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Managing retail outlets

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This document provides guidance on managing retail outlets. It emphasizes that location is the most important factor for a retail business. A store's neighborhood will determine its success. To maximize sales and profits, a retailer needs to understand customer demand in the local area by observing competitors and asking customers questions. Setting the proper prices by mapping competitors' prices and price drops is also critical. The entire process from sourcing products to pricing, promotions and analyzing sales is covered to help retailers optimize operations and sales.

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Managing Retail Outlets
WHY RETAIL OUTLETS ? 1) Convenient Location 2) Offer Choice (Assortment) 3) Can buy in Small Qty
LOCATION IS THE MOST IMPORTANT FACTOR IN RETAIL
Managing retail outlets
YOUR NEIGHBOURHOOD WILL DETERMINE YOUR BUSINESS
OBSERVE LOCALITY 1) How many outlets - nearby ? 2) Product Categories ? 3) Product Variants ? 4) How different are products in features & pricing 5) Estimating the demand C at the competitor outlets
KNOWING YOUR CUSTOMER 1) What questions do they ask ? 2) What features are they looking for ? 3) Randomly ask on the street ＾electronic store￣ 4) Which products makes the customer curious ? 5) Which products are ignored by the customer ? 6) Busy ? Leisure ? Price Conscious ? 7) What do they buy C Stand at POS
PRICE MAPPING Basic Feature C 32￣ LCD 32￣ LCD with 3D support PRICE PRICE BRAND X BRAND Y BRAND Z BRAND Y BRAND Z BRAND P
MAPPING PRICE DROPS Basic Feature C 32￣ LCD 32￣ LCD with 3D support PRICE PRICE BRAND X BRAND Y BRAND Z BRAND Y BRAND Z BRAND P
WHAT WILL BE MY STORE¨s USP ? 1) POSITION THE STORE FOR THE MARKET 2) STORE GOODS FOR THE MARKET
PRODUCT SOURCING 1) Decide which products to stock ? 2) What features/Quality will my customer expect ? 3) What Price will they be take it for ? 4) Private Label ? Finding factories/agencies to source the right products
RFQ > PRODUCTION 1) Product Needed 2) Demand Qty Required 3) Ask for best Price, 4) Will they do Private Label ? Will Send Brochures Acceptable MOQ Ask for a Price per Qty Free Sample
PURCHASE CYCLE Payment Contacted Production Shipping Seen Samples Lead Time Factory Lead Time Documentation Reorder Check Promotion Display Pricing Storage MOQ Retail Sales /Barcodes/
PRICING TERMINOLOGY EXW : Ex-Warehouse Pricing (will be ready in factory warehouse FOB : Free on-board Pricing (will leave the goods at the origin port) CNF : Cost and Freight (will be shipped to destination port)
Containers left on Shipping Port
Containers on Shipping Vessel
Shipping Carton gets docked on containers Containers on Ships
PRODUCTION STARTS 1) Advance Paid C Production Starts 2) For Private Label brand C Share Logo (AI format) 3) Share Packaging Cover Design (PSD/AI format) 4) Shipping Carton Design (mention as text) Will send you photos Balance Payment at the end (TT/LC)
RFQ > SHIPPING 1) Port of Origin 2) Destination Port 3) CBM if LCL; Container Size if FCL 4) When to ship ?
