Retail Management
Unit 1
Unit 1
Introduction to Retailing
Structure:
1.1 Introduction
Objectives
1.2 Concept of Retailing
1.3 Functions of Retailing
1.4 Terms and Definition
1.5 Retail Formats and Types
1.6 Retail Industry in India
Growth of organised retailing in India
1.7 Importance of Retailing
1.8 Changing Trends in Retailing
1.9 Opportunities and Challenges in Retailing
1.10 Summary
1.11 Glossary
1.12 Terminal Questions
1.13 Answers
1.1 Introduction
Retailing is one of the fastest growing segments of the economy. Retail
industry provides excellent business opportunities and is the single largest
industry in many nations. It is the world’s largest private sector contributing
to 8% of the GDP and it employs one sixth of the labour force. The
estimated retail trade is expected to be 7 trillion US$. Many countries have
moved forward only because of the retail industry. At present, we can see a
vast change in the retail industry. As far as India is concerned, retail
contributes to 14% of our GDP and it is the second largest employer after
agriculture. According to a survey, India is classified as the fifth most
attractive retail destination in the world and the second among the countries
in Asia.
In this unit, let us take a look at the many facets of this exciting business.
This unit helps in answering the questions related to functions of retailing,
significance of retailing, formats of retailing, retailing channels and the
changing trends in retailing.
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Objectives:
After completing this unit, you should be able to:
 define the term retailing
 explain the importance of retailing
 state the various functions of retailing
 explain the different retail formats
 describe about the retail industry in India
 discuss the changing trends and challenges in retailing.
1.2 Concept of retailing
The distribution of consumer products begins with the producer and
eventually ends at the consumer. Between the producer and the consumer
there is a middleman – the retailer, who links these two. Retailing, thus, can
be defined as a conclusive set of activities or steps used to sell a product or
a service to consumers for their use. It is responsible for meeting individual
demands of the consumer with supplies of all manufacturers. Retailing also
adds value to the products and services sold to consumers for. Retailing is
an important field of business because of its impact on the economy, its
functions in distribution, and its relationship with firms.
Retailers are responsible for supplying the goods, merchandise or services
to the consumer. They perform specific activities such as anticipating
customer wants, developing assortments of products, acquiring market
information and financing.
Thus, in addition to selling, retailing includes diverse activities like, buying,
advertising, data processing and maintaining inventory. Unlike in corporate
sales, where sales people regularly call on institutional customers to initiate
and conclude transactions, in retailing most end users or final customers
patronise stores. As a result, store location, product assortment, timings,
store fixtures, sales personnel, delivery and other factors, become very
critical in drawing customers to the store. Many times the final customers
make many unplanned purchases. Therefore, retailers need to place
impulse items in high traffic locations, organise store layout, train sales
people in suggesting and place related items next to each other to stimulate
purchase.
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A common assumption is that retailing involves only the sale of products in
stores. However, the sale of services like those offered at a restaurant,
parlour or by car rental agencies are also included in retail. Also, selling
need not necessarily take place through a store. Retailing encompasses any
channel that could be used to approach the consumer, for example, selling
through mail, door-to-door visits, internet, etc.
Retailing today is at an interesting crossroad. On one hand, retail sales are
at their peak. New technologies are aiding improvement in retail productivity.
There are lots of opportunities to start a new retail business or work for an
existing one and to become a franchisee. Global retailing possibilities are in
abundance. On the other hand, retailers face numerous challenges, like
consumers being bored with shopping, lack of time for shopping, too many
stores in one location, and competition among retailers which results in
frequent price cutting (and low profit margins). Customer service
expectations are also high when more retailers offer self-service and
automated systems.
The basic principles of retailing remain the same – identification and
satisfaction of consumer needs and wants, with the purpose of earning
profit. However, the way in which retailers pursue these basic principles has
developed quite dramatically in recent years. Retailing uses a customercentred, chain-wide approach to strategy development and implementation
– it is value-driven and it has clear goals.
Retailing encompasses the business activities involved in selling goods and
services to the consumers for their personal, family, or household use.
