Retail Store Design (Unit IV)

8/11/2019 Retail Store Design (Unit IV)

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Prof. Shikhar Das SrivastavaUnit- IV (Retail Management)


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Retail Store Operations A) Store Atmosphere : The store must offer a positive ambienceto the customers for them to enjoy their shopping and leave

with a smile.The store should not give a cluttered look.The products should be properly arranged on the shelvesaccording to their sizes and patterns. Make sure products donot fall off the shelves.There should be no foul smell in the store as it irritates thecustomers.

The floor, ceiling, carpet, walls and even the mannequinsshould not have unwanted spots.Never dump unnecessary packing boxes, hangers or clothes inthe dressing room. Keep it clean.

Make sure the customers are well attended.


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B) Cash HandlingOne of the most important aspects of retailing is cash handling.It is essential for the retailer to track the daily cash flow to calculate

the profit and loss of the store.Cash Registers, electronic cash management system or an elaboratecomputerized point of sale (POS) system help the retailer tomanage the daily sales and the revenue generated.Prevent Shoplifting/Safety and Security

The merchandise should not be displayed at the entry or exit of thestore.Do not allow customers to carry more than three dresses at onetime to the trial room.Install CCTVs and cameras to keep a close watch on the customers.Each and every merchandise should have a security tag. Ask the individuals to submit carry bags at the security.Make sure the sales representative handle the products carefully.


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E) Visual MerchandisingThe position of dummies should be changed frequently.

There should be adequate light in the store. Change theburned out lights immediately.Dont stock unnecessary furniture at the store. Choose light and subtle colours for the walls to set the

mood of the walk-ins.Make sure the signage displays all the necessaryinformation about the store and is installed at the rightplace visible to all.The customers should be able to move and shop freely inthe store.The retail store should be well ventilated.


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F) Training ProgramThe store manager must conduct frequent training programs forthe sales representatives, cashier and other team members to

motivate them from time to time.It is the store managers responsibility to update hissubordinates with the latest softwares in retail or any otherdevelopments in the industry.It is the store managers responsibility to collate necessaryreports (sales as well as inventory) and send to the head officeon a daily basis.

G) Inventory and Stock ManagementThe retailer must ensure to manage inventory to avoid beingout of stock. Every retail chain should have its own warehouse to stock themerchandise.Take adequate steps to prevent loss of inventory and stock.


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Retail Store Design & Visual Merchandising

Store design and layout tells a customer what the store is all aboutand it is very strong tool in the hands of the retailer forcommunicating and creating the image of the store in the mind ofthe customers.

The design and layout of the store are a means of communicatingthe image of the retail store.

The environment which is creates in the retail store, is acombination of the exterior look of the store, the store interiors,the atmosphere in the store and the events, promotions and thethemes.


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The overall look of a store and the series of mental pictures andfeelings it evokes within the beholder.

For the retailer, developing a powerful image provides theopportunity to embody a single message, stand out from thecompetition and be remembered.


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Elements of store design

Storedesign

Building architecture

Frontage &Entrance

Ext.Display space

TargetCustomers

Health & Safety

Location

Storetheme

Merchandise Mix

Parking

Access


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Exterior Store Design & Interior Design

Exterior

LocationParkingEase of access

The building architecture

Health and safety standardsStore windows, lightingInteriorFixtures

Flooring & CeilingsLightingGraphics & Signages

Atmospherics


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Visual merchandisingCan be termed as the orderly, systematic, logical and intelligent way o

putting stock on the floor

VM is the art of presentation, which puts the merchandise infocus. It educates the customers, creates desire and finallyaugments the selling process.


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Visual merchandising is the activity and profession ofdeveloping the floor plans and three-dimensional displaysin order to maximize sales.Both goods or services can be displayed to highlight theirfeatures and benefits. The purpose of such visualmerchandising is to attract, engage and motivate thecustomer towards making a purchase. Visual merchandising commonly occurs in retail spacessuch as retail stores and trade shows.

Techniques Visual merchandising builds upon or augments the retaildesign of a store. It is one of the final stages in setting out astore in a way customers find attractive and appealing.Many elements can be used by visual merchandisers increating displays including color, lighting, space, productinformation, sensory inputs (such as smell, touch, andsound), as well as technologies such as digital displays andinteractive installations.


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PrinciplesThe purpose of visual merchandising is to:

Make it easier for the customer to locate the desiredcategory and merchandise.Make it easier for the customer to self-select.Make it possible for the shopper to co-ordinate andaccessorise.Recommend, highlight and demonstrate particularproducts at strategic locations.

Educate the customer about the product in an effective& creative way.Make proper arrangements in such a way to increasethe sale of unsought goods.


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METHODS OF DISPLAYS

Color DominanceCo-ordinated PresentationPresentation by price

Forms: 1) Window displays: Window displays cancommunicate style, content, and price.Display windows mayalso be used to advertise seasonal sales or inform passers-byof other current promotions.2) Food merchandising: Restaurants, grocery stores,convenience stores, etc. use visual merchandising as a tool todifferentiate themselves in a saturated market .
http://en.wikipedia.org/wiki/Market_saturationhttp://en.wikipedia.org/wiki/Market_saturation


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SITE SELECTION

For considering any site location fit for Retail Outlet,retailers consider three factors;

(i) The characteristics of the site

(ii) The characteristics of the trading area for a store at thesite.

