RETAILING• Retailing is the set of business activities that adds value to the product and services sold to consumers.• It include all the activities involved in selling goods or services to the final consumer for personal ,non-business use.
Concepts• Variety(Breadth of merchandise): It is the number of merchandise category a retailer offers.• Assortment (Depth of merchandise): It is the number of different item in a merchandise category.• Stock keeping unit(SKU)is the each different item of the merchandise.
Functions• Providing an assortment of product and services.• Breaking Bulk• Holding Inventory• Providing Services• Convenient location
Economic significance of retailing• Effective distribution channel(Vertical Integration)• Developing innovative products• Support for community• Social Responsibility
The retail management decision process• The world of Retailing : Introduction Types of retailers Multichannel Retailing Customer buying behavior• Retailing Strategy: Retail marketing strategy Financial strategy Retail location Site location Organization structure and HRM Information system and supply chain management
The retail management decision process• Merchandise Management: Managing merchandise assortment Merchandise planning system Buying merchandise Pricing Retail communication mix Store Management: Managing the store Store layout design and visual merchandising Customer service
Evolution of retails• Traditional Formats:• Haats• Mandis• Established Formats:• Kirana shops:• Convenience stores• Department stores• Company showrooms• Cooperative stores• Pan/ beedi shops
Evolution of retails in India• Emerging Formats:• Exclusive retail outlets• Hypermarket• Speciality malls• Multiplexes• Fast food outlets• Service galleries
Classification of retail format (Types of retails )• Store based retailing:• Non-store based retailing• Service retailing
Classification of Retail formats• Store based Retailing:• 1)Form of ownership:• Independent retailer• Chain retailer• Franchise• Leased Department• Consumer cooperatives
Store Based Retailing• 2)Merchandise offered:• Convenience store• Supermarkets• Hypermarkets• Speciality Stores• Departmental stores• Off price retailers• Factory Outlets• Catalogue showrooms• Category killers• Warehouse clubs
Convenience store• The product range covers the basic requirements in food and grocery.• The store size ranges from3000-8000 sq.ft.
Super markets• Large , low cost, low margin ,high volume, self service operations designed to meet the need for food groceries and other non food items.• It ranges from400 sqm to 2500 sqm ,selling at least 70% of food items.
Hyper market• It is the combination of supermarket and a department store selling wide range of food and non food items.• Sales area between 5,000 and 15,000 sq m .• Discounted price.• A destination offer.• At least 35% of selling space devoted to non grocery product is termed as a hyper market.
Specialty Store• A store specializing in a particular type of merchandise.• It would operate in an area under 8,000 sq feet .• Narrow product line , with deep assortments in the product line.• Clearly defined target market.• Eg:Chamosa,Viveks
Department store• It varies from20,000 to 40,000 sq ft and stock anywhere between 50,000 to 1,00,000 SKU’s• They have separate departments on several floors.• They depend on food ,clothing and home related items for at least 10% but less than 70% of their sales.
Non-store retailing• Direct selling• Mail order• Telemarketing• E-tailing• Information kiosks• Automated vending• The cash and carry
Service retailing• Banks• Car Rentals• Video Rentals• Airlines• Education• Health care
Features of service retailing• Intangibility• Simultaneous production and consumption• Perishability• Inconsistency
Drivers of retail change in India• Socio economic factor• Changing Income profiles• The age factor• The changing role of women• The changing consumption basket• Increase credit friendliness• Geographical dispersion of market potential
FDI policy• 51 per cent foreign investment in single brandRetail with prior Government permission.• Single-brand retailers such as Nike, Damro, Louis Vuitton, can operate now on their own.
FDI is allowed through any of the following methods:• Hi-Tech items• Social sector items• Medical and diagnostic items• Item sourced from Indian small sector with technology provided by foreign collaborator• Two-year Test marketing
FDI• 100% FDI is allowed on specific approval basisIn case of trading companies in India for carrying out any of the following:1)Export Trading2)Bulk imports3)Cash and carry4)Sales substantially to group companies.
FDI• Franchise agreements • Most widely used entry route by multinational retailers• Cash and Carry wholesale trading• • 100% FDI is allowed in wholesale trading which involves building of a large distribution infrastructure to assist local Manufacturers• • Metro AG of Germany
FDI• Strategic licensing agreements• • Foreign company enters into a licensing agreement with a domestic retailer
Porters five forces with respect to Indian retail sector• Threats of new entrants• Threats of substitutes• Bargaining power of suppliers• Bargaining power of buyers• Intensity of rivalry
Indian retail market• Highly fragmented• Low entry barriers• Absence of economies of scale• High transportation cost• Diverse market need• High cost of real estate• Lack of adequate infrastructure