Retail Management

World of Retailing:

Retailing is a global, high-tech industry that plays a major role in the global economy. About one in five
U.S. workers is employed by retailers. Increasingly, retailers are selling their products and services
through more than one channel—such as stores, Internet, and catalogs. Firms selling services to
consumers, such as dry cleaning and automobile repairs, are also retailers.

Retail management:

The various processes which help the customers to procure the desired merchandise from the retail
stores for their end use refer to retail management. Retail management includes all the steps required
to bring the customers into the store and fulfil their buying needs. Retail management makes shopping a
pleasurable experience and ensures the customers leave the store with a smile. In simpler words, retail
management helps customers shop without any difficulty.

What is Retailing?

Most common form of doing business It consists of selling merchandise from a permanent location (a
retail store) in small quantities directly to the consumers. These consumers may be individual buyers or
corporate. Retailer purchases goods or merchandise in bulk from manufacturers directly and then sells
in small quantities Shops may be located in residential areas, colony streets, community centers or in
modern shopping arcades/ malls.

Meaning of Retailing:

According to Kotler: ´Retailing includes all the activities involved in selling goods or services to the final
consumers for personal, non business uses.

A process of promoting greater sales and customer satisfaction by gaining a better understanding of the
consumers of goods and services produced by a company.

Characteristics of Retailing:

1. Direct interaction with customers/end customers.

2. Sale volume large in quantities but less in monetary value

3. Customer service plays a vital role

4. Sales promotions are offered at this point only

5. Retail outlets are more than any other form of business

6. Location and layout are critical factors in retail business.

7. It offers employment opportunity to all age.

Types of Retailers: Store Retailing by Store based Strategy Food Retailers

1. Departmental stores.
2. Convenience Store.

3. Full Line Discount.

4. Conventional Supermarket.

5. Specialty Stores

6. Food Based Superstore

7. Off Price Retailer.

8. Combination Store.

9. Variety Store.

10. Super Centres

11. Flea Market.

12. Hypermarket.

13. Factory Outlet.

14. Limited Line Stores.

15. Membership Club.

1. Department Store

Department stores are large retailers that carry wide breadth and depth of products. They offer more
customer service than their general merchandise competitors. Department stores are named because
they are organized by departments such as juniors, men‘s wear, female wear etc. Each department is act
as ―mini store‖. Means the each department is allocated the sales space, manager and sales personnel
that they pay an attention to the department. IMC program for each department is different and
particular. Department store utilizes various sources for marketing communication. Due to overstoring
most of the budget are spending on advertising, couponing and discounts. Unfortunately the use of
coupons diminishes profits and creates a situation where consumer does not buy unless they receive
some type of discount.

2) Convenience stores:

Convenience stores are located in areas that are easily accessible to customers. Convenience store carry
limited assortment of products and are housed in small facilities. The major seller in convenience stores
is convenience goods and non alcoholic beverages. The strategy of convenience stores employ is fast
shopping, consumer can go into a convenience stores pick out what they want, and check out relatively
short time. Due to the high sales, convenience store receives products almost daily. Because
convenience store don‘t have the luxury of high volume purchase

3) Full line Discount Stores

It conveys the image of a high volume, low cost, fast turnover outlet selling a broad merchandise
assortment for less than conventional prices. It is more to carry the range of products line expected at
department stores, including consumer electronics, furniture and appliances. There is also greater
emphasis on such items as auto accessories, gardening equipment, and house wares. Customer services
are not provided within stores but at centralized area. Products are sold via self service. Less fashion
sensitive merchandise is carried.

4) Specialty Store:

Specialty store carry a limited number of product within one or few lines of goods and services. They are
named because they specialize in one type of product. Such as apparel and complementary
merchandise. Specialty store utilizes a market segmentation strategy rather than typical mass marketing
strategy when trying to attract customers. Specialty retailers tend to specialize in apparel, shoes, toys,
books, auto supplies, jewelry and sporting goods. In recent years, specialty stores have seen the
emergence of the category killer. Category killers (sometimes called power retailer or category specialty)
are generally discount specialty stores that offer a deep assortment of merchandise in a particular
category.

5) Off-price Retailers

Off price retailers resemble discount retailers in that they sell brand name merchandise at everyday low
prices. Off price retailers rarely offer many services to customers. The key strategy of off price retailers is
to carry the same type of merchandise as traditional department stores but offer prices that can be 40
to 60 percent lower. To able to offer the low prices, off price retailers develop special relationship with
their suppliers for large quantity of merchandise. Inventory turnover is the key factor of successful off
price retailing business. In addition to purchasing close outs and cancel orders, off price retailers
negotiate with manufacturer to discount order off merchandise that is out of seasons or to prepay for
items to be manufactured thus reducing the price of buying items.

E.g. there are many types of off price retailers, including outlet store, Manufacturers department store
or even specialty store chains can be an off-price retailer.

6) Variety Store

Variety store offer deep assortment of inexpensive and popular goods like stationary, gift items,
women‘s accessories, house wares etc. They are also called 5 to 10 percent store because the
merchandise in such stores, used to cost much.

7) Flea Market

Flea market is a literal transaction of the French aux puces, in outdoor bazaars in Paris. A flea market is
the outdoor or indoor facility that rent out space to vendors who offer merchandise, services and other
goods that satisfy the legitimate needs of customers. Flea market provides opportunity for entrepreneur
to start business at low price. A flea market consist of many retail vendors offering a variety of products
at discount price at places where there is high concentration of people. On specific market days they
assemble for exchange of goods and services

8. Factory Outlets

Factory outlets are manufacturer owned stores selling manufacturers closeouts, discontinued
merchandise, irregulars, cancelled orders, and sometimes in seasons, first quality merchandise.
9) Membership Clubs

A membership club appeals to price conscious consumers, who must be a member of shop there. It
breaks the line between wholesale ling and retailing. Some members of typical club are small business
owners and employee who pay a nominal annual fee and buy merchandise at wholesale prices; these
customers make purchase for use in operating their firm or for personal use. They yield 60% of total club
sale. The bulk members are final consumers who buy exclusively for their own use; they represent 40
%of overall sales.

10. Conventional supermarket

Conventional supermarket is essentially large departmental stores that specialize in food. According to
the food marketing institute, a conventional supermarket is a self service food store that generates an
annual sales volume of $2 million or more. These stores generally carry groceries, meat and produce
products. A conventional food store carries very little general merchandise.

11. Food Based Superstore

One of the biggest trends over the past twenty years in food retailing has been the development of
superstore. Superstores are food based retaliates that are larger than the traditional supermarket and
carry expanded service daily, bakery, seafood and non food sections. Supermarket varies in size but can
be as large as 150000 sq ft. Like combination stores food based superstore are efficient, offer people a
degree of one stop shopping stimulate impulse purchase and feature high profit general merchandise.

12. Combination Store

Because shoppers have been demanding more convenience in their shopping experience, a new type of
food retailers has been emerging. This type of retailer combines food items and non food items to
create one stop experience for the customer. Combination stores are popular for the following reasons.
They are very large from the 30000 to 100000 or more sq ft. this leads to operating efficiencies and cost
savings. Consumer like one stop shopping and will travel further to get to the store. Impulse sales are
high.

13. Super Centers and Hypermarkets

Super center is a combination of a superstore and discount store. Supercenter developed based on the
European Hypermarkets, an extremely large retailing facility that offers many types of product in
addition to foods. In supercenter more than 40 percent of sales come from non food items. Super
Centre is fastest growing retail category and encompasses as much as sales. Wal-Mart is category leader
with 74 percent share of super center retail share.

