Tag: University of Mumbai BMS Notes

The word logistics is derived from the french word “loger” which means “to quarter and supply troops”. When large number of troops and their equipment move, meticulous planning is required to move volumes of goods and ammunition in that direction. From a marketing point of view, customers are satisfied when they get right product at the right place, at the right time and in the right quantity. Retail logistics system ensures smooth flow of goods to customers through efficient movement of logistics.

Meaning of retail logistics

‘Retail logistics’ is the organist process of managing the flow of merchandise from the source of supply to the customer.

Large retailers deal in a wide variety of products. This has created a need for a systematic planning of movement of numerous goods until they are delivered to the customer. Retail logistics ensures that everything is in place to offer better delivery and service at lower prices by way of efficient logistics and added value.

Functions of retail logistics system

1. The increased product variety in stores has forced the retailer to follow an effective logistics system. It takes care of the

• Flow of merchandise from the producer or intermediary to the warehouse,
• Arrangement of transport to the retail units till the merchandise is sold and delivered to the customers.

2. The system satisfies the customer by taking the right product to the right customer, at the right place and at the right time. This requires a planned approach right from the starting point till the point of delivery.
3. Profitability of the present and future are maximized by the logistics system by means of fulfillment of orders in a cost effective way.
4. It ensures the availability of infrastructure such as warehousing, transport, inventory and administration. The inter relationship that exists between these elements are effectively coordinated.
5. Retail logistics system strives to add value for the customer. For this purpose, the cost elements in the supply chain are brought under the direct control of the retailer. Depending on sales volume, retailers create central or regional distribution centres. They decide on major investment in property, plant and equipment with associated overheads.
6. The functions incorporated in the retail logistics are summarized.

• The physical movement of goods
• The holding of the goods in stock holding points
• The holding of goods in quantities required to meet demand from the consumers
• The management and administration of the process in modern complex distribution system.

The Future of Retail Logistics

Retailers are facing a new reality where delivery logistics once a stable part of retail business can now be the difference between success and failure. Much of the disruption in logistics can be attributed to the ‘Amazon effect’ of consumers being able to select the products they want, at competitive prices, and receive them promptly to their doorstep, office, a nearby locker or even the trunk of their car.

The network required to support this level of service requires breadth, scale and velocity. With consumer demand for same-day or next-day delivery becoming the norm, retailers must now work out how they can optimize costs in order to better serve customers. 

Digital commerce is now a vital part of all retailers’ businesses, and speed is critical to their success. Walmart last year announced that it would soon begin offering free same-day shipping in New York and its surrounding areas. Other big box retailers are likely to have the infrastructure necessary to support increasing consumer shipping demands in urban areas, but they must find a way to balance the costs of doing so to succeed in the long run.

Larger retailers typically have two to three regional distribution centers (DCs) in locations chosen to optimize delivery times and costs, and can access nearly 80 percent of the United States in two days. However, many struggle with inventory and labor management. Increasing customer demand highlights the need for more nodes and sophisticated distribution networks.

Logistics companies are reshaping their core businesses to meet the industry’s needs. As major logistics companies invest in growing the breadth and depth of their networks, final mile delivery efficiency plagues their abilities to scale efficiently. This is essentially the last section of the delivery chain from where goods leave the warehouse, to where they arrive at a customer’s doorstep.

As logistics providers seek to increase efficiency and reduce costs, they will implement more strategic operations. For instance, goods will be delivered in a batched manner, once per day, rather than in separate deliveries; items will be delivered in reusable, sustainable containers; and products in some urban areas may even be delivered by automated robots.

Market forces are also creating opportunities for third-party logistics providers (3PLs), who are well positioned to support these emerging fulfillment capabilities. 3PLs can support multiple purchasing channels with multi-node networks and urban hubs; provide ‘final mile’ order delivery alternatives; and can support made-to-order and specialty packaging. They can also support AI, automation and analytics.

As retailers look to the future of fulfillment, there are three potential scenarios we expect to see evolve over the next few years:

1. Free two-day standard shipping

Free two-day shipping will become the norm nationwide. Amazon Prime has already set the standard for free two-day shipping now retailers are fighting to achieve the same offering. They will ideally need two to three regional DCs in strategic locations around populated regions. Optimal locations are driven by service-level window rather than proximity to inbound freight locations.

2. Next-day shipping standardization

Consumers will begin to expect next-day shipping in many urban areas, with two-day shipping in all other areas. Next-day shipping will be available in all key markets and digital commerce sales will increase as a percent of total retail sales. Retailers will require a more robust fulfillment network with more localized distribution centers. Optimal DC locations are close to urban areas where retailers will be able to fulfill both retail stores and online orders.

3. Next-day-plus shipping standardization

Next-day-plus shipping will become the standard for most of the U.S., with same-day shipping available in most major metropolitan areas. For some key verticals, such as grocery and B2B home improvement, standard same-day shipping in large metropolitan areas may soon become a reality, with next-day shipping for the majority of the United States outside of major metropolitan areas. This type of wide-reaching network will require large-scale infrastructure investment from retailers, limiting the feasibility of this network for many.

A bright future for retail

The future of retail logistics is dynamic, fast, and integrated across channels and platforms. Both retailers and logistics companies will succeed in the new retail logistics marketplace by enhancing customer experience and increasing speed of delivery. To do so, they must lead with novel approaches to cost optimization and renewed investment in new services to deliver value for customers. This new mindset, called zero-based supply chain (ZBSC), drives profitability by emphasizing the future over the past, and will help retailers capture supply chain value in the rapidly changing world around them, and their customers.

Corporate Replenishment policies are guidelines and strategies implemented by organizations to manage the replenishment of inventory efficiently. These policies aim to strike a balance between maintaining optimal stock levels, reducing carrying costs, and meeting customer demand. While specific policies may vary based on the industry, business model, and product characteristics, there are common principles and considerations that organizations incorporate into their corporate replenishment strategies.

