RETAIL MANAGEMENT

What is Retail?

Retail involves the sale of goods from a single point (malls, markets, department stores etc)
directly to the consumer in small quantities for his end use. In a laymans language, retailing
is nothing but transaction of goods between the seller and the end user as a single unit
(piece) or in small quantities to satisfy the needs of the individual and for his direct
consumption.

Let us understand the concept with the help of an example.

Tim wanted to purchase a mobile handset. He went to the nearby store and purchased one
for himself.

In the above case, Tim is the buyer who went to a fixed location (in this case the nearby
store). He purchased a mobile handset (Quantity - One) to be used by him. An example of
retail.

The store from where Tim purchased the handset must have shown him several options for
him to select one according to his budget and need.

From where do you think the store owner (also called the retailer) purchased all the
handsets?

Here the manufacturers and the wholesalers come into the picture.

The retailers purchase goods in bulk quantities (huge numbers) to be sold to the end-users
either directly from the manufacturers or through a wholesaler.

The Supply chain

Manufacturers........................Retailers................End User
(Consumer)
Wholesalers

Manufacturers - Manufacturers are the ones who are involved in production of

goods with the help of machines, labour and raw materials.
Wholesaler - The wholesaler is the one who purchases the goods from the
manufacturers and sells to the retailers in large numbers but at a lower price. A
wholesaler never sells goods directly to the end users.
Retailer - A retailer comes at the end of the supply chain who sells the products in
small quantities to the end users as per their requirement and need.

The end user goes to the retailer to buy the goods (products) in small quantities to
satisfy his needs and demands. The complete process is also called as Shopping.

Shopping - The process of purchasing products by the consumer is called as

shopping. However there are certain cases where shopping does not always end in
buying of products. Sometimes individuals do go for shopping but return home empty
handed. Such a shopping is merely for fun and is called window shopping. In window
shopping, individuals generally go to the market, check out various options and their
prices but do not buy anything. This kind of shopping helps to break the monotony.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 1

Retailing refers to a process where the retailer sells the goods directly to the end-user for his
own consumption in small quantities.

Functions performed by retailers:

(1) Buying and Assembling:
A retailer deals in different variety of goods which he purchases from different wholesalers
for selling to the consumers.He tries to locate best and economical source of the supply of
goods.

(2) Warehousing or Storing:

After assembly of goods from different suppliers, the retailers preserve them in stores and
supply these goods to the consumers as and when required by them. The goods are kept as
reserve stocks in order to ensure uninterrupted supply to the consumers.

(3) Selling:
The end objective of the retailer is to sell the goods to consumers. He undertakes various
methods to sell goods to the ultimate consumers.

(4) Credit Facilities:

He caters to the needs of the customers even by supplying them goods on credit. He bears
the risk of bad debts on account of non-payment of amount by the customers.
(5) Risk Bearing:
A retailer has to bear different type of risks in relation to goods. While in stores, goods are
exposed to various risks like deterioration in quality, spoilage and perishability etc. The
products are confronted to natural risks viz; fire, flood, earthquake and other natural
calamities. Other type of risks like change in customers tastes also adversely affects the
sales.

(6) Grading and Packing:

The retailer grades the goods which are left ungraded by the manufacturers and the
wholesalers. He packs the goods in small packages and containers for the convenience of
the customers.

(7) Collection and Supply of Market Information:

The retailers are in direct touch with the consumers. They gather invaluable information with
regard to likes dislikes tastes and demands of the consumers and pass on this information to
the wholesalers and the producers which are very helpful to them.

(8) Helps In Introducing New Products:

Without the services of retailers, new products cannot be introduced properly in the market.
This is so because a retailer has a direct link with the consumer. He can explain nicely about
the utility and the characteristics of a new product to the customer.

(9) Window Display and Advertising:

The retailer displays the products in show windows in order to attract the customers. This
leads to immense publicity for the product.

Services Performed By Retailers:

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 2

Retailers provide important services to both the wholesalers and the consumers.

