RETAIL MANAGEMENT

Introduction to retailing

Retailing in general sense consists of business activities that are

involved in buying and selling of goods and services to ultimate
consumers for their own use ranging from Bread butter to automobiles
to apparels to airline tickets.

Retailing consists of selling merchandise from a permanent location (a

retail store) in small quantities directly to the consumers. These
consumers may be individual buyers or corporate. In the world of Trade
and Commerce, a retailer purchases goods or merchandise in bulk from
manufacturers directly and then sells in small quantities are known as
Retail stores or shops.

Characteristics of Retailing:
Retailing is different from other forms of business in the following
ways:
(i) It offers direct interaction with customers/end consumers.

ii) Sale volume is comparatively large in quantities but less in monetary

value as compared to exporting/manufacturing.

(iii) Customer service plays a vital role in the success of retail business.

(iv) Sales promotions are offered at this point only.

(v) In almost all countries, retail outlets are more than any other form of
business.
(vi) Location and layout are critical factors in retail business.

(vii) It offers employment opportunity to all age groups irrespective of

age and gender, qualification or religion etc

Phases in the evolution of retail sector

The origins of retailing in India can be traced back to the emergence of

Kirana stores and mom-and-pop stores. These stores used to cater to
the local people. Eventually the government supported
the rural retail and many indigenous franchise stores came up with the
help of Khadi & Village Industries Commission. The economy began to
open up in the 1980s resulting in the change of retailing. The first few
companies to come up with retail chains were in textile sector, for
example, Bombay Dyeing, S Kumars, Raymonds, etc. Later Titan
launched retail showrooms in the organized retail sector. With the
passage of time new entrants moved on from manufacturing to pure
retailing.

Shopping malls emerged in the urban areas giving a world-class

experience to the customers. Eventually hypermarkets and
supermarkets emerged. The evolution of the sector includes the
continuous
improvement in the supply chain management, distribution channels,
technology, back-end operations, etc

EMERGING TRENDS IN RETAILING

Weekly Markets, Village and Rural Melas

 Source of entertainment and commercial exchange

Convenience stores, Mom-and-pop / Kirana shops

Neighborhood stores/convenience
Traditional and pervasive reach

PDS outlets, Khadi stores, Cooperatives

Government supported
Availability/low costs/distribution

Exclusive brand outlets, hypermarkets and supermarkets,

department stores and shopping malls
Shopping experience/ efficiency
Modern formats/ international

Factors responsible for the growth of

organised retailing are as under:

1. Growth of middle class consumers:

In India the number of middle class consumer is growing rapidly.

With rising consumer demand and greater disposable income has
given opportunity of retail industry to grow and prosper.

They expect quality products at decent prices. Modern retailers

offer a wide range of products and value added services to the
customers. Hence this has resulted into growth of organised
retailing in India.
 Growing consumerism would be a key driver for organized retail in
India. Rising incomes and improvements in infrastructure are
enlarging consumer markets and accelerating the convergence
(meeting) of consumer tastes.

2. Increase in the number of working women:

Today the urban women are literate and qualified. They have to
maintain a balance between home and work. The purchasing habit of
the working women is different from the home maker.

They do not have sufficient time for leisure and they expect everything
under one roof. They prefer one-stop shopping Modern retail outlets
therefore offers one store retailing.

3. Value for money:

Oganised retail deals in high volume and are able to enjoy economies of
large scale production and distribution. They eliminate intermediaries in
distribution channel

Organised retailers offer quality products at reasonable prices. Example:

Big Bazaar and Subhiksha. Opportunity for profit attracts more and
more new business groups for entering in to this sector.

4. Emerging rural market:

Today the rural market in India is facing stiff competition in retail sector
also. The rural market in India is fast emerging as the rural consumers
are becoming quality conscious.

Thus due to huge potential in rural retailing organised retailers are

developing new products and strategies to satisfy and serve rural
customers. In India, Retail industry is proving the countrys largest
source of employment after agriculture, which has the deepest
penetration into rural India.

5. Entry of corporate sector:

Large business tycoons such as Tatas, Birlas, and Reliance etc. have
entered the retail sector. They are in a position to provide quality
products and entertainment.

As the corporate the Piramals, the Tatas, the Rahejas, ITC,

S.Kumars, RPG Enterprises, and mega retailers- Crosswords,
Shoppers Stop, and Pantaloons race to revolutionize the retailing
sector.

6. Entry of foreign retailers:

Indian retail sector is catching the interest of foreign retailers. Due to

liberalisation multinationals have entered out country through joint
ventures and franchising. This further is responsible for boosting
organised retailing.

7. Technological impact:
Technology is one of the dynamic factors responsible for the growth of
organised retailing. Introduction of computerization, electronic media
and marketing information system have changed the face of retailing.
Organized retailing in India has a huge scope because of the vast
market and the growing consciousness of the consumer about product
quality and services.

One of the major technological innovations in organised retailing has

been the introduction of Bar Codes. With the increasing use of
technology and innovation retailers are selling their products online with
the help of Internet.

8. Rise in income:

Increase in the literacy level has resulted into growth of income among
the population. Such growth has taken place not only in the cities but
also in towns and remote areas.

As a result the increase in income has led to increase in demand for

better quality consumer goods. Rising income levels and education
have contributed to the evolution of new retail structure. Today, people
are willing to try new things and look different, which has increased
spending habits among consumer.

9. Media explosion:

There has been an explosion in media due to satellite television and

internet. Indian consumers are exposed to the lifestyle of countries.
Their expectations for quality products have risen and they are
demanding more choice and money value services and conveniences.
10. Rise of consumerism:

With the emergence of consumerism, the retailer faces a more

knowledgeable and demanding consumer. As the business exist to
satisfy consumer needs, the growing consumer expectation has forced
the retail organizations to change their format of retail trade. Consumer
demand, convenience, comfort, time, location etc. are the important
factors for the growth of organised retailing in India.

The retail industry is divided into organised and un-organised sectors.

Organised retailing It refers to trading activities undertaken by
licensed retailers, that is, those who are registered for sales tax, income
tax, etc.

These include the corporate-backed hypermarkets and retail chains,

and also the privately owned large retail businesses.

Un-organised retailing- It on the other hand, refers to the traditional

formats of low-cost retailing, for example, the local kirana shops, owner
manned general stores, paan/beedi shops, convenience stores, hand
cart and pavement vendors.

It is important to understand how retailing works in our economy, and

what role it plays in the lives of its citizens, from a social as well as an
economic perspective. India still predominantly houses the traditional
formats of retailing, that is, the local kirana shop, paan/beedi shop,
hardware stores, weekly haats, convenience stores, and bazaars, which
together form the bulk.
Types Of Retail Institutions Or Retailers
Retail stores can be broadly classified into two categories, i.e.

1. store based retailers

2. non-store based retailers.

A. Store based retailer:

Store based retailer is again classified,

on the basis of ownership,

on the basis of product line/ merchandize,

on the basis of sales volume and

on the basis of operation method.

1. Types of retailers on the basis of ownership

On the basis of ownership, retailers are divided into four
classes as follows:

a) Independent stores

The retailing shops operated under the ownership of a single

person is called independent stores. Because such retailing
institutions are operated under the management, ownership,
direction and control of a person, they are called independent
stores.

Advantages VS Disadvantages:
Advantages
 Flexibility in choosing merchandise,
Flexibility in choosing Locations
strategy Control over investment costs and personnel
functions,
Flexibility in price
independence Strong entrepreneurial leadership
Disadvantages
Lack of bargaining power
Lack of economies of scale
Labor intensive operations
Over-dependence on owner
Limited long-run planning

b). Chain stores

`Chain stores are those multiple retailing institutions, which are
operated under same ownership and management. Stores are
opened at different places and they are operated under the
management and control of companys central office.

