Question Paper – May 2019

Q.1 What do you mean by Retail and Retailing? How many types of
retailers are found in the market?
Ans. Retailing encompasses the business activities involved in selling
goods and services to consumers for their personal, family, or
household use. It includes every sale to the final consumer— ranging
from cars to apparel to meals at restaurants to movie tickets.
Retailing is the last stage in the distribution process. All
of the businesses and people involved in the physical movement and
transfer of ownership of goods and services from producer to
consumer. Retailers often act as the contact between manufacturers,
wholesalers, and the consumer. Retailers collect an assortment from
various sources, buy in large quantity, and sell in small amounts. This
is the sorting process.
Another job for retailers is communicating both with
customers and with manufacturers and wholesalers. Shoppers learn
about the availability and characteristics of goods and services, store
hours, sales, and so on from retailer ads, salespeople, and displays.
Manufacturers and whole- salers are informed by their retailers with
regard to sales forecasts, delivery delays, customer complaints,
defective items, inventory turnover, and more. Many goods and
services have been modified due to retailer feedback.
Retailers also complete transactions with customers. This
means having convenient locations, filling orders promptly and
accurately, and processing credit purchases. Some retailers also
provide customer services such as gift wrapping, delivery, and
installation. To make themselves even more appealing, many firms
now engage in multi-channel retailing, whereby a retailer sells to
consumers through multiple retail formats (points of contact). Most
large retailers operate both physical stores and Web sites to make
shopping easier and to accommodate consumer desires. Some firms
even sell to customers through retail stores, mail order, a Web site,
and a toll-free phone number. For these reasons, products are usually
sold through retailers not owned by manufacturers (wholesalers). This
lets the manufacturers reach more customers, reduce costs, improve
cash flow, increase sales more rapidly, and focus on their area of
expertise. Three factors that most differentiate retailing from other
types of business are:
1. The average amount of a sales transaction for retailers is much
less than for manufacturers. This low amount creates a need to
tightly control the costs associated with each transaction (such
as credit verification, sales personnel, and bagging); to
maximize the number of customers drawn to the retailer, which
may place more emphasis on ads and special promotions; and to
increase impulse sales by more aggressive selling.
2. Final consumers make many unplanned or impulse purchases.
Surveys show that a large percentage of consumers do not look
at ads before shopping, do not prepare shopping lists (or do
deviate from the lists) once in stores, and make fully unplanned
purchases. This behaviour indicates the value of in-store
displays, attractive store layouts, and well-organized stores,
catalogs, and Web sites. Candy, cosmetics, snack foods,
magazines, and other items are sold as impulse goods when
placed in visible, high-traffic areas in a store, catalog, or Web
site. Because so many purchases are unplanned, the retailer’s
ability to forecast, budget, order merchandise, and have
sufficient personnel on the selling floor is more difficult.
3. Retail customers usually visit a store, even though mail, phone,
and Web sales have increased. Despite the inroads made by
nonstore retailers, most retail transactions are still con- ducted in
stores—and will continue to be in the future. Many people like
to shop in person; want to touch, smell, and/or try on products;
like to browse for unplanned purchases; feel more comfortable
taking a purchase home with them than waiting for a delivery;
and desire privacy while at home. This store-based shopping
orientation has implications for retailers; they must work to
attract shoppers to stores and consider such factors as store
location, transportation, store hours, proximity of competitors,
product selection, parking, and ads.
Together, there are four principles that form the retailing concept
which should be understood and applied by all retailers:
1. Customer orientation: The retailer determines the attributes and
needs of its customers and endeavors to satisfy these needs to the
fullest.
2. Coordinated effort: The retailer integrates all plans and activities to
maximize efficiency.
3. Value driven: The retailer offers good value to customers, whether
it be upscale or discount. This means having prices appropriate for the
level of products and customer service.
4. Goal orientation: The retailer sets goals and then uses its strategy to
attain them.
The retailing concept is straightforward. It means communicating
with shoppers and viewing their desires as critical to the firm’s
success, having a consistent strategy (such as offering designer
brands, plentiful sales personnel, attractive displays, and above-
average prices in an upscale store); offering prices perceived as “fair”
(a good value for the money) by customers; and working to achieve
meaningful, specific, and reachable goals.

Type of Retailers:
There are nine types of retailers. These are:
1. Speciality Store: A speciality store is one which focuses on one
or two specific categories. They have a very narrow product
line. However, the advantage of a speciality store is that you
will find many things in that store related to that speciality
which you might not find on the open market.
2. Department store: Departmental stores are generally located
within malls and they may not have their own independent
stores. Department stores have a lot of products under their roof.
They will sell clothing, men’s and women’s accessories,
children’s toys, home furnishing and many different things.
They generally have separate sections for separate categories.
However, the number of categories are not exhaustive. These
stores might not deal in as many categories as Supermarkets or
hypermarkets. They will not sell FMCG items like Soap or
Shampoo. Even if they sell that, they will limit the categories by
some other means.
3. Supermarkets: They are known to be vast marketplace with a
wide variety of categories available. Most of these categories
 deal in the residential market segment by dealing in a lot of food
varieties, necessary and useful products, groceries, bakery
products, laundry, etc. More than consumer durables, these
types of supermarkets focus on the FMCG products. Many
customers in the supermarket are looking to refill their home
inventory and the best place to do that is the supermarket
because you can fill up with a lot of stuff in very less time.
Product assortment is a speciality of supermarket because the
products need to be displayed in such a manner that the
customers gets attracted to them and they sell faster. Normally,
Supermarkets are also preferred because they have a lot of
variants of the same product. You can find a lot of different
varieties of soaps and shampoos at your local supermarket
which you won’t find in your local convenience store. As
consumer grow, supermarkets are becoming smarter and smarter
and bringing various price incentives to shop with them.
4. Convenience stores: A store in your locality which provides the
most basic material to you in a timely manner and which is
available to you for all basic needs is a convenience store. These
are small stores which do not have too many categories or too
much depth in their product line. They will have 2-3 types of
each product and the volume too will be lesser. The shop is a
small shop giving super-fast service with a focused approach.
5. Drug stores: Drug stores are the ones which sell medicines and
are specialized in it. They can be a form of specialized store
itself but let’s face it – drug stores are now wider and longer
than any specialized store because of the population and the
number of medicines we need in day to day life. But drugstores
now sell many other things besides pharmaceuticals. They have
become another form of specialized retail stores where many
things can be bought like Health and beauty products, basic
snacks, protein supplements, small medical equipment as well as
other personal care and healthcare products.
6. Discount Stores: Ever heard of the words “Every day low
prices”. If you have not, that is the tagline which Walmart used
to great effect to sell off its wares and to become one of the
leading retail stores in the market. Walmart can be categorized
 in two different kind of retail stores – The Supermarkets or
Discount stores. However, due to its pattern of discounting and
attracting customers on the basis of discounts, it is more apt to
place Walmart as a Discount store. Discount stores sell all
products at a good discount which attracts the customers. They
do this by buying the products in huge volumes from the
company. On the front end, they also establish a huge number of
supermarkets and hypermarkets so that they can liquidate these
products to the customers by passing on the margins.
7. Off-price/used goods store: Ebay started in this business very
well and sold many products at a good discount because they
were products which had some small defect, or they were
leftover goods from the manufacturers who did not find the
goods up to the mark. Another market which is booming right
now is the used goods store. The market of Used goods or resale
Is so big that even brands like Audi or others are now offering
support and ratings for the sale of used goods so that consumers
are happy even with the used products. Off-price stores are
stores which sell items that have a minor defect during the time
of manufacturing or which have a small defect due to handling.
The sale of off-price goods is on the rise because of the
establishment of E-commerce portals like Amazon and Alibaba.
When you sell on these portals, there is a small percentage of
products which gets damaged during transit. Such products are
directly sold to the off-price type of retail stores which sell it to
the end consumers.
8. Super stores or Hypermarkets: Superstores are retail stores
which are huge in size and have many many different categories
under their belt. Think of a Superstore having everything under
its roof – all the products that you can buy as a “residential
consumer”. These retail stores are not found in malls. Rather
they are malls by themselves. A superstore or a hypermarket
does a good job of balancing the cheap the good, the quality as
well as the premium. Basically, you will find low level, mid-
level and even high-level quality of products in a hypermarket.
Hence it is known as a “complete market”. This category is
being affected most heavily since the advent of E-commerce
 because there is huge cost associated with running a superstore
or a hypermarket.
9. Ecommerce stores: Without a doubt, E-commerce is the future
of retail. Even now, Amazon has a huge market share of retail
and has a top positioning in the customer’s mind. If you don’t
get a product anywhere offline, you will definitely find it online
because the sellers from all across the country sell products
online and there is even an option to import the product from
another country. This reduces the cost of distribution of product
and increases the total number of products available to the end
customers. Not only Amazon or Alibaba, there are many small
E-commerce retail stores popping up as well. Every specialized
retailer or even convenience goods salesperson is launching his
or her website and directly selling products from their website
which is nothing but a type of E-tailing. In the future, we can see
almost all brands having their own online retail stores and
cutting the middlemen by directly selling to end customers.

Q.2 Share the importance of Retail Market Strategy. How this can
gain sustainable competitive advantage?
Ans. The importance of developing and applying a retail strategy:
A retail strategy is the overall plan guiding a retail firm. It influences
the firm’s business activities and its response to market forces, such
as competition and the economy. Any retailer, regard- less of size or
type, should utilize these six steps in strategic planning:
1. Define the type of business in terms of the goods or service
category and the company’s specific orientation (such as full
service or “no frills”).
2. Set long-run and short-run objectives for sales and profit, market
share, image, and so on.
3. Determine the customer market to target on the basis of its
characteristics (such as gender and income level) and needs
(such as product and brand preferences).
4. Devise an overall, long-run plan that gives general direction to
the firm and its employees.
 5. Implement an integrated strategy that combines such factors as
store location, product assortment, pricing, and advertising and
displays to achieve objectives.
6. Regularly evaluate performance and correct weaknesses or
problems when observed.

To gain sustainable competitive advantage:

To prosper, a retailer must properly apply the concepts of “value” and

“relationship” so
1. customers strongly believe the firm offers a good value for the
money and
2. Both customers and channel members want to do business with
that retailer.
As retailers look to the future, this is the looming bottom line on
value: “Consumers will demand more for less from the shopping
experience. Time and budget constrained consumers will spend less
time shopping, make fewer trips, visit fewer stores, and shop more
purposefully. Different strokes will satisfy different folks. Consumers
will shop different formats for different needs. Specifically, they will
split the commodity shopping trip from the value-added shopping trip.
Consumers are becoming more skeptical about price. Under the
barrage of sales, price has lost its meaning; gimmicks have lost their
appeal. To regain consumer confidence, pricing by retailers and
manufacturers alike will become clearer, more sensible, and more
sophisticated.

