Unit 1

Retail: Retailing goes as back as time goes and the best part of it is that the
concept of retailing hasn’t changed for centuries. But before we move on to
elaborating retail definition or its concept, you should be clear of these two
terminologies –

Good: Product offered in the market in exchange for money.

Distribution Channel: Is the path or route decided by the company to deliver its
goods to the customers.

What Is Retailing?
Retailing is the distribution process of retailer getting the goods (either from the
manufacturer, wholesaler, or agents) and selling them to the customers for the
actual use.

In simple terms, retailing is the transaction of small quantities of goods between a

retailer and the customer where the good is not bought for the resale purpose.

What is A Retailer?
A retailer is a person or a business who sells small quantities of goods to the
customers for the actual use.

Remember –

 Retail is a channel of distribution

 Retailing is a business process
 Retail is a business or person
Importance of Retailing
Retailing is important for the creators, customers, as well as the economy.

Retail stores are the places where most of the actual sales to the customers take
place. They act as both a marketing tool for the brands and a support tool for the
customers to exchange and communicate important information.

Besides this, retailing is a great asset to the economy. It provides jobs, adds to the
GDP, and acts as a preferred shopping channel during the holiday season.

Characteristics Of Retailing
Retailing can be differentiated from wholesaling or manufacturing because of its
certain distinct characteristics which include –

 Direct contact with the customer – Retailing involves direct contact with the
end customer and are a mediator between the wholesaler and the customer or
the manufacturer and the customer depending upon the distribution channels
used.
 Relationship with the customers – Retailers form a bond with the customers
and help them decide which products and services they should choose for
themselves.
 Stock small quantities of goods – Retailers usually stock small quantities of
goods compared to manufacturers and wholesalers.
 Stock goods of different brands – Retailers usually stock different goods of
different brands according to the demand in the market.
 Customers’ contact with the company – Retailers act as the representatives
of the company to the end customers who give their feedback and suggestions
to them.
 Have a limited shelf space – Retail stores usually have very limited shelf
space and only stock goods which have good demand.
  Sells the goods at maximum prices – Since retailing involves selling the
products directly to the customers, it also witnesses the maximum price of the
product.

Functions Of Retailing
Retailers have many important functions to perform to facilitate the sale of the
products. These functions include –

Sorting
Manufacturers produce large quantities of similar goods and like to sell their
inventories to few buyers who buy in lots. While customers desire many varieties
of goods from different manufacturers to choose from. Retailers balance the
demands of both sides by collecting and assorting the goods from different sources
and placing them according to the customers’ needs.

Breaking Bulk

Retailers buy the goods from manufacturers and wholesalers in sufficiently large
quantities but sell to the customers in small quantities.

Channel of Communication
Since retail involves direct contact with the end consumers, it forms a very
important channel of communication for the companies and manufacturers. The
manufacturer tries to communicate the advantages of their products as well as the
offers and discounts through retailers.

Retail also acts as a mediator between the company and the customer and
communicates the feedback given by the customers back to the manufacturer or
wholesaler.

Marketing
Retail stores are the final channels where the actual decisions are made. Hence,
they act as important marketing channels for the brands. Smart placements,
banners, advertisements, offers, and other strategies are executed by the
manufacturers to increase their sales in retail stores.

Key Functions Performed by a Retailer

 A retailer performs the dual functions of buying and assembling of goods.

