RETAIL MANAGEMENT

Before understanding the concept of retail, let us first go through few terminologies.

• Market - Any system or place where parties are engaged in exchange of either goods or services is called as market. The parties are often called as buyers and sellers. The seller offers his goods or services to the buyer who in return purchases it in exchange of money.
• Goods - Tangible (things which can be seen and touched) physical products which are transferred from a seller to the buyer (consumer) to fulfill the latter’s need are called as goods.

Jack owned two laptops which he sold to Mike. In this case Jack is the seller while Mike is the buyer. Laptops are the goods which were earlier in Jack’s custody and now belong to Mike.

What is Retail ?

Retail involves the sale of goods from a single point (malls, markets, department stores etc) directly to the consumer in small quantities for his end use. In a layman’s language, retailing is nothing but transaction of goods between the seller and the end user as a single unit (piece) or in small quantities to satisfy the needs of the individual and for his direct consumption.

Let us understand the concept with the help of an example.

Tim wanted to purchase a mobile handset. He went to the nearby store and purchased one for himself.

In the above case, Tim is the buyer who went to a fixed location (in this case the nearby store). He purchased a mobile handset (Quantity - One) to be used by him. An example of retail.

The store from where Tim purchased the handset must have shown him several options for him to select one according to his budget and need.

From where do you think the store owner (also called the retailer) purchased all the handsets?

Here the manufacturers and the wholesalers come into the picture.

The retailers purchase goods in bulk quantities (huge numbers) to be sold to the end-users either directly from the manufacturers or through a wholesaler.

The Supply chain

Manufacturers	........................	Retailers	................	End User (Consumer)
	Wholesalers

• Manufacturers - Manufacturers are the ones who are involved in production of goods with the help of machines, labour and raw materials.
• Wholesaler - The wholesaler is the one who purchases the goods from the manufacturers and sells to the retailers in large numbers but at a lower price. A wholesaler never sells goods directly to the end users.
• Retailer - A retailer comes at the end of the supply chain who sells the products in small quantities to the end users as per their requirement and need.
  The end user goes to the retailer to buy the goods (products) in small quantities to satisfy his needs and demands. The complete process is also called as Shopping.
• Shopping - The process of purchasing products by the consumer is called as shopping. However there are certain cases where shopping does not always end in buying of products. Sometimes individuals do go for shopping but return home empty handed. Such a shopping is merely for fun and is called window shopping. In window shopping, individuals generally go to the market, check out various options and their prices but do not buy anything. This kind of shopping helps to break the monotony.

Types of Retail Outlets

Retailing refers to a process where the retailer sells the goods directly to the end-user for his own consumption in small quantities.

