ABSTRACT Retail Management has become a very challenging job as the organisations are to face a rapidly changing socio-economic environment and to face stiff competition due to globalisation. Many universities in India have included retail management as a subject of study in the fields of Commerce at various levels. Retail Management is universally relevant. The commerce curriculum is incomplete without a paper on retail management. Important retail management concepts have been explained in simple terms. Charts and diagrams have been given wherever necessary.
Retail Management focuses on the entire organization from both a short and a long-term perspective. Management aims to increase the effectiveness of organizations. The principles of retail management are flexible, not absolute, and must be usable regardless of perspective. Retail management DEFINITION AND SCOPE OF RETAILING : The word retail is derived from the French word retail, meaning 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. RETAILING PRINCIPLES
In order to be sound, and effective, an organization must be governed by the following basic principles: 1. Clear definition of objectives and policies According to this principle of retail organization, each employee must understand the objectives and policies of the store. 2. Duties and Responsibilities According to this principle, the duties and responsibilities of each and every employee working at various levels in the retail store should be clearly defined. The line of authority must be clear from the highest to the lowest positions.
All employees must be informed of their respective position, responsibilities in the retail organization and the persons to whom they are answerable and who reports to them. 3. Unity of Command According to this principle, one employee working at junior level should be responsible to one direct supervisor. The purpose is to avoid any conflict regarding responsibilities of employees receiving orders from more than one supervisor. 4. Supervision and Control According to this principle, even after delegating the authority, the supervisor still will be responsible for a manager’s or employees’ mistakes.
He cannot get rid of the mistake done by his juniors or those who are to achieve the goal. 5. Interest in employees According to this principle, the retail organization should show continuous interest in its employees, job promotion, employees’ participation in management, internal promotion, efforts job recommendation, job enrichment, induction and so on; improve employee morale and efficiency. 6. Monitoring of Human Resource According to this principle, issues related to employees like attendance, employee turnover, punctuality and absenteeism should be regularly monitored otherwise they can create problems for the retail organization. . Rule of Simplicity According to this principle, simplicity in all sorts of operations is must for running a retail organization properly. There should be a limit to the number of employees’manager could directly supervise. 8. Responsibility and Authority According to this principle, assigning duties without any authority will not work in a retail organization. Therefore, responsibilities should be associated with proper authority. an employee who is responsible to achieve some retail organization’s objectives needs the power to achieve it. RETAIL SALES GOALS
Retail Sales measures the gross receipts of a retail store by selling durable and nondurable goods. The main components of retail sales are grocery, food & clothing and Shoe retailing. In India, consumer spending roughly accounts for over 60% of GDP and is therefore, a vital element in the country’s economic growth. Any change in retail sales pattern is important and is seen as the timeliest indicator of wide consumption patterns. Retail sales may have short term and long term goals in nature. Short term retail sales Goals are supposed to support and merge into long term goals.
The goals of retail sales (i) to serve a link between the manufacturer and end consumers (ii) to improve communication with retail customers (iii) to improve sales target (iv) to provide efficient customer service knowing the power of mouth advertisement (v) to build image among general public (vi) to improve social responsibility “- (vii) to serve different markets (viii) to get quick feedback about the merchandise sold and consumer services offered (ix) to convert visitors to buyers 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 (Convenio, HP Speedmart) 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), ooks/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: Hypermarkets
Large supermarkets, typically 3,500-5,000 sq. ft. Mini supermarkets, typically 1,000-2,000 sq. ft. 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. RETAILING SCENARIO- GLOBAL VIEW: Retailing in more developed countries is a big business and better organized than what in India. According to a report published by McKinsey & Co. along with the Confederation of the Indian Industry the global retail business is a worth a staggering US$ 6. 6 trillion. In the developed world, most of it is accounted for by the organized retail sector. The service sector accounts for a large share of GDP in most developed economies.
And the retail sector forms a very strong component of the service sector. In short, as long as people need to buy, retail will generate employment Globally, retailing is a customer-centric with a emphasis on innovation in products, processes and services. With total sales of US$ 6. 6 trillion in, retailing is the worldi?? s largest private industry, ahead of finance and engineering. Some of the worldi?? s largest companies are in this sector: over 50 Fortune, 500 companies and around 25 of the Asian Top 200 firms and retailers. Wal-Mart, the worldi?? second largest retailer, has a turnover of US$ 260 billion, almost one-third of Indiai?? s GDP. [pic] As many as 10% of the worldi?? s billionaires are retailers. The industry accounts for over 8% of GDP in western countries, and is one of the largest employers. According to the U. S. Department of Labor, more than 22 million Americans are employed in the retailing industry in over 2 million retail stores. [pic][pic] RETAIL INDUSTRY IN INDIA: Retail is India is a largest industry, accounting for over 10 percent of the country GDP and around eight percent of employment.
