Retail management

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Retail Management

Welcome

Course plan

Books to read

Evaluation pattern

Name cards

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Retail Management

Course plan:

•Overview

•Institutions

•Understanding customers

•Market strategy

•Financial strategy

•Store location/ site evaluation

•Organizing for retail

•Merchandise management

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Retail Management

Course plan:

•Store management

•Store layout

•Customer service

•Retail selling

•Logistics and information systems

•Careers in retailing

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Retail Management

Books to read

Why we buy: Paco Underhill

The call of the Mall: Paco Underhill

The Nordstorm way:

The Walmart Way

Made in America: Sam Walton

Retail management : Berman Evans

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Retail Management

Books to read

Pour your heart into it: Howard Schultz

Leading By design: Ingvar Kamprad

Like No other store: Marvin Traub

It happened in India: Kishore Biyani

Retail Management: Gibson Vedamani

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Retail Management

Evaluation patterns:

•Project – 10 + 10

•Case – 10

•Quiz/test – 10

•Class participation: 10

( weighting subject to variation)

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Retail Management

Overview:

•Alice in Wonderland- looking through the retail prism

•Reducing queue size - TESCO

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Retail Management

Benefits to the customers:

•Breaking bulk

•Providing assortment

•Holding inventory

•After sales service

•Providing information

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Retail Management

Benefits to the companies:

•Greater revenue

•More reach

•Eyes and ears of the retailer

•Obsolescence: physical/ technological/fashion

•Some pioneers: bombay dyeing , Raymonds, S Kumar’s (!) and Grasim, Digzam (!), Binny’s (!), Mafatlal, DCM

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Retail Management

Some statistics (interview purpose)

•In India, retailing accounts for 10% of GDP, 8% of employment

•Annual growth rate: 20-30%

•Current size: Rs. 800,000 crore

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Retail Management

Factors behind growth in retailing

Economic growth/urbanization, consumerism, brand profusion, availability of real estate

Retailing environment:

•Economic

• legal (FDI)- debate , property regulations, real estate ( rents, taxes- car batteries)

• labor laws ( walmart )

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Retail Management- overview

•Technological

•competitive

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Retail Management- institutions

Theories of retail life cycle

1. Wheel of retailing

a. Entry phase

b. Trading up phase (life style, trinethra)

c. Vulnerability phase ( disruptive change)

2. Dialectic process: two institutional forms with different advantages modify their formats till they develop a third format combining their advantages

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Theories of retail life cycle

3. Retail accordion – continuous movement from general- specialized- general

4. Natural Selection: firm should be flexible enough to adapt to the changing environment and should adapt its behavior

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Lessons from life cycle:

• Expand during introduction

• In maturity, administration skills and operations are critical

• Adaptation is essential at the end.

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Retailer classification:

Store based-

• Independent store

• Chain store (disadvantages)

• Franchise store-• Master franchising – McDonald’s OR• Area development franchising• Exclusive showrooms- world of Titan• Product/trademark franchising- pierre cardin• Business format franchising

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Store based-

• Leased department

• Consumer cooperative ( NTPC, SAIL, samabayikas)-

• farmer coops- India, Poland, ( Turkey, Italy, Belgium, mid-west Europe- slow food)

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US Defn. of a department store:

1. Minimum fifty people

2. 20% of total revenue from apparel and soft goods

3. Should carry: furniture, home furnishings, appliances, radio/tv/ household products

4. Annual sales under $10 million ( single product line not more than 80%)

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• Convenience stores ( 7/11, spencer’s daily)

• Supermarkets: focus on food and household maintenance ( where to put milk?)

• Departmental store- pantaloons.

• Hypermarkets- combination of a discount store and food based supermarket

• Guerilla retailing- Isaac Mizrahi

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• Category killers ( power retailers)

• Toys ‘r’ Us, Staples, Sports Authority, Home Depot ( Villager Hardware??), Builder’s Square, Lowe’s, Blockbuster

• Chroma, musicworld , home town……

• Why are traditional departmental stores dead ? ( infants in India)

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• Emergence of specialty and discount store• Designer labels have not increased store loyalty• Specialty chains have stronger supply chains• Too big and unproductive• Scrambled merchandising from food retailers• Reacting to suppliers• Leveraged buyouts- debt-poor cash flow, limited

funds for store renovation.

