5th

Why site selection matters

1. Customer Flow

How easily people (both walking and driving) can pass by and enter the store.

2. Ease of Access

Is it easy to get in and out of the location?

3. Parking Availability

Do customers have space to park? (This matters more in car-focused cultures.)

4. Visibility

Can people easily see the store from the street?

5. Complementary Tenants

Are there nearby businesses (like a café or gym) that attract the same type of customers and help drive foot traffic?

Why Open Multiple Stores in One Area?

1. It lowers costs in advertising and distribution (economies of scale).

2. we can now have distribution center to supply nearby stores more efficiently.

3. someone can say cannibalazation. But it can still be worth it if the extra sales made are greater than the extra costs.

4. Putting similar or related stores near each other draws more customer traffic. for example, shopping area

What is Trade Area and its zones

It is geographic areas around a store where most of its customers come from. It's split into 3 parts:

1. Primary Zone

➤ Brings in 50-70% of total customers.

➤ Usually people who live or work very close.

2. Secondary Zone

➤ Brings in another 20-30%.

➤ Slightly farther away but still regular visitors.

3. Tertiary/Fringe Zone

➤ Occasional visitors who live far away.

➤ May stop by while traveling or visiting.

What is GIS and what's used for

GIS is a mapping tool that helps retailers make smarter decisions using location-based data.

Retailers use GIS to:

1. Visualize customer density (where most shoppers live)

2. Define trade area boundaries

3. Identify ideal customer segments (e.g., using tools like ESRI Tapestry)

4. Spot competitors and traffic trends

Design 5 objectives (What the Store Should Achieve)

1. Implement the Retail Strategy

Store layout and look should match the brand's image and positioning (e.g., luxury vs. budget).

2. Build Loyalty

Make shopping comfortable and intuitive so customers enjoy the experience and want to come back.

3. Increase Sales Per Visit

Design the store to guide customers through areas and products that encourage more purchases.

4. Control Costs to Increase Profits

Create layouts that support efficient staffing and operations to reduce labor and running costs.

5. Meet Legal Requirements

Design must be accessible to everyone (e.g., ADA compliance in the U.S.), including people with disabilities.

Design 4 Trade-offs (What Needs Balancing)

1. Efficiency vs. Aesthetics

→ A beautiful store may cost more or be harder to clean and maintain.

2. Impulse Buying vs. Easy Navigation

→ Placing items to tempt customers might make it harder to find essentials quickly.

3. Utility vs. Fun

→ Should the store focus on being efficient (e.g., fast shopping) or on being enjoyable and engaging (e.g., exploration)?

4. Space vs. Sales Density

→ More space makes shopping more pleasant, but less product per square meter = fewer sales.

→ Example: The "butt-brush effect" occurs when narrow aisles cause discomfort, especially when people bump into each other—it can drive shoppers away.

How stores strategically position products to guide customer movement and boost sales.

1. Strike Zone

→ The first area customers see after entering (after the decompression zone).

→ Sets the store's tone and grabs attention quickly.

2. Destination Merchandise

→ Items people come in specifically looking for (like milk or batteries).

→ Usually placed at the back or far corners to make customers pass by other products along the way.

3. Impulse Merchandise

→ Products people buy on a whim.

→ Placed in high-traffic and high-visibility areas like:

Right-hand side of aisles

Aisle entrances

End caps (ends of shelves)

Near the checkout

How products are displayed to influence what customers notice, feel, and choose to buy.

🛍️ Key Techniques:

1. Idea-Oriented Displays

→ Group items as they're used together (e.g., full outfit on a mannequin, or pasta + sauce + wine).

2. Item/Size Presentation

→ Neat (аккуратная), consistent organization by type or size helps customers find what they need quickly.

3. Colour Blocking / Vertical Merchandising

→ Organizing by color or in vertical lines helps guide the eye and makes the display more appealing.

All KPI categories

1. Space Productivity KPIs (how well the store uses its physical space to generate sales)

2. Customer Flow & Exposure KPIs (where customers go and what they see)

3. Merchandising Execution KPIs (how well the store is set up and stocked)

4. Service Experience KPIs (how well the store serves its customers)

what makes Omnichannel different

1. Integrated Inventory Visibility

Whether customers shop in the store, on the website, or through an app, the stock must be updated in real-time.

This means if someone buys the last shirt in the store, it disappears from the website too, so no one else tries to buy it.

2. Stores as Hybrid Service + Fulfillment Nodes

Stores now do more than just sell products—they also prepare and fulfill online orders. Common services include: BORIS - Buy Online, Return In Store.

3. Order Orchestration

When someone orders something, the system figures out:

👉 Should it come from the nearest store?

👉 From a big warehouse?

