Dynamic Global Retailing Management [1 ed.] 9789350439999, 9788184885002

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Dynatnic Global

RETAIL'I NG MANAGEMENT PROF. M.N . RUDRABASAVARAJ Chairman & Chief Executive Officer, MNR Associates. Singapore, Indonesia & India. President & Executive Director, MNRAssociates, Pvt. Ltd., Singapore. Professor & Director of Management, International Institute of Productivity Science & Management, Bangalore, India. Formerly Professor of Management, Valkunth Mehta National Institute of Co-operative Management. Pune. Professor & Head of Department of Management, PSG College of Technology, Colmbatore. Visiting Professor of Human Resources Management, Jamnalal Bajaj Institute of Management Studies, Mumbal.

( Fi'rst Edition: 2010 )

~ GJiimalaya GJlublishingGHouse MUMBAI , NEW DELHI , NAGPUR ', BENGALURU , HYDERASAO , CHENNAI , PUNE , LUCKNOW' AHMEDABAD' ERNAKULAM , BHUBANESWAR , INDORE

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ISBN : First Edition

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2010

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DEDICATED TO I All My Retail Clients in India, Indonesia, Singapore, Japan, USA and Many Others!

"This page is Intentionally Left Blank"

OM SAHANAVAVTU SAHANAV BUNAITU SAHAVEEYAM KARVAVAHAI TEJASVINA VADEETHAMASTU MAVIDVISHAVAHAI OM SHANTI SHANTI SHANTIHI

Let us all come together Let us all eat together Let us all exercise our intellectual thoughts Keeping away all our differences OM peace, peace peace I

I

"This page is Intentionally Left Blank"

PREFACE Objective Dynamic Global Retailing Management. because, first of all, we are dealing with everchanging customers and their lifestyles, needs and desires; secondly, the market forces, both national and global, that are swiftly volatile and highly fluid; thirdly, global competition, that is forcing retailers to be as their toes and to be more proactive than reactive and to be more dynamic than static. That is why we call the book "Dynamic Global Retailing Management" and to be successful in Retailing Management. The retailers has address the dynamic and global forces in the marketplace. This pioneering book on retailing management prepares men and women for the exciting, challenging and rewarding career of managing in retailing industry - a sunrise industry in India in the New Millennium. The book is primarily based on the author's consulting experiences, experiments and global research in retailing management. The author has assisted and advised some ofleading retailing business groups to grow from a local group with $100 million turnover to national and multinational Department Stores and Supermarkets with a billion dollar turnover over a period of two decades in various countries like Singapore, Indonesia, Japan, USA, Thailand, Malaysia, South Mrica, Hong Kong, India, etc. Through our research, travels, consulting and, education and training and development in more than 100 countries around the world, we have learnt from leading retail stores, management and Asian and World Retail Conferences, Seminars and Workshops, some challenging concepts and ideas in the theory and practice of retailing management, which we shall study with the readers, students and managers in India and the world. In addition to the discussions of retailing industry in India, major attention is given to provide international perspectives through the discussion of various areas of retailing managers of the leading organisations in the world, not only in retailing groups but also in other leading global organisations. The major purpose of the pioneering work is to make readers and retail managers more productive, professional and effective as a person and retail managers by acquiring an international perspective and applying the philosophy, principles, concepts and the theories in their work the pursuit of excellence in retailing management.

Who will Benefit from this Book? All persons who work in retail organisations will benefit from learning about contemporary retailing management. They include students in colleges and universities, all staff

working in retailing organisations, aspiring retailing managers and entrepreneurs who want to improve their skills, knowledge and attitudes and finally become more excellent, effective and efficient managers and entrepreneurs. This book will be an eye-opener for even traditional and main provision store owners as well as directors, chairmen, managers in modern retailing organisations like supermarkets, department stores, hypermarkets, specialy stores, super stores, etc. The book will be particularly helpful to students and others, who want to embark on their own entrepreneurial career in retailing business. To break into retail is quite easy and anybody can start retail store but to grow into a prosperous and profitable and from a small provisional store into a state and national and international operation, you need professional management and this book will make an excellent guidepost and shows you the methodology, skills, techniques, in short, the art and science of retailing management.

