Retail Formats Classification, Key Features, Advantages and Disadvantages

Retail Formats

(Classification, Key Features, Advantages and Disadvantages)


Retail Formats can be classified into the following categories:
Store Based: Store based formats can be further classified into two formats based on the basis of Ownership or Merchandise offered.
Non Store Based Classification: Non Store retail organizations focus on establishing direct contact with the consumer. This may be both personal (direct personal selling) and nonpersonal TV, the Internet, mail, catalog or phone).
Service Based Classification: Such retailers specialize in providing different kinds of services to the end consumer. The services can be classified as Banking Services, Rentals, Electricity, cooking gas, etc. Various factors like quality of service, how much customization can be provided for meeting the client specific requirements, the uniqueness of the service and delivery within the timelines, usage of innovative technology, etc, are given importance for determining the success of service.

Classification of Retailers on the Basis of Ownership

  1. Sole Proprietorship: This constitutes the majority as many small business ventures start on a sole proprietorship basis only. In the case of sole proprietorship, the ownership of the business exists with a single person, usually the one who is responsible for the day to day affairs of running the business.
  2. Partnership: This is also one of the most common business formats in India. In Partnership form of business, the ownership is shared between two or more people for running the business.
  3. Joint Venture: A Joint venture involves the creation of a third or a new entity due to collaboration between two or more than two parties, with an agreement to manage the business operations in a particular area by combining their resources and sharing their profits as per the well-defined terms and conditions of the contract.
Key Features of Chain Stores: When 4 or more than four stores manage the same merchandise under the central ownership and usually receive their supplies from a central warehouse. The Chain stores in Europe are equally called as Multiple Shops, unlike America where it is regarded as Chain Stores. The main objective of Chain Store system is to approach the maximum number of customers by expanding operations across a larger territory, but with a concentration on selling the same merchandise.
In Indian context organizations such as BATA and Usha Lexus operate chain stores across the country. These organizations offer varieties or various model variants of a single product, and the buying is centralized, but selling is decentralized.

Salient Features are given below

  • A retail system to be considered as a Chain store should have more than 1 retail store engaged in the same merchandise and being operated with a moderate degree of centralization.
  • The focus is on horizontal expansion by establishing multiple stores for reaching maximum customers across various geographies.

Advantages of Chain Stores

  • Chain Stores enjoy cost advantages due to the economy in purchase operations, low advertisement expenditures and low selling prices of the products.
  • The risks are distributed as a result of which the possibility of losses is minimized.
  • Delinquency, bad debts and the complexities in the processes of accounting can be avoided since the chain stores operate on the basis of cash.
  • Chain stores need not be established in costly or prime locations and enjoy flexibility in their style of operation.

Limitations of Chain Stores

  • The claim that the products in chain stores are sold at lower prices is false.
  • Practically chain stores are inflexible as the chain stores specialize in offering standardized products only.
  • Chain stores face a lot of personnel issues due to the complexities of a large-scale business operation.
  • Chain stores run a perennial risk of losing the brand image because various customer-centric initiatives are not being given that much importance. But the customers in the present scenario look for several other benefits regarding services.
  • Chain Stores enjoy cost advantages due to the economy in purchase operations, low advertisement expenditures and low selling prices of the products.
  • The risks are distributed as a result of which the possibility of losses is minimized.
  • Delinquency, bad debts and the complexities in the processes of accounting can be avoided since the chain stores operate on the basis of cash.
  • Chain stores need not be established in costly or prime locations and enjoy flexibility in their style of operation.

Features of Departmental Stores

Departmental Stores can be either classified on the ownership basis or income groups. The key features of Departmental Stores are given below:
  • Departmental stores perform operations in an integrated manner all under the single roof.
  • Departmental stores are multi leveled retail outlets operating on a large scale at the international level, national level and locally as well, offering a variety in their merchandise. In India, the major national players operating departmental stores are Westside, Shoppers Stop, Lifestyle, etc. While the local players Meena Bazaar of Hyderabad and Ebony in Delhi.
  • The key criterion which determines the success of a departmental store is the location in which it operates and also other factors like store size, space availability, the area which is being targeted and crucial issues such as the potential of the store in attracting the customers.

