RETAIL MANAGEMENT

PROF. R.MATHUR

RETAIL
MANAGEMENT ..1
INTRODUCTION
CONCEPTS, ROLE & ENVIRONMENT
RETAILING Business activities involve Selling
Goods and Services to Consumers for
their Personal, Family or Household use.
Every sale of Goods and Services to final
consumer Food products, apparel,
movie tickets; services from hair cutting
to e-ticketing.

Retailing is the Last stage in Distribution

Process- Wholesale is an intermediate
where Goods and services are sold to
Business customers.

RETAIL
MANAGEMENT
..1
Retailer is customer focused, not
Product focused.

Manufacturer may reach customers

through:
Dealers
Company showrooms
Super / Hypermarkets
Manufacturers will decide on Retail
Distribution:
Intensive
Selective
Exclusive

RETAIL
MANAGEMENT
..1
ORGANISED
RETAILING

In India Organised Retailing is 2%

Retail sector highly fragmented
Retail chains like Wal Mart, Sears,
McDonalds brought Rapid Growth
and consolidation of Organised Retail
Rapid rise of Income levels and
accompanying changes in lifestyles
greatly contributed to growth of
Organised Retail

RETAIL
MANAGEMENT
..1
ORGANISED
RETAILING

In India, increase in Disposable income,

Purchasing Power of growing Middle
Class conducive conditions for growth of
Organised Retail
Indian Retail environment different from
that of western countries:
- Cities congested, large population in
rural areas
- Smaller purchases, limited household
space

RETAIL
MANAGEMENT
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RETAILING
CONCEPT
Retaillier French for breaking bulk
Retailer links Producers to Customers
Retailer is a person, agent, agency,
company or organisation reaching the
Goods or Services to ultimate consumer
Retailers perform specific activities:
Anticipate customer wants
Stock product assortments
Acquire market information
Finance Retail business

RETAIL
MANAGEMENT
RETAILING
CONCEPT ..1

Retailing may take place through:

Retail Store
Mail
Direct
Internet
Sales
Door-to-door
Retail services like Restaurants, Hotels,
Parlour, Health Services, car rentals,
Travel
In USA Retail generates $3 trillion
through 23 mil. Employees. Wal Mart
generates $245 Bio. sales through 1
Mio.nationally and .3 Mio. Foreigners.

RETAIL
MANAGEMENT
..1a strong
Strong economies have

Retail sector
Entry in retail sector is easy, hence
results in fierce competition
Retail must perform its primary role
of catering to customer satisfaction
Retail earns modest profits of 9-10%
Retail stores of different sizes face
distinct challenges. Their sales
volume influences:
- Merchandise purchase
- Promotion & - Expenses Control

RETAIL
MANAGEMENT
..1
Last
decade has seen tremendous

changes in Retail Business from

made to order to ready to wear,
from counter sales to self service,
emphasis on value addition and cost
reduction.
Family run retail business giving way
to modern professional retail.
Retail improving inventory
management through systems
faster turnover, better profitability,
fast changing customer preferences
for assortment of goods and
services. BETTER CUSTOMER CARE

RETAIL
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GLOBAL RETAIL INDUSTRY
1.

2.
3.

4.
5.

Retail sales driven by Ability

(disposable income) and
willingness (consumer confidence)
Worldwide retail sales Est.$7 Trio.
Expenditure on Household
Consumption increased by 68%
between 1980 and 1998
Top 200 retailers account for 30%
worldwide demand
Over 50 of the Fotune 500 and 25
of Asian Top 200 are Retailers

RETAIL
MANAGEMENT
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ORGANISED RETAIL
1.
2.
3.

4.

By 2006 - 200 Shopping Malls Up

from 25 in 2003
Expect by 2006, to develop 40
mio.sq.ft. quality Retail Space
6 A Grade cities Delhi NCR,
Mumbai, Bangalore, Hyderabad,
Chennai, Kolkata will have 34 mio.
and non metros Pune, Ahemadabad
Ludhiana, Chandigarh, Jaipur,
Lucknow, indore, Cochin 6 mio.
Delhi NCR will have 26 mio.,
Mumbai another 5 mio.

RETAIL
MANAGEMENT
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RETAIL CHARACTERISTICS
1.
2.
3.
4.
5.
6.

Direct End-User Interaction

Platform for Promotions & POP
displays
Lower unit sales
Retail location critical
Services as important as Core
Products
Large number of Retailers to meet
geographical coverage and
population density

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MANAGEMENT
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RETAIL EVOLUTION
THEORIES
Four theories of evolution are:
1. Wheel of Retailing
Cyclical
2. Accordion theory
Theories
3. Dialectic Process
Evolutionary
4. Natural selection
Theories
Cyclical: Begin with one state and
return to that state at some time
in future
Evolutionary: Changes similar to
biological evolution

RETAIL
MANAGEMENT
..2
Wheel
of Retailing

Wheel represents phases through which

some types of Retailers pass:

Retailers attract customers low price, low

service
Expand market More expensive
merchandise, More services, open More
convenient locations. Trading up process
increases costs & price of their
merchandise, creating opportunities for
new low price retailers to enter e.g.
Discount stores & category specialists
Some Retailers dont begin as low price, low
service entrants, e.g. Upscale fashion
specialty stores.

