CRM in retail.pptx CRM CRM CRM CRM CRM CRM

McGraw-Hill |
LEARNING OBJECTIVES
Explain the concept of strategy
Describe the concept of a business model
Discuss the importance of strategy and process of strategy formulation in
retail
Analyze the elements of retail value chain
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The word strategy comes from ancient Greece.
The word spread to France as stratégie and then to English as “strategy” in 1810.
The primary definition examined is by Carl von Clausewitz’ ‘the art of the employment of
battles to gain the object of war’.
This definition views strategy as policy and believes that battle is the only means of
achieving strategic ends.
George Steiner, considered as the father of strategic planning notes that strategy entered
the management literature as a way of referring to what one did to counter a competitor’s
actual or predicted moves.
Steiner points out that there is little agreement to the meaning of strategy in business.
Some of the definitions Steiner pointed include : • Strategy is that which top management
does that is of importance to the organisation. • Strategy refers to basic directional
decisions, that is, to purposes and missions. • Strategy consists of the important actions
necessary to realise these directions. • Strategy answers the question: What should the
organisation be doing? • Strategy answers the question: What are the ends we seek and
how should we achieve them?
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The rise and subsequent fall of strategic planning brings us to the definition of strategy put
forth by Henry Mintzberg.
According to Henry Mintzberg, people use ‘strategy’ in several different ways, the most
common being the following:
1. Strategy is a plan, a ‘how’, a means of getting from here to there.
2. Strategy is a pattern in actions over time; for example, a company that regularly markets
very expensive products is using a ‘high-end’ strategy.
3. Strategy is position; that is, it reflects decisions to offer products or services in markets.
4. Strategy is perspective, that is, vision and direction.
Strategy as the basis for competition is best understood from the perspective of Michael
Porter.
According to Porter, competitive strategy is ‘about being different’. He adds, ‘It means
deliberately choosing a different set of activities to deliver a unique mix of value’
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Benjamin Tregoe and John Zimmerman define strategy as ‘the framework, which guides
those choices that determine the nature and direction of an organization’.
This can be interpreted as selecting products to offer and markets in which to offer.
Treacy and Wierseman identify three ‘value disciplines’ that can serve as the basis for
strategy: operational excellence, customer intimacy, and product leadership. As with driving
forces, only one of these value disciplines can serve as the basis for strategy.
Strategy is perspective, position, plan and pattern. Strategy is the bridge between policy or
high-order goals on the one hand and tactics or concrete actions on the other.
Strategy is a framework that provides guidance for actions to be taken and, at the same
time, is shaped by the actions taken.
While creating a strategy, it must be remembered that every business has its distinctive way
of organising the many activities that are involved in delivering its product or service to the
end consumer. I
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A business model, helps understand, describe and predict the ‘activity of buying and selling
goods and services’ and ‘earning money’ of a particular company.
A synthesis of literature shows that there are mainly nine building blocks to help us
describe business models, which are listed below –
1.The target customer segments addressed by the retailer;
2. The value proposition of what is offered to the market;
3. The communication and distribution channels to reach customers and offer the value
proposition;
4. The relationships established with customers;
5. The configuration of activities required to implement the business model;
6. The core competencies needed to make the business model possible;
7. The revenue streams generated by the business model constituting the revenue model;
8. The cost structure resulting for the business model;
9. The partners and their motivations of coming together to make a business model
happen.

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A business model is, thus, a conceptual tool that contains a set of elements and their
relationships and allows expressing a company’s logic of earning money.
An organisation is not singularly responsible for the success or failure of its business plans.
It is affected by an external environment which influences the forces which shape strategy.
Companies that thoroughly understand their business model rethink and redesign
constantly for long term success.
Thus, both strategy and business model evolve in keeping with the requirements of the
consumers, changes in technology and other factors affecting the market.
Alibaba though an ecommerce company, has a unique business model. It varies significantly
from that adopted by Amazon or eBay.

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Alibaba.com is a business to-business site, a Chinese ecommerce platform represented by
three businesses: Alibaba, Taobao and Tmall.
It is a business to-business site. Taobao on the connects international businesses to
consumers – or consumers to consumers – and Tmall is a marketplace geared towards
China’s middle class, focused on large, multi-national brands.
An interesting element of its business model is the fact that the Alibaba Group holds no
inventory and owns no warehouses.
Alibaba has created software platforms that facilitate the exchange of goods and services.
While Alibaba’s revenues are less than Amazon’s, the reported operating and profit margins
are higher.
Deployment of technology and the use of data analysis have played a key role in the success
of the group.

