Assignment Code: BRL-007/TMA/2021-22

Course Code: BRL-007

Assignment Name: Store Operations – I

Year: 2021-2022

Verification Status: Verified by Professor

Marks: 100

SECTION A

Q1) (a) What is the importance of organization structure in retail? Explain the important tasks performed in retail.

Ans) An organisational structure is a primarily hierarchical concept of subordination of entities that collaborate and give value to achieve a common goal. Clustered entities are a type of organisation. Depending on its objectives and goals, an organisation can be organised in a variety of methods and styles. The organisational structure outlines the tasks that must be completed by individual employees and establishes the chain of command and responsibility within the company. An effective organisational structure will smooth the advancement of working relationships between a variety of organisational entities and may improve working competency inside organisational units. In the current situation, the organisational structure has shifted from a vertical to a horizontal one. There are a few measures that can help you create a better organisational structure.

There are four broad categories of tasks performed at the retail firm. The following are some of the tasks that are carried out under strategic management:

1. Develop a retail strategy

2. Identify the target market

3. Determine the retail format

4. Design organizational structure

5. Select store location

Merchandising Management is responsible for the following tasks:

1. Buy merchandise

2. Locate vendors, Evaluate Vendors

3. Negotiate with Vendors

4. Control merchandise inventory

5. Develop merchandise budget plans

6. Review open-to-buy stock positions

7. Price Merchandise

8. Discounts

The tasks performed by Store Management are;

1. Recruit, hire, train store personnel

2. Plan work schedule

3. Evaluate performance

4. Maintain store facility

5. Locate and display merchandise

6. Provide services like gift wrapping

7. Handle customer complaints

8. Prevent inventory shrinkage

The tasks performed by Operations Management are;

1. Promote the firm, its merchandise, and services

2. Plan communication programs and budget

3. Select media

4. Manage public relations

Manage human resource:

1. Develop policies

2. Plan career paths

Distribute merchandise

1. Locate warehouses

2. Receive merchandise

3. Mark n label merchandise,

4. Store merchandise, Sending merchandise to store

5. Return merchandise to vendor

Establish financial control

1. Provide timely information on financial performance

2. Forecast sales, cash flow, profits.

(b) Explain the challenges of space management and how you will maximize the profitability of your space.

Ans) Challenges of Space Management

Retailers tailor assortments, store layouts, merchandisable and non-merchandisable space, and special promotions to match the needs of local customers. They must do it while maximising earnings and return on investment from every square foot of each store. This necessitates careful space planning, from the amount of floor space allotted to each category to the shelf capacity for individual objects.

Due to a lack of visibility into each store's actual fixtures and space limits, prototype store layouts and one-size-fits-all planograms are created. It can be challenging to ensure that what each store does satisfies headquarters' broad category aims and corporate objectives as it seeks for localization. Furthermore, future space planning becomes difficult because headquarters space planners rarely have visibility into and an accurate grasp of the actual adjustments made at each particular shop.

Furthermore, merchants frequently manage space planning in silos, resulting in severe disadvantages across the board. Retailers who manage space without taking into account category-level roles, goals, and objectives, for example, may end up with adjacencies that don't complement one another or not enough space for high-demand categories. Furthermore, supply chain space limits, such as fixture capacity, must be disclosed and understood. There is a risk of faulty inventory planning, inadequate service levels, and out-of-stocks on the shelves if limits are not conveyed downstream.

Maximize the Profitability of Your Space

An ERP-like system can help retailers solve these common yet tough problems, allowing them to maximise profits on every square foot of their businesses. It connects merchandising with store design, construction, operations, and inventory management. Detail floor plan layouts, including fixture capacity, location, and merchandisable and non-merchandisable area, can also be created and automated using an IT system.

Q2) (a) Distinguish between strategic and resultant drivers.

Ans) Strategic Drivers: These are critical factors in the success of a retail store or showroom. As these must be clearly specified at the outset of the company. The more clearly defined and targeted the theme, the more effective it is in attracting the required foot traffic to the store.

