RETAIL MERCHANDISING

NAME OF THE AUTHOR

PRASANNA P. SUVARNA

NAME OF THE INSTITUTE

Srinivas Institute of Management Studies

Pandeshwar, Mangalore

EMAIL-ID
Psuvarna55@yahoo.in

Phone No
+91 9964897963
ABSTRACT
      Retail Management has become a very challenging job as the organisations are to face a rapidly
changing socio-economic environment and to face stiff competition due to globalisation. Merchandising is
the methods, practices, and operations used to promote and sustain certain categories
of commercial activity. In the broadest sense, merchandising is any practice which contributes to the sale of
products to a retail consumer. Retailing has been defined and the functions performed by the retailers are
being depicted. The importance and various methods of retailing are explained here. It also includes material
handling, inventory management and the use of technology in retail. I have also added about different types
of shoppers and shopping malls and of many terms used in retail marketing.

Introduction to retail merchandising

            The word retail is derived from the French word retail, meaning to cut a piece off or   to break bulk.
In simple terms, it implies a first-hand transaction with the customer. Retailing can be defined as the buying
and selling of goods and services. It can also be defined as the timely delivery of goods and services
demanded by consumers at prices that are competitive and affordable.

            Retailing involves a direct interface with the customer and the coordination of business activities
from end to end- right from the concept or design stage of a product or offering, to its delivery and post-
delivery service to the customer. The industry has contributed to the economic growth of many countries and
is undoubtedly one of the fastest changing and dynamic industries in the world today.

The Indian Retail Sector

The Indian retail sector was estimated to be worth USD 350 billion1 during 2007 and is expected to grow at
a compounded annual growth rate (CAGR) of 6.8% to approximate USD 4271 billion by 2010. To
underscore, in 2007, almost 97% of the Indian retail market was dominated by traditional 'kirana' or 'dad and
son shops'. The country's vast geographic, cultural, and economic diversity has inadvertently facilitated
traditional retail over centuries because of a strong need and preference for customized and personalized
shopping requirements. The organized retail market in India has accounted for only a small percentage -
approximated 3% in 2007 - of the total domestic retail market. However, the current domestic economic
buoyancy supported by liberalized government policies and improved logistics and communications
infrastructure has spurred the organized retail sector to clock 25%+ annual growth over the last few years.
The current trends indicate this sector will grow by 35-40%2 over the next 3-5 years accounting for 5% of
 total domestic retail sales by 2010. To understand this expansion, WNS has looked at some of the drivers of
this growth using “PEST - Political / Economical / Social / Technical” analysis.

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors,
India retail industry is one of the fastest growing industries in India, especially over the last few years.
Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and
preferences of the consumers, the industry is getting more popular these days and getting organized as well.
With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India
retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Functions performed by retailers:

1. Providing an assortment of products and services.

Supermarkets typically carry 20000 to 30000 different items made by over 500 companies. Offering an
assortment enables their customers to choose from a wide selection of brands, designs, sizes, colours, and
prizes at one location. All retailers offer assortment of products, but they specialize in the assortments they
offer. Most consumers are well aware of the product assortments that the retailers offer; even small children
tend to know where to buy different types of products.

2. Breaking bulk.
To reduce transportation costs, manufacturers and wholesalers typically ship cases of frozen dinners or
cartons of blouses to retailers. Retailers than offer the products in smaller quantities tailored to individual
consumers’ and households’ consumption patterns. This is called breaking bulk.

3. Holding inventory
A major function of retailers is to keep inventory that is already broken into user-friendly sizes so that
products will be available when consumers want them. Thus, consumers can keep a small inventory of
products at home because they know local retailers will have the products available when they need more.
By maintaining an inventory, retailers provide a benefit to customers; they reduce the consumers cost of
storing products. This is particularly important to consumers with limited storage space and who want to
purchase perishable merchandise like meat.
4. Providing services
Retailers provide services that make it easy for customers to buy and use products. They offer credit
so consumers can have a product now and pay for it later. They display products so consumers can see and
test them before buying. Some retailers have salespeople in stores or use their websites to answer questions
and provide additional information about products.

RETAIL MERCHANDISING

Retail merchandising is the process used in order to conduct retail sales. As part of the process, the
merchandiser pays close attention to the types of products offered for sale, how to best present those
products to consumers, and determining what a reasonable retail price is for each unit sold. , merchandising
is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level,
merchandising refers to the variety of products available for sale and the display of those products in such a
way that it stimulates interest and entices customers to make a purchase. Merchandising is more than simply
the arrangement of products on the shelf. It is an integral component of the business image. It should be
considered when you design your logo, business cards, brochures, letterhead, packaging, and product mix.

