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?


Who is a Retailer?


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.

5Ms. Geetanjali Gulati

The Wheel of Retailing

• Explains changes in the retailing institutions.

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


ENTRY PHASE

TRADING UP PHASE

VULNERABILITY PHASE


• 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



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


Retail Life Cycle


INNOVATION GROWTH MATURITY DECLINE

African Markets South Asian MarketsIndian Markets Developed Markets

SALES

TIME

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


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


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.


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


What do Retailers do???


Functions Performed by a Retailer

• Providing an assortment of products and services

• Breaking bulk

• Holding inventory

• Providing services

• Provide an experience


Why is Retailing Important in our Society???


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


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


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



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


What types of decisions do retail managers make???


The Retailing Management Decision Process

• Understand the world of retailing

• Developing retail strategy

• Implementing retail strategy


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


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


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”



Demographic Profile of India


2010 (Estimate)




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


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


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


Developing Retail Strategy

• It also involves strategic decision areas:• u

– Market

– Financial

– Location

– Organizational structure

– Human resources

– IS & SCM

– CRM


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


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


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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