Retail Concept

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1. RETAIL CONCEPT
The distribution of consumer products begins with the producer and ends at the
ultimate consumer. Between the producer and the consumer there is a middleman---the
retailer, who links the producers and the ultimate consumers. Retailing is defined as a
conclusive set of activities or steps used to sell a product or a service to consumers for
their personal or family use. It is responsible for matching individual demands of the
consumer with supplies of all the manufacturers. The word ‘retail’ is derived from the
French work retailer, meaning ‘to cut a piece off’ or ‘to break bulk’.
A retailer is a person, agent, agency, company, or organization which is
instrumental in reaching the goods, merchandise, or services to the ultimate consumer.
Retailers perform specific activities such as anticipating customer’s wants, developing
assortments of products, acquiring market information, and financing. A common
assumption is that retailing involves only the sale of products in stores. However, it also
includes the sale of services like those offered at a restaurant, parlour, or by car rental
agencies. The selling need not necessarily take place through a store. Retailing
encompasses selling through the mail, the Internet, door-to-door visits---any channel that
could be used to approach the consumer. When manufacturers like Dell computers sell
directly to the consumer, they also perform the retailing function.
Retailing has become such an intrinsic part of our everyday lives that it is often
taken for granted. The nations that have enjoyed the greatest economic and social
progress have been those with a strong retail sector. Why has retailing become such a
popular method of conducting business? The answer lies in the benefits a vibrant retailing
sector has to offer—an easier access to a variety of products, freedom of choice and
higher levels of customer service.
As we all know, the ease of entry into retail business results in fierce competition
and better value for customer. To enter retailing is easy and to fail is even easier.
Therefore, in order to survive in retailing, a firm must do a satisfactory job in its primary
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role i.e., catering to customers. Retailers’ cost and profit vary depending on their type of
operation and major product line. Their profit is usually a small fraction of sales and is
generally about 9-10%. Retail stores of different sizes face distinct challenges and their
sales volume influences business opportunities, merchandise purchase policies, nature or
promotion and expense control measures.
Over the last decade there have been sweeping changes in the general retailing
business. For instance, what was once a strictly made-to-order market for clothing has
now changed into a ready-to-wear market. Flipping through a catalogue, picking the right
colour, size, and type of clothing a person wanted to purchase and then waiting to have it
sewn and shipped was the standard practice in the earlier days. By the turn of the century
some retailers set up a storefront where people could browse, while new pieces were
being sewn or customized in the back rooms. Almost all retail businesses have undergone
a similar transition over the years.
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CHARACTERISTICS OF RETAILING
Retailing can be distinguished in various ways from other businesses such as

manufacturing. Retailing differs from manufacturing in the following ways:
• There is direct end-user interaction in retailing.

• In is the only point in the value chain to provide a platform for promotions.
• Sales at the retail level are generally in smaller unit sizes.
• Location is a critical factor in retail business.
• In most retail businesses services are as important as core products.
• There are a larger number of retail units compared to other members of the value
chain. This occurs primarily to meet the requirements of geographical coverage
and population density.
Direct Interaction with Customers
Retail businesses have a direct interaction with end-users of goods or services in the
value chain. They act as intermediaries between end-users and suppliers such as
wholesalers or manufacturers. Therefore, they are in a position to effectively
communicate the response and changing preferences of the consumers to the suppliers or
sales persons of the company. This helps the manufacturers and markets to redefine their
product and change the components of its marketing strategy accordingly. Manufacturers
require a strong retail network both for reach of the product and to obtain a powerful
platform for promotions and point-of-purchase advertising. Realizing the importance of
retailing in the entire value chain, many manufacturers have entered into retail business
by setting up exclusive stores for their brands. This has not only provided direct contact
with customers, but has also acted as advertisement for the companies and has provided
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the manufacturers with bargaining power with respect to other retailers who stocked their
product. Retailing provides extensive sales people support for products which are
information intensive, such as in the case or consumer durables.
Lower Average Amount of Sales Transaction
The average amount of sales transaction at retail point is much less in comparison to the
other partners in the value chain. Many consumers buy products in small quantities for
household consumption. Due to lower disposable incomes, some consumer segments in
India even buy grocery items on a daily basis rather than a weekly or a monthly basis.
Inventory management becomes a challenge for retailers as a result of the many minor
transactions with a large number of customers. Hence, retailers must take care of
determining average levels of stock, order levels and the retailer has to keep a tight
control on costs associated with each transaction in the selling process. Credit
verification, employment of personnel, value-added activities like bagging, gift-wrapping
and promotional incentives all add up to the costs. One way to resolve this is for the retail
outlets to be able to attract the maximum possible number of shoppers.
Point-of-purchase Display and Promotions
A significant relevant chunk of retail sales comes from unplanned or impulse purchases.
Studies have shown that shoppers often do not carry a fixed shopping list and pick up
merchandise based on impulsive or situational appeal. Many do not look at ads before
shopping. Since a lot of retail products are low involvement in nature, impulse purchases
of the shopper is a vital area that every retailer must tap into. Therefore, display, point-of-
purchase merchandise, store layou8t and catalogues become important. Impulse goods
like chocolates, snack foods and magazines can sell much more quickly if they are placed
in a high visibility and high traffic location.
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Larger Number of Retail Business Units
Location of retail store plays an important role compared to other business units.
Manufacturers decide the location on the basis of availability of factors of productions
and market. Similarly, retailers consider factors like potential demand, supply of
merchandise and store image-related factors in locating the retail outlet. The number of
operation units in retail is the highest compared to other constituents of the value chain,
primarily to meet the needs for geographic reach and customer accessibility.
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FUNCTIONS OF RETAILING
Retailers play a significant role as a conduit between manufacturers, wholesalers,

suppliers and consumers. In this context, they perform various functions like sorting,
breaking bulk, holding stock, as a channel of communication, storage, advertising and
certain additional services.
SORTIONG
Manufacturers usually make one or a variety of products and would like to sell
their entire inventory to a few buyers to redu7ce costs. Final consumers, in contrast,
prefer a large variety of goods and services to choose from and usually buy them in small
quantities. Retailers are able to balance the demands of both sides, by collection an
assortment of goods from different sources, buying them in sufficiently large quantities
and selling them to consumers in small units.
The above process is referred to as the sorting process. Through this process,
retailers undertake activities and perform functions that add to the value of the products
and services sold to the consumer. Supermarkets in the US offer, on and average, 15,000
different items from 500 companies. Customers are able to choose from a wide range of
designs, sizes and brands from just one location. If each manufacturer had a separate
store for its own products, customers would have to visit several stores to complete their
shopping. While all retailers offer an assortment, they specialize in types of assortment
offered and the market to which the offering is made. Westside provides clothing and
accessories, while a chain like Nilgiris specializes in food and bakery items. Shoppers’
Stop targets the elite urban class, while Pantaloons is targeted at the middle class.
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BREAKING BULK
Breaking bulk is another function performed by retailing. The word retailing is