Corporate replenishment policies play a vital role in optimizing inventory management, ensuring product availability, and controlling costs. These policies provide a framework for organizations to navigate the complexities of supply chain management, build efficient relationships with suppliers, and enhance overall operational effectiveness. By aligning replenishment policies with organizational goals and industry best practices, businesses can achieve a balance between meeting customer demand and maintaining a cost-effective and sustainable supply chain.

Formalized logistics policies permit the head office of a retail organization to be responsive to operational needs. Companies have invested an enormous amount of fixed capital on warehousing, vehicles and other equipment. Apart from fixed assets, the current assets in the form of inventory, accounts receivable and cash also form a substantial part of investment.

Thus, corporate replenishment has become an integral part of the corporate strategy. It is instrumental to the achievement of financial and strategic objectives.

Components

1. Reorder Point:

Organizations set a reorder point for each product, which represents the inventory level at which a new order should be placed. The reorder point is typically determined by considering factors such as lead time, demand variability, and desired service levels.

2. Safety Stock:

Safety stock is a buffer of inventory held to protect against uncertainties such as unexpected demand spikes or supply chain disruptions. Corporate replenishment policies define how safety stock levels are calculated and maintained.

3. Lead Time Management:

Considering the time it takes for suppliers to deliver orders, organizations establish lead time targets. Policies may include measures to reduce lead times, such as optimizing supplier relationships or using expedited shipping options.

4. Order Quantity (EOQ):

The Economic Order Quantity (EOQ) is the optimal order quantity that minimizes total inventory costs. Corporate replenishment policies may specify the calculation and application of EOQ to determine the most cost-effective order quantities.

5. ABC Analysis:

Organizations often categorize products into groups based on their importance or value. The ABC analysis classifies items as A (high-value, low-quantity), B (medium-value, medium-quantity), and C (low-value, high-quantity). Replenishment policies may then be tailored to the specific needs of each category.

6. Supplier Collaboration:

Collaborative relationships with suppliers are crucial for effective replenishment. Policies may include guidelines on communication, performance monitoring, and joint efforts to reduce lead times and improve order accuracy.

7. Dynamic Replenishment Strategies:

Some organizations adopt dynamic replenishment strategies, adjusting reorder points and order quantities based on real-time demand fluctuations, promotions, or seasonal variations.

8. Technology Integration:

Replenishment policies often involve the use of advanced technologies, such as inventory management systems, demand forecasting tools, and automated order generation systems. Integration with Enterprise Resource Planning (ERP) systems may also be part of the strategy.

9. Cross-Functional Collaboration:

Collaboration between different departments, including sales, marketing, and logistics, is essential for effective replenishment. Policies may encourage cross-functional teams to share information and align strategies.

10. Continuous Improvement:

Replenishment policies should include mechanisms for continuous improvement. Regular reviews, performance evaluations, and adjustments based on lessons learned contribute to an adaptive and responsive replenishment strategy.

11. Sustainability Considerations:

Some organizations incorporate sustainability into their replenishment policies, considering environmentally friendly practices, such as optimizing transportation routes, reducing packaging waste, and sourcing from eco-friendly suppliers.

12. Compliance and Governance:

Policies may include guidelines to ensure compliance with regulatory requirements and governance standards. This includes adherence to industry regulations, ethical sourcing practices, and responsible inventory management.

13. Demand Forecasting:

Accurate demand forecasting is a key element of replenishment policies. Policies may define the methodologies used for forecasting and the frequency of updates.

14. Financial Considerations:

Replenishment policies should align with financial goals, considering budget constraints, cost control measures, and overall financial performance.

15. Risk Management:

Policies may include strategies for mitigating risks related to supply chain disruptions, geopolitical factors, and other external variables that can impact replenishment processes.

Corporate replenishment policy is broader in its application. It is based on the organization’s replenishment ethos related to a systems approach.

Advantages of Corporate replenishment to customers

1. Goods are available at the point of sales where and when the customer needs them.
2. An item advertised in the media is certainly available in stock as stock is assured through the system. This adds to customer goodwill.
3. The economies of scale and inventory savings available to retailers are passed on to the customer. The retailer is able to forecast bulk buying requirements more accurately. Hence, the retailer is able to obtain greater discounts from suppliers. A part of the savings can be passed on to customers.

Advantages of Corporate replenishment to store management

1. With well designed corporate replenishment, the management is relieved from the botheration of stock checking and ordering. Use of automatic stock replenishment has completely freed the store management from stock ordering worries.
2. Store management has more time to manage resources and implement company policies. Computerized goods receipt system has saved the time spent on inventory management.
3. With the use of automated systems, managers will not worry about stock position. But they should ensure that stock counting is accurately recorded. Stock outs occur for reasons such as unpredictable shifts in demand, product unavailability, poor data capture control, loss of information, computer failure etc. In these situations, managers should communicate major stock outs immediately to the head office.

The automatic stock replenishment system merely removes the task of physically ordering stock. It does not relieve the manager from the responsibility to ensure maximum customer satisfaction through product availability.

Advantages of Corporate replenishment to Company

1. The company benefits from maximizing service and minimizing costs. Inventory replenishment is managed to keep the amount of stock to an acceptable level, it avoids dead stock in which capital is locked up unnecessarily.
2. Minimum stock holding prevents capital from being locked up. Capital may be employed for the expansion and development of the business.
3. Due to effective control over stock holding, floor space required for warehousing is reduced. This enables the store manager to divert floor space for selling activities. In a self service environment, products are displayed by making effective use of floor space.
4. Stock will be allocated and received into stores to coincide with advertising and other sales promotional activities. If advertising products are not available in stores, it is a major fault on the part of the retailer.