Retailers provide the goods and service that consumer’s need – from food,
automobile parts, apparel, home furnishings, appliances and electronics to
advice on home improvement and skilled labour.
The word ‘retailing’ is derived from a French word ‘Retaillier’ which means to
cut off a piece. While retailing includes every sale to the final consumer
(ranging from cars to apparel to meals at restaurants), we normally focus on
those businesses that sell “merchandise generally without transformation,
while rendering services incidental to the sale of merchandise”.
The figure 1.1 below depicts the retailing concept.
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Figure 1.1: Retailing concept
Together, these four principles form the retailing concept which should be
understood and applied by all retailers:
1. Customer orientation – the retailer determines the attributes and needs
of its customers and endeavours to satisfy these needs to the fullest.
2. Coordinated effort – the retailer integrates all plans and activities to
maximise efficiency.
3. Value-driven – the retailer offers good value to customers for both
upscale or discount products. This means that the prices should be
appropriate for the level of products and customer service.
4. Goal orientation – the retailer sets goals and then uses strategies to
attain them.
Self Assessment Questions
1. Retailing encompasses the business activities involved in selling goods
and services to consumers for their personal, family, or household use.
(True / False)
2. The word ‘retailing’ has come from a French word ‘Retaillier’ which
means to cut off a piece. (True / False)
3. Retailers perform specific activities such as anticipating customer
wants, developing assortments of products, acquiring market
information and financing. (True / False)
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1.3 Functions of retailing
Retailers play a significant role as a conduit between manufacturers,
wholesalers, suppliers and consumers. The retailers perform some
important functions to create value to the product, the customer and the
manufacturer. They are:
1. Providing an assortment of products and services.
2. Breaking bulk.
3. Holding inventory.
4. Providing services.
5. Acting as a channel of communication.
6. Transporting and advertising.
7. Increasing the value of products and services.
8. Increasing the value of products and services.
9. Providing promotional support.
1. Providing an assortment of products and services: Retailers carry a
large variety of products from maximum number of companies. Offering
an assortment enables customers to choose from a range of brands,
designs, sizes, colours, and prices at one location. Manufacturers
sometimes specialise in producing specific types of products. If these
manufacturers had their own stores that only sold their own products,
consumers would have to go to many different stores to buy groceries
for their household use. All retailers offer an assortment of products, but
they specialise in the assortment they offer. Supermarkets provide an
assortment of food, health and beauty care products, and household
products, while the limited stores may provide an assortment of clothing
and accessories. Most consumers are well aware of the product
assortments that retailers offer.
2. Breaking bulk: To reduce transportation costs, manufacturers and
wholesalers typically ship large cartons of products. Retailers then break
the combination of huge quantity of products and offer them in smaller
quantities to the consumers according to their consumption patterns.
This is called breaking the bulk. This is important to both manufacturers
and consumers. It is cost effective for manufacturers to package and
ship merchandise in larger quantities. It is also easier for consumers to
purchase merchandise in smaller, manageable quantities.
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3. Holding inventory: A major function of retailers is to keep inventory
that is already broken into user-friendly sizes to ensure availability of
products when consumers want them. Thus, consumers can keep a
small inventory of products at home and purchase from retailers as and
when they need more. By maintaining an inventory, retailers provide a
benefit to consumers – they reduce the consumer’s cost of storing
products. This is particularly important to consumers with limited storage
space and in case of perishable merchandise, like meat, milk and
produce.
4. Providing services: Retailers provide services that make it easier for
customers to buy and use products. They offer credit so that consumers
can use a product immediately and pay for it later. They display products
so that consumers can see and test them before buying. Some retailers
have salespeople to answer questions and provide additional
information about products. Multi-channel retailers offer the flexibility of
buying anytime – day or night. Customers can choose whether they
want to pick up merchandise at a store or have it shipped to their home.
Providing product guarantees, after-sales services and dealing with
consumer complaints are some of the services that add value to the
actual product at the retailers’ end.
5. Acting as a channel of communication: Retailers also act as a
channel of communication and information between the wholesalers or
suppliers and the consumers. From salespeople and advertisements in
the store, shoppers learn about the characteristics and features of the
products or services offered. Manufacturers learn from retailers about
the sales forecasts, delivery delays and customer complaints.
