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RETAIL & MALL MANAGEMENT

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WHY RETAIL???
Provide employment to 8% of total workforce. Growth of Retail sector :-From US $ 410 billion in 2008 ,Indian Retail is expected to grow US $ 535 billion by 2018. Highest retail density 12 million retail outlets for a population of over 1000 million Contribution in GDP

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Manufacturers Perspective
The Four Ps of Marketing
Retailers Retailersare are part part of of the the distribution channel channel distribution Product

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Distribution

Price

Promotion

Retailing

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Retailing a set of business activities that adds value to the products and services sold to consumers for their personal or family use.
According to Kotler: Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non business use

How Retailers Add Value

The value of the product and service increases as the retailer performs functions.

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PROVIDING AN ASSORTMENT

PROVIDING SERVICES HOLDING INVENTORY BREAKING BULK

How Retailers Add Value

The value of the product and service increases as the retailer performs functions.

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Doll can be bought on credit or put on layaway Doll is featured on floor display Doll is offered in convenient locations in Doll is developed in quantities of one several styles Doll is developed at manufacturer

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The Nature of Retailing

Retailers Organizations that purchase products for the purpose of reselling them to ultimate consumers Retailing Transactions in which ultimate consumers are the buyers Retailers create utilitytime, place, possession, and form Success in retailing comes from having a strong customer focus coupled with desired levels of service, product quality, and innovation.

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Manufacturing, Wholesaling and Retailing

Vertical Integration firm performs more than one set of activities Ex: retailer invests in wholesaling or manufacturing Backward Integration retailer performs some distribution and manufacturing activities Forward Integration manufacturers undertake retailing activities

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RETAIL BENEFITS
CONSUMERS MANUFACTURERS /WHOLESALERS
Physical deterioration Fashion change Technological obsolescence

BULK BREAKING ASSORTMENT STORING SERVICES

ABSORBS RISKS

Reasons for changing retail landscape Amity Business School

Rise of Consumerism Enhanced experience Increased Convenience Introduction of private label Advent of technology

Table 1.2

Private labels of Bharti Wal-Mart

Great Value George Home Trends Mainstays Kid Connection Faded Glory Athletic Works Astitva Food Apparel Furnishing Plastic Containers, Kitchen accessories Toys, Clothing Footwear Athletic Shoes Indian Ethnic wear

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Aditya Birla Group

Feasters More

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Fruit squash,biscuits,fruit syrup,Instant fruit mix, Noodles Various groceries

110 Toilet cleaners, Detergent Soaps percent Paradise Room and Air Freshener Fresh-odent Toothpaste and toothbrush

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Food and FMCG Men Apparel Koryo

Fresh n Pure,Cleanmate,Tastytreat,Caremate, Sach Brands DJ& C,Knighthood,John Miller Refrigerators, washing machines, ACs, Fans, Toasters

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Decode Consumer Behavior

Offering Discounts Lowering Prices Offering Value Added Services Leveraging Partnerships

CABs- CUSTOMER ADVISORY BOARDS Big Bazaar

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Customer Experience Life-Cycle

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Classifying Customer Service

HIGH HIGH Value of Service to The Shopper
PATRONAGE BUILDERS High cost activities that are primary factors behind customer loyalty

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LOW
PATRONAGE SOLIDIFIERS Low cost little things that increase loyalty

LOW

DISAPPOINTERS Expensive Services that do not real good

BASICS Low cost activities that are naturally expected

Cost of Offering Customer Service

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What Level of Customer Services complement a firms image? Should there be a choice of Customer Services Should Customer Services be free? How can a retailer measure the benefits of providing Customer Services against their costs? How can Customer Services be terminated?

Reevaluating Expansion Plans

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Industry Evolution in India

Traditionally retailing in India can be traced to The emergence of the neighborhood Kirana stores catering to the convenience of the consumers Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission 1980s experienced slow change as India began to open up economy.

