He is not dependent on us. We are dependent on him.
He is not an interruption in our work. He is the purpose of it.
He is not an outsider in our business. He is part of it.
We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so. -Gandhi Turnover is vanity,
profit is sanity,
cash is king With about 11 retail shops for every 1,000 persons, India has the highest shop density in the world.
That's one shop for every 20-25 families.
In cities, the density is much higher. Delhi, for example, has nearly 45 shops per thousand persons!
A nation of shopkeepers !!! With hundreds of customers visiting every day, scores of competitors continuously tempting the customers every moment, Retail is a sector with high wear & tear and most exciting one too PATRONAGE Buy Basket size Frequency of visit Share of basket / wallet Recommend / refer
K N N Need Know Visit
Choose Referrals THE RETAIL ENGINE Atul Natu
Satisfied Revisit KNOW Store location Visibility Word of mouth Promotion Distance VISIT Store front Ease of access Convenience Proposition Assortment Pricing strategy Promotions Referrals Past experience CHOOSE Assortment Display Pricing Salesmanship Pricing
NEED GENERATION Display Pricing Assortment
Location Assortment Display THEORIES OF STORE CHOICE Hedonistic model Utilitarian model Convenience model Gravity theory This theory proposes that the probability of a store being selected by a customer is directly proportional to the size of the store and inversely proportional to the distance to be traveled to reach the store Linear model The linear learning model is based on the premise that the customers choice of store is based on his / her previous experience with the store. Better the experience, larger the probability that the store will be visited by the customer. Agglomeration forces In some categories, more the number of stores are clustered together, more will be the benefit to the retailer. The stores complement each other due to the cluster Situational This theory does not rely on gravity alone to explain the customers store choice. It takes into account the purpose of the store visit. The customer selects a store based on the purpose of purchase. Simultaneous process of store choice - Based on the utility theory, the simultaneous choice model believes that the customer assesses the utility of each of the store and then selects the store with maximum utility. Hierarchical choice It assumes that the customers will not have awareness, time, ability to know the offering of all the stores selling the desired product. Hence instead of comparing all the stores, and their utilities, the customers first choose a cluster of stores. After selecting a particular cluster, the customer chooses a store based on utility theory from amongst the choices available in that cluster. A Stewart Fotheringham (1988) says Lowest total cost - Fixed and variable expenses of shopping HYPOTHESES WRT STORE CHOICE FROM REVIEWED LITERATURE Consumers selection of a store is not completely random but is biased by her previous experience of a particular store and is proportional to the frequency of her visit to the store Customers associate stores with specific store attributes. They select the store on the basis of top-of-mind recall wrt its association with dominant store attributes Store choice is influenced by the situational factors related to the purchase. Eg shopping for gifting purpose v/s for one self, shopping in emergency v/s general shopping The grocery shopping choice of formats is based on basket size and frequency of trips. Larger basket size prefer EDLP whereas lower basket size prefer HILO. Higher frequency prefer HILO whereas lower frequency prefer EDLP Customers weigh the total cost (comprising of the fixed cost and the variable cost of shopping) while making a decision on store choice. Store attribute saliencies differ across task definitions and store choice is differentiated by task definitions Customers decide upon a geographic area first before deciding on a store. They select a store within that geographic area as a second level of decision. RETAIL STRATEGY Customer 7 Ps Product - Assortment width, depth Price Full price, discount stores Place towns, location strategy Physical ambience - size, interiors People, Promotion, Processes Property strategy Owned / Leased / Franchised / Dealer Formats SIS / Own / Operations Merchandising Category management Location Assortment Customer Competition Property Customer segmentation Store layout and display management Technology
SOME RETAILERS Food & Grocery - More, Easyday, Food Bazaar, Reliance Fresh, Spencer's Foodservice - CafCoffee Day, Mainland China, Haldiram's, McDonald's, Dominos, Pizza Hut, KFC Consumer Electronics - Croma, Next, Reliance Digital, eZone, Reliance iStore Leisure Crossword, Odyssey, Landmark, Planet M Beauty & Wellness - VLCC, Kaya Skin Clinic Pharmacy & Healthcare - Apollo Pharmacy, Guardian, Religare, 98.4 Home & Interiors - Home Centre , Rosebys, Home Town, @home, Home Stop Department Store - Lifestyle, Pantaloons, Shoppers Stop, Westside Hypermarket - Spencer's Hyper, Hypercity, MORE, Big Bazaar, Reliance Mart, Star Bazaar
