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RETAILING
Retailing is a set of business activities thatadds value to the products and services sold to
consumers for their personal or family use.
A r etaile r is a business person/unit that sellsproducts and/or services to consumers for thepersonal or family use.
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RetailingWo r lds la r gest p r ivate indust ry
US$ 6.6 tr illion sales annuall y
Indian r etailingLa r gest emplo ye r afte r ag r icultu r e almost 8% of populationHighest outlet densit y in wo r ld
Ar ound 12 mn outletsS till evolving as an indust ry
RETAILING
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Weekl y Ma r kets /Village Fai r s /Mela(s)
Convenience S to r es /
Kir anas
Khaadi S to r es / Coope r atives
Exclusive Br and Outlets /Hype r-S upe r Ma r kets /Depa r tment S to r es /S hopping Malls
Tr aditional Reach
Gove r nment Suppo r ted Availabilit y
Histo r ic /Ru r al Reach
Mode r n Fo r mats
Evolution of Indian r etail
S ou r ce of Ente r tainment
Neighbo r hood S to r es
Convenience
Low Costs Dist r ibution
Inte r national
S hopping Expe r ience
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RETAILING - Importance
R etailing has a tremendous impact on theeconomy. It involves high annual sales andemployment. As a major source of employment retailing offers a wide range of career opportunities including; store
management, merchandising and owning aretail business.
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RETAILING - Importance
C onsumers benefit from retailing in that, retailersperform marketing functions that makes itpossible for customers to have access to abroad variety of products and services.R etailing also helps to create place, time andpossession utilities. A retailer's service alsohelps to enhance a product's image.
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RETAILING - FunctionsIn general, retailers perform four distinct functions :
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RETAILING - Formats
R egardless of the particular type of retailer (such as a supermarket or a departmentstore), retailers can be categorized by
a) Ownership,
b) Store strategy mix, and
c) Non store operations.
Figure 1.3 illustrates this concept.
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RETAILING Forms of Ownership
Independent Neighborhood Stores.
R etail C hain Shoppers Stop, Westside, etc.
R etail Franchising McDonalds, Pizza Hut, etc.
C ooperatives Amul.
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RETAILING Store Strategy Mix
Convienence S to r e - for fill in items such asbread, milk, eggs, chocolates and candy etc.
Supe r ma r kets - The Govt. run Super bazaar,and Kendriya Bhandar in Delhi are goodexamples of a super market. Similarly inMumbai, we have Apna Bazar and SahakariBhandar.
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RETAILING Store Strategy Mix
Depa r tment S to r es - Large format appareldepartment stores include Pantaloon, Ebonyand Pyramid. Others in this category are:Shoppers Stop and Westside.
Specialit y S to r e - Music World for audio needs,
Tanishq for jewellery and McDonalds, Pizza Hutand Nirula's for food services.
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RETAILING Store Strategy Mix
Hype r Ma r kets - Is a special kind of combination store which integrates aneconomy super market with a discount
department store. A hyper market generallyhas an ambience which attracts the family aswhole. Pantaloon R etail India L td. (P R IL )through its hypermarket "Big Baazar", offersproducts at prices which are almost 10% -25% lower than the market price.
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RETAILING - Non Store
In Home Retailing - Eureka Forbes vaccumcleaners and water filters.
Telesales /Telephone Retailing - privateinsurance companies, and credit companiesetc.
Catalog Retailing - Some multi level marketingcompanies like AmWay resort to catalogueretailing.
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RETAILING - Non Store
Dir ect Response Retailing Telebrands is aclassic example of direct response retailing.
Automatic Vending - Products are sold directlyto customers/buyers from machines. ATMs,Pepsi/ C oca C ola.
Elect r onic Retailing /E-Tailing - Amazon.com,E-bay and Bazee.com
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RETAILING - Decisions
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RETAILING Customer / Consumer
U nderstanding consumer needs and buyingbehavior is critical for effective retail decision
making. This calls for D iffe r entiation .
The Indian customer is strongly value driven,
but at the same time enjoys the pleasure of shopping.
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RETAILING Customer / Consumer
The factors that need careful analysis are : whatproducts/services do customers buy? How
much are they willing to pay? What mode of payment do they prefer?
Do they look for discounts and price offs ? Whatare the regional differences of customers acrossthe country ? (e.g. C hennai, Kolkata,C handigarh, Mumbai etc.).
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RETA ILING - The Consume r B u ying Pr ocess .
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RETAILING Customer / Consumer
According to a recent study conducted by A.F.Fergurson & C o; the average monthly incomespent on food, grocery and personal care items
varied across different segments:U pper income households spent on an averageR s.4500/- per month.
For middle income household the correspondingfigure was R s.2800/- andThe lower income group spent R s.1200/- per month.
