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Self-service in Retail Trade of Consumer Cooperation: Assessment and Strategy of Development

Isaenko EV* and Degtyar ON
Belgorod University of Cooperation, Economics and Law, Sadovaya Street, 116a, Belgorod, 308023, Russia
Corresponding Author: Isaenko EV, Belgorod University of Cooperation, Economics and Law, Sadovaya Street, 116a, Belgorod, 308023, Russia, Tel: 7471250-48-20; E-mail: isaenko0409@mail.ru
Received September 21, 2015; Accepted October 12, 2015; Published October 15, 2015
Citation: Isaenko EV, Degtyar ON (2015) Self-service in Retail Trade of Consumer Cooperation: Assessment and Strategy of Development. J Internet Bank Commer S1: 009.
Copyright: © 2015 Isaenko EV, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits
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Abstract

The article studies the necessity to convert consumer cooperatives’ stores into the self-service system, directions of self-service development strategy implementation in retailing. The authors analyze assessment methods of the sale process, a single store and a consumer cooperative organization in the whole.

Keywords

Self-service; Self-service development; Retail trade; Consumer cooperative organizations; Self-service stores; Sale process; Merchandising

Introduction

Trade is one of the largest economic sectors in any country’s economy. It ensures goods movement from a production sphere to a consumption one. Being a source of cash, trade forms the state’s financial stability basis. The share of trading industry in the developed countries’ ultimate product value ranges from 15 to 25%. In Russia GDP share of trade exceeds 22% [1]. In Western countries, where economy is focused on demand, as a rule, it is assumed that retail provides necessary services and brings a positive contribution to the economy [2].
The utmost satisfaction of people’s needs in retailing services is considered to be one of the priority socio-economic issues being addressed within a climate of modernization and innovative development of national economy. The best solution of this problem is to develop the self-service system, which integrates opportunities of economic entities operating in this sphere and consumers’ preferences. Development of self-service as an effective method of goods sale in consumer cooperation turns out to be of particular significance. This is relevant to retail trade that dominates in the structure of this highly diversified sector but adapts to the conditions of dynamically changing environment with certain difficulties. Retail units of consumer cooperation of Belgorod Region are of no exception.
The problem of self-service development has been highlighted in the studies of domestic and foreign scientists notably [3-21].

Methodology

Solution of the stated tasks is carried out on the basis of general scientific methods (analysis, synthesis), economic and statistical methods of data processing (grouping, comparison, method of index numbers), methods of sociological research (surveys), and methods of deterministic integrated assessment (distance method, ranking method, summation method, geometric mean method, coefficients).