Advantages VS Disadvantages:
Advantages
High degree of bargaining power due to volume of
purchase.
Cost efficiencies
Efficiency from computerization,
Efficiency from sharing warehouse and other functions
Defined management philosophy
Considerable efforts in long-run planning

Disadvantages

Limited flexibility
Higher investment costs
Complex managerial control
Limited independence among personnel

c). FRANCHISING
 Franchising A contractual agreement between a franchisor
and a retail franchisee, which allows the franchisee to
conduct business under an established name and according to
a given pattern of business Franchisee pays an initial fee and a
monthly percentage of gross sales in exchange for the
exclusive rights to sell goods and services in an area

Franchise Formats:
I )Product/ Trademark -

Franchisee acquires the identity of a franchisor by agreeing to sell

products and/or operate under the franchisor name Franchisee
operates autonomously Ex: AUTO DEALERS

ii) Business Format

Franchisee receives assistance: for location, quality control, accounting systems,

start-up practices, management training . Ex. Common for restaurants, real
estate

Advantages VS Disadvantages:
Advantages

small capital required

acquire well-known names
operating/management skills taught
cooperative marketing possible
exclusive selling rights
less costly per unit

Disadvantages

Locked by contractual agreement and premature exit

Profit sharing- paying a % of gross sales regardless of profits.
No specific individual USP
From the Franchisors Perspective:
Benefits
National or global presence
Payment regardless of sale of goods by the franchisee

Disadvantages

Poor performance by an outlet hampers the franchisors image.

Lack of standardization
High degree of supervision reqd

d) LEASED DEPARTMENTS-

A leased department is a department in a retail store rented by a Manufacturer

The Manufacturer is responsible for running the department These help the
stores in generating greater traffic and provide one stop shopping Ex: Food
Courts, ATMs

Advantages and disadvantages-of head deptt

Advantages

This increase the sale of the retail store

Best utilization of the store
One stop shopping for the customer
Increasing merchandize range
Less responsibility of head dept.

Disadvantage-

Sometime way of functioning lead to conflict with owners.

Sometimes mismanagement brings down the stores image
Policies of head dept might impact the ideas of leased dept.

Advantages and disadvantages-of leased deptt

Advantages

Leased deptt. Get readymade customers.

Reduced cost
Synergy effects from good image

Disadvantages
 Inflexibility in shopping hours and operating style
Restriction of products

e)Vertical market system

Vertical marketing systems consist of all the levels of independently owned firms along a
channel of distribution. Independent systems have separately owned manufacturers,
wholesalers, and retailers.

In partially integrated systems, two separately owned firms, usually

manufacturers and retailers, perform all production and distribution functions.

With fully integrated systems, single firms do all production and distribution
functions.

Some firms use dual marketing, whereby they are involved in more than one type
of system.

f)Consumer cooperative/ Consumer stores

Consumer cooperatives are owned by their customers, who
invest, elect officers, manage operations, and share savings or
profits. They account for a tiny piece of retail sales. Cooperatives
are formed because consumers think they can do retailing
functions, traditional retailers are inadequate, and prices are
high. They have not grown because consumer initiative is
required, expertise may be lacking, expectations have frequently
not been met, and boredom occurs.
The consumers in association establish such retailing shops to get rid of
the exploitation of middlemen. Generally, consumer stores purchase
goods directly from producers and sell them to its members at cheap rate.

Horizontal marketing system

2. On the Basis of Merchandise offered

a). Departmental Stores:
A departmental store is a large scale retail institution that offers several
products from a pin to plane such as clothing, grocery etc. Retail
establishment that sells a wide variety of goods.

Departmental stores are the largest form of organized retailing today,

located mainly in metro cities, in proximity to urban outskirts. They lend
an ideal shopping experience with an amalgamation of product, service
and entertainment, all under a common roof. Examples include
Shoppers Stop, Piramyd, Pantaloon.

b) Convenience stores:
These are relatively small stores located near the residential area.
They offer limited line of convenient products such A ` store is a
small store or shop that sells items such as candy, ice-cream, soft
drinks, lottery tickets, cigarettes and other tobacco products,
newspapers and magazines, along with a selection of processed
food and perhaps some groceries, etc.

Such stores enable the customers to make quick purchase and offer
them few services. They stock a limited range of high-turnover
convenience products and are usually open for extended periods during
the day; Prices are slightly higher due to the convenience premium.

c). Super Market:

These are retail organisations that provide low cost high volume self-
service operation to meet consumer requirements. Most of the super
market charge lower price. Example: Subhiksha.
They are the large self-service outlets, catering to varied shopper
needs. These are located in or near residential high streets. A
supermarket, also called a grocery store, is a self-service store offering
a wide variety of food and household merchandise, organized into
department.

It is larger in size and has a wider selection than a traditional grocery

store and it is smaller than a hypermarket or superstore. Supermarkets
usually offer products at low prices by reducing their economic margins

d). Hyper Market:

A hypermarket is a superstore which combines a supermarket and a

department store. Hyper markets are huge retail stores that offer various
products such as clothes, jeweler, stationery, electronic goods at
cheaper price. Example: Big Bazaar, Star Bazaar, Giant Stores etc.
They focus on high volume.

e) Specialty stores:

A specialty store is a store, usually retail, that offers specific and

specialized types of items. They offer a narrow product line that
concentrates on specialised products such as jeweler, fabrics, furniture
etc. Customer service and satisfaction are given due importance.

For example, a store that exclusively sells cell phones or video games
would be considered specialized. A specialty store specializes in one
area.

3. Types of retailers on the basis of volume of sales

Retailers can be divided in two classes on the basis of volume of sales as
follows:

i. Small-scale retailers
The retailers who buy and sell small quantity of goods are called small-
scale retailers. Mostly, the small-scale retailers who operate business
under sole ownership or partnership firms keep small stock of goods.
They purchase necessary goods from wholesalers and sell to local
consumers.

ii. Large-scale retailers

The retailers who buy large amount of goods, keep in store and sell them
are called large-scale retailers. Such businessmen give emphasis to
division of labor and specialization to bring effectiveness in their business.
The financial position of such retailers remain relatively strong and have
risk bearing capacity.

4. Types of retailers on the basis of method of operation

On the basis of method of operation, retailers can be classified as follows:

i In-store retailing
The retailers who sell different goods opening their shops are called
shopkeepers or in-store retailers. Customers buy necessary goods going
to retailers' shops. The retailers from small-scale retailing shops to large-
scale retailing shops like departmental stores, supermarkets, multiple
shops etc from which goods are sold to final consumers, include in in-
store retailing class.

ii. Non-store retailing

Nowadays, retailers are found selling different goods to consumers
without establishing any shop. Similarly, the practice of selling
goods visiting door to door of customers is not a new. Other main
methods of selling goods without opening any shop are retailing through
mail and use of vending machine.
B. Non-Store Retailing:

A direct relationship of the retailer with his customer is on the basis of

non-store Retailing. In India around twenty percent of retail sale is from
non-store. The proportion of non store is growing steadily.

It is classified as under:

1. Direct Selling:

Direct selling is a retail channel for the distribution of goods and

services. There is no fixed retail location. In direct selling there is a
direct contact of the retailer with his ultimate customers.

It is highly an interactive form of retailing. Products like cosmetics,

jewellery, food items are sold in such manner. The retailers visit home
place or work place of the customers to sell the products. It is also
known as network marketing where the products and services are sold
face to face.

2. Mail order:
It is a retail format in which offerings are communicated to the
customers through a catalogue, letters or brouchers. Such retailing is
suitable for specialty products. The buyer places an order for the
desired products with the merchant through a telephone call or website.
Internet and online payment options, has made shop from home easier.

3. Tele Marketing:
It is a form of retailing in which the products are advertised on television.
Details about the product in regard to its features, price, warranty,
direction to use etc. are mentioned and explained. Phone numbers are
provided due to which customers can make a call and place an order for
the product.

4. Automatic Vending:
This is a form of non store retailing in which the products are stored in a
machine and dispensed to the customers when they deposit cash.
Vending machines are placed at convenient and busy locations like air
ports, shopping malls, working place etc. This machine primarily
contains products like chocolates, snacks and drinks etc.

5. Electronic retailing:
It is also called as e-tailing or internet retailing. It is a retail format in
which products are offered to the customers through internet. The
customers can evaluate and purchase the products from their homes or
office place. This kind of retail is gaining importance in recent years.

Choosing a Retail Store Location

Retail location is considered to be one of the most important

elements in retail marketing strategy, because it is a long-
term decision, associated with long-term capital
commitment. The selection of retail store locations is one of
the most significant decisions in retail marketing, because in
store based retailing, good locations are key elements for
attracting customers to the outlets and sometimes can even
compensate for a mediocre retail strategy mix. A good
location therefore can lead to strong competitive
advantages, bec ause location is considered one of the
elements of the retail marketing mix that is unique and
thus cannot be imitated by competitors.

Types of locations
There are three basic types of locations available for retail
stores: (1)solitary sites,

(2)unplanned shopping areas

(3)planned shopping districts.

