1. Mention Names and IDs of your Group members.

Immersive Reader

19-91395-3 ZEBUN NESSA ZERIN

19-91483-3 TAMIM AHMED TANIN

19-91511-3 MD. TOWHEED AHMED

20-91676-1 MOSTAFA AMINUL HASSAN

2. What is retailing? (Ch-1)

Answer: Retailing is the set of business activities that adds value to products and services sold to
consumers for their personal or family use. Often, people think of retailing only as the sale of
products in stores, but retailing also involves the sale of services such as overnight lodging in a
motel, a doctor’s exam, a haircut, or a home delivered pizza. Not all retailing is done in stores.
Examples of nonstore retailing include ordering a T-shirt on your mobile phone app, buying
cosmetics from an Avon salesperson, ordering hiking boots from an L.L. Bean catalog, and
renting a Blu-Ray from a Redbox kiosk.

3. What is a retail chain? Mention name of any retail chain of Dhaka. (Ch-1)
Answer: A chain store or retail chain is a retail outlet in which several locations share a brand,
central management, and standardized business practices. They have come to dominate the
retail and dining markets, and many service categories, in many parts of the world. A franchise
retail establishment is one form of chain store. In 2005, the world's largest retail chain, Walmart,
became the world's largest corporation based on gross sales.
Example of Retail chain of Dhaka:
The first intervention of superstore was in 2001 by Rahimafrooz Superstores Limited, namely
Agora with 4 outlets. In quick succession, Agora was followed by Nandan, initially with two
large-scale outlets and Meena Bazar with four medium-scale outlets. In 2008, ACI Ltd. launched
its own retail chain, Shwapno. Inside Dhaka there are other smaller chains such as Daily
Shopping (9 outlets), Almas (4 outlets), Carrefamily (2 outlets), Pick & Pay (2 outlets), Lavender
(2 outlets) and Prince Bazar (2 outlets). In addition to Dhaka, Agora, Shwapno & Meena Bazar
operates in Chittagong, Khulna, Sylhet and Rajshahi.

“Shwapno” is the largest retail chain in Bangladesh which operated by ACI Logistics Limited.
Shwapno approximately cover over 35,000 households each day, which mean it’s have larger
customer coverage & the most number of outlets (60 outlets). That’s why Shwapno is currently
the market leader. ACI Logistics made its entry into retail in 2008 as “Fresh and Near” in order to
fulfill the company’s “Seed to Shelf” vision of connecting farmers directly with consumers.

In numbers, Shwapno has 60, Meena Bazar has 18 & Agora has 10 outlets.

4. What is the basic difference between backward integration and forward integration? Give
examples. (Ch-1)
Answer:
Key Difference –Backward Integration vs Forward
All businesses are a part of a value system (a network where the company is connected with its
suppliers and customers), where many organizations work in collaboration to deliver a product
or service to the customers. Both forward and backward integration are forms of vertical
integration, i.e., where the company integrates with other companies who are in different steps
on the same production path; for instance, with manufacturers and distributors. Forward
integration is an instance where the company acquire or merge with a distributor or retailer
whereas backward integration is an instance the company acquire or merge with a supplier or
manufacturer. This the key difference between forward and backward integration.

Forward Integration:
Forward integration is a business strategy where the company merge with or acquire a company
that provides services to deliver the product to the end customer. This alliance can be with an
intermediate distributor or a retailer.

Example: If a brewery enters into an alliance with a company selling beer, this is a form of
forward Integration.
Disney provides a sound real life company example of forward integration where the company
purchased more than 300 retail stores that sell merchandise based on Disney characters and
movies.
Backward Integration:
If the company decides to enter into an alliance with a manufacturer or a supplier by way of
acquisition or merger, this is called backward integration. This is done in order to achieve
improved efficiency and cost savings.

Example: A bakery business purchasing a wheat processor or a wheat farm is a form of

backward integration since it is a supplier of ingredients.
Ford Motor Company incorporated subsidiaries that supply key inputs to its vehicles such as
rubber, metal and glass. Other popular global companies such as Amazon.com and Tesco have
collaborated with suppliers in a similar way.

Difference between Forward and Backward Integration:

Some companies practice vertical integration to a greater extent where they are both
backwardly and forwardly integrated. Apple is such a company where it is integrated with
manufacturers of hardware and Apple Retail Stores exclusively sell company’s products.

Vertical integration facilitates healthy business communications and relationships since two or
more companies do business collaboratively to serve the end customer. Since all the
organizations involved have a common objective, goal congruence is well established. There are
lower costs of transactions and a commitment towards high quality.

