Prof.

Shikhar Das Srivastava

Unit- IV (Retail Management)
Retail Store Operations
A) Store Atmosphere: The store must offer a positive ambience
to the customers for them to enjoy their shopping and leave
with a smile.
The store should not give a cluttered look.
The products should be properly arranged on the shelves
according to their sizes and patterns. Make sure products do
not fall off the shelves.
There should be no foul smell in the store as it irritates the
customers.
The floor, ceiling, carpet, walls and even the mannequins
should not have unwanted spots.
Never dump unnecessary packing boxes, hangers or clothes in
the dressing room. Keep it clean.
Make sure the customers are well attended.

B) Cash Handling
One of the most important aspects of retailing is cash handling.
It is essential for the retailer to track the daily cash flow to calculate
the profit and loss of the store.
Cash Registers, electronic cash management system or an elaborate
computerized point of sale (POS) system help the retailer to
manage the daily sales and the revenue generated.
Prevent Shoplifting/Safety and Security
The merchandise should not be displayed at the entry or exit of the
store.
Do not allow customers to carry more than three dresses at one
time to the trial room.
Install CCTVs and cameras to keep a close watch on the customers.
Each and every merchandise should have a security tag.
Ask the individuals to submit carry bags at the security.
Make sure the sales representative handle the products carefully.


C) Customer Service
Customers are assets of the retail business and the
retailer cant afford to lose even a single customer.
Greet customers with a smile.
Assist them in their shopping.
The sales representatives should help the individuals buy
merchandise as per their need and pocket.
The retailer must not oversell his products to the
customers. Let them decide on their own.
D) Refunds and Returns
Formulate a concrete refund policy for your store.
The store should have fixed timings for exchange of
merchandise.
Never exchange products in lieu of cash.


E) Visual Merchandising
The position of dummies should be changed frequently.
There should be adequate light in the store. Change the
burned out lights immediately.
Dont stock unnecessary furniture at the store.
Choose light and subtle colours for the walls to set the
mood of the walk-ins.
Make sure the signage displays all the necessary
information about the store and is installed at the right
place visible to all.
The customers should be able to move and shop freely in
the store.
The retail store should be well ventilated.

F) Training Program
The store manager must conduct frequent training programs for
the sales representatives, cashier and other team members to
motivate them from time to time.
It is the store managers responsibility to update his
subordinates with the latest softwares in retail or any other
developments in the industry.
It is the store managers responsibility to collate necessary
reports (sales as well as inventory) and send to the head office
on a daily basis.
G) Inventory and Stock Management
The retailer must ensure to manage inventory to avoid being
out of stock.
Every retail chain should have its own warehouse to stock the
merchandise.
Take adequate steps to prevent loss of inventory and stock.


7
Retail Store Design & Visual Merchandising
Store design and layout tells a customer what the store is all about
and it is very strong tool in the hands of the retailer for
communicating and creating the image of the store in the mind of
the customers.

The design and layout of the store are a means of communicating
the image of the retail store.

The environment which is creates in the retail store, is a
combination of the exterior look of the store, the store interiors,
the atmosphere in the store and the events, promotions and the
themes.

8
The overall look of a store and the series of mental pictures and
feelings it evokes within the beholder.

For the retailer, developing a powerful image provides the
opportunity to embody a single message, stand out from the
competition and be remembered.




9
Elements of store design
Store
design
Building
architecture
Frontage &
Entrance
Ext.
Display
space
Target
Customers
Health &
Safety
Location
Store
theme
Merchand
ise Mix
Parking
Access
10
Exterior Store Design & Interior Design
Exterior
Location
Parking
Ease of access
The building architecture
Health and safety standards
Store windows, lighting
Interior
Fixtures
Flooring & Ceilings
Lighting
Graphics & Signages
Atmospherics



11
Visual merchandising
Can be termed as the orderly, systematic, logical and intelligent way of
putting stock on the floor

VM is the art of presentation, which puts the merchandise in
focus. It educates the customers, creates desire and finally
augments the selling process.


Visual merchandising is the activity and profession of
developing the floor plans and three-dimensional displays
in order to maximize sales.
Both goods or services can be displayed to highlight their
features and benefits. The purpose of such visual
merchandising is to attract, engage and motivate the
customer towards making a purchase.
Visual merchandising commonly occurs in retail spaces
such as retail stores and trade shows.
Techniques
Visual merchandising builds upon or augments the retail
design of a store. It is one of the final stages in setting out a
store in a way customers find attractive and appealing.
Many elements can be used by visual merchandisers in
creating displays including color, lighting, space, product
information, sensory inputs (such as smell, touch, and
sound), as well as technologies such as digital displays and
interactive installations.



Principles
The purpose of visual merchandising is to:
Make it easier for the customer to locate the desired
category and merchandise.
Make it easier for the customer to self-select.
Make it possible for the shopper to co-ordinate and
accessorise.
Recommend, highlight and demonstrate particular
products at strategic locations.
Educate the customer about the product in an effective
& creative way.
Make proper arrangements in such a way to increase
the sale of unsought goods.

14

15
16
METHODS OF DISPLAYS

Color Dominance
Co-ordinated Presentation
Presentation by price

Forms: 1) Window displays: Window displays can
communicate style, content, and price.Display windows may
also be used to advertise seasonal sales or inform passers-by
of other current promotions.
2) Food merchandising: Restaurants, grocery stores,
convenience stores, etc. use visual merchandising as a tool to
differentiate themselves in a saturated market.





