retail planning1

8/12/2019 Retail Planning1

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Retail Planning

Module II


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The Fundamental Question

What is our business ?

Where is the Market? Its

potential?

Who is our customer?

Where should be the location?

How much should be size? What will our business be?

What should our business be?


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Purpose And method of Retail

Planning


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The Retail Strategy

A clear and definite plan that the retailer

outlines to tap the market and build a longterm relationship with the consumers.


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Format of stores Unique Differentiator

Target Market is a group of consumers with similar needs and buying

behavior. These could be serviced by a retail outlets of similar formats

Retail Market Strategy identifies

Target Market


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How to focus on customer

Map your customers needs and

create a niche based on demand

Have a Target Group which you think

will respond to your USP

Every communication every time

should talk about the same

positioning


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The retail strategy enables

Store location

Merchandising

Pricing

Marketing


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Set the mission Vision of the store.

Situation Analysis (PEST).Internal &

externalAnalysis

Retail Strategy.

Analysing and Control.


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Retail Market Strategy Planningfor what?

For merchandise.

Inventory and logistics control.

Information systems.

Pricing and promotional campaigns.Store location and layout.

Expansion plans in short on every functional

activity to stay competitive.


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Establishing mission

Analyse situation

Identity option

Set objectives

Obtain & allocate Resources

Develop implementation Plan

Monitor Progress & control

Steps involved in

developing

retail strategy


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Some Vision

Wall martto give ordinary folk the chance to buy the

same thing as rich people.

Mc Donald - ( QSCV). Quality, Service, Cleanliness & Value

Shoppers Stop - to be global retailer in India, and to

maintain the No 1 position in the Indian market in the

department store category.


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Retail mix

Its a blend of various retailactivities The main element of

Retail Mix are

Store Location

Merchandise assortment

Pricing policy

Customer service.

Visual merchandising

Marketing & sales promotion

R t il B d


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Retail Brand

Retailer brands are typically more multi-sensory innature than product brands and can rely on rich consumer

experiences to impact their equity.

Retailers also create their brand images in different ways,

e.g.,by attaching unique associations to the quality of their

service,

product assortment

merchandising,

pricing and credit policy, etc.


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The brand positioning

By differentiation

The best after sales service.

By offering the best quotes in

prices & offers.


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Factors influencing retail brand

Access

Store Atmosphere Price & promotion

Cross category Assortment.

After sale Service


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Brands in Retail

There are 3 types

Manufacturer Brand/ National brand.

Licensed Brand

Private label brand

Store brand

Umbrella

brand

Individual

brand

Carries retailer name

Westside, Big bazaar

Common brand name is

used across multiple

categories eg Bare

(pantaloon )

Specific brand name created

for specific market segment


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PLC of Brand


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Merchandise management


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Different role in merchandising

Understanding the consumer segment for whom the

merchandise is being created. Buyers create basket that is offers to the customers.

Offer of products requires planning and selecting the

specific merchandise which will form the part of

merchandise assortment. The buyer interact with vendor and suppliers and work

towards determining who is best suited.


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Duties of merchandiser.

PlanningSales forecasting budgeting

Directing Guiding trainingadditional markup and mark down

Coordinating and supervising withbuyers

Controlling Assessing the

merchandising performance net sales,markup % Gross margin, Stock

turnover.


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Factors effecting the function of buying

The type of retail organisation The type of merchandise to be

retailed

The quantities to be retailed.


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Methods of buying Cooperative buying.

Centralised Vs Decentralised buying. Buying committee.

Resident Buying offices.


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Definition of merchandising planning

The planning and control of the merchandise

inventory of the retail firm in a manner , which

balances between the expectations of the target

customer and the strategy of the firm.


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Principles of Merchandising

Understanding the target market Build merchandise plan , one store at a

time.

Buy what your customer want not what

you want. Build right assortment.

Be consistent.

Offer value.

Understand vendor and negotiate. Share information.

Accept mistake.

Seek surprise to customer.


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Merchandising

Strategy


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Top down & bottom up Planning


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The dimensions of Merchandise planning.


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Merchandise hierarchy for


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Determine

Product

Requirement

Selectsuppliers

VendorNegotiation

Pricing

the

Product

Follow

up

Allocation

of

Products

Monitor &

Correction

What is Buying cycle ?


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Key concept in merchandising

Merchandise mix- Complete range of products.

Merchandise line- same end use

Fad

Fashion

Basic product


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Process of Merchandise buying

1. Identifying the sources of supply.

2. Contacting and evaluating the sources of supply.

3. Negotiating with the vendors.

4. Establishing vendor relationships.5. Analyzing vendor performance.


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Step 1. Identifying the sources of supply

Identify the sources of supply.

Weather sourced from domestic or

international market.