Q.3 How price of product affect Retail Business? What are the
various factors which affect pricing in Retail Business?
Ans. Retail price setting can take one of several approaches. Some
retailers offer deep discounts and no-frills shopping (think Costco),
others offer everyday low pricing (think Wal-Mart), others offer mid-
level prices and promote special sales (think Macy’s), and still others
set prices that are rarely discounted (think Apple stores). A new
entrant to the retail pricing mix is the “real-time deal,” whereby online
firms, usually driven by social media, offer deals for consumers
willing to make a purchase during a defined—and short—time period.

Real-time deal revenues have skyrocketed in recent years and now

generate billions ofdollars in annual sales. Here’s how the process
works:
1. A social media firm sets up a site and invites people to sign up
for shopping privileges and to ask friends to join.
2. The firm arranges with local retailers to give a discount of 25 to
75 percent off the regular price for one good or service.
3. Consumers are sent an E-mail or other online message to visit
the social media firm’s site and buy the “deal of the day,” which
often lasts for 24 hours or less.
4. The consumers buy a certificate for the good or service from the
social media firm and then redeem it.
5. The social media firm gets a fee from the retailer.
Goods and services must be priced in a way that both achieves
profitability for the retailer and satisfies customers. A pricing strategy
must be consistent with the retailer’s overall image (positioning),
sales, profit, and return on investment goals.
There are three basic pricing options for a retailer:
1. A discount orientation uses low prices as the major competitive
advantage. A low-price image, fewer shopping frills, and low
per-unit profit margins mean a target market of price-oriented
customers, low operating costs, and high inventory turnover.
Off-price retailers and full-line discount stores are in this
category.
2. With an at-the-market orientation, the retailer has average
prices. It offers solid service and a nice atmosphere to middle-
class shoppers. Margins are moderate to good, and average to
above-average quality products are stocked. This firm may find
it hard to expand its price range, and it may be squeezed by
retailers positioned as discounters or prestige stores. Traditional
department stores and many drugstores are in this category.
3. Through an upscale orientation, a prestigious image is the
 retailer’s major competitive advantage. A smaller target market,
higher expenses, and lower turnover mean customer loyalty,
distinctive services and products, and high per-unit profit
margins. Upscale department stores and specialty stores are in
this category. A key to successful retailing is offering a good
value in the consumer’s mind—for the price orientation chosen.
Another factor shaping today’s pricing environment for retailers of all
types is the ease by which a shopper can compare prices on the Web.
When a consumer could only do price comparisons by visiting
individual stores, the process was time-consuming—which limited
many people’s willingness to shop around. Now, with a few clicks of
a computer mouse, a shopper can quickly gain online price
information from several retailers in just minutes—without leaving
home. Web sites such as PriceGrabber.com, NexTag, Shopping.com,
and Mysimon.com make comparison shopping very simple.
External factors affecting a retail price strategy:
Several factors have an impact on a retail pricing strategy. Sometimes,
the factors have a minor effect. In other cases, they severely restrict a
firm’s pricing options.
 The Consumer and Retail Pricing:
Retailers should understand the price elasticity of demand—the
sensitivity of customers to price changes in terms of the
quantities they will buy—because there is often a relationship
be- tween price and consumer purchases and perceptions. If
small percentage changes in price lead to substantial percentage
changes in the number of units bought, demand is price elastic.
This occurs when the urgency to purchase is low or there are
acceptable substitutes. If large percent- age changes in price lead
to small percentage changes in the number of units bought,
demand is price inelastic. Then purchase urgency is high or
there are no acceptable substitutes (as takes place with brand or
retailer loyalty). Unitary elasticity occurs when percentage
changes in price are directly offset by percentage changes in
quantity.
 The Government and Retail Pricing:
 Three levels of government may affect domestic retail pricing
decisions: federal, state, and local. When laws are federal, they
apply to interstate commerce. A retailer operating only within
the boundaries of one state may not be restricted by some
federal legislation. Major government rules relate to horizontal
price fixing, vertical price fixing, price discrimination, minimum
price levels, unit pricing, item price removal, and price
advertising. For retailers operating outside their home countries,
a fourth level of government comes into play: international
jurisdictions.
 Manufacturers, Wholesalers, and Other Supplies and Retail
Pricing:
There may be conflicts between manufacturers (and other
suppliers) and retailers in setting final prices; each would like
some control. Manufacturers usually want a certain image and to
enable all retailers, even inefficient ones, to earn profits. Most
retailers want to set prices based on their own image, goals, and
so forth. A supplier can best control prices by using exclusive
distribution, not selling to price-cutting retailers, or being its
own retailer. A retailer can best gain control by being a vital
customer, threatening to stop carrying suppliers’ lines, stocking
private brands, or selling gray market goods. Retailers
sometimes carry manufacturers’ brands and place high prices on
them so rival brands (such as private labels) can be sold more
easily. This is called “selling against the brand” and is disliked
by manufacturers because sales of their brands are apt to
decline. Some retailers also sell gray market goods, brand-name
products bought in foreign markets or goods trans- shipped from
other retailers. Manufacturers dislike gray market goods because
they are often sold at low prices by unauthorized dealers. They
may sue gray market goods resellers on the basis of copyright
and trademark infringement
 Competition and Retail Pricing:
Market pricing occurs when shoppers have a large choice of
retailers. In this instance, retailers often price similarly to each
other and have less control over price because consumers can
easily shop around. Supermarkets, fast-food restaurants, and gas
 stations may use market pricing due to their competitive
industries. Demand for specific retailers may be weak enough so
that some customers would switch to a competitor if prices are
raised much.
With administered pricing, firms seek to attract consumers on
the basis of distinctive retailing mixes. This occurs when people
consider image, assortment, service, and so forth to be important
and they are willing to pay above-average prices to unique
retailers. Upscale department stores, fashion apparel stores, and
expensive restaurants are among those with unique offerings and
solid control over their prices.
Most price-oriented strategies can be quickly imitated. Thus, the
reaction of competitors is predictable if the leading firm is
successful. This means a price strategy should be viewed from
both short-run and long-run perspectives. If competition
becomes too intense, a price war may erupt— whereby various
firms continually lower prices below regular amounts and
sometimes below their cost to lure consumers from competitors.
Price wars are sometimes difficult to end and can lead to low
profits, losses, or even bankruptcy for some competitors. This is
especially so for Web retailers.

Q.4 Throw light on Retail Promotion. Share role of Personal Selling

in Retail Promotion Mix.
Ans. Retail promotion includes any communication by a retailer that
informs, persuades, and/or re- minds the target market about any
aspect of that firm. Retailers devote significant sums to promotion.
For example, a typical department store spends up to 4 to 5 percent of
sales on ads and 8 to 10 percent on personal selling and support
services. And most department store chains also invest heavily in
sales promotions and use public relations to generate favourable
publicity and reply to media information requests. A retailer’s broad
promotional goals are typically drawn from this list:
 Increase sales.
  Stimulate impulse and reminder buying.
 Raise customer traffic.
 Get leads for sales personnel.
 Present and reinforce the retailer image.
 Inform customers about goods and services.
 Popularize new stores and Web sites.
 Capitalize on manufacturer support.
 Enhance customer relations.
 Maintain customer loyalty.
 Have consumers pass along positive information to friends and
others.
In developing a promotional strategy, the firm must determine which
of these are most important. It is vital to state goals as precisely as
possible to give direction to the choice of promotional types, media,
and messages. Increasing sales is not a specific goal. However,
increasing sales by 10 percent is directional, quantitative, and
measurable. With that goal, a firm would be able to prepare a
thorough promotional plan and evaluate its success.
Perhaps the most vital long-term promotion goal for any
retailer is to gain positive word of mouth (WOM), which occurs when
one consumer talks to others—in person, on the phone, by E-mail,
through social media, or in some other format. If a satisfied customer
refers friends to a retailer, this can build into a chain of customers. No
retailer can succeed if it receives extensive negative WOM. Negative
WOM will cause a firm to lose substantial business. Both goods- and
services-oriented retailers must have positive word of mouth to attract
and retain customers. They need WOM referrals to generate new
customers.
Personal Selling:
Personal selling involves oral communication with one or more
prospective customers for the purpose of making a sale. The level of
personal selling used by a retailer depends on the image it wants to
convey, the products sold, the amount of self-service, and the interest
in long-term customer relationships—as well as customer
expectations. Retail salespeople may work in a store, visit consumer
homes or places of work, or engage in telemarketing.
Objectives: The goals of personal selling are to:
1. Persuade customers to buy (since they often enter a store after
seeing an ad).
2. Stimulate sales of impulse items or products related to
customers’ basic purchases.
3. Complete customer transactions.
4. Feedback information to company decision makers.
5. Provide proper levels of customer service.
6. Improve and maintain customer satisfaction.
7. Create awareness of items also marketed through the Web, mail,
and telemarketing.
Advantages and Disadvantages: The advantages of selling relate to its
personal nature:
1. A salesperson can adapt a message to the needs of the individual
customer.
2. A salesperson can be flexible in offering ways to address
customer needs.
3. The attention span of the customer is higher than with
advertising.
4. There is less waste; most people who walk into a store are
potential customers.
5. Customers respond more often to personal selling than to ads.
6. Immediate feedback is provided.
The major disadvantages of personal selling are that:
1. Only a limited number of customers can be handled at a given
time.
2. The costs of interacting with each customer can be high.
 3. Customers are not initially lured into a store through personal
selling.
4. Self-service may be discouraged.
5. Some customers may view salespeople as unhelpful and as too
aggressive.
Types: Most sales positions involve either order taking or order
getting. An order-taking sales- person performs routine clerical and
sales functions—setting up displays, stocking shelves, answering
simple questions, and ringing up sales. This type of selling is most
likely in stores that are strong in self-service but also have some
personnel on the floor. An order-getting salesperson is actively
involved with informing and persuading customers and in closing
sales. This is a true “sales” employee. Order getters usually sell
higher-priced or complex items, such as real- estate, autos, and
consumer electronics. They are more skilled and better paid than
order takers.
A manufacturer may sometimes help fund personal selling by
providing PMs (promotional or push monies) for retail salespeople
selling its brand. PMs are in addition to regular salesperson
compensation. Many retailers dislike this practice because their
salespeople may be less responsive to actual customer desires (if
customers desire brands not yielding PMs).

