Retailing Management
Some retail humor……………..• A retailer was dismayed when a competitor selling the same type of
product opened next-door to him, displaying a large sign proclaiming "Best Deals.“
• Not long after that, he was horrified to find yet another competitor move in next door, on the other side if his store. It's large sign was even more disturbing—"Lowest Prices.“
• After his initial panic, and concern that he would be driven out of business, he looked for a way to turn the situation to his marketing advantage. Finally, an idea came to him. Next day, he proudly unveiled a new and huge sign over his front door.
•"Main Entrance!"
Main topics to be covered in this presentation
• convenience store
• 101 shopping mall
• store location analysis
• warehouse club field study report
convenience store• A little history on 7 Eleven• They have more than 4600 stores in Taiwan
Toshifumi Suzuki
Consumer buying behavior in NCTU
• Students make up the largest customer segment
• They seek to satisfy their utilitarian needs• They engage in habitual decision making
Floor layout
• Customers tend to shop in a more deliberate and efficient manner
• Time spent on the whole buying process is crucial
Figure 1: Layout of NCTU 7-Eleven
Entrance Media Shelf HH Necessities
Drinks
Machine
Refrigerator
(beverages)
Storage D
oor
Refrigerator (dairy products)Fast Food (microwavable)
Refrigerator(ice cream & frozen desserts)
Counter
Confectionery Products
Fresh Food: (Bread/Toasts)
Instant NoodlesFast Food (hotdogs/soup/eggs)
Fresh Food (buns)
Canned & Food Specialties
Fats and Oils
CookiesChips
Basic Necessities & Cosmetics
Shelves
Assortments mixCategory Major Brand(s)Group 2024 Ice Cream and Frozen Desserts
Uni-President
Group 2026 Fluid Milk Uni-President Group 2037 Fruit Juices Uni-PresidentGroup 2038 Frozen Specialties 7-ElevenGroup 2051 Bread & other Bakery products
Uni-President
Group 2052 Cookies & Crackers RitzGroup 2064 Candy & other Confectionary Products
Wrigleys
Group 2065 Chocolate & Cocoa Products
Meiji
Group 2066 Chewing Gum WrigleysGroup 2086 Bottled, Canned Soft Drinks & Water
Uni-President, Wei Dan
Group 2096 Potato Chips, Corn Chips & Snacks
7-Eleven
Group 2099 Food Preparations Uni-President, Wei Dan
Is NCTU 7-Eleven successful in attracting their targeted market to shop with them?
• Their superior location is a major advantage over their competitors
• There is a wide array of fresh food which is replenished daily
• They can consider preparing more fresh food rather than microwavable
Taipei 101 shopping mall
Some quick facts
• 2.36 million square feet of office space• 893,000 square feet of parking space• 796,000 square feet of retail space• Some of Taipei 101’s office occupants include
Consumer buying behavior of segment 1
• Segment 1 - White collar workers and young working professionals working in the Hsin Yi district
• Age between 24 to 35, annual income of USD 30,000 to USD 50,000, fashion followers, middle upper class of society
• Buying behavior• Seek to satisfy their hedonic needs• Look upon celebrities as reference groups to
guide them on the latest fashion
Consumer buying behavior of segment 2• Segment 2 - High net worth individuals (both
local and international)• Annual income of at least USD 100,000, upper class of society, attend social functions regularly
• Buying behavior• Price of products are least of their concern• They value the entire shopping experience more• Obtain information from their own social
networks on places to patronize to get the latest fashion goods
Retail Mix• Understanding the consumer’s needs is the
foundation of a good retail strategy• If you offer a retail mix oblivious to the market
environment and your consumer’s need, they will patronize other shopping malls in the area
• Mall layout & design, Store mix, Retail communication mix
Mall layout & design
Types of Stores
• Up to 55% of the mall is allocated to public space
• Wider aisles• High ceilings throughout the entire mall• Warm lighting is used to create a soothing
ambience• Classical music is played in the background• Clean toilets
Mall layout and design
Exquisite Window Display
Floor Guide & DescriptionLevel Floor Guide Description ExamplesBasement 1 Grand Market High quality food court and
shops for urban livingJason’s market, Grand Market Food Court
Level 1 Avenue 101 Popular regional brands Kenneth Cole, Bally, Ted Baker
Level 2 The Designer Walk
Design oriented international brands
De Beers, Jean Paul Gaultier, Kookai
Level 3 The Galleries Couture
European and global flagship stores
Cartier, Louis Vuitton, Celine, IWC
Level 4 City Square High end restaurants and cafes
Wasabi Buffet, Maxim’s de Paris
Level 5 Financial Centre
Financial centre and banquet halls
International Banquet Hall
Table 1: Description of each level in Taipei 101 shopping mall
Retail communication mix
• Taipei 101 website, monthly magazine, direct mails and Celebrity endorsements
• Taipei 101 partnered with Taiwan tourism board to feature Taipei 101 in international advertisements
Building a sustainable and competitive advantage
• Taipei 101 is successful in creating depth for designer products however there isn’t sufficient mass market labels in the mall
• Improve the Taipei 101 shopping mall website• Partner designer labels to feature new
products on the Taipei 101 website
Regional/Global Competition•Taipei 101 should look at the global competition
•Work together with the other shopping malls in the Hsin Yi district
•Conduct coordinated sales promotions to attract shoppers
H&M’s Retail Location in Taipei City
??
