Retail and Supply Chain Management

Module 3

Contents:
• Retail organization and HRM; operations management: financial and operations
dimensions, Managing retail services
• Service characteristics; Branding: perceptions of service quality, sales force
management.
• Retail Information Systems
• Merchandise management and pricing: merchandise plan, merchandise buying and
handling, people in retailing
• Internationalization and globalization
• Shopping at World stores; going International; the internationalization process;
Culture, business and international management.

Retail organization and HRM

Introduction:
The retail sector has played a phenomenal role in India with tremendous contribution to the
Indian economy. Retailing sector has been observing tremendous changes with the entry of
organized retail companies. The organized retailing in India is undergoing a metamorphosis
and is expected to scale up to meet international standards. In this world of cut throat
competition the need for effective HRM practices has been increasing rapidly. In order to
face this tough competition of global economy, the organized retailers in India have
started to realize the need for efficient manpower and hence, strengthening their
business with the help of HRM activities. The HRM practices, therefore, have become their
prime concern. The present paper is an attempt to analyse the HRM practices implemented in
the organized retail sector in India. The study also throws light on the Human Resource (HR)
challenges faced by the sector and suggested measures to improve the work culture in Indian
scenario.

Retailing is one of the pillars of economy. It consists of all activities that result in the offering
for sale of merchandise to consumers for their own use and is the final step in bringing goods
to the end-users. According to US consulting group AT Kearney’s report published in June,
2010, India is the third most attractive retail market for global retailers among the thirty
largest emerging markets. The Indian retail industry has expended by 10.6 percent between
2010 and 1012 and is expected to increase to US$ 750-850 billion by 2015. The greater
availability of personal credit and a growing vehicle population providing improved mobility
contributed towards annual retail sales growth of 12.2 percent. Though the Indian
retail sector is dominated by unorganized sector with 90 percent share, it is providing
immense opportunities for large scale retailers to set up their operations. The organized
retailing sector is steadily increasing with the entry and operations of departmental
stores, hypermarkets, supermarkets and specialty stores which are replacing traditional
formats dramatically altering the retailing landscape in India.

Human Resource Management in organized retail:

 Recruitment: Depending on the size of the number of vacancies or if it’s a new store
then campus recruitment is done or recruitment is done through recruiters and
consultants. For shop floor sales requirement advertisement is put up in the local
newspapers.
 Selection: Selections are based on group discussions & interviews. Some retailers
take an entrance test followed by group discussion and personal interview.
 Performance Appraisal: It is one of the most controversial systems within human
resource. No one in any organization is ever happy with the system because it
explores the bitter truth of an employee. It is inherently conflict based because it is
subjective and differs from person to person.
 Training and development: Retail industry has finally taken shape in India, and is
experiencing a rapid growth. Since organized retail is growing
tremendously procuring trained human resource for retail is a big challenge. The
talent base is limited and with the entry of big retailers in the market there is a huge
demand of trained and skilled professionals in this sector. This has led many retailers
to introduce Learning and Development department within the organization.
 Compensation: Compensation is payment for services rendered to an
organization by an employee. Compensation may me direct or indirect
compensation & is a motivator for employees at all levels.
 Rewards, Incentives and Recognition: Every retailer is looking at various ways to
motivate their employees and reduce attrition rate. Introduction of rewards,
incentives and recognition of employee is increasingly becoming popular within the
industry. Retailers like PRIL have launched PERK-Performance Enhancement
Reward Kit and star performer of the month in their stores. They are used to reward
performance at the individual, team and organizational level.
 Employee Discipline: It is a management tool to correct employee behaviour

Operations Management: Financial and Operations dimensions

The retail business operations include all the activities that the employers perform to keep the
store functioning smoothly. The shopping experience of a customer is planned before the
customer enters, shops, and leaves the store with a smile or with agony by carrying a
perception about the store. This experience drives the customer’s decision of visiting the store
in future.
So, retail operations can encompass everything about how a store operates each day. If we
think about it linearly, we can see examples of responsibilities. Start with choosing the store’s
location and designing the store. Then think about how the store plans, orders, and adjusts its
product inventory: How it prices items and displays them in the store, under what lighting, in
what arrangement, and with what signs. How it treats its customers throughout the store
experience, from entry to exit. How it handles cash and credit. How it handles returns and
refunds. How it handles price markdowns and sales. How it manages its staff and maintains
its premises. How it handles data about customers, products, sales, and revenue. All of this
can fall under the field of retail operations.

