A brief overview to fmcg retail supermarket sector ppt

A Brief Overview About FMCG Indian Retail Supermarkets Sector
Presented By:
DL Vishnu Kumar
B. Tech || MBA || PGDMM
By DL Vishnu Kumar 1

S.No Topics Pg.No
1 Introduction to Retailing 3
2 Introduction to Retail Industry 4
3 Cyclical Theory - Wheel Of Retailing 5
4 Concept of Life Cycle in Retail 6
5 Different FMCG Trade Formats 7
6 Various Retail Formats 8
7 SWOT Analysis 9
8 Service Towards Customer Satisfaction 10
9 Promotion 10
10 Categories & Category Management 11
11 Private Label 12
12 Pilferage & Shrinkage Management 12
13 Pricing 13
14 Product Mix 14
15 Inventory Management 15
16 Types of Inventories 16
17 Principles Of Merchandising 17
18 Merchandising & Product Classification 18
19 19
19 Planograms 19
20 OTB(Open to Buy) 20
21 Battle for Shelf Space 21
22 Customer's Eye level to the Fixtures 22
23 Display Approach for Food & Groceries & General Merchandise 23
24 Modern Technology used in Retail Supermarket Sector 24
25 Types of Store Layouts 25
26 Retail Supermarket Employees Hierarchy Structure 26
27 Store Manager Responsibilities 27
28 The 5's of Retail Operations 27
29 Elements of Store Design 28
30 Signage 29
31 The most effective types of Retail Fixtures & Displays 30
32 Goods Distribution System for Super Markets 55
33 Warehousing in Supermarkets 56
34 Loyalty Programmes 57
35 Recommendations 57
36 Retail Glossary 58
37 Bibliography 65

Introduction to Retailing
“Retailing is a distinct, diverse and dynamic sector”. “It is an activity of enormous economic significance to most
developed nations”. It generates revenue and wealth for nation, encourages investments and brings technological
advancements. Stated that “it brings employment and creates wealth of the economy. It is a vibrant part of our
changing society and a major source of employment. Retailing performs activities at larger level so it requires
massive manpower to handle and manage its operations. Retailing also helps society in general by providing goods
and services in reasonable price and increasing their standards of living. “Retailing activity can be viewed as a
significant contributor to the economy in general”.
Retailing is the set of activities that markets products or services to final consumers for their own
personal or household use. It does this by organizing their availability on a relatively large scale and supplying them
to consumers on a relatively small scale.” Retailing makes products and services available in large quantities.
Retailers produce or order the products/services in bulk so they can take advantage of economy of scale and thus
they can formulate competitive pricing strategies. Products and services are generally sold through the store or onthey can formulate competitive pricing strategies. Products and services are generally sold through the store or on
the internet.
3By DL Vishnu Kumar

Introduction to Retail Industry
The first decade of modern retail in India has been characterized by a shift from traditional kirana shops
to new formats including department stores, specialty stores hypermarkets, and supermarkets and
across a range of categories. Modern retail formats have mushroomed in metros and mini-metros. In the
last few years, modern retail has also established its presence in the small cities, exposing residents to
shopping options like never before.
The various processes which help the customers to procure the desired merchandise from
the retail stores for their end use refer to retail management. Retail management includes all the steps
required to bring the customers into the store and fulfil their buying needs. Retail management makes
shopping a pleasurable experience and ensures the customers leave the store with a smile. In simpler
words, retail management helps customers shop without any difficulty.

Cyclical Theory – Wheel Of Retailing
The Wheel of Retailing theory states that the evolution process comprises three stages:
1. Entry Phase. 2. Trade-up Phase 3. Vulnerable Phase
This theory is diagrammed as a large wheel with three spokes dividing the wheel into three segments or stages.
1. Entry Phase:
• Starts with offering limited merchandise with low prices and retail organizations, as a strategy, have low margins in order
to increase penetration of the market.
• When these retail outlets are successful, others rival retailers rapidly imitate and
adapt those characteristics.
2. Trade-up Phase:
• As the store progresses in its growth, the organization enters the second stage, which is the trade-up stage where the
• As the store progresses in its growth, the organization enters the second stage, which is the trade-up stage where the
organization offers full services and a range of merchandise in full prices, without any discounts.
3. Vulnerable Phase:
• In the third stage, according to the Wheel of Retailing Theory, the wheel turns as the store matures in its growth and faces
more competition.

Concept of Life Cycle in Retail
• The concept of product life cycle as explained by Philip Kotler, is also applicable to retail organizations as they
pass through identifiable stages of:
1. Innovation
2. Development
3. Maturity
4. Decline.
• This is commonly termed as the Retail Life Cycle.
• The Retail Life cycle is a theory about the change through time of the retailing outlets.
• It is claimed that the retail institutions show ‘s-shaped' development through their economic life, that has been
classified into four main phases.
classified into four main phases.

