Lecture 1 introduction
Retail operations definitions:
- the sale of small quantities of items to the end consumer, as supposed to wholesale,
which involves selling to businesses.
- Activities involved in selling physical goods or services for customer personal or
household consumption
There needs to be a mechanism that breaks up the bulk of products.
Purpose of retail:
- break up bulk
- holding inventory
- offer an assortment (provide variety)
- lower consumer search cost
- offer services (curation, expertise, return handling)
The cost of retail: There are costs of the channel activities
- this increases the costs of products and services
- the costs of the supply chain can be as high as the costs of
the product
20 percent of the GDP is the cost of selling goods (retail)
Retail is always growing. People spend more because of the increase in GDP. Only during
Covid retail growth was negative. After Covid retail grew again.
Turnover vs sales volume
Turnover is price times number of products
sales volume is adjusted with inflation (price changes).
Some defining characteristic of retail:
- highly regulated
- when shops can open, when trucks can supply the stores etc.
- low productivity
- large amount of employees but this employees don't bring much profit
- thin profit margins
- average profit margins: groceries 2,4%, apparel 4,1%, consumer electronics
13,2%
- globalization
- Chinese firms coming to the netherlands
- rapid influx of technology
- new machines, drones etc. Tech industries are also investing in retail.
,Introduction to retail operations
This is a forward supply chain: It goes from the supplier towards the consumer.
The reverse value chain:
- This chain is concerned about retrieving, reusing, and recycling
- The retailers are forced to engage in reverse value chain due to legislation
Offline retail:
selling populair items
The scattered inventory problem: not knowing where the product is going to be purchased.
With online retail, you get rid of the stores. This means less real estate costs and inventory
pooling -> putting all product in a central warehouse
The fulfillment is from the regional warehouse. The product is going from the warehouse to
the online consumer via transport.
The online marketplace
- It is an example of a online platform
- allow third parties to sell through its digital channels
- common that the market place has its own assortment exp bol.com, amazon
In the market places there are alot of regulations.
,The opening of your own marketplace is a trend. The positives are:
- create a more engaging product assortment: new categories and brands
- source of additional revenues
The effect of Covid on retail
E Commerce has grown two to five times faster than before covid. Some of this growth is not
permanent. Online accelerated but it did not remove physical retail.
Online retail turnover is 3.8 procent growth. Physical retail is 5.5 percent growth in 2022.
The key takeaways
, Week 2 The omnichannel revolution
The omnichannel revolution
- single channel: only one channel to reach customers, only a physical store or only a
website
- Multi channel: Multiple channels to reach customers, a store, a website, an app etc.
these channels however are not linked.
- Cross channel: Multiple channels. It connects the channels. for example click and
collect or buy in store home delivery.
- Omnichannel: Takes cross channel to the extreme. At any point in time the consumer
can use different channels in their customer journey. they may use two channels at
the same time.
Omnichannel retail common definition:
- providing customers with seamless journeys across all available journeys.
Omnichannel customer journey
Not all the channels that customers use are under your control.
Retail operations definitions:
- the sale of small quantities of items to the end consumer, as supposed to wholesale,
which involves selling to businesses.
- Activities involved in selling physical goods or services for customer personal or
household consumption
There needs to be a mechanism that breaks up the bulk of products.
Purpose of retail:
- break up bulk
- holding inventory
- offer an assortment (provide variety)
- lower consumer search cost
- offer services (curation, expertise, return handling)
The cost of retail: There are costs of the channel activities
- this increases the costs of products and services
- the costs of the supply chain can be as high as the costs of
the product
20 percent of the GDP is the cost of selling goods (retail)
Retail is always growing. People spend more because of the increase in GDP. Only during
Covid retail growth was negative. After Covid retail grew again.
Turnover vs sales volume
Turnover is price times number of products
sales volume is adjusted with inflation (price changes).
Some defining characteristic of retail:
- highly regulated
- when shops can open, when trucks can supply the stores etc.
- low productivity
- large amount of employees but this employees don't bring much profit
- thin profit margins
- average profit margins: groceries 2,4%, apparel 4,1%, consumer electronics
13,2%
- globalization
- Chinese firms coming to the netherlands
- rapid influx of technology
- new machines, drones etc. Tech industries are also investing in retail.
,Introduction to retail operations
This is a forward supply chain: It goes from the supplier towards the consumer.
The reverse value chain:
- This chain is concerned about retrieving, reusing, and recycling
- The retailers are forced to engage in reverse value chain due to legislation
Offline retail:
selling populair items
The scattered inventory problem: not knowing where the product is going to be purchased.
With online retail, you get rid of the stores. This means less real estate costs and inventory
pooling -> putting all product in a central warehouse
The fulfillment is from the regional warehouse. The product is going from the warehouse to
the online consumer via transport.
The online marketplace
- It is an example of a online platform
- allow third parties to sell through its digital channels
- common that the market place has its own assortment exp bol.com, amazon
In the market places there are alot of regulations.
,The opening of your own marketplace is a trend. The positives are:
- create a more engaging product assortment: new categories and brands
- source of additional revenues
The effect of Covid on retail
E Commerce has grown two to five times faster than before covid. Some of this growth is not
permanent. Online accelerated but it did not remove physical retail.
Online retail turnover is 3.8 procent growth. Physical retail is 5.5 percent growth in 2022.
The key takeaways
, Week 2 The omnichannel revolution
The omnichannel revolution
- single channel: only one channel to reach customers, only a physical store or only a
website
- Multi channel: Multiple channels to reach customers, a store, a website, an app etc.
these channels however are not linked.
- Cross channel: Multiple channels. It connects the channels. for example click and
collect or buy in store home delivery.
- Omnichannel: Takes cross channel to the extreme. At any point in time the consumer
can use different channels in their customer journey. they may use two channels at
the same time.
Omnichannel retail common definition:
- providing customers with seamless journeys across all available journeys.
Omnichannel customer journey
Not all the channels that customers use are under your control.