(iii) The estimated potential sales that can be generated by astore at the site.


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1. Site CharacteristicsSome characteristics of the site that affect store sales andthus considered in selecting a site are;

The Traffic Flow past the site and accessibility to the site. When the traffic is greater, more consumer are likely to stopin and shop at the store. Thus retailers often use traffic countmeasures to assess a sites attractiveness. The Accessibilityof the site is the ease with which customers can get into andout of the site. Accessibility is greater for sites located nearmajor highways and with traffic lights and lanes.


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2.Location CharacteristicsSome Factors associated with specific locations that

retailers consider when evaluating a site are (i) Parking(ii) Store visibility (iii) adjacent retailers.Parking : If there arent enough space or type spaces aretoo far if there are too many far from the store,customers will be discouraged from patronizing the siteand the store.Store Visibility: Visibility refers to customers ability tosee the store from the street. In an area with a highlytransient population, such as tourist center or large city,good visibility from the road is particularly important. Adjacent Retailers: Complementary retailer target thesame market segment.


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3.Restrictions & CostsRetailers may place restrictions on the type of tenants thatare allowed in a shopping center in their lease agreement.Some of these restrictions can make the shopping centermore attractive for a retailer.Example: a specialty mens apparel retailer may prefer a leaseagreement that precludes other mens apparel retailers from

locating in the same center.Retailers would look unfavorably on a shopping center with asign size restriction that prevented easy visibility of thestores name from the street.


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Store Design

A) Grid Layout: 1. Doesnt provide visually exciting design. 2. Well suited for shopping trips in which customer need to

move through out the entire store.3. The grid Layout is also cost efficient.4. One problem is customers typically arent exposed to all of

the merchandise in the store.5. This type of store is beneficial for customers who do weekly

grocery shopping.

Figure of grid layout is on next slide, have a look.


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Receiving

&Storage

Fruits

vegetables

Racks/Shelf

Books & Magazines, Seasonal Display

Office & CustomerService

Cart Area I N

OUT

Check Outs


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B) Race Track layout: 1. Its also known as loop, is a store that

provides a major passageway that loops around the store toguide customer traffic around different departments withinthe store.

2. Cash register stations are typically located in each dept.bordering the racetrack.

3. It facilitates the goal of getting customers to seethemerchandise available in multiple depts. And thusencourages impulse purchasing.

4. As customers go around the racetrack, their eyes are forcedto take different viewing angles rather than looking down

one aisle as in the grid design

Figure of Race- track layout is on next slide, have a look.


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C) Free Form layout: 1. It also known as boutique layout,

arranges fixtures and aisles in an asymmetric pattern.2. It provides an intimate, relaxing environment that facilitates

shopping and browsing this layout is typically used in smallspecialty stores.

3. Creating this pleasant shopping environment is costly.Because there is no well-defined traffic pattern like racetrackand grid layout, arent naturally drawn around the store andpersonal selling becomes more important for providingguidance like Bloomingdales I.C.B. boutique.

4. Designers objective was to create a simple, clear space that

draws customers into the area.

Figure of Free form layout is on next slide, have a look.


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Storage, Receiving & Marking

Dressing Rooms

A

B C

D

Undergarments


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Supply Chain Management - Introduction A value chain is another name for a supplychain . A supply chain is a sequence oforganizations - their facilities, functionsand activities - that are involved inproducing and delivering a product orservice.

Li & Fung is Hong Kongs largest exporttrading company. It has also beeninnovative in supply chain management .


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Supply Chain Management - Introduction

Supplier

Supplier

Supplier

Storage} Mfg. Dist. Retailer CustomerStorage

Supplier

Supplier

Storage} Service Customer


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Supply Chain Management - Introduction

Yarn

Zippers

Factory1

Factory2

Factory3

Factory4

Factory5

TheCustomer(Retailer)

YarnDying &Weaving


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Supply Chain Management - IntroductionSupply chain management deals with linking theorganizations within the supply chain in order to meetdemand across the chain as efficiently as possible. In ourexample, Li & Fung is creating and managing the links. Innon- brokered supply chains, one or more of the chains

organizations can provide the management function. Why is supply chain management so important?

