A retail chain wants to open in a new area. Should it diversify the product chain? Should it open a new POS in the same vicinity? What could it do to increase profitability? What could be the possible considerations?
I am talking of a imaginative situation here per say. In order to improve operational efficiency to raise profits here are some of the things that the retail chain can do. Each company follows a trail of phases- namely, Revenue Generation to Cost Cutting measures to Value Addition – these are the simple steps from the start to the end.
- Measure total population within 5 kilo meters area, Sales/ Population for mom and pop shop, population density within 5 kilo meters radius to identify the set up of the retail store for a POS. These indicators in a positive manner give the indication of greater buying habits through a retail chain.
- Sales/ Product, Profit/ Product, Bundling of products, Product diversification – Historical data analysis about this things give a hint about the product diversification that the new retail chain can have.
- Integration of the POS at the national level, connectivity to ware house and inventory through product quantity threshold – This would allow to notice the trends of buying habits for a product in a national level to estimate product want and usage. A connection to the warehouse where a product quantity falls below a certain level is a striking factor for the products to come to the POS from the warehouse.
- Promotion via certain segmentation, statistical data through coverage and feedback – Through proper feedback on the age, sex, demographics, income level, and every product can be offered to certain segments based on bundling and differentiation. The maximum product usage can give hints for differentiation.
Economy of scale, raising bars in the profits later – Initially it should be driven by small margin and a greater volume, but when it becomes a one-stop-shop, the margin can be raised.
- Kid zone, 50 INR Zone, 100 INR Zone, 200 INR Zone, bundling of products in the generic zone as compared to the specific zone, historical data about item category and profits/item category – Dividing zones into certain zones as the kid zone, and specific denomination zones will lead to a greater margin. How? A thing priced as 45 – 49 INR can fall in that 50 INR zone letting people think that they are buying cost-effective products all at 50 INR, but in reality the margins are more.
- Purchase amount per bigger family members – promotional discount, enabling crowd pullers – The bigger the family has come for shopping, or the number of families coming for shopping with a greater amount of sales per member and number of people taken into consideration, the money back guarantee should be allowed.
- Corporate tie up- bank tie up, credit card tie up, loan tie up for spending habit can be done to ensure the data about spending habits and mutual benefits. Each one of them can explore mutual benefits with one another.
Adding value to the sales is the highest order need. Here are some things that can be done.
- Free delivery at the right time optimizing time and path, a simple note of thanks in mobile and e-mail – All this adds value to the sales, and a word of gratitude will win honors.
- Special discount day and scheme to address the time and day of maximum rush for two days a week like Tuesday and Thursday to attract crowd averse people.
- Cash back guarantee for POS, works like an ATM, free lift to home for bigger purchase for people having no cars for targeting customers far off in lieu of the cash back or discount is a good way to improve the value addition.
- A greater value addition for calling for purchase at a call centre, by looking at the web site for a specific product after identification for members at annual charges can apply.
- A greater value addition through the call centre for the help of replacement of bad products- take from home at a particular time and day as per schedule.