AN INTRODUCTION TO INCOME STATEMENT

We shall discuss on how we can arrive at our organisation's profit and loss without getting into the core financial side of the business, this is also known as Income statement. I have kept it as simple as possible for retail business users to understand the calculation mechanism and the various factors that impact our profits. I have not included capital expense, re-investment of funds, expansion expenses, paid-up stock value, creditors, debtors, dividends, etc. I have only considered a few simple expense and revenue components to give an understanding of how we can arrive at our Income Statement
Before we begin with the workings, let us understand the below terms that will be used in the calculations that follow :

TURNOVER
In simple business terms turnover is nothing but our front line sales i.e. the sales value realized after deduction of VAT, sales and service/miscellaneous taxes that are collected from customers.

COGS
This is the cost of goods that are sold i.e. (Weighted average cost of the goods sold X quantity sold). This helps us understand the purchase cost incurred for the sale of a good and this amount does not include VAT in it. This is the weighted average of the unit cost at which the goods are purchased. Refer "RETAIL FORMULAE - THEIR USAGE AND BENEFITS TO BUSINESS OPERATIONS" post to know how it is calculated

EBITDA
This is the Earnings that an organisation makes after its operational expenses and before applying Interests, Taxes on earnings, Depreciation of assets and amortisation cost. This is a simple base figure or percentage what a business makes from the turnover after incurring variable/ fixed operational costs. It gives us a picture on how efficient we operate our business and how much room we have for applying the other financial expenses as mentioned above.

PBT 
Profit Before tax or gross profit that an organisation achieves before paying the tax on earnings. This value can also be arrived at as a percentage by dividing it with Turnover value

PAT 
Profit after tax or net profit that an organisation achieves after paying the tax on earnings. This value can also be arrived at as a percentage by dividing it with Turnover value

OVERHEADS/ OPERATION EXPENSES
Every Business will have over head costs that are differentiated as fixed and variable cost for the given financial period. Examples for fixed expenses are Rent paid, Annual Maintenance Charges, etc.,
and for variable expenses are Marketing, Wages, Electricity & Water, Repair and Maintenance, etc.,
For further details check out the post "OPEX and CAPEX - Fixed and Variable Costs"

DEPRECIATION
Not all assets acquired by an organization will appreciate in value. Most of the assets depreciate in value over a period of time and it has to be eventually disposed for purchase of a new one. We cannot write off the total value of the asset after a few years in a single fiscal year in one go as it may lead pull down profits for the financial year drastically and more over it is not the right thing to do too for we have used the asset in business over a period of time. In order to manage this, the business will write off a percentage of the asset value as depreciation every year throughout the asset's life time.

AMORTISATION
Every Business will have to invest in technology, licenses and hardware but this should not be totally consumed as a expense for a single financial quarter or year because we will use them over a period of time though they are paid up front. So the lifespan of the technology, hardware and license investment is projected and the investment is split equally throughout the period. This is known as amortisation.

TAX
This is no the VAT or Service tax collected on behalf of the government. This is the actual tax on revenue that the organisation has to pay to the government. The revenue that will be considered here is the net revenue after deduction of all expenses, amortisation expense and depreciation.

I will summarise the workings at 4 levels i.e. Turnover, EBITDA, PBT and PAT with an illustration.

Retailer ABC has taken a franchise for Apple products in 4 States in India. He has 20 stores that are operational and sells all the latest apple gadgets. Lets see his sales for a quarter from April 2016 till June 2016 for both of his stores as given below

Based on the above sales figures we shall arrive at our EBITDA and PAT
Incomes
Total Gross Sales for the period  (A)                                             :  67,35,00,000
Total VAT Collected                                                                          :  8,27,10,526 (-)
Total Net Sales  (Turnover)(B)=(A/(1+VAT%))  or (A-V)           :  59,07,89,474
Cost of Goods Sold   (G)                                                                  :  49,00,00,000 (-)
Total Revenue  (C) = (A-B)                                                            :  10,07,89,474
Turnover Net Margin %  (A-G)/A X 100                                     :  17%
Expenses & Loss
Rental expense                                                                                  : 1,10,00,000
Salaries and Wages                                                                           : 1,20,00,000
Repair and Maintenance                                                                   :      3,50,000
Marketing Expense                                                                           :      6,00,000
Electricity and Water                                                                        :     12,00,000
Staff Welfare                                                                                     :     13,00,000
IT and Administrative Expense                                                        :     45,00,000
Insurance Expense                                                                            :     10,00,000
Logistics                                                                                           :     10,00,000

