Professional Documents
Culture Documents
Home Shopping
As per guided instructions we were supposed to establish a new small-medium sized
retail store, so we planned to open a medium sized Departmental store with high variety
and medium assortment it would have a high variety of products arranged and displayed
in departments within the store dealing with all type of products with medium level of
service and normal prices and target market would be the people of the concerned town
thats Johar town, well open the store in the middle of town that connects whole town
and people can conveniently come and buy things that they want to.
The complete structure of store its strategies, functions, buying behavior and retail mix
are described below in detail:
Providing Assortment: assortment is the depth of a product that a retailer keeps for
its customers, retailers specialize in one category and provide alternative products
and brands of that product to the customers, being a departmental store our variety
would be high but assortment would be medium so the customers can choose in
between different type of products and brands, we would also be keeping multiple
stock keeping units (SKUs) so the customers can have the quantity they desire and
we wont be out of stock as well.
Breaking Bulk: breaking the bulk describes the importance of retailers
manufacturers and wholesalers cant provide products to customers in low quantity
they deal in larger quantities but retailers take from wholesalers and provide
customers the quantity of product they want, being a departmental store we would be
buying in bulk but selling in smaller quantity and providing them with products they
want to suit their needs
Holding inventory: we would be holding enough inventory to serve all customers
when the demand of a specific product arises and would be keeping inventory in no
consumption time, manufacturers would also be funded by keeping their products in
store
Providing Services: just like providing customers with products services carry equal
importance with products we would give them some value adding services to choose
our store and become loyal like giving products on credit to customers but not to
everyone, giving them a trial of possible products so they can choose weather to buy
it or not, displaying all products where they can be seen so the customers can choose
1
Final Project
easily, they can touch and feel the products before buying, if they dont like it or are
not satisfied with its usage they can return it (not every product) sales people would
be arranged to answer their questions about the product, and delivering them
products at their homes.
Variety
Broad
Assortment
Medium
Prices
Normal
Services
Medium
Location
Medium
Well be following the pattern of a departmental store to meet the customers needs
that they can come to one place and buy whatever they need to or the products can
even be delivered to their homes without any extra charges
Budget: heres our complete budget plan and sales required to reach break
even, we have analyzed the market it has got potential and for a departmental
store and we can reach break even with in 2 years of our startup and then
profits will start generating, given below are the complete details.
Expenses
Building rent
Salaries
Utilities
Total
Amount in millions
0.1
0.2
0.1
0.4
Final Project
Given below are one time acquiring and starting up costs.
Activities
Building acquiring cost
Wiring and electricity works
Utilities and office equipment
Racks
Computers and sales software
Training employees and hiring
Total
Costs in millions
1.2
0.25
0.25
0.1
0.25
0.1
2.15
We have analyzed our monthly expenses are around 0.3 million rupees and we would
take around 2 years to reach break even our invested amount thats 4.4 million so we
would have to make sales of 3800 rupees every day.
The finance sources are given as under.
Sources
Owners
Loan
Outside sources
Percentage
50
25
25
Business Plan: we have planned where we see our business within 10 years
all these plan are given below
Short-term plan: after startup we have a plan to get the
customer feedback and keep up the good work with customers
help and as customers as we can with in the first year.
Medium term plan: with 1-5 years of our business we have
planned to open more departments in our store and extend it in
size by keeping just one store in focus
Long term plan: within 5-10 years of our business we plan to
move out of Johar town and reach other towns as well and
increase the number of our stores in city Lahore.
Final Project
Need recognition
Information search
Evaluation
Selection
Purchase
Repeat purchase and become loyal
Home Shopping
Normal
Zero
Almost 5-10 mins. For Johar town
5 mins.
Normal
Around 100
According o the multi attribute model of store performance to rate the store it would be
having the following points:
Final Project
Convenience
Assortment
Information search
8
7
7
Using this model we can understand where we are into the consideration set of our
customers as compared to our competitors and who will be more attracted to our stores in
our case families who want convenience and economy will be more loyal to our store.
Well be following this retail format to keep our self ahead of our competitors
Attributes
Assortment
Number of outlets
Price
Home shopping
Medium-high
Single
Medium
5
Final Project
Breadth
Ambiance
CRM
Location
Positioning
High
Medium-High
High
Medium
Departmental store
Final Project
departments and we would be using cost based pricing and would promote our
store in the whole town by holdings within the town and by distributing brochures
house to house, our merchandise would be displayed in a highly arranged manner
in store for convenience of customers and location is the center of town where
every household from town and outsiders near it can approach within 10 minutes
or even lesser than that.
