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Principles of Retail Management: Daiso

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by

Sarah De Souza

on 4 February 2014

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Transcript of Principles of Retail Management: Daiso

Principles of Retail Management: Daiso
Retail Positioning
Daiso's Competitors
Secondary Zone - Bedok, Bishan and Ang Mo Kio
Tertiary Zone - Heartlands
Recommendations
Background of Daiso
Inventory Level
Product Availability
Highly dependent on the level of backup stock carried.
If a product is
well received and highly sought after
, more stock for that product will be carried.

Vendors Lead Time
Majority of Daiso's merchandise are non-perishable.
In the event of vendors having a
longer lead time
, more stocks must be ordered to
maintain Daiso's desired level of product availability.
Based on demographics and lifestyle trends of its shoppers.
For example, in Daiso Orchard, provides a deeper assortment of beauty products and gifts, as they are highly sought after by shoppers there.
Retail
Location
Daiso locates itself at the
heartland, residential areas -
Rivervale Mall, City Square Mall and Tampines 1.

And the town area
, so as to bring convenience to working adults and shoppers in that area - Ion Orchard, Plaza Singapura and Vivocity.
Retail
Format
Merchandise Management
Most merchandise in Daiso fall under the
staple merchandise category
.
Continuous demand for merchandise
basic household items, food and basic hardware.
It is
easy to forecast and stipulate demand
.
Focuses on
continuous replenishment
so as to prevent shortages.
Daiso can be classified as an
extreme-value
store, as all merchandises sold in Daiso are priced at $2.
Purpose
Established in Japan on
March 1972,
and the brand started off by selling low priced household items.

However it started to launch its
100-yen shop Daiso in 1987.
To examine a reputed retailer’s – Daiso, strategy.

Make some practical recommendations that can further strengthen Daiso’s retail position in Singapore.

Daiso provides a significantly large variety and shallow assortment!
Limited Customer Service are provided as they adopt a self-service approach!
Daiso positioned itself as a retailer that offers a
low price and broad variety.
Competitive Advantage
Daiso provides products catered to
several target markets - adults, families and the elderly.
Value$
Japan Home
Slightly
higher prices

Offers
more local products
instead of products imported from Japan.
More similar with Daiso in regard to product offering - imported goods from Japan.
Value$
20 Outlets
in Singapore
Japan Home
46 Outlets in Singapore
Japan Home has its store locations widely spread across Singapore.

Japan Home also has outlets that are not located within shopping malls but
neighborhood strip shopping centers.
Trade Area, Daiso @ Ion Orchard
Primary Zone - Central Region
Many adults working in the central area account for many of Daiso's customers.

Tourists whom visit the central area.
Daiso can be considered a
destination store
, hence shoppers are willing to travel a good distance to shop at Daiso.
Residential areas such as
Sembawang, Bukit Panjang, Tampines, Serangoon and Sengkang.

Less shoppers living in these heartlands will shop at Daiso, Ion Orchard, as they already have
convenient access to a Daiso in their heartland malls
.
Daiso @ Tampines 1
Daiso @ City Square Mall
Allocation of merchandise to stores
Seasonal merchandise offerings
, are brought in during Christmas, Chinese New Year and Valentines Day.

Hence, a
higher level of seasonal novelty items
are brought in to maintain a high product availability.
Retail
Pricing
Everday Low Pricing Strategy

Fixed pricing of
$2
for all items
Reassures customers of low prices all day & everyday.
Greater
ease of purchases
and
less consideration time
for purchases.
Affordable price appeals to price sensitive shoppers.

Consideration time relatively shorter.
Facilitates more impulse purchases at Daiso.

Psychological effect that merchandises are cheap, therefore people can buy more items.
Loss Leader Pricing Technique
Daiso may suffer losses from
products that cost more to produce.

Dining or kitchen appliances or gardening tools are produced at a higher cost as compared to paper-crafted merchandises.

