RETAIL LOCATIONS

Real estate is the largest fixed investment for a retailer, Store location and real estate
markets are thus important factors in the business equations.

For a retailer, it means being at the right place at the right time. In other words, it’s all
about the three Ps – Property, Property and Property. Store location is one of the key
consideration for a shopper. It helps a retailer develop a sustainable competitive
advantage.

SITE SELECTION

The key factors that go into the evaluation of a site for a retail location are accessibility,
terms of occupancy and legal considerations.

 Location decisions are taken at levels : region, catchment (or trade) area and
specific site.

- The region refers to the part of the county. A particular state or a city.

- The catchment area is a contiguous geographic area that accounts for a

majority of a stores sales and customers. The catchment maybe a part of a
city or it can extend beyond the city boundaries, depending on the type of
store and the density of potential customers surrounding it.

- This will typically have zones : primary zone, from which the store
derives -60-65 per cent of the customers and the secondary zone, which
accounts for 20 % of the store customers and tertiary zone.

 Stores can also be defined as destination stores or parasite stores, based on the
location of the store. A destination store is one in which the merchandise,
selection, presentation, pricing or other unique features act as magnet for
customers. A parasite store is the on that does not create its own traffic but
depends on floating traffic.

 Factors, which affect the attractiveness of market and trade areas are
demographics, business climate and competition.
  The final selection of a site flows from following sources- the actual merchandise
plan of the company for the next one year, the legalities involved in site selection
and the ability of the site to meet various standards of retail properties prescribed
by the company. The final selection of the location is done based on the
profitability estimates of each store.

 Once the site is selected based on the merchandise and business plan of the
company, the allocation strategy for the merchandise is derived automatically,
This is called a Planogram.

The company planograms for various floor, which can identify how many pieces of a
particular SKU would be stored on each floor and on what type of display fixtures. These
planograms too have to tie up with the merchandising plan of the entire chain.

Once this is done, factors like average retail merchandise to be kept per square feet, in
different categories, the targeted sales per square feet in that category and the targeted
return per square feet required from that category is derived. These parameters are then
tracked on a regular basis, as they represent actual store performance. Thus while site
selection is a one time decision, the effectiveness of this decision is tracked over a much
longer period of time.
 STORE LAYOUT, INTERIORS AND DISPLAY

TYPES OF LAYOUTS :

Most modern store layouts revolve around three forms : Grid layout, racetrack and free
form.

Grid Layout

A grid layout found mainly in a grocery store contains long gondolas of merchandise and
aisles in repetitive pattern. This is a cost-efficient layout, with the most effective
utilization of space. This layout works best in a supermarket, where customers are drawn
by their needs, while it does not work in department stores and speciality stores.

Racetrack layout

A racetrack layout, also called a loop, is a type of store layout in which a major aisle runs
through the store. The aisle provides access to the multiple shop-in-shop within the store.
This is the favoured format for most department stores. Globus, for instance, conforms to
the racetrack pattern. In each section of the store, a customer encounters only one
particular type of merchandise, as in shirts, or ladies’ western wear, and so on.

Free – form layout

A free-form layout , also known as a boutique layout, arranges fixtures and aisles
asymmetrically. It is successfully used in smaller speciality stores or within departments
of larger stores. Westside, in Mumbai, follows this layout. The store is like a grand living
room. The merchandise is displayed on a single floor, at two levels. This gives a customer
entering the store a feel of the entire range of goods available. Merchandise is kept is
separate clusters, depending on adjacencies amongst the various products.
STORE LAYOUTS - KEY CONSIDERATIONS

There are a few optimizing factors that the prototype design team must keep in mind.
Ideally, a store design should :

 Enhance sales : The store layout should entice customers to move around the
store to purchase more merchandise than they may have originally planned. Many
stores achieve this by having different entry and exit points.

 Circular Plan : It means placing the merchandise in such a manner that the
retailer can influence the customer movement in the store. Typically, in
supermarkets, the destination category is kept at the end of the store or in the last
aisle, so that the customer is indirectly forced to go through the entire store.

 Maximise returns per square foot : A layout can increase the amount of time
and money that customers spend in a store. In order to meet these objectives, the
store designers have to decide about alternative design types, allocating space to
feature and bulk-of-stock selling areas and making efficient use of walls and
windows.

