Retail Management Mid-term
Strategic alternative for GAP
-0ffer unquien online merchandise 0leaver ecommericne instead of realist -dont open new store just convert old store to old navyu -focus on old navy
Category specialists
-big box stores that offer a narrow but deep assortment of mechandsie -primarlity use the self serve approach with limited service in some departments -sell merchandise ranging from $0.25 to $45,000 with margins of 25% to 28% -frequently referred to as category killers" because they offer such a complete assortment in category that they can "kill" the business of nearby retailers offering the same category merchandise -compettition is fierce and hard to differentiate between chateau specialiest
benefits of store channel
-toughting and feeling products -personal service -risk reduction -immediate gradtification -entertainment/socail -browsing -cash payment
How retailers create value
1-providing an assortment of products and services 2-breaking bulk: the shipment of case packs, counting individuals SKUS, to retail 3-holding inventory 4-providing services: retailers need to make it easier for customers to buy and use products
Impact of e-commerce
80% of global shopping currently takes place in store and 20% online.
shareholder peromance measures
==reward shareholders -return cash in form of dividends -stock price apparition -eps growth -share repurchases
Customer acquisition cost
CAC=(ATL + BTL + PRODUCT COST)/(# OF NEW CUSTOMERS) -The CAC is the cost associated with convincing a customer to buy your product or service. this cost is inclusive of the product cost -typically increase as business matures
service vs. merchandsie (4)
-Intangibility: services are less tangible than products. its hard for service based retailers to know how they are doing -simultaneouse prodcuts & consumption: Service providers created and deliver the service as the customers is countering it. it is critical for serve ce retailers to get it right the first time -perishability: services are perishable. in contrast merchandise can be held in inventory until there is demand for it -inconsistency: seriveces are products by people, and no two people are alike
-Markdown -margin -media total as a % of sales -operating margin -opportunity cost
-Markdown: a reduction of price or the amount by which the original price is reduces -margin:what your changing on top of COGS -media total as a % of sales: a simple way to arrive at a marking budget is for retailers to have a target percentage of sales that they expect to spend -operating margin: measure of a company's pricing strategy and operating efficiency. Earning/ revenue -opportunity cost: when he rabid manager has limited resources and must make a choice this is the value of the next best altermnatice foregone
-Private label -retial price -retaling -sales per sq ft -sale per store -sell though -shelf life -SKU -turnover -weeks of inventory
-Private label: a product designated as a brand from the errata, rather than that of the manufacture -retial price: the price at which retailers sell a product or service -retaling:the set of business activities that adds value to products and services sold to consumers for their personal or family use, -sales per sq ft: total monthly sales/total square footage -sale per store: total sales/ total # of stores -sell though: ration of (quantity sold at retail: quantity distributed to the shoe from wholesale) -shelf life: the length of time which a product is usable or salable. SHRINKAGE-reduction in earning due to waste or theft -SKU: STOCK KEEPING UNITS indicualt items within the store that have their own unique UUPC. whereas as consensual supermarkets carry about 30,000 SKU convict store only cary about 1,500 SKU -turnover: the rate at which an asset (typically inventory) is replaced -weeks of inventory: the amount of on hand product at retail or wholesale
Extreme value retailers
-alse called "dollars stores" -small discount store that offer a broad variety but shallow assortment of household goods, health and beauty care products and groceries -manufactures often develop lower costing packaging or products for these retailers in order to help them keep the retailers unit prices low -primarily target low inconmc e consumers thats have retail locations in lower income neighbor hoods
Off price retailers
-an inconsistent assortment of brand names merchandise at a significant discount off the the manufactures suggested retail price )MSRP) -20%-60% lower than MSRP because of unique buying and merchandising price partially: ---manufacuters that have overruns, canceled orders or focaseting mistakes ---closeouts: end of season merchandise that is being discontinues ---irregulars: merchandise with minor mistakes -for many consumers, inconsistency is why they shop at this retail format -one of the fastest growing e-commerce retail formats with shops. flash sales
Brick and click
-blazing a trail for integrated, interactive and everywhere retailing a growing number of brick and mortar retailer in both the us and eurpore are also enabling consumers to shop their brands via multiple complimentary channels including faceboook, smartphones -these retailers are capitalizing on the benefits of the online/ offline hybrid retailers experience- plugging into the latest technologies to make their mark
Search behavior
-seach landscape is super competitive -custome algorithms by each engine -solve search problems by answering peoples questions though meaningful content that consumers will want to experience -by keenly aware of how much time your consumer is willing to spend on each and the tradeoff they re seeking to decide- the major cost incurred this period of the buying process in a consumers time