derived from the French word retailer, meaning ‘to cut a piece off’. To reduce
transportation costs, manufacturers and wholesalers typically ship large cartons of the
product, which are then tailored by the retailers into smaller quantities to meet individual
consumption needs.
HOLDING STOCK
Retailers also offer the service of holding stock for the manufacturers. Retailers
maintain an inventory that allows for instant availability of the product to the consumers.
It helps to keep prices stable and enables the manufacturer to regulate production.
Consumers can keep a small stock of products at home as they know that this can be
replenished by the retailer and can save on inventory carrying costs.
ADDITIONAL SERVICES
Retailers ease the change in ownership of merchandise by providing services that

make it convenient to buy and use products. Providing product guarantees, after-sales
service and dealing with consumer complaints are some of the services that add value to
the actual product at the retailers’ end. Retailers also offer credit and hire-purchase
facilities to the customers to enable them to buy a product now and pay for it later.
Retailers fill orders, promptly process, deliver and install products. Salespeople are also
employed by retailers to answer queries and provide additional information about the
displayed products. The display itself allows the consumer to see and test products before
actual purchase. Retail essentially completes transactions with customers.
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CHANNEL OF COMMUNICATION
Retailers also act as the channel of communication and information between the
wholesalers or suppliers and the consumers. From advertisements, salespeople and
display, shoppers learn about the characteristics and features of a product or services
offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays, and
customer complaints. The manufacturer can then modify defective or unsatisfactory
merchandise and services.
TRANSPORT AND ADVERTISING FUNCTIONS

Small manufacturers can use retailers to provide assistance with transport, storage,
advertising and pre-payment of merchandise. This also works the other way round in case
the number of retailers is small. The number of functions performed by a particular
retailer has a direct relation to the percentage and volume of sales needed to cover both
their costs and profits.
As a result of these functions, retailers are required to perform the following activities:
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ACTIVITIES PERFORMED BY RETAILERS
Retailers undertake various business activities and perform functions that add value to the
offerings they make to their target segments. Retailers provide convenient location, stock
and appropriate mix of merchandise in suitable packages in accordance with the needs of
customers. The four major activities carried out by retailers are:
1) Arrange for assortment of offerings

2) Breaking quantity
3) Holding stock
4) Extending services
ARRANGING ASSORTMENT
An assortment is a retailer’s selection of merchandise. It includes both the depth

and breadth of products carried. Retailers have to select the combination of assortments
from various categories. The assortments must include substitutable items of multiple
brands and price points. They should be distinguished on account of physical dimensions
and attributes e.g., colour or flavour. The small retailer takes assortment decision on the
basis of his experience; on the other hand retailers from organized retailing depend on a
detailed study of past trends and future projections.
Retailers need to consider certain factors while devising assortment plans for their stores:
profitability associated with particular merchandise mix, store image, layout and the level
of compatibility between the existing merchandise. For example, FoodWorld, a leading
food supermarket positioned as a one-stop shopping centre, deals in multiple product
categories along with all possible variants of brands, stock keeping units, and physical
attributes in order to meet the expectations of their consumers and survive in the
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business. Whereas, Subhiksha, a grocery chain in south India has impressive assortments
of only the fast moving brands rather than all available variants in the market. Their
assortment plan is governed by location, size and store image of their stores.
BREAKING BULK
Breaking bulk means physical repackaging of the products by retailers in small

unit sizes according to customer’s convenience and stocking requirements. Normally,
retailers receive large quantities of sacks and cases of merchandise from suppliers to
reduce their transportation costs. In order to meet their customers’ requirements retailers
have to break or arrange the bulk into convenient units. This entire function of the
retailers adds value to the offerings not only for the end customers but also for the
suppliers in the value chain. Even in the earlier days of generic and commodity-based
trading most of the retailers used to perform this important function in the value chain.
This function receives negligible attention from the retailers now due the introduction of
new product categories, such as FMCG and ready-to-wear apparel.
HOLDING STOCK
To ensure the regular availability of the offerings retailers maintain appropriate

levels of inventory. Consumers normally depend on the retailers directly to replenish
their stocks at home. Therefore, retailers, on periodic basis, maintain the required levels
of stock to meet the regular or seasonal fluctuations in the demand. Retailers need to
maintain equilibrium between the range or variety carried and the sales which it gives rise
to. Retailers have to face the negative consequences of holding unwanted levels of stock
—for instance, too little stock will hamper the sales volume, whereas, too much stock
will increase the retailer’s cost of operation. Generally, in small towns of India most
retailers have arrangements with the nearby warehouses to stock the goods. Some are so
small that they have to stock only on the shop floor. Retailers in the organized sector, to a
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certain extent, are using effective software packages for maintaining adequate levels of
inventory. At the same time, retailers avail of just-in-time deliveries with the help of
efficient consumer response systems, which reduces the burden of maintaining high
levels of stocks.
EXTENDING SERVICES
Retailing provides multiple services to immediate customers and other members of

the value chain. The set of services extended by particular retailers may be part of their
core product offerings or it may be ‘add on’ to their product or service. Retailers offer
credit, home delivery, after-sales services and information regarding new products to
their customers, thereby making the shopping experience convenient and enjoyable. At
the same time, they provide stocking place, reach to the ultimate customers, and
information about the concerned target segment to the suppliers. For example, Time
Zone, the first organized retail chain of wristwatches in India, started by leading watch
manufacturers Titan, set up in all its stores, service centres with proper equipment and
trained manpower. This has not only diluted the relevance of service providers in the
unorganized sector but has also enhanced the confidence of the customers in the retai9l
services provided by the particular retail chain, as after-sales service is considered to be
an integral ingredient of the watch purchase.
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CATEGORIZING RETAILERS
Categorizing retailers helps in understanding the competition and the frequent changes
that occur in retailing. There is no universally accepted method of classifying a retail
outlet, although many categorization schemes have been proposed. Some of these include
classifying on the basis of
• Number of outlets
• Margin Vs Turnover
• Location
• Size.
The number of outlets operated by a retailer can have a significant impact on the
competitiveness of a retail firm. Generally, a greater number of outlets add strength to the
firm because it is able to spread fixed costs, such as advertising and managers’ salaries,
over a greater number of stores in addition to acquiring economies of purchase. While
any retailer operating more than one store can be technically classified as a chain owner,
for practical purposes a chain store refers to a retail firm which has more than 11 units. In
the United States, for example, chain stores account for nearly 95% of general
merchandise stores.
Small chains can use economies of scale while tailoring merchandise to local needs.
Big chains operating on a national scale can save costs by a centralized system of buying
and accounting. A chain store could have either a standard stock list ensuring that the
same merchandise is stocked in every retail outlet or an optional stock list giving the
outlets the advantage of changing the merchandise according to customer needs in the
area. Because of their size, chain stores are often channel captains of the marketing
channel—captains can influence other channel partners, such as wholesalers, to carry out
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activities they might not otherwise engage in, such as extended payment terms and
special package sizes.
Big stores focus on large markets where their customers live and work. They use
technology to learn more about their customers and target them with point-of-sale
machines interactive kiosks, and sophisticated forecasting and inventory systems. They
tend to stock a narrow range of inventory that sells well and maintain an extensive
inventory of the fast selling products. Branding is important to them. Pricing is often a
key area of focus for these retailers. Big stores have many strengths, including regional or
national reputation, huge buying power, vast inventory and hassle-free return and
exchange policies. Their prime locations, the consistency in their products and services,
the fact that they are open when people can and want to shop and the clear consistent
image and identity they develop and maintain challenge the abilities and resources of
many small retailers. Perhaps their biggest advantage is their knowledge in every aspect
of their business, from inventory selection to store layout.
However, large retailers are not perfect. They have competitive weaknesses that small
retailers can exploit. Most offer the same standardized assortments of products nationally.
Local managers have little say in inventory selection. Often, sales staff has minimal
product knowledge. Staff turnover is extremely high. Most large retailers have little
connection with the community they serve. They usually do not offer special services.
Larger companies are often slow to recognize and react to changes in their local markets.
Independent retailers can co-exist and flourish in the shadow of the big chains by
developing a niche within the diverse market. The niche should be developed on the basis
of new or unusual product offerings, superior service and overall quality. While value is
important, price may be less important. Efficient operations, including precise buying
practices, are a must. Customer contact within the niche market must be characterized by
‘high-touch’ service. The key factor is innovation: stores that do not change will perish.
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The road to success for the independent retailer lies in doing all the things those big chain
stores cannot or will not do. The successful independent retailers embrace the following
principles:
• Be prepared for change.

