MODULE 1

RETAILING

Retailing is the distribution process in which all the activities involved in selling the merchandise directly to final
customers in the retail chain. Retailers are the link between the manufactures and ultimate customer

According to Still “Retailing consist of those activities involved in selling directly to ultimate customers”.

A retailer is the key player in the marketing process as it regularly intimates with the final customers.

Retailing involves

1. Understanding the needs of consumers.

2. Developing good assortment of merchandise.
3. Displays the merchandise in an effective manner so that the consumers find it easy and attractive by them.

Nature or characteristics of retailing

1. Direct interaction with consumers – It sells the goods directly to consumers and gets feedback from
customers.
2. Customer services – The retailer provide different services to consumers like delivery, credit facilities.
3. Small quantities makes large quantity – A retailer is selling a smaller quantities through break the bulk
function. However, the small quantities become large when aggregated.
4. Different forms – Retailers have undergone changes. Traditionally retailers where like melas, then changed
to kirana stores and super bazars. Now they are like organized retail before as like malls, hypermarkets.
5. Big employment provider – It provides employment to large number of people.

Importance of retailing

1) Services to wholesalers and producers

a) Advertisement of new products
b) Arrangement to sell the goods
c) To provide Information about consumer habits, taste and needs
2) Services of consumers
a) Selection
b) Variety of goods
c) Distribution
d) Credit facility

Objectives of Retailing

1) Customer satisfaction – Retailers know that satisfied customers are loyal customers. Consequently, the
retailers must develop strategy to buildup relationship that result in customer retaining to make more purchases.
2) Acquiring the right products – A customer will only be satisfied if they can purchase the right products to
satisfy their needs. The important objective for retailer is to identify the products that customers want and
negotiate with suppliers to obtain these products.
3) Product presentations – Once obtained, products must be presented to customers in a way that generate
interest. Retail merchandising often requires hiring creative people who understand and relates to market.
4) Traffic Building – Retailers must use promotional methods to build customer interest .For retailers, a key
measure of interest is the number of people visiting a retail location. Building traffic is accomplished with
variety of promotional techniques such as advertising, local newspaper, discount coupons etc.
5) Layout – For store based retailers a stores physical layout is an important component in creating a retail
experience that will attract customers. The physical atmosphere is more than just designing in what part of the
store to locate product. For many retailers designing the right shopping atmosphere can add appeal of a store.
6) Keep in pace with technology – Technology has rated all areas of retailing including customer knowledge,
customer relationship management, product movement, web technology and many more.

RETAILER
Retailing is the sale of goods in small quantities to ultimate consumers. A wholesaler buys goods in large
quantities and cuts the bulk goods into small lots and sells them to retailers. The retailer cuts them again into
small quantities and sells them to ultimate customers. Thus the retailer works in between the wholesaler and
consumers.

Functions of a retailer
1) Buying and assembling – A retailer sells different varieties of goods which he purchases from different
wholesalers for selling to consumers.
2) Warehousing and storing – After assembling the goods from different suppliers the retailers reserve them
in stores and supply it to customers as and when required. The goods are kept as reserve in store in order to
ensure uninterrupted services to the consumers.
3) Selling – the end objective of the retailer is to sell the goods to consumers. He undertakes various methods
to sell goods to the ultimate customers.
4) Credit facilities – The retailer cares to the needs of the customers even by supply them goods on credit.
5) Risk bearing – A retailer has to bear different types if risk in relation to goods. While it store goods they
are exposed to various risk like deterioration of quality, spoilage etc to the products are confronted to
natural risk like fire, flood, earthquake and other natural calamities. Other type of risk like change in
customer taste also adversely affects the sales.
6) Grading and packaging – the retailer grades the goods which are left ungraded by manufactures to the
wholesalers. He packs the good in small packages for the convenient of the custoners.
7) Collection and supply of market information – the retailers are in direct contact with the customers.
They gather valued information with regard to likes, dislikes, taste and demand of the consumers. They
pass on the information to the wholesalers and producers.
8) Helps in introducing new products – Without the service of retailer new products cannot be introduced
in the market. This is so because the retailer has a direct link with the consumers. He can explain the user
about the uses, characteristics etc about a product to the customer.
9) Window display and advertising – the retailer displays the product in windows in order to attract the
customers. This leads to publicity of the product.

