Retailing

CH: 5 RETAILING
TOPICS:
1. INTRODUCTION TO RETAILING
2. CUSTOMER RELATIONSHIPMANAGEMENT IN RETAILING
3. MERCHANDISINGAND INVENTORY
4. MANAGEMENT IN RETAILING
OPPOSITE CHECKER:POOJA ZANZMERA

No. Roll no. Name
1. 106 Savani vidhee
2. 74 Patel Kirti
3. 75 Patel Mayuri
4. 78 Patel Twinkal
5. 113 Solanki Khoosbu
6. 121 Vastarpara Ami
7. 123 Virani Jinal

• WHAT IS RETAILING?
Retailing is a distribution channel function
where one organization buys products from
supplying firms or manufactures the product
themselves, and then sells these directly to
consumers. A retailer is a reseller (i.e., obtains
product from one party in order to sell to another)
from which a consumer purchases products.

1. Retailing: Introduction, Meaning,
Definition and Characteristics
By: Rohan Agarwal
Introduction:
Liberalized financial and political environment in India
has prompted a wave of large number of entrants into
the country’s rapidly growing retail industry during the
past few years, without doubt, the retail industry in
India is in the throes of radical restructuring. The
fundamental drivers of change are increasing per
capita income, growing GDP, availability of consumer
finance and therefore irreversible. Retailing in general
sense consists of business activities that are involved
in buying and selling of goods and services to ultimate
consumers for their own use – ranging from Bread
butter to automobiles to apparels to airline tickets.

In India, after agriculture, the retail is the second
largest sector that provides enough employment to
Indian workforce. But retailing in India is at cross
roads on the one side, retail sales are making new
heights year after year and on the other side,
traditional Indian retailers (Kirana stores) face
numerous challenges.

Experts believe that retail expansion in the coming
five to seven years is expected to be stronger than
our Indian GDP growth, driven by changing
lifestyles and by strong income growth, which in
turn will be supported by favorable demographic
patterns and the extent to which organized
retailers succeed in reaching lower down the
income scale to reach potential consumers
towards the bottom of the consumer pyramid. Use
of plastic money, easy availability of consumer
credit will also assist in boosting consumer
demand.

Today, a vast majority of India’s young population
favors branded goods. With the spread of satellite
televisions and visual media, urban life style
trends have spread across the rural areas also.
The shopping extravaganza of the Indian middle
class especially the young population for clothing,
eating outside and lust for modern living styles
has unleashed new possibilities for retail growth
even in the rural areas.

Thus, 85% of the retail boom which was focused
only in the metros has started to infiltrate towards
smaller cities and towns. Tier-II cities are already
receiving focused attention of retailers and the
other smaller towns and even villages are likely to
join in the coming years. This is a positive trend,
and the contribution of these tier-II cities to total
organized retailing sales is expected to grow to 20-
25%. One of the principal reasons behind the
explosion of retail and its fragmented nature in the
country is the fact that retailing is probably the
primary form
Of disguisedunemployment/underemployment in
the country.

Given the already over-crowded agriculture sector,
and the stagnating manufacturing sector, and the
hard nature and relatively low wages of jobs in
both, many million Indians are virtually forced into
the services sector.

wikipedia.org
Retail involves the process of selling
consumer goods or services to customers through
multiple channels of distribution to earn a profit.
Demand is identified and then satisfied through a
supply chain. Attempts are made to increase
demand through advertising. In the 2000s, an
increasing amount of retailing began occurring
online using electronic payment and delivery via a
courier or via postal mail.

Retailing as a sector includes
subordinated services, such as delivery The term
"retailer" is also applied where a service provider
services the small orders of a large number of
individuals, rather than large orders of a small
number of wholesale, corporate or government
clientele. Shops may be on residential streets,
streets with few or no houses, or in a shopping
mall.

Shopping streets may restrict traffic to
pedestrians only. Sometimes a shopping street has
a partial or full roof to create a more comfortable
shopping environment - protecting customers from
various types of weather conditions such as
extreme temperatures, winds or precipitation.
Forms of non-shop retailing include online
retailing (a type of electronic commerce used for
business-to-consumer (B2C) transactions) and
mail order.

Shopping generally refers to the act of
buying products. Sometimes this is done to obtain
final goods, including necessities such as food
and clothing; sometimes it takes place as a
recreational activity. Recreational shopping often
involves window shopping (just looking, not
buying) and browsing: it does not always result in
a purchase.

