Module 1

Retail Management

Retail Management - Meaning & Definition

Retail management is the process of running and managing retail outlets’ day-to-day
activities surrounding the selling of goods and services to customers. It is the process
that aims to make sure that customers are happy with the goods and services they
purchase and that retail outlets run smoothly and remain profitable.

Why is Retail Management Important?

Retail management is crucial to the success of any retail store. Key to any effective retail
management strategy are the individual store managers. They take care of store
employees, help achieve sales goals, assist with maintaining customer satisfaction,
oversee the daily activities of the retail outlet, and empower colleagues who may be
potential retail store managers in the future.

The Origins and Evolution of Retail

The word “retail” comes from the Old French word “retaillier” which literally means “to
cut back, cut off, reduce”. Since the early 15th century, the term has been used to
describe the “sale of commodities in small quantities or parcels”.

However, the history of retail goes beyond the Middle Ages (5th-15th century) because
its birth can be traced back to the Age of Antiquity (3200 BC-476 AD).

From the barter system, or the old method of directly exchanging goods or services
before money existed, to primitive shops, trade centers, and open-air, public markets in
ancient Persia, Assyria, and Babylonia, retail has been a practice since the beginning of
recorded human history.

From standardized coinage as a mode of payment (around 600-500BC) to the

development of banknotes or paper money during the Song Dynasty (12th century), the
lucrative business of retailing contributes much not only to a nation’s economy, but to
the global market as well.
Merging into the Renaissance (12th-15th century) and the Age of Discovery (15th-17th
century), retail flourished in Medieval Europe, where traders set up permanent shops in
major cities and periodically sold goods in countryside fairs or market towns.
Trademarks, or any visible sign used to identify a merchant’s goods and distinguish
them from others, began to take on a greater importance during this period.

Transitioning from booth-like shops with dark interiors to general merchandising stores
with glazed windows, display cases, and service counters, significant retail innovations,
including the invention of price tags, occurred during the Industrial Revolution
(18th-19th century).

Emerging multi-vendor spaces operating under covered roofs called “shopping

arcades” paved the way for retailing in the modern era—department stores, warehouse
shops, and retail outlets.

At the dawn of the contemporary age (1945-present), shopping malls shaped the retail
experience to be easily accessible and comfortable for people to spend more time in the
facility and increase their likelihood of making purchases.

However, the continuous rise of technological advancement established e-commerce, or

buying and selling products through online services or over the internet, as a necessary
platform of doing business in today’s retail industry.

What is the Retail Management Process?

The process of retail management has evolved from managing a physical store in one
location to handling retail outlets around the world, concentrating efforts on virtual
shops or online shopping. The retail management process, as we know it today, entails
several key concepts in the fields of business administration, finance, and marketing.
Here is the end-to-end retail management process to help you get started in the world
of retail:

1. Identify the problem you want to solve

Every thriving retail business usually came into existence by solving a real-world
problem. Success in retail starts by focusing on the problem you want to solve, not on
the solution you want to offer. Through intentional problem-solving with the help of
root-cause analysis techniques such as the 5 Whys method, retail management
wannabes can dive deep into the problem, so they can offer better solutions to solve
 them.
Another step in this part of the retail management process is competitive analysis or
competitive research. Strategically collecting and reviewing information about the retail
business’ competitors can help retail managers determine what about the problem they
aim to solve has yet to be fully or easily solved. Finding out what your competitors do
can provide a different perspective on solving the problem, giving you an advantage to
do what they cannot do or have not yet done.

2. Understand the people you want to help

Once the problem to be solved has been clearly identified, the next step in the retail
management process is market research, or gathering information about the consumers’
needs and preferences. At this point in the retail management process, the goal is to
validate the reality, impact, and value of the problem you want to solve to the people
you want to help. To aid retail managers in understanding their customers deeper,
practice empathy mapping, or the collaborative visualization used to articulate what
you know about a particular type of customer, and create a customer journey map, or
the complete sum of experiences that your targeted customers go through when
interacting with your retail company or brand. Having a deep understanding of the
people you want to help enables you to know them better than they know themselves;
ergo, you can be best positioned to reach them out, promising and delivering on the
solution that can best solve their problem or fulfill their desire.

3. Develop and test your product or service

After knowing exactly what problem you want to solve and who you want to do it for,
data-driven and well-informed product development can take place. In developing
your product or service, supply chain management (e.g. sourcing and procurement)
becomes crucial.
You want to make sure that in this part of the retail management process, you have the
high-quality materials for the most reasonable price, so you can make your product or
deliver your service in the most cost-effective way.
Anything new has to be tested in order to measure its effectiveness, and your product
or service is no exemption. Test results can help you discern the strengths and
weaknesses of your products or service, leveraging on what you can do best to solve the
 problem of the consumers. Getting feedback through customer satisfaction surveys can
help the retail management improve the product or service by aligning with their
customers’ wants and needs better.

4. Address all legal and financial matters

The moment you believe your product or service is ready to go out into the world and
be used by the ones you created it for, regulatory compliance comes into play. Before
going to market, the retail management needs to deal with all the necessary compliance
audits, safety inspections, and quality certifications, especially when it comes to product
labeling for international retailers.
In today’s retail industry, cyber security and consumer privacy becomes a compliance
risk which the retail management should address. Financial concerns such as adhering
to the suggested retail price, paying sales tax on products and services sold in certain
states, and more should also be addressed by retail managers, especially when the retail
business has physical store locations, back-office systems, and in-store staffing.

5. Specify and prepare administrative needs

Even upon settling the legal and financial areas of the retail business, the retail
management still has to consider and manage the manpower needed (e.g. sales
representatives, customer support, training and development) and the communication
channels established, or the media touch points you will have with your customer
based on their journey. Inventory management, or the supervision of the flow of goods
from the manufacturers to the point of sale, should also be taken care of-from
overseeing restock levels to preventing under-stocking and overstocking.
At this point in the retail management process, set up your retail brand for success by
organizing retail logistics, or product movement and demand management, visual
merchandising, or the practice of displaying products in a way that makes them
visually appealing to maximize sales, and reporting metrics (e.g. units per transaction,
average transaction value, sales per category or sales per employee, gross profit versus
net profit).

6. Promote your retail brand, product, or service

 With all of the planning and preparations, it is only at this point in the retail
management process that the company or brand can launch, offering the real-world
problem-solving solution. Marketing, or the strategies for presenting offerings that have
value for customers, including advertising, the activity of placing online and offline
store advertisements, should be employed to drive awareness toward your products
and services, generating sales from your target audience. Pop-up shops, retail
collaboration, and special in-store events can also help attract customers and drive sales.
Other retail sales strategies include effective communication training for your store
employees, curating your best stocks to provide consumers with the best transnational
purchases they can make, and cross-selling or up-selling for improving customer
retention or encouraging return customers.

