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By
Binoy john varghese

 Retail - Any business that directs its marketing efforts towards
satisfying the final consumer based upon the organiza...

 From customers point of view, retailer serves by
providing goods that he needs in the required
assortment and at the r...
 Five different perspectives - By serving the consumers by
way of functioning as a marketing intermediary and
creating t...

 The Retailer also serves the manufacturers by
Performing the function of distributing the goods to
the end users.
 Cr...

 Retailer is customer focused, not Product –focused.
 Manufacturer may reach customers through:
• Dealers
• Company sh...

 Four theories of evolution/ retailing are:
1. Environmental theory
2. Cyclical Theories
a) Wheel of Retailing
b) Accor...
 Darwinian approach-Retailers with most appropriate
structure and formats will survive.
 If there are different environ...

 Cyclical Theories : Begin with one state and return
to that state at some time in future.
Cyclical Theories
a) Wheel o...

10
a) WHEEL OF RETAILING
Entry Phase
-Low prices
-Limited facilities
-Limited service
Vulnerability Phase
-High prices
-...
 Wheel represents phases through which some types of
Retailers pass:
 Retailers enter by attracting customers – low pri...

 In rural markets, Retailers sell many categories under one roof:
shoes, cosmetics, foods, cloth, medicines. However th...
 Retail development pass through 4 stages-
 Introduction stage – slow rate of growth due to
limited resources and exper...

c) RETAIL LIFE-CYCLE THEORY
Time
Retail
development
Introduction
Growth
Maturity/Saturation
Decline
Level of sales
Cash ...
 Competition between retailers causes changes in the
nature of retail environment.
 It is due to the imbalance caused b...

 Evolutionary Theories : Changes similar to
biological evolution
Evolutionary theories
a) Dialectic Process
b) Natural ...

 Retail formats emerge by adopting characteristics
from other forms of retailers in much the same way
as the child is t...

 A new value proposition by one retailer gives rise to
two retailers with same value.
 E.g. Tesco always copied Sainsb...

 Those Retail Institutions Succeed which adapt to
changes in customers, Technology, competition and
legal environment.
...
 Two different approaches to quality management.
a) Product-attribute approach –
 match the product conformance to stan...
 Gronroos, 1982 – focus on IMAGE, a gap between
expected and perceived service.
 Aggregation of functional and technica...

Traditional marketing
activities
Expected
service
Perceived
service
Perceived service quality
Image
Technical
quality
Fu...
 Parasuraman et.al., 1985, customer evaluate quality as
difference between expected and perceived service.
 Five servic...

Word of mouth
Personal
needs
Past
experience
Expected service
Perceived service
Service delivery
Translation of
percepti...

QUALITY CHARACTERISTICS
Merchandise
 Performance
 Features
 Reliability
 Conformance to stds
 Durability
 Servicea...

 Retail sales driven by Ability (disposable income)
and willingness (consumer confidence)
 Worldwide retail sales Est....

Top 7 Global Retailers
Rank Name of Retailer
Sales
(USD Bn)
Grocery Sales (%)
1 Walmart - USA 235 44%
2 Tesco- UK 63 75%...

 Retailer links Producers to Customers
 Retailer is a person, agent, agency, company or organization
reaching the Good...

Retailing is Big Part of Economy
Services
(50%)
Government
(15%)
Manufacturing
(18%)
Retail
(17%)
Employment Projections...

 FDI in Retail in India; Chinese lesson
 A.T. Kearney‘s Global Retail Development Index
ranks India first
 Retailing ...

Corporate
No of
Outlet
Remarks
Reliance Retail 700+ Biggest Retail Chain & fast Expanding,
operating in 14 States.
Big B...

336 376 421
471
527
590
1011
12 17 29 51 74 97
282
0
200
400
600
800
1000
1200
2007 2008 2009 2010 2011 2012 2017
US$Bil...

Anticipated Indian Retail
Country Share of Organized
Retail
Years taken to reach the
level from < 5%
China 20% 10
Poland...

Growth Of Indian Retail
336
590
1011
0
200
400
600
800
1000
1200
2007 2012* 2017*
US$Bn
Size of Indian Retail
Indian Ret...

 Private Consumption US $568 Bn (62%)
 Rural India consists of 720 Million consumers across
627,000 villages
 17% of ...

