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© Oxford University Press 2010
RETAIL MANAGEMENT, 2/ERETAIL MANAGEMENT, 2/E
Chetan BajajChetan Bajaj, Director, Sona School of Management, Salem, Tamil Nadu
Rajnish TuliRajnish Tuli, Director, Millward Brown, South East Asia, Singapore
Nidhi Varma SrivastavaNidhi Varma Srivastava, Director, Millward Brown, India
© Oxford University Press 2010
Chapter - 1Chapter - 1RETAILING: ROLE, RELEVANCE AND TRENDSRETAILING: ROLE, RELEVANCE AND TRENDS
© Oxford University Press 2010
What is retailing?Retailing: a conclusive set of activities or steps used
to sell a product or a service to consumers for their personal or family use
Retailer: a person, agent, agency, company or organization instrumental in reaching the goods, merchandise, or services to the ultimate consumer
Countries that have enjoyed the greatest economic and social progress have been those with a strong retail sector
Over the last decade there have been sweeping changes in the general retailing business
© Oxford University Press 2010
Retail industry and economyRetail business is the largest private industry Retail is ahead of finance and engineering and
contributes over 8 per cent of GDP in the western countries
Over 50 of the Fortune 500 and about 25 of the Asian Top 200 companies are retailers
Today, in some developed countries, retail businesses have shares as large as 40 per cent of the market
The significance of the retail business has increased with the fast growth in the service sector
© Oxford University Press 2010
Retail industry in IndiaRetail forecasts in India:
- the business in India is expected to reach Rs. 25,000 billion in 2008
- growth of organized retailing in both food and non-food segments
- proportion of sales through organized retailing estimated, increase by 8% in 2010 Emergence of organized retailing: -India to have over 700 shopping malls by 2015 (400 operational malls in 2010)
- land developers rushing to cash in on the booming retail business
© Oxford University Press 2010
Contd…
50 million square feet of total mall space in India, expected to sprout in six metros (Delhi and Mumbai) and seven non-metros in 2008
40 per cent of the total mall space to be concentrated in the National Capital Region
© Oxford University Press 2010
Characteristics of retailingDirect end-user interactionSole point in the value chain to provide platform for
promotionsSales at the retail level is generally in smaller unit sizesLocation is a critical factor for retail businessRetail services are as important as core productsA larger number of retail units as compared to other
members present in the value chain
© Oxford University Press 2010
Functions of retailing
SortingBreaking bulkHolding stockAdditional servicesChannel of communicationTransport and advertising functions
© Oxford University Press 2010
Activities performed by retailers
Arrange for assortment of offeringsBreaking quantityHolding stockExtending services
© Oxford University Press 2010
Categorizing retailers
Number of outletsMargin vs Turnover Location Size
© Oxford University Press 2010
Trends in retail formats
Mom and Pop Stores and traditional kirana storesE-commerceDepartment StoresDiscount StoresCategory KillersSpecialty StoresE-tailers
© Oxford University Press 2010
Relationships between retailers and suppliers
The retail sector is critically dependent on its suppliers for effective operation and the profitability of its business
Several socio-economic and demographic factors are considered by manufacturers for identifying the ideal retail format mix for its products
This is illustrated by the washing soap category in India and the resultant retail format preferences
© Oxford University Press 2010
Retail format mix adopted by manufacturers for soaps
Soap is targeted towards women as they are the chief decision-makers in soap purchase. Medicated positioning like germ killing and anti-bacterial are marketed to families.About 75% of the soaps are bought through these following types of outlets.
Kirana storesPan-beedi shopsDepartment stores
© Oxford University Press 2010
Retail strategyDefine the business of the firm in terms of orientation
towards a particular sectorSet short-term and long-term objectives with regard to
image and profitabilityIdentify the target market and direct efforts on the basis of
the customers characteristics and needsDecide the broad direction the company must take in
futureImplement an integrated plan that encompasses all
aspects of retailing like pricing, location, and channel decisions
Evaluate and revise the plan depending on the nature of the internal and external environment
© Oxford University Press 2010
Retail concepts An essential part of the retailing strategy, the retailing concept is essentially a customer-centred, company-wide approach to developing and implementing a marketing strategy. The retailing concept covers four broad areas:
Customer orientationGoal orientationValue driven approachCoordinated effort
© Oxford University Press 2010
The changing face of retailingRole of the Internet- Does the size of the retail organization play a big part in
adapting easily to the Internet? - Is the product/service offering also a prime determinant of
cyber retailing? Branding through retailers- How do retailers choose which brands to display? - Why do many new products fail in the marketplace- How can manufacturers maximize the brand opportunity in
a given retail outlet? - What is future of Lifestyle Clustering?- Vertical retail concepts are increasing in popularityConsumption related mega trends
© Oxford University Press 2010
Drivers of success in the retail sector Customers are the driving force in change Re-evaluating the marketing planAdvanced education for retailers is critical for growthStrong visual recognitionThe workplace challengePlanning for success
