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ST PAUL'S UNIVERSITY

CAT ONE

COURSE CODE: BSP 309

COURES TITLE: RETAIL MERCHENDISING

Admission No: BBAMNRB395417

Lecturer: MARY KIBUINE

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QUESTION ONE

a) Explain FIVE environmental factors that determine survival of a retail business. (10
marks)

1. Economic Conditions: Retail business success depends on economic conditions. Retailers'

sales and profitability are affected by the economy, consumer spending, inflation, and
unemployment. Retailers lose sales when consumers cut discretionary spending during
recessions. However, economic upswings boost consumer confidence and disposable income,
which boosts retail sales.

2. Market Competition: Significant environmental factors include retail market competition.

Direct and indirect competitors can hurt retailers. Competitive strength, pricing, product
offerings, and customer service can affect a retail business's market share and profitability.
Consumer preferences change, so staying competitive requires constant adaptation and
differentiation.

3. Technological Trends: Advancements can improve or disrupt the retail industry. New
technologies like e-commerce platforms, mobile apps, and in-store automation can help retailers
attract and retain customers. To compete and provide a seamless customer experience, retailers
must keep up with technological trends and integrate them into their operations.

4. Regulatory Environment: Government policies and regulations can significantly impact the
retail industry. Retailers must follow tax, labor, health and safety, and consumer laws.
Regulations like minimum wage increases and tax policy changes can affect operating costs and
profitability. Long-term survival requires awareness and compliance with these rules.

5. Social and Cultural Trends: Changing consumer preferences, behaviors, and values impact
retail businesses. Lifestyle, demographic, and cultural changes can affect product demand and
shopping habits. Adjusting to these trends and offering products and services that appeal to their
target market will help retailers succeed. Social and cultural factors like sustainability concerns
can influence consumers' choices, increasing demand for eco-friendly and socially responsible
products.

b) Describe FIVE features of an adaptive retail enterprise. (10 marks)

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1. Data-Driven Decision-Making: Adaptive retailers use data and analytics to guide their
strategies. They make informed decisions by analyzing customer behavior, sales trends,
inventory levels, and other metrics. This data-driven approach helps retailers identify successes
and failures and adjust their strategies. Personalizing marketing and merchandising improves
customer experience.

2. Multichannel and Omnichannel Retailing: Adaptive retailers prioritize meeting customers

where they are, including physical stores, e-commerce websites, mobile apps, and social media
platforms. They offer multichannel and omnichannel shopping so customers can shop
seamlessly. This flexibility helps retailers reach more customers and adapt to changing tastes.

3. Agile Supply Chain Management: Retailers with adaptable supply chains are efficient and
agile. Optimizing inventory management, demand forecasting, and supplier relationships reduces
lead times and costs. A flexible supply chain lets retailers respond quickly to demand and market
trends, keeping products in stock when customers want them.

4. Customer-Centric Approach: Adaptive retail enterprises prioritize customer-centricity. These

retailers value customer feedback, needs, and preferences. They actively engage with customers
via various channels, gather feedback, and improve the shopping experience. This customer
focus allows retailers to adapt product assortments, pricing, and services to customer needs.

5. Innovation and Experimentation: Adaptive retailers encourage innovation and

experimentation. They experiment with new technologies, store formats, marketing strategies,
and business models. These companies take calculated risks and learn from mistakes. Innovation
can improve efficiency, customer engagement, and competitive differentiation, helping retail
companies stay ahead.

QUESTION TWO

a) Determine FIVE consequences a retail business may suffer for engaging in unethical
practices. 10 marks)

1. Reputation Damage: Unethical practices like deceptive marketing, low product quality, or
unfair employee treatment can damage a retail business's reputation. Negative publicity and
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customer backlash can damage credibility. Damage to the brand's reputation may reduce
customer loyalty, making it harder to attract and retain customers.

2. Legal and Regulatory Consequences: Unethical behavior may cause legal and regulatory
issues. Fines, penalties, and legal action can result from violating consumer protection, labor, and
environmental laws. Legal disputes and investigations affect retailers' finances due to their cost
and duration.

3. Lower Sales and Profits: Unethical practices can harm a retailer's finances. Customers who
discover unethical behavior may shop elsewhere, reducing sales and profitability. Negative
publicity or boycotts can hurt a retailer's bottom line because customers may avoid doing
business.

4. Employee Disengagement and High Turnover: Unethical retail practices can cause employee
dissatisfaction, low morale, and disengagement. High employee turnover can result from unfair
labor practices, disrespect, or poor working conditions. This can disrupt operations, raise
recruitment and training costs, and harm the workplace.