Introduction
• Hennes & Mauritz (H&M), is a well known Swedish apparel company worldwide, with 1,800 stores spread across 35 countries.
• “Offering fashion and quality at the best price.” • Aim to be located in the best business location.• Taipei is the essential business center in
Taiwan.
Factors To Consider• Target market
– Fashion pursuer, good quality, middle price• Cost of operating stores
– H&M only leases the stores instead of buy them.• How many stores to open
– Experiment the market or promote the brand • The characteristics of the trade area
– CBD, natural and physical barriers, store accessibility, demographic, level of competition
• The characteristics of the retail site– Traffic & accessibility, visibility, adjacent stores, restrictions and costs
• Estimate potential sales• Lease negotiation
Trade Area
Taipei City
Trade AreaTrade Area Type Accessibility Competition
LevelDemographic
TypeZhongxiao CBD Very High Very High Employees,
fashion pursuers
Zhongshan Artistic, Shopping
Medium High Unique fashion
pursuers
TPE Train Station
Transportation center,
cram schools, old CBD
Very High Medium Employees, students, travelers
Ximen Teenager recreation
High Medium Students
Tienmu Residence Medium Medium Foreigners, residents
Zhong Xiao E. Rd.
Breeze Center
Sogo BR4
Sogo at&t
MinYao
Sogo
Din Hao
Small Retailers, Apparel & Accessories Specialty Stores,
Restaurants, Bars
MRTMRT
Mango
Retail Site-East Zone
Taipei City Hall
Neo 19
NYNY
Movie Theater
Taipei 101
Zhong Xiao E. Rd.
MitzukoshiA9, A11, A8
A4Eslite Book Store
MRT
Mango
BellaVita
UniPresident Mall
Retail Site-Xinyi District
Retail SiteRetail Sites Accessibility Visibility Adjacent
StoresRestriction
& CostEast Zone Very High High Department
Stores, Small
Retailers, Restaurants
13,000NT/ping/month
XinYi District High Medium Department Stores
10,000NT/ping/month
Estimate Potential SalesXinyi District (Sales at Mango: NT5,940 ,000)
H&M Mango
Average Store Size 136ping 121ping
Probability of Mango customer shopping at H&M:(136/5)/[(136/5) + (121/5)] = 0.529
Forecasted Sales at H&M = $0.529 * 5.94m = $3.14m
Using Huff Gravity Model with λ= 1
East Zone (Sales at Sogo: NT4,000,000,000)
H&M Sogo
Average Store Size 136ping 3636ping
Probability of Sogo customer shopping at H&M= (136/5)/[(136/5) + (3636/5)] = 0.036
Forecasted sales at H&M = 0.036*(4b/3636*136 )= NT$5.3m
Costco warehouse club field study report
Organization Structure
The Directors
Human Resource Management
• The organization and management of employees is crucial to help retailers perform its critical business functions.
• Employees are a valuable asset to any retailer.• In manufacturing machines• In retailing labor intensive
HR Management
Requirements:• Every employee has to start work from the
bottom regardless of education level• 3 month probation period
HR Management
Reason:• Reduce employment turnover rate • Build up a pool of committed and loyal
employees• Understand how each department functions• Facilitate the buying and selling activities
Hsinchu Personnel
• To take into consideration the size and management practices of Costco.