• ETYMOLOGY
Retail comes from the Old French
word tailler, which means "to cut off, clip, pare,
divide" in terms of tailoring (1365). It was first
recorded as a noun with the meaning of a "sale in
small quantities" in 1433 (from the Middle French
retail, "piece cut off, shred, scrap, paring").[1] Like
in French, the word retail in both Dutch and
German also refers to the sale of small quantities
of items.

RETAIL STRATEGY
The retailing strategy is a marketing
plan abstractly designed to offer its products and
services in a way that will optimize customer
satisfaction. Service quality and marketing mix
strategy have significant and positive association
on customer loyalty. The marketing strategy
effectively outlines all key aspects of firms
targeted audience; demographic and preference.
Throughout a highly competitive market, the retail
strategy sets up long-term sustainability. It focuses
on customer relationships, stressing the
importance of added value and customer
satisfaction.

The retail mix is designed to
complement the retail strategy through theoretical
tools such as the product, its quality and value, the
promotions, place, and price. Retail store design
strategy The design of a retail store is critical when
appealing to its intended market, as this is where
first impressions are made. It can influence a
consumer’s perception of the quality of the store,
visually communicating value. Certain techniques
are used to create a consumer brand experience,
which in the long run drives brand loyalty.

The front of the store is paid close
attention too, known as the “decompression zone"
[4] This is usually an open space in the entrance of
the store to allow customers to adjust to their new
environment. An open planned floor design is
effective in retail as it allows customers to see
everything. Depending on what side of the road
cars drive on in the country, determines what way
the store will direct its customers. New Zealand
retailer stores for instances would direct
customers to the left. Brands are now recognizing
that human nature has a conceptual profile and a
sensory profile.

Through the notions of sensory stimulation
retailers can engage maximum emotional impact
between a brand and its consumers by relating to
both profiles; the goal and experience. By
achieving so it can influence purchasing behavior
maximizing outcomes. This is done through the
relation of touch, smell, sight, taste and noise. It is
common for a retailer store to play music that
relates to their targeted market. Jewelry stores like
Michel Hill have dim lighting to creating a sense of
intimacy. Super markets offer taste testers.
Clothing garments are at arms reach, allowing
customers to feel the different textures of clothing.
Wooden floors also contrast with the carpeted
fitting rooms, which is designed to create a sense
of homeliness when trying on garments.

‘Peter Alexandra’ is renowned for their
scented candles. These aspects outlined add to
the sensory experience put in place to strategically
achieve customer satisfaction and retention. This
will create future opportunity and help a brand
stand out in amongst the competitive market.
A marketplace is a location where goods and
services are exchanged. The traditional market
square is a city square where traders set up stalls
and buyers browse the stores. This kind of market
is very old, and countless such markets are still in
operation around the whole world.

In some parts of the world, the retail
business is still dominated by small family-run
stores, but this market is increasingly being taken
over by large retail chains. Most of these stores are
called high street stores. Gradually high street
stores are being re-grouped in condensed
geographical areas along specific streets or
districts such as the Magnificent Mile in Chicago,
Illinois or at single locations called malls. These
are more defined and planned spaces for retail
stores and brands.

TYPES BY PRODUCTS
Retail is usually classified by the following
type of products:
Food products — typically require cold
storage facilities. Hard goods or durable goods —
automobiles, appliances, electronics, furniture,
sporting goods, lumber, etc., and parts for them.
Goods that do not quickly wear out and provide
utility over time. Soft goods or consumables —
clothing, other fabrics, footwear, toiletries,
cosmetics, medicines and stationery. Goods that
are consumed after one use or have a limited
period (typically under three years) in which you
may use them. Arts — contemporary art galleries,
bookstores, handicrafts, musical instruments, gift
shops, and supplies for them.

 Types by marketing strategy:
These are the following types of retailers by
marketing strategy:
Discount department store Charters Towers,
North Queensland, Australia
 Department store:
Department stores are very large stores
offering a huge assortment of "soft" and "hard"
goods which often bear a resemblance to a
collection of specialty stores. A retailer of such
store carries a variety of categories and has a
broad assortment of goods at an average price.
They offer considerable customer service.

