Professional Documents
Culture Documents
Module - 1: Introduction To The World of Retailing
Module - 1: Introduction To The World of Retailing
Module - 1: Introduction To The World of Retailing
Coverage.
What is Retailing The importance of retailing Opportunities in retailing Trends in Retail Industry Retail Management Decision Process Types of Retailers
Definition
A conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demands of the consumer with the supplies of all the manufacturers. French word retaillier meaning to cut a piece off or to break the bulk. A retailer is a person, agent, agency, company, or organization which is instrumental in reaching the goods, merchandise, or services to the ultimate consumer.
Retailing a set of business activities that adds value to the products and services sold to consumers for their personal or family use
It is the largest private industry, ahead of finance and engineering. Retail is the largest industry in the world with sales of $ 7.3 trillion. 25 of the top 50 Fortune 500 companies are in retail. Every 10th billionaire in the world is a retailer. Retail is the second largest industry in US in terms of establishments and employees. Generates $3.8 trillion in sales in US. Generates 11.7% of US employment. Well known retailers - Wal Mart, Harrods, Sears, McDonalds
Home Depot
Huge product assortment Prices are 20% 30% below hardware stores Obsessed with offering high quality customer service Lifetime value of customers: $25,000 Well-trained, highly motivated salespeople earn above average salaries Customer problem solving is encouraged Internet site offers many home improvement tips One of todays most successful retailers
The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India
With growing market demand, the industry is expected to grow at a pace of 25-30% annually, contributing 8-10 to GDP.
2nd largest employer. About 12 million retail outlets in India.
They are predominantly small, independent, and owner managed shops. Boom in retail industry is due to increase in the disposable income of the middleclass households. The retail business in India is expected to reach US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018. Today organized retailing in India is estimated to increase from 4% in 2008, to 16% in the next five years.
US$ Bn
336
Indian Retail expected to grow close to 12% p.a. in the next 10 years
Characteristics of Retailing
There is direct end user interaction in retailing. It is only the point in the value chain to provide a platform for promotions. Sales at the retail level is generally in smaller unit sizes. Location is a critical factor in retail business. In most retail businesses services are as important as core products. There are a larger number of retail units compared to other members of the value chain.
Changing demographics and industry structure Expanding computer technology Emphasis on lower costs and prices Emphasis on convenience and service Focus on productivity Added experimentation Counting growth of non-store retailing
Functions of Retailing
Channel of communication
Transport and Advertising functions
Trends in Retailing
Mom-and-pop stores E-commerce Department Stores Discount Stores Category Killers Speciality Stores E-tailers
Provide Assortment Buy other products at the same time Break Bulk Buy it in quantities customers want Hold Inventory Buy it at a convenient place when you want it Offer Services See it before you buy; get credit; layaway
From a traditional setup to a professional setup Fastest growing service industry in India Marketing oriented industry like FMCG, consumer durables etc. Being customer focused and being innovative is the key. Includes dynamics of supply chain management, merchandising more than any other industry. Large requirements of professionally trained manpower like MBAs to manage businesses.
Promotion/Advertising
Level-2
Level-3
Environmental Factors
Macro
Intratype competition - between same type retailer Intertype competition - Greater Variety of products makes for scrambled merchandising.
Customers
Consumer Behavior
Indicates how the firm plans to focus its resources to accomplish objectives. It identifies
Target markets Nature of Merchandise and services Building a long term advantage over competitors
Wal-Mart
V/S
Toys R Us
big towns Toys, games, bicycles and children Low price
Small towns ----Wide Varity shallow selection ----furniture for Low price ------
strategy Financial strategy Location strategy Organizational structure Human Resource Information systems Supply Chain Strategies CRM
Retail Mix combination of factors used to satisfy customer needs and influence their purchase decision.
of merchandise and service Pricing Advertising and promotion Store design and merchandise display Level of customer service Store location
Customer Service
Location
Retail Strategy
Merchandise Assortment
Communication Mix
Pricing
Location Strategy
Free-standing Stores
Merchandise Assortment
Communication Mix
Pricing
Assortment Strategy
Customer Service
Location
Communication Mix
Pricing
Location
Pricing Strategy
Merchandise Assortment
Customer Service
Communication Mix
Low, EDLP
Customer Service
Location
Communication Mix
Store Design and Display Merchandise Assortment
Pricing
Customer Service
Location
Merchandise Assortments
Pricing
Customer Service
Limited
Location Merchandise Assortment Store Design and Display Communication Mix
Pricing
Types of Retailers
2.
3. 4. 5. 6.
Nature of ownership Operational structure Type of retail location Length and depth of merchandise Method of customer interaction Based on goods and services
1. Nature of ownership
2. Operational Structure
3. Retail location
Retailers in a Free-standing location Retailers in a business-associated location Retailers in specialized markets Retailers at airports
Department stores
Discount stores Speciality stores
Category killers
1. Discount store discount store retailer that offers a broad variety of merchandise, limited service, and low prices. Eg. Wal-Mart, Subiksha
2. Specialty stores A specialty store concentrates on a limited number of complementary merchandise and provides a high level of service. Eg. Park Avenue from Raymonds
3. Category specialist is discount store that offers a narrow variety but deep assortment of merchandise. They are basically discount speciality stores. By offering a complete assortment in a category specialists can kill a category of merchandise for other retailers and thus are called category killers Eg. Home Depot, Sangeetha, Univercell 4. Department stores are retailers that carry a broad variety and deep assortment, offer some customer services, and are organized into separate departments for displaying merchandise. Eg. Shoppers Stop, Pantaloons.
Non-traditional retailing
Store-based Retailing
Food Retailers
Convenience store Supermarkets Food-based superstores Combination stores Limited-line stores Warehouse stores
40
Direct Marketing
Catalog
Direct Selling
Person-to-person
Non-Traditional Retailing
The Internet
Online
shopping E-tailing
Video-kiosks
Video-catalogs
42
Product retailer
Service retailer
Rented-goods
43