Advantages of Corporate replenishment to suppliers

1. It is easier for a supplier to cope with one order for all stores of a chain than order for each store independently.
2. The supplier can affect delivery of goods in the most economical way.
3. Using traditional forms of ordering is both time consuming and inaccurate. Processing orders for central distribution warehousing is quite easy for the supplier.
4. Only expert buyers place orders on behalf of store management. From the supplier’s point of view, it is preferable to deal with buyers who have expertise in the field of buying.

Promotion is a type of communication between the buyer and the seller. The seller tries to persuade the buyer to purchase their goods or services through promotions. It helps in making the people aware of a product, service or a company. It also helps to improve the public image of a company. This method of marketing may also create interest in the minds of buyers and can also generate loyal customers.

It is one of the basic elements of the market mix, which includes the four P’s: price, product, promotion, and place. It is also one of the elements in the promotional mix or promotional mix or promotional plan. These are personal selling, advertising, sales promotion, direct marketing publicity and may also include event marketing, exhibitions, and trade shows.

Types of Promotion

1. Advertising

Advertising means to advertise a product, service or a company with the help of television, radio or social media. It helps in spreading awareness about the company, product or service. Advertising is communicated through various mass media, including traditional media such as newspapers, magazines, television, radio, outdoor advertising or direct mail; and new media such as search results, blogs, social media, websites or text messages.

2. Direct Marketing

Direct marketing is a form of advertising where organizations communicate directly to customers through a variety of media including cell phone text messaging, email, websites, online adverts, database marketing, fliers, catalog distribution, promotional letters and targeted television, newspaper and magazine advertisements as well as outdoor advertising. Among practitioners, it is also known as a direct response.

3. Sales Promotion

Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability.

4. Personal Selling

The sale of a product depends on the selling of a product. Personal Selling is a method where companies send their agents to the consumer to sell the products personally. Here, the feedback is immediate and they also build a trust with the customer which is very important.

5. Public Relation

Public relation or PR is the practice of managing the spread of information between an individual or an organization (such as a business, government agency, or a nonprofit organization) and the public. A successful PR campaign can be really beneficial to the brand of the organization.

Promotions: Setting your objectives

New and growing businesses are, in marketing terms, growth brands. Promotion acts as an investment activity for future growth and profits.

Any promotional activity will pivot around trial, although it is important to remember that trial is only temporary and repurchase, or loyalty, will depend on how the consumer perceives the product.

Repurchase levels and the consequent success of the product or service will depend on how effectively the trial is carried out as well as the customer’s perception, through trial, of the product.

If your business is an entirely new or re-launched product, it is important to manage your expectations before committing enormous budgets to promotional activity.

For example, however innovative your product is, the first into the market tends to get the biggest market share. Do not expect too much, particularly in the short-term.

Another fundamental factor is the environment in which you wish to promote. When putting together a promotional strategy, objectives can only be established in the context of the market. Foremost here are customer dynamics.

• Who do you want to promote to?
• What do they want?
• Why do they buy competitors’ products or services?
• Similarly, where do you want to pitch your product or service?
• What about your competitors?

Other considerations may include any supply limitations, distribution issues, and the possibility of micro marketing: perhaps it is worth testing the activity on a regional basis.

Matching Techniques to objectives

Broadly speaking there are four promotional techniques that attract target customers to participate:

• Price
• Free Gifts
• Prizes
• Emotional Benefits

Each of these devices acts to entice the consumer in a slightly different manner and can be implemented in a number of ways.

Price Promotions

Price promotions are an excellent means of generating trial and loyalty as well as increasing volume of purchase and getting consumers of competitor brands to change to yours brand switch.

A word of warning prize promotions are legally complex and you should always seek professional advice. The main difference between competitions and free prize draws is that competitions may request a proof of purchase and free prize draws have to be no purchase necessary.

By definition, a competition has to incorporate an element of skill such as questions and a tiebreaker to complete. Instant win promotions are technically free prize draws, which is why the small print will always offer customers the chance to participate without purchasing the product in question.

Despite these complexities, instant win promotions are an excellent call to action and proven drivers of trial, brand switch and often, awareness. Equally competitions and free prize draws are tried and tested ways of encouraging customers to pick you product.

Emotional benefits

Promotions using emotional benefits or image are harder to define. Key emotional techniques include sponsoring an event such as the Olympics, linking up with a charity and character licensing activity.

The promoter will benefit from the transfer of the qualities associated with the chosen partner and may well gain additional media coverage.

This sort of activity is best suited to image building and brand awareness, which is why it will often run alongside another of the techniques described above such as including a competition prize linked with the promotional partner.

Recruitment takes place from the point when a business decides that it needs to employ somebody up to the point where a pile of completed application forms has arrived in the post. Selection then involves choosing an appropriate candidate through a range of ways of sorting out suitable candidates leading to interviews and other tests. Training involves providing a range of planned activities that enable an employee to develop the skills, attitudes and knowledge required by the organization and the work required.

Recruitment

Attracting the right candidates to apply for a job can be an expensive process. It is even more expensive when done badly because when unsuitable candidates apply for a job, then the post may need to be re-advertised so it is best to get it right first time.

The starting point is to carry out job analysis to identify the sorts of skills, knowledge and essential requirements that someone needs to have to carry out a job. These details can be set out in a job specification, which is passed on to recruiters it gives them a picture of the ideal candidate.

A job description is also helpful because it sets out:

• The title of a post
• When and where it will be carried out
• Principal and ancillary duties of the post holder
• Other details.

The job description can be sent out to potential candidates along with a person specification, which sets out the desirable and essential characteristics that someone will need to have to be appointed to the post.

A variety of media will be used to attract applications e.g. national newspapers for national jobs, and local papers and media for local posts.

Job advertisements set out such details as:

• Location of work
• Salary
• Closing date of application
• How to apply
• Experience required
• Qualifications expected
• Duties and responsibilities.

Selection

Selection simply involves choosing the right person for the job. Effective selection requires that the organization makes the right prediction from data available about the various candidates for a post.

