Retail Management

Module 1 The World of Retailing

THE WORLD OF RETAILING

1. 2. 3. 4. Introduction to the World of Retailing Types of Retailers Multichannel Retailing Customer Buying Behavior

RETAILING STRATEGY
5. 6. 7. 8. 9. 10. 11. Retail Marketing Strategy Financial Strategy Retail Location Site Location Organization Structure & Human Resource Management Information System & Supply Chain Management Customer Relationship Management

MERCHANDISE MANAGEMENT
12. Managing Merchandise Assortments 13. Merchandise Planning System 14. Buying Merchandise 15. Pricing 16. Retail Communication Mix

STORE MANAGEMENT
17. Managing The Store 18.Store Layout, Design Merchandising 19. Customer Service

&

Visual

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Key Ingredients:
What is retailing? What do retailers do? Why is retailing important in our society? What career, entrepreneurial, and other opportunities does retailing offer? What types of decisions do retail managers make?

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Who is a Retailer?

Customer

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Retailing Defined:
The word Retail is derived from the French word retaillier This means to cut a piece of or to break bulk In simple terms it implies a first hand transaction with the customer Thus Retailing can be defined as: a set of business activities that adds value to the products and services sold to consumers for their personal or family use.

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The Wheel of Retailing

Explains changes in the retailing institutions. It explains phases through which some types of retailers pass.

ENTRY PHASE

TRADING UP PHASE

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The Wheel of Retailing

Innovation Retailer (Entry Phase)
Low Status Low Price Minimal Service Poor Facilities Limited Product Offering

Traditional Retailer (Trading Up Phase)

Elaborate Facilities Expected , Exotic & Elaborate Services High Rent Locations High Prices Extended Product Offerings
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The Wheel of Retailing

Mature Retailer (Vulnerability Phase)
Top Heaviness Conservatism Declining ROI

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Retail Life Cycle

Growth Profit

S A L E S

INNOVATION

GROWTH

MATURITY

DECLINE

African Markets Indian Markets

South Asian Markets

Developed Markets

TIME 9

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INNOVATION
A new organization is born

It differs sharply from the other retailers

There are only a few competitors The rate of growth is fairly rapid Management fine tunes its strategy through experimentation Level of profitability is moderate This stage can last up to 5 years

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ACCELERATED GROWTH
There is rapid increase in sales Few competitors emerge It is now in a position to pre-empt the market & establishes a position of leadership

Since growth is imperative, the investment level is also high mainly in system & processes
The level of profitability if high as well

This stage can last from 5 8 years

Towards the end of this stage cost pressures tend to appear

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MATURITY
The organization still grows but competitive pressures are felt acutely Newer forms of retail formats tend to arise The rate of growth declines & so do profits It calls for rethinking strategy & repositioning itself in the market A change may occur not only in the retail format but also in the merchandise mix offered.

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DECLINE
The retail organization looses its competitive edge. The growth is negative Profitability declines further

Overheads are high

The organization needs to decide if it is still going to continue in the market

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What do Retailers do???

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Functions Performed by a Retailer

Providing an assortment of products and services Breaking bulk Holding inventory Providing services Provide an experience
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Why is Retailing Important in our Society???

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Economic Significance of Retailing

1. 2. 3. GDP Growth Employment Opportunities Greater Exports

4.
5.

Better Quality of Products & Services

Increased Tax Revenues

6.
7.

Organized Indian retail sector will encourage tourism

Scope of improvements in agriculture with the help of the Indian Retail Sector
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What career, entrepreneurial, and other opportunities does retailing offer?

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Opportunities in Retail
Management Opportunities
Design & develop new products Undertake marketing activities Market research

Entrepreneurial opportunities
Kishore Biyani heads Future Group worth Rs. 3,550 Crores

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Opportunities in Retail
1. 2. 3. Fastest Growing Sector in India Humungous Customer Pool Tremendous Growth Rate

4.
5.

Percolating Down Huge potential in Tier II cities.

Rural Retailing

6.

Expected Further Relaxation of FDI

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Opportunities in Retail
1. 2. 3. Fastest Growing Sector in India Humungous Customer Pool Tremendous Growth Rate

4.
5.

Percolating Down Huge potential in Tier II cities.

Rural Retailing

6.

Expected Further Relaxation of FDI

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What types of decisions do retail managers make???

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The Retailing Management Decision Process

Understand the world of retailing Developing retail strategy Implementing retail strategy

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Understand the World of Retailing

Retailing managers need to know the environment in which they operate There are 2 critical environmental factors:

1. Macro Environment
a. b. c. Technological factors Social factors Ethical / legal / political factors

2. Micro environment
a. b. Competitors Customers

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Macro Environment
Technological factors
Rapid change in technology RFID Technology Use of EID Rise in E Tailing

Automated self service systems improve satisfaction

Concept of media carts to study and analyze customers better
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Macro Environment
Social Factors
Shift in Indias demographic profile Rise of the middle class Rise of no. of working women Rise in no. of people working 24 X 7 This gives rise to new merchandising categories and round the clock retail

Retailer needs to understand the local culture

The new success mantra is Think Local & Act Local

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Demographic Profile of India

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Demographic Profile of India

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Demographic Profile of India

2010 (Estimate)

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Demographic Profile of India

Number of Households (in 000s) Rural

360 842 2,301 8,889

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Macro Environment
Legal/Ethical/Political Factors
Legal environment affects the interest of foreign investors It also affects the risk perception of customers Ethical factors include retailers trade off between promoting a good product or promoting a product with good margins Political environment deals with the political stability of an economy

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Micro Environment
Customers
Existing customers
Potential customers

Competitors
Inter type competition: similar merchandise using different formats. Ex discount & department stores

Intra type competition: same formats

Competition based on Location Proximity
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Developing Retail Strategy

The retail strategy indicates how the firm plans to focus its resources to accomplish its objectives It identifies:
The target market The nature of merchandise & services to be offered How the retailer will build a long term advantage

Sustainable competitive advantage in retail can be build by:

Customer loyalty Location Human resource management Distribution and information systems Unique merchandise Vendor relations Customer Service Ms. Geetanjali Gulati 36

Developing Retail Strategy

It also involves strategic decision areas:
u

Market Financial Location Organizational structure Human resources IS & SCM CRM

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Implementing Retail Strategy

To implement retail strategy, management develops a retail mix that satisfies the needs of its target market better than its competitors The Retail Mix is the decision variables retailers use to satisfy customer needs & influence their purchase decision
Customer Service Location

Store Design & Display

Retail strategy

Merchandise Assortments

Communication Mix Ms. Geetanjali Gulati

Pricing 38

Implementing Retail Strategy

Managers in the buying organization must decide:

How much & what type of merchandise to buy?

The vendors to use & the purchase terms The retail prices to set How to advertise & promote merchandise

The store managers must determine, how to:

Recruit Select Motivate sales associates Where & how the merchandise will be displayed The nature of services to provide customers

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Top 10 Indian Retailers

1. Shoppers Stop

2.
3. 4.

Westside (Trent)
Pantaloons Lifestyle

5.
6. 7. 8. 9.

RPG Retail (Food World, Music World)

Crossword Wills Lifestyle Globus Piramals (Piramyd& Crossroads)

10. Ebony Retail Holdings Ltd.

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