INTRODUCTION TO RETAILING

Introduction

Where do you buy your requirements of grocery, garments,watches etc. and your requirements for services such as haircut, tailoring, dry-cleaning etc? You fulfill these requirements either by going to super market, kirana shop for grocery, an apparel shop or a garment store for garments, a showroom for watches, or a saloon for haircut etc. What are these shops or supermarkets doing? They are providing you either product or services. They are all engaged in retailing.

For people living in metros, large or small cities. Retailing is a familiar phenomenon. Because, there are number of markets, different types of shops and many competitng among themselves for selling similar goods. Even a vegetable market is a retail market. Retail business is more unorganized in rural areas and isolated habitats because the few shops available there may be selling most of requirements of the local people, but still they are doing retailing.

Historically, retailing has been continuing with the development of civilized society. There are different kinds of shops in the market. They range from a hardware store to a sweet shop. They have no relations in the terms of sharing gains from each others business. Retailing Is now taking shape of an organized business where a supermarket is big as a market of a small city and it comprises of different kinds of products providers. Therefore study of retailing requires a systematic study of different areas of selling involved in it.Retailing includes all the activities involved in selling goods and services directly to the final consumer for personal or non-business use. Retailing is the sale of goods and services to the ultimate consumer for personal, family or household use. Thus, retailing involves more than selling tangible products, it includes every sale of goods and services to the final co

The term final consumer is a key issue in the concept of retailing. The person who run the retail business will not be final or end customers. The person whom the retailers sell are the final players in buying the goods or s. EXAMPLE:- Maruti udyog for automobile parts produced be an outsoursed manufacturer, pharmaceuitical firm buying chemicals from another firm, a pan vendor getting beetle leaves from a wholesaler. Retailing is the final leg in the distribution channel ofgoodsand s.Retailing involves: Identifying target markets Interpreting needs of targeted customers Developing good assortment of merchandise Presenting them in an effective manner so that consumer find it easy and attractive to buy. Retailing differs from marketing in the sense that it refers to only those activities, which are related to marketing goods and services to final consumers for personal, family or household use. Wheras marketing, according to American markeing association refers to process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives.Thus, any organisation selling a product or services to final consumer whether a manufacturer, wholesaler, or a retailer is doing retailing. It does not matter how the goods and service to create exchanges that satisfy individual and organizational objectives. Example: WAL-MART (The biggest retailer in the world).

Place of Retailing In A Distribution Channel

When you buy a product, you rarely buy it directly from the manufacturer. Most producers of goods and services do sell their product directly to end or final users. Between you and the manufacturer are number of intermediaries. These intermediaries constitute a distribution channel or marketing channel.A retailer is the final distribution channel. It is the interface between customer and the rest of the channel. Thus, retailer is a business that sells products and services to customer for their personal, family or non-business.

Importance of Retailing In The Economy Retailing accounts for about 15-20% of the origanized workforce in any developed economy. It is the second largest employer in India after agriculture. There are about 6 million retail establishment in India. Of which, 4.1 million (70%) sell food products, and related items. And interesting research In this area has shown that grocery stores (56% of all retail outlets) and general stores (13%) dominate rural India. There are 1.8 million retail outlets in urban India . of which more than 50% earn between Rs 7,50,000 Rs 25,00,000 daily. There are about 21% outlets in urban area engaged in service retailing. Though no official data is available, the given above figures indicate that this sector mat be employing about 15-20% of the organized, which is in line with global averages.Retailing accounts for an impressive part of gross domestic product(GDP). The year 1997-1999 has been slow down in economic growth with GDP growth rate pegged at 4 to 5%. Total retail sales in India reached Rs5793 billion in 1996 representing around 53% of the GDP and 69% of consumer expenditure. Retail sales per capita was Rs 6297 in 1996. Re is also important, as it is an important tax collection point for the government.

Functions Of RetailersRetailing have multiple functions. At one end they create market for consumption of the goods and services and on the other hand generate employment for million people. These all functions are performed or adopted by the retailers itself. Understanding customer need and wants Providing an assortment of product or services to co Breaking bulk Providing services to consumer Providing information to suppliers

Retailers And Retail Formats

Introduction

This concept of organized retail marketing has caught on like lightning. It creates a distribution network that cuts out various immediatary costs and creates a much smoother interface between manufacturer and consumer has seen many of the worlds leading entrepreneurs successfully walk down a particularly profitable road.

