Consumers satisfied with the store’s service quality are most likely to remain loyal. Service quality is being increasingly perceived as a tool to increase value for the consumer; as a means of positioning in a competitive environment to ensure consumer satisfaction, retention and patronage. Much of the attention focused on the service quality construct is attributable to the SERVQUAL instrument developed by Parasuraman, Zeithaml & Berry (1988) for measuring service quality.

1. Retail Management
Service & quality in retailing
Consumers satisfied with the store‘s service quality are most likely to remain loyal. Service quality is being
increasingly perceived as a tool to increase value for the consumer; as a means of positioning in a competitive
environment to ensure consumer satisfaction, retention and patronage. Much of the attention focused on the
service quality construct is attributable to the SERVQUAL instrument developed by Parasuraman, Zeithaml &
Berry (1988) for measuring service quality.
In the process of acting as a link between the wholesaler (or the manufacturer) and the consumer, a retailer
performs many functions:
1. Buying and Assembling: It has been said that a retailer stocks wide variety of products to meet the
requirements of a large number of customers. For this purpose, the retailer has to assemble products of different
manufacturers from different wholesalers through the process of buying. In buying these products he has to be
cautious. He has to find out the best and cheapest source of supply. Then he has to select only such of the goods
offered which would suit the need of his customers. He must purchase only in quantities enough to meet the
demands of his customers.
2. Warehousing and storing: Products thus assembled have to be stored by the retailer so that they are held in
reserve stocks out of which consumers requirements are met without any interruption by selling in small
quantities.
3. Selling: The ultimate purpose of retailing business is to sell these products to the consumers. Though a
retailer is sometimes referred to as buying agent of consumers, producers and manufacturers regard retailer as a
means of dispersing goods to the market and drawing income into their hands so that they can continue their
business of production.
4. Assumption of Risk: The retailer has to bear the risk of physical deterioration of goods and fall in value. A
retailer has to stock goods in anticipation of demand from his customers. This stock must always be sufficient to
meet any demand from the customers. This fact involves risk to the extent of the stocks held by any retailer.
Firstly, the products stored are subject to the usual risks of flood and other natural calamities. Secondly, there
are the risks of flood and other natural calamities. Secondly, there are the risks of spoilage and deterioration due
to the very nature of goods. Then there is the risk of change in fashion. Fickle mindedness of the consumers and
human tendency to like change in life together make loss of value through change in style and fashion - a very
real risk to a retail trader.
CET MBA
Module 1
Prepared by Belli P K

2. Retail Management
5. Grading and Packing: Retailers have to sort out in different lots goods or products left ungraded by the
producer or the wholesaler. Also, they must make arrangements for proper packing of goods which are sold
loose.
6. Financing: Often retailers have to grant credit to consumers. Credit sale in effect means facilitating the flow
of products through the marketing channel to its ultimate goal. Thus retailers contribute in financing the
marketing process.
7. Supply of Market Information: Retailers, being in touch with the consumers, are most favorably situated to
study consumers' behavior, changes in the tastes, fashions and demand etc. Thus they collect valuable
information pertaining to the problems of marketing.
8. Advertising: Retailers display goods in their stores.
Organised vs unorganized sector
Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those who are
registered for sales tax, income tax, etc. These include the publicly tradedsupermarkets, corporatebacked hypermarkets and retail chains, and also the privately owned large retail businesses.
Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the
local corner shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement
vendors, etc
Organized retailing is based on the principle of unity and unorganized retailing is based on the principle of
singularity. Both organized and unorganized retailing is found in most of the countries throughout the world.
India and China are strong examples of countries in which unorganized retailing dominated their markets.
Today these countries have a growing economy because of the influx of organized retailers into their markets.
Future of Retail in India The Indian retail market is estimated at US$ 350 billion. But organised retail is
estimated at only US$ 8 billion. However, the opportunity is huge—by 2010, organised retail is expected to
grow to US$ 22 billion. With the growth of organised retailing estimated at 40 per cent (CAGR) over the next
few years,
Reasons for Retail Growth: favourable demographics rising consumer incomes real estate developments
especially the emergence of new shopping malls, availability of better sourcing options - both from within India
and overseas - and changing lifestyle.
Organized versus Unorganized Retailing Changing Age Profile And Disintegration Of Joint Family Growing
Disposable Income Income growth and structural changes will fuel growth Organised Retailing Will Expand
Sharply Foreign Investment Will Play a Bigger Role in Retailing.
India is poised to be the key driver for retail market globally and study after study shows co-existence of
organized and un-organized growth. India‘s share of organized retail has just
hovered around about 4 per cent despite advent of big corporate in retail sector.
China, which brought in global retailers like Wal-Mart in 1996, has just about 20 per cent of
organized retail meaning the argument that unorganized retail gets decimated, is fallacious. The highest CAGR
achieved for organized retail in India is 46 per cent plus for personal care segment and about 40 per cent for
CET MBA
Module 1
Prepared by Belli P K