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• Factory outlets• A) mfg. controls location- out of the way of

distributors• B) can be profitable – low rent, variety, service

and NO margin for distributors• C) proper disposal of discontinued items• D) brand factory

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Retailer classification:Non-Store based• Direct marketing- the international scenario• A) company reputation- earlydays/ geography• B) shop when you like• Assortment• Brand names carried• Toll free number ( cost of shopping)• Credit card acceptance• Speed of promised delivery time• Comparable store prices• Satisfaction with past purchases

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Non-Store based

• Direct marketing- the international scenario

a) Increased competition

b) Dual distribution channels

c) New use of catalogs- specialogs, carry complimentary product ads, sell the catalogs

d) New use of TV: shopping networks and infomercials

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Non-Store based

• Direct marketing- the Indian scenario ( is there an opportunity- discussion)

• Global direct marketing- –

• (assignment- eddie bauer, lands end, sharper image, williams-sonoma)

• Challenges: lack of standards, different currencies, wide variations in postal rates, uniformity for mass mailing

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Non-Store based

• Direct selling- relatively slower growth, for telemarketing rules check

• www.ftc.gov/bcp/telemark/rule.htm

• Network marketing-

• Some retailers also have direct sales force: J C Penny decorator consultants

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Non-Store based- online retail

• Reasons for not shopping on the web-

• privacy

• security,

• seeing/touching products,

• need to talk,

• not enough information

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Non-Store based- online retail

• Reasons for not shopping on the web-

• Knowing the address

• Clutter of websites

• Easily bored

• Slow sites ( rich sites)- Hasbro

• Customer service

• Coordinating web-based selling with stores

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Non-Store based- online retail- types of web

• Brochure web site

• Commerce site- full scale selling, BUT not integrated with database

• Integrated site – purchasing, inventory and accounting. Out of stock items removed , ordered immediately

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• ‘webified store’– web connectivity to POS terminals- customer

directed to other stores if item out of stock– Provides information from manufacturer’s site

Site integrated with manufacturer systems– Has all information for collaborative sales– Mfg automatically replenishes fast selling

merchandise- SHIP directly to consumers

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• How will a TOP LUXURY RETAILER’s webpage look like?

• PRADA ( check site)

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• “In Prada we always like to have a different way with everything. We look to the trend and then ask how we could do it another way. That is the way to add value, so long as you do it intelligently.”

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Non-Store based

• Vending machines: (www.refreshment.aramark.com)

• Generally beverages and food items

• Why high priced items do not sell?

• Video kiosks- potential- Virgin

• Are smart cards better options than coins?

• Airport retailing – dubai, india/ station retailing ?

http://www.refreshment.aramark.com/

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‘many retailers have grown accustomed to shifts in what the consumer wants and are well acquainted with economic cycles. Even as they shutter unprofitable stores, they are opening newer, profitable formats and converting existing units to these formats.’

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Retail Management- understanding customers

Demographics is dead !

• Age distribution of population ( Eddie Bauer)-

• US scenario (33% above 50) - products

• Income – 1980 to 2000 (why Walmart succeeded), disappearing middle class

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• Urbanization

• The shrinking household

• The working women

• Diversified minorities ( black Santa)

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Demographic analysis

The limited ( www.limited.com) has

• Express (young women)

• Structure (for men)

• Bath and Body Works( toiletries)/ Health and glow

• Victoria’s secret ( lingerie)

• Henri Bendel (upscale women’s clothing)

• Lane Bryant (full-figured women’s clothing)

http://www.limited.com/

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Geography analysis (BB Gujarat)Regional market: Metro geography- spending priority

West North South east

Grocery Grocery Grocery Grocery

Eating out Personal care

Eating out apparel

Books/music Eating out apparel savings

Personal care

Books/music Books/music Personal care

savings savings savings Eating out

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Consumer buying behavior

What they buy, how much

(ability, willingness and authority- the didero effect)

Look out for factors like shopping distance, working women spend, time spent, priority list

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Buying centers- who buys?( for whom?)- diapers Buying influences- why do they buy?- shopping as

antidepressant• Psychological factors: • Personal factors- self concept• Social factors- class, culture, reference groups

How do they buy – stimulus/ problem awareness/ information search/ evaluation of alternatives/ purchase/post purchase

Pharma retail – reactive well and worried well ( how will store design vary?)

