Assignment Set- 1

Q1. How does store layout and store design contribute in retail business? Explain. Ans.:Store Design As the store space is fixed, the optimum use of available store space is critical factor in successful retailing. To achieve this it requires balancing the effects of the overall store design and atmosphere with the more direct impact of product layout and merchandising offered within the store. Store layout and design must reflect local requirements, designed to emphasize the impact of an open, bright store. However, optimizing the available space and different fixtures would be necessary in a store for retailer to maximize the product range and to offer additional services. Steps in Planning a Store Layout Keeping in mind the above discussed objectives of a store layout design, the following care should be administered in each department to get the maximum enhancement of the store image and the merchandise offered by it. 1. Designing the store front: Attention should be paid in designing a store front. It should be graphically strong and descriptive enough for any one driving by to know what is sold inside the store. The sign should be big, bright, multi-layered and create brand awareness throughout the shop. 2. The entry of the store: The front door should quickly be transported and sensory loaded. It should be designed in such a way that sound, light, sight and motion should be strong with inviting store atmosphere. 3. Flooring: Now-a-days different types of flooring material are used to create the texture in the store. Commercial vinyl flooring with inlaid laser cut logos and icons can be used in aisles. These enhance the store image and add value to the ambiance of the store. 4. Ceiling and lighting: Decorated Ceiling with dropped soffits, space frames, trusses, neon and graphics enhance the store image.

Lighting will have more impact. Lighting arrangements should be in such a way that it enriches the shopping experience. Different lights like adjustable halogen lamps, neon lights etc are available in markets. Lighting effect such as moving lights, color screens create theatrical effects that will enhance the shopping experience. 5. The POS counter: The POS counter should be designed so that the traffic patterns allow entry into the store without being immediately confronted by cash register or by a line of customers waiting to check out. Care should be taken that the counter is clearly marked with an overhead display or soffit to avoid confusion and should be provided with point of sale merchandise opportunities. These might include bins holding small impulse items as well as showcases that serve as counter tops so that customers have to see whats in them as they make their purchase while they are waiting to pay the bill. 6. Wall Fixtures: Care should be administered not to pack the walls with shelves. Instead they can be used to display merchandise, graphics, photo boxes, videos etc. Division and color are important so the walls are to be segmented into sections which provoke customer interest. Different types of merchandising systems: Slat wall, grids, recessed standards and wall cases are commonly used. The variety of visual presentation will provoke additional interest which results in sales. 7. Floor fixtures: The floor fixtures should also be flexible. Long runs of gondolas should be limited because they will bind the store into an immovable pattern. Care should be taken that the sales floor is wired for electric and computer cables. Fix Turing will become much more customer interactive and future displays will incorporate video and computer technologies to impact sales at the point where the purchasing decision is most often made. 8. Sound and Music: Sound is known to be worlds single most powerful emotional element. Sound encourages customers to stay in the store longer and to come back more often, Care should be taken that music in the store is effectively and consistent. 8. Signs and graphics:

Signs and graphics will help customers find their way through the store and will add to the overall ambiance of the shop. In-store graphics should be large and distinctive and should include a combination of photo blow ups, back lighted transparencies and props that all promote the shops identity and theme. 9. Video: Video monitors can serve as an entertainment back drop and provide information about a variety of subjects. For instance, in a mall video displaying different products, their features and their promos will educate the customer about the product line which makes the customer to stay long and the shop. This technique will capture your clients attention and keep them in the shop for a longer time. 10. Kiosk/Computers: In-store interactive computers will really separate future planning stores from those in operation today. They can be extensively used to facilitate the customers and in other hand capture the information which can otherwise used for further Customer Relationship programs, market survey etc. Steps in Selecting a Store Layout The basic arrangement of the selling space is of primary importance, because it effects all other design decisions. Each type of layout has inherent strengths and weaknesses. With changing formats and increasingly sophisticated store design research and techniques, retailers have been experimenting with many combinations of these plans. ] Though there exist number of layout formats, which are adopted by the retailer based on the product line, store design, choice of retailer etc, Layouts may be categorized into three basic types: Grid Free flow Loop/boutique Grid Layouts It is a linear design for a selling floor where fixtures are arranged to form vertical and horizontal aisles throughout the store.

Supermarkets, discount stores, grocery, drug store and other convenience oriented retailers, typically use it. This layout is mostly of the stores convenience and facilities a lot of products out on display. Q2. What legal procedures exist to handle customers in retail environment? Ans.:Legal Procedures for Customer Handling Now a days every business well being is determined by the Customer. They are the lifeline of any business and it is important to minimizing customer dissatisfaction and avoiding it. However best the retailer efforts to satisfy his customers there is always a chance of dissatisfied customer or customers having some problem with the retail organization. In fact there are some legal Acts and rules laid by the government to safeguard customers interest. Now let us briefly discuss various legal procedures which are in practice to safe guard customers rights and interests. First let us attempt to know who a customer is? Customer is defined as: 1. Buyer of any goods for a full or partly paid promised on consideration or under any system of deferred payment. 2. Use of such goods with approval of actual buyer. 3. Hirer or receiver of any services for a fully or partially paid and party promised consideration or under any system of deferred payment. In Consumer Protection Act, the word "consumer" has been defined separately for goods and services. For the purpose of "goods", a consumer means a person belonging to the following categories: i) One who buys or agrees to buy any goods for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment ii) It includes any user of such goods other than the person who actually buys goods and such use is made with the approval of the purchaser. Note: A person is not a consumer if he purchases goods for commercial or resale purposes. For the purpose of services, a consumer means a person belonging to the following categories:

i) one who hires or avails of any service or services for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment ii) It includes any beneficiary of such service other than the one who actually hires or avails of the service for consideration and such services are availed with the approval of such person. Consumer protection' is a form of government regulation which protects the interests of consumers. For example, a government may require businesses to disclose detailed information about products particularly in areas where safety or public health is an issue, such as food. Objectives of consumer protection Act-1986: 1. To ensure better protection of the rights of the consumers 2. To provide speedy and effective redressed to consumer disputes 3. To promote voluntary consumer movements to safeguard the interest of consumers. Extent and coverage of the Act: 1. The Act applies to all goods and services 2. It covers all sectors whether private, public or co-operative. Any affected customer, any voluntary organization registered under the societies Act or Companies Act 1956 or the central may lodge their complaints with redressed for follow-up towards getting justice and compensation. What are rights of Consumer? Under the Consumer Protection Act 1986, a consumer is guaranteed the following rights: Right to be protected against the marketing of goods and services which are hazardous to life and property Right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumer against unfair trade practices Right to be assured, wherever possible, access to a variety of goods and services at competitive prices Right to be heard and to be assured that consumers' interests will receive due consideration at appropriate forums Right to seek redressal against unfair trade practices and unscrupulous exploitation of consumers

Right to consumer education. Essentials of a complaint: 1. The complaint must contain facts and allegations in writing 2. The complaints or his authorized agent should file the complaints 3. The complaint ought to have suffered injury or loss due to unfair trade practice, defective goods and deficiency of services or excessive price of goods 4. The relief sought for. 5. The documents if any to get orders for one or more of the relief. Relief available to consumers: Depending on the nature of relief by the consumer and facts, the redressal forum may arrange to get orders for one or more of the relief. a. Removal of defects from the goods. b. Replacement of goods. c. Refund of money d. Award compensation for the loss or injury suffered. e. Removal of defects or deficiencies in service f. Discontinue the unfair trade practice or the restrictive trade practice or not to repeat it. g. Not to offer the hazardous goods for sale h. Withdraw the hazardous goods from being offered for sale. Hierarchy of consumer courts in India: Consumer Protection Act, 1986 provides three tier Courts for the adjudication of Consumer Disputes. The lowest level courts are constituted at District level which is called District Courts. Above them State level Consumer Courts are constituted which are called State Commission and on National level there is National Commission. * Refer Appendix-I for customer redressal form given at end of the book. * Refer Appendix-II for Model form of Appeal given at end of the book. Customer handling procedures in terms of credit card payments: Now a day the business landscape is changing every day. Customers are shopping the goods and services not only in a brick and mortar store but also on internet at their convenience. So also the mode of payment changed. Now a days most of the bills are paid by using credit cards. So there should some safe guarding rules and regulations to protect the customer from credit cards fraud. The following are some of them:

The Consumer Guidance Society of India has released its list of recommendations for cyber retailers. Some of the recommendations are as follows: 1. Consumers must be provided with details of the retailers identity and physical location. 2. Consumers should be made aware of the full name of the company they are dealing with as this may not always be the same as their web-address. This is important in view of the recent spate of domain name squatting. 3. Web-sites should make it clear to the consumer which countries they deliver to, before the order process is embarked upon. Price information should be transparent. 4. If web sites are marketing globally, it is important that web-sites have a facility to incorporate the delivery charges in the total price as also currency conversion. 5. Cyber retailers must design sites to ensure that purchasers are shown the terms and conditions before confirming their order or are offered a link to click on the terms and conditions, suggests the report. CI firmly believes that the law governing Internet transactions should be the law of the consumers home country, to ensure familiarity with the procedures. If a cyber retailer specifies that the law governing transactions on its web site will be that of its own country, this must be highlighted to the consumers. In addition, the consumer must have the right to pursue a dispute within his own country. Jurisdiction remains an issue for settling cross-border disputes in cyber shopping. CI adds that the ordering process must be unambiguous and permit forth with cancellation of orders. In order to complete the contract, the consumer should be sent an acknowledgement or confirmation of the order. As regards return of goods, CI suggests that the consumers must have the right to return goods within a specified time limit sans any reason. This policy must be displayed on the web site including information about any costs which may have to be incurred by the consumers. In India, consumers protection laws or even selfregulatory guidelines relating to cyber shopping have yet to evolve. To minimize risk of fraud while transacting online the following can be observed: i) Customer should make purchases only on trusted sites.