Advantages of Departmental Stores

  • Departmental stores enjoy the benefits of economies of scale and also cost advantages due to its large scale operation. Usually, the purchases are done in bulk or large quantities as a result of which special concessions can be availed on the purchases.
  • Departmental stores usually have ready availability of cash in liquid form, which provides an advantage of procuring quality goods at affordable prices along with special discounts/concessions and keeping a reserved stock for meeting the growing demands of the customers and enjoying a business advantage.
  • Customers usually get attracted towards the departmental stores for their buying requirements due to the availability of a variety of products under a single roof.

Disadvantages of Departmental Stores

  • The overall costs and expenses involved in the operation of the departmental stores are very high.
  • The element of personal involvement or maintaining client relationship is found to be lacking in the case of departmental stores.
  • The departmental stores always run the perennial risk of incurring heavy losses or damages.
  • The staff members are usually poor qualified and lack the requisite competencies or the training for dealing with the day to day business affairs or addressing the challenges involved in the business.

Features of Super Markets

  • Supermarkets operate on a large scale basis and are the self-service kind of stores which may be entirely operated by the owner or may lease some of the departments on concessional rates.
  • These stores are usually located in prime shopping locations where facilities for the parking are available.
  • The key hallmarks of supermarkets are the availability of a variety of merchandise and branded products, affordable prices and availability of parking facility.

Advantages of Super Markets

  • Supermarkets offer convenience in shopping, and the customers enjoy the benefit of buying their preferred products by selecting from a variety.
  • The supermarkets sell products at affordable prices.
  • The customer’s shopping time is considerably reduced.

Disadvantages of Super Markets

  • Supermarkets incur heavily on administrative and maintenance expenses.
  • Service aspects are usually ignored in this model of retail.
  • The store operation costs are very high.

Advantages of Direct Selling

  • Direct selling also called as home selling involve an element of a personal touch as the customers can establish a contact with the sales representative and discuss their buying requirements or clarify their queries.
  • The consumers enjoy the benefit of purchasing the products as per their convenience either at home or any other location of their choice.
  • The role of the seller is very crucial in case of direct selling as the seller can personally demonstrate the products before the consumer and influence them for the purchase by trying out persuasive skills.

Limitations of Direct Selling

  • Managing the administrative requirements, determining the sales commissions for the sales agents, determining the terms and conditions of work (part time or full time) may involve heavy costs.

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Retail Formats Classification, Key Features, Advantages and Disadvantages

Retail Formats

(Classification, Key Features, Advantages and Disadvantages)


Retail Formats can be classified into the following categories:
Store Based: Store based formats can be further classified into two formats based on the basis of Ownership or Merchandise offered.
Non Store Based Classification: Non Store retail organizations focus on establishing direct contact with the consumer. This may be both personal (direct personal selling) and nonpersonal TV, the Internet, mail, catalog or phone).
Service Based Classification: Such retailers specialize in providing different kinds of services to the end consumer. The services can be classified as Banking Services, Rentals, Electricity, cooking gas, etc. Various factors like quality of service, how much customization can be provided for meeting the client specific requirements, the uniqueness of the service and delivery within the timelines, usage of innovative technology, etc, are given importance for determining the success of service.

Classification of Retailers on the Basis of Ownership

  1. Sole Proprietorship: This constitutes the majority as many small business ventures start on a sole proprietorship basis only. In the case of sole proprietorship, the ownership of the business exists with a single person, usually the one who is responsible for the day to day affairs of running the business.
  2. Partnership: This is also one of the most common business formats in India. In Partnership form of business, the ownership is shared between two or more people for running the business.
  3. Joint Venture: A Joint venture involves the creation of a third or a new entity due to collaboration between two or more than two parties, with an agreement to manage the business operations in a particular area by combining their resources and sharing their profits as per the well-defined terms and conditions of the contract.
Key Features of Chain Stores: When 4 or more than four stores manage the same merchandise under the central ownership and usually receive their supplies from a central warehouse. The Chain stores in Europe are equally called as Multiple Shops, unlike America where it is regarded as Chain Stores. The main objective of Chain Store system is to approach the maximum number of customers by expanding operations across a larger territory, but with a concentration on selling the same merchandise.
In Indian context organizations such as BATA and Usha Lexus operate chain stores across the country. These organizations offer varieties or various model variants of a single product, and the buying is centralized, but selling is decentralized.