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Types of consumer decision making:

Extended, limited and routine

Buying scenes: where do they buy from- groceries, fish, vegetables

Food and grocery mainly from kirana

( atta chakki, open edible oil (BB Sangli)- food bazaar as a destination)

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• Memetics- a way of understanding the customer-

• Memes are ‘cultural genes’

• Application – shoes with adjustable soles, tees with customizable graphics

• ( If interested, read ‘The Selfish Gene’- Richard Dawkins)

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Retail Strategy

‘In retail, you are either operations driven- where your main thrust is towards reducing expenses and improving efficiency- or you are merchandise driven. The ones that are truly merchandise driven can always work on improving operations. But the ones who are operations driven tend to level off and begin to deteriorate’

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Retail Strategy

Check www.sba.gov

Elements of strategy : ( Honda)

1. Situation analysis ( mission, alternatives, goods category)- ikea, movie halls, archies

• Product based/ need based

• Leader/follower

http://www.sba.gov/

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Retail Strategy

2. Objectives: can refer to sales, profit, customer satisfaction and image

3. Consumer identification: mass marketing, concentrated marketing, differentiated marketing

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Retail Strategy

3 generic strategies:

• Operational excellence- McDonald’s, domino’s uses this as a differentiator

• Product differentiation: Westside, sheetal design studio ( hemant trivedi)/qwiky’s

– Price strategy- loss leader pricing strategy

• Customer intimacy : CRM- barista, shopper’s stop, customer loyalty programs, Nordstorm

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Retail Strategy

Other strategies:

• Ansoff’s product market expansion grid

• Entry barriers in the form of culture – baskin robbins, barista, starbucks

• ‘paradigm of 1’

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Retail Strategy

Analyzing retail performance:

Payback period analysis-

Rentals : Rs. 30 per sft for supermarkets ( 5000 sft): Rs 50 per sft for departmental stores-

Initial investments: Rs 800 per sft/ Rs 1200 per sft

Employee cost: Rs 5000 per month

Electricity: Rs 10 per sft

• Income from brand promotion

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Retail Strategy

Analyzing retail performance:

Importance of stock turns ( annual sales / year end inventory)- increasing stock turns increase incremental ROCE – helpful in funding growth of new outlets through internal accruals

Reason why many retailers fail: leveraged expansion and low stock turns ( shopper’s stop/ Trent in 2000), barista early days

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Retail Strategy

Things to remember when investing in a retail chain:

a. A long gestation business, 5-7 years before stabilizing

b. Making EACH store profitable is very imp.

c. if you are making losses- a. consider going public

b. Go public, raise money, pay debt and go forward AND

c. Stop/control expansion till that time.

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Retail operations

Retail operations include:

1. Customer service/ accommodation

2. Retail selling

3. Store staffing and scheduling

4. Retail floor and shelf management

5. Store administration and facilities management

6. Warehousing and supply chain management

7. Loss ( shrinkage) prevention

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Retail operations

Retail operations include:

8. Pos/ cashiering process

9. Visual merchandising and displays

Dipstick parameters:

a.Customer transactions- at different points of time

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Retail operations

b. Customer conversion ratio (percentage yield rate/ walk to buy ratio)

c. Returns to net sales

d. Transactions/ hour

e. sales/transaction

f. Hourly customer traffic: multi-department stores

g. Stocks ( av selling price/ stock price)

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Retail operations

• Stock turnover /inventory turnover ratio:

Net sales/ average value of inventory

If daily sales account for 2% of the stock, whats the ratio?