14. Warehouse Clubs and Stores.

Warehouse clubs and stores were developed to satisfy customers who want to low prices every day and
are willing to give up services needs. These retailers offer a limited assortment of goods and services,
both food and general merchandise, to both end users and midsize businesses. The stores are very large
and are located in the lower rent areas of cities to keep their overhead low cost low. Generally,
warehouse clubs offer varying types of merchandise because they purchase product that manufactures
have discounted for variety of reasons. Warehouse clubs rely on fast moving, high turnover
merchandise. One benefits of this arrangement is that the stores purchase the merchandise from the
manufacture and sell it prior to actually having to pay the manufacturer.

15. Limited Line Stores

Limited line store also known as box stores or limited assortment stores, represent a relatively small
number of food retail stores in the United States. Limited line store are food discounters that offer a
small selections of products at lows prices. They are no frills stores that sell products out of boxes or
shippers. Limited line stores rarely carry any refrigerated items and are often cash and carry, accepting
no checks or purchase bags from the retailers. In limited line store, the strategy is to price products at
least 20 percent below similar products at conventional supermarkets.

Functions of retailing:
Retail trade performs many valuable functions for the trade and commerce as a whole. Some of
them are as follows:
1) Delivery of the goods to the end consumer:
This makes shopping for all requirements quite hassle-free for the consumers. This also
facilitates consumption and maximizes consumer satisfaction. Because
the company cannot take responsibility of delivery to every single customer, it appoints
retailers. One of the functions of retailing is immediate delivery.
2) Is an essential part of the distribution chain

Because the retailer takes over the cumbersome task of distribution of goods manufactured to
the target market, the manufacturer is relieved of this responsibility and can divert his
resources to manufacturing activities.

3)Finances the wholesaler:

While booking his order of goods with the wholesaler, the retailer pays some percentage or the
whole of the order price in advance. This helps the wholesaler to carry on with his operations
seamlessly. In some industries, it is the retailer who pays cash to maintain stock and in others
the wholesaler has to carry the stock as paid capital. Nonetheless, financing is one of the major
functions of retailing. A retailer who does not contribute to financing will bring down the
effectiveness of the supply chain.

4) Stores the goods according to market requirement

The retailer invests his working capital in building a gamut of inventory reflecting market
requirements. He also sells the requisite quantity, however small or big, to the final consumers
satisfying their needs. The retailers know the complete demand and supply potential due to
their years of experience. Hence it is one of the functions of retailing to balance the demand
and supply as per external market conditions.

5) Lends a hand in manufacturer’s marketing initiative

Retailer plans and executes many advertising and promotion activities at the point of purchase
i.e. right in his store. This leads to gain in popularity of and favorable market conditions for
the product of the manufacturer.

6) Assumes storage and credit risks

When the retailer orders and stores a large quantity of goods from the manufacturer, he makes
sufficient provisions to store it safely for some days. This involves costs. Also, there is also a risk
of loss of these goods on account of destruction, theft, spoilage etc. The retailer assumes these
risks while storing goods.

7) Extends credit facilities to the consumers and assumes credit risk

The retailer does so to encourage shopping. This adds to the vigor of commercial activities in
the economy. But there is also a risk that the customers won’t pay for the goods bought or may
return damaged goods to the retailer. This inherent risk in trade is assumed by the retailer.

8) Offers wide variety of customers and enticing price range in a product line

In order to attract more customers, a retailer offers a wide range of merchandise at attractive
prices. This results in higher consumer satisfaction and higher standards of living in any
economy.

9) Provides convenience in shopping

Retailers try to set up their shops nearby housing areas or near parks, schools – the areas
where the customer finds it very convenient to shop. This enhances the consumer welfare.

10) Offers after sale services, differentiated packaging, giving more information about the use
of the product

All these activities add value to the retail transaction and cater to various requirements of the
consumers suitably.
11) Hears the voice of the market

The retailer measures the pulse of the market by listening to the consumer feedback,
expectations, complaints, and by observing a shift in the tastes and preferences of the
consumers. This arms him with very critical market intelligence enabling the entire commercial
fraternity to gear up for the changing economic scenario.

12) Generating employment for masses

Retail trade, especially the brick-and-mortar models, are human resource-centric

establishments. They require many employees for numerous functions such as stock taking,
over the counter selling, packaging, after sales services, floor management etc. Thus, retail
sector thrives with lots of lucrative employment opportunities for all the talented job aspirants.

What are the types of retail channels?

A retail channel is the means by which a consumer can obtain a product or service. Businesses often use
multiple retail channels to reach a larger audience and market their products in a more convenient manner. A
few of the most popular retail channels include:

 Retail stores
 Online retailing
 Catalog retailing
 Direct selling
 Television home shopping
 Automated retailing

Retail Stores
A retail store is a physical location where consumers go shopping for a product in-person.
While retail stores may sometimes be owned by producers and provide a means for direct
product distribution, most retail stores are owned by retailers such as Target or Walmart, who
offer a variety of different brands for the same or similar products. Department stores such as
J.C. Penney, wholesale or warehouse stores such as Sam's Club, discount stores such as T.J.
Maxx or Ross, and specialty stores that focus on targeted goods such as clothing or homeware
are all forms of retail stores. The concept of a retail store as a well-defined retail channel
benefits consumers by giving them immediate satisfaction for their needs. Additionally, they
may be presented the opportunity to receive fast and personalized assistance if needed.
online retail
Online retail is a type of eCommerce whereby a business sells goods or services directly to
consumers from a website. The website may be their own, or it may be owned by a larger
retailer or marketplace like Amazon

Online retail is a similar concept to brick-and-mortar retail. Shoppers enter the store, search
through an organized inventory of products and then pay for their goods at checkout. It’s just
that online retail takes place over the Internet while brick-and-mortar is done in person.

Online retail is a type of eCommerce whereby a business sells goods or services directly to
consumers from a website. The website may be their own, or it may be owned by a larger retailer
or marketplace like Amazon.

Online retail is a similar concept to brick-and-mortar retail. Shoppers enter the store, search
through an organized inventory of products and then pay for their goods at checkout. It’s just that
online retail takes place over the Internet while brick-and-mortar is done in person.

Catalog Retailing:
In simle term retailers who mail catalogues to their customers and maintain showrooms where
sample of the products for sale are displayed is known as catalogue retailing. Customers can
choose a product given in catalogue and order the same through telephone , mail or any other
way as preferred by the retailer.

Direct selling

Direct sales are sales that occur between a brand and the end-user without a middleman or
distributor. They are a type of B2C (business to customer) sale, and they can happen in-person
or online. The most important thing for your company to know about direct sales is that it's on
the rise—with no signs of slowing down.

Television home shopping

Television Home Shopping means Product-focused television programming whereby Products are
sold by "on-air" hosts and orders are placed by viewers directly with the party providing said
television programming or its agents or representatives, using substantially the format used as of
the date hereof by VVI, HSN and QVC. Without limiting the generality of the preceding sentence,
Television Home Shopping does not include commercials or Syndicated Programs, but does, for
the five year period commencing on the date hereof, include so-called "infomercials" of a length not
exceeding 30 minutes.

Automated retailing:
Automated Retail is the way of the future! Automated Retail is the use of a machine to sell
retail products, but it is far more than this. Automated retail is a brand new sales channel for
retailers and brands to reach customers in an innovative, exciting and non-traditional way.

Automated Retail has been growing exponentially within the last few years to an all time high.
Many retailers and national brands are looking for a way to build brand awareness and expand
into untapped markets with minimal investment and low costs of entry.

