SCHEME MANAGEMENT

Sujith called Ramesh in his cabin and informed him that as sales were very low in his department he wants to put up some good schemes for the weekend. He wanted to put up two schemes-
Avail 25% off on all tops in the ladies wear,
Buy 2 trousers and avail 50% off on the third. It had given tremendous response last year.
During the weekend as usual there were lot of customers on the flow and everybody was busy purchasing. Sujith noticed that most of the customers were not aware of the offer being run in his store. Also the billing process was slow at the cash counters as most of the customers were verifying with the cashiers if there was any offer on the specific product purchased by them.
At the customer service desk he noticed that some customers were complaining that they were billed wrong on the products they purchased and they wanted a refund. On attending to one of the customer the staff at the CSD noticed that some schemes that was available on the ladies products were not updated in the system, even though signage were placed on these products informing about the scheme.
Sujith also noticed Ramesh running to and fro from the cash desk to the IT room along with some merchandise. He also noticed that some customers were also shouting at him.

What was the major problem in Sujith’s store and what was the reason for the same. What should have Ramesh done to avoid this?

Scheme Preparation:
In retail stores to satisfy customers as well as to improve sales and liquidate stocks exciting schemes and offers are often put up in the stores. To put up the right scheme on the right product at the right time is in itself a skill which the retailer or the store in-charge needs to have.
The store in-charge needs to have a thorough understanding of the products in terms of sale, age of the stock that is the period between the time it has hit the store till date, stock-in-hand, performance of the stock related to profitability, the best sellers and the slow sellers, customer profile, and market trend.

To make it simpler let us take an example of a departmental store dealing with apparels. In the men’s formal section there exists 5 lines of shirts which have been received in the store at various intervals. Assume that the cost price of the shirts is INR.300/- and selling price of the all the shirts are INR750/-.The category has informed to maintain a 60% margin on all the lines. The sales performance of the shirts also varies. Now two more new lines of shirts have reached the warehouse and need to be accommodated in the formal section. Hence to create space for these two new lines the department manager needs to come up with a good scheme so as clear the existing stocks and create space for the new stocks.

Below chart shows the data of the stock-in-hand of the five lines of shirts


Shirt

1
2
3
4
5
new line 1
new line 2
Stock-in-hand
575
425
567
250
565
750
750
arrival date
Nov-07
Dec-07
Nov-07
Jan-08
Jan-08
in transit
In transit
sales qty.till Mar-08
175
325
183
500
185
NA
NA
MRP
750/-
750/-
750/-
750/-
750/-



From the above data it is clear shirt 1 was a slow seller with lot of dead stock and also shirt 3. Shirt 4 is the best seller. To introduce the two new lines schemes have to be put on shirts 1, 2 and 3 with maximum offers on shirts 1 and 3.

Let us consider shirt 1
Total no. of shirts ordered is 750
Cost price = 300/-
MRP= 750/-
Profit Margin= 150%
Margin to be maintained= 60% i.e. can relax the discount maximum to 480/-
No. of pieces sold= 175

Below listed are some attractive ways the stocks can be cleared and maintain the required margin.
1. 125 more shirts need to be sold for break even if sold at maintained MRP of 750/- and open to maximum schemes on the balance 450 shirts.
· For ex: Avail 50% off or 60% off and so on. Can also use a scheme which will benefit the sale of other lines.
· For ex: To promote the sales of shirt 5 which is a new entrant compared to the rest of the stocks an offer can be put where one can avail shirt 1 for free. This will help clear the dead stock, increase the sale of the new entrant as well as make space for the new lines.

2. Sell the rest of the shirts (575pcs.) at 480/- (35% off) maximum and still make a profit.

3. Shirts 1 and 3 can also be sold as “Buy 2 for 999/-” and clear maximum stocks and also maintain the required margin.

While putting such offers care should be taken to maintain the margins as expected by the category team, to achieve top line and bottom line.

To make it a success the employees within the store need to plan and prepare well in advance so as no goof up takes place during the schemes being operational within stores.

Communicating the team about the scheme
First and foremost the relevant manager needs to communicate to his team regarding the scheme. It is his responsibility to explain each individual staff the application of the scheme in detail so as the staff feels comfortable during its operation and while explaining to the customer about the scheme.