 Discount store:
Discount stores tend to offer a wide array of
products and services, but they compete mainly on
price. They offer extensive assortments of
merchandise at affordable and cut-rate prices. In
the past, retailers sold less fashion-oriented
brands. However, in more recent years companies
such as TJX Companies (Own T.J. Maxx and
Marshalls) and Ross Stores are discount store
operations increasingly offering fashion-oriented
brands on a larger scale.
 Warehouse store:
Warehouses that offer low-cost, often high-
quantity goods piled on pallets or steel shelves;
warehouse clubs charge a membership fee.

 Variety store:
Variety stores offer extremely low-cost
goods, with a vast array of selection. The downfall
to this is that the items are not very high quality.
 Demographic:
Retailers that aim at one particular segment
(e.g., high-end retailers focusing on wealthy
individuals).
 Mom-And-Pop:
A small retail outlet owned and operated by
an individual or family. Focuses on a relatively
limited and selective set of products.

 Specialty store:
A specialty (BE: speciality) store has a
narrow marketing focus — either specializing on
specific merchandise, such as toys, shoes, or
clothing, or on a target audience, such as children,
tourists, or plus-size women.Size of store varies —
some specialty stores might be retail giants such
as Toys "R" Us, Foot Locker, and The Body Shop,
while others might be small, individual shops such
as Nutters of Savile Row.Pricing is usually not the
priority when consumers are deciding upon a
specialty store; factors such as branding image,
selection choice, and purchasing assistance are
seen as important. They differ from department
stores and supermarkets which carry a wide range
of merchandise.

 Convenience store:
A convenience store provides limited amount of
merchandise at more than average prices with a
speedy checkout. This store is ideal for emergency
and immediate purchase consumables as it often
works with extended hours, stocking every day.
 Hypermarkets:
Provides variety and huge volumes of exclusive
merchandise at low margins. The operating cost is
comparatively less than other retail formats.

 Boutique:
Boutique or concept stores are similar to specialty
stores. Concept stores are very small in size, and
only ever stock one brand. They are run by the
brand that controls them. An example of brand that
distributes largely through their own widely
distributed concept stores is L'OCCITANE en
Provence. The limited size and offering of
L'OCCITANE's stores are too small to be
considered a specialty store proper.
 General store:
A general store is a rural store that supplies the
main needs for the local community.

 Supermarket
A supermarket is a self-service store consisting
mainly of grocery and limited products on non
food items. They may adopt a Hi-Lo or an EDLP
strategy for pricing. The supermarkets can be
anywhere between 20,000 and 40,000 square feet
(3,700 m2). Example: SPAR supermarket.
 Mall
A shopping mall has a range of retail shops at a
single outlet. They can include products, food and
entertainment under one roof. Malls provide 7% of
retail revenue in India, 10% in Vietnam, 25% in
China, 28% in Indonesia, 39% in the Philippines,
and 45% in Thailand.

 "Category killer" or specialist:
By supplying wide assortment in a
single category for lower prices a category killer
retailer can "kill" that category for other retailers.
For few categories, such as electronics, the
products are displayed at the centre of the store
and sales person will be available to address
customer queries and give suggestions when
required. Other retail format stores are forced to
reduce the prices if a category specialist retail
store is present in the vicinity.

 E-tailer:
The customer can shop and order
through the internet and the merchandise is
dropped at the customer's doorstep or an e-tailer.
Here the retailers use drop shipping technique.
They accept the payment for the product but the
customer receives the product directly from the
manufacturer or a wholesaler. This format is ideal
for customers who do not want to travel to retail
stores and are interested in home shopping.

 Vending machine:
A vending machine is an automated
piece of equipment wherein customers can drop
the money in the machine and acquire the
products. Some stores take a no frills approach,
while others are "mid-range" or "high end",
depending on what income level they target.

 Other types
Other types of retail store include:
Automated retail stores — self-
service, robotic kiosks located in airports, malls
and grocery stores. The stores accept credit cards
and are usually open 24/7. Examples include
ZoomShops and Redbox. Big-box stores —
encompass larger department, discount, general
merchandise, and warehouse stores.

Retailers can opt for a format as each
provides different retail mix to its customers based
on their customer demographics, lifestyle and
purchase behaviour. A good format will lend a
hand to display products well and entice the target
customers to spawn sales.