Retail industry in India:

Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to
the entry of several new players. It accounts for over 10% of the country’s gross domestic
product (GDP) and around eight % of the employment. India is the world’s fifth-largest global
destination in the retail space. India ranked 73 in the United Nations Conference on Trade and
Development's Business-to-Consumer (B2C) E-commerce Index 2019. India is the world’s fifth-
largest global destination in the retail space and ranked 63 in the World Bank’s Doing Business
2020. The retail sector in India accounts for over 10% of the country’s GDP and around 8% of
the workforce (35+ million). It is expected to create 25 million new jobs by 2030.

The sizeable middle class and nearly unexplored retail market in India are the main enticing
factors for international retail behemoths seeking to move into newer markets, which will help
the Indian retail business grow more quickly. The urban Indian consumer's purchasing power is
increasing, and branded goods in categories like apparel, cosmetics, footwear, watches,
beverages, food, and even jewellery are gradually evolving into business and leisure that are
well-liked by the urban Indian consumer. The retail sector in India is expected to reach a
whopping US$ 2 trillion in value by 2032, according to a recent analysis by the Boston
Consulting Group (BCG).

India is the world’s fifth-largest global destination in the retail space. In the FDI Confidence
Index, India ranked 17 (after US, Canada, Germany, United Kingdom, China, Japan, France,
Australia, Switzerland, and Italy).

India is one of the most promising and developing marketplaces in the world. There is a great
deal of desire among multinational corporations to take advantage of the consumer base in
India and to enter the market first. Nearly 60 shopping malls encompassing a total retail space
of 23.25 million sq. ft are expected to become operational during 2023-25.

India ranks among the best countries to invest in Retail space. Factors that make India so
attractive include the second largest population in the world, a middle-income class of ~158

households, increasing urbanization, rising household incomes, connected rural consumers, and
increasing consumer spending.

As of 2021, there were 1.2 million daily e-commerce transactions. Online shoppers in India are
expected to reach ~500 million in 2030 from +150 million in 2020. The E-Commerce market is
expected to touch US$ 350 billion in GMV by 2030.

India’s retail sector was experiencing exponential growth with retail development taking place
not just in major cities and metros, but also in small cities. Healthy economic growth, changing
demographic profile, increasing disposable income, urbanisation, and changing consumer tastes
and preferences have been some of the factors driving growth in the organised retail market in
India.

To improve the business climate and make it simpler for foreign companies to register fully
owned subsidiaries in India, the Indian government has implemented a number of rules,
regulations, and policies.

Changing trends in Retailing

10 New Retails Trends You Need to Know for 2024

1. Ecommerce is here to stay

2. Safety is important to consumers

3. Self-service checkout options

4. Chatbots are the newest team members

5. In-store appointment booking

6. 24/7 customer service

7. Omnichannel shopping

8. Transparency in shipping

9. Less waste in packaging

10. Supply chain vulnerability and global crises

Two retail trends that every business can count on in 2024 are change and innovation. Online
and in-person retail is moving faster than ever. Technological innovation is leading that charge.
And so are shifting consumer expectations.

Businesses need to stay on top of retail trends that will impact their success in order to get
ahead of the curve. Embracing that change will help retailers thrive this year and beyond. But
we know it can be hard to stay aware of trends on top of everything you have going on as a
business own

Unit-2
Understanding retail consumer deals with understanding their buying behavior in retail
stores. Understanding the consumer is important to know who buys what, when, and how. It is
also important to know how to evaluate consumer’s response to sales promotion. It is very vital
to understand the consumer in the retail sector for the survival and prosperity of the business.

Consumer versus Customer

A consumer is a user of a product or a service whereas a customer is a buyer of the product or
service. The customer decides what to buy and executes the deal of purchasing by paying and
availing the product or service. The consumer uses the product or service for oneself.
For example, the customer of a pet food is not the consumer of the same. Also, if a mother in a
supermarket is buying Nestlé Milo for her toddler son then she is a customer and her son is a
consumer.
Identifying a Customer

It is sometimes difficult to understand who is actually a decision maker while purchasing when
a customer enters the shop accompanying someone else. Thus everyone who enters the shop is
considered as a customer. Still, it is necessary to identify composition and origin of the
customers.

 Composition of Customers − It includes customers of various gender, age, economic and

educational status, religion, nationality, and occupation.
 Origin of Customer − From where the customer comes to shop, how much the customer
travels to reach the shop, and which type of area the customer lives in.
 Objective of Customer − Shopping or Buying? Shopping is visiting the shops with the
intention of looking for new products and may or may not necessarily include buying.
Buying means actually purchasing a product. What does the customer’s body language
depict?
Customer’s Buying Behavior Patterns

The needs, tastes, and preferences of the consumer for whom the products are purchased
drives the buying behavior of the customer. The pattern of customer’s buying behavior can be
categorized as −

Place of Purchase

Customers divide their place of purchase. Even if all the products they want are available at a
shop, they prefer to visit various shops and compare them in terms of prices. When the
customers have a choice of which shop to buy from, their loyalty does not remain permanent to
a single shop.

Study of customer’s place of purchase is important for selection of location, keeping

appropriate merchandise, and selecting a distributor in close proximity.

Product Purchased

It pertains to what items and how many units of items the customer purchases. The customer
purchases a product depending upon the following −

 Availability/Shortage of product
 Requirement/Choice of product
 Perishability of product
 Storage requirements
 Purchasing power of oneself

This category is important for producers, distributors, and retailers. Say, soaps, toothbrushes,
potatoes, and apples are purchased by a large group of customers irrespective of their
demographics but live lobsters, French grapes, avocadoes, baked beans, or beef are purchased
by only a small number of customers with strong regional demarcation.

Similarly, the customers rarely purchase a single potato or a banana, like more than two
watermelons at a time.

Time and Frequency of Purchase

Retailers need to keep their working time tuned with customer’s availability. The time of
purchase is influenced by −

 Weather
 Season
 Location of customer
The frequency of purchase mainly depends on the following factors −

 Type of commodity
 Degree of necessity involved
 Lifestyle of customers
 Festivals and customs
 Influence of the person accompanying the customer.

For example, Indian family man from intermediate income group would purchase a car not
more than two times in his lifetime whereas a same-class customer from US may buy it more
frequently. A tennis player would buy required stuff more frequently than a student learning
tennis at a school.

Method of Purchase

It is the way a customer purchases. It involves factors such as −

 Is the customer purchasing alone or is accompanied by someone?

 How does the customer pay: by cash or by credit?
 What is the mode of travel for the customer?
Response to Sales Promotion Methods

The more the customer visits a retail shop, the more (s)he is exposed to the sales promotion
methods. The use of sales promotional devices increases the number of shop visitors-turned-
impulsive buyers.

The promotional methods include −

 Displays − Consumer products are packaged and displayed with aesthetics while on
display. Shape, size, color, and decoration create appeal.
 Demonstrations − Consumers are influenced by giving away sample product or by
showing how to use the product and its benefits.
 Special pricing − Unit’s special price under some scheme or during festive season,
coupons, contests, prizes, etc.
 Sales talks − It is verbal or printed advertisement conducted by the salesperson in the
shop.

An urban customer, due to fast paced life would select easy-to-cook or ready-to-eat food over
raw food material as compared to rural counterpart who comes from laid-back lifestyle and
self-sufficiency in food items grown on farm.

It is found that the couples buy more items in a single transaction than a man or a woman
shopping alone. Customers devote time for analyzing alternative products or services.
Customers purchase required and perishable products quickly but when it comes to investing in
consumer durables, (s)he tries to gather more information about the product.

Factors Influencing Retail Consumer

Understanding consumer behavior is critical for a retail business in order to create and develop
effective marketing strategies and employ four Ps of marketing mix (Product, Price, Place, and
Promotion) to generate high revenue in the long run.

