Retail Management

Prof. Rakhi Thakur

Retailing : Introduction

Click to edit Master subtitle style Retail Mercahndise


What is Merchandising?
American Marketing Association has defined merchandising as, „ the planning involved in marketing the right merchandise at the right place at the right time in the right quantities at the right price.‟  It is achieving the „Five Rights‟  Having the right product  In the right quantity  Available at the right place  At the right time  At the right price

Merchandise Management

It is the analysis, planning, acquisition, handling and control of the merchandise investments of a retail operation.


The Evolution Of Merchandising
Initially retailers operated one or two stores

Then retailers started adding stores Workload on buyers increased
Planner came into being

Factors Affecting The Buying Function

Source: A theory of merchandise buying behaviour, Jagdish N Seth, Theory in Retailing, American Marketing Association

The Merchandising Activities     Planning • formulating policies • forecasting sales Directing • Guiding and training buyers Co-ordinating • co-ordinating the buying effort Controlling • assessing buyer‟s performance 6 .

The Merchandising Activities     Forecasting sales for the forthcoming budget period Translating the sales forecast into inventory levels in terms of rupees Inspiring commitment and performance on the part of the merchandisers and buyers Assessing merchandise and buyer‟s performance 7 .

development and management Pricing the merchandise to achieve the required targets Inventory management 8 .The Buying Activities      Developing the merchandising strategies Planning and sorting merchandise assortments Vendor selection.

The Concept Of Merchandise Planning  Merchandise planning can be defined as the planning and the control of the merchandise inventory of the retail firm. in a manner which balances between the expectations of the target customers and the strategy of the retail firm. 9 .

The Process of Merchandise Management .

The Implications of Merchandise Planning .

manageable group of products/services that consumers perceive to be interrelated and/or substitutable in meeting a consumer‟s needs.What is a Category A distinct. .

.What is Category Management    Managing the business of a category with a plan A common sense approach to building and managing your business A disciplined process that has evolved over time OR The distributor/supplier process of managing categories as strategic business units.

merchandising assortment strategy. replenishment   Affects manuf. sales and marketing Team approach between channel members . promo efforts. shelf space.Scope of Category Management  Integration of Buying and Merchandising responsibilities  Management of price.

Need of Category Management        Concept introduced in the early 1990‟s by The Partnering group Products were not viewed as consumer-centric categories Lack of a formalized business planning process Underutilization of consumer research. data. and tools Data mining was in its infancy No formalized & balanced view of business performance Non-collaborative supplier relationships .

How does customer purchase? .

Category Management in Practice   Category Plans – Jointly developed by retailers and manufacturers Strategies and Financial Objectives – GM.To become the lead supplier or channel captain for that category . Allocate space that maximizes Gross Margin/unit of space Supplier Goal . sales per sq feet   Retailer Goal – optimise each part of the store.

Category Management Process Category Definition Category Role Category Review Category Assessment Category Scorecard Category Strategies Category Tactics Plan Implementation .

Definition and Role   Strategic Decisions Performed as needed Category Definition Category Role .

Category Definition   Market Structure Preference Segmentation .

Running Case 21  ITC .

Products at a Glance .


especially housewives Mint-O • Mainly the youth since it exudes a ‘bindaas’ youthful image • Highly focused on children Kitchens Of India • Focuses on people who enjoy having royal cuisine with Indian-ness and a touch of sophistication Candyman Sunfeast • Children (who uses the product) • Parents ( who are the buyers) Bingo! • Mainly youth and middle-aged people .Market Segmentation Aashirvaad • Focuses on Indian families.

Convenience To be a category provider and help reinforce the retailer as the store of choice by delivering good target consumer value. 25 . competitive target consumer value. superior target consumer value. Routine To be one of the preferred category providers and help develop the retailer as the store of choice by delivering consistent. help reinforce the retailer as the store of choice by delivering frequent.Category Role Destination To be the primary category provider and help define the retailer as the store of choice by delivering consistent. competitive target consumer value. Occasional/Seasonal To be a major category provider.

Category Role Foods Role Aashir.Kitchens Sunfeast Mint-O Candy Of India vaad Bingo -man Destination Routine Occasional Convenience       .

Assessment Market Market Share & Benchmarks Distributor/ Retailer Contribution & Productivity Category Sub-Category Segment Brand SKU Consumer Buyer Profile & Purchase Behavior Supplier Share & Efficiently .

Market Share .

NRI’s) KoI cooking pastes for high end market A whole wheat based product targeted at children Each and every segment Benefit to the farmers & other consumers at the low end .Who is the target customer? Targeted at premium segment (tourists.

3. E-Choupal allows ITC to develop long-term supplier relationships Acceptance of any kind of gifts or payments from suppliers or customers is viewed as a serious breach of company ITC supported with investments in technology and equipments from world class suppliers in flexible packaging •Fast and effective sales ordering processes. •Flexibility •Quick reaction . 2.Suppliers – Distributors-RetailersCustomers 1.

LOGISTICS      Countrywide network in the agri-business One million paan. bidi shophops Another half-a-million outlets for other products 40 food factories across the country Army of traditional wholesalers to reach remote markets .

Ft/Week Private Label Sales % of Gross Profit Gross Margin Product Supply Days of Supply Inventory $ Turns GMROI Service Level Current _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ Target _______________ _______________ _______________ _______________ _______________ _______________ _______________ ______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ .Scorecard Consumer Retention Level Purchase Incidence Satisfaction Rating Share Category of Department Category of Market Sales Category $ Growth Sales/Sq. Ft/Week Profit Gross Profit $ Gross Margin Gross Profit Sq.

