Module 1

Introduction to retailing

Retailing-introduction

Retailer is a person or business that sells goods to the public in relatively small
quantities for use or consumption rather than for resale. Retailer is the person
Who links the producer and ultimate consumers. The word ‘retail’ is derived
from the French word retailer which means ‘ to cut a piece off’ or to break bulk.
The retail industry is divided into organised and un-organised sectors.
Organised retailing refers to trading activities undertaken by licensed retailers,
that is, those who are registered for sales tax, income tax, etc.

These include the corporate-backed hypermarkets and retail chains, and also the
privately owned large retail businesses. Un-organised retailing, on the other
hand, refers to the traditional formats of low-cost retailing, for example, the
local kirana shops, owner manned general stores, paan/beedi shops,
convenience stores, hand cart and pavement vendors.

Definition of retailing
activities involved in the selling of goods to ultimate consumers for personal
or household consumption is known as retailing

Characteristics

The followings are some of the essential characteristics of a retailer:

 He is regarded as the last link in the chain of distribution.

 He purchases goods in large quantities from the wholesaler and sell in
small quantity to the consumer.
 He deals in general products or a variety of merchandise.
  He develops personal contact with the consumer.
 He aims at providing maximum satisfaction to the consumer.
 He has a limited sphere in the market.

Functions

1) Buying and assembling – A retailer sells different varieties of goods which he purchases from
different wholesalers for selling to consumers.
2) Warehousing and storing – After assembling the goods from different suppliers the retailers reserve
them in stores and supply it to customers as and when required. The goods are kept as reserve in store
in order to ensure uninterrupted services to the consumers.
3) Selling – the end objective of the retailer is to sell the goods to consumers. He undertakes various
methods to sell goods to the ultimate customers.
4) Credit facilities – The retailer cares to the needs of the customers even by supply them goods on
credit.
5) Risk bearing – A retailer has to bear different types if risk in relation to goods. While it store goods
they are exposed to various risk like deterioration of quality, spoilage etc to the products are
confronted to natural risk like fire, flood, earthquake and other natural calamities. Other type of risk
like change in customer taste also adversely affects the sales.
6) Grading and packaging – the retailer grades the goods which are left ungraded by manufactures to
the wholesalers. He packs the good in small packages for the convenient of the custoners.
7) Collection and supply of market information – the retailers are in direct contact with the customers.
They gather valued information with regard to likes, dislikes, taste and demand of the consumers.
They pass on the information to the wholesalers and producers.
8) Helps in introducing new products – Without the service of retailer new products cannot be
introduced in the market. This is so because the retailer has a direct link with the consumers. He can
explain the user about the uses, characteristics etc about a product to the customer.
9) Window display and advertising – the retailer displays the product in windows in order to attract the
customers. This leads to publicity of the product.

Examples

Department Stores, Discount Stores, Clothing Stores, Specialty retailers

Convenience Stores, Grocery Stores, Drug Stores

Objectives of Retailing

1) Customer satisfaction – Retailers know that satisfied customers are loyal customers. Consequently, the
retailers must develop strategy to buildup relationship that result in customer retaining to make more
purchases.
2) Acquiring the right products – A customer will only be satisfied if they can purchase the right products
to satisfy their needs. The important objective for retailer is to identify the products that customers want
and negotiate with suppliers to obtain these products.
3) Product presentations – Once obtained, products must be presented to customers in a way that generate
interest. Retail merchandising often requires hiring creative people who understand and relates to market.
4) Traffic Building – Retailers must use promotional methods to build customer interest .For retailers, a key
measure of interest is the number of people visiting a retail location. Building traffic is accomplished with
variety of promotional techniques such as advertising, local newspaper, discount coupons etc.
5) Layout – For store based retailers a stores physical layout is an important component in creating a retail
experience that will attract customers. The physical atmosphere is more than just designing in what part of
the store to locate product. For many retailers designing the right shopping atmosphere can add appeal of a
store.
6) Keep in pace with technology – Technology has rated all areas of retailing including customer
knowledge, customer relationship management, product movement, web technology and many more.

Evolution of retail In India

The beginning of retail business in India can be traced back to the emergence of
Weekly Bazaars and Rural Fairs (Melas). These weekly bazaars, used to be big
attraction to both urban and rural people by catering their day to day
requirements of grocery, utensils, spices etc.

Then the traditional age saw the emergence of the neighbourhood ‘kirana’ store
(usually known as Convenience stores or Mom-and-pop store) to cater to
convenience of the Indian consumers.

Finally, the government came forward and supported the rural retail and many
local franchise stores. They provide financial and marketing support to Khadi &
Village Industries Commission (KVIC). Today KVIC has a nationwide chain of
more than 7000 stores in India. This phase also eyewitnesses the emergence of
multi-level shopping stores with parking facility.

Then with the opening up of economy in 1980s, the retailing in India saw huge
change in terms of its size and functioning. S Kumar’s, Bombay Dyeing and
Raymond’s were among few companies to come up with retail chains in textile
sector. Later Titan (a Tata Product) launched retail showrooms in various parts
of the country under organized form of retailing..

