UNI

T-1I
NTRODUCTI
ONTORETAI
LING

I
ntr
oduct
ion:
Thewor dret
aili
sderivedf
rom theFrenchwor
dr et
ail
l
iermeaningtocuta
pi
eceof fortobreaki
ngbulk.I
nsimpletermsi
tinvol
vesactivi
ti
eswhereby
productorserv
icesaresol
dt ofi
nalconsumer
sinsmal lquanti
ti
es.
Meani
ngofr
etai
l
:
Retai
li
sthesal
eofgoodstothepubl
i
cinr
elat
ivel
ysmal
lquant
it
iesf
oruse
orconsumpt
ionrat
hert
hanresal
e.
Meani
ngofRet
ail
i
ng:
Ret ail
ingencompassest hosebusinessacti
vi
ti
esinvol
vedwi t
ht hesaleof
goodsandser v
icestot hefi
nal
consumerf orpersonal
,famil
y,orhousehol
d
use.Ret ai
l
ingisthefinalst
ageinachannel ofdist
ri
buti
on.Retai
ling
functionsareperfor
medbyanyf i
rm sel
li
ngmer chandi
seorprov i
ding
servicestothefinal
consumer .
Def
ini
ti
on:
Accordi
ngtoPhi
l
ipKotler
:“Ret
ail
i
ngincl
udesall
theacti
vi
ti
esinvol
vedi
n
sel
li
nggoodsorser
vicestothefi
nal
customersforper
sonal
,non–
busi
nessuse.
”
Meani
ngofr
etai
lmanagement
:
I
t’
sapr ocessofpromotinggr
eat
ersalesandcust
omersati
sfact
ionby
gaini
ngabetterunder
standi
ngoftheconsumersofgoodsandservi
ces
producedbyacompany .

Char
act
eri
sti
csofr
etai
l
ing:
 Mar keti
ngori
entati
on:
Retail
i
ngisady namicindustr
y.I
tkeepsgrowingbymov i
ngret
ail
operati
onsint
onewmar ket.Mar
ketsareevergangingandcharacter
izedby
ri
skandt hr
eat.Ret
ailmarketi
ngther
eforerequiresdi
ff
erentt
ype’
s
decisi
onstobemadet hecomplexi
tyofthesituati
ons.
 Multi
-channelretai
li
ng:
Retail
i
ngi
sconnect i
ngl i
nkbetweent
heproducers/whol
esal
ersand
customer
s.Theirscaleofoperat
ioni
sti
tl
edmor etoser
vesophi
sti
cat
ed

1
consumer s.Thesuccessmodel f
ormostretailsector
sismulti
-channel
ret
ail
ing.Intheextendedchannelofr
etai
ldistr
ibuti
onmanuf act
urer
wholesalerandretail
erpr
ovidesachai
noff aci
lit
atingser
vicesi
nor dert
o
sel
lthepr oductt
ot hefi
nalcustomer
s.
 Di rectcontactwit
ht hecustomer :
Retai
l
ingi nvol
vesdirectcontactwit
ht hecustomer
,soret
ail
ersneedt
o
understandcustomerneedsandpr eferencestopr
ovi
dethem wit
han
eff
ectiv
eshoppi ngexperience.
Retail
ersmustbeabletobuil
drelat
ionshi
pswithcustomers,
offerhel
pful
adviceandprovi
deapositi
veshoppingexperi
ence.Ithel
pstocreatean
atmosphereinthest
orethatencouragescust
omer stoshop,t
hus
i
ncreasingsal
es.
 Relat
ionshipwit
hthecustomers:
Ret
ailer
sneedtobeabl et
odeveloprel
ati
onshipswit
hcust omer
stocr
eat
e
l
oyal,l
ong-
ter
m customers.Ret
ail
ersshoul
dof f
erexcel
lentcust
omer
ser
viceandstri
vetoprovi
deapositi
veshoppingexperi
ence.
Theyshouldalsobeknowl
edgeabl
eabouttheirproductsandserv
icesso
thatcustomershav
eaccesstorel
i
ablei
nformation.Retai
ler
smustalsobe
abletorespondqui
ckl
ytocustomercomplai
ntsandf eedback.
 St ocksmall quanti
ti
esofgoods:
Retail
erstypi
call
ystocksmal lerquanti
ti
esofitemsthanothertypesof
businesses.Thi
sr equi
resretail
erstobeabl et
okeepupwi ththelat
est
tr
endsi nproductsandser v
icessot hattheycanqui
cklyr
estockpopular
i
tems.
Ret
ail
ersmustalsobeabletomonit
ori
nventor
ylev
elsandensur
ethat
i
temsareavai
lablewhencustomer
sneedthem.
I nnovati
vemet hodsofthi
nkingandplanni
ng:
Retai
l
ingr equi
resretail
erst
obeabl etothi
nkini
nnov ati
veway sandcreat
e
eff
ectiveplansformeet i
ngcust
omerneeds.Retailer
smustal so
understandthelatesttr
endsinproductsandser
vices,aswellaschanges
i
ncust omerpr ef
erencessothattheycanstayaheadoft hecompetit
ion.
Wit
hinnovati
vemethodsofthi
nki
ngandplanni
ng,r
etai
lerscandev
elop
ef
fect
ivestr
ategi
esthatwi
l
lhelpt
hem succeedi
ntheretail
market
.

