1

Retail Management
ASHISH J SANYAL
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Lecture one

India Facts and Figures.

Story of Retail India/World.
Indian Perspective.
Changing Retail Perspective.
Key Sectors in Indian Retail.
Road Blocks.
Retail Centers in India.
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INDIA FACTS AND FIGURES.
(1)

Population 1.25 billion. Rural 72%. Urban 28%.

States 29.
Union Territories 7.
Districts 642.
Villages 650 000.
Cities 380.
Towns - 5100.
Megalopolis 6.
Mobiles 1.0 billion 70 in active use.
Smartphones 200 million.
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FACTSCONT

TV penetration Urban 80%. Rural 40%

Radio - 100%.
Electrification 96%?
Airports 125 International 18.
Railways 7112 Stations. 115000 km of Railway lines.
Ports 12 Major. 7500 km coastline.
Highways Express Ways National Highways State Highways
District Roads.
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Story of retailcITY

French word Retaillier which means Break Bulk.

Sells goods I Small quantities.
Retail is the largest private industry in the world USD 10 trillion.
Wal Mart the largest Corporation in the World.
Large Retailers Wal Mart Carrefour Royal Ahold Home Depot Kroger Metro Target - Tesco Safeway Ito
Yokado Walgreens Printemps.
Tata Birla Reliance Goenka Raheja Byani.
Modern Retail in Developed counteies in 75/100 years old.
India Shoppers Stop opened in 1988. Cinema Hall.
Cross Roads Tardeo - First Mall in 1999. Piramals. Now getting out of retail.
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Indian perspective.

Second Largest after Agriculture.

Employs 8% of Total Workforce.
Highly Fragmented 15 million retail outlets.
95% are smaller than 500 sq ft.
Total Retain Business is estimated to be USD 250 billion.
5% is Modern Retail but growing. Estimated to be 15% by 2025.
USA 80% - 40% China Thailand 20%
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Changing Retail landscape.

Proximity to Customer Post 1991 Liberlisation has seen a slow but

dramatic shift.
Rise of Consumerism.
Double Income Families. Also now DINKS!!
Improving Infrastructure Roads and Logistic Parks.
Technology In 1995/6 Basic mobile phone was 50k and a single call
was Rs 15!!
Internet A game changer.
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Key sectors in Indian retail

Groceries.
Restaurants and Fast Food.
Apparel
Footwear.
Books Music Stationary.
Furnishing Hard & Soft.
Beauty and Wellness.
Jewellery.
Eye wear and Watches.
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Road blocks to retail development.

Retail not recognised as an Industry A State Subject.

High cost of real estate.
Infrastructure.
Multiple and Complex Taxation.
Shortage of Trained Manpower.
Lack of clarity on Foreign Direct Investment for 26 years!! (Political Hot
Potatoe)
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Retail centres in india.

Delhi (NCR) Mumbai - Bangalore. (75% Lifestyle Retail)

Hydrabad Calcutta Pune - Ahmedabad.
Chandigarh Goa - Chennai - Bhopal Lucknow Guwahati Patna .
Growing Business from Tier 2/3/4 cities.
E retail has changed the face of retail in the last 3 years.
100 Smart cities will bring more rapid growth Digital India.
Penetration/speed/connectivity requires improvement.
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Retail Formats

Footpath to Luxury retail shops in Malls and 5 Star Hotels.

STORE BASED RETAILING Convenience Supermarkets Hypermarkets Speciality
Departmental Stores Factory Outlets Pop Ups.
Forms of Ownership Independent Chain Franchise Co Operatives.
NON STORE RETAIL Direct Marketing Mail Order Telemarketing Automated
Vending.
Cash and Carry Metro.
Franchising Quick Roll Out - Product Trade Name Business.
Mainly International Brands but in the last 5 years Indian Brands also entering the
market and doing very well .
Coffee Caf Day Combination of Franchise and company owned,
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Retail strategy (2)

Art of the General STRATEGOS.

War is now in the market place.
Dramatic changes taking place in retail almost on a daily basis.
Retailers need to be ahead of the curve to survive.
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DESIRED OUTCOME

Mission Statement.
Analyse Situation.
Identify Options.
Set Objectives.
Obtain and Allocate Resources.
Develop Implementation Plan.
Monitor Progress and Control.
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Mission Statement.

Products and services to be offered.

Customers to be Served.
Geographic area to operate in.

Value system of the Organisation.

Culture.
Ethos.
Tata and Reliance.
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Analyse Situation.

Looking inward Are we ready?

SWOT.
BCG Matrix.
PEST .