In larger retail businesses, some of the functions may fall outside of what they call their
operations department. For example, they may have departments for finance and/or
accounting, marketing, human resources, and IT. Sometimes those departments exist at the
corporate level but less so at individual stores, where more jobs may fall under operations. At
smaller stores, nearly every position may fall under operations. It all depends on the
definitions of the individual business.
The retail operations include:
• Store Management
• Premises Management
• Inventory Management
• Receipt Management
• Supply Chain management and Logistics
• Customer Service

Store Management
The retail store being the fundamental source of revenue and the place of customer
interaction, is vital to the retailer.
The store manager may not himself perform, but is responsible for the following duties −
 Maintaining cleanliness in the store.
 Ensuring adequate stock of merchandise in the store.
 Appropriate planning, scheduling, and organization of staff, inventory and expenses,
for short and long-term success.
 Monitoring the loss and taking preventive measures to protect the company’s assets
and products in the store.
 Upgrading store to reflect high profitable image.
 Communicating with head office/regional office when required.
 Conducting constructive meetings with staff to boost their morale and motivate the
staff to achieve sales goals.
 Communicating with customers to identify their needs, grievances, and complaints.
  Ensuring that the store is in compliance with employment laws regarding salary, work
hours, and equal employment opportunities.
 Writing performance appraisals for assisting staff.

Premises Management:
The store premises are as important as the retail store itself. Managing premises includes the
following tasks:

• Store location
• Store design and layout
• Creating departments within a store
• Visual merchandising and display
• Store atmosphere
• Determining Working Hours of Store
• Managing Store Security
• Signage
• Store space management
Store location: As the adage goes, location, location, location. Visibility and customer traffic
patterns play a key role in a store’s success. People will travel off the beaten path for
something special, but it’s generally harder to build that business.
Store design and layout: The store’s exterior and interior design sets the tone for the
shopping experience. Design can signal a clean, well-organized but relatively spartan
discount store (think Target), a well-stocked, industrial looking warehouse (Home Depot or
Lowe’s) or an upscale, well-appointed department store (Nordstrom’s) or clothing boutique
(Anthropologie). Another consideration is the display layout. Racks, shelves, or displays can
be arranged straight, at angles, or in a geometric pattern to create visual interest in addition to
organization. Similarly, traffic patterns for customers can be gridded, almost like streets,
looping or curving, or more free flowing. Changes in these patterns can affect what customers
see and what they purchase.
Creating departments within a store: This is important for item findability in a store, as
well as for delivering tailored customer service. By creating speciality areas, such as
jewellery, shoes, sporting goods, and housewares, retail professionals create “stores within
stores” and have specialty employees who are better able to serve customers.
Visual merchandising and display: Create attractive displays of products to set a tone and
an expectation. Sometimes, you aren’t just selling a product - you’re selling an experience. A
pleasing display of merchandise sends a message to the would-be buyer, and so does a
sloppy, unkempt table. Even the height at which items are placed can make a big difference.
Some professionals use a retail planogram, a type of diagram, to detail the placement of items
in a store.
Store atmosphere: Lighting, music, and consistent overall store maintenance create a
pleasant atmosphere that makes customers want to shop there. Unpleasant factors like clutter,
doors, inadequate air conditioning, or unserviced restrooms can turn off customers. At the
best stores, employees strive to create a pleasant atmosphere that helps to define the brand.
Determining Working Hours of Store: It majorly depends upon the target audience,
retailed products, and store location. For example, a grocery store near residential area should
open earlier than a fashion store. Also, a solitary store can be open as long as the owner wants
to but a store in a mall has to adhere to working hours set by the mall management.
Managing Store Security: It helps avoiding inventory shrinkage. It depends upon the size of
store, the product, and the location of store. Some retailers attach electronic tags on products,
which are sensed at store entrance and exits by sensors for theft detection. Some stores install
video cameras to monitor movement and some provide separate entry and exit for personnel
so that they can be checked.
Signage: Posting signs, both outside and inside, help to direct customers and make them
aware of products, services, and offers. Without good signage, a store can be difficult to
navigate, and customers might not see what store managers want them to see.
Store space management: Avoid clutter and disorganization by managing space well in the
store. Make items easily accessible and use out-of-the-way space for storage.

Inventory Management

For a store to succeed, it needs to have the products to satisfy its customers. This is the fourth
area of retail operations: inventory management. Stores do their best to balance supply and
demand for products in a constant cycle of selling and restocking. If a product doesn’t move
well, it is replaced with something that does. If a product does sell well, the store increases its
inventory. It may sound simple, but the quirks of supply and demand can make inventory
management difficult. Problems in the supply chain can make it hard to get hold of desired
products. A sudden shift in demand, such as a new product making an older one less
attractive, can catch a store by surprise.

