CK COLLEGE OF ENGINEERING AND TECHNOLOGY

DEPARTMENT OF MANAGEMENT STUDIES

UNIT III RETAILING DECISIONS

Choice of retail locations - internal and external atmospherics – Positioning of retail shops –

Building retail store Image - Retail service quality management – Retail Supply Chain

Management– Retail Pricing Decisions. Mercandising and category management – Buying.

1) What is retail location?

Retail location occupies important position in retailing decisions. The logic of this is that if the right

site is acquired, success should a simple matter of opening for business. Location is a top priority

for all businesses. If all other things are approximately equal, the consumer generally will select the

closest store.

2) Define freestanding sites or isolate store.

An isolate store is a free standing retail outlet located either on a highway or a street. There are no

adjacent retailers with whom the stores share the shoppers’ traffic. There are various advantages in

choosing such retail location. The competition in location is less and the retail cost is relatively low.

3) List the types of Retail locations?

A retailer has to choose among alternate types of retail locations available. There are three basic

location types to distinguish among:

1) Freestanding sites / Isolated stores,

2) City or town locations / unplanned business district, and

3) Planned shopping centre/planned business site.

4) Write the types of unplanned Business District?

(i) Central Business Districts

(ii) Secondary Business District

(iii) Neighbourhood Business Districts

(iv) Strip Shopping Districts

5) Discuss the factors affecting the choice of retail Location?

Pedestrian Traffic: In analysing pedestrian traffic, retailers consider the types of people that pass

by the store in addition to the sheer numbers of passersby.

Vehicular Traffic: The quantity and characteristics of vehicular traffic must be examined,

especially by retailers appealing to customers who drive there.

Parking Facilities: Parking facilities must not be overlooked in assessing a location and specific

sites in it.

Transportation: The availability of mass transportation, access from major highways, and ease of

deliveries must be examined in assessing a location and specific sites.

6) What are the issues in selecting the retail location?

The selection of the location is of key importance and this requires a systematic approach to the

acceptance or rejection of certain areas in favour of others. This is because of several issues: 1)

Consumer Choice 2) Need for Competitive Advantage 3) Consideration of Trends 4) High

Investment 5) Declining Number of Sites

7) Discuss the role of atmospherics in retail?

Role of store atmospherics are as follows: 1) Creates Attention. 2) Creates Message. 3) Creates

Affect 4) Store Atmospherics Influence Shopping Behaviour 5) In-Store Messaging and Visual

Imaging are Sales Motivators.

8) Explain atmospherics.

Atmospherics refers to the design of an environment via visual communications, lighting, colours,

music and scent to simulate customers’ perceptual and emotional responses and ultimately affect

their purchase behaviour. Atmospherics complements the other aspects of the store design and

merchandise. It is important that the atmospheric elements to work other in order to create a

positive impact on the customers.

9) List the internal atmospherics in retail.

Interior atmospherics refers to all aspects of the physical environment found inside the store.

Elements of interior atmospherics of stores are evolved by an intelligent combination of the factors

such as: flooring, colours, lighting, scents, sounds, fixtures, wall textures, temperature, width of

aisles, dressing facilities, vertical transportation, dead areas, personnel, self-service, merchandise,

prices (levels and displays), cash register placement, technology/ modernisation, cleanliness.

Internal atmospherics principles are always applied to store interiors.

10)Define Retail positioning.

Positioning of a retail store refers to the position the store occupies in the minds of consumers and

it is always relative to the competition

11)Define retail store image.

The store image is how the shopper perceives the store in terms of the products available in store,

the store itself and the experience he or she expects when shopping at the store. The key to success

in retailing is to create a store image that is liked and perceived positively by the consumers.

12)Write down the Steps in building retail brand image?

Steps in building retail brand image are as follows: 1) Creating a High Level of Brand Awareness

2) Develop Associations 3) Consistent Reinforcement of the Image of the Brand.

13)Elucidate service quality.

Customer service plays a greater role in differentiating a retail concern from that of its competitors

It other words customer service is the set of activities and programs undertaken by retailers to

make shopping experience more rewarding for their customers. The retailer may follow a

customized or standardized approach in delivering the service.

14)Write the service gap models?

There are four types of gap models given by Zeithaml, Berry, and Parasuraman which are as

follows:

1) Knowledge Gap

2) Standard Gap

3) Delivery Gap

4) Communications Gap

15)Give the benefits of SCM in retailing.

Supply chain management is an end-to-end process in merchandise planning and movement, from

planning the inventory to the point of reaching the merchandise to the customers. It involves

integration of business process from end user through original suppliers that provides products,

services and information that adds value for customers.

16)State the retail pricing objectives.

Pricing is the art of translating into quantitative terms (rupees) the value of the product or a unit of a

service to customers at a point in time. The retail pricing objectives is fixed based on the sales,

profits, and return on investment or cash flow.

17)List the approaches for retail pricing?

The three major categories of methods used to determine or establish product prices are: 1) Cost

Oriented Pricing 2) Demand-Oriented Pricing. 3) Competition Oriented Pricing.