Salient Features are given below

  • A retail system to be considered as a Chain store should have more than 1 retail store engaged in the same merchandise and being operated with a moderate degree of centralization.
  • The focus is on horizontal expansion by establishing multiple stores for reaching maximum customers across various geographies.

Advantages of Chain Stores

  • Chain Stores enjoy cost advantages due to the economy in purchase operations, low advertisement expenditures and low selling prices of the products.
  • The risks are distributed as a result of which the possibility of losses is minimized.
  • Delinquency, bad debts and the complexities in the processes of accounting can be avoided since the chain stores operate on the basis of cash.
  • Chain stores need not be established in costly or prime locations and enjoy flexibility in their style of operation.

Limitations of Chain Stores

  • The claim that the products in chain stores are sold at lower prices is false.
  • Practically chain stores are inflexible as the chain stores specialize in offering standardized products only.
  • Chain stores face a lot of personnel issues due to the complexities of a large-scale business operation.
  • Chain stores run a perennial risk of losing the brand image because various customer-centric initiatives are not being given that much importance. But the customers in the present scenario look for several other benefits regarding services.
  • Chain Stores enjoy cost advantages due to the economy in purchase operations, low advertisement expenditures and low selling prices of the products.
  • The risks are distributed as a result of which the possibility of losses is minimized.
  • Delinquency, bad debts and the complexities in the processes of accounting can be avoided since the chain stores operate on the basis of cash.
  • Chain stores need not be established in costly or prime locations and enjoy flexibility in their style of operation.

Features of Departmental Stores

Departmental Stores can be either classified on the ownership basis or income groups. The key features of Departmental Stores are given below:
  • Departmental stores perform operations in an integrated manner all under the single roof.
  • Departmental stores are multi leveled retail outlets operating on a large scale at the international level, national level and locally as well, offering a variety in their merchandise. In India, the major national players operating departmental stores are Westside, Shoppers Stop, Lifestyle, etc. While the local players Meena Bazaar of Hyderabad and Ebony in Delhi.
  • The key criterion which determines the success of a departmental store is the location in which it operates and also other factors like store size, space availability, the area which is being targeted and crucial issues such as the potential of the store in attracting the customers.

Advantages of Departmental Stores

  • Departmental stores enjoy the benefits of economies of scale and also cost advantages due to its large scale operation. Usually, the purchases are done in bulk or large quantities as a result of which special concessions can be availed on the purchases.
  • Departmental stores usually have ready availability of cash in liquid form, which provides an advantage of procuring quality goods at affordable prices along with special discounts/concessions and keeping a reserved stock for meeting the growing demands of the customers and enjoying a business advantage.
  • Customers usually get attracted towards the departmental stores for their buying requirements due to the availability of a variety of products under a single roof.

Disadvantages of Departmental Stores

  • The overall costs and expenses involved in the operation of the departmental stores are very high.
  • The element of personal involvement or maintaining client relationship is found to be lacking in the case of departmental stores.
  • The departmental stores always run the perennial risk of incurring heavy losses or damages.
  • The staff members are usually poor qualified and lack the requisite competencies or the training for dealing with the day to day business affairs or addressing the challenges involved in the business.

Features of Super Markets

  • Supermarkets operate on a large scale basis and are the self-service kind of stores which may be entirely operated by the owner or may lease some of the departments on concessional rates.
  • These stores are usually located in prime shopping locations where facilities for the parking are available.
  • The key hallmarks of supermarkets are the availability of a variety of merchandise and branded products, affordable prices and availability of parking facility.

Advantages of Super Markets

  • Supermarkets offer convenience in shopping, and the customers enjoy the benefit of buying their preferred products by selecting from a variety.
  • The supermarkets sell products at affordable prices.
  • The customer’s shopping time is considerably reduced.