Parameters General / Traditional Trade Modern Trade
Example
Small Retailers, Dealers, Stockists, Wholesalers,
Distributors, Kirana Shop, Open markets, Corner
stores, Kiosks, Street vendors.
Supermarket chains, Mini-markets, Hypermarkets, Category Killers,
Convenient Stores, Malls, Discount Stores, Department Stores,
Speciality Stores.
Demand Erratic or Seasonal Consistent (internal promotions)
Customer interaction
Interpersonal skills (from retailer's hand to the
customer's hand like B2C) and door to door field
marketing agents.
Customer can pick and choose the items and then proceed to check-
out(B2C). This gives the benefit of choice to the customer, where they
can evaluate multiple products side-by-side. Also includes selling to big
corporate houses(B2B).
Order placement Based on current stocks Strategically planned to meet promotional demands
Lead time Short – Direct Structured (pre-empted)
Product range Limited Huge
On-time deliveries Comparatively lower focus Comparatively higher focus
Order fulfilment time Can be accommodated at different times
Has to be specific to pre-decided time-slots (missing which might raise
a penalty on the distributor)
Different FMCG Trade Formats
Economies of scale Goods traded on MRP
Large Retailers can absorb cost and give promotional discounts to drive
purchases.
Credit cycle Short Long (customized)
Market Share 80-90% 10-20%
Product Ranges
Foodstuff, carbonated drinks, household items,
tobacco items, mobile recharges etc.
Packaged rice, liquid soaps, floor cleaners, breakfast cereals, air
fresheners, foodstuffs, carbonated drinks and household equipment,
cosmetics etc.
Market Place Infrastructure
Requires the presence of the local shop and display
of all items on sale
Can be conducted at anytime and anywhere in the world. Even when
the customer is flying over skies or inside moving trains & Online
Ecommerce businesses.
Sector Unorganised. Organised.
Aesthetics Simple & Normal Interiors. Modern, Creative & Design Interiors.
Trade Margin & Prices High Margin & Low Prices. Low Margin & High Prices.

Various Retail Formats
Supermarket: A self-service store offering a wide variety of food and household products. Store layout is organized into
aisles with fixtures of shelves used to display merchandise. The average supermarket has roughly 15,000 to 25,000 SKUs
in stock spread over 1,000 to 4,000 sq. metres.
Hypermarket/Supercentre: A large retail facility combination of supermarket and a department store. hypermarkets
allow customers to satisfy their routine shopping needs in one trip. Offering a wide range of products, including food
and household products as well as general merchandise. On average a hypermarket covers a floor space of 10,000 to
20,000 sq. metres, and stocks roughly 50,000 to 100,000 SKUs.
Minimarket/Superette: A small supermarket. Usually these stores have one or two check-out counters.
Discount stores: Hard discounters are characterized by very aggressive low price strategy, small assortment size (500 to
1,500 SKUs) comprising primarily private labels, in relatively small stores (300 to 1,000 sq. metres). Soft discounters1,500 SKUs) comprising primarily private labels, in relatively small stores (300 to 1,000 sq. metres). Soft discounters
primarily sells limited range of food and household products at low prices. These stores stock roughly 1,500 to 3,000
SKUs, and their floor space varies from 300 to 3,000 sq. metres.
Health and personal care store: Retail’s health and personal care products.
Convenience store: A shop with extended opening hours, stocking a limited range of food and household goods. It
stocks about 500 to 1,500 SKUs and is usually less than 300 sq. metres in size. Examples include 7-Eleven.
Category killers: Supplying wide assortment in a single category for lower prices a retailer can "kill" that category for
other retailers. sales person will be available to address customer queries and give suggestions when required
Warehouse store/warehouse club: A retail facility, which offers food, household products and some general
merchandise in bulk, at discounted prices. It offers a no-frills experience. The warehouse shelving is heavily stocked
with merchandise intended to move at a fast pace. On average it stocks about 4,000 SKUs. Unlike a warehouse club, a
warehouse store does not require membership or membership fees.

SWOT Analysis
Strengths:
•Better understanding of customers helping the company to serve them better.
•Vast range of products under one roof helping in attracting customer and their family to shop together and enjoy the
experience.
•Benefit of early entry into the retail industry.
•Diversified business operating all over India in various retail formats.
Weaknesses:
•High cost of operation due to large fixed costs.
•Very thin margin.
•High attrition rate of employee.
•Poor Crowd Management during high discounts period.
•Long queues at billing counter.
•Need to introduce multiple billing options for store billing during high discount periods.
•Need to introduce multiple billing options for store billing during high discount periods.
Opportunities
•Lot of potential in the rural market.
•Can enter into production of various products due to its
in depth understanding of customer’s taste and
preferences.
•Can expand the business in smaller cities as there is a
lot of opportunity.
Threats:
•High Business risk involved.
•Lot of competitors coming up to tap the market potential.
•Margin of business reducing all the time.

