UNIT III

Retail Institutions by Ownership

 CONTENTS
• Retail Institutions Characterized by Ownership:
Independent, Chain, Franchising, Leased
Department, Vertical Marketing system,
Consumer Cooperative.
 Ownership Forms

•Independent
•Chain
•Franchise
•Leased Department
•Vertical Marketing system
•Consumer Cooperative
Ownership Forms
 Independent Retailer :is someone who is completely responsible for his or
her own business. The retailer owns or has bought an independent store
and has built the business from the ground up by assessing all needs of the
store, which can include staffing, marketing, merchandizing, sales, etc.

 Chain Stores :Chain stores are groups of retail outlets that operate under
central ownership and management and handle the same product,
methods and practices usually.
Franchising: Arrangement where one party (the franchiser) grants another
party (the franchisee) the right to use its trademark or trade-name as well as
certain business systems and processes, to produce and market a good or service
according to certain specifications.

Leased department : When a section of a department in a retail store

is leased/ rented to an outside party, it is termed as a leased department. It is the
best method for retailers to expand their product offering to the customers.
In India, many large department stores operate their perfumes and cosmetics
counters in this manner. Example: Timex Watches
 BASIS FOR COMPARISON LICENSING FRANCHISING
Licensing is an arrangement in Franchising is an arrangement
which a company (licensor) in which the franchisor permits
sells the right to use franchisee to use business
Meaning intellectual property model or brand name for a
( technical know-how, fee, to conduct business, as an
copyright and trade marks )or independent branch of the
produce a company's product parent company (franchisor).
to the licensee, for royalty.
Registration Not necessary Mandatory
Involves one time transfer of Needs ongoing assistance of
Process property or rights. franchiser.
 - With a licensing agreement, you're selling your brand. Disney, for example, is a titan of
licensing. You can find Disney-branded shirts, dolls, breakfast cereals, books and watches.
Disney doesn't manufacture all that. Instead, it gives other companies a license to put the Disney
name and Disney characters on their products. Disney gets a big fee; the licensee draws more
buyers through the magic of the Disney brand.
 - Franchising is closer to setting up a chain of stores. A McDonald's franchisee doesn't simply
slap the trademarked name on his own burgers; instead, he opens a new McDonald's that looks
identical to all the other McDonald's.
 Vertical Marketing System : Various parties like producers, wholesalers and
retailers act as a unified system to avoid conflicts retailer work together as a
unified group in order to meet consumer needs for promoting the efficiency and
also the scale of economies in way that the products can be promoted towards
customers, products get inspected, credit can be provided to the customers and
also can be delivered to the customers.
Corporate VMS
• Combines Successive stages of production and distribution under single
ownership
• Examples:
– Bata, Bombay Dyeing, Raymond
– Sears, Goodyear
– Amway is an American cosmetic company, which manufactures its own
product range and sell these products only through its authorized
Amway stores. Here the ownership of production and distribution is
with the company itself.
Administered VMS

• One member of the distribution channel employs enough power, generally

though sheer size, to effectively control the activities of the other members of
the distribution channel.
• Command high level of co-operation in shelf space, displays, pricing policies
and promotion strategies
– For example, Big brands like Unilever, ITC, Procter& Gamble etc. command
a high level of cooperation from the retailers in terms of display, shelf
space, pricing policies, and promotional schemes.
 Contractual VMS
• Independent producers, wholesalers and retailers
operate on a contract and joined together by contract for
their mutual benefit
• Could take the forms of:
» Eg: if 15 independently owned restaurants enter into an
agreement with a produce wholesaler, the total costs go
down for everyone thanks to bulk ordering and shipping.
» Hence, they are also called “Value- adding partnerships”.
Consumer Cooperative
- It is generally owned and managed by co-operative societies.
- A consumer cooperative is a retail business which is owned by the consumers
themselves.
- The basic objective of establishing cooperative stores is to eliminate middlemen.
- Consumers form a society to manage the business and profit thus earned is
distributed among themselves in proportion of their contribution

Examples: Sahakari Bhandar’s and Apna Bazaar shops in Mumbai and Super
Bazaar in Delhi and Kendriya bhandar
THANK YOU