2
B.
K.COLLEGE,
BELGAUM
  Stockgoodsofdi ff
erentbrands:
Retai
ler
sshoul dstockanar r
ayofi t
emsf rom several
diff
erentbr
andst o
meetcust omerneedst heyshouldalsost r
ivetoprovi
deawi deselect
ionof
quali
tymer chandi
seatcompet it
iveprices.Retai
l
ersmustal soensurethat
thei
rstoresarewell-
stockedandof ferit
emst hatcustomersneed.
Funct
ionsofRet
ail
i
ng-:
1.Under st
andi
ngt heNeedsofConsumer s–Knowi ngandunder standing
customerneedsi satt hecenterofeverysuccessfulbusi
ness.Ther ef
ore,a
ret
ailershoul
dclearl
yunder standneedsofhist ar
getcustomer s.Every
ret
ailershoul
dknowt hereasonfortheircust
omer stobuyf r
om t hem and
notfrom thei
rcompet itor
s.Thisiscal
ledUniqueSellingPropositi
on{USP}.
USPcanchangeast hebusinessormar ketchanges.Ar et
ail
ercanhav e
dif
ferentUSPsfordifferentty
pesofcust omer.
2.Buyi
ngandAssembli
ng–Ar etai
l
erdeal
si ndi
ff
erentvari
etyofgoods
whichhepur
chasesf
rom di
ffer
entwhol
esalersf
orsell
ingtothe
consumer
s.Hetri
est
olocatebestandeconomicalsourceofthesuppl
yof
goods.
3.breakingtheBulk–Manuf actur
ersnormall
ysendt hei
rproductsinbul
k
(wholecasesorcar tons)toretai
lerstomini
mi zetr
ansportat
ioncost.As
theretail
erssel
lgoodsi nsmal l
erquanti
ti
es,theyshouldbreaklarge
quanti
tiesint
oconv enientsmal l
erquanti
ti
es.Thisprocessiscall
ed
breaki
ngt hebulk.
4.WarehousingorSt ori
ng–Af terassembl yofgoodsfr
om dif
fer
ent
suppli
ers,
ther et
ail
erspreser
vet hem i
nst oreandsuppl
ythesegoodsto
theconsumer sasandwhenr equiredbythem.Thegoodsar ekeptas
reser
vestocksi nordertoensureuninter
ruptedsuppl
ytotheconsumers.
5.Sel
li
ng–Theendobject
iveofther
etai
leri
stosel
lthegoodsto
consumer
s.Heunder
takesvari
ousmethodstosel
lgoodstotheult
imat
e
consumer
s.
6.CreditFaci
l
iti
es–Hecaterstot
heneedsoft
hecustomersevenby
suppl
yingthem goodsoncr
edit
.Hebear
stheri
skofbaddebtsonaccount
ofnon–pay mentofamountbythecust
omers.
7.Ri
skBear
ing–Ar
etai
l
erhast
obeardi
ff
erentt
ypeofr
isksi
nrel
ati
ont
o

3
B.
K.COLLEGE,
BELGAUM
goods.Whi l
einstores,goodsar eexposedt ovari
ousrisksli
ke
deter
iorati
oninqual i
ty,
spoilageandperishabi
li
tyetc.Theproductsare
confr
ont edtonaturalri
sksv i
z.,
fir
e,f
lood,eart
hquakeandot hernatur
al
cal
ami ti
es.Othertypeofrisksli
kechangei ncustomerst ast
esalso
adverselyaff
ectsthesales.
8.Gradi
ngandPacking–Ther etai
lergr
adesthegoodswhi charel
eft
ungr
adedbythemanufacturersandt hewholesal
ers.Hepacksthegoods
i
nsmal l
packagesandcontainersfortheconveni
enceofthecustomers.
9.Coll
ect
ionandSuppl
yofMar ketI
nfor
mat i
on–Ther et
ail
ersareindir
ect
touchwit
htheconsumers.Theygat
herinval
uablei
nformationwithregard
toli
kesdi
sli
kestast
esanddemandsoft heconsumer sandpassont hi
s
i
nformati
ontothewhol
esalesandtheproducerswhicharev er
yhelpfult
o
them.
Ty
pesofr
etai
l
ing:
Ret
ail
i
ng

St
orebasedr
etai
l
ing nonst
orebasedr
etai
l
ing
Hy
per
mar
ket
s El
ect
roni
cret
ail
i
ng
Super
mar
ket Di
rectsel
l
ing
Conv
eni
encest
ore Di
rectmar
ket
ing
Cashandcar
ry Aut
omat
icv
endi
ng

A.St orebasedretai
li
ng:
Storeretail
ingref
erstother
etai
li
ngact
ivi
ti
est
hatcanbeconduct
edi
n
f
ixedlocationli
kestoreandmarket.

 Hypermarket:
Ahypermarketi
sar etai
lst
orethatcombinesadepar t
mentst or
eanda
gr
ocerysupermarket.Of
tenav er
ylargeestabl
ishment,hyper
marketsoff
er
awidevari
etyofproductssuchasappliances,
clothi
ng,andgrocer
ies.
4
B.
K.COLLEGE,
BELGAUM
Hy
per
mar
ket
sof
fershopper
saone-
stopshoppi
ngexper
ience.
 Supermarket
:
Asuper marketi
saself-
ser
viceshopof f
eri
ngawi devariet
yoffood,
beveragesandhouseholdpr
oducts,organi
zedintosecti
ons.Thiski
ndof
stor
ei slar
gerandhasawiderselect
ionthanearli
ergroceryst
ores,buti
s
smallerandmor el
imi
tedintherangeofmer chandi
sethanahy permarket
orbig-boxmarket.
 Conveniencestore:
Ar et
ail
storethatcarr
iesali
mitedselect
ionofbasi
citems,aspackaged
foodsanddr ugstor
eitems,andisopenlonghoursfortheconv
enienceof
shoppers.
I
tiscal
ledconveni
encestorebecausei
tisopeni
naconveni
entl
ocati
on
t
hatiscloset
ocust omer
s,sotheydon'
tneedtodr
iveormakeaspeci
alt
ri
p
t
oshopessentiali
tems.
 Cashandcar
ry:
Acash-
and-
carryi
saself-
servi
cewholesal
estore,
especi
all
yforgrocer
ies,
atwhi
chcustomerspayateachvi
sitandtakethegoodstheyhavebought
awaywit
hthem.
B.Nonst
orebasedr
etai
l
ing
Thesell
i
ngofgoodsandtheserviceswithoutestabl
ishi
ngaphy si
calst
ore
sknownasnon-st
oreret
ail
i
ng.i
tincludesvendingmachi ne,
tel
emarketi
ng,
cat
alogsal
esmailor
derandtel
evisionmar ket
ingprograms.
1.Elect
roni
cret
ail
ing
Elect
roni
cret
ail
ingisty
peofret
ail
i
nginwhichther
etai
l
erand
consumercommuni cat
ewit
heachothert
hroughanint
eract
ive
el
ectroni
cnetwork.