To stock enough merchandise on offer
The staffs from the respective department need to ensure that stocks for the said period the scheme or offer that is going to run is available. The manager need to ensure that every staff takes this as an opportunity to liquidate his or her stocks and hence to stack all fixtures with maximum number of stocks. Availability of stocks during the schemes also entertains more walk-ins to the stores. During any scheme running in the store if stocks or proper merchandise mix is unavailable then it does not satisfy customers, its focus is lost and one ends up losing sales and the scheme turns out to be a flop show.

To keep the department ready
The manager needs to ensure that the department where the scheme is running is kept neat and clean, all the fixtures are aligned properly, merchandise displayed neatly so as it gives customers an impression to shop in the department.

To arrange for all signage
All signage need to be prepared with the updated schemes mentioned on them. These signage need to be then placed on the fixtures accordingly so as it communicates properly to all the customers entering the department.

To inform IT to update the scheme in system
The manager has to ensure that all schemes are updated by the systems personal so as during the billing the customer does not face any problems due to the same if not updated.

To inform Head Cashier about the scheme
Head cashier needs to be informed about the scheme running in the store so as he can communicate the same to his cashiers. The cashiers need to be aware of all schemes running in the store.

To inform CSD about the scheme
The customer service desk team also need to be updated about schemes running in the store so as accordingly announcements can be made to inform customers about the schemes running inside the store. Also it will help the desk staff to answer telephonic queries from customers regarding the schemes in case it has been put up in the media as well.

To inform the marketing team about the scheme
The marketing team need to be informed about the scheme well in advance so as they are prepared with all logistics required accordingly.

Pre-Event Preparations

In retailing major events are planned during festive seasons so as to attract customers. The traffic to the stores during the festive season is phenomenal and to make the full utilisation of the same retailers come up with good offers and schemes. Almost 40 -45% of the sales for the entire year is covered during the festive season. Hence it’s a very critical period for the retailers and to make it a successful event retailers need to plan and prepare well in advance for smooth operations so as the customers are benefited and also the store benefits from the same.
The success of the store and good business depends on how efficiently the event was pre-planned how effectively it was put into action.
The manager is responsible for the effective operation of the store during this period. He needs to check personally the requirements of each and every department. A checklist needs to be in place to take care of the same.

Checklist-Department wise:

Shop-floor:
· Extra sales staffs need to be manning the department.
During major events huge customer walk-ins is expected and hence there is a requirement of extra sales staffs (on temporary roles) for back-up and floor coverage.
· All cashiers need to be present.
Because the walk-ins will be high there will also be a huge conversion rate. Due to this to avoid long queues at the cash desks and to enhance the billing efficiency all cash tills within the store need to be kept operational, for which there will be requirement of full coverage of cashiers.
· Check all merchandise have proper tags, barcodes to ensure fast billing
The loss prevention team need to ensure all merchandise is individually tagged to avoid pilferage which will be very evident due to the crowd expected. Also to avoid problems and delay in billing at the cash counter all merchandise need to be checked thoroughly for availability of barcodes.
· Sufficient availability of hangers
Merchandise is ordered in volumes during major events, and hence it becomes very necessary to also avail extra hangers from the warehouse to display the same in the store.
· All VM signage to be in place
The department managers should keep all the signage mentioning the offers ready well in advance to avoid last minute mess up.
· Extra stocks of essential merchandise (socks, vests, etc.)
Such merchandise should never be out of stock at any given time
· Fill in all shelves to capacity
All the fixtures and shelves should be available with merchandise as per capacity; no fixture should be seen with less stock or sizes not available.
· Arrange back stock areas
Most of the stores have a back stock area to keep excess merchandise as well as back up stocks. This area needs to be well arranged at all time so as it becomes easy for the floor staff to pick stocks from the stock area whenever required without difficulty.
· Size sets to be organised
All merchandise displayed on the fixtures need to be merchandised size-wise so as it becomes convenient for customers to identify and pick the stock they require.

· Colour blocking to be done in advance
Colour blocking means arranging merchandise as per their shades of colours in a specific section to visually appeal the customers and attract them towards the section. Refer chapter on visual merchandising.