SHIPPING - 20'ft container 26-28 CBM - 40'ft container 56-58 CBM; - 40'ft HQ container 60-68 CBM - 45'ft HQ container about 78 CBM
CLEARANCE DOCUMENTS 1) Country of Origin Certificate 2) Bill of Lading 3) Factory Invoice 4) Packing List 5) Import License Copy On submitting documents, container is released, and a truck transports goods to warehouse
PRODUCT CYCLE Payment Contacted Production Seen Samples Shipping Factory Documentation Reorder Check Promotion Display Pricing Storage MOQ Retail Sales /Barcodes/
WAREHOUSE C OWN VS PUBLIC Public Storage - Charged based on space occupied per CBM (Cubic Meter) per day
BARCODES Barcodes on products bring up unique SKU nos, that identify a particular product
RFID TAGS RFID Tags now replace the traditional barcodes
RFID TAGS
COST & PROFIT ? Factory Cost + Shipping Cost + Demurrages (if any) Landing Cost = + Clearance Charges + Storage Cost ? Expected Price (based on positioning) - Landing Cost = Gross Profit Consider : Current Competition Pricing + Existing Inventory Levels
BUNDLE OFFERS ? Bundle Offer Price = Product A Cost + Product B Cost = Total Cost + Standard GP Bundle Offers makes product incomparable across stores Bundle Offers liquidate stocks together Bundle Offers are also done to increase the average invoice value
PRICE ELASTICITY If you know price elasticity for each category C you can estimate sales for locally sourced models also. Price Elasticity = ? % change in units sold /% change in price
PRICE DROPPED ? RESPONDING TO COMPETITOR PRICE DROPS When Competition reduces price C We respond if its affects our perceived value It¨s ok to drop prices to stay competitive in the market C as long as the price drop is still making a low profit; and will average out on category If it is not competitive to drop prices C wait and respond C liquidate if not competitive any more
SELL AT COST ? RESPONDING TO COMPETITOR PRICE DROPS Source Unique Models - Promote heavily C Sell at Cost C Yet end up profitable If it is not competitive to drop prices C wait and respond C liquidate if not competitive any more
SALESMAN TRAINING 1) Products available in the market 2) Educate how features as benefits 3) Features Comparison against our model 4) Price Comparison against our model 5) Give them Readymade Rebuttals for standard questions
SHOPPING CART If the shopping cart is big; they end up buying more
RETAIL DISPLAY Display Piece + Stock Pile ups (Visual Cues to denote new product) + Feature Card with Price Calculate average sales per day to know the response C Promote if needed- - Educate salesmen before making the display - Highlight new product - Highlight new product on Collaterals
SHELF LIFE New season - trends C new models Transition defective models with new models JUST IN TIME APPROACH IS IDEAL. EDUCATE TRANSISTIONS ACROSS THE STORE
STOCK PILE UP !!! Check with salesman C why it is not moving ? Where is the fault C feature, model quality, customer preference, not adequate walk ins - Change Display - Reduce price - Make new offer C Announce ! - Bundle Offers & Liquidate - Sponsor Gifts for corporate promotion
STOCK SHORTAGE Source Locally C New brand at relatively same price point Promise customers when goods will be available C get contacts.
MONITOR DEFECT RATE Exchange pieces or reimburse cash. Negotiate with Supplier on next reorder C get free pieces to compensate loss Start looking for a reliable factory C start seeing samples even before reorder point
LUCKY DIPS FOR CUSTOMER DB Who is my customer ? How far do they live ? What is their average income ? Who buys C what ? Run a lucky dip and ask them fill the details C now collate it to know where they live Accept that Demand will not go on C Open new stores !
RETAIL ANALYTICS Key insights on product sales trends. Key insights on - Add on Sale ? Key insights on - How to Bundle ? Peak Store Operations ? C What time is high traffic time ? Which day ? Plan Salesman shifts accordingly
STOCK VARIANCE - Check lapses in Process (Returns not recorded) - Check for lapses in bundle offers (free items not recorded) SHOP LIFTING !!! RFID TAGS - CAMERAS
FAKE DEMAND Real Demand Vs Fake Demand - Eating into the discontinued model¨s share
REORDER BASED ON HISTORY What is the Mean ? What is the Standard Deviation ? What is the Reorder Time ? How long will the existing stock last ? What is the defect/return rate ? Most ERP systems now have alerts for re-ordering when stock reaches a particular point
REORDER BASED ON HISTORY There's a 68% probability of a data point falling within one standard deviation of the mean. Virtually all of the data points (99.7%) can be expected to be within three standard deviations of the mean.
LINE EXTENSIONS Down-Market Stretch - A store positioned in the middle market may want to introduce a lower-priced line when the middle market is stagnating or declining. Up-Market Stretch - A store positioned for the middle market may want to introduce a higher - priced line for higher margins No Brainer to know that you can¨t serve all with limited floor space.
