Retail Management

2 Year full time PGDM

Area – Marketing
Credits - 4
Sessions 5 & 6
 Session
Session35 & 6

• Retail Locations
• Importance
• Evaluation
• Selection
• Retail Business Structure
• Functional Organization
• Sonakshi went to the Ready for a quick quiz.. ??
mall on her lunch hour (prize one crore) just kidding!!!!!!!!!!!!!!!!!
to eat with her sister.
While they were there, • If a retailer plans to use the
they witnessed a back- online channel synergistically
to-school fashion show with other channels, it can
in Lifestyle. They took a expect:
walk and watched the • A. Its multichannel
play.What benefit of customers to make more
store shopping were purchases
Sonakshi and her sister • B. massive cannibalization
enjoying? • C. a decrease in sales from all
• A.Detailed information of its other channels
• B. Entertainment and • D. customers to research on
social interaction the website and shop in
• C. Convenience competitive stores
• D. Personal service • E. sales to stabilize equally
• E. Touch and feel among the channels
products • Ans : A
• Answ : B
• Shoppers who go from one
store to another buying only
items that are on special are
referred to as cherry pickers.
• TRUE
• What is value?
• A. Inexpensive merchandise.
• B. The relationship between
what a consumer has and what
they want.
• C. The relationship between
desire and need.
• D. The relationship between
what consumers receive and
what they paid for it.
E. The lowest price and the
lowest quality merchandise or
service.
• Ans: D
Ready for a quick quiz.. ??
(prize one crore) just kidding!!!!!!!!!!!!!!!!!
• Chandrika is the store manager for
Shapers, a pet store specializing in
tropical fish. She needs to hire a full-
time salesperson. What should she do
first?
• A. set up the guidelines she will use to
recruit, select, train, and evaluate the
new salesperson
• B. visit other stores and look at how
their employees treat customers
• C. look at the worst employees and
determine what characteristics make
them ineffectual workers
• D. ask the opinions of the store's long-
time customers
• E. identify essential activities that need
to be performed and the qualifications
used to perform them effectively
• Ans : E
 Location Funnel
• Continent /
Global Hemisphere
• Zone
• State
Country
• City / Town

• Zone in a City Town

• Area
Business
Location • Specific Location
 Expansion of Business in Retail

Expansion Strategy

• Geographical
Expansion
• New Location –
Understand business
opportunities
• New Store – Site
Selection
 Expansion Strategy-Geographical Expansion
Many locations

• In a growing country like India, one of

the major strategies of Retailers is
expansion.
• Expansion brings under the company
more Retail Square foot area resulting in
• More Customers
• More Sales
• More margins
• Scale of Economy
Realities of Indian Retailing
• One Product / Category line
• One Location
• One owner
 Expansion Strategy- Profiling

• Before embarking upon any

expansion it is essential to do
profiling:
Company Profiling
• New Entrepreneur
• Large Corporate
• Medium Corporate
• Small Establishment
• WHY?
 Expansion Strategy- Profiling

• Assessment of Financial Strength

• Internal Resources required for
growth
• Internal Infrastructure
• Internal Systems and Support
systems
• Knowledge of the Industry
• People
• Technical and Commercial
Expertise
• Management Bandwidth
 Expansion Strategy- Profiling

PRODUCT PROFILE
The main reason for performing
Product Profiling is to
• Define Your Product Category
• Example:
• Is it a Consumer /Industrial
Product ?
• Durable/ Non-Durable
• Food/Non- Food
 Expansion Strategy- Profiling

PRODUCT PROFILE
• Essentials (Milk/Medicine
etc.)
• Expensive Branded product
• Value for Money Product
• Discount Merchandise
• Does your product have
many alternatives?
• Is your product likely to
undergo changes in
Design/Technology
• Product life cycle (ex:
Soap/Computers)
 Expansion Strategy- Product Profiling

PRODUCT PROFILE
• Exercise:
• To profile the
Products /Service
of your respective
Business
 Parameters for Selecting a City/Town
Social Environment Data

• Government Establishments
• Business Establishments
• Factories
• Warehouses
• IT Establishments
• Educational Institutions
• Religious Institutions
• New Housing Developments
• Malls / Multiplexes
 Output after analyzing City/Town

• Estimate Market Size

(Total value of Market in
Rs.Crores)
• No of people
• Value of Transaction in
your business
• Track down existing
competition
• Target Market Share
(Revenue)
 Output after analyzing City/Town

• Target Market Share

(Revenue)
• Estimate number of
Stores/Outlets
• Zoning of high potential
areas (with respect to your
business)
• Look for Site options
 How to identify a potential City? - Exercise

• Identify 3 cities where

you think you can
expand
• Plot all the
parameters
• Classify the 3 cities in
to :
• Most desirable City
to be present
immediately
• Desirable to be
present after some
time
 How to identify a potential City?
Exercise

• Mapping of
your
geographical
presence
• Mapping of
your
Competition
 How to identify Potential Cities

• General published
Data
• Official Publications
• Commercial
Publications
• Data available with
Associations/Chamb
er of Commerce/CII
• Contacts..
 How to identify potential cities?

