RETAIL MANAGEMENT

Growing Importance of Retail Sector

Large and increasing contribution to GDP Economic importance more visible Major employer Retailers diversifying their activities Organisations growing on an international scale Blurring of areas of retail to include wider areas of business activity Size of operation allowing for supply chain control.

Characteristics of Retailing
There is direct end-user interaction in retailing. Sales at the retail level is generally in smaller unit sizes. Location is a critical factor in retail business. In most retail businesses services are as important as core product. It is the only point in the value chain to provide a platform for promotions.

Modern Retail In Expansion Phase

Initiation Conceptualization Expansion and Entry of Global Retailers Consolidation
Large Scale Consolidation Stiff Competition

I
Size of Industry
Manufacturers opening their own outlets

II
Pure play Retailers, realizing the potential start to test waters,

Entry of large global retailers

III

IV

Movement to Smaller Cities and Rural Areas

More Aggression from International Players

Expansion by leading Product Brands

Large Investment Commitments by large Indian corporates

More than 5-6 Players with Revenues in excess of US $ 700 mn Specialty Formats based on finer segmentation of the market Private brands getting established

Pre 1995

1995 to 2005

2005 to 2010

2010 Onwards

Types of Retail Formats

Mom and Pop Stores (e.g. kiryana stores) Department stores ( Shoppers stop) Specialty store ( Pizza Hut) Supermarkets (Wal-Mart,Big Bazaar) Convenience stores (In & Out)

E-tailors (e-bay,amazon.com)
Discount stores (Koutons) Full-line discounters or mass merchandisers Specialty discount stores or category killers

FUNCTIONS OF RETAILERS
UNDERSTANDING CUSTOMER NEEDS & WANTS PROVIDING ASSORTMENT OF GOODS SERVICES

PROVIDING SERVICES TO CUSTOMERS

FUNCTIONS OF RETAILERS

BREAKING BULK

HOLDING INVENTORY

PROVIDING INFORMATION TO SUPPLIERS

Retail Market Break-Up in 2008

Source: Technopak Analysis

India Retail Scenario

The Indian retail market is expected to be about US $ 535 Billion by 2013. With an anticipated US$ 30 Billion in fresh investments over next 5 years, modern retail will show impressive CAGR >40%

Modern R etail

R etail

G DP 2,135 1,487

1,161 783 8 280 410 18 2008 73 2013 (P ) 535 170 2018 (P )

All Figs in US$ billion

755

2003

Currently, Modern Retail Comprises a Small Percentage of Total Retail in India

Breakup of Modern and Traditional Retail

Breakup of categories within modern retail

Spending Shifting From Basic To Discretionary

Food & Grocery Rent, Utilities & Education Fuel, Transport & Communication Savings & Investment Discretionary Expenditure

32%

2013

32%

30% 2008 4% 10%

5% 11% 36%

20%

27%

20% The share of food and grocery in the

consumers wallet continues to drop releasing money for discretionary expenditure F&G share expected to decline from 36% in 2008 to 32% in 2013

4% 9%

2003 20%

40%

Source: India Consumer Trends 07, Technopak analysis

Despite Current Slowdown, Growth Opportunity For Retail & Consumer Products Is Still Intact
Medium and long term prospects for the Indian economy continue to be enthusing with strong domestic consumption and reduction in commodity prices, inflation, and lowering interest rates. Sectors such as Consumer Products, Food & Grocery, Consumer Appliances & Durables, QSRs, Healthcare, Education, etc. are still showing high growth prospects as reflected in their recent financial numbers. Modern Indian retail is currently experiencing a steep learning curve and the current turbulence is not entirely unexpected or undesirable. Retail will witness expansion, consolidation, acquisition and further entry of international chains between 2009-2013 giving further fillip to the overall growth of modern retail. Investment options will further increase as the Government will finally open up international investment in the retail sector during 2009-2013 period.

DEFINITION OF RETAILING
The term retailing is derived from the old French word retailler meaning a piece of or to cut up. Retail is: Any business that directs its marketing efforts towards satisfying the final consumer based upon the organisation of selling goods and services as a means of distribution.

Classification of Retail Units

Retail stores can be classified as per the following Nature of ownership: - Sole proprietorship, Partnership, Joint Venture Limited Liability company. On the basis of Operational Structure : - Independent Unit, Retail Chain, Franchise, Leased (s-in-s) departments, Co-operatives (Fair price) On the basis of retail Location : - Free Standing Retailers, In Business-associated location, planned shopping centers On the basis of Merchandise Mix.