2.Di
rectsel
l
ing

Di
rectsel
li
ng,alsoknownasperson-
to-
per
sonretai
l
,isabusi
nessmodel
wherepeoplesellpr
oduct
sdi
rectl
ytoendconsumer.
Directsell
i
ngi sthesell
ingofproductsinanon-
ret
ail
set
ti
ng,f
orexampl
e,
athome, onli
ne,orothervenuesthatarenotast
ore.I
tel
i
minates

5
B.
K.COLLEGE,
BELGAUM
middl
emenwhoar ei
nvol
vedindi
str
ibut
ion,
suchaswhol
esal
ersand
r
egional
dist
ri
but
ioncent
ers.
3.Dir
ectmar ket
ing
Dir
ectmar ket
ingconsistsofanymar ket i
ngt hatrel
iesondi rect
communi cati
onordistri
butiont oindi
vidual consumer s,rathert
han
thr
oughat hir
dpar t
ysuchasmassmedi a.Mai l
,emai l
,socialmedia,
andtexti
ngcampai gnsareamongt hedel iv
erysy st
emsused.Di rect
marketi
ngi sablendofdifferentnon-storer etai
l
ingpr act
ices.
Companiesusedt ododi rectmar keti
ngt hroughcoupons,
newspapers,magazines,andmai l
s( l
etters).Howev er,wi
tht he
adventoftheint
ernet,compani esnowuseemai l
s,e-newspaper ,
websit
es,e-magazines,etc.

4.Automaticvending
Automaticvendingincl
udessel l
i
ngpr oductswi tht hehelpof
machines.Most l
y,FMCGcompani esoper atewi t
haut omat i
cv ending
machines.Fir
msi nstal
lautomaticv endingmachi nesinpubl icorev en
i
npr i
vatepl
aces.It'
sacoi nortoken- operatedmachi ne.Thebuy er
i
nputsacoi nortokenintothemachi neandr ecei
v esapr edetermined
quanti
tyofproduct.InWest er
ncount r
ies,thi
sf orm ofretail
ingselli
ng
i
squitepopular.Thesearenowgai ningpopul ar
it
yi nIndi
aaswel l
.

AdvantagesofNon- St
oreRet ai
l
ing
 LowerBusi ness/OverheadCost s:
Thebestt hingaboutnon-storeretai
lingisyoucanstar
tabusi nesswi
th
l
it
tleresources.Ifyougof oratradit
ionalbri
ck-
and-
mor t
arstore,youwi
ll
needaphy sical
store,
andt hatcanbev er
yexpensi
ve.But,
itrequir
esa
warehouseandadi git
alplatf
orm wher eyoucanconnecttoyourcustomers.
 BetterandEasyAccesstotheMar ket:
Non-st
oreretail
i
nghasmadeiteasierforbusinessestoaccessthemarket
.
Youcansetupasi mpleonl
ineshopandst artsell
ing.Amazon,eBay,
and
Ali
babastartedassi
mpleonli
nestores,andnowt heyaretheleadi
ng
ret
ail
ersacrossthegl
obe.

 MarketGrowth:
Non-stor
eretai
li
ngi snowboomi ng.Iti
snoteasytocapt ur
eorserv ea
biggermarketwithon-st
oreret
aili
ng.However,
wi t
ht hi
stypeofretail
ing,
youcanaccessl ocalaswell
asint er
nati
onalmarkets.Thepotenti
al f
or

6
B.
K.COLLEGE,
BELGAUM
marketgr
owt
hisimmensei
nthi
sret
ail
i
ng.Youj
usthav
etodev
elop
ef
fecti
vemar
ket
ingst
rat
egi
es.

 Cust omerI ntell

i
gence:
Non-stor
er et
ail
ingr equir
escustomerstosubmitsomenecessaryper
sonal
detai
lstobuyapr oduct.Thisway,compani
escankeeparecordofthei
r
customers,canaccesst hem wit
hpromoti
onaloff
ers,
andevaluat
e
customers’needsi nabet terway.

Disadvant agesofNon- StoreRet ai

l
ing
 Cust omer s’Trust:
Oneoft hemostchal l
engingthingsfornon- st
oreretai
l
ersist
oat t
ract
customer sandgai nthei
rtrust.Infact,
itcanbemor edif
fi
cul
tforthose
newent rant swhodon’ thaveanypr i
ormar ketreput
ati
on.Afi
rm without
anyphy sical pr
esencemayf i
ndi tverydif
ficul
ttogetthebusi
nessgoi ng.

 Adv ert
isi
ngCosts:
Anon-storeretai
l
ermaynotneedaphy sicalstor
e,buti
tneedstoadv er
ti
se
i
tsproductstogetcustomers.Digi
tal
mar ket
ingcanbev er
yexpensive,
and
i
tmost l
ywor ksviat
hepay-per-
cli
ckmet hod.Thatsaid,t
headvert
iserwil
l
havetopayf orever
ysingl
ecli
ckoni t
sadv er
ti
sementregardl
essofthe
sal
e.

 Structur
alCost
s:
St
ructur
alcostsinanon-
stor
eretai
li
ngbusinesscanbehigh.Abusi ness
wi
llneedawebsi t
eandawarehousetostartwith.Moreov
er,soci
almedi a
pr
esenceisequallyi
mport
antfornon-
stor
er et
aili
ng,
andy oumayhav et o
hi
reexpertstomakeandmanagey ourwebsiteandsocialmediaprofi
les.

