Retail Management: A Strategic Approach (International Edition)
1. What are the pros and cons of starting a new bakery versus buying an existing one?
Starting up a bakery business had advantages of non-restrictive decision-making hence the direction and the control of the business all depends on the owner. It also advents owners by operating the way s/he likes by means of creating own working environment. Aside from the flexibility of working hours, the owner could further gain business knowledge and experience and the financial gain will be limited to him/her. There are also no limitations of how successful the business will be and on the amount of income earned. Disadvantages of start-ups, however, are risks owned and mitigated solely, increased responsibility and increased liabilities. Not getting paid of extra long hours and uneven period and substantial investment of time and money are other disadvantages. When buying, this provides opportunity to own business minus all the paper works and also reducing the risk. It can take less time since there is no need to build up the resources. Customer list and physical location of the business could be readily available as well as legal approvals necessary. Drawbacks of buying an existing bakery business are investing large amount of money aside from the requirement of working capital and honoring or renegotiating contracts.
2. How would you supervise and motivate a 19-year-old supermarket cashier? A 65-year-old cashier?
When motivating the young cashier, it is important to recognize both small and big accomplishments within the workplace. Appreciation is one of the requirements of the young workers particularly in the retail industry that does not always compensate achievements with monetary values. Praise or positive feedbacks given in a fairly public place also seems to boost esteem of employees aged 16 to 25. Humiliating young employees, however, only builds resentment toward the company. Communicating with the young cashier is also imperative because this is seen as a way to build relationships especially on lower level employees like the cashiers. In supervising this cashier, internal promotion should be considered particularly when performance is above excellent. Dialoguing is another way to supervise him/her effectively to learn about work-related concerns. On the other hand, supervising the older cashier requires that the management provides ongoing challengers for him/her for it is important that s/he will feel functional and important. Apart from seniority, performance should always be an indicator and not the age. Communicating openly with him/her about individual strengths and weaknesses is the next important thing. Promoting involvement, providing regular feedback, offering training opportunities, offering flexibility, cultivating an atmosphere of respect are just some of the motivational tools for the older cashier.
3. Present a checklist of two factors for a chain retailer to review in determining how to allocate merchandise among its stores.
In allocating merchandise, one basic checklist is a checklist to reduce inventory shortages. There are six categories for this checklist: buying, marking, handling, selling, inventory planning and accounting. This 20-item checklist determines the quantity of merchandised purchase including noting special purchase terms and returned goods. Retail prices are also determined if clear and proper. Markdowns and additional markups are recorded. Removing all price tags if necessary is covered. Purchase quantities against orders are checked and also the measured quantities of the merchandise. Whether sales personnel are aware of the correct selling prices is also checked and recorded. Lastly whether physical inventory is conducted and permanent records are kept and monitored for accuracy are also checked.
Space planning is another important aspect of merchandise allocation. A checklist that ensures merchandise reach the retail store at the least possible time is location/site evaluation checklist. There are eight categories such as pedestrian and vehicular traffics, parking facilities, transportation, store composition, specific site and terms of occupancy and overall rating. This checklist identifies the potential consumer traffic that could eventually purchase merchandises. How accessible is the merchandise store for people is determined through this checklist aside from the visibility and possible rivals of the stores.
4. What are the pros and cons of a retailer’s relying too much on a want book?
The retail outlook is shaped by needs and wants of the retailers themselves. Retailers are always after making sales and making stores more appealing to boost sales. Nevertheless, they also do not want being out of stock and having excess stock. Performing better is an ongoing goal of retailers. As such, they keep a want book. These want books reflect what are needed and how it should such need be accomplished. One benefit of having a want book is its very nature which is direction and performance-driven. Retailers want the best for the business which in effect is the best for employees, shareholders, stockholders and the community in general. Another advantage of having a want book is that its task specificity. Retailers would know if their wants are realistic and attainable aside from being objective. In this way, tasks to accomplish could be effectively delegated. However, when wants books are inexistence the tendency is to zealously implement things by the book which jeopardizes flexibility and creativity of the employees, teams and the workforce generally. Retailers could put pressure on the people to accomplish tasks that are either too simplistic or impractical.
5. Present a seven-item checklist for a retailer to use with its reverse logistics.
A reverse logistics checklist will cover freight issues, control issues, customer service issues, product recovery, inventory of returned goods, financial asset recovery, and shipping right merchandise. Decisions will be based on this. To illustrate:
6. What are the pros and cons everyday low pricing to a retailer? To a manufacturer?
One of the main advantages of everyday low pricing to a retailer is making profits or returns which could be in excess of cost capital basically because of the other advantages as low-cost capital, with low fixed costs and specific knowledge of operation was realistically obtainable. Another advantage for the retailer is the capability to carry diverse lines of merchandise in great depth. However, the disadvantage is bulk buying which is common among retailers selling at discounted prices. The prices of merchandise move along with the changes in the industry like inflation and deflation and shift in demand and supply, for instance. For the manufacturer, an advantage is the continuity of production specially that there is an expectant place, people or establishment to supply. Another advantage of the manufacturer is, although products are sold at low prices, retailers carry the name of the manufacturer as a trusted brand. However, the power over the retailer is low. Retailers could put pressure on manufacturers to sell merchandise at much cheaper prices. In other times, retailers could demand the manufacturers to increase quality of items which will impact materials and production costs.