• Move to a narrower niche market and stop competing directly with the big
retailers.
• Learn more about customers and include best customers in a database.
• Invest appropriately in advertising and promotion.
• Charge regular prices and avoid discounting (ensure requisite mark-up).
• Buy with precision and search out specialty suppliers.
• Maintain essential inventory.
• Focus on profit instead of volume (be ready to lose an occasional sale).
• Provide extraordinary service.
• Employ the best possible staff.
• Understand the significance of the Internet.
2. RETAIL ORGANIZATION
The term retail organization refers to the basic format or structure of a retail business
designed to cater to the needs of the end customer. Recently, some scholars have started
referring to India as a nation of shopkeepers. This epithet has its roots in the huge number
of retail enterprises in India, which were over 12 million in 2003. About 78% of these are
small family businesses utilizing only household labour.
Retail firms may ;be independently owned, parts of a retail chain, operated as a
franchisee, leased departments, owned by manufacturers or wholesalers, consumers
owned or co-operative society.
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A retail unit could be owned by:

• Manufacturer (e.g., company owned retail outlets)
• Wholesaler (e.g., Vastra outlet in Rajouri in New Delhi)
• Independent retailer (Chanakya Sweet Shop near Hazratganj in Lucknow)
• Consumer (consumer owned grocery stores in man y residential societies)
• Co-operative society (e.g., Mother Dairy milk booths in Delhi)
• Government (e.g., Cottage Emporia)
• Ownership shared among franchiser and franchisee (e.g., Archies Gallery)
Although most Indian retailers fall in the category of small-scale units, there are also
some very big retailers. Organized retail stores are generally characterized by large,
professionally managed store formats providing goods and services that appeal to
customers, in an ambience that is conducive for shopping and provides a memorable
experience to customers.
From positioning and operating perspectives, each ownership format serves a
marketplace niche and presents certain advantages and disadvantages. Retail executives
must not lose sight of this in playing up their strengths and working around their
weaknesses.
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CLASSIFICATION OF RETAIL UNITS
Conceptual classification of a business unit provides the marketers with strategic

guidelines, useful in the design of retailing strategy. Besides, retail businesses are
extremely diverse and there are quite a few types of retail units. Therefore, retail units are
classified on multiple of ownership, geographical locations, kind of customer interaction
level of services provided etc.
Retailers Classified on the Basis of Ownership

One of the first decisions that the retailer has to make as a business owner is how the
company should be structured. This decision is likely to have long-term implications, so
it is important to consult with an accountant and attorney to help one select preferred
ownership structure.
There are four basic legal forms of ownership for retailers:
1) Sole proprietorship: - The vast majority of small businesses start out as sole
proprietorships. These firms are owned by one person, usually the individual who
has the day-to-day responsibility for running the business.
2) Partnership: - A partnership is a common format in India for carrying out

business activities (particularly trading) on a small or medium scale. In a
partnership, two or more people share ownership of a single business.
3) Joint venture: - A joint venture is not well defined in the law. Unless
incorporated or established as a firm as evidenced by a deed, joint ventures may be
taxed like association of persons, sometimes at maximum marginal rates. It acts
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like a general partnership, but is clearly for a limited period of time or a single
project.
4) Limited liability Company (public and private):- The Limited Liability

Company (LLC) is a relatively new type of hybrid business structure that is now
permissible in most states. The owners are members, and the duration of the LLC
is usually determined when the organization papers are filed.
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Classification of Retailers on the basis of Operational Structure
Retail businesses are classified on the basis of their operational and organizational
structure. Operational structure defines the key strategic decision of retail entity, whether
to hire employees and manage the distributed sales function internally or to reach
customers though franchised outlets owned and operated by local entrepreneurs.
Retail firms can be classified into five heads on the basis of their respective operational
structures:
1) Independent retail unit: - The total number of retailers in India is estimated to be

over 5 million in 2003. About 78% of these are small family businesses utilizing
only household labour. An independent retailer owns one retail unit.
2) Retail Chain: - A chain retailer operates multiple outlets (store units) under
common ownership; it usually engages in some level of centralized (or
coordinated) purchasing and decision making.
3) Franchising: - Franchising involves a contractual arrangement between a

franchiser (which may be a manufacturer, a wholesaler, or a service sponsor) and a
retail franchisee, which allows the franchisee to conduct a given form of business
under and establishments name and according to a given pattern of business.
4) Leased Department or Shop-in-shop:- It refers to department in a retail store

that are rented to an outside party. Usually this is done in case of department and
specialty stores and also at times, in discount stores.
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5) Co-operative Outlets: - Co-operative outlets are generally owned and managed

by co-operative societies. In this context the detailed example of Kendriya
Bhandar in India.
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Classification of Retailers on the basis or Retail Location
Retailers have also been also been classified according to their store location. Retailers
can locate their stores in an isolated place and attract the customers to the store on their
own strength—such as a small grocery store or paan shop in a colony, which attracts the
customers staying close by.
Classification of retailers on the basis of location is discussed below:
1) Retailers in a free-standing location: - Retailers located at a site which is not
connected to other retailers depend entirely on their sore’s drawing power and on
the various promotional tools to attract customers. This type of location has
several advantages including no competition, low rent, better visibility from the
road, easy parking and lower property costs. For example the Haldiram’s outlet on
the Delhi-Jaipur highway and the McDonald’s outlet on Delhi-Ludhiana highway.
2) Retailers in a Business-associated Location:- In this case, a retailer locates his
store in a place where a group o retail outlets, offering a variety of merchandise,

work together to attract customers to their retail area, and also compete against
each other for the same customers.
3) Retailers in Specialized Markets: - Besides the above location-based

classification, we also have in India-retailers who prefer specialized markets,
particularly traditional independent retailers or chain stores. In India, most of the
cities have specialized markets famous for a particular product category. For
example, in Chennai, Godown Street is famous for clothes, Bunder treet for
stationery products, Usman street for jewellery, T Nagar for ready-made garments,
Govindappan naicleen street for grocery, Poo Kadia for food and vegetables.
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4) Airport Retailing: - For quite some time, duty-free shops and newsstands
dominated the small amount of commercial space provided at airports. Lately,

serious efforts are being made to design new airport facilities in order to
incorporate substantial amounts of retail space.
The key features of airport retailing are:

• Large groups of prospective shoppers
• Captive audience
• Strong sales per square foot of retail space
• Strong sales of gift and travel items
• Difficulty in replenishment
• Longer operating hours
• Duty-free shopping possible.
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Mom-and-pop Stores and Traditional Kirana Stores
The retail sector is changing as new store categories have started dominating the
marketplace. Mass merchandisers (Wal-Mart, Big Bazaar), discount clubs (Subhiksha),
so-called category killers (Home Depot, Vishal chain), and speciality retailers (Time
Zone, Tanishq) have all developed a successful retail models. At the same time, the small
mom-and-pop stores and the traditional department stores, are finding the competition
intense. In 2002, while Wal-Mart and Target saw revenues grow (by 12% and 10%,
respectively), department stores such as Saks and Federated experienced declining
revenues (down 3% and 1% respectively). But even in the mass-merchandising segment,
the competition is fierce, as is evidenced by Kmart’s bankruptcy announcement in 2002.
Small independent stores, across product categories, is a very common retail formats they
are also undertaking large scale renovations to appeal and attract their target consumer
segments.
E-commerce
The amount of retail business being conducted on the Internet is growing every
year. Indeed, Forrester Research Agency projects e-commerce revenue to rise to $123
billion in 2004, an increase of some 28% over the previous year and for e-tailing to
comprise a bigger slice of the overall retail pie (5.6%, up from 4.5% in 2003). Many
major retail organizations and manufacturers have online retail stores. Companies like
Amazon.com and First and second.com, which helped pioneer the retail e-commerce
concept, are now being followed by bricks-and-mortar and catalogue retailers like J.
Crew, which are expanding retail e-commerce into new markets.
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Department Stores
A few years ago, names like Sears, J.C. Penney, Macy’s, and Montgomery Ward
dominated malls and downtowns all over America. Over the last decade or so, however,
these department stores have suffered badly. In part, this is a result of changing shopping
patterns and increased competition from discount stores. It has also come from financial
burdens incurred by companies that acquired competing companies and grew too fast. It
is unlikely that these players will disappear from the market. However, they should be
ready to expect more bumps as the strong get stronger and the weak get absorbed.
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Discount Stores
These are giants such as Wal-Mart (the largest retailer in the world, with more
than a million; employees), Target and Kmart, as well as membership warehouses, such
as Costco. These, along with the category killers, have changed the landscape of both the
retail industry and America. Where once mom-and-pop and department stores dominated
retail, now the discount retailers and category killers are at the top of the heap. And
where once shopping malls, anchored by at least one major department store; used to be
the dominant retail presence lining the nation’s roads, now it is the behemoth Wal-Marts
and Home Depots.
VARIETY OF MERCHANDISE MIX
The retail merchandising has come a long way in India since the days when general
stores (kirana) that stocked everything from groceries to stationery and small shops that
sold limited varieties of products (such as clothes, furniture, medicines) reigned supreme.
There are many different retail stores in India—convenience stores, supermarkets,

hypermarkets, department stores, brand stores and discount stores characterized by the
variety of merchandise mix offered by a respective retail format. The consumer can
choose between different stores for different needs. Retail units, on account of variety of
merchandise mix, can be classified as follows:
Discount Stores: - Retailers offering a broad variety of merchandise mix, limited or no
service and low prices are characterized by low margins, heavy advertising, low
investments on fixtures, limited support from sales people etc. Discount stores prefer
shopping centres that provide space at lower rents as they attract customers from other
adjoining stores in the shopping centre.
Specialty Stores: - Specialty stores stress on one or a limited number of complementary

product categories and extend a high level of service to their customers. In India, the
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traditionally independent retailers in the specialized market centres operate in a particular

product category, at these centres attract large crowds. Such specialized retail operations
provide expertise economies of scale, bargain and image to the particular stores.
Supermarkets and Hypermarkets: - A hypermarket is a very large retail unit offering

merchandise at low prices. Superstores have a sales area of over 50,000sq.ft.
Hypermarkets are characterized by large store size, low operating costs and margins, low
prices and comprehensive range of merchandise.
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3. RETAIL LOCATION STRATEGY
Location is the most important ingredient for any business that relies on customers. It is
also one of the most difficult to plan for completely. Location decisions can be complex,
costs can be quite high, there is often little flexibility once a location has been chosen and
the attributes of location have a strong impact on a retailer’s overall strategy. In India,
most retailers prefer to own the property rather than avail of the desired property through
lease or rental. This makes the location decision even more critical. Choosing the wrong
site can lead to poor results and in some cases insolvency and closure.
IMPORTANCE OF LOCATION DECISION

The importance of the location decision is due to the following factors. Location is a
major cost factor because it
• Involves large capital investment
• Affects transportation costs
• Affects human resources cost, e.g., salaries
Location is a major revenue factor because it

• Affects the amount of customer traffic
• Affects the volume of business
LEVELS OF LOCATION DECISION AND ITS DETERMINING FACTORS
A retailer has to take the location decision, basing on three aspects:

1) Selection of a city
2) Selection of an area or type of location within a city
3) Identification of a specific site
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The factors which influence these decisions are discussed below:
Selection of a City
The following factors play a significant role in the selection of a particular city for
starting or relocating an existing retail business:
• Size of the city’s trading area: A city’s trading area is the geographic region
from which customers come to the city for shopping. A city’s trading area would
comprise its suburbs as well as neighboring cities and towns. Cities like Mumbai
and Delhi have a large trading area as they draw customers from far off cities and
towns.
• Population of population growth in the trading area: The larger the population
of the trading area, the greater the potential of the city as a shopping location. A
high growth n population in the trading area can also increase the retail potential.
• Total purchasing power and its distribution: The retail potential of a city also
depends on the purchasing power of the customers and its distribution networks in
its trading area. Cities with a large population of affluent and upper middle-class
customers can be an attractive location for stores selling high-priced products such
as designer men’s wear. The fast growth in purchasing power and its distribution
among a large base of middle class is contribution to a retailing boom around
major cities in India.
• Total retail trade potential for different lines of trade: A city may b become
specialized in certain lines of trade and attract customers from other cities.
Moradabad has become an important retail location for brassware products while
Mysore is famous for silk saris.
• Number, size and quality of competition: The retailer also considers the
number, size and quality of competition before selecting a city.
• Development cost: The cost of land, rental value and other related cost.
27
Selection of an Area or Type of Location within a City
In the selection of a particular area or type of location within a city, evaluation of the
following factors is required.
• Customer attraction power of a shopping district or a particular store: Major
shopping centres like Chandni Chowk in Delhi, Colaba in Mumbai and
Commercial Street in Bangalore attract customers from far off, while small
shopping centres located in colonies attract customers from immediate
neighborhood.
• Quantitative and qualitative nature of competitive stores: Retailers would like
to evaluate the product lines carried by other sores, number of stores in the area,
etc. before selecting the area.
• Availability of access routes: The area or shopping centre should provide easy
access routes. There should not be traffic jams and congestion MG Road in
Bangalore provides easy access from different t parts of the city and hence has
become popular.
• Nature of zoning regulations: The retailer should also consider the zoning
regulations in the city.
• Direction of spread of the city: The retailer should consider the direction in
which the city is developing while selection the location.
28
Selection of a Specific Site
The choice of a specific site is particularly important. In central and secondary

