RETAILING - SHORT NOTES

 

RETAILING - SHORT NOTES

MBA / BBA MARKETING MANAGEMENT 

QUESTION PAPER OCTOBER 2019    

            PUNE UNIVERSITY 

Retailing is the act of selling products or services to people for their personal, nonbusiness use.

 A retailer is a business that specializes in the act of retailing primarily.

Retailing includes all the activities involved in selling goods or services directly to final customers for their personal, nonbusiness use.

A retailer is any business enterprise whose sales volume comes primarily from retailing.

 

EVOLUTION OF RETAIL IN INDIA - I

?Barter system was known as the first form of Retail

?Followed by Kirana Stores and Mom & Pop Stores

?Finally Manufacturing era necessitated the small stores and specialty stores

?It was a seller’s market till this point of time with limited number of brands available

?1980s experienced slow change as India began to open economy.

The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers.

?Post 1995 onwards saw an emergence of shopping centers.

?In beginning of 21st century, emergence of hyper and super markets trying to provide customer with 3 Vs - Value, Variety and Volume

 ?Expanding target consumer segment

 

Functions performed by Retailers - I

Ø  Transactional

Ø  Buying,

Ø  Selling and Risk Taking

Ø  Logistical

Ø  Assorting,

Ø  Storing and Sorting

Ø  Facilitating

Ø  Financing,

Ø  Grading and

Ø  Marketing Information

Ø  Breaking Bulk

Ø  Holding stock and risk taking

Ø  Creating place and time utility

Ø  Assortment of product and services

Ø  Extending other services

Ø  Creating demand and sales of merchandise

 

RETAIL ORGANIZATIONS:

Achieve many economies of scale, such as greater purchasing power, wider brand recognition, & better trained employees.

 The major types of retail organizations are:

 • Corporate Chain Stores: Two or more outlets that are commonly owned & controlled, employ central buying & merchandising, & sell similar lines of merchandise.

 Their size allows them to buy in large quantities. Ex: Tower Records, Pottery Barn.

 

Retail formats: Food-oriented retailers ? Convenience stores ?

Spencer’s Daily Express ? Bharti Retail Easy Day ? Om daily needs Pratidin ? Supermarkets ? Spencer’s Spencer’s Super ? Future group Food Bazar ? Aditya Birla Group ‘more’ ? Hypermarket ? Spencer’s Spencer’s Hyper ? Future group Big Bazar ? TATA group (trent) Star India Bazar ? Super-centre (Big-Box) ? Wal-mart ? Meijer ? Fred Meyer

Retail formats:

Non-Food oriented retailers -

 I ? Departmental Store ? Raheja Group Shopper’s Stop ? Trent Westside ? Future group Pantaloon ? Specialty Store ? Multiple line specialty retailer ? O Croma ? O Vivek’s ? Single line specialty retailer ? ITC Wills Lifestyle ? O Manyavar ? Category Killer ? Walmart in toys ? Amazon.com for books ? eBay for e-auction ? Value Retailing ? Pantaloons retail – Brand Factory

Retail formats:

 Non-Food oriented retailers - II

? Off-price retailer ? Warehouse clubs ? Cash-n-Carry ? Big Bazar Whole-sale Club ? Flea Market ? Janpath in Delhi ? Zaveri bazar in Mumbai ? Airport Retailing ? Shopper’s Stop – Nuance, Switzerland ? Tata - Woolworth, Australia to start Croma ZIP ? Railway Retailing ? IRCTC ? Sanchi

 Voluntary Chain:

 Wholesaler-sponsored group of independent retailers engaged in bulk buying & common merchandising. Ex: Independent Grocers Alliance.

 

Retailer Cooperative:

Independent retailers who set up a central buying organization & conduct joint promotion efforts. Ex: Associated Grocers, ACE.

Consumer Cooperative:

A retail firm owned by its customers. Started by community residents. Ex: local consumer cooperatives.

 Franchise Organization: Contractual association between a franchiser & franchisees.

Normally based on some unique product, service or method of doing business.

