CLASSIFICATION OF RETAILERS

CLASSIFICATION ON THE BASIS OF OPERATIONAL STRUCTURE To make key strategic decision Whether to hire employees and manage

the distributed sales function internally or to reach customers through franchised outlets owned and operated by local entrepreneurs

Various options in terms of investments, cost savings related to economics of scale, potential demand enhancing and reputation benefits

(1)INDEPENDENT RETAIL UNIT Owns one retail unit Highest number of outlets 2.20 million independent retailers 40% of total retail store sales Macro level – non-industry based

economic growth Micro level – low capital and licensing

requirements

Advantage Flexibility – location as preferred – product

assortments – workers – leases – niche goods/services – control over their strategies – decision making – one geographic market, so consistency – bargaining with suppliers – bypass suppliers

Disadvantage Maintaining inventory – transportation – no

bulk orders – handling costs – computerization expensive for small retailers – high cost of TV ads

(2)RETAIL CHAIN Multiple outlets 9000 retail chains in 65000 places in US Generate 75% sales from department

stores, discount department stores, grocery stores

Stationery , furniture, beauty salon less than 50% sales

Advantage Bargaining power (Volume purchase) – new

products as introduced – proper service – buying directly from manufacturers – bypass wholesalers – centralized purchasing – uniforms (employees) – price discount

Disadvantage Additional branch – consistent prices,

promotions – products difficult to maintain – investments high – lack of communication – time delays – problem with employees

(3)FRANCHISING Contractual Arrangement( Manufacturer,

wholesaler or service sponsor) which allows the franchise to conduct a given form of business under an establishment name and according to a given pattern of business

Franchisee pays initial fee and monthly percentage of gross sales

TWO TYPES OF FRANCHISINGProduct / Trademark based Franchisers identities – name They run autonomously from franchisor but

stick to rules like displays, working hours, location etc

Business format Interactive relationship Receive assistance on site location, quality

control, accounting systems, startup practices, management training and responding to problems

Example : McDonald

SIZE AND STRUCTURAL ARRANGEMENTS IN FRANCHISING Retail franchising began in 1851, singer

sewing machine first franchised dealers, popular in 1900s

Then auto & truck dealers still provide more than one-half of all US retail franchise sales

KEY ASPECTS OF RETAILING National or global presence can be

developed quickly money obtained when delivered – get

greater incentives Franchisers will receive royalties

POTENTIAL PROBLEMS IN RETAILING Firms reputation gets harm if they do

not adhere to company standards Ineffective franchised units directly

injure their franchisers profitability

LEASED DEPARTMENT OR SHOP –IN- SHOP It refers to department in retail store

that are rented to an outside party Small business Shopping centre food courts E-Zone (Home theatre system) for

different brands Merchandise displays, reordering of

items, inventory will be an advantage Conflict with using the operating

procedures with the leased departments and customer may blame the stores

COOPERATIVE OUTLETS Managed by cooperative societies It is called as Kendriya Bhandar Able to maintain competitive prices Margin kept low Better quality control, pre-testing of all

grocery items Both Govt. & private employed persons

CLASSIFICATION ON THE BASIS OF RETAIL LOCATION(1) Free standing retailers Which is not connected to other

retailers No competition, low-rent, better

visibility, low property costs Neighbourhood stores – serving small

locality Highway stores – roadside customers Attracting customers with good parking

facilities , multi-cuisine restaurants, fast food restaurants, clean washrooms

BUSINESS ASSOCIATED LOCATION Locates its store in a place where a group of

retail outlets offering a variety of merchandise work together to attract customers

Unplanned business districts – two or more retailers locate their stores together – all facilities with variety of goods, services and prices, but limitations like congestion, lack of space for large outlets, parking problems

Planned shopping centres – unified commercial establishments, centrally owned or managed, designed and operated as a unit surrounded by parking facilities

RETAILERS IN SPECIALIZED MARKETS Traditional independent retailers or

specialized chain stores Chennai Godown street is famous for

clothes, Bunder street for stationery products, Usman road for jewellery, T-nagar for ready-made garments, poo kadai for flowers

Limited infrastructure related costs

AIRPORT RETAILING Duty free shops and news-stands Parents who forgot to buy something for

kids Banks, currency exchange,

telecommunication, restaurants

VARIETY OF MERCHANDISE MIX

Departmental storesFor e.g: Ebony, Globus, Lifestyle, Pantaloon, Shoppers Stop, and

Westside

Discount StoresFor e.g.: S Kumar’s S-MART Discount Chain, Margin Free Market, and Subhiksha

Specialty StoresFor e.g.: Footware - Speciality Store

Khadder- Khadi Specialty and Titan Hypermarkets

For e.g. : Pantaloon’s Big Bazaar ,Giant, and

FoodWorld

METHOD OF CUSTOMER INTERACTIONStore retailers They operate from fixed point-of-sale

locations to attract a high volume of walk-in customers

Retail stores have extensive displays of merchandise and use mass-media advertising

They sell products or services to the customers for personal, household or official purposes

NON STORE RETAILERS These retailers approach their

customers and market their merchandise through electronic media – internet – direct selling – stalls in exhibitions, trade fairs, periodic markets – vending machines

CATALOGUE AND DIRECT MAIL RETAILINGFactors for the success of catalogue retailing:

- Convenience: customers can shop when it is convenient for them in accordance to their schedule

- Time saving: one save resources on account of time and travelling cost and parking problems

- Information: relevant product information is available in detail

- No time limits: no undue pressure to buy unlike as in retail store shopping

DIRECT SELLINGPerson-to-person selling:

- Party-plan or group presentations

- Multilevel network

TELEVISION SHOPPING Television shopping is retail format

where existing and prospective customers watch a TV programme demonstrating a product and then place an order for the same by telephone, e-mail or Internet

Three types of television shopping: cable channels meant for shopping, infomercials, and direct-response advertising shown on TV (For example: Asian Sky Shop, TSN, TVC, TSNM)

VENDING MACHINE RETAILING A form of non-store retailing where

products or services are placed in a machine and are dispensed to customers when they deposit cash or use plastic money (credit or debit card)

Vending machines vending machines offer consumers greater convenience 24 hours a day, and have replaced many services formally requiring a human interface