Q.5 Write short note on any two of the following:

a) Branding in Retail
b) Advantages of E-Tailing
c) Trends in International Retailing
Ans. Brands: As part of its assortment planning, a retailer chooses the
proper mix of manufacturer, private, and generic brands—a challenge
made more complex with the proliferation of brands. Manufacturer
(national) brands are produced and controlled by manufacturers. They
are usually well known, supported by manufacturer ads, somewhat
pre-sold to consumers, require limited retailer investment in
marketing, and often represent maximum quality to consumers. Such
brands dominate sales in many product categories. Popular
manufacturer brands include Apple, Coke, Gillette, Levi’s, Microsoft,
Nike, Nintendo, Revlon, and Sony. The retailers likely to rely most
heavily on manufacturer brands are small firms, Web firms,
discounters, and others that want the credibility associated with well-
known brands or that have low-price strategies (so consumers can
compare the prices of different retailers on name-brand items).
Although they face extensive competition from private bands,
manufacturer brands remain the dominant type of brand, accounting
for more than 80 percent of all retail sales worldwide.
Private (dealer) brands, also known as store brands, contain
names designated by wholesalers or retailers, are more profitable to
retailers, are better controlled by retailers, are not sold by competing
retailers, are less expensive for consumers, and lead to customer
loyalty to retailers. With most private brands, retailers must line up
suppliers, arrange for distribution and warehousing, sponsor ads,
create displays, and absorb losses from unsold items. This is why
retailer interest in private brands is growing.
In the past, private brands were only discount versions of mid-
tier products. They are now seen in a different light: “Most shoppers
are more alert to the concept of quality and value. Retailers recognize
that price is not the single differentiator for all shoppers and cannot
tempt everyone away from manufacturer brands. Thus, they have
invested in the development of a wider variety of competitive
offerings. Multi-tiered private label offers meet consumers at the
premium, standard, and value points often with differentiated features
at the higher-priced levels. In some categories, the premium private
label will be the most expensive and innovative product.”
Care must be taken in deciding how much to emphasize
private brands. As previously noted, many consumers are loyal to
manufacturer brands and would shop elsewhere if those brands are
not stocked or their variety is pruned.
Generic brands feature products’ generic names as brands (such as
canned peas); they are no-frills goods stocked by some retailers. They
are a form of private brand. These items usually receive secondary
shelf locations, have little or no promotion support, may be of lesser
quality, are stocked in limited assortments, and have plain packages.
Retailers control generics and price them well below other brands. In
supermarkets, generics account for under 1 percent of sales. For
prescription drugs, where the quality of manufacturer brands and
generics is similar, generics provide 60 percent of sales.
The competition between manufacturers and retailers for
shelf space and profits has led to a battle of the brands, whereby
manufacturer, private, and generic brands fight each other for more
space and control. Nowhere is this battle clearer that at large retail
chains.
Advantages of E-Tailing:
1. You can start with lesser investment – compared to traditional
offline retailing, e-tailing doesn’t require businesses to spend a lot of
money for business showrooms, outlets, shops, and renting
commercial areas - just to make them more visible to the public.
With e-tailing, all the business promotions happen online. Hence, you
will be able to operate your business using your online shop in order
to advertise, promote, and process purchases and other transactions
with your customers. In addition, it also has significantly lower
operating costs compared to having a physical store.

2. It is more convenient for you and your consumer – the World

Wide Web offers easier and more convenient business transactions
compared to offline retailing.  This allows business to provide more
complete information on their website compared to the information in
the brochures that are being handed out by sales representatives.
Furthermore, the sales process is only done with a few clicks, starting
from the inquiry stage to the closing of the deal – which is obviously
a much faster and convenient process.
As mentioned earlier, another advantage of e-tailing is that you don’t
have to rent an office to do business. Hence, you can be at your home
while you run your e-tailing company - thereby saving you time and
effort, and the need to travel to and fro your shop or office.

3. You can interact with your clients – this is another advantage of

e-tailing.  With this type of interaction - e-tailers can personally
connect with their consumers and consumers can give their
appropriate feedbacks accordingly, making it an excellent customer
service tool.
And with the numerous media available for your customers, such as
social networks, videos and emails, the customer is also given
multiple options on how to communicate with the company.
With this interaction, businesses can effectively assess in more ways
how they can improve their services or products, which in the end,
will certainly guarantee a much higher rate of satisfied customer.

4. Provides your business with different promotional platforms –

a physical store is only restricted to its area of visibility and
accessibility, meaning it can only operate at best - if your shop can be
seen and can be accessed by the public – either at the store, the beach
or the mall, as the case may be.
Websites, on the other hand, can be accessed to almost all areas where
the internet is available, allowing businesses to reach a wider market.

5. Easier for customer to locate your business – with multiple

available search engines, customers may have an easier time in
locating your business and its branches (if you have a physical store). 
In here, all that they have to do is type in the product that you are
selling, any related services, or company name - and the different
locations of your business that are conveniently close will appear.

Trends in International Retailing:

From 2008 through 2011, the economies of the United States and
many other countries around the globe either declined or were
stagnant. In some instances, the effects were devastating. Millions of
people lost their jobs, had trouble paying their mortgages (with many
having to give up their homes), and became pessimistic about the
future. Long-time firms such as Borders, Blockbuster, and Great
Atlantic & Pacific Tea declared bankruptcy or went out of business.
Numerous other retailers suffered losses and had to run frequent sales
to generate business or to close unprofitable stores.
The lack of jobs and concern over job security have
resulted in both less spending (and increased savings) as well as
reduced consumer confidence (due to lower levels of home equity and
losses in stock market investments). The personal savings rate, the
percent of each paycheck that is not spent, increased to 6.4 percent in
2011, the highest rate since June 2009. Because consumer spending
constitutes 70 percent of the U.S. economy, this reduction in spending
is a major drag on economic growth. Further evidence of increased
savings has been the increased use of debit cards instead of credit
cards.
The effect of the economic downturn has been especially hard
on home- and appliance-based retailers such as Home Depot, Lowe’s,
and Sears. Each of these retailers highly relies on the sale of tools,
home renovation supplies, and large appliances. Standard & Poor’s
projected that each of these retailers would have same store sales
declines for 2011.
On the other hand, retailers such as Dollar General and
Family Dollar have benefitted from increased purchases from two
different market segments: the “trade down” and the “trade in.” The
first segment, which was affected by increased gasoline prices and
food costs, traded down to these stores. On the other hand, although
trade-ins could afford to shop elsewhere, they increasingly shopped at
discount stores to exercise their frugality and smart shopping skills.
Off-price apparel chains such as Marshalls, Burlington Coat Factory,
and T.J. Maxx also drew new shoppers because many people became
more value-driven. In addition, these off-price chains had significant
buying opportunities due to overstocked channel members and
cancellations of purchases from bankrupt retailers.
The 2008–2011 retail bankruptcies were undertaken
under a tougher set of rules than in the previous economic downturn.
Prior to 2005, U.S. firms had an unlimited amount of time to file a
restructuring plan after filing for bankruptcy. Since 2005, these filings
have had to be submitted within 18 months. Under earlier laws,
retailers had two years or more (via extensions) to determine which
store locations to keep. Today, retailers under bankruptcy protection
must make store-closing decisions within 210 days. Retailers in
bankruptcy also now need to pay suppliers and utilities during the
retailers’ bankruptcy period. Under the older laws, suppliers and
utilities had to wait until a company emerged from bankruptcy before
being paid. Lastly, due to concerns from lenders who were burnt with
mortgage-backed securities, troubled retailers have found it much
more difficult to get financing. As a result of these factors, many
retailers that entered bankruptcy were unable to restructure and, thus,
were forced to close.
Among the bankruptcies that were quickly followed by
company closings were: Borders, Blockbuster (which was sold off),
Anchor Blue, and Syms. While all of these retailers were adversely
affected by the overall economic conditions in the United States, the
specific causes of their declines were somewhat different.

Question Paper – May 2018

Q.1 What is Retailing? Trace the evolution of retailing in India.

Discuss the merits of modern retailing compared to traditional
retailing.
Ans. For definition of Retailing, refer Question Paper – May 2019,
Q.1
Evolution of Retail in India:
The Indian retail industry has over 12 million outlets, which is the
largest number of retail outlets in the world. It contributes over 10%
of the GDP of the country and is estimated to provide employment to
over 18 million people, around eight percent of the country’s
employment, being the largest employment provider after agriculture.
Of the 12 million retail outlets present in the country, nearly 5 million
sell food and related products. Even with the large number of outlets,
organised retail accounts for only 4 per cent of the total market,
opening huge growth potential in this segment. For the year 2008,
A.T. Kearney’s annual Global Retail Development Index (GDRI)
rated India as No.2 retail destination, whereas for the year 2005 to
2007, India has maintained No.1 position as the most attractive
market for retail investment. However, according to recently released
CB Richard Ellis global report, entitled How Global is the business of
Retail?, which maps the global footprint of 250 of the world’s top
retailers, India is placed at number 44 in the list of preferred
destinations.
The whole concept of shopping has altered in terms of
format and consumer buying behaviour, ushering in a revolution in
shopping in India. Modern retail has entered India as seen in
sprawling shopping centers, multi-story malls and huge complexes
that offer shopping, entertainment and food all under one roof. The
Indian population is witnessing a significant change in its
demographics. A large young working population with median age of
24 years, nuclear families in urban areas, along with increasing
working-women population and emerging opportunities in the service
sector are going to be the key growth drivers of the organized retail
sector in India. Several well-known foreign retail giants like Wal-
Mart, Carrefour, TESCO etc. are sitting on the fence waiting to enter
India as soon as the FDI norms are relaxed.
Merits of modern retailing compared to traditional retailing:
1. Eliminates Geographical Limitation and Time Constraint: The
first major perk of eCommerce poses a stark difference in terms
of the location factor of your business. eCommerce has
positively eliminated geographical limitations by allowing
consumers to purchase anywhere. This will cater to a significant
portion of potential consumers who prefer to shop on-the-go.
By eliminating geographical limitations, you open up a
wider coverage for your business which eventually presents to
you with the possibility of branching out to the international
market and target audience without having to set up any new
operating base overseas.
The ability to purchase around the clock as well, be it
before or after the standard operating hour of brick-and-mortar
physical stores could lead to a higher potential of conversion in
terms of sales and purchases.
 The increasing use of mobile devices among consumers
has also contributed in making this particular eCommerce
advantage, a significant upgrade from the conventional practice.

2. Cost Saving: eCommerce proves to be highly cost effective as

well due to the fact that it requires lower investment or business
capital as compared to setting up a physical store where you
need to fork up your budget on costly monthly rental and
maintenance.
If you are setting up an online business, it will only
require you to set up a web-based platform and probably an
office for operation, and you are then sufficiently equipped to
kickstart your business.
Additionally, the number of employee required is also
relatively lower as compared to conventional businesses where
most of the business processes are fully or partially automated.
Hence, reducing the need for human resources to make sure that
your business operation is functioning well.
On a different note, eCommerce can also cut down
on your marketing cost tremendously without compromising on
the results – you could get the same if not better results from
conventional marketing efforts.
At a portion of the cost, online marketing strategies
(inclusive of digital marketing) could be effective when
executed either through paid advertising or through organic
reach and engagement targeted to your audience.
Regardless, both are still going to cost your business
much lower than having to pay for advertisement on
conventional medium such as print media, television or radio
advertisement, etc.