• Advertisement…
• Personal Knowledge
about a city
• Real Estate Agents
• General information in
the Press about the city
and your specific business
• Special
Survey/Questionnaire by
self or Data Collection
Agency appointed for
this purpose
How to identify potential cities? Constraints in Data Collection
in India

• Official Data may not be

available
• Data collection date may
be irrelevant
• As a result Data could
have errors
• Example: Census was
taken in 2011.
• Can we use this data
now?
• Many industries in India
are fragmented
• No Common industry
bodies/Associations
 How to identify potential cities?
Constraints in Data Collection in India

• The absence of Data

capture at Sale point
• Data published with
intentional exaggeration
• Data collected for another
purpose (not relevant to
the current exercise)
• Un-verified data / fake
data / irrelevant data
• Social media data
 Site Evaluation / Selection Process

• Having identified a city and a

possible zone within the city to
start a new operations, the next
step is to identify a suitable
location / site
• Site Evaluation is to be
performed on each of the sites
under question
• It would also be prudent to
evaluate the Competitors site
 Site Evaluation / Selection Process

• The process involves a systematic

and Un-biased evaluation of
each site
• Preferably giving a weight to
each point / parameter
• Site evaluation can be done by
self / appointed Agency
• But prefer the company’s own
employees perform the same
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Existing / Target no of
sites
• Review Site Address
• Developer’s Name and
Address
• Other Projects under
progress
• Completed project
• Contact Person
• Designation
• Contact Number
 Site Evaluation / Selection Process
Basic Data Collection about Site

1. Type
1. Part of Mall
2. stand alone
3. High Street
4. Central Business District
5. Destination store
6. Part of Complex with
independent entry
7. Semi Urban/rural area
8. Shop in Shop
 Site Evaluation / Selection Process
Basic Data Collection about Site

1. Location Rating:
1. Main Road
2. Arterial Road

3. Important Street
4. Bye lane
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Proposed Spot / Rating

Ground Floor
First Floor
Second Floor
Third Floor
Fourth Floor and above
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Parking Facilities
 500 to 1000 Cars
 250 to 500 Cars
 < 250 Cars
 Two Wheelers Parking
Included / Not included
 If Not included, built
capacity of two wheelers
 Assisted / Valet Parking
available YES / NO
 Parking fee:
Yes/ No; If Yes,
Parking Fee Rs:
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Utilities Provision
• Adequate power available
• Yes / No
• If No, list alternatives
• Adequate water available Yes /
No
• If No, list alternatives
• Back Up Power provision
• Yes / No
• If No, list alternatives
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Other Prominent Retailers

Anchor Retailers in the Mall
1
Anchor Retailer in the Mall
2
Anchor Retailer in the Mall 3
Outlets of competition in
the Mall1
Outlets of competition in
the Mall 2
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Nearby Schools /
Colleges /
Theatres/Instituti
ons /
• Strength
• Timings
• Any restrictions
• Places of prayers
• Temples /
Churches /
Mosques
 Site Evaluation / Selection Process
Basic Data Collection about Site

Average Footfalls per day

Estimates

Weekdays Builder
estimates
Our estimates
Weekends Builder
estimates
Our estimates
 Site Evaluation / Selection Process
Basic Data Collection about Site

Direction of flow of
Traffic
• Highway
• One-Way
• No parking Board
• Fly over
obstructing access
 Site Evaluation / Selection Process
Basic Data Collection about Site

Signage/Visibility

Main Signage
Totem Pole
Directional Signage
Other Promotional Signage
Space
Overall assessment of Visibility
 Site Evaluation / Selection Process
Basic Data Collection about Site

Area Zonal Classification

Central Business District

Residential
Commercial
Industrial
Export Promotion Zone/Tax Free
Zone
Transit Retailing
Airport / Sea port / Railway Station /
Bus station
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Terms of Lease
• Rental Rates in the Mall (Rs.
per square feet)
• Rental Rates prevalent in area
(Rs. Per sft)
• Rent Escalation after __ years
• Rate of Escalation
• Electricity and Water charges
• Air conditioning charges
• Ops and Maintenance Charges,
if any
• Other charges, if applicable
 Site Evaluation / Selection Process
Basic Data Collection about Site

• Statutory Compliances
Trade license Yes / No
Signage license Yes/ No
Police-L & O / Crime/ Traffic:
Yes/ No
Fire Yes/ No
Corporation Yes/ No
Water Analysis Yes/ No
Labour Department Yes/ No
Any Others Yes/ No If
yes, please furnish details of such
requirements
 Site Evaluation / Selection Process
Basic Data Collection about Site

