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Sales & Retail Management 5


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    Prof. Raghavendran.V
  • 2. Introduction
    Retail management
    The various processes which help the customers to procure the desired merchandise from the retail stores for their end use refer to retail management. Retail management includes all the steps required to bring the customers into the store and fulfil their buying needs.
    Retail management makes shopping a pleasurable experience and ensures the customers leave the store with a smile. In simpler words, retail management helps customers shop without any difficulty.
    By Prof. Raghavendran.V
  • 3. RM
    Retail is derived word from “Retaillier”, which means to cut of a piece or to break bulk. Therefore, a retailer may be defined as a dealer or trader who sells goods in small quantities.
    Thus retailing is final distribution of merchandise, for consumption by the end consumers.
    By Prof. Raghavendran.V
  • 4. Functions of RM
    From the customer’s point of view, the retailer serves him by providing the goods that he needs, in the required assortment, at the required place and time. From an economic standpoint, the role of a retailer is to provide real added value or utility to the customers. This comes from four different prospective:
    By Prof. Raghavendran.V
  • 5. Functions of RM ( Utility)
    First utility is form of a product
    Second in form of time utility
    Third in form of place utility &
    Last in form of ownership utility is created.
    By Prof. Raghavendran.V
  • 6. Characteristics of RM
    Direct End-User Interaction
    Platform for Promotions & POP displays
    Lower unit sales
    Retail location critical
    Services as important as Core Products
    Large number of Retailers to meet geographical coverage and population density
    By Prof. Raghavendran.V
  • 7. Retail industry in INDIA
    • In India Organized Retailing is 2%
    • 8. Retail sector highly fragmented
    • 9. Retail chains like Wal Mart, Sears, McDonalds brought Rapid Growth and consolidation of Organized Retail
    • 10. Rapid rise of Income levels and accompanying changes in lifestyles greatly contributed to growth of Organised Retail
    By Prof. Raghavendran.V
  • 11. Retail Industry in INDIA
    • In India, increase in Disposable income, Purchasing Power of growing Middle Class conducive conditions for growth of Organised Retail
    • 12. Indian Retail environment different from that of western countries:
    • 13. - Cities congested, large population in rural areas
    • 14. - Smaller purchases, limited household space
    By Prof. Raghavendran.V
  • 15. Drivers of retail change in INDIA
    Socio- Economic factors
    Changing Income profiles
    The age factor
    The changing role of women and evolving family structure
    The changing consumption basket
    Increased credit friendliness
    Geographical dispersion of market potential
    By Prof. Raghavendran.V
  • 16. The size of retail in INDIA
    In the year 2006 the INDIAN retail market was estimated at Rs 12,00,000 crores and organized sector is about 55,000 crores
    See chart from the text book, page number 37.
    By Prof. Raghavendran.V
  • 17. Segment wise division
    Food and Grocery
    By Prof. Raghavendran.V
  • 18. Segment Wise Division
    By Prof. Raghavendran.V
    Clothing & Textiles
    Consumer Durable
    Jewellery retail
    Books, music & gift
    Fuel/ Petro retail
    Write sector classification for the above:
  • 19. Foreign Direct Investment in Retail
    FDI is a method of allowing external finance into an economy. FDI facilitates international trade and transfer of knowledge, skills and technology. FDI constituted a small per cent of gross fixed capital formation in 1993, which went up to 4%.
    INDIA is fastest emerging as a key destination of FDI, According FDI confidence index prepared by AT Kearney, India ranks second in FDI attractiveness, first being China.
    By Prof. Raghavendran.V
  • 20. FDI in retail
    In India FDI retail is not allowed. An international retailer can enter the Indian retail market through any of the following methods:
    • Hi-Tech Items
    • 21. Social sector items
    • 22. Medical & diagnostic items
    • 23. Manufactured with technology provided by the foreign collaborator.
    • 24. Two- year test marketing (Simultaneously commencement of manufacturing)
    By Prof. Raghavendran.V
  • 25. FDI
    Foreign owned companies cannot own and run retail shops to sell other category of goods to consumers in INDIA.