Historic/Rural Reach

Traditional/Pervasiv e Reach

Evolution of Indian Amity Business School retail

Government Supported Modern Formats/ International

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas

Weekly Markets Village Fairs Melas

Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency

Evolution of Organized Retailing

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RETAIL MIX

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STORE DESIGN AND DISPLAY STORE LOCATION CUSTOMER SERVICE COMMUNICATION MIX PRICING MERCHANDISE ASSORTMENT

Evolution of Retail FormatsAmity Business School

1852 Bon Marche the first department store was set up in Paris (Volume sales and money back guarantee) Late 1800 Rise of 5 and 10 cents stores served the needs of poor class. 1859 First grocery chain store A&P (Atlantic and Pacific) store 1870 Montgomery Ward - First mail order catalogue 1916 Self service concept Piggly Wiggly store in Memphis 1930s Emergence of Supermarkets

Emergence of Discount stores after World War II, to meet the needs of Blue collar workers.
First Hypermarket Carrefour in France in 1963

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CLASSIFICATION OF RETAIL ESTABLISMENTS

On the basis of ownership
INDEPENDENT CHAIN FRANCHISE LEASED DEPARTMENT VERTICAL MARKETING SYSTEM CONSUMER COOPERATIVE

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COMPETITIVE ADVANTAGE OF INDEPENDENTS FLEXIBILITY EASE OF ENTRY CONTROL OVER STRATEGIES INDEPENDENTS HAVE INDEPENDENCE SPECIALIST IN NICHE

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DISADVANTAGES OF INDEPENDENTS

BARGAINING POWER ECONOMIES OF SCALE LABOR INTENSIVE OPERATIONS LIMITED ACCESS TO MEDIA

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Classification of Retail Establishments

Chain
Operates multiple outlets under same ownership Engages in some level of organized / centralized buying & decision making High on bargaining power due to volume buying Can create private label brands Achieve economy in buying / warehousing High on investments due to spread Control is difficult due to dispersed location

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Classification of Retail Establishments

Leased Departments
Is a department in a retail store rented to a 3rd party
Usually specialized products / services are offered to broaden the merchandize / service offering e.g. chemist / photo-shop or cafeteria Pros / cons for both lessor & lessee

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Classification of Retail Establishments

Vertical Marketing System Network of several levels of independent owned businesses along a channel of distribution.
INDEPENDENT VERTICAL MARKETING SYSTEM PARTIALLY INTEGRATED SYSTEM FULLY INTEGRATED SYSTEM

CONSUMER COOPERATIVE
Retail firm owned by its customer members. Three Basic Reasons For Existence
Consumer feels they operate store better than traditional retailers. They think existing retailers inadequately fulfill customer needs. Retailer makes excessive profits.

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Amity Business School Store Based Retail Institutions

General merchandise retailers

Specialty stores Traditional department stores Full line discount store Variety store Off-price chain Factory outlet Membership Club Flea Markets

Amity Business School Store Based Retail Institutions

Food merchandise retailers

Convenience stores Conventional Supermarkets Food Based Superstore Combination store Box (Limited Line Store Warehouse stores

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Convenience Store Discounter Hypermarkets

6ten,EasyDay,Big Apple Margin Free market Big Bazaar,Star Bazaar,Reliance mart,Hypercity More, Reliance fresh, Nilgiris Foodworld

Supermarket

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Convenience store is typically a well located ,food-oriented retailer that is open for long hours and carries a moderate number of items. Conventional supermarket is a self service store with grocery meat and other departments.

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Food- Based Superstore is larger and more diversified than a conventional supermarket. Combination store unites supermarket and general merchandise .

Box store is a food based discounter.

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Retailing
Retailers Are Classified By:
Amount of service Product lines Relative prices Organizational approach
Self-service retailers
Customers are willing to self-serve to save money Discount stores

Limited-service retailers
Most department stores

Full-service retailers
Salespeople assist customers in every aspect of shopping experience High-end department stores Specialty stores

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Retailing
Retailers Are Classified By:
Amount of service Product lines Relative prices Organizational approach
Specialty stores
Narrow product lines with deep assortments

Department stores
Wide variety of product lines

Supermarkets Convenience stores

Limited line

Superstores
Food, nonfood, and services

Category killers
Giant specialty stores

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Retailing
Retailers Are Classified By:
Amount of service Product lines Relative prices Organizational approach
Discount stores
Low margins are offset by high volume

Off-price retailers
Independent off-price retailers
TJ Maxx, Marshalls

Factory outlets
Levi Strauss, Reebok

Warehouse clubs
Sams Club, Costco

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Retailing
Retailers Are Classified By:
Amount of service Product lines Relative prices Organizational approach
Discount stores
Low margins are offset by high volume

Off-price retailers
Independent off-price retailers
TJ Maxx, Marshalls

Factory outlets
Levi Strauss, Reebok

Warehouse clubs
Sams Club, Costco 14 - 46

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Retailing
Retailers Are Classified By:
Amount of service Product lines Relative prices Organizational approach
Corporate chain stores
Commonly owned / controlled

