MM Chap 18, Retailing

8/12/2019 MM Chap 18, Retailing

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RE TAILINGBy-Prof. Snehal Chincholkar
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Retailing is a business activity that involvesselling product/services to customers for theirnon-commercial ,individual or family use .

Whole selling involves selling to individuals andorganizations for their business use.


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MEANING

It is the 2 nd last channel in the distribution channel.It act like an intermediate between the manufacturer andthe consumers.It provide 3 Vs to the customers that isVALUEVARIETYVOLUME


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Issues in Retailing :

How can we best serve our customers whileearning a fair profit? How can we stand out in a highly competitiveenvironment ,where consumers have too manychoices? How can we grow our business, while retaininga core of loyal customers


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4 P of Retailing

That enhance the sell of product are

PlacePossessionPassion

Pleasure


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Organized and Unorganized Retailing

Organized retailing is based on the principle of unity andunorganized retailing is based on the principle of singularity.

Large chains such as WalMart, Big Bazar , etc are some of theexample.

The unorganized mom and pop retailers and independent retailerscontinue to fulfil a need.

The organized retailing giants are trading organizationalexpertise for a share of the markets across the world.


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Margin and Turnover Framework by Ronald Gist

L-H High Turnover H-HLow Margin and High Turnover High Margin-High Turnovere.g. A Discount Store A convenience food store

Low Margin High Margin

L-L H-LLow Margin and Low Turnover High Margin-Low TurnoverA store of this type is a disaster e.g. An up market specialty store

Low Turnover


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KEY FACTORS

Change in consumer profileDemographic factor

Increase in the number of international brandsIncreasing urbanization
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TYPES OF RETAILING.


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FORMATS OF RETAIL

MARKET

MALLS (60,000 TO 7,00,000 sq feet)These are the largest form of retail formats. They provide an ideal

shopping experience by providing a mix of all kinds of products andservices, food and entertainment under one roof. Examples areSahara Mall, Inorbit Mall.


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Convenience Stores

Convenience Stores (400-2,000 sq. feet) They arecomparatively smaller stores located near residentialareas. They are open for an extended period of the day

and have a limited variety of stock and convenience products. Prices are slightly higher due to theconvenience given to the customers.They are generally food stores.Ex- Local Kirana stores,Retail outlet at petrol pump


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Specialty Store

Specialty stores offer a wide selection of speciallychosen goods pertaining to single product line.

These stores provide narrow product line but a wideassortment of choice within this product line.

Health & Glow Stores, Tribhovandas Bhimji Zaveri ,


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Departmental Stores

A departmental Store carries several product lines,invariably all that is required by a typical household /

person.

It is a general merchandise retailers with considerablylarge retail space with separate section allocated.It offers wide variety of products to consumers.Ex Akabarallys , ( More Specialized products ) Ex-Shoppers Stop , Bombay Store, PantaloonDepartment Stores (OVER 30,000 sq feet)


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Supermarket

Supermarkets are large , low cost , low margin,high volume self service operation designed toserve the customer need for food , laundry andhouse hold maintenance product.

Ex-, Big Bazar , Tesco , Walmart , D-Mart


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Discount StoresAs the name suggest discount stores offers discount onMRP.The purpose of doing so is to obtain profits on large

sales volume.It keeps its operational cost to minimum byemphasizing on self service and no frills interiors Its locations trends to be in low rent area and it drawscustomer from even distant locationFor Example: Loot Mart ,Subiksha , Wal Mart (Discounted Super market )


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Hypermarkets

It is very large stores having area between 2 lacs-3lacs squarefeet.

In commerce, a hypermarket is a superstore combining asupermarket and a department store. The result is an expansiveretail facility carrying a wide range of products under one roof,including full groceries lines and general merchandise. In theory,

hypermarkets allow customers to satisfy all their routineshopping needs in one trip.

For example: Hyper city


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Changing Retail

Croma ZipFood Bazar
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SERVICE RETAILING.


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Combination of goods & services:

Video parlor rents video CDs & Sell them as

well.

Rental goods & services

Parlous and Spa


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Non-Goods service retailing:

Personal services are provided. No physicalgoods are involved only the time & expertise of

the person who is going to provide the service is bought for fee.

Stock broker ,tutors, personal trainer


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Non Store Based Retailing .

Direct Selling.

Direct Marketing.

Automated Vending Machine.


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Direct Selling

It is the process of selling the product directly tothe customers by meeting them personally intheir homes, offices or other non-store locations.

Amway, & Tupperware are well knowncompanies involved in direct selling.


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Direct Marketing

It is the process of exposing the consumer to the product or service ,through mailers, telephonecalls, satellite television ,or radio.

For example TVC


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Automatic Vending .

It is a type of non-store retailing in whichvending machines are used to dispense goods orservices to customers without of a sales person.

