ASST PROF. JONLEN ASST PROF. JONLEN DESADESA

Retail Formats refer to the different kinds of retail outlets, from where customers can purchase products.

Store based and Non-Store based Retailing. Retail formats can be classified based upon their

ownership, size or merchandise offered.

An independent retailer is a small retailer, usually owning and operating a single outlet.

He may be a young person, graduate starting business. Many independent stores are passed on from

generation to generation. He is independent in his business. Easy of entry is the reason for a high number of

retailers in India. Usually in the form of sole proprietorship

No restrictions on an independent retailer Sole decision making authority Focus on local area to achieve business goals Easy task of starting business To serve local demand

Cannot compete with big retail outlets Focus on labor intensive techniques Limited bargaining power Limited funds Small scale of operations

Also known as chain store. It is a group of two or more outlets carrying the same

sort of merchandise assortment. Owned and controlled jointly by the same retailer. There are common purchases, promotional efforts. Bargaining is possible. Two or more outlets under a common ownership is

called a retail chain. E.g: Louis Philippe, Van Heusen, Arrow, Westside,

Music World, Planet M, Borkars Superstores, Eagles Warehouse etc

ADVANTAGES

Increased Bargaining power with suppliers

Cost effectiveness Increases efficiency

DISADVANTAGES

High establishment costs Difficulty in management High expenses on safety

stock Centralized decision

making

Franchising is a specialized form of licensing in which the franchisor not only sells intangible property to the franchisee, but also insists that the franchisee agree to abide by strict rules as to how it does business/

In franchising, the franchisee uses the name of the franchisor to conduct business operations.

The franchisor provides all the required help and support to the franchisee for a fee known as royalty.

Under franchising, an independent company called the franchisee operates the business under the name of another company called the franchisor.

The franchisor is required to be strong in its business and should also have a good business reputation. It has to be successful in its home country. E.g: McDonalds, KFC, Pizza Hut.

Agreement 2 Parties- Franchisor & Franchisee Compensation Dispute Resolution Duration of the Contract

Limited financial commitment. Primarily used by service firms. Lesser risks for both parties. Franchisor gets knowledge about the culture

of other countries where the franchisee operates.

Risk of worldwide reputation if no quality control.

Disputes among the parties. Loss of reputation incase of substandard

products. Leakage of trade secrets.

Also termed as shop-in-shops. A retail store or a department is leased or rented to an

outside party. 2 parties- Lessor & Lessee and monthly rent. An emerging trend in Indian retail, is that larger retail

chains setting up smaller retail outlets in malls, stores, airports, railway stations etc.

They offer limited number of merchandise. When a section of a department in a store is leased to

an outside party, it is termed as a leased department.

ADVANTAGESADVANTAGES Provides one-stop shopping

experience. Lesser burden on the Lessor. Lessor gets regular rent.

DISADVANTAGESDISADVANTAGES Operating hours may vary. Items sold are limited. Bad image of the lessee can

spoil the image of the entire store.

Lessor may increase rent, if the lessee is doing very well.

These are retail outlets owned & managed by the consumer members.

They provide essential commodities at reasonable prices. It aims at serving the interest of common man by

stabilizing the prices of products. Interested customers come together, invest their money

and elect members to run day to day activities. Profits are shared among the members equally or based

on their contribution. They offer a variety of products to customers. E.g: Sarkari Bandhar, Apna Bazaar Shops in Mumbai,

Super Bazaar stores in Delhi, Goa Bagyadar in Goa etc

Limited Expansion Profit is shared by its members They sell essential commodities at reasonable

prices Average customer service Main purpose is social service, not profit.

These are small stores located in residential areas, having long working hours.

Offer a limited line of convenience products like eggs, bread, milk etc.

Their merchandise mostly include food items & general items.

Size of convenience stores is around 3000 sq.ft. Retail stores at petrol pumps, In & Out, HP Speed Mart

are some Convenience stores in India. 7 Eleven, Circle K & SPAR are some international

examples.

Convenience stores are located in convenient locations and offer a limited variety of merchandise.

In Indian context, they are termed as kirana storeskirana stores. Convenience stores are now spreading to densely

populated cities. They charge higher prices as compared to supermarkets.

ADVANTAGES

Quick Shopping Less Check out time Long shopping hours

DISADVANTAGES

Limited product range High pricing Small stores

A Supermarket is a large self-service store selling food items, household goods to customers under one roof.

It is large in size and offers a wider selection for the customers than a standard grocery store.

It is smaller than a hypermarket. A supermarket typically comprises of fresh produce,

household items, eatables and baked goods with shelf space reserved for canned and packaged goods as well as for various non-food items like household cleaners and pharmacy products consumed regularly

Area-500 to 2500 sq.m.

  One roof, low cost. Central location. Wide selection. Benefits of being large scale. No Bad debts.

No Credit. No Personal Attention. Mishandling of Goods. High Overhead Expenses. Huge Capital Requirement. 

Hypermarket is derived from the French word hypermarche, which is a combination of a supermarket and a department store.

