Professional Documents
Culture Documents
Store Operations
Store Operations
Store Operations
JNU, Jaipur
First Edition 2013
JNU makes reasonable endeavours to ensure content is current and accurate. JNU reserves the right to alter the
content whenever the need arises, and to vary it at any time without prior notice.
Index
I. Content....................................................................... II
IV. Abbreviations..........................................................IX
Book at a Glance
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Contents
Chapter I........................................................................................................................................................ 1
Introduction to Store Operations................................................................................................................ 1
Aim................................................................................................................................................................. 1
Objectives....................................................................................................................................................... 1
Learning outcome........................................................................................................................................... 1
1.1 Introduction............................................................................................................................................... 2
1.2 Origination of Stores................................................................................................................................. 2
1.3 Store Operations........................................................................................................................................ 3
1.3.1 Major Responsibilities of a Store Manager.............................................................................. 3
1.3.2 Assisting Major Retailers.......................................................................................................... 5
1.3.3 Logical Activity Flow of Store Operations............................................................................... 5
1.4 Store Operations Management System [Soms]........................................................................................ 6
1.5 Microsoft Dynamics Retail Management System (RMS)........................................................................ 7
1.6 Retail Store in India.................................................................................................................................. 9
1.6.1 Curtain Raiser to WIPRO Retail............................................................................................. 10
1.6.2 Big Bazaar: The Brand Building Challenge........................................................................... 10
1.7 Strategy behind the Store Design.............................................................................................................11
1.7.1 Store Space: Case Study of Store Hanger............................................................................... 12
1.7.2 Fraschetti: Automates Warehouse to Improve Operations...................................................... 13
1.8 Introduction to Store Operations Solutions ........................................................................................... 14
1.8.1 Task Manager.......................................................................................................................... 14
1.8.2 Workforce Manager................................................................................................................ 14
1.8.3 Time and Attendance.............................................................................................................. 15
1.8.4 Store Walk............................................................................................................................... 15
Summary...................................................................................................................................................... 16
References.................................................................................................................................................... 16
Recommended Reading.............................................................................................................................. 17
Self Assessment............................................................................................................................................ 18
Chapter II.................................................................................................................................................... 20
Managing Customers.................................................................................................................................. 20
Aim............................................................................................................................................................... 20
Objectives..................................................................................................................................................... 20
Learning outcome......................................................................................................................................... 20
2.1 Introduction............................................................................................................................................. 21
2.2 Definition of a Retail Customer.............................................................................................................. 21
2.3 Types of Customers................................................................................................................................. 21
2.3.1 Loyal Customers..................................................................................................................... 22
2.3.2 Discount Customers................................................................................................................ 23
2.3.3 Impulse Customers................................................................................................................. 23
2.3.4 Need-Based Customers........................................................................................................... 24
2.3.5 Wandering Customers............................................................................................................. 24
2.4 Customer Segmentation.......................................................................................................................... 25
2.5 Commonly used Bases of Customer Segmentation................................................................................ 25
2.5.1 Demographic Segmentation.................................................................................................... 25
2.5.2 Psychographics Segmentation................................................................................................ 27
2.5.3 Geographic Segmentation....................................................................................................... 27
2.6 Customer Information Management....................................................................................................... 27
2.6.1 Loyalty Programs.................................................................................................................... 27
2.7 Customer Service Principles................................................................................................................... 28
2.7.1 Services Offered by Retailers................................................................................................. 28
2.7.2 Strategic Advantage through Customer Service..................................................................... 29
2.7.3 Cost of Good Customer Service............................................................................................. 29
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2.7.4 Customers Evaluation of Service Quality............................................................................... 29
2.7.5 Service Recovery.................................................................................................................... 30
Summary...................................................................................................................................................... 32
References.................................................................................................................................................... 32
Recommended Reading.............................................................................................................................. 33
Self Assessment............................................................................................................................................ 34
Chapter III................................................................................................................................................... 36
Managing Manpower.................................................................................................................................. 36
Aim............................................................................................................................................................... 36
Objectives..................................................................................................................................................... 36
Learning outcome......................................................................................................................................... 36
3.1 Introduction............................................................................................................................................. 37
3.2 Managing Human Resource.................................................................................................................... 37
3.3 Organisational Structure of a Retail Firm............................................................................................... 39
3.3.1 Meaning of Organisational Structure...................................................................................... 39
3.3.2 Steps in Developing Organisational Structure........................................................................ 39
3.3.3 Retail Organisational Structure............................................................................................... 40
3.4 Manpower Planning................................................................................................................................ 41
3.5 Job Description....................................................................................................................................... 43
3.6 Recruitment............................................................................................................................................. 44
3.6.1 Values of Recruitment............................................................................................................. 44
3.6.2 Process of Recruitment Managing Manpower........................................................................ 44
3.7 Sourcing For Employees......................................................................................................................... 45
3.7.1 Internal Sources...................................................................................................................... 45
3.7.2 External Sources..................................................................................................................... 45
3.8 Careers in Retailing................................................................................................................................. 46
3.9 Management in Retail Store.................................................................................................................... 46
3.9.1 Support Functions................................................................................................................... 47
3.9.2 Merchandise Management...................................................................................................... 47
3.9.3 Project / Store Design............................................................................................................. 48
3.9.4 Training of Employees............................................................................................................ 48
3.10 Motivation: A Key to Employee Performance...................................................................................... 49
Summary...................................................................................................................................................... 52
References.................................................................................................................................................... 52
Recommended Readings............................................................................................................................ 53
Self Assessment............................................................................................................................................ 54
Chapter IV .................................................................................................................................................. 56
Managing Merchandise.............................................................................................................................. 56
Aim............................................................................................................................................................... 56
Objectives..................................................................................................................................................... 56
Learning outcome......................................................................................................................................... 56
4.1 Introduction............................................................................................................................................. 57
4.2 Merchandise Management...................................................................................................................... 57
4.3 Supply Chain........................................................................................................................................... 57
4.3.1 Managing Supply Chain......................................................................................................... 57
4.3.2 Warehousing Facility.............................................................................................................. 59
4.4 Managing Merchandise Costs................................................................................................................. 59
4.5 Managing Merchandise Quality.............................................................................................................. 60
4.6 Merchandise Display and Store Capacity............................................................................................... 60
4.6.1 Basic Formats of Merchandise Display.................................................................................. 60
4.6.2 Keys to Successful Merchandise Display............................................................................... 61
4.6.3 Important Tips on Merchandise Display................................................................................. 61
4.7 Shrinkage & Loss Prevention................................................................................................................. 62
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4.7.1 Shrinkage................................................................................................................................ 62
4.7.2 Loss Prevention....................................................................................................................... 62
4.8 Retail Margin Analysis........................................................................................................................... 63
4.8.1 Inventory Turnover................................................................................................................. 63
4.8.2 GMROI................................................................................................................................... 64
4.8.3 Break-even Point..................................................................................................................... 64
4.8.4 Retail Math Formulas............................................................................................................. 64
4.8.5 Measuring Retail Performance and Productivity.................................................................... 65
4.9 Open-to-Buy Planning: Controlling your Inventory............................................................................... 66
4.9.1 Store Level Stock Planning..................................................................................................... 66
4.9.2 Avoiding Mismanagement of Merchandise............................................................................ 66
4.10 Keywords.............................................................................................................................................. 67
Summary...................................................................................................................................................... 68
References.................................................................................................................................................... 68
Recommended Reading.............................................................................................................................. 69
Self Assessment............................................................................................................................................ 70
Chapter V ................................................................................................................................................... 72
Introduction to Stores................................................................................................................................. 72
Aim............................................................................................................................................................... 72
Objectives..................................................................................................................................................... 72
Learning outcome......................................................................................................................................... 72
5.1 Introduction............................................................................................................................................. 73
5.2 Basic Functions of Stores Houses........................................................................................................... 73
5.2.1 Size of Stores.......................................................................................................................... 73
5.2.2 Site Selection ......................................................................................................................... 74
5.2.3 Construction............................................................................................................................ 74
5.2.4 Fire Precautions...................................................................................................................... 78
5.2.5 Security................................................................................................................................... 79
5.2.6 Safety / Health........................................................................................................................ 79
5.3 Classification of Store............................................................................................................................. 79
5.3.1 Varieties of Stores................................................................................................................... 80
5.3.2 Central or Main Store............................................................................................................. 82
5.4 Location of Stores................................................................................................................................... 82
5.4.1 Location of Main Stores......................................................................................................... 82
5.4.2 Stockyards and its Location.................................................................................................... 83
5.5 Layout of Store....................................................................................................................................... 84
5.5.1 Stock Location Alternatives.................................................................................................... 85
5.5.2 Practical Problems in Location of Stock................................................................................. 85
5.6 Materials At Risk in Storage................................................................................................................... 86
5.6.1 Conditions Affecting Life of Goods....................................................................................... 86
5.6.2 Store for Special Type of Materials........................................................................................ 86
5.6.3 Storage of Explosives............................................................................................................. 87
5.6.4 Storage of Chemicals.............................................................................................................. 87
5.7 Store Efficiency...................................................................................................................................... 88
Summary...................................................................................................................................................... 89
References.................................................................................................................................................... 89
Recommended Reading.............................................................................................................................. 90
Self Assessment............................................................................................................................................ 91
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Chapter VI................................................................................................................................................... 93
Managing Space.......................................................................................................................................... 93
Aim............................................................................................................................................................... 93
Objectives..................................................................................................................................................... 93
Learning outcome......................................................................................................................................... 93
6.1 Introduction............................................................................................................................................. 94
6.2 Skill of Managing Space......................................................................................................................... 95
6.2.1 Store Design............................................................................................................................ 95
6.2.2 Shelf Location and Space....................................................................................................... 95
6.2.3 Visibility and Sales Promotion............................................................................................... 95
6.2.4 Competition among Brands.................................................................................................... 96
6.2.5 Screening of Products............................................................................................................. 96
6.3 Space Planning Concept......................................................................................................................... 96
6.3.1 Objectives of Space Planning................................................................................................. 96
6.3.2 The Process............................................................................................................................. 97
6.4 Optimising Space Availability................................................................................................................ 98
6.4.1 Clusters based on Similar Demand Trends............................................................................. 98
6.4.2 Accurate and Efficient Assortment Management................................................................... 98
6.4.3 Creating Floor Plans that Increase Store Productivity............................................................ 98
6.4.4 Efficiently Develop Planograms for Improved Space Management...................................... 98
6.5 Return on Space...................................................................................................................................... 98
6.6 Maintenance of Space............................................................................................................................. 99
6.6.1 The Challenges of Space Management................................................................................... 99
6.6.2 Maximise the Profitability of your Space............................................................................... 99
6.6.3 Key Features of a Space Management Software.................................................................... 99
6.6.4 Adherence of Space Plan...................................................................................................... 100
6.6.5 Avoid Mismanagement of Space Managing Space............................................................... 100
6.6.6 Cleanliness of Place.............................................................................................................. 101
Summary.................................................................................................................................................... 102
References.................................................................................................................................................. 102
Recommended Reading............................................................................................................................ 103
Self Assessment.......................................................................................................................................... 104
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Chapter VIII...............................................................................................................................................119
Standard Operating Procedure (SOP) and Transaction Matrix...........................................................119
Aim..............................................................................................................................................................119
Objectives....................................................................................................................................................119
Learning outcome........................................................................................................................................119
8.1 Introduction........................................................................................................................................... 120
8.2 The SOP Process................................................................................................................................... 120
8.2.1 SOP Preparation.................................................................................................................... 120
8.2.2 Review and Approval............................................................................................................ 120
8.2.3 Frequency of Revisions and Reviews................................................................................... 120
8.3 SOP Documentation.............................................................................................................................. 121
8.3.1 Objective of SOP.................................................................................................................. 121
8.4 Process at the Alteration Counter.......................................................................................................... 121
8.4.1 Process at the Tailor’s Desk.................................................................................................. 121
8.4.2 Process at the Alteration Counter.......................................................................................... 121
8.4.3 Daily Audit by Inventory Department.................................................................................. 122
8.5 Alteration Request Slip......................................................................................................................... 122
8.5.1 Annexure – I.......................................................................................................................... 122
8.6 Understanding Retail Business Drivers................................................................................................ 123
8.8 Influencing Factors............................................................................................................................... 124
8.9 Average Transaction Size...................................................................................................................... 125
8.10 Influencing Factors for Achieving Higher Ticket Size....................................................................... 125
8.10.1 Upgradation to Higher Priced Items................................................................................... 126
8.10.2 Requirement of Management Action . ............................................................................... 126
8.10.3 Items per Ticket.................................................................................................................. 126
8.10.4 The Influencing Factors...................................................................................................... 126
8.11 Measuring Performance...................................................................................................................... 126
8.12 The Final Word on Achieving Best Result on Sales........................................................................... 127
Summary.................................................................................................................................................... 128
References.................................................................................................................................................. 128
Recommended Reading............................................................................................................................ 129
Self Assessment.......................................................................................................................................... 130
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List of Figures
Fig. 1.1 Visual merchandise in stores............................................................................................................. 2
Fig. 1.2 Skill-set thoughts............................................................................................................................... 4
Fig. 1.3 The store performance improvement continuum............................................................................... 5
Fig. 1.4 Major responsibilities of a store manager in a store operation.......................................................... 6
Fig. 1.5 Retail management systems for store operations.............................................................................. 7
Fig. 2.1 Classification of customers.............................................................................................................. 22
Fig. 2.2 Customer loyalty cycle.................................................................................................................... 23
Fig. 2.3 Need of customers........................................................................................................................... 24
Fig. 2.4 Bases of segmentation..................................................................................................................... 25
Fig. 3.1 Managing human resource............................................................................................................... 37
Fig. 3.2 Utilisation of manpower management............................................................................................. 38
Fig. 3.3 Productivity of employee................................................................................................................. 38
Fig. 3.4 Steps in manpower planning............................................................................................................ 41
Fig. 3.5 Job analysis...................................................................................................................................... 42
Fig. 3.6 Performance standard...................................................................................................................... 42
Fig. 3.7 Recruitment cycle............................................................................................................................ 44
Fig. 3.8 Two type of incentives..................................................................................................................... 49
Fig. 3.9 Clarity of goals in the form of SMART........................................................................................... 51
Fig. 7.1 Classification of assets................................................................................................................... 107
Fig. 7.2 Lighting system in store.................................................................................................................112
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List of Tables
Table 2.1 Age distribution of the consumers................................................................................................ 26
Table 3.1 Job description of a retail salesperson........................................................................................... 43
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Abbreviations
B2B - Business to Business
CRM - Customer Relation Management
ROI - Return on Investment
POS - Point of Sale
RMS - Retail Management System
CSV - Comma Separated Value
EDC - Electronic Data Capture
PDA - Personal Digital Assistant
ERP - Enterprise Resource Planning
TCO - Total Cost of Ownership
RFID - Radio Frequency Identification
SOMS - Store Operation Management System
DIY - Do it Yourself
BPL - Below Poverty Line
APL - Above Poverty Line
GMROI - Gross Margin Return on Inventory Investment
OTB - Open to Buy
GM - Gross Margin
VM - Visual Merchandising
SOP - Standard Operating Procedure
SOPD - Standard Operations Process Document
IX/JNU OLE
Chapter I
Introduction to Store Operations
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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Store Operations
1.1 Introduction
Retailing is a ‘technology-intensive’ industry. Successful retailers work closely with their vendors to predict consumer
demand, shorten lead times, reduce inventory holding and thereby, save on cost. Wal-Mart had pioneered the concept
of building a competitive advantage through distribution and information systems in the retailing industry. Society
is changing and the evolution of the Internet in recent years is causing unprecedented changes in consumption
patterns. The virtual world is getting bigger, and in coming years it is going to add a feather in the cap as far as
retail industry in concerned.
It was during this period that many historians, such as Erika Rappaport and Judith Walkowitz, have charted the rise of
London’s main shopping areas and their role as a space of female conspicuous consumption. They have constructed
their arguments by examining masculine criticisms (although they also explore a number of early feminist attacks)
surrounding the female shopper.
The augment of the department store or grand emporium in the 19th century brought more changes in store design
and visual displays. The early department stores continued with the idea of displaying merchandise in complex and
luxurious setting. A retail store is a retail establishment, which gratify an extensive variety of the consumer’s personal
and residential product needs; and at the identical time offering the consumer an alternative of manifold merchandise
lines, at changeable price points, in all product categories. Retail stores more often than not sell products including
attire, furniture, home appliances, electronics, and furthermore select other lines of products such as paint, hardware,
toiletries, cosmetics, photographic equipment, jewellery, toys, and sporting goods. Definite department stores are
more hush-hush as discount stores. Discount stores frequently have central customer checkout areas, by and large
in the front area of the store. Department stores are more often than not ingredient of a retail chain of many stores
positioned around a country or several countries.
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1.3 Store Operations
Retailers drop millions of rupees per year due to contradictory store-level implementation of their corporate approach.
The cost bang of inconsistent execution is between 2-5 percent of annual sales. Un-coordinated corporate planning
result in uncertainty and precedence divergence in the store. Lack of two-way response prevents constant development.
Store managers are filled to capacity with communication and left to prioritise tasks on their own.
Field managers swamped by a glut of out-of-date MIS reports fight fires reactively as an alternative of providing
leadership. Labour schedules are out of footstep with genuine workload necessities. Even though tasks are completed
corporate struggles to authenticate acquiescence. Store operations enable retailers to make certain dependable
implementation of their corporate strategy by all stores and pull through the sales they would have otherwise lost.
Store operations comprise task manager (for closed-loop task management), Workforce Manager (for forecasting
and preparation labour based on sales forecasts, corporate initiatives, and employee skills and work predilection),
Time and Attendance (for time entry, labour tracking, and time costing functionality), KPI Activator (for real time,
KPI-driven alerts with the ability to assign corrective rejoinder based on best practices), and Store Walk (for ensuring
consistency from enhanced store walks and audits). Store Operations solutions facilitate retailers to boost efficiency,
augment sales, and comprehend rapid ROI. Store Operations has again and again implemented its solutions in 21
weeks or less, across numerous store formats at some of the world’s largest retailers.
The primary attitude at the rear the science of shopping is the simplest one. Public have confident similarities and
tendencies, which the retail environment must receive into account. Store operations are concerned with maximising
the efficacy of the retailer’s use of resources on a day to day basis. Retail store operation is about converting resources
into sales and profits. Store operation aims at maximising profits by providing a satisfactory experience and effective
service to customers by making optimal use of people, space and merchandise. Store operation is about executing
the strategies and policies of the retail business at the store level on a day to day basis. Store operations could be
seen from four perspectives namely: Product, Customers, Sales, and Place. Let us throw some more light on these
four important ingredients in this whole episode of ‘SO’:
• The ‘Product’ perspective will include type of merchandise, merchandise planning, merchandise display, and
so on.
• The ‘Customer’ perspective will include customer service, customer relationship, and customer satisfaction.
• The ‘Sales’ perspective includes selling process, sales promotions, pricing and discounting policies, and so
on.
• The ‘Place’ perspective will include location, managing space, fixtures and layout design, meeting statutory
requirements of the place and so on.
These four terms has a great linkage with one-another. After the development of a product, how it is going to serve
the customers matter a lot that is its sales and place from where the product disseminate. Most part of operations at
a store level can only be accomplished by detailed planning. Planning of store operations translates into managing
customers, manpower, merchandise, space, fixtures, promotions, statutory licensing and permissions from government
agencies, taxes, and so on. The other dimension of retail operation is about managing exceptions. This involves
things like managing the store during tough weather conditions, providing medical help as first aid to customers
who might get un-well in the store, fire-fighting plans and so on. Let us look at the major responsibilities of a store
manager, which are given below, in order to understand briefly what store operations would involve.
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Store Operations
• Store lay-out and display is maintained as per the design provided by the central office.
• Fixed and semi-fixed assets, as well as current assets are maintained and managed well for achieving proper
utilisation and returns.
• Store operational expenses are managed well in order to achieve a profitable operation.
• All statutory licensing requirements are fully met.
• File regular tax returns in totality as per government rules.
• Describe the organisation structure of the Store Operations function and who should be responsible for what.
Retail store operation impression is one of the most noteworthy constituent of integrated planning. Although the
retail environment is a critical constituent of brand communications, many in-store marketing opportunities lack
thorough psychoanalysis in key areas such as fulfilment, media value, brand equity metrics, sales lift and by and
large ROI.
Having a winning vision and approach for the retail business are significant but not adequate to tip the odds entirely
in favour of success. Retail works with retailers to illuminate and operationalise the strategies they have to appreciate
their expansion objectives.
Consumer habits survey commissioned by Store Perform Technologies and afterward, conducted by Harris Interactive
found that the retailers spotlight on creating a constantly optimistic shopping understanding across all of their stores
can reap the benefits of customer loyalty. A retailer’s successful effecting of critical in store operations and initiatives
is more important to creating customer trustworthiness than providing discounts and promotions.
Retail works with retailers in all channels who are facing a multiplicity of equipped challenges. The endeavour of the
retailers is to enhance the process improvements, which resulted in increased sales and reduced operating expenses
for the clients. The team has decades of experience assisting major retailers in all aspects of store operations. The
skill-set includes following thoughts.
Labor Management
Operational Procedural Do
and Scheduling
Assessment Cumentation
Solutions
Implementation of
Workload/ Task
Customised Best
Balancing
Practices
Functional Analytics/Metrics/
Schedules Benchmarking
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1.3.2 Assisting Major Retailers
Retail’s experts in store operations can provide assistance with respect to store vision and strategy, organisation,
operating metrics, coordination with upstream activities, service environment and functional operation.
Labour
Operational Best Management Customer
Practices and Service
Effectiveness Scheduling Excellence
System
Typical
Typical Retail Improvement Best in Class
Performer Range
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Store Operations
, Helping
Customer with Product Display
Attending Product and Visual
Location and Customer Customer Selection Merchandising
Store Layout Entry
Planning
Store Training
Maintenance Ambience Sales Team , Pos Software
and Repairs Maintenance
To do Regular
Replenishments Analysis of
Sales Trends
Preparation of
To Maintain
To do Regular Merchandising
Stock
Stock Take Plan
The aim of the store operation management system is to know accurately what sold best in every department, group
and season make a decision what to buy or mark down. Track ROI from your ads, mailings, promotions, sales and
discounts.
Thus, it is observed that a store operation management system accomplish store operations, in employing a
communication equipment. In the store, connected with at slightest one store workstation by way of a first line
inside the store and connected with a server by a second line outside the store. The communication apparatus judges
the operation type of each operation request sent from the store terminal and, when the operation form is a primary
operation, processes the operation appeal and, when the operation type is a second operation, transmits the operation
request to the server so that the server processes the operation task. Thus, has laid the groundwork for streaming
store administration and achieving greater accuracy in ordering and help one to cut costs and create more potential
for new services.
