sndt retail operation and inventory

The Strategic profit Model

The strategic profit model helps retailers to evaluate the financial

performance of their business.

Two decision making areas profitability and productivity

Profitability :States the profit that the retailer generates in terms of

assets , owners equity

Productivity : State the profit / sales that the retailer generates for each

unit of resource input: floor space, labor, and inventory investment

Profitability

Current assets = Merchandise inventory+ Merchandise in display+ Cash in hand

(Merchandise sold out)+ Merchandise to be received from vendors for which payments

have been made +current and savings account in bank+ marketable securities + prepaid

expenses

Total Assets = Fixed assets + current assets

Return on Assets (ROA) :Is net profit divided by total assets.

Return on Net Worth (RONW): Is net profit divided by owners’ equity.

Net Profit Margin :Is the net profit divided by total sales .

Profit Path

Net Sales = Gross amount of sales- Customer returns –allowances

- Discount

Gross Profit/margin = Net sales – cost of goods sold

Net Profit = Gross margin – Expenses

Net Profit Margin = Net profit / Net sales

Retailer Analysis

Particulars RA RB

1.Gross Sale 200000000 200000000

2.Customer Returns 100000 90000

3.Allowances 50000 75000

4.Net Sales(1-2-3) 199850000 199835000

5.Cost of goods sold 120000000 130000000

6.Gross Margin(4-5) 79850000 69835000

7.Expenses 20000000 20000000

8.Net Profit(Rs.)(6-7) 59850000 49835000

9.Net Profit Margin(8/4) 0.299474606 0.249380739

10.Assets(Rs.) 10000000 9000000

11.Owners equity(Rs.) 500000 500000

12.ROA(8/10) 5.9855.537222222

13.RONW(8/11) 119.7 99.67

Productivity

Space Productivity :Annual profit divided by the total square feet of retail floor space.

Labor Productivity: Annual profit divided by the number of full-time + Part time employees.

Merchandise Productivity: Annual profit divided by the investment in merchandise.

Store Analysis

Store A Store B

Gross Margin (Rs.) 10000000 10000000

Space (Sq. ft.) 1000 1200

Labor( Rs.) 100000 90000

Inventory(Rs.) 50000 55000

GMROS 10000 8333.333

GMROL 100 111.1111

GMROI 200 181.8182

Retail Pricing

The amount of money charged for a product or services or the value the consumer exchanges for the benefit of having or using the product or services.

Dynamic pricing: Charging different prices depending on individual customers and situations.

Pricing StrategiesPricing Strategies

Market SkimmingMarket Skimming Market PenetrationMarket Penetration

>Setting a High Price for a New Product to Maximize Revenues from the Target Market.

>Results in Fewer, More Profitable Sales.

> Setting a Low Price for a New Product in Order to Attract a Large Number of Buyers.

>Results in a Larger Market Share.

Product Line PricingProduct Line PricingSetting Price Steps Between Product Line Items

i.e. $299, $399

Product Line PricingProduct Line PricingSetting Price Steps Between Product Line Items

i.e. $299, $399

Optional-Product PricingOptional-Product PricingPricing Optional or Accessory Products

Sold With The Main Producti.e. Car Options

Optional-Product PricingOptional-Product PricingPricing Optional or Accessory Products

Sold With The Main Producti.e. Car Options

Captive-Product PricingCaptive-Product PricingPricing Products That Must Be Used

With The Main Producti.e. Razor Blades, Film, Software

Captive-Product PricingCaptive-Product PricingPricing Products That Must Be Used

With The Main Producti.e. Razor Blades, Film, Software

Product-Bundle PricingProduct-Bundle PricingPricing Bundles Of Products Sold Together

Product-Bundle PricingProduct-Bundle PricingPricing Bundles Of Products Sold Together

Product Mix Pricing StrategiesProduct Mix Pricing Strategies

ProductMix

PricingStrategies

ProductMix

PricingStrategies

Price-Adjustment Strategies Price-Adjustment Strategies

• Adjusting Prices for Psychological Effect.•Price Used as a Quality Indicator.

• Temporarily Reducing Prices to Increase Short-Run Sales.

• Adjusting Prices to Account for the Geographic Location of Customers.• i.e. FOB-Origin, Uniform-Delivered, Zone Pricing, Basing-Point, & Freight-Absorption.