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RETAILING Customer / Consumer
Some of the major criteria for the rightapproach to a customer need are:
C reating the right environmentL istening to customersProviding rewards to frequent buyersR ealising the lifetime value of a customer and ensuring loyalty
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RETAILING Customer / ConsumerDecision Making Process
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Retail Mix
The most basic characteristic of a
retailer is its retail mix - theelements used by retailers tosatisfy their customers needs.
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Retail Mix
Four (4) elements of the retail mix that areparticularly useful for classifying retailersare :
1) The type of merchandise sold2) The variety and assortment of
merchandise sold3) The level of customer service, and4) The price of the merchandise.
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Retail Promotion
It is defined as the integ r atedcommunications ta r geted at info r ming,pe r suading the ta r get ma r ket about thema r keting mix of the r etail entit y.
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Retail Marketing Communication
All means adopted by a retail store tocommunicate a store specific message tothe customers constitute the retailmarketing communication .
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B ASIC TASKS OF COMMUNICATION
Intimate the customers about the presence of astore or outlet.
Invite them to visit the store and make it reallyan attractive proposition to do so.
Amidst all the media clutter make a consistenteffort to remind them to do so.
The primary function of any marketing communication
strategy is to increase footfalls in the store.
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INTEGRATED MARKETING COMMUNICATION
Integrated marketing communication consists of a quiver of communications tools. It includes:
AdvertisingSales PromotionPublicity
Direct MarketingPersonal SellingPublic R elations
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Multi Channel Retailing
A multi channel retailer sells merchandise or services through more than one channel.Many single channel retailers are evolvinginto multi channel retailers to attract andsatisfy' more customers. Through acombination of channels, retailers can offer
unique benefits provided by each channel.
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Multi Channel Retailing
In a consumer centric, hyper competitiveenvironment, success in retailing will comefrom.. giving customers, solutions to thei r needs and wants th r ough diffe r entchannels .
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The benefit to customers from
1) Store C hannels :
BrowsingTouching and Feeling the ProductPersonal ServiceCash PaymentEntertainment and Social Experience
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2) C atalog C hannels:
Offer convenience of browsing through theavailable merchandise, and placing an
order anytime of the day, on any day fromanywhere. C ustomers can look through acatalog on a journey, in off -ice or in bed. Anadded advantage of catalog shopping is thesafe environment from where an order canbe placed.
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3) The Internet :
In addition to the convenience and securityof shopping from home or office, e-tailinghas the advantage of offering a wider selection of products and morepersonalized information.
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KEY GROWTH IMPERATIVES AND ENAB LERS
Need fo r Attaining Scale within Local Regions /Ar eas .
The existing retailers need to scale up fast,particularly in grocery segment where high over-head costs are justified for slower expansion.
The onus will not only be on becoming multi-format in nature but also adopt different modelsfor penetrating second-tier cities and towns witha common back-end.
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KEY GROWTH IMPERATIVES AND ENAB LERS
Getting the Ope r ational and Sou r cing Elementsin P lace .
Sourcing is very much the bane of the localretailing industry, particularly in the food andstaples category on account of significantintermediation with no value-addition which
needs to be done away with.The aspects of sales density and sales-staff productivity also need attention from an
operational point of view.
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KEY GROWTH IMPERATIVES AND ENAB LERS
Need fo r Gr eate r Funding and Or ganizationalCapabilities Enhancement .
None of the existing retailers have the level of sophistication and financial strength for anaggressive rollout, though it is evident they are
still in proof of concept stage with capability toscale up faster sooner or later. This does providethe opportunity for new players to steal a marchover the current breed of pioneers.
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KEY GROWTH IMPERATIVES AND ENAB LERS
Need to Keep Pace with Globalisation .
The fact that the retailing industry has not beenopen to foreign direct investment (FDI) is indeeda blessing in disguise for the local players to gettheir acts right in terms of matching the
standards of international retailers especially invalue based retailing, operational efficiency,category expansion, technology and innovation.
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KEY GROWTH IMPERATIVES AND ENAB LERS
You would also support that the above imperativesdemand the following key enablers :
R eady availability of real-estate with easier zoning provisions.
According industry status, allowing FDIinvestments and removing bottlenecksthreatening to impede the growth of this sector.
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KEY GROWTH IMPERATIVES AND ENAB LERS
You would also support that the above imperativesdemand the following key enablers :
The need for concerted government-private sector efforts to enable creation of more technicalinstitutions for man power training.
R educing taxes on luxury goods to create retailcentered tourists destination.
Tax rationalisation through implementation of VATand necessary regulatory streamlining.
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KEY GROWTH IMPERATIVES AND ENAB LERS
You would also support that the above imperativesdemand the following key enablers :
Facilitate creation of a financial model/frameworkthat looks at core processes like foot-fallsgeneration, conversions and average transactionvalue, customer acquisition costs, sourcing costs,merchandising costs, shrinkage costs, localizationcosts.