Professional Documents
Culture Documents
Retail
Retail
Retail
profit is sanity,
cash is king”
With about 11 retail shops for every 1,000 persons,
India has the highest shop density in the world.
• Buy
• Basket size
• Frequency of visit
• Recommend / refer
THE RETAIL ENGINE
Need
N
Know
Visit K
Revisit N
Choose
Referrals
Satisfied
Atul Natu
KNOW
• Store location
• Visibility
• Word of mouth
• Promotion
• Distance
VISIT
• Store front
• Ease of access
• Convenience
• Proposition
– Assortment
– Pricing strategy
• Promotions
• Referrals
• Past experience
CHOOSE
• Assortment
• Display
• Pricing
• Salesmanship
• Pricing
NEED GENERATION
• Display
• Pricing
• Assortment
• Location
• Assortment
• Display
THEORIES OF STORE CHOICE
• Hedonistic model
• Utilitarian model
• Convenience model
• Gravity theory – This theory proposes that the probability of a store being selected by a
customer is directly proportional to the size of the store and inversely proportional to the
distance to be traveled to reach the store
• Linear model – The linear learning model is based on the premise that the customers’
choice of store is based on his / her previous experience with the store. Better the
experience, larger the probability that the store will be visited by the customer.
• Agglomeration forces – In some categories, more the number of stores are clustered
together, more will be the benefit to the retailer. The stores complement each other due to
the cluster
• Situational – This theory does not rely on gravity alone to explain the customers store
choice. It takes into account the purpose of the store visit. The customer selects a store
based on the purpose of purchase.
• Simultaneous process of store choice - Based on the utility theory, the simultaneous choice
model believes that the customer assesses the utility of each of the store and then selects
the store with maximum utility.
• Hierarchical choice –It assumes that the customers will not have awareness, time, ability to
know the offering of all the stores selling the desired product. Hence instead of comparing
all the stores, and their utilities, the customers first choose a cluster of stores. After
selecting a particular cluster, the customer chooses a store based on utility theory from
amongst the choices available in that cluster. A Stewart Fotheringham (1988) says
• Lowest total cost - Fixed and variable expenses of shopping
HYPOTHESES WRT STORE CHOICE FROM REVIEWED
LITERATURE
• Customer
• 7 Ps
– Product - Assortment – width, depth
– Price – Full price, discount stores
– Place – towns, location strategy
– Physical ambience - size, interiors
– People, Promotion, Processes
Hut, KFC
• Home & Interiors - Home Centre , Rosebys, Home Town, @home, Home Stop
• Hypermarket - Spencer's Hyper, Hypercity, MORE, Big Bazaar, Reliance Mart, Star Bazaar
LOCATION, LOCATION, LOCATION!!!
• Site condition
• Legal considerations (e.g. environmental
considerations, zoning restrictions, building codes,
signs, licensing requirements)
• Terms of lease/rent agreement
• Total cost of ownership
• Length of lease
• Local taxes
• Restrictive clauses in lease
Types of Leases
• Percentage
• Fixed - Rate
Maintenance-increase-recoupment lease -
used with either a percentage or fixed rate lease.
• Rent increases if insurance, property taxes, or
utility bills increase beyond a certain point.
Retail Formats
Store-Based Nonstore-Based
Freestanding Nontraditional
Direct Interactive
Selling Internet
TV
SOME IMPORTANT METRICS
• Walk-ins
• Conversions
• Average Transaction Value (ATV)
• Sales per Sq.Ft.
• Gross Margin return on Investment (GMROI)
• Gross Margin return on Floor space
• Gross Margin return on Inventory
• Inventory turnover
• Sell thru
• Same store growth
• Markdown Goods percentage
• Shrinkage to Net Sales
Store patronage model*
1 5
Store Attributes Store attribute
salience 8
6 Store experience
7
Store attribute
Store visit
perception
9
2.1 Purchase /
Product basket size
2.2
Task definition
10
4 Post sales
Marketing experience
factors
11
Customer subjective Patronage
Factors under management control intentions
3
New customer affecting Customer
Same customer affecting attributes
12
Word of Mouth /
Advocacy
* – Atul Natu
Store factors • Customer factors • External retail stimuli
• Product
– Price – Educational levels – Industry reputation
– Quality – Professional activity – Public relations
– Assortment
– Availability – Family age – Sales promotion
• Service – Gender – Social responsibility
– Distance – Age
– Size
– Format
– Income
– Advertising – Values and culture
– Convenient parking facilities – Behavioral issues
– Convenient location
– Social expectations
– Convenient opening hours
– Friendliness of salespeople
– Service
– Fast checkout
– Store atmosphere
– Store image
– Ease of credit
Factors studied *
Store Attributes Store attribute salience Store attribute perception
Location / Distance
Size
Price
Format – EDLP / HILO, Specialty /
general merchandise
Retail centers Marketing factors
Parking Feature advertising
Convenience Task definition Word-of-mouth
Assortment Gift v/s self
Product quality Time pressured
Freshness Risk perception
Basket size
Store experience
Billing speed
Store appearance
Store layout
Store assistance friendliness
Convenience
Products Customer attributes Trust
Food & Grocery Age Organisational benevolence
Apparel Social class perception / self image
Audio equipment Education
Soap Shopping frequency
Paper tissues Self confidence
Tooth paste Post sales experience
Occupation
Coffee Returns policy
* – Atul Natu
Thank you …
• Operations • Theories of retail
• Merchandising – NKVC – VKNC
• Category management – Time
– Convenience
• Location
• Retail Strategy
• Quotations
• 7 Ps
• Resources & references
– Product
– Price • Multichannel
– Place • Metrics
– Promotion • Shrinkage
– People • Challenges / constraints
– Physical ambience • Formats
– Processes – Brands – MBO / EBO
• Types of retail – Ownership – COCO / Dler / Franchisee
– Size –
• Technology – Assortment –
• Assortment – Locations – SIS / Standalone / Mall / High street / Out
• Supply chain of town / Downtown
• Customer
• Competition
• Property
• Customer segmentation
EXAMPLES