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Retailing Management

Some retail humor..


A retailer was dismayed when a competitor selling the same type of product opened next-door to him, displaying a large sign proclaiming "Best Deals. Not long after that, he was horrified to find yet another competitor move in next door, on the other side if his store. It's large sign was even more disturbing"Lowest Prices. After his initial panic, and concern that he would be driven out of business, he looked for a way to turn the situation to his marketing advantage. Finally, an idea came to him. Next day, he proudly unveiled a new and huge sign over his front door.

"Main Entrance!"

Main topics to be covered in this presentation


convenience store 101 shopping mall store location analysis

report

warehouse club field study

convenience store
A little history on 7 Eleven They have more than 4600 stores in Taiwan

Toshifumi Suzuki

Consumer buying behavior in NCTU


Students make up the largest customer segment They seek to satisfy their utilitarian needs They engage in habitual decision making

Floor layout
Customers tend to shop in a more deliberate and efficient manner Time spent on the whole buying process is crucial

Figure 1: Layout of NCTU 7-Eleven


Fast Food Refrigerator (ice cream & (microwavable) frozen desserts) Refrigerator (dairy products) Drinks Storage Refrigerator (beverages) Door Machine

Fresh Food (buns) Fast Food (hotdogs/soup/eggs)


Shelves

Instant Noodles

Fresh Food: (Bread/Toasts) Cookies Chips Basic Necessities & Cosmetics Confectionery Products Canned & Food Fats and Oils Specialties

Counter

Entrance

Media Shelf

HH Necessities

Assortments mix
Category Group 2024 Ice Cream and Frozen Desserts Group 2026 Fluid Milk Group 2037 Fruit Juices Group 2038 Frozen Specialties Group 2051 Bread & other Bakery products Group 2052 Cookies & Crackers Group 2064 Candy & other Confectionary Products Group 2065 Chocolate & Cocoa Products Group 2066 Chewing Gum Group 2086 Bottled, Canned Soft Drinks & Water Group 2096 Potato Chips, Corn Chips & Snacks Group 2099 Food Preparations Major Brand(s) Uni-President Uni-President Uni-President 7-Eleven Uni-President Ritz Wrigleys Meiji Wrigleys Uni-President, Wei Dan 7-Eleven Uni-President, Wei Dan

Is NCTU 7-Eleven successful in attracting their targeted market to shop with them?
Their superior location is a major advantage over their competitors There is a wide array of fresh food which is replenished daily They can consider preparing more fresh food rather than microwavable

Taipei 101 shopping mall

Some quick facts


2.36 million square feet of office space 893,000 square feet of parking space 796,000 square feet of retail space Some of Taipei 101s office occupants include

Consumer buying behavior of segment 1


Segment 1 - White collar workers and young working professionals working in the Hsin Yi district
Age between 24 to 35, annual income of USD 30,000 to USD 50,000, fashion followers, middle upper class of society

Buying behavior Seek to satisfy their hedonic needs Look upon celebrities as reference groups to guide them on the latest fashion

Consumer buying behavior of segment 2 Segment 2 - High net worth individuals (both local and international)
Annual income of at least USD 100,000, upper class of society, attend social functions regularly

Buying behavior Price of products are least of their concern They value the entire shopping experience more Obtain information from their own social networks on places to patronize to get the latest fashion goods

Retail Mix
Understanding the consumers needs is the foundation of a good retail strategy If you offer a retail mix oblivious to the market environment and your consumers need, they will patronize other shopping malls in the area Mall layout & design, Store mix, Retail communication mix

Mall layout & design

Types of Stores

Mall layout and design


Up to 55% of the mall is allocated to public space Exquisite Window Display Wider aisles High ceilings throughout the entire mall Warm lighting is used to create a soothing ambience Classical music is played in the background Clean toilets

Floor Guide & Description


Table 1: Description of each level in Taipei 101 shopping mall

Level Basement 1

Floor Guide Description Grand Market High quality food court and shops for urban living Avenue 101 Popular regional brands