WHEEL OF RETAILING
The wheel of retailing is one of the well accepted theories of structural change in retailing. This was
developed by Malcolm. P.MC Nair of Harward University. It is basically a Theory of Cyclical of circular
development. The wheel of retailing concept describes how retail institutions transform during their life
cycle.
According to this theory, the cycle can be broadly classified into 3 phases:
1) Initial Phase – In the initial entry phase, the new retailers enters the market with a low status and low
price. The new retailer start with a small store that offers goods at low price and those goods which
have high demand. As a result, the retailers will be able to attract more customers from more
established competitors. The retailer tries to keep cost at minimum by offering maximum services to
customers. They locate the store at a low rent area and offer a limited product mix.
 2) Trading Phase – The success and market acceptance of the new retailer will force the established
retailer to imitate the change made by the new entrant. This in turn will force the new entrant to
differentiate its product through different product mix. During this period the new retailer elaborate
changes. The external structure of the store are upgraded. The retailer now reposition itself by offering
maximum customer service, a posh shopping atmosphere and relocating to high cost area. Thus in the
process of trading the entrant matures to a higher status and high price operation. This change will
increase the cost of the retailer.
3) Vulnerability Phase – Finally this stage will leads to the vulnerability phase. The innovative store
will have to deal with high cost and there will be reduced return on investment. Thus the innovative
retailer matures into an established form and vulnerable to new innovator who enters into the market.
The entry of new innovator make the end of the cycle and beginning of the new cycle in the industry.

FEATURES
1) Initial Phase
a) Low status b) low price c) minimum priced) limited products

e) Location at the low cost area f) Maximum services

2) Trading up Phase

a) Elaborate facility is expected b) Essential Services c) Higher Price

d) location in high cost area e) Extended product offering

3) Vulnerability Phase

a) Limited Stage b) Cost burden c) Decline in rate on investment

Retail Life Cycle

The concept of product life cycle is also applicable to retail organizations as it pass through identifiable stages of
innovation, development, maturity and decline. . This is what is commonly termed as retail life cycle. It is a theory
about the change through time of retail outlets. The development curve of retail life cycle has been classified into 4
phases.

1) Innovation/ Introduction stage – Even a new organization is gone, it improves the convenience can create
advantage to the final consumers that differ from the services offered by other retailers in this stage of
innovation. The organization has few competition. The rate of growth is fairly rapid and the management
finds strategy through experimentation. The level of profitability is moderate.
2) Growth/ Development phase – The retail organization faces a rapid increase in sales as organization
moves to the development or growth stage. A few competition arises, since the company has been in the
market for a while. It is now in a position to leadership since the growth is essential. The investment level
also high and there will be profit.
3) Maturity Phase – The organization still grows but competitive pressure are from new forms of retailing.
Thus the growth rate tends to decrease gradually as market becomes more competitive. Direct competition
increases. The rate of growth slows and profit also starts declining. This is the time when the retail
organization needs to re-think its strategy and re-position itself in the market. A market change may occur
not only in the format but also in the goods offered for this stage.
4) Decline – In this stage, the retail competition losses its competitive edge, and there is a decline. In this
stage, the organization needs to decide whether it is still going to continue in the market. The rate of growth
is negative, profitability declines and other overheads are high.
 CLASSIFICATION OF RETAILERS
Retailers can be classified according to their selling process
1) Store based Retailers
2) Non Store based Retailer

1) Store based retailers – They operate at a fixed point of sale location .These stores are designed and
located to attract a high volume of walk in customers. In general, store based retailers offer a wide variety
of merchandise and use mass media advertising to attract the customers. They typically sell goods for
personal or household consumption.