(I) Services To Wholesalers:

(a) They supply invaluable information with regard to tastes, preferences, fashions and
demands of the customers to the wholesalers who in turn transmit the same to the producers
which is of immense utility to them.
(b) By taking over the function of retailing from the wholesalers and manufacturers, retailers
relive them from selling goods in small quantities to the consumers.
(c) Many retailers usually place orders in advance with the wholesalers which is very helpful
in planning the purchases of the wholesalers.
(d) Sometimes retailers make advance payments for the goods to be received from the
wholesalers. In this manner, they help in financing the wholesale trade.
(e) Without the services of the retailers a new product cannot be introduced in the market
supplied to him by the wholesalers.

(II) Services to Consumers:

(a) The retailers assemble variety to produces from the wholesaler and place them at the
doorstep of the consumers and provide them a convenience of choice.
(b) They provide credit facilities to the consumers thereby helping them in times of difficulty.
(c) They extend personalised service to the consumers and try to give them maximum
satisfaction.
(d) They introduce new products to the consumers and also guide them as to their uses.
(e) They extend free home delivery and after sales service to the consumers.
(f) They allow cash discount to the consumers on the products sold.
(g) They buy and stock products best suited to the consumers.
(h) They give valuable advice regarding the use and maintenance of the products delivered
by them.
(i) They cater to the needs of every type of consumer by keeping in view their paying
capacity.
(j) They supply fresh products to the consumers.
(k) They usually take back the goods which do not suit to the consumers and replace them.

Roles And Importance Of Retailer In Channel System

Retailers have an important place in the distribution channel. As they sell goods to final
consumers, they play useful as well as an important role in distribution channel as the last
link. In the absence of retailers, the consumers cannot find necessary goods at only one
place or at a single shop. They need to walk to many shops to find one after another goods.
The producers and wholesalers also need to face various problems. To discuss the role and
importance of retailer means, it is relevant to mention their services provided to producers,
wholesalers and consumers.

1.Services of retailer to producers and wholesalers

The valuable services provided by retailers to producers and wholesalers are as follows:
- Sources for wider distribution of goods

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 3

- Information about consumers
- Risk bearing
- Increase in sales volume
- Storing function
- Reduced distribution cost
- Expertise advice

2. Services of retailer to consumers

Retailers also provide different services to consumers as follows:
- Supply of varieties of goods
- Supply of necessity and fresh goods
- Selection facility
- Credit facility
- Home delivery
- Information about new goods
- Advice
Thus, retailers provide valuable services to producers, wholesalers and consumers. The
services they provide to producers, wholesalers and consumers make it clear that retailers
remain present in the distribution channel as bridge between producers or wholesalers and
consumers

Meaning And Features Of Retailing:

Retailers have occupied an important place in the field of business. The retailers remain as
very useful and as the last link in the channel of production and distribution. They provide
goods and services to the final consumers. Retailers purchase goods from producers or
wholesalers in large quantity and sell to the consumers in small quantity. As the retailers
indistribution channel closest to the consumers, they perform various useful services in
marketing.

Therefore, who purchase large quantity of goods from producers or wholesalers and resell
them to consumers dividing in small quantity or cutting in small pieces are called retailers.
This business is called retail trade or retailing.

Features Of Retailing

1. Small quantities :Retailers buy and sell goods in small quantity.

2. Sell to ultimate consumers:Retailers sell goods to ultimate final consumers.
3. Varieties of goods:A retailer can sell various necessary goods to consumers.
4. Personal contact:A retailer establishes direct and personal contact with customers.
5. Shop display:Retailers decorate and display goods to attract customers.
6. Last link:Retailers work as the last link of distribution channel.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 4

 Types Of Retail Institutions Or Retailers
The business institutions or persons who sell goods to final consumers are called retailers.
There are different types of such retailers. For the systematic study they can be divided in
different classes, such as on the basis of ownership, on the basis ofproduct line, 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:
i. 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.