Nomadic retailing
-smart retailer are open more pop up and smaller stores to provide greater consumers engargment across wider array of consumer epxerinse - retailers may no longer need as much product in store- thanks to larger online inventors, but will need physical ideal digital intreated brand toughpoitns as part of a wider omni channel stategy
Drugstores
-speciality stores that concentre on health and beauty care -perscription drugs often represent 65% of drugstore sales -pharmcy is biggest serive investment. focus on hiring pharmacist that consumers will trust- makes consumers more likely to repet visits -increasing dedicated shelf space to cosmetics department -60% of stores come from he "big three": Walgreens, CVS, Rite Aid
Variety and asssortment
-stockin a deep and broad assortment (at the same time) is appealing to consumers but costly for retailers -Services (while attractive to consumers) are generally more costly because they require more overhead
Gap Positioning
-the gap brand repositioned form its early role with a single category of jeans as the uniform for the younger generation. 27 categories "basic pieces for anyones closet" -from khakis and vest to cords, leather and colored jeans, every year during the 1990s marked a different adcernting campaigns with high levels of spending demurring different people promotiing a singular piece of clothing -companyg grew very quialcuy -the gap was trying to be too many things to too many people and lost their way
Retailer characteristics
-the type of retailer a consumer chooses to patronize depends on the benefits the consumer is seeking Ex: boutique Hotel c. Chain hotel -IntRAtype retailers survie and prosper because they satisfy a group of consumers' needs more effectively than their competitors -consumers patronize differnet retal types when they have different needs
fast fahsion and old navy
-undermins gaps postion -fast fashion is more fightable items for consumers closets
Offer wifi in stores
-us department stores and big box retails offer free wifi -aim to improve customer connectivity to online tools such s consumer review sites
brand loyalty
-when consumers will purchase a particular brand of product or service regardless of price or convenience -consumers are reluctant to switch to other brands when their particular brand isn't available -retaielrs can satisfy consumers needs only if they offer the specididc brand desired -creates both problems and opportunities for retailers
Psychological barriers
-why don't people shop somewhere anymore -infrequenty visited areas -crime -not seen as being cool -lack of parking
Determining site location
1-evalutating the retail strategy --value equation ---target market ---competitive advances 2-evalauting geographci ---determine availability of real estate in desired location and class ---consider competicitivenss of market 3-evelauting stie specifics ---ADT counts ---population counts ---psychological barriers 4-evaluate brand share, brand awareness and future purchas internet 5-what does your intutition say?
Budget calender
52 weeks in a year/ 4 quarters per year/ 13 week in quarter -fiscal year: defines a spiffy tax reporting period. for a company ( not same dates for every company-depends on their sales)s
Retail classification (ABC)
A- highest quality, best looking, well located, good access and professioanlly managed, highest quality tenants and rent\ B-little bit older, good quality, value added investors target these building as investors C- lowes classifaiciton of office build and space. older buildings, located in less desirable areas and in need of extensive renovation. cheapest rent
brand architecture
leverage the equity accumulated at the core in order to broaden appeal among multiple consumers segments and enhance profitability
retail strategy
the combination of 3 elements -retailers target market -the format and resource the retailer plans to satisfy the target market needs -the bases on which the retailer plans to build a sustainable competitive advantage
brand equity
the positive effect of the brand on the differnce between the price that the consumer accepts today when the band is known compared to the value of the benefit received
Brand swithcing
when consumers are willing to switch to another brand of product or service (usually because of price or convince) -most often caused by OUT of Stock and price promotions
Full line discount
-100k-120k sq ft -board variety of merchandise, limited service and low prices -many full line discount retailers are converting themseleves to super center to compete with category specialist
Warehouse clubs
-100k-150k sq ft -typically located in low rent district with simple interiors -limited and irregular assortment of food and general merchandise with little service at low prices for consumers and small businesses -heavy food sampling adds to the experience -annual membership fee of $50
Super centers
-160k-200k sq ft -combine super market with a full line discount store -broad assortment of grocery and general merchandise products under one roof (one stop shopping experience) -primary reason for shopping is food. Non food items are often purchases on impulse
Convenience stores
-3k-5k sq ft -located at expensive, high traffic intersections -empahses on the speedy checkout -more than half the items purchases are consumer within 30 min -gas accounts for 71% of store sales, Tobacco for 38% of in store sales followed by beverages -they stores are trying to rely less on gasoline revenue and produce more prepared food options
