Retail Engineering and its Impor

A multichannel retailer can be described as a company that sells directly to the public using more than one distribution channel. Some of the common distribution channels include selling through retail stores, e-commerce, catalog retailing, mobile commerce and the new digital interactive television.

There are several different benefits of Multi-Channel retailing such as customers demand to interact in different ways while each channel offers a unique set of benefit for each customer. For example selling through retail stores offers the benefit of browsing, touching and feeling the products, the personal service and the ease of cash payments. While the e-commerce channel on the other hand offers the convenience, safety, the broad selection, detailed information on the product and personalization. In the process the customers are given the flexibility, enablement and experience. While, the retailers gain Wallet Share through cross channel shopping, and better understanding of customer’s perspective on different channels. This in turn helps Partners and Vendors increase their revenue and profitability through newer channels while making them survive the competitive market.

When a customer uses different aspects of multi-channel retailing to acquire the desired product until they are completely satisfied with the product purchased. A primary example would be when a customer has researched the item online and then purchased it at the store. Or, a customer has purchased the product online and for some reason was dissatisfied and has returned it to the nearest store. In these processes the customer has used more than one medium or channel to complete the transaction of the product and can be described as cross-channel shopping.

Criteria
Annual revenue	$ 378.9 Billion (USD) (2008)	€82.15 billion (Euro) (2007) Approx. $ 120.914 Billion (USD)	$28.8 Billion (USD)
Number of stores	2,447 Wal-Mart Supercenters in U.S, 591 Sam's Clubs in U.S and 2,980 stores in 14 countries outside of the U.S with a total of Approx. 6018 stores worldwide.	1,302 Hypermarkets, 2,919 Supermarkets, 6,252 Discount Stores, 4,813 Convenient Stores with a total of 15,430 stores worldwide.	A total of 293 stores worldwide.
Number of employees	2,100,000 (2008)	461,260 (2004)	120,000 (2008)
Net profit margin	3.4%	3.0%	N/A
Number of countries that the company operates in	16 different countries	18 countries and Asian Countries (Asian countries numbers vary by each quarter).	36 different countries
Formats of retailing	Department Stores, Electronic Retailer.	Department Stores, Convenience Stores..	Department Stores, Warehouse stores, Category Specialists, And Electronic Retailer.

Introduction

In today’s retail industry, Multi-channel retailing is a pre-dominant step to success. With current economic set down and well cautioned and knowledgeable consumers, the retail industry has taken several steps to meet consumer demands, while maintaining net profits. In this paper we will discuss today’s consumer market, from its trends and several steps and strategies implemented by the retailing industry and understand the possible future outcomes. We will also see how Increase in the use of Technology is used to reduce costs and increase in the value of the product being delivered.

Today’s Consumer Market

Nearly 87% of today’s consumers have researched products online before buying at least in the past ninety days of their purchase. (BIGresearch CIA, June 2006.) Most of the products researched include electronics, apparel, appliances, home improvements and medicines according to Dr. Donna M. Romeo, Manager of Customer Trends. To help the consumers’ research, the retailers offer elaborated online information on their website about the products with comparison of prices available by other retailers in the market. To help the consumer decide in favor of the respective retailers to purchase the good, retailers now offer consumer review on each product that has been purchased by other consumers in the past. This strategy helps eliminate the risk of bad decision making by the consumer, while at the same time providing valuable feed back to the retailer.

In addition, to consumers decision making towards a specific retailer. The retailer provides videos and high quality pictures of the goods that are being purchased. This helps the customer get a better look and feel of the product that is being purchased. IKEA, Wal-Mart and Carrefour (Varies by regional websites) have all successfully implemented this and have seen remarkable boost in sales.

Retailing Strategies implemented by Retailers

Several different retailing strategies are implemented to reduce costs for higher profit margin. Primary examples would be the big three supercenter such as Wal-Mart, Carrefour and Target. While several others are following the foot steps such cutting inventory, using just-in-time are just a few. Some of the other strategies implemented include Elimination of cashier,

Large consumer stores have implemented self check-out systems that help speed up small quantity transactions. This helps the retailer save on labor costs. Recurring Seasonal Sales, help the retailers get rid of unwanted inventory while reducing inventory costs. Implementation of RF ID technology helps reduce time lost in communication and helps forecasting consumer demand with accuracy.

While comparing the future store to my selection of three choices Wal-Mart, Carrefour and IKEA and personally having the opportunity to visit them, there have been several similarities and all are headed in the same direction. The main key points that these stores share in common are the everyday Low Prices, Large variety of goods, and the Convenience. Apart from the common positive aspects, the retailers have tried to Create Shoppers Experience in different ways. For example, IKEA offered gift vouchers worth $4,000 in gift certificates to the first person in line at the opening of its new Atlanta store, while at the same time it attracted more than 2,000 IKEA fanatics.

