Lecture -7

Retail Industry

Evolution and status

Retail industry
In-store Retail ; Shops and stores Non-store Retail: Direct marketing, catalogs, Television, Telephone, Vending machines etc. Retail sector is 2nd largest employer after agriculture. 12 million retail outlets contributing to Rs.11200 billion sales in Pakistan Food retail constitutes 62.7%of total (6944 Billion) Other FMCG 1280 Billion Other consumer Durable 2976 Billion

Retailing consists of Business activities involved in selling goods &services to consumers for their personal,family, or household use

Retail functions
Providing assortment Sorting Breaking bulk Rendering services Risk bearing Holding inventory Channel of communication Transport and advertising

Functions of a Retailer

Retailers provide important functions that increase the value of the products and services they sell to consumers and facilitate the distribution of those products and services for those who produce them. These functions are.. 1) Providing an assortment of products and services Most consumers are well aware of the product assortments retailers offer. 2) Breaking Bulk To reduce transportation costs, manufacturers and wholesalers ship cases / cartons to retailers. This is called breaking bulk. It is cost effective for both manufacturers and consumers

Holding inventory - A major function of retailers is to keep inventory that is already broken into user friendly sizes so that products will be available when consumers want them. 4) Providing services a) Retailers provide services that make it easier for customers to buy and use products. b) They offer credit so consumers can have a product now and pay for it later. c) They display products so consumers can see and test them before buying. d) Some retailers have salespeople on hand to answer questions and provide additional information about products

5) Increasing the value of products and services By providing assortments ,breaking bulk, holding inventory, and providing services, retailers increase the value consumers receive from their products and services

Basic retailing tasks

Fundamental task- getting consumers into stores -converting them -operating efficiently Retailing strategy: planned after identifying The Target market Retailers in the same trade pursue different target markets

Retail strategy
Decisions on location, assortment, pricing and ambience are decided after the target market is identified retail strategy combines controllable and un controllable variables. Location, management, merchandise management, pricing communication with the customer are controllable variables

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Strategy
Uncontrollable variables are consumers, competition, technology, economic conditions, seasonal variations, legal restrictions.

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Retail mix
Merchandise-price and quality Location Ambience Communication Service

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Customer Services Retailers also differ in the services they offer customers. Customers expect retailers to provide some services--accepting personal checks, proving parking, and displaying merchandise.

Private labels Retailers brand

Lower priced as a result of cost advantages. Higher margins If the brand succeeds the retailers negotiating strength increases. Merchandising task becomes easier.

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Successful Retail brands

Agha Supper , Metro, Imtiaz Store , Big Bazar, Makro, etc.

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Retail performance indicators

Of transactions: most tills indicates this Of items sold Total traffic: possible if traffic counters are installed Average sale: Total sales/ of transactions (avg. amount that each customer spends) Items per sale: total items sold/#of transactions (items per customer-a key driver)

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Retail performance indicators

Conversion rate: #of transactions/total traffic. (what %age of customers entering actually making a purchase) Sales per hour: total sales/#of staff hours worked (a measure of staff productivity

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Retail growth
Fastest growing retail segments: Food and grocery:61% Clothing :55% Pharmacy :27% Furniture and fixtures :27% Durables :18% Watches and jewelry :18%

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Warehousing

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Meaning of warehousing
Storage done on a large scale and in a systematic manner is called warehousing Holding or preserving goods in huge quantities from the time of their purchase or production till their actual use or sale. One of the important auxiliaries to trade. It creates time utility by bridging the time gap between production and consumption of goods.

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Need for warehousing

Seasonal production Seasonal demand Large scale production Quick supply Continuous production Price stabilization

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Types of warehouses
Private warehouses : owned and managed by manufacturers or traders to store exclusively their own stock of goods. Public warehouses :available to anyone on payment of rent. Statutory licence and regulations apply to own and manage public warehouses. Government warehouses :owned, managed controlled by central or state govt. CWC ,FCI.

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Types of warehouses
Bonded warehouses: owned and managed by govt. or private agencies. Generally owned by dock authorities and located near ports. Goods are usually bonded with customs and excise departments. Co-operative warehouses: owned managed and controlled by co-operative societies.

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Types of warehouses
Cross-docking warehouses.( flow through distribution) Products from an arriving truck are not stored in a warehouse. It is immediately moved across the receiving dock to other trucks for immediate delivery to stores.

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Characteristics of ideal warehouses

Location Material handling appliances Space Special facilities Protection Security Safety

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Functions of warehouses
Storage Protection Risk bearing Financing Processing Grading and branding Transportation

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Logistics & channel management

transportation
Matl.handling Logistics as a System of inter -related components

Order processng
Inventory ctrl

Management Tries to mini-mize the cost Of using the Components Taken as a whole

warehousing
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packaging

Material handling
Placement and movement of products in a storage area. Fork lifts, cranes, conveyor systems, cross docking

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Interface between logistics and channel management

Defining logistics Service standards

Ensuring logistics Meets channels service needs

Selling the logistics program

Monitoring results of Logistics program

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