Retail Trends & Strategies


  • Better market positioning: This involves more careful identification of market segments and providing service superior to that of competition.
  • Market intensification: This involves clustering more stores in the same metropolitan area and contiguous markets.
  • Secondary markets: Expansion will be increasingly focused on secondary markets  of under 100,000 population because there may be less competition from larger retailers, and costs, such as wages, may be lower.
  • Differences in store size: Retailers will have a more flexible portfolio of different sized stores depending on the size of the community and existing retail competition. More use of second-hand space will occur because this can result in savings of 30 percent or more in rent.
  • Productivity increases: The application of central checkout, self-selection, and low gross margins to areas of trade where these techniques have not been used before will occur. Look now at toy supermarkets, home-decorating centers, and self-service shoe stores.
  • Fewer product options: Product lines will increasingly be consolidated, and new product development will be cut back.
  • Service growth: Services retailing will continue to grow as a percentage of total retail sales. Services already represent about 50 percent of the gross national product.
  • More mergers: Increasingly, smaller and weaker firms will be absorbed as more retail outlets struggle to survive.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

TV Advertising


Television can only be effective if you see it enough. And enough is a lot. Enough is expensive. How much is enough? Many experts say you can measure how much enough is by understanding rating points. A GRP, or Gross Rating Point, is calculated on the basis of one percent of the TV sets in the TV marketing area. If one million TV sets are in the area, one rating point equal 10,000 sets. The cost of TV advertising is determined by the size of each GRP in the marketing area, and advertisers pay for a given number of GRPs when the buy advertising time. The experts advise that you should not consider TV advertising unless you can afford to pay for 150 GRP per month. Those can come in the form of 75 GRP per week every other week, or 50 GRPs for three weeks out of four, or even 150 GRPs for one week per month. How much a single rating point costs in your area depends upon the size of area, the competitive situation, and the time of year.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Significance of Productivity


The significance of productivity in increasing national welfare is universally recognized. There is no human activity that does not benefit from improved productivity. This is important because more of the increase in gross national income, or GNP, is produced by improving the effectiveness and quality of manpower than by using additional labor and capital. National income, or GNP, grows faster than the input factors when productivity is improved.

Productivity improvement, therefore, results in direct increases in the standard of living under conditions of distribution of productivity gains according to contribution. It would be wrong to state that productivity is the only important worldwide source of real economic growth, social progress and improved standard of living.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Want Satisfaction and Levels of Living


The level of want satisfaction achieved in a given economic society is hard to measure. Ordinarily it is expressed in terms of per capita income—sometimes gross and sometimes net, depending on the availability of data. There may be a great dispersion around the average; and the average income figure may be misleading.  Nevertheless, per capita income appears to be one of the best measures available of the performance of an economy.

Sometimes people judge the performance of an economy on the basis of whether per capita incomes are at a satisfactory level. The implication is that if the level is below satisfactory, something ought to be done about it—that everyone is entitled to a satisfactory level of living. Judgments of these kinds are not very valuable from the point of view of economic analysis.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Direct Response


You should, if at all possible, engage in direct marketing. The value to you is enormous. You get to pinpoint your prospects with amazing accuracy. You can be selective in regard to age, race, sex, occupation, buying habits, money spent on past direct mail purchases, education, special interests, family composition, religion, marital status, and geographic location. The list should naturally start with your own customers. From there you can expand it to include people who have recently moved into your area, and people who have recently been married or divorced, or become parents. You can eliminate people who have moved away.

You might engage in a simple direct mailing of postcards to customers, informing them of a sale you will have the next week. They will very much appreciate the early notification and will show their gratitude by purchasing from you. You might also engage a full scale direct mailing, consisting of an outer envelop, a direct mail letter, a brochure, an order form, a postpaid return envelop, and even more.

Whatever you do, the process begins when you decide exactly what it is you wish to offer. How will you structure that offer? Then you must select your mailing list. If you haven’t got the names already, you can purchase them from a list broker. Be sure, you buy a clean, fresh list. You must be certain that you know all  the costs involved: postage printing, writing the mailing, artwork, paper, personalization (individualizing each letter by name and address, and repeat mailing costs. Your gross sales, minus these costs and your production, handling, and shipping costs, will contribute your profits. Be sure you make financial projections and know your break-even point.

In the old days, a direct mail campaign meant a letter. Today it means a letter, two, three or five follow-up letters, perhaps a follow-up phone call or two, and finally, one more direct mail letter. Many entrepreneurs engage in weekly or monthly direct mailings.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Accounting Information


Accurate cost data are required for the successful implementation of the integrated physical distribution management concept using total cost analysis, for the management and control of physical distribution operations, and to aid in setting selling prices and in justifying price differentials.

As the cost of physical distribution increases, the need for accurate accounting for the costs becomes increasingly critical. Since the physical distribution function is relatively more energy intensive and labor intensive than other areas of the firm, its ratio of costs to total company costs has been steadily increasing. Efficient and effective distribution policies cannot be determined until the costs related to separate functional areas and their interaction are made available to distribution decision makers.

The quality of the accounting data will influence management’s ability to exploit new markets, take advantage of innovative transportation systems, make changes in packaging, choose between common carriers and private trucking, increase deliveries or increase inventories, and determine to what extent the order-processing system should be automated.

The accounting system must be capable of providing information to answer the following questions:

a)        What are the impacts of physical distribution costs on contribution by product, by territory, by customer, and by salesperson?

b)        What are the costs associated with providing additional levels of customer service? What trade-offs are necessary and what are the incremental benefits or losses?

c)        What is the optimal amount of inventory? How sensitive is the inventory level to changes in warehousing patterns or to changes in customer service levels? How much does it cost to hold inventory?

d)        What mix of transportation modes and carriers should be used?

e)        How many field warehouses should be used and where should they be located?

f)          How many production set-ups are required? Which plants will be used to produce each product?

g)        To what extent should the order-processing system be automated?

To answer these and other questions requires knowledge of the costs and revenues that will change if the physical distribution system changes. That is, determination of a product’s contribution should be based on how corporate revenues, expenses, and hence profitability would change if the product line were dropped. Any costs or revenues that are unaffected by the decision are irrelevant to the problem. For example, a relevant cost woul be public warehouse handling charges associated with a product’s sales; a non-relevant cost would be the overhead costs associated with the firm’s private trucking fleet.

Implementation of this approach to deceision making is severely hampered by the lack of availability of the right accounting data or the inability to use the data when they are available. The best and most sophisticated models are only as good as the accounting input, and a number of recent studies attest to the gross inadequacies of distribution cost data.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Price-earnings Ratio


Price-earnings ratios are published daily in newspapers for stock market-listed companies, along with the gross dividend yield, dividend cover and other information about the shares of each company. The method of calculation is what the name suggests:

Price-earnings ratio = stockmarket share price divided byEarnings per share

The stockmarket share price used is the one published in the financial newspapers at the close of business in the stock exchange for the previous evening.

As a generalization, when the price earnings ratio of a company is higher than the average for other companies in the same business sector, the stockmarket expects the company to achieve higher than average earnings per share in the foreseeable future to justify the above-average valuation of the shares.

In certain circumstances, the explanation may be quite different. For example, a takeover bid for the company may be widely expected, and the share price has already increased significantly in anticipation of the price to be offered by the bidder.

It must never be forgotten than the analysis of share prices, and especially the prediction of future changes, cannot be done simply by calculating the various ratios. If this was possible, making a fortune on the stockmarket would be easy. In practice, even the most experienced investment-fund managers would make costly errors of judgment from time to time.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight