UNIT-III

RETAILING DECISONS
Choice of retail locations – Internal and external atmospherics – Positioning of retail shops – Building
retail store Image – Retail service quality management – retail supply chain management – Retail Pricing
Decisions. Merchandising and category management – buying.

Introduction:-
“A store is place, retail or virtual, where the shoppers comes to buy goods and services, the sales
transaction occurs at this junction”

The location of retail store has for a long time been considered the most important ‘P’ in retailing:-

1. Product,
2. Price,
3. Place ------------ Retail Location.
4. Promotion,

PLACE:-
Location is a most important factors.
Factors affecting retail location:-
1. Size and characteristics of market potential.

Small size Large size

2. Level of competition.
3. Access to transportation.
4. Parking space availability.
5. Attributes of nearby stores.
6. Property costs (or) land cost.
7. Time period of agreement.
8. Population trends.
9. Legal problem.
10. Rent of the retail store.
11. Kinds of product sold.
12. Traffic.
13. Other factors.
Selecting a shopping center:-
1. Trade area and its growth.
2. General income level of the trade area.
3. Number of households.
4. Demographics of trade area.
5. Market analysis.
 6. Location of store in the center.
7. Space.
8. Rent and lease agreement.
9. Fittings.
10. Other services.
Levels of Location Decision:-
(or)
Steps in Location Decision:-
Step =>1 Selection of City 1. Size of City’s trading area.
2. Population & growth rate.
3. Purchasing power.
4. Market potential.
5. Number, size, quality of completion.
Step =>2 Selection of area with in 1. Availability of transportation route.
City 2. Regulation of area.
3. Possibility of area expansion.
4. Nature of competition.

Step =>3 Selection of Site location 1. Store location factors.

2. Traffic.
3. Parking facility.
4. Store cost.
5. Size and characteristics of market potential.
6. Level of competition.
7. Access to transportation.
8. Parking space availability.
9. Property costs.
10. Time period of agreement.
11. Population trends.
12. Legal problem.
13. Rent of the retail store.
14. Kinds of product sold.
Types of Retail Location:-

Types of Retail Location

1. Free-standing Location. 2. Planned shopping center. 3. Unplanned shopping

center.

1. Neighborhood stores. 1. Shopping Malls. 1. Central Business unit(CBU).

2. Highway stores.
2. Community Shopping
Centre.
3, Neighborhood shopping
Centre.
4, Specialty store shopping
Centre.
5, Airport malls.
6, Merchandise Kiosks.
7, Periodic markets.
2. Secondary Business
District.
3. Neighborhood Business
District.
4. Strip Shopping District.
5. Sub-urban business
District.

Store Location Analysis:-

1. Check list analysis method.
2. Financial analysis method.
3. Multiple regression modern method.
4. Economic analysis method.
Retail Location theories:-
1. Central place theory.

Retail Location

2. Spatial interaction theory.

(Flow of Goods, Customer, IT, Supply and Demand factor)
3. Land value theory.
Y
 This theory rent based calculate the value.
Rent Bid rent
0 X
Distance
Internal and External Atmospherics:-
What is Store Atmospherics?
Store atmosphere refers to “A store physical characteristics that are used to develop retail
image”.

There are two kinds of Atmosphere

Internal (or) interior Atmosphere External (or) exterior

Atmosphere

Inside the Show room Outside the store

What are the four element of retail store Atmosphere?

Interior Exterior atmosphere

atmosphere

4 elements of retail store

atmosphere

Visual Store Layout

merchandise

1. Interior atmosphere:- 2. Exterior atmosphere:-

1. Flooring. 1. Entrance.
2. Lighting. 2. Display windows.
3. Wall. 3. Size of building.
4. Temperature. 4. Parking.
5. Personal (or) Employee. 5. Frond office painting.
6. Cleanness. 6. Store layout.
7. Trail room. 7. Height of the building.
8. Color. 8. Visibility.
9. Music sound. 9. Surrounding area.
10. Mirror. 10. Store marquee.
3, Store Layout:- Meaning:-
 Store layout means “Physical arrangement of thinks”.
 Store layout has to ensure “Customer friendly (or) User friendly”.
 It has to motivate “Self services” “ Attractive” “Impulse buying”.
Types of store layout:-

Types of store layout

Grid Layout Free-form Layout

Race track Layout Stored Layout

1. Grid Layout:-
1. It is commonly used Layout.
2. It is most applied in grocery.
3. It is traditional format store.
4. It helps in free get purchase item.
5. Less space.
6. It save time and cost.
2. Free – form Layout:-
1. It is used in department store.
2. It is most convenience.
3. It is commonly used in specialty store.
4. It is also called as Boutique Layout.
5. The customer easily choice the product.
6. It Need large space.
3. Race track Layout:-
1. This layout used in impulse buying and sales promotional layout.
2. Hear expose to large number of product.
3. It is also called and Loop Layout.
4. Retail Units with multiple Department most suitable for race track unit.
5. Examples:-
Big bazaar.
Pantaloons.
4. Stored layout:-
1. It is common layout India.
2. It save time and cost.
3. It applied in super market.
4. Shopper shop.

