Retail Management

Ans 1 What Is Retailing?

Retailing is the distribution process of retailer getting the goods (either from the manufacturer, wholesaler, or agents) and selling them to the customers for the actual use.

In simple terms, retailing is the transaction of small quantities of goods between a retailer and the customer where the good is not bought for the resale purpose.

Retailing Types

Retailing can be divided into five types. Here are the types of retailing that exists today –

Store retailing: This includes different types of retail stores like department stores, speciality stores, supermarkets, convenience stores, catalogue showrooms, drug stores, superstores, discount stores, extreme value stores etc.

Non-store retailing: Non-store retailing is a type of retailing where the transaction happens outside conventional shops or stores. It is further divided into two types – direct selling (where the company uses direct methods like door-to-door selling) and automated vending (installing automated vending machines which sell offer variety of products without the need of a human retailer).

Corporate retailing: It involves retailing through corporate channels like chain stores, franchises, and merchandising conglomerates. Corporate retailing focuses on retailing goods of only the parent or partner brand.

Internet retailing: Internet retailing or online retailing works on a similar concept of selling small quantities of goods to the final consumer but they serve to a larger market and doesn’t have a physical retail outlet where the customer can go and touch or try the product.

Service retailing: Retailers not always sell tangible goods, retail offerings also consists of services. When a retailer deals with services, the process is called service retailing. Restaurants, hotels, bars, etc. are examples of service retailing.

Functions of Retailing

Retail trade performs many valuable functions for the trade and commerce as a whole. Some of them are as follows:

1) Delivery of the goods to the end consumer

This makes shopping for all requirements quite hassle-free for the consumers. This also facilitates consumption and maximizes consumer satisfaction. Because the company cannot take responsibility of delivery to every single customer, it appoints retailers. One of the functions of retailing is immediate delivery.

2) Is an essential part of the distribution chain

Because the retailer takes over the cumbersome task of distribution of goods manufactured to the target market, the manufacturer is relieved of this responsibility and can divert his resources to manufacturing activities.

3) Finances the wholesaler

While booking his order of goods with the wholesaler, the retailer pays some percentage or the whole of the order price in advance. This helps the wholesaler to carry on with his operations seamlessly. In some industries, it is the retailer who pays cash to maintain stock and in others the wholesaler has to carry the stock as paid capital. Nonetheless, financing is one of the major functions of retailing. A retailer who does not contribute to financing will bring down the effectiveness of the supply chain.

4) Stores the goods according to market requirement

The retailer invests his working capital in building a gamut of inventory reflecting market requirements. He also sells the requisite quantity, however small or big, to the final consumers satisfying their needs. The retailers know the complete demand and supply potential due to their years of experience. Hence it is one of the functions of retailing to balance the demand and supply as per external market conditions.

5) Lends a hand in manufacturer’s marketing initiative

Retailer plans and executes many advertising and promotion activities at the point of purchase i.e. right in his store. This leads to gain in popularity of and favorable market conditions for the product of the manufacturer.

6) Assumes storage and credit risks

When the retailer orders and stores a large quantity of goods from the manufacturer, he makes sufficient provisions to store it safely for some days. This involves costs. Also, there is also a risk of loss of these goods on account of destruction, theft, spoilage etc. The retailer assumes these risks while storing goods.

 7) Extends credit facilities to the consumers and assumes credit risk

The retailer does so to encourage shopping. This adds to the vigor of commercial activities in the economy. But there is also a risk that the customers won’t pay for the goods bought or may return damaged goods to the retailer. This inherent risk in trade is assumed by the retailer.

8) Offers wide variety of customers and enticing price range in a product line

In order to attract more customers, a retailer offers a wide range of merchandise at attractive prices. This results in higher consumer satisfaction and higher standards of living in any economy.

9) Provides convenience in shopping

Retailers try to set up their shops nearby housing areas or near parks, schools – the areas where the customer finds it very convenient to shop. This enhances the consumer welfare.

10) Offers after sale services, differentiated packaging, giving more information about the use of the product

All these activities add value to the retail transaction and cater to various requirements of the consumers suitably.

11) Hears the voice of the market

The retailer measures the pulse of the market by listening to the consumer feedback, expectations, complaints, and by observing a shift in the tastes and preferences of the consumers. This arms him with very critical market intelligence enabling the entire commercial fraternity to gear up for the changing economic scenario.

12) Generating employment for masses

Retail trade, especially the brick-and-mortar models, are human resource-centric establishments. They require many employees for numerous functions such as stock taking, over the counter selling, packaging, after sales services, floor management etc. Thus, retail sector thrives with lots of lucrative employment opportunities for all the talented job aspirants.

Importance Of Retailing

Retailing is important for the creators, customers, as well as the economy.

