Course Code: BRL–007
Course Title: Store Operation – I
Assignment Code: BRL–007/TMA/2014-15
Coverage: All Blocks
Maximum Marks: 100
Attempt all the questions
(A) Short Type Questions
1. Discuss the issues involved in understanding different types of customers in retailing.
Solution:-
Retailing is essentially an art which depends upon the ability of a retailer to handle customers. This ability in turn depends upon another ability of the retailer and that is to identify the differences among the various types of customers that visit their store. This research paper is based on the various strategies applied by the retailers/ retail sales personnel to handle various types of customers so that they are able to provide them, customer delight and hence a memorable shopping experience. The problem has been dealt with, with the help of a primary data collected through a field survey conducted with around 250 retail shoppers‟ in various organized & unorganized sector retail outlets such as Lifestyle malls, Shoppers Stop, Reliance fresh, Easy day, Bombay selections, Ambience mall & Tata Croma retail stores . Despite of the limitations of the research which are inherent to any such study, following major conclusions have been arrived at:
A) Store/ Sales staff with which a customer actually interacts, play most crucial role in making the shopping experience of a customer.
B) Each customer entering a retail store is different in terms of his shopping attitude and purchase behavior.
C) A sales/ service personal should be smart enough to understand these differences and modify his/her sales presentation according to the type of customer he/she is handling at a particular time.
D) Profitability can be increased by handling different customers, differently.
KEY WORD: Purchase process Retail shoppers Retail sales personal Retail shoppers‟ behavior shopping attitudes Store image shopping experience
On the basis of their shopping attitudes the retail customers can be classified as:
1) DEFENSIVE SHOPPER- such types of shoppers distrust the retail sales person and feel that he/she has the only objective of pushing the product across the retail counter and therefore usually are skeptical about the products suggested to them by the sales personnel.
STRATEGY TO HANDLE SUCH TYPE OF CUSTOMERS: These types of customers can be easily identified by the way they react to the assistance offered to them. Such types of customers prefer to be left alone and take their own purchase decision. Sales persons should be advised not to talk much to such customers, offer advice only when asked for.
2) INTERRUPTIVE SHOPPER- such type of shoppers are very impatient, they won‟t listen to your sales talk and are always eager to show how off ,their knowledge about the products to the sales person. They would often interrupt you in your sales presentation, saying that they already know a lot about what they want and at times would get involved in detailing the product themselves to the sales person thereby showing him/her their wide knowledge base.
STRATEGY TO HANDLE SUCH TYPE OF CUSTOMERS: Acknowledge and appreciate their wisdom and knowledge. Don’t be cross with them. Such types of shoppers are easily impressed if a sales person is humble and patient to listen to their knowledgeable views. Therefore instead of you doing the talking, let them speak and as soon as you get a cue that they are aware about the product/brand and are impressed with it, close the sales call with a sweet smile and say, “what else can I say, sir you already know everything so well. So how much should I pack.”
3) DECISIVE CUSTOMER- although these customers are quiet knowledgeable but they won’t show off the same to the sales person, instead they would patiently listen to the sales talk and raise valid questions and queries to the sales person. They are open to new ideas and suggestions. These shoppers if convinced can be converted to a customer very easily and that too a loyal one.
STRATEGY TO HANDLE SUCH CUSTOMERS: The biggest mistake that a sales person can do is to argue with these types of customers and offend them. They are very sure of their decisions and although are ready to experiment with new ideas or suggestions but after a lot of thinking. They take time in taking decisions but once they are convinced they stick to their decisions. Sales personals are advised to spend quality time with these shoppers and don’t show a pushy attitude to such customers. Let them take decision at their own pace.
4) INDECISIVE CUSTOMER- these types of customers are undecided about what they actually want they can be highly profitable if handled properly. They can be very easily converted to a loyal customer also if the store sales/service staff treats them well and most importantly help them arrive at a purchase decision.