Shrinkage (Variance due to loss of stock)                                        :     10,00,000
Total Expense (D)                                                                            :  2,94,50,000 (-)
EBITDA   (E) = (C-D)                                                                    :   7,13,39,474
EBITDA %  (E/B X 100)                                                                :  12.1%

Interest Paid                                                                                      :     30,00,000 (-)

Amortisation value                                                                           :      55,00,000 (-)

Depreciation value                                                                            :     20,00,000 (-)

Total Income before Tax                                                                 :   6,08,39,474  

Tax Payable                                                                                       :   1,05,28,000 (-)

Profit After Tax      (P)                                                                    :   5,03,11,474

Profit Percentage to Turnover     (P/B X 100)                               :   8.5%                

The above shows how we can work a simple income statement by which we can get to know how our business operations is performing, which are the areas we need to work on and where we need to concentrate to reduce our expenses. All expenses can be expressed as a percentage of turnover to see which one of them actually eat into our profits more. I have shown the same in the below pictorial representation for all expenses as a percentage of turnover. I hope this helps to get an overview of an income statement.

WHAT ANALYSTS CAN LEARN FROM CHILLING BEER BOTTLES ?

As retailers we come across multiple issues in our day to day operations that cannot wait for an analysed corrective actions, so an immediate solution is needed that too a wise one. But we end up giving the same fix over and over again.
What we need to understand is that most of us keep doing repetitive spot fixes for the same problem over and over again without actually resolving the underlying cause to an issue. The solution can be explained with a simple example and I am sure this will change your perception and plan of action towards your day to day issues.
The answer is: How an out door caterer chills the beers in the Ice box for an event in less than 10 minutes and ensures that the chillness is retained throughout the event for the beers placed in the ice box. How does he do it? Its simple, he puts a layer of solid Ice at the bottom of the ice box and places the beer bottles above it. This will keep the beer bottles chilled for longer and to get that instant chillness, he fills with another layer above the beer bottles with crushed ice. That's the trick and yes some of you will be aware of this process.
We need to apply the same principle vice versa for our retail problems. Crushed Ice is a spot fix to an issue but it will not keep out the problem for long and it will repeat. The bottom layer of solid ice is the permanent fix to the problem which will keep out the issue for ever just like it does for the beer bottles throughout the outdoor event.
When you face a problem on the shop floor, it requires a spot fix and you have to give one before it escalates further and leaves the customer unhappy. But you should not forget the solid ice. Now you have to invest time and efforts to find the actual root cause to this recurring issue and provide the permanent fix to avoid a fire fighting situation again.
This will ensure that the issue doesn't resurface and also increase your management efficiency and customer satisfaction. A simple perspective that can give an effective solution to your day to day operational issues. CHEERS ! 

E-COMMERCE KILLING BRICK AND MORTAR RETAILING !! IS IT REALLY HAPPENING !

Many have argued and even a few are convinced that Online shopping revolution will kill E-Commerce but it has so far not happened. Yes people are vastly shifting from Brick and Mortar to Online to buy products but how many people are satisfied with their online shopping experience is a big question mark.
The answer lies in the reality we see around us, if customers shopping online are satisfied with the experience then why do we still have a huge crowd walking into shopping malls and department stores ! E-commerce will increase the customer's spending because of products made easily available but it will not kill BNM (brick and mortar) due to the follow reasons :

1. WE ARE SOCIAL BEINGS
2. DELIVERY COMPLICATION
3. SECURITY
4. EXCHANGES
5. SUSTAINABILITY
6. COMPETITIVE RIVALRY
7. SUPPLIER BARGAINING POWER

1. WE ARE SOCIAL BEINGS

We human like to socialise, meet people and have a new experience. All that we own and the importance they carry depends on the experience that we have got out of them. With that being said, how much do we enjoy shopping online in front of a computer. To be frank we don't enjoy or get an experience of shopping from it. We just buy online because we get better discounts or choices. In India we have got into the new practise of physically checking out an electronic product like TV or a mobile in a shop and then compare the prices online. Later we end up buying online since we get a better deal. But online retailers cannot sustain forever through discounts which we will discuss under sustainability. The top selling products of online retailers in India is electronics, in particular mobiles. This means we are still attached to buying our daily needs form Brick and Mortar stores. And people still prefer to buy product such as clothing, health and beauty, furniture and grocery from brick and mortar stores.

