Retailing

In this chapter we will discuss:

 Types of retailers
 Global trends in retailing
 Trends in retailing in India
 What
What is
is Retailing?
Retailing?
 All the activities involved in selling goods
or services directly to final consumers for
their personal, non business use.
 Retailers - businesses whose sales come
primarily from retailing.
 Retailers can be classified as:
 Store retailers
 Non store retailers
 Some facts
 Retailing industry is estimated to
become $ 427 billion industry by 2011.
 There is a tremendous growth in the
post liberalization era
 What is Organized Retail ?
Any retail outlet chain (and not a one
shop outlet) which is professionally
managed, (even if it is family run) has
accounting transparency (with proper
usage of MIS and accounting
standards) and organized supply
chain management with centralized
quality control and sourcing can be
termed as an organized retailer in
India.
(Dept. of Company Affairs)
 Most of the giant corporate
companies are entering this field like
1. Tata – Westside 7. ITC – Lifestyle
2. Eureka Forbes 8. Shoppers stop
3. IOC 9. HPCL
4. BPCL 10. RPL
5. Sahara – Sahara 11. Globus chain
mall 12. RPG – Food
6. Pantaloons – Big world, Spencer’s,
bazaar, Food Giant, Music
bazaar, Gold world, Health &
bazaar Glow
 Some facts
 Increase in double income families
given boost to this sector
 As the available time for shopping
decreased, they are looking for an out
let which can provide all the products
in the same place
 Increased demand exists for instant
products and services
 Retail sector is still a protected
industry
Classification
Classification By
By Owner
Owner ship
ship
Store Type Example
Independent
Independentretailers
retailers
(80
(80––85%)
85%) All
Allconvenient
convenientstores
stores(kirana
(kiranashops)
shops)

Chain
Chain retailer
retailer Pantaloons,
Pantaloons,Spencer’s
Spencer’sShoppers
Shoppersstop
stop

Franchising
Franchising Mc
McDonald’s,
Donald’s,Domino’s,
Domino’s,Petroleum
Petroleumbusiness
business

Leased
Leaseddepartment
department Big
Bigshoppy
shoppyat
atBig
Bigbazaar,
bazaar,Music
Musicworld
worldat
atCross
Cross
word
word

Vertical
Verticalmarketing
marketing Manufacturing,
Manufacturing,wholesaling
wholesaling&&Retailing
Retailingwill
willbe
be
units
units done by the same company E.g.: Reliance Petroleum
done by the same company E.g.: Reliance Petroleum

Consumer
Consumer Amul,
Amul,Mother
Motherdiary,
diary,Anand
AnandBazaar,
Bazaar,Supply
SupplyCo.
Co.
Cooperatives
Cooperatives Kerala
Kerala
Classification
Classification By
By Product
Product Line
Line
Store Type Length and Breadth of Product
Assortment
Specialty Narrow
NarrowProduct
ProductLine,
Line,Deep
DeepAssortment
Assortmente.g.
e.g.Food
SpecialtyStores
Stores Food
world, Music world, Health and Glow
world, Music world, Health and Glow

Large
Largeretail
retailspace,
space,Wide
WideVariety
Varietyof
ofProduct
ProductLines
Linese.g.
e.g.
Department
DepartmentStores
Stores West side, shoppers stop, lifestyle, pantaloons,
West side, shoppers stop, lifestyle, pantaloons,
Spencer's
Spencer's

Supermarkets Self
Supermarkets Selfservice,
service,Wide
WideVariety
Varietyof
ofFood,
Food,Laundry,
Laundry,&&Household
Household
Products
Products e.g. food world, Trinetra, Ponnu, Modern,Nilgiris
e.g. food world, Trinetra, Ponnu, Modern, Nilgiris

