1. Retail Marketing 1

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RETAIL MARKETING

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Introduction to Retail

Unit I

Introduction to Retail: what is Retail,

The functions of retail, retailing inIndia. The evolution of retail in India,retail Change in India

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Introduction:

The word retail has its origin in French word retaillier and

means to cut a pieceor to break bulk.

Retailing is the sale of goods and services to the

ultimate consumer for personal, family orhousehold use.

According to Kotler: Retailing includes

all the activities involved in selling goods

or services to the final consumers for

personal, non business use

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Retailing a set of business activities that

adds value to the products and services sold

to consumers for their personal or family use.

A retailer is a business that sells products

and/or services to consumers for personal orfamily use.

What is Retailing?


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Retailing may be understood as the final step in the distributionof merchandise for consumption by the end consumers.

Retailing is responsible for matching final consumer demandwith supplies of different marketers.

Retailing is high intensity competition industry, The reasons forits popularity lie in its ability to provide easier access to varietyof products, freedom of choice and many services toconsumers.

The Indian retail is dotted by traditionally market place calledbazaars or haatscomprises of numerous small and large shops,selling different or similar merchandise

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The nature of retail marketing

The key aspects of retail marketing is anattitude of mind.

In making retail marketing decisions, retailers

must consider the needs of the customers. Retail marketing decisions are driven by what

the shoppers need and want.


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Retail marketing is therefore a philosophy andis all about satisfying the customers

What the customers regard as value and what

they buy is decisive. What the customers buy determines the nature

of the retailers business.


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The essence of retail marketing is developing

merchandise and services that satisfy specific needs

of customers, and supplying them at prices that will

yield profits.

Retailers must take the customers needs into

consideration in retail operation.


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Retail marketing is stimulating, quick-paced, andinfluential.

It encompasses a wide range of activities including: Environmental analysis

Market research

Consumer analysis

Product planning etc.


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The concept of retail marketing

The retail marketing concept is the acceptance by theretailer that it is the customer and not demand that lie

at the core of the retail organisation.

The retail marketing concept is a philosophy, not a system

of retailing or retail structure. It is founded on the belief that profitable retailing and

satisfactory returns on investment can only be achieved byidentifying, anticipating and satisfying customer needs anddesires.

It is an attitude of mind that places the customer at the verycentre of retailing activities.


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How Retailers Add Value

Breaking Bulk

-Buy it in quantities customers want

Holding Inventory

-Buy it at a convenient place when you want it

Providing Assortment

-Buy other products at the same time

Offering Services

-See it before you buy, get credit, layaway


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Doll can be

bought on creditor put on layaway

Doll is featured onfloor display

Doll is offered in

convenientlocations inquantities of oneDoll is developed

in several styles

How Retailers Add Value

Doll is developed at

manufacturer

The value of the product and service increasesas the retailer performs functions.


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Manufacturers Perspective

The Four Ps of Marketing

Distribution

Retailers are part of thedistribution channel

Retailers are part of thedistribution channel

Product

Price

Promotion


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Distribution ChannelDistribution Channel

PPT 1-4


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Accounting Finance

MISOperations

Marketing

Human Resources

Retailers are a Business Like Manufacturers


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Decision Variables for Retailers

Customer Service

Store Designand Display MerchandiseAssortment

CommunicationMix

LocationPricing

RetailStrategy


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Nature of Retail Industry is Changing

Mom and Pop Store

To Todays Retailer


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Functions of a retaillier

From the customer point of view, the retailer serves him byproviding the goods that he needs in the required assortment, atthe required place and time.

From an economic standpoint, the role of a retailer is to providereal added value or utility to the customer. This comes fourdifferent perspectives

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1. Form: First is utility regarding the formof a product that isacceptable to the customer.

The retailer does not supply raw material, but rather offersfinished goods and services in a form that the customers

want.

The retailer performs the function of sorting the goods and

providing us with an assortment of product in variouscategories.

2. Time: He cerates Timeutility by keeping the store openwhen the consumers prefer to shop.

preferable shopping hours.

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5. Place: By being available at a convenient location, he createsplaceutility.

6. Ownership: Finally, when the product is sold, ownershiputility is created.

Apart from these functions retailer also performs like:

5. Arranging Assortment:manufacturers usually make oneor a variety of products and would like to sell their entireinventory to few buyers to reduce costs. Final consumers, incontrast prefer a large variety of goods and services to choosefrom and usually buy them in small units.

Retailers are able to balance the demands of both sides, bycollecting an assortment of goods from different sources,buying them in sufficiently large quantities and selling them toconsumers in small units

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5. Breaking Bulk: to reducetransportation costs, manufacturerand wholesalers typically ship large cartons of the products,

which are then tailored by the retailers into smaller quantities to

meet individual consumption needs

6. Holding stock: Retailers maintain an inventory that allowsfor instant availability of the product to the consumers. It helps

to keep prices stable and enables the manufacture to regulateproduction.

7. Promotional support: small manufacturers can use retailersto provide assistance with transport, storage, advertising, andpre- payment of merchandise.

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Major type of retail stores

There is no universally accepted method of classifying retailer.Various schemes have been proposed to categories retailersbased on

Number of outlets

Margin vs. turnover

Location

Size.

Because of overlap of classification criteria, some stores mayqualify as undertwo different categories.

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1. General merchandise retailer: general merchandiseretailer carry a variety of product lines, with considerabledepth. Some major types of these stores includesupermarkets and hypermarkets , discount stores and

department stores.

o Super market: A supermarket is a large self service retailstore that carries a wide variety of consumer products underone roof , such as complete line of food products , laundry

requirement, household maintenance items.

