RETAIL MANAGEMENT                         CHAPTER-1 RETAIL PRICINGA. IntroductionB. Retail Management SystemC. Retail Mana...
C. Food Retailers    D. Non-Store Retailing    E. Issues in International RetailingCHAPTER-5 IMPACT OF RETAIL MANAGEMENT I...
Chapter-8 PRICINGA. Questions involved in pricingB. DefinitionsC. Retail Location StrategiesD. New Development DriversE. C...
CHAPTER-1                                             RETAIL PRICINGIntroductionRetail Management consists of Managing the...
Retail Management Improves productivity and business performance     i.    Increase knowledge of operations.    ii.    Mak...
Improves productivity and business performance    i.    Increase knowledge of operations. Gain full visibility into store ...
data systems reduce the need to re-enter information, freeing your staff to focus on          managing and selling more ef...
relationship backed by one of the worlds leading technology providers. Microsoft Business              Solutions is a fami...
shopping around for the best deal, regularly reviewing their financial position and moving from onefirm to another when it...
address all parts of the problem at once. We and our partners - Government, industry, the media, thevoluntary sector, and ...
success measures for the other specific priorities I mentioned.       This aims to support new and innovative projects ded...
suitable advice to consumers. And that those consumers should be able to recognize when this ishappening, and when it is n...
Treating Customers Fairly      As I have set out, the fair treatment of customers by firms is a key part of the broader pi...
CHAPTER- 2RISK-BASED REGULATIONIntroduction      Which brings us to the final Pillar of our retail strategy? Let’s hark ba...
a whole. We identify emerging retail risks in a number of ways, including:      i.      market data;     ii.      current ...
i.   How many – and what type of – firms are active in the market or product that we are           interested in.     ii. ...
We have been very active in working with third sector lenders, for example in delivering aproportionate, lighter touch reg...
Another major challenge facing the industry is A-Day, in other words 6 April 2006, when thenew pension tax simplification ...
The Band: The team that drives the program internally needs to be composed of skills thatare difficult to find in any mark...
enterprise and must understand both the role of each skill employed and the inter-relationshipbetween skills.Human skills ...
organization and its stakeholders. It is a comprehensive strategy of acquiring, retaining andpartnering with carefully tar...
methods and technologies used by the companies to manage their relationship with their clients.   The process of CRM inclu...
Product-Centricity is the key challenge that an organisation needs to overcome, in order to have asuccessful client relati...
CHAPTER-3RETAIL MARKETING STRATEGY       To develop a finely honed retail strategy, you often need to undertake primary or...
Most of the focus is on small cities. Nearly half of New Edges markets have a population ofless than 50,000, many of them ...
Finally, despite the obvious concentration of big company headquarters in a relatively fewmajor markets that New Edge avoi...
intended to be in 1,200 COs by the end of 2000. It also laid off 55 employees and refocusedoperations to help it take adva...
CHAPTER-4INTERNATIONAL RETAILINGIntroductionInternational Expansion of Retailers       In order to gain competitive advant...
iv.      General Merchandise Discount Stores, stores that sell high volumes of merchandise,               offer limited se...
venue for selling merchandise through the Internet; includes both the new dot-com             companies along with traditi...
duties for products they purchase from a neighboring country, consumers purchase       decisions become driven by tax diff...
CHAPTER-5IMPACT OF RETAIL MANAGEMENT IN THE GROWTH OF INDIA ECONOMY Definition and Scope of Retailing      The word retail...
pricing; sales and promotions; customer management and marketing; employee management; customized reports; and information...
feel the impact of organized retailing. There are two primary reasons for this. First, the modern retaileris yet to feel t...
population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population an...
these are small family businesses utilizing only household labour. Even among retail enterprises that employ hired workers...
has barred FDI in retailing since 1997. Hence, at present, foreign retailers can only enter the retailing sector through f...
of the retailing sector is to develop the link with the consumer. `Data Warehousing is an established concept in the advan...
The retail scenario in India is unique. Much of it is in the unorganized sector, with over 12million retail outlets of var...
CHAPTER-6INTERNATIONAL MARKETINGInternational marketing refers to marketing carried out by companies overseas or across na...
vii.    What is the influence of communities or unions for trading? E.g. The European Union                 and its author...
However they are normally transparent and you can plan to take them into account.        Non-tariff barriers are trickier ...
You have to make a difference - The group you manage has to be more effective, moreproductive with you there than they wou...
Appearance Does Matter - It may be a sad commentary on our superficial society, butappearance does matter. Whether its the...
of managing your hours and the many changing priorities you have every day is incredibly important.You’ll easily rise to t...
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
Retail management book @ bec doms bagalkot mba
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  1. 1. RETAIL MANAGEMENT CHAPTER-1 RETAIL PRICINGA. IntroductionB. Retail Management SystemC. Retail Management Improves productivity and business performanceD. Designed for growing retailersE. Improves productivity and business performanceF. Affordable out of the box, with functionality to help provide a quick return on your investmentG. Grows with your businessH. Capable and Confident Consumers CHAPTER-2 RISK-BASED REGULATIONA. IntroductionB. Identifying thematic risksC. How we select firms for thematic risksD. Financial inclusionE. MIFIDF. Retail Loyalty Programs: seven points to ponderG. Client Relationship Management CHAPTER-3 RETAIL MARKETING STRATEGY CHAPTER-4 INTERNATIONAL RETAILINGA. IntroductionB. General Merchandise Retailing BSPATIL
  2. 2. C. Food Retailers D. Non-Store Retailing E. Issues in International RetailingCHAPTER-5 IMPACT OF RETAIL MANAGEMENT IN THE GROWTH OF INDIA ECONOMY A. Definition and Scope of Retailing B. Types of Retail Operations C. The Emerging Sectors in Retailing D. Retailing Scenario- Global View E. Retail Shopkeepers F. Retail Sales CHAPTER-6 INTERNATIONAL MARKETING A. International Marketing Environment B. Retail Management Tips C. Winning at Store Management D. Retail Analytics E. Viewpoint on Retail - Retail Articles F. Retail Sales Management CHAPTER-7 RETAIL BUSINESS PLAN A. Introduction B. Retail Market Segmentation C. Relationship Marketing D. Integrated Relationship Management BSPATIL
  3. 3. Chapter-8 PRICINGA. Questions involved in pricingB. DefinitionsC. Retail Location StrategiesD. New Development DriversE. Current TrendsF. Under All Is the Land BSPATIL
  4. 4. CHAPTER-1 RETAIL PRICINGIntroductionRetail Management consists of Managing the sale of goods or merchandise from a fixed location, such as adepartment store or kiosk, or by post, in small or individual lots for direct consumption by the purchaser.Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses.In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, eitherdirectly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments areoften called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see theprocess of retailing as a necessary part of their overall distribution strategy.Shops may be on residential streets, shopping streets with few or no houses, or in a shopping center or mall.Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protectcustomers from precipitation. Online retailing also referred to as B2C type of e-commerce, and mail order areforms of non-shop retailing.Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such asfood and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves windowshopping (just looking, not buying) and browsing and does not always result in a purchase.The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (orpercentage) to the retailers cost. Another common technique is suggested retail pricing. This simply involvescharging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.In Western countries, retail prices are often called psychological prices or odd prices.Often prices are fixed and displayed on signs or labels. Alternatively, there can be price discrimination for avariety of reasons, where the retailer charges higher prices to some customers and lower prices to others. Forexample, a customer may have to pay more if the seller determines that he or she is willing to. The retailer mayconclude this due to the customers wealth, carelessness, lack of knowledge, or eagerness to buy. Anotherexample is the practice of discounting for youths or students.Retail Management System Store Operations allows you to better track andexpedite point-of-sale and business processes: i. Streamline business operations, including inventory, supplier management, and point-of- sale processes. ii. Make informed decisions with accurate data and powerful reporting tools. iii. Market, promote, and sell across multiple channels. iv. Expand easily to multi-store operations and e-commerce. v. Reduce POS system and operating costs. BSPATIL
  5. 5. Retail Management Improves productivity and business performance i. Increase knowledge of operations. ii. Make fast, informed decisions. iii. Offer superior customer service. iv. Improve inventory and supplier management. v. Maximize cash-in per customer. vi. Minimize labor costs. vii. Reduce inventory costs and out-of-stocks. viii. Integrate credit card processing.Designed for growing retailers i. Set up and use easily. Retail Management System can be set up quickly, tailored to meet specific retail needs, and provides access to expert support and assistance from certified Microsoft Business Solutions partners. Built-in wizards and an intuitive user interface help managers and associates to learn point-of-sale procedures in minutes. ii. Track and manage inventory efficiently. Retail Management System eliminates the need to conduct inefficient, manual stock counts, saving time and reducing employee overhead. You can track and manage items across your business using any inventory method, including services, layaways, work orders, and back orders. Compatible inventory types include standard, serialized, kit, assembly, matrix, lot matrix, voucher, non-inventory, and weighed. iii. Streamline point-of-sale processes. With Retail Management System, associates can work with a customizable point-of-sale screen that lets them check prices, availability, and stock location instantly. Theyll be able to access complete customer information; handle multiple tenders and partial payments at checkout; and quickly create and process returns, backorders, sales quotes, work orders and layaways. Automated processes make it easy to balance multiple tenders efficiently and accurately, helping employees save valuable time. iv. Integrate and operate with your existing systems. Retail Management System is compatible with Microsoft Windows® 98 and later operating systems, and supports popular point of sale peripherals including printers, magnetic strip readers, bar code readers, and more. BSPATIL
