Retail Management Challenges & Strategies

This assignment delves into the complexities of managing businesses within the UK retail sector. It examines the influence of Foreign Direct Investment (FDI) on both the efficiency and capabilities of retailers. The analysis extends to exploring key strategies employed by retailers to navigate a dynamic market landscape, including visual merchandising, customer service optimization, and ethical sourcing practices. Additionally, the assignment considers the impact of consumer behavior and trends on retail success.

Retail and
Merchandising
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Main body........................................................................................................................................3
A strategic perspective.................................................................................................................3
The role of buyer..........................................................................................................................4
Implications of suppliers relations...............................................................................................6
Appropriate examples..................................................................................................................7
Evidence of appropriate theory and practise................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................11
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INTRODUCTION
In the present scenario, retail industry is one of the leading and fastest growing industry
in the world. It can be stated that along with higher growth rate, the industry has also witnessed
high degree of competition. At the time of carrying out their operations, businesses in retail
industry come across with two different terms which are merchandising and sales (Varley, 2014).
However, it can be argued that both the terms of completely different from each other and people
often gets confused between the two. The present study demonstrate a strategic perspective of
the principles and process which being employed by retailers operating at large scale. Along with
this, this report also highlight the role played by buyer in the retail industry.
MAIN BODY
A strategic perspective
In simpler term, the word merchandising can be defined as the process in which
businesses present their services and products in front of customers. The objective behind such
presentation is to increase sales and profits of retail companies. It can be stated that
merchandising is not an easy task and organizations are required to put wide variety of efforts.
They are required to the best location where each product can be displayed (Doyle, 2012). Along
with this, retail companies also need to develop eye catching displays so that more and more
customers can be attracted to buy a particular product. It can be expressed that countries such as
UK, are largely benefited from their retail sector as it is contributing a lot in its overall economic
development of the nation (Kent, 2007). In the present scenario, there are some retailers which
has managed to earn higher sales through innovations.
On the other side of this, few businesses in the industry are not able to earn adequate
profits because of the highly competitive business environment. The retail industry is very
important for the overall economic development of UK as it has contributed a sum of £310
billion in the year 2013. In addition to this, the industry also act as a major link between all the
manufacturer (producers) and customers. It has also played very crucial role in lowering down
the rate of unemployment in nation by employing more than 3 million individuals. In terms of
strategic perspective for large scale retailers, it can be stated that the government of UK, is well
aware of the importance of retail industry and has always developed strategies which support its
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growth and development (Kumar and Patel, 2010). Nowadays, government and businesses in the
retail industry are working together in order to deal with major issues faced and enhance the
existing growth rate. The strategies developed by government and large scale retailers in the
country lay emphasis on exploring more business opportunities at international level. The
development of strategies such as UKTI Retail International Action Plan has resulted in
providing potential opportunities for global growth and development. In addition to this, the
strategy also focuses on providing easy access to other international markets which offers higher
sales and growth rate. On the other side of this, the government and large scale retailers are also
working in partnership in order to eliminate trade barriers and encourage free flow of services
and products within nations (Pretious and Love, 2006). The laws developed at local level in
terms of retail are also made easy in order to reduce their complexity. In the current scenario,
many large and medium sized retailers has started operating with online store. The trend of
online promotion and sale of products in retail is growing with a very good pace. It can be stated
that in last one decade, entire retail industry has gone through a drastic change.
Nowadays, large businesses has developed new and more potential channels for
marketing and sales of its products. This includes emergence of platform such as e-commerce
and m-commerce from which customers can buy products from large retailers. Many companies
have developed their own online retail stores in order to make the entire shopping experiences of
customers more convenient (Megicks, 2007). Furthermore, brand such as Tesco, Asda, Sainsbury
have also developed their mobile application from where individuals can buy different products
with the help of mobile phones. These strategies of using new channels has resulted in increasing
sales and profits of large scale retailer. Along with this, it has also resulted in lowering down the
rate of footfall.
