Retail management book @ bec doms bagalkot mba

1. RETAIL MANAGEMENT
CHAPTER-1 RETAIL PRICING
A. Introduction
B. Retail Management System
C. Retail Management Improves productivity and business performance
D. Designed for growing retailers
E. Improves productivity and business performance
F. Affordable out of the box, with functionality to help provide a quick return on
your investment
G. Grows with your business
H. Capable and Confident Consumers
CHAPTER-2 RISK-BASED REGULATION
A. Introduction
B. Identifying thematic risks
C. How we select firms for thematic risks
D. Financial inclusion
E. MIFID
F. Retail Loyalty Programs: seven points to ponder
G. Client Relationship Management
CHAPTER-3 RETAIL MARKETING STRATEGY
CHAPTER-4 INTERNATIONAL RETAILING
A. Introduction
B. General Merchandise Retailing
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2. C. Food Retailers
D. Non-Store Retailing
E. Issues in International Retailing
CHAPTER-5 IMPACT OF RETAIL MANAGEMENT IN THE GROWTH OF INDIA
ECONOMY
A. Definition and Scope of Retailing
B. Types of Retail Operations
C. The Emerging Sectors in Retailing
D. Retailing Scenario- Global View
E. Retail Shopkeepers
F. Retail Sales
CHAPTER-6 INTERNATIONAL MARKETING
A. International Marketing Environment
B. Retail Management Tips
C. Winning at Store Management
D. Retail Analytics
E. Viewpoint on Retail - Retail Articles
F. Retail Sales Management
CHAPTER-7 RETAIL BUSINESS PLAN
A. Introduction
B. Retail Market Segmentation
C. Relationship Marketing
D. Integrated Relationship Management
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3. Chapter-8 PRICING
A. Questions involved in pricing
B. Definitions
C. Retail Location Strategies
D. New Development Drivers
E. Current Trends
F. Under All Is the Land
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4. CHAPTER-1
RETAIL PRICING
Introduction
Retail Management consists of Managing the sale of goods or merchandise from a fixed location,
such as a department store or kiosk, or by post, in small or individual lots for direct consumption by
the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be
individuals or businesses. In commerce, a retailer buys goods or products in large quantities from
manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities
to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of
the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their
overall distribution strategy.
Shops may be on residential streets, shopping streets with few or no houses, or in a shopping center
or mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or
full roof to protect customers from precipitation. Online retailing also referred to as B2C type of
e-commerce, and mail order are forms of non-shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities
such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping
often involves window shopping (just looking, not buying) and browsing and does not always result
in a purchase.
The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup
amount (or percentage) to the retailers cost. Another common technique is suggested retail pricing.
This simply involves charging the amount suggested by the manufacturer and usually printed on the
product by the manufacturer.
In Western countries, retail prices are often called psychological prices or odd prices.
Often prices are fixed and displayed on signs or labels. Alternatively, there can be price
discrimination for a variety of reasons, where the retailer charges higher prices to some customers
and lower prices to others. For example, a customer may have to pay more if the seller determines
that he or she is willing to. The retailer may conclude this due to the customer's wealth, carelessness,
lack of knowledge, or eagerness to buy. Another example is the practice of discounting for youths
or students.
Retail Management System Store Operations allows you to better track and
expedite point-of-sale and business processes:
i. Streamline business operations, including inventory, supplier management, and
point-of-sale processes.
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5. ii. Make informed decisions with accurate data and powerful reporting tools.
iii. Market, promote, and sell across multiple channels.
iv. Expand easily to multi-store operations and e-commerce.
v. Reduce POS system and operating costs.
Retail Management Improves productivity and business performance
i. Increase knowledge of operations.
ii. Make fast, informed decisions.
iii. Offer superior customer service.
iv. Improve inventory and supplier management.
v. Maximize cash-in per customer.
vi. Minimize labor costs.
vii. Reduce inventory costs and out-of-stocks.
viii. Integrate credit card processing.
Designed for growing retailers
i. Set up and use easily. Retail Management System can be set up quickly, tailored
to meet specific retail needs, and provides access to expert support and assistance
from certified Microsoft Business Solutions partners. Built-in wizards and an
intuitive user interface help managers and associates to learn point-of-sale
procedures in minutes.
ii. Track and manage inventory efficiently. Retail Management System eliminates
the need to conduct inefficient, manual stock counts, saving time and reducing
employee overhead. You can track and manage items across your business using
any inventory method, including services, layaways, work orders, and back orders.
Compatible inventory types include standard, serialized, kit, assembly, matrix, lot
matrix, voucher, non-inventory, and weighed.
iii. Streamline point-of-sale processes. With Retail Management System, associates
can work with a customizable point-of-sale screen that lets them check prices,
availability, and stock location instantly. They'll be able to access complete
customer information; handle multiple tenders and partial payments at checkout;
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6. and quickly create and process returns, backorders, sales quotes, work orders and
layaways. Automated processes make it easy to balance multiple tenders efficiently
and accurately, helping employees save valuable time.
iv. Integrate and operate with your existing systems. Retail Management System is
compatible with Microsoft Windows® 98 and later operating systems, and supports
popular point of sale peripherals including printers, magnetic strip readers, bar
code readers, and more.
Improves productivity and business performance
i. Increase knowledge of operations. Gain full visibility into store operations with
daily sales graphs and journals that can be viewed and printed from any register.
With Retail Management System, you can preview, search, and print journals by
register, batch, and receipt number, as well as close out data accurately. Data can
also be shared across multiple store locations to give you different views of your
business.
ii. Make fast, informed decisions. Access and analyze data across your entire
business using powerful reporting and communications functionality. Drawing
from detailed, current information, you can identify sales trends in every
department, category, and season; evaluate operations and financials; track the
return on investment of advertising and sales campaigns; set and monitor
business policies across stores; and much more.
iii. Offer superior customer service. Retail Management System equips your staff to
respond quickly to customer needs, making it easier for you to turn a single
purchase into a lasting and profitable customer relationship. Associates can
expedite checkouts quickly, target customer preferences to offer up-sells and
cross-sells, and implement automatic discounts for frequent shoppers. Customers
receive the efficient, personalized service that builds their loyalty and boosts your
revenues.
iv. Improve inventory and supplier management. Replenish top-selling items
efficiently and negotiate consistently lower purchasing costs by tracking item
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7. movement and vendor histories. You can also extend purchasing and fulfillment
processes to the Web through e-fulfillment services.
Affordable out of the box, with functionality to help provide a quick return
on your investment
i. Maximize cash-in per customer. Use Retail Management System to make the
most of every transaction: target customer preferences to suggest up-sells and
cross-sells, and advertise other products at point of sale with onscreen graphical
displays. Expand your customer reach and increase revenues with multi-channel
marketing, catalog sales, and phone orders.
ii. Minimize labor costs. Easy to learn and use, Retail Management System helps
ensure managers and associates get up to speed quickly. Comprehensive
functionality and shared data systems reduce the need to re-enter information,
freeing your staff to focus on managing and selling more effectively. And with full
visibility into business information, you'll know when to staff up or cut back, and
which associates bring in the highest revenues.
iii. Reduce inventory costs and out-of-stocks. Maintain tight control over inventory
with automatically generated purchase orders and stock levels. Centralized
purchasing and in-store transfers enable you to replenish items efficiently and
cost-effectively. Visibility into supplier histories makes it easy to select vendors
who offer the best service and the lowest prices.
iv. Simplify card processing and reduce transaction costs. Retail Management
System helps provide quick access to authorizations and makes it easier to capture
electronic signatures. Electronic Data Capture can accelerate card transactions by
up to 600 percent. And, utilizing POSitive Technologies sister company POSitive
Payment Solutions, Retail Management System also offers integrated card
processing that includes substantial discounts on services and eliminates the need
for additional card terminals. There are no charges for application or setup. Read
more about Positive Payment Solutions.
Grows with your business
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8. i. Expand easily. Ready to open a new store? With Retail Management System, you
can protect your investment and keep the same software and systems as your
business grows into multiple stores and retail channels. As you add customers and
products to your system, flexible Microsoft SQL Server™ technologies let you store
and manage virtually unlimited amounts of information.
ii. Integrate with other solutions. Retail Management System integrates easily with a
number of popular business applications, including Microsoft Business Solutions
Financials, Microsoft Small Business Manager, third-party applications, and others.