Organized Vs Unorganized Retail Sector
Organized Retail Sector Unorganized Retail Sector

Factor Organized Retail Sector Unorganized Retail Sector
Definition Modern form of retailing Traditional form of retaili...

Comparative Penetration of Organized
Retail
USA Taiwan Malaysia Indonesia China India
85% 81%
55%
30%
20%
3%
15% 19%
45%...

 Organized Retail is 2 % of the total Retail Industry
and expected to Grow by 10% by 2012.
• Increasing Consumer aspira...

 In India Organized Retailing is 2%
 Retail sector highly fragmented
 Retail chains like Wal-Mart, Sears, McDonalds
b...

 In India, increase in Disposable income, Purchasing
Power of growing Middle Class conducive
conditions for growth of O...

 Self-service : Self service is the corner-stone of all discount
operations. Customers carry out their own locate-
comp...

 Store retailers : specialty store , supermarket ,
department store , convenience store , discount
store, etc
 Non-sto...

 Store-based Retailers operate from a fixed location
that requires consumers to travel to the store to view
and select ...

 Non-store based Retailers attempt to reach the
consumer at home, work, or any place other than a
store where they migh...

 Retailing may take place through:
• Retail Store
• Mail Direct
• Internet Sales
• Door-to-door
 Retail services like ...

 Strong economies have a strong Retail sector
 Entry in retail sector is easy, hence results in fierce
competition
 R...

 Last decade has seen tremendous changes in Retail
Business – from made to order to ready to wear,
from counter sales t...

 Direct End-User Interaction
 Platform for Promotions & POP displays
 Lower unit sales
 Retail location critical
 S...

1. Ownership Business:
• Proprietorship,
• Partnership,
• Limited liability company
2. Operational Structure:
• Independ...

4. Type Of Pricing:
• Low pricing, minimum Service
• Premium Merchandise, High Service
• Premium pricing, distinctive Im...

 GROCERS - Major business is grains, provisions,
spices, edible oils. Grocers may be dealing in many
other items.
 GEN...

 MODERN FORMAT STORE –
 a) Part of a chain of stores with self-service
facilities
 b) Part of a chain, but does not h...

 TOBACCO KIOSK : Deal in tobacco products like
Paan, Cigarettes, etc. are called Pan Bidi shops. Many
of them also deal...

 Customer Orientation:
• Attributes & Needs satisfaction
 Coordinated Efforts:
• Maximize Business Efficiency
 Value ...

1. Communication with Customers
2. Identify Customers Needs
3. Provide Products and Services to
4. Satisfy Customers
5. ...

 Customer Service approach:
1. Create a conducive environment
2. Listen to your Customers
3. Direct mail
4. Relationshi...

 Consumer spend their money at Retail which drives
the economy. Retailers realize Revenue when
Consumers buy products o...

 Vertical Retail Concept: Traditional stores and
Shop-in-Shop concepts – mixture of system and
individuality, e.g. Sale...

 Retail Management By Chetan Bajaj
 Retail Management By Berman & Evans
 Retail Management By Levy & Weitz
BOOKS FOR ...
RETAIL
MANAGEMENT ..3CASE STUDY:
 Facts Of the Case – No assumptions
 Key Issues
 List alternatives
 Evaluate alternat...
RETAIL
MANAGEMENT ..2TOTAL RETAIL EXPERIENCE
 Merchandising & Display
 Brands and Quality Of Goods
 Inventory Carried
...
RETAIL
MANAGEMENT ..2TOTAL RETAIL EXPERIENCE
Possible Pitfalls:
Discount stores – Ample Stock
Neighborhood Store – Overly ...
RETAIL
MANAGEMENT ..2OPPORTUNITIES:
 Management –
Raise capital
Purchase
Use MIS to Control Operations
Employ for Sales C...

RETAIL STRATEGY
OVERALL ACTION FRAMEWORK
 Mission
 Goals
 Consumer Market
 Overall Activities
 Feedback and Control...

Forward Retail Planning – FOCUS
 Analysis Of Requirements Of Business
 Set realistic Goals
 Differentiate Itself for ...

MISSION
 Commitment to A Business – Business Decision
 Around Goods and Services sold or around
Consumer needs.
 Spec...
 Distinctive Role In Market –
A Leader or a Follower
Leader – Unique strategy
Follower – Emulate standard Practices with...

