Retail Management

5

Retail

Management

Sales and

Retail

Management

Setting the Stage

Being close to the customers,

retailers have a critical

influence over the choice of the

end customers.

Introduction

• Retail companies are those components of the

distribution channel that interact directly with the

end customers.

• Retail enterprises, therefore, tend to possess greater

knowledge about the customers needs and

aspirations

What is Retailing?

• Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, non-business use.

• Any Organization selling to final consumers- whether it is manufacture, wholesaler or retailer- is doing retailing.

What is Retailing?

• Any business entity selling to consumers directly is retailing – in a shop, in person, by mail, on the internet, telephone or a vending machine

• Retail also has a life cycle – newer forms of retail come to replace the older ones – the corner grocer may change to a supermarket

• Includes all activities involved in selling or renting products or services to consumers for their home or personal consumption

Characteristics of retailing

• Order sizes tend to be small but many

• Caters to a wide variety of customers. Keeps a large assortment of goods

• Lot of buying in the outlet is ‘impulse’- inventory management is critical

• Selling personnel and displays are important elements of the selling process

• Strengths in ‘availability’ and ‘visibility’

• Targeted customer mix decides the marketing mix of the retailer

Functions of Retailers

• Marketing functions to provide consumers a wide variety

• Helps create time, place and possession utilities

• May add form utility (alteration of a trouser bought by a customer)

• Helps create an ‘image’ for the products he sells

Functions of Retailers

• Add value through:

– Additional services – extended store timings, credit,

home delivery

– Personnel to identify and solve customer problems

– Location in a bazaar to facilitate comparison shopping

Retailers are classified based on: Amount of Service They Offer

Breadth & Depth of Product Lines

Relative Prices Charged

How They Are Organized

Types of Retailers-Retail Formats

Amount of Service

• Self-Service Retailers:

– Serve customers who are willing to perform their own

“locate-compare-select” process to save money.

• Limited-Service Retailers:

– Provide more sales assistance because they carry more

shopping goods about which customers need

information.

• Full-Service Retailers:

– Usually carry more specialty goods for which customers

like to be “waited on.”

Specialty Stores: Carry narrow product lines with deep assortments within those lines.

Department Stores: Carry a wide variety of product lines—typically clothing, home furnishings, and household goods. Each line is operated as a separate department managed by specialist buyers or merchandisers.

Product Line Classification

Supermarket: Large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of food, laundry, and household products.

Convenience Stores: Small stores located near residential areas that are open long hours 7 days a week and carry a limited line of high-turnover convenience goods.


Superstores: Much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services.

Category Retailers: Giant specialty stores that carry a very deep assortment of a particular line and is staffed by knowledgeable employees.


Discount Store: A retail institution that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume.

Off-Price Retailer: Retailer that buys at less-than-regular wholesale prices and sells at less than retail. Examples are factory outlets, independents, and warehouse clubs.

Relative Prices Classification

Factory Outlet: Off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturer’s surplus, discontinued, or irregular goods.

Independent Off-Price Retailer: Off-price retailer that is either owned and run by entrepreneurs or is a division of a larger retail operation.


Warehouse Club: Off-price retailer that sells a limited selection of brand-name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees.


Chain Stores: Two or more outlets that are owned and controlled, have central buying and merchandising, and sell similar lines of merchandise.

Voluntary Chain: A wholesaler-sponsored group of independent retailers that engages in bulk buying and common merchandising.

Organizational/Operational Classification

Retailer Cooperative: A group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conducts joint merchandising and promotion efforts.

Franchise: A contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system.


Merchandising Conglomerates: A free-form corporation that combines several diversified retailing lines and forms under central ownership, along with some integration of their distribution and management functions.


Global Retail Industry

• The retail world globally is well organized and in most developed countries is controlled by major companies.

• It is estimated that the global business is retail worth US$6.6 trillion, most of which in the developed world is organized retail.

• In the developing countries, the retail trade is mostly unorganized.

• The size of the retail market varies from $2325 billion in the US, to $180 billion in India.

• Of this, the share of organized retail is 85% in the US and about 5% in India.


• China has 20% and Taiwan is big at 80%.

• The retail sector is considered as part of the service

sector and in countries where organized retail is

strong, the contribution of the service sector to the

GDP is very high.

• It is estimated that the 2 million retail outlets in the

US employ about 22 million people.



The Global Retail Market: issues and

Challenges

• The significance of retail not only from its

contribution to various economies but also by the

level of employment generated by the industry.

• The world retail is a fast changing one and calls for

constant evolution on the part of the retailers.

• A retailer not only needs to keep track of the

competition, the changes in technology and the

socio economic climate of the nation that he is

operating in.


Challenges

• Emergence of new market

• Empowered consumer

• Technology enabled efficiencies

• The rise of e-age

• Emerging market investment in developed

countries

• The fight to plant the flag in India

• Global consumers growth shifts away from the US

• The rise of long tail retailing


Challenges-how to overcome

• Agility in response and integration within the

organization.

