RM 115

RETAIL MANAGEMENT
RETAIL MANAGEMENT ..1
INTRODUCTION –
CONCEPTS, ROLE & ENVIRONMENT
RETAILING Business activities involve Selling Goods and
Services to Consumers for their Personal, Family or
Household use.
“Every sale of Goods and Services to final consumer” – Food
products, apparel, movie tickets; services from hair cutting
to e- ticketing.
 Retailing is the Last stage in Distribution Process-
Wholesale is an intermediate where Goods and services
are sold to Business customers.

Retailer is customer focused, not Product – focused.
Manufacturer may reach customers through:
Dealers
Company showrooms Super /
Hypermarkets
Manufacturers will decide on Retail Distribution:

Intensive
Selective
Exclusive
ORGANISED RETAILING
 In India Organised Retailing is 2%
 Retail sector highly fragmented
Retail chains like Wal Mart, Sears, McDonalds
brought Rapid Growth and consolidation of
Organised Retail
Rapid rise of Income levels and accompanying
 changes in lifestyles greatly contributed to growth
of Organised Retail
ORGANISED RETAILING
 In India, increase in Disposable
income, Purchasing Power of growing
Middle Class conducive conditions for
growth of Organised Retail
 Indian Retail environment different
from that of western countries:
-Cities congested, large population in
rural areas
-Smaller purchases, limited household
space
RETAILING CONCEPT
“Retaillier” French for breaking bulk Retailer links
Producers to Customers Retailer is a person, agent,
agency,
company or organisation reaching the
Goods or Services to ultimate consumer
Retailers perform specific activities:
 Anticipate customer wants Stock
product assortments Acquire market

information Finance Retail business
RETAILING CONCEPT
Retailing may take place through:
Retail Store
Mail Internet Direct
Sales
Door-to-door
Retail services like Restaurants, Hotels, Parlour, Health

Services, car rentals, Travel
In USA Retail generates $3 trillion through 23 mil.
Employees. Wal Mart generates $245 Bio. sales
through 1 Mio.nationally and .3 Mio. Foreigners.
 Strong economies have a strong
Retail sector
 Entry in retail sector is easy, hence
results in fierce competition
 Retail must perform its primary role
of catering to customer satisfaction
 Retail earns modest profits of
9-10%
 Retail stores of different sizes face
distinct challenges. Their sales
volume influences:
- Merchandise purchase
- Promotion & - Expenses Control
Last decade has seen tremendous changes in Retail

Business – from made to order to ready to wear,
from counter sales to self service, emphasis on value
addition and cost reduction.
Family run retail business giving way to modern
professional retail.
Retail improving inventory management through
systems – faster turnover, better profitability, fast
changing customer preferences for assortment of
goods and services. BETTER CUSTOMER CARE
GLOBAL RETAIL INDUSTRY
1. Retail sales driven by Ability (disposable income)

and willingness (consumer confidence)
2. Worldwide retail sales Est.$7 Trio.
3. Expenditure on Household Consumption
increased by 68% between 1980 and 1998
4. Top 200 retailers account for 30% worldwide
demand
5. Over 50 of the Fotune 500 and 25 of Asian Top
200 are Retailers
ORGANISED RETAIL FORMAT
1. By 2006 - 200 Shopping Malls – Up from 25 in 2003

2. Expect by 2006, to develop 40 mio.sq.ft.
quality Retail Space
3. 6 A Grade cities Delhi NCR, Mumbai, Bangalore,
Hyderabad, Chennai, Kolkata will have 34 mio. and
non metros Pune, Ahemadabad Ludhiana,
Chandigarh, Jaipur, Lucknow, indore, Cochin 6 mio.
4. Delhi NCR will have 26 mio., Mumbai
another 5 mio.
RETAIL CHARACTERISTICS
2. Direct End-User Interaction
3. Platform for Promotions & POP displays
4. Lower unit sales
5. Retail location critical
6. Services as important as Core Products
7. Large number of Retailers to meet geographical
coverage and population density
RETAIL EVOLUTION THEORIES
Four theories of evolution are:

