Retail Management


Course plan
Books to read Evaluation pattern Name cards

Retail Management

Course plan: •Overview •Institutions •Understanding customers •Market strategy •Financial strategy •Store location/ site evaluation •Organizing for retail •Merchandise management

Retail Management

Course plan: •Store management •Store layout •Customer service •Retail selling •Logistics and information systems •Careers in retailing


Retail Management Books to read Why we buy: Paco Underhill The call of the Mall: Paco Underhill The Nordstorm way: The Walmart Way Made in America: Sam Walton Retail management : Berman Evans 4 .

Retail Management Books to read Pour your heart into it: Howard Schultz Leading By design: Ingvar Kamprad Like No other store: Marvin Traub It happened in India: Kishore Biyani Retail Management: Gibson Vedamani 5 .

Retail Management Evaluation patterns: •Project – 10 + 10 •Case – 10 •Quiz/test – 10 •Class participation: 10 ( weighting subject to variation) 6 .

Retail Management Overview: •Alice in Wonderland.TESCO 7 .looking through the retail prism •Reducing queue size .

Retail Management Benefits to the customers: •Breaking bulk •Providing assortment •Holding inventory •After sales service •Providing information 8 .

Raymonds. Digzam (!). Binny’s (!). DCM 9 . S Kumar’s (!) and Grasim.Retail Management Benefits to the companies: •Greater revenue •More reach •Eyes and ears of the retailer •Obsolescence: physical/ technological/fashion •Some pioneers: bombay dyeing . Mafatlal.

retailing accounts for 10% of GDP. 800.Retail Management Some statistics (interview purpose) •In India. 8% of employment •Annual growth rate: 20-30% •Current size: Rs.000 crore 10 . batteries) • labor laws ( walmart ) 11 . availability of real estate Retailing environment: •Economic • legal (FDI). consumerism. brand profusion. property regulations.Retail Management Factors behind growth in retailing Economic growth/urbanization.debate . real estate ( rents.

Retail Management.overview •Technological •competitive 12 .

trinethra) c. Dialectic process: two institutional forms with different advantages modify their formats till they develop a third format combining their advantages 13 . Wheel of retailing a. Entry phase b. Trading up phase (life style.institutions Theories of retail life cycle 1.Retail Management. Vulnerability phase ( disruptive change) 2.

Retail accordion – continuous movement from general.specialized. Natural Selection: firm should be flexible enough to adapt to the changing environment and should adapt its behavior 14 .Retail Management.general 4.institutions Theories of retail life cycle 3.

Retail Management. administration skills and operations are critical • Adaptation is essential at the end. 15 .institutions Lessons from life cycle: • • Expand during introduction In maturity.

pierre cardin Business format franchising 16 .world of Titan Product/trademark franchising.Retail Management.institutions Retailer classification: Store based• Independent store • Chain store (disadvantages) • Franchise store• • • • • Master franchising – McDonald’s OR Area development franchising Exclusive showrooms.

Poland. samabayikas)farmer coops. mid-west Europe. SAIL. ( Turkey.Retail Management.India. Belgium. Italy.institutions Retailer classification: Store based• Leased department • • Consumer cooperative ( NTPC.slow food) 17 .

radio/tv/ household products 4. Annual sales under $10 million ( single product line not more than 80%) 18 . of a department store: 1. appliances. Should carry: furniture. Minimum fifty people 2.Retail Management. home furnishings.institutions Retailer classification: US Defn. 20% of total revenue from apparel and soft goods 3.

spencer’s daily) • Supermarkets: focus on food and household maintenance ( where to put milk?) • Departmental store.Isaac Mizrahi 19 .institutions Retailer classification: • Convenience stores ( 7/11. • Hypermarkets.combination of a discount store and food based supermarket • Guerilla retailing.Retail Management.pantaloons.

Lowe’s. musicworld . Staples. Builder’s Square.Retail Management. Sports Authority. Blockbuster • Chroma.institutions Retailer classification: • Category killers ( power retailers) • Toys ‘r’ Us. Home Depot ( Villager Hardware??). home town…… • Why are traditional departmental stores dead ? ( infants in India) 20 .