18)Define merchandise management.

Merchandising is the planning involved in marketing the right merchandise at the right place at the

right time in the right quantities at the right price.

19)Dicuss the factors affecting the merchandising fucntions.

Merchandising does not function in isolation. It is affected by various factors like the organisation

structure, the size of the retail organisation and the merchandise to be carried.

20)Define category management.

Category management is the process of managing a retail business with the objective of

maximising the sales and profits of a category rather than the performance of individual brands

or models.

PART – B QUESTIONS AND ANSWERS

1. Describe the process involved in the retail pricing decisions.

Pricing has got an implication on the revenue generated by the retail organization. It also affects the

overall objectives and other components of the retail strategy. A price plan should be integrated and

responsive enough to provide good value to the shoppers.

Once the objectives and polices are in place, an overall pricing strategy is developed. The strategy

gives direction to all decision made regarding the pricing variable viz., when to use customary and

variable pricing, one-price policies and flexible pricing, odd pricing, leader pricing, multiple-unit

pricing and price lining.

Approaches for Setting Price

The three major categories of methods used to determine or establish product prices are:

1) Cost Oriented Pricing: To generate a profit, product costs must be covered. Cost-oriented

pricing (also called cost-plus pricing) has two approaches: mark-up pricing (the more common) and

breakeven pricing. Mark-up pricing is the most widely practiced form of cost-oriented pricing.

2) Demand-Oriented Pricing: Under the demand-oriented pricing method, prices are set based on

consumer demand. In this approach, retailers often raise prices based on unusual environmental

changes.

3) Competition Oriented Pricing: In competition-oriented pricing, a retailer uses competitors’

prices as a guide, rather than demand or cost considerations. A competition-oriented firm might not

alter its prices to react to changes in demand or costs unless competitors alter theirs.

The various pricing strategies followed by the retailer to meet his short term and long-term

objectives are as follows:

1) Differential Pricing: Method in which a product has different prices based on the type of

customer, quantity ordered, delivery time, payment terms, etc. In setting a differential pricing

policy (also known as price variability)

2) Price Levelling: Under this policy, the retailer attempts to maintain price levels for the long-

term. Also called customary pricing, this type of policy is typically implemented prior to the actual

opening of a retail facility.

3) Lifecycle Pricing: Pricing may be planned based on the product or store life cycle. Under

lifecycle pricing, price points are set based on the stage of the product life cycle (introduction,

growth, maturity, and decline) that the product (or store) has reached.

4) Price Lining: A retailer using a price lining policy offers various products and prices to match

its competitors’ offerings for a particular product category.

5) Price Stability: At times, retailers try to create a stable price, or a “one-price policy”, for certain

products, to avoid price wars with the competition.

6) Psychological Pricing: Psychological pricing takes into account the consumer’s perceptions and

beliefs. The three main types of psychological pricing are:

i) Odd/Even Pricing: The retailer using odd/even pricing places prices on individual products that

ends in either an odd or an even number. Odd/even pricing allegedly began in grocery retail outlets.

ii) Reference Pricing: These pricing uses consumers’ frame of reference to help set price. A frame

of reference is established through information searches or previous experience purchasing other

like products.

iii) Prestige Pricing: Selling products at high prices to establish a reputation of quality is called

prestige pricing. This pricing strategy aims to create “snob appeal”.

7) Skimming Pricing: Price skimming is a pricing strategy in which a retailer sets a relatively high

price for a product or service at first, and then lowers the price over time.

8) Penetration Pricing: Penetration pricing is the pricing technique of setting a relatively low

initial entry price, a price that is often lower than the eventual market price.

9) Leader Pricing: In this pricing a high-demand item is priced low and advertised heavily in an

effort to attract consumers into a store. The items selected for leader pricing should be widely

known and purchased frequently.

10) Promotional Pricing: Promotional pricing is generally used in conjunction with sales

promotions where prices are reduced for a short period of time. Common types of promotional

pricing are as follows:

i) Special-Event Pricing: In this pricing, items are reduced in price for a short period of time,

based on a specific happening, such as back-to-school, Presidents’ Day, or anniversary sales.

ii) Rebates and Coupons: Rebates are partial refunds provided by the manufacturer to consumers.

Coupons allow customers to take reductions at the time of purchase.

iii) Low or No-Interest Financing: A number of furniture stores will advertise no-interest

financing loans for furniture purchases. This strategy has been a sales success for a number of

industries in the past, be careful how you use it though as consumers are becoming more sensitive

to the true value of the strategy.

iv) Buy One Get One Free: If product costs are low, and price includes a healthy profit margin,

this may be a good strategy to use if you have an overabundance of inventory. Even better if

competitive pricing comparisons result in your product offer being the better deal.

v) No Charge or Low-Cost Warranties: If a business has a good warranty or return program

(good in the sense that there are no, or few, product failures and no, or few, product returns), then it

is not a high cost investment for them to offer low cost or no cost warranties.

11) Pre-Emptive Pricing: Pre-emptive pricing is a strategy which involves setting low prices in

order to discourage or deter potential new entrants to the retailer’s market, and is especially suited

to markets in which the retailer does not enjoy any market privilege and entry to the market is

relatively straight-forward.