  6. 6. Improves productivity and business performance i. Increase knowledge of operations. Gain full visibility into store operations with daily sales graphs and journals that can be viewed and printed from any register. With Retail Management System, you can preview, search, and print journals by register, batch, and receipt number, as well as close out data accurately. Data can also be shared across multiple store locations to give you different views of your business. ii. Make fast, informed decisions. Access and analyze data across your entire business using powerful reporting and communications functionality. Drawing from detailed, current information, you can identify sales trends in every department, category, and season; evaluate operations and financials; track the return on investment of advertising and sales campaigns; set and monitor business policies across stores; and much more. iii. Offer superior customer service. Retail Management System equips your staff to respond quickly to customer needs, making it easier for you to turn a single purchase into a lasting and profitable customer relationship. Associates can expedite checkouts quickly, target customer preferences to offer up-sells and cross-sells, and implement automatic discounts for frequent shoppers. Customers receive the efficient, personalized service that builds their loyalty and boosts your revenues. iv. Improve inventory and supplier management. Replenish top-selling items efficiently and negotiate consistently lower purchasing costs by tracking item movement and vendor histories. You can also extend purchasing and fulfillment processes to the Web through e- fulfillment services.Affordable out of the box, with functionality to help provide a quick return onyour investment i. Maximize cash-in per customer. Use Retail Management System to make the most of every transaction: target customer preferences to suggest up-sells and cross-sells, and advertise other products at point of sale with onscreen graphical displays. Expand your customer reach and increase revenues with multi-channel marketing, catalog sales, and phone orders. ii. Minimize labor costs. Easy to learn and use, Retail Management System helps ensure managers and associates get up to speed quickly. Comprehensive functionality and shared BSPATIL
  7. 7. data systems reduce the need to re-enter information, freeing your staff to focus on managing and selling more effectively. And with full visibility into business information, youll know when to staff up or cut back, and which associates bring in the highest revenues. iii. Reduce inventory costs and out-of-stocks. Maintain tight control over inventory with automatically generated purchase orders and stock levels. Centralized purchasing and in- store transfers enable you to replenish items efficiently and cost-effectively. Visibility into supplier histories makes it easy to select vendors who offer the best service and the lowest prices. iv. Simplify card processing and reduce transaction costs. Retail Management System helps provide quick access to authorizations and makes it easier to capture electronic signatures. Electronic Data Capture can accelerate card transactions by up to 600 percent. And, utilizing POSitive Technologies sister company POSitive Payment Solutions, Retail Management System also offers integrated card processing that includes substantial discounts on services and eliminates the need for additional card terminals. There are no charges for application or setup. Read more about Positive Payment Solutions.Grows with your business i. Expand easily. Ready to open a new store? With Retail Management System, you can protect your investment and keep the same software and systems as your business grows into multiple stores and retail channels. As you add customers and products to your system, flexible Microsoft SQL Server™ technologies let you store and manage virtually unlimited amounts of information. ii. Integrate with other solutions. Retail Management System integrates easily with a number of popular business applications, including Microsoft Business Solutions Financials, Microsoft Small Business Manager, third-party applications, and others. You also can integrate Retail Management System with PDA, mobile, and wireless solutions. iii. Invest in your business, not in IT support. Retail Management System does not require an extensive IT staff to set up and maintain, and adapts easily to meet specific retail needs. As your business changes and grows, your Microsoft Business Solutions partners can provide support and assistance with customizing, integrating, and scaling your solution. iv. Count on Microsoft. With Retail Management System, you can begin a long-lasting BSPATIL
  8. 8. relationship backed by one of the worlds leading technology providers. Microsoft Business Solutions is a family of connected applications and services for small and mid-sized businesses, with years of experience delivering business applications and services known worldwide for top quality. To promote efficient, orderly and fair markets, both retail and wholesale; to help retailconsumers achieve a fair deal; and to improve our own business capability and effectiveness. Underthis umbrella, we believe there to be four pillars essential to delivering a more effective and efficientretail market through which a fair deal for consumers can be delivered:Capable and confident consumers. i. Clear, simple and understandable information available for, and used by, consumers. ii. Soundly managed and well capitalized firms who treat their customers fairly. iii. Risk-based regulation. Im conscious that there are significant prudential issues around too, the main issues whichbear on the retail markets. Initiatives such as treating customers fairly and financial capability are part of the broaderpicture designed to deliver these outcomes. And in all of this our emphasis is on outcomes and thuson changing the behaviors of firms and consumers in the real world. So, ultimately, we want tomeasure the success of this strategy by looking at the difference it makes to your customers, theconsumers of financial services and products. In terms of overall regulatory approach, I shouldemphasize that our clear preference is to encourage efficient markets as the best means of providingquality goods and services to consumers. Only after market solutions have been exhausted shouldregulatory initiatives be contemplated.So how will we know that these outcomes have been achieved? Here are four general propositions. First, more engaged consumers will be actively thinking about their financial needs and doingsomething to address them - managing their money well and planning ahead for the longer-term.Consumers will be active in educating themselves about financial products and in seeking outinformation from a range of sources. Second, consumers collectively will exert greater competitive pressure in the market by BSPATIL
  9. 9. shopping around for the best deal, regularly reviewing their financial position and moving from onefirm to another when it makes sense to do so. Consumers will judge firms on the quality of theproducts and services provided, including how firms behave when things go wrong – the way in whichfirms deal with complaints, for example. Third, and following closely from my last point, consumers will feel much more positive abouttheir engagement with the industry; they will take well informed decisions based on clear andunderstandable information and will be clear about their own responsibilities in taking those decisions. Fourth, more consumers will be included in the financial services world. This is partly aboutcapability but it is also about access. We recognize absolutely the central importance of financialinclusion as part of this equation.Capable and Confident ConsumersFirst, the issue of consumer capability. There is no controversy about the nature of the problem. Increasing the level of consumercapability is more critical now than it has ever been. We live in an age where responsibility is passingfrom state to individual. Individuals are being asked to make more and more financial decisions, manyof which were previously taken for us in relation to health, or education, or pensions. But against thisincreasing requirement, the actual capability of those who need to make financial decisions is toooften inadequate, in terms of basic literacy and numeracy, as well as in respect of specific financialknowledge. We can all cite examples of this, so I will limit myself to just one. A study by the Institute ofFinancial Services showed that eight from ten people did not correctly identify the term APR asdescribing the interest rate and other costs of a loan. I suspect that our baseline survey of financialcapability – more on which in a moment – will provide a decent further supply of such examples. So the problem of financial capability is immense, in terms of both the basic requirements ofliteracy and numeracy which underpin financial capability; and in terms of specific financialknowledge.So how can we respond to this magnitude of challenge? As you know, FSA has been leading and co-ordinating the National Strategy for FinancialCapability. When the work began in 2003, we listened to those who cautioned against trying to BSPATIL
  10. 10. address all parts of the problem at once. We and our partners - Government, industry, the media, thevoluntary sector, and others - therefore examined seven areas: schools, young adults, the workplace,families, retirement, borrowing and generic advice. Having undertaken a huge amount of pilot work todetermine what practical initiatives will put us in a position to achieve the step change in capabilitythat is required, we have started to move on to the next stage towards national delivery. The Financial Capability Steering Group met last month to take stock of the National Strategyand to consider options for the future. The Steering Group agreed to a set of specific priority projectson which to focus covering: i. schools ii. higher education iii. the workplace iv. maternity/paternity leaver resources v. FSA information campaigns vi. development and roll-out of the Debt Test - which is designed to provide guidance to individuals on whether they are at risk of becoming over-indebted vii. And further work on whether there is a commercial case for the delivery of generic advice. In addition, the Steering Group left open the possibility of wider rollout of initiatives to YoungAdults not in education, employment or training, subject to the findings of ongoing pilots and anexamination of the associated business case. Supported by a team of specialist advisers, we are nowpreparing business cases which will examine the public policy and potential commercial benefits oftaking these specific projects to national roll-out. The business cases will provide the basis formeaningful discussions with public and private sector partners on sustainable funding and the othercommitments fundamental to making them happen – this includes, for example, access to both publicand private sector workplaces for the provision of financial capability seminars to the workforce. On timings, we want to be in a position by the end of the first quarter next year to have cleardelivery and funding plans in place to move to national roll-out. At the same time, we will also publishanother central part of our work on financial capability, the results of our baseline survey. This willdescribe and measure the state of financial capability in the UK, looking at peoples ability to managemoney, make financial choices, plan ahead and get help. We will repeat the survey periodically tomeasure success in raising levels of financial capability and we will, of course, be developing further BSPATIL