6. Transporting and advertising: Small manufacturers use retailers to
provide assistance with transport, storage, advertising and pre-payment
of merchandise. This also works the other way round in case the
number of retailers is small. The number of functions performed by a
particular retailer has a direct relation to the percentage and volume of
sales needed to cover both their costs and profits.
7. Increasing the value of products and services: From the customer
point of view, the retailer serves him by providing the goods that he
needs in the required assortment, at the required place and time.
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8. Providing promotional support: Small manufacturers can use retailers
to provide assistance with transport, storage, advertising, and prepayment of merchandise. The retailer also serves the manufacturers by:
 Accomplishing the function of distributing the goods to the end users.
 Creating and managing a channel of information from manufacturer
to consumer.
 Acting as a final link in the distribution chain.
 Recommending products where brand loyalty is not strong or for
unbranded products.
1.4 Terms and definition
Retailing: It encompasses the business activities involved in selling goods
and services to consumers for their personal, family, or household use.
Assortment: The number of stock keeping units within a merchandise
category. It is also called depth of merchandise.
Breaking bulk: A function performed by retailers or wholesalers in which
they receive large quantities of merchandise and sell them in small
quantities
Impulse purchases: An unplanned purchase by a customer.
Retailing: Retailing consists of business activities involved in selling goods
and services to consumers for personal, family or household use.
Vertical integration: An example of diversification by retailers involving
investments by retailers in the wholesale or manufacture of merchandise
1.5 Retail formats and types
Retail industry is continuously going through changes on account of
liberalisation, globalisation and consumer preferences. While multinational
retail chains are looking for new markets, manufacturers are identifying,
redefining and evolving new retail formats. Retailers can be classified by
retail store strategy mix, which is an integrated combination of time, location,
assortment, service, advertising and prices, etc. The various categories are
grouped under two main headings:
1. Store retail format.
2. Non-store retail format.
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1. Store retail format
The following are the types of retail stores under store retail format:
1. Convenience store: It is generally a well situated, food oriented
store with long operating hours and a limited number of items.
Consumers use a convenience store, for fill-in items such as bread,
milk, eggs, chocolates and candy, etc. They are comparatively
smaller stores located near residential areas. They are open for an
extended period of the day and have a limited variety of stock and
convenience products. Prices are slightly higher due to the
convenience given to the customers. Convenience stores provide a
limited variety and assortment of merchandise at a convenient
location in a 2000-to-3000-sq.ft. store with speedy check out
facilities. These are relatively small stores located near a residential
area. They are open long hours, seven days a week and carry a
limited line of high-turnover convenience products at slightly higher
prices. They also have plus take away sandwiches, coffee, soft
drinks, etc. Though not many convenience stores exist in India, the
retail stores, like ‘HP Speed mart’ and ‘In & Out’ that have come up
at petrol pumps in major Indian cities can be termed as convenience
stores. Examples of international stores are 7-Eleven, Circle K,
Albert Heijn and SPAR.
2. Supermarkets: These are diversified stores which sell a broad
range of food and non -food items. A supermarket typically carries
household appliances, apparel items, bakery, jams, pickles, books,
audio/video CDs, etc. This type of store has a selling area of
1000–2000 sqm and with at least 70% of its merchandise comprising
of food stuffs and everyday commodities. Internationally, the size of
these stores varies from 8000 to 20000 square feet. Examples of
supermarkets are Subhiksha, Reliance Fresh, Food World, Food
bazaar and Nilgiri’s.
3. Departmental stores: These consist of several product lines,
typically clothing, home furnishings, and household goods with each
line operated as a separate department managed by specialist
buyers or merchandisers. A departmental store usually sells a
general line of apparel for the family, household items, home
furnishings and applications. The size of an average Indian
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departmental store varies from 20,000 to 40,000 sq. ft. and stocks
anywhere between 50,000 to 100,000 SKUs. Large format
department stores include Pantaloons, Ebony and Pyramid. Others
in this category are Shoppers Stop, Westside and Lifestyle.