These functions fall under inventory management:

Ordering merchandise: Buyers place orders for products, trying to anticipate the demands
of customers. They’re trying to get the right products in the right quantities at the right time.
To be efficient and cost-conscious, they don’t want to order too much. In an automated
system, the inventory needs are forecasted, so stock replenishment is automated. Another
factor to consider is the merchandise mix. Stores want to ensure that the customer has a
variety of products, sizes, colours, and other features to choose from, at appropriate price
points.

Receiving stock: Stores receive shipments from suppliers and distributors. They carefully
track and record it all, and make sure it’s handled properly and is in good condition.
Using an inventory system: The three main types are perpetual inventory, physical
inventory, and combined. With perpetual inventory, the counts are updated upon each sale.
This is what happens with today’s computerized POS systems. With physical inventory
accounting, the business physically counts its inventory. With a combined system, both
methods are used, where the physical count provides a cross-check of the computerized
system.

Pricing: Stores set the prices and mark the products either physically on the product or in the
computer via the product’s barcode, or both ways. Price reductions are based on supply and
demand, season, promotions, and other factors.

Merchandise handling: This includes stocking shelves and displays, moving items for
customers, and shipping items to customers.

Merchandise manager, category manager, and other staff handle the inventory. It includes the
following tasks −

 Receiving products from the vendor.

 Recording inward entry of the products.
 Checking the products against quality norms laid by the retail company and for details
such as colours, sizes, and styles. In case of large stores, this task is automated to a
large extent.
 Separating and documenting the faulty or damaged products for returning.
 Displaying the products appropriately to gain customers’ attention. Heavy products
are kept at the lower level. Most accessed products are kept at the eye-level and the
less accessed products are kept at high level of shelves. On-the-fly-purchased
products such as chocolates, candies, etc. are placed near payment counters.

Receipt Management

Managing receipt is nothing but determining the manner in which the retailer is going to get
the payment for the sold products. The basic modes of receipt are −

 Cash
 Credit card
 Debit card
 Gift card

Large stores have the facility of paying by the modes listed above but small retailers
generally prefer accepting cash. The retailer pays card fees depending upon the volume of
transactions with the suppliers, manufacturers, or producers.

The staff responsible for accepting payment needs to clearly understand the procedure for
accepting payment by cards and collecting the amount from the bank.

Supply Chain Management and Logistics

Supply Chain Management (SCM) is the management of materials, information, and finances
while they move from manufacturer to wholesaler to retailer to consumer. It involves the
activities of coordinating and integrating these flows within and out of a retail business.
Most supply chains operate in collaboration if the suppliers and retail businesses are dealing
with each other for a long time. Retailers depend upon supply chain members to a great
extent. If the retailers develop a strong partnership with supply chain members, it can be
beneficial for suppliers to create seamless procedures, which are difficult to imitate.

Customer Service

The top management of a retail business decides the customer service policy. The entire retail
store staff is trained for customer service. Each employer in the retail store ensures that the
service starts with ski le and the interacting customer is comfortable and has a pleasant
shopping experience.

The promptness and politeness of the retail store staff, their knowledge about the product and
language, ability to overcome challenges, and rapidness at the billing counter; everything is
noted by the customer. These aspects build a great deal of customer’s perception about the
store.

Many retail stores train staff members to handle the cash counter. They have also introduced
a concept of express billing where customers buying less than 10 products can bill faster
without having to stand in the regular payment queue.

During festivals and markdown periods, the trend of shopping increases.

Much of a store’s success depends on customer service - how it treats its customers.
Customers may not always be right, but they’re always the customer, representing a potential
sale and potential review. With excellent customer service, stores can increase their
competitiveness, and even make up for shortfalls in other areas, such as convenience or
pricing. Positive, personalized customer service can help the little guys compete against the
big guys, and it can help brick-and-mortar stores compete against online operations.
However, online operations have been increasingly good at providing remote customer
service, with services such as convenient returns. The best-run stores comprehensively train
their employees on how to treat customers and provide superior service to keep them coming
back.

The following questions address elements of customer service:

 How are customers greeted when they enter the store?

 Is there a familiarity with repeat customers?
 Is personal service offered? At what point?

 If the store doesn’t have what the customer wants, how does the store handle that? Is
it willing to say who else might have the item?
 Does the store offer helpful guidance - after really listening to the customer?
 Is loyalty rewarded, such as through loyalty programs?
 If the customer has a problem or concern, how does the store handle it?

Returns and refunds are another vital area of customer service. A store buys faith and loyalty
with customers when it handles returns easily and without hassle. Customers want to know
that if they make a mistake with a purchase, the store won’t penalize them. Stores should also
carefully track returns to understand patterns and resolve problems. Technology makes this
process easier.

