Dan Shahrezaey Understanding Retailing Assignment 1 Date of Issue- 10/01/2011 Submission Date-18/02/2011 Tutor-Mike Delaney Task 1 P1 A retailer is a person that buys goods which are sold in considerable vast quantities. The items are bought from the manufacturers and they are then sold to consumers. The retailer’s bulk buys their items and breaks down into quantities that are deemed suitable for the customers to buy at a larger price than the cost. The retail industry that exists in the UK is huge because in the year 2010 the sales were recorded at being over ? 93 billion.
The reason why this particular industry is important to the British economy is that in 2009, the UK retail sales were well advanced into plus ? 285 billion and obviously it’s a lot of money and it shows that more than a 1/3 of the spending that is done by the consumers has developed through the shops. The retail sector generates 8% of the Gross Domestic Product of the UK. In 2010 there were 286,680 retail outlets in the UK available. This is further proof that the retail industry is very strong.The retail industry in global aspects has be recognised as being relatively bigger because there are emerging markets like China who have expected a growth in their profits for 2010. However there has been improvement to help the consumers in the USA. However the recent lack of wealth is expected to lower the spending of the consumer.
A continent called Asia makes the realisation of having one of the greatest growth prospects for the retailers in 2010 to look upon. In India, garments, fashion accessories, cosmetics and white goods are expected to continue the uptrend of 2009 in 2010 and beyond.In Europe, there are household appliances, which have growth potentials that are considered to be large. There are over 180 million appliances which are 10+ years, and they’re still usable and in perfect condition. The appliances offer a huge amount of potential for the newer energy saving appliances.
There are different retailer formats around and they are: * Hypermarkets * Convenience stores * Supermarkets * Department stores * Specialty stores * General stores * Discount shops Hypermarkets provide a variety of different items at a low margin and the operating cost is comparatively less than other retail formats.It is a huge supermarket and it is usually located out of town. Convenience stores are stores that sell limited items that are useful for emergencies. They don’t sell too much items but just about enough for a day’s food shopping.
They are found in residential areas such as a village. Supermarkets are large grocery stores, which distribute items for home use such as groceries, dairy products and goods for use in such as toiletries. Department stores are a retail establishment that specialize in satisfying a range of the customer’s personal and residential goods product needs.They offer the consumer (s) a choice of multiple merchandise lines, at variable price points, and they are formed in all product categories. Department stores sell products that are used for households and they include items such as furniture, toiletries, hardware, sporting goods and jewellery/toys. There are some department stores which are known as discount stores.
Specialty stores are small stores that specialize in a specific range of merchandise and subject related items. Most of the stores have a lot of depth in their stock of the item that they are specialized in and they provide a high level of expertise and service.The pricing policy is in a range of medium to high and it depends on the factors such as the type of merchandise but it is whether are operated by an owner or part of a chain operation in which they have an advantage of bulk purchasing and a centralised warehousing system. General stores are stores that carry a simple amount of merchandise that isn’t too over the top. A general store is referred to as a corner shop and they sell items that are known as “stapled goods” which are items such as milk, bread, and cheese. They sell items for household use and they are hardware and electrical goods.
Discount stores are permitted to distribute their goods at a lower price that those of a normal outlet. A lot of discount stores distribute a range of items but different stores specialise with merchandise that are jewellery, and electrical appliances. Task 2 P2 When goods are delivered to stores all over the UK, they are put through a journey from a manufacturer/producer all the way to the retailer and it is set in a lot of stages to form a chart. These are two examples of how two different products are moved from being at the manufacturers to being distributed from the shelves in a store. Producer vExporter (ship, plane and lorry) v Middle man v Middle man v The company that is buying the product v Regional Distribution Centre (RDC) v Stores v Customer/Consumer This is the example of how a typical product is produced and how it goes through different places to get to the consumer. The goods are transported using different types of transport for example, planes, trains, cars, ships and heavy goods vehicles. There are perishable and non-perishable processes.
The perishable process involves items that can decay easily. It can be a food item such as a tomato. The non perishable process involves items that are wearable-clothing.
