Era Of Information Technology Store And Retailers example essay topic

[url] RETAILING Introduction: The word retailing is derived from the French word 'retailer', meaning 'to cut a piece off ' or 'to break a bulk'. in simple terms, it implies a first-hand transaction with the customer. Retailing involves a direct interface with the customer & the coordination of business activities from end to end- right from the concept or design stage of a product or offerings, to its delivery & post-delivery service to the customer. The industry has contributed to the economic growth of many countries & is undoubtedly one of the fastest changing & dynamic industries in the world today. According to a report by the Center for Monitoring Indian Economy (C MIE) investments in organized retailing - which includes shopping malls, retail chains etc. - doubled from Rs. 1,000 crore in January 2000 to Rs.

2,000 crore in January 2001. Organizations sell their products & services through these retail outlets & get feedback on the performance of their products & customers expectations about them. Retail stores serve as communication hubs for customers. Commonly known as the point of sale (POS) or the point of purchase (POP), retail stores transmit information to the customers through advertisement & displays. Hence the role of retailing inh the marketing mix is very significant. Retail Marketing Mix: The retail marketing mix consists of the following elements: PRODUCT OFFERINGS: this refers to the product mix that the store retails for customers after a careful study of what their needs & wants are.

By matching customer preferences with an assortment of merchandise offered within the stores categories, the retailer gets an ideal basket size per customer. The basket size contains the mix of items a customer buys during a visit. PLACE: This is the location of the store & its catchments boundaries. The key to optimizing the element of place in the marketing mix is to undertake local marketing efforts besides the national marketing plan. Determining the market share of the store in the catchments area gives an indication of its performance & efficiency. PRICE: Price is an important element in the marketing mix as customers are very price-sensitive.

Pricing is of different kinds: Maximum Retail Pricing Promotional Pricing Loss Leader Pricing Price Bundling Old Pricing Everyday Low Pricing Differentiation by a distinctive offering of merchandise can also be done through an effective pricing strategy. Pricing does a great deal for the retailer. For instance, the retail store may be able to increase its footballs with a leader pricing strategy or it may provide value for customers with a loss leader pricing strategy. Loss leader pricing means selling merchandise or some of the merchandise at cost or near cost for promotional purpose to attract customers & establish a 'Low-price' reputation. Developing the pricing strategy, hence, is critical to retail organization. It may have a high, medium or low pricing strategy as shown in the chart below- HIGH MEDIUM LOW HIGH Premium strategy High-value strategy Super-value strategy MEDIUM Over-charging strategy Medium-value strategy Good-value strategy LOW Rip-off strategy False economy strategy Economy strategy PRICE PROMOTIONS & EVENTS: This help the store to achieve its short-term goals.

Promotions may be price-led or occasion-led, in which case special merchandise is offered by the store only for the occasion (e.g. : Dandiya). Most retail organization run promotions during festival like Diwali, Christmas, New Year, Valentine's day, Id, & so on. Sometimes promotions are driven by brands in cooperation with the retailer. Retail events are gaining significance in India with retailers preferring them to direct price-offs. However, if run very frequently promotions may prove detrimental to the image & positioning of the store. PEOPLE: There are two kinds of people as far as the retail marketing mix is concerned: people to serve (customers) & people that serve (employees).

It is customer who determines whether the retail store is selling the right products & services. People that serve the organization are the ambassadors or the face of the retail store. Excellent delivery standards-which go hand-in-hand with the image & positioning of the store-can be achieved only if the staff are trained well. PRESENTATION: Presentation is the way products & services are grouped & presented in retail store.

Such presentation should conform to the store's positioning & customers profile. For instance, a boutique selling designer garments needs to present its merchandise in exclusive splendour- it cannot use ordinary furniture & fixtures. Attending on customers in the boutique ought to be done on a very personal basis, as a mass approach will turn them away. Service management model: THE RETAIL STRATEGY MIX A retailer's ability to devise & apply a sound retail strategy depends on how well that firm identifies & understands its customers, & forms its retail strategy mix to appeal to them.

Thus, in this section, I shall briefly look at 1. Retail Target Markets 2. The Retail Strategy Mix. 3. Target Markets: A retail firm must identify the characteristics, needs and attitudes of consumers and then devise an appropriate target market plan.

It must consider the demographics, lifestyles, consumer profiles, shopping attitudes, decision making process of its target market. THE RETAIL STRATEGY MIX: Comprises of 4 aspects: 1 Merchandise management 2 Business location 3 Retail Pricing 4 Promotional strategy. MERCHANDISE MANAGEMENT: Merchandising consists of the activities involved in a retailer's buying goods & services and making them available for sale. PROCESS FOR IMPLEMENTING MERCHANDISE PLANS: 1 Information is gathered about target market needs and prospective suppliers. 2 The retailer chooses firm-owned, outside, regularly used and / or new supply sources of merchandise.