ii) They should look for security lock symbol on your browser, for all pages that capture your private information including credit card details. * Clicking on the security lock symbol in your browser shows details of the VeriSign certificate issued to the site - including certificate validity date. iii) Customer should check his/her monthly credit card statements carefully and promptly. If you identify any irregularities, if any he should immediately bring them to the attention of the issuing bank. iv) Customer should dedicate a single credit card for online purchases. It will be easier to review your records. Q3. Elaborate on the role played by IT applications in retail stores. Ans.:Most of the big retail businesses use retail IT applications widely. But few critical areas where IT applications are effectively used are as follows: POS: use of scanners and bar coding equipments to identify the item, displaying its cost and thus facilitate the billing process. A new technical advancement in which the shopping cart is kept for scanning which scans the item in cart by laser beams and thus generating the final bill is the virtue of technological advancement in retail sector. Payments: payments at billing counter are facilitated by the technological

advancements in retail payment systems. Now a days most of the customers shop using credit cards due to fast and easy payment process. Conversion of electronic cheque is a recent development where the cheques are processed electronically rather than manually where the retailer has to voids it and hands back a receipt to customer. In this process the cheques are captured digitally which makes the billing process very fast. Demand forecasting: Right product at right place and at right time is a key success for any retail business. Demand forecasting in retail business is a key aspect of success. Many types of software are being developed in recent times to forecast the demand of products or merchandise in the stores. Though they cannot substitute real retail expertise personnel but these applications can be augmented by an efficient, objective and scientific approach of forecasting demand. Inventory management: In order to optimize the deployment of inventory, retailers need to manage the uncertainties, constraints and complexities across their global

supply chain on continuous basis. This allows them to improve their inventory forecasting abilities and accurately set inventory targets. And IT solution is approved and market leading solution for determining optimal time-varying inventory for every item, at every location throughout supply chain. This allows the retailers to significantly reduce inventory without adversely affecting service levels. Various ERP softwares are now available in markets which are retail specific which help in integrating all the functions from ware house to distribution, front office to back office and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting stocks in time and avoiding stock outs by reducing the cost and rendering high customer service. CRM: Customer relationship management which is the present day mantra of many retailers is also using the IT applications. The rise of loyalty programs, mail order and internet shopping provided the retailer with an access to customer data base. Data warehousing and data mining tools facilitate the retailers for productive use of the database to promote his /her business. These applications also facilitate the research of customer buying behavior, product demand etc. Store Management: Information technology is used in store operation management. Information technology applications generally integrate the different departments in the stores and facilitate different operations to function smoothly, effectively and within less time. Q4. What tasks does a retailer have to carry out in inventory management? Assess the importance of various inventory levels. Ans.:Retailers Task in Inventory Management Due to the complexity and the cost associated with inventory management most of the retailers are now expecting the suppliers to perform more tasks or they are out sourcing at least a part of inventory management activities. In older times the manufacturers used to produce the goods and ship the same to the retailer when there order is place. Then the retailer used to repack it by tagging the products with price tags with required quantities and made them ready to source on retail floors. Inventory Levels

Having proper inventory on hand is a tough and necessary task for a retailer. It is necessary to have proper inventory levels in the stores because: Customers demand cannot be predicted and it keeps on changing Retailer should never lose a sale due to lack of stock in stores If excess of inventory is stocked in stores, it causes carrying costs Carried over merchandise unsold for a long period results in losses to retailer Shelf space allocation should be linked to current revenues which mean that the allocations must be regularly reviewed and adjusted. In case a retailer is running any promotion or campaign the product on offer need to be displayed correctly and replenished once sold.

Q5. How can we classify retail stores? What are the different types of retail store operations? Ans.:Classification of Stores The retail models can primarily be classified into store based and non-store based retailer. The normal brick and motor stores, is the traditional store based set up. Whereas the non store based retailers contain the direct selling, telemarketing, automatic vending, mail order retailing and internet retailing. The store based retailer can further be classified on the basis of the merchandise they offer, the store formats they observe and manner of their ownership. Classification of retail stores based on owner ship Retail stores are classified as follows based on the type of ownership of the store: Independent retailer: He is one who owes and operates only one retail out let. It is generally owed by a single person and operated by using the help of family members. Good personal relationships are developed with the customers and tend to pass from generations to generations. In India most of the retail set up is of this type. Ex: local baniya / kirana shop. A chain retailer: It is a corporate retail chain where two or more outlets come under common owner ship. They may be operated at different geographical locations and carry the same brand/store name. Theses retail stores operated under single ownership and have similarities in the merchandise offered, the ambience, advertising and promotions etc. Ex: Food world, Globus, West side etc

Franchising: At present, the government allows 51 per cent FDI in single brand retailing and in cash & carry formats. This existing FDI policy limits any foreign investments in the multi-brand segment. So most of the foreign retailers carry out their businesses through Franchising. A franchise is a contractual agreement between the franchiser and the franchisee, which allows the franchisee to carry on the trade under an established name/ franchiser name in return for a fee or compensation. This type can be further classified as under- (a) A product or a trade mark franchise: Where a franchisee sells the products/services under franchiser name. ex: Archies (b) A business format franchise: In this the business is carried under the name of the franchisee name by the individual. In both the cases retail business is carried on with franchise of a single or multiple out lets within a region or country. Franchising gives a chance of expanding the operations of a retail business. Leased departments: This is also known as shop-in-shop, where a section of a department store in a retail store is leased/rented to an outside party .In this case the stores display a limited number of products in the anchor stores to catch the potential customer base. Their main aim is to be available to the consumers near to his work place or home. Consumer co-operatives: A consumer co-operative is a retail institution owned by its member customers forming a group. The consumer cooperative structure in the country has four tiers, with the National Cooperative Consumer Federation of India Limited (NCCF). Thirty State Cooperative Consumers Organizations are affiliated to the NCCF. At the Central/Wholesale level, there are 800 Consumer Cooperative Stores Ex: Apna bazaar, Sahakari bhandars etc. Classification based on product/services offered The organized retail stores can be classified in to the following categories based on the product/services (merchandise) they offer: Convenient stores: These are relatively small stores located near to residential areas which operate for long hours, all the 7 days a week. Ex: petrol bunks like HP speed mart, local groceries stores etc.