What is virtual merchandise?

It refers to display the product.
1. Lighting display.
2. Signage board.
3. Sales promotional tools.
 4. Wall display.
5. Toys display.

Positioning of retail shop:-

What is Retail Positioning?

“Retail Positioning is the process of creating and maintaining a distinctive/ valued image of
the retailer in the minds of customer”.
Examples:-
1. Only coffee.
2. Music world.
3. Walmart.
4. Toy’s R
5. KFC.
In simple Retail Positioning is position the retail shop image in the mind of customers.

STP:-
Step=> S------- Segmentation.
Step=> T------- Target.
Step=> P------- Positioning.

What are the various Retail Positioning Strategies:-

Retail Positioning Strategies

Product offering Benefit Positioning Strategy

User Positioning Strategy Competitor Positioning Strategy

Attribute Positioning Image/Brand image Positioning

Specialty product Positioning Merchandise category position

Low Price Positioning Place Positioning Strategy

Retail Promotion Positioning People Positioning

Presentation Positioning Quality Focus Positioning

Example of Retail Positioning Map:-

High Life Style Big Bazaar

Product Line
Shoppers Stop Shoe Store
Low

High Low

Value

Retail Store Image:-

What is Retail Store Image?

Retail store image is an “Individuals Cognitions” about particular retail store.

In simple retail store image is in the mind of customer and perception about particular retail store.

Factors (or) various Retail Store Image Dimensions:-

I. Location Convenience dimensions:-
1. Access route.
2. Traffic problem.
3. Travelling time.
4. Parking facility.
II. Merchandise Dimensions:-
1. Number of Brands.
2. Quality.
3. Product line.
4. Depth assortment.
III. Value for Price Dimension:-
1. Low price.
2. Discount.
3. Offer.
IV. Sales and store service dimension:-
1. Sale’s man service.
2. Reliability.
3. Billing procedure.
4. Right time deliver.
5. Neatness in store.
 V. Congeniality Dimension:-
1. Store layout.
2. Internal atmosphere.
3. External atmosphere.
4. Visual merchandise.
VI. After sales service dimension:-
VII. Quality Dimension:-
VIII. Brand image dimension:-
IX. Sales promotion dimension:-
X. Specialty store dimension:-

Retail Service Quality Management:-

Meaning of Customer Service?
“Customer service is the ability of an organization to constantly and consistently give the
customer needs and expectations”.
Types of Customer Service:-
1. Pre – purchase customer services.
2. At the time of customer services.
3. Post purchases customer services.
Services Quality Management:-
What is mean by Quality?
Quality => “Fitness for Use”
Service Quality=> P/E
P=> Performance.
E=> Expectation.
Management=> Planning, Staffing, Organizing, Coordinating, Controlling.
What are the Four Characteristic of Service:-
1. Intangibility.
2. Perishability.
3. Inseparability.
4. Variability.
Explain Various Retail Service Quality Dimension:-
1. Tangibility.
2. Reliability dimension.
3. Responsiveness.
4. Assurance.
5. Empathy.
6. Accessibility.
7. Price and product verity dimension.
8. Complain dimension.
9. Competence dimension.
What is CRATER Model:-
C=> Complain.
R=> Reliability.
A=> Accessibility.
T=> Tangible.
E=> Empathy.
R=> Responsiveness.

Gap model in service quality dimension:-

Expected service

Gap 1 Gap 5
Perceived service

Gap 4 External
communication
Service delivery

Gap 3
Customer driven service
design

Gap 2
Company perception of
customer expectation

Gap = customer expectation – customer perception

Types of Gap:-
1. Knowledge gap.
2. Standard gap.
3. Delivery gap.
4. Communication gap.
Retail Supply Chain Management:-
Definition:-
Supply chain management is the management of upstream and downstream relationship with supplier
and customer, to deliver superior customer value at less cost.
Principles of Supply Chain Management:-
1. Segment customer focused and service needs.
2. Supply chain management network.
3. Match with demand and supply.
4. System oriented concept.
5. Service oriented.
6. Improved efficiency.
7. Relationship with suppler and customer.
8. Reduce transportation cost.
9. Reduce warehouse cost.
10. Minimize the time.
Scope of Supply Chain Management (or) Elements of Supply Chain
Management:-
Supplier Mgt Inventory Mgt Distribution Mgt

Sales force Mgt Scope of SCM

Financial Mgt Payment Mgt Channel Mgt

Supply Chain Management Process:-

Material Flow Material Flow Material Flow
Supplier Manufacturer Distribution Customer

Information Flow Information Flow Information Flow

Process Organizational Enabling

Structure technology

Material Flow Information Flow Financial Flow

Supply Chain Management Pyramid/Framework:-
1.Supplier

1.Strategic
Level
Customer
service 2.Manufacturer.

