Retail Primer

April 2007 1

Retail Primer

April 2007 2

Session Objective

By the end of the session the participant will be able to:• Explain what is Retail• Explain some of the terminologies used in Retail Industry• Explain Buy, Move & Sell concept• Explain the daily Store Operations• Explain Visual Merchandising and it impact on the business• Explain the different types of store window• Explain the elements of store design• Explain some if the store layout in retail• Explain Future of Retail in India

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Evolution of Retail

April 2007 4

“Retail touches our lives as end consumers, by providing us with the products or services that we need.”

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History Of Retail• Barter system was known as the first form

of retail

• As time passed currency was exchanged with goods and services

• Hawkers carried out the first retailing in push carts

• Then Mom & Pop Stores followed

• Manufacturing necessitated the emergence of small stores and later specialty stores

April 2007 6

International Retail Industry

• One of the world’s largest industry exceeding US $ 9 trillion

• 47 of Global Fortune 500 companies & 25 Asia's Top 200 companies are retailers

• US, EU & Japan constitutes 80% of world retail sales

Source: Images Retail Study 2005

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What is Retail?

April 2007 8

Retail Is• Selling directly to customers

• Selling in smaller units / quantities, breaking the bulk

• Present in neighborhood

• Very high in numbers

• Recognized by their service levels

• Fitting any size and or location

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Types of Retail

Organized Retail – 3%

Unorganized Retail – 97%

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• Unorganized Retailing

– Hawkers (thela-wallahs) and Mom n Pop Stores (kirana)

– Weekly Markets (shandy / subzi bazaars)

Types Of Retailers

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• Organized Retailing

– Convenient / Department Stores– Discount Stores & Factory Outlet Showrooms (FOS)– Lifestyle / Specialty Stores– Super Markets /Hyper Markets – Wholesalers Club– Company / Franchise Showrooms

Types Of Retailers

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OrganizedVs.Unorganized

OrganizedRetail

Un-organizedRetail

Store Based

Non-StoreBased

ProductBased

PriceBased

OwnershipBased

ServiceBased

On-Line Direct Catalogue TV Retail

Store-BasedVs.Non-Store Based

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ProductBased

PriceBased

GeneralMerchandise

FoodRetail

ServicesRetail

Food ServiceRetail1. Discount

2. Specialty3. Category specialist4. Department5. Drug

1. Supermarket2. Super store3. Convenience store4. Big box

• Super center• Hypermarket• Warehouse club

1. Full service2. Product + service

Factory Outlets

Single PriceOutlets

Close-outOutlets

Category Killer

CorporateRetail

FranchiseeRetail

IndependentRetail

Co-operativeRetail

OwnershipBased

ServiceBased

Full Service

Limited Service

SelfService Vending

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Retail Scene Across The Globe

• In the U S : Wal-Mart, Krogers, Sears (K Mart) Home Depot J C Penney,

• In U.K : Tesco, Sainsbury, Morrisons, Asda, M & S,

• In France : Carrefour, Casino

• In Germany : Metro, Rewe

• In China : Lianhua, Hualian,

• In Japan : Aeon,Ito-Yakodo

April 2007 15

Global Retail Players

•

April 2007 16

A Peek Inside Some Of The Stores

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Retail Terminology

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Retail Terminology

The next few slides pertain to the various terminologies that are commonly used in any Retail environment. The terminologies have been classified under the following groups:

• Merchandizing• Financial• Marketing• IT• Fixture and Visual Merchandizing• Retail Operations

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Purchase Order (PO)

Main Item

PO

Accessories

Assortment Depth & Breadth

Depth

BreadthPrice Tag

Merchandising Terms

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Best Before Date (BBD)Staples

Expiry Date Stock Keeping Unit (SKU)

Merchandising Terms

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Discounts

Approval

Tender

Sales Order (SO)

Financial Terms

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BundlingInvoice

Financial Terms

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Anchor Store Packaging Cross Promotions

Warranty Guarantee

Marketing Terms

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Bar Code

Point of Sale (POS)

Electronic Article Surveillance System

Radio Frequency Identification (RFID)

IT Terms

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Signage Planogram Endcap

Point of Sale (POS)

1

Cashiering

>> Cashiering steps

Point of Purchase (POP)

Fixtures And Visual Merchandising Terms

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Retail Operations Terms

1. Impulse purchase: Purchases made without any planning

2. Foot falls ( Walk-ins): No. of people who enter the stores

3. Conversion: No. of people ( walk-ins) who purchased at the store (expressed as a percentage)

4. Tills: Billing counters

5. CPD: Customer Pole Display

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Key Links Of Retail Supply Chain

SUPPLIER TO DISTRIBUTION CENTRE

DISTRIBUTION CENTRE TO RETAIL

RETAILER TO CONSUMER

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Merchandise and category management