Retailing has now become a key growth area. There has been an attitude change in the way the Indian consumer thinks about shopping. What, where and how they buy is now the big question. Over the last decade, there has been a significant evaluation in his psyche, a change that has been carefully recorded and documented by behavioral pundits.

Retailing in India like abroad in diverse form such as street vendors to large group like ABRL,Bharti,Cinemax,Inox,PVR ,Adlabs are few names in long list and different formats. Each type of retailing survives and makes profit by satisfying their target group of customer in most convenient and efficient manner.

Classification Of RetailersThe three basic legal forms of ownership are sole proprietorship, partnership and limited liability company. 1) LEGAL FORM

1) OPERATIONAL STRUCTUREThere are three operational structures: The independent trader(usually operating only one retail outlet, the multiple or chain store; and the co-operatives.

2) RANGE OF MERCHANDISESome retail business offers a wide range of goods. Examples of these include variety stores like Marks and Spencer or department stores like Harrods. Others concentrate on narrow ranges like health foods; leather goods; greeting cards and these are called speciality stores or niche retailers.

3) DEGREE OF SERVICE Although many retail outlets have been converted or built to self- service or self-selection standards there are other which offer their consumer sevices such as delivery, credit, gift wrapping, repairs etc. many former self-service retailers are now looking at ways of gaining competitive advantage by adding new customer services.

4) PRICING POLICY

Some retailers choose to emphasize low price rather than the service element of their retailing mix. Others choose to price above the competition knowing that they will generate business on the basis of some other attribute such as convenient location o exclusive image.

5) LOCATIONAnother way to classify retailers is according to geographic location. With the increasing cost of town centre sites and traffic congestion, many retailers have sought edge-of-town locations, while others have preferred to stay in cluster locations in own centres as shown here. Stand alone stores, shopping centres or complex, destinantion stores and convenience stores are based on location.

6) SIZE OF OUTLETThe average size of many multiples branches has increased quiet markedly over the past few years as more and more firms become large and medium-space users. The term superstore has been used to define outlets between 25,000 and 50,000 sq. ft and hypermarkets are those stores over 50,000 sq. ft many outlets are now being built in the 50,000-1,00,000 sq. ft range.

7) BASED ON CUSTOMER CONTACTMost retail transactions are conducted by face-to-face contact in retail stores. Significant proportion of retail sales is generated by non-store retailing operations such as mail order catalogues, telephone selling, vending, door-to-door selling or mobile shops. They are all important in specific marketing situations.

TYPES OF RETAILERS BASED ON MERCHANDISE AND PRICING

Departmental storesA departmental store is defined as a large store selling A broad variety and deep assortment Offer considerable customer services and organized into physically separate departmentsA departmental store is organized into departments selling clothing and accessories, home furnishing and furniture, toys and games, consumer durables, and kitchenware.

Some characteristics of departmental store are : Located in central ,market area or a major shopping centre, locations supported by potentially large catcments. Availability of parking space. Freedom for the customer to move around and view Relatively high margins large enough to cover heavy staffing, the range of services offered and high accommodation costs. Availability of personal assistance in shopping, added customer services and amenities.

Speciality stores

A discount store is a general merchandise retailer that offers broad variety of merchandise, shallow assortment, limited service and low price. Discount stores offer lower price due to limited service and low cost locations. Discount stores tend to have characteristics such as:-

Very low price Low margins High degree of self-service Low cost fittings No free s, such as delivery.The examples of discount store chains are wal- mart and k-mart.

SUPERMARKETS, SUPER STORES AND HYPERMARKETS

A supermarket is a self-service food store offering groceries along with other merchandise for household maintenance and laundry etc.A superstore has space for offering known traditional goods and services like a pharmacy, a flower shop, a book store etc under one roofA shopping mall is an arrangement of retail stores and other places for leisure time activities such as dining, entertainment etc.A shopping centre or a plaza is a configuration of five or more tenant spaces of approximately, 1,000 sq. ft each used for retailing developed under one building plan in such a way to have a unified character.

Characteristics of above type of retail formats are:

Substantial surface car parking spaces under the control of the superstore retailer and serving the superstore largely or exclusively.

A range of 25,000-30,000 individual items, covering most foods and many non-foods .

A broadly similar pricing, service and general marketing strategy to the discount store.

The comprehensive in-store use of information technology such as electronic point-of-sale equipment, and advanced food preparation equipment, e.g. for in-store bakeries.

