Retail Module1

Retailing Definition

Retailing is a convenient, convincing and comfortable method of

selling goods and services. Retailing, though as old as business,
trade and commerce has now taken new forms and shapes. This is
because of new management techniques, marketing techniques and
also due to ever changing and dynamic consumer psychology.

What is Retail ?

Retail involves the sale of goods from a single point (malls, markets,
department stores etc) directly to the consumer in small quantities
for his end use. In a layman‘s language, retailing is nothing but
transaction of goods between the seller and the end user as a single
unit (piece) or in small quantities to satisfy the needs of the individual
and for his direct consumption.
Let us understand the concept with the help of an example.
Tim wanted to purchase a mobile handset. He went to the nearby
store and purchased one for himself.
In the above case, Tim is the buyer who went to a fixed location (in
this case the nearby store). He purchased a mobile handset
(Quantity - One) to be used by him. An example of retail.
The store from where Tim purchased the handset must have shown
him several options for him to select one according to his budget and
need.
From where do you think the store owner (also called the retailer)
purchased all the handsets?
Here the manufacturers and the wholesalers come into the picture.
The retailers purchase goods in bulk quantities (huge numbers) to be
sold to the end-users either directly from the manufacturers or
through a wholesaler.
Definition and Scope of Retailing:

Retail Industry, one of the fastest changing and vibrant industries in

the world, has contributed to the economic growth of many
countries. The term 'retail' is derived from the French word retailer
which means 'to cut a piece off or to break bulk'. In simple terms, it
implies a first-hand transaction with the customer.

Retailing can be defined as the buying and selling of goods and

services. It can also be defined as the timely delivery of goods and
services demanded by consumers at prices that are competitive and
affordable.

Retailing involves a direct interface with the customer and the

coordination of business activities from end to end- right from the
concept or design stage of a product or offering, to its delivery and
post-delivery service to the customer. The industry has contributed
to the economic growth of many countries and is undoubtedly one of
the fastest changing and dynamic industries in the world today.
Concept of retaling -The Supply chain

Manufacturers ........................ Retailers ................ End User

(Consumer)
Wholesalers

 Manufacturers - Manufacturers are the ones who are involved

in production of goods with the help of machines, labour and
raw materials.
 Wholesaler - The wholesaler is the one who purchases the
goods from the manufacturers and sells to the retailers in large
numbers but at a lower price. A wholesaler never sells goods
directly to the end users.
 Retailer - A retailer comes at the end of the supply chain who
sells the products in small quantities to the end users as per
their requirement and need.

The end user goes to the retailer to buy the goods (products) in
small quantities to satisfy his needs and demands. The
complete process is also called as Shopping.

 Shopping - The process of purchasing products by the

consumer is called as shopping. However there are certain
cases where shopping does not always end in buying of
products. Sometimes individuals do go for shopping but return
home empty handed. Such a shopping is merely for fun and is
 called window shopping. In window shopping, individuals
generally go to the market, check out various options and their
prices but do not buy anything. This kind of shopping helps to
break the monotony.

What are the Functions of Retailing?

Various parties to the production and distribution of goods play a

pivotal role in any economy keeping the robust volume of trade and
commerce flowing through the market, leading a nation to
prosperity. One of the important participants in the distribution
network is the retailer. There are many functions of retailing which
have to be taken care of by the retailer. Before we go to retailing, let
us understand the major participants of distribution.

Major participants in Production and Distribution cycle

The major participants in any commercial cycle are:

1. Manufacturer – the one who sources raw materials, land, labor

and applies his entrepreneurial skills in the production of goods.
2. Wholesaler – deploys huge investments in warehousing and
stocking of goods bought in bulk quantities from the
manufacturer to sell them at a wholesale mark up i.e. profit
margin to the retailers.
3. Retailers – selling the goods bought from the manufacturer to
the final consumer.
4. Consumers – they are the people who buy goods from the
retailer to satisfy their daily needs.

Functions of Retailing

Retail trade performs many valuable functions for the trade and
commerce as a whole. Some of them are as follows:

1) Delivery of the goods to the end consumer

This makes shopping for all requirements quite hassle-free for the
consumers. This also facilitates consumption and maximizes
consumer satisfaction. Because the company cannot take
responsibility of delivery to every single customer, it appoints
retailers. One of the functions of retailing is immediate delivery.