Retail in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. That said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favourable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way to becoming the next boom industry.
The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organised retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian population is witnessing a significant change in its demographics.
A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working -women population and emerging opportunities in the services sector are going to be the key growth drivers of the organised retail sector. Big in size and turnover, Indian retailing industry is characterised by certain attributes. The network of retailers reaches every nook and corner of the country. So any product produced anywhere in the country can be easily accessed by the buyers from any location. Thus the spatial convenience of Indian retailers is vary high.
Secondly, in India the retailing industry is an unorganised lot consisting of, in most of the cases, small entrepreneurs. And the virtual omnipresence of the Indian retailer can be attributed to these small entrepreneurs only. The second attribute gives rise to the following characteristics Power of the retailers, as such is very less, and in many cases it is negligible. This weakness has been exploited by the manufacturers and the stronger partners of the marketing channel. The retailers, in general, abide by the terms and conditions set by the manufacturers and other “big rothers” of the channel. The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore, the manufacturers cannot maintain the desired relationship with the retailers, which in turn, makes management of the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost remote. Therefore, the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. So the dependence of retailers on other channel members increases to a high extent.
Thus the participation of retailers in the flows of marketing mix becomes lower than desired. The financial strength of the Indian retailers, in general, is very low and hence the investment capabilities. This makes the retailers more dependent on the other channel members. However, these characteristics are peculiar to the small retail outlets and may not be present at every kind of retail level. Retail Shopkeepers: India has sometimes been called a nation of shopkeepers. This epithet has its roots in the huge number of retail enterprises in India, which totalled over 12 million in 2003.
About 78% of these are small family businesses utilising only household labour. Even among retail enterprises that employ hired workers, the bulk of them use less than three workers. India’s retail sector appears underdeveloped not only by the standards of industrialised countries but also in comparison with several other emerging markets in Asia and elsewhere. There are only 14 companies that run department stores and two with hypermarkets. While the number of businesses operating supermarkets is higher (385 in 2003), most of these had only one outlet. The number of companies with supermarket chains was less than 10. Retail Sales :
Retail sales, which amounted to about Rs7,400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail sales are also expected to expand at a higher pace of nearly 10%. In a developing country like India, a large chunk of consumer expenditure is on basic necessities, especially food related items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71% of retail sales in 2002. The remaining 29% of retail sales are non-food items. The share of food related items fell over the review period, down from 73% in 1999.
This is to be expected as, with income growth, Indians, like consumers elsewhere, spent more on non-food items compared with food products. Sales through supermarkets and department stores are small compared with overall retail sales. However, their sales grew much more rapidly (about 30% per year). As a result, their sales almost tripled during this time. This high acceleration in sales through modern retail formats is expected to continue during the next few years with the rapid growth in numbers of such outlets in response to consumer demand and business potential.
Government Policy : There has been vigorous opposition to foreign direct investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away their business, lead to the closure of many small trading businesses and result in considerable unemployment. Given the political clout of the small trading community, because of their enormous numbers, the government has barred FDI in retailing since 1997. Hence, at present, foreign retailers can only enter the retailing sector through franchising greements. Growth of Retailing in India : Indian retailing industry has seen phenomenal growth in the last five years (2001-2006). Organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of Indian retail sector. RNCOS India Retail Sector Analysis (2006-2007) report helps clients to analyze the opportunities and factors critical to the success of retail industry in India. Organized retail will form 10% of total retailing by the end of this decade (2010).
From 2006 to 2010, the organized sector will grow at the CAGR of around 49. 53% per annum. Cultural and regional differences in India are the biggest challenges in front of retailers. This factor deters the retailers in India from adopting a single retail format. Hypermarket is emerging as the most favorable format for the time being in India. The arrival of multinationals will further push the growth of hypermarket format, as it is the best way to compete with unorganized retailing in India. Technology Impact :
The other important aspect of retailing relates to technology. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. Simultaneously, it will be technology that will help the organised retailer score over the unorganised players, giving both cost and service advantages. Retailing is a `technology-intensive’ industry. It is quoted that everyday at least 500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of JC Penney to its corporate headquarters.
Successful retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. They introduced two innovative logistics techniques – cross-docking and electronic data interchange. Today, online systems link point-of-sales terminals to the main office where detailed analyses on sales by item, classification, stores or vendor are carried out online.