 Secur i
tyandLegalRequi rements:
Websitesandotherdigi
tal channelsareal
waysexposedtohacking.Ifa
hackergetsint
oyourbusi nesswebsi t
eorsocial
mediaprofi
les,
thingscan
becomev erymessyfory ou.Besides,youmustbeawar eofandcompl y
wit
hecommer celawsrelatedtor unanon-st
oreret
ail
i
ngbusiness.

For
msofr
etai
lbusi
nessowner
shi
p:

1.I
ndependentRet
ail
er:

I
nindependentr
etai
l
eri
sonewhobui
l
dshi
s/herbusi
nessf
rom t
hegr
ound

7
B.
K.COLLEGE,
BELGAUM
up.From t
hebusi
nessplanni
ngstaget
oopeni ngday,t
heindependent
ret
ail
ownerdoesitall
.He/shemayhireconsult
ants,
staf
fandot her
sto
assi
stinthebusi
nessendeavor
.Theopport
uniti
esareendless.

Adv
antages:
 Therearenorestri
ctionsonwho, howorwher eanent r
epreneur
shouldsetuphis/herbusiness.
 Thefreedom t
odowhatonewant st odoisthebiggestadvantagei
n
thi
sform ofbusiness.Itcanbeextremelyful
fi
ll
i
ng.

Di
sadvantages:
 Becauseoft heeaseandfl
exibi
li
tyofgett
ingst
arted,t
herecanbea
l
otofcompet i
ti
oninapart
icul
arareaforacert
aintypeofcust
omer.
 Ev er
ybusinessdeci
sionr
estsont heowner(
s).

 Therei
snobrandi
ng,nopr
esetgui
del
i
nesandagr
eatdeal
ofr
iski
n
thi
sbusi
nessmodel.

2.Existi
ngRetai
lBusiness:
Someonewhoi nher
itsorbuysanexist
ingbusinessi
stakingowner
shi
p
andresponsi
bil
i
tyofsomeoneel se’
shardwork.Thefoundati
onhasal
ready
beenlai
d.

Adv
antages:
 Thebiggestadv
antagetobuy i
nganexi sti
ngbusinessort aking
ownershi
pofanalreadyestabli
shedretailst
oreisti
me.( Thatist i
me
savi
ng).
 Thetimetobuil
dacustomerbase, thet i
met oestabl
ishbr andi
ng,
andthetimeitt
akestoestabli
shcreditaregenerall
yallpastwhi ch
meansmostoft hehardpartisbehi
ndt henewowner .

Di
sadvantages:
 Theexi st
ingbusi
nessmayhaveanegativ
eimageorreput
ati
ont hat
wil
ltakeal otoft
imetoundo.
 Loyalcustomersmaynotliket
hechangeofowner
ship.Pr
evious
owner shavecausedprobl
emsbyopeningacompeti
ngbusiness.

8
B.
K.COLLEGE,
BELGAUM
 3.Fr anchise:
Purchasingaf ranchi
seisbuyingther
ighttouseaname,product
,concept
andbusi nessplan.Thefranchiseewi
l
lrecei
veaprovenbusi
nessmodel
fr
om anest abl
ishedbusi
ness.

Adv
antages:
 Alloft
hebusi nessoperati
onprocesseshavebeenestabl
ished.
 Thef r
anchiseer ecei
veshelpf
rom anetworkandcustomer smay
al
readyfamili
arwi ththename.
 Themar ket
ingst rat
egyhasalr
eadybeenputinplace.
 Mostallofther i
skassociat
edwithstart
ingaret
ailbusi
nesshas
beenreduced.

Di
sadv
ant
ages:

 Fr
anchi
seespayaf
ee,
orr
oyal
ty,
basedonsal
eseachy
ear
.

 St
art
upcost
srel
ati
ngt
othef
ranchi
semaybehi
gh.

 Oneofthebiggestdi
sadv
ant
agesofowni
ngaf
franchi
sei
sthel
ack
off
lexi
bil
i
tyandf r
eedom.

4.Deal ership:
Retail
ersmayf indthebusinessmodel ofal i
censeddealer
shipasami xof
franchi
seandi ndependentretai
l
er.Thelicenseehasther i
ght(sometimes
thisisexclusiv e)tosellabrandofproducts.Unli
keafranchise,thedealer
cansel lav arietyofbrandsandt her
egener al
lynofeestothelicensor.
Dealershipsmayormaynotbei denti
fi
edasanaut hor
izedsellerorbythe
company ’
st rademar k.

Deal
ershi
pisanactiv
itywher
eadeal
erpur
chasegoodsf
rom manuf
act
urer
andselli
ttoenduser.

Adv
ant
ages:

 Deal
ershi
prel
ati
oni
smuchmor
efl
exi
blet
hant
hatoff
ranchi
se.

 Maybegoodf
orpar
tti
mer
etai
l
ersort
hosej
ustst
art
ingi
nret
ail

9
B.
K.COLLEGE,
BELGAUM
Di
sadv
ant
ages:

 Ev
erybusi
nessdeci
sioni
srestonowner
.

 Gr
eatdeal
ofr
iski
nthi
sbusi
nessmodel
.

 Becauseoft
heeaseoffl
exibi
l
ityofget
ti
ngstar
tedt
her
ecanbel
otof
competi
ti
oninpar
ti
cul
arareaofconsumer.

5.Net workMar ket

ing:
Multi
levelmarketi
ng(MLM)ornet wor kmar keti
ngi sabusinessmodel
wheret hesel
li
ngofpr oduct
sdependsont hepeopl einthenetwork.Not
onlyisaproductbeingsold,butothersalespeopl earebeingrecruit
edt o
sel
l t
hatsamepr oductorproductline.I
t’
spr obablynotatypeofbusi ness
onewoul dini
ti
all
yconsiderwhendi scussingr etai
lbusinesses,butAmway
usedt hi
smodel quit
esuccessfull
yf ormanyy ears.