4. Wheel of Retailing Cyclical
5. Accordion theory Theories
6. Dialectic Process Evolutionary
7. Natural selection Theories
Cyclical: Begin with one state and
return to that state at some time
in future
Evolutionary: Changes similar to
biological evolution
Wheel of Retailing
Wheel represents phases through which
some types of Retailers pass:
Retailers attract customers – low price, low
service
Expand market – More expensive
merchandise, More services, open More
convenient locations. Trading up process
increases costs & price of their
merchandise, creating opportunities for
new low price retailers to enter e.g.
Discount stores & category specialists
Some Retailers don’t begin as low price,
low service entrants, e.g. Upscale fashion
specialty stores.
THE ACCORDION THEORY
Retailers fluctuate from strategy of
offering wide merchandise with shallow
assortment to offering limited
categories with deep assortment
In rural markets, Retailers sell many
categories under one roof: shoes,
cosmetics, foods, cloth, medicines.
However the assortment is shallow and
customers have limited choice.
Department stores have both width and
depth of merchandise
Speciality stores carry special categories
with deep selection
DIALECTIC PROCESS
An evolutionary theory based on premise
that retail institutions evolve.
The theory suggests that new Retail
formats emerge by adopting
characteristics from other forms of
retailers in much the same way as the
child is the product of the pooled genes
of the parents.
Specialty stores with high margins, low
turnover plush operations
Discount stores with low margins, high
turnover low operations
Both the above were synthesized to form
category specialist stores.
NATURAL SELECTION
Those Retail Institutions Succeed which
adapt to changes in customers,
Technology, competition and legal
environment.
Department stores have tried to
combat specialty stores by opening
specialty counters within the stores.
Interest in physical fitness and
increased number of women in
workforce have made salad bars in
grocery stores successful.
RETAIL BUSINESS CLASSIFICATION
. Ownership Business:
Proprietorship,
Partnership,
Limited liability company
6. Operational Structure:
Independent Trader,
Chain Of Stores, Franchising,
Consumer Cooperative
9. Width & Depth Of Merchandise:
Specific Product Category
Wide Range
1. Type Of Pricing:
Low pricing, minimum Service
Premium Merchandise, High Service
Premium pricing, distinctive Image
5. Consumer Interaction:
Direct interaction
Mail Order
Tele-Selling
Vending machines
Door-to-door
Mobile Vending
 GROCERS - Major business is grains,
provisions, spices, edible oils. Grocers
may be dealing in many other items.
 GENERAL STORES - Deal in items
Daily needs and stocking number of
categories, is identified as a general
store.
 CHEMIST- Deal in Ethical
Pharmaceutical Products. Require a
license and a Qualified Pharmacist.
Such outlets also deal in diverse FMCG
products.
MODERN FORMAT STORE –
a)Part of a chain of stores with self-
service facilities
b)Part of a chain, but does not have
self-service Facilities
c)Stand-alone (not part of a chain)
with self-service facilities
FOOD STORE : Deal mainly in food
products - milk, beverages, tea,
coffee, squashes, ketchup, jams,
chocolates, biscuits, bakeries etc.
 TOBACCO KIOSK : Deal in tobacco
products like Paan, Cigarettes, etc. are
• called Pan Bidi shops. Many of
them also deal in packaged
consumer products like toilet
soaps, toothpaste, washing soaps,
biscuits, confectionery, batteries

etc.
• COSMETIC STORE : Deal in Ladies
Personal care products /
Cosmetics, General toiletry
RETAIL CONCEPT
Customer Orientation:
Attributes & Needs satisfaction

Coordinated Efforts:
Maximize Business Efficiency

Value driven:
Good Value for Money

Goal Orientation
Achieve Goals
RETAILING CONCEPT
 Communication with Customers
 Identify Customers Needs
 Provide Products and Services to
Satisfy Customers
 Elicit Feedback to Improve
Services – Word Of Mouth
RETAILING CONCEPT
Customer Service approach:
 Create a conducive environment
 Listen to your Customers
 Direct mail
 Relationship Marketing – Long Term
 Rewards for Regular Customers
ROLE
 Consumer spend their money at Retail
which drives the economy. Retailers

realize Revenue when Consumers buy
products or Services from them.
 The revenue passes up the Consumer
Goods distribution chain viz. to

Wholesalers, Distributors and
Manufacturers.
 Retail Industry employs 17-20% Workforce
that drives the Economy.
 Retail trends often mirror trends in a
nation’s overall economy.
 Retailers add value by Providing the Right
Product at The Right Place at the Right
Time.
 ENVIRONMENT
 Retailing is a Dynamic field with very
Competitive Environment.
 Retailers act as Filters – Strong lobby for
success or otherwise of a Product or
Services.
 Companies create Retailer Value and
Consumer Differential Advantage to
improve success rate of their Brands.
 Constraints – Multiple Brands and SKUs
for each category, Shelf Space, funds
available, Turnover of Merchandise.
New Concepts & Trends
2. Vertical Retail Concept: Traditional
stores and Shop-in-Shop concepts –
mixture of system and individuality,
e.g. Sale of Non-food items like
newspapers, magazines with snacks,
beverages
3. Consumption Related Trends:
Increasing Consumers with Purchasing
Power & More Migrant Consumers
Demand for Broad selection of Products
Demand for Good quality Products e.g.
Honest, Original and Green Products
Indian Economy – GDP Projections Through 2022 (2007
Prices)
US$ US$
Billion 2007 Billion
Brazil 1,068 2012
Rus sia 979
Brazil 1,369
India 916 Rus sia 1,304
France 2,232 India 1,409
UK 2,374 France 2,470
UK 2,648
China 2,630 Germany 3,198
Germa 2,897 China 4,197
US A 13,245 US A 15,354
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 - 5,000 10,000 15,000 20,000
US$ US$
Billion Billion 2022
2017
Brazil 2,282
Brazil 1,789 Rus s ia 2,103
Rus sia 1,688 India 3,128
India 2,119
France 3,085
France 2,761
UK 3,251
UK 2,953
3,513 Germany 3,766
Germany
China 6,341 China 9,229
US A 17,031 US A 19,751
- 5,000 10,000 15,000 20,000 - 5,000 10,000 15,000 20,000 25,000
*GDP figures are in real terms with base year as 2007
India is expected to be comparable with UK & France in GDP by 2022