shopping centre, non-anchor sores depend on customers coming to the market and the
traffic generated by anchor stores. The large stores in turn depend on attracting customers
from the existing flow of traffic. Where sales depend on nearby settlements, selecting the
trading area is even more important than picking the specific site.
29
TYPES OF RETAIL LOCATION
A retailer has to choose among alternate types of retail locations available. It may locate
in an isolated place and pull the customer to the store on its own strength, such as a small
grocery store or paan shop in a colony which attracts the customers staying close by. Or,
it may locate in a business district where ther3 are a large number of retail
establishments. If it decides to locate its store in a business district, it may have a choice
ranging for, the large shopping centres in the heart of the city or smaller shopping
complexes in a suburb.
The various options available to a retailer in India are shown below:
Free-standing Location
Where there are no other retail outlets in the vicinity of the store and therefore, the
store depends on its own pulling power and promotion to attract customers. This type of
location has several advantages including no competition, low rent, and often better
visibility from the road, easy parking and lower property costs.
Neighborhood Stores
Neighborhood stores are located in residential neighborhoods and serve a small

locality. They sell convenience products like groceries. Now, even the large organized
sector stores, which pull customers from across the city, are also coming up in suburbs or
away from major markets as free-standing locations. For example, Kemp Fort and
LifeStyle stores are free-standing stores in Bangalore away from major market of the city.
30
Highway Stores
Highway stores are located along highways or at the intersections of two highways
and attract customers passing through these highways.
Business-associated Location
These are locations where a group of retail outlets offering a variety of merchandise
work together to attract customers to their retail area, but also compete against each other
for the same customers. This type of location can be further classified as:
SITE SELECTION ANALYSIS
With the advent of new retail formats in India such as planned shopping centes and malls,
emergence of free-standing department stores, hypermarkets, etc., and further
development of traditional business districts and other unplanned shopping locations, a
retailer is presented with a wider choice of locations. Consideration of all the options
keeping in view the product mix, customer profile and overall business model presents an
enormous challenge. A retailer has to consider the following factors while selecting a
site:
• Kind of products sold

• Cost factor
• Competitor’s location
• Ease of traffic flow and accessibility
• Parking and major thoroughfares
• Market trends
• Visibility
31
Cost Factor in Location Decision
Location decision on cost considerations alone is risky. Space cost is a

combination of rent or mortgage payment, utilities, leasehold improvements, general
decoration, security, insurance and all related costs having a place to conduct business
operations. Traditionally, the retail community placed great importance on owning the
place since this was considered prestigious in the business community. However, there
are many periodic retail markets in Indian which operate on particular days of the week.
The retailers operating in these periodic markets keep shifting from place to place and do
not own any property; instead they pay a small rental for their set-up in each market. This
supports their model of selling goods at very low margins.
Competitor’s Location
The type and number of competitors is another important factor. The presence of
major retail centres, industrial parks, franchisee chains and department stores should be
noted. Intense competition in the area shows that new businesses will have to divide the
market with existing businesses. If one is not able to offer better quality and
competitively priced products, one might reconsider that particular location. An excellent
location may be next or close to parallel or complementary businesses that will help to
attract customers.
Ease of Traffic Flow and Accessibility
These two factors are more important to some businesses than others. Consider the
nature of the business you are planning to open and your potential customers. Retailers
selling convenience goods must attract business from the existing flow of traffic.
Studying the flow of traffic, noting one-way streets, street widths and parking lots, is
hence important. The following factors have to be considered: parking availability,
32
distance from residential areas or other business areas, traffic congestion, side of street,
width of street, part of the block and neighbors. Evaluate how accessible the site is for
walk-in or drive-by traffic as well as the amount of pedestrian traffic and automobile
traffic that goes by the proposed location.
Parking and Major Thoroughfares
Parking is another site characteristic that is especially a cause for concern in

densely populated areas. When evaluating the parking that exists at a retail site, there are
two considerations: parking capacity (the number of cars that can be parked), and parking
configuration (the way the parking lot is laid out, the direction of the travel lanes and
spaces, landscaping, etc.). There are several ratios that are generally used to determine
the adequacy of a parking lot. While different ratios exist for different types of retailers or
service providers, the ideal ratio for food stores is in the magnitude of 7-8 cars per 1,000
square feet of food store.
Market Trends
Evaluate the community from a broad, futuristic perspective. Local newspapers

are a good source of information. Discussions with business owners and officials in the
area can also help. Make use of information available through the Chamber of commerce.
Visibility
Visibility has a varied impact on a store’s sales potential. It is important when a

shopper is trying to find the sore for the first or second time. Once the shopper has
become a regular customer, visibility no longer matters. But consider this fact: one in five
families’ moves every year, which means that some part of a community’s population
may be ‘shopping’ in a new store.
33
4. RETAILING IN INDIA
RETAIL IN INDIA
The retail industry in India is largely unorganized and predominantly consists of

small, independent, owner-managed shops. Retailing is India’s largest industry in terms
of contribution to GDP and constitutes 13% of the GDP (Gross Domestic Product). There
are around 5 million retail outlets in India. There are also an unaccounted number of low
cost Kiosks (tea stalls, snack centres, barber shops) and pushcarts mobile vendors. Total
retail sales area in India was estimated at 328 million sq. mt. in 2001, with an average
selling space of 29.4 sq. mt. per outlet. In India, the per capita retailing space is about 2
sq. ft., which is quite low in comparison to the developed economies.
In 2000, the global management consultancy AT Kearney put retail trade at Rs

400,000 crore, which is expected to increase to Rs 800,000 crore by the year 2005—an
annual increase of 20%. According to a survey by AT Kearney, an overwhelming
proportion of the Rs 400,000 crore retail markets are unorganized. In fact, only a Rs
20,000 crore segment of the market is organized. There is no integrated supply chain
management outlook in the Indian traditional retail industry.
Food sales constitute a high proportion of the total retail sales. The share was
62.7% in 2001, worth approximately Rs 7,039.2 billion, while non-food sales were worth
Rs4189.5billion. However, the non-food retailing sector registered faster year-on-year
growth than the food sales sector. The trend to market private labels by a specific retail
store is catching on in India as it helps to improve margins. The turnover from private
labels by major retail chains was estimated at around Rs 1200 million in 2000.
34
35
36
Organized retail market in india
37
BRA_DS GIFTS & OFFERS