2) Is an essential part of the distribution chain

Because the retailer takes over the cumbersome task of distribution

of goods manufactured to the target market, the manufacturer is
relieved of this responsibility and can divert his resources to
manufacturing activities.

3) Finances the wholesaler

While booking his order of goods with the wholesaler, the retailer
pays some percentage or the whole of the order price in advance.
This helps the wholesaler to carry on with his operations seamlessly.
In some industries, it is the retailer who pays cash to maintain stock
and in others the wholesaler has to carry the stock as paid capital.
Nonetheless, financing is one of the major functions of retailing. A
retailer who does not contribute to financing will bring down
the effectiveness of the supply chain.

4) Stores the goods according to market requirement

The retailer invests his working capital in building a gamut of

inventory reflecting market requirements. He also sells the requisite
quantity, however small or big, to the final consumers satisfying their
needs. The retailers know the complete demand and supply potential
due to their years of experience. Hence it is one of the functions of
retailing to balance the demand and supply as per external market
conditions.

5) Lends a hand in manufacturer’s marketing initiative

Retailer plans and executes many advertising and promotion

activities at the point of purchase i.e. right in his store. This leads to
gain in popularity of and favorable market conditions for
the product of the manufacturer

6) Assumes storage and credit risks

When the retailer orders and stores a large quantity of goods from
the manufacturer, he makes sufficient provisions to store it safely for
some days. This involves costs. Also, there is also a risk of loss of
these goods on account of destruction, theft, spoilage etc. The
retailer assumes these risks while storing goods.

7) Extends credit facilities to the consumers and assumes credit risk

The retailer does so to encourage shopping. This adds to the vigor of

commercial activities in the economy. But there is also a risk that the
customers won‘t pay for the goods bought or may return damaged
goods to the retailer. This inherent risk in trade is assumed by the
retailer.

8) Offers wide variety of customers and enticing price range in

a product line In order to attract more customers, a retailer offers a
wide range of merchandise at attractive prices. This results in higher
consumer satisfaction and higher standards of living in any
economy.

9) Provides convenience in shopping

Retailers try to set up their shops nearby housing areas or near

parks, schools – the areas where the customer finds it very
convenient to shop. This enhances the consumer welfare.

10) Offers after sale services, differentiated packaging, giving more

information about the use of the product

All these activities add value to the retail transaction and cater to
various requirements of the consumers suitably.

11) Hears the voice of the market

The retailer measures the pulse of the market by listening to the
consumer feedback, expectations, complaints, and by observing a
shift in the tastes and preferences of the consumers. This arms him
with very critical market intelligence enabling the entire commercial
fraternity to gear up for the changing economic scenario.

12) Generating employment for masses

Retail trade, especially the brick-and-mortar models, are human

resource-centric establishments. They require many employees for
numerous functions such as stock taking, over the counter selling,
packaging, after sales services, floor management etc. Thus, retail
sector thrives with lots of lucrative employment opportunities for all
the talented job aspirants.

strategic planning

Strategic planning is an organization‘s process of defining its

strategy, or direction, and making decisions on allocating its
resources to pursue this strategy, including its capital and people.
Various business analysis techniques can be used in strategic
planning, including SWOT analysis (Strengths, Weaknesses,
Opportunities, and Threats ) and PEST analysis (Political, Economic,
Social, and Technological analysis) or STEER analysis involving
Socio-cultural, Technological, Economic, Ecological, and Regulatory
factors and EPISTELS (Environment, Political, Informatic, Social,
Technological, Economic, Legal and Spiritual)

Strategic planning is the formal consideration of an organization‘s

future course. All strategic planning deals with at least one of three
key questions:

1. ―What do we do?‖
2. ―For whom do we do it?‖
3. ―How do we excel?‖

In business strategic planning, the third question is better phrased

―How can we beat or avoid competition?‖. In many organizations,
this is viewed as a process for determining where an organization is
going over the next year or more—typically 3 to 5 years, although
some extend their vision to 20 years. In order to determine where it
is going, the organization needs to know exactly where it stands,
then determine where it wants to go and how it will get there. The
resulting document is called the ―strategic plan‖.

Strategic planning may also be a tool for effectively plotting the

direction of a company; however, strategic planning itself cannot
foretell exactly how the market will evolve and what issues will
surface in the coming days in order to plan your organizational
strategy. Therefore, strategic innovation and tinkering with the
‗strategic plan‘ have to be a cornerstone strategy for an organization
to survive the turbulent business climate.

