RETAIL MANAGEMENT
UNIT -II
The Retailing Concept
Customer
orientation
Coordinated effort
Retailing
concept
Retail Strategy
Value- driven
Goal orientation
Customer orientation - The retailer determines the attributes & needs of its
customers & endeavors (take action) to satisfy these needs.
Coordinated effort - The retailers integrates all plans & activities to maximize
efficiency.
Value-driven - The retailer offers good value to the customers, whether it be
upscale (expensive) or discount i.e., “appropriate pricing” for goods &
customer service.
Goal oriented - The retailer sets goal & uses its strategy to attain them.
Classification of Retail Institutions
Store-based retail
strategy mix
Ownership
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Independent
Chain
Franchise
Leased department
Vertical marketing system
Consumer cooperative
Nonstore-based
retail strategy mix
& nontraditional
retailing
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Convenience store
Conventional supermarket
Food-based supermarket
Combination store
Box (limited line) store
Warehouse store
Specialty store
Variety store
Traditional department store
Full-line department store
Off-price chain
Factory outlet
Membership club
Flea (louse) market
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Direct marketing
Direct selling
Vending machine
World wide web (WWW)
RETAIL FORMAT
Retail is usually classified by type of products as follows:
• Food products
• Hard goods or durable goods (“hardline retailers”)
- appliances, electronics, furniture, sporting goods, etc. Goods
that do not quickly wear out and provide utility over time.
• Soft goods or consumables - clothing, apparel, and other
fabrics. Goods that are consumed after one use or have a
limited period (typically under three years) in which you may
use them.
• Services
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banking,
insurance,
transportation,
communication, IT & ITES, etc,. those are also marketed like
products across the retail counters.
Unorganized Retail
• “Unorganized retailing” is defined as an outlet
run locally by the owner or caretaker of a shop
that lacks technical and accounting
standardization. The supply chain and
sourcing are also done locally to meet local
needs.
Organised Retail
• Defined as those companies engaged in
retailing which have a network of retail
outlets, compared to the stand alone format
characterized by the traditional sector, and
those who adopt professional management
for day to day operations.
In-Store Retailing
1. Department Stores
2. Super Markets
3. Discount Houses
4. Chain Stores or
5. Multiple Shops
Non-Store Retailing
1. Direct Selling
2. Telemarketing
3. Online Retailing
4. Automatic vending
5. Direct Marketing.
Franchising
Department Stores
• Department stores are very large stores offering a huge
assortment of “soft” and “hard” goods; often bear a
resemblance to a collection of specialty stores. A retailer
of such store carries variety of categories and has broad
assortment at average price. They offer considerable
customer service.
• Thus a department store is a retailing business unit that
handles a wide variety of shopping and specialty goods
and is organized into separate departments for purposes
of sales promotion, accounting control and store
operation.
• Recent trends are to add departments for automotive,
recreational and sports equipment, as well a services such
as insurance, travel advice and income-tax preparation.
Department stores are distinctive in that they usually are
oriented towards service. They are usually shopping
centers.
Super Markets
• It is a self-service store consisting mainly of grocery and
limited products on non food items. They may adopt a Hi-Lo or
an EDLP strategy for pricing. The supermarkets can be
anywhere between 20,000 and 40,000 square feet (3,700
m2).
Example: SPAR supermarket. These are large, self-service stores
that carry a broad and complete line of food and non-food
products. They have central check out facilities.
• Kotler defines supermarket as ‘a departmentalised retail
establishment having four basic departments viz. self-service
grocery, meat, produce and diary plus other household
departments, and doing a maximum business. It may be
entirely owner operated or have some of the departments
leased on a concession basis’.
Discount Houses
• Discount stores tend to offer a wide array of products and
services, but they compete mainly on price offers extensive
assortment of merchandise at affordable and cut-rate prices.
• Normally retailers sell less fashion-oriented brands. These are
large stores, freely open to the public and advertising widely.
• They are self-service and general merchandising stores. They
carry a wide assortment of products of well known brands,
appliances, house wares, home furnishings, sporting goods,
clothing, toy and automotive services.
• They complete on low price basis and operate on a relatively
low mark-up and a minimum number of customer service.
They range from small open showroom to catalogue type order
offices to full line limited service, and promotional stores.
• They buy their merchandise stocks both from wholesale
distributors and directly from manufacturers.
Chain Stores or Multiple Shops
• A chain store system consists of four or more
stores which carry the same kind of merchandise
are centrally owned and managed and usually
are supplied from one or more central
warehouses.
A chain store is one of the retail units in chain store
system. Chains have been interpreted as a group of
two or more reasonably similar stores in the same
kind or field of business under one ownership and
management, merchandised wholly or largely from
central merchandising head quarters and supplied
from the manufacturer or orders placed by the
central buyers.
1. Warehouse stores- warehouses that offer low-cost,
often high quantity goods piled on pallets or steel
shelves; warehouse clubs charge a membership fee;
2. Variety stores- these offer extremely low-cost goods,
with limited selection;
3. Demographic Stores- retailers that aim at one
particular segment (e.g., high-end retailers focusing
on wealthy individuals).
4. Mom-And-Pop Stores - is a retail outlet that is
owned and operated by individuals. The range of
products are very selective and few in numbers.
These stores are seen in local community often are
family-run businesses. The square feet area of the
store depends on the store holder.
5. Specialty stores- A typical speciality store gives attention
to a particular category and provides high level of service to
the customers. A pet store that specializes in selling dog food
would be regarded as a specialty store. However, branded
stores also come under this format.
For example if a customer visits a Reebok or Gap store then
they find just Reebok and Gap products in the respective
stores.
6. General store- a rural store that supplies the main needs
for the local community;
7. Convenience stores- is essentially found in residential
areas. They provide limited amount of merchandise at more
than average prices with a speedy checkout. This store is
ideal for emergency and immediate purchases as it often
works with extended hours, stocking everyday;
Hypermarkets- provides variety and huge volumes of exclusive
merchandise at low margins. The operating cost is comparatively less than
other retail formats.
9. Malls -has a range of retail shops at a single outlet. They endow with
products, food and entertainment under a roof.
10. Category killers or Category Specialist -By supplying wide assortment
in a single category for lower prices a retailer can “kill” that category for
other retailers. For few categories, such as electronics, the products are
displayed at the centre of the store and sales person will be available to
address customer queries and give suggestions when required. Other retail
format stores are forced to reduce the prices if a category specialist retail
store is present in the vicinity.
Non-Store Retailing
A large majority - about - 80% - of retail
transactions are made in stores.
However, a growing volume of sales is taking
place away from stores. Retailing activities
resulting in transactions that occur away from a
physical store are called non-store retailing.
It is estimated that non-store sales account for
almost 20% of total retail trade.
DIRECT SELLING
• In the context of retailing, direct selling is
defined as personal contact between a sales
person and a consumer away from a retail
store.
• This type of retailing has also been called in
home selling.