Each of the basic location types is associated with specific

advantages and disadvantages according to, for example,
the size of the catchment area, occupancy costs, pedestrian
or vehicle customer traffic, restrictions placed on store
operations or convenience of the location.

1.Solitary Sites (Free-Standing Sites, Isolated Sites)-

This type of location relates to single, free standing outlets

that are isolated from other retailers. They can, for example,
be positioned on roads or near other retailers or shopping
centres. Such sites are used, for instance, by large store
formats in food and non food retailing or for convenience
shops.

2.Unplanned Shopping Areas-

 Unplanned shopping areas are retail locations with several
outlets in close proximity to each other that have evolved
over time. The retail mix is not the result of long range
planning and for such locations, there is no centralized
management. The main kinds of unplanned shopping areas
are

(1)central business districts (traditional downtown areas in

cities/towns), (2)secondary business districts in larger cities
and main street or high street locations in smaller cities,

(3)neighbourhood districts, and

(4)strip or string locations (locations along a street or

motorway).

3.Planned Shopping Districts/Shopping Centres

Planned shopping areas are retail locations that have been

architecturally planned to provide a unified theme for a
number of outlets. These sites are developed deliberately
and usually have some large, key retail brand stores
(anchor stores) and a number of smaller retailers to add
diversity and special interest.

The basic types of shopping centres are retail parks that

consist of a purpose built cluster of free standing retail
outlets. There are(large)parking facilities and shopping
centres that consist of single buildings which are marketed
as a unified shopping destination, usually with one name and
logo.

The retail mix is different from retail parks, as the range of

stores is wider and often includes luxury and leisure items as
well as clothing, footwear and other typical central location
merchandise.
Several specific types of retail parks and shopping centres
have been developed:

(1) neighbourhood or strip/community centres that are

typically anchored by a supermarket,

(2) power centres that consist primarily of large format

retailers,

(3) shopping malls that are enclosed, climate controlled and

lighted shopping centres (regional or super regional
shopping malls),

(4) lifestyle centres that encompass an open air

configuration of upscale specialty stores, entertainment and
restaurants,

(5) fashion/specialty centres that comprise mainly upmarket

clothing shops and boutiques carrying high quality and price
fashion merchandise,

(6) outlet centres that contain manufacturers and retailers

outlet stores or off price retailers, and

(7) theme or festival parks that typically employ a unified

theme carried by the retail outlets, their architectural design
and their merchandise and can be anchored by restaurants
or entertainment facilities.

The decision as to which kind of retail location to select

depends on the companys strategy. It is an integral part of
the retail location decision process.

Retail Location Decision Process

Retail location decisions typically follow a systematic process
that starts with a general assessment of geographic areas
and leads to a detailed assessment of specific site
characteristics. This process can broadly be described as a
three step selection process:

1. Market selection: The first step is the consideration of a

region that has potential for a new retail outlet.

2. Area analysis: Within the chosen region, a potentially

optimal area for the store is selected.

3. Site evaluation: In the chosen geographical area, the best

available site(s) are examined in terms of all features that
are relevant to potential store performance. This step
concludes with a final decision as to the specific site

To choose a particular site for retail store , following

points should be taken care of

Type of Goods
Examine what kind of products you sell, as some goods will require certain types
of locations. Would your store be considered a convenience store, a specialty shop
or a shopping store?

Convenience goods require easy access, allowing the customer to quickly make a
purchase. A mall would not be a good location for convenience goods. This
product type is lower priced and purchased by a wide range of customers.

Specialty goods are more unique than most products and customers generally
won't mind traveling out of the way to purchase this type of product. This type of
store may also do well near other shopping stores.

A shopping store usually sells items at a higher price which are bought
infrequently by the customer. Furniture, cars and upscale clothing are examples of
goods found at a shopping store. Because the prices of theses items are higher, this
type of customer will want to compare prices before making a purchase.

Therefore, retailers will do well to locate their store near like stores.
Population and Your Customer
If you are choosing a city or state to locate your retail store, research the area
thoroughly before making a final decision. Read local papers and speak to other
small businesses in the area. Obtain location demographics from the local
library, chamber of commerce or the Census Bureau. Any of these sources should
have information on the area's population, income, and age. You know who your
customers are, so make sure you find a location where your customers live, work
and shop.

Accessibility, Visibility, and Traffic

Don't confuse a lot of traffic for a lot of customers. Retailers want to be located
where there are many shoppers but only if that shopper meets the definition of
their target market. Small retail stores may benefit from the traffic of nearby larger
stores.

How many people walk or drive past the location.

Is the area served by public transportation?

Can customers and delivery trucks easily get in and out of

the parking lot?

Is there adequate parking?

Depending on the type of business, it would be wise to have somewhere between 5

to 8 parking spaces per 1,000 square feet of retail space.

When considering visibility, look at the location from the customer's viewpoint.
Can the store be seen from the main flow of traffic? Will your sign be easily seen?
In many cases, the better visibility your retail store has, the less advertising
needed. A specialty retail store located six miles out of town in a free-standing
building will need more marketing than a shopping store located in a mall.

Signage, Zoning, and Planning

Before signing a lease, be sure you understand all the rules, policies and
procedures related to your retail store location. Contact the local city hall and
zoning commission for information on regulations regarding signage. Ask about
any restrictions that may affect your retail operation and any future planning that
could change traffic, such as highway construction.

Competition and Neighbors

Other area businesses in your prospective location can actually help or hurt your
retail shop. Determine if the types of businesses nearby are compatible you're your
store. For example, a high-end fashion boutique may not be successful next door
to a discount variety store. Place it next to a nail or hair salon and it may do much
more business.

Location Costs
Besides the base rent, consider all costs involved when choosing a retail store
location.

Who pays for lawn care, building maintenance, utilities, and

security?

Who pays for the upkeep and repair of the heating/air units?

If the location is remote, how much additional marketing will

it take for customers to find you?

How much is the average utility bill?

Will you need to make any repairs, do any painting or

remodeling to have the location fit your needs?

Will the retailer be responsible for property taxes?

The location you can afford now and what you can afford in the future should
vary. It is difficult to create sales projects on a new business, but one way to get
help in determining how much rent you can pay is to find out what sales similar
retail businesses are making and how much rent they're paying.

Personal Factors
If you plan to work in your store, think about your personality, the distance from
the shop to home and other personal considerations. If you spend much of
your time traveling to and from work, the commute may overshadow the
exhilaration of being your own boss. Also, many restrictions placed on a tenant by
a landlord, management company or community can hamper a retailer's
independence.

Special Considerations
Your retail shop may require special considerations. Make a list of any unique
characteristic of your business that may need to be addressed.

Will the store require special lighting, fixtures or other

hardware installed?

Are restrooms for staff and customers available?

Is there adequate fire and police protection for the area?

Is there sanitation service available?

Do the parking lot and building exterior have adequate

lighting?

Does the building have a canopy that provides shelter if

raining?

What is the crime rate in the area?

Are there (blue laws) restrictions on Sunday sales?

Don't feel rushed into making a decision on where to put your retail store. Take
your time, research the area and have patience. If you have to change your
schedule and push back the date of the store's opening, then do so. Waiting to find
the perfect store location is better than just settling for the first place that comes
along. The wrong location choice could be devastating to your retail business.

Importance Of Retail Site Selection

Retail site selection is a very important decision. First, a location is usually one of the
most important elements customers use in choosing a store. Second, when chosen, a
retailer must live with the site for many years because it is expensive. Lastly, because
great sites are acquired by other retailers, it is mostly hard to find them.[

For a retail enterprise, location may result as succeess or failure. But a good location is
related with target market, rivals and costs.[

At retail business, achievement or failure is related with the features of trade area
surrounding the location. Sales in retail stores are not only related with the numbers of
families and people next to the trade area, but also the costumers come from abroad

Lastly, the site may be in a shopping center. In such a case, the retailer can generally be
sure that it will have the suitable mix of neighbors, sufficient parking places, and fine
traffic. But, in some cases, the retailer must realize the situation in which the center is not
correctly planned. It is hard to gain in a shopping center where most of the places are not
hired.

The critical side of channel strategy is the location of store. Proper places give chance to
easy transportation, attracts lots of customers and they change customers shopping and
buying concepts.

