Retail Chronicles - April 2022 by Retail Lab SIMSR

Retail

Chronicles Monthly Newsletter | Volume 6 | Issue 15 | April 2022

CONTENTS 03

RETAIL BUDGETING & SALES FORECASTING It is never too late to start budgeting in any business. Many businesses struggle to survive without a budget. Retailers use sales forecasting to predict future sales.

PAYMENT & CHECKOUT Sheds light on how Payment and Checkout are crucial aspects of operations in the retail industry. Also shows different types of ways a customer can make payment and checkout.

RETAIL OPERATIONS: VISUAL MERCHANDISING AND STORE LAYOUT Visual merchandising & Store layout comes into the picture which is done by retailers to increase footfall and drive sales with maximum impact.

RETAIL OPERATIONS-INVENTORY MANAGEMENT Inventory Management is all about having the right amount of stock at the right time in your inventory. Inventory is the most important asset of a business.

PODCASTS

TRIVIA QUIZ

WRITERS Aayush Ghildiyal | Harsh Gupta | Akshita Kulshreshtha | Raghav Khandelwal |

EDITOR Riya Shah

RETAIL BUDGETING & SALES FORECASTING

Aayush Ghildiyal - MBA RM Retail Chronicles | Page 03

April, 2022

It is never too late to start budgeting in any business. Even if you've been in the company for a long time, it might provide you a significant boost. According to accountants, this is an area where many shops fail. Here is how Budgeting might help you: ·Estimate the amount of money you will have to deal with. ·To keep against running out of money (and getting into scrapes with suppliers or banks) ·Develop preparations for reinvesting in the business to improve it ·Check to determine if things are off track and make any course changes ·Make sure you have the money to pay yourself. ·Many businesses struggle to survive without a budget, yet going on instinct may be stressful and costly.

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The retail budgeting process is a multi-step exercise carried out once a year to plan for the coming year. When budgeting for a retail store, the ultimate aim is to create a realistic final P&L budget for the firm that lays out the projected revenues and costs, as well as the final net profit number for the coming year. It's also essential to verify the sustainability of your processes before committing or investing in them before launching a retail business.

Aside from the need to plan for optimal goods purchases, the retail budgeting process will provide an estimate of the business's expenditures and the income required to cover these costs in order to conclude the year economically. A firm may be able to generate substantial revenues, but the costs of maintaining the business may continue to grow to the point where they are no longer covered by the sales, rendering the enterprise non-viable. As a result, before the year begins, all income sources should be documented and anticipated, and all-expense lines should be scheduled ahead of time and followed throughout the year. April, 2022

Common mistakes in Budgeting are as follows: · Budgeting High Sales: Some managers are overconfident or fail to correctly appraise the market conditions around them, resulting in a forecast of highly high sales growth for the current year.

1. Sales Budgeting: It is critical to be realistic in your sales budget because your purchasing budget will be decided by this estimate, and correcting this in the future will be difficult. Gross Profit = Sales x Gross Margin (%) 2. Cost Budgeting: Includes Rent, Manpower, Selling, Promotion, and admin expenses. It should now be clear why sales budgeting is the first stage. Basically, it will have an impact on cost budgeting.

· Budgeting Low Sales: This will have no effect on expenses because they would have been decreased, resulting in long-term efficiency. However, this will result in fewer purchases and a missed opportunity to increase sales. · Budgeting Inaccurate Margins: It's critical to precisely budget the margins since, at the end of the day, it's the margins that pay the bills.

3. P&L Budgeting: The P&L budgeting phase is the final stage in the retail budgeting process, and it is based on the preceding two methods. P&L stands for profit and loss, and the income statement is another name for it.

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April, 2022

Sales Forecasting: Retailers use sales forecasting to predict future sales by examining previous sales, recognising trends, and projecting data into the future. The most basic version of a sales prediction will take last year's sales in Store A, assume a continuance of some multi-year pattern for Store A (e.g., a certain percentage of increase or drop in sales), and project forward to estimate sales in Store A this year. From the inception of the industry, sales forecasting has been the traditional method of retailing. Even though modern retailers have access to more data than ever before (as well as new technologies and business intelligence dashboards) and can readily employ more complex and precise forecasting methods, sales-based forecasting remains the backbone of most retail operations.