Supermarkets: These retail establishments, which are primarily involved in providing food to consumers but have increasingly ventured into other product areas in recent years. Ex. Nillgiris, more etc Hypermarkets: These are huge retail stores occupying an area ranging from 80,000 to 2, 20,000 sq feet. It often has both food and non food items available within the stores. This concept is pioneered by Carrefour in France. Ex: Spencer Hypermarket. Specialty stores: This type of retail stores typically concentrates their efforts on selling a single type or very limited range of merchandise. Examples: Clothing stores, musical instrument stores, party supply stores. (Planet M) Department stores: These establishments are comprised of a series of departments, each of which specializes in selling a particular grouping of products. Example: A retail store having different departments selling food item, groceries, soaps and detergents, house hold utensil etc. Discount stores: This type of retail outlets offer consumers a trade-off: i.e. .lower prices (typically on a broad range of products) but for lower levels of service. Indeed, many discount stores operate under a basic "self-service" philosophy. Example: Brand Factory, Mega Mart. Category killer: A large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete. It is Also Known As: Big Box Store. Examples: Best Buy is an example of an electronics category killer. Catalogue showrooms: Catalogue retailers usually specialized in hard goods, such as house ware, jewelry, and consumer electronics. A consumer will walk in to the stores and the sales man shows the catalogue and explains the features of the product and takes the order by noting its code mentioned in the catalogue and delivers the product at a later time. Ex: Argos, Tanishq showrooms. Non-Store Retailing Typically retailing gives us a sense of customer walking into a store and making a buy or a purchase. But now a days the sales are carried out even with a retailer and a customer placed in different geographical locations. This concept of retailing without the involvement of any physical retail store is known as non-store retailing.

The following are some of the non-store retailing formats: Mail-order businesses and other non store retailing establishments: Some retail establishments subsist entirely on mail order, forsaking traditional stores, while other companies maintain operations on both levels. In addition, this category includes sales made to end consumers through telemarketing, vending machines, the World Wide Web, and other non store avenues. 5. Direct selling: In this type of retailing there is a personal contact between a sales person and a consumer away from a retail store. The sales person walks to the customers and makes the sale at his/her door steps. This channel of retailing particularly suits the products which need demonstration. Ex. Amway. 6. Tele marketing: Selling the products/services through marketing them by telephone is known as telemarketing. Products which can be brought without seeing can be purchased in this manner. Ex: credit cards, club membership cards etc. 7. Television shopping: The products/services are advertised on the television with all details like features of the product, price, guarantee etc. Products or services of customers choice can be booked using the telephone numbers provided with the advertisement shown and purchases can be made. The products/services of customer choice are home delivered. Ex: Asian sky shop. 8. Online retailing or e-tailing: With the advancement of internet technologies, purchases are just a click away. Online retailing is one which consists of electronic transactions in which goods or services are purchased by ordering on internet. Online retailing or e-tailing en powered the customer with convenience shopping in 24X7 shopping environment. Ex. E-bay 9. Most of the brick and motor retailers are now stepping into e-tailing also. For example many retailers have their own websites carrying the business online also. Ex. Big bazaar of Futures group has online sales carried out through their website 10. Automatic vending: The sale of products through a machine with no personal contact between the buyer and seller is called automatic vending. Ex. A Pepsi vending machine. Some emerging trends in Retailing: The following are some of the emerging trends in retailing. Airport Retailing: Retail is becoming increasingly important, focusing on retail and food and beverage strategies up fort, so as to reshape airports into exciting, energize

business and retail/entertainment centers as well as transportation hubs. Airport retailing world over is big with about 60 per cent of the revenues earned through commercial activities at the airport. In India this market is right now in a nascent stage with a strong growth potential. Significant and Innovative Investment in Indian Airports India currently has 126 operational airports of which 11 are international, 89 are domestic and the remainder is managed by the military. For the size of the country, this is a relatively small number with huge scope for organic expansion in tune with demand. However, airport development in India is booming with recent developments in hyderabad, Bangalore, Halwara, Kannur, and Kohima among others. At least 100 new airports are in the pipeline across India. Many of these will be replacements, but modernization of established airports is also afoot throughout the country, from the hubs of New Delhi and Mumbai to Bhopal, Kolkata, Udaipur, Chennai and Varanasi among others. India has taken an innovative approach to Brownfield and Greenfield airport developments through partnerships of government, airport authorities, industrial firms, financial investors and airport management and retail specialists, both foreign and national. Public private partnerships are immensely popular, due to perceived successes of this model in North America and Europe. As well as bringing in necessary investment and expertise, they fit in with Indias interest in maintaining the interests of government and/or national investors in Indian commercial ventures. A potentially negative aspect of this arrangement is that restrictions may deter potential investors resulting in a slower rollout. As a key determinant of retail spends, Indias airport infrastructure still requires considerable investment to turn potential into reward. But the signs are that airport retailing will continue to receive the prioritization it deserves as a premium revenue driver for airport owner-management. Principal Hubs in Delhi and Mumbai Mumbai and New Delhi are the principal hubs in India, accounting for around twothirds of international travel. Lucrative returns are expected from Mumbais Chatrapati Shivaji International, India's biggest international and domestic aviation hub which, together with Delhis Indira Gandhi International, accounts for around 75.0% of airport duty-free sales in India. New Hyderabad & Bangalore Airports Bangalore is one of Indias boom cities, driven by the rapid growth of the IT sector. Bangalore, Indias fourth largest airport has also seen phenomenal growth, to the

