Sales and Merchandising in the Leading Cosmetic Retail Chain, Sa Sa - Report Example

321KM Sales and Merchandising – Assignment Executive Summary The paper is focused on the various important facets of sales and merchandising strategies employed by a retail chain enterprise named Sa Sa International Holdings Limited (Sa Sa). The discussion has encompassed importance of store location, category management of the business process, pricing strategy of the retail stores along with the significance of store design in the cosmetic retail stores. Moreover, the study has also focused on the buying and the sourcing strategies that are implemented in the modern retail segment. Buying and sourcing through the appropriate use of suppliers and vendors and the importance of obtaining an effective relationship in between them in order to obtain organizational benefits have been highlighted within this paper. Additionally, the importance of effective merchandising plan and modern merchandising techniques have also been focused throughout the study in relation to the leading cosmetic retail chain, Sa Sa. Table of Contents 1 Executive Summary 2 Introduction 4 Analysis of Operating Context of Retail Management 5 About Sa Sa 5 Store Location 6 Category Management 7 Pricing Strategies 8 Store Design and/or Infrastructure Management 8 Buying and Sourcing Strategies 9 Benefits of Strategic Sourcing 11 Merchandising Strategies 13 Visual Merchandising 14 Recommendations 15 Conclusion 17 Works Cited 18 Introduction With the immense growth in the retail sector, managing personalization and ensuring constant up-gradation of merchandising strategies are among the fundamental tools in order to achieve a significant position for a modern day organization. In the context of increasing competitive scenario in the retail merchandising, the organizations need to focus on the personal needs of the consumers along with making available the requisite products within the stores. The strategy can help the organizations to develop their customers’ attention by providing fresh products along with making it easy to manage the stock keeping units of the store. The process also assists to customize each store appearance for identifying the needs of the local consumers along with their buying behaviors. Moreover, the method is also supportive in terms of preserving consistency and brand reliability of the retail organizations within the competitive retail segment (Lash, “How to Successfully Manage Retail Merchandising and In-Store Advertising Campaigns”). The paper intends to analyze about the retail management framework of Sa Sa International Holdings Limited (Sa Sa) cosmetic retail group and its various perspectives of retailing its products including store location, category management, pricing strategy along with its store design. Moreover, the study also includes the buying and merchandising strategies of this retail chain organization with regard to the perspectives of retail management concept. Analysis of Operating Context of Retail Management About Sa Sa Sa Sa International Holdings Limited (Sa Sa) is one of the leading beauty product retailing groups within the Asian market. The organization deals in more than 600 brands including health and beauty products, skin, hair and body care products along with make-up products and perfumes through its more than 250 retail units. Sa Sa has been able to flourish its business growth with the concept of “one-stop cosmetics specialty store” by providing a large number of consumers with a huge collection of both exclusive and own branded beauty care products. The organization also has its online retailing service for the customers along with employing effective marketing tools in order to provide services through its various stores (Sa Sa International Holdings Limited, “Who We Are”). In the context of retail management concept, the chain retail organizations are associated with the geographically dispersed units that are organized by the headquarters of the retail enterprise. The various forms of chain retailing network may include holdings, sole-ownership and franchise stores that are normally operated by the headquarters of the retailing units. The headquarters of the retail units such as Sa Sa possesses various responsibilities such as ensuring effective store location, category management, preparing pricing strategies for the available products as well as store design or infrastructure management in terms of providing retail services to its customers. Store Location The store site location for a retailing unit is one of the major decisions, which is taken by the organization. There are certain numbers of influences which can affect the retail business by selecting a wrong site or unimpressive location for the retail units. The organizations in the modern day context are highly conscious about the selection of the store location of their retail units in order to ensure significant growth of the retail business. Store location is an important element for the organizations in order to realize and to place themselves as a part of the preferred choices of the customers which can deliver a competitive advantage for the retail enterprises. In the context of the retail chain units, the store location should be placed in the specific areas where a large number of people takes place in terms of buying such as, shopping centers, free standing outlet or non-traditional based store within the market place (Karadeniz, “The Importance of Retail Site Selection in Marketing Management and Hypothetical Approaches Used in Site Selection”). Sa Sa has more than 185 stores in the most sophisticated market places within Asia’s major cities of the nations such as Hong Kong, Malaysia, Macau, Singapore Thailand, Taiwan and China. The company deals with in excess of 400 brands along with 15,000 Stock Keeping Units (SKU) including a large number of beauty products (U.S. Commercial Service, “Cosmetics and Toiletries Market Overview”). Category Management Category management related effects are significantly