Transcript
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To understand what retailing is about To understand some theories in retail
To visit the global retail scene and trends
To understand how relationships in retailwork
To understand about trade and retail formats
To understand the types of retailers
To learn about retail focus on categories To understand retail strategy guidelines
To get a glimpse of retail managementstrategies
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To understand other retail performancemeasures
To look briefly in retail operations
To learn about efficient consumer response To understand some retail initiatives in rural
markets
To look at franchising and e-retailing
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Retail retaillier to break bulk
The term retailer also implies that he deals
directly with the end user or consumer
Last link in the distribution channel
the retailer has more knowledge of thecustomers aspirations and needs and caninfluence the end user buying decisions
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The order sizes tend to be small but many
Retailer caters to a wide variety of customers
and needs to keep a large assortment ofgoods
A lot of the buying in the retail outlet could
be on impulse, hence, managing inventory iscritical
Retail store personnel and the goods
displayed are important elements in the
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The retailers strengths are ensuringavailability and visibility of the product hesells
The targeted customer mix decides theelements of the marketing mix which theretailer has to develop to optimize his
investment
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Any business entity selling products andservices to consumers is retailing
The goods may be sold in a shop, in person,by mail, on the internet, telephone or avending machine
It could be sold in a shop, on the street or inthe home of the consumer
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Just as for products, retail also has a life cycle
Newer forms of retail come up to replace the
old
Retailing includes all activities involved inselling or renting consumer products and
services directly to ultimate consumers fortheir personal or home consumption
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A study of consumer buying habits found that35% of supermarket purchases werespecifically planned
Impulse purchases, substitutions of onebrand for another, generally plannedpurchases where consumers do not have a
brand in mind
These decisions are influenced by the qualityof retailers merchandising efforts
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Price (Value offered, credit, special discounts) Location (convenience, parking, safety, stores
nearby)
Product Selection (assortment, brands,quality)
Special Services (home delivery, specialorders, gift wrap, valet parking)
Helpful Salespeople (courteous,knowledgeable, fast check-out)
Fairness in Dealings (honesty, returnprivileges)
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Ensuring awide variety of product offering
Helping create time, place and possession
utilities
Added services (alteration service for aclothing store)
Retailers add value to products through: Services: credit, delivery, extended store hours Personnel: identify and solve customer problems Location of store
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Form of ownership sole, partnership,corporation
Operational Structure independent, chain,
franchise
Service and Price Orientation full service,limited service, self-service, normal margin,
discounted, off-price
Merchandise Offering general, mass orspecialty Merchandise width - number of non-competing product
lines
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Specialty Stores narrow product line with deepassortment (apparel, furniture, books)
Department Store Several product lines indifferent departments
Supermarket large, low-cost, low-margin, highvolume, self-service operation with a wideoffering
Convenience Store small stores located inresidential areas, open long hours all days of theweek, offers limited variety of fast moving items
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Discount Store standard merchandise soldat a lower price
Franchise Organization Contractualarrangement between the producer andretailers to sell the producers productsexclusively
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Fastest growing industry in the world
Has to constantly re-invent itself in new ways tothrive
Must consider bottom-up pressure exerted byconsumer
Consumer decides which retailer is good for himbased on whats new that the retailer can offer
Retailer must innovate to ensure customerstickiness
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Retailers can be wholesalers but the reverse isnot possible
Retailers focus on the cost and demand sideof the business Need to be profitable with optimum inventory
Inventory turnover must be high even if margins arelow
Must optimize service levels
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Traditional high margins, limited volume,providing personalized services to customers
Modern low margins, high volume, servicesare not personalized
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Most critical point of purchase
Has the power to influence buying decisionsof customers
Companies woo the retailers
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Wheel of Retailing Enumerates ways in which retail organizations
change during their lifetime:
Stage 1- Retail outlet starts simple, with low prices
and margins Stage 2 - It slowly increases prices and margins as
image improves, services are added
Stage 3 - Retailer eventually builds a premium image
Stage 4 - This creates a gap in the market which gets
filled by new outlets at stage 1
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The Retail Accordion Theory
The general-specific-general theory
Outlets start as general retailers
Grows as a specialized retailer
In time becomes even a bigger general retailer
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Theory of Natural Selection
Evolution of retailers is influenced by environmentalfactors i.e. economic, demographic, legal, political
and technological
Retailers who adapt to these factors becomesuccessful
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Retail Life Cycle
Retail is similar to product life cycle
4 stages
Innovation
Quick growth
Maturity
Decline
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Retail world is well organized in developedcountries