SITE SELECTION

For considering any site location fit for Retail Outlet,
retailers consider three factors;

(i) The characteristics of the site
(ii) The characteristics of the trading area for a store at the
site.
(iii) The estimated potential sales that can be generated by a
store at the site.
1. Site Characteristics
Some characteristics of the site that affect store sales and
thus considered in selecting a site are;
The Traffic Flow past the site and accessibility to the site.
When the traffic is greater, more consumer are likely to stop
in and shop at the store. Thus retailers often use traffic count
measures to assess a sites attractiveness. The Accessibility
of the site is the ease with which customers can get into and
out of the site. Accessibility is greater for sites located near
major highways and with traffic lights and lanes.
2.Location Characteristics
Some Factors associated with specific locations that
retailers consider when evaluating a site are (i) Parking
(ii) Store visibility (iii) adjacent retailers.
Parking : If there arent enough space or type spaces are
too far if there are too many far from the store,
customers will be discouraged from patronizing the site
and the store.
Store Visibility: Visibility refers to customers ability to
see the store from the street. In an area with a highly
transient population, such as tourist center or large city,
good visibility from the road is particularly important.
Adjacent Retailers: Complementary retailer target the
same market segment.
3.Restrictions & Costs
Retailers may place restrictions on the type of tenants that
are allowed in a shopping center in their lease agreement.
Some of these restrictions can make the shopping center
more attractive for a retailer.
Example: a specialty mens apparel retailer may prefer a lease
agreement that precludes other mens apparel retailers from
locating in the same center.
Retailers would look unfavorably on a shopping center with a
sign size restriction that prevented easy visibility of the
stores name from the street.
Store Design

A) Grid Layout: 1. Doesnt provide visually exciting design.
2. Well suited for shopping trips in which customer need to
move through out the entire store.
3. The grid Layout is also cost efficient.
4. One problem is customers typically arent exposed to all of
the merchandise in the store.
5. This type of store is beneficial for customers who do weekly
grocery shopping.

Figure of grid layout is on next slide, have a look.

Receiving
&
Storage
Fruits
vegetables
Racks/Shelf
Books & Magazines, Seasonal Display
Office & Customer
Service
Cart
Area
I
N

OUT
Check Outs
u

B) Race Track layout: 1. Its also known as loop, is a store that
provides a major passageway that loops around the store to
guide customer traffic around different departments within
the store.
2. Cash register stations are typically located in each dept.
bordering the racetrack.
3. It facilitates the goal of getting customers to seethe
merchandise available in multiple depts. And thus
encourages impulse purchasing.
4. As customers go around the racetrack, their eyes are forced
to take different viewing angles rather than looking down
one aisle as in the grid design

Figure of Race-track layout is on next slide, have a look.



C) Free Form layout: 1. It also known as boutique layout,
arranges fixtures and aisles in an asymmetric pattern.
2. It provides an intimate, relaxing environment that facilitates
shopping and browsing this layout is typically used in small
specialty stores.
3. Creating this pleasant shopping environment is costly.
Because there is no well-defined traffic pattern like racetrack
and grid layout, arent naturally drawn around the store and
personal selling becomes more important for providing
guidance like Bloomingdales I.C.B. boutique.
4. Designers objective was to create a simple, clear space that
draws customers into the area.

Figure of Free form layout is on next slide, have a look.


Storage, Receiving & Marking
Dressing Rooms
A
B
C
D
Undergarments

Supply Chain Management - Introduction
A value chain is another name for a supply
chain.
A supply chain is a sequence of
organizations - their facilities, functions
and activities - that are involved in
producing and delivering a product or
service.
Li & Fung is Hong Kongs largest export
trading company. It has also been
innovative in supply chain management.
Supply Chain Management - Introduction
Supplier
Supplier
Supplier
Storage
}
Mfg. Dist. Retailer Customer Storage
Supplier
Supplier
Storage
}
Service
Customer
Supply Chain Management - Introduction
Yarn
Zippers
Factory
1
Factory
2
Factory
3
Factory
4
Factory
5

The
Customer
(Retailer)

Yarn
Dying &
Weaving
Supply Chain Management - Introduction
Supply chain management deals with linking the
organizations within the supply chain in order to meet
demand across the chain as efficiently as possible. In our
example, Li & Fung is creating and managing the links. In
non-brokered supply chains, one or more of the chains
organizations can provide the management function.
Why is supply chain management so important?
To gain efficiencies from procurement, distribution and logistics
To make outsourcing more efficient
To reduce transportation costs of inventories
To meet competitive pressures from shorter development times,
more new products, and demand for more customization