3. Retail Management
jems and jewelry, as against food and grocery, which, grew only about 16 per cent./ Retail economy accounted
for seven per cent plus share of total employment in 2004-05, and with projections to grow every year, with
more and more formats opening up in the retail sector. Retail in India has grown manifold over the years with
both organized (Reliance, Tatas, Future Group, RPG, Aditya Birla Group and Bharti enterprises etc in the fray
with full might). But a clear pan India appeal shows India is ready to host retail without fear or favor.
Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP.
The Indian retail market is estimated to beUS$ 450 billion and one of the top five retail markets in the world by
economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people.
As of 2013, India's retailing industry was essentially owner manned small shops. In 2010, larger
format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were
present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3%
of Indian population).
Mom-and-Pop
Represent the small, individually owned and operated retail outlet. In many cases these are family-run
businesses catering to the local community often with a high level of service but relatively small product
selection..
Mass Discounters
These retailers can be either general or specialty merchandisers but either way their main focus is on offering
discount pricing. Compared to department stores, mass discounters offer fewer services and lower quality
products.
Warehouse Stores
This is a form of mass discounter that often provides even lower prices than traditional mass discounters. In
addition, they often require buyers to make purchases in quantities that are greater than what can be purchased
at mass discount stores. These retail outlets provide few services and product selection can be limited.
Furthermore, the retail design and layout is as the name suggests, warehouse style, with consumers often
selecting products off the ground from the shipping package. Some forms of warehouse stores, called
warehouse clubs, require customers purchase memberships in order to gain access to the outlet.
Category Killers
Many major retail chains have taken what were previously narrowly focused, small specialty store concepts and
have expanded them to create large specialty stores. These so-called ―category killers‖ have been found in such
specialty areas as electronic (e.g., Best Buy), office supplies (e.g., Staples) and sporting goods (e.g., Sport
Authority).
Department Stores
These retailers are general merchandisers offering mid-to-high quality products and strong level of services,
though in most cases these retailers would not fall into the full-service category. While department stores are
classified as general merchandisers some carry a more selective product line. For instance, while Sears carries a
wide range of products from hardware to cosmetics, Nordstrom focuses their products on clothing and personal
care products.
CET MBA
Module 1
Prepared by Belli P K

4. Retail Management
Boutique
This retail format is best represented by a small store carrying very specialized and often high-end merchandise.
In many cases a boutique is a full-service retailer following a full-pricing strategy.
Mall management broadly includes:
positioning a mall
zoning – formulating the right tenant mix and its placement in a mall
promotions and marketing
facility management – infrastructure, traffic and ambience management
finance management
Positioning a Mall
Positioning a mall refers to defining the category of services offered based on demographics, psychographics,
income levels, competition in neighboring areas and extensive market research of the catchment. For example,
if the market research indicates that the average number of households living in a particular area belongs to the
upper middle class, then a high-end retail mall would suit the location.
Positioning also refers to the location of the shopping mall. A good location defined in terms of factors like ease
of access via roads, good visibility, etc. is considered as one of the prime prerequisites for a mall.
Zoning – Formulating the Right Tenant Mix and Its Placement in a Mall
Tenant mix refers to the combination of retail shops occupying space in a mall. A right tenant mix would form
an assemblage that produces optimum sales, rents, service to the community and financiability of the shopping
mall venture.
Zoning refers to the division of mall space into zones for the placement of various retailers. A mall is dependent
on the success of its tenants, which translates to the financial feasibility of the tenant in the mall. Generally,
there are two types of consumers visiting malls – focused and impulse buyers. The time spent by focused buyers
in malls is relatively lower compared with impulse buyers who also enjoy window shopping. There is little that
retailers can do to attract focused buyers as they usually know what they require and from where. However,
right tenant mix and optimum retailer placement after a diligent zoning exercise can help retailers attract both
types of consumers, especially the impulse buyers.
Formulating the right tenant mix based on zoning not only helps attract and retain shoppers by offering them
multiple choices and satisfying multiple needs, but also facilitates the smooth movement of shoppers within the
mall, avoiding clusters and bottlenecks. This helps influence shoppers‘ mall preference and frequency of visits.
It also helps in building a distinct image in the minds of shoppers, which is critical considering the robust
upcoming supply of malls.
The selection of the right anchor tenant plays a crucial role in establishing a good tenant mix. The anchor tenant
is defined as the largest occupier in a mall in terms of square feet. Vanilla retailers5 cluster around the anchor
and feed off the shopping traffic it generates. The successful execution of the zoning exercise for a mall is
carried forward through lease management on an ongoing basis. Forging good leases with retailers is an
essential part of ensuring the presence of the right retailers in a mall.
Promotions and Marketing
Promotional activities and events in a mall form an integral part of mall management. Activities like food
festivals, handicraft exhibitions and celebrity visits increase foot traffic and in turn sales volumes. Organising
CET MBA
Module 1
Prepared by Belli P K

