"In my whole retailing career, I have stuck to one guiding principle: give your customers

what they want…and customers want everything: a wide assortment of good quality
merchandise, lowest possible prices, guaranteed satisfaction with what they buy, friendly
knowledgeable service, convenient hours, free parking, and a pleasant shopping
experience.

You love it when you visit a store that somehow exceeds your expectations and you hate
it when a store inconveniences you, or gives you hard time, or just pretends you are
invisible…"

– Sam Walton (Founder, Walmart)

In the complex world of today, the consumer is king and retailers are keener on
consumer satisfaction. Considering the busy lifestyles of today’s consumers, the retailers
also provide services apart from products.

Retailing occupies a very important place in the economics of any country. It is the final
stage of distribution of product or service. It not only contributes to country’s GDP but
also empowers a large number of people by providing employment.

Retail Management starts with understanding the term 'Retail'.

What is Retail?
“Retailing includes all activities involved in selling goods or services to the final
consumers for personal, non-business use.”

- Phillip Kotler

Any organization that sells the products for consumption to the customers for their
personal, family, or household use is in the occupation of retailing.

Functions of a Retailor
Retailor provides the goods that customer needs, in a desired form, at a required time
and place.

 A retailor does not sell raw material. He sells finished goods or services in the form
that customer wants.

 A retailer buys a wide range of products from different wholesalers and offers the
best products under one roof. Thus, the retailor performs the function of both
buying and selling.

 A retailor keeps the products or services within easy reach of the customer by
making them available at appropriate location.

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Retail in Marketing Channels

With industrialization and globalization, the distance between the manufacturer and the
consumer has increased. Many times a product is manufactured in one country and sold
in another. The levels of intermediaries involved in the marketing channel depends upon
the level of service the consumer desires.

Type A and B: Retailers. For example, Pantaloons, Walmart.

Type C: Service Providers. For example, Eureka Forbes.

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Classification of Retailing Formats

The retailing formats can be classified into following types as shown in the diagram:

Ownership Based Retailing

Let us see these retailers in detail:

 Independent Retailers: They own and run a single shop, and determine their
policies independently. Their family members can help in business and the
ownership of the unit can be passed from one generation to next. The biggest
advantage is they can build personal rapport with consumers very easily.
For example, stand-alone grocery shops, florists, stationery shops, book shops,
etc.

 Chain Stores: When multiple outlets are under common ownership it is called a
chain of stores. Chain stores offer and keep similar merchandise. They are spread
over cities and regions. The advantage is, the stores can keep selected
merchandise according to the consumers’ preferences in a particular area.
For example, Westside Stores, Shopper’s Stop, etc.

 Franchises: These are stores that run business under an established brand name
or a particular format by an agreement between franchiser and a franchisee. They
can be of two types:
o Business format. For example, Pizza Hut.
o Product format. For example, Ice cream parlors of Amul.

 Consumers Co-Operative Stores: These are businesses owned and run by

consumers with the aim of providing essentials at reasonable cost as compared to
market rates. They have to be contemporary with the current business and
political policies to keep the business healthy.

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For example, Sahakar Bhandar from India, Puget Consumers Food Co-Operative
from north US, Dublin Food Co-Operative from Ireland.

Merchandise Based Retailing

Let us see these in detail:

 Convenience Stores: They are small stores generally located near residential
premises, and are kept open till late night or 24x7. These stores offer basic
essentials such as food, eggs, milk, toiletries, and groceries. They target
consumers who want to make quick and easy purchases.

For example, mom-and-pop stores, stores located near petrol pumps, 7-Eleven
from US, etc.

 Supermarkets: These are large stores with high volume and low profit margin.
They target mass consumer and their selling area ranges from 8000 sq.ft. to
10,000 sq.ft. They offer fresh as well as preserved food items, toiletries, groceries
and basic household items. Here, at least 70% selling space is reserved for food
and grocery products.

For example, Food Bazar and Tesco.

 Hypermarkets: These are one-stop shopping retail stores with at least 3000
sq.ft. selling space, out of which 35% space is dedicated towards non-grocery
products. They target consumers over large area, and often share space with
restaurants and coffee shops. The hypermarket can spread over the space of
80,000 sq.ft. to 250,000 sq.ft. They offer exercise equipment, cycles, CD/DVDs,
Books, Electronics equipment, etc.

For example, Big Bazar from India, Walmart from US.

 Specialty Stores: These retail stores offer a particular kind of merchandise such
as home furnishing, domestic electronic appliances, computers and related
products, etc. They also offer high level service and product information to
consumers. They occupy at least 8000 sq.ft. selling space.
For example, Gautier Furniture and Croma from India, High & Mighty from UK.

