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Retailing VTU notes
PART-B- RETAIL MANAGEMENT

MODULE 5 - RETAIL MANAGEMENT

Retail Management: Definition:
“Retailing consists of activities involved in selling goods and services to ultim ier. Retailers will be interested to assess the working of the supplier on paramerter such as innovation,speed of new product or variant introduction, sampling service, marketing support(advertising and promotion) and handling queries and complaints.

CATEGORY MANAGEMENT:
Category management is the process of managing a retail business with the objective of maximizsing the sales and profits of a category rather than the performance of individual brands or models. A category is an assortment of items that the customer sees as reasonable substitutes for each other. For example, retailers in ready to wear segment consider female and male clothing as one category. It systemizes grouping of products into strategic units or category so as to better meet consumer needs and achieve sales and profit goals.Today, the relevance of category management is driven by the emergence of multiple number of brands in each product category. For the success of any category management, retail business requires changes in the merchandising system and organizational commitement. Advantages of Category Mangement:

1. Increased sales
2. Reduced Inventory management
3. Improved route and warehouse efficiency.

The Essential Elements of Effective Category Mangement:
1. Category should be arranged as if consumers could stock the shelf themselves 2. Category composition should be on the basis of time, space and product benefit 3. Category management shoud drive multiple item purchase

4. Category management is a dynamic, proprietary set of decision, not a standard, universal practice. 5. It is directed to create value for the consumer rather than faciliting relations between supplier and retailer.

6. Category management plan should be based on the overall competitive environment in a specific trading area.

VARIOUS REPLENISHMENT POLICIES:
1. Fixed cycle of Replenishment: Replenishment takes place at predetermined time intervals, which are decided jointly by the retailers and suppliers. It is useful when:
-predictable demand and sales pattern, high transportation cost, Batch production with large batch size. 2. Continuous Replenishment: It is decided by the supplier and rtailer. Whenever inventory dips below the required level of purchase order is automatically generated leading to fullfilmen.It is useful when -unpredictable sales pattern, goods for which historical sales is not available

FINANCIAL OBJECTIVE OF MERCHANDISING:
Merchandise planning consists of establishing objectives and delivering plans for obtaining these objectives. The objective range from the corporate objectives to the micro level objectives regarding the merchandise assortment,stocking and re-order. Merchandise management involoves decisions related to inventory which in turn is the largest investment for any retailer. In this context the best merchandise performance measure is the Gross margin return on inverntory(GMROI) (Gross margin/Net sales)* (Net wales/Avg. Inventory at cost)=(Gross Margin)/Average Inventory at cost.

EVALUATING MERCHANDISE PERFORMANCE:
Retailers usually confront situation where they have to revise (drop or add) various SKUs, vendors or department during merchandising management. Three evaluative procedures to review the performace of merchandise are discussed below. 1. ABC Analysis: This method classifies the inventory into categories, proportional to the inventory’s total cost, designated A, B, and C. or high, medium and low rotation. At the same time ABC analysis assist the management to merchandise by some performance measure to determine which set of items should never be out of stock, which items should be allowed to be out of stock occasionally, and which set of items should be dropped form the stock acquiring lists. ABC analyses uses...
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