3. Convenience: The core factor allowing eCommerce to gain the

upper hand from conventional businesses lies in its convenience.
Convenience is an important value that is largely demanded by
modern consumers today.
 The ability to shop faster, easier, require little to no
effort, and time saving, is the key that pushes forward
eCommerce relevance among the general consumers.
The features offered by most eCommerce platforms
are designed to provide consumers with the best user experience
in terms of convenience. eCommerce features allow consumers
to locate specific products easier and quicker with search bar
functionality.
Consumers can also refine and customize the search
option to directly view relevant products. The convenient
browsing experience enables consumers to explore, research and
compare products for a better decision making process before
making a purchase.
This is one example how the features on eCommerce
platforms promote convenience on top of the apparent perks of
enabling you to skip all together the hassle of physically visiting
a store which will cost consumers on travel expenses and their
time.  

4. Online Visibility: eCommerce websites are largely dependent on

new and organic traffic to prosper, therefore online visibility is
of extreme importance. Conventional businesses without any
online counterpart are indefinitely missing out on having online
presence which is a huge loss of potential revenue.
eCommerce especially for online retail, it is driven by
traffic from search engine as compared to traditional retail that
relies only on branding, referrals, and pre-formed relationship.
On the other hand, by gaining online visibility through
an eCommerce platform, it allows businesses to gain and pull
new visitors cum consumers through embedded HTML linking
to your webpage, search engine optimization, backlinks from
other sources such as collaborative partners or social media
platforms.

5. Enables Promotions, Discount, Coupons, and Group Buy:

eCommerce has made easier for businesses to come up with
promotions, discounts, and group buy marketing strategies. The
 convenience gained from selling online enables you to launch
these marketing strategies with higher frequency with lesser
time required to churn out marketing collateral and materials.
Consumer buying experience is also improved when they
are able to be instantly notified for any new promos, deals, etc.,
through email marketing and newsletter subscription. In return,
this will strengthen your brand awareness along with increasing
product sales conversion.

6. Ability to Sell Niche Products: Another advantage of

eCommerce especially within the B2B space is the ability to
create a new market for niche products. It paves a pathway for
businesses that sell products that are new, rare, or scarce to find
especially in physical stores.
At times, buyers and sellers of niche products can find it
difficult to find and source from each other. However, with the
help of online visibility and search engine optimization, it is
easier for your niche businesses to pop up first as relevant
searches.

7. Information Abundance: eCommerce is advantageous when

information is put at stake. There are limitations to the amount
of information that can be displayed in a physical store but this
is not the case for eCommerce websites. It promotes information
abundance without limitations.
Additional information available on eCommerce
platforms are such as product images, product descriptions,
product specifications, product availability, delivery fulfilment
information, payment method, and user review, plus more.
The information abundance affects consumers in a way
that it promotes buyers’ autonomous purchasing experience by
allowing them to conduct independent product research and
comparison when given with sufficient information.

8. Allows Targeted Communication: Targeted communication

across a huge pool of consumer database is another significant
benefit of eCommerce. The sign up feature for users allows
 businesses to gather data, create a database, and analyze the data
to understand your target market better.
Hence, allowing you to understand your consumers’
user behaviour and plan out on how to communicate to a
specific target audience based on your data collection.
Eventually, it gives businesses the ability to craft more
effective marketing strategies and efforts such as email
marketing, member-only promo, product suggestion, etc. It also
allows businesses to establish a community revolving around
their eCommerce platforms.

9. Cost Effective Inventory Management: Better and improved

inventory management at a lower cost is another direct benefit
of eCommerce business model within the B2B space. The more
organized and streamlined the inventory management, the lower
the cost inflicted on your business.
With eCommerce, businesses comprising of merchants
or vendors can save cost of handling inventory by leveraging on
automated inventory management within the eCommerce
platform.
Automated inventory management here refers to the
eCommerce features that allows businesses to monitor and track
their inventory level, purchase history, and order status inside
the user account.
This helps businesses to conduct stocktake, cross check
orders, and restocking in a more efficient manner with better
accuracy by reducing the chances of human error.

Q.2 What are the trade-offs in a retailer’s deciding during

merchandise planning? How much to emphasize private brands
rather than manufacturer brands? Accordingly, discuss in-store
promotional strategies for each of them with the help of
examples.
Ans. A good assortment plan makes a trade-off between variety,
assortment and product availability. If a retail store is filled with
large variety, the assortments with each variety will be less, and
also the backup stock. Product availability, being external to an
 organization, creates difficulty in making the trade-off. Thus, a
good assortment requires inclusion or deletion of a category
from the store, obviously the most important to merchandising
plan.
 Determining variety and assortment: Variety and assortment
determination depends on a number of factors such as
profitability of the merchandise mix, corporate strategy and
positioning towards the assortment, physical characteristics of
the store, customer profile and degree of complementarity.
Given these factors, retailers make a balance between too much
assortment versus too little assortment while planning for
merchandise.
 Determining product availability: Implementing assortment
plan depends largely on the availability of product. Product
availability is the percentage of demand for a particular SKU
satisfied by the supplier. The higher product availability
indicates increased backup stock and lower chance of out of
stock for the retailer. Continuity in the flow of product in a
category optimizes cost and consequently the financial goal of
the firm. Too little a backup stock means the chance of out of
stock and the loss of sales, and probably, the customer too. On
the other hand, higher backup stock means holding more
inventory and more blockage of constrained financial resources.
Thus, a right assortment plan requires ensuring product
availability of the respective variety and assortment.

As part of its assortment planning, a retailer chooses the proper mix of

manufacturer, private, and generic brands—a challenge made more
complex with the proliferation of brands. Manufacturer (national)
brands are produced and controlled by manufacturers. They are
usually well known, supported by manufacturer ads, somewhat pre-
sold to consumers, require limited retailer investment in marketing,
and often represent maximum quality to consumers. Such brands
dominate sales in many product categories. Popular manufacturer
brands include Apple, Coke, Gillette, Levi’s, Microsoft, Nike,
Nintendo, Revlon, and Sony. The retailers likely to rely most heavily
on manufacturer brands are small firms, Web firms, discounters, and
others that want the credibility associated with well-known brands or
that have low-price strategies (so consumers can compare the prices
of different retailers on name-brand items).
Private (dealer) brands, also known as store brands,
contain names designated by wholesalers or retailers, are more
profitable to retailers, are better controlled by retailers, are not sold by
competing retailers, are less expensive for consumers, and lead to
customer loyalty to retailers. With most private brands, retailers must
line up suppliers, arrange for distribution and warehousing, sponsor
ads, create displays, and absorb losses from unsold items. This is why
retailer interest in private brands is growing.
In the past, private brands were only discount versions of mid-
tier products. They are now seen in a different light: “Most shoppers
are more alert to the concept of quality and value. Retailers recognize
that price is not the single differentiator for all shoppers and cannot
tempt everyone away from manufacturer brands. Thus, they have
invested in the development of a wider variety of competitive
offerings. Multi-tiered private label offers meet consumers at the
premium, standard, and value points often with differentiated features
at the higher-priced levels. In some categories, the premium private
label will be the most expensive and innovative product.”
Care must be taken in deciding how much to emphasize
private brands. As previously noted, many consumers are loyal to
manufacturer brands and would shop elsewhere if those brands are
not stocked or their variety is pruned.

Q.3 What factors do retailers consider when pricing merchandise?

Discuss basic pricing strategies used by retailers with the help of
examples.
Ans. For factors affecting retail pricing, refer Question Paper – May
2019, Q3

Pricing Strategies:
 Everyday Low Pricing: This strategy emphasises continuity of
retail prices at a level somewhere between the regular non-sale
price and the deep-discount sale price of the retailer’s
competitors. The term everyday low pricing is therefore
 somewhat of a misnomer. Low doesn’t necessarily mean the
lowest.
 High-Low Pricing: In a high/low pricing strategy, retailers offer
prices that are sometimes above their competitor’s everyday low
prices (EDLP), but they use advertising to promote frequent
sales. Retail stores which follow this strategy provide a high
fixed utility to customers with a convenient format, high quality
service and a good assortment of products. Customers visit such
stores frequently as they buy in small quantities. Since the price
often fluctuates in such stores customers defer the purchase of
high priced products till the price falls. When the price falls they
stock up on the item.
 Mark-up Pricing: Markup on cost can be calculated by adding a
pre-set (often industry standards) profit margin or percentage, to
the cost of the merchandise. Markup on retail is determined by
dividing the dollar markup by retail.
 Vendor Pricing: Manufacturer Suggested Retail Pricing (MSRP)
is a common strategy used by the smaller retail shops to avoids
price wars and still maintain a decent profit. Some suppliers
have minimum advertised prices but also suggest the retail
pricing. By pricing products with the suggested retail prices
supplied by the vendor, the retailer is out of decision making
process.
 Competitive Pricing: Consumers have many choices and are
generally willing to shop around to receive the best price.
Retailers considering a competitive pricing strategy will need to
provide outstanding customer service to stand above the
competition.
o Pricing below competition simply means pricing products
lower than the competitor’s price. This strategy works well
if the retailer negotiates the best prices, reduces costs and
develops a marketing strategy to focus on price specials.
o Prestige pricing or pricing above competition, may be
considered when location, exclusivity or unique customers
service can justify higher prices. Retailers that stock high-
quality merchandise that isn’t available at any other
location may be quite successful in pricing their products
 above competitors.
 Psychological Pricing: Psychological pricing is used when
prices are set to a certain level where the consumers perceives
the price to be fair. The most common method is odd-pricing
using figures that end in 5, 7 or 9. It is believed that consumers
tend to round down the price of $9.95 to $9, rather than $10.
 Skim Pricing: Skim pricing attempts to “skim the cream” off the
top of the market by setting a high price and selling to those
customers who are less price sensitive. Skimming is a strategy
used to pursue the objective of profit margin maximization.
 Penetration Pricing: Penetration pricing pursues the objective of
quantity maximization by means of low price. It is most
appropriate when:
o Demand is expected to be highly elastic; that is, customers
are price sensitive and the quantity demanded will increase
significantly as price declines
o Large decreases in cost are expected as cumulative volume
increases
o The product is of the nature of something that can gain
mass appeal fairly quickly
o There is a threat of impending competition
 Leader Pricing: Here, retailers price one or more products at
substantially low cost to attract customers and increase the sale
of complementary products in the store. Usually, these products
are regarded as loss leaders. The products selected for leader
pricing should be those that are frequently bought by target
customers.
 Price Bundling: Here distinct items, generally from different
lines of merchandise are offered together at a special price. This
can increase the volume of sales, as well as the traffic at the
retail stores.

