Retailing
by Shraddha Kochar 1
Contents
• Meaning
• Challenges
• Current Scenario
• Why retail is so popular
• Types of Retailing
• SWOT Analysis
• Nature
• Retail coping up with E-commerce
• Division as per set up
• Assignment
• Merchandise Mix
• Prospects
• Operations
What is Retailing ???
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Retailing
• A distribution process
• Activities involved in selling the merchandise directly to the final consumer
(i.e. the one who intends to use the product) are included.
• It encompasses sale of goods and services from a point of purchase to the
end user, who is going to use that product.
Wholesaler/
Manufacturer Retailer Consumer
Distributor
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Current Situation in Retail
• India's retail market is expected to increase by 60 per cent to reach US$ 1.1 trillion by 2020, on
the back of factors like rising incomes and lifestyle changes by middle class and increased
digital connectivity. Online retail sales are forecasted to grow at the rate of 31 per cent year-on-
year to reach US$ 32.70 billion in 2018.
• Luxury market of India is expected to grow to US$ 30 billion by the end of 2018 from US$ 23.8
billion 2017 supported by growing exposure of international brands amongst Indian youth and
higher purchasing power of the upper class in tier 2 and 3 cities, according to Assocham.
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Current Situation in Retail
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Current Situation in Retail
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Current Situation in Retail- Article to Read
• https://www.indiaretailing.com/2019/04/22/fashion/indian-fashion-retails-trendsetters/
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Types of Retailing
• Store Retailing
– Department store is the best form of store retailing, to attract a number of
customers. The other types of store retailing includes, speciality store,
supermarket, convenience store, catalogue showroom, drug store,
super store, discount store, extreme value store.
– Different competitive and pricing strategy is adopted by different store
retailers.
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Types of Retailing
• Specialty Store- A specialist store is a
shop that caters to one specific retail
market. Examples of specialist stores
include camera stores, pharmacies,
stationers and bookstores.
• A speciality store in fashion brands
can also be called as an EBO
(Exclusive Brand Outlet)
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Types of Retailing
• Supermarket- It’s a self-service shop offering a wide variety of food, beverages
and household products, organized into sections and shelves. It is larger and
has a wider selection than earlier grocery stores
• Shelf space is also reserved for canned and packaged goods and for various
non-food items such as kitchenware, household cleaners, pharmacy products
and pet supplies. Some supermarkets also sell other household products that
are consumed regularly, such as alcohol (where permitted), medicine, and
clothes, and some sell a much wider range of non-food products: DVDs,
sporting equipment, board games, and seasonal items (e.g., Christmas
wrapping paper in December).
• Supermarket + Department Stores= Hypermarket
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Types of Retailing
• Convenience Store- it’s a small retail
business that stocks a range of
everyday items such as groceries,
snack foods, confectionery, soft
drinks, tobacco products, over-the-
counter drugs, toiletries, newspapers,
and magazines.
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Types of Retailing
• Catalogue Showroom- A discount
retailer where consumers select
merchandise from a catalogue and
shop at a warehouse-style location.
Customers typically write up their
own orders, products are usually
stocked in a back room, and there are
limited displays.
Fabindia, Interior Design Studio, GK N5
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Types of Retailing
• Drug Store- A store that sells health
care products and medicine.
Customers can buy both over-the-
counter and prescription medication
at a drug store. It is not uncommon
for drug stores to carry other
frequently used household products
and merchandise.
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Types of Retailing
• Super Store- are very large
supermarkets or shops selling
household goods and equipment.
Superstores are usually built outside
city centres away from other shops.
• For Eg. Metro Stores in India
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Types of Retailing
• Discount Store- is a retail shop which sells products at prices that are lower
than the typical market price.
• Extreme value store- Retailers Small discount stores Limited merchandise
assortment Very low prices Target market low-income consumers
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Types of Retailing
• Non-store Retailing: It is evident from the name itself, that when the
selling of merchandise takes place outside the conventional shops or stores, it
is termed as non-store retailing. It is classified as under:
– Direct marketing: In this process, consumer direct channels are employed by the company
to reach and deliver products to the customers. It includes direct mail marketing,
catalogue marketing, telemarketing, online shopping etc.
– Direct selling: Otherwise called as multilevel selling and network selling, that involves door
to door selling or at home sales parties. Here, in this process the sales person of the
company visit the home of the host, who has invited acquaintances, the sales person
demonstrate the products and take orders.
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Types of Retailing
– Automatic vending: Vending machines are primarily found in offices, factories, gasoline
stations, large retail stores, restaurants etc. which offer a variety of products including impulse
goods such as coffee, candy, newspaper, soft drinks etc.
– Buying service: The retail organization serves a number of clients collectively, such as
employees of an organization, who are authorized to purchase goods from specific retailers
that have contracted to give discount, in exchange for membership.