Voluntary chains
Wholesaler-sponsored groups of independent retailers

Retailer cooperatives
Groups of independent retailers who buy in bulk

Franchise organizations
Based on something unique

Non Traditional Retail Formats

Kiosks Airport Retailing Recycled Retailers Liquidators Hospital Retailing Car Boot Retailers

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Airport Retailing : Challenges

Increase in travel Increased duration the passenger need to spent in airport New international airports

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NON-STORE BASED RETAILING

Direct Marketing Direct Selling Vending Machines Electronic Retailing

ROLE OF WEB

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RETAILER IMAGE AND PRESENCE GEOGRAPHICAL SPREAD CUSTOMER SERVICE PROVIDE INFORMATION COST EFFICIENT

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Factors effecting Growth of E- retailing

Ease with which customer try innovation
Trying out Electronic shopping Perceived risk Social & Entertainment experience Ordering & Receiving Merchandise Number of Alternatives Cost of Merchandise

Benefits offered by innovation compared to present alternatives.

Customer Acquisition in E Retailing

Educate Guarantee Manage Expectations Customer Satisfaction

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MULTICHANNEL RETAILING
Why Multichannel Retailing????
Expanding Market Presence Leveraging Existing assets Overcoming Limitations of Existing formats Insights into customer Shopping Behavior Increasing Share of Wallet

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Issues in Multichannel Retailing

Brand Image Merchandise assortment Pricing

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Merchandise/Service Continuum

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Process of Format Selection

Shoppers Retailers objective Competitors

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Define value Preposition

Find out enablers and deterrents in environment

Find out what it takes to deliver the value preposition Decide on store or non store format

Store Choice Model For Evolving Markets

RISK REDUCER Proximity Quality of Merchandise Personal Relationship
CHOICE ENHANCER

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Convenience Availability and spread Design Format

SHOP EXPERIENCE ENHANCER Ambience Customer Service Entertainment

STORE PREFERENCE

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RETAIL INSTITUTIONS
THEORIES OF INSTITUTIONAL CHANGE (evolution of retailing through the Four Gears)

Wheel of retailing Retail accordion Dialectic Process Natural selection

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Wheel of retailing
Malcolm P McNairs Retail institutions changes takes place in a cyclical manner: New retailer often enters market (low-status, low profit margin, low price store formats) ,

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Cont.3 phases of this theory

Entry phase Trading-up phase Vulnerability phase
Elaborate facilities expected & essential & exotic services, Higher-rent locations ,fashion Orientation, higher prices, extended Product offerings
Top Heaviness, Conservatism, Declining ROI.
Trading up phase
Vulnerability phase

Traditional Retailer

Mature Retailer

NEW ENTRANT
ENTRY PHASE

Low status, low price ,minimal service , Minimal facilities & limited product offering

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DIALECTIC PROCESS ( OR MELTING POT THEORY)

Thomas j Maronick and Bruce J Walker According to this model retailers mutually adapt in the face of competition from opposites. When challenged by competitor with differential advantage (adopt strategies & tactics in the direction of that advantage thereby negating some of the innovators attraction)

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The innovator upgrade (modify products and institutions) The two retailers gradually moves together in terms of offerings, facilities, supplementary services & prices. They become indistinguishable or quite similar (synthesis) Established firm---Profits thru Economies of scale New firm ------- new technology (it gains competitive advantage)

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THE DIALECTIC PROCESS (diagram)

Specialty Store High margin Low turnover High price Full service Deep assortment Plush facilities

Category Killers Average margin Average turnover Low price Limited service Deep assotment

Discount Store Low margin, high turnover ,low price, No service

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This is the theory of retail institutional change --- Evolution process: outlets offering wide variety of merchandise to stores offering specialized products & then to wide variety of merchandise Merchandise mix strategies of retailers change, while the retail prices & margins remain the same

RETAIL ACCORDION THEORY

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Natural Selection theory

Based on the Darwins theory of evolution Retail institution should be flexible enough to adapt to the changing environment and should adapt its behavior to survive in the market RIGID Behavior (to change) stagnate and force the retail institution to exit Retail institution change product line, price ,location and promotional strategies (as per the retail environment)

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Its not the strongest of the species and not the wisest that survive, but the ones that are most responsive to change.
- Charles Darwin