Research indicates that the most valid form of selection method is the use of an assessment centre where candidates are subjected to a variety of test including interviews, group exercises, presentations, ‘in-tray’ exercises, and so on.

Psychometric (personality) tests have become increasingly popular in the UK in recent years and are often used alongside other tests.

Interviews will be most successful when they are tightly related to job analysis, job description and the person specification.

In-tray exercises can be used for candidates to respond to work-related and other problems, which are presented to them in an in-tray to be processed.

Training

Training for employment is very important. In a modern economy like our own the nature of work is constantly changing. New technologies mean that new work skills are constantly required. To succeed in business or in a career, people will need to be very flexible about where they work and how they work, and to constantly change the range of skills they use at work.

There are basically two types of training:

On-the-job training

Employees develop and improve their work skills whilst actually doing the job in question. For example, word processor operators rapidly improve their skills by constant practice. A supermarket till operator quickly learn effective practice by working alongside a more skilled mentor.

Off-the-job training

Employers will often encourage their employees to develop their skills through off-the-job training courses. For example, a trainee may be allowed to attend a day-release course at the local college. This might apply to a wide range of different skills including hairdressing, banking, insurance, electrical work and plumbing.

Compensation is a wide range of financial and non-financial rewards to employees for their services rendered to the organization. It is paid in form of wages, salary, other benefits such as vacations, maternity leave, medical facilities etc. compensation helps in motivating the employees and reduce labor turnover.

Compensation can also be defined as follows:

• A system of rewards that can motivate the employees to perform.
• A tool that is used to foster values and culture.
• An instrument that enables an organization to achieve its objectives.

The management should ensure that compensation structure is designed after taking into account certain factors such as qualification, experience, attitude and prevailing rates in the markets. Compensation means the reward that is received by an employee for the work performed in an organization. It is an important function of human resource management. Employees may receive finan­cial and non-financial compensations for the work performed by them.

Financial compensation includes salary, bonus, and all the benefits and incentives, whereas non-financial compensation includes awards, rewards, citation, praise, recognition, which can motivate the employees towards highest productivity.

Objectives of Compensation

1. The compensation should be paid to each employee on the basis of their abilities and training.
2. Compensation should be in the form of package.
3. It should motivate the employees towards increasing productivity.
4. It should be capable of taking care of employees for safety and security needs also.
5. It should be flexible and clear.
6. It should not be excessive.
7. Compensation should be decided by the management as per the norms fixed by the legislations in consultation with the union.

Types of compensation

1. Base compensation

Base compensation involves monetary benefit to the employees in the form of wages and salaries. It is giving the remuneration to the workers for doing the work. Wages are generally given to the workers based on hourly, daily, weekly or monthly basis. But salary is the compensation given to the office employees. Wages may be based on the number of units produced i.e. piece wage system or the time wage system i.e. the time spent on the job. But salary is always based on the time spent on the job. When it is difficult to judge the production of the company then the compensation is paid in form of salary.

2. Supplementary compensation

Supplementary compensation, now days the organizations use supplementary compensation over and above the base compensation. It helps in satisfying the employees as well as retaining them for long time. It can be given in form of various services like housing, medical, educational facility. Supplementary compensation is also called fringe benefit as well as hidden payroll. The basic purpose of fringe benefit is to maintain efficient human resources in the organization and to motivate the employees.

These are the two main types of compensation.

Supplementary compensation is again divided into following types:

(i) Protection against hazards: supplementary compensation helps in protecting against the hazards of illness, injury, old age, death, permanent disability.

(ii) Employee services: some big organizations provide housing, low-cost loan, food, medical, and day care centre for children, educational facilities to their employees for their services.

(iii) Payment for time not worked: the employees are also paid for the time they are not working like wash up time, lunch period, vacations, holidays, sick leave etc.

(iv) Legal payments: payment under this category involves unemployment; layoff compensation, old age benefits etc.

Thus, there are various kinds of supplementary compensation which are given to the employees.

Characteristics of the Compensation

The main characteristics of the compensation system are as follows:

1. A hierarchy of pay levels
2. A hierarchy of jobs
3. A set of rules and procedures
4. Qualities required for movement from one level to other

An organization’s compensation system usually consists of three separate components. Each element of the compensation package has a link with an individual need hierarchy. All allowance are linked to basic pay. In order to motivate the employees when they achieve objectives, rewards and incentives are incorporated along with basic pay. To retain the employees and to get long-term commitments, stock option plan, annual increments and promotion are provided.

Any sale happening to the end customer which is not happening through a traditional retail channel or through a physical retail space is known as Non-store retailing. Amazon is a perfect example of Non-store retailing. Amazon does not have its own retail space from where it sells the goods to customers. It directly sells from its website and does not sell via a retail space. Hence, it is known as a Non-Store Retailer.

There are different types of Non-store retailers in the market. Some of the non-store retailers are very popular even today whereas others have died down. Let us make it clear that non-store retailing does not mean an average line of business. In fact, Non-store retailing is rising in importance due to the fact that cost of establishment is very low and all expenses are variable and not fixed. We will discuss the benefits of Non-store retailing in some time.

Types of Non-Store Retailing

• Direct Sales

One of the oldest forms of non-store retailing is the Direct sales type. The best way to describe this would be Door to Door salesmen who do cold calls to homes and offices to sell their products. They might also do other activities like Standees, promotions, and others to directly sell to the end customer.

This type of non-store retailing involves manual involvement and might involve usage of good selling techniques and personal selling skills. A door to door selling is used for selling technical equipment like Air Conditioners, Vacuum cleaners, Water purifiers and others. Even religious books are nowadays sold door to door. The advantage of this technique is that it is a quick closure type of sale. You will close the sale in 1 or maximum two visits.

The direct sale is a type of non-store retailing which is falling in usage. There are only somewhere it is still applicable. FMCG and Consumer durables are using it to some extent but it is almost absent in other industries. One of the reason is the noise in the market due to continuous advertisement because of which customers are irritated. The second is the growing sense of insecurity and the need for privacy due to which many salesmen are not allowed to enter into societies.

