Unit- 4

Retail Store Management

Dr.Yogananthan.
 Content
• A – store management
• B – site selection & approaches
• C – store layout, design & visual
merchandising
 Unit 4-a
Store Management
• Recruiting & selecting store employees
• Socializing & training new employees
• Motivating & managing store employees
• Evaluation & feedback
• Compensation & rewarding
• Controlling costs
• Reducing inventory loss
 Recruiting & selecting store
employees
• Job analysis
• Job description
• Locating prospective employee
• Screening & selecting applications
• Hiring
 Socializing & training new
employees
• Orientation programs
• Training
– Phase wise training
– OJT
 Motivating & managing store
employees

• Leadership
• Motivating employees
• Maintaining Morale
 Evaluation & feedback
• Why to do evaluation?
• How often?
• Formats of evaluation
• Rater errors
 Compensation & rewarding
• Extrinsic rewards
• Intrinsic rewards
• Compensation program
 Controlling costs
• Labour scheduling
• Store maintenance
• Energy management
 Reducing inventory loss
• Calculating shrinkage
• Detecting & preventing shoplifting
• Reducing employee theft
 Unit 4-b
Site selection &
approaches to site selection
Importance of RETAIL LOCATION

• Importance of Location Choice

• Location Decisions
• Site Evaluation
• Building Decisions
Why Is It Important To Choose A
Store Location Carefully?
• Location can differentiate the store and
provide a competitive advantage
• Location affects marketing strategy
Determines customer patronage
Impacts store image and personality
• Location affects the financial strategy
Determines cost
Affects store volume
FOUR TYPES OF LOCATION DECISIONS

What region of the country?

What city or community?
What area of the city?
What specific site?
 What region of the country?
• Consider:
 Tax variables
 Type of market coverage
1. Regional Dominance
2. Saturation
3. Smaller communities
 What City?
Must consider:
• Population • Competitive
Characteristics Characteristics
• Total size of trading • Saturation level
area • Number and size of
• Age and income competitors
distribution • Geographic coverage
• Growth trends • Competitive growth
• Education levels trends
• Occupation
distribution and trends
 What City?
Must consider:
• Economic • Regulation
Characteristics Characteristics
• Number and type of • Taxes
industries • Licensing
• Dominant industries • Zoning restrictions
• Growth projections • Local ordinances
• Financial Base
 What City?
Must consider:
• Location • Supply
Characteristics Characteristics
• Number and type of
locations • Delivery time
• Costs • Delivery costs
• Accessibility to customers • Availability and
• Accessibility to reliability
transportation
• Owning/leasing options • Storage facilities
• Utility Adequacy
 What City?
Must consider:
• Labor • Promotion
Characteristics Characteristics
• Availability of • Type of media
Management coverage
Clerical • Media overlap
Skilled
• Costs
• Wage levels
• Unions
• Training
 Retail Trading Area
• Is the area from which a retailer attracts its
customers or obtains its business
• Clear delineation has several benefits
 Demographic and socioeconomic characteristics
of consumers can be determined
 Focus of promotional activities can be ascertained
 Impact of branch store can be determined
 Geographic weaknesses can be highlighted
Size and shape of the trading area
depends on:
• Store type • Travel time
• Store size • Traffic barriers
• Location of • Availability of
competitors products
 How To Evaluate A Trading Area

• Spotting techniques
License plate surveys
Customer surveys
Customer credit, delivery or service records
Customer participation in contests and
sweepstakes
 How To Evaluate A Trading Area

• Quantitative procedure
Converse breakeven point method
Huff’s probability model
 Composite Trading Areas
• Structured based on the type of goods a
retailer sells and the consumer’s
willingness to exert shopping effort
• Divided into:
a) Convenience Goods Zone
b) Shopping Goods Zone
c) Specialty Goods Zone
 Proportional Trading Areas
• Are based on the distances customers are
from a store and the willingness to
overcome these distances
• Divided into:
a) Primary Trading Zone – 50-70% of business
b) Secondary Trading Zone – 20-30% of business
c) Fringe Trading Zone – 5-10% of business
What area of the city?
Must Consider:
Central Business District
versus
Secondary Business District
versus
Neighborhood Business District
versus
Planned Shopping Center
Versus
Solo Location
What are the advantages and disadvantages of each type of site?