• Administrative Personnel• Floor Personnel
Administrative Personnel
DEPARTMENTS PERSONNEL
ADMINISTRATIVE
Senior Management 5
Membership Department 10
Accounts Department 3
Marketing Department 5
Purchasing Department 5
IT Department 2
Logistics Department 30
TOTAL ADMINSTRATIVE PERSONNEL 60
Floor Personnel
FLOOR PERSONNEL Pharmacy 5Optical 5Tire Center 5Food Preparation 15Operations and Maintenance 4Floor Helper/ Sample Personnel 10Checkout Counters 36TOTAL FLOOR PERSONNEL 80 TOTAL PERSONNEL NEEDED 140
FLOOR PERSONNEL Pharmacy 5Optical 5Tire Center 5Food Preparation 15Operations and Maintenance 4Floor Helper/ Sample Personnel 10Checkout Counters 36TOTAL FLOOR PERSONNEL 80 TOTAL PERSONNEL NEEDED 140
Floor Personnel
FLOOR PERSONNEL Pharmacy 5Optical 5Tire Center 5Food Preparation 15Operations and Maintenance 4Floor Helper/ Sample Personnel 10Checkout Counters 36TOTAL FLOOR PERSONNEL 80 TOTAL PERSONNEL NEEDED 140
Information Systems
• Electronic data interchange (EDI)• Intranet• Extranet: Costco’s CRX
(Collaborative Retail Exchange) program• No RFID usage
Information Systems
• CRX: Vendor Managed Inventory System
• Inventory method: continuous review system (monitored continuously with each sale)
Intranet
Extranet
Merchandise Management
• It is about managing a portfolio of merchandise inventory.
• Uses their retailer’s information to monitor the performance of their merchandise portfolio.
• Buyers want to offer the right quantity of right merchandise.
• Want to avoid over stocking or a stock out situation• Want to satisfy financial objectives
Merchandise Management Process
1. Buyers forecast category sales
2. Develop an assortment plan for merchandise in that category
2. Setting inventory level
4. Negotiates with vendors
1. Forecasting Sales
• Costco offers a majority of staple merchandises
Staple Merchandises CategorySales over many seasons YesSales of a specific style over many seasons
Yes
Sales vary dramatically from one season to the next
No
Sales
Time
1. Forecasting Sales
• A record of sales for each SKU is available.
• Buyers forecast future sales from extrapolating historical sales.
• Information from vendors about market research on merchandise categories is useful in buyer’s forecasting.
2. Assortment plan
• A list of the SKUs that a retailer will offer in a merchandise category.
• Have to reflect the firm’s retail strategy, trade off between too much and too little assortment etc.
2. Assortment Plan
• Costco’s retail strategy: offering good products at good value.
• Costco offers a few SKU per category (4000SKU)- Fewer SKUs will reduce inventory investment, space
Retail store is its warehouse…
2. Assortment Plan• Costco’s retail strategy: offering good products at good
value.
• Costco offers a few SKU per category (4000SKU)- Fewer SKUs will reduce inventory investment, space- Avoid low merchandize turnover rate- Better control E.g. Dairy products
• Costco offers National and Private Brand• Costco considers complementary SKU
3. Setting inventory level• Costco will make frequent ordering and shipments- Limited warehouse space- Keep inventory investment low
• Need to carry buffer stock to avoid stock out- Affected by lead time- Fluctuation in demand- Vendor’s product availability
4. Negotiating with Vendors
• National Brand Products- Discuss performance of previous season, vendor’s offering for
coming season- Quality & Uses of product- Product’s market research- Price (10% sales profit) - Slotting fees, exclusivity items, terms of purchase and
transportation costs.
5. Buys Merchandise
• Requires a good information system
• Requires a good supply chain management
Supply Chain Management
Retail store is the warehouse, saves on labour and cost
Averitt Express
The major components of retailingLearning Points:
1.Store layout2.Merchandise Mix3.Retail Strategy4.Consumer Buying Behavior5.Retail Mix6.Location7.Human Resource Management8.Information System9.Merchandise Management10.Supply Chain Management
The Retail Team of amateurs with Dr Trappey!
Thank You!