RETAIL MANAGEMENT UNIT - IV

PREPARED BY
S. SYED MUTHALIFF., M.B.A., M.Phil.,

VISUAL MERCHANDISE Visual Merchandising can be can be defined as the orderly, systematic, logical and intelligent way of putting stocks on the floor. Thus the role that VM plays can be listed as below : 1) The primary purpose is to enable sales of the product/ service sold by the retailer. 2) To inform and educate the customer about the product / service in the store. 3) To enable easy of shopping for the consumer, by informing about colours, sizes, prices and the basic location of the product. 4) Creating and enhancing the stores image.

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TOOLS USED FOR VISUAL MERCHANDISE All the elements of the store can play a role when it comes to create a visual impact on the consumer. Apart from using the products to make a visual impact on the consumers, some of the commonly used ones are : Colours & textures Fixtures and merchandise presentation Signages Windows Props Lighting Mannequins Colour & texture : Colour increases brand recognition by up to 80%. Colour improves readership as much as 40%. Colour accelerates learning from 55 to 78%. Colour increases comprehension by 73%. Colour advertisement are read up to 42% more than similar

Ones in black and white. Colours can be up to 85% of the reason people decide to buy. Texture deals with the look and feel of materials. Visual texture is the result of light refracted from any surface. Textile texture can be rough, smooth, thick, sandy, soft, hard, fine, regular and irregular. Mannequins : The word mannequin, comes from the Dutch word manneken, literally meaning little man. Mannequin is the French form. Mannequins are typically used in a retail store environment to display the merchandise. There are many types of mannequins available, the most commonly type is the lifestyle mannequin. This mannequins are the same size as a real person and have arms, legs, hands, feet, and a head. Most of them can be posed in different position to give them a more lifelike look. Mannequins can look like male, females or children. Other mannequins consist of only a torso on a stand.

The Plano gram : A plano gram is a tool used by the retailer that helps determine the location of merchandise within a department. It is a diagram that visually communicates how merchandise and props physically fit into a store fixture or window to allow for proper visibility and price point options. A plano gram is created after taking into account factors like product sales, the movement of the products within the product category and the space required for various products. They usually list the exact number of square feet used for various products and the exact number of products to be displayed in a particular area. METHODS OF DISPLAY : Retailers, while displaying their products may adopt various methods. The chief among them are : 1. Colour Dominance : This is the simplest and the most directed method of presenting merchandise. In such a display merchandise is primarily displayed by colour. Within the colour display, the product may

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Be displayed by size and style. Co ordinated presentation : Many a times, it is effective to present merchandise in a coordinated manner. Presentation by coordinated may be done for garments, and it can done for home fashions, bed and bath linens and even kitchen requisites. Presentation by price : In such a display, the inexpensive, bargain or sale merchandise is displayed first. The volume of the product and the saving is dominant.

While displaying similar items in various sizes, it is advisable to place the small size of the products on the left, and the larger size on the right. As most customers are right handed, they tend to unconsciously reach for the items closest to the right hand.

COMMON ERRORS IN CREATING THE DISPLAY : Many errors made in display can be easily avoided. Some of the most common errors include the following. Clutter : Too much of merchandise in one place always creates a cluttered look and may actually turn a person away from the merchandise rather than attract him. Lack of underlying theme : The display created is often not linked to the message that the retailer wants to convey to the customer. The customer should be able to understand the concept presented by looking at the display in a few seconds. Too many props : There is no specific rule that stipulates the number of props appearing in a display. However, the error of over propping a display can be more serious than using too few props. The type and number of props are dependent on the merchandise.

Dirty floors : Unclean floors reflect the attitude on the part of the store management and implies a basic disregard for the customer. Poor Lighting : The over use or under use of lighting can take away from the overall look of the store and the merchandise.

SPACE MANAGEMENT The space within stores and on the stores shelves and fixtures is a scare resources. Space management involves two dimensions I) The allocation of store space to merchandise categories and brands II) The location of departments or merchandise categories in the store. I) Space allocated to merchandise categories : Some factors that retailers consider when deciding how much floor or shelf space to allocate to merchandise categories and brands are a) Productivity of allocating space b) The merchandises inventory turnover c) impact on store sales d) The display needs for the merchandise.