Pros of Sales Based Forecast: This is a straightforward method that is simple to implement. Most retailers construct a forecast based on their sales history using a combination of their ERP, BI tools, and (in many cases) Excel. As a result, practically every store, large or small, can create basic sales estimates without investing in new equipment or procedures. Retail Chronicles | Page 06

Cons: A sales-based forecast will result in many exceptions if you're a modern shop that sells through many channels (with different locations and delivery hubs). If you apply a traditional sales forecast technique for a complicated business, you will quickly discover that the estimates are inaccurate. To achieve a more accurate picture, teams of analysts will need to manually reconcile dozens of aspects (that a sales prediction does not consider). Effective inventory management ensures that you have the correct items on hand at the right time for your consumers, but not so many that they spoil or become obsolete. It's simple to run out of stock (and leave dissatisfied customers empty-handed) or overstock a product (and waste money on things you can't sell) without demand forecasting. You can prepare your supply chain and inventory for any projected peaks by estimating demand and avoiding having too much stock, which harms your cash flow and raises storage expenses.

April, 2022

PAYMENT AND CHECKOUT

Harsh Gupta- MBA IB Retail Chronicles | Page 07

April, 2022

Introduction: The retail industry is growing at a significant rate worldwide. With the growth of the retail industry, the management of retail operations is also becoming crucial and is gaining light. The operations have many aspects like inventory management, payment, checkout, store layout, budgeting, etc. Payment and checkout are crucial aspects of operations in the retail industry. With the increase in the footfall of the customers, the queue length in front of the payment counter also increases. Sometimes it doesn't matter how much time a customer has spent shopping, but every second feels like an hour waiting in the queue when it comes to the payment part. So to make the payment and checkout, there can be a few measures that retail industries can consider.

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Buy Online Pick up In Stores (BOPIS): This retail strategy has gained momentum mainly during the pandemic to follow social distancing norms. Under this strategy, a customer can choose items, pay for them online, and pick the items at a particular time, at one specific pinpoint. This strategy is also known as curbside pickup. This strategy is crucial not only for the speedy payment process but also for inventory management.

April, 2022

Self Checkout: According to a report by PYMNTS, the majority of the customers prefer unattended retail channels as it gives them a chance to shop at their own pace. The customers also like the selfcheckout method. There are many retail shops and restaurants which have adopted this technology. Some restaurants provide the customers with a tablet at the table where they can order and pay without any human touch. Macdonald's has also adapted this technology along with the traditional payment method. The customer can order and pay via self-service touch screen kiosks located near the checkout lines.

Other Methods Of Payment: In many retail stores, the cashier makes the bill via manual typing or handwritten invoices. These traditional methods are time-consuming. The retail owners can adopt many new technologies to make the process much faster. Credit card, debit card, google pay, Paytm, etc. is one of the methods of payment., Apart from them, other technologies can also be used like: the use of QR codes, Bar Codes, tap and pay, etc., where the consumer can scan the product and can pay online via the use of their mobile phones from anywhere in the store.

Mobile Checkout: Nowadays, almost everyone carries a smartphone in their hands, and the internet has become a basic necessity for everyone. So, with the help of some applications, and other technology, the customer can pay by itself from anywhere in the retail shop. Some applications like Shopify POS (point of sale) can turn a mobile phone into a POS. Thus the customer does not need to depend upon a particular checkout area. This checkout method can be crucial to shortening the queue length in front of the checkout area and making the payment process much faster. This technology also helps customers make more informed decisions vis giving them some details like product specifications, current stock, etc., on their screens. In this way, the retail shops can also use staff strength much more productively. The staff can give their time to customers to assist them in shopping.

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Optimize the staff schedule: The retail owners can analyze the customers' shopping data. They can identify the peak hours and thus can optimize their staff accordingly. For example, if the footfall of the customers is more in the afternoon in a retail shop, then the retail owners can deploy more staff in the afternoon at the checkout area. Payment and checkout management is one of the most crucial aspects of the operations of retail shops. The overall customer shopping experience can be improved via small changes and technology.

April, 2022

RETAIL OPERATIONS: VISUAL MERCHANDISING AND STORE LAYOUT

Raghav Khandelwal - MBA RM Retail Chronicles | Page 10

April, 2022

Introduction: Have you ever visited a shop and spent a longer time than you intended to? You must have gone from aisle to aisle and have spent more than you thought. That is exactly what retailers want. This is where Visual merchandising & Store layout comes into the picture which is done by retailers to increase footfall and drive sales with maximum impact. In this article, we will see and understand key concepts of store layouts and their connection with visual merchandising. We will also see how a retailer can create efficient retail places which attract customers and encourage more purchases.

About Store Layout: Store layout or store design is a term used to describe how retailers set their goods, product displays & fixtures in a store. It involves strategic decisions to use the available space efficiently to influence customer decisions. There are two components of a store layout given below: Store Design ( it involves the use of floor plans, displays, furniture, fixtures, signage & lighting ) Customer Flow ( it is the way that a customer browses through the store ) In the practical world, there is no right or wrong retail layout. It should be tailored for the target market and the product range being offered by the retailer. Having an effective store layout takes shopper engagement into account & leads buyers throughout the store instead of leaving them to figure out how to navigate. A store layout has two options, either to guide the customer to the most popular item or to a section of a store that doesn't generate many sales.