5. Retail Management
cultural events has time and again proved vital in attracting consumers to a mall. Such activities may also act as
a differentiator for a mall. Developers can work on drafting marketing strategies
for individual malls to meet the needs of the local consumer base and the challenges of local, and in some cases,
regional competitors.
Facility Management
Facility management refers to the integration of people, place, process and technology in a building. It also
means optimal utilisation of resources to meet organisational needs. It broadly includes infrastructure, ambience
and traffic management.
Infrastructure Management – Infrastructure management refers to the management of facilities provided to
the tenants within the mall. This includes provision of adequate power supply, safety issues in case of
emergency and miscellaneous issues related to signage, water supply, sanitation, etc. These form an integral
part of mall management as they are the basic amenities that any tenant would look for in a mall. Infrastructure
management also includes risk management issues such as essential safety measure asset liability and
environmental audits as well as emergency and evacuation training.
Ambience Management – The overall shopping experience provided for consumers becomes an important
factor for the success of any mall. Ambience management includes management of parks, fountains and overall
look of the mall. A mall is not just a place for shopping but is also a place where people spend their leisure time.
In favourable, lush green landscaping with seating facilities and the presence of food and beverage inside or
outside the mall can increase foot traffic.
Traffic Management – Traffic management includes managing foot traffic into the mall and parking facilities.
Foot traffic management involves crowd management inside the operational area of a mall. The flow of people
is related to the design of the mall and the spatial distribution of its tenants. For example, a star-shaped mall
tends to have a problem of crowding in the centre of the mall, as everyone has to pass through the centre while
moving from one side to the other. Circular malls, on the other hand, would not have this problem. They tend to
have better pedestrian flow and less congestion. Managing parking facilities includes provision of ample
parking and manoeuvring of cars in the parking lot.
Finance Management
Professional financial management of a mall as a business venture is a must. Mall management also covers
financial management, which involves monitoring and controlling of various issues such as: cash receipts and
collection of income including rentals, service charges, car park receipts, electricity and other utility income
developing accounting systems to track the ageing of debts, payment delay patterns, bad debts and payment of
all invoices and expenses developing standard financial templates so that a detailed annual property budget is
prepared at times, organising resources to deliver an efficient and effective annual external audit.
Issues Related to Mall Management in the Indian Retail Market
Lack of Feasibility/Market Research Prior to the Development of a Mall – In the past, some malls were
constructed without carrying out a rigorous due diligence exercise on their feasibility. The market scene is
gradually changing wherein more and more developers are approaching property consultancy firms to conduct
feasibility and positioning studies for their projects.
Zoning – Landlords/developers tend to lease out retail space on a first-come-first-served basis. This creates a
sub-optimal tenant mix like a food and beverage outlet next to a designer apparel shop instead of an accessories
or a footwear shop.
Design Issues – At present, most of the popular malls have long queues and congestion outside their main entry
points during weekends and festive seasons. Having only one entry and exit points also leads to overcrowding.
Similarly, the visibility of retail units from all vantage points is poor in many malls.
CET MBA
Module 1
Prepared by Belli P K

6. Retail Management
Few Promotional Activities – There are very few promotional activities organised in the majority of malls at
present. Developers perceive that these events only help increase foot traffic and not revenues.
Facility Management – Good infrastructure/facility management of common areas becomes a problem in
malls where retail outlets are sold as strata title.
Parking – Many malls in India do not have adequate parking. Since most malls are being built in the city,
developers typically provide basement parking facilities. However, these parking spaces are inefficient due to
low ceiling heights, bad lighting and single entry and exit points.
Visual merchandising is the activity and profession of developing the floor plans and three-dimensional
displays in order to maximise sales. Both goods and 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.
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.
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.
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.
Visual merchandisers may perform the following tasks:
communicate with managers of department stores to work out the floor layout, traffic flow and display
points, as well as what items are to be displayed and how
design window or internal displays based on a theme, style or trend of promotion
obtain props and accessories for constructing displays
make and paint props and signs
dress mannequins and use appropriate lighting to display merchandise for the best possible presentation
arrange ticketing and signage
maintain, store and dismantle displays after promotion periods.
Store operations management
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.
CET MBA
Module 1
Prepared by Belli P K

