Retail Management

By : Er. Deg. Prof. Lokesh Mahajan Dated : 26/8/2011 30/8/2011 NIFT, Kangra
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

Index
Overview of Retailing Environment
Definition, History & evolution , Size of Indian Retail Current Scenario & Emerging Trends

Store Formats
Type of retailers , Types of ownership , Non store Retail Types of retailers on the basis of ownership Service price & Merchandise.

Elements of Retail Mix

6Ps of Retail / Retail Mix
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

Index
Store Organization
Organogram / Structure of various retail formats

Retail Market Strategy

10 Steps

Trade Area analysis & Site selection

Trading Area & site Characteristics Location Theories

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Overview of Retailing Environment

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Definitions
Retailing: is the set of business activities that adds value to product & services sold to consumers for their personal or family use. Retailer: is a business that sells products or services to consumers for their personal or family use. Distribution Channel: is a set of firms that facilitate the movement of products from point of production to POS to ultimate consumer.
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

History & Evolution

History: 1850 , first organizsed dept. store launched in USA influence by India Trading system by RM Macy & Marshell field & by 1900 its mushroomed across USA & Europe. By 1945, consolidate growth of organised retail happen in USA. After 1994, with use of IT & other technical development , retail develop at fast pace across the world.
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

Retailing in India.
Retail is the new buzzword in India. The global Retail development Index has ranked India first, among the top 30 emerging markets in the world. It is believed that India has the potential to deliver the fastest growth over the next 50 years. While barter would be considered to be oldest form of retail trade, since independence , retail in India has evolved to support the unique needs of country, given its size and complexity
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 Second largest sector after Agriculture. Contributes about 10 11 % of the GDP

The estimated size of the organized retail industry in India is Rs. 16,000 crores. This is 2 % of the total estimated retail trade. Indian Retail trade increased from Rs. 2200 billion in 2000 to Rs 3300 billion by the year 2005 India's first true shopping mall complete with food courts, recreation facilities and large car parking space was inaugurated as lately as in 1999 in Mumbai. (this mall is called "Crossroads").

The Evolution of Retail in India

Retail in India has evolved to support the unique needs of our country, given its size and complexity Haats, Mandis and Melas have always been a part of the Indian landscape. They still continue to be present in most parts of the country and form an essential part of life and trade in Various areas. The PDS (Public Distribution System) would easily as the single largest retail chain existing in the country. The evolution of the PDS of Grains in India has its origin in the rationing system introduced by the British during world war II

 The system was started in 1939 in Bombay and subsequently extended to other cities and towns. the system was abolished post war but however attaining independence India was forced to reintroduce it in 1950. There was rapid increase in the ration shops ( being increasingly called the Fair Price Shop or FPSs) The Canteen Stores Department and the Post Offices in India are also among the largest network of outlets in the country reaching population across the country.

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The Khadi & Village industries (KVIC) was also set up post independence. The cooperative movement was again championed by the government.

India's Largest retail Chains: 1. 2. 3. PDS: 463,000 Post offices: 160,000 KVIC: 7,000

4.

CSD Stores:3,400

(source business world marketing White book 2005)

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 In the past decade, the Indian marketplace has transformed dramatically. However from the 1950,s to the 80,s, investment in various industries was limited due to low purchasing power in the hands of the consumer and the governments policies favoring the small scale sector. The first attempts at organized retailing were noticed in the textiles sector. One of the pioneers in this field was Raymonds which set up stores to retail fabric.

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 Raymonds distribution network today comprises 20,000 retailers and over 256 exclusive showrooms in over 120 cities of the country Other textile manufacturing who set up their own retail chains wee Reliance- which set up Vimal showrooms and Garden Silk Mills, which set up Garden Vareli showrooms.

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The Evolution of retail in India

Traditional Formats Itinerant Salesman Haats Melas Mandis etc.

Established formats Kirana shops Convenience/ department stores PDS/ fair price shops Pan/ Beedi shops

Emerging Formats Exclusive retail outlets Hypermarket Internal retail Malls / Specialty Malls Multiplexes Fast food outlets Service galleries

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Drivers of Retail change in India

major drivers :
1. Changing Income Profiles: Steady economic growth fuelled

2.

the increase in disposable income in India. The average middle class family's disposable income rose by more than 20% between 1999-2003. Diminishing difference between Rural and urban India: Rural India accounts for over 75% of India population and this in itself offers a tremendous opportunity for generating volume driven growth. Tax benefit. In year 2002-03 LIC sold 50% of its policies in rural India. Same BSNL also sold its 50% connection in small towns .

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Size of Indian Retail

The Indian retail industry has over 12 millions outlets (Universe), which is largest number of retail outlets in the world. Contributes 10% to GDP & 8% to country employment. Out of 12 millions retail outlets , 5 millions sell food & related products. Even with largest Universe , organized retail is only 4% and thus huge growth potential. As per AT Kearneys GRDI , in 2005-07, India ranks no.1 & in 2008 , India Ranks no.2.
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

Total Retail Sales - 2005

0 2%
4% 4% 7%

1% 1% 2% Food & Grocery Clothing Durables Jewelry & Accessory Home Furnishing Health & beauty Medical Services 77% Footwear Books & Music

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Current Scenario & Emerging Trends

Students Study Project ?