  11. 11. success measures for the other specific priorities I mentioned. This aims to support new and innovative projects dedicated to financial capability led byvoluntary and community organisations. We have made available a minimum of £200K for projectsrunning up until March 2007 with the majority of awards likely to be between £5,000-20,000. We weredelighted to receive over 300 applications to the Fund from which a shortlist of applicants has beendrawn up. We hope to announce the award winners before the end of year. We are extremely grateful for the support of BBA members in taking forward work on financialcapability, including many contributions to the working groups. We have had particular support fromLloyds-TSB, with Eric Stobart chairing the Workplace Group and Jim Dredge energetically directingthe programme of pilots, with full-time support from Alastair Hogg of the Prudential.So we are now in a critical new phase as we work up the business cases. We are reaching the pointwhen the rubber really hits the road on the funding and other support required to make it all happen.As was ever the case with this initiative, that requires the proactive involvement of government andthe industry.Clear, Simple, Understandable Information Alongside the common desire for more capable and confident consumers, we must ensure thatthose consumers are given the information and advice that is both necessary and relevant whenmaking a financial decision. Just as you will be familiar with Principle 6 of our Principles for Businessessentially that firms should treat their customers fairly - Principle 7 explicitly states what we expectfrom firms when it comes to providing information: "Firms must pay due regard to the informationneeds of their clients and communicate information to them in a way which is clear, fair and notmisleading." This ranges from financial promotions in all guises, to product literature and covers allinstitutions, from small one man advisors to major retail banks. Good quality financial advice also plays an important role in ensuring that consumers haveexpert help in making a complex range of important financial decisions. The provision of financialadvice is a large industry, and with rising incomes and wealth, and evidence that many individuals arenot investing enough for their retirement, there is significant scope for the advice market to expandsignificantly. The challenge here for providers of advice is to demonstrate to more consumers thatthere is value to them in paying for these services. At the simplest level, this means a retail financial advice market that is providing good quality, BSPATIL
  12. 12. suitable advice to consumers. And that those consumers should be able to recognize when this ishappening, and when it is not, and to respond accordingly. We are clear that the retail financial services market is not yet operating in a consistentlyeffective and efficient way. On the mortgages side, for example, our early findings report a mixedpicture in terms of standards. On the investments side, the market is still changing. Both productproviders and distributors face a range of challenges. They need to adapt their business strategies toreflect a depolarized world. Some need to rebuild capital and balance sheets. All this is challengingenough but comes at a time when the industry overall is still coping with sluggish demand forinvestment products in weak markets and is trying to engage with consumers who still have low levelsof confidence in the sector. As regulator, we do not want to prescribe how the advice market should be structured. Rather,we want to allow firms to choose what advice they provide, and to allow consumers to choose whatadvice they want to take and how they pay for it. And we want consumers to be able to understandthe different types of advice that are available to them. That is why depolarization is largely a permissive regime and firms are free to develop theirbusiness models in a more tailored way for their customer base, or they can continue trading prettymuch as they were before – albeit with improved disclosure and other adjustments such as therequirement for independent firms to offer a fee option. As you would expect, we are going to conduct a review of how depolarization is working inpractice. The first stage is to check compliance with the new rules. Thereafter, and over longer timeperiods, we will review the extent to which firm and consumer behavior has altered. We know that those who use our fact sheets, calculators and other web-based material findthem to be helpful. But we also know that we need to do more to make that material more accessibleand to promote its availability, including in partnership with others such as the BBC. The current‘mortgageslaidbare’ campaign is a hint of our new approach in this area. We are part-way through thecampaign, but we have already seen a very significant increase in traffic to our mortgage resourcesand we will feedback on the overall success of the campaign in due course. We are planning twofurther campaigns early in the New Year to cover issues around pensions and A-day and to promotethe various resources available to help consumers plan their finances effectively. Again, we willensure that we measure the effectives of these campaigns in influencing consumer behavior BSPATIL
  13. 13. Treating Customers Fairly As I have set out, the fair treatment of customers by firms is a key part of the broader picture.As you know, our approach has been not to define precisely what constitutes "treating customersfairly", but rather to challenge the senior management of firms to work this out for themselves, takinginto account the particular types of business that they undertake. We recognized that many of youhave already done or are in the process of carrying out a "gap analysis", to identify areas of businesswhere more needs to be done. Treating Customers Fairly needs to be embedded into the culture of a firm at all levels, so thatover time it becomes business as usual. This is all very much a responsibility of senior management,not just a compliance issue. To help, we have produced a number of statements of good practice and case studies toillustrate some of the considerations that senior management should take into account. We havepublished many of these on our website and further case studies on management information,remuneration, complaint-handling and others were published last month. These examples reflect real life scenarios and provide material which firms may find useful asbackground when considering how best to ensure that they treat their customers fairly. In particular,they are intended to illustrate the kinds of questions that firms should consider in particular sets ofcircumstances. Inevitably, the issues raised are not exhaustive and the practices observed are notprescriptive – treating customers fairly is not something that lends itself to box-ticking.We have also suggested that a useful starting point is to think of treating customers fairly in terms ofthe product life cycle. So depending on the precise nature of a firms business this could meanaddressing the fair treatment of customers at any of the following stages: product design andgovernance; identifying target markets; marketing and promoting the product; sales and adviceprocesses; the remuneration of sales forces and advisers; after sales information; and complaintshandling. As part of the next stage, we will also be looking at quality of advice. The aim will be toconsider how we can measure and improve the overall quality of advice, rather than looking atspecific products or examples where the advice process goes wrong. We will test current practices,looking at a range of areas including training and competence; the systems and controls that supportgood advice; and entry standards for advisers and firms. BSPATIL
  14. 14. CHAPTER- 2RISK-BASED REGULATIONIntroduction Which brings us to the final Pillar of our retail strategy? Let’s hark back to the earlier remarksabout our preference for market-based solutions over regulatory intervention. Proportionate, risk-based regulation is what brings this to life – helping us determine where our resources are bestdeployed to address the biggest risks that carry the highest impact were they to crystallize.For example, we acknowledge that the mortgage and general insurance intermediaries market hasundergone significant changes and we have been keen to stress that we have taken a graduatedapproach to supervision in the first year of the regimes. That is, in the main we are telling firms whatthey need to do to improve compliance levels which well come back and check and it is only in themore serious cases that well do further investigation. As these changes become more familiar to themarket our approach will become firmer. We deal with emerging retail risks in two ways. First, where supervisors identify risks within theindividual firms they supervise, they may take steps to mitigate them with the firm concerned.Second, we seek to identify risks arising across different types of firms and market sectors and carryout work to mitigate them where our risk-based approach justifies doing so – so called thematic work.I’d like to spend a few minutes describing our approach to this.Identifying thematic risks Risks in the retail market take many forms; risks to consumers, firms, sectors, or the market as BSPATIL
  15. 15. a whole. We identify emerging retail risks in a number of ways, including: i. market data; ii. current trends and developments in the markets; iii. financial promotions; iv. issues identified through our discussions with firms; and v. Risks identified by our sector teams, supervisors, contact centers, and other stakeholders. We look for flags like new or unexpected developments. For example, an unusual surge inretail sales of a product given market conditions might prompt us to make further enquiries about howthis produce is being sold. Our monitoring of financial promotions is also an important source ofintelligence. We priorities our workload to focus on the most significant risks. Where a development couldindicate a new risk, we will often do a small amount of work to find out more and help us identifywhether action is warranted. In around 60% of the issues we investigate no further action is taken. If we do decide regulatory action is justified, we consider what tools to use in light of thecircumstances of each risk. Some of the key risks we have identified and on which we decided to dofurther work include: i. Payment Protection Insurance ii. Mortgage Disclosure Documents iii. Lifetime mortgages iv. Contracting out of the state second pension v. Premium reviews and variable interest rates; and vi. Income WithdrawalHow we select firms for thematic risks Thematic work involves looking at a particular issue or set of issues across sample of firms.When we contact firms they sometimes assume that, because they have been selected, this impliesthat we have already decided that there is a problem in that firm. This is not the case. The decisiontakes into account a number of factors, including: BSPATIL