important for the retailers for promoting the brand of a particular product category which largely increases the sale of the specific product category along with facilitating to increase store traffic and ensuring the enhancement of the other product categories of the store as well. Moreover, the category management of the retailing units is highly concentrated on the aspect of enhancing the sales of their own private label products. In recent times, most numbers of retailers are highly concerned with regard to the promotional offers of national or exclusive branded products within their stores which may affect the private label products. Therefore, the retail enterprises should attempt to incorporate the promotional activities and highly preferable selling strategies for of the private label category products within the store (Kamakura & Kang, “Chain-Wide and Store-Level Analysis for Cross-Category Management”). In order to enhance the category management aspect of Sa Sa, the retail chain organization has commenced wider performance accountability along with valuable purchasing strategies through the suitable category management structure of the company. The concept has enhanced the inventory plan and facilitated to develop product mix of the company which enables it to increase the number of product offerings as well as increases overall sale of its retail stores (SA SA International Holdings Limited, “Annual Results for the year ended 31 March 2011 Dividends and Closure of Books”). Pricing Strategies The pricing strategies of the products are also a vital facet for the retail organizations in terms of accumulating growth as well as sustaining the existing customers. The essential decisions of pricing policies are set by the headquarters of the retail units which also determine the pricing lists along with various promotional activities of the product(s) for the entire group of units or for specific unit in a particular region. From the perspective of pricing strategy of Sa Sa, the company develops the pricing of the various segments of products according to the facets of product sourcing, development and product placing performed intimately based on the market trends. Through its website by using e-retailing strategy, Sa Sa provides customers with price suggestion. In this process, the company also seeks information from the buyers regarding whether they have found a similar product as that is offered by Sa Sa at a lower cost. In that case, they have decided to ensure that they provide even more competitive pricing (SA SA International Holdings Limited, “Annual Results For The Year Ended 31 March 2011 Dividends and Closure of Books”). Store Design and/or Infrastructure Management Store design is one of the prime components of the retail units which can ensure the aspect of physical evidence for a retail store to attract the customers and to facilitate them to easily find out their requirements within the store. The retail stores need to utilize various tools of designing and maintaining the store ambiance to create more traffic to the store. Moreover, the store layout of retail units may also entail multifarious communication displays for the customers according to the product category. The retail units of enterprises in the present decade should also endeavor to enable the use of technological facet of designing the store layout. This is because the customers of the modern times are highly influenced by the various technological features such as creative lighting, presence of required computerized applications, product display arrangements among others within the store. The store design and infrastructure management of Sa Sa takes into consideration the creative and the exceptional ways of making its product assortments visually appealing. The company seeks to enhance the store design concept as one of the major development parts. The store designing process of the company ensures that its customers have the opportunity of having an easy access of the products within the periphery of the store along with providing a facility to the customers of having more interaction with the sales executives (Hong Kong University of Science and Technology, “Marketing Strategy & Policy”). Buying and Sourcing Strategies The buying and sourcing strategy of retail enterprises enables to simultaneously balance the designs and the features of the required arrangements with organizational objectives. The strategic sourcing procedure employed of an organization is the procurement procedure that intends to develop and to consider the purchasing activities of the organization. From the perspective of manufacturing unit, the sourcing is frequently considered as one of the crucial factors of supply chain management. The sourcing strategy of an organization examines the current spending of the organization including the type of products along with keeping the record of the purchased product units. It also helps to identify the vendors from where the products are purchased and to make the required cost analysis including the analysis of all the expenses. The sourcing strategy of the organizations enables to identify the appropriate supplier(s) and to improve future sourcing strategies in order to purchase similar products according to supply and demand situation by reducing risks and additional costs. Incorporation of new suppliers, making negotiations with new suppliers regarding the price, transportation facilities, product quality along with service levels are also important parts that an organization such as Sa Sa considers in terms of approving a buying and sourcing strategy (Nishiguchi 191). Product buying and sourcing is one of the valuable concepts used by the modern business world along with making effective practice of the process in terms of purchasing the products from its suppliers. Moreover, the strategic sourcing is applicable in the large numbers of procurement activities that takes place within the organization due to the rigidity within the pricing nature of the products (United Parcel Service of