Directorate of Distance Education Swami Vivekanand Subharti Unive

II Year

Course Code : MBA -302

Course Title : Retail Management

Assignment No. : MBA -302/ 2023

Maximum Marks : 30

Attempt any 5 questions from the given 10 questions.

All questions carry equal marks.

Q1. What is Retail Strategy?

Q2. Write the Importance of Location in Retail Business
Q3. What is Merchandising?

Q4. Discuss the Factors Influencing Merchandising

Q5. Explain the Functions of a Merchandising Manager

Q6. What is the role of store management?

Q7. What are your greatest strengths as a facilities manager?

Q8. What are the major issues in logistics and supply chain management?

Q9. What is Space Management?

Q10. Which type of spaces are required in retail store?

Q01-What is Retail Strategy?

What is Retail Strategy?

Retail strategy is a holistic marketing plan for a product or a service to reach the final
retail channel and influence the consumers. This strategy covers everything from what
retail channels a product or service will be available in to what should be the price or
sales incentive to be given and how to display the product in the shelf.
Retail strategy is developed for product to be distributed through retail outlets. When a
product is sold through a retail outlet, a number of factors affect the sale of the product.

Factors in Retail Strategy

Some of the factors as already mentioned below are:
1. Pricing/discounting of the product
2. Incentive structure followed
3. Promotions planned
4. Placing of the product
5. Display attractiveness
6. Incentive structure for the retailers
7. Overall Consumer Behavior

These are some of the major factors and is not inclusive of all. Strategizing on how to
proceed in all these friends to finally influence the consumer to buy your product is the
development of retail strategy.

Published by MBA Skool Team, Last Updated: August 15, 2021

What is Retail Strategy?

Retail strategy is a holistic marketing plan for a product or a service to reach the final
retail channel and influence the consumers. This strategy covers everything from what
retail channels a product or service will be available in to what should be the price or
sales incentive to be given and how to display the product in the shelf.

Retail strategy is developed for product to be distributed through retail outlets. When a
product is sold through a retail outlet, a number of factors affect the sale of the product.

In this article:

 Factors in Retail Strategy

 Retail Strategy Example

Factors in Retail Strategy

Some of the factors as already mentioned below are:

1. Pricing/discounting of the product

2. Incentive structure followed

3. Promotions planned

4. Placing of the product

5. Display attractiveness

6. Incentive structure for the retailers

7. Overall Consumer Behavior

These are some of the major factors and is not inclusive of all. Strategizing on how to
proceed in all these friends to finally influence the consumer to buy your product is the
development of retail strategy.
Source: integraldetail

The above mentioned factors are the controllable variables of a retail strategy as shown
in the picture. Apart from planning for these a retail strategy should also take into
account the uncontrollable factors like seasonality, legal restrictions, economic
conditions etc. in order for the strategy to be effective.
Retail Strategy Example
One of the examples of the retail strategy can be placement of the product at the retail
channel. Many times when we go to a retail store, just before the billing counter, we see
products like gums, chocolates and other products with smaller SKUs which can just be
picked while the customer is waiting at the billing counter.
This is a part of retail strategy and helps both the brands as well as the retail chain by
driving sales even at the end of the journey.
Q2. Write the Importance of Location in Retail Business

Importance of Location in Retail Business

Retail store location is also an important factor for the marketing team to consider while setting
retail marketing strategy. Here are some reasons −
 Business location is a unique factor which the competitors cannot imitate. Hence,
it can give a strong competitive advantage.
 Selection of retail location is a long-term decision.
 It requires long-term capital investment.
 Good location is the key element for attracting customers to the outlet.
 A well-located store makes supply and distribution easier.
 Locations can help to change customers’ buying habits.

Trade Area: Types of Business Locations

A trade area is an area where the retailer attracts customers. It is also called catchment area.
There are three basic types of trade areas −
Solitary Sites
These are single, free standing shops/outlets, which are isolated from other retailers. They are
positioned on roads or near other retailers or shopping centers. They are mainly used for food
and non-food retailing, or as convenience shops. For example, kiosks, mom-andpop stores
(similar to kirana stores in India).
Advantages − Less occupancy cost, away from competition, less operation restrictions.
Disadvantages − No pedestrian traffic, low visibility.
Unplanned Shopping Areas
These are retail locations that have evolved over time and have multiple outlets in close
proximity. They are further divided as −

 Central business districts such as traditional “downtown” areas in cities/towns.