Adv
antages:
 General
lyver
yli
tt
lestart
upf undingisneededtooper at
ethi
stypeof
busi
ness.
 Networkmarketi
ngprovidesfreedom f r
om conventi
onalr
etai
l
ing
busi
nessesandoffersagr eat
eri nt
eracti
onwithall
typesofpeopl
e.
Forthosewil
li
ngtoinvestthetime, hugeprof
it
scanbemade.

Di
sadv
ant
ages:

 Toomanyunscrupul
ousmulti
l
evelmar
ket
ingschemesexi
st.Some
syst
emsrequi
rethei
rdeal
erstobemorei
nter
estedi
nrecr
uit
ingnew
membersthani
nselli
ngthepr
oductst
oconsumers.

 I
tmaybedi
ff
icul
ttooper
atewi
thoutast
oref
ront
.

Fact
orsr
esponsi
blef
ort
hegr
owt
hofor
gani
zedr
etai
l
ingi
nIndi
a
Themajorf
act
orsr
esponsi
blef
ort
hegr
owt
hofor
gani
zedr
etai
l
ingi
nIndi
a
areasf
oll
ows–

10
B.
K.COLLEGE,
BELGAUM
  EnhancedWor ki
ngWomen:
Todayt heurbanwomenar eli
ter
ateandqualifi
ed.Theyhav et
o
mai nt
ainabalancebetweenhomeandwor k.Thepurchasinghabi
tof
thewor ki
ngwomeni sdi
fferentf
rom thehomemaker .Theydonot
hav esuff
ici
enttimeforl
eisureandtheyexpectev er
ythi
ngunderone
roof.Theypreferone–stopshoppi ng.Modernretai
loutlet
sther
efor
e
offeronestoreretai
l
ing.

 ValueforMoney–
Or ganizedretaildealsinhighv ol
umeandar eabletoenjoy
economi esofl argescalepr oduct
ionanddistr
ibut
ion.Theyeli
mi nat
e
i
ntermedi ari
esi ndistr
ibuti
onchannel.Organi
zedretail
ersoff
er
qualit
ypr oductsatr easonablepri
ces.Example:bi
gbazaar .
Oppor t
uni t
yforpr ofi
tattr
actsmor eandmor enewbusi nessgroups
forenteringintothissector.

 Emer gingRur alMar ket–

Todayt herural marketinIndi
ai sfacingsti
ffcompet it
ioni nretail
sectoralso.Ther uralmarketinI ndi
ai sf
astemer gingast herural
consumer sar ebecomi ngqualityconscious.Hugepot ent iali
nr ur
al
ret
aili
ngor ganizedretail
ersaredev elopi
ngnewpr oductsand
str
ategiest osatisf
yandser ver uralcust
omer s.InIndi
a, Retail
i
ndust r
yispr ovingthecount r
y’slargestsourceofempl oymentaf ter
agri
culture,whichhast hedeepestpenet rati
oni ntorur
al India.

 EnhancedMi ddleClassConsumer s–
I
nI ndi
at henumberofmi ddlecl
assconsumeri sgrowingrapidl
y.Wit
h
ri
singconsumerdemandandgr eat
erdisposablei
ncomehasgi ven
opportunit
yofretai
lindustrytogrowandpr osper.Theyexpectqual
it
y
productsatdecentpr i
ces.Moder nret
ailer
sofferawiderangeof
productsandv al
ueaddedser vi
cestothecustomer s.

 GrowthofConsumer i
sm –
Withtheemer genceofconsumerism,theret
ail
erfacesamor e
knowledgeabl
eanddemandi ngconsumer.Asthebusinessexistto
sati
sfyconsumerneeds, t
hegrowingconsumerexpect at
ionhas
for
cedt heret
ailorgani
zat
ionstochangethei
rformatofretai
ltrade.

11
B.
K.COLLEGE,
BELGAUM
  TechnologicalImpact–
Technologyisoneoft hedy nami cf
actorsresponsibleforthegrowth
oforganizedretaili
ng.Introductionofcomput eri
zat i
on,el
ectroni
c
mediaandmar ket i
nginfor mationsystem havechangedt hefaceof
retai
l
ing.Organizedr etai
linginI ndi
ahasahugescopebecauseoft he
vastmar ketandt hegrowi ngconsci ousnessoft heconsumerabout
productqualit
yandser vices.Oneoft hemaj ortechnological
i
nnov at
ionsinor ganizedr etail
i
nghasbeent heintroducti
onofBar
Codes.Wi ththeincreasinguseoft echnologyandi nnovationret
ail
ers
aresell
ingtheirproduct sonl i
newi t
hthehel pofInternet.

 EnhancedI ncome–
Increaseintheli
teracyl evelhasresult
edintogrowt hofi ncome
amongt hepopulati
on.Suchgr owthhast akenplacenotonl yi
nt he
citi
esbutalsoint ownsandr emot eareas.Asar esulttheincreasein
i
ncomehasl edtoi ncreasei ndemandf orbetterqualityconsumer
goods.Ri si
ngincomel evelsandeducat i
onhav econt r
ibutedtothe
evoluti
onofnewr etai
lst r
ucture.Todaypeoplear ewilli
ngt otrynew
thingsandlookdi ff
erent ,
whi chhasincreasedspendi nghabi t
s
amongconsumer .

 MediaExplosi
on–
Ther
ehasbeenanexpl osioninmedi aduetosatel
li
tetelevi
si
onand
i
nter
net.Indi
anconsumersar eexposedtotheli
fest
yleofcountri
es.
Thei
rexpectati
onsforquali
typroductshav
erisenandt heyare
demandingmor echoi
ceandmoneyv al
ueser
v i
cesandconv eni
ences.