A gigantic discount retail facility complex that combines the features of a supermarket, departmental store and specialty stores all under one roof.

A hypermarket is a superstore which combines a supermarket and a departmental store. The result is a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise”

Area: 80000-220000 sq.ft. Offers a wide variety of food items. Non-food items include clothes, jewellery, sports

equipment, cycles, motor accessories, books, CDs, DVDs, TVs, electrical equipment, computers etc.

Prices are very reasonable or cheap because of large scale operation.

Unique products are offered. They also include pharmacies, cash machines,

cafeterias etc.

Multi-level store Car parking facilities 25-60 cash counters Discounted pricing policy Self service store Separate departments and sections Thousands to lakhs of items sold Found in very large cities Payment modes include cash, debit & credit cards

Indian hypermarkets include: Big Bazaar, HyperCity & Reliance Retail.

Global: Carrefour, Walmart, Tesco.

Big Bazaar offers 170000 items in over 20 categories.

A speciality store focuses on a narrow product line. It has a deep assortment in that product line such as

apparels, footwear, consumer electronics etc. The area is around 8000 sq.ft. They offer a limited variety but full range of

merchandise. They have a clearly defined target market. They offer high level of service to customers. Egs: Adidas, Bata, Nokia World, Music World,

Pantaloons, IKEA, Sony World, Food Bazaar, Reynolds etc.

A departmental store is a large retail outlet that offers a wide variety of products with deep assortment.

It is organized into separate departments for the purpose of selling & display.

Each department has its own selling, accounts, packaging & security staff.

Area: 20000-40000 sq.ft. They offer a high level of customer service. Prices are moderate to above average. Much more

expensive as compared to hypermarket.

The products offered include FMCG products, groceries, consumer households, home furniture, apparels, cosmetics and accessories etc.

They employ at least 50 employees. Egs: Food World, West Side, Shopper’s Stop, Lifestyle,

Music World, Vishal Mega Mart, Pantaloons, Spencer’s etc.

Off-price retailers buy merchandise at less than wholesale price and sell them at less than retail price.

They buy leftover merchandise from manufacturers or big wholesalers.

The reason for low prices is due to the absence of advertising or sales promotion offers for its products.

The products sold may have minor defects, odd sizes, unpopular colours.

In India, the sales of the off-price retailers are on the decline because of the increasing popularity of supermarkets & departmental stores.

Egs: Factory Outlets of Pantaloon, Levi’s & Liberty.

A factory outlet is a retail store owned & managed by a retail firm (manufacturer) for the purpose of selling defected items, cancelled items, season-end items, close outs etc.

Very similar to off-price retailers. They are found at the outskirts of the city. They offer heavy discounts, thus creating a threat to

other retailers. Some permanent factory outlets have sheds with parking

or restaurant. Egs: Factory Outlets of Pantaloon, Levi’s & Liberty.

Open 7 days a week Long working hours Limited consumer service Less marketing efforts Out of the way location Huge Discounts

Catalogue retailers specialize in house ware goods, jewellery and consumer electronics.

A customer walks into the retail showroom and goes through the catalogue of the product that he would like to purchase.

Sometimes, customers are required to write the code number of the product mentioned in the catalogue and hand it over to the clerk, who then arranges for the product to be brought out from the warehouse for inspection and purchase.

Egs: Argos, Service Merchandise, Best Products

Non- store based retailing is the third category of retail format.

There is no physical presence of a store. Retailing is done to the customer directly either

through direct/personal selling or direct marketing. It is much more convenient for the customer. It includes Direct Selling, Mail Order, Tele

Marketing and Automated Vending.

It involves making a personal contact with the end customer at home or at work.

There is face to face interaction. Cosmetics, jewellery, food & nutritional products, home

appliances, books etc are products sold through this medium.

Services include financial products & education. Makes use of sales personnel- men & women. Sales people earn commission based on their sales.

Mainly handled by housewives (70%) Highly interactive in nature Sales depends on communication & demonstration Non- store retail format Absence of intermediaries

Direct mail refers to ads that are sent directly at the addresses of a target group of customers.

E-mails are also sent to prospective customers about the products available.

Details about the product, price, features, phone no, toll free no, order form, e-mail address are provided.

If interested, the customer can order the product via mail. There is no face to face interaction, however it is a form

of direct marketing.

Also known as teleshopping. Television commercials that run as long as a typical

television program. They can be as long as 30 minutes. Normally shown at a time other than peak hours.

Such as late night or early in the morning. Details about the product, price, features, phone no, toll free no, order form, e-mail address are provided.

It allows detailed demonstration of the product. Make use of catchy phrases or employ celebrities. Heavy discounts are offered. Asian Sky Shop was the first retailer who

introduced the concept of teleshopping.

Automatic Vending Machines are automatic machines used for the purpose of selling general merchandise like soft drinks, snacks, coffee, candy.

Very famous in USA & Europe, but in its infancy stage in India.

Located at convenient locations. They work either by inserting a coin or swiping of a

card. Information kiosks- touch screen computer.