RETAILING

Anudeep Nair

DEFINITION & SCOPE

Retail is derived from French word retaillier ,
meaning-to cut a piece off or to break bulk. In simple
terms , it implies a first hand transaction with customer
Retailing involves direct interface with customer and the
coordination of business activities from end to end
Any organization selling to final consumers-whether it is
a manufacturer, wholesaler, or retailer is retailing

RETAILING
David Gilbert has defined retail as any business that
directs its marketing efforts towards satisfying the final
consumer based upon the organization of selling goods
and services as a means of distribution.
Retailing is the set of business activities which adds
value to the products and services sold to consumers for
the personal or family use Michael Levy

ROLE OF RETAILERS

Retailers organize the availability of merchandise on a large scale

and supply them to consumers on a relatively small scale.
Retailers create value for consumers through a combination of
service , price , location/ accessibility, convenience of timing,
information, lifestyle support, and experience.
They offer an assortment/range of merchandise to facilitate choice
for selection for consumers, and also after sales service.
They enable the adoption of products and services. Concept of dual
adoption
They have created a shift from distribution oriented perspective to
consumer value- oriented perspective

RETAILING NATURE& IMPORTANCE

Retailing forms an integral part of the marketing mix and
includes elements like product, place, price, promotion,
presentation, people. Place relates to the distribution &
availability of products in various places
Customers are first introduced to the products at the
retail store
Retail stores serve as communication hubs for
customers. known as point of sale (POS).
Retail can also greatly influence marketers decision on
pricing, promotion and product strategy.
Retail can also influence customers decision

RETAILING SCENARIO

Global retail business size US$ 7 Trillion.

Organized retail business : US 80%, W Europe 70%, Malaysia50%, Thailand 35%, China 10%, India 3 to 4%.
US 22 Mn. People employed in retail .
Retail sector forms a very strong part of service sector.
Total retail outlets in India 14 Mn. Most of them in unorganized
sector.
Per capita retail space in India is 2 sq. ft. compared to 16 sq. ft. in
US.
Retail in India now growing at 15-20% CAGR. At present size of
market USD 380 Bn.
Major business houses in retail Tata, Reliance, Birla, Biyani,
Goenka,
India has more than 9 outlets per 1000 people , largest in world

KEY DRIVERS OF GROWTH

Consumer pull
Rising income
Explosion of media
Change in consumer behaviour and lifestyle
Changing attitudes /consumerism
Rise of rural market
Establishment of efficient supply chain
Emergence of multiple hubs of retail activity
Change in scale of operations resulting in economy of scale
Entry of large corporate
Entry of foreign retailers
Technological impact

BOTTLENECKS IN GROWTH OF RETAIL

IN INDIA

Country risk
Poor infrastructure
Government policy
Time pressure due to red -tapism
Lack of proper laws to counter piracy and counterfeiting
Huge regional differences in tastes
Shortage of world class retail space and skilled human resources
Complex tax structure

IMPACT OF RETAILING ON ECONOMY

Real estate
Tourism and outbound shopping
Higher GDP
Outsourcing opportunities
Employment potential
Helps build stronger supply chain
Improves remuneration of producer
Competition results in better quality
Attracts foreign investment

HOT RACE HELPS

THEORIES OF RETAILING

Wheel of Retailing - This theory is one of the oldest and most

popular. It postulates that retailers enter the business at a fairly low
status, low prices ( very utilitarian & serving basic function of
availability ) .This helps them to compete with established retailers.
The Retail accordion Retail development is linked to human
habitation. It expands or contracts in line with the geographical
expansion of the society.
Melting pot theory A new value proposition by one retailer gives
rise to more retailers with the same proposition.
Polarization theory In longer terms ,the industry consists of mostly
large and small size retailers. BERMUDA TRIANGLE EFFECT.

LIFE CYCLE CONCEPT

Concept of life cycle is also applicable to Retail. Retail organization pass

through identifiable stages of Innovation, Development, Maturity, and
Decline. Attributes & Strategies change as institution mature. Retail
organization show s shaped development curve.
Innovation A new organization when born improves the convenience or
creates other advantages for the final customer that differ sharply from
those offered by other retailers. In this phase growth is rapid but profitability
are moderate/low.
Accelerated growth growth is rapid. Organization is in a position to pre
empt the market by establishing position of leadership. Investment is largely
in systems & processes.
Maturity competitive pressures increases. Growth rate decreases and
profits also decline. Organization has to rethink strategy & repositioning is
required. Change of format or merchandise mix may be changed.
Decline Retail organization looses its competitive edge and growth
declines rapidly .