The non-perishable goods are items that do not spoil or decay-for example- canned goods are non perishable as well. There is an example of how a farmer can help develop a process that involves the shipping of a perishable product. The perishable process is labelled out below: Tomato is created in England The farmer has grown it and is going to have it exported The exportation process begins and the tomato is taken away by the Lorries The middle man has the goods and they have to be shipped to an RDC (regional distribution centre) The consumer receives the goods and the customers buy the productThere is an example of how non-perishable goods are processed from being made in a foreign country to being bought by customers in England. The jeans are man-made They are created using man-made material by Asian people who earn ? 2 a day for the manufacturing of the product being made. The item is transferred to England via plane The item is taken by lorry to an RDC (Regional Distribution Centre) At the Regional Distribution Centre, the item is tagged and checked for faults before it is distributed to a store hundreds of miles away from the RDC.
The item has arrived at the store and it is ready to be sold by the company to a consumer (customer) The item is bought by a customer who then wears it casually A regional distribution centre (RDC) is the main warehouse where goods are stored for distribution to the stores nationwide. There are different examples of goods having distinctive distribution channels and techniques. The distribution channels include having availability of the product and this means that the product has to be available as soon as it is produced, there has to be a specific quantity of he product available and the time taken to create the product has to be quick and on time. The movement of the goods has to be quick because it is set in a timeline from manufacturer to the retailer and then sold to the consumer. There are distribution channels for different types of goods such as edible goods and clothing. The wholesalers are the intermediaries and the intermediaries are known as the “middle men” and this means that as the more times the middle men are involved in the process of produce to consumer, the increasing ofThere is retail control in terms of the supply chain and this means that companies can now distribute goods under their own name- for example supermarkets like Tesco and Sainsbury’s now sell goods such as baked beans under their own brand name. They are much cheaper in quality and the price but some people prefer to buy goods made by the company because they consider them cheaper for the value of money. A lot of companies also now use a term called E-Retailing and this is where the retailing involves a lot of ICT and computing use to sell the goods online- on the internet to people all over the world.
It is a much easier process because people pay for their goods using a credit/debit card. It is easier for the seller because they can advertise their goods on a website and people will be attracted to buy the item and the price is normally cheaper online than in-store. The distribution channels provide functions which enhance the products such as transport, storage and after sales services. The distribution process includes the supply chain, moving goods around the UK and Europe, and sourcing which is around the UK and Internationally.The supply chain is shaped by the nature of the goods (perishable), the time factor and the retail sector (format). The supply chain is described as a group of people which process the creation, delivery, and sale of a product to the consumer. The supply chain is made up of multiple companies who coordinate activities to set themselves apart from the competition. A supply chain has three key parts in which they have to be split into and they are: * Supply-It focuses on the raw materials that are supplied to manufacturing, including how, when, and from what location.
The Manufacturing process focuses on how to converting these raw materials into finished products. * Distribution focuses on making sure that these products reach the consumers through a well organised network of distributors, warehouses, and retailers. There will be problems in the supply chain where there will be problems occurring occasionally such as when the level of demand changes. There will be an expectant of a shorter supply chain and this will involve cutting intermediaries to cut costs.There will be a negative effect on cash flow because there won’t be much money coming into the business and nobody will be buying many products that are available. When the level of demand changes, there are some positives as if the demand increases, then so will the supply so then there will be more products for the business to sell. There will be more intermediaries and this will mean that there are more suppliers to get products from, there will be more distributors to distribute the goods out and there will be more storage to keep the items safe and protected.There are more opportunities for the business to add more staff to their company to boost the income of the company.
Storage locations in retail: There are a lot of locations for storage in retail and they are: * Warehouses * Distribution Centres * Stockrooms All these places are great for storing stock because they need to be tagged and sorted out in terms of quality and quantity before they are distributed to the customers in the stores.The logistics process involves the process of the integration of several aspects such as material handling, warehousing, information, transportation, packaging and inventory. The primary duty of a logistics system is to ensure geographical repositioning of unfinished goods, and it is meaning that the finished inventories of the organization have to be at the required place at the lowest possible cost. Logistics has evolved well over the past several years because of how the retailer manages their demands well.