Retail Management- institutions • • • • • • • Emergence of specialty and discount store Designer labels have not increased store loyalty Specialty chains have stronger supply chains Too big and unproductive Scrambled merchandising from food retailers Reacting to suppliers Leveraged buyouts- debt-poor cash flow, limited funds for store renovation.


Retail Management- institutions • • • • • Factory outlets A) mfg. controls location- out of the way of distributors B) can be profitable – low rent, variety, service and NO margin for distributors C) proper disposal of discontinued items D) brand factory


Retail Management- institutions Retailer classification: Non-Store based • Direct marketing- the international scenario • A) company reputation- earlydays/ geography • B) shop when you like • Assortment • Brand names carried • Toll free number ( cost of shopping) • Credit card acceptance • Speed of promised delivery time • Comparable store prices • Satisfaction with past purchases


the international scenario a) Increased competition b) Dual distribution channels c) New use of catalogs.Retail Management.institutions Retailer classification: Non-Store based • Direct marketing. carry complimentary product ads.specialogs. sell the catalogs d) New use of TV: shopping networks and infomercials 24 .

williams-sonoma) • Challenges: lack of standards. lands end. different currencies.– • (assignment.discussion) • Global direct marketing.institutions Retailer classification: Non-Store based • Direct marketing.Retail Management. sharper image. uniformity for mass mailing 25 .the Indian scenario ( is there an opportunity. wide variations in postal rates.eddie bauer.

relatively slower growth.htm • Network marketing• Some retailers also have direct sales force: J C Penny decorator consultants 26 .institutions Retailer classification: Non-Store based • Direct selling.Retail for telemarketing rules check • www.

• not enough information 27 . • need to talk.institutions Retailer classification: Non-Store retail • Reasons for not shopping on the web• privacy • security. • seeing/touching products.Retail Management.

online retail • Reasons for not shopping on the web• Knowing the address • Clutter of websites • Easily bored • Slow sites ( rich sites).Hasbro • Customer service • Coordinating web-based selling with stores 28 .institutions Retailer classification: Non-Store based.Retail Management.

BUT not integrated with database • Integrated site – retail.institutions Retailer classification: Non-Store based.full scale selling. ordered immediately 29 . inventory and accounting.Retail Management. Out of stock items removed .types of web • Brochure web site • Commerce site.

types of web • ‘webified store’ – web connectivity to POS retail.Retail Management.customer directed to other stores if item out of stock – Provides information from manufacturer’s site Site integrated with manufacturer systems – Has all information for collaborative sales – Mfg automatically replenishes fast selling merchandise.SHIP directly to consumers 30 .institutions Retailer classification: Non-Store based.

institutions Retailer classification: Non-Store based.types of web • How will a TOP LUXURY RETAILER’s webpage look like? • PRADA ( check site) 31 .Retail retail.

Retail Management- institutions

Retailer classification: Non-Store based- online retail- types of web • “In Prada we always like to have a different way with everything. We look to the trend and then ask how we could do it another way. That is the way to add value, so long as you do it intelligently.”


Retail Management- institutions

Retailer classification: Non-Store based • Vending machines: ( • Generally beverages and food items • Why high priced items do not sell? • Video kiosks- potential- Virgin • Are smart cards better options than coins? • Airport retailing – dubai, india/ station retailing ? 33

Retail Management- institutions

‘many retailers have grown accustomed to shifts in what the consumer wants and are well acquainted with economic cycles. Even as they shutter unprofitable stores, they are opening newer, profitable formats and converting existing units to these formats.’

understanding customers Demographics is dead ! • Age distribution of population ( Eddie Bauer)• US scenario (33% above 50) .products • Income – 1980 to 2000 (why Walmart succeeded). disappearing middle class 35 .Retail Management.

Retail Management.understanding customers • • • • Urbanization The shrinking household The working women Diversified minorities ( black Santa) 36 .

Retail customers Demographic analysis The limited ( has • Express (young women) • Structure (for men) • Bath and Body Works( toiletries)/ Health and glow • Victoria’s secret ( lingerie) • Henri Bendel (upscale women’s clothing) • Lane Bryant (full-figured women’s clothing) 37 .

spending priority West Grocery Eating out Books/music Personal care North Grocery Personal care Eating out Books/music South Grocery Eating out apparel Books/music east Grocery apparel savings Personal care savings savings savings Eating out 38 .Retail Management.understanding customers Geography analysis (BB Gujarat) Regional market: Metro geography.