2. DELIVERY COMPLICATION

This is one key factor that causes a lot of discomfort to buy from online. We end up giving our office address to receive products from online retailers because we cannot make ourself available at the house awaiting a delivery. At the same time, we don't have the privilege of replacing a product then and there when received damaged and incorrect. And when the product is found faulty after a few days of use, we again need to wait for the pick up of the product and the replacement. Reverse logistics is a very expensive process for an online retailer and it directly takes a toll on their margin, so on a long run this will be discouraged by online retailers causing a lot of discomfort to the customers. Also for a country as big as India, online retailers will end up investing heavily on their Hubs and distribution centres increasing their logistics expenses.

3. SECURITY

Though this area has had a drastic improvement over the recent past, it is still open to hacks and insecurity. Online purchases of larger amounts are still not preferred by consumers and are also not encouraged by banks in India causing a huge hurdle.

4. EXCHANGES

As discussed in delivery complications, exchanges are still a complicated process while shopping online for both the retailer and the customer. It causes a lot of inconvenience and involves a lot of time and money. Taking back a faulty product or a wrongly delivered product from customer's place is highly unprofitable for an online retailer leading to unsustainable business model with respect to reverse logistics.

5. SUSTAINABILITY

This is an area yet to be unearthed. Currently online retailers are attracting customers through elusive discounts and better choices. But how long will an online retailer be able to sustain the customer base through promotions is a big question because this involves high compromise on operating margins. So far none of the Indian online retailer has attained break even or even come closer to attaining the same. This means the current business strategy is unsustainable because investments will not pour in without returns to share holders. An unprofitable business model cannot be a sustainable business model.

6. COMPETITOR RIVALRY

Unlike Brick and Mortar stores where the rivalry is restricted to a catchment or area, the rivalry for

online is has a wider bandwidth due to all the competitors having complete and easy access to the entire market or country. This triggers red ocean business strategy to be adopted by rivals to kill one another for market share. Exactly what happened and is continuing to happen between Amazon and Flipkart in India. Such rivalry is usually fought through heavy discounts causing an unsustainable business model which will force small players to quit the business model and it can also lead to Monopoly is smaller markets which is unhealthy for the market and the consumers. This will make sustainability of the players in the market difficult in long term and could lead to customer dissatisfaction and breach of trust.

7. VENDOR BARGAINING POWER

Currently the online market is on a peak growth phase in India and entering maturity phase in a few

developed nations. This ensures that the vendor bargaining power is low and online retailers/ market place have an upper hand. This enables better fund flow and relaxed payment options for retailers thereby enabling higher discounts that are specifically given by online retailers on top of vendor discounts, there by reducing the price even when turnover is low. But when E-commerce market matures similar to Brick and Mortar market then the vendors will have better bargaining power or will come on par with that of online retailer's there by tightening the free flow of fund and stabilizing market price of their products there by reducing discounts. This may lead to exit of online retailers who rely on discounts for sales push.

CONCLUSION

Below is the statistics of E-Commerce contribution to retail industry in USA from 2011 to 2015 and it is no way closer to the current market fear that E-commerce will kill Brick and Mortar. The fact is that Brick and Mortar stores are closing down because of inept management of business operational, market saturation, fund crunch and ballooning costs that need to be cut to retain profitability. Brick and Mortar model of retail is very much a viable business which will be profitable when managed efficiently over the years to come, even with the launch of new technologies like augmented reality and virtual reality.

Source : www.internetretailer.com

Eventually Retail Industry will emerge to be OMNICHANNEL where free movement of customers is encouraged between multiple channels during their shopping phase before finalizing their purchase. Hence E-commerce will only help retailers to improve their turnover and maintain competitive edge but it will not kill Brick and Mortar business model of retail, Never, Ever - DOT.

EFFECTIVE PEOPLE MANAGEMENT

Treating employees and customers on par is important for a successful retail organisation. Employees are our internal customers. A frustrated staff or a staff with low moral will leave customers frustrated. Hence the below points of staff management will add value to efficient customer service.