Rapid Transformation
Anticipated
28% share
Current Size & Future Projections for Indian Retail Market
1200 1011
1000
US$ Billion
800 590
471 527
600 421
336 376
400
282
200
51 74 97
0 12 17 29
2007 2008 2009 2010 2011 2012 2017
Total Retail Organized Retail
Reach a share of 28% by 2017

HIGH GDP GROWTH
10% 9.0% 9.4%
9%
8% 6.4%
6.6% 6.0% 6.8%
7% 6.0%
5.4% 5.6%
6% 5.2%
5%
4%
3%
2%
1%
0%
1997
1998
1999
2006
2004
2005
2000
2002
2001
2003
Projections of 8% sustainable real GDP growth rate till 2020 promise

high growth potential for Indian Retail
Radical Transformation Anticipated In
Indian Retail
Country Share of Years taken to
Organized Retail reach the level
from < 5%
China 20% 10
Poland 20% 8
Brazil 36% 15
Thailand 40% 18
US 85% 50
India 17% (estimated) 5
27% (estimated) 10
India looking at rapid GROWTH compared to other countries

Growth Of Indian Retail …
Source: Technopak Analysis, CSO & Other Sources
Indian Retail expected to grow close to 12% p.a. in the next 10

years
WITH HIGH PRIVATE CONSUMPTION
 Private Consumption US $568 Bn
(62%)
 Retail US $352 Bn (62%)
Urban US $158 Bn (45%)
Rural US $194 Bn (55%)
 Non-Retail US $358 Bn (38%)
• Public Spending +Gross Capital
Formation 38%
• Rural India consists of 720 Million
consumers across 627,000 villages
• 17% of these villages account for 50% of
the rural population and 60% of the rural
wealth implying reaching out to almost
100,000+ villages to address even 50% of
this rural opportunity WITH HIGH
PRIVATE CONSUMPTION
RAPID TRANSFORMATION
 Investments in the range of US$ 20+ Billion
expected in the next 5years in Retail & its

Supply Chain alone
 Size of modern retail likely to touch US$
74+ Billion by 2011

 At least 2.5 Million additional direct jobs
likely to be created in the next 5 years

 Hyper-competition is expected to set in by
2008-9.
TRADITIONAL RETAILERS
 Retail market is growing from US$ 336
billion to US$ 590 in 2012
 That means an additional market of US$
254 billion
 Even if the modern retailing can go from
US$ 12 billion to US$ 74 billion in 2011
Still US$ 180 billion is left to be addressed
by traditional retailers
 The growth of modern retail will be more in
urban as compared to rural
BOOKS FOR REFERENCE
4. Retail Management By Chetan Bajaj

5. Retail Management By Berman &
Evans
6. Retail Management By Levy & Weitz
CASE STUDY:
 Facts Of the Case – No assumptions

 Key Issues
 List alternatives
 Evaluate alternatives
 Recommend Course Of Action
TOTAL RETAIL EXPERIENCE
 Merchandising & Display
 Brands and Quality Of Goods
 Inventory Carried
 Customer Service
 Pricing
 Support Functions: Parking
 Create Customer Excitement

TOTAL RETAIL EXPERIENCE
Possible Pitfalls:
Discount stores – Ample Stock
Neighborhood Store – Overly
Trendy Products
Full Service Store – Knowledgeable
Theme Restaurants – Novelty
wears off, food so-so, Prices high
MEET CUSTOMER NEEDS
OPPORTUNITIES:
 Management –
Raise capital
Purchase
Use MIS to Control Operations
Employ for Sales Counters, Stores
and Cash Counters
Undertake Marketing Activities
 Entrepreneurial Opportunities
RETAIL STRATEGY
OVERALL ACTION FRAMEWORK

 Mission
 Goals
 Consumer Market
 Overall Activities
 Feedback and Control Mechanism
Forward Retail Planning – FOCUS
 Analysis Of Requirements Of Business
 Set realistic Goals
 Differentiate Itself for Target Customers
- Benchmarking
 Knowledge Of Business Environment –
Legal, Economic, Competitive
 Synergize efforts
 Reduce Business Risk – Feedback and
Control
MISSION
 Commitment to A Business –
Business Decision
 Around Goods and Services sold or
around Consumer needs.
 Specific or Generic approach
 Distinctive Role In Market –

A Leader or a Follower
Leader – Unique strategy
Follower – Emulate standard Practices
with better execution than competitor.
 Market Scope – Customer Base
 Dynamic Decision In Sync. With Retail
Environment
Ownership and Management:
 Sole Proprietorship –Individual accrues
Profits, Risks, Costs. Is Liable for Legal

Claims. Limited Capital and Expertise.
 Partnership – Share Profits, Risks,
Costs. Owners Liable for Legal Claims.

Better Capital Investments and
Capabilities.
• Corporation – Incorporated under law.