• Operations:
 Retail pricing
The pricing technique used by most retailers
is cost-plus pricing. This involves adding a markup
amount (or percentage) to the retailer's cost.
Another common technique is suggested retail
pricing. This simply involves charging the amount
suggested by the manufacturer and usually printed
on the product by the manufacturer.

In Western countries, retail prices are
often called psychological prices or odd prices.
Often prices are fixed and displayed on signs or
labels. Alternatively, when prices are not clearly
displayed, there can be price discrimination, where
the sale price is dependent upon who the customer
is. For example, a customer may have to pay more
if the seller determines that he or she is willing
and/or able to. Another example would be the
practice of discounting for youths, students, or
senior citizens.

 Competition:
Retail stores may or may not have
competitors close enough to affect their pricing,
product availability, and other operations. A 2006
survey found that only 38% of retail stores in India
believed they faced more than slight
competition.[14] Competition also affected less
than half of retail stores in Kazakhstan, Bulgaria,
and Azerbaijan. In all countries the main
competition was domestic, not foreign.[15]

 Staffing:
Because patronage at a retail outlet
varies, flexibility in scheduling is desirable.
Employee scheduling software is sold, which,
using known patterns of customer patronage,
more or less reliably predicts the need for staffing
for various functions at times of the year, day of
the month or week, and time of day. Usually needs
vary widely. Conforming staff utilization to staffing
needs requires a flexible workforce which is
available when needed but does not have to be
paid when they are not, part-time workers; as of
2012 70% of retail workers in the United States
were part-time.

This may result in financial problems for the
workers, who while they are required to be
available at all times if their work hours are to be
maximized, may not have sufficient income to meet
their family and other obligations.

 Transfer mechanisms:
There are several ways in which consumers
can receive goods from a retailer:
Counter service, where goods are out of
reach of buyers and must be obtained from the
seller. This type of retail is common for small
expensive items (e.g. jewelry) and controlled items
like medicine and liquor. It was common before the
1900s in the United States nd is more common in
certain countries like India.[which?] Click and
Commute, where products are ordered online and
are picked up via a drive through. Ship to Store,
where products are ordered online and can be
picked up at the retailer's main store Delivery,
where goods are shipped directly to consumer's
homes or workplaces.

Mail order from a printed catalog was
invented in 1744 and was common in the late 19th
and early 20th centuries. Ordering by telephone
was common in the 20th century, either from a
catalog, newspaper, television advertisement or a
local restaurant menu, for immediate service
(especially for pizza delivery), remaining in
common use for food orders. Internet shopping —
a form of delivery — has eclipsed phone-ordering,
and, in several sectors — such as books and
music — all other forms of buying. There is
increasing competitor pressure to deliver
consumer goods- especially those offered online-
in a more timely fashion. Large online retailers
such as Amazon.com are continually innovating
and as of 2015 offer one-hour delivery in certain
areas.

They are also working with drone
technology to provide consumers with more
efficient delivery options. Direct marketing,
including telemarketing and television shopping
channels, are also used to generate telephone
orders. started gaining significant market share in
developed countries in the 2000s. Door-to-door
sales, where the salesperson sometimes travels
with the goods for sale. Self-service, where goods
may be handled and examined prior to purchase.

Digital delivery or Download, where
intangible goods, such as music, film, and
electronic books and subscriptions to magazines,
are delivered directly to the consumer in the form
of information transmitted either over wires or air-
waves, and is reconstituted by a device which the
consumer controls (such as an MP3 player; see
digital rights management). The digital sale of
models for 3D printing also fits here, as do the
media leasing types of services, such as
streaming.

• Second-hand retail
* Charity shop
Some shops sell second-hand goods. In the
case of a nonprofit shop, the public donates goods
to the shop to be sold. In give-away shops goods
can be taken for free.

Another form is the pawnshop, in
which goods are sold that were used as collateral
for loans. There are also "consignment" shops,
which are where a person can place an item in a
store and if it sells, the person gives the shop
owner a percentage of the sale price. The
advantage of selling an item this way is that the
established shop gives the item exposure to more
potential buyers.E-tailers like OLX,Quikr etc. also
working on second hand goods sales.