Department store
-3k-5k sq ft -located in large regional malls -disticit store departments -first their: exclusive upscale merchandise and excellent customer service -Second their: more modestly priced with less customer service -third tier: caters to price conscious consumers
Supermarkets
-50k-75k sq ft -sell the majority of food merchandise in the US, but they are under PRESSURE! -often located in historical shopping centers and strip malls for easy access but allow for complimentary services around the store -~70% of US shoppers have bought something organic over a recent three month period -1 in 3 shoppers have recently switched grocery stores -shoppers spend about 13 minutes shopping per trip an average of 3 times per week
Diffferntaitaotion
a marketing process that showcases the difference between products looks to make a product more attractive by contrasting its unique qualities with other competing products
brand
a rband is calculus, the sum of which depend upon a consumer;s integration with it Old definition=logo, ads, slogans New definition= consistent, predictable behavior
Concept stores
a store that appeals to a particular lifestyle or psychographics segment where retailers design a full sensorial experience cares a broad array of categories with a theme in mind -there is a crucial distinction today between the act of shoping and where a product purchase is made -ecommerce is challenging traditional brick and mortar stores to creat better experience -prolieferation of channel, device and service mean people can shop whenever and however they want to
above and below the line seach
above: effective when the target aduacice is large and difficult to define; most expensive per impression; often difficult to measure below:need to know precisely who you are talking to and what need of their you are going to fill; ability to personable the message to the individual; more precise measurement techniques; typically occure later in the search process
Competittve adavanctage
an advantage there retailer has over its competition that is not easily copied by competitors and thus can be maintained over a ling period of time
value propostion
an innovation, service or feature within the value equation intended to make a company or product attractive to customers
Impulse purchase
an unplanned buying decision made by consumers on the spot after seeing merchandise -typically takes place at the point of purchase -he;lips increase overall market basket and generate trail of new products -POP is typically the most valuable real estate in the store -supported with POInt of Sale (POS) communication
Intafngible assts
are non physical, such as brand , value, trandmark, and customer service. intangible assets add to company possible future worth and can be much more valauble than its tangible assets
Tangible assets
are physical assets such as land, vehicles, equipment, machinery, furniture, inventory, stock, bonds and cash. These assets are the backboned of a company that keeps it in production but are not averrable to customer
Market bastket analusis
are there combination of products that frequenelty co occur in transaction? -co brand affinity (circualrs) -enhandces store design -targeted email and direct mail -promotional plans -upgrade opportunites (orgainic v. conventional) -cross promotional opportunities
intERtype competition
competition among retailers that sell similar merchandise using different types of retail outlets Ex: walmart vs. walgreens
IntrAtype competition
competition between the same types of retailer Ex; CVS vs. walgreens
commercial real estate
imporatn to hire a professional real estate broker to help you negotiate the best possible lease -many brokers represent both landlords and tenants
Data to observe buying behavior
market information -market basket analysis/ consumer takeaway -category share performance -competiticie pricing intelligence -same store sales consumer reseach -qualitative research (focus groups) -customer service center data -ethnogrphic research
Unplanned lcoation
no centrilaed management who determine what stores can be in the development or how they operate -freestanding -centeral business district -inner city -gentrified residential site -main street
Cross shopping
pattern of buying both premium and low prices merchandise -the lack of certain goods at luxury stores that require shoppers to seek them elsewhere -people psychological desire to consider themselves average rather than elite -tendecy to rationalize high spending at designer store by occasionally shopping at a discount store
planned location
shopping center manager and or developer who makes and enforces polities about store operations dn maintains common areas -shopping center -power centers -enclosed shopping malls -lifestyle cents -mixed use developments -outletcenters -theme/festival centers
Market basket
the combination of products that a customer purchases during a single transaction -time of day -amount per item -co-brand/categories per transaction -total dollars ($) spent
Branding
the development of visual brand itentiy that will help consumer identity with the products and service that are offered
target market
the market segment towards which a the retailer plans to focus its resources and value equation -technolgoical innovation: accelerate digital innovation of consumer serivce -planned obsolescnes: long development cycles to test new materials and design that will appeal to a broad range of consumers -vertically integrate: operations,planning, material development, manufacturing, marketing and sales are done in house