Amway, Tupperware and several other multi-level marketing firms actually use direct selling to good effect. They have chains of distributors and end sellers who sell to the end customers. Because the end seller generally knows the end buyer very well, the sale is high and these companies are case studies in the world of direct selling or non-store retailing.

• Direct Marketing

Unlike Direct selling, Direct marketing is on the rise especially since the adoption of the internet. It was initially used in the form of direct mail services where letters and coupons were sent to the end customer. Later on, once internet started, Email marketing was very successfully used where companies spent a huge amount of designing and sending emails to a large number of customers.

After emails, it went to websites and we could see Amazon, eBay, Alibaba and other websites grow and sell products by the truckloads. None of these sellers had a single store. All of it was online. Finally today, we can see that even small businessmen have their online store and a website and they sell their products not only through a physical presence but regularly take part in non-store retailing via social media or via their own websites.

Direct marketing is a segment which is supposed to grow even more over the years. Whatsapp has penetrated the market to a great extent and there are many “Whatsapp stores” opening up where you can get fashion apparels at a good discount. Already Amazon has surpassed Walmart in terms of its valuation and we see more and more online stores rising up. In fact, traditional retail is now afraid of the powers of direct marketing via the internet.

• Automatic Vending

If websites can be used for a large variety of products, then what is the 24×7 salesman for the FMCG sector? Well, it is the Automatic vending machine. If you are right now in your office, you probably have a machine by Café Coffee day or Nescafe which is vending tea or coffee for you. It might be a normal cup of coffee for u, but it is a unit of sale for Nescafe or Café Coffee Day.

Automatic vending machines are being used very smartly in the FMCG segment. We recently wrote an article on the top coffee brands and if you look at that article, you will find brands like Nespresso which are pushing their coffee vending machines into the market because once these vending machines are placed, the sale of coffee to the end customer becomes easier and it is higher in margins because there is no middleman involved.

Similarly, Cold Drink, Newspaper, Beer, Chewing gums, chocolates and even pizza is nowadays sold through an automatic vending machine. These are just straightforward examples of non-store retailing where you don’t need a store of 200 square feet to sell a pizza or cold drinks. Automatic vending has now become a prominent business model in FMCG and is being innovatively adopted in other sectors as well.

Besides the above three type – there is also the use of buying services in the form of a non-store retailer. The best example of this is an existing rate contract between government agencies and a seller who can sell products of a company. Because of the rate contract, the government agencies have to buy only from that seller and only at the given price. The seller, in turn, has to deliver the machine to all locations of the government agency.

However, because buying services as a model of non-store retailing is used very less, and because of the vast penetration of internet in our laptops and smartphones, buying services are now considered almost a part of direct marketing. Because practically everything happens online now.

Benefits of Non-Store retailing

• The cost of establishment is less: The cost of starting a website is always lesser then starting an offline retail outlet.
• Costs are variable in nature: While traditional retail has many fixed costs like rent, salaries etc, the costs of non-store retailing are variable and keep changing.
• Scaling up Is easier: Since the usage of internet for non-store retailing, scaling up of a non-store retailing business is easier than store retailing.

E-tailing Limitations

• Hard to Build Customer Relations

The friendly smile of an employee greeting you as you walk into a retail store can go a long way in building customer relations, helping ensure repeat business. Helpful and knowledgeable interaction with store employees creates confidence with customers. E-tailing lacks the opportunity for face-to-face contact and must try other means to establish long-term relationships with customers.

• Can’t Feel Products

Just looking at a photograph and reading a description of a product may give enough information for a consumer to make a purchase online. Some products, however, need to be held, smelled, touched and listened to in person, making them poor candidates for e-tailing. Musicians, for example, will typically want to play an acoustic guitar before making a purchase, since every guitar has its own unique feel and sound. A person interested in buying speakers for his home stereo may want to listen to them, which can be demonstrated in a retail store but not through an online e-tailer. Deciding on the purchase of a new car is another instance where people are apt to want to smell, sit in and test drive the car.

• Finding Your E-tail Store

In the 1989 movie, “Field Of Dreams,” the theme was, “If you build it, they will come.” Unfortunately, just creating a website does not ensure potential customers will visit your store. A retail store in a shopping mall is almost guaranteed it will get a lot of interest generated by foot traffic. While there are strategic promotional steps an e-tailer can take to try to increase the odds of his site appearing in the results list from a Google search, driving Internet traffic to a site requires a lot of work, with no sure results.

• Additional Costs

E-tailing involves additional costs for purchased items compared to purchases made at brick and mortar stores. Items must be mailed or shipped, incurring not only the additional cost of postage but also for packing materials, which can be significant if items are large or fragile. When items have to be returned, even more postage may be required by the e-tailer for return shipping costs.

• Lack of Consumer Trust and Security

People may have more trust and confidence in dealing with a physical retail store than with an online e-tailer. They know that the store is there, and if they have a problem they know where to go. In contrast, a website might look very impressive, yet the business might simply be a person working part-time with a laptop computer on a kitchen table, who could close the business at any time or simply decide to ignore customers who have complaints. Some consumers might not only be leery of the solidness of an e-tailer but also be hesitant to share credit card and other personal information over the Internet to someone they can’t see.

Bar coding is an automatic identification technology that allows data to be collected rapidly and accurately from all aspects of a company’s operations, including manufacturing, inspection, transportation, and inventory elements. Because of these attributes, bar coding is used for a wide range of applications in almost every aspect of business. Indeed, it is the most commonly used tool for automated data entry worldwide, and is widely regarded as one of the most important business innovations of the twentieth century.

Bar codes provide a simple method of encoding text information that can be easily read by inexpensive electronic scanners. The code itself consists of a series of adjacent parallel bars of differing widths similarly spaced apart. This pattern of bars and spaces sometimes referred to as the Universal Product Code—represents alphabetic characters or numbers that are the unique identification for a certain product. First utilized in supermarkets and libraries, bar coding identification has grown over the years to have applications in many fields.