Q.4 Why is human resource important in retailing? How can retailers

motivate employees to sell merchandise aggressively and at the same
time not jeopardize customer service?
Ans. Superior human resource management in retailing not only
requires that a firm hire and train good employees, but also keep them
motivated. With the high employee turnover rate in retailing, this is
not an easy task. Now, social media are emerging as a creative way to
assist retailers in their human resource management.
Human resource management involves recruiting, selecting, training,
compensating, and supervising personnel in a manner consistent with
the retailer’s organization structure and strategy mix. Personnel
practices are dependent on the line of business, number of employees,
location of outlets, and other factors. Because good personnel are
needed to develop and carry out retail strategies, and labor costs can
amount to 50 percent or more of expenses, the value of human
resource management is clear.
Retailers face a human resource environment characterized by a large
number of inexperienced workers, long hours, highly visible
employees, a diverse work force, many part-time workers, and
variable customer demand. These factors complicate employee hiring,
staffing, and supervision. The need for a large retail labor force often
means hiring those with little or no prior experience. Sometimes, a
position in retailing represents a person’s first “real job.” People are
attracted to retailing because they find jobs near to home; and retail
positions (such as cashiers, stock clerks, and some types of sales
personnel) may require limited education, training, and skill. Also, the
low wages paid for some positions result in the hiring of
inexperienced people. Thus, high employee turnover and cases of
poor performance, lateness, and absenteeism may result. The long
working hours in retailing, which may include weekends, turn off
certain prospective employees; many retailers now have longer hours
since more shoppers want to shop during evenings and weekends.
Accordingly, some retailers require at least two shifts of full-time
employees. Retailing employees are highly visible to the customer.
Therefore, when personnel are selected and trained, special care must
be taken with regard to their manners and appearance. Some small
retailers do not place enough emphasis on employee appearance (neat
grooming and appropriate attire). It is common for retailers to have a
diverse labor force, with regard to age, work experience, gender, race,
and other factors. This means that firms must train and supervise their
workers so that they interact well with one another—and are sensitive
to the perspectives and needs of one another.
Due to their long hours, retailers regularly hire part-time workers. In
many supermarkets, more than one-half of the workers are part-time,
and problems may arise. Some part-time employees are more
lackadaisical, late, absent, or likely to quit than full-time employees.
They must be closely monitored.
As a rule, retailers should consider these points:
 Recruitment and selection procedures must efficiently generate
sufficient applicants.
 Some training must be short because workers are inexperienced
and temporary.
 Compensation must be perceived as “fair” by employees.
 Advancement opportunities must be available to employees who
view retailing as a career.
 Employee appearance and work habits must be explained and
reviewed.
 Diverse workers must be taught to work together well and
amicably.
 Morale problems may result from high turnover and the many
part-time workers.
 Full- and part-time workers may conflict, especially if some
full-timers are replaced.
It is imperative to motivate employees in a manner that yields job
satisfaction, low turnover, low absenteeism, and high productivity.
Consider these suggestions from one leading consultant:
I. Motivate Employees to Find Solutions—Encourage employees
to be solution creators instead of problem creators. When
employees communicate a problem, look at it as an opportunity
to empower the employees.
II. Motivate Employees by Soliciting Opinions— Just asking for
opinions tells employees that you value their input.
III. Motivate Employees by Managing to Their Level—Learn
employees’ skills, experience, and motivation levels for
 performing workplace tasks. Follow-up based on your findings.
IV. Motivate Employees by Delegating Tasks—Delegating a task
shows employees you have confidence that they can do the job.
V. Motivate Employees by Encouraging Ideas—Create a safe
environment for employees to share their ideas. Always give
them credit for the ideas they express.
VI. Motivate Employees by Embracing Mistakes—Allowing
employees to make mistakes allows them to grow, be creative,
and be empowered.
VII. Motivate Employees by Assigning Leadership Roles—
Leadership comes at all levels and doesn’t require a title. Take
the time to align employees’ skills with leadership opportunities.
VIII. Motivate Employees by Rewarding Initiative—Publicly
recognize employees during meetings, with reward bonuses,
etc., so other employees are motivated to take initiative.
IX. Motivate Employees by Getting Goal Setting Buy-In—
Employees will be more motivated to achieve your goals if they
help develop those goals.

Q.5 Write short notes on the following:

a) E-tailing
b) Retail Image
Ans. E-tailing is the selling of retail goods on the Internet. E-tailing
has resulted in the development of e-tailware -- software tools for
creating online catalogs and managing the business connected with
doing e-tailing. A new trend is the price comparison site that can
quickly compare prices from a number of different e-tailers and link
you to them.
Electronic retailing (E-tailing) is the sale of goods and services
through the Internet. E-tailing can include business-to-business (B2B)
and business-to-consumer (B2C) sales of products and services. E-
tailing requires companies to tailor their business models to capture
Internet sales, which can include building out distribution channels
such as warehouses, Internet webpages, and product shipping centers.
 Notably, strong distribution channels are critical to electronic
retailing as these are the avenues that move the product to the
customer.

Electronic retailing includes a broad range of companies

and industries. However, there are similarities between most e-tailing
companies that include an engaging website, online marketing
strategy, efficient distribution of products or services, and customer
data analytics.

Successful e-tailing requires strong branding. Websites must

be engaging, easily navigable, and regularly updated to meet
consumers' changing demands. Products and services need to stand
out from competitors' offerings and add value to consumers' lives.
Also, a company's offerings must be competitively priced so that
consumers do not favor one business over another on a cost basis
only.
E-tailers need strong distribution networks that are prompt
and efficient. Consumers cannot wait for long periods for the delivery
of products or services. Transparency in business practices is also
important, so consumers trust and stay loyal to a company.
There are many ways companies can earn revenue online. Of course,
the first income source is through the sales of their product to
consumers or businesses. However, both B2C and B2B companies
could earn revenue by selling their services through a subscription-
based model such as Netflix, which charges a monthly fee for access
to media content.

Revenue can also be earned through online advertising. For

example, Facebook earns revenue from ads placed on its website by
companies looking to sell to Facebook users.

Retail Image:

A retailer needs a superior communications strategy to properly

position itself in customers’ minds, as well as to nurture their
shopping behavior. Once customers are attracted, the retailer must
strive to create a proper shopping mood for them.
Image refers to how a retailer is perceived by customers and
others, and positioning refers to how a firm devises its strategy so as
to project an image relative to its retail category and its competitors—
and to elicit a positive consumer response. To succeed, a retailer must
communicate a distinctive, clear, and consistent image. Once its
image is established in consumers’ minds, a retailer is placed in a
niche relative to competitors. For global retailers, it can be
challenging to convey a consistent image worldwide, given the
different backgrounds of consumers.
Today’s extensive use of social media by all parties—
including customers, the general public, the media, suppliers, brands,
and retailers themselves—must be thoroughly understood by retailers
and proper strategies proactively enacted. No firm, of any size or type,
is immune from the impact of social media content—pro and con—on
its image. Social media encompass online technology tools that allow
vast numbers of people to easily communicate with one another via
the Internet and mobile devices. Through social media, messages,
audio, video, photos, podcasts, and other multimedia communications
are possible.
Creating and maintaining a retail image is a complex,
multi-step, ongoing process. It encompasses far more than store
“atmosphere,” which is discussed shortly. Furthermore, with so many
people having little time for shopping and others having less interest
in it, more retailers understand that may have to entertain shoppers to
draw their business.
A retailer’s image depends heavily on its “atmosphere,” the
psychological feeling a customer gets when visiting that retailer. It is
the personality of a store, catalog, vending machine, or Web site.
“Retail image” is a much broader and all-encompassing term relative
to the communication tools a retailer uses to position itself. For a
store-based retailer, atmosphere (atmospherics) refers to the store’s
physical characteristics that project an image and draw customers. For
a nonstore-based firm, atmosphere refers to the physical
characteristics of catalogs, vending ma- chines, Web sites, and so
forth. A retailer’s sights, sounds, smells, and other physical attributes
all contribute to customer perceptions.
A retailer’s atmosphere often influences people’s shopping
enjoyment, as well as their time spent browsing, willingness to
converse with personnel, tendency to spend more than originally
planned, and likelihood of future patronage. Many people even form
impressions of a retailer before entering its facilities (due to the store
location, storefront, and other factors) or just after entering (due to
displays, width of aisles, and other things). They often judge the firm
prior to examining merchandise and prices.
When a retailer takes a proactive, integrated atmospherics
approach to create a certain “look,” properly display products,
stimulate shopping behavior, and enhance the physical environment,
it engages in visual merchandising.
Question Paper - May 2017
Q.1 (a) How the impact of technology has affect the retail sector in
India? Elaborate.
(b) State the benefits of data-warehousing in Retailing.
Ans. (a) Technological innovations have brought significant changes
across industries and sectors. Its presence is visible in the retail sector
too. Technological advancements like virtual shopping assistants, in-
store stylist robots, AI-powered recommendation engines, bot
managed billing counters, etc., have altered the dynamics of retail
drastically. In fact, the most visible transformation is of the buyers
into digitally empowered creed who is also a hyper-connected
consumer with a complete view of the competing landscape.
In tandem, retailers are also bringing in innovation into
established practices. Data Analytics and data intelligence have
presented a striking picture of reinvented retail and retailers have
decided not to be left behind.
Customers are now kept informed through multiple
information sources, both physical and digital. For example, a
customer looking at a product inside a retail store can now browse for
rival products, check their pricing and availability at the click of a
button and without having to physically leave the store. They are
increasingly turning to social media platforms to check reviews and
feedback about products and service offerings before making a
purchase.
Customers tend to make rapid transitions across different
channels during the browse, purchase and fulfill steps of the cycle to
achieve the highest convenience during shopping. A customer may
research online, buy at a physical store and expect the product to be
delivered at home as it would if it had been bought online.
With shorter attention spans and more varied options, they
now demand more flexibility and quicker turnaround time for
deliveries and returns. Customers expect to be connected to retailers
anytime and anywhere, and if they are not responded to
instantaneously, they would not hesitate to share and amplify
feedback with the wider audience.