retail format
the nature of the retailers operations (its value equation) that it will use to satisfy the needs of its target market
Variety
the number of different merchandise categories retailer offers (breadth)
Assortment
the number of different merchandise items offered within a specific category (depth)
SWOT
S -recngized by customers and competitors as import to them -significailly infuses whether or why customer do business with them -not easily initiated or sbsitued by competition -cannnt also be a weakness W -reconized by customs and competitors as imprint to them -signfiicially influences whether or why customer sod business with them -not easily imitated or substituted by competition -cannot also be strength O -opportuniteis our customer and competitor would also have -cannont be our own ideas -id we didn't ecisist would still be true T -threats our customer and competitors would also have -cannot be our own ideas -if we didn't exist would still be true
Gap case study
Shifts in US Apparel -increing buyer affinity towards fast fashion brands -percetion of GAP merchandise as less fashionable than competitive cash fashion brands -GAP lagging behind competitors in theongoonign shif in echoer buying behavior -excess of retail location
-break even point -% change -CAGR(compound annual growth rate) -Cost -COGS (cost of goods sold) -Index -Inventory
-break even point:the point at which the cost and revenue are equal COGS/contribution margin per item=unit volume -% change:by how much (or how little) a business element changed between two given periods of time. brand managers need to meet or exceed expectations for growth rate -CAGR(compound annual growth rate): not used very often but when it is used it will be leveraged to domesticate how a business or industry is growing over the ling haul -Cost: what a retailer pays for a product to assume it in their inventory -COGS (cost of goods sold): what you pay for a product+what it cost you tousle it to a consumer. when a product becomes a SALE, then its COGS can be fully account for -Index:the amount of change with in all inducible segments,c impaired to the whole, often reveals brand loyal and brand switch segments. % of consumers with in a segment/segment as a % of whole=INDEX -Inventory: the amount (units) or value (dollars) of a company's assets
Major challenges of multi-cahnnel
-centralzied v decentralized consumer -consistnet brand image -merchadnsie assortment -pricign -channel migration
Benefits of e-commerce
-deeper and broader selection -more information to evaluate -persoanlzaiton -expanded market presence -enhanced shopping experience
Segmentation approaces (5)
-demographic: easily measured objective characteristics such as age, gender, income and education -geographic: abses on the idea that commoners within a certain area tend to have similar purchase behaviors -phychogrpahcisL grouping people by the way they think, and approach living their lives"lifestyle -sitiuation: grouping people the basis by which they purchased the products under what circumstance -benefit: grouping consumers by the core requiems that seek from a product or service
pop up stores
-great location alternative that are partially attractive to retailers with high seasonal sales -creates a "limited time only" surprise for the customer -business goal: launch new products, build brand awareness, showcase style and design trend Radnor to give away exclusive goodies and treats -pop up spaces can be in common areas or in line and anywhere from several hours to 6 week
Return on tangible assets
-harder to calculate ROI on intangible assets, brand managers know intangible assets build loyalty -cannont measure a return such as improved revenue or saving in operational cost -one specific measure that you can use to measure a return on intangible assets is though customer satisfaction -when brands go thought thought times, finance people start elimination valuable parts of the value chain for the customer
Hybrid connections
-improving the quality and speed of the retail journey is critical to covering browser into buyers -a
Three basic financial statemetns
-income statement: a financial statement that measures a company's revensues, cost and expenses over a specific accounting period (profit and loss statement) -balance sheet: a financials statement that summarizes a company's assets, liabilities and shareholders equity at a specific point in time -cash flow statement: a financial statement that shows how changes in income and balance sheet account affect cash and cash equivalents
retail site selction
-location decisions are very risky -the section of a location type reinforces the retailers strategy -some retailers grow thought site acquisition -there are three types of shopping situations: convinced shopping, comparison shopping, specialty shopping -some retailers have struggles because of poor site selection
Purchase intent
-measure of the probability that a consumer will patronize your store -aslo refered to as furtuer purchase internst -quantitative research question: how likely would you be to buy this product for yourself if priced as shown? -important to measure because retailers want to spend money with consumers who have a high future purchase interest
Catalg channel
-non store retail channel in which the retail offering is communicated to customers through direct mail to consumer -50% of US consumers shop though catalogue every year -biggest categories:drugs, beauty, computers, softener, clothing, accessories, furniture, housewares -declining in comparist ot e-commerce