Visiting locations to Understand trendsin market , Evaluate new resources

Merchandise offering.

Retailers reaching out to farmers and

Investing in contract farming Organisation also go for Foreign

sources


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Step 2.Contacting and evaluating the sources of supply

Criteria in deciding on potentialvendors

Target market for whom the

merchandise is purchased Fit between the product and the

image of the organization

Merchandise and the price offered.

Terms and services offered by thevendor

The vendors reliability and reputation


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Vendor evaluation

Once sources of supply are identified

they need to beevaluated Merchandise itself

Price

Adaptability of suppliers to the

requirements of the retailer Delivery schedules, quantity

discounts, recycling andrepackaging of productsparticipating in schemes

Meet Delivery requirements


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Step. 3 Negotiating with the vendors

Need to negotiate on

Price

Delivery dates Discounts

Shipping terms

Returns

Payment terms

Warranties and

guarantees

V d d t il


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Vendor details

Vendors history

Discounts available to the buyer

Eg


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Step. 4 Establishing vendor relationships

Shared information right

information is shared.

To maintain strategic

partnership with vendorsthe buyer need to build on

Mutual Trust

Open communications

Common goals Credible commitments


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Cont..

Evaluating vendor

performances on 4 key

criteria

Gross Margin Contribution

Adherence to company

policy Customer acceptance level

Merchandise quality


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Negotiation

Purchase negotiation is the last stage prior to the

signing of the purchase contract. It is necessary to

go for purchase negotiation because in order to get

the ideal price and best state of article , which ispurchased

Negotiation are basically focused on

Price, Freight, Delivery dates , Method of shipment

and shipping costs, return privileges' and discounts


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Assortment


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Assortment

The combination of all products

made available in a store and a

set of products offered within a

product category.

The two major components of an

assortment planning are the

Depth of products offered.

Width of the product variety.


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Assortment planning involves

The quantities of each

product that will be

purchased to fit into the

overall merchandise

plan. Details of color, size,

brand, materials, etc.

have to be specified.

A balanced assortment

of merchandise for the

customer.


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Inventory management.


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Inventory Management In Retail

Carry the right inventory

Carry the right amount of inventory.

Manage cash flows.

Earn a profit.


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The markup

The difference between the cost of a ggod

or service and its selling price

Retail price/ sp = Cost + markup

Markup = Retail price/sp -cost.

M th d f i t t l


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Methods of inventory control

Selective methods are selected to

render treatment to different type

of retail.

Price

Consumption

Lead time Procurement difficulties.

EOQ d l


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EOQ model

Focus on

When to order ?

How much to order ?

EOQ refers to the optimal order size that will result in the

lowest total of orderand carrying cost for an item of

inventory given its expected usage, carrying cost and

ordering cost.

By calculating this the firm will be able to determine the

minimum order size to control the cost.

ABC Analysis


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ABC Analysis

ABC analysis is rank order merchandise

by some performance measure to

determine

Which item to be never be stock out,

Which item to be Allowed to be stock out.

Which item to be deleted from stock selection.

ABC is 80 : 20 principles

The first step in the ABC analysis is to rank

order SKU using more or more criteria.


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FSN Analysis F - fast moving.

S-Slow moving.

N- Non moving.

Objective was to

determine theitems according

to the moments.

VED l i


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VED analysis

Based on criticality of the item

inventory is classified.

V- vital

E- essential D- desirable.

Objective was to determine thecriticality of an item V had large

stock. D had minimum stock.

HML A l i


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HML Analysis

H- High cost

M-Medium cost

L-Low cost.

GMROI


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GMROI

It is merchandise planning and decision making tool to assist

the buyers in identifying and evaluating whether anadequate gross margin is being earned by the product

purchased, compared to the investment in inventory required

to generate the gross margin.

GMROI= Gross margin/ Average Inventory cost.

It focus on return on investment rather than sales as a basisfor merchandising decision.

Focus on SKUs of individual pdt rather than dept total and it

helps to identify product winners & core products.


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Gross Margin is the value of sales less the cost of goodssold. Increasing gross margin entails increasing sales

revenue or reducing the cost of the merchandise.

GMROI


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SUPPLY CHAIN

MANAGEMENT


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Logistics Distribution Warehousing

The components of supply chain

CONCEPT OF SCM


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CONCEPT OF SCM

Supply chain-network of facilities anddistribution options that performs thefunctions of procurement of materials,transformation of these materials into

intermediate and finished products andthe distribution of these products to thecustomers

Objective-right product, place, time,price and profit for the retailer

Objectives of Retail Supply Chain


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Objectives of Retail Supply Chain

Right Product at Right place and at Right Time andPrice& profit(for retailer).

Supply Chain Management Ensures a smooth

and efficient flow from raw material to finishedgoods, into hands of the consumers.