Theor
iesofRet
ail
i
ng-:
Thetheori
esdevelopedtoexpl ai
ntheprocessofret
ail
devel
opment
.It
rev
olvesaroundtheimpor t
anceofcompet i
tiv
epressur
es.I
tist
he
i
nvestmentsinorganizat
ionalcapabi
li
ti
es.
Env
ironment
alTheor
y–
 Accordi
ngt oenvironment
altheor
ythereisachangeinretai
l.I
tis
att
ri
butedtot hechangeintheenvi
ronmentinwhichtheretail
ers
operat
e.
 Theenv i
ronmental t
heor
yexplai
nshowr etai
lbusi
nessevolvedfrom
thespecial
izedstoresi
ntodepart
ment,discount
,chai
n,mailorder

12
B.
K.COLLEGE,
BELGAUM
 andonlinest ores.Retailenvir
onmenti smadeupofcust omer s,
compet i
torsandchangi ngtechnol ogy.
 Thechangesi nt heexternalenvir
onmentcanal tertheprof i
tabili
tyof
ret
ailorganizations.I
fanor ganizationisnotablet ocopewi thits
exter
nal envir
onment ,
itwillsoonv anishfrom t
hemar ket.Thus, the
bir
th,successordecl i
neofdi ff
erentf ormsofretailenterpri
sesmany
atimesi sattri
but edtothebusi nessenv ir
onment .
 Therefore,Dar win’sstatementof“ Sur vi
vali
stheFittest”isv erywell
appli
cableint hiscontext.Forthisr eason,i
tisimpor t
antf orretail
ers
tobeawar eofandadj usttochangi ngenv i
ronments.

Cy
cli
cal
Theor
y–
 Cycli
caltheor ybasicall
yexpl ai
nst hedi f
ferentphasesi nacompany .
Accordingt othistheory, changefol l
owsapat t
ernandallphases
haveidentifi
ableat tr
ibutesassociat edwitht hem.
 Therear ethreepr i
mar ycomponent sassoci atedwi t
hthetheory:
Wheel ofretaili
ng,retail
cy cleandr etai
laccor dion.
 Wheel ofretaili
ngr ef
erst oacompanyent eringt hemarketwithlow
pri
cesandaf fordableser vi
ceinordert ochal lengecompet i
tor
s.The
ret
ailaccordingaspectofcy cl
icaltheorysuggest st
hatsome
businessesgof rom outletsthatofferanar rayofpr oduct
st o
establi
shment spr ovidi
nganar rowsel ecti
onofgoodsandser vi
ces.

Conf
li
ctst
heor
y:
 Accor di ngt ot hist heorythecompet iti
onorconf l
ictbet weent wo
opposi tet ypesofr etai
lers,l
eadst oanewf ormatbei ngdev eloped.It
say st hatr etailerschangei nresponset ocompet i
tion.
 Itexpl ainshowsomedepar t
mentst orestransiti
onedi ntodiscount
stores.Theconf li
ctal way sexistsconf l
ictalway sexist sbetween
oper ator sofsi mi larformat sorwi thinbr oadr etailcategor i
es.
 Thist heor yproposest hatnewf or
msofr etaili
nst i
tutionsemer gedue
to“ i
nt er–i nstitutional confli
ct.”Whenani nnov ativeretail
er
(antithesi s),chal lengesanest abl i
shedr etai
ler(thesis) ,
anewf orm of
retail
er( synthesi s)r esults.Thesy nt hesislaterbecomesat hesis,
tri
gger i
nganewt ur nforanewt ur
nf orassimilation.Forexampl e,
whenat hesisandant i
thesisar etakenasdepar tmentst oresand
discountst oresr espect i
vely,t
hesy nthesismayemer geasdi scount
depar tmentst or es.

13
B.
K.COLLEGE,
BELGAUM
Wheel
sofr
etai
l
ing:
TheWheel ofRet
ail
i
ngisatheor
ytoexpl
aint
heinst
it
uti
onalchangesthat
takeplacewheninnovat
ors,
incl
udi
nglar
gebusi
nesshouses,entert
he
retai
larea.
TheWheel ofRetail
ingisahy pot
hesisthatdescri
beshowretail
ers
approacht ocapturemar ketshar
eandcr eatebrandval
ue.I
texplainshow
retai
l
er susuall
ybegi natthebott
om ofthewheel wit
hlowprices,prof
it
s
andpr esti
geandt hengr adual
lyworkthei
rwayupt oincr
easedpr i
ces,
profi
tsandpr esti
ge.
Thecy
clecanbebr
oadl
ycl
assi
fi
edi
ntot
hreephases–
I
.Ent
ryPhase
I
I.Tr
adi
ngupPhase
I
II
.Vul
ner
abi
l
ityPhase
Ent
ryphase:
 Thenew, innovati
ver etail
erent erthemar ketwi thal owst atusand
l
owpr i
cest oreformat .
 Startswithasmal lstoret hatof fersgoodsatl owpr icesorgoodsof
highdemand.Thi swoul dat tractthecust omer sf r
om mor e
establi
shedcompet i
tors.Tr i
est okeept hecost satmi ni
mum by
offeri
ngonl ymi ni
mal servicet ocust omer s,mai nt
ainingamodes
shoppingat mospher e, locatingt hest oreinal owr entareaand
offeri
ngal i
mitedproductmi x.
 Successandmar ketaccept anceoft henewr etail
erwi l
lforcethe
establi
shedt oi mi
tatet hechangesi nr etaili
ngmadebyt henew
entrant.Thiswoul dfor cet henewent rantt odiffer
ent i
ateitsproduct
s
throught heprocessoft radingup.

Tr
adi
ngupphase:
 Newr etai
l
ertri
estomakeel abor at
echangesi ntheext
ernalst
ruct
ure
oft
hest orethr
oughupgr adation.
 Ret
ailerwil
lnowreposit
ionitselfbyoffer
ingmaxi mum cust
omer
ser
vice,aposhshoppingatmospher e,
andr el
ocati
ngtohighcost

14
B.
K.COLLEGE,
BELGAUM
 area(
aspertheconveni
enceofthecust
omers).
 Thusint
hisprocesst
henewent r
antwil
lmaturet
oahi gherstatus
andhi
gherpri
ceoperati
on.Thi
swill
incr
easethecostoftheretail
er.