Resultant Drivers: We saw that walk-ins are the result of strategic drivers such as Brand Positioning, Store Positioning, and Target Consumers, which help in generating traffic to the store because target customers find the brand meeting / accepting their requirement and fulfilling their needs both from a consumption and aesthetic point of view, thus Walk-in is the Resultant Driver.

(b) Evaluate the nature of decision making within retail organization pertaining to retail operations practices.

Ans) Retailers lose millions of rupees each year due to inconsistent implementation of their corporate strategy at the retail level. The cost of inconsistency in execution ranges from 2 to 5% of annual revenue. Uncoordinated corporate strategy causes confusion and precedence divergence in stores, and a lack of two-way responsiveness prevents constant progress. Store managers are overburdened with information and left to their own devices to prioritise jobs. Field managers, who are overloaded with out-of-date MIS reports, react to fires rather than giving leadership. Labor schedules are out of sync with actual workload requirements. Corporate struggles to authenticate acquiescence even after tasks are performed.

Store Operations enables businesses to ensure consistent application of their corporate strategy across all locations and to recover sales that would otherwise be lost. Task Manager (for closed-loop task management), Workforce Manager (for forecasting and preparing labour based on sales forecasts, corporate initiatives, and employee skills and work preferences), Time and Attendance (for time entry, labour tracking, and time costing functionality), KPI Activator (for real-time, KPI-driven alerts with the ability to assign corrective rejoinder based on best practises), and Store Walk are the components of Store Operations (for ensuring consistency from enhanced store walks and audits). Retailers may use Store Operations solutions to increase productivity, increase sales, and realise a quick return on investment. Store Operations has repeatedly implemented its solutions in 21 weeks or less at some of the world's leading retailers, across a variety of store formats.

The most basic attitude is at the heart of the science of shopping. The public has strong similarities and habits that must be taken into account in the retail environment. On a daily basis, store operations are focused with maximising the efficacy of the retailer's resource use. The goal of running a retail store is to transform resources into sales and profits. The goal of store operations is to maximise earnings by delivering a positive customer experience and excellent service by making the best use of people, space, and merchandise. On a daily basis, store operation entails carrying out the retail business's strategies and policies at the store level. Product, Customers, Sales, and Place are the four angles from which store operations can be viewed.

Q3) (a) What are the advantages and disadvantages of having a centralized warehouse?

Ans) The warehousing facility should be suitable for the use of appropriate terns, structurally stable, well-maintained, and clean). Proper equipment on hand (lighting, labelled racks, containers, forklift, etc. ), efficient product flow (LIFO vs. FIFO), security, and centralised or decentralised facilities are all factors to consider.

The following are the benefits and drawbacks of centralised warehousing:

Advantages

1. It frees up space at individual plants,

2. Central inventory is less than the sum of several decentralized warehouses,

3. Better purchasing leverage,

4. Faster turnaround on large orders,

5. More efficient use of labour.

Disadvantages

1. Loss of “hands on” control at plant level,

2. Requirement for mutually agreed upon grading standards,

3. Taping procedures,

4. Hanging/folding standard,

5. Reduced local flexibility,

6. “all eggs are in one basket.”

(b) “In store, design is proportionately related to profitability.” Discuss.

Ans) There are various biological and anatomical elements and restrictions that affect everyone who shops at the store. While there are many disparities among shoppers in terms of tastes, preferences, gender, age, money, and so on, there are also many similarities that should be reflected in the store's design. There are some things that must be memorised in the design of the retail outlet when it comes to some essential facts. The majority of clients will have two hands, which will be approximately 36 inches off the ground when they are standing. This means that if you sell things below that height, your customers will have to bend down to get them.

The store design strategy, which is more of a pedagogy, addresses these challenges to some level. Getting the sales personnel to carry some baskets and giving one to each customer who has two products in their hands is an excellent way to improve sales. This immediately frees up one hand, allowing them to add more items to the basket. This type of strategy increases the rupee worth of each transaction at no expense. The longer you can keep a consumer in your store, the more you can sell them. The faster your consumers walk, the fewer items they will buy. Customers will be able to see the items and signs clearly if the store encourages a relaxed pace. This will also aid in the purchase of further items.