Strategic management seeks to coordinate and integrate the

activities of the various functional areas of a business in order to
achieve long-term organizational objectives. A balanced scorecard
is often used to evaluate the overall performance of the business and
its progress towards objectives.

No discussion of strategic planning can ignore the micro and macro

factors that are relevant in the success and possible failure of the
retail business. The business environment is a marketing term and
refers to factors and forces that affect a firm‘s ability to build and
maintain successful customer relationships. The three levels of the
environment are. We will focus on micro and macro factors in this
module:

1. Micro (External) environment – small forces within the company

that affect its ability to serve its customers.
2. Internal environment – can be controlled, however, it can‘t
influence an external environment.
3. Macro (external) environment – larger societal forces that affect
the microenvironment.

Type of Retail Outlets

Retailing refers to a process where the retailer sells the goods
directly to the end-user for his own consumption in small quantities.
Types of Retail outlets
 Department Stores

A department store is a set-up which offers wide range of

products to the end-users under one roof. In a department
store, the consumers can get almost all the products they
aspire to shop at one place only. Department stores provide a
wide range of options to the consumers and thus fulfill all their
shopping needs.
Merchandise:
Electronic Appliances
Apparels
Jewellery
Toiletries
Cosmetics
Footwear
Sportswear
Toys
Books
CDs, DVDs
Examples - Shoppers Stop, Pantaloon

 Discount Stores

Discount stores also offer a huge range of products to the end-

users but at a discounted rate. The discount stores generally
offer a limited range and the quality in certain cases might be a
little inferior as compared to the department stores.
Wal-Mart currently operates more than 1300 discount stores in
United States. In India Vishal Mega Mart comes under discount
store.
Merchandise:
Almost same as department store but at a cheaper price.

 Supermarket

A retail store which generally sells food products and

household items, properly placed and arranged in specific
departments is called a supermarket. A supermarket is an
advanced form of the small grocery stores and caters to the
 household needs of the consumer. The various food products
(meat, vegetables, dairy products, juices etc) are all properly
displayed at their respective departments to catch the attention
of the customers and for them to pick any merchandise
depending on their choice and need.
Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
Fruits
Soft drinks
Frozen Food
Canned Juices

 Warehouse Stores

A retail format which sells limited stock in bulk at a discounted

rate is called as warehouse store. Warehouse stores do not
bother much about the interiors of the store and the products
are not properly displayed.

 Mom and Pop Store (also called Kirana Store in India)

Mom and Pop stores are the small stores run by individuals in
the nearby locality to cater to daily needs of the consumers
staying in the vicinity. They offer selected items and are not at
all organized. The size of the store would not be very big and
depends on the land available to the owner. They wouldn‘t offer
high-end products.
Merchandise:
Eggs
Bread
Stationery
Toys
Cigarettes
Cereals
 Pulses
Medicines

 Speciality Stores

As the name suggests, Speciality store would specialize in a

particular product and would not sell anything else apart from
the specific range.Speciality stores sell only selective items of
one particular brand to the consumers and primarily focus on
high customer satisfaction.
Example -You will find only Reebok merchandise at Reebok
store and nothing else, thus making it a speciality store. You
can never find Adidas shoes at a Reebok outlet.

 Malls

Many retail stores operating at one place form a mall. A mall

would consist of several retail outlets each selling their own
merchandise but at a common platform.

 E Tailers

Now a days the customers have the option of shopping while

sitting at their homes. They can place their order through
internet, pay with the help of debit or credit cards and the
products are delivered at their homes only. However, there are
chances that the products ordered might not reach in the same
condition as they were ordered. This kind of shopping is
convenient for those who have a hectic schedule and are
reluctant to go to retail outlets. In this kind of shopping; the
transportation charges are borne by the consumer itself.
Example - EBAY, Rediff Shopping, Amazon

 Dollar Stores

Dollar stores offer selected products at extremely low rates but

here the prices are fixed.
Example - 99 Store would offer all its merchandise at Rs 99
only. No further bargaining is entertained. However the quality
of the product is always in doubt at the discount stores.
 Retail Planning, Development and Control.

planning is a formal process. Thus, it is marked by specific activities

in which firms engage to build a marketing plan, ensuring that the
entire organization is aligned on strategic priorities. The actions
included in strategic planning are:

1. Objective Setting
2. Situational Analysis
3. Customer Analysis
4. Tactical Planning
5. Implementation and Control

Objective Setting

A firm might pursue any number of objectives for any number of

reasons. For example, an objective around sales could be expressed
by total revenue, total units, or YOY (year over year) growth.