RETAIL
MANAGEMENT
THE ACCORDION ..2
THEORY

Retailers fluctuate from strategy of

offering wide merchandise with shallow
assortment to offering limited
categories with deep assortment

In rural markets, Retailers sell many

categories under one roof: shoes,
cosmetics, foods, cloth, medicines.
However the assortment is shallow and
customers have limited choice.
Department stores have both width and
depth of merchandise
Speciality stores carry special categories
with deep selection

RETAIL
MANAGEMENT
..2
DIALECTIC PROCESS

An evolutionary theory based on premise

that retail institutions evolve.
The theory suggests that new Retail
formats emerge by adopting
characteristics from other forms of
retailers in much the same way as the
child is the product of the pooled genes
of the parents.
Specialty stores with high margins, low
turnover plush operations
Discount stores with low margins, high
turnover low operations
Both the above were synthesized to form
category specialist stores.

RETAIL
MANAGEMENT
..2
NATURAL SELECTION

Those Retail Institutions Succeed which

adapt to changes in customers,
Technology, competition and legal
environment.
Department stores have tried to
combat specialty stores by opening
specialty counters within the stores.
Interest in physical fitness and
increased number of women in
workforce have made salad bars in
grocery stores successful.

RETAIL
MANAGEMENT
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RETAIL BUSINESS CLASSIFICATION

1.

2.

3.

Ownership Business:
Proprietorship,
Partnership,
Limited liability company
Operational Structure:
Independent Trader,
Chain Of Stores,
Franchising,
Consumer Cooperative
Width & Depth Of Merchandise:
Specific Product Category
Wide Range

4.

5.

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MANAGEMENT
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Type
Of Pricing:
Low pricing, minimum Service
Premium Merchandise, High Service
Premium pricing, distinctive Image
Consumer Interaction:
Direct interaction
Mail Order
Tele-Selling
Vending machines
Door-to-door
Mobile Vending

RETAIL
MANAGEMENT
..2 is grains,
GROCERS - Major business

provisions, spices, edible oils. Grocers

may be dealing in many other items.
GENERAL STORES - Deal in items Daily
needs and stocking number of
categories, is identified as a general
store.
CHEMIST- Deal in Ethical
Pharmaceutical Products. Require a
license and a Qualified Pharmacist.
Such outlets also deal in diverse FMCG
products.

RETAIL
MANAGEMENT
..2
MODERN FORMAT STORE

a) Part of a chain of stores with selfservice facilities

b) Part of a chain, but does not have
self-service Facilities
c) Stand-alone (not part of a chain)
with self-service facilities
FOOD STORE : Deal mainly in food
products - milk, beverages, tea,
coffee, squashes, ketchup, jams,
chocolates, biscuits, bakeries etc.

RETAIL MANAGEMENT ..2

TOBACCO KIOSK : Deal in tobacco

products like Paan, Cigarettes, etc. are
called Pan Bidi shops. Many of them
also deal in packaged consumer
products like toilet soaps, toothpaste,
washing soaps, biscuits, confectionery,
batteries etc.
COSMETIC STORE : Deal in Ladies
Personal care products / Cosmetics,
General toiletry products, Mens
toiletry products, Baby Care Products.

RETAIL
MANAGEMENT
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RETAIL CONCEPT
Customer Orientation:
Attributes & Needs satisfaction
Coordinated Efforts:
Maximize Business Efficiency
Value driven:
Good Value for Money
Goal Orientation
Achieve Goals

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RETAILING CONCEPT

Communication with Customers

Identify Customers Needs
Provide Products and Services to
Satisfy Customers
Elicit Feedback to Improve
Services Word Of Mouth

RETAIL
MANAGEMENT
RETAILING
CONCEPT..2
Customer Service approach:
Create a conducive environment
Listen to your Customers
Direct mail
Relationship Marketing Long
Term
Rewards for Regular Customers

RETAIL
MANAGEMENT ..2
ROLE

Consumer spend their money at

Retail which drives the economy.
Retailers realize Revenue when
Consumers buy products or
Services from them.
The revenue passes up the
Consumer Goods distribution chain
viz. to Wholesalers, Distributors
and Manufacturers.

RETAIL
MANAGEMENT ..2

Retail Industry employs 17-20%

Workforce that drives the Economy.

Retail trends often mirror trends in a

nations overall economy.

Retailers add value by Providing the

Right Product at The Right Place at
the Right Time.

RETAIL
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ENVIRONMENT

Retailing is a Dynamic field with very

Competitive Environment.
Retailers act as Filters Strong lobby
for success or otherwise of a Product
or Services.
Companies create Retailer Value and
Consumer Differential Advantage to
improve success rate of their Brands.
Constraints Multiple Brands and
SKUs for each category, Shelf Space,
funds available, Turnover of
Merchandise.

RETAIL
MANAGEMENT
New Concepts &..2
Trends
1.

2.

