Retailing
Management
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!"
Main topics to be covered in this presentation
•
convenience store
•
101 shopping mall
•
store location analysis
•
warehouse club field study
report
convenience store
• A little history on 7 Eleven
• They have more than 4600 stores in Taiwan
Toshifumi Suzuki
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
Floor layout
• Customers tend to shop in a more deliberate
and efficient manner
• Time spent on the whole buying process is
crucial
Figure 1: Layout of NCTU 7-Eleven
Fast Food
Refrigerator
(ice cream & (microwavable)
frozen desserts)
Refrigerator (dairy products)
Instant Noodles
Fast Food (hotdogs/soup/eggs)
Shelves
Counter
Fresh Food: (Bread/Toasts)
Cookies
Chips
Basic Necessities & Cosmetics
Confectionery Products
Entrance
Canned & Food Fats and Oils
Specialties
Media Shelf
Drinks
Storage
Refrigerator (beverages)
Door
Machine
Fresh Food (buns)
HH Necessities
Assortments mix
Category
Group 2024 Ice Cream and Frozen
Desserts
Group 2026 Fluid Milk
Group 2037 Fruit Juices
Group 2038 Frozen Specialties
Group 2051 Bread & other Bakery
products
Group 2052 Cookies & Crackers
Group 2064 Candy & other
Confectionary Products
Group 2065 Chocolate & Cocoa
Products
Group 2066 Chewing Gum
Group 2086 Bottled, Canned Soft
Drinks & Water
Group 2096 Potato Chips, Corn Chips
& Snacks
Group 2099 Food Preparations
Major Brand(s)
Uni-President
Uni-President
Uni-President
7-Eleven
Uni-President
Ritz
Wrigleys
Meiji
Wrigleys
Uni-President, Wei Dan
7-Eleven
Uni-President, Wei Dan
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
Taipei 101 shopping mall
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
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
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
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
Mall layout & design
Types of Stores
Mall layout and design
• Up to 55% of the mall is allocated to public
space
•Exquisite
WiderWindow
aislesDisplay
• High ceilings throughout the entire mall
• Warm lighting is used to create a soothing
ambience
• Classical music is played in the background
• Clean toilets
Floor Guide & Description
Table 1: Description of each level in Taipei 101 shopping mall
Level
Basement 1
Floor Guide Description
Grand Market High quality food court and
shops for urban living
Examples
Jason’s market,
Grand Market
Food Court
Level 1
Avenue 101
Kenneth Cole,
Bally, Ted Baker
Level 2
The Designer Design oriented international
Walk
brands
Level 3
Level 4
Level 5
Popular regional brands
De Beers, Jean
Paul Gaultier,
Kookai
The Galleries European and global flagship Cartier, Louis
Couture
stores
Vuitton, Celine,
IWC
City Square
High end restaurants and
Wasabi Buffet,
cafes
Maxim’s de Paris
Financial
Centre
Financial centre and banquet
halls
International
Banquet Hall
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
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
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
H&M’s Retail Location in Taipei City
?
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.
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
Trade Area
Taipei City
Trade Area
Trade Area
Type
Accessibility
Competition
Level
Demographic
Type
Zhongxiao
CBD
Very High
Very High
Employees,
fashion
pursuers
Zhongshan
Artistic,
Shopping
Medium
High
Unique
fashion
pursuers
TPE Train
Station
Transportatio
n center,
cram schools,
old CBD
Very High
Medium
Employees,
students,
travelers
Ximen
Teenager
recreation
High
Medium
Students
Tienmu
Residence
Medium
Medium
Foreigners,
residents
Retail Site-East Zone
Breeze
Center
Small Retailers, Apparel &
Accessories Specialty Stores,
Restaurants, Bars
Sogo
MRT
Din Hao
Zhong Xiao E. Rd.
at&t
MRT
Mango
Sogo
BR4
Min
Yao
Sogo
Retail Site-Xinyi District
Zhong Xiao E. Rd.
MRT
UniPresident
Mall
Eslite
Book
A4
Store
Taipei City
Hall
Bella
Vita
Mitzukoshi
A9, A11, A8
Mango
NY
NY
Taipei 101
Movie
Theater
Neo
19
Retail Site
Retail Sites
Accessibility
Visibility
Adjacent
Stores
Restriction
& Cost
East Zone
Very High
High
Department
Stores,
Small
Retailers,
Restaurants
13,000NT/pi
ng/month
XinYi District
High
Medium
Department
Stores
10,000NT/pi
ng/month
Estimate Potential Sales
Xinyi District (Sales at Mango: NT5,940 ,000)
Average Store Size
H&M
Mango
136ping
121ping
Probability of Mango customer shopping at H&M:
(136/5)/[(136/5) + (121/5)] = 0.529
Forecasted Sales at H&M = $0.529 * 5.94m = $3.14m
East Zone (Sales at Sogo: NT4,000,000,000)
Average Store Size
H&M
Sogo
136ping
3636ping
Probability of Sogo customer shopping at H&M
= (136/5)/[(136/5) + (3636/5)] = 0.036
Forecasted sales at H&M = 0.036*(4b/3636*136 )= NT$5.3m
Using Huff Gravity Model with λ= 1
Costco warehouse club field study report
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
The Directors
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
HR Management
Requirements:
• Every employee has to start work from the
bottom regardless of education level
• 3 month probation period
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
Hsinchu Personnel
• To take into consideration the size and
management practices of Costco.
• Administrative Personnel
• Floor Personnel
Administrative Personnel
DEPARTMENTS
PERSONNEL
ADMINISTRATIVE
Senior Management
5
Membership Department
10
Accounts Department
3
Marketing Department
5
Purchasing Department
5
IT Department
2
Logistics Department
30
TOTAL ADMINSTRATIVE
PERSONNEL
60
Floor Personnel
FLOOR PERSONNEL
FLOOR PERSONNEL
Pharmacy
Pharmacy
Optical
Optical
Tire
Center
Tire Center
Food
Preparation
Food Preparation
Operations
and Maintenance
Operations
and
Maintenance
Floor
Helper/
Sample
Personnel
Floor Helper/
Sample Personnel
Checkout
Counters
Checkout
Counters
TOTAL
FLOOR
PERSONNEL
TOTAL FLOOR PERSONNEL
TOTAL PERSONNEL NEEDED
TOTAL PERSONNEL NEEDED
5
55
55
155
415
104
10
36
36
80
80
140
140
Floor Personnel
FLOOR PERSONNEL
Pharmacy
5
Optical
5
Tire Center
5
Food Preparation
15
Operations and Maintenance
4
Floor Helper/ Sample Personnel
10
Checkout Counters
36
TOTAL FLOOR PERSONNEL
80
TOTAL PERSONNEL NEEDED
140
Information Systems
• Electronic data interchange (EDI)
• Intranet
• Extranet: Costco’s CRX
(Collaborative Retail Exchange) program
• No RFID usage
Information Systems
Intranet
• CRX: Vendor
Managed Inventory
System
• Inventory method:
continuous review
system (monitored
continuously with
each sale)
Extranet
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
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
1. Forecasting Sales
• Costco offers a majority of staple merchandises
Yes
Yes
Sales
Staple Merchandises
Category
Sales over many seasons
Sales of a specific style over
many seasons
Sales vary dramatically from
one season to the next
No
Time
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.
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.
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
Retail store is its warehouse…
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
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
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.
5. Buys Merchandise
• Requires a good information system
• Requires a good supply chain management
Supply Chain Management
Averitt Express
Retail store is the warehouse, saves on labour and cost
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
The Retail Team of amateurs
with Dr Trappey!
Thank You!