The first important step in retail merchandising is establishing working relationships

with manufacturers who will provide the goods or services that are ultimately sold by the retailer. This type
of retail buying involves determining what products will be carried in the retail establishment, negotiating
the unit price that will be charged by the manufacturer, and arranging for the delivery of those goods.
Depending on the number of units the retailer can afford to purchase at a given time, it may be relatively
easy to obtain a discounted unit price, making it easier for the retailer to be competitive in the local
marketplace.

Once the goods are secured, the retailer must determine the unit price that he or she will assign to the
products. In all cases, this retail price will be higher than the cost of purchasing the goods from the supplier.
It is this difference between the wholesale price and the retail price that allows the retailer to make a
profit and remain in business. Some retailers follow a formula of setting the retail price at a fixed percentage
above the acquisition price, while others base the retail pricing on factors such as the desirability of the items
and the amount of competition from other retailers in the immediate area.

After setting the retail pricing, the process of retail merchandising moves on to the task known as setup and
display. This process is concerned with displaying the goods within the retail setting to best advantage. By
 using such devices as display windows, elevated platforms, and colourful backdrops to attract the attention
of shoppers, the retailer increases the chances of selling units quickly. Setup and display are often considered
especially important with fashion merchandising and similar retail settings, in that the visual display is often
the key means of attracting customers who are highly likely to make a purchase. Quick sales lead to higher
profits and the chance to secure more products that will result in more sales.

The importance of retail merchandising

Merchandising and display are an important part of the marketing plan, and should have a reasonable
budget allocated - even for a retailer operating on a shoestring. In today's competitive retail environment a
retailer cannot afford to consider merchandising as a 'frill'. Everyone is competing for the customers' dollar.

There are more choices out there for consumers than ever before. With all these choices, what will grab the
consumer's attention? You've invested the money to get that expensive, high traffic location, but how will
you keep the customers from walking right by your door? How will you encourage them to return? What is
unique about your store? After investing money on the important priorities such as merchandise, great
location, part-time staff, insurance, accountant, advertising, your carefully budgeted money can be lost if
your store doesn't measure up to the customers' expectations.

Posters covering the door and windows, hand lettered signs, lack of lighting and untidy displays send the
message that your business isn't serious. If your store looks like a bargain basement, customers will expect
bargain basement prices and may draw the conclusion that your product is poor quality. This judgement may
have little to do with the product itself, but be the result of poor presentation.

Merchandising is more than simply the arrangement of products on the shelf. It is an integral component of
the business image. It should be considered when you design your logo, business cards, brochures,
letterhead, packaging, and product mix.

When you examine your merchandising, you examine what the customers' experience, from their first sight
of your store front, until they leave store - hopefully with a purchase in hand. Merchandising is also about
understanding the way customers shop. By using this knowledge, you can position your merchandise to
increase sales.

You need to create an environment that attracts the customer, is comfortable to shop, and encourages the
customer to return.

 Are the store front and windows attractive & inviting?

  Is all signage clear, professional and legible?
  Is the store interior welcoming and comfortable?
  Is merchandise presentation appealing?
 Are seasonal and high-margin merchandise placed in high profile locations?
  Overall, is the store appearance professional?
Of course, if you are on a shoestring budget, you need to start small, but make sure you include a plan for
growth. One of the exciting things about retail is that it is dynamic. If you don't grow and change, customers
assume you have nothing new to offer them. You don't have to overhaul the entire store, but rotate
merchandise, change displays, and change signage to make the customer feel that there is always something
new for them to see or experience.

Retail merchandising involves:

Display: Create an attractive display

A creative display can draw the customer in, promote a slow moving product, announce a sale, or welcome a
season. Some stores located in a mall or other structure may lack windows, but don’t despair. There are
many places throughout the store to build beautiful displays.

