Retailing Functions Of

a)Kirana Stores b)Exclusive Fuel Retail Outlet

c)Departmental Grocery Stores d)Franchised

Food Outlet

Milin Mohan K

Retail is an old phenomenon in India.  

Retailing consists of all activities involved in selling goods and services to consumers for their personal, family, or household use.

It covers sales of goods ranging from automobiles to apparel and food products, and services ranging from hair cutting to air travel and computer education.

The Indian Retail Industry on the whole is divided into organized and unorganized sectors.

Despite the emergence of organized food retail, the traditional kirana stores accounts for about 90% of the trade.

Indian Retail & Kirana Stores

The shoppers in India prefer the local kirana stores over malls.

The shoppers love to hangout and shop from their local traditional stores because of

the familiarity with ambiance ease of access, emotional attachment, early opening and late closing times etc., which suits the local

residents

The three things that kiranas do better : i. Customer Relationship Management ii. Dynamic Merchandising and iii. Efficient store operations

Kirana Stores

Kirana stores are typically small in size as they are located in the residential area zones.

The size of the stores revealed that about half of the stores were less than 200 sq. feet. Some of them were relatively bigger

LOCATION

Food, non-food and staples were the major category of items stored by all the kirana stores.

Kirana stores food items in the range of 11- 60 items and some stores stored about 91-100 food items. They stores stored vegetables in the range of 1-20, non-food in the range of 11-50, staples in the range of 1-50 and beverages in the range of 11-20.

In kirana stores, the food items were carried for about 1-7 days. Vegetables were carried for 1-4 days. The non-food items were carried for 4-7 days. The staple items were carried for 4-9 days. The beverages were carried for 4-13 days

Merchandise Management

Kirana store did not spend much on the inbound transportation as the goods were delivered to their stores by the suppliers.

The suppliers were wholesalers, dealers and salespersons. In case, when they went personally

to bring the merchandise, they used their own vehicles such as motorbikes and sometimes the auto rickshaws.

TRANSPORTATION

  Kirana stores used more than one source namely wholesalers, dealers

and salesmen to source their merchandise.

Among them, procurement of merchandise by calling through phone to the wholesalers was the most popular (62%) one followed by placing orders with the salesmen who visited the stores (36%) at regular intervals.

As regards procurement of merchandise, kirana stores are showered with numerous benefits by the suppliers based on the order size, store relationship and image.

Most of the kirana stores got the quantity discount and sometimes gift vouchers as well.

The kirana stores most often used the option of buying on cash as well as through credit (54%). About 38% of the kirana stores paid the cash whenever they bought the merchandise.

Stores most often got a maximum of 2 weeks credit from the suppliers

SOURCING

Among the stores who had given discount on purchases, about three-fourth of the stores had given discount on total items purchased and about 10% of the stores had given discount on the individual items purchased.

The discount did not exceed 10% and majority of the stores gave a discount of 2% or 5%

Discount On Goods

It may be understood that computers have not been used in kirana stores extensively.

Less than quarter of the kirana stores (23%) have only used the computers in management of their stores.

Of which, 41% of the kirana stores used computers for managing inventory and 50% of the stores used for accounting applications

HP Retail Outlets  HPCL retail outlets believe in maintenance, maintaining

not just the vehicle, but a steady relationship with the consumer.

They take care of not only our fuelling needs, but also complete vehicle care.

They stock related products like tires, batteries and accessories, so you don't have to go shop - hopping.

All other value - added services ensure that our vehicle is well looked after.

So they bring us conveniences that allow us to carry out our banking activities, make important calls or send an e - mail, and even shop for essential grocery items.

Exclusive Fuel Retail Outlets

Club HP as a brand was developed for Retail Outlets and nurtured after an exhaustive research and auditing its architecture which included collecting feedback from over 13,000 respondents in several key markets across the country.

The "Club HP" concept aims to provide the assurance of "Quick Fills", "Expert, Personalized Service", "Total Vehicle Management" and "Consumer Conveniences". 

While designing the bouquet of services for Club HP outlets, HPCL has relied upon the feedback received directly from consumers

.

Club HP

Fuel is delivered to these outlets in tank trucks fitted with tamper proof locks and a high degree of control is kept by the HPCL staff to ensure that quality standards are strictly enforced. 

HPCL realize that consumers are highly conscious of the fuel that goes into their vehicles - each "Club HP" outlet carries the assurance of HPCL’s ‘Good Fuel Promise’ and delivers the right quality and quantity of the products on offer.

Delivery Of Fuel

How the fuel price is calculated in India?

Suppose if the petrol price per litre in Chennai is Rs 51.90, here the break-up of cost calculated by the  government:

Basic Price = Rs 21.93 Excise duty = Rs 14.35 Education Tax = Rs 0.43 Dealer commission = Rs 1.05 VAT = Rs 5.5 Crude Oil Custom duty = Rs 1.1 Petrol Custom = Rs 1.54 Transportation Charge = Rs 6.00 Total price = Rs 51.90 

So for a Rs 22 litre petrol at pumps, consumers in India pay Rs 28 extra so high degree of control is kept by the HPCL staff to ensure that quality standards are strictly enforced.

 

Determination Of Fuel Prices

IDENTIFICATION OF LOCATIONS

Locations for setting up Petrol/Diesel retail outlets are identified by HPCL after carrying out required feasibility study and commercial viability.

Mode of selection of dealers

The locations identified, as above, are advertised under applicable category in at least two newspapers, one English and one regional vernacular newspaper having wide circulation in the State.

Persons meeting the eligibility criterion can apply and the selection will be made from amongst eligible applicants after the due process of technical evaluation of

sites, interview and post selection scrutiny

Identification of Locations And Mode of Selection Of Dealers

1. Company Owned: In case the outlet is developed under company owned category, the land

only will be taken on lease for a period of 30 years. Rental will be paid by HPCL, and will not be recovered from the dealership. The superstructure will be provided by the company and SSLF as applicable will be charged at a higher rate, which at present, is Rs.47/- per KL for petrol and Rs.40/- per KL for diesel.

2. Dealer Leased: In case the outlet is to be developed under this category, the land and

superstructure, will be taken from the selected candidate on lease for a period of 30 years. The rental will be paid by HPCL and recovered from the dealership as additional licence fee. The Service Station Licence Fees (SSLF) as applicable will be charged at a lower rate which, at present, is Rs.17/- per KL for petrol and Rs.15/- per KL for diesel.

3. Dealer Owned : On strategic consideration, company may decide to develop certain retail

outlets on Dealer owned basis. In such cases, the land and superstructure will not be taken on lease from the selected candidate. The Service Station Licence Fees (SSLF) as applicable will be charged at a lower rate which, at present, is Rs. 17/- per KL for petroland Rs.15/- per KL for diesel.

Type of Retail Outlet Dealerships /License Fees :

Following basic facilities has to be provided by each dealer-select at the Retail Outlet :

Drinking Water, Free Air , First Aid kit with medicines, Toilet , Pollution under Control Equipment (PUC) ,Telephone,Adequate illumination, Land & its development, Driveway, Compound wall, Sales Office, Store, Generator , Compressor Room, Fire Fighting Facilities etc.

Additional Facilities (Site specific) :

All such facilities required for customer service such as Staff Room cum Change Room, Canopy, Service Station, Rest Room, Restaurant, Telephone Facilities, PUC facility (if mandatory) and/other .

Facilities as may be specified by HPCL from time to time.

Types of Merchandise

a)Staple Goods – items that are constantly in demand by customers. Examples are toothpaste, milk, or bread. Used consistently and replaced on a regular basis.

b)Convenience Goods – small, inexpensive items that customers purchase frequently.

Examples are gum, bottled water, or magazines.

c)Fashion Goods – items that are popular at a certain time. An example is clothing.

Includes any item that comes in or out of styleRetailer will maximize sales by acquiring the product as it is gaining

popularity.

d) Seasonal Goods – products that are popular only at a certain time of year.

Examples are caps, boxed chocolates, or snow skis.

Departmental Grocery Stores

Businesses must pay close attention to their target market and must obtain, develop, maintain, and continually improve upon their merchandise mix.

◦ Components of the Mix Merchandise Mix – made up of all the products that a

business sells Product Line – a group of closely related products that

a business sells Product Items – the products that make up a product

line. A specific model or brand

Merchandise Mix

The role of a buyer in a retail setting is to purchase goods for resale to the customer.

Their activities include planning, research, and evaluation.

Merchandise planning – includes four elements – planned sales, a beginning-of-the-month inventory, planned purchases, and planned deductions such as employee discounts and markdowns.

Research – helps buyers choose the best vendor for the needed products. In choosing a vendor for the products the following factors should be considered:

Production capabilities Past experience Product and buying arrangements Special services Discounts Payment arrangements.

Evaluating – of both the products that were purchased and the vendor that supplied the product.

Buying Activities

When determining the price of a product, it is important not only to maximize profits but also to provide value to the customer.

Steps for product pricing

◦ Determine Objectives – the business must determine what profit they want to earn and what strategy suites their style.

◦ Study Costs – the business should understand all costs involved in offering a product.

◦ Estimate Demand – the business should determine the demand for the product and set prices accordingly

◦ Study Competition – the business should know the competition and the competition’s prices

◦ Select Strategy – the business must choose the pricing strategy for the business

Cost-oriented pricing – the difference between the cost of the product and its selling price

Demand-oriented pricing – is based on demand for the product. When demand is high, customers will be willing to pay more for the product.

Competition-oriented pricing – setting prices based on the competition’s prices◦ Set Price

PRICING

The steps in the receiving process are

Receiving merchandise – the process a business uses to receive merchandise at their store. Receiving record – a form used to describe the goods received

Checking Merchandise – verifies that the correct merchandise and quantities were delivered. Blind Check Method – one of the most accurate, yet time consuming,

methods for checking merchandise. Employees open boxes and make a list of items sent. This list is then compared with the invoice.

Direct Check Method – used the most frequent. Involves checking off the merchandise on the invoice.

Dummy Invoice Method – combines the best features of both the blind check method and the direct check method. Employees take an invoice without the quantities and records the amount of each item in the shipment.

Spot Check Method – takes the least amount of time, but is the least

accurate method.Involves spot checking a certain number of boxes.

Merchandise Receiving Process

Involves getting the merchandise ready to sell. Steps include

◦ Unpacking Merchandise◦ Ticketing Merchandise◦ Security Tags to protect against theft◦ Presentation

Preparing Merchandise

Reasons for Returns◦ An item may have been received that was not

ordered◦ An order may have been cancelled after it already

shipped◦ Too many items were shipped◦ Merchandise arrived too late◦ Unsold merchandise may be returned for credit

Handling Returns to Vendors

Inventory – the amount of goods stored by a business.

◦ Perpetual Inventory – a method of tracking inventory on a constant basis. The information required to maintain a perpetual inventory system can be collected either manually or electronically through a point-of-sale system – which is a computerized method of collecting inventory data.

◦ Physical Inventory – system where stock is visually inspected or counted to determine the quantity on hand. Is usually conducted only periodically. Visual Inspection – involves placing a card in a bin of merchandise stating

what the product is and the quantity that should be on hand. Counting Stock – gives the business an accurate number of what is in

stock.

◦ Combined System – involves using both the perpetual and physical inventory systems to insure an accurate count of the inventory.

Inventory Management

Shrink – occurs when the physical count is less than the perpetual count. Can be caused by◦ Theft – by customers, employees, or vendors◦ Errors – through miscounting or computer input

errors

Shrink Prevention ◦ Education of employees◦ Planning of the store layout to eliminate problem

areas for theft◦ Security – can include security personnel, security

devices, or pre-employment testing

SHRINK and its Prevention

McDonald's is an example of brand franchising.

McDonald's, the franchisor, grants the right to sell McDonald's branded goods to someone wishing to set up their own business, the franchisee.

The license agreement allows McDonald's to insist on manufacturing or

operating methods and the quality of the product. This is an arrangement that can suit both parties very well.

Under a McDonald's franchise, McDonald's owns or leases the site and the restaurant building. The franchisee buys the fittings, the equipment and the right to operate the franchise for twenty years.

To ensure uniformity throughout the world, all franchisees must use standardized McDonald's branding, menus, design layouts and administration systems.

Franchised Food Outlet

  On the financial side, McDonald's has to be given a

monthly rent, which is calculated on a sliding scale based on the restaurant's sales, i.e. the higher the sales, the higher the percentage and visa versa.

There is also a service fee of 5 percent of sales in addition to the contribution to marketing.

The purchase price of a restaurant is based on cashflow and is generally about £150,000 upwards.

The new franchisee is expected to fund a minimum of 25 percent of this from their own funds.

Financial Side

Legislation requires employers to provide a healthy and safe workplace, Where a person has management and control of a workplace, they also have responsibility (in the areas in which they have management and control) for the health and safety of people at that workplace.

Both franchisors and franchisees should be aware of their respective health and safety responsibilities.

Franchisors should understand the management and control they have over a workplace through the franchise systems they require franchisees to implement and follow.

Maintaining Safety by the Retailer

The food cooked is done so in bulk, in advance and is kept hot, or is reheated upon order. This allows the food to be served within five to ten minutes, ensuring rapid food delivery and timely service. 

Fast food franchising stresses uniformity. Since many fast food franchises are part of a restaurant chain, the food cooked is standardized. The ingredients used and the method of cooking are almost the same so the food also looks and tastes identical.

The capital required to start a fast food franchise is relatively low so fast food eateries can be found nearly everywhere in the world. 

Fast food outlets also provide take-away or take-out food in addition to a sit-down service. A drive-thru service is usually quicker because it allows food to be ordered and delivered without leaving your car. 

Retail Functions

Fast food is food prepared and served quickly so it is done at a lower cost. 

Fast food is usually classified as food that can be eaten quickly and without forks, spoons or knives, such as sandwiches, burgers, fried chicken, french fries, chicken nuggets, tacos, pizza or ice cream cones. 

The food prepared in fast food restaurants is often highly processed and prepared on an industrial level with standard ingredients and uniform cooking methods. It is served usually in cartons or packets to minimize costs.

Retail Functions (Cont..)