Management Services: the Acts of Retailing and Channeling - Essay Example

RETAIL AND CHANNEL MANAGEMENT Ross (2009) & Philip, (2009) s that marketing is the process by which different parties engage in exchange of goods and services. A market comprises of buyers and sellers. Retailing and channeling are both concepts commonly used in marketing. According to Bhatia, (2008), retail refers to the process of selling goods and providing services from a single premise directly to consumers. Retail exercises entail the provision of goods to end users in small quantities. On the other hand, channeling refers to the methods or procedures through which a producer or a service provider moves the goods to the end user. Typical channel marketing methods used include direct selling or selling through a reseller. The act of retailing comes in when a producer delivers goods to consumers through a reseller. Delivery of goods from the production premises to the market goes through some stages involving different parties. The typical steps of a supply chain start with the delivery of goods from the producer to a wholesaler. A wholesaler buys goods from the producer in large quantities only to sell them to the retailers. A retailer comes in at the end of a supply chain where it sells goods to consumers in small quantities. A retail store may be involved is some channeling activities, which may include delivery of goods from their main store to other small outlets or to consumer environments. In the modern business arena, retail industry is growing at a tremendous pace. Recent commerce statistics shows that the retail industry will hit a $13 206 billion by the year 2015. Just like any other business and marketing concepts, the acts of retailing and channeling require management services. This brings us to the context of retail and channel management. All management activities involve the process of planning, organizing, leading, directing and controlling the involved processes. According to Neelesh (2008), the process of retail and channel management entails the acts of planning, organizing and directing the delivery and supply of goods from the retail stores to the end users. Retail management refers to all the integrated processes which facilitate procurement of the desired goods and services by a consumer. Retail management incorporates the management and marketing concepts in achieving the goal of effective provision and delivery of goods to the end users. An efficient retail management exercises accomplish the result of making customers’ shopping experience exciting. According to Nicholas (2005) & Gary (2005), channel management refers to the provision of goods and services to the customers using either direct or indirect supply processes. The goals of channel management aim at providing goods to retail premises in an effective and timely manner. Channel managers avoid situations which may result in shortage of goods in retail stores. Integration of the channel and retail management facilitates the process of achieving an efficient marketing system within any retail company. Introduction In this report, we will perform retail and channel management analysis courtesy of the WH Smith Retail Company. W H Smith is an England based retail company established back in 1792 by Henry Walton Smith and his wife. William Henry Smith, who was their eldest son, inherited the company after the death of his parents. This is where the retail store gained the name W H Smith. The retail store is a public limited company listed in the London Stock Exchange. This company employs approximately 16000 people in its retail stores over Europe. The company’s headquarters is situated at Swindon, United Kingdom. The company takes advantage of travel and high street environment in all the retail business practices. In the travel industry, W H Smith has its stores at the airports, railways stations, work places and the motorway service premises. According to Robert (2010), W H Smith operates 561 retail units in the travel industry alone. High street business comprises of 612 retail stores located across the major cities in UK. Having introduced the company, we will analyze the company’s strategic plan by performing a deep analysis of its retail and channel management activities across the entire business environment. In addition, we will analyze the company’s potential threats and opportunities. Upon identifying the main elements and performing a SWOT analysis of the company, we will provide recommendations on the problems identified in the strategic plan. Robert (2010) says that W H Smith took advantage of travel and high street business environment. As a result, the company’s retail stores spread across various geographical regions in the entire UK. During the early stages, Smith’s stores dominated Swindon streets. However, the company engaged in expansion activities during the 1970’s. This expansion exercise led to the development of retail stores in the entire England streets. In the recent past, W H Smith opened a new store in Northern Ireland. In addition, the company opened two more stores in the Republic of Ireland in the last two years. These Ireland stores are in the travel environments. W H Smith retail stores are found in Australia, France and the United States. In this regard, the company’s stores spread over a wide geographical region. Based on its wide geographical coverage, W H Smith operates in different social settings. In this regard, social forces influence the company’s practices in these different environments. Still on the macro-environment, technology presents both the negative and positive effects to the company. Technology enables W H Smith to employ internet marketing while the same aspect of technology presents some marketing threats due to substitute products in the stationery market. According to Robert (2010), W H Smith employs a unique retail formula in its travel and high street business premises. Being a retailer, Smith has an effective channel system which ensures supply of goods from the producers to its stores around the entire geographical regions. One of the main characteristic of Smith’s retail formula is the presence of its convenience stores at the travel and street premises. The company’s stores are set in strategic positions like entrances and exit areas of airports and motorway travel environments. W H Smith believes that a perfect retail formula takes into consideration the aspect of positioning. As a result, the company positioned all the 561 travel stores and the 602 high street stores