A significant amount of time is required if the customer is walking through the entire store and contemplating a large range of items. Buyers have been timed at some stores and found to spend four or five times as much time as non-buyers. If you can get your consumers to shop for longer periods of time, your average sales will rise. On the other hand, you must know how long your clients spend shopping in your store so that you may devise tactics to raise it. The science of shopping clearly demonstrates that store design and profitability are inextricably related. You will make more money if your store has a good design.

Q4) (a) How do you discriminate between conventional and contemporary retail formats.

Ans) a) Food pricing, as well as the variety of products and services offered to consumers, are affected by changes in the food retailing industry. The expanding presence of non-traditional shops will help the typical American consumer, as non-traditional retailers' average food prices are 5-25 percent lower than traditional retailers'.

(b) Discuss the advantages of using demographic and psychographic segmentation.

Ans)

Demographic Segmentation

Many supermarkets build their retail mix based on demographics such as age, gender, and marital status. Retailers can also utilise demographic data to choose the best location for their business.

Income Groups: People in various income groups have varying demands for items and services. The people can be categorised as Upper Class, Upper Middle Class, Middle Class, Lower Middle Class, and Lower Class based on their income. The lower class is further divided into categories such as Below Poverty Line (BPL) and Above Poverty Line (APL), among others.

To better understand client buying habits, several merchants employ income classification. Lower-income customers, for example, are more likely to eat at home, are less inclined to acquire luxury things, and are more realistic in their purchasing decisions than those in higher income categories. Middle-income customers are more educated and spend more money on vacations and out-of-home meals than lower-income consumers.

Middle-class shoppers, like lower-income shoppers, are looking for higher-quality goods at a lower price. Upper-income individuals are more likely to purchase luxury things, travel, eat outside the home, be highly educated, and possess large homes. A retailer can detect where his consumers are located and choose the location for his business using income data. Alternatively, a current retailer can alter his product mix to cater to the bulk of his area's more profitable clientele.

Age Groups: Another key piece of information that a shop needs is the age distribution of its customers. A group of people of the same age profile will usually have comparable shopping patterns. Generational marketing is the study of age groups and how they behave in the consumer market.

Retailers of ready-to-wear clothing, shoes, bicycles, life insurance, and other products employ age-based segmentation to sell their products. All of the aforementioned demographic data can be converted into relevant information for the store.

Psychographics Segmentation

Lifestyle analysis is referred to as psychographics. Psychographic data can reveal "what customers do" over the course of days, weeks, or even years. Information on hobbies, interests, opinions, and lifestyle may be included in this data. A consumer's lifestyle typically provides retailers with more precise and extensive information about that consumer's purchasing habits.

In a multicultural country like India, a retailer's comprehensive analysis of psychographics is required before launching a product or deciding on the product mix in a store. Having the same standard product lines across the country could lead to low sales at a number of locations. Even within the same city, sales of a product can differ from one location to the next. A merchant must maintain continual contact with their consumer base in order to gain a deeper understanding of them.

Q5) (a) Explain the purpose and benefits of standard operating procedures.

Ans)

Benefits

1. To offer people with all of the information they need to do their jobs safely, healthily, and efficiently. In the long term, putting a premium on productivity while ignoring safety, health, and the environment is costly. It is preferable to teach personnel in all elements of their jobs than risking future accidents, fines, and litigation.

2. To ensure that production procedures are carried out consistently in order to maintain process and product quality control. Individuals and businesses alike desire products of consistent quality and specs. Standard operating procedures (SOPs) define job steps that assist standardise goods and, as a result, quality.

3. To guarantee that operations run smoothly and are finished according to a set of guidelines. You can help prevent process shutdowns caused by equipment failure or other facility damage by following SOPs.