1. Hire
2. Induct and Educate
3. Observe and Discuss
4. Performance Evaluation
5. Promote

1. Hire

This is the primary and the most significant process in hunting professional talents who can deliver and take the organisation towards achieving its set goals. But getting the right talent for the right role is a complex task because all you have is only 2 Hours on the whole to shortlist an employee. Never hire a person just by looking at his resume and qualification, prioritise your interview questions on the below points :

Aptitude :
Test the interviewee on simple to complicated aptitude question to know when he/she stands with respect to reasoning and analysis skills

Attitude :
His willing to adopt different culture, willingness to do short term business travel, how he will treat his superiors, subordinates and his customers in particular

Communication :
Willingness to learn local languages, verbal and written communication skills

Ability to train people :
Must be willing to train people and should have trained his colleagues or subordinates in previous organisation if he had a chance

Expertise he has gained : 
A  few simple question to understand how anxious the person is towards learning new things and how much expertise he has gained from his past experience (Ask them to keep in brief)

His/her view on politics :
His point of view towards employee politics (see how straight forward, confused or diplomatic his response is, that's how political he will be)

Work culture he/she would prefer :
workaholic or slow worker or perfectionist or fast paced

Once you have scrutinised the above, then move on to his technical and operational knowledge in the respective field you are looking to deploy him/her in. A wise guy with a wrong attitude poses more danger to your organisation than a dumb employee who can be trained.


2. Induct and Educate

Induction process should be as detailed and simplified as possible, so that the new employee can understand and accept the new work environment he is getting into. Induction process should be well planned and did over a short period of time. The below points have to be covered in the induction process :
- Company History
- Company's accomplishment
- Organisation's Goals
- Vision and mission statement
- Work culture
- Organisation hierarchy structure and departments
- HR policy

Upon completion of the Induction process, classroom training sessions should be conducted on the respective Key Responsible Areas. Job description should be covered in depth to impart the role and importance of the employee. A simple test should be conducted at the end of the session to access the efficiency of the employee. The report card should be shared with the respective store manager where the employee is being deployed. This is assist the store manager to understand the strengths and weaknesses of his employees and to train them to convert their weaknesses into strengths

Induction and training is not the end of this process, regular training on various expertise and conduction educational programs will motivate your staffs and also improve their skill levels.
A detailed training on the new styles, products to be introduced for the season before the launch will build confidence in the staffs and also enhance their product knowledge.
Human Resource department should play a major part in this activity by encouraging staffs to do certifications and other skill improvement activities.
A few retailers have commenced Post Graduation Management programs for their staffs to take them to the next level in their career which will benefit both the employee and the employer. A very good example for this is Future Group, India.
Education should also be coupled with behavioural training programs to training staffs on behaviour and custom handling techniques.

2. Observe and Discuss

Store manager or the respective department manager should be well aware of their staffs' strengths and weaknesses. Also they should be aware how they are placed in the store among the other staffs, what regards the other staffs have for him. It can be effectively done with the help of "Johari's Window" technique.

The Johari window is a technique created in 1955 by two American psychologists, Joseph Luft and Harrington Ingham,used to help people better understand their relationship with self and others. It is used primarily in self-help groups and corporate settings as a heuristics exercise.
When performing the exercise, subjects are given a list of 56 adjectives and pick five or six that they feel describe their own personality. Peers of the subject are then given the same list, and each pick five or six adjectives that describe the subject. These adjectives are then mapped onto a grid.
Charles Handy calls this concept the Johari House with four rooms.
Room 1 is the part of ourselves that we see and others see.
Room 2 is the aspects that others see but we are not aware of.
Room 3 is our private space, which we know but keep from others.
Room 4 is the most mysterious room in that the unconscious or subconscious part of us is seen by neither ourselves nor others. (CREDITS : Wikipedia)

Open/Arena: Attributes that are known and recognised by both the staff and his peers. As a Manager you need to talk about this to the employee and advice what you feel is good and what he can improve upon

Blind Spot: Attributes that are known and recognised by his peers and not known to the staff himself. As a mentor you need to discuss this with the staff and understand how far are they genuine. Staffs are prone to do gossips in a people oriented environment. So blind spots may not always be genuine ones.