Retail stores are the places where most of the actual sales to the customers take place. They act as both a marketing tool for the brands and a support tool for the customers to exchange and communicate important information.

Besides this, retailing is a great asset to the economy. It provides jobs, adds to the GDP, and acts as a preferred shopping channel during the holiday season.

Ans 2 What is assortment planning?

Assortment planning in retail is the process of selecting the products that a retailer wants to sell during a particular period to maximize profitability. In other words, it means that retailers decide what merchandise they should buy and market to their customers. It is all about having the right goods in the right place at the right time.

Customers’ satisfaction highly depends on the variety of products that retailers provide. Your customers might get disappointed if the products they look for are out of stock or if the color they prefer is not available. As a result, they will go to your competitor’s store instead.

It is important to note that putting all your products in your store is impossible since the inventory cost will go up. Thus, you should optimize assortment and make retail strategy planning a priority in order to save costs and achieve profit maximization.

What does the process look like?

You may wonder where to start and how the assortment planning process works. Have a look at the following steps.

Research and build a plan

Before building an assortment strategy or plan, you have to first analyze each branch and store’s historical sales performance, followed by identifying the latest trends. You are going to study the items required, such as the cost, average selling price, and the lifespan of a batch of products, to name a few. Retailers can develop a plan according to the data and the information cited.

Store clustering

Store clustering is the process of grouping stores with similar attributes, including location, sales, store size, customer demographics, product features, etc. By doing so, you can apply a similar assortment plan to stores in the same group. More importantly, this step allows you to localize product assortments and promotions to meet the customers’ demand in various regions.

Decide the breadth and depth of assortments

Retailers have to decide the number of items being sold in each cluster. Product breadth refers to the number of categories, while depth is various styles and items in a particular category. It is important to strike a balance between breadth and depth to attract the most customers.

Create a visual merchandising plan

Visual merchandising is to present products in the most appealing way. This forces you to think about what products are placed in the center of the store and what options are located near the cashier. Bear in mind that the purpose of carrying out visual merchandising is to motivate your customers to consume by highlighting each product’s benefits. Again, you should localize your plan for different stores and work on it according to past data.

Double-check and execute the plan

After you finished the above steps, you have to ensure everything is on track. You might want to confirm the colors, styles, quantities are delivering to the right stores, and the plan is aligned with the financial budget. When all the examinations are done, you’re good to go.

How can you benefit from assortment planning?

Assortment planning in retail brings a lot of advantages to your business. We will look into some of the greatest benefits here.

Retain your loyal customers

Instead of guessing, you are making evaluations based on each store’s past sales performance and formulating a plan accordingly. In this way, your loyal customers will find what they want in your store since they might have bought similar items last year and assume that you are providing them this year.

Control inventory spending

When your retail strategy planning is carefully done, you will have an accurate estimation of the assortment needed. Retailers will thus spend money on inventory according to the plan and will not overspend. As a result, we will reduce unnecessary inventory costs and spending. You can avoid misallocation of goods and discard redundant inventory since everything is well planned.

Ans 1 Speed, agility and efficiency are expected of today’s retail businesses. To achieve this, retailers should invest in an electronic inventory control system, a central database, a point of sales system and an automated statistical forecasting system.

These tools don’t simply reduce your overhead and improve your planning. They’ve become essential tools that can provide you with a competitive edge to thrive and grow in the market.

Here are seven ways technology can improve your retail business.

1. Reduce inventory costs

An inventory control system is now a basic tool for retail management. It allows you to know what merchandise you have on hand and on order, and how many of each item you have received and sold.

Once setup, these systems automatically update your database when products sell or move from one location to another—from a warehouse to a store, for example. They also provide a variety of instantaneous data analysis tools to keep track of your business.

Once online, every aspect of your stores’ performance is at your fingertips. Select and view products by cost, price, margin, first or last date sold, date received or UPC codes. In minutes you can create new categories with hundreds of subcategories of style, size or color.

2. Improve customer satisfaction

Customers expect you to be able to tell them if you have a product in stock or on order. They don't want to wait while you wander through the storeroom or phone the warehouse.

Having an electronic inventory system allows you to answer customer questions with just a few keystrokes. You can also check the inventory held by different stores if you have multiple locations.

3. Automate your inventory control

Electronic inventory control can eliminate over-ordering and under-buying by referring to each store's sales history to calculate the optimum stock levels for each item. You tell the system how many days of supply you prefer—which you can modify, for example, according to the season—and the system will look at past sales patterns to determine when you need to re-order.

Your system can also perform "open to buy" calculations that tell you how much to spend on particular store categories for maximum return. The system takes past sales cycles, such as seasonal variations, into account. You may also query the system to determine what the order should be if sales rise or fall.