Vertical Retail Concept: Traditional stores

and Shop-in-Shop concepts mixture of
system and individuality, e.g. Sale of
Non-food items like newspapers,
magazines with snacks, beverages
Consumption Related Trends: Increasing
Consumers with Purchasing Power &
More Migrant Consumers Demand for
Broad selection of Products Demand for
Good quality Products e.g. Honest,
Original and Green Products

Indian Economy GDP Projections Through 2022 (2007

Prices)
US$
Billion

US$
Billion

US$
Billion

US$
Billion

*GDP figures are in real terms with base year as 2007

India is expected to be comparable with UK & France in GDP by 2022

Rapid Transformation
Anticipated
28% share

Reach a share of 28% by 2017

HIGH GDP GROWTH

Projections of 8% sustainable real GDP growth rate till 2020

promise high growth potential for Indian Retail

Radical Transformation
Anticipated In Indian Retail
Country

Share of
Organized
Retail

Years taken to
reach the level
from < 5%

China

20%

10

Poland

20%

Brazil

36%

15

Thailand

40%

18

US

85%

50

India

17% (estimated)
27% (estimated)

5
10

India looking at rapid GROWTH compared to other countries

Growth Of Indian Retail

*Projected

Source: Technopak Analysis, CSO & Other Sources

Indian Retail expected to grow close to 12% p.a. in the next 10

years

RETAIL
MANAGEMENT
..3
WITH
HIGH PRIVATE CONSUMPTION

Private Consumption US $568 Bn

(62%)
Retail US $352 Bn (62%)
Urban US $158 Bn (45%)
Rural US $194 Bn (55%)
Non-Retail US $358 Bn (38%)
Public Spending +Gross Capital
Formation 38%

RETAIL
MANAGEMENT ..3
Rural India consists of 720 Million

consumers across 627,000 villages

17% of these villages account for
50% of the rural population and
60% of the rural wealth implying
reaching out to almost 100,000+
villages to address even 50% of
this rural opportunity WITH HIGH
PRIVATE CONSUMPTION

RETAIL
MANAGEMENT
RAPID
TRANSFORMATION..2

Investments in the range of US$ 20+

Billion expected in the next 5years in
Retail & its Supply Chain alone
Size of modern retail likely to touch US$
74+ Billion by 2011
At least 2.5 Million additional direct jobs
likely to be created in the next 5 years
Hyper-competition is expected to set in
by 2008-9.

RETAIL
MANAGEMENT
..3
TRADITIONAL
RETAILERS

Retail market is growing from US$ 336

billion to US$ 590 in 2012
That means an additional market of US$
254 billion
Even if the modern retailing can go from
US$ 12 billion to US$ 74 billion in 2011
Still US$ 180 billion is left to be
addressed by traditional retailers
The growth of modern retail will be
more in urban as compared to rural

RETAIL
MANAGEMENT ..3
BOOKS FOR REFERENCE
1.
2.

3.

Retail Management By Chetan Bajaj

Retail Management By Berman &
Evans
Retail Management By Levy & Weitz

RETAIL
MANAGEMENT
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CASE
STUDY:

Facts Of the Case No assumptions

Key Issues
List alternatives
Evaluate alternatives
Recommend Course Of Action

RETAIL
MANAGEMENT
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TOTAL
RETAIL EXPERIENCE

Merchandising & Display

Brands and Quality Of Goods
Inventory Carried
Customer Service
Pricing
Support Functions: Parking
Create Customer Excitement

RETAIL
MANAGEMENT
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TOTAL
RETAIL EXPERIENCE
Possible Pitfalls:
Discount stores Ample Stock
Neighborhood Store Overly
Trendy Products
Full Service Store Knowledgeable
Theme Restaurants Novelty
wears off, food so-so, Prices high
MEET CUSTOMER NEEDS

RETAIL
MANAGEMENT ..2
OPPORTUNITIES:

Management
Raise capital
Purchase
Use MIS to Control Operations
Employ for Sales Counters, Stores
and Cash Counters
Undertake Marketing Activities
Entrepreneurial Opportunities

RETAIL
MANAGEMENT
RETAIL STRATEGY ..3
OVERALL ACTION FRAMEWORK
Mission
Goals
Consumer Market
Overall Activities
Feedback and Control Mechanism

RETAIL
MANAGEMENT
..3 FOCUS
Forward Retail Planning

Analysis Of Requirements Of Business

Set realistic Goals
Differentiate Itself for Target
Customers - Benchmarking
Knowledge Of Business Environment
Legal, Economic, Competitive
Synergize efforts
Reduce Business Risk Feedback and
Control

RETAIL
MANAGEMENT ..3
MISSION

Commitment to A Business
Business Decision
Around Goods and Services sold or
around Consumer needs.
Specific or Generic approach

RETAIL
MANAGEMENT ..3

Distinctive Role In Market

A Leader or a Follower
Leader Unique strategy
Follower Emulate standard
Practices with better execution
than competitor.
Market Scope Customer Base
Dynamic Decision In Sync. With
Retail Environment

RETAIL
MANAGEMENT
..3
Ownership
and Management:

Sole Proprietorship Individual

accrues Profits, Risks, Costs. Is
Liable for Legal Claims. Limited
Capital and Expertise.
Partnership Share Profits, Risks,
Costs. Owners Liable for Legal
Claims. Better Capital Investments
and Capabilities.

RETAIL
MANAGEMENT ..3

Corporation Incorporated under

law. Funds through Sale of Stocks.
Ownership Transfer is easy. Private
Limited Company Limited number
of Individuals with Limited Liability.
Public Limited Company Open to
Public to Invest In Stocks. Profits
and Dividends attract Taxes.
Managed by professional managers.

