Retail Management Exam 3

Information Gathering Site Selection & Trade Area Analysis Operations Management

What suppliers need to know from the retailer

• Estimated category sales

• Inventory turnover rates

• Feedback on competitors

• Level of customer returns

What suppliers need to know from the customer

• Attitude toward styles/models

• Extent of brand loyalty

• Willingness to pay a premium for superior quality

What retailers need to know from the supplier

• Advance notice of new models and model changes

• Training materials

• Sales forecasts

• Justification for price changes

What retailers need to know from the customer

• Why people shop there

• Customers’ likes/dislikes

• Where else people shop

What consumers need to know from the supplier

• Assembly and operating instructions

• Extent of warranty coverage

• Where to send a complaint

What consumers need to know from the retailer

• Where specific merchandise is stocked in the store

• Methods of payments

• Return and other policies

Retail Information System (RIS)

• Anticipates the information needs of retail managers

• Collects, organizes, and stores relevant data on a continuous basis

• Directs the flow of information to the proper decision makers

What Target knows about you (Guest ID)

ethnicity, job history, magazines, marital status, education status, brand loyalty, car ownership, political affiliations, car ownership

Data-Base Management

a major element in a RIS. System gathers, integrates, applies, and stores information in related subject areas. Used for: loyalty program management, customer analysis, promotion evaluation, trade area analysis

Primary Data

Information collected by the firm for a specific purpose

Advantages of primary data

• collected for a specific purpose

• current

• relevant

• known and controlled source

Disadvantages of primary data

• More expensive

• Time consuming

• Information may not be acquitted

• Limited perspectives

Secondary Data

Information collected by someone else for another purpose

Advantages of secondary data

• Inexpensive

• Fast

• Several sources and perspectives

• Generally credible

• Provides background information

Disadvantages of secondary data

• May not suit current study

• May be incomplete

• May be dated

• May not be accurate or credible

• May suffer from poor collection techniques

Data Mining and Micromarketing

the in -depth analysis of information to gain specific insights about customers, product categories, vendors, etc.

Harrah’s Data Mining

Wanted to know what offers would attract the most customers. $60 in casino chips or $30 in chips, one free night, and a free dinner for two.

82% of revenue came from 26% of customers

Typical customer was middle aged to senior adults, middle class, local, aspired to high levels of achievement and reward.

Micromarketing

Application of data mining whereby retailers use different marketing techniques for specific customer segments

Segments based on location, customer need, brand loyalty, industry

Customer Prioritization

Micromarketing leads to this. Certain perks for consumers based on greater usage. Can be a double-edged sword if used too much.

Example: Delta sky miles, Hilton HHonors

Retail Location Types

Isolated stores, planned shopping centers, and unplanned business districts

Flagship stores

A company’s most prominent location, holds/sells the highest volume of merchandise, or largest store

Ex. REI- rock climbing wall, Apple Store- issues with architecture, Tiffany’s- the Tiffany diamond

Unplanned Business Districts

Central, Secondary, and Neighborhood Business Districts. Gray area is likely.

Isolated Stores

A freestanding retail outlet with no adjacent retailers. Example, 7/11, Dollar General

Advantages of Isolated Stores

• No direct competition

• Good for convenience stores

• Adaptable facilites

• Easy parking

• Excellent for store that generates own traffic

Disadvantages of Isolated Stores

• Difficulty attracting customers

• Lack of cumulative attraction for customers

• High advertising expenses

• No cost sharing for promotions

Planned Shopping Centers

• Architecturally unified

• Centrally owned (or managed)

• Operated as a unit

• Based on balanced tenancy

• Accompanied by parking

Examples, strip/ outlet malls (Whole Foods+ 4 Rivers + Francesca’s+ Lululemon)

Advantages of Planned Shopping Centers

• Well-rounded assortments

• Strong suburban population

• One-stop, family shopping

• Cost sharing of promotions

• Transportation access

• Pedestrian traffic

Disadvantages of Planned Shopping Centers

• Limited flexibility

• Higher rent

• Restricted product offerings in lease

• Competition

• Domination by anchor stores

Central Business Districts

Formed around a geographic point where all public transportation systems converge. Higher pedestrian traffic. Near commercial and social facilities. Target of revitalization efforts. Example: Times Square, Ponce City Market

