SALES AND DISTRIBUTION

MANAGEMENT
Chapter-16 Channel Institutions: Retailing
Learning Objectives
LO1: To understand the definitions of retailing
LO2: To explain the functions of retailing
LO3: To discuss the importance of retailing
LO4: To identify the types of retailers, retail formats and retail
categories
LO5: To describe the retailing scenario in India
 RETAILING

“Retailing includes all the activities involved in selling goods or services

directly to final consumers for their personal, non-business use”. A retail
organization is “any organization that is involved in this type of selling
irrespective of how and where goods and services are being sold”. A retailer
is “the person or an organization who is involved in these type of activities”.
-Philip Kotler
FUNCTIONS OF RETAILING
1. Physical possession flow:
• Passing the delivery goods to customers for a price.
• Maintaining desired assortments in both required quantity and variety for
supplying to customers.
• Maintaining storage facilities
• Taking possession of goods from wholesalers
2. Title
3. Promotion
4. Negotiate
5. Finance
7. Order flow
8. Payment flow
9. Information flow
 IMPORTANCE OF RETAILING
When producers sell directly to their final buyers in an
organization marketing then they get linked to their final buyer in
marketing channels. In consumer product marketing such type of
direct channels is not commonly available. Most of the purchases
are made by the consumers at the retail stores which work
independently of the producer. Thus, the final stage for consumer
products in a marketing channel is retailing. They provide the most
important link between the ultimate consumers and the producers.
The simple selling and buying does not encompass the entire
retailing. Since economic utility is created by it, therefore, it is
important for consumers. On the other hand, as it forms the most
important connection between the end-users and the
manufacturers so it is important to them.
 CLASSIFICATION OF RETAILERS
I. On the basis of their conventional understanding of the retail practices in the Indian context:
• Limited line retailers: specialize in line of products that are related
• General stores: anything which can be sold in reasonable volume is carried in such stores
• Conventional stores: such stores work on price competition avoidance
II. On the basis of expanded service and assortment
• Department store: combining speciality shops and limited line retailers
• Speciality shops: special types of products are sold there like sporting goods
III. On the basis of mass merchandising retailers
• Hypermarkets: all goods and services that are purchased routinely and very large in size that try to carry
items other than drugs and food
• Mass merchandisers: stores that focus on high turnover and low margins with many departments having
self-service stores
• Discount houses: at substantial price cuts a wide assortment is offered
• Catalogue showroom retailers: display showroom with back-up inventories and sell several lines out of a
catalogue
• Supermarkets: large stores specializing in self-service and wide assortment including grocery
Based on added convenience
• Telephone and direct mail retailing
• Selling directly at the consumer’s home through door-to-door
• Automatic vending: delivering and selling products through
machines
• Convenience stores: limited line food stores offering
convenience and not assortment
 Evolution of Retailing
The Wheel of Retailing
The Retail Life Cycle
 Types of Utility in Retailing
Form Utility
• This type of utility includes the service or design of the product.
Place Utility
• Place utility can be acquired by providing an easy access to services and goods.
Time Utility
• When a product is made available as soon as the need arises then the time utility exists.
Possession Utility
• The gain and satisfaction received from having and using a particular good or service.
 RETAILING SCENARIO IN INDIA
• Some features of retail industry in India are as follows:
• Total domestic retail market is estimated at Rs 9300 billion and growing
at 3 to 4% per annum.
• An estimated 32.9 lakh retailers having around 60 lakh sales persons
exist in India.
• Out of these, nearly 21 lakhs are involved in selling non-durable goods.
• Majority of the retailers belong to cities and only one-third exist in
villages.
• In India, an estimated six retailers exist per one thousand population
whereas in USA seven retailers for every 1000 persons.
 Rural India
• Rural markets generally stock regional and local brands
with longer credit periods and higher margins
• An estimated 50 percent of rural population prefers buying
from weekly haats or shanties
• Poor reach of media and communication, poor visibility and
product display, poor storage system, low density of shops per
village,
• Dispersed trade and population, poor road connectivity and
large number of small markets.
 ONLINE RETAILING OR e-TAILING
It has the following advantages:
• A favourable image is created for the company
• Promotion of new products or services and use of demonstrations to highlight
features
• Provides details of loyalty programs, answer to queries, price comparisons,
choices available and product information
• Reaches consumers anywhere in the world
Summing Up

Retailing includes all activities involved in selling or renting consumer products and services directly to
ultimate consumers for their personal or household use. Sale of consumer products or industrial products is
not included in retailing. Further, all firms engaged in retailing cannot be called retailers. It can be said that a
retailer is the person or a firm that derives more than half of its sales revenue from sales made directly to
ultimate consumers. Retailers are classified into different categories based on service, assortment, mass
merchandising, retail practices and convenience.
Key terms
1. Retailing: Retailing includes all the activities involved in selling goods or services
directly to final consumers for their personal, non-business use.
2. Discount stores: A discount store or discounter offers a retail format in which
products are sold at prices that are in principle lower than an actual or supposed
"full retail price".
3. Hypermarkets: A hypermarket is a retail store that combines a department store
and a grocery supermarket.
4. Supermarkets: A supermarket is a self-service shop offering a wide variety of food,
beverages and household products, organized into sections.
5. e-tailing: “It is the selling of retail goods on the Internet.”

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