Retail Management. how much (ability. priority list 39 . working women spend. willingness and authority.understanding customers Consumer buying behavior What they buy. time spent.the didero effect) Look out for factors like shopping distance.

understanding customers Buying centers. reference groups How do they buy – stimulus/ problem awareness/ information search/ evaluation of alternatives/ purchase/post purchase Pharma retail – reactive well and worried well ( how will store design vary?) 40 .why do they buy?.diapers Buying influences.self concept • Social factors.who buys?( for whom?).shopping as antidepressant • Psychological factors: • Personal factors.class. culture.Retail Management.

open edible oil (BB Sangli).food bazaar as a destination) 41 .Retail Management. limited and routine Buying scenes: where do they buy fromgroceries. vegetables Food and grocery mainly from kirana ( atta chakki. fish.understanding customers Types of consumer decision making: Extended.

tees with customizable graphics ( If interested.a way of understanding the customerMemes are ‘cultural genes’ Application – shoes with adjustable soles.understanding customers • Memetics. read ‘The Selfish Gene’Richard Dawkins) 42 • • • .Retail Management.

or you are merchandise driven. The ones that are truly merchandise driven can always work on improving operations.Retail Strategy ‘In retail. you are either operations drivenwhere your main thrust is towards reducing expenses and improving efficiency. But the ones who are operations driven tend to level off and begin to deteriorate’ 43 .

alternatives.Retail Strategy Check Elements of strategy : ( Honda) 1. Situation analysis ( mission. goods category). movie halls. archies • • Product based/ need based Leader/follower 44 .ikea.sba.

Retail Strategy 2. Objectives: can refer to sales. concentrated marketing. differentiated marketing 45 . customer satisfaction and image 3. profit. Consumer identification: mass marketing.

Nordstorm 46 .loss leader pricing strategy • Customer intimacy : CRM.McDonald’s. sheetal design studio ( hemant trivedi)/qwiky’s – Price strategy. shopper’s stop.Retail Strategy 3 generic strategies: • Operational excellence. domino’s uses this as a differentiator • Product differentiation: Westside. customer loyalty programs.barista.

barista. starbucks • ‘paradigm of 1’ 47 .Retail Strategy Other strategies: • Ansoff’s product market expansion grid • Entry barriers in the form of culture – baskin robbins.

30 per sft for supermarkets ( 5000 sft): Rs 50 per sft for departmental storesInitial investments: Rs 800 per sft/ Rs 1200 per sft Employee cost: Rs 5000 per month Electricity: Rs 10 per sft • Income from brand promotion 48 .Retail Strategy Analyzing retail performance: Payback period analysisRentals : Rs.

barista early days 49 .increasing stock turns increase incremental ROCE – helpful in funding growth of new outlets through internal accruals Reason why many retailers fail: leveraged expansion and low stock turns ( shopper’s stop/ Trent in 2000).Retail Strategy Analyzing retail performance: Importance of stock turns ( annual sales / year end inventory).

A long gestation business. raise money. c. consider going public b.Retail Strategy Things to remember when investing in a retail chain: a. pay debt and go forward AND c. Making EACH store profitable is very imp. 50 . 5-7 years before stabilizing b. Stop/control expansion till that time. if you are making lossesa. Go public.

Retail selling 3. Warehousing and supply chain management 7. Loss ( shrinkage) prevention 51 . Store staffing and scheduling 4. Customer service/ accommodation 2. Store administration and facilities management 6.Retail operations Retail operations include: 1. Retail floor and shelf management 5.

Customer transactions.Retail operations Retail operations include: different points of time 52 . Pos/ cashiering process 9. Visual merchandising and displays Dipstick parameters: a.

Retail operations b. Hourly customer traffic: multi-department stores g. Stocks ( av selling price/ stock price) 53 . Customer conversion ratio (percentage yield rate/ walk to buy ratio) c. Transactions/ hour e. Returns to net sales d. sales/transaction f.

Retail operations • Stock turnover /inventory turnover ratio: Net sales/ average value of inventory If daily sales account for 2% of the stock. whats the ratio? • Percent inventory carrying cost (Inventory carrying cost / net sales) 54 .

