Definition of Retailing

Retailing includes . . . .
all activities involved in selling, renting, and providing goods and services to ultimate customers for personal, family or household use. In the channel of distribution, retailing is where the

customer meets the product. It is through retailing that

exchange occurs.

Indias Largest Retailers

Pantaloon Retail
The flagship company of Future Group, Pantaloons Retail operates over 16 million square feet of retail space, has over 1000 stores across 73 cities in India and employs over 30,000 people. It can boast of launching the first hypermarket Big Bazaar in India in 2001. The companies also operates in other retail segments such as - Food & grocery (Big bazaar, Food bazaar), Home solutions (Hometown, furniture bazaar, collectioni), consumer electronics (e-zone), shoes (shoe factory), Books: music & gifts (Depot), Health & Beauty care services (Star, Sitara andHealth village in the pipeline), e-tailing (Futurbazaar.com), entertainment (Bowling co.) The turnover this year was 12500 crores.

K Raheja Group
They forayed into retail with Shoppers Stop, Indias

first departmental store in 2001. It is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). They have signed a 50:50 joint venture with the Nuance Group for Airport Retailing. Shoppers Stop has a national presence, with over 2.05 million square feet area across 39 stores in 17 cities. It has also introduced new formats in the market viz Home Stop the exclusive home furnishings, dcor as well as furniture store and HyperCity a premium shopping destination for Foods, Homeware, Home Entertainment, Hi-Tech Appliances, Furniture, Sports, Toys & Fashion. Other format of the company includes -- Crossword Book Store, Mothercare & Early Learning Centre (ELC), Estee Lauder group , Airport Retailing, TimeZone Entertainment. The turnover this year was 1570 crores.

Tata group
Established in 1998, Trent - one of the subsidiaries of Tata Group - operates Westside, a lifestyle retail chain and Star India Bazaar - a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, India`s largest book and music retailer. Tatas has also formed a subsidiary named Infiniti retail which consists of Croma, a consumer electronics chain. Another subsidiary, Titan Industries, owns brands like Titan, the watch of India and Tanishq, the jewellery brand. Sales turover was 197.13 crore in December 2010.

RPG group
One of the first entrants

into organised food & grocery retail with Foodworld stores in 1996 and then formed an alliance with Dairy farm International and launched health & glow (pharmacy & beauty care) outlets. Now the alliance has dissolved and RPG has Spencers Hyper, Super, Daily and Express formats and Music World stores across the country.

Landmark group
Landmark

Group was launched in 1998 in India; currently owning 100 stores across various retail formats. The retail ventures of Landmark Group includes Home Centre, Centrepoint, Babyshop, Splash, Shoe Mart, Lifestyle, Max, Lifestyle Department Stores, SPAR hypermarkets, Foodmark, Fun City, Fitness First, Citymax India etc. It is a 3.8 billion dollar company.

Bharti-Walmart
Bharti have signed a 50:50

percent joint venture agreement with Walmart in which Wal-Mart will be taking care of cash & carry and Bharti will do the frontend. Further they plan to invest USD 7 billion in creating retail network in the country including 100 hypermarkets and several hundred small stores.

Reliance
The company owns more

than 560 Reliance Fresh stores and recently it has also launched Reliance Mart Hypermart. The company further plans to launch its hypermart in Delhi /NCR,Hyderabad, Vijaywada, Pune and Ludhiana region. The turnover was 4500 crore for this year.

AV Birla Group
AV Birla Group`s brand portfolio

includes brands such as Louis Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town. Also, Madura garments is subsidiary of Aditya Birla Nuvo Ltd. The recently acquired food and grocery chain of south, Trineth, has further increased their number of store to 400 stores in the country. The company also own More supermarkets and hypermarkets. Currently it runs 600 supermarket and nine hypermarkets across India. The turnover this year was 1700 crores.