7. Always ensure continuous improvement

If retail managers really think about it, there is actually no end to the retail management
process as they should continuously improve how they do business in order to thrive in
the market. The retail management can know what to enhance about their operations
when they simply adopt an agile approach to retail, taking an informed risk of how to
boost retail sales, doing more of what works, and learning from what doesn’t work.
Without continuous improvement, any retail company or brand will not survive. Retail
managers can try expanding their product or service offers, re-targeting their audience,
and more, depending on the size of the company, the stage of growth they’re in, the
customers they’re helping, the problem they’re solving, and the product or service
they’re offering.

Retail Operations
In the recent past, shoppers have been moving increasingly to making purchases online.
But whether an e-commerce store or brick-and-mortar shop, retailers need to move
quickly to be ready for the next wave of customer trends. Ambitious retail businesses
will look for ways to improve efficiency and timeliness, as well as give customers a
greater experience to compete with their rivals.

What are Retail Operations?

Retail Operations refers to the daily functions of a retailing business. The activities
provide a shopping experience for consumers to access and make purchases. These
functions include the layout and design of stores (both online and physical locations),
inventory management, order fulfillment, customer service, sales, accounting and
returns. It encompasses many processes that happen after customers hit the ‘buy’
button. These processes are directly linked to customer experience.
Large or small, all retailers will want to have systems in place to improve their
operations. Depending on the company, many variables will affect what works best for
them and their bottom line. Businesses must define their own strategy, but the overall
aim is to stay competitive in an evolving marketplace.

One part of Retail Operations is procuring products or services and storing them in an
orderly fashion. From there, the product or service is made available to the customer.
This includes activities directing the customer to the store, such as marketing. Once the
customer has made it to the homepage or physical shop, the customer needs product
accessibility. Finally, a system and form of payment must be available to complete the
purchase.

What are the Functions of Retail Operations?

Regardless of size or domain, businesses will need the same basic functions to operate
in the retail sector. For larger businesses, some functions may be in their own
departments, residing outside of Operations. These might be departments such as
accounting, IT, and marketing. And in medium-sized or growing businesses, many of
these functions may be done by a few people or even a single individual.

- Shop qualities
For an e-commerce retailer, nothing is more important than having a shop with a
domain that is easy to find online and navigate. Good SEO and good design can go a
long way in making a sale. Customers need an easy path to find what they are looking
for and proceed to the checkout page.

You want to give the customer a pleasant experience. Orderly laid out stores or online
shops give the customer a seamless and consistent shopping experience. This includes
how products are categorized and by what department. Each retailer will want to
arrange their shop so that customers can quickly find what they are looking for.
Businesses can opt to use planograms to guide merchandising decisions. Part of Retail
Operations is giving customers a complete shopping experience. The aesthetics of
visuals, music, and other ways to warm the senses improve the store environment for
staff as well as customers.

For your webshop, the first step is to choose the right e-commerce platform to build
your store on, which allows your business to grow freely. Then, you will need proper
SEO, advertisements, and affiliate links in the right places to increase site traffic.
Physical signage in high traffic areas can help potential customers to make it to brick
and mortar stores in the same way.

- Customer service
Current retail trends show that good customer service will be more important than ever
to stay competitive. Especially for medium-sized businesses and those looking to
challenge better-established rivals.

Virtual or in-person, the customer experience should begin with a greeting. Offer a
promotion or free gift to new visitors to your e-commerce site. Regular online
customers should have a way to be recognized via cookies and user account
information. Personalization can be a major factor in retaining future customers. Better
retention leads to greater customer lifetime value (CLV).

The checkout process is all part of the customer experience. Retailers need to make
checkout quick and easy. Cart abandonment has many causes and is a major issue in
e-commerce. Operations must find ways to track and improve the customer checkout
experience.

Post-purchase services like delivery, returns and refunds are also a critical part of the
customer experience. Deficient post-purchase services often lead to negative online
reviews, which are harmful to a brand’s reputation. 77% of poor online reviews are
directly related to issues shoppers have after clicking ‘buy’. So, it’s crucial for retailers
to offer their customers a frictionless post-purchase experience, including fast deliveries,
instant delivery notifications, hassle-free returns and rapid refunds.

For omnichannel retailers, customer service should be seamless between channels. This
means consistency in terms of product prices, inventory levels, order status, and so on.
Customers should be able to access the same quality of assistance no matter whether
they approach you online, in-store, or through another platform.

- Payment, security, and internal controls

Operations also involve what forms of payment are accepted. As well as how those
payments are handled at checkout. These days, retailers who have a physical store will
be using some form of Point-of-Sale (POS) system. The good thing is that not only will
most POS systems process payment, they will also aid in inventory management.

To minimize human error, standard operating procedures (SOPs) will be in place for all
handling of cash and card payments. Supervisors and managers will need to ensure all
staff are aware of, and competent with, company SOPs.

Depending on the size of the business, precautions need to be in place to prevent fraud.
This could be simple like a visible security guard or camera in a shop, or behind the
scenes with complex systems in place. For e-commerce, AI and cloud security can
establish and eliminate potential threats with blazing speed.

- Inventory and warehouse management

Inventory management begins with ordering from the supplier. Purchasing staff needs
to anticipate customer demands. This can be as simple as having enough winter coats in
stock for Christmas or having the computing resources to handle peak service hours.

Once the product has been ordered, a retailer must decide how it will receive it. Once
received, the product will need to be recorded, handled, and stored properly.

An effective inventory operation can help with forecasting customer needs. With an
integrated inventory demand planning software, businesses can perform data-driven
demand forecasting based on their chosen KPIs.

Today, most retailers will be using some form of inventory management system. Either
through the use of spreadsheets or inventory management software, the stock must be
accurately kept. When a retail business grows or expands into multiple channels, new
technology is likely to be added. This could include a new:

● Order management system

● CRM (customer relationship management) solutions
 ● Purchasing and accounting software
● POS (point of sale)

These technologies should be seamlessly integrated with the inventory and warehouse
management systems. For fast-growing retailers who look for operational agility and
flexibility, a complete retail-tailored Digital Operations Platform may be a good choice,
avoiding any disjoint or glitchy integrations.

- Administration
Administration functions involve a lot of activities that are behind the scenes. The best
maintenance of a shop or e-commerce website is done before problems arise. Customers
must get a consistent and efficient shopping experience with every visit. Any bad
experiences such as dead product links or payment failures can leave a bad taste in a
customer’s mouth.

Staff training must be carried out to a standard of excellence. Whether it is recording

the receiving of stock or handling cash, there needs to be a uniformity in daily
operations. Training procedures and checklists must be utilized and continually
monitored. Customer-facing or online help desk staff must be given service training and
be familiar with SOPs.

