Retail organization and classification of retail units
RETAIL ORGANIZATION ANDCLASSIFICATION OF RETAILUNITS
RETAIL ORGANIZATION The term retail organization refers to the basic format or structureof a retail business designed to cater to the needs of the endcustomer. Recently, some scholars have started referring to India as anation of shopkeepers. This epithet has its roots in the huge numberof retail enterprises in India, which were over 12 million in 2003.About 78% of these are small family businesses utilizing onlyhousehold labour.
A RETAIL UNIT COULD BEOWNED BY: Manufacturer (e.g., company owned retail outlets) Wholesaler (e.g., Vastra outlet in Rajouri in New Delhi) Independent retailer (Chanakya Sweet Shop near Hazratganj in Lucknow) Consumer (consumer owned grocery stores in man y residential societies) Co-operative society (e.g., Mother Dairy milk booths in Delhi) Government (e.g., Cottage Emporia) Ownership shared among franchiser and franchisee (e.g., Archies Gallery)
CLASSIFICATION OFRETAIL UNITS Conceptual classification of a business unit provides the marketerswith strategic guidelines, useful in the design of retailing strategy.Besides, retail businesses are extremely diverse and there are quite afew types of retail units. Therefore, retail units are classified onmultiple of ownership, geographical locations, kind of customerinteraction level of services provided etc.
1. RETAILERS CLASSIFIEDON THE BASIS OFOWNERSHIP
INDEPENDENT RETAILERAn independent retailer owns onlyone retail unit. The management hasdirect contact with the customers andcan quickly respond to their needs.
CHAIN STORES A chain retailer operates multipleoutlets under common ownership. Itusually engages in some level ofcentralized purchasing and decisionmaking.
FRANCHISING It involves a contractual arrangement between a franchisor and a retailfranchisee, which allows the franchisee to conduct a given business underestablished name and according to a given pattern of business. The franchisee pays an initial fee and a monthly share of gross sales in exchangefor the exclusive rights to sell goods and services in a specified area. Franchising is a retail organizational form in which small businesses can benefitbeing a part of a large retail institution.
DIRECT MARKETING It is a form of retailing in which a customer is first exposed to a good orservice through a non-personnel medium (such as direct mail, broadcast orcable TV, radio, magazine, newspaper etc.) and then orders by mail, phone(usually a toll free number), fax or by computer. Direct marketing can be divided into two broad categories:• General: General marketing firms offer a full line of products fromclothing to house ware.• Specialty: Specialty firms focus on narrow product lines.
DIRECT SELLING It includes both personal contact with consumers in their homes (and othernon-store locations such as offices) and phone solicitations initiated by aretailer. Examples: Carpet selling, vacuum cleaner, other household products,cosmetics, books, encyclopedia etc. It emphasizes convenience in shopping and a personal touch.
VENDING MACHINE It is a retailing format involving the coin or card operated dispensing of hotand cold beverages and food or snacks items. It eliminates the use of sales personnel. It allows round the clock sales. Location of the machines can be done according customer’s convenience.
WORLD WIDE WEB WWW in the field of retailing relates to online retailing. It enables retailer’s world wide presence. Enhances the retailer’s brand. Provides information to the consumers. Promotes new products. Furnish customer service. Cost efficient Can announce special offers and also employment opportunities.
SINGLE AND MULTI CHANNELRETAILINGSingle-Channel Retailing:• If a firm sells to consumers through one format.Multi-Channel Retailing:• If a firm sells to consumers by combining storeand non-store retailing- as well as using multiplestore formats.
INTEGRATED MULTI-CHANNELSTRATEGY Integrated promotions across channels. Ensuring product consistency across channels. Having an effective information system that can share data across channels. Enacting a store pickup process for items purchased on the web or through acatalog. Searching for multi-channel opportunities with appropriate partners.
2. CLASSIFICATION OFRETAILERS ON THE BASIS OFOPERATIONAL STRUCTURE Independent retail unit: – The total number of retailers in Indiais estimated to be over 5 million in 2003. About 78% of these aresmall family businesses utilizing only household labour. Anindependent retailer owns one retail unit. Retail Chain: – A chain retailer operates multiple outlets (storeunits) under common ownership; it usually engages in some level ofcentralized (or coordinated) purchasing and decision making.
Franchising: – Franchising involves a contractual arrangementbetween a franchiser and a retail franchisee, which allows the franchiseeto conduct a given form of business under and establishments nameand according to a given pattern of business. Leased Department or Shop-in-shop:- It refers to department in aretail store that are rented to an outside party. Usually this is done incase of department and specialty stores and also at times, in discountstores. Co-operative Outlets: – Co-operative outlets are generally ownedand managed by co-operative societies.
3. CLASSIFICATION OFRETAILERS ON THE BASISOR RETAIL LOCATION Retailers in a free-standing location: – Retailers located at a site which isnot connected to other retailers depend entirely on their sore’s drawing power andon the various promotional tools to attract customers. This type of location hasseveral advantages including no competition, low rent, better visibility from theroad, easy parking and lower property costs. Retailers in a Business-associated Location:- In this case, a retailer locateshis store in a place where a group o retail outlets, offering a variety ofmerchandise, work together to attract customers to their retail area, and alsocompete against each other for the same customers.
Retailers in Specialized Markets: - Besides the above location-based classification, we also have in India-retailers who prefer specializedmarkets, particularly traditional independent retailers or chain stores. InIndia, most of the cities have specialized markets famous for a particularproduct category. For example, in Chennai, Godown Street is famous forclothes. Airport Retailing: – For quite some time, duty-free shops andnewsstands dominated the small amount of commercial space providedat airports. Lately, serious efforts are being made to design new airportfacilities in order to incorporate substantial amounts of retail space.