UNIT III

ATMOSPHERICS
DEFINITION :
Atmospherics pertains to a stores
physical characteristics that are used to
develop the image of the retail unit and draw
customers.
Inother words it describes to the physical
elements in a stores design that appeal to
consumers and encourages them to buy.
Atmospherics classified into exterior and
interior atmospherics.

Exterior atmospherics

Exterior atmospherics refers to all aspects of physical

environment found outside the store.
Such as
Store front
Marquee
Entrance
Display windows
Size of building
Visibility
Adjoining stores
Parking
Accessibility
Uniqueness
Surrounding area

Retail store entrance

Store entrance provides prospective customers access
to the retail outlet.
In india most of the traditional store enjoy open
entrance.
Doors are considered somewhat a restrictions to entry
common in semi urban township.
In metros, retailers are trying to create a unique
environment within their store, which needs to be
separated by doors.
Helps to window displays.
Walkways
Number of entrance

Window display
Garments and gift retailers
Important factor contributing to image building of the
store
Significant marketing tool to communicate with
prospective and also new customers
During festive season, retailers display their selective
merchandise along with their respective prices or
discounts offered to attract pedestrian traffic
particularly price conscious shoppers.
Various aspects considered in window displaying are
number, size, shape, colour, material, theme of
display and frequency of changes.

Marquee/sign board
Its usually a painted or neon light
displaying only the store name or the
store name along with the trademark
and other important information of a
retail store at the storefront or
entrance.
To enhance visibility to pedestrian
and moving vehicles.

Parking facilities
Plays important role in the success of
a retail store.
Great significance in urban shopping
centers due to increase in number of
car owners.
Nowadays irrespective of their
location all shopping centers
provides adequate parking facility to
their customers.

Interior atmospherics
Interior atmospherics refers to all
aspects of the physical environment
found inside a store.
Interior atmospherics affects sales,
time spent in the store.
Ghosh defines retail atmosphere as,
the psychological effect of feeling
created by a stores design and its
physical surroundings.

Interior atmospherics

Flooring
Lighting
Fixtures
Temperature
Dressing facility
Dead areas
Self service
Colour
Scents , sounds
Wall texture
Personnel
Merchandise
Cleanliness
Cash register placement.

Lighting
Lighting is used to highlight
merchandise, sculpt space, and
capture mood or feeling that
enhances the stores image.
It can hide errors and outmoded
store design.

Signage
Visual cues meet most of the
communication needs of the
customers in shopping centers and
retail stores.
Signage provide information
regarding a stores policy in respect
of returned goods, timing to return,
prevailing discounts etc.

Music
Music is one of the key
environmental variables that can
influence shoppers.
It affects time spent in the store,
propensity to shopping and
satisfaction with the shopping
experience.

Scent
Many buying decisions based on
emotions, and smell has a large
impact on our emotions, such as
happiness, hunger, disgust and
nostalgia.

Fixtures
The primary purpose of fixtures are
to efficiently hold and display
merchandise.

Retail location

Market identification
Determining the market potential
Identify the most attractive sites
Select the best site available

Market identification
Identify the markets attractive to a
retailer.
Market characteristics has to be
analyzed.
For eg : In India every region has its
own peculiarities and needs.

Determining the market

potential
In order to determine the market
potential various elements
considered are,
Demographics of the population and
area
Competition and compatibility
Laws and regulations
Trade area analysis

Identify alternate sites and select

the site
After having determined the market potential
and area , a retailer has to select a site to
locate the store.
Various factors affects the decision are,
Traffic
Accessibility
Number and type of stores exist in the area
Amenities available
To buy or to lease
Product mix offered

Positioning of the retail shop

Positioning involves the design and
implementation of a retail mix to
create an image of the retailer in the
customers mind relative to its
competitors.

Retail supply chain

management
Supply chain management:
A supply chain consists of all
parties involved, directly or indirectly, in
fulfilling a customer request. The supply chain
includes not only the manufacturer and
suppliers, but also transporters, warehouses,
retailers, and even customers themselves.
Within each organization, such as a
manufacturer, the supply chain includes all
functions involved in receiving and filling a
customer request.

Sources:
Plants
Ports

Field
Regional
Warehouses:
Warehouses: Stocking
points
Stocking
points

Customers,
Demand
Centers

Supply

Inventory &
warehousing
costs
Production/
Transportati
purchase
Transportation
on
costs
costs
costs
Inventory &
warehousing
costs

Flows in a supply chain

Information
Product
Funds

Supply Chain

Customer

Cycle View of Supply

Chains
Customer

Customer Order Cycle

Retailer

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Distributor

Manufacturer

Supplier

Push/Pull View of Supply

Chains
Pull processes: execution is
initiated in response to a
customer order
Push processes: execution is
initiated in anticipation of
customer orders

Push/Pull View of Supply

Chains
Procurement,
Manufacturing and
Replenishment cycles

PUSH PROCESSES

Customer Order
Cycle

PULL PROCESSES

Customer
Order Arrives

Characteristics of Retail
Supply Chain Management
Short Life Cycle: Many products in these sectors
have a short life cycle. The time period in which it is
saleable is likely to be short and seasonal.
High Volatility: Demand for these products is rarely
stable. It may be influenced by the weather, movies
and advertising.
Low Predictability: Due to the high volatility of
demand, it is extremely difficult to forecast with any
accuracy.
High impulse purchase: Many buying decisions
for these products are based on impulse and taken
at
the
point
of
purchase.
Animpulse
purchaseorimpulse buyingis an unplanned

