RETAILING

MANAGEMENT
UNIT - 2

PRESENTED BY

K.BALASRI PRASAD
B.Sc(KU), M.B.A(OU), NET(UGC), (Ph.D)(MGU)
ASSISTANT PROFESSOR IN MANAGEMENT
VISHWA VISHWANI GROUP OF INSTITUTIONS
 BBA/MBA 5 year Integrated Course III Year - V Semester
Paper – 5.1: Retailing Management
Unit – I: Introduction:
Definition and Scope of Retailing; Retailing Scenario – Global; Retailing Scenario-India;
Prospects of Retailing in India’s; Trends in Retailing; Retailing formats; Retail Strategies.
Unit – II: Store Planning:
Store planning; Design and Layout; Retail merchandising; Supply Chain Management in
Retailing.
Unit – III: Retail Marketing and Advertising:
Retail Marketing Strategies; strategic Positioning; retail marketing mix; customer relationship
management; direct marketing; micro marketing in retailing, and adverting in retailing.
Unit – IV: Retail Operations and e-Tailing:
Store Operating parameter; using strategic resource model in Retailing; Designing performance
programme; online retailing, and online retail categories.
Unit – V: Retail Management Information System and Retail Research:
Retail Technology and Automations; Retail Technology and CRM; Human resources and
Executive information systems; Developing a research Methodology; Retail audit.
References:
1. Cullen & Newman, 2007, “Retailing, environment and operations”, Thomson. 2. Levy & Weitz, 2005, Retailing, TMH.
3. Gibson G. Vedamani, “Retail Management”, Jaico Publishing House, 2nd Ed.
4. Ron Hasty and James Reardon, 1997 Retail Management, McGraw Hill International Edition.
5. A J Lamba, 2006, The Art of Retailing, TMH. 6. Patrick M. Dunne and Robert F. Lusch ,2005, Retailing, Thomson Learning
 Unit – II: Store Planning

Store planning;
Design and Layout;
Retail merchandising;
Supply Chain Management in
Retailing.
 Store planning
 Store planning enables retailers to constantly assess
which stores are performing adequately to help achieve the
overall corporate objectives established.
 Store planning also becomes a key factor when considering
new store openings, store closing, and relocations.
 Great customer service begins with the location, format, and
layout of the store.
 If the store is in the wrong location, or doesn’t meet the
specific needs of consumers then all the customer service
can’t make retail Endeavour a success.
There are six key areas of retail store planning that need to be
considered:
1. Store Format
 An effective store format provides the basis for delivering your
products to the right type of customer.
 Using the store format as a starting point allows you to build your
retail plan and put processes in place accordingly.
 Retail Vision has the knowledge and expertise to help you match
your store format, size, and location to your core customer.
2. Site Selection
 The best location for your store is one close to where your customers
live or work, or one which is easy to travel to by car or public
transport.
 Retail Vision will give idea on the tools and skills to develop site
criteria, and help to find the ideal site for the store.
3. Site & Building Planning
 Once the ideal site is selected for the store, make the best use of
the site in terms of access, car parks, traffic flow, and the size of
the building in relation to the site.
 How big the stockroom needs to be in relation to the sales floor,
as well as where to position the service, office, and staff areas.
4. Space Allocation
 Certain product categories will perform better than others, and
correct space allocation can add 15-20 % to your sales and
profits.
 It’s important to identify your best performers and work out how
much space to allocate to each department.
 For example if you are a supermarket, how much space will you
allocate to non-food, household items, and fresh food?
5. Store Layouts
 In order to determine your retail store layouts you need to get
inside the heads of your customers and identify their decision-
making hierarchy.
 How does your customer move around the store and decide
which product to purchase?
 Each category should be placed in its ideal position, with related
categories adjacent to it.
Steps involved in choosing a Retail Location
You can either choose a location in a busy area
within the city which has a considerably high
rent.
or
you can choose a retail store location a small
distance away from the city with a lower
rent where a good amount of money will have
to be spent on advertising campaigns so that
it comes to the notice of the public eye. 
Will they be accessible to your target customers?