You also can integrate Retail Management System with PDA, mobile, and wireless
solutions.
iii. Invest in your business, not in IT support. Retail Management System does not
require an extensive IT staff to set up and maintain, and adapts easily to meet
specific retail needs. As your business changes and grows, your Microsoft Business
Solutions partners can provide support and assistance with customizing,
integrating, and scaling your solution.
iv. Count on Microsoft. With Retail Management System, you can begin a long-lasting
relationship backed by one of the world's leading technology providers. Microsoft
Business Solutions is a family of connected applications and services for small and
mid-sized businesses, with years of experience delivering business applications
and services known worldwide for top quality.
To promote efficient, orderly and fair markets, both retail and wholesale; to help retail
consumers achieve a fair deal; and to improve our own business capability and effectiveness.
Under this umbrella, we believe there to be four pillars essential to delivering a more
effective and efficient retail market through which a fair deal for consumers can be
delivered:
Capable and confident consumers.
i. Clear, simple and understandable information available for, and used by,
consumers.
ii. Soundly managed and well capitalized firms who treat their customers fairly.
iii. Risk-based regulation.
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9. I'm conscious that there are significant prudential issues around too, the main issues
which bear on the retail markets.
Initiatives such as treating customers fairly and financial capability are part of the
broader picture designed to deliver these outcomes. And in all of this our emphasis is on
outcomes and thus on changing the behaviors of firms and consumers in the real world. So,
ultimately, we want to measure the success of this strategy by looking at the difference it
makes to your customers, the consumers of financial services and products. In terms of
overall regulatory approach, I should emphasize that our clear preference is to encourage
efficient markets as the best means of providing quality goods and services to consumers.
Only after market solutions have been exhausted should regulatory initiatives be
contemplated.
So how will we know that these outcomes have been achieved? Here are four general
propositions.
First, more engaged consumers will be actively thinking about their financial needs
and doing something to address them - managing their money well and planning ahead for
the longer-term. Consumers will be active in educating themselves about financial products
and in seeking out information from a range of sources.
Second, consumers collectively will exert greater competitive pressure in the market
by shopping around for the best deal, regularly reviewing their financial position and
moving from one firm to another when it makes sense to do so. Consumers will judge firms
on the quality of the products and services provided, including how firms behave when
things go wrong – the way in which firms deal with complaints, for example.
Third, and following closely from my last point, consumers will feel much more
positive about their engagement with the industry; they will take well informed decisions
based on clear and understandable information and will be clear about their own
responsibilities in taking those decisions.
Fourth, more consumers will be included in the financial services world. This is partly
about capability but it is also about access. We recognize absolutely the central importance
of financial inclusion as part of this equation.
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10. Capable and Confident Consumers
First, the issue of consumer capability.
There is no controversy about the nature of the problem. Increasing the level of
consumer capability is more critical now than it has ever been. We live in an age where
responsibility is passing from state to individual. Individuals are being asked to make more
and more financial decisions, many of which were previously taken for us in relation to
health, or education, or pensions. But against this increasing requirement, the actual
capability of those who need to make financial decisions is too often inadequate, in terms of
basic literacy and numeracy, as well as in respect of specific financial knowledge.
We can all cite examples of this, so I will limit myself to just one. A study by the
Institute of Financial Services showed that eight from ten people did not correctly identify
the term APR as describing the interest rate and other costs of a loan. I suspect that our
baseline survey of financial capability – more on which in a moment – will provide a decent
further supply of such examples.
So the problem of financial capability is immense, in terms of both the basic
requirements of literacy and numeracy which underpin financial capability; and in terms of
specific financial knowledge.
So how can we respond to this magnitude of challenge?
As you know, FSA has been leading and co-ordinating the National Strategy for
Financial Capability. When the work began in 2003, we listened to those who cautioned
against trying to address all parts of the problem at once. We and our partners -
Government, industry, the media, the voluntary sector, and others - therefore examined
seven areas: schools, young adults, the workplace, families, retirement, borrowing and
generic advice. Having undertaken a huge amount of pilot work to determine what practical
initiatives will put us in a position to achieve the step change in capability that is required,
we have started to move on to the next stage towards national delivery.
The Financial Capability Steering Group met last month to take stock of the National
Strategy and to consider options for the future. The Steering Group agreed to a set of
specific priority projects on which to focus covering:
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11. i. schools
ii. higher education
iii. the workplace
iv. maternity/paternity leaver resources
v. FSA information campaigns
vi. development and roll-out of the Debt Test - which is designed to provide
guidance to individuals on whether they are at risk of becoming over-indebted
vii. And further work on whether there is a commercial case for the delivery of generic
advice.
In addition, the Steering Group left open the possibility of wider rollout of initiatives
to Young Adults not in education, employment or training, subject to the findings of
ongoing pilots and an examination of the associated business case. Supported by a team of
specialist advisers, we are now preparing business cases which will examine the public
policy and potential commercial benefits of taking these specific projects to national
roll-out. The business cases will provide the basis for meaningful discussions with public
and private sector partners on sustainable funding and the other commitments fundamental
to making them happen – this includes, for example, access to both public and private
sector workplaces for the provision of financial capability seminars to the workforce.
On timings, we want to be in a position by the end of the first quarter next year to
have clear delivery and funding plans in place to move to national roll-out. At the same time,
we will also publish another central part of our work on financial capability, the results of
our baseline survey. This will describe and measure the state of financial capability in the
UK, looking at people's ability to manage money, make financial choices, plan ahead and
get help. We will repeat the survey periodically to measure success in raising levels of
financial capability and we will, of course, be developing further success measures for the
other specific priorities I mentioned.
This aims to support new and innovative projects dedicated to financial capability led
by voluntary and community organisations. We have made available a minimum of £200K
for projects running up until March 2007 with the majority of awards likely to be between
£5,000-20,000. We were delighted to receive over 300 applications to the Fund from which
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12. a shortlist of applicants has been drawn up. We hope to announce the award winners before
the end of year.
We are extremely grateful for the support of BBA members in taking forward work on
financial capability, including many contributions to the working groups. We have had
particular support from Lloyds-TSB, with Eric Stobart chairing the Workplace Group and Jim
Dredge energetically directing the programme of pilots, with full-time support from Alastair
Hogg of the Prudential.
So we are now in a critical new phase as we work up the business cases. We are reaching the
point when the rubber really hits the road on the funding and other support required to
make it all happen. As was ever the case with this initiative, that requires the proactive
involvement of government and the industry.
Clear, Simple, Understandable Information
Alongside the common desire for more capable and confident consumers, we must
ensure that those consumers are given the information and advice that is both necessary
and relevant when making a financial decision. Just as you will be familiar with Principle 6
of our Principles for Business essentially that firms should treat their customers fairly -
Principle 7 explicitly states what we expect from firms when it comes to providing
information: "Firms must pay due regard to the information needs of their clients and
communicate information to them in a way which is clear, fair and not misleading." This
ranges from financial promotions in all guises, to product literature and covers all
institutions, from small one man advisors to major retail banks.
Good quality financial advice also plays an important role in ensuring that consumers
have expert help in making a complex range of important financial decisions. The provision
of financial advice is a large industry, and with rising incomes and wealth, and evidence that
many individuals are not investing enough for their retirement, there is significant scope for
the advice market to expand significantly. The challenge here for providers of advice is to
demonstrate to more consumers that there is value to them in paying for these services.
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13. At the simplest level, this means a retail financial advice market that is providing
good quality, suitable advice to consumers. And that those consumers should be able to
recognize when this is happening, and when it is not, and to respond accordingly.
We are clear that the retail financial services market is not yet operating in a
consistently effective and efficient way. On the mortgages side, for example, our early
findings report a mixed picture in terms of standards. On the investments side, the market
is still changing. Both product providers and distributors face a range of challenges. They
need to adapt their business strategies to reflect a depolarized world. Some need to rebuild
capital and balance sheets. All this is challenging enough but comes at a time when the
industry overall is still coping with sluggish demand for investment products in weak
markets and is trying to engage with consumers who still have low levels of confidence in
the sector.
As regulator, we do not want to prescribe how the advice market should be structured.
Rather, we want to allow firms to choose what advice they provide, and to allow consumers
to choose what advice they want to take and how they pay for it. And we want consumers to
be able to understand the different types of advice that are available to them.
That is why depolarization is largely a permissive regime and firms are free to develop
their business models in a more tailored way for their customer base, or they can continue
trading pretty much as they were before – albeit with improved disclosure and other
adjustments such as the requirement for 'independent' firms to offer a fee option.
As you would expect, we are going to conduct a review of how depolarization is
working in practice. The first stage is to check compliance with the new rules. Thereafter,
and over longer time periods, we will review the extent to which firm and consumer
behavior has altered.
