Retail–Structure, Types and Role

STRUCTURE
1. Independent, Single Store Establishments
2. Corporate Retail Chains
3. Franchise Stores
 Independent, Single Store
Establishments
• These are generally located in localities where population is higher. They can be a
specialized apparel store to MBO or a grocery store. Owned by a family or
individual with operations limited lo the area where store is located with direct
personal relationship with customers.

• The essence is that they have better understanding of their customers and
supported by long standing patronage as they can revert to their needs within
short span of time.

• Unlike others they pay less attention to Store Design, Merchandise Mix, Employee
Trainings, Book Keeping etc. This category of course requires very less capital to
start, thus are major drivers to entrepreneurship in the retail category.

• They also have very low credit rating in the market or almost nil past records to
prove their goodwill or financial health; thus working with them or engaging with
them, as supplier or tenant would require other party to be careful and safeguard
all their interes
 Corporate Retail Chains
• As the name suggests, these well-known brands may specialize in a form of
retailing (like super market, hypermarket, apparel store) with multiple stores
across the state, country or even in the world. They have centralized decision-
making body that may take decision for all its stores and then executed by
respective city heads or unit heads.

• The number of stores may vary from 10 to over 300 (such as Safeway, Wal-Mart,
Target). They can be part of large corporation also like Target Corporation owns
Target, Dayton’s and Hudson’s. Thus they may have multiple stores for multiple
brands and multiple categories.

• These stores employ large number of people and also sometimes become
bureaucratic due to complex and multi-level decision-making process but sell
product at lower price due to economies of scales attained through wide
distribution channel and mass buying of products. They have same merchandise
mix and merchandise across all stores.

• In India, Shopper’s Stop, Big Bazar, Pyramid, Shubiksha, Music World, Planet
Sports, etc., are examples of this kind of stores.
 Franchise Stores
• Franchising is an agreement between a franchiser and a franchisee that allows the
franchisee to operate a retail outlet using a name and format developed and
supported by the franchiser. These stores can be restaurants, fast food outlets,
apparel outlets, sports goods outlets, hypermarkets etc.

• In this kind of an arrangement generally franchiser charges franchisee a lump sum

fees towards usage of brand names, retailing expertise plus a royalty and
franchisee has to bear all operation cost along with above and has to earn profit.

• Though in recent times franchiser also underwrites the losses if it occurs to avoid
high attrition and motivate franchisee to invest as these kinds of arrangement
require high investment. Franchisers support franchisee with merchandise
planning, store management, training, manpower sourcing, IT support, interiors
and advertising at national and regional level.

• This format fuels growth faster as franchiser does not need to block huge capital,
employ more people and hold huge stock. This model has helped people with
adequate capital but without any technical knowledge to enter into retail trade. In
India, UCB, Reebok, Adidas, Lee are examples for this kind of retailing.
 TYPES
Retailing refers to a process where the retailer sells the goods directly
to the end-user for his own consumption in small quantities.

Types of retail outlets are:

• Department Stores
• Discount Stores
• Supermarket
• Warehouse Stores
• Mom and Pop Store (also called Kirana Store in India)
• Speciality Stores
• Malls
• E Tailers
• Dollar Stores
 Department Stores
• A department store is a set-up which offers
wide range of products to the end-users under
one roof. In a department store, the
consumers can get almost all the products
they aspire to shop at one place only.

• Department stores provide a wide range of

options to the consumers and thus fulfill all
their shopping needs.
 Contd…
• Merchandise:
Electronic Appliances
Apparels
Jewellery
Toiletries
Cosmetics
Footwear
Sportswear
Toys
Books
CDs, DVDs

• Examples – Shoppers Stop, Pantaloon

 Discount Stores
• Discount stores also offer a huge range of products to the
end-users but at a discounted rate.

• The discount stores generally offer a limited range and the

quality in certain cases might be a little inferior as
compared to the department stores.

• Wal-Mart currently operates more than 1300 discount

stores in United States. In India Vishal Mega Mart comes
under discount store

• Merchandise:
Almost same as department store but at a cheaper price.
 Supermarket
• A retail store which generally sells food products and
household items, properly placed and arranged in specific
departments is called a supermarket.

• A supermarket is an advanced form of the small grocery

stores and caters to the household needs of the consumer.

• The various food products (meat, vegetables, dairy

products, juices etc) are all properly displayed at their
respective departments to catch the attention of the
customers and for them to pick any merchandise
depending on their choice and need.
 Contd…
• Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
Fruits
Soft drinks
Frozen Food
Canned Juices
 Warehouse Stores
• A retail format which sells limited stock in bulk
at a discounted rate is called as warehouse
store.