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o Discount store: these stores are self service, standardgeneral merchandise retailers regularly offering brand nameand private brand items at low price, earn lower margins andpush for high sales turnover. The characteristics of truediscount stores include

Selling products at discounted price Carry standard international , national, or store brand to

build image

Self service stores to minimize operational costs

Preferred store location are low rent areas.

Like best known discount store is Wal-Mart. In India almost allretail stores offer discounts.

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o Department store: a department store is larger retail storeorganized into several departments, offering a broad verity and

depth of product lines. The product mix may include foodproducts, appliances, clothing, furnishing and other householdgoods.

Like Pantaloons, shoppers stop,

department store only for kids is Kids Kemp.

Fashion related department stores in India are Ebony, Globus,pantaloons, lifestyles.

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2. Specialty Stores: specialty stores carry a narrow productmix with depth of assortment within the line.

The emphasis is on a limited number of complimentaryproducts and high level of customer service

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

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

3. Shopping Malls: shopping malls typically deal with severalbases and product categories and provide a large variety ofmerchandise service.

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

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4. Retail chains: a retail chain operates multiple retail outletsunder common ownership in different cities and towns.

To some extent the purchasing function and decision makingare coordinated or centralized.

Like Westside, Globus, Food world, McDonald's retail petrol

outlets. Etc.

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The Marketing Retail Equation

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Manufacturer

Retailer

Consumer

Manufacturer

Consumer

Manufacturer

Wholesaler

Retailer

Consumer

Feedba

ck


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Retailing in India.

Retail is the new buzzword in India.

The global Retail development Index has ranked India first,among the top 30 emerging markets in the world.

It is believed that India has the potential to deliver the fastestgrowth over the next 50 years.

While barter would be considered to be oldest form of retailtrade, since independence , retail in India has evolved tosupport the unique needs of country, given its size andcomplexity

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Second largest employer sector after Agriculture. Contributesabout 1011 % of the GDP

The estimated size of the organized retail industry in India isRs. 16,000 crores. This is 2 % of the total estimated retailtrade.

"The retail trade is estimated to grow at 13 per cent per annumfrom $322 billion in 2006-07 to $590 billion in 2011-12,"

India's first true shopping mallcomplete with food courts,recreation facilities and large car parking spacewasinaugurated as lately as in 1999 in Mumbai. (this mall is called"Crossroads").

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The Evolution of Retail in India

Retail in India has evolved to support the unique needs of ourcountry, given its size and complexityHaats, MandisandMelashavealways been a part of the Indian landscape. They still continue tobe present in most parts of the country and form an essential partof life and trade in Various areas.

The PDS (Public Distribution System) would easily as thesingle largest retail chain existing in the country. the evolution ofthe PDS of Grains in India has its origin in the rationingsystemintroduced by the British during world war II

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The system was started in 1939 in Bombay and subsequentlyextended to other cities and towns. the system was abolished

post war but however attaining independence India was forcedto reintroduce it in 1950.

There was rapid increase in the ration shops ( being

increasingly called the Fair Price Shop or FPSs)

The Canteen Stores Department and the Post Officesin India are also among the largest network of outlets in the

country reaching population across the country.

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The Khadi & Village industries (KVIC)was also set up postindependence. The cooperative movement was again championed by thegovernment.

India's Largest retail Chains:

1. PDS: 463,000

2. Post offices: 160,000

3. KVIC: 7,000

4. CSD Stores:3,400

(source business world marketing White book 2005)

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In the past decade, the Indian marketplace has transformeddramatically. However from the 1950,s to the 80,s, investmentin various industries was limited due to low purchasing powerin the hands of the consumer and the governments policies

favoring the small scale sector.

The first attempts at organized retailing were noticed in thetextiles sector. One of the pioneers in this field was Raymonds

which set up stores to retail fabric.

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Raymonds distribution network today comprises 20,000

retailers and over 256 exclusive showrooms in over 120 citiesof the country

Other textile manufacturing who set up their own retail chainswee Reliance- which set up Vimal showrooms and Garden SilkMills, which set up Garden Vareli showrooms.

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The Evolution of retail in India

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Traditional

Formats

Itinerant SalesmanHaatsMelas

Mandis etc.

Established

formats

Kirana shopsConvenience/

department storesPDS/

fair price shops

Pan/ Beedi shops

Emerging

Formats

Exclusive retail outletsHypermarketInternal retail

Malls / Specialty MallsMultiplexes

Fast food outlets

Service galleries


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Drivers of Retail change in India

major drivers :1. Changing Income Profiles: Steady economic growth fuelled

the increase in disposable income in India. The averagemiddle class family's disposable income rose by more than

20% between 1999-2003.2. Diminishing difference between Rural and urban India:Rural

India accounts for over 75% of India population and this initself offers a tremendous opportunity for generating volumedriven growth. Tax benefit. In year 2002-03 LIC sold 50% ofits policies in rural India. Same BSNL also sold its 50%

connection in small towns .

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3. Changes in Consumption patterns: Occupational changes andexpansion of media have caused a significant change in the

way the consumer lives and spends his money.

o The changes in income brought about changes in the

aspirations and the spending patterns of the consumers. thebuying basket of the consumer changed

4. The emergence of a young Earning India : Nearly 70% of theIndian population is below the age of 34. taking advantages ofemployment opportunity in the booming service sector these

young Indians are redefining service and consumption patterns

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Prominent sector in Indian retail

1. Clothing, textiles and fashion Accessories:

2. Food & food Services:

3. Consumer Durables:

4. Books & Music:Other emerging sectors

5. Jewellery retail

6. Footwear retail

7. Time Wear Retail8. Fuel Retail/ petro retail

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1. Retail Marketing 1

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