STRATEGY TO HANDLE SUCH CUSTOMERS: The major advantage such customers offer to a sales person is „their inability to decide‟, a sales person can get a cue of such customer from the way they roam around the store with a weary or amazed look. They would pick up something and then drop it to take up something new. At times they may ask for assistance or they might not do so and would leave the store without actually looking at something, therefore the main role that a sales person is suppose to play is to help them in not only showing around, what the store has on sale but to also assist them in taking final purchase decision. The help should be offered in such a way that the customer should not feel that you have taken decision for him/her. Hence don’t leap at the chance to do cross/up selling unless you feel that the customer will be ready for it or won’t mind additional dip on his/her pocket. Let him/her come back next time and perhaps you can get more sales done or more incentives achieved rather than making the kill in one go.
5) SOCIABLE CUSTOMER- such type of customers are the ones whom every sales person wants to avoid as they eat away a lot of peak time and yet it is not clear whether they are going to buy or not. They cannot be ignored as they often visit the store again and again and therefore eventually become store loyal. They can be a source of „word-of-mouth‟ publicity too.
STRATEGY TO HANDLE SUCH CUSTOMERS: The major mistake a store can commit as far as such customers are concerned is to take them as casual wanderers. They can be easily identified from their over friendly behavior and their interest in gossiping around with the store staff. It is desirable to enter into a small talk with them along with showing them around the store items. The major problem with such customers is that they take a lot of time in arriving at a decision.
6) IMPULSIVE CUSTOMERS- The most unpredictable customers. They shift their decisions very swiftly. They take quick purchase decision at a moment and the very next moment they may change their decision and drop the idea of buying anything from the store.
Occasionally do these customers turn out to be loyal customers however at times they can turn out to be profitable ones due to their impulsive behavior. STRATEGY TO HANDLE SUCH CUSTOMERS: These customers can be easily identified from their inability to stick to one decision or quick decision making or their impulsive behavior. Although they hardly return back to the same store again, still can be profitable one time catch for a sales person as they take fast decisions and hence save his precious time. But it is only possible if the sales person is smart enough to understand their psyche and body language and as soon as they tend to arrive towards the final purchase decision he/she should try to close the sales immediately. Pushy sales strategy works well with these types of shoppers.
Retailers often focus on creating new customers with the help of its advertising, publicity and sales promotion activities. The strategies mentioned above can help the retailer identify, handle and categorize new customers but a retailer should not loose focus of those 20% frequent customers who usually generate majority of a retailer’s sales.(Pareto rule). The existing customers can be classified into the following two categories:
a) LOYAL CUSTOMERS- approximately 50% of a store’s sale comes from these regular, loyal and dedicated customers. They are hooked to a particular store and don’t need to be reminded again and again about the store.
STRATEGY TO HANDLE SUCH CUSTOMERS: Regular follow ups through mail, telephone or SMS is a must. Whenever the new stock arrives they should be the first ones to be informed. Offer special discounts, offers and schemes specifically designed for these shoppers. Although whatever best you do for them, is not enough. Yet the more services you offer them, the more privileged they feel, the more they will recommend your store to others.
b) DISCOUNT CUSTOMERS- their visit frequency depends upon the type and amount of the discounts offered by the store. The only thing that attracts them to a store is the offers and discounts offered by the retailer. They are the cash generators.
STRATEGY TO HANDLE SUCH CUSTOMERS: Since they are only attracted towards the marked down price tags therefore limit the services offered to them. However keep them updated about your end season sales or discount offers, on regular basis.
Just like management, retailing is also an art as well as science. While the scientific back support comes from the way a store is administered and its financial soundness whereas the art of retailing depends upon the efficacy, efficiency and effectiveness of the store staff in handling customers and making shopping a memorable experience for them. So that they come over again and again to the store not only for shopping but to relish that wonderful shopping experience and share the same with others.
2. How do the customers evaluate their service quality? Explain with suitable examples.
Solution:-
The Eight dimensions of Quality
Eight dimensions of product or service quality management can be used at a strategic level to analyze quality characteristics.
Performance: Performance refers to a product’s primary operating characteristics. This dimension of quality involves measurable attributes; brands can usually be ranked objectively on individual aspects of performance.
Features: Features are additional characteristics that enhance the appeal of the product or service to the user.