Store based retailers can be further classified into

1. Store based Retailers
A) Ownership based
 Independent
 Chain Store
 Franchise Store
 Leased Department Store
 Vertical Marketing System
 Consumer Cooperative
B) Strategic Mix
I. Food Oriented Retailer
 Convenience Store
 Conventional Super Market
 Food Based Supermarket
 Combination Store
 Box Store
 Warehouse Store
II. General Merchandise Retailer
 Specialty Store
 Variety Store
 Department Store
 Off Price Retailer
 Membership club
 Flea Market

A) Ownership based – Depending on the ownership pattern stores can be divided into 6 categories
 Independent Retailers – It can be defined as a store which is owned by a single retailer. In this
store, licensing procedures are simple and initial investment is low. As a result there are many new
entrants. This leads to an increases in competition in the retail market. In such an environment to
retain customers independent retailers should become customer focus and customer oriented

Advantages
1. The independent retailer is free to select a convenient location and suitable store format
2. The independent retailer can concentrate on small target market to achieve the business
objective.
 3. The retailer can decide the timing, product mix and price on the basis of requirements of
target market.
4. The cost of setting up of independent store is low
5. The owner takes all decisions regarding the store.

Disadvantages

1. The bargaining power of independent store is less than that of other retail format like
supermarket, chain stores as they purchase goods in limited quantities.
2. In many cases, independent store fail, because, the retailer lack to adopt modern tools and
techniques for managing various retail functions like finance, promotion, operations etc.

 CHAIN STORE – These stores have two or more retail outlet that are commonly owned.
This stores have a centralized buying and merchandising system and sells similar line of
merchandise
Advantages
1. Chain retailers can purchase at lower price and keep shopping cost low as they purchase in
bulk
2. As the purchase for all retail unit are done together, chain stores have high bargaining power.
They can bargain with suppliers over prices, quantity and discounts.
3. A centralized decision making system and the use of latest technology increases the efficiency
of the chain stores.
4. Full time experts are employees for long term planning allow chain stores to regularly
monitor the opportunities and threats in the environment.

Disadvantages
1. The initial cost of establishment is higher for chains stores.
2. It is difficult for the top management to evaluate the activities of every individual stores
in the chain.
3. Centralized management is difficult for chain stores as the location of each store is
graphically dispersed.

 FRANCHISEE STORE – A franchising operation is a legal, contractual relationship between the

franchiser and franchisee. A franchisee is a type of license that a party (Franchisee) acquires to
allow them to have access to a business of franchiser. Proprietary knowledge, process and trade
mark is required in order to allow the party to sell a product or provide a service under the
business name in exchange the franchisor usually pays the franchisor an initial startup and annual
licensing fee .
Eg:- Dominos , McDonald's etc.

Franchise store can be classified into

A) Products or Trademark franchise –It is an agreement under which the franchisor grants the
franchise the right to buy products and use its trademark
B) Business format franchise - it refers to an agreement where the franchisor teaches the
franchise the entire business format apart from giving right to sell goods it includes marketing
selling inventory accounting procedures etc
Advantages
 1. Franchise will get well known brands and goods
2. Franchise can be benefited from the nationwide promotional activity launched in
association with the franchisor
Disadvantages
1. Concentration of many franchisees at a particular location main lead even more
saturation and affect the volume of sales and profits.
2. Once the retailer enter into an agreement they have to purchase raw materials and good
only from the franchisor till the contract expires
3. In many cases the royalty on payments to franchisor is linked to gross sales rather than
the profits
 LEASED, DEPARTMENT – A department in a little store that is rented to an outside party is
called least department. In other words, floor space with in a store is leased and run as a separate
business . A leased department within a store is a good method available till retailers for
expanding their products to the customers.

Advantages (from stores perspective)

1. The market is enlarged by providing one stop customer shopping
2. Regular store personal do not have to be involved
3. Leased departments operate pay for sale expenses reducing the store cost.
4. A percentage of revenue is received regularly
Disadvantages
1. Leased departments operating procedure may conflict with store procedures
2. Customers may blame problems on the stores rather than the leased.

