retail management unit 1

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RETAIL MANAGEMENT

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RETAILING

• Final stage of any economic activity

• Involves all activities in selling goods/services to the final consumer for personal use.

• Link b/w the producer & consumer

• Most important channel member

• An image creator

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THE RISE OF THE RETAILER

The Pre-marketing

Era

Dominance of the

Wholesaler

Dominance of the

manufacturer

Era of the Retailer

Age of the

Consumer

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REASONS FOR RISE OF THE RETAILER

•Rise of consumerism•Proximity to the consumer•Growth of private labels•Globalization•Technology

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CHALLENGES FACED BY RETAILERS

• Emergence of new markets

• Empowered consumers

• Technology-enabled efficiencies

• The rise of the e-age

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WHY RETAILING???

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UNDERSTANDING RETAIL FORMATS

CLASSIFICATION OF

RETAIL FORMATS

STORE BASED

NON-STORE BASED

PRODUCT MIX

PRICE

OWNERSHIP BASED

SERVICESRETAILING

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STORE BASED(operate from a physically brick & mortar

environment)

On the basis of product mix offered:

1. Convenience Stores Essentially found in residential areas Provide limited amount of merchandise at more

than average prices with a speedy checkout. Ideal for emergency and immediate purchases as

it often works with extended hours, stocking everyday;

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2. Supermarkets A self-service store consisting mainly of grocery

and limited products on non food items. May adopt a hi-low or an edlp strategy for pricing. Can be anywhere between 400sqm & 2500sqm Eg: foodworld, Food Bazaar, Reliance Fresh etc.

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3. Hypermarkets Combination of supermarket & department store Provides variety and huge volumes of exclusive

merchandise at low margins. Operating cost is comparatively less than other

retail formats. Selling area between 5000- 15000sqm One-stop shopping Offering food & non-food items. Eg: carrefour, Walmart, Tesco, Big Bazaar etc.

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4. Specialty stores Gives attention to a particular category and

provides high level of service to the customers. A pet store that specializes in selling dog food

would be regarded as a specialty store. However, branded stores also come under this

format. For example if a customer visits a reebok then

they find just reebok products in the respective stores.

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5. Category killers/Category Specialist By supplying wide assortment in a single

category for lower prices a retailer can "kill" that category for other retailers.

Stock deep Nalli’s in Chennai for sarees & Toys Kemp in

Bangalore, LOFT in Mumbai (footwear)

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6. Department stores Very large stores offering a huge assortment of

"soft" and "hard goods Often bear a resemblance to a collection of

specialty stores A retailer of such store carries variety of categories

and has broad assortment at average price. They offer considerable customer service. Have atleast 50 employees 20000-40000 sqft. Shopper’s stop, westside, lifestyle, marks &

spencer, harrods etc.

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On the basis of price offered:

1.Consumer CooperativesAim at providing essential commodities at reasonable pricesDemocratic institution owned, managed & controlled by its members for protection of the interest of common consumers.Protects consumer interest & stabilise the pricesEg: Sahakari Bhandar & Apna bazaar in Mumbai & Super Bazaar in delhi.

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2. Off Price Retailers Merchandise sold in odd sizes, unpopular colors, off seasons & less pricessEg: Pantaloon factory outlets, Levi’s FOs

Some Other formats are:Discount department storesOutlet storesLimited assortment storesDollar stores: traditional format selling 20-80% of groceries & other consumable products at discounted prices

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NON STORE BASED

1.Catalogue showrooms

Specialise in hard goods such as house wares, jewellery & consumer durables.

Customer walks into the showroom, browse the catalogue, specifies the product code & place the order.

Eg: Hypercity has joined forces with ARGOS, UK based.

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2. Direct Selling

3. Direct Marketing (Mail order, television retailing)

4. Electronic Shopping

5. Automated Vending/Kiosks

6. Airport Retailing

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SERVICES RETAILING

• Selling services rather than merchandise• Services like: Ailrlines, automobiles repair,

banks, credit cards, education,health care, fitness, hotels, insurance, movies, restaurants etc.

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OWNERSHIP BASED RETAILING

• Independent, single store establishments• Corporate Retail chains (Walmart, JC Penny etc)• Franchising (Haldirams, BR, Domino’s , KFC,

Lilliput, ferns & petals etc)• The Cash & Carry• Leased Departments

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THEORIES OF RETAIL DEVELOPMENT

Classified into:1. Environmental Theory (retail change is

attributed to change in environment)

2. Cyclical/Wheel Theory (retail change follows a pattern having identifiable attributes)

3. Conflictual Theory (conflict between 2 opposite type of retailers leads to a new format)

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ENVIRONMENTAL THEORY

• Retailers confront an environment which is made up of customers, competitors & changing technology.

• Retailers who successfully adapt techno, economic, demo & legal changes prosper & vice versa.

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CYCLICAL/WHEELOF RETAILING THEORYGiven by Prof. Malcolm P. McNair

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1. New retailers often enter the market place with low prices, margins, and status. The low prices are usually the result of some innovative cost-cutting procedures and soon attract competitors.

2. With the passage of time, these businesses strive to broaden their customer base and increase sales. Their operations and facilities increase and become more expensive.

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3.They may move to better up market locations, start carrying higher quality products or add services and ultimately emerge as a high cost price service retailer.

4. By this time newer competitors as low price, low margin, low status emerge and these competitors too follow the same evolutionary process.

5.The wheel keeps on turning and department stories, supermarkets, and mass merchandise went through this cycles.

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CONFLICTUAL THEORY

• Conflict exists between operators of similar formats.

• Retail innovation leads to development of more retail formats

• Retailing evokes through a dialectic process: blending of 2 opposites to create a new format.

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• Thesis: Individual retailers as corner shops all across the country

• Anti thesis: Department stores

• Synthesis: Blending of thesis & antithesis resulting in thriving supermarkets & hypermarkets. It becomes the “thesis” for next round of evolution.

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Retail Life Cycle

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INDIAN RETAIL SCENARIO

Traditional Business Models:

• Mandis

• Haats

• Melas

• The local Kirana

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DRIVERS OF RETAIL GROWTH

• Economic Growth• Growing middle class• Demographics (47% of population below 20 & 70%

below 40)• Changing family structure (working women)• Changing consumption basket (Maslow’s hierarchy)

• Urbanization

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KEY SECTORS IN INDIAN RETAIL

• Food Retail: Food & Grocery

Food Services (Restaurants)• Apparel : Men’s, Women’s & Kid’s wear• Consumer Durables :Electronics (TV, Audio, DVD)

Utilities (Refrigerators, WM, kitchen appliances, ACs, Vacuum Cleaners)

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• Footwear• Jewellery• Watches• Telecom

OTHER SUBSECTORS• Fuel• Pharma• Beauty & wellness• Books, Music & gifts

BEYOND URBAN BOUNDARIES• Hariyali Kisaan Bazaar• E-choupal

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THANK YOU