Name: Mancy Khadka (BBA V)

Explain, based on extensive research, how the current COVID pandemic would transform
the landscape of retail industry. Using relevant research data, facts and statements, discuss
the matter with reference to global and Nepali context.

Answer.

The storm spread by COVID pandemic has been responsible for hundreds and thousands of
deaths worldwide. The virus has aggressively affected the lives of humans, besides that,
countless number of industries have been in a great loss a well. People have now started
accessing majority of necessities through online services and product purchase, which has raised
the utilization of e-commerce businesses. Reports claim that some of the retail industries such as
automobile sector, tourism, aviation, hotel industries, textile and fashion industries, real estate
sector and sports and entertainment have encountered the negative effects from the pandemic. On
the other hand, the biggest rise has been seen on the medicine sector, chemical industries and e-
commerce market place.

Apart from that, an article determined that as the pandemic has worsened, most of the retail
tenants and their landlords are in an argument, since the retailers pledged to not pay the rent.
Some of these retailers were forced to shut down and due to lack of revenue generation for the
party, they have been unable to pay their lease on time.

As per the behavioral shifts, the following two categories have had a lot of experience.

1. Essential goods
2. Non-essential goods
Globally, the pandemic has transformed the landscape of this particular industry from various
aspects. Apart from Nepal I will be focusing on countries such as United States, UK, India and
China as we are highly influenced by these countries. They are described as follows:

 As we are highly influenced by our neighboring country India in this industry, it is seen that
30 percent of the retail stores are in complete shutdown that has resulted in about 18 lakh
jobs, stated by the CEO of Retail Association of India. [ CITATION Ret \l 1033 ]
 A recent study done by Alvarez and Marsal suggested that half of the retailers could be
totally wiped out if the virus continues to spread in this pace. It comes from a research of 34
non-food retailers in the UK, it has been discovered that five out of the 34 that were analyzed
are already facing negative cash flows because of the outbreak. [ CITATION Eco \l 1033 ]
 One example of how the pandemic has worsened the scenario of retail business is the True
Religion denim retailer in the United States. It recently filed for its bankruptcy, this is
because it highly relied on the departmental stores (such as Macy’s) for its sales. It shows
that even though the departmental and grocery stores are in operation worldwide, the retailers
are facing loss as they are not being able to sell their general merchandise, which are
responsible for bringing higher margins.
 In Nepal, the most exciting Visit Nepal 2020 was called off, which could have brought so
many opportunities for the retailers in our country. The overall shift in travelling of people
has broken the travel searches and merchandise purchase as well.
 After the cases were settled in China, its medicine business reached heights as it supplied the
health equipment in almost every country in this world.
 It can be said that there has been a drastic impact on the sector of jewelry, apparels,
consumer electronics and durables. As a whole, these sectors of the industry has caused
billions of dollars of losses already.

What we can take away from the research on the impact of the pandemic of the retail industries
landscape is that:

1. Essential and non-essential retailers are in parallels and going through opposite
performance.
2. This is most likely due to the behavior that shows concerns of the people.
3. The e-commerce retail market has took off completely due to the pandemic and it would
be beneficial if most of these retail sectors started dealing online.
Describe how retailers are operating their stores in current COVID pandemic scenario,
and devise a strategy to operate during such crisis. Use specific brand/store related
examples. Using relevant research data, facts and statements, discuss the matter with
reference to global and Nepali context.

The COVID brought a complete disruption in the retail Industry. From bulk buying to shopping
in online platforms, the purchasing behavior has changed overnight. We see that this industry has
tried their best to prevent the virus from spreading by offering delivery services, shutting down
their stores, wearing proper sanitary equipment when going places, reducing the opening hours
of the stores and still managing to communicate with the employees as well as the consumers.
From a research, it is seen that a retailer should always define a competitive advantage. For
example, e-commerce retailers such as Amazon and Walmart value retailers with superior
experience. In the context of today, the retailers who delayed their investment in inventory are
lacking behind others. Such stores are uncontrollably trying on to delivery their products and
services. Furthermore, the sector facing the boom right now such as mom and pops stores,
grocers, pharmacies, etc. which weren’t necessarily put to shut down. These stores are all nearby
to us. People haven’t walked far away from their home for a while now and it is questionable if
they will in the future after the pandemic is left behind. This has resulted in the change in the
behavior of the consumer completely.
The strategies I would like to suggest to the retail industry are as follows:-

