Sales and Distribution

Management 2e

Tapan K. Panda
Sunil Sahadev

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 Chapter 21

Retail Management

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 Learning Objectives
Understand the retail marketing process

Understand the retail marketing mix

Understand the retail positioning concept

Discuss the merchandising strategy

Explain the customer service strategy in a retail context

Understand the trading format concept

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Retail marketing mix and Retail positioning
Merchandise characteristics

Customer service characteristics

Trading format

Customer communication

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Retail marketing mix and Retail positioning
How merchandising functions affects profitability?

1. the merchandise in the store affect the volume of sales as it is

primarily the merchandise that attracts customers.

2. since profitability is based on the turnover rate of the inventory,

the choice of merchandise and the quantity of merchandise of
each category stocked affects the overall profitability of the
establishment.

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Factors affecting choice of retail strategy
Companys strategic objectives in terms of the level of profitability
desired
Space availability
Preferences of target customers
Relationships with manufacturers
Availability of trained salespeople etc.

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 Category Management
Category management is an emerging merchandising philosophy
which attempts to manage the retail business by focusing on
product category results.

It arranges grouping of products into strategic business units.

The goal of category management is to improve the operating

results of a retailer and its associate partners including
manufacturers, distributors, and brokers by focusing on
consumers.

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 The Merchandising Function
The merchandising function takes care of the purchase, storage,
display, and sales of the goods in a retail set-up.

It starts with the decision about what to buy, when and in what
quantities.

The merchandising manager has to look into two major aspects

availability and variety.

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Availability of stock and stock holding
cost
Stock
holding
cost

+20%

Percentage of availability 80% 90% 100%

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Financial aspects of Merchandising
Cost method of retail accounting

Retail method of accounting

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 Merchandise planning process
Develop a sales plan

Plan reductions

Develop a stock plan

Plan merchandise needs

Calculated planned Purchase

Plan mark ups based on profitability targets

Gross Profit and Inventory Investment and Analysis on the Lines of ABC Analysis

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Critical Merchandising Ratios for Retail
Decisions
Stock turnover ratio

Gross margin return on investment

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Deciding on the Customer Service Levels
Product services
These are services that are offered along with a product.

Service products
These include services offered by a restaurant, haircutting
salons, tailoring outlets, beauty parlours, banks, etc.

Support activities
These include services like a bus service from a store, home
delivery, a small play area for children who come to the
shopping centre, etc.
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Qualifying and Determining Services
A qualifying service is described as a service that a retailer must
offer simply in order to qualify for customers consideration.

A determining service is a service that actually determines a

customers store preference and choice.

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 Customer performance measuring
techniques
Frequency or browsing visits
Frequency of purchase visits
Average transaction per visit
Items purchased
Range purchased
Customer service facilities used

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Purchase process for service requirement
identification
Purchase process Service requirements
Search
Comparison
Pre-purchase phase

Product related

Purchase phase Augmentation of the product

Transaction related

Post purchase phase Delivery

Installation
Use extension
Repeat visits

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 Trading Format
Shopping Occasion and Store Format
Macro Considerations for Trading Format
Trading area analysis
Delineating the trading area for retail outlets
Reillys Law
Muffs Law
Micro Considerations for Trading Format
Store layout
Visual merchandising

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 Attitude towards trading format and
store environment
Shopping attitudes
Task oriented Pleasure oriented
Convenient location
Ample parking Exclusive store merchandise
Pre-purchase Close to other task oriented Wide choice
stage stores Prestigious image
Relevant merchandise
selection Ambience and excitement
Visual merchandising
During purchase High availability In-store facilities
Competitive prices Product services centers
Rapid cash handling
Theme displays
Customer advice areas
Post purchase Product displays
Customer advice areas

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 Customer Communication Strategy in
Retail Outlets
The communication strategy attempts to portray the most
preferred image of the store among the target customers.

The objective of a communication programme is to propel the

target audience to visit the store, avail of some new promotion
scheme, etc.

Long-term and short-term orientation of retail promotion

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