RETAIL

MARKETING
In the growing market, retail marketing has become one of the major emerging trends in
the entire economical cycle. It is the retail market only which provides the consumer a
basic platform to encounter with goods and a shop keeper for the first time. Retail
market consists of a fixed location like boutique, store, departmental store etc, here in
these location consumers meets the shop keeper and purchase goods in return of certain
value. Maintaining a certain profit margin, these shop keepers sell goods to their
consumers. The basic motive of these shopkeepers is to satisfy the consumers and fulfill
their needs and demands.
Retail marketing strategy has become one of the basic elements of marketing strategy
which includes a lot of planning and proper execution of this planning. Now let us first
focus on the basic nature of retail. Firstly in retail, a marketer needs to focus primarily
on the needs and desires of the customers.
Retail marketing even focuses on satisfying the customers, maintaining a proper profit
margin for the owner of the goods. Customer needs are the basic key factors of retail.
Retail marketing consists of 5 basic pillars, first is saving the precious time of the
customers. Second is setting the right prices of the goods, third is creating a proper
connection with the emotions of the customers, fourth pillar is paying the right respect
to the customers and lastly solving the problems of the customer is another pillar of
retail.
Creating customer loyalty is the basic function of retail, as once you create customer
loyalty towards your brand it will be easier for you to stay in the market for a longer
period of time. Creating customer loyalty is not a very easy task, as it takes years for a
brand to create customer loyalty.You can only create customer loyalty if you have a retail
marketing plan, some of such marketing plans are the sales promotional activities .

Reward program includes special gifts on purchase of bulk goods and loyalty cards are
special privileged cards which are offered to customers in order to provide them huge
discounts and free gifts. These sorts of special sales promotional activities not only
increase the sales target but at the same time increase customer loyalty also.
With so many new sales promotional programs promoted by the retail marketing
strategies, now it is possible to create a healthy relationship with the customers.
Previously creating emotional bonding with the customers was not taken into
consideration, and thus customers were only treated as customers who were just
supposed to pay the price of the goods. Thus, this resulted in lower customer loyalty and
it gave rise to huge number of product switching.

Retail Marketing is the range of activities undertaken

by a retailer to promote awareness and sales of the companys
products. This is different from other types of marketing because
of the components of the retail trade, such as selling finished
goods in small quantities to the consumer or end user, usually
from a fixed location. Retail marketing makes use of the common
principles of the marketing mix, such as product, price, place and
promotion. A study of retail marketing at university level includes
effective merchandising strategies, shopping and consumer
behavior, branding and advertising. Retail marketing is especially
important to small retailers trying to compete against large chain
stores.

Product
The cornerstone of the retail marketing definition is the product.
In the retail environment, merchandise is classified according to
the category into which it falls. These categories include hard or
durable goods such as appliances, furniture, electronic goods and
sports equipment; food; and soft goods or consumables. Soft
goods include clothing, furnishings, cosmetics, paper goods and
other items with a typical life span of three years or less. For
example, in a small business selling handmade crafts, the
products would likely all fall under a single category.

Place
The place where retail marketing occurs helps to define the
process. A retail operation can be store-based retail or non-store,
according to the Internal Revenue Services Retail Industry
Handbook. More than 90 percent of U.S. retail stores are small,
single-store, owner-managed operations; however, these
generate less than 50 percent of sales from retail stores
countrywide. A definition of retail marketing includes the places
where it occurs, such as in-store, online and points of sale. This
also applies to non-store operations such as retail sales taking
place from the business owner's home.

Price
Pricing is a major aspect of any retail marketing strategy. The
price of merchandise helps to define the methods of retail
marketing employed, as well as the target market, store location
and retail format used to sell it. Pricing in the retail environment is
based on fulfilling objectives such as covering the cost of sales
and overhead, and in accordance with the four basic retail pricing
strategies. These are everyday low pricing, high/low pricing,
competitive pricing and psychological pricing. In a small retail
business such as selling handcrafts, pricing may be based purely
on the cost of sales, because overhead costs, if they exist, are
minimal.