TYPES OF RETAILERS BASED ON OPERATIONAL STRUCTUREThese type of retailers include independent traders, multiple chain stores, cooperative societies, concessionaires and franchising. They are different from the merchandise- based stores because they have independent supply mechanisms and hence price variations are high.

Independent Traders

A single individual or sole trader owns the majority of shops in India. The usual number of branches controlled by the sole trader is one or at the most two. A family mostly owns this type of retail format with high dependence on the owner. Kirana shops, drug stores, STD/PCO outlets etc are very good example of such retailers.

Advantages of the independent traders

The main advantages of independent traders are: As the owner has direct contact with the customer and therefore can quickly respond to their needs.

Independent traders can be flexible owing to their small size.

Price competition from retail multiples who can reduce their costs through bulk buying and other economies of scale. They are not bound by any bureaucratic rules that may restrict retail chain(s) or cooperativw society managed stores. So, they can freely locate their store wherever they want and the type of merchandise they sell.

Lack of specialist expertise in retail functions, e.g. buying, in store merchandising, accounting, or possiboly lack of time to carry them out adequately. Single store retailers have to rely on owner-managers capabilities to make broad range of retail decisions.

The cost of advertisement and promotion is very high for a single store.

Lack of capital to expand and improve the business . especially in case of networkingand use of IT for development of bu, the expenditures are too high for a single store.

Interia- the small trader may not wish to expand because of the extra problems expansion brings.

Due to high accommodation costs the independent often lacks the advantages of being in a large shopping centre with heavy pedestrian traffic generation.

Changing shopping habits brought about by increased car usage has concentrated purchases in large well located one stop store in cities.

MULTIPLE OR RETAIL CHAIN STORESThe large multiple retail organization is invariably of the joint-stock company type and therefore in common ownership with degree of centralized control. A large multiple is defined as an organization. With ten or branches. This form is strongest in departmental stores, speciality stores, variety sstores, food stores, drug stores etc. Their size allows them to buy in lrge quantities at lower prices.In India many manufacturers own retail chains, which then sell their products only. Examples of this kind are videocon plazas, BPL gallery, Raymond , Titan watches etc.

Co-operative Societies

The Co-operative Movement began in rochdale in 1844. A co-operative society is defined as a co-opearive retailing organization trading on co-operative principles, affiliated on the national co-operative movement and registered under the co-operative Societies Acts.The priciples of the movement applicable to retailing are:

Voluntary and open membership

Democratic control; one member,one vote.

Payment of limited interest on capital.

Concessionaire

The stopover store format is one that rides piggyback on another retail outlet, say a petrol pump. This stopover format is a concession that offers instant use or ready to eat categories of merchandise.A kiosk is one such concessionaire format placed ina small or shopping centre or a bus station, airport etc. a kiosk is a small freestanding open pavilion often open on one or more sides used for information , sales and promotion.

Franchising

Franchising is the granting of sole selling rights within a given geographical area. The franchising company(the franchiser) supplies equipment and/or raw materials for a licensee who either pays a franchise fee or a percentage of turnover, or contracts to buy supplies from the franchiser. The licensee is also helped in finding a location and is trained in all aspects of the business.

Generally, franchises are distinguished by three characteristics : The franchiser owns a trade or service and liceses it to franchisees in return for royalty payments.

The franchisee pays for part of the system. This is normally in two parts, one as initial fee, which is only a small part of total amount. Second, service fee on turnover on monthly or quarterly basis.

The franchiser provides its franchisee with marketing and operations system for doing business.

Benefits to franchiser are : Covering new territory

Hard work of persons who are entrepreneurs rather than employees

The franchisees familiarity with local community and conditions

Benefits to franchisee are : Buying into a proven business with a well known and accepted brand name.

Receiving support in areas of marking, advertising, site selection, and

Borrowing money from banks becomes easier

The most common problems in franchising business are: Franchiser encroaching on franchisees territory by bringing in another franchisee in the same locality,

Exaggerated claim of support by franchiser, and

High failure rate.

NON-STORE RETAILING

Mail order Mail order retailing using the mail to get order and/or facilitate delivery takes several forms as follows :

Mail order catalogueThese are mainly of two types the general merchandise catalogue, and the specialist catalogue. Much of the selling is done through a network of part-time agents who are paid a commission on the things they sell.

Automatic vendingSelling out of machines has been part of retail scene for many years (particularly for making a local telephone call) and there has been somethingof recent boom in auto-vending, notably in closed, relatively vandal-proof areas such as sports centres and airports.