BIG BAZAAR 1st 3 months 15% off on fashion
1st 3 months 10% off on get Merchandize.
FOOD BAZAAR 1 KG Food bazaar sugar free

1st 3 months 3% off on foods.
Pantaloons Rs.100 off on apparel purchase of

Rs. 500 or get a T-shirt worth Rs. 299 on
apparel purchase of Rs. 1000
Central Rs. 50 off on Rs.1000 & above

purchase. For 1st 3 months Rs. 250 off
on Rs. 2500 & above purchase.
BRAND FACTORY Rs. 50 off on Rs. 1000 & above

purchase.For 1st 3 months Rs. 250 off on
Rs.2500 & above purchase.
DEPOT Rs .50 book free from exclusive

depot collection per month.
Shoe Shoe polish/socks FREE on Rs.100 per

month.
Mport/genm Airtel live VAS cards ( worth Rs.

500 content FREE)
38
Planet sports Rs. 249 Spalding/Converse cap

FREE on purchase of Rs.111 & above per
month.
F123/CO 1 video game FREE per month

with load of min. Rs. 50
TOP 10 Rs. 200 off on Rs. 1000 & above
purchase.
Home Town Gift worth Rs.250 for every Rs1000 &

above spent per month.Get gift worth 7.5%
of purchase
above Rs. 10,000 at HOME TOWN.
STAR & SITARA 1 time foot massage FREE per month.
eZONE A head phone worth Rs. 199 with

purchase through FUTURE CARD at
eZONE.
MUG worth Rs.50 on 1st purchase every month.
Bombay blue 10%-15% off on total bill amount.
COPPER CHIMNEY 10%-15% off on total bill amount
YATRA 10%-15% off on total bill amount
39
JOI_T VE_TURES:
Table 3.3
LOB NAME SIZE(PER.SQR.FT) FORMAT
RESTAURANT ,LEISURE
& ENTERTAINMENT
BLUE FOODS(50:50)
GALAXY
ENETRTAINMENT
BOWLING COMPANY
FINE DINING
RESTAURANT
(15.73%)STAKE
30,000
LIFESTYLE
F123-ARCADE &
GAMES
7000-20,000 LIFESTYLE
SPORTS BAR 2,500 LIFESTYLE
CHAMOSA 100 VALUE
FOOT WEAR RETAILING
FOOTMART RETAIL(I)LTD
LIBERTY SHOES (51:49)
SHOE FACTORY
6,000-15,000 VALUE
FASHION & SPORTS
WEAR
PLANET RETAIL(49:51)
LIFE STYLE
KIDS WEAR RETAILING
GJ FUTURE FASHIONS
LTD.(50:50)
GINI & JONY 1,500-5,000 LIFESTYLE
HEALTH ,BEAUTY &
WELLNESS
MANIPAL HEALTH
SYSTEMS
MANIPAL CURE &
CARE (50:50)
TAWALKAR’S(50:50)
LIFESTYLE & VALUE
AIRPORT(DUTY FREE
SHOPPING)
ALPHA AIRPORTS
ALPHA FUTURE(50:50)
INSURANCE
REITS & MALL MGMT
(50:50) J V
ASSICURAZIONI
40
GENERALI (ITALY)
FUTURE
GENERALI(58:16:26)
CAPIA LAND
RETAIL.LTD
(SINGAPORE
41
Central trategy
CURRENT SCENARIO
42
The Indian population is whooping 1 billion with 75% of the people living in villages and
small towns. It is only natural that the agricultural sector is the biggest employer with its
contribution to GDP pegged at 26.7%. Retail is India’s largest industry after Agriculture
with around 20% of the economically active population engaged in it and generation 10%
of our country’s GDP. The growth of the efficient small store culture can be attributed to
the 6 million villages distributed across the length and breadth of the country. The 12
million retail outlets in India are the highest in the world, and cater to the purchase need
of its pole. It is interesting to note, that the Urban Population although just 25% of the
total, is an astounding 250 million in size and is growing at a healthy rate of 7% per
annum. The chief driver of growth in the retail sector has been the consumer, with the
spending increasing at an average of 11% per annum. The Core and the Lower middle
have increased their share in the Growth.
The Indian consumer’s shopping needs are and traditionally have been fulfilled by Kirana
sores (corner stores), Kiosks, street vendors, weekly bazaars and high-street shops for
consumer durables and luxury goods. To cater to this, each city developed its own
identity and shopping cluster, for instance in Pune there is MG Road, Bangalore has
Brigade Road and Commercial Street, Delhi has Connaught Place, Karol Bagh and South
Extension. India will have 358 shopping malls by 2007. Droves of middle-class Indians
have broken off their love of traditional stand-alone shops that have no ACs, organized
parking lots and other public amenities, according to a study by fashion magazine Image.
At present (September 23, 2005), In India we have 96 malls, covering an area of 21.6
million sq ft. And by year end the count will shoot up to 158 malls. It will cover 34
million sq ft area.
43
Currently estimated at $205 billion to grow to $400-500 million, over the next 2-3 years.
• Smaller cities will have about 12.8 million sq ft of mall space by 2007.
• Ludhiana to account for 2.5 million sq ft.
• Ahmedabad about 3.4 million sq ft.
• Delhi and Mumbai now have maximum number of shopping centres.
• Gurgoan saw the largest development in terms of retail outlet.
• North region has 39% of India’s retail share.
• East region has 10% of India’s retail share.
• West region has 33% of India’s retail share.
• South region has 18% of India’s retail share.
• Government and co-operative sector is also making their steps in retailing. For
example, Kendriya Bhandar, Apna Bazar, Mother Dairy, Super Bazar etc.
44
DRIVERS OF CHANGE IN RETAILING
• Changing demographics and industry structure
• Expanding computer technology
• Emphasis on lower costs and prices
• Emphasis on convenience and service
• Focus on productivity
• Added experimentation
• Continuing growth of non-store retailing.
In today’s competitive environment retailers have redefined their role in general, and
in the value chain in particular. Retailers act as gatekeepers who decide on which new
products should find their way to the shelves of their stores. As a result, they have a
strong say in the success of the product or service launched by a business firm. A product
manager of household appliances claimed, ‘Marketers have to sell a new product several
times, first within the company, then to the retailer and finally to the user of the product.’
It is a well-established fact that manufacturers need to sell their products through
retail formats that are compatible with their business strategy, brand image, and market
profile in order to ensure a competitive edge. The role of retailers in the present
competitive environment has gained attention from manufacturers because external
parties such as market intermediaries and supplying partners are becoming increasingly
powerful. It is necessary for marketers of consumer products to identify the need and
motivations of their partners in the marketing channel. This is especially true in the case
or new products.
The increasing numbers of product categories followed by multiple brands in each
category complicate decision-making for both manufacturers and market intermediaries.
45
Retailers want of optimize sales within the limited shelf space, governed by their
individual sales philosophy. Retailers undertake risk in selecting a portfolio of products
or brands to offer to their customers. Retailers have to make optimum selection of goods
to be sold given the following major concerns:
• Selling space available is relatively fixed and must return maximum profits. If
such space is occupied by merchandise that is not moving, it will not result in
profit. The retailer may have to resort to substantial price reductions in order to get
rid of the unsold stock.
• Selling space available is relatively fixed and must return maximum profits. If
such space is occupied by merchandise that is not moving, it will not result in
profit. The retailer may have to resort to substantial price reductions in order to get
rid of the unsold stock.
Retailing is a dynamic industry---constantly changing due to shifts in the needs of the