7. Retail Management

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.
 Don‘t allow customers to carry eatables inside the store.
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.
 Clothes should not have unwanted stains or dust marks as they lose appeal and fail to impress the
customers.
 Install a generator for power backup and to avoid unnecessary black outs.
 Keep expensive products in closed cabinets.
 Instruct the children not to touch fragile products.
 The customers should feel safe inside the store.
Customer Service
 Customers are assets of the retail business and the retailer can‘t 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.
 Give the individual an honest and correct feedback. If any particular outfit is not looking good on
anyone, tell him the truth and suggest him some better options.
 Never compromise on quality of products. Remember one satisfied customer brings five more
individuals to the store. Word of mouth plays an important role in Brand Promotion.
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.
CET MBA
Module 1
Prepared by Belli P K

8. Retail Management
Never be rude to the customer, instead help him to find something else
Supplier relationship management (SRM) is the discipline of strategically planning for, and managing, all
interactions with third party organizations that supply goods and/or services to an organization in order to
maximize the value of those interactions. In practice, SRM entails creating closer, more collaborative
relationships with key suppliers in order to uncover and realize new value and reduce risk.
The focus of SRM is to develop two-way, mutually beneficial relationships with strategic supply partners to
deliver greater levels of innovation and competitive advantage than could be achieved by operating
independently or through a traditional, transactional purchasing arrangement.
In many fundamental ways, SRM is analogous to customer relationship management. Just as companies have
multiple interactions over time with their customers, so too do they interact with suppliers – negotiating
contracts, purchasing, managing logistics and delivery, collaborating on product design, etc. The starting point
for defining SRM is a recognition that these various interactions with suppliers are not discrete and independent
– instead they are accurately and usefully thought of as comprising a relationship, one which can and should be
managed in a coordinated fashion across functional and business unit touch-points, and throughout the
relationship lifecycle.
1. A formal SRM team or office at the corporate level. The purpose of such a group is to facilitate and
coordinate SRM activities across functions and business units. SRM is inherently cross-functional, and
requires a good combination of commercial, technical and interpersonal skills. These ―softer‖ skills
around communication, listening, influencing and managing change are critical to developing strong
and trusting working relations.
2. A formal Relationship Manager or Supplier Account Manager role. Such individuals often sit within the
business unit that interacts most frequently with that supplier, or may be filled by a category manager in
the procurement function. This role can be a full-time, dedicated positions, although relationship
management responsibilities may be part of broader roles depending on the complexity and importance
of the supplier relationship (see Supplier Segmentation). SRM managers understand their suppliers‘
business and strategic goals, and are able to see issues from the supplier‘s point of view while balancing
their own organization‘s requirements and priorities.
3. An executive sponsor and, for complex, strategic supplier relationships, a cross-functional steering
committee. These individuals form a clear link between SRM strategies and overall business strategies,
serve to determine the relative prioritization among a company‘s varying goals as they impact suppliers,
and act as a dispute resolution body
Supplier segmentation, in contrast, is about determining what kind of interactions to have with various
suppliers, and how best to manage those interactions, not merely as a disconnected set of siloized transactions,
but in a coordinated manner across the enterprise.[6] Suppliers can be segmented, not just by spend, but by the
total potential value (measured across multiple dimensions) that can be realized through interactions with them.
Further, suppliers can be segmented by the degree of risk to which the realization of that value is subject
SRM, in contrast, is about collaboratively driving value for both parties, resulting in lower costs, reduced risk,
greater efficiency, better quality, and access to innovation.[9] This requires a focus on both negotiating the
contract and managing the resulting relationship throughout implementation, as well as systematic joint valuediscovery efforts
Inventory Control is the supervision of supply, storage and accessibility of items in order to ensure an
adequate supply without excessive oversupply. It can also be referred as internal control - an accounting
CET MBA
Module 1
Prepared by Belli P K