RETAIL
MANAGEMENT ..3
Business:

Start A New Venture Flexibility of

retailing Factors
Buy an Existing Business Balance
Of Advantages should be Positive
weigh the negatives carefully
Become A Franchisee Combines
Enterprise with Known Brands.
Brand also puts a number of rigid
Quality and Business Restrictions.

RETAIL
MANAGEMENT
Types
Of Retail Goods &..3
Services
Durable Goods
Furniture, Electrical Appliances,
Hardware, Timber, Jewelry,
Automotive and Spare Parts
Non-Durable
Apparel Cloth, Garments, Food Group
Green Grocers, Packaged Foods,
General Merchandise, Eating Places,
Petrol Stations, Chemists, Stationery

RETAIL
MANAGEMENT
Service
Establishments..3

Personal Services
Dry Cleaning, Health Care,
Photographic Goods, Barber Shops,
Amusement Services, Movie
Theatres, Clubs, Amusement Parks,
Game Arcades
Repair Services
Automobile, Electrical Gadgets,
Watch & Jewelry, Electronic Gadgets

RETAIL
MANAGEMENT
..3
Hotel
Services

Hotels, Resorts
Professional Services
Lawyers, Doctors & Surgeons,
Chartered Accounts, Stock
brokers, Real Estate Agents
Potential Retail Business Owners
Aptitude for a Particular Business

RETAIL
MANAGEMENT
..3
Personal Aptitude
Knowledge, Experience, Qualifications,
Inborn Skills and Acquired Skills
Financial Resources
Land and Building, Fixtures,
Equipment
Time Demands
Owners Availability
Personnel
Sales People, Inventory, Cashiers

RETAIL
MANAGEMENT
..3
RETAIL
OBJECTIVES STRATEGY

Sales Growth, Market Share

Profit Level, ROI, Efficiency
Satisfaction Total Retail Experience
Positioning Up-market, Mid-Priced,
Discount Oriented, Mass Market, Niche
Value Scale-Quality, price
Fashion Scale-Fashion, Style,
Assortment
Image Projected

RETAIL
MANAGEMENT
..3 Group To
Target
Market Customer
Be Attracted and Satisfied.
Mass Broad Spectrum of Customers
Concentrated Specific group
Differentiated Two or more distinct
Groups with Different Retail
Approaches

RETAIL
TARGET MARKET TECHNIQUES
MANAGEMENT ..3

STRATEGY

MASS MARKET

CONCENTRATED

DIFFERENTIATED

LOCATION

Near Large
Population

Near Small
Medium Pop.

Near Large
Population

RETAILMIX

Wide
Assortment,
Medium Qual.

Distinct Goods
for Target
Market

PROMOTION

Mass Advtg.

Deep
Assortment,
High/ Low
Qual.
Direct mail

PRICING

Popular

High or Low

High, Medium
and Low

STRATEGY

Large
Homogeneous
Group

Specific
Strat.
Directed at
Specific Gr.

Strategies
directed at
Heterogeneous
Groups

Different
Media for
Target Groups

RETAIL
CONTROLLABLE
UNCONTROLLABLE
MANAGEMENT
..3
VARIABLES
VARIABLES
Store Location

Consumers

Managing a
Business
Merchandise @
Pricing
Communicating

Competition
Technology
RETAIL
STRATEGY
Economic
Conditions
Seasonality
Legal Restrictions

RETAIL
MANAGEMENT
..3
Mission

Situation Analysis
Ownership
Goods/Services category
Sales
ObjectivesProfit
Customer satisfaction
Image
Mass
Target Customer Concentrated
Differentiated
Controllable
Overall strategy Uncontrollable
Short Term
Specific activities
Competition
Evaluation
Control
Adjustment

RETAIL
MANAGEMENT ..4

RETAILERS MARKETING DECISIONS:

-Target Market: Focus resources & Retail Mix
-Product Differentiation Strategy: Product
Assortment Breadth & Depth
-Services: Pre-purchase, Post-purchase,
Ancillary
-Price: Target market, Product Mix,
Competition
-Promotion: Promote & Reinforce Image
-Location: Vicinity of Target market

RETAIL
MANAGEMENT ..4

MARKET SEGMENTATION- TARGET MARKET

Sex, Age, Family Size -Type, Marital, Status,
Socio-economic Class, Occupation,
Geographic: Metros, large Towns
Psychographic: lifestyles, Personality, Values
Services: Advertising, Displays, Special
Offers; Delivery, Gift Wrapping, Returns,
Tailoring, Installation; Cheque Cashing,
Parking, Restaurants, Rest rooms

RETAIL
MANAGEMENT ..4

Pricing: High Profit %, Low Volume & Low

Profit %, High Volume
Loss Leader, Discounts -Clear Merchandise
EDLP Every Day Low pricing vs. Discounts
Promotion: Frequent Shopper Rewards,
Coupons, Sampling, Ads.
Location: Sales effectiveness
Number of people pass by - % Enter
% Buy- Average Amount per Sale
CASE STUDY CONVENIENCE STORE

RETAIL
MERCHANDISE
MANAGEMENT:
MANAGEMENT
..5

A Key Strategy: Develop & Implement

Merchandising - Plans Of Proper Assortment
Of Goods & Services As In Demand, make
them Available at Places, Times, Prices &
Quantity to Satisfy Target Customers
Merchandising Decisions dramatically affect
Performance.
Investments in Merchandising Skills & Talent
produce Better results than Investments in
Technology or other Skill Specialties. 70 -80
% Results Depend on Merchandisers.

