By

Binoy john varghese

 INTRODUCTION


 Retail - Any business that directs its marketing efforts towards
satisfying the final consumer based upon the organization of
selling goods and services as a means of distribution .
 Retailer - A dealer or trader who sells goods in small
quantities, or one who repeats or relates .
 Retailing -All activities involved in the marketing of goods
and services directly to the consumers for their personal, family
or household use or Retailing includes all the activities
involved in selling goods / services directly to final consumers
for personal , non-business use.
 Retailing derived from French word “retailler” means ‘a piece
of’ or ‘to cut up’.
 FUNCTIONS OF A RETAILER


 From customers point of view, retailer serves by
providing goods that he needs in the required
assortment and at the right place and time.
 From customers point of view, retailer serves by
providing goods that he needs in the required
assortment and at the right place and time.
 From an economic standpoint the role of a retailer is
to provide real added value or utility to the
customer.
 FUNCTIONS OF A RETAILER


 Five different perspectives - By serving the consumers by
way of functioning as a marketing intermediary and
creating time, place and ownership utility.
1. First utility arises from the need of providing a finished
goods and services in the form that is acceptable to the
customer.
2. The retailer performs the function of storing the goods, and
providing us with an assortment of products in various
categories
3. The retailer creates time utility by keeping the store open
when the consumers prefer to shop.
4. By being available at a convenient location, he creates place
utility.
5. Finally when the products are sold ownership utility is
created.
 FUNCTIONS OF A RETAILER


 The Retailer also serves the manufacturers by
Performing the function of distributing the goods to
the end users.
 Creating a channel of information from
manufacturer to the consumer.
 By serving as a final link in the distribution chain.
 Recommending products where brand loyalty is not
strong or for unbranded products.
 INTRODUCTION –
CONCEPTS, ROLE & ENVIRONMENT

 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 EVOLUTION THEORIES

 Four theories of evolution/ retailing are:
1. Environmental theory
2. Cyclical Theories
a) Wheel of Retailing
b) Accordion theory
c) Retail lifecycle theory
3. Conflict theory
4. Evolutionary theories
a) Dialectic Process
b) Natural selection
 1.ENVIRONMENTAL THEORY


 Darwinian approach-Retailers with most appropriate
structure and formats will survive.
 If there are different environmental conditions, they
need to adopt in order to succeed.
 E.g.: Economy and culture.
 They must also respond to the evolution of market
conditions or else they will face extinction.
 Major environmental factors
1. Changes related to customers-Demographic, attitude
and preferences, life style and economic influences.
2. Changes in technology.
3. Changes in competition.
 2.CYCLICAL THEORY


 Cyclical Theories : Begin with one state and return
to that state at some time in future.
Cyclical Theories
a) Wheel of Retailing
b) Accordion theory
c) Retail lifecycle theory
 Evolutionary: Changes similar to biological
evolution
 a) WHEEL OF RETAILING

Trading-up Phase
-Moderate to high prices
-Elaborate facilities
-Increase in skills

Vulnerability Phase
Entry Phase -High prices
-Low prices -Excellent facilities
-Limited facilities -Excellent service
-Limited service -Declining ROI

10
 a) WHEEL OF RETAILING


 Wheel represents phases through which some types of
Retailers pass:
 Retailers enter by attracting customers – low price, low
service
 Expand market – More expensive merchandise, More
Trading up services, open more convenient locations.
process increases costs & price of their merchandise,
creating opportunities for new low price retailers to enter
e.g. Discount stores & category specialists
 Finally they mature as high cost high price retailers who
become vulnerable to new entrants-inability to adapt.
 Some Retailers don’t begin as low price, low service
entrants, e.g. Upscale fashion specialty stores.
 b) THE ACCORDION THEORY


 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.
 Starting with general stores - neighboring localities
 Slowly switching to specialist stores - like gifts, restaurants,
entertainment at a certain distance
 These specialist retailers when mature start adding variety and
become general stores.
 Some become category killers – is a retailer that carries such a
large amount of merchandise in a single category at such good
prices that it makes it impossible for the customers to walk out
without purchasing what they need, thus killing the
competition.
 Department stores have both width and depth of merchandise.
 c) RETAIL LIFE-CYCLE THEORY