To gain efficiencies from procurement, distribution and logisticsTo make outsourcing more efficient

To reduce transportation costs of inventoriesTo meet competitive pressures from shorter development times,more new products, and demand for more customization


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Supply Chain Management - IntroductionTo meet the challenge of globalization and longer supply chains

To meet the new challenges from e-commerceTo manage the complexities of supply chainsTo manage the inventories needed across the supply chain

Why is supply chain management difficult?Different organizations in the supply chain may have different,conflicting objectives

Manufacturers: long run production, high quality, high productivity,low production costDistributors: low inventory, reduced transportation costs, quickreplenishment capabilityCustomers: shorter order lead time, high in-stock inventory, large variety of products, low prices

Supply chains are dynamic - they evolve and change over time


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Supply Chain Management - IntroductionSupply chains and vertical integration

For any organization vertical integration involves either taking onmore of the supplier activities (backward) and/or taking on more ofthe distribution activities (forward) An example of backward vertical integration would be a peanutbutter manufacturer that decides to start growing peanuts ratherthan buying peanuts from a supplier An example of forward vertical integration would be a peanut buttermanufacturer that decides to start marketing their peanut betterdirectly to grocery storesIn supply chains, some of the supplying and some of thedistribution might be performed by the manufacturer


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Supply Chain Management - IntroductionThe significance of vertical integration in the supply chain is that

the activities that are performed by the manufacturer are typicallymore easily managed than those which are performed by otherorganizationsTherefore, the degree of vertical integration can have an impact onthe structure and relationships between members of a supply chain


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Supply Chain Management - IntroductionStrategic, tactical and operating issues

Strategic - long term and dealing with supply chain designDetermining the number, location and capacity of facilitiesMake or buy decisionsForming strategic alliances

Tactical - intermediate termDetermining inventory levelsQuality-related decisionsLogistics decisions

Operating - near term

Production planning and control decisionsGoods and service delivery schedulingSome make or buy decisions


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Supply Chain Management - IntroductionKey issues in supply chain management include

Distribution network configurationHow many warehouses do we need? Where should these warehouses be located? What should the production levels be at each of our plants? What should the transportation flows be between plants and warehouses?

Inventory control Why are we holding inventory? Uncertainty in customer demand?Uncertainty in the supply process? Some other reason?If the problem is uncertainty, how can we reduce it?How good is our forecasting method?


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Supply Chain Management - IntroductionDistribution strategies

Direct shipping to customers?Classical distribution in which inventory is held in warehouses and thenshipped as needed?Cross-docking in which transshipment points are used to take stockfrom suppliers deliveries and immediately distribute to point of usage?

Supply chain integration and strategic partneringShould information be shared with supply chain partners? What information should be shared? With what partners should information be shared? What are the benefits to be gained?


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Supply Chain Management - IntroductionProduct design

Should products be redesigned to reduce logistics costs?Should products be redesigned to reduce lead times? Would delayed differentiation be helpful?

Information technology and decision-support systems What data should be shared (transferred)

How should the data be analyzed and used? What infrastructure is needed between supply chain members?Should e-commerce play a role?

Customer valueHow is customer value created by the supply chain?

What determines customer value? How do we measure it?How is information technology used to enhance customer value in thesupply chain?


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Supply Chain Management - IntroductionHow can you assess how well your supply chain is

performing?The SCOR model - Supply Chain Operations Reference Model -developed by the Supply Chain Council ( http://www.supply-chain.org/ ) can be used to assess performanceSCOR model metrics include:

On-time delivery performanceLead time for order fulfillmentFill rate - proportion of demand met from on-hand inventorySupply chain management cost Warranty cost as a percentage of revenueTotal inventory days of supplyNet asset turns
http://www.supply-chain.org/http://www.supply-chain.org/http://www.supply-chain.org/http://www.supply-chain.org/http://www.supply-chain.org/


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Supply Chain Management - IntroductionCreating an effective supply chain

Develop strategic objectives and tacticsIntegrate and coordinate activities in the internal portion of thesupply chainCoordinate activities with suppliers and customers

Coordinate planning and execution across the supply chainConsider forming strategic partnerships


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SCM - Inventory Management IssuesManufacturers would like to produce in large lot sizesbecause it is more cost effective to do so. The problem,however, is that producing in large lots does not allow forflexibility in terms of product mix.Retailers find benefits in ordering large lots such asquantity discounts and more than enough safety stock.The downside is that ordering/producing large lots canresult in large inventories of products that are currentlynot in demand while being out of stock for items that are

in demand.


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SCM - Inventory Management IssuesOrdering/producing in large lots can also increase thesafety stock of suppliers and its corresponding carryingcost. It can also create whats called the bullwhip effect .The bullwhip effect is the phenomenon of orders andinventories getting progressively larger (more variable)moving backwards through the supply chain. This isillustrated graphically on the next slide.


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SCM - Inventory Management Issues

O r d e r S

i z e

TimeSource: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998

Customer Demand

Retailer OrdersDistributor Orders

Production Plan


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SCM - Inventory Management IssuesSome of the causes of variability that leads to the bullwhipeffect includes:

Demand forecasting Many firms use the min-max inventory policy. This means that when the inventory level falls to the reorderpoint ( min ) an order is placed to bring the level back to the max , orthe order-up-to-level . As more data are observed, estimates of themean and standard deviation of customer demand are updated.This leads to changes in the safety stock and order-up-to level, andhence, the order quantity. This leads to variability.Lead time As lead time increases, safety stocks are increased, andorder quantities are increased. More variability.


