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 Retailing
Retail consists of the sale of goods or merchandise from a fixed location, such as a
department store, boutique or kiosk, or by mail, in small or individual lots for direct
consumption by the purchaser. Retailing may include subordinated services, such as
delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys
goods or products in large quantities from manufacturers or importers, either directly
or through a wholesaler, and then sells smaller quantities to the end-user. Retail
establishments are often called shops or stores. Retailers are at the end of the supply
chain. Manufacturing marketers see the process of retailing as a necessary part of their
overall distribution strategy. The term "retailer" is also applied where a service
provider services the needs of a large number of individuals, such as a public utility, like
electric power.

Shops may be on residential streets, shopping streets with few or no houses or in a

shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping
street has a partial or full roof to protect customers from precipitation. Online retailing,
a type of electronic commerce used for business-to-consumer (B2C) transactions and
mail order, are forms of non-shop retailing.

Shopping generally refers to the act of buying products. Sometimes this is done to
obtain necessities such as food and clothing; sometimes it is done as a recreational
activity. Recreational shopping often involves window shopping (just looking, not
buying) and browsing and does not always result in a purchase.

Functions of retailing

Sorting

Manufacturers usually make one or a variety of products and would like to sell their
entire inventory to a few buyers to redu7ce costs. Final consumers, in contrast, prefer a
large variety of goods and services to choose from and usually buy them in small
quantities. Retailers are able to balance the demands of both sides, by collection an
assortment of goods from different sources, buying them in sufficiently large quantities
and selling them to consumers in small units.

The above process is referred to as the sorting process. Through this process, retailers
undertake activities and perform functions that add to the value of the products and
services sold to the consumer. Supermarkets in the US offer, on and average, 15,000
different items from 500 companies. Customers are able to choose from a wide range of
designs, sizes and brands from just one location. If each manufacturer had a separate
store for its own products, customers would have to visit several stores to complete
their shopping. While all retailers offer an assortment, they specialize in types of
assortment offered and the market to which the offering is made. Westside provides
clothing and accessories, while a chain like Nilgiris specializes in food and bakery items.
Shoppers’ Stop targets the elite urban class, while Pantaloons is targeted at the middle
class.
Breaking Bulk

Breaking bulk is another function performed by retailing. The word retailing is derived
from the French word retailer, meaning ‘to cut a piece off’. To reduce transportation
costs, manufacturers and wholesalers typically ship large cartons of the product, which
are then tailored by the retailers into smaller quantities to meet individual consumption
needs.

Holding Stock

Retailers also offer the service of holding stock for the manufacturers. Retailers
maintain an inventory that allows for instant availability of the product to the
consumers. It helps to keep prices stable and enables the manufacturer to regulate
production. Consumers can keep a small stock of products at home as they know that
this can be replenished by the retailer and can save on inventory carrying costs.

Additional Services

Retailers ease the change in ownership of merchandise by providing services that make
it convenient to buy and use products. Providing product guarantees, after-sales service
and dealing with consumer complaints are some of the services that add value to the
actual product at the retailers’ end. Retailers also offer credit and hire-purchase
facilities to the customers to enable them to buy a product now and pay for it later.
Retailers fill orders, promptly process, deliver and install products. Salespeople are also
employed by retailers to answer queries and provide additional information about the
displayed products. The display itself allows the consumer to see and test products
before actual purchase. Retail essentially completes transactions with customers.

Channel of Communication

Retailers also act as the channel of communication and information between the
wholesalers or suppliers and the consumers. From advertisements, salespeople and
display, shoppers learn about the characteristics and features of a product or services
offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays, and
customer complaints. The manufacturer can then modify defective or unsatisfactory
merchandise and services.

Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance with transport, storage,
advertising and pre-payment of merchandise. This also works the other way round in
case the number of retailers is small. The number of functions performed by a particular
retailer has a direct relation to the percentage and volume of sales needed to cover both
their costs and profits.
Etymology
Retail comes from the Old French word retaillier, which means "to cut off, clip, pare,
divide" in terms of tailoring (1365).It was first recorded as a noun with the meaning of a
"sale in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred,
scrap, paring"). Like the French, the word retail in both Dutch and German
(detailhandel and Einzelhandel, respectively) also refers to the sale of small quantities of
items.

Types of retail outlets

A marketplace is a location where goods and services are exchanged. The

traditional market square is a city square where traders set up stalls and buyers browse
the merchandise. This kind of market is very old, and countless such markets are still in
operation around the whole world.

In some parts of the world, the retail business is still dominated by small family-run
stores, but this market is increasingly being taken over by large retail chains.

