RETAIL MANAGEMENT, 2/E
Chetan Bajaj,
Bajaj Director,
Sona School of Management, Salem, Tamil Nadu
Rajnish Tuli,
Tuli Director,
Millward Brown, South East Asia, Singapore
Nidhi Varma Srivastava,
Srivastava Director,
Millward Brown, India
Chapter - 2
RETAIL ORGANIZATION
The changing structure of retailing
• All dynamic developments in retailing (department stores,
warehouse clubs, and hypermarkets) are responses to a
changing environment
• Changing customer demand, new technologies, intense
competition, and social change create new opportunities
even as they shake up existing business
• The Internet and web technologies have itself created a
myriad of opportunities for web based business model of
retailing
• This has created competition for the retailer in order to
maintain and grow its share of market and compete within
its band of retailers
• For e.g.: Bharat Petroleum - Making A Difference through
Innovative Retailing
Theories of structural change in
retailing
Retailing has always been a dynamic industry. There are
certain theories of how firms evolve and change the
industry in the process. They are:
The wheel of retailing
The dialectic process
Natural selection
The wheel of retailing
It was proposed by Malcomb McNair at Harvard
University. It is basically a theory of cyclical or circular
development. The wheel of retailing concept describes
how retail institutions transform during their
evolutionary life cycles.
The dialectic process
This second theory holds that retailing evolves through a
dialectic process- the blending of two opposite store
types into a superior form. For example- Fabindia and
Nalli offer both a wide array of customer services and a
broad assortment of specialized merchandise.
Natural selection
According to this theory, retail stores evolve to meet
changes in the micro-environment. The retailers that
successfully adapt to technological, social, demographic,
economic, and political changes are most likely to grow
and prosper.
Classification of retail units
Bases for classification of retail units
Nature of ownership
Operational structure
Length and depth of merchandise
Nature of service
Types of pricing policy
Types of retail location
Method of customer interaction
Retailers classified on the basis of
ownership
Sole proprietorship
Partnership
Joint venture
Limited liability company (public and private)
Retailer’s classification on the basis of
operational structure
Independent retail unit
Retail Chain
Franchise
Size and structural arrangements in franchising:
1. Manufacturer-retailer
2. Wholesaler-retailer franchise
3. Service sponsor-retailer
• Leased departments
Co-operatives
New areas
Leased department or Shop-in-shop
Co-operative outlets
Largest consumer cooperative society
Major initiatives
Benefits To Consumers
Target market
Revised positioning
Types of retail location
Retailers at freestanding locations
Retailers in business-associated locations
Retailers in specialized markets
Retailers at airports
Variety of merchandise mix
Departmental stores
For e.g: Ebony, Globus, Lifestyle, Pantaloon, Shoppers
Stop, and
Westside
Discount Stores
For e.g.: S Kumar’s S-MART Discount Chain,
Margin Free Market, and Subhiksha
Specialty Stores
For e.g.: Footware - Speciality Store
Khadder- Khadi Specialty , Gautier , Vivek ,
and Titan
Hypermarkets
For e.g. : Pantaloon’s Big Bazaar ,Giant, and
FoodWorld
Methods of customer interaction
Retail transactions are carried out through face-to-
face interaction between retailers and customers in
the case of retail stores.
There are certain methods:
Store retailers like candles for sale during a Diwali
mela at Dilli Haat.
Non-store retailers
Electronic retailing like Internet and Mobile
Association of India (IAMAI)
Catalogue and direct mail retailing
Factors for the success of catalogue retailing:
- Convenience: customers can shop when it is convenient
for them in accordance to their schedule
- Time saving: one save resources on account of time and
travelling cost and parking problems
- Information: relevant product information is available in
detail
- No time limits: no undue pressure to buy unlike as in
retail store shopping
For example – FABMALL --- E-RETAILER
Direct selling
Person-to-person selling:
- Party-plan or group presentations
- Multilevel network
Television shopping
Television shopping is retail format where existing and
prospective customers watch a TV programme
demonstrating a product and then place an order for the
same by telephone, e-mail or Internet
Three types of television shopping: cable channels meant
for shopping, infomercials, and direct-response
advertising shown on TV
(For example: Asian Sky Shop, TSN, TVC, TSNM)
Vending machine retailing
A form of non-store retailing where products or services
are placed in a machine and are dispensed to customers
when they deposit cash or use plastic money (credit or
debit card)
Vending machines vending machines offer consumers
greater convenience 24 hours a day, and have replaced
many services formally requiring a human interface