Results

World practice shows that self-service method is the most attractive one for customers, and the most profitable for retailers. For example, the proportion of self-service in food retail in the USA is 95%, Sweden – 100%, Norway – 84.8%, Denmark – 79%, Great Britain – 93.2% [11].
Modern development of retail trade in Russia with the emergence of the chain trade, which uses progressive methods and forms of sales, has led to the growth of competition on the consumer market.
The main trade system in the countryside is consumer cooperation, which was also affected by the changes as the whole trade system of Russia. Emergence of competitors in the countryside, outdated material and technical base of retail companies, lack of own working capital, high interest rate for credits, low income of the rural population have led to the weakening of consumer cooperation positions on the consumer market.
At present the situation is stabilizing. Scientific studies and business practice of consumer cooperation organizations testify to the fact that retail trade while providing for the development and improvement of competitiveness of both separate consumer cooperation organizations and the system as a whole, has to apply the most efficient methods of goods sales by retail trade companies, which are adequate to the economic situation in consumer cooperation and the economy of the country.
One of the main conditions for ensuring competitive advantages and improving the fecundity of consumer cooperation retail trade is the availability and situation of retail trade objects.
The share of the Belgorod Oblast consumer cooperation retail trade companies in the total number of retail trade companies of the said Oblast decreased from 28.5% in 2008 to 19.6% in 2012 (Figure 1).
The decrease of the share of the Belgorod Oblast Consumer Union retail trade companies in the total amount of the Oblast retail trade companies is determined by the growth of the number of competitive retail trade units of other organizations in the Oblast and by the decrease of its own retail trade companies.
During 2008-2012 the Belgorod Oblast saw the growth trend of the number of retail trade companies. During the period under study (from 2008 until 2012) their number increased by 19 units and amounted in 2012 2,483 units [22].
Such a change in the quantitative composition of the Belgorod Oblast retail trade companies is determined by the influence of the market.
Taking into account the fact that consumer cooperation should develop it trading activity with the view of meeting its social mission, which means the solution of the social problems of the countryside as the main area of its activity, then the main number of retail trade companies is concentrated in the countryside with their density in 2012 amounting to 81.5% (Table 1).
The influence of competitive environment is reflected in the decrease of the number of consumer cooperation retail trade companies, located not only in the district centers and town type settlements.
Introduction of self-service is the necessary condition for the improvement of consumer cooperation retail trade competitiveness.
For the majority of goods groups self-service is the most preferable and it has evident advantages in comparison with the individual services.
It is necessary to note that in the majority of the developed states self-service possesses high density in retail trade of foodstuffs.
Basing on the authors’ theoretical studies, we suggest considering development of self-service in retail trade of consumer cooperation as the process of transferring to the new quality condition of retail trade in the sphere of consumer cooperation on various levels of management (organization, store, technological process) by using self-service as an effective method of goods selling. It allows improving performance of retail units and increase of the clients’ satisfaction level with services by reducing time and providing conditions that are more comfortable for buying goods [14].
Since 2008, consumer cooperative organizations of Belgorod Region have started the process of transferring their stores to the self-service system. The research findings have shown that this transformation process has been performed by reconstruction of the operating stores as well as by reprofiling and reconstructing of non-trading units.
While in 2008 there were only 27 stores converted to self-service ones, the number thereof reached 81 units by 2012. The percentage of self-service stores in its total number increased from 4.1% in 2008 to 17.5% in 2012 (Figure 2).
The main part of self-service stores is located in the rural area (66.7% of its total number).
There are different types of consumer cooperative self-service stores. Supermarkets are very important as they help to concentrate a wide range of goods in a single sales area. Their number increased up tp 38 units during 2008 - 2012.
The main advantage of supermarkets is that if stores of this type have a sales area not less than 400 m2 and distribute both an optimal range of food products and a wide range of non-food products they are mainly self-service stores. On visiting supermarkets customers can find everything they need: from food to domestic appliances [12].
In 2012 self-service stores can be found almost in all the organizations of the Belgorod Regional Consumer Society with the exception of the Belgorod, Volokonovka, Chernyanka district consumer societies. Among the leaders in the growing number of self-service stores at the studied period (2008-2012) we should mention Veydelevka district consumer society (from 1 to 8 units), Prokhorovka district consumer society (from 2 to 8 units), Rakitnot district consumer society (from 2 to 9 units), Tomarovka rural consumer society (from 2 to 8 units), Shebekino district consumer society (from 1 to 6 units), Yakovlevo district consumer society (from 5 to 9 units) (Table 2).
Undoubtedly, the main indicator of commodity disposal is a retail trade turnover. It is obvious that during a month, a quarter or a year period the volume of retail trade turnover may experience wide range fluctuations [18].
Over the monitoring period, self-service stores in consumer cooperation of Belgorod Region have been characterized by the sustainable growth of retail trade turnover and the growth of its share in the total turnover of the Belgorod Region Consumer Society (Figure 3).
A significant growth in trade retailers’ turnover had been achieved due to the increased number of supermarkets as well as to expansion and restructuring of the selling goods range.
In order to study effectiveness of self-service retail expansion in the cooperative trade sector we worked out an evaluation mechanism to justify advantages and disadvantages of this service method on the basis of the selected criteria and indicators.
The findings of the study show that since self-service had been implemented, the assessment parameters of these stores’ effectiveness have been increased significantly and retained its positive dynamics during the whole study period (Table 3).
The data presented above reaffirm the need to develop self-service as this method provides positive economic effect of a retail unit’s performance and strengthens its competitive positions on goods and services market.

