchandising
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Retail Management
What is Merchandising?
Merchandising is planning, buying & selling of merchandise (product).
The American Marketing Association defined merchandising as the planning involved in
marketing the right merchandise at the right place at the right time in the right quantity
at the right price.
Merchandising can be termed as the analysis, planning, acquisition, handling & control of
the merchandise investments of a retail operation.
Factors affecting the merchandising function
Merchandising
function
Merchandising
to be carried
Organization
structure
Size of
organization
Types of stores
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Retail Management
Merchandise Planning
Merchandise planning can be defined as the planning & control of the merchandise
inventory of the retail firm, in a manner which balances between the expectations of the
target customers & the strategy of the firm.
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Merchandise
Planning
Store Operations
Space planning
Communication about new
products & their features
Marketing
New product introductions
Developing advertisements
Finance
Payments to suppliers
Profitability measurements
Retail Management
Sales Plan
Merchandise
Budget
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Company
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Retail Management
Month
%age
increase
Feb
12%
April
25%
43,750
June
21%
42,350
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Retail Management
Value of inventory
Actual sales
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The lower limit of the range width is often called aesthetic minimum
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Branding
Brand
The American Marketing Association defined a
brand as a name, term, design, symbol or
a
combination of them, intended to identify
Branding existed from the time man felt the need to differentiate his products from that
being
by others.
theoffered
goods
or services of one seller or group
Branding gradually became a guarantee of the source of the product & ultimately its use
ofa form
sellers
& to against
differentiate
them from
as
of legal protection
copying grew.
With the development of shops, shopkeepers hung pictures above their shops indicating
those
of the competitors.
the types of goods they sold.
With industrial revolution mass production came into existence but the distance between
the manufacturers & customers increased.
This eventually led to the evolution of the role of the brands as tools by which consumers
identified the products.
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Retail Management
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Retail Management
Support Functions
Supplie
rs
Third
Party
Logistics
Retail
Operatio
ns
Custome
r Mgmt.
Systems
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Retail Management
Custome
rs
Private Label
When the retailer decides to sell products or a line of merchandise which is owned,
controlled, merchandised & sold by the retailer in his own store/chain of stores, he is said to
be Selling Own Label / Brand or Private Label merchandise.
The Private Label Marketing Association defines store products as all merchandise sold
under a retail stores private label. That label can be stores name or a name created
exclusively by that store. In some cases, a store may belong to a wholesale buying group
that owns labels, which are available to the members of the group. These whole-sale owned
labels are referred to as controlled labels
A private label can be classified as:
Store Brand which carries the retailers name, such as Westside, Food World, Big Bazaar
etc.
An Umbrella Brand where a common brand name is used across multiple categories
example Splash (Lifestyle), Bare (Pantaloon) etc.
Individual Brands where specific brand names are created for specific market segments
and/or categories.
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Retail Management
Private label goods become more successful where the no. of competing products is
lower.
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Retail Management
Make or
Buy
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Placing
the
order &
Allocati
ng the
goods
Marketi
ng
Performanc
e
Measureme
nt
Retail Management
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Category Management
- A Method of Merchandise Management
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Retail Management
Category Management
Category Management can be defined as the distributor/supplier process of managing
categories as SBUs, producing enhanced business results by focusing on delivering customer
value.
A category is an assortment of items that a customer sees as reasonable substitutes
of each other.
A category management concept is a focus on a better understanding of consumer
needs as the basis for retailers & suppliers strategies, goal, & work processes.
The need to reduce costs, control inventory levels & replenish (refill) stock
efficiently led to the concept of Efficient Consumer Response (ECR).
Category management provides renewed opportunities for meeting consumer needs
& at the same time, for achieving competitive advantage as well as lower costs
through greater work process efficiencies.
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Retail Management
Retail Management
Trading
Partner
Relationship
s
Strategy
Business
Process
Organizatio
nal
Capabilities
Information
Technology
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Market Share
Winners
Questionable
Opportunities
Market Growth
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The Retail
Marketing
Mix
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Retail Management
Pricing
Customer
Service
Retail
Store
Image
Product /
Merchandise
features
Promotion
Brand
Associations
Presentation
Place /
Location
Shopping
Experience
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Why IT in Retail?
Retail Management
Application of IT
Electronic Data Interchange (EDI)
Database Management, Data Warehousing, Data Mining
Radio Frequency Identification (RFID)
Transaction Processing System (TPS)
Decision Support System (DSS)
Enterprise Resource Planning (ERP)
Intranet & Internet
E-Commerce or E-Trailing
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Retail Management
SCM in Retail
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Retail Management
Supplier
Manufacturer warehouse
Manufacturer
Physical Flow
Finance Flow
Retailer
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Retailer warehouse
Retail Management
Warehouse
Design &
Operations
Information
Systems
Network
Strategy
STRUCTURAL
Transportati
on
Managemen
t
FUNCTIONAL
Policies &
Procedures
Materials
Manageme
nt
Facilities &
Equipment
Organization
& Change
Managemen
t
IMPLEMENTATION
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Retail Management
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Retailer
traditionally
provides
CRM benefits
customer by
enabling
Product choice
Range selection
Tailored range
Access
Channel choice
Consistent
experience
Support
Information
Enhanced service
Individual
treatment
Customer service
1:1 relationship
Value
Scale efficiencies
Customer defined
value
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Retail Management
Value per
customer
No. of
customers
In-store PoS
Advertisement
Targeted Direct
Mail
Merchandising
Added value
services
Lower value
segment
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Grow able
Segment
Retail Management
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Parking
Location
Building
Arch.
Safety
Location
Access
Store Design
Store
Theme
Target
Customer
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Merchandis
e Mix
Retail Management
Retail Management
Free-flow Layout
Retail Management
Grid Layout
Retail Management
Racetrack/Loop Layout
A major customer aisle begins at the entrance, loops through the store
usually in the shape of a circle, square, or rectangleand then returns the
customer to the front of the store.
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Retail Management
Spine Layout
A single main aisle runs from the front to the back of the store,
transporting customers in both directions, and where on either side of this
spine, merchandise departments using either a free-flow or grid pattern
branch off toward the back side walls.
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Retail Management
Visual Merchandising
An orderly, systematic, logical, & intelligent way of putting stock on the floor.
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Retail Management
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Retail Management
Thank you