1. Collect information and stay informed:- The retailers should study the current landscape in
order to operate their business. They should study the trends through Google Trend and
Alerts to stay up-to-date on the conditions of their consumer and get to know the frame of
mind of the consumer. For example, many restaurants in Nepal such as Trisara have
understood how much their consumers are missing these exotic cuisines during this time.
Such restaurants are operating online, taking orders and fulfilling their consumer’s craving
by delivering to them.

2. Being transparent:- The consumers who are interested in your business always want to keep
a track on that. These people should be proactively engaged through communication. Apart
from that, the employees who work in there should be protected and well communicated as
well. A well designed structure should be built which would allow them to run the business
or store from the comfort of their own house, decisions should also be taken with the consent
of everyone through Zoom meetings, so that they would feel engaged. Creative ads should be
used as well to share necessary information about the precautions, provision of the services,
delivery timelines and so on.

3. Real-time adjustment: The consumer behavior has shifted significantly, the retail businesses
should make sure that their product information is updated through all the channels. Through
social Medias, the retailers who are offering online should showcase their changes in delivery
or online practices.
The following is the grocery and other ecommerce graphs:
Furthermore, few examples from Nepal can be highlighted i.e. the most popular Daraz online
platform which is responsible for delivering clothing, home appliances, mobile phones, etc. have
now started to deliver essential items such as grocery through the help of partnership with Big
Mart. It wouldn’t have been possible if these two didn’t co-operate and both the fields were
likely to be in a greater loss. Daraz being everyone’s favorite online platform, it is seen to be
inclined in the future. However, the Digital Streaming services such as Netflix, Hulu, Amazon
prime, etc. should have been promoted aggressively in Nepal through online payment app such
as Esewa and Khalti. These are the services that has gained a lot of subscribers worldwide and if
they were conveniently available in our country, it would have been beneficial for these IT
sectors as well.

3. Explain the followings.

a. Finance issues and ratios in retail business. b. Operational issues and ratios in retail
business. c. HR issues in Nepalese retail industry (like hospitality, restaurant and other
organized retail businesses)

a. Finance issues and ratio in retail business:-

The key financial issues in Retailing are related to profit planning, budgetary planning as well as
financial measures of retail performance. The profit planning includes setting objectives in order
to gain profit in a particular period of time, it is determined through co-ordination with sales
target. It also involves reducing the cost or expenses by carefully monitoring the operation. Apart
from that budgetary control is another technique with the help of which a company’s cash flow
terms are measured. It helps to ensure the use of a firm’s valuable resources as well as downsizes
the risk and motivates to generate profit. These issues can be tabulated and measured through
various financial accounting and ratios. They are, Return on Capital Employed, Liquidity ratios,
cost percentage, etc.

Operating profit
 ROCE= x 100
Capital Employed
Current Asset
 Current Ratio=
Current Liabilities
Current Asset−Stock
 Quick Ratio=
Current Liabilities
Cost
 Cost percentage= x 100
Sales

b. Operational Issues and ratios in retail business:-

The major areas of retail operations are customer service and Accommodation, Retail selling
Process, Store Staffing & Scheduling, Retail Floor & Shelf Management, Stores Administration
& Facilities Management, Warehousing & Supply Chain Management, Loss (Shrinkage)
Prevention, POS/ Cashiering Process, Visual Merchandising and Displays. To evaluate these, a
routine parameters should be used to measure the operation of retail stores. These parameters are
customer transactions, stocks, space and employees.