Gap brand architeriure
-over time gap build a portfolio of brands that largely appeal to the same target market -banana republic was the outlier with refined casual and tailored looks for men and women wand a higher income -gap consider real waste a competitive advantage and made significant investments in securing retail location for all operating units some of which were not intuitive for consumers in the midet od shopping for basic clothing
Evaluating site specirics
-population density -avergae daily traffic -daytime working population -avegraege home price or price per square foot -income -cars per houshold -menas of transportation
Value equation of a brand (5)
-position -product -price -promotion -place must be: identifiable, actionable, substantial, reachable
Specialty stores
-rank among the most profitable and fastest growing retail formats int he work. Consumers "love" specialty stores -$1800 per sq ft -concentrate on a limited number of compeltemtry merchandise (deep and narrow) with a high level of service -Often used a multi pronged straegy to location section that included mall, lifestyle and central business districts
Service retailers
-retailers that primarily sell series rather than mortise -26 different categories of servie retailers, so one does not fit all when it comes to location format -many organization such as banks, hospitals, health spas, and unfiverist are adopting the retail pricieips
Multittribute theory
-retailers use a predictive model to understand how consumers see a retailer products or channel s collection of core requrinments -uses requirements, belies and weights as the basis for determining the propensity for consumer to choose one option over another (explains customer loyalists) -core requriments (attudes) cause performace beliefs -conusmers past experience with a product/service in addition to ATL and BTL marking informs their beliefs -model is predictive not factual
profiabily large corportiaton
RG= -maxiize awarnes -wide assortment of products -brand power OE= - purchasing power -automation -go private label
profitaiblity in indepenedt retailers
RG= -specialty assocrtmetn: by the first to carry smaller indepened local brands -network potential: solve a problem for a very small group of loyal customers who will spread the word -high touch serve: reward employees for remembering customers names OE= -labor schedualing: are you over scheduling or have to many employ -portion conrol: are portion correct? are we bring pizza?
Profitabilyt in middle market
RG= -value customer program -speciality prepared food OE= - listne carefully to customer complaints -be aware of "sweet hearing"
GAP SWOT
S -broad base of consumers -high levels of awareness for gap brand among all consumer segments -breadth of product assortment -ecommerce platforms W -lack of fashionable merahdise as compared to cpetitice retailers -product quality issues -lacky of speed to market and inventory turnover -brand campaign that does not fell donsisten -oldnay product are more desirable than gap products O -consuemrs are shopping more online -consumers want more affordable clothing -consumer are willing to purchase clothing more frequently at lower priced points T -rapid, dynamically changing category with millennials increasing carrying more purchasing power -gowth of more fashionable realties
The buying process
the process by which consumers 1-recognize their needs: van be both functional and emotional, consumers needs control the market, most have multiple needs 2-seach for information: search depends on how much additional info is required, if an emotional need is being fulfilled it will take longer, prior experience minimizes search time 3-evaluate their alternatives: consumer have a list of core requirements for every need; perfromace beliefs; Multiattribute attitude model to understand core requirements by segment and the requirements impact on performance believes; attitude , uniqueness and purchase intent 4-make a purchase decision: CHOICE(customer don't always show the store with highest evaluation); retailers must positively reinforce the search and evaluation phase, help cusomters reduce the rise of making a purchase mistake, create a sense of urgency 5-post purhcase evaluation: LOYALTY-retailer ideal at this stage is for consumers re -purchase however, a consumer can also decide the product or service does not meet or exceed their needs
COnsideration set
the set of alternatives the consumer evaluates when making a chocie of retailer to patronize which can be included by: 1-increaing beliefs about the store's perfromace 2-changing customers importance weight 3- adding a new benefit (core requirement
Retailing
the set of business activities that adds value to products and services sold to consumers for their personal or family use. "retailers create value" 90% of sales are made in stores les than a 15 minute drive from the consumers home or workplace
profitablity
what is left of revenue after a business pays all of its expense. 1- revenue growth: driving top line growth ---increase market basket ---product line extensions ---aquistions ---increase margins-biggest(most negative) impact to consumers 2-operational excellence: what we can do to be as effcient as possible? -reduce cost- better control of what you spend at the store -manage inventory- it burns cash to hold inventory. do certain product lines not sell? Buyer regular do SKY rationalization