Funds through Sale of Stocks.
• Ownership Transfer is easy. Private Limited
Company – Limited number of Individuals
with Limited Liability. Public Limited
Company – Open to Public to Invest In
Stocks. Profits and Dividends attract Taxes.
Managed by professional managers.
Business:
 Start A New Venture – Flexibility of
retailing Factors
 Buy an Existing Business – Balance Of
Advantages should be Positive – weigh

the negatives carefully
 Become A Franchisee – Combines
Enterprise with Known Brands. Brand

also puts a number of rigid Quality and
Business Restrictions.
Types Of Retail Goods & Services
 Durable Goods
Furniture, Electrical Appliances,

Hardware, Timber, Jewelry,
Automotive and Spare Parts
 Non-Durable
Apparel – Cloth, Garments, Food Group –

Green Grocers, Packaged Foods,
General Merchandise, Eating Places,
Petrol Stations, Chemists, Stationery
Service Establishments
 Personal Services
Dry Cleaning, Health Care, Photographic

Goods, Barber Shops, Amusement
Services, Movie Theatres, Clubs,
Amusement Parks, Game Arcades
 Repair Services
Automobile, Electrical Gadgets, Watch &

Jewelry, Electronic Gadgets
 Hotel Services
Hotels, Resorts
 Professional Services
Lawyers, Doctors & Surgeons,

Chartered Accounts, Stock brokers,
Real Estate Agents
Potential Retail Business Owners
Aptitude for a Particular Business
 Personal Aptitude
Knowledge, Experience, Qualifications,
Inborn Skills and Acquired Skills
 Financial Resources
Land and Building, Fixtures, Equipment
 Time Demands
Owner’s Availability
 Personnel
Sales People, Inventory, Cashiers
RETAIL OBJECTIVES – STRATEGY
 Sales – Growth, Market Share
 Profit – Level, ROI, Efficiency
 Satisfaction – Total Retail Experience
 Positioning – Up-market, Mid-Priced,

Discount Oriented, Mass Market, Niche
Value Scale-Quality, price
Fashion Scale-Fashion, Style, Assortment
Image Projected
Target Market – Customer Group To Be
Attracted and Satisfied.
Mass – Broad Spectrum of Customers
Concentrated – Specific group
Differentiated – Two or more distinct
Groups with Different Retail Approaches
TARGET MARKET TECHNIQUES
STRATEGY MASS MARKET CONCENTRATED DIFFERENTIATED
LOCATION Near Large Near Small Near Large

Population Medium Pop. Population
RETAILMIX Wide Deep Distinct Goods
Assortment, Assortment, for Target
Medium Qual. High/ Low Market
Qual.
PROMOTION Mass Advtg. Direct mail Different
Media for
Target Groups
PRICING Popular High or Low High, Medium
and Low
STRATEGY Large Specific Strategies
Homogeneous Strat. directed at
Group Directed at Heterogeneous
Specific Gr. Groups
CONTROLLABLE UNCONTROLLABLE
VARIABLES VARIABLES
Store Location Consumers
Managing a Competition
Business
Merchandise @ RETAIL Technology
Pricing STRATEGY
Communicating Economic
Conditions
Seasonality
Legal Restrictions
 Mission
 Situation Analysis Ownership
 Goods/Services category
 Sales
 Objectives Profit
 Customer satisfaction
 Image
 Mass
 Target Customer Concentrated
 Differentiated
 Controllable
 Overall strategy Uncontrollable
 Short Term
 Specific activities Competition
 Evaluation
 Control Adjustment
RETAILERS MARKETING DECISIONS:
• -Target Market: Focus resources & Retail Mix
• -Product Differentiation Strategy: Product
Assortment Breadth & Depth
• -Services: Pre-purchase, Post-purchase,
Ancillary
• -Price: Target market, Product Mix,
Competition
• -Promotion: Promote & Reinforce Image
• -Location: Vicinity of Target market
 MARKET SEGMENTATION- TARGET MARKET
Sex, Age, Family Size -Type, Marital, Status,
Socio-economic Class, Occupation,
Geographic: Metros, large Towns
Psychographic: lifestyles, Personality, Values

Services: Advertising, Displays, Special
Offers; Delivery, Gift Wrapping, Returns,
Tailoring, Installation; Cheque Cashing,
Parking, Restaurants, Rest rooms
Pricing: High Profit %, Low Volume & Low
Profit %, High Volume
Loss Leader, Discounts -Clear Merchandise
EDLP Every Day Low pricing vs. Discounts
 Promotion: Frequent Shopper Rewards,
Coupons, Sampling, Ads.
 Location: Sales effectiveness –
Number of people pass by - % Enter –

% Buy- Average Amount per Sale
CASE STUDY – CONVENIENCE STORE
MERCHANDISE MANAGEMENT:
 A Key Strategy: Develop & Implement
• Merchandising - Plans Of Proper Assortment Of
Goods & Services As In Demand, make them
Available at Places, Times, Prices & Quantity to
Satisfy Target Customers
• Merchandising Decisions dramatically affect

Performance.

