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Retailing Management. Some retail humor…………….. A retailer was dismayed when a competitor selling the same type of product opened next-door to him, displaying.

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Presentation on theme: "Retailing Management. Some retail humor…………….. A retailer was dismayed when a competitor selling the same type of product opened next-door to him, displaying."— Presentation transcript:

1 Retailing Management

2 Some retail humor…………….. A retailer was dismayed when a competitor selling the same type of product opened next-door to him, displaying a large sign proclaiming "Best Deals.“ Not long after that, he was horrified to find yet another competitor move in next door, on the other side if his store. It's large sign was even more disturbing—"Lowest Prices.“ After his initial panic, and concern that he would be driven out of business, he looked for a way to turn the situation to his marketing advantage. Finally, an idea came to him. Next day, he proudly unveiled a new and huge sign over his front door. "Main Entrance!"

3 Main topics to be covered in this presentation convenience store 101 shopping mall store location analysis warehouse club field study report

4 convenience store A little history on 7 Eleven They have more than 4600 stores in Taiwan Toshifumi Suzuki

5 Consumer buying behavior in NCTU Students make up the largest customer segment They seek to satisfy their utilitarian needs They engage in habitual decision making

6 Floor layout Customers tend to shop in a more deliberate and efficient manner Time spent on the whole buying process is crucial

7 Figure 1: Layout of NCTU 7-Eleven EntranceMedia Shelf HH Necessities DrinksMachine Refrigerator (beverages) StorageDoor Refrigerator (dairy products) Fast Food (microwavable) Refrigerator ( i ce cream & frozen desserts) Counter Confectionery Products Fresh Food: (Bread/Toasts) Instant Noodles Fast Food (hotdogs/soup/eggs) Fresh Food (buns) Canned & Food Specialties Fats and Oils Cookies Chips Basic Necessities & Cosmetics Shelves

8 Assortments mix CategoryMajor Brand(s) Group 2024 Ice Cream and Frozen Desserts Uni-President Group 2026 Fluid MilkUni-President Group 2037 Fruit JuicesUni-President Group 2038 Frozen Specialties7-Eleven Group 2051 Bread & other Bakery products Uni-President Group 2052 Cookies & CrackersRitz Group 2064 Candy & other Confectionary Products Wrigleys Group 2065 Chocolate & Cocoa Products Meiji Group 2066 Chewing GumWrigleys Group 2086 Bottled, Canned Soft Drinks & Water Uni-President, Wei Dan Group 2096 Potato Chips, Corn Chips & Snacks 7-Eleven Group 2099 Food PreparationsUni-President, Wei Dan

9 Is NCTU 7-Eleven successful in attracting their targeted market to shop with them? Their superior location is a major advantage over their competitors There is a wide array of fresh food which is replenished daily They can consider preparing more fresh food rather than microwavable

10 Taipei 101 shopping mall

11 Some quick facts 2.36 million square feet of office space 893,000 square feet of parking space 796,000 square feet of retail space Some of Taipei 101’s office occupants include

12 Consumer buying behavior of segment 1 Segment 1 - White collar workers and young working professionals working in the Hsin Yi district Age between 24 to 35, annual income of USD 30,000 to USD 50,000, fashion followers, middle upper class of society Buying behavior Seek to satisfy their hedonic needs Look upon celebrities as reference groups to guide them on the latest fashion

13 Consumer buying behavior of segment 2 Segment 2 - High net worth individuals (both local and international) Annual income of at least USD 100,000, upper class of society, attend social functions regularly Buying behavior Price of products are least of their concern They value the entire shopping experience more Obtain information from their own social networks on places to patronize to get the latest fashion goods

14 Retail Mix Understanding the consumer’s needs is the foundation of a good retail strategy If you offer a retail mix oblivious to the market environment and your consumer’s need, they will patronize other shopping malls in the area Mall layout & design, Store mix, Retail communication mix

15 Mall layout & design

16 Types of Stores

17 Up to 55% of the mall is allocated to public space Wider aisles High ceilings throughout the entire mall Warm lighting is used to create a soothing ambience Classical music is played in the background Clean toilets Mall layout and design Exquisite Window Display

