RETAIL

MANAGEMEN
T
Vishal Chauhan (22109)
Rajesh Surani (22155)

MBA Evening, Sem-V

 • Retailers are middlemen
• They deal with ultimate customers
• They link producers and customers
• Their transactions are small in volume
Retailers • They take title of the goods
• They buy from wholesalers for reselling
• Products can be sold in person, by internet,
or at home
 • Retailers are merchants whose main business is
selling directly to ultimate customers.

Peter D. Bennett

Retailers • Retailer is a merchant middleman who is

engaged primarily in selling to ultimate
consumers

Dictionary of Marketing
Retail Definition
• any business that directs its
marketing efforts towards satisfying
the final consumer based upon the
organization of selling goods and
services as a means of distribution.

David Gilbert
 • Retailing encompasses the business activities
involved in selling goods and services to
consumers for their personal, family or
household use.
Barry Berman & Joel R. Evans
Retailing
• Retailing is the set of business activities that
adds value to the products and services sold
to consumers for their personal or family use
Michael Levy, Barton A. Weitz & Ajaya Pandit
Retail Management

• The various processes which help the

customers to procure the desired
merchandise from the retail stores for
their end use refer to retail
management.
• Retail management includes all the steps
required to bring the customers into the
store and fulfill their buying needs.
 Meaning of Retail Management

The various processes which Retail management includes all steps Retail management makes shopping
help the customers to procure required to bring the customers into a pleasurable experience and
the store and fulfill their buying ensures the customers leave the
the desire merchandise from needs. store with a smile. In simpler words,
the retail stores for their end management helps customers shop
use refer to retail without any difficulty.
management.
 • Retail management saves times and ensures
the customers easily locate their desired
Need for merchandise and return home satisfied.
Retail • An effective management avoids
unnecessary chaos at the store.
Management • Effective management controls shopliftings
to a large extent.
Example

Peter wanted to gift his wife a nice You just can’t afford to make the
watch on her birthday. He went to customer wait for long. The
nearby store to check out few merchandise needs to be well
options. The retailer took almost an organized to avoid unnecessary
hour to find watches. This irritated searching. Such situations are
Peter and he vowed not to visit the common in mom a pop stores
store again. An example of poor (kirana stores). One can never enjoy
retail management. shopping at such stores.
Characteristics of
Retailing
• Links wholesaler and customers
• Brings goods and services closer to the
consumers.
• Sells to ultimate customers
• Sells in small quantity
• Deals in large varieties of products
• Requires less amount of capital
• Profit margin is higher in retailing compared to
wholesaling
• Retailer is the last link in the distribution
channel.
 • Arrangement of assortment of products and
services.
• Breaking bulk
• Holding the stock
Functions of • Providing different services
Retailing • Retailer as a channel of communication
• Providing transportation and advertising
facilities to wholesalers/manufacturers
• Providing customer satisfaction
• Providing positive shopping experience
 • Size and its format
• Store location
• Store image
Scope/elements • Optimum utilization of retail personnel
of retail • Inventory management
operations • Managing the customer
• Store security
• Insurance
• Computerization
Types of Retailers
On the basis of ownership

• Independent store
• Chain store
• Contract store
• Consumer store

On the basis of product line

• General store
• Single line store
• Specialty store

On the basis of sales volume

• Small scale retailers

• Large scale retailers

On the basis of method of operation

• In-store retailing
• Non-store retiling
Malls
• Many retail stores
operating at one place
form a mall.
• A mall would consist of
several retail outlets each
selling their own
merchandise but at a
common platform.
E-Tailers

NOW A DAYS THE CUSTOMERS HAVE THE THEY CAN PLACE THEIR ORDER THROUGH THIS KIND OF SHOPPING IS CONVENIENT FOR
OPTION OF SHOPPING WHILE SITTING AT INTERNET, PAY WITH THE HELP OF DEBIT/ THOSE WHO HAVE A HECTIC SCHEDULE AND
THEIR HOMES CREDIT CARDS OR CASH ON DELIVERY ARE RELUCTANT TO GO TO RETAIL OUTLETS.
Department Stores

A department store is a set-up

which offers wide range of products
to the end-users under one roof.

In a department store, the

consumers can get almost all the
products they aspire to shop at one
place only.

Department stores provide a wide

range of options to the consumers
and thus fulfill all their shopping
needs.
Super market
• A low price, self service retail
store which generally sells food
products and household items,
properly placed and arranged in
specific departments is called a
supermarket.
Discount Stores
• Discount stores also offer a huge
range of products to the end-
users but at a discounted rate.
• The discount stores generally offer
a limited range and the quality in
certain cases might be a little
inferior as compared to the
department stores.
 • Mom and Pop stores are the small stores run
by individuals in the nearby locality to cater
to daily needs of the consumers staying in
Mom and the vicinity.
Pop Store • They offer selected items and are not at all
organized.
( Kirana • The size of the store would not be very big
Store ) and depends on the land available to the
owner.
• They wouldn’t offer high-end products.
Warehouse
Stores
• A retail format which sells
limited stock in bulk at a
discounted rate is called as
warehouse store.
• Warehouse stores do not
bother much about the
interiors of the store and the
products are not properly
displayed.
Superstores and
Hypermarkets
• Very large retail establishments
• Started in the early 1960s in the UK
• Applying the basic principles of discount stores

• Superstores: sales area of 25000-50000 sq. ft.