4. Specialty store: This has a narrow product line with a deep
assortment. A clothing store would be a single-line store, men’s
clothing store would be a limited-line store, and a men’s custom-shirt
store would be a super speciality store. This kind of store
concentrates on the sale of a single line of products or services, like
audio equipment, jewellery, beauty and health care, etc. Consumers
are not confronted with racks of unrelated merchandise. Most
specialty stores operate in an area under 8000 sq. ft. Successful
specialty stores in India include, Music World for audio needs,
Tanishq for jewellery and McDonalds, Pizza Hut and Nirula’s for food
services.
5. Hyper markets: This is a special kind of combination store which
integrates an economy supermarket with a discount department
store. Pantaloons Retail India Ltd. (PRIL) thorough its hypermarkets
‘Big Bazaar’, offers products at prices which are slightly lower than
the market price. A hyper market generally has an ambience which
attracts all members of the family. These stores occupy an area
ranging between 80000 sq. ft. to 200000 sq. ft. Examples of Hyper
market are Carrefour, Wal-Mart super centre, Tesco and Target.
Examples of hyper market in India include Big Bazaar and Star India
Bazaar.
6. Mom-and-pop stores or Kirana stores: These are generally familyowned businesses catering to small sections of society. They are
small, individually run and handled retail outlets. These kinds of
stores are very common in India.
7. Category killers: These are small specialty stores that have
expanded to offer a range of categories. They have widened their
vision in terms of the number of categories. They are called category
killers as they specialise in their fields, for example electronics (Best
Buy) and sporting goods (Sport Authority). Internationally the size of
category killers ranges from 20,000 sq. ft. to 1,20,000 sq. ft. Toys
R Us is a good example of an international category killer.
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8. Malls: These are the largest form of retail formats. They provide an
ideal shopping experience by providing a mix of all kinds of products
and services, food and entertainment under one roof. Examples are
Sahara Mall, TDI Mall in Delhi.
9. Discount store: These are the stores or factory outlets that provide
discount on the MRP items. They focus on mass selling and
reaching economies of scale by selling the stock left after the season
is over. Standard merchandise is sold at lower prices with lower
margins and higher volumes. Discount retailing has moved into
specialty merchandise stores, such as discount sporting goods
stores, electronics stores and book stores.
10. Off-price retailer: Merchandise bought at less than regular
wholesale prices and sold at less than retail prices. It often includes
leftover goods, overruns and irregulars.
11. Superstore: About 35,000 sq. ft. of selling space traditionally aimed
at meeting consumers’ total need of routinely purchased food and
non-food items. It also includes services such as laundry, dry
cleaning, shoe repair, check cashing, and bill paying.
2. Non Store Retail format
The following are the types of retail under non-store retail format:
1. E-tailers: These are retailers that provide online facility of buying
and selling products and services via internet. They provide a picture
and description of the product. This type of selling is becoming very
popular as it is convenient and offers a wide variety for the
customers. But it does not provide a feel of the product and may not
be authentic sometimes. Examples are Amazon.com, Ebay.com, etc.
2. Vending: This kind of retailing is intruding the industry. Smaller
products such as beverages and snacks are some of the items that
can be bought through vending machines. At present, it is not very
common in India.
3. Catalogue retailing: In this format, retail offering is communicated
to the customer through a catalogue. Now-a-days, major catalogue
retailers have embraced a multichannel strategy by integrating
internet into their catalogue operations. Customers often get a
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catalogue in the mail, look over it, and go to the Internet for more
information before placing an order.
4. Direct selling: This involves contacting the end customers
personally at home or at the workplace. Cosmetics, food and
nutritional products, educational materials are some of the products
sold in this manner. Modicare and Amway are the two major
companies who are active in direct selling.
Self Assessment Questions
4. The function performed by retailers or wholesalers in which they
receive large quantities of merchandise and sell them in small
quantities is called as ________________.
5. _______________ provide a limited variety and assortment of
merchandise at a convenient location in a 2000–3000 sq. ft. store with
speedy check out facilities.
6. Examples of super markets are Subhiksha, Reliance Fresh, Food
world, Food bazaar and Nilgiri’s. (True / False)
7. _______________ comprises of several product lines, typically
clothing, home furnishings, and household goods, with each line
operated as a separate department managed by specialist buyers or
merchandisers.