RETAIL
MERCHANDISING
PLAN: ..5
MANAGEMENT

All Merchandising Decisions Based on

Plans1. Needs Of Target Market
2. Type Of Retail Business
3. Marketplace Positioning
: Mass - Wide & Deep Assortment Broad
Customer Market
:Niche Specific Market Segment High
Customer Loyalty Shields against
Conventional Competitors

RETAIL
MANAGEMENT ..5

4. Defined Value Chain (Trends )

- Expected: Hygiene, Timely Service,
Knowledgeable, Stock Popular Products,
Returns/ Redressal
-Augmented: Special Services,
Differentiated Brands, Loyalty Prog.
-Potential: Elements not yet Perfected
or Opportunities not yet exploited.
5. Product Trends

RETAIL
MANAGEMENT ..5

Merchandising Plans will drive

Decisions:
Product Lines to Carry
Shelf Space to Allot to Different Products
Inventory Turnover
Pricing Across Categories & Within
Promotions
Assortment Breadth: Narrow or Wide
Depth: Deep Or Shallow

RETAIL
MANAGEMENT ..5

Scope Of Responsibility for Personnel:

Full Merchandising Functions Buying
& Selling: Selection Of Merchandise,
Pricing Displays, Customer
Transactions.
Separate Buying & Selling Functions.
Micro Merchandising Shelf space
Basis Demand Pattern
Cross Merchandising Carry
Complimentary Goods & Services
Water, Soda, Soft Drinks, Juices, Ethnic

RETAIL
MANAGEMENT
..5
Merchandise
Plan - Forecasting
:

Staple Merchandise Regular Daily Need

Products, Stable Sales List Of products,
Inventory Level, Colours, Brands, Style
Size
Assortment Merchandise Apparel,
Furniture, Autos. Variety Of products to
enable Customers a Selection. Demand
Varies, Forecast difficult. Decision On
Product Lines, Styles Designs & Colours.
Model Stock Plan - Colour, Size, Qty.

RETAIL
MANAGEMENT ..5

Fashion Merchandise Cyclical sales

due to Changing tastes and Life Styles

Seasonal Merchandise Seasonality In

Sales Summers Cottons, Winters
Woolens Forecasting for Season

Fad Merchandise High Level Of Sales

In a Short Time. Toys, Games are short
lived Fads. Extended fads Residual
sales Continue for longer Periods.
Never Out List Always in stock

RETAIL
MANAGEMENT ..6

PRICING STRATEGY IN RETAILING:

Retailer Prices Goods & Services to:
- Achieve Profitability
- Satisfy Customers
- Be Consistent with Overall Image, Sales,
Profits, ROI
Pricing Options:
- Discount Orientation
- At-the-market Orientation- Average Pricing
- Upscale Orientation

RETAIL
MANAGEMENT ..6

Discount Orientation:
- Low pricing as competitive
advantage
- Low status Image, Fewer shopping
frills, Price based customers, Low
operating costs, High Inventory T/O.

At-the-market Orientation:
Middle Class shoppers
- Offers excellent service, Good
atmosphere

RETAIL
MANAGEMENT ..6

- Profit margins > = Moderate

- Quality > = Average
- Price Range Difficult to Expand as
Competition from Discount Stores or
Prestige Stores Squeezes the Range

Upscale Orientation:
- Prestige Major Competitive Edge
- Smaller Target Market, Higher
Operating Costs, lower Inventory T/O
Means Customer Loyalty,

RETAIL
MANAGEMENT ..6

Distinctive Services & Product

Offerings, High unit Profit margins
PROVIDE A GOOD VALUE IN
CUSTOMERS MIND FOR THE
CHOSEN PRICE ORIENTATION.
CUSTOMER NOT NECESSARILY
LOOKING FOR THE BEST PRICE BUT
FOR GOOD VALUE REAL &
PERCEIVED -FOR MONEY.

RETAIL
MANAGEMENT ..7

Research on price In Buying Decisions

reveals Different Motivations for
Different market Segments.
CONSUMER PURCHASE & PRICING:
Price Elasticity Of Demand
Sensitivity to Price Changes. Small %
Change in Price Substantial %
Change in Demand High Price
Elasticity. Urgency to purchase is low
or acceptable substitutes exist.

RETAIL
MANAGEMENT ..7

Large % Change in Price Small %

Change in Demand Demand InElastic. Urgency to purchase is high
or there are no acceptable
substitutes. Occurs with Brand or
Retailer Loyalty.
Unitary Elasticity - % Change in Price
directly off-set by % Changes in
Quantity Demand

RETAIL
MANAGEMENT ..7

In Retailing computing Price Elasticity is

Difficult due to other factors of Product
Mix also interplay. Demand hard to
predict. Price Sensitivity varies by
Market Segment based on Shopping
Orientation:-Economy: Shop around for
Lowest Price. Segment Growing rapidly.
- Status: Perceive Retailers as different,
Look for Prestige Brands and customer
Service.