Number of transaction
• Customer Conversion Ratio= x 100
Customer traffic

Total Return∧Allowances
• Return to Net Sales= x 100
Net sales

Net Sales
• Sales Per Transaction=
No of Transactions

¿
• Hourly Customer Traffic = Customer traffic∈ Number of hours ¿

Total value of goods sold

• Average selling price =
Total Qty . Sold
 Total value of goods∈stock
• Avg. Stock Price =
Total Qty . stock

Net Sales
• Sales per Sq. Ft. =
Sq . ft . of Selling Space

c. HR issues in Nepalese retail industry (like hospitality, restaurant and other organized retail
businesses)

There are numerous Human Resource issues faced by a business such as, employee tracking,
man power planning as per the infrastructures and budget, lack of theoretical education, seasonal
demands every year, benefits to women in retailing and so on. As there are vast number of
employees working, the management should gracefully know to handle them. The HR issues in
Nepalese industry are mainly associated with expense control, part-time employees, and diverse
group of employees.

Expense
control

HR
Part-time
Diversity
employees
The Human Resource is liable to the profitability of the business. In Nepal the experience of
staffs in most of the retail industry is little to nothing theoretically, this effects the businesses
significantly. Additionally, in order to minimize the cost in hospitality and restaurants, Nepalese
retailers should start complementing full time workers along with part-timers since they are less
expensive and lastly, it is difficult to handle a whole diversity of people in such industry. Since
people have different backgrounds, their mannerisms are different as well. In the case of
hospitality and restaurant sectors, they should increase their effort to recruit and train each and
every staffs and retain mature, minorities also. They should use different approaches to manage
the HR of their business.
4. What are the techniques you would use to place merchandise in your store? Explain
with regards to various zones inside a retail store.

Merchandising refers to a way of displaying the related merchandises in the same place, in a
clean and well stocked shelves along with including promotional items. This process usually
cover the overall selection, purchase and stock-management of the business. Following are the
types of merchandising:-

 Decompression zone:- This is the space that is mostly located right inside the front door.

 High
Traffic
Areas
&
Impulse

merchandise:- This is generally placed at high traffic areas i.e. Point of Sales or cash
wraps.
 Highly Visible Areas:- These are generally at the end of aisle, which can be seen from the
very first entrance of the door as well as from anywhere inside. This is used for impulse
merchandise.
 Strike Zone:- This is a space where the promotional merchandises are displayed.
 Planograms:- A planogram is used to balance the art and science of the products.
 The image is a planogram where detergents are properly arranged based on their type,
color mechanism and the criteria they fulfill.

Thus, through help of a good placement of merchandising, sales of the products can be
boosted easily inside the store.
5. Explain how retailers could use various moment marketing techniques. Explain
providing a few brand related examples.

Moment marketing can be defined as the creation of relevant impulses online and offline in real
time. It means getting the right message across the consumers mind in that exact moment. It is
one of the best way to reach larger number of consumers. Retailers could use it by highlighting
the current event that’s happening globally.

It can be done through digital platforms like social media by featuring snippets. It attracts 8.6%
of all the clicks and are worth your time. Another perfect example is the Moment Marketing
done by the popular networking company Airtel. It was a response to the announcement of Jio

company.

This was a smart marketing practiced by Airtel to build their brand.

Apart from that, Zomato and Swiggy also utilized Moment Marketing. Zomato tweeted
addressing the dark mode on Instagram when it newly arrived.

6. What are the indicators that reflect the success of retail stores based on space
maximization? Explain with necessary formulae and numerical calculation along with
inference of calculation.

There are various metrics used to expand the retail stores, be it a small one or big. If one wants to
increase retail sales performance, the first and foremost step must be to properly track the metrics
and measure them with the help of different indicators. These indicators affects the success of a
retail store they are explained as follows:-
  Sales per square foot:- It is one of the most important indicator in terms of retail stores. It
is commonly used for the inventory management of the various retail outlets. It helps to
measure the sales per square foot along with the efficiency of a store’s management in
creating revenues given the amount of sales space.
Net Sales
Formula: Sales per Sq. Ft. =
Sq . ft . of Selling Space

Store A Store B Store C Store D

Sales (lakh) 10 20 35 45
Retail Space 3000 2000 5000 10,000
(sq ft)

Now,

Sales per square foot : Store A = 333.33 per square foot.

