Retail and sales management


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Retail and sales management

  1. 1. Retail and Sales Management
  2. 2.  ‘Retailing includes activities of marketing and selling products or services to end consumers for their own household or personal use’ ‘Retailer is a Person or Agent or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer’
  3. 3. “Retailing includes all the activities in selling goods or services directly to final consumers for personal ,nonbusiness use”“A Retailer or retail store is any business enterprise whose sales volume comes primarily from retailing”“A retailer is a business and can be an individual, chain store, departmental store, supermarket, specialty store, small locality shop, paan-bidi kiosk, or a service retailer etc., who links the producers and the final consumer.
  4. 4. Evolution of Indian Retail Malls, Hyper markets, Departmental stores etc Cooperative stores Mom and Pop ‘ Kirana Stores’Weekly BazaarsRural Fairs(Melas)
  5. 5.  Retailing is divided into two categories  Store retailing  Non store retailing  Direct selling, Direct marketing, Automatic vending, Telemarketing, TV Home Shopping, Electronic shipping Functions of Retailers  Arranging assortment  Breaking bulk  Holding stock  Channel of communication  Promotional support  Extending services
  6. 6. Retail Formats Ownership Based- It refers to the basic system or basic format of doing business. Under this format, proprietor is responsible for the success and failure of the store. It is a format, which legally has no separate existence from its owner  Independent Retailer  Chain store  Franchising  Leased Departments  Vertical Marketing System  Consumer Cooperatives
  7. 7.  Chain store- A chain retailer operates multiple outlets under a common ownership and name. Merits:  good bargaining power with suppliers  cost effectiveness and ease of managing store operations  use of technology increases work efficiency Demerits:  huge establishment cost  difficulty to monitor the day to day activities of all the retail chains
  8. 8. Few examples of chain stores Mc Donald’s Big Bazaar Café Coffee Day Pizza Hut Archies Westside
  9. 9.  Franchising- It signifies a contractual agreement that allows the Franchisee to operate a retail outlet using the name and format of the franchiser. The franchisee pays a fee and royalty.  Product or trademark franchising: Here the franchiser allows the use of the identity but does not always control the operations. The franchisee may draw up certain operating rules in consultation with the franchiser  Archies and Hallmark
  10. 10.  Business Format Franchising: Here the franchiser draws out the strategic plans and lays the procedures for operations and assist the franchisee on the issue of site location, building the store, quality control, training the store employees etc  Mc Donald’s  Domino’s Pizza Few Key Franchisers  Aptech  Koutons  Reliance Fresh  NIIT  Pizza Hut
  11. 11.  Merits of Franchising to Franchisee  Individual franchisee can own and run a retail store with relatively less investment  Well established and successful brands can create more customers Demerits of Franchising to Franchisee  Due to presence of more than one outlet of the same barnd, the problem of over saturation may occur, resulting in low sales  Under contractual agreement Franchisee may be restricted to make purchases through Franchiser or through some approved suppliers
  12. 12.  Leased Department Stores- A leased department which is also known as shop-in shop or store-in store is a section of a department in a retail store given to any outside party on monthly rental basis. The person who provides the store space to outside party is known as lessor and the person who takes the store space is known as lessee
  13. 13. Vertical Marketing Systems- It refers to an arrangementin which the whole channel focuses on the same target marketat the end of the channel. This includes producer,distributors, wholesalers & retailers acting in an integratedmanner Corporate VMS- It refers to the producer’s ownership of the entire channel right from manufacturing to wholesaling & retailing like Sherwin-Williams not only makes paint but also owns & operates 3000 retail outlets, Titan, Vimal fabrics, Bata, BPCL owns many petroleum refineries as well as petrol pumps Administered VMS- It is achieved when some members because of their position, size and power are in a commanding position to secure cooperation and support from resellers at different levels like HUL, ITC, P&G Contractual VMS- It consists of independent businesses at different levels in the channel. Members agree to cooperate with each other by entering into contract like Jaipuria group bottler for Pepsi , Body shop
  14. 14. Conventional vs. Vertical Marketing System
