UNIT I

Trends in Retailing

TYPES OF RETAILERS Food Retailers1. Convenience store (Kirana /Mom-Pop)

2. SupermarketTrends in Supermarket RetailingCompetition from Discount Stores

Changing Consumption Patterns

Efficient Distribution

Lower Costs Lower Prices

Time Pressure Eating Out More Meal Solutions

TYPES OF RETAILERS

General Merchandise Retailers1. Departmental stores2. Discount stores3. Speciality stores4. Category killers or specialists5. Hypermarket or Super centers6. Drug stores7. Factory Outlet or Off-price stores8. Family shops9. Wholesale clubs10. Shopping malls11. One dollar store12. Parasite stores13. Hobby stores14. Airport retailing15. Shop-in-Shops

Characteristics of General Merchandise Retailers

TYPES OF RETAILERS Non-Store Retailers1. e-tailing2. Television Shopping3. Tele-Marketing4. Kiosks – Audio and video5. Vending machines Service Retailers

1. Personal services – dry cleaning, health care, studio,parlours, movie theatres, multiplexes, clubs,amusement park, game arcades, etc.

2. Repair Services – Automobile, electrical gadgets,electronic gadgets, watch repair centers, Mobileservice centers, etc.

3. Hotel services – Hotels, restaurants, fast-foods,Resort etc.

4.Professional Services – Lawyers, Doctors, CharteredAccountants, stock brokers, real estate agents etc.

MULTI-CHANNEL RETAILING

Multi-channel retailing is a marketing strategy that offersyour customers a choice of ways to buy products.

A true multi-channel strategy covers purchases from astore, purchases from a website, telephone ordering, mailorders, interactive television, catalog ordering andcomparison shopping sites.

The aim of a multi-channel retailing strategy is tomaximize revenue and loyalty by offering your customerschoice and convenience.

Pioneers of multichannel retailing include Macy's, NextPLC, John Lewis and Neiman Marcus, though specialistbusinesses such as Channel Grabber have made theconcept the success that it is in modern e-commerce.

MULTI-CHANNEL RETAILING

Issues in Catalogue Retailing

Low Start Up Cost

Evolution of Multi-Channel Offering

Hard to compete with large well established firms

Increasing Mail Costs

Clutter from other Catalogs

General merchandise catalogs like JC Penney

Specialty Catalogs like JC Whitney, Victoria Secret

Sales by Catalogue Retailers

Issues in Direct Selling

Providing information and demonstrations is costly

Party plan system: merchandise is demonstrated in a

party atmosphere

Multi-level network: Master distributors sell to

distributors who sell merchandise

Pyramid schemes: Firm sells to other distributors

and little if any merchandise goes to end users

Issues in Television Home Shopping

Consumers watch cable stations, infomercials or direct

response ads

Few consumers watch regularly

Most purchases made by small proportion of viewers

Customers can’t examine merchandise

Customers must wait for merchandise to come on

Sells mostly jewellery, apparel, cosmetics, kitchenware,

exercise equipment

Issues in Vending Machine Retailing

Sales growth has been

declining due to higher prices

and healthier eating habits

New technology may help sales

growth

Vending machines are

beginning to accept credit

Trend of placing machines in

captive consumer locations

Types of Non-store Retailers

CUSTOMER BUYING BEHAVIOR

How do customers decide which retailer to go to andwhat merchandise to buy?

What social and personal factors affect customerpurchase decisions?

How can retailers get customers to visit their storesmore frequently, and buy more merchandise duringeach visit?

Why and how do retailers group customers intomarket segments?

Stages in the Buying Process

Customer Buying Behavior Patterns

1. Place of Purchase

2. Items Purchased

3. Time and Frequency of Purchase

4. Method of Purchase

5. Response to Sales Promotion devices through

a. Displays – window, models, racks, posters, sign board

b. Pricing – deal, offers, prices, discounts, coupon

c. Demonstration - samples

d. Sales talks - explanation

Overview of Retail Technology

Multimedia Kiosks – Promotional touch screen booth Web Based Commerce – e-commerce EP0S – Electronic Point of Sale – (Loyalty card databases holds customer

demographic information and addresses. Specific offers to specific customers)Ex: Used by Wal-Mart sales of beer and nappies were linked that joint saleswere highest on Friday evening.USES

1. Scanning System To Charge Accurate Prices2. Monitor staff to increase their producticity3. In food industry – eliminates price for individual items

All the above points help to cut down the labour costs and accurateshopping basket data can be collected & stored for analysis.

EDI – Electronic Data Interchange (Time between sending an order andreceiving the merchandise has been slashed at TESCO)

GSI – Geographic Information Systems (socio-demographic data by postalcode along with company transaction to forecast the likely turnover of storesin different locations.RT Ex: Safeways, UK applies this system where it provides a small handscanner to customers to watch the prices before they are placed in theshopping basket.

Role of Emerging IT in Retailing –I. Management Information Systems (MIS)

Converting Data to information

1. Customers who buy toothpaste tend to also buy

toothbrush

2. Talcum powder does not sell well

3. Almost everyone wants to sell bread

Functions of MIS

Capture of Data

Storage of Data: hard disks, optical devices, CDs and

magnetic tapes

Processing of Data: data mining

Distribution of Data and Information

Presentation of Information

Old MIS

Restricted to creating data for account auditing

Tracking of records

Stocks, money, bank accounts and balances, records

of wages and attendance, tax paid and payable etc..

New MIS systems

It evolved into areas that were earlier unthinkable

Assists managers in making decisions in all areas of

business

Marketing, Personnel, Cash Management,

Investment, Production, Operations, Logistics etc..