The responsibility of a retailer is to identify the most economical source for
obtaining the goods from the suppliers and passing on the advantages to the
consumer.
 The retailers perform the functions of warehousing and storing. They store
the goods in bulk and make them available as per the requirement of the
consumer. Warehousing and store keeping helps in ensuring uninterrupted
availability of the goods to the consumers.
 The primary function of a retailer is selling the products to the customers for
which various techniques or business practices are being adopted by the
retailer to achieve the strategic goals.
 The prime focus of a retailer is on maximizing customer satisfaction by
delivering quality products and services both on cash as well as credit basis.
As a result of which, retailer always runs the risk of accumulating bad debts
on account of non-payment of the amount from the consumer.
 A retailer needs to have robust risk management capabilities. Various kinds
of risks can be involved in a retail business which a retailer should be well
prepared with like loss or damage of the products due to deterioration in
quality, perish ability or spoilage. A change in customer’s buying
preferences or tastes can also affect the retail business to a great extent, or
even the products may be damaged due to the natural calamities or vagaries
of nature.
 A retailer performs the crucial function of grading for all those goods which
at times are either left ungraded by the wholesalers or manufacturers so that
the customers readily accept the goods. The retailer is responsible for the
packing of goods in small packages or small containers for the customer’s
convenience.
 The retailers are the direct point of contact or communication with the
customers; hence they gather information regarding the changing tastes and
preferences of the consumers pass on the customer feedback to the
manufacturers for continuous improvement in service delivery.
 Retailers act as a vital channel for the launch of new products in the market
as they are the direct interface with the consumers and can communicate
directly with the targets consumers about the new product features and
advantages.
  The retailers are responsible for the product promotion and advertisement by
planning the product displays and visual merchandising for attracting the
customers.

Characteristics of a Retailer

 In the entire distribution chain, a retailer is considered to be the final link,

who deals directly with the customer.
 A retailer purchases in bulk from the wholesalers and sells the products to
the customers in small quantities.
 A retailer essentially maintains a variety of merchandise.
 The aim of a retailer is to achieve maximum satisfaction by exceeding their
expectations and delivering exceptional services.

Reasons for studying retailing

 Retailing has major impact in the Economy

 Retailing is the final stage in delivering products to consumers
 The vast career opportunity in retailing
 Retailing functions in distribution
 The relationship among retailers and their suppliers

Marketing

Marketing refers to activities a company undertakes to promote the buying or

selling of a product or service. Marketing includes advertising, selling, and
delivering products to consumers or other businesses.

 Marketing refers to all activities a company does to promote and sell

products or services to consumers.
 Marketing makes use of the "marketing mix," also known as the four Ps—
product, price, place, and promotion.
 At its core, marketing seeks to take a product or service, identify its ideal
customers, and draw the customers' attention to the product or service
available.
 Product, price, place, and promotion are the Four Ps of marketing. The Four
Ps collectively make up the essential mix a company needs to market a
product or service. Neil Borden popularized the idea of
the marketing mix and the concept of the Four Ps in the 1950s.
 Product
 Product refers to an item or items the business plans to offer to customers.
The product should seek to fulfill an absence in the market, or fulfill
consumer demand for a greater amount of a product already available.
Before they can prepare an appropriate campaign, marketers need to
understand what product is being sold, how it stands out from its
competitors, whether the product can also be paired with a secondary
product or product line, and whether there are substitute products in the
market.

Price
 Price refers to how much the company will sell the product for. When
establishing a price, companies must consider the unit cost price, marketing
costs, and distribution expenses. Companies must also consider the price of
competing products in the marketplace and whether their proposed price
point is sufficient to represent a reasonable alternative for consumers.

Place
 Place refers to the distribution of the product. Key considerations include
whether the company will sell the product through a physical storefront,
online, or through both distribution channels. When it's sold in a storefront,
what kind of physical product placement does it get? When it's sold online,
what kind of digital product placement does it get?

Promotion
 Promotion, the fourth P, is the integrated marketing communications
campaign. Promotion includes a variety of activities such as advertising,
selling, sales promotions, public relations, direct marketing, sponsorship,
and guerrilla marketing.

 Promotions vary depending on what stage of the product life cycle the
product is in. Marketers understand that consumers associate a product’s
price and distribution with its quality, and they take this into account when
devising the overall marketing strategy.
Retail Equation

 Marketing has been defined as the process by which individuals and groups
obtain what they need and want through creating, offering, and freely
exchanging products and services of value with others.

 The Chartered Institute of Management defines marketing as the

management process responsible for identifying, anticipating and satisfying
customer requirements profitably.