Service towards Customer Satisfaction
Supermarket’s service quality can be measured through the following five dimensions:
• Tangibles: What can be experienced from personnel, physical facilities and environment of the retail stores
Properly dressed, easily approachable staff & a reasonably large store area equipped with modern equipments & properly
displayed products.
• Reliability: Staff delivering the expected or promised service dependably and accurately
Here also it performs well by performing operations at designated time, changing & keeping correct records of customers
& not stacking any expired products.
• Responsiveness: Willingness of the company to help its customers in providing them with a good quality and fast service
Time to time schemes depending on the customer requirements, to generate enough demand for its products.
• Competence: Assurance of employees’ ability to convey trust and confidence through company and product knowledge
• Competence: Assurance of employees’ ability to convey trust and confidence through company and product knowledge
All the staff selected should be given proper induction and training program & also given information about company’s
business & other relevant information.
• Empathy: Demonstrated by providing a caring, individualized service performance for customers
Multiple trained store staff willing to help customers whenever they need.
•Above the Line(ATL) Promotion: TV advertisement, Internet advertisement, Partnering with media companies, FM radio
advertisements, Newspaper Advertisements, Banners & Posters etc.
•Below the Line(BTL) Promotion: Discount Coupons, Competition & Prizes, Exchange Offers, Money Back Offers, Novelty
Gifts for high value purchases, Special Occasion Purchases,
Promotion

Categories & Category Management
Categories are groups of products that meet similar needs. Departments are groups of categories that meet related
needs.
A broader need is met by a super category (e.g. hair care category), which essentially is a group of related categories
(e.g. shampoo, conditioner, hair colour). Categories comprise of sub-categories or segments (e.g. anti-dandruff
shampoos).
Category Management is the process of managing retail business that merchandise category outputs rather than the
contribution of individual brands or models.
It is also away for companies to buy more effectively and to save significant sums of money in procurement.
Category captain is the vendor who helps to develop a better understanding of shopping behaviour , create
Category captain is the vendor who helps to develop a better understanding of shopping behaviour , create
assortments that satisfy consumer needs of that area, improve profitability etc
Benefits of category management are as follows:
1. Manufacturers benefit from value added
relationship with retailers.
2. Improved shopping experience.
3. Maximise their return on inventory
investment.
4. Cost Reductions & Maximise Sales.

Private Labels
A private label product is manufactured by a contract or third-party manufacturer and sold under a retailer's brand
name. As the retailer, by specifying everything about the product – what goes in it, how it's packaged, what
the label looks like – and pay to have it produced and delivered to our warehouses.
Categories of private label brands:
•Premium private label
•Copycat brands
•Exclusive brands
•Generic brands
Significance of using private label:
•High Margin: The advertising and promotional costs are done away.
•Customer Loyalty
•Differentiation
•Differentiation
•Competitive Advantage
•Better Bargaining Power
•Control: Private labelling gives more control over pricing, marketing, sales & distribution.
•The store is finding a huge loss in the form of shrinkage.
•In spite of high security at the store, the stores find hard time in managing pilferage and shrinkage.
•The company ties up hard tag and soft tag in the product to reduce the shrinkage.
•The company’s has to come up with new strategy of manually counting each and every product of store every
quarter. This process is called Stock Take.
Pilferage & Shrinkage Management

Pricing
The pricing objective is to get “Maximum Market Share”. Pricing is based on the following techniques:
Value Pricing (EDLP – Every Day Low pricing): Offering consumers the lowest available price without coupon
clipping, waiting for discount promotions, or comparison shopping.
Promotional Pricing: Offering financing at low interest rate. The concept of psychological discounting (Rs. 99,
Rs. 49, etc.) is also used to attract customers. This also caters on Special Event Pricing (Close to Diwali, Gudi
Padva, and Durga Pooja).
Differentiated Pricing: Differentiated pricing i.e. difference in rate based on peak and non-peak hours or days
of shopping is also a pricing technique used in Indian retail, which is aggressively used by Big Bazaar.
e.g. Weekday Special Pricing.
Bundling: It refers to selling combo-packs and offering discount to customers. The combo-packs add value to
customer and lead to increased sales. Big Bazaar lays a lot of importance on bundling.
e.g. 3 Good Day family packs at Rs 60(Price of 1 pack = Rs 22) & 5kg oil + 5kg rice + 5kg sugar for Rs 599.
1st degree price discrimination: Charging the maximum possible price for each unit which enables the firm to
capture all available consumer surplus for itself.
2nd degree price discrimination: Charging a different price for different quantities, such as quantity discounts for
bulk purchases.
3rd degree price discrimination: Charging a different price to different groups of consumers for the same good.
These groups of consumers can be identified by particular characteristics such as age, sex, location, time of use.

Product Mix
Apparels
•Denims & T- Shirts
•Fabrics
•Formal Wear
•Casual Wear
•Party Wear
•Ethnic Wear
•Accessories
•Under Garments
•Night Wear
•Dress Materials
Home &
Personal Care
Foods Farm Products Chill Station
•Staples
•Ready to eat
•Ready to cook
•International
Food
•Spices
•Imported Bazaar
•Tea & Coffee
•Fruits
•Vegetables
•Imported Fruits
•Dairy Products
•Soft Drinks
•Packaged
Juices
•Milk Items
•Frozen Foods
•Ice creams
•Shampoos
•Detergents
•Soaps
•Liquid Wash
•Creams
•Deodorants
•Home cleaners
•Utensils
•Plastics
•Crockery
•Dress Materials
•Sarees
•Crockery
•Sundries
•Living Room
•Bed Room
•Kitchen
•Dinning Rooms
•Kids Room
•Been Bags
•Paintings
•Decorative
Items
•Beauty Care
•Artificial
Jewellery
Electronics
Fashion &
Jewellery
Furniture
Child Care &
ToysConfectionary
•Kids Wear
•Toys
•Stationary
•Child Care
• Television sets
•Washing Machines
• Refrigerator
• Personal Care
• Microwaves
• Small Appliances
• Laptops
• Computer
Accessories
• Kitchen
Appliances
•Bakery & Mini
Restaurant