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SCM - Inventory Management IssuesBatch ordering. Many firms use batch ordering such as with a

min-max inventory policy. Their suppliers then see a large orderfollowed by periods of no orders followed by another large order.This pattern is repeated such that suppliers see a highly variablepattern of orders.Price fluctuation. If prices to retailers fluctuate, then they may

try to stock up when prices are lower, again leading to variability.Inflated orders. When retailers expect that a product will be inshort supply, they will tend to inflate orders to insure that they willhave ample supply to meet customer demand. When the shortageperiod comes to an end, the retailer goes back to the smaller orders,

thus causing more variability.


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SCM - Inventory Management IssuesHow then can we cope with the bullwhip effect ?Centralizing demand information occurs when customerdemand information is available to all members of thesupply chain. This information can be used to betterpredict what products and volumes are needed and when

they are needed such that manufacturers can better planfor production. However, even though centralizingdemand information can reduce the bullwhip effect , it willnot eliminate it. Therefore, other methods are needed to

cope with the bullwhip effect .


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SCM - Inventory Management IssuesMethods for coping with the bullwhip effect include:

Reducing uncertainty. This can be accomplished by centralizingdemand information.Reducing variability. This can be accomplished by using atechnique made popular by WalMart and then Home Depot calledeveryday low pricing (EDLP). EDLP eliminates promotions as wellas the shifts in demand that accompany them.Reducing lead time. Order times can be reduced by using EDI(electronic data interchange).Strategic partnerships. The use of strategic partnerships can

change how information is shared and how inventory is managed within the supply chain. These will be discussed later.


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SCM - Inventory Management IssuesOther helpful techniques for improving inventory

management include:Cross-docking. This involves unloading goods arriving from asupplier and immediately loading these goods onto outboundtrucks bound for various retailer locations. This eliminates storageat the retailers inbound warehouse, cuts the lead time, and has

been used very successfully by WalMart and Xerox among others.Delayed differentiation. This involves adding differentiatingfeatures to standard products late in the process. For example,Bennetton decided to make all of their wool sweaters in undyed yarn and then dye the sweaters when they had more accurate

demand data. Another term for delayed differentiation is postponement .


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SCM - Inventory Management IssuesDirect shipping. This allows a firm to ship directly to customers

rather than through retailers. This approach eliminates steps in thesupply chain and reduces lead time. Reducing one or more steps inthe supply chain is known as disintermediation . Companies such asDell use this approach.


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SCM - Strategic PartneringStrategic partnering (SP) is when two or more firms thathave complementary products or services join such thateach may realize a strategic benefit. Types of strategicpartnering include:

Quick response,

Continuous replenishment, Advanced continuous replenishment, and Vendor managed inventory (VMI)


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SCM - Strategic PartneringIn advanced continuous replenishment SP suppliers willgradually decrease inventory levels at the retailers locationas long as they can still meet service levels. The result isthat inventory level are continuously improved. Kmart uses this approach.

In vendor managed inventory SP the supplier will decide onthe appropriate inventory levels for each of the products itsupplies and the appropriate inventory policies to maintainthese levels. One of the best examples of this is the SPbetween WalMart and Proctor & Gamble . (See summaryon next slide.)


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SCM - Strategic Partnering

CriteriaTypes

DecisionMaker

InventoryOwnership

New SkillsEmployed by vendors

Quick Response

Retailer Retailer Forecasting Skills

ContinuousReplenishment

Contractually Agreed to Levels Either Party

Forecasting & Inventory Control

AdvancedContinuous

Replenishment

Contractually agreed to & ContinuouslyImproved Levels

Either Party

Forecasting & Inventory Control

VMI Vendor Either Party

RetailManagement

Source: Simchi-Levi, Kaminsky & Simchi-Levi, Irwin McGraw Hill, 2000


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SCM - Strategic PartneringRequirements for an effective SP include:

Advanced information systems,Top management commitment, andMutual trust

Steps in SP implementation include:Contractual negotiations

OwnershipCredit termsOrdering decisionsPerformance measures


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SCM - Strategic PartneringDevelop or integrate information systems

Develop effective forecasting techniquesDevelop a tactical decision support tool to assist in coordinatinginventory management and transportation policies

Advantages of SP include:

Fully utilize system knowledgeDecrease required inventory levelsImprove service levelsDecrease work duplicationImprove forecasts


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SCM - Strategic PartneringDisadvantages of SP include:

Expensive technology is requiredMust develop supplier/retailer trustSupplier responsibility increasesExpenses at the supplier also often increase

Third party logistics (3PL) involves the use of an outsidecompany to perform part or all of a firms materialsmanagement and product distribution function.

Examples of companies that provide 3PL include Ryder DedicatedLogistics and J.B. Hunt .Examples of companies that use 3PL include 3M , Dow Chemical ,Kodak and Sears .