Entry Barrier Suppliers Customers Substitute products

Competition.
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IDENTIFYING OPTIONS

Market Penetration - Car Companies opening more dealerships.

Market Development. IKEA.
Retail Format Development. Carrefour 3 retail formats.
Diversification - ITC.

Case Study of B&Q India Entry Strategy.

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Set objectives.

Sales Volumes Beverage Companies.

Market Share - Luxury Car companies.
Retail Expansion Program Bata MEP.
Profitability Targets - Unilever.
Liquidity Targets.
Return on Investment Targets.
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Obtain and allocate resources.

Where is the money coming from?

Debt/Borrowing.
Equity/Own Funds.
Companies normally allocate certain resources for a fixed period of time to see if
the venture is profitable over a certain period of time. This depends on the financial
strength of the company. They set mile stones to monitor the progress closely.
Taking a Hard Decision never Easy!!
Walmart failed in Germany they exited in 5 years.
Future Group sold their Furnishing business.
Piramals exited from Retail.
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IMPLEMENTATION PLAN

The Right People sitting in the Right Bus in the Right Seat!!
Measurable - MIS System giving the right financial picture.
Accessible Is there a logistical network in place.
Viable Is the market ready.
Stable - The socio/economic/political situation stable. Kashmir?

Positioning - Marketing Mix Pricing Locations - Format

Advertising/Promotion
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Monitor Progress & CONTROL.

Not just Financials.

Positioning Marks & Spencers
Merchandise As per positioning. Best Guess.
Price Points Are they in line with market profile and positioning.
(Luxury Cars)
People/Policy Is the organisation a Happy Place to Work?
Is the Leadership Effective - Companies often change the CEO!!
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METHODS OF ENTERING NEW
MARKETS.

Export. Raymonds in Dubai.

Franchising/Licensing. McDonalds 2 partners in India
Acquisitions and Mergers - COKE buying Parle Beverages.
Joint Ventures. Zara and Tata.
Organic Growth. 100% FDI not allowed in Multi Brand Retail as yet.
(Single Brand is allowed in India IKEA)
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RETAIL BRANDING.

People buy into the image of the brand this brand is an refelection of
me.
Quality.
Service.
Communication.
Consistency.
Value for Money NOT CHEAP.
First choice in the mind of the customer.
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Why People buy (3)

Basic Need.
Convenience.
Replacement.
Scarcity.
Aspirational.
Emotional Vacum.
Lower Prices.
Great Value.
Name Recognition.
Fad or Innovation.
Compulsary Purchase.
Ego Stroking.
Niche Identity.
Peer Pressure.
Boy Scout Effect.
Reciprocity.
Addiction.
Fear.
Indulgence.
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Understand the customer.

Who is the customer.

Target Segment.
Demographics.
Their needs individual and family.
Buying Behaviour.
Where does she buy from.
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Factors influencing decision.

Socio Cultural Background.

Family income.
Travel Time and Distance.
Locational Convenience.
Range of Merchandise.
Value for Money/Price.
Trusted Brand.
Discount Seeker.
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Search for information.

NEED ROCOGNITION.
Family and Friends.
Internet.
Media and Print - Radio TV.
Point of Purchase.
Visit - Store / e-store.
Evaluation of Options.
Buy or Click out
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Building STORE LOYALTY.

90% of all purchase decisions are based of personal experience at the

store.
Merchandise.
Staff Service.
Store Ambience.
Pre disposition to a particular Brand.
Brand Name for New Products.
But how do you explain IMPULSE SHOPPING in a Shop you have never
visited before?!?
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How the Indian customer has
changed in the last 20 years.

Media Explosion.
Increase in Disposable Income The Great Indian Middle Class.
Increased earning of Young People.
Rising Aspirations of Tier 1/2/3/4 and Rural India.
Increased number of Working Ladies.
We are spending less on Food 54% in 2002 to 44% in 2012.
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Research for setting up retail a
store

Market research by a professional company.

Experienced eye just can feel the latent need.
Sees similarities with what he saw China and India.
Information about a market is available.
Examples of Bata BMW - B&Q Carrefour.
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INSIGHT.
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LOCATION Location Location
(4)

Brick & Mortar Retail.

Positioning.
Image.
Merchandising Mix.
Perfect location is not always available or too Expensive.
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Types of Location

Isolated Free Standing.

Busy High St.
Market Place.
Business District.
Shopping Center
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How to Choose a Retail Location.

Positioning - Merchandise - Cost Affordability Availability.

Location Potential.
Identify the locations Good Better Best.
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Determine the Market Potential.

Demographic Features of the Population.