    Some popular entry options for foreign players are:
    • Franchising operations
    • 26. Joint venture
    • 27. Manufacturing facility in India
    • 28. Distribution offices
    By Prof. Raghavendran.V
  • 29. Challenges to retail development in INDIA
    Organized retail is little over a decade old. It is largely an urban phenomenon and the pace of growth is still slow and reasons are:
    • Retail not being recognized as an industry
    • 30. The high costs of real estate
    • 31. Very high stamp duties
    • 32. Lack of adequate infrastructure
    • 33. Multiple and complex taxation system
    By Prof. Raghavendran.V
  • 34. Analysis of INDIAN Retail
    By using porter’s models, let us analyze the Indian retail segment.
    By Prof. Raghavendran.V
    Threat of new entrants
    Bargaining powers of Suppliers
    Bargaining powers of buyers
    Threat of substitute products/ services
    Porter’s Five Force of Competition
    Four theories of evolution are:
    Wheel of Retailing Cyclical
    Accordion theory Theories
    Dialectic Process Evolutionary
    Natural selection Theories
    Cyclical: Begin with one state and return to that state at some time in future
    Evolutionary: Changes similar to biological evolution
    Prof. Raghavendran.V
  • 36. Wheel of Retailing/ (Cyclical Theory)
    Wheel represents phases through which some types of Retailers pass:
    Retailers attract customers – low price, low service
    Expand market – More expensive merchandise, More services, open More convenient locations. Trading up process increases costs & price of their merchandise, creating opportunities for new low price retailers to enter e.g. Discount stores & category specialists
    Some Retailers don’t begin as low price, low service entrants, e.g. Upscale fashion specialty stores.
    Prof. Raghavendran.V
  • 37. Prof. Raghavendran.V
    Retailers fluctuate from strategy of offering wide merchandise with shallow assortment to offering limited categories with deep assortment
    In rural markets, Retailers sell many categories under one roof: shoes, cosmetics, foods, cloth, medicines. However the assortment is shallow and customers have limited choice.
    Department stores have both width and depth of merchandise
    Specialty stores carry special categories with deep selection
    Prof. Raghavendran.V
    An evolutionary theory based on premise that retail institutions evolve.
    The theory suggests that new Retail formats emerge by adopting characteristics from other forms of retailers in much the same way as the child is the product of the pooled genes of the parents.
    Specialty stores with high margins, low turnover plush operations
    Discount stores with low margins, high turnover low operations
    Both the above were synthesized to form category specialist stores.
    Prof. Raghavendran.V
    Prof. Raghavendran.V
    Discount Store
    Department Store
    Discount Department Store
    Those Retail Institutions Succeed which adapt to changes in customers, Technology, competition and legal environment.
    Department stores have tried to combat specialty stores by opening specialty counters within the stores.
    Interest in physical fitness and increased number of women in workforce have made salad bars in grocery stores successful.
    Prof. Raghavendran.V
  • 42. The concept of life cycle in RETAIL
    The concept of PLC as Philip Kotler is also applicable to retail organizations. This is because retail organization pass through identifiable stages of innovation, development, maturity and decline. This is what is commonly termed as the “RETAIL LIFE CYCLE”
    Prof. Raghavendran.V
    Assignment: Explain the concept of Retail Life cycle?
  • 43. Business Models in Retail
    Critical factors, which affect the retail model are
    • Trends in the market positioning
    • 44. Competition, &
    • 45. The organizational capabilities
    By Prof. Raghavendran.V
  • 46. Classification of retail formats
    By Prof. Raghavendran.V
  • 47. Careers in Retailing
    It is people centric industry, which can be exposed to multi-disciplinary and skills. It offers many choices in terms as career.
    Buying and Merchandising
    Store operations
    Human Resources
    Technology and E-commerce
    Visual Merchandising
    Supply Chain Management & Logistics
    By Prof. Raghavendran.V
  • 48. Assignment time: Sub on 20th Sept
    Global Challenges in Retail Industry?
    Brief out Traditional Business Models in Indian retail.
    Brief out Classification of retail formats.
    Classify & Differentiate b/w Super, Hyper markets & Departmental stores.
    By Prof. Raghavendran.V