Retail Marketing 372 Castro

Staple Merchandise
● Predictable Demand
● History of past sales
● Relatively accurate forecasts
Fashion merchandise
● Unpredictable Demand
● Limited Sales History
● Difficult to forecast sales
Merchandise management
Process by which a retailer offers the correct quantity of the right merchandise in the right place at the right time and meets the company’s financial goals
Category management
Process of managing a retail business with the objective of maximizing the sales and profits of a category
Developing a Sales Forecast
● Understanding the nature of the product life cycle
● Collecting data on sales of product and comparable products
● Using statistical techniques to project sales
● Work with vendors to coordinate manufacturing and merchandise delivery with forecasted demand
Retailers develop fashion forecasts by relying on
● Previous sales data
● Market research
● Fashion and trend services
● Vendors
have proprietary information about their marketing plans and tend to very knowledgeable about market trends.
Assortment Plan
Is a list of the SKUs that a retailer will offer in a merchandise category and reflects the variety and assortment that the retailer plans to offer in a merchandise category
Variety (breadth):
Number of different merchandising categories within a store/department
Assortment (depth):
Number of SKUs within a category
Product Availability
Defines the percentage of demand for a particular SKU that is satisfied
distinguishing name or symbol, such as a logo, that identifies the products or services offered by a seller and differentiates those products and services from those offered by competitors
Value of brand image to retailers (brand equity)
○ attract customers
○ build loyalty
○ higher prices lead to higher gross margin
○ reduced promotional expenses
○ facilitates entry into new markets ( gap → gap kids)
Value of brand image to customers
○ promises consistent quality
○ simplifies buying process
○ reduces time and effort for searching for information about merchandise/ retailer
Integrated Marketing Communication Program
○ a program that integrates all of the communication elements to deliver a comprehensive, consistent message
○ providing a consistent image can be challenging for multichannel retailers- Need to consider the needs of all channels early in the planning of its communication program
○ present a consistent brand image through all communications with customers
■ store design
■ advertising
■ website
■ magalog
Direct mail
any brochure, catalog, advertisement, or other printed marketing material delivered directly to the consumer through the mail or a private delivery company.
Mobile Marketing
is marketing through wireless handheld devices, such as cell phones, or mobile commerce (m-commerce) involves completing a transaction via the cell phone
Public relations
○ managing communications and relationships to achieve various objects
○ building and maintaining a positive image of the retailer
○ handling or heading off unfavorable stories or events
○ maintaining positive relationships with the media
○ In many cases, public relations activities support other promotional efforts by generating free media attention and general goodwill.
Allocate the promotional budget
○ the retailer decides how much of its budget to allocate to specific communication elements, merchandise categories, geographic regions, or long and short term objectives
○ budgeting allocation decision is more important budget amount decision
○ high assay principle: the retailer allocates the budget to areas that will yield the greatest return
Extrinsic rewards
rewards provided by either the employee’s manager or the firm such as compensation, promotion, and recognition
Intrinsic rewards
employees get personally from doing their job well because they think it is challenging and fun
Job enrichment
The redesign of a job to include a greater range of tasks and responsibilities.
Compensation Programs
● A compensation plan is effective for motivating and retaining employees when the employees feel the plan is fair and that compensation is related to their efforts
○ Types:
■ Straight salary compensation
■ Incentive compensation plans
● Straight commision
● Quota bonus plan
■ Group incentives
Store Design Objectives
● Implement retailer’s strategy
● Build loyalty
● Increase sales on visits
● Control cost
● Legal considerations – americans with disabilities act
● Design trade-offs
Grid layout
○ easy to locate merchandise
○ does not encourage customers to explore store
■ limited site lines to merchandise
○ allows more merchandise to be displayed
○ cost efficient
○ used in grocery, discount, and drugstores
Racetrack layout (loop)
○ loop with a major aisle that has access to departments
○ draws customers around the store
○ provide different viewing angles and encourage exploration, impulse buying
○ used in department stores
○ Ex. JC Penny
Free Form (boutique) Layout
○ fixtures and aisles arranged asymmetrically
○ provides an intimate, relaxing environment that facilitates shopping and browsing
○ pleasant relaxing ambiance doesn’t come cheap- small store experience
○ inefficient use of space
○ more susceptible to shoplifting- salespeople can not view adjacent spaces
○ used in specialty stores and upscale department stores
Suggestions for Effectively Using Signage
● Coordinates signage to store’s image
● Use appropriate typefaces on signs
● Inform customers
● Use them as props
● Keep them fresh
● Limit the text on signs
Digital Signage
Visual Content delivered digitally through a centrally managed and controlled network and displayed on a TV monitor or flat panel screen
● Superior in attracting attention
● Enhances store environment
● Provides appealing atmosphere
● Overcomes time-to-message hurdle
● Messages can target demographics
● Eliminates costs with printing, distribution and installing traditional signage
Straight Rack
● Holds a lot of apparel
● Hard to feature specific styles and colors
● Found often in discount and off-price stores
● Smaller than straight rack
● Holds a maximum amount of merchandise
● Easy to move around
● Customers can’t get frontal view of merchandise
● Holds large amount of merchandise
● Allows customers to view entire garment
● Hard to maintain because of styles and colors
● Fashion oriented apparel retailer
● Versatile
● Grocery and discount stores
● Some department stores
● Hard to view apparel as they are folded
Tonnage Merchandising
Large quantities of merchandise displayed together
Frontal Presentation
Display as much of the product as possible to catch the customers eye
Merchandise Presentation Techniques
● Idea-Oriented Presentation
● Style/Item Presentation
● Color Organization
● Price Lining
● Vertical Merchandising
Space Management
● The space within stores and on the stores shelves is a scarce resource
● the allocation of store space to merchandise categories and brands
● the location of departments or merchandise categories in the store
Space Planning
● Productivity of allocated space ( sales per square foot, sales per linear foot)
● Merchandise inventory turnover
● Impact on store sales
● Display needs for the merchandise
Highly trafficked areas
○ Store entrances
○ Near checkout counter
Highly visible areas
○ End aisles
○ Displays
Demand/Destination merchandise
Back left-hand corner of the store
Cluster complimentary merchandise next to each other
Special merchandise
Lightly trafficked areas (glass pieces, women’s lingerie)
a diagram that shows how and where specific SKUs should be placed on retail shelves or displays to increase customer purchases
Customer Service
The set of activities and programs undertaken by retailers to make the shopping experience more rewarding for their customers. These activities increase the value customers receive from the merchandise and service they purchase.
Personalized approach
encourages service provider to tailor the service to meet each customer’s personal needs
■ greater benefits to customers
■ greater inconsistency
■ higher cost
○ Store- sales associates offer individual customer service
○ Electronic channel- instant messaging
○ Drawback- service might be inconsistent
○ Customized service is costly
Standardized approach
based on establishing a set of rules and procedures and being sure that they are implemented consistently
■ lower cost
■ high consistency
■ meets but does not exceed expectations
■ retailers that use this approach-mcdonalds, wal mart, ikea, dollar general, save a lot
Merchandise Kiosks
small, temporary selling spaces typically located in the walkways of enclosed malls, airports, train stations, or office building lobbies
Instrumental support
associates need to have the appropriate systems and the right equipment to deliver the services
Strategic Advantage through customer service
○ good service keeps customers returning to a retailer and generates positive word of mouth communication, which attracts new customers
○ the challenge of providing consistent high quality service offers an opportunity for a retailers to develop a sustainable competitive advantage
○ 85% percent of consumers in a survey say they spend more at retailers that provide good service, 82% say they are likely to recommend those retailers to their friends and family

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