ii. Chain stores

Chain stores are those retailing institutions, which are operated by a company under its
ownership and management. Stores are opened at different places and they are operated
under the management and control of company's central office.
iii. Contract chain
Contract chain means a business institution, which is operated by private entrepreneurs
under their own management. But they perform some business related functions such as
purchase of goods of same nature, branding , advertising etc. jointly with the retailers. The
retailers selling same nature goods enter into contract for buying goods. Buying huge
amount of goods in this method reduces price of goods and the cost also is borne jointly due
to which profit can be increased.
iv. Consumer stores
The retailing shops operated under the ownership of consumers are called consumer stores.
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.
2. Types of retailers on the basis of product line Retailers can be divided in three
classes on the basis of product line as follows:
i. General stores
General stores are such retailing shops where all kinds of goods are found or bought and
sold. In such stores all the necessary goods for the local consumers are made available.
Foodstuffs, clothes, sports materials, household goods, medicines etc are found in such
stores.
ii. Single line stores

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 5

Some retailers deals in only the goods of certain product line. Such retailers achieve
specialization in selling some kinds of goods. Single line retailers involve in dealing in goods
belonging to one product line like goods of household uses, medicines, electronic goods,
motor cars, clothes etc.
iii. Specialty stores
The retailers who deal in only one kind of products of a certain product line are called
specialty storeorretailers.
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 retailingNowadays, 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.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 6

 Building and sustaining relationship in retailing

1. Building and Sustaining Relationship in RetailingBuilding and Sustaining Relationship in

Retailing is in general to explain what value really means and highlight its essential role
inretailers in building and sustaining relationships. It basically describe how both customer
relationships and channel relationshipsmay be nurture in highly competitive
marketplaceObjectives of Building and Sustaining Relationship in Retailing:It explains what
value really means and highlights its fundamental role in retailers building and sustaining
relationships. Sellersundertake a series of activities and processes to provide a given level
of value for the consumer.
Consumers then perceive thevalue offered by sellers, based on the perceived benefits
received versus the prices paid.

Perceived value vary by type of shopper.A Retail Value Chain represents the total bundle of
benefits offered by a channel of distribution. It comprises store location,ambience, customer
service, the products/brands carried, product quality, the in-stock position, shipping, prices,
the retailersimage, and so forth. Some elements of a retail value chain are visible to
shoppers and others are not. An expected retail strategyrepresents the minimum value chain
elements a given customer segment expects from a given retailer type.

An augmented retailstrategy includes the extra elements that differentiate retailers. A

potential retail strategy includes value chain elements not yetperfected in the retailers
industry category.To describe how both customer relationships and channel relationships
may be nurture in todays highly competitive marketplace.For relationship retailing to work,
enduring relationships are needed with other channel members, as well as with customers.

Moreretailers now realize loyal customers are the backbone of their business.To engage in
relationship retailing with consumers, these factors should be considered: the customer
base, customer service,customer satisfaction, and loyalty programs and defection rates. In
terms of the customer base, all customers are not equal. Someshoppers are more worth
nurturing than others; they are a retailers core customers. Customer service has two
components:expected services and augmented services.

The attributes of personnel who interact with customers, as well as the number andvariety of
customer services offered, have a big impact on the relationship created. Some firms have
improved customer service byempowering personnel, giving them the authority to bend
some rules. In devising a strategy, a retailer must make broad decisionsand then enact
specific tactics as to credit, delivery, and so forth.

Customer satisfaction occurs when the value and customer service provided in a retail
experience meet or exceed expectations.Otherwise, the consumer will be dissatisfied.

Loyalty programs reward the best customers, those with whom a retailer wants todevelop
long-lasting relationships.

To succeed, they must complement a sound value-driven retail strategy. By studying

defections,a firm can learn how many customers it is losing and why they no longer
patronize it.Members of a distribution channel jointly represent a value delivery system.

Each one depends on the others; and every activitymust be enumerated and responsibility
assigned. Small retailers may have to use suppliers outside the normal channel to get
theitems they want and gain supplier support. A delivery system is as good as its weakest
link.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 7

 A relationship oriented technique thatsome manufacturers and retailers are trying,
especially supermarket chains, is category management.To examine the differences in
relationship building between goods and service retailers.Goods retailing focuses on selling
tangible products. Service retailing involves transactions where consumers do not purchase
oracquire ownership of tangible products

There are three kinds of service retailing rented goods services, where consumers
leasegoods for a given time; owned-goods services, where goods owned by consumers are
repaired, improved, or maintained; and non
goods services, where consumers experience personal services rather than possess them.
Customer service refers to activities thatare part of the total retail experience. With service
retailing, services are sold to the consumer.The unique features of service retailing that
influence relationship building and retention are the intangible nature of manyservices, the
inseparability of some service providers and their services, the perish ability of many
services, and the variability ofmany services.