Here are some factors which directly influence consumer buying behavior −

Market Conditions/Recession

In a well-performing market, customers don’t mind spending on comfort and luxuries. In

contrast, during an economic crisis they tend to prioritize their requirements from basic needs
to luxuries, in that order and focus only on what is absolutely essential to survive.

Cultural Background

Every child (a would-be-customer) acquires a personality, thought process, and attitude while
growing up by learning, observing, and forming opinions, likes, and dislikes from its
surrounding. Buying behavior differs in people depending on the various cultures they are
brought up in and different demographics they come from.

Social Status

Social status is nothing but a position of the customer in the society. Generally, people form
groups while interacting with each other for the satisfaction of their social needs.

These groups have prominent effects on the buying behavior. When customers buy with family
members or friends, the chances are more that their choice is altered or biased under peer
pressure for the purpose of trying something new. Dominating people in the family can alter
the choice or decision making of a submissive customer.
Income Levels

Consumers with high income has high self-respect and expects everything best when it comes
to buying products or availing services. Consumers of this class don’t generally think twice on
cost if he is buying a good quality product.

On the other hand, low-income group consumers would prefer a low-cost substitute of the
same product. For example, a professional earning handsome pay package would not hesitate
to buy an iPhone6 but a taxi driver in India would buy a low-cost mobile.

Personal Elements

Here is how the personal elements change buying behavior −

Gender − Men and women differ in their perspective, objective, and habits while deciding what
to buy and actually buying it. Researchers at Wharton’s Jay H. Baker Retail Initiative and the
Verde Group, studied men and women on shopping and found that men buy, while women
shop. Women have an emotional attachment to shopping and for men it is a mission. Hence,
men shop fast and women stay in the shop for a longer time. Men make faster decisions,
women prefer to look for better deals even if they have decided on buying a particular product.

Wise retail managers set their marketing policies such that the four Ps are appealing to both
the genders.

 Age − People belonging to different ages or stages of life cycles make different purchase
decisions.
 Occupation − The occupational status changes the requirement of the products or
services. For example, a person working as a small-scale farmer may not require a high-
priced electronic gadget but an IT professional would need it.
 Lifestyle − Customers of different lifestyles choose different products within the same
culture.
 Nature − Customers with high personal awareness, confidence, adaptability, and
dominance are too choosy and take time while selecting a product but are quick in
making a buying decision.
Psychological Elements

Psychological factors are a major influence in customer’s buying behavior. Some of them are −

 Motivation − Customers often make purchase decisions by particular motives such as

natural force of hunger, thirst, need of safety, to name a few.
 Perception − Customers form different perceptions about various products or services
of the same category after using it. Hence perceptions of customer leads to biased
buying decisions.
  Learning − Customers learn about new products or services in the market from various
resources such as peers, advertisements, and Internet. Hence, learning largely affects
their buying decisions. For example, today’s IT-age customer finds out the difference
between two products’ specifications, costs, durability, expected life, looks, etc., and
then decides which one to buy.
 Beliefs and Attitudes − Beliefs and attitudes are important drivers of customer’s buying
decision.
Consumer’s Decision Making Process

A customer goes through a number of stages as shown in the following figure before actually
deciding to buy the product.

However, customers get to know about a product from each other. Smart retail managers
therefore insist on recording customers’ feedback upon using the product. They can use this
information while interacting with the manufacturer on how to upgrade the product.

 Identifying one’s need is the stimulating factor in buying decision. Here, the customer
recognizes his need of buying a product. As far as satisfying a basic need such as hunger,
thirst goes, the customer tends to decide quickly. But this step is important when the
customer is buying consumer durables.
  In the next step, the customer tries to find out as much information as he can about the
product.
 Further, the customer tries to seek the alternative products.
 Then, the customer selects the best product available as per choice and budget, and
decides to buy the same.

What is a Market Segmentation?

It is a process by which the customers are divided into identifiable groups based on their
product or service requirements. Market segmentation is very useful for the marketing force of
the retail organization to create a custom marketing mix for specific groups.

For example, Venus is in the business of retailing organic vegetables. She would prefer to invest
her money for advertising to reach out to working and health conscious people who have
monthly income of more than say, $10,000.

Market segmentation can also be conducted based on customer’s gender, age, religion,
nationality, culture, profession, and preferences.

Types of Retail Markets

There are two types of retails − Organized Retail and Unorganized Retail.

Organized Retail

Organized Retailing is a large retail chain of shops run with up-to-date technology, accounting
transparency, supply chain management, and distribution systems.

Unorganized Retail

Unorganized Retailing is nothing but a small retail business conducted by an owner or a

caretaker of the shop with no technological and accounting aids.

What is Retail Strategy?

It is a plan designed by a retail organization on how the business intends to offer its products
and services to the customers. There can be various strategies such as merchandise strategy,
own-brand strategy, promotion strategy, to name a few.

A retail strategy includes identification of the following −

 The retailer’s target market.

 Retail format the retailer works out to satisfy the target market’s needs.
  Sustainable competitive advantage.
Strategies for Effective Market Segmentation

For effective market segmentation, the following two strategies are used by the marketing
force of the organization −

Concentration (Niche) Strategy

Under this strategy, an organization focuses going after large share of only one or very few
segment(s). This strategy provides a differential advantage over competing organizations which
are not solely concentrating on one segment.

For example, Toyota employs this strategy by offering various models under hybrid vehicles
market.

Multi-segment Strategy

Under this strategy, an organization focuses its marketing efforts on two or more distinct
market segments.

For example, Johnson and Johnson offers healthcare products in the range of baby care, skin
care, nutritional, and vision care products segmented for the customers of all ages.

UNIT-3
Retail Store Location: Importance, Types, & Tips to have a Good
Location
Having a good location for retail is one of the crucial impacts in the case of
the marketing strategy of retail because many of the associated long-term decisions and
commitments depend on the location of the retail. Having a good location is one of c primary
element in attracting prospects and customers.

At times a good location can also lead to an excellent competitive advantage because in
retail marketing mix location is one of the crucial parameters and unique which cannot be
copied by competitors in any way.

Importance of a good retail store location

A good retail location as a competitive advantage which cannot be copied by the competition.
One location can occupy one retail store, and time also plays a crucial role along with the
location.
For example, the retail store of Gucci opens up in a particular neighborhood then, and for a
couple of months, that is the store which is going to be the only purchase point of all the Gucci
products for a neighborhood.

If Nike shows up in the same neighborhood after a couple of months, it won’t be possible for
Nike to occupy the same location as of Gucci. Nike store has to be located either very close,
which entirely depends on the availability of the location, or it has to be placed very far from
the Gucci store thereby targeting a different neighborhood and different customers.

Customer proximity is another concern for most of the retail businesses. Several stores can be
opened away from the city with a cheaper budget, but it won’t be possible for the retailers to
bring customers to that particular neighborhood.

Hence the retailers have to think the way customer would think and open a store which would
be convenient for the customers. Since geographically, peoples are spread out at every possible
location, retailers cannot open a store in every neighborhood and instead they have to think of
a Central location which would be accessible by most of the neighborhood within a particular
diameter of the circle.

The retail store should be close to the place of customers. The word to use here has no
quantification, and it cannot be quantified at the store should be located within 1 mile or ten
miles of the customer, and it is a dependent on the locality in the country and the probability of
the retailer.

Types of Retail Store location

The primary three types of retail locations that can be considered depending on the nature of
the business.
1) Solitary sites

These are single small outlets of shops which are separated from different writers, and they are
positioned near other retailers on the roads on the way to shopping centers. Many of the food
and non-food retailers use this type of solitary sites.

The primary advantage of having a solitary site is that it is away from the competition and
provides the services to the customers, which help the customer to zero down on
the product offered by that particular retailer.

