Lecture 3

Question 1

Name and describe the four main trends and challenges in the retail industry.

Answer 1

Concentration of
shop floors
› Increase of shop floor per store
› Decrease of number of stores
› Leads to a reduction of accessibility to shopping possibilities

Structural change in
retail
› Despecialization: Consumer markets instead of specialized markets
(e.g. groceries in drug stores, clothes in grocery stores)
› Leads to Increased complexity of goods by increasing the diversity and
number of goods

Demographic
change
› Steadily growing number of elderly people in developed countries
› Limited mobility of elderly people
› Generates new concepts of supply for this target group

IT and Data Analysis
› Generation and analysis of large amounts of data
› Possible identification of customer-specific needs
› Increased reliability and reduced costs by data-based forecasts
› Credible data is a requirement

Question 2

Briefly explain the Efficient Consumer Response approach. (ECR)

Answer 2

ECR creates a win-win-win situation by optimizing the value chain.

Stakeholder-overarching strategy which ensures efficient processes by
striking up strategic value adding partnerships -> Total System Efficiency

› Increased efficiency in service provision leads to a reduction of logistic
costs and an increased turnover rate
› Increased effectiveness in service provision comes through the
coordination of activities of producer and distributor regarding the
purchasing behavior of consumers at the point of sale (PoS)
› The value of trades and sales is increased by a higher acceptance of
customers and willingness to spend more money

Question 3

› What are the reasons of the bullwhip effect?

Answer 3

› Order batching
› Lack of communication between supply chain partners
› Price fluctuations
› Demand information
› Free return policies

Question 4

› Name four solutions of the bullwhip effect.

Answer 4

› Improved communication
› Better forecasts
› Elimination of delays
› Reduced order sizes
› Good customer service

Question 5

Explain two new technologies of the market of the future.

Answer 5

Self scanning of goods by customers enables a quicker payment process.
Tap to Go - Scanning of the products at electronic shelf labels with the help of a
smartphone app or a customized NFC card

Mobile Payment
NFC-compatible payment terminal and smartphone
› Conjunction of a payment app with a suitable payment method
› Holding of the smartphone against the NFC-compatible payment
terminal
› Confirmation of payment via Pin or Touch-ID/Face-ID

Question 6

› What are the strengths and weaknesses of the Amazon Go stores?

Answer 6

Strengths:
No queues at cash registers, cashless shopping, only a
smartphone must be brought
› Low labour costs
› Theft-proof system

Weaknesses:
› Customers often cover distinguishing characteristics
› Data privacy
› Larger groups of people cause technological difficulties

Question 7

What is the bullwhip effect?

Answer 7

› Bullwhip-effect describes an upstreaming amplified reaction when
demand is fluctuating
› Start of bullwhip-effect is always a fluctuation in demand starting at the PoS
› Bullwhip-effect eventuates in unbalanced workload in production and unbalanced stock