The business plan of the retail network is that every year is in more and more demand. It is easier to open a business in such a trade than in any other field. For this reason, the competition is huge.
What is a trading network?
A retail chain consists of several stores that share certain common features. Firstly, at least two or more stores can be called a network. Secondly, all outlets should be united by a common host. Thirdly, such sales outlets have one supplier of goods to all stores. If the points sell products in large quantities, that is, in bulk, then the buyer must be one. The last thing that unites such stores is the same style of processing all documents.
It can be added that retail chain enterprises are a more effective way of doing business in the field of trade than managing several separate stores.
Pros of creating a distribution network
The chain of stores has many positive aspects, but several of them can be distinguished:
- A large number of stores will allow its owner to better regulate the assortment of goods, as well as reduce the price for it, if necessary. These two qualities are the key to successful trading.
- The business plan of the retail network always includes the purchase of a large assortment of goods in large quantities. Such a bulk purchase has always been more profitable in terms of cost savings on delivery. In addition, wholesale buyers are often given product discounts.
- The chain of stores always has a single and centralized management. This suggests that all decisions are made quickly and clearly, and at the highest level. Plus, in such stores most often only highly qualified specialists work, which eliminates the many problems in work that are present in smaller enterprises.
- It is possible to reduce the cost of goods due to the fact that there is no need for a constant search for distribution points, as well as in the absence of advertising. Because of this, the final price will also be lower, which, of course, will attract more buyers.
- The business plan of the retail chain should also take into account that each individual store is located in its own area, and there may be demand for different goods. That is, a small independence in the selection of goods for each individual point of a single trading network will only benefit the entire enterprise.
Retail chain in numbers
If we turn to the numbers, then the organization of business retail retail chains in foreign countries occupy almost the entire market. Only about 4% are in small shops or individual stores. Everything else is occupied by full-fledged networks with a single host. If you turn to the Russian Federation market for statistics, then only 20-30% of stores are in retail chains. All other stores and outlets are separate small enterprises. However, observations suggest that this trend is improving. Every year there are fewer individual points, and networks are growing.
It is also worth adding that the retail chain, which has 19 or more stores, goes into the category of the trading chain. In other words, it moves to the next step of development. Some economists, after making calculations and observations, came to the conclusion that the most profitable would be the network that includes 21 or more stores.
Distribution Network Structure
A stationary retail outlet is not just a few outlets that follow one goal. These are several independent enterprises, each of which is located in a certain territory and is intended to meet the needs of the population in a particular product or service. Retail chain management is the process of managing an entire network of retail outlets. The essence of management is that the director must monitor the quality of the services provided, as well as the availability of the necessary goods at these points, which is in demand. If necessary, it is necessary to review the assortment so that it most closely matches the needs of the population in this area.
A successful trading network is characterized by the fact that it is able to provide citizens with the necessary goods or services as quickly and efficiently as possible. At the same time, it is best to place such establishments near a large crowd of people, that is, near offices or houses.
What is characterized by the network
A retail chain is characterized by several of the following points:
- There should be a certain ratio between outlets that sell food and non-food products.
- A certain percentage that the network occupies among the entire market for the sale of this product.
- A certain percentage of outlets that sell specialized goods / services of the total number of outlets.
- The business plan of the retail network should include the various methods of selling goods and services that currently exist.
There are several indicators that characterize retail chains. Products with short lead times should also occupy a certain percentage of the total. Such stores must be equipped with refrigerators, as most often they sell such goods as dairy products or meat.
What you need to open a network
A business plan for a retail chain should have several specific points:
- The entire network control center should be located in one place or office.
- All activities associated with the purchase of goods should be carried out in a single place, from a single supplier.
- All commercial operations that are necessary for each store individually are carried out under the guidance of managers from the main office.
- All stores that are part of the same distribution network must be equipped with the best cash registers, which will allow accurate counting of finances and goods sold.
All points included in a single network must comply with a single standard in their appearance, as well as deal with the sale of goods, which is strictly determined by the main office.
How to create an effective network
The statement that opening your own store is very profitable, true only if you do it wisely and in accordance with all the rules. You can increase the income from such an enterprise many times if you start opening not just one point, but a whole network. It will be even more profitable to open retail outlets in different cities that are close to each other. This plan is quite realistic to put into effect without unnecessary losses in the material plane, if you follow some instructions:
- Drawing up a sound business plan.
- Registration of the network and receipt of all papers.
- Choosing the right room for the store.
- Conclude agreements with suppliers on favorable terms.
- Pick up professional workers.
- Conduct a good marketing company.
Network Organization
- The first thing to do is to precisely determine the segment of products that will be sold, as well as the price criterion. The network can sell both expensive goods and ordinary goods that are commonplace among ordinary citizens every day.
- The second step is, of course, the registration of the company in the tax.You can register a chain of stores as a limited liability company, or you can register as an individual business.
- If there are not enough funds at once for several points, then it is better to create one full-fledged than several poorly equipped ones.
- When searching for suppliers of goods and concluding an agreement with them, it is necessary to discuss all possible conditions, as well as a system of discounts, if the quantity of purchased products will increase.
- It will be very important to choose good employees. However, the manager, who should be in each individual store, will play the most important role.
Opening Rules
There are only two options for developing your business. The first option is an independent discovery, and the second is a franchise. As practice shows, franchising is even more in demand in some countries than the independent opening of a new business. The first rule that will help in opening a franchise network is the search for successful franchising. It is necessary to thoroughly study the area in which it is planned to work, as well as all the companies that can provide their franchise.
The second rule is budgeting. Composing this document is very important, because, firstly, it will take into account all the costs required to implement the idea, and secondly, without a clear plan for the future, no franchisor will provide a franchise. In addition, it is worth remembering that in the estimate the rental of the place where the store will be located should be taken into account. This is a very important point, since it is best to place a point in a crowded place, and, as a rule, rent in such places is several times more expensive than in remote places.
Merchandise supply outlets
The supply of goods to a retail trade network is a set of certain measures, which consists of commercial and technical actions, as a result of which the goods are delivered to their places of sale. It is necessary to monitor this system very closely, since it should provide a constant need for citizens in a certain type of product.
Organization of supply
In order to organize a stable and constant supply of goods, it is necessary to follow some important requirements:
- When organizing the delivery of goods from the manufacturer, it is necessary to take into account the territorial location of the supplier, as well as the volume of products that he manufactures and the volumes required by the point network for the sale of this product. The volume of supply should be slightly larger than the volume of consumption, but not too much so that the goods do not have time to deteriorate.
- The quantity of imported goods should also correspond to the store’s turnover and its capacities. In addition, it is necessary to ensure that the point has all the necessary technical equipment for storing purchased goods. Such equipment most often includes refrigerators for storing meat, dairy products, etc.
- When placing an order for the next delivery of products, it is necessary to take into account the balance from the previous delivery, as well as add to this the average rate of goods sold.
- A properly created system for supplying a point with goods is characterized by the fact that the shelf life of the goods remains minimal.
The rhythm of product delivery is very important. Firstly, this characteristic should ensure the delivery of goods at regular intervals. Secondly, a correctly tuned rhythm of goods delivery will supply the store with a constant small supply of products, which will ensure a constant sale and will eliminate the shortage at a certain moment. The most important thing in supplying a retail network is its efficiency. It is also important to monitor the cost-effectiveness of commodity supply, which implies a minimum cost for the delivery of products.