 Sales techniques:
Every retail store operates under the goal of
overcoming the other competition in the market to
create brand dominance and/or large profit. This is
done by different sales techniques created and/or
adopted by retailers. Techniques include hiring
staff which are deemed attractive by the target
demographic (Physical appearance, smell, sound
and behavior all attribute to a persons
attractiveness).

other techniques include store location,
somewhere easily visible with lots of traffic (Traffic
can be but not limited to pedestrians or vehicles).
Also stores create custom interior design to suit
the stores personality and the target market. Some
of the largest retailers spend millions on a stores
marketing technique to invite customers in to
spend their time and money. .

As consumers have grown from the days of
wandering in and buying goods or services just for
the face value to being informed on products and
how they are made companies focus on the values
of society such as being sustainable or being fair
trade approved. Conscious consumers are
attracted by the stores morals of being righteous
and thus creating a strong brand image that stands
our from the competition. Adding value to goods or
services such as a free gift or buy 1 get 1 free adds
value to customers where as the store is gaining
sales.

A destination store is one that customers
will initiate a trip specifically to visit, sometimes
over a large area. These stores are often used to
"anchor" a shopping mall or plaza, generating foot
traffic, which is capitalized upon by smaller
retailers.

 Customer service:
Customer service is the "sum of acts and
elements that allow consumers to receive what
they need or desire from your retail
establishment." It is important for a sales
associate to greet the customer and make himself
available to help the customer find whatever he
needs. When a customer enters the store, it is
important that the sales associate does everything
in his power to make the customer feel welcomed,
important, and make sure he leaves the store
satisfied.

Giving the customer full, undivided attention and
helping him find what he is looking for will
contribute to the customer's satisfaction. For retail
store owners, it is extremely important to train
yourself and your staff to provide excellent
customer service skills. By providing excellent
customer service, you build a good relationship
with the customer and eventually will attract more
new customers and turn them into regular
customers. Looking at long term perspectives,
excellent customer skills give your retail business
a good ongoing reputation and competitive
advantage.

Customer service is essential for several reasons.
By exemplifying these valued qualities for a
customer; companies utilize the experience the
customer walks away with. Thus, setting the
example for providing "great customer service."
An organization who trains their employees about
properly servicing the customer will benefit more
than those who do not. Customer service training
entails about how properly servicing the customer
will benefit corporations and businesses. This
being said, it is important to establish a bond
amongst customers-employees known as
Customer relationship management.

2.CUSTOMER RELATIONSHIP
MANAGEMENT IN RETAILING:
A business philosophy and set of strategies,
programs, and systems that focus on identifying
and building loyalty with a retailer’s most valuable
customers.
All customers are not equally profitable, and more
or less profitable customers need to be treated
differently

Retailers now concentrate on providing more value
to their best customers using targeted promotions
and services to increase their share of wallet – the
percentage of the customers’ purchases made
from the retailer
All customers are not equally profitable, and more
or less profitable customers need to be treated
differently
Retailers now concentrate on providing more value
to their best customers using targeted promotions
and services to increase their share of wallet – the
percentage of the customers’ purchases made
from the retailer

• THE CUSTOMER RELATIONSHIP
MANAGEMENT:
• CRM is an iterative process that turns customer data
into customer loyalty through four activities:
 Collecting customer data
 Analysing the customer data and identifying target
customers
 Developing CRM programs
 Implementing CRM programs
 Collection Customer data:
 Transactions – a complete history of purchases

 Purchase date, price paid, SKUs bought, whether or
not the purchase was stimulated by a promotion
 Customer contacts by retailer (touch points) --visits
to web site, inquires to call center, direct mail sent to
customer
 Customer preferences
 Descriptive information about customer
 Demographic and psychographic data
 Customer’s responses to marketing activities

• IDENTIFYING INFORMATION:
• Approaches that store-based retailers use:
• Asking for identifying information
• Telephone number, name and address
• Offering frequent shopper cards
• Loyalty programs that identify and provide rewards
to customers who patronize a retailer
• Private label credit card (that has the store’s name
on it)
• Connecting Internet purchasing data with the
stores

• GUIDELINE FOR FAIR INFO
PRACTICES:
 Notice and awareness
 Comprehensive statement about information
storage, manipulation, and dissemination
 Choice/consent
 Opt-in and opt-out options
 Access/participation
 Customer able to confirm accuracy
 Integrity/security
 Controls for theft and tampering
 Enforcement/redress
 Mechanism to insure compliance