However, the shortcomings of having a solitary site are the pedestrian traffic will always be so
as compared to a shopping center or a convenience store and the visibility will also business
along with the huge amount of investment since the site will be solitary.
2) Unplanned shopping areas

These are the locations of retail stores which have evolved over a long period of time and have
multiple outlets in nearby proximities. These are further divided into:

Central business district such as the downtown areas in major cities

Secondary business districts on main or high Street

District neighborhood

Location switch on the street or on the motorway which is also known as strip locations.

The advantages of having unplanned shopping areas are that there is very high pedestrian
traffic during working hours and also because of my residential areas. This ensures a constant
pull of customers.

The disadvantage of having unplanned shopping area is that there is a threat of shoplifting
because of which high security is required. Also, it may cause inconvenience to other
customers, and there are high chances of traffic blocking because of the unavailability of
parking facilities.

3) Planned shopping areas

The retail locations which are well planned according to the architecture and provide multiple
out that are under the same roof are called as planned shopping areas. They have huge land
spaces and the collection of major retail brands. Malls, Speciality, and Lifestyle centers are
classified under planned shopping areas.

High visibility to customers and harmful of customers is a major advantage of planned shopping
areas. But the disadvantages are that why security is required, and the cost of occupancy is also
high.

Tips to have a good retail location:

Choosing the right education is crucial in terms of business, as stated above. As such, there are
different rules which govern choosing of location for retail store depending on the nature of the
business and the target audience.
However, the following are a few of the steps which can be applied by almost all the retailers in
order to find the right retail location.

1.Market analysis:

The company has to analyze the market in terms of their product and industry
along with the nature of competition and the presence of competition. The
company also has to consider how old are there in the market and how many
some other businesses are there in the current location.

They have to check and analyze the market to know how far is the competition been successful
in satisfying the customers. The company also has to analyze how convenient is the location in
terms of supply chain management and warehousing in order to make the products available
on a daily basis.

2) Demographics of the market:

The demographics of locality is essential to be considered in order to choose the retail location.
The age group of the customer, profession, Lifestyle, profession, religion income groups, etc.

3) Market potential evaluation:

The paying capacity of the population plays an important role in the evaluation of the potential
of the market, along with the impact of the competition and the product estimation and
demand. The retailer should also have the knowledge of regulations and laws of the country in
which the store is being operated.

Other things such as communal festivals which have an impact on the demand should also be
considered by the business such as Christmas.

4)Identification of alternatives:

Most of the times it so happens that the retailers in hurry of starting the business finalize a
location which costs them a fortune within fact a similar location with similar business potential
would’ve been available somewhere very close which was neglected or overlooked.

In such cases, the retailer should not carry on finalizing the retail location and should also go
out for alternatives and evaluate that location with similar parameters as stated above.
5)Allocation of marketing budget:

A retail store should have a marketing budget depending on the cost of the location, which is in
the third to build the brick and mortar place. The store which is occupying a prime location and
has a good inflow of customers has indeed cost a fortune for the retailer.

In such cases, the marketing budget will be very less since the story is visible to most of the
customers and passers-by. On the contrary, a store which is located away from the main street
should use more marketing campaigns and spend on marketing collaterals in order to attract
more customers to the store.

FACTORS AFFECTING LOCATION DECISIONS

There are number of factors that influence location decisions. But there are only few factors
that play a deciding role in location decision making. For manufacturing industry, producing at
low cost is the most important factor. A location would be decided which mostly fulfills this
criteria. A service industry would try to be close to the market and intend to provide quality
service. So, all factors that fulfill this criterion would be included in making a decision about
selecting a location.

Location of Raw Materials:

Companies will be persuaded to locate their operation close to source of material for
following three reasons:

Necessity: Mining can only be done where minerals re present. Agriculture can only happen
in fertile and irrigated area. Hydro power can only be produce near source of water. In all such
cases mining, agriculture and hydro power industry would be located close to their source of
raw material because in such case raw material cannot be transported.

Perishability: Sugar mills are located close to sugarcane fields. Tyre manufacturing industry is
ideally located close to rubber producing areas. Industries involved in processing of perishable
goods such as fruits, vegetables, milk etc. should be located close to source of their raw
material.

Transportation: Firms which work on strategy of low cost producers tend to adopt
operations which would lower the cost of their final product. Fruit and vegetable vendors tend
to locate close to residential areas. Warehouses like ‘Best Price’ are located close to retailers as
they are suppliers of bulk material to retailers and not to final customer. Big manufacturing
plants which require variety of raw material in huge quantities tend to locate close to source of
that raw material which is required in maximum quantity. For example, steel industry requires
coal and iron ore. Another interesting example is of car industry. All car industry like Ford,
Maruti Suzuki etc. tend to locate their plants close to sea ports. One of the major reasons is that
with increasing competition and saturation n domestic market they are focusing on exports of
cars. Locating at sea ports would help them to reduce their transportation cost in terms of
accessing consumers and also in terms of importing raw material or semi-finished goods for
their produce in India.

Proximity to Markets:

Services are characterized by their production and consumption at the same time. Also most
of the services cannot be stored. Because of these attributes majority of the service providers
locate themselves close to their consumers. For instance, barber shop, car wash, service
stations etc. Thus, service industry’s location decision is primarily governed by ability to locate
close to consumer. This factor has a disadvantage to it. Cities where services tend to locate
themselves have higher utilities cost which ultimately increase operating cost of these services.
Thus, in case of services proximity to markets become predominant factor in location decision
making process.

Service companies tend to locate their operations close to final consumer for following
reasons:

Competition: Vehicle dealers, apparel stores are clustered with each other. It is observed
that most car dealers are located close to their competitors. Similar is the case with apparel
stores. The reason for this can be attributed to providing options to the consumer. A visitor
looking to buy apparel would like to visit a competitor store located close by in order to
increase his/her options.

Convenience: Retailers providing low cost products such as soaps, toothpaste etc., impulse
buying products such as candies, magazines etc. tend to locate close to markets to provide easy
accessibility to consumers. Traditional shopping markets tend to sale more variety of products
than a shopping mall because of their closeness to consumer.

Perishability: Retailers such as flower shops, dairy products, meat shops etc. selling products
which are perishable in nature locate close to consumer to reduce distribution costs.

In case of manufacturing firms only those companies with low cost and perishable products
such as

bakery, sweet shop etc. tend to locate themselves close to markets. Big manufacturing
industries such as car manufacturing, leather and textile are located away from consumer
because such industries require large space, dedicated freight area etc.

Labor Factors:

Two factors that are to be considered while deciding about labor factors are:
 Skill set of labor: Skill set of labor can be divided into three categories: namely, highly skilled,
semi-skilled and unskilled. Industries such as Information Technology, Aircraft Manufacturing,
R&D etc. require a highly skilled set of labor. That is the reason such industries are found in
major cities with abundant good quality education facilities. Semi-skilled labor with low to
medium scale wages is required in call centre industry. Thus, India became a hub of call centers
and majority of such industry was located in India. Industries such as construction, agriculture,
mining etc. which require labor in abundance but of low skill set are located in area where low
skilled labor is available at low wages.

Cost of Labor: is a huge factor in deciding location of a firm. China became manufacturing
hub because of availability of low and semi-skilled labor in abundance at very low wages. That is
the reason majority of industry from US shifted to China. But as the industry got matured and
labor shifted from semi-skilled to high skilled category their wage level increased. So, the
benefit of low cost service provider was nullified and now many manufacturing firms are
relocating themselves back to US. Similar case is happening with call centre industry of India.
With increasing wage levels companies have lost cost advantage so they are relocating their
operations to other South East Asian countries.

Thus, selection of a location with respect to labor depends on type of product/service being
produced by the firm.