(b) Benefits of data-warehousing in Retailing:

1. A Data Warehouse Saves Time– Data Warehousing enables
you to create a consolidated system for operation, business
data capture and analysis. This eradicates the need for manual
exporting of data across business functions to excel sheets for
reporting. Business users can quickly access critical data
from a number of sources — all in one place. This can help
rapidly make informed decisions on key initiatives. They
wouldn’t waste time in retrieving data from multiple so
2. Enhanced Business Intelligence – Data warehousing and
analytics extract data from different departments and present
it in the form of reports and dashboards. Further, the self-
service capabilities of the dashboard enable users to slice and
dice data, perform drill-down and drill-up functions to view
the data at a holistic as well as granular level. This enables
business users to derive critical business insights and take
swift and well-informed decisions to enhance operational
efficiency and business growth.
3. Demand Forecasting and scaling of operations – Demand
forecasting is essential for retailers as their scale of operation
does not remain constant throughout the year. It fluctuates
heavily depending upon the season. For instance, a major
chunk of annual sales happens during festive seasons for
retail players. Hence, it is extremely critical for them to scale
up to meet the increased demand during such peak seasons
 and then scale down to avoid excess inventory when the sales
return to normal.
4. Better understanding of customers – Data warehousing and
analytics assist retailers in getting a deeper look at the
behavior of the customer, their preferences, buying behavior
etc. and use the insights for customized offers, contextual
marketing and even to plan the design and aesthetics of the
stores.

Q.2 Retail formats are of diverse nature. Explain the formats which
are prominently in India. How Indian retail formats are different from
the formats available in other countries?
Ans. India is growing at a great pace and the retail sector is also
developing with it. Big Indian business houses are entering into retail
sector and are adopting various retail formats for their business which
are best suited to them. We can divide Indian retail market in three
forms which are mentioned below:

 Store Retailers

 Non-store retailers

 Service retailers
 1. Store Retail Formats:
o Mom-and-pop Store: These are family owned stores which
provide small quantity of merchandise or goods to the
customers. They are individually run and target the smaller
sections of the society. These stores provide high standard
services. They provide home delivery and credit facility without
any interest to its customers.
o Convenience Store: Convenience is offered in a lot of ways to
the customers through easily accessible store locations and small
store size that allows the customers to do quick shopping and
fast checkout. The product selection offered by these retailers is
very limited and the price of the products can be high.
o Supermarkets: Supermarket is another popular retail format in
India. A supermarket is a grocery store which deals in food and
household goods. They offer a fairly huge range of products and
self-service. People usually go to the supermarkets to buy goods
in large quantities so that they can stock those goods for later
consumption. They provide products for reasonable prices and
of medium to high quality.
o Department Store: Department stores are classified as general
merchandisers. Some carry a more selective product line. For
instance, while Sears carries a wide range of products from
hardware to cosmetics, Nordstrom focuses their products on
clothing and personal care products.

o Category Killers: The specialty stores are called Category

Killers. These stores are specialized in their fields and they offer
only one category of products. The most popular examples of
category killers include wall-mart and electronic stores like Best
Buy and sports accessories stores like Sports Authority.

o Discount Stores: Discount stores offer price reduction. Discount

stores offer product at lower price than market price. The main
reason behind this low price is the additional stock left over
towards the end of any season. Discount stores sell their goods
at a reduced rate with an aim of drawing bargain shoppers.
o Mass Discounters: These are general and specialty store that
provide huge discounts on their merchandise to finish block
stock and its small difference between discount stores and mass
discounters is that it provides lesser services to customers.

o Warehouse Stores: These are the type of mass discounters that

provide comparatively less price than the traditional mass
discounters. Moreover, these stores often requires the buyers to
make the purchases in quantities that are greater than what can
be purchased at mass discount stores. These retail outlets
provide few services and product selection can be limited. The
retail design and layout is as the name suggests that is
warehouse style with consumers often selecting products off the
ground from the shipping package. Some forms of warehouse
stores called warehouse clubs require customers to purchase
memberships in order to gain access to the outlet.

o Street vendors: The Street Vendors or hawkers who sell

products on the streets are quite popular in India. They try to
attract the customers’ attention through shouting out about their
product mix. Street vendors are found in almost every city in
India and the business capital of Mumbai has a number of
shopping areas which are comprised mainly of street vendors.
These hawkers not only sell just clothes and accessories but also
local food.

o Kiosks: Kiosks are box-like shops which sell small and cheap
items like cigarettes, toffees, newspapers and magazines, water
packets, tea and coffee. These are most commonly found on
every street in a city and target primarily to the local residents.

o Hypermarkets: Hypermarkets in India are a combination of

supermarket and department store. These are large retailers that
provide all kinds of groceries and general goods. Big Bazaar and
Reliance Fresh are hypermarkets that attract enormous crowds.

o Malls: Malls are the largest retail format in India. These are the
largest retail format in India. Malls provide everything that a
 person wants to buy under one roof. From clothes and
accessories to food or cinemas, malls provide all of this, and
more. Examples include Spencers Plaza in Chennai, India,
Alpha one in Amritsar and Viva collage in Jalandhar.

2. Non-store Retail Formats:

o Catalog Retailers: Retailers such as Lands’ End and LL Bean

have built their business by having customers place orders after
seeing products that appear in a mailed catalog. Orders are then
delivered by a third-party shipper.

o E-retailersL Possibly the most publicized retail model to evolve

in the last 50 years is the Retailer that principally sells via the
Internet. There are thousands of online-only retail sellers of
which Amazon.com is the most famous. These retailers offer
shopping convenience including being open for business all day,
every day. Electronic retailers or e-tailers also have the ability to
offer a wide selection of product since all they really need in
order to attract orders is a picture and description of the product.
That is, they may not need to have the product on-hand the way
physical stores do. Instead an e-tailer can wait until an order is
received from their customers before placing their own order
with their suppliers. This cuts down significantly on the cost of
maintaining products in-stock.

o Vending: Vending machines is a automatic machine from where

we can purchase items like cold-drinks, chocolates by throwing
coins in it. While most consumers are well aware of vending
machines allowing customers but newer devices are entering the
market containing more expensive and bulkier products. These
systems require the vending machine have either Internet or
telecommunications access to permit purchase using credit
cards.

3. Service Retailers:

Service retailers are those which provide different services to

customers. Such as:
Ownership Styles Followed by Different Category Retailers:

 Individually Owned and Operated: This structure refers to single

ownership stores having one or more stores under it. Single
ownership of retail outlets most frequently occurs with small
retail stores, though there are some cases, for instance in the
automotive or furniture industries, where single ownership
involves very large outlets.

o Franchises: Purchasing a franchise is buying the right to use a

name, product, concept and business plan. The franchisee
will receive a proven business model from an established
business.

o Dealership: Retailers may find the business model of a

licensed dealership as a mix of franchise and independent
retailer. The licensee has the right (sometimes this is
exclusive) to sell a brand of products. Unlike a franchise, the
dealer can sell a variety of brands and there generally no fees
to the licensor. Dealerships may or may not be identified as
an authorized seller or by the company’s trademark.

o Corporate Chain: A retail chain consists of multiple retail

outlets owned and operated by a single entity all performing
similar retail activities. While the number of retail outlets
required to be classified as a chain has never been specified,
we will assume that anyone owning more than five retail
locations would be considered a chain.

 Efficient Ownership Type: If you are based in India and have

sufficient money to invest in a new business, then you must
surely consider a good franchise business option. There are
different types of franchise business in India that are hugely
successful and looking for expansion. Franchising is one of the
popular models of business looked as a win-win model by both
the franchisor and the franchisee. In fact, this business concept
is a great way of expanding a proven business model by
 leveraging the resources and the enterprise of potential
franchisees.

Q.3 (a) What are the various Merchandise presentation techniques

adopted by Indian Retailers? Explain.
(b) What are the benefits of cost oriented pricing for retailers?

Ans. (a) Today’s successful retailer is the one making the most
profitable use of every square foot of available space in the store.
Because space is costly, you need to have a strategy for its use.
Strategic floor patterns, location of merchandise, amounts of
merchandise and appropriate displays are all key factors to consider.

Merchandise presentation techniques adopted by Indian Retailers

1. Housekeeping: Somebody has said that ‘cleanliness is next to

godliness’. A dirty, haphazard store convey the message that the store
has lost interest and is not serious about its future and customers.
Create a daily and weekly cleaning schedule to take care of all
necessary tasks. Dust the shelves, clean the cash counter, vacuum the
floor and wash the windows.
The cleaner the store is, the more pleasant the shopping
experience will be for the customer. Remember this cleanliness drive
should be on regular basis. Avoid doing near festivals or special
occasion. Because when customers visit whole year then what’s the
meaning of doing it once in a year.

Create a daily and weekly checklist of every housekeeping

duty that must be completed. Assign these duties to various
individuals and hold them accountable for getting them done.

(i) Chase those dust bins away. Vacuum daily.

(ii) Clean the lights.

(iii) Dust the shelves.

(iv) Get rid of the tape on the windows.

(v) No dust. No grime.

(vi) No smudges. No grease.

(vii) Polish the chrome.

(viii) Remove the clutter behind the cash counter. Tidy up the back
room.

2. Lighting: Lighting attracts maximum attention and highlights

items for display. Researches have proved that proper lighting can
increase retail sales by up to twenty percent. Start with ensuring that
there are no burnt out lights. Use the best bulbs, tubes possible.
Cheaper bulbs can cause merchandise to look grey and shabby. Make
use of spot lights, preferably halogen to highlight key selling areas.
Make the front of your store glow with good light. You need to be
noticed and a bright store front is more attractive and appealing.
3. Music: Music these days is an essential element to a store. Be it
food retailing, grocery or luxury retailing, the importance of music
cannot be ignored. But while playing music in stores, be careful to
play the kind of music that reflects both the products you sell and the
type of clientele that you hope to attract. Avoid FM radios as
commercials can kill the purchasing mood or even advertise a
competitor. Purchase a good quality DVD player which will ensure
appropriate and continuous music with various options.
4. Signage: It is the silent salesperson for your business. It costs little
but has innumerable benefits. Researches have shown that as much as
seventy-five percent of all the retail sales are generated at the point of
purchase by signage, displays and events within the store. In order to
differentiate yourself from the competitor and represent the right
image among customers, it would be wise to look into getting your
signs professionally done.

Following are a few ideas for signs:

(i) Create a consistent look. Colour, size, type style, and layout should
be consistent.

(ii) Make your signs short and sweet. You have only few seconds to
tell the customer what you want them to hear.
(iii) It should be clear and understandable.

(iv) Only post positive signs about your policies. If it’s negative,
either change it or don’t post it.

(v) Use unique feature / benefit / price signs.

5. Windows: Window in each store is not only desirable but is of

utmost importance. Being a retailer, you must think of your windows
as an idyllic way to attract new and existing customers. You can use
them for: sales promotions, image building, seasonal changes, new
arrivals, latest trends and to showcase high demand items. Window
displays should be changed frequently so as to avoid becoming stale
and easy to ignore. They should be changed at a minimum of once per
month.