👉 From a special location just for deliveries (called a dark store)?

This is called order orchestration, and it helps make delivery faster and cheaper.

4. Cross-Channel Consistency

No matter where a customer shops (online, app, or store), everything should feel the same:

Same prices

Same promotions

Same loyalty points

Same customer service

This makes it feel like one single brand, not separate experiences.

What "Good Omnichannel Operations" Look Like

1. Predictable & Balanced Workflows

Online orders are handled smoothly as part of the daily routine.

Staff know exactly how to manage online pickups, deliveries, and returns.

The store is set up with smart station design to keep things flowing efficiently.

🛒 Example: You order online, the staff picks and packs it without disrupting in-store customers.

2. Real-Time Inventory + Accurate Promises

The system only shows products as available if they truly are.

Stores don't promise delivery or pickup of items that are out of stock.

📦 Example: If Zara says it's ready for pickup, it really is - no surprises.

3. Allocated Space for Fulfillment

Stores have dedicated areas for:

Order pickup

Staging items

Packing boxes

Handling returns

🚗 Example: A "Drive Up" pickup zone at Target or Starbucks mobile pickup counters.

4. Integrated Technology + Data Flow

All systems (app, checkout, routing, delivery) talk to each other in real time.

They work as one system, so orders are processed correctly and fast.

🔄 Example: You order via app, store gets notified instantly, and the item is packed + ready quickly.

5. Capacity Planning

Stores prepare for busy times (like Black Friday or lunch rush).

They staff accordingly and keep systems ready for more online demand.

📊 Example: Extra workers are scheduled when big promotions or holidays are coming.

Good omnichannel stores are:

✅ Organized

✅ Honest about what they can deliver

✅ Have special areas for online orders

✅ Use smart tech to stay connected

✅ Ready for busy times

What is SCM (Supply chain management)

SCM helps make sure the right product is:

In the right place

In the right quantity

At the right time

👉 This means customers find what they need, when and where they expect it — leading to better satisfaction.

How Retailers Use SCM to Their Advantage

Retailers use technology and systems to:

1. Coordinate better with suppliers and transport companies — so everything arrives on time.

2. Avoid stockouts (empty shelves) and make products more available.

3. Adapt to local needs — e.g., different stores stock different products based on what people in that area want (using POS = Point of Sale data).

4. Reduce inventory costs — by keeping only what's needed and selling it quickly (increasing turnover).

Why CRM Matters for Retailers

1. Loyal customers = more profit

Loyal shoppers spend more often and are more valuable over time (they give a bigger share of their wallet to the retailer).

2. Retention is cheaper than acquisition

It's much easier and cheaper to keep a customer than to find new ones.

3. Loyalty comes from great experiences, not just discounts

People return because they feel emotionally connected, respected, and consistently have positive service experiences.

CRM Process

1. Collect customer data

Retailers gather detailed customer information and store it in a customer data warehouse, such as:

1)What you buy (transaction history: product, date, price)

2)How you interact (website visits, returns, call center chats)

3)Your preferences (brands, colors, sizes)

4)Your demographics (age, location) and lifestyle/behavior (psychographics)

2. Analyze data to find best customers

1)Spot their most valuable customers (those who spend the most, return often, or influence others).

2)Focus efforts (marketing, service, promotions) on where it matters most.

3. Develop CRM programs

1)Target effectively: Send them relevant offers they care about.

2)Personalize interactions: Make customers feel seen and valued (like being greeted by name or remembering preferences).

3)Boost visits and long-term value: Encourages customers to return more often and spend more over their lifetime.

4. Implement CRM programs

Put the strategy into action in stores or online.

5. Learn from results

Repeat the cycle with better insights.

How Information Systems Enable Modern Retail Operations (RFDI & EDI)

1. Real-Time Data Flow Across the Supply Chain

When a customer buys something, the system automatically tells the store, warehouse, and supplier.

So, if a product is running low, it gets restocked quickly — no one has to do it manually.

🟦 Example: If a shirt is sold, the computer knows and reorders more.

2. Data Warehouses

Stores save all the data: what was bought, when, where, and by who.

They use this info to:

Know what people like

Plan how much to order

Run smart promotions

🟦 Example: If many people buy snacks on Fridays, the store will stock up for Fridays.

3. EDI (Electronic Data Interchange)

This is a digital way for stores to talk to suppliers.

They send:

Orders

Shipping info

Inventory updates

🟦 Why? It's faster and makes fewer mistakes than calling or emailing.

4. RFID (Radio Tags)

These are like smart barcodes that don't need to be seen or scanned directly.

They track where each product is in real time.

🟦 Why it helps:

Reduces lost or missing items

Helps find products fast

Makes counting stock easier