3 The merchandise under consideration is evaluated through inspection, sampling and / or description. 4 Purchase terms are set. They may have to be negotiated in their entirety or through uniform contracts. 5 The purchase conclusion is made-manually or automatically. 6 Merchandise handling decisions are taken relating to receiving & storing, price & inventory marking, displays, pilferage control etc.

7 Reordering decisions are made. 8 Re-evaluation of merchandising plans takes place. BUSINESS LOCATION: The choice of location is crucial because of the complex decision making involved, high costs, immobility after site selection and its possible impact on the retailer strategy. The selection of store location consists of 4 steps: a) Trading area analysis: A Trading area is a geographical area from which a retailer draws customers.

Trading areas may be delineated by using trend analysis, consumer surveys, 'Reilly's law of retail gravitation' and 'Huff's law of shopper attraction' b) Determining desirable location: There are 3 basic location types to choose from: 1 The isolated store 2 The unplanned business district 3 The planned shopping center c) General site for the business: First, the specific form of isolated store is decided. Then, the general location is picked say a particular street, colony or shopping center. d) Specific site selection: For this purpose, factors like traffic, parking facilities, transport, attributes of the site, terms of occupancy should be considered. An overall rating is then computed for each location and site, and the best is picked. RETAIL PRICING: Pricing is a crucial strategic variable due to its direct relation with a firm's goals and its interaction with other retailing elements. A pricing strategy must be consistent with the retailer's overall image, sales, profit and ROI goals. Pricing strategy: A retail price strategy has 5 steps: objectives, policy, strategy, implementation and adjustments.

RETAIL PROMOTION: Is broadly defined as any communication by a retailer that informs, persuades, and / or reminds the target market about any aspect of that firm. Advertising, P.R., personal selling and sales promotion are the 4 elements of promotion. Steps in planning a promotion strategy: 1 Goals are stated in specific and measurable terms. Positive word of mouth (WOM) is an important long-term goal. 2 An overall promotion budget is set on the basis of one of these techniques: all you can afford incremental, competitive parity, etc. 3 The promotional mix is outlined, based on the firm's budget, the type of retailing involved, the coverage of the media, and the hierarchy of effects.

4 The promotional mix is enacted. Included are decisions involving specific media, promotional timing, message content, sales force composition, particular sales-promotion tools, and the responsibility for coordination. 5 The retailer systematically reviews and adjusts the promotional plan, consistent with its preset goals. CHALLENGES AHEAD FOR RETAILING Organized retailing is not a bed of roses for the big players also. In addition to the advent of Internet, various issues glare at retailing. Some of them are HUMAN RESOURCE: Big retail shops do not confine their target segments for employees to undergraduates.

Shoppers Stop broke the myth of MBAs not wanting to go into the retailing career. Cross Roads and Spencer also hire MBAs to manage their chains. However there still exists a gap between the supply and demand of professionals. Mr. Goenka, chairman RPG Group, hopes that one of the greatest challenges facing modern retailing in India is the availability of trained personnel. In order to address the problem RPG Group has set up a national retail Institute in Chennai, which, offers a variety of courses in retail management for frontline, supervisory and managerial post. Retaining the human resources is also a major challenge for these big retailers.

The bigwigs like Crossroads offer high compensation and create a cohesive environment that makes an employee proud to be a part of such big retail chains. SPACE AND INFRASTRUCTURE: To establish a retail shop / Mall, the real estate and the infrastructure are very vital. The expenditure and availability on both the accounts do hinder the growth of the retail chain. The land ceiling restrictions and other state restrictions on land use have prevented the growth of efficient retailing in the cities. An average investment of about Rs.

5 crore is required to establish a mall and that explains the rush of big companies into this business. Small and individual retailers find it difficult to pour in that much of investment. In addition to the initial investment, to combat e-tailing, expenditure has to be incurred on technological side. This makes the retail projects less attractive for the individual players. CONSUMER MINDSET TOWARDS DISCOUNT STORES: In India the concept of discount stores like Wall-Mart, at which genuine, defect free international brands are available at 50% discount, is yet to catch on. Still, the major section of customers is conservative and choosy and prefers to go to a known retail shop than opt for a discount store.

Very few discount stores like SM 2, Mumbai are at present operational. Its reach is confined to major cities. Breaking the conventional mindset of the Indian consumers that discount stores do not sell inferior goods will take some time. RURAL MARKET- HOW TO PENETRATE? Penetration into the rural market is what big retailers have to concentrate on for growth. Attracting rural markets will be different from that of the urban market.

For example detergent cakes are preferred to powder and coconut oil in bottle to sachets in the rural areas. The rural consumer are different from the urban consumers as they are more price sensitive and their quantity of consumption would be less as their share of wallet for shopping along with entertainment is delineated. Food and agricultural inputs dominate the rural consumers list and whatever is left would be used to fulfill aspirational needs. Customers in the rural area are not urbanites without money.

