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Unit I

INTRODUCTION TO RETAILING

Definition – functions of retailing - types of retailing – forms of retailing based on ownership.

Retail theories – Wheel of Retailing – Retail life cycle. Retailing in India – Influencing factors –
present Indian retail scenario. Retailing from the International perspective.

Retailing Concepts- Introduction

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.

Meaning of Retailing:
Retailing is one area of the broader term, e-commerce. Retailing is buying and selling both goods
and consumer services. With more number of educated and literate consumers entering the
economy and market, the need for reading the pulse of the consumers has become very essential.

Retail marketing is undergoing radical restructuring. This is because of increase in gross

domestic product, increase in per capita income, increase in purchasing power and also the ever
changing tastes and preferences of the people. The entry of plastic money, ATMs, credit cards
and debit cards and all other consumer finances, the taste for the branded goods also added for
the evolution of retail marketing.

Retail marketing is not just buying and selling but also rendering all other personalized consumer
services. With the RM picking up it has given a new look for various fast moving capital goods
(FMCG) goods. This not only increased the demand for various goods in the market but also
made retail marketing the second largest employment area, the first being agriculture.

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

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of many countries and is undoubtedly one of the fastest changing and dynamic industries in the
world today.

Types of Retail Operations:

Retail operations enable a store to function smoothly without any hindrances. The significant
types of retail operations consist of:

Department store

Specialty store

Discount/Mass Merchandisers

Warehouse/Wholesale clubs

Factory outlet

Retail Management System targets small and midsize retailers seeking to automate their stores.
The package runs on personal computers to manage a range of store operations and customer
marketing tasks, including point of sale; operations; inventory control and tracking; pricing; sales
and promotions; customer management and marketing; employee management; customized
reports; and information security.

The Emerging Sectors in Retailing:

Retailing, one of the largest sectors in the global economy, is going through a transition phase
not only in India but the world over. For a long time, the corner grocery store was the only
choice available to the consumer, especially in the urban areas. This is slowly giving way to
international formats of retailing. The traditional food and grocery segment has seen the
emergence of supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience
stores and fast-food chains.

It is the non-food segment, however that foray has been made into a variety of new sectors.
These include lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside),
apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, MusicWorld,
Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.),
drugs and pharmacy (Health and Glow, Apollo).

The emergence of new sectors has been accompanied by changes in existing formats as well as
the beginning of new formats:

Hypermarts

Large supermarkets, typically 3,500-5,000 sq. ft.

Mini supermarkets, typically 1,000-2,000 sq. ft.

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Convenience stores, typically 750-1,000sq. ft.

Discount/shopping list grocer

The traditional grocers, by introducing self-service formats as well as value-added services such
as credit and home delivery, have tried to redefine themselves. However, the boom in retailing
has been confined primarily to the urban markets in the country. Even there, large chunks are yet
to feel the impact of organised retailing. There are two primary reasons for this. First, the modern
retailer is yet to feel the saturation' effect in the urban market and has, therefore, probably not
looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-
effectiveness, has come to be identified with lifestyles.

In order to appeal to all classes of the society, retail stores would have to identify with different
lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially
`value for money' image. The attractiveness of the other stores actually appeals to the existing
affluent class as well as those who aspire for to be part of this class. Hence, one can assume that
the retailing revolution is emerging along the lines of the economic evolution of society

Theories of structural changes of retailing:

The evolution of RM has taken a fantastic transition from traditional methods to modern
thinking. Starting as primary or traditional retailing with melas, fairs, jataras, weekly bazaars,
rural fairs to mom and pop shop kirana stores the journey further reached to public distribution
systems ( PDS) Khadi outlets, co- operative stores and finally reached the level of shopping
malls , bazaars, super bazaars and special bazaars.

Traditional- melas, Fairs, weekly Bazaars, Rural fairs.

Indegenous- mom and pop, kirana stores Neighbor stores.

Contemporary- PDS, Khadi outlets, co-operative stores

Modern Retailing- shopping malls, Bazaars, Super Bazaars, Special bazaars.