Characteristics of Households in the area.
Competition.
Compatibility/Adjacency. Especially in a Mall.
Law and Regulations. (No kitchen near a Petrol Pump or Bar near a
residential/educational area Information from Local Municipality)
Trade Area Analysis Primary Secondary Tertiary.
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Before the final decision!!

Traffic Pedestrian Vehicular . Different for Big Bazar/Jimmy Choo.

Accessibility of the Market Public transport.
Types/Numbers of other similar stores in the Mall.
Advantage/disadvantage.
Amenities Available - Toilets Hygiene Parking Handicap Friendly.
Traffic Flow One Way New Flyover Coming Soon Security
Concerns.
Buy or Lease - Consultant a Lawyer.
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MERCHANDISING management
(5)

The HEART Retailing Process of Planning and Buying.

Six Rights - Goods Quantity Quality - Place Time Price.
Co- ordination with ALL other departments of the Organisation. (HR
Operations Finance Logistics MIS)
Analysis Planning Acquisition Handling - Control
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Evaluation of Merchandising.

Retail no longer a Mom N Pop Type operation Single Unit.

Grown to be Multi Location National/International.
Very Large operations 500 sq ft to 500 000 sq ft and Larger.
In Large Retail Companies Most CEOs - Background Merchandising.
Companys success is determined by the Merchandise and its
profitable Sale.
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Functions of Merchandise Manager.

Shoppers Stop has 250 people in the Dept Designers to Quality Controllers.
Several Depts Accessories House Furnishing Private labels External
Brands
Putting together a collection Benneton Example A Profit Center.
Assortment Planning Size Color Styles.
Fixing the Prices for each item in the collection.
Developing the vendor Base. (Marks & Spencer Example)
Inventory Management.
Work within the constrains of Space Money and Profitability Targets
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Developing a Sales FORECAST.

How much of each product will need to be purchases for each season.
1) Review Past Sales.
2) Analysing the changes in Economic conditions. (Demont!!)
3) Analysing Changes in Sales Potential especially Fashion.
4) Monitoring Competition Activity.
5) Creating a Sales forecast along with Operations.
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Merchandise Control
OTB.

OTB Open to Buy. (Standard Stock 100. Sold 75 . Present Stock 25.
therefore OTB - 75.)
Limits overbuying/underbuying.
Prevents loss of Sales.
Maintains Purchases within Budgeted Limits.
Reduces Markdowns due to excess buying.
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Assortment planning.

Example Mens Department Shirts.

Type of Shirt: Party Casual Formal Sports.
Size: Small Medium Large Extra Large XXL XXXL.
Sleeve Length: Full 3Quarter Half Sleeve.
Collar Type: Regular Cut Away Round. Chinese.
Fabric: Cotton Linen Silk - Blend.
Price Points Rs 750 Rs 2500 Rs 5000.
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Merchandising Buying.

A Retail Company makes or Loses money IF it Purchases Smartly.

What to Buy.
When to Buy (Wool for sweaters)
How much to buy.
Where and from Whom to Buy.
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Vendor Management.

Evaluation:
Reputation especially for Quality and timely supply.
Track Record - Cross Check with others.
Prices - Must be within the Price Band. ,
Payment Terms 30 90 Days Longer the better.
Sampling Especially if New.
Sign an Agreement with penalty clause.
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Analysing Vendor performance.

Done every season/year.

Total Orders placed in the season/year.
Customer Returns Quality.
Adherence to Timely Delivery .
Participation in variousl schemes and promotions.
Mark Downs Shared Jointly.
Sales Performance 0n Merchandise.
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Private Labels.

Most departmental Sores have developed Private Labels Food items to Furniture.
1) Provides retailer with more margins generally also priced lower.
2) Must be done in a phased and well thought strategy Consistency of Quality
3) Keep it simple Start with basic items and then move up the value chain.
4) Tesco Cola outsells Coke 3:1 Also priced lower 90 cents. Coke 1.25.
5) Customers are willing to try but wary but if satisfied support actively.
6) Promote with the store prominent lacations.
7) Maintain balance with established Brands Dont Annoy them. Big Bazaar and
Cadbury Shoppers Stop with Madura Garments. Customer push back.
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Category Management.

ECR Efficient Consumer Response for better Customer Service.

Strategic Business Units with the Store.
The store is divided into SBUs as per their categories Biscuits Wine.
Category Teams are made responsible for their SBUs.
They decide on special promotions to increase sales and customer
contact.
Proctor and Gample have a Vice President sitting in the Wal Mart HQ.
Ensures better service levels between the Principal and Retailer.
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Pricing Strategy in
RETAIL.