extent that significant pressure on airport infrastructure has meant a new airport is required. A Greenfield development is in the pipeline at Devanahalli, and is expected to open in Q3 2008, after which the existing airport will be closed and passed over to Hindustan Aeronautics, an aerospace firm. Types of Retail Store Operations Now-a-days consumers are not only looking for the core products or functional benefits from retailers but also non functional benefits from the retailers, which need to be compatible with their lifestyles. For example, most of the traditional eating joints in India such as Haldiram, Bikaner and Sagar Ratna have revised their product offerings and atmospherics on the lines of the multinational chains to compete with them and to serve changed expectations of the consumers. Though retailing consist of numerous tasks they can be broadly divided into outlining the specific tasks, dividing the tasks, grouping the tasks into jobs, classifying the jobs and Integrating positions within the organization. As discussed above the retail organizations structures differ from one format to other. A retail professional, whose job is to take care of the overall store operations and drive the business to profit ends should be able to manage the entire store operations successfully. With hundreds of tasks to perform daily, retailers need insight into dayto-day operations at the store level. Though there are may be number of store operations, the store operations depends on several factors like size of the store, merchandise or products in stores etc they can be briefly categorized into: Store administration. Management of premises. Managing inventory and display. Accounting functions. Customer service. Advertising, promotional events Human resources functions Housekeeping etc

Each of these functions is explained in detail in successive units. Many retailers still rely on paper-based systems and word-of-mouth communication, which can result in incomplete tasks, strained management, and increased costs. These traditional ways (paper based) work may lead the retailer with over loaded work, low customer satisfaction and confusion at store level and with increased operating costs. With the latest technological advancements many software products are in market which makes the store managers job easy. (More explanation is covered under unit- IT in store operations). So a retail management solution provider should keep in mind all the above tasks and a better solution should be provided which suits the needs and objectives of the retailer. Though technological advancements decreased the complexity of the in store tasks, still some difficulties are encountered in day to day Retail operations management. A few of them are as follows: Insufficient visibility and insight into marketing, merchandising and operational tasks. Poor communication and accountability between corporate offices and retail stores. Strained HR functions in the stores. Delayed task execution and under utilization of employee resources. The store operations are important aspects of retail business. From managements view, operations of the store are the major element of cost. Processes, people and tasks need to be defined by the management to ensure the smooth flow of operations. A well-prepared operational manual or a blue print is the starting point of efficient store operations. Based on the size and format of the store this operational manual changes. So a retail store manager should aim at the best performance of different store operations and aim at the profitability of the store. Good store operational practices, best and optimum used of resources at appropriate time facilitates the stores personnel to overcome the above said hurdles. Q6. Is strategic planning helpful for a retail store? Justify. What are the steps involved in it? Ans.:Strategic Planning in a Retail Store Strategy in simple means planning and coordinating the activities sequentially. In case of Retailers planning is required in every step of their business. In general it is outlining of retailers mission, goals, predicting the consumer base, overall activities

and control mechanism. In simple Retail strategy is the perspective, position, plan and pattern of a retailer. It can also be stated as a long term, broad base intention of a Retailer to aim at the success of his business. In simple it is the process of planning the organization, implementation, and control of the entire firms activity. In this competitive world, retail strategy is a fundamental tool to a retailer to position his/her business at par from its competitors. Each aspects of retail business such as merchandising, sales, operations, service and finance which of course constitute the major portion of store operations have to be well planned in order to support the main business strategy. The following are the some of the important tasks that a retailer should bear in his mind to accomplish the stores profitability: Develop a mission statement for the firm Define specific goals and objectives of the firm Develop basic strategies to reach objectives and fulfill mission Identify Strengths, Weaknesses, Opportunities and Threats Clear vision of the mission statement enables the retailer to list down the specific goals and objectives of the store. Once the goals and objectives are clearly stated it enables the retailer to develop the basic strategies that are to be implemented to reach the objectives in fulfilling the mission. This clear vision helps to identify the strengths, weaknesses, opportunities and treats that exists and thus enables the retailer to successfully run the business. It should be noted that the goals are usually different for each strategic business unit within the overall retail organization. So it is clearly understood that the retailers mission and strategies depends upon many variables like nature of business, retail format adopted, and type of merchandise/product dealt with etc. Retail operational strategy: The main purpose of a strategy in any business is to provide a method, route, way or channel with a direction to follow in managing a business. A successful retail strategy should satisfy the following three requirements:

1. The strategy of a store should achieve co ordination amongst various functional areas in the organization. 2. The strategy must clearly define how resources are to be allocated. Since resources are limited the strategy should be framed in such a way that it achieves the objectives within the time frame. 3. Thirdly it has to lead to superior market position facing the competitors.