  16. 16. i. How many – and what type of – firms are active in the market or product that we are interested in. ii. The desire to find a sample of firms that is representative of the various sizes or structures in the market. iii. The desire to create a representative sample. This will include some firms which we think are likely to set the highest standards in terms of systems and controls and practices more generally in that area. iv. Whether any of the firms are – or have recently been – involved in any other areas of our work, so that where possible thematic work is spread across firms. Achieving this spread can be a particular challenge when it comes to the largest groups. Where firms have dedicated supervisors, the supervisor will be involved in decisions about which thematic projects the firm takes part in. We realize that this "air traffic control" of thematic work and the burden it can impose is ofconcern to firms and we are committed to holding regular dialogue with the industry to set out anindicative timetable for our future thematic work. Our Business Plan, which will be published inJanuary, provides an ideal peg for such a discussion. We are also examining whether the process forcommunicating the outcome of thematic work to individual firms and industry trade associations canbe improved. As you will have gathered from my description, thematic work will remain a keysupervisory tool, allowing us to respond quickly to emerging risks.Financial inclusionI said at the start that financial inclusion is an important consideration in our work. The FSAs position on this is very clear. Under the public awareness objective, the FSA has astatutory responsibility for promoting public understanding of the financial system. This objective isintended to be interpreted quite generally.So while the FSA has no statutory responsibility for financialinclusion, we are absolutely mindful of the impact of our work on all groups.We see our role in this as twofold. First, in our regulation of the industry we want to avoid creating barriers to inclusion, includingproviding assistance to those taking innovative approaches to understand the relevant regulatoryissues and possible solutions. When authorizing the first purely Islamic bank in Europe we workedconstructively with the senior management of the Islamic Bank of Britain on such issues. BSPATIL
  17. 17. We have been very active in working with third sector lenders, for example in delivering aproportionate, lighter touch regulatory regime for credit unions and in working with the CommunityDevelopment Finance Association to see if a code of practice for Community Development FinanceInstitutions is the best way forward for these organisations. And we have, over the last eighteenmonths, been leading a multi-agency initiative to defuse the identification issue’. We welcome theBBAs contribution to the work of the Joint Money Laundering Steering Group, whose new Guidanceis published next year. This is expected to include a wider range of options for people to prove theirID so that, by the end of next year, ID should be a significantly reduced barrier to financial inclusion. Second, in our consumer awareness remit we aim to help consumers become more confidentand capable through the National Strategy for Financial Capability and our wider education andinformation work about which I spoke earlier. So the FSA is just one partner in the work being done here. The Banking industry, led by itstrade association, is of course very active, in particular in addressing the challenge laid down byGovernment to make significant progress towards halving the number of unbanked households in theUK within 2 years. In partnership with the BBA, we have recently revised our guide to Basic Bankaccounts. There are many further examples of industry activity in this area. We look forward tocontinuing to work with banks, the BBA and other parties to ensure the difficulties and barriers facedby those who are excluded from financial services can be overcome. Finally, a very brief word about two other significant challenges in the retail markets area, notleast in respect of the impact of European legislation.MIFID It is hard to exaggerate the pervasive effect which MiFID will exert over financial markets andfinancial institutions and it is important to recognize that this is not a wholesale business issue. We will do all we can to make the timetable pressures more manageable. To help give focus tofirms preparatory efforts, pending publication of the Commissions recommendations and then of ourCPs on implementation, we plan to publish in the next week or so a "Planning for MiFID” documentdesigned to help firms get to grips with their planning for implementation despite the continuingdebate over Level 2 measures. I urge you to study it.Strategy challenges of A-Day BSPATIL
  18. 18. Another major challenge facing the industry is A-Day, in other words 6 April 2006, when thenew pension tax simplification rules take effect. Last September my colleague Sarah Wilson warnedfirms to make sure they review the business and strategic impact of A-day. A-Day is very significant for those of you who deal with the complexities and intricacies ofpensions on a regular basis, and who advise consumers on a product which they find particularlycomplex. It is clear that much work is going on in many firms but, with just over four months to go,both firms and advisers now urgently need to start planning for the changes if they have not alreadydone so. And a further dimension, of course, is that the government is expected to consult on proposalsto introduce a new regulated activity for personal pensions, meaning that the FSA could be regulatingthe sale of Self Invested Personal Pensions from April 2007.Retail Loyalty Programs: seven points to ponder The shape shifter: Customer knowledge is the single most powerful pay-off of a Loyaltyprogram. Theres a load of analytical approaches beyond RFM for retailers wishing to leveragecustomer knowledge. Not all of these appear to be easy to adopt and marketers shun analytics moreout of a lack of understanding of what it can do for them. Get the experts in, listen to them – youll findthat theres ROI in it for you. The Painter: Building a loyalty program concept requires not just sound strategic thinking, butloads of rigor. The success lies in being able to detail out solutions to over 100 decision points that aloyalty program concept needs to cover. You cannot be reacting to situations as they happen! The Magician: The loyalty card is the most familiar face of a loyalty program. There are manyoptions here from Mag Stripe to RFID, stand alone to coalition, but the key point is that launching acard does not a loyalty program make. This space is littered with failed programs that were launchedas a card and little else. The Neuromancer: The software on which your program depends needs to be designedcarefully, and should handle all aspects of your program. Retail POS solutions often offer a basicloyalty module – these are usually inadequate! The point: Dont design your program to fit thesoftware. BSPATIL
  19. 19. The Band: The team that drives the program internally needs to be composed of skills thatare difficult to find in any market. Direct marketing, CRM and Loyalty skills need to be nurtured andthe team needs top management support. Importantly, you will need to rely on the right partners tocome in with specific skills. The Campaigner: Campaign management practices are better established amongst thebanks than retailers, but here is where the real pay-off is. Leverage campaign management tools asthey will allow you to run hundreds of targeted campaigns which really do pay off, as compared to afew festival offers and generic promotions. The Timekeeper: Set expectations right. To launch a program AND expect a jump in saleswithin 6 months is pushing it. Building up a quality member base (no mass enrolments), setting up theback end, campaign management – these all take time and effort, and the metrics to measuresuccess take time to show the returns.Business Skills Good business management is the key to success of any business house. It is a creative forcewhich helps in the optimum utilization of resources of an organisation. The process of managing abusiness comprises several intertwined elements by which the goals and objectives of theorganisation are achieved. These elements or functions include, promoting and marketing the productproduced by the firm; making the product available to prospective consumers through properdistribution channels; managing the accounts and finances of the firm; protecting its intellectualproperty, etc. It also involves creating harmony among the working of various departments anddivisions of the firm. Managing human resources and managing relationship with the customers arethe most important elements in the whole process of business management. An entrepreneur with good managerial skills can convert the disorganized resources of men,money, material and machinery into a productive business enterprise. In a modern business, differenttypes of skills are required in order to effectively manage an organisation in a dynamic environment.These skills includeTechnical skills Refer to the ability and knowledge in using equipment, techniques and procedures involved inperforming specific tasks. An entrepreneur must know the skills which should be employed in his BSPATIL
  20. 20. enterprise and must understand both the role of each skill employed and the inter-relationshipbetween skills.Human skills Consist of the ability to work effectively with other people both as individuals and as membersof a group. Such skills are required by an entrepreneur in order to win co-operation of others and tobuild a base for a successful work team.Conceptual skills Comprise the ability to see the whole organisation and the inter-relations between its parts.Such skills help the entrepreneur to conceptualize the environment and to take a broad andfarsighted view of the organisation. These skills include the competence to understand a problemfacing the organisation in all its aspects and solving the problem. It is necessary for rational decisionmaking Managing is a dynamic and an on-going process which continues to operate so long as thereis an organized action for the achievement of group goals.Client Relationship Management Client Relationship Management (CRM) means managing your client. It is a business strategywhich is used to create and sustain long-term, profitable client relationships. It means understandingcustomers using quantitative and qualitative research, segmenting them and articulating positioningstatements for each of the segments based on their expectations and contribution to profits. It isnecessary in order to retain old customers, acquire new customers and improve profitability from theexisting client base. The Concept of CRM makes its origin from the changed approach to businessmanagement and profitability. In other words, the traditional approach of making one-time sales isbeing replaced with making long-term commitments to customers. The new approach puts forwardthe need to have a proper customer/client relationship management (CRM) strategy in theorganisation. It revolves around the customers. It is a set of processes of creating, communicatingand delivering value to customers and for managing customer relationships in ways that benefit the BSPATIL