Yet these objectives, though all focused on sales, are not all the
same. There are clear difference between those measures and what
they might mean for an organization. Further, the measure is only
part of the consideration. The stated objective might be made with
an eye ultimately on profitability or market share or operational
efficiency. Objective setting is not just stating a goal, ambition or
target. It isn‘t only about WHAT the firm plans to accomplish, such as
―grow category sales by 4%‖ or ―increase profit to $150k‖ or ―reduce
returns to <5%.‖ It must also include the plan for HOW the firm can
accomplish that goal, which implies WHY the objective is
strategically important.

In this way, the objectives listed above might be revised to read:

 ―Grow category sales by 4% by increasing merchandising and

promotional activity.‖
 ―Increase profit to $150k by introducing new flavors and
regional brands.‖
 ―Reduce spoilage to <5% by increasing stock rotation in
produce.‖
As you can see, the specific measurable goal didn‘t change. But,
each objective now includes language around how it will be
achieved. And, in doing so, they imply the organizational priorities,
the ―why.‖ By adding this detail, the firm helps the broader
organization focus on the activities that support the strategy.

For example, while we could raise prices or reduce product costs or

eliminate marketing expenses to increase profit by $150k, the
inclusion of ―by introducing new flavors and regional brands‖
informs the organization how the objective is to be met. And, in doing
so, we understand that there is value in changing our assortment to
provide more variety and popular local items for shoppers. Thus,
there‘s little room for confusion about what‘s important. In this case,
it is likely the shopper experience, reflected in variety and local
products. Thus, the firm helps the broader organization focus on the
activities that support the strategic opportunity and gives it meaning.

Situational Analysis

Situational analysis helps decision-makers in the firm understand

what to do and how to do it. At its most basic level, it‘s a multi-
dimensional consideration of the context (the environment in which
we‘ll compete), organizational capabilities, customer, and
competition. These factors describe the business environment, how
our own abilities can deliver value relative to consumer needs, and
the likely actions/reactions of our competitive set.

Customer Analysis

Customer analysis is a critical activity that ultimately helps focus

marketing and sales resources more efficiently. It includes research
into and analysis of consumer behavior, the results of which inform
segmentation, targeting, and positioning. Thus, rather than
marketing a product or actively trying to sell it across a wide swath
of the total population, customer analysis helps break the population
into smaller homogenous segments. From these, marketers select
the sub-population of potential customers who are the most
attractive and most accessible for targeting.

This is based upon both the long-term economic attractiveness of

the segment and the firm‘s organizational capabilities. In this way,
the firm can optimize its marketing mix to position its offerings to
meet these consumers‘ needs. This both ensures that consumers‘
needs are satisfied and creates a virtuous cycle wherein the firm can
continue to innovate, developing products that suit its core
consumers, despite changing needs and demands.

Tactical Planning

Tactical plans are the short-term actions the firm takes to affect the
controllable elements of the strategy. For example, if a firm has the
objective to ―grow category sales by 4% by increasing
merchandising and promotional activity,‖ a relevant tactic might be
to plan robust promotional activity in key seasons. For example, this
might mean that merchants engage their vendors in the soft drink
and salty snacks categories to support promotions and allocate in-
store space for merchandisers or store associates to build displays
in advance of the New Year‘s holiday or the Super Bowl. It could also
mean that the corporate marketing team develops in-store circulars
or television commercials to promote sale items around
Thanksgiving, asking store managers to bring in shippers and high
backstock levels to ensure sufficient inventory is kept on-hand. Each
of these examples illustrate how a short-term tactical execution
supports the broader objective of growing category sales by 4% by
increasing merchandising and promotional activity.

Implementation and Control

Implementation and control refers to how the firm puts its strategic
plan into place, including how it organizes cross-functionally and
communicates priorities. Further, it also includes how the firm tracks
progress toward its objectives, measuring performance so that
adjustments can be made, if necessary. Certainly, a firm is
responsible for managing its controllable variables. But, robust
monitoring and control systems help firms react and adjust to
uncontrollable variable like changes to the business environment or
specific competitive activity.