Assignment Set- 2
Q1. What are the pricing objectives in retail stores? What are the elements of retail price? Ans.:Stores pricing objectives or goals provide direction to the whole pricing process. Based on the priority of the objectives the retailers determine their pricing. Briefly the objectives can be summarized as: (1) The overall financial, marketing, and objectives of the retail business which are to be met. (2) It should be intact with the characteristics of product/ brand; and (3) Consumer price elasticity and price points; and resources available should be kept in mind while setting the price. Key Retail Price Objectives: To maximize long-and short-term profit To increase sales volume (quantity) To increase sales value To increase market share and to obtain a target rate of return on investment (ROI) To maintain a proper image of the store and products To discourage customers from becoming overly price-conscious To be consistent with setting prices To increase customer traffic during dull periods To clear out seasonal merchandise To match competitors' prices without starting a price war To be regarded as the price leader in the market area by consumers To provide ample customer service

 To minimize the chance of government actions relating to price advertising and anti-trust matters To discourage potential competitors from entering the marketplace To create and maintain customer interest To encourage repeat business Based on the desire to achieve all or a set of such objectives, the retailer evolves various pricing policies, strategies, and short-term tactical initiatives Q2. How does a retailer carry out profit planning in his/her retail stores? What are the key business ratios that would be available for financial analysis? Ans.:Profit Planning in Stores All the transactions that are taken place in a retail store are recorded and to analyze the financial position of the store these statements are used. One such financial statement which shows the financial position of the store is Profit & Loss Account. A profit and Loss Account (income) statement is the summary of a retailers revenues and expenses over a given period of time. In general they are recorded and analyzed on a fixed period of time (ex. monthly, quarterly, half yearly or annually). It is crucial point that same time periods are used in comparing profit-and-loss performance so that the comparison is even. Theses profit and loss account statements are used for regular monitoring of progress towards goals update performance estimates and revise the existing strategies and methods adopted. As a normal financial statement the following are the major components of a retailers P&L A/C. Lets now examine the major components of profit and Loss account: Net sales it is a figure which shows the revenue received by the retailer during the given period of time after deducting customer returns, markdowns and employee discounts.

Cost of goods sold Its the amount a retailer pays to acquire the merchandise sold during a given period of time. Its based on purchase price and freight charges, less all discounts(such as quantity, cash and promotion) Total available goods (ready to be sold) = Beginning inventory + purchases. And Cost of goods sold= (Ending inventory-total available goods). Gross profit (margin) it is the difference between net sales and the cost of goods sold. It consists of operating expenses plus net profit. Gross profit= (Net sales-cost of goods sold) Operating expenses these are the cost incurred in running a retail business. Total operating expense is a list of all retailers expenses incurred to run the retail business. Taxes these are the expenses paid by the retailer to the central, state/local government. Net profit after taxes the profits earned after all costs and taxed are deducted. Key Business Ratios The following are some of the other ratios used to determine retailers success or failure. Quick Ratio: It is the ratio of cash plus accounts receivable divided by total current liabilities, those are due within a period of one year. Current Ratio: its the ratio of total current assets divided by total current liabilities. Collection period: It is the ratio of accounts receivable divided by net sales and then multiplied by 365. Accounts payable to net sales: It is a ratio obtained by accounts payable divided by annual net sales. Overall gross profit: It is net sales minus cost of goods sold then divided by net sales. Q3. Is promotion essential in retail? Explain how retailer can select an appropriate promotion mix for his/her store. Ans.:-

Selection of promotion Mix However strong the strategy of a retail store is, promotion mix plays an important role in the profits of the organization. Promotion is basically a communication process. It is broadly defined as any communication by a retailer that informs, persuades, and/or reminds the target market about any aspect of that firm. Promotion is an exercise in information, persuasion and influence Accordingly; promotion has come to mean the overall co ordination of advertising, selling, publicity and public relations. Promotion Mix: A promotion mix involves three main activities: personnel selling, advertising and sales promotion. Approaches to promotion: The objective of promotions is to catch the potential customer and pass through a series of stages that lead to purchase the product/services. One concept in this perspective is AIDA concept: i.e.; A to create Attention I is Interest and D Is desire to make a purchase and finally leading to A Action (make the purchase). These are the logical stages through promotional methods act. Different retailers use different promotional strategies to maximize their business. The promotional strategy of different stores may be different. The following are the steps involved in planning a promotion strategy: 1. Goals should be specific and measurable terms. Positive Word Of mouth (WOM) should be recognized as an important long-term goal. 2. An overall promotion budget is set based on how much a retailer can afford for incremental, competitive parity, etc. 3. The promotional mix is outlined, based on the firms budget, the type of retailing involved, the coverage of the media, and the hierarchy of effects. 4. The promotional mix is enacted. Included are decisions involving specific media, promotional timing, message content, sales force composition, particular salespromotion tools, and the responsibility for co ordination? 5. The retailer systematically reviews and adjusts the promotional plan, consistent with its preset goals. which