Besides vendors, the focus of the retailing sector is to develop the link with the consumer. `Data Warehousing’ is an established concept in the advanced nations. With the help of `database retailing’, information on existing and potential customers is tracked. Besides knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured. Retailing, as discussed before , is at a nascent stage in our country. Most organised players have managed to put the front ends in place, but these are relatively easy to copy.
The relatively complicated information systems and underlying technologies are in the process of being established. Most grocery retailers such as FoodWorld have started tracking consumer purchases through CRM. The lifestyle retailers through their affinity clubs’ and ` reward clubs’ are establishing their processes. The traditional retailers will always continue to exist but organised retailers are working towards revamping their business to obtain strategic advantages at various levels – market, cost, knowledge and customer.
With differentiating strategies – value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behaviour, the ground is all set for the organised retailers. It would be important to note, however, that the retailing industry in India is still a `protected industry’. It is one of the few sectors which still has restrictions on FDI. Given the current trend in liberalisation, it will not be long before the retailing sector is also thrown open to nternational competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater dynamism into the market. That will be when the real action will begin. Major retailers in India: India top retailers are largely lifestyle, clothing and apparel stores. This is followed by grocery stores. Following the past trends and business models in the west retail giants such as pantaloon, Shoppers Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores.
These Wal-Mart wannabes have the economy of scale to be low medium cost retailers pocketing narrow margin. RETAILING SCENARIO-INDIA: The retail scenario in India is unique. Much of its is in the unorganized sector, with over 12 million retail outlets of various sizes and formats. Almost 96% of these retail outlets are less than 500 sq. ft. in size, the per capita retail space in India being 2 sq. ft. Compared to the US figure of 16 sq. ft. India per capita retailing space is thus the lowest in the world. With more than 9 outlets per1,000 people , India has the largest number in the world.
Most of them are independent and contribute as much as 96% to total retail sales. Because of the increasing number of nuclear families,working women, greater work pressure and increased commuting time, convenience has become a priority for Indian consumers. They want everything under one roof for easy access and multiplicity of choice. This offers an excellent opportunity for organized retailers in the country who account for just 2% (and modern stores 0. 5%) of the estimated US $180 billion worth of goods that are retailed in India every year.
The growth and development of organized retailing in India is driven by two main factors lower prices and benefits the consumers can resist. According to experts, economies of scale drive down the cost of the supply chain, allowing retailers to offer more benefits offered to the customer. The retail business in India in the year 2000 was Rs. 400,000 crore and is estimated to go to Rs. 800,000 crore by the year 2005, an annual increase of 20%. The contribution of the organized retail industry in the year 2000 was Rs. 20,000 crore and is likely to increase to Rs. 60,000 crore by 2005. [pic] GROWTH OF RETAIL OUTLETS IN INDIA: India is rapidly evolving into a competitive marketplace with potential target consumers in the niche and middle class segments. The market trends indicate tremendous growth opportunities. Global majors too are showing a keen interest in the Indian retail market. Over the years, international brands like Marks & Spencer, Samsonite, Lacoste, McDonald, Swarovski, Domino among a host of others have come into India through the franchise route following the relaxation of FDI (foreign direct investment ) restrictions.
Large Indian companies among them the Tata, Goenka and the Piramal groups are investing heavily in this industry. Organizations ready to take on this challenge can leverage the opportunities offered by a population of more than a billion. The prospects are very encouraging. Buying behaviour and lifestyles in India too are changing and the concept of Value for Money is fast catching on in Indian retailing. This is evident from the expansion of the pantaloons chain into a large value format, Big Bazaar, and the entry of new discount stores in food retailing in the South, namely, Subhiksha and Margin Free. pic] According to a report by the Centre for Monitoring Indian Economy (CMIE), investments in organized retailing which include shopping malls, retail chains etc. – doubled from Rs. 1,000 crore in January 2000 to Rs. 2,000 crore in January 2001. TRENDS IN RETAILING : The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. A sudden concept of `non store’ shopping emerged, which threatened to take away the potential of the store.
More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a sub-segment of the `store’ frequenting traffic. Internationally, the concept of net shopping is yet to be proven. And the poor financial performance of most of the companies offering virtual shopping has resulted in store-based retailing regaining the upper hand. Other forms of non-store shopping including various formats such as catalogue / mail order shopping, direct selling, and so on are growing rapidly.