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April, 2022

Before choosing a store layout, it is important for a retailer to look into the customer Flow and customer behaviour patterns which impacts both the store sales and success factor. In the next section, let us see some of the key store layouts being used in the practical world. Types of Store layouts1. Forced-Path This type of layout puts customers on a predetermined route in a retail store, guiding customers to the products that a retailer wants to be seen. Ultimately, this layout maximizes the chances of every section being seen by the customer. But, it may lead to customers feeling restricted and they may get frustrated. 2. Straight This type of layout is one of the easiest to plan and implement for a retailer. Here, one main section runs down the store connecting the various other sub-sections on the rest of the floor. It is a popular floor plan as it is quite convenient for shoppers for some specific products. The potential risk associated with this type of layout is that customers may move down the sections quickly missing the products placed on the other sides of the store.

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3. Geometric This retail store design is a blend of functionality with creativity. As the name implies, this layout incorporates displays of all shapes & sizes like squares, circles, rectangles, etc. This type of layout enhances the visual appeal of stores, especially those having a unique interior. Although it provides a unique store design it can be too eccentric for older customers. It is also not the best way to optimally use full-floor space.

4. Loop A loop layout or the racetrack layout is a closed-loop path that guides customers throughout the store to the checkout point. One of the best examples of this layout is that of Apple Experience Stores. Since the traffic pattern is predictable here, this layout enables promotional items to have better chances to get seen by customers. Customers can get in and out easily of the store which is a barrier to high traffic turnover and is a big disadvantage for the store.

April, 2022

Visual merchandising & key trends Visual merchandising involves everything which contributes to the look and feel of the store and enhances the shopping experience. The main essence of visual merchandising is to attract more customers into the store and retain the customers that are already in the store by providing a seamless experience that generates more sales. Visual merchandising makes use of attractive displays, lighting, colour, floor plans, technology and a combination of other elements to use the retail space creatively and effectively. The person responsible for this marketing practice is a visual merchandiser present at each store to analyse the shopping behaviour of customers and continuously improve the overall store appearance. The main benefits of visual merchandising are; that it firstly reflects your brand and is a source of identity for the shopper. For example, if we consider the Hamley’s store we can identify it from a distance due to its attractive red colour and distinct store appearance. Secondly, it engages the potential customer and improves the time spent in the store. Thirdly a well-organised store simply leads to more sales. The main elements of visual merchandising include displays, signages, fixtures and store environment including colour, lighting, sound, and smell. Visual merchandising starts from window displays which are an essential part and need to be attractive enough to grab the attention of the customers to enter your store. Apart from window displays your storefront should have a proper signboard having your store name printed clearly. Inside the store, the products should be well arranged on fixtures or shelves well within the reach of the customers to prevent any kind of inconvenience. Retail Chronicles | Page 13

Proper signages indicating discounts, new arrivals, product information display cards etc should be present for utmost convenience. The overall design of the store should be in sync with the brand proposition. For example, a toy store would have a more colourful and bright appearance with more attractive fixtures around the store. Whereas in a luxury store selling handbags, the store would be more minimalistic and aesthetically pleasing. Apart from this the store atmospherics play an important role and should consist of a light sound in the background to keep the shopper engaged with a pleasant fragrance that is not very strong.

Conclusion: Visual Merchandising and Store layout play an important role in enhancing the customer experience and generating more sales. A good product/ service alone will not lead to more sales. Consumers are now looking for better in-store experiences which lead to higher satisfaction. Tailoring the store layout and visual merchandising as per the nature of the product and tracking consumer shopping behaviour in a particular category is the best way to continuously improve your in-store experience.

April, 2022

RETAIL OPERATIONSINVENTORY MANAGEMENT

Akshita Kulshreshtha - MBA RM Retail Chronicles | Page 14

April, 2022

Inventory is the most important asset of a business. It is said that the Inventory of a business is just money sitting around in another form. And a business is all about having the right amount of money at the right time. Simply translating this to the fact that Inventory Management is all about having the right amount of stock at the right time in your inventory. Inventory Management is one of the most core Operations of a Retail Store. Without the inventory, the Retail store stands inoperable. With the world running on the internet, some stores have their inventory offline, in the traditional Brick and Mortar stores, whereas some have it online where the business is made through an online marketplace or an ECommerce website. Up and coming retail stores have also started to have a multi-channel inventory management system which is a combination of the offline inventory and the online marketplace. Furthermore, there is the Omnichannel inventory, where the company provides a unified experience across all channels that they operate in. Inventory management is all about having balanced stocks in place. You can never have too little or too much inventory at your hand or it may affect your business. Retail Chronicles | Page 15