IT infrastructure and data management will involve optimizing and integrating many
technology tools. This can include a working POS system, barcoding, online user
account data, and a customer relationship management (CRM) platform.

Operational Stages of Retail Management

Retail operations is a functional term that encompasses all the retailing activities that
physical storefronts, chains, and eCommerce sites depend upon to operate
successfully.

Given its scope — “all the retailing activities” (emphasis on all) — narrowing down the
elements that matter most to your retail operations is vital.

To do that, let’s focus on the five operational stages inventory passes through on its
path to, within, and from a retailer:
 1. Sourcing
2. Storing
3. Managing
4. Staffing
5. Serving

Stage 1: Sourcing

Sourcing is the process of finding good quality suppliers for your retail business.

These suppliers must be:

● Reliable
● Cost-effective
● Scaled to your business’ needs

In finding suppliers and manufacturers who check all these aspects, will be able to
operate with confidence, knowing they will be able to provide for the needs of their
customers.

Stage 2: Storing

Unless you’re selling the latest hot-ticket item in your niche, chances are you’ll need to
store most of your product in one or more warehouses before you’re able to sell them.

When storing your retail products, it’s important to maintain the product’s quality at all
times. This means storing them in safe and secure locations that accommodate the
product in question (e.g., climate-controlled rooms, etc.). The more optimized your
storage space, the lower the chances of spoilage and other mishaps.

Your products also need to be stored in a manner that eases retrieval. More accessibility
means easier deliverability, which means more efficient processes — and happier
customers.

Stage 3: Managing inventory

Inventory management aims to maintain the flow of product from supplier to

warehouse to retail store shelves.
The goal is to ensure that a sufficient amount of product is always available to meet the
fluctuating demands of the market, while simultaneously avoiding spoilage and
overstocking.

The easier your stock flows through your supply chain, the lower your risk of incurring
damages will be.

Stage 4: Staffing

Your retail organization will only run the way you want it to run if you’ve put the right
people in place. Whether hiring front-of-the-house or back-of-the-house teams, you
need to ensure your staff is:

● Adequately sized and properly scheduled

● Highly qualified and driven
● Matched to the best-fit position

With a solid staff backing up a solid approach to retail management, your business will
easily find itself on the path to success.

Stage 5: Serving

The ultimate goal of any retail business is to provide value to the consumer — and, in
turn, receive value back from them.

The way in which your retail company provides value to your audience depends on a
variety of factors, such as:

● Type of retail store you operate

● Target customers’ needs and expectations
● Operational capacity and progressive approach to retail overall

It’s important to know what your customers want from your retail business both now
and in the future. After all, if you don’t know how to best serve your target audience,
you won’t be fulfilling your goals as a retailer in the first place.

The Challenges Retailers Face in Retail Operations

Shoppers in 2020 accelerated the ongoing trend of moving the buying experience
online. And with many disruptions still ahead, people are looking for flexibility.
They want to be able to work at any time and from anywhere, for instance.

Consumer’s buying habits from retail stores are evolving, too. Shopping is done when
convenient. Consumers want the best prices and money-back guarantees, but they also
want their purchases as soon as possible.

Retailers must evolve with their consumers. And this can present several challenges.

- Price
As more shopping moves online, competitive pricing is as important as ever.
Operational costs are usually a key factor in determining retail prices and margins.
Giants like Amazon and Walmart have efficient supply chains allowing them to lower
their operational costs. In order to compete, e-commerce brands must optimize their
operation workflows and cut costs down too.

- Personalization
Today, shoppers are placing a higher priority on the buying experience alongside
product and price. One of their expectations is more personalization and customization.
Customers expect a tailored shopping experience with relevant purchase
recommendations and targeted promotions. But they also expect to have more options
for customizing the product to fit their needs

Retailers must come up with ways to recognize and reward repeat customers. But they
also need to make new customers feel special. Retailers must stay on top of
customization trends.

- Store management
Retail Operations in bricks and mortar stores are directed by the store Retail
Management team. The store operations manager will take a long-term view of the
business goals. They will monitor metrics like KPIs related to daily sales. Store
managers guide daily operations in a dynamic environment. Dealing with changes to
keep the business on course.
For management to be successful, they need to recruit and hire the right people. And
need to fit employees into the right roles. They must pick the right leaders and lead by
example. Management will conduct employee reviews and any form of discipline,
including termination.

Managers will have the final decisions on sales forecasts and total budgeting. They will
work with other stakeholders to ensure SOPs are being followed. Management will
provide oversight for the internal controls involving security and loss prevention.

Operations leadership will work to maintain and improve all aspects of customer
service. Regular training and observations can be used to guide front of house staff and
educate. Management will oversee policies for communication within the company.
And also communication best practices in business to business dealings.

The responsibilities of governance and legal compliance will also fall to Operations
management. Operations must keep a watchful eye on daily activities to ensure
minimal liability for the company in all areas. Areas such as security, customer safety,
or employee break periods.

- Multi-store and omnichannel shopping

It’s no secret that a key to a retailer’s success is getting in on the e-commerce market
share, ideally through omnichannel retailing. With consumers moving online with
shopping, those with poor or no online presence will be left behind. Even the smallest
businesses will want to make use of multiple sales channels. Physical shops that ignore
online consumers do so at their own peril.

Multiple retail locations and channels can offer several benefits. But businesses reaching
for those gains will also be experiencing new challenges. Maintaining consistency
becomes difficult, the more channels, processes, and people are involved in operations.

- Employee retention
Just like consumers, employees today expect more. Retail sales associates can be on the
lower end of the pay scale. The retail industry has one of the highest employee turnover
rates. While store managers are expected to hire the right people, that is only the
beginning.
Employees are more likely to stay with a company when they are engaged. Every
individual will be motivated by different things, but nobody wants to work on
easily-automated, repetitive tasks that don’t generate much value. It can be difficult for
management and HR to be effective at engagement. They must find the right initiatives
to improve staffing and employee retention.

Retail Inventory Management

Inventory management is one of the pillars of a successful retail operation. Retail

inventory management techniques help stores and e-commerce sellers satisfy
customers, reduce costs and increase profits.

Retail inventory management is the process of ensuring you carry merchandise that
shoppers want, with neither too little nor too much on hand. By managing inventory,
retailers meet customer demand without running out of stock or carrying excess
supply.
In practice, effective retail inventory management results in lower costs and a better
understanding of sales patterns. Retail inventory management tools and methods give
retailers more information with which to run their businesses, including:

1. Product locations
2. Quantities of each product type
3. Which stock sells well and which doesn’t, by location and sales channel.
4. Profit margin by style, model, product line or item
5. Ideal amount of inventory to have in back stock and storage
6. How many products to reorder and how often
7. When to discontinue a product
8. How changing seasons affect sales

What Is the Importance of Inventory Management in Retail?