Operations management: financial dimensions:

Operations management involves the efficient and effective implementation of the policies
and tasks necessary to satisfy the firm’s customers, employees, and management (and
stockholders, if a public company). This has a major impact on both sales and profits.

Profit Planning

Profit-and-loss (income) statement - Summary of a retailer’s revenues and expenses over a

given period of time Review of overall and specific revenues and costs for similar periods
and profitability

Sample of Profit and Loss statement:

Asset Management

• The Balance Sheet

• Assets
• Liabilities
• Net Worth
• Net Profit Margin
• Asset Turnover
• Return on Assets
• Financial Leverage

Increasing Profit Margins

• Increase sales of private label brands

• Centralize buying to increase bargaining power
 • Reduce SKUs in each category to increase bargaining power
• Reduce operating expenses via self-service operations, and through “buy on line, pick
up in-store” to reduce delivery costs
• Increase Web sales
• Reduce labor expenses through increased use of part-time help, better scheduling

Increasing Asset Turnover

• 24/7 operations
• Outsource delivery and credit operations
• Lease instead of own assets (virtual corporation owns few assets)
• Reduce inventory levels through quick response, through reducing product
proliferation, and through drop shipping
• Utilize second-use locations to reduce store renovation expenses
• Utilize inexpensive fixtures—pipe rack, cut case displays

Other Key Business Ratios

• Quick ratio—cash plus accounts receivable divided by total current liabilities (due
within one year).
• Current ratio—total current assets (including inventory) divided by total current
liabilities.
• Collection period—accounts receivable divided by net sales and then multiplied by
365. (Aging accounts receivable).
• Accounts payable to net sales—accounts payable divided by annual net sales.
• Overall gross profit—net sales minus the cost of goods sold and then divided by net
sales.

Budgeting

Budgeting outlines a retailer’s planned expenditures for a given time based on expected
performance. Costs are linked to satisfying target market, employee, and management goals.

Benefits of Budgeting

• Expenditures are related to expected performance.

• Costs can be adjusted as goals are revised.
• Resources are allocated to the right areas.
• Spending is coordinated.
• Planning is structured and integrated. Cost standards are set.
• Expenditures are monitored during a budget cycle.
• Planned budgets versus actual budgets can be compared.
• Costs/performance can be compared with industry averages.

Cost Classifications

• Capital expenditures—long term investments (can be leased, often depreciated

• Fixed costs– constant over range of sales
• Direct costs—can be traced to departments, stores, products
• Natural account expenses—classified by name such as salaries
 • Operating expenses—short run expenses
• Variable costs-based on sales levels
• Indirect expenses-general overhead that can be allocated to cost centers
• Functional account expenses-classified by purpose or activity, such as cashiers,
customer service personnel

Bad Costs Bad costs are costs incurred for customer services that:
Customers do not value (will pay not additional prices for) Are not required by customers

Causes and Examples of Bad Costs

 Over-centralizing stores operations

 Common hours of operation and services regardless of location needs
 Reducing all expenses on a proportionate basis
 Some services are more highly valued like low waiting lines or custom-made
sandwiches
 Trading-up to capture more affluent customers
 Alienating existing customers and not attracting more affluent ones
 Not responding to changes in consumer behaviour due to technology
 Ignoring Web– order on-line and pick up in-store; using catalogues versus Web
 Not responding to competition
 Not understanding low-cost competition, unbundled pricing opportunities

Managing retail services

"Customer service is the sum total of what an organization does to meet customer
expectations and produce customer satisfaction".

Customer service can be used as a framework to look at all aspects of your business:

• Image and presentation

• Promotion of services
• Contact and communication with customers
• Service delivery
• Monitoring and improving services
• Resolving customer problems
• Customer relationship management

5 Key Elements Of “Excellent Customer Servicer in Retail”

“The Right Approach”

• When to Approach?
• How to Approach?
• Right Attitude
 • When to Approach?
• When customer is not able to find something on his own.
• When customer is trying to compare two or more items.
• Approach when you think you have an opportunity to show them latest
merchandise of same quality.
• When NOT to approach
• First thing first!! Let’s understand when you should not approach.
• Do not approach the customer immediately after they enter into the Store.
• Do not approach when they are busy trying out merchandise or discussing
something about it with the person, they walked in.
• Give them Ample time to look around and find stuff they are looking for.
• Do not approach customer when they are talking/browsing on their mobile
phone.

