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RetailingRetailing includes all activities in selling goods& services to the final consumer
The seller is a Retailer & his business isRetailing.
It doesnt matter howhow the products are sold ( byperson, mail, telephone, internet etc) orwherewherethey are sold from ( store, on the street or inconsumer homes )
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Conventional Sales & Distribution Set up FMCG,Durables ,Apparels,Daily needs,Financial Products etc
Retail Environment &Growing Importance Retail scenario over last 8-9 Yrs
Current scenario
Players & Their Influence
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Retail Store Operations
Functions & Working
Significance of marketing
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Company owned /Stand alone stores
Specialty stores
Departmental Stores SuperMarket
Hyper markets
Malls &CommercialSpaces
RetailChain s
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Convenience Stores
Discount stores
Off Price Retailer
Category killer Catalog Showroom
Self Service
Self Selection
Limited service
Full Service
Retailers can also position themselves on service intensity
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Human resources management Institutional business Administration / Maintenance
SupplyChain & LogisticsManagement Maintenance Accounts & Finance Business Development / BOT MIS management
Visual merchandising Marketing & Loyalty Program management Operations Buying & Merchandising
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Top lines Sales Customer Entry Marketing programs
Productivity & Efficiency
Category Management &Consolidation
Profitability
CategoryManagement &MOS tracking, GMROF,OperationalCosts Occupation, HR, Electricity,CAM
SOP & LegalCompliance
Accounts & Processes, Best Practices Team, Audit Frequency Efficiency
Conversion
CashMemo Size GMROL
Customer Satisfaction Index Concept ofMystery Shoppers
SOP Audit
Associate Satisfaction Index Rewards & Recognition
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Conversion =Total Number of BillsTotalCustomer entry
E.g. on a single day the total entry of the customers in
the store is 1000 & the total bills made by thecustomers is 400 No's
The conversion will be 400 / 1000 = 40%
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Cash Memo Size = Total SalesTotal no of Bills
E.g. on a single day the total entry of the customers in
the store is 1000 & the total bills made by thecustomers is 400 No's, The sales are 800,000/-
Cash Memo Size will be 800,000/ 400= 2000/-
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Items per Ticket = Total number of Items Sold
(IPT) Total number of bills
E.g. on a single day the total entry of the customers in
the store is 1000 & the total bills made by thecustomers is 400 No's & the total number of items sold
is 1600 nos
IPT will equal to 1600 / 400 = 4 items
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Sales per square feet
GrossMargin Return on Footage (GMROF)
SPQFT = Total Sales for a period
Total area or MPA
GMROF = Gross Margin earned
Total Area or MPA
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What is merchandise management ?
Making assortment plan, Deciding on the product mix, forecasting & allocating the products
mix , Negotiating the price of the products,Merchandise plan considers
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Marketing
Considerations
Store & Image,Trading format, retail proposition,
EnvironmentMerchandise strategyoptions
Issues of Width & depth,Quality, Exclusivity, Seasonalityof range, Promotional agreement
Type of customer base Frequency of customer visits & purchases, Length ofseason,Avg transaction value , Range purchased
Financial considerations Profitability & sales performance projections, Stockturnover ratio,Terms of trade, corporate objectives &
pricing considerations
MerchandiseAssortment Search
Ensuring merchandise meets criteria of required range,comparison, cost , price range offer, brand policy, etc
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( should avoid resistance to change & constantly consolidate basis GMROFor Sales per Sqft )
Analysis What people want
Planning What time frame is in consideration? Acquisition Where to get it from ? Handling Issues like,Tagging, Soiling, etc
Control Inventory management
Arrangement Centralized / Decentralized TOT Consignment ,Outright,Minimum
guaranteed commission or MGC)
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An assortment of items that the customer sees asreasonable substitutes for each other Destination Brands,Toys ,Music
Routine White Shirts, Soaps
Seasonal Mangoes , oranges,Christmas merchandise
Convenience fill In
Categories could also be
Traffic Builders
Transaction builders CashGenerators
Image creators
ExcitementCreators
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Arrange them as customers would arrange them Take into consideration time, space, etc
Drive purchases of multiple categories Its not an institutionalized decision, its dynamic Plays important role in differentiation
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Variety / Assortment Basis positioning
Breadth Within categories which Brands?