• Adjusting Prices for International Markets.• Price Depends on Costs, Consumers, Economic Conditions & Other Factors.

Psychological Pricing

Promotional Pricing

Geographical Pricing

International Pricing

Retail Location

Steps in Retail Location

Trading-area analysis

Location type

Site selection

Trading area

The place from which retailers can expect their customers are called trading areas.

Primary trade zone -- Usually 3-5 miles; generates 60-65% of customers

Secondary trade zone -- Usually 5-7 miles ; generates 20% of customers

Tertiary trade zone -- Usually 7-10 miles

Trading Area for a Store

Store

7-10 miles from store



Trading area Analysis

Trade area analysis is the process to determine the expected traffic from trading areas and whether it is appropriate to support their potential business . This is done by evaluating and analyzing various factors related to local demographics and area characteristics. It identifies the following:

Places from where the traffic would flow Size of the population Population trend Demographics of the population Characteristics of the area

Demographics

The size of population is not sufficiently indicative of the type of people who inhabit a trading area.

The following demographic factors are analyzed before making a decision about location.

Income level , Occupation and lifestyles Age group Family structure Household permanency Population trends

Area Characteristics

Traffic flow (Number and types of vehicle/ pedestrians

passing location)

Accessibility of Trading area through mass transit

Availability of manpower

Local legislations

Complementing and competing stores

Retail Location TheoriesRetail Location Theories

Retail Gravity Theory

Saturation Theory

Huff’s Gravity Model

Based on the premise that the probability that a given customer will shop in a particular store

or shopping center becomes larger as the size of store or center grows and distance or

travel time from customer shrinks

Huff’s Model Formula

tripsshopping of kinds different on time travelofeffect thereflects that oexponent tAn

center shopping point to starting scustomer' from distanceor timeTravel

center shopping of Size

center shopping particular a to travelingorigin ofpoint given aat customer a ofy Probabilit

Where

ijT b

ijT

jj S

jiijP

n

1jb

ijTjS

bijTjS

ijP

Gravity Model Illustration

Institutional area

Store A

(10000 Sq.ft.)

Store B

(6000 Sq.ft.)

Store C (7000 sq.ft.)

Institutional Area

4 miles

2 miles

3 miles

Index of Retail Saturation It takes into account demand and supply aspect of the retail business and

measures the attractiveness of a retail market.

IRS is the ratio of demand for a product (D) divided by available supply (S)

Where D= No. of Household in the geographic area (H) *annual retail expenditure for a particular line of trade per household (RE).

S=Sq. footage of retail facility of a particular line of trade in a geographical area

(RF) IRS= H*RE/RF

Higher IRS value indicates demand is more and supply is less i.e. currently it is less saturated hence attractive retail market.

Numerical

Location No. of Household Annual Exp per

household (Rs.) Area (Sq. Ft.)

Kharghar 500 40000 5000

Belapur 550 37000 4800

Freestanding location

An isolated store on a highway or a streetLack of direct competition.Generally lower rents.Freedom in operations and hours.Inexpensive parking.Better road and traffic visibility Advertising costs are very highGas stations , Hotels , fast food restaurants .Lack of drawing power from complementary stores.Difficulties in attracting customers for the initial visit.

Business districts

A type of retail location where two or more stores situate together (or in close proximity )in such a way that the total arrangement or mix of stores is not due to long range planning.

There are Four kinds of such business districts

1. Central Business Districts

2. Secondary Business Districts

3. Neighborhood Business Districts

4. String

Central Business Districts (CBD) Hub of retailing in a city. Also termed as downtown. Greater density of office building and stores. Both vehicular and pedestrian traffics are very high The core of a CBD 1-2 Km with cultural and entertainment facilities

surrounding them. Shoppers are drawn from urban area and include all class of people. Excellent product / service assortment Access to public transportation Inadequate parking Travel time is too high for those in suburban Connaught place , Colaba ,MG Road

Secondary Business district A SBD is one which is relatively newer in a city with

no historical background and has evolve over a period of time with the growth of population in a city.

