Chapter 1
Understanding The World Of Retailing
What Is Retailing..?
• Retailing is the set of business activities that adds
value to the products and services sold to
consumers.
• Often people think of retailing only as the sale of
products in store but retailing also involves sales of
services.
• For example:
a home
delivered pizza, etc.
A Retailer’s Role In Distribution Channel
Retailer satisfy consumer needs by having right
merchandise, at right price, at the right place.
Retailers also provide markets for producers to sell
their merchandise.
Some manufacturers are performing both
production and retailing
business activities which is
called vertical integration.
Functions Performed By Retailers
• Retailers provide important functions that increase
the value of products and services they sell to
consumers and facilitate the distribution of those
products and services for those who produce them.
These functions are:
1. Providing an assortment of
products and services.
2. Breaking Bulk.
3. Holding inventory.
4. Providing services.
1. Providing An Assortment Of Products And
Services.
• Supermarkets typically carry thousands of products.
Offering an assortment enables their customers to
choose from a wide selection of brands.
2. Breaking Bulk
• To reduce the quantity of product different retailer
purchase small quantity product ,thus bulk quantity
can be divided into small once.
• Retailers then offer the products in smaller
quantities to individual consumer
This is called breaking bulk.
• Breaking bulk is important to both
manufacturers and consumers.
3. Holding Inventory.
A major function of retailers is to keep inventory
 into user friendly sizes so that products will be
 available when consumer want them.
Thus consumer can keep a small inventory of
products at home.
(4) Providing services.
• Retailers provide services that make it easier for
customers to buy and use products.
• They display product so consumers can see and test
them before buying.
• Some retailers have salespeople for providing
information about products, and
also provide home delivery
service.
• Day and night service is also
offered.
Types of Retailers
We classify retailers on the basis of their retail mix.
Types of retailers:Food stores:-there are three types of retailer.
 ( convenience stores).those store which product
can be used on daily basis.
General Merchandise Retailers:- ( Specialty stores,
category specialist, medicine. And so on.
Multichannel Retailers.
• A multichannel retailer is a retailer that sells
merchandise or services through more then one
channel.
• Multichannel retailing include.
1 Store based.
2. Nonstored base.
(Electronic, catalog/direct mail,
direct selling, TV home
What is Consumer Buying Behavior.
• Here we discuss six stages in the buying process.
1.Need recognition
1. Need recognition
2. Search for
information
2. Information
search about
product
3. Evaluate retailers
3. Evaluate product
4. Select a retailer.
4. Select product
5. Visit store site
5. Purchase
merchandise
6. Repeat store
product.
6. Post purchase
evaluation.
What is the Retail Market Strategy.
• A retail market strategy is a statement identifying,
1. The retailers target market towards which the
retailer plans to focus its recourses, how to invest our
capital ,and which market to target it business
market or consumer market.
(2)Retail location and Site Selection
strategies.
 Location strategies are important for both consumer
and competitive reasons.
 The retailer consider the following issues before
selecting a retail area: People living in the area.
 Their lifestyles.
 How wealthy they are.
 Is the area growing.
 Level of competition.
(3)Human Recourse Strategies.
 Two critical issues of HRM are development of
committed workforce and effective management of
a diverse workforce.
Building a committed workforce is critical in
retailing because high turn over has a major effect
on profitability.
Managing diversity is also very
important because consumers are
becoming more diverse.
What is Customer Relationship
management.
• Customer relationship management (CRM) is
business philosophy and set of strategies, programs
and systems that focuses on identifying and
building loyalty with a firms most valued customers.
1. Collecting Customer
Data.
2. Analyzing and
Identifying Target
Customers
4. Implementing CRM
Program
3. Developing CRM
program
What is Merchandise Planning System.
• It is the process by which the retailer attempts to
offer the right quantity of the right merchandise.
• Retailers are required to make decisions about
thousands of individual items from hundreds of
vendors.
• Buying process must be
organized in systematic, orderly way.
(1) Buying Merchandise
• Retailers must determine their branding strategy.
• Should they buy well known national brands or to
develop private brands with their own name on it.
• How and where they will meet and communicate
with their vendors?
• Will it be face to face or over the
internet?
Pricing.
• Pricing decisions is vital because consumers are
looking for good value when they buy merchandise
and services.
• Many consumers have become price sensitive.
• Others are willing to pay extra for quality.
Store Management.
Managing the store.
Customer
Service.
Store layout,
and design.
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Managing the store.
• Responsibilities of store managers are as under.
1: Managing employees.(number of employee
needed)
2: Controlling cost.(using cost effective strategies)
3: Managing merchandise.(analyzing the product)
4: Providing consumer service.
Store layout, design and visual merchandising.
• Here the decisions are needed about how to display
the product, in which place because there are
thousands of products and each product must be
accessible easily.
Customer Service.
• Customer service is the set of activities and
programs undertaken by retailers to make the
shopping experience more rewarding for their
customers. Services offered by retailers.
•
• Acceptance of credit
card.
• Credit.
• Delivery to home .
• Demonstration of
product
• Display of merchandise.
• Extended store hours
• Parking
• Play areas for children.
• Presentation on how to
use merchandise.
• Repair service