We know that those who use our fact sheets, calculators and other web-based
material find them to be helpful. But we also know that we need to do more to make that
material more accessible and to promote its availability, including in partnership with others
such as the BBC. The current ‘mortgageslaidbare’ campaign is a hint of our new approach in
this area. We are part-way through the campaign, but we have already seen a very
significant increase in traffic to our mortgage resources and we will feedback on the overall
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14. success of the campaign in due course. We are planning two further campaigns early in the
New Year to cover issues around pensions and A-day and to promote the various resources
available to help consumers plan their finances effectively. Again, we will ensure that we
measure the effectives of these campaigns in influencing consumer behavior
Treating Customers Fairly
As I have set out, the fair treatment of customers by firms is a key part of the broader
picture.
As you know, our approach has been not to define precisely what constitutes "treating
customers fairly", but rather to challenge the senior management of firms to work this out
for themselves, taking into account the particular types of business that they undertake. We
recognized that many of you have already done or are in the process of carrying out a "gap
analysis", to identify areas of business where more needs to be done.
Treating Customers Fairly needs to be embedded into the culture of a firm at all levels,
so that over time it becomes business as usual. This is all very much a responsibility of
senior management, not just a compliance issue.
To help, we have produced a number of statements of good practice and case studies
to illustrate some of the considerations that senior management should take into account.
We have published many of these on our website and further case studies on management
information, remuneration, complaint-handling and others were published last month.
These examples reflect real life scenarios and provide material which firms may find
useful as background when considering how best to ensure that they treat their customers
fairly. In particular, they are intended to illustrate the kinds of questions that firms should
consider in particular sets of circumstances. Inevitably, the issues raised are not exhaustive
and the practices observed are not prescriptive – treating customers fairly is not something
that lends itself to box-ticking.
We have also suggested that a useful starting point is to think of treating customers fairly in
terms of the product life cycle. So depending on the precise nature of a firm's business this
could mean addressing the fair treatment of customers at any of the following stages:
product design and governance; identifying target markets; marketing and promoting the
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15. product; sales and advice processes; the remuneration of sales forces and advisers; after
sales information; and complaints handling.
As part of the next stage, we will also be looking at quality of advice. The aim will be
to consider how we can measure and improve the overall quality of advice, rather than
looking at specific products or examples where the advice process goes wrong. We will test
current practices, looking at a range of areas including training and competence; the
systems and controls that support good advice; and entry standards for advisers and firms.
CHAPTER- 2
RISK-BASED REGULATION
Introduction
Which brings us to the final Pillar of our retail strategy? Let’s hark back to the earlier
remarks about our preference for market-based solutions over regulatory intervention.
Proportionate, risk-based regulation is what brings this to life – helping us determine where
our resources are best deployed to address the biggest risks that carry the highest impact
were they to crystallize.
For example, we acknowledge that the mortgage and general insurance intermediaries
market has undergone significant changes and we have been keen to stress that we have
taken a graduated approach to supervision in the first year of the regimes. That is, in the
main we are telling firms what they need to do to improve compliance levels which we'll
come back and check and it is only in the more serious cases that we'll do further
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16. investigation. As these changes become more familiar to the market our approach will
become firmer.
We deal with emerging retail risks in two ways. First, where supervisors identify risks
within the individual firms they supervise, they may take steps to mitigate them with the
firm concerned. Second, we seek to identify risks arising across different types of firms and
market sectors and carry out work to mitigate them where our risk-based approach justifies
doing so – so called thematic work. I’d like to spend a few minutes describing our approach
to this.
Identifying thematic risks
Risks in the retail market take many forms; risks to consumers, firms, sectors, or the
market as a whole. We identify emerging retail risks in a number of ways, including:
i. market data;
ii. current trends and developments in the markets;
iii. financial promotions;
iv. issues identified through our discussions with firms; and
v. Risks identified by our sector teams, supervisors, contact centers, and other
stakeholders.
We look for flags like new or unexpected developments. For example, an unusual
surge in retail sales of a product given market conditions might prompt us to make further
enquiries about how this produce is being sold. Our monitoring of financial promotions is
also an important source of intelligence.
We priorities our workload to focus on the most significant risks. Where a
development could indicate a new risk, we will often do a small amount of work to find out
more and help us identify whether action is warranted. In around 60% of the issues we
investigate no further action is taken.
If we do decide regulatory action is justified, we consider what tools to use in light of
the circumstances of each risk. Some of the key risks we have identified and on which we
decided to do further work include:
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17. i. Payment Protection Insurance
ii. Mortgage Disclosure Documents
iii. Lifetime mortgages
iv. Contracting out of the state second pension
v. Premium reviews and variable interest rates; and
vi. Income Withdrawal
How we select firms for thematic risks
Thematic work involves looking at a particular issue or set of issues across sample of
firms.
When we contact firms they sometimes assume that, because they have been selected, this
implies that we have already decided that there is a problem in that firm. This is not the
case. The decision takes into account a number of factors, including:
i. How many – and what type of – firms are active in the market or product that we
are interested in.
ii. The desire to find a sample of firms that is representative of the various sizes or
structures in the market.
iii. The desire to create a representative sample. This will include some firms which
we think are likely to set the highest standards in terms of systems and controls
and practices more generally in that area.
iv. Whether any of the firms are – or have recently been – involved in any other areas
of our work, so that where possible thematic work is spread across firms.
Achieving this spread can be a particular challenge when it comes to the largest
groups. Where firms have dedicated supervisors, the supervisor will be involved in
decisions about which thematic projects the firm takes part in.
We realize that this "air traffic control" of thematic work and the burden it can impose
is of concern to firms and we are committed to holding regular dialogue with the industry to
set out an indicative timetable for our future thematic work. Our Business Plan, which will
be published in January, provides an ideal peg for such a discussion. We are also examining
whether the process for communicating the outcome of thematic work to individual firms
and industry trade associations can be improved. As you will have gathered from my
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18. description, thematic work will remain a key supervisory tool, allowing us to respond
quickly to emerging risks.
Financial inclusion
I said at the start that financial inclusion is an important consideration in our work.
The FSA's position on this is very clear. Under the 'public awareness' objective, the
FSA has a statutory responsibility for promoting public understanding of the financial
system. This objective is intended to be interpreted quite generally.So while the FSA has no
statutory responsibility for financial inclusion, we are absolutely mindful of the impact of
our work on all groups.
We see our role in this as twofold.
First, in our regulation of the industry we want to avoid creating barriers to inclusion,
including providing assistance to those taking innovative approaches to understand the
relevant regulatory issues and possible solutions. When authorizing the first purely Islamic
bank in Europe we worked constructively with the senior management of the Islamic Bank of
Britain on such issues.
We have been very active in working with third sector lenders, for example in
delivering a proportionate, lighter touch regulatory regime for credit unions and in working
with the Community Development Finance Association to see if a code of practice for
Community Development Finance Institutions is the best way forward for these
organisations. And we have, over the last eighteen months, been leading a multi-agency
initiative to 'defuse the identification issue’. We welcome the BBA's contribution to the work
of the Joint Money Laundering Steering Group, whose new Guidance is published next year.
This is expected to include a wider range of options for people to prove their ID so that, by
the end of next year, ID should be a significantly reduced barrier to financial inclusion.
Second, in our consumer awareness remit we aim to help consumers become more
confident and capable through the National Strategy for Financial Capability and our wider
education and information work about which I spoke earlier.
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19. So the FSA is just one partner in the work being done here. The Banking industry, led
by its trade association, is of course very active, in particular in addressing the challenge
laid down by Government to make significant progress towards halving the number of
unbanked households in the UK within 2 years. In partnership with the BBA, we have
recently revised our guide to Basic Bank accounts. There are many further examples of
industry activity in this area. We look forward to continuing to work with banks, the BBA
and other parties to ensure the difficulties and barriers faced by those who are excluded
from financial services can be overcome.
Finally, a very brief word about two other significant challenges in the retail markets
area, not least in respect of the impact of European legislation.
MIFID
It is hard to exaggerate the pervasive effect which MiFID will exert over financial
markets and financial institutions and it is important to recognize that this is not a
wholesale business issue.
We will do all we can to make the timetable pressures more manageable. To help give
focus to firms' preparatory efforts, pending publication of the Commission's
recommendations and then of our CPs on implementation, we plan to publish in the next
week or so a "Planning for MiFID” document designed to help firms get to grips with their
planning for implementation despite the continuing debate over Level 2 measures. I urge
you to study it.
Strategy challenges of A-Day
Another major challenge facing the industry is A-Day, in other words 6 April 2006,
when the new pension tax simplification rules take effect. Last September my colleague
Sarah Wilson warned firms to make sure they review the business and strategic impact of
A-day.
A-Day is very significant for those of you who deal with the complexities and
intricacies of pensions on a regular basis, and who advise consumers on a product which
they find particularly complex. It is clear that much work is going on in many firms but, with
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20. just over four months to go, both firms and advisers now urgently need to start planning for
the changes if they have not already done so.
