Strategic Retail Management - 2012

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This presentation educates the audience about Strategic Retail Management. This presentation is intended for educational purposes. The examples used are also for educational purpose. If any person or organization has any issues pertaining to same, please inform me, I will alter the same.

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  • Technically, classification of Retailing is done by Govt. bodies like SIC (Standard Industrial Classification) & NAICS etc . which classifies the retailer through a two digit code (retail sector), then it is further divided into (retail business). Independent stores : A type of retailer that operates a single establishment. can work on improving merchandising, revive marketing practices, outstanding customer service, efficiency of business through IT , more manpower.Chain store: A retailer that operates more than one / multiple store. Economies of scale: economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase. Chains use IT ERP/CRM s/w to control theft, pilferage, inventory control, ordering & to monitor the sales & buying patterns of customers.Franchise: A contractual agreement between a Franchisor and a Franchisee that allows a franchisee to operate a retail establishment using the brand name & guidelines (working methods).Business Franchise: Like McDonalds , a lot of interaction happens between Franchisor & Franchisee. Franchisor provides all assistance like site selection, accounting, planning, training, marketing, product , machinery etc.Product Franchise: A situation in which Franchisee agree to sell the franchisor's products or services. Like Beer distributors, they avail the benefits of promos , schemes & discounts from companies & sell various brands.Trademark franchise: Franchisee acquires franchisor’s identity & uses the trademarks developed by franchisor. Like GM dealers sell Chevy & Pontiac both .. To use GM’s TM while selling its products.Coop : not so popular in India , however Cooperative stores are of 3 types: retail sponsored – when several retailers band together & start a store.Wholesale sponsored - when several wholesalers band together & start a store.Consumer coop – a retail establishment owned & operated by group of consumers.Leased deptt. Shop In Shop-small area in a deptt. Store is leased to a brand. Also leasing an area or retail space for an outlet like CCD. General Merchandise : retailer involved in general items , barring food & beverages.Department stores: a large retailer , carrying huge variety of products , organized into deptts. They offer better customer service than GM stores, each deptt. Acts as a mini store. Each deptt. Sales advisors & deptt. Managers to handle the over all functioning of one deptt. Not all deptt. Stores are part of retail chains. Discount stores: a deptt. Store that offers limited customer service & has merchandise priced below as compared to other stores.Specialty store: a store that carries a limited no. of products with in one or few lines of goods & services.Category killers : power retailer/ category specialist – offers a deep assortment of merchandise.Offprice retailers : a retailer that sells branded merchandise at 40~50% discount , merchandise can be distressed or over run.Close out retailers: sells broad assortment of merchandise purchased at close out stores.Flea market : a retail format in which many vendors sell used as well as new & distressed merchandise.
  • Wheel of retailingEntry phase - Retail innovators often appear as low price operators. Thus the cycle begins with retail institutions starting off with low prices & low service levels.Trading up – retailers wish to expand their business and attract more customers, enhance the quality and quality of merchandise handled, provide more services, and open outlets in more convenient locations. This leads to increase in operating costs and prices, thus offer opportunities for new competitors to enter market with low price strategies.Vulnerability phase – is characterized by an increase in competition in services of all kinds and by a convergence in terms of the marketing mix of retailers as they mature. They become vulnerable to new competitors that enter the market with low prices.
  • Customer card identifies you as an authorised “Member” customer. You cannot gain access to a Cash N Carry centre without your card.Cash & Carry operates on a Business to Business (B2B) model. That is why Customer Cards are only issued to customers who hold valid business licenses.VAT License , Weights & Scale License, Shops & Establishments License , Municipality License , Service Tax/Professional Tax LicenseOr any other valid business license issued the Government to do business.Warehousing arrangement / Stack up to reduce cluttering & increase revenue / sq.mGroup / Collective Packing (Packing of 5/ 10together,OEM packing , No frills)Cash n Carry – Pay thru cash & bring your own vehicle. Parking facility available.HACCP , IFS approved best quality products
  • Conclusion : The food retailing landscape has changed dramatically over the past few decades. Competition has increased, because of various factors like Mergers & Acquisitions & internationalization of retail companies.Even though non-store retail formats have developed, (because of growth in IT & communication tech.) ; still brick & mortar store formats remain the most important channels that have been developed & has gained market share. Discount oriented retail formats(Hyper markets) , small food based Hard discounters & Convenience stores are becoming increasingly popular.Category Migration is also observed very prominently, along with cross selling across categories (food & Non –food both).
