FINANCIAL MERCHANDISING MANAGEMENT

1. To describe the major aspects of financial merchandise planning and management 

The purpose of financial merchandise management is to stipulate which products are bought by the retailer, when, and in what quantity. Dollar control monitors inventory investment, while unit control relates to the amount of merchandise handled. Financial merchandise management encompasses accounting methods, merchandise forecasts and budgets, unit control, and integrated dollar and unit controls.

2. To explain the cost and retail methods of accounting  

Two accounting techniques for retailers are the cost and retail methods of inventory valuation. Physical and book (perpetual) procedures are possible with each. Physical inventory valuation requires counting merchandise at prescribed times. Book inventory valuation relies on accurate bookkeeping and a smooth flow of data.

The cost method obligates a retailer to have careful records for each item bought or code costs on packages. This must be done to find the exact value of ending inventory at cost. Many firms use LIFO accounting to project that value, which lets them reduce taxes by having a low ending inventory value. In the retail method, closing inventory value is tied to the average relationship between the cost and retail value of merchandise. This more accurately reflects market conditions, but is more complex.

3. To study the merchandise forecasting and budgeting process  

This is a form of dollar control with six stages: designating control units, sales forecasting, inventory-level planning, reduction planning, planning purchases, and planning profit margins. Adjustments require all later stages to be modified.

Control units -- merchandise categories for which data are gathered -- must be narrow enough to isolate problems and opportunities with specific product lines. Sales forecasting may be the key stage in the merchandising and budgeting process. Through inventory-level planning, a firm sets merchandise quantities for specified periods through the basic stock, percentage variation, weeks’ supply, and stock-to-sales methods. Reduction planning estimates expected markdowns, discounts, and stock shortages. Planned purchases are linked to planned sales, reductions, ending inventory, and beginning inventory. Profit margins are related to a retailer’s planned net sales, operating expenses, profit, and reductions.

4. To examine alternative methods of inventory unit control  

A unit control system involves physical units of merchandise. It monitors best-sellers and poor sellers, the quantity of goods on hand, inventory age, reorder time, and so on. A physical inventory unit control system may use visual inspection or a stock counting procedure. A perpetual inventory unit control system keeps a running total of the units handled through recordkeeping entries that adjust for sales, returns, transfers, and so on. A perpetual system can be applied manually, by merchandise tags processed by computers, or by point-of-sale devices. Virtually all larger retailers conduct regular physical inventories, two-thirds use a perpetual inventory system.

5. To integrate dollar and unit merchandising control concepts  

Three aspects of financial inventory control integrate dollar and unit control concepts: stock turnover and gross margin return on investment, when to reorder, and how much to reorder. Stock turnover is the number of times during a period that the average inventory on hand is sold. Gross margin return on investment shows the relationship between the gross margin in dollars (total dollar operating profits) and average inventory investment (at cost). A reorder point calculation – when to reorder – includes the retailer’s usage rate, order lead time, and safety stock. The economic order quantity – how much to reorder – aids a retailer in choosing how big an order to place, based on both ordering and inventory costs.

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RETAIL BRANDING

Def : Brand is the product’s essence, its meaning and its direction. It defines its identity in time and space.

Successful Retail Branding starts with:

• 1.      A clear definition of what the retailer stands for
• 2.      An identification of what the customers associate it with
• 3.      When customers think the brand is a reflection of them
• 4.      When the retailer is in the minds of the customer when he think of brand.