  15. 15.  Consumer Cooperatives- These retail outlets are owned and managed by its customers. A group of customers (members) start retail operations by investing money and then elect members to run day to day activities and share profits on the basis of investment made. However because of limited members and lack of marketing skills State Consumer Cooperative Organizations have come up like: Karnataka Cooperative Consumers Federation Limited Maharashtra State Cooperative Consumers Federation Ltd Gujarat State Cooperative Consumers Federation Ltd Few examples of Consumer Cooperatives  Kendriya Bhandar  Apna Bazaar  Sahakari Bhandar 
  16. 16. Retail Formats Merchandise Based  Food Oriented Retailers  General Merchandise Retailers
  17. 17.  Food Oriented Retailer- They deal with food related products and also sometimes deal with general merchandise  Convenience store- These are small retailers that offer a limited variety of merchandise but at convenient locations. These stores are modern versions of the traditional ‘kirana’ store and are relatively small stores 400-3000 sq ft located near residential areas. They are usually small size easily accessible stores offering a quick shopping and extended hours.  In & Out, Twenty Four Seven Retail Stores  Conventional supermarket- It is a self service store offering groceries, dairy products, shampoos, soaps, clothes and household cleaning products etc. These are located in or near residential high streets and ranges till 50000 sq ft and carry around 10000 SKUs  Apna bazaar, food world, super bazaar
  18. 18.  Food based superstore- Superstores are usually large supermarkets that have space area till 50000 sq.ft. These stores sell grocery and many other related products  Food Mart Outlets  More outlets Combination store/Super Center/Mega Store- A super centre is a combination of supermarket and a discount retail store. Its average size is about 150000 sq.ft. and deal with grocery and general merchandise  Wal Mart
  19. 19.  Warehouse store/club- It is a retailer that offers food and general merchandise at low prices mainly to other retailers and also to final consumers. Warehouse stores are membership based retail outlets and are sometimes also known as cash and carry wholesalers  Big Bazaar Wholesale club  Sam club  Costco club  Carrefour to operate in India through the wholesale cash & carry route  METRO cash & carry wholesale center
  20. 20.  General Merchandise Retailers  Specialty store- The retail chains, which deal in specific categories and provide deep assortment. They carry a narrow product mix with depth of assortment within the line.  RPGs Music World, Mumbais bookstore Crossword, Music store Planet M, Park Avenue of Raymonds  Category killer (Big Box Store): It is a large specialty store featuring enormous selection of its product category at relatively lower prices. Range 20000 to 100000 sq ft.  Home Depot- Home Improvement  Best Buy- In Electronics  Staples- Office supplies  Books  Hypermarket- It is a superstore which combines a supermarket and a department store offering full lines of grocery and general merchandise all under one roof. Ranges from 15000 sq ft to 100000 sq ft and above.  Reliance mart, Big bazaar, Giants
  21. 21. Future Group Big BazaarReliance Retail Reliance MartSpencers Spencer’s HypesTrent (Tata Group) Star India Bazaar
  22. 22.  Departmental stores- A store with several departments like apparel, cosmetics, home-ware, electronics etc under one roof with each section within the store functioning as a strategic business unit. Range more than 10000 sq ft. with usually more than 100000 SKU’S-(A number assigned to a product by a retail store to identify the price, product options and manufacturer of the merchandise)  Shopper stop, Lifestyle, Pantaloons, Westside Malls- The largest form of organized retailing today. Located mainly in metro cities. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof  Central, Huma mall, Iskon mall, Mall of India, Ansal Plaza, Centre Plaza mall, Sahara mall
  23. 23. Departmental stores Promoter GroupWestside Trent LtdShopper stopGlobus K Raheja GroupPantaloons Pantaloon Retail
  24. 24.  Discount stores- Wal-Mart, Big Bazaar Factory outlets/Off-Price Stores Membership club/Warehouse Club
  25. 25. Retail FormatsGroup name/ Retailer Existing Formats Brand NamePantaloon Department stores PantaloonsRetail India ltd Hypermarkets Big bazaar Supermarkets Food bazaar Malls CentralRPG Retail Hypermarkets, Supermarkets Spencer’s Music stores- speciality stores Music worldShopper’s Department store Shopper’s stopstop Ltd Books & music stores- hypermarket Crosswords Home furnishings- speciality stores Home stopTrent India Ltd Department stores Westside Hypermarkets Star India bazaarViswapriya Discount stores SubhikshaBPCL Convenience stores In & Out
