Introduction to Retail Management
Some quick facts
PWC pegged the Indian retail market at $500
billion in 2012 and estimated that it would
grow two and a half times by 2020.
The potential is enormous as only 5 % of the
retail market is organised.
The organised retail is growing at 25 to 30 %
every year.
Retailing….an introduction
Retailing is evolving into a global high-tech business.
Walmart is now the world’s largest corporation and has
become the largest food retailer in the United States.
French based Carrefour, the world’s second-largest
retailer operates hypermarkets in more than 24 countries
(but not in US).
Some of the largest retailers in the United States, such as
A & P, Food Lion, Stop & Stop, and 7-Eleven are owned
by companies with headquarters in Europe and Japan.
Copyright © Houghton Mifflin
17 | 3 Company. All rights reserved.
Retailers are using sophisticated communication and
information systems to manage their business.
E.g. at the 8200 7-eleven stores in Japan, each customer’s
market basket is scanned.
Amazon.com maintains a data warehouse with
information about what each customer has bought.
E-mails are sent to the customers when new books in
their area of interest are published.
Brick-and –mortar stores are leveraging their customer
base by making it easy and convenient to buy at stores,
over the internet, or buy phone using a catalogue.
Copyright © Houghton Mifflin
17 | 4 Company. All rights reserved.
Concept of Retailing
Retailing is a set of business activities that adds
value to the products and services sold to
consumers for their personal or family use.
It is responsible for matching individual demands
of the consumer with supplies of all the
manufacturers.
The word “retail’ is derived from the French word
retailer, meaning ‘to cut a piece off’ or ‘to break
bulk”
Copyright © Houghton Mifflin
17 | 5 Company. All rights reserved.
The Nature of Retailing
Retailing
Transactions in which ultimate consumers are the
buyers
Retailers
Organizations that purchase products for the purpose
of reselling them to ultimate consumers
Retailers add value—shopping convenience, services, and
purchasing assistance to customers
Retailers create utility—time, place, possession, and form
Success in retailing comes from having a strong
customer focus coupled with desired levels of service,
product quality, and innovation.
Copyright © Houghton Mifflin
17 | 6 Company. All rights reserved.
A Retailer’s role in the
Distribution Channel
Retailers attempt to satisfy consumer needs by
having the right merchandise, at the right price,
at the right place, when the consumers want it.
Retailers are the final business in a distribution
channel that links manufacturers to consumers.
When manufacturers like Polo.com and Avon sell
directly to consumers, they are performing both
the production and retailing business activities.
Eg. Vishal mart
Copyright © Houghton Mifflin
17 | 7 Company. All rights reserved.
Functions performed by
retailers
It is sometimes easier and cheaper to buy directly like
from farmers or Dell computers so, why to have retailers.
Retailers provide important functions that increase the
value of the products and services they sell to the
consumers.
These are :
Providing assortment
Breaking Bulk
Holding inventory
Providing services.
Copyright © Houghton Mifflin
17 | 8 Company. All rights reserved.
Providing Assortments
Manufacturers specialize in producing different
types of products. While retailers provide a wide
assortment of brands, designs, sizes, colors and
prices in one location.
Campbell makes soup, Kraft makes dairy
products, Kellogg makes breakfast cereals. If
each had its own store, it would be very difficult
for them and also for the customers.
Supermarkets typically carry 20,000 to 30,000
different items made by over 500 companies.
Breaking Bulk
Manufacturers ship products in large
quantities. Retailers then offer the products
in smaller quantities tailored to individual
consumers’ and household consumers
patterns. This is called breaking bulk.
Breaking bulk is also important for both
manufacturers and consumers.
Holding Inventory
A major function of retailers is to keep
inventory . By maintaining an inventory,
retailers reduce the consumer’s cost of
storing products.
Providing Services: Retailers provide a lot of
services to the customer.:
Provide credit
Display products
The World of Retailing
Introduction to the world of retailing
Types of Retailers
Multi-channel retailing
Customer Buying Behaviour
Retail Strategy
Retail Marketing Strategy
Financial Strategy
Site Location
Organisation Structure and HRM
Information systems and SCM
Customer Relationship Management
Merchandise management
Planning Merchandise Assortments Store Management
Buying Systems Managing the Store
Buying Merchandise Store Layout, Design and Visual Merchandising
Pricing Customer Service
Retail Communication mix
Understanding world of Retailing
The first step in the retail management
process is understanding the world of
retailing.
Need to know their customers and
competition.
Need to take care of macro environment
factors including technological, social, and
ethical/ and micro-environement factors.
Competitors: A retailers primary competitors are those with the
same format, Department stores compete against other
department stores and super markets against supermarkets. This
is called intratype competition.
Some stores provide great variety and offer one-stop shopping to
satisfy more of the needs of their target market. E.g. food and
clothing are now available in grocery, department, discount and
drugstores.
The offering of merchandise not typically associated with the
store type like clothing in a drugstore is called scrambled
marketing.
This increases intratype competition.
Since convenience of location is important in store’s choice,
proximity to competitors is a critical factor in identifying
competition
Customers
Customers needs are changing at an ever-
increasing rate.
Retailers are responding to broad
demographic and lifestyle trends in the
society . In US, more of elderly population.
To develop and implement an effective
strategy, retailers need to understand why
customers shop, how they select a store, and
how they select among that store’s
merchandise.
Developing a Retail Strategy
Based on the understanding of the macro and micro
environmental factors, the reatiler has to develop
the retail strategy.
The retail strategy indicates how the firm plans to
focus its resources to accomplish its objectives. It
identifies:
The target market towards which the retailer will
direct its effort.
The nature of the merchandise and services the
retailer will offer to satisfy needs of the target
market &
How the retailer will build a long-term advantage
over competition.
Strategic Decision Areas
Determining a market strategy
Financial strategy
Location strategy
Organisational structure and human resource
strategy
Information systems strategy
Supply chain strategy