Discussion

In the highly competitive market environment, effectiveness of retail organizations which belong to the Belgorod Region Consumer Society is heavily dependent on trade services and a choice of sales methods, in particular self-service, which is one of the most effective sales methods applied in consumer cooperatives’ retail stores, as it improves service quality in retail trade. Compared to such a conventional method as personal selling across the counter, self-service has certain advantages in respect to the use of the sales floor, the possibility of expanding a range of goods and their presentation to consumers. The application of self-service as one of the factors improving service quality in retail trade provides cost-efficiency by increasing effectiveness of both the total area use and the sales floor use, as well as the throughout capacity, and the single purchase value [17].
One of the main tasks of consumer cooperatives’ retail stores is to work out a self-service development strategy and directions of its implementation (Figure 4).
Effective implementation of an organization’s mission and achievement of its goals is only possible if there is a sound, wellconsidered strategy, which is a set of rules to guide the organization in making managerial decisions [23].
When companies face the challenge of increasing a level of comprehensive customer service in the market, they have to pay more attention to strategic planning [9].
The development and implementation of a specific strategic plan confer certainty and uniqueness to organizations’ activities, and open a clear perspective for their further growth. In turn, a lack of a development strategy leads to instability of organizations in the corresponding market segment due to impacts of random factors which is accompanied by a decrease of organizations’ performance, in general.
In a competitive market, however, an organizational development strategy as an element of strategic management focuses not only on achievement of established objectives, but also on creation of appropriate conditions for the organization’s competitiveness and growth in line with changing market contexts.
Therefore, the essence of strategic management is that the organization contributes to comprehensive, well-organized strategic planning in order to work out a long-term strategy aimed at achieving the organization’s goals and creating management tools for implementation of the selected strategy.
The above is fully relevant to the consumer cooperative system, an active consumer market actor, which activities focus mainly on providing goods and services to the target audience, i.e. rural population. At the same time, as consumer cooperation is a socially oriented system, making profits is not its main objective. Consumer cooperatives strive to make a surplus or profit in order to implement their social mission and strengthen their material and technical infrastructure facilities.
It is precisely a strategy that generalizes a goal achievement framework. On the one hand, a strategy is a decision affecting all subsequent tactical actions. On the other hand, tactics are a component of a strategy. Tactics are determined by a strategy [20].
In our opinion, formation and implementation of a self-service development strategy in consumer cooperatives’ retail stores involve such management levels as an organization (working out a strategy for a consumer cooperative organization, as a whole); a retail store (working out strategic directions of self-service development in a retail store); a sales process (working out ways to improve the sales process in the context of sales operations).
An effective management and achievement of positive economic and financial results create a real basis for enhancing consumer cooperatives’ social role, solving numerous social problems. Strengthening of the social base leads to a larger amount of customers in co-operative stores; ensurs dynamic growth of retail trade turnover, and, finally, increases the cooperative segment of the market. This creates objective prerequisites for the economic well-being of the system.
To achieve the set goals we need a clear determination of the action course and resource allocation. With regard to the presented model the goal is to develop self-service retailing.
Analysis of the factors contributing to the development of selfservice in consumer cooperation includes study and assessment of micro, macro and internal environmental factors, which directly or indirectly affect its activity.
Microenvironment factors such as customers, suppliers, competitors and location have a direct impact on the self-service development.
Among the listed factors, customers are the most important element, since they determine assortment policy of any self-service store and a set of provided additional services, including the so-called additional business environment (a cafe, a bank office, a drugstore, and others).
Relationships with suppliers as well as a properly working mechanism of economic relations are significant for timely and qualitative customers’ demands satisfaction.
Competitors affect the structure of the product range, the price level, a set of the provided additional services, quality of service and the image of the store as a whole.
Equally important for a proper strategy elaboration of selfservice retailing is microenvironment that shows actual or potential interest in self- service. Self-service companies are surrounded by microenvironment which includes: financial community, mass media contact audience, state authorities’ contact audience etc.
With regard to macro factors, their impact on the self-service development is indirect, as they are similar to almost all business entities. These factors include political, legal, climatic, scientific, technical, socio-economic and demographic factors.
Political and legal factors, such as observance of consumers’ rights, goods selling procedure, technical standards and operating rules of trade and technological equipment, influence organizational basis of the particular activity.
Natural and climatic factors determine peculiarities of assortment policy formation depending on seasonality of production, consumption and supply of goods.
Scientific and technical factors are connected with the level of scientific and technological progress development and implementation of its results into the trade process. They, in particular, determine the use of modern trade and technological equipment, advertising media, sales process and accounting automatization, development of logistics supply chains.