9. Retail Management
procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets
or avoid fraud and error etc.
Inventory control may refer to: In economics, the inventory control problem, which aims to reduce overhead
cost without hurting sales, In the field of loss prevention, systems designed to introduce technical barriers
to shoplifting.
It answers the 3 basic questions of any supply chain: 1. When? 2. Where? 3. How much?
A warehouse is
a commercial
building for
storage
of goods.
Warehouses
are
used
by manufacturers, importers, exporters, wholesalers, transportbusinesses, customs, etc. They are usually large
plain buildings in industrial areas of cities and towns and villages. They usually have loading docks to load and
unload goods from trucks. Sometimes warehouses are designed for the loading and unloading of goods directly
from railways, airports, orseaports. They often have cranes and forklifts for moving goods, which are usually
placed on ISO standard pallets loaded into pallet racks. Stored goods can include any raw materials, packing
materials, spare parts, components, or finished goods associated with agriculture, manufacturing and
production.
For a warehouse to function efficiently, the facility must be properly slotted. Slotting addresses which storage
medium a product is picked from (pallet rack or carton flow), and how they are picked (pick-to-light, pick-tovoice, or pick-to-paper). With a proper slotting plan, a warehouse can improve its inventory rotation
requirements—such as first in, first out (FIFO) and last in, first out (LIFO)—control labor costs and increase
productivity.
Traditional warehousing has declined since the last decades of the 20th century, with the gradual introduction
of Just In Time (JIT) techniques. The JIT system promotes product delivery directly from suppliers to consumer
without the use of warehouses. However, with the gradual implementation ofoffshore
outsourcing and offshoring in about the same time period, the distance between the manufacturer and the
retailer (or the parts manufacturer and the industrial plant) grew considerably in many domains, necessitating at
least one warehouse per country or per region in any typical supply chain for a given range of products.
Recent retailing trends have led to the development of warehouse-style retail stores. These high-ceiling
buildings display retail goods on tall, heavy duty industrial racks rather than conventional retail shelving.
Typically, items ready for sale are on the bottom of the racks, and crated or palletized inventory is in the upper
rack. Essentially, the same building serves as both warehouse and retail store.
Another trend relates to Vendor Managed Inventory (VMI). This gives the vendor the control to maintain the
level of stock in the store. This method has its own issue that the vendor gains access to the warehouse.
Large exporters/manufacturers use warehouses as distribution points for developing retail outlets in a particular
region or country. This concept reduces end cost to the consumer and enhances the production sale ratio.
Cross docking is a specialized type of distribution center (DC) in that little or no inventory is stored and product
is received, processed (if needed) and shipped within a short timeframe. As in warehousing, there are different
types of cross docks.
Reverse logistics is another type of warehousing that has gained attention in our "green-conscious" world. The
term refers to items that are going from the end user back to the distributor or manufacturer.
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of AngloFrench derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.[1] For the
franchisor, the franchise is an alternative to building 'chain stores' to distribute goods that avoids the
investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The
CET MBA
Module 1
Prepared by Belli P K

10. Retail Management
franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the
business.
Two important payments are made to a franchisor: (a) a royalty for the trademark and (b) reimbursement for the
training and advisory services given to the franchisee. These two fees may be combined in a single
'management' fee. A fee for "disclosure" is separate and is always a "front-end fee".
A franchise usually lasts for a fixed time period (broken down into shorter periods, which each require
renewal), and serves a specific territory or geographical area surrounding its location. One franchisee may
manage several such locations. Agreements typically last from five to thirty years, with premature cancellations
or terminations of most contracts bearing serious consequences for franchisees. A franchise is merely a
temporary business investment involving renting or leasing an opportunity, not the purchase of a business for
the purpose of ownership. It is classified as a wasting asset due to the finite term of the license.
Franchise fees are on average 6.7% with an additional average marketing fee of 2% [7]
A franchise can be exclusive, non-exclusive or 'sole and exclusive'
Obligations of the parties
Each party to a franchise has several interests to protect. The franchisor is involved in securing protection for
the trademark, controlling the business concept and securing know-how. The franchisee is obligated to carry out
the services for which the trademark has been made prominent or famous. There is a great deal of
standardization required. The place of service has to bear the franchisor's signs, logos and trademark in a
prominent place. The uniforms worn by the staff of the franchisee have to be of a particular design and color.
The service has to be in accordance with the pattern followed by the franchisor in the successful franchise
operations. Thus, franchisees are not in full control of the business, as they would be in retailing.
Customer relationship management (CRM) is a model for managing a company‘s interactions with current
and
future customers.
It
involves
using
technology
to
organize,
automate,
and
synchronize sales, marketing, customer service, and technical support.
Types of CRM
Sales force automation (SFA) uses software to streamline the sales process. The core of SFA is a contact
management system for tracking and recording every stage in the sales process for each prospective client, from
initial contact to final disposition. Many SFA applications also include insights into opportunities, territories,
sales forecasts and work flow automation
CRM systems for marketing track and measure campaigns over multiple channels, such as email, search, social
media, telephone and direct mail. These systems track clicks, responses, leads and deals.
CRMs can be used to create, assign and manage requests made by customers, such as call center software which
help direct customers to agents.[2] CRM software can also be used to identify and reward loyal customers over a
period of time.
Appointment CRMs automatically provide suitable appointment times to customers via e-mail or the web,
which are then synchronized with the representative or agent's calendar
For small businesses a CRM may simply consist of a contact manager system which integrates emails,
documents, jobs, faxes, and scheduling for individual accounts CRMs available for specific markets for
professional markets (legal, finance) are frequently touted for their event management and relationship tracking
opposed to financial return on investment (ROI).
Social media is the modern form to build customer relationship. Some CRMs coordinate with social media sites
like Twitter, LinkedIn, Facebook and Google Plus to track and communicate with customers who share
CET MBA
Module 1
Prepared by Belli P K

