chapter#1 retailing

8/8/2019 Chapter#1 Retailing

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Abdi Rahman Daud

Sami ullahAhmed Haji

Zia-Allah Khattak

Chapter #1


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What is Retailing ?

All the activities directly related to the sale

of goods and services to the ultimate

consumer for personal, non-business use.

The word retailing is derived from the

French word retaillier, meaning to cut apiece off or to break bulk


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Who is Retailer?

A person, agent, agency, company,

organization that links the producer and theultimate consumer by delivering goods or

services.


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Misconceptions about Retailing

A common misconception is that retailing

involves ONLY the sale of product in

stores. But Retailers performs specific activities, like

* anticipating customers wants,

*developing assortments of products,

* acquiring market information,


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The selling need not necessary take place

through a store.

Retailing encompasses selling through

* Mail,

* Internet,

* Door to door*Any channel that reaches consumer


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For the general

public

For thebusiness

For theeconomy

Importance ofRetailing::


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For the General Public

Retailing has become such an intrinsic part

of our everyday lives that it is often taken

for granted. Retailing sector offers:

*An easier access to a variety of products

*Freedom of choice.

* Higher levels of customer services.


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For the Business(Value chain)


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For the economy of the country

The nations that have enjoyed the greatest

economic and social progress have been

those with a strong retail sector.

In the West retail business contributes 8%

of GDP. In India around 10-11% of GDP.

Huge number of the worker in every

county is employed by retail sector


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Caution!!!!

To enter retailing is easy and to fail is

even easier.

Because, the ease of entry into retail

business results in fierce competition and

better value for customer.

In order to survive in retailing, a firm must

do a satisfactory job in its primary role.


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Ways toWays tosurvivesurvive

Good customer service

Understanding conceptOf Retail profitability

Professional attitude


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Characteristics of retailing Direct interaction with customers

Act as intermediaries between end-users and

suppliers such as wholesalers ormanufacturers.

Lower average amount of sales transactions

* The average amount of sales transaction at

retail point is much less because most of theconsumer buy the products in small quantity


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Point of purchase display and promotions

* Most of retail sales comes from impulse

purchases because shopper dont carry a fixedshopping list.

Large number of retail business units

* The number of operating units in retail is the

highest compared to other partners of the valuechain.

* In order to meet the needs for geographic reachand customer accessibility


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FunctionsFunctionsOfOf

RetailingRetailing

Transport &

ads functions

Sorting

Breaking

Bulk

Channel of

communication

Value-added

services

Holding

stock


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1. Sorting

Retailers are able to balance the demands of bothsides (manufacturers & end users), by collectingan assortment of goods from different sources.

2. Breaking bulk

Retailer buying products in sufficiently largequantities, and selling them to consumers in small

units in order to meet individual consumptionneeds.


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3. Holding stock

Retailers maintain inventories that allows for

instant availability of the products to theconsumers.

4. Value-added services

Retailer also provide services that make itconvenient to buy and use product like product

guarantee, after- sales services.


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CategorizingCategorizing

RetailersRetailers

No universal method

Number ofout lets

Margin or turnover

Lo

catio

n

size


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Structure and Nature of Retailing Channels

Manufacturer

Wholesaler

Retailer

Consumer


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Trends in RetailF

ormats

Retail industry is continuously going through

changes on account of liberalization,

globalization, and consumer preferences.

Manufacturers are identifying, redefining, or

evolving new retail formats.


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Following are some of the retail formats:

Department Stores

Specialty Stores

Discount Store

E-retailers

Convenience Stores

Mom and Pop stores

Category killers


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Departmental store

* A large retail store offering a variety of merchandise

and services and organized in separate

departments.

* E.g Sears, J.C Penney.

discount store

* These are giant store such as Wal-Mart, which sells

products at prices lower than those asked by

traditional retail outlets.


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Relationships Between the

Retailers and their Suppliers

1. Intensive distribution

The use of all available outlets for a product.

2. Selective distribution

Uses only a portion or percentage of the available

outlets in each geographical area.

3. Exclusive distribution

The use of only a single retail outlet for a product

in a large geographical area.