However, the size of the direct market industry is too limited to deter the retailers. For all the convenience that it offers, electronic retailing does not suit products where `look and see’ attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. The most critical issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved. Recent trends include:
Retailing in India is witnessing a huge revamping exercise. India is rated the fifth most attractive emerging retail market: a potential goldmine. Estimated to be US$ 200 billion, of which organized retailing (i. e. modern trade) makes up 3 percent or US$ 6. 4 billion. As per a report by KPMG the annual growth of department stores is estimated at 24%. Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. [pic] CHANGING TRENDS IN RETAILING: By the turn of the 20th century, the face of the Indian retailing industry had changed significantly.
The retailing industry, which, until the early 1990s, was dominated by the unorganized sector, witnessed a rapid growth in the organized sector with the entry of corporate groups such as Tata, RPG, ITC and Bennett Coleman & Company into the retailing market. With the liberalization and growth of the Indian economy since the early 1990s, the Indian customer witnessed an increasing exposure to new domestic and foreign products through different media, such as television and the Internet.
Apart from this, social changes also had a positive impact, leading to the rapid growth in the retailing industry. Increased availability of retail space, rapid urbanization, and qualified manpower also boosted the growth of the organized retailing sector. Food retailing was a key area that saw some action at the national level, with players like Foodworld and Subhiksha, establishing stores all over India.
While supermarket and departmental chains replaced traditional grocery and general store formats, introduction of fast f oods (McDonalds), packaged foods ( MTR, Namma MTR), vending machines and specialty beverage parlors (Nescafe, Tata Tea, Cafi?? Coffee and Barista) brought about significant changes in the eating habits of Indian consumers. However, it was the non-food sector that saw tremendous action, with the introduction of new produc t segments. These segments mainly comprised lifestyle /apparel/ fashion/ accessories (eg.
Shoppers Stop, Westside, Lifestyle, Pantaloons, Reebok), books/music (Landmark and Crosswords), drugs and pharmacy and beauty (Health & Glow, CavinKare and Shahnaz Husain). The emergence of new segments also resulted in new store formats, including hypermarts, large supermarkets (3,500-5,000 sq. ft), mini supermarkets (1,000-2,000 sq. ft), convenience stores (750-1000sq. ft) anddiscount/shopping/grocer. According to reports, organized retailing, which accounted for about 6% of the total retail industry in 1999, was expected to increase to about 20% by 2005.
In October 2003, the total organized retail market in India was valued at about Rs. 200 bn and was estimated to grow eightfold in the next decade. TOP 10 Retail companies in India |TOP 10 Retail companies in India | |Retail companies in India section in Naukri hubs analysis and report on Top 10 companies in retail Industry, Top Company in | |retail sector, branded retail companies, top player in retail sector. |Shoppers’ Stop | |Westside (Trent) | |Pantaloon (Big Bazaar) | |Lifestyle | |RPG Retail (Foodworld, Musicworld) | |Crossword | |Wills Lifestyle | |Globus | |Piramals ( Pyramid & Crosswords) | |Ebony Retail Holdings Ltd. | | | | | | | Consumer behaviour and retailing decisions [pic] Retail outlet selection and brand selection [pic] There are three fundamental patterns which a consumer can follow and they could be: (I) Brand first, retail outlet second (ii) Retail outlet first, brand second (iii) Brand and retail outlet simultaneously.
A consumer wanting to buy a car may collect information on brands and purchase it from a retail outlet based on his perception of price offered or after-sales service provided by the outlet (typically, search for information on brands is followed by retail outlet selection in durables). In certain product categories, especially where `category killers’ exist, consumers may think of the retail outlet initially and then the brands (television, refrigerator and audio products retailed through outlets like Vivek and Co. in the South, could be an example). One more dimension may be to compare brands in the evoked set at retail outlets which also exist in an evoked set of their own. This is highly possible, especially in the Indian context where dealers develop a social relationship with consumers, especially in semi-urban and rural areas.
Primary research could be used to discover the specific sequence involved in a situation of this kind. A `brand first’ dimension may need feature-based advertising and a `retail outlet first’ dimension may require a set of point-of-purchase (POP) materials and special training to sales personnel to recognise the needs of consumers. Further, if it is known that a number of consumers may be oriented to visit their favourite retailer (before obtaining information on brands) in a geographical area, there would have to be more emphasis on regional/local advertising which highlights the retail shop rather than regular brand-based national advertising. Strategies and sequences Retail outlet first and brand second:
When a number of consumers follow this sequence of decision-making, display of point-of-purchase material and building the image of the outlet becomes important. The manufacturer of the brand may have to ensure that the brand (and the variants demanded) will be available at the key outlets in a locality. Point-of-purchase materials which are to be used at the retail outlet may require primary research – should visuals be used, should product features be used, should the POP material be in the regional language. There may also be a need to monitor competition from other retail outlets to ensure that consumers are kept satisfied in terms of service, price, promotional deals and ambience.