The SBD’s are closer to the residential areas. Smaller trading areas. High rentals Parking difficulties Less chain stores A city may have more than 1 SBD Central Market , South extension market , Karol

Bagh , Bandra Linking Road , Vashi sec-17 ,Chembur(Sion –Panvel Highway)

Neighborhood Business district It appeals to the convenience shopping and service

needs of a single residential area It contains several small stores such as a drycleaner

, a stationary store ,, a barber shop / a beauty salon ,, liquor store , restaurant .

The leading retailer would be a supermarket or a drugstore .

Long hours ,less hectic atmosphere. Prices are on a higher side

String

A shopping area comprising a group of retail stores with similar or compatible product lines located along a street or a highway .

It starts with an isolated store , success than breeds competitors

Factory outlets in Mahipalpur (Delhi) and Chembur (Mumbai) , marble / stone retailers (vasant kunj in Delhi) , furniture market in Delhi, Fashion street in Mumbai , Janpath in Delhi

Flea Market

Make shift or temporary arrangements to sell / Barter

Discounted prices Chor Bazaar , Handloom / Handicraft

Bazaar , weekly markets , melas , mandi

Parasites

Parasite stores do not create their own traffic. They make money based on their proximity to things that will draw foot traffic / footfall. (Bigger stores, train stations, airports, office buildings)


Anchor Stores

A large store such as a department store or supermarket, that is prominently located in a shopping mall to attract customers who are then expected to patronize the other shops in the mall.


Mall

A shopping centre as defined by International council of Shopping centers is a group of retail and other commercial establishments on a site owned ,planned , developed and managed as a single property .

The availability of parking is an important feature Good assortment of goods and services Suburban population One stop family shopping Shopping experience

Site Selection

Once the retailer has decided which location shopping districts is best suited to serve its needs, the next step is to select the specific site within it that offer the best chance for success .

Site Characteristic

• Number of parking spaces available

• Distance of parking areas

• Ease for loading / unloading/loading / unloading/delivery

• Visibility of site from street

• History of the site

• Compatibility of neighboring stores

•

Site Characteristic

• Size and shape of site• Condition of existing building• Ease of entrance and exit for traffic• Ease of access for handicapped customers• Building safety code restrictions• Zoning and building norms• Terms of lease/rent agreement• Local taxes• Operations and maintenance cost• Restrictive clauses in lease

Reasons for Retail Boom In India

YOUNGISTAAN (40% of population is between 25-

35 years) : Quality , design , fashion conscious , free from hassles ,believe in spending )

Kids becoming aware of external environment and are becoming more demanding

Influence of International travel and media (5 Mn Indians Travelled abroad , 67 mn cable and satellite homes)

Emergence of new activities Credit friendliness

Weekly MarketsVillage FairsMelas

Convenience StoresMom and Pop/Kiranas

PDS OutletsKhadi StoresCooperatives

Exclusive Brand Outlets/Shopping Malls

Traditional Government Supported

Historic Modern Formats/ International

Evolution of Indian Retail

Source of Entertainmen

t

Neighborhood Stores/Convenie

nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie

ncy

Retailing functions??

Buying & Merchandising.

Five golden rules:-

1. Right merchandise.

2. Right time.

3. Right Place.

4. Right Price.

5. Right stock qty.

Retailing functions??

Store Planning and Operations

1. Space Management

2. Ambience/ Services.

3. Visual Merchandising – The silent seller.

4. Customer management.

5. Inventory management

Retailing functions??’

Human Resources

Finance & Accounts

IT

ClassificationClassificationof of

Retail Retail FormatsFormats

ClassificationClassificationof of

Retail Retail FormatsFormats

OwnershipOwnership

Level of ServiceLevel of Service

MerchandiseMerchandise

PricePrice

CLASSIFYING RETAIL OUTLETS

IndependentRetailers-one store

ownership

IndependentRetailers-one store

ownership

Chain Stores-many stores but only one owner

Chain Stores-many stores but only one owner

Franchises-many owners of many stores

Franchises-many owners of many stores

CLASSIFICATION BY OWNERSHIP

Cooperatives – member consumers are the owners

Leased

Independent Retailer

Owns and operate only one retail outlet Managed by owner / proprietor and a few other

family members ( Generation shops) Local baniya / Kirana store / paanwala One to one rapport with customer Limited bargaining power with supplier

Chain Retailer

Two or more outlets under common ownership Commonality in terms of , BUYING ,

MANAGEMENT, MERCHANDISE , AMBIENCE ,ADVERTISING , PROMOTIONS

Very high bargaining power with supplier City and regional preferences ignored Pantaloons , Shoppers Stop , West side , globus ,

Wills Sports, Arrow etc.

