Book Preview - The A to Z of Retail Management.

As we all know that retail is a huge & growing sector. There is lot of literature dedicated to this sector, however there is no comprehensive material available which talks about the basics of this sector which is easily understandable by the people who are new to this sector and trying to get in to this sector or learn about this sector.

We tried to address this need by coming out with a book “The A to Z of Retail Management”.

Below is the outline of the topics which are being covered in this edition of the book:

Part 1: Introduction to Retail:  In this part, overview of retail and emerging topics like multi channel and eCommerce in retail have been covered.

Part 2: Retail Strategy: This part talks about the strategies employed by the retailers to gain and retain the market share. It talks also about the marketing, financial strategies of retailers and also covers the dynamics of retail store and relationship management by retailers, role of information technology in retail and business intelligence in retail.

Part 3: Supply Chain Management in Retail: This part covers the basics of supply chain management and role it plays in retail. Topics covered in the part include inventory management, retail logistics, sales forecasting, merchandise planning, purchasing and pricing.

Part 4: In Store Execution: This topic covers about the various aspects of in store management of a retail store right from the store layout, design and visual merchandising to store management. It also covers other important aspects like managing store executives, sales management and also customer service in retail.

Part 5: Additional Topics: This part is dedicated to cover the various important topics like emerging technologies in retail, ethical issues & sustainability in retail. It also talks about franchising business in retail and also careers in retail.

This book is designed to cover the basics of each and every topic in retail in a way which is easily understandable by everybody irrespective of their background. We hope you will find this initiative helpful and look forward for your feedback on the book.

To grab a copy of this book, please write to Eka Publishers: ekapresshyderabad@gmail.com.

You can also buy the book from below sites:

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-Thanks

Swapnil Saurav & Ravi Potti.

eCommerce state in China

Look at China's top 10 eCommerce sites:

10. Taobao Mall
9. paipai
8. tuan800
7. VANCL
6. M18.com
5. newegg
4. dangdang
3. joyo-amazon
2.360buy
1.taobao

What do you see common across all these sites? Yes, all of them are "chaotic". You will see banner ads all over, promotions flashing everywhere, offers of discounts - it all will give you a look of mess. But are these because of bad wen design, offcourse not. These sites are designed that way - in a way, it reflects the mood if chinese online shoppers. According to a report by CNN, its the online customers that what this kind of shopping atmosphere.

"Our consumers like a page that is very crowded, busy with a lot of links so they can open lots of windows at the same time." David Wei, China tech investor and former CEO of e-commerce giant Alibaba, couldn't agree more: "When I worked for Alibaba, I cleaned the homepage to an international standard. It doesn't work." China is a hot but tough market for the e-tailers.

The fight between eBay and Taobao is well known, resulting in exit of eBay from China. Story goes like this- Taobao listed the top 10 things that eBay was doing in China and they decided to do everything differently. eBay charged for the listing, Taobao offered it with no fees. Auction model was used by eBay to rank its listings where as Taobao used a retail model. eBay tried to restrict the communication between the buyer and the seller but Taobao created an instant messaging tool to encourage buyer-seller communication. And the result of all these - eBay had to leave China.


If you're eyeballing the China's online market, you have to be cautious with every step you take and keep your mind open- its a mad world out there. Statistics of the industry are mind-boggling. Taobao (Alibaba's consumer e-commerce engine), China's largest ecommerce site, clocks revenue which is more than amazon and ebay combined. China is the second largest market, after USA, which boasts of revenue greater than $210 billion (year 2012) which comes from the 591 million Internet users. Number of internet users is more than the population of USA, the third largest populous country.

China has its own share of problems. The delivery services is not yet fully mature. Logistics sector is fragmented and sometimes it becomes tough to reach all parts of the countru. This has resulted in emmergence of new players, especially in last mile delivery sector with companies like Yihaodian. Companies use mopeds and motorcycles to reach customers. If the infrastructure is improved, the country's online market will grow leaps and bounds for sure.

Increasing popularity of social networking will help in further growth of ecommerce. Current 50% of China's population is using social media.

E-commerce in China is now less than a bloodsport.