2. How will you build the retail store image? Explain with current Indian

examples

Retail image refers to how a retail store is perceived by consumers and others. A retailer

uses the store to establish a competitive advantage and communicate its offering to the

consumer.

The store image is how the shopper perceives the store in terms of the products available in

store, the store itself and the experience he or she expects when shopping at the store.

The key to success in retailing is to create a store image that is liked and perceived positively

by the consumers.

Retail image enables a firm to create a niche in the consumers mind relative to the

competitors.

Retail image will enable a firm to attract, retain and expand thecustomer base.

Creating and communicating a retail image involves complex and multistep process.

Maintaining the store image in tune with the retail firms’ objective is equally important

which makes the task as an ongoing process.

There are several factors relating to the store and its environment that contributes towards

building store image; target market, firm’s positioning, customer service, store location,

pricing, attribution of physical facilities, shoppers experience, community service,promotion

tools, store specific factors.

Building Retail Store Image

Steps in building retail brand image are as follows:

1) Creating a High Level of Brand Awareness: Brand awareness is the ability of the potential

customer to recall or recognise the brand. ‘Aided recall’ is when the customers indicate that they

know the brand when the name is told to them. ‘Top-of-mind’ awareness is that the customer

remembers that particular brand so well and comes first in his mind.

The top-of-mind awareness is created by:

i) Having a name that is easy to remember,

ii) Repeated advertisements,

iii) Repeated sponsorships,

iv) Have a large number of outlets,

v) Catchy slogans, attractive logos, etc.

2) Develop Associations: Brand association is anything that is linked to connect the brand in the

minds of the customer. Some common associations that the customers develop with their brand

name are as below:

i) Merchandise Category: Chennai silks will have the customers associate its name with silk saris.

Krishna Sweets will have the customers associate its name with sweets. So whenever the customer

has a need to buy sweets, this name comes in his mind because of the association.

ii) Price or Quality: Wal-Mart is associated with low price and good value.

iii) Specific Attribute or Benefit: The convenience store 7-Eleven is part of an international chain of

retail stores.

3) Consistent Reinforcement of the Image of the Brand: The retailer’s brand image is developed

and maintained through the retailer’s communication program and other elements of

communication mix. The other elements are merchandise assortment, pricing, the design of the

stores, website and the customer service that the store offers. Retailer needs to be consistent in his

messages and send the same kind of message through various elements. If price is the main brand

strength, the same has to be conveyed always and through all elements.

Retail Image Dimensions

In today’s competitive era, it would be difficult for retailers to leave a lasting impression if they

attempted targeting all types of consumers.

The need is to target only specific kinds of consumers and develop relevant associations with them.

For example, Shoppers Stop may be associated with a pleasant, easy going shopping experience

and a satisfied loyal consumer who can benefit from the deals that the store offers. Food World

may be associated with value in FMCG products and groceries. Landmark may be synonymous

with the variety it offers in books. Marketers can control the kind of associations which need to be

developed to provide the required differentiation. There may be a store that sells well-known

brands at a lower price and does not offer much in store help. A network of such stores can develop

an image of convenience and value (by planning the locations). Another aspect of store image is the

shopping area. Different shopping locations in a city have different kinds of images among

consumers. For example, in Bangalore, Commercial Street is more known for textiles than

consumer durables. An up-market consumer durable located there will find it difficult to attract

traffic (unless it is planned on a large scale in terms of merchandise and visibility). Similarly, an

up-market textile store in a predominantly discount oriented shopping area may not attract the

attention of the intended target segment which may also have a symbolic need (of even shopping in

an exclusive locality) with regard to the shopping area it visits.

To measure the image of the retail store or shopping centre, it is essential to identify the relevant

customer attitudes. Lot of work on this has been done in the western world. The most

comprehensive presentation is Fisk’s conceptual model in which he summarises the store qualities

as below:

Dimension Determinants

1) Location convenience

i) Access route

ii) Traffic barrier

iii) Traveling time

iv) Parking availability

2) Merchandise suitability

i) Number of brands stocked

ii) Quality

iii) Breadth of assortment

iv) Depth of assortment

3) Value for price

i) Price of a particular item

ii) Price of same item in another store

iii) Discounts

4) Sales effort and stores services

i) Courtesy of salesmen

ii) Helpfulness of salesmen

iii) Reliability and usefulness of advertising

iv) Billing procedure

v) Adequacy of credit arrangements

vi) Delivery promptness and care

vii) Eating facilities

5) Congeniality

i) Store layout

ii) Store decor

iii) Merchandise display

iv) Class of customers

v) Store traffic and congestion

6) Post-transaction satisfaction

i) Satisfaction with goods purchased and used

ii) Satisfaction with returns

iii) Satisfaction with price

iv) Satisfaction with accessibility to store

The above list is not comprehensive and may not apply to all industries. Banks may have to

develop other dimensions relevant to them.

