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2 nd FACE-TO-FACE MEETING PJJ. MGM 4254 JULY 2010. Overview. Step 1: investigate alternative trading areas Step 2: determine what type of location is desirable Step 3: select the general location Step 4: evaluate alternative specific store sites. Chpt 9 Trading-Area Analysis.

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  2. Overview • Step 1: investigate alternative trading areas • Step 2: determine what type of location is desirable • Step 3: select the general location • Step 4: evaluate alternative specific store sites

  3. Chpt 9Trading-Area Analysis • To demonstrate the importance of store location for a retailer and outline the process for choosing a store location • To discuss the concept of a trading area and its related components • To show how trading areas may be delineated for existing and new stores

  4. Criteria to consider include • population size and traits • competition • transportation access • parking availability • nature of nearby stores • property costs • length of agreement • legal restrictions

  5. Choosing a Store Location Step 1: Evaluate alternate geographic (trading) areas in terms of residents and existing retailers Step 2: Determine whether to locate as an isolated store or in a planned shopping center Step 3: Select the location type Step 4: Analyze alternate sites contained in the specific retail location type

  6. Figure 9.5 The Segments of a Trading Area

  7. Total size and density Age distribution Average educational level Percentage of residents owning homes Total disposable income Per capita disposable income Occupation distribution Trends Table 9.1 Chief Factors to Consider in Evaluating Retail Trading Areas Population Size and Characteristics

  8. Figure 9.8 Analyzing Retail Trading Areas

  9. Chp 10Site Selection • To thoroughly examine the types of locations available to a retailer: isolated store, unplanned business district, and planned shopping center • To note the decisions necessary in choosing a general retail location • To describe the concept of one-hundred percent location • To discuss several criteria for evaluating general retail locations and the specific sites within them • To contrast alternative terms of occupancy

  10. 3 Types of Locations Isolated Store Planned Shopping Center Unplanned Business District

  11. Advantages No competition Low rental costs Flexibility Good for convenience stores Better visibility Adaptable facilities Easy parking Disadvantages Difficulty attracting customers Travel distance Lack of variety for customers High advertising expenses No cost sharing Restrictive zoning laws Isolated Stores

  12. Unplanned Business Districts Secondary Business District Central Business District Neighborhood Business District String District

  13. Advantages Well-rounded assortments Strong suburban population One-stop, family shopping Cost sharing Transportation access Pedestrian traffic Disadvantages Limited flexibility Higher rent Restrictions on offerings Competitive environment Requirements for association memberships Too many malls Domination by anchor stores Planned Shopping Centers

  14. Figure 10.7 Location/ Site Evaluation Checklist

  15. Chp 11 Retail Organization and Human Resource Management • To study the procedures involved in setting up a retail organization • To examine the various organizational arrangements utilized in retailing • To consider the special human resource environment of retailing • To describe the principles and practices involved with the human resource management process in retailing

  16. Figure 11.1 Planning and Assessing a Retail Organization: Factors to Consider

  17. Figure 11.1 Planning and Assessing a Retail Organization: Factors to Consider

  18. Figure 11.1 Planning and Assessing a Retail Organization: Factors to Consider

  19. Figure 11.3 Division of Tasks in a Distribution Channel

  20. Grouping Tasks into Jobs

  21. Figure 11.4 A Job Description for a Store Manager

  22. Table 11.1 Principles for Organizing a Retail Firm • Show interest in employees • Monitor employee turnover, lateness, and absenteeism • Trace line of authority from top to bottom • Limit span of control • Empower employees • Delegate authority while maintaining responsibility • Acknowledge need for coordination and communication • Recognize the power of informal relationships

  23. Figure 11.5 Different Forms of Retail Organization

  24. Figure 11.5 Different Forms of Retail Organization

  25. Figure 11.5 Different Forms of Retail Organization

  26. Figure 11.5 Different Forms of Retail Organization

  27. Figure 11.6 Organization Structures Used by Small Independents

  28. Figure 11.7 The Basic Mazur Organization Plan for Department Stores

  29. Figure 11.8 The Equal-Store Organizational Format Used by Chain Stores

  30. Human Resource Management in Retailing • Recruiting • Selecting • Training • Compensating • Supervising

  31. Chp 12Operations Management: Financial Dimensions • To define operations management • To discuss profit planning • To describe asset management, including the strategic profit model, other key business ratios, and financial trends in retailing • To look at retail budgeting • To examine resource allocation