  21. 21. organization and its stakeholders. It is a comprehensive strategy of acquiring, retaining andpartnering with carefully targeted customers to enhance long-term relationships with them. Thismanagement approach seeks to create superior value for the company and the customers. Client relationship and satisfaction is a critical dimension of every business initiative.Foundation of a successful business lay in its successful client relationship management. Clientssatisfaction with the performance of the company depends on how well their professional andpersonal needs are addressed to by the company. Clients pay attention not only on what thecompany does but also on how well it does it. Hence, clients perception of service quality needs to beproperly managed.An efficient and effective CRM strategy is beneficial to an organisation in several ways:- i. Most importantly, it helps the company to build and maintain a loyal customer base. ii. It can have more volume of sales by selling more to the group of those customers with whom it has maintained a good relationship and are satisfied with the firm and its quality of services. iii. It overtime incurs lower costs in serving those customers because of their Increasing confidence and lesser doubts or questions about the product. iv. It can resort to lesser promotional campaigns in order to attract those customers. It also enjoys the benefit of retaining its employees if it has a stable base of satisfied customers. Besides, customers also want to remain loyal to a firm because they also enjoy benefits from such long-term association. It gives them a feeling of trust and confidence in the firms services along with a sense of a reduced anxiety about the product. Overtime, in a long-term customer-firm relationship, a service provider may actually become a part of the customers social support system. Such customers may even receive special treatment from the organisation in the form of: - getting the benefit of doubt; being given a special deal or price; getting preferential treatment etc. A successful CRM initiatives start with a business philosophy that aligns company activitiesaround customer needs. The level of professionalism, listening skills, availability, responsiveness,reliability, etc form an important part of the client relationship management. CRM covers all the BSPATIL
  22. 22. methods and technologies used by the companies to manage their relationship with their clients. The process of CRM includes:- i. Identifying the factors important to clients ii. Promoting a client-oriented philosophy iii. Adopting client based measures iv. Developing end-to-end processes to serve the clients v. Providing successful client support vi. Handling client complaints CRM virtually had its beginnings in Sales Force Automation (SFA) which is a process ofproviding the sales force of a company with technology support in order to improve the efficiency ofthe selling process. The main benefits of SFA are:-the improvement in customer service by helpingthe sales force responds quickly & accurately; improvement in sales force productivity; and bettermanagement control and visibility of the sales process.Generally, CRM works at two levels Operational CRM, also known as “front office” CRM, provides support to basic businessprocesses such as sales, marketing, services, etc. It involves areas where the customer is i. Directly in contact with the company, these contacts are classified into two: - (i) Inbound contact are the ones in which a customer accesses the company support center or website or meets the company employees. (ii) Outbound contact are the ones in which a sales representative of the firm makes direct sales to the customers or makes a sales call or e-mails a marketing message. These direct interactions are referred to as customers touch points. Each interaction with a customer is generally added to a customers history and company can retrieve such information from the database as and when needed. ii. Analytical CRM, also known as “back-office” or “strategic” CRM, involves understanding the customer activities that occurred in the front office. It involves retaining existing customers and providing timely and regular information to them. It uses the technology to compile customer data to facilitate analysis and develop new business processes to refine business decisions. BSPATIL
  23. 23. Product-Centricity is the key challenge that an organisation needs to overcome, in order to have asuccessful client relationship management. In other words, an organisation needs to become client-centric, because it will allow for a consistent interaction with its most important constituency,’ TheClients. BSPATIL
  24. 24. CHAPTER-3RETAIL MARKETING STRATEGY To develop a finely honed retail strategy, you often need to undertake primary or secondarymarket research. You need to analyze your competition, their products or services and their approachto the market. You need to use this information to shape your retail market strategy and then developgo to market messaging and retail marketing campaigns. Sometimes you need to recruit the rightpartners. Your sales force needs to develop key account plans and execute them efficiently. Oftenthey need retail specific tools to help them do this. Finally, they need the industry training so that theycan “talk the talk” and “walk the walk”. Faced with these needs, many of the world’s leading technology vendors turn to MartecInternational for assistance. Companies like Microsoft, SAP, NCR, Hewlett Packard and many othersuse Martec’s expertise and tools to enhance their go to market activities. They come to Martecbecause we blend many years of retail expertise with a deep knowledge of what a sales personneeds to do to be successful. We show them how to use their retail knowledge and tools to closebusiness. Martec provides primary and secondary market research services, as well as publishingstudies of the retailers such as our UK Top 100 Retailers IT in Retail Report. We supply acomprehensive database of UK and North American retailers to support marketing activities andprovide a wide range of tools to help sales people develop account plans and execute salescampaigns more effectively. Most marketing strategies are geared to ensuring you beat your competitors. But you dontusually expect to eliminate competition entirely. Thats what broadband DSL provider New Edge Networks has apparently done with its uniquesmall-market approach - although the company has had to revise its strategies in recent months, likeeveryone else, and diversify to adapt to tough market conditions. Based in Vancouver WA, New Edge started by offering DSL access services in small citiesand towns and semi-rural areas across the U.S., mainly to business customers. Its co-located in justunder 600 Telco central offices (COs) in 350 cities and towns in 29 states. The footprint takes in apopulation of about 30.6 million. BSPATIL
  25. 25. Most of the focus is on small cities. Nearly half of New Edges markets have a population ofless than 50,000, many of them one-CO towns. In many of those COs, not even the local ILEC has competitive DSL offerings, and where theILEC does offer service, it is typically more focused on the residential market. Clearly there are reasons why the New Edge approach has not attracted a host of copycats,the most obvious being that prospective customers are simply thinner on the ground in smallcommunities than they are in big cities. To pursue such a strategy nationally as New Edge has donealso means the company had to install more central office infrastructure and spend more onconnectivity than most CLECs to reach the same size customer base.But there is another side to the equation, says New Edge president, CEO and co-founder Dan Moffat. "We wanted to go into markets where others werent," Moffat explains. "In metro markets,youd typically find Covad, North Point and Rhythms, probably others too, plus the ILEC all in thesame CO. In most of our markets, its just us and the ILEC."Its clear now, with the demise of NorthPoint and with Rhythms recent troubles, just how cut-throat competition has been in those largermarkets. Not that it hasnt been tough in smaller markets too. While New Edge did not have tocontend with deep-pocketed national competitors like North point and Covad - well, formerly deep-pocketed - it did meet smaller rivals.Moffat characterizes them as regional players. They included Jato Communications, VectrisCommunications and Connect South Communications. But all three have now retired from the field ofbattle. The mistake too many DSL providers made, Moffat says, was blowing all their capital on roll-outs, leaving nothing for marketing through the tough times. The other reason New Edge adopted its small-market strategy is that Moffat, who had workedextensively with independent telcos as a consultant, knew that contrary to expectations, demand forbroadband services was high in small communities.” People in these markets want the services justas badly as people in metro markets," Moffat says. "Maybe more so." For many people in smallmarkets, he notes, living there is a work- and life-style choice. But to get those benefits, they sacrificeeasy access to goods and services, entertainment - and customers. So many see availability ofbroadband services as even more vital as people do in larger markets. "For those," Moffat says,"[broadband] opens up a whole new window on the world." BSPATIL
  26. 26. Finally, despite the obvious concentration of big company headquarters in a relatively fewmajor markets that New Edge avoids, Moffat notes that 15 per cent of major national companies havebases of operation within his footprint. New Edge had a pretty good idea how to market services insmall communities because of Moffats experience with small telcos. He isnt prepared to spill thebeans on all his secrets, but he does mention a few. First, New Edge adopted a pragmatic wholesale-retail business model. The preference isalways to go into a new market with a good, strong local ISP partner. "You want the people who gofor coffee [with prospective customers] or sit with them on local Chambers of Commerce," Moffatexplains. "People well entrenched in the community." But where it cant find a strong and willingpartner - some communities didnt even have local dial-up service when New Edge came to town - ithas for the last three months been able to offer ISP services itself. Moffat also talks about the need for "guerilla tactics" as opposed to "carpet bombing" whenmarketing in smaller communities. "In a metro market," he says, "you do the roll-through at about50,000 feet - usually with a big media blitz. But with our markets, were more specific and targeted.""There is much less reliance on mass media. The marketing is usually done more through lists anddirect mail and inside (telephone) sales. And it relies heavily on local knowledge which we mainly getfrom our partners." Local partners always help design the campaigns, though New Edge does have its owntemplates for small-town marketing drives. Local partners also share marketing costs, usually splittingit 50-50 with New Edge. "Theyve got to have some skin in the game," Moffat says. But as relativelysuccessful as New Edge has been with this fairly unique strategy on the broadband DSL side, it likelywould not have survived if it had relied entirely on that business. Luckily, one of the requirements of a national small-market strategy is that you need a fiberring network to backhaul traffic from all those little markets to the Internet - or wherever. New Edgesbackbone includes 18 regional access points. The company had been using it all along to offer virtual private network (VPN), LANinterconnection and related services to regional and national enterprise customers. Recently itrealized these services were actually growing faster than broadband DSL. In fact, they now accountfor more than 50 per cent of New Edges revenues. So a month and a half ago, the companyannounced it was scaling back its aggressive plan for rolling out new markets - at one time it had BSPATIL