• Corporate Retailing: It includes retail organizations such as corporate
chain store, franchises, retailer and consumer cooperatives and merchandising
conglomerates. There are a number of advantages that these organizations
can achieve jointly, such as economies of scale, better and qualified
employees, wider brand recognition, etc.
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Nature of Retailing
• Retail business can be divided into certain categories on the basis of margin-
turnover retail operations this framework is useful in planning and
development of retailing strategy.
• Margin and turn over are the key parameters of retailing. The success of retail
outlet depends on these two parameters.
– Margin is defined as the percentage mark-up at which the inventory in the retail store is
sold.
– Turnover is defined as average inventory sold.
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Nature of Retailing
Margin
Turnover
Low Margin High Margin
• Eg. Mom & Pop stores (Kirana Stores) • Eg. Channel, Dior
• Competition is very high • Cater to specific clientile
• Can be replaced easily • Stores are located in prime
locations
Low Turnover
• Eg. Big Bazaar, Walmart • Eg. Convenience Stores
• Have variety of products, hugh breadth and • Stores location is in a non-
depth commercial locations
• Caters to Mass Consumer • Overhead cost may be high,
High Turnover
• Stores are located near but high prices can ensure
profitability
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Retailing divided as per the set up
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Retailing divided as per setup
Organised - Retailers are those Un-organised- The Indian retail
who are licensed for trading industry was traditionally dominated
activities and registered to pay by small family- run Kirana stores or
taxes to the government. Organized neighbourhood mom-and-pop store.
These shops are characterized by very
retail is nothing but a retail place small area and limited assortment and
where all the items are classified varieties stacked in a small place,
and segregated according to their inefficient upstream processes, poor
utility, form, and nature and infrastructure and lack of modern
brought under one roof. They are technology, inadequate funding, and
placed in different departments and absence of skilled manpower. This
displayed very systematically with traditional way of retailing is known as
their price points. unorganized retailing.
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Elements of Retail Marketing Mix
• Elements in the retail mix include the 6. VM and display
1. Brand positioning 7. PR and social media strategy
2. Merchandise mix and level of 8. Location strategy
services offered 9. Philanthropic and CSR activities
3. Right pricing
10. CRM and loyalty programs
4. PLBs (private label brands)
11. Brand Image
5. advertising and promotional
programs
6. Physical environment
7. Store design
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Retailing Operations
1. Managing the Store Atmosphere:
– The store must offer a positive ambience to the customers for them to enjoy their
shopping experience so that they leave with a smile.
– Basic necessities should be taken care of like proper arrangement of products, no foul
smell; clean floors, ceilings, carpets, walls; clean dressing rooms etc.
– No eatables should be allowed inside the store.
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2. Cash Handling:
Cash registers, electronic cash management system or an elaborate computerised point of sale system
should be there to manage the daily sales and the revenue generated.
3. Safety and Security:
– Apparatus to prevent shop lifting, for example – CCTV.
– Do not allow customers to carry more than three dresses in a trial room.
– Every merchandise should have a security tag.
– Ask the individuals to submit their carry bags at the entry point.
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3. Customer Service:
– Customers’ shopping experience should be excellent in the store. In this era of competition
when most of the things are available in every next shop, it is the customer service which
can be the USP (Unique Selling Proposition) of any store. Thus a satisfied customer would
be the one who would visit again along with five other customers.
4. Refund and Returns:
– Formulate concrete policy for refunds and returns.
– Store should have fixed timings for refund/exchange of merchandise.
– Never be rude to the customers, instead help them to find options.
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4. Visual Merchandise:
– There should be adequate light in the store.
– Do not stock unnecessary furniture in the store.
– Choose light and subtle colours for walls to set the mood for footfalls and impulse
purchase.
– Choose the signage display that must display all the necessary information.
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5. Training Programme:
– The store manager must conduct frequent training programmes for sales representatives,
cashiers and other team members to motivate them from time to time.
– It is the store manager’s responsibility to update his subordinates with the latest practises
and software's in retail industry.
– He should collate the necessary reports (salary, inventory, performance appraisals) and
send it to head office on timely basis.
– Inventory and Stock Management
– The retailer must ensure to manage inventory to avoid being ‘out-of- stock’
– Every retail chain should have its own warehouse to stock the merchandise.
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Challenges in Retailing
• Business Environment Scanning:
– Macro and micro factors which can influence a business should be evaluated first which
include government policies, technology, resources, competition in market, characteristics
of consumer segment etc. It also involves developing an organizational mission, evaluating
the ownership and management alternatives, and selecting a product or service type to
engage in retailing.
• Setting Objectives:
– Objectives are set in areas such as retail sales, profits, customer satisfaction and the store
image.
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• Identification of Target Markets and Consumers:
– Market segmentation is must to know about needs and expectations of customers. Then
identify a suitable marketing process which may be in the form of mass marketing,
concentrated marketing, or differentiated marketing.
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Why do you think Retailing in becoming popular in India
so much ?