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Space Productivity : A simple rule of thumb for allocating space is to allocate on the basis of the merchandises sales. retailers should allocate space to a merchandise category on the basis of its effect on the profitability of the entire store. Inventory turnover : Inventory turnover affects space allocations in two ways. * First, the merchandise categories with higher inventory turnover merit more space than merchandise categories with lower inventory turnover. * Second, more space needs to be allocated to fast selling merchandise to minimize the need to frequently restock the shelf to reduce stock outs. Impact on store sales : When allocating space to merchandise categories retailers need to consider the allocation impact on the entire store. The objectives of space management is to maximize the profitability

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Of the store, not just a particular merchandise category or departments. Display consideration : The physical limitations of the store and its fixtures affect space allocation. Location of merchandise categories and design elements : The store layout, signage, and feature areas can guide customers through the store. The location of merchandise categories also plays a role in how customers navigate through the store. Introductory displays, including graphics, typically welcome and educate customers as they enter the store. The entry area is often referred to as the decompression zone because customers are making an adjustment to the new environment, taking off their sunglasses, closing their umbrellas, and developing a visual impression of the entire store.

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Once customers pass through the decompression zone, they often turn right and observe the prices and quality of the first items they encounter. This area, referred to as the strike zone, is critical because it creates the customers first impression of the stores offering. Thus, retailers should display some of their most compelling merchandise in the strike zone. After passing through the strike zone, the most heavily trafficked and viewed area is the right hand side of the store. At this point in the journey through the store, customers have become accustomed to the environment, developed a first impression and are ready to make purchase decisions. Thus the right hand side is the prime area for displaying merchandise. Some additional implication of store design are : Impulse Merchandise : Impulse products are or products that are purchased without prior plans, like fragrances and cosmetics in department stores and magazines in supermarkets are almost located near the front of the store, where theyre seen by everyone and may draw people into the store.

Demand Merchandise :- Demand merchandise and promotional merchandise are often placed in the back, left hand corner of the store. Placing high demand merchandise in this location pulls customers through the store, increasing the viability of other products along the way. Special Merchandise : Some merchandise categories involve a buying process that is best accomplished in a lightly trafficked area. (e.g) Glass sculptures are unique, expensive art pieces that require thought and concentration for their purchases decision. Thus, locates their merchandise in a lightly trafficked area to minimize the distraction of customers who purchase. Adjacencies : Retailers often cluster complementary products together to facilitate multiple purchases. (e.g) Mens dress shirts and ties will be located next to each other.

KEY ROLES IN A STORE ENVIRONMENT The responsibilities of a store manager, they would include. 1) Customer Service : Instill in the employees the meaning and importance of customer service as outlined in the retail philosophy. Promote and monitor quality of service among staff through training and by acting as a positive model. Be personally available to all customers to communicate and identify their needs and address their questions or concerns. 2) Budgeting and planning : Ensure that goals will be met through appropriate planning and organization of staff inventory and expenses for short and long term success. Develop and monitor the capital expenses budget to ensure that the store is properly maintained and upgraded to meet the light maintenance standards that reflect the store image. Monitor a loss prevention programme to protect the company's inventory and assets.

3) Personnel : Hire the right people for the job Inspire employees so that each person contribution of the store Delegate work load appropriate and effectively Write performance evaluations and goal assessments on the assistant store manager With the assistant store manager, evaluate all store employees When necessary discipline employees consistent with the company disciplinary policies 4) Communication : Communicate with the regional / HO as per the requirements laid down by the organization with reference to sales, targets, customer service, events and local issues. Hold staff meetings to boost employees morale and drive for achieving the results needed. Ensure that company policy and procedures are communicated in a timely manner and adhered to accordingly.

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Motivate and develop staff in order to encourage their professional development. Legal compliance : Ensure that the store is in compliance with all employment laws, including wage and hour human rights and equal employment opportunities. Maintain safe working conditions for employees and customers, Resolve safety concerns quickly Ensure store security from internal and external theft and know the proper apprehension and prosecution procedures.