Taking into consideration effect of socio-economic factors is also important as it has a significant impact on volume and structure of consumption. Among them should be mentioned the following ones: population’s income levels, retail trade serviceability, cultural, ethnic, domestic factors.
Among demographic factors we should mention age and sex structure of the population and its density, specifics of the population settlement at a particular territory, level of fertility and mortality, level of education, geographic population shift. These factors also have a significant impact on volume and structure of consumption.
Among the internal environment factors, which directly affect formation and implementation of the self-service development strategy, should be named resource, organizational and managerial factors. Resource factors include financial and economic potential, human resources, material and technical basis, availability of modern equipment, productivity, turnover of goods, and number of employees. Organizational factors are a way of trade and technological process organization, the store’s working hours, volume and regularity of deliveries, size of the store. Managerial factors include management organizational structure.
Among the emerging development trends occurring in the retail trade self-service we could identify: strategic development directions of retail trade at the consumer cooperative organization level, strategic development directions of self-service at the store level and areas of sales process improvement in the supermarket.
For consumer cooperative organization
a. Creation of a unified network of consumer cooperatives’ selfservice stores
b. Development of self-service stores in the “handy shop” format
c. Construction of large shopping centers with centralized warehouses, computer systems in each store and automatic request transmission for goods delivery from the central warehouse to stores
d. Creation of a single brand name of self-service stores
e. Adoption of unitary standards for registration arrangements of self-service stores
f. Opening of self-service stores for selling mainly food products and general merchandise goods
g. Adoption of a consumer promotion program
h. Further stores’ shift-over to self-service in the course of reconstruction and modernization of the existing stores.
For cooperative shops
a. Development and implementation of business events in selfservice stores to attract buyers, including shareholders
b. Issuing and distribution of store cards among shareholders and the population in service
c. Range of goods formation with a glance to mandatory testing of first batches of new products
d. Quality control of products offered in self-service stores
e. Training personnel for professional skills mastering
f. Range of goods produced/provided by consumer cooperatives, local producers and large out-of-region suppliers
g. Maximum use of IT-technologies
h. Share growth of low price goods
i. Rendering of additional services
j. Merchandising is becoming particularly important for selling goods in the supermarket.
Open access allows clients to examine a shelf display, touch and take in arms products they may be interested in. More traditional methods of marketing do not encourage clients’ direct contact with the exhibited commodity [7].
Merchandising is a component of marketing techniques to promote a product from a manufacturer to a consumer, which ensures competitiveness of retail consumer cooperatives by means of visual and behavioral tools aimed at maximizing sales volumes, improving business efficiency and customers’ loyalty [24].
In retail trade marketing offers not a commodity but services on its provision while considering all the requirements that ultimate customers can set up. So the crucial point is not just to produce a product for satisfying customers’ demands (as it is the case with manufacturing companies) but to create service conditions suitable for the product purchasing. The product will meet the buyer’s needs, but retail marketing is designed to make purchase process convenient for buyers [25].
Taking in consideration the above, improvement of sales process in cooperative retail stores is possible with the implementation of the following areas:
a. Placing of children’s corners in the entrance area
b. Interior design of sales area with a glance to functional and aesthetic criteria
c. Setting up a regime of convenient working hours
d. Stock breadth according to customers’ preferences
e. Rational organization of sales area
f. Placement of product groups according to sales volumes
g. Shelf position regarding to distribution of buyers’ attention in horizontal and vertical extent of the demonstration resource
h. Additional sales outlets with display laying out
i. Detection of consumer traffic with a glance to the established patterns of their behavior
j. Reduction of time spent for searching products through the use of promotional materials
k. Creation of a sales area atmosphere using scents, music, lighting according to the characteristics of the offered goods
l. Availability of a permanent sales area
m. Placement of novelties (resembling, promotional, seasonal, casual) in the checkout aisle
n. Placement of quick tills
o. Observance of optimal passage width between points-of-sale and other trading equipment
p. Introduction of automated accounting offices.
It is believed that merchandising can be effective when it implements collaborative efforts of both a manufacturer and a seller. The merchandising plan can only be implemented in case it takes into account interests of all the participants and, thus, focuses on the consumer’s needs [16].
Development and implementation of the self-service development strategy presupposes its implementation at the considered levels.
Evaluation of the self-service development strategy implementation can be carried out by using the stated indicators, which helps to evaluate self-service development at various levels.
Thus, indicators for strategy assessment at a consumer cooperative organization level and at a store level are grouped into social, marketing, economic and technological clusters.
To evaluate the sales process in the self-service store, the indicators are combined according to operations connected with goods selling: meeting buyers, offering goods, merchandise offering, payment and dispatch of goods.
Basing on the assessment, which either positively or negatively characterizes development of cooperative self-service stores, an adequate management decision in relation to the development strategy implementation can be formed.