And a further dimension, of course, is that the government is expected to consult on
proposals to introduce a new regulated activity for personal pensions, meaning that the FSA
could be regulating the sale of Self Invested Personal Pensions from April 2007.
Retail Loyalty Programs: seven points to ponder
The shape shifter: Customer knowledge is the single most powerful pay-off of a
Loyalty program. There's a load of analytical approaches beyond RFM for retailers wishing to
leverage customer knowledge. Not all of these appear to be easy to adopt and marketers
shun analytics more out of a lack of understanding of what it can do for them. Get the
experts in, listen to them – you'll find that there's ROI in it for you.
The Painter: Building a loyalty program concept requires not just sound strategic
thinking, but loads of rigor. The success lies in being able to detail out solutions to over
100 decision points that a loyalty program concept needs to cover. You cannot be reacting
to situations as they happen!
The Magician: The loyalty card is the most familiar face of a loyalty program. There
are many options here from Mag Stripe to RFID, stand alone to coalition, but the key point is
that launching a card does not a loyalty program make. This space is littered with failed
programs that were launched as a card and little else.
The Neuromancer: The software on which your program depends needs to be
designed carefully, and should handle all aspects of your program. Retail POS solutions
often offer a basic loyalty module – these are usually inadequate! The point: Don't design
your program to fit the software.
The Band: The team that drives the program internally needs to be composed of
skills that are difficult to find in any market. Direct marketing, CRM and Loyalty skills need
to be nurtured and the team needs top management support. Importantly, you will need to
rely on the right partners to come in with specific skills.
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21. The Campaigner: Campaign management practices are better established amongst
the banks than retailers, but here is where the real pay-off is. Leverage campaign
management tools as they will allow you to run hundreds of targeted campaigns which
really do pay off, as compared to a few festival offers and generic promotions.
The Timekeeper: Set expectations right. To launch a program AND expect a jump in
sales within 6 months is pushing it. Building up a quality member base (no mass
enrolments), setting up the back end, campaign management – these all take time and
effort, and the metrics to measure success take time to show the returns.
Business Skills
Good business management is the key to success of any business house. It is a
creative force which helps in the optimum utilization of resources of an organisation. The
process of managing a business comprises several intertwined elements by which the goals
and objectives of the organisation are achieved. These elements or functions include,
promoting and marketing the product produced by the firm; making the product available
to prospective consumers through proper distribution channels; managing the accounts and
finances of the firm; protecting its intellectual property, etc. It also involves creating
harmony among the working of various departments and divisions of the firm. Managing
human resources and managing relationship with the customer's are the most important
elements in the whole process of business management.
An entrepreneur with good managerial skills can convert the disorganized resources of
men, money, material and machinery into a productive business enterprise. In a modern
business, different types of skills are required in order to effectively manage an
organisation in a dynamic environment. These skills include
Technical skills
Refer to the ability and knowledge in using equipment, techniques and procedures
involved in performing specific tasks. An entrepreneur must know the skills which should be
employed in his enterprise and must understand both the role of each skill employed and
the inter-relationship between skills.
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22. Human skills
Consist of the ability to work effectively with other people both as individuals and as
members of a group. Such skills are required by an entrepreneur in order to win
co-operation of others and to build a base for a successful work team.
Conceptual skills
Comprise the ability to see the whole organisation and the inter-relations between its
parts. Such skills help the entrepreneur to conceptualize the environment and to take a
broad and farsighted view of the organisation. These skills include the competence to
understand a problem facing the organisation in all its aspects and solving the problem. It is
necessary for rational decision making
Managing is a dynamic and an on-going process which continues to operate so long
as there is an organized action for the achievement of group goals.
Client Relationship Management
Client Relationship Management (CRM) means managing your client. It is a business
strategy which is used to create and sustain long-term, profitable client relationships. It
means understanding customers using quantitative and qualitative research, segmenting
them and articulating positioning statements for each of the segments based on their
expectations and contribution to profits. It is necessary in order to retain old customers,
acquire new customers and improve profitability from the existing client base. The Concept
of CRM makes its origin from the changed approach to business management and
profitability. In other words, the traditional approach of making one-time sales is being
replaced with making long-term commitments to customers. The new approach puts
forward the need to have a proper customer/client relationship management (CRM) strategy
in the organisation. It revolves around the customers. It is a set of processes of creating,
communicating and delivering value to customers and for managing customer relationships
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23. in ways that benefit the organization and its stakeholders. It is a comprehensive strategy of
acquiring, retaining and partnering with carefully targeted customers to enhance long-term
relationships with them. This management approach seeks to create superior value for the
company and the customers.
Client relationship and satisfaction is a critical dimension of every business initiative.
Foundation of a successful business lay in its successful client relationship management.
Client's satisfaction with the performance of the company depends on how well their
professional and personal needs are addressed to by the company. Client's pay attention
not only on what the company does but also on how well it does it. Hence, client's
perception of service quality needs to be properly managed.
An efficient and effective CRM strategy is beneficial to an organisation in several
ways:-
i. Most importantly, it helps the company to build and maintain a loyal
customer base.
ii. It can have more volume of sales by selling more to the group of those
customers with whom it has maintained a good relationship and are
satisfied with the firm and its quality of services.
iii. It overtime incurs lower costs in serving those customers because of
their Increasing confidence and lesser doubts or questions about the
product.
iv. It can resort to lesser promotional campaigns in order to attract those
customers.
It also enjoys the benefit of retaining its employees if it has a stable base of satisfied
customers. Besides, customers also want to remain loyal to a firm because they also
enjoy benefits from such long-term association. It gives them a feeling of trust and
confidence in the firm's services along with a sense of a reduced anxiety about the
product. Overtime, in a long-term customer-firm relationship, a service provider may
actually become a part of the customer's social support system. Such customers may
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24. even receive special treatment from the organisation in the form of: - getting the benefit
of doubt; being given a special deal or price; getting preferential treatment etc.
A successful CRM initiatives start with a business philosophy that aligns company
activities around customer needs. The level of professionalism, listening skills, availability,
responsiveness, reliability, etc form an important part of the client relationship management.
CRM covers all the methods and technologies used by the companies to manage their
relationship with their clients.
The process of CRM includes:-
i. Identifying the factors important to clients
ii. Promoting a client-oriented philosophy
iii. Adopting client based measures
iv. Developing end-to-end processes to serve the clients
v. Providing successful client support
vi. Handling client complaints
CRM virtually had its beginnings in Sales Force Automation (SFA) which is a process of
providing the sales force of a company with technology support in order to improve the
efficiency of the selling process. The main benefits of SFA are:-the improvement in
customer service by helping the sales force responds quickly & accurately; improvement in
sales force productivity; and better management control and visibility of the sales process.
Generally, CRM works at two levels
Operational CRM, also known as “front office” CRM, provides support to basic business
processes such as sales, marketing, services, etc. It involves areas where the customer is
i. Directly in contact with the company, these contacts are classified into two: -
(i) Inbound contact are the ones in which a customer accesses the company
support center or website or meets the company employees. (ii) Outbound
contact are the ones in which a sales representative of the firm makes direct
sales to the customers or makes a sales call or e-mails a marketing message.
These direct interactions are referred to as customer's 'touch points'. Each
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25. interaction with a customer is generally added to a customer's history and
company can retrieve such information from the database as and when needed.
ii. Analytical CRM, also known as “back-office” or “strategic” CRM, involves
understanding the customer activities that occurred in the front office. It
involves retaining existing customers and providing timely and regular
information to them. It uses the technology to compile customer data to
facilitate analysis and develop new business processes to refine business
decisions.
Product-Centricity is the key challenge that an organisation needs to overcome, in order
to have a successful client relationship management. In other words, an organisation needs
to become client-centric, because it will allow for a consistent interaction with its most
important constituency,’ The Clients'.
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26. CHAPTER-3
RETAIL MARKETING STRATEGY
To develop a finely honed retail strategy, you often need to undertake primary or
secondary market research. You need to analyze your competition, their products or
services and their approach to the market. You need to use this information to shape your
retail market strategy and then develop go to market messaging and retail marketing
campaigns. Sometimes you need to recruit the right partners. Your sales force needs to
develop key account plans and execute them efficiently. Often they need retail specific tools
to help them do this. Finally, they need the industry training so that they can “talk the talk”
and “walk the walk”.
Faced with these needs, many of the world’s leading technology vendors turn to
Martec International for assistance. Companies like Microsoft, SAP, NCR, Hewlett Packard
and many others use Martec’s expertise and tools to enhance their go to market activities.