• Investments in Merchandising Skills & Talent
produce Better results than Investments in
Technology or other Skill Specialties. 70 -80 %
Results Depend on Merchandisers.
MERCHANDISING PLAN:
 All Merchandising Decisions Based on Plans-
1. Needs Of Target Market

2. Type Of Retail Business
3. Marketplace Positioning
: Mass - Wide & Deep Assortment – Broad
Customer Market
:Niche –Specific Market Segment – High
Customer Loyalty – Shields against
Conventional Competitors
4. Defined Value Chain – (Trends )
- Expected: Hygiene, Timely Service,
Knowledgeable, Stock Popular Products,
Returns/ Redressal
-Augmented: Special Services,
Differentiated Brands, Loyalty Prog.
-Potential: Elements not yet Perfected or
Opportunities not yet exploited.
5. Product Trends
Merchandising Plans will drive Decisions:
Product Lines to Carry
Shelf Space to Allot to Different Products
Inventory Turnover
Pricing – Across Categories & Within
Promotions
Assortment – Breadth: Narrow or Wide
Depth: Deep Or Shallow
Scope Of Responsibility for Personnel:
Full Merchandising Functions – Buying &
Selling: Selection Of Merchandise,
Pricing Displays, Customer Transactions.
Separate Buying & Selling Functions.
Micro Merchandising – Shelf space Basis
Demand Pattern
Cross Merchandising – Carry
Complimentary Goods & Services
Water, Soda, Soft Drinks, Juices, Ethnic
Merchandise Plan - Forecasting :
 Staple Merchandise – Regular Daily Need
Products, Stable Sales – List Of products,
Inventory Level, Colours, Brands, Style Size
 Assortment Merchandise – Apparel,
Furniture, Autos. Variety Of products to
enable Customers a Selection. Demand
Varies, Forecast difficult. Decision On
Product Lines, Styles Designs & Colours.
Model Stock Plan - Colour, Size, Qty.
 Fashion Merchandise – Cyclical sales due
to Changing tastes and Life Styles
 Seasonal Merchandise – Seasonality In
Sales – Summers Cottons, Winters

Woolens – Forecasting for Season
 Fad Merchandise – High Level Of Sales
In a Short Time. Toys, Games are short

lived Fads. Extended fads – Residual
sales Continue for longer Periods. Never
Out List – Always in stock
PRICING STRATEGY IN RETAILING:
Retailer Prices Goods & Services to:
-Achieve Profitability
-Satisfy Customers
-Be Consistent with Overall Image, Sales,
Profits, ROI
Pricing Options:
-Discount Orientation
-At-the-market Orientation- Average Pricing
-Upscale Orientation
Discount Orientation:
-Low pricing as competitive advantage
-Low status Image, Fewer shopping
frills, Price based customers, Low
operating costs, High Inventory T/O.
At-the-market Orientation:
Middle Class shoppers

-Offers excellent service, Good
atmosphere
-Profit margins > = Moderate
-Quality > = Average
-Price Range Difficult to Expand as
Competition from Discount Stores or
Prestige Stores Squeezes the Range
 Upscale Orientation:
-Prestige Major Competitive Edge

-Smaller Target Market, Higher
Operating Costs, lower Inventory T/O
Means Customer Loyalty,
Distinctive Services & Product Offerings,
High unit Profit margins
PROVIDE A GOOD VALUE IN
CUSTOMERS’ MIND FOR THE CHOSEN
PRICE ORIENTATION.
CUSTOMER NOT NECESSARILY
LOOKING FOR THE BEST PRICE BUT
FOR GOOD VALUE – REAL &
PERCEIVED -FOR MONEY.
Research on price In Buying Decisions
reveals Different Motivations for
Different market Segments.
CONSUMER PURCHASE & PRICING:
Price Elasticity Of Demand – Sensitivity to
Price Changes. Small % Change in Price
Substantial % Change in Demand – High
Price Elasticity. Urgency to purchase is
low or acceptable substitutes exist.
Large % Change in Price Small % Change
in Demand – Demand In-Elastic.
Urgency to purchase is high or there are
no acceptable substitutes. Occurs with
Brand or Retailer Loyalty.
Unitary Elasticity - % Change in Price
directly off-set by % Changes in
Quantity Demand
In Retailing computing Price Elasticity is
Difficult due to other factors of Product
Mix also interplay. Demand hard to
predict. Price Sensitivity varies by Market
Segment based on Shopping
Orientation:-Economy: Shop around for
Lowest Price. Segment Growing rapidly.
- Status: Perceive Retailers as different,
Look for Prestige Brands and customer
Service.
- Assortment oriented: Seek Retailers
with Strong Assortment in Product
Categories and look for Fair Pricing
- Convenience Oriented: Shop only when
they Must at nearby locations with long
hours. Prepared to pay higher Prices.
- - Loss Leaders: Price below cost to
attract more customers.