 Secondary business districts in larger cities and main street or high street locations.
 Neighborhood districts.
 Locations along a street or motorway (Strip locations).

Advantages − High pedestrian traffic during business hours, high resident traffic, nearby
transport hub.
Disadvantages − High security required, threat of shoplifting, Poor parking facilities.
Planned Shopping Areas
These are retail locations that are architecturally well-planned to provide a number of outlets
preferably under a theme. These sites have large, key retail brand stores (also called “anchor
stores”) and a few small stores to add diversity and elevate customers’ interest. There are
various types of planned shopping centers such as neighborhood or strip/community centers,
malls, lifestyle centers, specialty centers, outlet centers.

Advantages − High visibility, high customer traffic, excellent parking facilities.

Disadvantages − High security required, high cost of occupancy.

Factors Determining Retail Locations

The marketing team must analyze retail location with respect to the following issues −
 Size of Catchment Area − Primary (with 60 to 80% customers), Secondary (15
to 25% customers), and Tertiary (with remaining customers who shop
occasionally).
 Occupancy Costs − Costs of lease/owning are different in different areas,
property taxes, location maintenance costs.
 Customer Traffic − Number of customers visiting the location, number of
private vehicles passing through the location, number of pedestrians visiting the
location.
 Restrictions Placed on Store Operations − Restrictions on working hours, noise
intensity during media promotion events.
 Location Convenience − Proximity to residential areas, proximity to public
transport facility.

Steps to Choose the Right Retail Location

A retail company needs to follow the given steps for choosing the right location −

Step 1 - Analyze the market in terms of industry, product, and competitors − How old is
the company in this business? How many similar businesses are there in this location? What the
new location is supposed to provide: new products or new market? How far is the competitor’s
location from the company’s prospective location?
Step 2 – Understand the Demographics − Literacy of customers in the prospective location,
age groups, profession, income groups, lifestyles, religion.
Step 3 – Evaluate the Market Potential − Density of population in the prospective location,
anticipation of competition impact, estimation of product demand, knowledge of laws and
regulations in operations.
Step 4 - Identify Alternative Locations − Is there any other potential location? What is its cost
of occupancy? Which factors can be compromised if there is a better location around?
Step 5 – Finalize the best and most suitable Location for the retail outlet.

Measuring the Success of Location

Once the retail outlet is opened at the selected location, it is important to keep track of how
feasible was the choice of the location. To understand this, the retail company carries out two
types of location assessments −
Macro Location Evaluation
It is conducted at a national level when the company wants to start a retail business
internationally. Under this assessment, the following steps are carried out −
 Detailed external audit of the market by analyzing locations as macro
environment such as political, social, economic, and technical.
 Most important factors are listed such as customer’s level of spending, degree of
competition, Personal Disposable Income (PDI), availability of locations, etc.,
and minimum acceptable level for each factor is defined and the countries are
ranked.
 The same factors listed above are considered for local regions within the selected
countries to find a reliable location.
Micro Location Evaluation
At this level of evaluation, the location is assessed against four factors namely −
 Population − Desirable number of suitable customers who will shop.
 Infrastructure − The degree to which the store is accessible to the potential
customers.
 Store Outlet − Identifying the level of competing stores (those which the
decrease attractiveness of a location) as well as complementary stores (which
increase attractiveness of a location).
 Cost − Costs of development and operation. High startup and ongoing costs affect
the performance of retail business.
Q3. What is Merchandising?
Merchandising Meaning
Merchandising refers to the marketing and sales approach for
promoting goods at retail outlets and influencing consumer behavior,
thus boosting sales. It constitutes a vital part of retail management and
makes products visually appealing to buyers at a brick-and-mortar or
online store.
The in-store and on-store promotional strategy may consider display
designs, free samples, discounts, coupons, points-of-sale, quantity,
pricing, etc. It, therefore, ensures increased sales by making items on
display presentable. Essentially, the concept entails using creativity
and innovation to display and sell items to encourage customers to
purchase. As a result, companies can meet their sales targets with
ease.