8. ______________ are retailers that provide online facility of buying and
selling products and services via internet.
9. Give any one example of hyper market in India.
1.6 Retail Industry in India
Retail industry is one among the largest industries in India, with an
employment of around 8% and it contributes to over 10% of the country's
GDP. Retail industry in India is expected to rise 25% yearly. It is expected
that by 2016 modern retail industry in India will be worth US$ 175– 200
billion. Retail industry in India is one of the fastest growing industries with a
revenue expected in 2012 to amount US$ 420 billion and is increasing at a
rate of 5% yearly. A further increase of 7–8% is expected in the retail
industry in India due to growth in consumerism in urban areas, rising
incomes, and a steep rise in rural consumption. It is estimated that the retail
industry in India will amount to US$ 21.5 billion by 2011. Shopping in India
witnessed a revolution with the change in the consumer buying behaviour
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and the whole format of shopping also altered. Retail industry has a modern
approach with multi-storied malls, huge shopping centres, and sprawling
complexes which offer almost everything.
Indian retailers’ preferred means of expansion is to expand to other regions
and to increase the number of their outlets in a city. In the Indian retailing
industry, food is the most dominating sector and is growing at a rate of 9%
annually. The branded food industry is trying to enter the India retail industry
and convert Indian consumers to branded food buyers. At present 60% of
the Indian grocery basket consists of non-branded items. India retail industry
is progressing well and for this to continue, retailers as well as Indian
government will have to make a combined effort.
1.6.1 Growth of organised retailing in India
Before liberalisation, the markets were driven by manufacturers as they had
control over the supply of products. But post liberalisation, markets are
basically driven by demand where the consumer calls the shots. Over the
last few years, the consumer has evolved into being extremely demanding.
In terms of quality, it is termed as ‘Customer defined quality’ both in product
and service specifications.
Organised retailing in India initially began in South India. In comparison with
metro cities like Mumbai and Delhi, land prices in cities like Chennai,
Hyderabad and Bangalore were available at cheap prices when retailing
was in its early stages. This supports the concept called store
rationalisation, where cheap prices ultimately reflect in the availability of
products at lesser costs which places both the retailer and the consumer in
an ideal footing. In major cities in India, nearly 30% of the food sales are
accounted by supermarkets. In the consumer durable space, the firms such
as Viveks and E-Zone have contributed significantly through specialty
chains. Two years of recession in the early part of 2000 to bring down the
property prices in cities like Mumbai and Delhi, and this is when retailing
made an entry into these regions.
The boom in retailing in India has been mainly observed in the urban
markets. There are two main reasons for this. Firstly, the retailers present in
the urban markets feel that the opportunities available in urban markets are
yet to exhaust and therefore it makes sense to be tapping opportunities that
are not fully explored. Secondly, identification on the basis of lifestyle needs
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that appeal to different classes of the society also leaves a gap that most
retailers want to fill. Retail chains like Crossroads, Shoppers Stop are
concentrating on the upper segment of the consumer population and are
selling products at higher prices. On the other hand, retail outlets like Food
World, Big Bazar, target the middle class population. Retailing is all about
meeting customer expectations by making better customer segmentation
and thereby targeting the lifestyle needs of these classified consumer
segments.
1.7 Importance of retailing
There is a propensity in sales to sell more to few than to sell small quantities
to many. It would be better go to one wholesaler who would sell as much
than go to 100 retail outlets. This is a tendency that FMCG companies try
hard to battle. The repercussions of this tendency are as below:
1. Most importantly wholesale dependency makes the company's position
weak and also makes it vulnerable. Retailing gives strength to the
company – strength derived out of hedged risks among many small
retailers rather than a small set of wholesalers.
2. Organised retailing in India was estimated at Rs. 18,000 crores in
2001–2003 and has grown at about 40% over the last 3 years (Source
KSA Retail Outlook).
3. Retailing has a tremendous impact on the economy. It involves high
annual sales and employment. Retailing is a major source of
employment that offers a wide range of opportunities including store
management, merchandising and owning a retail business.