Elements of effective visual merchandising

 Balance: asymmetrical rather than symmetrical balance with the display
 Size of the objects: place the largest object into display first.
 Colour: helps set mood and feelings
 Focal point: where product and props/signage and background come together.
 Lighting: should accent focal point, if possible.
 Simplicity: less is more so know when to stop and don’t add too many times

Material handling:

Material Handling refers to activities, equipment, and procedures related to the moving, storing, protecting
and controlling of materials in a system. MH means providing the right amount of the right material at the
right place at the right time in the right position in the right sequence for the right cost moving, the hundreds
of different ways of handling materials are generally classified according to the type of equipment used. For
example, the International Materials Management Society has classified equipment as (1) conveyor, (2)
cranes, elevators, and hoists, (3) positioning, weighing, and control equipment, (4) industrial vehicles, (5)
motor vehicles, (6) railroad cars, (7) marine carriers, (8) aircraft, and (9) containers and supports

Material handling equipment

 Is all equipment that relates to the movement, storage, control and protection of materials, goods and
products throughout the process of manufacturing, distribution, consumption and disposal. Material handling
equipment is the mechanical equipment involved in the complete system Material handling equipment is
generally separated into four main categories: storage and handling equipment, engineered systems,
industrial trucks, and bulk material handling.

Inventory management
Inventory management is a costly and time-consuming activity for any retail organization. Today’s
competitive retail environment requires real-time data communication between stores and the
corporate office for store-level activities—including item look-up, stock counts, and transfers—in
order to improve the quality of inventory information, in-store efficiency, and sell-through.

Benefits of Store Inventory Management

1. Streamlines management of store-labour expenses for reduced costs.
2. Improves control of inventory management, for reduced carrying costs.
3. Prevents stock-outs and overstock using in-store location level tracking.
4. Helps “save the sale” by using real-time cross-store inventory access.
5. Maximizes staff availability to customers for improved customer service and
satisfaction.
6. Streamlines in-store processes for increased efficiency.
7. Minimizes the need for extensive staff training.
8. Enables the performance of back-office business functions anywhere in the store.
9. Facilitates the rapid delivery of merchandise to the sales floor, so that customers find
the items they want.

Replenishment of goods

Dictionaries define Replenishment as "filling again by supplying what has been used up." Replenishment is
also a process that occurs regularly. If vendors only offer merchandise in a limited number of shipments -
common in the fashion industry - merchandise planning and allocation should be used to support ordering.
While replenishment can support these situations, the time required for item setup and forecasting often
outweighs the savings from the automation of forecasting and ordering. 

Benefits of Successful Replenishment 

Excelling at replenishment enables a retailer to implement the promotional, pricing and assortment strategies
established. Not only does winning the replenishment game enable execution of these strategies, but
additional profit can be gained by minimizing inventory levels and reducing lost sales. Time is made
available for analysis and special projects when fighting the fires of overstock and out of stocks is removed
from the buyer's day. Replenishment is an area within operations where retailers can find an edge to beat the
competition and delight the customer. 
Use of technology in retail

The role of technology in retail gives the look of evolution. Retailing reveals that technology gets more
sophisticated and the consumer's expectations will go up exponentially. It change faster, retail can keep up
the convergence of a few key technologies is enabling that change gives us the best preview of what can
happen in the next five to eight years. One of the key factors in achieving an organised and efficient retail
operation is the use of technology as an enabler. IT is the key enabler to improving customer satisfaction,
operational efficiencies and by extension profitability. A typical pan-national retail operation would have
multiple regional warehouses, offices and retail outlets. In such an operation how does the headquarters
know the daily turnover at each of its outlets, how does it know which products are selling the most in which
region at which outlet, how does one store know if a stock-out item in its own inventory is available at
another store location for whom it is slow moving item. Most of these issues can be solved by the
appropriate use of technology. The ability to have current information on a real time basis and analyzing that
data for better forecasting are some of the payback provided by technology.

Retailers all across the country believe that shrinkage due to inventory recording, handling and
administrative errors costs retailer's millions. In an intensely competitive, cost-conscious industry,
appropriate IT and telecommunications infrastructure can make a vast difference, and can result in improved
productivity and major cost savings through more accurate supply chain forecasting and better inventory
management.

An in-store system that uses magnetic strips or barcodes or RFID to monitor actual versus intended product
location on the floor or in the stockroom. By using RFID-encoded shelf edge labels with embedded shelf
readers, a grid could be set up for verifying pangrams compliance for standard shelving and promotional
displays, with a corresponding alert for misplaced items sent to store personnel. Big payoffs could be
realized for frequently moved and misplaced items, such as apparel, shoes, CDs and DVDs.

Appropriate investment in technology can impact the business positively through improved operational
efficiencies, increased profitability, happier customers and providing a competitive advantage.

Advantages of the use of technology:

 Increased store efficiency
 Improved Data Integrity
 Streamlined inventory control
 Reduced shrinkage, pilferage and losses
 Comprehensive business analytics
 Reduced paperwork

Types of shoppers

The 'sightseer' shopper

this person seems intent on strolling, in a leisurely fashion, with their trolley, merely enjoying the sights.
They do not appear to be particularly interested in taking things from shelves. They kind of, ‘gaze’ for a
minute or two and then wander off down the aisle, seemingly content in their own little world.