How this Book is Organised? In 16 valuable chapters, the book is created to a discussion of all vital areas and functions of retail management with a global perspective, challenging issues of retailing industry, strengths and weaknesses of retailing, line and staff functions of retailing management and live cases of how top retailers manage various aspects and functions of retailing.

Case Studies The high point of this book is the presentation of three global retail organisations: (1) WAL-MART, (2) Sears & Roebuck and (3) Marks & Spencers and how they manage their large organisations provide excellent lessons in retailing management for our nascent contemporary retailing groups in India and elsewhere.

Chapters We shall discuss the theory and practice of retailing management in sixteen chapters spread over 281 pages, tables and graphics. The first four chapters deal with an overview of retail industry, and its vital role in the economy, retail management theory and proactive management philosophy of retail and other leading organisations in the world and customer is king, attracting and retaining customers through excellent service and guaranteeing satisfaction. The next eight chapters present the various line and the fortune of retaining future in India and the world. The first chapter deals with an overview of retailing industry in India and the world. It discusses the vital role of retailing as a socio-economic system and its vital contribution to GNP, economic development, generation of employment opportunities in the economy. It deals with the various formats of retailing, traditional and' modern and the distribution channels as well as

the definition of retailing and various types of retailing. The chapter gives you a picture ofthe traditional mom-and-pop store and the contemporary department stores and supermarkets in India and their strengths and weaknesses. The second chapter highlights the metamorphosis from a small store to the largest superstore like WAL-MART and the magic of professional management with examples drawn from Indonesia, Singapore, India, Japan and USA, covering the history and development of organisations and organisational structures of modern retailing stores as well as General Motors and Ford, Matsushita. The third chapter discusses the retailing management philosophy and vision and mission of organisations like Sears & Roebuck, Hero, Supermarkets as well as the famous organisations like GM and Ford in America & Matsushita, providing lessons in the evolution of appropriate philosophies, vision and mission for our organisations. The fourth chapter deals with the most important aspect of retailing- the customer, who is the King in retail and how to attract various types of customers, identifying their needs and satisfying their customer first philosophy followed by Matsushita and WAL-MART has helped these organisations to scale great heights in businesses, like No.1 on the Global Fortune 500. The next two chapters - 5th and 6 th - deal with merchandising management and operations management - the line functions of retail management. Merchandising is the heart of retailing and how to ... the whole world to source merchandise, merchandise presentation, visual merchandising, bring costs down without compromising the quality, price labelling and listening and following the customer to identify what he wants, when, where and at what price are all great concerns of buyers. The operations deal with sales operations in the retail store and we provide a sales operation manual as a guide and also dealing with opening and closing ceremony of stores. The million dollar trick in sales is "to give the lady what she wants." The next six chapters discuss the staff advisory and service functional areas of management, marketing management, human resources management, finance management, security management, warehousing and inventory maI?-agement and information systems management, which help the operations of buying and selling in a retail operation.

Case Studies and Learning The most significant part of the book from a learning point of view is the case history of three of the largest organisations of the world - (1) WAL-MART, No. 1, in 2008 Global

Fortune 500; (2) Sears & Roebuck, which is to be No. 1 for more than 30 years in retailing, until displaced by WAL-MART; (3) MARKS & Spencers, No.1 in UK, all known for their sound professional management. The 13th , 14th and 15th chapters deal with WAL-MART, Sears & Roebuck and Marks & Spencers respectively. The keen student of retailing will have some most valuable lessons to take home to his organisation to emulate ~nd succeed. The 16th and last chapter deals with retailing future in India and the world and that future is very bright, if the retailers manage and expand their empires by simple challenge of "giving the customer what he wants" and learning to be professional, productive and proactive in managing and satisfying the customer, market and economy in India and the world.

Life-long Learning This book is only the beginning of the learning process, though it is quite comprehensive. We would recommend the learning philosophy of Mr. Samuel Walton who never stopped learning from every new store, every new format of retailing even from competitors, would travel by bus, train and later fly his air plane to visit new stores not only in America, but also Japan, Korea, UK, Europe and all over the world to learn what new ideas, formats, concepts are being created and how he could learn a small idea to implement in his store. He would bring to everyone, including his own "associates" and dare to experiment regardless of success or failure. His was a life of learning and experiments and eventually succeeding in a manner unheard of in the history of business. We would invite our readers not only to read and learn but also experiment and share their rich knowledge, experiments and experiences so that we enrich the world of retailing and management.