Retail operations • Gross margin return on inventory Gross margin/ average value of inventory • • Markdown percentage shrinkage to net sales 55 .

Retail operations • Space productivity: • Occupancy cost per square foot selling space ( gives estimate of gross margin required for multi unit retailers) • Sales/square foot • Stock/per foot • Percentage selling space 56 .

useful for buyers • Quantity or value purchased per buyer (buyers performance depends upon number of suppliers. no.Retail operations • employee productivity: • Net sales/employee • Customers served/employee • Gross margin per employee ( measure employee’s performance). of SKUs as well as replenishment cycles involved) 57 .

inventory. labor and space inventory – GMROI Space – GMROF Labor – GMROL If overall retail performance is to remain unaffected: PRICE CUT IMPLIES IMPROVED increased sales and space and labor 58 .Retail operations • The strategic resource model of retail SRM measures three resources.

Raymond’s – 24.1 • RONW gives good indicators for future expansion 59 .09).Retail operations • The strategic profit model of retail Return on net worth (RONW) =profit margin (net profit/net sales) x Asset turnover ( net sales/total assets) x Financial leverage ( total assets/net worth) pantaloon. bata – (3.4.64 Westside – 7. archies – 21.

Retail operations • The strategic profit model of retail 3 tools to manage performance: – – – Profit management Asset management Debt management 60 .

do’s and dont’s (HBR article on pricing cues) Cutting costs without cutting corners ( use of technology. scm …) 61 .Retail operations • The strategic profit model of retail Profit management: • • • Involves sales productivity and cost control (Tuesday morning) Price increase.

steps for better inventory performance: Right quantity/ fewer suppliers/ control systems/ managing slow moving items 62 .Retail operations • The strategic profit model of retail Asset management: • • • • Discount stores have higher asset t/o than department stores ROA ( net profit/assets) is a common indicator Inventory control is critical.

Retail operations • The strategic profit model of retail Debt management: • Pros and cons of leverage ( interest rates)using franchising when in trouble ( barista) Short term. new equipment .) and long term finance Short term finance may be inevitable for seasonal retailers Setting performance objectives 63 • • • .. intermediate ( refurbishment.

Process of store planning and location selection b. Details of store design and image mix d.Store planning. design and layout Learning objectives: a. Some location assessment formats c. Issues related to store layout/ circulation 64 . Retail space management e.

Store planning. design and layout Trading area analysis: • • How trading area is related to promotions trading area overlap. fringe trading areas 65 . Mapinfo) Primary.2 stores in the same mall can have different trading areas • • Use of GIS (Eicher. secondary.

design and layout Trading area analysis: • • • • • • Destination store Parasite store ( flower shop in a hospital) Use of store records Consumer profiling (reliance retail) Can we have a shopper stop at shankarpally Analog model – similarity analysis 66 .Store planning.

design and layout Trading area analysis: • • Regression model: using equations ( sales vs.) Gravity model: considers – Distance between consumers and comp – Distance between consumers and chosen site – Store image 67 .Store planning.. traffic …. population size.

Store planning. design and layout Trading area analysis: • • Reilly’s law: gives the point of indifference Huff’s law of shopper attraction: considers product assortment. travel times. sensitivity between the two 68 .

design and layout Trading area analysis: main factors • Population size and characteristics • Availability of labor • Closeness to source of supply • Promotion facilities • Economic base • Competitive situation • Availability of locations • regulations 69 .Store planning.

disposable income • Buying power index = 0.3 ( area% of national retail sales) + 0. design and layout Trading area analysis: buying power • Effective buying income (EBI).2 ( area % of population) 70 .Store planning.5 ( area’s % of national EBI) + 0.

mall location • • • • 71 . design and layout • Store planning includes location planning and site selection Location planning: 1. high street location ( high eyeball rate) 2. destination/freestanding location 3.Store planning.

72 .Store planning. design and layout • • • • • • • • Factors to consider during site selection Adjacent occupants Commercial viability Taxes/ legal issues Number of floors Other nearby facilities Parking Terms of contract etc.