HOLISTIC BRANDING YOUR BRAND IS NOT JUST THE STORE Perceived Image - Store Perceived Image - Service Center Perceived Image - Home Installations Response while returning defective products C Brand Positioning Marketing Communications Press Releases
COMMUNICATE CLV COMMUNICATE CUSTOMER LIFETIME VALUE (CLV) Total Households in the neighborhood = 10,000 Average spend on groceries per family = Rs 4000 per month One customer stays in the neighborhood on an average of 10 years Value of one customer lost = (4000*12)*10 = Rs 4,80,000 You will not give good service C if you never communicated the Average CLV to the salesman
PROMOTIONS IT IS YOUR JOB TO KEEP THEM INFORMED Newspaper C works best for Today Only offers Radio C reinforces Today Only offers C creates sense of urgency Product Flyers /Brochures C Distribute at local households + works best on the first week of the month OOH Hoarding C no immediate response C good for long term local branding - Acts as reminder C Ideal to place on approach roads near the store SMS Alerts at 3pm C for DISCOUNT SEASONS !
MEDIA BUYING EFFECTIVENESS MEASURE FOOTFALLS AGAINST EACH PROMOTION Which Media Works for me ? C Measure footfalls. Where does competitor advertise C collect all competitor ads C file them. Hire a Media Buying Agency Media Buying Agency charges 12% commission per bill. Hire an Ad Agency C keep consistency in branding
IN-STORE PROMOTIONS LIVE EXPERIENCE C NEW TRIALS - GOOD WAY TO SELL NEW PRODUCTS
IN STORE SPACE C RENTED FOR ADS New Revenue Streams Can Charge Brand Managers for visibility & promotions Increases Sales Adds to the excitement
IN-STORE EXCITEMENT MEASURE FOOTFALLS AGAINST EACH PROMOTION Games ? Music ? Bigger Shopping Cart C For more sales ? Background Imagery C Seasonal ? Tag the Shopping Cart One Entrance C One Exit C increases client purchase duration
MALL LIFECYCLE IF THE AVERAGE FOOTFALL IN THE MALL IS LOW Which phase of the lifecycle is the mall ? You cannot make people walk into your store with ＾TODAY ONLY￣ offer always.
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Managing retail outlets

  • 2. WHY RETAIL OUTLETS ? 1) Convenient Location 2) Offer Choice (Assortment) 3) Can buy in Small Qty
  • 3. LOCATION IS THE MOST IMPORTANT FACTOR IN RETAIL
  • 6. OBSERVE LOCALITY 1) How many outlets - nearby ? 2) Product Categories ? 3) Product Variants ? 4) How different are products in features & pricing 5) Estimating the demand C at the competitor outlets
  • 7. KNOWING YOUR CUSTOMER 1) What questions do they ask ? 2) What features are they looking for ? 3) Randomly ask on the street ＾electronic store￣ 4) Which products makes the customer curious ? 5) Which products are ignored by the customer ? 6) Busy ? Leisure ? Price Conscious ? 7) What do they buy C Stand at POS
  • 8. PRICE MAPPING Basic Feature C 32￣ LCD 32￣ LCD with 3D support PRICE PRICE BRAND X BRAND Y BRAND Z BRAND Y BRAND Z BRAND P
  • 9. MAPPING PRICE DROPS Basic Feature C 32￣ LCD 32￣ LCD with 3D support PRICE PRICE BRAND X BRAND Y BRAND Z BRAND Y BRAND Z BRAND P
  • 10. WHAT WILL BE MY STORE¨s USP ? 1) POSITION THE STORE FOR THE MARKET 2) STORE GOODS FOR THE MARKET
  • 11. PRODUCT SOURCING 1) Decide which products to stock ? 2) What features/Quality will my customer expect ? 3) What Price will they be take it for ? 4) Private Label ? Finding factories/agencies to source the right products
  • 12. RFQ > PRODUCTION 1) Product Needed 2) Demand Qty Required 3) Ask for best Price, 4) Will they do Private Label ? Will Send Brochures Acceptable MOQ Ask for a Price per Qty Free Sample
  • 13. PURCHASE CYCLE Payment Contacted Production Shipping Seen Samples Lead Time Factory Lead Time Documentation Reorder Check Promotion Display Pricing Storage MOQ Retail Sales /Barcodes/
  • 14. PRICING TERMINOLOGY EXW : Ex-Warehouse Pricing (will be ready in factory warehouse FOB : Free on-board Pricing (will leave the goods at the origin port) CNF : Cost and Freight (will be shipped to destination port)
  • 15. Containers left on Shipping Port
  • 17. Shipping Carton gets docked on containers Containers on Ships
  • 18. PRODUCTION STARTS 1) Advance Paid C Production Starts 2) For Private Label brand C Share Logo (AI format) 3) Share Packaging Cover Design (PSD/AI format) 4) Shipping Carton Design (mention as text) Will send you photos Balance Payment at the end (TT/LC)
  • 19. RFQ > SHIPPING 1) Port of Origin 2) Destination Port 3) CBM if LCL; Container Size if FCL 4) When to ship ?