Understanding inventory management ultimately boils down to understanding the following aspects of it: 1. Types of Inventory - Having the full visibility of the inventory and complete knowledge of what lies where in the inventory, 2. Inventory forecasting - Knowing the needs of the business for the forthcoming period and being prepared for the same. 3. Purchasing Inventory - Knowing when and how to place orders of restocking the inventory, 4. Inventory Storage - Having enough capacity and resources required to store all the supplies that support your business. 5. Inventory Analysis - Having data at your fingertips to analyze the inventory well and then take well informed decisions. 6. Handling Techniques - Efficiently carrying out all the core operations of picking up, packing, storing and shipping the inventory 7. Multichannel tracking - Having complete visibility of any sales and purchases made so much so that the stock volumes in your head are quite close to the actual figures. 8. Inventory Accounting - Proper knowledge of keeping books and records of financials related to the inventory. April, 2022

9. Inventory Management Systems - Knowing fully well how to use efficient inventory management systems such that the entire process is automated well. Importance of Inventory Management Effective Inventory Management systems help a great deal in a Retail store. While it may sound like a back-office operation which is relatively less exciting than Sales or finances of the business, it is a core operation and needs to be taken seriously. Following are the ways in which inventory management can be very effective for successful retail operations: 1. Customer experience - No business wants to see their customers go unhappy after willing to make a purchase because of a lack of stocks. Hence inventory management ensures happy customers

4. Optimizing Fulfillment - Inventory that is properly maintained and managed will ultimately be chosen, packed, and dispatched to consumers more rapidly. Effective Inventory Management The first step is to make a commitment to forecasting on a regular and well-organized basis. You'll need a good notion of how much inventory you have on hand and how much you expect to sell in the future months so you can plan for replenishment. Then you'll need to buy new inventory as soon as possible, preferably based on particular reorder points. Also, make sure your warehouse has the correct organizational structure in place to allow for optimal storage, minimal shrinkage, and quick and efficient delivery.

2. Improved Cash Flow - If inventory management is not managed properly, it would mean that there was an uneven distribution of cash across inventory and other operations. If too much cash is used up in the inventory, then other operations like payroll and marketing will be affected. 3. Avoiding Shrinkage - Buying too much of the incorrect inventory and/or not properly keeping it might result in it being 'dead,' spoiling, or being stolen.

In order to ensure effective Inventory Management, an automated system comes in handy. When it comes to inventory, an inventory management software or system handles all of the heavy lifting for a retail organization. It does not rely on manual, paper, or spreadsheet methods and manages inventory additions and subtractions automatically. Retail Chronicles | Page 16

April, 2022

PODCAST

RETAIL BUDGETING & SALES FORECASTING

RETAIL OPERATIONS: VISUAL MERCHANDISING AND STORE LAYOUT

-AAYUSH GHILDIYAL

-RAGHAV KHANDELWAL

RETAIL OPERATIONS-INVENTORY MANAGEMENT

PAYMENT AND CHECKOUT

-AKSHITA KULSHRESHTHA

-HARSH GUPTA

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April, 2022

TRIVIA

QUIZ

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April, 2022

Q1. The most important assets for the hotel industry are:

Q5. Which factor can dissuade customers from shopping in summers?

a) b) c) d)

a) Social Effects b) Price Effects c) Loyalty Effects d) Physical Effects

Client Trust Client Experience All of the above None of the above

Q2. All of these can attract more visitors to the hotels except:

Q6. What percentage of buyers spend more on foods for picnic during summers?

a) Marketing of experience b) Experiential Packages c) One-stop facilities d) High-speed internet

a) b) c) d)

Q3. Which of these companies is known for its sustainable fashion? a) b) c) d)

Vero Moda Only Good earth AND

Q4. Which of these fabrics is not suitable for summers? a) b) c) d)

Crotia Cotton Rayon Khadi

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25% 5% 31% 70%

Q7. This company owns the largest market share in the air conditioner retail market: a) b) c) d)

Voltas Hitachi LG Samsung

Q8. The first coupon was introduced by which of these companies? a) b) c) d)

Coca-Cola Thumps Up Samsung LG

April, 2022

REFERENCES https://www.statista.com/statistics/206844/hotel-revparby-region-worldwide/ https://www.statista.com/topics/1102/hotels/#dossierKeyfi gures https://explore.openaire.eu/search/publication? articleId=doajarticles::924428c0c6b70cdaa4b9d9a77559d9e9 https://www.forbes.com/sites/forbescoachescouncil/2018/0 8/02/yes-franchising-has-its-freedoms/?sh=70f192a23382

/retaillabsimsr @Retail_Lab @Retail_Lab