  32. Major Components of a Profit-and-Loss Statement • Net Sales • Cost of Goods Sold • Gross Profit (Margin) • Operating Expenses • Taxes • Net Profit After Taxes

  33. Asset Management • The Balance Sheet • Assets • Liabilities • Net Worth • Net Profit Margin • Asset Turnover • Return on Assets • Financial Leverage

  34. Financial Trends in Retailing • Slow growth in U.S. economy • Funding sources • Mergers, consolidations, spinoffs • Bankruptcies and liquidations • Questionable accounting and financial reporting practices

  35. Budgeting • Budgeting outlines a retailer’s planned expenditures for a given time based on expected performance • Costs are linked to satisfying target market, employee, and management goals

  36. Budget Benefits • Expenditures are related to expected performance • Costs can be adjusted as goals are revised • Resources are allocated to the right areas • Spending is coordinated • Planning is structured and integrated • Cost standards are set • Expenditures are monitored during a budget cycle • Planned budgets versus actual budgets can be compared • Costs/performance can be compared with industry averages

  37. Cost Categories • Capital expenditures • Fixed costs • Direct costs • Natural account expenses

  38. Capital Expenditures Long-term investments in fixed assets Operating Expenditures Short-term selling and administrative costs in running a business Resource Allocation

  39. Chp 13Operations Management: Operational Dimensions • To describe the operational scope of operations management • To examine several specific aspects of operating a retail business: operations blue-print; store format, size, and space allocation; personnel utilization; store maintenance, energy management, and renovations; inventory management; store security; insurance; credit management; computerization; outsourcing; and crisis management

  40. Operational Decisions • What operating guidelines are used? • What is the optimal format and size of a store? What is the relationship among shelf space, shelf location, and sales for each item in the store? • How can personnel be matched to customer traffic flows? Would increased staffing improve or reduce productivity? What impact does self-service have on sales?

  41. Operational Decisions_2 • What effect does the use of various building materials have on store maintenance? How can energy costs be better controlled? How often should facilities be renovated? • How can inventory best be managed? • How can the personal safety of shoppers and employees be ensured?

  42. Operational Decisions_3 • What levels of insurance are required? • How can credit transactions be managed most effectively? • How can computer systems improve operating efficiency? • Should any aspects of operations be outsourced? • What kind of crisis management plans should be in place?

  43. Operating A Retail Business • Operations Blueprint • Store Format, Size, and Space Allocation • Personnel Utilization • Store Maintenance, Energy Management, and Renovations • Inventory Management • Store Security • Insurance • Credit Management • Computerization • Outsourcing • Crisis Management

  44. Inventory Management Decisions • How can handling of merchandise from different suppliers be coordinated? • How much inventory should be on the sales floor versus in a warehouse or storeroom? • How often should inventory be moved from nonselling to selling areas of a store? • What inventory functions can be done during nonstore hours? • What are the trade-offs between faster supplier delivery and higher shipping costs? • What supplier support is expected in storing merchandise or setting up displays? • What level of in-store merchandise breakage is acceptable? • Which items require customer delivery? When? By whom?

  45. Credit Management Decisions • What form of payment is acceptable? • Who administers the credit plan? • What are customer eligibility requirements for a check or credit purchase? • What credit terms will be used? • How are late payments or nonpayments to be handled?

  46. Crisis Management • There should be contingency plans for as many different types of crisis situations as possible • Essential information should be communicated to all affected parties as soon as the crisis occurs • Cooperation – not conflict – among the involved parties is essential • Responses should be as swift as feasible • The chain of command should be clear and decision makers given adequate authority

  47. Chp 14Developing Merchandise Plans • To demonstrate the importance of a sound merchandising philosophy • To study various buying organization formats and the processes they use • To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation • To discuss category management and merchandising software

  48. Merchandising Activities involved in acquiring particular goods and/or services and making them available at the places, times, and prices and in the quantity that enable a retailer to reach its goals.

  49. Merchandising Philosophy • Sets the guiding principles for all the merchandise decisions that a retailer makes • Should reflect • Target market desires • Retailer’s institutional type • Market-place positioning • Defined value chain • Supplier capabilities • Costs • Competitors • Product trends

  50. Scope of Responsibility • Full array of merchandising functions • Buying and selling • Selection, pricing, display, customer transactions • Focus on buying function only

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