Inventory management is vital for retailers because the practice helps them increase
profits. They are more likely to have enough inventory to capture every possible sale
while avoiding overstock and minimizing expenses.
From a strategic point of view, retail inventory management increases efficiency. The
practice:

● Decreases Inventory Costs:

When you know how much stock you have and how much you need, you can
pinpoint inventory levels more accurately, thereby reducing storage and carrying
costs for excess merchandise. Other savings include shipping, logistics,
depreciation and the opportunity cost that comes from not having an alternative
product that might sell better.

● Minimizes Out-of-Stocks:

To avoid disappointing customers and missing sales, retailers want to avoid

running out of inventory. Retailers can use inventory management tools to
determine how much stock is “just right” to have on hand, neither too much nor
too little. This amount will be larger for bestsellers than for unpopular products.
Also, with real-time information on sales and stock, retailers can react quickly by
reordering, transferring stock from another location or drop shipping to the
customer.

● Improves Profit Margins:

With lower inventory costs and enough supply to fill every order, retailers
improve profitability.

● Prevents Spoilage and Obsolescence:

Inventory management helps retailers address another costly inefficiency that

happens when products expire or become obsolete. This phenomenon can apply
to perishables that have a limited shelf life, such as milk and meat, or a
non-perishable that becomes obsolete because consumer tastes and technology
change. For example, season collections or holiday-specific packaging. Or when a
piece of consumer technology adds a popular new feature, the old models may
face plummeting demand: Consider how the rise of smart televisions sunk
demand for models that weren’t capable of streaming content.

● Improves Multichannel and Omnichannel Performance and Order Fulfillment:

If you are selling via physical stores, your website and third-party merchants, it
can be difficult to keep correct inventory counts across all channels. Having
 accurate inventory data across selling channels lets you use your inventory more
efficiently, ultimately getting the product to consumers faster.

● Simplifies Processes and Facilitates Growth:

Strong inventory management also reduces friction in your systems as sales

grow. Shipping, receiving and order fulfillment run more smoothly, and you
minimize errors, customer complaints and staff stress.

● Reduces Shrinkage:

Shrinkage is inventory loss due to shoplifting, product damage, vendor mistakes

or fraud, employee theft and administrative errors. According to a survey by the
FMI food industry association, the average supermarket loses up to 3% of sales
through shrinkage. A National Retail Federation survey puts average shrinkage
for its members at 1.4% of sales in 2019. This data suggests that most losses stem
from incorrectly recording inventory on intake, miscounting it or misplacing it.
Stronger retail inventory management could reduce shrinkage by at least half.

● Eases Supply Chain Management:

Having a firm grip on inventory and sales trends helps you manage your supply
chain better. You can use the replenishment system that works best for you,
whether that’s just-in-time ordering or fewer, bigger orders. Retail inventory
management helps you determine your economic order quantity (EOQ), which is
the ideal order size to minimize inventory costs including holding, shortage and
ordering expenses. The EOQ formula, which factors in demand in units, ordering
costs such as shipping charges and holding costs, works best when these
variables remain consistent over time. Learn more about the EOQ formula.

● Improves Customers Satisfaction:

When customers get the products, they want faster with fewer mistakes or
out-of-stocks, it increases customer loyalty.

● Improves Forecasting:

You can use data such as historical sales results and available inventory to project
future sales, growth and capital needs. These forecasts are vital to your
budgeting and guide spending for marketing, product development and staffing.
How Does Retail Inventory Management Work?

Retail inventory management works by creating systems to log products, receive them
into inventory, track changes when sales occur, manage the flow of goods from
purchasing to final sale and check stock counts.

The information from these systems helps you achieve the benefits of retail inventory
management, such as lower costs and higher profit margins.

10 Basic Steps in Retail Inventory Management

The 10 basic steps in retail inventory management verify the goods you have, their
quantity, location and other specifics such as expiration date. This stock data is useful
for maximizing profits by understanding demand, costs and other variables.

You can integrate these procedures into a retail inventory management system, which
can be as simple as a paper ledger or a spreadsheet but typically involves an electronic
solution.

The following is a breakdown of the steps in retail inventory management.

1. Create a Centralized Record of All Products:

List all the products you carry in one place with these details:
 ● Product name
● Stock-keeping unit (SKU)
● Brand
● Variables such as size, retail price, product category, lot number, location
and expiration date.
● Vendor and vendor SKU
● Wholesale cost
● Minimum reorder amount
● Economic order quantity (EOQ)
● Case quantity amount
● Inventory on hand
● Reorder lead time

Add product images and descriptions to help staff identify products. This step is key if
you sell by ecommerce. When you add new products, put them into your inventory
record. Whenever information such as a vendor or wholesale cost changes, update it.
Establish policies for entering inventory, including who is responsible and when to do
it. Having rich data helps unlock the power of a retail inventory management system.

2. Identify Stock Location:

If you are a small business with just one store, recording your inventory’s
location is straightforward. Items are probably either on display or in the
stockroom. But retail chains with multiple sites and omnichannel sellers might
have inventory in warehouses, distribution centers, transit, stockrooms and on
store shelves. Within those destinations are more specific locations such as
section, shelf and rack. Misplaced and overlooked products represent missed
sales and lost revenue. Retail inventory management practices help prevent this.
Use radio frequency identification (RFID) tags, barcodes and labels that contain
category and department codes to fully or partially automate the mapping of
your inventory.

3. Do Regular and Accurate Stock Counts:

You need to count your inventory periodically to ensure it is accurate. Take into
account shrinkage, damage, defects and returns to avoid errors. A retail
inventory management system makes this process easier because you only need
to double-check your data, rather than start from scratch. So, you can primarily
focus on deviations. The frequency of counts depends to an extent on your
 business’s complexity, scale and the type of inventory management system you
use. Nonetheless, experts recommend counting inventory once a quarter or once
a year at absolute minimum. Some businesses count individual parts of their
stock daily. Several counting techniques exist, including physical counting and
cycle counting.

4. Combine Sales Data with Inventory Data to Simplify Reporting:

A retail inventory management system can integrate sales and inventory data.
This picture shows you which goods are turning over fastest (a metric called
sales velocity) and which are lagging. Use the product data to decide when and
how much to reorder and when to offer promotions or discounts.

5. Create a Purchasing Process:

Schedule times to review data and place orders, so you don’t get caught behind
seasonal trends or risk stock outages. With an electronic system, you can set
stock levels for individual products that trigger alerts for reorder. These levels
should include a buffer that allows sales to continue at normal levels. If you’re
using a manual system, review which items are sold out or at reorder points, and
add them to your purchase list. Prioritize purchases based on an item’s
profitability, popularity and lead time. Then, create a purchase order.