Supply Chain Management - Introduction
To meet the challenge of globalization and longer supply chains
To meet the new challenges from e-commerce
To manage the complexities of supply chains
To manage the inventories needed across the supply chain
Why is supply chain management difficult?
Different organizations in the supply chain may have different,
conflicting objectives
Manufacturers: long run production, high quality, high productivity,
low production cost
Distributors: low inventory, reduced transportation costs, quick
replenishment capability
Customers: shorter order lead time, high in-stock inventory, large
variety of products, low prices
Supply chains are dynamic - they evolve and change over time
Supply Chain Management - Introduction
Supply chains and vertical integration
For any organization vertical integration involves either taking on
more of the supplier activities (backward) and/or taking on more of
the distribution activities (forward)
An example of backward vertical integration would be a peanut
butter manufacturer that decides to start growing peanuts rather
than buying peanuts from a supplier
An example of forward vertical integration would be a peanut butter
manufacturer that decides to start marketing their peanut better
directly to grocery stores
In supply chains, some of the supplying and some of the
distribution might be performed by the manufacturer
Supply Chain Management - Introduction
The significance of vertical integration in the supply chain is that
the activities that are performed by the manufacturer are typically
more easily managed than those which are performed by other
organizations
Therefore, the degree of vertical integration can have an impact on
the structure and relationships between members of a supply chain
Supply Chain Management - Introduction
Strategic, tactical and operating issues
Strategic - long term and dealing with supply chain design
Determining the number, location and capacity of facilities
Make or buy decisions
Forming strategic alliances
Tactical - intermediate term
Determining inventory levels
Quality-related decisions
Logistics decisions
Operating - near term
Production planning and control decisions
Goods and service delivery scheduling
Some make or buy decisions
Supply Chain Management - Introduction
Key issues in supply chain management include
Distribution network configuration
How many warehouses do we need?
Where should these warehouses be located?
What should the production levels be at each of our plants?
What should the transportation flows be between plants and
warehouses?
Inventory control
Why are we holding inventory? Uncertainty in customer demand?
Uncertainty in the supply process? Some other reason?
If the problem is uncertainty, how can we reduce it?
How good is our forecasting method?
Supply Chain Management - Introduction
Distribution strategies
Direct shipping to customers?
Classical distribution in which inventory is held in warehouses and then
shipped as needed?
Cross-docking in which transshipment points are used to take stock
from suppliers deliveries and immediately distribute to point of usage?
Supply chain integration and strategic partnering
Should information be shared with supply chain partners?
What information should be shared?
With what partners should information be shared?
What are the benefits to be gained?
Supply Chain Management - Introduction
Product design
Should products be redesigned to reduce logistics costs?
Should products be redesigned to reduce lead times?
Would delayed differentiation be helpful?
Information technology and decision-support systems
What data should be shared (transferred)
How should the data be analyzed and used?
What infrastructure is needed between supply chain members?
Should e-commerce play a role?
Customer value
How is customer value created by the supply chain?
What determines customer value? How do we measure it?
How is information technology used to enhance customer value in the
supply chain?
Supply Chain Management - Introduction
How can you assess how well your supply chain is
performing?
The SCOR model - Supply Chain Operations Reference Model -
developed by the Supply Chain Council (http://www.supply-
chain.org/) can be used to assess performance
SCOR model metrics include:
On-time delivery performance
Lead time for order fulfillment
Fill rate - proportion of demand met from on-hand inventory
Supply chain management cost
Warranty cost as a percentage of revenue
Total inventory days of supply
Net asset turns
Supply Chain Management - Introduction
Creating an effective supply chain
Develop strategic objectives and tactics
Integrate and coordinate activities in the internal portion of the
supply chain
Coordinate activities with suppliers and customers
Coordinate planning and execution across the supply chain
Consider forming strategic partnerships
SCM - Inventory Management Issues
Manufacturers would like to produce in large lot sizes
because it is more cost effective to do so. The problem,
however, is that producing in large lots does not allow for
flexibility in terms of product mix.
Retailers find benefits in ordering large lots such as
quantity discounts and more than enough safety stock.
The downside is that ordering/producing large lots can
result in large inventories of products that are currently
not in demand while being out of stock for items that are
in demand.

SCM - Inventory Management Issues
Ordering/producing in large lots can also increase the
safety stock of suppliers and its corresponding carrying
cost. It can also create whats called the bullwhip effect.
The bullwhip effect is the phenomenon of orders and
inventories getting progressively larger (more variable)
moving backwards through the supply chain. This is
illustrated graphically on the next slide.
SCM - Inventory Management Issues
O
r
d
e
r

S
i
z
e

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
Customer
Demand
Retailer Orders
Distributor Orders
Production Plan
SCM - Inventory Management Issues
Some of the causes of variability that leads to the bullwhip
effect includes:
Demand forecasting Many firms use the min-max inventory
policy. This means that when the inventory level falls to the reorder
point (min) an order is placed to bring the level back to the max , or
the order-up-to-level. As more data are observed, estimates of the
mean and standard deviation of customer demand are updated.
This leads to changes in the safety stock and order-up-to level, and
hence, the order quantity. This leads to variability.
Lead time As lead time increases, safety stocks are increased, and
order quantities are increased. More variability.
SCM - Inventory Management Issues
Batch ordering. Many firms use batch ordering such as with a
min-max inventory policy. Their suppliers then see a large order
followed by periods of no orders followed by another large order.
This pattern is repeated such that suppliers see a highly variable
pattern of orders.
Price fluctuation. If prices to retailers fluctuate, then they may
try to stock up when prices are lower, again leading to variability.
Inflated orders. When retailers expect that a product will be in
short supply, they will tend to inflate orders to insure that they will
have ample supply to meet customer demand. When the shortage
period comes to an end, the retailer goes back to the smaller orders,
thus causing more variability.