Image concept is most relevant in respect of the retail sector because of the customer intimacy with

the store.Like the producers who only deal with the limited number of wholesalers, retailers relate

directly with the consumers through physical premises, salesforce, offerings, and services. Thus

customers develop personal images of retail stores based on their experience.

There may be several dimensions associated with retail image, and extensive primary research has

to be done to ensure that a retail store does not select too many dimensions and dilute its store

positioning strategy. Product associations can stand for quality, variety, style or price. Service can

develop its associations with sales personnel, pre-sales or after-sales service, easy return of faulty

goods, shopping ease or delivery. Consumer imagery can be developed by associating a specific

type of consumer with a retail outlet. Ambience can be associated with decor, lighting, moving

space, layout, cleanliness, and comfort. Convenience can be associated with locations and parking.

Value can be associated with low prices, bundling of products at a low price, delivery or a

combination of these dimensions. Choosing and nurturing the right image is a prerequisite for the

long-term profitability of any retail outlet.

3) Consistent Reinforcement of the Image of the Brand: The retailer’s brand image is developed

and maintained through the retailer’s communication program and other elements of

communication mix.

For example, the T.V. advertising may mention and highlight about the variety of merchandise in

the store, the sales promotion may be pitched on attractive prices. In such a case different messages

may be going to the customer and so the customer may not form a unique image about the store.

3. Explain the various steps involved in selecting a retail location. Discuss the factors to be

considered in site selection.

A good retail location may lead to a success even if merchandise dealt is limited, prices are high

and promotion is not done in an attractive manner.

On the other hand even if the assortments are wide, prices are affordable and promotion is very

attractive a retail firm may fail if the location decision is made wrongly.

Location is a crucial decision due to the following reasons;

It is one of the most important factor consumers take into consideration while choosing a

store

It is the least flexible element in the strategic mix. A retailer cannot keep changing his

location due to the fixed nature, huge investment and the length of lease agreement.

As mentioned above a bad location can lead to failure. On the other hand a good location

will definitely contribute to success even if other strategic mix or not favourable.

The location of the store contributes a greater extent to the store’s image.

The store location affects the long run and the short run planning.

The retailers should follow the following four steps in deciding the location.

1. Evaluate alternative geographic (trading) areas in terms of the potential characteristics of

Residents’ , offices, commercial establishments and existing retailers.

2. Determine the desirable location from the three basic formats viz., isolated, unplanned district or

planned shopping centre.

3. Select the general location for the store and evaluating the alternative store sites

4. Computing the overall rating and making the selection.

The importance of the location decision is due to the following factors:

1) Consumer Choice: The location is often the most important consumer behaviour consideration

in a customer’s decision of where to shop.

2) Need for Competitive Advantage: The decision over where to develop a retail outlet will be of

strategic importance because retailers can gain long-term competitive advantage if they develop in

the best location.

3) Consideration of Trends: Any decision on location has to consider the recent social and

structural changes – greater use of the motor car, the importance of out-of-town shopping centres,

regional shopping areas, the growth of multiple retailers, the power of retailer brands, and so on.

4) High Investment: Development of a retail site is accompanied by high investment and rental

costs and long lead times, which require decisions regarding long-term financial implications.

5) Property Asset: It is important to select carefully as the final property assets of a company can

be valued as high as their annual turnover.

6) Declining Number of Sites: There are a restricted number of new sites for development and

within Government policy guidelines, less opportunity to obtain planning permission easily.

7) Cost Factor: Location is a major cost factor because it involves large capital investment, affects

transportation costs, and affects human resources cost.

8) Revenue Factor: Location is a major revenue factor because it affects the amount of customer

traffic, and affects the volume of business.

9) Means of Success: Locating the retail store in the right place is considered to be adequate for

success. If not properly selected then it may result in the loss of customers and employees.

10) Not Changeable: While retailer can change his merchandise mix, adjust prices, improve

communication with consumers and offer better service, once the store comes into existence, it is

fairly difficult to change the location.

4. Bring out the components of service quality along with the customer evaluation of

service quality in retail.

Components of Service Quality

Dimensions for service quality are more or less the same which we associate with the

concept of Quality in General. Often organisations use a performance measure matrix using

the same service dimensions and they often call it RATER based on the 5 dimensions

described below:

1) Reliability: Reliability refers to ability to perform the service dependably and accurately.

No doubt reliability is a critical factor but in some cases it becomes essential dimensions.

FedEx may position itself on “World on time” or First Flight Couriers Ltd. may use

“Anytime, Anywhere First” by using reliability dimensions.

2) Assurance: Assurance is knowledge, courtesy of employees and their ability to convey trust

and confidence. Trust and confidence building is an important consideration in positioning.

For example, Punjab National Bank positions itself by conveying trust and confidence by

“the name you can Bank upon”. Through this statement a customer is being assured of

quality service.

3) Tangibility: Tangibility relates to physical facilities, equipment, personnel, and

communication materials. Tangibility is used by hotels, restaurants, tourism, and retailers. For

example, Sahara Airlines has always placed tremendous importance on customer satisfaction

and they have been positioning themselves as ‘High on Achievement’ by showing the awards

won by them in their advertisements.