- - Predatory Pricing: Seek to Reduce
Competition by selling at very low Pricing

Unit Pricing: Indicate Pricing at a unit,
e.g., per Kg – to enable quick
comparisons by customers.
Sharp Practices:
Bait and Switch Advertising:
Lures customer with exceptionally low
prices. On contact customer informed of
stock-out and offer another product.
Conflicts In Pricing:
Manufacturer Wholesaler
Retailer
Co. Price Distributor’s Price (a-b%)
Wholesale Price (a-w%)
Price To Retailer (a)
Price To Consumer (a+ c%)
Gray Market Goods: Imported Goods at
Lower Prices.
Market Pricing: High Competition,
customers seek lowest pricing. Price
increase leads to brand switching.
Administered Pricing: Strong product
Differentiation, Control by retailer on
Price charged. For customers Image,
Assortment, Personal service more
important than Price, e.g. Fashion
apparel stores, upscale restaurants.
PRICING OBJECTIVES:
Market Penetration – Achieve large
revenues by setting Low prices and sell
high unit volumes – an aggressive
strategy to discourage competition
Market Skimming – Profit is Objective.
Charge Premium Prices and attract
Customers seeking Service, Assortment
& Status. Does not maximize Sales. ROI
or early Cash Recovery Objectives met.
Selling Pr. Demand Sales Av .Cost Op. Exp. Tot. Cost
9 114000 1026000 7.6 104000 970400

10 104000 1040000 7.85 94000 910400
11 80000 880000 8.25 88000 748000
12 60000 720000 8.75 80000 605000

Selling Pr. Tot. Profits Markup % Av. Inv. Hold Inv. T/O R O Inv.%
9 55600 16 12000 9.5 61
10 129600 22 13000 8 127
11 132000 25 14000 5.7 114

12 115000 27 16000 3.8 82
Unit Sales Sales Goal ROInv. %
Profit Profit/Unit
Prestige Pricing:
Premium pricing to convey exclusive
image for the product or Service. Evoke
perceptions of Quality and Prestige.
Habeebs Parlour, Delhi Golf Club, Luxury
hotels.
Odd – Even Pricing:
Odd Pricing to indicate lower “Good” deal.
Even Pricing to indicate higher quality.
Bundled Pricing:
Offering two or more Products or Services
at one price.
Fixed & variable Pricing:
Variable pricing for highly differentiated
or unbranded products. Fixed pricing for
Branded products.
PLANNING & CONTROL
Retailer forms a New Strategy or Adjusts
an Existing one, gathering and analyzing
feedback reveals effectiveness of
Operation. Feedback can be obtained
for:
- Attributes, Buying Behaviour
- Alternative Store location
- Inventory Planning
- Product Mix Offering
-Pricing
-Promotion
-Store image
Research efforts related to risk involved:
-Higher risk : Store Location
-Lower risk: Introduction of New
Product Line
Information Gathering and Processing is
ongoing for Feedback & Control
Non-systematic or Incomplete ways of
obtaining information due to constraints
of Time, Costs or Lack of Research
Skills:
-Using Intuition: Gut feel
-Assuming Past Trends to Continue and
follow past practices
-Copy Competition
-Devising a Strategy based on few
individuals perceptions
Example: Movie tickets cost –weekdays
vs. weekends and matinee vs. evenings
Toy store orders for holiday season basis
last year’s demand +. Research
indicated higher optimism and desire to
gift. Stock-out before peak, unable to
get delivery of extra stocks.
Chain Store in new Location – doing 40%
of expected business. Research shows
Store name and Image unknown, ad
media choice incorrect
Retailer’s Objectives direct Strategic
Planning – some Routine. Non-routine
require careful evaluation
Strategy outlined, new data required for
its operation acquired and files updated
or retrieved from storage, analyzed and
interpreted. All this at Information
Control Centre. Decisions made and put
into operation.
Retail Information System – RIS
Environment Mission, Objectives
Competitors, Economy
Strategic Plans
(a) DATA COLLECTION INFORMATION (b) DATA STORAGE+
ANALYSIS CONTROL RETREIVAL
INTERPRETATION CENTRE © UPDATING
DATA
FILES
FEEDBACK Retail Operation

IMPLEMENTATION
Performance results are fed to ICC and
compared with objectives set. Regular
and Exception reports ( Giving reasons
for deviation) generated and sent to
Operational Managers for necessary
action.
Building RIS
How active RIS role – Reports in routine
or as-and-when
Internal or Out-sourced- Some Specific
Researches can be out-sourced.
Cost Of RIS – 0.5 to 1.5% of revenue
Quanta of Data – Edit raw data and
share interpretation
Frequency of Data dissemination – who
receives which report
Data Storage – Easy retrieival, adequate
Longitudinal analysis (Period to Period)
RETAIL PROMOTION
All communication that informs,
persuades and reminds the target
market about marketing mix of the
Retail business.
Objectives of Communication:
- Increase customer Flow
- Increase Purchase BY Target Market
-Increase sale of Specific product
or Product Category
- Develop Store Image
Communication Promotion Mix:
-Advertising
-Sales Promotion
-Publicity
-Personal Selling
Department or Large Stores manage
through Promotion department of the
store. Small Retailers pool resources
with manufacturers for Promotions.
Advertising – Paid Communication using
Impersonal mass media: Print – news
papers, magazines, direct mail and AV
media like TV, radio.
Local, vernacular language Print media
used by small retailers.
Cable TV is also used by small retailers.
Large retailers use a combination of
media.
Sales Promotion is a paid Impersonal
communication offering additional value
to customer. Encourages customer visits
and Promotes trial and repeat Purchase
of focus Products or Services
Special events, In-store Demonstration,
Contests
Publicity -Un-paid form of Communication
that provides Information about the
retail through media.
A Powerful Business strategy evolves
through knowledge of Target
Customers, Clarity of Business
Objectives. Effective selection of media
for Promotion Strategy.
Major shift to Nuclear families in ’90’ s
have shifted focus on to kids in
Promotional strategies
ATMOSPHERICS & RETAIL SPACE MANAGEMENT
REFERS TO THE PHYSICAL CHARACTERISTICS OF
THE RETAIL STORE LIKE EXTERIORS,
INTERIORS, LAYOUT PLANNING AND VISUAL
MERCHANDISING.
PLAY A SIGNIFICANT ROLE IN
 ATTRACTING CUSTOMERS AND RETAINING
THEM
 IMPROVING QUALITY OF SERVICE EXPERIENCE
 POSITIONING THE RETAIL OUTLET
 OPTIMUM RETAIL SPACE UTILIZATION