They come to Martec because we blend many years of retail expertise with a deep
knowledge of what a sales person needs to do to be successful. We show them how to use
their retail knowledge and tools to close business.
Martec provides primary and secondary market research services, as well as
publishing studies of the retailers such as our UK Top 100 Retailers IT in Retail Report. We
supply a comprehensive database of UK and North American retailers to support marketing
activities and provide a wide range of tools to help sales people develop account plans and
execute sales campaigns more effectively.
Most marketing strategies are geared to ensuring you beat your competitors. But you
don't usually expect to eliminate competition entirely.
That's what broadband DSL provider New Edge Networks has apparently done with its
unique small-market approach - although the company has had to revise its strategies in
recent months, like everyone else, and diversify to adapt to tough market conditions.
Based in Vancouver WA, New Edge started by offering DSL access services in small
cities and towns and semi-rural areas across the U.S., mainly to business customers. It's
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27. co-located in just under 600 Telco central offices (COs) in 350 cities and towns in 29 states.
The footprint takes in a population of about 30.6 million.
Most of the focus is on small cities. Nearly half of New Edge's markets have a
population of less than 50,000, many of them one-CO towns.
In many of those COs, not even the local ILEC has competitive DSL offerings, and
where the ILEC does offer service, it is typically more focused on the residential market.
Clearly there are reasons why the New Edge approach has not attracted a host of
copycats, the most obvious being that prospective customers are simply thinner on the
ground in small communities than they are in big cities. To pursue such a strategy
nationally as New Edge has done also means the company had to install more central office
infrastructure and spend more on connectivity than most CLECs to reach the same size
customer base.
But there is another side to the equation, says New Edge president, CEO and co-founder
Dan Moffat.
"We wanted to go into markets where others weren't," Moffat explains. "In metro
markets, you'd typically find Covad, North Point and Rhythms, probably others too, plus the
ILEC all in the same CO. In most of our markets, it's just us and the ILEC."It's clear now, with
the demise of North Point and with Rhythms' recent troubles, just how cut-throat
competition has been in those larger markets. Not that it hasn't been tough in smaller
markets too. While New Edge did not have to contend with deep-pocketed national
competitors like North point and Covad - well, formerly deep-pocketed - it did meet
smaller rivals.
Moffat characterizes them as regional players. They included Jato Communications, Vectris
Communications and Connect South Communications. But all three have now retired from
the field of battle. The mistake too many DSL providers made, Moffat says, was blowing all
their capital on roll-outs, leaving nothing for marketing through the tough times.
The other reason New Edge adopted its small-market strategy is that Moffat, who had
worked extensively with independent telcos as a consultant, knew that contrary to
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28. expectations, demand for broadband services was high in small communities.” People in
these markets want the services just as badly as people in metro markets," Moffat says.
"Maybe more so." For many people in small markets, he notes, living there is a work- and
life-style choice. But to get those benefits, they sacrifice easy access to goods and services,
entertainment - and customers. So many see availability of broadband services as even
more vital as people do in larger markets. "For those," Moffat says, "[broadband] opens up a
whole new window on the world."
Finally, despite the obvious concentration of big company headquarters in a relatively
few major markets that New Edge avoids, Moffat notes that 15 per cent of major national
companies have bases of operation within his footprint. New Edge had a pretty good idea
how to market services in small communities because of Moffat's experience with small
telcos. He isn't prepared to spill the beans on all his secrets, but he does mention a few.
First, New Edge adopted a pragmatic wholesale-retail business model. The preference
is always to go into a new market with a good, strong local ISP partner. "You want the
people who go for coffee [with prospective customers] or sit with them on local Chambers
of Commerce," Moffat explains. "People well entrenched in the community." But where it
can't find a strong and willing partner - some communities didn't even have local dial-up
service when New Edge came to town - it has for the last three months been able to offer
ISP services itself.
Moffat also talks about the need for "guerilla tactics" as opposed to "carpet bombing"
when marketing in smaller communities. "In a metro market," he says, "you do the
roll-through at about 50,000 feet - usually with a big media blitz. But with our markets,
we're more specific and targeted." "There is much less reliance on mass media. The
marketing is usually done more through lists and direct mail and inside (telephone) sales.
And it relies heavily on local knowledge which we mainly get from our partners."
Local partners always help design the campaigns, though New Edge does have its own
templates for small-town marketing drives. Local partners also share marketing costs,
usually splitting it 50-50 with New Edge. "They've got to have some skin in the game,"
Moffat says. But as relatively successful as New Edge has been with this fairly unique
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29. strategy on the broadband DSL side, it likely would not have survived if it had relied entirely
on that business.
Luckily, one of the requirements of a national small-market strategy is that you need
a fiber ring network to backhaul traffic from all those little markets to the Internet - or
wherever. New Edge's backbone includes 18 regional access points.
The company had been using it all along to offer virtual private network (VPN), LAN
interconnection and related services to regional and national enterprise customers. Recently
it realized these services were actually growing faster than broadband DSL. In fact, they now
account for more than 50 per cent of New Edge's revenues. So a month and a half ago, the
company announced it was scaling back its aggressive plan for rolling out new markets - at
one time it had intended to be in 1,200 COs by the end of 2000. It also laid off 55
employees and refocused operations to help it take advantage of the wide area services
market. Does this mean New Edge's small-market DSL strategy really failed. Moffat doesn't
see it that way. There's no question, he says, that demand is still there and will continue to
grow.
The drying up of capital markets has had two important impacts, though. It means a
wider roll-out by New Edge is out of the question right now. But it also makes it difficult or
impossible for any new competitor to enter its markets. And that means New Edge in effect
has a competition-free zone. When capital markets do loosen up again, its position may be
virtually unassailable.
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30. CHAPTER-4
INTERNATIONAL RETAILING
Introduction
International Expansion of Retailers
In order to gain competitive advantage and to increase sales and profits, retailers are
rapidly expanding internationally. Among leading retailers conquering international markets
are Wal-Mart (U.S.), Metro AG (Germany), Sears Roebuck (U.S.), followed by a number of
German groups—Rewe, Edeka, and Aldi.
International Retailing Defined
All activities involved in selling products and services to final international consumers
for their personal consumption. It involves operations of international retailers beyond
home-country borders, along with operations of local retailers in different countries
worldwide.
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31. Retail Formats
Variations in Different Markets: There are three main retail formats: general
merchandise retailing, food retailing, and non-store retailing.
General Merchandise Retailing
i. Specialty Stores, stores that offer a narrow product line and wide assortment,
category include clothing stores, bookstores, toy stores, etc. Represent the
main retail format in developing countries, but are popular in developed
countries as well
ii. Specialized Markets, large markets that contain specialty stores specializing in
a particular product category; exist in both developed and developing countries.
iii. Department Stores , large stores that offer a broad variety of products, as well
as a wide assortment. Although department stores have suffered losses lately in
North America and many appear to be retrenching, they abound both in
Western and Eastern Europe, and are very popular in Asia.
iv. General Merchandise Discount Stores, stores that sell high volumes of
merchandise, offer limited service, and charge lower prices. All-purpose
discount stores like Wal-Mart offer a wide variety of merchandise and limited
depth. Category specialists (category killers) like Staples' and Toys ‘R Us carry a
narrow variety of merchandise and offer a wide assortment.
v. Off-Price Retailers, retailers that sell brand name and designer merchandise
below regular retail price; they usually sell overruns, irregular products and
products from earlier seasons. Off-price retailers are very popular in the United
States and Canada and are rapidly catching on in the rest of the world.
vi. Catalog Showrooms, retailers that offer high-turnover, brand name products at
discount prices. Customers usually order from a catalog in the showroom where
the product is only displayed, then pick up the goods at a designated location.
Ikea has pioneered the catalog showroom concept around the world.
Food Retailers
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32. i. Conventional Supermarkets, self-service retailers with high annual sales;
abound worldwide.
ii. Superstores , large food retailers that sell food, drugs, and other products. In
this category are: combination stores that sell foods and drugs, which are
popular in the U.S., and hypermarkets, which combine supermarket, discount,
and warehouse retailing principles, which are popular in the rest of the world,
especially in Europe and Latin America.
iii. Warehouse Clubs or Wholesale Clubs, stores that require members to pay an
annual fee and operate in low-overhead, warehouse-type facilities, offering
limited lines of brand name and dealer-brand groceries, apparel and other
goods at a discount.
iv. Convenience Stores, small retailers located in residential areas; carry limited
lines of higher-turnover necessities. While the formats differ, convenience
stores abound in both developing and developed countries.