  • Direct Selling : vertical marketing in which sales people contact customers directly in a convenient location, demonstrate merchandise benefit or explain service/products, take an order and deliver the product.Electronic Selling : Technological form of direct selling. The rapid diffusion of Internet access and usage has stimulated not only bricks and mortar retailers to create Internet shops, but also pure electronic retailers (pure players) have evolved, like Amazon.Equity Stores: Brick and Mortar Stores. Manufacturers from Apparel, Footwear, Jewelry, Sports Equipment, Home equipmentMonobrand Specialty stores: managed as retail chains, manufacturers have strong control & centralized decision making.Flagship stores : offer total production program in high quality presentation (lifestyle presentation) in top locations of large metros.Factory outlet : FOC are an opportunity to improve their revenues from irregulars, production over runs and merchandise returned by retailers. Merchandise is always sold at discounted price.Dealer Partnership programs : manufacturer offers limited offer package (mrktng, IT, training etc.) they run thru SiS, Corner concepts etc.Franchise System : manufacturer contributes thru every possible support (IT, CRM,Marketing, sales promotion, advert., financial support etc.)
  • Retail Partnership Concept – MBOs Franchising – Stand Alone StoresEquity – Branded Stores
  • Market penetration : Higher sales from existing markets can either be obtained by attracting current non-customers, who either do not buy products in the offered categories at all or who buy them from competitors. Loyalty of customers can be improved & value of their shopping baskets can be increased.Product development : This can be done by providing the existing customer base with new product categories in the existing stores. Eg. Apparel stores expanding into selling shoes. Here Product Development refers to introducing new retail formats in existing markets. Like store retailers offering their product in the internet or supermarket retailers opening convenience stores.Market Development : Regional retailers expanding their traditional store formats to other regions or national retailers expanding to new countries attempt to increase revenue for the company with this strategy.Diversification : it often leads retailers beyond traditional retail markets. like Tata’s – auto, chemicals, power, steel, IT, f&b, housing, finance, insurance etc.Growth strategies for retailers can take two basic forms :Enhancing sales in existing retail outletsEnhancing sales by enlarging the outlet networkOrganic Growth : Location decision, store layout, manpower every aspect is under control. Risk is limited as expansion is gradual. Financial resources, CAPEX is high, Gradual growth as due to zoning restrictions, planning permission, search of sites etc. Also loss in flexibility over time. For the same reason modern retail information systems allow combination of centralized decision making with a locally adapted marketing.JV : adv. Of combination of resources of two companies, with reduction of risk, larger the retail , it is more likely to expand on its own , afford the expenses & absorb the risk. Drawback is high coordination costs, complex management, low stability & control of strategy is not possible.Franchising : Unit franchising – Fsor grants Fsiee the right to engage in a single franchised business operated at a specified location. Master franchising – Fsor grants Master Fsiee a set territory, and within this territory, Master Fsiee can establish unit Franchises.M&A – Merger – 2 companies are combined& one of them loses its legal independence. Acquisition – a company acquires a majority interest in another or takes over certain assets (stores) of another company.
  • International Retail Sourcing : Stores are domestic , many retailers have been buying goods from foreign countries.Cross border retailing : internationalization of store operations.DMO: retail concept from home market is transferred to other countries.GBO : retail concept is not adapted to differences in local markets.MNO: retail concept of substantial adaptations or diverse formats/ concepts operating in heterogeneous markets.GLO: retail concept of moderate adaptation to heterogeneous markets. The retail company brings together economies of scale (efficiency) & and a concentration on country markets (effectiveness).Assortment v/s Format : GDMO- standardized formats & assortments. Standardized formats include location of stores & instore marketing.Standardization of Assortments include merchandising & category management.GLO – assortment & price /promotion are adapted to local conditions. MNO – means diff. formats (positioning, retail brands ) with diff. assortments & diff. price/promos policies in diff countries.