Considered a part of the service sector
Service sectors contribution to GDP is veryhigh
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Before, manufacturers called the shots
Today, modern retailers are gaining upperhand
Modern retailers get quantity discounts, sellshelf display space and get special discounts
on promotional stocks
They put conditions on stocking and sellingnew products
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They create their own private brand tocompete with better known company brandson their shelves
Advantages: Lower price
Higher margins for retailer
If successful, gives better bargaining power toretailers
Merchandising is simpler
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Technology to help organize growingnumber of retail partners
Less price cuts to retailers to avoidoverstocking, focus on promotions on theconsumer level
Developing new products and pack sizes
Own outlets
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A successful retailer builds strongrelationships between suppliers andcustomers
Customer satisfaction is a result of totalcustomer experience
Total customer value = product value +service value + image value
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Retailing is the process of reaching out tocustomers through suitable formats
Format is the physical feature of the storeand the services it provides
Retailers use formats to distinguish
themselves from each other
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Location Format Where the store is located in relation to the
customer
Merchandise Based Formats Based on what products the retail format offers
(general or specialized)
Size Based Formats Total space available in the store for the consumer
to roam around in
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Price Based Formats Main attraction: low prices
Concession Based Formats Franchising
Smaller concessionaires complement the offeringsof the major store
Ownership Based Formats Classification is based on who owns the store
Sole, partnership, corporation
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Conventional Retailers Avoiding price competition
General Stores Carrying anything that can be sold in a reasonable
volume
Single/Limited Line Stores Specializing in a certain line of related products
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Expanded Assortment and Service
Specialty Shops Selling special types of products (sporting goods)
Department Stores Combination of many limited line stores and
specialty shops
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Mass Merchandising Retailers
Supermarkets
Catalogue showroom retailers Sell several lines out of a catalogue and display showroom
with back-up inventories Discount Houses
Offer a wide assortment of substantial price cuts
Mass Merchandisers Large self-service stores with many departments that focus
on low margins but high turnover
Hypermarkets Very large stores that carry goods consumers purchase
routinely
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Convenience-Focused Retailers
Convenience Stores
Vending Machines
Door-to-door selling
Telephone and direct mail retailing
Online selling
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Categories basic unit for makingmerchandising and buying decisions
Product lines carried by a retailer
Category Management Focus Parameters Efficient introduction of new products into the
stores Running product promotions effectively
Optimum store assortment reflecting trading areaand customers needs
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Customers needs are influenced by:
Characteristics of the consumer: age, occupation,location, economic status
Buying pattern of consumers in products, brands,variants, pack sizes preferred
How much time spent on shopping
If sales promotions induce consumers to buy more
Frequency of purchases
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Fad generates high sales for a short periodof time
Basic products (staples) reflect continuousdemand
Seasonal Products only relevant in the
appropriate seasons
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Category managers are responsible for theirbusiness and profitability
Relevant points in managing categories: Should reflect trading area of operation
Survey trading area before setting up store
Shelves should be stocked in an appealing manner
Classification should reflect consumers preference
All categories in the store must be visible to ensuremultiple purchases and drive impulse buying
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Selection of Vendor Price Quality Reliability Time for processing orders Terms and conditions Ethics
Selection of Merchandise Quality inspection by sampling Negotiated terms Order and Delivery time Inventory holding rules Re-ordering costs
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The retailer is able to provide service tocustomers by: Merchandising
The format used
The communication process used
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Merchandising A set of activities involved in acquiring goods and
services and making them available at the places,times and prices and quantity that enable a retailer
to reach his goals
Merchandise Planning
Relates to merchandise variety and assortment
Stock turnover ratio (cost of merchandise sold /average inventory value at cost)
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Merchandising
Merchandising Strategy
Wide Assortment Strategy
Deep Assortment Strategy
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Category Management The management of the retail business by looking
at the performance of categories of products ratherthan brands or models
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Positioning Strategy Strategy is built around the identity the store
develops in terms of what it has to offer tocustomers (products, Value added service)
Product Differentiation Strategy Strategy is built around products offered
Operational Superiority Strategy is built around streamlined processes
within the store Store Location
Used as a strategy for competitive advantage
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Gross Margin Return on Inventory Investment Gross Margin * sales to inventory ratio
Gross Margin per Full Time EquivalentEmployee Gauge if employees are maximized
Gross Margin per Square Foot Measure of how well the floor space is being
utilized
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