Strategic planning is a formal process firms (should) undergo to

develop a plan for how best to compete, given the business
environment, the firm‘s own capabilities relative to the needs of the
customer and the anticipated actions/reactions of competitors. The
outcome of this process is a marketing plan, the ―road map‖ for how
the firm will pursue its strategic objectives. It is a shared document
to ensure that the entire organization is aligned on priorities and
action items, regardless of function.

Knowing your Customers

If changing consumer behaviour is driving the move away from

traditional seasons, it is even more important to be able to
understand data and trends. Retail marketing expert Stella Hartley
sets out the key rules.

The customer has always been King (or Queen) to retailers, now with
the growth of e-commerce and digital media it seems we are
sometimes overwhelmed with customer data, not only what
customers have bought or spent but what they are thinking and
feeling and how they are living their lives.

The vital thing for retailers is to focus on what all this data actually
means for them and to think about WHY customers behave in the way
they do and how retailers can influence this behaviour.

It‘s about getting to what marketers call ‗insights‘, key information

about your customers that you can use to shape your offer and gain
competitive advantage whatever channels you sell through.

1 TALKING HELPS

There‘s no substitute to actually talking to customers, preferably

physically when they are shopping, in focus groups or virtually
through Social Media, product reviews or SurveyMonkey.
Conversations and listening can help you make sense of and provide
rationales for the sales data you are analysing.

2 SPEED

A key trend most retailers have spotted is that customers are more
demanding, the internet has sped everything up, customers want
more newness, they have a shorter attention span, one seasonal
range isn‘t going to excite them.
3 ADDED VALUE

They can price compare instantly online so it‘s better to have

exclusive product or an added value shopping experience and a
strong brand reputation that customers trust. If they buy online they
want deliveries faster and to be able to return products quickly and
easily (and preferably at no cost!)

4 SEGMENTATION

Customer segmentation can be a really useful tool to help you

understand customer types, who is buying what, which segment is
commercially more valuable, which segment is growing. Make sure
your range reflects the segments but importantly not too many
segments or the offer will look too fragmented and your brand will
lack focus. Sometimes deciding who your customer isn‘t is as
important as deciding who it is.

5 DISCOUNTING

Customers are increasingly savvy about promotions and special

offers, the recession has taught them to wait for the discounts which
now are more frequent and less likely to be twice yearly big sales.

6 EVENTS

Instead, Black Friday has become the most anticipated retail event
of the year which has made both customers and retailers rethink the
crucial lead up to Christmas. Customers now feel that if they don‘t
shop that weekend or don‘t get some amazing buys they have
somehow failed! Even small businesses can create relevant offers
that add value rather than succumb to big discounts.

7 HAVE A POINT OF VIEW

Having a clear point of view is crucial to creating a strong brand and

building a relationship with customers. Importantly, it also gives you
a framework within which to develop your range. Some retailers can
rely on suppliers to do all the work and come up with a constant
stream of new ideas, but it depends on the sector you are in and the
quality of your supply base.
8 TREAD CAREFULLY WITH TRENDS

Advice from seasoned designers and buyers is don‘t slavishly follow

trends, use the good forecasting tools that are available but look
everywhere (markets, vintage, blogs, cool brands) for ideas and
inspiration. Sometimes originality is in the ability to edit. WGSN,
Style.com, Premier Vision, Pitti Filati, Pitti Uomo, Maison et Objets
and Heimtextil can all provide good research opportunities but
everyone follows everyone else – how to break out and be different is
a real skill, particularly when you want to have a POV but not get
caught with stock you can‘t shift!

9 BE CULTURALLY AWARE

If you are a major department store business you can more easily
monitor macro economic and lifestyle trends with hired experts, if
not you have to be aware of what‘s going on around you. Be aware
that the popularity of the Great British Bake Off and the growing
interest in gardening and knitting means that alongside technology
there is a consumer trend which is about more authentic, homespun,
tactile activities and relaxation.

10 FILTER THE INFORMATION

In a world that‘s shrinking with global communications and transport

networks it‘s not difficult to find lots of potential suppliers to help
with product development, but it‘s the filtering of those suppliers,
whether on ethical grounds, style, fashionability, price, quality,
reliability and crucially fit with your brand and POV, that is the
challenge.

11 REMEMBER TO LOOK UP

It‘s about being aware of what‘s happening outside your business,

it‘s all too easy to be very inwardly focused particularly when
running a small business with little resource.