Reliability: Reliability is the likelihood that a product will not fail within a specific time period. This is a key element for users who need the product to work without fail.
Conformance: Conformance is the precision with which the product or service meets the specified standards.
Durability: Durability measures the length of a product’s life. When the product can be repaired, estimating durability is more complicated. The item will be used until it is no longer economical to operate it. This happens when the repair rate and the associated costs increase significantly.
Serviceability: Serviceability is the speed with which the product can be put into service when it breaks down, as well as the competence and the behavior of the service person.
Aesthetics: Aesthetics is the subjective dimension indicating the kind of response a user has to a product. It represents the individual’s personal preference.
Perceived Quality: Perceived Quality is the quality attributed to a good or service based on indirect measures.
3. Explain in-detail about manpower planning, recruitment and sourcing of employees in modern Retail Stores.
Solution:-
Man-Power Planning:
Manpower Planning which is also called as Human Resource Planning consists of putting right number of people, right kind of people at the right place, right time, doing the right things for which they are suited for the achievement of goals of the organization. Human Resource Planning has got an important place in the arena of industrialization. Human Resource Planning has to be a systems approach and is carried out in a set procedure. The procedure is as follows:
Analysing the current manpower inventory
Making future manpower forecasts
Developing employment programmes
Design training programmes
Importance of Manpower Planning:
Key to managerial functions- The four managerial functions, i.e., planning, organizing, directing and controlling are based upon the manpower. Human resources help in the implementation of all these managerial activities. Therefore, staffing becomes a key to all managerial functions.
Efficient utilization- Efficient management of personnel’s becomes an important function in the industrialization world of today. Seting of large scale enterprises require management of large scale manpower. It can be effectively done through staffing function.
Motivation- Staffing function not only includes putting right men on right job, but it also comprises of motivational programmes, i.e., incentive plans to be framed for further participation and employment of employees in a concern. Therefore, all types of incentive plans becomes an integral part of staffing function.
Better human relations- A concern can stabilize itself if human relations develop and are strong. Human relations become strong trough effective control, clear communication, effective supervision and leadership in a concern. Staffing function also looks after training and development of the work force which leads to co-operation and better human relations.
Higher productivity- Productivity level increases when resources are utilized in best possible manner. higher productivity is a result of minimum wastage of time, money, efforts and energies. This is possible through the staffing and it’s related activities ( Performance appraisal, training and development, remuneration)
RECRUITMENT
Recruitment is the process of locating and encouraging potential applicants to apply for existing or anticipated job openings.
Recruitment is broadly classified into two type
Internal Recruitment
-Promotion.
-Transfer.
-Retired Manager.
-Recall Form Long Leave.
-Internal Advertisement.
External Recruitment
-Management Consultant.
-Advertisement.
-Management Institute.
-Recommendations.
-Deputations Personnel.
What is sourcing?
Recruitment can be broadly split into two main areas – sourcing and selection. Sourcing is the stage which encompasses candidate attraction, while the selection stage encompasses the interview and offer process. Sourcing will begin once approval has been officially granted to fill a vacant role within the organisation. When sourcing potential candidates, the aim will be to make the vacancy known to as many qualified people as possible.
Sourcing considerations
In order to select the best sourcing method for your vacancy, it is first necessary to define your target candidate(s). For example, will they be found in this country, might they still be at university, or are they specialists who exist only in certain industry sectors? You should then consider any restraints you have in terms of time (when does the vacancy need to be filled by and have you got the time to devote to processing applications and conducting interviews?) and cost (can you afford to pay for advertising or for a consultant to undertake the task for you?).
When choosing your sourcing method, it’s also important to consider the level of competition within the labour market. Are you likely to be competing with other organisations that might be more appealing to candidates in terms of size, reputation, benefits, etc? If so, you may need to be quite creative in the way in which you communicate with your potential candidates in order to beat the competition.
4. What are the ways to calculate inventory turnover ratio?
Solution:-
Managing inventory levels is important for most businesses and this is especially true for retailers and any company that sells physical goods. The inventory turnover ratio is a key measure for evaluating just how efficient management is at managing company inventory and generating sales from it.