 One can look at the marketing – retail equation from two perspectives – one
being that of a manufacturer and the second from the point of view of the
retailer. With the growth of industrialization and urbanization, the distance
between the manufacturer of a product and the actual consumer has
increased. In our world, many products are manufactured in one country and
sold to a market in another. Most producers no longer sell their products or
services directly to the consumer, but instead, use intermediaries to get their
product to the final consumer. The marketing channel design is largely based
on the level of service desired by the target consumer. Here, the retailer
provides valuable inputs to the manufacturer on the products and the
consumers.

 Some of the most common marketing channels are illustrated below:

 Consumer Retailer  Wholesaler Manufacturer

 Consumer Retailer Manufacturer

 ConsumerManufacturer

 Manufacturers or suppliers that offer products for immediate consumptions

are known as direct manufacturers or suppliers e.g. Eureka Forbes, whose
door-to-door salesman offer its products directly to customers is an example
of a company which offers its products directly to the consumers. The Direct
Mail order business companies are another example.

 More traditional manufacturers or supplies are associated with delayed

consumption e.g. shown below. Companies, which deal primarily with
immediate consumption, are known as service providers, while those that
deal with delayed consumption are retailers. An example of a service
 provider under this definition would be a cinema, while a retailer in the same
sector would be a video shop.

 The other perspective of looking at the marketing retail relationship is from

that of the retail industry itself. Every retailer needs marketing. The
marketing efforts of a multi brand retailer like Food World and Shopper’s
Stop are different from those of an own brand retailer like Westside.
However, the basic principles of marketing are no different for a retailer than
for any other supply organization. What different is the immediacy of many
retail marketing exchanges, and the range of activities that can be
undertaken by the retail marketer in order to achieve a profitable exchange
with a customer.

 While modern marketing theory may have stemmed from producers of the
fast moving consumer goods (FMVG) manufacturers, more recent
developments such as relationship marketing and interactive marketing have
evolved from the needs of service providers. These ‘new’ marketing
activities focus on the dynamic link between a specific supplier and its
immediate customer. It is here that the needs of retailing coincide with the
domain of marketing.

 There are two specific dimensions to retail marketing: first, how to attract
customers into the retail environs – shop, restaurant, supermarket or the
‘virtual’ Internet store for instance and second, how to persuade those
customers to make a purchase from the store. Both are necessary to achieve
success.

Marketing concepts applied to retailing

 The concept of retailing involves selling products or services to customers.

While you may think of a retail sales channel as a brick-and-mortar store,
that is actually only one kind of retail. Retail sales can happen through
online shopping or even direct sales. What constitutes a retail sale is that
the end user of the product or service is also the buyer.

The Four P's of Marketing in the Concept of Retailing

The functions of retailing and retail marketing are based on the four
P's: product, price, place and promotion. These are the basic foundations of any
retail business, and you may hear them referred to as the "marketing mix". Each
 of these four fundamentals must work in conjunction with each other in order to
create an aligned marketing strategy that is designed to capture the attention of
the consumer.

Finding the Best Product

The first step to creating a successful retail business is having the right

product for your audience. It is important to understand the needs and challenges
of your target market. Conduct market research to see where the gaps are in the
market and how your business can fill them. Do not sell a product that you think
customers will like; sell a product that they need.

Consider Product Packaging

One of the critical factors of your product is the packaging. Instead of being just
an afterthought, note that packaging adds to the user experience. It is a way to
inform consumers about your brand and its values, and it is also a way to stand
out in the market.

Consider top-performing brands and their unique packaging. Take Apple, for
example. All of their packaging design is minimalist and is aligned very closely
to their visual brand strategy. It is easy to spot an Apple product from afar in a
sea of products.

Be sure to align the product and the packaging with the key values and goals of
your target market. For example, if your audience values sustainability, source
environmentally friendly materials to create your product. Continue that into your
packaging and reuse recycled materials instead of single-use plastics.

Deciding on an Attractive Price

In the concept of retailing, price plays a critical role in the buying decision. Your
price must cover the cost of the goods in addition to overhead costs with enough
margin for you to make a profit. There are many pricing strategies retailers can
use:

 Everyday bargain pricing: Some retailers choose to keep their prices low
all the time. While they have thin profit margins, they make up for it in volume of
customers.
 High/low pricing: For some retailers, it is more profitable to keep the
pricing of a product high and only lower it when the product is no longer trendy
or in season.