6. Shelving and Displays: High margin and profit items get the best
space. Research shows that eye level and just slightly below is the
best shelves to sell from.

(b) Benefits of cost oriented pricing for retailers:

Pricing a product is one of the most important aspects of

your marketing strategy. Generally, pricing strategies include the
following five strategies.
 Cost-plus pricing—simply calculating your costs and adding
a mark-up
 Competitive pricing—setting a price based on what the
competition charges
 Value-based pricing—setting a price based on how much the
customer believes what you’re selling is worth
 Price skimming—setting a high price and lowering it as the
market evolves
 Penetration pricing—setting a low price to enter a competitive
market and raising it later
Dolansky provides the following advice for entrepreneurs who want
to determine a value-based price.
o Pick a product that is comparable to yours and find out what the
customer pays for it.
o Find all of the ways that your product is different from the
comparable product.
o Place a financial value on all of these differences, add
everything that is positive about your product and subtract any
negatives to come up with a potential price.
o Make sure the value to the customer is higher than your costs.
o Demonstrate to customers why the price will be acceptable,
which includes talking to them.
o If there is an established market, the current price range will
help educate you about the customers’ price expectations.

Q.4 (a) What are the different stages a customer goes through while
selecting a retailer?
(b) Explain how a retailer can handle customer complains
effectively?
Ans. Besides identifying target market characteristics, a retailer
should know how people make decisions. This requires familiarity
with consumer behavior, which is the process by which people
determine whether, what, when, where, how, from whom, and how
often to purchase goods and services. Such behavior is influenced by
a person’s background and traits. The consumer’s decision process
must be grasped from two different perspectives:
(1) what good or service the consumer is thinking about buying
and
(2) where the consumer is going to purchase that item (if the
person opts to buy).
A consumer can make these decisions separately or jointly. If made
jointly, he or she relies on the retailer for support (information,
assortments, and knowledgeable sales personnel) over the entire
decision process. If the decisions are made independently—what to
buy versus where to buy—the person gathers information and advice
before visiting a retailer and views the retailer merely as a place to
buy (and probably more interchangeable with other firms). In
choosing whether or not to buy a given item (what), the consumer
considers features, durability, distinctiveness, value, ease of use, and
so on. In choosing the retailer to patronize for that item (where), the
consumer considers location, assortment, credit availability, sales
help, hours, customer service, and so on. Thus, the manufacturer and
retailer have distinct challenges: The manufacturer wants people to
buy its brand (what) at any location carrying it (where). The retailer
wants people to buy the product, not necessarily the manufacturer’s
brand (what), at its store or nonstore location (where).
The consumer decision process has two parts: the process
itself and the factors affecting the process. There are six steps in the
process: stimulus, problem awareness, information search, evaluation
of alternatives, purchase, and post-purchase behavior. The consumer’s
demographics and lifestyle affect the process.
The best retailers assist consumers at each stage in the process:
stimulus (newspaper ads), problem awareness (stocking new models),
information search (point-of-sale displays and good salespeople),
evaluation of alternatives (clearly noticeable differences among
products), purchase (acceptance of credit cards), and post-purchase
behavior (extended warranties and money- back returns). The greater
the role a retailer assumes in the decision process, the more loyal the
consumer will be.
Each time a person buys a good or service, he or she goes through a
decision process. In some cases, all six steps in the process are
utilized; in others, only a few steps are employed. For example, a
consumer who has previously and satisfactorily bought luggage at a
local store may not use the same extensive process as one who has
never bought luggage.
Stimulus: A stimulus is a cue (social or commercial) or a drive
(physical) meant to motivate or arouse a person to act. When a person
talks with friends, fellow employees, and others, a social cue is
received. The special attribute of a social cue is that it involves an
interpersonal, non- commercial source. A commercial cue is a
message sponsored by a retailer or some other seller. Ads, sales
pitches, and store displays are commercial stimuli. Such cues may not
be regarded as highly as social ones by consumers because they are
seller-controlled. A third type of stimulus is a physical drive. It occurs
when one or more of a person’s physical senses are affected. Hunger,
thirst, cold, heat, pain, or fear could cause a physical drive. A
potential consumer may be ex- posed to any or all three types of
stimuli. If aroused (motivated), he or she goes to the next step in the
process. If a person is not sufficiently aroused, the stimulus is ignored
—terminating the process for the given good or service.
Problem Awareness: At problem awareness, the consumer not only
has been aroused by social, commercial, and/or physical stimuli but
also recognizes that the good or service under consideration may
solve a problem of shortage or unfulfilled desire. It is sometimes hard
to learn why a person is motivated enough to move from a stimulus to
problem awareness. Many people shop with the same retailer or buy
the same good or service for different reasons; they may not know
their own motivation, and they may not tell a retailer their real reasons
for shopping there or buying a certain item.
Recognition of shortage occurs when a person discovers
a good or service should be repurchased. A good could wear down
beyond repair, or the person might run out of an item such as milk.
Service may be necessary if a good such as a car requires a repair.
Recognition of unful- filled desire takes place when a person becomes
aware of a good or service that has not been bought before or a
retailer that has not been patronized before. An item (such as contact
lenses) may improve a person’s lifestyle, self-image, and so on in an
untried manner, or it may offer new performance features (such as a
voice-activated computer). People are more hesitant to act on
unfulfilled desires. Risks and benefits may be tougher to see. When a
person becomes aware of a shortage or an unfulfilled desire, he or she
acts only if it is a problem worth solving. Otherwise, the process ends.
Information Search: If problem awareness merits further thought,
information is sought. An information search has two parts:
(1) determining the alternatives that will solve the problem at hand
(and where they can be bought) and
(2) ascertaining the characteristics of each alternative.
First, the person compiles a list of goods or services that address the
shortage or desire being considered. This list does not have to be
formal. It may be a group of alternatives the person thinks about. A
person with a lot of purchase experience normally uses an internal
memory search to determine the goods or services—and retailers—
that are satisfactory. A person with little purchase experience often
uses an external search to develop a list of alternatives and retailers.
This search can involve commercial sources such as retail
salespeople, noncommercial sources such as Consumer Reports, and
social sources such as friends. Second, the person gathers information
about each alternative’s attributes. An experienced shopper searches
his or her memory for the attributes (pros and cons) of each
alternative. A consumer with little experience or a lot of uncertainty
searches externally for information.
The extent of an information search depends, in part, on the
consumer’s perceived risk regarding a specific good or service. Risk
varies among individuals and by situation. For some, it is
inconsequential; for others, it is quite important. The retailer’s role is
to provide enough information for a shopper to feel comfortable in
making decisions, thus reducing perceived risk. Point- of-purchase
ads, product displays, and knowledgeable sales personnel can provide
consumers with the information they need.
Once the consumer’s search for information is completed,
he or she must decide whether a current shortage or unfulfilled desire
can be met by any of the alternatives. If one or more are satisfactory,
the consumer moves to the next step in the decision process. The
consumer stops the process if no satisfactory goods or services are
found.
Evaluation of Alternatives: Next, a person selects one option from
among the choices. This is easy if one alternative is superior on all
features. An item with excellent quality and a low price is a certain
pick over expensive, average-quality ones. However, a choice may
not be that simple, and the person then does an evaluation of
alternatives before making a decision. If two or more options seem
attractive, the person determines the criteria to evaluate and their
importance. Alternatives are ranked and a choice is made.
The criteria for a decision are those good or service attributes that are
considered relevant. They may include price, quality, fit, durability,
and so on. The person sets standards for these characteristics and rates
each alternative according to its ability to meet the standards. The
importance of each criterion is also determined, and attributes are
usually of differing importance to each person. One shopper may
consider price to be most important while another places greater
weight on quality and durability.
At this point, the person ranks alternatives from most
favorite to least favorite and selects one. For some items, it is hard to
rate attributes of available alternatives because they are technical,
intangible, new, or poorly labeled. When this occurs, shoppers often
use price, brand name, or store name as an indicator of quality and
choose based on this criterion. Once a person ranks alternatives, he or
she chooses the most satisfactory good or service. In situations where
no alter- native is adequate, a decision not to buy is made.
Purchase Act: A person is now ready for the purchase act—an
exchange of money or a promise to pay for the ownership or use of a
good or service. Important decisions are still made in this step. For a
retailer, the purchase act may be the most crucial aspect of the
decision process because the consumer is mainly concerned with three
factors:
1. Place of purchase—this may be a store or a nonstore location.
Many more items are bought at stores than through nonstore retailing,
although the latter are growing more quickly. The place of purchase is
evaluated in the same way as the good or the service: alternatives are
listed, their traits are defined, and they are ranked. The most desirable
place is then chosen. Criteria for selecting a store retailer include store
location, store layout, service, sales help, store image, and prices.
Criteria for selecting a nonstore retailer include image, service, prices,
hours, interactivity, and convenience. A consumer will shop with the
firm that has the best combination of criteria, as defined by that
consumer.
2. Purchase terms—these include the price and method of payment.
Price is the dollar amount a person must pay to achieve the ownership
or use of a good or service. Method of payment is the way the price
may be paid (cash, short-term credit, long-term credit).
3. Availability—this relates to stock on hand and delivery. Stock on
hand is the amount of an item that a place of purchase has in stock.
Delivery is the time span between placing an order and receiving an
item and the ease with which an item is transported to its place of use.
If a person is pleased with all aspects of the purchase act, the good or
service is bought. If there is dissatisfaction with the place of purchase,
the terms of purchase, or availability, the consumer may not buy,
although there is contentment with the item itself.
Post-Purchase Behavior: After buying a good or service, a consumer
may engage in post- purchase behavior, which falls into either of two
categories: further purchases or re-evaluation. Sometimes, buying one
item leads to further purchases and decision making continues until
the last purchase is made. For instance, a car purchase leads to
insurance; a retailer using scrambled merchandising may stimulate a
shopper to make further purchases after the primary good or service is
bought.
A person may also re-evaluate a purchase. Is performance as
promised? Do actual attributes match the expectations the consumer
had? Has the retailer acted as expected? Satisfaction typically leads to
contentment, a repurchase when a good or service wears out, and
positive ratings to friends. Dissatisfaction may lead to unhappiness,
brand or store switching, and unfavorable conversations with friends
and negative online postings. The latter situation (dissatisfaction) may
result from cognitive dissonance—doubt that the correct decision has
been made. A consumer may regret that the purchase was made at all
or may wish that another choice had been made. To overcome
cognitive dissonance and dissatisfaction, the retailer must realize that
the decision process does not end with a purchase. After-care (by
phone, a service visit, or E-mail) may be as important as anything a
retailer does to complete the sale. When items are expensive or
important, after-care takes on greater significance because the person
really wants to be right. Also, the more alternatives from which to
choose, the greater the doubt after a decision is made and the more
important the after-care. Department stores pioneered money-back
guarantees so customers could return items if cognitive dissonance
occurred.
Realistic sales presentations and ad campaigns reduce post-sale
dissatisfaction because consumer expectations do not then exceed
reality. If overly high expectations are created, a consumer is more apt
to be unhappy because performance is not at the level promised.
Combining an honest sales presentation with good customer after-care
reduces or eliminates cognitive dissonance and dissatisfaction.
(b) A retailer can handle consumer complaints effectively by
following ways:

1: Put Your Emotions Aside: Whether it's a friendly lady trying to

simply tell you how to do your job better - with the best of intentions -
or a disgruntled customer ready to erupt in rage, the best way you can
handle any customer sharing a complaint is without your personal
emotions getting in the way. Calmly listen to what they are saying,
then just as calmly reply and react to them with the following tips in
mind.