PCO


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Anchor Stores/Tenant

Any store that serve as the main stores in planned shopping centers because of their strongconsumer appeal.

Ex-CCD in CrosswordCCD in Vashi Central


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E-Retailing

The sale of goods and services through theInternet. Electronic retailing, or e-tailing, caninclude business-to-business and business-to-consumer sales.Jabong ,Flipkart , Local Baniya etc


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Retail.
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Strategic Decision in Retailing

Location Decision

Target Market SelectionBusiness ModelStore Layout and Design

Merchandise MixPositioning Retail StoreCustomer ServicePromotion Decision


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Location Decision

Demographic and psychographic profile of population .

Availability and size of target market in the area.Threat from competitionPositioning of competitor in the target market

Real estate development in the area.Business climate in the area.


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Selecting a Target Market

Retailers analyze demographic, geographic,and psychographic profiles to segment andselect potential markets.Physical characteristics and amenities thatattract customers and satisfy their shoppingneeds.


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Business Model

Margin and Turnover Framework by RonaldGist


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Store Layout, Design & Visual

Merchandising


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Objectives of the Store Environment

Get customers into the store (store image)

Serves a critical role in the store selection process

Important criteria include cleanliness, labeled prices, accurate and pleasantcheckout clerks, and well-stocked shelves

The store itself makes the most significant and last impression

Once they are inside the store, convert them into customers buyingmerchandise (space productivity)

The more merchandise customers are exposed to that is presented in an orderlymanner, the more they tend to buy

Retailers focusing more attention on in-store marketing marketing dollarsspent in the store, in the form of store design, merchandise presentation, visualdisplays, and in-store promotions, should lead to greater sales and profits(bottom line: it is easier to get a consumer in your store to buy more


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Objectives of Good Store Design

Design should:

be consistent with image and strategy

positively influence consumer behavior consider costs versus value be flexible


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Store Layout (and Traffic Flow)

Conflicting objectives:

Ease of finding merchandise versus varied andinteresting layout

Giving customers adequate space to shop versus

use expensive space productively


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Grid (Straight) Design Best used in retail environments in

which majority of customers shop theentire store

Can be confusing and frustrating because it is difficult to see over thefixtures to other merchandise

Should be employed carefully;forcing customers to back of largestore may frustrate and cause them tolook elsewhere

Most familiar examples forsupermarkets and drugstores


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Curving/Loop (Racetrack) Design

Major customer aisle(s) begins atentrance, loops through the store(usually in shape of circle, square orrectangle) and returns customer to frontof store

Exposes shoppers to the greatest possible amount of merchandise byencouraging browsing and cross-shopping


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Free-Flow Layout Fixtures andmerchandise groupedinto free-flowing

patterns on the salesfloor no defined traffic

pattern

Works best in smallstores (under 5,000square feet) in whichcustomers wish to

browse

Works best whenmerchandise is of thesame type, such asfashion apparel

If there is a greatvariety of merchandise,fails to provide cues asto where one departmentstops and another starts

Storage, Receiving, Marketing

Underwear Dressing Rooms

Checkout counter

Clearance

Items

Feature Feature J e a n s

C a s u a

l W e a r

S t o c k

i n g s

A c c e s s o

r i e s

P a n

t s

T o p

s

T o p

s

S k i r t s a n

d D r e s s e s

H a t s a n

d

H a n

d b a g s

Open Display Window Open Display Window


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Spine Layout Variation of grid, loop and free-form layouts

Based on single main aisle running from thefront to the back of the store (transportingcustomers in both directions)

On either side of spine, merchandisedepartments branch off toward the back or sidewalls

Heavily used by medium-sized specialty

stores ranging from 2,000 10,000 square feet

In fashion stores the spine is often subtlyoffset by a change in floor coloring or surfaceand is not perceived as an aisle


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Location of Departments

Relative location advantages

Impulse products

Demand/destination areas

Seasonal needs

Physical characteristics of merchandise

Adjacent departments


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Feature AreasThe areas within a store designed to get thecustomers attention which include:

End caps displays located at the end of the aisles Promotional aisle/area Freestanding fixtures Windows Walls Point-of-sale (POS) displays/areas


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Fixture TypesStraight Rack long pipe suspended withsupports to the floor or attached to a wall

Gondola large base with a vertical spineor wall fitted with sockets or notches intowhich a variety of shelves, peghooks, bins,

baskets and other hardware can beinserted.