in convenient environments accessible by most consumers. In these stores, the company’s management employs a retail mechanism that achieves effective positioning of goods in shelves. One of the company’s objectives as stipulated in the mission statement is to enhance the aspect of pleasurable shopping experience among its customers. According to Robert (2010), the company’s statistics shows that more than 300 million customers visit their store every year. In this regard, the company handles voluminous customers in the store at every instance. In its efforts aimed at enhancing convenience and avoiding congestion at any given moment, the company utilized the aspect of space within its business premises. The retail stores have spacey arranged shelves which are organized with respect to the different stationery products. Since its objective is to enhance pleasurable shopping experience of its customers, the business premises are hygienic and contain amble car parks. With regard to retail structure and formats, the company uses showcases in displaying and selling its products. These showcases allow customers to move around the stores and checking all the available goods. This freedom of movement and choice of products allows the customer to fulfill their wishes by selecting the product of their choice. In addition, the company has convenient cashier desks positioned at the exits of the stores. This retail formula of using showcases also facilitates easy management of the stores when restocking the products. Showcases also make maintenance services by the employees efficient. In its mission statements, the company is sensitive on the issue of environmental conservation. Therefore, the showcases respond to the concept of environmental conservation by reducing congestion at the counters. Competitor Analysis In all its geographical premises around the world, W H Smith operates free enterprise business environments. These environments have active competition in fighting to secure substantial portions of the stationery retail market. According to Robert (2010), W H Smith participates in more than one retail industry which includes the bookstore, music store, articles and magazines store. There are other established retail companies in all these three industries. In the UK, the three largest direct competitors include ASDA Group Limited, Amazon and Blackwell. Apart from the UK, these companies have established stores in other geographical regions around the world. In the 20TH centuries, W H Smith faced a lot of direct competition from the developing companies at those times. The rise of these competitor stores in the 20TH centuries led to the financial predicament that befell the company during the 1970’s. However, the company went public and raised capital for expansion. Consequently, W H Smith was able to acquire and merge with most of its direct competitors. Currently, some of the prevailing competitors in the stationery retail sector include the three mentioned companies, which cumulatively take about 40% of the total stationery market in the UK. In addition, W H Smith started experiencing indirect competition with the advancement in information technology. Integration of information into the internet has affected the company’s newspaper and magazines sector. Moreover, many books and articles are currently available in electronic forms. This has affected sales of academic and professional books in the company’s stores. Therefore, the internet and internet libraries are the indirect competitors of the company. Just like W H Smith, ASDA, Amazon and Blackwell are strong retail companies with solid strategic plans. These three companies have established retail stores across the UK streets. With the fact that the three companies have a 40% market share, their business practices are exemplary in the retail industry. All these companies can attribute their success to the effective strategic plans they use in their business practices. These strategic plans contain clearly defined objectives. For example, the objectives of Blackwell include maintaining and enhancing retail management services in the stores to attract new customers and keep current customers. In addition, Blackwell has an objective of evaluating the possible opportunities in the stationery retail industry and capitalizes in the opportunities. On the other hand, Amazon aims at optimizing their retail and channel management practices to enhance their marketing operations. ASDA has an objective of enlarging their market share through enhanced promotional services and the practice of reputable social responsibility role in their business premises. Target Market In its marketing practices, W H Smith segmented the entire UK market based on the demographic characteristics of age. According to Donald (2011) & Cooper (2011), age segments allow the company to sell products like toys to children, music to the youth and newspapers to the older generation. In addition, the company segmented the market into geographical regions around the U K and the world. The company’s target market is in the travel premises and the high streets in the Cities. All these markets are found in the urban areas of the subject countries. With respect to the assortment and products marketed by the company, the ideal target market for such products would be the busy and densely populated urban areas. Ressell (2004) acknowledges that most of the urban people are interested in information and other stationery materials in their daily activities. Offices and workplaces require stationery for their functioning. In addition, learning institutions needs printed and electronic books for their knowledge base. Therefore, the company has to avail the stationery to the right consumers. At this juncture, W H Smith strives to reach the right consumers in their rights places. W H Smith chooses to retail their products through high streets and travel ways in order to reach these consumers interested in stationery in a convenient manner. In the context of travel ways, the company can avail their assortment to potential customers comprising of scholars interested in books and those interested in other products like magazines and news papers. Robert (2010) states that the diversity of product interests of the entire population using travel and high street areas presents W H Smith with a perfect business environment of reaching the target market. Rogers (2011) states that customers’ profile enable objective performance of the marketing processes. Customer profiles specify the characteristics