Focusing on the Consumer

Customer‘s Buying Behavior Patterns
The needs, tastes, and preferences of the consumer for whom the
products are purchased drives the buying behavior of the customer.
The pattern of customer‘s buying behavior can be categorized as −

Place of Purchase

Customers divide their place of purchase. Even if all the products

they want are available at a shop, they prefer to visit various shops
and compare them in terms of prices. When the customers have a
choice of which shop to buy from, their loyalty does not remain
permanent to a single shop.
Study of customer‘s place of purchase is important for selection of
location, keeping appropriate merchandise, and selecting a
distributor in close proximity.

Product Purchased

It pertains to what items and how many units of items the customer
purchases. The customer purchases a product depending upon the
following −

 Availability/Shortage of product
 Requirement/Choice of product
 Perishability of product
 Storage requirements
 Purchasing power of oneself
This category is important for producers, distributors, and retailers.
Say, soaps, toothbrushes, potatoes, and apples are purchased by a
large group of customers irrespective of their demographics but live
lobsters, French grapes, avocadoes, baked beans, or beef are
purchased by only a small number of customers with strong
regional demarcation.
Similarly, the customers rarely purchase a single potato or a
banana, like more than two watermelons at a time.

Time and Frequency of Purchase

Retailers need to keep their working time tuned with customer‘s
availability. The time of purchase is influenced by −

 Weather
 Season
 Location of customer
The frequency of purchase mainly depends on the following factors
−

 Type of commodity
 Degree of necessity involved
 Lifestyle of customers
 Festivals and customs
 Influence of the person accompanying the customer.
For example, Indian family man from intermediate income group
would purchase a car not more than two times in his lifetime
whereas a same-class customer from US may buy it more
frequently. A tennis player would buy required stuff more frequently
than a student learning tennis at a school.

Method of Purchase

It is the way a customer purchases. It involves factors such as −

 Is the customer purchasing alone or is accompanied by

someone?
 How does the customer pay: by cash or by credit?
 What is the mode of travel for the customer?

Response to Sales Promotion Methods

The more the customer visits a retail shop, the more (s)he is
exposed to the sales promotion methods. The use of sales
promotional devices increases the number of shop visitors-turned-
impulsive buyers.
The promotional methods include −
  Displays − Consumer products are packaged and displayed
with aesthetics while on display. Shape, size, color, and
decoration create appeal.
 Demonstrations − Consumers are influenced by giving away
sample product or by showing how to use the product and its
benefits.
 Special pricing − Unit‘s special price under some scheme or
during festive season, coupons, contests, prizes, etc.
 Sales talks − It is verbal or printed advertisement conducted by
the salesperson in the shop.
An urban customer, due to fast paced life would select easy-to-cook
or ready-to-eat food over raw food material as compared to rural
counterpart who comes from laid-back lifestyle and self-sufficiency
in food items grown on farm.
It is found that the couples buy more items in a single transaction
than a man or a woman shopping alone. Customers devote time for
analyzing alternative products or services. Customers purchase
required and perishable products quickly but when it comes to
investing in consumer durables, (s)he tries to gather more
information about the product.