Malls emerged in big cities like Hyderabad giving a world-class experience to

the customers under one roof. Supermarkets and Hypermarkets emerged. Today
India has both small and large formats with exclusive stores having national and
international brands .These new retail formats such as super markets and hyper
markets are constantly trying to provide the customer with the 3 V’s. (Variety,
Value, and Volume).

Today Retails in India has become one of the pillars of its economy and
accounts for 14 to 15percent of its GDP. The Indian retail market is one of the
top five retail markets in the world by economic value. India's retail industry
employs about 40 million Indians .

Emerging trends in retailing

The retail industry is going through an enormous amount of change. Customer

behavior is changing, and their expectations are higher than ever. It is important
for retailers to understand some key industry trends in order to ensure that their
businesses are successful now, and for years to come. Here are 5 retail industry
trends retailers are embracing in order to keep their companies thriving.

1. Invest in Omnichannel Retail Strategies

One of the most important retail industry trends is investment in Omnichannel

retail strategies.  It is the way of selling products that is the same
and equally good for the customer whether they are buying from a computer,
a mobile phone app, etc., or in a physical shop:Research shows that the
consumer consult the devices prior to making a purchase. Consumers may look
at an item on their mobile and complete the purchase on their iPad, or they may
search for an item on the web and pick it up in the store later.

. 2. Provide a Personalized Retail Experience

Another retail industry trend that is becoming increasingly important to
consumers is having a personalized shopping experience. Personalization in the
retail world often involves retailers giving consumers suggestions based on their
taste, location, order history, and previous searches. Retailers also create
personalized experiences through simple services. This includes chat-bots that
increase customer engagement and interaction, text messages that provide
updates on orders, online- and tele-based communications, and other services.

3. Attend to the Growing Culture of Immediacy

The rise of technology has led to an impatient consumers. today’s generation of

consumers want to receive a communication response in 10 minutes, compared
to previous generations which expected a response in 10 days. Today’s
consumers want immediate results and retailers need to both speed up and
expand their services in order to respond to the culture of immediacy.

4. Embrace the Digital Mobile Wallet

One emerging retail industry trend is the use of mobile as a payment method.
Therefore, to better thrive in the industry, retailers must ensure that they provide
flexible payment methods such as mobile payments

5. Expand into Emerging Markets and Create New Channels

One common retail industry trend is the ability to tap into new markets and
channels. Technology has made it easier for retailers to tap into international
and emerging markets that would otherwise be difficult to reach. Retailers are
no longer confined to a single location or market and many of them are able to
expand their operations overseas by following an effective digital strategy.
retailers have a vast, untapped opportunity ahead of them and they must
establish a retail strategy that can both expand and scale easily.  

Major Factors Responsible for the Growth of Organised Retailing in India

1. Growth of consumers: In India the number of consumer is growing rapidly.
With rising consumer demand and greater disposable income has given
opportunity of retail industry to grow and prosper.
2. Increase in the number of working women:
Today the urban women are literate and qualified. They have to maintain a
balance between home and work. The purchasing habit of the working women
is different from the home maker.They do not have sufficient time for leisure
and they expect everything under one roof. They prefer one-stop shopping
Modern retail outlets therefore offers one store retailing.

3. Value for money:Organised retailers offer quality products at reasonable

prices. Example: Big Bazaar and Subhiksha. Opportunity for profit attracts
more and more new business groups for entering in to this sector.
4. Emerging rural market:
Today the rural market in India is facing stiff competition in retail sector also.
The rural market in India is fast emerging as the rural consumers are becoming
quality conscious.:

Thus due to huge potential in rural retailing organised retailers are developing
new products and strategies to satisfy and serve rural customers. In India, Retail
industry is proving the country’s largest source of employment after agriculture,
which has the deepest penetration into rural India.

5. Entry of corporate sector:

Large business groups such as Tata’s, Birla’s, and Reliance etc. have entered
the retail sector. They are in a position to provide quality products and
entertainment.this lead to the rapid growth of retail industry,.

6. Entry of foreign retailers:

Indian retail sector is catching the interest of foreign retailers. Due to
liberalisation multinationals have entered out country through joint ventures and
franchising. This further is responsible for boosting organised retailing.

7. Technological impact:
Technology is one of the dynamic factors responsible for the growth of
organised retailing. Introduction of computerization, electronic media and
marketing information system have changed the face of retailing. Organized
retailing in India has a huge scope because of the vast market and the growing
consciousness of the consumer about product quality and services.

8. Rise in income:
Increase in the literacy level has resulted into growth of income among the
population. Such growth has taken place not only in the cities but also in towns
and remote areas.

As a result the increase in income has led to increase in demand for better
quality consumer goods. Rising income levels and education have contributed
to the evolution of new retail structure. Today, people are willing to try new
things and look different, which has increased spending habits among
consumer.

9. Media explosion:
There has been an explosion in media due to satellite television and internet.
Indian consumers are exposed to the lifestyle of countries. Their expectations
for quality products have risen and they are demanding more choice and money
value services and conveniences.