Customer Experience Impacting Retail Management (2012) - V of V

Conclusion

Today's retail environment has changed a lot compared to what it was five years ago. Today customers look for best combination of product features, price and service which led to change in virtually every aspect of the way retailers conduct business. Retailers operate on razor thin margin and still have to innovate and provide high service level. Connected consumers — armed with laptops, tablets and smart phones — are transforming the traditional retail experience based on their unprecedented access to information. Whether they are checking prices at the brick-and-mortar stores or at an online store or turning to the Web for reviews and opinions — in essence, the omni-channel consumer is more connected and better informed than ever. There is almost no second chance for a retailer if it fails to live up to a product, service or price promise, as consumers have several alternative purchasing options to consider — and a plethora of ways to share their negative experiences with extended communities of potential buyers. This also means that retailers have a real opportunity to differentiate themselves and present their customers with the products they want at the right price irrespective of the channel.

Retailers need to focus on improving customer experiences. Delivering a customer experience not only builds loyalty, but is profitable too.  With the advancement in technology, retailers do have lot of information about customers, their buying history which should be used to improve customer experience.

Moving forward, one of the key strategies for retailers will be increasing their level of collaboration and information sharing between internal departments and external agencies. Retailers are looking for integrating solution that addresses retailers delivering of goods to customers, and also gives visibility into real-time supply processes and the supply chain alignment required to effectively supply those goods.

Customer Experience Impacting Retail Management (2012) - IV of V

Pricing during the product end-of-life markdown period

      For retailers of fashion-oriented or seasonal goods, markdowns are a critical component of the product lifecycle. Retailers not only have to determine when to begin markdowns, but also the initial reduction, a schedule for subsequent price drops and a plan for multiple stores.

We have seen retailers swing from trying to achieve Everyday Low Price (EDLP) to hyper-promotions as the bottom fell out of consumer demand, to a panicked response to consumers’ latest ability to compare prices, whether between online and store or between competitors [9]. Customers are increasingly going for promotional activity but without any customer data to support it.

TABLE VIII
Top Pricing Strategies

End-to-end promotion planning and execution Increased Promotions and Objectives realized Promotional strategies for every product/location combination

Retailers look for Markdown optimizer which can manage the complete markdown event, recommending time-phased price adjustments based on consumer price sensitivity, product lifecycle, inventory and other costs. Top pricing and promotion strategies of retailers are listed in the table above. We inferred that most retailers have limited visibility and information sharing among decision makers which lead to excess inventory or out-of-stocks. These retailers look for tool which can broad visibility and connect end to end promotion planning and execution, which will enable to synchronize both the base demand forecast and the promotional demand forecast. Retailers want increased Promotions with specific objectives like increased customer traffic with more targeted ads and promotions.

While mark-down can increase sales and consumer loyalty, it can also be expensive if it’s not effectively planned and executed. Markdown and promotion require execution of time-sensitive processes across departments and trading partners [10]. Retailers look for help in determining which products to promote at which locations, the optimal price to maximize profitability and effective consumer marketing strategies.

  Store execution and supply chain design

Retailers always look to improve its store execution to increase sales and customer satisfaction. Based on a research, it’s found that customer perceived in-stock is primarily driven by actual in-stock and customer rating of employee knowledge; overall customer satisfaction is primarily driven by customer perceived in-stock, payroll level, customer rating of employee knowledge and check-out efficiency; and sales is primarily driven by actual in-stock, overall satisfaction and payroll level [11].

TABLE IX
Top Store execution Strategies

Single projection of forecast across all channels Connecting current and future shoppers Integrated information flow of merchandise and distribution

Table IX has the list of important store execution strategies we inferred from our analysis. Customers want to have consistent information across all the channels hence it becomes important for retailers to manage inventory in an omni-channel fashion. This has come out as the most important strategies in managing a store. Another strategy which has not changed over the years is connecting the current and future shoppers. With lot of data, it’s difficult for the retailers to pick what is relevant and leave out what’s not.

Online store execution: More and more retailers are taking social media route to reach out to larger prospects.

TABLE X
Top Online store execution Strategies

Search Engine optimization Publishing contents to social media Manage public profiles

Table X has the list of important store execution strategies for an online store.