  27. 27. intended to be in 1,200 COs by the end of 2000. It also laid off 55 employees and refocusedoperations to help it take advantage of the wide area services market. Does this mean New Edgessmall-market DSL strategy really failed. Moffat doesnt see it that way. Theres no question, he says,that demand is still there and will continue to grow. The drying up of capital markets has had two important impacts, though. It means a wider roll-out by New Edge is out of the question right now. But it also makes it difficult or impossible for anynew competitor to enter its markets. And that means New Edge in effect has a competition-free zone.When capital markets do loosen up again, its position may be virtually unassailable. BSPATIL
  28. 28. CHAPTER-4INTERNATIONAL RETAILINGIntroductionInternational Expansion of Retailers In order to gain competitive advantage and to increase sales and profits, retailers are rapidlyexpanding internationally. Among leading retailers conquering international markets are Wal-Mart(U.S.), Metro AG (Germany), Sears Roebuck (U.S.), followed by a number of German groups—Rewe, Edeka, and Aldi.International Retailing Defined All activities involved in selling products and services to final international consumers for theirpersonal consumption. It involves operations of international retailers beyond home-country borders,along with operations of local retailers in different countries worldwide.Retail Formats Variations in Different Markets: There are three main retail formats: general merchandiseretailing, food retailing, and non-store retailing.General Merchandise Retailing i. Specialty Stores, stores that offer a narrow product line and wide assortment, category include clothing stores, bookstores, toy stores, etc. Represent the main retail format in developing countries, but are popular in developed countries as well ii. Specialized Markets, large markets that contain specialty stores specializing in a particular product category; exist in both developed and developing countries. iii. Department Stores, large stores that offer a broad variety of products, as well as a wide assortment. Although department stores have suffered losses lately in North America and many appear to be retrenching, they abound both in Western and Eastern Europe, and are very popular in Asia. BSPATIL
  29. 29. iv. General Merchandise Discount Stores, stores that sell high volumes of merchandise, offer limited service, and charge lower prices. All-purpose discount stores like Wal-Mart offer a wide variety of merchandise and limited depth. Category specialists (category killers) like Staples and Toys ‘R Us carry a narrow variety of merchandise and offer a wide assortment. v. Off-Price Retailers, retailers that sell brand name and designer merchandise below regular retail price; they usually sell overruns, irregular products and products from earlier seasons. Off-price retailers are very popular in the United States and Canada and are rapidly catching on in the rest of the world. vi. Catalog Showrooms, retailers that offer high-turnover, brand name products at discount prices. Customers usually order from a catalog in the showroom where the product is only displayed, then pick up the goods at a designated location. Ikea has pioneered the catalog showroom concept around the world.Food Retailers i. Conventional Supermarkets, self-service retailers with high annual sales; abound worldwide. ii. Superstores, large food retailers that sell food, drugs, and other products. In this category are: combination stores that sell foods and drugs, which are popular in the U.S., and hypermarkets, which combine supermarket, discount, and warehouse retailing principles, which are popular in the rest of the world, especially in Europe and Latin America. iii. Warehouse Clubs or Wholesale Clubs, stores that require members to pay an annual fee and operate in low-overhead, warehouse-type facilities, offering limited lines of brand name and dealer-brand groceries, apparel and other goods at a discount. iv. Convenience Stores, small retailers located in residential areas; carry limited lines of higher-turnover necessities. While the formats differ, convenience stores abound in both developing and developed countries.Non-Store Retailing i. Internet Retailing,(also known as interactive home shopping or electronic retailing): a BSPATIL
  30. 30. venue for selling merchandise through the Internet; includes both the new dot-com companies along with traditional retailers attempting additional market penetration using the Internet. ii. Vending Machines, retailing format that has become very popular, with extent of use varying from country to country—they are particularly popular and omnipresent in Japan. iii. Television Home Shopping, a venue for selling merchandise to consumers in their homes using cable channels. Examples of television home shopping are infomercials and direct response advertising, popular in North America and Europe, and becoming increasingly popular in Asian markets. iv. Catalog Retailing and Direct Mail Retailing, a venue for selling merchandise to consumers using catalogs and other types of direct mail. It allows for the international expansion of retailers, but must be adapted to local market needs and practices. There are many obstacles to catalog retailing in developing countries: deficient telephone service, unreliable mail service, and low income, among others. v. Direct Selling, a retailing venue whereby a salesperson, typically an independent distributor, contacts a consumer, demonstrates product use and benefits, takes orders and delivers the merchandise. Direct selling firms are most active in the growth markets of Southeast Asia, Central and Eastern Europe, and Latin America. Recently, due to the negative publicity surrounding direct selling practices, China has banned all direct selling operations. vi. Network Marketing, variation on direct selling, involves signing up sales representatives to go into business for themselves with minimal start-up capital. Their primary task is to sell more "distributorships" and merchandise. Network marketing is growing rapidly, especially in emerging markets.Issues in International Retailing i. Legislation and Regulation local governmental regulations differ from one market to another. Legislation has a profound impact on a firms operations through regulations that restrict the firms marketing strategies in the target market. ii. Taxation and Cross-Border Shopping in countries where consumers are not charged BSPATIL
  31. 31. duties for products they purchase from a neighboring country, consumers purchase decisions become driven by tax differences, rather than by differences in producer prices. This may cause reduced profits for domestic retailers.iii. Variation in Retail Practices Consumer Perspective, retail practices vary from one market to another depending on consumer practices and preferences in the market. In the United States, for example, consumers purchase products in bulk and less frequently. In Japan and in most European countries, consumers purchase products in smaller quantities and on a daily basis.iv. Variation in Retail Practices Sales people and Management sales service differs from market to market, ranging from extremely friendly to curt and even rude salespeople. Some stores can charge an entrance fee for people shopping there, while other stores require a particular dress code of their customers. BSPATIL
  32. 32. CHAPTER-5IMPACT OF RETAIL MANAGEMENT IN THE GROWTH OF INDIA ECONOMY Definition and Scope of Retailing The word retail is derived from the French word retailer, meaning to cut a piece off or to break bulk. In simple terms, it implies a first-hand transaction with the customer. Retailing can be defined as the buying and selling of goods and services. It can also be defined as the timely delivery of goods and services demanded by consumers at prices that are competitive and affordable. Retailing involves a direct interface with the customer and the coordination of business activities from end to end- right from the concept or design stage of a product or offering, to its delivery and post-delivery service to the customer. The industry has contributed to the economic growth of many countries and is undoubtedly one of the fastest changing and dynamic industries in the world today.Types of Retail Operations Retail operations enable a store to function smoothly without any hindrances. The significant types of retail operations consist of: i. Department store ii. Specialty store iii. Discount/Mass Merchandisers iv. Warehouse/Wholesale clubs v. Factory outlet Retail Management System targets small and midsize retailers seeking to automate their stores. The package runs on personal computers to manage a range of store operations and customer marketing tasks, including point of sale; operations; inventory control and tracking; BSPATIL
  33. 33. pricing; sales and promotions; customer management and marketing; employee management; customized reports; and information security.The Emerging Sectors in Retailing Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, and Apna Bazaar), convenience stores (Convenio, HP Speed mart) and fast-food chains. It is the non-food segment; however that foray has been made into a variety of new sectors.These include lifestyle/fashion segments (Shoppers Stop, Globus, Lifestyle, Westside),apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, Music World, rosswords,Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and harmacy(Health and Glow, Apollo). The emergence of new sectors has been accompanied by changes in existing formats as wellas the beginning of new formats: i. Hyper marts ii. Large supermarkets, typically 3,500-5,000 sq. ft iii. Mini supermarkets, typically 1,000-2,000 sq. ft iv. Convenience stores, typically 750-1,000sq. ft v. Discount/shopping list grocer The traditional grocers, by introducing self-service formats as well as value-added servicessuch as credit and home delivery, have tried to redefine themselves. However, the boom in retailinghas been confined primarily to the urban markets in the country. Even there, large chunks are yet to BSPATIL
  34. 34. feel the impact of organized retailing. There are two primary reasons for this. First, the modern retaileris yet to feel the saturation effect in the urban market and has, therefore, probably not looked at theother markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, hascome to be identified with lifestyles. In order to appeal to all classes of the society, retail stores would have to identify with differentlifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially`value for money image. The attractiveness of the other stores actually appeals to the existingaffluent class as well as those who aspire for to be part of this class. Hence, one can assume that theretailing revolution is emerging along the lines of the economic evolution of society.Retailing Scenario- Global View Retailing in more developed countries is a big business and better organized than what inIndia. According to a report published by McKinsey & Co. along with the Confederation of the IndianIndustry the global retail business is a worth a staggering US$ 6.6 trillion. In the developed world,most of it is accounted for by the organized retail sector. The service sector accounts for a large share of GDP in most developed economies. And theretail sector forms a very strong component of the service sector. In short, as long as people need tobuy, retail will generate employment. Globally, retailing is a customer-centric with a emphasis oninnovation in products, processes and services. With total sales of US$ 6.6 trillion, retailing is the world’s largest private industry, ahead offinance and engineering. Some of the world’s largest companies are in this sector: over 50 Fortune,500 companies and around 25 of the Asian Top 200 firms and retailers. Wal-Mart, the world secondlargest retailer, has a turnover of US$ 260 billion, almost one-third of India GDP. Retailing in India is gradually inching its way to becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working BSPATIL