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Goals of LogisticsEconomy in movement of goods (external internalmovement) Accuracy in order managementTime management of shipments and deliveriesShelf-life and replenishment of perishable goods(Eg.Egatematrix)

Coordination with suppliers and third-party serviceproviders (Eg.Verisign, Gati)Backup plans and return shipments


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Logistics spans across the functions of Supply Chain Management

CPFR3 PL

Order Processing & FulfillmentQR (Quick Response)ECR (Effecient Customer Response)

Transportation & Warehousing

Customer Transactions & Customer SatisfactionInventory ManagementLogistics


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The Sophisticated Logistics System of Reitmans


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Performance GoalsRelate costs incurred to specific logistics activitiesPlace and receive orders as easily, accurately, andsatisfactorily as possibleMinimize the time between ordering and receivingmerchandiseCoordinate shipments from various suppliersHave enough merchandise on hand to satisfy customerdemand, without having so much inventory that heavymarkdowns will be necessary


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Performance Goals_2

Place merchandise on the sales floor efficientlyProcess customer orders efficiently and in amanner satisfactory to customers Work collaboratively and communicate regularly with other supply chain membersHandle returns effectively and minimize damagedproductsMonitor logistics performance Have backup plans in case of breakdowns in thesystem


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A.N.Charlu Retail Management 02 63

Supply Chain ManagementThe supply chain is the logistics aspect of a value delivery chain

Parties involved

Manufacturers WholesalersThird-party specialistsRetailer


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Supply Chain ManagementFacilitating system for movement of goods or servicesfrom supplier to customerCoordinates suppliers, intermediaries, third-partyservice providers and customersRopes in CPFR and 3PL systems


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CPFR(Collaborative Planning, Forecasting and Replenishment)

Inventory replenishmentInformation sharingSatisfying customer demandsEconomy in inventory, logistics and transportationexpenditure


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3PLProcurement (Sourcing)Order ManagementProductionDistribution After Sales ServiceReverse Logistics

WarehousingTransport


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Order Processing &

FulfillmentStarts with product enquiryEnds with delivery or returnUses

CPFRQRECR

3 Way Match (Qty, Price, Receipts)


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DEPOTS Qty.Required

OrderedQty

AvailableMax.Qty

Price MinimumPack

Cost Rank

D. 1 500 1000 1000 10.00 50 10,000 2D. 2 600 390 400 12.00 30 4680 3D. 3 200 3000 1500 1700 9.00 300 13500 1D. 4 800 110 5000 15.00 10 1650 4D. 5 900

3000 3000

ORDER PROCESSING AND FULFILLMENT (A CASE STUDY)

SCM & TECH MARRIAGEOrder Processing & Fullfillment


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Transportation & WarehousingNo. of shipmentsMinimum / Economic Order QuantityShipment OwnershipInfrastructure qualityNon-store retailing


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Customer Transactions & Customer ServiceOutbound logistics

Retail storesNon-store retailers WebtailersDirect Sellers

Customer Service vis--vis logistical efficiency


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WarehousingCentralized WarehousingDirect Store Distribution


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Claires Aggressive

Use of Central Warehousing


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Logistics support in India


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Inventory ManagementCost effectiveness Vendor managed inventoryLoss in inventory

Employee theftCustomer shoplifting Vendor fraud and errors

Electronic surveillanceReverse Logistics


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Problems Balancing Inventory LevelsThe retailer wants to be appealing and never lose a saleby being out of stock; it does not want to be stuck withexcess merchandise

What fad merchandise and how much should becarried?Customer demand is never completely predictableShelf space allocation should be linked to currentrevenues


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Logistics Indian Experience

(Case Study: Bombay Dubbawalla )Four thousand five hundred semi-literate dabbawalascollect and deliver 175,000 packages within hours !

Six-sigma quality with zero documentation!120-year-old logistics system!

Mumbai's dabbawalas developed their home-grown versionof logistics long before the term was coined by the modernbusiness!

One mistake for every eight million deliveries!


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Elegant LogisticsUses 25 Kms of public transport, 10 Kms of footworkMultiple transfer pointsRouting and Sorting limited to few central points

Simple colour code determines the packets route andpriorityLunch packets transfer from train to bicycle to footBusiness model worth replicating in the digital age

Reverse logistics


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g

Reverse logistics stands for all operations related to the reuseof products and materials. It is "the process of planning,implementing, and controlling the efficient, cost effective flowof raw materials, in-process inventory, finished goods andrelated information from the point of consumption to the pointof origin for the purpose of recapturing value or properdisposal.More precisely, reverse logistics is the process of

moving goods from their typical final destination for thepurpose of capturing value, or proper disposal.Remanufacturing and refurbishing activities also may beincluded in the definition of reverse logistics."

The reverse logistics process includes the management


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g p gand the sale of surplus as well as returned equipment andmachines from the hardware leasing business.

Normally, logistics deal with events that bring the producttowards the customer. In the case of reverse logistics, theresource goes at least one step back in the supply chain.For instance, goods move from the customer to the

distributor or to the manufacturer.

Lets look at an example; a manufacturer produces


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p ; pproduct A which moves through the supply chainnetwork reaching the distributor or customer. Anyprocess or management after the sale of product Ainvolves Reverse Logistics. If product A happened tobe defective the customer would return the product.The manufacturing firm would then have to organiseshipping of the defective product, testing theproduct, dismantling, repairing, recycling ordisposing the product. Product A will travel in reversethrough the supply chain network in order to retainany use from the defective product. This is whatreverse logistics is about.