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Microsoft Dynamics Microsoft Dynamics
Retail Management Systems Retail Management Systems
Store Operations Head Quarters
HEAD QUARTERS
From the above figure, it has been observed that the key feature is conversion to broad band. By recording the store-
operation manual on the server at head office, for example, we can make available the latest version electronically
for consultation at any time, paper lessly. It also helps in acknowledging electronic and other cashless payment
formats, and being easy to use and fast. Thus, it helps position new store staff better for their duties.
Microsoft Dynamics RMS to meet your specific retail management needs. Enable employees to learn POS procedures
in minutes with built-in wizards and an intuitive user interface.
Customise data fields to track information you want to see about customers, inventory, and suppliers. Keep costs down
now and into the future with support for existing computers and OPOS (OLE for POS)-compatible peripherals.
Track and manage inventory using any stock and sales method and inventory types that include standard, serialised,
kit, assembly, matrix, lot matrix, voucher, non-inventory, and weighed.
Track item movement and supplier histories, quickly generate purchase orders, and add items on the fly.
Export purchase orders to Microsoft Office Excel and Microsoft Office Word for easy customisation and viewing
in a matrix grid format.
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Store Operations
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• Work with independent software vendors to enhance existing functionality. You can also add new features,
functionality, and applications, including vertical solutions, accounting and enterprise resource planning (ERP)
integration, ecommerce solutions, personal digital assistant (PDA) and mobile/wireless stations, and additional
integration to EDC and credit card services.
The enlargement of retailers depends principally on their collection of environmental markets and chance of new
stores. Retail chains that discover the most excellent match between the positioning of the stores and uniqueness of
the local market are the most contemporary ways to accomplish something. From a consumer viewpoint, convenient
locations and product assortment drive store would be an utmost alternative to bridge this gap.
The retail sector keeps reinventing itself as it moves with the times and matches ever increasing customer demands
for efficient services and best prices. This has raised substantial challenges for the retail merchandising business
as one can endeavour to accomplish cost optimisation with the best processes in place as far as India is concerned.
Leveraging decades of experience in this sector, Wipro Retail unit provides focused solutions for this retail sector
in particular and helps one to achieve strategic business targets in a competitive market.
The in-depth retail knowledge provides one the insight and project execution skill to offer customised solutions in
the e-business, CRM, SCM, Technology Infrastructure, ERP, Data Warehousing, Stores Operations Management,
Retail Shrink Management, Retail Merchandising and Business Intelligence space. The offerings cover various
segments of the retail sector like grocery, specialty, pharmacy and convenience retailing. In the below mentioned
head we will throw light on a Wipro retail case study, which emphasise how the industry specialists and customers
through the Centres of Excellence in supply chain efficiency, retail merchandizing and pricing, RFID, pharmacy in
retail, in-store solutions and data analytics execute a process. Retailing is one of the pillars of the economy in India
and accounts for 13% of GDP.
The retail industry is divided into organised and unorganised sectors. Over 12 million outlets operate in the country
and only 4% of them being larger than 500 sq ft (46 m2) in size. Organised retailing refers to trading activities
undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, and so on. These include
the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. On the
other hand, unorganised retailing, refers to the traditional formats of low-cost retailing, for example, the local kirana
shops, owner managed general stores, paan/beedi shops, convenience stores, hand cart and payment vendors, and
so on. In India, a shopkeeper of such kind of shops is usually known as a dukandar.
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Store Operations
Wipro Retail helps on to understand where the business is going and the challenges that are faced to lead organisational
transformations to the next level. We have the delivery expertise to partner retailers in making a sustainable difference
with proven experience and commitment to customer excellence, as key driving factors. Wipro Retail is an Oracle
Retail Tier 1 Partner, which deals in store operation management system (SOMS) already discussed in an elaborative
manner at point 1.4 of this unit, has enjoyed a long standing relationship that jointly leverages the power of the
Oracle Retail suite to provide end-to-end business and IT solutions for global retailers. Wipro Retail is the most
successful integrator of Oracle Retail solutions and boasts prime reseller status in many territories.
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Strategic decisions taken to build the Big Bazaar brand
The strategic decisions that lead to building of Big Bazaar were as follows:
Real estate game
For a retailer, location is one of the most important things. According to KB, real estate cost should be less than 5
% of total sales of store in order to provide maximum benefits to customer. The strategic decisions to secure spaces
before other retailers join in have resulted in cost-saving. Also, it has created early presence in market.
Nurturing relationships
KB follows strategy to develop trust and nurture relationships with suppliers. This trust led to strategically correct
decisions most of the time. Whoever works with Future Group, either leaves in initial deals or continues forever.
Use of technology, scenario planning and story-telling Big Bazaar planning and design used advance technologies
like scenario planning and storytelling. These techniques were mainly used for store-design layout, store-location
selection. The strategy to use user focused, prototype-based development tool made the brand adapt to the fast
changing external environment.
Design Management
Design-led thinking helped Big Bazaar to achieve ‘customer-first’ objective and ultimately lead to better financial
performance. Big Bazaar strategy to focus on design led to creation of Idiom, an independent design and consultancy
firm, based in Bangalore. They are one of the few organisations in India having economist, ethnographers and
sociologists working across various teams as a part of Design management team. Back-end operations, supply
chain Harvard Business School just did a case study on Pantaloons’ supply chain and it says that Pantaloons’ is
the most cost-effective supply chain in the world. India may not have a modern supply chain but it definitely has a
cost-effective one. Retailers have made use of the existing supply chain.
Do you use shopping baskets in your store? Where do you store them? Are they in stacks around the store or are
they located just in one place near the entrance. A good tactic to increase sales is to get the sales staffs to carry some
baskets and give one to many customers that has two items in their hands. Immediately, this will free up one hand
so that they can add more merchandise to the basket. Tactics like this increase the rupee value of each transaction
and there is no cost. The longer you can keep your customer in the store, the more they will buy. The quicker your
customers walk, the less they will purchase. If the store encourages a leisurely pace, the customers will see the
merchandise and the signs clearly. This will also contribute to purchasing more.
If the customer is walking through the complete store and considering a wide variety of merchandise, a substantial
amount of time is required. In some stores, buyers have been timed in spending four or five as much time as non-
buyers. If you can acquire your shoppers to shop longer, then your average business will also increase, on the other
hand, you have to be acquainted with how long your customers spend shopping in your store for you can design
strategies to augment it. The science of shopping shows quite obviously that store design and profitability are linked
very intimately. If your store has a good design, you will be more into moneymaking.
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Hangers are a critical part of any clothing display. Using the proper types of hangers will not only protect and
preserve the merchandise, but it will also help your customers find what they are looking for much faster. Hangers
for clothing and fashion accessories are available in a variety of styles, materials and sizes. Standard adult hangers
are usually around 17 inches wide, while children’s hangers are only 12 to 14 inches. Speciality hangers for pants
and skirts are available in 14 inches.
Economical plastic, durable metal and classic wood hangers may all be suitable to use in a retail environment. Before
choosing clothes hangers to use in your store, learn about the more popular types of hangers.
Plastic Hangers: Commercial plastic hangers are generally available in white, black or clear plastic. The quality
will run from lightweight, almost flimsy, plastic to the super heavyweight unbreakable hangers. Plastic hangers
work well as an all-purpose hanger. These are generally used for shirts, blouses, and dresses.
Wire Hangers: Metal, or wire, hangers will also vary in quality. The most inexpensive, lightweight metal clothes
hangers are the type you may receive with your dry cleaning. Heavier metal hangers won’t bend or sag and are
great for stores with a more contemporary look as wire can rust. Some wire clothing hangers are coated in coloured
vinyl to protect fabric.
Wooden Hangers: Classic wood hangers are available in a natural finish with chrome hardware or the higher end
teak wood with brass hardware. Wood hanger styles include coat hangers with or without wooden bars, hangers
with metal rods or lock bars on a spring to prevent pants from sliding.
Tubular Hangers: All-purpose tubular moulded hangers are the type also available to consumers and found in many
homes. They come in a large variety of colours. Using coloured hangers may increase sales appeal.
Padded Hangers: Not only does a cloth covered hanger protect delicate garments, the padded hanger is usually
covered with satin and therefore, a pretty way to display lingerie or other clothing. The padding helps to prevent
slipping and assists in preserving the shape of the garment.
Specialty Hangers: Retailers have many choices in hanger styles for unusual garments or non-typical situations.
Notched hangers are perfect for items with straps. Skirt/slacks hangers have metal or plastic clips on a metal rod
which prevent sliding. Another type of specialty hanger is the salesman’s hanger. These strong, chrome hangers
feature a space-saving style and are ideal for trade-shows or salespeople transporting garments.
Hanger Accessories: Hanger markers, cardboard tubes and other hanger accessories help retailers keep their
merchandise neat and tidy while creating an appealing display. Instead of purchasing different types of specialty
hangers, piggyback connectors can be used on most any hanger to allow two garments to be displayed together.
Soft plastic clips can attach easily to most hangers with notched tops. Also, foam hanger covers or strips can be
placed on most any plastic or wooden hanger to prevent items from slipping. Before buying commercial hangers
for a retail store, consider the following factors:
• Garment Type: The most important factor when choosing a hanger is to determine the type of garment to be
displayed. Of the many types of hangers available to retailers, each has its own particular function. For example,
the higher cost and thickness of wood would make it impractical to choose wooden hangers for displaying tee
shirts.
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• Store Atmosphere: Hangers should match, or at least blend, with a store’s decor. Take into consideration the
look and feel of the store when choosing hangers. Upscale boutiques may want to avoid lightweight plastic
hangers, while teak wood hangers may look out of place in a discount store.
• To give or not to give: Some retailers write their marketing plans to include custom printed hangers. Occasionally,
a retailer may even receive clothing from the manufacturer already on hangers. All of these hangers are generally
passed on to the customer and are considered a standard cost of doing business. On the other hand, more expensive
and higher quality hangers are generally reused as long as they remain in good condition.
• Storage Space: Retailers that give away hangers, whether imprinted or not, should consider storage space.
Hangers can be purchased in bulk to reduce costs and to avoid running out. Keep in mind that hanger boxes are
usually on the large side and may take up a lot of space in the stockroom. As sales clerks remove items from
hangers, these recycled hangers should also have a neat and organised space at the checkout counter.
The widespread nature of the deliveries means Fraschetti manages an enormous number of orders and invoices each
day. Working closely with Intermec partner Incas, Fraschetti now uses Intermec’s 2455 vehicle mount computers in
place of traditional paper-based means of shipping and receiving to ensure the right products and correct amount are
delivered to the appropriate retail locations. The logistics involved in managing this many orders can be daunting.
Consider a large number of deliveries that each include an extremely complex assortment of goods of different
amounts, example, 10 pulleys, nine tubes, 11 boxes of nails, six bags of earth, four pipes and so on. The inventory
management and distribution process could be staggering. The use of Intermec’s 2455 vehicle mount computers
has enabled the Italian retailer to easily move nearly 12,000 items per day without error.
Since using Intermec, the improvement in warehouse operations has been dramatic. The entire warehouse area
is now mapped allowing Fraschetti to track all of its items at all times. A considerable increase in the number of
operations performed and a steep fall in the number of errors occurred has contributed to the organisation’s increased
profitability. In the future, Fraschetti plans to implement an automation system for its other very important operations,
such as the optimisation of loads and the automatic weighing of larger packages.
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About Fraschetti
The company’s history began in 1870 when Francesco Fraschetti opened a small ironmongery in Ceprano and by
doing so paved the way for what was to become one of Italy’s leading household and DIY (do it yourself) item
marketing companies. The ownership of the company has always remained in the family and after periods of strong
growth and others of consolidation; it is now in its fourth generation. The company today operates across the center
and south of Italy providing a very high level of service and annual sales totalling around 35 million Euros. In the
last few years, the sector has moved on with the advent of the new DIY chains of shops, but the traditional sales
point, the old-fashioned hardware store, still accounts for the largest percentage of business.
About Incas
Based in Italy, from its foundation, the aim of the Incas group has been to find innovative methods for industrial
process automation and control. Today, this aim is fully realised within a modern, efficient and innovative company.
A marked specialisation in the two areas constitutes its core business, logistics and production monitoring, has
made it possible to develop skills that translate into powerful strengths: the ability to propose flexible and efficient
solutions supported by an extensive knowledge of system integration. Guarantee of reliability and providing support
over time.
For leaner convenience we are explaining these terminologies in a more elaborative manner.
Task Manager gives retailers active control of every store, giving upper management the ability to turn strategy into
action, and the benefits of higher sales and improved performance.
This powerful solution streamlines store execution with one comprehensible channel of communication that focuses
stores on their objectives and provides real-time feedback and visibility of task compliance to field and corporate
managers. In short, it facilitates good tasks while eliminating bad tasks.
It gives store managers, field managers, and corporate the ability to clearly plan and communicate objectives across the
enterprise, optimise productivity throughout a variety of regions, and return the primary focus to their customers.
Whether it’s introducing a new line of merchandise, running promotions, or conducting product recalls, heads-up
management drives your chain’s ability to turn a healthy profit and continue to grow. Task manager gives your
managers exactly the information they need, without being overloaded, so that they can get out of the back room
more and into the store where they can make a difference.
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web-based forms that eliminate the frustration and drudgery of paper-based scheduling. The solution generates
optimised schedules that are in compliance with labour laws, union rules, and work policies while respecting employee
preferences, availabilities, and proficiency. Integration with Time and Attendance allows real-time monitoring of
key labour metrics and exceptions to ensure compliance.
To Workforce Manager, scheduling is not just about filling shifts for the day, it’s about matching skills and availability
to the actual tasks in and around the store. Powered by unique algorithms, Workforce Manager takes into account
all store activities—routine, sales-driven, corporate-directed, even vendor deliveries—and incorporates them into
labour forecasts that yield optimal labour schedules. It’s also the only labour scheduling.
Store Operations-I system is to fully leverage the ad hoc activities that account for more than 30 percent of work
in most retail stores.
Store Walk uses focused sets of questions, created and controlled by retail management, that are used to focus district
and regional managers’ attention on the parts of their stores that deserve the most attention. But Store Walk goes
beyond being an incredibly effective checklist. Problem areas that show up in the exception based system can be
used to automatically trigger tasks that fix issues using best practices as a model.With Store Walk, every visit and
walkthrough mean the start of major improvements to your retail business.
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Summary
• Retailing is a ‘technology-intensive’ industry.
• The augment of the department store or grand emporium in the 19th century brought more changes in store
design and visual displays.
• Retailers drop millions of rupees per year due to contradictory store-level implementation of their corporate
approach.
• Store managers are filled to capacity with communication and left to prioritise tasks on their own. Store Operations
enable retailers to make certain dependable implementation of their corporate strategy by all stores and pull
through the sales they would have otherwise lost.
• Store Operations solutions facilitate retailers to boost efficiency, augment sales, and comprehend rapid ROI.
• Retail store operation is about converting resources into sales and profits. Store operation aims at maximising
profits by providing a satisfactory experience and effective service to customers by making optimal use of
people, space and merchandise.
• Retail Store Operation impression is one of the most noteworthy constituent of integrated planning.
• Logical Activity flow is a kind of activity that links with one another and facilitate the store manager in finding
out the responsibilities allocated to his/her downline.
• Store Operations Management System gives retail organisation the type of information tools that retail
blockbusters use, such as customer purchase histories, e-receipts, personalised marketing, even B2B, e-commerce
and CRM/ERP connectivity.
• The enlargement of retailers depends principally on their collection of environmental markets and chance of
new stores.
• Retail chains that discover the most excellent match between the positioning of the stores and uniqueness of
the local market are the most contemporary ways to accomplish something.
• The retail sector keeps reinventing itself as it moves with the times and matches ever increasing customer
demands for efficient services and best prices.
• There are certain bodily and anatomical factors and limitations, which are widespread to all the people shopping
in the store.
• Hangers are a critical part of any clothing display.
• Hanger markers, cardboard tubes and other hanger accessories help retailers keep their merchandise neat and
tidy while creating an appealing display.
• Store operations solutions is a sophisticated technology and database tools, which provide a retail organisation
a pathway.
References
• Hub Pages. A History of Visual Merchandising in Retail Store [Online] Available at: <http://sarahmarie1.hubpages.
com/hub/A-History-of-Visual-Merchandising-in-Retail-Stores> [Accessed 17 February 2012].
• Microsoft Business Solutions. Retail Management Systems [Online] Available at: <http://www.digitalretailer.
com/RMSdemo/UIc.html> [Accessed 17 February 2012].
• Gilbert, D., 2002. Retail Marketing Management. FT Prentice Hall.
• Davies, B. & Ward, P., 2002. Managing Retail Consumption. John Wiley and Sons Ltd.
• Dynamicsrms. Microsoft Dynamics RMS - National Retail Federation [Video online] Available at: < http://
www.youtube.com/watch?v=-KGnnGUg5e4 > [Accessed 17 February 2012].
• Snehashar. Big Bazaar [Video online] Available at: < http://www.youtube.com/watch?v=0lMUGC_1MGU >
[Accessed 17 February 2012].
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Recommended Reading
• Barry, B., Evans, J.R. and Mathur, M., 2011. Retail Management: A Strategic Approach, Pearson Education.
• Krafft, Manfred; Mantrala, and Murali K., 2006. Retailing in the 21st century: current and future trends. New
York: Springer.
• Lamba, A.J., 2003. The Art of Retailing. Tata McGraw Hill, New Delhi.
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Self Assessment
1. Since when did the western countries witnessed the development of departmental stores?
a. 1850’s
b. 1860’s
c. 1960’s
d. 1950’s
2. A __________ is a retail establishment, which gratify an extensive variety of the consumer’s personal and
residential product need.
a. consumer store
b. retail store
c. warehouse
d. merchandise
3. ____________ managers are filled to capacity with communication and left to prioritise tasks on their own.
a. Store
b. Task
c. General
d. Deputy
5. Which of the following is an activity that links with one another and facilitate the store manager in finding out
the responsibilities allocated to his/her down line?
a. Store operation
b. Planning of store
c. Logical activity flow
d. Management system
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6. Which of the following statements is false?
a. Retail store operation impression is one of the most noteworthy constituent of integrated planning.
b. Having a winning vision and approach for the retail business are significant but not adequate to tip the odds
entirely in favour of success.
c. Retail works with retailers in all channels who are facing a multiplicity of equipped challenges.
d. Having a winning vision and approach for the retail business are not significant but adequate to tip the odds
entirely in favour of success.
7. _____________ offers small and mid-market retailers a complete point of sale (POS) solution that can be adapted
to meet unique retail requirements.
a. RMS
b. Soms
c. S.O
d. CSV
8. Which of the following is not an application of Microsoft Dynamics Retail Management System?
a. Drive retail growth with a flexible, connected solution
b. Improve merchandising efforts
c. Set up and use easily
d. Automate inventory and purchasing management
9. Which of the following is not one of the factors that shaped Big bazaar retail store?
a. Observing customer regularly Store Operations
b. Imbibed entrepreneurial spirit in organisation
c. Building on core values
d. Hand cart and payment vendors
10. Which of the following is one of the most important factors when choosing a hanger?
a. Garment type
b. Store Atmosphere
c. Accessories
d. Storage space
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Chapter II
Managing Customers
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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2.1 Introduction
A successful retail organisation comprehends its market, its customers and the implication of strategic locality in
a more systematic manner, so that the competition in the retail industry can be easily tackled. Such organisations
need the most important micromarketing tools to examine where to put new stores, set up customer profiles, and
establish finest marketing practices in order to attract new customers.
In retailing, the customer is the reason for the existence of the retailer. People who make the purchase are the ones
who drive the business. A success of a retailer will depend on how well she/he identifies and understands her/his
customers. All retailing efforts should be directed at the individuals who will inevitably purchase the product or
services offered by the retailer. A retailer needs to research their customers; about how they are and how do they
make their purchases?
Retailers use a number of methods to identify their consumer base. The behaviors exhibited by the customer
when they shop for goods or services will tell a great deal about them.Is your retail store customer-centric? What
does being customer-centric even signify? Most area of expertise stores would articulate that they are focused on
customers, and would summit out that without customers their store would not survive. This is true. Simply being
there in the market, opening the store in a locality, stocking products and employing staff is not the similar as being
customer-centric.
Being customer-centric means that the whole thing you accomplish from the products that you bear, to the surroundings
that you lay them in, and the staff that you have to provide those customers is centered on and about customers and
their experience in the store. There is a huge dissimilarity between merely serving a customer and centering the
whole thing you do on the customer’s specific needs and fulfillment.
When a customer uses the product purchased by him/her then he or she becomes a consumer. Thus, a person who
had purchased the product is called “customer” and the person who actually used or consumed is called “consumer”.
For an example, a person purchased a shirt and gifted it to his son on his birthday. Here, the person who purchased
the shirt is the customer and the son who used the shirt is the consumer.
In the retail industry, it seems as though we are constantly faced with the issue of trying to find new customers. Most
of us are obsessed with making sure our advertising, displays, and pricing all “scream out” to attract new customers.
This focus on pursuing new customers is certainly prudent and necessary, at the same time; it can wind up hurting
us. Therefore, our focus really should be on the 20 percent of our clients who currently are our best customers.
In retail, this idea of focusing on the best current customers should be seen as an ongoing opportunity. To better
understand the rationale behind this theory and to face the challenge, we need to break down shoppers into five
main types:
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Discount
Customers
Loyal Impulse
Customers Customers
Wandering Need-Based
Customers Customers
From figure 2.1 the learner can understand that the retail customers can be classified into five categories. Now, let
us discuss in detail about those entire retail customer in a one-to-one basis.
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Shifting
Loyalty
Loyal Hardcore
Switchers
Customer Loyal
Soft-core
Loyalty
Philip Kotler, again, defines four patterns of behavior of loyal customers as below:
• Hardcore Loyal: Who buys the brand all the time
• Soft-core Loyal: Loyal to two or three brands
• Shifting Loyalty: Moving from one brand to another
• Switchers: With no loyalty (possibly ‘deal-prone’, constantly looking for bargains or ‘vanity prone’, looking
for something different)
Nothing will make a loyal customer feel better than soliciting their patronage and showing them how much you
value it. Many times, the more you do for them, the more they will recommend you to others.
Visual merchandising in store and the window acts as a silent salesman for these customers. Clearly, this is the
segment of our clientele that we all like to serve. There is nothing more exciting than assisting an Impulse shopper
and having them respond favorably to our recommendations. We need to target our displays towards this group
because they will provide us with a significant amount of customer insight and knowledge.
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Is your customer
your competitor?
They buy for a variety of reasons such as a specific occasion, a specific need, or an absolute price point. As difficult
as it can be to satisfy these people, they can also become loyal customers, if they are well taken care of. Salespeople
may not find them to be a lot of fun to serve, but, in the end, they can often represent your greatest source of long-
term growth. It is important to remember that Need-Based customers can easily be lost to Internet sales or a different
retailer. To overcome this threat, positive personal interaction is required, usually from one of your top salespeople.
