An Introduction to Retail Management & Marketing

Book 4 Retail Marketing

Book 4 Sessions Session 2: Retail buying Session 3: Supply chain management Retail logistics in the UK: past, present and future

Session 3: Supply chain management Focus is on product management & how this affects buying & merchandising decisions. Decisions about single P items have to be made within the context of P range offered by a retailer

Putting together product assortments  In Image A : Endless selection of fresh vegetable produce. This retailer provides a great deal of choice of one P category: vegetables.  In Image B there is a large number of P types (or categories), but there is relatively limited choice within each of the categories.

Product assortment strategies used by retailers include: Width and depth - P assortment is generally determined by the store format used. Ex: - Supermarket offers a wide assortment of different P categories to fulfill most of basic grocery needs of local customers, but P choice is limited within each category. - A specialist retailer such as Boots the pharmacy offers a very deep assortment of health P but this is a narrow band of P categories compared to department stores that offer width & depth in their P assortment - ‘Category killer’: retailers using same approach to specialist but on a much larger scale & level of intensity. Large specialist retailers such as IKEA focus their assortment on particular categories of P, e.g., furniture with extended depth of choice within categories of G they sell to 'kill off' competition

 Service level - when retailers put together P assortments they consider level of S to offer. This means that some P lines must be available 100 % of the time, whereas for other P lines it is acceptable to be available say 80 % of the time. Higher S level offered, higher financial investment in stock, it is important to get level of P availability just right.  Consistency - Extent to which P in the range are similar to other P on sale within the store. Typically, a retailer uses the attributes of the P on sale to act as indicator to shopper, for ex on price

Lifestyle retailing Retailers create brands & marketing messages in order to stand out in the marketplace & have a special meaning for their customers. Position a retailer adopts in the marketplace is reinforced by the P it offers for sale. Consumer begins to trust that retailer will provide P they are seeking at quality, price & S they require. To combat competition is for a retailer to find a position in the marketplace which is unique and/or different. Lifestyle retailer is ≠from specialist retailer because selecting P for a lifestyle retailer requires more detailed K of particular customer type & how they choose to live their lives.

 By selecting P that meet customer's lifestyle, retailer is able to offer a choice of P determined by a particular style of living that is not easily defined using segmentation variables such as age, income level or geographical location. Lifestyle retailing has enabled some specialist retailers to extend their P ranges without losing sight of core business & identify gaps in the marketplace which enable their operations to weather economic storms.

Product selection - management issues Selecting P for a P range involve decision making at 2 key levels: Is there a place for a particular P in retailer's range? Decision making focuses on getting P range right, & ensuring that whenever a customer enters a store P offer is interesting & relevant to them Details of P to be included in the range. Buyer has to ensure a P reflects the image retailer is trying to portray & supports brand's positioning.

Product range (assortment) decisions Space is an expensive commodity in retailing. Retailers must use floor space within business to produce maximum benefits Buyers constantly review P ranges & assess whether it stop selling certain items or scale down P offer in a particular category. In certain circumstances analysis of customers wants might reveal D for a new P

Product assortment plan: Is a model stock list that aids selection of P & actual P management. Plan works by focusing on actual P from a physical rather than a financial & is written down in a way that represents an ideal P selection that a customer should see any time they visit the store. It uses variables such as colors, styles, flavors, sizes & price The grid shown in Fig 3.1 illustrates the use the plan When putting together a P plan, buyers consider a P features such as its physical properties, packaging, product quality, branding, style and functionality. 

Standard price Premium price   Children's Adult patterned Blue Bath Hand Face Royal Seaside motif Bath Hand Brights design Pink Burgundy Cartoon character 1 Bath Pastels design 1 Peach Cream Cartoon character 2 Pastels design 2 Aqua Fashion colour White

In certain circumstances, retailers sell own-label P, which enable buyers to have more direct involvement in the development of P It allows retailers to have more direct control over price & quality of the own-label P, which often leads to high profit margins

Buying cycles A simplified buying cycle for fashion P (Fig 3.2) When planning P assortments is forecasting D for P With the use of bar code technology & sophisticated computer programs, analysis of D has become easier. However, managing P ranges such as fashion that change with seasons poses additional problems In order to buy right P, at right time, in right quantities & get them delivered to right place at right time there is a critical path which retailers can follow A simplified buying cycle for fashion P (Fig 3.2)  It represents cycle for one buying season & in fashion there are at least 2/3 seasons per year

For ex, in September a footwear buyer will be concerned with current autumn sales & deliveries, be in the process of finalizing range of spring/summer styles, & will be starting to gather new styling ideas for the next year's autumn range.

Category management  In P areas that are fashion-orientated, customers have a high expectation of change within P range. If grocery P, frequent changes to P ranges is confusing & irritating. Many P have loyal customer following & a ct D, & if such a P not be available, dissatisfied customers But customers now like to try new P variations so P ranges have to be managed: popular items can always be found, as well as new P for consumers‘ seeking variety.

For this category management  A merchandise category is the term used for an assortment of P items that a customer sees as reasonable substitutes for each other. Each P stock keeping unit (SKU) is able to satisfy same basic need, but category would include a nb of P variations which satisfy individual preferences.

For ex, product area 'confectionery' can be broken down into 3 distinct categories: boxed, bagged and countlines (bars). A countline bar (such as a Snickers or Mars) fulfills a need which is different to products in the other two categories.

Rather than planning profit margins of individual items, P are managed as a group to obtain maximum category performance. Decisions regarding P dvp, pricing & promotions are made with a view to maximizing profitability of category, rather than individual SKU.  Buyer's role is extended to a category mgt role, with responsibility to manage category right Category manager would be involved with new P dvp within category, working with suppliers on new P innovations

 Part of category management is concerned with in-store marketing: ensuring that category is supported with point-of-sale materials and appropriate space Category manager are concerned with logistical arrangements, customer service & after sales To succeed in category mgt approach ensure a close collaboration with suppliers. It is in the interest of leading suppliers 'category champions' to work with a retailer to make a merchandise category as successful as possible