An Introduction to
Retail Management
&
Marketing
Book 4
Retail
Marketing
Book 4 Sessions
 Session 2: Retail buying
 Session 3: Supply chain management
 Retail logistics in the UK: past, present
and future
Session 3: Supply chain management
• Focus is on product management & how this affects
buying & merchandising decisions.
• Decisions about single P items have to be made
within the context of P range offered by a retailer
1. Putting together product assortments
In Image A : Endless selection of fresh vegetable produce. This retailer
provides a great deal of choice of one P category: vegetables.
In Image B there is a large number of P types (or categories), but there is
relatively limited choice within each of the categories.
Product assortment strategies used by retailers
include:
a) Width and depth - P assortment is generally
determined by the store format used. Ex:
- Supermarket offers a wide assortment of different P
categories to fulfill most of basic grocery needs of local
customers, but P choice is limited within each category.
- A specialist retailer such as Boots the pharmacy offers a
very deep assortment of health P but this is a narrow band
of P categories compared to department stores that offer
width & depth in their P assortment
- ‘Category killer’: retailers using same approach to
specialist but on a much larger scale & level of intensity.
Large specialist retailers such as IKEA focus their
assortment on particular categories of P, e.g., furniture
with extended depth of choice within categories of G they
sell to 'kill off' competition
b) Service level - when retailers put together P
assortments they consider level of S to offer. This
means that some P lines must be available 100 % of
the time, whereas for other P lines it is acceptable
to be available say 80 % of the time.
• Higher S level offered, higher financial investment
in stock, it is important to get level of P availability
just right.
b) Consistency - Extent to which P in the range are
similar to other P on sale within the store.
Typically, a retailer uses the attributes of the P on
sale to act as indicator to shopper, for ex on price
Lifestyle retailing
• Retailers create brands & marketing messages in order
to stand out in the marketplace & have a special
meaning for their customers.
• Position a retailer adopts in the marketplace is
reinforced by the P it offers for sale.
• Consumer begins to trust that retailer will provide P
they are seeking at quality, price & S they require.
• To combat competition is for a retailer to find a position
in the marketplace which is unique and/or different.
• Lifestyle retailer is ≠from specialist retailer because
selecting P for a lifestyle retailer requires more detailed
K of particular customer type & how they choose to live
their lives.
• By selecting P that meet customer's lifestyle, retailer is
able to offer a choice of P determined by a particular
style of living that is not easily defined using
segmentation variables such as age, income level or
geographical location.
• Lifestyle retailing has enabled some specialist retailers
to extend their P ranges without losing sight of core
business & identify gaps in the marketplace which
enable their operations to weather economic storms.
2. Product selection - management issues
• Selecting P for a P range involve decision making at
2 key levels:
1) Is there a place for a particular P in retailer's range?
Decision making focuses on getting P range right,
& ensuring that whenever a customer enters a store
P offer is interesting & relevant to them
2) Details of P to be included in the range. Buyer has
to ensure a P reflects the image retailer is trying to
portray & supports brand's positioning.
Product range (assortment) decisions
• Space is an expensive commodity in retailing.
• Retailers must use floor space within business to
produce maximum benefits
• Buyers constantly review P ranges & assess whether
it stop selling certain items or scale down P offer in
a particular category.
• In certain circumstances analysis of customers wants
might reveal D for a new P
•
•
•
•
•
Product assortment plan:
Is a model stock list that aids selection of P & actual
P management.
Plan works by focusing on actual P from a physical
rather than a financial & is written down in a way
that represents an ideal P selection that a customer
should see any time they visit the store.
It uses variables such as colors, styles, flavors, sizes
& price
The grid shown in Fig 3.1 illustrates the use the plan
When putting together a P plan, buyers consider a P
features such as its physical properties, packaging,
product quality, branding, style and functionality.
Standard price
Premium price
Children's
Bath Hand Seaside
Face
motif
Adult patterned
Blue
Bath Hand Royal
Face
Bath Hand Brights
design
Bath Hand
Pink
Bath Hand Burgundy Bath Hand Cartoon
Bath
Face
Face
character 1
Pastels
design 1
Bath Hand
Peach
Bath Hand Cream
Face
Bath Hand Cartoon
Bath
Face
character 2
Pastels
design 2
Bath Hand
Aqua
Bath Hand Fashion
Face
colour
Bath Hand
Face
White
Bath Hand
Face
Fashion
colour
Bath Hand
Face
• In certain circumstances, retailers sell own-label P,
which enable buyers to have more direct
involvement in the development of P
• It allows retailers to have more direct control over
price & quality of the own-label P, which often leads
to high profit margins
Buying cycles
• When planning P assortments is forecasting D for P
• With the use of bar code technology & sophisticated
computer programs, analysis of D has become easier.
• However, managing P ranges such as fashion that
change with seasons poses additional problems
• In order to buy right P, at right time, in right quantities
& get them delivered to right place at right time there is
a critical path which retailers can follow
A simplified buying cycle for fashion P (Fig 3.2)
• It represents cycle for one buying season & in fashion
there are at least 2/3 seasons per year
• For ex, in September a footwear buyer will be
concerned with current autumn sales & deliveries,
be in the process of finalizing range of
spring/summer styles, & will be starting to gather
new styling ideas for the next year's autumn range.
Category management
• In P areas that are fashion-orientated, customers
have a high expectation of change within P range.
• If grocery P, frequent changes to P ranges is
confusing & irritating.
• Many P have loyal customer following & a ct D, &
if such a P not be available, dissatisfied customers
• But customers now like to try new P variations so P
ranges have to be managed: popular items can
always be found, as well as new P for consumers‘
seeking variety.
 For this category management
• A merchandise category is the term used for an
assortment of P items that a customer sees as
reasonable substitutes for each other.
• Each P stock keeping unit (SKU) is able to satisfy
same basic need, but category would include a nb of
P variations which satisfy individual preferences.
For ex, product area 'confectionery' can be
broken down into 3 distinct categories:
boxed, bagged and countlines (bars).
A countline bar (such as a Snickers or Mars) fulfills a need
which is different to products in the other two categories.
• Rather than planning profit margins of individual
items, P are managed as a group to obtain maximum
category performance.
• Decisions regarding P dvp, pricing & promotions are
made with a view to maximizing profitability of
category, rather than individual SKU.
• Buyer's role is extended to a category mgt role, with
responsibility to manage category right
• Category manager would be involved with new P
dvp within category, working with suppliers on new
P innovations
• Part of category management is concerned with instore marketing: ensuring that category is supported
with point-of-sale materials and appropriate space
• Category manager are concerned with logistical
arrangements, customer service & after sales
• To succeed in category mgt approach ensure a close
collaboration with suppliers.
• It is in the interest of leading suppliers 'category
champions' to work with a retailer to make a
merchandise category as successful as possible