4) Empathy: Empathy relates to caring attitude, individualised attention the firm provides to

its customers. For example, the Taj Hotel established its position as “She” who cares and

provides individual attention and makes customers feel important to the organisation.

5) Responsiveness: Responsiveness relates to willingness to help customers to provide prompt

service. For example, at Hotel Radisson every question asked is answered by yes I can! Be it

midday or midnight people at Radisson are trained to respond to the customer needs

promptly

Gaps Model for Improving Retail Services Quality

When customers’ expectations are greater than their perceptions of the delivered product or service,

customers are dissatisfied and feel that the quality of the retailer’s service is poor. Thus, retailers

need to reduce the service gap (the difference between customers’ expectations and perceptions of

customer service) to improve customers’ satisfaction with their service.

Four factors affect the service gap viz., the knowledge gap, standards gap, delivery gap and the

communication gap. In order to reduce the service gap the retailer should try to reduce these gaps

The knowledge gap

Knowledge gap refers to the difference between customer expectations and the retailer’s perception

of the customer expectations. The retailer should be able to understand what the customer wants.

The Standards Gap

Once the retailer has gathered the information about the customers’ expectation and perception, the

next step involved is to set standards for delivery of high quality service. At this stage the standards

gap may arise due to the difference between the retailer’s perception of customer’s expectations

and the customer service standards it sets.

The delivery gap

The delivery gap refers to the difference between the retailer’s service standards and the actual

service delivered to the customers. Setting standards alone is not enough in achieving excellent

service quality. It has to be delivered as per the specifications fixed.

To reduce this gap, retailers must ensure that service performance meets service standards and must

cover following points:

1) Clarify employee roles.

2) Ensure that all employees understand how their jobs contribute to customer satisfaction.

3) Match employees to jobs by selecting for the abilities and skills needed to perform each job well.

4) Provide employees with the technical training needed to perform their assigned tasks effectively.

5) Develop innovative recruitment and retention methods to attract the best people and build

loyalty.

6) Enhance performance by selecting the most appropriate and reliable technology and equipment.

7) Teach employees about customer expectations, perceptions and problems.

8) Train employees in inter-personnel skills, especially for dealing with customers under stressful

conditions.

Eliminate role conflict among employees by involving them in the process of setting standards.

9) Train employees in time management.

10) Measure employee performance and tie compensation and recognition to delivery of quality

service.

The communication gap

The communication gap refers to the difference between the service promised by the retailer and

the actual service delivered. Overstating the services offered will raise the customers’ expectation.

Ultimately when the promised services are not delivered the expectations will exceed the perceived

service leading to customer dissatisfaction.

5. What are the drivers of supply chain performance? Explain the factors influencing SCM

in retail.

The performance of a supply chain, both its efficiency and responsiveness, depends upon the

following six components which are as follows:

1) Facility: It is the place where utility is added to convert the inputs. Here inventory is either

processed to another form or stored before being transported to the next partner of the chain. A

facility of a supply chain may be a factory, warehouse or a retail store. The number of facilities and

the capacity of each one of them affect the efficiency and responsiveness of the supply chain.

2) Inventory: It is stored by all supply chain partners – suppliers, manufacturers, distributors, and

retailers. The quantity of inventory and its location affects the efficiency and responsiveness of

chain. For example, for readymade garments, responsiveness requires more inventory with the

retailer as it will help a customer to visit a retailer and walk-out with his choice of garment.

3) Transportation: Transportation in a supply chain is movement of material from one partner to

another.Faster transportation adds to responsiveness at the expense of its efficiency. A company

with a number ofretail stores may have its own fleet of vehicles for transporting material from one

store to another store.

4) Information: Information connects various supply chain stages and allows them to coordinate

activities Information is crucial to the daily operations of each stage of the supply chain. An

information system can enable a firm to get a high variety of customised products to customers

rapidly.

5) Sourcing: Sourcing is the choice of who will perform a particular supply chain activity such as

production, storage, transportation, or the management of information.

6) Pricing: It determines how much a firm will charge for goods and services that it makes

available in the supply chain. Pricing affects the behaviour of the buyer of the good or service, thus

affecting supply chain performance.

Various business and economic forces influence the effectiveness of a supply chain. They include

consumer demand, globalisation, competition, information and communication, regulation and

environmental concerns.

1. Consumer Demand: The key focus of an organisation is to find a balance between cost and

quality, and customisation and availability without compromising on any one of them. Customers’

expectations with regard to quality, speed of service, choice, and price have increased significantly.

2) Globalisation:Organisations are realising the importance of benefiting from the competitive

advantages of other economies. For example, American and European companies have realised the

cost benefits of outsourcing operations to Asian or Latin American.

3) Competition: Competition in every business has increased significantly over the last decade. It

has increased due to advancements in technology, increased globalisation, easy access to

information, creative business designs, etc. These factors have dislodged many market leaders.

4) Information and Communication: The improvements in information flow and communications

systems are key forces providing support for supply chain decisions. The Internet is an application,

which is redefining the way products are purchased, sold and distributed.