· Impulse areas to be fully stocked
Many essential products like handkerchiefs, socks, wallets, cookies, ready to eat items and other accessories are usually and most often placed near cash counters. these products help to top up sales as they act as impulse products to a customer at the shop floor or standing in a queue at the cash counter, who pick these products just for the sake of it or got an interest in the product at the last moment and made a decision to buy. Such a purchase is termed impulse buy and products are termed as impulse products. The areas, mostly at the cash desk, are termed as impulse areas. Mostly stall bins and stack bins are used to display these impulse products.

· All cartons and empty boxes to be removed from the shop floor
The shop floor should not be seen with cartons or boxes of merchandise lying around as these cause hindrance and inconvenience to customers.

· To create proper aisles for customers
All departments and sections need to be clearly demarcated with proper wide walking aisles. The floor should not look very congested with excess fixtures and merchandise displayed. All damaged goods to be cleared from the shop floor


Co-ordination with supply chain for timely delivery of stocks

Warehouse should be kept ready on-call for urgent deliveries. During events the warehouse need to operate on twenty four hour basis. It needs to be well equipped to deliver in times of any emergency, be it supply or delivery of stocks or home deliveries to customers.
· Systems(IT) should be tested for all discounts and overall efficient functioning before hand
· Updating and circulation of schemes sheet to all staff members
· Roster to be prepared well in advance

Cash counter:
· Additional cash tills to be installed.
If possible additional cash tills need to be installed in the shop floor to reduce customer traffic at payment counters, and to avoid inconvenience and problems for customers. Lack of cash tills within the stores lead to customers leaving the merchandise selected for billing to avoid standing in queues for long hours during peak time. Additional tills will help the store in efficient and quick billing, thus increasing business for the store.

· Float-coins and sufficient change need to be kept ready for the cashiers
The head cashier need to arrange for good amount of change from the bank well in advance to avoid falling short of change at the cash counters. Being proactive and giving a better service to the customers by arranging for such activities well in advance will certainly build the companies loyalty towards the customer and avoid the worry of losing customers in the long run due to lack of service.
Apart from this the head cashier also needs to take care of supply of consumables-shopping bags, staplers, staple pins, and other stationary requirements, Q-managers to control the queue, check the functioning of EDC machines and adequate supply of EDC rolls. He should arrange for extra sets of manual cash memos in case of emergencies, and make arrangements with associated banks for extra lines and support and Cash pick up arrangement. Hot listed card list also need to be provided to the cashiers.



Facility:
· Extra housekeeping staff
Because there will be a lot of customer walk-ins during any major events requirement of extra housekeeping will be necessary to cope up with the extra amount of workload that will exist.
· Additional security guards
Looking at the present scenario of major risks involved at public areas it becomes essential for retailers to arrange for extra security for safety purpose. Also stores become sensitive and get exposed to untoward incidents, theft, etc. during events. The deployment of extra security guards tends to minimize such incidents.
· AC maintenance, filters cleaned before hand
The maintenance department need to check maintenance of all A/C. Check has to happen to see whether the centralised A/C is functioning to its full capacity. All light bulbs and electrical points should be properly checked to avoid short circuits, etc. Generators servicing and stock of diesel need to be looked into.
· Opening and closing hours of the store need to be extended
· Valet parking needs to be under control
· Disaster management and evacuation plan should be in place
· Extra waste bins to be in place
· Extra chairs for senior citizens
· Delivery counter should be put up by the operations team
· PRO to keep all government officials informed accordingly well in advance
· A special team to be arranged to handle emergencies
· Extra plastic glass and drinking water facility to be arranged for customers walking inside the store.

CSD:
· Dedicated person for announcement
· Updated list of schemes running in the store
· Gift wrappers in place
· Scotch tape, rubber stamps, etc. in place
· First aid box to be re-filled
· Music and in-store entertainment to be organised
· Extra Tokens to be in place for baggage counter

HRD:
· Staff motivational incentives and rewards to be announced before hand
· Arrangement of refreshments for staffs
· All staff members to be advised to wear comfortable shoes
· Supply of Glucose for staffs need to be organised