SCM - Inventory Management Issues
How then can we cope with the bullwhip effect?
Centralizing demand information occurs when customer
demand information is available to all members of the
supply chain. This information can be used to better
predict what products and volumes are needed and when
they are needed such that manufacturers can better plan
for production. However, even though centralizing
demand information can reduce the bullwhip effect, it will
not eliminate it. Therefore, other methods are needed to
cope with the bullwhip effect.
SCM - Inventory Management Issues
Methods for coping with the bullwhip effect include:
Reducing uncertainty. This can be accomplished by centralizing
demand information.
Reducing variability. This can be accomplished by using a
technique made popular by WalMart and then Home Depot called
everyday low pricing (EDLP). EDLP eliminates promotions as well
as the shifts in demand that accompany them.
Reducing lead time. Order times can be reduced by using EDI
(electronic data interchange).
Strategic partnerships. The use of strategic partnerships can
change how information is shared and how inventory is managed
within the supply chain. These will be discussed later.
SCM - Inventory Management Issues
Other helpful techniques for improving inventory
management include:
Cross-docking. This involves unloading goods arriving from a
supplier and immediately loading these goods onto outbound
trucks bound for various retailer locations. This eliminates storage
at the retailers inbound warehouse, cuts the lead time, and has
been used very successfully by WalMart and Xerox among others.
Delayed differentiation. This involves adding differentiating
features to standard products late in the process. For example,
Bennetton decided to make all of their wool sweaters in undyed
yarn and then dye the sweaters when they had more accurate
demand data. Another term for delayed differentiation is
postponement.
SCM - Inventory Management Issues
Direct shipping. This allows a firm to ship directly to customers
rather than through retailers. This approach eliminates steps in the
supply chain and reduces lead time. Reducing one or more steps in
the supply chain is known as disintermediation. Companies such as
Dell use this approach.
SCM - Strategic Partnering
Strategic partnering (SP) is when two or more firms that
have complementary products or services join such that
each may realize a strategic benefit. Types of strategic
partnering include:
Quick response,
Continuous replenishment,
Advanced continuous replenishment, and
Vendor managed inventory (VMI)
SCM - Strategic Partnering
In quick response SP vendors receive point-of-sales (POS)
data from retailers. The data are then used to synchronize
production and inventory management at the supplier.
Although the retailer still prepares and submits individual
orders to the supplier, the POS data is used to improve
forecasting and scheduling.
In continuous replenishment SP vendors again receive POS
data and use them to prepare shipments at previously
agreed to intervals as well as to maintain agreed to
inventory levels. This approach is used by WalMart.
SCM - Strategic Partnering
In advanced continuous replenishment SP suppliers will
gradually decrease inventory levels at the retailers location
as long as they can still meet service levels. The result is
that inventory level are continuously improved. Kmart
uses this approach.
In vendor managed inventory SP the supplier will decide on
the appropriate inventory levels for each of the products it
supplies and the appropriate inventory policies to maintain
these levels. One of the best examples of this is the SP
between WalMart and Proctor & Gamble. (See summary
on next slide.)
SCM - Strategic Partnering
Criteria
Types
Decision
Maker
Inventory
Ownership
New Skills
Employed by vendors
Quick
Response
Retailer Retailer Forecasting Skills
Continuous
Replenishment
Contractually Agreed to Levels Either
Party
Forecasting & Inventory Control
Advanced
Continuous
Replenishment
Contractually agreed to & Continuously
Improved Levels
Either
Party
Forecasting & Inventory Control
VMI Vendor Either
Party
Retail
Management
Source: Simchi-Levi, Kaminsky & Simchi-Levi, Irwin McGraw Hill, 2000
SCM - Strategic Partnering
Requirements for an effective SP include:
Advanced information systems,
Top management commitment, and
Mutual trust
Steps in SP implementation include:
Contractual negotiations
Ownership
Credit terms
Ordering decisions
Performance measures
SCM - Strategic Partnering
Develop or integrate information systems
Develop effective forecasting techniques
Develop a tactical decision support tool to assist in coordinating
inventory management and transportation policies
Advantages of SP include:
Fully utilize system knowledge
Decrease required inventory levels
Improve service levels
Decrease work duplication
Improve forecasts
SCM - Strategic Partnering
Disadvantages of SP include:
Expensive technology is required
Must develop supplier/retailer trust
Supplier responsibility increases
Expenses at the supplier also often increase
Third party logistics (3PL) involves the use of an outside
company to perform part or all of a firms materials
management and product distribution function.
Examples of companies that provide 3PL include Ryder Dedicated
Logistics and J.B. Hunt.
Examples of companies that use 3PL include 3M, Dow Chemical,
Kodak and Sears.
What is logistics?

Procurement
Movement
Storage
Materials
Parts
Finished goods
Logistics is the total process of planning, implementing, and
coordinating the physical movement of merchandise from
manufacturer (wholesaler) to retailer to customer in the most
timely, effective, and cost-efficient manner possible
Goals of Logistics
Economy in movement of goods (external internal
movement)
Accuracy in order management
Time management of shipments and deliveries
Shelf-life and replenishment of perishable goods
(Eg.Egatematrix)
Coordination with suppliers and third-party service
providers (Eg.Verisign, Gati)
Backup plans and return shipments
Logistics spans across the functions of
Supply Chain Management
CPFR
3 PL
Order Processing & Fulfillment
QR (Quick Response)
ECR (Effecient Customer Response)
Transportation & Warehousing
Customer Transactions & Customer Satisfaction
Inventory Management
Logistics
The Sophisticated Logistics System of Reitmans
61
Performance Goals
Relate costs incurred to specific logistics activities
Place and receive orders as easily, accurately, and
satisfactorily as possible
Minimize the time between ordering and receiving
merchandise
Coordinate shipments from various suppliers
Have enough merchandise on hand to satisfy customer
demand, without having so much inventory that heavy
markdowns will be necessary
62
Performance Goals_2
Place merchandise on the sales floor efficiently
Process customer orders efficiently and in a
manner satisfactory to customers
Work collaboratively and communicate regularly
with other supply chain members
Handle returns effectively and minimize damaged
products
Monitor logistics performance
Have backup plans in case of breakdowns in the
system
A.N.Charlu Retail Management 02 63
Supply Chain Management
The supply chain is the logistics aspect of a
value delivery chain
Parties involved
Manufacturers
Wholesalers
Third-party specialists
Retailer
64
Supply Chain Management
Facilitating system for movement of goods or services
from supplier to customer
Coordinates suppliers, intermediaries, third-party
service providers and customers
Ropes in CPFR and 3PL systems