INDIAN RETAIL SCENARIO

Initially retailing began in the South and West- Nilgiris and

Spencers in South and Akbarallys, Amarsons, Benzer in Mumbai.
Post liberalization retail activity picked up.
Growth of Nuclear families, rapidly growing DI families, higher per
capita income, improved media/internet exposure, rising workforce
with global travel, increasing usage of credit/debit cards, growing
youth population with less emphasis on savings , online retailing is
catalyst for growth.
Shoppers stop started in Mumbai in 1991.
Shoppers stop , Big Bazar, Cross word, Pantaloon, Ebony ,
Westside have become household names
Retails first started with A cities and have quickly moved to B,
C ,and D cities

INDIAN RETAIL INDUSTRY

1.
2.
3.

Indian retail industry is one of the most fragmented and challenging in the
world.
Dominated by mom-and-pop outlets with very basic offerings, poor
ambience, avoid paying tax.
But with changing lifestyle and demography organized retail is picking
up .
32 % of 14 Mn. Outlets are in urban areas. Food sales constitute very
high proportion of total retail ( 62 % ).
Sectoral classification- retail sector in India can be classified in three
categories based on growth potential. These are :
Ready-to-go : dry groceries, electronics, certain kind of mens clothing,
music, books
Shape /adapt- fresh groceries, fast food, furniture, womens clothing
Wait-and-watch- pharmacy products, liquor products

INDIAN RETAIL INDUSTRY

1.
2.
3.

4.

In India Retailing revolution is emerging following the path of

economic evolution.
KSA Technopak places India in the second gear in a four gear
path of organized retail.
Gear one stage of Infancy Super Bazaar started in 1960S
Gear two meeting customer expectations- consumer driven
period of growth
Third gear shift in the power equation between manufacturer
and retailers. Efficient back-end management. Focus on customer
acquisition and category management.
Fourth gear period of consolidation

MAJOR INTERNATIONAL RETAILERS

Wal-Mart, USA
Kmart , USA
Carrefour, France
Tesco , UK
Metro AG , Germany
The Home Depot, USA
Royal Ahold, Netherlands
Sears, Roebuck , USA

TYPES OF RETAILERS

Department store
Specialty store
Supermarket
Convenience store
Discount store
Superstore
Catalog showroom
The mall
The plaza

Emporium

Kiosk
CDS TEST K(I)DS

STORE FORMAT CHARACTERISTICS

Retail format

location

space

items

Customer
profile

example

Convenience
store

Local
marketplace

3,000 to 5,000
sft.

Convenience
merchandise

Family, impulsive

711, 610

Super
market

Marketplace

large

Food &
household

Family,
loyal

foodworld

Dept.store

Marketplace

Large
10,000 sft.

Garments,
cosmetics

Family, very
loyal

Shoppers
stop

Speciality
store

strategic

medium

Single
category

Individuals
institution

Bata
Planet M

plaza

Marketplace

Very large

Independent
categories

Family, hang -outs

Heera Panna,
Ansals

Mall

Marketplace

Huge
> 200,000 sft.

Independent but
profiled

Family
Shopping, dining

Sahara,
City centre

Emporium

marketplace

Small/medium

Single group

Family
individuals

Handloom
cottage

kiosk

Busy
marketplace

Very
small

Fast moving

Impulsive buyers

Pepsi fountain

Hyper market

marketplace

Huge
200,000 sft.

variety

family

Giant eagle

Stop -over

Piggy back
location

Small to
medium

variety

Impulsive buyers

Stores attached to
Petrol outlets

STORE FORMAT BY PRICE

Discount stores

25% below MRP. Bombay Dyeing

ELDP ( every day low price)

Specialized in specific items.

Mostly in US

Factory outlet

Seconds, old stock, clearance sale

Single price

all items at a single price.

Mostly in US, Dollar store

LEVELS OF SERVICE

Self service
Self selection
Limited service
Full service

CATEGORIES OF RETAILING
Store retailing
Non-store retailing-four major classification
Direct selling Tupperware, Amway
Direct marketing- Credit cards, Insurance
Automatic vending
Mail order- Otto Burlingtons
Electronic Retail Amazon.com

RETAILING SEGMENTATION

Demographic
Psychographic
Value and Lifestyle
Mediagraphics media mad fast trackers, couch potatoes, settled
corpos, sarkari babus, traditionalists
Behavior based choice optimizers, premeditated shoppers,
economizing shoppers, support seekers, recreational shoppers
Attitude / Orientation based post purchase sharing, exploring active
information seeking, bargain seeking, price driven
Work / fun typology fun shoppers, work shoppers
Relationship based/ net worth based

WVPD MBA

RETAIL MERCHANDISING
Merchandising is unique and exclusive to the retail
industry. It refers to the entire process of inventory
planning & management in a retail organisation.
Merchandising if done properly , leads to increase in
ROI.