To discuss the impact of technology on relationships in retailing.Technology is advantageous

when it leads to an improved information flow between retailers and suppliers, and between
retailersand customers, and to faster, smoother transactions. Electronic banking involves
both the use of ATMs and the instant processingof retail purchases. It allows centralized
records and lets customers complete transactions 24 hours a day, 7 days a week atvarious
sites.

Technology is also changing the nature of supplierretailercustomer interactions via point-

of sale equipment, self-scanning, electronic gift cards, interactive kiosks, and other
innovations.To consider the interplay between retailers ethical performance and
relationships in retailing.Retailer challenges fall into three related categories: Ethics relates
to a firms moral principles and values. Social responsibility hasto do with benefiting society.

Consumerism entails the protection of consumer rights. Good behavior is based not only
on thefirms practices but also on the expectations of the community in which it does
business.Ethical retailers act in a trustworthy, fair, honest, and respectful way. Firms are
more apt to avoid unethical behavior if they havewritten ethics codes, communicate them to
employees, monitor and punish poor behavior, and have ethical executives.
Retailersperform in a socially responsible manner when they act in the best interests of
society through recycling and conservationprograms and other efforts. Consumerism
activities involve government, business, and independent organizations.

Four consumerrights are basic: to safety, to be informed, to choose, and to be

heard.Transtutors.com is an effort on the part of expert tutors to give you maximum support
by way of pooling their subject knowledgeexclusively for your understanding and knowledge
enhancement. It is a highly accessible source of gaining understanding insubject of
Management and getting effective homework help and assignment support in topics like
Retail Management andBuilding and Sustaining Relationship in Retailing.

Strategic Retail Planning Process (4 Steps)

For the purpose of developing retail strategies, retailers are required to follow a step by step
procedure or planning process. The planning process discusses/involves the present stage
of business, the formulation, list of available strategic options, and the implementation of the
selected strategies. Considering the importance of strategic decisions for the future success
of the business, a systematic approach is essential.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 8

The strategic planning process:
1. Deciding the stores philosophy, mission and objectives,
2. Situation analysis,
3. Formulation of retail strategy
4. Strategy implementation and control.
1. Deciding the stores philosophy, mission and objectives:
The retail strategic planning process starts with the identification of stores mission for its
existence and hence the scope of the retail store. The mission of a store entails identifying
the goods and services that will be offered to customers. It also deals with the issue that how
the resources and capabilities of a store will be used to provide satisfaction to customers
and how the store can compete in the target market vis-a-vis its competitors.

The mission also involves the way of stores functioning. How a store will work and
accomplish its day to day operations? What is the emergency planning? All are answered in
the stores mission statement. For example, Vishal Mega Marts, they have philosophy of
customer satisfaction through manufacturing to retailing.

This reflects not only the way it tends to treat its customers, but discusses the secret of its
competitive advantage, i.e. the profit saved from absence of intermediaries like agents and
brokers, commission saved is distributed to customers by way of low priced items.

Once the organization mission has been determined, its objectives, desired future positions
that it wishes to reach, should be identified. Stores objectives are defined as ends which the
store seeks to achieve by its USP (Unique Selling Preposition) and operations.

The stores objectives may be classified into two parts

(i) External store objectives, and
(ii) Internal Store Objectives.
External store objectives are those that define the impact of store on its environment, e.g., to
develop high degree of customer confidence by providing quality goods at lowers prices.
Internal store objectives, on the other hand, are those that define how much is expected to
be achieved with the available resources, e.g. to raise the store turnover by 15% in the
coming year.
2. Situational Analysis (SWOT Analysis):
The objective of doing stores situation analysis is to determine where the store is at present
and to forecast where it will be if formulated strategies are implemented. The difference
between current and future position (forecasted) is known as planning or strategic gap.
Under organisational analysis, normally stores study their external (environmental) and
internal environments.

External Analysis:
The purpose of examining the stores external environment is to study the opportunities and
threats in the retailing environment. The external analysis studies factors that affect the
macro-environment of retailing industry and the task environment.