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Store Formats

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Types Of Retailers
Retail Formats Types

General Merchandise Retailer

Food Retailer

Nonstore Retailers

Department Stores

Drug store

Super Market

Electronic Retailers

TV home Shopping

Full-line Discount Stores

Extreme Value Retailer

Supercenters

Catalogue & Direct Mail

Vending M/c

Specialty Stores

Off-Price Retailer

Warehouse Clubs

Direct selling

Category Store 8/26/2011 Er. Deg. Prof. Lokesh Mahajan

Convience Stores NIFT, Kangra

Food Retailers
Super Markets: is self service food stores offering groceries, meat & produce with limited sales of non food items such as health & beauty. Eg. More, Reliance fresh Supercenters: is fastest growing retail category & large stores ( 150,000 220,000 sq.ft.) that combine super market with full-line discount stores. Eg. Bharti Wal-Mart. Hypermarkets : are also large (100,000 300,000 sq.ft.) combination 60-70% of food & 30-40% of general merchandise. Eg. Hypercity , Bigbazar, Star Bazar etc. Warehouse Clubs: are retailers that offers a limited & irregular assortments of food & general Merchandise with little service at low price for ultimate consumers. Eg. Costco
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

General Merchandise Retailer

Department store: are retailers that carry broad variety and deep assortment, offer customer services and organize their stores into distinctly separate departments for display merchandise. Eg. Regional malls like Apna Bazar Full-line discount store: are retailers that offer a broader variety of merchandise, limited services & low prices. Eg. Specialty Store: concentrate on limited number of complementary merchandise categories and provide a high level of service in relatively small stores. Eg. Zodiac , Wills Lifestyle , Croma, Tanisq , woodland Drugstore: are specialty stores that concentrate on health & personal grooming Merchandise. Eg. Apollo pharma , Medplus
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

Cont.
Category Specialist : are big box discount stores that offers a narrow but deep assortment of merchandise. Eg. Pantaloon Extreme Value Retailer : are small, full line discount stores that offer a limited merchandise assortments at very low price. Eg. Dollar store. Off Price Retailers : offer an inconsistent assortment of brand name merchandise at lowest prices. Eg. Loot

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Non Store Retailer

Electronic Retailers ( e-tailing, Online retailing): is a retail format in which retailers communicate with Customers and offers product & services sales over internet. Eg. Ebay Catalog & Direct Mail Retailers: catalog retailing is format in which retail offerings is communicated to customers through catalog (Shopper stop) , whereas direct mail retailers communicate with their customers using letters & brochers (Jet Airways). Direct Selling: is retail format in which sales people, frequently independent businesspeople, contact customer directly in convenient locations. Eg. Euraka Fobes
8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra

Cont
Home/TV shopping: is a retail format in which customer watch TV programme that demonstrate merchandise & then place order on telephone. Eg. Asian sky shop. Vending Machines: is nonstore format in which merchandise or service are stored in a machine and dispensed to customer when they deposit cash or use card. Eg. Pepsi Vending M/c , Bislery Veda

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Types of Ownership
Its the 4 type of retail format. Previous formats based upon merchandise & services they sell but this way based upon to classify retailers by their ownership.
Independent, Single store format: Corporate Retail Chains: is a company that operates multiple retail units under common ownership & usually has centralize decision making for defining & implementing strategies. Eg. ABG, Reliance Franchising: is contractual agreement between a franchisor & franchisee.

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Types of retailers on the basis of ownership Service price & Merchandise

based upon 4 major factors:
Intangible Simultaneous production & consumption. Perishability Inconsistency

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

Elements of Retail Mix

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

6 Ps
Promotion

Product

Place

Retail Mix
Price People Physical evidence

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

CHOOSING THE RETAIL MIX

Product Choosing the Retailing Mix Price Promotion

Place Personnel Presentation

CHOOSING THE RETAIL MIX

Product Personnel Promotion

Target Market

Presentation

Place

Price

Product Offering
The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix.

Retail Promotion Strategy

Advertising

Public Relations

Publicity

Retail Promotion Strategy

Sales Promotion

The Proper Location

Large, long-term commitment of resources

Location will affect future growth

Local environment may change over time

Location
Location Decisions Freestanding Store

Mall

Shopping Center

Shopping Center and Mall Locations

Advantages
Design attracts shoppers Anchor stores draw customers Ample parking Unified image

Disadvantages
Expensive leases Failure of common promotion efforts Lease restrictions Anchor store domination Direct competitors

Price
Low Price High Price

Good Value

Quality Image

Presentation of the Retail Store

Employee Type & Density Merchandise Type & Density Fixture Type & Density

Factors in Creation of a Stores Atmosphere

Sound Odors Visual Factors

Personnel and Customer Service

Trading Up

Two Common Selling Techniques

Suggestive Selling

PERSONNEL OF THE RETAIL STORE

How many How knowledgeable

How helpful / invasive

Factors in Personnel decisions

Fit the image of the product Good personal sellers

Retail Strategy

8/26/2011 Er. Deg. Prof. Lokesh Mahajan

NIFT, Kangra

RETAILING STRATEGY-PRICING
How much mark-up?

Allow for Shrinkage and discounting OR Use Everyday Low Pricing Benchmark or Signpost Items items used by consumers as an index of overall price level of the store I.e. How much do they sell T shirts for?

RETAILING STRATEGY - LOCATION

Central Business District
Parasites

Regional Shopping Centers

Anchor Stores

Freestanding Store

Strip Location
Destination stores Power centers

Shopping Center Tenant

Mall Tenant

Multichannel Retailers

Retail Strategies 10 Steps

Target Market & Retail Format Building sustainable Competitive advantage Customer Loyalty

HRM Distribution & Information System

Unique Merchandise
Vendor Relations Customer Service Multiple Source of Advantage

Growth Strategies 8/26/2011 Er. Deg. Prof. Lokesh Mahajan NIFT, Kangra