Secondary Business Districts

Revolves around a major street intersection, evolve with the spread of the city. Close to residential areas. Convenience oriented products. Access to main roads. Example: Collegetown

Neighborhood Business District

Formed to satisfy the convenience-oriented shopping needs of a neighborhood. Parking, less hectic than other business districts, large amount of convenience-based companies. Example: CVS, nail salons, dry cleaners

Ponce City Market

Example of a Central Business District. Mixed-use development in Atlanta. Originally a Sears distribution center, now home to shopping, dining, entertainment, luxury apartments, and office space.

Which type of location would work best for a fine dining restaurant?

Central Business District

Which type of location would work best for a dry cleaner?

Neighborhood Business District

Which type of location would work best for a Trader Joe’s?

Secondary Business District

Trading-Area Analysis

a geographic area containing the customers of a particular firm or group of firms for specific goods or services

Information gathered before a retailer chooses a location

• Population size and traits

• Surrounding competition

• Transportation access

• Parking availability

• Nature of nearby stores

• Property costs

• Length of agreement

• Legal restrictions

Benefits of trading-area analysis

• Discovery of consumer demographics

• Opportunity to determine focus of promotional activites

• Assessment of effects of trading area overlap

• Ascertain whether chain’s competitors will open nearby

GIS Software

Mapping system with key location-specific data used to graphically display trading area characteristics such as: population demographics, data on customer purchases, and competitor locations

Primary trading-area

Area of consumers of a business that contains 50-80% of customers

Secondary trading-area

Area of consumers of a business that contains 15-25% of customers

Fringe trading-area

Area of consumers of a business that contains the remaining % of customers not yet accounted for

Store types largest to smallest

Department stores> Supermarkets> Specialty stores> Convenience stores

Customer Journey

The complete sum of experiences that customers go through when interacting with your company and brand
Across all mediums:
• call center
• a chat environment online
• ecommerce
• in store

Operations Blueprinting

The systematic listing of actions performed by employees and customers

Touchpoints

The ways in which a customer experiences a product or service before, during, and after the purchase

Elements of Operations Blueprinting

Physical evidence, customer actions, on-stage employee contact, back-stage employee contact, and support processes

Customer actions

Customer steps taken as part of service delivery. Trains customers ex. ATM’s, Starbucks “language”, Co-creation

Visible contact employee actions

face-to-face encounters with the customer

Example: Ritz-Carlton works to “reset internal clocks”, own the relationship, empower employees to resolve issues themselves with a $2000/day/guest budget, and anticipate unexpressed needs.

Backstage employee actions

not face-to-face interaction with consumers

Support processes

necessary functions crucial to carrying out the services

Physical evidence

tangibles that customers are exposed to during contact with the retailer

Maximizing Personnel Productivity

Hiring the right people: attitude, match in personal values (Google interview questions), observe people skills, assess emotional strength (handling a stressful situation)

Top Google Interview Questions

• What do you know about Google?--Administrative business partner

• What scares you?--Business analyst

• How many ways can you think of to find a needle in a haystack?--Business associate

• Estimate the number of tennis balls that can fit into a plane.--Intern

• Describe AdWords to a 7-year-old.--Associate account strategist

• How many haircuts do you think happen in America every year?--Business associate

• Tell me a joke.--Executive assistant

Job standardization

creating uniform tasks for similar positions in different departments, drives efficiency

Example: Chipotle using scoops to measure ingredients

Cross-Training

Involves teaching an employee who was hired to perform one job function the skills required to perform other job functions. Increases employee loyalty while reducing labor costs

Example: Trader Joe’s, Costco

Technological Decisions/ Retail Self-Service

The good: customers order significantly more when using self-service technology. Example: Taco Bell digital app, Chili’s table tablets

The bad: Decreased overall satisfaction. Difficult delighting the customer but can easily disappoint