4. Consumers benefit from retailing as retailers perform marketing
functions that makes it possible for customers to have access to a broad
variety of products and services. Retailing also helps to create place,
time and possession utilities. A retailer’s service also helps to enhance a
product’s image.
5. Retailers participate in the sorting process by collecting an assortment of
goods and services from a wide variety of suppliers and offering them
for sale. The width and depth of assortment depends upon the individual
retailer’s strategy.
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6. They provide information to consumers through advertising, displays
and signs and through sales personnel. Marketing research support is
given to other channels, members, etc.
7. They store merchandise, mark prices on it, place items on the selling
floor and handle products; usually they pay suppliers for the items
before selling them to final customers. They complete transactions by
using appropriate locations, credit policies, and other services, like
delivery.
8. Retailing in a way, is the final stage in marketing channels for consumer
products. Retailers provide the vital link between producers and ultimate
consumers.
1.8 Changing trends in retailing
Of late, retail industry is undergoing tremendous changes in terms of
strategy adopted and the way business is being done. This has become a
trend in recent years. Some of such changing trends are mentioned below:
New retail forms and combinations: For instance, some supermarkets
include bank branches.
Growth of intertype competition: Different types of stores – discount
stores, catalogue showrooms, and department stores – all compete for the
same consumers by carrying the same type of merchandise.
Growth of giant retailers: Through their superior information systems,
logistical systems, and buying power, giant retailers are able to deliver a
good service and immense volumes of product at appealing prices to the
consumers. They are making it difficult for smaller manufacturers on what to
make, how to price and promote, when and how to ship and even how to
improve production and management. Manufacturers need these accounts;
otherwise they would lose 10 to 30% of the market.
Growing investment in technology: Retailers are using computers for
better forecasts, control inventory costs, order electronically from suppliers,
send e-mail between stores and even sell to customers within stores. They
are adopting checkout scanning systems, electronic fund transfer, electronic
data interchange, in-store television, store traffic radar systems and
improved merchandise-handling systems.
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Global presence of major retailers: Retailers with unique formats and
strong brand positioning are increasingly appearing in other countries.
Selling an experience and not just goods: Retailers are now adding fun
community in order to compete with other stores and online retailers. There
has been a marked rise in retail establishments that also provide a place for
people to congregate, such as coffee-houses, tea shops, juice bars, and
book shops.
Competition between store-based and non-store-based retailing: Some
store based retailers initially saw online retailing as a definite threat.
Consumers now receive sales offers through direct mails and catalogues
and through television, computers and telephones. These non-store based
retailers are taking business away from store-based retailers.
Self Assessment Questions
10. Retail industry is one among the largest industries in India, with an
employment of around 8% and contributing to over 10% of the
country's GDP. (True / False)
11. Retailing also helps to create place, time and possession utilities.
(True/ False)
12. Retailers participate in the sorting process by collecting an assortment
of goods and services from a wide variety of suppliers and offering
them for sale. (True / False)
1.9 Opportunities and Challenges in Retailing
To cope with a highly competitive environment, retailers are hiring and
promoting people with a wide range of skills and interests. Students often
view retailing as a part of marketing because management of distribution
channels is a part of manufacturer’s marketing function. But retailers
undertake most of the traditional business activities. For instance, retailers
conduct the following:
 Raise capital from financial institutions.
 Purchase goods and services.
 Develop accounting and MIS to control operations.
 Manage warehousing and distribution systems.
 Design and develop new products.
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Undertake marketing activities such as advertising, promotions, sales
force management and market research.
Retail is thus a people-centric industry which can simultaneously expose
you to many skills and disciplines. It offers many choices in terms of career,
chief among them being: buying and merchandising, marketing, store
operations, sales, finance, human resources, technology, visual
merchandising, SCM and logistics. Retail managers are often given
considerable responsibility early in their career. Retail management is also
financially rewarding.
Retailing also provides opportunities for people wishing to start their own
business. Some of the world’s richest people are retailing entrepreneurs.