Discount Less
Lessthan
thanretail
retailprice,
price,profits
profitsthrough
throughvolumes
volumese.g.
Discountstores
stores Subhiksha,
e.g.
Subhiksha,Margin
Marginfree,
free,Supply
Supplyco.,
co.,Pantaloons,
Pantaloons,Big
Big
bazaar,
bazaar,Gaint
Gainthyper
hypermarket
market

Hypermarkets Huge
Hypermarkets HugeSuperstores,
Superstores,wide
widevariety
varietyof
ofproduct
productrange
rangee.g.
e.g.Giant
Giant
Hyper
Hyper market, Number one shoppers city, Sahara malletc.
market, Number one shoppers city, Sahara mall etc.
 Retailing on the service and
goods Retail strategy mix
 In goods retailing physical products are
sold
 In services retailing access to service
is provided
 E.g. Shehnaz beauty parlor, Anoos etc
 Combination of both also exists
 E.g. video parlor which rents and sells
CD’s
 Owned
Owned goods
goods service
service Non
Non goods
goods service
service
e.g.
e.g. repairs
repairs and
and maintenance
maintenance e.g.
e.g. consultancy,
consultancy, personal
personal care,
care
of
of Pc’s
Pc’sAutomobiles
Automobiles && durables
durables Trainers,
Trainers, stock
stock brokers
brokers etc.
etc.
retailing
service
Types of
Rented
Rented goods
goods service
service
E.g.
E.g. Car
Car rental
rental agencies,
agencies,
Camera’s
Camera’s at at tourist
tourist place
place
of service
Classification of
Classification retailing
service retailing
 Factors to be
considered
1. Buyers are called as clients
2. Services cannot be stored
3. Mass production is not possible
4. Experience of service differs each time
Home
Home &
& Office
Office Parties
Parties
Online
Online Shopping
Shopping
TV
TV Shopping
Shopping Shows
Shows
Catalogs
Catalogs &
& Direct
Direct Mail
Mail
Automatic
Automatic Vending
Vending
Direct
Direct Selling
Selling
Direct
Direct Marketing
Marketing
of Non
Types of
Types Retailing
Store Retailing
Non Store
 Direct selling
 Selling the products directly to the
customers by meeting them personally
 Products like vacuum cleaners, milk,
new papers, magazines are sold
e.g. Eureka Forbes, Amway, Modicare ,
Tupper ware, Avon, Electrolux, Network
marketing
 Direct Marketing
 Exposing the consumer to the product
or service and soliciting a response
from him
E.g. Mailers, Telephone calls, cable,
satellite TV, Radio etc. , TSN,
Catalogue marketing, home shopping
net work, Amazon. COM
 Automatic vending
 Vending machines are used to
dispense products to consumers
 E.g. Milk Vending Machines, Telephone
booths, Ice cream Vending Machines,
Soft drink Vending Machines, Coffee
Vending Machines etc.
 Franchising
 It is a contractual and legally binding
agreement between a franchiser and a
franchisee
 The franchiser owns a trade or service
mark and licenses it to franchisees in
return for royalty payments
 Franchising
 Scott Shane from MIT’s Sloan school of
management in Cambridge studied the permanence
of 150 companies for 10 years and in 53 aspects,
and revealed that the companies which took right
decisions at right time are only successful
 Companies need to have good brand value before
entering into franchising
 Prior experience and local knowledge should be
considered while selecting a franchisee
 Long term contract gives much success as the
franchiser wins the confidence from franchisee.
Major types of franchising
Product distribution
franchisee