7. What, how, why and give a explain - Retail institutions by ownership in retail business
There are six ownership forms in the retail business. Independent is the first type generally referring to private-owned companies. These are mostly sole proprietorships, requiring own entrepreneurial skills, control over investment, cost and personnel and decision-making. Next is chain or retail outlet where brand is shared and the management is centralized. Chains typically have standardized business procedures and practices. Because there is common ownership, coordinated decision-making is possible. Franchising is the third where franchisors lend franchisees the use of the latter’s business philosophy, expertise and know-how. Franchising has benefits for both like expansion and legal and operational considerations. Leased department is conferring a right in one person to utilize a space belonging to the other within a retail store. Department leasing could be in fixed term, periodic, at will and at sufferance. For as long as the lessee pays rents and abides by the terms and conditions, s/he could occupy that department. Vertical marketing system is where producer, wholesaler and retailers work together as a unified group for the purpose of meeting customer needs while a consumer cooperative is a business owned by its members. Consumer cooperatives are also known as retail co-ops where merchandise sold are no different from a usual retail store.
8. What, how, why and give a explain - Identifying and understanding consumers in retail business
Retailers, in order to be profitable, should tap on what drives and influences consumers toward making a purchase decision. Six among these influencers are demographics, lifestyles, needs and desires, shopping attitude and behavior, retailer actions and environmental factors. Consumer demographic profile shapes and determines preferences of the people that they develop through interaction with family, friends, relatives, workers and even acquaintances. Further, consumer decisions also depend on social status for instance. Another determinant is levels of income which directly relates with levels of disposable incomes. Culture an affinity also affects the decisions especially those traits that are long-held in the families. To wit, it is important to consider attitudes and personality when making a purchase. Behaviors that are evident in perceptions of risk and outcomes of the purchase are other things to consider. Although functionality is always important, purchase decisions also depends on price, alternatives, convenience, brand name and reputation of retailers. The shopping experience itself inside a retail store is also important. Sales and quality finds are two among the motivators of purchasing. Environmental factors that shape purchase decisions are ethical stance or reputation of retailers and conformance to environmental policies applied when producing goods.
9. What, how, why and give a explain – retail organization and human resource management in retail business
Customer service is critical in the retailing business as it enhances level of consumer satisfaction. As a process to meet customer expectations, it is vital that retail stores are strategically manned. Strategically means employees are capable of dealing with the customers in respectful manner before, during and after the purchase. Employee empowerment is then a requirement. This can be carried out by means of integrating learning and development initiatives for the people while also creating an engaging culture in the process. Developing internal talent would be costly for retailers but if they realize the benefits of such in the long run they will invest in it. Retailers must remember that turnover rates incur significant costs and it ruins spontaneity. Training is just one aspect of human resource management others are recruiting, selecting, compensating and supervising. During recruitment and selection, aiming at diversity must be considered because a diverse workforce serves as a resource rather than a threat. This is a capacity-building strategy evident in range of talents, experience and knowledge insight. Nonetheless, a retail organization should compensate on the basis of performance. Understanding employee attitudes and behaviors would ease supervising.
10. What, how, why and give a explain - pricing strategy in retail business
Pricing strategies are demand-oriented, psychological, cost-oriented or competition-oriented. Demand-oriented pricing is a method of pricing where price is established for a product or service on the basis of level of demand. In setting prices, the manufacturing cost of the product and the required gross profit margin are of secondary importance. This is because prices could be raised when demand is high and lowered when demand is low. Profitability then is based on demand. Psychological pricing is a marketing practice where the belief is that specific prices have a psychological impact. This strategy of pricing depends greatly on the quality associations and prestige of the product. Cost-oriented pricing is a method of pricing where a fixed sum or a percentage of the total cost is added into the cost of the product to arrive at its selling price. Hence, the price is considered reasonable considering the cost incurred and perhaps efficiency of the operation. Finally, competition-oriented pricing is a strategy wherein prices are set based on what a firm’s competitors are charging competitive advantage. As such, prices are based on a unique or special feature of a firm that its rivals do not possess.
11. What, how, why and give a explain - developing merchandising plans in retail business
Merchandising plans should adhere into merchandising philosophies such as target market needs and wants, positioning, value chain, supplier capabilities, cost, competitors and product trends. Merchandising plans are important due to the fact that it implicates effective forecasting, innovating, assorting, branding, timing and allocating. Forecasts are the foundations of the plans while assortment implicates alternative for proper selection. Even so, retailers must bear in mind the ever-changing preferences of consumers which may define assortment and forecasting. Inventory and stock forecasting on the basis on demands on consumer staples of basics and special categories must be carefully planned. Merchandise planning should be founded on realistic marketplace variables including target market, trends, responsiveness, competition, profitability, risks and product life cycles. Salability is the main indicator here whereas the quality of merchandise is the determinant. Thereby, brands that retailers carry should be wide and must be of high quality. Merchandise flow directly relates with how effective the planning will be. Inventory levels and rates though it depends on demand will also tell if the merchandising planning is effective or not perhaps after a year.
12. What, how, why and give a explain - Implementing merchandising plans in retail business
Implementing the plans encompasses several stages that start from gathering information, selecting and interacting with merchandise sources, evaluating, negotiating, concluding purchases, receiving and stocking merchandise, reordering and reevaluation. Sources are manufacturers, full-service merchant wholesaler, limited-service merchant wholesaler and agents and brokers. Looking from this, informations are sourced through an interdisciplinary approach. Merchandisers should consider factors such as pricing, reliability, order processing time, information, guarantee, reorders, markup and risk among others. To negotiate properly, opportunistic buying and slotting allowances must be also considered. Ownership is transferred to the retailer after successful negotiation although there are other ways to conclude purchase like when shipment is received and when the supplier is paid already. Receiving and stocking depends on the stocking plans and arrangements. Space planning is also critical at this point to provide optimum visibility for each product category. There are four factors that affect reordering process which include order and delivery time, inventory turnover, financial outlays and ordering costs. These are the outcomes of reevaluation wherein the consumable space in retail stores, levels of demand and costs are just some of the pointers to determine the need for reordering.
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