Direct MailThis is the use of advertising literature sent directly to the potential customer for the purpose of selling goods and services .

Direct selling

Direct selling mean direct selling of the product by the salesman to the customer takes several forms as follows :

Door-to-Door- sellingSelling by salesperson is being done to launch new products. A variety of foodstuffs are also regularly delivered to the doorstep e.g. milk, bread, vegetables.

Mobile shops

These are traveling shops and are distinct from vehicles from which milk, bread, newspapers etc. are delivered. Vegetables, plastic toys and other small goods of household use are sold by hand driven carts.Markets (Haats)

Haats or rural markets remain the traditional way of retailing in rural and semi-urban India. In these markets, sellers bring their merchandise on one particular day(s) to particular place. Vegetables, groceries and household items are sold in this type of market.Direct response advertising

This is the use of advertising in newspapers or magazines to describe a product and stimulate the customer to write or Telephone for it.Electronic retailing

Electronic retailing has two formats, namely television shopping and online computer shopping services.Retailing through televisionIn this retail format customers watch a television programme demonstrating merchandise and then place an order over telephone. Major players in India are Asian sky shop, TSN, TVC, Telebrands etc.Retailing through internetIn this retail format customer and retailers communicate through an interactive electronic system (internet). After browsing through and satisfying himself customer places an order through internet, phone or by e-mail.Major retailers in India using this format are Jaldi.com Indiainfo.com Rediff.com

Retailing concepts

INTRODUCTIONThe overall purpose of the retailing is to provide goods and services wanted by customer and to do so profitably so that business can be sustained. This means if a retailer is to be successful and customer satisfied the retailer must understand the three core factors of retailing, namely, customers, their needs, wants and buying behavior; competition, their strategies; and above all the environment of customers and competition.

Factors influencing retailing businessCUSTOMERS Customers are the most important element for the retailers. To be successful retailer must know its customers.

RETAIL MIXThe various components of the retailing mix as subcategories of the for Ps, which is a very common terminology, adopted in marketing courses. The four Ps are : Place

Product

Price

Promotion

PLACEThe categories from the point of view of retailing in Place are : Convenience of shopping

Stores dcor and interiors

Store location

The convenience of shopping provides convenience of time, convenience of location, convenience of shopping at one place to the customers.

PRODUCT

Following factors of Products are useful for retail mix :

Breadth of merchandise

Depth of merchandise

Quality and fashion level of goods

PRODUCT MERCHANDISE ASSORTMENT : BREADTHBreadth of variety of merchandise refers to number of different merchandise categories a retailer offers. A store with many lines and departments of merchandise has breadth of assortment; a narrow line store is a speciality store.

PRODUCT MERCHANDISE ASSORTMENT : DEPTHDepth of assortment refers to number of different items in a merchandise category. So depth of assortment refers to the variety of colors, styles, sizes, and prices that a retailer offers in a given line.

PRODUCT QUALITY AND FASHION LEVEL OF GOODSQuality and fashion are important attractions at high level end. High quality, newest fashion are exclusively major considerations for high income, fashion conscious customers. Exactly opposite is true for low end. Low price and value for money are major considerations for relatively low-income customers.

PRICEToday, price is considered an indirect indicator of quality and fashion level of goods. And to an extent it is. Higher quality goods and newest fashion usually command higher prices. However, good quality may be available without the highest prices.

PROMOTION The retailer has to communicate with customers, initially to make them aware of hi or her offering and then to stimulate interest and desire.A : AwarenessI : InterestD : DesireA : Action.RETAIL RESEARCH

The retail marketing also includes the retail research which is very helpful in todays marketing environment. And the marketing environment is under going rapid changes and the need for the real time market information is greater than at any time before. There is a visible shift in demand of the cu. They are more quality oriented and wish to make marketing a pleasure experience. They have less time to shop and opening up of economy and globalization has pumped in so many imported products in the market that domestic products face tough competition. Retail business is now getting organized, and expanding its roots in the national as well as international market.There are some points which are related to the retail research :-

GlobalizationFirms, organizations expand their market coverage and boundaries beyond state and nations today, through the retail research it has become possible to develop the business systematically and cross national boundaries. And it has become possible only due to advent of information and communication.

Market segmentation

The market segmentation in this area is high. The customers physiological or runtime survival needs are high and the market is flooded with the suppliers, market share for each retailer is low and the competition is high. As income improves, and more families cross over. From the poor to middle class category, customers response to different products features, styles and other attributes, can only become accurate when you have complete market information.