The decision on adjustment of the self-service development strategy can be taken in case some trends, which are not consistent with the original goals and objectives have been found out. In this situation, the chosen development strategy should be either completely replaced, or adjusted for the identified negative trends.
Thus, the model of formation and implementation of the selfservice development strategy worked out for consumer cooperatives’ retail stores is aimed at realizing the core mission of consumer cooperatives through self-service development. The model takes into account impacts of macroenvironment, microenvironment and internal environment within which the system’s subjects operate. It also includes identified strategic directions, implementation conditions, and the assessment mechanism which criteria constitute the information basis for the strategy adjustment.
The implementation of the self-service development strategy predetermines its evaluation algorithm that allows carrying out the analysis at such management levels as an organization, a retail store, a sales process, and an individual operation of the sales process within economic, marketing, technological and social contexts (Figure 5).
A comprehensive assessment of self-service development that occupies an important place in the system of algorithmic components is provided by the proposed methodological approaches. They are based on the system of criteria and indicators characterizing economic, marketing, social and technological aspects of consumer cooperatives’ activities, consumer cooperative stores’ activities as well as operations of the sales process.
In order to assess the process of goods sales in a self-service shop we have suggested and grouped the indicators according to operations included in the said process: meeting of buyers, goods offer, goods selection, settlement and release of goods (Table 4).
Further realization of the self-service development assessment algorithm in consumer cooperation retail trade envisages the assessment of self-service by both the selected levels of units and operations and a comprehensive assessment.
The comprehensive assessment can be used as characteristics for a comparative analysis of organizations and commercial enterprises, and serve as the basis for selection of promising development options. It is fully acknowledged that it is impossible to single out a general illustrative indicator suitable for the comprehensive assessment. This owes to a significant, increasing number of both analysis objects and performance indicators and criteria. There arises the need to develop a comprehensive assessment based on a system of indicators, which can be aggregated in order to rank data [19].
In terms of organizations and retail stores, a comprehensive assessment of self-service development can be conducted in both static and dynamic settings. The assessment of self-service development in retail stores considered dynamic variables which were combined to form the composite index.
According to the results of the comprehensive assessment of the self-service stores and their development, the self-service store “Favorit”, which belongs to Veidelevka district consumer society, demonstrated the highest growth (the composite index has the highest value of 1.8) (Table 5).
The comprehensive assessment of self-service development in consumer cooperative organizations has been conducted on Euclidean distance formulae from the standard point to the specific indicators’ values being assessed by the organization. The value of the integral assessment for each object being under analysis has been determined by the formula:
           (1)
where Ij is an integral assessment for j-organization;
X1j, Х2j, ..., Хnj are standardized indicators of j-organization being under analysis.
Having ranked the values of Ij in ascending order, we have obtained the comprehensive assessment of self-service development in organizations, and the least distant value from the standard one will take the highest rating.
The comprehensive assessment of self-service development in consumer cooperative organizations has been conducted according to the suggested indicators grouped into the following clusters:
An economic cluster (retail trade turnover of self-service stores; retail trade turnover per self-service store; retail trade turnover of selfservice stores per square meter of total square; retail trade turnover of self-service stores per square meter of sales square; retail trade turnover per self-service store clerk; retail trade turnover per sales area clerk).
A social cluster (population per self-service store; number of shareholders per self-service store; share of self-service stores located in rural area in total number of consumer cooperatives’ self-service stores; availability of self-service stores per 1000 residents; availability of sales area of self-service stores per 1000 residents; retail trade turnover of self-service stores per capita of the population served; retail trade turnover of self-service stores per shareholder).
A technological cluster (share of self-service stores, equipped with modern barcode-reading point-of-sale terminals (POS) in total number of self-service stores; total square of self-service stores per store; sales square of self-service stores per store; share of sales square in total square of self-service stores; budget for 4 a marketing cluster (share of retail trade turnover of consumer cooperatives’ self-service stores in total retail trade turnover of consumer cooperatives; share of retail trade turnover of consumer cooperatives’ self-service stores in total retail trade turnover of the region; share of self-service stores of consumer cooperatives in total number of retailing stores of consumer cooperatives).
A versatility indicator, used for evaluation of self-service development in consumer cooperatives, was got by summing up the integral indices for each cluster.
The results of an integrated assessment of self-service development in consumer cooperative organizations suggest the following conclusions: if in 2008 the organizations that achieved the best results after transition to self-service were Prokhorovka, Tomarovkа and Veidelevka consumer societies, then in 2012 the maximum rank had Prokhorovka, Tomarovkа and Rakitnoe consumer societies (Figure 6).
This technique allows making a comparative assessment not only of the whole organization, but also of each selected cluster in order to study their effect on ranking changes.