Inventory Turnover
Like a typical turnover ratio, inventory turnover details how much inventory is sold over a period of time. It is calculated as:
Cost of Goods Sold ÷ Average Inventory
Or
Sales ÷ Inventory
Usually, a higher inventory turnover ratio is preferred, as it indicates that more sales are being generated given a certain amount of inventory. Alternatively, for a given amount of sales, using less inventory to do so will improve the ratio.
Sometimes a very high inventory ratio could result in lost sales, as there is not enough inventory to meet demand. It is always important to compare the inventory turnover ratio to the industry benchmark to asses if a company is successfully managing its inventory.
Days Sales of Inventory (DSI) or Days Inventory
The inventory turnover ratio on its own takes some time to put into perspective. Going a step further, days sales of inventory, also known as days inventory, is simply the inverse of the inventory turnover ratio multiplied by 365. This puts the figure into a daily context, as follows:
(Average Inventory ÷ Cost of Goods Sold) x 365
DSI significantly changes between industries and it is important to compare it against peer companies. Businesses that sell perishable products like supermarkets or groceries stores have lower inventory days than business that sell furniture or appliances.
Example:-
For the fiscal year ended Jan. 2014, Wal-Mart Stores Inc (WMT) reported annual sales of $476.3 billion, year-end inventory of $44.9 billion, and annual cost of goods sold (or cost of sales) of $358.1 billion.
Its inventory turnover for the year equals:
$358.1 billion ÷ $44.9 billion = 8.0
Its days inventory equals:
(1 ÷ 8) x 365 = 46 days.
This indicates that Wal-Mart sells its entire inventory within a 46-day period, which is quite impressive for such a large, global retailer.
The Bottom Line
The inventory turnover ratio is one of the best indicators of how efficiently a company is turning its inventory into sales. Even better, the days inventory ratio puts it into a daily context.
5. Discuss the areas where theft and fraud may take place. What measures would you suggest to prevent them?
Solution:-
One of the most serious threats to the success of a small business is employee theft. Misplaced trust, lax hiring and supervision, and a failure to implement basic financial controls can lead to an environment that is ripe for internal theft and fraud.
The Association of Certified Fraud Examiners estimates that the typical business will lose an average of 6 percent of revenues from employee theft. The ACFE Report to the Nation on Occupational Fraud and Abuse indicates that small businesses suffer disproportionate losses because of the limited resources they have to devote to detecting fraud.
Small business owners can help protect their businesses from employee theft and fraud with the following eight tips.
1. Create a Positive Work Environment
A positive work environment encourages employees to follow established policies and procedures and act in the best interests of the organization. Fair employment practices, written job descriptions, clear organizational structure, comprehensive policies and procedures, open lines of communication between management and employees, and positive employee recognition will all help reduce the likelihood of internal fraud and theft.
2. Implement Internal Controls
Internal controls are measures that ensure the effectiveness and efficiencies of operations, compliance with laws and regulations, safeguarding of assets, and accurate financial reporting. These policies and procedures should address the following points.
Separation of duties: No employee should be responsible for both recording and processing a transaction.
Access controls: Access to physical and financial assets and information, as well as accounting systems, should be restricted to authorized employees.
Authorization controls: Develop and implement policies to determine how financial transactions are initiated, authorized, recorded, and reviewed.
3. Hire Honest People
Of course, this is the goal of every company, and it’s easier said than done. Dishonest employees will ignore your attempts to provide a positive work environment, and they’ll search for ways to defeat even the most comprehensive internal controls.
Pre-employment background checks are an excellent way to cut down on hiring dishonest employees. A thorough pre-employment background check should include:
Criminal history for crimes involving violence, theft, and fraud
Civil history for lawsuits involving collections, restraining orders, and fraud
Driver’s license check for numerous or serious violations
Education verification for degrees from accredited institutions
Employment verification of positions, length of employment, and reasons for leaving
4. Educate Your Employees
You need to inform your employees about your policies and procedures related to fraud, the internal controls in place to prevent fraud, your organization’s code of conduct and ethics policies, and how violations of these policies will be disciplined. Every employee should sign a form to verify receipt of this material.