  35. 35. population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector.Big in size and turnover, Indian retailing industry is characterized by certain attributes. The network of retailers reaches every nook and corner of the country. So any product produced anywhere in the country can be easily accessed by the buyers from any location. Thus the spatial convenience of Indian retailers is vary high. Secondly, in India the retailing industry is an unorganized lot consisting of, in most of the cases, small entrepreneurs. And the virtual omnipresence of the Indian retailer can be attributed to these small entrepreneurs only. The second attribute gives rise to the following characteristics: Power of the retailers, as such is very less, and in many cases it is negligible. This weakness has been exploited by the manufacturers and the stronger partners of the marketing channel. The retailers, in general, abide by the terms and conditions set by the manufacturers and other "big brothers" of the channel. The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore, the manufacturers cannot maintain the desired relationship with the retailers, which in turn, make management of the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost remote. Therefore, the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. So the dependence of retailers on other channel members increases to a high extent. Thus the participation of retailers in the flows of marketing mix becomes lower than desired. The financial strength of the Indian retailers, in general, is very low and hence the investment capabilities. This makes the retailers more dependent on the other channel members. However, these characteristics are peculiar to the small retail outlets and may not be present at every kind of retail level.Retail Shopkeepers India has sometimes been called a nation of shopkeepers. This epithet has its roots in the huge number of retail enterprises in India, which totaled over 12 million in 2003. About 78% of BSPATIL
  36. 36. these are small family businesses utilizing only household labour. Even among retail enterprises that employ hired workers, the bulk of them use less than three workers. Indias retail sector appears underdeveloped not only by the standards of industrialized countries but also in comparison with several other emerging markets in Asia and elsewhere. There are only 14 companies that run department stores and two with hypermarkets. While the number of businesses operating supermarkets is higher (385 in 2003), most of these had only one outlet. The number of companies with supermarket chains was less than 10.Retail Sales Retail sales, which amounted to about Rs7, 400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail sales are also expected to expand at a higher pace of nearly 10%. In a developing country like India, a large chunk of consumer expenditure is on basic necessities, especially food related items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71% of retail sales in 2002. The remaining 29% of retail sales are non-food items. The share of food related items fell over the review period, down from 73% in 1999. This is to be expected as, with income growth, Indians, like consumers elsewhere, spent more on non-food items compared with food products. Sales through supermarkets and department stores are small compared with overall retail sales. However, their sales grew much more rapidly (about 30% per year). As a result, their sales almost tripled during this time. This high acceleration in sales through modern retail formats is expected to continue during the next few years with the rapid growth in numbers of such outlets in response to consumer demand and business potential.Government Policy There has been vigorous opposition to foreign direct investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away their business, lead to the closure of many small trading businesses and result in considerable unemployment. Given the political clout of the small trading community, because of their enormous numbers, the government BSPATIL
  37. 37. has barred FDI in retailing since 1997. Hence, at present, foreign retailers can only enter the retailing sector through franchising agreements.Growth of Retailing in India Indian retailing industry has seen phenomenal growth in the last five years (2001-2006).Organized retailing has finally emerged from the shadows of unorganized retailing and iscontributing significantly to the growth of Indian retail sector. RNCOS India Retail Sector Analysis (2006-2007) report helps clients to analyze the opportunities and factors critical to the success of retail industry in India. Organized retail will form 10% of total retailing by the end of this decade (2010). From 2006 to 2010, the organized sector will grow at the CAGR of around 49.53% per annum. Cultural and regional differences in India are the biggest challenges in front of retailers. This factor deters the retailers in India from adopting a single retail format. Hypermarket is emerging as the most favorable format for the time being in India. The arrival of multinationals will further push the growth of hypermarket format, as it is the best way to compete with unorganized retailing in India. Technology Impact: The other important aspect of retailing relates to technology. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. Simultaneously, it will be technology that will help the organized retailer score over the unorganized players, giving both cost and service advantages. Retailing is a `technology-intensive industry. It is quoted that everyday at least 500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of JC Penney to its corporate headquarters. Successful retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. They introduced two innovative logistics techniques - cross- docking and electronic data interchange. Today, online systems link point-of-sales terminals to the main office where detailed analyses on sales by item, classification, stores or vendor are carried out online. Besides vendors, the focus BSPATIL
  38. 38. of the retailing sector is to develop the link with the consumer. `Data Warehousing is an established concept in the advanced nations. With the help of `database retailing, information on existing and potential customers is tracked. Besides knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured. Retailing, as discussed before, is at a nascent stage in our country. Most organized players have managed to put the front ends in place, but these are relatively easy to copy. The relatively complicated information systems and underlying technologies are in the process of being established. Most grocery retailers such as Food World have started tracking consumer purchases through CRM. The lifestyle retailers through their `affinity clubs and `reward clubs are establishing their processes. The traditional retailers will always continue to exist but organized retailers are working towards revamping their business to obtain strategic advantages at various levels - market, cost, knowledge and customer. With differentiating strategies - value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behavior, the ground is all set for the organized retailers. It would be important to note, however, that the retailing industry in India is still a `protected industry. It is one of the few sectors which still has restrictions on FDI. Given the current trend in liberalization, it will not be long before the retailing sector is also thrown open to international competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater dynamism into the market. That will be when the real action will begin.Major retailers in India India’s top retailers are largely life style; clothing and apparel stores.This is followed by grocery stores. Following the past trends and business models in the west retail giants such as Pantaloon, Shopper’s Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores. These Wal-Mart wannabes have the economy of scale to be low �medium cost retailers pocketing narrow margin.Retailing Scenario-India BSPATIL
  39. 39. The retail scenario in India is unique. Much of it is in the unorganized sector, with over 12million retail outlets of various sizes and formats. Almost 96% of these retail outlets are less than500 sq.ft. In size, the per capita retail space in India being 2 sq.ft. Compared to the US figure of 16sq.ft. India�s per capita retailing space is thus the lowest in the world. With more than 9 outletsper1, 000 people, India has the largest number in the world. Most of them are independent andcontribute as much as 96% to total retail sales. BSPATIL
  40. 40. CHAPTER-6INTERNATIONAL MARKETINGInternational marketing refers to marketing carried out by companies overseas or across nationalborderlines. This strategy uses an extension of the techniques used in the home country of a firm.Introduction to International Marketing. International marketing is simply the application of marketingprinciples to more than one country. However, there is a crossover between what is commonlyexpressed as international marketing and global marketing, which is a similar term.International Marketing Environment One of the fundamental steps that need to be taken prior to beginning international marketingis the environmental analysis. Of course there are many tools on Marketing Teacher that would proveuseful at this stage such as lessons on the marketing environment, PEST Analysis, SWOT Analysis,POWER SWOT and Five Forces Analysis. However, the very specific and unique nature of eachindividual nation needs to be looked into. Below we consider the nature of an international PESTAnalysis, and the influence of tariff and non-tariff barriers.An International PEST Analysis PEST is a well-known and widely applied tool when considering the external nature of thedomestic market. However, it is equally as useful when applied to the nature of the internationalmarketing environment.International PEST Analysis would consider i. How easy will it be to move from purely domestic to international marketing? ii. Would your business benefit from inward foreign investment? iii. What is the nature of competition within each individual market, and how will companies from other nations compete when you meet with them head-to-head in unfamiliar countries? iv. Many other factors those are specific to your organization or industry. v. Political vi. Is there any historical relationship between countries that would benefit or hinder international marketing? BSPATIL