Do not forget that your product won’t reach the

customer’s eye if he/she doesn’t walk in through the
door at your store!

Choosing the wrong retail store location can have

disastrous consequences.
1. Type of Store you wish to set up
Your retail store location should be consistent with
the type of product that you want to sell and the type
of store you want to put up.
Are you looking to get your brand into the public
eye, but at the same time looking for a low-cost
option in the initial days of your business?
The first step for you would be to decide on whether
you want to play the number game or position
yourself as a specialty retailer.
2. Demographics
 Six months prior to opening your store, you must start your
site selection process.
 Target audience attributes like Average age, Income of the
people living in your store’s catchment area must be analyzed.
3. Workforce Attributes
 Are the kind of employees you are looking for living in an
area close to your retail store location?
 Will it be easy for them to travel to the store?

 Are there enough facilities around so as to make things

convenient for your employees?
4.Businesses and competition in the proximity
 It is a smart move to place your store at a point which has businesses
around that can eventually help drive traffic into your own store.
 Any business or category of product that is closely related to yours
should help your business too.
 Another important aspect to be considered is competition. Your
competitors have done good research on the demographics before
opening their store there.
5. Footfall
 You can understand the optimum level of traffic for a particular
targeted area.
 Understanding the footfall at your neighboring stores will help you
in a big way to estimate foot traffic at your store.
 You can make use of sophisticated location analysis tools to
understand the traffic pattern in a certain area.
6. Accessibility
 Your store should be easily accessible to the common people
using own/public transportation.
 Having a store with great quality products in a deserted area
would serve absolutely no purpose.
 Depending on which area you are opening the store in, take
into account aspects like parking facilities, distance from
the nearest subway station, whether the street you’re
located on is a walking street, etc.
 Space the shelves and display in your storewide apart such
that people needing wheelchairs can navigate without
discomfort.
7. Leases
 Before you enter into a lease, it is advisable to hire a good
lawyer who can negotiate the lease for you.
 Is this the right location for your store?

 Is the condition of the building good?

 Are there adequate utilities around?

 Is the positioning of your store in the building good enough?

 Is there enough space for all the retail, office storage, and
workroom space you need?
Store Design:

Store design—everything from the height of the

shelf to the carpet on the floor—can help
influence the shoppers in a way that’s favorable
to the sale.
Retail store design factors into window displays,
furnishings, lighting, flooring, music and store
layout to create a brand or specific appeal.
The objective of retail store design is to
positively impact customer experience and
create value.
Three elements of a good design:
 Layout: The arrangement of the products in the shelves and
aisles and display stands constitute the layout of the store.
 Signs and graphics: Use of graphics and lettering to display
store hours, Price Talkers, aisle signs and markers to help
customers navigate the aisles.
 Feature areas and displays to capture attention: To get
the customers attention items will be placed at entrances,
freestanding displays, and sometimes even an entire aisle of
promotional items
 Store Layout
 Store layout is the way, the store or business space that is
used to promote sales and to satisfy the customer.

 Store layout is the design of a store’s floor space and the

placement of items within that store.

