Retail Management

Prof. Rakhi Thakur

Retailing : Introduction

Click to edit Master subtitle style Retail Mercahndise

Management
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What is Merchandising?
American Marketing Association has defined merchandising as, the planning involved in marketing the right merchandise at the right place at the right time in the right quantities at the right price. It is achieving the Five Rights Having the right product In the right quantity Available at the right place At the right time At the right price

Merchandise Management

It is the analysis, planning, acquisition, handling and control of the merchandise investments of a retail operation.

The Evolution Of Merchandising

Initially retailers operated one or two stores

Then retailers started adding stores Workload on buyers increased

Planner came into being
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Factors Affecting The Buying Function

Source: A theory of merchandise buying behaviour, Jagdish N Seth, Theory in Retailing, American Marketing Association

The Merchandising Activities

Planning formulating policies forecasting sales Directing Guiding and training buyers Co-ordinating co-ordinating the buying effort Controlling assessing buyers performance
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The Merchandising Activities

Forecasting sales for the forthcoming budget period Translating the sales forecast into inventory levels in terms of rupees Inspiring commitment and performance on the part of the merchandisers and buyers Assessing merchandise and buyers performance

The Buying Activities

Developing the merchandising strategies Planning and sorting merchandise assortments Vendor selection, development and management Pricing the merchandise to achieve the required targets Inventory management
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The Concept Of Merchandise Planning

Merchandise planning can be defined as the planning and the control of the merchandise inventory of the retail firm, in a manner which balances between the expectations of the target customers and the strategy of the retail firm.

The Process of Merchandise Management

The Implications of Merchandise Planning

What is a Category
A distinct, manageable group of products/services that consumers perceive to be interrelated and/or substitutable in meeting a consumers needs.

What is Category Management

Managing the business of a category with a plan A common sense approach to building and managing your business A disciplined process that has evolved over time
OR

The distributor/supplier process of managing categories as strategic business units,

Scope of Category Management

Integration of Buying and Merchandising responsibilities

Management of price, shelf space, merchandising assortment strategy, promo efforts, replenishment

Affects manuf. sales and marketing Team approach between channel members

Need of Category Management

Concept introduced in the early 1990s by The Partnering group Products were not viewed as consumer-centric categories Lack of a formalized business planning process Underutilization of consumer research, data, and tools Data mining was in its infancy No formalized & balanced view of business performance Non-collaborative supplier relationships

How does customer purchase?

Category Management in Practice

Category Plans Jointly developed by retailers and manufacturers Strategies and Financial Objectives GM, sales per sq feet

Retailer Goal optimise each part of the store, Allocate space that maximizes Gross Margin/unit of space Supplier Goal - To become the lead supplier or channel captain for that category

Category Management Process

Category Definition Category Role Category Review

Category Assessment
Category Scorecard Category Strategies

Category Tactics
Plan Implementation

Definition and Role

Strategic Decisions Performed as needed

Category Definition Category Role

Category Definition

Market Structure Preference Segmentation

Running Case
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ITC

Products at a Glance

Segmentation
FMCG

FOOD AND BEVERAGES

OTHER FMCG PRODUCTS

Market Segmentation
Aashirvaad
Focuses on Indian families, especially housewives

Mint-O

Mainly the youth since it exudes a bindaas youthful image

Highly focused on children

Kitchens Of India

Focuses on people who enjoy having royal cuisine with Indian-ness and a touch of sophistication

Candyman

Sunfeast

Children (who uses the product) Parents ( who are the buyers)

Bingo!

Mainly youth and middle-aged people

Category Role
Destination To be the primary category provider and help define the retailer as the store of choice by delivering consistent, superior target consumer value. Routine To be one of the preferred category providers and help develop the retailer as the store of choice by delivering consistent, competitive target consumer value. Occasional/Seasonal To be a major category provider, help reinforce the retailer as the store of choice by delivering frequent, competitive target consumer value. Convenience To be a category provider and help reinforce the retailer as the store of choice by delivering good target consumer value.
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Category Role
Foods Role Aashir- Kitchens Sunfeast Mint-O Candy Of India vaad Bingo -man

Destination Routine Occasional Convenience

Assessment
Market
Market Share & Benchmarks

Distributor/ Retailer
Contribution & Productivity

Category Sub-Category Segment Brand SKU

Consumer
Buyer Profile & Purchase Behavior

Supplier
Share & Efficiently

Market Share

Who is the target customer?

Targeted at premium segment (tourists, NRIs) KoI cooking pastes for high end market

A whole wheat based product targeted at children

Each and every segment

Benefit to the farmers & other consumers at the low end

Suppliers Distributors-RetailersCustomers
1. 2. 3. E-Choupal allows ITC to develop long-term supplier relationships Acceptance of any kind of gifts or payments from suppliers or customers is viewed as a serious breach of company ITC supported with investments in technology and equipments from world class suppliers in flexible packaging Fast and effective sales ordering processes. Flexibility Quick reaction

LOGISTICS

Countrywide network in the agri-business One million paan, bidi shophops Another half-a-million outlets for other products 40 food factories across the country Army of traditional wholesalers to reach remote markets

Scorecard
Consumer Retention Level Purchase Incidence Satisfaction Rating Share Category of Department Category of Market Sales Category $ Growth Sales/Sq. Ft/Week Profit Gross Profit $ Gross Margin Gross Profit Sq. Ft/Week Private Label Sales % of Gross Profit Gross Margin Product Supply Days of Supply Inventory $ Turns GMROI Service Level Current _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ Target _______________ _______________ _______________ _______________ _______________ _______________ _______________ ______________ _______________ _______________ _______________

_______________ _______________ _______________

_______________ _______________ _______________

_______________ _______________ _______________ _______________ _______________

_______________ _______________ _______________ _______________ _______________

Different Goals for Different Categories

Manufacturer Scorecard

Effective use of technology Consumer, operational, return on marketing investment, competitive and other metric.