 Competitive pricing: This pricing strategy involves pricing products based

on what direct competitors are doing.

 Charm pricing: This involves using odd numbers, such as $4.95 instead of
$5.00. Consumers associate $4.95 as being closer to $4.00 than $5.00, which
makes that price more attractive.

 Value-based pricing: Retailers who take this route price products based on
what they are worth to customers and not how much the product costs to make.

Being in the Right Place

In retailing, place is a critical factor because this is where the sale between the
retailer and the customer occurs. The place can be a retail store, online, pop-up
shop, farmer's market, street-side stand or anywhere else your customers are
found. When selecting the place for your retail operation, it is important
to conduct research to see where your target audience shops the most.

Captivating Audiences with Engaging Promotions

The retail services definition also includes promotion, which is the process
of communicating the benefits of your product to the consumer. There are several
ways to promote your products to entice customers: advertising, personal selling,
sales promotions, direct marketing and public relations.

When deciding on which promotional channels to use, it is important to first

establish your goals for the promotion. For example, public relations is a good
way to increase brand awareness, while sales promotions are a good way to
increase revenue in the short term.

Some of the emerging career opportunity  in retailing are as follows:

 Retail industry is one of the fastest evolving industries in Industry. The
Indian retail industry is undergone drastic changes with the consumers looking at
convenience with multiplicity of choices under one roof.

It generates huge employment opportunities. This has changed the face of retailing
in India. As the sector is booming in India, a career in retail sector is promising a
growth potential for the ambitious youngsters.

The candidates are trained in supply chain management, finance management,

marketing information, electronic retailing, marketing and business
communication, customer relationship etc. With rapidly expanding departmental
stores and huge shopping malls, plenty of job opportunities are opening all over
India.

Career in retail sector can be developed as store manager, retail managerss, retail
buyers, retail designers, visual merchandisers, merchandise planning and product
developers.

Several institutes in India including Birla Institute of Management Technology

(BIMTECH) in Greater Noida, RPG Institute of Retail Management, Indian Retail
School offer various courses associated with retail management.

Many multinational companies have come forward in the retailing business.

Reliance Group, ITC Retail, Aditya Birla Group, Tata Group’s Trent & Westside,
Subhiksha, Shoppers Stop, and Future Groups Big Bazaar & Pantaloons, Apparel
Chains, Raymond’s, Arvind Brands, Lifestyle
International, Spencers etc. are some of the top companies. The boom in retail
industry has created many employment opportunities; people from varied skills
and talent are required in the industry.

These actions are expected to generate 10-15 million jobs over next few years. As
a career, retail management is a dynamic field. Career in retailing is becoming one
of the highly sought career options in India.

Some of the career options in retailing are:

1. Sales and related jobs:
Sales are the main aspect of retail industry. It is an important part of store
operations. The important duty of the sales staff is to sell the products to the
customers.

Other than sales, the related job involves, sales associate, cashier for receiving
payments by cash, check, debit card, or credit card and operating cash registers etc.

The retail staff also discharges duties like preparing displays, making deposits at
cash office, taking inventory etc. depending upon their working hours. The retail
staff should be well equipped with excellent communication skill. In a very short
span of time retail revolution has taken place.

2. Store manager:
A store manager is the person ultimately responsible for the day- to-day operations
or management of a retail store.

All employees working in the store report to the store manager. Store manager is
responsible for managing human resource, hiring team, indulging training and
development programmes, managing profit and loss of the store, banking, and
handling customer complaints.
  Visual merchandiser:

Visual merchandising is the activity of promoting the sale of goods. Visual

merchandising is an art intended to increase sales. It is a tool to achieve sales
target. It is the art of displaying merchandise in such a manner that appeals to the
eyes of the customer. Visual merchandiser is responsible for merchandising.
Creativity is essential to be a good visual merchandiser. Visual merchandising
includes window displays, signs, interior displays etc. A combination of colour and
theme plays an important role in visual merchandising.