This is especially applicable to durables retailing in India (in cities). Retailers attempt to increase consumer traffic by providing a number of `add-ons’. Brand first and outlet second: The brand was probably thought of by the consumers because (i) the consumers may not have developed a relationship with any retailer which is strong enough to get into the `evoked retail set’ or (ii) the brand has got into the evoked set because of advertising or positive word of mouth. Local advertising with the mention of brand names which have already got into the evoked set would enable consumers to be pulled’ to the outlet. Primary research may be required to identify the brands in the evoked set.
This feedback may have to be provided by the manufacturers of a brand to retailers in various regions (especially if it is a brand with a major chunk of the market and one which is nationally advertised). Even multinational outlets could make use of this approach and mention the brands in the evoked set (in a given geographical area). This is likely to improve traffic to the outlet. Besides, the evoked set could also change from time to time depending on the strategies of brands. About two decades ago, brands like Solidaire, Dyanora and Crown may have been top-of-the-mind (in a specific geographical area) but slowly gave way to other brands – these changes should be captured (how often this happens, why, and the differences between markets) to formulate retail strategies.
The local advertising could be different from the national advertising for the brand. A brand may be advertised on features nationally but the retail outlet in may prefer to highlight the effective after-sales service associated with the brand as this may be a priority of consumers. The combination of `push-pull’ strategy is shown in the table. The interest generated in the brand would have to be backed by good pre-sale services at the outlet. Brand and retail outlet simultaneously: When consumers think of the brand and retail outlet together, it means that they have a certain preference for the outlet and would like to check the evoked set of brands there.
The marketer would have to carry out primary research to find out specific markets where consumers have a very positive relationship with retailers. This is important because of the influence of retailers over the purchase behaviour of consumers in the Indian context. It may also be worthwhile to check if the evoked brands are carried by the retailers who have a positive relationship with the target segments. This is to ensure that the retailers who have a favourable perception among the target segment carry the desired brands. Failing this, consumers may turn to a different retailer, which would be to the disadvantage of a retailer who has already won the confidence of consumers. Retail sales personnel also become important in this situation.
The prospective consumers are “carried over” to the purchase stage by the store personnel and hence there should be incentive programmes for the store personnel. If a company such as BPL or Videocon is dealing with a number of brands/sub-brands, it has to ensure the availability of specific brands which may interest the consumers. If the retail outlet is a large one dealing with a number of brands (like Vivek), a shop-in-shop arrangement may be preferable. This model puts the brand in focus and reinforces the positive association a consumer may have about it. A considerable amount of pre-sale service would have to back up the shop-in-shop concept. The shop-in-shop concept creates an aura of exclusivity.
Consumers tend to have higher expectations about the pre-sale service and the attention given to them. A large store also is likely to stock several brands and hence all brands in the evoked set would have to compete with each other to progress from the evoked set to choice set. Large outlets may also have a built-in provision for a lower price (because of volumes) and hence may be in a better position to clinch the deal with consumers who may simultaneously consider both the brand and the retail outlet. The retail marketing mix The retail marketing mix consistsof the following elements: (I) Product Offerings: This refers to the product mix that the store retails for customers after a careful study of what their needs and wants are.
By matching customer preferences with an assortment of merchandise offered within the store’s categories, the retailer gets an ideal basket size per customer. The basket size contains the mix of items a customer buys during a visit. (2) Place: This is the location of the store and its catchment boundaries. The key to optimizing the element of ‘place’ in the marketing mix is to undertake local marketing efforts besides the national marketing plan. Determining the market share of the store in the catchments given an indication of its performance and efficiency. (3) Price: Price is an important element in the marketing mix as are very price-sensitive.
Pricing is of different kinds: Maximum retail price (MRP) on items generally means full pricing Promotional pricing Involves a temporary reduction in the priced. customer during a particular season, while closing a particular1itto clear saleable defectives and shop- soiled merchandise. Loss leader pricing is a tactic used to sell at cost or a little above cost few critical items to get more footfalls into the store. A Odd pricing is the way footwear organizations like Bata price their products in India – at levels like Rs. 129. 95, 149. 95 etc. Price bundling is the reduced price offered for a bundle or a predefined group of merchandise when bought together by the customer.