Different Goals for Different Categories .

. return on marketing investment.Manufacturer Scorecard   Effective use of technology Consumer. competitive and other metric. operational.

Balanced Scorecard   Provide feedback to both retailer and manufacturer Foster collaboration .

Create a Marketing Strategy Seven Common Marketing Strategies Traffic Building : Attracting customers to store/ aisle/ category Transaction Building : Enlarging the average purchase size Profit Contribution Cash Generating Excitement Creating Image Creating Turf Defending : Positioning the category strongly versus competitors .

Tools   PoS Scan Data Retailers Internal Data .

Turf Protector Micro marketing .Reduce Transit Time DC/Store Handling .Consumer Strategies Strategies Category Category Roles Destination Procurement Acquisition Strategy . Backhaul DC/Store Handling .Transaction Building .(If Necessary) Differentiated .Turf Protecting Cluster Marketing In-store Service Full Service .All EDI & EFT Distribution DC/Store Receiving .DSD.DSD.Transaction Building .Traffic Building .Best Cost & Terms Transaction Strategy .Sale-Ready Packaging Marketing Attract Strategy .Some EDI & EFT Acquisition Strategy .Cross Dock .Reduce Shrink Transportation .Transaction Building Uniform Marketing Self-Service Non-Differentiated .Image Enhancing Build Loyalty Strategy .Auto Replenishment Transportation .(From Competition Occasional/ Seasonal Convenience Acquisition Strategy .Sale-Ready Packaging DC/Store Receiving .(From Competition) DC/Store Receiving .Reduce Shrink Build Loyalty Strategy .Minimize Handling .Best Quality/Reliability .Majority EDI & EFT Semi-Service .(If Necessary) Non-Differentiated .Best Cost & Terms Transaction Strategy .Best Cost & Terms Transaction Strategy .Best Quality/Reliability .(From Competition) .Auto Replenishment Transportation .(From Competition Routine Acquisition Strategy .Auto Replenishment DC/Store Handling .Minimize Handling . Backhaul DC/Store Handling .Low Cost Attract Strategy .Reduce Shrink .Excitement Creating Cluster Marketing Self Service .Best Quality/Reliability .(If Necessary) Non-Differentiated .Traffic Building .

  .Marketing Strategies  “SHARUKH KHAN” “DHONI” & “SURYA” as brand ambassador of SUNFEAST Sunfeast World 10K Bangalore-Brand philosophy Spread the smile   E-Ccommerce activities for READY-TO-EAT Snack brand Tie-up with leading portals to promote snack range Panel tastes & approves it before processing takes place.

Biscuits)  Diversification of products (Biscuits. and Ready to Eat)  Extensive advertising (Biscuit. Wafers. wafers)  . Staples. confectionary. Wafers  Distribution Network  Market differentiation (Ready to eat.Category Strategies 41 Entering into less competitive or unexplored markets (Ready to eat.

Category Tactics Category Definition Category Role Category Review Category Assessment Category Scorecard Assortment Merchandisin g Category Strategies Category Tactics Plan Implementation Pricing Promotion .

200 differentiated products under 6 distinctive brands .Assortment   Famous restaurants like the Bukhara and the Dum Pukht .deep understanding of the Indian palate. localized launches The branded & packaged food business is represented in 4 categories in the market: ๑ Ready To Eat Foods ๑ Staples ๑ Confectionery ๑ Snack Foods  High SKUs.

Snack Foods Aashirvaad Aashirvaad: Staples: Aashirvaad Atta (Market Share: 50%). Gulab Jamun Ready Meals: Aaloo Mutter. Aashirvaad Salt Spices: Aashirvaad Pickle Mirch Powder Instant Mixes: Rava idli Mix. Palak Paneer .

CONFECTIONERY 40 % share in the mint category Source: hindubusiness line .

KoI – high end •Various SKUs at differentiated price points • Direct frontal attack by introducing similar priced SKU’s • Facilitate timely supply of raw materials • e-Choupal initiative • Printing & packaging business also lead to highquality.5/.10/per 100 gm pack) .per 75 gram pack .PRICING •Low Margins in confectionary business •Low price points(Rs. Rs. cost-effective & innovative packaging .

Distributed more than 4 lakh large racks POS • Introduced mega-size wafer trolleys outside most mom-and-pop outlets Trolley .Shelving • POS .

modern trade outlets. radio. online games. downloads. mobile games Clutter-breaking communication to create excitement around the brand 360-degree communication(outdoors. print.educates users about the current offers. on-ground promotions and mall activation) Social media Sponsor events for Channel V    .PROMOTION . stores.Bingo     Humour and irreverent advertising Crowd sourcing strategy in TVC Online presence .

Celebrity Endorsements .

Retailers must return expired or damaged products within six months after the date of expire.   .Plan Implementation Distribution System  ITC uses FIFO method to reduce the wastage of goods due to expiry. The company collects all the expired goods four times a year. and destroys them.  They also keep the good on constant move from low sales area to high sales area.

ITC finally became a profitable business for the first time since its launch in 2001. both under the Aashirvaad Brand.glucose. imitating and emulating the leader that was Britannia. they did what any new player in the market does. Launch of Bingo in 2007. with three varieties of biscuits . marie.  ITC entered the biscuits market with Sunfeast in 2003.Plan Implementation Diversification Strategy Food Business easy to enter. and cream.   .ITC entered into several categories-:  ITC entered into the branded and packaged foods business in 2001 with the launch of Kitchens of India brand. ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006.

52 Thankyou .

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