SIKKIM MANIPAL UNIVERSITY

ASSIGNMENT

Name Dhananjay Kumar

Roll No. 510911381

Course MBA-Semester-3

Subject Retail Marketing

Subject Code MK0003-Set-1

Centre Code 1799

Q.1 a. List out the various features of retailing and explain its
importance. (7 marks)
The word RETAIL is derived from French word retailer, meaning to cut a
piece off or to break bulk.

Retail trade may be defined as, A trade, which consist of selling to

ultimate consumers of a variety of products in small lots. It is exactly
and literally so and is meaningful that retail trade is that cuts off smaller
portions from large lump of goods. From the bulk of products procured by
the wholesaler, small lots are cut and distributed through retailers.
Retailers are the last link in the channel of distribution between the
manufacture and the ultimate consumer. The retail shop is one of the
oldest and most widely used business establishments in the country.
Retailing is defined as a conclusive set of activities or steps used to sell a
product or a service to consumers for their personal or family use. It
includes all activities directly and indirectly related to the sales of goods
or services to the ultimate consumer. Irrespective of who sells, the
distinction of retailing is normally made on the basis of to whom the
products are sold. Retailing is subject to constant and dramatic changes.
Many forces like Social, Economical, Technological, Government policies
etc. influence it.

Following points highlights the importance of retailing.

a. Key member in the channel of distribution: Retailer as the link

in the chain of distribution performs good many functions of
marketing. The channel of distribution goes incomplete without his
contributions to make the final consumers buy the products. He acts
as a catalyst agent to both the manufacturers as well as to the
customers.

b. Buying & Assembling: Retailer assembles products from different

manufactures and wholesalers and stock wide variety of products to
meet the varied and small requirements of large number of
customers. This assembling is possible through the process of
buying variety of products from different sellers.

c. Warehousing: Retailer is a safety valve for releasing the goods in

quantities of different varieties and price ranges according to the
consumer needs. Warehousing makes possible holding the stocks to
match between the consumer demand and supply conditions.

d. Selling: The final aim of a retailer is to sell the products so bought

and held by him. Retailer is rightly called as the buying agent of
consumers. He is the means to dispose the goods to the consumers.
Successful retailing needs good deals of salesmanship tactics.

e. Risk-shouldering: Risk shouldering is the basic responsibility of a

retailer arising out of physical deteriorations and changes in prices.
These are unavoidable as he holds sufficient and variety of
inventories from the time they are bought till they sell.
 f. Grading & Packing: Retailers undertake second round grading and
packing activities left by the manufactures & wholesalers. As he
sells in loose packs and very odd lots, packing assumes a particular
importance.

g. Financing: In successful marketing, the contribution of retailers is

really is worth emphasising with consumer financing. His financing
consists of credit granted on liberal terms to the consumers,
investment in stocks, salaries & wages and other trade expenses.

h. Advertising: Retailers are the best agents to advertise the

products and ideas. In collaboration with the wholesaler and
producer, retailers do undertake shop display, distribution of sales
literature, introduction of new product etc.

i. Supply of market information: As being in close and constant

touch with consumers, he clearly keenly observes, studies the
consumer behaviour, changes in tastes and fashions and therefore
demands. This collected information is passed on to the wholesalers
& manufacturers for their perusal.

j. Offer Opportunity: Retailers give the manufacturers and

producers the opportunity of presenting their products to the
consumers by providing the necessary vent and access.

k. Big Relief: Manufacturers nd the wholesalers are really relieved of

the head braking odd job of retailing to the individuals in pretty
small quantities.

Some more points also highlight like Provision of information, Produce the
risk of loss, Largest choice, Relief from storage, Extra service, Supply of
Information, Rapid economic growth, Generate employment
opportunities, Potential untapped markets, cash & carry wholesale trading
etc.

b. Briefly explain the functions of a departmental store. (3

marks)

- Department stores are retailers that carry a broad variety and deep
assortment, offer considerable customer service, and are organized
into separate departments for displaying merchandise.

- Each department within the store has a specific selling space

allocated to it, a POS terminal to transact and record sales, and
sales people to assist customers.

- The major departments are womens, mens and childrens clothing

and accessories; home furnishing and furniture, and kitchenware
and small appliances.

- In some situations, departments in a department store or discount

 store are leased and operated by and independent company.

- A leased department is an area in a retail store that is leased or

rented to an independent firm. Retailers lease departments when
they feel they lack expertise to efficiently operate the department.

- Speciality department stores use a department store format but

focus primarily on apparel and soft home furnishings.

- The nature of traditional department stores has changed

considerably over the years, so the distinction between traditional,
speciality, and promotional department stores has blurred. With few
exceptions, traditional department stores have eliminated many of
the departments they originally had.

- Department stores overall sales have stagnated in recent years due

to increased competition from discount stores and speciality stores.

- Many consumers wait to buy merchandise when it goes on sale

rather than at the initial retail price. 60 to 80% of all merchandise
sold by department stores is on sale.

- In response to this increased competition, department stores are

altering their merchandise mix, improving their in-stock position on
fashion merchandise and improving their customer service.

Q.2 a. What do you mean by a store layout? How is it useful in

retailing? (4 marks)

Store layout is the term used to refer the interiors and the allocation or
the plan in which the products are displayed in the store. It is quite
imperative for the retailers to understand the customer and prepare a
customer friendly layout.

A customer friendly layout gives an impetus to the shopper to spend more

time in the store hence increasing the chances of shoppers buying more
merchandise. In the case of India many of the independent retailers do
not have or have limited spaces for the customer movement. Especially in
smaller stores, one would find cash counter located at the store entrance.
This treatment is common with so called Kinara Stores.