 Retail development pass through 4 stages-
 Introduction stage – slow rate of growth due to
limited resources and experiences.
 Growth stage – Rapid growth as efficiency and
experience increase.
 Maturity stage – Level off due to increased cost and
high competition and reduced efficiency.
 Decline stage – Decrease in market share and
profitability. May sometimes withdraw from market.
 c) RETAIL LIFE-CYCLE THEORY

Cash flow

Maturity/Saturation

Growth Decline

Level of sales

Introduction

Retail
development
0 Time
 3. CONFLICT THEORY


 Competition between retailers causes changes in the
nature of retail environment.
 It is due to the imbalance caused by innovations
(Brown, 1987) – Four stages of response.
 Types of retailer response to innovation.
1. Shock.
2. Defensive retreat.
3. Acknowledgement and assessment.
4. Adaptation.
 4. EVOLUTIONARY THEORY


 Evolutionary Theories : Changes similar to
biological evolution
Evolutionary theories
a) Dialectic Process
b) Natural selection
 a) DIALECTIC PROCESS


 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.
 a) DIALECTIC PROCESS


 A new value proposition by one retailer gives rise to
two retailers with same value.
 E.g. Tesco always copied Sainsbury
 In India too the grocery sector is facing a price led
dialectic process…some of them are sure to die

Department Store
Thesis Discount Dept. Store
Synthesis
Discount Store
Antithesis
 b) 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 specialty outlets
within grocery stores.
 Management of service and quality in
retailing

 Two different approaches to quality management.
a) Product-attribute approach –
 match the product conformance to standardized
requirements.
 Controls companies output by using internal standard
setting prospective.
 Training -led management style.
b) Consumer-oriented approach –
 Holistic process of service delivery to be controlled by
considering expectation and attitude of customers.
 Marketing-led approach.
 E.g. Perceived service quality Gronroos model and
Parasuraman, Zeithaml & Berry model.
 PERCEIVED SERVICE QUALITY
GRONROOS MODEL

 Gronroos, 1982 – focus on IMAGE, a gap between
expected and perceived service.
 Aggregation of functional and technical variables.
 Functional quality– How technical elements are
transferred to customers.
 Technical quality– What the customer is actually
receiving.
MANAGING PERCEIVED SERVICE QUALITY
GRONROOS MODEL

Expected Perceived
Perceived service quality


service service

Traditional marketing
activities Image

Attitudes Internal
Technical solutions
relation

Technical Functional
Knowhow Machines
quality quality

Computerized systems Customer contacts

What? How?
PARASURAMAN, ZEITHAML & BERRY
MODEL

 Parasuraman et.al., 1985, customer evaluate quality as
difference between expected and perceived service.
 Five service-quality gaps are identified.
 Realization of these gaps and reducing and closing the
gaps led to improved satisfaction.
 Gap 1: ignorance of customer expectations
 Gap 2 : requirement for service design stds
 Gap 3 : not delivering to service stds
 Gap 4 : inconsistency between performances &
promises(service delivery & external commn.)
 Gap 5 : the service shortfalls
 SERVICE DELIVERY QUALITY
PARASURAMAN, ZEITHAML & BERRY MODEL
Personal Past
Word of mouth needs experience


Expected service

Gap 5

Perceived service
CONSUMER

MARKETER Gap 4 External com

Service delivery To consumers

Gap 3
Translation of
perceptions into service-
Gap 1 quality specifications
Gap 2
Mgmt perceptions of
consumer expectations
QUALITY CHARACTERISTICS


Merchandise Services
 Performance  Tangibles
 Features  Reliability of staff
 Reliability
 Responsiveness of staff
 Conformance to stds
 Durability  Assurance /
 Serviceability Competence
 Aesthetics  Empathy
 Image
 GLOBAL RETAIL INDUSTRY

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


Sales
Rank Name of Retailer Grocery Sales (%)
(USD Bn)
1 Walmart - USA 235 44%
2 Tesco- UK 63 75%
3 Carrefour-France 58 84%
4 Home Depot -USA 55 51%
5 Kroger - USA 55 70%
6 WalGreens -USA 52 75%
7 Aldi Group- Germany 48 18%
 Why retailing so important?