Market Skimming.
Market Penetration
Leader Pricing.
Price Bundling.
Multi Unit Pricing.
Discount.
Everyday LOW Pricing/
Odd Pricing.
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Analysing Merdise Performance.

ABC Analysis. 80:20 rule. Ensure that the fast sellers are always in
Stock. Get rid od the C!!
Sell Through Analysis - Items which sold without any discount. Max
Return.
Multiple Attribute Method Brand Score Card. How they have
performed on the criteria's of Brand Reputation* Service Quality
Loyalty - Sales.
*Some Reupdated Brands may not sell well but they add to the Image
of the Store so they remain in the Shop Floor.
GROSS MARGIN RETURN ON INVESTMENT (GMROI)
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Hr & OPPS in retail management (6)

Inside a Large Retail Organisation.

Top Management.
Buying and Merchandising.
Store Operations.
Administration and Human Resouces.
Logistics and Suppy Chain.
Marketing Finance Visual Merchandising .
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Human resources.

Front Line employees often their First Jobs.

1) Identify various roles in the organisation.
2) Recruiting the person with the right attitude.
3) Training and Re Training 2/3 times in a Year.
4) Motivation Long Hours Physically challenging Rude Customers.
5) Evaluation and Performance Reeview.
International retailers make all their Employees start at the Shop Level and
then move them to other departments. Several have CEOs started at the shop.
By the time they are 40 they reach Director level at 45 ready to be the CEO!!
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Identifying Various Org Roles.

Merchandising Operations Logistics Finance MIS/IT - Marketing .

Education Company sponsored MBA/B Tech.
Skill Sets Can be Trained.
Attitude not everyone is suited for a job in retail.
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HR Role Cont.

Recruitment Requirement from Operations X Number od Shops in 2017.

Process starts 6/9 months before the Opening. (1000 - 500 300 - 200 100 -
50)
Induction.
Communication Skills.
Product Knowledge.
Company Policies on Retrurn.
Knowledge of the Workplace.
Market Awareness.
Personal Grooming.
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Careers not a job.

Career not a job if you stay the course. Looking ahead 20 years is a
long time but looking back it is a blink of an eye !!
Organisation Culture -Transparency and Caring.
Rewards and Recognition.
Monetary Benefits Dubai. (8k 20k)
Manpower at the Entry Level is a HUGE ISSUE.
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Retail Operations.

Store Administration.
Managing Inventory and Display.
Managing Receipts.
Customer Service.
Managing Promotions Events - Partnerships.
Management of Premises Statutory Requirements.
Security staff and Customers.
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Store ADMINISTRATION.

MANAGER IS THE CAPTAIN OF THE SHIP.

Opens on time.
Neat and tidy to receive customers.
Assigning duties.
Granting Leave.
Motivation.
Descpline.
Security of Staff and Customers.
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Inventory and Display

Merchandise should be put on display asap.

VM should be as per seasonal requirement.
All inward goods should be recipted and filed shortages reported.
Goods Return paced and sent back to the sender.
Price tags proper Match with the price on the system.
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Managing receipts.

Follow company norms of payment. Cash and Credit Card.

If receipts dont tally cashier to pay the deficit.
Deposit in the Bank every evening or first thing in the morning.
Experienced person should be the Cashier.
Point of fraud and theft is high.
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Customer Service.

A company Culture Each person responsible Chairman to Doorman to Sweeper.

Aim is to provide the customer with an EXPERIENCE.
Going the Extra Mile.
Check out time point of irritation faster check out Self Billing.
Parking Availability of Shopping Carts Security at the Car Park.
Senior Citizen Friendly. Consideration to Ladies.
Clean toilets.
Simple reward systems.
Getting too system Driven Human Touch.
Empower the shop level employees.
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Retail Information systems (7)

Retail An early adopter of Technology. Necessary to remain

competitive.
Large retailers have 100 000 SKU.
Inventory management is the Differentiator. (Color Size style)
Uniform Product Code is now a norm.
County Code Company Code Product Code.
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Benefits of IT in retail

Data is Information more recent the better to aid decision making.

Scanners machines at the point of sales. Captures product data.
Payment by credit card captures Customer Data.
Loyalty Card captures your purchases at the particular Shop nationwaide.
A lot of data/information is being collected on every purchase.

HOW DOES THIS DATA/INFORMATION HELP THE RETAILER AND CUSTOMER?

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How does it help the retailer

Efficient Stock of Merchandise.

Collection of Data - Helps to see customer buying patterns.
Plan for the Future.
Efficiency in Operations Faster Check Out.
Helps in Communication. EDI (Electronic Data Exchange)
Also connected to the back end to the Vendors.
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Factors affecting the use of
technology.