18 Floor Guide & Description LevelFloor GuideDescriptionExamples Basement 1Grand Market High quality food court and shops for urban living Jason’s market, Grand Market Food Court Level 1Avenue 101Popular regional brands Kenneth Cole, Bally, Ted Baker Level 2 The Designer Walk Design oriented international brands De Beers, Jean Paul Gaultier, Kookai Level 3 The Galleries Couture European and global flagship stores Cartier, Louis Vuitton, Celine, IWC Level 4City Square High end restaurants and cafes Wasabi Buffet, Maxim’s de Paris Level 5Financial Centre Financial centre and banquet halls International Banquet Hall Table 1: Description of each level in Taipei 101 shopping mall

19 Retail communication mix Taipei 101 website, monthly magazine, direct mails and Celebrity endorsements Taipei 101 partnered with Taiwan tourism board to feature Taipei 101 in international advertisements

20 Building a sustainable and competitive advantage Taipei 101 is successful in creating depth for designer products however there isn’t sufficient mass market labels in the mall Improve the Taipei 101 shopping mall website Partner designer labels to feature new products on the Taipei 101 website

21 Regional/Global Competition Taipei 101 should look at the global competition Work together with the other shopping malls in the Hsin Yi district Conduct coordinated sales promotions to attract shoppers

22 H&M’s Retail Location in Taipei City ?

23 Introduction Hennes & Mauritz (H&M), is a well known Swedish apparel company worldwide, with 1,800 stores spread across 35 countries. “Offering fashion and quality at the best price.” Aim to be located in the best business location. Taipei is the essential business center in Taiwan.

24 Factors To Consider Target market – Fashion pursuer, good quality, middle price Cost of operating stores – H&M only leases the stores instead of buy them. How many stores to open – Experiment the market or promote the brand The characteristics of the trade area – CBD, natural and physical barriers, store accessibility, demographic, level of competition The characteristics of the retail site – Traffic & accessibility, visibility, adjacent stores, restrictions and costs Estimate potential sales Lease negotiation

25 Trade Area Taipei City

26 Trade Area TypeAccessibilityCompetition Level Demographic Type ZhongxiaoCBDVery High Employees, fashion pursuers ZhongshanArtistic, Shopping MediumHighUnique fashion pursuers TPE Train Station Transportatio n center, cram schools, old CBD Very HighMediumEmployees, students, travelers XimenTeenager recreation HighMediumStudents TienmuResidenceMedium Foreigners, residents

27 Zhong Xiao E. Rd. Breeze Center Sogo BR4 Sogo at&t Min Yao Sogo Din Hao Small Retailers, Apparel & Accessories Specialty Stores, Restaurants, Bars MRT Mango Retail Site-East Zone

28 Taipei City Hall Neo 19NY Movie Theater Taipei 101 Zhong Xiao E. Rd. Mitzukoshi A9, A11, A8 A4 Eslite Book Store MRT Mango Bella Vita UniPresident Mall Retail Site-Xinyi District

29 Retail Site Retail SitesAccessibilityVisibilityAdjacent Stores Restriction & Cost East ZoneVery HighHighDepartment Stores, Small Retailers, Restaurants 13,000NT/pi ng/month XinYi DistrictHighMediumDepartment Stores 10,000NT/pi ng/month

30 Estimate Potential Sales Xinyi District (Sales at Mango: NT5,940,000) H&MMango Average Store Size136ping121ping Probability of Mango customer shopping at H&M: (136/5)/[(136/5) + (121/5)] = Forecasted Sales at H&M = $0.529 * 5.94m = $3.14m Using Huff Gravity Model with λ= 1 East Zone (Sales at Sogo: NT4,000,000,000) H&MSogo Average Store Size136ping3636ping Probability of Sogo customer shopping at H&M = (136/5)/[(136/5) + (3636/5)] = Forecasted sales at H&M = 0.036*(4b/3636*136 )= NT$5.3m

31 Costco warehouse club field study report

32 Organization Structure Chairman Jeffrey H. Brotman CEO James D. Sinegal CFO COO of Merchand ising Regional COOs COO of Global Operations Regional GM Divisional GM Info systems Human Resource Manageme nt Admin & Chief Legal Officer

33 The Directors

34 Human Resource Management The organization and management of employees is crucial to help retailers perform its critical business functions. Employees are a valuable asset to any retailer. In manufacturing  machines In retailing  labor intensive

35 HR Management Requirements: Every employee has to start work from the bottom regardless of education level 3 month probation period