 Retailer links Producers to Customers
 Retailer is a person, agent, agency, company or organization
reaching the Goods or Services to ultimate consumer
 Retailer in close contact with the customers
 Sell small quantities of items on a frequent basis
 Convenience in terms of location , payment and credit facilities
, range of merchandise , after sales service, etc.
 Offer selection – merchandise assortment
 Retailers perform specific activities:
• Anticipate customer wants
• Stock product assortments
• Acquire market information
• Finance Retail business
 Retailing is Big Part of Economy


Manufacturing Retail
(18%)
(17%)

Government
(15%)

Services
(50%)

Employment Projections for 2010 by BLS (Bureau of Labour Statistics, US)

 Retail in India


 FDI in Retail in India; Chinese lesson
 A.T. Kearney‘s Global Retail Development Index
ranks India first
 Retailing in India - unorganized sector
 Organized retail at 2 % , 85% in US, 20% in China
 At 270 million, one of the largest consumer base
 GDP growth, increased literacy, increase in media
penetration
 60% of India is under the age of 30 - propensity to
shop is higher
 Corporate- Indian Retail


No of
Corporate Remarks
Outlet
Reliance Retail 700+ Biggest Retail Chain & fast Expanding,
operating in 14 States.
Big Bazaar 164 Fast Expanding, Big Size Stores

Bharti - Walmart 105 Retail Stores in NCR, Punjab, UP & Rajasthan,

Expanding quickly to South
03 Cash & carry Stores

Aditya Birla 500+ Concentration in South(acquired Trinethra

and Fab Malls)
Spencers 210 Oldest Retailer in India, operates in 27 Cities

Metro-AG- Germany 4 Cash and carry stores located at Mumbai,

Hyderabad & Kolkatta, Expanding Slowly
 Rapid Transformation Anticipated


28% share
Current Size & Future Projections for Indian Retail Market
1200
1011
1000
US$ Billion

800
590
600 527
471
376 421
400 336
282
200
51 74 97
0 12 17 29
2007 2008 2009 2010 2011 2012 2017

Total Retail Organized Retail

Reach a share of 28% by 2017

 Anticipated Indian Retail


Country Share of Organized Years taken to reach the
Retail level from < 5%
China 20% 10
Poland 20% 8
Brazil 36% 15
Thailand 40% 18
US 85% 50
India 17% (estimated) 5
27% (estimated) 10

India looking at rapid GROWTH compared to other countries

 Growth Of Indian Retail


Size of Indian Retail
1200
1011
1000
800
590
US$ Bn

600
400 336
200
0
*Projected
2007 2012* 2017*

Source: Technopak Analysis, CSO & Other Sources

Indian Retail expected to grow close to 12% p.a. in the next 10 years
 HIGH PRIVATE CONSUMPTION


 Private Consumption US $568 Bn (62%)
 Rural India consists of 720 Million consumers across
627,000 villages
 17% of these villages account for 50% of the rural
population
Organized Vs Unorganized Retail Sector


Organized Retail Sector Unorganized Retail Sector
 Organized Vs Unorganized Retail Sector


Factor Organized Retail Sector Unorganized Retail Sector
Definition Modern form of retailing Traditional form of retailing
Examples Hypermarket, Mom n Pop stores, hand cart,
Retail chain etc. pavement vendors etc
Market Share 2% 98%
Market Growth 35% 6%
Challenges Poor supply chain Use of labour intensive
management, aggressive technology, lack of government
expansion etc. support etc.
Comparative Penetration of Organized
Retail

Organized Traditional

15% 19%
45%
70%
80%
97%
85% 81%
55%
30%
20%
3%
USA Taiwan Malaysia Indonesia China India
 Growth of organized Retail in India


 Organized Retail is 2 % of the total Retail Industry
and expected to Grow by 10% by 2012.
• Increasing Consumer aspiration
• Growing no of Nuclear families
• Growing Size of working women segment
• Demand from tier II and III cities and rural markets.
• Large young working Population
 ORGANISED RETAILING