1.9.1 Challenges faced by the retail sector
The organised sector in retailing faces stiff competition from the
unorganised sector. Despite some optimism, the low cost structure in terms
of the operational cost of the unorganised sector always challenges the
existence of the organised sector and with it the issue of sustained growth.
Besides, unorganised sector has also the benefit of being mobile, (the
Kirana store in India can take itself to a place where business activity takes
place) when the situation demands. Such mobility is not available to
organised retailers who operate through fixed premises.
Traditional retail operations in India are deep rooted and also enjoy the
benefit of an owner-operated structure which involves low cost and less
taxes to pay. On the other hand, organised sector has large expenses in the
form of high labour costs, welfare and social security costs of employees,
bigger premises and higher corporate taxes to pay. The key challenges that
need to be addressed by the organised sector to ensure sustained growth
may be summarised as follows:
 Availability of space to support retail operations where government
intervention is necessary.
 Foreign Direct Investment needs focus in terms of liberalised policy. Too
many regulations do not facilitate fund flows and this will restrict external
participation.
 Increased focus on training and development of workers needs the
attention of both the government and the industry.
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Successful retailing needs the presence of experienced personnel
considering the dynamic characteristics of the retail sector. This leads to
belligerence between retailers to retain the right people. The result of
such argumentativeness leads to high rate of attrition in retail industry.
There persists a challenge of providing increased income to farmers. A
larger pie of the profits arising from the produce is taken away by
middlemen, not keeping the interests of the producing farmers into
consideration.
Besides the above, issues regarding supply chain management, mass
procurement management and inventory management are areas that
the entrepreneurs need to take into consideration.
1.10 Summary
Let us now summarise the key learnings of this unit:

Retailing is a part of our every day life. Retailing consists of business
activities involved in selling goods and services to consumers for their
personal or household use.

Retailing includes every sale of goods and services to the final
consumers. Retailing is the last stage in the distribution process.
Retailing is selling of merchandise directly to the consumer.

Retail managers must make complex decisions in selecting target
markets and retail locations, determining what merchandise and
services to offer, negotiating with suppliers and distributing merchandise
to stores, training and motivating sales associates, and deciding how to
price, promote and present merchandise.

Several special characteristics distinguish retailing from other types of
business: small average sale, impulse purchases and popularity of
stores.

The retailers perform some important functions to create value to the
product as well as customer: providing an assortment of products and
services, breaking bulk, holding inventory and providing services.

The various categories are grouped under two main headings: Store
retail format and Non-store retail format.
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Retail Management

Unit 1
Store retail format includes convenience stores, departmental stores,
hyper markets, super markets, discount stores, etc. Non store retail
formats include e-tailing, vending machines, catalogue retailing and
direct selling.
1.11 Glossary
Convenience stores: Small stores located near a residential area. It caters
to customers who prefer ‘convenience of buying or shopping to the price of
the product’.
Category killers: Small specialty stores have expanded to offer a range of
categories. They have widened their vision in terms of the number of
categories
Hyper markets: This is a special kind of combination store which integrates
an economy super market with a discount department store.
E-tailers: These are retailers that provide online facility of buying and selling
products and services via internet.
1.12 Terminal Questions
1. Explain what is meant by retailing.
2. Explain various functions of retailing.
3. Explain how the convenience stores are different from departmental
stores.
4. Explain the role and importance of retail industry in India.
5. Write a note on changing trends in retailing.
1.13 Answers
Self
1.
2.
3.
4.
5.
6.
7.
Assessment Questions
True
True
True
Bulk Breaking
Convenience stores
True
Departmental Stores
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Retail Management
8.
9.
10.
11.
12.
Unit 1
E-tailers
Star India Bazaar
True
True
True
Terminal Questions
1. Refer section 1.1 and 1.2.
2. Refer section 1.3.
3. Refer section 1.5.
4. Refer section 1.6.
5. Refer section 1.8.
References:

Berman, B., & Evans, J. R. (n.d.). Retailing Management. Pearson
Education.

Levy, M., & Weitz, B. A. (n.d.). Retailing Management. Tata McGraw Hill.

Pradhan, S. (n.d.). Retailing Management - Text and Cases. Tata
McGraw Hill.
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