Advantages (from leased departments)

1. Stores are known and the other regular customer may help in immediate sale for leased departments.
2. Some cost are reduced through share facilities life security equipment, display windows etc
3. There images enhanced by relationship with the popular store.
Disadvantages
1. The books and service lines are usually restricted.
2. There maybe in flexibility in operating style
3. If there successful the stores made take the credit.
 CONSUMER COOPERATIVE
It is a retail institution managed by its consumers for their mutual benefits.It is a form of enterprise that is oriented
towards services rather than profit. Its main aim is to fulfill the need and aspiration of their members
Advantages
1. The purchase are made in bulk and hence trade discounts are available
2. Less advertisement expenses are incurred
3. Profit earned are not spend on cooperative investments.
4. members feel a sells of their belongings
5. It helps to develop the managerial ability among members.
Disadvantages
1. It mainly focus on the need for medium and small income group
2. It surfers low finance
3. Lack of professional management due to lack of fiancé.
  FOOD ORIENTED RETAILER

Approximately 40 of Indian consumer’s expenditure goes into food and groceries. So most of the stores in Indian
economy are food oriented retailers

a) Convenience Store
These are relatively small store that are located near residential areas. They are open long hours, 7 days a
week and carry a variety of products with limited assortment of merchandise.
Offering a limited variety of food and household products and staying open for long hours at convenient
location are called convince store.
b) Conventional Supermarket
These are those stores focus on food and household maintenance products. These stores earn very
limited revenue from the sale of non food items. The main characteristics of this store format are the self
service operation. In this type of store the customer himself pickup whatever he wants.
c) Food based supermarket
A food based supermarket is larger and more diversified than a conventional supermarket. It provides
the full range of grocery items, thus allowing the customers to do all his grocery shopping under one roof.
d) Combination Store
These stores generally have supermarket and general merchandise as two different departments managed
by one management. Therefore these are called combination supermarket. This lead to increase in
efficiency as well as decrease in operating cost. Due to one stop shopping facility, these offers more benefit
for customers.
e) Box Store
A box store is a food based discount store that concentrates on small selection of goods. Such stores have
limited shopping hours, limited service and limited stocks. The retailers offer a limited number of national
brands. The products are kept in boxes or cases and the customers have to serve themselves.
f) Warehouse Store
A warehouse store or warehouse supermarket is a food and grocery retailer that operates stores geared
towards offering deeper discount prices than a traditional supermarket. Customers cannot be sure about the
availability of goods constantly as the warehouse retailers but these goods only when the manufacturer or
wholesaler offers a deep price or quantity discount.

GENERAL MERCHANDISE RETAILER

In general merchandise retailing, the strategic merchandise mix ranges from a shallow assortment to a deep
assortment of goods and services on the basis of location, price, atmosphere, service, promotion mix.

a) Specialty Store
A specialty store is a type of general merchandise store that sells limited lines of closely relayed products
or services to a selected group of customers. Specialty store offer a particular product line with a deep
assortment to its customers. The specialty stores provide limited product line consisting of quality brands,
designs, labels and provide with adequate customer support. Specialty merchandise line retailers can
specialize on the basis of price unit, size, quality, style, fashion etc.
b) Variety Store
This store offer a deep assortment of popular goods like stationary, inexpensive gift items, women
accessories etc.
c) Department Store
These are large retail units that offer wide variety and a deep assortment of goods and services. These
goods and services are organized into separate departments for the purpose of gaining control over various
 store activities like selling, promotion and customer service. These store strive to provide a one stop
shopping experience to customers. A typical department store offer clothing, shoes, cosmetics and other
household goods.
d) Off price retailers
These retailers offer an inconsistent assortment of branded fashion oriented soft goods at low prices. These
retailers can sell branded and designer label merchandises at low price as they purchase goods from
manufactures who have excess inventory.
e) Membership club
These are set up to cater price conscious customers. Customers have to pay annual fee to become the
member of the club. Membership in the club allows them to purchase goods at lowest price. Such store are
very large. They are characterized by little or no advertising, limited or no delivery services, little or no
credit and very low price.
f) Flea Market
It is an outdoor or indoor facility that rents out space to renders who offer merchandise, services, and other
goods that satisfy the needs of customer. This is a type of street market that is often seasonal.