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A retail strategy can be defined as ‘a clear and definite plan that the retailer outlines to tap
the market and build a long-term relationship with the consumers’.
The definition of a retail strategy enables other areas within the organisation to determine
their strategies. Primary among these are:
1) Store location
2) Merchandising
3) Pricing
4) Marketing
Experts have argued that the three most important aspects of any retail business were
location, location and location.
Model based on discounting may not really require prime locations; in this case, a larger
space may be what is needed. In the context of retail today, a retailer would probably need
to modify this to the Channel through which he is going to reach the end consumer.
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The second factor influenced by the strategy, is the stocked merchandise.
Merchandising must match the selling strategy. Very often the merchandising strategy is
based more on long-term vendor relationships or competitive distribution issues than on a
business strategy communicated throughout the organisation.
Merchandise strategies should be based on consumer research.
Related to merchandising is pricing, which again is influenced by the business model that the
retailer has chosen.
The process of strategy formulation in retail is the same as that for any other industry.
The mission is the first step - internal strengths, weaknesses, external threats and
opportunities are examined for management to decide. The options are examined and the
objectives set. Next, the management identifies the major strategic alternatives it could
pursue.
Markets are then determined - within the country and internationally.
The objectives are determined and resources are obtained and allocated to help achieve the
objectives. The strategy must then be implemented. Finally, results must be measured and
evaluated to ensure that the strategy is working and any
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Steps involved in developing a retail strategy

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The five forces model
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Five forces of competition

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The five forces model
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Michael Porter’s Five Force analysis is a tool for the structural analysis of industries.
• Entry of competitors: The ease of entry for competitors to enter the market and to start
competing and the barriers to entry which may exist.
• Threat of substitutes: The ease with which a product or a service can be substituted,
especially made cheaper.
• Bargaining Power of Buyers: The position of the buyers, can they work together to gain
efficiencies in buying.
• Bargaining Power of Suppliers: The position of the sellers. Do many suppliers exist or is
there a existence of only a few suppliers.
• Rivalry among the existing players: The level of competition between the existing players,
the size and the strength of the players in the industry.

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Ansoff’s Matrix, helps us understand the options available to a retailer.
These alternatives available to the retailer are: • Market penetration • Market
development • Retail format development • Diversification.
Growth opportunities for a retailer.
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PRODUCTS
MARKETS

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https://boardmix.com/examples/ansoff-matrix-example/

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Ikea India news
https://www.hindustantimes.com/business/this-is-ikeas-plan-for-india-doorstep-delivery-owing-to-online-
demand-101706609663663.html

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The retail Value Chain
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As the retailer grows from the position of one shop to a chain of retail stores and from a
local to a regional and national presence, strategy and planning become important.
A firm may create a cost advantage by reducing the cost of individual value chain activities
or by reconfiguring the value chain. Once the value chain has been defined, by assigning
costs to the value chain activities, one can perform a cost analysis.
A firm develops a cost advantage by controlling these drivers better than its competitors.
‘Reconfiguring’ the value chain can also provide a cost advantage. This means structural
changes such as a new production process, new distribution channels or a different sales
approach.
This is especially relevant today with the growth of multiple channels of retail and
distribution.
Occasionally, there have been references to retail strategy models like the pentagon and the
triangle. The retailer can either become a pentagon player or a triangle player. If the retailer
chooses to become a pentagon player, he focuses on: • Product • Place • Value • People •
Communications
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Chapter 14 – Human Resource Management
In Retail – A Strategic Tool

