From Thomas Bata to Nalli Kuppuswamy Chetty, Garware Supermarkets to Akbarally's, retailing has been around for a thousand years or more. There have been shopkeepers manning 50 sq ft. and there have been shopkeeper industrialists handling 50,000 sq. ft. What separates the two is the extent to which things are 'organised'! Key aspects include performance metrics, category management and the role of technology.

PERFORMANCE METRICS
Retailing guru Paco Underhill, in his book 'The science of shopping,' states that branding and advertising build brand awareness and purchase predisposition. However, these do not always translate into sales. Brand value is not the blind force it used to be. Many purchasing decisions are made or can be heavily influenced on the floor of the shop itself. Shoppers are susceptible to the impressions and information they acquire in stores. Data to assist retailers to improve everyday sales also comes from the shop floor. Here are a few indicators.

1.Conversion Rate
The very concept of conversion rate implies that shoppers need to be transformed into buyers. Conversion rates vary widely depending on what kind of store or product we're talking about. In some sections of the supermarket, conversion rate is probably 100 per cent (dairy or toilet paper). In an art gallery full of paintings, probably the conversion will be less than one per cent. Conversion rate measures what you make of what you have - it shows how well or how poorly the entire enterprise is functioning. Refer table 1.1 for data on conversion rates.

2. Time spent in the store
The amount of time spent in the store is the single most important factor determining how much the customer will buy. Over and over again, studies show a direct correlation. For instance, in an electronics store, buyers spent nine minutes, 29 seconds, whereas non-buyers spend five minutes and six seconds. In some stores, buyers spend three times as much time as non-buyers.

At Shopper's Stop and Pyramids, this varies vastly by the section of the store (more time spent in the mix 'n' match section) and by the gender of the shopper. The male shopper takes what he wants and leaves, whereas the female shopper looks around, touches, feels, compares and then buys. However, Crossword was able to provide data saying that non-buyers spend about 15 minutes while buyers spend about 45 minutes in the store.

3. Interception Rate
The more shopper-employee contacts take place, the greater the average sale. In a large clothing chain studied, the interception rate was 25 per cent, which meant that three-quarters of all shoppers never spoke a word to a salesperson. This meant that in all probability, customers were becoming frustrated, wandering around or just plain confused or in need of information. If the staff was not helping the stores sell, then what was it doing?

Piramyds believes in giving customers their own space and hence salespeople do not aggressively approach the customer. Krish Iyer reveals, "each salesperson has to adopt five frequent customers over a period of time and ensure that they get prompt service. Indians don't like to be interrupted when they are shopping and we have to keep this in mind." At Shopper's Stop, each sales person has a target of ten intercepts per day with the ratio of customer to employee being 25:1. Crossword believes in letting the customer be! Experience has taught them that one out of five shoppers ask for help. This translates into an interception rate of 20 per cent.

4. Personal recognition
Customers want to go where everybody knows their name! This is a battlefield where small locally owned stores could compete with the national chains. Given a choice, people will shop where they feel wanted and they'll pay a little more for the privilege. Studies show that any contact initiated by the store employee increases the likelihood that the customer will buy something.

This is a feel-good factor as far as the customer is concerned. Piramyds provides system-driven recognition upto a maximum of 37 times a year via the club membership. They have 20000 club members at present out of which 65 per cent are silver, 25 per cent gold and 10 per cent are platinum members. At Shopper's Stop, a robust First Citizen's program, which includes special shows like the Phalguni Pathak show and gifts for the top 50 shoppers, all add up to good recognition measures. Crossword operates system driven recognition through the book rewards program. This is the largest CRM program in the book industry with 32000 members. It has gone a step further in that it is the only retail company to give accumulated points statement on the bill with every purchase.

5. Approaching the trial room as close of sale
Most retailers think of the trial room as a bathroom without the plumbing. This is the most misguided aspect of store architecture and design. It's a truism that improving the quality of the dressing rooms increases sales. Inside the dressing room, the shopper is captive in a very small place with nothing on their minds but a desire to buy something that will make them look beautiful. The buyer is vulnerable and ready to take the plunge. This is the moment to close the sale where all the charm and service of the sales force should be turned on fully.

This concept is catching up with the Indian retail operations. Shopper's Stop boasts of colourful trial rooms for children. The average trial room measures 4.5 by 4.5 ft with two tables and two side mirrors. A lot more needs to go into the ambience of it though. Piramyds does not have good trial rooms in the kids' section. However, for the adults, large mirrors have been placed just outside the trial room to facilitate close of sale. Salespeople have not been trained to assist the customer who goes into the trial room. In fact, at most outlets, they keep a keen eye on the number of garments going into the trial room and the number coming out to detect pilferage if any. The same checks could be achieved if the salesperson, instead of hovering around suspiciously, takes interest in whether the garment really fits the customer or offers to get another size or colour.

AMENABILITY AND LAYOUT OF MERCHANDISE
There are certain physical and anatomical abilities, tendencies, limitations and needs common to all people, and the retail environment must be tailored to these characteristics. The first principle goes into every aspect of the shopping experience. Shoppers either see merchandise and signs clearly or they don't. They will reach objects either with difficulty or with ease. They will move through areas swiftly or slowly or not at all. All of these physiological and anatomical factors come into play simultaneously, forming a complex matrix of behaviours, which must be understood if the retail environment is to adapt itself successfully to the shopper.