Types of Retail outlets

• Department Stores
  A department store is a set-up which offers wide range of products to the end-users under one roof. In a department store, the consumers can get almost all the products they aspire to shop at one place only. Department stores provide a wide range of options to the consumers and thus fulfill all their shopping needs.
  Merchandise:
  Electronic Appliances
  Apparels
  Jewellery
  Toiletries
  Cosmetics
  Footwear
  Sportswear
  Toys
  Books
  CDs, DVDs
  Examples - Shoppers Stop, Pantaloon
• Discount Stores
  Discount stores also offer a huge range of products to the end-users but at a discounted rate. The discount stores generally offer a limited range and the quality in certain cases might be a little inferior as compared to the department stores.
  Wal-Mart currently operates more than 1300 discount stores in United States. In India Vishal Mega Mart comes under discount store.
  Merchandise:
  Almost same as department store but at a cheaper price.
• Supermarket
  A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket. A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer. The various food products (meat, vegetables, dairy products, juices etc) are all properly displayed at their respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.
  Merchandise:
  Bakery products
  Cereals
  Meat Products, Fish products
  Breads
  Medicines
  Vegetables
  Fruits
  Soft drinks
  Frozen Food
  Canned Juices
• Warehouse Stores
  A retail format which sells limited stock in bulk at a discounted rate is called as warehouse store. Warehouse stores do not bother much about the interiors of the store and the products are not properly displayed.
• Mom and Pop Store (also called Kirana Store in India)
  Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity. They offer selected items and are not at all organized. The size of the store would not be very big and depends on the land available to the owner. They wouldn’t offer high-end products.
  Merchandise:
  Eggs
  Bread
  Stationery
  Toys
  Cigarettes
  Cereals
  Pulses
  Medicines
• Speciality Stores
  As the name suggests, Speciality store would specialize in a particular product and would not sell anything else apart from the specific range.Speciality stores sell only selective items of one particular brand to the consumers and primarily focus on high customer satisfaction.
  Example -You will find only Reebok merchandise at Reebok store and nothing else, thus making it a speciality store. You can never find Adidas shoes at a Reebok outlet.
• Malls
  Many retail stores operating at one place form a mall. A mall would consist of several retail outlets each selling their own merchandise but at a common platform.
• E Tailers
  Now a days the customers have the option of shopping while sitting at their homes. They can place their order through internet, pay with the help of debit or credit cards and the products are delivered at their homes only. However, there are chances that the products ordered might not reach in the same condition as they were ordered. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In this kind of shopping; the transportation charges are borne by the consumer itself.
  Example - EBAY, Rediff Shopping, Amazon
  Dollar Stores
   Dollar stores offer selected products at extremely low rates but here the prices are fixed.

Retail Pricing - Different Types of Pricing Models

The sale of goods from fixed points (malls, department stores, supermarkets and so on) to the consumer in small quantities for his own consumption is called as retail. According to the concept of retailing, a retailer doesn’t sell products in bulk; instead sells the merchandise in small units to the end-users.

Retail Pricing

Cost Plus Pricing Mechanism

Every organization runs to earn profits and so is the retail industry.

Cost plus pricing works on the following principle:

• Cost Price of the product + Profit (Decided by the retailer) = Final price of the merchandise.

According to cost plus pricing strategy the retailer adds some extra amount to the actual cost price of the product to earn his share of profits. The final price of the merchandise includes the profit as decided by the retailer.

Cost Plus Pricing

• Cost plus pricing strategy takes into account the profit of the retailer.
• Cost plus pricing is an easy way to calculate the price of the merchandise.
• The increase in the retailer price of the merchandise is directly proportional to the increase in the cost price.
• The customers however do not have a say in cost plus pricing.

Manufacturer Suggested Retail Price (Also called List Price or Recommended retail price)

According to manufacturer suggested retail pricing strategy the retailer sets the final price of the merchandise as suggested by the manufacturer.

MSRP

• The retailer sells his merchandise at a price suggested by the manufacturer.

Condition 1

• The retailer sells the product at the same price as suggested by the manufacturer.

Condition 2

• The retailer sells the merchandise at a price less than what was suggested by the manufacturer - Such a condition arises when the retailer offers “Sale” on his merchandise.

Condition 3

• Retailers initially quote an unreasonably high price and then reduce the price on the customer’s request to make him realize that a favour has been done to him. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise.

Competitive Pricing

The cut throat competition in the current retail scenario has prompted the retailers to guarantee excellent customer service to the buyers for them to prefer them over their competitors.

• The price of the merchandise is more or less similar to the competitor’s but the retailers add on certain attractive benefits for the customers. (Longer payment term, gifts etc.)
• The retailers ensure that the customers leave their store with a smile to have an edge over the competitors.
• He tries his level best to offer better services to the customers for a better business in future.

Pricing Below Competition

According to pricing below competition policy

• The price of the merchandise is kept lesser than what is being offered by the competitors.

Prestige Pricing (Pricing above competition)

According to prestige pricing mechanism, the price of the merchandise is set slightly above the competitors.