Everyday low pricing (EDLP), which is not a familiar concept in India,is pricing different kinds of merchandise on a lower scale everyday pricing is innovative and exclusive to the identity of the store, offeringthe right value to the buyer, it will bring in more and more customersand help the retailer to retain them as well. (Pricing has been discussedhere as part of the marketing mix. Pricing strategy is dealt within detail (4) Promotions and Events: These help the store to achieve its short-termgoals. Promotions may be price-led or occasion-led, in which canspecial merchandise is offered by the store only for the occasjon(example: Dandiya).
Most retail organizations run promotions duringfestival seasons like Diwali, Christmas, New Year, Valentine’sDay,Id,and so on. Sometimes promotions are driven by brands in cooperation with theretailer. Retail events are gaining significance in India with retailerspreferring them to direct price-offs. However, if run very frequentlypromotions may prove detrimental to the image and positioning of the store. (5) People: There are two kinds of people as far as the retail marketingmix is concerned: People to Serve (customers) and People that Serve(employees). It is customers who determine whether the retail storesselling the right products and services. People that se,rve. he organization are the ambassadors or the face of the retail were. Excellent delivery standards – which go hand-in-hand with the: and positioning of the store – can be achieved only if the staff are trained well. (6) Presentation: Presentation is the way products and services are grouped and presented in a retail store. Such presentation should conform to the store’s positioning and customer profile. For instance, a boutique selling designer garments needs to present its merchandise in exclusive splendor – it cannot use ordinary furniture and fixtures. Attending on customers in the boutique ought to be done on a very personal basis, as a mass approach will turn them away Retail Formats
These do not offer full service category products and some carry a selective product line. K. Raheja’s Shoppers Stop is a good example of department stores. Other examples are Lifestyle and Westside. These stores have further categories, such as home and decor, clothing, groceries, toys, etc. • Malls: These are the largest form of retail formats. They provide an ideal shopping experience by providing a mix of all kinds of products and services, food and entertainment under one roof. Examples are Sahara Mall, TDI Mall in Delhi. • Specialty Stores: The retail chains, which deal in specific categories and provide deep assortment in them are specialty stores. Examples are RPG’s Music World, Mumbai’s bookstore Crossword, etc. Discount stores: These are the stores or factory outlets that provide discount on the MRP items. They focus on mass selling and reaching economies of scale or selling the stock left after the season is over. • Hypermarkets/ Supermarkets: These are generally large self-service outlets, offering a variety of categories with deep assortments. These stores contribute 30% of all food and grocery organized retail sales. Example: Big Bazaar. • Convenience stores: They are comparatively smaller stores located near residential areas. They are open for an extended period of the day and have a limited variety of stock and convenience products. Prices are slightly higher due to the convenience given to the customers. E-tailers: These are retailers that provide online facility of buying and selling products and services via Internet. They provide a picture and description of the product. A lot of such retailers are booming in the industry, as this method provides convenience and a wide variety for customer. But it does not provide a feel of the product and is sometimes not authentic. Examples are Amazon. com, Ebay. com, etc. • Vending: This kind of retailing is making incursions into the industry. Smaller products such as beverages, snacks are some the items that can be bought through vending machines. At present, it is not very common in India Retail Advertising – Types of Retail Promotion
Two approaches may be used to increase both customer traffic in your store and the sale of specific items or merchandise lines. These approaches, best used in conjunction with each other, are: • Retail advertising – which addresses those potential customers who are not within the store • In-store promotions – which can attract the attention of customers within the store or via window displays Retail Advertising – Retail Promotion Although the primary purpose of this section is to discuss merchandise management, advertising is so important to the concept that its inclusion, though brief, is necessary. There are two major types of advertising: Advertising to acquaint potential buyers with the special features of a product.
With many industries, advertising of this type is done by the manufacturer of the product. Quite often, however, the retailer must do some of this advertising. When this occurs, it is often necessary to work with an advertising agency so they may help you write the copy (wording) such that the advertising will bring the best results. Such advertising concentrates almost solely on the single featured product. Advertising the availability and price of nationally known merchandise. Much retail advertising is merely directed at letting potential customers know that the product is available and informing the customer of special prices or promotions which may encourage her/him to buy, at your store.