DIMENSIONS OF ATMOSPHERICS:
 PRESENTATION LIGHTING
 STYLING COLOUR PLANNING
 DESIGN USE OF WALLS/ MATERIALS
APPEAL TO CUSTOMERS
EXTERIORS – STORE FRONT, DISPLAY
WINDOWS
INTERIORS – LIGHTING, COLOUR, FACILITIES
ENHANCES DISPLAY & PROVIDES RELEVANT
INFORMATION
ATMOSPHERICS PLANNING RELEVANT FOR ALL
RETAIL SET-UPS, ESPECIALLY:
- PLANNED SHOPPING CENTRES
- LIFESTYLE STORES
A TIDY WORK ENVIRONMENT ATTRACTS A HIGH
STORE PATRONAGE
ATMOSPHERICS PLAY AN IMPORTANT ROLE:
- CREATE POSITIONING FOR RETAIL OUTLET
- ATTRACT NEW CUSTOMERS
- ORGANIZE STORE AND MERCHANDIZE
- ENRICH SHOPPING EXPERIENCE
ATMOSPHERICS ROLE IN RETAIL STRATEGY
 ATTRACTS NEW CUSTOMERS
 CREATES A USP
 FACILITATES EASY MOVEMENT INSIDE THE

STORE
 FACILITATES ACCESS TO MERCHANDISE
INSIDE THE STORE
 ENSURES OPTIMUM SPACE UTILIZATION
 ENSURES EFFECTIVE & DESIRED

PRESENTATION INSIDE THE STORE
 REDUCES PRODUCT SEARCH TIME INSIDE
THE STORE
CHOICE OF FIXTURES, DÉCOR, SIGNAGE
ENABLE CUSTOMERS PERCEPTION.
PROPER PLACEMENT OF SIGNAGES
INDICATING PRODUCTS OFFERED INCREASE
EFFECTIVENESS. CUSTOMERS NECESSITY TO
ASK QUESTIONS INCREASE STRESS LEVELS.
UNIFORMS WORN BY STORE EMOLOYEES
ALSO REDUCE CUSTOMER STRESS AND
ANXIETY TO ASK QUESTIONS.
QUALITY OF STORE FIXTURES SIGNIFY A
RETAILER CUTTING CORNERS OR MAKING
LARGE PROFITS.
SIGNAGE, LAYOUT AND FURNISHINGS ADD TO
AMBIENCE AND EFFECTS STORE-BROWSING
COMFORT OF CUSTOMERS.
IN STORE ELEMENTS SUCH AS COLOUR,
LIGHTING AND MUSIC MAY AFFECT
PURCHASE DECISIONS MORE THAN POP AND
DISPLAYS. TO IMPROVE IN STORE
ATMOSPHERE, PERFUMES GET DESIRED
EFFECT – ESPECIALLY TO GET RID OF
CERTAIN ODOURS. IF THESE ARE
COMPLEMETARY TO THE STORE, THE
SERVICE QUALITY EXPERIENCE IMPROVES.
MUSIC PLAYS AN IMPORTANT ROLE IN
ENHANCING CUSTOMER’S TIME SPENT IN
THE RETAIL OUTLET – ESPECIALLY
SOOTHING MUSIC, NOT THE FAST PACED.
STIMULATE RETAIL ENVIRONMENT
PLEASURE EFFECT: CLASSICAL HINDI
MUSIC ENHANCES SHOPPERS’ ENJOYMENT
AROUSAL EFFECT: SLOW INSTRUEMENTAL
MUSIC RESULTS IN SUBDUED ACTIVITY IN
SERVICE SETTINGS LIKE RESTAURANTS.
DOMINANCE: CUSTOMERS FEEL DOMINANT
( IN CONTROL). ENVIRONMENTAL ASPECTS -
COLOUR OF INTERIORS, HEIGHT OF CEILING
DETERMINE CUSTOMER DOMINANCE.
FURNITURE AND FIXTURES MAY IMPACT THE
DURATION OF TIME SPENT IN-STORE.
PHYSICAL ENVIRONMENT
STORE LAYOUT/DESIGN EMOTIONS SHOPPING
MERCHANDISE DISPLAY BEHAVIOUR
MUSIC
AROMA CUSTOMER’S
SENSES
KEY COMPONENTS OF RETAIL
ATMOSPHERICS
 EXTERIOR ATMOSPHERICS
 INTERIOR ATMOSPHERICS
 STORE LAYOUT
 VISUAL MERCHANDISING
EXTERIOR ATMOSPHERICS
STOREFRONT
MARQUEE
ENTRANCES
DISPLAY WINDOWS
SIZE OF BUILDING
ACCESSIBILITY
VISIBILITY
INTERIOR ATMOSPHERICS
FLOORING
LIGHTING
ODOUR/ AROMA
FIXTURES
WALLS
TEMPERATURE
AISLES
CONVENIENCES/HYGIENE
STORE LAYOUT
SHOPPING FLOOR SPACE
TRAFFIC FLOW
DEPARTMENTS LOCATION
SPACE / MERCHANDISE CATEGORY
SIGNAGE
VISUAL MERCHANDISING
ASSORTMENT
THEME
ENSEMBLE
RACKS AND SHELVES
CASH COUNTERS
CONTROL RETAIL STRATEGY
Rules to stay Competitive:
Commitment – Enthusiasm in Business
Share – Staff Involvement in Decision making
Listen & Communicate – Customers and Staff
Appreciate – Good efforts
Celebrate – Good Achievements
Motivate – Challenging goals and rewards for
High performers
Exceed – Deliver more than promises
Control – Operating Costs
Swim Upstream – Evaluate Competition and do
something Different.
INTEGRATING RETIAL STRATEGY
Situation Analysis Objectives
Strategy Target Market
Specific Activities
Control
OPPORTUNITY ANALYSIS
Overall Direction & Goals: Top Down
Middle Level: Inputs from Internal and
External Sources. Generate Ideas early.
Generate Specific Plans with Deadlines.
SALES OPPORTUNITY GRID
Rates the promise of New and Established
Goods, Services, Store outlets
RETAIL PRICE, FLOOR SPACE, DISPLAY COSTS,
OPERATING COSTS, MARKUP; SALES
ESTIMATES, GROSS AND NET PROFITS IN Rs.
AT FIRST, SIX AND 12 MONTHS.
DEFINING PRODUCTIVITY
Efficiency with which a Retail Strategy is carried
out. Reach Sales and Profit Goals keeping
Operating Costs under control.
PERFORMANCE MEASURES
Criteria used to assess effectiveness and setting
standards for each performance. Measures
used: Total Sales Turnover, Average Sales per
store, Sales by Goods/ Service Category,
Gross Margin/ ROInvst., Op.Income, Inventory
T/O, Financial ratios, Profitability
RETAIL INSTITUTION BY OWNERSHIP
Retail Institution refers to basic format or
structure of a Business.