6. Establish a Process for Markdowns and Promotions:

Product sales can fail to live up to expectations for several reasons, such as a
cooling trend, obsolescence or seasonal factors. If you offer markdowns, be
disciplined about discounting and moving slow sellers, which can generate cash
and make room for more profitable products. Additionally, create a strategy
ahead of time for promotions to ensure that you have enough stock on hand to
meet demand.

7. Create a Stock Receiving Procedure:

During the receiving process, you’ll verify incoming orders and enter goods
accurately into an inventory system. Without an established procedure, any
supplier error or damage in transit can result in problems like unexpected stock
outages, overpayment to vendors and dead stock. Check each delivery against
the purchase order to verify the contents match the order. Count cartons and
pallets, confirming product type and numbers and noting mistakes, damage or
 shortfalls. Follow up with vendors on any issues. Then, enter the new products
into inventory counts and store the goods. Depending on your needs, you might
add price tags or bar codes to the stock. Perpetual inventory management, the
simplest way of managing inventory, involves counting goods as soon as they
arrive. Read the article on perpetual inventory to learn more.

8. Create a Procedure for Returns:

Without an inventory management process for handling customer returns, you

face an increased risk of holding unsellable stock or missing an opportunity to
put a sellable item back on display. When a customer makes a return, check to
see if the item is damaged or defective, and route it for repair, write-off or return
to the vendor as appropriate. If the product is sellable, add it to your inventory
counts, and put it in its correct place (in a physical store, ecommerce inventory,
etc.).

9. Determine a Dead Stock Procedure:

Excess inventory ties up capital and weighs on profitability. Dead stock includes
damaged items, incorrect deliveries and leftover seasonal products. First, record
items that fall into this category and remove them from inventory. Designate a
place to hold dead stock, and handle it regularly (weekly, monthly or in a
timeframe that’s right for your business). Ship merchandise that you can return
to vendors for credit, called pullbacks, promptly. Note any deadlines for the
return shipment. Return damaged and defective goods to suppliers, or document
and notify suppliers, according to their policy. Depending on your product line,
you can deal with the remainder by selling to outlets, donating, recycling or
disposing of it.

10. Pick Your Inventory KPIs:

To gauge the success of your process, pick and track some key performance
indicators (KPIs). Profitability, inventory value, sell-through rate and turnover rate
are essential metrics for retailers.

Retail Advertising and Promotion

Whether you’re just setting up shop or been running your store for decades, acquiring
new customers and keeping the ones you already have are paramount. The good news
is that there are more than enough ways to market your business.

In this post, we’ll shed light on the ins and outs of retail marketing and offer insights
into the various strategies you can use in your business.

What is retail marketing?

Retail marketing pertains to the strategies and tactics that retailers use to attract
customers and drive sales. Retail marketing has 4 key components, also known as the “4
Ps”: Product, Price, Place, and Promotion.

Product. First is the Product, which is the physical item that’s being sold.

Price. The second is Price, which refers to the pricing strategy that the merchant uses to
sell the item. (Examples include “everyday low prices,” implementing pricing
psychology like using “$9.99” etc.)

Place. Third is “Place” which refers to the location or platform used to sell products.

Promotion. Finally, there’s Promotion, which is what the retailer does to get the word
out and entice sales.

Successfully executing your retail marketing strategies requires a solid handle on the 4
Ps. Tracking these components and ensuring that they’re all working together is
essential to any marketing initiative.

For best results, use a POS and retail management system that allows you to manage
the 4 Ps with ease. With the right platform, you can keep all your ducks in a row (i.e.,
your products, prices, places, and promotions) and focus on bringing your retail
marketing ideas to life.

With that said, here are some tips on how to market your retail business and get in front
of the right people.

1. Be where your customers are

Effective retail marketing isn’t just about the specific campaigns that you run; the
channels and platforms on which you run your initiatives matter a great deal. Even the
most brilliant marketing tactics won’t be effective if you don’t meet your customers
where they’re are.

So before ideating on your next slogan or initiative, take some time to analyze where
your customers are and where they’re coming from.

Here are some areas that you can look into:

The channels that are driving traffic to your brick-and-mortar store

Identify the channels, tactics, and activities that are bringing visitors to your retail
stores. Some common ones may include:

● Retail displays and in-store initiatives – Are people coming into your store
because of the vibrant windows? Are they attracted to the large signs or beautiful
products you have on display? If these in-store efforts are driving results, then you
know that it’s worth doubling down on them.
● Online listings – People are increasingly turning to tools like Google and Yelp to
find and discover businesses in their neighborhoods. If this is the case for your
retail biz, then be sure to make them a big part of your retail marketing strategy.
● Digital marketing – From Facebook ads and Instagram posts to AdWords and a
strong ecommerce presence, the things you do online may also drive in-store
traffic. See to it that you’re measuring your efforts on the digital marketing front.
● Word of mouth – Are your customers talking up your business? If word of mouth
is a big traffic driver for you, be sure to incorporate it into your retail marketing.

The devices that your customers are using when browsing your site

If you have an online store, be aware of the devices that people are using when
browsing your site. Are most of your visitors using a computer or are they increasingly
on their mobile devices? What’s the device split that you’re seeing on your site? The
insights you gather will help inform your design and marketing efforts.

The performance of your brand across various networks and platforms

Compare your brand presence and performance across different platforms. If you have
multiple social media accounts, for example, it’s worth measuring and comparing your
fanbase and engagement on different sites or apps, so you can identify your strengths
and weaknesses.

For instance, are you getting more engagement on one social network over another? Are
people clicking on certain ads and not paying attention to others? Determine the
reasons behind these things, then use those insights to steer your retail marketing
strategy.

2. Use with the store assets you already have

Before looking at fancy retail marketing tactics, start by leveraging the assets you
already have. If your store is up and running, you likely have a lot of resources that you
can use in your marketing efforts.

These assets include:

Your merchandise and fixtures

The best way to attract and convert customers is to wow them with your amazing
merch. See to it that you’re always stocking the right products. Then once you have the
right merchandise, come up with creative displays and arrangements to make them
pop.

Not sure how to do that? Start by identifying your “Lake Front Property.” This is the
area of your store that generates the most revenue.

According to Rich Kizer and Georganne Bender, “Displays in this area should house
new, hot and high margin product, not every day, basic items that are best housed
toward the rear of the store. And since 90 percent of customers enter a store and look or
turn to the right, the LakeFront Property needs to be merchandised with particular
care.”

Your window and curbside

Your window and curbside offer tons of opportunities to attract new customers, so get
the most out of them. Let’s start with your windows…
Window displays – Keep changing things up and try to update your displays at least
once a month. For busy shopping seasons like the holidays, you want to do it every
couple of weeks or even every week if possible.