Under external analysis, retailer studies these parameters:

(i) Economic environment of retailing,
(ii) Political environment of retailing,
(iii) Legal environment of retailing,
(iv) Socio-cultural environment of retailing,
(v) Technological environment of retailing, and
(vi) International environment of retailing.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 9

The stores task environment can be influenced directly by retailers own policies and
includes competitors, suppliers and customers.

Internal Analysis:
The objective of studying internal environment of its own store is to identify the stores
strengths and weaknesses. The store will try to increase its capabilities, and overcome the
weaknesses that deter the business profit. While doing the internal analysis, store examines
the quality and quantity of its available resources and critically analyzes how effective these
resources are used.
These resources for the purpose of examining are normally grouped into human resources,
financial resources, physical resources (assets) and intangible resources (goodwill, image
etc).

The types of questions that are enquired under different resources are:

Human resource:
(a) Is present strength of employees at various levels is sufficient for future action?
(b) Are the employees trained and capable to perform the tasks assigned to them?
(c) Are the employees loyal to store?
(d) Are the employees punctual and regular?
(e) Are the employees skilled in their assigned tasks?

Financial resource:
(a) What is the total cash flow from stores present activities?
(b) What is the ability of retail store to collect money at the time of requirement/ emergency?
(c) How much effective and stable financial policies are?
(d) What is the ratio between fixed and current assets?
(e) What are the contingency plans in case of negative cash flow?

Physical resources:
(a) What is the contribution of fixed assets?
(b) What is the position of abandoned/unused assets?
(c) How effective and update are the stores information systems?

Intangible resources:
(a) What is the present capability of the companys management?
(b) How effective is the R & D cell?
(c) How good is the competitors intelligence system?
(d) How effective stores loyalty programmes are?
(e) What is the capability of retail store manager?
(f) Are customers loyal towards companys products?
3. Formulation of Retail Strategy:
In this stage, after analyzing the stores capabilities in terms of HR, finance, physical and
intangible resources, a store manager formulates retail strategy with regard to marketing,
retail positioning and retail mix. Marketing is the way to achieve the set objectives.
Therefore, marketing strategy should be devised according to stores primary and secondary
objectives. Generally, marketing strategy is developed on the basis of product and/or market
segmentation instead of the market as a whole.
Retail Positioning is a plan of stores action for how the retailer will enter the target market
and will compete with its main competitors. Retail positioning from a retail stores point of
view, is a step by step plan to create and maintain a unique and everlasting image of the
store in the consumers mind.
This process reveals the fact that understanding what customer wants? is the success key
to retail positioning in the market. Under retail positioning, a retailer conveys the message
that its products are totally different and as per customers requirement. The reason here is

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 10

that customers are attracted towards items that are new for them with the perception that if it
is new, it will have some extra/added features.

Retail positioning is made possible under these circumstances:

(i) By differentiating the stores merchandise from its competitors,
(ii) By offering high level of after sales services at nominal/no cost, and
(iii) By adopting low pricing policies.
Retail Mix is the blend of various retail activities which in total present the whole concept of
retailing. The retail marketing and retail positioning strategies are put into effect by this retail
mix the set of controllable elements that a retailer can use to satisfy customers needs and
to influence their buying behavior and compete effectively in the target market. Utmost care
is required on the part of retail manager to select the various elements for a perfect retail
mix.

The main elements a retail store manager has to face are:

i. Stores location
ii. Merchandise assortment
iii. Pricing policy
iv. Customer service mechanism
v. Visual merchandising
vi. Personal selling efforts
vii. Advertising efforts and
viii. Stores internal and external environments.
4. Strategy Implementation and Control:
It is concerned with the designing and management of retail systems to achieve the best
possible combination of human, financial, physical and intangible resources of a retail store
to achieve the formulated objectives, without timely and effective implementation also
requires scheduling and coordination of various retail activities. For example, the
coordination between the marketing and sales promotion department is a must for sales
promotion to make success.

