Introduce the tools, techniques and models normally used to perform management control in retail companies.
1 - how wide to make the assortment and the resulting importance of a good logistics service for customers, who increasingly demand one-stop shopping modes;
2 - the depth of the merchandise mix, with related choices regarding the “amount” of information to include in the distribution formula adopted.
In grocery, the choices concerning the number of caregories, brands and product variants to be included in the assortment, are inevitable once a decision has been made on the type of distribution to use.
Basket analysis: Technical analysis of the contents of individual receipts to identify products often purchased together to aid stock management.
Simpler management aimed at ensuring a good supply system rather than selecting references upstream or what products to deal in.
To help reduce out-of-stock risk, businesses could use distribution centres to improve the logistics of materials and information flow.
Competitive advantage comes from looking for and selecting the right supplier. The information offered by the width and/or exclusiveness of the assortment is created by identifying those companies who are able to bring the goods to the market; know-how is a source of differentiation.
Reduce the need for working capital and fixed assets to a minimum.
Commercial brands in the past
Make the range of products and points of sale more appealing;
Encourage price comparison and (price leadership competition);
Implement assortment policies based on well-known products combined with continual promotions;
Maximise the speed of reinvestiment in stock;
Make industry responsible for guaranteeing the quality of the products.
Product sector and private labelling
Features of the product sectors in favour of private labelling:
The new management choices
Rethinking referencing policies from a category management perspective;
Intensifying private labellingusing the brand-logo, often to the detriment of well-known industrial brands;
Simplifying and rationalising decisions concerning the merchandise mix and incoming logistics, to achieve better margins and productivity through:
Management of the display area and enhancement of the product range, with the aim of helping the customers’ search in the shop.
Nelson’s product category classification:
Identifying the best references for marketing, and their positioning in the point of sale to respond to needs the customer reveals through their purchasing behaviour.
→ It helps customers in their search.
→ It improves readability and access to the product range.
→ It is developed based on positioning of the traffic-generating references within the point of sale.
Shelf Management: Defining quantity and quality of the display area given to each reference.
Surface area proportional to turnover, weighted as per growth in sales rates;
SLIM Method (Store Labour and Inventory Management);
Search for logistic efficiency;
Market share criterion;
(Gross or net) margins criterion.
Loyalty cards: They may be “membership” cards or may be used to collect “points” → Point-collecting cards.
Increased turnover with equal client base, achieved by stimulating the average expenditure level of high-potential customers;
Expanded market thanks to the spontaneous, free-of-charge sponsorship provided by loyal, satisfied customers;
Increased overall margins thanks to one-to-one marketing initiatives offered to the most demanding returning customers, who are usually willing to accept price increases in exchange for better services;
Lower penetration and commercial development costs.
It is a top-down process from the desired company margins, to the margins of the single references;
It is affected by the price positioning of manufacturers, with the exception of special offers and promotions;
It may lead to the creation of loss leader products;
In non-grocery, it is often limited to establishing a mark-up to add to the purchase cost;
It makes it possible to reduce consumption of competing products thanks to in-shop promotions;
It must take into account, if not exploit, the presence of cherry pickers.