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KEY COMPONENTS OF RETAIL OPERATIONS Store Administration and management of the premises Managing Inventory and display Managing Receipts Customer Service Managing Promotions, events, alliances and partnerships Store Administration and management of the premises: Managing of the premises ; * Firstly, the duration of the business need to be determined. It is also necessary to specify with whom the responsibility of opening and closing the store lies. some conditions that need to have taken into account while determining the business hours are the target audience for the stores and the kind of products that are to be retailed. * Second factor, which effects the working hours of a retail store, is the store location. A free standing store can operate at hours

That it chooses to, while a store which is a part of a shopping centre or mall will need to follow the hours decided by the management of the mall. * Security of the store premises and of the merchandise in the store is equally important. The size of the store and the level of operation determine the level of security required. A small independent retailer may not really need security for his premises, but a large department store may consider it necessary. Store Administration : store administration deals with various aspects, like the cleanliness of the store premises maintenance of the store facade and the display of windows etc. Administration is also responsible for utilizing the store personnel effectively. Time keeping for the store staff is Important. It is also necessary to keep track on holidays and the shifts that the staff may be required to work. The premises of the store need to be maintained as per the standards decided upon by the management. This involves

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The task of cleaning the store and arranging the merchandise before the first customer can walk into the store. The important task of administration involves ensuring that all the required permissions and licenses to run a retail establishment are produced from the right authorities. Managing Inventory and Display : The task of allocating the merchandise to various stores usually rests with the merchandise management team or the category manager, as the case may be. At the store, the store staff does the management of this inventory. To enable them to work efficiently, the complete procedure for the handling of merchandise at the store level needs to be documented. Responsibilities with respect to merchandise at the store level involve receiving and inwarding the goods. Once the merchandise is received at the store, the quantity and other details like colour, style and size have to be checked with the document accompanying the goods to defect any discrepancies. In case of most large retailers, using a hand held scanner, the merchandise is scanned and the system updated for stocks

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Received. Merchandise may be received at the store from a central warehouse, a regional distribution centre, a supplier or from another store. Proper documentation also needs to be done when returning goods to the various locations as and when required. The procedure to be followed for shop soiled goods and customer returns also needs to be clear. As integral part of managing inventory at the store level is displaying it correctly. The best merchandise may lie unsold if it is not displayed in a manner that is appealing and convenient for the customer. Managing Receipts : Managing receipts involves defining the manner in which the retailer is going to receive payment for the sales. The most common method for receiving payments for goods sold in India, is cash or by credit card. While most of the large retail store would accept either of the above forms of payment are by way of cheque or a debit card. Some stores also have a co-branded card, which can be used for payments.

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Customer service: The customer service policy to be adopted by the retailer is decided upon the top management. This is actually put into practice by every person working within the retail store. Customer service does not have to begin and end at the customer service counter in the retail store. Each person on the floor of the retail store can ensure that the customer who comes in contact with him or her is comfortable and has a pleasant shopping experience. This is something which has to be imbibed in them, and has to be a top down approach. Managing Promotions, Events, Alliances and partnerships : Events and promotions are very much a part of the retail marketing scene. In order to enable the success of an event or a promotion, it is necessary that the store where the action is to take place be geared for the same. This may require hiring of additional staff, working the existing staff in shifts, running a short training programme on the features of the promotion, the hours and the specialty of the merchandise.

Many a times, a retail store may have a tie up with a local partner, to promote certain products or services. This has to be managed at a store level. Managing alliances and partnerships with local partners is also an important part of store operations. Display of merchandise and point of purchase material has to be managed at the store level.