Store management and operations

Supply chain management and logistics

Sourcing

Stock and information

Buying Moving Selling

Retail Value Chain

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About BSC

Supply Chain and Logistics Management

Merchandising and Category Management

Sourcing

Store Management and Operations

Retail Operations

BUY

Retail Value Chain

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Sourcing

1. Sourcing is the process of Procuring the desired product range

2. Sourcing Involves– Vendor Identification and Selection– Order Processing with the Vendor, and Payables management

and– Collaborating with the Vendor in jointly designing and

developing the product– Contract Management

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Move

Retail Value Chain

About BSC

Supply Chain and Logistics Management

Merchandising and Category Management

Sourcing

Store Management and Operations

Retail Operations

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1. Supply Chain management is the process of – Managing the merchandise– Information flow – Ensuring fast and cost efficient movement of stock

Supply Chain Management

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Retail SCMRetail SCM

Information flowInformation flowPhysical flow

of merchandise- Logistics

Physical flow

of merchandise- Logistics

Transportation

management

Transportation

managementWarehouse

management

Warehouse

management

Inbound LogisticsManagement

Inbound LogisticsManagement

Outbound LogisticsManagement

Outbound LogisticsManagement

Inventory

management

Inventory

management

Retail Supply Chain Management Functions

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1. Physical Flow Of Merchandise – Logistics

2. In-Bound Logistics Management - Merchandise Flow

from Vendor to Retailer Warehouse

3. Out-Bound Logistics Management - Merchandise Flow

from Retailer Warehouse to Retailer Store

4. Reverse Logistics - Flow back of merchandise from

customer to Stores to Warehouse to Vendor for

customer returns

Logistics

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Importance of Cold ChainCold Chain Management For Milk & Dairy Products

Dairy Farm Dairy Plants Retail Outlets Consumer

April 2007 36

Sell

Retail Value Chain

About BSC

Supply Chain and Logistics Management

Merchandising and Category Management

Sourcing

Store Management and Operations

Retail Operations

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1. Management of Demand and Supply of

Merchandise– Involves both creation and management of demand

– Involves management of Supply to fulfill demand

2. Demand Side Management– Pricing : - Manage demand and generate revenue

– Promotion : - Enhance demand and revenue Generation

3. Supply Side Management– Ordering : -Manage product procurement from vendor

– Allocation : -Manage stock shipment to stores and stocking at warehouses

– Replenishment : - Manage stock levels and triggers both ordering and allocation

Merchandise Management

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Category Management

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Category Management

1. Category– An assortment of items (SKUs) the customer sees as reasonable substitutes for

each other

2. Category Management– The process of managing a retail business with the objective of maximizing the

sales and profits of a category.

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• Advantages of Category Management – Increased Sales– Reduced Inventory Investment– Improved Route and Warehouse Efficiency– Helps in negotiating with your vendors on margins

Category Management

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Typical categorization of a general merchandise

Category Management

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Store Operations and Management

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Store is at the forefront of the retail process channel.

Store management includes various functions :• Store Operations • Store Layout and Visual Merchandising• Store Supervision• Staff availability• Point of Sales management• Customer Care

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Store Management & Operations

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1. Day Beginning Activities (Pre-sales)

2. Activities during a Business Day (During Sales)

3. Day End Activities (Post sales)

Store Operations – Day’s Activities

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•Counter/Section cleanliness

•Planogram followed

•Replenishments done

•Displays & signage

•Price & Security tags

•Location of bags, hangers & packing material

•Knowledge of Schemes

•Sales achievement and target

•New Arrival product knowledge

•Staff Availability/scheduling

•Lighting & Convenience

•Self & Staff grooming

Pre Sale Preparation

April 2007 46

• The store head or the senior manager on duty conducts the meeting wherein the following are taken up:– Achievements & Targets– Customer complaints & compliments– Stock out status and expected day of arrival– Merchandise related issues– Discipline related matters– Any other relevant thing

Morning Briefing

April 2007 47

•Presentation

•Need discovery

•Primary sales

•Add on sales

•Attending to complaints

•Institutional Sales

•Competition Study

•Banking

•Briefing/Reviews

•Stock Receipts & Dispatches

•Raising orders

•Strategize

During The Sale

April 2007 48

1. Conformity of the standards on the floor2. Look and feel of the store3. Cleanliness4. Presentation5. Stock outs6. Customer reactions7. Back room8. General amenities9. Staff presentability

The store head / senior manager may do floor walk(s) at any time of theday!

Floor Walk

April 2007 49

1. The Customer service desk announces the closing of the day

2. The security does an audit of high value counters3. Cashiers closes their counter and submits cash4. Retrievals from the checkouts5. Replenishments done6. Face ups carried out7. Change of planogram, if any, carried out8. All mandatory checks done 9. Store is closed in the presence of the security

Store Close

April 2007 50

• The activities that form part of this section include scheduled activities, as well as, exigencies. They are:– Perpetual and annual inventory– Conducting various store led events/promotions– Safety drill– Maintenance of equipment– Emergency handling– First Aid Assistance

Other Activities

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Promotional Activities

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Promotions are carried out :

1. To increase the sales ( new products / non moving items/seasonal )

2. To bring in new customers ( foot falls )

3. To offer value for Customers

4. To differentiate from other stores

Store Promotions

April 2007 53

The following are the types of store promotions:1. Loyalty Programs2. Price off3. Quantity Discounts4. Bundled sales5. Cross selling6. Discount coupons7. Special sales (annual days, festival days)

Store Promotions

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Visual Merchandising

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Visual Merchandising

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1. Visual Merchandising (VM) is the art of presenting the products in the store by the retailer.

