Managing Retail Outlets

WHY RETAIL OUTLETS ?

1) Convenient Location

2) Offer Choice (Assortment)

3) Can buy in Small Qty

LOCATION IS THE MOSTIMPORTANT FACTOR IN

RETAIL

YOUR NEIGHBOURHOODWILL DETERMINE YOUR

BUSINESS

OBSERVE LOCALITY

1) How many outlets - nearby ?

2) Product Categories ?

3) Product Variants ?

4) How different are products in features & pricing

5) Estimating the demand – at the competitor outlets

KNOWING YOUR CUSTOMER

1) What questions do they ask ?

2) What features are they looking for ?

3) Randomly ask on the street “electronic store”

4) Which products makes the customer curious ?

5) Which products are ignored by the customer ?

6) Busy ? Leisure ? Price Conscious ?

7) What do they buy – Stand at POS

PRICE MAPPING

BRAND X BRAND Y

PRICE

BRAND Z BRAND Y

PRICE

BRAND Z BRAND P

Basic Feature – 32” LCD 32” LCD with 3D support

MAPPING PRICE DROPS

BRAND X BRAND Y

PRICE

BRAND Z BRAND Y

PRICE

BRAND Z BRAND P

Basic Feature – 32” LCD 32” LCD with 3D support

WHAT WILL BEMY STORE’s USP ?

1) POSITION THE STORE FOR THE MARKET2) STORE GOODS FOR THE MARKET

PRODUCT SOURCING1) Decide which products to stock ?

2) What features/Quality will my customer expect ?

3) What Price will they be take it for ?

4) Private Label ?

Finding factories/agencies to source the right products

RFQ > PRODUCTION1) Product Needed

2) Demand Qty Required

3) Ask for best Price,

4) Will they do Private Label ?

Will Send BrochuresAcceptable MOQ

Price per Qty

Ask for a Free Sample

PURCHASE CYCLE

ContactedFactory

Seen SamplesProductionLead Time

ShippingLead Time

DocumentationStorage

/Barcodes/DisplayPromotionCheck

Retail SalesReorderMOQ

Pricing

Payment

PRICING TERMINOLOGYEXW : Ex-Warehouse Pricing (will be ready in factory warehouse

FOB : Free on-board Pricing (will leave the goods at the origin port)

CNF : Cost and Freight (will be shipped to destination port)

Containers left on Shipping Port

Containers on Shipping Vessel

Shipping Carton gets docked on containersContainers on Ships

PRODUCTION STARTS1) Advance Paid – Production Starts

2) For Private Label brand – Share Logo (AI format)

3) Share Packaging Cover Design (PSD/AI format)

4) Shipping Carton Design (mention as text)

Will send you photos at the end

Balance Payment(TT/LC)

RFQ > SHIPPING1) Port of Origin

2) Destination Port

3) CBM if LCL; Container Size if FCL

4) When to ship ?

SHIPPING- 20'ft container 26-28 CBM- 40'ft container 56-58 CBM;- 40'ft HQ container 60-68 CBM- 45'ft HQ container about 78 CBM

CLEARANCE DOCUMENTS1) Country of Origin Certificate2) Bill of Lading3) Factory Invoice4) Packing List5) Import License Copy

On submitting documents, container is released, and a truck transports goods to warehouse

PRODUCT CYCLE

ContactedFactory

Seen Samples Production Shipping

DocumentationStorage

/Barcodes/DisplayPromotionCheck

Retail SalesReorderMOQ

Pricing

Payment

WAREHOUSE – OWN VS PUBLIC

Public Storage - Charged based on space occupied per CBM (Cubic Meter) per day

BARCODES

Barcodes on products bring up unique SKU nos, that identify a particular product

RFID TAGS

RFID Tags now replace the traditional barcodes

RFID TAGS

COST & PROFIT ?

• Expected Price (based on positioning) - Landing Cost = Gross Profit

Factory Cost + Shipping Cost + Demurrages (if any) + Clearance Charges + Storage CostLanding Cost =

Consider : Current Competition Pricing + Existing Inventory Levels

BUNDLE OFFERS ?Product A Cost + Product B Cost = Total Cost + Standard GPBundle Offer Price =

Bundle Offers are also done to increase the average invoice value

Bundle Offers makes product incomparable across storesBundle Offers liquidate stocks together

PRICE ELASTICITYIf you know price elasticity for each category – you can estimate sales

for locally sourced models also.

• % change in units sold/% change in price

Price Elasticity =

PRICE DROPPED ?

If it is not competitive to drop prices – wait and respond – liquidate if not competitive any more

RESPONDING TO COMPETITOR PRICE DROPS

When Competition reduces price – We respond if its affects our perceived value

It’s ok to drop prices to stay competitive in the market – as long as the price drop is still making a low profit; and will average out on category

SELL AT COST ?