Promotion
Retail marketing relies heavily on the promotional aspect of the
marketing mix, as can be seen by the number of print
advertisements for consumer goods such as clothing, food and
furniture. Promotions take place in both traditional media such as
television, print, outdoor billboards and radio, as well as new
media such as the Internet. The choice of promotional channels is
influenced by factors such as the competitive retail environment,
the profit margin on sales and the budget available for promotion
purposes. The success of retail marketing is defined by the
success of the business in selling its merchandise. Promotion may
be more difficult for small businesses, because of their lower
advertising budgets, but social media provides a low-cost method
of promotion.

Types of Retailers
There are 7 main types of retailers which can be defined by the size of their business
and the way they in which they sell their products.
The 7 main types of retailers are-

1.

Department Store This type of retailer is often the most complex offering a
wide range of products and can appear as a collection of smaller retail stores
managed by one company. The department store retailers offer products at various
pricing levels. This type of retailer adds high levels of customer service by adding
convenience enabling a large variety of products to be purchased from one retailer.

2.

Supermarkets Generally this type of retailer concentrates in supplying a range

of food and beverage products. However many have now diversified and supply
products from the home, fashion and electrical products markets too. Supermarkets
have significant buying power and therefore often retail goods at low prices.

3.

Warehouse retailers This type of retailer is usually situated in retail or

Business Park and where premises rents are lower. This enables this type of
retailer to stock, display and retail a large variety of good at very competitive prices.

4.

Speciality Retailers Specialising in specific industries or products, this type of

retailer is able to offer the customer expert knowledge and a high level of service.
They also add value by offering accessories and additional related products at the
same outlet.

5.

E-tailer This type of retailer enables customers to shop on-line via the internet
and buy products which are then delivered. This type of retailer is highly convenient
and is able to supply a wider geographic customer base. E-tailers often have lower
rent and overheads so offer very competitive pricing.

6.

Convenience Retailer Usually located in residential areas this type of retailer

offers a limited range of products at premium prices due to the added value of
convenience.

7.

Discount Retailer This type of retailer offers a variety of discounted products.

They offer low prices on less fashionable branded products from a range of
suppliers by reselling end of line and returned goods at discounted prices.

Types of Retail outlets

Department Stores
A department store is a set-up which offers wide range of products to the endusers 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 wouldnt 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 in India: Industry Structure

The retail industry in India is highly fragmented and
unorganised. Earlier on retailing in India was mostly done
through family-owned small stores with limited
merchandise, popularly known as kirana or mom-andpop stores. In those times, food and grocery were
shopped from clusters of open kiosks and stalls called
mandis. There were also occasional fairs and festivals

where people went to shop. In the twentieth century,

infusion of western concepts brought about changes in
the structure of retailing. There were some traditional
retail chains like Nilgiri and Akbarallys that were set up
on the lines of western retail concepts of supermarkets.
The government set up the public distribution system
(PDS) outlets to sell subsidised food and started the
Khadi Gram Udyog to sell clothes made of cotton fabric.
During this time, high streets like Linking Road and
Fashion Street emerged in Mumbai. Some manufacturers
like Bombay Dyeing started forward integrating to sell
their own merchandise. Shopping centres or complex
came into existence, which was a primitive form of
todays malls.
Since liberalisation in early 1990s, many Indian players
like Shoppers Stop, Pantaloon Retail India Ltd (PRIL),
Spencer Retail ventured into the organised retail sector
and have grown by many folds since then. These were
the pioneers of the organised Indian retail formats. With
the opening up of foreign direct investment in singlebrand retail and cashand-carry formats, a new chapter
unfolded in the retail space. Many single-brand retailers
like Louis Vuitton and Tommy Hilfiger took advantage of
this opportunity. The cash-and-carry format has proved
to be an entry route for global multichannel retailing
giants like Metro, Wal-Mart and Tesco.

Booming Indian economy spurs

consumption
The Indian economy posted a remarkable CAGR growth of 8.9%
during FY04-FY08, which increased the per capita income and in
turn, the disposable income of a large section of the population.
Growth in the retail trade depends on the fundamentals of an

economy. The Indian economy grew at a robust rate over the last
five years, riding high on the high growth in the service sector
(10.5%) and the manufacturing sector (9.4%) as compared with
7.4% and 4.1% during FY99-FY03. The rise in per capita income
and the resultant rise in disposable income stimulated
consumption during this five-year period, thereby resulting in a
spurt in retail trade. Furthermore, according to the Mckinsey
Global Institute (MGI), the average real household disposable
income is likely to grow by 5.3% during 2005-2025 and reach Rs
318,896 per annum as compared with 3.6% in the previous 20
years, which indicates the huge potential for the retail sector in
India.