Characteristics of Good MIS

Information should be available when it is needed

Accuracy of information should not be compromised

Information should be complete

Information must be relevant to its users

Why does an Organization need MIS

Developing and enhancing core competences

Enhancing supply chain management

Facilitating quicker decision making

Improving the effectiveness and efficiency of retail managers

Facilitating CRM

Improving Organizational control

Developing competitive advantage

II. Marketing Support Systems (MSS)

Differentiating One’s offering

Establishing credibility

Developing distribution channels

Creating and maintaining relationships with

customers

Reducing the time-to-market

Retail Information Systems

1. E-Point of Sale (PoS)

2. Sourcing

3. Inventory Management (Stock)

4. Networking and Communication (Channels)

5. Customer Relationship Management (CRM)

6. Loyalty Management (Brand Loyal & Store Loyal)

7. Payroll Administration

8. E-commerce

9. Accounting

Point of Sale

Identify products using barcodes, RFID

Record customer purchases

Record refunds

Print bills

Record payment amounts and payment mode

Handle discounts

Sourcing

Purchasing the right products from the right vendors at the right time

Tracking

Managing

Maintain sourcing data

Relationships

Payments

Transactions

Inventory Management

Inventory occupies space and costs money

Minimizing inventory is a objective

Low inventory leads to the risk of stock outs

Stock outs lead to customer dissatisfaction

Stock outs could lead a customer to change theirchoice of retailer

Reordering as different frequencies

Networking and communication

Ability to interact with other computer systems isimportant

Automated and instantaneous re-ordering ofproducts has revolutionized inventory management

Triggering emails, SMSs for special events

Ability to network using the internet or LAN is amost powerful feature

Networking and communication

Maximize Channel Sales

Analyze channel health bymonitoring key metricssuch receivables, inventorystock, capital adequacy, etc.

Enable single point partnerportals to raise purchaseorders, track order status,delivery dates, back-orders,etc.

Abide regulatory norms byfollowing global tradepractices.

CRM Capturing, storing, mining and using customer data is one of the

important functions of an RISImplications of CRM in Retailing

Data CaptureGive your customers incentives to provide their contact information, andyou'll be able to target them after the sale with your retail marketing.This information also can be used in CRM software, to segment yourcustomer base by demographic indicators and sales histories.

Improve Sales• Try new strategies for increasing your sales, or focusing your

customers on the items with the highest profit margins, determinemethods of isolating these strategies in your sales data.Ex. Sales thro. display is high or ad is high - staffs find out thro.observation and feed it in PoS

Data miningAfter capturing your new retail sales data, begin mining this informationin your CRM software to correlate which sales initiatives are relating to themost profitable techniques.Ex. a store selling cold drinks may offer one-day discounts if the managerbelieves that high temperatures correlate to higher sales.

Loyalty Management

Formulate up sell strategies by mining existingcustomer data.

Run loyalty programs to retain and reward repeatcustomers.

Customers are loyal for two,

1. Brand loyal

2. Store Loyal

iVend Loyalty Software by citiXsys, UK Reward, Retain and Engage using iVend. iVend is used for the following

1. Develop the relationship2. Get more Sales with your Rewards Program3. Ability to track and monitor shopping habits

Loyalty Square SoftwareLoyalty Square helps fuel your business growth and profitability through

our marketing analytics such as response models, cross sell analytics, retentionstrategies, market basket analysis, sales force effectiveness and market mixmodels. Customer Buying Behavior:

1.Month beginning shopping vs. month-end shopping2.Weekday purchase vs. weekend purchase3.Intraday purchase4.Shopping basket, etc. Loyalty Square helps in deep dive analysis of

categories, identify monthly shoppers, etc. Response Models: Through predictive analytics, we aid you in your market

decisioning process,1. To determine purchase and loyalty propensities2. To set prices3. Forecast sales or test the effectiveness of alternate marketing plans.

Cross-sell Analytics:1. To increase value of your customer relationships2. Drive product penetration3. Increase the revenue per customer and thereby profitability, Loyalty

Square's solutions will provide more actionable marketing decisions,allowing you to execute cross sell and up sell programs.

Loyalty Square Software..

Retention Strategies:1. In an era of customer choice, brand disloyalty and low switching costs retaining good

customers is no easy task.2. Our marketing analytics combined with market consulting and database services aid

companies identify valuable customers and design the right strategies and allocate the rightresources to retain them.

Market Basket Analysis:1. Understanding the purchase pattern of customers is highly beneficial in driving up sales.2. Loyalty Square’s analytic solutions will help you to identify affinity between various products.3. This information will help you to design combo offers, optimal store layouts, inventory

management, etc.

Sales Force Effectiveness:1. Monitoring sales force performance and adjusting to shifts in market share positions are

imperative to optimizing market strategies.2. Loyalty Square helps you shift through prospects and customers to select the best targets and

build an effective strategic plan to meet your revenue and profitability targets.

Market Mix Models:Helps in designing successful marketing strategies like,

1. Assessing sales performance of your company with respect to competition2. Your marketing activities3. Pricing4. Response by store group/cluster or consumer segment

Payroll Administration

Managing large number of employees is easy with‘best of breed’ software for payroll management

Salary, perks, incentives, commission, allowances etc

E-Commerce

High price of real estate to the retailer

Inconvenience of physical shopping to the consumer

Increased penetration of internet connectivity

Evolution of secure payment options online

Availability of reliable logistics providers

e-tailing, electronic fund transfer, online trading etc

Accounting

Accounting is the most important system of internalcontrol for a retail organisation

RIS packages tend to include accounting modules

Most retailers prefer to use specialized accountingsoftware such as Tally instead of relying on theaccounting module of their RIS

Cost Accounting (Price fixation for merchandise)