Every retail store is different, so certain design tips may work better for others. The
“best” design or look depends on your customers, so zero in on who you’re targeting
and craft your displays specifically for them.

Also, consider telling stories with your displays. You can do this by selecting a theme,
and finding stories in line with it.

Check out what Anthropologie is doing. The apparel retailer changes the window
displays of its stores depending on certain seasons or events. What makes their window
displays great, though, is that Anthropologie always finds a unique angle or story
within its chosen season theme.

For instance, for Earth Day 2013, the retailer decided to “pay homage to the gifts of
gardening with a variety of handcrafted fruits and veggies, and containers made from
recycled cans, tires, bottles and more.”

Curbside – Don’t neglect your curbside. In addition to keeping this space clean and
tidy, consider adding “curbside extras”. For example, why not set up a sandwich board
outside your shop with some eye-grabbing text or art? Doing so can make passers-by
stop and pay attention.

Check out this great example from Covet Shoppe & Jewelry Bar in San Francisco

Your staff

Did you know that Starbucks spends more money on employee health benefits than
coffee beans? And according to AOL, the company also “offers extensive benefits
packages that are customized for each employee, called “Your Special Blend.” Options
include things like bonuses, 401 (k) matching plans, health/medical/dental plans, and
even adoption assistance.”

Starbucks recognizes that happy and healthy employees perform better and are
generally more pleasant. Walk into any Starbucks store and you’ll likely find
enthusiastic baristas who chat up customers and recognize their regulars. Starbucks’
employees provide a great in-store experience that keeps people coming back.

Here’s our point: employees could be your best marketers. It’s important to keep them
engaged and motivated. Accomplishing that starts with hiring the right people and
treating them well. Offer competitive compensation, provide ample training, and strive
to be a great place to work.

These steps will lead to happier employees and higher levels of performance, which in
turn lead to better retail experiences and more satisfied customers.

3. Leverage social media

When it comes to retail and social media, there are three platforms you should seriously
consider: Facebook, Instagram, and Pinterest. These are the most consumer-centric
networks, making them ideal for merchants. Pinterest has the added edge of being a
platform people specifically go to conduct research before they purchase something.

So let’s break it down:

Facebook tips for retailers

Here’s the reality: if you’re a brand who wants to get more visibility on Facebook, you
need to pay for it. The social network has been decreasing brands’ organic reach for
some time now, but in 2018, we can expect business’ organic presence to decline even
more.

Mark Zuckerberg himself said that they will be rolling out changes to the News Feed to
prioritize content from friends, family, and groups, so business pages will have to fight
even harder to get exposure.

Here’s what you can do to compete:

Start a Facebook Group – Facebook lets you create Groups for your business or brand.
Think of Facebook Groups as clubs or communities where your most engaged
customers and fans can congregate.
While you can talk about your products and business, the primary purpose of having a
Facebook Group is to allow your customers to connect with each other. It’s not a place
to shamelessly promote your business.

One example of a company that’s leveraging Facebook Groups is Peloton, an indoor

cycling brand. The company established the Official Peloton Rider Page, which is
“intended to be a community board for Peloton members to share their experiences on
the Peloton bike and iOS app.”

The Group is very active, and people use it to share their workouts, ask questions, dish
out tips, and more.

See if you can do something similar for your Facebook presence. If you sell something
that’s centered around a particular lifestyle or interests (e.g. fitness, food, crafts), then
consider creating a Facebook Group for your patrons and potential customers.

Run Facebook ads – If Groups aren’t your cup of tea, or if you want even more brand
visibility on Facebook, then you’ll need to run Facebook ads to reach your target
audience.

The good news is, Facebook has a variety of ad products with robust targeting
capabilities that let you zero in on your specific audience.

The best thing to do is test different advertising solutions, then keep track of your
metrics (e.g. clicks, engagement, sales, etc.) Take note of the numbers, then use those
insights to determine your ROI. This will help you figure which ad types are right for
you and how much to budget for Facebook advertising.

Using Instagram to market your store

With over 800 million monthly active users (over half of which are active daily), it’s
obvious that Instagram is a go-to social network for today’s shoppers. Here are some
best practices to consider:

Curate your visual content exquisitely – Your Instagram posts should be anything but
random. You need to create a clear brand aesthetic so when people visit your profile,
they get a quick idea of who your brand is.
Check out Clad and Cloth’s profile. You can see instantly from their collection of photos
that their brand produces casual clothing items and likes a clean neutral palette with
pops of color.

So, if you haven’t done so yet, spend time thinking about your brand aesthetic. Ask
yourself, what kind of first impression do you want people to have about your brand?
Find the answer then figure out how to make it come to life on your Instagram page.

Make liberal use of Instagram Stories – Instagram Stories allow you to be more
informal with your aesthetic, as people expect Stories to be more spontaneous and less
curated. You can use them to give people behind-the-scenes glimpses at your store or
showcase new products.

A secondary feature of Instagram Stories is that you can create a few permanent ones
to display on your profile, highlighting things you really want your potential
customers to see. Check out what Peridot Decorative Homeware is doing. The retailer
uses these permanent Story spots to make it easy for people to view interior designs,
shop for items, and more. They even created custom Story cover images to make them
look more attractive!

Hashtag it up – Research which hashtags are relevant to your brand and use them to
help your photos surface in front of people you’d like to become customers. Pro tip:
rather than putting the hashtags right into the caption, post your picture without
hashtags and immediately comment on them. It looks cleaner than putting hashtags in
the caption.

Pinterest for retailers

Now let’s move on to Pinterest best practices:

Remember that curation is key – Like your Instagram profile, make sure that your
Pinterest boards are carefully curated. You should create boards that make it simple for
potential customers to navigate to things they’re interested in.

J.Crew, as you can see, has boards that make it easy for you to look at their jeans, their
prints, or their stripes.
Don’t just pin your own things – Get social and pin things on your boards from
others. (But make sure it fits your aesthetic.)

Be aware that the Pinterest algorithm doesn’t necessarily surface your content
quickly – It can often take up to 6 months for your content to really start appearing in
people’s feeds.

This means that, while you should be pinning your products, pages that will do best for
you organically are likely to be links to your blog posts. You can write blog posts
specifically for Pinterest, such as gifting guides that help get your brand lift and will
then direct your customers on to your correct pages all year round. As for products,
they’ll do great on Pinterest in ad form.

4. Consider SMS marketing

SMS marketing has been making waves, and for good reason: people love their phones.
Research shows that US consumers check their phones 52 times a day and that text
messages have a higher open rate (98%) compared to email (25%).