Store B = 1,000 per square foot.

Store C = 700 per square foot.

Store D = 450 per square foot.

Thus, since the sales per square foot of Store B is highest, it is performing very well.

 Space Productivity Index: This indicator is used by almost all the retailers around the
globe in order to compare the percentage of the store’s total gross margin that a particular
merchandise category generates in relation to its percentage of total store selling space
used. Its maximization helps to improve the space capacity of a store.
It can be calculated as follows:-

Category Sales(lakh) Gross Margin Total Square foot

Girls 4 1 1000
Boys 6 3 5000
Seniors 8 4 6000
Total 8 lakh 12000 sq. ft.

Gross Margin∈ Rs . % of total

Formula: SPI =
Sq . ft .% of total
Again,

GM % Total sq. foot %

(100,000/800,000) * 100 = 12.5% (1000/12000) * 100 = 8.33 %
Similarly, 37.5% 41.67 %
Similarly, 50% 50%

Therefore,

12.5
SPI of Girls = =1.5 %
8.33

37.5
SPI of Boys = =0.90 %
41.67

50
SPI of Seniors = =1 %
50

In this case, the space productivity index of girls, boys and seniors are 1.5, 0.90 and 1 percent
respectively.
7. Define the concept of Merchandise management and explain various components/areas
associated with it. Make necessary diagram.

Merchandise management is a concept of evaluating human behavior and buying habits in order
to determine the ways to arrange the stock, displays and sell goods at retail stores. It is a process
where a group of products are arranged in order to highlight them to sell faster. Overall, the
visibility and its appeal leads to boosting its sales. Its diagram looks as follows:-

Internal Efficiency
in handling
product
categories
Transportation

Product purchase
 Big Mart

These product categories can be explained as follows:-

 Software in merchandise management:- It is basically a software that helps business

owners drive more sales with applications that include point of sale features, inventory
management, retail customer relationship management and more.
 Planogram:- It is a model that indicates the placement of retail product on shelves in
order to maximize the sales. It usually communicates how to set the merchandise, ensure
sufficient inventory levels on the shelves, doing color match, so on.
 Category management:- It is an assortment of items which the consumer may perceive as
substitute for each other. It helps to maximize sales and profiting of categories.
 Financial Analysis:- There are various processes of doing financial analysis for
merchandising. They are expressed as gross profit, revenues, calculating net profit and so
on.
Thus, these are the few points associated with merchandise management.

8. Explain the concept of Category Management in depth. How various financial ratios
are used to evaluate performance of specific categories? Explain with numerical and
calculations.

Category management can be defined as the concept where the discrete groups of products that
are divided based on their nature. It helps to signify the sales and good will of various products
and provide the customers their needs according to what, where and when the demand arises.
This is calculated with the help of Space Productivity Index. This indicator is used by almost all
the retailers around the globe in order to compare the percentage of the store’s total gross margin
that a particular merchandise category generates in relation to its percentage of total store selling
space used. Its maximization helps to improve the space capacity of a store.

It can be calculated as follows:-

Category Sales(lakh) Gross Margin Total Square foot

Girls 4 1 1000
 Boys 6 3 5000
Seniors 8 4 6000
Total 8 lakh 12000 sq. ft.