Four-way Fixture two crossbars that sit perpendicular to each other on a pedestal

Round Rack round fixture that sits on pedestal

Other common fixtures: tables, large bins,flat-based decks


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Merchandising Strategy

Planograms : Diagrams of how to exhibitselections of merchandise within a store

Category management : Retailing strategywhich views each product category as anindividual profit center, and the retailer managesthe performance and growth of the entire categorySlotting allowance -Fees paid by manufacturersto secure shelf space from retailers for their

product


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Three Psychological Factors toConsider in Merchandising Stores

Value/fashion image Trendy, exclusive, pricy vs value-oriented

Angles and Sightlines Customers view store at 45 degree angles from the path they travel as they

move through the store Most stores set up at right angles because its easier and consumes less

space

Vertical color blocking

Merchandise should be displayed in vertical bands of color wherever possible will be viewed as rainbow of colors if each item displayedvertically by color

Creates strong visual effect that shoppers are exposed to moremerchandise (which increases sales)


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Visual MerchandisingThe artistic display of merchandise and theatrical props used as scene-setting decoration in the store

Several key characteristics Not associated with shop-able fixture but located as a focal point or other

area remote from the on-shelf merchandising (and perhaps out of the reachof customers) Use of props and elements in addition to merchandise visuals dont

always include merchandise; may just be interesting display of itemsrelated to merchandise or to mood retailer wishes to create

Visuals should incorporate relevant merchandise to be most effective

Retailers should make sure displays dont create walls that make itdifficult for shoppers to reach other areas of the store


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Store Front Design

Storefronts must: Clearly identify the name and general nature of the

store Give some hint as to the merchandise inside In many cases includes store windows an

advertising medium for the store window displays

should be changed often, be fun/exciting, and reflectmerchandise offered inside


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Store Window
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Atmospherics

The design of an environment via:

visual communications

lighting color sound scent

to stimulate customers perceptual and emotionalresponses and ultimately influence their purchase

behavior


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Visual Communications

Name, logo and retail identity

Institutional signage

Directional, departmental and category signage

Point-of-Sale (POS) Signage

Lifestyle Graphics


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Visual Communications

Coordinate signs and graphics with storesimageInform the customer

Use signs and graphics as propsKeep signs and graphics freshUse appropriate typefacesCreate theatrical effects


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Lighting

Important but often overlooked element in successfulstore design

Highlight merchandise

Capture a mood

Level of light can make a differenceBlockbusterFashion Departments


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Color

Can influence behavior

Warm colors increase blood pressure, respiratory rate and

other physiological responses attract customers and gainattention but can also be distracting

Cool colors are relaxing, peaceful, calm and pleasant

effective for retailers selling anxiety-causing products


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Sound & Scent

Sound Music viewed as valuable marketing tool Often customized to customer demographics Can use volume and tempo for crowd control

Scent Smell has a large impact on our emotions

Victoria Secret, The Magic Kingdom, The Knot Shop Can be administered through time release atomizers or via

fragrance-soaked pellets placed on light fixtures


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Huge shopping outlets like Big Bazaar placeimpulse purchase items like chewing gums,gems, chocolates, mint, mouth fresheners etc.near the billing counter to take advantage of thewaiting time.


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Visual Merchandising
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Positioning the Retail StoreHigh

Low High Low

BreadthOf productline

Value Added

Life Style Big Bazaar

Benetton Shoe Store


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Wheel of Retailing

High end StrategyHigh PriceExcellent facilities and ServicesUpscale Consumers

Medium StrategyModerate PriceImproved facilities

Low end strategy Broader base of value and

consciousLow PricesLimited facilities and servicesPrice sensitive consumers


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P f M i Effi i i i


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Parameters for Measuring Efficiencies inRetail Operation

TurnoverMargin( Gross)Margin ( Net )

Fixed assets/Investment/Capital employed No. of employeeSales volume

No. of transactions

Store spaceOperating expenses


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Trends In Retailing In India

It is still highly unorganised, but things arechanging slowly.

12 lacs retailers in India.

Organized retailing is 4%of total retailing.


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Highest employment provider after agriculture.

India has topped AT Kearney's annual GlobalRetail Development Index (GRDI) for the third

consecutive year, maintaining its position as themost attractive market for retail investment.


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The Indian retail market, which is the fifth largest retaildestination globally, according to industry estimates isestimated to grow from US$ 330 billion in 2007 to US$427 billion by 2010 and US$ 637 billion by 2015.

organized retail which presently accounts for 4 per centof the total market is likely to increase its share to 22

per cent by 2010.


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Driven by changing lifestyles, strong income growthand favorable demographic patterns, Indian retail isexpanding at a rapid pace.


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CAREER OPPORTUNITY

As retail sector is moving towards modernization and consolidation,generating employment for innumerable people.

It is expected to offer 50,000 jobs in the coming FIVE years.Vacancies from the entry level to senior Management level.

SKILLS REQUIREDCommunication skills Team spiritOut standing personality Dynamic Right attitudeInter personal skills Adaptable


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Case of FEBINDIA
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Documents

MM Chap 18, Retailing