Examples Jasons market, Grand Market Food Court Kenneth Cole, Bally, Ted Baker

Level 1 Level 2

The Designer Design oriented international Walk brands

Level 3

Level 4
Level 5

De Beers, Jean Paul Gaultier, Kookai The Galleries European and global flagship Cartier, Louis Couture stores Vuitton, Celine, IWC City Square High end restaurants and Wasabi Buffet, cafes Maxims de Paris Financial Centre Financial centre and banquet halls International Banquet Hall

Retail communication mix


Taipei 101 website, monthly magazine, direct mails and Celebrity endorsements Taipei 101 partnered with Taiwan tourism board to feature Taipei 101 in international advertisements

Building a sustainable and competitive advantage


Taipei 101 is successful in creating depth for designer products however there isnt sufficient mass market labels in the mall Improve the Taipei 101 shopping mall website Partner designer labels to feature new products on the Taipei 101 website

Regional/Global Competition
Taipei 101 should look at the global competition
Work together with the other shopping malls in the Hsin Yi district Conduct coordinated sales promotions to attract shoppers

H&Ms Retail Location in Taipei City


?

Introduction
Hennes & Mauritz (H&M), is a well known Swedish apparel company worldwide, with 1,800 stores spread across 35 countries. Offering fashion and quality at the best price. Aim to be located in the best business location. Taipei is the essential business center in Taiwan.

Factors To Consider
Target market
Fashion pursuer, good quality, middle price

Cost of operating stores


H&M only leases the stores instead of buy them.

How many stores to open


Experiment the market or promote the brand

The characteristics of the trade area


CBD, natural and physical barriers, store accessibility, demographic, level of competition

The characteristics of the retail site


Traffic & accessibility, visibility, adjacent stores, restrictions and costs

Estimate potential sales Lease negotiation

Trade Area

Taipei City

Trade Area
Trade Area Zhongxiao Type CBD Accessibility Very High Competition Level Very High Demographic Type Employees, fashion pursuers Unique fashion pursuers Employees, students, travelers Students

Zhongshan

Artistic, Shopping Transportatio n center, cram schools, old CBD Teenager recreation

Medium

High

TPE Train Station

Very High

Medium

Ximen

High

Medium

Tienmu

Residence

Medium

Medium

Foreigners, residents

Retail Site-East Zone


Breeze Center

Small Retailers, Apparel & Accessories Specialty Stores, Restaurants, Bars

Sogo
MRT

Din Hao

at&t
MRT

Zhong Xiao E. Rd.

Mango

Sogo BR4 Sogo

Min Yao

Retail Site-Xinyi District


Zhong Xiao E. Rd. MRT UniPresident Mall Eslite Book A4 Store Bella Vita

Taipei City Hall

Mitzukoshi A9, A11, A8

Mango

NY NY

Movie Theater

Neo 19

Taipei 101

Retail Site
Retail Sites Accessibility Visibility Adjacent Stores Restriction & Cost

East Zone

Very High

High

Department Stores, Small Retailers, Restaurants Department Stores

13,000NT/pi ng/month

XinYi District

High

Medium

10,000NT/pi ng/month

Estimate Potential Sales


Xinyi District (Sales at Mango: NT5,940 ,000) H&M Average Store Size 136ping Mango 121ping

Probability of Mango customer shopping at H&M: (136/5)/[(136/5) + (121/5)] = 0.529 Forecasted Sales at H&M = $0.529 * 5.94m = $3.14m East Zone (Sales at Sogo: NT4,000,000,000) H&M Average Store Size 136ping Sogo 3636ping

Probability of Sogo customer shopping at H&M = (136/5)/[(136/5) + (3636/5)] = 0.036

Forecasted sales at H&M = 0.036*(4b/3636*136 )= NT$5.3m


Using Huff Gravity Model with = 1

Costco warehouse club field study report

Organization Structure
Chairman
Jeffrey H. Brotman

CEO
James D. Sinegal

CFO

COO of Merchand ising

COO of Global Operations

Regional GM

Divisional GM

Info systems

Human Resource Manageme nt

Admin & Chief Legal Officer

Regional COOs

The Directors

Human Resource Management


The organization and management of employees is crucial to help retailers perform its critical business functions. Employees are a valuable asset to any retailer. In manufacturing machines In retailing labor intensive

HR Management
Requirements: Every employee has to start work from the bottom regardless of education level 3 month probation period