Despite the advantages forward and backward integration, these two options may not be viable
for many companies. Some supplier or distributors may prefer to do business independently
since they have significant capacity and the ability to enjoy greater economies of scale (cost
advantage that arises with increased output of a product). For instance, DHL the world’s largest
 logistics company has vast economies of scale and very efficient distribution channels; thus, they
will not consider entering into alliances with other companies.

Forward vs Backward Integration

In forward integration, the company Backward integration is where the company
acquire or merge with a distributor. acquire or merge with a suppler or manufacturer.

Purpose
The main purpose of forward The main purpose of backward integration is to
integration is to achieve larger market achieve economies of scale.
share.

The difference between forward and backward integration depends on whether the company integrates
with a manufacturer/supplier or distributor/retailer. Other than that, they share widely similar
structure, merits and demerits, as both are forms of vertical integration. The success in vertical
integration always depends on the ability of two or more firms to work together towards a common
goal. Partners in a vertical integration arrangement have different levels of bargaining powers and this
may even lead to conflicts among them at times. These has to be controlled and resolved in order to
achieve increased benefits from the alliance.

5. How does retailer add value for consumers? (Ch-1)

Answer:
 Break Bulk -Buy it in quantities customers want
 Hold Inventory -Buy it at a convenient place when you want it
 Provide Assortment -Buy other products at the same time
 Offer Services -See it before you buy, get credit, layaway
 Informing -Receive information to complete a transaction
6. How does retailer add value for manufacturers? (Ch-1)
Answer:
• Distribute goods to customers.
• Channel information from customers.
• Absorb risks
– Physical deterioration
– Fashion change
– Technological obsolescence
• Smoothen the production cycle.

7. How does retailer create economic utility? (Ch-1)

Answer:
• Form Utility: It is created by manufacturing and other means of production and when goods are
sorted into smaller units.
• Place Utility: Make the products available in a way that easily accessible by customers.
• Time Utility: Make the products available when the customers want to purchase.
• Possession Utility: Retailers assists the customers in acquiring products through credit etc.

8. What are the different types of retail segments? Give one example from each. (Ch-1)
Answer:
Apparel, accessories, and luxury goods: Men’s wear, women’s wear, children’s wear, footwear,
watches and jewelry. Example: Aarong.
Food & grocery: Food, beverages, tobacco, household care, and personal care. Example:
Shwapno.
Electrical & electronics: Audio-visual equipment, fixed and mobile telecommunications
equipment, computers and peripherals, domestic appliances, photographic equipment and
games consoles. Example: Singer Bangladesh Limited
House & garden: Carpets and floor coverings, domestic furniture, garden products and home
improvement products. Example: Partex Furniture
Media products: Books, newspaper, stationery, and recorded music and video. Example:
Amazon
Sports & leisure: Sports and fitness equipment, and traditional toys and games. Example: Sports
world.

9. Mention the names of different food retail chains of Dhaka city? (Ch-1)
Answer:
10. "Retailing is a high tech industry”-briefly explain. (Ch-1)
Answer:
• Selling Merchandise over the Internet
• Using Internet to manage supply chains
• Analyze POS data to tailor assortments to stores
• Computer systems for merchandise planning

11. What are the different elements of retail mix? Briefly explain. (Ch-1)
Answer:
• Retail mix consists of three sub-mixes (by Rosenbloom, 1976) :
– Goods and services mix (variety and assortment, parking sales service, credit, price,
guarantee and exchanges, alterations and adjustments, delivery)
– Communication Mix (personal selling, advertising, window display, interior display,
public relations, store layouts, catalogs, telephone sales)
– Physical distribution Mix (store location, distribution centers, inventory control,
transportation, handling goods).
• Retail mix has six elements (by Levy & Weitz, 2004) :
– Location
– Pricing
– Communication
 – Store design & display
– Customer service
– Merchandise Assortments

Location:

• It shapes customer decision on where to shop.

• If a site is selected it cannot be occupied by another store.
• Criteria to be considered- population, competition, transportation access, parking availability,
nature of nearby stores, property costs, length of agreement, legal restrictions.

Pricing:

 Strategic weapon for many retailers.

 Retailers should price their merchandise items in a way that both profitability of the retailers
can be achieved and customers can be satisfied.

 Criteria to be considered- target market, store policies, merchandise assortments, competition,

customer considerations.

Communication:

 To develop appealing brand images, attract customers to store outlets and internet sites and
encourage them to buy.

 To inform them about- merchandises/services-build store image

 To inform store hours, special offerings, product features, styles in fashion

 Common tools- advertising, personal selling, sales promotion, publicity, and direct marketing

 The main objective is to influence perception, attitudes and behavior of the shoppers.