Retailers have to be careful while choosing store location because of two reasons. First of
them is that it is a so important element for customer choosing store,. Most of us would
buy food from the store which is closest to us. Second of them is, location is important
for retailers to exploit development survivable competition advantage. Retailers can
easily change prices, services and good diversity. Nevertheless it s not easy for them to
change their conclusion about the location. Because they realize so important investments
to develop or purchase a real estate. Maybe they made long term renting contract with
project improvers. Because of this retailers, having wonderful locations, have the
competition advantage which can not be imitated easily.

Store Layout and Design

Customer buying behavior is an important point of consideration while
designing store layout. The objectives of store layout and design are

 It should attract customers.

It should help the customers to locate the products effortlessly.

It should help the customers spend longer time in the store.

It should motivate customers to make unplanned, impulsive purchases.

It should influence the customers buying behavior.

.

The straight floor plan is an excellent store layout for

most any type of retail store. It makes use of the walls and
fixtures to create small spaces within the retail store. The
straight floor plan is one of the most economical store
designs.

The diagonal floor plan is a good store layout for self-

service types of retail stores. It offers excellent visibility
for cashiers and customers. The diagonal floor plan invites
movement and traffic flow to the retail store.

The angular floor plan is best used for high-end

specialty stores. The curves and angles of fixtures and
walls are makes for a more expensive store design.
However, the soft angles create better traffic flow
throughout the retail store.
The geometric floor plan is a suitable store design for
clothing and apparel shops. It uses racks and fixtures to
create an interesting and out-of-theordinary type of store
design without a high cost.

The mixed floor plan incorporates the straight, diagonal

and angular floor plans to create the most functional store
design. The layout moves traffic towards the walls and
back of the store.

Importance of a Store Layout

A stores layout is one of the key strategies in its success.
Therefore, a lot of time, effort and manpower go into its
design. Retailers use layout to influence customers
behavior by designing the stores flow, merchandise
placement and ambiance. Layouts also help retailers
understand how much revenue per square foot they are
making; using this information, they can properly assess
the strengths and weaknesses in their merchandising mix.
Types of Layout
1. Grid Layout:

Grid Layout is a type of store layout in which

counters and fixtures are placed in long rows or
runs, usually at right angles, throughout the
store. Following are the advantages and
disadvantages of Grid layout.
Advantages
Low cost
Customer familiarity
Merchandise exposure
Ease of cleaning
Simplified security
Possibility of self-service

Disadvantages
Plain and uninteresting
Limited browsing
 Stimulation of rushed shopping behavior
Limited

this type of layout used in grocery or drug

stores.

2. Diagonal Layout:

Diagonal layouts are very similar to grid layouts.

Like a grid layout, the merchandise in the store is
separated into aisles which lead to the checkout
area. However, in a diagonal layout, the aisles are
set at an angle to the front entrance of the store.
Doing this helps maximize the space available in a
smaller store.
3. Mouse Trap Layout:
In a mouse trap layout, when customers enter the
store there is only one direction to go. Customers
walk around the perimeter of the store, stopping
to pick up items they need until they reach the
checkout aisles located where they originally
entered. Mouse trap layouts are often used in
furniture stores
and are considered a more traditional style
store layout.

4. Mixed Floor Plan:

A mixed floor plan layout incorporates different
types of layouts throughout the store. This is often
seen in a department store setting where different
floor plans work better depending on the type of
merchandise on display in that particular area.
For example, the house wares section of a
department store might use a grid layout while the
clothing sections work better with a race track
layout. Having the flexibility to use different
layouts for each type of merchandise ensures that
 customers find what they are looking for quickly
and easily in every department.

5. Free Flow Layout:

FreeFlow Layout is a type of store layout in which

fixtures and merchandise are grouped into free-
flowing patterns on the sales floor.

Advantages
Allowance for browsing and wandering freely
Increased impulse purchases
Visual appeal Flexibility

Disadvantages
Loitering encouraged
 Possible confusion
Waste of floor space
Cost
Difficulty of cleaning
For a spacious store layout that's flexible and
ideal for displaying impulse items, opt for a free
flow store layout. Arrange products throughout the
store using racks and shelves placed so that
customers can move around the browse freely and
employees can access customers immediately to
assist with buying decisions. A free flow store
layout is ideal for clothing stores, jewelry stores,
boutiques and small specialty shops. Use caution
with this type of layout because it can appear
cluttered, instead of spacious and free moving, if
product displays and racks aren't situated to
maximize space.

6. . Loop Layout:

Loop Layout is also known as Racetrack layout. It

is a type of store layout in which a major customer
aisle begins at the entrance, loops.
 through the store, usually in the shape of a circle,
square, or rectangle, and then returns the
customer the front of the store.

7. Spine Layout:
Spine Layout is a type of store layout in which a
single main aisle runs from the front to the back of
the store, transporting customers in both
directions, and where on either side of this spine,
merchandise departments using either a free-flow
or grid pattern branch off toward the back aisle
walls. A store's layout displays the overall image of
the store and creates the perception that
customers have about the store's environment.
The image of the store not only attracts
customers, but it also causes them to purchase
goods while shopping there.

Store Design
Both internal and external factors matter when it comes to store
design.

Interior Design

The store interior is the area where customers actually look for
products and make purchases. It directly contributes to influence
customer decision making. In includes the following

Clear and adequate walking space, separate from product display area.

Free standing displays: Fixtures, rotary displays, or mannequins installed

to attract customers attention and bring them to the store.

End caps: These displays at the end of the aisles can be used to display
promotional offers.
 Windows and doors can provide visual messages about merchandise on
sale.

Proper lighting at the product display. For example, jewelry retail needs
more acute lighting.

Relevant signage with readable typefaces and limited text for product
categories, for promotional schemes, and at Point of Sale (POS) that
guides customers decision-making process. It can also include hanging
signage for enhancing visibility.

Sitting area for a few differently abled people or senior citizens.

Exterior Design

This area outside the store is as much important as the interior of the
store. It communicates with the customer on who the retailer is and
what it stands for. The exterior includes

Name of the store, which tells the world that it exists. It can be a plain
painted board or as fancy as an aesthetically designed digital board of
the outlet.

The store entrance: Standard or automatic, glass, wood, or metal? Width

of the entrance.

The cleanliness of the area around the store.

The aesthetics used to draw the customers inside the store.

OBJECTIVES OF STORE DESIGN

Designing a store layout includes deciding the best

methods of presenting goods to the customer. Goods
are presented either on shelving units, hanging from
something, on pegboard, stacked or placed on dump
 tables. The methods determined are designed to
optimize sales volumes.

Some objectives for a store design are to

1. Implement the retailer's strategy,
2. Influence customer buying behavior,
3. Provide flexibility,
4. Control design and maintenance costs, and
5. Meet legal requirements.
6.To guide the customer around the store to increase
purchase.
7.To create balance between sales and shopping space.
8. To create effective merchandising Presentation.
9. Use multi level to Provide sense and variety.

To develop the good store layout, stores designers must balance

objectives that often conflict. For examples, the store layout should
entice costumers to move around the store to purchase more
merchandise than they may have originally planned
However the layout is to complex, customers may find it difficult to
locate the merchandise they are looking for and decide not to
patronize the store.

Factors Affecting Store Layout

1. Stock/inventory level
2. Degree of changes in operation.
3. Target customers and the average no. of customers
visiting the store.
4. Movement required in the store locating, picking, storing
the product.
5. Mode of Operation
6. Volume and variety ratio in the product line carried
7. Number of department in store .
 8. Types of Product/Merchandise offered by the store
9. Total space Available.

RETAILING IMAGE MIX/ STORE IMAGE

Image can be described as the overall look of a store and the series of mental pictures and
feelings it evokes within the beholder. For the retailer, developing a powerful image provides
the opportunity to embody a single message, stand out from the competition and be
remembered.

Studies indicate that a retailer has roughly seven seconds to capture the attention of a
passing customer. The following elements combine to form a distinctive image that not only
reaches out and grabs the customer' s attention, but makes a positive impression within
those precious few seconds.

The Image-makers:
1. An Identifiable Store Name
2. A Powerful Visual Trademark
3. An Unmistakable Storefront
4. An Inviting Entrance
5. A Consistent and Compelling Store Look and Hook

1. Identifiable Store Names What's in a Name?

An effective store name sets the tone and provides a store' s identification by conjuring up an
image in the customer's mind.

A store name should be easy to say and remember, indicative of the images and feelings
you want the customer to retain and unlikely to sound dated in a few years.