  26. 26. FUTURE GROUP
  27. 27. Theories of Retail Development The Wheel of Retailing The Retail Accordion Melting Pot Theory (dialectic process)
  28. 28. The Wheel of Retailing (Malcomb McNair) Entry phase Vulnerability phase Top heaviness Conservatism Low price Declining ROI Low margin Low status Becomes Limited products Up-market location Trading-up phase Fashion orientation Becomes Extended assortment Higher prices Elaborate facilities Exotic services
  29. 29. CONSUMER BEHAVIOUR“Consumer behavior refers to the mental and emotional process and the observable behavior of consumers during searching, purchasing and post consumption of a product or service”
  30. 30. Consumer decision making processNeed recognition Information search Evaluation of alternatives Purchase decision Post purchase behavior
  31. 31. Consumer Buying processNeed recognition Searching for Retailers Finalizing a Retailer Selecting Merchandise Purchasing Merchandise
  32. 32. Level of Consumer Decisions Extensive decision making/Complex high- involvement- This kind of decision making usually happens for unfamiliar, expensive and /or infrequently bought products. Like cars, homes, computers etc Limited Decision Making- Here it happens when an individual purchases a product occasionally and is required to look for a different brand or retailer for a product one is used to because of non-performance or non- availability
  33. 33.  Routine response/Programmed behaviour- Here low involvement, frequently purchased products are involved Impulse buying- It is those purchases that do not involve any concious planning
  34. 34. Buying Roles Initiator- The initiator is the person who first suggests or thinks of the idea of buying the particular product or service. Influencer- Is a person whose views and advice carry some weight in making the final decision Decider- The decider is a person who ultimately determines any part of, or the entire buying decision- whether to buy, what to buy, how to buy or where to buy etc Buyer- Is the person who makes the actual purchase User- Is the person or persons who consume or use the product or service
  35. 35. Forms of Purchasing or Buying Behavior Complex  This behavior occurs when customers get very much involved in the purchase and acquaint themselves with brands and quality differences Dissonance Reducing  Sometimes in spite of high involvement, the buyer may find it difficult to differentiate between brands Habitual  This behavior occurs on low involvement products and on frequent purchases Variety Seeking
  36. 36. Private label Brands“Private labels often referred to as in-house brands or store brands, are those that are owned by the retailers themselves”
  37. 37. Reasons for the development of PrivateLabel Brands Identification of need gap Need to create unique merchandise Need for a Changing consumer Private Label habits Creating customer Need to earn Loyalty increased margins
  38. 38. The Process of Private Label Creation
  39. 39. Defining the ObjectiveDefining the Gaps in the Market Decision on make or buy and sourcingDetermine the marketing and sales strategy Determine the measures of performance
  40. 40. Steps involved in developing a Retail strategy
  41. 41. Defining the Objective Analyze situationIdentify options and allocate resourcesDevelop the implementation plan Monitor progress and control
  42. 42. The Retail Marketing Mix Product Price PlaceRetail Marketing Mix Promotion Presentation Customer People Service
  43. 43. Merchandising American Marketing Association ‘the planning involved in marketing the right merchandise at the right place at the right time in the right quantities at the right price’ ‘planning, developing and presenting of products for identified target markets with regard to pricing, assorting, styling and timing’
  44. 44. The Merchandiser: Role and Responsibilities Planning- Though the merchandisers may not be directly involved in the actual purchase of merchandise, they formulate the policies for the areas in which they are responsible by forecasting sales and analyzing consumer demand Directing- Guiding and training buyers in terms product quantity and quality to be purchased Coordinating- Usually, merchandise managers supervise the work of more than one buyer, hence they need to coordinate the buying effort in terms of how well it fits in with the store image and with the other products being bought by other buyers Controlling
  45. 45. Visual Merchandising It is largely associated with creating the look of the store. Here the Visual merchandisers are responsible for the placement of design elements
  46. 46. Retail Pricing
  47. 47. Factors affecting Retail Pricing Uniqueness of the Product Retail Business ModelPricing Strategy Competitors Pricing Strategy Economic Conditions Target Market and Demand