Inventory Management
Inventory management is the practice of monitoring, controlling and coordination of the ordering, storage and use of
components that a company uses in the production of the goods it sells. A firm’s inventory is one of its major assets and
represents an investment that is wound up until the item sells.
Its objective depends on 5R’s: Effort should be made to place an order at the right time with right source to acquire the
right quantity at the right price and right quality.
The different types of inventory are as follows:
Convenience products are generally low priced ones and routine daily use items. They can be further divided into.
Staple goods/merchandise are purchased on a regular basis and will include most food and grocery items.
Impulse goods are purchased out of impulse without any prior plan before entering the store. The product itself, its
display, its packaging, and price are important elements in the sale of such merchandise.
Emergency goods are the items or merchandise that are needed due to certain emergency or unexpected need, and
needed immediately. For example, a pain reliever or a headache pills.
needed immediately. For example, a pain reliever or a headache pills.
Types of Inventory Management System
Inventory Management Systems are of two types:
a.) Periodic Inventory System:
The periodic inventory system measures the level of inventory using an
occasional physical and the cost of goods that are sold. Commodity
purchases are recorded in the purchase account. The cost of goods sold and
the inventory account are always updated at the end of a specific period.
b.) Perpetual Inventory System:
The perpetual system keeps continuous track of the inventory balances, by
making updates automatically whenever a product is sold or received.
Returns and purchases are recorded immediately in inventory account.

Types of Inventories
The inventory management for all the branches is that they adopt different methodology for different categories of
products.
1) Cycle inventory is carried for the FMCG product category and Food Category as the turnover of these products is high
and after a period they get expired.
2) Safety level inventory is adopted for Apparel as the cost of these products is high and they can be retained for longer
span.
3) Seasonal inventory is adopted for the products which are in demand for only peak season.
Normally Supermarkets generally deals in international, local brands along with private labels.
The Retail FMCG inventories can be further classified into:
Apparels & Foot wear: Formal & casual wears, fabrics, jeans & shirts, footwear etc.
Home Care: soap, detergents, cleaning agents
Chill station: beverages products, drinks.
Chill station: beverages products, drinks.
Farm Products: Fruits, vegetables, dairy products
Electronics: TV, Mobile, Accessories
Book zone: Magazines, news papers.
Home decorator: Bed sheets, pillow covers, carpets to kitchen utility items like steel utensils and crockery and other minor
utility items required in a house.
Furniture: All kinds of furniture.
Baby Care: Disposables.
Luggage's: School Backpacks, trolleys.
Toys & Stationary: All age group toys, Books & Pens & Pencils.
Perishable products like fruits and vegetables are handled with care and accuracy. They are purchased on regular basis as
per demand. Care is also taken that damaged and rotten vegetables are either rejected or sold at a lower cost to the local
market.
Imperishable products which are utensils, electronic items and staple goods are generally purchased from local
manufacturing units from different parts of countries..

Principles of Merchandising
•Breadth of Merchandise(narrow or wide). Also called as Variety. Like having one of every product category.
•Depth of Merchandise(deep or shallow). Also called as Assortment. Like having a vast array of possible options
for particular category.
•Quality of Merchandise (high to low).
•Local Brands & National Brands & Private Labels.
•Pricing policies or Attractive Promotion Offers.
A systematic approach that is aimed at maximising return on investment, through planning sales and
Inventory in order to increase profitability. It does this by maximising sales potential and minimising losses from
mark-downs and stock-outs.

Merchandising & Product Classification
The Merchandise Classification/ Hierarchy
Product Classification/Categorization Based on
Consumer Need

Planograms
•They are visual representations of a store's products or services on display.
•They are considered a tool for visual merchandising.
•A planogram will show you exactly:
1. The overall store layout
2. The details on the placement of every product in the store
3. The aisle and shelf each product should be located
4. The number of facings allocated for each SKU
•Other terms and abbreviations for a Planogram(POG) include:
1. Shelf space plan1. Shelf space plan
2. Space plan
3. Schematics
• Benefits of Planograms:
1. Maximise Sales.
2. Maximise Space.
3. Maximise Productivity.
•Planograms can be done by:
1. Planogrammer.
2. Planogram Softwares.
3. Planogram Experts.