Balanced Scorecard

Provide feedback to both retailer and manufacturer Foster collaboration

Create a Marketing Strategy

Seven Common Marketing Strategies
Traffic Building : Attracting customers to store/ aisle/ category Transaction Building : Enlarging the average purchase size Profit Contribution Cash Generating Excitement Creating Image Creating Turf Defending : Positioning the category strongly versus competitors

Tools

PoS Scan Data Retailers Internal Data

Consumer Strategies Strategies Category Category

Roles Destination Procurement
Acquisition Strategy - Best Quality/Reliability - Best Cost & Terms Transaction Strategy - All EDI & EFT

Distribution
DC/Store Receiving - Auto Replenishment Transportation - DSD, Backhaul DC/Store Handling - Cross Dock - Sale-Ready Packaging DC/Store Receiving - Auto Replenishment Transportation - DSD, Backhaul DC/Store Handling - Minimize Handling - Reduce Shrink Transportation - Reduce Transit Time DC/Store Handling - Reduce Shrink - Sale-Ready Packaging

Marketing
Attract Strategy - Traffic Building - Image Enhancing Build Loyalty Strategy - Transaction Building - Turf Protector Micro marketing - Transaction Building - Turf Protecting Cluster Marketing

In-store Service
Full Service - (If Necessary) Differentiated - (From Competition

Routine

Acquisition Strategy - Best Quality/Reliability - Best Cost & Terms Transaction Strategy - Majority EDI & EFT

Semi-Service - (If Necessary) Non-Differentiated - (From Competition

Occasional/ Seasonal Convenience

Acquisition Strategy - Best Quality/Reliability - Best Cost & Terms Transaction Strategy - Some EDI & EFT Acquisition Strategy - Low Cost

Attract Strategy - Traffic Building - Excitement Creating Cluster Marketing

Self Service - (If Necessary) Non-Differentiated - (From Competition)

DC/Store Receiving - Auto Replenishment DC/Store Handling - Minimize Handling - Reduce Shrink

Build Loyalty Strategy - Transaction Building Uniform Marketing

Self-Service Non-Differentiated - (From Competition)

Marketing Strategies

SHARUKH KHAN DHONI & SURYA as brand ambassador of SUNFEAST

Sunfeast World 10K Bangalore-Brand philosophy Spread the smile

E-Ccommerce activities for READY-TO-EAT Snack brand Tie-up with leading portals to promote snack range Panel tastes & approves it before processing takes place.

Category Strategies
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Entering into less competitive or unexplored markets (Ready to eat, Staples, Wafers Distribution Network Market differentiation (Ready to eat, Biscuits) Diversification of products (Biscuits, Wafers, and Ready to Eat) Extensive advertising (Biscuit, confectionary, wafers)

Category Tactics
Category Definition Category Role

Category Review

Category Assessment Category Scorecard

Assortment

Merchandisin g

Category Strategies Category Tactics Plan Implementation

Pricing Promotion

Assortment

Famous restaurants like the Bukhara and the Dum Pukht - deep understanding of the Indian palate, localized launches The branded & packaged food business is represented in 4 categories in the market:

Ready To Eat Foods Staples Confectionery Snack Foods

High SKUs, 200 differentiated products under 6 distinctive brands

Snack Foods Aashirvaad

Aashirvaad: Staples: Aashirvaad Atta (Market Share: 50%), Aashirvaad Salt Spices: Aashirvaad Pickle Mirch Powder Instant Mixes: Rava idli Mix, Gulab Jamun Ready Meals: Aaloo Mutter, Palak Paneer

CONFECTIONERY

40 % share in the mint category Source: hindubusiness line

PRICING
Low Margins in confectionary business Low price points(Rs.5/- per 75 gram pack , Rs.10/per 100 gm pack) , KoI high end Various SKUs at differentiated price points
Direct frontal attack by introducing similar priced SKUs Facilitate timely supply of raw materials e-Choupal initiative Printing & packaging business also lead to highquality, cost-effective & innovative packaging

Shelving

POS - Distributed more than 4 lakh large racks POS Introduced mega-size wafer trolleys outside most mom-and-pop outlets Trolley

PROMOTION - Bingo

Humour and irreverent advertising Crowd sourcing strategy in TVC Online presence - educates users about the current offers, online games, downloads, mobile games Clutter-breaking communication to create excitement around the brand
360-degree communication(outdoors, print, radio, modern trade outlets, stores, on-ground promotions and mall activation) Social media Sponsor events for Channel V

Celebrity Endorsements

Plan Implementation
Distribution System

ITC uses FIFO method to reduce the wastage of goods due to expiry.

They also keep the good on constant move from low sales area to high sales area.
The company collects all the expired goods four times a year, and destroys them. Retailers must return expired or damaged products within six months after the date of expire.

Plan Implementation
Diversification Strategy Food Business easy to enter- ITC entered into several categories-:

ITC entered into the branded and packaged foods business in 2001 with the launch of Kitchens of India brand.

ITC entered the biscuits market with Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did what any new player in the market does, imitating and emulating the leader that was Britannia. ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both under the Aashirvaad Brand.
Launch of Bingo in 2007, ITC finally became a profitable business for the first time since its launch in 2001.

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Thankyou