Vul
ner
abi
l
ityphase:
 Thei nnovati
v est orewillhav et
odeal wi
thhi
ghcost s,conser vati
sm
andaf all
onROI .Thus, t
hei nnov ati
v est
oremat uresi ntoan
establi
shedf irm andbecomesv ulnerabl
etothenewi nnov at
orwho
enterst hemar ket .
 Ent ryofthenewi nnovatormar kst heendoft hecy cleandbegi nning
ofthenewcy cl
ei ntothei ndustry.
 Exampl eoft histheor y–ki ranast oreswerereplacedbyt hechain
storeslikeApnaBazarandFoodWor l
d(newentrant )whi chint ur
n
facedsev erecompet i
ti
onf rom super market
sandhy permar ketsli
ke
BigBazarandGi ant.

Ret
ail
li
fecy
cle:
Ther etai
lli
fecycl
eistheprocessofgrowt handdecli
nethatretai
l outl
ets,
l
ikepr oducts,
experi
ence,whichconsi
stsoft heearl
ygrowth,accelerated
development ,
maturi
ty,anddecli
nestages.Theconceptofproductl ife
cycleisalsoappli
cabletoret
ailor
ganizat
ions.Thisi
sbecauser etail
organizati
onspassthroughidenti
fi
abl
est agesofinnovat
ion,development ,
mat uri
tyanddecli
ne.Thisiswhatiscommonl yt
ermedast heretaill
ife
cycle.
St
agesofr
etai
ll
if
ecy
cle:

I
nnov
ati
on gr
owt
h mat
uri
ty decl
i
ne

St
agesofr
etai
ll
if
ecy
cle:
15
B.
K.COLLEGE,
BELGAUM
Phase–1:
Int
roduct
ion/I
nnov
ati
on–
 Anewor ganizati
onisbor n; i
timprovestheconv enienceorcr eat
es
otheradv antagestot hefinalcustomersthatdiffersharplyfr
om
thoseof f
eredbyot herr et
ailers.
 Thisisstageofi nnov ati
on,wher etheorgani
zationhasaf ew
compet it
ors.Sinceitisanewconcept ,
therat
eofgr owt hisf
airl
y
rapidandt hemanagementf inetunesitsst
rategyt hrough
experiment ati
on.I
nt hisstaget helevel
sofprofit
abi l
i
t yaremoderat
e.
Entrepreneursinthi
sphaseofdev elopmenteitherintroduceanew
retai
lstoremodel .

Phase–2:
Growt
h–
 Ther etail
or ganizati
onf acesr apidincreasesi nsales.Ast he
organizationmov est ostaget woofgr owt h, whi
chi sthest ageof
dev el
opment ,afewcompet i
torsemer ge.Si ncethecompanyhas
beeni nthemar ketforawhi l
e, i
tisnowi naposi t
iont opre-emptthe
mar ketbyest ablishingaposi tionofleader ship.
 Sincegr owt hisimper ati
ve,thei nvestmentl eveli
sal sohigh, asi
sthe
profit
abili
ty.Investmenti slargelyinsy st
emsandpr ocesses.This
stagecanl astfrom f i
vetoeighty ears.Howev er
,towar dstheendof
thisphase, costpr essurestendt oappear.

Phase–3:
Mat
uri
ty:
I nthisst age,lotofcompet it
ionandst or edefi
nest heindust r
yinst
ead
off eeli
ngnewanddi f
fer
ent .Compet i
tioni ncr
easest hepoi ntwher
e
i
ndust r
yov erexpands.
I tisleadingt odecli
nepr ofit
sandr educedcust omerloy alt
y.Thus,t
he
growt hratet endstodecr ease.Graduallyasmar ketsbecomemor e
compet i
tiveanddi r
ectcompet i
ti
onincr eases,therateofgr owth
slowsdownandpr ofi
tsalsost ar
tdecl i
ning.
 Thisi sthet i
mewhent her etai
lorganizationneedst or ethi
nkits
strategyandr eposi
ti
onitselfinthemar ket.Achangemayoccurnot
onlyi nthef ormatbutalsoi nthemer chandi semi xoffered.

Phase–4:
Decl
i
ne–
 Ther
etai
lor
gani
zat
ionl
osesi
tscompet
it
iveedgeandt
her
eisa
16
B.
K.COLLEGE,
BELGAUM
 decli
ne.Inthisstage, t
heor gani zat
ionneedst odecidei fitisst
il
l
goingt oconti
nuei nthemar ketornot .
 Ther ateofgrowt hisnegat i
ve, profi
tabi
li
tydecli
nesf urtherand
overheadsarehi gh.Ther etailbusinessinIndiahasonl yr ecent
ly
seent heemer genceofor gani zed,corporat
eact iv
ity
.
 Traditi
onall
y,mostoft her etailbusinessinIndiahasbeensmal l
ownermanagedbusi ness.Itisdi ff
icul
ttoputdownar etail
organizati
on,whichhaspassedt hr
oughal l
thef ourstagesoft he
retai
lli
fecycle.

Pr
esentI
ndi
anRet
ail
Scenar
io-:
Rapi
dGr
owt
h–
 Ther etailmov ementinI ndi ahasacqui redthecr it
ical masst hatis
requiredf orrapi daccelerationint ermsofi ndust rygr owt haswel l as
geogr aphical spread.TheI ndianr et
ailindustrycannol ongerbe
callednascent .
 Thespr eadofsuperst orest othenor thernci ti
essuchasDel hi,
Chandi garh, JaipurandKol katai sevidenceoft hef actthator ganized
retail
inginI ndiahasemer gedf rom it
ssout her nbast ion.Ther et
ailing
boom i sbei ngdr ivenbyi ncreasedexpect ationsaswel laschangi ng
shoppi ngbehav i
oroftheur banI ndi
anconsumer .Wi tht heincreasing
numberofnucl earfamili
es, wor kingwomen, greaterwor kpressure
andi ncreasedcommut i
ngt i
me, consumer sar elooki ngf or
conv enience.