He has a distinct identity and value system. One more challenge in the rural market is that shopping habits vary according to seasons. During harvest time, the spending of a rural consumer increases compares to other times. However, penetration of television, increasing literacy levels, mobility between rural and urban areas and telecommunication (STD Services) have increased their awareness towards branded products and entertainment. Customized retail shops would be a big success in the rural areas too if the right strategies are adopted.

E-TAILING The retailing community has accepted and realized the fact that the consumers want to choose between the variety of brand and value for money is their topmost priority. The big retailers have to deliver a consistent branded experience. Crossroads in Mumbai is an endeavor to achieve the same, though its target segments the upper and upper middle class. Technology has made a difference in retailing also. E-tailing (through internet) is considered to be eroding the store retailing slowly. Is it the real picture?

With the concept of B 2 C (Business to Consumer Transactions over internet) coming up at a fast pace, an intimate two-way access is emerging between the retailer and the customers. Customized products are offered to the customers. For instance while one buys a book through Amazon. com, a synopsis of the book, its reviews, its prominent readers and other books of the same author are some of the information provided to the customers. Within minutes of placing an order, one gets a confirmation thus saving time and satisfying the customer.

The penetration level of the internet is increasing at a pace that the reach would be equivalent to what television took about 40 years and that cable about 15 years. In online services and the web, the retailers seek out the customers unlike the traditional model where the customer goes to the store and locates the product. The busy life-style of the consumers in this hectic era, tilts the preference needle towards the online retail model. However, B 2 C success depends on the behavioural and attitudinal changes in customers.

First, the customers have to be familiar with Internet and have to be informed about buying on the net. Then, the customers have to build the mentality to trust the e-sellers and be convinced on the products quality. The KSA customer 2000 study showed that only 1% have ever used net shopping though 40% are aware of it. But 10% of the representatives do not trust the quality in net shopping. This shows e-tailing (stand alone) has a long way to go in India. The major advantage of the retailers in India is that, most of the products operate on the push factor than pull factor.

In order to popular ise their products the manufacturers have to attract the customers to feel the products, physical existence and this is enabled by the retailers. Instead of viewing e-commerce as a threat for retailing the big retailers can embrace technology and provide value added and personalised services to the customers. In the recent times, companies like ARCHIES have used technology to their advertisement and increased their sales. By promoting, Fathers day, mothers, sisters, friendship, valentines, and even egg and Love at first sight days, Archies has been successful in pulling crowd in their galleries all over India. The big retailers can learn the lesson from Archies. A recent KSA Techno park survey finding showed that Apparels and Consumer durables occupy the top slot in priority for shopping in India.

Apparels and Consumer durables and for that matter even footwear are those products which gives satisfaction when you feel it. How can the big retailers use technology in this? Technology is so flexible that it can coexist with business anywhere. The big retailers have to have their websites to combat the competition from e-tailing. For instance for clothing, the big retailers can show the variety and design offered by them through the net. A virtual experience can be provided and the customer can have n option whether to visit the shop or shop from home.

If the virtual round through the shop is irresistible, the customer will definitely come to the shop for an experience at least. Thus, in this era of Information Technology store and retailers have to become technology savvy to satisfy customer preferences. The consumer mercantile activities grouped into three phases, pre-purchase preparation, purchase consummation and post-purchase interaction have to be properly incorporated with technology. INDIA'S LARGE RETAILERS Company Turnover (in Rs crores) Outlets Space (in sq ft) Expansion Plans (to be achieved by 2002) RPG 156 27 Food World 2 Music World 4 Spencer's outlets 200 000 50 Food World 8 Music World 18 Health & Glow outlets for total turnover of 23.75 crores per month Shopper's Stop 130 1 each in Mumbai, Bangalore, Hyderabad, Delhi, Jaipur 100 000 15 -17 outlets if FIP B approves Foreign Equity Vivek & Co 90 8 in Chennai 3 in Bangalore 1 in Salem 100 000 10 stores in Chennai and Bangalore 7 in Hyderabad, Vishakhapatnam & Vijayawada Nilgiri's 76 17 Supermarkets 14 Cake shops 80 000 4 outlets 30% growth in terms of turnover 289 stores by 2007 Pantaloon 60 12 stores 40 franchises 90 000 11 superstores N ANZ 40 15 Supermarkets 70 100 N. A Vit an 25 11 Departmental Stores 50 000 25 outlets 100 crore turnover Crossword 16 Bookstores in Ahmedabad, Delhi, Mumbai, Pune Goa, Nasik 27 000 25 stores Landmark N. A 1 in Chennai and Coimbatore 18 000 Plans to open Mall in Calcutta with E mami Kemp Chain of Stores N. A 2 stores in Bangalore 125 000 Kemp City retailing cum entertainment development, over 200 acres Char agh Din N. A Mumbai store 10 000 Will remain single location store [/url].