Brand

True branding effort

• 1.      Communication that inspires emotional reaction
• 2.      Customer Service
• 3.      How salespersons greet customers
• 4.      How fast product is shipped and delivered
• 5.      Involves every single contact occurring between any product and a human

• Role of Brand
• 1.      Successful Retail Branding ensures Stable long term demands
• 2.      Better margins
• 3.      Differentiation by way of creating long term association
• 4.      Adds value to the product
• 5.      Trust of fulfillment of service expectations
• 6.      Protection from growing competition
• 7.      Image as a company attractive enough to work for
• 8.      Negotiation with suppliers from a position of improved strength

Brand Loyalty

Brand or store loyalty will ensure

• ·         Positive disposal to the brand based on brand loyalty
• ·         Brand preference : Frequent utilization of the store over other stores
• ·         Brand allegiance: Continuous utilization of the store overtime 

Brand loyalty may be expressed for one or more brands

• 1.      Hard core loyalty : Buying one brand all the time
• 2.      Soft core loyalty : Buying a combination of two competing brands
• 3.      Shifting loyalty : Buying preference shifting from one brand to another
• 4.      Switchers: No loyalty to any one brand based on the deal given.

Positioning of brands Determined on the basis of

·         Product usage

·         Price

·         Price

For successful brand positioning Brand Managers should

• ·         Regularly assess the customer’s opinions
• ·         Clearly identify the target
• ·         Plan the brand
• ·         Differentiate the brand from others in the sub group

Differentiate the brand from others in the sub group

Personality of the brand

• ·         It is created by way of adding psychological values through
• ·         Packaging
• ·         Advertising
•     Other aspects of the marketing mix

Importance

• ·         Encourages customers to build a relationship with a brand
• ·         Gives strength to the brand
• ·         Ensures the staying power of the brand

Concept has two non-functional aspects of brands

• 1.      Brand image
• 2.      Brand identity

Brand image

• ·         Customers regard brands possess human-like characteristics
• ·         Customers experience brands as bundles of association
• ·         Customers see, hear, smell, taste and get gut feelings about different brands
• ·         This profile or essence is called brand image

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Retail Promotional Strategy

Retail Promotional Strategy

•  Any communication by a retailer that informs, persuades, and/or reminds the target market about any aspect of that firm

Elements of the Promotional Mix

Advertising Sales promotion Store atmosphere Web site SEM	Personal selling E-mail marketing
Publicity SEM	Word of mouth

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

•          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

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 sponsor

        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

•          Some media require long lead time

•          Some media have high throwaway rate

•          Some media limit the ability to provide detailed information

Personal Selling

Oral communication with one or more prospective customers for the purpose of making a sale

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 time

•          High costs

•          Doesn’t get customer in store

•          Self-service discouraged

•          Negative attitudes toward salespeople (aggressive, unhelpful)

Sales Promotion

Encompasses the paid communication activities other than advertising, public relations, and personal selling that stimulate consumer purchases and dealer effectiveness

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 points

•          Short-term effects only

•          Used as a supplement

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EMERGING TRENDS IN INDIAN ORGANIZED RETAIL SECTOR

The emerging trends in the Indian organized retail sector would help the economic growth in India.

There is a fantastic rise in the Indian organized retail sector in a very short period of time between 2001 and 2006. Eventually, out of the shadows of the unorganized retail sector, India has a chance of tremendous economic growth, both in India and abroad. 

The emerging trends in the Indian organized retail sector are also adding up to the development of the Indian organized retail sector. The relaxation by the government on regulatory controls on foreign direct investments has added to the process of the growth of the Indian organized retail sector.

The infrastructure of the retail sector will evolve radically in the recent future. The emergence of shopping 

The trends to follow in the future:

• The Indian Organized retail sector will grow up to 10% of total retailing by 2010. 

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Retail Inventory Management

The retail industry can be extremely competitive and one of the biggest challenges is managing a store’s retail inventory. Businesses need to have space to store a wide number of products along with a wide variety. If a retail store does not carry enough of a product, then they are losing potential customers who will shop elsewhere.

Retail inventory is different from other forms of inventory because of the quantities needed. Retail chains need warehouses to keep all of their stock and the means to transport it to their stores. Keeping up with such large quantities can be difficult for anyone, even with the help of an automated system. To track a company’s products, a retail inventory management system needs to be successfully implemented.

What Is Retail Inventory Management?