That’s why if you haven’t dipped your toes into SMS retail marketing, it may be time to
do so. Start collecting your customers’ mobile numbers and send — with their
permissions — relevant marketing communications.

One retailer that’s seen amazing results with SMS marketing is Federation +, a popular
streetwear brand in New Zealand.

Federation + markets its brand on multiple channels, including SMS. One notable
initiative is the brand’s end of the year SMS campaign, in which customers were offered
a 20% discount both in-store and online. To give people a sense of urgency, the offer
ended at midnight that same day.

The initiative worked incredibly well. The campaign had a 95% delivery rate, an 8%
click rate, and a conversion rate of 11%. Suffice it to say, Federation + ended the year
strong!

5. Leverage video

In many cases, the best way to market your merchandise is to show your products in
action. This is easily doable in-store, where shoppers can touch and feel products or
even try them on. However, when marketing online, you need to get more creative with
your visuals.

Enter video marketing. When leveraged correctly, video does an excellent job in
showcasing the use cases and value proposition of your merchandise.

Here are some quick tips for using video in your marketing:

- Make them relatable – You want viewers to connect with your brand when they
watch your videos. You can do this by making the content as relatable as
possible. Start by featuring people who look like your target customers. If you’re
targeting middle-aged moms, for example, then you’ll want to feature that
persona in your content.
- Choose the right format and platforms – Determine the best platform for your
videos. Is your target audience on YouTube? Do they prefer TikTok or
Instagram? The answers to these questions will help inform your video strategy.
Factors like the length of your videos, the content you’ll produce, as well as the
themes and effects that you’ll incorporate into the content, hinge on the platform
on which your videos will live.
- Have a clear CTA – Determine what you want viewers to do after watching your
content. Do you want them to follow you online? Check out a specific product
page? Get in touch with you? Mention the CTA in your video or add a link in the
description. In some cases, you can embed a CTA link into the content and ask
viewers to “click” or “swipe up.”

One brand that’s doing a top-notch job with video marketing is Rebecca Minkoff.
Rebecca often posts Reels on her Instagram page to showcase different apparel pieces
and accessories. Rebecca Minkoff herself embodies that trendy female persona of her
brand, so she’s the perfect subject to star in these videos.

There’s also a clear CTA on most of her Reels. Whenever a product is featured in a
video, Rebecca Minkoff tags those products so customers can easily view and
purchase them.

6. Market your business through key partnerships

Partnering with a local business or charity is a wonderful way to get your brand’s name
out to people who can come and shop in person, not just online. There are a few ways to
do this:

Partner with the stores in the same location as you – If you’re in a strip mall or
downtown area, you can ask the stores around you to offer your coupons to their
customers (in return for you doing the same). The upside here is that you’ll be directly
reaching people who are perfectly positioned to just pop by. The downside is that your
neighbors’ clientele may not be your clientele.

Partner with stores in the general area whose clientele are your clientele – If you have
stores in the nearby area that service the same clientele as you, you can also ask them to
offer your coupons. Alternatively, if you worry that no one will be motivated to drive to
you based on coupons, you can always take your business to your partner and set up a
pop-up shop for a day.

Partner with a local charity to put on an event – Customers these days are much more
socially conscious and like to shop with brands who care. Partnering with a local charity
offers you the chance to hit two birds with one stone: get your name out to a new set of
people and show your customers you care about making a difference at the same time.
Choose a charity whose values align with your own and set up an event!

- Beef up your email marketing

Email marketing is still the most effective marketing channel, with a 4400% ROI. Taking
advantage of email to acquire new customers just requires a little savvy-ness.

- Segment your non-customers – The best way to use email marketing for getting
new customers is to segment your subscribers who haven’t purchased yet into
their own list. (For even more effective and personalized emails, you should
further segment this list by other relevant pieces of information.)

You can then send people who haven’t purchased yet targeted campaigns with
first-time buy offers or giveaways.

- Showcase your story and values while you’re at it – Another great campaign
idea is to send an email detailing your brand story. It’ll get people engaged with
your brand and excited about your values.
The Farmer’s Dog is killing it on this front. Check out this gorgeous email I received
after not purchasing. Their story is touching and the 20% off coupon is a solid CTA to
end on. (And fun fact: their marketing automation software also served me a
personalized 20% off CTA when I went to the website independently about 20 minutes
later. Genius.)

- Provide value (period) – Email promotions aren’t the only way to acquire new
customers.

You also have to think about the long game of email + content marketing, in which you
send valuable content without any hard sells or strings attached. This builds trust and
positions your brand as an authority, so when people are ready to buy, they’ll think of
you.

Check out what The Dollar Shave Club (DSC) is doing. While DSC sends promotional
emails now and then, they also have DSC “Original Content” emails that contain
informative (and entertaining) articles on grooming, health, style, work, and more.

These content pieces are non-salesy and they’re refreshing to read, especially when
every other company out there keeps sending “SALE” or “BUY NOW!!” emails.

The bottom line? Your email marketing strategy should have a mix of promotional and
valuable content. Find the balance that works for your subscribers and go from there.

8. Run a win-back marketing campaign

Marketing to new shoppers is great, but what about your existing customers? I’m
specifically referring to those who haven’t shopped with you in a while. Identify
inactive shoppers and win them back with a marketing campaign showing them what
they’re missing.

A good example of this in action comes from Our Bralette Club (OBC), a lingerie retailer
based out of Singapore. OBC uses Marsello to automatically run “win-back” campaigns.

Using Marsello, OBC automatically identifies customers who haven’t shopped with the
brand in a while, and sends them a series of messages encouraging them to come back
— complete with a 15% coupon. These messages have generated amazing results. OBC
earned $4,000+ in revenue in just 4 months thanks to this automated email flow.
9. Consider influencer marketing

These days, a nod or endorsement from an influencer carries more weight than
traditional advertising. Why? Because people are more inclined to act on the
recommendations of sources they know, like, and trust.

This is why it pays to have an influencer strategy. Getting key individuals to

recommend or talk about your brand can drive awareness, traffic, and ultimately, sales.

The basis of influencer marketing is that your brand partners with a third party content
creator who then pushes your products on their platform(s).

One brand, Morphe, used influencer marketing to become in less than a decade one of
the most powerful names in the beauty industry. Morphe was founded in 2008 with the
very intention of using beauty influencers, particularly those on Youtube, as their
primary way to generate sales. They have given many, many beauty influencers affiliate
codes, but Morphe really refined the art of marketing by working very strategically
with a certain few top influencers, whom they pay extra.

They also collaborated with these influencers to create customized beauty items, like
eyeshadow palettes, which the influencers then encouraged their huge followings to
purchase.

This strategy paid off in a big way when Morphe’s top influencer, Jaclyn Hill, delivered
Morphe 1 million sales of her palette in 6 months last year. At $38/palette, that’s pretty
life-changing for a brand.