RETAIL STORE BRAND A name, term, design, symbol or a combination of them intended to identify the goods or service of one seller or group of seller and to differentiate them from those of the competitors. THE CONCEPT OF RETAIL BRAND: As markets evolve and become more competitive, it will become more important for retailers to focus on branding. Retail branding does not necessarily focus only on the creation of a private label alone. In case of multi brand retailers, the task becomes more difficult as the retailers needs to create a store identity, which is different from that of the brands that he sells within the store, but at the same time, there has to be a level of consistency among the products available. While retail in India is still at a nascent stage, there still is a strong need to look at branding as a key tool for differentiation. Customers today, not know what they want to buy, but also have a phenomenal amount of choice available to them. If a customer wants to buy a pair of Levis jeans, he can buy them

From the companys own outlet or any of the department stores like shoppers stop, lifestyle. The price of the product would be the same and the shopping environment would also be similar. Why then should the consumer choose one retailer and not the other? This is where a strong retail brand, which connects to the consumer can make a difference. A strong retail brand can swing the consumers decision in favour of a particular retailer. In the competitive retail environment, the three generic strategies of cost, focus and differentiation, have become bare necessities to survive in business. The customer is looking at experiences that a company can provide when delivering the solution to the customer. A brand depicts and portrays the total experience a customer has with the product or service. BUILDING A RETAIL BRAND : A retail brand is a combination of the companys heritage, the merchandise mix available in the store, the store environment, the service strategy, the advertising and promotion. Retail brands constantly need to keep evaluating themselves by

Asking the following questions : Can the brand be identified with the lifestyle of its target customers ? Is there a perception difference between the brand and the products offered by the retailer and other retailer ? Can a story be woven around the brand? Creating a unique brands identity is what most retailer strive for. This has become more important today than virtually ever before. The starting point of creating a unique brand identity is to identify what it wishes to be in the mind of the consumer I,e, identity the opportunity for the target segment that is being tapping. This may require going out to the consumer, understanding their lifestyles and then trying to fathom the space that it wants to be in. Successful retail branding starts with a clear definition of what the retailer stands for It starts with the identification of that one word that the retailer wants to be in the minds of the consumer

Retail branding dose not sell a specific product. It is about customer service and how sales people great the customers. It is about how fast products is shipped or delivered. In short retail branding involves every single contact that occurs between any product and a human representative of the company and any costumer or potential customer in the whole wide world. Successful branding is based on simplicity and clarity. At the heart of retail branding lies a deep understanding of the business that the retailer is in and how he can satisfy the customers needs.

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RETAIL ADVERTISING AND PROMOTION (THE RETAIL COMMUNICATION MIX) Communication is an integral part of the retailers marketing strategy. Primarily communication is used to inform the customers about the retailer, merchandise and the services. It also serves as a tool for building the store image. The retailer can use various platforms / channels for communication. The most common tools are : Advertising Sales Promotion Public Relations Personal selling Direct Marketing Advertising : Advertising can be defined as any paid form of non personal presentation and communication through mass media. It is

RETAIL COMUNICATION MIX

Sales Promotion

Public Relation
Advertising Retail Communication Mix

Direct Marketing

Personal Selling

Popularly believed that one of the main aims of advertising is to sell to a wide mix of consumers and also to induce repeat purchases. However a retailer may use advertising any of the following objectives: Creating awareness about a product or store Communication information in order to create a specific image in the customers mind in terms of the store merchandise, price quality benefits etc. Create a desire to want a product To communicate the store policy on various issues Help to identify the store with nationally advertised brands Help to identify the store with nationally advertised brands Help in repositioning the store in the mind of the consumer To increase the sales of specific categories or to generate short term cash flow by way of a sale. Help reinforce the retailers corporate identity.

The retailer for advertising may use any one or a combination of the following mediums : Press advertisements Posters and leaflets, brochures, booklets. Point of purchase displays Advertising can also through medium like radio, television, outdoor hoardings and the Internet. Determining the advertising / Promotional Budget : Following are the main methods that may be employed to determine the advertising budget : a) The percentage of sales Method : This is perhaps the most commonly used method for determining the budget. Here the budget is a fixed percentage of sales. The biggest advantage of this method is that it is simple to apply and it allows the retailer to set an affordable limit on promotional activity.