LOCATION, LOCATION, LOCATION!!! Largely defines & restricts the trading area, visibility Requires complex decision making Costs lots of money upfront as well as recurring Little flexibility once a location has been chosen Attributes of location have a strong impact on the retailers strategy & Vice versa STEPS FOR PLANNING LOCATION Plan the national footprint Plan the town level / city level zones Plan the format strategy Ownership Size Type (stand alone / high street / mall / SIS) Evaluate alternative geographic areas in terms of the characteristics of residents and existing retailers (trading- area analysis) Make a decision about location type Decide evaluation criteria Analyze alternate sites Assess viability SITE EVALUATION Site condition Legal considerations (e.g. environmental considerations, zoning restrictions, building codes, signs, licensing requirements) Terms of lease/rent agreement Total cost of ownership Length of lease Local taxes Restrictive clauses in lease Types of Leases Percentage Fixed - Rate Percentage leases - rent is based on a percentage of sales. Retailers also typically pay a maintenance fee based on a percentage of their square footage of leased space. Most malls use some form of percentage lease. Variations of Percentage Leases Percentage lease with specified maximum - percentage of sales up to a maximum amount. Rewards retailer performance by allowing retailer to hold rent constant above a certain level of sales Percentage lease with specified minimum - retailer must pay a minimum rent no matter how low sales are.
Sliding scale - percentage of sales as rent decreases as sales go up. Fixed Rate Leases Fixed rate leases - used by community and neighborhood centers. Retailer pays a fixed amount per month over the life of the lease. Not as popular as percentage leases Graduated lease - a variation of the fixed rate lease Rent increases by a fixed amount over a specified period of time.
Percentage or Fixed Rate Leases Maintenance-increase-recoupment lease - used with either a percentage or fixed rate lease. Rent increases if insurance, property taxes, or utility bills increase beyond a certain point. Net lease - retailer is responsible for all maintenance and utilities. Est MODEL The Est model guides business leaders in making their company the best in one of five critical areas Assortment (biggest). Price (cheapest). Fashion (hottest). Customer service (easiest). Speed of service (quickest).
Winning At Retail: Developing a Sustained Model for Retail Success -Willard N. Ander (Author). Neil Z. Stem Retail Formats Store-Based Nonstore-Based Freestanding Business District Nontraditional Shopping Centers/Malls Interactive TV Internet Direct Selling RETAILER FORMATS FOR ACCESSING YOUR TARGET MARKET Shop in shop SOME IMPORTANT METRICS Walk-ins Conversions Average Transaction Value (ATV) Sales per Sq.Ft. Gross Margin return on Investment (GMROI) Gross Margin return on Floor space Gross Margin return on Inventory Inventory turnover Sell thru Same store growth Markdown Goods percentage Shrinkage to Net Sales
Store patronage model*
1 Store Attributes 2.2 Task definition 5 Store attribute salience 6 Store attribute perception 3 Customer attributes
4 Marketing factors
7 Store visit 8 Store experience 9 Purchase / basket size 10 Post sales experience 11 Patronage intentions 12 Word of Mouth / Advocacy Factors under management control New customer affecting Same customer affecting Customer subjective 2.1 Product * Atul Natu Store factors Product Price Quality Assortment Availability Service Distance Size Format Advertising Convenient parking facilities Convenient location Convenient opening hours Friendliness of salespeople Service Fast checkout Store atmosphere Store image Ease of credit
Customer factors Educational levels Professional activity Family age Gender Age Income Values and culture Behavioral issues Social expectations
External retail stimuli Industry reputation Public relations Sales promotion Social responsibility Factors studied * Store Attributes Location / Distance Size Price Format EDLP / HILO, Specialty / general merchandise Retail centers Parking Convenience Assortment Product quality Freshness Task definition Gift v/s self Time pressured Risk perception Basket size
Store attribute salience
Store attribute perception
Customer attributes Age Social class perception / self image Education Shopping frequency Self confidence Occupation Marketing factors Feature advertising Word-of-mouth Store experience Billing speed Store appearance Store layout Store assistance friendliness Convenience Trust Organisational benevolence Post sales experience Returns policy