The retailer can charge higher price than the competitors only under the following circumstances:

Exclusive Brands at the store.
Brand image of the store
Prime location of the retail store
Excellent customer service
Merchandise not available at any other store
Latest Trends

Psychological Pricing

• Certain price of a product at which the consumer willingly purchases it is called psychological price.
• The consumer perceives such prices to be correct.
• A retailer sets a psychological price which he feels would meet the expectations of the buyers and they would easily buy the merchandise.

Multiple Pricing

• According to multiple pricing, the retailer sells multiple products (more than one) for a single price.
• The retailers combine few products to be sold for a single fixed price.
• 3 Shirts for $100/- or 3 Perfumes for $20/- and so on.

Discount Pricing

According to discount pricing, the retailer sells his merchandise at a discounted price during off seasons or to clear out his stock.

Retail Management - Meaning and its Need

What is management ?

Management refers to the process of bringing people together on a common platform and make them work as a single unit to achieve the goals and objectives of an organization. Management is required in all aspects of life and forms an integral part of all businesses.

Retail management

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 fulfill 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.

Need for Retail Management - Why retail management ?

Peter wanted to gift his wife a nice watch on her birthday. He went to the nearby store to check out few options. The retailer took almost an hour to find the watches. This irritated Peter and he vowed not to visit the store again.-An example of poor management.

You just can’t afford to make the customer wait for long. The merchandise needs to be well organized to avoid unnecessary searching. Such situations are common in mom and pop stores (kirana stores). One can never enjoy shopping at such stores.

Retail management saves time and ensures the customers easily locate their desired merchandise and return home satisfied.

An effective management avoids unnecessary chaos at the store.

Effective Management controls shopliftings to a large extent.

• The retailer must keep a record of all the products coming into the store.
• The products must be well arranged on the assigned shelves according to size, colour, gender, patterns etc.
• Plan the store layout well.
• The range of products available at the store must be divided into small groups comprising of similar products. Such groups are called categories. A customer can simply walk up to a particular category and look for products without much assistance.
• A unique SKU code must be assigned to each and every product for easy tracking.
• Necessary labels must be put on the shelves for the customers to locate the merchandise on their own.
• Don’t keep the customers waiting.
• Make sure the sales representatives attend the customers well. Assist them in their shopping. Greet them with a smile
• The retailer must ensure enough stock is available at the store.
• Make sure the store is kept clean. Don’t stock unnecessary furniture as it gives a cluttered look to the store. The customers must be able to move freely.
• The store manager, department managers, cashier and all other employees should be trained from time to time to extract the best out of them. They should be well aware of their roles and responsibilities and customer oriented. They should be experts in their respective areas.
• The store manager must make daily sales reports to keep a track of the cash flow. Use softwares or maintain registers for the same.
• Remove the unsold merchandise from the shelves. Keep them somewhere else.
• Create an attractive display.
• Plan things well in advance to avoid confusions later on.
• Ask the customers to produce bills in case of exchange. Assign fixed timings for the same. Don’t entertain customers after a week.

Retail Marketing

The mechanism of selling products in small quantities from fixed locations to the customers for their end use is called as retailing.

In the current scenario where the end-user has several options to rely on, it is essential that the retailer promotes his brand well amongst the masses.

Let us go through some tips to promote a retail brand well:

Signage

Signboards go a long way in creating brand awareness and promoting a particular brand.

• The signage must display the name as well as logo of the retail store.
• It must be installed at the right place visible to all even from a distance.
• It should not be very small. Small signages fail to attract the customers.
• Choose the right paint colour.
• Don’t add unnecessary information. Keep it simple but informative.
• Make sure the signage attracts the customers into the store.
• Choose the right theme.

Advertising

Advertising is a strong medium which influences the buying decision of the customer and prompts him to shop. The retailer must ensure to communicate the USPs of his brand to the target customers well through various modes of advertising. The advertisement must be eye-catching for the end-users to click on them.