II) NON STORE BASED RETAILLERS

Although non store retailer serve the general public like store based retailers they offer in their retailing
methods. These retailers reach customers and markets by using various methods like broadcasting,
publishing , electronic catalogue, going door to door, conducting in home demonstration and distributing
through vending machines.
A) Traditional Retailers
a) Direct Marketing - The Direct Marketing Association (DMA) defines direct marketing system
as ‘an interactive marketing system that uses one or more advertising media to yield a
measurable response or transaction at any location.
In direct marketing a customer is informed about the product through non personal media like
TV. Radio, internet, magazines etc. the customer makes orders through the mail or phone.
b) Direct selling - As defined by Direct Selling Association (DSA) – “Direct selling is a method of
marketing and retailing consumer goods directly to consumers”. It encourages convenience
shopping as well as personal touch or feel of a product. This type of selling can also be called as
door to door selling because sales person approaches customers directly to sell a product or
services.
c) Vending Machines - A vending machine involves a coin and card operated dispensing of goods
and services. It eliminates the use personal selling and facilitates sale machines that can be
placed wherever they are most convenient for customers.
Banks sue ATM machines to make banking more convenient. Customers goods sold through
vending machines include soft drinks, coffee etc.
d) Catalogue marketing - It refers to sales made through catalogues to a selected list of customers.
In catolgue basic product and pricing information is given along with instruction for placing an
order. The kind of delivery (Mail, post parcel) that the customer wants can be selected while
ordering.
e) Tele marketing - Telemarketing is a method of direct marketing in which a salesperson solicits
prospective customers to buy products or services, either over the phone or through a subsequent
face to face or Web conferencing appointment scheduled during the call.
Telemarketing can be a particularly valuable tool for small businesses, in that it saves time and
money as compared with personal selling, but offers many of the same benefits in terms of direct
contact with the customers.
 f)TV Home shopping - It is a medium of marketing through which shop by TV. Retailers
demonstrate a product and describe its benefits and uses. If a customer wants to purchase he can
order it through internet or telephone. TV shopping work on the following manner.
 The merchandise item are displayed, described and demonstrated on television.
 Using toll free number provides, the customers can place order.
 Payments are done through credit cards.

B) NON TRADITIONAL RETAILER

a) Worldwide shopping (Electronic Shopping

Electronic Retailing which is also known as internet retailing, e-tailing, cyber-retailing, virtual retailing or e-
retailing is the sale of goods /services through and electronic media. This electronic media, we all know is Internet
(World Wide Web). But these days due to revolution in electronic communications, besides internet, several other
medias like digital television, web-enabled mobile telephones (WAP), tele-conferencing devices etc. are also
operational. The main advantage of electronic/internet retailing is that it does not require any direct human
interactions. Besides this, internet retailing offers same quality, convenience of access, reliability and lower cost. In
short, this form of retailing allows the customers to evaluate and purchase goods and services without going to any
physical retail store.

b) Video Kiosks - The video kiosk is a self-supporting, interactive, electronic computer terminal that
displays goods and services on a video screen and permits the viewer to make selections. It uses touch
screen for consumers. By simply touching the screen, it shows videos clips, presentations, and product
details immediately on screen or on an attached projector.
c) Video Catalog - It is a retail catalogue on a CD –ROM Disc. It has to be reviewed on a comport
monitor. After viewing the catalogue, the customer can call up the retailer to order the goods. The disc
allows the retailer to quickly gather information about the retailer’s product.

Retail Marketing Strategy

A retail marketing strategies a statement identifying

 The retail target market
 The format that the retailers plan used to satisfy the target market need
 The basis on which the retailers plans to build a sustainable competitive. 
Elements
1. Target market – It refers to the market segment towards which the retailer plans to focus. Segments are in
terms of lifestyle, buying situation, geographical location etc. 
2. Retail formats- it is the appearance that's the retailer presents to the customers, layout pricing etc. 
3. Building sustainable competitive advantage- It includes strong relationship with customers’ suppliers and
achieving efficient internal operations.