2. Powerful Visual Trademarks

On Your Mark An identifiable trademark adds a visual image to the memory recall of a store
name, by combining words and pictures, colour, shape, typeface, texture and/or style to
make it stand out. Identifiable even in the absence of the store name, a successful
trademark should be unique to you, indicative of your products and services, consistent with
the overall impression you want to leave customers and be professional and well-designed.

3. Unmistakable Storefronts Traffic-Stoppers

Customers simply don't have the time to "read" into the store, so just as your store name and
trademark -- the title of your" book" -- must provide instant recognition and recall, your
exterior storefront -- the cover of your "book" -- must project a welcoming, clear and concise
image of what' s in-store.

Traffic-stopping storefronts use a thoughtful combination of exterior architecture, signing and

window displays to ensure a powerful first impression.

Exterior Architecture
A store's exterior look is often referred to as the architecture, and comprises aspects such as
building materials, architectural style and detail, colours and textures. A store in a Victorian
brownstone building, for example, will exude images associated with the building' s
architectural era, such as cozy, tastefully cluttered and comfortable.

If your exterior architecture is not projecting the right image, consider painting or re-facing
the storefront, adding or removing some architectural elements in keeping with your image,
or consulting a designer to totally re-engineer the storefront.

The Store Sign

The store sign is a vital element of the storefront, identifying your store and beckoning the
customer to take notice and stop. In realizing the value of a strong storefront sign, many
retailers are employing new design techniques which include projecting the store sign
beyond the lease line, adding motion, or using three-dimensional lettering and unique
lighting applications to add depth to the sign.

If your storefront sign is losing the battle for visual dominance among neighbouring stores,
consider re-painting it or adding more colour, making it bigger and bolder, incorporating your
trademark, using new, more contemporary materials to create your sign, and/or adding
motion or lighting.

Store Windows
A store's exterior windows or glass storefront provide an additional opportunity to reach out
and grab the passing customer. Windows are integral in creating a positive impression since
they offer an opportunity to begin telling your store's unique merchandise story immediately.

Many retailers underestimate the powerful pull of an effective window, treating the area more
as additional stock space than the true image-maker and magnet it can be. This prime real
estate should be approached as a showcase for the newest seasonal merchandise
dramatized with props and themes in keeping with your store image.

Consider adding motion to your window with animated displays, turntables, fans, video
screens or motorized pulleys.

The Customer's Vantage Point

In planning your storefront, utmost consideration must be given to the customer's vantage
point. Place yourself in the customer's shoes in considering their reverie -- the speed at
which they are traveling, their preoccupation-levels and the chances of getting them to stop.
The more hurried and distracted a customer is, the less chance there is of getting their
attention.

To increase the chances of customers noticing your store, consider the following: What
direction and angle is the customer coming from? Is your exterior sign visible and legible
from a distance? Is the traffic predominantly drive by or walk by? Are there any discernible
traffic patterns and at what speed are they moving at various times of the day? Are your
store windows easy to read from the distance the customer will first notice them?

One brilliant pet retailer made sure that dog-walkers didn't pass by his store -- he placed an
antique fire hydrant right beside his entrance!

4. The Store Entrance

The entrance to the store is the division between the outside and inside environments. Mall
retailers have an easier chance of luring customers into the store with a wide, open
entrance, creating a seamless entry from the mall to the store. Retailers who depend largely
on impulse traffic should try to create an open storefront, either by removing storefront
barriers completely or by creating an unobstructed view into the store with a glass frontage.

Street retailers and some mall tenants who require portals due to climate control or a need
for intimacy or security, have less opportunity to give customers a tantalizing taste of the
interior, therefore have a greater challenge of persuading them through the door. For these
retailer, an unobstructed and welcoming doorway combined with a great window display can
provide the lure.

In all types of store entrances, customer's need to get the impression that they (and their
children) will be comfortable and welcome. Obstacle courses, visual clutter and "Do Not"
signs on the doors are negative turn-offs that often result in a negative first impression and a
lost customer.

Multiplying Positive Impressions

Creating a consistent positive impression is important -- particularly so if you have more than
one store. Customers should be able to recognize and identify with your store, Even if your
multiple locations differ in size, shape, design and even merchandise mix, you can create
continuity of image by having common elements throughout the chain. Consider applying the
same store trademark to all of your marketing, storefront and in-store applications, extending
some common exterior elements to all of your stores and/or using similar props, treatments
and themes in your store windows.

5. By Look or by Hook Getting the Customer In

Within the first few seconds of catching their interest, the customer' s focus moves beyond
the store's exterior for a visual scan of the interior while they mull over whether to enter or
not. Getting a customer through the door is indeed a victory.
In most instances, customers are either on a mission to make a planned purchase (the
Seekers), or are shopping for amusement, entertainment or ideas (the Browsers).

Seekers may plan a trip to your store to make a premeditated purchase or may decide to
enter because they are comparison shopping for something specific. For the seeker, a
deeper look into the store must reinforce their confidence that the store will have what they
are seeking and that they can get in and out easily and quickly.

Browsers are more inclined to enter a store impulsively, drawn by the overall impression that
a store has something they should check out. For the browser, a further look into the store
must plant a seed of interest and hook them in.

For both seekers and browsers, the deeper glance into the store and the resulting decision --
to enter, or not -- is often attributed to the overall store look and a compelling hook.

A Visual Look
An inviting entrance is crucial in stopping the customer and establishing a positive first
impression, but if the inside store messages create feelings of inconsistency or confusion, all
is lost. For example, a clear and well-articulated store entrance that is followed up with a
barrage of inconsistent aisle patterns, sloppy merchandising and confusing signs signals to
the customer that the exterior image will not be fulfilled on the inside. Truly impressive stores
are consistent in all efforts from the storefront right through to the stockroom.

A Visual Hook
A visual hook is a call to action that diverts a customer's attention to your store with a "Stop!
There's something here for you!" Powerful visual hooks are created by marrying other visual
merchandising components for a more memorable first impression.

Well-executed hooks hold tremendous appeal for the customer, particularly the browser. A
fashion retailer, for example, recently created a compelling hook for one promotion using the
sights, sounds and smells of the Orient. Sales associates posted at the entrance offered
fortune cookies containing discount coupons to customers. Large colourful posters, banners
and Oriental art and props throughout the store windows and interior carried the theme
further. Even the air was filled with the subtle sounds of Oriental stringed instruments and
lightest whiff of incense.

Just like the above example, many of today's retailers are extending their store hooks into
the realm of sensory appeal for a total image package. But to ensure the result is
appropriate, you need to understand the psychological effect of sight, sound and smell on
the consumers.
 Retail Management - Space

Space management is one of the crucial challenges faced by todays

retail managers. A well-organized shopping place increases
productivity of inventory, enhances customers shopping experience,
reduces operating costs, and increases financial performance of the
retail store. It also elevates the chances of customer loyalty.

Let us see, how space management is important and how retailers

manage it.

What is Space Management?

It is the process of managing the floor space adequately to facilitate
the customers and to increase the sale. Since store space is a limited
resource, it needs to be used wisely.

Space management is very crucial in retail as the sales volume and

gross profitability depends on the amount of space used to generate
those sales.

Optimum Space Use

While allocating the space to various products, the managers need to
consider the following points

Product Category

o Profit builders High profit margins-low sales products. Allocate

quality space rather than quantity.

o Star performers Products exceeding sales and profit margins.

Allocate large amount of quality space.
 o Space wasters Low sales-low profit margins products. Put
them at the top or bottom of shelves.

o Traffic builders High sales-low profit margins products. These

products need to be displayed close to impulse products.

Size, shape, and weight of the product.

Product adjacencies It means which products can coexist on display?

Product life on the shelf.

Retail Floor Space

Here are the steps to take into consideration for using floor space
effectively

Measure the total area of space available.

Divide this area into selling and non-selling areas such as aisle, storage,
promotional displays, customer support cell, (trial rooms in case of
clothing retail) and billing counters.

Create a Planogram, a pictorial diagram that depicts how and where to

place specific retail products on shelves or displays in order to increase
customer purchases.

Allocate the selling space to each product category. Determine the

amount of space for a particular category by considering historical and
forecasted sales data. Determine the space for billing counter by
referring historical customer volume data. In case of clothing retail,
allocate a separate space for trial rooms that is near the product display
but away from the billing area.

Determine the location of the product categories within the space. This
helps the customers to locate the required product easily.
 Decide product adjacencies logically. This facilitates multiple product
purchase. For example, pasta sauces and spices are kept near raw pasta
packets.