Business format
franchise

Trade name
franchisee
Product distribution franchisee
Business format franchisee
Trade name franchisee
controlling
controllingthe
theQuality
Quality
Motivation
Motivationof
ofthe
thefranchisee
franchisee
Extended
Extendedmarket
marketpenetration
penetration
Speedier
Speedierexpansion
expansion
Low
Lowcapital
capitaland
andlow
lowrisk
risk
Advantages - Franchiser
 Lower
Lowerprofit
profitpotential
potential
Expenses
Expensesinvolved
involved
Business
Businesscontrol
control
Disadvantages - Franchiser
Resale
Resaleof
ofthe
thebusiness
business
Entrepreneurial
Entrepreneurialbenefits
benefits
Easy
Easyfinancing
financingof
ofthe
thebusiness
business
Operational
Operationaladvantages
advantages
Reduced
Reducedbusiness
businessrisk
risk
Advantages - Franchisee
 Non
Nonperformance
performanceof
ofthe
thefranchiser
franchiser
Free
Freepayment
payment
Limited
Limitedfreedom
freedom
Disadvantages - Franchisee
 Wide
Wide&&deep
deepproduct
productassortment
assortment
e.g.
e.g.Big
Bigbazaar,
bazaar,giant, numberone
giant,number oneshoppers
shopperscity
city
Wide
Wide&&shallow
shallowproduct
productassortment
assortment
e.g.
e.g.InIn&Out
&Outstores
storesof
ofBPCL,
BPCL, medium
mediumsize
sizeretail
retailoutlets
outlets
Narrow
Narrow&&shallow
shallowproduct
productassortment
assortment
e.g.
e.g.small
smallretail
retailoutlets
outlets
Narrow
Narrow &&Deep
Deep product
productassortment
assortment
e.g.
e.g.Odyssey,
Odyssey,Food
Foodworld,
world,Mc.
Mc.Donald’s
Donald’s
Narrow to Shallow
It can vary from a Wide and Deep to 
procurement
Product assortment and
 Product assortment and
procurement
 Next decision is of quantity to store,
display duration. It should be decided
after a detailed analysis only
 Next step is to decide the frequency of
inventory replenishment
 Allocation of enough store space
Global Trends in Retailing
 Retail industry has undergone
significant global changes over the
past two decades
 Retailing evolved from a small local
merchandising to e-tailing
 It always focused on offering best
quality products to customers
 Global Trends in Retailing
 Retailerwant to offer the customers the
right product, at right time, at right
place and at the right price.
 Retailers tries to fulfill this mission by
making continuous changes with the
invent of disruptive technologies.
 Global Trends in Retailing
 Amazon. co. and Auction site e-bay brought
significant changes in the e-tailing industry
 Online retailers are rapidly changing and are
offering wide variety of products to
customers.
E.g.: Amazon. COM which offers a wide variety
of products in association with other e-tailers
 Disruptive technologies may alter the
economy of an industry but they cannot
change the profitability patterns of retailers
 Global Trends in Retailing
 Success of retailing can be attributed to
the profits it produced and inventory
turnover ratio.
 Retailing is likely to expand through e-
commerce where people start shopping
on-line
 Global Trends in Retailing
 Retailers offering branded products are
most likely to succeed.
 Comparison of products can be
through audio and video clips
 Still it is difficulty for a product which
the customers wants to touch and feel.
 Home
Rank Retailer Sales
Country
1 Wal-Mart Stores, Inc. USA $202,011
2 Carrefour Group France $62,216
3 The Home Depot, Inc. USA $53,553
4 The Kroger Co. USA $50,098
5 Royal Ahold Netherlands $48,239
6 Metro AG Germany $43,816
7 Target Corporation USA $39,176
8 Albertson's, Inc. USA $37,931
Sears, Roebuck and
9 USA $37,328
Co.
10 Kmart Corporation USA $36,151