• Hypermarket: over 50000 sq. ft. of selling area
Franchising

IT IS THE GRANTING OF SOLE FRANCHISING COMPANY OR CONTRACTS TO BUY

SELLING RIGHTS WITHIN A SUPPLIES EQUIPMENT FOR A
LICENSEE WHO EITHER PAYS A SUPPLIES FROM THE
GIVEN GEOGRAPHICAL AREA.
FRANCHISE FEE OR A FRANCHISOR.
PERCENTAGE OF TURNOVER.
 • a retail store owned and managed by
consumer-customers who supply the capital
and share in the profits by patronage
dividends.
Cooperative • Their basic objective is to eliminate
store middleman.
• Consumers establish cooperative store in
order to get quality goods at minimum price
by eliminating wholesalers and retailers.
 Mail order business

• Mail-order business is a non-store

retailing in which goods are sold through
mail.
• Customers send written order to sellers
asking to send goods as demanded.
• Then the seller sends the goods to the
customers through mail or post offices.
• The customers cannot see the goods
until they reach at their shops or homes.
 • Independent stores are
businesses that operate with a
single retail outlet, or are
Independent structured as a small chain
with no more than three
Store locations.
• Generally, stores of this type
are individually owned, owned
by a family, or owned by two
partners.
Others

Mobile shops

Automatic vending

Door to door trading

Party selling

Club trading etc.

Factors illustrating the growing
importance of the retail sector

LARGE AND INCREASING ECONOMIC IMPORTANCE MAJOR EMPLOYER RETAILERS AS RETAILERS DIVERSIFYING ORGANIZATIONS
CONTRIBUTION TO GDP MORE VISIBLE GATEKEEPERS THEIR ACTIVITIES GROWING ON AN
INTERNATIONAL SCALE

SIZE OF OPERATIONS BLURRING OF AREAS OF

ALLOWING FOR SUPPLY RETAIL TO INCLUDE
CHAIN CONTROL WIDER AREA OF
BUSINESS ACTIVITY
 • Internal (controllable and micro in nature)
• Human resources
• Store image
• Merchandise mix
• Financial strength
• Services offered
Retail • External (uncontrollable and macro in nature)
Environment • Technological forces
• Economic forces
• Demographic forces
• Socio cultural forces
• Competition
 • It refers to thousands of small, mostly family-
owned retail businesses.
• Also are unorganized retail sector.
Traditional • It has the locational advantage, familiarity
with people, selling in small quantities and
Retail credit advantage.
Format • But they lack modernization, less attractive,
less varities of products, lack of space, lack
of offers, allowances, and discounts, etc.
 Modern retail formats are defined by the activities involves
in selling products and services to final customers, be it
national or international.
It operates throughout the country. Thereby the delivery
Modern process involves well defined delivery norms, barcodes,
and specific time for the delivery of goods.

retail The trade volume (purchase or sell) of goods is found to be

high.
formats in Promotion is either monthly or daily.
India
Modern trade is dependent on professional and legal
relationships.
 A franchise (or franchising) is a method of distributing
products or services involving a franchisor and a
franchisee, who pays a royalty and often an initial fee for
the right to do business under the franchisor's name and
system.
The practice of creating and distributing the brand and
Franchisin franchise system is most often referred to as franchising.

g
Ongoing royalties paid to franchisors vary by industry
and can range between 4.6% and 12.5%.
Types of franchises
• Business Format Franchises
• Most common type
• A company expands by supplying independent business owners with an established business, including its name and trademark.
• The franchiser company generally assists the independent owners considerably in launching and running their businesses. In return,
the business owners pay fees and royalties.
• Examples include McDonalds, Burger King, and Pizza Hut
• Product Franchises
• With product franchises, manufactures control how retail stores distribute their products.
• Through this kind of agreement, manufacturers allow retailers to distribute their products and to use their names and trademarks.
• To obtain these rights, store owners must pay fees or buy a minimum number of products.
• Tire stores, car dealerships, etc. for example, operate under this kind of franchise agreement.
• Manufacturing Franchises
• Through manufacturing franchises, a franchiser grants a manufacturer the right to produce and sell goods using its name and
trademark.
• The major soft drink companies also sell the supplies to the regional manufacturing franchises. In the case of Coca Cola, for example,
Coca Cola sells the syrup concentrate to a bottling company, who mixes these ingredients with water and bottles the product, and
sells it on
 A READY-MADE BUSINESS FORMULA TO FOLLOW,

MARKET-TESTED PRODUCTS AND SERVICES,

Advantages IN SOME CASES, ESTABLISHED BRAND RECOGNITION.

of
franchising FOR EXAMPLE, IF YOU'RE A MCDONALD'S FRANCHISEE, DECISIONS
ABOUT WHAT PRODUCTS TO SELL, HOW TO LAYOUT YOUR STORE, OR
EVEN HOW TO DESIGN YOUR EMPLOYEE UNIFORMS HAVE ALREADY
BEEN MADE.