Freestanding isolated sites

Unplanned clustered sites
Planned clustered sites
 What specific site?
• Of secondary importance to selecting the area
itself
• More important for smaller stores depending on
intercept shopping and large stores depending on
attracting patrons from existing potential
customers
• Checklist developed based on five principles of
site evaluation
 Retail Site Evaluation Principles
1. Interception – customer traffic increases in sites
that have an ability to intercept customers.
2. Cumulative Attraction – clusters of similar and
complementary retail stores generally have
greater drawing power.
3. Compatibility -- the more compatible stores are,
the greater the exchange of customers.
4. Congestion -- balance problems with 2 & 3
5. Accessibility
 To measure accessibility
consider:
 Number of traffic arteries
 Number of traffic lanes
 Directional flow of traffic arteries
 Number of intersections
 Configuration of intersections
 Type of medians
 Speed limit
 Number and type of traffic control devices
 Size and shape of site
 Buying versus building versus leasing?

What are the advantages and

disadvantages?
 Buy Existing Facility
• Advantages • Disadvantages
 Ownership  Long-term
 Operating flexibility commitment
 Quick occupancy  Initial capital outlay
 Accessibility to traffic  Adaptability
 Asset appreciation  Initial facility
condition
 Maintenance costs
 Buy Land And Build
• Advantages • Disadvantages
 Ownership  Long-term
 Operating flexibility commitment
 Facility condition  Initial capital outlay
 Asset appreciation  Construction time
 Location flexibility  Maintenance costs
 Lease
• Advantages • Disadvantages
 Quick occupancy  Operating inflexibility
 Relatively low initial  Changing lease terms
costs  Initial facility
condition
 Reduced commitments
 Adaptability
 Lease non-renewal
 Unit 4-c
Store Layout and Design
 Goals
 Discuss two Primary
objectives of store layout and
design
 Discuss Steps in Planning the
Store Layout
 Discuss Fixtures, Merchandise
Presentation and Psychological
Impact
 Discuss Sensory
Communication of a Store to
its customers
Objectives of Store Environment
 Store Image
Overall Perception the
Consumer has of the
Store’s Environment
 Space Productivity
How effectively the
retailer uses its space to
generate sales (and
profits)
Exhibit 13.1

Elements That Compose the Store

Environment
Visual
Store Planning
Communications
Space Allocation
Retail Identity
Layout
Graphics
Circulation
POS Signage
Store Image
and
Productivity

Store Design Merchandising

Exterior Design Fixture Selection

Ambiance Merchandise Presentation
Lighting Visual Merchandising
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Store Planning - Allocating Space
 Non - Selling Space
 Back Room
 Offices and Functional
Space
 Aisles, Service Areas
 Selling Space
 Floor Space
 Fixtures
 Walls
 End Caps
 Checkouts
Store Planning - Circulation Pattern
 Free Flow Layout -
Fixtures and Merchandise
are grouped in Free-
flowing patterns on the
sales floor
Store Planning - Circulation Pattern
Grid Layout - Counters and Fixtures are placed in
long rows or “runs” usually at right angles, throughout the
store
Store Planning - Circulation Pattern
Loop Layout - The major customer aisle begins at the
entrance, loops through the store and returns customer to
the front of the store
Store Planning - Circulation Pattern
 Spine Layout - The
major customer aisle runs
from the front to the back
of the store, with
merchandise departments
branching off to the the
back side walls
 Advantages and Disadvantages of
Free Flow and Grid Layouts

