RETAILING

RETAILING

Shailendra S.Rana presentation,RBMI

RETAILING

Distribution channel

Manufacturing wholesaler

Consumer RETAILER

• Retailing is the Last stage in Distribution Process whereas Wholesale is an intermediate where Goods and services are sold to Business customers.

RETAIL MANAGEMENT INTRODUCTION RETAILING Business activities involve Selling

Goods and Services to Consumers for their Personal, Family or Household use.

Not all retailing done in stores(e.g.direct sales of cosmetics, catalog sales, home shopping on cable TV ,haircut)

E.g. of retailing Food products, apparel, movie tickets; services from hair cutting to e-ticketing.

• Retailers are at the end of the distribution chain & involve in direct interface with the customer

• Retailers pass on products from producers & wholesalers to customers

• Key objective: availability of right product, in right quantity, at right time

RETAILER CHARACTERISTICS

1. Direct End-User Interaction2. Platform for Promotions & POP

displays3. Lower unit sales4. Retail location critical5. Services as important as Core

Products6. Large number of Retailers to meet

geographical coverage and population density

SOME OF THE BIGGEST RETAILERS OF WORLD

• WALMART• KMART• J.C.PENNEY• COSTCO• SAFEWAY

IMPORTANCE OF RETAILING

• Retailers play a key role as the contact between manufacturers,wholesellers & customers

• Retailers collect an assortment of goods from various sources in large quantities & offer to sell in smaller quantities to consumers(SORTING PROCESS)

• Communicating both with manufacturers,wholesellers & customers

• In the absence of retailers Contact between the manufacturer & customer will become complicated

• Save time & cost • Provide Place utility & time utility

FUNCTIONS OF RETAILING

• Activities: * Providing an assortment of products &

services * Breaking bulk * Holding inventory * Providing services

Providing an assortment of products

• Supermarkets carry 15000 different items made by over 500 companies

• This assortment enables customers to buy wide selection of brands,designs,sizes,colors & prices in one location

• Not the case in individual manufacture’s retail outlets

Breaking Bulk

• To reduce transportation costs, manufacturers ship whole cases of their products to retailers

• Retailers then offer the products in smaller quantities tailored to individual consumers usage pattern

• Breaking the large shipments into smaller consumer quantities – Breaking Bulk

16

The Retailer’s Role in the Sorting Process

Holding inventory

• To make the availability of products when consumers want them

• Consumers can have small inventory of products at home as retailers will have the availability

• By maintaining inventory,retailers reduce customer’s cost of storing products

Providing services

• Provide services that make it easier for customers to buy & use products

• Offer products on credit• Display products for ease of use by customers

for purchase• Assistance provided by sales people on

purchase

BUILDING & SUSTAINING RELATIONSHIPS

Relationship Retailing

• Establishing long term bonds with customers, rather than act as if each sales transaction is completely new

• WHY RELATIONSHIP RETAILING?It is harder to attract new customers than to

make existing ones happy

BUILDING RELATIONSHIP WITH CUSTOMERS BY PROVIDING VALUE

• Value is a combination of quality, service & price

VALUE ORIENTED RETAIL STRATEGY

• EXPECTED • AUGMENTED• POTENTIAL

EXPECTED RETAIL STRATEGY

In expected retail strategy customers expect minimum value elements from a retailer-

E.G. Cleanliness of store Convenient store hours Knowledgeable employees Timely service Parking & return privileges If not performed properly, these elements cause

customer dissatisfaction

AUGMENTED RETAIL STRATEGY

In augmented retail strategy retailers provide extra elements for providing value

These extra elements differentiate one retailer from another

E.G.Free home deliverySuperior sales peopleCustomer loyalty programs

POTENTIAL RETAIL STRATEGY

• A potential retail strategy encompasses the value elements which are not yet perfected by any retailer in that industry-

E.G. unlimited customer return privileges7 days/24 hours store timings

DO WE RESPECT OUR CUSTOMERS?

• Do we stand behind what we sell?• Do we keep promises?• Do we value customer time?• Do we communicate with customers

respectfully?• Do we thank customers?

FOUR FACTORS FOR APPLYING RELATIONSHIP RETAILING

• THE CUSTOMER BASE• CUSTOMER SERVICE• CUSTOMER SATISFACTION• LOYALTY PROGRAMS & DEFICTION RATES

THE CUSTOMER BASE

Retailers must analyze their customer base in terms of-

Population & life style trendsAttitude & reasons for shoppingThe level of loyaltyNew versus old customers

CORE CUSTOMERS

• Most loyal• Pay their bills timely• Reasonable in their service request

CUSTOMER SERVICE

Customer service refers to the identifiable but intangible activities undertaken by a retailer.