Retail strategic planning process

1. Developing the mission–The mission statement is statements of long term purposes of the organization that's
prescribes what the retailers wishes to accomplish in the market in which it chooses to complete. It is the basic
foundations of the whole planning process and should be precise and reflective of the firm’s attitude and philosophy.
The stake holders can gain and understanding of the some philosophy at its mission statement.
Eg:McDonald’s mission statement is quality service convenience and volume which emphasize on delivering value
to its customers by providing quality services and convenience
2. Establishing objectives - After the basic purpose of existing of the retail shop is known, the retailers decide the
objectives of the firm. Objectives are formal statements of what the firm seeks to achieve in terms of sales,, volume
profitability, market share quality etc. Although profit is the prime objective for existing of the firm , some firms
incorporate to set up social objectives as well. This helps them to establish a good image in the community.
3. Situational analysis or SWOT analysis- Before implementing a strategy a retailer should have a clear
understanding of the external and internal environment so that the retailers should conduct through analysis of the
firms and also assess the available opportunities and threats in the environment .The assessment of internal and
external environment is known as situational analysis or SWOT analysis
4. Identifying the strategic alternatives- The result of a situational analysis forms the bases which the retailer
evaluate the strategic alternatives of the firm. The strategic alternatives that the retailer considers are market
penetration, market developments, retail formats and diversification
5. Selecting the target market- After evaluating the strategic alternatives, the retailer select the one that promises
maximum profits and offers the best scope for growth. Once this is done, the retailer would need to select the target
market that it want to continue.
6. Obtaining various resources needed to complete- The retailer can choose to enter the retail business either by
starting a new firm, buying acquiring an existing business, by entering into partnership with an alternative firm,
through a joint venture etc. The decisions regarding obtaining the resources depends on the way the retailer chooses
to enter the retail business .If the retailer choose to acquire an existing firm it may not need to arrange physical
resources as they are already available. They can focus on achieving financial and human resources
7. Developing and positioning strategy- the positioning strategy give the retailer a clean picture of the relative
positioning of the firm with regard to its competitors
8. Strategy implementation - It involves developing an action plan and assigning the ownership, establish critical
path and linking the action plan to operating plans. The objective of this strategy is to create value for customers.
The practices of the firm should be customer oriented. Merchandise sold should be attractive. Advertising and
promotion should be appealing.
9. Evaluating results and controlling operations- The effectiveness of a strategy can be known only by measuring
the performance of the implemented strategy. Once plan is implemented it is essential to monitor the various
activities to determine how effective the plan has been. Ifthe objectives are not achieved analysis need to be done.
Periodic evaluation of the strategy implemented should be done which help the retailer to understand the changing
market situations.

PROBLEMS OR CHALLENGES OF RETAIL INDUSTRY

1. Retail demand depends on the economy - Economic factors including personal income, consumer confidence,
job growth and interest rate can gradually affects consumer spending and retailer sectors. During recession period,
retail sales growth can slow and eventually decline. Retail spending grows rapidly during strong economic growth
and consumers spend a greater share of income in purchasing.
2. Industry concentration / competition - In many retail segments, large companies dominate and hold majority of
the market. With limited marketing fund small retailers struggle to compete with large advertising by major retailers
3. Trends affects market- Consumers tastes and preference can change rapidly and greatly affects demand for retail
items, fashion and product life cycle are unpredictable and companies may struggle to make merchandising
decisions based on future trends. Forecasting error can result in excess merchandise on out of stock and missed
opportunities
4. High workers turnover- Employee turnover in the retail Industry is high typically averaging above 50 %
annually. Due to low payments and low growth potential recruiting and training new personal is a constant activity
for most retailers and can be costly. Inadequate staffing it can result in in customer service problem
5. Crime related losses- Despite security measure theft, shoplifting and fraud are ongoing problems for retailers.
Employee theft accounts for above 40 %e of losses and shoplifting accounts for 35%.