 In India Organized Retailing is 2%
 Retail sector highly fragmented
 Retail chains like Wal-Mart, Sears, McDonalds
brought Rapid Growth and consolidation of
Organized Retail
 Rapid rise of Income levels and accompanying
changes in lifestyles greatly contributed to growth of
Organized Retail
 ORGANISED RETAILING


 In India, increase in Disposable income, Purchasing
Power of growing Middle Class conducive
conditions for growth of Organized Retail
 Indian Retail environment different from that of
western countries:
• Cities congested, large population in rural areas
• Smaller purchases, limited household space
 Need for Retailer’s service


 Self-service : Self service is the corner-stone of all discount
operations. Customers carry out their own locate-
compare-select process to save money.
 Self-selection: customers can find their own goods ,
although they can ask for assistance.
 Limited service : retailers in this category carry more
shopping goods , and customers need more information
and assistance. The store also offer services such as credit
and merchandise return privileges
 Full service : salespeople are ready to assist in every
phase of locate-compare-select process . High cost of
retailing
 Types of Retail Formats


 Store retailers : specialty store , supermarket ,
department store , convenience store , discount
store, etc
 Non-store retailers : direct selling (multi-
level/network marketing) , telemarketing ,
automatic vending , buying service .
 Combination
 Types of Retail Formats


 Store-based Retailers operate from a fixed location
that requires consumers to travel to the store to view
and select merchandise and/or services.
 Store-based Retailers
• Department stores
• Specialty stores
• Supermarkets
• Supercenters
• Category killers
• Convenience stores

44
 Types of Retail Formats


 Non-store based Retailers attempt to reach the
consumer at home, work, or any place other than a
store where they might be susceptible to purchasing.
 Non-store based Retailers
• Street peddling
• Direct selling
• Mail-order
• Automatic-merchandising machine
• Electronic shopping

45
RETAILING CONCEPT

 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 Mn.
Employees. Wal-Mart generates $245 Bn. sales through 1
Mn. nationally and 0.3 Mn. Foreigners.
 RETAIL

 Strong economies have a strong 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

 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 CHARACTERISTICS

 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
 RETAIL BUSINESS CLASSIFICATION


1. Ownership Business:
• Proprietorship,
• Partnership,
• Limited liability company
2. Operational Structure:
• Independent Trader,
• Chain Of Stores,
• Franchising,
• Consumer Cooperative
3. Width & Depth Of Merchandise:
• Specific Product Category
• Wide Range
 RETAIL BUSINESS
CLASSIFICATION

4. Type Of Pricing:
• Low pricing, minimum Service
• Premium Merchandise, High Service
• Premium pricing, distinctive Image
5. Consumer Interaction:
• Direct interaction
• Mail Order
• Tele-Selling
• Vending machines
• Door-to-door
• Mobile Vending
 RETAIL
MANAGEMENT ..2

 GROCERS - Major business is grains, 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 self-service
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,
Men’s toiletry products, Baby Care Products.
 RETAIL CONCEPT


 Customer Orientation:
• Attributes & Needs satisfaction
 Coordinated Efforts:
• Maximize Business Efficiency
 Value driven:
• Good Value for Money
• Goal Orientation
• Achieve Goals
 RETAILING CONCEPT


1. Communication with Customers
2. Identify Customers Needs
3. Provide Products and Services to
4. Satisfy Customers
5. Elicit Feedback to Improve Services – Word Of
Mouth
 RETAILING CONCEPT


 Customer Service approach:
1. Create a conducive environment
2. Listen to your Customers
3. Direct mail
4. Relationship Marketing – Long Term
5. Rewards for Regular Customers
 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 Industry employs 17-20% Workforce that
drives the Economy.
 Retail trends often mirror trends in a nation’s overall
economy.
 Retailers add value by Providing the Right Product
at The Right Place at the Right Time.
 New Concepts & Trends


 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
 BOOKS FOR REFERENCE


 Retail Management By Chetan Bajaj
 Retail Management By Berman & Evans
 Retail Management By Levy & Weitz
 RETAIL
MANAGEMENT ..3
CASE STUDY:

 Facts Of the Case – No assumptions

 Key Issues
 List alternatives
 Evaluate alternatives
 Recommend Course Of Action
 RETAIL
MANAGEMENT
TOTAL RETAIL EXPERIENCE
..2
 Merchandising & Display
 Brands and Quality Of Goods
 Inventory Carried
 Customer Service
 Pricing
 Support Functions: Parking
 Create Customer Excitement
 RETAIL
MANAGEMENT ..2
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
OPPORTUNITIES:
..2
 Management –
Raise capital
Purchase
Use MIS to Control Operations
Employ for Sales Counters, Stores and
Cash Counters
Undertake Marketing Activities
 Entrepreneurial Opportunities
 RETAIL
MANAGEMENT ..3
RETAIL STRATEGY


OVERALL ACTION FRAMEWORK
 Mission
 Goals
 Consumer Market
 Overall Activities
 Feedback and Control Mechanism
 RETAIL
MANAGEMENT ..3
Forward Retail Planning – FOCUS


 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
Ownership and Management:
..3

 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
Business:
..3

 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 & Services
..3
 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
 Personal Aptitude
..3

Knowledge, Experience, Qualifications,
Inborn Skills and Acquired Skills
 Financial Resources
Land and Building, Fixtures, Equipment
 Time Demands
Owner’s Availability
 Personnel
Sales People, Inventory, Cashiers
 RETAIL
MANAGEMENT
RETAIL OBJECTIVES – STRATEGY
..3

 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
Target Market – Customer Group To Be Attracted and
Satisfied.

Mass – Broad Spectrum of Customers
Concentrated – Specific group
Differentiated – Two or more distinct Groups with
Different Retail Approaches
 RETAIL MANAGEMENT
..3 TECHNIQUES
TARGET MARKET
STRATEGY MASS MARKET CONCENTRATED DIFFERENTIATED

LOCATION Near Large Near Small Near Large

Population Medium Pop. Population
RETAILMIX Wide Deep Distinct Goods
Assortment, Assortment, for Target
Medium Qual. High/ Low Market
Qual.
PROMOTION Mass Advtg. Direct mail Different
Media for
Target Groups
PRICING Popular High or Low High, Medium
and Low
STRATEGY Large Specific Strategies
Homogeneous Strat. directed at
Group Directed at Heterogeneous
Specific Gr. Groups
 RETAIL MANAGEMENT
CONTROLLABLE
..3 UNCONTROLLABLE
VARIABLES VARIABLES
Store Location Consumers
Managing a Competition
Business
Merchandise @ RETAIL Technology
Pricing STRATEGY
Communicating Economic
Conditions
Seasonality
Legal Restrictions
RETAIL MANAGEMENT
..3
 Mission
 Situation Analysis Ownership



Sales
Goods/Services category

 Objectives Profit
 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 MANAGEMENT
..5
MERCHANDISE MANAGEMENT:


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 MANAGEMENT
MERCHANDISING PLAN:
..5
 All Merchandising Decisions Based on Plans-

1. 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 )

Popular Products,

- Expected: Hygiene, Timely Service, Knowledgeable, Stock
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 In-Elastic.
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:
Manufacturer  Wholesaler
Retailer
Co. Price Distributor’s 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. Demand Sales Av .Cost Op. Exp. Tot. Cost
9 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. Tot. Profits Markup % Av. Inv. Hold Inv. T/O R O Inv.%
9 55600 16 12000 9.5 61
10 129600 22 13000 8 127
11 132000 25 14000 5.7 114
12 115000 27 16000 3.8 82

Unit Sales 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 year’s 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
Retailer’s Objectives direct Strategic

Planning – some Routine. Non-routine
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 Retail Operation

IMPLEMENTATION
 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, DÉCOR,

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 STORE-
BROWSING 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 CUSTOMER’S 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 CUSTOMER’S
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 Target Market

Specific Activities

Control
 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 MANAGEMENT
..11
RETAIL INSTITUTION BY OWNERSHIP


Retail Institution refers to basic format or
structure of a Business.