Customer service comprises of two components-

EXPECTED CUSTOMER SERVICEAUGMENTED CUSTOMER SERVICE

CUSTOMER SERVICE

• EXPECTED CUSTOMER SERVICE-the level of service that customers want to receive from a retailer such as basic courtesy

• AUGMENTED CUSTOMER SERVICE-something extra from the customers expectations. It gives retailer a competitive advantage over other retailers

DEVELOPING A CUSTOMER SERVICE STRATEGY

Decisions regarding customer service strategy are-• RANGE-WHAT SERVICES ARE EXPECTED & WHAT

SERVICES ARE AUGMENTED FOR A PARTICULAR RETAILER?

• LEVEL-WHAT LEVEL OF CUSTOMER SERVICE IS PROPER TO COMPLEMENT A FIRM’S IMAGE?

• CHOICE-SHOULD THERE BE A CHOICE OF CUSTOMER SERVICES?

• PRICE-SHOULD CUSTOMER SERVICES BE FREE?• MEASUREMENT-MEASURING BENEFITS OF PROVIDING

CUSTOMER SERVICES AGAINST THEIR COSTS• RETENTION-TERMINATION OF SERVICES?

CUSTOMER SATISFACTION

• Customer is satisfied when- VALUE & CUSTOMER SERVICE =CUSTOMERS’EXPECTATIONS

• Customer is dissatisfied when-VALUE & CUSTOMER SERVICE <CUSTOMERS’EXPECTATIONS

REASONS OF CUSTOMER DISSATISFACTION

• TRUE LIES-dishonesty or unfairness• BROKEN PROMISES-don’t show up as promised• I JUST WORK HERE-powerless employees who lack the

authority to solve basic customer problems• WAITING-some of the checkout lanes or service counters are

closed• AUTOMATIC PILOT-emotionless,no eye contact,impersonal

service staff• SILENCE-employees who don’t bother to communicate with

customers • DON’T ASK-employees unwilling to make an extra effort to

help customers

REASONS OF CUSTOMER DISSATISFACTION

• RED ALERT-Retailers who assume customers are stupid or dishonest & treat them disrespectfully

• CLUELESS EMPLOYEES-who don’t know the answers to customers’ common questions

• MISPLACED PRIORITIES-employees visit each other or do personal tasks while the customers wait. Employees who refuse to assist a customer because they are off duty or on a break

WHY CUSTOMERS DON’T COMPLAIN

• Customers feel complaining produces no result

• Customers don’t find the complaining easy• They have lot of options

HOW TO GET CUSTOMER FEEDBACK?

• Complaining process should be easy• Make customers assure that their problems

are being addressed• Ongoing customer satisfaction surveys

BASIC QUESTIONS FOR A CUSTOMER SATISFACTION SURVEY

1. How satisfied are you with our customer service?(very satisfied,satisfied,indifferent,dissatified,very dissatisfied)

2. Please rate our customer service(excellent,very good,fair,poor)

3. We provide good customer service(strongly agree,agree,indifferent,disagree,strngly disagree)

4. How often does customer service exceed your expectations?(very frequently,frequently,same verytime,infrequently,very infrequently)

5. What do you like most about our service?6. What do you like least?

CONSUMER LOYALTY PROGRAMS

• Consumer loyalty programs(frequent shopper)reward retailer’s best customers with whom it wants long lasting relationships

FEATURES OF A GOOD CUSTOMER LOYALTY PROGRAM

• Useful & appealing to customers• Attainable in a reasonable time frame• Honor shopping behavior

ELEMENTS OF A GOOD CUSTOMER LOYALTY PROGRAM

• REWARDS• VALUE ADDED BENEFITS• CUSTOMER RECOGNITION

INTERPLAY BETWEEN RETAILERS’ ETHICAL PERFORMANCE & RELATIONSHIP IN RETAILING

For building & sustaining long term relationships retailers have three challenges-

1. Obligation to act ethically (ETHICS)2. Act in the best interest of society(SOCIAL

RESPONSIBILITY)3. Avoid business practices that violates customers

rights(CONSUMERISM)

ETHICS