The logistics are responsible for the moving of the stock forwards and backwards in the distribution process. There are types of transport in terms of the logistics process and they are-ships, planes, Lorries, vans, and many more. There is a lot of ICT usage in the supply chain.
A lot of companies use ICT to do the following tasks: develop supply chain relationships, help develop the customer service for getting an advantage with the competitors, update the logistic functions across the supply chain and this enables the costs to be reduced and improve the efficiency.I have an example of a clothing item that goes through the supply chain from producer to consumer but from an ICT perspective. Manufacturer in India- they deal with the recording of invoices, transactions and recording the orders correctly A wholesaler in the UK orders the goods in from abroad; they record the payments and the orders/deliveries. The Regional Distribution Centre (RDC) records the stock that has come in and they also record the transactions that are completed.
The shipments are dealt with if there are faults that have occurred.A warehouse in a town would then record the stock that has come in and check the orders if they are right and not the wrong ones; they check the deliveries if they have been dropped off on time and lastly install barcodes on the products so then they can be transferred to the shops for distribution to the customers. A shop in Guildford would recieve the goods and record the stock to see if the orders are correct, they start the payments process from the customers and they begin the transactions that occur between customer and employee. The invoices are given to customers as a form of proof of purchase.There is usage of the EPOS system and (EDI). Benefits are available for the use of sourcing in United Kingdom.
* There can be shorter transit times * Shorter lead times * Lower costs in terms of the time management and the communication * There will be an ability to monitor the total production process and it will be easier. A retailer could consider the acceptance of higher prices to lower the risks and association of sourcing from another country other than one in the UK or a closer country geographically. The costs will be higher if you are sourcing from a less developed country.M1-A An e-retailer is someone who uses the internet primarily for shopping for goods or services that are provided. They use the potential of the internet to attract old/new customers and convert newer customers to newer things. There are two types of e-retailer, pure play and brick/click.
A pure play e-tailer uses the Internet as its primary means of retailing. There are examples of pure play e-tailers and they are Apple and www. Play. com.
A brick and click e-tailer can take advantage of the Internet so that their goods can be pushed and have the income generated well to get higher.The retailer needs to have a physical storefront made available to the customers to travel to. The advantages of a pure play e-tailer are that they can shop online with technologies that are secure of safeguarding internet credit/debit card transactions. Pure play does not associate the risks which include balancing the resources between the online channel and the traditional media which is well known. They are more likely to invest more money towards the online storefronts as opposed to what a b;c company could do.The brand names which are well known attract a lot of customers and therefore it maintains a great shopping experience for the customer. The consumers realise that the experience of shopping online is helpful for them because they can have a look at what they’re getting their money for in terms of using price comparison websites and learning about different products and services.
The disadvantages of pure-plays state that there’s not an advantage of having a brand name that is owned by them and they don’t have a well built customer base.There isn’t an inventory system so that they can record what goods are coming and going out of the business. They will have to be committed to creating a brand name and working hard to develop a customer base.
The pure plays often get troubles with potential viruses that are obtained from opening emails that are disguised as something else of interest to the person. They have to be careful and keep an eye on anything suspicious happening online. There could be security and technical problems that should be maintained and therefore the people using the internet must be retrained to learn more about the internet format of sales.They should learn how to take on an appropriate dialogue when emailing customers in terms of beginning slowly and start to build up the trust of the customers.
Some of the retailers think that the Internet technology is too hard to use and they refrain from using it. They assume that the cookies within the internet can invade their privacy and uncover private data. A lot of consumers prefer not to purchase goods online because they don’t want to buy products from a pure play retailer because they don’t know what the item is like before it’s bought in terms of the fitting of it and if there are any defects on it.