Disadvantages of Super Markets

  • Supermarkets incur heavily on administrative and maintenance expenses.
  • Service aspects are usually ignored in this model of retail.
  • The store operation costs are very high.

Advantages of Direct Selling

  • Direct selling also called as home selling involve an element of a personal touch as the customers can establish a contact with the sales representative and discuss their buying requirements or clarify their queries.
  • The consumers enjoy the benefit of purchasing the products as per their convenience either at home or any other location of their choice.
  • The role of the seller is very crucial in case of direct selling as the seller can personally demonstrate the products before the consumer and influence them for the purchase by trying out persuasive skills.

Limitations of Direct Selling

  • Managing the administrative requirements, determining the sales commissions for the sales agents, determining the terms and conditions of work (part time or full time) may involve heavy costs.

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Retailer: Characteristics, Functions and Services

Characteristics, Functions and Services of a Retailer

In the fast changing globalized and a technology-driven business world, Retail industry over last few decades has witnessed a sea change. World’s largest retail giant of the present times Walmart is operating worldwide by establishing hypermarkets in various countries by taking the help of sophisticated means of communication as well as information systems technology.
A careful analysis of the trends reveals that in the Fortune 500 list of organizations, 50 are from retail industry and the top rank is occupied by the world’s No. 1 retail giant Walmart. The statistics convincingly reveal how fast the retail industry has grown and paved the path for expansion of business as well as employment opportunities.

Characteristics of a Retailer

  • In the entire distribution chain, a retailer is considered to be the final link, who deals directly with the customer.
  • A retailer purchases in bulk from the wholesalers and sells the products to the customers in small quantities.
  • A retailer essentially maintains a variety of merchandise.
  • The aim of a retailer is to achieve maximum satisfaction by exceeding their expectations and delivering exceptional services.

Key Functions Performed by a Retailer

  • A retailer performs the dual functions of buying and assembling of goods. The responsibility of a retailer is to identify the most economical source for obtaining the goods from the suppliers and passing on the advantages to the consumer.
  • The retailers perform the functions of warehousing and storing. They store the goods in bulk and make them available as per the requirement of the consumer. Warehousing and store keeping helps in ensuring uninterrupted availability of the goods to the consumers.
  • The primary function of a retailer is selling the products to the customers for which various techniques or business practices are being adopted by the retailer to achieve the strategic goals.
  • The prime focus of a retailer is on maximizing customer satisfaction by delivering quality products and services both on cash as well as credit basis. As a result of which, retailer always runs the risk of accumulating bad debts on account of non-payment of the amount from the consumer.
  • A retailer needs to have robust risk management capabilities. Various kinds of risks can be involved in a retail business which a retailer should be well prepared with like loss or damage of the products due to deterioration in quality, perishability or spoilage. A change in customer’s buying preferences or tastes can also affect the retail business to a great extent, or even the products may be damaged due to the natural calamities or vagaries of nature.
  • A retailer performs the crucial function of grading for all those goods which at times are either left ungraded by the wholesalers or manufacturers so that the customers readily accept the goods. The retailer is responsible for the packing of goods in small packages or small containers for the customer’s convenience.
  • The retailers are the direct point of contact or communication with the customers; hence they gather information regarding the changing tastes and preferences of the consumers, pass on the customer feedback to the manufacturers for continuous improvement in service delivery.
  • Retailers act as a vital channel for the launch of new products in the market as they are the direct interface with the consumers and can communicate directly with the targets consumers about the new product features and advantages.
  • The retailers are responsible for the product promotion and advertisement by planning the product displays and visual merchandising for attracting the customers.

Services Provided by a Retailer

To Customers:

  • A Retailer ensures ready stock availability of goods for the customers in sufficient quantities and sells the goods to the customers as per their quantity specifications.
  • A retailer ensures availability of a wide variety of choices of products for the customers by keeping different varieties at various prices and also different brands as well.
  • A retailer can provide credit facilities and heavy cash discounts on the purchase of different products to the customers.
  • Retailers can provide customized services and pay personalized attention to the customers for achieving a higher level of satisfaction with the delivery of product or service.
  • Retailers introduce new products to the customers and also guide them with the usage of the products.
  • Retailers can provide additional services like free home delivery or after sales services.
  • Retailers purchase and maintain a stock of those products which are mostly demanded by the customers. They aim at catering to the requirements of all kinds of customers with varied buying capacities.

