Nama : Aji Salman Kusuma Jaya Negara

NIM : 3351191066

Kelas : E

Management Retail

For a pharmacist, the idea of having one’s own retail pharmacy is always attractive. The free
flow of cash, flexible working hours and community engagement are among some reasons why
a pharmacist would like to start up a business. In addition to the professional knowledge,
management skill and techniques are core competency that a retail pharmacist must possess in
order to run a successful business. However, within the context of retail pharmacy business,
there are multiple challenges that a pharmacist has to face in day-today operations. The
availability of stock, number of competitors and the ever-changing business environment pose
a threat to the survival of businesses around the globe.

Retailing is one of the world’s largest industries. It is in a permanent state of change,

and the pace of this change has been accelerating over the last decade. From the
marketing perspective, retailers are, by definition, closer to the consumer than
manufacturing companies. Retailers represent the culmination of the marketing
process and the contact point between consumers and manufactured products. While
retailing has long set buying decisions as its highest priority and was very focussed
on the product assortment, it now follows a more holistic approach to management
and marketing and is seizing the opportunity to be consumer oriented, engage in the
personal contact with customers, gather information on consumer behaviour and
exploit insights into consumer behaviour and preferences. What was once a simple
way of doing business is transforming into a highly so phisticated form of
management and marketing. Retail marketing consistently features more efficient,
more meaningful and more profitable mar keting practices.

Retailing involves those companies that are engaged primarily in the activity of
purchasing products from other organisations with the intent to resell those goods to
the final customer, generally without transformation, and rendering services
incidental to the sale of merchandise. The retailing process is the final step in the

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distribution of merchandise; retailers are therefore organised to sell merchandise in
small quantities to the general public. The services added to the products commonly
include transportation and stock keeping to ensure that the products are available at
the point of sale. However, the process also encompasses the selection of products
for a retail assortment, the provision of sales advice, aftersales service and many
other functions.

A number of developments are responsible for the dynamic change in modern retail
management. In most developed countries, retailing has experienced a dramatic
increase in the scale of operations and in market concentration. This is due partly to
the appearance of large scale retail chains that have taken over market share from
independently owned small shops. These retail chains first developed into regional
groups and then into nationally and even internationally active retail operations. In
the last decade, mergers and acquisitions between already large players have
intensified this development. Many retailers now have massive turnover, very large
numbers of employees and extensive store networks.

In most country markets, retailing is also a very concentrated industry. According to

the market research company Planet Retail, the top 5 food retailers account for more
than 55 % of the market in the UK In Germany and in France, it is even above 70 %.
Consequently, a shift in power within the distribution channel is one of the most
influential developments over the last decades. The power of individual retail
organisations is growing; they are now comparable to and, in many cases, even larger
than many manufacturers, even for global brand manufacturers such as Procter &
Gamble, Sony or Nestlé. Thus, manufacturers now depend on a few large retailers for
a substantial share of their turnover. Hand in hand with the increasing size, retail
marketing budgets, IT budgets, and budgets for top managers, have been increasing.
Not only the growing size and concentration, but also the in creased sophistication
of retail management, combined with the better availability of customer data,
contributed to the power shift. Retailing is currently one of the leading industries in the
application of new technologies. Retailer PoS data has became more valuable as IT
systems have facilitated the collection of data at the checkout. Furthermore, as
retailers have grown from regional to national chains, they have been able to
accumulate knowledge about consumer trends, the development of product sales, etc.,
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that has enhanced their relevance as gatekeepers for products on their route to the
customer. Customer specific data that is now increasingly being gathered via loyalty
cards, adds to this knowledge. Where manufacturer brands once used to be all
important, the last few years have witnessed the power of retail brands challenging the
position of suppliers. Retailers have started to embrace the concept of strategic
marketing, they use strategic planning and position themselves relative to their
competitors. Thus, the enormous buying volume of retailers is only one source of its
power base, certainly the most important, but other developments add to their power.

Retailers are intermediaries in the distribution channel. However, while retailing has
long been considered a somewhat passive link in the value chain between
manufacturer and consumer, retailers now use their position to become the dominant
player in the distribution channel. They develop their own marketing concepts and
assume marketing leadership in the vertical relationship with manufacturers. Retailers
have also developed their own logistics concepts. Accordingly, while it was the
manufacturers who traditionally fulfilled large parts of the logistics function,
retailers today also strive towards logistics leadership in the distribution channel.