How to Approach

• Greet with a smile!! “It’s not only important, Its “Mandatory”. Approach
Customers with a personalized warm welcome.
• Make sure you create a unique and meaningful experience.
• Acknowledge when prospects/customers look at you. After the approach if
their concern is related to another department or person, facilitate.
• Do not redirect them to another person.
• Call the executive to help.
• Customers feel special if you know them by their names

“Right Attitude”

• “I am going to close a sale”

• “I am going to help the shopper to make an Informed Decision.”
• “People who walk in here are just another shopper” “People who walk in to
this store Should be on CENTER STAGE”
• “I only care about Merchandise related information”
• “I care not only about merchandise but human behavior their feelings,
understandings and perception”
• “I work as a representative for this store”
• “I am into human relationship Profession”

Service characteristics
Lack of Ownership:

Lack of ownership may be one of the most obvious ones of the characteristics of service. It
refers to the fact that you cannot own and store a service like you can a product. This
characteristic is strongly linked to several other characteristics of services, such as
intangibility, perishability, inseparability.

Intangibility:

When thinking about the characteristics of services, intangibility may come to your mind
first. Service intangibility means that services cannot be seen, tasted, felt, heard or smelled
before they are bought. You cannot try them out. For instance, airline passengers have
nothing but a ticket and a promise that they will arrive at a certain time at a certain
destination. But there is nothing that can be touched.

Inseparability:

Characteristics of services include inseparability, which means that services are produced and
consumed at the same time. This also entails those services cannot be separated from their
providers. Contrary to services, physical goods are produced, then stored, later sold, and even
later consumed. Services are first sold, then produced and consumed at exactly the same time.
A product can, after production, be taken away from the producer. However, a service is
produced at or near the point of purchase. For instance, when visiting a restaurant, you order
your meal, the waiting and delivery of the meal, the service provided by the waiter/ress etc.
All these parts, including the providers, are part of the service and therefore inseparable. In
services marketing, a service provider is the product.

Variability:

Variability does also belong to the important characteristics of services. It refers to the fact
that the quality of services can vary greatly, depending on who provides them and when,
where and how. Because of the labour-intensive nature of services, there is a great deal of
difference in the quality of service provided by various providers, or even by the same
providers at different times.

Perishability:

Perishability means that services cannot be stored for later sale or use. In other words,
services cannot be inventoried. This is one of the most significant characteristics of services,
since it may have a major impact on financial results. Doctors or dentists often charge
patients for missed appointments because the service value has foregone. The value existed
only at that particular point and disappeared when the patient did not come. When demand is
steady, the perishability of services is not a problem. However, in case of fluctuating demand,
service firms can have difficult problems. For this reason, transport companies own much
more equipment than they would if demand were even throughout the day: the demand
during rush-hours needs to be served at that specific time, it cannot be served later or earlier.
Consequently, service companies use various techniques for creating a better match between
demand and supply: Demand shifting.

User participation:

Finally, the characteristics of services include user participation. Indeed, users participate in
every service production. Even when the user is not required to be at a location where the
service is performed, users participate in every service production. A service cannot be
separated from its provider, but neither can it be separated from its user.

Branding: perceptions of service quality

Service marketing is very different from product marketing and the field of services
marketing was first developed in late 1970s. Since then, there has been huge progress in
developing service quality and service efficiency to improve consumer retention. Service
industry is generally developed in advanced economies and branding service
providing companies can be very difficult to maintain. In 1985, Zeithaml et al. were the first
researchers to suggest that services are different from tangible goods and service industry
generally composes of four unique characteristics such as intangibility, heterogeneity
(variability), perishability and inseparability (Brown et al., 1991). Another fifth quality of
services is the lack of ownership. Services can only be experienced but never owned.

These qualities are unique to the service sector. However, some of these qualities are directly
expressed by some consumer products. The characteristics of services, the SERVQUAL gap
are studied and there after service quality recommendations are suggested that will help to
improve the service quality.

Seroquel or service quality is not a new phenomenon. SERVQUAL is the model suggested
by Parasuraman, Zeithaml and Berry in 1988. SERVQUAL is actually a gap analysis to
understand whether the organization is able to meet the consumer needs. SERVQUAL
measures the service quality and service delivery gap created between service providers and
consumers. Service quality is evaluated by consumers based on the reliability of the service,
responsiveness, assurance provided by the service providers, empathy shown by service
providers and the tangibles that are visible to the consumer. However, SERVQUAL has been
criticized by Cronin and Taylor (1994) as they have held that it does not give the true idea
about service quality or consumer satisfaction. SERVPERF consists of 22 perception items
that give an accurate test about the disconfirmation of consumers to services. In fact, service
quality has now been understood to be more about the perception than anything else.
However, in spite of the critique, SERVQUAL still serves as a good examination of the gaps
between the service delivery and service perception of consumers.