If it is not competitive to drop prices – wait and respond – liquidate if not competitive any more

RESPONDING TO COMPETITOR PRICE DROPS

Source Unique Models - Promote heavily – Sell at Cost – Yet end up profitable

SALESMAN TRAINING1) Products available in the market2) Educate how features as benefits3) Features Comparison against our model4) Price Comparison against our model5) Give them Readymade Rebuttals for

standard questions

SHOPPING CART

If the shopping cart is big; they end up buying more

RETAIL DISPLAY

Calculate average sales per day to know the response – Promote if needed-

- Educate salesmen before making the display- Highlight new product- Highlight new product on Collaterals

Display Piece + Stock Pile ups (Visual Cues to denote new product) + Feature Card with Price

SHELF LIFE

New season - trends – new modelsTransition defective models with new models

JUST IN TIME APPROACH IS IDEAL.EDUCATE TRANSISTIONS ACROSS THE STORE

STOCK PILE UP !!!Check with salesman – why it is not moving ?

Where is the fault – feature, model quality, customer preference, not adequate walk ins

- Change Display- Reduce price- Make new offer – Announce !- Bundle Offers & Liquidate- Sponsor Gifts for corporate promotion

STOCK SHORTAGESource Locally – New brand at relatively same price point

Promise customers when goods will be available – get contacts.

MONITOR DEFECT RATEExchange pieces or reimburse cash.

Negotiate with Supplier on next reorder – get free pieces to compensate loss

Start looking for a reliable factory – start seeing samples even before reorder point

LUCKY DIPS FOR CUSTOMER DBWho is my customer ?How far do they live ?

What is their average income ?Who buys – what ?

Run a lucky dip and ask them fill the details – now collate it to know where they liveAccept that Demand will not go on – Open new stores !

RETAIL ANALYTICSKey insights on product sales trends.

Key insights on - Add on Sale ?Key insights on - How to Bundle ?

Peak Store Operations ? – What time is high traffic time ? Which day ?Plan Salesman shifts accordingly

STOCK VARIANCE- Check lapses in Process (Returns not recorded)

- Check for lapses in bundle offers (free items not recorded)

SHOP LIFTING !!!

RFID TAGS - CAMERAS

FAKE DEMAND

Real Demand Vs Fake Demand - Eating into the discontinued model’s share

REORDER BASED ON HISTORYWhat is the Mean ?

What is the Standard Deviation ?What is the Reorder Time ?

How long will the existing stock last ? What is the defect/return rate ?

Most ERP systems now have alerts for re-ordering when stock reaches a particular point

REORDER BASED ON HISTORY

There's a 68% probability of a data point falling within one standard deviation of the mean.

Virtually all of the data points (99.7%) can be expected to be within three standard deviations of the

mean.

LINE EXTENSIONSDown-Market Stretch  - A store positioned in the middle market may want to introduce a lower-priced

line when the middle market is stagnating or declining.

Up-Market Stretch - A store positioned for the middle market may want to introduce a higher -priced line for higher margins 

No Brainer to know that you can’t serve all with limited floor space.

HOLISTIC BRANDINGYOUR BRAND IS NOT JUST THE STORE

Perceived Image - Store Perceived Image - Service Center

Perceived Image - Home Installations Response while returning defective products –

Brand Positioning Marketing Communications

Press Releases

COMMUNICATE CLVCOMMUNICATE CUSTOMER LIFETIME VALUE (CLV)

Total Households in the neighborhood = 10,000Average spend on groceries per family = Rs 4000 per month

One customer stays in the neighborhood on an average of 10 years

Value of one customer lost = (4000*12)*10 = Rs 4,80,000

You will not give good service – if you never communicated the Average CLV to the salesman

PROMOTIONSIT IS YOUR JOB TO KEEP THEM INFORMED

Newspaper – works best for Today Only offersRadio – reinforces Today Only offers – creates sense of urgency

Product Flyers /Brochures – Distribute at local households + works best on the first week of the month

OOH Hoarding – no immediate response – good for long term local branding- Acts as reminder – Ideal to place on approach roads near the store

SMS Alerts at 3pm – for DISCOUNT SEASONS !

MEDIA BUYING EFFECTIVENESSMEASURE FOOTFALLS AGAINST EACH PROMOTION

Which Media Works for me ? – Measure footfalls.Where does competitor advertise – collect all competitor ads – file them.

Hire a Media Buying AgencyMedia Buying Agency charges 12% commission per bill.

Hire an Ad Agency – keep consistency in branding

IN-STORE PROMOTIONSLIVE EXPERIENCE – NEW TRIALS - GOOD WAY TO SELL NEW PRODUCTS

IN STORE SPACE – RENTED FOR ADS

New Revenue StreamsCan Charge Brand Managers for visibility

& promotions

Increases SalesAdds to the excitement

IN-STORE EXCITEMENTMEASURE FOOTFALLS AGAINST EACH PROMOTION

Games ?Music ?

Bigger Shopping Cart – For more sales ?Background Imagery – Seasonal ?

Tag the Shopping Cart

One Entrance – One Exit – increases client purchase duration

MALL LIFECYCLEIF THE AVERAGE FOOTFALL IN THE MALL IS LOW

Which phase of the lifecycle is the mall ?

You cannot make people walk into your store with “TODAY ONLY” offer always.

Thank you