Profiling of local
population (High Income
/ Upper Middle Class /
Middle class / Low
Income*) [* strike off
inapplicable groups]
List important Areas
around
1 Km Radius
2 Km Radius
3 Km Radius
 Site Evaluation / Selection Process
Basic Data Collection about Site

List Competition
around
1 Km Radius
2 Km Radius
3 Km Radius
List population
Density around 5
kilometers radius
 Site Evaluation / Selection Process
Basic Data Collection about Site

CONSTRUCTION
RELATED
Construction Norms:
FSI Ratio
Comparable FSI ratios
in other industries
General Retail
Commercial
IT Related/ BPO ITES
Housing
 Site Evaluation / Selection Process
Basic Data Collection about Site

CONSTRUCTION RELATED
 Minimum Setback
applicable
Yes/No
 If Yes …………….ft from
the building line
 Fire / Safety Norms – Is
sprinkler system
compulsory Yes/No
 Pollution Norms with
respect to Power back up
generator
 Site Evaluation / Selection Process
Basic Data Collection about Site

MANPOWER/LABOR
RELATED
Trained Man Power
Availability
Other Factors related to
Recruitment, retention of
Employees like Housing
transport requirement,
Minimum Wages etc.
 Site Evaluation / Selection Process
Basic Data Collection about Site

• EXERCISE
• take two sample
sites and perform site
evaluation
• Also give weight
points to each of the
parameters.
• After assigning
weight, the over-all
rating to be finalized.
• Compare site ratings
with each
 Closing Un-profitable store locations

• Closing non-profitable
stores is as important as
opening profitable stores
• When to decide ?
• Deteriorating
Performance
• After all alternative
marketing and other
efforts have failed.
• Finding an alternative site
in the same locality
• Evaluating Cost Benefit
Ratio of the loss making
unit
• Make sure not to lose
market share
 Closing Un-profitable stores

• Re-use the existing assets

• Transfer Stocks to other
stores
• Clearance of Stocks
( Recommended)
• Staff Relocation / Training
• Inform Customers about
new location / alternative
store
• Communicate to loyal
customers individually, if
possible
 Category Expansion

• In addition to Geographical
expansion, a store can also
expand in terms of ‘expansion
in PRODUCT OFFERING’
• More Options from a Brand
• Increase in Depth of
merchandise
• Increase in Width of
merchandise
• More Brands in a Category
• More value added service in a
category
 Related/Un-related Categories

• Stores can offer

opportunities in selling
related categories in
merchandise
• This adds value to the
existing category
• Example: Selling
Prepaid/Post paid
connections when selling
mobile phones
• Complimentary Products:
Like selling Coffee in a
browsing center
 Related/Un-related Categories

• Similarly, offering un-

related but useful
merchandise can also give
expanded business
opportunity
• A grocery store can sell
Pre-Paid / Post Paid
connections even though
they do not sell mobile
phones
Retail Organization

2 Year full time PGDM

Area – Marketing
Credits - 4
Sessions 6
 Retail Business Structure
Realities in today’s scenario
• Predominantly (nearly 90
%) all retail organizations
are one-man driven in India
• Corporate structuring and
functional delegation is yet
to happen in most of the
organizations
• Clubbing or Multi-Tasking
of functions are very
common (know-all
attitude)
 Retail Business Structure
functional
• Corporate Management
• Buying / Merchandising
• Finance
• Marketing
• Retail Operation / Sales
• Warehousing / Logistics and Supply chain
• IT
• HR and Administration
• Project Management
 Retail Business Structure
Centralized Management
• Corporate Management
• Buying / Merchandising
• Finance
• Marketing
• Operations management ( Retail sales )
• Warehousing / Logistics and Supply chain
• IT
• HR and Administration
• Project Management
 Retail Business Structure
De-Centralized Management
• Corporate Management
• Buying / Merchandising
• Finance
• Marketing
• Operations Management / Retail Sales
• Warehousing / Logistics and Supply chain
• IT
• HR and Administration
• Project Management
 Retail Business Structure
Management – Franchising Retail
• Corporate Management
• Buying / Merchandising
• Finance
• Marketing & Brand Management
• Franchisee Relations / Coordination /
Management
• Warehousing / Logistics and Supply chain
• IT
• HR and Administration
• Project Management
 Retail Business Structure
Regional / Geographical based
• Corporate Management
• Buying / Merchandising (Central / Zonal)
• Finance (Central / Zonal )
• Marketing & Brand Management ( Central/ zonal)
• Warehousing / Logistics and Supply chain (Central
/ Zonal )
• IT (Central / Zonal
• HR and Administration ( Central / Zonal)
• Project Management ( Central / Zonal)
 Exercise
• Let us draw the Org chart of the following
companies ( imaginary )
– Big Bazaar
– Lifestyle
– Reliance digital
Landmark group
End of Session