Sales force management

Sales Force Management (SFM) is a sub-system of marketing management. It is Sales

Management that translates the marketing plan into marketing performance. Sales force
management is the soul of the company. Establishing a world recognize brand does not only
require marketing and advertise efforts, but it also requires the sales representatives or in
simple words sale force along with all other promotional activities. Sales force - Division of a
business responsible for selling products or services. Sales force is linking between
companies and customer. Therefore, companies have to be careful in designing and
structuring sales force.

Importance and Benefits of Sales force management:

Better Sales Operations:

Efficient sales force management ensures that all moving parts of sales operations are
working well to guarantee the end user a satisfactory experience. The competitive edge of
thriving enterprises lies in sustaining regular customers. Whatever the product/service may
be, a good sales force is able to guarantee good experiences to customers, which is a direct
result of an efficient sales management system.

Better understanding of the market:

Sales force management allows for a better understanding of your market, keeping you up-to-
date with new trends and the ability to apply these trends to sustain relevance within your
market niche. Relevance is key to sustaining growth in competitive marketplaces. Your sales
team is tasked to keep your brand and product/service relevant and moving towards excellent
customer experience.

Defined sales strategy:

Aside from reaching targets, goals, and objectives for the business, sales force management
formulates strategies that are designed specifically for the product/service offered. Being able
to formulate strategies brings in systematic methods of continuing sales growth, expansion of
market reach, and CRS or Customer Relations Systems tailor-fitted to the company. In
strategizing, one size does not fit all. Enabling your sales team to create strategies to zero in
on specific demographics or niches opens new doors for the enterprise.

Generating Leads:
Sales teams create leads and follow these leads or probable customers by getting relevant
information – such as personal details, purchasing behaviours and preferences.

Sales Forecasting:

Projecting the enterprise’s sales using previous sales figures is an important tool for
management to make business decisions to increase potential sales, as well as in training the
sales team for specific objectives or goals. Forecasting sales also enables decision-makers to
address aspects such as productivity, distribution of product/service, and even the marketing
budget.

Order Management:

Order management covers the streamlining of processes to efficiently process and fulfil
customer orders – resulting in an increase in sales, retaining customers, and maintaining
excellent customer relations. In a nutshell, an order management system is a process of
delivering a product/service with minimal to no delay.

Conflict Resolution:

While making a purchase, it is highly likely that your lead might have different ideas from
you. In this case, you need to set their expectations straight. Having a record of all the
conversations you have with your leads ensures that there are no conflicts later.

Retail Information Systems

Retail management information systems provide many functions for the companies who use
them. Typically, a computer program or other automated process, RMIS collect data on
customers, track inventory, provide electronic point of sales services and conduct market
research. Your favourite clothing store, for instance, likely uses a RMIS to keep your name in
its loyalty program database, ring up your purchase and determine whether the blue shirt you
bought is popular enough among customers to restock.

CRM, or customer relationship management, is an important aspect of running a retail

business. It is a method, usually electronic, for tracking all of your business’s relationships
and interactions with past and present customers. A CRM database is, in essence, a book of
business that retailers can turn to when they need to conduct market research or send circulars
through the mail. It’s essential that a good CRM system is included in a company’s RMIS.

Objectives of RIS

• Transaction processing system

• Supply Chain improvement.
• Reduce unsold inventory through online auctions.
• Efficiency across business functions
• Data processing and analysis
• Customer experience and loyalty.
• Advertising and promotions
Uses of Information in retail

• Efficient stocking of merchandise

• Collection of data
• Efficiency in operations
• Helps Communication

• Efficient stocking of merchandise:

• Basis of sales analysis and decision on replenishment
• Re-ordering and merchandise planning
• Trends in sales can be analysed it helps to avoid situation of stock out, spot
merchandise or product, higher inventory turns.
• Collection of data:
• Data can be about consumers, purchases, frequency of buying and typical
basket size
• Customer preference for certain brands can be identified.
• Efficiency in operations:
• Serves as a basis for integrating the functioning of various departments
• Automated process, billing etc. reduce times
• Helps Communication:
• Retailers’ stores can also communicate with each other and with the
warehouse
• Electronic Data Interchange can also be used for communication with
suppliers and vendors.

IT in retail:

Radio Frequency Identification (RFID): As name implies, RFID is an ID-identification-

system It relies on a small chip that is implanted in a tag. The chip can record and store data,
such as a serial number, price or purchase record. Electronic scanner can use radio signals to
read or track the ID tag.