11. Retail Management
opinions and experiences about their company, products and services.[3] Once you have identified the trends
through social media a business can make more accurate decisions on what products to supply to the society.
CRM futurist Dennison DeGregor describes a shift from 'push CRM' toward a 'customer transparency' (CT)
model, due to the increased proliferation of channels, devices, and social media.
Supply chain management
A supply chain consists of all stages involved, directly or
indirectly, in fulfilling a customer request. The supply chain
not only includes the manufacturer and suppliers, but also
transporters, warehouses, retailers, and customers themselves.
It is a network of facilities and distribution
options that performs the functions of procurement of
materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished
products to customers.
Supply chain management
acknowledges all of traditional logistics and also includes activities such as
marketing, new product development, finance, and customer service.
Taken individually, different supply chain requirements often have
conflicting needs. For instance, the requirement of maintaining high levels
of customer service calls for maintaining high levels of inventory, but then
the requirement to operate efficiently calls for reducing inventory levels. It
is only when these requirements are seen together as parts of a larger picture
that ways can be found to effectively balance their different demands.
Effective supply chain management requires simultaneous improvements
in both customer service levels and the internal operating efficiencies
of the companies in the supply chain.
there are five areas where companies
can make decisions that will define their supply chain capabilities:
Production; Inventory; Location;Transportation; and Information.
As with factories,warehouses too can be built to accommodate different
approaches. There are three main approaches to use in warehousing:
1. Stock keeping unit (SKU) storage—In this traditional approach, all
of a given type of product is stored together. This is an efficient
and easy to understand way to store products.
2. Job lot storage—In this approach, all the different products related
to the needs of a certain type of customer or related to the needs
of a particular job are stored together. This allows for an efficient
picking and packing operation but usually requires more storage
space than the traditional SKU storage approach.
3. Crossdocking—An approach that was pioneered by Wal-Mart in
its drive to increase efficiencies in its supply chain. In this approach,
product is not actually warehoused in the facility. Instead the
facility is used to house a process where trucks from suppliers
CET MBA
Module 1
Prepared by Belli P K

12. Retail Management
arrive and unload large quantities of different products. These large lots are then broken down into smaller lots.
Smaller lots of
different products are recombined according to the needs of the
day and quickly loaded onto outbound trucks that deliver the
products to their final destination.
Wal-Mart is a company shaped by its supply chain
and the efficiency of its supply chain has made it a leader
in the markets it serves.
Wal-Mart introduced concepts that are now industry standards. Many
of these concepts come directly from the way the company builds
and operates its supply chain. Let’s look at four such concepts:
The strategy of expanding around distribution centers (DCs)
Using electronic data interchange (EDI) with suppliers
The “big box” store format
“Everyday low prices”
The strategy of expanding around DCs is central to the way Wal-Mart
enters a new geographical market. The company looks for areas
that can support a group of new stores, not just a single new store.
It then builds a new DC at a central location in the area and opens
its first store at the same time. The DC is the supply chain bridgehead
into the new territory. It supports the opening of more new
stores in the area at a very low additional cost. Those savings are
passed along to the customers.
The use of EDI with suppliers provides the company two substantial
benefits. First of all this cuts the transaction costs associated with
the ordering of products and the paying of invoices. Ordering products
and paying invoices are, for the most part, well defined and routine
processes that can be made very productive and efficient
through EDI. The second benefit is that these electronic links with
suppliers allow Wal-Mart a high degree of control and coordination
in the scheduling and receiving of product deliveries. This helps to
ensure a steady flow of the right products at the right time, delivered
to the right DCs, by all Wal-Mart suppliers.
The big box store format allows Wal-Mart to, in effect, combine a
store and a warehouse in a single facility and get great operating
efficiencies from doing so. The big box is big enough to hold large
amounts of inventory like a warehouse. And since this inventory is
being held at the same location where the customer buys it, there
is no delay or cost that would otherwise be associated with moving
products from warehouse to store. Again, these savings are passed
along to the customer.
Everyday low prices are a way of doing two things. The first thing is
to tell its price-conscious customers that they will always get the
best price. They need not look elsewhere or wait for special sales.
The effect of this message to customers helps Wal-Mart do the
second thing, which is to accurately forecast product sales. By
eliminating special sales and assuring customers of low prices, it smoothes out demand swings making demand more
steady and
predictable. This way stores are more likely to have what customers
want when they want it.
CET MBA
Module 1
Prepared by Belli P K