Franchising

Contractual agreement between franchiser and franchisee which allows the

franchisee to conduct business under an established name as per a particular

business format in return for a fee or a compensation .

Such type of ownership enriches the Franchiser as the Franchisee are

entrepreneur who bring their business skills to grow the business of Franchisers.

Ineffective / Bad Franchisee may harm the reputation of the Franchiser

Such a system does not allow Territorial exclusivity .

Franchising

Franchiser: The originator of a trade name, product, methods of operation, and so on that grants operating rights to another party to sell its products.

Franchisee: An individual or business that is granted the right to sell another party’s product.

Product and Trade Name Franchising

Product and Trade Name Franchising

BusinessFormat

Franchising

BusinessFormat

Franchising

Dealer agrees to sell certain products provided by a

manufacturer, but can use any sales tactics he chooses.

Archie's , Auto dealers

Dealer agrees to sell certain products provided by a

manufacturer, but can use any sales tactics he chooses.

Archie's , Auto dealers

Dealer must sell the franchiser’s product in the exact way the

franchiser prescribes.Ex – McDonalds, Planet Fashion

Stores

Dealer must sell the franchiser’s product in the exact way the

franchiser prescribes.Ex – McDonalds, Planet Fashion

Stores

BASIC FORMS OF FRANCHISING

Leased Department Also termed as Shop-in Shops A section of a space is leased to an outside party Retailer expands its product offering to the customers Perfumes / cosmetic counters in department stores The proprietor of leased department is responsible for all aspects

of its business and normally pays a percentage of sales as rent . The store sets operating restrictions for the leased department to

ensure overall consistency and coordination .

Cooperatives

Consumers invest in the enterprise

Profits are distributed among the members as dividends

Stores managed by elected officials

Apna bazar ,Super bazar ,Kendriya bhandar ,Sahakari bhandar

Full Service

Full Service

SelfService

SelfService

CLASSIFICATION BY LEVEL OF SERVICE

PRODUCT MIX HINDUSTAN UNILEVER LIMITED

PERSONAL WASH LAUNDRY HAIR CARE DEODORANTS SKIN CARE

ORAL CARE

COLOUR COSMETICS

FOODS AND BEVERAGES

LUX SURX SUNSILK AXEFAIR AND LOVELY

PEPSODENT LAKME BROOKE BOND

LIFEBUOY RIN CLINIC REXONA PONDS CLOSEUP LIPTON

LIRIL WHEEL VASELINE KISSAN

HAMAM ANNAPURNA

BREEZE KNORR

DOVE KWALITY WALLS

PEARS

REXONA

Convenience StoresConvenience Stores

SupermarketsSupermarkets

Departmental StoresDepartmental Stores

HypermarketsHypermarkets

Specialty StoresSpecialty Stores

Off Price RetailersOff Price Retailers

Catalogue RetailingCatalogue Retailing

RETAILERS BY PRODUCT OFFERING

Category Killers

Warehouse Clubs

Restaurants

Kirana

Kirana Stores Neighborhood / residential areas /

Independent retailers Food oriented Eased / personalized/ emergency purchase 2-3 times a week Convenience products Open for long hours Home delivery and monthly credit

Convenience stores

Neighborhood food oriented store open for long hours Moderate number of items (more than kirana ) The store size is relatively larger than kirana and provides better

customer service in terms of ambience ,paclaging , presentation and quality.

Prices are not as competitive as other formats like supermarket ,department stores but certainly on the lower side than the lirana stores.

The ease of shopping at convenience store in terms of time and impersonal nature of supermarlet makes these stores more appealing .

According to FMI : A small local store selling mostly grocery , open until late at night or even 24 hours a day and is abbreviated as c store

The store size is 3000-8000 sq ft Stores in petrol pumpslike HP Speed mart, In and Out.