  Total Top 10
  $612,520
Trends in Retailing in India
 Retail industry is un organized till
eighties
 Corporate are increasingly coming
into this sector
 Several factors are contributing for
the growth of this sector.
 GDP figuring above 8% and a hope to
raise up to 10%
 Second highest populated country
Fourth largest economy, increased
urbanization
 Trends in Retailing in India
 Demand for new and varied products
 Demand for branded goods on a large
scale
 Retailing is the second largest
employer in India.
 Customer is ready to a pay a higher
price if he gets a high quality service
with increased efficiency, convenience
and a wide range of products.
Trends in Retailing in India
 India is one country which has highest
no. of outlets capita with a total of 12
lakhs outlets
 14,000 crore of GDP is contributed by
this sector
 Major segments in retailing are
consumers durables, furniture,
healthcare, garments, food & services,
personal care products, apparels,
music and books
Trends in Retailing in India
 With the increase in competition there
is an increase in search for better
techniques
 One strategy found is better store lay
outs
 Stores are designed to reflect the
culture of the area.
E.g.: Raymond's in Margoa represents
Portuguese culture.
Trends in Retailing in India
 Application of IT in retail sector is increasing
day by day. IT improved the effectiveness in
operating stores, merchandise mgt,
inventory mgt, sales forecasting etc.,
 Television shopping & online shopping are
also on air.
 Product demonstration will be given along
with its features and benefits and carries toll
free number
E.g. Tele shopping business in India.
Trends in Retailing in India
 Even though un organized sector does not
provide advanced & technological facilities
to the customers, thrives to offer customized
solutions to shoppers.
 They are also stocking wide variety & coming
with state of the art display
 Retailers of organized sector are setting
stores on a large scale, which allows to
bargain with suppliers to get lower cost and
supply chain efficiency.
Trends in Retailing in India
 Highly trained staff is the other feature which
increases the productivity
 Organized retailing counts for 1.2% currently,
which may grow up to 1.9% by the end of the
year.
 Investment is expected to reach 35,000
crores.
 Some of the entrants are Tata’s , Raheja’s
piramals, RPG group etc.
 Organized food retailing is also making rapid
progress
E.g.: Mc Donald’s, food world etc.
 Govt. opposes the FDI’S in retailing as most
of the Indians are against to it.
 Who are in warfare?
 Reliance – Rs. 25,000 crore
 the AV Birla Group – Rs. 15,000
crore
 the Tatas – Rs. 400 crore
 the Bhartis – Rs. 6,000 crore
 the Mahindras – Rs. 400 crore
 the ITC Group – Rs. 800 crore
 the Godrejs
 Wadias
 Direct and Online
Marketing
 E-mails through Internet
 Catalogues from various
organizations
 Telephone calls

???Find the similarities in the

above cases???
Advantages and disadvantages of
on line marketing
 Rapid penetration of online marketing
in recent times
 Increased usage of online services
 Greater importance is being given to
ecommerce and associated services by
governments
 The following advantages of online
marketing are increasing its popularity
 Advantages and disadvantages of
on line marketing - Advantages
1. It reaches a larger customer base
2. Potential customers around the world
can be reached
3. Convenience in shopping is given to
customers (i.e. they can shop from any
where either work place or home
4. Firms can give video clips and statistics
so that the customer can compare the
products and services easily
Advantages and disadvantages of on
line marketing - Advantages
5. There is a direct interaction and closer
relationship between the marketer and the
customers
6. Maintaining an online store does not have
traditional costs associated with
maintenance of a conventional store. (i.e.
real estate, shelf space, interiors, insurance
premiums are almost absent)
7. Marketer can count the exact no. of
customers visiting the site.
 Advantages and disadvantages of on
line marketing - disadvantages
1. People are still not accustomed to shopping
online
2. Difficulty faced by grocers, marketers of
apparels, flowers and carpets
3. Customers will take some more time to get
used to shopping online
4. Credit cards is the other area of difficulty,
where the Indian customer is still reluctant to
give the credit card number and it hampers
online business in country
 How to design online
advertising
1. Target customer should understand it
easily
2. E – mails and news letters can be
targeted to the relevant customer group
3. Besides advertising, collaboration with
other sites will attract the potential
customers
E.g. the author of a book advertises in his
own site and Amazon. COM as well
 Online advertising
 Forums
 News groups
 Bulletin boards
 Web committees
 E-mails
 Web-casting
Retailing-Two Career Paths