  • Advantages of retail brand – an existing retail brand strengthens brand awareness and differentiations , hence increases the effects of marketing.Strong brand simplifies the purchasing process as the decision making becomes easier. Strong Brand exerts halo effect , a positive general effect about the brand. Strong Brand avoids the prospect of cannibalization, as strong brand can facilitate franchise operations, brand extensions etc like Spencers hyper market & convenience stores or CCD coffee shop & Express retail.
  • Free Standing , Isolated sites – be positioned on roads or near other retailers or shopping centres. Eg large store formats in food and non food retailing or for convenience shops. Unplanned shopping areas – several outlets in close proximity to each other. 1) Central business districts (downtown areas in city) 2) secondary business districts in larger cities and main street or high street locations in smaller cities 3) Neighborhood districts 4) strip or string locations (along a street or motorway)Planned Shopping Districts/ Shopping Centres – Retail parks
  • Merchandise Mix or Product Range – a retailers total product offering.Merchandise Management – at strategic level it means, selecting the right item for the store & at operational level , it means products are available when customers want to purchase them.Staple – carried permanently by the retailer & have stable sales . Eg white shirt , blue jeans for an apparel retailerFashion – products that have cyclical sales as due to changing tastes and lifestyles. Apparels change every year .Seasonal – products that do not sell equally well over consecutive time periods. Skiing equipment, short pants etc.Fad – products that generate high sales for a short period of time. Eg. Ben10 or Pokemon accessories.Breadth/ width of assortment – no. of product lines the retailer offers. Generalists (wide) & Specialists (narrow). Customer finds most of the merchandise he wants “under one roof”.Depth – no. of SKUs in a particular category ( brands, colors, tastes, sizes). Deep gives customers a good choice within categories. Shallow focuses better on fast selling items in category.Specialty stores – specialist image, very good choice in categories; no one-stop shopping, more dependent on trendsConvenience stores – high inventory returns, aimed at specific target group ; no one-stop shopping, often low customer loyaltyDepartment stores – one stop shopping, broad target group; diffuse image, low inventory turns Discounters – high inventory turns, broad target group ; weak merchandise image, some disappointed customersCategory Def – to determine the products that make up the category & its segmentation from consumer’s perspective.Cat Rule – assign role for the category based on consumer, competitor, & retailer info.Cat Assesment – anlayze category, sub-category etc.. Review of detailed info.Perf. Measures – establish category’s perf. Measures and targets.Category strategies – develop marketing & product supply strategies Category tactics – determine optimum assortment pricing, shelf presentation & promotion tacticsPlan implementation – implement category business plan thru specific schedule & list of responsibilities.
  • Cost oriented – a fixed percentage (mark up) is added to the cost of products.Competition oriented – retailers identifies his main competitors & sets his price accordingly.Demand oriented- retailer bases his prices on consumer demand.
  • Instore marketing -
  • Latent Loyalty – like people have very positive attitude towards Bose speakers , but not able to buy from there.True Loyalty – most favourable position , repeated patronageSpurious Loyalty – repeated patronage is observed towards the retailer, but that is not because of positive attitude, may be because of lack of alternatives.
  • Buyer - is a person who purchases finished good , typically for resale, for a firm /govrnt/organization.Can also be termed as Purchase Manager or Merchandiser , depending upon industries they belong to. Buying & merchandising is a related function , usually Buyer & Merchandiser is same person , because merchandiser is the one decides about product line, range , quantity , quality on the basis of consumer behaviour , trends, market research & insights. Merchandiser tells the Buyer “What to Buy?”, “How Much?”, “When?” Buyer decides from “Where to buy?”,”At what Price?”, and also coordinates with the Quality teams for Quality Checks. Like GAP is a Buying House.. They buy merchandise from various other buying houses , manufactured as per GAP’s guidelines.KAM – is the SPOC for an account of Buying House … These functions are interchangeable.