Supermarkets Food store offering groceries and limited range of

non food items / general merchandise ie health and beauty aids , gift items

Large stores ,low cost , low margin , high volume , self service operations

85% food and grocery items Impulse buying 8000-20000 sq ft Nigiris , Foodworld, Subhiksa , Food Bazar ,

Spencers, Spinach

Departmental Store Large stores selling several product lines with each operating as a department under one

roof. Product mix is largely non food like apparel , accessories ,books , music , footwear . 20000- 40000 sq. ft. Target customers are not price conscious Ambience / VM plays important role. National brands as well private labels Merchandise return policy and loyalty programs Anchors in a shopping mall They help in attracting high traffic 30% conversion rates Atleast 50 employees 50000- 100000 SKU’s Shopper’s Stop , Pantaloon , Lifestyle , Westside , Globus , Akbarally’s , The Bombay

Store , Benzer , Ebony , Chermas , Meena Bazzar . International players like Marks & Spencer , Sears , J.C.Penny .

Hypermarkets Derived from the French word Hypermarche which is a combination of a

economy supermarket and a discount department store . Also termed as supercentrees Carrefour started first hypermarket in 1963 A store with 80000-2,20000 sqft. with at least 35% of selling space

devoted to non grocery product like clothes , jewellery , hardware , sports equipment , books , CD’S /DVD’S , Video’s , TV , electric equipments .

One stop shopping Cheapest Pricing Wal –Mart (the Wal-Mart supercentres), Carrefour, Target ( Super

Targets) , Tesco (Tesco Extra Stores), Big Bazaar , Star India Bazaar , Hypercity

Specialty Store

A retail store specializing in a particular type of merchandise or single product line with deep assortments in that product line

Such business model is characterized by high level of customer service or product information

Concentrate on apparel , jewellery ,drugs, fabrics , sporting goods , Car / Scooters , furniture etc.

8000 sq.ft.

The Gap , Ikea , Proline fitness centre , Croma , Kings electronics

Off Price Retailers

Merchandise is sold at less than retail prices Buys manufacturers seconds , off seasons at a deep discount The merchandise may be in odd size ,unpopular colors or with

minor defects Manufacturer owned / Factory outlet (Pantaloon Factory outlets,

Levy’s factory outlet etc.) Parental company to expand their business

Catalogue Retailers

A retail outlet selling durable products and other high mark-up merchandise from a catalogue.

BUYER'S choose items from the catalogue and complete an order form which is then processed in – store .

Category Killers

A specialty retailer who offers a very large selection in the chosen product category and economical prices

Focus on one product category, they stock deep , dominate the product category

20,000-1,20,000 sq.ft. Nalli’s in saris, Trouser Town in Trousers,

Toys Kemp in Toys , The Loft in footwear.

Warehouse Clubs

A limited-service merchant wholesaler that sells appliances, household items, and groceries on a cash-and-carry basis to members, usually small businesses and groups

Restaurants

Sell tangible products, food and drink, but also provide valuable service.

Major FormsMajor Formsofof

NonstoreNonstoreRetailingRetailing

Major FormsMajor Formsofof

NonstoreNonstoreRetailingRetailing

Automatic VendingAutomatic Vending

Direct selling (Door to Door, Party plan,Multi level networking ) ,Direct Marketing(TV , mail/ catalogue

Direct selling (Door to Door, Party plan,Multi level networking ) ,Direct Marketing(TV , mail/ catalogue

Electronic RetailingElectronic Retailing

NON-STORE RETAILING

Service

Banks Hotels Hospitals Education Airlines Car Rentals Housekeeping

Retail Objectives

Retail Mission

Market Performance Objectives

Financial Performance Objectives

Personal Objectives

Societal Objectives

Sales Volume

Market Share

Self-

Gratification

Power and Authority

Status and

Respect Benefactor

Equity

Consumer

Choice

Taxes

Employment

Productivity

Profitability

Retailing Mix

The retailing mix includes the activities related to managing the store and the merchandise .

Managing the merchandise includes five golden rues of merchandising i.e. right merchandise at right price at right time at right place and right quantity .

Managing the store means right location , right exterior and interiors as well the right services to the customer

The retailing mix includes the activities related to managing the store and the merchandise .

Managing the merchandise includes five golden rues of merchandising i.e. right merchandise at right price at right time at right place and right quantity .

