Professional Documents
Culture Documents
RETAIL MANAGEMENT by Anant Dhuri MMS Marketing Notes PDF
RETAIL MANAGEMENT by Anant Dhuri MMS Marketing Notes PDF
RETAIL MANAGEMENT
100 Marks
Course Content
1. Place of Retailing in the Marketing Mix.
2. Trends in retailing
3. Retail Economics
4. Retail Merchandising and Shop Displays
5. Retail Advertising and Sales Promotions
6. Managing People at Work - Recruitment and Motivation
7. Communication and Customer Relations.
8. Inventory control and Financial Management
9. Retail Strategies
10. Retail Marketing
11. Retail Management Information Systems :- Use of New Technology
12. Super Market / Departmental Stores /Chain store Management
13. Comparative retailing across the World.
14. Role of personal selling in retailing.
15. Store layout.
16. Relationship Marketing
17. Supply Chain Management
18. Retail Research including Retail Audits and Consumer Research at the point of purchase
19. On-line retailing
20. Trends in retailing should include the Indian as well as the international context.
Reference Text:
1
RETAIL MANAGEMENT Anant Dhuri
Chapter 1
PLACE OF RETAILING IN THE MARKETING MIX
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique
or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.[1] Retailing may include
subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys
goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then
sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of
the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution
strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals,
such as a public utility, like electric power.
Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may
be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation.
Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are
forms of non-shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and
clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just
looking, not buying) and browsing and does not always result in a purchase.
What is Retailing?
• Retailing – a set of business activities that adds value to the products and services sold to consumers for their
personal or family use.
• A retailer is a business that sells products and/or services to consumers for personal or family use.
Examples:
• Retailers:
-Sears, Holiday Inn, McDonalds, Amazon.com, Jiffy Lube, AMC Theaters, American Eagle Outfitter, FAO Schwartz,
Kroger
• Firms that are retailers and wholesalers that sell to other business as well as consumers:
-Office Depot, The Home Depot, United Airlines, Bank of America, Sams Clubs
2
RETAIL MANAGEMENT Anant Dhuri
3
RETAIL MANAGEMENT Anant Dhuri
Chapter 2
TRENDS IN RETAILING
2) Discount stores –
tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of
merchandise at affordable and cut-rate prices. Normally retailers sell less fashion-oriented brands.
4) Warehouse stores –
Warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge
a membership fee;
5) Variety stores –
these offer extremely low-cost goods, with limited selection;
6) Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals).
7) Mom-And-Pop :
is a retail outlet that is owned and operated by individuals. The range of products are very selective and few in
numbers. These stores are seen in local community often are family-run businesses. The square feet area of the
store depends on the store holder.
8) Specialty stores:
A typical speciality store gives attention to a particular category and provides high level of service to the customers. A
pet store that specializes in selling dog food would be regarded as a specialty store. However, branded stores also
come under this format. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap
products in the respective stores.
9) General store –
Usually a rural store that supplies the main needs for the local community;
4
RETAIL MANAGEMENT Anant Dhuri
11) Hypermarkets:
provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively
less than other retail formats.
12) Supermarkets:
is a self service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or
an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 square feet (3,700
m2). Example: SPAR supermarket.
13) Malls:
has a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof.
15) E-tailers:
The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep.
Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives
the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to
travel to retail stores and are interested in home shopping. However it is important for the customer to be wary about
defective products and non-secure credit card transaction. Example: Amazon, Pennyful and Ebay.
Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they
target. Other types of retail store include:
1) Automated Retail stores are self-service, robotic kiosks located in airports, malls and grocery stores. The stores
accept credit cards and are usually open 24/7. Examples include ZoomShops and Redbox.
2) Big-box stores encompass larger department, discount, general merchandise, and warehouse stores.
3) Convenience store - a small store often with extended hours, stocking every day or roadside items;
4) General store - a store which sells most goods needed, typically in a rural area;
Retailers can opt for a format as each provides different retail mix to its customers based on their customer
demographics, lifestyle and purchase behaviour. A good format will lend a hand to display products well and entice the
target customers to spawn sales.
Retail pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage)
to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount
suggested by the manufacturer and usually printed on the product by the manufacturer. In Western countries, retail
prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels.
Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent
upon who the customer is. For example, a customer may have to pay more if the seller determines that he or she is
willing and/or able to. Another example would be the practice of discounting for youths, students, or senior citizens.