OTB(Open-to-buy)
•Open-to-buy (OTB) is a planning tool that works with retail business. It's the amount of merchandise a retail store
can buy during a certain time period.
•An open-to-buy plan is a purchasing budget for future inventory orders that a retailer creates for a specific period.
•An OTB plan helps a retailer stock the right amount of the right products at the right time by showing the difference
between how much inventory is needed and how much is available.
•The buying function may be centralized or decentralized geographically depending on the retail organization.
•OTB Formula:
Planned Sales + Planned Markdowns + Planned end of month inventory – Planned beginning of month inventory.
Planned Sales + Planned Markdowns + Planned end of month inventory – Planned beginning of month inventory.
•OTB can be calculated in either quantity units or dollars.
•Buying Cycle:

Battle for Shelf Space
•The battle for shelf space stems from the relationship between:
1. Share of space
2. Share of sales.
•An expanded a brand’s range on the shelf, means to offer consumers greater choice.
•A brand usually gets more facings to accommodate the additional items.
•More space = Greater visibility = Gaining market share.
•At the same time the incremental shelf space must be relinquished by other brands.
•Each item in a brand’s range must earn its place on the shelf. If it fails to do so:
1. Decrease in retailer’s and the manufacturer’s margins.
1. Decrease in retailer’s and the manufacturer’s margins.
2. Poor reflection on the brand and the manufacturer image.
3. Brand getting de-listed.
Most of the suppliers are required to pay slotting fee in order to get their products stocked on shelves.

Customer’s Eye Level to the Fixtures
•Considering a consumer’s height and physical sign of sight
and vision is an important step in the retail display design
process.
•A person’s height determines the angle at which they see
the products on display, and so your product displays and
store signs should target those optimal angles.
•The average heights are as follows:
Adult Females: 5’ 4”
Adult Males: 5’ 9”
10-Year-Old Boy/Girl: 4’ 7”

Display Approach For Food & Groceries & General Merchandise
1. Category: To be divided into departments and segregated as per their broad categories like fresh fruits,
vegetables, packed or processed foods, laundry and detergents, cleaning supplies.
2. Sub Category: Within a given category, needs to be segregated and displayed together. For example: fabric
softeners, machine powder, etc. are treated as sub categories within the fabric care category. Similarly, soft drinks,
hot beverages like tea and coffee, energy drinks, etc. fall in the main category of beverages.
3. Profit Margins and Sales: Important in analyzing display approach for each product. This will help determine how
and where these products need to be display. Brand with highest selling product in a category
is displayed at extreme left and moving right with decreasing sales.
4. Pricing: The product flow can either be high to low from left to right or vice a versa depending on the aisle flow
and store display strategy decided. Important space distribution i.e. how many product should be stocked per store
and where, that is which products should be placed to the right and left of each product to make practical and
profitable sense.
profitable sense.
5. Size: Usually the smaller sized package of a product is place on the left while its larger size variant is place on its
right. This placement is determined by the fact that most shoppers are right handed and are more likely to pick up a
product they want from the right of the display.
6. Color: While displaying products that have similar product packaging color like jam may be displayed as per color
where similar colors are broken up and divided with a product or package which has a different color.
7. Promotions/Offers: Special offers and promotions need to be assigned a district place in the store there for it is to
be visible to its target audience. Promotional end caps can be assigned. Special promotional visual material like
posters, runners, header cards, etc. need to be designed, printed and distributed to the store before the promotion
period starts.
8. Product Expiry: While stacking the products on the shelves make sure to place the new product i.e. product with
a later expiry date at the end and the product that have a closer on at the front.

Modern Technology used in Retail Supermarkets Sector
An EPOS system is one in which a
UPC/Barcode is read by a laser scanner
connected to a computer. On scanning a
product, the computer records the sold
items and displays the price of the
products to the customer. Eventually, an
itemised bill is generated and given to the
customer as the receipt.

Types of Store Layouts
Grid Layout:
Race track/Loop Layout:
Freeform Layout:
Freeform Layout:

Retail Supermarket Employees Hierarchy Structure

Store Manager Responsibilities
•Recruiting and training employees
•Merchandising Display
•Compliance/ adherence to all legalities
•Improving sales by customer satisfaction
•Monitoring stock levels
•Build and maintain store brand image
•Other responsibilities like, cleanliness, proper order, signage, etc
•Reducing Shrinkage and Pilferage.
The 5 S’s of Retail Operations

Elements of Store Design

Signage
•Any visual representation which gives information to the customers about a store, any office building, street, park is called
a signage.
•Signage helps the customers to easily reach their desired destination or locate a building by simply following the
instructions displayed on it.
•A customer can easily locate the store with the help of a signage. It is the sign board which actually attracts the customers
into the store.
•Sign board gives all necessary information about the store.
•The sign boards are an effective medium of communication between the retailer and the customer.
•A signage goes along way in influencing the customer’s buying decision
•Types of signage:
1. Category Signage. 2. Promotional Signage. 3. Digital Signage.
.