Taxes:

Taxes are sometimes considered as additional burden or cost by many firms. So many
companies tend to locate their operations in the regions which offer tax benefits. Many states
such as Himachal Pradesh, Uttrakhand and North East states have benefited from such clause.
But sometimes tax benefit is only a minor consideration in location f operations. In recent
times, it has been seen that Vodafone in spite of being having difficulty with tax authorities
stayed put its operations in India because of India’s huge market size.

Community Considerations:

Companies generating local employment, taking care of environment and providing schools,
hospitals to local community are always being attracted by some communities in lieu of some
benefits such as tax breaks etc. Tata Nano plant in Singur, Kolkata, POSCO plant in Orrisa
encountered huge problems in establishing their plants because local community was not
convinced that these manufacturing plants would be of any help to them. These plants were
perceived as destroyers of local habitat, polluting natural resources and working against the
benefits of local community. So, community considerations especially in manufacturing plants
such as steel, power plants, nuclear plants etc. play sometimes deciding role in location
decisions.

Utilities:
 Availability of utilities such as water, electricity and transportation facilities play a major role
in deciding location of manufacturing facilities. In present modern and hyper-competitive
business environment availability of such facilities in abundance at reasonable prices are
sometimes predominant factors in location decision making process. This aspect is clearly
evident from highly industrialized regions of the country such as coastal areas of Tamil Nadu,
Gujarat and Maharashtra. Major car companies, mobile phone manufacturers and other big
industrial establishments select these areas for setting up their manufacturing plants. Also,
presence of facilities such as schools, hospitals, recreation services for employees of the
companies are considered in location decision making. Many of major global companies have
employees from other countries. Bigger cities with developed infrastructure become major
attractive destinations for such companies as these cities are equipped with provision of all
such utilities. Thus, service companies which are dictated by close to market factors enjoy these
facilities as they decide to locate themselves in cities.

Site Related Factors:

Costly land is a major deterrent in establishment of companies. Cities lack in provision of

ample land at reasonable prices. Service firms which because of their operations need to be
close to consumers are also now locating themselves at the outskirt of city because of very high
land prices. Educational institutions are a prime example of this aspect. In recent times it has
been observed that schools and colleges are located outside the city which provides them
abundant land at low prices. This results them to be located away from their consumer. This
bottleneck is removed by providing bus services to children thus increasing transportation
costs.
Steps in Location Planning
Successful location planning involves a systematic approach, typically consisting of the following
steps:
1. Define Objectives:
 Overview: Clearly articulate the objectives of the location planning process. Common
objectives include cost minimization, improving customer service, or market expansion.
2. Gather Data:
 Overview: Collect relevant data about the supply chain, including customer locations,
supplier locations, transportation costs, and market demand.
3. Identify Candidate Locations:
 Overview: Create a list of potential locations based on the defined objectives and
available data. Consider factors such as proximity to suppliers, target markets, and
transportation infrastructure.
4. Quantitative Analysis:
 Overview: Utilize quantitative methods and tools to evaluate candidate locations. These
may include cost models, network optimization software, or geographic information
systems (GIS).

5. Cost Analysis:
 Overview: Calculate the total costs associated with each candidate location,
including transportation costs, labor costs, facility construction costs, and
operational expenses.
6. Market Analysis:
 Overview: Assess the proximity of each location to target markets and
customers. Consider factors like market size, growth potential, and competitive
dynamics.
7. Risk Assessment:
 Overview: Evaluate potential risks associated with each location, such as
natural disasters, political stability, and regulatory constraints.
8. Qualitative Factors:
 Overview: Consider qualitative factors that may not be easily quantifiable,
such as workforce availability, community support, and environmental impact.
9. Weighted Scoring:
 Overview: Assign weights to the different factors based on their importance to
the objectives. Calculate a weighted score for each candidate location to
facilitate decision-making.
10. Select Optimal Location:
 Overview: Choose the location that best aligns with the defined objectives and
has the highest weighted score.
11. Implementation:
 Overview: Once the optimal location is selected, proceed with the
implementation phase, which may involve securing real estate, building
facilities, and establishing operational processes.
12. Continuous Monitoring:
 Overview: Regularly monitor and evaluate the performance of the selected
location to ensure it continues to meet supply chain objectives. Adjust as
needed based on changing circumstances.
The Factors Affecting Retail Merchandising

Retail merchandising is the process of planning, buying, and selling products that
retailers offer to their customers. Merchandising is important for managing any
store, from brick-and-mortar to online marketplaces. However, this process can be
challenging as it is a poorly understood aspect of retail. It requires careful
attention to detail as retailers can easily end up wasting products and losing profit
from poor execution. There are four critical factors retailers must consider that can
influence merchandising functions and processes.

The Scale of the Operation:

It is important to consider the size of the retail operation. The scale of the
business, whether it’s a small local shop or a global conglomerate, plays a vital role
in determining its merchandising strategy. In smaller retail operations, the owner
may handle this. However, as the business expands into various departments,
brands, and stores, managing inventory will become more complex. Which often
requires more people to be involved in the procurement process.

The store’s physical size also plays a critical role in the merchandising process.
Smaller stores may have a limited product range, while larger ones have more
space for product displays and offer a large variety of products to customers.
Understanding the size of the retail operation and team are essential in
determining the appropriate merchandising approach.

The Division of Responsibilities:

Effective merchandising requires a separation of duties which is common in mid-

size and large retail operations. This means delegating responsibility for buying,
planning, and selling. By separating these tasks, retailers can ensure a more
balanced approach to merchandising. Retailers must also consider how the
separation of these duties could affect their overall merchandising efforts.

However, for smaller retailers, it may not be feasible to allocate these tasks to
different individuals. In such cases, it is crucial to ensure that the person in charge
is fully aware of the responsibilities and limitations of each role to avoid potential
drawbacks. Merchants should regularly review and assess their division of
responsibilities to ensure that they are still effective for their business needs.

UNIT-4
What Does Retail Price Mean?

The retail price is the price that the customers pay for the final product that is sold. These
customers do not buy the product to sell it onwards. They buy the product to use it. There is a
difference between a retail price, manufacturer price, and distributor price. These are all
different prices in the supply chain between seller and seller. In a free market system, the final
retailer will have the option to set their price based on their demand and supply.
If a retailer decides on a price, the main goal will be to maximize his profit while having an
amount that consumers would be willing to pay for. A manufacturer can suggest a retail price
to align the price with its overall strategy in producing the product.

Retail Price Example

Harmony is three retail stores that sell jewelry to women and children. The store purchases
jewelry from different distributors that again buy their products from manufacturers. The
marketing manager is trying to calculate what he should sell the gold necklace for. The
distributor sells the product for $25 per necklace. The manufacturer sold the product to the
distributor for $15. The manufacturer has a suggested retail price of $30 per necklace.

The market manager decided to sell the necklace at $29 because they are new to the market
and would like to attract some customers. The customers were willing to buy the product
because it was lower than the suggested retail price, giving them a sense of trust in the fact
that the new company would like to offer them reasonable prices.

factors that influence the price of retail products

Retail prices are determined by a variety of factors, and understanding them can help both
retailers and consumers make informed decisions.

In this article, we will discuss five major factors that influence the price of retail products.
Which one is the most surprising to you?

1. Cost of production and sourcing

Ultimately, the cost of producing and/or sourcing a product is the primary factor that
determines its retail price. This includes the cost of raw materials, labor, shipping, packaging,
and any other expenses incurred during production or sourcing.

2. Supply and demand

The law of supply and demand dictates that the price of a product will increase when demand
exceeds supply.
When a product is in high demand and there is limited supply, retailers can charge higher prices
to maximize profits. Conversely, when a product is abundant but demand is low, retailers may
need to lower prices to attract buyers.