Acknowledgements The author is grateful to his clients, many great retail~rs - small and large, in India and the world, researchers, innumerable colleagues, who presented their valuable ideas, research and experiences in their papers in numerous international and world forums and the many . great entrepreneurs and professional managers, who have enriched the world of retailing and management, whose contributions are gratefully acknowledged here. I am particularly grateful to my publishers, Himalaya Publishing House under the leadership of Mr. Pandeyji, who passed away recently and who was a great friend, for doing such a wonderful job of publishing all my works for the past three decades and wish Anuj, Neeraj, K. N. Pandey great luck in the future. Lastly, I am most thankful to my wife, Hamsamani, who had to do so much work to bring this one and many others to light.

Bangalore & Singapore December 15, 2008

Prof. M. N. Rudrabasavaraj

CONTENTS

1-25

CHAPI'ER1

RETAILING INDUSTRY

CHAPI'ER2

RETAILING MANAGEMENT: THEORY AND PRACTICE

26-55

CHAPI'ER3

RETAILING MANAGEMENT PHILOSOPHY

56-67

CHAPI'ER4

CUSTOMER IS THE KING: CUSTOMER FIRST POLICY

68-77

CHAPI'ER5

RETAIL MERCHANDISING MANAGEMENT

78-91

CHAPI'ER6

RETAILING OPERATIONS MANAGEMENT

92-107

CHAPI'ER7

RETAIL MARETING MANAGEMENT

108-123

CHAPI'ER8

RETAIL HUMAN RESOURCES MANAGEMENT

124-149

CHAPI'ER9

RETAIL FINANCE MANAGEMENT

150-160

CHAPI'ER10

RETAIL SECURITY MANAGEMENT

161-178

CHAPI'ER11

RETAIL WAREHOlJ '::~~ C f .ND INVENTORY MANAGEMENT

179-187

CHAPI'ER12

RETAIL INFORMATION MANAGEMENT

188-200

CHAPI'ER13

CASE STUDIES-WAL-MART

201-207

CHAPI'ER14

MARKS & SPENCERS

208-216

CHAPI'ER15

SEARS ROEBUCK STORY

217 - 227

CHAPI'ER16

RETAILING FUTURE IN INDIA AND THE WORLD

228-233

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CHAPTER!

RETAILING INDUSTRY ROLE OF RETAILING Retailing is a socio-economic system, which brings people together, to exchange goods and services for a small consideration; which matches the needs of the people, the ultimate consumers, with those of manufacturers and agriculturists, which not only satisfies the essential daily necessities of life but also promotes new lifestyles, thus peace, happiness and prosperity in the community.

A Socio-Economic System Retailing plays a vital role in the economy as the final part of the marketing process, in which the various functions of the seller, usually a store or service establishment and the buyer, an individual consumer, are primarily oriented to accomplishing the exchange of economic goods and services for the purposes of personal, family or household use. Retailing is the process of selling goods and services in small quantities to the ultimate consumer and it occupies a pivotal role in bringing manufactured goods and services and produce of agriculture to the ultimate consumer, who is prepared to provide a small profit to the merchant for his service. For every dollar/rupee the consumer pays for his goods, about one-third represents the operating expenses and profit of the retailing operations. Retailing is a part oflong distribution system in an economy.

Distribution Channels We shall see the role of retailing in three patterns of distribution of particular commodities Most products go through a long and complex sequence of events and owners to reach the consumer and the retailer plays a variety of roles in that process. In one case, the retailer may playa pretty passive role in the distribution of the product - by receiving a finished, manufactured product, storing and displaying it and then selling it to the consumer, who comes to buy that product. In other case, the retailer may assume a more aggressive role in creating a market for the product and promoting and selling the product. Some major retailers like Sears Rockbuck or Marks & Spencer playa major role in the production of the product as their own house brands. A good distribution system promotes the development of the economy by accelerating the pace of exchange of goods and services and by satisfying the needs of the people, witness many of the developing economies with their lack of a good distribution and retailing system affecting their industrial and economic development.

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