This is perhaps best done through ‘Omnibus’ ads which feature many products, their prices, and brief slogans about their benefits. Consumers very often “shop” such ads and will come into your store to buy one or two of the items listed. While there, they buy other things on impulse. Whatever your message may be, there are many ways to advertise – depending on how much information you wish to impart to prospective consumers, what kind of information (audio and/or visual), and how many consumers you wish to reach. Retailers who cater to local clientele may use advertising methods such as: • In-house flyers indicating products and bargains • Signs both internal and external to the store • Informative in-house displays of merchandise Direct mail advertising • Local newspapers • Distribution of flyers by hand or using the local newspaper deliveries (some papers have such arrangements) Those retailers who wish to launch a large scale campaign may, of course, resort to advertising via radio, television, or widely circulated newspapers. It is very important to remember that for any kind of advertising, single ads bring very sparse results. In order to make an advertising campaign successful, it is usually necessary to advertise repeatedly (five or six times during a one to two week period) to acquaint consumers with your service or product and, most important, with your store.
It is also necessary to maintain a regular program of advertising throughout the year in order to continue bringing customers into the store. Continual experimentation is necessary to determine which approaches are best. although proper advertising may involve an initially high expense, if it succeeds both in drawing more clientele into your store and in increasing sales in both advertised and unadvertised products, the initial investment may more than pay for itself. Once advertising has brought the consumer into your store, promotion and sales efforts must transfer the customer’s attention and interest into desire and action to buy. In-Store Promotion
Promoting merchandise may often be achieved by special arrangements with a manufacturer or a wholesaler . Often new merchandise will be offered at low introductory prices and the manufacturer or wholesaler will provide the retailer with special informative displays of the product as well as offer special rewards to the consumer. Many times a manufacturer will not offer displays but you will want to promote certain merchandise nevertheless. Basic ways through which you may create your own in-store promotions are: • window displays • special in-store displays • signs and posters • personal selling efforts Retail Displays
Both in-house displays of merchandise and advertising displays should be: • attention getting in coloration and layout • informative in regard to the product • either a direct or subtle sales pitch to convince the customer that he or she needs the product • informative of price, especially if it is a ‘special price’ Both display advertising and in-house displays often do well to feature a number of related products, some of which may or may not be on sale. Past studies in advertising have shown that a person’s eye is generally attracted to the center of a display, then off to the right of center and lastly reaches the edge of the display.
It is therefore good practice to place a featured item, which may be on sale, at the center of the display and another product for which you most wish to generate sales, to the immediate right of the featured item. Other related products may be placed outward from around the center of the display. When creating a display, it is important to tie-in merchandise lines with one another wherever possible . In this way, customers who are in the market for a specific product are also exposed to many related products and accessories which they will often buy. Such tie-in displays also create a more organized appearance of your store and will make products easier to find.
For example, a person looking for toothpaste might be more likely to buy a toothbrush, dental floss, or mouthwash if those products are in close proximity to the toothpaste. Tie-in displays also help to generate impulse buying. Quite often an advertised or ‘sale’ product will draw people into the store who will buy not only the advertised product but will also buy, on impulse, other unadvertised merchandise. Sales are often helpful to impulse buying since, when people feel they are getting a good bargain, they are often likely to reciprocate by purchasing other merchandise from you with money saved from the sale. Sales Effort All promotions and attempts to interest customers in new lines, new products, or in special sales, will work better if they are supported with sales effort.
For example, just before a product is rung up at the cash register, it is always a good idea to ask a customer whether he or she knows of a special sale, knows of a special product you are promoting, or could use something that goes well with the things the customer has already purchased. If such reminders are given in a friendly way without being persistent, many customers will make additional inquiries and often additional purchases . ON-THE-JOB ACTIVITY For your next in-store promotion, you might try using a tie-in display, with the featured item in the center of the display, surrounded by related products or accessories. If possible, discuss your ideas with a person knowledgeable in advertising; pursue any additional ideas which may arise from such a discussion.
Retail Inventory Management The True Cost of Retail Inventory When not managed carefully, inventory costs can be the difference between being profitable or losing your shirt. Putting A Retail Open-To-Buy To Work With a retail Open-to-Buy, you’ll gain better insight — and better revenues — into how much inventory you need to acquire and sell each month. Retail Inventory Turn and GMROI – Measuring Retail Inventory Productivity Sales, profitability, and cash flow are directly linked to a small retailer’s ability to manage inventory productively. Cycle Count, Cycle Count, Cycle Count A formal retail cycle count program will dramatically reduce your shrink.