5. Supplier and Partner Relationships: Unethical behavior can harm relationships with suppliers,
partners, and stakeholders. Suppliers may stop working with an unethical retailer, affecting
product availability and quality. Business partners may also distance themselves from the retailer
to avoid unethical behavior. It can disrupt the supply chain and reduce access to valuable
resources and partnerships.

b) Explain FIVE cultural habits that promote entrepreneurial development in the

retail industry among the youth in Kenya (10 marks)

1. Entrepreneurship and Risk-Taking: Entrepreneurship must be promoted. Kenyan youth should

learn to take risks and see failure as a learning experience. Young retail entrepreneurs can
overcome obstacles with a resilient and persistent culture.

2. Networking and Collaboration: Networking and collaboration are essential for entrepreneurial
growth. Kenyan youth should connect with mentors, peers, and industry professionals. This can
facilitate knowledge sharing, resource access, and collaboration, which are crucial in retail.
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3. Innovation and adaptability: The fast-paced retail industry requires innovation and
adaptability. Kenyan youth should be encouraged to think creatively, solve problems, and adapt
to market trends. Retail entrepreneurship can benefit from a culture of technology and openness.

4. Financial Planning and Literacy: Young entrepreneurs must learn financial literacy. Financial
management, budgeting, and business planning should be taught to young Kenyan entrepreneurs.
They can make better financial decisions and manage their retail businesses with this knowledge.

5. Community Recognition and Support: A culture of community support and recognition can
inspire young entrepreneurs. Young retailers gain confidence and motivation when communities
recognize their contributions. Support can be shown by attending local markets, promoting local
products, and celebrating entrepreneurial success.

QUESTION THREE

a) Describe FIVE ways that retailers market their merchandise (10 marks)
1. Visual Merchandising: Visual merchandising involves making products look appealing.
Store layouts, window displays, product placement, and signage make shopping appealing.
Well-organized and attractive displays can attract customers and encourage purchases.
2. Content Marketing: Content marketing engages and educates customers by creating and
sharing useful content. Retailers use blogs, videos, product reviews, and guides to provide
product information. This draws customers and establishes the retailer as a niche expert.
3. In-Store Experiences: In-store events, workshops, and experiences engage customers and
boost foot traffic. Events can include product launches, fashion shows, demonstrations, and
community activities. In-store experiences let customers interact with products and brands
differently.
4. Loyalty Programmes: To retain customers and encourage repeat purchases, retailers
implement loyalty programs. These programs reward loyal customers with discounts or
exclusive access. These programs are promoted through email marketing and in-store signage
by retailers.
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5. Product Labelling and Packaging: Product packaging and labeling are marketing. Packaging
can highlight a product on the shelf and inform consumers about its ingredients, benefits, and
usage.
b) Determine FIVE technologies that enable chain retail business (10 marks)

1. POS Systems: POS systems are crucial for chain retailers. They manage inventory, improve
checkout, and track sales. The cloud allows modern POS systems to access data in real time and
integrate with e-commerce platforms. These systems accept mobile wallets and contactless
payments.

2. Inventory Management Software: Retailers can optimize their supply chain and maintain
accurate stock levels with inventory management software. These systems automatically reorder
products, track sales, and monitor store stock levels. This technology reduces overstocking and
understocking, ensuring customers have products when they need them.

3. E-commerce, mobile apps: Chain retailers increasingly use e-commerce and mobile apps to
reach more customers. Online shoppers can browse product information, place orders, and
choose delivery and payment methods on these platforms. Omnichannel shopping is possible by
integrating e-commerce and physical store operations.

4. CRM Systems: CRMs help chain retailers manage customer data and relationships. They
gather and analyze customer data to personalize marketing and boost loyalty. These systems
track purchase history, preferences, and behavior to send targeted promotions and improve
shopping.

5. Electronic Shelf Labels: Electronic price tags (ESLs) let retailers update prices and
information live. These labels improve pricing accuracy, reduce manual price change labor costs,
and enable dynamic pricing.
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References

1. Handbook of Supply Chain Management by James B. Ayers, Publisher: Auerback

Publication
2. Essentials of Supply Chain Management by NJ Hugos, Publisher: John Wiley and Sons
3. Retailing Management by Michael Levy and Weitz Barton A, Publisher: John Wiley and
Sons
4. Activity – Based Costing: Making it Work for Small and Mid- Sized Companies,
Publisher: John Wiley, New York