SOME FRANCHISORS OFFER TRAINING AND FINANCIAL PLANNING OR

LISTS OF APPROVED SUPPLIERS. HOWEVER, DESPITE THESE BENEFITS,
SUCCESS IS NEVER GUARANTEED.
Disadvantages of franchising
• Includes heavy start-up costs as well as ongoing royalty costs.
• Franchisees also lack control over territory or creativity with their business.
• Franchisees could be adversely affected by poor location or management.
• The franchisor does not possess direct control over the sale of its products. As a
result, its own goodwill can suffer if the franchisor docs not maintain quality
standards.
• Franchising also involves ongoing costs of providing maintenance, assistance, and
training on the franchisor.
 • THE INDIAN CONTRACT ACT: including the franchise
offering, acceptance, consideration, validity, breach
and the termination of the franchise contract. The
act also ensures that the parties consent freely.
Legal issues • COMPETITION LAWS: The act aims to promote
competition and freedom of trade, protect
in consumers and prevent anti-competitive
agreements and activities that have an adverse
franchising effect on competition in India.
in India • INCOME TAX ACT: The Income Tax Act of 1961
governs the tax aspects of any franchise in India and
also that a cross-border franchisor comply with local
tax regulations with respect to any applicable tax
treaties.
Retail Dynamism

Environmental theory

Cyclical theories

• Wheel of retailing
• Retail accordion
• Retail life cycle

Conflict theory.
Environmental theory

A whole array of factors shape the nature of retail environments

factors of an economic, social, political, regulatory, cultural and demographic

nature all impinge upon the environment in which retailers operate.

It is easy to see direct links between some environmental conditions and retail
change
Changes related to the consumer

demographic changes – increases or decreases in population numbers, age groups,

racial groups, socio-economic groups, etc.;

attitudes and preferences to purchasing, brands and products;

changes in lifestyle, whereby time is more important and therefore fast food,
telephone banking, credit card payments and suchlike are becoming important;

economic influences based upon real incomes, confidence, numbers of women

working, etc.
Changes in technology
• microwave cookers, food freezers, motor cars, the Internet,
computer applications to business, just-in-time delivery
systems, and so on.
Changes in competition
• The competitive strength or otherwise of actual or alternative channels of distribution,
depending upon the nature and type of the retail organization.
• The impact of the Internet is a fundamental example of new types of competition that
can appear.
The wheel of retailing

When retailers enter a market As retailers develop their

This concept proposes ‘a they compete by offering goods experience and gain capital,
Proposed by McNair, at the lowest possible price or
more or less definite they tend to increase their
1931, ‘the bold new concept, the
level of service and quality
cycle’, innovation’, in order to attract
customers. – and therefore their price.

However, retailers in this position If this is the case the The consequence of this
This success allows move around the wheel of
may become vulnerable due to retailer may plunge into
mature retailers to move high costs, declining efficiency retailing is that a gap is left
decline and even be
steadily into an up and, perhaps, stagnating at the bottom end of the
management strategies which forced to withdraw from market – an opportunity for
market position. culminate in a downturn in sales. the market. a new retailer to enter.
The retail accordion theory

The retail accordion theory suggests that retailers initially enter

a market as a general retailer;

with experience they focus down on particular product sectors

and/or consumer groups.

Over time they begin to diversify their offer in order to grow,

but again will revert to specialization
The retail
life-cycle
theory • Retail developments pass through stages.
• At birth there are slow rates of growth due to limited resources and
experience.
• This is followed by a time of rapid growth as efficiency and experience
increase.
• Eventually growth will level off into the mature stage due to increased costs
and competition and reduced efficiencies.
• In a mature market the competition remains intense, growth slows and profits
begin to fall.
 • Competition between retailers causes changes in
the nature of the retail environment.
• However, it is not so much the day-to-day
competition between companies that causes
institutional change, but rather the imbalance
caused by innovations.
Conflict • Brown (1987) states that a response to innovation
follows a process of four stages.
theory • Initially, retailers are in shock at the innovation;
• secondly, they deny the threat by means of
defensive retreat;
• thirdly, they then move into a stage of
acknowledgement and assessment;
• finally, they develop a strategy of adaptation
Thank You!!!