 Store owners choose where the best spots are to place their
merchandise, and this helps them design their customer
flow, as well as the ambiance within their store.
 Significance/Importance of Store layout
 Retailers use layout to influence customers'
behavior by designing the store's flow, merchandise
placement and ambiance.
Layouts also help retailers understand how much
revenue per square foot they are making; using this
information, they can properly assess the strengths
and weaknesses in their merchandising mix.
Predict Consumer Behavior: The flow of a store's
layout determines how customers shop. Escalator
placement, arrangement of fixtures and even the
placement of departments affect the store's traffic.
 Maximize Square Footage: This can be predicted with the use
of its layout. So if a specific area is lacking in sales, the retailer
can rearrange merchandise to meet sales goals. 
 Provoke Additional Sales: The layout can organize product
categories together so that customers find different items they are
looking for in one location.
 Equally as important is the layout's ability to keep
complementary products or similar brands in proximity so that
a customer will be more inclined to buy products connected to
the one they are shopping for. 
 Theft Prevention: High-priced items are sometimes kept in
locked showcases in the rear of the store. Sometimes the store
layout places the exit in area that passes security.
Types of store layout
Adopting and adapting are a few basic store layouts can unlock
unrealized sales potential.
1. Grid/Straight Floor Plan: The straight floor plan is an excellent
store layout for any type of retail store. It makes use of the walls
and fixtures to create small spaces within the retail store. The
straight floor plan is one of the most economical store designs.
2. Diagonal Floor Plan: The diagonal floor plan is a good store
layout for self-service types of retail locations. It offers excellent
visibility for cashiers and customers. The diagonal floor plan
invites movement and traffic flow to the retail store.
3. Angular Floor Plan: The angular floor plan is ideal for high-end
specialty stores. The curves and angles of fixtures and walls
makes for a more expensive store design. However, the soft
angles create better traffic flow throughout the retail store.
4. Geometric/FreeFlow Floor Plan: The geometric floor plan is a
suitable store design for clothing and apparel shops. It uses racks
and fixtures to create an interesting and out-of-the-ordinary type
of store design without a high cost.

5. Mixed Floor Plan: the mixed floor plan incorporates the

straight, diagonal and angular floor plans to create the most
functional store design. The layout moves traffic towards the
walls and back of the store. 
Grid/Straight Floor Plan
Diagonal Floor Plan
Angular Floor Plan
Geometric/Free Flow Floor Plan
Mixed Floor Plan
STORE LAYOUT
PLANOGRAM
GONDOLA
Gondola
PROCESSED FOOD GONDOLA
PERSONAL CARE GONDOLA/END CAPS
Layout selection – Chief Considerations
 Along with floor dimensions, it’s essential to do store layout
research before designing your plan.

 However, choosing the best store layout involves more than

adjusting your aisle size or sticking to typical measurements.
Instead, it starts with your customers.

 Specifically, with an “emphasis on the customer behavior

and the customer experiences the retailer wants to achieve.” 
(1) Customer Desires
 Determine what your customers need from your store.

 Do they crave a luxurious experience or demand

convenience? 
 Think about who shops at your store as well.

 Address the consumer’s main concerns first, then move on to

the logistics of your store layout ideas.
(2) Store Density Levels
 The appearance of a packed store draws people in by playing
on their Fear Of Missing Out (FOMO).
 Yet, if your customers can’t comfortably fit down an aisle,
then they may be less likely to make a purchase.
(3) Stock and Presentation Space
 Value: Tightly packed shelves allow you to showcase more items
in less space. But value shoppers want to quickly fill their
shopping carts, which may require wider aisles.
 Exclusivity: Smaller display areas limit the number of items but
may provide for more freedom of movement while narrow aisles
encourage browsing.
(4) Appropriate Transition Spaces: The best floor plans provide
transition spaces that help customers flow naturally throughout
your store.
(5) Decompression Zones: Not everyone is in the shopping
mindset when they enter your doors.
Some may be following a shopping list, while others only want to
browse.
Avoid shocking customers with too much excitement right when
they walk in your store.
(6) Room for Growth
 Investing a ton of money into set fixtures doesn’t make
much sense if you can’t alter your space down the road.

 Although you may not know how your future store will
change, it’s a good idea to build in some flexibility to your
planning.

 The ability to freshen up your space with minimal funding

helps you in the long run.
(7)Emphasis on the Checkout
 The final checkout (billing) space isn’t merely an area to
complete a purchase.
 Instead, well-planned store layouts guide the shopper to the
checkout area in a natural manner while also providing
opportunities for extra purchases.
(8)Operational Support
 Although your focus should be on your customers, if your team
can’t replace inventory without closing down an aisle, then you
have a problem.
 Before finalizing your design layout plan, take a walk through
from the perspective of an employee.
 Doing so will help you avoid issues with stocking, moving
displays, or creating promotional spaces.