13. Retail Management
Retail Promotion
• Any communication by a retailer that
informs, persuades, and/or reminds the
target market about any aspect of
that firm
Management of Promotional
Efforts Must Fit Into a Retailer‘s Overall Strategy
• A retailer‘s location will help determine the target area for promotions
• Retailers need high levels of traffic to keep merchandise moving –
promotion helps build traffic
• Retailer‘s credit customers more store loyal and purchase on larger
quantities making them an excellent target for promotions
• Promotions can increase short-run cash flow
• Promotional creativity and style should coincide with building and fixture
creativity
• Promotion can be viewed as a major component of customer service
because it provides information
Promotional Guidelines
• Utilize promotions that are consistent with and enhance store image
• Review success or failure of each promotion to help in developing future
promotions
• Test new promotions when possible
• Use appeals that are of interest to your target market and that are realistic to
obtain
• Make your objectives measurable and obtainable
• Develop total promotional campaigns, not just ads
• New stores need higher promotional budgets than established stores
• Stores in out-of-the-way locations require higher promotional budgets than
stores with heavy traffic
planning a retail promotional strategy
Promotional Objectives
• Increase sales
• Stimulate impulse and reminder buying
• Raise customer traffic
• Get leads for sales personnel
• Present and reinforce the retailer image
• Inform customers about goods and services
• Popularize new stores and Web sites
• Capitalize on manufacturer support
• Enhance customer relations
• Maintain customer loyalty
• Have consumers pass along positive information
to friends and others
Public Relations
CET MBA
Module 1
Prepared by Belli P K

14. Retail Management
• Public Relations - Any communication that fosters a
favorable image for the retailer among its publics
– Nonpersonal or personal
– Paid or nonpaid
– Sponsor-controlled or not
• Publicity – Any nonpersonal form of public relations
whereby messages are transmitted through mass
media, the time or space provided by the media is
not paid for, and there is no identified commercial
sponsor
Public Relations
Advantages
• Image can be presented or
enhanced
• More credible source
• No costs for message’s
time or space
• Mass audience addressed
• Carryover effects possible
• People pay more attention
than to clearly identified
ads
Disadvantages
• Some retailers do not
believe in spending on
image-related
communication
• Little control over publicity
message
• More suitable for short run
• Costs for PR staff,
planning activities, and
events
Advertising
• Paid, nonpersonal communication
transmitted through out-of-store mass
media by an identified sponsor
• Key aspects
– Paid form
– Nonpersonal presentation
– Out-of-store mass media
– Identified sponso
Advertising
Advantages
• Attracts a large audience
• Gains pass along readership
(for print)
• Low cost per contact
• Many alternatives available
• Control over message
content; message can be
standardized
• Message study possible
• Editorial content surrounds
ad
• Self-service operations
possible
Disadvantages
• Standardized messages lack
flexibility
• Some media require large
investments
• Geographic flexibility limited
CET MBA
Module 1
Prepared by Belli P K

15. Retail Management
• Some media require long
lead time
• Some media have high
throwaway rate
• Some media limit the ability
to provide detailed
information
Yellow Pages
• The average consumer looks
at: 4.32 ads.
• 70% of consumers look at
the bigger ads when they are
not sure where to make a
purchase.
• 65% of consumers feel that a
large ad signifies a business
with an established
reputation.
• 83% of consumers start
looking at ads in the
beginning of a heading
Billboards/Outdoor Ads
• On average, a billboard is only viewed for 7 seconds!
• A good rule is to use about 8 to 10 words in your entire ad!
• Your message must be very short so it can be easily read by the people driving
60 to 75 miles per hour by your sign.
•Measured and priced in gross rating points
(GRP) - the total number of postings in a
marketing schedule versus the
population. The GRP is calculated by dividing
the traffic count by the population .
•Billboards are typically purchased as 25, 50,
75, or 100 GRP (showings). For example, if
you want a 50 GRP (showing), than 50% of
the population should see your billboards
every single day.
Radio Advertising
• Retailers spent $72.2 million on
metropolitan commercial radio advertising
in the first six months of 2005
Media Selection
• Coverage – maximum number of consumers in
the retailer‘s target market
• Reach – actual total number of target customers
who come into contact with the ad message
• Frequency – average number of times each
person who is reached is exposed to the ad
during a given time period
Scheduling Retail Ads
• Ads should appear on (or slightly precede) the days when
customers most likely to purchase
• Ads should be concentrated around the times when people
receive their payroll checks
• If funds are limited, concentrate ads during periods of highest
demand
• Ads should be timed to appear during time of say or day of week
when the best cost-per thousand for the target market ((cost of
ad/number of people in the target market viewing the ad) x
1000)
• The higher the degree of habitual purchasing of a product class,
the more the advertising should precede the purchase time
Personal Selling
Oral communication with one or more
prospective customers for the purpose of
making a sale
Personal Selling
Advantages
• Message can be adapted
• Many ways to meet
customer needs
• High attention span
• Less waste
• Better response
• Immediate feedback
Disadvantages
• Limited number of
customers handled at one
CET MBA
Module 1
Prepared by Belli P K

