tail management module1(1)

Retail Management

Module – 1

The World of Retailing

Ms. Geetanjali Gulati 2

THE WORLD OF RETAILING

1.Introduction to the World of Retailing2.Types of Retailers3.Multichannel Retailing4.Customer Buying Behavior

RETAILING STRATEGY

5.Retail Marketing Strategy6.Financial Strategy7.Retail Location8.Site Location9.Organization Structure & Human Resource Management10.Information System & Supply Chain Management11.Customer Relationship Management

STORE MANAGEMENT

17. Managing The Store18.Store Layout, Design & Visual Merchandising19. Customer Service

MERCHANDISE MANAGEMENT

12. Managing Merchandise Assortments13. Merchandise Planning System14. Buying Merchandise15. Pricing16. Retail Communication Mix

Key Ingredients:

• What is retailing?

• What do retailers do?

• Why is retailing important in our society?

• What career, entrepreneurial, and other opportunities does retailing offer?

• What types of decisions do retail managers make?

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Who is a Retailer?

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Customer

Retailing Defined:

The word ‘Retail’ is derived from the French word – retaillier

This means – ‘to cut a piece of’ or ‘to break bulk’

In simple terms it implies – a first hand transaction with the customer

Thus Retailing can be defined as: a set of business activities that adds value to the products and services sold to consumers for their personal or family use.

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The Wheel of Retailing

• Explains changes in the retailing institutions.

• It explains phases through which some types of retailers pass.

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ENTRY PHASE

TRADING UP PHASE

VULNERABILITY PHASE

The Wheel of Retailing

• Innovation Retailer (Entry Phase)– Low Status

– Low Price

– Minimal Service

– Poor Facilities

– Limited Product Offering

• Traditional Retailer (Trading Up Phase)– Elaborate Facilities

– Expected , Exotic & Elaborate Services

– High Rent Locations

– High Prices

– Extended Product Offerings

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The Wheel of Retailing

• Mature Retailer (Vulnerability Phase)– Top Heaviness– Conservatism– Declining ROI

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Retail Life Cycle

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INNOVATION GROWTH MATURITY DECLINE

African Markets South Asian MarketsIndian Markets Developed Markets

SALES

TIME

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INNOVATION

• A new organization is born

• It differs sharply from the other retailers

• There are only a few competitors

• The rate of growth is fairly rapid

• Management fine tunes its strategy through experimentation

• Level of profitability is moderate

• This stage can last up to 5 years

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ACCELERATED GROWTH

• There is rapid increase in sales

• Few competitors emerge

• It is now in a position to pre-empt the market & establishes a position of leadership

• Since growth is imperative, the investment level is also high mainly in system & processes

• The level of profitability if high as well

• This stage can last from 5 – 8 years

• Towards the end of this stage cost pressures tend to appear

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MATURITY

• The organization still grows but competitive pressures are felt acutely

• Newer forms of retail formats tend to arise

• The rate of growth declines & so do profits

• It calls for rethinking strategy & repositioning itself in the market

• A change may occur not only in the retail format but also in the merchandise mix offered.

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DECLINE

• The retail organization looses its competitive edge.

• The growth is negative

• Profitability declines further

• Overheads are high

• The organization needs to decide if it is still going to continue in the market

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What do Retailers do???

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Functions Performed by a Retailer

• Providing an assortment of products and services

• Breaking bulk

• Holding inventory

• Providing services

• Provide an experience

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Why is Retailing Important in our Society???

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Economic Significance of Retailing

1. GDP Growth

2. Employment Opportunities

3. Greater Exports

4. Better Quality of Products & Services

5. Increased Tax Revenues

6. Organized Indian retail sector will encourage tourism

7. Scope of improvements in agriculture with the help of the Indian Retail Sector

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What career, entrepreneurial, and other opportunities does retailing offer?