Transfer mechanism
There are several ways in which consumers can receive goods from a retailer:
• Counter service, where goods are out of reach of buyers and must be obtained from the seller. This type of retail is
common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. It was common before
the 1900s in the United States and is more common in certain countries like India.[which?]
• Delivery, where goods are shipped directly to consumer's homes or workplaces. Mail order from a printed catalog
was invented in 1744 and was common in the late 19th and early 20th centuries. Ordering by telephone is now
common, either from a catalog, newspaper, television advertisement or a local restaurant menu, for immediate
service (especially for pizza delivery). Direct marketing, including telemarketing and television shopping channels, are
also used to generate telephone orders. started gaining significant market share in developed countries in the 2000s.
5
RETAIL MANAGEMENT Anant Dhuri
• Door-to-door sales, where the salesperson sometimes travels with the goods for sale.
• Self-service, where goods may be handled and examined prior to purchase
Challenges
To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following
hurdles:
Regulatory barriers including
- Restrictions on real estate purchases, especially as imposed by local governments and against "big-box" chain
retailers;
- Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and
percentage share of voting stock (e.g., common stock) purchased;
Unfavorable taxation structures, especially those designed to penalize or keep out "big box" retailers (see
"Regulatory" above);
Absence of developed supply chain and integrated IT management;
High competitiveness among existing market participants and resulting low profit margins, caused in part by
- Constant advances in product design resulting in constant threat of product obsolescence and price declines for
existing inventory; and
Lack of properly educated and/or trained work force, often including management, caused in part by
- Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges.
Sales techniques
Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always
trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design
custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend
millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products
change, so will a retail landscape. Retailers can also use facing techniques to create the look of a perfectly stocked
store, even when it is not. A destination store is one that customers will initiate a trip specifically to visit, sometimes
over a large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot traffic, which is
capitalized upon by smaller retailers.
Customer service
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your
retail establishment." It is important for a sales associate to greet the customer and make himself available to help the
customer find whatever he needs. When a customer enters the store, it is important that the sales associate does
everything in his power to make the customer feel welcomed, important, and make sure he leave the store satisfied.
Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's
satisfaction.
MAJOR TRENDS
6
RETAIL MANAGEMENT Anant Dhuri
Chapter 3
RETAIL ECONOMICS
Retail economics
Much has been made of the recent changes in the competitive and economic landscape for retailers. Consolidation,
increasing competition, market saturation, increasing customer demands and accelerating product cycles are among the
things retailers now have to navigate to remain successful. Despite today‘s complexities however, the fundamentals of
retail economics remain the same. In fact, the most basic principles of retail economics have not changed since the
th
Venetian merchants of the 13 century. An admittedly simplified, but potent view of retail economics holds as true today
as it did in ancient Venice:
• Develop a concept that appeals to customers such that goods can be bought for less and sold for more
• Add locations
• Cover overhead
Accepting this basic view of retail economics, the primary task for a successful retailer is to get the ―economics of the
box‖ (store) working. If the retail concept is working, each store produces acceptable gross margins on product sold.
These margins cover the cost of store labor and other store overhead, and the store overall contributes margin to cover
corporate overhead. This is the fundamental building block of healthy retail economics, and without it, all other strategies
will eventually wither. If the economics of the box work, the next question is one of profitable scale. How many stores are
required to support the corporate overhead? How fast can the store base grow? When and how are investments made to
streamline corporate overhead and make it scale more efficiently? If all three concepts are working, a retailer‘s
economics are sound. If one aspect isn‘t working, it is sometimes possible to temporarily cover up for it using the other
levers: Adding more stores can cover up for declining margins. Reducing overhead can cover up for slow growth. Having
an exceptionally good year at picking merchandise covers up for excesses in overhead expenses. But none of these
cover-ups lasts forever. Only the retailer that successfully manages its economics holistically can expect to win in the
long run.