The role of buyer
In the present scenario, buyer has started to play very important role in growth and
success of business enterprise in retail sector. In simpler terms, retail buyer can be defined as the
one which buy different products and services with an objective of reselling them. At the time of
carrying out their operations, there are various things which needs to be taken into consideration
(Hart and et,al. 2007). This includes sales trends, assessing changing needs of customers and
current stock available. It can be stated that a retail buyer is the one who is completely
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responsible for carrying out the process of planning and selection of all services and products
which can be made available from its own retail outlet or store. However, it can be stated that the
role of retail buyer is not an easy task and the buyer is required to deal with lots of issues and
challenges (Wigley and Rachel Chiang, 2009). One of the major among those is to identify
customer needs and select products according to the same. In the present scenario, demand, taste
and preference of individuals in market changes with a drastic speed. Businesses or retail buyers
cannot sustain for long time period by offering same kind of services or products to customer in
the industry. Therefore, buyers in retail are required to make changes in their existing offerings
according to the changing market trend and customer taste. Along with this, the policy of store
and their financial budgets are the other important things which needs to be taken into
consideration.
There was a time when retail buyer used to be specialized in one particular products but
with the change in time and trends, these buyers have now become specialized in other product
type as well. It can be expressed that retail buyers play very important role in overall success of a
retail business enterprise. The rationale behind this is that these buyers helps organizations to
become aware their changing customers demand and the prices which customers are likely to pay
for a particular product or service (Fernie, Sparks and McKinnon, 2010). Thus, it can be
expressed that in retail industry, buyers are playing a significant role in carrying out assessment
of customer buying pattern and trends in market. On the other side of this, buyer role also
includes attending different trade shows and fairs with an objective to identify the need of new
product or services among people in the market. The retail buyers are also playing very
important role in evaluating overall products quality and encouraging feedback from all potential
customers (Barnes and Lea-Greenwood, 2010). It can be stated that in the present scenario, the
role of buyers in retail has become very complicated as they are also required to place order to
suppliers and negotiate with the same in terms of delivery and prices. However, it can be argued
that in order to operate in effective manner, these buyers are required to be capable enough to
understand the things or factors which encourages customers to purchase a particular service or
product.
The roles and responsibility of a buyer in retail are very complex and therefore they must
be capable enough to work in environment which is highly challenging. These buyers are
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required to ensure the fact that strong and long term relationship is developed within all supplies.
Along with this, they also need to develop effective strategies to approach new suppliers which
can support in growth and success of new products (Bray and Harris, 2006). One of the most
important tasks which needs to be accomplished by retail buyers is that they need to make
effective and most suitable decisions which can help in increasing sales by attracting more and
more customers. On the other side of this, retail buyers are also required to work closely with
different merchandisers in order to offer products and services as per the need and demand of
customers in market (Oubiña, Rubio and Jesús Yagüe, 2006). Another important role which is
played by buyers is of developing effective strategies which can results in increasing sales of a
particular retail business.
Implications of suppliers relations
At the time of dealing with suppliers, there are various things which needs to be take care
of by all retail businesses. Furthermore, high buying power assist all companies to have adequate
control over their suppliers and carry out their operations in more effective manner. In the
present scenario, it is required by each and every retailer whether large or small to have adequate
approach towards suppliers (Bruce and Daly, 2007). Along with this, suppliers are also required
to become a part of companies overall strategic planning. However, it can be argued that many
businesses in retail perceives that because they are buyers, they can easily dominate all their
major suppliers. Companies also believes that they have adequate authority and can easily carry
out exploitation of all their major supplier. It can be stated that in order to achieve higher growth
rate and competitive advantage over other market players, companies in retail sector are required
to focus on development of long term and healthy relationship with all major suppliers.
Furthermore, reliable, effective and good suppliers have become very important or
crucial element of a business enterprise. In addition to this, organizations are also required to
become aware of the implications which they may have because of supplier relationship (Park,
Jeon and Sullivan, 2015). One of the major implication of supplier and buyer relationship can be
on the overall quality of products. It can be expressed that supplier can have both negative and
positive impact on products quality. Good and healthy relation with all suppliers results in
delivering higher quality products to all customers which further lead to enhancing the overall
degree of customer satisfaction. In addition to this, healthy buyer and supplier relationship also
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lower down the chances of returns and businesses ultimately ends up with more cash in their
bottom line. On the other hand, relationship with supplier also effect the ability of retail
companies to deliver accurate and satisfactory products to customer on time. The results of this is
that large scale retailers are able to maintain their inventory level to as low as possible. It can be
also stated that low inventory level reduces the risks for businesses (Hines and Bruce, 2007).
