All posts in Retail

Sales and Operations Planning (S&OP) has been considered a best practice in the manufacturing industry for the past 25 years. Initially started as a process to balance demand and supply, retail S&OP has evolved to a more robust Integrated Business Planning (IBP) process that links Strategic Plans, with product portfolio reviews and new product introductions, unconstrained demand plans, supply plans and capabilities, and financial appraisals of the Integrated Business Plans over a planning horizon of 24 months or more.

Significant benefits, both financial and strategic, have been the result of S&OP implementations in the manufacturing sector. However, in the retail sector, S&OP has not been adopted or at least not adopted in what would be defined as Class A Best Practices. This is currently causing the Retail Supply Chain network to remain unpredictable, minimizing some of the benefits a retail supplier would see from S&OP as well as the benefits a retailer would see if it adopted retail S&OP Class A Best Practices.

This article on Retail S&OP will describe recent developments with retail’s migration towards integrated business planning implementations. In detail, we will discuss:

1) Why Retail S&OP?

2) What is Retail S&OP (in detail)?

3) The impact of Retail S&OP on the retailer and the retailer’s suppliers.

The Role of Effective Integrated Business Planning and Communication

Retail S&OP is a step-by-step process that includes monthly reviews, product reviews, and category management. Before it was introduced, however, plans were always kept on the short term horizon, a nightmare for effective planning initiatives. Today, VICS, or Voluntary Inter-industry Commerce Solutions, is a standards body that almost every major corporation, such as Walmart, Lowe’s, and Target, abides by. Before VICS introduced these best practice measures, suppliers were pushed to implement integrated business planning in some form or another into their existing processes – whether they worked or not – in order to reduce costs and encourage in-house efficiency. Essentially, it was to keep up with the competition.

Reciprocation and trust remain vital in keeping the supply chain strong, but these elements have to trickle down to every stepping stone for integrated business planning to work. With VICS heading up retail S&OP initiatives, the process established a more direct approach to integrated business planning, at least two years out, that involved all partners and links in the chain. Information was shared to promote reciprocation. With a more proactive sharing strategy in place, companies using retail S&OP are often more adept at balancing and forecasting supply and demand and product launches, making the entire retail supply chain significantly less reactive and, thereby, saving money for everyone involved.

The product itself benefits from better integrated business planning strategies. In order to decide which new product will in fact be launched or promoted, the merchandising group draws up a monthly review to chart out a course of action. But planning doesn’t stop at the monthly level since many buyers plan well in advance of a year. Clothing purchases can occur eighteen months out; stores change layouts; aisles get wider; and promotional activities are scheduled — this all takes months and manpower to plan. However, if this information is shared in advance, suppliers can plan appropriately.

Some of this shared information comes from various sources, such as the store replenishment group, who indentifies in-store demand. Point of Sale (POS) is another useful retail tool that can scan and record purchases and, therefore, help forecast demand. It’s the responsibility of the warehouse management and logistic transportation group to collaborate to figure out lead time as well as how much inventory should be kept in stock. Routine supply review aggregates this detailed information to ensure there is enough product in the right place at the right time. And, as would be expected, there are significant cost improvements here. Retail S&OP helps avoid supply chain disasters, while keeping necessary merchandise in stock. Too much stock on hand equates to money sitting in limbo, while an extended shelf life requires products to be returned to the manufacturer or, worse, become dated.

The Future of Integrated Business Planning in the Retail Industry

Issues are bound to arise, but any problems should be resolved at the lowest level before being escalated. Potential concerns may center on building new distribution centers, declines in demand, or poor promotions. If questions remain, any financial appraisals can be done by the CFO or executive team, based, of course, on monthly reviews that forecast profit.

Company executives will be looking at the business over the next twenty four months, primarily at the aggregate level, to make sure that the company is going in the right direction. During each strategic meeting, executives will expect retail S&OP to work in this capacity, while hoping to avoid the Bull Whip effect. (In a nutshell, this means if you were to break out the different links in the supply chain and look at each individual product, it would be fairly predictable. If you were to go to different links of supply chain and look at orders between each link, such as supplier to store, the image starts to look like a bull whip, vacillating and unsteady. However, the farther one gets away from the retail store link, the more the bull whip fluctuates up and down.)

You may be wondering what’s next for integrated business planning in retail. Above all, collaboration is the key to success. CPFR(R)(1), or Collaborative Planning, Forecasting and Replenishment, an industry standard of VICS, helps steady the Bull Whip, eliminating many of the emergencies or issues. Integrated business planning also ensures that fires are extinguished at the source. Just remember that the biggest sin in retail is to disappoint customers with ‘out of stock’ notices – largely preventable with a methodical approach to retail S&OP.