HR Management
Reason: Reduce employment turnover rate Build up a pool of committed and loyal employees Understand how each department functions Facilitate the buying and selling activities

Hsinchu Personnel
To take into consideration the size and management practices of Costco. Administrative Personnel Floor Personnel

Administrative Personnel
DEPARTMENTS ADMINISTRATIVE Senior Management Membership Department Accounts Department Marketing Department 5 10 3 5 PERSONNEL

Purchasing Department
IT Department Logistics Department TOTAL ADMINSTRATIVE PERSONNEL

5
2 30

60

Floor Personnel
FLOOR PERSONNEL FLOOR PERSONNEL Pharmacy Pharmacy Optical Optical Tire Center Tire Preparation Food Center Food Preparation Operations and Maintenance 5 5 5

5 5 5 15
15 4 4 10 10 36 36 80 80 140 140

Operations and Maintenance Floor Helper/ Sample Personnel Floor Helper/ Sample Checkout Counters Personnel
Checkout Counters TOTAL FLOOR PERSONNEL TOTAL FLOOR PERSONNEL TOTAL PERSONNEL NEEDED TOTAL PERSONNEL NEEDED

Floor Personnel
FLOOR PERSONNEL Pharmacy 5

Optical
Tire Center Food Preparation

5
5 15

Operations and Maintenance


Floor Helper/ Sample Personnel Checkout Counters TOTAL FLOOR PERSONNEL TOTAL PERSONNEL NEEDED

4
10 36 80 140

Information Systems
Electronic data interchange (EDI) Intranet Extranet: Costcos CRX (Collaborative Retail Exchange) program No RFID usage

Information Systems
Intranet

CRX: Vendor Managed Inventory System Inventory method: continuous review system (monitored continuously with each sale)

Extranet

Merchandise Management
It is about managing a portfolio of merchandise inventory. Uses their retailers information to monitor the performance of their merchandise portfolio. Buyers want to offer the right quantity of right merchandise. Want to avoid over stocking or a stock out situation Want to satisfy financial objectives

Merchandise Management Process


1. Buyers forecast category sales 2. Develop an assortment plan for merchandise in that category 2. Setting inventory level 4. Negotiates with vendors

1. Forecasting Sales
Costco offers a majority of staple merchandises
Staple Merchandises Category Sales over many seasons Sales of a specific style over many seasons Sales vary dramatically from one season to the next

Yes Yes No

Sales Time

1. Forecasting Sales
A record of sales for each SKU is available. Buyers forecast future sales from extrapolating historical sales. Information from vendors about market research on merchandise categories is useful in buyers forecasting.

2. Assortment plan
A list of the SKUs that a retailer will offer in a merchandise category. Have to reflect the firms retail strategy, trade off between too much and too little assortment etc.

2. Assortment Plan
Costcos retail strategy: offering good products at good value. Costco offers a few SKU per category (4000SKU) - Fewer SKUs will reduce inventory investment, space

Retail store is its warehouse

2. Assortment Plan
Costcos retail strategy: offering good products at good value. Costco offers a few SKU per category (4000SKU) Fewer SKUs will reduce inventory investment, space Avoid low merchandize turnover rate Better control E.g. Dairy products

Costco offers National and Private Brand Costco considers complementary SKU

3. Setting inventory level


Costco will make frequent ordering and shipments - Limited warehouse space - Keep inventory investment low Need to carry buffer stock to avoid stock out Affected by lead time Fluctuation in demand Vendors product availability

4. Negotiating with Vendors


National Brand Products
- Discuss performance of previous season, vendors offering for coming season - Quality & Uses of product - Products market research - Price (10% sales profit) - Slotting fees, exclusivity items, terms of purchase and transportation costs.

5. Buys Merchandise
Requires a good information system

Requires a good supply chain management

Supply Chain Management

Averitt Express

Retail store is the warehouse, saves on labour and cost

The major components of retailing


Learning Points:
1.Store layout 2.Merchandise Mix 3.Retail Strategy 4.Consumer Buying Behavior 5.Retail Mix 6.Location 7.Human Resource Management 8.Information System 9.Merchandise Management 10.Supply Chain Management

The Retail Team of amateurs with Dr Trappey!

Thank You!

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