7
RETAIL MANAGEMENT Anant Dhuri
Chapter 4
RETAIL MERCHANDISING AND SHOP DISPLAYS
8
RETAIL MANAGEMENT Anant Dhuri
Chapter 5
RETAIL ADVERTISING AND SALES PROMOTIONS
9
RETAIL MANAGEMENT Anant Dhuri
Chapter 6
MANAGING PEOPLE AT WORK - RECRUITMENT AND MOTIVATION
10
RETAIL MANAGEMENT Anant Dhuri
Chapter 7
COMMUNICATION AND CUSTOMER RELATIONS
11
RETAIL MANAGEMENT Anant Dhuri
Chapter 8
INVENTORY CONTROL AND FINANCIAL MANAGEMENT
12
RETAIL MANAGEMENT Anant Dhuri
Chapter 9
RETAIL STRATEGIES
13
RETAIL MANAGEMENT Anant Dhuri
Chapter 10
RETAIL MARKETING
14
RETAIL MANAGEMENT Anant Dhuri
Chapter 11
RETAIL MANAGEMENT INFORMATION SYSTEMS: USE OF NEW TECHNOLOGY
15
RETAIL MANAGEMENT Anant Dhuri
Chapter 12
SUPER MARKET / DEPARTMENTAL STORES /CHAIN STORE MANAGEMENT
16
RETAIL MANAGEMENT Anant Dhuri
Chapter 13
COMPARATIVE RETAILING ACROSS THE WORLD
17
RETAIL MANAGEMENT Anant Dhuri
Chapter 14
ROLE OF PERSONAL SELLING IN RETAILING
18
RETAIL MANAGEMENT Anant Dhuri
Chapter 15
STORE LAYOUT
19
RETAIL MANAGEMENT Anant Dhuri
Chapter 16
RELATIONSHIP MARKETING
20
RETAIL MANAGEMENT Anant Dhuri
Chapter 17
SUPPLY CHAIN MANAGEMENT
21
RETAIL MANAGEMENT Anant Dhuri
Chapter 18
RETAIL RESEARCH INCLUDING RETAIL AUDITS AND CONSUMER RESEARCH AT THE POINT OF PURCHASE
22
RETAIL MANAGEMENT Anant Dhuri
Chapter 19
ON-LINE RETAILING
23
RETAIL MANAGEMENT Anant Dhuri
Chapter 20
TRENDS IN RETAILING SHOULD INCLUDE THE INDIAN AS WELL AS THE INTERNATIONAL CONTEXT
24
RETAIL MANAGEMENT Anant Dhuri
PPT Content
FORMATS
• Supermarket - Means a large food store with at least 4000 sq. ft.(5000 in Europe) where bulk of the sale is under
self-service system.
• Hypermarket - Is larger version of Super Market with at least 25 check-outs, wider aisles, large parking, better
customer service and deep discount.
• Discount Store - everything is cheaper.
• „C‟ Store - is miniature supermarket.
• Super Center - Huge store (3 lakh sq.ft), huge parking and selling almost everything.
• Warehouse Club - means a sort of wholesaler who sells in bulk at the cheapest possible rate only to members.
• Department Store - Non- Food outlet of at least 10,000 sq ft, with 5 different product categories and the trust is
garments
Specialty Store
1 Single Brand, Single Product category
2 Single Brand, Multiple Product category
3 Multiple Brand, Single Product category
4 Multiple Brand, Multiple Product category
Mall
1. A conglomerate of retailer were certain common services like parking, security, elevators, lifts, toilets, drinking water,
seating arrangement etc are given by the developer of a mall.
2. It is not a retail format but format in which retailing is done
3. Anchor Tenants
4. Retail Mix
World of Retailing
Largest industry in the world (6.6 trillion dollars)
Largest industry in ALL countries
FORTUNE 500 is dominated by Retailers
Almost HALF of the richest men of the world are Retailers
Four of the TOP TEN richest people are from one retail family
Retailers are the BIGGEST employers
Darling of the STOCK MARKET
Top 5 retailers in the developed countries control 50 % to 60 %
of Food Retailing
WAL - MART
The biggest company of the world. No.1 in fortune 500. Sale $ 263 Billion
More than 25 times bigger than Tata & Reliance
More than 5000 stores in 13 countries and 4 continent.
Biggest Employer – More than 15 lakh employees.
Net profit more than 12000 crores
Smallest store is 40000 sq.ft & bigger stores are 300000 sq.ft
In one store number of trolleys are more than what we have in domestic and international airport
Huge parking 35 to 70 acres
Godown- bigger than 9 football fields put together
It has the largest flee of vehicles of Aero planes, Jets
Its sale is more than the total sale of all FMCG companies put together
It‘s purchase of P&G products is more than what P&G sells in whole of Japan
Sale of undergarment is more than double the USA
25
RETAIL MANAGEMENT Anant Dhuri
26
RETAIL MANAGEMENT Anant Dhuri
27
RETAIL MANAGEMENT Anant Dhuri
Joint Ventures
International firms can enter into agreements with domestic
players, and set up base in India. The share of the multinational
is restricted to 49 per cent in this route.