This information tells you:

How much you should invest in inventory from month to month;

how much inventory you need to order to keep up with expected sales without going overboard and tying up excess capital;

how merchandise to keep flowing into the store throughout the season;

which items are 'hot' and which are not, and their respective manufacturers; and

what are your best-selling stores and who are your best individual sales staff.

4. Facilitate inventory control

Internal theft and pricing errors can eat up about 4% of retail inventory. A portable terminal offers much greater speed and accuracy than manual counts.

The system immediately flags discrepancies with recorded inventory levels and verifies pricing, making it easier to detect pricing errors and missing merchandise on the spot.

5. Keep track of your margins

Your inventory control system can suggest pricing and markdowns within your pre-set parameters, and/or track your margins based on the prices you enter. It will also ensure you are always aware of gross margins.

Even with special pricing offers, you never lose track of your margins. You can establish different pricing for different stores across geographic regions, for instance, and for preferred customers such as employees or major buyers. You can also pre-set markdowns for end-of-season or other sales. The system continues to track gross margin, including the effects of markdowns and preferred pricing.

6. Improve your forecasting

Automated statistical forecasting systems create far more calculated and accurate demand forecasting.

Past sales data, forecasts, and future orders are all on one system. As a result, more accurate forecasts can be made based on the totality of this information.

Forecasting systems can reach the desktop of every line manager, bringing chain-wide input (if appropriate) into the process through interactive Web-based applications. Forecasts can then be further adjusted, taking every aspect into account.

Automation facilitates fast projections and scenario planning.

7. Adopt a just-in-time relationship with suppliers

Forecasting tools work in tandem with a central database, inventory control and sales systems to tie purchasing more closely to actual customer demand.

The result is an opportunity to reduce inventory and adopt a just-in-time relationship with suppliers

Ans 2Definition: Relationship Marketing is a modern approach to marketing which focuses on enhancing the customer experience and developing customer loyalty rather than increasing the sales volume and profit of the organization. Keeping the customers engaged and providing them with the highest possible value from their purchase is essential. Here comes the role of relationship marketing.

Importance of Relationship Marketing

Customer relationship management is the essence of today’s competitive business environment. Creating new customers for the organization is not enough; enhancing the customer experience is also necessary for an organization.

Following are the various reasons for which relationship marketing has evolved as an essential part of any business:

Increase in Sales Volume: Enhanced customer experience means an easy upselling and cross-selling of goods or services to satisfied customers. This ultimately increases sales volume.

Low Advertisement Cost: A successful relationship marketing reduces the efforts on customer acquisition since it helps in retaining customers for long-term. Thus, decreasing the advertisement cost.

High-Profit Better Price: A satisfied customer tends to bargain less for the prices and is ready to pay a fair price for the goods or services. This increases the profit margin of the seller.

Creates Brand Image: A happy customer will promote the product or service among their peers, relatives and the known ones. This word of mouth creates a strong brand image of the organization.

Customer Retention: Customer acquisition is not everything; meeting the customer needs, creating value for the customers and making them buy again and again is essential. All this is possible through customer relationship marketing.

Gain a Competitive Edge: A loyal customer feels comfortable buying goods or services from one single store rather than shopping around at various places. This is an advantage for the organization over its competitors.

Ans 3THE RELATIONSHIP BETWEEN DESIGN AND MARKETING

MARKETING IS A FRAMEWORK FOR THE ORGANIZED DELIVERY OF EXPERIENCES DESIGNED TO ACHIEVE A PARTICULAR RESPONSE OR ACTION. WITHIN A BUSINESS CONTEXT, THIS FRAMEWORK IS TYPICALLY GROUNDED IN RESEARCH, BOTH QUALITATIVE AND QUANTITATIVE, AND DRIVEN BY A MEASURABLE GOAL OR DESIRED OUTCOME. IN MOST CASES, THIS GOAL INCLUDES SOME FORM OF ECONOMIC GAIN BUT MAY INCLUDE ANCILLARY SOCIAL BENEFITS AS WELL. BEHIND ALL MARKETING PLANS IS AN AGENDA OR POINT OF VIEW THAT DRIVES THE MESSAGE THROUGH VARIOUS CHANNELS WHERE THEY ARE EVENTUALLY EXPELLED AT IDENTIFIED TOUCH POINTS. THESE TOUCH POINTS SERVE TO INFORM THE USER OF THE INTENDED MESSAGE AND HELP TO DELIVER A MEANINGFUL EXPERIENCE.