To Wholesalers:

  • Retailers are a valuable source of information and feedback for the wholesalers who in turn pass on the same information to the producers of the products. Crucial information related to the changes in the buying preferences of the customers, their experience with the usage of the products, feedback on the prices and quality of the products is passed on to the wholesalers. This helps in improving the existing services and in customizing the product solutions as per the requirements of the customers.
  • A retailer absorbs most of the burden of the wholesaler and also of the manufacturer by selling the goods in small quantities to the customers. The wholesalers are relieved from the burden of maintaining direct touch with the customers and managing the entire gamut of activities involved in convincing the customers for purchasing their products.
  • Retailer supports the wholesaler by acting as a channel for distributing the goods to the customers.
  • Retailer acts as the point of contact between the customer and the wholesaler. Retailers are responsible for creating and improving the demand for various products by taking care of the display and merchandising activities.
  • Retailers act as a major source of funding for the wholesale trade by placing the orders and making payments in advance to the wholesalers for those goods.

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Retailer: Characteristics, Functions and Services

Characteristics, Functions and Services of a Retailer

In the fast changing globalized and a technology-driven business world, Retail industry over last few decades has witnessed a sea change. World’s largest retail giant of the present times Walmart is operating worldwide by establishing hypermarkets in various countries by taking the help of sophisticated means of communication as well as information systems technology.
A careful analysis of the trends reveals that in the Fortune 500 list of organizations, 50 are from retail industry and the top rank is occupied by the world’s No. 1 retail giant Walmart. The statistics convincingly reveal how fast the retail industry has grown and paved the path for expansion of business as well as employment opportunities.

Characteristics of a Retailer

  • In the entire distribution chain, a retailer is considered to be the final link, who deals directly with the customer.
  • A retailer purchases in bulk from the wholesalers and sells the products to the customers in small quantities.
  • A retailer essentially maintains a variety of merchandise.
  • The aim of a retailer is to achieve maximum satisfaction by exceeding their expectations and delivering exceptional services.

Key Functions Performed by a Retailer

  • A retailer performs the dual functions of buying and assembling of goods. The responsibility of a retailer is to identify the most economical source for obtaining the goods from the suppliers and passing on the advantages to the consumer.
  • The retailers perform the functions of warehousing and storing. They store the goods in bulk and make them available as per the requirement of the consumer. Warehousing and store keeping helps in ensuring uninterrupted availability of the goods to the consumers.
  • The primary function of a retailer is selling the products to the customers for which various techniques or business practices are being adopted by the retailer to achieve the strategic goals.
  • The prime focus of a retailer is on maximizing customer satisfaction by delivering quality products and services both on cash as well as credit basis. As a result of which, retailer always runs the risk of accumulating bad debts on account of non-payment of the amount from the consumer.
  • A retailer needs to have robust risk management capabilities. Various kinds of risks can be involved in a retail business which a retailer should be well prepared with like loss or damage of the products due to deterioration in quality, perishability or spoilage. A change in customer’s buying preferences or tastes can also affect the retail business to a great extent, or even the products may be damaged due to the natural calamities or vagaries of nature.
  • A retailer performs the crucial function of grading for all those goods which at times are either left ungraded by the wholesalers or manufacturers so that the customers readily accept the goods. The retailer is responsible for the packing of goods in small packages or small containers for the customer’s convenience.
  • The retailers are the direct point of contact or communication with the customers; hence they gather information regarding the changing tastes and preferences of the consumers, pass on the customer feedback to the manufacturers for continuous improvement in service delivery.
  • Retailers act as a vital channel for the launch of new products in the market as they are the direct interface with the consumers and can communicate directly with the targets consumers about the new product features and advantages.
  • The retailers are responsible for the product promotion and advertisement by planning the product displays and visual merchandising for attracting the customers.