Channel Net

Design Work

2.Structural

Ware House Transportation Material 3.Distribution.

Design Management Management

3.Financial Level

MIS Policy/ Facility Organizational 4.Customer.

Procedure Change

4.Implementation Level

Main Drivers of Supply Chain Management:-

Main Drivers of SCM

Supplier Customer

Facility Inventory

Transportation Information Flow

Sourcing Pricing

Technology Demand/Supply
Retail Pricing Decision:-
What is mean by Retail Pricing Decision?
Price may be defined as the exchange of goods and services in terms of money in simple
words price means. Value for the product.

Value = benefits

Price

Pricing Objectives:-
1. Product quality objective.
2. Market share objectives.
3. Penetration objectives.
4. Skimming price objective.
5. Return on investment objectives.
6. Profit objective.
Approaches of retail pricing strategy:-
Approaches of retail pricing strategy

Cost oriented approach Demand oriented approach Competition oriented approach

1. Mark up pricing. 1. Consumer market pricing.

a. Initial Markup 2. Industry markup pricing.
pricing.
b. Maintained markup
pricing.
2. Break even pricing.

Mark up pricing:-
Retail price = Cost + Markup / Profit margin.
1. Initial markup pricing:-
Initial markup %
On retail price = planned operating cost + planed profit + planned reduction

Planned net sales and reduction

2. Maintained markup pricing:-
Maintained markup %
On retail price = actual operating cost + actual profit + actual reduction

Actual net sales

Methods of retail pricing strategy;-
1. Skimming pricing.
2. Penetration pricing.
3. Differential pricing.
4. Psychological pricing.
5. Competitor pricing.
6. Bundled pricing.
7. Price lining method.
8. Markup leader price.
9. Promotional pricing.
10. Price discrimination.
11. Markup pricing.
12. Demand based pricing.
Factors affecting pricing decision:-
1. Supplier.
2. Customer.
3. Competitor.
4. Government.
5. Internal and external environment.
Merchandise management;-
What is mean by merchandise management?
Merchandise means goods bought and sold for a profit.
According to American Marketing Association=> “Merchandise is the planning involved in
marketing the right merchandise at the right place, at the right time at the right price at the right quantity”.
Elements / Functions merchandise management:-
1. Market analysis.
2. Planning.
3. Goods acquisition.
4. Handling.
5. Inventory control.
6. Analyze market opportunity.
7. Select in the right supplier.
8. Supplier performance management.
9. Build brand image.
10. Category management.
11. Competitive advantage.
12. Improve profitability.
Factors affecting merchandise Functions:-
Size of organization Functions of merchandise (4’P)

Merchandise management funcction

Organization structure Type of store

Merchandise management mix:-

Variety Assortment Quality

Merchandise Price pounds

management Mix

Category To meet the Place pounds

management demand

Steps in merchandise:-
Step 1:- Deciding the source of merchandise.

1. Raw source.
2. Government.
3. Agent.
4. Whole sales.
Step 2:- Meeting the vendors:-
1. Time save.
2. Less cost.
3. Inventory.
Step 3:- Evaluating the vendors.
1. Personal history.
2. Quality of the product.
3. Financial strength.
Step 4:- Selection of right vendor.
Step 5:- Negotiating with vendors.
1. FOB = Free On Board.
2. CIF = Cost Insurance Freight.
3. COD = Cash On Delivery.
4. Credit terms.
Step 6:- Purchasing from vendors.
Step 7:- Establishing and maintain relationship with vendors.
Step 8:- Handling the merchandise.
Step 9:- to satisfy the customers.
Category management:-
Category management is a distinct group of product and service that the consumer perceive to be
interrelated in meeting one consumer needs.
In simple words category management is managing different group of product and services.
Functions/ Steps in category management process:-
1. Category definition.(High, Medium, Low category )
2. Define the category role:-
i. Distinction categories.
ii. Preferred categories.
iii. Seasonal categories.
iv. Occasional categories.
v. Convenience categories.
3. Category assessment:-
i. Turnover.
ii. Profit.
iii. ROI – Return on Investment.
iv. Customer.
4. Performance of measurement category:-
i. Sales.
ii. Profit.
iii. Market share.
iv. Stock turnover.
v. SKU = Stock Keeping Units.
5. Different strategies in category management:-
i. Increase transaction.
ii. Traffic building.
iii. Profit generating.
iv. Image generating.
6. Category score card:-
i. BCG matrix.

High
Sleepers Winners
Market share
Low
Questioner Opportunities

Low High

Market Growth
 ii. SWOT analysis.
7. Develop category tactics.
8. Category plan implementation.
9. Periodical review / feedback.