Retail is usually classified by type of products as follows:

 Food products
 Hard goods ("hardline retailers") - appliances, electronics, furniture, sporting
goods, etc.
 Soft goods - clothing, apparel, and other fabrics.
There are the following types of retailers by marketing strategy:

 Department stores - 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.
 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.
 Supermarkets - sell mostly food products;
 Warehouse stores - warehouses that offer low-cost, often high-quantity goods
piled on pallets or steel shelves; warehouse clubs charge a membership fee;
 Variety stores or "dollar stores" - these offer extremely low-cost goods, with
limited selection;
 Demographic - retailers that aim at one particular segment (e.g., high-end
retailers focusing on wealthy individuals).
 Mom-And-Pop (or Kirana Stores as they call them in India): 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.
 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.
 General store - a rural store that supplies the main needs for the local
community;
 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.
 Hypermarkets: provides variety and huge volumes of exclusive merchandise at
low margins. The operating cost is comparatively less than other retail formats. A
classic example is the Metro™ in Bangalore.
 Supermarkets: 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 20,000-40,000 square feet. Example:
SPAR™ supermarket.
 Malls: has a range of retail shops at a single outlet. They endow with products,
food and entertainment under a roof. Example: Sigma mall and Garuda mall in
Bangalore, Express Avenue in Chennai.
 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. For example: Pai
Electronics™ store in Bangalore, Tata Croma.
 E-tailers: The customer can shop and order through internet and the
merchandise are dropped at the customer's doorstep. Here the retailers use drop
shipping technique. They accept the payment for the product but the customer
receives the product directly from the manufacturer or a wholesaler. This format is
ideal for customers who do not want to travel to retail stores and are interested in
 home shopping. However it is important for the customer to be wary about defective
products and non secure credit card transaction. Example: Amazon and Ebay .
 Vending Machines: This is an automated piece of equipment wherein customers
can drop in the money in machine and acquire the products. For example: Soft
drinks vending at Bangalore Airport.

Some stores take a no frills approach, while others are "mid-range" or "high end",
depending on what income level they target.

Other types of retail store include:

 Automated Retail stores are self service, robotic kiosks located in airports, malls
and grocery stores. The stores accept credit cards and are usually open 24/7.
Examples include ZoomShops and Redbox.
 Big-box stores encompass larger department, discount, general merchandise,
and warehouse stores.
 Convenience store - a small store often with extended hours, stocking everyday
or roadside items;
 General store - a store which sells most goods needed, typically in a rural area;
Retailers can opt for a format as each provides different retail mix to its customers
based on their customer demographics, lifestyle and purchase behaviour. A good format
will lend a hand to display products well and entice the target customers to spawn sales.
Growth

An increasing number of people in India are turning to the services sector for
employment due to the relative low compensation offered by the traditional agriculture
and manufacturing sectors. The organized retail market is growing at 35 percent
annually while growth of unorganized retail sector is pegged at 6 percent.

The Retail Business in India is currently at the point of inflection. Rapid change with
investments to the tune of US $ 25 billion is being planned by several Indian
and multinational companies in the next 5 years. It is a huge industry in terms of size
and according to management consulting firm Technopak, it is valued at about US $ 350
billion. Organised retail is expected to garner about 16-18 percent of the total retail
market (US $ 65-75 billion) in the next 5 years.

India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI) for
the third consecutive year, maintaining its position as the most attractive market for
retail investment. The Indian economy has registered a growth of 8% for 2007. The
prediction for 2008 is 7.9%. The enormous growth of the retail industry has created a
huge demand for real estate. Property developers are creating retail real estate at an
aggressive pace and by 2010, 300 malls are estimated to be operational in the country.

With over 1,000 hypermarkets and 3,000 supermarkets projected to come up by 2011,

India will need additional retail space of 700,000,000 sq ft (65,000,000 m2) as compared
to today. Current projections on construction point to a supply of just 200,000,000 sq ft
(19,000,000 m2), leaving a gap of 500,000,000 sq ft (46,000,000 m2) that needs to be
filled, at a cost of US$15–18 billion.

According to the Icrier report, the retail business in India is estimated to grow at 13%
from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganized retail sector
is expected to grow at about 10% per annum with sales expected to rise from $ 309
billion in 2006-07 to $ 496 billion in 2011-12.
The Indian Retail Market

Indian market has high complexities in terms of a wide geographic spread and distinct
consumer preferences varying by each region necessitating a need for localization even
within the geographic zones. India has highest number of outlets per person (7 per
thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the
world Indian retail density of 6 percent is highest in the world. 1.8 million households in
India have an annual income of over  45 lakh (US$99,900)

Delving further into consumer buying habits, purchase decisions can be separated into
two categories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators,
washing machines, dishwashers, microwave ovens and DVD players fall in the status
category. Indulgence-oriented products include plasma TVs, state-of-the-art home
theatre systems, iPods, high-end digital cameras, camcorders, and gaming consoles.
Consumers in the status category buy because they need to maintain a position in their
social group. Indulgence-oriented buying happens with those who want to enjoy life
better with products that meet their requirements. When it comes to the festival
shopping season, it is primarily the status-oriented segment that contributes largely to
the retailer’s cash register.

While India presents a large market opportunity given the number and increasing
purchasing power of consumers, there are significant challenges as well given that over
90% of trade is conducted through independent local stores. Challenges include:
Geographically dispersed population, small ticket sizes, complex distribution network,
little use of IT systems, limitations of mass media and existence of counterfeit goods.
Challenges
To become a truly flourishing industry, retailing needs to cross the following hurdles:

 Automatic approval is not allowed for foreign investment in retail.

 Regulations restricting real estate purchases, and cumbersome local laws.
 Taxation, which favours small retail businesses.
 Absence of developed supply chain and integrated IT management.
 Lack of trained work force.
 Low skill level for retailing management.
 Lack of Retailing Courses and study options
Intrinsic complexity of retailing – rapid price changes, constant threat of product
obsolescence and low margins.
Rural Marketing