Various ways of Advertising

1. Billboards

   Billboard is one of the best ways of out of home advertising.
   Out of home advertising refers to creating awareness amongst the individuals when they are out of their homes.
   • Install hoardings, banners, bill boards at strategic locations such as heavy traffic areas, major crossings, railway stations, bus stands etc to entice the customers. The retailer must ensure that the banners get noticed and bring results.
   • Newspapers, Television and radio are also effective ways to promote a brand. Television reaches a wider audience and makes the store popular amongst all.
   • The advertisement should be a visual treat, appeal the customers and prompt them to visit the store.

2. Coupons

   • Coupons are an effective way of promoting a brand as they offer some kind of financial benefit to the customers in the form of discounts and rebates and thus attracting them into the store.
   • Coupons help in furthering the brand image of the retail store without much investment.
   • More and more people visit the stores to redeem the coupons, thus making the brand popular.
   • Discounts, sale, rebates are good ways to promote a brand.

3. Private Label

• Private label is an effective way to promote one’s brand at low costs.
• Products manufactured by one company but sold under another company’s brand name are called Private Label Products.
• Create your own website.
• Print your own calendars, diaries, planners, table tops with your store’s name, address as well as logo. Such an activity creates awareness among individuals.
• Always keep your visiting cards handy and distribute them to as many people as you can.
• In the current scenario, social networking sites go a long way in promoting brands. Create communities and invite people to join the same.
• Customer loyalty programs help to retain customers and attract new individuals to the store.
• Create a positive ambience at the store. Nothing works better than customer satisfaction in the retail industry. One satisfied customer brings ten new customers along with him.

Tips to be a Successful Retailer

• Opening a retail store is no joke. It demands dedication, detailed study and meticulous planning. An individual must do his groundwork well. Plan things well in advance to avoid problems later on.
• It is important to do some kind of research work before taking the big leap. Browse through related websites to gain an in-depth knowledge.
• An individual must be well aware of the fundamentals of retail industry to have an edge over others. Short term courses in retail make an individual well versed with the basic concepts of retailing, store formats, visual merchandising and so on which eventually help him in the long run.
• Know what is happening around you. Keep yourself updated with the latest trends in the retail industry. Check out various fashion magazines, brochures, catalogues, newspapers for the latest developments.
• Know your target market well. Find out more about the tastes and preferences to meet their expectations.
• It is important to choose the right location for the store to ensure maximum walk-ins. Make sure the store is well connected by means of transportation. Don’t open store at a secluded place.
• Make sure there is adequate parking space near your store.
• Promote your store well. It is essential to create awareness of your brand amongst the customers for them to know about the brand’s existence. Devise strategies to make your brand popular amongst the masses.
• Create the company’s website and get your visiting cards printed.
• Set a budget for everything.
• The products stocked in the store and their display play an important role in attracting the customers into the store. A retailer must never compromise on quality of the merchandise. Visit various wholesalers to check out the latest trends. Pick up something which is unique and not available at any other store. Don’t stock things which are out of fashion. The merchandise should be as per the target market and location of the store.
• Visit few other retail outlets to get an idea about store designs and layouts.
• Hire trained employees for your store. The employees must be well aware of their roles and responsibilities for them to deliver their best. Motivate them from time to time through various training programmes, appraisals, incentives and other monetary benefits.
• Be patient and don’t rush into things.
• Plan your store layout well. Make sure there is ample space inside the store for the customers to move and shop freely.
• Don’t dump products. Use shelves, cabinets and almirahs to stock your merchandise.
• Be disciplined. Open your store on time and assign fixed timings for lunch and tea.
• Treat your customers as kings. Advise all the store members to be courteous with the customers. The sales representatives must assist the customers in their shopping and make sure they leave the store with a smile.
• Never oversell. Let the customers decide on their own what would look good on them.
• Manage your inventory well.
• It is important for the retailer to track the cash flow.
• Download various retail softwares to make your work easier and effective.