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Module II
What is our business ? Where is the Market? Its potential? Who is our customer? Where should be the location? How much should be size? What will our business be? What should our business be?
A clear and definite plan that the retailer outlines to tap the market and build a long term relationship with the consumers.
Target Market
Format of stores
Unique Differentiator
Target Market is a group of consumers with similar needs and buying behavior. These could be serviced by a retail outlets of similar formats
Set the mission Vision of the store. Situation Analysis (PEST).Internal & external Analysis Retail Strategy. Analysing and Control.
Political
Economic
Social
Technological
Political stability
Income distribution Level of of population technology usages in the sector Size of the population Penetration of internet
Monetary policy
Consumer protection
Consumer confidence
Retail Market Strategy Planning for what? For merchandise. Inventory and logistics control. Information systems. Pricing and promotional campaigns. Store location and layout. Expansion plans in short on every functional activity to stay competitive.
Set objectives
Establishing mission
Some Vision
Wall mart to give ordinary folk the chance to buy the
same thing as rich people.
Retail mix
Its a blend of various retail activities The main element of Retail Mix are Store Location Merchandise assortment Pricing policy Customer service. Visual merchandising Marketing & sales promotion
Retail Brand
Retailer brands are typically more multi-sensory in nature than product brands and can rely on rich consumer experiences to impact their equity. Retailers also create their brand images in different ways, e.g.,by attaching unique associations to the quality of their service, product assortment merchandising, pricing and credit policy, etc.
By differentiation The best after sales service. By offering the best quotes in prices & offers.
Access Store Atmosphere Price & promotion Cross category Assortment. After sale Service
Brands in Retail
There are 3 types Manufacturer Brand/ National brand. Licensed Brand Private label brand
Store brand
Umbrella brand
Common brand name is used across multiple categories eg Bare (pantaloon )
Individual brand
PLC of Brand
Merchandise management
Duties of merchandiser.
Planning Sales forecasting budgeting Directing Guiding training
additional markup and mark down
Coordinating
buyers
Controlling
Assessing the merchandising performance net sales, markup % Gross margin, Stock turnover.
Factors effecting the function of buying The type of retail organisation The type of merchandise to be retailed The quantities to be retailed.
Methods of buying
Cooperative buying. Centralised Vs Decentralised buying. Buying committee. Resident Buying offices.
The planning and control of the merchandise inventory of the retail firm in a manner , which balances between the expectations of the target customer and the strategy of the firm.
Principles of Merchandising
Understanding the target market Build merchandise plan , one store at a time. Buy what your customer want not what you want. Build right assortment. Be consistent. Offer value. Understand vendor and negotiate. Share information. Accept mistake. Seek surprise to customer.
Merchandising Strategy
Allocation of Products
Select suppliers
Follow up
Pricing the Product
Vendor Negotiation
1. 2. 3. 4. 5.
Identifying the sources of supply. Contacting and evaluating the sources of supply. Negotiating with the vendors. Establishing vendor relationships. Analyzing vendor performance.
Vendor evaluation
Once sources of supply are identified they need to be evaluated Merchandise itself Price Adaptability of suppliers to the requirements of the retailer Delivery schedules, quantity discounts, recycling and repackaging of products participating in schemes Meet Delivery requirements
Vendor details
Vendors history Discounts available to the buyer
Eg
Cont..
Evaluating vendor performances on 4 key criteria
Gross Margin Contribution Adherence to company policy Customer acceptance level Merchandise quality
Negotiation
Purchase negotiation is the last stage prior to the signing of the purchase contract. It is necessary to go for purchase negotiation because in order to get the ideal price and best state of article , which is purchased Negotiation are basically focused on Price, Freight, Delivery dates , Method of shipment and shipping costs, return privileges' and discounts
Assortment
Assortment
The combination of all products made available in a store and a set of products offered within a product category.
The two major components of an assortment planning are the Depth of products offered. Width of the product variety.
Inventory management.
The markup
The difference between the cost of a ggod or service and its selling price Retail price/ sp = Cost + markup Markup = Retail price/sp -cost.
EOQ model
Focus on
When to order ? How much to order ? EOQ refers to the optimal order size that will result in the lowest total of order and carrying cost for an item of inventory given its expected usage, carrying cost and ordering cost. By calculating this the firm will be able to determine the minimum order size to control the cost.
ABC Analysis
ABC analysis is rank order merchandise by some performance measure to determine
Which item to be never be stock out, Which item to be Allowed to be stock out. Which item to be deleted from stock selection.
ABC is 80 : 20 principles
The first step in the ABC analysis is to rank order SKU using more or more criteria.
FSN Analysis
VED analysis
Based on criticality of the item inventory is classified.