If they are treated to a level of service not available from the web or another retail location, there is a very strong
chance of making them loyal customers. For this reason, Need-Based customers offer the greatest long-term potential,
surpassing even the Impulse segment.
Thus, using this considerate to help out turn Discount, Impulse, Need-Based, and even Wandering Customers into
Loyal ones will facilitate in nurture the retail business. Simultaneously, ensuring that our Loyal Customers have an
optimistic understanding each time they go into our store will only provide to augment our bottom-line profits.
Since a retailer is serious about growing his business, he needs to focus his effort on the loyal customers, and
merchandise the store to leverage the impulse shoppers. The other three types of customers do represent a segment
of the business, but emphasising too much on them means misdirecting the resources.
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2.4 Customer Segmentation
As per the Center for Business Planning of a Business Resource Software, Inc “The purpose for segmenting a market
is to allow your marketing/sales program to focus on the subset of prospects that are “most likely” to purchase your
offering. If done properly, this will help to insure the highest return for your marketing/sales expenditures.” Thus,
keeping in mind the above thought Market segmentation is a perception in economics and marketing. A market
segment is a detachment of a market made up of people or organisations sharing one or more characteristics that
source them to insist related product and/or services based on qualities of those products such as price or task.
A retail market segment is a group of customers whose needs are satisfied by the same retail mix because they have
similar needs and go through similar buying process. Retail market can be segmented in different ways, customers
can be grouped on the basis of the fact that they live in the same locality, have similar incomes, similar age and
education. Retailers use various data depending, which is best suited for their business.
Demographic
Segmentation
Geographic Psychographics
Segmentation Segmentation
After going through the above figure, it is clear that segmentation with the help of these three bases is noteworthy.
We will elaborately explain these three in a more in depth manner.
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• Marital Status
• Height/Weight/Sizes
• Color/Region /Caste
Many supermarkets segment market use demographics such as age, gender, marital status to develop their retail
mix. Retailers can also use demographic data in selecting the appropriate location in which to operate.
Income Groups: People in different income brackets demand different types of products or services. The population
can be classified based on the income like Upper Class, Upper Middle Class, Middle Class, Lower Middle Class and
Lower Class. Lower class can further be classified as Below Poverty Line (BPL) and Above Poverty Line (APL),
and so on.
Many retailers use income classification to understand the consumer spending habits. Lower-income consumers, for
instance, are more likely to eat at home, than less likely to buy luxury items and tends to be more practical in their
purchase than other income groups. Middle income consumers are generally educated and spend more on vacation
and meals outside the home than lower income people do. Like lower income people, middle class consumers tend
to search for higher- quality merchandise at lower price. People in the upper-income category are more likely to
buy luxury items, spend on travel, eat outside the home, be highly educated and own big houses.
Using the data on income, a retailer can identify where the customers are located and can select the locality for his
store. Alternatively, an existing retailer can change the product mix in his store to serve the majority of the more
profitable customers in his locality.
Age Groups: Age distribution of the consumers is also another important data, which a retailer requires. Normally,
the buying pattern of a group of persons in same age profile will be similar. The study of age groups and how they
behave in the consumer market is called generational marketing. The data on age can be categorised in the following
seven life stages:
Marital
Age Profession Family
status
4-14 years School Goers
The next time you go shopping or watch a television commercial, observe how various retailers target their marketing
towards the different generations. For instance, the strategy in selling to seniors is to depict them as active and
attractive.
Think of all the commercials of products that feature healthy and energetic senior urging the consumer to buy the
product to enrich their lives.
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Retailers dealing with readymade garments, shoes, bicycle, Life Insurance, and so on use age wise segmentation
to market their products. All of the demographic data mentioned above can be turned into useful information for
the retailer.
In India, careful study of the psychographics is a must for the retailer before a product launch or to decide the
products mix at a store. Having same standard product lines across the country may result in poor selling at many
outlets. Sometimes, even within the same city, sales of a product may vary from one outlet to the other outlet. A
retailer has to be in constant touch with the customers’ base to understand them better.
Even within the country, stores belonging to the same retailer must adjust to the unique needs of their customers
in different regions. Hotel chains serve spicier foods in Andhra Pradesh, more coconut based recipes in Kerala and
chettinad preparations in Tamil Nadu.
One of the main objectives of a retailer is to deliver consistent value and quality to the customer. Understanding
consumer need and their buying behavior is the first step towards providing the consumer with the kind of product
and service that he/she needs and demands. In order to create products and services, which are suited to the needs
of a changing consumer, a retailer needs to do research on buying habits, items purchased or not purchased and
so on. While it is possible to get this information through market research conducted by agencies, it is not always
possible to approach the customer besides the data is not always specific to a retailer. Hence, retailers use various
methods and programs for obtaining this information.
Retailers have realised the importance of repeat purchases by the customers. Therefore, they devised innovative
ways to retain the customers.
Large retailers spend millions on tools and technology to gather more information about their customers. This
information is then used to design, develop and package products and solutions tailored to meet customer’s needs.
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Super markets discovered that people generally buy milk, eggs, bread and butter together. Therefore, they generally
stock these products close together so that a customer who picks up a carton of milk will subconsciously be encouraged
to pick up eggs, bread and possibly butter.
Data warehouses help in studying customer patterns, buying trends and behavior and provide a tremendous amount
of information to marketing managers and planners. In retail categories where products and services are at par,
customers’ relationship and therefore, loyalty programs play the role of differentiator. The blend of recognition and
reward offered through a loyalty program can encourage customers to be part of the program. When customers opt
for a permission-based loyalty program, they will be more willing to share identified.
The best way to coordinate marketing objectives across channels is by building a knowledge base of customer
behaviors and preferences. A well-conceived and executed loyalty program can be the key to turning shoppers into
profitable customers. A good customer loyalty program needs to possess the following characteristics.
• Visibility: A loyalty program must be highly visible, regardless of the channel. The retailer web site can show
special offers for program members, a catalogue can feature the program prominently and shoppers should be
asked if they would like to join. Cross promotional material should be present and easily available.
• Simplicity: To succeed, a loyalty program should be easy to use in all channels, minimise the fine prints.
• Value: The balance of reward and recognition must establish value in the customers mind and motivate
incremental purchase. Program rewards should be credited regardless of where the customer prefers to shop.
• Trust: Keep the promise made by the loyalty program. If the program promise is for a personalised and highly
valued service, don’t shower the customer with meaningless offers that obviously are available to everyone, or
don’t keep exclusive product previews as all are getting the same benefits.
The above list is not exhaustive. There are many more innovative services a retailer can offer. But the most important
indicator of quality service is not only the number of services offered, but also how they are delivered by the
employee of the store.
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2.7.2 Strategic Advantage through Customer Service
Top retailers in the world differentiate their retail offering. Build customer loyalty and develops sustainable
competitive advantage by providing excellent customer service.Good service keeps customers returning to a retailer
and generates positive word-of mouth publicity, which attracts new customers.
Customisation and standardisation are the two approaches that retailers use to develop as sustainable customer
service advantage.
Customisation Approach
Customisation approach relies on the quality of interaction between a sales associate and the customer. This
approach encourages service providers to tailor the service to meet each customer’s personal need. This approach
is generally seen in high end apparels and accessories retailers. Here, you will see sales associates assisting the
customer individually.
The customised approach typically results in most customers receiving superior service. But the service might
be inconsistent because service delivery depends on the judgment and capabilities of the service provider. Some
service providers are better than others, and even the best service provider can have a bad day. In addition, providing
customised service is costly, since it requires better trained service providers.
Standardisation Approach
This approach is based on standardising key touch points of service delivery and ensuring that these guidelines are
followed strictly. Rules and procedures are set for customer. Through standardisation, customers receive the same
service in the store time after time. For example, at McDonald’s restaurants across the globe the customer receives
the same food and service. The food may not be exactly what the customer wants, but it’s consistent and served in
a timely manner at a low cost.
Store design and layout also play an important role in the standardisation approach. In most of the situations the
customer do not need the assistant of a sales person. They know what they want to buy and their objective is to find
it in the store quickly. In this situation, the retailer offers good service by providing a layout and signage that enables
customers to locate the merchandise easily, by having the relevant information in display, and by minimising the
time required to make a purchase including the billing.
They are dissatisfied when they feel the service is below their expectations:
Customer Expectations
Customer’s expectations are based on a customer’s knowledge and experiences. Expectations vary depending on
the type of store.
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Customers expect a super market to provide convenient parking, to be opened from early morning to late evening,
to have a wide variety of fresh and packaged foods that can be located easily and to offer fast checkout at cash
counter. At the supermarket, customers normally do not expect to have a store employee standing in the aisle to offer
information about groceries or how to prepare meals. On the other hand, when the same customer goes to a specialty
store, they expect the store to have knowledgeable salespeople who can provide information and assistance. Similarly,
the service expectation of a customer from a road side tea stall is different to when he is visiting a star hotel.
Since expectations aren’t the same for all retailers, a customer may be satisfied with low levels of actual service in
one store and dissatisfied with high service levels in another store. Customers have low service expectation for self
service retailers like discount stores and supermarkets. Wal-Mart provides a unusual\ service for a discount store;
an employee stands at the entrance of each store, greets customers and answer questions. Because this service is
unexpected in a discount store, customers evaluate Wal-Mart’s service positively, even though the actual service
level of service is far below that provided by another specialty store.
Departmental stores have many more salespersons available to answer questions and provide information than Wal-
Mart does. But customer service expectations are also higher for departmental stores. If a department store customer
can’t locate a salesperson quickly for assistance, they are dissatisfied.
Perceived Service:
Customers base their evaluations of store service on their perceptions. While these perceptions are affected by the
actual service provided, service due to its intangibility is often hard to evaluate. Customers evaluate service quality
based on five service characteristics such as reliability, assurance, tangibility, empathy and responsiveness. Some
cues that the customers use to assess these service characteristics are shown in figure as under;
Service problems enable a retailer to demonstrate his commitment to provide high quality customer service. By
encouraging complaints and handling problems, a retailer has an opportunity to strengthen its relationship with its
customers.
Most retailers have standard policies for handling customer complaints. If a correctable problem is identified, such
as defective merchandise, retailers may either offer to replace the merchandise or give a credit towards future
purchases or give cash refund. In many cases, the problem can be heard to identify whether it is uncorrectable or a
result of customer’s unusual expectations. In such cases, service recovery might be more difficulty. Retailers follow
this step for effective service recovery:
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Reliability Assurance
Tangibility Empathy Responsiveness without interruptions. Interruptions can further irritate customer. Store managers
should be empathetic towards a complaining customer and should be happy to receive the complaint. Employees
should receive carefully to determine what the customer perceives to be a fair solution to his complaint.
Retailers can minimise the time to resolve complaints by reducing the number of people the customer must come in
contact with. As a general rule, store employee who deal with customer should be made as self-sufficient as possible
to handle the problem. Customer is more satisfied when the first person they contact can resolve a problem. When
customers are referred to several different employees, they waste a lot of time repeating their story and also the
chance of conflicting responses by store employees increases.
Effective service recovery significantly increases customer satisfaction, and produces positive word of mouth
publicity to the retailer.
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Summary
• A customer, also called client, buyer, or purchaser, is more often than not used to denote to a present or potential
buyer or user of the products of an individual or organisation, called the supplier, seller, or vendor.
• When the goods and services are bought and sold to end users, it is expressed as retail. Despite the fact that
retail may also be a small or mass buyer.
• Customer loyalty describes the tendency of a customer to choose one business or product over another for a
particular need.
• Loyal customers represent no more than 20 percent of our customer base, but make up more than 50 percent
of our sales.
• Discount Customers shop our stores frequently, but make their decisions based on the size of our markdowns.
• Impulse customers do not have buying a particular item at the top of their “To Do” list, but come into the store
on a whim.
• Need-Based Customers have a specific intention to buy a particular type of item.
• Wandering Customers have no specific need or desire in mind when they come into the store. Rather, they want
a sense of experience and/or community.
• Brand loyalty, in marketing, consists of a consumer’s undertake to repurchase or else carry on using the brand
and can be demonstrated by frequent buying of a product or service or other constructive behaviors such as
word of mouth encouragement.
• Customisation approach relies on the quality of interaction between a sales associate and the customer.
• The customised approach typically results in most customers receiving superior service. But the service might
be inconsistent because service delivery depends on the judgment and capabilities of the service provider.
• Standardised approach is based on standardising key touch points of service delivery and ensuring that these
guidelines are followed strictly.
• Store design and layout also play an important role in the standardisation approach.
• Providing high-quality service, particularly customised service, can be very costly.
• Retailers need to consider the costs and benefit of customer services policies. Many retailers in western countries
are reconsidering their “no questions asked” return policy.
• When customers evaluate the quality of retail service, they compare their perceptions of the service they received
with their expectations.
• Customers expect a super market to provide convenient parking, to be opened from early morning to late evening,
to have a wide variety of fresh and packaged foods that can be located easily and to offer fast checkout at cash
counter.
• Departmental stores have many more salespersons available to answer questions and provide information than
Wal-Mart does.
• Customers base their evaluations of store service on their perceptions.
References
• Diamond, J. and Pintel, G., 2008. Retail Buying. Peaseson Education.
• Gupta, S., 2005. Managing Customers as Investments. Wharton School Publishing.
• Infopark. Online Marketing: Managing Customer Relations [Online] Available at: <www.infopark.com/1818008/
crm-online-marketing> [Accessed 21 February 2012].
• Learn Marketing. Managing Customer Services Online [Online] Available at: < www.learnmarketing.net/
managingcustomerservicesonline.htm > [Accessed 21 February 2012].
• GHMconnect. Four Types of Customers [Video online] Available at: <http://www.youtube.com/watch?v=h2__
s10x9jkm> [Accessed 21 February 2012].
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• edmanley2. Customer Service Lecture 1 [Video online] Available at: < http://www.youtube.com/watch?v=AkDvT-
r66zk> [Accessed 21 February 2012].
Recommended Reading
• Wedel, M. and Kamakura, W.A., 2000. Market Segmentation: Conceptual and Methodological Foundations.
Amsterdam Kluwer.
• McDonald, Malcolm and D., 2004. Market Segmentation: How to do it, how to profit from it. Butterworth-
Heinemann.
• Sullivan, M., Adcock, D., 2002. Retail Marketing. Thomson Learning.
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Self Assessment
1. Loyal________ undergo better than soliciting their input and showing them how much you value it.
a. retailer
b. vendor
c. customer
d. manufacturer
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8. When a customer uses the product purchased by him/her then he or she becomes a ___________.
a. consumer
b. retailer
c. loyal customer
d. need based customer
9. For which of the following customers does visual merchandising act like silent customers?
a. Need based
b. Impulse
c. Discount
d. Loyalty
10. _______________ have no specific need or desire in mind when they come into the store.
a. Wandering customers
b. Need based customers
c. Discount customers
d. Impulse customers
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Chapter III
Managing Manpower
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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3.1 Introduction
To remain workable the organisation needs to be effectively staffed with the best qualified persons in each position.
We have gone through in the previous unit about the comprehensive view of managing customers with a flavour of
retailing. In this unit, we are going to talk about a manpower management, which further led to managing customer
in a better manner. As we have observed that retail had a great inclination towards the labour, in this chapter, retail is
a labour intensive industry; a human resource of the organisation is a critical factor in the success of the retailer.
Human resource management is very important in retailing because employees play a major role in performing
critical business functions. Retailers rely on people to perform the basic retailing activities such as buying, displaying
merchandise, and providing service to the customer. This chapter will deal with the major areas of managing human
resource like recruitment, selecting, training, supervising, evaluation and compensating sales associates.
Hiring
Recruiting
Compensation
human
resources
planning
Benefits training
Evaluation
To find the outlay & ability of the person and assigned the right job. Managing human resource plays a noteworthy
role in a successful retail business. A well managed human resource will give a retailer advantage over his
competitors.
Since retail is a labour intensive industry, labour cost accounts for a significant percentage of a retailer’s total
expenses. Effective management of employee can produce a cost advantage for the retailer. The experience most
customers have with a retailer is determined by activities of employee who select the merchandise, display the stock
on the shelves, and provide service on the floor. An employee thus, can greatly influence the customer’s perception
about the store. The differentiation and retailer makes with his efficient employees cannot be duplicated by other
retailers.
For example, every department store knows that Nordstrom’s employee provides outstanding customer service;
however they are not able to develop the same customer oriented culture for their firm.
The manpower management is the actual utilisation of man in the detection of a particular goal or purpose, whereby
such individual does not get lost away from the focal point or said goal. Thus, in a layman language manpower
management is the capability of a personage to synchronise with the sub-ordinates and employees, which in turn
reflects the affluence of the company or firm or organisation.
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The objective of human resource management is to align the capabilities and behaviours of employees with the
short-term and long- term goals of the retail firm.
Productivity of an employee is an indicator of the performance of human resource management. Productivity can
be the retailer’s sales or profit divided by the number of employees.
This relationship can be calculated for a specific period and monthly or quarterly and monitored for improving
employee productivity, which can be improved by increasing the sales generated by employee or by reducing the
number of employee, or both.
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While employee productivity is directly related to the retailer’s short-term profits, employee attitudes such as job
satisfaction and commitment have important effects on customer satisfaction and subsequent long term performance
of the retailer. A failure to consider both long and short term objectives can result in the mismanagement of human
resource and a result is bigger loss to the retailer.
In the present scenario organisational structure had a paradigm shift from vertical structure to horizontal one. There
are certain steps, which can facilitate an organisational structure. We will take into consideration gradually.
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Once the tasks have been identified, the retailer groups them into jobs to be assigned to specific individuals and
determines the reporting relationships. Rather than performing the entire task mentioned above, individual employees
are typically responsible for only one or two tasks. Care should be taken that employee is not burdened by too many
tasks, at the same time to few task will lead to boredom.
Productivity increases when employees have the proper amount of authority to effectively undertake the responsibility
assigned to them. Example, buyers who are responsible for the profitability of a merchandise category need to have
the authority to make decision that will enable them to fulfil this responsibility. They should have the authority to
select and price the merchandise for their category and determine how the merchandise is displayed and sold.After
assigning tasks to employees, the final step is to determine the reporting relationship. Productivity can decrease
when too few or too many employee report to a supervisor. The number of subordinates is greater when they perform
simple standardise tasks, when they are well trained and competent, and they perform tasks at the same location as
the supervisor.
As sales increases, specialisation in management may occur when the owner manager hires additional management
employees. The owner manager continues to perform strategic management tasks. The store manager may be
responsible for administrative task associated with receiving and shipping merchandise and managing employees.
In contract to the management of a single store, retail chain management is very complex. Managers must
supervise units that are geographically distant from each other. In most large retail firms, the two senior executives,
typically called the CEO and COO, work closely together in managing the firm. One is primarily responsible for
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the merchandise and marketing activities of the firm and the other is responsible for the stores, human resource,
distribution, information systems and finance divisions.
Key activities like merchandise, planning, marketing, finance, visual merchandising and human resources are
managed from the corporate headquarters.
They are required to estimate the business needs of the organisation and plan for the resources needed to realise
the business goals.
Preparing
to
Recruit
Workforce
Planning
Developing Attracting
and Staff
Retaining
Staff
Recruiting
and
Selecting
Staff
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Job Analysis
Job Analysis is a procedure to recognise and establish in facet the particular job duties and requirements and the
comparative significance of these duties for a given job. Job Analysis is a method where judgments are prepared
about data composed on a job.
Functional
Demands
Pre
Training Employment
Programs Screening
Job
Analysis
Chs
Safe Works
Consultation
Method
Compliance
Hazard
Identification
The Job Analysis identifies essential activities and is used to determine the qualifications of potential employees.
PERFORMANCE
MINIMUM SCORE
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The main purpose of conducting job analysis is to prepare job description and job specification, which in turn helps
to hire the right quality of workforce into the organisation. For example, retail salespersons responsibility may vary
from company to company and from department to department within the store. A salesperson selling perfumes
on the floor needs to be aggressive in selling, whereas salesperson selling expensive jewellery needs to have good
product knowledge to answer customer’s queries. Managers can obtain the information needed for a job analysis by
observing employees presently doing the job and determining the characteristics of exceptional employees.
Job Responsibilities
• Answer all customer queries and maintaining excellent customer service standards.
• Follow-Up for products sent for repairs or replacements with the sales and service team of the suppliers.
• Responsible for calling up customers to inform about special promotions or offers.
• Ensure housekeeping standards within the customer service counter as per company’s standards.
• Ensure leaflets, tags, CRM forms and so on. They are in sufficient numbers.
• Proactively promoting all value services available at the store level.
• Maintain a database of customers to initiate cross selling activities.
• Responsible for printing and replacing price tags, feature cards and so on, for all displayed products.
• Responsible for cash, credit cards, gift vouchers and so on.
• Process orders for delivery and installation to customer premises and follow- up with the logistics department
for executing the job in time.
• Handle customer complaints, warranty issues, after sales service and so on coordinate with suppliers for getting
the product repaired in the least possible time.
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3.6 Recruitment
Recruitment is the process of attracting prospective employees and stimulating them for applying job in an
organisation. As per the Wikipedia “Recruitment refers to the process of attracting, screening, and selecting qualified
people for a job at an organisation or firm. For some components of the recruitment process, mid- and large-size
organisations often retain professional recruiters or outsource some of the process to recruitment agencies.” Thus,
recruitment refers to the process of finding right people for the right job or function, more often than not undertake
by recruiters. It also may be undertake by an employment group or a member of staff at the business or organisation
looking for recruits. The need for recruitment may arise from any of the following:
All candidature proceedings are strictly confidential. Human Resources Department & Interview panel members
shall treat all the proceedings of interviews, information on applicants and all their deliberations as strictly
confidential.
The needs arise from changes in organisation and retirement policy. When a new store is planned to be opened the
manpower requirement for various positions can be estimated and hence, this is planned recruitment. Anticipated
needs are those movements in personnel, which an organisation can predict by studying trends in internal and external
environment. If a competitor opens a store close to yours and is paying higher wages you can anticipate that a certain
number of staff will leave your store. Resignation, deaths, accidents, illness give rise to unexpected needs
review what
New trustee
went well, needs
recruited
changing
Recruitment cycle
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3.7 Sourcing For Employees
The sourcing for employee is going to play a very important role. Sources for potential candidates can be both
Internal and External.
Recruitment Cycle
Transfer: Transfer from one location to another suitable candidates are promoted internally to take up the
vacancy.
Promotion Internal Job Opportunity: The vacancy is advertised internally within the organisation that interested
candidates can apply for the same.
Retailers’ uses a combination of sources to fulfil their staffing requirements. Various factors in the job markets influence
the demand and supply of manpower. The retailer’s internal factors like recruitment policy, human resources planning,
size of the firm, and cost of the recruitment and growth and expansion plans affect his recruitment strategy.
External factors like manpower supply and demand, labour market, image/goodwill of the retailer, political/social/
legal environment, unemployment rate, and competitor’s activity also affects the retailer’s recruitment plans and
staff cost.