Manufacturing
International retailers can set-up manufacturing units for their
products in India. Entry through this route entails the company
the rights to retail the products in India through individual retailing
outlets.
METRO IN INDIA
Metro AG of Germany has a presence in India at Bangalore,
Kolkatta & Mumbai. It opened its first Indian outlet in
Yeshwanthpur, Bangalore in 2003 on a sprawling 6,500 square
metres area and added one more centre there.
Mission Statement
"METRO is a Cash & Carry self-service wholesaler for businesses and professionals. METRO provides quality products and business
solutions at the lowest possible prices". "As worldwide No. 1 in self-serve wholesale, we systematically address the needs of our
customers. In keeping with our motto "From professionals for professionals," we offer an extensive range of high-quality food and
nonfood products at competitive prices. With efficient logistics and a business concept that can be adapted flexibly to the requirements
of diverse markets and locations, we are actively setting the stage for sustainable growth."- CEO METRO Cash & Carry
The METRO Cash & Carry success story began in 1964 with the opening of the first wholesale outlet in Germany. Today the company
is represented in 30 countries with METRO and MAKRO Cash & Carry stores at 544 locations - and offers its commercial customers up
to 50,000 different products from a single source. METRO Cash & Carry International GmbH in Duesseldorf, Germany, is the
Management Holding Company steering the global business. The METRO Group was created in 1996 through the merger of leading
trading companies. The corporate group is composed of high-performance, operationally independent companies and businesses.
28
RETAIL MANAGEMENT Anant Dhuri
METRO Cash & Carry operates in various countries with three store formats: Classic, Junior and ECO. The sales area of a Classic
wholesale outlet is 10,000 to 16,000 square meters. This format is mainly used in Western European countries. In Eastern Europe and
Asia, smaller Classic stores so called Junior stores of 7,000 to 9,000 are generally built. ECO stores – for example, in France and Italy –
have sales areas of 2,500 to 4,000 square meters. While the Classic outlets offer a comprehensive range of up to 50,000 food and
nonfood products, ECO stores are concentrated on food, especially perishables. With ranges comprising 90 percent food products,
ECO stores are mainly geared toward hotel and catering industry customers requiring large amounts of fresh, high-quality food on a
daily basis.
Internationalization
Business principle and success factors
In advance of market entry - A team of specialists analyzes all aspects relevant to operations, such as purchasing, sales and
marketing, laws, human resources and logistics.
Local staff a priority - The objective is to staff a new store as quickly as possible with local employees
Expanding the business concept in Europe - continued to expand in Southern and Western Europe.
A leap across the Mediterranean - jump across the Mediterranean was successfully carried out with stores in Turkey and
Morocco.
Development in Eastern Europe - Hungary, Poland, Romania, Czech Republic, Bulgaria and Slovakia.
Expansion into the Far East - first international wholesaling company to receive a license for nationwide expansion in China
Sails set for further emerging markets - And now focus on Asia
METRO (INDIA)
METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore.
With this METRO introduced the concept of Cash & Carry to India.
These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore.
Launch Plan
Mumbai Metro did a launch plan of their retail store in Bhandup on 8th May 2008 and it is 2 yrs now
Soft Launch
HoReCa (Hotels, Restaurants, and Cafes ) : May 5th 2008
200 premium outlets were invited for the soft launch where they were displayed with the best quality products like meat, Grocery
products, METRO in-house brands like Quality & ARO, cold chain at the METRO store. The store Manager – Mr. Swen Betzing
interacted personally with all the General Managers & Chefs of the premium
5-star hotels & deluxe properties across Mumbai city. The guests had a first-hand look of all the 18000 SKUs displayed at the METRO
store at Bhandup (West). It is a replica of the METRO group across the world. All the stores look alike to each other.
10 Advantages
Here are the Top 10 reasons to partner with METRO:
1) Best Prices - With huge purchasing power & efficient operations, we make sure to provide you quality products at the best prices.
2) It's your Warehouse - With our computerized goods management system, you are assured about availability of the products, in
quantities you need. Meaning you need not tie up your money in stock that does not sell quickly.