Store design and display:

 Architectural character or decorative style and consists of

 external design elements like style, signage, windows, entrance, materials, colors,
lightings

 Internal design elements like layout, fixtures, displays, floors, color, light, ceilings.

 It communicates the customer what the store is all about and develop the image of a
retail store.

 The design serves the functional purpose of protecting, enclosing and displaying merchandise at
convenient time at convenient location.

Customer Service:
  Is the set of activities undertaken by retailers to make the shopping experience more rewarding
for the shoppers.

 It consists of- store hours, parking, shopper friendliness of the store layout, credit acceptance,
salespeople, rest rooms, employee politeness, delivery policies, the time shoppers spend in
check-out lines, follow-up service etc.

Level of service includes both the quality of services provided by the salesperson and the quality of
associated services such as gift, wrapping and mailing depending on the type of merchandise being sold
and shoppers being targeted.

Merchandise Assortments:

 Is the selection of merchandises a retailer carries.

 The main purpose of creating an assortment plan is to create a balanced assortment of

merchandise in terms of color, size, brand, materials, quantities.

 Overall choice of merchandise conveys a clear message to the shoppers about the type of
organization they are purchasing from.

It acts as a differentiator.

Claire’s Retail Mix:

 Location: Enclosed malls

 Merchandise Assortment: Jewelry, accessories and cosmetics for tweens and teens

 Pricing: Modest with sales

 Communication Mix: TV and Magazine Ads

 Store design and display: Racetrack with Displays

 Customer service: Modest

Macy’s Retail Mix:

 Location: Enclosed malls

 Merchandise Assortment: Many items in apparel and soft home

 Pricing: Moderate with frequent sales

 Communication Mix: TV, newspaper ads and special events

 Store design and display: Racetrack with Displays

 Customer service: Modest

Target’s Retail Mix:

 Location: Free standing stores

 Merchandise Assortment: large number of categories, private labels, few items in each
category.

 Pricing: Low to modest.

 Communication Mix: TV and newspaper insert ads.

 Store design and display: colorful, wide aisles displays for products with grid layout.

 Customer service: Limited

12. Why are retailers using multiple channels to interact with customers? (Ch-3)
Answer:
 Customers want to interact in different ways
 Each channel offers a unique set of benefits for Customers

13. What are the benefits received by the shoppers whenever they use different retail channels
(stores/catalogs/internet)? Briefly explain (Ch-3)
Answer:

Unique Benefits Provided by Store Channel:

Browsing
Touch and feel products
Personal service
Cash payment
Immediate gratification
Entertainment and social interaction
Risk Reduction
Benefits Provided by Catalog Channel:
Convenience
Portability, easily accessible
Visual presentation
Safety
Unique Benefits Provided by Internet Channel:
Convenience
Safety
Broad selection
Detailed information
Personalization
Virtual communities
Problem-solving information
More info to evaluate merchandise

Problem Solution Benefits Offered By Electronic Channel:

 Information Tailored to Individual Consumers to Help Them Make Quicker and Better Purchase
Decisions
• Bundling Information, Services, and Products
• Examples – iVillage
– The Wedding Channel, The Knot

14. How will you define virtual community (Ch-3)

Answer:
People who seek information, products and services communicate with each other regarding
specific issues.
Virtual community is a network of members sharing common interests that interact with each
other electronically.
• Examples:
– IVillage – Women
– Garden.Com - Gardeners
– Flypaper.com – talks about fashion
– Cafeutne.org – social issues

15. Briefly discuss the Strategic Profit model. (Ch-6)

Answer:
16. What do you mean by benchmarking? (Ch-6)
Answer: Performance of retailer over time – retailer can compare its recent performance to its
performance in the preceding months, quarters or years. Performance of a retailer compared to
its competitors

17. How will you define merchandise management? (Ch-12)

Answer: Performance of retailer over time – retailer can compare its recent performance to its
performance in the preceding months, quarters or years. Performance of a retailer compared to
its competitors
18. How will you define a merchandise category? Give example. (Ch-12)
Answer:
A merchandise category is an assortment of items that customers see as substitutes for each
other.
Vendors might assign products to different categories based on differences in product
attributes.
Retailers might assign two products to same category based on common consumers and buying
behavior
19. How will you define category management? (Ch-12)
Answer:
Category management is the process of managing a retail business with the objective of
maximizing the sales and profits of a category.
Department stores manage at category level, but grocery stores manage merchandise around
brands and vendors.
Objective is to maximize the sales and profits of the entire category, not just a particular brand.
The McGraw-Hill Companies, Inc./Andrew Resek, photographer Selected vendor res
 20. How will you define category captain? (Ch-12)
Answer:
Selected vendor responsible for managing a category
Vendors frequently have more information and analytical skills about the category in which they
compete than retailers
 Helps retailer understand consumer behavior
 Creates assortments that satisfy the customer
 Improves profitability of category