Non-Store Retailing
i. Internet Retailing,(also known as interactive home shopping or electronic
retailing): a venue for selling merchandise through the Internet; includes both
the new dot-com companies along with traditional retailers attempting
additional market penetration using the Internet.
ii. Vending Machines, retailing format that has become very popular, with extent
of use varying from country to country—they are particularly popular and
omnipresent in Japan.
iii. Television Home Shopping, a venue for selling merchandise to consumers in
their homes using cable channels. Examples of television home shopping are
infomercials and direct response advertising, popular in North America and
Europe, and becoming increasingly popular in Asian markets.
iv. Catalog Retailing and Direct Mail Retailing, a venue for selling merchandise to
consumers using catalogs and other types of direct mail. It allows for the
international expansion of retailers, but must be adapted to local market needs
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33. and practices. There are many obstacles to catalog retailing in developing
countries: deficient telephone service, unreliable mail service, and low income,
among others.
v. Direct Selling, a retailing venue whereby a salesperson, typically an
independent distributor, contacts a consumer, demonstrates product use and
benefits, takes orders and delivers the merchandise. Direct selling firms are
most active in the growth markets of Southeast Asia, Central and Eastern
Europe, and Latin America. Recently, due to the negative publicity surrounding
direct selling practices, China has banned all direct selling operations.
vi. Network Marketing , variation on direct selling, involves signing up sales
representatives to go into business for themselves with minimal start-up capital.
Their primary task is to sell more "distributorships" and merchandise. Network
marketing is growing rapidly, especially in emerging markets.
Issues in International Retailing
i. Legislation and Regulation local governmental regulations differ from one
market to another. Legislation has a profound impact on a firm's operations
through regulations that restrict the firms' marketing strategies in the target
market.
ii. Taxation and Cross-Border Shopping in countries where consumers are not
charged duties for products they purchase from a neighboring country,
consumers' purchase decisions become driven by tax differences, rather than
by differences in producer prices. This may cause reduced profits for domestic
retailers.
iii. Variation in Retail Practices Consumer Perspective, retail practices vary from
one market to another depending on consumer practices and preferences in the
market. In the United States, for example, consumers purchase products in
bulk and less frequently. In Japan and in most European countries, consumers
purchase products in smaller quantities and on a daily basis.
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34. iv. Variation in Retail Practices Sales peopl e and Management sales service
differs from market to market, ranging from extremely friendly to curt and even
rude salespeople. Some stores can charge an entrance fee for people shopping
there, while other stores require a particular dress code of their customers.
CHAPTER-5
IMPACT OF RETAIL MANAGEMENT IN THE GROWTH OF INDIA ECONOMY
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35. Definition and Scope of Retailing
The word retail is derived from the French word retailer, meaning to cut a piece off
or to break bulk. In simple terms, it implies a first-hand transaction with the customer.
Retailing can be defined as the buying and selling of goods and services. It can also be
defined as the timely delivery of goods and services demanded by consumers at prices
that are competitive and affordable.
Retailing involves a direct interface with the customer and the coordination of
business activities from end to end- right from the concept or design stage of a product
or offering, to its delivery and post-delivery service to the customer. The industry has
contributed to the economic growth of many countries and is undoubtedly one of the
fastest changing and dynamic industries in the world today.
Types of Retail Operations
Retail operations enable a store to function smoothly without any hindrances. The
significant types of retail operations consist of:
i. Department store
ii. Specialty store
iii. Discount/Mass Merchandisers
iv. Warehouse/Wholesale clubs
v. Factory outlet
Retail Management System targets small and midsize retailers seeking to automate
their stores. The package runs on personal computers to manage a range of store
operations and customer marketing tasks, including point of sale; operations; inventory
control and tracking; pricing; sales and promotions; customer management and
marketing; employee management; customized reports; and information security.
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36. The Emerging Sectors in Retailing
Retailing, one of the largest sectors in the global economy, is going through a
transition phase not only in India but the world over. For a long time, the corner grocery
store was the only choice available to the consumer, especially in the urban areas. This is
slowly giving way to international formats of retailing. The traditional food and grocery
segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris,
and Apna Bazaar), convenience stores (Convenio, HP Speed mart) and fast-food chains.
It is the non-food segment; however that foray has been made into a variety of new
sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus, Lifestyle,
Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies,
Music World, rosswords, Landmark), appliances and consumer durables (Viveks, Jainsons,
Vasant & Co.), drugs and harmacy (Health and Glow, Apollo).
The emergence of new sectors has been accompanied by changes in existing formats
as well as the beginning of new formats:
i. Hyper marts
ii. Large supermarkets, typically 3,500-5,000 sq. ft
iii. Mini supermarkets, typically 1,000-2,000 sq. ft
iv. Convenience stores, typically 750-1,000sq. ft
v. Discount/shopping list grocer
The traditional grocers, by introducing self-service formats as well as value-added
services such as credit and home delivery, have tried to redefine themselves. However, the
boom in retailing has been confined primarily to the urban markets in the country. Even
there, large chunks are yet to feel the impact of organized retailing. There are two primary
reasons for this. First, the modern retailer is yet to feel the saturation' effect in the urban
market and has, therefore, probably not looked at the other markets as seriously. Second,
the modern retailing trend, despite its cost-effectiveness, has come to be identified with
lifestyles.
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37. In order to appeal to all classes of the society, retail stores would have to identify with
different lifestyles. In a sense, this trend is already visible with the emergence of stores with
an essentially `value for money' image. The attractiveness of the other stores actually
appeals to the existing affluent class as well as those who aspire for to be part of this class.
Hence, one can assume that the retailing revolution is emerging along the lines of the
economic evolution of society.
Retailing Scenario- Global View
Retailing in more developed countries is a big business and better organized than
what in India. According to a report published by McKinsey & Co. along with the
Confederation of the Indian Industry the global retail business is a worth a staggering US$
6.6 trillion. In the developed world, most of it is accounted for by the organized retail sector.
The service sector accounts for a large share of GDP in most developed economies.
And the retail sector forms a very strong component of the service sector. In short, as long
as people need to buy, retail will generate employment. Globally, retailing is a
customer-centric with a emphasis on innovation in products, processes and services.
With total sales of US$ 6.6 trillion, retailing is the world’s largest private industry,
ahead of finance and engineering. Some of the world’s largest companies are in this sector:
over 50 Fortune, 500 companies and around 25 of the Asian Top 200 firms and retailers.
Wal-Mart, the world second largest retailer, has a turnover of US$ 260 billion, almost
one-third of India GDP.
Retailing in India is gradually inching its way to becoming the next boom industry.
The whole concept of shopping has altered in terms of format and consumer buying
behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in
sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping,
entertainment and food all under one roof.
The Indian retailing sector is at an inflexion point where the growth of organized
retail and growth in the consumption by Indians is going to adopt a higher growth
trajectory. The Indian population is witnessing a significant change in its demographics.
A large young working population with median age of 24 years, nuclear families in urban
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38. areas, along with increasing working-women population and emerging opportunities in
the services sector are going to be the key growth drivers of the organized retail sector.
Big in size and turnover, Indian retailing industry is characterized by certain attributes.
The network of retailers reaches every nook and corner of the country. So any
product produced anywhere in the country can be easily accessed by the buyers from any
location. Thus the spatial convenience of Indian retailers is vary high.
Secondly, in India the retailing industry is an unorganized lot consisting of, in most
of the cases, small entrepreneurs. And the virtual omnipresence of the Indian retailer can
be attributed to these small entrepreneurs only.
The second attribute gives rise to the following characteristics: Power of the
retailers, as such is very less, and in many cases it is negligible. This weakness has been
exploited by the manufacturers and the stronger partners of the marketing channel. The
retailers, in general, abide by the terms and conditions set by the manufacturers and
other "big brothers" of the channel.
The manufacturers cannot directly reach all retailers in a particular geographical area.
Therefore, the manufacturers cannot maintain the desired relationship with the retailers,
which in turn, make management of the channel complicated. This also makes the
possibility of a direct feedback loop from the retailers almost remote.
Therefore, the member operating between the manufacturers and retailers become
more powerful as they can block the channel of communication between the two. So the
dependence of retailers on other channel members increases to a high extent. Thus the
participation of retailers in the flows of marketing mix becomes lower than desired. The
financial strength of the Indian retailers, in general, is very low and hence the investment
capabilities. This makes the retailers more dependent on the other channel members.
However, these characteristics are peculiar to the small retail outlets and may not be
present at every kind of retail level.
Retail Shopkeepers
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39. India has sometimes been called a nation of shopkeepers. This epithet has its roots
in the huge number of retail enterprises in India, which totaled over 12 million in 2003.
About 78% of these are small family businesses utilizing only household labour. Even
among retail enterprises that employ hired workers, the bulk of them use less than three
workers.