And once you’re in the habit of continuously cycle counting, you’ll probably never have to do a full physical inventory again. Turning Excess Retail Inventory Into Cash How to turn excess retail inventory into cash. The Coin of the Realm Why inventory management is of critical importance to small retailers. So What Exactly Is A Retail Open-To-Buy? It’s a tool that in the hands of a fully committed retailer can profoundly improve financial performance. A Retail Inventory Management Key – Think of Inventory in Terms of Time Small retailers who think of their inventory in terms of weeks of supply almost always experience healthier cash flows. The Full Cost of Inventory: Exploring Inventory Carrying Costs
When you reduce inventory, not only are you freeing up capital, but you are also creating opportunities to reduce expenses, improve profitability, and increase cash flow. Managing Retail Inventory and Maximizing Return on Inventory Investment Don’t fall in love with your inventory, it’s not likely to love you back. It’s either going to be sold and converted to cash, or it’s sitting there tying up cash, costing you more cash each and every additional day it’s not sold. The Dollars and Cents of Inventory Turn Inventory turn can be a powerful metric for freeing up vital dollars and cents for more productive purposes. Retail Merchandising The Very Best Consignment Shops and Classic Retail Fundamentals
Spending some time shopping in the very best of these stores highlights and reinforces several classic retail fundamentals Merchandising Strategy For Independent Retailers How do independent retailers compete with big-box stores? By selling quality products with great customer service, obtaining higher initial markups, and avoiding corrosive sales down the road. Avoiding Heavy Retail Markdowns As the new season begins, small retailers need to plan sales conservatively and maintain lean inventories to keep from slashing prices down the road. Chasing The Last Sale The objective for any small retailer is to maximize profitability and cash flow. Carrying too much inventory can decimate both. Dealing With Retail Assortment Creep
It may be easier to sell your existing customers new items than it is to find new customers for your existing items, but in selecting those new items it is critical that you are actually growing sales, and not just your inventory. Managing Pre-Season Retail Commit Percentages Managing your pre-season commit percentages is one of the keys to having a profitable season. SUGGESTIONS: To make Indian retailing world class many a challenges are to be overcome by the industry. Some suggestions to improve the situation are offered below. Establishment of Retailer co-operatives, which will maintain warehouses etc. to work as a distribution centre for the member retailers can help Indian retailer attain a respectable position in the relationship matrix mentioned above.
The whole organisation will run at a no-profit, no-loss basis. This would enable the retailers to buy the products they want directly from the original manufacturers in huge quantity This would make the application of the concepts of QR (Quick Response) and ECR (Efficient Consumer Response ) possible to a certain extent.. However, many inherent difficulties may make the functioning or even establishment of such a co-operative difficult. Nevertheless, these problems are inevitable and must be dealt with. firmly. Merger and buy-out of weak retailers by a stronger one, specially in metros and big cities may be another step towards this direction.
This would give the new retailer the desired leverage tobe world. class. Use of technology to the greatest extent possible may also help strengthening the retailer position in the marketing channel. First step may be taken with setting up of a network of independent firms believing in use of technology for business excellence. Then a collection of strong retail organisations may pressurise the suppliers and other channel members to use compatible technology. This may open the door for implementation of QR or ECR or other relevant concepts for the retailers. An overall change is to bring about in the mindset of the retailers. They will have to think differently.
They must find out and satisfy service outputs of the target customers Unless there is a drastic change in the mindset of at least large and medium retailers and as well as that of the manufacturers, the required change is not going to come by easily. The retailers must learn and understand to lead the chain from the front. Setting up of more and more non-store retailing centers would also ensure a strong retailing organisation. Non-store retailing makes implementation of modern principles easierandlesscostlier. Setting up of franchisee organisation may also help in strengthening the position of the retailers. The franchiser can exert a tremendous control over the way retailing is done. Transnational service organisation like McDonald and KFC are being able to offer a centralised control over purchase and operation.
Large and medium sized retailers may take up the concept of franchising to reach the market in a more meaningful way. Though the management of franchisee network is difficult than managing a retail chain in view of high level of investment and other obligations, Indian retailers should spread out its wings its in this profitable and efficient way. CONCLUSION: 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 andlowerservice 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. Chapter-3: Power Point Slides [pic] [pic] [pic] [pic] [pic][pic] [pic][pic] [pic] [pic] [pic][pic][pic] Bibliography Swapna pradhan, Retailing Management, Delhi, Tata McGraw-Hill Publishing Company Limited. Gibson g. vedamani , retail Management , Chennai, jaico publishing house Dr. harjit singh, retail Management, Delhi,s. chand WEB SITES : http://www. fibre2fashion. com/industry-article/free-retail-industry http://www. naukrihub. com/india/retail/top-companies/ http://www. thehindubusinessline. com