5) Government Regulation: Governments have played a significant role in the evolution of the

supply chain. Trade barriers, duties and other such trade related decisions are in the hands of

governments of various countries. These rules and regulations directly affect the functioning of

supply chain entities.

6) Environment: Growing concern for the environment has made an impact on supply chain

design. Many European countries have regulations regarding the usage of packaging material.

Efficient supply chain management provides following benefits to customers and retailers:

1) Reduced Stock-Out: The worst thing that can happen to a retailer is non-availability of an item

wanted by a customer when the customer has visited the store. If a customer visits Viveks to buy a

Samsung LCD TV – 32 inches and if it is not available, he would go to Croma and buy the same.

Not only that, he would also buy some more items that he normally buys from Vivek. Therefore the

stores should do everything to

ensure that the number of times that stock-out occurs is reduced to a minimum.

2) Availability of the Right Items: Another benefit of an efficient SCM is that each store gets

what is exactly required by the customers in that area. Big Bazaar in Nelson Manickam road may

need different kind of items compared to Big Bazaar in T Nagar. This is also made possible

because of superior information system as details of each sale are captured in the information

system.

3) Higher Return on Investment: It increases the sales, net profit margins, and improves

inventory turnover ratio. Retailers can also reduce their transportation expenses by coordinating

deliveries. A good information system that coordinates among the vendors and the buying staff of

the firm helps to buy things at a lower cost and improve margin.

4) Strategic Advantage: A critical factor in Wal-Mart’s success is its information and supply chain

management. Even though competitors understand this, they are not able to achieve the same level

of performance because of two reasons:

i) Wal-Mart has made substantial investments in developing its systems and it has the business

volume to justify this.

ii) Its systems are not simply some software, any firm can buy from any supplier but they are

customised for Wal-Mart through experience and earning.

6. Analyze the changes occurring in the retail environment and discuss the possible

implications of such changes for retailers

The two components of atmospherics used in managing the overall store image and display are as

follows:

1) External/Exteriors Atmospherics

2) Internal/ Interiors Atmospherics

1. External/ Exteriors Atmospherics

Exterior atmospherics refers to all aspects of physical environment found outside the store. It

significantly affects store traffic and sales. It is generated by all aspects of the store exterior.

The internal store comprises the interior of the store that the customer sees once he or she has

entered the store. Its physical attributes consist of following points are as follows:

1) Place of Location: The exterior store design includes the place where the store is located. In

case the retail store is located in a shopping centre or mall, the architecture and the overall look of

the mall or centre have to be taken into consideration. The kind of image being projected by the

promoters also influences the image of the retail store. For example, a retail store located in a five

star hotel carries the image of the five star hotels.

2) Marquee: The store marquee and the store frontage also play an important role in influencing

the perception of consumers about the store. The store marquee is the first mark of identification of

the retailer or the retail store. It helps the retailer to identifying the store and attracts customers. One

of the most common examples of a popular marquee is the golden arch of McDonald’s.

3) Store Entrance: The store entrance should be designed to encourage the customer into the store.

The major factors to consider are the size of the entrance and flat-entry surfaces. Some retailers

have dispensed with windows, thus opening up the whole of the shop front as an entrance – this is

possible in a covered shopping centre but does involve increased security risks. A cluttered, dirty

storefront will be one of the first factors which will actually deter a customer from entering the

retail store. Storefronts may be starlight fronts, which are parallel to the sidewalk or the footpath.

An Angled front is one which is at a slight angle to the traffic. A store may also consider having

more than one entrance or windows; in such a case, the entrance looks similar to a shopping arcade

and such an entrance is often termed as an arcade front.

4) Display Windows: Display windows are very common features among retailers dealing in

garments and gift items. This feature is even prevalent among retailers in small towns. With the

advent of new variants of display windows at local levels and also sponsored by the manufacturers

for their authorised retail outlets, display windows are considered an important factor contributing

to image-building of the store. For example, Titan Watches provides valuable inputs to Time Zone

(first organised chain of retail stores in India) franchisers to install impressive moveable windows

to display their merchandise, which not only communicate with prospective shoppers but also

attract new customers to the store. During festive seasons, retailers display their selective

merchandise along with their respective prices or discounts offered to attract pedestrian traffic,

particularly the price-conscious shoppers.

5) Door Types: Selecting the type of door is another factor worth considering while planning a

store’s interior. There are many types of doors that a retailer can select – regular, revolving,

electric, self-opening, push and pull door, or climate controlled. The door is used to control the

physical atmosphere within a space by enclosing it, excluding air drafts, so that interiors may be

more effectively heated or cooled. They are also used to screen areas of a building for aesthetics,

keeping formal and utility areas separate. Retailers consider doors as having an aesthetic role in

creating an impression of what lies beyond.

6) Walkways: Walkways play a very important role in building up a store’s exterior image. A wide

and rich walkway makes a very unique feature of a store’s image, when compared to narrow and

constrained

walkway. While constructing a store, the retailer should ensure that ample space is available for a

walkway.