Further, the spirit of team work is an essential part for the success of strategy
implementation. If the retail stores strategies are competitive, marketing efforts are as per
demand but the sales promotion employees are not taking it seriously or are ineffective,
result will not be up to the mark.
The implementation of new retailing strategies sometimes require changes in the way of
functioning and duties that can lead to resistance from employees. Therefore, stores should
take positive steps to reduce this resistance to change and to convince the employees that it
in a long term will be beneficial for both the store and employees.

The positive steps include the following:

(i) Inspection,
(ii) Detection, and
(iii) Correction.
It means after implementing the retail strategies, retailer should assess how effectively
strategies are being implemented, how far the strategic objectives are being achieved and
what has been left to be achieved in the stores objectives list. Therefore, retailers inspect
the implemented strategies from time to time and detect the fault (if any) in the
implementation of various retail elements. If any deficiency is found during inspection
process, that has to be corrected with immediate effect without any further loss to store.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 11

Types of Retail outlets

Department Stores

A department store is a set-up which offers wide range of products to the end-users under
one roof. In a department store, the consumers can get almost all the products they aspire to
shop at one place only. Department stores provide a wide range of options to the consumers
and thus fulfill all their shopping needs.

Merchandise:
Electronic
Appliances,Apparels,Jewellery,Toiletries,Cosmetics,Footwear,Sportswear,Toys,Books,CDs,
DVDs etc..

Examples - Shoppers Stop, Pantaloon

Discount Stores

Discount stores also offer a huge range of products to the end-users but at a discounted
rate. The discount stores generally offer a limited range and the quality in certain cases
might be a little inferior as compared to the department stores.Wal-Mart currently operates
more than 1300 discount stores in United States. In India Vishal Mega Mart comes under
discount store.

Merchandise:
Almost same as department store but at a cheaper price.

Supermarket

A retail store which generally sells food products and household items, properly placed and
arranged in specific departments is called a supermarket. A supermarket is an advanced
form of the small grocery stores and caters to the household needs of the consumer. The
various food products (meat, vegetables, dairy products, juices etc) are all properly
displayed at their respective departments to catch the attention of the customers and for
them to pick any merchandise depending on their choice and need.

Merchandise:
Bakery products, Cereals,Meat Products, Fish
products,Breads,Medicines,Vegetables,Fruits,Soft drinks,Frozen Food,Canned Juices

Warehouse Stores

A retail format which sells limited stock in bulk at a discounted rate is called as warehouse
store. Warehouse stores do not bother much about the interiors of the store and the
products are not properly displayed.

Mom and Pop Store (also called Kirana Store in India)

Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to
daily needs of the consumers staying in the vicinity. They offer selected items and are not at
all organized. The size of the store would not be very big and depends on the land available
to the owner. They wouldnt offer high-end products.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 12

Merchandise:
Eggs ,Cigarettes, Bread , Toys ,Stationery Pulses Cereals Medicines etc.

Speciality Stores

As the name suggests, Speciality store would specialize in a particular product and would
not sell anything else apart from the specific range.Speciality stores sell only selective items
of one particular brand to the consumers and primarily focus on high customer satisfaction.

Example -You will find only Reebok merchandise at Reebok store and nothing else, thus
making it a speciality store. You can never find Adidas shoes at a Reebok outlet.

Malls

Many retail stores operating at one place form a mall. A mall would consist of several retail
outlets each selling their own merchandise but at a common platform.

E Tailers

Now a days the customers have the option of shopping while sitting at their homes. They
can place their order through internet, pay with the help of debit or credit cards and the
products are delivered at their homes only. However, there are chances that the products
ordered might not reach in the same condition as they were ordered. This kind of shopping is
convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In
this kind of shopping; the transportation charges are borne by the consumer itself.

Example - EBAY, Rediff Shopping, Amazon

Dollar Stores:Dollar stores offer selected products at extremely low rates but here the
prices are fixed.

Example - 99 Store would offer all its merchandise at Rs 99 only. No further bargaining is
entertained. However the quality of the product is always in doubt at the discount stores.