Hidden/Façade: Attributes that are known only to the employee but not known to others. Though this attribute can disturb the employee, for example personal problems which can deteriorate the employee's performance should be addressed to if feasible. For example if an employee needs paternity leave for a longer period of time, then you can route it though the Human Resource Department and provide relief to the employee rather than forcing him to work under mental pressure. This will improve both the employee moral and his regards for the team and organisation.

Unknown:  Attributes that neither exists or not known to the employee and his peers. As a manager you could have noticed these attributes through your observation. You need to discuss these and it can help is improving the capabilities of the employee

4. Performance Evaluation :

Performance Evaluation is a more friendlier alias for Appraisal. Maximum efforts should be put in by managers to understand the strengths, weaknesses and opportunities for every single employee reporting to him at the store. Appraisal or Performance evaluation should be done at least twice a year or half yearly, to check and review your employees' performance.
Performance evaluation should be done in three ways to get effective results as classified below :

1. Self-Evaluation : As an employee of the organisation, the staff should be given an opportunity to review his performance for the period of time. Give a set format with their KRA and rating scale. They will then have to rate themselves how they have excelled in each of their KRAs. He should also be given a column to mention his areas of improvement and what he expects from the organisation in the current appraisal cycle

2. Peers' Evaluation : Performance evaluation in a retail store should not just be a two way review just between an employee and his manager, it should be a three way review where is his colleague and managers of other departments should also be involved. They might play a very minimal role by just giving their review briefly about each employee but this will help you understand how the employee stands among his colleagues and also to understand his Blind Spots

3. Actual Evaluation/Appraisal Process : This is the most important and the final step and it does not begin after the above two process but well before them and it is a continuous process  and part of the manager's KRA. Keep a small track sheet or a log book for your department and list down your employee's names with their respective categories. Then keep dotting down their achievements, performance details, customer appreciations, etc. to be finally reviewed at the time of appraisal. With a detailed performance review already in a manager's hand, he will be able to compare his with others' reviews and come up a comprehensive and unbiased appraisal review

4. Promote :

This is one of the key motivating factors for every employee. Promotion should motivate an employee and appreciate him for his work. There should be an elevation is both his pay cheque and his position when the employee has hit the right chords with his KRA. The new position or promotion given should help the employee learn new expertise and diversify his skills, so that his learning is not halted. Whenever we promote a staff to higher responsibility it is advisable to change his store location post training to ensure he is comfortable to execute his new duties without any hassle which could be caused by his ex-colleagues. When a capable and efficient employee finds himself stagnant in the organisation, he will move out as the job market is always interested to absorb good talents.
Losing a well trained employee to a competitor will cost you both in business and in operations effectiveness because retail space in a people oriented business.
Below points are to be considered while promoting a staff :
- New position to be challenging and motivating the staff to improve his skill set
- Proper salary correction to be done considering the market standards
- Formal re-introduction to be given to store staffs on his new roles and responsibilities
- A short term review date to be set and communicated to the employee for reviewing his performance and difficulty he faces in his new role

           HIRE - TRAIN - CHECK - ADVICE - REVIEW - PROMOTE 

OMNICHANNEL RETAILING / CROSS CHANNEL RETAILING

What is Omnichannel retailing , to understand this we need to first understand the various channels in retail industry :
1. Brick and Mortar stores (BNM)
2. E-Commerce
3. Catalogue Stores


1. BRICK and MORTAR STORES

These are the regular retail stores where we walk in, pick our products, bill them and leave. Though they are customer friendly, it is becoming more and more expensive for retailers to maintain physical stores in today's retail environment. With retailers working on wafer thin margins in grocery and FMCG, it is getting difficult to maintain profits by running a physical store. Moreover brick and mortar stores have high overheads such as Monthly Bills, Repair and maintenance, store sales staffs, management staffs, housekeeping and security expenses, rentals, CAM charges, etc. To dilute the expenses, retailers have moved on to open bigger Hypermarkets and reduce the number of departmental and supermarkets in their chains. Exclusive brand outlets are fading off and multi-brand outlets are gaining popularity in value retailing. In this growing trend small retailers and entrepreneurs find it difficult to penetrate the market and fight alongside with big time retailers. This is also one of the main reasons FDI in Multi Brand Retailing is opposed in India. Types of Brick and Mortar stores are :
- Chain Stores
- Department Stores
- Category Killers
- Store on Wheels
- Dark Store