Based on our study, we found that retailers are fighting hard to get listed on the first page of search engine, which helps them to drive customer visits. More and more contents are published to the social media sites like Facebook. Infact, most of the large size retailers are moving towards Omni channel way where there will be a seamless information flow among all the channels. Third and most important point is that retailers do not stop just at publishing the content but also manages it. They try to satisfy angry customers over blogs or Facebook page.

Applying appropriate resources to understand customer and their requirements is the key for successful store execution. Retailers have to be on top of the market trends and understand economic factors in making plans. Challenge comes in executing these plans into orders, transfers, load builds, and transportation schedules. Another problem faced by retailers is "Execution gap". An execution gap is any implementation issue or problem that has a negative impact on the integrity of a merchandising program. A gap can range from mis-shelved products to poor sign placement or be as severe as damaged display components, or most importantly, a missed installation deadline [12]. There are many examples and each are avoidable with proper planning.

Customer Experience Impacting Retail Management (2012) - III of V

A.    Optimizing the inventory carried of each SKU

While there are certain macroeconomic influencers retailers control (e.g., unsteady financial markets, wildly fluctuating fuel prices and unemployment figures that haven't been seen in decades), most retailers yet are not taking any truly meaningful action to move through their excess perpetual inventory from stores and other sales channels [4]. SKU Rationalization based on customer-buying patterns is a WIN/WIN – Customers get what they want, supply chain costs are reduced and profits grow [5]. In the current economic environment, retailers cannot afford to have cash tied up in excess inventory and the same time does not want to lose when things turn around [6]. In order to increase speed to shelf, inventory turnover and at the same time make sure that capital is not tied up in inventory, retailers have adopted SKU rationalization strategies.

Retailers look to classify their inventories into groups based on sales/profitability and have plans for these groups. The Category Management teams are getting more and more involved in the buy-in process [7]. Retailers look to adopt smart SKU rationalization which can help to make informed decisions about SKUs they carry, reduce costs tied up with excess or stale inventory, while increasing consumer satisfaction and sales.

TABLE VII
Top Store level Inventory Optimization Strategies

Scalability and extensibility of retail shelf-level inventory Visibility Into Product Carrying Costs vs. Incrementally. Timely order fulfilment functions

Leading retailers realize that scalability and extensibility of their retail shelf-level inventory strategies is dependent on improved end-to-end inventory order management [4].  This can be achieved by having visibility into product carrying cost and the benefit. Retailers are looking for comprehensive approaches that enable customer-centric inventory management for each retail stores /channels.

Main question retailers are facing is- what to send to which store for what reason? [8] In addition to calculating the direct and indirect impact of carrying a particular SKU, retailers also look at the “image impact” of carrying or not carrying a SKU. Customers make his or her perception about a store based on the products it carries. This is another factor retailers have to think before doing SKU rationalization.

Customer Experience Impacting Retail Management (2012) - II of V

Planning the assortment of products

Economic downturn has forced consumers to change their buying habits. They are buying less, focusing on essential items and emphasizing price. Localized assortments and customer-centric merchandising driven by good assortment plans, is seen as the way to address the problems being faced today [3]. Getting the right product at the right time for the customer is always a priority. Retailers are integrating their financial and item planning strategies for making buying decisions based on customer preference than managing those inventories

TABLE VI

Top Assortment Planning Strategies

SKU rationalization determining the proper depth & breadth of an assortment Assortments and financial plans and how they work together Focus on buying decision than on inventory management Forecasting within an assortment plan.

Important Assortment planning strategies, we inferred from various sources related to retailers are listed in table VI. Most of the companies are doing rationalization determining the proper depth and breadth of an assortment at each store based on local demand and needs. Another important strategy of retailers that was inferred from our study was that retailers are integrating their strategic and financial plans with assortment planning so that they can develop comprehensive, enterprise-wide plans that more accurately reflect consumer demand and drive margins.

Assortment Planning execution is hindered by various internal problems, like, lack of necessary support tools (e.g. Store Planning, Store Clustering etc.) and the key functions are often not integrated (e.g. financial plans, assortment plans etc.). Understanding Consumer Demand ay store level, analysing "bestsellers" from similar assortments and integrating information from different groups using different tools are some of the challenges retailers look to address in immediate future.