• Percent inventory carrying cost

(Inventory carrying cost / net sales)

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Retail operations

• Gross margin return on inventory

Gross margin/ average value of inventory

• Markdown percentage

• shrinkage to net sales

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Retail operations

• Space productivity:

• Occupancy cost per square foot selling space ( gives estimate of gross margin required for multi unit retailers)

• Sales/square foot• Stock/per foot• Percentage selling space

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Retail operations

• employee productivity:

• Net sales/employee• Customers served/employee• Gross margin per employee ( measure

employee’s performance)- useful for buyers• Quantity or value purchased per buyer

(buyers performance depends upon number of suppliers, no. of SKUs as well as replenishment cycles involved)

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Retail operations

• The strategic resource model of retailSRM measures three resources- inventory, labor and

space

inventory – GMROI

Space – GMROF

Labor – GMROL

If overall retail performance is to remain unaffected:

PRICE CUT IMPLIES IMPROVED increased sales and space and labor

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Retail operations

• The strategic profit model of retail

Return on net worth (RONW)=profit margin (net profit/net sales) xAsset turnover ( net sales/total assets) xFinancial leverage ( total assets/net worth)

pantaloon- 4, bata – (3.09), archies – 21.64Westside – 7, Raymond’s – 24.1

• RONW gives good indicators for future expansion

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Retail operations


3 tools to manage performance:

– Profit management

– Asset management

– Debt management

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Retail operations


Profit management:

• Involves sales productivity and cost control (Tuesday morning)

• Price increase- do’s and dont’s (HBR article on pricing cues)

• Cutting costs without cutting corners ( use of technology, scm …)

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Retail operations

• The strategic profit model of retailAsset managementAsset management:

• Discount stores have higher asset t/o than department stores

• ROA ( net profit/assets) is a common indicator

• Inventory control is critical- steps for better inventory performance:

• Right quantity/ fewer suppliers/ control systems/ managing slow moving items

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Retail operations

• The strategic profit model of retailDebt managementDebt management:

• Pros and cons of leverage ( interest rates)- using franchising when in trouble ( barista)

• Short term, intermediate ( refurbishment, new equipment ..) and long term finance

• Short term finance may be inevitable for seasonal retailers

• Setting performance objectives

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Store planning, design and layout

Learning objectives:

a. Process of store planning and location selection

b. Some location assessment formats

c. Details of store design and image mix

d. Retail space management

e. Issues related to store layout/ circulation

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Trading area analysis:

• How trading area is related to promotions

• trading area overlap- 2 stores in the same mall can have different trading areas

• Use of GIS (Eicher, Mapinfo)

• Primary, secondary, fringe trading areas

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• Destination store

• Parasite store ( flower shop in a hospital)

• Use of store records

• Consumer profiling (reliance retail)

• Can we have a shopper stop at shankarpally

• Analog model – similarity analysis

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• Regression model: using equations ( sales vs. population size, traffic …..)

• Gravity model: considers– Distance between consumers and comp– Distance between consumers and chosen site– Store image

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• Reilly’s law: gives the point of indifference

• Huff’s law of shopper attraction: considers product assortment, travel times, sensitivity between the two

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Trading area analysis: main factors

• Population size and characteristics

• Availability of labor

• Closeness to source of supply

• Promotion facilities

• Economic base

• Competitive situation

• Availability of locations

• regulations

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Trading area analysis: buying power

• Effective buying income (EBI)- disposable income

• Buying power index = 0.5 ( area’s % of national EBI) + 0.3 ( area% of national retail sales) + 0.2 ( area % of population)

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• Store planning includes location planning and site selection

• Location planning:

• 1. high street location ( high eyeball rate)• 2. destination/freestanding location• 3. mall location

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Store planning, design and layout• Factors to consider during site selection

• Adjacent occupants• Commercial viability• Taxes/ legal issues• Number of floors• Other nearby facilities• Parking• Terms of contract etc.

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Location selection issues for a supermarket

• No. of offices, buildings within a 50 m radius• No. of kirana store within 1 km radius• Competitor premises nearby

Customer flow data: (weekdays)

• Lean/medium/peak• Residents/people in transit, students,

professionals….