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The speedy increase of the retail sector and its profound infiltration in a variety of parts of the country within a
tremendously little span of time has now been termed as the retail revolution by India media. In order to furnish to
the manpower needs of the retail business different retail management courses are being launched by several business
schools in India. As the sector is booming in India, a career in retail sector undertakes good wages and increase
prospective for the motivated youngsters. Retail management is associated with retailing business of departmental
stores and shopping malls. There is a gigantic demand for the retail management professionals to route all merchandise
shipments, to accomplish store sales and prosperity, administration of stores as well as communication with the
clients to gratify them.
Retailing offers a variety of career paths such as buying, store management, sales promotion and advertising,
personnel, operations/ distribution, loss prevention and finance. Retail offers almost immediate accountability for
talented people so they can reach key management position within a decade. The primary entry-level opportunities
for a retailing career are in the area of buying and store management.
Buying positions are more number- oriented, while store management positions are more people oriented. Retailers
typically want all of their staff to understand their customers and their merchandise.
As per the www.indiaedu.com “An estimated growth rate in retail sector in India has been about 30-40% with
establishment of more than 200 shopping malls. It is estimated that the retail sector will create over 13 million jobs
throughout the country by 2012. More than 60% of these jobs will be available in the rural areas.”
According to USA, today there has been a decline in the number of young people willing to consider retail as a
career. This leaves a virtual gold mine of opportunities for everyone else. In fact, the National Retail Federation
(NRF) indicated that the average annual salary for a retail manager is approximately $42,000, though at larger
department or chain stores it can skyrocket to $200,000 and more.. Therefore, most managerial staff begins their
careers in store management or buying.
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3.9.1 Support Functions
• Inventory: The inventory plays a very crucial role in the operations as it keeps a check on the stocks in each
department. Every Inward and Outward has to go through the inventory control. They perform “stock take”
periodically. Perpetual (regular) inventory is conducted every month for all the brands of all the concepts. The
inventory team takes care of all the documentations involved in movement to merchandise to the store and
back to the warehouse.
• Information Technology (I.T.): The I.T. at the store is responsible for the infrastructure and software support at
the store. They work along with the other function to manage data on stocks, sales, price, discounts, inventory,
reports, prepare tax assessment.
• Administration: The Administration department is responsible to manage security, facilities and maintenance
of the store, issue of Gift Vouchers. It is also responsible for managing customer grievances.
• Cash and Billing: The Cash and Billing department is responsible to facilitate the billing process. They maintain
all records of sales transaction and report to the appropriate authority. The Cash and Billing department is headed
by Chief Cashier and supported cashiers.
• Marketing: Marketing takes care of various promotional events in the store like Diwali promotions, Annual
day celebrations and Promotions, Christmas promotions and so on. Marketing supports all the departments
in running their internal promotions by providing communication materials, taking care of visual branding,
Institutional sales, out-store tie-ups.
• Security: The Security department is responsible for the safety and order of the store. The Security personnel
conduct safety checks on employees and customers to avoid undesirable events. They conduct regular patrolling
in the store to safe-guard the premises and assets, maintain the parking areas, support in valet parking, checking
garments in trial rooms, maintaining staff and visitors movements, the security personnel reports to the store
manager.
• Maintenance: The Maintenance department is responsible for maintenance of facilities at the store like lights, air
conditioners, generators, escalators and elevators. The Maintenance personnel reports to the Store Manager.
• House-keeping: They are in-charge of maintaining the basic cleanliness and hygiene standards of the store.
The Housekeeping personnel reports to the store manager.
• Human resource: The HR function is responsible for the workforce management, like recruitment and
induction, training and development, compensation, maintaining personnel records, career planning, performance
management, Industrial and Employee relations. The Store HR manages the HR functions at the store.
• Commercial: The commercial department is responsible for financial control and audit of store and warehouse.
The department takes care of the cost control, financial accounts of store, payments like expenses incurred by
the company, budgeting, over heads, budge versus actual analysis, sales analysis, stocks inwards and outwards,
and payments of non-trading items.
• Warehouse: A Warehouse is a commercial building for storage of goods. The warehouse stocks goods received
from the vendor/manufacturer and on requisition is sent to the store. The warehouse operation largely involves
inspection of stocks which arrive at the ware-house, Tagging and Bar coding, safe keeping and retrieval, dispatch
to stores and customers, handling store returns.
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• Once the merchandise is in the store, planners closely monitor sales and work with buyers on decisions such
as how much additional merchandise to buy if the merchandise is doing well, or when to mark down the
merchandise if sales are below plans.
In the retail perspectives training is one of the imperative challenges as it’s impact is to reduce employee turnover
and to increase productivity. High turnover reduces sales and increases cost. Sales are lost because inexperienced
employee lacks the skill and knowledge about the company policies and merchandise to effectively interact with
customers. Cost increase due to the need to continually recruit and train new employees. Retail Training caters to the
retail industry and trains students for entry-level merchandising, sales and supervisory positions in the industry.
Training plays an important role in decreasing employee turn-over by creating an atmosphere of mutual commitment
in the firms. When a retailer demonstrates its commitment to employee development, employee responds by
developing loyalty to the company. Training is particularly important in retail industry because more that 70 percent
of retail employees have direct contact with the customer. They are responsible for helping customers satisfy their
need and solve their problems. A well trained employee will be able to meet the customer’s expectation and satisfy
his needs adequately. Training is crucial as it provides the new employee with valuable information about the
organisation’s culture, as well as information about company’s product, services and policies. Training for current
employees provides retail personnel with new information and innovative ways to get the task performed faster,
more accurately, and with less stress.
Training for the retail staff is usually conducted in the following areas:
• About the organisation: Here, the employee is informed about the organisation history, its structure, the policies
and procedures, rules objectives and expectations.
• Product knowledge: Product knowledge is very important for a retail sales person. He/she needs to know the
features, process, qualities and benefit of the product that they are selling. The sales person should also know
the current market trends and the offerings of his competitor. Product knowledge many times is the key factor
in the customer’s decision making process.
• Return and exchange process: The sales person should be aware of the policies on return and exchange of a
product in his store. This enables him to guide the customers properly in case they have an issue.
• Customer service: To serve the customer efficiently, the sales staff should be aware of the various ways to ensure
the customer is happy shopping at the store and will return in future. Most retailers attach a lot of importance
to customer service programs. The retailer’s customer service standards are communicated to the staff in such
programs.
• Personal grooming: The sales person in the face of the organisation to the customer hence he should be well
groomed at all time. This program will provide information to the staff regarding the stores grooming standards,
uniforms, shoes, personal hygiene.
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3.10 Motivation: A Key to Employee Performance
Performance is considered to be a function of ability and motivation, thus ability in turn depends on education,
experience and training and its improvement is a slow and long process. On the other hand motivation can be
improved quickly.
One of the critical tasks of human resource management is to motivate employees to work towards achieving the
firm’s goals and implementing its strategy. Many people know motivation as the driving force behind an action.
This is probably the simplest explanation about motivation. Motivation can be considered the state of having
encouragement to do something.
There is an old saying you can take a horse to the water but you cannot force it to drink; it will drink only if it’s
thirsty - so with people. They will do what they want to do or otherwise motivated to do. Whether it is to excel on
the workshop floor or in the ‘ivory tower’ they must be motivated or driven to it, either by themselves or through
external stimulus.
Incentives
Incentives are another method of motivating which a retailer frequently uses. A buyer will be motivated to focus on
the firm’s profitability if they receive a bonus on the profitability of the merchandise they buy. There are two type
of incentives normally used such as commission and bonus.
40
35
Percentage of Firms
30
25
20
15
10
5
0
Bonus Pay Bonus And Commission No Incentive
Commission Pay Pay
Pay (Pure Salary)
Incentives are very effective in motivating employee to perform the activity on which the incentive is based. But
incentives may cause employees to ignore other activities. For example, sales persons whose compensation is based
entirely on their sales may be reluctant to spend time say merchandising.
Organisational culture
The final method for motivating and employee is to develop a strong organisational culture. An organisational
culture is the set of values, traditions and customs in a firm that guides the employee behaviour. The guidelines are
not written in a set of policy documents but they are traditions that are passed along by experienced employee to
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new employee. Many retail firms have strong organisational culture that gives employee a sense of what they are
supposed to do on their job. For example, Nordstrom’s strong organisation culture emphasise customer service,
while Wal-Mart organisation culture focuses on reducing costs so the firm can provide low price to its customer.
Organisational culture are developed and maintained through stories and symbols. Values in an organisation culture
are often explained to new employees and reinforces to present employees through stories. A commission is a
compensation based on a fixed formula such as say 1 % of Sales. For example, many retail sales persons receive
compensation on the basis of the value of sales he has made.
A bonus is additional compensation awarded periodically based on an evaluation of the employees performance.
Example, store manager receive a bonus based on the stores performance relative to budgeted sales and profit.
Performance appraisal
Performance appraisal, also known as employee appraisal, is a method by which the job performance of an employee
is evaluated. Performance appraisal is generally done in terms of quality of the work done, quantity of the work done,
cost incurred and the time taken for the work. Performance appraisal is a part of the career development program in
an organisation. Performance appraisals are regular reviews of employee performance within organisation. Generally,
the aims of a performance appraisal are to:
A common approach to assessing performance is to use a numerical or scalar rating system whereby managers are
asked to score an individual against a number of objectives or attributes the basis for performance evaluation is
the goals that have been set. Goals which are specific, tied to rewards and voluntarily committed to by employee,
work as a motivator to perform well. Performance can be enhanced through measures taken to clarify and establish
work goals. Goals make the expected level of performance clear and help improve performance by measuring the
progress of a task. Good performance is recognised and poor performance is also be identified and addressed with
constructive criticism.
An important part of the goals is the measurement and the comparison of the employee’s actual performance with the
standards set. Ideally, when employees recognise employee training needs, forms a basis for personnel decisions:
• Salary increases
• Promotion, disciplinary action and so on
• Provide feedback on performance to employees
• Offer the opportunity for organisational diagnosis and development
• Facilitate communication between employee and administration themselves have been involved with the
goal setting and the choosing the course of action to be followed by them; they are more likely to fulfil their
responsibilities.
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• Clarity of goals: Goals are clearly understood. In a retail organisation, the goals for performance would depend
on the role performed by the individual. The goals set for a buyer or merchandiser would be different from those
for the sales staff. For example, the sales staff will be evaluated on the basis of achievement of individual targets
and the departmental targets, and buyer will be evaluated for setting up a line of merchandise with maximum
sell through.
GOAL
Compensation
One key factor attracting and retaining employee is the method used to compensate and otherwise reward them.
Employee compensation refers to both the payment of money for services performed and any benefit the employees
is to receive from the retailer, such as health insurance, life insurance, paid holidays, car loan and so on. Whatever
method is chosen to reward the employee for their work, the compensation plan should be fair to all employees as
well as to the retail organisation.
In addition to the above plans, retailers often grant the employees with fringe benefits. Some of the major fringe
benefits are:
• Insurance: Health and Life insurance is provided under this scheme. The insurance may be for the employee
only or for the employees’ immediate family.
• Recreational facilities: Many retailers offer employee facility to relax or work out. This may come in the form
of health club membership or an exercise room.
• Employee discount: Employees are often awarded discount at the retail outlet for products they purchase from
the retailer.
• Profit sharing: Profit sharing programs allow employees to share in the retailers overall profits. Employee stock
option is also another method of sharing the profits.
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Summary
• The HR function is responsible for the workforce management, like recruitment and induction, training and
development, compensation, maintaining personnel records, career planning, performance management, industrial
and employee relations. The Store HR manages the HR functions at the store.
• Job Analysis is a procedure to recognise and establish in facet the particular job duties and requirements and
the comparative significance of these duties for a given job.
• Manpower management is in addition called as Human resource management, which means employing people,
developing their resources, utilising and sustaining the process implicated are managing, planning, organising,
directing and controlling.
• Motivation and employee to perform better is another challenge.
• An organisational structure is a principally hierarchical perception of subordination of entities that work together
and add to serve one universal aim.
• Organisations are a variation of clustered entities. It allows the articulated portion of responsibilities for dissimilar
functions and processes to diverse entities such as the branch, department, workgroup and individual.
• Performance appraisal, also known as employee appraisal, is a method by which the job performance of an
employee is evaluated. .
• Manpower planning is the first step towards manpower management. It refers to the process of using available
assets for the implementation of the business plans.
• Recruitment is the procedure of attracting potential employees and stimulating them for applying job in an
organisation.
• Retail organisation structure differs according to the type of retailer and the size of the firm. A retailer with a
single store will have a completely different structure that a national chain.
• Teams can be both horizontal and vertical.
• Training plays an important role in decreasing employee turn-over by creating an atmosphere of mutual commitment
in the firms.. Training the employees to do the role better and faster is another important function.
• Training helps to reduce employee attrition and builds organisations ability to manage change.
• The process whereby individuals or persons are put to take measurement in the energetic running the task in an
organisation is called human resource management.
• The manpower management is the actual utilisation of man in the detection of a particular goal or purpose,
whereby such individual does not get lost away from the focal point or said goal.
• The main purpose of conducting job analysis is to prepare job description and job specification, which in turn
helps to hire the right quality of workforce into the organisation.
• Recruitment is the process of attracting prospective employees and stimulating them for applying job in an
organisation.
• A retail store is usually managed by a store manager of a business manager. Successful store manager must
have an ability to lead and motivate employees.
References
• Bradt, G. and Vonnegut, M., 2009. Onboarding: How To Get Your New Employees Up To Speed In Half The
Time. John Wiley & Sons.
• Mejia, G., Luis R., David B., Balkin, and Cardy, R.L., 2004. Managing Human Resources. 4th ed. Upper Saddle
River, NJ: Prentice Hall.
• Staffing and Recruiting Essentials. Employee Hiring Checklist [Online] Available at: <http://www.staffing-and-
recruiting-essentials.com/Hiring-Checklist.html> [Accessed 22 February 2012].
• eGyankosh. Managing Manpower. [pdf] Available at: <http://www.egyankosh.ac.in/bitstream/123456789/39074/1/
Unit-3.pdf> [Accessed 22 February 2012].
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• JamesVardaman. Human Resource Management Lecture 1 Part 2 [Video online] Available at: < http://www.
youtube.com/watch?v=6QFHXZOlCZs> [Accessed 22 February 2012].
• Nptelhrd. Lecture - 19 Manpower Planning [Video online] Available at: < http://www.youtube.com/
watch?v=zv2jKnaY2YU> [Accessed 22 February 2012].
Recommended Readings
• Grote, Richard C., 2002. The Performance Appraisal Question and Answer Book: A Survival Guide for Managers.
AMACOM Books.
• Kleiman, L.S., 2000. Human Resource Management: A Tool for Competitive Advantage. Cincinnati: South-
Western College Publishing.
• Noe, R. A., John R. H., Barry G., and Patrick M. W., 2000. Human Resource Management: Gaining a Competitive
Advantage. 5th ed. Boston: McGraw-Hill/Irwin.
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Self Assessment
1. ___________ refers to the process of finding right people.
a. Recruitment
b. Planning
c. Managing
d. Training
3. Which of the following is a process in which individuals or persons are put to take measurement in the energetic
running the task in an organisation?
a. Management
b. Recruitment
c. Human resource management
d. Organisational structure
4. Which of the following is not one of the steps performed under strategic management?
a. Develop a retail strategy
b. Selecting store location
c. Buy a merchandise
d. Identifying target market
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7. Which of the following is not a step in manpower planning?
a. Design job description and the job requirement
b. Predict manpower plans
c. Job analysis
d. Give boost to youngsters by appointment
9. __________ is the process of attracting prospective employees and stimulating them for applying job in an
organisation.
a. Management
b. Recruitment
c. Human resource management
d. Organisational structure
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Chapter IV
Managing Merchandise
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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4.1 Introduction
As a retailer, one of your important assets is ‘space’. On the other hand, in numerous situations the quantity of space
you have is a limited resource. It needs to be well managed. The homelands that have enjoyed the utmost trade and
communal development have been those with a well-built retail sector. Why has retailing turn out to be such a well-
liked method of conducting business? The credit goes to merchandise, which is an easier access to a multiplicity of
products, liberty of choice and elevated levels of customer service.
In previous unit we had observed that the terminology ‘retail’ is consequential from the French work retailer, meaning
‘to cut a piece off’ or ‘to break bulk’. The business processes are organised in a tree structure. The allocation of
consumer products commence with the producer and ends at the decisive consumer. Linking the producer and the
consumer there is a middleman—the retailer, who relates the producers and the eventually consumers.
After discussing a lot on how to manage customer and further manpower, the next important task is management
of commodity. The present unit “managing merchandise” leads in this direction. This unit provides the learner with
a comprehensive view of managing commodities.
Supply chain management is defined as the systemic, strategic co-ordination of the traditional business functions
within a particular company and across businesses within the supply chain, for the purposes of improving the long-term
performance of the individual companies and the supply chain as a whole (Mentser, 2001). Internet-enabled supply
chain applications model the supply chain, and when combined with advanced execution solutions, substantially
get better productivity from beginning to end quantifiable inventory and product cost reductions. These benefits are
comprehended all the way through sooner response to market opportunities, enhanced customer satisfaction, and
true group effort with suppliers and customers.
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The supply chain management necessitates proper understanding of supply & demand considerations. In order to
understand the product demand or requirement, we shall have to determine:
• Demand from customers by product & day
• Plant turnaround time by product
• Quantities already shipped to depots by products
• Extra inventory for new accounts
• Percentage of products to be upgraded
• Reports and trend analysis
Ordering Documents is the next step wherein we review three types of documents:
• Purchase Orders from Buyer
• Shippers’ Challans/Documents
• Goods Received Note of the ware-house
Supplier’s Invoices: These solutions offer an integrated suite of advanced forecasting, planning, and scheduling to
manage the supply chain. An integrated framework supports various modules and state-of-the art tools for a broad
range of business decisions. These enable the business to monitor the condition of the supply chain and provide
immediate feedback and exception notices.
Better Visibility
• Common view of forecast, orders, and inventory across the supply chain
• Ability to access and use plant information to improve decision making
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4.3.2 Warehousing Facility
Warehousing facility should be appropriate to use up terns of right size, structurally sound, well maintained and
clean. The question arises - should size determine product volume or product volume determines size? This is defined
with the following parameters - proper equipment on hand (lighting, labeled racks, containers, forklift, and so on),
efficient product flow (LIFO vs. FIFO), security, and centralised or decentralised facility.
Now-a-days, aggressive retail atmosphere requires real-time data communication between stores and the corporate
office for store-level activities—including item look-up, stock counts, and transfers—in order to get better the
eminence of inventory information, in-store efficiency, and sell-through. Managing this mountain of merchandise
has turn out to be a principal meet head-on to manufacturers that must be familiar with and live out the products
flipside into their allocation channels for purposes of refurbishing, remanufacturing, recycling or liquidating the items
returned by end users. With the rising volume of substance, a noteworthy amount of a manufacturer’s productivity
may depend on its ability to deal with the invalidate flow of its goods.
We also need to understand Managing Merchandise Costs consists of purchase price, processing labor and product
longevity. Dealing with suppliers involves bid specifications as follows:
• Description
• Size
• Composition (that is Nylon or Polyester)
• Color
• Weight (that is lbs per bale)
• Construction
• Delivery costs and timetables
• In order to obtain the Best Value for the purchase, one should ensure:
• Competitive bids from several suppliers
• Bid specs and RFPs make “Apples vs. Apples” comparison possible, among several bids received.
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Many business consultants consider that small business owners are among the leaders in ground-breaking merchandise
display strategies. W. Rae Cowan noted in Chain Store Age Executive, for example, that “in many instances, smaller
specialty chains are leading the way in store ambience supporting their overall marketing strategy in a broad range
of categories from fashion through hardware and house wares and building supplies areas. By their very nature,
specialty stores depend on their fixtures to generate a differentiation or niche in the marketplace and being physically
smaller in some cases allows for faster response to market trends and conditions such as, successful retailers today
are using their fixtures to productively dispense their merchandise and communicate an appropriate environment
on the retail floor.”
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4.6.2 Keys to Successful Merchandise Display
Trudy Ralston and Eric Foster, authors of How to Display It: A Practical Guide to Professional Merchandise
Display, cited several key components of successful merchandise display that are particularly relevant for small
business owners.
• First, displays should be economical, utilising only space, materials, and products that are already available.
• Second, displays should be versatile, able to “fit almost anywhere, exhibit almost any merchandise, and convey
almost any message.”
• Finally, displays have to be effective. The ideal display should be readily visible to any passer-by and should
be arranged so that there is no time or space lag between when a potential buyer sees the design and when he
or she can react to it. The ideal display also shows the customer what the product actually looks like, not some
flat and intangible picture of it. Few other forms of promotion can give such a vivid presentation of both the
merchandise and character of a store.”
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Some of the methods involved with loss prevention activities are as follows:
• Store Mapping: It represents the area identified within the store, within this area the stock take will be done
for all the items displayed or stored. In larger stores, there are several departments and sections and hence, it is
always helpful to demarcate areas as per different sections to be covered for stock-take activity.
• Wireless LAN: This is necessary to link the POS (point of sales) billing, stock inward or stock outward system
with the main server at a central location, to keep track of the activities happening at the store level.
• Task Assignment: Stock take is an important exercise and hence, needs to be assigned to people who can do
the same objectively. Thus, normally there is some-one from the central office or a senior member from the
accounts or software team is present who is familiar with the total stock-take process and is assisted by the staff
assigned to this specific task.
• Mobile Computers: This is used where the POS system as explained above is not linked within the LAN
(local area network). Here, the mobile computer is used to feed the stock-take data through internet and to get
the immediate feedback from the main office on the variation between the actual physical stock and the system
stock at the main office as per the records of inward, outward, sales, returns and so on.
• Barcode Scanning: It is a system whereby through a hand-held electronic instrument the scanning of barcodes
on each of the item is done to get the data entered into the stock-take software.
• Supervisory Control: There needs to be someone at the supervisory level who is keeping centrally track of
physical stocks at various locations and variations if any in different stores under his/her control and taking
necessary corrective steps about the same.
• Data Exchange: This is a system/process whereby POS data exchange takes place on-time basis with the main
data-base and maintains the information on various activities like stock inward, stock outward, sales, customer
returns, and balance stock position on-time basis. Thus, both the person at the store and at the central office can
access the same data on-line basis.
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• Exchange facility: It is also connected with the vendors thereby they are also in touch with the day to day
operation at the store level and are able to directly arrange for stock replenishments based on on-time sales
activity and stock levels at the store.
• Reports: These reports on physical stock take process showing item wise stock of all the items covered during
stock-take (through bar-code scanning). Report also shows the variation between the system stock and the actual
stock-take. There are other reports related to sales and stock also generated.
• Physical Stock Takes: Today’s organised retailers operate a chain of retail outlets across the territory of
operation, in various formats like Convenience Stores, Supermarkets and Hypermarkets. Daily groceries,
toiletries & cosmetics, and even fresh vegetables and fruits are on offer. The chains are well spread out with
stores covering large urban and suburban areas. The larger the spread, greater is the distribution of inventory
across the organisation.
