Page 267 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes The retail division had a target of about 50 sales point, searched by a consultant and
interiorly designed by a fashion architect.
The market: the company operated in the casual sportswear mainly on jackets. Geographical
distribution was worldwide but mainly rich eastern countries and emerging countries,
due to the average price of the product. The “ideal” customer belonged to a fairly rich
class, he liked sportswear and he was fairly aggressive. The style actually intended to be
aggressive enough to be chosen both by young and older people.
The existing retail IT system was originally chosen to support the initial outlet, so its main
features were:
 Low cost
 Little and clear functionalities
 One level architecture (shops and main)
 single cash register in a shop
 Written and maintained by a near located, “friend” software house.
Quite a few problems had been solved on a “quick” solution attitude as volumes were
small, no general approach.
The whole situation was worsened by the fact that no user came from a structured culture
environment so they tent to solve their problems on an unstructured, personal way.
When the whole phenomena grew bigger two very dangerous behaviors came up:
1. The stockholder thought: “if it works for four it will work for five etc.”
2. The software house used to say: “I am willing to grow up with you: tell me what you
want and I will do it.”
The company was really pushing the instrument over its project limits patching it over
and over.
The economical situation: mainly due to the international crisis the company was
financially overexposed and the shop system was a real weight to the balance sheet: out of
a dozen shops existing only two or three were profitable, another two or three run even
and the rest were both losing money and creating end-of-season unsold inventory. These
numbers also did not take into account hidden costs that the company had to sustain to
help the shop system; costs which are difficult to pin out but that are often consistent. I am
talking about time spent by “structure” people like accounting and/or logistics to help
the whole system run.
The turn point came when an outside consultancy firm had to investigate the economical
situation on behalf of a new possible stakeholder. The problem was not so much the retail
policy as a principle but the way it had been implemented. The company culture was
industrial and everybody used to think to “customers” as being wholesaler, which means
professionals, and not final customers.
Even if a retail manager and a merchandiser existed, real decisions were made by people
coming from “product” oriented people so many the whole process was still very “fashion”
and “industry”.
The functional approach: to evaluate correctly the job to be done we went through a
dimensional analysis of the needs of the retail department customers including all the
aspects of “product”; “subjective” and “social” aspects.
For every view we tried to find as many “objective” data as possible trying to avoid
preconceptions. This job was guided by an external consultant, a right choice in my opinion,
Contd....

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