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Right to Consumer Education

Right to Consumer Education means right to acquire knowledge and skill needed to become an informed service receiver for or on behalf of persons with disabilities, their caregivers or families throughout their lives. Ignorance of consumers, particularly the illiterate and rural service receivers, is mainly responsible for their exploitation. Appropriate forum for consumer education, enlightenment and protection of their rights is therefore mandatory to prevent such unhealthy practices in the service delivery organization for persons with disabilities.

CONSUMER MOVEMENT IN THE MODERN PERIOD

Consumer  movement in the present form  came into  being only  in  the 1930's  in the

West  and only in the 60's  in India.

The basic objectives  of consumer movement  world wide  are as  follows :

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The basic reason  for the development  of  consumer  movement in  India 

In India, the basic reasons  for the  consumers movement have been:

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The  factors  which  stimulated the consumer movement in  recent  years  are:

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Extra topics related to consumer education

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Definition of Retail Marketing

Retailing is defined as a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demands of the consumer with supplies of all the manufacturers. The word ‘retail’ is derived from the French work retailer, meaning ‘to cut a piece off’ or ‘to break bulk’.

The successful implementation of the components of the traditional marketing mix (product, place, price and promotion) is essential for success in retail marketing. The savvy marketer must have a thorough understanding of his or her customers to answer the questions that are implied by each of the 4 P's.

<!->Product

A retail business typically opens within a specific business category, such as men's clothes. The retailer must decide questions relating to price range, fashion and selection. All of these issues are answered by the assumptions that the retailer makes on the products most likely to attract his targeted customer base. The ability to match products and customers is as much art as science.

<!->Place

  

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<!>Price

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<!>Promotion
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Retail: The key growth drivers

Changes in demographics: India has the lowest median age of 24 as compared to developed countries like USA, UK, Japan etc. The composition of the Indian population is shifting towards the age group of 20-49 i.e. the working population with purchasing power. Approximately 60% of the Indian population is below 30 years of age. Thus, India has the largest ‘young’ population in terms of sheer size and this young segment is the major driver of consumption as they have the ability (disposable income) and willingness to spend.

Rising income levels: 

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Changes in consumer needs, attitudes and behaviour: 

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Increased credit friendliness: 
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Increasing awareness of Indian consumers:  
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Retail management

Retail management is the sale by seller in small quantities to customer not for resale 
I prefer to understand "Retail Management" as:

The process of bringing the ultimate user to the main producer, through

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Choosing retail store location

Where you choose to locate your retail business will have a major impact on everything your shop does. The difference between selecting the wrong location and the right site could be the difference between business failure and success.

Before choosing a retail store location, define how you see your business, both now and in the future.

·         What do your customers look like?

·         Can you visualize your building?

·         Do you know what you want to sell and what you want your business to be known for?

·         Have you determined how much retail space, storage area, or the size of the office you need?

Without the answers to these basic questions, it will be hard to find the perfect location for generating the maximum amount of profit for your retail store.

Type of Goods

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Factors of retail location

Population and Your Customer

If you are choosing a city or state to locate your retail store, research the area thoroughly before making a final decision. Read local papers and speak to other small businesses in the area. Obtain location demographics from the local library, chamber of commerce or the Census Bureau. Any of these sources should have information on the area's population, income and age. You know who your customers are, so make sure you find a location where your customers live, work and shop.

Accessibility, Visibility and Traffic

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·         How many people walk or drive past the location.

·         Is the area served by public transportation?

·         Can customers and delivery trucks easily get in and out of the parking lot?

·         Is there adequate parking?

Location Costs

Besides the base rent, consider all costs involved when choosing a retail store location.

·         Who pays for lawn care, building maintenance, utilities and security?

·         Who pays for the upkeep and repair of the heating/air units?

·         If the location is remote, how much additional marketing will it take for customers to find you?

·         Will the retailer be responsible for property taxes?

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Personal Factors

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Special Considerations

Your retail shop may require special considerations. Make a list of any unique characteristic of your business that may need to be addressed.

·         Will the store require special lighting, fixtures or other hardware installed?

·         Are restrooms for staff and customers available?

·         Is there adequate fire and police protection for the area?

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