  • 20. SHIPPING - 20'ft container 26-28 CBM - 40'ft container 56-58 CBM; - 40'ft HQ container 60-68 CBM - 45'ft HQ container about 78 CBM
  • 21. CLEARANCE DOCUMENTS 1) Country of Origin Certificate 2) Bill of Lading 3) Factory Invoice 4) Packing List 5) Import License Copy On submitting documents, container is released, and a truck transports goods to warehouse
  • 22. PRODUCT CYCLE Payment Contacted Production Seen Samples Shipping Factory Documentation Reorder Check Promotion Display Pricing Storage MOQ Retail Sales /Barcodes/
  • 23. WAREHOUSE C OWN VS PUBLIC Public Storage - Charged based on space occupied per CBM (Cubic Meter) per day
  • 24. BARCODES Barcodes on products bring up unique SKU nos, that identify a particular product
  • 25. RFID TAGS RFID Tags now replace the traditional barcodes
  • 27. COST & PROFIT ? Factory Cost + Shipping Cost + Demurrages (if any) Landing Cost = + Clearance Charges + Storage Cost ? Expected Price (based on positioning) - Landing Cost = Gross Profit Consider : Current Competition Pricing + Existing Inventory Levels
  • 28. BUNDLE OFFERS ? Bundle Offer Price = Product A Cost + Product B Cost = Total Cost + Standard GP Bundle Offers makes product incomparable across stores Bundle Offers liquidate stocks together Bundle Offers are also done to increase the average invoice value
  • 29. PRICE ELASTICITY If you know price elasticity for each category C you can estimate sales for locally sourced models also. Price Elasticity = ? % change in units sold /% change in price
  • 30. PRICE DROPPED ? RESPONDING TO COMPETITOR PRICE DROPS When Competition reduces price C We respond if its affects our perceived value It¨s ok to drop prices to stay competitive in the market C as long as the price drop is still making a low profit; and will average out on category If it is not competitive to drop prices C wait and respond C liquidate if not competitive any more
  • 31. SELL AT COST ? RESPONDING TO COMPETITOR PRICE DROPS Source Unique Models - Promote heavily C Sell at Cost C Yet end up profitable If it is not competitive to drop prices C wait and respond C liquidate if not competitive any more
  • 32. SALESMAN TRAINING 1) Products available in the market 2) Educate how features as benefits 3) Features Comparison against our model 4) Price Comparison against our model 5) Give them Readymade Rebuttals for standard questions
  • 33. SHOPPING CART If the shopping cart is big; they end up buying more
  • 34. RETAIL DISPLAY Display Piece + Stock Pile ups (Visual Cues to denote new product) + Feature Card with Price Calculate average sales per day to know the response C Promote if needed- - Educate salesmen before making the display - Highlight new product - Highlight new product on Collaterals
  • 35. SHELF LIFE New season - trends C new models Transition defective models with new models JUST IN TIME APPROACH IS IDEAL. EDUCATE TRANSISTIONS ACROSS THE STORE
  • 36. STOCK PILE UP !!! Check with salesman C why it is not moving ? Where is the fault C feature, model quality, customer preference, not adequate walk ins - Change Display - Reduce price - Make new offer C Announce ! - Bundle Offers & Liquidate - Sponsor Gifts for corporate promotion
  • 37. STOCK SHORTAGE Source Locally C New brand at relatively same price point Promise customers when goods will be available C get contacts.