America, “Strategic Sourcing: Building a Foundation for Success”). The procurement functions of the modern organizations such as Sa Sa are measured to be a strategic program and are observed to accumulate values in terms of the processes of the entire business. According to the present day scenario, the procurement process of the organizations such as Sa Sa are associated with different responsibilities that include both operational and strategic levels activities in terms of sourcing functions. The managers in the organization are proactively engaged with reducing, controlling and estimating costs by performing the fundamental roles as well as building effective network with their suppliers. Their role extends to cross functional actions with manufacturing functions and supply chain activities. In recent times, in Sa Sa, especially in the Chinese business unit the procurement process strategy of the organization is becoming more effective and easy to handle by implementation of Enterprise Resource Planning (ERP) system, which plays a major role in order to process the procurement functions of the organization (Aqua Management & Consulting Group, “Material Sourcing and Buying Strategies”). Benefits of Strategic Sourcing The sourcing strategy of an organization is associated with the designing, planning, building effective relationship with the suppliers, finding out procurement and pricing strategies as well as identifying the supply chain requirements of Sa Sa. The strategy comprises a combination of its objectives aligned with or conforming to the goals of the stakeholders including financial, operational and productions along with marketing and distribution divisions of the company. Moreover, the strategic sourcing ensures considerable bottom-line advantages by reducing the cost of products/services that are purchased by the organizations. The sourcing and the procurement strategies have become sophisticated rapidly with enabling technological advancements in the use of mutual supplier management process along with e-procurement, and benchmarking (Kelton, Chertow & Boyd Inc., “Strategic Sourcing: High Gain, Low Pain”). However, global sourcing approach is a complex strategy which can also generate various difficulties in order to make successful implementation of it within the organizations such as Sa Sa. For instance, logistics and inventory management which include shipping and delivery are some of the significant operational problems determined by Sa Sa by involving international sourcing approach. The implications in the logistics management of global sourcing for Sa Sa have been observed in terms of its affects upon the aspect of reduction in the transportation costs for the various geographic location (Hong & Holweg, “Evaluating the Effectiveness and Efficiency of Global Sourcing Strategies: A Conceptual Note”). Moreover, the inventory planning and the distribution strategies of Sa Sa considerably play exceptional roles to facilitate it to provide its beauty products to every region of its existence both in the wholesale As well as retail business markets. Furthermore the company deals with more than 100 numbers of imported brands with a feasible strategy of purchasing from its international vendors as well as selling to its customers (SA SA International Holdings Limited, “Annual Results For The Year Ended 31 March 2011 Dividends and Closure of Books”). Merchandising Strategies The merchandising strategy as a part of the retail management is one of the important facets in terms of displaying the products of the store which can facilitate to attract the customers. An effective merchandising technique of a store can be able to generate a significant traffic of its customers in the store. The merchandising strategies play a crucial role in the retail sales and distribution. From the perspective of retail management, the merchandising is the physical display of the products of the retail store. Moreover, merchandising is one of the vital parts for the retailers to increase the traffic of its customers to the store. The process involves the facet of making communication about the desired products along with their various features and availability. The merchandising managers of the store have various responsibilities regarding displaying, advertising and categorizing of the products within the store. In the context of cosmetic products that are offered by Sa Sa, there is an extend number of product variances along with varied categories. The various ranges of products and their point-of-sale are critical parts to consider for the merchandising manager of Sa Sa. The objective of cosmetic retail store is to create a psychological affect on the customers’ mind to purchase those products. To create a purchasing intention on the customers, the stores employ a range of product merchandising techniques to create a sense of glamour, prestige and opulence related to the products of the store. These types of practice create confidence in the product quality along with the brand image. Sa Sa is also well-known for the exceptional store designing concept with a creative and decent merchandising plan. The cosmetic chain retail organisation is highly conscious with the display and advertising its large collection of product categories (SA SA International Holdings Limited, “Annual Results for the Year Ended 31 March 2011 Dividends and Closure of Books”). Visual Merchandising With the concern of successful cosmetic retailing, the retail stores of Sa Sa require to create a distinct and loyal brand image in the customers’ mind. From this perspective, the visual merchandising is one of the effective tools for the retailers to keep a place of their products in the customer’s mind through the way of displaying the products of the store. Visual merchandising of the store helps to create a brand image and ensures to build a positive influence in the customers buying trend that leads to increase in the sale of the store (Vaidya, “Visual Merchandising - Concepts & Concerns”). The method is not only crucial for