Another implication of suppliers relationship is that suppliers can play one of the most
significant role in innovating services and products for large scale retailers. Innovations not only
support companies in offering something new to customers but also assists in getting competitive
advantage over other market players in the retail industry. Good supplier relationship encourages
suppliers to get involved in process of company and present them with business ideas which are
highly innovative.
It can be also expressed that there are certain principles which companies can follow in
order to develop long term and healthy relation with all their major suppliers. The first thing is
that businesses are required to make payment to their respective supplier always on time. All the
process of negotiations should be carried out before development of bill and once the bill has
been generated from supplier's end, companies are required to pay them on time (Broadbridge,
Maxwell and Ogden, 2007). Another principle which can be used to develop long term
relationship is by seeking for more personalized relationship with them. It is required by large
scale retailers to establish not only professional but personal relationship with their suppliers.
This can be done with the help of strategies such as inviting supplier in meetings, encouraging
their view or inviting them to official picnic or parties. On the other side of this, it is also very
beneficial to share some information of company with all suppliers. The information shared can
be related to modifications in existing products or pricing strategy. The rationale behind this is
that by getting such information, supplier can help companies to gain or acquire new customers.
Appropriate examples
In practical world, there are several examples which can be used to understand the
implications of relationship with suppliers. For instance large scale retailers such as Asda work
in partnership with all their suppliers. This has resulted in creating in sense of satisfaction among
suppliers and help both the parties to earn adequate profits. On the other hand, large retailers
such as Tesco is considered as one of the worst companies in terms of dealing with its suppliers.
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At the time of carrying out its operations, the brand has not complied with code of conducts. In
order to improve its financial performance, Tesco has also delayed the process of making
payment to all its supplier (Tesco knowingly delayed payments to suppliers, 2016). This created
dissatisfaction among suppliers and also resulted in declining the financial performance of
Tesco. Another example of implications of supplier relationship is that large retailer such as
Sainsbury are able to earn adequate profits and high market share by working closely and in
partnership will all supplier. This has resulted in providing opportunity to the retailer to offer all
products and services on time and at convenient prices.
Evidence of appropriate theory and practise
According to the key principle of merchandising, the sales of products and services
depends on how well they are being displayed and presented in the store. Furthermore, more
presentable products are able to attract more and more attention of people and results in
increasing sales. One of the major theory which is associated with merchandising and retailing is
of placement by pricing. As per the theory, the chances of seeing and buying of nearby products
increases in situations where customers are being provided with a retail environment which is
based on prices. This can be well understand by example that retail businesses can sale bread at
low prices by placing cakes and pastries near it (Lewis and Arnold, 2012). These products are
considered to be of very high margin and when people buys them, businesses able to recover the
money which they have reduced in bread. Another effective theory of merchandising is of
purchase behaviour in which retail businesses are required to lay more and more emphasis on
purchase behaviour of customers in the market. As per this theory, businesses are required to
become aware of all their potential customers along with the factors which influences them to
buy a particular product or services. It can be stated that in traditional methods of merchandising,
retail companies used to provoke their customers to enter the shop.
On the other hand, modern method of merchandising includes use of internet and social
media with an objective to attract more and more customers. Thus, it can be stated that this
theory of merchandising and retailing focuses on influencing behaviour of people within market.
Other than this, competitors effect theory is another effective theory which is used in context of
merchandising. In the present scenario, businesses in retail industry are putting lots of efforts and
resources in stealing customers of other companies (Fu, Helmers and Zhang, 2012). This theory
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focuses on providing businesses with potential opportunities to counteract their main
competitors. This counteract can be done by using effective tools such as advertisement of retail
products on newspaper, internet and magazines. The output of this is that these tools creates
needs and awareness among customers and other potential people in the market. However, it can
be argued that business compete with each others on the basis of their products, prices and brand
value (Trautrims and et.al., 2009). Therefore, in certain situations it may not be suitable for
companies in retail sector to employ a low price strategy as it will directly affect profit margin in
negative term. As per the competitor effect theory of merchandising, businesses can gain
competitive advantage over other market players by offering customers with enhanced and the
best quality of services.