65
CPFR
(Collaborative Planning, Forecasting and Replenishment)
Inventory replenishment
Information sharing
Satisfying customer demands
Economy in inventory, logistics and transportation
expenditure
66
3PL
Procurement (Sourcing)
Order Management
Production
Distribution
After Sales Service
Reverse Logistics
Warehousing
Transport
67
Order Processing &
Fulfillment
Starts with product enquiry
Ends with delivery or return
Uses
CPFR
QR
ECR
3 Way Match (Qty, Price, Receipts)

68
DEPOTS Qty.
Required
Ordered
Qty
Available
Max.Qty
Price Minimum
Pack
Cost
Rank
D. 1
500
1000 1000 10.00 50 10,000 2
D. 2
600
390 400 12.00 30 4680 3
D. 3
200
3000 1500 1700 9.00 300 13500 1
D. 4
800
110 5000 15.00 10 1650 4
D. 5
900
3000
3000
ORDER PROCESSING AND FULFILLMENT
(A CASE STUDY)
SCM & TECH MARRIAGE
Order Processing & Fullfillment
69
Transportation & Warehousing
No. of shipments
Minimum / Economic Order Quantity
Shipment Ownership
Infrastructure quality
Non-store retailing
70
Customer Transactions & Customer Service
Outbound logistics
Retail stores
Non-store retailers
Webtailers
Direct Sellers
Customer Service vis--vis logistical efficiency
71
Warehousing
Centralized Warehousing
Direct Store Distribution

72
Claires Aggressive
Use of Central Warehousing
73
Logistics support in India
74
Inventory Management
Cost effectiveness
Vendor managed inventory
Loss in inventory
Employee theft
Customer shoplifting
Vendor fraud and errors
Electronic surveillance
Reverse Logistics
75
Problems Balancing Inventory Levels
The retailer wants to be appealing and never lose a sale
by being out of stock; it does not want to be stuck with
excess merchandise
What fad merchandise and how much should be
carried?
Customer demand is never completely predictable
Shelf space allocation should be linked to current
revenues
76
Logistics Indian Experience
(Case Study: Bombay Dubbawalla)
Four thousand five hundred semi-literate dabbawalas
collect and deliver 175,000 packages within hours !

Six-sigma quality with zero documentation!

120-year-old logistics system!

Mumbai's dabbawalas developed their home-grown version
of logistics long before the term was coined by the modern
business!

One mistake for every eight million deliveries!

77
Elegant Logistics
Uses 25 Kms of public transport, 10 Kms of footwork
Multiple transfer points
Routing and Sorting limited to few central points
Simple colour code determines the packets route and
priority
Lunch packets transfer from train to bicycle to foot
Business model worth replicating in the digital age
Reverse logistics

Reverse logistics stands for all operations related to the reuse
of products and materials. It is "the process of planning,
implementing, and controlling the efficient, cost effective flow
of raw materials, in-process inventory, finished goods and
related information from the point of consumption to the point
of origin for the purpose of recapturing value or proper
disposal.
More precisely, reverse logistics is the process of
moving goods from their typical final destination for the
purpose of capturing value, or proper disposal.
Remanufacturing and refurbishing activities also may be
included in the definition of reverse logistics."
The reverse logistics process includes the management
and the sale of surplus as well as returned equipment and
machines from the hardware leasing business.
Normally, logistics deal with events that bring the product
towards the customer. In the case of reverse logistics, the
resource goes at least one step back in the supply chain.
For instance, goods move from the customer to the
distributor or to the manufacturer.

Lets look at an example; a manufacturer produces
product A which moves through the supply chain
network reaching the distributor or customer. Any
process or management after the sale of product A
involves Reverse Logistics. If product A happened to
be defective the customer would return the product.
The manufacturing firm would then have to organise
shipping of the defective product, testing the
product, dismantling, repairing, recycling or
disposing the product. Product A will travel in reverse
through the supply chain network in order to retain
any use from the defective product. This is what
reverse logistics is about.
IT in Retail Sector
INTERNET RETAILING
GROWTH TRENDS AND ANALYSIS
THE FUTURE OF PAYMENTS

Retail sales in Japan and Western Europe, both facing rapidly ageing consumer bases, will remain
relatively flat, although non-store retailing, driven by internet retailing, will continue to be a source
of growth in these markets
Internet retailing, however, is not necessarily the fastest growing channel in all markets. Broadband
penetration and low levels of credit card ownership have hindered growth of the internet retailing
channel in many emerging markets. In addition, new modern grocery formats such as
hypermarkets and discounters, introduced by major international grocery retailers, have kick-
started rapid growth in Latin America and Eastern Europe. Similarly, the value proposition of
variety stores is beginning to redefine mixed retailing within Russia and parts of the Middle East.
Internet Retailing Blazes a Trail
TECHNOLOGY IN RETAILING
Euromonitor International
2010/2011 Retailing Fastest Growing Channels by Market

