Updated: Oct 24, 2019
In the global picture, retail management plays a vital role affecting the worldwide economy growth. However, not everyone grasp the basic information & updated trend in this field let alone how to run a retail business properly. Then, this article is created just for you with the aim of providing the most up-to-date retail management’s knowledge and retail market trend.
Keep scrolling down and see how many parts does retail management cover to get prepared for your business!
I. Basic information about retail management
1. What is Retailing?
Generally, retailing is a distribution process which includes all the activities in selling the merchandises directly to the end users or everyone who intends to use the products.
Retailing is so-called as a distribution process since it encompasses the sale of goods and services from a point of purchase to the final consumers, who are going to use that product.
2. How does Retail business work?
No one will tell you about how to start a retail business in the most proper way. However, it is obligatory to all the retailers in the world to grasp the framework of their business with 10 basic steps as followed:
Create your business plan
Decide on the legal structure
Think of a name for your business
Create file for an employer identification number
Understand other retail business law
Hire an attractive location
Find a place for inventory
Plan store policies and procedures
Develop a customer service plan
Recruit a team of employees
After having planned all the details in, the big picture of your retail business will be clearly shaped.
3. Why Retail business is significant today?
Retailing is an integral part of modern society. People now highly depend on retail stores in order to seek for a comfortable life while in the past, goods and service were made available by the process of trading.
Let's look at many developed countries in the world namely USA, England, German,.. the retail management business is one of the biggest contributors to the Gross Domestic Product (GDP) and it is evaluated to increase much more dramatically in the near future. Retailing is a driving force of the economy and its mission is to encourage sustained growth.
II. Classifications of retail management
Generally, retail management can be shorted as 2 kinds involving retail formats & decisions to make about merchandising and pricing. Keep reading to get more information.
1. Retail formats and strategies
There are many formats of retail management from traditional, modern to direct retail approaches. Small to medium business can use mobile retailers, hawkers, convenience and specialty stores to boost their sales. Large retailers, on the contrary, are known as supermarkets, departmental stores, hypermarkets and manufacturer’s showroom.
Other formats of retail management are co-operative and direct channel. With co-operative format, two or more retailers can work together and open a chain of co-operative stores. Some direct channels for retailers to apply in their formats are tele-marketing, internet marketing, in-home selling, mail-order selling and vending machines.
2. Retail strategy decisions: merchandising and pricing
In almost industry, merchandising and pricing are essential element to maintain a business and also a factor for experts to evaluate the performance of a company. To successfully running a retail business, you will need to make a firm & precise decision on the following criterion:
a. Retail marketing strategy mix
Four Ps is being replaced by six Ps marketing which will define a retailer’s strategy so that it’s an important progression to bear in mind: Goals drive strategy, and strategy drives tactics. In terms of retail marketing strategy, the six Ps will help you create a retail communication program.
Applying the marketing mix as a springboard to the six elements of the retail strategy mix should back you up a lot. Your marketing mix should be something you pay thorough attention to since the success of your business depends on it.
6Ps marketing in retail management includes product, price, place, promotion, personnel, and presentation. Each of them requires different approaches uhwich highly require tactics of retail managers.
b. Merchandising and its implications
Merchandising is a definition which is very intimate with retailing. Basically it is the activity of promoting the sale of goods for retail. This process includes many display techniques, free samples, on-the-spot demonstration, pricing strategy, special offers, and other point-of-sale methods.
Effective merchandising helps products to be displayed in an appealing place which strengthens brand messages, and makes stores easier for customers to shop. There are 5 ways to promote retailing:
Overall shelf health: Low inventory levels (more out-of-stock products) could lead to a negative impact on potential sales and brand identity.
Frequency and consistency of restocking: Similarly, restocking products are worth considering. Make sure to create replenishment plans based on the needs of individual stores to save money and ensure there are products on the shelves whenever needed.
Competitive or conflicting signage: Unfortunately, you can’t control where to put competitor’s products, advertisements or displays. However, you can control where and how your products are displayed. Ensure the space is adequate for your products' display.
Broken Displays: Many unforeseen design issues can happen like ripped displays leading to stocking issues, disorder on the shelf creating negative brand image for shoppers.
Display Compliance: Many times, we find that displays have been set up with missing signage or missing parts. The lack of signage, or conflicting products can make your consumers confused, leading to a lack of brand awareness and potentially result in the ineffective display or promotion.
c. Retail pricing strategy and consequences
Retail pricing strategy is considered as an important element for determining the perception that affect the consumers’ impression on a store and one of the major difficult issues faced by retailers. It is because of the retailers’ expectation that the customers will part with their money.
In that case, retail pricing is a convincing tool that attracts customers to purchase from a certain retail store and it can be significantly affect retailer's profitability; store brand, sales, product and brand image. More importantly, it also influence the consumer's intention to purchase, consumer's experience and customer loyalty. Undoubtedly, pricing is an important consideration when buying consumable goods for customers with low-income as well as wealthy customers.
d. Retail distribution network
The last thing to decide on retail management is the retail distribution network. Briefly, retail distribution channels are the paths goods and services have to reach the end consumer from the vendor.
These paths can be short, direct distribution channels are the process straight to the consumer. The supply chain may also be longer, involving wholesalers, distributors, or other agents who act as intermediaries. However, the more intermediaries are involved, the higher the price of the product will be. But these more lengthy distribution channels are necessary for some areas where direct sales are infeasible or impractical.
Before opting for a retail distribution network for your business, experts suggest company managers take the following in mind:
Consider the competition: Look into retail distribution strategies your competitors are using and ask yourself why are they using that strategy? Is it working? How does your company apply to take the most advantage?
Costs & Benefits: It is extremely important to determine the costs and benefits to decide whether a strategy is financially feasible. Retail distribution plans are not easy to set up and expensive to reverse if you find that the plan you’ve chosen is on the wrong track and may harm your company.
Have a few choices on the table: Ranking your options by order of preference, you will give yourself a convenient reference to decide against your most favored option or if you have sufficient capital to try multiple strategies.
3. Retail scenario in emerging markets
An emerging market is a country that has some stereotypes of a developed market, but does
not meet the standards to be termed as a developed market. This term includes countries that may become developed markets in the future or used to be in the past. In the near future, the demand for bulk of goods in that kind of market will increase dramatically, especially healthy and high-standard products.
Recently, several studies show that international retailers create more jobs helping to drive down the price of food and other essentials, thereby, raises local business standards. The expansion of modern retailers has helped job seekers—especially women— as well as consumers & local suppliers.
Modern retailers would love investing in technologies and processes that enable them to achieve greater economies of scale & drive down costs, allowing them to provide lower prices for consumers. Many big corps invest in local and international retailers expanding in emerging markets as competition brings better value for consumers.
III. How to achieve an effective retail management process
It would be fantastic if you are running a good retail management process. If not, keep patient because, in the modern age, technologies can help company leaders a lot of tasks in their working routine including retail management.
Nowadays, retail management pos has emerged to be a new trend among managers who want to optimize their retail business by advanced technology. It is understandable because of the outstanding features of POS system, its convenience, its capacity to handle multi-task and inform users every time, everywhere they want.
Among POS system, bePOS - an all-in-one point of sale solution has been highly recommended by hundreds of retailers around over 10 countries where we have started our business. bePOS has integrated all the highest technology in the world to meet the need of customers such as instant recording, cash & staff management, CRM, cloud-based and inventory management in a portable platform allowing retail management to be worked out in the easiest & effortless way.
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