The Most Effective Types of Retail Fixtures & Displays
A retail display is anything in a store that houses or promotes your product, as they are often the
first point of contact between your product and the shopper. They are as follows:
Dump Bins:

Freestanding Displays:

Wall fixtures:

Entryway Displays:

Gondola Displays:

Display Cases:

Window Displays:

Banner Stands:

End Cap Displays:

Grocery Bins:

Shelf Talkers:

Clip Strips:

Data strip:

Side Talkers:

A4/A3 Frames:

Offer Jackets:

180 Degree Magnet:
90 Degree Magnet:

Danglers:

Wobblers:

Header Boards:

Shelf Flags:

Category Dividers/Banners:

Floor Graphics:

Table Displays:

Open Multideck Chillers:

Goods Distribution System for Supermarkets
Super Market 1
Super Market 2
Super Market 3
Super Market 1
Super Market 2

Warehousing in Supermarkets

Loyalty Programmes
• A high performance retail stores brings in increased sales as well as improved customer loyalty.
•Retail Companies believe in building long-lasting relationships with customers.
•Encouraging repeat customer visits through our unique offers and special sale days.
•Taking the whole concept of customer loyalty to the next level by joining hands with PAYBACK.
•PAYBACK is world’s largest and most successful multi-partner loyalty programs.
•With PAYBACK, customers can shop, save and get rewarded.
•This program enables consumers to collect millions of points across online and offline partners – with just a single card.
Recommendations
•Needs to increase more Customer Loyalty programs and schemes.
•Better Crowd Management. Needs to arrange good vehicle parking space during promotion periods.
•Improve Customer Experience thru better store personnel training and good appearance.
•Prevent Stock outs after promotional schemes.
• Increase Numbers of Cold Storages inside the Supermarket for holding frozen goods stock.
•Customers can accumulate points across retail chain formats, thereby making “shopping rewarding”.
•Single company retail chains can have PAYBACK Loyalty program.

RETAIL GLOSSARY
ARS: Auto Replenishment System is the functionality in Replenish Management System(RMS) which calculates the
Recommended Order Quantity (ROQ) based on the replenishment settings done in RMS
ASPD: Average Sales Per Day is the average of the quantity sold in a day during the stipulated time period.
ATS: Available To Sell means a product is in good condition meeting all the necessary standards for sale of it to a
consumer.
Average Cost: This is the moving weighted average of unit cost captured at SKU location level.
Average Holding Inventory: It is the average stock value held for particular times. It is used for inventory turnover and
return on investment calculation.
Barcode: Barcode is a scanner readable code in the form of a pattern of lines with varying width that is printed on a
product. This displays the UPC of the product at the POS upon scanning to register the sales against the respective
product.
Book Stock: This is the stock on hand held in the system at a given point in time. Book stock is use in inventory
analysis and variance calculations.analysis and variance calculations.
Carton Pack Size: It is the quantity of a single SKU that can be accommodated in one case that is supplied by the
supplier. Purchase Orders are by default placed in carton pack size. This is also known as supplier pack size.
Cash Float: A float is a small amount given by the head cashier to a cashier while allocating the POS Till during the
opening of the shift. This is given in multiples of smaller currency in order to return change to customers at the time
purchase. The amount it returned to the head cashier during end of shift.
Customer Conversion Rate: It is the percentage of customers who have actually bought a retailer’s product or service
when compared to the total footfall/Walk-in for the stipulated time period.
CRM: Customer Relationship Management deals with the policies defined by an organisation to communicate with its
existing customers and future potential customers. It covers areas of ERP, Customer Service Desk, POS, loyalty
programme, marketing, data integration, customer data analysis, analytics and digitalisation.
Customer Return /Sales Return: This is the process wherein a customer returns the purchased product to the retailer
due to dissatisfaction, damages or product quality.

Cycle Count: These are short span perpetual inventory checks done at store and warehouse locations for high value
shrinkage SKUs, in order to identify the root cause for loss of inventory. Cycle counts are also done at warehouse on
regular basis to do health check for internal storage locations to avoid hurdles caused while picking due to incorrect
inventory.
Data Cleansing: Data cleansing is an activity done at short term intervals by technical support team to comb the data in
the database by validating table relations and accuracy of the data present.
DSR: Daily Sales Report is generated as part of EOD activity at stores. It is generated in order to reconcile tenders and cash
collected during the day and compared it against the system generated report. Short in cash collected or card swipes are
identified.
EOD: End of Day is the process which involves closure of POS tills and generation of sales report along with sales log file
for the day from back office system. This marks the end of all the transaction at store for the day. Post this activity
completion, any new transaction can be done in the next business date only.
GMROI: Gross Margin Return on Investment ratio helps retailer to know what level of returns can be obtained upon the
RETAIL GLOSSARY
GMROI: Gross Margin Return on Investment ratio helps retailer to know what level of returns can be obtained upon the
investment made for a stipulated time period. In simple terms it helps us understand the performance of a category/ item
with respect to gross sales margins.
GMROS: Gross Margin Return on Selling Area ratio explains the gross margin made by the product upon the selling area
allocated for the product. This is used by retailers to find the gross margin per square feet in the selling area and take
decision on expansion of selling area or reduce the selling area or discontinue the product all together.
GRN: Goods Received Note is the document created when a Purchase Order is received at the branch or warehouse.
Gross Sale: This is sum of the total amount paid by a customer to a retailer for the service enjoyed or a product
purchased. This is used for reconciliation of tenders in Daily Sales Report during End Of Day Process.
Help Desk: A system (application, people and process) put in to place to provide support and resolve issues and concerns
raised by IT and Business users within an organisation. This acts both as a bridge and a repository for communications
between Business, IT Department and support team.

