To understand what retailing is about To understand some theories in retail To visit the global retail scene and trends

To understand how relationships in retail work To understand about trade and retail formats To understand the types of retailers To learn about retail focus on categories To understand retail strategy guidelines To get a glimpse of retail management strategies

To understand other retail performance measures To look briefly in retail operations To learn about efficient consumer response To understand some retail initiatives in rural markets To look at franchising and e-retailing

Retail retaillier to break bulk The term retailer also implies that he deals directly with the end user or consumer Last link in the distribution channel the retailer has more knowledge of the customers aspirations and needs and can influence the end user buying decisions

The order sizes tend to be small but many Retailer caters to a wide variety of customers and needs to keep a large assortment of goods A lot of the buying in the retail outlet could be on impulse, hence, managing inventory is critical Retail store personnel and the goods displayed are important elements in the

The retailers strengths are ensuring availability and visibility of the product he sells The targeted customer mix decides the elements of the marketing mix which the retailer has to develop to optimize his investment

Any business entity selling products and services to consumers is retailing The goods may be sold in a shop, in person, by mail, on the internet, telephone or a vending machine It could be sold in a shop, on the street or in the home of the consumer

Just as for products, retail also has a life cycle Newer forms of retail come up to replace the old Retailing includes all activities involved in selling or renting consumer products and services directly to ultimate consumers for their personal or home consumption

A study of consumer buying habits found that 35% of supermarket purchases were specifically planned Impulse purchases, substitutions of one brand for another, generally planned purchases where consumers do not have a brand in mind These decisions are influenced by the quality of retailers merchandising efforts

Price (Value offered, credit, special discounts) Location (convenience, parking, safety, stores nearby) Product Selection (assortment, brands, quality) Special Services (home delivery, special orders, gift wrap, valet parking) Helpful Salespeople (courteous, knowledgeable, fast check-out) Fairness in Dealings (honesty, return privileges)

Ensuring awide variety of product offering Helping create time, place and possession utilities Added services (alteration service for a clothing store)

Retailers add value to products through:

Services: credit, delivery, extended store hours Personnel: identify and solve customer problems Location of store

Form of ownership sole, partnership, corporation Operational Structure independent, chain, franchise Service and Price Orientation full service, limited service, self-service, normal margin, discounted, off-price Merchandise Offering general, mass or specialty

Merchandise width - number of non-competing product lines

Specialty Stores narrow product line with deep assortment (apparel, furniture, books) Department Store Several product lines in different departments

Supermarket large, low-cost, low-margin, high volume, self-service operation with a wide offering Convenience Store small stores located in residential areas, open long hours all days of the week, offers limited variety of fast moving items

Discount Store standard merchandise sold at a lower price Franchise Organization Contractual arrangement between the producer and retailers to sell the producers products exclusively

Fastest growing industry in the world Has to constantly re-invent itself in new ways to thrive

Must consider bottom-up pressure exerted by consumer

Consumer decides which retailer is good for him based on whats new that the retailer can offer Retailer must innovate to ensure customer stickiness

Retailers can be wholesalers but the reverse is not possible Retailers focus on the cost and demand side of the business
Need to be profitable with optimum inventory Inventory turnover must be high even if margins are low Must optimize service levels

Traditional high margins, limited volume, providing personalized services to customers

Modern low margins, high volume, services are not personalized

Most critical point of purchase Has the power to influence buying decisions of customers Companies woo the retailers

Wheel of Retailing
Enumerates ways in which retail organizations change during their lifetime:
Stage 1- Retail outlet starts simple, with low prices and margins Stage 2 - It slowly increases prices and margins as image improves, services are added Stage 3 - Retailer eventually builds a premium image Stage 4 - This creates a gap in the market which gets filled by new outlets at stage 1

The Retail Accordion Theory

The general-specific-general theory Outlets start as general retailers Grows as a specialized retailer In time becomes even a bigger general retailer

Theory of Natural Selection

Evolution of retailers is influenced by environmental factors i.e. economic, demographic, legal, political and technological Retailers who adapt to these factors become successful

Retail Life Cycle

Retail is similar to product life cycle 4 stages
Innovation Quick growth Maturity Decline

Retail world is well organized in developed countries Considered a part of the service sector Service sectors contribution to GDP is very high