3) Everything under One roof - 18,000 different Food & Non-food items to meet all your different needs under one roof. This will save
your time as compared to purchasing from a variety of sources.
4) Extended business hours - To make sure that you are always served, we are open 7 days a week, from 6 a.m. to 10 p.m.
5) Quality guaranteed - Strict quality checks and modern storage technology including cold storage ensures that you get the best
quality
6) Free parking - Hassle free parking space for around 450 two wheelers & 270 four wheelers, to make sure that you are free of
parking problems.
7) After sales Service - We do not just make a sale, our Customer Service Team is available to you for resolving your queries, and
problems, if any.
8) Offers at your fingertips - Every two weeks you receive our catalogue, METRO Mail with over 300 offers for your business at the
best wholesale prices. Also receive instant alerts through e-mail and SMS.
9) Clear and easy invoice - Our detailed invoice makes it easy for you to monitor your purchases. All your purchase information is
available on a single invoice, enabling you to manage your stocks better.
29
RETAIL MANAGEMENT Anant Dhuri
10) Great value for money - A wide range of our own brand products offers high quality at the lowest price, which adds to your profits
even more.
2. Non Food –
The store offers a wide array of over 10,000 non-food items. These include, among other things:
Health & Beauty: Cosmetics, Perfumes, Personal Care, Oral, Hair, OTC Medicines (Disprin etc.)
Tobacco Cigarettes
Detergents & Cleaning Materials: Laundry Detergents (Washing powders, Bars etc.), Cleaning agents (Cleaning bars, powders
etc.), Household Products, Paper Goods (Paper Plates, Tissues, Cups etc.)
Office equipment: Office Supplies & Machines, Computers & Accessories, Cash Registers, Phones, Fax Machines etc .
Media / Accessories: Portable Audio, Music Systems, TV Sets, Entertainment Accessories, Cameras, Car Radio, etc.
Home Electrics / Improvement: Refrigerator, Washing Machines, Microwaves, Mixer Grinders, Toasters, Lamps & Bulbs, Hand
Tools, Power Tools, etc.
Home Decoration / Seasonal: Gifts, Artificial Flowers, Furniture, Aluminium Ladders, Arts & Crafts, Candles, etc.
Home Textiles / Ladieswear / Menswear / Childrenwear: Bed Linen, Towels, Table Linen, Curtains, Carpets, Shoes, Apparel -
Men's, Apparel - Ladies & Kids etc.
Sports / Toys / Luggage / Shoes / Leather Goods: Sports Clothing, Swimwear, Toys & Gifts, Sports Shoes, Bikes & Accessories,
etc.
Transport Solutions
To help you with the delivery of your purchases to your business premises we have partnered with Relogistics. There are various
delivery solutions at competitive rates that you can avail of at the delivery counter at our distribution centres.
30
RETAIL MANAGEMENT Anant Dhuri
Swot Analysis
31
RETAIL MANAGEMENT Anant Dhuri
B2B MARKETING
32
RETAIL MANAGEMENT Anant Dhuri
Users: This includes individuals who use the product or service that is to be purchased. Often users play the role of
the initiators. The influence of the users in purchasing decisions may vary from minor to major. They may define the
specifications of the needed product. They may be shop floor workers, maintenance engineers, or R&D engineers.
Influencers: They are the individuals who could influence the buying decision. Generally, technical people (such as
design engineers, quality control engineers) have a substantial influence on purchase decisions. Sometimes
individuals outside the organisation, who are experts or consultants, play the role of influencers by drawing
specifications of products or services.
Deciders The actual buying decisions are made by the deciders. The deciders may be one or more individuals
involved in the buying decision. It ¡s very important to identify the deciders, although at times it may be a difficult task.
Generally, for routine purchases the buyer (or purchase executive) may be the decider. But, for high-value and
technically complex products, senior executives are the deciders.
Gatekeepers: They are the individuals who could control (or filter) the flow of the information regarding products and
services to the members of the buying center. Sometimes the gatekeepers may control sales people‘s meetings with
the members of the buying center. Gatekeepers are often the assistants or junior persons attached to purchase (or
materials) manager. Industrial marketers, after understanding the roles of the buying-center members, must identify
the individuals and groups who are the members of buying center. The emphasis in the buying ccntcr is on the
organisational groups, that is, the functional areas, which participate in the buying decision process. These areas are
explained in the following section.