GLOBAL RETAIL MARKET

All activities involved in selling products and services to final International customers for their personal
consumption are called Global retailing or international retailing. 
Rising GDP, great disposable income, increasing consumers spending pattern etc combines to achieve the Global
retail market and opportunities for retail segment players. 
Some factors that are likely to boost sales in the industry include urbanization, technological growth, selection and
continued popularity of online purchasing.  Retail industry is one of the largest industry in the worldwide both in
number of establishments and number of employees. 
Walmart is the world's largest retailer, the largest employer with 1 million associates. It has become the most
successful retail brand due to its ability, market share and efficiency.

CHALLENGES
1. Cultural Complexities- It is important to know the customers, than their preferences and values in the market.
People in different countries, place have different values and priorities on different products
2. Language barriers- The inability to communicate with customers is one of the biggest barriers for selling
internationally. To overcome, business should provide information in local languages. In addition having a customer
representative who can speak local languages is important and helps to prevent misunderstanding
3. Shipping cost, duties, taxes, export licenses and regulations - it is one of the most barrier for business selling
internationally .While selling overseas retailers need to consider the rules and regulations of each country. They
should enter into agreement with international shipping service providers who can take care of complex process of
shipping cost, duties, and taxes.

REASON FOR INTERNATIONALIZATION OF RETAILING

1. Inadvertent internationalization: Inadvertent internationalization is due to political instability.

Sometimes, changes in the demarcation of national borders take place. This may mean a retail company is
operating in a different market although its stores have not physically moved.
2. Non-commercial reasons: Non-commercial reasons of political, personal, ethical or social responsibility
have motivated retailers to move into foreign markets.
3. Commercial objectives: It includes entering the market which gives retailers competitive edge. Gaining
important market knowledge before moving in on larger scale learning about innovations may be other
commercial objectives of retail internationalization.
4. Government regulations: Government regulations influence the choice of market by retailers. It is not a
prerequisite to internationalization. Retailers prefer the markets with fewer restrictions on their growth.
Severe regulations at home push retailers into the international arena
5. Growth potential: Retailers seek the best growth potential possible. If they perceive profitable
opportunities in overseas markets, they are likely to capitalize on them.

RETAIL ENVIRONMENT 
The retail environment provides opportunities and threats to the organization. The retailers are required to adapt
changes that are most suitable to the changing environment. A better understanding of a retail environment helps
retailer to formulate better strategic planning in retailing. 

EXTERNAL ENVIRONMENT
Like any other industry Retail Industry is also affected by external environment some of the constitutes of the
external environment which have an impact on a retail organization
1. Economic environment - The nature of economic system in a country have a direct impact on the retail
business.  Therefore the retailers should have a thorough understanding of the various economic factors of a country
that would influence their operations and profitability.  Some of them are GDP, rate of inflation, purchasing power,
interest rate, tax rate etc. Higher the growth of the GDP implies that consumers have more income and hence they
spend more resulting in higher sales and more profit for retailers
2. Legal environment- Environment use various rules and regulations to ensure that retailers does not participate in
unfair trade practices but most of the time these regulations hamper the growth of Retail Industry. Some of the legal
and regulatory programs that retailers face in India are restriction on FDI, property regulations, Complex tax
systems, licensing and registration procedures etc
3. Technological Environment- Technology is one of the most importance drives of change in Retail Industry. The
computerization of various retail stores operations like inventory management billing database management,
widespread use of barcode, scanners etc have brought changes in retailing in India
Retailers are also using Technology to improve shopping environment and provide pleasant shopping experience to
the customers it helps to reduce Lead time and overcome stop problem
4. Competitive environment - Though the retailing industry is in its recent stage there is a severe competition
among the existing players. Moreover huge untapped potential is encouraging many players to venture into retailing.
Organized retailers are also affected by the stiff competition from the traditional stores. In an organized sector the
competition among the retailers where is depending on the way the retail operations are carried out.

INTERNAL ENVIRONMENT
All the factors which influence business and present within the retail business itself is known as internal
environment. It is fairly under the control of business and organizations. Internal environment is composed of the
elements within the organization including current employees. Management, corporate culture etc.

Internal factors affecting business are as follows

1. Objectives of the retail business
2. Policies of the business
3. Management changes and attitude 
4. Employee moral 
5. Cultural changes
6. Financial changes
 7. Management information system