McGraw-Hill |
Learning Objectives
1. The Role Of HRM In Retail
2. The Significance Of HRM In Retail
3. The Key Elements Of The Human Resource Function
4. Creating Organization Structures
5. Organization Structure In Retail
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The Role Of HRM In Retail
The early 1990s saw the emergence of Human Resources as a key factor
within the gamut of the company’s strategy and its implementation. The
function of Human Resources has moved across four strategic paradigms
which are:
• The Personnel Perspective – The firm purely hires people, but the focus is not on hiring
the best or on personnel development.
• The Compensation Perspective – The firm uses bonuses, incentives and meaningful
distinctions in pay to reward performance.
• The Alignment Perspective – The firm does see human capital as assets but does not
invest in utilizing the capabilities of the same.
• The High-performance Perspective – The firm views Human Resources as an integral
element of the firm’s strategy implementation.
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HRM can be defined as ‘a strategic and coherent approach to the management of an
organizations’ most valued assets – people working there who individually and
collectively contribute to the achievement of its objectives’.
Strategic Human Resource Management is the practice of aligning business strategy with
that of HR practices to achieve the strategic goals of the organisation. The aim of SHRM is
to ensure that HR strategy is not a means but an end in itself.
The HRM policy enhances the performance of the organisation, the well-being of
employees, or the well-being of society and has to take the four Cs of Commitment,
Competence, Cost effectiveness and Congruence into consideration
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It describes the seven factors that enable a company to be organized in an effective
manner. All the factors are interdependent, hence if one does not pay proper attention to
one of them, it may influence the others.
At the center of the McKinsey model is – shared values, which largely focus on what the
organisation stands for and its beliefs and values. A key link to the shared values is
strategy, which builds on how the firm plans to achieve its goals. Allocation of resources,
understanding consumers and competitors are also important.
The next element is structure, which focuses on how the various units within the
organisation function and function with each other. The processes and the procedures
which take into consideration elements from finance to employee performance are a part
of systems, and people in the organisation or the staff is the one who makes it possible
along with the skills of the people within the organisation.
Last but not the least, it is the style or the leadership style that is adopted within the
company.
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The Key Elements Of The Human
Resource Function
The Human Resources function in retail involves:
• Identifying various roles in the organisation
• Recruiting the persons with the right attitude to fit the jobs
• Training
• Motivation of employees
• Evaluation of employee performance
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Resource Function
1. Identifying Various Roles In The Organization:
This helps in determining the number of people required for various jobs, the skill sets, and
educational background needed and the location where they are going to be based
depending on the organization structure defined and the size of the retail operation.
Key tasks in a typical retail organization involve:
• Buying and merchandising
• Store management and operations
• Technology support
• Supply chain and logistics
• The function of managing people
• Marketing, customer service and customer experience
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Resource Function
2. Recruitment and Selection:
Next step is to categorize job based on the functional or geographic needs. The aim of the
recruitment process is to make available job applicants for a specified job/s. Common ways
of recruitment include newspaper advertisements, visits to colleges, existing employees,
references, recruitment agencies and even websites.
3. Training : Training is an important aspect of HRM in retail which is needed for
• Inducting new persons/staff into the organization
• Training of sales staff for skill enhancements
• Training of staff/personnel for skill enhancements
• Training for functional areas and related to the workforce
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Resource Function
4. Motivation of employees:
Success in a retail environment largely depends on the workforce. The need to influence
people within the organization to perform the tasks as needed by the organisation is very
important. The key factors that help in motivating people are:
1) The organisation culture 2) The rewards and recognition
3) The monetary benefits 4) Prospects for growth and job enrichment
5. Evaluation of employee performance:
The basis for performance evaluation is the goals that have been set. Goals, which are
specific, tied to rewards and voluntarily committed to by employees. Goals make the
expected level of performance clear and help improve performance by measuring the
progress of a task
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Creating Organisation structures
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Creating Organisation structures
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The first step in creating an organization structure, which will work for the
retailer, is to define the various tasks/activities that need to be performed.
They can broadly be classified as:
• Top Management
• Buying and Merchandising
• Store Operations
• Administration and Human Resources
• Support functions like – Advertising, Marketing, PR and Accounts
Once these tasks have been identified, the management needs to take into consideration
its own requirements and targets and how they can be achieved. It needs to consider the
requirements of the target market and the needs of its own internal customers, i.e., the
employees. An organization structure or an organization chart is then developed after
taking into consideration all these factors.

McGraw-Hill |
Organisation Structure In Retail
The way a retailer is organized contributes to its uniqueness. The organization structure
makes a definite impact on the various functions within the organization. Various factors,
which influence the creation of organizational structures, are:
• Scope and scale of operation viz local, regional, national or international
• Types of products sold
• Type of departmentalization, i.e., functional, product wise or geographic
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The four functions that he recommended are:
1. Control: This department is usually responsible for looking after the assets of the
organisation and functions like accounting; credit and control are a part of it.
2. Publicity: Responsibilities include advertising, sales promotions, public relations,
publicity, etc.
3. Operations: Include responsibilities the actual operations of the store, including
receiving goods, checking, maintaining recorded and customer relations.
4. Merchandising: Duties of this department would start with forecasting the merchandise
required, procuring the merchandise, pricing it and making it available at the retail stores.
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