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The competitive parity method ; Here, the budget is based on the estimated amount spent by the competition. There is a risk that it could be based on wrong information and again, there is little consideration for market conditions or growth opportunities. The research approach or the task and objectives method ; The budget is determined on the basis of a study of the best forms of advertising goals and then defines the tasks necessary to accomplish these goals. Next the management determines the cost for each task and adds up the total to arrive at the required budget. Here the advertising expenses are linked to the retailers objectives and the effectiveness of some forms of advertising can be measured and compared to costs. The incremental Method : The budget is simply based on the previous expenditure. What can be offered : The budget allocated for advertising or for promotions is based

On the basis of the money that can be allocated by the retailer for this purpose. Determining the message and the communication platform : The advertising message is often a major factor affecting the success or failure of the advertising campaign. To start with the retailer needs to determine what to say. This is largely dependent on the advertising objectives and the target consumers. After determining what to say the retailer needs to determine how to communicate the message. Some platform that may be used are listed below: Stressing the unique features of the products sold in the store. Reflecting a lifestyle or desired lifestyle by showing people shopping in a particular environment. Testimonials from celebrities Association formats : Creating the mood and communicating the psychological benefits by the way of exciting association.

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Sales Promotion : A sales promotion can be defined as a paid non personal form of communication that incentives customers to visit a store and / or purchase merchandise during a specific period of time. Sales promotion helps a retailer by way of attracting customer traffic and enables quick result to be achieved. SALES PROMOTIONS AIMED AT CONSUMERS: A retailer may create a sales promotion aimed at the consumer due to various reasons. Some of these reasons are listed below: To stimulate trial purchases To encourage repeat purchases To encourage larger purchases Introduce a new brand / product Counter competitors strategy

COMMON RETAIL PROMOTIONS ARE : Coupons : A Coupons allows the buyer a reduction in price on specific merchandise or products, when the coupons is redeemed Coupons may be delivered through newspapers, magazines, post or in products. Contests : A contests needs customers to compete and the prizes are based on skill, though in the case of sweepstakes the customer only needs to enter in his name and the winner is determined by chance. Demonstrations : Demonstrations are used to show the customers the performance capabilities of the products. Product / Brand promotions and schemes : This is a straightforward scheme in which the consumer either gets a monetary discount on the purchase of a particular products or gets two products of the same type for the price of one. Samples : Getting customers to simply try a brand can have an effect on decision making. Sampling provides the customer an opportunities to use the product at no cost. Various techniques

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May be adopted for sampling and this may be door to door through mail or which newspapers and magazines. Frequent shopper programmes : Most retailers have the frequent shopper programmes. Where a member accumulates points for every purchase. Members often get invitations to events sponsored by the retailer or associates. PUBLIC RELATIONS AND PUBLICITY :Public relations is a marketing communications functions, which aims at fostering goodwill. An organisation may integrate the PR efforts by way of press releases, feature stories and company newsletters or by interview with the press or press conferences. Publicity is a non paid form of media coverage. In todays world, it is rarely free and a fair amount of skill has to be exercised by the organisation to ensure that the right media coverage is achieved. Examples of events in retail, which may merit publicity are :Store Openings

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Store renovations Celebrity associations New product ranges and launches Awards received by the retailer Fashion shows and sponsored events PERSONAL SELOING :Personal selling is a paid form of personal advertising, where salespeople assist customers in satisfying their needs through a person to person exchange of information. It is a process of learning the needs and wants of the buyer and of striving to satisfy them with the required products or service. Personal selling may occur within the environs of the retailer store where personal selling deals with the sales person satisfying the needs of the customers. It may also occur outside the retail store where orders are taken from customers by way of the telephone, internet or mail and that are then served.

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Point of purchase (POP) Displays :The dictionary of retailing defines point of purchase communications as the promotional signs and interior displays often located at the point of sales or alongside displays of merchandise. Point of purchase (POP) displays have become integrals to retail today. They help reinforce in store product branding enhances retail sales floor sales floor communication and provide information to the customer. The Concept Of Integrated Marketing Communication :The American Association of advertising agencies defines integrated marketing communications as The concept of marketing communication planning that recognizes the added value of a comprehensive plan that evaluates the strategies roles of a communication disciplines and combines these disciplines to provide clarity consistency and maximum communications impact.