Drugstores are specific types of specialty stores that focus on beauty and health and
personal grooming merchandise. In addition, these stores often sell categories such as
food items, magazines or newspapers, stationery, toys or gifts. Depending on
governmental health care policies, in some cases, pharmacies are associated with
drugstores and sell prescription pharmaceuticals in addition to ethical or over the
counter (OTC) medicine. The product categories sold in this store format are similar
in some respects to food items, mainly in terms of shopping frequency and purchasing
patterns (“near food items”). In some statistics, drugstores are therefore classified as
food store formats Compared to traditional specialty stores, drugstores tend to be
more aggressive on price and apply pricing strategies such as every day low price
(EDLP) strategies or promotion pricing. Important players include Boots, Walgreens,
Schlecker or dm drogerie market. Drugstores are often located in city or shopping
centres, but are now found more and more at locations such as neighbourhood
locations or isolated sites. Thus, they play an important role in proximity retailing
and usually – because of their locational strategy and rather small store size with
speedy check out facilities – offer a high degree of shopping convenience.
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With regard to logistics and supply chain management, three types of sourcing
options can be described. Stockless means that the manufacturer delivers to the outlets
of a retailer and/or a transit terminal/cross docking terminal of a retailer according to
the just in time philosophy. This implies collaborative relationships using, for
example, Electronic Data Interchange (EDI) for replenishment. Stock characterises
a kind of sourcing for which the products are stored in one central or in several
regional warehouses. This situation is typical for commodities bought in foreign
countries, for example (huge quantities with low prices). Stock reduced lies in between
the two extremes. Through the use of modern concepts of supply chain management,
such as vendor managed inventory (VMI), stock volume decreases, but the service
level remains constant or even increases (“never out of stock”).

The manifold instruments of retail sourcing are not applied in a standardised way
for the complete product assortment, but, depending on the situation, in terms of a
multichannel system, subject to the requirements of the supply and sales markets. For
the sourcing of some product ranges, it makes sense to use electronic media, but for
others, there is no virtue in doing so, because, for example, there are no product
standards. In addition, the question arises of whether a product should be purchased
nationally or rather internationally when using electronic marketplaces. Requirements
such as product quality and supplier reliability are very important for this decision.

The decision about cooperative sourcing also cannot be made unanimously over the
entire product range of a company. Whereas this seems to make sense in many
cases, e.g. for bundling demand or for using logistics services, cooperative sourcing
may in fact be counterproductive and lead to price increases, for example in markets
with an extremely low supply the emergence of surplus demand.

The sourcing conditions in retailing are characterised by an enormous number of

articles and a high assortment dynamic. Nevertheless, the manifold situations can be
simplified into three sourcing situation clusters resulting from the combination of the
two dimensions “Relevance for Differentiation“ and “Complexity of Sourcing
Situation”. Those two dimensions take into account the supplier market on the one
hand, and the sales market on the other. From the category management perspective, the
relevance for differentiation, i.e. the importance of a certain product for creating a
distinctive image which differentiates the retailer from its competitors, aims at the
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relevance (“role”) of a category or product group. In simplified terms, the relevance
for differentiation can be classified as “high” (e.g. categories in the “destination role”
or in the “routine role”) or “low” (e.g. categories in the “convenience role”). The
relevance for differentiation is likewise influenced by the complexity of consumer
needs which become manifest in sensitivity with regard to quality requirements (e.g.
food safety), to product involvements (“high interest” vs. “low interest”) and the
continuity of needs (e.g. effects of fashion trends and seasonal fluctuations). The
complexity of the sourcing situation, which can be classified as “high” as well as “low”,
is also characterised by different influence factors. Questions within the frame of
complexity of the sourcing situation, refer to the transparency of possible supply
sources and the number of (potential) suppliers. However, the importance of the
geographical displacement of suppliers (national sourcing vs. direct import) as well as
the level of concentration and the productive capacity of suppliers (manufacturers),
have to be considered in this context as well.

Starting from multichannel sourcing and the current strategic basic trends in retail
sourcing, new responsibilities are increasingly emerging for traditional buying.
There are also shifts with regard to the organisation relevance of various sectors.
This results in changing requirements as far as future buyers are concerned.

In general, a consistent customer orientation is reflected in the company’s organisation

in such a way that marketing and sales gain influence, whereas the importance of
buying tends to decline. On the other hand, the growing process orientation is
reflected in the changing nature of annual retailer supplier negotiations. Whereas
price negotiations have so far been of prime importance within the frame of traditional
buying, the importance of other terms – particularly conditions with regard to logistics
and marketing, combined with a customen oriented management of the supply chain
according to the supply chain management philosophy – is rising with the transition
of many manufacturers to purely net prices. Within the context of optimising the
synergy potential of retail businesses by bundling the volume of purchase across
countries and sales formats, international purchasing organisations are increasingly
emerging which coordinate sourcing across the group or the company. In the course
of international sourcing, the relevance of specialised knowledge in the field of
quality assurance is also growing. The introduction of procurement is also leading

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to an extensive change with regard to both organisational and personal aspects, and
as far as the corporate culture is concerned. In this regard, the learning aptitude of the
company as a whole is also relevant. Thus, it is generally necessary to organise or
reorganise purchasing and sourcing processes in the context of electronic sourcing
and to ensure compatibility with previous systems with the help of standards.(Zentes
& Morschett, 2007)

PUSTAKA

Zentes, J., & Morschett, D. (2007). Strategic Management Retail (1st ed.). Gabler.