  41. 41. vii. What is the influence of communities or unions for trading? E.g. The European Union and its authority over European laws and regulation. viii. What kind of international and domestic laws will your business encounter? ix. What is the nature of politics in the country that you are targeting, and what is their view on encouraging foreign competition from overseas?Economic What is the level of new industrial growth? E.g. China is experiencing terrific industrial growth.What is the impact of currency fluctuations on exchange rates, and do your home market and yournew international market - share a common currency? E.g. Polish companies trading in Eire will useEuros. There are of course the usual economic indicators that one needs to be aware of such asinflation, Gross Domestic Product (GDP), levels of employment, national income, the predisposition ofconsumers to spend savings or to use credit, as well as many others.Socio-cultural Culture, religion and society are of huge importance. What are the cultural norms for doingbusiness? E.g. is there a form of barter? Will cultural norms impact upon your ability to tradeoverseas? E.g. Putonghua is very difficult for many Western people to learn.Technology Do copyright, intellectual property laws or patents protect technology in other countries? E.g.China and Jordan do not always respect international patents. Does your technology conform to locallaws? E.g. electrical items that run on non-domestic currents could be dangerous. Are technologies atdifferent stages in the Product Life Cycle (PLC) in various countries? E.g. versions/releases ofsoftware.Tariff and Non-Tariff Barriers There are a number of fences that companies need to plan for when initialising internationalmarketing. Tariff and non-tariff barriers are still very common, even today. Tariff barriers are charges imposed upon imports - so they are a form of import taxation. Thiscould mean that your margins are reduced so much that trading overseas becomes too unprofitable. BSPATIL
  42. 42. However they are normally transparent and you can plan to take them into account. Non-tariff barriers are trickier to spot. Governments sometimes act in favour of their owndomestic industries rather than allow competition from overseas. Bureaucracy is a hurdle oftenencountered by exporting companies - it takes many forms and includes unnecessary hold-ups andred tape. Quotas are another form of non-tariff barrier i.e. restricting the quantity of a product that canbe imported into a particular country.Retail Management Tips Its The Customer Stupid - To paraphrase that popular, and successful, quote from BillClintons 1992 campaign: The single most important aspect of your business is your customers. Makesure your entire team understands that - and acts like they understand it. "Doctor" Your Customers - Everyone wants to think they are special. You can make yourcustomers feel special if you treat them like your family doctor treats you. For the time you are withthem, concentrate on them and what they are telling you. Exclude everything else for that period oftime. Delight the Customer - It is heard a lot, but seldom practiced. Today I saw a productionsupervisor straighten out a mess and, in the process, calm an irate customer. When I heard her tellthem to put two mugs with the companys logo into the package being sent to the customer, I knewshe understood what "Delight the Customer" means. You never have to make up for a good start - If a project or a job gets off to a bad start itcan be difficult to catch up. Do your planning up front so you get a good start and you wont regret it. Train Your Supervisors - The key to your business success is the productivity of youremployees. The key to employee productivity is their perception of their immediate supervisor. Investin training your supervisors and managers. It will pay off. Under-promise and over-deliver - This goes beyond the old adage dont promise what youcant deliver. Instead, deliver more than what you promised. Its a good way to build customer rapport- both outside and inside the company. Your first obligation is to the customer - Without customers you dont have a business.Treat them with the same respect you expect when you are a customer. Make sure everyone in yourorganization understands the importance of customer service. BSPATIL
  43. 43. You have to make a difference - The group you manage has to be more effective, moreproductive with you there than they would be if you were not. If they are as productive without you,there is no business sense in keeping you on the payroll. Your biggest business challenge is your competition - They have to take away yourcustomers to survive or grow. How are they going to do that? How can you stop them? How can yousteal their customers? Dont wait for it to happen. Start preparing NOW. Follow Through On Sales Promises - Dont let your sales people make promises thecompany cant meet. If they tell a customer they can have 100 gross of widgets "tomorrow before 10",they better be sure that many are already in the warehouse. Nothing loses customers faster thanbroken promises. Doing it right costs less than doing it over - Have you ever been asked "Why is there neverenough time to do it right, but always enough time to do it over"? Save the costs, including customerdissatisfaction and lower worker morale, by concentrating on doing the job right the first time. Doesn’t Be A Demotivator - Your job as a leader is to get and keep your people motivatedand working toward the common goal. Demeaning them, to their face or to others, erodes theirmotivation. So does dismissively telling them that their ideas "are stupid". Watch your own actions tobe sure you arent defeating your own efforts by demotivating your people. Keep the flame alive - When people join your organization they are all fired up and ready todo great things. Over time we all too often wear down that enthusiasm. Instead, do what you can tofan the flames of their enthusiasm and you will be amazed at their output. You Cant Listen With Your Mouth Open - You’re associates, your employees, yoursuppliers, your customers all have something of value in what they have to say. Listen to the peoplearound you. You will never learn what it is if you drown them out by talking all the time. Remember,the only thing that can come out of your mouth is something you already know. Shut up and learn. Anyone can steer the ship in calm waters - What will set you apart in your career is how youperform during the tough times. Dont become complacent and relax just because things are goingwell. Plan ahead for the downturn. It is easier to save a dollar than to earn a dollar - Every dollar you dont spend is a dollaryou dont have to earn to achieve the same profit level. Invest as needed to grow the business, buywhat you need, but dont spend without forethought and a good reason. BSPATIL
  44. 44. Appearance Does Matter - It may be a sad commentary on our superficial society, butappearance does matter. Whether its the packaging on your product, the first impression you makewhen calling on a new client, or your companys web site people notice how things look. They careabout how things look and make judgments about you and/or your product based on appearance. Get your people involved - Its a lot easier to get employees to stand behind a companydecision if they have the opportunity to participate in the discussion. Management still has to makethe decision. but if they have had the opportunity to make their point of view known employees aremore apt to stand behind the ultimate decision, even if they dont agree with it. Fix The Problem, Not The Blame - It is far more productive, and less expensive, to figure outwhat to do to fix a problem that has come up than it is to waste time trying to decide whos fault it was. Actively Listen - Listen to your customers, your employees, your suppliers, and anyone elsewho comes in contact with your business. Honestly evaluate what they have to say, without lettingyour ego get in the way, and you will probably learn something that benefits your businessWinning at Store Management “Winning at Store Management” includes a step-by-step approach to hiring top performers.But hiring and motivating great people is only part of your success. You want to train them and makesure they know what is expected of them so that you have the comfort of knowing that all of yourpeople are moving in the same direction; the comfort of knowing that your store is always in safehands. This guide will teach you how to ensure that happens. With DMSRetail’s training plan, youwon’t have to worry about fitting in the training time. The program is made to work with your timeconstraints and your hour control or wage cost plan. The time and money you save on training is abonus. This is a training program that fits your ‘budget’. Let’s face it, you have a limited number ofstaff hours available to use. It’s up to you to use those hours in the most productive way possible.With this guide you’ll receive tools to make training fit into your schedule effortlessly. You won’tbelieve how easy it is! Your new people will learn how to do their job, how to conduct themselves inan exemplary fashion and how to succeed. Thats an achievement to be proud of.Imagine that you have the best people and they are fully trained and ready to succeed In addition to hiring top performers, training them well and preparing them for success, the task BSPATIL
  45. 45. of managing your hours and the many changing priorities you have every day is incredibly important.You’ll easily rise to the challenge with the skills you’ll develop by reading and applying “Winning atStore Management”. You’ll effectively manage every hour, every day, every week and so on.Planning and managing your time will make a huge difference to the level of success you will achieve.With this guide, you’ll become highly effective at managing every day and will even start to do somelong range planning. That’s a skill that will earn you a lot of respect from your executive. Topmanagement wants people who can look ahead with concrete plans for increasing their business.People who do this move up in the organization! DMSRetail’s “Winning at Store Management” was designed by retail experts. Their experienceon the sales floor, at store and district management levels and as members of the executive teamsfor a number of successful, prominent retail companies…from apparel to electronics to confectionsand computer hardware/software…has provided them with an immense amount of knowledge in theretail management field.Retail Planograms Planograms are diagrams that show where products or merchandise should be placed on ashelf or other sort of display. The idea is to maximize the amount of merchandise on the shelf and theamount of sales by arranging in such a way that makes it appealing to the consumer while minimizingwasted space. Planograms differ significantly by retail sector. Fast-moving consumer goods organizations andsupermarkets largely use text and box based planograms that optimize shelf space, inventory turns,and profit margins. Apparel brands and retailers are more focused on presentation and use pictorialplanograms that illustrate "the look" and also identify each product Often retailers use planograms to decide how best to get as much on their shelves as possibleor increase sales. Even more often, however, the suppliers will send a planogram before sendingtheir product as a suggestion to help in displaying their good s so they can be easily seen and will beplaced alongside like objects. BSPATIL

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