36 HR Management Reason: Reduce employment turnover rate Build up a pool of committed and loyal employees Understand how each department functions Facilitate the buying and selling activities

37 Hsinchu Personnel To take into consideration the size and management practices of Costco. Administrative Personnel Floor Personnel

38 Administrative Personnel DEPARTMENTSPERSONNEL ADMINISTRATIVE Senior Management5 Membership Department10 Accounts Department3 Marketing Department5 Purchasing Department5 IT Department2 Logistics Department30 TOTAL ADMINSTRATIVE PERSONNEL60

39 Floor Personnel FLOOR PERSONNEL Pharmacy5 Optical5 Tire Center5 Food Preparation15 Operations and Maintenance4 Floor Helper/ Sample Personnel10 Checkout Counters36 TOTAL FLOOR PERSONNEL80 TOTAL PERSONNEL NEEDED140 FLOOR PERSONNEL Pharmacy5 Optical5 Tire Center5 Food Preparation15 Operations and Maintenance4 Floor Helper/ Sample Personnel10 Checkout Counters36 TOTAL FLOOR PERSONNEL80 TOTAL PERSONNEL NEEDED140

40 Floor Personnel FLOOR PERSONNEL Pharmacy5 Optical5 Tire Center5 Food Preparation15 Operations and Maintenance4 Floor Helper/ Sample Personnel10 Checkout Counters36 TOTAL FLOOR PERSONNEL80 TOTAL PERSONNEL NEEDED140

41 Information Systems Electronic data interchange (EDI) Intranet Extranet: Costco’s CRX (Collaborative Retail Exchange) program No RFID usage

42 Information Systems CRX: Vendor Managed Inventory System Inventory method: continuous review system (monitored continuously with each sale) Intranet Extranet

43 Merchandise Management It is about managing a portfolio of merchandise inventory. Uses their retailer’s information to monitor the performance of their merchandise portfolio. Buyers want to offer the right quantity of right merchandise. Want to avoid over stocking or a stock out situation Want to satisfy financial objectives

44 Merchandise Management Process 1.Buyers forecast category sales 2.Develop an assortment plan for merchandise in that category 2.Setting inventory level 4.Negotiates with vendors

45 1. Forecasting Sales Costco offers a majority of staple merchandises Staple Merchandises Category Sales over many seasonsYes Sales of a specific style over many seasons Yes Sales vary dramatically from one season to the next No Sales Time

46 1. Forecasting Sales A record of sales for each SKU is available. Buyers forecast future sales from extrapolating historical sales. Information from vendors about market research on merchandise categories is useful in buyer’s forecasting.

47 2. Assortment plan A list of the SKUs that a retailer will offer in a merchandise category. Have to reflect the firm’s retail strategy, trade off between too much and too little assortment etc.

48 2. Assortment Plan Costco’s retail strategy: offering good products at good value. Costco offers a few SKU per category (4000SKU) -Fewer SKUs will reduce inventory investment, space

49 Retail store is its warehouse…

50 2. Assortment Plan Costco’s retail strategy: offering good products at good value. Costco offers a few SKU per category (4000SKU) -Fewer SKUs will reduce inventory investment, space -Avoid low merchandize turnover rate -Better control E.g. Dairy products Costco offers National and Private Brand Costco considers complementary SKU

51 3. Setting inventory level Costco will make frequent ordering and shipments -Limited warehouse space -Keep inventory investment low Need to carry buffer stock to avoid stock out -Affected by lead time -Fluctuation in demand -Vendor’s product availability

52 4. Negotiating with Vendors National Brand Products -Discuss performance of previous season, vendor’s offering for coming season -Quality & Uses of product -Product’s market research -Price (10% sales profit) -Slotting fees, exclusivity items, terms of purchase and transportation costs.

53 5. Buys Merchandise Requires a good information system Requires a good supply chain management

54 Supply Chain Management Retail store is the warehouse, saves on labour and cost Averitt Express

55 The major components of retailing Learning Points: 1.Store layout 2.Merchandise Mix 3.Retail Strategy 4.Consumer Buying Behavior 5.Retail Mix 6.Location 7.Human Resource Management 8.Information System 9.Merchandise Management 10.Supply Chain Management

56 The Retail Team of amateurs with Dr Trappey!

57 Thank You!


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