communicating about the products and the store but also is vital to emphasize in order to enhance the advertising aspect to encourage the customers for purchasing the products. Visual merchandising of a retail store can be determined as the every visual parts of the store both internal and external that builds a positive reflection of total accomplishments of retail store (Levy and Weitz 10-730). According to the modern day context, the external display of a retail store is involved with creative and decent design to draw a large numbers of customers to the store. In addition, the internal display is also a vital factor with regard to the overall success of a retail enterprise. It is also important for the merchandising manager to apply various types of merchandising techniques of the products within the store. The creative techniques for merchandising presentation include idea-oriented display with creative style, colour organisation, price lining along with tonnage and frontal merchandising presentation. These kinds of strategies are largely employed by Sa Sa (Levy and Weitz, 10-730; U.S. Commercial Service, “Cosmetics and Toiletries Market Overview”). There are certain supplementary programs used in retail merchandising such as advertising, sales promotion along with various other related activities and their controlling through a proper accounting method is also an important part for Sa Sa. Moreover, the relationship with the investors as well as customers is a crucial factor for Sa Sa for continuous growth of the enterprise. The marketing strategies of Sa Sa also involve the purchasing and development of products as well as planning and allocation techniques that are highly influential parts for the retail organisation (The University of Tennessee, “Retail/Merchandising”). Recommendations According to the perspective of present day business scenario, the retail enterprises such as Sa Sa are highly concentrating on the aspects of buying and sourcing along with decent merchandising in order to create a considerable brand image and increasing the store performance. The buying and sourcing of products is an important part for the organisation in terms of facilitating the brand merchandise in a reasonable price to compete with the other retail organisations. In the context of buying and sourcing of the products or materials for a retail store of Sa Sa, the strategic sourcing or commodity strategies are the fundamental steps. Strategic sourcing comprises incorporating a strategic approach in order to select an efficient supplier. This is quite crucial for Sa Sa to consider in future. The approach reflects the arrangement of procurement strategy and business plan of the organisation in the context of integration and arrangement process, which plays an imperative role for the organisation in terms of making a transformation in the purchasing and supply management process (Rendon, “Commodity Sourcing Strategies: Processes, Best Practices, and Defense Initiatives”). With this concern Sa Sa, the cosmetic retail chain corporation, should focus on the buying and sourcing segment in terms of increasing higher productivity along with creating a significant brand image within the global retail sector. The company should also focus on the relationship with its suppliers and vendors for future expansion of its retail chain. On the other hand, merchandising is another important facet for the retail store to achieve a significant growth by selling products and increasing brand position. It helps to identify the customers’ tastes and preferences while they are visiting the stores. Interactive and attractive visual merchandising strategy can be employed by Sa Sa which can create an impulsive action among the customers to purchase the products as well. Sa Sa needs to be highly conscious in terms of representing its products alluringly as well as ensuring availability of the products by following recent trends. Conclusion The recent intensive growth in the cosmetic product retailing industry has commenced largely due to implication of a feasible practice of strategic retailing approach. According to the present scenario, the buying decisions of a large number of consumers are substantially affected by marketing and advertising strategies along with merchandising displays and store atmosphere. It can be observed that Sa Sa, as a leading corporation, has been employed prudent sales and merchandising strategies in order to compete with other companies in the sector. However, it needs to provide more focus on visual merchandising strategy in future times within its stores to allure its consumers towards its offered brands. Works Cited Aqua Management & Consulting Group. Material Sourcing and Buying Strategies. Listing of Events, No Date. Web. 12 Jun. 2012. Hong, E. & Holweg, M. Evaluating the Effectiveness and Efficiency of Global Sourcing Strategies: A Conceptual Note. Publications, 2005. Web. 12 Jun. 2012. Hong Kong University of Science and Technology. Marketing Strategy & Policy. School of Business & Management, 2005. Web. 14 Jun. 2012. Jennings, David. “Strategic Sourcing: benefits, Problems and a Contextual Model”. Management Decision. 40.1 (2002): 26-34. Print. Karadeniz. Mustafa. “The Importance of Retail Site Selection in Marketing Management and Hypothetical Approaches Used in Site Selection”. Journal of Naval Science and Engineering. 5. 3 (2009): 79-90. Print. 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Annual Results for the year ended 31 March 2011 Dividends and Closure of Books. Hong Kong Exchanges and Clearing Limited, 2011. Web. 14 Jun. 2012. The University of Tennessee. Retail/Merchandising. What Can I Do With This Major, 1998. Web. 14 Jun. 2012. U.S. Commercial Service. Cosmetics and Toiletries Market Overview. Hong Kong, No Date. Web. 14 Jun. 2012. United Parcel Service of America. Strategic Sourcing: Building a Foundation for Success. UPS Supply Chain Solutions, 2005. Web. 12 Jun. 2012. Vaidya, H. Visual Merchandising - Concepts & Concerns. Images, No Date. Web 14 Jun. 2012. Read More