Store planning. design and layout Location selection issues for a supermarket • • • No. of offices. students. buildings within a 50 m radius No. professionals…. 73 . of kirana store within 1 km radius Competitor premises nearby Customer flow data: (weekdays) • • Lean/medium/peak Residents/people in transit.

of footfalls expected • • • • Expected conversions Expected sales per day in the area Average basket value The kishore biyani way ( hit movies/ lower parel Phoenix Mill) 74 .Store planning. design and layout Customer flow data: (weekends) Extra factors• No.

design and layout Site selection – some pointers • • Balanced tenancy Ownership vs.Store planning. leasing • Sale-leaseback • Lease types: straight lease/ graduated lease % lease ( specified minimum/ maximum) Lease covering increase in maint Net lease ( retailers pay for facilities) 75 .

design and layout Site selection – some pointers • • • • • • How pantaloon kolkata store was selected gut feel. % of daily sales as security 76 . location.Store planning. no stairs. agreement with SS Dhanuka.

design and layout Store design and image • • • • • • • Employee type and density (saree shop one per 100sft/ DP: one/ 400 sft) Merchandise type and density s/market has a higher density than dp/stores Fixture type and density (boltless racks) wood/marble/granite in jeweler Metal and plastic in sports shop 77 .Store planning.

design and layout Store design and image • • Sound type Odour type (coffee/ flowers for men/cosmetics) • Visual type and factors: – – – Yellow for gold/ day tones for garments Yellow and red increases pulse rate (impulse goods) Pastels/soft tones for places requiring long time for inspection and selection (watches and jewelers) 78 .Store planning.

facilities (60:40) • Staple goods: store USP:55% of store offering-generally towards the back (shirts and trousers/ grains and sugar ) 79 .Store planning. staircases. lifts. aisles. design and layout Store design and image – the space mix Idea is to optimize selling space The selling area is used to present the merchandise • Non-selling part is accounted for by circulation space.

15% of the storegiven maximum exposure ( candies/socks)near cash counters and exits Different categories.Store planning. design and layout Convenience goods: basic merchandise.bought in multiple units (white tshirts) Impulse purchase merchandise.different places 80 .30% of the store.

Helping customers reach and access merchandise c. design and layout retail space management: a. Aesthetics of a well planned floor triggers a come back feeling e. Creating a feeling of comfort in their minds d. Ensuring smooth and efficient customer flow b. Helps in selling more effectively and retain customers 81 .Store planning.

Store planning, design and layout

store layout: the circulation plan a. Lighting and displays have a pinball effect b. Dp store highway is six feet wide/ 3‟ in sm

a. b. c. d. e.

Free flow circulation: boutiques Grid circulation: typically in supermarkets Race track circulation: subiksha/ikea Herringbone- typically in a narrow store Spine – herringbone without side roads

Store planning, design and layout

floor space management a. Sales / sft b. Margins/sft c. Stock / sft

Space audits:
• • Hot spot analysis Selling space to non-selling space

Store planning, design and layout

golden rule for retail space planning: • • • Customer comes first! Only browsers can turn into buyers Optimize trading space Appeal to customer‟s five senses


Visual merchandising • • • enhances shopping experience Is a communication tool Role of Presentation • • • Helps customer in making buying decision Store atmosphere Using a theme for VM 85 .

Visual merchandising • VM will differ for lifestyle retailing (aspiration) and value retailing • Signage.imp in larger stores Job of a VM • Planning the theme and create displays • Arranging props for displays • Arranging fixtures and lighting • Setting up stores before opening • Working with floor plans • Training • Organizing merchandising units 86 .

Visual merchandising • • • Displays.window (exclusive / open window) Live display – kid‟s kemp Marquee display • • • • • Island displays Counter displays ( backlit – watches) Brand corners ( shelves and gondolas) End cap displays ( the boomerang effect) Cascade/waterfall display 87 .

Visual merchandising • • • • • • Some more points on signage: Message should be zone specific Where to put signs in a shoe store? In a multi-storied mall ? Banner in the cash area Smart sign placement intercepts shopper’s line of vision • Look for areas where people have time ( forced to wait.maruti) 88 .

Visual merchandising • Some more points on signage: • Signage in restaurant – you are looking for the waiter & then the restroom – sign near a restroom ? • McDonald’s: 75% of customers read menu AFTER ordering • Table tents• Deeper areas require longer messages • What's common to bank. p/o and fast food joints ? 89 .