It is always desirable for these enterprises to carry out physical stock take exercises for all the Retail Outlets and
Distribution Centres, so that stock visibility is 100% and also reconciliation can be done regularly. This prevents
pilferage and stock irregularities. The exercise is currently done meticulously, but is entirely manual. Therefore,
the time taken is too long and the loss of business is very substantial, since the store remains closed for business till
then. Further, the manual data consolidation takes too long and is very error prone.
The business wishes to implement a stock taking system that will eliminate these shortcomings in the manual process,
and will carry out the process much sooner so that there is a reduction in the loss due to closure. Following needs
presently partly or fully exist with respect to the different software available for Stock Take Solution in Retail:
Need #1: To identify, count and record the physical stock available in the store.
Need #2: To reduce manual errors in the process and increase accuracy.
Need #3: To ensure that the entire stock take exercise takes place in a timely manner so that loss of sale due to
closure is minimised.
Need #4: To have the entire data of the stock take exercise ready in a proper format without the need for any manual
data entry.
Need #5: To reduce product movement and handling during the stock take process.
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• The result is the number of times the average inventory is sold and replaced.
• Inventory turnover can be calculated in whole, as well as by department or merchandise category wise. Inventory
turns can be calculated by the month, quarter, season or year.
4.8.2 GMROI
Gross Margin Return on Inventory Investment (GMROI also known as GMROII) is an important tool in analysing
your sales and inventory. The GMROI calculations assist retailer in evaluating whether a sufficient gross margin is
being earned by the products sold, compared to the investment in inventory required to generate those gross margin
dollars. The procedure for the calculation of GMROI is as follows:
• Find the average inventory at cost.
• Calculate the gross margin of the item.
• Divide the gross margin by the average cost of inventory to get GMROI.
• The result is a ratio indicating the number of times gross margin is earned from the inventory investment.
• GMROI calculation can be used to measure the performance of the entire shop, but it is also more effective if
used for a particular department or category of merchandise.
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• Sell-Through % = Units Sold ÷ Units Received
• Stock-to-Sales = Beginning of Month Stock ÷ Sales for the Month
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The number of items in all stock plans is multiplied by the price line to arrive at the dollar value of the planned
inventory. Adjustments in the stock plan may be necessary if the financial constraints preclude an ambitious stock
assortment.
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4.10 Keywords
• Information: Integration of processes through the supply chain to share valuable information, including demand
signals, forecasts, inventory, transportation, potential collaboration, and so on.
• Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP)
and finished goods.
• Cash-Flow: Arranging the payment terms and methodologies for exchanging funds crossways entities surrounded
by the supply chain.
• Value: Value is the supplementary profits over and beyond the costs of structure the network. Co-creating
value and sharing the benefits suitably to persuade effectual Managing Merchandise participation is an input
challenge for any supply system.
• Retail logistics: “The process of managing the integrated flow of merchandise from buying, through distribution,
into the retail store, and ultimately into the hands of the consumer”.
• Sourcing Strategy: Identifying and prioritising supply and demand improvement opportunities by area of
spend.
• Sourcing Operating Model: Process and organisation required to support the overall sourcing strategy, goals
and objectives.
• Vendor Management: Approach and process required to manage vendors to ensure that product is provided
at the right total cost with minimised risk.
• Cost Management: Knowledge of product/service total cost and applying the understanding of cost drivers in
vendor negotiations.
• Sourcing Technology: Tools required to enable the sourcing organisation to realise cost-savings goals.
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Summary
• Merchandising has steps forward to churn out to be so much further than the buying and selling of products.
• Supply chain products successfully lend a hand to deal with business complication and optimise the supply
chain. Managing Supply Chain involves a definite ambition, information and service level agreements. A goal
could be ‘the ability to ship specified products to customers on time’.
• Warehousing facility should be appropriate to use up terms of right size, structurally sound, well maintained
and clean.
• Managing merchandise quality translates into delivering a product that meets or exceeds specifications, auditing
procedures of new products, quality assurance for processed products & product security.
• Merchandise displays are special presentations of a store’s products or services to the buying public.
• The effectiveness of these cornerstones of merchandising display strategy can be increased by remembering
several other tips as well.
• The percentage of loss of products between manufacture and point of sale is referred to as shrinkage, or
sometimes called shrink.
• Measuring inventory turn is the first step in building an inventory plan, which eliminates unnecessary inventory
and frees up cash.
• Controlling inventory turnover is the key to keeping our shelves stocked with interesting products and keeping
the cash flowing.
• Gross Margin Return on Inventory Investment (GMROI also known as GMROII) is an important tool in
analysing your sales and inventory.
• In the present scenario cost of hiring and maintaining staff including taking care of their training needs make
the cost of staffing a significant expense, and hence, the retail management needs to keep the costs and relevant
performance parameters under constant control.
• The number of items in all stock plans is multiplied by the price line to arrive at the dollar value of the planned
inventory.
• Reductions refer to the lowering of retail value of your inventory and are caused by planned markdowns,
shrinkage (stock shortage) and discounts to employees or other special groups.
• To arrive at the open-to-buy figure for the month, it is necessary to subtract (from the above planned purchases
figure) the dollar value of the commitments already placed for delivery during the same month.
• Integration of processes through the supply chain to share valuable information, including demand signals,
forecasts, inventory, transportation, potential collaboration, and so on.
References
• Jakson, T. and Show, D., 2008. Mastering fashion buying and merchanidising management, Palgrave.
• Cooper, M.C., Lambert, D.M., & Pagh, J., 1997. Supply Chain Management: More Than a New Name for
Logistics. The International Journal of Logistics Management.
• egyankosh. Managing Merchandise. [pdf] Available at: <http://www.egyankosh.ac.in/bitstream/123456789/39075/1/
Unit-4.pdf> [Accessed 23 February 2012].
• slideshare. Merchandise Management [Online] Available at: <http://www.slideshare.net/Annie05/merchandise-
management-presentation-704616> [Accessed 23 February 2012].
• RCABelfast. CIMA E3 Lecture 16 Managing Supply Chain [Video online] Available at: <http://www.youtube.
com/watch?v=FAl0dHaqsH4> [Accessed 23 February 2012].
• eHow. Advertising Techniques : Visual Merchandising Tips [Video online] Available at: <http://www.youtube.
com/watch?v=NXeoQPzVz2k&feature=results_main&playnext=1&list=PL98D7EB1D75128083> [Accessed
23 February 2012].
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Recommended Reading
• Halldorsson, A., Kotsab, H., Mikkola, J. H., Skjoett-Larsen, T., 2007. Complementary theories to supply chain
management. An International Journal.
• Hines, T., 2004. Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier.
• Ketchen, Jr., G., & Hult, T.M., 2006. Bridging organisation theory and supply chain management: The case of
best value supply chains. Journal of Operations Management.
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Self Assessment
1. In a _______________, a business model represents a sample business situation in which the product may be
used.
a. merchandise management
b. retail management
c. business process
d. communal development
5. Which of the following is not one of the benefits offered by supply chain solutions?
a. Enhanced efficiency
b. Lead time for supplier
c. Better visibility
d. Enhanced response and implementation
7. Which of the following is not one of the basic formats of merchandise display?
a. Storefront window displays
b. Showcase displays
c. Found space displays
d. Economical displays
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8. __________ term refers to product presentations that utilise small but nonetheless usable areas of the store.
a. Storefront window displays
b. Showcase displays
c. Found space displays
d. Economical displays
9. Which of the following is not one of the major sources of inventory shrinkage in retail?
a. Employee theft
b. Shoplifting
c. Vendor fraud
d. Displays
10. ____________ represents the area identified within the store, within this area the stock take will be done for
all the items displayed or stored.
a. Store mapping
b. Wireless LAN
c. Task assignment
d. Mobile computers
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Chapter V
Introduction to Stores
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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5.1 Introduction
In this chapter, we will see the various aspects of storage planning and store buildings to ensure smooth stores
operations.
Since various organisations have different needs under different situations, it is difficult to generalise sitting and
construction of storage buildings. Based on problems commonly encountered with the existing store buildings some
guidelines can be drawn.
From the above data, the site and building details can be worked out.
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5.2.3 Construction
After selecting a suitable site, you have to plan the size, shape and the type of construction of the storehouse. This
is to be done carefully because the building would be in use for a long time and any mistake made at this stage may
cause day to day problems in running the stores affecting its efficiency. As regard the storehouse buildings, they
can be either single-storied or multi-storeyed.
Single-storied buildings
Where extensive land is available in proper location without any restriction; single storied building is the best
proposition. It is difficult to make cost comparison with multi-storey constructions. But you should bear in mind
that land cost may be the highest single cost and an overriding one for a proper site. Normally, clear spans between
columns can be about 20 m for steel framed construction and about 12 m for concrete construction. In case of single
storied construction, storage modules can be conveniently fixed for standard bins and so on for storage. This would
not be easily possible in multi-storey construction where clear spans may be limited.
Multi-storeyed buildings
Where land cost of a suitable site is prohibitive or the site is small, multi-storeyed store construction would be
preferred. However, handling appliances used would need heavier supporting members or supports at closer spacing,
restricting the freedom to plan for convenient storage modules. The factors in favour of multi-storeyed constructions
are:
• More space is available for stores for storage in a small area.
• If stores that is to serve production / process plants already operating in the upper floors of a multi-storeyed
building, a multi-storeyed stores building connected therewith would be better.
• Better natural lighting for work and cleaner air for the storage of delicate materials at the top floor.
• Use of gravity for delivery to lower levels from the floors above.
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Prefabricated buildings may normally be considered. Standard modular units can be used to save time, money and
maintenance cost.
Foundation / Floors
Floor is an important feature of any storehouse because not only does it have to carry the weight of all stock held but
also provide a suitable surface for the operation of wheeled vehicles, whether manually or mechanically operated. Floor
must therefore, be of adequate strength and have a good, hard, smooth finish with a minimum of obstructions.
First of all you have to decide whether the floor would be at ground level or not. This would depend on handling
methods employed. Where overhead cranes and so on are used, the floor should preferably be at the ground level.
In case lift / trucks / conveyors are used, the floor can be raised to the height of the platforms of road lifting. In that
case, ramps may be provided from ground to floor with suitable slope and widths to allow access for vehicles.
Accordingly, the anticipated floor loading can be calculated and design of the foundations and floor may be done.
The following points are to be considered while designing the foundations floors:
• When power driven vehicles stop and start frequently, floor should be reinforced as loads created by such vehicles
exceed those by normal rolling motion.
• Normal factor of safety for floor strength for rolling loads is more than that for static uniformly distributed load.
In addition, dynamic load imposed by a moving truck is about 25% above its static weight.
• Speed, accuracy and safety in handling depend on the condition of the floors.
• Floor should be such that it offers the least “interactive resistance” (force required to overcome resistance to
movement). More interactive resistance in floors would result in the increase in fuel consumption. At the same
time, floor should be hard enough, skid proof and dust proof.
• The best type of flooring is concrete flooring, which provides a hard surface and reasonable grip to vehicles to
avoid slippage.
Floors have to be of even level to reduce interactive resistance and to lessen wear and tear of the equipment used.
This is more important where high rise racks are used for keeping the stocks.
Floor Maintenance
Proper floor treatment and maintenance are very important in storehouses for the following reasons:
• To avoid accidents and to protect the goods stored on the floor from water seepage.
• Prevention of dust raised by the movement of handling vehicles.
• Reduction of skidding of vehicles.
• Avoidance of slippage of stock.
Cracks occur due to the movement of mechanical and manual handling equipments and immediate repairs should be
undertaken for rectification. Concrete floors can be kept clean by mapping it with a damp cloth. Lines painted on the
floor indicating lanes for pallet trucks, and so on become indistinct over time and need to be repainted. Flammable
liquids and hazardous goods are to be stored in a separate go down as per government rules.
Multiple Flooring
Building storage factor (ratio of usable storage space to total area of floor) can be increased by the use of pallets
and block stacking. In the case of bins, double tier bins can be used. In double tier bins, since tops of lower bins
support the next, higher ones, layout of lower bins is somewhat in flexible and they cannot be moved at will. Where,
flexibility of layout of lower bins is essential, mezzanine floors are constructed. A mezzanine floor effectively
improves the available floor space but the disadvantages would be that reduction of the natural lighting in the area
below the mezzanine floor. Steel platform construction for mezzanine floor would be better as the same can be
easily erected or dismantled.
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Structure
Design of the framework for storehouse depends on whether it is to carry the weight of the building only or to
carry also overhead cranes, conveyors and so on along a minimum height of about 8 m to the eaves is therefore
necessary. Where power handling is employed, example, cranes and such, the supporting structure should be able to
carry both the crane and its maximum load. For storehouses not employing overhead lifting equipment, minimum
height of the building can be about 4.5 m to the eaves. Greater height may allow the flexibility for extension in
terms of mezzanine flooring at a later date. This aspect can be carefully thought as the height of the building can be
increased by a few metres without a proportionate increase in overall cost. However, this may involve additional
expense for extra lighting.
The choice of building material to be used in construction is governed not purely by economic consideration but
also by the safety provisions, especially against fire hazard. It is usual to construct lower walls of storehouses in
brick I concrete blocks niasonry, with supports for attachments. This is better than asbestos, which is fragile and
may get damaged due to accidental impact by transport vehicles and other handling equipment. Roof can be clad
with corrugated steel or other sheeting materials.
Where overhead gantry cranes are employed, the structure should have an independent steel framework designed
for this purpose. Steel frame construction can be more readily modified than brick and concrete construction. But
in the case of standard concrete construction units, fixing facilities to house canopies, doorways and openings and
so on can be more easily provided. Fire resistance is quite a difficult problem for which special provisions are to be
made. Necessary statutory provisions with regard to fire have to be made.
Rolling shutters are preferred for despatch and receiving bays which can be locked and are therefore more secure.
Normal single double leaf shutters are satisfactory for heavy traffic. Where, heavy mechanical transport traffic is
envisaged, provision of ‘in’ and ‘out’ doors side by side could be considered. They should be easily operatable.
Doors should be of sufficient width so that vehicles can easily pass through without causing damage to the sides of
the door. Small doors could be provided at sides so that staff has easy access during times when it is not necessary
to have the main doors open. But with large doors, rain water may pass underneath during rainy season. The floor
below may be raised with slopes on both sides.
Sliding doors can be used for access stores from outside. Folding doors are expensive, but the width of the door
opening can be controlled at will, thereby restricting the entry of outside elements. They are easy to handle and
speedy in operation. Where, security is important, automatic sliding doors can be used with an electronic sensing
device.
Height of the doorway is important and carefully considered at the initial stage. Future requirements regarding the
headroom and so on has to be thought of in detail as the cost of modification for extra door height along with the
take into consideration cost of increasing the lintel height at a later stage after occupation can be too high. Design
of doors should also the possible fire hazards and provisions may be made for the same.
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Lighting
Construction should be such that natural lighting is used as much as possible.However, while making use of natural
light, the following points are to be kept in mind:
• A power other than direct sunlight may be diffused and tends to be cut off by storage equipment.
• The angle of direct light (and thus degree of obstruction) is lower during morning and evening periods.
• Natural lighting is not constant through different weather conditions and in different seasons.
In most storehouses, shelves or racks are placed along the walls, and hence side windows should be at such a height
that the day light through them is not obstructed by these fixtures. Lighting through roofs is a necessity in large
storehouses and the best use can be made of a roof space by installing continuous glazing. They should preferably be
with wired glass as far as practicable passages should get the full benefit of natural light. Sufficient opening panels
must be installed to provide adequate ventilation and they should be capable of being securely fastened.
As regards artificial lighting, installation should be planned depending on the layout of bins and racks so that
maximum amount of light shines into storage compartments. Lighting fittings should not come in the way of any
cranes or other handling equipment.
Fluorescent tubes are more efficient than bulbs but may involve larger investment. For lighting in areas prone to fire
hazards, flameproof equipments are to be used. General illumination for traffic areas and stockyards can be with
standard Sodium vapour / Mercury vapour lamps with fittings mounted at about 6 m height on wooden 1 concrete
poles or columns. For larger stockyards having widely dispersed goods, light source must be at a still greater height
and with rotation / swivelling attachment to give proper lighting effects and distribution.
Ventilation
Normal ventilation should be sufficient in most stores. Control is needed if goods stored may give off toxic gases
or noxious fumes. Ventilation in stores should meet the fire safety requirements.
Roof ventilators when backed by automatic sprinklers on segregating curtains play a major role to help extinguish
fire in case of fire accident. If automatic ventilators are provided provision for manual operation also should be
available to open them in case of fire.
Roofs
The cost due to increase in ceiling height is less in comparison with the cost of other building materials. This is
more so in case of storehouses with large floor areas where ratio of wall to foundations and floor area is low. It is
normally observed that additional cost due to increase in height from 3 m to 6 m is about 5% of total cost and from
3 m to 10 m it is about 7%.
Shape of roof and disposition of roof lights are also the materials used for roof insulation influence fire safety. Clear
roof height should at least be one metre above the top of racks and bins to enable access to fire-fighting. Roof costs
go up if spacing between columns are very large, but more space would be available for proper storage. If the roof
has to carry over head conveyors and so on roof members should be designed as load bearing structures
.
So far we have discussed the various aspects to be considered while planning for new store buildings. However, due
to financial constraints or otherwise, it may not always be possible to build a new stores building, and the alternative
is to go for an available existing stores building to be used for stores operation.
Normally, such buildings are old store buildings. It is also possible that these buildings may have been originally
constructed for other purposes and later taken over as storehouse with a minimum of adaptation. In any case, such
buildings need improvements before they can be used as a store building. There are some general points needing
consideration in such instances.
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Access
It happens to be the most common unsatisfactory feature. It should be ensured that access roads are properly made
up, doors are relocated and height of doors modified if necessary.
Structure
Roofs may be too high. This may be taken advantage of by putting in another storage floor and availing thereby
more usable space.
• Access to upper floors if existing may be poor. This can be rectified by improving the access but if not permitted,
then by the installation of a new one.
• Floors of existing building may be bad or not have been properly maintained.
• It would be preferable to provide a new and correctly levelled concrete floor.
• Natural lighting is inadequate. There may not be natural lightening in the roof.
• Windows may be less in number and the existing windows may be smaller and too far apart. This can be
improved by putting continuous glazing on the roof and existing structure permitting, side windows can be
raised or extended.
In case any unnecessary internal structures are there they can be removed without any problem provided they do
not support the main structure.
Where the materials in store present an exceptional risk, avoid timber in construction as much as possible and
cladding, which has been treated with a bituminous compound or other inflammable mixture. Water mains providing
adequate supply should be suitably located and equipped with sufficient hydrants.
Fire safety in stores and storage areas depends on a number of factors from which some general observations can
be made. Fires spread by conduction, convection and radiation and its growth in a building can be controlled by
imparting to it the properties of integrity stability and insulation. Then there is the method of extinguishing fires by
water, the cheaped and most commonly available fire-fighting medium.
As fire needs fuel (materials) to burn, the first step to control it is to limit the fuel (materials) present, and in stores
this can be achieved by dividing very large spaces into smaller compartments. Reasonably well-constructed brick /
R.C.C. walls and roofs have the required measure of integrity, stability and insulation thus, providing a certain degree
of fire resistance. Separating the store from, say, the timber yard in the open by about 100 m would protect it from
the radiated heat from an accidental fire in the yard. Then, a source of ignition is needed to start a fire. Defective
electrical installations (sparks) and undetected smoking (glowing buttons) are two common enough sources to which
we can add, for instance, welding carried out in manufacturing. It should be possible to eliminate the first two by
exercising control and the third by maintaining a minimum separation between production and storage. As regards
provision of water, there can be automatic sprinklers, manually operated hydrants, or buckets and extinguishers,
which the personnel can (and should be trained to) use, coupled with all this is a measure of watchfulness like a fire
check before closing time and during week ends and holidays when the premises is unoccupied for long periods.
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5.2.5 Security
Security of the storage area and materials stored are important in any stores. Direct access to stores must be limited
to authorised staff only. If due to necessity other staff need to enter and withdraw materials, they should do so only
after due verification except for access by fire and security officers. Doors provided should be restricted to the
minimum number necessary for efficient operation. They should be fitted with adequate locks. All windows and
sky lights must be capable of being securely fastened and preferably protected with wire mesh and bars. It would
be best if issue area is segregated from storage area. Store staffs have the responsibility for the care and custody of
all materials from the time of receipt to the time of issue.
For security outside normal hours, access to storehouses and stockyards may be allowed to only store staff and fire
officers. Vigilance / security should be provided round the clock for the stores area / stockyard area.
It is said that if an intruder is resisted from gaining unauthorised entry for the first five minutes, then he is usually
discouraged and apprehensive of being seen by the patrolling staff goes away. So, the fencing, the locks, the doors
and such other security measures have to be sufficiently robust and strong to withstand the assaults by the intruder
for those crucial minutes and the system of patrolling is to be such that all areas are visited a number of times during
security rounds.
Functional Classification: Functional stores are normally stores, which are attached to various units in a production
complex. These stores serve the concerned unit in order to fulfil the purpose for which the unit is meant. Example
for such stores are raw material store, procured material store, general store, jig and tool store, piece parts store,
finished parts stores and so on. They are usually located within or near the units they serve.
Physical Classification: Such stores are based on physical consideration like the bulk or volume of materials and
the distances they are to be carrying before they are used.
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In large factories, the stores are usually decentralised storing only the items (and not everything) needed in the units
they serve, thus displaying a high degree of specialisation. The variety of such stores is many; and it is difficult to
classify them under set rules. Also, there are instances when the stores may belong to either of the classification
or both. For example, a departmental store of a big manufacturing department of a large complex displays the
characteristics of both. The descriptions which follow are of stores which show a mixed degree of centralisation
and decentralisation.
Production Store
Houses materials consumed during production such as oils, abrasives, eye shields and so on. In case there is no
separate jig and tool store, production store may also include small tools and equipment.
General Store
Contains goods consumed throughout the factory for general use like paint brushes, cleaning materials and so on.
Salvage Store
Normally located near the exit so as to ensure segregation of rejected materials from the production area, thereby
saving valuable production space and for easy disposal.
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Packing Store
Contains packing materials and preferably is to be under direct control of the packing section.
Quarantine Store
Store for finished raw materials received and the inspection test results of which are awaited. The materials there
are not for issue. This is essentially a transit store and preferably be located near receipt area to reduce handling. If
inspection is carried out in the store itself, necessary equipments to be kept there and the area is to be large enough
for inspection purposes.
Bonded Store
This is for customer’s materials ready for inspection and certification by Inspection Excise officials. It should be
located outside the main building to reduce unauthorised entry there. Such stores are also used for explosives and
other hazardous materials and are to be located at a distance from other buildings.
The physical existence of the store depends on volume of movement, flow rate, degree of security needed to ensure
that only approved items get into the production lines after inspection. The time of waiting and the nature of goods
produced are also factors to consider. These are located at appropriate places along production lines.