MERCHANDISE PLANNING
Objective of merchandise planning is to achieve the
following seven rightsproduct
place
quantity
quality
price
product mix or assortment
time

MERCHANDISE HIERARCHY
Merchandise hierarchy is a disciplined way of grouping
the merchandise mix at different levels , starting from a
high level grouping to the lowest level of the stock
keeping
According to levels you may have different
resources/divisions

MERCHANDISE PLANNING

Range planning- strategic plan, assortment plan

Planogram

CONSIDERATIONS IN MERCHANDISE
PLANNING
Marketing considerations

Store image, trading format, environment, retail

proposition, trends in fashion,

Merchandise strategy options

Availability of stock based on assortment profile,

quality, seasonal requirement

Type of customer base

Items, range of purchase, frequency of visits

/purchases

Financial plans

Projections of profitability and sales, stock turn

over, corporate objectives and pricing strategy

Merchandise assortment search

Desired range, brand policy, delivery requirement,

PHASES IN MERCHANDISE PLANNING

Consumer dictates the choice

Availability
Inventory turnover
Marketing consideration
Merchandise strategy options
Type of customer base
Financial plans
Merchandise assortment research
Evaluating merchandise plan using GMROI measure

TIME FM AC

DEFINITION

Category management in retailing is defined as the process of

managing categories as strategic business units. This produces
enhanced business results by achieving a robust bottom line for
each category.
A category is a merchandise group that addresses similar consumer
needs and wants. Goods in a category are displayed and sold
together in a retail environment so that customer choices are easier.

PROCESS
Category management
Category
vision

Category
implementation

Category
definition

Category
tactics

Category
role

Category
strategies

Category
assessment

Category
Balance
scorecard

PROCESS

Vision This refers to the top managements view of what each

category ought to achieve in terms of customer satisfaction or value
offerings and the differentiation thus achieved for leadership.
Definition This is made based on customer segmentation and the
specific SKU that belong to the category.
Role This defines the objective of the category in the entire
merchandise mix and determines its relative importance. Some
categories may play a destination role in the product mix and some
impulse role.
Assessment This is done to identify gaps if any between the
category vision and the existing contributing SKUs to the category.
This assessment helps improve the categorys business by
identifying opportunity gaps in sales, stock turns, and profits

PROCESS
Balanced score card This helps measure the performance of the
retail business. It establishes specific business targets for the
category while reflecting on its performance.
Category strategies These aim at achieving the best of customer off
take from the shelves , ringing in the maximum number of
transactions , earning maximum margins and achieving certain
subjective goals like excitement, sensationalism, etc. for customer
satisfaction.
Tactics category tactics refer to the tactical requirements to achieve
the score card targets.
Implementation and review This refers to the store level execution
of the category business plan and strategies and monitoring category
performance against the plan to take action on an ongoing basis.

PRIVATE LABEL BRANDS

Logic for Private Label Brands
How do I differentiate myself from other competing stores that sell
various brands of merchandise available everywhere ?
How do I create a sustainable differentiation for my product
offerings ?
How do I stay ahead of local competition ?
How my store can remain profitable especially in an environment
where margins are being squeezed ?
The answer to all the above questions seems to be private label Brand

PRIVATE LABEL BRANDS

Private label brands contribution to Wal Mart s total sales is

almost 40%. Same is the case with Tesco. Sainsburys own labels
generate nearly 30% of sales.
In India also margins are under pressure. Apparel retailers manage
to get gross margins of 30-33% after struggling a lot while food
sector has to settle for just 15- 17 %.
Shoppers stop has 4 private label brands that contribute around
25% of revenue growing at 5% annually. Foodworld s private labels
contribute 215, while westsides private labels give 70-80% of
merchandise.

RETAIL DECISIONS

Price decision
Communication decision
Location decision Layout , Design
Size decision

TRENDS IN RETAILING
New retail forms & combinations- petrol pumps with
ATM, or and with eating outlet bookstore with coffee
shop
Growth of inter type competition-department stores &
discount stores competing for same customers
Growth of organised retail- India present size $ 300 Bn.
present share of organised retail may be 4-6% but likely
to grow at 25 -30 % CAGR
Growth in investment in technology
Presence of major global retailers
experience and not just goods

COCLUSION

RETAIL PROMOTION
The current Marketing challenge in Retail are:
Creating footfalls in the store
Converting browsers into buyers
Creating footfalls in the stores starts with building the
store brand, positioning the store, profiling target
customers and understanding their buying motives,
defining the retail marketing mix, creating customer
relationship, and loyalty and direct marketing, effectively
planning and implementing store events and promotions.