  • 38. MONITOR DEFECT RATE Exchange pieces or reimburse cash. Negotiate with Supplier on next reorder C get free pieces to compensate loss Start looking for a reliable factory C start seeing samples even before reorder point
  • 39. LUCKY DIPS FOR CUSTOMER DB Who is my customer ? How far do they live ? What is their average income ? Who buys C what ? Run a lucky dip and ask them fill the details C now collate it to know where they live Accept that Demand will not go on C Open new stores !
  • 40. RETAIL ANALYTICS Key insights on product sales trends. Key insights on - Add on Sale ? Key insights on - How to Bundle ? Peak Store Operations ? C What time is high traffic time ? Which day ? Plan Salesman shifts accordingly
  • 41. STOCK VARIANCE - Check lapses in Process (Returns not recorded) - Check for lapses in bundle offers (free items not recorded) SHOP LIFTING !!! RFID TAGS - CAMERAS
  • 42. FAKE DEMAND Real Demand Vs Fake Demand - Eating into the discontinued model¨s share
  • 43. REORDER BASED ON HISTORY What is the Mean ? What is the Standard Deviation ? What is the Reorder Time ? How long will the existing stock last ? What is the defect/return rate ? Most ERP systems now have alerts for re-ordering when stock reaches a particular point
  • 44. REORDER BASED ON HISTORY There's a 68% probability of a data point falling within one standard deviation of the mean. Virtually all of the data points (99.7%) can be expected to be within three standard deviations of the mean.
  • 45. LINE EXTENSIONS Down-Market Stretch - A store positioned in the middle market may want to introduce a lower-priced line when the middle market is stagnating or declining. Up-Market Stretch - A store positioned for the middle market may want to introduce a higher - priced line for higher margins No Brainer to know that you can¨t serve all with limited floor space.
  • 46. HOLISTIC BRANDING YOUR BRAND IS NOT JUST THE STORE Perceived Image - Store Perceived Image - Service Center Perceived Image - Home Installations Response while returning defective products C Brand Positioning Marketing Communications Press Releases
  • 47. COMMUNICATE CLV COMMUNICATE CUSTOMER LIFETIME VALUE (CLV) Total Households in the neighborhood = 10,000 Average spend on groceries per family = Rs 4000 per month One customer stays in the neighborhood on an average of 10 years Value of one customer lost = (4000*12)*10 = Rs 4,80,000 You will not give good service C if you never communicated the Average CLV to the salesman
  • 48. PROMOTIONS IT IS YOUR JOB TO KEEP THEM INFORMED Newspaper C works best for Today Only offers Radio C reinforces Today Only offers C creates sense of urgency Product Flyers /Brochures C Distribute at local households + works best on the first week of the month OOH Hoarding C no immediate response C good for long term local branding - Acts as reminder C Ideal to place on approach roads near the store SMS Alerts at 3pm C for DISCOUNT SEASONS !
  • 49. MEDIA BUYING EFFECTIVENESS MEASURE FOOTFALLS AGAINST EACH PROMOTION Which Media Works for me ? C Measure footfalls. Where does competitor advertise C collect all competitor ads C file them. Hire a Media Buying Agency Media Buying Agency charges 12% commission per bill. Hire an Ad Agency C keep consistency in branding
  • 50. IN-STORE PROMOTIONS LIVE EXPERIENCE C NEW TRIALS - GOOD WAY TO SELL NEW PRODUCTS
  • 51. IN STORE SPACE C RENTED FOR ADS New Revenue Streams Can Charge Brand Managers for visibility & promotions Increases Sales Adds to the excitement
  • 52. IN-STORE EXCITEMENT MEASURE FOOTFALLS AGAINST EACH PROMOTION Games ? Music ? Bigger Shopping Cart C For more sales ? Background Imagery C Seasonal ? Tag the Shopping Cart One Entrance C One Exit C increases client purchase duration
  • 53. MALL LIFECYCLE IF THE AVERAGE FOOTFALL IN THE MALL IS LOW Which phase of the lifecycle is the mall ? You cannot make people walk into your store with ＾TODAY ONLY￣ offer always.