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IT in Retail Sector


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INTERNET RETAILING

GROWTH TRENDS AND ANALYSIS

THE FUTURE OF PAYMENTS

TECHNOLOGY IN RETAILING


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Retail sales in Japan and Western Europe, both facing rapidly ageing consumer bases, will remainrelatively flat, although non-store retailing, driven by internet retailing, will continue to be a sourceof growth in these markets Internet retailing, however, is not necessarily the fastest growing channel in all markets. Broadbandpenetration and low levels of credit card ownership have hindered growth of the internet retailingchannel in many emerging markets. In addition, new modern grocery formats such ashypermarkets and discounters, introduced by major international grocery retailers, have kick-started rapid growth in Latin America and Eastern Europe. Similarly, the value proposition of variety stores is beginning to redefine mixed retailing within Russia and parts of the Middle East.

Internet Retailing Blazes a Trail

Euromonitor International

2010/2011 Retailing Fastest Growing Channels by Market


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INTERNET RETAILING





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Wi-Fi is a hotspot for 2012 and marketers should take advantage of that. Consumers will benefit from the offersand the price war.For many developed market consumers, PCs and laptops are beginning to take a backseat as most smartphoneowners use these convenient devices to surf the internet and watch TV anywhere from parliaments to buses.Levels of internet access vary considerably across the countries reviewed: 86% of the UK population are internetusers, compared with just 6% of the Indian population.The use of mobile phones to compare prices in-store and to read reviews was also found to be most prevalentamong Chinese respondents, of whom 39% compare prices in-store at least once per week and 43% read reviews.

Free Wi-fi Enhances the Instore Experience


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T bl L d h W T d Di i l CTECHNOLOGY IN RETAILING


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Tablets are predicted to overtake laptops as the dominantform factor in portable computers in volume terms by 2015.Growth will be driven primarily by the growth in availabilityand accessibility of data networks, the expansion ofconsumer-oriented cloud computing services, and, especially,rapid price erosion of hardware.The devices are likely to be highly dependent on cloudservices for data storage and processing. Thus, the expansionof cloud services will facilitate volume growth and priceerosion by decreasing the need for high performance internalcomponents in tablets.Price erosion is likely to be the single biggest driving force inthe tablet market over the foreseeable future. The decline willbe particularly rapid in media tablets, for which significantprocessing power and connectivity features beyond Wi-Fi willnot be a necessity.

The pace of price erosion is likely to peak in 2012-2013, as theaverage unit price is expected to decline to US$319 fromUS$497 in 2012. This decline will be accompanied by a rapidacceleration in diffusion rates in developing markets.

Tablets Lead the Way Towards Digital Convergence

E i S i h R l Wi d LTECHNOLOGY IN RETAILING


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Middle East and Africa

North America

Latin America

Asia Pacific

Eastern Europe

Western Europe

Australasia

Middle East's reliance on tourists and expatriates and Africa's rising levels of disposable

income sees the region pulling ahead in projected value growth terms.

Despite fears of a double-dip recession, growth projections remain decent. The region

remains a hotbed for technological launches and innovations, supported by a strong base

of tech adopters.

Latin America's small sales base pushes value growth. However, low disposable income

levels limit sales increase, in actual terms.

Given the presence of the world's two most populous nations China and India the

region's key driver for value sales remains volume. China's rise as an economic powerhouse

is underlined, with value outperforming volume sales.

In the forecast period, Eastern Europe is expected to shake off the high inflationary

pressures, weak currencies and plummeting EU manufacturing demand plaguing the

region in 2009.

Weighed down by financial turmoil in Portugal, Italy, Ireland, Greece and Spain, Western

Europe is projected to continue to flounder over the forecast period.

Price erosion and continued frugality in Australasia are expected to limit value growth.

Economies are Setting the Rules : Winners and Losers


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INTERNET RETAILING




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M bil Ph th Digit l W ll tTECHNOLOGY IN RETAILING


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Key consumer statistics Having identified the key parameters that must exist for NFCmobile payments to successful take off, we now explore howand why mobile phones can become the new digital wallet.This implies that consumers can leave their homes withbasically nothing but just their mobile phones in hand. A quick review of the compelling statistics in Euromonitors various researched industries, captured on the right, paints arosy picture for the growth and penetration of NFC mobilepayments.Specifically in the following slides, we will be exploring howmobile phones are evolving to be the one most criticalconsumer electronics item of ownership and where penetrationof mobile phone subscriptions in less developed pockets arerobustly gaining momentum, if not, already on par withdeveloped markets.

Over the 5 year period of 2011-2015, smartphones will becomethe top product choice for new purchases (as opposed tofeature phones) and increase its percentage contributionsignificantly as a total of mobile phone sales globally.

75% of the worlds population willpossess mobile phonesubscriptions in 2012

28%the worlds population will havea credit card in 2012

1,502million new mobile phones salesin 2012

Mobile Phones as the Digital Wallet

Mobile Phones as the Digital WalletTECHNOLOGY IN RETAILING


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Beyond mobile phone ownership, an online poll by Accenture shows that consumers in developing marketssuch as India and China are more receptive to mobile payments than consumers in developed markets,

such as in Europe and the US.