3. Competition
Level of competition is also important, and in a particular market, it can have a significant
impact on retail prices.

When there are many retailers selling the same or similar products, prices tend to be more
competitive. This is because retailers try to undercut each other to attract customers. However,
in markets with few or no competitors, retailers may be able to charge higher prices since the
product has exclusivity.

4. Brand recognition and prestige

The reputation of a brand can also influence the price of a product. Brands that are perceived
as high-end or prestigious – for instance, Rolex or Ralph Lauren – can command higher prices,
as consumers are willing to pay more for products associated with luxury and exclusivity.
On the other hand, lesser-known or more generic brands may need to price their products
lower to compete with more established counterparts.

5. Seasonal and economic factors

Retail prices can also be influenced by seasonal and economic factors. For example, during
holiday seasons, retailers may offer discounts or promotions to attract more shoppers. In times
of economic recession or uncertainty, on the other hand, retailers may need to lower prices to
entice consumers to make purchases.

In summary, the price of retail products is influenced by a range of factors, including production
costs, demand and supply, competition, brand recognition, and seasonal and economic
factors.

What is receipt management?

An essential component of general accounting, receipt management involves the secure

tracking, storage and handling of business receipts.

There are two facets of receipt management to be aware of:

 1. Expense receipts: Issued by suppliers when a business purchases goods or services.

These include things like utility bills as well as physical goods.

2. Customer receipts: Issued by businesses when a customer purchases goods or services.

Any good online receipt management system will have clear policies to store both types of

receipts, keeping them separated. While tracking the first type of expense receipt helps with

calculations of profit and loss, managing customer receipts helps a business track its daily

income.

What Is Store Management?

Overseeing the daily operations of a retail business entails many responsibilities, ranging from
training store employees to maintaining the brand's reputation.

By understanding the many aspects of store management and its best practices, retailers can
optimize their inventory and enhance customers' shopping experiences. With proper
management, retail organizations will be able to maintain efficient control over their business
and positively impact their overall productivity.

is the practice of operating and supervising all activities within a store. This includes working
closely with staff, creating shift schedules, communicating with suppliers, and dealing with
customer complaints.

Store managers have the responsibility of tracking and monitoring inventory levels to prevent
stocking too much or too little products. By maintaining the optimal amount of inventory,
retailers will be able to meet customers' demands while minimizing unnecessary expenses.

Additionally, they must reach retail sales goals to ensure that the store remains profitable.
Store managers also look after their employees' wellbeing and assign tasks to encourage staff to
meet their individual sales targets.

Inventory management:
It refers to the process of ordering, storing, using, and selling a company's
inventory. This includes the management of raw materials, components, and
finished products, as well as warehousing and processing of such items. There are
different types of inventory management, each with its pros and cons, depending on
a company’s needs.
  Inventory management is the entire process of managing inventories from
raw materials to finished products.
 Inventory management tries to efficiently streamline inventories to avoid
both gluts and shortages.
 Four major inventory management methods include just-in-time
management (JIT), materials requirement planning (MRP), economic order
quantity (EOQ) , and days sales of inventory (DSI).

The Benefits of Inventory Management

A company's inventory is one of its most valuable assets. In retail, manufacturing, food
services, and other inventory-intensive sectors, a company's inputs and finished products are
the core of its business. A shortage of inventory when and where it's needed can be extremely
detrimental.

At the same time, inventory can be thought of as a liability (if not in an accounting sense). A
large inventory carries the risk of spoilage, theft, damage, or shifts in demand. Inventory must
be insured, and if it is not sold in time it may have to be disposed of at clearance prices—or
simply destroyed.

For these reasons, inventory management is important for businesses of any size. Knowing
when to restock inventory, what amounts to purchase or produce, what price to pay—as well
as when to sell and at what price—can easily become complex decisions. Small businesses will
often keep track of stock manually and determine the reorder points and quantities using
spreadsheet (Excel) formulas. Larger businesses will use specialized enterprise resource
planning (ERP) software. The largest corporations use highly customized software as a service
(SaaS) applications.

Pricing strategies:
In today’s competitive retail market, it is more important than ever for retailers to have a clear and
well-defined pricing strategy.

A pricing strategy is a plan that a business uses to determine what to charge for its products and
services. However, it’s not as easy as just picking a number out of thin air. There are a number of
factors that must be considered, such as the cost of goods, the desired profit margin, customer
demand, and competitor prices.

Retailers use various different pricing strategies and tactics to attract customers and drive sales.
Some of the most common include MSRP, competitive-based pricing, cost-plus pricing,
penetration pricing, discount pricing, keystone pricing, and loss leaders, among others.
In this article, we will take a closer look at these pricing strategies, as well as some tips on
developing and implementing an effective retail pricing tactic to gain a competitive advantage and
keep your business profitable.

MSRP

MSRP, or Manufacturer’s Suggested Retail Price, is the price that a manufacturer recommends a
retail business charge for a product. MSRP is generally higher than the wholesale pricing that the
retailer pays for the product, as it includes the retailer’s markup.

This is the starting point for most retailers when pricing their products. It considers the production
cost, the desired profit margins, and any competition in the market.

Competitive-Based Pricing

Competitive-based pricing is when a retailer prices their products based on competitor

pricing. This pricing strategy can be used to either match with the same price or undercut
the prices of competitors. It is a common pricing method used by businesses in highly
competitive markets.

Cost-Plus Pricing

Cost-plus pricing refers to a situation when a seller determines the retail price of a product
by adding a markup to the cost of the product. The markup is usually a percentage of the
cost, but it can also be a flat fee. It is a simple pricing strategy to calculate, but it does not
take into account competition pricing or customer demand.

Discount Pricing

A discount pricing strategy involves temporary reductions in the retail price of a product
or service. They are typically used to increase sales or clear out inventory. Discounts can
take many different forms, such as a percentage off, buy one get one free, or free shipping.

Loss Leaders

A loss leader is a product that is sold at a loss in order to attract customers to a store or
website. The hope is that once customers get interested in the said product, they will
purchase other, more profitable items. The loss leader pricing strategy is typically used by
businesses that have a large selection of products.
Limit Pricing

Limit pricing is when a business sets a price that is low enough to discourage competitors
from entering the market, but high enough to cover the costs of production and still make a
profit. This pricing tactic is typically used by businesses with a large market share or those
in monopoly markets.

Penetration Pricing

A penetration pricing strategy involves setting a lower price for a product or service in
order to gain market share. This pricing strategy is typically used by businesses when they
first enter a market or launch a new product or service.

Skimming Pricing

Skimming pricing refers to setting a high price for a product or service in order to
maximize profits. This pricing strategy is typically used by businesses when they first enter
a market. Then, with time, a company lowers the prices to attract more price-sensitive
customers.

Value-Based Pricing

Value-based pricing is when a business determines the retail price of a product or service
based on the perceived value to the customer. This pricing strategy takes into account the
customer’s needs and wants, as well as the competition.

Target Pricing

Target pricing is about setting a price for a product or service based on the desired profit
margin. The company then works backward to determine the cost. This pricing strategy
takes into account the competition, customer demand, and the desired profit margin.

Psychological Pricing

Psychological pricing is when a business uses pricing tactics that exploit the psychological
biases of customers. This pricing strategy can take many different forms, such as odd-even
pricing, bundle pricing, and anchoring.
Bundle Pricing

Bundle pricing refers to selling two or more products or services together for a discounted
price. This pricing strategy is typically used to increase sales, clear out inventory, or attract
customers

Price Discrimination

Price discrimination is when a business charges different prices from different customers
for the same product or service. This pricing strategy is typically used by businesses that
have a monopoly in the market.