RFID Smart Labelling:

• Monitor unattended inventory

• Shipping and Receiving applications
• Provide real time tracking and locating of tagged items on shelves Check-out Process
• Reduce time spent in line Reduce labour/time cost of employees Streamline check-out
process with ability to scan multiple items and pay for them all at once Inventory
Control

Point of Sale (POS) Software’s:

• User Interface
• Inventory
• Reports
 • Invoicing
• Receivables
• Accounts Payable
• Credit Card Payments
Smart shopping Carts:
• AI-powered shopping cart is a plug-and-play solution—no installation is required
• Shoppers can simply throw items into their cart, and built-in sensors identify the items
and tally a virtual basket.
• During the shopping journey, it helps shoppers discover in-store deals with its
interactive screen. Once done, they can conveniently pay on the cart and leave the
store
• E.g.: Caper shopping cart
• An electronic shelf label (ESL) system is used by retailers for displaying product
pricing on shelves. The product pricing is automatically updated whenever a price is
changed from a central control server. E.g.: RSG Inc Electronic Shelf Labeling
• Virtual Reality (VR) literally makes it possible to experience anything, anywhere,
anytime.
• It is the most immersive type of reality technology and can convince the
human brain that it is somewhere it is really not.
• Head mounted displays are used with headphones and hand controllers to
provide a fully immersive experience.
• E.g.: Specsavers’ Frame Styler tool

Merchandise management:

The merchandise management process allows the retail buyer to forecast with some degree of
accuracy what to purchase and when to have it delivered. This will greatly assist the company
in attaining its sales and gross margin goals. Buyers must rely heavily on historical sales data,
coupled with personal experience and their own intuition about market trends.
Merchandising is the sequence of various activities performed by the retailer such as
planning, buying, and selling of products to the customers for their use. It is an integral part
of handling store operations and e-commerce of retailing.
Types of Merchandise

Staple Merchandise Fashion Merchandise

It has predictable demand It has unpredictable demand
History of past sales is available Limited past sales history is available
It provides relatively accurate forecasts It is difficult to forecast sales

Factors Influencing Merchandising

The following factors influencing merchandising are:
• Size of the Retail Operations
• Shopping Options
• Separation of Portfolios
Size of the Retail Operations
This includes issues such as how large is the retail business? What is the demographic scope
of business: local, national, or international? What is the scope of operations: direct, online
with multilingual option, television, telephonic? How large is the storage space? What is the
daily number of customers the business is required to serve?
Shopping Options
Today’s customers have various shopping channels such as in-store, via electronic media
such as Internet, television, or telephone, catalogue reference, to name a few. Every option
demands different sets of merchandising tasks and experts.
Separation of Portfolios
Depending on the size of retail business, there are workforces for handling each stage of
merchandising from planning, buying, and selling the product or service. The small retailers
might employ a couple of persons to execute all duties of merchandising.
Merchandise plan
Merchandise planning is a strategic process in order to increase profits. This includes long-
term planning of setting sales goals, margin goals, and stocks.
• Step 1: Define merchandise policy. Get a bird’s eye view of existing and potential
customers, retail store image, merchandise quality and customer service levels,
marketing approach, and finally desired sales and profits.
• Step 2: Collect historical information. Gather data about any carry-forward inventory,
total merchandise purchases and sales figures.
• Step 3: Identify Components of Planning.
• Customers − Loyal customers, their buying behavior and spending power.
• Departments − What departments are there in the retail business, their
subclasses?
• Vendors − Who delivered the right product on time? Who gave discounts?
Vendor’s overall performance with the business.
• Current Trends − Finding trend information from sources including trade
publications, merchandise suppliers, competition, other stores located in
foreign lands, and from own experience.
• Advertising − Pairing buying and advertising activities together, idea about
last successful promotions, budget allocation for Ads.
• Step 4: Create a long-term plan. Analyze historical information, predict forecast of
sales, and create a long-term plan, say for six months.
Merchandise buying and handling

• Step 1: Collect Information − Gather information on consumer demand, current

trends, and market requirements. It can be received internally from employees,
feedback/complaint boxes, demand slips, or externally by vendors, suppliers,
competitors, or via the Internet.
• Step 2: Determine Merchandise Sources − Know who all can satisfy the demand:
vendors, suppliers, and producers. Compare them on the basis of prices, timeliness,
guarantee/warranty offerings, payment terms, and performance and selecting the best
feasible resource(s).
• Step 3: Evaluate the Merchandise Items − By going through sample products, or the
complete lot of products, assess the products for quality.
• Step 4: Negotiate the Prices − Realize a good deal of purchase by negotiating prices
for bulk purchase.
• Step 5: Finalize the Purchase − Finalizing the product prices and buying the
merchandise by executing buying transaction.
 • Step 6: Handle and Store the Merchandise − Deciding on how the vendor will deliver
the products, examining product packing, acquiring the product, and stocking a part of
products in the storehouse.
• Step 7: Record the Buying Figures − Recording details of transactions, number of
unit pieces of products according to product categories and sub-classes, and respective
unit prices in the inventory management system of the retail business.
Merchandise Handling
• Stocking of merchandise can be at store or at warehouse
• In either case, receiving function must inspect, verify and log in deliveries and
compare to vendor invoice
• Price marking of product must be performed, if required

