Companies like Target or Walmart follow four company-level retailing concepts in every activity they engage in. By adhering to these principles, it allows them to run a tight operation, fulfill their customer’s expectations, and generates value for business overall.
Retailing Concept: Four Principles Every Retailer Should Know
The retailer determines the attributes and needs of its customers and endeavors to satisfy these needs to the fullest.
It establishes and monitors standards of customer satisfaction and strives to meet the clientele’s needs and expectations related to the product or service sold by the business.
Business strategies that tend to reflect a customer orientation might include: developing a quality product appreciated by consumers; responding promptly and respectfully to consumer complaints and queries, and dealing sensitively with community issues.
The retailer integrates all plans and activities to maximize efficiency. Today, retailers are integrating their physical stores with e-commerce sites, a telephone sales channel, and an eBay type solution to move out dead inventory items as rapidly as possible.
Some retailers are sophisticated enough to be emphasizing different merchandise in each channel. The whole multi-channel system is generally tied together with a database that captures customer information, manages inventory, identifies buying trends and facilitates more effective merchandise management.
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The retailer offers good value to customers, whether it be upscale or discount. This means having prices appropriate for the level of products and customer service. Here are four strategies you could try today to drive value:
The Hoshin Kanri technique is often described as a target-means strategy. The Japanese word ‘hoshin’ means ‘shining metal pointing direction’; ‘kanri’ means management or control. It is described as a system for translating an organization’s vision and objectives into actionable and measurable strategies throughout the company. It is a process for focusing many resources on a few high priority issues to achieve a breakthrough.
The greatest strength of this system is its ability to translate qualitative, executive goals into quantitative, achievable actions. It has proven its usefulness in the implementation of concepts like Total Quality Management (TQM) and Total Quality Environmental Management (TQEM).
It generally describes characteristics of the product or process as a function of the characteristics of the organization that produces it. From the Hoshin Kanri perspective, the success of the product or process development is directly linked to the ability of an organization to put into practice its strategic goals.
‘Kaizen’ is often translated in western literature as ongoing, continuous improvement. In contrast to the traditional emphasis on revolutionary, innovative change on an occasional basis, Kaizen advocates uninterrupted, ongoing incremental change.
Originally a Buddhist term, Kaizen comes from the words ‘Renew the heart and make it good’. Adoption of the Kaizen concept requires changes in the ‘heart’ of a business’s corporate culture and structure, since Kaizen requires companies to translate their corporate vision into every aspect of a company’s operational practice.
Kaizen can be implemented in corporations by improving every aspect of a business process in a step-by-step approach, while gradually developing employee skills through training and increased involvement. The key areas in implementing Kaizen are:
Shop floor – GENBA
Product – GENBUTSU
The facts – GENJITSU
By pursuing improvements in the three ‘GENs’, a manager develops an eye for problems. Gradual enhancements to the key operations – product development, manufacturing, service and sales – multiply into greater success, sustainable competitiveness and good business performance.
Poka-Yoke is the Japanese term for mistake-proofing. It is designed either to prevent an error from happening or to make an error obvious at a glance.
Therefore, a product development process that respects Poka-Yoke logic aggressively seeks to eliminate the possibility of errors and waste and to increase resource efficiency in the entire product lifecycle.
‘Multidisciplinary optimization’ (MDO) is an emerging discipline that relies on mathematics, statistics, operations research and computer science. Objectives and environmental constraints are stated in terms of mathematical equations, and the best solution obtained via a solution of those equations.
There is a more qualitative version of the MDO method that uses the same algorithm. It is more comprehensive than the quantitative method, since it includes all relevant components. On the other hand, in this broader version of MDO, a number of components are not easily quantified. The qualitative MDO must therefore include a degree of subjectivity.
MDO is a useful tool for product or process optimization. The equations can be defined so that the objective is to maximize quality and resource efficiency and to minimize cost, and thus to maximize value. However, it is important to identify and define all design parameters in order to achieve the desired result.
The retailer sets goals and then uses its strategy to attain them. Goal orientation is the degree to which a person or organization focuses on tasks and the end results of those tasks.
Strong goal orientation advocates a focus on the ends that the tasks are made for instead of the tasks themselves and how those ends will affect either the person or the entire company.
Studies have also used goal orientation to predict sales performance, goal setting, learning and adaptive behaviors in training, and leadership.
These four principles act as an anchoring philosophy to retail success. Unfortunately, this concept is not grasped by every retailer. Some are indifferent to customer needs, plan haphazardly, have prices that do not reflect the value offered, and have unclear goals.
Some are not receptive to change, or they blindly follow strategies enacted by competitors. Some do not get feedback from customers; they rely on supplier reports or their own past sales trends.
The retailing concept is straightforward. It means communicating with shoppers and viewing their desires as critical to the firm’s success, having a consistent strategy (such as offering designer brands, plentiful sales personnel, attractive displays, and above-average prices in an upscale store); offering prices perceived as “fair” (a good value for the money) by customers; and working to achieve meaningful, specific, and reachable goals.
However, the retailing concept is only a strategic guide. It does not deal with a firm’s internal capabilities or competitive advantages but offers a broad planning framework.