Retail store operations:

When retail-marketing space is a best shopping zone for the consumers, it is quite challenging to
the businessman. It has to ensure not only product availability but also make the shopping more
creative and pleasurable. RM has to take care of various areas like,

Store administration and management

Inventory and stock management

Managing of receipts

Theft management

Customer service

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Sales promotion

Employee morale

RM is once again a wonderful economic activity that creates a win win situation. It brings not
only the success of the businessman but also the success of both consumer and the employees.
This is possible only if there is product and price satisfaction.

1. Store administration and management- this involves cleanliness, discipline, proper

documentation, no objection certification for various products and skilful management of
products and personnel.

Inventory management- it becomes the duty of the retail manager to check day to day and time
to time the stock so as to ensure the product is made available at the counters. Not only the
expected product availability has to be maintained but also the quality and shelf life has to be
guaranteed. Inventory has to be evaluated correctly and receipts have to be properly maintained.
With retail marketing shopping has taken a trendy and pleasurable affair. With all these changes
customer service has become the most important service to be rendered in the marketing field.
The customer has to be given maximum possible choice with a blend of perfect sales promotion
from the side of the retailer. So the overall picture of retail stores promotion has become a
exclusive area of management.

All other 5 points to be detailed

Characteristics and trends in retailing

Interaction with the end consumers

It enhances the volume of sales but the monetary value is less

Customer service plays a vital role

There is a tendency for automatic sales promotion

With more outlets retail marketing creates visibility

Location and layout plays a vital role.

Creates employment opportunities to all age groups, gender , irrespective of qualification and
religion.

Generates job opportunities in flexi timings.

Retail marketing creates a place, time and possession utility for a product.

History of Retail Management:

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Retail marketing started from Mediterranean regions and spread to Egypt and Babylonia. For
over 2000 years Retail marketing flourished in Rome. After the destruction of Roman Empire
retailing spread across the globe and Romans are the first ones to conduct sophisticated retailing.
As sophistication and human relations go hand in hand Retail marketing has got lot to do with
the psychology of human behaviour. So retail marketing can be conveniently called has
psychology of marketing.

Trends in retailing: Retail Marketing is largely based on three Vs- Value, Volume and Variety.
Though the Retail marketing had the quantitative development across the globe, the quality is no
doubt being compromised with the Globalization.International quality products are competing
with indiginised products. This variation in size, quality and competition has made Indian market
face ridiculous growth. As the competition is between international and indiginised products, its
taking a great toll on both the sectors.

With the big giants entering the market, there is a grave competition in the Indian Economy.
After 1995 the great companies like Food world, Reliance, Planet M, Music World and many
others also entered the retail market. The visibility and the craze to remain in the forefront of
business has made many of the giant companies to move from manufacturing to front line
retailing. With this Retailing has become prominent giving world class shopping experience to
the customers under one roof.

Indian retailing, thus enjoys many unique features, is still done in a primitive way. Barring a
few exceptions, Indian retailers, particularly FMCG retailers, are not in a position to implement
world-class practices of supply chain management. The concepts of Quick Response or Efficient
Consumer Response are unheard of in Indian retailing. The two bases of modern retailing
management, the Electronic Data Interface and a mutually respectable partnership among
retailers and suppliers (the manufacturers) are missing to a great extent in Indian context. Also,
Indian marketing channel members are performing some unnecessary tasks, which makes the
channel structure heavy and inefficient. Though these inefficiencies are observed in all retailing
irrespective of industry, the symptoms are more evident in Indian FMCG retailing. Inefficiency
in retailing leads to lower profitability of the retailers and lower service outputs for the
consumers.

Ways and means to strengthen the position of the retailing industry, doing away with the causes
for the inefficiencies, therefore, are to be taken up in an urgent manner. Such measures may
include establishment of retailers co-operatives, merger and buy-out, use of technology to the
greatest possible extent, setting up of nonstore retailing centers and increase in franchisee
network.

Definition, Types, and Examples of Retailing

Retail is the sale of goods to end users, not for resale, but for use and consumption by the
purchaser.