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Customer flow data: (weekends)

Extra factors-

• No. of footfalls expected

• Expected conversions

• Expected sales per day in the area

• Average basket value

• The kishore biyani way ( hit movies/ lower parel Phoenix Mill)

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Site selection – some pointers

• Balanced tenancy

• Ownership vs. leasing

• Sale-leaseback

• Lease types: straight lease/ graduated lease% lease ( specified minimum/ maximum)Lease covering increase in maintNet lease ( retailers pay for facilities)

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Site selection – some pointers

• How pantaloon kolkata store was selected

• gut feel, • location, • no stairs, • agreement with SS Dhanuka, • % of daily sales as security

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Store design and image

• Employee type and density• (saree shop one per 100sft/ DP: one/ 400 sft)

• Merchandise type and density• s/market has a higher density than dp/stores

• Fixture type and density (boltless racks)

• wood/marble/granite in jeweler

• Metal and plastic in sports shop

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Store design and image

• Sound type

• Odour type (coffee/ flowers for men/cosmetics)

• Visual type and factors:

– Yellow for gold/ day tones for garments– Yellow and red increases pulse rate (impulse

goods)– Pastels/soft tones for places requiring long time

for inspection and selection (watches and jewelers)

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Store design and image – the space mix

Idea is to optimize selling space

The selling area is used to present the merchandise

• Non-selling part is accounted for by circulation space, aisles, staircases, lifts, facilities (60:40)

• Staple goods: store USP:55% of store offering-generally towards the back

(shirts and trousers/ grains and sugar )

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Convenience goods: basic merchandise- 30% of the store- bought in multiple units (white t-shirts)

Impulse purchase merchandise- 15% of the store- given maximum exposure ( candies/socks)- near cash counters and exits

Different categories- different places

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retail space management:

a. Ensuring smooth and efficient customer flowb. Helping customers reach and access

merchandisec. Creating a feeling of comfort in their mindsd. Aesthetics of a well planned floor triggers a

come back feelinge. Helps in selling more effectively and retain

customers

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store layout: the circulation plan

a. Lighting and displays have a pinball effectb. Dp store highway is six feet wide/ 3’ in sm

a. Free flow circulation: boutiquesb. Grid circulation: typically in supermarketsc. Race track circulation: subiksha/ikead. Herringbone- typically in a narrow storee. Spine – herringbone without side roads

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floor space management

a. Sales / sftb. Margins/sftc. Stock / sft

Space audits:

• Hot spot analysis

• Selling space to non-selling space

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golden rule for retail space planning:

• Customer comes first! Only browsers can turn into buyers

• Optimize trading space

• Appeal to customer’s five senses

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Visual merchandising

• enhances shopping experience

• Is a communication tool

• Role of Presentation

• Helps customer in making buying decision

• Store atmosphere

• Using a theme for VM

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• VM will differ for lifestyle retailing (aspiration) and value retailing

• Signage- imp in larger stores

Job of a VM• Planning the theme and create displays• Arranging props for displays• Arranging fixtures and lighting• Setting up stores before opening• Working with floor plans • Training• Organizing merchandising units

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• Displays- window (exclusive / open window)

• Live display – kid’s kemp

• Marquee display

• Island displays

• Counter displays ( backlit – watches)

• Brand corners ( shelves and gondolas)

• End cap displays ( the boomerang effect)• Cascade/waterfall display

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• Some more points on signage:

• Message should be zone specific

• Where to put signs in a shoe store?

• In a multi-storied mall ?

• Banner in the cash area

• Smart sign placement intercepts shopper’s line of vision

• Look for areas where people have time ( forced to wait- maruti)

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• Some more points on signage:• Signage in restaurant – you are looking for

the waiter & then the restroom – sign near a restroom ?

• McDonald’s: 75% of customers read menu AFTER ordering

• Table tents- • Deeper areas require longer messages• What's common to bank, p/o and fast food

joints ?

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• Some more points on signage:

• Putting backlit signage beneath a table in post office?