Gross Margin∈ Rs . % of total

Formula: SPI =
Sq . ft .% of total

Again,

GM % Total sq. foot %

(100,000/800,000) * 100 = 12.5% (1000/12000) * 100 = 8.33 %
Similarly, 37.5% 41.67 %
Similarly, 50% 50%

Therefore,

12.5
SPI of Girls = =1.5 %
8.33

37.5
SPI of Boys = =0.90 %
41.67

50
SPI of Seniors = =1 %
50

In this case, the space productivity index of girls, boys and seniors are 1.5, 0.90 and 1 percent
respectively.
 Case study 1:
a. How would PhonePe revolutionize the retail ecosystem? Justify your arguments.
Ans: This digital wallet system seems to look like the most convenient way of performing
transaction. A research shows that the customers seek convenience everywhere. As
mentioned in the case, this also comes with disadvantages of theft and robberies in retail
stores. However, PhonePe would attract a lot of customers if they were made available in
all the retail stores. People would visit any stores like they’re walking inside an ATM
booth and exchange the transaction. This will lead them to take a view in the store as well
which might result in boost of sales in the exact timing.
b. What are the benefits of digitized payment system for overall customers and public?
Ans: The benefits of a digitized payment system for overall customers and public are as
follow:-
 It helps to save cost through increased convenience and efficiency.
 It helps to increase the transparency as well as security through accountability.
 It has become an important tool for advanced financial management.
 Various platforms offer discount when digital wallets are used to make payments.
 Expenditure can be tracked easily.
c. What other retail marketing strategies could be adopted by this company to penetrate the
market?
Ans: Product Strategy: PhonePe is a unique service, it enables the customers to easily get
cash through a click. It should empower the customers to use their app and enable the
function of having a bank account.
Price Strategy:- It is a free service, however, it should provide customers with benefits
when they store money in this platform.
Place Strategy:- It should be made available in such places where people are highly
engaged in online transactions such as Mumbai, Bandra, Noida, in India.
Promotion Strategy:- It should invest on ad campaigns through TVs, Billboards,
magazines, etc.
d. Explain moment marketing. How could PhonePe use this concept?
Ans: COVID pandemic has shut down most ATMs right now. Therefore, PhonPes should
invest in partnering up Moms and Pops as well as departmental stores in various
locations. This will ultimately help people to avoid going to banks and do smaller
transactions in nearby essential stores. Apart from that, it should update all the
information on social media on where these exchanges can be done and which retail
stores to connect to get the money.

Case Study 2.
a. As the local marketing agent, develop a promotional strategy focused towards
“Revenue Marketing” of the company in Nepal.
As the local marketing agent of Netflix, in order to promote it I would:-
 Prepare a google questionnaire and conduct a survey among the students of colleges
on what shows they loved the most. Since these are the people who mostly use this
digital platform.
 Based on their answers, I would suggest the company to make a content of their
choice, upgrade the platforms with the shows according to the age group of people.
 Apart from that, local content should be added to Netflix. Netflix originals with the
actors of our country would help the streaming platform to take off for sure.
 Assigning trusted brand ambassadors could be another way of promoting it.
Thus, these would help to increase the subscription of Netflix In Nepal resulting in
generation of lots of revenue.

b. How would you influence the consumer behavior of Nepalese customers to subscribe
Netflix?

The consumer behavior Nepalese customers of Netflix in Nepal can be influenced in the
following way:-

 Identifying their expectations regarding this platform.

 By adding local contents, producing Netflix original movies and shows that are
made in Nepal.
 Convenient way of making subscriptions.
 Showcasing contents according to their age groups.
 Utilizing ethnographics
 c. Perform marketing mix and STP analysis for the Nepalese customers of Netflix.

Answer:- Product strategy:- Netflix will be the only platform that is going to be easily
accessible in Nepal unlike Amazon Prime and Hulu.

Price Strategy:- Prices should be planned according to the people’s income in our
country. The students do not seem to earn for themselves in Nepal therefore, the price
should be cheaper for example, Rs 500 for basic plan and Rs. 1000 for premium.

Promotion Strategy:- Netflix should acquire trusted Actors as brand ambassadors in order
to promote themselves. Promotion through TVs, Ads and magazines should be done.

Place Strategy:- The entire business of Netflix in conducted online and is available in all
the countries in the world.

e. Develop pricing plans for Netflix in Nepal.

Plan Price

Basic Plan Rs. 500

Standard Plan Rs. 700

Premium Plan Rs. 1000

Since the PCI in Nepal is very low, offering these plans initially would be a great start for
Nepalese customers.