Emer
genceofRegi
on–Speci
fi
cFor
mat
s–
 Fort hefirsttimei n10y ears,theindustryi
swi t
nessingt he
dev elopmentofr egion–speci f
icformats.Withorgani zedr etail
penet rat
ingi nBcl asst owns, retail
ershavestart
eddi fferentiatingin
thesi zesandf ormat sofst ores.
 Forexampl e,indepar tment alstoreformat,whil
emostAcl assci t
ies
andmet roshav elargerst oresof50, 000plussq.ft
.si zes, storesinB
classt ownhav est abil
i
zedi nt he25,000–35, 000sq.f t.range.Most
player shavest artedoper atingt hesetwoformatsacr ossv arious
citi
es, whichhashel pedt hem t ostandardi
zethemer chandi se
offeringacr osst hechai n.

17
B.
K.COLLEGE,
BELGAUM
Emer
genceofDi
scountFor
mat
s–
 Largerdiscountf
ormat s,popularl
yknownashy permarket
s,arenow
emer gingasmajorcompet i
tor
st obothunorganizedandorganized
ret
ail
er s.
 Penet rat
ionofor
ganizedr et
ailint
othelowerst r
ataofincomegr oups
andconsumerdemandf orincreasedvalue–for–moneyhasi mproved
thepr ospect
softhesef ormats.Theseformat sspanacrossthe
enti
rer angeofmerchandisecat egor
ies
 Forexampl e–BigBazaar .

Unor
gani
zedRet
ail
–
I ndianr etai
lisdomi natedbyal argernumberofsmal lret
ail
ers
consi sti
ngoft hel ocal kiranashops, owner–mannedgener alst
ores,
chemi sts,f
oot wearshops, appar elshops, paanandbi ndishops,hand
–car thawker s, pav ementv endor s,
etc.,whichtogethermakeupt he
socal ledunor gani zedr etailortraditi
onal retai
l.
 Thel ast4–5y ear shav ewi tnessedt heent ryofanumberof
organi zedretailer sopeni ngst oresinv ari
ousmoder nformatsin
met rosandot heri mpor tantci ti
es.St i
ll
,theov eral
lshareoforganized
retail
ingi ntotal retailbusi nesshasr emai nedlow.

Fact
orsAf
fect
ing/I
nfl
uenci
ngI
ndi
anRet
ail
Indust
ry–
I
ncr
easei
npercapi
taI
ncome–
 PerCapi t
aI ncomemeanshowmuchani ndivi
dualearns,oftheyearly
i
ncomet hatisgener at
edinthecount rythroughpr oducti
veactivi
ti
es.
Indiahasmar kedgrowt hi
npercapi t
aincomeby10. 5%whi chshows
tremendousi ncreaseinGNP( GrossNat i
onal Product)ofthecount r
y.
 Incr easei npercapitaincomer efl
ectshikei nincomeofHousehol ds
whi chi nturnwi l
lconsumemor e,t
husl eadingtogr owthofretai
l
sect or.Househol dprefertoshopf r
om bi ggiantsascompar etotheir
KiranaSt ore.

Demogr
aphi
cal
Changes–
I
ndiai
shavi
nghugeyoungageworki
ngpopulati
onwhichis
gener
ati
nghugei
ncomeandhighsavi
ngs.Foranydev
elopi
ng

18
B.
K.COLLEGE,
BELGAUM
 countryyoungagegroup,i
ncome,sav
ingsar
ekeyfactor
sforit
s
growth.
 Presenceofthesekeyfact
orshashel
pedinatt
ract
ingbi
gretai
l
gi
antst oIndi
a.

Hi
ghSt
andar
dofLi
vi
ng–
 Standardofl ivi
nginI ndi
ahasi mpr oved.Ear
lierShoppinginIndia
al
way shadanemot i
onaltagat t
achedt oit
,alongwitht hatpeopl
e
uset ohav emy ththatshoppi ngfrom shoppingcompl exesorMal l
s
i
scost l
i
erandi tsuitsonlytor i
chclass.
 Butnowt hingshav echangedpeopl ehavechangedt heir
mi sconceptionandhav eadoptedMal lcult
ure.Thisshowst hat
standardofl iv
inghasi ncreased.

Changei
nConsumpt
ionPat
ter
n–
 Consumpt ionpat t
ernsamongv ariousclasseshavechangedov erthe
years.Ear
liercustomer swerebrandloyalduetowhi chtheywere
all
owingnewbr andstoent ert
hemar ket.
 Butnowcust omer sareshowinggoodr esponsetonewpr oduct
enteri
ngthemar ketbecausetheyhaver eal
izedt
hatt heyarepayi
ng
forquali
ty.Thisdrasti
cchangei ncustomer ’
sperceptionhasopened
way sformanynewent r
ants.

Av
ail
abi
l
ityofLow–CostConsumerCr
edi
t–
I tisri
ghtl
ysai dthatsal
esgenerat edoncr editaremoreascompar e
tocashsal es.Withthechangeincr editpolici
es,manynew
customer shav eenter
edthemar ket.Pur chasingoncreditbasiswit
h
goodcr editworthi
nessgivesbothsel lerandbuy erf
lexibi
lit
yto
transact.
 Earli
erduet olackofcashmanybuy ersuset opostponet heir
purchases, butnowwi t
hmoder nizationtheyar ecar
ryingitoncredi
t
basisasi tischeapertorepay
.

I
mpr
ovement
sinI
nfr
ast
ruct
ure–
 Wi
thmanyi
nfr
ast
ruct
ural
changest
aki
ngpl
acer
ightf
rom met
ror
ail
s
19
B.
K.COLLEGE,
BELGAUM
 toroadconnecti
vityi
nt hecount r
y,r
etai
lisal
soexpandingit
swings.
 Withhugeinfr
astructurespendingwhichhasenteredthecount
ryin
form ofFDI(
ForeignDi r
ectInvestment)
,moreret
ailgi
antshave
proposedtoenterIndianMar ket.

20
B.
K.COLLEGE,
BELGAUM