Semi-finished Store
These are essentially a form of work-in-progress stores. Components may be made in bulk and part finished for used
in production later. Their equipment and control would be based on the needs of the production department. They
are used where considerable quantities of semi-finished parts are required in addition to work-in-progress stocks.
Transit Store
Some authors define Transit Store as a separate store. But every store is a transit store, where goods to support the
work at a distant place can be stored ready with the main items. This, therefore, comes under both classifications.
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A central store for a small factory appears to be a straightforward issue, but this is not so if there are functional,
considerations, especially where user points are dispersed and the consumption is heavy. Anyway, a central store in
a small factory ensures better control, efficient record keeping and quick communication. If, however, it is within
the production area the advantages thereof will be gone when the demands of production will push the store into a
continuously shrinking area leading to not increased efficiency but chaos and muddle. It would be better to consider
a store outside the production area with facility for future expansion and power handling.
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In the Case of Scattered / Dispersed Production
• The extent of geographical dispersion of the factories.
• Do they differ considerably in size?
• Are their products similar?
• The volume and value of stock throughout the year.
• Are the materials handled hazardous / fragile?
• What is the mode of communication between various user points?
• What is the staff life of the materials?
• Are supervisor / operational labour available locally?
• What are the costs of transportation?
• What are the off loading / loading facilities available?
• Is there a need for inspection / testing of materials?
Many mathematical methods are there to determine the optimal location of a central store in a large manufacturing
organisation by considering the points and such other details we discussed earlier. The simplest is to find out the
centre of gravity of the system by including the frequency of vehicle movement per unit period, the tonnage moved
during that time and the distance over, which it was moved in a mathematical formula. This is done in the same
way as in determining the centre of gravity of a loaded beam or shaft.
The difference is that the beam or the shelf would usually be straight while the production units and the stores would
be rarely aligned that way. As regards the various stores described under functional classification, their location
depends on the locations of the units they are to serve.
It is necessary, however, to take into account the practical difficulties encountered while deciding on the location
of a new storehouse or stockyard. Some of these problems are listed as follows:
• Heavy capital investment may have already been made in existing storehouses / stock yards.
• Location of supply sources may be unsuitable for the site envisaged.
• Lines of communications in a physical sense as also by written words may be too long difficult.
• Seasonal demands are different for each of the constituents.
• Material availability may not be consistent throughout the year.
Access roads occupy considerable areas of stockyards. It is economical to make concrete / tarmac access roads
and to surface the stacking areas with ashes. Usually, a store or a stockyard should be as near as possible to the
geographical centre of the area to be served. Mechanical handling becomes necessary in the stockyard if the goods
are in bulk. For transportation later to work centres directly from the stockyards also such appliances are useful.
It is better to locate the stockyards away from the production centre for securing reasons and fence them properly
with minimum number of gates.
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Stockyards may not always be a cheaper alternative to storehouses. If bulk materials in large sizes are kept in
stockyards to save space, they require stronger foundations cost is more than that of a normal building; they also
need costly mechanical handling methods.
Fencing and gates and other security arrangements may involve heavy expense. Since stockyards are in open,
expenditure is involved in providing proper drainage. Protection against spread of fire (in case of inflammable
goods) is provided by constructing barrier walls, trenches, drainage channels, and so on.
A good layout is essential for efficiency in flow. However, in very efficient layouts supervision tends to be difficult
because of bottle necking or bunching of items at some points in the line of flow. The length of communication
should be simple and as short as possible. A good layout of stores with adequate provision of marshalling areas
would minimise the length to be travelled for material picking operations.
The following points are to be kept in mind for proper layout planning of stockyards:
• Supervision in storehouses is much easier than in the stockyards, which are to be manned continuously. Good
housekeeping of stockyards is more difficult than that of stores.
• Travelling distances are to be reduced between the stores and other units as well as that between inter-sections.
Clear indication of traffic lanes is necessary. So is the provision for future expansions.
• Where risks of fire are present, the store needs to be divided into fire-resisting compartments.
While planning the layout of stores to be adapted from an existing building, it would be better to prepare a complete
drawing of the existing store building incorporating modifications of access, structure and services duly approved.
Logical sequence of activities from receipt to issue through various areas and the handling methods proposed should
be incorporated. Outdated and old bins / racks may be removed along with old handling equipment and, accordingly,
a new layout may be worked out. Office area can be modified based on the staff proposed to be employed and may
be sited to give good visibility of stores activities, providing easy access to people with the need to walk through
the stores area.
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5.5.1 Stock Location Alternatives
The various alternatives for stock locations are:
Frequency Location:
An ‘ABC’ analysis (as id inventory control) on the basis of frequency of daily movement of all fast moving items
may be conducted. The items are to be located in the descending order of frequency of movement. However, in this
analysis value of material, space occupied and weights moved are not directly related. The fastest moving items
can be located nearest to the issue point.
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Types of Damage
Types of damage encountered in storage are broadly classified as biological damage and non-biological damage.
Biological Damage
Damages occurring in organic substances and materials such as the ‘rot’ in timber, cloth moths’ infect woollen
cloths, white ants, and so on.
Non-biological Damage
These are in processed materials like rust and corrosion in metals, aging, expiry of shell life in dry batteries,
mechanical wear and tear, and so on.
Moisture
Moisture is the main reason for most of the damages, both biological and non-biological. The presence of moisture
leads to corrosion of metal, films and fungus formation in optical instrument, setting of cement and so on. Rubber
is one material, which is not affected by moisture but, in fact, is better preserved.
Temperature
Increased temperature affects materials like rubber, chemicals, plastics, electronic goods and so on.
Cement
Cement sets and solidifies if it gets damp. It must be stored in a dry building and should be kept off the floor because
of condensation at times on concrete floors. The cement bags are ensured therefore stored on wooden planks platforms.
Proper air circulation should be around the stacks of cement bags. Vertical stacking of bags should be limited to 10
to 15 bags only. Length of stacks should not be more than 15 bags. Stocks can be placed back to back with nominal
space in between. Between the stacks, there should be a gap of at-least 0.6 m to ensure not only air circulation but
also for purpose of issue verification of bags.
Timber
Timber is susceptible to rot if it is wet when it is attacked by fungi. Sawn timber is best stored inside or in sheds
with sides open. Boards if stacked should be stacked interleaved with scantlings so that air circulation is ensured
throughout the stack.
All metals are liable to corrosion, especially iron and steel, if kept for long periods. It is necessary to protect them with
a coat of oil, grease (for steel bars kept in open), but in the case of iron castings corrosion is not of significance.
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‘0-s Tyres if stored in piles one on top of another may damage the internal fabric which, is to be avoided. They
should be kept upright on their treads. Since it is made of rubber, too much heat may be harmful and hence is to be
kept away from heat sources.
Agricultural Produce
Crops if kept in store for long periods are liable to germinate or are likely to be attacked by pests. The grain bags
should be kept dry and at intervals may require dusting with rot prevention compounds or insecticides.
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Financial goals would be minimum capital blocked, high stock turn, low operating costs, minimum overheads and
so on.
Services considerations would be prompt response to requests, issue of fresh materials, avoiding stock-outs, issue
with least formality and so on.
Control considerations would demand proper up keeping of records, proper auditing, accurate maintenance of
records, proper documentation of returns, and so on.
The considerations described above are based on what you have learnt from other units.
From stores buildings point of view, the stores efficiency should aim at the following:
• Efficient use of storage space.
• Minimum handling and employment of effective handling aids and methods.
• Avoidance of accidents.
• Adequate staffing and their personnel training.
• Centralisation where it is possible and appropriate.
It is likely that the goals of efficient warehousing may not be the same as the goals of other departments. For assessing
stores efficiency; these overall objectives have to be carefully considered.
An overall statement of aim of stores and stock control activity would be difficult to enumerate. The basic objective
should be to perform the stores operation with efficiency so as to get things in an economical way and to achieve
the desired result.
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Summary
• To receive raw materials, components, equipments, finished goods, arrange for their inspection and provide
adequate and proper storage for them.
• In order to determine the volume of the stores building and the storage space therein needed in an organisation
many factors have to be considered.
• After selecting a suitable site, you need to plan the size, shape and the type of construction of the storehouse.
• Where extensive land is available in proper location without any restriction; single storied building is the best
proposition.
• Where land cost of a suitable site is prohibitive or the site is small, multi-storeyed store construction would be
preferred.
• Floors have to be of even level to reduce interactive resistance and to lessen wear and tear of the equipment
used.
• Cracks occur due to the movement of mechanical and manual handling equipments and immediate repairs
should be undertaken for rectification.
• Building storage factor (ratio of usable storage space to total area of floor) can be increased by the use of pallets
and block stacking.
• Security is very essential in stores. Doorways and openings shall be suitably secured against unauthorised entry.
Positioning of doors is very important. A common arrangement is the provision of doors at the opposite ends
of the stores.
• Fluorescent tubes are more efficient than bulbs but may involve larger investment.
• Shape of roof and disposition of roof lights are also the materials used for roof insulation influence fire safety.
• Fires in storehouses would result in damages to storage areas and materials housed therein.
• Central or Main Store is a store, which would contain most of the materials serving all the needs of the users.
Two forms of centralisation are to be considered.
• Stores buildings involve construction costs and they are to take only those materials, which must not be stored
in the open.
• Fencing and gates and other security arrangements may involve heavy expense.
• A good layout is essential for efficiency in flow. However, in very efficient layouts supervision tends to be
difficult because of bottle necking or bunching of items at some points in the line of flow.
• While planning the layout of stores to be adapted from an existing building, it would be better to prepare a
complete drawing of the existing store building incorporating modifications of access, structure and services
duly approved.
• Petroleum and explosives storages are subject to government regulations with regard to their mode of transport,
design of buildings and safety precautions.
References
• Cambridge International College. Store Management [pdf] Available at: < http://www.cambridgecollege.co.uk/
coursesattachments/stkmod1.pdf> [Accessed February 2012].
• Logistic Cluster. Warehousing and Inventory Management [Online] Available at: < http://log.logcluster.org/
response/warehouse-management/index.html> [Accessed February 2012].
• Richards, G., 2011. Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs
in the Modern Warehouse. Kogan Page Publishers.
• Pradhan., 2009. Retailing Management 3E. 3rd ed. Tata McGraw-Hill Education.
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Recommended Reading
• McNair, M.P. and Gragg, C.I., 1931. Problems in retail store management. McGraw-Hill.
• Warman, J., 1972. Warehouse management. Heinemann.
• The University of Michigan. Printers’ ink, Volume 226. Printers’ Ink Pub. Co., 1949.
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Self Assessment
1. Which of the following is not a basic function of a store house?
a. To ensure proper preservation and maintenance of stock.
b. Carry out verification of go and assist in effective purchasing.
c. To check the volume of stock.
d. To receive raw materials, components, equipments, finished goods.
2. Which of the following factor is not put into consideration while determining the volume of the stores?
a. Column spacing
b. Aisles
c. Windows
d. Light
4. ____________ is an important feature of any storehouse because not only does it have to carry the weight of
all stock held but also provide a suitable surface for the operation of wheeled vehicles.
a. Floor
b. Windows
c. Doors
d. Layout
5. ___________ of the framework for storehouse depends on whether it is to carry the weight of the building only
or to carry also overhead cranes.
a. Product
b. Floor
c. Ventilation
d. Design
7. ________ are preferred for despatch and receiving bays, which can be locked and are therefore more secure.
a. Rolling shutters
b. Sliding doors
c. Folding doors
d. Double leaf shutters
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8. Which of the following is not taken into consideration before building can be used as a store building?
a. Access
b. Structure
c. Lighting
d. Area
9. ____________ are normally stores, which are attached to various units in a production complex.
a. Functional stores
b. Central stores
c. Transit stores
d. Sub stores
10. ___________is a store, which would contain most of the materials serving all the needs of the users.
a. Transit store
b. Functional stores
c. Sub stores
d. Main Store
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Chapter VI
Managing Space
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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6.1 Introduction
Getting the accurate blend of merchandise and maximising efficiency with assortments tailored to local preferences
and each store’s physical layout are challenging for any retailer. They are essential for regional chains, competing
with global giants.
Successful retail establishes, which categorise the accurate position and creating them ideal occupant mix to go well
with a meticulous target market, and this is a dynamic environment that we comprehend. Whether it’s at concept stage
or a fully-functioning shopping centre, the aim of the retailer is to adjoin significance each step of the technique.
Once a retailer decides what to buy from vendors and how much of it to allocate to specific stores, someone needs to
decide where in the stores the products will sit.This is a very important step in retail since store layouts are crucial
to the shopping experience. Products need to be easy to locate, near related products, and have the correct facings.
Should this product be on the endcap? Should it be at eye level? Should it have 8 facings or 10? Space management
is about maximising every inch of the selling floor.
The objective of the retailer is to house, display and sell products and services and realise a return on investment.
Two fields that are essential for developing a retail environment are marketing and design. From the marketing field,
we use sub-related fields such as consumer behaviour, communications, the marketing mix and strategy.
The design field is concerned with translating the marketing strategy into a three dimensional form, which takes
into account all the other factors, such as function, merchandise, operations, service and image and is in essence a
communication medium between buyer and seller. Ultimately, it is all these factors brought together in an integrative
and supportive manner that will result in the final retail concept and its success.
The success of a retail concept will also heavily depend on the training of staff on an ongoing basis, and manuals to
describe how to utilise the concept. It is also dependant on a team of people, such as suppliers, advertising agency,
and other professionals and so on. The concept should take into account historic data, current market realities and
prediction about the future consumer and retail business environment.
A retail concept should be far more than mere whimsical aesthetic considerations. It also needs to be innovative
and cost effective, flexible and oriented towards the target market. More importantly it also needs to differentiate
itself from the competition so that customers would prefer shopping there rather than elsewhere. The concept
should not just be a look but a complete experience. To this end, signage and graphic communications and visual
merchandising are key elements for consideration. Goods and services need to be presented in a way as to increase
the average consumer transaction.
Apart from it there are certain Retail Space Management software, which uses influential automation, optimisation,
graphics, workflow and analytics in an easy solution to foster enhanced decisions more rapidly. It aids teamwork
across well designed groups, allows management greater visibility into imperative business metrics and improves
group effort with vendor partners.
Thus, we had observed that presently like a long-lasting soap opera, it has been unfolding for approximately a year.
Each episode brings a new expansion. The Indian public has been tour it up in right intense. And a quiet revolution
is brewing in the Indian retail space.
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6.2 Skill of Managing Space
Once the inventory comes within a retail store, the subsequently gigantic thing, which comes within the mind of
a retailer, is to make a decision where to put it and how much vicinity should be allocated to the specific product.
The decision of where in the store the products will sit is very imperative footstep in retail since store layouts are
crucial to the shopping experience. Products need to be straight forward to place, be near related products, and have
the truthful facings. Space management is about maximising each edge of the selling floor.
Chandru Kalro, executive VP-marketing, TTK Prestige Ltd, says, “Our stores are designed in such a way that the
customer can have a non-obtrusive shopping experience. But in value formats, catering to masses, it is packing as
much merchandise as possible with not much emphasis on having it very organised. In formats catering to high end
customers, stores are designed to make the shopping experience great and there is a ‘stunner’ factor in the store.”
When asked how do retailers decide what to put and where on shelf, Kalro said,” Buyers do not always come to the
store with a preset list in their minds about the products they want to buy. We plan our shelf to ensure all products
in our range are well displayed as lot of the purchase is impulsive. Also while planning our shelf we see to it that
there is optimum utilisation of space and maximum amount of merchandise can be displayed.”
Many brands and retailers try to engage the customer at the point of sale. Product promotion inside the store is very
important to make consumers aware of sales promotion schemes as advertising in mass media is expensive and
deliveries are not 100 percent. Today, brands and retailers are cutting down on expenditure in mass media and focusing
on the customer contact point. This is going to become more pronounced as the modern retail grows in India.
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Kapoor also believes that consumers have their own preferences. He says, “Some people have preferences for
brands, on the other hand some have preferences for schemes and deals. Therefore, all the brands inside the store
thrive depending on the consumer preferences. Both need to be given equal importance.”
So does that mean the brand featuring an ongoing offer have its negative impact on brand without offer? As per
Kalro, offers are not the end of it all. Customers are ready to buy brands for the benefit and value proposition. There
are many brands that have no offers at all and yet they sell.”
Agreed with the Kalro point, Kapoor says, “I also believe that offer doesn’t affect sales too much. In fact the brand
with the offer can have a negative impact on the consumer giving a signal that is slow moving and hence the need
for an offer.”
Space planning concepts are defined by architectural/interior designers, which are concept oriented in the design
and planning of architectural interior space, and other three dimensional environments. The theoretical point of
reference is strongly aggravated by a marketing/strategic approach, the intention of which is to help businesses
to position and differentiate them effectively. This is done by research, marketing and branding, leading to totally
integrated concepts. The ultimate aim is to obtain superior profitability and hence a good return on investment. Cost
effective, yet innovative, space planning solutions are used in the attainment of this aim, which go beyond aesthetic
considerations. Measurement techniques are used to evaluate concepts, which help to demystify and objectify the
process.
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• To recommend possible combinations of products and services.
• To demonstrate how we will maximise the probability of success of the project.
• To be in the business of design- designing for business, the objective of which is to assist with the turning on
and inspiring people, adding value, creating desire all by enhancing the customers experience
• To see retail not only as a commercial activity but also a social activity.
• To keep up to date with current and future trends, which we then implement in our projects
• To take an integrated design approach in our work that takes into account all the factors which will impact on
the project.
• To apply retail science techniques in order to obtain maximum space efficiency and productivity.
Each section of space planning criteria provides the purpose and scope, definitions, policies, required program data
elements, and specific space planning criteria by functional area.
• Analysis of objectives and research
• Concept generation
• Space planning for optimum placement and display of all merchandise
• Colour, material and lighting considerations
• Signage design and placement for optimum impact
• Detailed drawings
• Fixturing design and placement for optimizing display and flexibility
• Selection and/or custom design of components
• Contract documentation
• Certification and regulation compliance
• Project co-ordination and supervision
• Coordination/installation of furniture, furnishings and clutter packages
• Post installation evaluation in terms of issues/shifts in marketplace
• Continuous measurement/analysis of performance of concept against a set of criteria
• Turnkey projects
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So to state the obvious the higher the GMROF the better, evolved retailers use this as a benchmark in getting
efficiency of departments within a store and between stores comparison.
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Operational Measures
• Put your best people to sell more of the high GM category
• Effective Use of VM to drive sell thorough
All this gets measured by a strong MIS back up, which makes the measurement of the same effective. Since real
estate costs are one of the largest expense items for a retailer it is very important for a retailer to track how this
resource is being used and how the same can be leveraged further. Indian retailers have managed to make the best
use of this, one to note is Shoppers Stop, which has evolved on this front.
Furthermore, because space planners at headquarters rarely have visibility into and an accurate understanding of the
actual modifications performed at each individual store, future space planning becomes cumbersome.
In addition, retailers often manage space planning in a silo, leading to significant disadvantages throughout the
retail organisation. For example, retailers that manage space with no regard for category level roles, strategies, and
objectives may find themselves having adjacencies that do not complement one another or not allocating enough
space to high-demand categories. Further, space constraints such as fixture capacity must be communicated and
understood throughout the supply chain. If constraints are not communicated downstream, there is a risk of inaccurate
inventory planning, inadequate service levels, and out-of-stocks on the shelves.
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• Store category space and adjacency analyses. These analyses leverage powerful category and planogram
performance metrics at the chain, cluster, and store level to identify potential floor or planogram adjacency
opportunities across the entire store. Importantly, this solution integrates with Oracle’s proven optimisation
analytics, maximising space utilisation.
• Drawing automation and two-way CAD communication. Automated drawing management tools ensure
that store-specific drawings can be created and maintained in a dynamic merchandising environment via two-
way communication with AutoCAD. This integration with a retailer’s CAD process and its item management,
supply chain, and planogram development processes ensures that changes that affect the store’s floor plan are
seamlessly incorporated, with minimal user intervention.
• 3-D store plan visualisation and maintenance. Detailed fixture and store environmental libraries enable photo-
realistic, walk-through environments of a new or prototype store.
• Single common relational database. A common relational database leveraging Oracle Retail database technology
stores detailed reports on inventory, fixturing, merchandising, and space/performance return.
• Integrated fixture takeoff and ordering. Direct integration with existing fixture libraries and manufacturer
ordering information enables Oracle Retail Macro.
Space planning is used to deliver version-specific fixture takeoffs and fixture ordering for store plans. Additionally,
a store difference report highlights additions and returns to stock of fixtures and fittings from remodel and
remerchandising initiatives.
Furthermore, because space planners at headquarters rarely have visibility into and an accurate understanding of the
actual modifications performed at each individual store, future space planning becomes cumbersome.
In addition, retailers often manage space planning in a silo, leading to significant disadvantages throughout the
retail organisation. For example, retailers that manage space with no regard for category-level roles, strategies, and
objectives may find themselves having adjacencies that do not complement one another or not allocating enough
space to high-demand categories. Further, space constraints such as fixture capacity must be communicated and
understood throughout the supply chain. If constraints are not communicated downstream, there is a risk of inaccurate
inventory planning, inadequate service levels, and out-of-stocks on the shelves.
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6.6.6 Cleanliness of Place
You may have fabulous merchandise to sell, but if you give the customer even one reason to assume that store
cleanliness is not a priority, they will take their wallets elsewhere.
• First Impressions Count: Is the parking area clean of litter and brightly lit? Is the entrance clean and inviting
with a trash receptacle available?
• Front Door Assumption: Is the glass clean and free of fingerprints? Customers will make the assumption if
the front door is dirty the rest of the store may be the same.
• Make it Glitter: If it’s glass or metal it must be clean. Make it a priority to dust and use glass cleaner every
morning after vacuuming.
• Shoulders to Knees: Customers notice the majority of “merchandising” between their shoulders and knees.
Make those areas a priority of cleanliness.
• Behind the Scenes: If the customer uses a fitting room, keep it spotless. 80% of a customer’s buying decision
happens in a fitting room. If you have a back stock area, keep it closed to the customer’s eyes.
• Necessary Rooms: Customers should be able to use your restrooms. Not only should it say “squeaky clean”
to your customers but it also should say something about how you value your employees and their comfort
level.
• Clutter Free: Shipping boxes, pallets, rolling racks, shipping materials needed for the operation of the store
should be out of site or neatly stored away from the traffic flow in the store.
• Ease of Shopping: Overstocking of merchandise can be overwhelming to the customer and they can “assume”
your store is messy merely because of the volume of merchandise. How easy is it to get around your store? Can
you get a stroller or wheelchair easily around the store?
• Aroma: Does your store “smell clean”? Customers can make an assumption of whether a store is clean based
on what they smell? If you have become to immune to any smell your store may have, ask friends or new
employees to give you their opinion.