Mobile Phones as the Digital Wallet

Source: Accenture online poll of consumers indicating if they favour using mobile phones for most payments



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Identifying potential NFC mobile payment markets

The accompanying table pits the top 14 markets across the different success factors identified by EuromonitorInternational as crucial to NFC mobile payment success and identifies countries that possess three or more of

the five variables. A higher score rating indicates higher success potential.The results clearly draw light to developing markets as possessing strong potential for NFC mobile paymentadoption, rather than the conventional belief that modern systems benefits largely from presence indeveloped markets such as US and Western Europe.

Country Smartphones Card paymenttransactions Chainedfast food

Expenditure onland transport

Store-basedretailing

Brazil China Spain US France

Japan Mexico South Korea UK Canada GermanyIndia Italy Philippines

Markets Ready for NFC Mobile Payment 2012

Visual StoresTECHNOLOGY IN RETAILING


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Tesco Plc, the third largest global retailer launched virtual shops insubways in South Korea under the name of Home Plus in 2011.

Is the trend spreading?2012

In a tube station in Portugal

Result

The number of new registered online members rose by 76% and online salesincreased by 130%.Home Plus (Tesco) is No1 in online sales and improved its position in theoffline

Visual Stores

Reducing CostsInnovation and competitive differentiation.Time Saver (South Korea is in the top three of the worlds hardest -

working countries)South Korea has more than 10 million smartphone users in a population

of less than 50 million.


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Definition of CRM

CRM is concerned with the creation,

development and enhancement of individualisedcustomer relationships with carefully targetedcustomers and customer groups resulting inmaximizing their total customer life- time value(2).


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The purpose of CRMThe focus [of CRM] is on creating value for thecustomer and the company over the longer term(3). When customers value the customer service thatthey receive from suppliers, they are less likely tolook to alternative suppliers for their needs (3).CRM enables organisations to gain competitiveadvantage over competitors that supply similarproducts or services (1)


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Why is CRM important?Todays businesses compete with multi -product offerings created and delivered bynetworks, alliances and partnerships of manykinds. Both retaining customers and buildingrelationships with other value-adding allies iscritical to corporate performance (3).

The adoption of C.R.M. is being fuelled by arecognition that long-term relationships with

customers are one of the most importantassets of an organisation (2)


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Why did CRM develop?CRM developed for a number of reasons:

The 1980s onwards saw rapid shifts in businessthat changed customer power (4)Supply exceeded demands for most products (4)Sellers had little pricing power (4)The only protection available to suppliers ofgoods and services was in their relationships with customers (4)


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What does CRM involve?

CRM involves the following (4):

Organisations must become customer focused

Organisations must be prepared to adapt so that ittake customer needs into account and deliversthemMarket research must be undertaken to assesscustomer needs and satisfaction


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Strategically significant customers

Customer relationship managementfocuses on strategically significantmarkets. Not all customers are equallyimportant (3).

Therefore, relationships should be built with customers that are likely to provide value for servicesBuilding relationships with customersthat will provide little value could result ina loss of time, staff and financial resources


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rmation Technology and CRM

Technology plays a pivotal role in CRM (2).Technological approaches involving the use of databases,data mining and one-to-one marketing can assistorganisations to increase customer value and their ownprofitability (2)

This type of technology can be used to keep a record ofcustomers names and contact details in addition to theirhistory of buying products or using services (2)This information can be used to target customers in apersonalised way and offer them services to meet their

specific needs (2)This personalised communication provides value for thecustomer and increases customers loyalty to the provider(2)

I f ti T h l d CRM E l


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Information Technology and CRM: Examples

Here are examples of how technology can be used to createpersonalised services to increase loyalty in customers:

Phone calls, emails, mobile phone text messages, or WAPservices (2):

Having access to customers contact details and their service orpurchase preferences through databases etc can enableorganisations to alert customers to new, similar or alternativeservices or products

- Illustration: When tickets are purchased online via

Lastminute.com, the website retains the customers details andtheir purchase history. The website regularly send emails toprevious customers to inform them of similar upcoming events orspecial discounts. This helps to ensure that customers willcontinue to purchase tickets from Lastminute.com in the future.

f ti T h l d CRM E l


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formation Technology and CRM: Examples

Cookies A cookie is a parcel of text sent by a server to a webbrowser and then sent back unchanged by the browser eachtime it accesses that server. HTTP cookies are used forauthenticating, tracking, and maintaining specific

information about users, such as site preferences and thecontents of their electronic shopping carts (5). - Illustration: The online store, Amazon, uses cookies to

provide a personalised service for its customers. Amazonrequires customers to register with the service when theypurchase items. When registered customers log in to

Amazon at a later time, they are greeted with a welcomemessage which uses their name (for e.g. Hello John). Inaddition, their previous purchases are highlighted and a listof similar items that the customer may wish to purchase arealso highlighted.