Retail Promotion Strategies Retail promotion is simply the way that retailers communicate with their publics. They exchange meanings with them through the messages they create and the media they use. When dealing with promotional strategy we tend to think of PROMOTIONS & EVENTS: These help the store to achieve its short-term goals. Promotions may be price-led or occasion-led, in which case special merchandise is offered by the store only for the occasion (e.g.: Dandiya). Most retail organization run promotions during festival like Diwali, Christmas, New Year, Valentine s Day, Id, & so on. Sometimes promotions are driven by brands in cooperation with the retailer. Retail events are gaining significance in India with retailers preferring them to direct priceoffs. However, if run very frequently promotions may prove detrimental to the image & positioning of the store. Now let us discuss about the people associated with these activities. People: There are two kinds of people as far as the retail marketing mix is concerned: people to serve (customers) & people that serve (employees). It is customer who determines whether the retail store is selling the right products & services. People that serve the organization are the ambassadors or the face of the retail store. Excellent delivery standards-which go hand-in-hand with the image & positioning of the store-can be achieved only if the staff are trained well. Presentation: Presentation is the way products & services are grouped and presented in a retail store. Such presentation should conform to the stores positioning & customers profile. For instance, a boutique selling designer garments needs to present its merchandise in exclusive splendor it cannot use ordinary furniture & fixtures. Attending the customers in the boutique should be done on a very personal basis, as a mass approach will turn them away Q4. Give short notes on ethics in retailing and retailers corporate social responsibilities. Ans.:Ethics in retailing Retailing as any other business should follow ethics. Though any retailer carries his business with an objective of profitability he should necessarily follow ethical practices

in his business. The ethical practices of a retailer are driven by its corporate vision and mission. There are number of areas where the retailer must develop a set of values and follow it up with appropriate behavior. The various constituencies which a retailer has to look for setting ethical standard are: Customers: The retailer needs to protect the rights of customers. Though there is a provision of customer protection act in Indian legal system, most of the customers are not aware of this. Retailer should be ethically responsible in protecting the customer rights. Community and the general public: Usually there is some legislation to protect some type of behavior, such as advertising, hoardings and black marketing. Retailer should develop some corporate responsibility and should aim for promotion of some noble cause. Employees: It is the ethical responsibility of the retailer to take care of the employees working in the organization. They should have a set of rules and regulations which safe guards the interest of both employees and the work force. A retail owner should develop and maintain a trusting relationship with his or her employees, with set of guidelines and reward policies to discourage employee theft etc. It is also important that the retailer does not have discrimination on basis of sex, marital/ family status, religion, caste or creed. Business Partners: Retail business is associated with many partners such as suppliers, logistics organizations, money lending banks and other professional organizations. All these transactions should be taken place in good will and in a transparency mode. Shareholders: Retailers should carry out the business conforming the highest standards of corporate governance in the environment he operates. The management should act only at the best interests of shareholders and not at individual interest. Beyond the above discussed constituencies, retailer needs to be ethical in his basic behavior, the types of products dealt with, their pricing policies, recalling the defective products from market, exchange policies etc. Corporate Social Responsibility

CSR policy is a function which is built-in, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical standards, and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. The issues of corporate social responsibility covers a companies approach not only to its markets but ti its employees, the local community, its suppliers and the way it treats the environment. Strategies for corporate social responsibility: 1. The mission and objectives of the organization should be closely postured and stanched with the corporate social responsibility 2. It should ensure that whatever responsible policy is carried out there is some competitive advantage gained that is specific and measurable as a benefit to the company 3. Retailers should voluntarily go for social responsibility programmers. Q.5 Explain the HR oriented functions in retail stores. Ans.:The process of Human Resource Management in retailing: The four main activities of the process of Human Resource Management are Recruitment and Selection, Training, motivation and Performance measurement.

Recruitment & Selection: After determining the tasks to be performed, the job needs to be to be categorized on the basis of the functional and geographic needs. Recruitment is the process of identifying the need for a new employee, defining the job and the appropriate person for it, attracting a number of suitable candidates, and then selecting the one best suited to the job. The recruitment can be done by giving advertisement in media, direct recruitment from colleges or educational institutions, or through external recruitment agencies like consultancy firms. Training: The selected candidates are to be trained based on their job profile and companies strategy. Proper training equips the candidates with necessary job skills and soft skills to perform better job. Training is important aspect of human resources management in retail. The following are some of the areas where the staffs are to be trained

1. Communication skills: Better communication and pleasing manners attract and retain the customer base. So it is very important to train the staff in this area. 2. Product knowledge: Product knowledge is very important for retail staff. They should be aware of the features, prices, qualities and benefits of the product they are selling. It is essential to posses the knowledge of the current market trends and the offerings of competitors. 3. Company policy returns: The sales men should be aware of the company policies and returns. 4. Knowledge of the work place. The staff should be aware of the store layout and design. He has to be aware of the presentation and stocking of the merchandise in the stores. 5. Market awareness: He should be aware of the trends and fashions present in the market. Knowledge of the stores in the same market and the promos and offers in the market in his product area and a strong knowledge of the competitors would be of a greater help for him in understanding what his customers may be interested in. 6. Personal grooming: The sales person is the face of organization to the world. A well dressed and proper mannered body language is required. Enough care has to be exercise in proper dress (uniform), shoes, etc. Motivation: Success of a retail business depends on the performance of the staff. As the retail business is becoming complex the retailer needs to keep the staff engaged and eradicate or control the boredom that may arise in the staff. So HR department needs to motivate the staff continuously to keep the phase of the staff and to maximize the performance of the staff. The key factors that help in motivating the staff are as follows: The organization culture The reward and recognition The cash benefits Prospects for growth and job enrichment. Evaluation of performance: A continuous evaluation based on the performance of the employee is to be done. This evaluation should result in motivating the work force by awards and rewards based on their performance. This also helps in further training the work force where they are lacking perfection.