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Retail involves the sale of merchandise from a single point of purchase directly to a customer
who intends to use that product. The single point of purchase could be a brick-and-mortar retail
store, an Internet shopping website, a catalog, or even a mobile phone.

The retail transaction is at the end of the chain.

Manufacturers sell large quantities of products to retailers, and retailers attempt to sell those
same quantities of products to consumers.

Why Is Retailing Is Important?

Retailers are the final link in the supply chain between manufacturers and consumers. Retailing
is important because it allows manufacturers to focus on producing goods without having to be
distracted by the enormous amount of effort that it takes to interact with the end-user customers
who want to purchase those goods.

Retailers should make the purchase of goods easy for the consumer. That's why retail stores have
salespeople, why Internet shopping websites have customer service instant chat popups, and why
catalogs have descriptions, photos, and toll-free phone numbers.

Retailing is about displaying products, describing the features and benefits of products, stocking
products, processing payments and doing whatever it takes to get the right products at the right
price to the right customers at the right time.

Some retailers offer additional services to the retail transaction like personal shopping
consultations, and gift wrapping to add something extra to the retail customer experience and
exceed the retail customer experience.

What's the Difference between Retail and Wholesale?

Wholesalers sell in large bulk quantities, without worrying about many of the aspects of retailing
that consumers expect like visual merchandising.

Wholesalers do not want to deal with a large number of end-user customers. Rather, their goal is
to sell large quantities to a small number of retailing companies.

It is rare for a wholesaler to sell goods directly to consumers. The exception to that would be
membership warehouse clubs like Costco, Sam's and Bj's Wholesale. These members-only retail
stores are a hybrid of wholesaling and retailing in that they sell directly to consumers, but they
sell in large quantities, which often allows them to sell at prices that are lower than other retailers
that sell in small quantities from impeccably merchandised stores in high-rent shopping districts.

The big difference between wholesale and retail is in the price. The retail price is always more
than the wholesale price. The reason for this is because the added cost of selling merchandise to
end-user customers - labor, rent, advertising, etc. - is factored into the pricing of the
merchandise. The wholesaler doesn’t have to deal with such expenses, which allows him to sell
goods at a lower cost.

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How Does The Retail Supply Chain Work?

The retail supply chain consists of manufacturers, wholesalers, retailers and the consumer (end
user). The wholesaler is directly connected to the manufacturer, while the retailer is connected to
the wholesaler, and not to the manufacturer.

Here are the roles of the key players in a typical retail supply chain:

Manufacturers – Produce the goods, using machines, raw materials, and labor

Wholesalers – Purchase finished goods from the manufacturers and sell those goods to retailers
in large bulk quantities

Retailers – Sell the goods in small quantities to the end-user at a higher price, theoretically at the
MSRP (Manufacturers Suggested Retail Price).

Consumer – End user who buys the goods (or “shops”) from the retailer for personal use.

There are exceptions to this traditional supply chain, however. Some of the world's largest retail
companies like Walmart, and Amazon.com, for example, are large enough to deal directly with
manufacturers, without the need for a wholesaler in the middle of the transaction.

What are Different Types of Retail Stores?

Here are some examples of the different types of brick-and-mortar retail stores where consumers
can purchase products for immediate use or consumption.

Department Stores

Sell a wide range of merchandise that is arranged by category into different sections of the
physical retail space. Some department store categories include shoes, clothing, beauty products,
jewelry, housewares, etc. Examples of department store retailers include Macy's, Nordstrom,
and jcpenney, to name just a few.

Grocery Stores and Supermarkets

Sell all types of food and beverage products, and sometimes also home products, clothing, and
consumer electronics as well.

Warehouse Retailers

Large no-frills warehouse-type facilities stocked wth a large variety of products packaged in
large quantities and sold at lower-than-retail prices

Specialty Retailers
Specialize in a specific category of products. Toys ‘R’ Us, Victoria's Secret, and Nike are
examples of specialty retailers.

Convenience Retailer
Usually part of a retail location which sells gasoline primarily, but also sell a limited range of

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