Today’s retail businesses use bar codes elements in complicated electronic point-of-sale (POS) systems. These systems enable businesses to capture information about inventory levels on a continuous basis. For example, a seller of health and beauty aids can scan the bar codes on merchandise as it leaves the store and transmit that data via an Electronic Data Interchange (EDI) system to its main suppliers. The supplier can then replenish the store’s inventory automatically. Internally, the retailer can study the point-of-sale data to determine more effective ways of marketing and merchandising its offerings. Manufacturers, meanwhile, utilize bar code technology in work process control, property management, job costing, maintenance, inventory control, and in tracking shipping and receiving activities. In the latter instance, for example, “scanners located at receiving and shipping areas can be used to record product movement,” remarked W. H. Weiss in Supervision. “In addition, captured information at the point of transaction permits invoices to be verified and bills of lading generated that are based on actual quantities shipped. Back orders can be immediately routed to the shipping dock.”

Users tabulate bar code information with reading devices called scanners. “Contact” scanners are handheld devices that must either touch or come into close proximity to the bar code symbol to read it; these scanners are used in situations where bar codes are difficult to get at or are attached to heavy or large items that cannot easily pass across stationary scanners. “Non-contact” readers, by contrast, are usually stationary scanners permanently installed (at checkout counters, etc.) Some handheld scanners may also use non-contact technology. Whatever the choice, a non-contact scanner does not have to come in contact with the bar code in order to register its contents. It uses reflected beams of light to read the bar code.

A small business planning to use bar codes should familiarize itself with the appropriate symbology to be used on its products. A website of the Measurement Equipment Corporation lists more than 230 national and international standards organizations able to assist the would-be user of bar codes depending on the kind of product to be coded. Examples are the Group of Terrestrial Freight Forwarders (GTF), the Chemical Industry Data Exchange (CIDX), and National Hardware Retail Organization (NHRO). Those looking for some general orientation may wish first to visit the Web site of the Uniform Code Council, (renamed GS1 U.S. on June 7, 2005 but still referred to by many as UCC) one of the leading umbrella organizations in bar coding. Part of the preparation is to ensure that the bar codes the business produces meet certain standards of print quality. “Print quality standards state the minimum levels of reflectance, contrast, and other critical measures of printed bar code symbol readability,” explained Weiss. “Information requirements covered by standards vary by industry. A serial number is important for some while a product weight is important for others.”

Today, bar coding technology stands as a ubiquitous part of nearly every industry of any size or economic significance. This state of affairs is unlikely to change any time soon, according to experts. Analysts do note that use of Optical Character Recognition (OCR) technology has grown in the field of document image processing in recent years. But bar coding technology remains superior to OCR in terms of expense, accuracy, and ease of operator use, and its users continue to find new and innovative uses for its still-developing technology.

History

In 1948 Bernard Silver, a graduate student at Drexel Institute of Technology in Philadelphia, Pennsylvania, US overheard the president of the local food chain, Food Fair, asking one of the deans to research a system to automatically read product information during checkout. Silver told his friend Norman Joseph Woodland about the request, and they started working on a variety of systems. Their first working system used ultraviolet ink, but the ink faded too easily and was expensive.

Convinced that the system was workable with further development, Woodland left Drexel, moved into his father’s apartment in Florida, and continued working on the system. His next inspiration came from Morse code, and he formed his first barcode from sand on the beach. “I just extended the dots and dashes downwards and made narrow lines and wide lines out of them.” To read them, he adapted technology from optical soundtracks in movies, using a 500-watt incandescent light bulb shining through the paper onto an RCA935 photomultiplier tube (from a movie projector) on the far side. He later decided that the system would work better if it were printed as a circle instead of a line, allowing it to be scanned in any direction.

On 20 October 1949, Woodland and Silver filed a patent application for “Classifying Apparatus and Method”, in which they described both the linear and bull’s eye printing patterns, as well as the mechanical and electronic systems needed to read the code. The patent was issued on 7 October 1952 as US Patent 2,612,994. In 1951, Woodland moved to IBM and continually tried to interest IBM in developing the system. The company eventually commissioned a report on the idea, which concluded that it was both feasible and interesting, but that processing the resulting information would require equipment that was some time off in the future.

Advantages

Error Prevention

Tracking errors make your inventory less accurate, which ultimately costs more money. Prior to barcodes, employees manually tracked individual items. Manual tracking leads to many human errors. Barcodes can track items with an error rate of about one error for every three million entries. At this rate, barcodes are nearly 10,000 times more accurate than manual entry.

Large Inventory Tracking

Without barcodes, companies that maintain inventories in the hundreds of thousands, or even millions, would have to scale back. They allow you to accurately track large stocks and also look up any single piece of merchandise in a matter of seconds.

Cost Savings

Barcodes save lots of money. Prior to their advent, employees tracked merchandise. It costs more money to employ added workers, and more money and time are spent tracking large quantities of goods. Eliminating excess employees makes companies more efficient and increases the bottom line.

Speed

The speed of a barcode tracking system is beneficial. For inventory purposes, the system’s speed allows tracking to be done quickly. At checkout lines, barcodes can be scanned to immediately identify the cost of goods, so clerks don’t have to type in prices. Customers don’t have to wait longer when someone is purchasing several items. Every time a barcode is scanned, the item is immediately logged within the appropriate inventory.

Electronic article surveillance is a technological method for preventing shoplifting from retail stores, pilferage of books from libraries or removal of properties from office buildings. Special tags are fixed to merchandise or books. These tags are removed or deactivated by the clerks when the item is properly bought or checked out. At the exits of the store, a detection system sounds an alarm or otherwise alerts the staff when it senses active tags. Some stores also have detection systems at the entrance to the restrooms that sound an alarm if someone tries to take unpaid merchandise with them into the restroom. For high-value goods that are to be manipulated by the patrons, wired alarm clips called spider wrap may be used instead of tags.