Metro
Metro Cash & Carry, the first

company to introduce cash and carry business, started its operations in India in 2003 with two Distribution Centres in Bangalore. Metro offers assortment of over 18000 articles across food and non food at the best wholesale prices. Currently Metro operates six cash and carry centres in Banglaore, Hyderabad, Kolkata and Mumbai.

Viveks Ltd
Vivek Limited is the largest

consumer electronics and home appliances retail chain in India, with 44 stores in south, covering a retail space area of over 1, 75, 000 sq. ft and a turnover of over Rs. 400 crore. Its brand, Viveks, is now a household name. The company plans to set up 50 more showrooms in South India.

Functions of a retailer
1.

Buying: A retailer buys a wide variety of goods from different wholesalers after estimating customer demand. He selects the best merchandise from each wholesaler and brings all the goods under one roof. In this way, he performs the twin functions of buying and assembling of goods. Storage: A retailer maintains a ready stock of goods and displays them in his shop. Selling: The retailer sells goods in small quantities according to the demand and choice of consumers. He employs efficient methods of selling to increase his sales turnover. Grading and Packing: The retailer grades the goods which are not graded by manufacturers and wholesalers. He packs goods in small lots for the convenience of consumers.

2.

3.

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5.

Risk-bearing: A retailer always keeps stock of goods in anticipation of demand. He bears the risk of loss due to fire, theft, spoilage, price fluctuations, etc. Transportation: Retailers often carry goods from wholesalers and manufacturers to their shops. Financing: Some retailers grant credit to customers and provide the facility of return or exchange of goods. In some cases, home delivery and after sale service are provided by retailers. Sales promotion: A retailer displays goods. He carries out publicity through shop decoration, window display, etc. He maintains direct and personal contacts with consumers. He persuades consumers to buy goods through personal selling. Information: Retailers provide knowledge to consumers about new products and uses of old products. They advise and guide consumers in better choice of goods. They also provide market information to wholesalers and manufacturers.

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Importance of a retailer
Providing variety & assortments: A typical supermarket provides thousands of products .it not only stocks brand varieties but also assortments within a particular brand.

Eg: shampoo- clinic plus, sun silk ,Pantene. -within that sub brand-clinic plus protein shampoo. Clinic all clear

Breaking bulk into smaller assortment: Though the retailer purchase products in bulk, in order to reduce transportation inventory and warehousing costs. he does not sell it bin bulk to end customer.

 Holding inventories:

the broken bulk is kept in stock until the customer comes for the purchase. Proving information: Informn regarding the products, services & promotions to the customer. he gives informn regarding the customers, purchase pattern & demand pulse to the manufactures. Implied functions: Merchandising:- identifying the right products for retail sourcing them and ensuring that they reach the end consumer Quality control: -internal part of merchandising-involves establishing the stds for merchandise procurement and ensuring that the consumers get quality product at expected stds.. Storage & maintenance:-perishable & non perishable Logistics:- transportation -includes proper planning ,follow up & contingency planning

 Other services : Offering credit to consumers Displaying products Giving demonstration for the product Providing samples for testing and tasting Handling enquires, complaints, guarantees, warranties Providing home delivery, installation ,gift wrapping Advertising and promotion

Classifying Retail Outlets

Retail outlets can be classified in several ways: -- Form of ownership. Who owns the outlet. -- Level of service. The degree of service provided to the customer. -- Merchandise line. How many different types of products a store carries and in what assortment.

Classifying retail outlets

METHOD OF CLASSIFICATION
Form of ownership

DESCRIPTION OF RETAIL OUTLET

Independent retailer Corporate chain Contractual system Retailer-sponsored cooperative Wholesaler-sponsored voluntary chain Franchise Self-service Limited service Full-service Depth Single line Limited line Breadth General merchandise Scrambled merchandise

Level of service

Merchandise line

Depth and Breadth of Product Line

Depth of product line means that the store carries a

large assortment of each item, such as shoe stores that offer running shoes, dress shoes, and childrens shoes.
Breadth of product line refers to the variety of different

items a store carries. -- scrambled merchandising refers to retailers that offer several unrelated product lines in a single store. -- hypermarkets are very large retail outlets that have the goal of offering customers everything at one outlet. -- Supercenters are retailers that combine a typical merchandise store with a grocery store.