Inner Pack Size: It is the break pack size of a supplier case i.e. how many quantities of an SKU are present within the
break pack of a supplier case.
Inventory Turnover: It represents the number of times a retailer rotates his inventory during the considered time
period. This is used to know how efficiently inventory is handled within the organisation.
IPO: Import Purchase Orders is the document released to a supplier from another country for supply of goods for a
requested quantity within the stipulated time period.
KPI: Key Performance Indicators are metrics used by a retail organisation to evaluate the performance in respective
area of interest. KPI differ from organisation to organisation. A few examples are Sales metrics, Customer loyalty
metrics, Vendor Performance Metrics, Inventory Metrics
KRA: Key Responsibility Areas are general outputs or responsibilities that are given to a particular team or role. The
performance of the team member or head is measured based on the fulfilment of his KRAs.
LPO: Local Purchase Order is the document released to a supplier for supply of goods for a requested quantity within
the stipulated time period.
RETAIL GLOSSARY
the stipulated time period.
Master Data Management: It is the approach taken by the retailer to manage the masters related to SKUs, Barcodes,
Suppliers, taxations, locations, SKU – supplier and SKU – Location mapping, etc. As a best practice retailers form a
Central Data Management team to centrally control all data related to master data changes to ensure better control
and reduce human error.
Maximum Book Quantity: This is the maximum stock expected to be maintained an SKU at a location at any given
point in time to meet the projected demand. This is used as a check for over ordering; thereby ensuring LPO is not be
raised for quantity beyond this point. In general referred to as MBQ along on with minimum book quantity.
Minimum Book Quantity: This is the minimum stock expected to be maintained for a SKU at a location at any given
point in time to meet the projected demand. This is usually set as the reorder point for the SKU and when the stock
levels hit this point, new LPO is raised to meet the maximum book quantity. In general referred to as MBQ along on
with maximum book quantity.
Net Sale: This is the sales made by a retailer excluding the VAT amount. Scan margin is calculated from Net Sales and
not from Gross sales.

RETAIL GLOSSARY
Non-Trading Item: These are inventory SKUs for which stock in maintained but are not sellable at POS. These include
stationary, packing material, carry bags, etc. that are bought for internal use and packaging purpose. There is no direct
revenue generated from these SKUs.
Pallet Size: It is the quantity of SKUs that can be stacked in a pallet. This is calculated by as (TI X HI) where in TI is the
number of cases that make up one tier of a pallet and HI is the number of tiers that make up one pallet vertically.
Perpetual Inventory: This is a method of tracking sales and purchases of an SKU in the system in near real time.
Petty Cash: An easily accessible amount of cash given on regular intervals to the profit centres in a retail organization for
purchase of low value non trading items and to accommodate small expenses related to repair and maintenance. A
report on usage of the fund it given by the profit centre to the head office based on which funds are reimbursed.
Pickup Lead Time: Time taken for transfer of goods from the supplier’s dispatch location to the retailer’s warehouse or
store. This is added to the supplier lead time to arrive at the total time taken for supply of goods from the date of order
approval.
POQ: Prescaled Order Quantity is the final order quantity that is requested from the supplier based on the supplier packPOQ: Prescaled Order Quantity is the final order quantity that is requested from the supplier based on the supplier pack
size. This is the nearest rounding off of the ROQ based on supplier pack size and rounding off threshold set in the system.
POS: Point of Sales is a till at the branch where payment transactions related to sale or return of Goods. It is the place
when the customer pays the retailer for the product or service offered.
Rate of Sale: This is the rate at which sale has increased or decreased in the current period compared to a similar period
in the past.
ROQ: Recommended Order Quantity is the requirement for goods placed by the branch or warehouse to the
procurement team. This can be system generated through ARS based on SOH and MBQ set or manually calculated.
RPM: Retail Price Management is used to manage pricing for products sold by a retailer. Promotions, clearance and
regular price changes at product level are done through this module. This publishes the information of price changes
made to POS through interface and batch programs.