HML Analysis
GMROI
It is merchandise planning and decision making tool to assist the buyers in identifying and evaluating whether an adequate gross margin is being earned by the product purchased, compared to the investment in inventory required to generate the gross margin.
GMROI
Gross Margin is the value of sales less the cost of goods sold. Increasing gross margin entails increasing sales revenue or reducing the cost of the merchandise.
Logistics
Distribution
Warehousing
CONCEPT OF SCM
Supply chain-network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products and the distribution of these products to the customers
Objective-right product, place, time, price and profit for the retailer
and
Price& profit(for retailer). Supply Chain Management Ensures a smooth and efficient flow from raw material to finished goods, into hands of the consumers. Integrate activities across the entire merchandise flow. Supply Chain exist in Both Service and Manufacturing organisations.
Need for Supply Chain Management Increased national and international competition Customers have multiple sources from which to satisfy their demand. Increasing pressure on the profit margins earned. The technology driven world today. Information is the key enabler of supply chain management.
STRATEGIC LEVEL----In this level the retailer can focus on the service levels required to support the unique value proposition that the retailer has developed. The retailer can then evolve appropriate channels and networks to achieve the uniqueness desired.
Framework for analysing issues in SCM STRUCTURAL LEVEL The next level allows retailers to identify the suppliers, stock points and to develop an appropriate transportation model. The extent of outsourcing is also determined at this level.
FUNCTIONAL LEVEL In this level the operational details are worked out. This includes developing policies and procedures around the facilities and equipment to be deployed, implementing the information system to support the operations Ensuring that the right Organisational and training inputs are provided.
Retail Logistics
Functions. 1.Physically moving the goods from one location to another , where location may be a distribution center, warehouse. 2.Stocking the goods at the locations needed in the quantities needed. 3.Management of entire process.
4th
is an independent, singularly accountable, non-asset based integrator who will assemble the resources, capabilities and technology of its own organisation and other organisations, incuding 3PLs, to design, build and run comprehensive supply chain solutions for clients Deloitte, SCMO (company), BMT Limited and Accenture
. Party Logistics
. Eg
Reverse Logistics
Flow of surplus or un wanted material , goods or equipment back from the firm, through its logistic chain for reuse recycling or disposal.
EDI RFID
PRINCIPLE 1
Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably.
Segmenting customers by their particular needs equips a company to develop a portfolio of services tailored to various segments - surveys, interviews, and industry research. Companies must analyze the profitability of segments,plus the costs and benefits of alternate service packages, to ensure a reasonable return on their investment and the most profitable allocation of resources.
PRINCIPLE 2
Customize the logistics network to the service requirements and profitability of customer segments.
The logistics network has been designed to meet the average service requirements of all customers; for others, to satisfy the toughest requirements of a single customer segment. The network will require more strong logistics planning enabled by real-time decision support tools that can handle flow-through distribution and more time-sensitive approaches to managing transportation.
PRINCIPLE 3
Listen to market signals and align demand planning accordingly across the supply chain, ensuring consistent forecasts and optimal resource allocation.
Excellent supply chain management - calls for sales and operations planning that transcends company boundaries to involve every link of the supply chain in developing forecasts collaboratively and then maintaining the required capacity across the operations.
PRINCIPLE 4
Differentiate product closer to the customer and speed conversion across the supply chain.
Time is important - many manufacturers are focussing on the lead time in the supply chain. They are strengthening their ability to react to market signals by compressing lead times along the supply chain, speeding the conversion from raw materials finished products tailored to customer requirements.
PRINCIPLE 5
Manage sources of supply strategically to reduce the total cost of owning materials and services.
o A sound knowledge of all their commodity costs, not only for direct materials but also for maintenance, repair, and operating supplies, plus the dollars spent on utilities and virtually everything else.
o Manufacturers can then consider how to approach supplierssoliciting short-term competitive bids, entering into long-term contracts and strategic supplier relationships, or integrating vertically.
PRINCIPLE 6
Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information.
The manager needs to build an IT system that integrates capabilities of three essential kinds.
1. For the short term, the system must be able to handle day-to-day transactions and e-commerce across the supply chain and thus help align supply and demand by sharing information on orders and daily scheduling. 2. From a mid-term perspective, the system must facilitate planning and decision making, supporting the demand and shipment planning needed to allocate resources efficiently.
3. To add long-term value, the system must enable strategic analysis by providing tools, such as an integrated network model to help managers evaluate plants, distribution centre, suppliers, and third-party service alternatives.
PRINCIPLE 7
Adopt channel-spanning performance measures to estimate collective success in reaching the enduser effectively and efficiently.
Thank you
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