Employees should receive annual training on these topics and on the definition of what’s considered fraudulent behavior, and sign an acknowledgement each time.
5. Create an Anonymous Reporting System
Every organization should provide a reporting system for employees, vendors, and customers to anonymously report any violations of policies and procedures.
Promote and encourage the use of the reporting system whenever possible, and take the reports seriously. The fact that they are anonymous does not mean they are any more or less credible; they should be investigated just as thoroughly as any reported misconduct.
6. Perform Regular (and Irregular) Audits
Every company should have regular assessments; but random, unannounced financial audits and fraud assessments can help identify new vulnerabilities, and measure the effectiveness of existing controls. Audits also let employees know that fraud prevention is a high priority for the organization, is an impediment to temptation, and keeps any possible wrongdoers uncomfortable enough that they may stop or leave the company.
7. Investigate Every Incident
There is no point in implementing a procedure if it is not going to be acted upon. Investigate every incident and report, no matter how large or small. A thorough and prompt investigation of policy and procedure violations, allegations of fraud, or warning signs of fraud will give you the facts you need to make informed decisions and reduce losses.
8. Lead By Example
Senior management and business owners set an example for the organization’s employees. A cavalier attitude toward rules and regulations by management will soon be reflected in the attitude of employees. All employees — regardless of position — should be held accountable for their actions.
Implementing these recommendations can dramatically reduce the opportunity for employee theft and protect the assets of your business. If you suspect fraudulent activity by an employee, seek professional assistance to conduct the investigation. Determine what’s necessary to protect your business and prevent a recurrence.
6. What is the relation between Bar Code & Bar Gun?
Solution:-
A barcode reader, also called a price scanner or point-of-sale ( POS ) scanner, is a hand-held or stationary input device used to capture and read information contained in a bar code . A barcode reader consists of a scanner , a decoder (either built-in or external), and a cable used to connect the reader with a computer. Because a barcode reader merely captures and translates the barcode into numbers and/or letters, the data must be sent to a computer so that a software application can make sense of the data. Barcode scanners can be connected to a computer through a serial port , keyboard port , or an interface device called a wedge . A barcode reader works by directing a beam of light across the bar code and measuring the amount of light that is reflected back. (The dark bars on a barcode reflect less light than the white spaces between them.) The scanner converts the light energy into electrical energy, which is then converted into data by the decoder and forwarded to a computer.
7. Specify some of the important tips for improving sales of the business.
Solution:-
The ability to sell someone something – whether it’s a product, a service, or an idea – is the fundamental skill at the core of many, many jobs in the business world (especially ones with commission-based pay). When it comes to closing a sale, it’s not all about smooth-talking your buyer. It’s just as important to be able to listen intently, think critically, and to intelligently apply effective sales techniques. By doing these things, not only will your personal sales increase – your business’s will as well. See Step 1 below to get started.
Part 1 of 2: Interacting With a Customer
Satisfy your customer. Above all else, try to keep your customer happy and satisfied. Humans aren’t perfectly logical creatures – if someone likes you, they’re more likely to buy from you, regardless of the deal you’re offering. Be friendly, charming, and open with your customer. Give her peace of mind. Whatever your customer is looking for, that’s what you should try to provide.
Listen. It’s pretty difficult to satisfy a customer if you don’t know what she wants – luckily, most of the time, all you’ll have to do to figure this out is to simply listen. This isn’t hard – at the beginning of your pitch, ask a customer what you can help with and let the customer describe her problem or desire. Once you know what she wants, you’ll be able to decide which products, services, etc. best meet her needs.
Give your full attention. When a customer is considering making a purchase, you want to give the impression that you’re available to fulfill any needs or answer any questions that may arise. You don’t want to give the impression that you’re distracted or that you’re attending to your customer as an afterthought. Whenever possible, interact with customers on a personal, one-to-one basis, returning to your other duties only when the job is done.