INTERNET RETAILING
GROWTH TRENDS AND ANALYSIS
THE FUTURE OF PAYMENTS

Wi-Fi is a hotspot for 2012 and marketers should take advantage of that. Consumers will benefit from the offers
and the price war.
For many developed market consumers, PCs and laptops are beginning to take a backseat as most smartphone
owners use these convenient devices to surf the internet and watch TV anywhere from parliaments to buses.
Levels of internet access vary considerably across the countries reviewed: 86% of the UK population are internet
users, compared with just 6% of the Indian population.
The use of mobile phones to compare prices in-store and to read reviews was also found to be most prevalent
among Chinese respondents, of whom 39% compare prices in-store at least once per week and 43% read reviews.
Free Wi-fi Enhances the Instore Experience
TECHNOLOGY IN RETAILING
63% of those aged 45 to 54 and are older executives understand
how to use smartphones and other technological devices. Ageing
workforces, thanks to improving health and longer life
expectancies, mean people are benefiting from full incomes for
longer. Today's 60 year-olds can expect to spend money for at least
another 20 years.
In Munich, Germany, the Frauencomputerschule, an expanding
enterprise for making computers accessible for women, has noted
that increasing numbers of older women are booking into their
courses.
Launched in June 2011 by a US-based individual, Hive Dock for the
iPhone 4 is designed to assist elderly people with visual
impediments to operate their smartphones.
Austrian entrepreneurs Albert and Eveline Fellner watched
Grandma struggling with her mobile phone and decided to expand
their company, which manufactured stationary telephones, into
the mobile market. The company now has a range of phones that
are desirable even to people taking part in triathlons as its easy
enough to use while running, and they look good in any handbag.
The principle is: one button, one function.
With the changing demographic in developed countries, R&E in
the technology sector will increasingly come up with more user-
friendly gadgets, better instructions and less complex processes in
order to access a market that does not depend on the vagaries of
employment and the financial market.
Older Consumers Are Still in the Game
TECHNOLOGY IN RETAILING

Tablets are predicted to overtake laptops as the dominant
form factor in portable computers in volume terms by 2015.
Growth will be driven primarily by the growth in availability
and accessibility of data networks, the expansion of
consumer-oriented cloud computing services, and, especially,
rapid price erosion of hardware.
The devices are likely to be highly dependent on cloud
services for data storage and processing. Thus, the expansion
of cloud services will facilitate volume growth and price
erosion by decreasing the need for high performance internal
components in tablets.
Price erosion is likely to be the single biggest driving force in
the tablet market over the foreseeable future. The decline will
be particularly rapid in media tablets, for which significant
processing power and connectivity features beyond Wi-Fi will
not be a necessity.
The pace of price erosion is likely to peak in 2012-2013, as the
average unit price is expected to decline to US$319 from
US$497 in 2012. This decline will be accompanied by a rapid
acceleration in diffusion rates in developing markets.



Tablets Lead the Way Towards Digital Convergence
TECHNOLOGY IN RETAILING
Middle East and
Africa
North America
Latin America
Asia Pacific
Eastern Europe
Western Europe
Australasia
Middle East's reliance on tourists and expatriates and Africa's rising levels of disposable
income sees the region pulling ahead in projected value growth terms.
Despite fears of a double-dip recession, growth projections remain decent. The region
remains a hotbed for technological launches and innovations, supported by a strong base
of tech adopters.
Latin America's small sales base pushes value growth. However, low disposable income
levels limit sales increase, in actual terms.
Given the presence of the world's two most populous nations China and India the
region's key driver for value sales remains volume. China's rise as an economic powerhouse
is underlined, with value outperforming volume sales.
In the forecast period, Eastern Europe is expected to shake off the high inflationary
pressures, weak currencies and plummeting EU manufacturing demand plaguing the
region in 2009.
Weighed down by financial turmoil in Portugal, Italy, Ireland, Greece and Spain, Western
Europe is projected to continue to flounder over the forecast period.
Price erosion and continued frugality in Australasia are expected to limit value growth.
Economies are Setting the Rules : Winners and Losers

TECHNOLOGY IN RETAILING
INTERNET RETAILING
GROWTH TRENDS AND ANALYSIS
THE FUTURE OF PAYMENTS

Payment
For mobile payments as a replacement for
credit/prepaid cards and to store credit/bank
information.
Ticketing
To purchase and add stored value to the tickets to
access transportation gates and gain event entry.
Sharing
To aid the transfer of documents and content across
electronic devices.
Service initiation
To activate a service on another device, which allows
for data transfer, to gain access to websites and
discounts on smart posters, amongst others.
Pairing
To establish Bluetooth connection by bringing devices
to NFC hotspots, by configuring networks
automatically between a pair of Wi-Fi devices.


NFC
Ecosystem
Payment
Ticketing
Sharing
Service
Initiation
Pairing


NFC and the Ecosystem
NFC technology can be used for a wide variety of applications, especially in high volume and low value transactions.
This includes the use of NFC;
TECHNOLOGY IN RETAILING
Near Field Communications (NFC)
Key consumer statistics
Having identified the key parameters that must exist for NFC
mobile payments to successful take off, we now explore how
and why mobile phones can become the new digital wallet.
This implies that consumers can leave their homes with
basically nothing but just their mobile phones in hand.
A quick review of the compelling statistics in Euromonitors
various researched industries, captured on the right, paints a
rosy picture for the growth and penetration of NFC mobile
payments.
Specifically in the following slides, we will be exploring how
mobile phones are evolving to be the one most critical
consumer electronics item of ownership and where penetration
of mobile phone subscriptions in less developed pockets are
robustly gaining momentum, if not, already on par with
developed markets.
Over the 5 year period of 2011-2015, smartphones will become
the top product choice for new purchases (as opposed to
feature phones) and increase its percentage contribution
significantly as a total of mobile phone sales globally.
75%
of the worlds population will
possess mobile phone
subscriptions in 2012
28%
the worlds population will have
a credit card in 2012
1,502
million new mobile phones sales
in 2012
Mobile Phones as the Digital Wallet
TECHNOLOGY IN RETAILING
Beyond mobile phone ownership, an online poll by Accenture shows that consumers in developing markets
such as India and China are more receptive to mobile payments than consumers in developed markets,
such as in Europe and the US.
Mobile Phones as the Digital Wallet
TECHNOLOGY IN RETAILING
Source: Accenture online poll of consumers indicating if they favour using mobile phones for most payments
Identifying potential NFC mobile payment markets
The accompanying table pits the top 14 markets across the different success factors identified by Euromonitor
International as crucial to NFC mobile payment success and identifies countries that possess three or more of
the five variables. A higher score rating indicates higher success potential.
The results clearly draw light to developing markets as possessing strong potential for NFC mobile payment
adoption, rather than the conventional belief that modern systems benefits largely from presence in
developed markets such as US and Western Europe.
Country Smartphones
Card payment
transactions
Chained
fast food
Expenditure on
land transport
Store-based
retailing
Brazil
China
Spain
US
France
Japan
Mexico
South Korea
UK
Canada
Germany
India
Italy
Philippines
Markets Ready for NFC Mobile Payment 2012
TECHNOLOGY IN RETAILING
Tesco Plc, the third largest global retailer launched virtual shops in
subways in South Korea under the name of Home Plus in 2011.