There are three areas which affect employees productivity. 1. Employees should be reliable and practice good time management skills. 2. Responsible and trustworthy employees help to create a friendly environment throughout the store 3. Employees who are comfortable in their working environment are likely to be more productive. Each retail firm has their own performance evaluation process based on their business. These performance systems are standardized and conducted in regular intervals. Such evaluation should be transparency as far as possible, so that employees believe in the process and strive for their better performance. So proper attention should be paid on the above mentioned areas so that the store employees turn up with the best productivity. Employees should be trained and motivated so that they work with commitment to achieve the desired results. dated when other factors have changed. Q6. What is the importance of CRM in retail stores? Explain Ans.:Any CRM program developed should cater to three different objectives. They are To retain the best customers of a retail store To convert average or good customers into loyal and high lifetime value customers To get rid of unprofitable customers. Customer retention: Retaining the customer is better than acquiring a new customer. Therefore all retailers focus on how best they can retain the customer and increase his lifetime value. There are four important approaches followed by the retailers.

Frequent shoppers programs: As we discussed in the beginning of this unit, frequent shoppers programs are generated to retain the customers who are coming to the retail store. Below are the some of the frequent shoppers programs adopted in India 1. Pantaloons: A Future Group company started the frequent shoppers program called Green Card. According to this scheme, customers are rewarded with points on the basis of their purchase. Every point generated is equal to Re. 1. Criteria for points generation are: Upto 399 points One Star 1 point for Rs. 50 400 or more additional points - Three star - 1 point for Rs. 40 800 or more additional points Five star - 1 point for Rs. 25 2. Shoppers Stop: As we discussed in this unit, Shoppers Stop frequent shoppers programs are called First Citizen Card. The details of the programs are given below Classic Moments Earn 1 Reward Point for every Rs.100 purchased. Silver Edge Earn 1 Reward Point for every Rs. 50 purchased. Golden Glow Earn 1 Reward Point for every Rs. 34 purchased. Every point generated at all the levels is equivalent to Rs.1. 3. Lifestyle: The loyalty program of Lifestyle is known as The inner Circle. The details of frequent shoppers program are For every Rs. 50 spent at any of the stores, 1 point is earned. For every 100 points earned, gift voucher of Rs.100 is received

4. Westside: The frequent shoppers program is called as Club West It offers Classic and Gold membership Offers 25 and 50 as the bonus points to Classic and Gold members Classic - For every Rs.50 spent at any of the stores, 1 point is earned. Gold - For every Rs.40 spent at any of the stores, 1 point is earned. 5. Globus: The frequent shoppers program is known as the Privilege Club card An enhanced version with larger offerings is the Gold Card' Special customer service: Retailers are providing special service to retain the customers. Organized retail stores understood the strategy of unorganized players of delivering the goods at the door step of the customers. Now many retailers in India offers door delivery services. Some retailers offer credit and financing options to card holders. This will encourage shopping and also retain them. Customization: Unorganized retailers who do not have capacity like big retailers started providing better service to customers. They changed their packing system to meet the small quantity requirement of the customers. Delivering the goods on receiving the phone calls and many more services helped unorganized retailers to meet the competition. This depicts the relevance of customization of the service and its role in boosting the revenue of the store. Community: Retailers are developing their own blog and encouraging the customers to create a blog. In this section customer write their review on the purchases they made in the retail store. They also reveal information on quality of merchandise or merchandise required. Converting the good customers into best customers: Retail organizations encourage their customers to purchase more. They follow two important strategies to get better realization from them : a) Cross merchandising: Assume a customer would like to buy a color television, then the retailer asks the customer to purchase a voltage stabilizer too. Thus he creates the market for voltage stabilizers. This often happens in online retailing too. Amazon.com search results include the column called those who purchased the above book also purchased line. Thus retailers are encouraging customers to buy the other merchandise. b) Add on selling: The technique used by the retailer to the customer to experience the new products and services. Banks ask the customers who are paying their EMIs promptly, to go for top up loans.

Dealing with unprofitable customers: Retailers sometimes face the peculiar problem of avoiding the unprofitable customers. These customers usually purchase in a small quantity and expect better customer service which is costly for the retailer. For example, a customer purchases a vegetable worth Rs.1 and asks for a packaging bag worth Rs. 1. Retailers follow different strategies to meet such unprofitable customers. They fix a minimum amount of the merchandise to purchase, or unstocking the non profitable items or reducing the service to such customers. Implementing CRM programs Implementing CRM programs through software Retailers are implementing different CRM software. The table below provides the information on CRM software implemented by the Indian retailers.

This software helps them to identify the right customer for the right CRM program CRM program implementation procedure 1. All CRM programs need to be monitored and assessed. Therefore the retailer should appoint a manager to see the overall CRM program. 2. All CRM programs require coordination among different departments of the retail store. 3. CRM manager should ensure the program reaches the right person. Hence proper data collection and analysis need to be done. 4. Periodic assessment needs to be done and if required, programs need to be changed.