  • Strategic Retail Management - 2012

    1. 1. Classification of Retail Based on Ownership INDEPENDENT CHAINS FRANCHISE COOPERATIVE LEASED Based on StrategyGeneral Department Discount Stores Specialty Store Off PriceMerchandise Stores Category Killers Retailers
    2. 2. Formats in Food Retailing Types Conventional Superstore Hyper Market Convenience Store Hard Discounter Parameters Supermarket Size (sq. m) 400- 1,000 1,000-5,000 5,000-30,000 200-400 500-1,500 Merchandise extensive width full assortment of full selection of medium width medium width and depth of supermarket supermarket and and low depth of and low depth, assortment; items, plus drugstore items, assortment, heavy use of average quality; health and and general average quality store brands manufacturer beauty aids and merchandise; (up to 90 %) and store brands general extensive width, merchandise and depth SKUs 20,000-30,000 30,000-40,000 40,000-150,000 1,000-3,000 700-1,500 Percentage foods 75 - 90% 60- 80% 60- 70 % 90% 80-90 % Prices average/ competitive competitive average to above very low competitive average/highAtmosphere & Services average/ average average average low good Locations city or community shopping community shopping city or neighbourhood neighbourhood centre centre neighbourhood or or traffic - or isolated sites or isolated sites highly frquented oriented sites Promotions use of heavy use of heavy use of little to moderate heavy use of newspapers, newspapers, newspapers, newspapers & flyers, coupons flyers, coupons flyers, coupons flyers
    3. 3. The Wheel of RetailingMature Retailer Innovation Retailer• top heaviness • low status• conservatism Vulnerability Phase Entry Phase • low price• declining ROI • minimal service • poor facilities • limited product offering Trading –UP Phase The Retail Life cycle Traditional Retailer • elaborate facilities • fashion-orientation • expectation of both • higher prices • essential and • extended product • exotic services • offerings • higher-rent locations II • Introduction Stage II • Development Stage III • Growth Stage IV • Maturity Stage V • Decline Stage
    4. 4. B2B Retailing Format “Big Box Strategy Mix” • HoReCa (On –Premise) Businesses • Area covered : 9,000 toCustomers • Corporates & SMEs 30,000 sq.m. • Educational Institutions • SKUs : 50,000 – 60,000 • Self- Employed Professionals • Food percentage: 60-70 % • Traders & Resellers • Prices: Low price strategy. • Wholesalers & Distributors • Atmosphere & service : • Supermarkets & Pharmacies average, WH look & feel • Fresh Meat & Poultry + Groceries • Location : isolated sitesCategories • Gourmet • Promotion : aggressive low • DIY & Home Improvement price strategy, mailers, • Healthcare & wellness coupons., loyalty programs • Technology World • Electronics & Appliances • Apparel & Footwear • Office & Stationery • Uncompromising customer focus • Professional service • High-quality, diverse range • Large selection of fresh products • High availability of goods • Low prices • Clear organisation and cleanliness • Quick processing at check-out • Good accessibility • Convenient opening hours
    5. 5. Non Store Formats in Food RetailingTraditional Non-Store formatsFor Fresh merchandise e.g. farm produce, bakery products,meat / fish , the use of market stands or truck and vansVending MachineKiosks or VM provide customers with product displays andinformation on the merchandise or electronic systems trackinventory and cash, thus reducing out –of-stocks ormalfunctions.Remote OrderingRO Channels such as internet Shops, traditional cataloguesor TV shopping are gaining importance , in the scenarioswhere dominant share of food retailing is generated by storeformats.Direct SellingSales persons contact customers directly at a convenientlocation(at home or work or via phone etc.) , theydemonstrate the product or provide them with informationor services. Eg. Party selling , MLM
    6. 6. New Competitors-Vertical Strategies Suppliers becoming Competitors for their Customers ! Controlled Distribution Secured Distribution System System Direct Selling Dealer Partnership Program Electronic Selling Franchise Systems Equity Stores Strengths Weaknesses Equities • High degree of Control • High capital costs • Organizational control • Huge operational costs • Brand/Promo controlAdvantages & • Guaranteed distributionDisadvantagesof Secured &Controlled Franchising • Limited capital costs • Limited ControlDistribution • Less ownership riskConcepts • Guaranteed distribution • Low fluctuation Dealer Partnerships • Low cost solution • Little control • Rapid expansion • High risk of losing partners • Less stability