References

1. CPFR(R) is a Registered Trademark of the Voluntary Interindustry Commerce Standards (VICS) Association.

An online store can bring completeness to your retail business. Through your online store, you can both mobilize your physical marketing resources to promote your retail business and streamline how your customers interact with you to purchase the product. However, the mindset of the customer becomes entirely different when it comes to purchase something over the web. In his sub-conscious mind, the customer usually looks for a better deal as his physical movement is confined (his shopping notions are somewhat pre-programmed when he visits the online store). Naturally, as an online retail store owner, onus is on you to present things in your store as per your customers psychological orientations.

A few things that govern customers psychology when it comes to online shopping and where you as an online retailer can take benefits are:

Neuromarketing techniques Brain-research studies show that online shoppers are greatly influenced by the color of the background, location of the product on the screen, display of pricing etc. The shoppers decision to buy a product or his spending limit is determined by these factors. For example, researchers suggests that a greenish pattern in the background of a product in an online store selling furniture, may help in firing the online customers neurons in a way that would make them sensitive to the price of the item. On the other hand, a blue-colored pattern may help in stimulating the online shoppers neurons towards the comfort-angle of the product. In simpler words, for a low-priced product keep a green background and highlight the low price, similarly, if your product is highly-priced, use a blue background and highlight the comfort features.

Affinity for free-shipping The phrase free-shipping is one of most sought-after characteristics of a any product sold online; at least a large section of the online shoppers just run for it! Consumers prefers free-shipping offers as they compare it to the shopping experience in the physical store; you take out your car, drive to the store, burn gas, buy the item, burn gas again, move through traffic, reach home, park your car and finally open the box on your living room table well, the retailers mind compares all these with the phrase free-shipping. Even a $20 discount weighs less than a $10 waiver in the name of free-shipping. Discount? Well, its ok; everybody gives. Free-shipping? Why, I will buy it! This is the psychology of major chunk of online shoppers.

Comparative pricing of products Online shoppers psycho-analysis report shows that most buyers give precedence to mid-range comparative pricing of a group of similar product. For instance, if you place two similar items on the category page of your store (showing brief details of both), one priced at $100, and the other at $150, most customers will purchase the cheaper one. Now, add a third item priced at say, $200 (the one that you are not even interested in selling); you will be amazed to see that most people will purchase the item selling for $150! Moral of the story always give your buyers something to compare!

Online shoppers also prefer the pricing in their local currencies (if you are selling globally) and they have a great love for coupons also. Moreover, the buying pattern also varies with various demographic parameters like age-group, income-group, sex, education, community and so on. So, while you sell observe and know your customers!

Do I need to buy a Barcode Package? This is a common question, so we thought we would provide some simple answers.

Most people asking this question are wanting to obtain a barcode number for a retail product they have created. They are usually being asked by a retailer to put a retail barcode number on to their product, and theyre not sure where to start.

Most independent barcode companies, such as Barcode Limited in New Zealand, offer retail barcode numbers in a variety of forms, including as a barcode package. A barcode package usually contains a unique retail barcode number, a guarantee certificate and barcode images in a variety of formats. Thanks to the wonders of the internet, you can order a barcode package like this online, and it will be emailed to you, usually within a few hours.

The barcode images you receive are the actual barcode picture, consisting of vertical black lines and spaces, with the barcode number written underneath. These barcode images are usually emailed to you in several different formats, such as .eps, .bmp, .pdf, .jpg or .tiff. Of these formats, the most accurate, and hence the best to use, are .eps and .pdf. When printing your barcode, it is important to have the edges of the lines as clean and sharp as possible. Hence, it is advisable to use a very accurate image format, such as .eps which is vector based. However, some graphics packages, which you might be using to produce your packaging artwork incorporating this barcode image, have specific image format requirements or limitations. Hence you will need to choose the format that works best for you, when you are inserting the barcode picture into the artwork for your packaging. If your packaging has already been printed, you can print the barcode picture onto sticky labels instead.

Companies like Barcodes Limited NZ will send the images to you in the standard size of 25mm x 37mm. Officially you can safely reduce them to 80% of this size (ie to 20mm x 30mm) when putting them onto your packaging. If you make them smaller than this, it makes them difficult for barcode scanners to read. If you like large barcodes, you can officially increase them to 200% of the standard size.

If you buy a barcode from a reputed Barcode Reseller, you will receive a unique number that will not expire, and that only you have the legal right to use. You can use your barcode worldwide. It is a one-off purchase & there are no future fees.

Can I just get a Barcode number without images? is another common question. Some people do not need barcode images, they only need a unique barcode number. If you are selling on Amazon, a barcode number is all you need. If you purchase your barcode from Barcodes Limited, then yes, you can just purchase the number without any images, saving yourself some unnecessary expense. And, if you buy just a barcode number and then later find out that you need images, it is easy to go back to the barcode company and order images.

The retail industry in India is emerging to attract new investments in the retail sector in the country.

Bharti Retail Ltd operates about 80 stores and owns a chain of grocery outlets and easyday market hypermarkets to cater to the retail market in India . Owned by billionaire Sunil Mittals Bharti Group, the company plans to open 140 retail stores in India in 2010, said Raj Jain, managing director of the groups venture with Wal-Mart Stores Inc.