Makes sense for large retailers in multi locations.

Nature of Business Fast moving Products Information if tracked can
help production planning.
Human Resources Available - Well trained professionals IT is becoming
the backbone of a large retail organisation. Becoming Power Centers!!
Small and Medium retailers are also adopting IT especially in the
inventory and billing management.
EXPENSIVE but Prices are coming down on a daily basis.
Rs 15k for Basic soft ware to several crores for more sophisticated
Software SAP, JD EDWARDS TCS - WIPRO
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Applications of technology.

NEW BUSS WORDS.

Data Management.
Data Warehousing.
Data Mining.
CRM.
Analytics.
E retailing.
Virtual Store.
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MARKETING n COMMUNICATION.
(6)

MARKETING MIX.
Product -
Price -
Place
Promotion
Presentation
Customer Service -
People
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STP APPROACH

Segmentation.
Target Market.
Positioning.
Retail Positioning Map Prices H/L Image H/L.
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Retail communication mix.

Advertising. Print/Electronic.
Sales Promotion.
Public Relations.
Personal Selling.
Direct Marketing.
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PUBLIC RELATIONS AND PUBLICITY.

Store Opening.
Store Renovation.
Celebrity Visits.
New Product Launch.
Fashion Shows and Events.
Innovative Ideas Monsoons allow senior citizens to walk inside the lobby area.

In the last few years Retailers are spending more money to generate
excitement in and around the shop itself to generate more footfalls and
build goodwill.
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Determine Budgets.

Percentage of Sale 5% to 10%.

Competitive Parity Method.
Research Approach What works Best for US.
Festive Season 50% Allocation of the Budget.
Incremental 10% more than last year.
What can we afford!!

Malls are pulling in their Brands and Vendors to cost share in all
promotional activity. WIN WIN Situation for ALL.
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Sales Promotion Activity

At Point of Sales.
Brand Promotion.
Free Sampling.
Frequent Shoppers Programmes.
Demonstrations.
Prizes and Gifts.
Coupons.
Contests.
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Supply Chain Management (8)

Emerging Pillar of Retail.

Last 20 years from Go-downs to Warehouses to Logistics Parks.
3ard Party Logistics. (3PL)
More expensive but more efficient.
Retailers can focus on their core business of Retailing of the Retail Mix.
People Product Price Location Promotion Presentation
Customer Service Profitability. (important)
AIM Faster delivery to the end user.
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Concept of Supply Chain Mgt.

Lessons from the World Wars. Troops Equipment Food had to reach
the right place at the Right Time.
Retail World Supplier Manufacturer - Warehouse - Store
Consumer.
Business to Business Model Car Tyres Mfg to Car Mfg. (OEM)
Technology Playing an increasingly more important role.
Benetton Robots. (500.000 sqft Logistic Centre ONE PERSON).
Real Time Shops linked to Warehouse (Madura Garments)
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Need for Supply Chain Mgt.

NOT JUST MERCHANDISE.

Physical Flow for Merchandise. (DC to Store.)
Information Flow. HQ Store HQ)
Financial Flow. HQ Store HQ)
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Evolution of Supply Chain.

In the 70s USA was losing out to Japan and Asia.

JIT Japanese introduction in Manufacture.
TQM Total Quality Management.
QR Quick Response. Finished Goods 60% of the time in Non Selling Area.
In Transit or in Warehouse.
POS Point of Sale Scanning Systems.
EDI Electronic Data Interchange.
UPC Univeral Product Code.(Bar Code)
ECR Efficient Consumer Response.
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Develop a Supply Chain Framework

Requires TOP MANAGEMENT BUY IN.

Strategic: Channel Design Network Strategy.
Structural: Warehouse Design Transport management - Material Mgt.
Functional: Information Systems Policies & Procedures facilities and
Equipment Organisation & Change Management.
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Supply Chain Integration in Retail.

Co Ordinated effort of ALL Departments. Especially Merchandising and

Supply Chain Sharing of Information.
Short Life Cycle Perishable products.
High Volatility High Fashion items.
High Impulse Purchase Happens at the Point of Sale.

Time to Market Time to Serve Time to React Lead Time Gap.

Zara is often referred to as a Logistic Company and not a fast fashion
Company. 2000 stores just in Spain new Collection every month.
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Innovation in Supply Chain Mgt.

Cross Docking.
CPFR: Collaborative Forecasting and Replenishment.
Pull Logistics. Demand from Store.
Push Logistics: From HQ as per order from the shops before the start of
the season.
Reverse Logistics Goods being sent back from the shops or the
customers. Point of irritation for the customer.