• Register Area: The most important area of the store, no matter what kind, is the place you exchange your hard
earned money for something you value, your purchase.
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Summary
• A retail concept should be far more than mere whimsical aesthetic considerations. It also needs to be innovative
and cost effective, flexible and oriented towards the target market.
• Retail Space Management software, which uses influential automation, optimisation, graphics, workflow and
analytics in an easy solution to foster enhanced decisions more rapidly.
• A literal meaning of sales display is arranging systematically saleable goods so as to attract the attention of the
customer.
• Today brands and retailers are cutting down on expenditure in mass media and focusing on the customer contact
point.
• Space Planning concepts are defined by architectural/interior designers who are concept oriented in the design
and planning of architectural interior space, and other three dimensional environments.
• Cost effective, yet innovative, space planning solutions are used in the attainment of this aim, which go beyond
aesthetic considerations.
• Space planning criteria lists precise necessities, which define and make available specialised working environments
within the retail outlets according to departments and function areas surrounded by the departments.
• Retailers face challenges from competitive discounting strategies, fluctuating consumer demand, and seasonal
inventory issues.
• Clustering based on demand insight allows organisations to make allocation and replenishment decisions, as
well as reduce uncertainty by having a flexible plan that can be tweaked to accommodate shifts in consumer
demand for more effective product launches.
• Intelligent forecasts help retailers determine trends in advance and plan for what products should be in what
stores at a specific time.
• High-traffic areas can be used to sell the higher demand items or promote seasonal products.
• Understanding shelf space availability, along with consumer demand, allows retailers to develop a replenishment
strategy to avoid excess inventory and plan for a rise in the purchasing of a product based on season or
promotions.
• GMROF stands for Gross Margin Return on Floor Space is a way for measuring of inventory productivity that
expresses the relationship between your gross margin, and the area allotted to the inventory.
• An ERP like system provides a solution to these common but difficult issues and enables retailers to achieve
maximum profitability across every square foot of their stores.
• Space management software should be an integrated store floor and shelf space solution that delivers
comprehensive functionality to empower retailers to maximise their return on space.
• Management of space provides a solution to these common but difficult issues and enables retailers to achieve
maximum profitability across every square foot of their stores.
• The space planning concepts are strongly motivated by a marketing/strategic approach, the intention of which
is to help businesses to position and differentiate them effectively.
References
• Indian Retailer, 2009. Skills of managing Space [Online] Available at: <http://www.indianretailer.com/article/
operations/store-management/Skill-of-managing-space-381/> [Accessed 27 February 2012].
• Egyankosh. Managing Space. [pdf] Available at: <http://www.egyankosh.ac.in/bitstream/123456789/39076/1/
Unit-5.pdf> [Accessed 27 February 2012].
• Newman, A. and Cullen, P., 2002. Retailing: environment & operations. Cengage Learning EMEA.
• Varley, R., 2006. Retail product management: buying and merchandising. 2nd ed. Routledge.
• YoniWagschal, 2010. Ways to. Increase Sales in Retail Store- New Store Marketing Ideas [Video online] Available
at: < http://www.youtube.com/watch?v=-8Pdx13QcWo&feature=related> [Accessed 21 March 2012].
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• 1000MarketingSecerts, 2011. Retail Store Cleaning [Video online] Available at :< http://www.youtube.com/
watch?v=vVB_E1jHbFA> [Accessed 21 March 2012].
Recommended Reading
• American Marketing Association, 1960. Marketing keys to profits in the 1960’s. American Marketing
Association.
• Newman, A. and Cullen, P., 2002. Retailing: environment & operations. Cengage Learning EMEA.
• Berman. Retail Management, 2007. A Strategic Approach, 10/E. Pearson Education India.
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Self Assessment
1. Which are/is the field/s that are/is essential for developing a retail environment?
a. Retailing
b. Marketing and design
c. Location
d. Merchandising
2. The decision of where in the store the products will sit is very imperative footstep in retail since _______________
are crucial to the shopping experience.
a. retailing
b. merchandising
c. store layouts
d. customers
4. ___________ concepts are defined by architectural/interior designers, which are concept oriented in the design
and planning of architectural interior space.
a. Visual merchandising
b. Retailing
c. Space planning
d. Marketing
5. Which of the following is not one of the space planning criteria by functional area?
a. Analysis of objectives and research
b. Concept generation
c. Detailed drawings
d. Kind of merchandise displayed
6. _____________ also allows stores to localise assortments based on the demographic of shoppers.
a. Demand planning
b. Visual merchandising
c. Detailed drawings
d. Space planning
7. Which of the following is a way for measuring of inventory productivity that expresses the relationship between
your gross margin, and the area allotted to the inventory?
a. GMROF
b. MGROF
c. ROFMG
d. GMRF
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8. An/A ___________ like system provides a solution to these common but difficult issues and enables retailers
to achieve maximum profitability across every square foot of their stores.
a. Retail
b. Marketing
c. GMROF
d. ERP
9. Which of the following provides a link between merchandising and store planning, construction, operations,
and inventory management?
a. Retail
b. Marketing
c. GMROF
d. ERP
10. Which of the following is one of the criteria in the cleanliness of a store place?
a. Front door assumption
b. Unregister area
c. Shoulder to knees
d. Cluter free
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Chapter VII
Managing Capital Assets
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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7.1 Introduction
Perhaps the only most damaging blunder in industry at the moment is the frequent practice of overlooking asset
management concepts during the design, formulating and startup of foremost innovative facilities. The global cost of
this poor management practice with relevance to assets pertains to retail is beyond doubt. New facilities familiarity
unnecessary unplanned downtime, resulting in extreme costs and loss of critical production due to quality and
quantity issues is also one of the agenda.
These losses can be let alone by implementing appropriate business processes and high-quality operational planning
preceding to facility startup. As everyone knows that any business is constituted of assets either made of fixed assets,
machinery, manpower or non fixed assets. Thus, retail is also constituted of assets, which are mainly constituted by
fixed assets, manpower, and non fixed assets. While the topic of man-power assets is dealt under the development
of ‘managing manpower’ topic we shall be dealing here with only non-human kind of assets, their significance and
their management.
There are also certain software with the help of those assets of retail business is managed. The aim of this software
is to provide finance professionals and management decision-makers with the capability to witness both fixed and
portable items, allowing detailed information to be stored against each asset. Portable assets can be recorded using
the latest Pocket.
PC technology enabling new, transferred and disposed assets to be rationalised in the system. The aim of this asset
management is not only to streamline the fixed asset management tasks , but also enables one to work out with
effectual control and with well-organised and unproblematic reporting on summarised and detailed movements in
fixed assets.
Capital retail is a well-known innovator in this sector. Capital retail manages roll out disposal strategies for a cross
section of retailers in addition to being recognised as leading shopping centre advisers, with over 7.5m sq ft of let
table space currently under remit. A partnership committed to extracting added value across our client portfolios
through a pro active, lateral attitude to retail property.
Assets
(1) (2)
Real Assets Fictitious Assets
(a) (b)
Fixed Assets Current assets
(i) (ii)
Tangible Assets Intangible Assets
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7.2.4 IT Assets
IT Management, which takes into consideration hardware and software, is directly or indirectly comes under
the domain of Classification of Asset. But when we talk in a retail perspective, IT had a great impact on retail as
technology is playing a great role in this sector:
• Fixed Assest
• Semi-fixedAssets
• MovableAssets
Knowing which IT assets you have and how they are used has become a confront in today’s complex and ever
evolving IT infrastructure. An archetypal IT infrastructure has numerous diverse assets of a range of types, and new
assets are being deployed daily to sustain the evolving business needs. Tracking hardware and software inventory
has become a trouble for many IT managers.
But taking IT inventory is not adequate. Once you put on control over your IT inventory, the subsequent footstep
is to link them against the associated financial assets, such as contracts, software licenses or service agreements, to
comprehend how they transmit to the business and acquire any actions required. IT Asset Management will facilitate
in effortlessly track the assets and comprehend how they contact the business.
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Reduce Costs by Better Managing and Administrating the IT Assets
• IT Asset Management can facilitate reduce the cost of administrating the hardware inventory, improve security
and ensure that one should be always ready for the next IT audit.
• Ensure software compliance by knowing what you have and what you use.
• Align IT with business goals to support business decisions such as purchasing or renewals.
IT Assets
• Hardware
• Software
• Printers
• Other
Financial assets
• Software Licenses
• Service Agreements
• Hardware Leases
• Maintenance contracts
Correlate Assets
• Align IT Assets to
• Financial Assets
Optimise Assets
• Impact analysis
• Discover gaps
• Risk management
• Cost reduction
• Take action
Improve productivity by empowering the IT administration team to easily track and manage assets and their
changes.
Detect unauthorised and illegal software by adopting a software usage policy and easily detecting any policy
deviations.
Below mentioned are the certain benefits pertaining to business and technology:
• Simplifies and streamlines the asset management
• Asset value at the figure tip
• Depreciation as per department, location, division, branch and so on
• Allocation and reallocation of asset management
• Tracking of the movement of fixed assets
• Insurance tagging to assets
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7.3.2 Creating Right Ambience for the Store as per Store Positioning and Product Strategies
Here, the purpose is to have assets that will facilitate in directly or indirectly in creating right type of ambience for
the store as per the decided strategic positioning of the store like store positioned for the high fashionable and high
priced products, or store positioned for its high class elegance, or store positioned for its simplicity in ambience
and overall appearance, or store positioned towards common public for its grocery products of daily use, and so
on. The assets that can be classified under this grouping are as follows: tiles or wooden flooring, various types of
fixtures used for display of materials like water-falls, big browsers, four-way browsers; split or window a.c. units;
display tables & racks; electronic wall units like TV screens, trolleys, baskets, small display units and fixtures, chairs,
sofas, decorative items, photo-frames, poster frames/ display arrangement on walls used for visual merchandising
and branding, flower plants, types of props used for window display as well as merchandise display, mannequins
and so on.
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While grouping assets as per its usage we have seen there are some classes of assets, which fall under more than
one grouping like the asset class of buildings and fixed structures serve the purpose of security & safety as well as
facility & convenience of the customers. Similarly, assets like sofas and chairs serve the purpose of both convenience
& facility to customers as well as fulfilling the purpose of creating right ambience for the store.
In terms of importance of this grouping we can rank them as follows. Assets falling under ‘stock storage, and security
purpose’ can be listed as the most important, followed by ‘creating facility and convenience for the customers’ as
the second most important category and the third important grouping is ‘creating right ambience for the store as per
store positioning and product strategies’.
It is essential for all retailers to generate a list of assets in their stores and create maintenance and safety plans for
each of the assets. A list of possible assets in the store, their purpose, and their maintenance requirements are stated
below.
Combining colors, texture, functionality and a diversity of designs, nothing transforms the retail commercial
environment like a contemporary finish. Research has shown that the look and feel of a commercial environment
can sway the amount of time a customer spends browsing and even the urge to purchase. And color, of course, has
been proven to affect their moods. So, especially when it comes to flooring, floor polishing services will have a big
impact due to the sheer surface area it covers.
High end stores use very expensive materials like granite to create impact. Some retailers use carpets while others use
ceramic tiles. Store managers need to familiarise themselves with the kinds of materials used for flooring in stores
and ensure that they have a clear understanding of the kind of maintenance that these floors require, for example
wooden flooring may require regular polishing to retain the shine of the floor. Dirty and ill maintained flooring gives
a sense of untidiness and many customers get put off when they enter such stores. Thus, management will have
to determine the frequency of cleaning or polishing of flooring in consultation with house-keeping experts, from
in-house team or outside, and draw out a preventive maintenance program, so as not to affect the regular business
of the store.
Lighting System
A good store would definitely have many kinds of lights for numerous purposes. Some lights are used to light up the
floor while some are used to draw attention to the merchandise moreover on the floor or in windows. Every light has
a rationale and fused bulbs if unattended can upshot into creating un-intended dark and light effects on the retail floor.
Many fashion retailers use lights as the means to create effect on the garments to make them look more attractive
to customers. Further, it is necessary to keep check on the fittings and fixtures used for light bulbs, to ensure there
are no possibilities of short-circuit due to defective wiring or fittings. Thus, again a preventive maintenance based
on the kind of fittings used can be drawn to avoid any mishaps.
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Air Conditioner Units
Imagine that the Air Conditioning is not working during the summer time in the store. Then the customers will fail
to enter inside the store as it will cause a suffocating and very uncomfortable environment inside the store. Thus,
it has become of great importance for every store, small or big, to install right AC system to create a cooling and
comfortable environment within the store.
AC maintenance is generally outsourced with specialised firms in this field or it is included as part of the purchase
contract. Normally a quarterly/half yearly servicing of the AC plant or the unit is done.
Generally, for big super markets or grocery stores most of the transaction is done against cash, and hence there is
need to regularly store the cash in safe deposit vault to avoid incidence of robbery or pilferage. Generally, the cash
deposited in safe deposit vault is withdrawn by an authorised person and further deposited with company’s banker.
The functioning of the safe deposit vault needs regular checking by the supplier of the vault as well as from security
point of view the locking code needs regular changing to avoid vault breakage incidence.
These equipments always carry risk of causing short-circuits or power failures and hence need proper regular
maintenance by an expert team from in-house or outsourced.
Weighing Scales
Fresh vegetables, fruits, and certain grocery items like rice, grains, dals, flours, and so on are sold on the basis of
weight. Hence, the weighing scale must give proper weight to avoid dissatisfaction of customers by raising doubt
in their minds about the exact weight of the quantity. Nowadays, many stores use electronic based weighing scale,
which shows to the customer on the opposite side of the weighing or billing desk the exact quantity being weighed,
thereby giving confidence to the customer about the correctness of the weight. Thus, it is of extreme importance to
ensure the weighing scale is functioning to the dot and decimals. Again the maintenance and upgradation of such
machines is outsourced to supplier of the said machine.
Kitchen Equipments
Many big stores have facility of in-house kitchen to provide tea and/or food to their employees. Hence, maintaining
well equipped and clean kitchen is utmost importance from hygiene point of view. Certain large format stores have
also started the facility of providing snacks and food items to customers visiting the store through separate stalls or
counters. Thus, keeping the kitchen equipments neat and clean besides well functioning goes without saying. While
regular cleaning is done by the staff looking after the kitchen the regular maintenance of equipments is outsourced
to the specialised agency or to the supplier of such equipments.
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Generator Sets being highly technical equipment needs daily check-up and normal maintenance, and hence many
stores have to employ in-house team for looking after these equipments 24X7 days. Certain high caliber preventive
check-ups/maintenance and up-gradation is usually out-sourced to the supplier of such equipments and charges for
the same are usually negotiated at the time of purchase of such equipments. The industrial generators with a heavy
duty facility from Kirloskar, Jackson, and so on could be the vendors who are in this field.
Hence, we can see the big jump in percentage return on Asset value when we convert the Net profit to Gross profit.
Most of the businesses take gross profit after interest to calculate the return on investment in Asset.
One may also like to know the sales over the Net Asset Value. The above values provide significant insight into the
utility value of the asset and one may like to see this utility value increases every year with the growth in business The
return on investment is also an indication of whether the right decision being made on the part of the management.
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If the investment is correct it will naturally reflect into higher return on investment by bringing in more traffic of
satisfied customers.
The percentage of old customers returning to the store is also the indication of the best use of the asset by providing
right kind of ambience and service to customers.Since the topic of depreciation has come up in this section of the
subject it will be appropriate to discuss the concept.
The purpose of calculating depreciation is to allow for deterioration of the assets over period of time due to wear
and tear of the normal business use. Thus, by allowing certain percentage of the assets to be worn down over a
period of time the accounting system is providing to the business with cash reserve for replacement of the asset or
up-gradation of the asset by undertaking renovations and repairs. Hence, for a running business this becomes a very
important part of the process. Generally, there are two methods of depreciation system followed.
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Summary
• A retail store comprises of many assets that need managing.
• Generally, the assets in the store can be classified into three categories such as Fixed Assets, Semi-fixed Assets,
and Movable Assets.
• Capital retail manages roll out disposal strategies for a cross section of retailers in addition to being recognised
as leading shopping centre advisers, with over 7.5m sq. ft. of let table space currently under remit.
• The computer software had not only streamlined the asset but also facilitated the retail organisation to integrate
the process.
• Flooring is an integral part of retail look and feel. Different types of retailers use different types of material to
create the required store environment for the customers.
• High end stores use very expensive materials like granite to create impact.
• Store managers need to familiarise themselves with the kinds of materials used for flooring in stores and ensures
that they have a clear understanding of the kind of maintenance that these floors require.
• Point-of-Sales machines are desk-tops used for mainly billing and generating reports and other information as
per the need of the management.
• The percentage of old customers returning to the store is also the indication of the best use of the asset by
providing right kind of ambience and service to customers.
• Lighting or illumination is the purposeful application of light to accomplish some aesthetic or practical effect.
• Lighting includes use of both artificial light sources such as lamps and natural illumination of interiors from
daylight. Lighting can also be an inherent constituent of landscaping.
• Point of sale/service (POS) machine is used to demeanour retail transactions. It can make available numerous
services, including credit card processing, check reading and cash transactions, depending on the model.
• Depreciation is a statutory provision made under the Income tax rule and thus, has been adopted by accountants
all over the world as a normal practice of maintaining proper account books..
References
• Eugene, F. B. and Ehrhardt, M.C., 2004. Financial Management. Austin, TX: Harcourt Publishers.
• Burns, William T., Jr., 2005. Accounting for Managers. Thomson/ South-Western.
• eGyankosh. Managing Capital Assets [Online] Available at: <http://www.egyankosh.ac.in/
bitstream/123456789/39077/1/Unit-6.pdf> [Accessed 28 February 2012].
• Investopedia. Asset Class [Online] Available at: <http://www.investopedia.com/terms/a/assetclasses.
asp#axzz1nfFsblBo> [Accessed 28 February 2012].
• unepAndYou. Absolute Assets: Accounting for natural capital session-2011 UNEP FI Global Roundtable [Video
online] Available at : <http://www.youtube.com/watch?v=tsV_Lapfvwc> [ Accessed 20 March 2012].
• 678partners.Grow assets under management, retail existing clients, find new clients and grow your revenue
series [Video online] Available at: <http://www.youtube.com/watch?v=KvVH7nuAO14> [Accessed 20 March
2012].
Recommended Reading
• Higgins, Robert C., 2001. Analysis for Financial Management. New York, NY: McGraw-Hill/Irwin.
• Horngren, Charles T., 2005. Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc.
• Stickney, Clyde, P., Brown, P. and Wahlen, J.M., 2004. Financial Reporting and Statement Analysis. Mason,
OH: Thomson/South-Western.
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Self Assessment
1. _______________ is a well-known innovator in asset sector.
a. Capital retail
b. Retailing
c. Fixed retail
d. Semi fixed retail
3. Which of the following assets are fixed in nature and once installed cannot be easily removed or moved from
one location to another as easily as other types of assets?
a. Semi fixed assets
b. Movable assets
c. IT assets
d. Fixed assets
5. Which of the following is not one of the types of usage categories in group assets?
a. Creating facility and convenience for the customers
b. Creating right ambience for the store as per store positioning and product strategies
c. Allocation and reallocation of asset management
d. For stock storage, and security purpose
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8. Which is the material is usually used by high end stores to create impact on flooring?
a. Copper
b. Silver
c. Graphite
d. Wood
9. Which of the following fixtures should be polished or painted and applied anti-white ant/termite polish on
regular basis as per the ambience of the store?
a. Steel fixtures
b. Wooden fixtures
c. Iron fixtures
d. Copper fixtures
10. _______________ calculated by dividing the net profit earned during the year, after adjusting for interest,
depreciation, and taxes; with net value of all the assets used within the store after adjusting for depreciation on
the asset.
a. Net profit on total net asset value
b. Gross profit on total asset value
c. Tax on total asset value
d. Asset value on gross asset value
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Chapter VIII
Standard Operating Procedure (SOP) and Transaction Matrix
Aim
The aim of this chapter is to:
Objectives
The objectives of this chapter are to:
Learning outcome
At the end of this chapter, you will be able to:
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8.1 Introduction
A Standard Operating Procedure (SOP) is a set of written instructions that document a routine or repetitive activity
followed by an organisation.
The development and use of SOPs are an integral part of a successful quality system as it provides staff with the
information to perform a job properly, and facilitates consistently in the quality and integrity of the end-result.
SOPs take into consideration the regularly recurring work processes that are to be conducted or followed within an
organisation. It not merely elaborate but also document the way activities are to be performed to facilitate consistent
conformance to technical and quality system requirements and to support operation.
An SOP may describe, for example, a fundamental or critical process with steps in which it has to be done. SOPs
are intended to be specific to the organisation or facility whose activities is described and assists that organisation
aim is to maintain their quality control and quality assurance processes and ensure compliance with governmental
regulations.
The development and use of SOP has various advantages for the organisation:
• An SOP minimises the variation and promotes standardisation through consistent implementation of a process
or procedure within the organisation.
• Temporary or inexperienced staff can do the job satisfactorily when SOP is followed.
• SOPs can indicate compliance with organisational and governmental requirements and can be used as a part of
a personnel training program, since they should provide detailed work instructions.
• An SOP minimises opportunities for miscommunication and can address safety concerns.
• It can be frequently used as checklists by inspectors when auditing procedures.
These individuals are essentially subject-matter experts who actually perform the work or use the process. A team
approach can be followed, especially for multitasked processes where the experiences of a number of individuals
are critical, which also promotes “buy-in” from potential users of the SOP.
SOPs should be written with sufficient detail so that someone with limited experience with or without knowledge
of the procedure, but with a basic understanding, can successfully reproduce the procedure when unsupervised.
SOPs should be also systematically reviewed on a periodic basis, example, every 1-2 years, to ensure that the policies
and procedures remain current and appropriate, or to determine whether the SOPs are even needed. The review date
should be added to each SOP that has been reviewed. If an SOP describes a process that is no longer followed, it
should be withdrawn from the current file and archived.
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8.3 SOP Documentation
Standard operation process document helps in the smooth conduction of the business process. It helps to minimise
errors and improves scalability of a business model. Critical SOP, if not followed properly, could lead to loss in
customer’s perception of the store besides incurring financial losses.
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Brand I:..................
Item Code:........................
Size:...........................
Nature of Alteration:...................
Time In:........................
Customer Signature:.............
Staff Signature:.....................
Time Out:............................
Date of Delivery:.............................
Customer Signature:.........................
Staff Sign:.................
Annexure - III
Sl. No.:................
Alteration:....................
Customer Inv. no/ Item Description:......................
MRP :....................
Time of Customer:........................
Slip no.:........................
Name:...........................
Date code:....................
Recipt by Completion signature:...................
Tailor with date:...............
Signature & time:......................
Retail transaction information contains an unbelievable prosperity of data about numerous aspects of a retail
enterprise. From this data, a retailer can derive customer behavior, employee and store-level performance, promotional
effectiveness, profit drivers and many other significant factors.