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RETAIL MANAGEMENT

RETAIL MANAGEMENT ..1

Manufacturer may reach customers through:

Manufacturers will decide on Retail Distribution:

Retail services like Restaurants, Hotels, Parlour, Health

Last decade has seen tremendous changes in Retail

GLOBAL RETAIL INDUSTRY

1. Retail sales driven by Ability (disposable income)

ORGANISED RETAIL FORMAT

1. By 2006 - 200 Shopping Malls – Up from 25 in 2003

Four theories of evolution are:

Attributes & Needs satisfaction

Maximize Business Efficiency

Good Value for Money

 Identify Customers Needs

 Provide Products and Services to

 Listen to your Customers

which drives the economy. Retailers

Goods distribution chain viz. to

- 5,000 10,000 15,000 20,000 - 5,000 10,000 15,000 20,000 25,000

*GDP figures are in real terms with base year as 2007

India is expected to be comparable with UK & France in GDP by 2022

Total Retail Organized Retail

Reach a share of 28% by 2017

10% 9.0% 9.4%

Projections of 8% sustainable real GDP growth rate till 2020 promise

India looking at rapid GROWTH compared to other countries

Source: Technopak Analysis, CSO & Other Sources

Indian Retail expected to grow close to 12% p.a. in the next 10

expected in the next 5years in Retail & its

74+ Billion by 2011

likely to be created in the next 5 years

4. Retail Management By Chetan Bajaj

 Facts Of the Case – No assumptions

 Brands and Quality Of Goods

 Support Functions: Parking

 Create Customer Excitement

OVERALL ACTION FRAMEWORK

 Distinctive Role In Market –

Profits, Risks, Costs. Is Liable for Legal

Costs. Owners Liable for Legal Claims.

• Corporation – Incorporated under law.

Advantages should be Positive – weigh

Enterprise with Known Brands. Brand

Furniture, Electrical Appliances,

Apparel – Cloth, Garments, Food Group –

Dry Cleaning, Health Care, Photographic

Automobile, Electrical Gadgets, Watch &

Lawyers, Doctors & Surgeons,

 Profit – Level, ROI, Efficiency

 Satisfaction – Total Retail Experience

 Positioning – Up-market, Mid-Priced,

LOCATION Near Large Near Small Near Large

Number of people pass by - % Enter –

1. Needs Of Target Market

Sales – Summers Cottons, Winters

In a Short Time. Toys, Games are short

Middle Class shoppers

-Prestige Major Competitive Edge

attract more customers.

Competition by selling at very low Pricing

9 114000 1026000 7.6 104000 970400

11 80000 880000 8.25 88000 748000

12 60000 720000 8.75 80000 605000