7) Size of the Building: The size of a building also has an impact on the store atmosphere. The

height of a building may either be disguised or non-disguised. The height of a building is said to be

disguised if a portion of the building is below the ground level. Retailers in these types of buildings

can attract the customers who are intimidated by large, impersonal buildings. The height of a

building is said to be non disguised if all the floors or the whole building is visible to pedestrians

from the ground level. Retailers in this type of buildings should study the perceptions of the target

customers visiting them. It is important to select right sized building for various types of

merchandise.

8) Awnings: An awning or overhang is a secondary covering attached to the exterior wall of a

building. The location of an awning on a building may be above a window, a door, or above the

area along a sidewalk. With the addition of columns an awnings becomes a canopy, which is able to

extend further from a building, as in the case of an entrance to a hotel. Restaurants often use

awnings broad enough to cover substantial outdoor area for outdoor dining, parties, or reception.

Awnings is often painted with information as to the name, business and address, thus acting as a

sign as billboards as well as providing shade, breaking steep winds, and protecting from rain or

snow.

9) Colours and Materials: At the very first sight, the colours and materials used for the store’s

exterior do create an impression in the customer’s mind. Generally, this impression leaves a long

lasting image of the store in a consumer’s mind. The exterior of a store should appeal to the target

customers. The colours and materials used should convey the image of the store. An increasing

number of retailers are using various types of textures, building materials like brick, matte-finished

acrylics, etc., at the entrance to create a soothing effect. Steel exteriors tend to project an image of

strength, while extensive use of glass creates a unique impression of contemporariness. Concrete

structures create an impression of a low cost and value based store, whereas use of brick creates a

rather upscale image.

The store facade may be composed of an entrance scaled to the plaza in which sit a set

Role of store atmospherics are as follows:

1) Creates Attention.

2) Creates Message.

3) Creates Affect

4) Store Atmospherics Influence Shopping Behaviour

5) In-Store Messaging and Visual Imaging are Sales Motivators.

7. Discuss in detail about the types of retail locations?

Freestanding Sites / Isolated Stores

With a freestanding site (also referred to as an isolated location), the retailer moves into an area

with no other retailers in the immediate vicinity (neighbourhood). Generally, the store is located off

of a main road, highway, or street. Based on the theories dealing with retail gravitation, retailers

have a hard time attracting consumers to a freestanding site, because the absence of other retailers

may lead consumers to decide not to bother making the trip.

City or Town Locations/Unplanned Business District

As it has been seen, a large number of retailers operate in planned shopping sites or in freestanding

sites. However, when making a site selection decision, the retail site selection specialist has a

number of unplanned shopping sites from which to select as well. Among the unplanned sites are

central business districts, secondary business districts, neighbourhood business districts, and

unplanned strip or string districts.

Unplanned shopping sites result when two or more retailers move into the same area or in close

proximity to each other. Unplanned sites area function of evolution; thus, they are not planned but

develop over time.

Types of Unplanned Business District

1) Central Business Districts: The central business district (CBD) is the downtown area of any

city. Some states, particularly on the East Coast, describe the CBD as the centre city. Because the

CBD is the hub of the city, it draws a great deal of pedestrian and automobile traffic. In addition,

many of the city’s public transportation systems have a link with the CBD.

2) Secondary Business District: A secondary business district (SBD) is an unplanned shopping

area in a city or town that is usually bounded by the intersection of two major streets. Cities–

particularly larger ones – often have multiple SBDs, each having at least a junior department store

(which may be a branch of a traditional department store or a full-line discount store), a variety

store, and/or some larger specialty stores -in addition to many smaller stores. This type of location

has grown in importance as cities have increased in population and “sprawled” over larger

geographic areas.

3) Neighbourhood Business Districts: The neighbourhood business district (NBD) generally

relies on convenience products as the main product mix. The NBD provides shopping for a

neighbourhood rather than a larger trading area; thus, many NBDs have several service retailers in

addition to product retailers. It is not uncommon to have a hair salon, a spa, a beer and liquor store,

one or two restaurants, a few smaller specialty stores, a drugstore, and a smaller supermarket in an

NBD. The drugstore and supermarket perform the function of an anchor store within these business

districts.

4) Strip Shopping Districts: Strip (or string) shopping districts have stores that are visible from

the road and arranged in a long “strip.” Strips are unplanned shopping districts consisting of a series

of retailers that sell comparable goods and services. Strip districts probably began as freestanding,

or isolated, sites, followed by an influx of competition. Because the stores in strips generally have

the same types of products, consumers often give strips special names, such as Automobile Mile or

Furniture Row.

Planned Shopping Centres/Planned Business Sites

A planned business site is just what the name suggests: an area of business that is planned.

Generally, each planned business site or district is centrally managed and/or owned. The key to a

successful planned business district is a balanced tenant mix, or tenancy, which allows the business

district to offer complementary merchandise to the consumer. Tenancy is based in part on

population data from the trading area.

In general, planned business districts are shopping centres developed to attract consumers from

greater distances. Part of the planning process for planned business districts includes the

development of some type of parking area. Most planned sites have at least one anchor store large

or distinct enough to attract traffic to the centre.