Evaluation of Performance: once the business starts running on its own with
most of the customers from the town coming to us we would be able to evaluate
our products and services how are we performing and where is some gap for
improvement and by overseeing that necessary improvements can be managed by
the team supervising the store in terms of quality and services.
6) Retail Store site selection and Location: The selection of a retail store is the
most important task it defines the success of business, if location is not considered or
analyzed it may lead to cannibalization but we have just one branch so there wont
be any such case but we analyzed the location well and followed a path to select the
location
Demography: our store is in Johar town a town with high population thats
increasing favorably and most of the people here belong to a same social class
with income and are willing to pay for good products and services.
Competition: we will face high intensity of competition here but the services
provided by our competitors are below the expectations of their customers so
well manage to survive and thrive as well
Business Climate: the business climate of this town would be in our favor people
here are with high income and willing to pay for products and market in this area
is facing its growth now so we have high possibility of success.
Accessibility: we are located in middle of the town our suppliers can reach us
easily in time and customers also would feel convenient to come.
Macro Analysis pattern of road is quite simple we are located at the end of a
main road and the road conditions are good there wont be any problem in
reaching the store, there are no such natural barriers to our store as well.
Micro Analysis: we are located on the left side of the store so its easy for
customers to stop by while going back to home, our store is on main road and is
visible to people passing by, as we are a medium sized store we have parking
facility of around 25 cars and 30 bikes at the same time that would more than 100
customers in the store at the same time and we analyzed it would be enough for
our start.
Trade Area: our 60-65 percent of customers form primary are from Johar town
and 20-25 percent of people from secondary area are from Gulberg and other
7
Final Project
towns near by and the rest of people form tertiary area are from the entire city that
are just visiting us once or twice by chance.
7) Retail Mix: its the set of tools and activities that a retailer uses to attract it
customers and satisfy them by providing them required products and services, some
of the important tools are mentioned and discussed below that wed be following in
order to achieve our targets.
Final Project
Your Human resource makes you stronger and gives you edge over competitors few
of the possible special issues that can occur in retailing are given below with the
solution how well handle them:
Part time employees: they are not trained though they cost less but they can
cost you double when not train with a adequate information of business
Expense control: paying employees high for better performance is a plus
point but it can reduce profits and increase the expenses.
Employee Demographics: seeing the type of store should be the employee
you cant use employee with age of more than 60 for a job that requires mind
and body effort the type and age of employees should be according to the job
International Issues: if your employees are from different countries and
cultures there can be a difference in their values and thats a hard thing to
make them understand and requires time, there could be different labor laws
in every country and they might need to learn your laws and hence training
and time would be required again.
Objectives of HR: all objectives that we took under consideration re given below
Final Project
10
Final Project
Owner
Merchandi
se
manager
Financial
Controll
Store
manager
Supervisor
Sales
Personnels
Solution for these issues: Taking following steps can solve all those
issues
discussed above
Having centralized system of control
Making coordination between departments
Involving store management in purchase
Assigning buying-selling roles
11
Final Project
Collecting
customer
data
analyzing
data and
identifying
target
market
Implementin
g CRM
programs
Developing
CRM
programs
Analyzing data and identifying customers: this phase includes the following
steps mentioned and discussed below;
Identifying information: where possible we can ask our customers about
their proffered products but its not possible all the time it be the violation
of their personal information some times in which they are nt interested to
share
12
Final Project
Offering shopping cards: Through these cards you well be able to see
what amount of products they are buying and how recently they have been
shopping
Identifying Market segment: by having RFM surveys we can get to now
who was the most recent customer, what was the frequency of their
purchase and what is the monetary value, so we will be able to know the
type of customers we are having and their require products
Knowing the type of customer: dividing the customers into following 4
types shown in the customer pyramid, well be able to know their types
and focus on platinum customers and converting others inot platinum as
well and deselecting the lead ones.