The customers find it a little inconvenient to return purchased goods if they are not suitable and a lot of people don’t find it comfortable if they use their credit card online because of the fraudulent processes that could happen if they give out their personal data. There is a lack of customer service and the goods may not be delivered as efficiently as thought of originally. The advantages of brick ; click retailers are that they utilise the usage of the existing suppliers that they have and they help ensure problem-free delivery of products and an assurance on the amount of supplies that they have.They use the more established and trusted brands that are already well known with the customers as opposed to unknown sources because people won’t buy products from a source that is not known to them. They also bring with them a benefit of being able to buy in larger quantities and get bigger discounts from their producers.
The disadvantages of brick and click retailers are that there are extra expenses that are associated with the website and there are extra costs also with a physical business. This means that it can lead to prices that are not always competitive. M1-BAn independent retailer is someone who starts up a business from scratch and they begin so by financing the costs of it themselves or with the help of a silent partner. They may hire a consultant if they need additional help. A Franchise is an authorisation for someone to open up a business selling another company’s goods and services in a particular place.
For example McDonald’s give authorisation for someone to open up a franchise in the McDonald’s name and sell their goods and services to customers. Network marketing is a marketing structure that some companies use as a part of their marketing strategy.It is about helping people and the companies use this tool to get to their other customers that they wouldn’t really be able to get hold of, i. e people who can’t be reached using the traditional online or offline marketing methods that are available. The first business I am going to compare is Currys and they are an electrical retailer.
They have stores in retail parks across the country. They sell electrical and houseware appliances. The company is part of the Dixons stores group and they are associated with businesses such as PC World and PixMania.Curry’s primary market is selling “white goods”, audio and video equipment, photographic equipment and computing products.
The white goods are products such as fridges, cookers, washing machines and water heaters. Their competitors are groups such as Comet and PC World. Their aim is to raise the bar in terms of being above all the other electrical appliance companies and be on top because they aim to become the leading electrical appliance company across the UK. Their values are to deliver great goods to the customers, know what they’re talking about and making their customers happy.They want their customers to feel appreciated about the fact that they are buying the goods from the stores and feel that they are being delivered exceptional customer service. The company chooses to open up in a retail park because it is close to the outskirts of the town centre and they are situated in a place that is easier for people to get to. For example some companies open up behind a motorway and this helps because customers can be attracted to the store when they see the familiar logo of the company and they also have big car parks which suit their target market as they can drop in quickly as a detour on a trip somewhere.
The second business that I am going to compare is Sainsbury’s. They are a grocery retailer which specialises in selling products in the following areas such as food/drinks, cleaning products, toiletries and technology/entertainment. Another main product that they offer as a business is a retail banking service and an opportunity to invest in retail property development. Their aim is to sell goods and offer them to the customers at fair prices in which are reasonable and will prevent the customer’s from shopping elsewhere for their goods.Another aim of Sainsbury’s is to make a profit to ensure that they can make a considerable amount of money to survive as a business. Their values are to promote their basics ranges which are items that are cheaper but from local produce farms. The values have offered a lot of food which has won awards and allowed the company to win even more to show for the successful things that they have attained in their business.
The size of Sainsbury’s as a business is vastly large but it is similar to Tesco in terms of what products are on offer. They are a multi chain business and they have stores all over the UK.The business is a public company and they are known as a supermarket however they do have stores which are considerably smaller and they are known as specialty stores. The reason why they are called that is because the specialty stores only supply goods which are selling a specific range of goods which are subject related. Sainsbury’s have a number of different ranges that include food and clothing. The different food ranges which they have are as follows: * Sainsbury’s Kids * Taste the Difference * Sainsbury’s So Organic * Sainsbury’s Be Good To Yourself * Sainsbury’s Free From Sainsbury’s Basics Sainsbury’s Kids range is seen as being very well balanced from a nutrition perspective and it can allow the parents to make good choices that are right for their children and ensure that they’re eating healthy foods. The foods are tested and approved by experts such as a group of school children who can analyse whether or not it’s good enough for children of their age groups.