 Departmental Stores: It is a multi-level, multi-product retail store spread

across average size of 20,000 sq.ft. to 50,000 sq.ft. It offers selling space in the
range of 10% to 70% for food, clothing, and household items.

For example, The Bombay Store, Ebony, Meena Bazar from India, Marks &
Spencer from UK.

 Factory Outlets: These are retail stores which sell items that are produced in
excess quantity at discounted price. These outlets are located in the close
proximity of manufacturing units or in association with other factory outlets.

For example, Nike, Bombay Dyeing factory outlets.

 Catalogue Showrooms: These retail outlets keep catalogues of the products for
the consumers to refer. The consumer needs to select the product, write its

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product

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 Retail Management

code and handover it to the clerk who then manages to provide the selected
product from the company’s warehouse.

For example, Argos from UK. India’s retail HyperCity has joined hands with Argos
to provide a catalogue of over 4000 best quality products in the categories of
computers, home furnishing, electronics, cookware, fitness, etc.

Non-Store Based (Direct) Retailing

It is the form of retailing where the retailer is in direct contact with the consumer at the
workplace or at home. The consumer becomes aware of the product via email or phone
call from the retailer, or through an ad on the television, or Internet. The seller hosts a
party for interacting with people. Then introduces and demonstrates the products, their
utility, and benefits. Buying and selling happens at the same place. The consumer itself
is a distributor.

For example, Amway and Herbalife multi-level marketing.

Non-Store based retailing includes non-personal contact based retailing such as:
 Mail Orders/Postal Orders/E-Shopping: The consumer can refer a product
catalogue on internet and place order for purchasing the product via email/post.

 Telemarketing: The products are advertised on the television. The price,

warranty, return policies, buying schemes, contact number etc. are described at
the end of the Ad. The consumers can place order by calling the retailer’s
number. The retailer then delivers the product at the consumer’s doorstep.
For example, Asian Skyshop.
.
 Automated Vending/Kiosks: It is most convenient to the consumers and offers
frequently purchased items round the clock, such as drinks, candies, chips,
newspapers, etc.

The success of non-store based retailing hugely lies in timely delivery of appropriate
product.

Service Based Retailing

These retailers provide various services to the end consumer. The services include
banking, car rentals, electricity, and cooking gas container delivery.

The success of service based retailer lies in service quality, customization, differentiation
and timeliness of service, technological upgradation, and consumer-oriented pricing.

Product Retailing versus Service Retailing

Product Retailing Service Retailing

Quality and cost are prime factors in the Timeliness and nature of people involved in
success of product retailing. service retailing are crucial factors in the
success.

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Product retailer and consumer Service provider and customer relationship is

relationship is established only if the established right from start.
consumer frequently visits the outlet.
Products can be stored in outlet while Services are intangible hence cannot be
retailing. stored while retailing.
Product retailing can be standardized. Service retailing cannot be standardized as it
highly depends upon the human entities
involved.
In product retailing, the ownership of In service retailing, there is no transfer of
the purchased product can be ownership. The consumer can only access the
transferred from owner to consumer service.
after transaction.

Retail versus Wholesale

Retail Wholesale

The products are sold to the customers The products are sold either to retailer for
directly further selling or to the customer directly
Retailer sells the products by adding his The cost of product sold at wholesale is always
own profit margin hence the cost of lesser than retail cost
product increases
Retail business generally does not have Wholesale business has a direct contact with
direct contact with the manufacturer the manufacturer
Retail business buys products from Wholesale businesses have to buy from the
wholesaler in small quantities. Hence, manufacturer in bulk. Hence if there is some
there is always an upper hand to issue with the quality of the product, they can
question the quality and discard the hardly complain
damaged products
Retail has to work on attracting Wholesale business is not much engaged into
customers, managing selling space, such activities
employee’s salaries, etc.
Retail business earns lesser profit Wholesale business earns more profit

Retail Terminology
Here are some commonly used terms in Retail Management:

The organized-efforts by individuals, groups, and governments to

Consumerism protect consumers from policies and practices that infringe consumer
rights.
Consumption Using a product or a service for one’s benefit in particular time; not for
resale.