RETAIL GLOSSARY
RTV: Return to Vendor is the document created to assist to return of goods back to supplier due to various reasons
such as damaged, non-selling, etc. A credit note is given by the supplier as a receipt of acceptance of the document.
Scan Margin: It is the margin made by a retailer by selling a product or service to a customer. This is arrived from
Net Sale i.e. Sales value after Tax in order to eliminate the VAT or other tax factor which are to be paid to the
government.
Selling Unit Retail: It is the price at which a retailer sells a product or service to a customer.
SKU: Stock Keeping Unit is the level of the SKU at which stock in maintained in the system. SKU is also called as Item
in retail.
SOD: Start of Day involves the process of download of master data and price change data into store Back Office and
Point of Sale. This also involves the process of float cash distribution and opening of POS tills for business
transactions.
SOH: This stands for Stock On Hand. In retail operations this refers to the physical stock for an SKU at a particular
location. In RMS this also refers to the book quantity for an SKU at the respective location.location. In RMS this also refers to the book quantity for an SKU at the respective location.
SOP: Standard Operating Procedures are documents explaining the steps to be followed in various operating areas
within an organization such as Operations, Environment, Service, Inventory management, Visual Merchandising,
etc. This is done in order to maintain discipline uniformity and quality standards within the organization.
SPF: Sales Per Square Foot/ Sales Per Footage is a retail calculation made to calculate the sales made per square
feet sales area. This will give us the efficiency of the store sales team.
Stock Audit: These are periodic perpetual inventory checks done at a branch or warehouse location to reconcile the
physical inventory with book stock and arrive at the shrinkage/variance. The variance is taken against the sales for
the time period to arrive at the variance percentage. This will give a good picture on loss in margin to the retailer
due to variance/shrinkage.
Warehouse: A location where products are stored and distributed centrally for a particular catchment area serviced
by the warehouse. In general warehouses are treated as cost centre in a retail organisation.
Variance/Shrinkage: These are quantities identified as Loss in book quantity while doing a cycle count or a stock
audit.

RETAIL GLOSSARY
Stock Holding Days: Based on the current SOH and the ASPD, a merchandiser can determine the number of days it
would take for the existing inventory to be exhausted. This is used as an input parameter to arrive at the
recommended order quantity in manual calculations and also in pricing strategy to liquidate non selling SKUs
through discounts.
Store Order Multiple: It defines the multiples of quantity that the store can request from the warehouses. It can be
set as Each, Inner or Cases, so the store’s ROQ and transfer requests are placed as per inner size and case size
defined.
Supplier Lead Time: Time taken from the date an order is released to the supplier to the date when the supplier
readies the stock for dispatch. This is added to the pickup lead time to arrive at the total time taken for supply of
goods from the date of order approval.
Tare weight: Tare weight or Tare in the weight of the empty container that holds the products. By subtracting the
tare weight from the gross weight, we can obtain the net weight of the goods carried in the container
Unit Cost: This is the cost price at which a product is purchased by the retailer from a supplier. This is alwaysUnit Cost: This is the cost price at which a product is purchased by the retailer from a supplier. This is always
excluding the vat rate. This can also be expressed as the net selling retail (net sale) the supplier charges for sale of
goods to the retailer.
UTS: Unavailable To Sell means a product is not in a good condition or does not meet the necessary standards for
sale to a consumer. Such products are returned back to the supplier or written off from the book quantity and
scrapped.
WMS: Warehouse Management System is the ERP module that facilitates users to manage Warehouse inventory,
perform complicated warehouse tasks with ease and receiving/shipping of goods based on requests created in RMS.
Omni Channel: Omni Channel is a means of providing the customer with a seamless shopping experience whether
they shop online or through mobile app or telephone or brick and mortar. Omni channel presence is a big advantage
to a retailer because it increase market reach and sustaining customer base by giving them convenient modes of
shopping.

RETAIL GLOSSARY
Base: The bottom flat part of each gondola section.
Category: Refers to the section in the store; for example Hardware, School Supplies, Cosmetics, etc.
Cut In: When a new product is introduced, the manufacturer usually likes to “cut-in” the new product into the existing
planogram via a revision or update.
Display: An entire gondola side, counter, category set complete with product and point of purchase materials.
Divider: Used along with fencing to separate product on the shelves.
End Cap: A 3 or 4 foot section located at the end of a gondola used to merchandise seasonal, temporary or promotional
product.
Facing: The number of times a product is merchandised on the shelf or peg hook. Some better selling products have
more than one facing.
Gondola: A type of free-standing shelving unit where products are merchandised.
Slotting fees: A lump sum paid to a retailer by suppliers to have their products featured on its store shelves and stored
in its warehouse. This fee also covers the cost to enter product data in the retailer’s inventory system and to program its
in its warehouse. This fee also covers the cost to enter product data in the retailer’s inventory system and to program its
computers to recognize the product’s unique barcode. The term is synonymous with “slotting allowance”. Slotting fees
are not the same as pay-to-stay, promotional, stocking, and failure fees. Each of these are separate costs that can be
incurred by a supplier as a result of being granted retail shelf space.

Bibliography
Essentials of Modern Retail Management by Max Muller
Inventory Accuracy by David J. Piasacki
https://www.academia.edu/7108307/RETAIL_MANAGEMENT_Introd
uction_to_Retail_Industry
http://www.inc.com/encyclopedia/store-management.html
http://www.capterra.com/warehouse-management-software/
https://www.tradegecko.com/product-tour/planogram.html
https://www.asapsystems.com/inventory-management-system.php
http://searchmanufacturingerp.techtarget.com/definition/Inventory-management
https://www.asapsystems.com/inventory-management-system.php
http://searchmanufacturingerp.techtarget.com/definition/Inventory-management
http://www.cmu.edu/visualmerchandising-systems/
https://www.microsoft.com/en-us/dynamics/what-is-erp.aspx
http://www.netsuite.com/portal/products/netsuite/erp.shtml

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