Depth Within Brands which lines Guided by constraints
Space ( Synergy ,Clutter !)MPA theory
Investment ( VMI, Inventory management , etc )
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Avg monthly sales = Total planned sales for season / number of months Avg stock for season = Total Planned sales / Inventory turnover ( Inventory turnover = number of turns the inventory is expected to do
during the season ) Basic Stock = Avg Stock Avg monthly Sales Hence monthly stock = Basic stock + planned months sales
Typical for a merchandise wherein the planning is done for 6 months period There could be variation during each months sales which reflects in stocking
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Average monthly sales = Total Planned sales 500000
Number of Months 6
83333
Average stock for the season = Total Planned sales 500000
Inventory Turnover 2
250000
Therefore Basic stock equals Avg stock 250000
(-) Avg monthly sales 83333
166667
- Depending on planned sales for the month as below BOM will be maintained
Hence BOM stock @ retail equals Basic Stock BOM
Feb 75000 166667 241667Mar 75000 166667 241667
Apr 100000 166667 266667
May 50000 166667 216667
Jun 125000 166667 291667
Jul 75000 166667 241667
T tal sales 500000
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Number of weeks to be
stocked
( depends on ) Number of weeks in the period / 26
Stock turnover for the period 2
13
Average weekly sales Estimated Sales 500000
Number of weeks 26
19230
BOM
Average weeskly sales (*) number of weeks to be
stocked 19230 13 250000
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Planned sales for month 75000
Plus EOM planned retail stocks 300000
Minus BOM 225000
Equals planned purchases 150000
educt current commitments for delivery ( GIT from Vendor ) 15000
OTB 135000
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Model Stock Plan : Example
Category Men's Shirts 100%
Attributes
Formals Casuals Sport Patry Wear
Type 10% 40% 20% 30%
Small Medium Large XL
Size 25% 40% 25% 10%
Long Short
Sleeve 30% 70%
Collar Button Down Regular
40% 60%
Color White Blue Beige Yellow
40% 18% 32% 10%
Fabric Cotton Blended
25% 75%
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GatheringInformation
electing themerchan isean ven or
interactions
Evaluatingoptions basisMo el stock Plan
Negotiating apurchase
Conclu ing the
purchases
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This process is then followed up by Receiving of merchandise & Reordering
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TradingManagers Non Apparels
CategoryManagers -Cosmetics
Merchandiser
Mass Lakme,Chambhor
MerchandiserPremium
Loreal,Vichy
Category mangerWatches &Sunglasses
Merchandiser fullline
Lancome,Clarins
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It will also be guided by the Degree of centralization or decentralization in buying
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Understanding price as a concept
Price sensitivity
Factors influencing price
Approaches to Retail price adjustments
Markdown,Markdown policy
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PriceConcept
ProfitMaximization
Target Return on Investment Target Return on Total sales
Market Share
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Cost of ProducingCost of ProducingDistributor /Distributor /
Manufacturer PriceManufacturer PriceRetailMarginsRetailMargins Retail PriceRetail Price
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Substitutes availability Unique Value Importance of purchase Price Quality comparisons Expenditure Size Psychology Fairness / Transparency Perish ability Competition
Volatile market Fluctuations
Supply Issues
Shrinkage rates
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MRP = Selling price
Mark Down = Discounted price Cost Price or List price COGS =Cost of goods sold or aggregate List Price MOS =Margin on Sales GMROF =Gross margin return on footage GMROL =Gross margin return on labor
MPA = Merchandise Plan Area
Sales per Sqft = Total Sales / MPA
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Factors Below the Market Pricing At Par with Market Above the Market Pricing
Store location Inconvenient Competitive Prime
Store Hours Short toCompetitive Competitive Long
Customer Service Self Service, LittleSupport, Limited Displays
Moderate High Service Intensity
Prestige Low Medium High
Merchandise uniqueness None Average Highly unique
Product Lines carried Mostly Private labels,
Closeouts,Some Brands
Better in terms of brands
availability, mostly Privatelabels
Exclusive in terms of
offerings, Rich Brandassortment
Assortment Innovation Conservative Concentration on Best
sellers
Leader
VAS Not Available Available at Fee Included in Price
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Market Penetration : Low prices
Market Skimming : High margins
ELDP : Everyday Low Prices Cost Oriented Pricing
Demand Oriented Pricing
Competition Oriented Pricing
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Markdowns
AdditionalMarkup
Employee Discounts Coupons
Rebates
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Overall Market Demand
Select Market Prices that will Maximize target market demand
Product Demand
Ensure the product / merchandise price is competitive for market share objectives
Competitive Environment
Estimate competitor reaction
Public Reaction
Consumers Sensitivity to Prices
Financial Goals
Test price against financial Goals
Marketing MixEnsure the price is consistent with Marketing mix
Profit Plan
Should be done with cost estimations in Place
Establish Pricing Policy
Timing , responsibility & Monitoring plan
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Understanding marketing mix from retail
Perspective & its role in differentiation
Product & Services Offered
Price
Promotion Place
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Retailing & Marketing
Strategy & Execution ofMarketingPlans approach
Typical set up of theMarketing
Departments or Team
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Consumer behavior in retail context
Comparison of challenges in
conventional formats v/s modern Trade Buying decision process its significance
Implications on retail management
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1. Merchandise management
2. Category management
3. Assortment Plan
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InformationGathering
Customer
Suppliers / Vendors Sales People feedback
Competition data
Other sources
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Selecting and Interaction with Sources
Company owned
Traders / importers EvaluatingMerchandise
Inspection
Sampling
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Setting objectives
Communication effects
Advertising Sales promotion
Relationship marketing & loyalty programme
Public relations
Promotional tools
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Components Merchandise Plan Area
Arrangement ofMerchandise & Departments
Synergy & Adjacency of Displays
Check out counters &Customer Entry Exits
Non Selling areas & facilities
Signanges & In store use of communication tools
Objectives Consistency with store positioning & Image
Functionality Ease & influence onCustomer buying decisions
Optimization of productivity from retail space
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Layouts / Patterns
Grid Pattern
Free Flow Boutique
Loop
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GRID Pattern
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Loop
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Boutique
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Free flow
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Office
Racks
Storage
Stora
ge
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Channels & channel flows
Supply chain
Growth of channel relationships &
partnerships Distribution logistics and stock control
Retail logistics cost structure
CPFaR
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Geographic locations
Locations sites and retail development
Catchment analysis Retail property development, current context
Leasing / buying decisions & processes
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Role of IT
IT for competitive advantage
Point of sales scope Database marketing
Business intelligence
IT training & domain expertise
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