2. E-COMMERCE

The latest mantra of every retailer. Reduced operating expense, better offers for customers, more number of products to offer, etc, are the benefits of E-commerce retailing. The best example is FLIPKART, which started of an online book store with a total face value of just 4,00,000 and has grown into a muti billion dollar company over a short time span of less than 10 years
(60.8 billion in revenue for FY 2013-14)
Flipkart is an e-commerce company founded in 2007, by Sachin and Binny Bansal. It is registered in Singapore, and owned by a Singapore-based holding company;. It operates in India, where it is headquartered in Bangalore, Karnataka (Credits : Wikipedia)
Online stores also offers customers a wide range of products, one stop shopping and home delivery options. Competition in Online retailing has further pushed the online retailers to offer various modes of payment from online payments to cash of Delivery. E-commerce is also helping the customers to save time in today's fast paced life. A few online retailers have taken the technology to new levels, one such retailer is RAYBAN who offers customer to try their sunglasses in a virtual environment.
You can try it if you haven't through the below link :


RAYBAN VIRTUAL MIRROR : http://www.ray-ban.com/usa/virtual-mirror

3. CATALOG STORES

Catalog stores , also known as catalog merchant. In this case the merchant sells his product to his customer through catalogues. Once the customer fianlises his/her selection then the merchant picks the product from the back warehouse and bills it for the customer. This is cost effective but with Online stores gaining market, catalog stores are fading off.


OMNICHANNEL RETAILING

Now that we have understood the above channels of retailing, we can proceed to Omnichannel Retailing. Omnichannel was preceded by multichannel retailing where in the retailer had presence in both Brick and Mortar and in E-commerce channel of retailing. Slowly multichannel retailing gave way for Omnichannel retailing where in retailers have one database serving all their products to both the customers online and offline. Customers can surf online and buy from a BNM store or see the physical product in a BNM store and buy online. This has also taken shopping experience to a all new level where in when a particular product is out of stock in a BNM store, sales staff can assist customer purchasing the product online and pay for the same at the BNM store or take a cash of delivery. Omnichannel retailing has picked pace and will be the future of retail industry. In near future, retailers will have fewer stores, either exclusive or cash and carry format stores and the rest will be Hubs spread across geographic locations for distribution of products purchased online. Customer loyalty programs will play a big part is retaining customers, we will discuss the same in my future blog. BNM and E-Commerce are closely interlinked in this format and with mobile technology revolutionising the way we browse, retailers are releasing apps in various platforms of mobile OS.
Thus making their presence in Mobile, social media and PCs through E-commerce and through BNM stores in tangible format for customers to choose from. Pricing strategy and category mix is usually maintained the same across all platforms thereby ensuring hassle free shopping for customers.
Dark Stores also known as dotcom centre, these are retail outlets or distribution centres that caters exclusively for online shoppers of that particular retailer. Its a large warehouse that can either be used to facilitate a "click-and-collect" service whereby a customer collects an item they have ordered online, or as an order fulfilment platform for online sales.
There is a new format of retailing which is also gaining popularity which is CLICK and COLLECT stores. Click and Collect model enables the patrons to avail a personalised, one-to-one service and experience the brand first hand. Unlike the conventional retail shops, these stores are also equipped with iPads that give access to the online portal as well aid the customers to place an order instantly in case of non-availability of a product. These facilities are transforming the whole process of purchasing products into a gen-next experience.
LENSKART , an Indian Eye-wear retailer has introduced this format of retailing in India recently


Happy Shopping :)

NEVER TAKE YOUR CUSTOMER COMPLAINTS LIGHTLY !!

To be a successful organisation, we should never take our customer suggestions and complaints lightly. In fact we can study our company's performance and gaps from  customer complaints and suggestions. Below two examples will throw light on the same :

1. GENERAL MOTORS MIFFED WITH PURCHASE OF VANILLA ICE CREAM !!

Never underestimate your Clients' Complaint, no matter how funny it might seem!

This is a real story that happened between the customer of General Motors and its Customer-Care Executive. Please read on.....