Demonstrate your product/service’s value. When it comes to convincing a reluctant customer to make a purchase, flowery, glowing praise for your product or service is only going to get you so far. To really get the customer on your side, show your customer how the thing you’re selling will make their life better. Whether it will save them money and time, give them peace of mind, or simply make them feel good, make sure your customer understands exactly how the item you’re selling benefits him in real, practical terms.
Know your field. Customers like buying from salespeople who seem knowledgeable without being condescending. Be a friendly resource for your customer. Ideally, not only should you know the products and/or services you’re selling like the back of your hand, but also those of your competitors. If you know this information, you’ll be able to make comparisons that cast your product or service in the best light possible and your competitors’ in a less favorable light. You’ll also be able to intuitively recommend certain products based on your customer’s unique situation.
Close. It’s relatively easy to get a customer to like a product, but your commission ultimately depends on whether your customers buy your products, which is another matter entirely. Try to get a commitment from customers the same day you first meet them – a customer that leaves the store to “think about it” might not come back. If a customer is reluctant to make a purchase immediately, try to sweeten the deal – offer a minor discount or “throw in” extra bonuses in exchange for a customer’s commitment.
Build relationships with your customers. Customers that feel that they’ve been respected and satisfied by a business are likely to give it a good review to their friends and may even return for future purchases. Building happy, respectful relationships with customers is a great way to give yourself a long-term sales boost. Try to genuinely connect with customers – when all’s said and done, even if it can be tempting to think of customers as nothing more than numbers on a balance sheet, remember that these are real people with real emotions and that nearly all of them appreciate human warmth.
Part 2 of 2: Using Sales Techniques
Create the impression of urgency. Most customers, whether they’re conscious of it or not, hate the idea of missing out on a good deal. Giving the impression that, by passing on a sale, your customer is missing a special offer or a limited-time deal is one of the oldest, most effective tricks in the book for getting reluctant customers off the fence. To do this, try to call attention to certain deals that won’t be offered forever or certain products that are almost out of stock and encourage customers to “jump” on these opportunities.
Flatter shamelessly (but subtly). The stereotype of the salesperson as a slimy flatterer isn’t entirely unearned – by playing to a customer’s ego, you can increase your chance for success on almost any given sale. The trick here is to genuinely flatter your customer without seeming transparent, cloying, or phoney. Pour on the honey, but don’t overdo it: when your customer takes your exclusive deal on a new car, she’s smart, not an absolute genius. When a heavy customer tries on a suit, he looks slim, not astoundingly dashing. Flatter, but be reasonable and realistic.
Make customers feel obligated. Most people are more likely to do things for others when the other person has already done them a favor. Particularly sly salespeople can take advantage of this fact by giving the customer the impression that they’ve received some favor or act of kindness. Sometimes, being attentive and responsive to a customer is enough – for instance, a shoe salesman who tirelessly runs back and forth from the storeroom so that a customer can try on a dozen pairs of shoes has demonstrated serious kindness simply by doing his job well. Other times, small “actual” favors are necessary, like getting a customer a drink or clearing time out of your schedule for an appointment.
Don’t rush a sale. It’s tempting, especially if your commission is on the line, to pressure a reluctant customer into a sale, rush him to the cash register, push him out the door, and forget about him. Obviously, this isn’t a smart way to make sales. Customers don’t like the idea that they’re being tricked or swindled, so sales tactics that rely too heavily on making fast, high-pressure pitches can build hostility. Even if these tactics result in short-term sales gains, negative word-of-mouth can cause long-term downturns and tarnish your image.
Be responsible and reliable. Other, slier sales techniques have their place, but if you do nothing else as a salesperson, try your best to have personal integrity. When you make a promise to a customer, deliver on it. When you make a mistake, offer a sincere apology. Respect is at the center of any sales transaction. Customers want to respect a salesperson enough to be confident they won’t be swindled; salespeople want to respect customers enough to assume they’ll get a good review for their hard work, and businesses want to respect customers enough to assume they’ll be paid for goods or services rendered. When one of these respect-based relationships breaks down, sales suffer, so do your part and earn your customers’ respect by being a respectable human being.