Further, one can classify the Drivers as Strategic Drivers and Transactional Drivers.
Strategic Drivers: These are very important drivers of a given retail business or showroom. As these needs to
be well defined at the start of the business. The better defined and focused theme is the more effective they are in
driving the desired traffic to the store. As each of these drivers is well explained in other sections of the course,
hence, they are not defined over here.
• Resultant Driver: We saw that walk-ins is the result of the strategic drivers like Brand Positioning, Store
Positioning and Target Consumers, which help in generating traffic to the store because of the target customers
finding the brand meeting / accepting their requirement and fulfilling their needs both from the consumption
point of view as well as aesthetic point, thus Walk-in is the Resultant Driver.
• Tactical Drivers: In generating enough walk-in to the stores retail companies have to resort to Promotion and
Advertising schemes, which act as both parts of Strategic Drivers as well as Tactical Drivers. But, it must be
noted that Tactical Drivers act always as sub-part of the Strategic Drivers as they always have to be in alignment
with the Strategic Drivers.
Thus, we saw that drivers need to be understood in the right context to understand their respective importance
and roles. The above discussion brings us to the Transactional Drivers, which are under direct control of the store
management. Let us understand more about the transactional drivers through the method of Transactional Matrix.
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Conversion Rate: It is quantifying the ratio of potential shoppers that have decided to buy. Rate varies considerably
by retail format, time of year, promotional activity. All these are measured with reference to a specific time frame.
Conversion: How many customers out of 100 who enter our store leave with a purchase measures how well we
convert “Shoppers to Buyers” The higher the conversion rates the better.
This is the driver, which finally decides whether the business is going to be successful or not, and hence, its importance
in the Transaction Matrix. If the store management is not effective and efficient in their overall handling of customers
then naturally the conversion will not be the desired one, even though company has been able to drive the traffic or
enough walk-ins to the store. Hence, many stores have practice of monitoring this driver on daily basis to understand
the effectiveness of its store personnel inside the store.
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Product Content with content percentages, Special Texture or Features if any, Accessories Details if any Trims
have been used, Embellishments if any like embroidery/print/other hand-work and so on. Colour Names, Styling
Details, Type of Fittings for wearable, any other value additions. Besides the sales staff needs to be aware of
wash-care instructions and need to guide the customer on this aspect carefully to avoid a dis-satisfied customer
after the sale.
• Closing the Sale: This is the most important aspect after the customer is taken through the range and is convinced
on product quality and the reasonableness of price. The closing of sale needs utmost care at the sales staff
level. He or she has to ensure that once the customer is nearing to make a choice his/her attention need not be
diverted to something else in the same collection thereby again creating a state of uncertainty in consumer’s
mind. Sometime the sales staff plays a deciding factor while finalising the choice of the customer by aiding the
customer in making the right choice by making some subtle suggestions on colour or texture of the material or
about the styling or cut of the garment, which will suit the customer’s body feature.
Thereby, gaining customer confidence and expediting the choice making process for the customer. It must be
understood that each customer do need reinforcement of their decision making process to make him/her feel satisfied
about the correct choice made. After the choice is finalised then there may be opportunity for doing cross selling,
again it has to be done in a suggestive manner without appearing to be overbearing.
Finally, the customer needs to be guided to the billing counter with sales staff helping the customer with his/her
baggage or personally carrying the product to the billing counter and facilitating the billing /payment process.
The sales staff should also make effort to get customer fill in their details or comments in the visitors book. The
customer mandatorily needs to be wished good-bye by the sales staff and invited to come to the store in the near
future next time. This helps in living a lingering feeling in the customer’s mind and also a feeling of importance
and satisfaction.
For this purpose let us understand the Product-Customer Matrix, which is a matrix that helps in determining the line
of action, the business needs to take when it has to consider expansion of the current business. It provides different
options the business has for expanding its existing line of business and thus, it acts as a basic guiding business model.
Let us try to use this model in dealing with transaction factors for helping in increasing the Transaction Size.
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Besides these factors the sales team will also go back to Product – Customer Matrix in Figure 1. In order to increase
the number of items per bill we can use Cell C, which allows us to sell New Products to Current Customer; Cell B by
selling Current Products to New Customers and Cell D by selling New Products to New Customers. Thus, through
these strategic thinking and customer management process we are in a good position to influence the customers for
increasing the number of items per bill size. While dealing with these customers again care has to be taken of never
over-imposing any thing on them but to show the new items/products in a very subtle polite manner.
Average ticket size per employee = Average ticket size per bill number of full time employees per store.
Average Number of Items per Employee = Average Number of Items per Bill Number of Full Time Employees.
The above measures will also tell us about the productivity achieved per employee in a given store at various point
of time besides providing comparison with other similar types of stores for the same period. Thus, helping us to
determine the standard strength of full time employees required, to achieve the given targets on the Transaction
Factors.
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8.12 The Final Word on Achieving Best Result on Sales
‘Sale’ is a very lucrative terminology in customer perspectives. It is also a driving force behind attracting customers
towards the store. There are certain following, aspects which can better conceptualise this thought.
• High sales mean fast depletion of stocks.
• Low sales mean risk of high stock levels. This means more of what we already have and hence no new
merchandise on floor.
• More fixtures means less space for customers and hence not enough circulation area
• Big back stock means higher risk of shop soiled merchandise and hence loss of sales.
• High stocks at the front end ensure that customers see a bad looking store.
• When we need to increase sales do not get into non sellers before exercising our winning horse
(merchandise).
• If we or our people do not understand the merchandise rest assured our customers won’t appreciate us or our
merchandise.
• If we expect others to train us in life without us seeking the same, we run the risk of missing the bus.
• Simple things in retail make first impressions on customers: Security guards, loose, uniform, cleanliness on
floor, method of handling merchandise.
• The attitude that we bring into the store in the morning determines what we are to achieve during the day. Do
not forget to have fun by achieving.
• We can either choose to be a fire-fighter or a planned player in life.
• The only power that sales personnel have is greater understanding of customers.
• Plan and get enough feedback and act on it.
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Summary
• A Standard Operating Procedure (SOP) is a set of written instructions that document a routine or repetitive
activity followed by an organisation.
• The development and use of SOPs are an integral part of a successful quality system as it provides staff with
the information to perform a job properly, and facilitates consistently in the quality and integrity of the end-
result.
• The organisation should have a procedure in place for determining what procedures or processes need to be
documented.
• SOPs should be reviewed (that is, validated) by one or more individuals with appropriate training and experience
with the process.
• SOPs need to remain current to be useful. Therefore, whenever procedures are changed, SOPs should be updated
and re-approved.
• The objective of this Standard Operating Procedure is to offer a smooth experience to the customer, coupled
with a full proof internal system, during the process of having the merchandise altered as per the customer’s
requirement.
• Retail transaction information contains an unbelievable prosperity of data about numerous aspects of a retail
enterprise.
• Drivers are the factors that drive the business or trade or sales. The factors are the cause for the sales, or business,
or trade, happening in the particular industry.
• The Transactional Drivers form the parameters or basis of measurement for the Transactional Matrix.
• The transaction matrix is used to measure performance of the business on a store-to-store, day-to-day basis. By
monitoring the transaction matrix, we come to know the extent to which the store potentialities make best use
of the customer entry into the store.
• For improving ticket size, the most important action from the management size is to recruit right kind of sales
staff to match the product and branding profile.
• ‘Sale’ is a very lucrative terminology in customer perspectives. It is also a driving force behind attracting
customers towards the store.
• Conversion Ratio is defined as how many customers out of 100 who enter our store leave with a purchase? It
measures how well we convert “Shoppers to Buyers”. The higher the conversion rate, the better.
• Drivers are the factors that drive the business or trade or sales. These are the factors that are the cause for the
sales, or business, or trade, happening in the particular industry.
• Standard operation process document, help in the smooth conduction of the business process. It helps to minimise
errors and improves scalability of a business model.
• The organisation should have a procedure in place for determining what procedures or processes need to be
documented.
• The Strategic Drivers are Brand positioning, store positioning, target customers and promotion schemes.
References
• Pradhan, S., 2009. Retailing Management. Tata McGraw-Hill Education.
• George H, Lucas Jr., Robert P. B, Larry G G., 1995. Marketing information: A professional reference guide.
Georgia State University Business Press.
• International Biopharmaceutical Association Publication. SOP Writing for Clinical Trials: Staff Training Aspects
[Online] Available at: <http://www.ibpassociation.org/IBPA_articles/sop_writing.htm> [Accessed at February
5, 2012].
• eGyankosh. Standard Operating Procedure (SOP) [Online] Available at: < http://www.egyankosh.ac.in/
bitstream/123456789/39078/1/Unit-7.pdf> [Accessed at February 5, 2012].
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• ATEtv., 2009 What is an SOP? [Video online] Available at : < http://www.youtube.com/watch?v=JY2uWUqfZkI>
[Accessed 21 March 2012].
• mbukay, 2009.Standard Operation Procedure (SOP) Training [Video online] Available at :< http://www.
youtube.com/watch?v=rk9n3PHA_oc > [Accessed 21 March 2012].
Recommended Reading
• Lamba, A.J., 2002. The Art of Retailing. Tata McGraw-Hill Education.
• Berman, B., Evans, J.R., 1995. Retail Management; A Strategic Approach. Prentice Hall.
• Tummala,R.R., Swaminathan,M., 2008. Introduction to system-on-package (SOP): miniaturization of the entire
system. The McGraw Hill Companies.
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Self Assessment
1. Which of the following is a set of written instructions that document a routine or repetitive activity followed
by an organisation?
a. Retail business
b. Transaction matrix
c. Standard Operating Procedures
d. Documentation
2. Resultant Driver B. They are in driving the desired traffic to the store.
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7. _____________ is quantifying the ratio of potential shoppers that have decided to buy.
a. Conversion rate
b. Transaction matrix
c. Influencing rate
d. SOP rate
9. ______________ is a matrix that helps in determining the line of action the business needs to take when it has
to consider expansion of the current business.
a. Product matrix
b. Product customer matrix
c. Customer matrix
d. Retail matrix
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Case Study I
Subhiksha: Managing Store Operations
Introduction
Founded in 1997, Subhiksha had grown from one store in 1997 to more than 1000 retail outlets in 2008. It sold
FMCG, grocery, pharmacy, mobile products, and fruits and vegetables (F & V). It was the largest supermarket and
mobile retail chain in India with presence in 90 cities. In 2008, organised retail accounted for about 4% industry
share. Although, organised retail was identified as high-growth area by the middle of 2008, players who had entered
the Indian retail had realised that organised retail in India was going to be tough business.
Strategy
Various players (Reliance, Bharti, Birla, and the Future Group) were experimenting with different formats and
models. Subhiksha decided to come up with its own model, which in its view was suitable to the Indian context.
Subhiksha targeted the middle and lower classes and not the high-end customers. To do so, it operated with an
everyday low pricing model and located several smaller stores to move closer to the customer. At the operational
level, it constantly planned to increase the supply chain process efficiency to deliver goods at low prices. The
Subhiksha business model is explained through a detailed description of operations of a store (Indiranagar) located
in Bangalore. It also describes operations of the distribution centre, which served the Indiranagar store apart from
serving 58 other stores. The case discusses the challenges of organised retail in general and specific challenges of
inventory and cost management for a discount retailer. It also provides detailed data, which can be used for the
diagnosis of the supply chain system at Subhiksha.
Conclusion
The Subhiksha case is a comprehensive case dealing with retail operations and supply chain issues in the retail
context. It is also a useful case discussing the complexity of introducing a unique business model in the Indian
organised retail context.
(http://hbr.org/product/subhiksha-managing-store-operations/an/IMB323-PDF-ENG)
Questions
1. When was Subhiksha group founded?
Answer
It was founded in 1997.
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Case Study II
Fraschetti: Automates Warehouse to Improve Operations
Fraschetti, a leading Italian hardware and household item retailer, purchases from more than 500 suppliers and
restocks approximately 2,500 sales points throughout Italy, often with exclusive products purchased in Europe or
the Far East and distributed under its own logo. Due to the size of the sector and the numerous product categories
within, the distributor has a prominent role in the exclusive distribution of big name brands.
“To work efficiently with traditional shops you have to be service oriented,” Giorgio Fraschetti, Vice President of
sales, said. “We have a network of 44 single-brand representatives connecting with the company at least once a day.
Our program involves deliveries at least twice a week over the whole area and once a week in the more inaccessible
areas. In some ‘privileged’ areas like Rome and Naples and the entire Latium coast, deliveries arrive every day. An
order received by noon today is filled by tomorrow.”
The widespread nature of the deliveries means Fraschetti manages an enormous number of orders that invoices each
day. Working closely with Intermec partner Incas, Fraschetti now uses Intermec’s 2455 vehicle mount computers in
place of traditional paper-based means of shipping and receiving to ensure the right products and correct amount are
delivered to the appropriate retail locations. The logistics involved in managing this many orders can be daunting.
Consider a large number of deliveries that each include an extremely complex assortment of goods of different
amounts, examples, 10 pulleys, nine tubes, 11 boxes of nails, six bags of earth, four pipes, and so on. The inventory
management and distribution process could be staggering. The use of Intermec’s 2455 vehicle mount computers
has enabled the Italian retailer to easily move nearly 12,000 items per day without error.
After an item is formatted, it is assigned a bar code label. The bar code label is identified by the Intermec 2455
vehicle mount computer. The goods are then handled as indicated by the computer. The Intermec 2455 shows where
to position goods in accordance with a specially designed logic as well as the items’ destination. After the positioning
of the goods, all handling, movement and checking is done using the Intermec 2455.
Since using Intermec, the improvement in warehouse operations has been dramatic. The entire warehouse area
is now mapped allowing Fraschetti to track all of its items at all times. A considerable increase in the number of
operations performed and a steep fall in the number of errors occurred has contributed to the organisation’s increased
profitability. In the future, Fraschetti plans to implement an automation system for its other very important operations,
such as the optimisation of loads and the automatic weighing of larger packages.
About Fraschetti
The company’s history began in 1870 when Francesco Fraschetti opened a small ironmongery in Ceprano and by
doing so paved the way for what was to become one of Italy’s leading household and DIY (do it yourself) item
marketing companies.
The ownership of the company has always remained in the family and after periods of strong growth and others of
consolidation; it is now in its fourth generation. The company today operates across the centre and south of Italy
providing a very high level of service and annual sales totalling around 35 million Euros. In the last few years, the
sector has moved on with the advent of the new DIY chains of shops, but the traditional sales point, the old-fashioned
hardware store, still accounts for them largest percentage of business.
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(Source: http://www.intermec.com/learning/content_library/case_studies/cs2057.aspx)
Questions
1. What is the work involved by Fraschetti?
2. How does Fraschetti manages to balance it’s every day work?
3. Which software has helped Fraschetti in managing work drastically?
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Case Study III
RGIS Pilots Space Optimisation Solution for Family Dollar
COMPANY OVERVIEW
Family Dollar, a successful Retail chain with more than 6,700 stores, located from Maine to Arizona, offers consumers
a wide array of products, shopping convenience and daily low prices.
PROBLEM
Family Dollar stores vary in size and product assortments. Although Family Dollar conducts store surveys on a project
basis for remodels, there was a need to collect spatial data for purposes of evaluating performance and determining
courses of action related to merchandise assortments and allocation of selling floor space. There was no facility for
the central repository of information across the chain or a market. This created two primary challenges:
Evaluation of product placement and adjacencies in specific stores and formats was difficult to track and manage.
There was limited visibility to understand and prioritise both large and small-scale space re-alignments
SOLUTION
RGIS and Family Dollar collaborated on a pilot program for the Baltimore, Maryland store locations in order to
map the store planogram, determine the gap between actual fixture and product placement and the realogram and
provide an accurate floor plan for fixturing and current space allocation. The objectives of the pilot included:
• Providing an analytical platform to more effectively evaluate space allocation and layout decisions
• Enabling faster execution through the use of improved store planning tools and fixture ordering processes and
eliminating the need to survey each specific store
• In mapping the pilot stores, RGIS used Smartspace™, an innovative suite of macro space planning solutions,
designed to optimise the use of available space. Specific tools included:
Smartspace™ StorViewer™ – a powerful space planning, reporting and collaboration tool. StorViewer™ can be
utilised by all levels of an organisation from store management to the C-suite to create chain-wide analysis, reporting
and heat maps. By connecting to a central store database over the internet or company intranet, StorViewer™
allows management to evaluate specific store performance and identify improvement opportunities across the
organisation.
Smartspace™ StorPlanner™ is an intelligent retail planning and space management application. StorPlanner™
enables retailers to evaluate the effectiveness of store layouts at the individual store, within clusters/geographies or
across the enterprise. The use of StorPlanner™ can result in significant productivity improvements in the management
and allocation of store space.
In order to populate the Smartspace™ StorPlanner™ database, RGIS used its proprietary data collection tool to
validate and update each store’s AutoCad drawing and associate planograms to each fixture section in each store.
RESULTS
Through the collaborative pilot, Family Dollar was able to gain increased visibility into the store layout, product
adjacencies and opportunities for enhancing available space.
Family Dollar’s Vice President, Format and Space Management reports: “Through this pilot, we were able to gain
greater intelligence about the space in our stores allowing us to make better decisions about how to use that space.
With a space optimisation tools StorPlanner™ and StorViewer™, we can make faster, high quality decisions to
ensure our stores are easy to shop for our customers and that they’re able to find what they need quickly.”
(http://www.rgis.com/us_en/services/smartspace/casestudies/2010/discount-retail.aspx)
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Questions
1. What is the work profile of Family Dollar?
2. What were the objectives of pilot programme?
3. What was the result of collaborative pilot programme?
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Bibliography
References
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Time. John Wiley & Sons.
• Burns, William T., Jr., 2005. Accounting for Managers. Thomson/ South-Western.
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Logistics. The International Journal of Logistics Management.
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• eGyankosh. Managing Capital Assets. [Online] Available at: <http://www.egyankosh.ac.in/
bitstream/123456789/39077/1/Unit-6.pdf> [Accessed 28 February 2012].
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Unit-3.pdf> [Accessed 22 February 2012].
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Unit-5.pdf> [Accessed 27 February 2012].
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bitstream/123456789/39078/1/Unit-7.pdf> [Accessed 5 February 2012].
• Eugene F. B and Ehrhardt, M.C., 2004. Financial Management. Austin, TX: Harcourt Publishers.
• edmanley2. Customer Service Lecture 1 [Video online] Available at: < http://www.youtube.com/watch?v=AkDvT-
r66zk> [Accessed 21 February 2012].
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23 February 2012].
• George H, Lucas Jr., Robert P. B., Larry G G., 1995. Marketing information: A professional reference guide.
Georgia State University Business Press.
• GHMconnect. Four Types of Customers [Video online] Available at: <http://www.youtube.com/watch?v=h2__
s10x9jkm> [Accessed 21 February 2012].
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• Gupta, S., 2005. Managing Customers as Investments. Wharton School Publishing.
• Hub Pages. A History of Visual Merchandising in Retail Store [Online] Available at: <http://sarahmarie1.hubpages.
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crm-online-marketing> [Accessed 21 February 2012].
• International Biopharmaceutical Association Publication. SOP Writing for Clinical Trials: Staff Training Aspects
[Online] Available at: <http://www.ibpassociation.org/IBPA_articles/sop_writing.htm> [Accessed 5 February
2012].
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Recommended Reading
• American Marketing Association. 1960. Marketing keys to profits in the 1960’s.
• Barry, B., Evans, J.R. & Mathur, M., 2011. Retail Management: A Strategic Approach, Pearson Education.
• Berman, B., Evans, J.R., 1995. Retail Management; A Strategic Approach. Prentice Hall.
• Berman. Retail Management: A Strategic Approach, 10/E. Pearson Education India, 2007.
• Grote, Richard C., 2001. The Performance Appraisal Question and Answer Book: A Survival Guide for Managers.
AMACOM Books.
• Halldorsson, A., Kotsab, H., Mikkola, J. H., Skjoett-Larsen, T., 2007. Complementary theories to supply chain
management. An International Journal.
• Higgins, Robert C., 2001. Analysis for Financial Management. New York, NY: McGraw-Hill/Irwin.
• Hines, T., 2004. Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier.
• Horngren, Charles T., 2005. Accounting. Upper Saddle River, NJ: Prentice- Hall, Inc.
• Ketchen, Jr., G., & Hult, T.M., 2006. Bridging organisation theory and supply chain management: The case of
best value supply chains. Journal of Operations Management.
• Kleiman, L.S., 2000. Human Resource Management: A Tool for Competitive Advantage. Cincinnati: South-
Western College Publishing.
• Krafft, Manfred; Mantrala, and Murali K., 2006. Retailing in the 21st century: current and future trends. New
York: Springer.
• Lamba, A.J., 2002. The Art of Retailing. Tata McGraw-Hill Education.
• Lamba, A.J., 2003. The Art of Retailing. Tata McGraw Hill, New Delhi.
• McDonald, Malcolm and D., 2004. Market Segmentation: How to do it, how to profit from it. Butterworth-
Heinemann.
• McNair, M.P. and Gragg, C.I., 1931. Problems in Retail Store Management. McGraw-Hill.
• Newman, A. and Cullen, P., 2002. Retailing: environment & operations. Cengage Learning EMEA.
• Noe, Raymond A., John R. H, Barry G, and Patrick M. W., 2000. Human Resource Management: Gaining a
Competitive Advantage. 5th ed. Boston: McGraw-Hill/Irwin.
• Stickney, Clyde, P., Brown, P. and Wahlen, J.M., 2004. Financial Reporting and Statement Analysis. Mason,
OH: Thomson/South-Western.
• Sullivan, M., Adcock, D., 2002. Retail Marketing. Thomson Learning.
• The University of Michigan. Printers’ ink, Volume 226. Printers’ Ink Pub. Co., 1949.
• Tummala,R.R., Swaminathan, M., 2008. Introduction to system-on-package (SOP): miniaturization of the entire
system. The McGraw Hill Companies.
• Warman, J, 1972. Warehouse management. Heinemann.
• Wedel, M. and Kamakura, W.A., 2000. Market Segmentation: Conceptual and Methodological Foundations.
Amsterdam Kluwer.
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Chapter II
1. c
2. b
3. a
4. a
5. c
6. d
7. b
8. a
9. b
10. a
Chapter III
1. a
2. b
3. c
4. c
5. d
6. a
7. c
8. a
9. b
10. d
Chapter IV
1. a
2. c
3. c
4. c
5. b
6. a
7. d
8. c
9. d
10. a
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Chapter V
1. c
2. c
3. d
4. a
5. d
6. b
7. a
8. d
9. b
10. d
Chapter VI
1. b
2. c
3. a
4. c
5. d
6. a
7. a
8. d
9. d
10. b
Chapter VII
1. a
2. b
3. d
4. d
5. c
6. a
7. d
8. c
9. b
10. a
Chapter VIII
1. c
2. b
3. c
4. a
5. c
6. d
7. a
8. d
9. b
10. d
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