Is the trend spreading?
2012

In a tube station in Portugal














Result

The number of new registered online members rose by 76% and online sales
increased by 130%.
Home Plus (Tesco) is No1 in online sales and improved its position in the
offline
Visual Stores
TECHNOLOGY IN RETAILING
Reducing Costs
Innovation and competitive differentiation.
Time Saver (South Korea is in the top three of the worlds hardest-
working countries)
South Korea has more than 10 million smartphone users in a population
of less than 50 million.

What is CRM?
CRM is a business strategy that aims to understand, anticipate and
manage the needs of an organisations current and potential
customers (1).
It is a comprehensive approach which provides seamless
integration of every area of business that touches the customer-
namely marketing, sales, customer services and field support
through the integration of people, process and technology (1)
CRM is a shift from traditional marketing as it focuses on the
retention of customers in addition to the acquisition of new
customers (2)
The expression Customer Relationship Management (CRM) is
becoming standard terminology, replacing what is widely perceived
to be a misleadingly narrow term, relationship marketing (RM)
(3).


Definition of CRM


CRM is concerned with the creation,
development and enhancement of individualised
customer relationships with carefully targeted
customers and customer groups resulting in
maximizing their total customer life-time value
(2).
The purpose of CRM
The focus [of CRM] is on creating value for the
customer and the company over the longer term
(3).
When customers value the customer service that
they receive from suppliers, they are less likely to
look to alternative suppliers for their needs (3).
CRM enables organisations to gain competitive
advantage over competitors that supply similar
products or services (1)


Why is CRM important?
Todays businesses compete with multi-
product offerings created and delivered by
networks, alliances and partnerships of many
kinds. Both retaining customers and building
relationships with other value-adding allies is
critical to corporate performance (3).

The adoption of C.R.M. is being fuelled by a
recognition that long-term relationships with
customers are one of the most important
assets of an organisation (2)
Why did CRM develop?
CRM developed for a number of reasons:

The 1980s onwards saw rapid shifts in business
that changed customer power (4)
Supply exceeded demands for most products (4)
Sellers had little pricing power (4)
The only protection available to suppliers of
goods and services was in their relationships
with customers (4)
What does CRM involve?
CRM involves the following (4):

Organisations must become customer focused
Organisations must be prepared to adapt so that it
take customer needs into account and delivers
them
Market research must be undertaken to assess
customer needs and satisfaction

Strategically significant customers
Customer relationship management
focuses on strategically significant
markets. Not all customers are equally
important (3).
Therefore, relationships should be built
with customers that are likely to provide
value for services
Building relationships with customers
that will provide little value could result in
a loss of time, staff and financial resources




Markers of strategically significant customers
Strategically significant customers need to satisfy at
least one of three conditions (3):

1. Customers with high life-time values (i.e. customers
that will repeatedly use the service in the long-term
e.g. Nurses in a hospital library)
2. Customers who serve as benchmarks for other
customers e.g. In a hospital library consultants who
teach on academic courses
3. Customers who inspire change in the supplier

Information Technology and CRM
Technology plays a pivotal role in CRM (2).
Technological approaches involving the use of databases,
data mining and one-to-one marketing can assist
organisations to increase customer value and their own
profitability (2)
This type of technology can be used to keep a record of
customers names and contact details in addition to their
history of buying products or using services (2)
This information can be used to target customers in a
personalised way and offer them services to meet their
specific needs (2)
This personalised communication provides value for the
customer and increases customers loyalty to the provider
(2)
Information Technology and CRM: Examples
Here are examples of how technology can be used to create
personalised services to increase loyalty in customers:

Phone calls, emails, mobile phone text messages, or WAP
services (2):
Having access to customers contact details and their service or
purchase preferences through databases etc can enable
organisations to alert customers to new, similar or alternative
services or products
- Illustration: When tickets are purchased online via
Lastminute.com, the website retains the customers details and
their purchase history. The website regularly send emails to
previous customers to inform them of similar upcoming events or
special discounts. This helps to ensure that customers will
continue to purchase tickets from Lastminute.com in the future.

Information Technology and CRM: Examples
Cookies
A cookie is a parcel of text sent by a server to a web
browser and then sent back unchanged by the browser each
time it accesses that server. HTTP cookies are used for
authenticating, tracking, and maintaining specific
information about users, such as site preferences and the
contents of their electronic shopping carts (5).
- Illustration: The online store, Amazon, uses cookies to
provide a personalised service for its customers. Amazon
requires customers to register with the service when they
purchase items. When registered customers log in to
Amazon at a later time, they are greeted with a welcome
message which uses their name (for e.g. Hello John). In
addition, their previous purchases are highlighted and a list
of similar items that the customer may wish to purchase are
also highlighted.