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Retail Strategy Retail strategy indicates how the firm plans to

focus its resources to accomplish its objectives.

There are six steps involved in the development ofa retail strategy, they include:

1. Defining the business of the firm in terms oforientation towards a particular sector.

2. Setting short-term and long-term objectiveswith regard to image and responsibility


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3.Identifying the target market towards which to directefforts on the basis of the customers characteristics

and needs4. Deciding the broad direction the company must take

in the future

5. Implementing and integrated plan that encompasses

all the aspects of retailing like pricing, location, andchannel decisions.

6. Evaluating and revising the plan depending on thenature of the internal and external environment.


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Retail conceptThe retailing concept covers four broad areas and is an

essential part of the retailing strategy:

A. Customer orientationThe retailer makes a careful study of the needs of the

customer and attempts to satisfy those needs.

B. Goal orientationThe retailer has clear cut goals and devises strategies to

achieve those goals.


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C. Value driven approach

The retailer offers good value to the consumer with

merchandise having the price and qualityappropriate for the target market.

D. Coordinated effort

Every activity of the firm is aligned to the goal andis designed to maximize its efficiency and deliver

value to the consumer


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The changing face of Retailing

1. Role of the internet

The internet has been used in three main ways tofacilitate retail marketing:

Used As a means of communicating informationabout the retail organization.

Used as a more proactive marketing tool, invitingconsumers interactively to access the website.

selling products online through transactions withthe customers.


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2. Branding through Retailers\

The role of retailers as communicators for a particular brand Is

important and advertising is effective not only because it persuades

consumers to buy a brand, but because it persuades retailers to

allocate that brand with extra shelf space.

This in turn conveys to the consumers that the brand is much in

demand, and therefore probably worth buying.


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How do Retailers choose

which Brands to Display?

The selection of the right products for the shelvesbecomes essential to retailers for their market

success. Most of retailers use store-planning software to

optimize the mix of products on the shelf in orderto generate maximum returns.

Retailers should consider appointing categorymanagers, whereby suppliers bid for the right tomanage an entire category of products, by offeringthe highest guaranteed rate of return to theretailer.


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Consumption-related mega-trends

There are certain trends in consumption behavior

that have a direct and significant impact on the

business strategy and profitability of retail

business.

These trends relate to the : Increase in consumer power Independence of time( 24/7) and space.

Rise of Leisure commuter Dematerialization ( experience oriented)


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Drivers for success in the retail sector

New revolution is taking place and for retailers to

thrive today, they must possess revolutionary

thinking which involves a desire to embracechange within their organization .

Changes include:

A more focused approach to strategic planning

Advanced marketing skills A stronger customer focus

Enhanced exposure on the world wide web


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Customers is the driving force to change

Customers are becoming more demanding and

less forgiving as their shopping optionsincrease in number, size, and variety.

Retailers may want to offer added convenience

by extending their hours of operation, improving

their website purchasing or by speeding up

check-out lines


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Advanced education for retailers is critical

for growth

Innovative retailers have discovered ways toimprove and adjust changes more quickly

and they must continue to learning.

Attending seminars, meeting other retailers,

and learning from both will add to thecompetitive edge that retailers must have

today.


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Strong visual recognition

Retailers today must take on a new approach to be

successful since visual marketing has becomeincreasingly important to drive more sales

About 70-80% of the buying decisions in mass retailing

today are made at the point of purchase.

It is important for retailers to learn how to focus on their

customers needs and to view their business through

customer eyes.


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1. To enter retailing is easy and to fail is even easier how

do you think retailers can survive in retailing business?

2. Why ha retailing became such a popular method of

conductinting business?3. why value chain is very important for retailing?

4. How do retailing is important for general public?

5. how do retailers choose which brands to display?

6. why do new products fail in the market?

7. how do retailers build their brand image with their

customers?


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1. some scholars suggest that the large retail organization

feel most threatened by internet do You agree with that.

And why?

2. why many retailers do not follow retailing conceptthough its simple to adopt?

3. how big stores use technology to learn more about their

customer?

4. how do independent retailers coexist and flourish in the

shadow of big chains?5. how do retailers ease to change in ownership of

merchants?

chapter#1 retailing

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