Pla
tin
um
gold
iron
lead
RFM analysis: it deals with how recently that customer has purchased
any product whats the frequency of his purchase and whats the monetary
value he is purchasing and by having this analysis wed be able to know
the type of that customer and then dealing with him accordingly
13
Final Project
Recently
Frequency
1-2
1-2
3-4
3-4
5-6
5-6
Over 6
Over 6
Monetary
<50000
>5000
<10000
>10000
<25000
>25000
<50000
>50000
0-2 months
3-4
5-6
Over 6
Implementing the program: by following all the steps and phase we can
implement and ensure a safe and profitable CRM program and can maintain a
relationship with our customers to be profitable and satisfy their needs as well.
14
Final Project
11) Buying
Merchandise,
Brand
Negotiation Strategies with Vendors.
Decisions,
The strategy of our store for buying merchandise for sale its
decision making and negotiations with vendors are described
below:
Final Project
Final Project
The communication program informs the customers about the retailer as well
as the merchandise/services
Can be used to create and maintain a strong differentiation for the retailer and
his brands
17
Final Project
Flexibility
Credibility
Cost
High
Highest
High
High
High
Lowest
High
Low
Low
Modest
Lowest
Low
Low
Modest
Modest
Modest
Modest
Modest
Modest
Highest
Highest
High
Low
Low
Highest
Low
Low
Low
High
Low
Paid
Impersonal
Mass media
Direct mail
Sales promo.
Store atmos.
Website
Paid
Personal
Sales person
Email
Unpaid
Impersonal
Publicity
18
Final Project
Unpaid
Personal
Word of mouth
Low
Low
High
Lowest
By using this table wed be able to see which type of communication with customers best
suits us in terms of coverage and cost.
Final Project
20
Final Project
14) Layout, Design and Visual merchandise: the design of our store that
wed be following for better view of our merchandise and the store layout I
described below.
Objectives of Store Design: some of the important objectives are given below.
21
Final Project
Checkouts
Exit
Entrance
Office
Signage and Graphics: signage helps the customers in locating the products.
22
Final Project
Category signage: used within particular dept. or sector of the store, smaller than
directional signs. Purpose- to identify the types of products offered-located near
the referred goods.
Final Project
Location of departments or merchandise categories in the same
area
Space allocated to Merchandise categories: well be allocating major space on
the base of the categories of product to achieve the following goals.
Space productivity: we would have to manage to space to
increase the productivity we will use less space in store arrange
them into categories to in less space more products can be shown
to customers
Inventory turnover: we would like to keep our inventory turnover
high, keeping the stocks in stores so more products would be sold
and new can be welcomed.
Store Sales: better space allocation and management would lead to
high store sales causing higher profits and achievement of goals
Display Consideration: when better arranged in categories,
products will be more visible and it would be easier for customers.
15) Customer Service: customer service has always been a plus point for any
retailer or business, retailers can get sustainable competitive advantage through it,
its discussed in detail below.
Strategic advantage through CS: customers can help achieve sustainable
advantage by providing them exceptional services, all employees and all
elements in a retail mix used by the retailer can add value to the services that
they are providing and can cause success for the business.
Challenges in providing quality services: providing customers the best
services in town is quite a hard target to achieve for retailers they can cost
much and would require much bigger human resource as well
Services provided are intangible
Its the hardest thing to control performance of employees
Services cant be measured
Keeping a check on services is quite hard
Services that we will offer: well be offering the following services to add value
to our products.
Acceptance of credit cards
ATM terminals
Credit sales
Easy return policy
Free delivery
Vast parking
24
Final Project
GAPS model for service quality: this model represents the gaps that are left
by retailers and lacks in quality that can be covered somehow.
Knowledge gap: knowledge gap is the lack of information about
what customers want and what retailer perceives, this gap can be
covered by knowing about customers and having a complete or
adequate information about their buying behavior and seeing that
we will try to cover that gap and give them products they have been
looking for.
The standard gap: services that are offered can always not be
accepted by customers they should meet a defined criteria and if not
meeting customers will not be coming to store every time due to
lack of standard, we will cover this gap by setting absolute
standards that are predefined and achievable.
The communication gap: retailers sometime fail to deliver what
they intend to and to fill that communication with customers is
required, we will cover this gap if customers arent satisfied by our
services by taking their feedback and trying to manage their
expectations, we will listen to them what they want to by becoming
a customer focused business, and providing them a fair solution and
resolving the issue.
25