ASSIGNMENT DRIVE SPRING 2020

PROGRAM Bachelor of Business Administration- BBA

SEMESTER Semester 4
SUBJECT CODE & NAME BBA 410 - Retail Management

Q1. Elucidate any five major retail marketing mix followed by modern retailers.

Answer:-

Retail marketing mix followed by modern retailers:-

Product

One of the main elements of retail marketing mix is the product and/or services that the
store offers to the customer. Products are also termed as merchandise. The different
products that the store offers is termed as merchandise mix.

Price

Pricing is an integral part of retail marketing mix. The price policy that the organisation
decides to follow depends on the customer profile that is the target segment for its product
range. Pricing decision has gained importance because today’s customers have more
alternatives to choose from and are better informed about these alternatives available in the
market place. Thus they are in a better position to seek good value when they buy
merchandise and service.

Place

Location is typically the prime consideration in a customer’s store choice decision. For
instance, when choosing where you are going to have your car washed, you usually pick the
location closest to your home or work. Similarly, most customers shop at the supermarket
closest to them. Location decisions have strategic importance because they can be used to
develop sustainable competitive advantage. If a retailer has the best location that is most
attractive to its customers, competitors cannot easily copy this advantage and are relegated
to occupy the second-best location. However, with the advances in technology and the advent
of television shopping and internet, many retailers are now going in for a click-and-mortar
approach.

Customer service

Having positive and long-term customer relationship management is vital in today’s

competitive retail arena. The most important ingredient is customer service to build a long
term relationship with customers. When marketers learn customer preferences
collaboratively, they engage in dialogues to help customers articulate their needs and identify
how to meet those needs. The option of support services that a retailer provides also has
become very important. The credit policies, product returns policies, etc. need to be clear not
only to the sales staff but also to the end customer. Relationship marketing, data
warehousing and customer relations management are the new buzzwords in the industry
today, and all these are aimed at enhancing customer service.

Presentation

The manner in which the merchandise is presented at the store is also very important. This
aspect not only deals with the store layout and ambience created, but also with visual
merchandising. Visual Merchandising is the orderly, systematic and intelligent way of
putting stock on display in the retail store. Many large retail organisations employ visual
merchandisers to aid the store in this function.

Q2. Write a detailed note on inventory management.

Answer:-

Retail inventory management is the process and methods used to keep track of the stock in a
retail business. These methods control everything from ordering, shipping, receiving,
tracking inventory, retail turn-over, and storage. Retail inventory management can help keep
a business’ profits at a steady margin as well as reduce theft and loss of inventory.

Inventory involves the task of allocating the merchandise to various stores which usually
rests with the merchandise management team. To enable them to work efficiently, the
complete procedure for the handling of merchandise at the store level needs to be
documented.

Responsibility with respect to merchandise at the store level involves receiving and in-
warding the goods. Once the merchandise is received at the store, the quantity and other
details like quality, colour, style and sizes etc. have to be checked with the document
accompanying the goods to detect any discrepancies and the documents must be recorded.
In the case of most large retailers, using a hand held scanner, the merchandise is scanned
and the system is updated for the stocks received. Proper documentation needs to be
maintained when returning goods to various locations/stores as and when required.

An integral part of managing retail inventory at the store level is to display merchandise
correctly. The best merchandise may be left unsold if it is not displayed properly in a manner
that is appealing and convenient for the customer. For example in a supermarket, if 15 ltr
packs of vegetable oil are placed on the topmost shelf, it may be inconvenient for the
customer to pick one up and carry, considering the fact that most of the customers at a
supermarket would be women. In case the retailer is running a theme promotion or
campaign, the products on offer need to be displayed correctly, and replenished once sold.

Inventory calculations
Stock turnover/inventory turnover rate = net sales/average retail value of inventory

Expressed as number of times, this ratio indicates how often the inventory is sold and
replaced in a given period of time. Some retailers also use the ratio cost of goods sold divided
by an average value of inventory at cost. Both can be calculated for any time period. When
either of these ratio declines there is a possibility that inventory is excessive.

Percent inventory carrying cost = (inventory carrying cost net sales) * 100

The importance of this measure has increased in recent years with the rise in inventory
carrying cost due to high interest rates. This measure is also important to reduce stock
obsolescence and to prevent blockage of working capital. Retailers use this measure to track
the percentage of their net sales represented by the fixed cost of maintaining inventory.

Gross margin return on inventory = Gross margin/average value of inventory

Expressed in rupee terms, the Gross Margin Return On Inventory (GMROI) compares the
margin on sales on the original cost value of merchandise to yield a return on merchandise
investment. Inventory can be valued at retail or at cost but for many retailers inventory
valued at retail is more accessible than the value at cost. However, using inventory valued at
retail may not give an accurate indication of investment cost. GMROI can be dramatically
altered by changes in inventory turnover and gross margin.

Q3. What are the elements of store design? Explain each in detail

Answer:-

Elements of store design:-

The store design tells a customer what the store is all about. It is very important for
communicating and creating an image of the store in the minds of the customer. It is the
creation of this image that is the starting point of all marketing efforts. This creation of
image is possible only when the merchandise, sales personnel, and the location – all these
work together with the elements of store design. These elements of store design are as
follows:

1) Store marquee.
2) Store front.
3) Atmospherics and aesthetics.
4) Store layout.

1) Store marquee: -Store marquee is the first mark of identification of the retailer or the
retail store. It is also sometimes called as a sign board. The store marquee is usually painted
or is a neon light displaying the store name or trade mark or a combination of store name,
trade mark and other important information of the retail store. It helps the retailer in
identifying the store and in attracting customers and it is an integral part of the building
façade.

2) Store front: -Store front is the next important element of store design that influences
the customer. A beautiful storefront helps in attracting the customer while a cluttered and
dirty storefront will deter a customer from entering the retail store. The store front is a
reflection of the personality of the store. The manner in which the merchandise is displayed
in the show windows also has a lot to do with enticing customers into the store.

3) Atmospheric and aesthetics: -Atmospherics is referred to as a store’s physical

characteristics that are used to develop the retail image and draw customers. It describes the
physical elements in a store design that appeals to consumers and encourages them to buy.
Some of the key ingredients of atmospherics are flooring, ceiling, lighting, music, level of
cleanliness, signages used within the store, etc.

4) Store layout: -Store layout refers to the interior retail store arrangement of departments
or groupings of merchandise. It is important for the retailers to evolve a customer friendly
layout. This involves paying adequate attention to factors such as:

i. Expected movement of customers visiting the store.

ii. Space allotted to customers to shop.
iii. Making adequate provision for merchandise to display.