RETAIL MANAGEMENT INFORMATION SYSTEM IT has been applied to some of the unique requirements of the retail business such as the need for product identification, the need for quick billing and settlement of bills electronically and specialized logistics applications. The use of information technology in retail includes a wide range of technologies, covering software, hardware and wire line and wireless communication. Typically a mature user of IT in retail uses a number of technologies such as : POS terminals, software for managing inventory and to interact with financial services organizations to complete transactions, in addition to the standard applications. The industry uses advanced constructs such as data warehousing / mining for trend analysis and customer management and highly specialized solutions for supply chain management.

THE NEED FOR PRODUCT IDENTIFICATION : A retail store offers at least a few hundred units of products to the consumer. In order to know the quantities, the types, colours, sizes and other characteristics of products sold. The universal product code (UPC) or barcode as it is popularly know was developed from this need. While the first barcode patent was issued in 1952, the retail industry adopted It much later, as to implement a barcode system, hardware to produce the codes and interpret the information contained in them was required. Once this was developed, the grocery retailers were the first to adopt the barcode. What is the UPC? The Universal Product Code or the bar code is basically a product identifier made up of a series of bars and spaces which represent alphanumeric information's. In 1972 manufacturers and distributors of 12 European countries formed a council to explore the development of a standard numbering system for

Europe, similar to and compatible with the UPC. The Europe Article Numbering (EAN) was born as a result. It is a superset of the UPC and is followed in India. THE IMPORTANCE OF INFORMATION TECHNOLOGY IN RETAIL : Efficient Stocking of Merchandise : The items purchased information on merchandise sold in the store, this is the basis of sales analysis and decisions on replenishment, re ordering and merchandise planning. If this information is passed on to the manufacturer, it can help reduce production time. If this particularly true in case of fashion items, which have a very short life cycle. Collection of Data : The use of technology aids data collection. Data can be collected about consumers, their purchases, the frequency of their buying and the typical basket size. The information helps the retailer distinguish the customers who shops at his store frequency and also reward them.

Efficient in operations : The use of information technology serves as a basis for integrating the functioning of various departments. When a retailer decides to use the power of technology serves as a basis for integrating the functioning of various departments. When a retailer decides to use the power of technology to aid business, the investment in terms of money is usually in terms of money is usually high. However, the benefits of the use of information technology are many. As the process gets automated, the time involved in a particular task is reduced. Helps Communication : Communication within the organization can be faster with the use of software. Retail stores can communicate with each other and with the ware houses. This can be done 24 hours a day and seven days a week. Electronic data interchange can also be used for communication with suppliers and vendors.

APPLICATION OF TECHNOLOGY Some of the applications of technology, which are relevant to retailers. Electronic Data Interchange (EDI) : Electronic Data Interchange (EDI) is defined as the exchange of business information, through standard interfaces, by using computers. It can also be interpreted of business data between organizations in a computed format that does not required the re-keying of the information. Data base management, Data Warehousing, Data Mining A simple purchase at any retail store can enable the store to gather a vast amount of information about its customers and products. The use of system to organize, retrieve, search and manage that data is termed as database management. Data can be with respect to products, customers, vendors and suppliers or a combination of them put together. By swiping the customer loyalty card at the time of purchase an entire information system starts functioning. The stores

Computer sends the information to the companys central computer, which usually hosts the data warehouse. From this data warehouse, the organization is able to retrieve data that will give important information about the purchase made, the total number of purchases made. The colours, size and demographic data of the customer. Data mining refers to the extraction of data for specific applications which the use of technology. Radio Frequency Identification (REFID) : Radio Frequency Identification or REFID is fast transformation the way business is being conducted and monitored across the supply chain. Radio Frequency Identification (REFID) can be described as a wireless bar code which provides wireless communication between objects and readers. REFID uses tags or transponders that collect data and manage it in a portable, changeable database. It has the ability to identify and track products and

Equipments in real-time, without contact or line of sight. These tags, unlike barcodes, offer the possibility of reading, writing, transmitting, storing and updating information.