The 'social' shopper

this person decides to have a discussion with her friend about her recent disastrous hair appointment. The
growing crowd of shoppers grow increasingly impatient trying to reach the parsnips that are situated behind
these two social shoppers having their deep and meaningful discussion.

The 'angry' shopper

this is the one who has had a row with his/her spouse about whether or not the shopping has to be done as a
joint exercise. If looks could kill this person would have been a mass murderer in the supermarket today.

The 'aimless wanderer' shopper

This person is different from the sightseer shopper. This person seems to have no plan whatsoever. He/she
will be seen following the flow of trolley traffic in one aisle. The next time you see this person they are
going against the traffic. They do not appear to have any idea of where things are so they constantly find
themselves going against the flow.

Types of Shopping Malls

In general, you will find only regional centres, superregional centres, and fashion/specialty centres on this
Web site. Relatively few community centres were chosen, but appear here because the centre may have, at
one time, been considered a regional centre. Only a few theme/festival centres were listed in heavily
 urbanized areas, such as San Francisco, because of their particular attractiveness or size. Finally, the new
designation, lifestyle centre, displays because of their classic-mall type appearance even though they are
without a classic-mall anchor store.

Fashion/Specialty Centres

Characterized as higher end, fashion oriented centres between 80,000 and 250,000 sq. ft.

Community Centres

Characterized as having between 100,000 and 350,000 sq. ft. Usually two types of anchors, such as a
discount department store or large specialty/discount apparel store.

Lifestyle Centres

A new designation that has a loose definition. Generally, it's a centre that does not have an anchor tenant in
the classic sense (that is, a department store). However, lifestyle centres increasingly have a cinema as a
major tenant. Others have just a small collection of exclusive shops.

Outlet Centres

Characterized as manufacturers' outlet centres between 50,000 and 400,000 sq. ft.

Regional Centres

Characterized as having between 400,000 and 800,000 sq. ft. usually two or more anchors, such as a
conventional department store, junior department store, mass merchant, discount department store, or
fashion apparel store.

Superregional Centres

Characterized as having over 800,000 sq. ft. usually three or more anchors, such as a conventional
department store, junior department store, mass merchant, or fashion apparel store.

What are perceived customer values?

Customer's opinion of a product's value to him or her. It may have little or nothing to do with the
product's market price, and depends on the product's ability to satisfy his or her needs or requirements.

Factors in a retail outlet that influence customers to buy:

 Atmosphere:
 The physical characteristics and surrounding influence of a retail store that is used to create an image in
order to attract customers. E.g.: using of lighting and trendy fixtures to Connecting with customers is
essential to the success of your retail business.  The atmospherics of your store contribute to
those connections.   Retail Atmospherics is a term used to describe the manipulation of
elements such as colour, light levels, sound, scents and design within your store to influence
the buying habits of your customers. Atmospheric changes to a stores environment will
influence the customers mood or feeling for that retailer. Create an image in order to attract
customers.

 Convenience:
For smaller retailers the convenience sector has traditionally offered a niche market untargeted by the larger,
more powerful retailers who up until now have focused on mass retail channels. However, with increasingly
competitive markets and the recent spate of merger and acquisitions across Europe and the US - convenience
is viewed by many retailers as a tool to strategically reposition and by others to gain a share of a lucrative,
high growth sector.

 Sales people:

Selling is the lifeblood of retail. It takes skill, stamina and creativity yet it is often treated as one of the
lowest roles in an organization. Smart retailers help their sales staff improve their skills to better serve the
business and its customers. Some salespeople are naturals while others work hard to learn the skills.

 Refreshments:

In order to be successful with retail merchandising, it is necessary to provide consumers with a couple of key

benefits. First, the products must be of high quality; this helps to ensure the customer will return for more
purchases in the future. Along with the quality, the retailer must also sell the products at prices the consumer
finds reasonable. By providing quality products at affordable prices, the retailer has a much better chance of
standing out from the competition and remaining in business for many years to come.

Conclusion:

 The Indian retail sector has a great scope for the growth in the future.
 Shopping malls are now playing a very important role in the development of the Indian economy.
  There has been a growth in the retail merchandising sector.
 They provide the best shopping experience to the customers by satisfying the needs and preferences.

Bibliography

Wikipedia of retail merchandizing.

Websites anwers.com, scribd, slide share.

2nd edition on retail management: Rajendra Nagundkar