India's retail sector appears underdeveloped not only by the standards of
industrialized countries but also in comparison with several other emerging markets in
Asia and elsewhere. There are only 14 companies that run department stores and two
with hypermarkets. While the number of businesses operating supermarkets is higher
(385 in 2003), most of these had only one outlet. The number of companies with
supermarket chains was less than 10.
Retail Sales
Retail sales, which amounted to about Rs7, 400 billion in 2002, expanded at an
average annual rate of 7% during 1999-2002. With the upturn in economic growth during
2003, retail sales are also expected to expand at a higher pace of nearly 10%.
In a developing country like India, a large chunk of consumer expenditure is on
basic necessities, especially food related items. Hence, it is not surprising that food,
beverages and tobacco accounted for as much as 71% of retail sales in 2002. The
remaining 29% of retail sales are non-food items. The share of food related items fell
over the review period, down from 73% in 1999. This is to be expected as, with income
growth, Indians, like consumers elsewhere, spent more on non-food items compared
with food products.
Sales through supermarkets and department stores are small compared with overall
retail sales. However, their sales grew much more rapidly (about 30% per year). As a
result, their sales almost tripled during this time. This high acceleration in sales through
modern retail formats is expected to continue during the next few years with the rapid
growth in numbers of such outlets in response to consumer demand and business
potential.
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40. Government Policy
There has been vigorous opposition to foreign direct investment (FDI) in retailing
from small traders who fear that foreign retailing companies would take away their
business, lead to the closure of many small trading businesses and result in considerable
unemployment. Given the political clout of the small trading community, because of their
enormous numbers, the government has barred FDI in retailing since 1997. Hence, at
present, foreign retailers can only enter the retailing sector through franchising
agreements.
Growth of Retailing in India
Indian retailing industry has seen phenomenal growth in the last five years
(2001-2006). Organized retailing has finally emerged from the shadows of unorganized
retailing and is contributing significantly to the growth of Indian retail sector.
RNCOS India Retail Sector Analysis (2006-2007) report helps clients to analyze the
opportunities and factors critical to the success of retail industry in India. Organized
retail will form 10% of total retailing by the end of this decade (2010).
From 2006 to 2010, the organized sector will grow at the CAGR of around 49.53% per
annum.
Cultural and regional differences in India are the biggest challenges in front of retailers.
This factor deters the retailers in India from adopting a single retail format. Hypermarket
is emerging as the most favorable format for the time being in India. The arrival of
multinationals will further push the growth of hypermarket format, as it is the best way to
compete with unorganized retailing in India.
Technology Impact:
The other important aspect of retailing relates to technology. It is widely felt that the
key differentiator between the successful and not so successful retailers is primarily in
the area of technology. Simultaneously, it will be technology that will help the organized
retailer score over the unorganized players, giving both cost and service advantages.
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41. Retailing is a `technology-intensive' industry. It is quoted that everyday at least 500
gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of
JC Penney to its corporate headquarters. Successful retailers today work closely with their
vendors to predict consumer demand, shorten lead times, reduce inventory holding and
thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage
through distribution and information systems in the retailing industry. They introduced
two innovative logistics techniques - cross-docking and electronic data interchange.
Today, online systems link point-of-sales terminals to the main office where
detailed analyses on sales by item, classification, stores or vendor are carried out online.
Besides vendors, the focus of the retailing sector is to develop the link with the consumer.
`Data Warehousing' is an established concept in the advanced nations. With the help of
`database retailing', information on existing and potential customers is tracked. Besides
knowing what was purchased and by whom, information on softer issues such as
demographics and psychographics is captured.
Retailing, as discussed before, is at a nascent stage in our country. Most organized
players have managed to put the front ends in place, but these are relatively easy to copy.
The relatively complicated information systems and underlying technologies are in the
process of being established. Most grocery retailers such as Food World have started
tracking consumer purchases through CRM. The lifestyle retailers through their `affinity
clubs' and `reward clubs' are establishing their processes. The traditional retailers will
always continue to exist but organized retailers are working towards revamping their
business to obtain strategic advantages at various levels - market, cost, knowledge and
customer.
With differentiating strategies - value for money, shopping experience, variety,
quality, discounts and advanced systems and technology in the back-end, change in the
equilibrium with manufacturers and a thorough understanding of the consumer behavior,
the ground is all set for the organized retailers.
It would be important to note, however, that the retailing industry in India is still a
`protected industry'. It is one of the few sectors which still has restrictions on FDI. Given
the current trend in liberalization, it will not be long before the retailing sector is also
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42. thrown open to international competition. This will see a further segregation of the
international retailing brands and the domestic retailers, thereby injecting much greater
dynamism into the market. That will be when the real action will begin.
Major retailers in India
India’s top retailers are largely life style; clothing and apparel stores.This is followed
by grocery stores. Following the past trends and business models in the west retail giants
such as Pantaloon, Shopper’s Stop and Lifestyle are likely to target metros and small
cities almost doubling their current number of stores. These Wal-Mart wannabes have the
economy of scale to be low �medium cost retailers pocketing narrow margin.
Retailing Scenario-India
The retail scenario in India is unique. Much of it is in the unorganized sector, with
over 12 million retail outlets of various sizes and formats. Almost 96% of these retail
outlets are less than 500 sq.ft. In size, the per capita retail space in India being 2 sq.ft.
Compared to the US figure of 16 sq.ft. India�s per capita retailing space is thus the
lowest in the world. With more than 9 outlets per1, 000 people, India has the largest
number in the world. Most of them are independent and contribute as much as 96% to
total retail sales.
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43. CHAPTER-6
INTERNATIONAL MARKETING
International marketing refers to marketing carried out by companies overseas or across
national borderlines. This strategy uses an extension of the techniques used in the home
country of a firm. Introduction to International Marketing. International marketing is simply
the application of marketing principles to more than one country. However, there is a
crossover between what is commonly expressed as international marketing and global
marketing, which is a similar term.
International Marketing Environment
One of the fundamental steps that need to be taken prior to beginning international
marketing is the environmental analysis. Of course there are many tools on Marketing
Teacher that would prove useful at this stage such as lessons on the marketing environment,
PEST Analysis, SWOT Analysis, POWER SWOT and Five Forces Analysis. However, the very
specific and unique nature of each individual nation needs to be looked into. Below we
consider the nature of an international PEST Analysis, and the influence of tariff and
non-tariff barriers.
An International PEST Analysis
PEST is a well-known and widely applied tool when considering the external nature of
the domestic market. However, it is equally as useful when applied to the nature of the
international marketing environment.
International PEST Analysis would consider
i. How easy will it be to move from purely domestic to international marketing?
ii. Would your business benefit from inward foreign investment?
iii. What is the nature of competition within each individual market, and how will
companies from other nations compete when you meet with them
head-to-head in unfamiliar countries?
iv. Many other factors those are specific to your organization or industry.
v. Political
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44. vi. Is there any historical relationship between countries that would benefit or
hinder international marketing?
vii. What is the influence of communities or unions for trading? E.g. The European
Union and its authority over European laws and regulation.
viii. What kind of international and domestic laws will your business encounter?
ix. What is the nature of politics in the country that you are targeting, and what is
their view on encouraging foreign competition from overseas?
Economic
What is the level of new industrial growth? E.g. China is experiencing terrific industrial
growth. What is the impact of currency fluctuations on exchange rates, and do your home
market and your new international market - share a common currency? E.g. Polish
companies trading in Eire will use Euros.
There are of course the usual economic indicators that one needs to be aware of such
as inflation, Gross Domestic Product (GDP), levels of employment, national income, the
predisposition of consumers to spend savings or to use credit, as well as many others.
Socio-cultural
Culture, religion and society are of huge importance. What are the cultural norms for
doing business? E.g. is there a form of barter? Will cultural norms impact upon your ability
to trade overseas? E.g. Putonghua is very difficult for many Western people to learn.
Technology
Do copyright, intellectual property laws or patents protect technology in other
countries? E.g. China and Jordan do not always respect international patents. Does your
technology conform to local laws? E.g. electrical items that run on non-domestic currents
could be dangerous. Are technologies at different stages in the Product Life Cycle (PLC) in
various countries? E.g. versions/releases of software.
Tariff and Non-Tariff Barriers
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45. There are a number of fences that companies need to plan for when initialising
international marketing. Tariff and non-tariff barriers are still very common, even today.
Tariff barriers are charges imposed upon imports - so they are a form of import
taxation. This could mean that your margins are reduced so much that trading overseas
becomes too unprofitable. However they are normally transparent and you can plan to take
them into account.