BUILDING THE STORE BRAND

Store brand is built on parameters like merchandise
category, price/quality, specific attributes of benefits,
lifestyle/activity
Brand conveys the value proposition to the customer.
Like Shoppers stop signifies one stop shop for lifestyle
garments and its Feel the experience while you shop
theme conveys that it stands for free access and
experiential shopping
The name Big Bazaar itself tells the consumer that
brand is about : very large, with diverse and value for
money merchandise

RETAIL STORE POSITIONING

Store positioning is not what you do to the store , but
what you do to consumers mind.
A store can be exciting to its customers with its
merchandise, its range of services, service delivery
standards, ambience and convenience
Retail stores can position themselves in the minds of
their customers on various platforms derived from retail
mix like category , range distinction of merchandise,
convenience of location, or fashion trends.
Barista is positioned for new experience in the store
environment. It is not in the coffee business , serving
people , but it is in the people business , serving coffee.

POSITIONING
Planet M is positioned as the music store of the
universe
Wills sport, is positioned as the store where the
customer would enjoy the change
Wal-Marts positioning is Always low prices. Always WalMart
Nordstrom has positioned itself as the customer service
company
Lifestyle- Stay true. Dont Blend in

PROMOTIONAL ELEMENTS
Price Promotional pricing involves a temporary
reduction in the price to the customer during a particular
season.
loss leader pricing, price bundling, everyday low pricing
Sales promotions- these help the store to achieve short
term goals. Special merchandise for special occasions.
Retail stores alongwith product supplier may run a
campaign.
Presentation /shelf management- the way the products
and services are grouped and presentedin a retail store.
like a boutique selling designer garments needs to
present its merchandise in exclusive splendour.

DIRECT MARKETING

Direct mail
Catalogues and mail order
Telemarketing
Electronic retailing

ADVERTISING IN RETAILING
It involves both above-the-line and below-the line
communication. It consists of :
Point of sale advertising-displays, visual merchandising,
display contests, buntings/festoons/danglers/posters
Publicity- write ups in Media, sales promotion events
put in media, interviews of CEO etc.
Personal selling- Sales person advertising through
demo, presentation to the customer at retail store or thru
persuasive selling
Communication with customers

FRANCHISING
Franchising is a form of business that is quite popular in
retailing.
It is used by organizations to expand their business
through partners who are given the right to run the
organizations business. The organization becomes the
franchiser and the partner is the franchisee.
In this arrangement franchisee pays the franchiser a sum
of money or a percentage of income
In the event of start up scenario the franchiser often
covers the franchisee with a guaranteed income.

FRANCHISING

Franchising accounts for more than $ 1 Trillion of annual US sales

and nearly one third of retail transactions.more than 320,000
businesses are franchises employing one in sixteen workers
Franchising increases employment , earnings, and entrepreneurship
It helps in promoting sharing of technology, trademarks, marketing
intellectual property and business design rights. It also creates
relationship between one economy with another which helps
developing countries .
Franchising has two fold purpose: it enables the franchisee reduce
risks since he operates with proven knowhow and brand of the
franchiser. The franchisee also benefits as he is using the resources
of franchisee to expand business.

FRANCHISING
Franchising in retail involves creating a network of
interdependent business relationship that allows many to
share a store brand, a proven roll out system and a
successful business model.
Thus franchising is a strategic alliance between groups
of people who have specific relationship and
responsibilities with the common goal of dominating
markets

INDIAN SCENARIO
Indian franchise economy accounts for 5 % of GDP and
estimated at Rs. 4,500Cr. Approx.

TYPES OF FRANCHISING
Product/trade type- here the franchisee requires the
trade name, trademark and or product from the
supplier. For example Arrow, Scullers, Tommy
Hilfiger
Business format-This uses the franchisers
products/services and also the prescribed business
format. Bata, KFC, McDonalds

TYPES OF FRANCHISE AGREEMENTS

Direct franchising format

Subsidiary franchising
Regional/area franchising
Unit franchising
Master franchising

FRANCHISE OPERATIONS
ARRANGEMENTS
FRANCHISER OWNED AND FRANCHISEE
OPERATED
FRANCHISEE OWNED AND FRANCHISEE OPERATED

KEY SUCCESS FACTORS

Implementation of pre-tested model
Transfer of knowledge and relevant inputs by the
franchiser
Creating a win-win situation by reducing risks
Attitude of ownership and shared responsibility
Periodic performance review
Franchisee is the franchisers face to customers

CONCLUSIONS