Information Technology and CRM: Examples
Loyalty cards
the primary role of a retailer loyalty card is to gather data about customers. This
in turn leads to customer comprehension and cost insights (e.g. customer
retention rates at different spending levels, response rates to offers, new customer
conversion rates, and where money is being wasted on circulars), followed by
appropriate marketing action and follow-up analysis (6)
- Illustration: The supermarket chain, Tescos, offers loyalty cards to its customers.
When customers use the loyalty cards during pay transactions for goods, details
of the purchases are stored in a database which enables Tescos to keep track of all
the purchases that their customers make. At regular intervals, Tescos sends its
customers money saving coupons by post for the products that the customers
have bought in the past. The aim of this is to encourage customers to continually
return to Tescos to do their shopping

CRM software- Front office solutions
- Many call centres use CRM software to store all of their customer's details. When
a customer calls, the system can be used to retrieve and store information
relevant to the customer. By serving the customer quickly and efficiently, and also
keeping all information on a customer in one place, a company aims to make cost
savings, and also encourage new customers (7)



Face-to-face CRM
CRM can also be carried out in face-to-face interactions
without the use of technology
Staff members often remember the names and favourite
services/products of regular customers and use this
information to create a personalised service for them.
For example, in a hospital library you will know the name of
nurses that come in often and probably remember the area
that they work in.
However, face-to-face CRM could prove less useful when
organisations have a large number of customers as it would
be more difficult to remember details about each of them.
Benefits of CRM
Benefits of CRM include (8):

reduced costs, because the right things are being done (ie.,
effective and efficient operation)
increased customer satisfaction, because they are getting exactly
what they want (ie. meeting and exceeding expectations)
ensuring that the focus of the organisation is external
growth in numbers of customers
maximisation of opportunities (eg. increased services, referrals,
etc.)
increased access to a source of market and competitor
information
highlighting poor operational processes
long term profitability and sustainability

Implementing CRM
When introducing or developing CRM, a strategic review
of the organisations current position should be
undertaken (2)
Organisations need to address four issues (2):
1. What is our core business and how will it evolve in the
future?
2. What form of CRM is appropriate for our business now
and in the future?
3. What IT infrastructure do we have and what do we need
to support the future organisation needs?
4. What vendors and partners do we need to choose?
111
The Engineering Perspective

DATA MINING
112

Collection, storage, and analysis of typically huge
amounts of- data
Data readily resides in the companys data
warehouse
Data cleaning is almost inevitable
Data Mining
113
Goals of Data Mining

Developing deeper understanding of the data
Discovering hidden patterns
Coming up with actionable insights
Identifying relations between variables, inputs and
outputs
Predicting future patterns
Data Mining
114
Data selection
Data cleaning
Sampling
Dimensionality reduction
Data mining methods

Data Mining:
Steps
115
Exploratory Data Analysis
Segmentation
Cluster Analysis
Decision Trees
Market Basket Analysis
Association rules
Information Visualization
Prediction
Regression
Neural Network
Time Series Analysis
Data Mining:
Methods
116
Information Visualization
Data mining algorithms...
Can only detect certain types of patterns and insights
Are too complex for end users to understand
117
Information Visualization
A field of Computer Science which has evolved
since the 1990s.

Before 1990s: Graphical methods for data
analysis to pave the way for statistical methods
After 1990s:
Computer hardware has advanced with respect to
memory, computational power, graphics calculations
Software has advanced with respect to user interfaces
Data collection systems have advanced (barcodes,
RFID, ERP)
118
The analyst does not have to
understand complex algorithms.

Almost no training required.

There are no limits to the types
of insights that can be
discovered.
Information Visualization
Human Resource Management involves
recruiting,selecting,training,compensating and
supervising personnel in a manner consistent with the
retailers organization structure and strategy mix .
THE SPECIAL HUMAN RESOURCE
ENVIRONMENT OF RETAILING
Retailers face a HR environment characterized by
Large number of in experienced workers
Long hours
Highly visible employees
Diverse work force
Variable customer demand
THE HRM PROCESS IN RETAILING
The HRM process consists of these inter related
personnel activities
1.Recruiting retail personnel
2.Selecting retail personnel
3.Training retail personnel
4.Compensating retail personnel
5.Supervising retail personnel
Recruiting retail personnel
Recruitment is the activity where by a retailer
generates a list of job applicants.Many retailers have a
career or job section at their websites through which
the applicants can apply for the prescribed job.
For entry-level sales jobs, retailers rely on educational
institutions, ads, walk-in-interviews, employee
recommendations etc.
For middle management positions, retailers rely on
employment agencies, ads, and current employee
referrals etc.
Selecting retail personnel
Here the retailer selects new employees by matching the
traits of potential employees with specific job
requirements. Job analysis and description, the
application blank, references are some tools used by the
retailer in this process; they should be integrated.
Training retail personnel
Every new employees should receive pre-training
about firms history and policies, as well as job
orientation on hours, compensation, the chain of
command, and job duties etc.
Training program teach new(and
existing)employees how best to perform their jobs or
how to improve themselves
Compensating retail personnel
Compensation should be fair to both the retailer
and its employees. It will help to motivate employees
and improve their efficiency.
Compensation may be direct monetary payments
(salaries, commissions and bonuses) and indirect
payments (paid vacations, health and life insurance
and retirement plans)
Supervising retail personnel
Supervision is the manner of providing a job
environment that encourages employee
accomplishment.
The goals are to attain good performance, maintain
morale, motivate people, control cost communicate,
and resolve problems
Supervision is provided by personal contact, meetings,
and reports.