    7. 7. Direct Selling Electronic Selling Equity Stores Factory Outlet Flagship Store Specialty StoreMulti Channel Distribution Dealer Partnership Program Franchise System Independent Retailers Flagship Store Factory Outlet www.pumashop.in Ecommerce portal
    8. 8. Controlled and Secured Distribution Verticals • Verticals perform all production and distribution functions themselves. • Successful for both Brick N Mortar formats & E- Controlled Stores. Secured Distribution • Brands like Zara, Mango are successful e.g. in Distribution apparel industry. From Sheep to Shelf. • Advantage lies in controlling total value chain , SCM and understanding consumer behavior Retail Equity quickly. Partnership Franchising Concept • Secured Distribution used to develop equity chains . • Now manufacturer can sell directly to consumers without Brick N Mortar stores over the internet & through Dealer Partnership programs and Indirect and Direct/Secured Franchising. Distribution at Esprit • Main challenge is to manage the potential conflict between independent retailers, selling products from a particular manufacturer, and retailers , cooperating in a contractual system with this manufacturer on the one hand, and equity stores from this manufacturer as competitors on the other hand. As “pure players”, verticals are in much better position – they do not compete with their customers.
    9. 9. Growth Strategies Growth Options Products • With present products & in present markets , growth Present New can be achieved by Market Penetration. • Product Development is characterized by offering new Market Product products to existing customers. Present Penetration Development • Market Development is when a current product offer is targeted to a new customer segment, often in a newMarket Ansoff’s geographic area. Matrix New • Diversification entails offering new products to new Market markets. Diversification Development • Withdrawal from Markets is closing down or divesting (selling –off) the unprofitable parts of business . • Organic Growth (Internal Growth) is primary method for expansion. Outlet Growth Options • Joint Ventures is when parties agree to contribute equity and share the revenue, expenses & control of enterprise. • Franchising is a contractual agreement between two legally and financially separate companies. Organic Mergers & • M&A involves the consolidation or purchasing of existing Franchising Growth Acquisitions retail companies or retail outlets.
    10. 10. Internationalization of Retailing Internationalization of Benefits of Integration Standardization Adaptation Global Glocal Some products Some products International are global need some Hi Orientation Orientation Retailing products, changes in the Retail Sourcing meaning they product or can be sold in promotion Cross – Border foreign markets strategy to fit Retailing with virtually no new markets. Domestic Multinational adaptation. Lo Market Orientation Orientation Lo Hi Low responsiveness Non- standardized Strategic Sequencing of Market Entry Glocal Multinational Entry & Operating Strategy Export Orientation OrientationAssortment Licensing Global/ Franchising standardized Domestic Market Orientation Joint Venture standardized Non- standardized Format
    11. 11. Retail Branding & Positioning • Retail Branding – A retailer’s products are his stores; hence Retail Measurement of Brand Equity Brand is then a group of retailer’s outlets that carry a unique name Monetary Brand Consumer Oriented Equity Brand Equity or logo or both. • Indicators of Consumer Oriented retail brand equity are Brand •Additional Cash flow achieved by •When consumers react favorably to an Awareness, Trustworthiness of the Brand, Customer associating a brand element of marketing with product or mix. Satisfaction/Loyalty, Brand Liking & Differentiation. service. •Eg. Macy’s (in US) & • Positioning is deliberate defining and influencing customer’s •Eg. The Gap (8.2 Bi Big Bazaar /Food