Sainsbury’s Basics determines if customers can have a choice of buying cheaper quality goods if they’re on a low income and it helps them cut their weekly costs of buying foods.There is a range of over 700 lower priced foods and grocery items available for purchase. There are different shapes and sizes of vegetables and fruits, and also cheaper cuts of meat. Sainsbury’s so Organic establishes that the business were the first supermarket which sold organic products and this was back in 1986. Sainsbury’s have over 300 different products in this particular range and they are encouraged to try newer things and and it isn’t really expensive to try.Taste the Difference acknowledges that Sainsbury’s are passionate about delivering great food that is tasty and they have reviewed all the items that they have in their range and they want to ensure that their customers know that it’s the best food to buy in terms of the taste and quality involved in this. Sainsbury’s have therefore put together some good meals that taste really good in their opinion that is. Sainsbury’s Freefrom range offers more options for their customers who have gluten, wheat and airy intolerances and therefore insist on removing these particular ingredients from their diet because maybe they are allergic to these foods.
There is an item that is available for every occasion that is required and therefore the products have been created in a controlled environment and so this lets the customers know that the items will be safer to consume and complaints to the company may not happen. Sainsbury’s be good to yourself range service is all about the fact that they make it easier for the customers to make a healthier choice without having to compromise on the taste preferences.All the products are known to be either less than 3% or they have reduced fat in their products. (30% less than standard product). Sainsbury’s competitors are companies such as Tesco, Morrison’s, ASDA and LIDL.
The third business that I am going to compare is River Island and this company’s shop format is a menswear clothing retailer. They sell the latest clothing items for their customers to buy and they promote their goods using advertisements in the shop windows and on the Television. Their competitors are companies such as Topman, Mad House, Primark and Burton.Their aim is to sell men’s clothing to their customers at reasonable prices that are not too cheap or expensive. The last business that I am going to compare is a DIY retailer called Homebase and they are a company that sells DIY (Do It Yourself) goods for people that are interested in construction and practical aspects. They sell their goods at cheap prices and they have big stores which suits their target market.
They offer big car parks which widen their target market and allow them to purchase a lot of goods. They are located in retail parks and where their target audience are often found.M2 There are two different systems in two separate sectors.
One is from the food sector and the other is from the clothing sector. The food product that I am talking about is a pack of 4 burgers. The burgers are from animals that have been born and bred in England and they are killed for their food produce. The burgers are put in a place where they can be frozen to preserve the nature of how edible the product it is. The burgers are a perishable product because they can decay and go off as they have a sell by date incurred with them.There is a different process for this item because of this and it is set out that there have to be essential aspects to cover in terms of dealing with the process and situation. The foods are taken from an animal and they have to be put through a process in which they are checked for any evidence that the animal had a disease. The food has to be checked if the slaughter was carried out properly and in a clean environment.
If the food has passed some hygiene tests, then it can be sent off to the distribution centre to be packed, then the food has to be packed at the distribution centre and sent off to the stores.There will be a different way in terms of the transportation and logistics. The transportation of this product will have to be done quickly because the food can go off quickly. The transportation of the meat has to be done effectively in this aspect, the vehicles carrying the meats have to be designed and built to make locking and sealing easy, protect the cargo against extremes of heat and cold, and prevent infestation by pests. The vehicle design should permit effective inspection, cleaning, disinfection, and temperature control.The Interior surfaces should be made of materials that are suitable for direct food contact. For example, the surfaces may be made with stainless steel.
The meat transportation vehicles should be kept clean and free from dirt, debris, and any other substance or odour that may contaminate the product. They should be disinfected if needed. When the meat has arrived at the RDC, it should be handled with care and cut to a certain extent in terms of quantity and proportion for giving to the stores for sale to the customers.The products need to be packaged well and have specific information on it to certify whether or not it is to be consumed within a certain amount of time or it can be kept frozen for quite a few months. When the meat is cleared to be shipped off to the stores nationwide, they have to be delivered as soon as possible because the meat will go off and be deemed inedible. When the item has arrived at the stores, they should have been delivered in a suitable vehicle in terms of having the right temperature and the hygiene purposes ideal for the transportation of the product.Food retailers source largely from the UK; they have short lead times and can be very responsive to customer demand. The design of the distribution chain requires a capacity for frozen, chilled and fresh foods as well as packaged products.
