Retail Management

UNIT-1

Retail: (Introduction)
The word retail is derived from the French word retaillier meaning to cut a piece of or break
bulk. In simple sense it implies a firsthand transaction with customer it involves a direct interface
with customer and the coordination of business activities end to end. It is a set of business
activities that adds value to the products and services sold to the customer for their personal and
family use.
Characteristic of Retailing:

Direct end use- user interaction in retailing

Only point in the value chain to provide a platform for promotions.
Sales are usually small in unit size
Location is a critical factor
Services are important as core products
Large in numbers.

Importance of retailing:
Providing Assortments: offering an assortment enables their customer to choose from a wide
selection of products brands sizes, and price a one location.
Breaking Bulk: Retailers offer products in smaller quantities tailored to individual customer and
household consumption pattern. This activity is known as breaking bulk . This is important to
both manufacturer as well as customer.
Holding Inventory :
customer want them.

Retailers hold the inventory so that products will be available when

Providing Service : Retailers provide services that make it easier for customer to buy and use
products
Providing Additional Services:
In totality we may say that the retailers are of course increasing the values of products and services
by providing assortments breaking bulk , holding inventory and providing services

Retailer's role in Distribution channel:

A business that sells products /services to consumer for their family/self use.
A distribution channel is a set of firms that facilitate the movement of products from point
of production to pint of sale.
It means retailers are the final business in the distribution channel that links manufacturers
to consumers.

Manufacturer------------------Wholesaler.Retailer ----------------------Customer

Retailers Role in storing Process:

Scope of Retailing:
It involves a direct interface with customer and the coordination of business activities
from end to end
This industry has contributed to the economic growth of many countries and it is
undoubtedly one of the fastest changing and dynamic industries of the world
Retailing is one of the largest industries in terms of employment more than 30 million
people were employed in retailing in US and it is aging the largest employer in India as
well.
They act as channel of communication across value chain.
They provide assistance with transport, storage, advertising and pre payment of
merchandise.

Prospects of Retail management

With the introduction of open economy followed by boom in consumerism in India
and growth of organized retailing, the market had big expectations from the retail
sector both in terms of growth in business and in creating job opportunities.
Several institutions came up with retail management programs with a hope to
attract a large number of students who are keen to explore their career in retail. 15
years later, today, retail sector does not look as great to many as expected.
However, with the opening of FDI in retail the high hopes on retailing management
took a rebirth. If large global retailers open their stores across India then with the
likes of IKEA, TESCO, Wal-Mart stepping on the Indian soil, the global standard of
retailing is expected to reach India soon with all its benefits including better
industry practices and training, better salary packages and promising career
opportunities in retail management. We may need to wait for a year more to see
how the FDI is transforming the Indian retail scene and what are the real prospects
and scope of Retail management.

Retailing Scenario Global:

The largest business (USD 9 trillion) in more developed countries and better organized.

 Over 50 of the global fortune 500 companies and Asias 25 top out of 200 are retailers.
Wal-Mart is the undisputed leader followed by Carrefour
The largest 250 retailers operated in 6.8 countries on average and 21.3% of the slaes
coming from out side
The retailers for FMCG dominates the top 200 retailers of the world

Opportunities of retailing: Management Opportunities:To cope with a highly competitive and challenging environment, retailers are hiring and
promoting people with a wide range of skills and interests. Students often view retailing
as a part of marketing because the management of distribution channels is part of a
manufacturers marketing function. But retailers operate businesses and, like
manufacturers, undertake most traditional business activities. Retailers raise capital from
financial institutions; purchase goods and services; develop accounting and management
information systems to control operations; manage warehouses and distribution systems;
design and develop new products and undertake marketing activities such as advertising,
promotions, sales force management, and market research.
Entrepreneurial Opportunities:Retailing also provides opportunities for people who wish to start their own business.
Some of the worlds richest people are retailing entrepreneurs.

Evolution of Retail Competition: Three theories may be taken into account to explain the retail
competition
The Wheel of Retailing
Retail Life Cycle
Resource-Advantage Theory

The Wheel of Retailing Theory: Describes how new types of retailers enter the market as lowstatus, low-margin, low-price operators; however, as they meet with success, these new retailers
gradually acquire more sophisticated and elaborate facilities, and thus become vulnerable to new
types of low-margin retail competitors who progress through the same pattern.