consumers and the growth of technology. Retail formats and companies that were
unknown three decades ago are now major forces in the economy. Therefore, the
challenges for retail managers the world over are increasing---they must take decisions
ranging from setting the price of a bag of rice to setting up multimillion dollar stores in
malls. Selecting target markets, determining what merchandise and services to offer,
negotiating with suppliers, training salespeople---these are just a few of the many
functions that a retail manager has to perform on a perpetual basis.
The world over retail business is dominated by smaller family run chain stores and
regionally targeted stores but gradually more and more markets in the western world are
being taken over by billion dollar multinational conglomerates, such as Wal-Mart, Sears,
McDonald’s, Marks and Spencer. The larger retailers have managed to set up huge
supply/distribution chains, inventory management systems, financing pacts and wide-
scale marketing plans. In the backdrop of globalization, liberalization and highly aware
customers, a retailer is required to make a conscious effort to position himself
46
distinctively to face the competition. This is determined to a great extent by the retail mix
strategy followed by acompany to sell its products.
Strategic Planning in Retailing

A retail strategy is overall plan that guide a firm. It consists of situation analysis objectives
identification of customer market, broad strategy specific activities, control and Feedback.
Situation Analysis Objectives Identification Specific activities
Control
Overall
Strategy
Organisational mission
Ownership Management alternatives
Goods/Services Category
Sales
Profit
Satisfaction of Publics
Image
Mass Marketing
Concentrated Marketing
Differentiated Marketing
Controllable Variables
Uncontrollable Variables
Daily and Short term Operations
Responses of environment
Evaluation
Adjustment
Feedback
Element of Retail Strategy
47
MAJOR RETAILER SPACE HOLDERS IN INDIA
Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Food Bazaar,
Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World Entertainment Ltd.,
Pantaloon Retail India Ltd., Shoppers Stop, Subhiksha, Titan Industries, Trent and the
new entrants penetrating the market soon will include Reliance Retail Ltd, Wal-Mart
Stores, Carrefour, Tesco, Boots Group, etc.
48
RETAIL VIABILITY
As per the CII McKinsey report, based on a GDP growth rate of 6-7% per annum, by
2010 the retail sector is expected to be US $ 300 Billion industry. Some of the major
factors hindering the growth of this sector are as follows:
• The non-industry structure and status
• The lack of adequate infrastructure
• FDI restrictions in this sector
• The huge investments required in expanding their markets,
• Problems associated with working Capital funding from lending Institutions.
49
5. SWOT OF THE MARKET
50
STRENGTH
1) Organized retailing at US$ 3.31 billion, growing at 8%.
2) 2nd largest contributor to GDP after agriculture at 20%.
3) Pattern of consumption changing along with shopping trends.
4) A Growing population will translate to move consumers.
5) Consumer spending increasing at 11% annually.
6) Almost 25 million sq. ft. retail space available.
7) Paradigm shift in shopping experience for consumers pulling in more people.
8) Most of the entrants to organized retail come from 3 main categories, and have
ventured into retail as their business extension.
• Real Estate Developers

• Corporate Houses
• Manufacturers/Exporters
WEAKNESSES
1) Shortage of quality retail spaces at affordable rates.
2) Government regulations on development of real estate(Urban Land Ceiling Act)
3) Need to provide Value for Money-squeezing margins
4) Lack of industry status.
5) Retail revolution restricted to 250 million people due to monolithic urban-rural divide.
6) Footfalls not a clear indicator of sales as actual consumers lower in number.
7) Lack of huge investments for expansion

51
OPPORTUNITIES
1) Increasing urban population-more participants in retail revolution.
2) Increase in consuming middle class population.
3) Social factors like dual household income has enhanced spending power.
4) Spends moving towards lifestyle products and esteem enhancing products.
5) Availability of old industrial lands-prime real estate locked in sick industrial units.
6) Average grocery spends at 42% of monthly spends-presents a huge opportunity.
7) Increase in use of credit cards.
THREATS
1) Rising lease/rental costs affecting project viability
2) FDI restrictions in the retail sector
3) Poor monsoons and low GDP Growth could affect consumer spending drastically.
4) Archaic labour laws are a hindrance to providing 24/7 shopping experience
5) Personalized service offered by Mom-&-Pop stores.
6) Unavailability of qualified personnel to support exponential growth in retail.
7) Differentiate taxation laws hindering expansion.
52
6. INDIAN CONSUMERISM
The lifestyle and profile of the Indian consumer is going through a rapid transformation.
The population of India is young, energetic and full of enthusiasm. 50% of the Indian
population is under the age of 25. There has been a transition from price
consideration to quality and design, as the focus of the customer has changed. The
upper and middle- class population of today needs a feel good experience even if
they have to spend a little more for that. People are moving towards luxury and want
to experiment with fashion and technology. There is an increasing need of better
apparels, cars, mobile phones and consumer durables.
53
The food & grocery, clothing, consumer durables and books & music sectors are the
major retail sectors. However, unorganized small outlets largely control the sector. Hence
there is tremendous potential for the organized sector in various formats, such as
hypermarkets, supermarkets, specialty stores, category killers and discount chains.
Controllable Variables Uncontrollable Variables
1. Store Location 1. Consumers

2. Managing business
2. Competition
3. Merchandise management
3. Technology
and pricing
4. Communicating with the 4. Economic Condition
Customer
5.Seasonality
54
FACTORS AFFECTING CONSUMER DECISION-MAKING
A consumer’s purchase decision tends to be affected by the following four factors:

1) Demographic
2) Psychological
3) Environmental
4) Lifestyle
55
DEMOGRAPHIC FACTORS
Demographic factors are unique to a particular person. They are objective,

quantifiable and easily identifiable population data such as sex, income, age, marital
status etc. It also involves identification of who is responsible for the decision-making or
buying and who is the ultimate consumer.
PSYCHOLOGICAL FACTORS
Psychological factors refer to the intrinsic or inner aspects of the individual. An
understanding of consumers’ psychology guides the marketers’ segmentation strategy.
ENVIRONMENTAL FACTORS
Environmental factors cover all the physical and social characteristics of a
consumer’s external world, including physical objects, spatial relationships, the social
factors , co customers, reference groups, social class . The environmental factors
influence consumers’ wants, learning, motives, which in turn influence effective and
cognitive responses and among other things the shopping behavior of the individual.
LIFESTYLE
Lifestyle refers to an individual’s mode of living as identified by his or her
activities, interests and opinions. Lifestyle variables have been measured by identifying a
consumer’s day-to-day activities and interests. Lifestyle is considered to be highly
correlated with consumer’s values and personality.
An individual’s lifestyle is influenced by, among other things, the social group he
belongs to and his occupation. For example, double-income-no-kids (DINKS) families in
metros shop very regularly at the super malls because of the limited time at their disposal
and they also look for entertainment while shopping on weekends. At the same time, they
are higher spenders than, for e.g., single-income families.
56
7. DIVISION OF RETAILERS IN INDIA
The retail sector in India can be divided into two major categories:
1) Organized
2) Unorganized
57
TRADITIONAL v/s MODERN FORMAT RETAILERS
The retail boom will face a strong competition from the 12 million mom-and-pop stores.
These are easily accessible and provide services like free home delivery and goods at
credit, which is not possible with hypermarkets and supermarkets. Buying from Malls,
Supermarkets and Department stores like Subhiksha, Marks & Spencers, etc. provide a
different environment where one can pick and choose from a variety of products. Owing
to the entry of such big players, the small shopkeepers fear losing their business. Reliance
Retail Ltd. has been inviting such people to join in its Dairy business as franchisees.
Traditional family run convenience stores are too well established in India than to be
wiped out and besides there is uniqueness in the traditional items that represent the sub-
continent. The retail stores in India are essentially dominated by the unorganized sector
or traditional stores. In fact the traditional stores have taken up 98 percent of the Indian
retail market. Now stores run by families are primarily food based and the set up is as
Kirana or the 'corner grocer' stores. Basically they provide high service with low prices.
If the stores are not food based then the type of retail items available are local in nature.
The traditional family run convenience stores can take pride in the fact that the Kirana is
the most common outlet forms for the consumers. The tough competition for convenience
stores are coming from organized retail stores dealing in food items, like:
• Apna Bazaar
• Canteen stores
• Food World
• Subhiksha
• Food Bazaar
58
Convenience Stores are open for long hours and are one of the formats of the Indian
retail stores that cater to basic needs of the consumer. A good example of such would be
Convenio. These stores are found in both residential as well as commercial markets. The
food products of traditional family run convenience stores are comprised of branded as
well as non-branded items. The benefits of family run convenience stores is that they give
importance to:
• Personal touch
• Facilities of credit
• Quick home delivery
Non-food based stock comprises of multiple and varieties of local brands. The future of
such stores as they face competition from organized sector would depend on the
following particulars:
• Place and capacity

• Diligent area coverage
• Disciplined work schedule
• Managing turnover
• Revenue from assets
• Customer service and satisfaction
The traditional family run convenience stores serves the purpose of the housewives
who definitely wants to avoid traveling long distances to purchase daily needs. The
convenience factor in terms of items, among people in general can be highlighted as
below:
• Groceries
• Fruits
• Drug Store
59
• Necessary stationery
As such traditional family run convenience stores are here to stay and cannot be
oversized by the organized retail sector besides, it represents the variety of India.
60
I. 9. CONCLUSION
The convenience and personalized service offered by the unorganized sector holds its
future in good stead for the future. Organized retail of late has seen a tremendous boom
and is attracting more people to the malls.
What is to be seen is how organized retail can duplicate the same level of personalized
customer service levels offered by the unorganized sector to have a higher conversion
ratio.
The target audience for both the organized and unorganized retail formats remains
relatively the same. When shopping in malls, people value the experience related to the
trip the most and return most frequently for the same. Besides, while enjoying the
experience they seem to buy high ticket and items of conspicuous consumption most
frequently.
61

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Retailing can be distinguished in various ways from other businesses such as

• There is direct end-user interaction in retailing.

Direct Interaction with Customers

Lower Average Amount of Sales Transaction

Point-of-purchase Display and Promotions

Larger Number of Retail Business Units

Retailers play a significant role as a conduit between manufacturers, wholesalers,

Breaking bulk is another function performed by retailing. The word retailing is

Retailers ease the change in ownership of merchandise by providing services that

TRANSPORT AND ADVERTISING FUNCTIONS

ACTIVITIES PERFORMED BY RETAILERS

1) Arrange for assortment of offerings

An assortment is a retailer’s selection of merchandise. It includes both the depth

Breaking bulk means physical repackaging of the products by retailers in small

To ensure the regular availability of the offerings retailers maintain appropriate

Retailing provides multiple services to immediate customers and other members of

• Be prepared for change.

A retail unit could be owned by:

CLASSIFICATION OF RETAIL UNITS

Conceptual classification of a business unit provides the marketers with strategic

Retailers Classified on the Basis of Ownership

There are four basic legal forms of ownership for retailers:

2) Partnership: - A partnership is a common format in India for carrying out

4) Limited liability Company (public and private):- The Limited Liability

Classification of Retailers on the basis of Operational Structure

1) Independent retail unit: - The total number of retailers in India is estimated to be

3) Franchising: - Franchising involves a contractual arrangement between a

4) Leased Department or Shop-in-shop:- It refers to department in a retail store

5) Co-operative Outlets: - Co-operative outlets are generally owned and managed

Classification of Retailers on the basis or Retail Location

Classification of retailers on the basis of location is discussed below:

1) Retailers in a free-standing location: - Retailers located at a site which is not

2) Retailers in a Business-associated Location:- In this case, a retailer locates his

store in a place where a group o retail outlets, offering a variety of merchandise,

3) Retailers in Specialized Markets: - Besides the above location-based

dominated the small amount of commercial space provided at airports. Lately,

The key features of airport retailing are:

Mom-and-pop Stores and Traditional Kirana Stores

There are many different retail stores in India—convenience stores, supermarkets,

Specialty Stores: - Specialty stores stress on one or a limited number of complementary

traditionally independent retailers in the specialized market centres operate in a particular

Supermarkets and Hypermarkets: - A hypermarket is a very large retail unit offering

3. RETAIL LOCATION STRATEGY

IMPORTANCE OF LOCATION DECISION

Location is a major revenue factor because it

A retailer has to take the location decision, basing on three aspects:

The factors which influence these decisions are discussed below:

Selection of an Area or Type of Location within a City

Selection of a Specific Site

The choice of a specific site is particularly important. In central and secondary

TYPES OF RETAIL LOCATION

The various options available to a retailer in India are shown below:

Neighborhood stores are located in residential neighborhoods and serve a small

• Kind of products sold

Cost Factor in Location Decision

Location decision on cost considerations alone is risky. Space cost is a

Ease of Traffic Flow and Accessibility

Parking and Major Thoroughfares

Parking is another site characteristic that is especially a cause for concern in

Evaluate the community from a broad, futuristic perspective. Local newspapers

Visibility has a varied impact on a store’s sales potential. It is important when a