Breadth vs. Depth of Merchandise Lines

Breadth: Number of different product lines Mens Clothing

Shoes

Appliances

CDs

Depth: Number of items within each product line

Nike running shoes Florsheim dress shoes Top Sider boat shoes Adidas tennis shoes

Amana refrigerator Sony TV sets JVC videocassette recorders General Electric dishwashers Sharp microwave ovens

Classical Rock Jazz Country Western

Suits Ties Jackets Overcoats Socks Shirts

Forms of Non-store Retailing

High Active customer involvement
Direct selling
Telemarketing On-line retailing Television home shopping

Direct mail and catalogs Automatic vending

Low Low Active retailer involvement High

Automatic Vending
Non-store retailing that makes it

possible to serve customers where stores cannot. Maintenance and operating costs are high. Small convenience products are available in vending machines. Of the 3 million vending machines now in use, 1.8 million are soft drink machines.

Direct Mail & Catalogs

Marketing efficiency is improved

through segmentation and targeting. Customer value is enhance by providing a fast and convenient means of making a purchase. In 1998 Americans increased their catalog spending to $87 billion. A typical household receives 50 catalogs each year.

Television Home Shopping

TV home shopping is possible when consumers

watch a shopping channel on which products are displayed; orders are placed over the telephone. Two popular home shopping programs reach 60 million homes and have combined sales of $2 billion. TV home shopping programs traditionally attract 40-50 year old females. Limitations of TV shopping have been the lack of buyer-seller interaction and the inability of consumers to control the items they see.

Online Retailing
Online retailing allows consumers to search

for, evaluate, and order products through the Internet. The advantages of online retailing are: ability to comparison shop privacy variety Forecasts suggest that current annual sales of $10 billion could reach $100 billion in just a few years.

Telemarketing

Telemarketing involves using the telephone to interact with and sell directly to consumers.

According to the American Telemarketing Association, telemarketing sales exceed $500 billion. As the use of telemarketing grows, consumer privacy has become a topic of discussion among consumers, Congress, the Federal Trade Commission, and businesses.

Direct Selling
Direct selling involves direct sales of goods and services to consumers through personal interactions and demonstrations in their home or office. Industry sales are more than $16 billion, but are declining in the U.S. as retail chains begin to carry similar products at discount prices, and the increasing number of dual-career households reduces the number of potential buyers at home. Many direct selling retailers are expanding into international markets to offset the decline in domestic sales.

Retail Positioning Matrix

The retail positioning matrix positions

retail outlets on two dimensions: breadth of product line and value added. Breadth of product line is the range of products sold through each outlet. Value added includes such elements as location, product reliability, and/or prestige.

Retail Positioning Matrix

Broad

Kmart

Bloomingdales

Breadth of product line

Just for Feet

Tiffany

Narrow Low Value added High

Key to Retail Positioning

For a store to be successfully positioned, it must have an identity which has some advantages over competitors, and at the same time are recognized and valued by consumers.

The Retailing Mix

The retailing mix includes: 1. Goods and services 2. Physical distribution 3. Communications tactics chosen by a store.