Surveillance tags that could be attached to items in stores were first invented by Arthur Minasy in 1966. Initially the concept of pilferage becoming a real concern to retailers started in 1964 when a requirement was raised by a retailer in Ohio after he faced pilferage in his store. Thereafter lots of research started happening and today it has reached a stage where visible deterrence have moved on to where a retailer does not even have to install pedestals in a store.

Types of Electronic Article Surveillance

There are several major types of electronic article surveillance systems:

• Electro-Magnetic, also known as magneto-harmonic or Barkhausen effect
• Acousto-magnetic, also known as magnetostrictive
• Radio Frequency (8.2 MHz)
• Microwave
• Video surveillance systems (to some extent)
• Concealed EAS Surveillance Systems

1. Electro-magnetic systems

These tags are made of a strip of amorphous metal (metglas) which has a very low magnetic saturation value. Except for permanent tags, this strip is also lined with a strip of ferromagnetic material with a moderate coercive field (magnetic “hardness”). Detection is achieved by sensing harmonics and sum or difference signals generated by the non-linear magnetic response of the material under a mixture of low-frequency (in the 10 Hz to 1000 Hz range) magnetic fields.

When the ferromagnetic material is magnetized, it biases the amorphous metal strip into saturation, where it no longer produces harmonics. Deactivation of these tags is therefore done with magnetization. Activation requires demagnetization.

The EM systems are suitable for libraries to protect books and media. In the retail segment, unlike AM and RF, EM can protect small or round items and products with foil packaging or metal objects, like cosmetics, baby milk cans, medicines, DIY tools, homeware etc. EM systems can also detect objects placed in foil bags or in metal briefcases.

A further application is the Intellectual property (IP) protection against theft: Security paper with embedded microwires, which is used to detect confidential documents if they are removed from a building.

2. Acousto-magnetic systems

These are similar to magnetic tags in that they are made of two strips: a strip of magnetostrictive, ferromagnetic amorphous metal and a strip of a magnetically semi-hard metallic strip, which is used as a biasing magnet (to increase signal strength) and to allow deactivation. These strips are not bound together but free to oscillate mechanically.

Amorphous metals are used in such systems due to their good magnetoelastic coupling, which implies that they can efficiently convert magnetic energy into mechanical vibrations.

The detectors for such tags emit periodic tonal bursts at about 58 kHz, the same as the resonance frequency of the amorphous strips. This causes the strip to vibrate longitudinally by magnetostriction, and it continues to oscillate after the burst is over. The vibration causes a change in magnetization in the amorphous strip, which induces an AC voltage in the receiver antenna. If this signal meets the required parameters (correct frequency, repetition, etc.), the alarm is activated.

When the semi-hard magnet is magnetized, the tag is activated. The magnetized strip makes the amorphous strip respond much more strongly to the detectors, because the DC magnetic field given off by the strip offsets the magnetic anisotropy within the amorphous metal. The tag can also be deactivated by demagnetizing the strip, making the response small enough so that it will not be detected by the detectors.

AM tags are three dimensional plastic tags, much thicker than electro-magnetic strips and are thus seldom used for books.

Called Emtag by B&G International, this type of tag is often attached to the inside of a plastic surround permanently attached to the power cords of hand tools and equipment.

3. Radio frequency systems

These tags are essentially an LC tank circuit (L for inductor, C for capacitator) that has a resonance peak anywhere from 1.75 MHz to 9.5 MHz. The standard frequency for retail use is 8.2 MHz. Sensing is achieved by sweeping around the resonant frequency and detecting the dip.

Deactivation for 8.2 MHz label tags is typically achieved using a deactivation pad. In the absence of such a device, labels can be rendered inactive by punching a hole, or by covering the circuit with a metallic label, a “detuner”. The deactivation pad functions by partially destroying the capacitor. Though this sounds violent, in reality, both the process and the result are unnoticeable to the naked eye. The deactivator causes a micro short circuit in the label. This is done by submitting the tag to a strong electromagnetic field at the resonant frequency, which induces voltages exceeding the capacitor’s breakdown voltage.

In terms of deactivation, Radio Frequency is the most efficient of the 3 technologies (RF, EM, AM – there are no microwave labels) given that the reliable “remote” deactivation distance can be up to 30 cm (11.8 in). It also benefits the user in terms of running costs, since the RF de-activator only activates to send a pulse when a circuit is present. Both EM and AM deactivation units are on all the time and consume considerably more electricity. The reliability of “remote” deactivation (i.e. non-contact or non-proximity deactivation) capability makes for a fast and efficient throughput at the checkout.

Efficiency is an important factor when choosing an overall EAS solution given that time lost attempting to deactivate labels can be an important drag of cashier productivity as well as customer satisfaction if unwanted alarms are caused by tags that have not been effectively deactivated at the point of sale.

Deactivation of RF labels is also dependent on the size of the label and the power of the deactivation pad (the larger the label, the greater the field it generates for deactivation to take place. For this reason very small labels can cause issues for consistent deactivation). It is common to find RF deactivation built into barcode flat and vertical scanners at the POS in food retail especially in Europe and Asia where RF EAS technology has been the standard for nearly a decade. In apparel retail deactivation usually takes the form of flat pads of approx. 30×30 cm.

4. Microwave systems

These permanent tags are made of a non-linear element (a diode) coupled to one microwave and one electrostatic antenna. At the exit, one antenna emits a low-frequency (about 100 kHz) field, and another one emits a microwave field. The tag acts as a mixer re-emitting a combination of signals from both fields. This modulated signal triggers the alarm. These tags are permanent and somewhat costly. They are mostly used in clothing stores and have practically been withdrawn from use.