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Information Technology and CRM: Examples

Loyalty cardsthe primary role of a retailer loyalty card is to gather data about customers. Thisin turn leads to customer comprehension and cost insights (e.g. customerretention rates at different spending levels, response rates to offers, new customerconversion rates, and where money is being wasted on circulars), followed byappropriate marketing action and follow- up analysis (6)

- Illustration: The supermarket chain, Tescos, offers loyalty cards to its customers. When customers use the loyalty cards during pay transactions for goods, detailsof the purchases are stored in a database which enables Tescos to keep track of allthe purchases that their customers make. At regular intervals, Tescos sends itscustomers money saving coupons by post for the products that the customershave bought in the past. The aim of this is to encourage customers to continuallyreturn to Tescos to do their shopping

CRM software- Front office solutions - Many call centres use CRM software to store all of their customer's details. When

a customer calls, the system can be used to retrieve and store informationrelevant to the customer. By serving the customer quickly and efficiently, and alsokeeping all information on a customer in one place, a company aims to make costsavings, and also encourage new customers (7)

F f CRM


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Face-to-face CRMCRM can also be carried out in face-to-face interactions without the use of technologyStaff members often remember the names and favouriteservices/products of regular customers and use thisinformation to create a personalised service for them.

For example, in a hospital library you will know the name ofnurses that come in often and probably remember the areathat they work in.However, face-to-face CRM could prove less useful whenorganisations have a large number of customers as it would

be more difficult to remember details about each of them.

B fi f CRM


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Benefits of CRMBenefits of CRM include (8):

reduced costs, because the right things are being done (ie.,effective and efficient operation)increased customer satisfaction, because they are getting exactly

what they want (ie. meeting and exceeding expectations)ensuring that the focus of the organisation is externalgrowth in numbers of customersmaximisation of opportunities (eg. increased services, referrals,etc.)

increased access to a source of market and competitorinformationhighlighting poor operational processeslong term profitability and sustainability

I l i CRM


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Implementing CRM When introducing or developing CRM, a strategic reviewof the organisations current position should beundertaken (2)Organisations need to address four issues (2):

1. What is our core business and how will it evolve in thefuture?

2. What form of CRM is appropriate for our business nowand in the future?

3. What IT infrastructure do we have and what do we needto support the future organisation needs?

4. What vendors and partners do we need to choose?

The Engineering Perspective


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The Engineering Perspective

DATA MINING

Data Mining


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Collection, storage, and analysis of typically hugeamounts of- dataData readily resides in the companys data warehouseData cleaning is almost inevitable

g

Data Mining


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Goals of Data Mining

Developing deeper understanding of the data

Discovering hidden patternsComing up with actionable insightsIdentifying relations between variables, inputs andoutputsPredicting future patterns

g

Data Mining: Steps


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Data selectionData cleaningSampling

Dimensionality reductionData mining methods

Steps

Data Mining:Methods


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Exploratory Data AnalysisSegmentation

Cluster AnalysisDecision Trees

Market Basket Analysis Association rulesInformation VisualizationPrediction

RegressionNeural Network

Time Series Analysis

Methods

Information Visualization


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Data mining algorithms...Can only detect certain types of patterns and insights Are too complex for end users to understand



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Information Visualization A field of Computer Science which has evolvedsince the 1990s.

Before 1990s: Graphical methods for dataanalysis to pave the way for statistical methods

After 1990s:Computer hardware has advanced with respect tomemory, computational power, graphics calculationsSoftware has advanced with respect to user interfacesData collection systems have advanced (barcodes,RFID, ERP)



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The analyst does not have tounderstand complex algorithms.

Almost no training required.

There are no limits to the types

of insights that can bediscovered.



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Human Resource Management involvesrecruiting,selecting,training,compensating and

supervising personnel in a manner consistent with theretailers organization structure and strategy mix .

THE SPECIAL HUMAN RESOURCE


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THE SPECIAL HUMAN RESOURCEENVIRONMENT OF RETAILING

Retailers face a HR environment characterized byLarge number of in experienced workersLong hoursHighly visible employeesDiverse work force Variable customer demand


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Recruiting retail personnelRecruitment is the activity where by a retailergenerates a list of job applicants.Many retailers have acareer or job section at their websites through which

the applicants can apply for the prescribed job.For entry-level sales jobs, retailers rely on educationalinstitutions, ads, walk-in-interviews, employeerecommendations etc.

For middle management positions, retailers rely onemployment agencies, ads, and current employeereferrals etc.


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Selecting retail personnel

Here the retailer selects new employees by matching thetraits of potential employees with specific job

requirements. Job analysis and description, theapplication blank, references are some tools used by theretailer in this process; they should be integrated.


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Training retail personnelEvery new employees should receive pre-trainingabout firms history and policies, as well as joborientation on hours, compensation, the chain of

command, and job duties etc.Training program teach new(andexisting)employees how best to perform their jobs orhow to improve themselves


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Compensating retail personnelCompensation should be fair to both the retailer

and its employees. It will help to motivate employeesand improve their efficiency.

Compensation may be direct monetary payments(salaries, commissions and bonuses) and indirectpayments (paid vacations, health and life insuranceand retirement plans)


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Supervising retail personnelSupervision is the manner of providing a jobenvironment that encourages employeeaccomplishment.

The goals are to attain good performance, maintainmorale, motivate people, control cost communicate,and resolve problemsSupervision is provided by personal contact, meetings,and reports.

Documents

Retail Store Design (Unit IV)