The Retailing Mix

Store location Distribution centers Warehousing Transportation Handling goods Packing
Variety and assortment Sales assistance Customer services Pricing Credit Guarantees and exchanges Alterations and adjustments Store image and atmosphere Parking Delivery

Personal selling Consumers Advertising Window displays Internal displays Public relations Store layout Catalogs Telephone sales

Implications of the Retail Positioning Mix

Types of Retailers
High Value-added/ Broad Line (Bloomingdales)

Keys to Success
Creative merchandising image-excitement, leader High price/high margin Store Ambiance Economies of scale--volume Image--good guys, conveniences Low price/low margin Low or self-service Efficiency of operations Unique of high quality products Image--exclusive specialty High price/high margin Personal service/advice Expensive presentation Specialty mass merchandising Image--value conscious, consistent Low price, loss leaders Little or self-service Cookie-cutter stores

Low Value-added/ broad line (Kmart)

High Value-added/ narrow line (Tiffany)

Low Value-added narrow line (Just for Feet)

Retail Pricing Terminology

Markup refers to how much should be added

to the cost the retailer paid for the product to reach a final selling price.
Original markup is the difference between the

retailers original cost and initial selling price.

The maintained markup is the difference

between the final selling price and retailer cost and is also the gross margin.

Retail Pricing Terminology

Markdown occurs when the product does not

sell at the original price and an adjustment is necessary.

Shrinkage is theft of merchandise by

customers and employees.

Off-price retailing involves selling brand

name merchandise at lower than regular prices. The difference between the off-price retailer and a discount store is that off-price merchandise is bought by the retailer from manufacturers excess inventory at prices below wholesale prices.

Store Location Types of Store Locations

Central business district regional shopping centers community shopping centers

strip location
power center

The Wheel of Retailing

As more time passes, outlet adds still more services
2. Outlet now has: Higher prices Higher margins Higher status 3. Outlet now has: Still higher prices Still higher margins Still higher status

As time passes, outlet adds services

Passage of time

1. Outlet starts with: Low prices Low margins Low status

4. New form of outlet enters retailing environment with characteristics of outlet in Box 1

Market share or profit

Early growth Value-retail stores

On-line retailers
Single-brand stores

Single-price stores Factory outlet stores

The Retail Life Cycle

Accelerated development

Warehouse clubs
Fast food outlets Convenience stores Supermarkets Department stores

Profit

Market share

Maturity Decline

Malls (?)
Catalog Retailers General store

LO3

Evolution of Retail Competition

1. The Wheel of Retailing 2. The Retail Accordion 3. Retail Life Cycle

LO3

Evolution of Retail Competition

Wheel of Retailing Theory

New types of retailers enter the market as low-status, low-margin, low-price competitors and take market share away from established retailers. These new retailers gradually acquire more elaborate facilities, becoming less efficient, and are replaced by new low-status, low-margin, low-price retailers.

LO3

Wheel of Retailing
Some would argue that McDonalds has become a victim of the wheel of retailing. When McDonalds started out, it served a select menu. Over the years, the McDonalds product offering has expanded to the inclusion of playgrounds, thus opening the way for new, low-cost fast-food providers, such as Checkers.

LO3

Evolution of Retail Competition

The Retail Accordion
Wide Assortment

Time

Narrow Assortment

Wide Assortment

LO3

Evolution of Retail Competition

The Retail Accordion

Retail institutions evolve from outlets that offer wide assortments to specialized stores that offer narrow assortments and continue repeatedly through the pattern.

LO3

Evolution of Retail Competition

The Retail Life Cycle
Retail institutions pass through an identifiable cycle which includes: 1. Introduction 2. Growth 3. Maturity 4. Decline

LO3

Evolution of Retail Competition: The Retail Life Cycle Introduction

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.

LO3

Evolution of Retail Competition: The Retail Life Cycle Growth

Sales and profits increase, validating the entrepreneurs good idea. 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.

LO3

Evolution of Retail Competition: The Retail Life Cycle Maturity

Market share stabilizes and profits decline because: 1. managers used to managing simple small retail outlets must now manage large complex firms, 2. industry has over expanded, and 3. competitive assaults by new retail formats.

LO3

Evolution of Retail Competition: The Retail Life Cycle

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

Future Changes in Retailing

Impact of Technology Changing Shopping Behavior Importance of Brands