• Separate strategies for shoppers walking in and walking out

• Shifting bill boards/ moving bill boards/ video bill boards/ rotating arena

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• Prada, one of the highly coveted luxury fashion retailer, has decided to open a ‘one of its kind’ store in New York, Barcelona and Berlin.

• What ideas you will give to prada, to create a unique customer experience ?

• the shop will carry mainly women’s dresses -

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• $40 million, 23,000 sft store

• ‘The store’s never really been about maximizing the per-square-foot sale space.We wanted to be seen to waste space. Which is another form of luxury’

rem koolhas

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• Interactive dressing rooms:

• Glass changes from transparent- translucent-transparent

• Lighting- day/night/evening

• Closet touch screens- RFID closet

• Staff devices: all-in-one/ catwalk videos

• Magic mirror- ‘see your back’/ slow motion

• Use of human factor specialists

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Personal selling in retail

• Role of a retail salesperson:

• Resource for information

• Value counsellor

• PRO

• Merchandise custodian

• Explaining benefits and not features

• Keeping complaints to the minimum

• Develop loyalty

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• Checklist for sales

• Test of attitude

• Test of skill

• Test of knowledge ( shopper’s stop)

• Test of integrity

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• The sales process

• Connect with the customer ( beyond smiling- Indian scenario)

• Probe needs subtly

• Presenting merchandise

• Handling objections

• Recognizing buying signals

• Trial close and add-ons- up and x-selling

• Suggestive selling

• closing

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• A sample training tip:

• Greet the customer

• Listen to their needs

• Know your products

• Lern to juggle several shoppers

• Pack merchandise carefully

• Refer customers by their name

• Stress hassle-free return policy

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• Lessons from a successful sales associate:

• First 10 minutes

• Offers delivery/ travels to customer’s office / home

• Sends hand written note about latest trends

• Key customers receive bags/ chains on birthdays/ anniversaries

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• Lessons from a Nordstrom legend:

• Don’t think about sales

• Calling customers when new stocks arrive

• Accepts new opportunity

• Bad opening day – cold calls

• 7 years to perfection

• Arrive early and do difficult things first

• Using the telephone

• EARNING trust

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• Lessons from a Nordstrom legend:

• Choose your role – time saver/ confidante/ teenage counselor/ know-all

• People love to talk about themselves

• Never judge by appearance

• Talk less about price- get your judgment

• Don’t take a decision on his behalf

• Multiple sales

• Follow through- stunning effect

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Merchandising

• Learning points:

• Category management

• Assortment planning process

• Setting financial objectives

• Product mix trends

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Merchandising

• Category hierarchy:

• Division (apparel…)

• Department (men’s….,)

• Category (shirts..)

• Sub category: full sleeve formals

• Brand: arrow

• Style: button down collar

• Options: size(4), color (5), design (3), price (3)

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Merchandising

• Category is a distinct , manageable group of products and services, perceived by customers to be interrelated and/or substitutable – men’s and girls’ jeans

• C-M involves managing all SKUs within a category – satisfying customers and increasing sales e.g. color plus in mumbai

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Merchandising

• Responsibility of category manager

• Vendor interaction

• Merchandise selection

• Merchandise pricing

• Working with ad department

• Role of merchandise planner:

• Purchasing the right quantity of product

• Assigning merchandise to stores

• Monitoring sales and suggesting markdowns

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Merchandising

• The C – M process:

• Category definition

• Category roles:- destination, routine, convenience and seasonal

• Category assessment

• Category scorecard: developing bottomline and setting targets

• Category strategies: developing marketing strategies- demand and supply oriented

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Merchandising

• Category tactics related to assortments, pricing etc

• Implementation

• The buying organizers: purchasers/buyers

• Setting financial objectives: GMROI/ inventory turnover

• Advantages of rapid inventory t/o:– Increases sales volumes– Reduces obsolescence / markdowns

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Merchandising

– Improves salesmen morale– Helps to buy more merchandise– Reduces operating expenditure (lower carrying

cost, lower interest)– Increases asset turnover

– Disadvantages:– Loosing customers/ increasing cost of goods of

sold due to purchase in smaller quantities– Increases operating expenditure- meeting, order

processing etc

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Merchandising

– Category lifecycle- difference between fad / fashion – Krrish

– The assortment planning process– Depth ( assortment) / breadth (variety)