Shoppers' Stop ensures that the merchandise is placed in such a manner, that all touch and feel happens at the eye-level. Aimed at giving the shopper a spacious international experience, there is a clear demarcation of areas and signage that indicates clearly the location of a desired item. At Crossword, lots of books are kept at lower levels but staff is alert to assist the needy. Since Crossword is positioned as the family bookstore, the children's section is at the extreme end, so that the customer walks through the entire length of the store. At the same time, the section is quite far from where the serious reader would be examining books on management and philosophy.

CATEGORY MANAGEMENT
One would feel that there was little co-relation between sale of beer and diapers? Customer data-mining at Sainsbury, a UK grocery store, showed a marked relation between the two. Their sales started climbing on weekends. Surprised, Sainsbury started stocking diapers next to beer. The result: While beer sales anyway zoomed every weekend, diaper off-takes climbed up more steeply. The explanation: Both needed stocking up for weekend getaways.

Category management could be defined as stocking, displaying, placing and promoting each category accordingly (source KSA Technopak) Worldwide studies by KSA show it can raise profits by 10 per cent and reduce inventory by 20 per cent. The idea is to treat each stock-keeping unit as a profit centre. Maximum benefits are derived when the process goes back right up to the manufacturer, influencing manufacturing cycles, pack sizes, distribution and even the retail network. Started by Wal-Mart in the early nineties, category management has now begun to pick up pace. In India, retailers are just beginning to take a look at it. Shopper's Stop is one. And that finalised several decisions for the store. Says Nagesh: "For us, shirts have become a destination category."

Shirts account for 55 per cent of all sales for Shopper's Stop. Shopper's Stop realised that customers shop for shirts according to brand, colour and fabric, in that particular order. So this is how the store now arranges its shirt clusters. Similarly, size, style and fabric, in that order, drive shopping for trousers.

At Ebony, the DS Group promoted retail chain, category management has ensured that display can now follow the MDQ or the minimum displayed quantity concept, saving valuable shelf space, says Lalit Kumar, group vice-president. In fact, at Ebony, the merchandising is being decided by the management objectives in complete consonance with the customer behaviour, forecasting and competition mapping, says Kumar.

Category management is a religion at Crossword. Every Crossword outlet has five mandatory categories - books, music, CDs, toys and stationery. For most stores, books contribute to 60 per cent of the turnover. There are two category managers in every store, one for books and one for the others. Under them, there are the buyers and merchandisers. While the buyers are product specialists, the merchandiser's job is to achieve sales targets and maximise them.
If the merchandiser has a target of Rs. 10 lakh per year for a particular category, then at any given time, he has stocks worth Rs. 2.5 lakh.

The stock is rotated four times a year. On the whole, the inventory is equivalent to three months sale.

The buyers also have to take care of two factors while doing their job - rate of sale and stock in hand. Book orders are usually placed for two weeks at a time. This helps the store monitor stock movement. Sriram maintains, "We have to manage our buying in such a way that 90 per cent gets sold, since publisher's take back only 10 per cent."
With space also at a premium, the repertoire of books has to be displayed optimally. The largest space is allocated for children's books, which account for 20 per cent of the titles. That's because kids need space and a variety to choose from. 80 per cent of the book sales come from 40 per cent of the categories."

The Crossword destination stores are for hardcore book lovers while the sub-brand crossword corner is targeted at medium and light readers. While the destination stores carry 25 to 30 categories of books, the corner outlets have about 5 to 10. On an average the corner stores carry two to four percent of the titles tacked by the mother brand and these are normally bestsellers. Recently, they have been experimenting with the concept of Bookmart, a discounted version of the store.

Role of technology in category management
In the area of technology, Shoppers Stop has invested in a good way. Approximately 14 per cent of the company's net worth is invested in IT. The setting up of each outlet entails an investment of Rs. 5-8 crore. These outlets retail branded apparel, cosmetics, jewellery, footwear and hair accessories, among other things.
A look at the technology wiring reveals that the 13 stores with 400000 sq ft of retail space and 300 suppliers are not too hassled about category management. On an average, the merchandise is turned around 5.5 times as compared to an industry average of about 4. Its supply chain cost is only 1 per cent of its sale, which is helped tremendously by the following packages that Nagesh invested in, in 1999.

SUMMING IT UP
Mining customer data can throw up surprising category co-relations. It can also give more insights into shopping patterns within each category: And then there are the impulse and the planned buys.
Pre-dominance of fragmented, small retailers in India, however, means category management remains unheard of. Insights into customer behaviour are anyway rarely shared with suppliers. If shared, the suppliers can decide their trade partners (for volumes or image), distribution policy (differentiating channels for impulse versus planned purchases), logistics (continuous replenishment versus fixed) and even packaging (single versus multiple). In fact, suppliers can arrive at cost of serving trade partners and chalk out a performance matrix, maximising the returns from the relationship. When the retailers evolve to this level (and some already are), we will see the real retail-revolution taking place.

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