Managing the store means right location , right exterior and interiors as well the right services to the customer

TargetTargetMarketMarket

ProductProduct

PricePrice

PromotionPromotion

PlacePlace

PersonnelPersonnel

PresentationPresentation

CHOOSING THE RETAIL MIX

Retail Mix

Product: width and depth of product assortment

Prices Place: location and hours Promotion: advertising, publicity and public

relations Presentation: layout and atmosphere (the

overall impression conveyed by a store’s physical layout, décor and surroundings)

Personnel: customer service and personal selling

RETAILING STRATEGY - LOCATION

Freestanding Store

Freestanding Store

Shopping Center Tenant

Shopping Center Tenant

Mall TenantMall Tenant

Parasites



Destination Stores

A retail store in which the merchandise , pricing , presentation , service act as a magnet for the customers .It acts a an ultimate retail destination .The Central offers everything for the shoppers to shop , eat and celebrate .It houses 300 brands across categories such as apparel , footwear , accessories ,books, music , coffee shops, restaurants , pubs , discotheques . Apart from this separate section for services such as travel , finance , investment , insurance , concert , cinema ,, ticket booing ,art exhibitions .

A retail store in which the merchandise , pricing , presentation , service act as a magnet for the customers .It acts a an ultimate retail destination .The Central offers everything for the shoppers to shop , eat and celebrate .It houses 300 brands across categories such as apparel , footwear , accessories ,books, music , coffee shops, restaurants , pubs , discotheques . Apart from this separate section for services such as travel , finance , investment , insurance , concert , cinema ,, ticket booing ,art exhibitions .

Anchor Stores



Identifying Strategic Alternatives

Market PenetrationIncrease the product mix

Increase the frequency/volume of purchase

Market development/ ExpansionNew customer base

Retail Format development

DiversificationNew retail formats aimed at new market segments

Reta

il Form

ats

Existing New

Market Segments

Existin

gN

ew

Business Model for

Launching a Retail Store

????????????? What do you want to sell Who do you want to sell Why customers will shop at our store (service, convenience, quality, promptness or

competence). What value customer expects from you What is your USP( special sizes, competitive prices, better service, wider selection, good

location or convenient hours). Where do you want to sell Mechanism to evaluate best performing store Return/ Exchange / Refund policies. No hassle measure Employees training and professionalism Comfort before , during and after shopping (parking , wash rooms , drinking water ,

ambience ) Integration of IT in business to help streamline everyday tasks such as inventory control,

point of sale, and overall business analysis , Customers / Merchandise tracking system , Customer feedback system

How to arrange and display merchandise that will attract customers to visit the store and buy.

What should be done to increase Basket size Implement proven business formulas of other successful retail firms.

Business Model

Strategic Retail Marketing

Strategic Location

Strategic Profit

Strategic Retail Marketing

The Concept

Customer

Retail Mix

The Concept

Background

Vision

Mission

Objective

Policy Statement

Store Identification

Background

History and Evolution of the Industry

Size of the Industry

Major Players

Situation Analysis

Situation AnalysisSituation Analysis

Retailer

Social/demographic

Economic

Technological

Political

Customers

Company resources

Vendor/Suppliers /Manufacturer

Competitors

Vision

Comprises two components :- Ideology and Future

Ideology means what we stand for and why we exist ,what we aspire to achieve , to create

Future means where we want to proceed

Mission

A mission statement highlights the following :

The target customers The value it intends to offer

Retail Objectives

Retail Mission

Market Performance Objectives

Financial Performance Objectives

Personal Objectives

Societal Objectives

Sales Volume

Market Share

Self-

Gratification

Power and Authority

Status and

Respect Benefactor

Equity

Consumer

Choice

Taxes

Employment

Productivity

Profitability

Policy

Shopping as an experience Quality at competitive prices To be with you throughout the day We value your money Your satisfaction is our mantra of success We value your feedback

Store Identification

Brand

Logo

Customer

GeographicGeographic DemographicDemographicPsychographicPsychographicBehavioralBehavioral

STATE OF BEINGSTATE OF BEING STATE OF MINDSTATE OF MIND

Retail Consumer Categories

Product Groupie

Time Killer Focused Fulfillers

General Browsers

Pleasure Seekers

Merchandising The primary function of retail is to sell merchandise.

Merchandising is the process of analysis , planning , procurement , handling and control of the merchandise.

Most Strategic aspect of the retail business is to decide merchandise mix and quantity to be purchased.

Merchandise mix represents the full range of mixture of products a retailer offers to its target customer.

