UNIT III-

RETAIL INSTITUTION BY OWNERSHIP

-Dr Gaganpreet Ahluwalia
WHEEL OF RETAILING
Wheel of Retailing
+The wheel of retailing theory explains the life cycle of a retail
organization and the different levels through which it passes.
A & P: A CASE STUDY
Wheel of Retailing
Wheel of Retailing-
ABC & Co. (Car Retailer):
Entry Stage
+ ABC and Co. entered the market in the year 2001 with a single model of cars which was
priced extremely low to target the middle class and the price-sensitive consumer base. It
operated from various rental showrooms located in the outskirts of the cities.

Growth Stage
+ The company was able to gain recognition in the market for affordable cars by the year
2006. The consumers showed interest, and the booking for cars increased tremendously.
+ The retailer brand now slightly hiked up the price of its initial model and also launched
three more models with new features.
+ Even the stores were shifted to busy market places in various cities for better exposure.
Also, activities like credit purchase, service centres, customer relationship management,
etc. were introduced.
Wheel of Retailing-
ABC & Co. (Car Retailer):
Maturity Stage
+ By the year 2015, the company had almost 211 showrooms in the country selling
out multiple models of cars in different colour variants. By this time, the company
is unable to attract new customers and faces a saturation point in business.

Decline Stage
+ The company’s sale starts to fall by the year 2018, and the debt on it is quite high.
Thus, decreasing the return on investment on the one hand, and increasing the
liabilities and operating cost on the other side.
+ Now, in such a situation, ABC and Co. can either shut down its non-performing
showrooms or can come up with an innovative idea which can revive the
company’s position.
Wheel of Retailing-
ABC & Co. (Car Retailer):
Wheel of Retailing-Strategies:
BASIS OF CLASSIFICATION OF RETAIL STORES
I. OWNERSHIP OF
STORES:

2. OWNED BY
1. INDIVIDUAL ONE CORPORATE
STORE/ PART OF ENTITY/
A CHAIN MULTIPLE
OWNERSHIPS
The first basis of classification of Retail Institutions is on
ownership and following are the various forms of it:

Owned by
Independently
Franchisee- Leased manufacturers Consumer-
owned: Ownes Chain owned.
owned. department. or owned.
only one store
wholesalers.
Independently owned
+Characteristics:
a. Owns only one store
b. Largest in numbers
c. Serves a particular market niche

+Advantages: Flexible, low investment, direct control, consistency,

independence

+Disadvantages: Limited bargaining power, labour intensive,

overdependence on owner
Chain owned
+Characteristics:
a. Multiple units
b. Common ownership
c. Centralized functions

+Advantages: Bargaining power is more, Efficiency, Better

technology, Better planning

+Disadvantages: No flexibility, Investments are more, Limited

independence
Franchisee owned
+ Characteristics:
a. Two parties (Franchisor and Franchisee)
b. Contractual Agreement
c. Franchisee pays fee on sales

Franchisee-
+ Advantages: Relatively small investment, well-known name, standard
procedures
+ Disadvantages: Potential over-saturation, Cannot go beyond agreement,
Royalty

Franchisor-
+ Advantages: Fast establishment, Control over franchisee, cash flow
improves, control over std. Operations, Royalty
+ Disadvantages: Lack of uniformity, competition between franchisee, poor
units affect cash flow, franchisees may desire for independence
Leased department
+Characteristics:
a. It’s a department in a retail store, rented to outside/third
party
b. Lease department operator is responsible for operations
c. It broadens the merchandise of the store
d. Common for in-store shoe, beauty salon, jewelry, cosmetics
or watch repair
e. Also called shop in shop format
Eg: GILI-Geetanjali jewelers in shopper's stop
Consumer Co-Operatives
+Characteristics:
a. Owned by customers.
b. A group of customers invest in the company, elect officers,
manage operations and share profit
c. Quite successful in rural India eg. Amul
II. RETAIL STRATEGY
MIX:

1. FOOD & 2. GENERAL

GROCERY MERCHANDIS
BASED STORE E STORE
 Food Oriented retailers use five major
strategic formats:

1. Convenience store Eg. Mom n Pop

stores, Easy Day
2. Conventional supermarket Eg.
Food & Grocery Reliance Fresh, Food Bazaar
3. Food-based superstore Eg. Big Bazaar
4. A combination store Eg. D-Mart, Big
Bazaar
5. Warehouse store
 General Merchandise retailers use eight stores
based general merchandise:

1. Specialty stores Eg: Party dresses- Manyavar,

Gourmet Food- Nature's Basket, Watches-
World of Titan
2. Traditional department store: Eg: Shopper's
Stop, Westside
General Merchandis
e 3. Full-line discount store Eg: Brand Factory,
Walmart
4. Variety store
5. Factory outlet Eg: Reebok, Nike, Pepe, Biba
6. Membership club Eg: Metro Cash n Carry, Big
Bazaar wholesale club
7. Flea market. Eg: Haats in Rural
8. Category Killer Eg: Croma, Staples, Ikea
III. NON TRADITIONAL
FORMATS:

4. DIRECT
1. ONLINE 2. MOBILE 3. SOCIAL
MARKETIN
CHANNEL CHANNEL MEDIA
G
+Any retail format that is not store based is considered non-
traditional retail format.

+They include direct channels to reach the consumers like:

Direct Marketing
+Customer is exposed through non personal mediums and query
comes from customer's end.
+Customers can order by mail, phone, fax or online.

Advantages
+Low cost, customer convenience, more data base

Disadvantages
+Limited range, Clutter because of many companies, Dynamic change in
pricing is difficult

Eg:. Amazon, Flipkart, Myntra

Direct Selling
+Direct Selling include personal contact in non-store locations and
phone solicitation. It starts from Retailer's end.

Advantages
+Personal touch

Disadvantages
+Costlier than Direct Marketing

Eg: Eureka Forbes, Amway

Vending Machine
+Vending machine involves coin or card operated
machine/dispenser.

Advantages
+Eliminates sales personnel, Convenient

Disadvantages
+Theft, Vandalism, Stock-out

Eg: MilK, Beverages, Newspaper

Online retailing/E-tailing
+Computer and Internet is used to connect with consumer.

+Online presence of consumer awareness/info about

company- website, testimonials, no financial Transaction

+Online presence for back end integration, financial

transaction happens for vendors, suppliers, manufactureres
E-tailing
+Online presence and financial transaction with consumers

Advantages
+Less costly, Better reach, More specified consumer data,
Convinience

Disadvantages
+Does not work for all, Touch and dfeel missing, Matching
customer expectation becomes challenging
Video Kiosk
+Kiosk is a free standing, interactive, computer terminal that
uses touch screens.

+It can be installed anywhere

RETAIL LIFE CYCLE
RETAIL LIFE CYCLE STAGES
+The retail life cycle theory holds that retail institutions
experience the cycle of innovation, growth, maturity and
decline, like goods and services that they sell. As with
the product life cycle
RETAIL LIFE CYCLE STAGES
RETAIL LIFE CYCLE STAGES