Visual merchandising • Some more points on signage: • Putting backlit signage beneath a table in post office? • Separate strategies for shoppers walking in and walking out • Shifting bill boards/ moving bill boards/ video bill boards/ rotating arena 90 .

What ideas you will give to prada. has decided to open a „one of its kind‟ store in New York. to create a unique customer experience ? the shop will carry mainly women‟s dresses - • • 91 . Barcelona and Berlin.Visual merchandising • Prada. one of the highly coveted luxury fashion retailer.

We wanted to be seen to waste space.Visual merchandising • $40 million. Which is another form of luxury‟ rem koolhas 92 .000 sft store • „The store‟s never really been about maximizing the per-square-foot sale space. 23.

Visual merchandising 93 .

day/night/evening Closet touch screens.RFID closet Staff devices: all-in-one/ catwalk videos Magic mirror.Visual merchandising • • • • • • • Interactive dressing rooms: Glass changes from transparenttranslucent-transparent Lighting.‘see your back’/ slow motion Use of human factor specialists 94 .

Personal selling in retail • • • • • • • • Role of a retail salesperson: Resource for information Value counsellor PRO Merchandise custodian Explaining benefits and not features Keeping complaints to the minimum Develop loyalty 95 .

Personal selling in retail • • • • Checklist for sales Test of attitude Test of skill Test of knowledge ( shopper’s stop) • Test of integrity 96 .

up and x-selling Suggestive selling closing 97 .Personal selling in retail • • • • • • • • • The sales process Connect with the customer ( beyond smilingIndian scenario) Probe needs subtly Presenting merchandise Handling objections Recognizing buying signals Trial close and add-ons.

Personal selling in retail • • • • • • • • A sample training tip: Greet the customer Listen to their needs Know your products Lern to juggle several shoppers Pack merchandise carefully Refer customers by their name Stress hassle-free return policy 98 .

Personal selling in retail • • • • • Lessons from a successful sales associate: First 10 minutes Offers delivery/ travels to customer’s office / home Sends hand written note about latest trends Key customers receive bags/ chains on birthdays/ anniversaries 99 .

Personal selling in retail • • • • • • • • • Lessons from a Nordstrom legend: Don’t think about sales Calling customers when new stocks arrive Accepts new opportunity Bad opening day – cold calls 7 years to perfection Arrive early and do difficult things first Using the telephone EARNING trust 100 .

Personal selling in retail • • • • • • • • Lessons from a Nordstrom legend: Choose your role – time saver/ confidante/ teenage counselor/ know-all People love to talk about themselves Never judge by appearance Talk less about price.get your judgment Don’t take a decision on his behalf Multiple sales Follow through.stunning effect 101 .

Merchandising • Learning points: • • • • Category management Assortment planning process Setting financial objectives Product mix trends 102 .

price (3) 103 .Merchandising • • • • • • • • Category hierarchy: Division (apparel…) Department (men’s…...) Sub category: full sleeve formals Brand: arrow Style: button down collar Options: size(4). color (5).) Category (shirts. design (3).

perceived by customers to be interrelated and/or substitutable – men’s and girls’ jeans • C-M involves managing all SKUs within a category – satisfying customers and increasing sales e. manageable group of products and services.g.Merchandising • Category is a distinct . color plus in mumbai 104 .

Merchandising • • • • • • • • • Responsibility of category manager Vendor interaction Merchandise selection Merchandise pricing Working with ad department Role of merchandise planner: Purchasing the right quantity of product Assigning merchandise to stores Monitoring sales and suggesting markdowns 105 .

convenience and seasonal Category assessment Category scorecard: developing bottomline and setting targets Category strategies: developing marketing strategies.Merchandising • • • • • • The C – M process: Category definition Category roles:destination. routine.demand and supply oriented 106 .

pricing etc Implementation The buying organizers: purchasers/buyers Setting financial objectives: GMROI/ inventory turnover Advantages of rapid inventory t/o: – Increases sales volumes – Reduces obsolescence / markdowns 107 .Merchandising • • • • • Category tactics related to assortments.

order processing etc 108 .meeting.Merchandising – Improves salesmen morale – Helps to buy more merchandise – Reduces operating expenditure (lower carrying cost. lower interest) – Increases asset turnover – Disadvantages: – Loosing customers/ increasing cost of goods of sold due to purchase in smaller quantities – Increases operating expenditure.