Merchandise mix covers decision on three parameters

1. Variety

2. Assortment

3. Budget

Merchandise Mix 3 Dimensional approach (Length , width and depth )

Merchandise variety is the number of different product line that a retailer stocks in the store (Length)

Merchandise assortment is the number of different product items the retailer stocks within a particular product line (Width and depth )

Number of different Brand in a particular product line indicates the Length of that line

Style , size , colors , designs , price, flavors indicate the depth

MERCHANDISE MIX HINDUSTAN UNILEVER LIMITED

PERSONAL WASH LAUNDRY HAIR CARE DEODORANTS SKIN CARE

ORAL CARE

COLOUR COSMETICS

FOODS AND BEVERAGES

LUX SURX SUNSILK AXE

FAIR AND LOVELY

PEPSODENT LAKME BROOKE BOND

LIFEBUOY RIN CLINIC REXONA PONDS CLOSEU

P LIPTON

LIRIL WHEEL VASELINE KISSAN

HAMAM ANNAPURNA

BREEZE KNORR

DOVE KWALITY

WALLS

PEARS

REXONA

Total cost of merchandise sold Billed cost – the price at which goods are purchased and

which appears on the invoice of the vendor’s bill Inward freight or transportation charges- the amount the

vendor may charge for the delivery of merchandise. Inward freight plus billed cost is called the billed delivered cost

Alteration and workroom costs- the amt that selling dept may be charged for which is necessary to put the merchandise in condition for sale ( Assembling, polishing etc). It is treated as additional cost since it applies to only to the goods that have been sold and not to to all purchases.

Cash Discounts-discounts which vendors may grant for payment of an invoice within a specified time.

Total cost of merchandise sold Billed costs(plus) Inward freight or transportation

charges=================================

Billed delivered cost(plus) Workroom costs=================================

Gross Merchandise cost(minus) Cash Discount=================================

Total cost of merchandise sold

Transportation costs

FOB – Free on Board indicates the point at which ownership of the merchandise changes e.g. store, plant, factory, warehouse, port.

FOB Factory-in this arrangement the retailer takes title to the merchandise at the point of the shipment(factory). The retailer takes all transportation charges and assumes all risks for the goods while in transit.


FOB Destination- this agreement states that the vendor pays all transportation costs and retains title to to the merchandise until it arrives at the place designated by the buyer. Also stated as FOB store or FOB buyer’s warehouse.


FOB Shipping (consolidation) point. This agreement means that the vendor pays any crating and transportation costs for getting the goods to the shipping company that will transport the goods to the retailer.

The retailer takes ownership of the goods at the point and is responsible for the cost of getting the goods to the store or receiving point.


FOB Destination,(Charges Reversed). This agreement indicates that the vendor owns the goods until they get to the buyer’s designated point,however the retailer agrees to pay the transportation.


In most cases the transportation charges must be prepaid. This means transportation costs are paid by the vendor when the merchandise is delivered to the carrier such as UPS, a freight forwarder, etc.

When the merchandise is FOB Factory and freight has been prepaid, the retailer reimburses the vendor for the shipping charges to he cost of the merchandise. The amount remitted to the vendor equals the net cost of merchandise plus the cost of transportation

Employee Type & DensityEmployee Type & Density

Merchandise Type & DensityMerchandise Type & Density

Fixture Type & DensityFixture Type & Density

SoundSound

OdorsOdors

Visual FactorsVisual Factors

Factors Factors inin

CreatingCreatingStore’sStore’s

Atmosphere Atmosphere


CreatingCreatingStore’sStore’s

Atmosphere Atmosphere

PRESENTATION (COMMUNICATION) OF THE RETAIL STORE

Most Influential Factors in a Store’s Atmosphere

Employee type and density: characteristics of employees and the number per thousand square feet of selling space

Merchandise type and density: products carried and how it is displayed

Fixture type and density: actual display materials

Sound: music Odor: smells and fragrances Visual factors: colors, lighting, outdoors

How manyHow many

How knowledgeableHow knowledgeable

How helpful How helpful

Fit the image of the productFit the image of the product

Good personal sellersGood personal sellers


Personnel Personnel decisionsdecisions


Personnel Personnel decisionsdecisions

PERSONNEL OF THE RETAIL STORE

sndt retail operation and inventory

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