33
RETAIL MANAGEMENT Anant Dhuri
DC Inventory Flow
1) Put away method
2) Flow through method
3) Cross Docking
Staffing in (DC)
3PL v/s Own Staff
KAM/DC Mgr/OB/IB/Inventory/Transportation
3PL – KAM/ Supervisor/DEO/Checkers/Pickers/Helpers/Crane O‘tors
Shifts / Breaks / Over time
Security
34
RETAIL MANAGEMENT Anant Dhuri
STORE
35
RETAIL MANAGEMENT Anant Dhuri
1. Selection of a city
Population & growth trends
- Current population
- Population dynamics – apartments v/s homes, population density, likelihood of growth, decline, their income
level, seasonal changes / periodical incomes, age groups & sexual composition
Size of the city‟s trading area - primary, secondary, tertiary
Purchasing power & its distribution - disposable income
Trade potential
Number, size, quality of competition
Disadvantages
• Huge Initial Investment
• Heavy Interest
• Maintenance costs
• Decrease in real estate value has to be borne by the Owner
2. Lease
Advantages
• No Initial Investment except Deposit (if any)
• No Initial Interest
• Opportunity to move elsewhere at the expiration of the lease
36
RETAIL MANAGEMENT Anant Dhuri
TYPES OF LOCATION
1) Free standing locations - neighborhood stores, HIGHWAY STORES
2) Unplanned cbd‟s
• neighbourhood- business – district
• downtown or central business district
• suburban business district
• secondary business district
37
RETAIL MANAGEMENT Anant Dhuri
38
RETAIL MANAGEMENT Anant Dhuri
39
RETAIL MANAGEMENT Anant Dhuri
One has to study the market practices with reference to these categories
• Fruits & Vegetable may be purchased from Farmers
• FMCG products may be purchased from the Distributors/ Wholesalers
• There may be Backward Integration or Outsourcing
• Mutton, Chicken, Beef etc from Abttoir
• Fish from Landing Jetty
• Large Retailers may have Backward Integration
40
RETAIL MANAGEMENT Anant Dhuri
2. Product variety
3. Product availability
4. Customer experience
5. Order visibility
6. Returnability
41
RETAIL MANAGEMENT Anant Dhuri
42
RETAIL MANAGEMENT Anant Dhuri
SALES MIX
43
RETAIL MANAGEMENT Anant Dhuri
MARK UP = Rs 19 = Rs 17.59
1.08
44
RETAIL MANAGEMENT Anant Dhuri
RECEIPT OF GOODS
Receipt of goods
• Check list for FMCG
• Billing as per Company‘s markup policy
• Discounts, Schemes as per PO
• Modern Trade discounts are given
• Date of Manufacturing, Expiry, Best before
• Free gifts if any
• Quantity, GALA
• Bar code if any
• Not rejected goods from other Retailer
• Return, Exchange, replacement
45
RETAIL MANAGEMENT Anant Dhuri
PRINCIPLES OF PURCHASE
FIVE „R‟
1) Right Quantity
2) Right Quality
3) Right Price
4) Right Source
5) Right Time
ST
WEEKLY SALE: 1 WEEK – 40%
ND
2 WEEK – 30%
RD
3 WEEK – 10%
TH
4 WEEK – 20%
SOURCES OF PURCHASE
• Bigger stores purchase directly from companies
• What is correct?
• Cut the coat according to your cloth
Koopra / sabudana – Salem/cochin
Alponso mangoes – Konkan growers
Grapes – Nasik
• As you grow big follow – backward integration
RIGHT TIME
Planning according to the demand
46
RETAIL MANAGEMENT Anant Dhuri
SUPPLIER LIST
- NAME / ADDRESS / TEL..:! MOB: / EMAIL ID
- COMPANIES / BRANDS / SKUs
- TERMS OF PAYMENTS, EXTRA CREDIT DAYS
- SHOP CLOSED ON / TIMING
- EXTRA SCHEMES IF ANY
- NÆN1E OF THE OWNER
- NAI\IE OF TSI
- NAME OF ASM
- NAME OF ASDM
Guidelines
• company scheme
• new products and consignment arrangement
• goods well purchased means half sold
• buy what you sell
• buy that much you can sell
• 2% saving in purchase is equal to
• 16% increase in sale
One has to study the market practices with reference to these categories
• Fruits & Vegetable may be purchased from Farmers
• FMCG products may be purchased from the Distributors! Wholesalers
• There may be Backward Integration or Outsourcing
• Mutton, Chicken, Beef etc from Abttoir
• Fish from Landing Jetty
• Large Retailers may have Backward Integration
• Markup Structure
• Discrimination
• Advertisement I Display Charges
• Credit Period
• Return I Exchange — (RepIacement)
• Schemes
• Taxation
INVENTORY CONTROL
• What is stock?