Determining buffer stocks:1. Availability offered by retailer2. Demand fluctuation3. Lead time fluctuation4. Product availability of the vendor

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Merchandising

– Assortment plan: minimum for fashion related category

– Product mix trends:

– Shotgun merchandising– Rifle merchandising

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Merchandising

– Assortment plan: minimum for fashion related category

– Product mix trends:

– Shotgun merchandising– Rifle merchandising

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Merchandising

– Most common: OTB (open to buy)

– Helps retailers project and control future buying– OTB refers to merchandise budgeted for

purchase during a certain period of time for which the stocks have not yet been ordered. It also involves forecasting

– OTB amount: amount remaining to be ordered to meet the budget

– Retailers tend to overstock when sales increase and under stock when they are low

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Merchandising

– Most common: OTB (open to buy)

– Helps retailer fix the ideal amount of stock that should be on hand at the beginning of any given month and the quantum of new merchandise to be received during the month

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SCM & logistics

– PPO: pre purchase order- instrument thru which the tentative plan of order placement to the vendor is done for the whole season as soon as the inventory planning is completed

– Integrated supply chain- Whirlpool

– Hit ratio: gap between delivery and purchase orders

– VMI: vendors manage inventory at the store/ take back slow selling items

– EDI: – Warehouse management:

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SCM & logistics

– EDI:

– Warehouse management: GRN

– ITN- inter transfer notes- when merchandise is supplied to the retail stores (ITN out)

– Material handling: forklifts/ Zara using hangers

– ECR

– Automatin and barcodes (EAN standards)-

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SCM & logistics

– RFID in retail:– No need to unload goods at cash/ shrinkage– No need to check loadings and unloading in the

warehouse– Results from WM: 16% reduction in OOS items

AND items with RFID tags replenished 3 times faster

– SCM @ Tanishq

– SCM @ Shopper Stop

– SCM@ Reliance retail (article discussion)

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SCM & logistics

– Logistics- military origin

– Critical in an era of globalization and outsourcing

– Logistics is tactical and SCM strategic: walmart, dell and Zara

– No longer a cost

– Dangers of scm: the walmart effect, nike

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SCM & logistics

Some trends:

– Putting second factories in customer-dense markets

– Zara breaking conventions

– Two issues: buying cheaper and cutting stocks

– The bull-whip effect- source of major inefficiency

– P&G and pampers– More reliable information flow can smooth out

fluctuations

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SCM & logistics

Some trends:

– In future supply chains/networks will compete with each other and NOT companies

– Manufacturing complexities – CISCO

– Agile, adaptable and speedy

– Flexitronics: 30 countries- how ‘transnational’ companies use SCM strategically- toyota

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SCM & logistics

Some trends:

– Criticality of information ( and inventory)– Different product (supply chains) move at

different speed- this creates assortment problem for retailers

– 2 ‘moments of truth’ for retailing (P&G)

– A. is the product on the shelf?– B. does it deliver what it promises?

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SCM & logistics

Some trends:

– Role of packaging in SCM

– Toyota in India

– Role of containerization

– Fedex, UPS and DHL- how they are growing?

– By giving value added services – like?

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SCM & logistics

Some trends:

– Fedex – Kinkos- e-mailing documents/ emergency backups

– UPS and Toshiba laptops

– Whirlpool truck drivers

– Just-in-time lobsters

123

SCM & logistics

Some trends: be careful of slim supply chains

How sony ericsson came into being – Toyota using video conferencing to discuss new

rumours (6 lacs cars, 200 tier I suppliers in 400 factories)

– How all this relates to globalization (End of the Line, Barry Lynn)

– Due to consolidation, globalization and outsourcing provide temporary relief- flexibility is lost

124

SCM & logistics

Some trends: be careful of slim supply chains – Continental strategies– Product line strategies

– Limits of globalization defined by supply chain management! Come back home

– Risk management (internal and external)- impact on share price

Documents

Retail management