Integrate activities across the entire merchandise

flow.

Supply Chain exist in Both Service andManufacturing organisations.

Need for Supply Chain Management


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Supply chain management today , links

demand management, resource management and

supply management.

Demand changes mean a shorter life cycle ofcompanies product.

N d f S l Ch i M t


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Increased national and internationalcompetition

Customers have multiple sources from which

to satisfy their demand. Increasing pressure on the profit margins

earned.

The technology driven world today. Information is the key enabler of supply chain

management.


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Framework for analysing issues in SCM


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STRATEGIC LEVEL----In this level the

retailer can focus on the service levels

required to support the unique valueproposition that the retailer has developed.

The retailer can then evolve appropriate

channels and networks to achieve the

uniqueness desired.



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STRUCTURAL LEVEL

The next level allows retailers to identifythe suppliers, stock points and to develop

an appropriate transportation model. The extent of outsourcing is also

determined at this level.




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FUNCTIONAL LEVEL

In this level the operational details are worked

out.

This includes developing policies andprocedures around the facilities and equipment

to be deployed, implementing the information

system to support the operations Ensuring that the right Organisational and

training inputs are provided.


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Retail Logistics

Functions.

1.Physically moving the goods from one

location to another , where location may

be a distribution center, warehouse.

2.Stocking the goods at the locations

needed in the quantities needed.

3.Management of entire process.


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Emerging Concepts in Logistics

3rd Party Logistics povides outsourced or 'third party' logisticsservices to companies for part or sometimes all of their supply chain

management function.

4th

Party Logistics is an independent, singularly accountable,non-asset based integrator who will assemble the resources, capabilities andtechnology of its own organisation and other organisations, incuding 3PLs, to

design, build and run comprehensive supply chain solutions for clients. EgDeloitte, SCMO (company), BMT Limited and Accenture

Reverse Logistics Flow of surplus or un wanted material , goodsor equipment back from the firm, through its logistic chain for reuse recycling or

disposal.


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Reasons for SCM Integration

Short life cycles

High volatility

Low predictability

High impulse purchase

Time to market

Time to serve Time to react

Information Systems used in


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Information Systems used in

Retailing

EDI

RFID


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Principles Of

Supply Chain Management


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PRINCIPLE 1

Segment customers based on the service needs

of distinct groups and adapt the supply chain to

serve these segments profitably.


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Segmenting customers

by their particular needs equips a company to

develop a portfolio of services tailored to various

segments - surveys, interviews, and industry

research.

Companies must analyze the profitability of

segments,plus the costs and benefits of

alternate service packages, to ensure a

reasonable return on their investment and the

most profitable allocation of resources.


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PRINCIPLE 2

Customize the logistics network to the

service requirements and profitability ofcustomer segments.


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The logistics network has been designed to

meet the average service requirements of all

customers; for others, to satisfy the toughest

requirements of a single customer segment.

The network will require more strong logisticsplanning enabled by real-time decision support

tools that can handle flow-through distribution

and more time-sensitive approaches to

managing transportation.


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PRINCIPLE 3

Listen to market signals and align demand

planning accordingly across the supply

chain, ensuring consistent forecasts and

optimal resource allocation.


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Excellent supply chain management - calls for

sales and operations planning that transcends

company boundaries to involve every link of the

supply chain in developing forecasts

collaboratively and then maintaining the requiredcapacity across the operations.


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PRINCIPLE 4

Differentiate product closer to thecustomer and speed conversion across the

supply chain.


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Time is important - many manufacturers are

focussing on the lead time in the supply chain.

They are strengthening their ability to react to

market signals by compressing lead times alongthe supply chain, speeding the conversion from

raw materials finished products tailored to

customer requirements.


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PRINCIPLE 5

Manage sources of supply strategically to

reduce the total cost of owning materials

and services.


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PRINCIPLE 6

Develop a supply chain-wide technology strategy

that supports multiple levels of decision making

and gives a clear view of the flow of products,

services, and information.

The manager needs to build an IT system that


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g y

integrates capabilities of three essential kinds.

1. For the short term, the system must be able to

handle day-to-day transactions and e-commerceacross the supply chain and thus help align supply

and demand by sharing information on orders and

daily scheduling.

2. From a mid-term perspective, the system must

facilitate planning and decision making, supporting

the demand and shipment planning needed to

allocate resources efficiently.

3. To add long-term value, the system must enable

strategic analysis by providing tools, such as an

integrated network model to help managers evaluate

plants, distribution centre, suppliers, and third-party

service alternatives.


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PRINCIPLE 7

Adopt channel-spanning performance measuresto estimate collective success in reaching the end-

user effectively and efficiently.


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Thank you

retail planning1

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