Problems

 Vendor category captain may have different goals than retailer

Antitrust Consideration:

 The vendor category captain could collude with retailer to fix prices
 It could block brands from access to shelf space
 Category captains need to temper zeal for control over retailers

21. How will you evaluate merchandise management performance? (Ch-12)

Answer:
Merchandise managers have control over
 The merchandise they buy
 The price at which the merchandise is sold
 The cost of the merchandise
Merchandise managers do not have control over
 Operating expenses
 Human resources
 Real estate
 Supply chain management
 Information systems

22. What does GMROI stand for? How will you calculate GMROI? (Ch-12)
Answer:
GMROI (Gross Margin Return on Investment):
A measurement of how many gross margin dollars are earned on every dollar of inventory
investment made by the buyer.
GMROI = Gross Margin Percent x sales to stock ratio
= (gross margin / net sales) × (net sales/avg inventory at cost)
= gross margin/avg inventory at cost

23. What are the advantages of rapid turnover? (Ch-12)

 Answer:
 Increased sales volume
 Less risk of obsolescence and markdowns
 Improved salesperson morale
 More resources to take advantage of new buying opportunities

24. Briefly explain the approaches to improve inventory turnover? (Ch-12)

Answer:
 Reduce number of categories
 Reduce number of SKUs within a category
 Reduce number of items in a SKU
BUT if a customer can’t find their size or color or brand, patronage and sales decrease!
To improve inventory turnover
 Buy merchandise more often
 Buy in smaller quantities which should reduce average inventory without reducing sales
BUT by buying smaller quantities
 Buyers can’t take advantage of quantity discounts so
 Gross margin decreases
 Operating expenses increase
 Buyers need to spend more time placing orders and monitoring deliveries

25. Write a short note on CPFR. (Ch-12)

Answer:
Collaboration, Planning, Forecasting and Replenishment Systems (CPFR):
Systems used by retailers and vendors to work together to ensure that the right merchandise is
at the right place at the right time.
◦ Benefits both retailers and vendors
◦ Increases fill rate, reduces stock-outs, increases inventory turns

26. What do you mean by variety, assortment, and product availability?

27. What are the key characteristics of staple merchandise and fashion merchandise? (Ch-13)
Answer:

28. What are the different factors that determine backup stocks? (Ch-13)
Answer:
 Level of backup depends on product availability retailer wishes to provide
 The greater the fluctuation in demand, the more backup stock is needed
 The amount of backup stock needed is also affected by the lead time from the vendor
 Fluctuations in lead time affect the amount of backup stock
 Vendor’s product availability affects retailers’ backup stock requirements
29. How will you define order point? (Chh-13)
Answer:
 Order point = the point at which inventory available should not go below or else we will run out
of stock before the next order arrives.
• Assume Lead time = 0, Order point = 0
• Assume Lead time = 3 weeks, review time = 1 week, demand = 100 units per week
• Order point = demand (lead time + review time) + buffer stock
• Order point = 100 (3+1) = 400
• Assume Buffer stock = 50 units, then
• Order point = 100 (3+1) + 50 = 450
• We will order something when order point gets below 450 units.
Order Point = (Demand/Day) x (Lead Time +Review Time) + Backup Stock
167 units = (7 units x (14 + 7 days) + 20 units
So Buyer Places Order When Inventory in Stock Drops below 167 units
30. What is shrinkage in retailing? How will you measure shrinkage? (Ch-13)
Answer:
Shrinkage: Inventory loss caused by shoplifting, employee theft, merchandise being misplaced or
damaged and poor bookkeeping.
Retailers measure shrinkage by taking the difference between
1. The inventory recorded value based on merchandise bought and received
2. The physical inventory actually in stores and distribution centers
31. Briefly discuss multi-attribute method for evaluating vendors. (Ch-13)
Answer:
The multi-attribute method for evaluating vendors uses a weighted average score for each
vendor. The score is based on the importance of various issues and the vendor’s performance
on those issues.

A buyer can evaluate vendors by using the following five steps:

• Develop a list of issues to consider in the evaluation (column 1)
• Importance weights for each issue in column 1 are determined by the buyer/planner in
conjunction with the GMM (column 2)
• Make judgments about each individual brand’s performance on each issue (the remaining
columns)
• Develop an overall score by multiplying the importance for each issue the performance for
each brand or its vendor.