He added that Wal-Mart can open a large number of retail stores in India if the government allows foreign direct investment in the South Asian countrys retail industry.

The company awaits policy changes in the retail market in India. The Bharti-Walmart JV runs the BestPrice Modern Wholesale stores to cater to the retail sector in North India. This is a 50:50 cash and carry joint venture between Bharti Enterprises and WalMart. The company will require additional manpower as it plans to open more cash-and-carry stores in the retail sector in the country. At present, it has two stores in India (in Punjab) and employs 450 workers.

The government has been in talks to open the multi-brand retail sector for FDI. At present, up to 51 per cent foreign investment is allowed in single brand retail and 100 per cent FDI in wholesale, but none in multi-brand.

The company has recently launched the second Bharti-Walmart Training Centre in New Delhi by entering into a public-private partnership with the Delhi Government. The centre would enroll up to 2,000 students a year to impart free of cost training in sectors, such as retail, BPOs and hospitality. The centre was inaugurated by Sheila Dikshit, Chief Minister of Delhi and would work to fill up the shortage in skilled workers for organised retail and cash-and-carry stores.

At a recent function, the Daniele Smadja, Head of the Delegation of the EU to India, said “We would like India to further open its economy to EU investments.

Furthermore, Nokia India is focussing on the retail distribution model. It is for the first time the worlds largest mobile phone company has initiated a retail distribution model for its services venture.

In yet, another format of the retail market in India, the major retail players proved to be a boon to the small food processing vendors as they helped the latter put in a system which in turn attracted FMCG companies to hire the same vendors on account of quality.

Similarly the retail market in India is foraying into various sectors. Retail in healthcare sector is witnessing an immense interest from private equity investors. The upturn in the retail industry in India is attracting PE investors, gearing them to maximise their profits with the highest deal volumes being in various sectors including retail. According to V Jayasankar, Head, Private Equity, Kotak Investment Banking, There is high level of interest in the retail sector as it directly feeds on consumption.

Additionally, the airport retail market in India is witnessing a renaissance with the fast pace of development in the expanding airport facilities in the country and the increasing number of passengers. With people on a constant move the target audience is easily available and the round the clock mode of retail sector available on airport gives that strategic advantage to the retail players.

When looking at various studies on the failure rates of new businesses of any type, attempting a start-up is risky to put it mildly. The numbers are widely varied, but everywhere you look the percentages of casualties are brutal and the wipe-outs happen quickly. Anywhere from 24% to 50% of new businesses don’t make it past 2 years. Indicators suggest as many as 80% of companies will go belly up within 5 years. Enterprising souls still exist in this increasingly digital world willing to do business in the very tenuous world of retail, where small business owners face the hardest work and greatest risk in business start-ups.

The retail industry is particularly vulnerable to sudden collapse because they must process and move inventory constantly. There are a full range of bills to pay: rent on a pedestrian-rich street will be exorbitant, employees must be paid, utilities, taxes, invoices for inventory, and so on. All it takes is a few slow weeks to get behind for many stores. Their competitors are all around the same street where the pedestrians shop – they would be foolish to open anywhere else. The business volume just has to be shared with nearby stores.

Women’s clothing stores are plentiful; they represent the typical retail environment, where customer service is offered at the door by the salesperson who will help in suggesting clothes and try to move some merchandise. Turning on the charm is of the utmost importance to make the customer feel at home and trigger the impulse buy. Subconsciously people feel a bit obligated to buy once they have taken up the time of the nice store personnel.

If the new store owner is convinced that the business plan is sound, the first step is renting the square footage in the right location. The second step will be to equip the space as a retail store with the appropriate fixtures. The next step is to arrange inventory, an accounting system, and cash register. Then the right employees have to be hired to smile and speak on your behalf. CATV security cameras need to be set up to prevent shoplifting. Much of the budget after that will be needed for advertising, advertising, and more advertising so that the world will know you are open for business.

This article focuses on the second step – the retail store fixtures. Walls and dividers can be rearranged from time to time to liven up the look of the store; special grid wall panels and slat walls are provided by companies who supply all the items necessary for displaying goods in retail stores. A wide variety of tools are used to hold, hang, reflect, or display all the merchandise the store wants to sell to the public.

Retail displays are more than glass display cases or racks for clothes. Mirrors are often used to make the store’s interior look much bigger. Mannequins in strategic places can draw attention to clothing items and they produce a strong 3D advertising effect. One Toronto store fixtures company has mannequins for sale or rent and bust forms that can compete with department store mannequins for style and erectness, as well as necessary items like tagging guns, clothes hangers, and floor racks.

A retail store is a time consuming and risky endeavor but when things go well the profit margin can make it all worthwhile. Not everyone will end up in a dark room with a bottle of whiskey and his arm around a mannequin after crashing and burningthe success stories are perhaps 20% after 5 years and many companies can show enough value to sell the business or merge with another to expand into a truly profitable future.