Customer Experience Impacting Retail Management (2012) - I of V

Abstract
Retailing is a huge industry (40% of the U.S. economy and the largest employer) that has consistently been an incubator for new business concepts. The retailing business, in today’s world is focussed on the customer’s buying experience. Focus on customer experience and understanding their needs can solve many retailers’ chronic problems such as stock outs and markdowns.
While the retail sector has always been very competitive, customers too have become more exacting, demanding ever-increasing levels of service. It is critical for retailers to understand their customers. The buying patterns those are critical to determining which products to stock and which to remove from the inventory. Visibility into how consumers buy items, how and when they bundle products can help retailers to forecast and plan. It also helps to improve customer satisfaction level.  Retailers can respond by increasing the variety of their products, becoming more prices competitive, striving towards higher service levels, and utilizing advances in computing capabilities and information technologies to improve their supply chain efficiency.
This is my second research paper, where we have evaluated the performance on following major themes: assortment and inventory planning, markdown and store execution of retailer and their strategies for next 2 years. SKU rationalization determining the proper depth & breadth of an assortment and forecasting within an assortment plan are immediate priorities for retailers. In today’s Omni-channel world it’s important for retailer to enhance customer experience, be it in brick and motor store or online or any other store format. We present the strategies retailers are planning to adopt in next 2 years for these four themes.

Introduction

In the 80's and early 90's Wal-mart pioneered new approaches to supply chain management and human resource management, and also influenced major established firms like P & G to change their approach to supply chain management. Dell has revolutionized the supply chain for PCs and prompted many firms to consider the direct model. Amazon.com, more than any other firm, has been credited with transforming the internet from being an academic toy to the primary technology influencing business today [1]. On the other side, we also see that most retailers have struggled to maintain profitability. Customer demographics vary by retailer and can be different within a retail segment. For example, while women buy more clothing and beauty products, men spend more on latest technology [2]. Demographic trends do affect retailer strategy and marketing. In today’s economic environment, companies cannot afford to carry large inventory. Theme of retailing has moved to satisfying customer with minimum inventory and thus increasing sales. This is the theme of our paper. We have focussed our study on such store specific parameters.

This research, based on the retailers of every revenue size and geographical areas, shows that retailers are investing in their assortment planning, optimizing Stock Keeping Unit (SKU) at store level, implementing pricing and promotions and focus on store execution. Our inferences are based on the data collected from Companies’ views expressed in their annual report and other disclosures, case studies published by the companies or by their vendors and practical observations being carried out in the retail domain. The research goal is to be able to understand what retailers are doing to enhance their customers’ experience at a store and in the process deliver a higher customer satisfaction, more shopping visits and increase its profitability.

Study Rationale

The retail domain has faced plenty of challenges in the past mainly because of the increasing competition and the customer’s choice in low spending. The retail chain executives are finding it difficult to cope up with the high levels of service and low costs, as the businesses face more global pressure.

The purpose of this study is to explore what retailers are doing to enhance the customer experience at a store and new trends emerging in the process and the challenges they are facing in doing so. We studied about 38 companies and their data present in public domain. The study was focussed on following four major themes:

·  Planning the assortment of products: Customer demand at every store is different. We will cover the strategies leading retailers are adopting for item and assortment planning so as to meet customer demand.

·  Optimizing the inventory carried for each SKU at every store: It’s important to have lean inventory. We will look at strategies leading retailers are adopting to optimise inventory at store level.

·  Pricing, especially during the product end-of-life markdown period: We will look at strategies leading retailers are adopting to improve execution of promotions especially during the markdown period to increase sales.

·  Store execution: We look at the brick and motor as well as online in-store strategies which leading retailers are planning to adopt.

The findings of the quantitative and the qualitative data show that the supply chain management can overcome the lesser customer spending and help retailers to lower costs. The trends and practices followed by the retail supply chain shows how to position the supply chain for the upcoming years. We believe that the findings from this research will provide insight into the new trends emerging from the way retailers are shaping their business to attract more customers and gain larger wallet share. We have talked about recent developments which companies are looking to implement in immediate future. We believe our study will help all those who want to track the latest developments in retail fields.