Retail Management

How Retailers Add Value• Breaking Bulk

-Buy it in quantities customers want• Holding Inventory

-Buy it at a convenient place when you want it• Providing Assortment

-Buy other products at the same time• Offering Services

-See it before you buy, get credit

Manufacturer’s Perspective

Distribution

Retailers are part of the distribution channel

Retailers are part of thedistribution channel

Product

Price

Promotion

Distribution ChannelDistribution Channel

PPT 1-4

Growing Importance of Retail Sector

• Large and increasing contribution to GDP • Economic importance more visible• Major employer• Retailers as gatekeepers• Retailers diversifying their activities • Organizations growing on an international

scale

Issues in Retailing

• How can we best serve our customers while earning a fair profit?

• How can we stand out in a highly competitive environment where consumers have too many choices?

• How can we grow our business , while retaining a core of loyal customers?

Relationship Management Among Retailers and Suppliers

• Disagreements may occur :– Control Over Channel– Profit allocation– Number of Competing Retailers– Product Displays– Promotional Support– Payment terms– Operating flexibility

Distribution Types

• EXCLUSIVE: Suppliers make agreements with one or few retailers that designate the latter as the only ones in a specified geographical area to carry certain brands of products.

• INTENSIVE: Suppliers sell through as many retailers as possible.

• SELECTIVE: Suppliers sell through a moderate number of retailers.

Characteristics of Retailing

• Direct Interaction with Customers • Lower Average Amount of Sales Transaction • Point-of-Purchase Display and Promotion • Large Number of Retail Business Units

Functions of Retailing

• Providing an assortment of products and services.

• Breaking bulk• Holding inventory• Providing services

Functions of Retailer• The retailer thus performs two functions like buying of goods

and assembling of goods.• The retailer performs storing function by stocking the goods

for a consumer.• He develops personal contact with the consumers and gives

them goods on credit. • He bears the risks in connection with Physical Spoilage of

goods and fall in price. Besides he bears risks on account of fire, theft, deterioration in the quality and spoilage of goods.

• He makes arrangement for delivery of goods and supply valuable market information to both wholesaler and the consumer.

Retail Industry and Economy

• It is the largest private industry, ahead of finance and engineering, contributing over 10% to the GDP.

• Over 50 of fortune 500 and about 25 of the Asian Top 200 companies are retailers/retail company.

Retail Industry in India

• It is the largest industry in India with an employment around 8%.

• About 12 million retail outlets in India are predominantly small, independent, and owner managed shops.

• Boom in retail industry is due to income growth, changing lifestyles, and favorable demographic patterns.

• It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion.

• The retail business in India is expected to reach Rs.25,000 billion this year.

• A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption.

• It is one of the fastest growing industries, increasing at a rate of 5% yearly.

• It is predicted that the retailing industry in India will amount to US$ 21.5 billion by 2012 from the current size of US$ 7.5 billion.

• It is expected that by 2012, India may have 6000 new shopping centers.

• Today organized retailing in India is 2% of the total retail business, it is expected to reach 6% by 2012.

• Food is the most dominating sector and is growing at a rate of 9% annually.

• At present 60% of the Indian grocery basket consists of non- branded items.

Examples of Retailers

Retail Formats : • Departmental Stores • Discount Stores • Specialty Stores • Malls • Convenience Stores • Hypermarket/Supermarket• E-Tailers

Departmental Stores

• A department store is larger retail store organized into several departments, offering a broad verity and depth of product lines. The product mix may include food products, appliances, clothing, furnishing and other household goods.

Like Pantaloons, shoppers’ stop, Department store only for kids is Kids Kemp. Fashion related department stores in India are

Ebony, Globus, pantaloons, lifestyles.

Discount Stores• As the name suggests, discount stores or factory

outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season.

• The product category can range from a variety of perishable/ non-perishable goods.

• These stores are self service, standard general merchandise retailers regularly offering brand name and private brand items at low price, earn lower margins and push for high sales turnover.

The characteristics of true discount stores include

Selling products at discounted price Self service stores to minimize operational

costs Preferred store location are low rent areas. • Like best known discount store is Wal-Mart. In

India almost all retail stores offer discounts, Subhiksha

Specialty Stores

• Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors.

• specialty stores carry a narrow product mix with depth of assortment within the line.

• The emphasis is on a limited number of complimentary products and high level of customer service.

• Specialty store often sell shopping goods such as Jewelry, apparel, computers, music systems, sporting goods.

• Like; Tanishq, Titan watches, Van Heusen, Raymond's.

Malls

• The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Pyramid, and Pantaloon.

• shopping malls typically deal with several bases and product categories and provide a large variety of merchandise abs service.

• Ansal plaza (Delhi), Garuda mall (Bangalore) Sahara plaza Gurgaon Spenser Plaza Chennai

Convenience Stores

These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium.

Supermarket

A supermarket is a large self service retail store that carries a wide variety of consumer products under one roof , such as complete line of food products , laundry requirement, household maintenance items.

E-Tailers

The retailers who operate online stores to purchase their products are called e-tailers. Here the customers can buy the products they want through online. The best example we can give for e-tailers are Amazon.com, e-bay.com, etc...