Types of Planned Shopping Centres/Business Sites

The major types of planned business sites are as follows:

1) Shopping Mall: A shopping mall is referred as the collection of independent retail stores,

services, and parking areas constructed and maintained by a management firm as a unit.

Shopping malls are enclosed, climate controlled, lighted shopping centres with retail stores on one

or both sides of an enclosed walkway. Parking is usually provided around the perimeter of the mall.

Shopping malls are classified as either regional (less than 1 million square feet) or super regional

(more than 1 million square feet). Super regional centres are similar to regional centres, but because

of their larger size, they have more anchors, specialty stores, and recreational opportunities and

draw from a larger geographic area.

i) Regional Centres: A regional centre is a shopping mall that provides general merchandise (a

large percentage of which is apparel) and services in full depth and variety. Its main attractions are

its anchors, department and discount stores, or fashion specialty stores. A typical regional centre is

usually enclosed with an inward orientation of the stores connected by a common walkway, with

parking surrounding the outside perimeter.

ii) Super-regional Centres: A super-regional centre is a shopping centre that is a similar to

regional centre, but because of its larger size, it has more anchors and a deeper selection of

merchandise, and it draws from a larger population base. As with regional centres, the typical

configuration is an enclosed mall, frequently with multi-levels.

2) Community Shopping Centres/Power Centres: Community shopping enters are substantially

smaller than regional centres or mega malls. Community shopping centres tend to be between

100,000 and 400,000 square feet. They may house a smaller, branch department store as an anchor.

Sometimes the anchor is a large discount store, a category killer, or a combination of these retailers.

In addition to the anchor store(s), the community centre has a number of smaller stores. Some

community centres also have convenience stores as tenants.

3) Neighbourhood Shopping Centre/Traditional Strip Centres: A neighbourhood shopping

centre is a planned shopping facility, with the largest store being a supermarket or a drugstore.

Other retailers in the centre often include a bakery, a laundry, a dry cleaner, a stationary store, a

barber shop or beauty parlour, a hardware store, a restaurant, a liquor store, and a gas station. This

centre focuses on convenience-oriented goods and services for people living or working nearby. It

serves 3,000 to 50,000 people who are within a 15-minute drive (usually less than 10 minutes).

4) Fashion/Specialty Centres: A fashion/specialty centre is a shopping centre that is composed

mainly of upscale apparel shops, boutiques, and gift shops carrying selected fashions or unique

merchandise of high quality and price. These centres need not be anchored, although sometimes

gourmet restaurants, drinking establishments, and theatres can function as anchors. The physical

design of these centres is very sophisticated, emphasising a rich decor and high-quality

landscaping.

Fashion/specialty centres usually are found in trade areas having high income levels, in tourist

areas, or in some central business districts. These centres’ trade areas may be large because of the

specialty nature of the tenants and their products.

5) Merchandise Kiosks: Although not a type of shopping mall, merchandise kiosks are found in

shopping malls of all types and are a popular location alternative for retailers with small space

needs. Merchandise kiosks are small selling spaces offering a limited merchandise assortment.

These selling spaces are typically between 40 and 500 square feet and can be in prime mall

locations. They are relatively inexpensive compared to a regular store. They usually have short-

term leases, shielding tenants from the liability of having to pay long-term rent in case the business

fails. Some merchandise kiosks operate seasonally, for example, selling polar fleece in winter and

baseball hats in summer. Of course, vendors also can be evicted on short notice. These alternatives

to regular stores are often a great way for small retailers to begin or expand.

6) Lifestyle and Outlet Centres: Lifestyle centres are gaining momentum. A planned shopping

centre targeted to upper-income shoppers. Typically outdoors with a “Main Street” ambience,

tenants that sell nonessential items, higher building and landscaping costs than those of other retail

developments, and parking in front of the stores. Outlet centre is a type of community centre that

brings together retail establishments for manufacturers and retailers of consumer goods. These

centres increase drawing power by providing deep discounts on brand-name products.

7) Airport Retailing/Airport Mall: One important high-pedestrian area that has become popular

with national retail chains is airports. After all, what better way to spend waiting time than to have

a Starbucks coffee or stop into Victoria’s Secret? Sales per square foot at airport malls are often

three to four times as high as at regular mall stores. However, rents are at least 20 per cent higher

than at malls. Also, costs can be higher – hours are longer, and since the location is often

inconvenient for workers, the businesses have to pay higher wages. The best airport locations tend

to be ones where there are many layovers (Pittsburgh) and international flights (Miami). The best-

selling products are those that make good gifts, necessities, and easy-to-pack items.

8) Store within a Store: Another non-traditional location for retailers is within other, larger stores.

Retailers, particularly department stores, have traditionally leased space to other retailers such as

sellers of fine

jewellery or furs. Grocery stores have been experimenting with the store-within-a-store concept for

years with service providers like banks, film processors, and video outlets. Wal-Mart had been

putting McDonald’s and independently owned coffee shops in some of its new stores. Radio Shack

has put stores inside Blockbuster Video stores.