But on the other hand, many organized retailers provide adequate space
within the store for shoppers and create layouts that facilitate a definite
pattern of customer traffic. In other words the layout creates Aisles so
that the shopper can move on a predefined path inside the store. Layout
planning caters to decisions about nature of traffic flow, kinds of product,
space available and maintenance of the space on a daily basis.

Store layout is one of the many facets of Retail Atmospherics and hence it
is significant. Store layout plays a very important part in the cost analysis
by the retail firm and also the general brand communication of the store.
 b. Write a note on sales forecasting. (3 marks)

A retailer estimates its expected future revenues for a given period by

sales forecasting. Forecasts may be company wide, departmental, and for
individual merchandise classifications. Perhaps the most important step in
financial merchandise planning is accurate sales forecasting, because an
incorrect projection of sales throws off the entire process. That is why
many retailers have state-of the art forecasting systems. Longs Drug
Stores has dramatically improved its cash flow by using a system from
Evant.

Larger retailers often forecast total and department sales by techniques

such as trend analysis, time series analysis, and multiple regression
analysis. Small retailers rely more on guesstimates, projections based
on experience. Even for larger firms, sales forecasting for merchandise
classifications within departments ( or price lines ) relies on more
qualitative methods. One way to forecast sales for narrow categories is
first to project sales on a company basis and by department, and then to
break down figures judgementally into merchandise classifications.

External factors, internal company factors, and sessional trends must be

anticipated and taken into account. Among the external factors that can
affect projected sales are consumer trends, competitors actions, the state
of the economy, the weather , and new supplier offering. For example,
Paralytics offers a patent.

Methodology to analyse and forecast the relationship among consumer

demand, store traffic, and the weather. Internal company factors that can
impact on future sales include additions and deletions of merchandise
line, revised promotion and credit policies, and change in hours, new
outlets, and store remodelling. With many retailers, seasonality must be
considered in setting monthly and quarterly sales forecasts. Handys
yearly snow blower sales should not be estimated from December sales
alone.

A sales forecast can be developed by examining past trends and

projecting future growth (based on internal and external factors). It is an
estimate, subject to revisions. Various factors may be hard to incorporate
when devising forecast, such as merchandise shortages, consumer
reactions to new products, the rate of inflation, and new government
legislation. That is why a financial merchandise plan needs some more
flexibility.

Q.3 If you need to start a retail outlet or store, what strategic

considerations will you take into account, in order to
implement your plans? (10 marks)

Location is the most important ingredient for any business that relies on
customers. It is also most difficult to plan for completely. Location
decisions can be complex, costs can be quite high, there is often little
flexibility once a location has been chosen and attributes of locations have
a strong impact on retailers overall strategy. Choosing the wrong side
have a lead to poor results and in some cases insolvency and closure.

Since more than 90% of the retail sales are made at the stores, the
selection of a store location is one of the most significant strategic
decisions in retailing. Although the small store features personal service
and long hours, it cannot match the supermarkets product selection and
prices. A large supermarket or a discount store can offer lower prices
since they get economies of scale in purchasing and operations. The
reasons for locating a store in a certain place vary with the type of
business. Hence retail location and layout play a vital role in business of
the retail outlets.

Retail store management involves paying adequate attention to factors

such as expected movement of the customers visiting the store and the
space allotted to the customers to shop, and making adequate provision
for merchandise display. These concerns are important as they contribute
to the capital cost of the retail firm and also the overall image of the
store. There are following other important factors which should also be
taken into account.

a. Kind of product sold: For stores dealing in convenience goods, the

quantity of traffic is more important. The corner of an intersection,
which offers two distinct traffic streams and a large window display
area, is usually a better site than the middle of a block.
Convenience goods are often purchased on impulse from easily
accessible stores. For stores dealing in shopping goods, the quality
of the traffic is more important. Stores carrying speciality goods
that are complementary to certain other kinds of shopping goods
may desire to locate closely to the shopping good stores. In
general, the specialty good retailer should locate in the type of
neighbourhood where the adjacent stores and other establishments
are compatible with retailers operation.

b. Cost factor: Location decision on cost considerations alone is risky.

Space cost is a combination of rent or mortgage payment, utilities,
leasehold improvements, general decoration, security, insurance
and all related costs of having a place to conduct business
operations. Traditionally, the retail community placed great
importance on owing the place since this was considered prestigious
in the business community. With the emergence of new forms of
retail formats such as franchising malls and departmental stores,
the dependence on rent or lease is increasing.

c. Competitors location: the time and number of competitors is

another important factor. The presence of major retail centres,
 Industrial park, franchise chains and department stores should be
noted. Intense competition is the area shows that new businesses
will have to divide the market with existing businesses. An existing
location may be next or close to parallel or complimentary
businesses that will help to attract customers.

d. Ease of traffic flow and accessibility: These two are the most
important factors to some business than others. Retailers selling
convenience goods must attract business from the existing flow of
traffic. Studying the flow of traffic, nothing one-way streets, streets
width and parking lots is hence important. The flowing factors like
parking availability distance from residential areas, side of the
street part of the block etc to be considered.

e. Parking and major thoroughfares: Parking is another site

characteristic that is especially a cause for concern in densely
populated areas. When evaluating the parking that exists at a retail
site, there are two considerations i.e. parking capacity and parking
configuration. The ideal parking ratio for a food store is about 3:1 or
3 sq.ft of the parking space for every square feet of store.

f. Market trends: Evaluate the community from a broad, futuristic

perspective, Local newspapers are a good source of information.
Discussions with business owners and officials in the area can also
help.

g. Visibility: Visibility has a varied impact on a stores sales potential.

It is important when a shopper is trying to find the store for the first
or second time. Once the shopper has become a regular customer,
visibility no longer matters. It follows of that a store readily be
seen, new residents of an area probably will not choose it.