A complaint was received by the Pontiac Division of General Motors:

'This is the second time I have written to you, and I don't blame you for not answering me, because I sounded crazy, but it is a fact that we have a tradition in our family of Ice-Cream for dessert after dinner each night, but the kind of ice cream varies so, every night, after we've eaten, the whole family votes on which kind of ice cream we should have and I drive
down to the store to get it. It's also a fact that I recently purchased a new Pontiac and since then my trips to the store have created a problem.....

You see, every time I buy a vanilla ice-cream, when I start back from the store my car won't start. If I get any other kind of ice cream, the car starts just fine. I want you to know I'm serious about this question, no matter how silly it sounds "What is there about a Pontiac that makes it not start when I get vanilla ice cream, and easy to start whenever I get any other kind?" The Pontiac President was understandably sceptical about the letter, but sent an Engineer to check it out anyway.

The latter was surprised to be greeted by a successful, obviously well educated man in a fine neighbourhood. He had arranged to meet the man just after dinner time, so the two hopped into the car and drove to the ice cream store. It was vanilla ice cream that night and, sure enough, after they came back to the car, it wouldn't start.

The Engineer returned for three more nights. The first night, they got chocolate. The car started. The second night, he got strawberry. The car started. The third night he ordered vanilla. The car failed to start.

Now the engineer, being a logical man, refused to believe that this man's car was allergic to vanilla ice cream. He arranged, therefore, to continue his visits for as long as it took to solve the problem. And toward this end he began to take notes: He jotted down all sorts of data: time of day, type of gas uses, time to drive back and forth etc.

In a short time, he had a clue: the man took less time to buy vanilla than any other flavour. Why? The answer was in the layout of the store. Vanilla, being the most popular flavour, was in a separate case at the front of the store for quick pickup. All the other flavours were kept in the back of the store at a different counter where it took considerably longer to check out the flavour.

Now, the question for the Engineer was why the car wouldn't start when it took less time. Eureka - Time was now the problem - not the vanilla ice cream!!!! The engineer quickly came up with the answer: "vapour lock".

It was happening every night; but the extra time taken to get the other flavours allowed the engine to cool down sufficiently to start. When the man got vanilla, the engine was still too hot for the vapour lock to dissipate.

Even crazy looking problems are sometimes real and all problems seem to be simple only when we find the solution with clear and logical thinking.

Don't just say it is " IMPOSSIBLE" without putting a sincere effort....
What really matters is your attitude and your perception.


2. SAINSBURY TAKES ADVICE FROM A 3-YEAR OLD - "RENAME YOUR BREAD"

A rigid attitude might just be the antithesis of great customer service. Proving that they’re a company that knows how to have a little fun, this next story from Sainsbury’s supermarket highlights how your support team should spot great opportunities to do things that are quirky and out of the ordinary.
Lily Robinson (who insists that she is three and a half years old) was quite confused by one of Sainsbury’s products called tiger bread. In her eyes, the bread didn’t resemble a tiger at all, and in fact looked very much like a giraffe.
It’s hard to disagree with her!


With a little assistance from mom and dad, she wrote a letter to Sainsbury’s customer service department. To her surprise, customer support manager Chris King (age 27 and one-third) told her that he couldn’t agree more.
He explained the origins of the name:

“I think renaming tiger bread giraffe bread is a brilliant idea – it looks much more like the blotches on a giraffe than the stripes on a tiger, doesn’t it? It is called tiger bread because the first baker who made it a loooong time ago thought it looked stripey like a tiger. Maybe they were a bit silly.”

Lily’s mom enjoyed the letters and ended up posting them on her blog. Before long, this cute correspondence was a viral hit, and the pressure was on for Sainsbury’s to change the name of the product to the much more appropriate giraffe bread.
Knowing the customer was certainly right in this instance—and spotting an unusual opportunity to do something fun—Sainsbury’s changed the name of the bread and put signs around their stores that give a humorous nod to Lily’s original idea.



