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321 37 solutions-case-studies_chapter-1-retailing-role-relevance-trends
 

321 37 solutions-case-studies_chapter-1-retailing-role-relevance-trends

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    321 37 solutions-case-studies_chapter-1-retailing-role-relevance-trends 321 37 solutions-case-studies_chapter-1-retailing-role-relevance-trends Document Transcript

    • Retail Management, 2/E Bajaj, Tuli & Srivastava CHAPTER 1 RETAILING: ROLE, RELEVANCE AND TRENDSSolution to Case Studies:1. Identify the nature of structural changes experienced by the entire value chain for perishable products.Perishable products value chain has gone through a process of restructuring havingconsiderable impact from food retailing format. Stable food prices, slowing growth in at-home food spending, and the increasing share of the food dollar spent in foodserviceChannels, and the growth of food sales by non-traditional retailers, including on-lineshopping options, have heightened competition among grocery retailers. Many foodretailers have opted to merge, citing cost savings and efficiency gains in order to bettercompete.2. Analyze the factors that contributed to structural changes in the value chain forperishable products.Factors that contributed to structural changes in the value chain for perishable productsare- Entry of new foreign competitors, played by new rules, Fresh produce is treated by them as other food commodities with more stable pricing and volume New competitors are mass merchandisers introducing supply chain management, a procurement model designed to streamline the distribution system by eliminating non value-adding transaction costs. While procuring new companies relay on private label.3. Analyze the response of the traditional retailers to meet the consolidation effort atvarious levels of value chain.Retailers expect greater efficiencies in the procurement of many products, includingproduce as a result of mergers. By purchasing more volume, retailers hope to lower theper-unit cost of goods by negotiating lower prices. In return, retailers may developpartnerships with preferred suppliers, concentrating volumes with these firms,potentially benefiting suppliers with more predictable firm level demand. Whendemand and supply are more closely coordinated buyers and sellers can work togetherto stimulate sales, and achieve more consistent volumes and quality.4. What kind of benefits retailers foresees through the vertical consolidation in theperishable food chain?Retailers expect greater efficiencies in the procurement of many products, includingproduce as a result of mergers. By purchasing more volume, retailers hope to lower theper-unit cost of goods by negotiating lower prices. In return, retailers may develop Copyright © Oxford University Press, 2010
    • Retail Management, 2/E Bajaj, Tuli & Srivastavapartnerships with preferred suppliers, concentrating volumes with these firms,potentially benefiting suppliers with more predictable firm level demand. Whendemand and supply are more closely coordinated buyers and sellers can work togetherto stimulate sales, and achieve more consistent volumes and quality. On the other hand,as price takers in a low margin business many shippers feel that they have little ability toabsorb lower fob prices, reporting that volume discounts are not cost-justified forcommodity-based fresh produce shippers (as opposed to shippers of value-addedproduce like packaged salads).Retailers also expect reduced marketing and selling costs as a result of relationshipswith preferred suppliers. Suppliers and distributors are being asked to help retailerswith the design and provision of category management, effective design of promotions,promotional allowances, and special packaging. To make this type of marketing supportfunction effectively retailers should share sales data with suppliers in order to betterevaluate promotions, seasonal effects, price responses, and other characteristics ofconsumer demand. However, to date it is mainly the mass merchandisers thataggressively share information with shippers, reducing the effectiveness of supply chainmanagement in conventional retail channels. Clearly, firms on both sides of the retail-shipper interface are still in the initial phases of capturing the potential benefits ofpartnering.Retailers expect greater efficiencies in the procurement of many products, includingproduce as a result of mergers. By purchasing more volume, retailers hope to lower theper-unit cost of goods by negotiating lower prices. In return, retailers may developpartnerships with preferred suppliers, concentrating volumes with these firms,potentially benefiting suppliers with more predictable firm level demand. Whendemand and supply are more closely coordinated buyers and sellers can work togetherto stimulate sales, and achieve more consistent volumes and quality. On the other hand,as price takers in a low margin business many shippers feel that they have little ability toabsorb lower fob prices, reporting that volume discounts are not cost-justified forcommodity-based fresh produce shippers (as opposed to shippers of value-addedproduce like packaged salads).Retailers also expect reduced marketing and selling costs as a result of relationshipswith preferred suppliers. Suppliers and distributors are being asked to help retailerswith the design and provision of category management, effective design of promotions,promotional allowances, and special packaging. To make this type of marketing supportfunction effectively retailers should share sales data with suppliers in order to betterevaluate promotions, seasonal effects, price responses, and other characteristics ofconsumer demand. However, to date it is mainly the mass merchandisers thataggressively share information with shippers, reducing the effectiveness of supply chainmanagement in conventional retail channels. Clearly, firms on both sides of the retail-shipper interface are still in the initial phases of capturing the potential benefits ofpartnering. Copyright © Oxford University Press, 2010