4. Regional Sales Manager:

A regional sales manager reports to national sales manager. A regional sales
manager requires excellent interpersonal and communication skill. A Retail Sales
Manager is responsible for the day-to-day operations of a retail store.

They also must have computer skills and be patient with both employees and
customers. Retail Sales Managers must be able to motivate and organize their
employees.

A retail sales manager must have obtained a degree in marketing, business or

communication. Regional managers are responsible for a group of retail stores.
They visit stores to observe performance and to help solve problems. Regional
managers report store performance to company headquarters and make important
decisions concerning employees.

5. Finance and Accounting:

A retail store requires well run financial department. A financial manager is
responsible for keeping the records of accounts of income, paying expenses,
maintaining financial records, cash flow control, banking etc. The financial
manager must be efficient enough to handle the risk of debts.
6. Human resources:
Human resource is one of the most important aspects in retail industry. This aspect
focus on recruiting right people for a particular job, because the success of retail
depends upon right sales force.
The HR function includes recruitment, selection, training and development
programmes, compensation and benefits etc. proper knowledge is require on the
part of HR manager to understand qualification and qualities to hire efficient staff.
HR function is in dealing with staff grievances and any disciplinary matters.

7. Logistic:
The logistics process consists of the process of integration of several aspects such
as material handling, warehousing, information, transportation, packaging and
inventory.

The logistics department is entrusted with the responsibilities of ensuring that the
entire process of logistics is maintained and developed in accordance with the
goals of the business at an economical cost.
8. Marketing:
Marketing .department includes functions like advertising, sales promotion and
public relation. People with specialised knowledge, creativity etc are required.
Advertising managers direct a firm’s advertising and promotional campaign.
Marketing managers work with advertising and promotion managers to promote
the firm’s products and services.

Trends in retailing
The top seven trends in retailing in India are as follows: 1. Shift from Unorganized
to Organized Retailing 2. Store Design 3. Competition 4. New Form of Retailing 5.
Technology 6. Consumer Buying Behaviour 7. Entertainment.
1. Shift from Unorganized to Organized Retailing:
Retailing in India is thoroughly unorganized. There is no supply chain
management perspective. The key factors that drive the growth of organized
retailing in India are higher disposable incomes, rising urbanization, growing
consumerism, nuclear family structure, growing number of educated and employed
women population.

2. Store Design:
Irrespective of the format, the biggest challenge for organized retailing is to create
an environment that pulls in people and makes them spend more time in shopping
and also increases the amount of impulse shopping.

3. Competition:
Competition is increasing between different types of retailers. Discount stores,
departmental stores, supermarkets, etc. all compete for the same customers. The
small independent retailers survive by providing personal services to the
customers.

4. New Form of Retailing:

Modem malls made their entry into India in the late 1990s, with the establishment
of Crossroads in Mumbai and Ansal Plaza in Delhi. India’s first true shopping
mall, ‘Crossroads’—complete with food courts, recreation facilities and large car
parking space—was inaugurated as late as 1999 in Mumbai. Malls have given a
new dimension to shopping experience.

5. Technology:
Technology today has become a competitive tool. It is the technology that helps
the organized retailer to score over the unorganized players, giving both cost and
service advantages. Technology has also made possible the growth of non-store
retailing.

6. Consumer Buying Behaviour:

In India, there are no uniform trends with respect to consumer buying behaviour.
There are visible differences in the shopping pattern of consumers across income
segments. Organized retailing has definitely made headway in the upper class.

However, even in this segment, items such as milk, fruits, vegetables and a
significant portion of ‘through-the-month’ purchases seem to be done at traditional
outlets. Organized retail outlets seem to be associated with branded items/special
purchases. Organized retailing does not seem to have made an impact on the lower
class, except for ‘curiosity’ shopping.

7. Entertainment:
Modem retail formats provide a place for people to assemble, and a means of
entertainment, by providing facilities such as food courts, mini theatre, children’s
play spaces and coffee shops. These facilities help the customers enjoy shopping.