Retailers such as Wal-Mart have being providing back to the community through several means. Recently, the Wal-Mart foundation donated $5.7 Million to support the Green Jobs in the U.S.

Retailers such as Carrefour have taken several steps and initiatives to make a Global Presence. Today, Carrefour in China has projected its sales to grow by almost 25%.

Possible Negative Outcomes

Although the feed backs prove to be beneficial to both end consumer and the retailer. The feedback could be used in mark-up pricing for the same product based on the consumer demand and feedbacks. This could make inexpensive products to mark up their prices and then making them less affordable to a certain population in society.

There is also a high possibility of false feed backs reviewed on web-sites in favor of the product by the retailer just to increase sales. On the other hand, high quality pictures and videos are added to help customer makes their decision. There is also a good possibility that the product shipped when arrived is not as advertised. This leaves customers spending on unwanted goods. Other issues such as early bird discounts during black Fridays, Seasonal Sales and during new store openings have caused several deaths and injuries to both customers and employees.

Pressure from large retailers for cheaper pricing on goods from their vendors; leave them no choice but room for cheaper quality products and at the expense of cheap labor. Other issues such as reduced jobs and decline in small businesses have been on the rise. From my personal point of view, at some point large retailers would eventually lead to uneven distribution of global wealth by becoming the most profitable business of the century.

Retail Mix - Eddie Bauer Vs. Abercrombie &Fitch

Eddie Bauer and Abercrombie &Fitch (A&F) are taken as example for the specialty stores in comparison with Wal-Mart as a discount store under the Clothing and Apparel category. Eddie Bauer is known for selling high quality casual apparel and accessories for modern outdoor lifestyles. They also sell their goods through different distribution channels such as Catalog retailing, and electronic retailing. A&F is again, known for selling high quality apparel and accessories for sporting and excursion goods. Wal-Mart on the other hand offers low price moderate quality goods. Clothing apparel encompass of third-party brands that are manufactured in South America, China, India, Sri-Lanka, Pakistan, Bangladesh and Thailand.
While analyzing the variety of merchandise sold, Eddie Bauer and A&F both commonly sell wide range of apparel ranging from Tees to shoes. Both the retailers stocked their inventory with high assortment in each category. On the other hand, Wal-Mart had a broad variety of goods ranging from clothing to groceries. They also offered low assortment and not providing a large variety in selected categories of clothing as shown in Table 2.1. If clothing is purchased from Wal-Mart, it is quite possible that the person sitting next to you while commuting has the same branded jeans and shirt. A&F and Eddie Bauer both had excellent customer service. Some other service include credit card offers to purchase goods on credit. The prices for goods were comparatively higher at A&F being to most expensive followed by Eddie Bauer and then Wal-Mart with the lowest price. For example, price comparisons for Men’s jeans at the three different stores are listed in Table 2.2.

Table 2.1: Illustrates the Trends between Specialty Stores and a Discounted Store

Table 2.2: Price comparison of Men’s jeans sold at Eddie Bauer, A&F and Wal-Mart

NAICS for different types of retailers

North American Industry Classification System (NAICS) for the three retailers are listed in Table 2.3. The country of origin for the SKU’s varied from store to store. For example, Eddie Bauer had their jeans made in the Dominican Republic, while A&F had their jeans manufactured in countries such as Columbia, Peru and even Mexico. While, Wal-Mart has Wrangler Jeans on shelves and are believed to be manufactured in the U.S. and occasionally, find some stocks to be manufactured in Mexico.

Table 2.3: Illustrating the NAICS coding scheme between different types retailers

Layout Strategies implemented

3. Eddie Bauer and A&F have implemented the Free- Form (Boutique) Layout with fixtures and aisles arranged asymmetrically while trying to induce a relaxing ambient atmosphere with music genre based on the clothe trend to motivate shoppers psychologically by elevating their mood through music. For example, A&F had urban, retro music which is common amongst the younger generation population. This strategy provides assurance to the buyers that they have come to the right place to purchase their clothing, as the music matches their taste, so must the clothes. However, on the other end Wal-Mart had no ambient atmosphere, but rather florescent lighting with no music, but managed to attract customers by their merchandise price tags. The “Everyday Low Prices” strategy assures customers that the purchases being made are of great value. While Wal-Mart makes the most efficient use of space, by using a combination of Race Track and Grid Store Layout in the groceries section. Abercrombie and Eddie Bauer accounts for most inefficient usage of space as shown in Figure 3.1 below.
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Citations:

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