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• Increased disposable income with the people because of rapid growth of per capita income
coupled with low interest rates.
• The changing family structure with double-income families with fewer children means less
frequent grocery shopping with more purchase per visit.
• The formal financial system facilitates interest banking and inexpensive credit, which has
boosted consumption.
• Changing real estate prices made people move to suburbs and the stores with parking
facility and food stalls could open in modestly priced open spaces.
• With the development of infrastructure, new roads and better mobility has made shopping
from organised retailers easier.
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Class Assignment- SWOT Analysis
Strength Weakness
Opportunity Threat
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How is Retail coping up with E-commerce?
• Case Study
– https://www.financialexpress.com/industry/rise-of-omnichannel-strategy-to-slow-down-growth-of-online-
retailers/1555100/
– https://www.financialexpress.com/industry/lifestyle-stores-adopt-an-omnichannel-and-tech-led-strategy-for-
growth/1555014/
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Other major challenges of Retail
• Poor Logistic and Infrastructure:
– Well-developed transport and communication, facility of warehousing are pre-requisite for
the growth of organised retail. India has poor infrastructure, road connectivity between
rural and market centers is not developed. Warehouse facility is poor and it is dismal in
case of cold storage.
• Low Per Capita Income:
– Around 30% of Indian Population in middle and rich income category. Rest 70% is poor,
approximately 30% is classified as below poverty line i.e., they do not have income to buy a
day’s meal. People in rural India lack liquidity; they do not have adequate cash to enjoy
luxuries.
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• FDI Policies:
– India needs huge Investment in Retail Logistics like Warehouse, Transportation and
Management. It is not only money but also necessary technology that can only come in the
form of FDI (Foreign direct investment) Politicians and policy makers are not unanimous
for entry of FDI in retail sector.
• Education and Training:
– Organised retail is described as semi hospitability Industry. A Customer must be well
treated to ensure repeat sale. (A study says that labour productivity in Indian retail sector is
only 6% of its counterpart in America). CRM that is customer relationship management can
ensure systematic growth of organised retail.
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• Real Estate Prices:
– Real estate prices in India for land and building is exorbitant cities like Mumbai, Delhi and
Bangalore have high land value. Since organised retail needs large area for amenities like
parking, amusement and also to accommodate big building, major portion of investment is
tied up in land and building. This may increase cost of operation. It may be difficult to
operate the store economically and profitably.
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Necessary steps to Promote Organised Retail
????
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Necessary steps to Promote Organised Retail
• FDI:
– Foreign Direct Investment and foreign capital is its major initiative needed to strengthen
the organised retail. FDI can bring better technology and managerial skills needed to
organise and promote the retail on large scale. India is scarce of capital and adequate
technology that is necessary to promote organised retail.
– Allowing the FDI to take part in multi brand and single brand products and its entry into
every range of city i.e., ‘A and B’ Category cities like Mumbai, Delhi, Bangalore and ‘C’;
Category cities like Hubli – Dharwad Davangeri Mysore etc., and in every part of India will
bring necessary capital, money men machine and management idea i.e., basic to promote
organised retail.
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• Development of Infrastructure:
– Development of Infrastructure villages and towns provide raw material and inputs
necessary for development of retail. The connectivity between rural and urban centers is
necessary that calls for better roads and communication. Warehousing is another area that
can create time and place utility and increase value of manufactured goods.
– India does not have problem with production, lack storage space is deteriorating and
damaging products. Creation of capacity in storage particularly cold storage at affordable
cost can help for both farmer and retailer. Along with this facility of easy and quick finance,
insurance can encourage the promotion of retail industry.
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• Education and Training:
– Retail sector has potential to offer employment opportunities in different area connected
with the industry. Qualified staff is necessary to manage activities connected with retailing
and also in the areas of Warehousing, Financing Banking and Insurance. Retail Sector can
provide adequate employment in that area provided qualified and trained staff is available.
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• Provision of Real Estate:
– Organised retail requires large area of land and building specially designed for retail
operations. Land value in India is very high, buildings are not specifically designed to
undertake retail activities. They are located in large buildings that are like big warehouse.
– This may not provide the required ambience, comfort and convenience necessary in retail
shopping Government should initiate steps to ear mark separate land for retail houses (like
done in case of Industries). Necessary steps should be undertaken to create buildings
complex that can house all departments. Facilities of retail at proper places to give comfort
and satisfaction to visitors.
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• Educate People in Consumption Habits:
– People of India do not have healthy consumption habits. Basically, they do not want to
spend money, they believe in saving they spend on gold jewellery, invest in real estate (due
to which their prices are rising). Healthy consumption habits must be promoted. People
should be educated to spend on the items that can give them satisfaction without
compromising on quality and health.
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Assignment
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Future Prospects
• https://retail.economictimes.indiatimes.com/news/apparel-fashion/apparel/over-300-global-
fashion-brands-to-open-stores-in-india-by-2020-mckinsey/68974181?photo_id=68604911
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