Availability offered by retailer 2.difference between fad / fashion – Krrish – The assortment planning process – Depth ( assortment) / breadth (variety) Determining buffer stocks: 1. Lead time fluctuation 4.Merchandising – Category lifecycle. Demand fluctuation 3. Product availability of the vendor 109 .

Merchandising – Assortment plan: minimum for fashion related category – Product mix trends: – Shotgun merchandising – Rifle merchandising 110 .

Merchandising – Assortment plan: minimum for fashion related category – Product mix trends: – Shotgun merchandising – Rifle merchandising 111 .

Merchandising – Most common: OTB (open to buy) – Helps retailers project and control future buying – OTB refers to merchandise budgeted for purchase during a certain period of time for which the stocks have not yet been ordered. It also involves forecasting – OTB amount: amount remaining to be ordered to meet the budget – Retailers tend to overstock when sales increase and under stock when they are low 112 .

Merchandising – Most common: OTB (open to buy) – Helps retailer fix the ideal amount of stock that should be on hand at the beginning of any given month and the quantum of new merchandise to be received during the month 113 .

instrument thru which the tentative plan of order placement to the vendor is done for the whole season as soon as the inventory planning is completed – Integrated supply chain.SCM & logistics – PPO: pre purchase order.Whirlpool – Hit ratio: gap between delivery and purchase orders – VMI: vendors manage inventory at the store/ take back slow selling items – EDI: – Warehouse management: 114 .

inter transfer notes.when merchandise is supplied to the retail stores (ITN out) – Material handling: forklifts/ Zara using hangers – ECR – Automatin and barcodes (EAN standards)115 .SCM & logistics – EDI: – Warehouse management: GRN – ITN.

SCM & logistics – RFID in retail: – No need to unload goods at cash/ shrinkage – No need to check loadings and unloading in the warehouse – Results from WM: 16% reduction in OOS items AND items with RFID tags replenished 3 times faster – SCM @ Tanishq – SCM @ Shopper Stop – SCM@ Reliance retail (article discussion) 116 .

nike 117 .military origin – Critical in outsourcing an era of globalization and – Logistics is tactical and SCM strategic: walmart.SCM & logistics – Logistics. dell and Zara – No longer a cost – Dangers of scm: the walmart effect.

SCM & logistics Some trends: – Putting second factories in customer-dense markets – Zara breaking conventions – Two issues: buying cheaper and cutting stocks – The bull-whip effect.source of major inefficiency – P&G and pampers – More reliable information flow can smooth out fluctuations 118 .

adaptable and speedy – Flexitronics: 30 119 .how ‘transnational’ companies use SCM strategically.SCM & logistics Some trends: – In future supply chains/networks will compete with each other and NOT companies – Manufacturing complexities – CISCO – Agile.

does it deliver what it promises? 120 .this creates assortment problem for retailers – 2 ‘moments of truth’ for retailing (P&G) – A. is the product on the shelf? – B.SCM & logistics Some trends: – Criticality of information ( and inventory) – Different product (supply chains) move at different speed.

SCM & logistics Some trends: – Role of packaging in SCM – Toyota in India – Role of containerization – Fedex. UPS and they are growing? – By giving value added services – like? 121 .

SCM & logistics Some trends: – Fedex – Kinkosemergency backups e-mailing documents/ – UPS and Toshiba laptops – Whirlpool truck drivers – Just-in-time lobsters 122 .

SCM & logistics Some trends: be careful of slim supply chains How sony ericsson came into being – Toyota using video conferencing to discuss new rumours (6 lacs cars. globalization and outsourcing provide temporary relief. Barry Lynn) – Due to consolidation.flexibility is lost 123 . 200 tier I suppliers in 400 factories) – How all this relates to globalization (End of the Line.

SCM & logistics Some trends: be careful of slim supply chains – Continental strategies – Product line strategies – Limits of globalization defined by supply chain management! Come back home – Risk management (internal impact on share price and external)- 124 .

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