RETAIL
MANAGEMENT ..7

- Assortment oriented: Seek Retailers

with Strong Assortment in Product
Categories and look for Fair Pricing
- Convenience Oriented: Shop only when
they Must at nearby locations with long
hours. Prepared to pay higher Prices.
- - Loss Leaders: Price below cost to
attract more customers.
- - Predatory Pricing: Seek to Reduce
Competition by selling at very low Pricing

RETAIL
MANAGEMENT ..7

Unit Pricing: Indicate Pricing at a

unit, e.g., per Kg to enable quick
comparisons by customers.
Sharp Practices:
Bait and Switch Advertising:
Lures customer with exceptionally
low prices. On contact customer
informed of stock-out and offer
another product.

RETAIL
MANAGEMENT ..7

Conflicts In Pricing:
ManufacturerWholesaler
Retailer
Co. Price Distributors Price (a-b%)
Wholesale Price (a-w%)
Price To Retailer (a)
Price To Consumer (a+ c%)
Gray Market Goods: Imported Goods
at Lower Prices.

RETAIL
MANAGEMENT ..7

Market Pricing:
High Competition,
customers seek lowest pricing. Price
increase leads to brand switching.
Administered Pricing: Strong product
Differentiation, Control by retailer on
Price charged. For customers Image,
Assortment, Personal service more
important than Price, e.g. Fashion
apparel stores, upscale restaurants.

RETAIL
MANAGEMENT ..7

PRICING OBJECTIVES:
Market Penetration Achieve large
revenues by setting Low prices and sell
high unit volumes an aggressive
strategy to discourage competition
Market Skimming Profit is Objective.
Charge Premium Prices and attract
Customers seeking Service, Assortment
& Status. Does not maximize Sales. ROI
or early Cash Recovery Objectives met.

RETAIL
MANAGEMENT ..7
Selling Pr.

Sales

Av .Cost

Op. Exp.

Tot. Cost

114000

1026000

7.6

104000

970400

10

104000

1040000

7.85

94000

910400

11

80000

880000

8.25

88000

748000

12

60000

720000

8.75

80000

605000

Selling Pr.

Unit Sales

Demand

Tot. Profits

Markup %

Av. Inv. Hold

Inv. T/O

R O Inv.%

55600

16

12000

9.5

61

10

129600

22

13000

127

11

132000

25

14000

5.7

114

12

115000

27

16000

3.8

82

Sales Goal

ROInv. %

Profit

Profit/Unit

RETAIL
MANAGEMENT ..7

Prestige Pricing:
Premium pricing to convey exclusive
image for the product or Service.
Evoke perceptions of Quality and
Prestige. Habeebs Parlour, Delhi Golf
Club, Luxury hotels.
Odd Even Pricing:
Odd Pricing to indicate lower Good
deal.
Even Pricing to indicate higher quality.

RETAIL
MANAGEMENT ..7

Bundled Pricing:
Offering two or more Products or
Services at one price.
Fixed & variable Pricing:
Variable pricing for highly
differentiated or unbranded
products. Fixed pricing for Branded
products.

RETAIL
MANAGEMENT ..8

PLANNING & CONTROL

Retailer forms a New Strategy or
Adjusts an Existing one, gathering
and analyzing feedback reveals
effectiveness of Operation.
Feedback can be obtained for:
- Attributes, Buying Behaviour
- Alternative Store location
- Inventory Planning
- Product Mix Offering

RETAIL
MANAGEMENT ..8

- Pricing
- Promotion
- Store image
Research efforts related to risk involved:
- Higher risk : Store Location
- Lower risk: Introduction of New
Product Line
Information Gathering and Processing is
ongoing for Feedback & Control

RETAIL
MANAGEMENT ..8

Non-systematic or Incomplete ways

of obtaining information due to
constraints of Time, Costs or Lack
of Research Skills:
- Using Intuition: Gut feel
- Assuming Past Trends to Continue
and follow past practices
- Copy Competition
- Devising a Strategy based on few
individuals perceptions

RETAIL
MANAGEMENT ..8

Example: Movie tickets cost weekdays

vs. weekends and matinee vs. evenings
Toy store orders for holiday season basis
last years demand +. Research
indicated higher optimism and desire to
gift. Stock-out before peak, unable to
get delivery of extra stocks.
Chain Store in new Location doing 40%
of expected business. Research shows
Store name and Image unknown, ad
media choice incorrect

RETAIL
MANAGEMENT ..8

Retailers Objectives direct Strategic

Planning some Routine. Nonroutine require careful evaluation
Strategy outlined, new data required
for its operation acquired and files
updated or retrieved from storage,
analyzed and interpreted. All this at
Information Control Centre.
Decisions made and put into
operation.