Make use of irregular shaped corner space wisely. Some products such as
domestic cleaning devices or garden furniture can stand in a corner.

Allocate space for promotional displays and schemes facing towards road
to notify and attract the customers. Use glass walls or doors wisely for
promotion.

IMPORTANCE FOR RETAIL SPACE MANAGEMENT

A well-planned and properly designed retail floor achieves a great

deal for the store:
a) It enables a smooth and efficient customer flow into the
store and within it. The design of the fixtures, the placement
of merchandise and the fixtures on the floor too direct
customers through the store.

b) It helps the customer reach and access the merchandise he

is looking for, without fail.

c) (c) The aesthetics of a well-planned floor are a visual feast

for the customer and trigger the come-back feeling in him,
as he feels a sense of belonging in the store,

d) (d) It helps creates a feeling of comfort in the minds of

customers, enabling them to waltz their way through
without facing any bottlenecks on the way.
 e) (It is said that generally the customer, while walking through
the retail floor, thinks of the benefits he is going to get from
his prospective purchase and feels happy about the right
choice, he is currently making).

f) (e) A well laid out floor, in essence, helps the store to sell
more effectively and retain customers.

Effectively retail space management is critical to the

successful operation of a retail store, as more and more
sales from the same space would lead to increased margins
for the organisation. According to R. Sriram, formar MD and
CEO of Crossword : Space Planning is integral to the
success of any retail store since the biggest investment in
retail is in space.

Unit- iv (retail marketing )

Retail Advertising & Retail Promotion Ideas

Two approaches may be used to increase both customer traffic

in your store and the sale of specific items or merchandise
lines. These approaches, best used in conjunction with each
other, are:
 Retail advertising - which addresses those potential
customers who are not within the store

In-store promotions - which can attract the attention of

customers within the store or via window displays

Retail Advertising - Retail Promotion

Although the primary purpose of this section is to discuss
merchandise management, advertising is so important to the
concept that its inclusion, though brief, is necessary.

There are two major types of advertising:

Advertising to acquaint potential buyers with the special

features of a product. With many industries, advertising of
this type is done by the manufacturer of the product. Quite
often, however, the retailer must do some of this advertising.
When this occurs, it is often necessary to work with an
advertising agency so they may help you write the copy
(wording) such that the advertising will bring the best results.
Such advertising concentrates almost solely on the single
featured product.

Advertising the availability and price of nationally

known merchandise. Much retail advertising is merely
directed at letting potential customers know that the product is
available and informing the customer of special prices or
promotions which may encourage her/him to buy, at your
store. This is perhaps best done through 'Omnibus' ads which
feature many products, their prices, and brief slogans about
their benefits. Consumers very often "shop" such ads and will
come into your store to buy one or two of the items listed.
While there, they buy other things on impulse
Whatever your message may be, there are many ways to
advertise - depending on how much information you wish to
impart to prospective consumers, what kind of information
(audio and/or visual), and how many consumers you wish to
reach.

Retailers who cater to local clientele may use advertising

methods such as:

In-house flyers indicating products and bargains

Signs both internal and external to the store

Informative in-house displays of merchandise

Direct mail advertising

Local newspapers

Distribution of flyers by hand or using the local

newspaper deliveries (some papers have such
arrangements)

Those retailers who wish to launch a large scale campaign

may, of course, resort to advertising via radio, television,
or widely circulated newspapers.

It is very important to remember that for any kind of

advertising, single ads bring very sparse results. In order
to make an advertising campaign successful, it is usually
necessary to advertise repeatedly (five or six times
during a one to two week period) to acquaint consumers
with your service or product and, most important, with
your store. It is also necessary to maintain a regular
program of advertising throughout the year in order to
continue bringing customers into the store.
Continual experimentation is necessary to determine which
approaches are best. Although proper advertising may involve
an initially high expense, if it succeeds both in drawing more
clientele into your store and in increasing sales in both
advertised and unadvertised products, the initial investment
may more than pay for itself.

Once advertising has brought the consumer into your store,

promotion and sales efforts must transfer the customer's
attention and interest into desire and action to buy.

In-Store Promotion

Promoting merchandise may often be achieved by special

arrangements with a manufacturer or a wholesaler. Often new
merchandise will be offered at low introductory prices and the
manufacturer or wholesaler will provide the retailer with
special informative displays of the product as well as offer
special rewards to the consumer.

Many times a manufacturer will not offer displays but you will
want to promote certain merchandise nevertheless. Basic ways
through which you may create your own in-store promotions
are:

window displays

special in-store displays

signs and posters

personal selling efforts

Retail Displays
Both in-house displays of merchandise and advertising displays
should be:

attention getting in coloration and layout

informative in regard to the product

either a direct or subtle sales pitch to convince the

customer that he or she needs the product

informative of price, especially if it is a 'special price'

Both display advertising and in-house displays often do well

to feature a number of related products, some of which may or
may not be on sale.

Past studies in advertising have shown that a person's eye is

generally attracted to the center of a display, then off to the
right of center and lastly reaches the edge of the display. It is
therefore good practice to place a featured item, which may be
on sale, at the center of the display and another product for
which you most wish to generate sales, to the immediate right
of the featured item. Other related products may be placed
outward from around the center of the display.

When creating a display, it is important to tie-in merchandise

lines with one another wherever possible. In this way,
customers who are in the market for a specific product are also
exposed to many related products and accessories which they
will often buy. Such tie-in displays also create a more
organized appearance of your store and will make products
easier to find. For example, a person looking for toothpaste
might be more likely to buy a toothbrush, dental floss, or
mouthwash if those products are in close proximity to the
toothpaste.
Tie-in displays also help to generate impulse buying. Quite
often an advertised or 'sale' product will draw people into the
store who will buy not only the advertised product but will also
buy, on impulse, other unadvertised merchandise. Sales are
often helpful to impulse buying since, when people feel they
are getting a good bargain, they are often likely to reciprocate
by purchasing other merchandise from you with money saved
from the sale

Sales Effort

All promotions and attempts to interest customers in new

lines, new products, or in special sales, will work better if they
are supported with sales effort. For example, just before a
product is rung up at the cash register, it is always a good idea
to ask a customer whether he or she knows of a special sale,
knows of a special product you are promoting, or could use
something that goes well with the things the customer has
already purchased.

If such reminders are given in a friendly way without being

persistent, many customers will make additional inquiries and
often additional purchases.

ON-THE-JOB ACTIVITY

For your next in-store promotion, you might try using a tie-in
display, with the featured item in the center of the display,
surrounded by related products or accessories.

If possible, discuss your ideas with a person knowledgeable in

advertising; pursue any additional ideas which may arise from
such a discussion.
When creating a display, it is important to tie-in merchandise
lines with one another wherever possible. In this way,
customers who are in the market for a specific product are also
exposed to many related products and accessories which they
will often buy. Such tie-in displays also create a more
organized appearance of your store and will make products
easier to find. For example, a person looking for toothpaste
might be more likely to buy a toothbrush, dental floss, or
mouthwash if those products are in close proximity to the
toothpaste.

Tie-in displays also help to generate impulse buying. Quite

often an advertised or 'sale' product will draw people into the
store who will buy not only the advertised product but will also
buy, on impulse, other unadvertised merchandise. Sales are
often helpful to impulse buying since, when people feel they
are getting a good bargain, they are often likely to reciprocate
by purchasing other merchandise from you with money saved
from the sale.

Retail Marketing Strategy

A retailer needs to decide as to what it wants to achieve for its
customers. It has to decide the target market and then select the
appropriate combination of product, price, place and promotion.

Some of the best retailing strategies to to decide the target market

and then select the appropriate combination of product, price,
place and promotion are as follows:
Retail positioning
This involves choice of target market and differential advantage. Target
market means to choose the segment market to which co wants to deal
with for ex. Woman 35 to 55 Who Want Comfortable, Casual, But
Stylish Apparel .
Targeting allows retailers to tailor the marketing mix which includes
product assortment, service levels, store locations, prices and
promotion, to the needs of their chosen customer segments

Differentiation provides a reason to the customer to shop at one store

rather than at another.. Retail positioning comes from novelty in the
processes of shopping offered to the customers and novelty in the
product assortment or both.

Novelty in the process offered to the shopper:

The way a store facilitates a shopper to make his choice of products
and brands, the way he is able to access the items in the store, and the
way he makes his payments, determine a customers satisfaction with a
store.

But a customer does not want a similar treatment for all his purchases
and on all occasions when he visits the store. For some products, his
choice of brand may be very clear, and a salespersons attempt to help
him would only irritate him.