• Focus on customer experience

• Social Responsibility

• Retail investment in services

• Investment in developed countries

• Retailers as world class markerts

Indian Retail Industry

• Traditionally retailing in India can be traced to

– The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the consumers

– Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission

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

• Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains

• Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches



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

• For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books.

• Post 1995 onwards saw an emergence of shopping centers,

– mainly in urban areas, with facilities like car parking

– targeted to provide a complete destination experience for all segments of society


• Emergence of hyper and super markets trying to provide customer with 3 V’s - Value, Variety and Volume

• Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid.

• At year end of 2000 the size of the Indian organized retail industry is estimated at Rs. 13,000 crore.

• It is estimated that there are over 12 million retail outlets in India of various sizes and varieties, most of them being in the unorganized sector.

• Unorganized sector contributes to about 95% of the retail business.


The organized players

• Indian companies

– Future Group

– Reliance Retail

– Bharti

– Shoppers'Stop

– Pyramid

– Aditya Birla Group

– Subhiksha

– Spencer Group

– Tata – Westside,

– Tata – Chroma

Foreign Players

Nike (Single brand)

Levis (Single brand)

Wal-mart (JV)

Metro (Cash&Carry)


• Estimated over 12 mln retail outlets with most of

them in the unorganized sector

• 10 outlets per 1000 population

• Average per capita space – 2 sq ft compared to 15

sq ft in the US

• Organized retail is estimated between 4 to 7% but

growing fast

Copyright © Houghton Mifflin Company. All rights reserved. 11 - 32

Retailing Trends - India

• Consumer wants more benefits without additional costs

• Rising income levels – cheap no longer works, but ‘value for money’

• Explosion of communication channels influences choices of products

• Increased literacy has made consumer more conscious of his bargaining power

• Growing number of urban nuclear families


• Influence of retailer increasing – assortment plus other facilities offered

• Rural consumers want the same things and as their urban counterparts and are willing to pay for it

• Better organized supply chains to cater to a large number of outlets in different locations

• Improved infrastructure helping the consumers

• Bigger volumes help in economies of scale


• Retailing in India is witnessing a huge revamping exercise as can be seen in the graph

• 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.


Unorganized : Vast majority of the twelve million stores are small "father and son" outlets

Fragmented : Mostly small individually owned businesses, average size of outlet equals 50 s.q. ft. Though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 s.q. ft per person is amongst the lowest.

Traditionally three factors have plagued the retail industry:

Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc.

Store design : Biggest challenge for organised retailing to create a “customer-pull” environment that increases the amount of impulse shopping. Research shows that the chances of senses dictating sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying major emphasis & investing heavily in store design.

Recent changes:


Rural bias: Nearly two thirds of the stores are located in rural areas. Rural retail industry has typically two forms: "Haats" and “Melas". Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs)

Traditionally three factors have plagued the retail industry:

Experimentation with formats: Emergence of discount stores: They are expected to spearhead the organised retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large cineplexes, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and Efoodmart formed which are aggregations of Kiranas.

Recent changes:


• Multiple drivers leading to a consumption boom:

– Favorable demographics

– Growth in income

– Increasing population of women

– Raising aspirations : Value added goods sales

• Food and apparel retailing key drivers of growth

• Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households.


• More successful in cities in the south and west of India. Reasons range from differences in consumer buying behavior to cost of real estate and taxation laws.

• Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption

– ITC is experimenting with retailing through its e-Choupal and Choupal Sagar – rural hypermarkets.

– HLL is using its Project Shakti initiative – leveraging women self-help groups – to explore the rural market.

– Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve the rural markets.

Retailing Trends – India

Major Retailers

1. Clothing, textiles and fashion Accessories:

2. Food & food Services:

3. Consumer Durables:

4. Books & Music:

Other emerging sectors

5. Jewellery retail

6. Footwear retail

7. Time Wear Retail

8. Fuel Retail/ petro retail


Major Retailers

• Pantaloon Retail

• K Raheja Group

• Tata group

• RPG group

• Landmark group

• Bharti-Walmart

• Reliance

• AV Birla Group's

• Metro

• Viveks Ltd


Retailing formats in India

• Malls

• Specialty Stores

• Discount Stores

• Department Stores

• Hyper marts/Supermarkets

• Convenience Stores

Department Stores: Shopper Stop, Lifestyle, Pantaloons

Hypermarkets: Big Bazaar, Spencer

Supermarkets and Conv. Stores: Subhiksha, Trinethra

Retailing Trends-FDI

• MNC players showing interest to operate in India

• Resistance from the existing players

• So far only cash-and-carry permitted

• Franchisees also allowed – KFC, Tag Heuer, Swatch, McDonalds

• Jan 2006, 51% FDI permitted in single brand businesses:

– All products should be under the same brand name

– Same brands should be sold internationally

– Branding at the time of manufacturing itself

• Now 100%

• Now 51% in multi brand retail

Career in retailing

• Buying and merchandising

• Marketing

• Store operations

• Sales

• Finance

• Human resources

• Technology and e-commerce

• Visual merchandising

• Supply chain management and logistics

Retail Locations

Why is Store Location

Important for a Retailer?