 Match the merchandise and format : A store targeted towards a youth market
can be merchandise-clogged, fixture-heavy and filled with flashing lights,
interactive displays and fixtures, and lively music.

 Allow flexibility in store design : As merchandise changes, the designer should

provide for enough flexibility to adapt to the new with the minimum of effort and
maximum efficacy. To achieve this, store furniture should be moveable and entire
store layout should lend itself to change, when required.

 Provide for the needs of the disabled/women/children and for the safety of
shoppers : While internationally, there are rules that direct stores to provide in-
store facilities for disabled and handicapped shoppers, no such rules exist in India.
This is slowly changing.
 MERCHANDISE AND SUPPLY CHAIN

INTRODUCTION :

The heart of modern organized retailing is merchandise and supply chain management.

Merchandising is to have the right quantity of the right merchandise in the right
place, at the right time.

In the world of retailing, this process is termed merchandise management. Evident here is
that there are many variables and decision points involving goods within a retailing
operation. The graph “Retail Flow” represents the end to end flows in retailing.

Supply Chain (logistic) Management

Raw Manufa Manu. Retailer’ Store Custom

mat. cturer Distri- s Dist er
supplier butor Centre

As in any other business, a retailer aims for two goals : to satisfy the consumer and to
maximize financial gains at the same time.

MANAGEMENT THE SUPPLY CHAIN

The merchandise movement in a retail chain set-up can be extremely complex. The
numbers involved at each stage are much larger in comparison to any other business.
There are two key elements to this-

a) Sourcing and vendor management

b) Logistics.

SOURCING AND VENDOR MANAGEMENT

SOURCING

A typical large retail chain may use hundreds to even a few thousand sources for
gathering the merchandise on its shelves. Identification of and arrangements with these
sources are an integral part of the merchandise planning process. Merchandise sourcing is
an area where a company can build competitive advantages.
DIFFERENT KINDS OF SOURCING

1) Manufacturer-Primary Source
2) Wholesaler or Distributor
3) From International Market-Imports

These are issues to be resolved, like quality control and building strategic alliances. When
direct links with either the manufacturer or his agents do not exist, other sources like
manufacturer’s showrooms, merchandise marts, or trade shows are used.

VENDOR MANAGEMENT

Organised retailers tend to prefer long-term associations with vendors. This helps
guarantee a regular supply of merchandise, of the desired quality and at acceptable costs.
This is essential for the planning process to function smoothly.

Each retailer has its own set of criteria for vendor selection. For example, a vendor
without such basics as Internet connections, e-mail and fax will not make it to the
Shoppers’ Stop list.

Retail buyers enter into agreements with approved vendors. The vendor can also lay
certain restrictions in terms of order sizes and display. The buyer, in turn, examines
aspects related to commercial bribery, counterfeit merchandise, gray market and diverted
merchandise and exclusive territory agreements by some retailers with vendors.

The smooth functioning of the buyer-vendor relationship depends on various parameters,

beginning with the selection process, clear agreements and frequent communication.

LOGISTICS MANAGEMENT

The core of SCM is in logistics management.

Logistics is the organized process of managing the flow of merchandise from the
source of supply – the vendor,wholesaler or distributor – through internal
processing functions like warehousing and transportation, until the merchandise is
sold and delivered to the customer.

The target of logistics management is to reduce inventory-holding costs and improve

profits.
Dimensions in Logistics Management :

 Distribution Centre :

The heart of retail logistics is the distribution centre it serves several functions, from
coordinating inbound transportation, receiving, checking, storing and cross-docking
to ticketing, marking, filling orders and coordinating outbound transportation.

 In store and Inbound Movements :

Logistics in retail chains are organized around the distribution centre, through there
are always cases of direct supply or movement between stores. Inbound transportation
is the movement of goods from the vendor, manufacturer or distributor to the
distribution centre.

 Logistic Process :

As the goods come in to the distribution centre, the next step is recording the receipt
of merchandise. Then comes the ticketing and marking. Now the goods are ready to
go to targeted stores.

 Logistic Innovations :

The logistics system detailed above developed along with advent of organized
retailing in the USA and Europe, which were the first to consolidate their retail
markets. Retail chains have since tried to bring about innovations designed to
increase the efficiency of the logistics chain.