The best part about this story for your store? You can totally replicate their success!
Morphe was an almost unknown brand when they first partnered with Hill, who was
also relatively unknown at the time. Morphe prudently chose to invest in her early on
and their partnership ultimately allowed both parties to flourish. If you’re looking to
use affiliate marketing, follow Morphe’s footsteps and get strategic about who you’re
investing in.

10. Start a referral campaign

Capitalize on word-of-mouth marketing with a referral campaign. While there are

many variations on referral campaigns, the core idea is that you provide some sort of
incentive for your happy customers to share the word about you to their friends.
Stitch Fix, a fashion box company, has referral marketing down to an art. Their referral
campaign is such a permanent part of their strategy that it actually has its own page on
their website.

Each customer is provided with a unique link to Stitch Fix’s home page. The customers
can then share this link with their friends and social network. When someone purchases
a box using that link, the original customer is given a $25 credit towards their next box.
(And the new customer is enticed to make a purchase with their own $25 credit.)

Retail Supply Chain Management

Retail organizations are using SCM to control inventory levels, product quality,
expenses, and timing. An effective supply chain strategy differentiates delivery terms
and service offerings which are vital for optimizing the customer service and balance of
cost.

Supply chain management (SCM) is the process of synchronizing the flow of physical
goods and associated information from the production line of low level com­ponent
suppliers to the end consumer.

This results in the provision of early notice of demand fluctuations and syn­chronization
of business processes among all cooperating organizations in this supply chain.
Effective SCM results in the significant reduction of both cost and time in the
procurement process, as well as reduction in inventory lev­els, thus enabling significant
gains in the organizational productivity. Supply chain management (SCM) concept is
revolutionizing the trade and business scenario across the globe.

Introduction

Retail organizations are using SCM to control inventory levels, product quality,
expenses, and timing. An effective supply chain strategy differentiates delivery terms
and service offerings which are vital for optimizing the customer service and balance of
cost. A cohesive approach considering production, supply, operation, service, and
transportation, is vital for designing a competitive retail logistics concept for a retail
organization.
Supply chain management (SCM) concept is revolutionizing the trade and business
scenario across the globe.

In the present era of networked organizations and interdependencies across

organizational boundaries, an organization’s competitiveness, perhaps its survival is
derived from its ability to influence external/third party resources and capabilities. It is
said that – “Competition today is not among individual businesses but among their
networks. The winner is the company with the better network.”

No longer can any organization viably “go it alone” when it comes to building and
delivering its offerings, no matter how strong its core competencies and products. The
extended enterprise and the networked organization have become the organizational
models for the future.

Organizations are narrowing their focus on their core competencies and outsourcing or
eliminating non-core activities. This trend is driven by ongoing efforts to deliver new,
innovative and more convincing products/services. Firms are increasingly turning to
external providers that can deliver many of these services better, faster, and cheaper.
Collectively these resources comprise its service chain.

Key to success in any organization is developing the ability to adopt the technology to
improve their profitability. With the advent of technology, retailers can achieve higher
levels of effectiveness in their efforts of giving better customer services.

No longer are the organization’s competitiveness constrained by its own internal

resources, intellectual capital and capabilities as the skills pool becomes almost
limitless. The major constraint that remains is the capability to procure and manage
those external services.

Successful business operations revolve around getting the right amounts of the right
products to the right markets at the right time in the most economical ways. SCM is one
of the ways to achieve this.

A supply chain is a business process that links manufac­turers, retailers, customers, and
suppliers in the form of a chain to develop and deliver products as a single vir­tual
organization of pooled skills and resources.
Within each organization the supply chain includes all functions involved in receiving
and filling a customer request. These functions include new product development,
marketing, operations, distribution, finance, and customer service.

Supply chain management (SCM) is the process of synchronizing the flow of physical
goods and associated information from the production line of low level com­ponent
suppliers to the end consumer. This results in the provision of early notice of demand
fluctuations and syn­chronization of business processes among all cooperating
organizations in this supply chain.

Effective SCM results in the significant reduction of both cost and time in the
procurement process, as well as reduction in inventory lev­els, thus enabling significant
gains in the organizational productivity.

Meaning and Definitions

Supply chain management (SCM) is the oversight of materials, information, and

finances as they move in a process from supplier to manufacturer to wholesaler to
retailer to consumer. Supply chain management involves coordinating and integrating
these flows both within and among companies.

It is said that the ultimate goal of any effective supply chain management system is to
reduce inventory with the assumption that products are available when needed. As a
solution for successful supply chain management, sophisticated software systems with
Web interfaces are competing with Web-based application service providers (ASP) who
promise to provide part or all of the SCM service for companies who rent their service.

Supply chain management refers to the management of material and information flow
in a supply chain to provide the highest degree of customer satisfaction at the lowest
possible cost. It requires the commitment of supply chain partners to work closely to
coordinate order generation, order taking and order fulfillment.

Some of the Formal Definitions of a Supply Chain are:

It is a network of autonomous or semi-autonomous business entities collectively

responsible for procurement, manufacturing, and distribution activities associated with
one or more families of related products.
A supply chain is a network of facilities that procures raw materials, transforms them
into intermediate goods and then final products, and delivers the products to customers
through a distribution system.

A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished products to
customers.

A supply chain “is a network of facilities and distribution options that performs the
functions of procurement of resources, conversion of these resources into halfway and
finished merchandises and the supply of these merchandises to the consumers”.

Significance and Importance (Efficiency of Supply Chain in Retail Business)

In the Indian context, the efficiency of supply chain in retail business is not so of high
importance as the vast retail market is much away from the so-called modern or
organized retailing. But for the success of retail the management of the supply chain is
very crucial. Because the whole Indian retail market is going through the phase of
globalization which is applicable in the context of Indian retail also. Efficient
management of the retail supply chain serves as a source of competitive advantage for a
retailer in a competitive environment.

Amul is the best example in this context. Good SCM reduces cost and increases
profitability for the retailer. In foreign context, its importance was earlier recognised. In
foreign context, Walmart is the best example. Supply chain technique can be vertical or
horizontal but the purpose is the same. Nowadays, businesses are hiring supply chain
experts or professions in the management of supply chain in retail. This is mainly done
to keep pace with the present competitive environment.

(i) Supply chain management is the management of material and information flow in a
supply chain to provide the highest degree of customer satisfaction.
(ii) It supports inventory management.
(iii) It helps for transportation service procurement.
(iv) It assists for customer service performance monitoring.
(v) It helps for operational analysis and design materials handling.
(vi) It ensures the operational improvements and distribution management.
(vii) It helps to reduce working capital.
(viii) Supply chain management accelerates cash-to-cash cycles.