Conclusions

The use of various methodological approaches to the comprehensive assessment of self-service development makes it possible to expand the empirical base and choose the most appropriate assessment methods in a given situation. In this regard, the assessment of self-service development can be carried out by means of using the proposed indicators and taking into the account such hierarchical levels as operations of the sales process in self-service stores in order to identify the need to improve the technological process; a self-service store in order to compare it to another; and consumer cooperative organizations in order to compare them with each other and to identify leaders.
To assess the sales process in a self-service store, indicators are assembled according such operations of the sales process as greeting a customer, offering a choice, making a choice, taking payment from customers, and issuing goods. The indicators used for assessing selfservice development at the level of a store and at the level of a consumer cooperative organization are grouped into social, marketing, economic and technological clusters.
The assessment of self-service development in consumer cooperatives’ retail stores makes it possible to shape consumer preferences, taking into account measures elaborated for the selfservice development.
Implementation of the proposed set of measures on self-service development in the consumer cooperatives’ retail trade will improve satisfaction of customers’ needs in goods and services, increase the number of buyers, improve operating results and enhance quality of trade services.
Thus, the obtained results contribute to theoretical justification of self-service development in consumer cooperation, improvement of its evaluation tools, development of a strategy and substantiation of its implementation that will improve market competitiveness of consumer cooperatives and help to satisfy consumers’ preferences.
The issue of using merchandising in self-service consumer cooperative retail stores has only been briefly touched upon in the article; however, it is an important aspect of self-service development in terms of effective promotion of goods and services as well as attracting consumer attention, thus it needs to be addressed by further research.

Tables at a glance

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Table 1 Table 2 Table 3 Table 4 Table 5
 

Figures at a glance



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Figure 4 Figure 5 Figure 6
 

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