• What is inventory?
• Inventory has inherent tendency to grow
• Cost of inventory or carrying cost - payment of interest insurance godown / warehousing charges
High stock holding is bad stock-out is worse
INVENTORY CONTROL
• Lead time
• Ordering cost
• Safety stock
47
RETAIL MANAGEMENT Anant Dhuri
48
RETAIL MANAGEMENT Anant Dhuri
MEDICINES
Statutory Requirement
- 240 Sq.ft area
- 100 Sq.ft storage area
- Appointment of Pharmacist with Degree or Diploma
- Shelf display with glass doors
- Refrigerator
- Green PLUS & not Red PLUS
Right place
- Near Hospitals
- Near Dispensaries and Clinics
- In Supermarket - at the entrance
- In Hypermarket - can be inside
Stock Turn
- 6 to 8 times can be achieved
- Few successful medical stores have achieved 12 to 15 times
Sales Mix
- Allopathy Medicines: 90 %
- Ayurvdeic Medicines: 5 %
- Surgical: 5 %
Margin Mix
- Allopathy Medicines: 16 %
- Ayurvdeic Medicines: 25 %
- Surgical: 50 %
49
RETAIL MANAGEMENT Anant Dhuri
EXTERNAL ATMOSPHERICS
- storefront
- marquee
- entrances
- display windows
- size of building
- visibility
- parking
- accessibility
INTERIOR ATMOSPHERICS
- flooring
- lighting
- odour
- fixtures
- walls and colour
- temperature
- aisles
- trial room
- dead/shadow area
- personnels cleanliness
STORE LAYOUT
• floor space allocation
• traffic flow
• department location
• merchandise category
• signage -
- Commodity Indicator
- Directional Signs
- Instructional Signs
- Courtesy Signs
TYPES OF LAYOUT
- Grid layout
- Race track layout
- Mouse trap layout
- Block layout
- Express layout
- Free form
50
RETAIL MANAGEMENT Anant Dhuri
Main Items:
- Gondola
- Gondola end
- Wall Rack
- Checkouts
- Dump Bins
- (Wall) Browsers
51
RETAIL MANAGEMENT Anant Dhuri
TH
- 4 Largest economy in the World in Purchase Power Parity
- Average GDP growth rate between 7% to 8.2% (earlier 6 %)
nd
- 2 Fastest growing economy in the World.
rd
- To be 3 Largest economy in terms of GDP in next 5 yrs
nd
- 2 most attractive developing market, ahead of China ( AT Kearney 2004)
- 52% of the GDP comes from Service Sector which includes Retailing, IT, Telecomm, Healthcare etc.
nd
- India is 2 in the list of the Preferred Destinations in the World - UNCTAD‘s World Investment Report 2004
- FDI Inflow grew by 24% - USD 3.44 Bn - 2002 USD 4.26 Bn – 2003 USD 6.60 Bn – 2004
52
RETAIL MANAGEMENT Anant Dhuri
BY YEAR 2007
• 50 million sq.ft. of Quality Space under development
• 6 Major cities to account for 41 million sq.ft.
• 300 malls, shopping centers & multiplexes to come
• To open 35 Hypermarkets
- 325 Large department Stores
- 1500 Supermarkets
- 10,000 quality outlets
53
RETAIL MANAGEMENT Anant Dhuri
54
RETAIL MANAGEMENT Anant Dhuri
More than 1,300,000 tonnes of food grain – worth millions of dollars – went rotten in storage over the past decade in
India, Food Corporation of India (FCI) officials admit. Surprisingly, of the total wastage almost 50% of the food grain was
damaged in Punjab, one of the leading states in agricultural production. and there's no history of floods or natural
calamities in Punjab. More than 72 per cent of the vegetable and Fruits are wasted in the absence of proper retailing.