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Customer It is the degree at which the customer is pleased after purchasing

Satisfaction and using a product or availing a service, and going to the same
retailer or service provider.
Distribution It is movement of products or services from manufacturer to end
consumer through a channel.
Empowered The consumers with access and knowledge of Internet, exploiting the
Consumers power of digital technologies, and demanding products and services
matching their personal preferences.
Inventory Reduction of inventory due to theft by employees, customers, or by
Shrinkage error from merchandise management at the time of receiving
merchandise.
It is planning, executing and controlling of the procurement and
Logistics movement of material and resources on some beneficial purpose.
Markdown Reduction in price.
Planogram Predetermined layout of display to promote merchandise sale.
It is the process of buying a product or a service. It involves various
Procurement stages such as planning, researching supplier or service provider,
negotiating price, placing order, making payment and availing the
product or service.
Retail Sale of products or services to end customer for consumption rather
than resale.
Supply-Chain It is the management of material and information flow in a chain
Management from manufacturer to consumer for providing highest level of
customer satisfaction at lowest possible price.
Switching Costs The costs incurred by a consumer for switching from one supplier or
marketplace to another.
Wholesale The business of selling products of large quantity at lesser price to
retailers or consumers.

Evolution of Retail
Though the barter system is considered as the oldest form of retailing, the traditional
forms of retailing such as neighborhood stores, main-street stores and fairs still exist in
the laid-back towns around the world. During post-war years in the US and Europe,
small retailers reformed their shops into large organized stores, markets, and malls.

Retail evolution mainly took place in three stages:

 Conventional

 Established

 Emerging

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1
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2.RETAIL SECTORS Retail
Management

“We have learnt that if we provide people with an occasion and an excuse to
shop, they will come.”

- Kishore Biyani (CEO Future group)

Today’s retail market is satisfying diverse needs of its consumers. The consumer’s needs
range from as basic as food & food services to as luxurious as jewelry items. In this
chapter, we analyze prominent retail sectors around the world, their structure, and the
key players in that sector.

The retail sectors are prominently divided into Food, Clothing & Textiles, Consumer
Durables, Footwear, Jewelry, Books-Music-Gift Articles, and Fuel.

Food
It comprises of food and grocery, and food services. The consumers buy packaged food,
ready-to-eat food, and avail food services at workplaces. Visiting a restaurant is no more
a luxury in today’s busy life. The retail food industry is growing rapidly with the pace of
lifestyles around the world.

Key Players: Food and Grocery retail: Food Bazar by Pantaloons, More by Aditya Birla,
Haldiram’s (India), Tesco (UK), Walmart (US), Carrefour (France).

In food services retail: KFC, McDonalds, Pizza Hut, Barista, Café Coffee Day.

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Clothing & Textile

Similar to food, clothing is one of the basic needs of humans. The textile industry
includes manufacturing of fabrics such as natural fibers, synthetic fibers, looms, and
various blends. Clothing is mainly seen as ready-to-wear apparels such as shirts, T-
shirts, trousers, jeans, ladies wear, kids wear, baby clothes and hosiery garments such
as socks, gloves, and inner wear.

Key Players: Arrow by Arvind Mills, Park Avenue by Raymond, Century Textiles (India),
Lee, Wrangler, Nautica, and Kipling, all by VF Corp (US), Bonito Deco Inc. (Taiwan).

Consumer Durables
The consumer durables are expected to have long life after purchase and are not
purchased frequently. It comprises retailing cars, motorcycles, and home appliances.

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Key Players: Vijay Sales, Croma by Tata, Maruti-Suzuki (India), Honda Motors (US),
Samsung Electronics (Korea).

Footwear
Footwear is categorized according to the consumer’s gender, raw material of product, and
design as shown in the diagram.

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Key Players: Bata, Liberty Footwear, Metro Shoes Ltd. (India), Reebok International
Ltd. (UK)

Jewelry
Two major segments in this retail sector are precious metal jewelry and gemstones. Out
of the precious metals, Indian jewelry market forms 80% of gold jewelry, 15% of
gemstone studded jewelry, and 5% of other metal jewelry.

Regional festivals, special days, and customs drive the demand in this retail sector.

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Key Players: Tanishq by Tata, Gili by Gitanjali Group.

Books-Music-Gift Articles
This includes assorted books, movie or audio CDs, gift articles,
and souvenirs. These retail shops are often found near
residential areas, tourist places, and historical monuments.
Festivals and celebrations are main driving factors for sale in
this sector. These items are not very frequently purchased and
consumer’s emotional factor is attached to the products than its
benefit.

Key players: Landmark bookstore by Tata enterprise (India), Paperchase

(UK).

Fuel
The highest five fuel consuming countries in the world are the
US, China, Japan, India, and Russia. This retail involves
activities such as production, refining, and distribution. Fuel
companies tie up with other retailers such as pharmacies, food
& food service, gift article retails to enter into petrol pump
convenience business.

Key Players: Bharat Petroleum Corporation Ltd., Hindustan

Petroleum Corporation Ltd., Oil & Natural Gas Commission Ltd.
(India), Siemens Oil & Gas Co. (US), Caltex Australia Petroleum

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Pty Ltd. (Australia).

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