Method of Customer Interaction

Type of Retailers

Store Retailers

Non-Stores Retailers

- Electronic Retailing - Catalogue & Direct Mail Retailing - Direct Selling

Person to Person Party Plan or Person Selling Multilevel Network - Vending Machines

Retail Marketing
The Nature of Retail Marketing:

The key aspects of retail marketing is an attitude of mind. In making retail marketing decisions, retailers must consider the needs of the customers. Retail marketing decisions are driven by what the shoppers need and want

Cont
Retail marketing is therefore a philosophy and is all about satisfying the customers What the customers regard as value and what they buy is decisive. What the customers buy determines the nature of the retailers business The essence of retail marketing is developing merchandise and services that satisfy specific needs of customers, and supplying them at prices that will yield profits. Retailers must take the customers needs into consideration in retail operation.

The concept of Retail Marketing

The retail marketing concept is the acceptance by the retailer that it is the customer and not demand that lie at the core of the retail organisation. The retail marketing concept is a philosophy, not a system of retailing or retail structure. It is founded on the belief that profitable retailing and satisfactory returns on investment can only be achieved by identifying, anticipating and satisfying customer needs and desires. It is an attitude of mind that places the customer at the very centre of retailing activities.

Retail marketing is stimulating, quick-paced, and influential.

It encompasses a wide range of activities including:

Environmental analysis Market research Consumer analysis Product planning etc.

Importance Of Marketing In Retailing

Marketing is a vital tool for every retailer, as it identifies current, unfulfilled needs and wants, which it defines and quantifies. Marketing determines which target groups the retailer should serve. Marketing could be seen as delivering an acceptable standard of living. Marketing can ensure complete satisfaction and sustained customer loyalty. Marketing depends on the efficient co-ordination of consumer prediction, product development, packaging design and influencing demand through appropriate communication medium. From these, a suitable mix is achieved.

Retail marketing objectives

The retail marketing objective is a performance parameter which has been explicitly stated. It can be stated in quantifiable terms and time terms so that results can be measured against it. Three types of retail objectives include: 1. Basic objective those which defines retailers longterm purposes. 2. Goals those which the retailer must achieve to be successful 3. Targets short-term goals that require immediate achievement.

Retail marketing mix

Retail marketing mix is the term used to describe the various elements and methods required to formulate and execute retail marketing strategy. Retail managers must determine the optimum mix of retailing activities and co-ordinate the elements of the mix. The aim of such coordination is for each store to have a distinct retail image in consumers mind. The mix may vary greatly according to the type of market the retailer is in, and the type of product/services.

The 3 Ps of Marketing (Extended Marketing mix)

Composition of key elements

Place Product Price Promotion People Process Physical Environment

Retail Marketing Mix

While many elements may make up a firms retail marketing mix, the essential elements may include:

Store location, merchandise assortments Store ambience, customer service, price, Communication with customers

Mix Personal selling Store image Store design Sales incentives People Process Physical evidence

Theories of Retail Development

Retail Development from the theoretical perspective:

No single theory can be universally applicable or acceptable. The application of each theory varies from market to market , depending on the level of maturity and the socio-economic conditions in that market.
The retail scenario keeps changing continuously. These changes are brought by ever changing customer requirement, economic development of the nation , falling borders, new technologies and by entrepreneurs.


1.

Growth in retail is a result of understanding market signals and responding to opportunities that arise in a dynamic manner. Theories of retail development can broadly be classified as:
Environmental: where a change in retail is attributed to the change in the environment in which the retailers operate.

2.

Cyclical : where change follows a pattern and phase can have definite identifiable attributes associated with them.
Conflictual: where the competition or conflict between two opposite types of retailers, leads to a new format being developed.

3.

 The Wheel Keeps On Turning And Department Stores, Supermarkets, And Mass Merchandise Went Through This Cycles

Mature retailer Top heavy Declining ROI

Innovative retailer Low status and price Minimum service Poor facilities Limited product offering

Traditional retailer Elaborate facilities Higher rent More locations Higher prices Extended product offerings

T Trading up phase

3. Conflict theory (dialectic Process) Conflict always exit between operators of similar formats or within broad retail categories. Retail innovation does not necessarily reduce the number of formats available to the consumer, instead , it leads to the development of more formats. Retailing involves through a dialectic process, i.e. blending of two opposite to creates a new format. This can be applied to development in retailing like;

A.

Thesis: Individual retailers as corner shops all across the country. Antithesis: A position opposed to the thesis develops over a period of time . (department store, discount store). The antithesis is a challenge to the Thesis. Synthesis: There is a blending of the Thesis and antithesis. The result position between the thesis and antithesis. Supermarkets and hypermarkets flourish. This synthesis for the next round of evolution.

B.

C.

Illustration
Antithesis

Thesis

Discount Store

Department Store

Discount Department Store