• ANALYZING CUSTOMER DATA AND
IDENTIFYING TARGET CUSTOMER:
• Analyze the customer database and convert the
data into information that will help retailers
develop programs for building customer loyalty
 Data Mining – technique used to identify
patterns in data
 Market Basket Analysis
 Identifying Market Segments
 Identifying Best Customers

• IDENTIFYING BEST
CUSTOMERS:
 Estimating Lifetime Value (LTV)
The expected contribution from the customer to the
retailer’s profits over his or her entire relationship
with the retailer
 Use past behaviors to forecast future purchases,
the gross margin from these purchases, and the
costs associated with serving the customers
 Classifying Customers by recency, frequency,
and monetary value of purchases (RFM
Analysis)

• CUSTOMER RETENTION:
 Estimating Lifetime Value (LTV)
The expected contribution from the customer to the
retailer’s profits over his or her entire relationship
with the retailer
 Use past behaviors to forecast future purchases,
the gross margin from these purchases, and the
costs associated with serving the customers
 Classifying Customers by regency, frequency,
and monetary value of purchases (RFM
Analysis)

• ELEMENT IN EFFECTIVE
FREQUENT SHOPPER PROGRAMS:
 Tiered rewards based on customer value
 Offer choices of rewards
No all customers value the same rewards
Non-monetary incentives, altruistic rewards
 Reward all transactions to ensure the collection of all
customer transaction data and encourage repeat
purchases
 Transparent and simple so that customers easily
understand when they will receive rewards

• CONVERTING GOOD
CUSTOMER AND INTO BEST
CUSTOMER:
 Customer alchemy: converting iron and gold
customers into platinum customers
 Add-on selling as a way to achieve customer
alchemy
Involves offering and selling more products and
services to existing customers and increasing the
retailer’s share of wallet with these customers
The Oprah Winfrey Show to sell books, movies,
and TV specials (Harpo Productions), a cable
channel (Oxygen Media), a Web site
(www.oprah.com), magazine (O)

3. MERCHANDISING AND
INVENTORY:
Definition:
Merchandise inventory is goods that
have been acquired by a distributor, wholesaler, or
retailer from suppliers, with the intent of selling the
goods to third parties. This can be the single
largest asset on the balance sheet of some types
of businesses. If these goods are sold during an
accounting period, then their cost is charged to the
cost of goods sold, and appears as an expense in
the income statement in the period when the sale
occurred. If these goods are not sold during an
accounting period, then their cost is recorded as a
current asset, and appears in the balance sheet
until such time as they are sold.

If the market value of merchandise
inventory declines below its recorded cost, then
you must reduce the recorded cost down to its
market value and charge the difference to expense,
under the lower of cost or market rule.
Merchandise inventory may be located
in three areas: in transit from suppliers (under FOB
shipping point terms), in the company's storage
facilities, or on consignment in locations owned by
third parties.

When compiling the total cost of
inventory for recordation at month end in the
company's accounting records, you need to
include all of the merchandise in all three of these
locations. Doing so is easiest with a perpetual
inventory system, which maintains up-to-date
balances of all unit quantities. A less reliable
method is the periodic inventory system, under
which a period-end physical count is needed to
verify quantities on hand.

 TYPES
OF RETAIL ORGANIZATIONS WE
HELP
 Big Box Stores and Mass Merchandisers
We have the resources, locations and
expertise to keep your inventories accurate,
efficient and on schedule across all your stores.
 Grocery and Convenience Stores
High volume and high product turnover
create a constant need for inventories. Put our
resources to work for you.

 Apparel & Department Stores
We can perform entire store inventories or
assist on a department by department basis. Our
services will help you achieve your inventory and
space goals.
 Specialty Retailers
Our services are scalable to any size
and can be applied to any product mix. From
boutiques and e-tailers to specialty stores, we can
help.

* Inventory Management in Retail Industry - Need
and Important Terminologies:
• What is Inventory Management?
Inventory refers to the goods stocked for future
use. Every retail chain has its own warehouse to
stock the merchandise to be used when the
existing stock replenishes.Inventory management
refers to the storage of products to be used at the
time of crisis.

The retailer keeps a track of the stocked goods and
makes sure there is surplus inventory to avoid
being “out of stock”. Such a process is called as
inventory management.