CASE STUDY

Pantaloons A Success Story in Organized

Retail
Retail plays a major role in increasing circulation and sales for all kinds of consumer goods and
services. Countries like USA, U.K. and China are successful examples of the same. Consumer
retail is the second-largest industry in the United States, both by the number of establishments
and by the number of employees. Wal-Mart, the worlds largest retailer, is also the worlds largest
employer. It has become the most successful retail brand in the world due to its ability to
leverage size, market segmentation, and its efficacy in assuming market dominance. Wal-Mart
heads the Fortune magazine list of top 500 companies in the world.

Retail Scenario in India:

In India over 94% of the retail sector consists of traditional mom-and-pop stores and streetvendors. With no large players, infrastructure being far from adequate and a tiny part of the
population being able to afford it, , Indian retail never attracted large business houses and
majorly focused on niche product segments and luxury goods.. This was till they realized that
retail in India is a USD $353 billion industry[BMI India Retail Report 2010] growing at a
CAGR of 10% and contributing more than 25% to the countrys GDP. Today it might seem
implausible that this important sector of the countrys economy had been overlooked by
Corporate giants. However they cannot be squarely blamed too. Indian retail has traditionally
been an unorganized sector, where retailers lacked the means as well as the will to develop or
expand. Retail could also never enjoy the support of the Indian consumer, who is famous for
being miserly and treated shopping as a form of leisure than a necessary evil, thus enjoying the
thrill of discovering bargains and discount deals on his own.
Small gains, lack of infrastructure, an unattractive Indian consumer and absence of regulation
never provided opportunities for retail giants to capitalize. Meanwhile, the Government preferred
to remain silent while the unorganized retail sector provided a meager standard of living to
millions in the country. Poverty plagued a majority of the population and the corporate giants
preferred to spend their resources in areas like power and telecom where large-scale
opportunities were abundant. Today the retail industry has witnessed a remarkable
transformation.
The New Story

The countrys towering economic growth of around 8% has resulted in major shifts in the Indian
economic class, with higher incomes leading to the growth of the Indian middle-class. This
middle-class is aware of the standards of living in other countries, thanks to exposure through the
tools of Globalization the Media & the Internet. They have decided to thus adopt a Spending
approach to improve their standard of living rather than the traditional Saving approach. The
currently estimated value of organized Indian retails target population is larger than that of the
entire United States. Voted the most attractive retail destination in the world for two years in a
row, India is expected to witness 10% growth in its retail sector over the next few years (Source:
Retail in India Getting Organized to drive growth. CII-A.T. Kearney, Nov. 2006, Assocham
Press Release). Recognizing the short-term and long-term growth of retail in India, a number of
domestic business giants have entered the retail industry. We focus on the factors that have led to
the success of Kishore Biyanis Pantaloon Retail.
Pantaloons Story
Pantaloons success and continuous growth in the Indian organized Retail market can be
attributed to a number of factors, some of which have been derived from the strategies of large
retailers in the west, while others are completely tailor-made for the Indian market. What is
evident at the outset is that Biyani has foreseen and understood the Indian retail roadmap better
than anyone else.
Pantaloons major advantage over its competitors in the retail sector has been its unique
understanding of the Indian organized retail market with all its quirks, shortcomings and
challenges. By creating a retail business from the ground-up and expanding rapidly, Pantaloon
has followed a Wal-Mart-like pattern of growth. However, unlike Wal-Mart, it decided to
experiment with as many retail formats, product-mixes and brands as was possible in order to
gain maximum knowledge about the uncertain Indian mindset. In fact, newer entrants in the
organized retail market would learn the ways of the unique Indian organized retail sector as well
as find a way to combat Pantaloons dominant market share in almost all forms of organized
retail a daunting task.
What did it do Right ?
The Retail Experiment Multiple Formats, Multiple Brands
Pantaloon has experimented with every retail format possible. Most of their experiments have
proven to be successful and Pantaloon continues to experiment while expanding existing
ventures. However, the real reward of these experiments is the knowledge and experience
gained- This was most elusive in a previously untouched and unknown organized retail sector.
This is an example of Pantaloon adapting itself to the Indian market rather than attempting to
copy a Wal-Mart. The experimentation process did not end with testing different store formats
alone: Pantaloon is also experimenting with a variety of products. From mens wear the company
has moved on to introduce furniture, sportswear, kitchen appliances, food, electronics and
childrens apparel. Again, it seems to know what works and what doesnt in the Indian market,
something that would not have been this apparent even 1 decade ago.