Non-tariff barriers are trickier to spot. Governments sometimes act in favour of their
own domestic industries rather than allow competition from overseas. Bureaucracy is a
hurdle often encountered by exporting companies - it takes many forms and includes
unnecessary hold-ups and red tape. Quotas are another form of non-tariff barrier i.e.
restricting the quantity of a product that can be imported into a particular country.
Retail Management Tips
It's The Customer Stupid - To paraphrase that popular, and successful, quote from
Bill Clinton's 1992 campaign: The single most important aspect of your business is your
customers. Make sure your entire team understands that - and acts like they understand it.
"Doctor" Your Customers - Everyone wants to think they are special. You can make
your customers feel special if you treat them like your family doctor treats you. For the time
you are with them, concentrate on them and what they are telling you. Exclude everything
else for that period of time.
Delight the Customer - It is heard a lot, but seldom practiced. Today I saw a
production supervisor straighten out a mess and, in the process, calm an irate customer.
When I heard her tell them to put two mugs with the company's logo into the package being
sent to the customer, I knew she understood what "Delight the Customer" means.
You never have to make up for a good start - If a project or a job gets off to a bad
start it can be difficult to catch up. Do your planning up front so you get a good start and
you won't regret it.
Train Your Supervisors - The key to your business success is the productivity of your
employees. The key to employee productivity is their perception of their immediate
supervisor. Invest in training your supervisors and managers. It will pay off.
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46. Under-promise and over-deliver - This goes beyond the old adage 'don't promise
what you can't deliver'. Instead, deliver more than what you promised. It's a good way to
build customer rapport - both outside and inside the company.
Your first obligation is to the customer - Without customers you don't have a
business. Treat them with the same respect you expect when you are a customer. Make sure
everyone in your organization understands the importance of customer service.
You have to make a difference - The group you manage has to be more effective,
more productive with you there than they would be if you were not. If they are as productive
without you, there is no business sense in keeping you on the payroll.
Your biggest business challenge is your competition - They have to take away your
customers to survive or grow. How are they going to do that? How can you stop them? How
can you steal their customers? Don't wait for it to happen. Start preparing NOW.
Follow Through On Sales Promises - Don't let your sales people make promises the
company can't meet. If they tell a customer they can have 100 gross of widgets "tomorrow
before 10", they better be sure that many are already in the warehouse. Nothing loses
customers faster than broken promises.
Doing it right costs less than doing it over - Have you ever been asked "Why is
there never enough time to do it right, but always enough time to do it over"? Save the costs,
including customer dissatisfaction and lower worker morale, by concentrating on doing the
job right the first time.
Doesn’t Be A Demotivator - Your job as a leader is to get and keep your people
motivated and working toward the common goal. Demeaning them, to their face or to
others, erodes their motivation. So does dismissively telling them that their ideas "are
stupid". Watch your own actions to be sure you aren't defeating your own efforts by
demotivating your people.
Keep the flame alive - When people join your organization they are all fired up and
ready to do great things. Over time we all too often wear down that enthusiasm. Instead, do
what you can to fan the flames of their enthusiasm and you will be amazed at their output.
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47. You Can't Listen With Your Mouth Open - You’re associates, your employees, your
suppliers, your customers all have something of value in what they have to say. Listen to the
people around you. You will never learn what it is if you drown them out by talking all the
time. Remember, the only thing that can come out of your mouth is something you already
know. Shut up and learn.
Anyone can steer the ship in calm waters - What will set you apart in your career is
how you perform during the tough times. Don't become complacent and relax just because
things are going well. Plan ahead for the downturn.
It is easier to save a dollar than to earn a dollar - Every dollar you don't spend is a
dollar you don't have to earn to achieve the same profit level. Invest as needed to grow the
business, buy what you need, but don't spend without forethought and a good reason.
Appearance Does Matter - It may be a sad commentary on our superficial society,
but appearance does matter. Whether it's the packaging on your product, the first
impression you make when calling on a new client, or your company's web site people
notice how things look. They care about how things look and make judgments about you
and/or your product based on appearance.
Get your people involved - It's a lot easier to get employees to stand behind a
company decision if they have the opportunity to participate in the discussion. Management
still has to make the decision. but if they have had the opportunity to make their point of
view known employees are more apt to stand behind the ultimate decision, even if they
don't agree with it.
Fix The Problem, Not The Blame - It is far more productive, and less expensive, to
figure out what to do to fix a problem that has come up than it is to waste time trying to
decide who's fault it was.
Actively Listen - Listen to your customers, your employees, your suppliers, and
anyone else who comes in contact with your business. Honestly evaluate what they have to
say, without letting your ego get in the way, and you will probably learn something that
benefits your business
Winning at Store Management
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48. “Winning at Store Management” includes a step-by-step approach to hiring top
performers. But hiring and motivating great people is only part of your success. You want to
train them and make sure they know what is expected of them so that you have the comfort
of knowing that all of your people are moving in the same direction; the comfort of knowing
that your store is always in safe hands.
This guide will teach you how to ensure that happens. With DMSRetail’s training plan,
you won’t have to worry about fitting in the training time. The program is made to work
with your time constraints and your hour control or wage cost plan. The time and money
you save on training is a bonus. This is a training program that fits your ‘budget’. Let’s face
it, you have a limited number of staff hours available to use. It’s up to you to use those
hours in the most productive way possible. With this guide you’ll receive tools to make
training fit into your schedule effortlessly. You won’t believe how easy it is! Your new people
will learn how to do their job, how to conduct themselves in an exemplary fashion and how
to succeed. That's an achievement to be proud of.
Imagine that you have the best people and they are fully trained and ready to succeed
In addition to hiring top performers, training them well and preparing them for
success, the task of managing your hours and the many changing priorities you have every
day is incredibly important. You’ll easily rise to the challenge with the skills you’ll develop
by reading and applying “Winning at Store Management”. You’ll effectively manage every
hour, every day, every week and so on. Planning and managing your time will make a huge
difference to the level of success you will achieve. With this guide, you’ll become highly
effective at managing every day and will even start to do some long range planning. That’s a
skill that will earn you a lot of respect from your executive. Top management wants people
who can look ahead with concrete plans for increasing their business. People who do this
move up in the organization!
DMSRetail’s “Winning at Store Management” was designed by retail experts. Their
experience on the sales floor, at store and district management levels and as members of
the executive teams for a number of successful, prominent retail companies…from apparel
to electronics to confections and computer hardware/software…has provided them with an
immense amount of knowledge in the retail management field.
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49. Retail Planograms
Planograms are diagrams that show where products or merchandise should be placed
on a shelf or other sort of display. The idea is to maximize the amount of merchandise on
the shelf and the amount of sales by arranging in such a way that makes it appealing to the
consumer while minimizing wasted space.
Planograms differ significantly by retail sector. Fast-moving consumer goods
organizations and supermarkets largely use text and box based planograms that optimize
shelf space, inventory turns, and profit margins. Apparel brands and retailers are more
focused on presentation and use pictorial planograms that illustrate "the look" and also
identify each product
Often retailers use planograms to decide how best to get as much on their shelves as
possible or increase sales. Even more often, however, the suppliers will send a planogram
before sending their product as a suggestion to help in displaying their good s so they can
be easily seen and will be placed alongside like objects.
Retail Analytics
Better Retail Decisions through Consumer and Store Data
In an industry notorious for expensive real estate, slim margins and tenuous
customer loyalty, retailers in every category need as much support as they can get when
deciding where to operate, what they should stock, which customers they should fight to
retain, and how to communicate with them."Retail Analytics leverage data in retail
processes to enable context-specific insight that is actionable."
Customer Profiles
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50. Who are my best customers and where do they live?
Adding demographic and behavioral data to the transaction record completes the
picture; not only will the retailer know what customers are buying from them, but they will
understand their lifestyles, particular life stage, their needs and wants, and what they are
buying from competitors.
Targeting
How can I connect with prospects if I don't know where they live?
Micromarketing data bases are produced each year, and are available at several layers
of geography-including Zip+4, postal code and postal walk. Gathered into refined segments,
these micro targets provide a wealth of actionable information about the households in each
location-and can be quickly mailed to.
Creative
How do I communicate with customers and prospects I don't know?
Quantitative information will help retailers understand their customer potential and
qualitative intelligence will improve marketing, messaging and targeting strategies.
Combined, this intelligence offers retailers a data-driven strategy to increase profitability.
Sales Forecasting
How do I predict what my customers will be looking for in the future?
Demographic and expenditure variables are ideal anchors for trend analysis. Trend
analysis uses historical data to make accurate predictions about future spending-in terms
of amounts, categories, even brands.
Loyalty
My rewards program shows me what my customers are buying from me, but what else
are they buying, and from where?
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