RETAIL
MANAGEMENT ..8

Retail Information System RIS

Environment Mission, Objectives
Competitors, Economy

Strategic Plans
(a) DATA COLLECTION
INFORMATION (b) DATA
STORAGE+
ANALYSIS
CONTROL
RETREIVAL
INTERPRETATION
CENTRE
UPDATING DATA
FILES

FEEDBACK
IMPLEMENTATION

Retail Operation

RETAIL
MANAGEMENT ..8

Performance results are fed to ICC

and compared with objectives set.
Regular and Exception reports
( Giving reasons for deviation)
generated and sent to Operational
Managers for necessary action.
Building RIS
How active RIS role Reports in
routine or as-and-when

RETAIL
MANAGEMENT ..8

Internal or Out-sourced- Some Specific

Researches can be out-sourced.
Cost Of RIS 0.5 to 1.5% of revenue
Quanta of Data Edit raw data and
share interpretation
Frequency of Data dissemination
who receives which report
Data Storage Easy retrieival,
adequate Longitudinal analysis (Period
to Period)

RETAIL
MANAGEMENT ..9

RETAIL PROMOTION
All communication that informs,
persuades and reminds the target
market about marketing mix of the
Retail business.
Objectives of Communication:
- Increase customer Flow
- Increase Purchase BY Target
Market

RETAIL
MANAGEMENT ..9

- Increase sale of Specific product

or Product Category
- Develop Store Image
Communication Promotion Mix:
- Advertising
- Sales Promotion
- Publicity
- Personal Selling

RETAIL
MANAGEMENT ..9

Department or Large Stores manage

through Promotion department of the
store. Small Retailers pool resources
with manufacturers for Promotions.
Advertising Paid Communication
using Impersonal mass media: Print
news papers, magazines, direct mail
and AV media like TV, radio.
Local, vernacular language Print
media used by small retailers.

RETAIL
MANAGEMENT ..9

Cable TV is also used by small retailers.

Large retailers use a combination of
media.
Sales Promotion is a paid Impersonal
communication offering additional
value to customer. Encourages
customer visits and Promotes trial and
repeat Purchase of focus Products or
Services
Special events, In-store Demonstration,
Contests

RETAIL
MANAGEMENT ..9

Publicity -Un-paid form of

Communication that provides
Information about the retail through
media.
A Powerful Business strategy evolves
through knowledge of Target
Customers, Clarity of Business
Objectives. Effective selection of
media for Promotion Strategy.
Major shift to Nuclear families in 90 s
have shifted focus on to kids in
Promotional strategies

RETAIL
MANAGEMENT
..10
ATMOSPHERICS
& RETAIL
SPACE MANAGEMENT
REFERS TO THE PHYSICAL CHARACTERISTICS OF
THE RETAIL STORE LIKE EXTERIORS,
INTERIORS, LAYOUT PLANNING AND VISUAL
MERCHANDISING.
PLAY A SIGNIFICANT ROLE IN

ATTRACTING CUSTOMERS AND RETAINING

THEM

IMPROVING QUALITY OF SERVICE EXPERIENCE

POSITIONING THE RETAIL OUTLET

OPTIMUM RETAIL SPACE UTILIZATION

RETAIL
MANAGEMENT ..10

DIMENSIONS OF ATMOSPHERICS:
PRESENTATION
LIGHTING
STYLING
COLOUR PLANNING
DESIGN USE OF WALLS/ MATERIALS
APPEAL TO CUSTOMERS
EXTERIORS STORE FRONT, DISPLAY
WINDOWS
INTERIORS LIGHTING, COLOUR, FACILITIES
ENHANCES DISPLAY & PROVIDES
RELEVANT INFORMATION

RETAIL
MANAGEMENT ..10

ATMOSPHERICS PLANNING RELEVANT FOR ALL

RETAIL SET-UPS, ESPECIALLY:
- PLANNED SHOPPING CENTRES
- LIFESTYLE STORES
A TIDY WORK ENVIRONMENT ATTRACTS A HIGH
STORE PATRONAGE
ATMOSPHERICS PLAY AN IMPORTANT ROLE:
- CREATE POSITIONING FOR RETAIL OUTLET
- ATTRACT NEW CUSTOMERS
- ORGANIZE STORE AND MERCHANDIZE
- ENRICH SHOPPING EXPERIENCE

RETAIL
MANAGEMENT ..10

ATMOSPHERICS ROLE IN RETAIL STRATEGY

ATTRACTS NEW CUSTOMERS

CREATES A USP

FACILITATES EASY MOVEMENT INSIDE

THE STORE

FACILITATES ACCESS TO MERCHANDISE

INSIDE THE STORE

ENSURES OPTIMUM SPACE UTILIZATION

ENSURES EFFECTIVE & DESIRED

PRESENTATION INSIDE THE STORE

REDUCES PRODUCT SEARCH TIME INSIDE

THE STORE

RETAIL
MANAGEMENT ..10

CHOICE OF FIXTURES, DCOR, SIGNAGE

ENABLE CUSTOMERS PERCEPTION .

PROPER PLACEMENT OF SIGNAGES

INDICATING PRODUCTS OFFERED INCREASE
EFFECTIVENESS. CUSTOMERS NECESSITY TO
ASK QUESTIONS INCREASE STRESS LEVELS.
UNIFORMS WORN BY STORE EMOLOYEES
ALSO REDUCE CUSTOMER STRESS AND
ANXIETY TO ASK QUESTIONS.

QUALITY OF STORE FIXTURES SIGNIFY A

RETAILER CUTTING CORNERS OR MAKING
LARGE PROFITS.