5. Video Surveillance

Video surveillance involves the act of observing a scene or scenes and looking for specific behaviors that are improper or that may indicate the emergence or existence of improper behavior.

Common uses of video surveillance include observing the public at the entry to sports events, public transportation (train platforms, airports, etc.), and around the perimeter of secure facilities, especially those that are directly bounded by community spaces.

The video surveillance process includes the identification of areas of concern and the identification of specific cameras or groups of cameras that may be able to view those areas. If it is possible to identify schedules when security trends have occurred or may be likely to occur, that is also helpful to the process. Then, by viewing the selected images at appropriate times, it is possible to determine if improper activity is occurring.

6. Concealed EAS Systems

These new types of systems have caught on lately as there are no visible pedestals or hindrance in the store facade. These systems are installed below the floor and dropped from the ceiling, and can then protect merchandise of retailers from being stolen as the entire range of door is covered. Various studies and researches have been done into making this technology powerful and effective. There are site conditions and other parameters which enable them to be successfully installed but often it has now been noted that malls insist on concealed system as a mandate to increase the shopping experience- for example a part of Dubai Mall in United Arab Emirates do not allow any visible systems. Concealed Systems will be the way to go for the future.

Electronic Shelf Labels (ESL) are digital display systems used to replace traditional paper price tags on store shelves. These labels are typically connected to a central system and can be updated electronically.

Components and Features of ESL:

• Digital Display Tags:

ESLs are digital tags that display product information, pricing, promotions, and other relevant details.

• Communication Infrastructure:

ESLs are connected to a central communication infrastructure, often through a wireless network, allowing for centralized control and updates.

• Centralized Management System:

Retailers use a centralized management system to update and control the information displayed on ESLs across the entire store.

• Dynamic Pricing:

ESLs enable retailers to implement dynamic pricing strategies. Prices can be updated in real-time based on factors such as demand, time of day, or promotions.

• Inventory Management Integration:

ESLs can be integrated with inventory management systems, ensuring that pricing is consistent with stock levels and promotions.

Benefits of Electronic Shelf Labels

In recent years, one of the most interesting changes to hit the industry has been Electronic Shelf Labels (ESLs). These “electronic” versions of price tags use e-ink to display a price and are connected to a computer database. This makes changing in-store prices as easy as typing a new price into the software and clicking “send”.

These price tags have numerous benefits for retailers. But ultimately, the greatest advantages are the ability to engage in real-time dynamic pricing in-store and build an omnichannel experience to enhance customer loyalty.

Interested in learning more about the benefits of these price tags? Here are 5 reasons brick-and-mortar retailers should consider the investment.

• Accurate pricing across channels

The internet has completely transformed how people shop, and it’s not uncommon for consumers to price check an item while they’re standing in a store. Shoppers lose trust in a company if the in-store prices don’t align with the online display, and unfortunately this is often the reality they encounter.

ESLs, however, completely change that interaction. With one standardized pricing system, your customers won’t be disappointed by price differences anymore. Instead, your company can immediately reflect any online price change in-store.

ESLs also allow you to align your promotion prices, audit trails for your headquarter to check changes, and fix any pricing errors. Each of these keeps your prices accurate across the board and ensures your customers see your optimal price.

2. Shelf edge influence

The shelf edge is one of the most important sales influencers. Most purchases are made at this point so you want to make sure your pricing information is accurate.

With paper labels, changing pricing information is prone to human error. It’s also a slow process, and by the time you finish re-labeling, prices might have changed again online.

With ESLs though, these changes are easy, so you can capture more sales at the shelf edge. You can react competitively to price changes, enable instant promotions, track what promotions work, and protect margins on time-sensitive stock. You can even create offers based on where a specific customer is standing in the store with just a few clicks.

• Enhance your omnichannel experience

It’s no secret that omnichannel is the future of retail. According to Planet Retail, 56% of consumers feel that technology improves their shopping experiences.

How do ESLs help you build a successful omnichannel experience? ESLs enable you to interact with your customers in ways that were previously impossible:

• Display stock levels so customers know whether the supply is limited
• Display online prices of competition so consumers can trust you when you say you have the best price
• Enable simple ordering with QR codes
• Display reviews of products, so shoppers can understand what others like or dislike about a product.

• It’s not as expensive as you think

Here’s the thing: ESLs do require an initial investment. And if you’re unsure about whether you will use them, it’s understandable why you might be skeptical of moving forward with the technology.

But with the shelf edge being the last and most powerful point of influence on a sale, the ability to control what a consumer sees at the push of a button is priceless. And the process of installing and configuring the labels isn’t as hard as you think:

• Minimal construction and installation: Electronic shelf labels are easy to install and can be set up with a simple screwdriver. They’re also easy to configure using the provided software
• High security with low maintenance: ESLs operate on an unused WiFi network for maximum security from interference at low maintenance for retailers
• Easy to use: Most ESL softwares are easy to use and learn. Just drag and drop the information you’d like to display and you’re done!

After installation, your employees no longer need to monitor the price tags each day. The centralized system makes it easy for one person to control all pricing changes on the shop floor.

• Payback is quick

According to DisplayData, the payback for ESLs is high. The company reports in-store sales typically increase by 6%, with a typical margin increase of 2%-3%.

The payoff is also fast. One of DisplayData’s customers, a major European retailer with over 800 stores, secured a payback on their investment in just 16 months and predicts over 170% ROI in the next two years. If you zoom out to 5 years, the retailer expects their ROI to increase by 400%.

Creating an innovative omnichannel experience is all about connecting stores and online. And the shelf edge is no exception. Retailers should carefully consider this key moment in the omnichannel buyer’s journey and recognize that electronic shelf labeling is one of the easiest ways to connect the two domains.

Types of ESLs:

• Segment Displays:

Basic displays showing pricing information.

• Dot Matrix Displays:

More advanced displays that can show text, graphics, and additional information.

• E-Ink Displays:

Use electronic ink technology, providing high visibility and low power consumption.