  48. 48. Retail Pricing Policies/Strategies Cost Oriented Pricing- A basic markup is added to the cost of the merchandise to arrive at the price. Here the retail price is considered to be a function of cost and markup Retail Price= cost + markup
  49. 49.  Demand Oriented Pricing- Here the price is set focusing on the quality and quantity that the customer would prefer while purchasing Competition Oriented Pricing- Here the retailer may set the price of the product at par with competition, above competition or below the competition Price Lining- It is a term used by retailers when they sell their merchandise only at given prices  Price Zone or Price Range- It is a range of prices for a particular merchandise line  Price Point- It is a specific price in that price range
  50. 50.  Market skimming- This pricing strategy is also known as price creaming. Market skimming pricing involves charging a high price for new products because the customer is new and unique so (hopefully) the consumers will be willing to pay higher prices for them. Market Penetration- Penetration pricing is used by firms who are trying to establish themselves in a new market and gain instant market share usually use this strategy. It is based around the idea that a company will set their prices low to encourage customers to buy their products instead of higher priced, more established brands. Value Pricing- Companies have adopted value pricing in which they win loyal customers by charging a fairly low price for a high quality offering. It is not simply setting lower prices it is a matter of reengineering the company’s operations to become a low cost producer without sacrificing quality.  Everyday low pricing (EDLP), High-low pricing  (Wal-Mart, Big Bazaar, Peter England) Psychological pricing/ Odd Pricing
  51. 51.  Price Bundling- This form of pricing is a variation of multiple pricing where various products are bundled together and sold as one unit e.g. Happy price Menu, computer hardware, printer and some softwares sold together Multiunit Pricing- The retailer offers discounts to customers who buy in quantity or who buy a product bundle. E.g. one t-shirt at 255.99 and two t-shirts for 355.99
  52. 52. Promotional Pricing Loss-leader pricing- Supermarkets and department stores often drop the price on well-known brands to increase additional store traffic Special event pricing- Sellers will establish special prices in certain seasons to draw in more customers Psychological discounting- It involves setting an artificial high price and then offering the product at a less price. (Big Bazaar) Cash Rebates Longer Payment terms Low-interest financing Warranties & service contracts
  53. 53. Differentiated Pricing Price discrimination- It occurs when a company sells a product or service at different prices  Customer segment pricing- Different customer groups pay different prices for the same product or service. (Museums, Parks)  Product form & Image Pricing- Many retail stores may sell men’s shirts in many styles, fabrics and levels of quality at different prices  Channel Pricing- Coca-Cola, Pepsi, Nescafe etc carries a different price depending on whether the consumer purchases in a restaurant or a vending machine  Location Pricing, Geographic Pricing  Time Pricing
  54. 54. Store Site Selection Types of Retail Locations  Freestanding Store/Isolated Store  Part of a Business District  Part of a shopping center
  55. 55. Steps involved in choosing a Retail Location Market Identification Determining the Market Potential  Demographic features of the population  The Characteristics of the households in the Area  Competition and Compatibility  Laws and Regulations  Trade Area Analysis Identify alternative sites
  56. 56. Trade Area Analysis Tertiary Trading Tertiary Trading Area Area Secondary Secondary Trading Area Trading Area Primary Primary Trading Area Trading Area Retail Store
  57. 57.  Select the site  Accessibility of the market  The Total number of stores and type of stores that exist in the area  Amenities available  To buy or to lease  The product mix offered
  58. 58. The Process of Merchandise Planning and Management Merchandise Planning  Product assortment  Price Range  space Sourcing  Make or buy  Vendor identification  Negotiations  Placing the order Allocation of Merchandise to stores Performance monitoring and evaluation
  59. 59. Store Design and Visual Merchandising
  60. 60. Elements of Store Design Exterior Store Design  The Store Marquee- The store marquee is the first ‘mark’ of identification of the retailer or the retail store. It helps the retailer in identifying and attracting customers  The Storefront Interior Store Design  Space Planning- It helps a retailer determine the amount of space available for selling and for storage. Space planning also includes  The location of various departments  The location of various products within the department (the creation of planograms) etc