4. To ensure that no manufacturing or other processes fail, putting anyone in the surrounding neighbourhood at risk. Following the health and environmental procedures outlined in SOPs prevents spills and pollutants that endanger plant neighbours and cause public uproar.

5. To guarantee that approved procedures are carried out in accordance with company and government guidelines. SOPs that are well-written help to ensure that government requirements are followed. They also show a company's sincere desire to do things appropriately. Failure to establish and follow proper SOPs will simply send the message to government authorities that your company isn't serious about following regulations.

Purpose

Standard Operating Procedures (SOPs) have the general goal of providing a standardised organisational framework for the collecting of comparable monitoring data on the presence of POPs (or other hazardous substance). In order to identify patterns and offer information for integrated risk assessments, comparable data is required. When a company has a certain goal in mind, SOPs are formed. The following are a few of the goals:

1. SOPs are in place to guarantee that all staff complete particular jobs satisfactorily.

2. SOPs exist to act as a guide for completing specified duties.

3. SOPs are supposed to help companies achieve their objectives by reducing errors and failures.

4. For a variety of connected jobs, SOPs should be able to describe the flow of work assignments, authority, and duties.

5. SOPs are utilised as guidelines within the business to ensure that a variety of work procedures are carried out correctly from beginning to end.

(b) What are the ways of preventing thefts and frauds?

Ans) The ways of preventing thefts and frauds are:

1. Train your staff

2. Install security signs/mirrors

3. Set up security cameras/software

4. Use RFID tags

5. Employ a security agency

6. Set up user permissions

7. Manage your inventory right

Q6) (a) Which are the major sources of goods shrinkage in a store? Explain them briefly.

Ans) Shrinkage, sometimes known as shrink, is the proportion of product loss between the point of manufacture and the point of sale. In the retail industry, the typical shrink rate is around 2% of sales. While the figure may appear low, according to the National Retail Security Survey on retail fraud, shrinkage cost U.S. retailers approximately $31 billion in 2001. The four most common causes of retail inventory shrinkage are shown below.

Employee Theft: Internal theft is the leading cause of shrinkage in retail, according to the National Retail Security Survey. Employee theft can take many forms, including discount abuse, refund abuse, and even credit card misuse. Unfortunately, this is one area of loss prevention that isn't given the same level of attention as client theft.

Shoplifting: Shoplifting is in a close second place. Customer theft happens when items are hidden, price tags are changed or swapped, or items are transferred from one container to another. While shoplifting is a smaller cause of inventory loss than staff theft, it nevertheless costs merchants roughly $10 billion per year.

Administrative Error: Approximately 15% of shrinkage is due to administrative and paperwork errors. Simple pricing errors resulting from markups or markdowns can cost retailers a lot of money.

Vendor Fraud: Vendor fraud accounts for the smallest percentage of shrink. Vendor fraud is most common when outside suppliers are in charge of stocking products in the store, according to retailers.

(b) “Promotion is a form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives.” Explain.

Ans) Promotion is a type of corporate communication that employs a variety of techniques to deliver a specific message to a specific audience in order to achieve specific organisational goals. Almost all businesses, whether for profit or not, across all industries, must engage in some form of promotion. Multinational corporations may spend significant sums to secure high-profile celebrities to serve as corporate spokespersons, while a one-person business owner may throw out business cards at a local businessperson's gathering.

An effective promotional plan, like other marketing decisions, necessitates a thorough understanding of how promotion interacts with other aspects of the marketing jigsaw (e.g., product, distribution, pricing, target markets). As a result, promotion decisions should be made with an understanding of how they may affect other sectors of the business. Running a significant advertising campaign for a new product without first ensuring there would be enough inventory to meet possible demand produced by the advertising, for example, would not sit well with the production department (not to mention other key company executives). As a result, marketers should not make promotional judgments in a vacuum. Rather, the effectiveness of a promotional plan as a whole necessitates involvement from those in the affected functional areas.