 Why Inventory Management?
Gone are the days when customers had limited
options for shopping. In the current scenario, if a
customer does not find the desired merchandise at
one retail shop, he has a second brand to rely on.
A retailer can’t afford to loose even a single
customer. It is really important for the retailer to
retain his existing customers as well as attract
potential buyers. The retailer must ensure that
every customer leaves his store with a smile.
Unavailability of merchandise, empty shelves leave
a negative impression on the customers and they
are reluctant to visit the store in near future.
Inventory management prevents such a situation.

One must understand that the products need some
time to reach the store from the supplier’s unit.
The retailer must have sufficient stock to offer to
the customers during the “lead time”.
Managing inventory also helps the retailer during
situations beyond control like transport strikes,
curfews etc. The retailer has ample stock as a
result of judicious inventory management even at
the time of crisis.

 IMPORTANT TERMINOLOGIES USED
IN INVENTORY MANAGEMENT:
1.SKU (Stock Keeping Unit)
Every product available at the store has a unique
code. This code which helps in the identification
and tracking of the products at the retail store is
called as stock keeping unit or SKU.
The retailer feeds each and every SKU in the
master computer and can easily track the product
in the stock just by entering the SKU Number.
Assigning a unique code to the products avoids
unnecessary searching.

EXAMPLE:
Let us take the example of “Numero Uno” which
stocks denims, shirts, T Shirts and targets both
men as well as women.
SKU for Shirts
*NU – M–40-FL-W
*NU - M-38-FL-B
Where:
NU stands for Numero Uno
M - Men
40 - Collar Size
FL - Full Sleeves
W - White (Color of the shirt)

In the same way B in the second example would
stand for Blue
Simply typing NU – M–40-FL-W would let the
retailer know whether the particular merchandise
is available with him or not.

1.NEW OLD STOCK
(ABBREVIATED AS NOS)
The stock which is never been sold by the retailer
and now not even being manufactured comprises
the new old stock. Such products do not have
takers and may not be produced anymore.

1.Stock out
Stock out refers to a situation when the retailer
fails to fulfill the customer’s requirement due to
lack of merchandise. The merchandise is not
available in the current inventory and thus the
customer has to return home empty handed.
 Preventing loss of inventory
Employees working at the store might get tempted
to steal the merchandise.

• LET US GO THROUGH SOME TIPS
WHICH HELP TO PREVENT LOSS OF
INVENTORY:
* Check the bags of the employees before
they leave the store.
* Raise an alarm whenever you find someone
stealing something. Supporting a wrong deed is
also a crime.
* Make sure that all the employees leave from
one common door.
* Avoid multiple exits.
* Check garbage before dumping.
* Keep proper record of the inventory (Stock
coming in and going out)

• MERCHANDISING:
Retail Merchandising refers to the various
activities which contribute to the sale of products
to the consumers for their end use. Every retail
store has its own line of merchandise to offer to
the customers. The display of the merchandise
plays an important role in attracting the customers
into the store and prompting them to purchase as
well.
Merchandising helps in the attractive display of the
products at the store in order to increase their sale
and generate revenues for the retail store.
Merchandising helps in the sensible presentation
of the products available for sale to entice the
customers and make them a brand loyalist.

• PROMOTIONAL
MERCHANDISING:
The ways the products are displayed and stocked
on the shelves play an important role in
influencing the buying behavior of the individuals.
A merchandiser maximizes the sale of the
products by:
 Attractive packaging:
The packaging of the merchandise goes a long
way in improving the brand value of the product. A
product kept in a nice box would definitely catch
the attention of the customers.

 Impressive presentation of the Product:
The display of the products at the retail store must
entice the customers. The merchandiser in
coordination with the store manager must ensure
that the products are according to the season as
well as latest trends.
 The merchandiser must:
Source something which is unique and not
available at any other retail store.
Never compromise on quality of the merchandise.
Compromising on quality costs later.
Source merchandise as per the season and
climate.

By mid of August and early September, the
summer merchandise is generally on a close out
and stores begin stocking merchandise for the
winter season. Warm clothing, full sleeves
apparels, jackets, pullovers start replacing cut
sleeves, capris, ankle length dresses, shorts and
so on. Colorful clothes dominate the shelves as
compared to the subtle colors in summers.
The type of product sourced also depends on the
climatic conditions of the place. A Reebok store in
Central India or Southern India would stock
summer merchandise between April to September
whereas a retail store under the same brand
somewhere in a cold area would source woolen
merchandise along with summer clothing as per
the demand of the season.