Thus, Daiso
attracts more customers
through this, and
boost sales
of lesser-cost products at the same time.
Store Layout
A combination of both grid and racetrack layout
Maximizes utilitarian benefits in regard to locating and purchasing with minimum hassle.
Grid Layout
Parallel Aisles
Merchandise sorted and positioned according to their category - handicraft, living, gifts, etc.
Cash registers situated at the entrance.
Racetrack Layout
There are major aisles to
guide customer traffic
towards various department and merchandise categories.

Fixtures are low so as to enable
easy browsing and navigation
within the store.
Signage
Category signages to guide customers.
Hence,
preventing clutter and confusion
because of its broad variety.
Visual Merchandising
Presented
vertically using shelves
, allowing customers to view the entire shelve and search for products easily.
Seasonal products
are displayed in large quantities, for example, ornaments and christmas trees.
End-caps
are used, so as to increase customer exposure to more merchandise categories.
Hence, encouraging
impulse and unplanned purchases
.
Atmospherics
Bright lighting
, creating a clean and vibrant feel for shoppers.

Welcoming and friendly atmosphere
- staff greeting and welcoming customers.

Enhance
Japanese
store image and shopping experience.

White
is used for most of the fixtures and walls, so as to create an illusion of a bigger and neater space.

Red
is also used in Daiso so as to further create a vibrant mood for shoppers.
Furthermore,
slow music
is played in the store, to
soothe customers mood.

This is because of the
high pedestrian traffic
that can make shopping in daiso hectic and stressful.

During
various festivities and occasions
, music played may be
in lieu
with these festivities. For example, christmas carols.
Customer Service
Standardized Approach

Shopping experience in daiso is also made
simple and straightforward
.

Hence,
less customer service
is required except when customers have trouble locating various merchandises.

Payment of items are made at the counters located at the entrance.
Evaluation of Service Quality
Reliability
Measures
high
on reliability
Depended on for
affordable
basic household items and merchandise.
Many customers
loyally shop
at Daiso as a result.
It has built a image of being reliable and dependable.
Tangibles
English translation stickers
pasted on every product.
Help customers to be aware of the product details.
Assurance
Moderate level
of assurance
Daiso delivers on its promises of affordable products and quality service.
However, Daiso does not rank high on
trustworthiness or consumer confidence
.
Some customers are
skeptical
about the quality and price of their merchandise.
Empathy
Practices a
high degree of empathy
.
Staff possess extensive knowledge.
Therefore enabling them to better serve and care for customers.

For example, directing them to the right location to locate an item.
Staff are aware of merchandise inventory levels - in stock or out-of-stock.

Hence, Daiso staff provides personalized and individualized care and attention.
Responsiveness
Daiso's customer service ranks
high
on responsiveness.
Prompt service is provided.
Staff will attend to customers needs' before carrying out their own work or duties.
Culture of prioritizing customer needs first.
Better satisfaction, and more enjoyable shopping experience.
Customers know how the store operates!
E-Carts
Self-Scan within the E-Cart
E-Carts
Incorporate the use of E-Carts at Daiso, Ion Orchard.
Quick and easy access to
merchandise information and store layout.
Due to its broad variety and shallow assortment, the store can seem cluttered and difficult to navigate!
Difficult to search for merchandise.
Ipad attached to the trolley.
Facilitating
access to needed information
whilst shopping.
Forgoes seeking help from staff
More
effective and efficient use of staff
through technology.
Ipads will be
secured
to carts so as to prevent theft.
Security barriers and cameras will be in place.
Self-Scan within the E-Cart
Many shoppers avoid using daiso trolleys because of lack of walking space in-store.
High traffic during peak periods, leads to long queues.
Further reducing walking space for shoppers.
Makes shopping and navigating a hassle, inconvenient and time-consuming.
We recommend including a self-scan function within the custom-made E-carts.
Customers
self-scan
the product's barcode using the Ipad.
Cashiers need not scan in products of multiple customers.
More efficient, as
queues would move faster and become shorter especially during peak periods.
Creates a
more peaceful and enjoyable
shopping experience.
Shoppers would be more willing to explore other areas of store.
Encourages
unplanned and impulse purchases.
Full transcript