Introduction to Retailing

Retaillier
• Retailing consist of business activities
involved in selling of goods & services to
consumer for their personal, family or non-
business use.

• A retailer is a businessman who sells

products and/or services to consumers for
personal or family or non-business use.
 Top 10 Retailers World Wide

Rank Retailer Home Country Sales

1 Wai-Mart Stores,Inc. USA $202,011
2 Carrefour Group France $62,216
3 The Home Depot ,Inc. USA $53,553
4 The Kroger Co USA $50,098
5 Royal Ahold Netherlands $48,239
6 Metro Ag Germany $43,816
7 Target Copporation USA $39,176
8 Albertson’s USA $37,931
9 Sears,Roebuck and Co USA $37,328
10 Kmart Corporation USA $63,151
TOTAL TOP 10 $612,520
Retail Sales
 The Four P’s of Marketing
Retailers
Retailersare
are part
part of
of the
the
distribution channel
distribution channel
Product

Distribution Price

Promotion
 Distribution Channel
PPT
PPT1-4
1-4
Distribution
Distribution Channel
Channel
 Retailers are a Business Like Manufacturers

Accounting Finance Marketing

Operations MIS Human Resources

 Reasons for studying Retailing
• Retail functions in distribution
 Characteristics of Retailing
• It offers direct interaction with customers.
• It sales products/services in small
quantities.
• Customer service plays vital role.
• Sales promotion is offered heavily at this
point.
• Location and layout are critical factors.
 Evolution of retailing in India
• Roots of retailing can be traced in
‘weekly bazars’ and ‘melas’.
• Traditional age saw the emergence of
‘kirana’ stores. (Convience stores or mom
and pop store)
• Government came up for rural retail. (Khadi
& Village Industries Commision- KVIC)
• Economy opened in late 1980’s .
And in late 1980’s with the opening up of economy
retailing in India experienced great change.
 Retailing Functions
• Identifying Customer Demands
• Management of Merchandise
• Convenience of timing
• Convenience of location.
 Retailing principles
• Clear definition of objectives
• Duties and responsibilities.
• Unity of command
• Supervision and control
• Monitoring human resources
• Responsibility and authority
 Global Retailing Trends
• Going internationalization
• Enhancing service offerings
• Expanding private brands
• Consolidation
 Reasons for Retail growth
• Emergence of nuclear family concept.
• Growing Indian young population
• Increased disposable income
• FDI in retail
• Low cost of operations
• E commerce
Low cost of operations
Decision Variables for Retailers
Customer Service

Store Design Merchandise

and Display Assortment
Retail
Strategy
Pricing Location

Communication
Mix
 List of Retail Entrepreneurs on
Forbes 400 Richest Americans
• Walton Family (Wal-Mart)
• Fisher (The Gap)
• Wexner (Limited)
• Menard (Menard’s)
• Marcus, Blank (The Home Depot)
• Kellogg (Kohl’s)
• Schulze (Best Buy)
• Levine (Family Dollar)
• Gold (99Cent Only)
 TYPES / BUSINESS MODELS IN RETAIL

• CLASSIFICATION ON THE BASIS OF

OWNERSHIP
• CLASSIFICATION ON THE BASIS OF
THE MERCHANDISE OFFERED
• NON-STORE RETAILING (OTHER)
 CLASSIFICATION ON THE BASIS OF
OWNERSHIP

• INDEPENDENT RETAILER
• CHAIN RETAILER
• FRANCHISE
• LEASED DEPARTMENTS
• CONSUMER CO-OPERATIVES
 INDEPENDENT RETAILER

• OWNERSHIP IS WITH INDIVIDUAL OR FAMILY

• GIVES EASE IN ENTRY AND EXIT
• FLEXIBILITY
• IN INDIAN RETAIL INDUSTRY MOST STORES
BELONG TO THIS CATEGORY
• QUICK DECISION MAKING
• CAPITAL LIMITATIONS
• LIMITED BARGAINING POWER WITH SUPPLIER
• CANNOT GAIN ECONOMIES OF SCALE
• LIMITED USE OF TECHNOLOGY
• LACK ADVERTISEMENTS
 CHAIN RETAILER

• OPERATES MUPTIPLE OUTLETS UNDER COMMON

OWNERSHIP
• ALL STORES HAVE SIMILARITY IN MERCHANDISE
OFFERED
• BARGAINING POWER WITH SUPPLIER
• ECONOMIES OF SCALE
• SHARING OF FINANCE AND FACILITIES
• CENTRALIZED BUYING AND DECISION MAKING
• ADVERTISEMENTS
• FLEXIBILITY MAY BE LIMITED
• HIGH INVESTMENT COST
• DECISION MAKING TAKES TIME
 FRANCHISE