Aisle
 Visual Merchandising
Visual merchandising is the practice in the
retail industry of optimizing the presentation of
products and services to better highlight their
features and benefits.
The purpose of such visual merchandising is to
attract, engage, and motivate the customer
towards making a purchase.
Visual merchandising traditionally occurs
using a blend of lighting, color combinations,
and articles of decor to stimulate an observer
and generate interest.
Retail merchandising
Retail merchandising is the organization of
merchandise in an appealing way to get shoppers
who come to retail store to be engaged and inspired
to purchase more products than they initially thought
they would.
Retail merchandising, when done right,
Removes confusion of customers, what to buy from
shoppers
Encourages a customer to shop in your store rather
than in another, and
Converts more shoppers into customers.
‘The Rights of Merchandising’ are :
The right merchandise
The right quantity
The right price
The right time
The right place
The right quality
Most basic an in-store merchandising plan should include: 
 An overall store layout plan of how traffic will move through
your store.
 A department plan that changes in-store displays with the
seasons and holidays.
 A budget for store fixtures, props, lighting, and signage.
 A merchandise planning system which will help maximize turn,
limit out-of-stocks, increase margins, and minimize markdowns.
 The time needed to merchandise a store will vary due to a
variety of circumstances:
 total number of SKU’s,
 size of your window displays,
 special requirements for individual displays, especially those needing
security,
 ability to move your fixtures easily. 
PROPS WINDOW DISPLAY
 Factors affecting retail merchandising
 Retail merchandising consists of the planning, buying and
selling of goods and products that retailers will then sell to their
customers. 
1. Size of the retail operation
 Is it a small operation with a single retail outlet, or is it a major
retail conglomerate with stores worldwide and websites in every
language?
 Who is in-charge of merchandising tasks. In a small retail
operation, the owner might take the controls for this
responsibility. 
 A multi-store chain may opt to have buying processes done at a
regional or local level, or have all store’s stock products based on
national trends.
2. Separation of duties
 Separation of duties is common in mid-size and large retail
operations.
 Often, buying, planning and selling may be separate tasks and
responsibilities for a variety of reasons, from security to
specialization.
 When the same person isn't taking care of all three parts of the
merchandising – buying, selling and planning – retailers need to
consider how that could impact overall merchandising efforts.
3. Shopping channel
 Nowadays, consumers have a number of options when it comes to
how they want to shop – online, through television, in-store, via
mail catalogs, etc.
 Retailers should offer all of these options to customers, it's pivotal
they have the merchandising strategy in place to support this
initiative.
 Whether retailers are known for low prices, unique products
or any other trademark, it's important that they take into
account how channel can impact merchandising efforts.
 A study from Retail Systems Research concluding that 70
percent of respondents believe Merchandising and
Inventory Management are critical to the success of
retailers.