perception of marketable object, with strong focus on USD), Zara (3.7 Bi Bazaar are among the USD) most recognized and competitiveness. likeable brands. • Positioning depends upon Quality of merchandise, variety of merchandise, convenience, price, customer service, location & store atmosphere. Branding Strategies at Different Retail CompaniesBrand Strategy Retail Company Retail Brands of the Company Café Coffee Day Café, Lounge, Express Principles of Successful Retail Branding Pizza Hut Dining, Express, PHDUmbrella Brand Spencers Deli, Super Market, Hyper Market Differentiation from Competitors Tesco Tesco Extra, Tesco (Super Markets), Tesco Express Pantaloons, Central, Brand Factory, Home Town, Ezone, Long-term marketing Continuity Future Group Planet Sports Big Bazaar, KBs Fair Price, Food Bazaar, FutureBazaar.com Coherence of different marketing componentsFamily Brand Trends, Footprints, Mart, Fresh,Digital, Jewels,Subhiksha Reliance Retail ,Autozone,Time Out & Brands (Diesel, Paul&Shark, Steve Madden,Hamleys, Thomas Pink etc.) Rocket Internet Jabong.com, Rock.in, Bamarang, Food Panda, 21DiamondsMixed Strategy Smile Group Dealsand you, Fashionandyou, Juvalia&you Metro Metro Cashn Carry,Real, Media-Markt, Saturn, Kaufhof
    12. 12. Marketing Mix in Retail - IStore Location – Trade Area & Analysis Location Assessment Techniques Location Evaluation Checklists Importance of Location • A good location can lead to competitive advantage. • Element of Marketing mix which is unique & cannot be imitated. • Long term decision implies long term capital commitment. • Fixed nature, hence cannot be changed in short term like prices, customer service, product assortment or advertising.
    13. 13. Marketing Mix in Retail - IIMerchandise & Category Management Depth of Assortment Specialty Stores Department Stores Merchandise Mix Staple Merchandise Fashion Deep Merchandise Seasonal Merchandise Convenience Stores Discounters Fad Merchandise Shallow Narrow Wide Breadth of Assortment Category Definition Category Category Review Category Rule Strategies • TrafficManufacturer / National Brand Store Brands / Private Labels •Opportunity for •Pull Effect Enhance differentiation , customer frequency in available at retailer Increasing stores. only •If a customer is Category • Transaction •Image Transfer , A retailer image can be satisfied with private Plan Management Category Building improved when it is label, then he will Implementation Assessment associated with the revisit the store to buy Process • Profit it again. manufacturer’s brands that are evaluated •Price competition is Generating positively. less severe , lower • Image procurement or production & Performance Creating marketing cost Category Tactics Measures Category Strategies
    14. 14. Marketing Mix in Retail - III Pricing Strategy Cost Oriented • Price positioning is a retailer’s price image in relation to his competitors Pricing & is determined by the positioning of company. Competition • W.r.t price structure , the differentiation is made between value(budget)Pricing Oriented Pricing price segment, medium(standard) price segment and a premium price segment. Demand Oriented Pricing • Price Differentiation occurs due to loyalty programs etc , also depending on target customer (for eg. Senior citizens) • Temporary Price Reductions happen through Promotion Packs, BOGOFs (Buy One Get One Free), Multipacks, Coupons & Store Wide reductions. Psychological Pricing Price –Quality relationship – Consumers some times evaluate product’s HiLo v/s EDLP quality based on the price, reason being consumers at times lack knowledge & information to judge the merchandising quality accurately. Price Communication - A red or yellow color of price sticker, large price HiLo (High Low ) Retailers have high regular Retailers offer consistently signs, crossed out “old” prices, comparison with recommended retail price prices, but they advertise low prices, thus enhancing by the manufacturers , and many other communicative measures can lead EDLP (Every Day Low Price ) their products & draw trust in retailer. Higher customers through temporary price transparency, smooth & decreased operations to a perception of lower prices. reductions. Reduced price costs, reduced out of credibility & change in stocks& reference prices.