The sector is constrained by widespread fragmentation in the supply chain, low productivity levels, and huge post-
harvest losses arising out of inadequate storage, cold chain and transport infrastructure, logistics and supply chain
management. India‘s Food grain wastage is more than UK‘s Total consumption. India stands No 1 in Production of Fruits
and Vegetable together It contributes to 10% of the world‘s Fruit production & 14 % of the Vegetable production
- of every 10 fruits 1 is from India
- of every 7 vegetables 1 is from India
Of every 4 Fruits and Vegetables produced 3 are wasted / thrown / rotten or not consumed. India has 5 to 6 middlemen
in fruits and vegetable trade, while all developed counties has 2 to 3 middlemen in the supply chain.
• ln bridging the farm gate to the dinner plate, more and more Indian retailers are now adopting the farm to fork model.
• Most of the retailers are in the process of putting up elaborate logistical chains to enable a smooth transition of goods
from the farm to the consumer.
• ‗Farm to fork‘, as this model is known, aims at minimizing the steps from the farmer to the retail store.
• A farm-to-fork model either sets up a logistical chain owned by the Retail Company or outsourcers it to a logistics
company. The chain includes small wholesale markets, or mandis, where the farmer can come and get a good price
for his produce.
• This produce is then carried directly to the nearest supermarket of the chain, or the warehouse from where it is
shipped to the cities.
• There is an imperative need for synergy in the pre-harvest, harvest and post-harvest process to bring in value
addition to the efforts of the farmers.
Actual Grower Farm collector Regional Conglomerate Local Market Yard APMC Broker
Semi-Wholesaler Customer
• In order to successfully run the Farm to form model the elimination of middlemen like farm collector, regional
conglomerate and semi-wholesaler is essential.
• The farmer brings the produce to the collection centre where the generally payment is in cash.
• The produces are graded / sorted / peeled / cleaned / cut / de-husked / chopped etc.
• Then transported to the stores via Distribution Centre (DC) through APMC market
Actual Grower Farm collector Regional Conglomerate Collection Centre Wet Distribution
Centre Semi-Wholesaler Customer
A survey reveals that a farmer or a grower gets 1/15th to 1/10th of the value paid by the consumer (exceptions are
Alphonso Mangoes, Grapes, exotic vegetables etc; where the grows earns 1/4th to 1/5th of the consumer‘s purchase
price) The fast moving SKUs in fruits are 20 to 25, while the veggies have around 30 to 40 (except onion, potato and
tomato) When we purchase Tomatoes at Rs 20 per kg from a hawker, the grower gets meager value of Rs 0.75 to Rs
2.00, while a retailer earns around Rs 2.00 to Rs 4.00. Major amount is swiped by the transportation and middlemen. If a
farm to fork model if successful there will be a win-win situation for both the growers and the retailers. In Tomatoes,
55
RETAIL MANAGEMENT Anant Dhuri
assuming the grower-retailer consortium, further assuming that there is no contract farming and not air lifted, average
selling price for the grower will be to the tune of Rs 2.50 to Rs 3.50. While landing cost of the retailers will be Rs 11.00 to
Rs 14.00 (depending on the distance). In such situation retailers can safely mark down and can adopt a leadership
pricing.
• The gist of this model is based on the backward integration of the retailer.
• Taking into consideration the constraints like of widespread fragmentation in the supply chain, low productivity levels,
and huge post-harvest losses arising out of inadequate storage, cold chain and transport.
56
RETAIL MANAGEMENT Anant Dhuri
CUSTOMER
Who is a CUSTOMER?
Customer: One who buys goods or services
Is every Customer is a Consumer?
Is every Consumer is a Customer?
Consumer: One that consumes, especially one that acquires goods or services for direct use or ownership rather than
for resale or use in production and manufacturing.
BUYING MOTIVES
· No one buys a product
· People ―buy‖ satisfaction for their
needs
BUYER‟S BEHAVIOR
• Need identification
• Information gathering
• Evaluation of alternatives
• Store selection
• Purchase decision
• Post purchase evaluation
TYPES OF CUSTOMERS
1) Age Group – Children, Youth, Adolescence, Mid-aged, Old-aged
2) Ethnicity - TAMIL, PUNJABI, MARATHI, BENGALI, GUJARATI
3) Purchase Occasion – CEREMONIAL, ANNUAL, SEASONAL, FESTIVAL, ROUTINE
57
RETAIL MANAGEMENT Anant Dhuri
Consumption Pattern
Categories in Food: TOTAL 73.5 %
Categories in Non – Food: TOTAL 26.5 %
58