CompetitionThe third market change is the emergence of high competition for sustenance. The tougher the competition, the more specific information is desired by the seller to project his products in a better way. A number of marketing tools are available to measure the effectiveness of branding, product differentiation, advertisement or sales promotion. Each retailer who wishes to remain ahead of his competitor would like to access the effectiveness of each of the components of store operations. This requires collection of relevant data within a responsible time, analysis of data and modifications of plans subsequently.

Example :One soft drink firm has come to know how many ice cubes in a glass customer prefer. They also have predicted the precise temperature at which their canned soft drink must be kept in vending machines.European supermarkets have concluded that the Swiss consume the most chocolates, the Greeks eat the most cheese, and the Irish drink the most tea. In addition they know that the Australians smoke the most.

Retail marketings advantages to the retailer and to the consumer.

Awareness

The primary benefit of retail marketing is to bring awareness to the consumer that the product exists to fill a need or a want that the consumer has. For example, if a retail marketing campaign is promoting a product that gets rid of nail fungus, someone with nail fungus now knows that an over-the-counter product is available to help resolve their nail fungus problem. In return, this marketing helps to boost sales for the nail fungus remover manufacturer and the retailer selling the product on its store shelves. In essence, potential customers of a product have to know that the product exists for the sales of the product to be successful. Retail marketing is the bridge between a product and its potential customer target market.

Boosts Profits

Retail marketing also has the advantage of boosting businessprofits. Whether it's announcing the launch of a new product or offering a special sale or coupon on an existing product, this type of retail marketing can attract larger crowds to the retail location. The more potential customers who walk through the door provides a potential for higher sales, and a larger sales volume brings increased profitability to the retail establishment.

Creates a Competitive Environment

Retail marketing creates a healthy competitive environment between retailers. This benefits consumers because it helps to keep their costs down when purchasing products. Retail marketing also helps keep competitors aware of what the other is charging for the same product, so it allows retailers to adjust prices as necessary to stay competitive in the market.

Creates Jobs

A direct positive effect of retail marketing is that it draws more customers to the retail stores. An indirect effect of retail marketing, however, is it creates jobs. When a retail store has more business, it also tends to need more employees to help with the volume of business. For potential employees that have experience in the retail industry or who are looking to break into retail work, retail marketing can open up many new job opportunities.

III annual retail Asia congress

The3rd Annual Retail Asia Congresstookplace at the Hong Kong Convention and Exhibition Centre from 22-24 June 2010. Attracting over 150 leading retail industry professionals,the event showcased the latest branding, marketing andoperational strategies for managing your retail business, maximising profitability and enhancing the customer experience in Asia.The conference featured a rostrum of stellar speakers representing retailers, shopping mall owners and managers, brands and marketing firms from across the region. We were delighted to welcome many industry leaders including, to name but a few: Yaron Jakubowica, CEO, FASHION TV Tom O'Keefe, Founder, Chairman & Head Barista, TULLY'S COFFEE Edith Law, Executive Director, ZTAMPS (BREAD N BUTTER) Colin Rice, IT Director, DAIRY FARM GROUP Jeffrey Sia, Director, EVERRISE SUPERMARKET Royce Yuen, Executive Director, FANCL Francis Gouten, Founder, GOUTEN CONSULTING Carmen Ho, head of Marketing & Brand Management, MIELE Lelio Gavazza, MD China, BULGARIRetailers made up nearly 40% of the audience, with government agencies, property developers and mall operators making up another 35%. Participants came from across Asia and globally, from countries as diverse as Hong Kong, singapore, Malaysia, India, Vietnam, Indonesia, China, Australia, the Philippines, UK, France, Austria and the USA.CAFE COFFEE DAY

General manager Mr. Ramesh AgarwalThe general manger of caf coffee day has defined his views and opinions about the retail marketing.It is a way of selling products to a customer at minimum cost, and we give services to society co-operate with customer and fulfill their needs. Advantages Very well vaitors. Speciality in every individual coffee. Located in the heart of the city

Disadvantages Limited products and services. LEE Owner Mr. Raj Singh

The owner of LEE has its view on retail marketing as under :It is a very difficult job. We provide a brand to the city. Our priority is to satisfy the customer and after it the profit factor comes in line. We also provide special schemes, such as discount, sale, off, gift vouchers etc. We treat our salesperson as a family and not as a worker, so that he also works faithfully and helps to satisfy the customer.

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