2. It attracts, inspires and motivates the customers to buy the product.

Visual Merchandising

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Visual Merchandising

It involves: 1. Store planning and Design 2. Store windows3. Floor displays4. Signs 5. Space design6. Furniture and Fixtures7. Props8. Decorations9. Mannequins

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Guiding Principles Of Visual Merchandising

– Visual Merchandising should be consistent with Image and strategy

– It should Positively Influence Consumer Behavior.

– It should Consider Costs versus Value.

– Visual Merchandising components should be flexible

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Following are the Business Impacts that Visual

Merchandising has for a retailer

1. Store DifferentiationStore Differentiation offers:– differentiated or range of products not sold by other retailers– better quality of service – a differentiated shopping experience

Business Impacts

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2. Increases Footfalls– Visual Merchandising at the window and in the store

helps increase footfalls which in turn help boost sales

3. Improve Sales– Good VM attracts attention to merchandise– Holds the customer’s attention until a sales associate is

available.– Educates customer about merchandise – Builds add-on sales by suggesting coordinated items or

bundling of items

Business Impacts

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Visual Merchandising-Store Front

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Visual Merchandising-Store Interior

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Window DisplaysExternal Internal

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Store Design

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Store Design

1. To Understand Store Atmospherics

2. To Understand Store Layouts

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Store Location Store Exterior Store Interior Store Mood BuilderSource: Levy & Weitz

Elements Of Store Atmosphere

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Elements Of Exterior Atmosphere8. Uniqueness

9. Surrounding stores

10. Surrounding area

11. Parking facilities

12. Special access for Physically challenged

13. Security Booth

14. Service staff access

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1. Entrance

2. Signage

3. Flooring

4. Lighting

5. Fixtures

6. Temperature

…

Elements Of Store Interior Atmosphere

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7. Colors

8. Scents

9. Sounds

10. Wall Textures

11. Width of Aisles

Elements Of Store Interior Atmosphere

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12. Dressing room facilities

13. Dead areas

14. Cash register placement

15. Cleanliness

16. Customer Service

17. Staff resting area

Elements Of Store Interior Atmosphere

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18. Store back office

19. Elevators

20. Fire/emergency exits

21. Pantry

22. Display area / sales area

23. Private viewing area (jewelry store)

Elements Of Store Interior Atmosphere

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Store Layout

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Store Layout

1. Store layout refers to the interior retail store arrangement of departments or groupings of merchandise.

2. It is important for retailers to evolve a customer-friendly layout.

3. In planning the layout it is important to consider issues related to:– Finding things easily and – Similar products together

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Layout of the Store

Store layout is used to entice customers to• Move around the store• Purchase more merchandise than they may have originally planned

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Types of Store Layouts

• Grid layout

• Free form layout

• Race course layout

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Grid Layout

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Free Form LayoutStorage, Receiving, Marketing

Underwear Dressing Rooms

Checkout counter

Clearance Items

Feature Feature

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Accessories

Pants

Tops

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Skirts

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Open Display Window Open Display Window

Storage, Receiving, Marketing

Underwear Dressing Rooms

Checkout counter

Clearance Items

Feature Feature

Jeans C

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Accessories

Pants

Tops

Tops

Skirts

and D

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and H

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Open Display Window Open Display Window

Storage, Receiving, Marketing

Underwear Dressing Rooms

Checkout counter

Clearance Items

Feature Feature

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Accessories

Pants

Tops

Tops

Skirts

and D

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Open Display Window Open Display Window

April 2007 79

Racecourse Layout

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Layout Type Characteristics

Grid Clear route and aisles

Free Form Random fixture positioning

Race course Looped pathwayInterconnecting boutique and islands

Characteristics Of Store Layouts

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Layout Type Advantages

GridCheapEasy maintenanceEasy movement

Free FormShopper freedomFlexibilityImage creation

Race course Aesthetically appealingEncourages impulse purchasing

Advantages Of Store Layouts

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Layout Type Uses Examples

GridFood storesSelf service stores

Foodworld / Fabmall

Free FormClothing storesDepartment stores

Race courseSpecialty storesConcession stores

Uses And Examples Of Store Layouts

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Support Functions

April 2007 84

HUMAN RESOURCES

VISUAL MERCHANDISING

GOODS RECEIVING

SECURITY

MAINTENANCE

CUSTOMER SERVICE DESK

HOUSE KEEPING

ACCOUNTS

IT

Support Functions

April 2007 85

Recap Objective

You will be able to:• Explain what is Retail• Explain some of the terminologies used in

Retail Industry• Explain Buy, Move & Sell concept• Explain the daily Store Operations• Explain Visual Merchandising and it impact on

the business• Explain the different types of store window• Explain the elements of store design• Explain some if the store layout in retail• Explain Future of Retail in India

April 2007 86

Thank You...