Types of retail location:

Types of retail location Free standing location Unplanned business district Planned shopping
centre

Free standing location:

Free standing location Neighborhood stores Convenience products Away from major
markets Inside neighborhood Less competition, low rent, easy parking, better visibility.
Difficulty in attracting customer

Highway stores Attract customer passing highways - Fast food restaurant, dhaba

Unplanned business districts:

Unplanned business districts Downtown or central business district A hub of retailing activity
Draws customer from across city and suburbs Metro CBDs attract customers outside city
Connaught place in Delhi, commercial street in Bangalore serve as upmarket for upper and
upper middle class customer.
Chandni chowk in delhi , chick in Bangalore and new market in calcutta serve middle and
lower middle class customers.

Secondary business districts:

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 13

Secondary business districts Unplanned cluster of stores located on a major intersection of
cities. Attract customers from many parts of cities. Dadar in Mumbai, Karol bag in Delhi.

Neighborhood business districts:

Neighborhood business districts Cluster and serve neighborhood trading area. Colonies

Suburban Business Districts:

Suburban Business Districts Stores located in towns periphery. Rely on traffic of downtown.
Growing market in Gurgaon and Noida .

Planned Shopping Centres:

Planned Shopping Centres Architecturally designed with parking facilities designed and
operated as a unit. Connaught place was initially designed as planned, but subsequently in
Chandigarh various sector markets are planned.

Regional Shopping Centre or Malls:

Regional Shopping Centre or Malls Largest planned shopping centres . Major departmental
stores, large trading area, high rent . Cross roads-Mumbai, Spenser plaza-Chennai,
metropolitan mall- Gurgaon .

Neighborhood/Community Shopping Centres:

Neighborhood/Community Shopping Centres Usually have a balance mix of stores, grocery,
chemist, variety store, few other stores combinedly. Sector market complex in Chandigarh.

Specialized market:
Specialized market Specialized market for a particular product category. Ahmadabad for
plastic material Ludhiana for machinery. Godown street in Chennai for clothes.

Periodic market:
Periodic market Peculiar market Meet at particular places on a particular day in a week.
Retailers move from place to place. Limited credit transaction. Low overhead Hats, Som
bazar .

Store Design and Layout - Different Floor Plans and Layouts

Opening a retail store is no joke and requires meticulous planning and detailed knowledge.

Location

Make sure your store is in a prime location and is easily accessible to the end-users. Do not
open a store at a secluded place.

Floor Plan

The retailer must plan out each and everything well, the location of the shelves or racks to
display the merchandise, the position of the mannequins or the cash counter and so on.

1. Straight Floor Plan

The straight floor plan makes optimum use of the walls, and utilizes the space in the
most judicious manner. The straight floor plan creates spaces within the retail store
for the customers to move and shop freely. It is one of the commonly implemented
store designs.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 14

 2. Diagonal Floor Plan

According to the diagonal floor plan, the shelves or racks are kept diagonal to each
other for the owner or the store manager to have a watch on the customers. Diagonal
floor plan works well in stores where customers have the liberty to walk in and pick
up merchandise on their own.

3. Angular Floor Plan

The fixtures and walls are given a curved look to add to the style of the store. Angular
floor plan gives a more sophisticated look to the store. Such layouts are often seen in
high end stores.

4. Geometric Floor Plan

The racks and fixtures are given a geometric shape in such a floor plan. The
geometric floor plan gives a trendy and unique look to the store.

5. Mixed Floor Plan

The mixed floor plan takes into consideration angular, diagonal and straight layout to
give rise to the most functional store lay out.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 15

Tips for Store Design and Layout

The signage displaying the name and logo of the store must be installed at a place
where it is visible to all, even from a distance. Dont add too much information.
The store must offer a positive ambience to the customers. The customers must
leave the store with a smile.
Make sure the mannequins are according to the target market and display the latest
trends. The clothes should look fitted on the dummies without using unnecessary
pins. The position of the dummies must be changed from time to time to avoid
monotony.
The trial rooms should have mirrors and must be kept clean. Do not dump
unnecessary boxes or hangers in the dressing room.
The retailer must choose the right colour for the walls to set the mood of the
customers. Prefer light and subtle shades.
The fixtures or furniture should not act as an object of obstacle. Dont unnecessary
add too many types of furniture at your store.
The merchandise should be well arranged and organized on the racks assigned for
them. The shelves must carry necessary labels for the customers to easily locate the
products they need. Make sure the products do not fall off the shelves.
Never play loud music at the store.
The store should be adequately lit so that the products are easily visible to the
customers. Replace burned out lights immediately.
The floor tiles, ceilings, carpet and the racks should be kept clean and stain free.
There should be no bad odour at the store as it irritates the customers.
Do not stock anything at the entrance or exit of the store to block the way of the
customers. The customers should be able to move freely in the store.
The retailer must plan his store in a way which minimizes theft or shop lifting.
i. Merchandise should never be displayed at the entrance or exit of the store.
ii. Expensive products like watches, jewellery, precious stones, mobile handsets
and so on must be kept in locked cabinets.
iii. Install cameras, CCTVs to have a closed look on the customers.
iv. Instruct the store manager or the sales representatives to try and assist all the
customers who come for shopping.
v. Ask the customers to deposit their carry bags at the entrance itself.
vi. Do not allow the customers to carry more than three dresses at one time to
the trial room.