Prominent in fast foods, video stores, health/fitness centers, auto rentals. Ex: McDonald’s, Pizza Hut, Taco Bell, Burger King.

Merchandising Conglomerate:

A free-form corporation that combines several diversified retailing lines & forms under central ownership , along with some integration of their distribution-&-management function Ex: F.W. Woolworth, Kids Mart.

TYPES OF RETAILING

With such a broad definition, the types of retailers are vast and are categorized based on their different characteristics.

The distinctive characteristics and examples that are most relevant to me as a consumer are below:

(a)Specialty Stores: Carry a narrow product line with a deep assortment within the line. Ex: Athlete’s Foot, Tall Men, The Limited.

(b)Supermarkets: Relatively large, low-cost, low-margin, high-volume, self-service operations designed to serve the consumer’s total needs for food, laundry, & household maintenance products. Ex: Kroger, Safeway, Food Lion. 

 (c)Convenience Stores: Relatively small stores located near residential areas, opened long hours seven days a week. Ex: 7-eleven

 (d)Factory outlets: Owned & operated by manufacturers & normally carry the manufacturer’s surplus, discontinued or irregular goods. Ex: Ralph Lauren, Liz Claiborne.

(e)Independent off-price retailers: Owned & run either by entrepreneurs or by division of larger retail corporations. Ex: TJX Cos.

(f)Warehouse clubs: Sell a limited number of brand-name grocery items, appliances, clothing, etc. at deep discounts. Operate in huge, low-overhead, warehouse-like facilities. No credit cards. No deliveries. • Ex: Sam’s Club.

(g)Superstores: 35,000 square feet selling space. Meets consumer’s total needs. Ex: Petsmart, Home Depot, Staples.

 (h)Department Stores: Carry several product lines. Ex: Sears, J.C. Penney, Bloomingdale’s. (i)Off-Price Retailers: Buy at less than regular wholesale prices & charge consumers less than retail.

(j)Discount Stores: Sell standard merchandise at lower prices by accepting lower margins & selling higher volumes. Ex: Wal-Mart, H.E.B., Kmart.

Importance of Retail :

Retailing has mirrored the increasing prominence of the retail industry.

Retailing provides necessary service and a positive contribution to the economy.

The importance of retailing is given below:

• Retailing shapes the lifestyle of people

• Retailing contributes to the economy

• Retailing dominates the supply chain

• Retailing is interdisciplinary 

 • Retailers have status as employers.

• Retailers are gatekeepers within the channel of distribution.

 • Retailers have scope for expanding internationally.

 

Target-market decision:

A retailer’s most important decision.

Until the target is not defined, the retailer cannot make consistent decisions.

Retailers should conduct periodic marketing research to ensure that they are reaching & satisfying their target customers.

 

• Price Decision:

Key positioning factor & must be decided in relation to the target market, the product-&-service- assortment & competition. Retailers must pay attention to pricing tactics. They will plan markdowns on slower-moving merchandise. 

  A growing number of retailers have abandoned “sales pricing” in favor of everyday low pricing (EDLP).

This could lead to lower advertising costs, greater pricing stability, a stronger store image of fairness & liability, & higher retail profits.

 

Promotion Decision:

Use promotion tools that reinforce image position.

 Place Decision:

Retailers have a choice of locating their stores in: – Central business districts (downtown). Rents are high.

– Regional shopping centers.

Large suburban malls containing 40-200 stores. .

 Malls are attractive because of generous parking, one-stop shopping, restaurants, & recreational facilities.

 – Community shopping centers. Smaller malls. Between 20- 40 smaller stores.

– Strip malls. Contain a cluster of stores, usually housed in one long building.

– A location within a larger store.

Certain well known retailers-McDonald’s, Dunkin Donuts- are locating units in airports, schools, 

 

How Retailing is different from other channels of distribution?

S. No. Basis of Comparison Retailing Other channels

 1. Interaction with end customers Direct and Regular Indirect and Irregular

2. Sales turnover Low High

3. Number of sales transaction High Low

4. Unit price of product High Low

5. Variety of merchandise High Low

6. Profit margins High Low

7. Importance of business location and sites Very Highly important Important