Smaller independent and voluntary group retailers continue to use wholesalers. The next product that I am going to talk about is a clothing item which is a pair of jeans. The pair of jeans is a non perishable item and they have to go through a more different process than that of a food product. The creation of the material o make the jeans has to be made in a foreign country and it is sewn together to make the product wearable. The product is then checked to see if there are any defects are appearing and if the item’s suitable for people to wear. The jeans are transported to England and then delivered to an RDC. At the RDC, the item is checked to see if it is the correct one to be sold by the company to the customer, if it is the right one, then it is tagged and packaged up ready to be sent off in pallets to the stores so that they can sell the item to the customers.
The transportation of the product has to be well maintained because the item must be kept clean and not be dirty because the item has to look presentable and ideal so someone can buy it from a store. The item needs to be kept in the original packaging that it was packed with and to be packed in category pallets when it is delivered so that it can be easily found when the store manager and the delivery staff open the products to tag them with security tags. With clothing retailers, the majority of the products are sourced overseas and they need lead times which are longer for the delivery process.They aren’t responsive in terms of getting back to their customers and the products require hanging facilities.
D1 I am going to talk about the aspects of the distribution system in the food processing of meat at Tesco and explain why I feel it is effective. I think that the aspects of the distribution system in terms of food processing of meat is important because the business has taken on a lot of responsibility to protect the meats from getting contaminated and they have handled the production process well.The reasons why I think this are because Tesco has taken a lot of precautions to make sure that the foods that have been transported have been kept in a clean and tidy environment throughout the journey from the producer to the RDC to the stores.
The food has to be checked to see if the animal had a disease or illness prior to being slaughtered and to make sure that the slaughter is/was carried out carefully and in a clean environment.The meat has to be transported in a vehicle that is suitable for carrying meats in, in terms of having met the right room temperature and secure from any infections for example flies that could get in a few gaps in the vehicle whilst it is moving and start to infect the meat. The meat has to be packaged well to prevent this from happening. These points are effective because it shows that the company is taking steps towards making sure that their reputation is not tarnished by the way that they do their jobs.The company aim to do their best in terms of carrying out the delivery process correctly and ensuring that the items get to their destinations on time to prevent them from rotting. There are some bad points that I consider to be ineffective for the company and they are that if the deliveries for the meat are delayed then the business will lose a lot of money because they need to have the foods delivered on time to ensure that they can be distributed to the customers.
Another point is that if there are not enough animals to slaughter then there is a problem because there won’t be enough meat to be distributed.This will cause a problem between the supplier and the company that wants the goods because the goods should’ve been delivered to the company for distribution at an earlier time and they will struggle to make sales because of the loss of stock that isn’t coming in. An alternative to this problem would be that the company involved in gaining stock from farmers would have to look overseas for solutions and so they will have to arrange for some meats to be imported from overseas to then be sold in a supermarket to the customers.If the meat wasn’t packaged well during the delivery and transportation process, it would decay and cause illness to the customers who purchase the goods. The reason why the meat should be packaged well is because it should be protected from any foreign objects which may find their way into the meat and infect it with contamination and therefore be rendered inedible.
The changes that I think the company should make to its distribution systems are that they should impose a lot of rules in the distribution process to make sure that the meat is legally protected and transported the correct way.In this I believe that the companies handling the process of meat should not be lazy in terms of wasting time not transporting the meat from the van to the warehouse within 20 minutes as this is a legal requirement that all distribution chains should follow. The reason why is because if they transport a lot of meat from the van to the warehouse and haven’t finished the remainder of the transportation then they have to throw the meat away because the van has been open for a considerable period of time and the meat that has been left behind and untouched could very well be contaminated by now and is not to be eaten.The effect that it would have on the company would be that they would have to be extra careful when they are distributing the food from the van to the warehouse because if they give the company food that has been contaminated then they will be breaking the law and should be suspended or fined a lot of money as a form of punishment. Bibliography Book sources: Publisher: Edexcel; 3RD edition (24 May 2010) ISBN-10: 1846906342 -BTEC Level 3 National Business Student Book 1 (Level 3 BTEC National Business) Online sources: Class notes written in lessons Referenced information on College intranet (GO! )