Mapping Out Society

While process mapping requires investing some time and energy,

mapping your retail processes around your customers‘ shopping
journeys can deliver wonders – to your shoppers and your business.
Managing a retail business can be stressful, especially in larger
storefronts with multiple clerks and managers. It‘s simply too
difficult to keep an eye on every single thing that goes on in your
store, especially since each employee has her own set of skills,
methods and moods.
However, this is where process mapping can come in handy. It‘s
quite possible to map out the entire customer journey and how
shoppers interact with your brand. While it does require some
analysis and brainstorming, as well as a store-wide collaboration,
process mapping delivers wonders.
 Concept of Life Cycle in Retail
• The concept of product life cycle as explained by Philip Kotler, is also
applicable to retail organizations as they pass through identifiable stages of:
1. Innovation
2. Development
3. Maturity
4. Decline.
• This is commonly termed as the Retail Life Cycle.
• The Retail Life cycle is a theory about the change through time of the
retailing outlets.
• It is claimed that the retail institutions show ‘s-shaped' development
through their economic life, that has been classified into four main phases.
 Concept of Life Cycle in Retail
1. Innovation
• A new organization is born — it improves the convenience or creates other
advantages to the final customers that differ from those offered by other
retailers.
• Stage of innovation, where there are fewer competitors
• Rate of growth is fairly rapid
• Management fine-tunes its strategy through experimentation.
• Levels of profitability are moderate
• This stage can last up to five years depending on the organization.
 Concept of Life Cycle in Retail
2. Accelerated Growth
• Rapid increases in sales.
• Few competitors emerge.
• Since the company has been in the market for a while, it is now in a position
to anticipate the conditions in the market by establishing a position of
leadership.
• Since growth is imperative, the investment level is also high, as is the
profitability. Investment is largely in systems and processes.
• This stage can last from five to eight years.
 Concept of Life Cycle in Retail
3. Maturity
• Retail organization still grows, but competitive pressures are felt from newer
forms of retailing that tend to arise. Thus, the growth rate tends to
decrease.
• Gradually, as markets become more competitive, the rate of growth slows
down and profits also start declining.
• Retail organization needs to rethink its strategy and reposition itself in the
market.
• Change may occur not only in the format but also in the merchandise mix
offered.
 Concept of Life Cycle in Retail
4. Decline
• Retail organization looses its competitive edge and there is a decline in
sales. Thus it needs to decide if it is still going to continue in the market.
• The rate of growth is negative, profitability declines further and overheads
are high.
• The retail business in India has only recently seen the emergence of
organized, corporate activity. Traditionally, most of the retail business in
India has been small owner-managed business.
• It is hence, difficult to put down a retail organization, which has passed
through all the four stages of the retail life cycle.
Role of franchising in retail

Franchising is a continuing relationship in which a franchisor provides a licensed privilege to the

franchisee to do business and offers assistance in organizing, training, merchandising, marketing,
and managing in return for a monetary consideration.

India is now seen as one of the world’s largest and fastest emerging markets, and its vast
population size and cultural diversity have made it a prime environment in which franchising can
thrive.

It is considered as a more attractive prospect for many people than opening their own business.
In a way franchise provides a stability of an existing model as it lessens a lot of the risk of
opening a brand new business. This is what that clicks in the minds of the Indian businessmen, as
many of them believe in relying on the fact that they are at least investing into an established
brand with a target market/ audience which has already been identified and is popular.

Choosing the right franchise is about matching your personality, skills, experience and
motivation to a particular franchise. It’s about getting a good fit between you and the
business. Here are a few recommended pointers to be kept in mind while screening
prospective franchisees.

Key Points

– Having an interest in entrepreneurship

– Being able to work independently
– Being well organized
– Being able to organize and motivate others to get things done.
– Working effectively as part of a group.
– Being attracted to continuous improvement.
– Being trustworthy in giving accurate information.
– Having a realistic understanding of the franchise relationship and background in retail
business.
– Drive and passion along with great organizational skills.
 Consumer decision making

Stages of Consumer Decision Making Process

Consumer Decision Making Process means the process of identifying and verifying the decision
making of the consumer by the business leaders or marketers. The Marketers have simplified
the process of decision making in following stages.

 Need Recognition
 Searching and gathering information
 Evaluating the Alternatives
 Actual Purchase of the Product or the Service
 Post Purchase Evaluation
Market Research

The ultimate goal of consumer research is to serve as the voice of the consumer. This
type of research focuses on understanding the consumer as a person by learning more
about his or her attitudes, needs, motivations, and behavior as they relate to a product
or service. More broadly, consumer research helps provide a company with relevant,
reliable, valid, and current information about their target buyer.

In the field of marketing, consumer market research can generally be defined as the
systematic collection and evaluation of data regarding customers’ preferences for actual
and potential products and services. It is also important to note that consumer market
research is not the exactly the same as marketing research. Marketing research is
actually comprised of both consumer and business-to-business research and examines
all aspects of a business environment.

Consumer market research can serve a variety of purposes, including the following:

 Help companies make better business decisions and gain advantages over the
competition
 Help marketing managers or executives make numerous strategic and tactical
decisions in the process of identifying and satisfying customer needs
 Remove some of the uncertainty by providing relevant information about the
marketing variables, environment, and consumers. In the absence of relevant
information, the consumer response to marketing programs cannot be predicted
reliably or accurately
 Provide insights that help guide the creation of a business plan, launch a new
product or service, optimize existing products and services, and guide expansion
into new markets
 Determine which portion of the population will be most likely to purchase a product
or service, based on variables such as age, gender, location, and income level
 Reveal characteristics of a target market
 Understand how consumers talk about the products in the market
 Identify which consumer needs are important and whether the needs are being
met by current products