It can be expressed that there are some merchandising practises for large scale retailers
which needs to be taken care of. One of the major among those is that, companies in the sector
are required to make sure that all need and demand of customers are being satisfied by their
offerings in the best possible manner. Furthermore, carrying out such practise will result in
developing sense of satisfaction among customers and it will also make them more loyal towards
a particular retail brand in market (Barnes and Lea-Greenwood, 2010). Another effective practise
which can be used for carrying out merchandising is by doing appropriate segmentation of entire
market. This means that retail companies are required to become well aware about the fact that
who will be targeted with physical outlet and individuals which will be entertained through
online store. Companies can also carry out effective merchandising with the help of value added
services. This can be used in context of goods or products which are not common. Employees in
retail sector can provide customers with additional services such as communicating or informing
customers about manufacturing process and cultural significance of a particular product. The
result of this is that customers will not only buy products but they will also purchase benefits and
shared values associated with the product.
CONCLUSION
From the above study, it can be concluded that at the time of carrying out activities such
as merchandising there are some principles which businesses are required to considered. Along
with this, it can be also inferred that buyer has started to play very important role in the entire
process of retail and merchandising. In the present scenario, businesses in retail sector are also
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required to develop good relationship with all their suppliers in order to achieve higher growth
rate and profits.
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REFERENCES
Books and journals
Barnes, L. and Lea-Greenwood, G., 2010. Fast fashion in the retail store environment.
International Journal of Retail & Distribution Management. 38(10). pp.760-772.
Bray, J.P. and Harris, C., 2006. The effect of 9-ending prices on retail sales: A quantitative UK
based field study. Journal of Marketing Management. 22(5-6). pp.601-617.
Broadbridge, A.M., Maxwell, G.A. and Ogden, S.M., 2007. 13_2_30: Experiences, perceptions
and expectations of retail employment for Generation Y. Career Development
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Bruce, M. and Daly, L., 2007. Challenges of fashion buying and merchandising. Fashion
Marketing: Contemporary Issues, pp.54-69.
Doyle, S.A., 2012. Merchandising and retail. Festival and Events Management, p.158.
Fernie, J., Sparks, L. and McKinnon, A.C., 2010. Retail logistics in the UK: past, present and
future. International Journal of Retail & Distribution Management. 38(11/12). pp.894-
914.
Fu, X., Helmers, C. and Zhang, J., 2012. The two faces of foreign management capabilities: FDI
and productive efficiency in the UK retail sector. International Business Review. 21(1).
pp.71-88.
Hart, C. and et,al., 2007. Employer perceptions of skills gaps in retail: issues and implications
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pp.271-288.
Hines, T. and Bruce, M., 2007. Fashion marketing. Routledge.
Kent, T., 2007. Creative space: design and the retail environment. International Journal of Retail
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Kumar, M. and Patel, N.R., 2010. Using clustering to improve sales forecasts in retail
merchandising. Annals of Operations Research. 174(1). pp.33-46.
Lewis, S. and Arnold, J., 2012. Organisational career management in the UK retail buying and
merchandising community. International Journal of Retail & Distribution Management.
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Megicks, P., 2007. Levels of strategy and performance in UK small retail businesses.
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Oubiña, J., Rubio, N. and Jesús Yagüe, M., 2006. Relationships of retail brand manufacturers
with retailers. International Review of Retail, Distribution and Consumer Research.
16(02). pp.257-275.
Park, H.H., Jeon, J.O. and Sullivan, P., 2015. How does visual merchandising in fashion retail
stores affect consumers’ brand attitude and purchase intention?. The International
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Pretious, M. and Love, M., 2006. Sourcing ethics and the global market: the case of the UK
retail clothing sector. International Journal of Retail & Distribution Management.
34(12). pp.892-903.
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Trautrims, A. and et.al., 2009. Optimizing on‐shelf availability for customer service and
profit. Journal of Business Logistics. 30(2). pp.231-247.
Varley, R., 2014. Retail product management: buying and merchandising. Routledge.
Wigley, S. and Rachel Chiang, C.L., 2009. Retail internationalisation in practice: per una in the
UK and Taiwan. International Journal of Retail & Distribution Management. 37(3).
pp.250-270.
Online
Tesco knowingly delayed payments to suppliers. 2016. [Online]. Available
thropugh:<http://www.bbc.com/news/business-35408064>. [Accessed on 13th June 2016].
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