FOR MORE CUSTOMER SUPPORT TALES FOLLOW THE BELOW LINK :
http://blog.bufferapp.com/great-customer-service-legendary

6Ps OF RETAIL MARKETING

I attended my first off campus interview with an experience of 1 year. I was asked this question by the interviewer. I was baffled by the question WHAT ARE THE 6Ps of RETAIL !!
But the interviewer did not give a sarcastic laugh , like most interviewers do when the interviewee cuts a blank face. He instead explained me the 6Ps in brief and I thank him for that till date because I never had to learn it more than once in detail to remember it. I hope the below section will help you to understand what I have understood and learnt so far about the 6Ps of Retail

THE 6Ps of RETAIL MARKETING :

1. Product
2. Placement
3. Price
4. Promotion
5. People
6. Pixel

Each of these 6 Ps have equal importance in running a successful business and contributes to higher turnover when kept in check and analysed for improvisations on regular basis. Now lets discuss the same in detail :

1. PRODUCT :

A product is anything in a tangible or intangible form sold by an organisation to a client for profits. It is the assortment of product sold by an organisation that defines the purpose of the organisation and its existence in the market. Simple examples for intangible Products can be Insurance policies, BPO services and for tangible products will be Fruits, grocery items, clothing, etc.
All retailers will categorise the products based on Manufacturing, Procurement, sales and seasonality


CLASSIFICATION BASED ON MANUFACTURING (applicable for "in-house products")

1. Core or Flagship products
2. Basics

CLASSIFICATION BASED ON PROCUREMENT

1. Consignment
2. Concession
3. Regular
4. Deposit
5. Non-Trading
 
CLASSIFICATION BASED ON SALES

1. Top Selling
2. A Class , B Class and C Class products based on average sales in descending
3. Clearance goods

CLASSIFICATION BASED ON SEASONALITY

1. New Launch
2. Continued Products

We will discuss the above in detail when we discuss Product classification in upcoming chapters


2. PLACEMENT :

Placement can be subdivided into two types in case of a brick and mortar store :
- Visual Merchandising
- Store location

Visual Merchandising is the art of placement of your products at the right place in the shop floor, which will in turn act as silent salesmen to your customers improving both your sales and your customers' shopping experience. Visual Merchandising covers effective signage placement, cross merchandising, floor plan, gondola placements, aisle spacing, television placement, window displays, etc. We will discuss visual merchandising in detail in the future chapter on the same.

Store Location plays a vital role in attracting walk-ins i.e. number of customers visiting the store. A store placed in a mall's ground floor, a store well connected by public transport, a store with good parking space will attract more customers than a store failing in these criteria. Type of customers and customer needs in the store's catchment area should be studied before finalising the location. A very simple example can be, we cannot open a jewellery store in a high security risk area even if the area is well connected by public transport which will in turn cascade to higher walk-ins.


3. PRICING STRATEGY :

Pricing strategy is the art of pricing your products, yes its not just a job of fixing margins. It involved very niche expertise of understanding the customers, catchment and the product life cycle. For example a merchandiser while maintaining the price of a product would consider the below points:
- introductory products
- standard product or a regular buy product
- flagship products
- non selling products
- out of fashion
- clearance
- off sale season
- competitor's pricing
- budgeted margin percentage for the product category
Based on the above a merchandiser will decide whether he has to go with a promotion strategy or mark-up strategy or mark-down strategy or clearance pricing strategy.


4. PROMOTION : 

Promotion involves the various steps or measures you take to ensure your message reaches your customer. The message can be brand image , merchandise, loyalty program or your presence in the market. Promotion can be divided into two simple types :
- Above the line Promotion
- In-store Promotion
The first being promotions done outside the store premises like hoardings, flyers, etc and latter being in-store signage, window displays, visual merchandising, freebies, etc.
The purpose of every promotion will be to increase the following :
- Sales
- Customer Walk-in
- Customer Conversion
- Average Bill Value
- Brand Image

5. PEOPLE : 

People are the face of any organisation or retail brand. It is its people who define the success of an organisation. With retail still being people oriented industry unlike manufacturing, having well groomed and trained people will help your organisation achieve its goals and mission.
Therefore recruitment and training of employees is of high priority and importance in a retail environment. Skilled sales staff can enhance your sales and customer loyalty multiple folds. Ensuring high morale in team members and management staff will ensure very high return on investment for the higher management. Human resource department plays a very vital part in people management.


6. PIXEL : 

Pixel covers the technological front which are used for promoting our products.
We are in the age of Internet and people spend a lot of time online to connect and communicate with one another. This window provides us a huge opportunity to communicate and promote our products and brand image. Online marketing has a faster reach and with Facebook, Blogging gaining huge popularity they can be utilised as good marketing instruments to reach out to our customers.
Other ways of marketing can be done through bulk messaging to loyalty customers, emails and on our official website and pages.