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Opportunities in Retail

• Management Opportunities– Design & develop new products– Undertake marketing activities– Market research

• Entrepreneurial opportunities– Kishore Biyani – heads Future Group worth

Rs. 3,550 Crores

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Opportunities in Retail

1. Fastest Growing Sector in India

2. Humungous Customer Pool

3. Tremendous Growth Rate

4. Percolating Down – Huge potential in Tier – II cities.

5. Rural Retailing

6. Expected Further Relaxation of FDI

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Opportunities in Retail

1. Fastest Growing Sector in India

2. Humungous Customer Pool

3. Tremendous Growth Rate

4. Percolating Down – Huge potential in Tier – II cities.

5. Rural Retailing

6. Expected Further Relaxation of FDI

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What types of decisions do retail managers make???

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The Retailing Management Decision Process

• Understand the world of retailing

• Developing retail strategy

• Implementing retail strategy

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Understand the World of Retailing

• Retailing managers need to know the environment in which they operate

• There are 2 critical environmental factors:

1. Macro Environmenta. Technological factors

b. Social factors

c. Ethical / legal / political factors

2. Micro environment a. Competitors

b. Customers

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Macro Environment

• Technological factors

– Rapid change in technology

– RFID Technology

– Use of EID

– Rise in E – Tailing

– Automated self service systems improve satisfaction

– Concept of media carts to study and analyze customers better

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Macro Environment

• Social Factors

– Shift in India’s demographic profile

– Rise of the middle class

– Rise of no. of working women

– Rise in no. of people working 24 X 7

– This gives rise to new merchandising categories and round the clock retail

– Retailer needs to understand the local culture

– The new success mantra is – “Think Local & Act Local”

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Demographic Profile of India

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Demographic Profile of India

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2010 (Estimate)

Demographic Profile of India

Demographic Profile of India

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Number of Households (in 000s)

Rural

360842

2,3018,889

Macro Environment

• Legal/Ethical/Political Factors

– Legal environment affects the interest of foreign investors

– It also affects the risk perception of customers

– Ethical factors include retailers’ trade off between promoting a good product or promoting a product with good margins

– Political environment deals with the political stability of an economy

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Micro Environment• Customers

– Existing customers

– Potential customers

• Competitors

– Inter type competition: similar merchandise using different formats. Ex – discount & department stores

– Intra type competition: same formats

– Competition based on Location Proximity

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Developing Retail Strategy

• The retail strategy indicates how the firm plans to focus its resources to accomplish its objectives

• It identifies:– The target market

– The nature of merchandise & services to be offered

– How the retailer will build a long term advantage

• Sustainable competitive advantage in retail can be build by:– Customer loyalty

– Location

– Human resource management

– Distribution and information systems

– Unique merchandise

– Vendor relations

– Customer Service

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Developing Retail Strategy

• It also involves strategic decision areas:• u

– Market

– Financial

– Location

– Organizational structure

– Human resources

– IS & SCM

– CRM

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Implementing Retail Strategy

• To implement retail strategy, management develops a retail mix that satisfies the needs of its target market better than its competitors

• The Retail Mix is the decision variables retailers use to satisfy customer needs & influence their purchase decision

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Retail strategy

Location

Communication

Mix

Store Design

& Display

Customer

Service

Pricing

Merchandise

Assortments

Implementing Retail Strategy

• Managers in the buying organization must decide:

– How much & what type of merchandise to buy?

– The vendors to use & the purchase terms

– The retail prices to set

– How to advertise & promote merchandise

• The store managers must determine, how to:

– Recruit

– Select

– Motivate sales associates

– Where & how the merchandise will be displayed

– The nature of services to provide customers

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Top 10 Indian Retailers1. Shoppers Stop

2. Westside (Trent)

3. Pantaloons

4. Lifestyle

5. RPG Retail (Food World, Music World)

6. Crossword

7. Wills Lifestyle

8. Globus

9. Piramals (Piramyd& Crossroads)

10. Ebony Retail Holdings Ltd.

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