Retail Format PPT 2

 Also known as Kirana Store & Mom & Pop
 Retailers owns one retail unit
 Are run by owners & their families
 India has the highest no. of independent
stores- kirana stores
 There are 9 million independent stores in India
accounting to 70% of retail outlet
 Average size in India is app 25-30 sq. meter
 brands are limited
 Allow customer to buy on credit
 home delivery in neighborhood
 Employ members of extended family
 Takes order by Telephone
 Ease of entry into the market so many
independent outlet .
Flexibility in choosing retail formats and locations
Because only one location is involved , detailed
specification can be chocked out
Small segment of customers are catered to
Investment cost for lease , fixture & workers can be
held down
prices, hours & other factors are set according
to the segment
Personal relation is created
Free from unions & seniority rules
In bargaining with suppliers, independent
don’t have much power as they often buy in
small quantities.
Reordering maybe difficult if minimum order
requirement is not full filled. Therefore
Independents often form groups
Loose on Economies of Scale
High cost of transportation ,ordering & handling
Labor intensive –everything is done manually
less promotional strategy
Overdependence on owners
Little time for long run planning
Chain Stores
Multiple outlets, under a common ownership , so
the decision making & purchasing is usually
a. Have bargaining power due to the purchase
b. Can take advantages of media
c. Use technology
d. They usually give time to long run planning &
may assign the job to someone for day to day
e. Warehousing maybe centralized
f. Less dependent on the owner & usually has
trained management
 Difficult to find new locations
 Difficult to maintain consistency in terms of
prices ,products, assortments firstly due to
difference in management & secondly due to
difference in local market
 Investment is higher.
 Managerial control is difficult
A contractual agreement between a franchisor (a
manufacturer, whole seller, service provider) & a
retail franchise, which allows the franchise to
conduct business under a established name &
according to a given pattern of business
The franchisee pays a initial fee & a monthly
percentage of gross sales in exchange of exclusive
rates to sell goods & service in that area.
Trademark Franchising
Acquires the identity of a franchisor by agreeing to
sell the latters products & operate under the latters
The franchise operates rather autonomously. There
are certain operating rules but the franchisee set
the store hours ,chooses a location & determines
facilities and displays.
Business Format Franchising
 Receive assistance on site location ,quality,
control ,accounting system, startup practices,
management training & responding to problems
besides the right to sell goods & services.
 Prototype stores ,standardized product lines,
cooperative advertising ,foster a level of
coordination previously found only a chain
Types of Franchise
Unit Franchising – Can operate only one unit
Master- Grants large territories & sub franchising
is allowed - Raymond's ,Titan, Wills lifestyle
 Development Agreement- Has right to operate
multiple units in a territory but no sub franchising
If they operate one outlet ,they are independent
& 2 or more they are chains
Advantages to Franchisee
a. Acquire well known name
b. Relatively small capital investment
c. Standard operating procedure
d. Cooperative marketing efforts
e. Exclusive selling rates.
Purchases may be less costly
Disadvantages to
a. Oversaturation if too many in one area
b. Locked into contracts requiring to purchase
from one franchisor
c. Cancellation clause
d. Royalty
a. National global presence developed more
b. Franchisee have to abide by strict rules
c. As franchisee owner so they work hard
a. Harm the overall reputation if they do not adhere to
co. standards
b. Lack of uniformity among outlets adversely affects
customer loyalty
c. Intra franchise competition not desirable
d. The resale value of individual unit is injured if
franchisee performs poor
Leased departments
 Is a department store inside a retail store.
 The leased department proprietor is
responsible all aspects of its business.
 The retail store puts some operating
restrictions to ensure overall consistency
and coordination.
Advantages for retailer
 Market is enlarged
 Personnel management, merchandize display
and reordering all are undertaken by lessee.
 Regular store personnel do not have to be
 Some expenses are paid by the LD so total cost
of store is reduced.
 A % of revenue is received regularly.
 Lessee may adversely affect the stores
Advantage to the leased
 Stores are known and have a steady walk in of
 Costs are reduced
 Their image is enhanced by their relationship with
popular store.
 Problems- the restrictions by the retailer in terms
of hours and days of working and total products
that can be stored are less
Department store
 Large retail units with an extensive assortment of
goods and services that are organized into
separate departments for the purpose of selling.
 Wide range of products like apparel, furniture,
appliances, home furnishing, toys, footwear,
handbags , wallets, watches, jewelry and so on.
 with no one merchandize line predominating
 No grocery
Convenience store
 Typically a well located food oriented retailer and carries a
moderate number of items.(serving the catchment)
 Ranging from 1,500 to 5,000 sq. ft. in size
 All necessary everyday household items including milk, eggs,
 Limited number of brands
 Store area is small with an average atmosphere. with very
less walking space.(aisle)
 Customer shop multiple types and the average transaction
size.(average ticket size)
 Due to limited shelf space stores receive
frequent deliveries.
 Simple and frequently used fruits and
vegetable only.
 No elaborate layout.
 have the same entry exit door
 Easy day, twenty four seven, reliance
fresh,6ten, Spencer's daily, food mart
 Big grocery store
 Large area- 10,000-30,00 square feet
 Large isles
 Non vegetarian section
 Variety of products with a large number of brands
 All household items including crockery, plastic
goods, utensils
 Food bazaar ( by big bazaar),Spencer's super
 Combination of department store and
 Average size 60,000- 1,20,000 square feet
 Have on an average of 70,000 items
 Big bazaar, Spencer’S hyper
Specialty Stores
 These include Lois Vuitton, the Body Shop, and
Victoria’s Secret. These stores concentrate on one type
of merchandise and offer it in a manner that makes it
special. Some are very high-end (Louis Vuitton) while
others cater to the price-conscious masses (Old Navy).
 The retail chains, which deal in specific categories and
provide deep assortment within the category in them
are specialty stores.
Category Killer
 As the name suggests, category killer is a large retail
chain store that dominates its product category so
completely that it eliminates a large chunk of
competition. Also known as big box store, a category
killer is a discount speciality store that offers an
extensive selection of merchandise at prices so low
that smaller stores cannot compete (read survive).
Discount Stores
 These are the stores or factory outlets that provide
discount on the MRP items. They focus on mass selling
and reaching economies of scale or selling the stock
left after the season is over.
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