Pantaloon has also introduced a number of private brands. For example, it has experimented with
launching clothing lines based on famous Bollywood blockbusters.. Within the brand retailing
space, Pantaloon has also tied up with some of Indias most popular brands like Gini and Jony to
sell them at their stores. Rather than attempt to compete with existing popular brands the
company has decided to partner with them and leverage them in the ambiguous Indian market.
These brands have achieved success and a loyal fan following; Pantaloons move has brought in
more customers then they could retain.
The competitors do have the opportunity to learn from the experiences of Indias largest retailer,
but the experience that comes with managing these diverse retail formats in the Indian scenario is
something that new entrants will have to learn on their own. Due to the pace at which Pantaloon
had moved, it has made several sectors of organized retail out of anybodys reach.
The Right Joint Ventures at the Right Time
In accordance with its experimentation policy Pantaloon has formed key joint ventures with a
number of popular names like Staples and Starbucks. With its first-mover advantage, it actively
shut doors for the competition by snapping up major brands before others could get to them.

Versatile Retailing
Rather than expand as a menswear retailer alone, Pantaloons policy of comprehensive
experimentation has given it an important advantage a versatile retail presence. Consumers see
Pantaloon as an exclusive brand retailer, discount retailer, specialty retailer and food retailer: all
at once. One of the reasons for this versatility is that the brand name has not been forced on, or
even associated with the different products and stores other than the original menswear line.
Instead, each store and product has been given its own identity and presence. Pantaloon is
essentially an organized retailer in the guise of a large number and variety of unorganized
retailers. This again represents the companys unique understanding of the Indian scenario
consumers often feel threatened in a monopolistic environment, and are thus allowed to choose
between multiple brands, all of which essentially belong to the same parent !!
Strengthening Back End Operations: Supply-Chain
A robust Supply chain serves as the backbone of a successful retail chain in the long-run.
Although the company ignored these aspects in initial phases due to the inadequacies in
infrastructure, it rightly favored experimentation over organization. But to continue to grow at
the pace it had acquired in the first few years, it needed to pay attention to its sourcing network,
transportation system and other logistics.. What Pantaloon is and will always have to improvise
on is the absence of basic infrastructure like transportation and regulation. The pace of expansion
of the retail industry is likely to outstrip that of development of the countrys infrastructure.
Pantaloon will have to be innovative in deciding as to how it compensates for these inadequacies
while efficiently managing its supply chain.

Money: The Ultimate Differentiator

Pantaloon has the upper hand as compared to most potential foreign and domestic competitors.
However the same characteristics that have made it an exclusive and versatile retailer can prove
to be a disadvantage. Much of Pantaloons competition comes from either retail ventures of other
large Indian industrial houses (Reliance Retail, Birlas retail venture) or foreign retail giants
(Wal-Mart). In other words, Pantaloons competition is rich, very rich. While the competition
may not have made inroads into the Indian market as thoroughly as Pantaloon, it still has enough
money to compensate for this shortcoming.
Summary
Through a carefully executed policy of comprehensive multi-format experimentation, Pantaloon
has managed to understand and take advantage of the compressed evolution of the organized
Indian retail industry (mentioned earlier) to become the dominant player. As far as industry
knowledge, experience and skill are concerned, Pantaloon with its dream team is looking in good
shape. Now it is facing stiff competition that is financially better-equipped. How it takes
advantage of its existing resources, accesses additional capital and competes with its competitors
in a race to develop an efficient supply-chain will determine the future of the company. While the
task is daunting, Pantaloon has more leeway and an enormous head-start compared to anyone
else.