Individual promotions must work together in addition to coordinating broad promotion decisions with other business sectors. Marketers who use the notion of Integrated Marketing Communication try to create a coherent promotional strategy that involves the coordination of a variety of promotional approaches. The important principle for a marketer that uses a variety of promotional options (we'll go over some probable options later in this tutorial) to achieve product objectives is to use a consistent message across all of them. For example, salespeople will discuss the same benefits of a product that are advertised on television. Customers will receive the same information regardless of how they are exposed to a marketer's promotional activities.

Q7) (a) What is the importance of Product-Customer Matrix?

Ans) While the factors discussed in the previous section, such as employee appearance and quality, communication skills, practical understanding of consumer psyche, product knowledge, and closing the sale, will continue to be important influencing factors, sales staff will also need to be trained in the following strategic selling processes, so that they will know what strategic approach to take in the event of a new or existing customer call. Let's look at the following Product-Customer Matrix to see what we're talking about. This is a matrix that aids in choosing the course of action that a company should take when considering expanding its current operations. It outlines the various possibilities available to a company for extending its current line of business, and so serves as a basic guiding business model.

PCMs can help managers better understand: what a company's products are; who its customers are; which product-customer segments it is currently in; which it is not in; the business(es) it is in; the competitors within each product-customer segment; which segments are currently important in terms of sales or profitability, and which are growing or declining; the nature and level of competitiveness in each segment; how firms compete and the key suckers The paper lays out a five-step process for incorporating PCMs into strategic thinking.

(b) What is the significance of depreciation on assets?

Ans) Depreciation is a statutory provision provided under the Income-tax regulation, and accountants all over the world have accepted it as a standard practise of keeping correct account books indicating depreciation of assets under the accounting system. The goal of computing depreciation is to account for asset deterioration over time as a result of typical commercial use wear and tear. As a result, by allowing a fixed percentage of assets to deteriorate over time, the accounting method provides the organisation with cash reserves for asset replacement or asset up-gradation through renovations and repairs. As a result, in a running firm, this becomes a critical aspect of the process. There are two types of depreciation systems that are often used.

Straight Line Method

This approach determines the net depreciated value of the asset at the end of the year by subtracting a fixed percentage (as determined by statute) from the initial asset value each year.

Written Down Value Method

In this method, a fixed percentage (as determined by statute) of the written down value (WDV) of the Asset at the beginning of the year is calculated, and the said value is then deducted from the WDV of the Asset at the beginning of the year to arrive at the WDV of the Asset at the end of the year (and, by logic, the WDV of the Asset at the beginning of the next year).

SECTION B

Q8) Which are the important segmentation methods? Explain each one of them briefly with examples?

Ans) Demographic Segmentation

Demographic characteristics are statistics that can be measured about a population. The retailer uses these criteria to categorise the market and choose a business target segment. Many supermarkets build their retail mix based on demographics such as age, gender, and marital status. Retailers can also utilise demographic data to choose the best location for their business.

Income Groups: People in various income groups have varying demands for items and services. The people can be categorised as Upper Class, Upper Middle Class, Middle Class, Lower Middle Class, and Lower Class based on their income. The lower class is further divided into categories such as Below

Poverty Line (BPL) and Above Poverty Line (APL), among others.

To better understand client buying habits, several merchants employ income classification. Lower-income customers, for example, are more likely to eat at home, are less inclined to acquire luxury things, and are more realistic in their purchasing decisions than those in higher income categories. Middle-income customers are more educated and spend more money on vacations and out-of-home meals than lower-income consumers.

Middle-class shoppers, like lower-income shoppers, are looking for higher-quality goods at a lower price. Upper-income individuals are more likely to purchase luxury things, travel, eat outside the home, be highly educated, and possess large homes. A retailer can detect where his consumers are located and choose the location for his business using income data. Alternatively, a current retailer can alter his product mix to cater to the bulk of his area's more profitable clientele.

Age Groups: Another key piece of information that a shop needs is the age distribution of its customers. A group of people of the same age profile will usually have comparable shopping patterns. Generational marketing is the study of age groups and how they behave in the consumer market.