SO, IF MARKETING IS A FRAMEWORK FOR THE ORGANIZED DELIVERY OF AN EXPERIENCE, DESIGN IS THE ACT OF BUILDING THE DELIVERY MECHANISM FOR THAT PARTICULAR EXPERIENCE. WITHIN THE MARKETING FRAMEWORK LIVES A SET OF CONSTRAINTS THAT INFORM THE STRATEGY, DELIVERY AND DESIGN OF A PARTICULAR EXPERIENCE. THESE CONSTRAINTS CAN INCLUDE BUDGET, TIMELINES, RESOURCES OR PARTICULAR MARKET SEGMENTS AND MUST BE THE PRIMARY MOTIVATOR WHEN EXPLORING POSSIBLE SOLUTIONS. WITHIN A BUSINESS CONTEXT, DESIGN WITHOUT MARKETING IS, PERHAPS, ARBITRARY. SINCE THE MARKETING FRAMEWORK INCLUDES A RESEARCH COMPONENT BUILT SPECIFICALLY TO UNCOVER UNMET NEEDS OR DESIRES, DESIGN SHOULD BE DRIVEN BY A STRATEGY OR INTENT TO MEET THESE NEEDS IN A MEANINGFUL AND RELEVANT WAY.

Ans 5Responsibilities of the Store Manager

1Recruiting employees for the store is the store manager’s prime responsibility. He not only has to hire the right candidates for the store but also train them for their overall development. He must ensure that all the employees (floor manager, department manager, cashier and so on) contribute to their level best for the effective functioning of the store.

He must act as a strong pillar of support and stand by his team at the hour of crisis. It is his duty to acquaint his team members with the latest trends in fashion or any other newly launched retail software. It is his responsibility to delegate responsibilities to his subordinates according to their specializations and extract the best out of them. The store manager must motivate his team members from time to time.

2The store manager must make sure his store is meeting the targets and earning profits. He is responsible for the smooth and effective functioning of the store.

3The store manager is responsible for maintaining the overall image of the store. It is his duty to sensibly display the merchandise so that it immediately catches the attention of the customers. The store manager must ensure that his store meets the expectations of the customers and lives up to its predefined brand image.

He must ensure:

a The store is kept clean

b Shelves and racks are properly stocked and products do not fall off the shelves.

c Mannequins are kept at the right place to attract the customers into the store and rotated frequently.

d The merchandise should be according to the season as well as the latest trends.

e The store is well lit, ventilated and offers a positive ambience to the customers.

F The signage displaying the name and logo of the store is installed at the right place and viewable to all.

4One of the major responsibilities of the store manager is to make the customers feel safe and comfortable in the store. It is his key responsibility to make sure that the customer leaves the store with a pleasant smile.

5 He is responsible for managing the assets of the store. The security and safety of the store is his responsibility. The store manager must ensure that sufficient inventory is available at the store to avoid being “out of stock”.

6 He along with his subordinates are responsible for planning, managing profit and loss, handling cash at the store as well as collating daily sales as well as other necessary reports.

7 He must ensure that the store is free from pilferage.

Ans 1What is 'Segmentation'

Definition: Segmentation means to divide the marketplace into parts, or segments, which are definable, accessible, actionable, and profitable and have a growth potential. In other words, a company would find it impossible to target the entire market, because of time, cost and effort restrictions. It needs to have a 'definable' segment - a mass of people who can be identified and targeted with reasonable effort, cost and time.

Ans 2What Is Customer Data?

 

Customer data is defined as the information your customers provide while interacting with your business via your website, mobile applications, surveys, social media, marketing campaigns, and other online and offline avenues.

 

Customer data is a cornerstone to a successful business strategy. Data-driven organizations realize the importance of this and take action to ensure that they collect the necessary customer data points that would enable them to improve customer experience and fine-tune business strategy over time.

Ans 3What is Retail?

A retail sale occurs when a business sells a product or service to an individual consumer for his or her own use. The transaction itself can occur through a number of different sales channels, such as online, in a brick-and-mortar storefront, through direct sales, or direct mail. The aspect of the sale that qualifies it as a retail transaction is that the end user is the buyer.

Ans4Definition

A convenience store or shop is a retail shop usually located around the corner where you live. It stocks all the essential goods such as groceries items like eggs, bread, butter, and milk, over-the-counter medicines, coffee, snacks, tobacco products, and soft drinks, etc. The convenience stores are referred to with various names such as corner shops, corner stores, or C-store.

Some convenience stores also sell alcohol. However, it is not permitted in every jurisdiction. There are very few jurisdictions that allow the sales of alcohol. Some convenience stores sell limited alcoholic products, the products that have low alcohol content in them such as beer and wine.

Ans 5What Do You Mean By Product Mix?

Product Mix, another name as Product Assortment, refers to several products that a company offers to its customers. For example, a company might sell multiple lines of products, with the product lines being fairly similar, such as toothpaste, toothbrush, or mouthwash, and also other such toiletries. All these are under the same brand umbrella.  Whereas, a company may have varied and distinct other product lines that may be in good contrast to each other, such as medicines and clothing apparel.  

 

Product mix can also be understood as the complete set of products and services that are offered by a firm. A product mix consists of the product lines, which are associated items that a consumer purchases.