Free Flow
Advantages

1. Allowance for browsing

and wandering freely

2. Increased impulse
purchases

3. Visual appeal

4. Flexibility
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Advantages and Disadvantages of
Free Flow and Grid Layouts
Free Flow
Disadvantages
1. Loitering
encouraged
2. Possible confusion
3. Waste of floor
space
4. Cost
5. Difficulty of
cleaning
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Advantages and Disadvantages of
Free Flow and Grid Layouts
Grid
Advantages
1. Low cost
2. Customer familiarity
3. Merchandise exposure
4. Ease of cleaning
5. Simplified security
6. Possibility of self-
service
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Advantages and Disadvantages of
Free Flow and Grid Layouts
Grid
Disadvantages

1. Plain and uninteresting

2. Limited browsing

3. Stimulation of rushed
shopping behavior

4. Limited creativity in
decor
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Fixture Types
• On-shelf vs. On Floor
• Gondola - Common
for Hardlines
• Racks - Common for
Softlines
• Wall Fixtures
• End Caps
• Checkout Fixtures
 Merchandise Presentation Planning
• Six Basic methods
Shelving
Hanging
Pegging
Folding
Stacking
Dumping
 Key Psychological Factors
• Value / Fashion Image -
• 45 degree angle presentation of product influences
sightlines image customer has regarding that
product
• Angles and Sightlines -
Customers view product at 45
degree angle and at eye level.
Where a product is placed on
shelves influences sales
• Vertical Color Blocking -
Display product in vertical bands of
color
 Examples of Visual Merchandising

“Visual Merchandising”, the art of attracting

patrons with visual cues, is central to a retailer’s
ability to generate sales. Visual Merchandising got
its start at the turn of the century, when department
stores began using theatrical set design and lighting
to create exotic displays. Today, the way the
departments are arranged, the location of the
escalators, the lighting--all are carefully planned to
earn the store more sales per square foot.

Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Examples of Visual Merchandising
Here’s sampling of the techniques stores use to
generate those sales:
Get’m coming and
going. Escalators are
a focal point of many
stores. That makes
them ideal locations
for promotional signs
and for impulse items
like perfume.

Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Examples of Visual Merchandising

Lead them to temptation.

Department-store design
incorporates a gauntlet of
goodies to stimulate impulse
buys. Cosmetics, a store’s
most profitable department,
should always be at the main
entrance to the store.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Examples of Visual Merchandising

Its all in the display. When an

item, such as a watch or a scarf,
is displayed in a glass case, it
implies luxury. An item in a glass
case with a lot of space around it
implies real luxury.

Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Examples of Visual Merchandising

“Bazaar? Behavior”. Even “high fashion”

stores aren’t above using the “dumping”
method to display gloves, leather goods,
scarves, and other small items the same
way bargain stores do. These bins have a
way of suggesting a “good buy.”

Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Examples of Visual Merchandising

Color is king.
Retailers believe
consumers are more
apt to buy clothes that
appear in full size and
color assortments.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
 Examples of Visual Merchandising

Suggestion positioning. Once the

customer has already purchased
one item, it’s easier to sell an
additional item. Thus apparel
retailers strategically place
impulse buys like hair bows and
costume jewelry by the cashier
the same way supermarket
checkouts display candy and
magazines.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company
All rights reserved.
Total Sensory Communication
• Sight - discussed previously
• Sound - What background
music is playing?
• Smell - Potpourri, tobacco,
stale food, fish. Major
influence on buying emotions.
• Touch - Is product open to
consumer to feel texture?
• Taste - Free samples of new
products at Supermarkets
 Summary
• The store itself it’s the
most meaningful
communication between
the retailer and the
customer
• The store environment
must:
Create an Image
Increase Productivity
Thank You
 Reference
• Levy, Weitz, Retailing management, Tata
McGraw hill edition, page -260-280,524-
552, 555-580.