  61. 61.  Atmospherics and Aesthetics  Fixtures are used for storing and displaying products. They may be floor fixtures or wall fixtures and are manufactured in various materials like wood, glass,steel etc  Flooring and ceilings  Lighting  Graphics and Signages The Layout- The layout of the store is the manner in which merchandise or products have been arranged in a retail store. It helps the movement of the customer within the store  Grid Layout  Race Track/Loop Layout  Freeform Layout
  62. 62. Grid Layout The Grid Layout is the one most commonly used in supermarkets and discount stores. While one area of display is along the walls of the store, the other merchandise is displayed in a parallel manner. It allows for movement within the area and uses space effectively. It is therefore a preferred layout in many retail stores that adopt self-service
  63. 63. The Grid Layout
  64. 64. The Race Track/Loop Layout As the name suggests, the display is in the form of a racetrack or a loop. It provides access to various shop-in-shops or departments within the store
  65. 65. The Race Track/Loop Layout
  66. 66. The Freeform Layout This type of layout allows free movement and is often used in retail stores to encourage people to browse and shop
  67. 67. The Freeform Layout
  68. 68. Types of Technologies used in Retailing In-store Technologies  Interactive Kiosks- These are computers with touch screen displays that provide shoppers with information about products in the store. With the help of these kiosks, customers can identify and select products without moving around the store  Virtual Display Case- A ‘virtual display case’ is a large screen projection video display and computer graphics system which shows images of shelves and the merchandise on them. It allows customers to scan and purchase items without going around the store. Here it is done with the help of 3D glasses and joystick
  69. 69. Interactive Kiosk
  70. 70.  Electronic Point-of-Sale Signage- Electronic POS signs are LCDs that show the names and prices of merchandise  Hand-held Shopping Assistant- It consists of a touch screen and barcode reader. As soon as the customer scan the barcode of the chosen product , the device provides them product information, usage suggestions and warranty information  Body Scanning Electronic Retailing
  71. 71.  Self-scanning and Self-checkout system- It is a hand-held bar code reader used by shoppers to scan and tally their purchases while shopping. The scanner displays the price of the chosen item. After shopping, the scanner prints out a ticket that the shopper can take to an express checkout counter.
  72. 72. Self-scanning and Self-checkout system
  73. 73. Virtual grocery store
  74. 74. HRM in Retail The Human Resource Function in retail involves  Identifying various roles in the organization  Recruiting and selecting the persons with the right attitude to fit the jobs  Training  Motivation of employees  Evaluation of employee performance
  75. 75. Tasks to be performed in a Retail Organization Buying and Merchandising Store Operations Management Administration and Legal Finance and Marketing and Accounts Promotion mix
  76. 76. Category Management Category- ‘A category is a distinct, manageable group of products or services that consumers perceive to be inter- related and /or substitutable’
  77. 77. The Reasons for the emergence of CategoryManagementConsumer Changes Information Technology Economic and Competitive Efficiency Pressures considerations
  78. 78. The Components of CategoryManagement Core Components  Strategy  Business Processes Enabling Components  Organizational capabilities  Information Technology  Performance measurement  Trading partner relationships
  79. 79. The Category Management Business Process
  80. 80. Category Definition Category Role Category AssessmentCategory strategy and TacticsCategory Plan Implementation Category Review
  81. 81.  Category Role- It determines the priority and the importance of various categories in the overall business Four Consumer Based Category Roles  Destination Categories- Here the retailer is the customer’s first choice for specific products. Destination categories are those that the retailer uses to help itself as the store of choice to the consumers by simply offering better value to the customer  Preferred/Routine Category- Here the retailer deals with products that consumers purchase as a matter of routine
  82. 82.  Occasional / Seasonal Category Convenience Category- These categories are those that the consumer finds convenient to pick up at a neighbourhood retailer, rather than visiting another retailer who may offer a wider selection