Key Takeaways
 Merchandising is a marketing and sales strategy for promoting
products in retail stores and influencing consumer behavior to
increase sales. For a corporation that sells tangible goods, it may
result in higher labor and material costs.
 The approach comprises displaying and selling goods using
originality and innovation to entice customers to buy, whether
from a physical or digital store.
 Packaging designs, free samples, discounts, coupons, points-of-
sale, quantity and pricing, and so on are all part of the in-store
and on-store promotional strategy.
 Individual purchase behavior, culture, holidays, and weather
impact the merchandising business. Product, retail, digital, visual,
and omnichannel are its most popular classifications.
How Does Merchandising Work?
The Merchandising definition describes the process of determining
the best strategy for attracting customers to a physical or digital
store’s merchandise. In simpler words, it is a technique employed by
both brick-and-mortar and online retailers, which involves designing
the store, displaying products aesthetically, using competitive pricing,
conveying their worth, and providing a seamless customer experience.
The overall strategy can result in increased labor and material
expenses for a company that sells tangible things.

Types Of Merchandising
Merchandising business can be of multiple types based on the
strategy it uses. However, here are a few of them to provide a better
understanding of the concept:

1. Product Merchandising
Both in-store and online stores use these promotional activities to
increase products sales. It deals with presenting physical or digital
products in a way that customers will spend money on them. This
method could involve correctly packaging the product or featuring
product photographs on the website.

2. Retail Merchandising
It refers to promotional and marketing strategies used for the
presentation of products in brick-and-mortar stores. When it comes
to displaying products within a retail store, arranging them orderly is
crucial besides the behavior of salespersons.
3. Digital/E-Commerce/Online Merchandising
Products on e-commerce websites, unlike those in traditional stores,
are hard to assess. As a result, online retailers focus on the
performance of their website and put the necessary information on
display alongside products. Also, they have an efficient and instant
customer care service to manage customer inquiries. Other
promotional efforts may include social media and email marketing.
With this, digital platforms gain the trust of consumers and a devoted
consumer base.
4. Visual Merchandising
Stores display the product design, packaging, benefits, and related
information, such as pricing and discount, to encourage consumers to
buy instantly. Advertisement banners and signage are the best ways
to make this approach impactful for increased product sales. Other
presentation elements used by physical and digital stores can include
spacing, color selection, lighting, web design, online videos, etc.

5. Omnichannel Merchandising
It includes providing robust customer support to customers across all
platforms (brick-and-mortar and online). It, thus, helps them decide
whether to purchase a particular product or look for something else.

Merchandising Business Examples

Here are some examples to get a better understanding of the
approach:

Example #1
In the United States, seasonal holidays have traditionally had a
considerable impact on retail sales. Many merchandising companies,
including Best Buy, Walmart, and Macy’s, witness increased product
sales during festivals. Home Depot Inc., a home improvement
company, is the latest to join the list. A few years before 2020, the
corporation began to rethink its strategy and provide massive
discounts on products, which resulted in a significant increase in sales
on Black Friday and other festivities.
Example #2
Nike Inc., an American sportswear brand, entered an agreement with
the National Basketball Association (NBA) in June 2015. The eight-
year arrangement, which began with the 2017-2018 season, allowed
the brand to become the NBA’s first official on-court apparel partner,
with its emblem appearing on team uniforms. It was part of its
business strategy to increase sales of its sportswear goods across
different consumer segments.
Q4. Discuss the Factors Influencing Merchandising
The factors affecting retail merchandising
Retail merchandising consists of the planning, buying and selling of
goods and products that retailers will then sell to their customers.
It’s a critical part of successfully managing both in-store and
eCommerce operations, yet it’s also one of the most challenging and
least understood aspects. Each part of the merchandising equation –
planning, buying and selling – needs to be carefully executed, or  the
retailer may end up losing profi t margins and not utilizing product
properly.