 Unique Pricing (Discounts)
Attractive prices, discounts, rebates also bring
customers to the store.
 Promotional schemes, gifts
Coupons and attractive gifts make shopping a
pleasurable experience for the customers.

Merchandising Tips:
The merchandiser must source products
according to the latest trends and season.
The merchandise should be as per the age, sex
and taste of the target market.
Merchandise for children should be in line with
cartoon characters (like Barbie, Pokémon etc.) to
excite them.
Creative Portico Pvt Ltd sources bed sheets,
curtains specially inspired from characters
(Disney, Harry Porter, Hannah Montana) - a hit
amongst kids.

Youngsters prefer funky clothes (colorful T Shirts,
faded denims) as compared to professionals who
would go for subtle colors.
The target market of Zodiac Clothing Company
Limited mainly comprises of office goers and
professionals. The merchandise (shirts, trousers,
neck ties, belts) is as per the taste of the
professionals. Beach house shirts would have no
takers in such a store.
The merchandiser ideally works on the “invariant
right” principle.

Since most of us are right handed, it is a
common tendency that customers entering into
retail store would first go towards the right side of
the store. The merchandiser should display the
unique and expensive collections on the right side
of the store to entice the customers.
The setup of the store should be such that
once a customer enters into a store, he has to walk
through each and every department.

The shelves should be stocked with the
latest trends. The merchandise should be well
organized on the racks according to their size and
pattern.
It is the key responsibility of the
merchandiser to create an attractive display to pull
the customers into the store. Once the customer
steps into the store, he would definitely buy
something or the other.

4. MANAGEMENT IN
RETAILING:
 What is management ?
Management refers to the process of bringing
people together on a common platform and make
them work as a single unit to achieve the goals and
objectives of an organization. Management is
required in all aspects of life and forms an integral
part of all businesses.

 Retail management:
The various processes which help the
customers to procure the desired merchandise
from the retail stores for their end use refer to
retail management. Retail management includes all
the steps required to bring the customers into the
store and fulfill their buying needs.
Retail management makes shopping a
pleasurable experience and ensures the customers
leave the store with a smile. In simpler words, retail
management helps customers shop without any
difficulty.

 Need for Retail Management - Why retail
management ?
Peter wanted to gift his wife a nice watch on her birthday. He
went to the nearby store to check out few options. The
retailer took almost an hour to find the watches. This irritated
Peter and he vowed not to visit the store again.-An example
of poor management.
You just can’t afford to make the customer wait for long. The
merchandise needs to be well organized to avoid
unnecessary searching. Such situations are common in mom
and pop stores (kirana stores). One can never enjoy
shopping at such stores.

Retail management saves time and ensures
the customers easily locate their desired
merchandise and return home satisfied.
An effective management avoids
unnecessary chaos at the store.Effective
Management controls shopliftings to a large
extent.

The retailer must keep a record of all the
products coming into the store.
The products must be well arranged on the
assigned shelves according to size, colour, gender,
patterns etc.
Plan the store layout well.
The range of products available at the store
must be divided into small groups comprising of
similar products. Such groups are called
categories. A customer can simply walk up to a
particular category and look for products without
much assistance.

A unique SKU code must be assigned to each and
every product for easy tracking.
Necessary labels must be put on the shelves for
the customers to locate the merchandise on their
own.
Don’t keep the customers waiting.
Make sure the sales representatives attend the
customers well. Assist them in their shopping.
Greet them with a smile

The retailer must ensure enough stock is available
at the store.
Make sure the store is kept clean. Don’t stock
unnecessary furniture as it gives a cluttered look
to the store. The customers must be able to move
freely.
The store manager, department managers, cashier
and all other employees should be trained from
time to time to extract the best out of them. They
should be well aware of their roles and
responsibilities and customer oriented. They
should be experts in their respective areas.

The store manager must make daily sales
reports to keep a track of the cash flow. Use
softwares or maintain registers for the same.
Remove the unsold merchandise from the
shelves. Keep them somewhere else.
Create an attractive display.
Plan things well in advance to avoid
confusions later on.
Ask the customers to produce bills in case
of exchange. Assign fixed timings for the same.
Don’t entertain customers after a week.

Retailing

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