But for some other products, the same customer would solicit help of
salespersons in making a choice among brands and would welcome a
salespersons attempt to influence his purchase. For some purchases,
the customer would like his favourite brand to be placed prominently on
the shelf.

But when he does not have a clear brand choice, he would not mind
some clutter on the shelves because he wants all the brands to be
available. Most customers would prefer to be allowed to pay their bills
as early as possible but on some occasions they would be more tolerant
of delays than on others.

Customers would be finicky about delays in making payments when

they are rushing home after office but they would be more relaxed
during their weekend shopping trips. While it is not easy to distinguish
between customers and their purchase occasions, the retailer will have
to make judgments about the expectations of a customer when he walks
into the store.
It will be a good idea to allocate a particular salesperson to a customer,
i.e., when a customer walks in he is always served by a particular
salesperson rather than different salespersons depending on what he
proposes to buy.

Such salespersons specialize in a product category and assist any

customer who is interested in the category. Under the new arrangement,
all salespersons would have to know enough about all the product
categories but would know more about the purchasing behaviour of a
set of customers allocated to them.

Novelty in the product/product assortment offered to

the shopper:
A retail shop has to be known for being of a certain type. A store may be
famous for being very prompt in stocking the latest or the most
fashionable product. Another may be known for stocking all possible
variety in a category and yet another may be famous for stocking the
most premium brands.

A store would become too unwieldy if it tries to have too many different
types of assortments. A store which stocks the latest products in a
category will also be able to stock the most premium brands of the
category but the attention of the company will be divided and it will be
difficult to handle relationships with diverse suppliers whose business
philosophies are different. Such a strategy will also send conflicting
signals to customers as to what the store really stocks well.
2. Location of the retail store:

For some products like groceries, consumers do not like to go to a far

away store. Therefore, store location has great influence on sales
performance of such products. A retailer has to decide whether it will be
a standalone store in a city, or will it open stores to cover a designated
area like a city, state or country. A retailer may decide to open one store
in each city.

The retailer has to buy from distributors to replenish its stocks. Or it

decides to open as many stores as a city can sustain, and moves to
another city and again opens as many stores as that city can sustain.
Therefore, it covers cities one by one, instead of opening one store in
each city. It opens a distribution centre in each city.

The distribution centre receives supplies for all the stores in the city in a
single truck from each supplier. Smaller lots of each of these supplies
are loaded on trucks bound for each store. The retailer buys from the
manufacturer directly, and does not have to buy from distributors.

A retailers choice of a city depends upon factors like its congruence

with its chosen target market, the level of disposable income, the
availability of suitable sites and level of competition. A retailers choice
of a particular site in a city depends on level of existing traffic passing
the site, parking facilities, presence of competitors and possible
opportunities to form new retailing centres with other outlets. When two
or more non-competing retailers agree to site outlets together, the
retailing centre can draw more customers than what each individual
store would have been able to do.

More than proximity to customers, the location of a store is important in

terms of how often the target customers are likely to visit the site as they
live their lives. The lifestyle of the target customers, and the goods and
services that they buy will decide whether they will visit the site or not,
and how often.

Being in the place which the customer will visit in pursuance of his
lifestyle will ensure that the customer will walk into the store. This aspect
is important because customers are combining purchases of different
genre of goods and combining purchases of goods and pursuance of
entertainment.

3. Product assortment and services:

A retailer has to decide on the breadth of its product assortment, and

also its depth. A retailer may have a broad product assortment, but
within each product line, it can stock a shallow product range. Or it can
have a narrow product assortment, but within each product line, it can
stock a deep product range.

Therefore, a retailers choice of product assortment ranges from

stocking one deep product line to stocking a broad range of products
including toys, cosmetics, jewellery, clothes, electrical goods and
household accessories. A retailer begins with one or limited product
lines and gradually broadens product assortment to be able to sell more
products to customers who come to its store.
Petrol stations start out as fuel providers, and expand by adding
provision stores or food outlets to maximize the revenue that can be
obtained from the customer. Some stations on the highway may also
add a Cineplex to make their retail outlet a one-stop entertainment and
utility centre for the customer.

By expanding its product assortment, a retailer reduces price sensitivity

of customers because a traveller stops at a petrol station as he can buy
an assortment of products, and not because its fuel cost is low. A
retailers decision of the product assortment that he will stock will
depend on its positioning strategy, the expectation that its customers
have come to have of it, and also on the profitability of product lines that
it carries.

It may be prompted to drop slow moving unprofitable lines unless they

are necessary to conform with the range of products expected by its
customers. A retailer also has to decide whether it will sell only
manufacturer brands, or it will have its own label or store brands. Most
manufacturers may sell own label brands products to compliment
manufacturer brands.

Retailers need to consider the nature and degree of customer service.

Degree of service can vary from customers being expected to search for
their items to elaborate displays and suggestions from sales personnel.
Retail outlets for expensive items like cars provide elaborate services in
the forms of product displays, test drives and arrangement of loans,
whereas in a discount store, customers would have to select their items,
sometimes from heaps of merchandise.
Service levels have to be higher when customer knowledge levels are
low, expertise is required to buy the right product (that the customer
lacks), the products are expensive (money spent in relation to
customers disposable incomes are high).

The retailer can also use service levels as a means of differentiating his
offer when the product assortment is similar to those of competitors. For
instance, a cosmetics store can employ its personnel as grooming
advisors to help a customer choose relevant products from the store.

4. Price:

A retailer may choose to compete purely on price, but price can be a

differential advantage only when a retailer has immense buying power,
and has been able to control cost. A retailer may favour everyday low
prices rather than higher prices supplemented by price discounts.

Such a retailer is patronized by customers who prefer predictable low

prices rather than occasional price discounts. A retailer may sell no-frill
products, which are basic commodities such as bread and soft drinks
that are sold in rudimentary packaging at low prices. It appeals to the
price conscious shopper who wants standard products at low prices.

Some retail items may be priced very competitively to generate more

demand for other items. Such products may often be sold below cost
and are called loss leader.

The idea is that the customers get attracted to the low price of the loss
leader and walk in the store to buy the item but may end up buying
many more items. The items chosen for inclusion should be widely
known and bought on frequent basis.

5. Promotion:

Retail promotion includes advertising, public relations, publicity and

sales promotion. The goal is to position the store in consumers minds.
Retailers design ads, stage special events and develop promotions
aimed at their markets.

A stores opening is a carefully orchestrated blend of advertising,

merchandising, goodwill and glitter. All the elements of an opening
press coverage, special events, media advertising and store displays
are carefully planned.

Retail advertising is carried out at the local level, although retail chains
can advertise nationally. Local advertising by retailers provides specific
information about their stores, such as location, merchandise, hours,
prices and special sales. In contrast, national retail advertising generally
focuses on image.

A popular retail advertising practice is cooperative advertising. Under

cooperative advertising, manufacturers pay retailers to feature their
products in store mailers or the manufacturer develops a TV or print ad
campaign and includes the name of the retailers carrying the product at
the end.

Many retailers are avoiding media advertising in favour of direct-mail or

frequent shopper programmes. The frequent shopper programmes offer
perks ranging from gift certificates to special sales for most frequent
shoppers. Direct-mail and catalogue programmes may be a cost
effective method of increasing store loyalty and spending by core
customers.

6. Store atmosphere:

Store atmosphere is created by the design, colour and layout of a store.

A retailer works on both exterior and interior designs to create an
appropriate store atmosphere. The store atmosphere should prompt
target customers to visit the store and stimulate them to buy once they
are in the store.

External designs include architectural design, signs, window display and

use of colour that create identity for a retailer. The image which is
projected should be consonant with the ethos of the store. For instance,
a kids store is usually bright, vibrant (may be in the shape of Mickey
Mouse) and colourful to attract the child and make him want to buy
things in the store.

Such a store should generally have lots of space for the child to move
around and explore his world. Even the salespeople should match the
childs temperament. They should be playful. Interior design like store
lighting, fixtures and fittings as well as layout, affect store atmosphere.

If a store has narrow aisles, it appears congested and unclean, the

customers may not like to spend too much time in such an environment.
A poorly lit store is uninviting.
Colour, sound and smell affect mood of customers, and customers stay
longer in stores which are colourful, plays good music and smells good.
People attribute different meanings to different colours, and a retailer
uses colours to create the desired atmosphere in the store. Music can
be used to create a relaxed atmosphere, and make the customers linger
on in the store.