RETAIL
MANAGEMENT ..10

SIGNAGE, LAYOUT AND FURNISHINGS ADD

TO AMBIENCE AND EFFECTS STOREBROWSING COMFORT OF CUSTOMERS.
IN STORE ELEMENTS SUCH AS COLOUR,
LIGHTING AND MUSIC MAY AFFECT
PURCHASE DECISIONS MORE THAN POP
AND DISPLAYS. TO IMPROVE IN STORE
ATMOSPHERE, PERFUMES GET DESIRED
EFFECT ESPECIALLY TO GET RID OF
CERTAIN ODOURS. IF THESE ARE
COMPLEMETARY TO THE STORE, THE
SERVICE QUALITY EXPERIENCE IMPROVES.

RETAIL
MANAGEMENT ..10

MUSIC PLAYS AN IMPORTANT ROLE IN

ENHANCING CUSTOMERS TIME SPENT IN
THE RETAIL OUTLET ESPECIALLY
SOOTHING MUSIC, NOT THE FAST PACED.
STIMULATE RETAIL ENVIRONMENT
PLEASURE EFFECT: CLASSICAL HINDI MUSIC
ENHANCES SHOPPERS ENJOYMENT
AROUSAL EFFECT: SLOW INSTRUEMENTAL
MUSIC RESULTS IN SUBDUED ACTIVITY IN
SERVICE SETTINGS LIKE RESTAURANTS.

RETAIL
MANAGEMENT ..10

DOMINANCE: CUSTOMERS FEEL DOMINANT

( IN CONTROL). ENVIRONMENTAL ASPECTS
- COLOUR OF INTERIORS, HEIGHT OF
CEILING DETERMINE CUSTOMER
DOMINANCE. FURNITURE AND FIXTURES
MAY IMPACT THE DURATION OF TIME SPENT
IN-STORE.
PHYSICAL ENVIRONMENT
STORE LAYOUT/DESIGN EMOTIONS SHOPPING
MERCHANDISE DISPLAY
BEHAVIOUR
MUSIC
AROMA
CUSTOMERS
SENSES

RETAIL
MANAGEMENT ..10

KEY COMPONENTS OF RETAIL

ATMOSPHERICS

EXTERIOR ATMOSPHERICS
INTERIOR ATMOSPHERICS
STORE LAYOUT

VISUAL MERCHANDISING

RETAIL
MANAGEMENT ..10
EXTERIOR
ATMOSPHERICS

STOREFRONT
MARQUEE
ENTRANCES
DISPLAY WINDOWS
SIZE OF BUILDING
ACCESSIBILITY
VISIBILITY

RETAIL
MANAGEMENT ..10

INTERIOR ATMOSPHERICS
FLOORING
LIGHTING
ODOUR/ AROMA
FIXTURES
WALLS
TEMPERATURE
AISLES
CONVENIENCES/HYGIENE

RETAIL
MANAGEMENT ..10

STORE LAYOUT
SHOPPING FLOOR SPACE
TRAFFIC FLOW
DEPARTMENTS LOCATION
SPACE / MERCHANDISE
CATEGORY
SIGNAGE

RETAIL
MANAGEMENT ..10

VISUAL MERCHANDISING
ASSORTMENT
THEME
ENSEMBLE
RACKS AND SHELVES
CASH COUNTERS

RETAIL
MANAGEMENT ..11

CONTROL RETAIL STRATEGY

Rules to stay Competitive:
Commitment Enthusiasm in Business
Share Staff Involvement in Decision making
Listen & Communicate Customers and Staff
Appreciate Good efforts
Celebrate Good Achievements
Motivate Challenging goals and rewards for
High performers
Exceed Deliver more than promises
Control Operating Costs
Swim Upstream Evaluate Competition and do
something Different.

RETAIL
MANAGEMENT ..11

INTEGRATING RETIAL STRATEGY

Situation Analysis
Objectives
Strategy
Specific Activities
Control

Target Market

RETAIL
MANAGEMENT ..10

OPPORTUNITY ANALYSIS
Overall Direction & Goals: Top Down
Middle Level: Inputs from Internal and
External Sources. Generate Ideas early.
Generate Specific Plans with Deadlines.
S
ALES OPPORTUNITY GRID
Rates the promise of New and Established
Goods, Services, Store outlets
RETAIL PRICE, FLOOR SPACE, DISPLAY COSTS,
OPERATING COSTS, MARKUP; SALES
ESTIMATES, GROSS AND NET PROFITS IN Rs.
AT FIRST, SIX AND 12 MONTHS.

RETAIL
MANAGEMENT ..11

DEFINING PRODUCTIVITY
Efficiency with which a Retail Strategy is
carried out. Reach Sales and Profit Goals
keeping Operating Costs under control.
PERFORMANCE MEASURES
Criteria used to assess effectiveness and
setting standards for each performance.
Measures used: Total Sales Turnover,
Average Sales per store, Sales by Goods/
Service Category, Gross Margin/ ROInvst.,
Op.Income, Inventory T/O, Financial ratios,
Profitability

RETAIL
RETAIL
INSTITUTION..11
BY OWNERSHIP
MANAGEMENT
Retail Institution refers to basic format or
structure of a Business.