• Warehouse stores do not bother much about

the interiors of the store and the products are
not properly displayed.
 Mom and Pop Store (also called
Kirana Store in India)
• Mom and Pop stores are the small stores run by
individuals in the nearby locality to cater to daily needs
of the consumers staying in the vicinity.

• They offer selected items and are not at all organized.

• The size of the store would not be very big and

depends on the land available to the owner.

• They wouldn’t offer high-end products.

 Contd…
• Merchandise:
Eggs
Bread
Stationery
Toys
Cigarettes
Cereals
Pulses
Medicines
 Speciality Stores
• As the name suggests, Speciality store would specialize in a
particular product and would not sell anything else apart
from the specific range.

• Speciality stores sell only selective items of one particular

brand to the consumers and primarily focus on high
customer satisfaction.

• Example -You will find only Reebok merchandise at Reebok

store and nothing else, thus making it a speciality store. You
can never find Adidas shoes at a Reebok outlet.
 Malls
• Many retail stores operating at one place form
a mall.
• A mall would consist of several retail outlets
each selling their own merchandise but at a
common platform.
 E Tailers
• Now a days the customers have the option of shopping while sitting
at their homes. They can place their order through internet, pay
with the help of debit or credit cards and the products are delivered
at their homes only.

• However, there are chances that the products ordered might not
reach in the same condition as they were ordered.

• This kind of shopping is convenient for those who have a hectic

schedule and are reluctant to go to retail outlets.

• In this kind of shopping; the transportation charges are borne by

the consumer itself.

• Example – EBAY, Rediff Shopping, Amazon

 Dollar Stores
• Dollar stores offer selected products at
extremely low rates but here the prices are
fixed.
 ROLE
• The retailer acts as a link between the customer and
the marketer, who is responsible for selling the
ultimate products and services to the customers.

• In the entire complicated process of marketing, retailer

acts an intermediary in the complex marketing &
distribution channel.

• Though manufacturers can directly sell their products

and services to the end customers ultimately, it may
result in high expenses, inconvenience and time-
consuming process.
 Contd…
• Social Significance
• Economic Significance
 Social Significance

• In the present business scenario, social responsibility and increasing importance

are being given to driving the functions of marketing functions with a sense of
social responsibility. This has resulted in retail organizations paying a great deal of
attention towards the social responsibilities which they have towards their
customers.

• Regulation and control from various pressure groups such as social activists,
social workers, and consumer activists compel the retailers in implementing their
marketing programmes restrictively and communicating the true picture about
the benefits or harms of using a product.

• The retail fraternity should give importance to the cultural differences and also the
differences in the values, beliefs, and faith of people while formulating their
marketing strategies and business development plans. This will be helpful in
meeting the demands of the consumers by understanding their expectations. The
marketing department of retail companies is engaged in identifying the
opportunities and threats to the business of the company by analyzing the socio-
cultural trends and the buying preferences of the consumers.
 Economic Significance
• The retailers play the role of sales specialists and also
as agents of purchase for their customers and suppliers
respectively. Retailers handle the entire gamut of roles
and functions aiming at understanding customer
requirements and anticipating the demand, gathering
information about the market trends through strong
market intelligence and making product related
assortments and discovering financing opportunities.
• It is relatively easier to become a retailer, as large
investment is not required, procurement of production
equipment is not required, and a retailer can procure
merchandise on the basis of credit.
 Contd…
• The retail sector in the present scenario is witnessing a fierce competition as a
large number of retail players have entered in the same market segment with
similar product offerings.

• The only differentiating factor which may provide a winning edge in the
competitive race is by providing better value to the consumers and satisfying the
consumers with their offerings. Besides this, a retailer should also be providing
justice to the producers and also to the wholesalers by ensuring that their
products are sold to the ultimate consumers.

• For expansion of business opportunities globally and tapping larger business

prospects, large retailers have been diversifying their business formats by way of
mergers or acquisitions to cater to the growing needs of a diverse and a larger
customer segment.

• Moreover, the retail industry has been impressive regarding generating large-scale
employment opportunities worldwide which is expected to grow at a much faster
rate in comparison with the other sectors performance in future as well.
 Contd…
• The retail sector has opened newer job avenues for people having
different areas of specialization with diverse skills and qualification
backgrounds.

• These opportunities could be in the areas of Finance & Accounting, Retail

Operations, Commercial Operations, Inventory & Warehousing, SCM &
Logistics, HRM, Distribution Systems, Marketing & Brand Management, IT,
New Products Development & Market Research/Business Analysis.

• Retailing career can be quite rewarding right from the start of the career
for a person as it may require bearing a handling a lot of challenges and
responsibilities right from the beginning.

• Moreover, retailing has given rise to entrepreneurial opportunities, and

few of the wealthiest entrepreneurs are involved in the retail business