Before, manufacturers called the shots Today, modern retailers are gaining upper hand Modern retailers get quantity discounts, sell shelf display space and get special discounts on promotional stocks They put conditions on stocking and selling new products

They create their own private brand to compete with better known company brands on their shelves Advantages:
Lower price Higher margins for retailer If successful, gives better bargaining power to retailers Merchandising is simpler

Technology to help organize growing number of retail partners Less price cuts to retailers to avoid overstocking, focus on promotions on the consumer level Developing new products and pack sizes Own outlets

A successful retailer builds strong relationships between suppliers and customers Customer satisfaction is a result of total customer experience Total customer value = product value + service value + image value

Retailing is the process of reaching out to customers through suitable formats Format is the physical feature of the store and the services it provides Retailers use formats to distinguish themselves from each other

Location Format
Where the store is located in relation to the customer

Merchandise Based Formats

Based on what products the retail format offers (general or specialized)

Size Based Formats

Total space available in the store for the consumer to roam around in

Price Based Formats

Main attraction: low prices

Concession Based Formats

Franchising Smaller concessionaires complement the offerings of the major store

Ownership Based Formats

Classification is based on who owns the store Sole, partnership, corporation

Conventional Retailers
Avoiding price competition

General Stores
Carrying anything that can be sold in a reasonable volume

Single/Limited Line Stores

Specializing in a certain line of related products

Expanded Assortment and Service

Specialty Shops
Selling special types of products (sporting goods)

Department Stores
Combination of many limited line stores and specialty shops

Mass Merchandising Retailers

Supermarkets Catalogue showroom retailers

Discount Houses

Sell several lines out of a catalogue and display showroom with back-up inventories Offer a wide assortment of substantial price cuts Large self-service stores with many departments that focus on low margins but high turnover Very large stores that carry goods consumers purchase routinely

Mass Merchandisers Hypermarkets

Convenience-Focused Retailers

Convenience Stores Vending Machines Door-to-door selling Telephone and direct mail retailing Online selling

Categories basic unit for making merchandising and buying decisions Product lines carried by a retailer Category Management Focus Parameters
Efficient introduction of new products into the stores Running product promotions effectively Optimum store assortment reflecting trading area and customers needs

Customers needs are influenced by:

Characteristics of the consumer: age, occupation, location, economic status Buying pattern of consumers in products, brands, variants, pack sizes preferred How much time spent on shopping If sales promotions induce consumers to buy more Frequency of purchases

Fad generates high sales for a short period of time Basic products (staples) reflect continuous demand Seasonal Products only relevant in the appropriate seasons

Routine Categories
Customers use the retailer as the preferred vendor for these items (i.e. closest convenience stores for milk, bread, soda)

Destination Category
The customers first choice for specific products (i.e. GNC for health supplements)

Season Categories
Retailer selling seasonal merchandise

Category managers are responsible for their business and profitability Relevant points in managing categories:
Should reflect trading area of operation Survey trading area before setting up store Shelves should be stocked in an appealing manner Classification should reflect consumers preference All categories in the store must be visible to ensure multiple purchases and drive impulse buying

Selection of Vendor

Price Quality Reliability Time for processing orders Terms and conditions Ethics Quality inspection by sampling Negotiated terms Order and Delivery time Inventory holding rules Re-ordering costs

Selection of Merchandise

The retailer is able to provide service to customers by:

Merchandising The format used The communication process used

Merchandising
A set of activities involved in acquiring goods and services and making them available at the places, times and prices and quantity that enable a retailer to reach his goals
Merchandise Planning
Relates to merchandise variety and assortment Stock turnover ratio (cost of merchandise sold / average inventory value at cost)

Merchandising
Merchandising Strategy
Wide Assortment Strategy Deep Assortment Strategy

Category Management
The management of the retail business by looking at the performance of categories of products rather than brands or models

Positioning Strategy
Strategy is built around the identity the store develops in terms of what it has to offer to customers (products, Value added service)

Product Differentiation Strategy

Strategy is built around products offered

Operational Superiority
Strategy is built around streamlined processes within the store

Store Location
Used as a strategy for competitive advantage

Gross Margin Return on Inventory Investment

Gross Margin * sales to inventory ratio

Gross Margin per Full Time Equivalent Employee

Gauge if employees are maximized

Gross Margin per Square Foot

Measure of how well the floor space is being utilized