16. Retail Management
time
• High costs
• Doesn’t get customer in
store
• Self-service discouraged
• Negative attitudes toward
salespeople (aggressive,
unhelpful)
Selected Reasons Why
Retail Sales Are Lost
Sales Promotion
Encompasses the paid communication
activities other than advertising, public
relations, and personal selling that
stimulate consumer purchases and dealer
effectiveness
Sales Promotions
Advantages
• Eye-catching appeal
• Distinctive themes
and tools
• Additional value for
customer
• Draws customer
traffic
• Maintains customer
loyalty
• Increases impulse
purchases
• Fun for customers
Disadvantages
• Difficult to terminate
• Possible damage to
retailer’s image
• More stress on
frivolous selling
CET MBA
Module 1
Prepared by Belli P K

17. Retail Management
points
• Short-term effects
only
• Used as a supplement
Types of Sales Promotions
Promotion and the
Hierarchy of Effects
CET MBA
Module 1
Prepared by Belli P K

18. Retail Management
Corporate social responsibility
Corporate social responsibility (CSR) is of high topicality in business practice across all industries.
Even though CSR is not a new idea and there are several retailers that have always cared
for socially responsible behavior, CSR activities such as ethical sourcing, corporate philanthropy,
cause-related marketing or socially responsible employment have been introduced or intensified by
retail companies mainly in the past several years: ―What was once embraced by a small elite group
of companies (names like Timberland, Patagonia, Aveda and REI [in the USA] or dmDrogeriemarkt, The Body Shop, and Coop [in Europe] come to mind), has gone mainstream ...‖
(Wilson 2008). The reasons why retailers engage in CSR initiatives are not only routed in legal
rules or accounting regulations. Retailers are also aware that their customers more and more evaluate
them according to their socially responsible behavior. Thus, the question of whether acting socially
responsible or not is not only an ideological one but an economic one (Smith 2003). Retail
companies have learned that ―not only is ‗doing good‘ ‗the right thing to do,‘ but it also leads to
‗doing better‘ through its positive effects on key stakeholder groups‖ (Bhattacharya and Sen 2004:
9). The leading US retail practice magazine Chain Store Age, thus, labeled corporate social responsibility
as ―the defining issue of our time
categorized CSR activities of 600 companies into six broad domains:
community support (e.g. health programs, educational initiatives), diversity (e.g. family-, sex-, disabilitybased initiatives), employee support (e.g. job security, safety-concerns), environment (e.g.
waste management, pollution control, animal testing), non-domestic operations (e.g. overseas labor practice,
operations in countries with human rights violations), and product (e.g. product safety,
antitrust disputes).
CET MBA
Module 1
Prepared by Belli P K

19. Retail Management
CSR seems to have a positive impact on consumer
behavior, but the underlying processes that lead to such positive effects still remain somewhat
open. As in previous research in the area of retailing usually only several aspects of socially
responsible behavior have been included in the analyses (e.g. only philanthropic or ecological oriented
activities)
HRM in retail
Increasing competition in domestic and international markets has focused attention on developing strategies that
maximise the return on investment in human resources. The transition from a manufacturing labour-intensive economic
model to a service-driven knowledge-centred one, coupled with an almost unprecedented level of environmental
uncertainty has forced organisations towards re-evaluating the importance of human capital and readjusting their
strategic priorities. As a result, there is a greater recognition that distinctive organisational competencies obtained
through highly developed employee skills; unique organisational cultures and effective management systems form the
basis for achieving competitive advantage (Greer 2001; Johnson & Scholes 1999). In this context, Lengnick-Hall &
Lengnick-Hall (1990) argue that competitive advantage is the essence of competitive strategy encompassing those
capabilities, resources, relationships and decisions, which permit an organisation to capitalise on opportunities in the
marketplace and to avoid threats to its desired position. While it has long been recognised that investment in human
resources can provide a sustainable source of competitive advantage and increases the likelihood of successful
implementation of a firm’s business strategies (Greer 2001; Cunningham & Hyman 1995), it has been argued that more
clarity is needed in specifying the process by which HRM is linked to competitive strategy
CET MBA
Module 1
Prepared by Belli P K