2: Avoid Challenging Their Complaint: It's easy and - quite frankly

- natural to want to tell a customer they are wrong in what they are
saying. However, this won't help you in your efforts to diffuse a
customer from getting more upset while sharing a complaint. Instead
of challenging their complaint, listen to what they are saying. And -
dare I say - even thank them. Here me out.

3: Thank Your Customer: The old saying "kill them with kindness"
could not be more true in a situation with a customer complaining.
But rather than smile and pretend to care, genuinely let them know
you are thankful they are sharing with you their complaint or concern.
For example, you can tell them right off the bat that you appreciate
them taking the time to talk to you about their concern and you want
to make sure you understand exactly what they are saying. This opens
up the opportunity for you to further listen to them, while hopefully
giving them the understanding that you want to actually hear what
they have to say.

4: Acknowledge What They Say: Listening to your customer

complain may not be your ideal scenario, but try your best to really
hear what they are saying. Are they upset that something took too
long? Or possibly a product they purchased isn't what they had in
mind? Maybe - but hopefully not - they are upset about a specific
employee they encountered while working with your business.
Whatever the "real reason" it is they are complaining, acknowledge it
and ensure you heard what they said.

5: Offer Support: Support comes in a variety of shapes and sizes.

Sometimes it's simply listening to them even more, other times it
means exchanging a defective item for a new one. Support should not
be black and white, though. If you really listened to what they had to
say, you should be able to suggest a handful of ways to support them -
or even better, one firm and perfectly ideal way to support them. You
have to be the judge here on what works best here - but keep in mind
that support means giving the customer something in response to their
complaint. One thing to note? If what you offer isn't satisfying their
expectations, don't give up... which leads me to tip number six.

6: Be Flexible: If no resolution is available to make your customer

happy or at the very least, content, then consider how else you can
help them. Possibly you make it a company policy to have $10 gift
cards to a local coffee shop on hand to give to upset customers (or
even customers who you may see are having a bad day, did something
nice for another customer, etc.). Bonus tip? Ask your local coffee
shop to give these to you for free or at a reduced price as a gesture to
get more people in their door. B2B marketing in local economies is
always a great way to help each other out. And in a case like this,
getting creative and being flexible is key.

7: Make Sure Your Customers Hear What You Are Saying: After

offering a resolution or identifying what you can - or cannot do - to
accommodate any requests they may have or simply to respond to the
complaint they stated, ask the customer if they have understood what
you said. Make sure you do this in a non-demeaning way, but rather
state your intent. Very simply, after all has been discussed, ask your
customer if they have understood how you can help them or for that
matter, how you are unable to do anything else to accommodate them.

8: Offer an Apology - With Gratitude Attached: The thing about

saying "I'm sorry" is that a lot of people won't believe you - and even
more importantly, you may not even mean it. Your goal is to
genuinely want to end your conversation with a sincere apology and
yet appreciation for your customer. Let them know you're sorry they
were inconvenienced or disappointed or upset, then also thank them
for giving you the chance to work it out with them. For many
customers, this sincere effort goes a long way. And for the customers
who are still not satisfied, it still leaves an impression on them -
but only if you really mean it.

9: Follow Up: After you've said you're sorry, showed your

appreciation and overall gave them the support they were hopefully
looking for, consider how else you can help support customers who
complain. One way to do this is to have upper management follow up
with these customers 24 to 48 hours after they have expressed their
complaint. This is simply another way to show them you care, as well
as it suggests you still have their complaint and concerns top of mind.
You can do this in a handwritten note sent to their home address - if
you have this information - or pick up the phone and call them
personally. If this is part of your protocol, be sure to ask for these
contact details from them so you can use them later.

10: Move On: When all is said and done, you can't dwell on customer
complaints in order to move on and forward with your next tasks on
hand. Most businesses are bound to get them every now and again
since very simply, you can't please everyone. This said, if customer
complaints are a normal routine for your business, you need to dwell
on them. All businesses, however, should have a plan of attack - no
pun intended - to help navigate how to handle customer complaints as
seamlessly, professionally and graciously as possible. In return?
Customers who give you another chance and tell their friends, family,
co-workers and more about the strong customer care they received
from your team.
Q. 5 Explain the challenges a retailer faces in handling human
resources. What are the necessary skill sets required for getting
employed in a retail setup? Draw the organization structure of a chain
of departmental store.
Ans. The challenges faced by a retailer in handling human resource
are:-
1. Employee Tracking: Most of the retailers have there store pan-
India and have a lot of different store in a same geographical area
so tracking of employee productivity is a tedious task.
2. Manpower Planning As Per Infrastructure: Each retail store has
different sections for fulfilling the demand of the consumer base, a
study had shown that if a retail customer specialist is trained well
it will automatically increase the profit of the store and also it
creates a good customer experience.
For examples – If there is a demand for the milk-related product in
your store in morning and daily needs item on weekdays you need
to have more trained employee in this section so that service will
be fast and that section will not be overcrowded.
Constant monitoring will help management to know where
they are lacking manpower planning and can help to train the
employees to achieve the organizational objective.
3. Seasonal Demand: During the festival, there are always rush on
retail stores.so employee demands are more and workforce needed
to be more organised during this time to handle this volume of
customers.
4. Lack Of Formal Education: There is the requirement of qualified
and talented manpower to look after the day to day operations and
cater to the wide spectrum of customer desires. As there is lack of
formal vocational institutes where the employee can be trained,
most of the retailers in India depend on in-house training or
fulfilling their training needs with small institutes.
5. Bad Loans: Bad loans are the big problem in the retail sector as
workers in this industry take a lot of loans from the company and
 as well as from bank so proper tracking is required for maintaining
the balance.
6. Women In Retailing: There are a lot of women in retailing and its
also scientifically proven that women increase the productivity of
retail store if they are working properly as they have the ability to
pursue people and they have genetical ability to work with
perfection and multitasking.
They can be easily trained and they can maintain a store more
properly than men.
Some policies need to be made by the organisation for giving
women some extra privilege like maternity leave, sharing working
hours e.t.c.
7. Threat of Poaching: Employee poaching is also very high both in
organized as well as an unorganized retail industry. Skilled
manpower is scarce in this industry and as such attracting the
employees of competitors by offering them better salaries is a
rather easy option.
A lot of capital is invested in each individual for his training and
development, so if any employee leaves its a loss of organisation.
So you have to always retain good employee because they are
assets of your organisation.
8. Career Advancement: A lot of employees in the retail industry
even don’t know the path for growth in their careers.
Proper goal management and training are required so that they will
grow and their growth will also help the organisation to grow,
Goal completion rewards are one of the initiatives that can be done
by the organisation.
Some training like proper communication classes, personality
development classes, Packing Techniques, Technical training are
few of the things organisation may adopt for growth.
9. Stressful Environment: The working pattern of the retail industry
requires employee to put in long hours of work which generally
cause fatigue and result in lower motivation among employees.
Besides this, in part-time and casual jobs there is less job security,
flexible shifts, unlimited working hours, lower salary and benefits
& poor working conditions resulting into stress.
10. Analytics Overview: As there are the vast number of employees
working in a single organisation Management level people rely
only on data that is shown in there databook or screen to address
the problems some common problems may be employee
attendance, individual store productivity, retention of employees
analyzing this data can figure out problem area so that they can act
on that before its too late.

For college graduates, executive training programs at larger retailers

offer good learning experiences and advancement potential. These
firms often offer careers in merchandising and non-merchandising
areas.
Here is how a new college graduate could progress in a career path at
a typical department store or specialty store chain: He or she usually
begins with a training program (lasting from three months to a year or
more) on how to run a merchandise department. That program often
involves on-the-job and classroom experiences. On-the-job training
includes working with records, reordering stock, planning displays,
and supervising salespeople. Classroom activities include learning
how to evaluate vendors, analyze computer reports, forecast fashion
trends, and administer store policy.
After initial training, the person becomes an entry-level operations
manager (often called a sales manager, assistant department manager,
or department manager—depending on the firm) or an assistant buyer.
An entry-level manager or assistant buyer works under the direction
of a seasoned department (group) manager or buyer and analyzes
sales, assists in purchasing goods, handles reorders, and helps with
displays. The new manager supervises personnel and learns store
operations; the assistant buyer is more involved in purchases than
operations. Depending on the retailer, either person may follow the
same type of career path, or the entry-level operations man- ager may
progress up the store management ladder and the assistant buyer up
the buying ladder.
During this time, the responsibilities and duties depend on the
department (group) man- ager’s or buyer’s willingness to delegate and
teach. In a situation where a manager or buyer has authority to make
decisions, the entry-level manager or assistant buyer will usually be
given more responsibility. If a firm has centralized management, a
manager (buyer) is more limited in his or her responsibilities, as is the
entry-level manager or assistant buyer. Further, an assistant buyer will
gain more experience if he or she is in a firm near a wholesale market
center and can make trips to the market to buy merchandise.
The next step in a department store or specialty store chain’s career
path is promotion to department (group) manager or buyer. This
position is entrepreneurial—running a business. The manager or
buyer selects merchandise, develops a promotional campaign, decides
which items to reorder, and oversees personnel and record keeping.
For some retailers, manager and buyer are synonymous. For others,
the distinction is as just explained for entry-level positions. Generally,
a person is considered for promotion to manager or buyer after two
years.
Large department store and specialty store chains have additional
levels of personnel to plan, supervise, and assess merchandise
departments. On the store management side, there can be group
managers, store managers, branch vice-presidents, and others. On the
buying side, there can be divisional managers, merchandising vice-
presidents, and others.
At many firms, advancement is indicated by specific career paths.
This lets employees monitor their performance, know the next career
step, and progress in a clear manner. Several retail career paths are
shown in the careers section of our Web site.
[Organization Structure is on the next page]