CRM (Customer Relationship Management )

Definition:
Customer Relationship Management (CRM) refers to the methodologies and
tools that help businesses manage customer relationships in an organized way.

CRM systems are collaborative; the gathering of data through all phases of the
customer relationship (marketing, sales, and service) provides a complete picture,
allowing business owners/managers to make informed decisions.

For small businesses, customer relationship management includes:

1. Processes that help identify and target their best customers, generate quality
sales leads, and plan and implement marketing campaigns with clear goals and
objectives;

2. Processes that help form individualized relationships with customers (to

improve customer satisfaction) and provide the highest level of customer service
to the most profitable customers;

3. Processes that provide employees with the information they need to know their
customers' wants and needs, and build relationships between the company and
its customers.
What Kinds of Data Are Recorded by a CRM System?
The key to an effective CRM system is comprehensive data collection. For
example, sales groups cannot properly respond to the customers wants/needs
without customer data from service groups, and vice-versa. CRM data includes the
following:

Contact details

Customer name

Customer contact information email, physical address,

phone/mobile, website address, social media contact
information such as Facebook page, LinkedIn profile, etc.
Includes preferred method of contact.

How the customer became aware of your company (web

search, newspaper ads, word of mouth, etc.)

Customer Personal Profile

Family information - can be used to send

birthday/anniversary/Christmas wishes, etc.

Hobbies - useful for rewarding your best customers with (for

example) a golf or ski pass or Christmas gift.

Group memberships, associations - can be useful for

generating sales leads with associates of the customer.

This type of information is normally obtained over time as you grow relationships
with customers.

Sales history

Products/services purchased, including date/time and

transaction amounts.

Method of payment (Paypal, cash, check, credit card).

 If purchases made on credit, details of credit terms and
history of credit payments.

Response to ad campaigns, promotions, etc.

This information is very useful for analytical purposes. For example, salespeople
can examine the frequency of purchases by a customer and send out reminders.
Purchase behavior can also be used to tailoring product offerings to suit customer
preferences. Customer responses to ad campaigns and promotions is can be used
to fine tuning your marketing strategy. Credit payment history can be useful
when issues of late payment arise.

Customer communication

How does the customer normally get in touch? Do they

prefer email, text, or phone communication? Do they
promptly return phone calls, text messages, or emails?

All communications with the customer should be noted -

digital contact (texts or email) should be filed, and a record
should be kept of phone calls to sales, service or customer
support.

Linking your email with the CRM system is a must - most CRM systems have
built-in or thirrd party add-on capability to integrate with popular email clients
such as Microsoft Outlook.

Customer Feedback

Customer complaints, product returns, and details of calls

for support should be recorded, as well as followup
information (was the issue resolved to the customer
satisfaction, or was there a refund, etc.)

Response to customer surveys.

Has the customer rated your products or services in an

online rating site or in social media?

Has the customer taken his business elsewhere and if

so, which competitor and why? (price, service, etc.). This
 can be taken from information received from the customer
directly or anecdotally.

Customer satisfaction metrics can point out a variety of issues that must be
addressed:

Repeated returns or complaints can point out particular

products that are defective or unreliable.

Product/service pricing that is not competitive.

Poor customer service - not responsive to phone or email

requests, products/services not delivered as promised,
customer complaints not properly dealt with, poorly trained
staff, and not "going the extra mile".
RETAIL BUYING FUNCTION
Introduction
The retail buying process, and those involved, play an
important role in the value chain as they ultimately
determine which products and brands are made available to
the consumer. Historically role of retail buying has been to
make decisions about which products to buy and which
suppliers to buy from, but now the retail buying process is
also increasingly involved in generating revenue from these
purchases. The modern retail buyer is now involved in
activities previously undertaken by the commercial,
operational and sales functions eg product development,
market analysis, sales forecasting and range, assortment,
and brand management.

The Role of the Retail Buyer and the Tasks in the Retail
Buying Process

One of the most common themes in the retail buying

literature is the exploration of the role of the retail buyer and
the tasks involved in the retail buying process.

These stages are typically regarded as part of a linear,

sequential process and comprise various forms of:

problem recognition (through internal or external stimuli); i

product specification;

supplier search;

supplier choice;

supplier evaluation

supplier selection;
 order specification;

and performance review.

In traditional buying process , All of the stages will feature in

the case of a new-task buy, (i.e. when both the product
being purchased is new and the potential supplier is not
known), but when products are re-bought some of the stages
in the sequence are un-necessary. For example, in the case
of a modified re-buy, when the same item is required but a
new supplier is sought, or in the case of a straight re-buy,
where the same product is bought from the same supplier.

But today the buying function is divided in to into five

major areas:

Planning forecasting, setting objectives, formulating

policies and standards (within a retailers overall
merchandise strategy), developing schedules and converting
estimates into budgets.

Organising - delegating key tasks within the buying unit.

Line organisation relates to the direct chain of command for
the buying function. Staff organisation refers to those
individuals who may advise others, but do not necessarily
have the power to enforce their ideas or decisions - this
group may include category managers, designers and space
planners

Co-ordinating - implementing, guiding and shaping the

buying plan. This may involve the observance of company
policy in range development and the balance within and
between merchandise groups and related categories. The
timing of merchandise deliveries both into the warehouse
and into the store(s) is another important co-ordinating task

Achieving - range selection and negotiation. This area is

most closely aligned with the traditional buy phase
approach outlined above and the traditional role and tasks of
the retail buyer.

Control - measuring the above and using corrective action

as appropriate (eg promotions, discounts, wastage.

Analysis of past sales and promotions analysing sales

reports and stock levels, analysing customer purchasing
patterns, predicting future trends, wants and desires
Planning financial budgets constructing sales and purchase
plans, assessing gross margins and stock levels, modelling
markdowns and markups

Developing merchandise constructing merchandise

assortments, selecting and pricing merchandise, meeting
vendors, sourcing private labels

Vendor planning and negotiations selecting vendors and

building relationships, replenish stock

Integrating marketing plans develop merchandising

plans, promotional activities etc, plans for sale

Training and development of staff providing information

to sales staff, planograms

So in other terms we can say that retail merchandising has become more wider
scope as compared to the old traditional retail merchandising. The focus is not
only buying the products but it also includes sales performances .

BUYING CENTRE AND DECISION MAKING UNIT

buying centre or decision- making unit (DMU) which

comprises a number of actors who each have a role in the
buying process.These are

User - on whose behalf a product is purchased.

 Influencer - who may be a specialist who advises on the
problem, perhaps in a technical capacity
Decider - who has ultimate responsibility for the
purchase decision.
Buyer - who is involved with day-to-day activity with
potential suppliers eg negotiation. A buyer in this
context may or may not be a decider.
Gatekeeper - through which information on particular
issues, say on products or markets, is distributed.
Potentially a gatekeeper can be an inhibiting factor in
the buyer-supplier relationship.

In grocery retailing most buying has been traditionally

undertaken by a buying committee.
A buying committee consists of two or more persons who
make joint decisions on the purchase of products made
available for resale through stores or other channels.
The buying committee approach also reduces the impact of
individual relationships (between a buyer and a supplier) on
decision making.
Buying centres are inevitably multi-faceted and dynamic in
nature (Johnston and Bonoma, 1981; Ghingold and Wilson,
1998) with decisions carried out by combinations of different
individuals referring to different criteria and at different
points in time.
The more interaction a buyer has with a supplier, the more
likely that supplier loyalty will develop and purchases will
continue to be made from that supplier.

ORGANISATIONAL INTEGRATION

Three forms of organisational integration which impact on

the buying process
1. VERTICAL INTEGRATION-
If buying is conducted centrally within a strongly vertically integrated
chain then it is called vertical integration. This buying process will
vary considerably from the model where store managers select at the
local level. The number of decision makers is dramatically reduced
potentially to one and the degree of central control, range
consistency and cost\efficiency is increased. Increased vertical
integration of retailing and supply chains in general is a common trend
in most market.
2. HORIZONTAL INTEGRATION-
The degree of co-ordination between stores within an organisation. A
wholly owned chain will exhibit a greater degree of horizontal
integration than a co-operative or federal organisational structure.
3. INTERNAL INTEGRATION-
The buying task is organised internally. The lower the degree of
vertical and horizontal integration, the more complex and
elaborate the process is likely to be. Inevitably there will be
more functions, activities, and decision makers to co-ordinate.