Internationalization and globalization: Retail

The trend of business globalization has actualized the topic about the international retail sale
area. Certain problems in working on the home market have had such an influence on many
retailers that they consider entering the foreign markets, thinking of it as a viable growth
strategy. These problems include: maturity on the home market, improvement of
communication technologies, financial conditions, decrease of free trade barriers, changing
the retail sale form through joining and acquisition. With the process of retail
internationalization gaining momentum, retailing is fast to become a global industry. Indeed,
the majority of distinguished world retailers already carries out its major sale part as part of
international operations “
The internalization of retail trade has speedy growth. In 1992 there were over 1.321
international institution in European Community in relation to 120 international institutions
in 1970. Internalization is present in all retail sector: foodstuff, non-foodstuff, mixed and
specialized trade, bid and small shops, etc. However, export retail shapes are the most
common shapes which stay dominant in their countries.
Intensive processes of retail internationalization have brought about a horizontal
collaboration and joining of retail from different countries in the world, which resulted in the
establishing of international retail alliances. International retail alliances are a fairly new
phenomenon, but regardless of that they exist in many forms. The Institute of Grocery
Distribution 1992 identified four types of alliances which have developed over recent years:
- Alliances established on development grounds, as an agreement between retailers on
cooperation in specific projects, in many ways as a way of entering the national market;
- Buying groups, where the members collaborate in buying, which increases their influence
on the producer;
- Alliances established on knowledge and skills, where retailers engage in cognition and
technical sense with others; and
- Multi-functional groups, which combine the elements of the previous three types of
alliances and where individual members can increase strategic advantages by engaging in
expertise, such as information technologies and systems.
Advantages gained by many members of international alliances are numerous, such as: a joint
voice in trade politics, increase of buying power by economy of scale, brand/development,
introducing and transfer for pan European retail brands, technology knowledge and systems,
knowledge improvement, market entry protection, a great readiness of international growth
and geographic market expansion, competitive position improvement and so on.
World market integration and globalization resulted in trade internationalization, especially
of its retail sector. Removing barriers for trade between national markets and forming a free
market, has provided a larger competitive environment and speeded up the growth rate.
Intensive processes of retail internationalization have brought about a horizontal
collaboration and joining of retail from different countries around the world, which resulted
in the establishing of international retail alliances.
Shopping at World stores: going International; the internationalization process

• Inadvertent internationalization,
• Non-commercial motives,
• Commercial objectives,
• Government regulations,
• Capitalizing on existing or potential sales opportunities
• 1. Inadvertent internationalization: Inadvertent internationalization is due to
political instability. Sometimes, changes in the demarcation of national borders take
place. This may mean a retail company is operating in a different market although its
stores have not physically moved. Changes in Eastern Europe are the examples of this
kind. The US retailer KMart entered Czechoslovakia. Within a year it found itself
operating in two district markets, the Czech and Slovak republics.
• 2. Non-commercial reasons: Non-commercial reasons of political, personal, ethical
or social responsibility have motivated retailers to move into foreign markets. For
example, retailers foray into markets for reasons of social and environmental
responsibility. Notably, the Body Shop’s “trade not aid” sourcing policy helped
develop infrastructures in order to stabilize economics.
• 3. Commercial objectives: It include entering the market which gives retailers
competitive edge. Gaining important market knowledge before moving in on a larger
scale learning about innovations may be other commercial objectives of retail
internationalization.
• 4. Government regulations: Government regulations influence the choice of market
by retailers. It is not a prerequisite to internationalization. Retailers prefer the markets
with fewer restrictions on their growth. Severe regulations at home push retailers into
the international arena. Loi Royer in France severely restricted the development of
large out of town stores. As a result the French hypermarkets turned to less restrictive
markets to continue their expansion.
• 5. Growth potential: Retailers seek the best growth potential possible. If they
perceive profitable opportunities in overseas markets, they are likely to capitalize on
them.

Culture business and international management in retail

Cases:
https://www.commisceo-global.com/blog/international-retail-and-cross-cultural-issues#C1