4. The organization structure:

 The organization structure that the retail organization adopts,
also affects the merchandising function.
 It is usually dependent on the size of the organization.
 Process of merchandise planning
 1. Forecast of Sales:
 Merchandise plan or budget is dependent on estimated sales.
 Forecast of sales for entire organisation, department and product
wise is to be made.
 Further new products to be added, or deletion of product is to be
considered.
 Estimate is made based on past records, present scenario, impact
of fashion, economic trend etc., Firm also has to determine pricing
strategy in the sale of product.
2. Merchandise Budget:
 Estimate of merchandise required is made based on expected sales.
 Estimate is made at head office level that determines merchandise
required for each store or department.
 Merchandise required for each department and likewise for each
store and for entire organisation.
 Makes financial implication of investment in merchandise.
 Plan ensures that investment on merchandise assures expected gross profit
or return.
 Plan has to assure that each store and departments is given adequate stock
support to avoid scarcity. At the same time it has to ensure that there is
turn-over of merchandise, if not to adopt strategy like markdown sales to
replenish the stock.
3. Merchandise Control:
 Retailer has to balance between purchase and sale of merchandise.
 It is necessary to avoid either over or under stocking of merchandise.
 Daily and weekly stock reports are taken to monitor the movement of
stock.
 Fresh order of purchase is made before the stock reaches danger level.
 Firms will have their own policy of maintaining stock levels. Control over
inventory can be ensured by monitoring movement of merchandise from
the warehouse to the store and from there to the department.
 Adequate control can minimize the problem of stock clearance, or
discount or mark down sale.
4. Assortment Planning:
 Assortment is arrangement of products category wise.
 It is presentation of entire products range classified under
categories, department or section.
 E.g. – Food section, cosmetics, Garments etc., merchandiser has
to ensure that there is proper assortment i.e., each assortment or
section must have relevant or related items, every category must
have adequate SKU (Stock keeping units) no shelf/rack should
be empty.
 At the same time it should be ensured no department or product
category is overloaded.
 Assorted merchandise need to be presented making optimum use
of space and positioning the products in racks, hangers etc., so
that it is visible, and comfortable for customer to select.
 Merchandise Buying
This activity includes the following −
 Step-1: Collect Information − Gather information on
consumer demand, current trends, and market requirements.
 It can be received internally from employees, feedback/complaint
boxes, demand slips, or externally by vendors, competitors, or
via the Internet.
 Step-2: Determine Merchandise Sources − Know who
all can satisfy the demand: vendors and producers.
 Compare them on the basis of prices, timeliness,
guarantee/warranty offerings, payment terms(Lead Time),
performance and selecting the best feasible resource(s).
 Step-3: Evaluate the Merchandise Items − By going
through sample products, or the complete lot of products, assess
the products for quality.
Step-4: Negotiate the Prices  Realize a good deal of
purchase by negotiating prices for bulk purchase.
Step-5: Finalize the Purchase  Finalizing the product
prices and buying the merchandise by executing buying
transaction.

Step-6: Handle and Store the Merchandise

Deciding on how the vendor will deliver the products, examining
product packing, acquiring the product, and stocking a part of
products in the storehouse.
Step-7: Record the Buying Figures  Recording details
of transactions, number of units of products according to product
categories and sub-classes, and respective unit prices in the
Inventory Management System of the retail business.
 Functions of Merchandise Manager
1. Develop and Maintain Vendor Relationships
 Merchandise Managers are their employer’s representatives in
communication with vendors.
 They are responsible for maintaining a positive working relationship
with all vendors, as well as negotiating product and shipping prices.
 They are also responsible for evaluating new vendors.
2. Develop and Implement Visual Merchandising Strategy
 Merchandise Managers are responsible for developing and
implementing the visual strategy for displaying products.
 This involves creating Planograms, performing floor moves and
delegating tasks to sales employees.
3. Maintain Inventory Management Records
 Merchandise Managers keep track of inventory supply.
 This involves proficiency with spreadsheets and basic accounting
skills, as they must track trends in production and shipping costs.
4. Train Employees on Product Knowledge
 No one knows more about the products a company sells than the
Merchandise Managers.
 They’re responsible for understanding the features and benefits
of a product, and then deciding whether said product would be a
hot seller amongst their target audience.
5.Analyze Sales Trends and Adjust Product Offering
 Merchandise Managers must constantly be analyzing Key
Performance Indicators ( KPIs ) to see which products are
generating the most revenue and which products are selling less
than projected.
 They then use this data to adjust the offering of products
accordingly.
 Merchandise Performance
The following methods are commonly practiced to analyze merchandise
performance −
ABC Analysis
 It is a process of inventory classification in which the total inventory is
classified into three categories −
 A – Extremely Important Items − Very crucial inventory control on
order scheduling, safety, prompt inspection, consumption pattern, stock
balance, refill demands.
 B – Moderately Important Items − Average attention is paid to them.
 C – Less important Items − Inventory control is completely stress free.
 This approach of segregation gives importance to each item in the
inventory.
 This way, a company can decide its investment policy in particular
items.
 Sell-Through Analysis
 In this method, the actual sales and forecast sales are compared
and the difference is analyzed to determine whether to apply
markdown or to place a fresh request for additional merchandise
to satisfy current demand.
 This method is very helpful in evaluating fashion merchandise
performance.
Multi-Attribute Method
 This method is based on the concept that the customers consider
a retailer or a product as a set of features and attributes.
 It is used to analyze various alternatives available with regard to
vendors and select the best one, which satisfies the store
requirements.
 Supply Chain Management in Retailing
 Supply chain management is the management of the flow
of goods and services and includes all processes that
transform raw materials into final products.