Services Provided by a Retailer

To Customers:

  • A Retailer ensures ready stock availability of goods for the customers in sufficient quantities and sells the goods to the customers as per their quantity specifications.
  • A retailer ensures availability of a wide variety of choices of products for the customers by keeping different varieties at various prices and also different brands as well.
  • A retailer can provide credit facilities and heavy cash discounts on the purchase of different products to the customers.
  • Retailers can provide customized services and pay personalized attention to the customers for achieving a higher level of satisfaction with the delivery of product or service.
  • Retailers introduce new products to the customers and also guide them with the usage of the products.
  • Retailers can provide additional services like free home delivery or after sales services.
  • Retailers purchase and maintain a stock of those products which are mostly demanded by the customers. They aim at catering to the requirements of all kinds of customers with varied buying capacities.

To Wholesalers:

  • Retailers are a valuable source of information and feedback for the wholesalers who in turn pass on the same information to the producers of the products. Crucial information related to the changes in the buying preferences of the customers, their experience with the usage of the products, feedback on the prices and quality of the products is passed on to the wholesalers. This helps in improving the existing services and in customizing the product solutions as per the requirements of the customers.
  • A retailer absorbs most of the burden of the wholesaler and also of the manufacturer by selling the goods in small quantities to the customers. The wholesalers are relieved from the burden of maintaining direct touch with the customers and managing the entire gamut of activities involved in convincing the customers for purchasing their products.
  • Retailer supports the wholesaler by acting as a channel for distributing the goods to the customers.
  • Retailer acts as the point of contact between the customer and the wholesaler. Retailers are responsible for creating and improving the demand for various products by taking care of the display and merchandising activities.
  • Retailers act as a major source of funding for the wholesale trade by placing the orders and making payments in advance to the wholesalers for those goods.

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Retail Management – Meaning and its Need

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.

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Retail Management – Meaning and its Need

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.

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Retail: Cross Merchandising

Cross Merchandising


Retailing refers to the concept of selling merchandise in small quantities to the consumers for their end use. According to retailing, the individual can walk up to any nearby retail store and purchase products as per his need and pocket in small units for his own consumption.
The display of merchandise at the store plays an important role in attracting the customers into the store. The display of the products at the retail store goes a long way in influencing the buying behaviour of the consumers. The presentation of the products is essential to create that first impression in the minds of the consumers.

Cross Merchandising

Cross merchandising refers to the display of opposite and unrelated products together to earn additional revenues for the store. Products from different categories are kept together at one place for the customers to find a relation among them and pick up all.

According to cross merchandising:
  • Unrelated products are displayed together.
  • The retailer makes profits by linking products which are not related in any sense and belong to different categories.
  • Cross Merchandising helps the customers to know about the various options which would complement their product.
  • Cross Merchandising makes shopping a pleasurable experience as it saves customer’s precious time.
Examples of Cross Merchandising
  • Mobile covers displayed next to mobile phones.
  • Recharge coupons with new sim cards
  • Batteries with electronic appliances
  • Neck ties or cuff links displayed with men’ shirt
  • Fashion jewellery, rings, anklets, hand bags with female dresses
  • Shoe laces, shoe shiners, shoe racks with shoes
  • Audio CDs with CD Players


Jenny went to a nearby retail store to purchase a shirt for herself. She picked up a nice blue formal shirt displayed on the mannequin. The retailer was smart enough to add matching trouser, scarf and a handbag to the mannequin (Cross Merchandising). Not only did Jenny purchase the shirt but also the trouser as well as the office bag as she felt the products would complement her shirt.
The customer at the first instance can’t really decide what all he needs apart from the products he has already purchased. Through cross merchandising, the retailer smartly tries his level best to convince the customers to buy additional products apart from his existing list.
Mike went to a nearby departmental store to purchase cigarettes. He spotted chewing gums displayed along with the cigarettes. He immediately decided to purchase the chewing gums along with his cigarettes which he might need after smoking. Thus cross merchandising (display of cigarettes along with chewing gum) made Mike realize the connection between the products and eventually pick both of them.