 Time-to-Market: In the shorter life cycle markets,

being able to spot trends quickly and to translate
them into products in the shop has become a prerequisite for success.
Time-to-serve: Traditionally, in retail orders from
retailers had to be placed on suppliers many months
in advance.
This gives rise to the risk of
obsolescence and high stock-outs, as well as
increased costs of inventory.
Time-to-react: Ideally, in any market, a company
would want to meet a customers requirements at
the time and place that the customer needs them.
The lead time gap: The fundamental problem that
many companies face is that the time that it takes to
source materials, convert them into products and
move them into the market place is invariably longer

Causes of supply chain

Delays in transmitting orders and
receiving
merchandise:
even
when
retailers can forecast sales accurately, there
are delays in getting orders to the vendor
and receiving those orders from the vendor.
Overreacting to shortages: when retailers
find it difficult to get the merchandise they
want, they begin to play the shortage game.
They order more than they need to prevent
stock outs, hoping they will receive a
larger partial shipment.
These over orders again lead the vendor to
think demand is higher than it really is.

 Ordering in batches: rather than

generating a number of small orders,
retailers wait and place larger orders
to reduce order processing and
transportation
costs
and
take
advantage of quantity discounts.
This ordering pattern leads the
vendor to think that sales are more
irregular than they really use.

Innovations in SCM
1. Vendor Managed Inventory (VIM):
In this approach, the vendor undertakes
the inventory management of the stores.
This is also called QRIS or the Quick
Response Inventory System.
It eliminates the need for paper
transactions. Using the mail, overnight
deliveries, fax in the quick response
system reduces lead-time.
The vendors computer acquires the data
electronically; no manual data entry is
required at the recipients end, which

2. Collaborative Planning Forecasting

and Replenishment (CPFR):
CPFR is one of the hottest buzzwords in
the chain context.
By aligning the forecasts of a retailer,
CPFR offers the opportunity to increase instock positions, gross margins and sales,
while reducing inventory investments and
stock-outs.
CPFR is based on managing forecasts and
inventory levels on an exception basis,
altering participating organizations to
potential problems, while allowing them to

3. Cross Docking
Cross docking is the function of warehouse
or
distribution
centers,
which
was
introduced by Wal-Mart.
Cross docking is a system in which the
vendors transport merchandise to a
distribution
centre,
pre-packed
in
quantities required by each store.
The merchandise is delivered to one side
of the distribution centre, the floor ready
merchandise is then transferred to the
other side of the distribution centre for
delivery to a store.

Pricing strategies
Market skimming high price initially
Market penetration initially low
price
Leader pricing one or few items at
a deep discount to increase traffic
and sales on complementary items.
EDLP continually price their
products lower than other retailers.

Retail Service Quality

Management
Providing high-quality service is difficult for
retailers.
Good service keeps customers returning to a
retailer and generates positive word-ofmouth communication, which attracts new
customers.
In addition, most service provided by
retailers are intangible - customers cant see
or feel them.
The challenges of providing consistent highquality service provides an opportunity for a

Customer Evaluation of
Service Quality
Reliability:
Accuracy
of
billing,
meeting promised delivery dates.
Assurance (Trust): Guarantees and
warranties, return policy
Tangibility: Appearance of stores,
salespeople
Empathy:
Personalized
service,
recognition by name.
Responsiveness: Returning calls and

The Gaps Model for

Improving Retail Service
Quality

Service Gap: It means the difference

between the customers expectations
and
perceptions
of
customer
service).
The gaps model indicates what
retailers need to do to provide highquality customer service.
Thus, retailers need to reduce the
service gap to improve customers
satisfaction with their service.

Four factors of Service Gap

Knowledge Gap: The difference
between customer expectations and
the retailers perception of customer
expectations.
Standards Gap: The difference
between the retailers perceptions of
customers expectations and the
customer service standards it sets.
Delivery
Gap:
The
difference
between
the
retailers
service
standards and the actual service

Gaps Model for Improving

Retail Service Quality
Service Gap
Customer
expectatio
ns for
service
quality

Knowled
ge Gap

Manageme
nt
perception
s of
customer
expectatio
ns

Standar
ds Gap

Standard
s
specifyin
g service
to be
delivered

Deliver
y Gap

Actual
service
deliver
ed

Commun
i-cation
Gap

Custome
r
percepti
on of
service
quality
Retailer
communi
-cation
about
service
quality

Retailers objectives on SQM

To understand the level of service
customers expect
To set standards for providing customer
service
To implement programs for delivering
service that meets the standards and
To undertake communication programs to
accurately inform customers about the
service offered by the retailer.

Category management
Category
Management
can
be
defined as the distributors /
suppliers process of managing
categories as strategic business
units, producing enhanced business
results by focusing on delivering
consumer value.
Category is a distinct, manageable
group of products or services that
consumers perceive to be inter-