 It involves the active streamlining of a business's supply-

side activities to maximize customer value and gain a
competitive advantage in the marketplace.

 Supply Chain Management (SCM) is the management of

materials, information, and finances while they move from
manufacturer to wholesaler to retailer to consumer.
It involves the activities of coordinating and
integrating these flows within and out of a retail
business.
Most supply chains operate in collaboration if the
suppliers and retail businesses are dealing with each
other for a long time.
Retailers depend upon supply chain members to a
great extent.
If the retailers develop a strong partnership with
supply chain members, it can be beneficial for
suppliers to create seamless procedures, which are
difficult to imitate.
==================================================================
=
 SCM is based on the idea that nearly every product that comes to
market results from the efforts of various organizations that
make up a supply chain. 
 In SCM, the supply chain manager coordinates the logistics of
all aspects of the supply chain which consists of five parts:
The plan or strategy

The Source (of raw materials or services)

Manufacturing (focused on productivity and efficiency)

Delivery and logistics

The return system (for defective or unwanted products)

 Supply Chain Integration
 Supply chain integration is a process where all the parties involved
with the fulfillment of a product are integrated into a single system.
 This requires significant coordination and alignment in order to
ensure everyone is effectively working toward the same goal at all
times.
 The process of creating cohesion and increasing connectivity
throughout the entire value chain, from procurement to production
planning to logistics.
 Integration help to smooth out the day-to-day functioning of a
modern supply chain.
 Different teams within an integrated supply chain should be able to
work together to bundle shipments, find new efficiencies, and
generally uncover areas of waste and redundancy.
 Vendor Managed Inventory(VMI)
 A business model where the buyer of a product provides
information to a vendor of that product and the vendor takes full
responsibility for maintaining an agreed inventory of the
material, usually at the buyer's consumption location.
 A third party logistics provider can also be involved to make
sure that the buyer have the required level of inventory by
adjusting the demand and supply gaps.
 Benefit of VMI is that the vendor is responsible for supplying
the customer(Retailer) when the items are needed.
 VMI removes the need for the customer to have significant safety
stock because the supplier manages the resupply lead times.
 The customer(Retailer) also can benefit from reduced purchasing
costs. Because the vendor receives data and not purchase orders,
the purchasing department has to spend less time on calculating and
producing purchase orders.
 The need for purchase order corrections and reconciliation is
removed.
 Lower inventories can reduce the need for warehouse space and
warehouse resources.
 As manufacturer has more visibility to their customers‘(Retailer’s)
inventory levels, it is easier to ensure that stock-outs will not
occur.
 Supply chain managers will feel like they can't find another
source for a product that is being managed by a supplier they
trust.
 Collaborative Planning, Forecasting and
Replenishment(CPFR)
 An approach which aims to enhance supply
chain integration by supporting and assisting joint practices.
 CPFR seeks cooperative management of inventory through
joint visibility and replenishment of products throughout the
supply chain.
 Information shared between suppliers and retailers aids in
planning and satisfying customer demands through a
supportive system of shared information. 
 The idea behind CPFR is that by coordinating activities
throughout the supply chain, inventories can be moved more
efficiently, in the correct quantities, to the correct inventory
locations to meet customer demand.
 Benefits of CPFR
Improved accuracy of sales and order forecasts
Reductions in inventory levels
Closer relationships among the supply chain
partners
Reduced supply chain uncertainty
Realization of supply chain cost reductions
More effective mitigation of supply chain risks
Improved flow of materials and information up and
down the supply chain
Greater efficiency in production and manufacturing
 Assignment / Important Questions
Unit-2
1. Explain key areas of retail store planning that need to be
considered.
2. Discuss the Significance of Store layout. Explain types of
Store Layouts.
3. Explain the Process of Merchandise Planning. Emanate on
how Merchandise performance is evaluated?