• A FRANCHISE IS A CONTRACTUAL
AGREEMENT BETWEEN THE
FRANCHISER AND FRANCHISEE,
WHICH ALLOWS FRANCHISEE TO
CONDUCT BUSINESS UNDER AN
ESTABLISHED NAME AS PER A
PARTICULAR BUSINESS FORMAT.
 FRANCHISE

• OWNERSHIP OF STORE IN SMALL

INVESTMENT
• ADVANTAGE OF BRAND NAME
• STANDARD OPERATING PROCEDURE
• ECONOMIES OF SCALE
• SHARING OF PROFIT
• CONTRACTUAL INFORCEMENTS
• CANCELLATION MAY TAKE PLACE
 LEASED DEPARTMENT
• Concept of shop in shop
• A leased department or a counter is leased/ rented
to an outside party
• Enlargement of market
• leased department operators pay for some
expenses
• Investment cost can be reduced
• Inflexibility of working hours
• Goods/ services are limited
 CONSUMER CO-
OPERATIVES
• Retail store owned by member consumers
• Limitations on growth opportunities
• Limited goods/ services are offered
• Main motive is co-operation not profit
Retail Location Space Merchandise Customer Example
Formats Profile
Supermarket Marketplaces Large Multiple,Cohesi Family A
in Metros ve Food and Profile,Mostly Supermarket
,towns,cities household Loyal Apna
categories Bazaar,Food
World
Speciality Strategic Medium Focussed Single Individuals,gro A fftwear
Store Sized Category ups & clusters store,A
of small music store
class,mediocor
e to high
loyalty
Department Destination Large Independent Family,High A store with
Store towns Categories loyalty department
,Metros & as
mega Metros SBU,Shoppe
rs Stop.
The Plaza Marketplace Large Independent Family & Heera panna
in metros Categories individuals In Mumbai
,Large towns
The Mall Destinations Huge Independent but Family Shopping,di
Mega Metros profiled & &individ ning &
defined category uals,Young, entertainme
mix like Fun nt.
shopping loving,,enter
,dinning,Entertai tainment,
nment ,etc.
The Marketplace Medium Single group Family & The Bombay
Emporium sized/s cattegory individuals Dyeing
mall Store

The Strategic Large Multiple,cohesive Price The discount

Bazaar categories in concious stores
reduced price individuals & Megamart ,
bands Family,Less Big Bazaar
loyalty
Stop-Over Piggy Back Small to Multiple,cohesive Impulsive The store
location Medium categories buyers inside the
petrol pump
Single Busy Medium Multiple Bargain The
price Marketpla Sized non Seekers “Dollar
denominati ce /Small cohesive Store” in
on categories USA
scrambled

Kiosk Busy Very Small Fast Nick of The bunk

Marketplac moving time shop
e Consumabl individuals
es
CLASSIFICATION ON THE BASIS IF
THE MERCHANDISE OFFERED

• CONVENIENCE STORE
• SUPERMARKETS
• HYPERMARKETS
• SPECIALITY STORES
• DEPARTMENTAL STORES
• OFF PRICE RETAILERS
• FACTORY OUTLETS
• CATALOGUE SHOWROOMS
 CONVENIENCE STORE

• Small stores located in residential areas

• Offers limited, daily use goods/ services
• It gives time and location convenience
 SUPERMARKETS

• These are large, low cost, low margin, high

volume, self service operations designed to
meet the needs for food, grocery and other non
food items.
• “store with a selling area between 400 sq m to
2500 sq m and selling at least 70% foodstuff
and everyday commodities.”
• Gives comfort of shopping to customers.
• High investment cost
 HYPERMARKETS

• A retail store with a sales area of more than

2,500 sq m, with at least 35% selling space
devoted to non grocery products.
• Combination of supermarket and department
store.
• Large variety of products offered
• Discounted price
• Economies of scale
• One stop shop
 SPECIALITY STORES
• Offers narrow goods/ services
• Deep assortment of chosen category
• Expertise in offered goods/ services
 DEPARTMENTAL STORES

• Those stores depending on food, clothing

and home related items for at least 10%, but
less than 70% respectively, of their sales.
• Departments on different floors
• 7000 sq m
 OFF PRICE RETAILERS
(Discount stores)

• 365 days discount.

• Offers branded merchandise
• Offers narrow goods/ services
• Economy of scale
 FACTORY OUTLETS

• Owned by manufacturer
• Profitable for customer and manufacturer
• Manufacturer can control the market
 CATALOGUE SHOWROOMS

• Narrow goods/ services are offered

• Few samples along with catalogue
• It gives ease to retailer
• Low investment cost.
• Consumer decision making is difficult.
 SINGLE PRICE STORE
• Offers branded or non branded goods /
services
• Appeals budget conscious customers
 NON-STORE RETAILING (OTHER)

• DIRECT SELLING
• MAIL ORDER
• TELE MARKETING
• AUTOMATIC VENDING MACHINE
• WORLD WIDE WEB
• DIRECT RESPONSE
• AIRPORT RETAILING
• HAWKERS