of potential customers who might be interested in the company’s products. Just like other business firms, W H Smith has developed a concrete customers’ profile detailing the characteristics of the potential consumers of their products. This customer’s profile enables them to concentrate their marketing activities to the right consumers in the entire retail market. Since the creation of a detailed customers’ profile, the company has been able to narrow down their marketing practices to the real customers; hence reducing their marketing costs in terms of promotion services. According to Robert (2010), the company’s management created a customers’ profile based on the elements of occupation, interests, location, media, likes and dislikes. W H Smith enjoys the market of professional employees who require books for purposes of developing their professional and personal skills at their professional fields. In addition, the company deals with scholars who require stationery as their learning materials. On the aspect of media, the company’s profile details those consumers interested in newspapers and magazines as their favorite media channels. The company targets consumers living in urban settings. Therefore, their retail shops are present in travel and high street areas of the urban settings. The company targets those members of the society who read and listens to music. On the other hand, these consumers have a dislike of acquiring their reading materials from public libraries. The target customers like using the stationery products at the comfort of their homes. Combination of all these profile characteristics enables the company to direct their marketing practices to the right consumer population in an economical manner. Product Offer Louis & David (2011) assert that assortment planning and management is one of the fundamental strategies used in retail stores. Proper assortment planning enables a retail company to enhance the aspect of customer satisfaction by availing the required range of products. According to Louis & David (2011), a target market characterized by varied customer interests in term of products, a retail store should stock a wide range of products due to corresponding variation in customers’ needs. Paul (2009) acknowledges that the basic elements of assortment are the product width and depth. Width of products defines the range of different products available in a retail store. On the other hand, product depth refers to the number of varieties of the same product available in a store. With respect to W H Smith, the company has a relatively wide range of products available in the store. Smith Company has six varieties of products which include books, magazines, stationery and cards, gifts, games and toys, computing and electronic devices. All these product varieties are available in the entire travel and high street stores of the retail company. On the other hand, the company has a deep variety of products available for each category. For example, in the books category, W H Smith has books of all the academic and professional disciplines ranging from sciences, arts to technology. In the category of magazines, W H Smith has a variety of 29 magazines for different topics and life styles. According to Robert (2010), the core assortment, which secures substantial amount of the store’s revenue, includes books and magazines. Stationery and cards are the basic assortment and yields considerable revenue with respect to the core assortment. However, eBooks, computing and electronics and toys are the edge assortments which serve to provide additional services to consumers. Paul (2009) acknowledges that buying and merchandising are inherent business practices in any retail store. Every retail company should carry out the buying and merchandise exercises in an informed manner to ensure objectivity of the company’s business practices. Proper buying and merchandising processes helps a merchant to appraise, choose, price and manage the company’s assortments in a manner that conforms to the company’s business objectives. According to Dennis (2002) & Malcolm (2002), merchandising entails the process of evaluating the market situations in terms of competition, product positioning and pricing issues. Before purchasing the varied assortment from the vendors and producers, W H Smith evaluates the market conditions in terms of competition from other stationery retailers. As a result, the company seeks to differentiate their stationery products from those of the other retail stores in the same industry to avoid head-on competition. Robert (2010) says that with respect to brand positioning, the company is actively marketing its brand throughout the entire business environment in the UK and other international cities. W H Smith also uses the elements of buying and merchandising to set an optimal price for their products. In the process of purchasing the products, the company employs solid negotiation skills in ensuring an optimal purchasing price for products from the vendors. In an effort to employ an effective buying and merchandising system, W H Smith uses customized merchandising software which facilitates effective merchandise management in the company. This customized software enables the company to manage purchases, prices and the total inventory for a specified period. Ross (2009) & Philip (2009) acknowledge that the main challenge in a competitive environment is the aspect of product pricing. W H Smith operates in an industry full of competitors. In this regard, price management is crucial in the company’s operations. The challenge in the retail industry is to set the price and manage the products’ prices throughout the marketing period in an efficient manner. In this context, W H Smith adopts some factors in deciding their product prices. These factors include cost, competition and customer-based pricing. These factors are responsible for the current pricing strategies employed by the company. One of the pricing strategies is competition pricing. Robert (2010) states that upon evaluation of the market environment in terms of competition, W H Smith sets lower compared to those of the competitors. In addition, the company uses a cost-based pricing strategy. The company takes into consideration the aspect of buying and merchandising cost when setting the products’ prices. The company sets a price that takes into account cost and profits after determining the required profit level. Moreover, the company employs customer based strategies through penetration pricing. Upon introduction of