Factors affecting location

Location of industry
The location of a business is considered when it starts-up or when its present location
is unsatisfactory. The business's objectives as well as the conditions of the
environment change, so the business may need to look for a new location once in a
while.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 16

There are many factors that affect the location of businesses, and these factors are
different for each business sector. We'll take a look at them below.

Factors affecting the location of a manufacturing business

Production methods and location decisions

Smallscale: transport and location of suppliers are less important.

Largescale: transport and location of suppliers are more important.

Market
Need to be near to transport perishable goods,Need to be near to cut transportation
expenses.

Raw materials/componentsNeed to be near to transport perishable goods,Need to be

near to cut transportation expenses.

External economies of scaleHow good nearby businesses are,For maintenance of

equipments,For training workers, etc

Availability of labour:Wages of the labourers,How skilled they are.

Government influence:Grants/subsidies,Restrictions on dumping, etc

Transport and communication: To be able to transport product easily.

Power:Need a reliable source of power to operate effectively.

Water supply:A lot of water is needed in the production process (e.g. cooling,
cleaning)Cost of water.
Personal preferences of the ownersMay locate in areas that,They come from.They
like,Pleasant weather, etc
Climate
E.g. to reduce heating costs in a warmer climate.Some climates are required to
produce certain items.

Factors affecting the location of a retailing business

Shoppers:Do shoppers go there?What kind of shoppers go there?

Nearby shops:Competitors.Mass market.Gap in the market.
Customer parking available/nearby:Convenience for the customer.
Availability of suitable vacant premises]Goods sites (e.g. in shopping centres) are in
short supply.
Rent/taxes:The more popular the site, the more expensive.
Access for delivery vehicles:For delivering goods.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 17

Security:If the area is insecure,Goods will be stolen.Insurance will be reluctant to
insure the shop.
Legislation:Laws restricting the trade of goods in certain areas.

Factors that influence a business to relocate either at home or abroad

The present site is not large enough for expansion.

If a business simply prefers to expand elsewhere, the factors affecting location will
have to be considered.

Raw materials run out.One alternative is to import raw materials from elsewhere.
Important for mining industries.
Difficulties with the labour forceWages are too high.Need skilled labour.
Rents/taxes rising.New markets open up overseas.Cuts transport costs.Bypass trade
barriers.
Government grantsTo attract businesses to locate in development areas.
To attract foreign investment.
To bypass trade barriersTariffsQuotas

Factors affecting the location of a service sector business

CustomersWhether customers require:Direct contact.

Is it convenient for customers to go the business?
Will the service arrive at customers' houses in time?
No direct contact needed.MailInternet
Personal preference of owners
Near their homes.
TechnologyTechnology allows businesses to locate in cheaper
sites,Telephone,Internet.
Transport.No need to be near customers.
Availability of labour
Need to locate to sites where skilled labourers live.
Labourers may relocate to be near the business.
ClimateImportant for tourism.
Near to other businesses
Businesses that supply or repair machinery to others need to be near them to respond
quickly.
Post office/banks need to be in busy areas for the convenience of customers. That is,
being near malls, shops, etc
Rent/taxes
If the business does not need direct contact with the customer, then it could locate in
cheaper areas.

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 18

S.Sreedevireddy B.Ed,M.B.A,M.Sc(psy) RIIMS 19