There are four critical factors that infl uence merchandising functions
and processes. Retailers must consider all four elements as they
plan their merchandising initiatives – it’s pivotal that they remember
that merchandising does not function in isolation.

1. Size of the retail operation

How big is the retailer in question? Is it a small operation with a
single eCommerce website, or is it a major retail conglomerate with
stores worldwide and websites in every language? As one would
expect, these two dramatically different businesses would have
vastly different retail merchandising approaches.

First and foremost, merchants should determine who is in charge of

merchandising tasks. In a small retail operation, the owner might
take the helm for this responsibility. However, as merchants expand
into different departments, stores and even brands, product
management becomes more complex and the number of people
involved in inventory purchasing will likely grow.

There are other factors involved as well. For example, a multi-store

chain may opt to have buying processes done at a regional or local
level, or have all stores stock product based on national trends.
Individual purchasers at stores may have more say or less,
depending on the size of retail operations. Size of the store is a
critical element that needs to be considered in the merchandising
process.
2. Separation of duties
Separation of duties is common in mid-size and large retail
operations. Often, buying, planning and selling may be separate tasks
and responsibilities for a variety of reasons, from security to
specialization.

When the same person isn’t taking care of all three parts of the
merchandising equation – buying, selling and planning – retailers
need to consider how that could impact overall merchandising
efforts. Of course, smaller merchants are likely to put all these duties
on a single person, so it’s crucial that merchants take into account
who is doing what at their companies.

3. Shopping channel
Another key consideration of merchandising is the shopping channel.
Nowadays, consumers have a number of options when it comes to
how they want to shop – online, through television, in-store, via mail
catalogs, etc.

While merchants should offer all of these options to customers, it’s

pivotal they have the merchandising strategy in place to support this
initiative. For example, mail order catalogs need to be planned well in
advance, because production of these materials can take weeks or
even months depending on the quantity needed. On the fl ipside, web-
based initiatives can be executed in near real-time.

For many merchants, fi lling a niche is important. Whether retailers

are known for low prices, unique products or any other trademark, it’s
important that they take into account how channel can impact
merchandising efforts.

Merchandising is an important task to get right, with a study from

Retail Systems Research concluding that 70 percent of respondents
believe merchandising and inventory management are critical to the
success of retailers. Managers should use all the tools at their
disposal to make the merchandising process as streamlined as
possible.
Q5. Explain the Functions of a Merchandising Manager

Merchandising managers are analytical professionals who specialize in

sourcing, managing, and curating a company's products and
promotional material. Duties fulfilled by merchandising managers
include overseeing the buying process, forecasting inventory demands
and trends, and negotiating with suppliers.

Merchandising Manager Job Description

Template
Our growing retail company is looking to appoint a talented and
experienced merchandising manager to create, oversee, and implement
merchandising strategies. You will manage a team of marketing and
merchandising professionals to ensure that all deadlines, inventory
requirements, and customer orders are completed in a timely manner.

Our ideal candidate is a detail-oriented and deadline-driven individual

with experience managing a small to medium-size team. This role also
requires excellent communication and interpersonal skills, with a
creative eye for sourcing and presenting garments and accessories.

Merchandising Manager Responsibilities:

 Overseeing the planning and implementation of merchandising
strategies.
 Creating eye-catching store layouts that showcase the brand and
aesthetic of the company.
 Negotiating the costs of inventory for multiple stores.
 Preparing annual and quarterly budgets, and presenting them to
the relevant stakeholders.
 Tracking inventory movement and systematically introducing
promotions, sales, price changes, etc.
 Identifying trends and monitoring supply and demand.
  Collaborating with the marketing department to brainstorm new
projects, campaigns, and business ideas.
 Interpreting sales reports and providing guidance on how to
improve figures and customer engagement.

Merchandising Manager Requirements:

 High school diploma or GED.
 Bachelor's degree in marketing, business management, retail, or a
related field is an added bonus.
 A minimum of five years' experience in a managerial position.
 A background in marketing, communications, and/or design is
preferred.
 Exceptional interpersonal and communication skills.
 Must be creative and detail-orientated.