The Retail Accordion:

Describes how retail institutions evolve from outlets that offer wide assortments to
specialized stores and continue repeatedly through the pattern.
This refers to a theory of retail institutional change that suggests that retail institutions go
from outlets with wide assortments to specialized, narrow, line store merchants and then
back again to more general, wide assortment institutions. It is also referred to as the
general specific- general category.

The Retail Life Cycle :

A theory of retail competition that states tahr retailing institutions, like the product they
distribute, pass through an indefinable cycle. This cycle can be partitioned into four distinct
stages that a retail institution progresses through:
1. Introduction
2. Growth
3. Maturity
4. Decline

1. Introduction Stage
Begins with an aggressive, bold entrepreneur who is willing and able to develop a different
approach to retailing of certain products. During this stage profits are low, despite increasing
sales levels
2. Growth:
Sales and profits explode. New retailers enter the market and begin to copy the retailers idea.
Late in this stage both market share and profitability approach their maximum levels.
3. Maturity:
Market share stabilizes and profits decline.
Shift in type of establishment
Overexpansion
Competition

4. Decline:
The once promising idea is no longer needed in the marketplace. As a result, market share and profits
fall.

Retail Institutions in the Various Stages of the Retail Life Cycle

Resource-Advantage Theory :
Resource-advantage theory is based on the idea that all firms seek superior performance
in an ever-changing environment.

Illustrates two important lessons for retailers:

Superior performance at any point in time is a result of achieving a competitive

advantage in the market place as a result of some tangible or intangible entity
(resource).

All retailers cannot achieve superior results at the same time.

Retail Format:

Retail formats can be classified on the basis of ownership, Type of store,

and non store based.

1. Ownership Based Retail Formats

Independent
Chain
Franchise
Leased department
Vertical marketing system
Consumer cooperative

1. Store Based Retail Format

Convenience store
Conventional supermarket
Food-based superstore
Combination store
Warehouse store
Specialty store
Variety store
Traditional department store
discount store
Off-price chain

Factory outlet
Membership club

2. Non store Based Retail Format:

Direct marketing
Direct selling
Vending machine
World Wide Web
Other emerging retail formats

3. New Retail Format:

Off-Price Retailers: Sell products at a discount but do not carry certain brands on a
continuous basis. They carry those brands they can buy from manufacturers at closeout or deep
one-time discount prices.

Hypermarkets: Are one and a half times the size of a supercenter

Supercenters: Combine a discount store and grocery store and carry 80,000 to 100,000
products in order to offer one-stop shopping.

Emerging Trends in Retailing: Retail industry is continuously going through change on

account of liberalization, globalization, and consumer preferences. While multinational retail
chains are looking for new markets , manufacturers are identifying ,redefining, or evolving new
retail formats Consumers are not only looking for core products or functional benefits but non
functional benefits.
1. Social media will continue to be defined, reshaped, and understood. Companies have
embarked on the journey of social media and 2012 will become the year that retailers
begin to fully explore the power of the applications associated with this communication
tool.
2. Next up is mobile commerce (M-Com), including selling, payment, and digital voice
technology. Today you can ask your iPhone for directions to the store. Tomorrow you
will be able to ask your iPhone for a Red Pantone 18-1763 TCX dress with short shelves,
20 from the waist, v-neck in organic cotton to be delivered to your doorstep in two
days.
3. .Finally, the last and most relevant trendwhat we may call the Game Changer in
2012. Omni-channel! By fully understanding, appreciating, and acting on the trends
listed above, a retailer can build the cross channel synergy of omni-channel. A seamless

integration of all channels into one brand for the consumer is essential, especially in this
day of technology. By integrating the com businesses, aligning these with social media
applications
Retail environment :A retail marketing environment consists of the external actors and forces that affect the
retailers ability to develop and maintain successful transactions and relationships with its
target customers.
We can distinguish between the retailers' micro environment and macro environment.
The micro environment consists of the actors in the retailer's immediate achievement
that affect its ability to serve its markets: Suppliers, intermediaries, customers,
competitors and publics.
The macro environment consists of legal, social, economic and technological forces.
Social and Economic Significance of Retailing
Support for Community:Retailers are also responsible for developing many innovative products and
services.

Retail Sales:Retailing affects every facet of life. Just think of how many daily contracts you
have with retailers when you eat meals, furnish your apartment, have your car
fixed, and buy clothing for a part or job interview.

Employment:Retailing also is one of the nations largest industries in terms of employment.

Global Retailers:With worldwide retail sales estimated at $8 Trillion, the 20 largest retailers represent a 12
percent share of the world market.