a product, the company sets a low price in an effort to bolster sales in the stationery market. When the product’s sales start to peak, the company increases the price to the required level guided by a competitor and cost-based pricing strategies. Store Layout and Visual Display According to John (2004) & Leigh (2004), store layout is the fundamental tool used to enhance sales and shopping experience among the customers. In the retail industry, space is an issue in market environments. In this regard, retail stores should utilize every available store in the market premises to optimize sales. In the context of W H Smith, the company adopts a straight floor in all its stores. This store layout proves effective in utilizing the spaces available in displaying products of different varieties. Paul (2009) says that the straight floor plan enables utilization of the retail space by making use of the fixtures and walls to create small spaces between the display shelves. The company integrates the aspect of layout and the visual display aspect to enhance an optimal retail environment in their stores. In the shelves, W H Smith uses the aspect of product size in enhancing display effects. In addition, retail stores use the color effect of their products to create an appealing retail store environment. The stores place brightly colored magazines and books at strategic positions to attract customers when shopping. In addition, the company’s stores have bright lighting system which illuminates the shelves. The company evaluates customer’s experience at the point of sales through customers’ responses at the counters. Straight floor plan and the visual display effects used enhance a friendly shopping environment for the customers. Customers can move graciously around the stores and identify their product of interest with easy. The shopping experience in the stores is further enhanced through quick purchase services at the counters and the packaging materials used for the purchased products. Therefore, the store employs all the tools and techniques of retailing in enhancing superior customer experience at the point of sale. Communication and Promotion Robert (2010) state that apart from the street advertisement and other promotional activities, W H Smith utilizes its point of sales is carrying out promotional services to the customers visiting the stores. The store uses these points of sales to communicate with consumers concerning new products or reduction of prices for certain products. W H Smith stores are full of display screens at the point of sale counters, and at strategic positions in the store. In addition, banners are placed at the exits and entrances of the stores in travel and high street areas. The company positions its point of sale counters at the exits of the store. These exits are where the customers spend humble time when purchasing the selected item. In addition, the company provides booklets and placards to customers after completing the purchase processes at the counters. These placards and booklets contain information concerning the variety of products offered by the stores and their respective price. These booklets and placards play a substantial role in performing promotional services of the company’s products. Therefore, the company utilizes its point of sale facilities in carrying out most of their promotional services. Location Strategy Ronald (2010) acknowledges that location is the most crucial aspect in the business practices of any company. In the retail industry, location plays a significant role in marketing products and services offered by the retailer. Therefore, a retail store should formulate a solid retail strategy that guides the location of its retail store in any retail market. Location strategies should be consistent with a company’s overall objectives defined in the mission statement. A business should have principles guiding the location of stores in any place within the suitable business sector. In the context of W H Smith, its location strategies conform to the goals of reaching the target market in a convenient manner. The use of travel ways and high street premises ensure the realization of this goal. According to Robert (2010), the company locates all its stores and retail premises in travel ways and streets. Most of the target customers use these travel and street areas in their duties. On the other hand, the company aims at availing their products in a convenient manner to the target customers. Therefore, the appropriate location strategy that conforms to this goal is to set up their stores in travel ways and high streets. Impact of Internet and Related Technologies Robert (2010) acknowledges that with the advancement in information technology, the company has recently ventured into internet marketing. According to John (2008) & Onkvisit (2008), internet marketing contributes a substantial portion of the total sales depicted in the retail industry statistics. As a result, most retailers are considering incorporating internet marketing into their business practices to get a substantial share of the depicted sales revenue. W H Smith started marketing their products through the internet five years ago. The online marketing catalogs used by the company provide details of all the product varieties available in the retail stores. A customer can select a product from the variety of products available due to the deep and wide product assortment. In addition, the company uses this online marketing practice to execute its promotions. W H Smith hosts an online customer database which manages orders and purchases practices. In case a customer is not within the central business district of a city where he/she makes the purchases, the company delivers the purchased products to the customer through its product delivery services. The introduction of online marketing services is responsible for the increase in the company’s sales revenue by 12% in the last two years. In addition, most customers are starting to engage in online business transactions with the company. This shows that the new aspect of internet marketing presents an enhanced customer experience. Strategic Issues Currently, W H Smith enjoys 12% of the entire UK market. The other firms like Amazon, Blackwell and ASDA take about 40% of the market share. In addition, there are numerous stationery retailing companies across the UK cities. Therefore, the UK stationery industry has intense competition with the limited market share. In the international markets, the firm meets other established stationery retailers