• Location is typically prime consideration in

customer’s store choice.

• Location decisions have strategic importance

because they can help to develop sustainable

competitive advantage.

• Location decisions are risky: invest or lease?

Types of Locations

• Free Standing Sites

• City or Town Locations

– Inner City

– Main Street

• Shopping Centers

• Other Location Opportunities

Selecting a particular location type

• Involves evaluating a series of trade-offs between

– The size of the trade area (geographic area

encompassing most of the customers who would

patronize a specific retail site)

– the occupancy cost of the location

– The pedestrian and vehicle customer traffic

– The restrictions placed on store operations by the

property manager

– The convenience of the location for customers

Freestanding Sites

• – location for individual store unconnected to other retailer

• Advantages:

– Convenience

– High traffic and visibility

– Modest occupancy cost

– Separation from competition

– Few restrictions

• Disadvantages:

– No foot traffic

– No drawing power

City or Town Locations

• Gentrification is bringing population back to the cities.

• Advantage to Retailers:

– Young professionals

– Incentives to move provided by cities

– Jobs!

– Low occupancy costs

– High pedestrian traffic

Central Business District (CBD)

• Advantages

• Draws people into areas during business hours

• Hub for public transportation

• Pedestrian traffic

• Residents

• Disadvantages

• High security required

• Parking is poor

• Evenings and weekends are slow

Main Streets vs. CBDs

• Occupancy costs lower than CBDs

• They don’t attract as many people

• There are not as many stores

• Smaller selections offered

• Not as much entertainment

• Some planners restrict store operations

Shopping Centers

• Shopping Center Management Controls:

– Parking

– Security

– Parking lot lighting

– Outdoor signage

– Advertising

– Special events for customers

Other Location Opportunities

• Airports

• Resorts

• Store within a Store

• Temporary or pop-up stores

Matching Location to Retail Strategy

• The selection of a location type must reinforce the retailer’s strategy

be consistent with

• the shopping behavior

• size of the target market

• The retailer’s position in its target market

• Department Stores Regional Mall

• Specialty Apparel Central Business District, Regional malls

• Category Specialists Power Centers, Free Standing

• Grocery Stores Shopping Centers

• Drug Stores Stand Alone

Store Layout

Store Design Objectives

• Implement retailer’s strategy

• Build Loyalty

• Increase Sales on Visits

• Control Cost

• Legal Considerations

• Design Trade-Offs

Store Design and Retail Strategy

• Meets needs of target market

• Builds a sustainable competitive advantage

• Displays the store’s image

Store Design Elements

• Layouts

• Signage and Graphics

• Feature Area

Store Layouts

• To encourage customer exploration and help customers move through the stores

– Use a layout that facilitates a specific traffic pattern

– Provide interesting design element

• Types of Store Layouts – Grid

– Racetrack

– Free Form

Grid Layout

• Easy to locate

merchandise

• Does not encourage

customers to explore store

– Limited site lines to

merchandise

• Allows more merchandise

to be displayed

• Cost efficient

• Used in grocery, discount,

and drug stores: Why?

Racetrack Layout

• Loop with a major aisle that has access to

departments

• Draws customers around the store

• Provide different viewing angles and encourage

exploration, impulse buying

• Used in department stores

11 - 62

Racetrack Layout

Free-Form (Boutique) Layout

• Fixtures and aisles arranged

asymmetrically

• Provides an intimate, relaxing

environment that facilitates

shopping and browsing

• Pleasant relaxing ambiance doesn’t

come cheap – small store experience

• Inefficient use of space

• More susceptible to shoplifting –

salespeople can not view adjacent

spaces.

• Used in specialty stores and upscale

department stores

Usage of Signage and Graphics

• Location – identifies the location of merchandise and

guides customers

• Category Signage – identifies types of products and

located near the goods

• Promotional Signage – relates to specific offers –

sometimes in windows

• Point of sale – near merchandise with prices and product

information

• Lifestyle images – creates moods that encourage

customers to shop

11 - 65

Space Management

• The space within stores and on the stores’ shelves

are fixtures is a scare resource

• The allocation of store space to merchandise

categories and brands

• The location of departments or merchandise

categories in the store

Space Planning

• Productivity of allocated space (sales/squire foot,

sales/linear foot)

• Merchandise inventory turnover

• Impact on store sales

• Display needs for the merchandise

Visual Merchandising: Fixtures

A. Straight rack

B. Rounder (bulk fixture,

capacity fixture)

C. Four-way fixture

(feature fixture)

D. Gondolas

Creating an Appealing Store

Atmosphere

• The design of an environment through visual

communications, lighting, colors, music, and scent to

stimulate customers’ perceptual and emotional responses

and ultimately to affect their purchase behavior

11 - 69

Date post:	14-May-2017
Category:	Documents
Upload:	ghanashyamkj
View:	225 times
Download:	0 times

Retail Management

Documents