Dynamic Pricing

Dynamic pricing is a business changing the price of a product or service based on real-time
demand. This pricing strategy is typically used by businesses that sell products or services
with limited availability, such as concert tickets or hotel rooms.

Geographical Pricing

Geographical pricing is a practice in which businesses charge prices depending on the

customers’ locations. This pricing strategy is typically used by businesses that have a large
geographical reach, such as online retailers.

Premium Pricing

Premium pricing is when a business charges a high price for a product or service. This
pricing strategy is typically used for luxury goods or products with a high perceived value.

Keystone Pricing

Keystone pricing is about setting the retail price at double the wholesale price. So, if the
wholesale price of a product is $10, the retail price would be $20. This pricing strategy is
typically used by businesses that have a large market share or by businesses in monopoly
markets.

UNIT-5
Retail Space Management:
Have you ever wondered how retailers manage to organize thousands of
products in a small store so efficiently? That hundreds of customers can shop
at the same time without going crazy. Therefore, making the full use of retail
space with strategic space management techniques is crucial for retailers.

A store which is well-organized and spacious provides better sales because

people like to shop in places where they don’t have to struggle much to find
what they need.

A well-organized store also helps you to cut cost as you don’t have to keep
the main salespersons to assist your customers in looking for products they
want.

Retail space management is a process of using the space available in the

store effectively. The management of space is important as a retailer is
required to display a large number of products in limited space available in
store. Space management is not a difficult process to understand.

In simple words, you can say that space management is a process of utilizing
store space to attract more and more customers and providing them a
pleasing shopping experience because you cannot deny that only a happy
customer can bring more sales.

Importance of Retail space management:

1 Retail space management is important to increase sales

Planning available space in the store helps you to increase sales. Having an understanding of
the space available in the store helps you to decide the layout of your store and location of
different categories of products.

It is essential for a retailer to divide the right amount of space available on shelves to the
different categories of products.
2 Customers can easily find the products they need

Nowadays, customers don’t only come to your store to buy things they need, but they also
come to destress themselves. Just think how they will feel if they can’t find things they want to
buy easily.

There are chances that they would prefer to visit a nearby store with a better organization, or
they would order the things that they want to buy online.

Let us understand this with the help of an example. Imagine your customer enter your store
with a list of ingredients to make a cheesecake.

He would expect to locate all the products easily and in less time. By organization, your store
properly and by allotting proper space to each product and placing them at the right place on
the shelf will help your customer to find them easily and without getting frustrated.

3 It is helpful in controlling the rush in the peak hours

Choosing an effective layout for your store is important as it will not only help you keep your
store well organized but will also keep the rush moving during peak hours of a day.

You can take professional help in choosing the right layout for your store, or you can copy the
layout plan of a store which has similar dimensions to your store.

Just imagine how difficult it would be for you to handle your store if it is always overcrowded.
Proper space management will let you choose the most sold categories of products and
distributing them around the store so that you can avoid cluttering in one corner of the store.

Different Layout design for Retail space management

The different layout design is used for different types of stores. Let us learn
about them one by one.

#1 Free Layout

As the name suggests, the free layout does not follow a proper design or fashion and is usually
used when there are large space and fewer products to display.

For example, the free layout is a suitable design for luxury stores and fashion stores. Using this
layout, you are not guiding your customers to follow a particular fashion.
Instead, you are giving them liberty wander in your store. You don’t impose any rules on them.
The free layout is the best way to showcase your creativity. However, don’t forget to add
proper signs and window display wherever required so that your customers don’t feel lost.

The free layout encourages interaction between salespersons and customers. Salespersons help
customers to make a shopping decision and also offering them other products available in the
store to make more sale.

#2 Grid Layout

Grid layout is the most common type of layout used by retail stores. in a grid layout, products
are displayed in a very predictable manner. So that customers don’t have to make much efforts
to look for products. You will see this type of layout in stores such as pharmacy
stores, convenience stores, grocery stores, etc.

The main reason behind using grid layout is to display maximum product categories without
leaving any empty space in the store.

In grid stores, items which are bought by customers impulsively are placed near the cash
counter, and staple products such as milk and bread are placed at the end of the store to
encouraging more sale.

This type of layout is suitable for stores which sell more than 30 categories of products.

#3 Loop Layout

Loop layout is a closed layout where the customer starts at one end of the store and can exit
store after going through all the merchandise available in store. This type of loop is suitable for
stores which sell a few categories of products. For example, a loop layout is good for a wine
store.

So that customers can have a look at all the wines available in the store before making a final
purchasing decision, loop layout helps you understand the pattern of traffic in-store, and there
are fewer chances that customers can bump into each other.

This type of layout can also prove to be risky as customers who don’t have much time would
not prefer to shop from such stores and might mind avoiding coming to store in the future.
#4 Herringbone Layout

Herringbone layout is a substitute for Grid layout for the store has long and narrow retail space.
This type of layout is used most by small hardware stores, libraries, tuck shops, etc. the one
major drawback for using herringbone layout is the risk of theft.

As space is congested and provides chances for picking and hiding things. But this can be
avoided by installing Cameras.

What is a CRM?
CRM stands for "customer relationship management." While CRM can refer simply to the
process of managing relationships with customers, in most cases, people use the term CRM to
refer to a CRM software.

A CRM software system stores and manages data on all of a business's contacts—including their
customers, leads, and even referral partners—all in one place. CRMs make it easy to filter and
sort through your contacts and track things like site visitors, sales opportunities, marketing
campaigns, and more.

In short, customer relationship management software is a single platform that serves as a

customer database, communication tool, and analytics dashboard all in one.

What is a retail CRM?

A retail CRM solution is a customer relationship management system that's built specifically for
retail businesses to keep track of their customer segments and leads.

A CRM for retail will include data and features like:

 Customer profiles with contact details and product preferences for each of buyers
 Credit card and other payment information a buyer has provided
 Automated email reminders on when to to reach out to a key customer
 Omnichannel order history so sales associates can see when and where a shopper has
purchased an item from your store—whether at your brick-and-mortar store or online
 Social media integrations to easily promote product releases and sales
 Filters and tags so you can easily segment customers and leads
 Lead tracking to give insight on where a lead is at in the sales process.
Retail Marketing Mix: The 6 Ps
As noted earlier, the four Ps of marketing are product, pricing, place, and promotion. The retail
marketing mix adds two more: people and presentation.

Product: The product is the item purchased by a customer. An effective product must capably
solve a customer need or perform a desired function. A product may be combined with related
products and purchased in a set or bundle.

Price: The price of a product is set by the retailer and designates how much money the
consumer pays to receive it. Price can play a role in the popularity of a product, especially if
consumers perceive that a product’s price is low relative to the value it provides.

Placement: Placement refers to where the product is sold. For example, does a retailer sell a
product in its store, on its website or in both places? In addition, some products might be sold
in some stores (like supermarkets) but not other stores (like department stores).

Promotion: Promotion refers to the assorted marketing activities to generate interest in the
product and drive sales. Promotional tactics include advertising, public relations and special
sales (for example, discounts or special offers).

People: People refers to company representatives (for example, employees, contractors, or

partners) who interact with customers in a retail setting. These representatives might answer
questions about products or verify product details, such as availability and sale price. In some
retail settings (for example, the sale of large, flat-screen televisions), people can be directly
responsible for converting “just looking” visitors into purchasing customers.

Presentation: Presentation refers to the experiential design of a retail setting. Presentation

elements include furniture, signage, wallpaper and retail space layout. The Apple Store is
known for its sleek aesthetic and design—an all-glass front side, with long rows of tables
featuring apple products