Psychographics Segmentation

Lifestyle analysis is referred to as psychographics. Psychographic data can reveal "what customers do" over the course of days, weeks, or even years. Information on hobbies, interests, opinions, and lifestyle may be included in this data. A consumer's lifestyle typically provides retailers with more precise and extensive information about that consumer's purchasing habits.

The following areas will be investigated through psychographics:

1. Lifestyle analysis is referred to as psychographics.

2. Psychographic data can reveal "what customers do" over the course of days, weeks, or even years.

3. Information on hobbies, interests, opinions, and lifestyle may be included in this data.

4. A consumer's lifestyle typically provides retailers with more precise and extensive information about that consumer's purchasing habits.

The following areas will be investigated through psychographics:

1. Activities: Work, hobbies, social events, vacation, entertainment, club membership, etc.

2. Interest: Family, home, job, community, fashion, food, etc.

3. Opinion: About themselves, social issues, politics, products, culture, etc.

In a multicultural country like India, a retailer's comprehensive analysis of psychographics is required before launching a product or deciding on the product mix in a store. Having the same standard product lines across the country could lead to low sales at a number of locations. Even within the same city, sales of a product can differ from one location to the next. A merchant must maintain continual contact with their consumer base in order to gain a deeper understanding of them.

Geographic Segmentation

The customer's physical location is the subject of geographic information. The retail market is divided into several geographic zones by various retailers. A state, a region, or a few small blocks in a neighbourhood can all be considered regions. Geographic segmentation is used to determine market mix since customers in the same geographic area behave similarly. Customers shop in stores that are close to their homes or offices, whereas individual retailers focus on a customer group that is relatively close to the store. A manufacturer of a high-end luxury car, for example, would prefer to put his showroom in a fancy neighbourhood of the city where the majority of his clients (the wealthy) reside.

Even inside the country, establishments belonging to the same merchant must adapt to the varying needs of their clients in various locations. In Andhra Pradesh, hotel chains serve spicier cuisine, in Kerala, more coconut-based recipes, and in Tamil Nadu, chettinad specialties.

Q9) What are the different ways in which to optimization of space availability is achieved?

Ans) Competitive discounting techniques, variable consumer demand, and seasonal inventory difficulties all provide obstacles for retailers. Developed to assist supermarkets enhance sales, space and category management has turned into a "must have" for merchants. Companies that integrate intelligence forecasting and demand data into innovative space and category management solutions can outperform competitors, increase market share, and improve customer happiness.

Clusters Based on Similar Demand Trends

Planners can build intelligent projections for specific products by using demand data acquired from comparable purchase habits; these forecasts are then used to create store clusters. Organizations may make better allocation and replenishment decisions by clustering based on demand data. They can also reduce uncertainty by having a flexible plan that can be altered to match fluctuations in consumer demand for more successful product launches.

Accurate and Efficient Assortment Management

Intelligent forecasts assist merchants in predicting trends and planning what products should be in which stores at what times. Retailers may predict trends for new and seasonal items, define assortments, and calculate store and shelf layout by using demand insight to drive planning. Demand planning also enables retailers to tailor assortments to the demographics of their customers.

Creating Floor Plans that Increase Store Productivity

Assuring that the appropriate amount of space is supplied, which is thought to be crucial for storing productivity. Using an intelligent prediction to create a floor plan allows businesses to select where certain products should be placed in order to maximise the available real estate based on anticipated demand. High-traffic zones can be used to advertise seasonal products or sell high-demand commodities.

Efficiently Develop Planograms for Improved Space Management

Retailers can establish a replenishment strategy based on shelf space availability and consumer demand to avoid excess inventory and plan for a spike in product purchases based on season or promotions. Increased revenue and efficiency can be achieved by maximising available space and minimising superfluous inventory. When constructing planograms in the past, merchants were frequently forced to pick between quantity and quality. Advanced technologies, such as JDA Software's Planogram Generator, allow retailers to create massive numbers of planograms while maintaining high quality.