    15. 15. Marketing Mix in Retail - IVIn store Easy internal orientation , In Store MarketingMarketing facilitate search process • Visual Merchandising – Refers to the arrangement of products (presentation & aesthetic appeal) in the store. Create positive store • Shopping process is differentiated through motives -Task atmosphere, emotional mind Completion and Recreational Shopping. of customers • Store Atmosphere comprises of visual elements (color, brightness etc.), aural elements ( music, audio advert. ), olfactory elements ( perfumes ), tactile (materials on floor, touching), gustatory elements (food samples, coffee served in book store) • Highly valuable store areas – entrance area , ground level space, end caps of gondolas, feature / special displays, check out area, eye level shelves..
    16. 16. Marketing Mix in Retail - V Customer Relationship Management Relative Customer Individualization/ Attitude Information segmentation Latent Loyalty (True) high Loyalty CRM No Loyalty Spurious low Loyalty CustomerProfit Orientation Interaction and Integration low high Repeat Patronage• Segmentation is done on three parameters : Value based, Customer based & Consumer behavior based.• CRM takes place through marketing communication by Customer Relationship Lifecycle Addressed direct mailings, E-Mail Marketing, Instore Multimedia Kiosks, Mobile Marketing, Personal Shopping Assitants.• A higher level of CRM can be employed through Internet marketing using Web Analytics, Web usage mining, SEO&SEM , Social Media Marketing.
    17. 17. Buying – Strategy & Concepts A Merchandise Philosophy must reflect Target Market desires, retailer’s institutional type, market Sourcing Tool Box place positioning, defined value chain, supplier Source Company-Owned Outside Supplier capabilities, costs, competitors, product trends. Interacting with active passive Merchandising SourceTransformation of the interface Supplier relationships transactional collaborativebetween Manufacturer and Retailer Stocking Merchandise stock Stock reduced Stock less Geographical market local/national international/global Mode of Buying individual cooperative Organisational Form internal external electronic Technological Form traditional (web -based) Mode of Buying and Organisational Form Individual & Cooperative Buying – A group of Retailers bundle their purchasing volumes to obtain volume discounts from the suppliers. Inside & Outside Buying Org. – A Buyer & Key Account Manager Relationship • KAM for • Buyer for • Buyer for • Buyer for Benetton ABC Benetton ABC Buying Shopper’s Benetton House • Buyer for Benetton • KAM for Stop Jabong.com • KAM for • KAM for Raw Shopper’s Corporate Jabong Material Stop Sales
    18. 18. Logistics – Physical DistributionLogistics Storage Facilities : ware houses, From Linear to Circular Logistics SystemsMix Distribution centers, retail stores. Inventory: Amount of stock to be held for each product Transportation : By ship, truck, rail or plane – from factory to WH/ DC and WH to Retail outlets Recycling/Reuse : Reverse logistics operations i.e. return of packaging Delivery of Online Orders Via E-Fulfillment Centre material and handling products. Consolidation of Supply Chain Logistics Model for Store-Based Picking of Online Orders
    19. 19. Performance Management Parameters Sales objectivesObjectives Objectives Objectives Customer Patronage Customer Traffic Financial Market Customer Loyalty Market Share Competitive Position Retail Image Vendor Relations Targeted returns Profitability Earnings per share Stockholder Dividends Labor Productivity Space Merchandise Social ResponsibilitySocietal Corporate Values
    20. 20. The Retail Life cycle •Introduction •Sales and •Rapid growth •Market •Sales VolumeDevelopment Maturity Growth Introduction Decline of new format Profits are of sales & Saturation decline •Alteration in low , but profit is seen. •Decline in •Profitability at least one of growing. •Existing sales & profit diminish the marketing •High Cost & Comp. expand growth •Either mix. risk their market. •New & repositioning •Diversion •Long term •New entrants Existing the retail is a from the sustainability arrive in the competition solution or strategy mix is not assured same format. gets tougher abandoning •Towards the •Aim is to the existing end , growth prevent format & acceleration decline of introduction begins to business & of a new decline & cost maintain format pressure profitability emerges.

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