dominating these markets. Therefore, the main competition issue faced by W H Smith is the aspect of rivalry in the stationery retail industry. According to John 920080 & Onkvisit (2008), rivalry has been propagated by some factors which include the presence of numerous retail firms in the market, the slow market growth and the high exit barriers. With respect to the numerous firms in the industry, W H Smith has to struggle to maintain its current market share. In this regard, the numerous market participants place enormous competition constrains to this company. The aspect of high exit barriers means that W H Smith must remain and compete in the industry. The assets and stores owned by the company are highly specialized for their unique retail methods. In this regard, it would be hard for W H Smith to be acquired by another company; hence the company is left with an option to remain and compete in the industry. Despite the issue of rivalry, the company has a competitive advantage when it comes to the retail methods and the lucrative internet marketing. According to Kenneth (2011) & Alan (2011), W H Smith is the leading online marketer of stationery in the UK market. Therefore, the strong online marketing places them in a better position with respect to competition. Moreover, its unique and effective retail methods comprising of excellent store layouts and superb visual display methods enhances pleasurable shopping experience among the customers. Therefore, the company still remains at a good position in the market and can still compete for more sales. Robert (2010) acknowledges that despite the competitive advantage displayed by the company, there are two main threats that could affect the company’s future. One of the possible threats is the entrants of new firms into the stationery retail market. In the recent past, the stationery retail industry has attracted numerous firms. The rate of increase of firms in the industry could affect competition. Presence of many firms in the industry will affect the current market share held by the company. Consequently, sales could drop and objectives of profit maximization could be affected. In addition, the company faces a threat of substitutes in the market. Stationery retail industry could be affected by the advancement of technology. Advanced technology means that some core and basic products sold by the company will be affected. Currently, various databases and other stationery retail companies are selling their products in electronic forms. The most common electronic products in the market currently are books and magazines. Jakki (2009) & Stanley (2009) acknowledge that every publisher and book producer is putting products in electronic forms. In addition, many consumers of stationery and media materials are switching to internet shopping. Therefore, there are numerous substitutes of stationery products in the market apart from those retailed by W H Smith. Another fact remains that these electronic products like books and magazines are cheap when purchased over the internet. This could make the current W H Smith customers switch to electronic products due to the difference in price. In this regard, the company could lose a substantial market share based on these two threats. Proposed Strategic Solutions According to Lawrence (2009), these threats can be dealt with using appropriate strategies that will enable the company’s current management practices to align with the company’s objectives. W H Smith aims at securing a large market share both in the local and international arenas. However, presence of threats could hinder the realization of these goals. In order to secure their future, the company should develop a strategic plan of dealing with these potential threats. The results obtained from SWOT analysis shows that the company has a competitive advantage based on its internet marketing. On the other hand, these strengths are counteracted by the weaknesses of the company’s human resource management. The company faces a lot of employees’ turnover within a short period than any other stationery retailer in the UK. In this case, the company should formulate strategies meant to solve the issue of employees’ turnover and the threat of losing the current market share due to new substitutes. According to Kenneth (2011) & Alan (2011), the main elements in a possible strategy will include utilization of its strong base of internet marketing in availing their products in electronic forms. This could entail creating a database where the current customers can download electronic books and magazines from the internet. In addition, the company should cope with the current digital provision of information so that they can fit into the marketing change resulting from the corresponding advancement in technology. On the issue of employee turnover, the company should introduce an effective performance management system that will enhance the practice of employee motivation in the industry. According to Kenneth (2011) & Alan (2011), implementation of these proposed strategies could encounter some barriers and issues that hinder smooth integration of the steps into the company’s corporate strategy. These issues include lack of the corporation among the employees while implementing the performance management system. Employees may feel that the performance management would unearth their incompetence; hence they may end up moving out of their jobs. In this case, the company should involve the employees in the process of formulating the performance management system. Participation of employees in the process will ensure calmness among them during the implementation process. On the aspect of substitutes, the company may lack the requisite resources to implement that strategy. Kenneth (2011) & Alan (2011) say that lack of financial resources and experts to implement the process could hinder smooth incorporation of the strategies into the main corporate strategy. In this context, the company should acquire the necessary resources and financial strength before embarking on implementing the process. Reference List Ross, B & Philip, K. (2009). Marketing: An Introduction. New York: Pearson. Peter, J. M. (2002). Retail Marketing. New York: McGraw-Hill. Bhatia, S. C. (2008). Retail Management. London: Atlantic Publishers & Dist. Nicholas, A & Gary, A. (2005). Retail Marketing. California: Routledge. Dennis, A & Malcolm, S. (2002). Retail Marketing. New York: Cengage Learning EMEA. Donald, J. B. & Cooper, M. B. (2011). 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