Important tips for Cross Merchandising

  • The opposite products should be sensibly displayed for the customers to be able to relate them.
  • The merchandise should be neatly arranged without giving a cluttered look to the store.
  • The merchandise must complement each other to create the desired impact.
  • The retailer must make sure the products have some logical connection with each other.
    Displaying neck ties with Laptops would make no sense and fail to excite the customers. The customer would purchase either of the two (Either the Laptop or the neck tie) depending on his need but would never purchase both. However if laptop bags are kept with laptops, there are chances that the customer might pick up both the products.
  • Use hangers, pegs, mannequins or suitable fixtures to intelligently display the unrelated goods and prompt the customer to pick all of them.

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Retail Merchandising


Merchandising

  • Retail Merchandising refers to the various activities which contribute to the sale of products to the consumers for their end use. Every retail store has its own line of merchandise to offer to the customers. The display of the merchandise plays an important role in attracting the customers into the store and prompting them to purchase as well.
  • Merchandising helps in the attractive display of the products at the store in order to increase their sale and generate revenues for the retail store.
  • Merchandising helps in the sensible presentation of the products available for sale to entice the customers and make them a brand loyalist.

Promotional Merchandising

  • The ways the products are displayed and stocked on the shelves play an important role in influencing the buying behavior of the individuals.
A merchandiser maximizes the sale of the products by:

Attractive packaging

The packaging of the merchandise goes a long way in improving the brand value of the product. A product kept in a nice box would definitely catch the attention of the customers.

Impressive presentation of the Product

The display of the products at the retail store must entice the customers. The merchandiser in coordination with the store manager must ensure that the products are according to the season as well as latest trends.
The merchandiser must:
  • Source something which is unique and not available at any other retail store.
  • Never compromise on quality of the merchandise. Compromising on quality costs later.
  • Source merchandise as per the season and climate.
By mid of August and early September, the summer merchandise is generally on a close out and stores begin stocking merchandise for the winter season. Warm clothing, full sleeves apparels, jackets, pullovers start replacing cut sleeves, capris, ankle length dresses, shorts and so on. Colourful clothes dominate the shelves as compared to the subtle colours in summers.
The type of product sourced also depends on the climatic conditions of the place.
A Reebok store in Central India or Southern India would stock summer merchandise between April to September whereas a retail store under the same brand somewhere in a cold area would source woollen merchandise along with summer clothing as per the demand of the season.
Unique Pricing (Discounts)
Attractive prices, discounts, rebates also bring customers to the store.
Promotional schemes, gifts
Coupons and attractive gifts make shopping a pleasurable experience for the customers.
Merchandising Tips
  • The merchandiser must source products according to the latest trends and season.
  • The merchandise should be as per the age, sex and taste of the target market.
  • Merchandise for children should be in line with cartoon characters (like Barbie, Pokemon etc) to excite them.
Creative Portico Pvt Ltd sources bed sheets, curtains specially inspired from characters (Disney, Harry Porter, Hannah Montana) – a hit amongst kids.
Youngsters prefer funky clothes (colourful T Shirts, faded denims) as compared to professionals who would go for subtle colours.
The target market of Zodiac Clothing Company Limited mainly comprises of office goers and professionals. The merchandise (shirts, trousers, neck ties, belts) is as per the taste of the professionals. Beach house shirts would have no takers in such a store.

  • The merchandiser ideally works on the “invariant right” principle.
    Since most of us are right handed, it is a common tendency that customers entering into retail store would first go towards the right side of the store. The merchandiser should display the unique and expensive collections on the right side of the store to entice the customers.
  • The set up of the store should be such that once a customer enters into a store, he has to walk through each and every department.
  • The shelves should be stocked with the latest trends. The merchandise should be well organized on the racks according to their size and pattern.
  • It is the key responsibility of the merchandiser to create an attractive display to pull the customers into the store. Once the customer steps into the store, he would definitely buy something or the other.

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Retail Marketing – Tips to Promote a Retail Brand

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.

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Retail Pricing Models

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; in
stead 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 favor 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.

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