Ownership and Management:
 Sole Proprietorship –Individual accrues Profits, Risks,
Costs. Is Liable for Legal Claims. L...
 Corporation – Incorporated under law. Funds
through Sale of Stocks. Ownership Transfer is easy.
Private Limited Company...

Business:
 Start A New Venture – Flexibility of retailing Factors
 Buy an Existing Business – Balance Of Advantages
sh...

Types Of Retail Goods & Services
 Durable Goods
Furniture, Electrical Appliances,
Hardware, Timber, Jewelry,
Automotive...

Service Establishments
 Personal Services
Dry Cleaning, Health Care, Photographic Goods,
Barber Shops, Amusement Servic...

 Hotel Services
Hotels, Resorts
Professional Services
Lawyers, Doctors & Surgeons,
Chartered Accounts, Stock brokers,
...

 Personal Aptitude
Knowledge, Experience, Qualifications,
Inborn Skills and Acquired Skills
 Financial Resources
Land ...

RETAIL OBJECTIVES – STRATEGY
 Sales – Growth, Market Share
 Profit – Level, ROI, Efficiency
 Satisfaction – Total Ret...

Target Market – Customer Group To Be Attracted and
Satisfied.
Mass – Broad Spectrum of Customers
Concentrated – Specific...
RETAIL MANAGEMENT
..3TARGET MARKET TECHNIQUES
STRATEGY MASS MARKET CONCENTRATED DIFFERENTIATED
LOCATION Near Large
Populat...
RETAIL MANAGEMENT
..3CONTROLLABLE
VARIABLES
RETAIL
STRATEGY
UNCONTROLLABLE
VARIABLES
Store Location Consumers
Managing a
B...

 Mission
 Situation Analysis Ownership
 Goods/Services category
 Sales
 Objectives Profit
 Customer satisfaction
...

 RETAILERS MARKETING DECISIONS:
-Target Market: Focus resources & Retail Mix
-Product Differentiation Strategy: Product...

 MARKET SEGMENTATION- TARGET MARKET
Sex, Age, Family Size -Type, Marital, Status, Socio-economic
Class, Occupation, Geo...

Pricing: High Profit %, Low Volume &
Low Profit %, High Volume
Loss Leader, Discounts -Clear Merchandise
EDLP Every Day ...

MERCHANDISE MANAGEMENT:
A Key Strategy: Develop & Implement
Merchandising - Plans Of Proper Assortment
Of Goods & Servi...

MERCHANDISING PLAN:
 All Merchandising Decisions Based on Plans-
1. Needs Of Target Market
2. Type Of Retail Business
3...

4. Defined Value Chain – (Trends )
- Expected: Hygiene, Timely Service, Knowledgeable, Stock
Popular Products, Returns/ ...

Merchandising Plans will drive
Decisions:
Product Lines to Carry
Shelf Space to Allot to Different Products
Inventory T...

Scope Of Responsibility for Personnel:
Full Merchandising Functions – Buying &
Selling: Selection Of Merchandise,
Prici...

Merchandise Plan - Forecasting :
 Staple Merchandise – Regular Daily Need Products, Stable
Sales – List Of products, In...

Fashion Merchandise – Cyclical sales
due to Changing tastes and Life Styles
Seasonal Merchandise – Seasonality In
Sale...

PRICING STRATEGY IN RETAILING:
Retailer Prices Goods & Services to:
- Achieve Profitability
- Satisfy Customers
- Be Con...

Discount Orientation:
- Low pricing as competitive advantage
- Low status Image, Fewer shopping
frills, Price based cus...

- Profit margins > = Moderate
- Quality > = Average
- Price Range Difficult to Expand as
Competition from Discount Store...

Distinctive Services & Product Offerings,
High unit Profit margins
PROVIDE A GOOD VALUE IN
CUSTOMERS’ MIND FOR THE
CHOSE...

Research on price In Buying Decisions
reveals Different Motivations for
Different market Segments.
CONSUMER PURCHASE & P...

Large % Change in Price Small % Change
in Demand – Demand In-Elastic.
Urgency to purchase is high or there are
no accept...

In Retailing computing Price Elasticity is
Difficult due to other factors of Product
Mix also interplay. Demand hard to
...

- Assortment oriented: Seek Retailers
with Strong Assortment in Product
Categories and look for Fair Pricing
- Convenien...

Unit Pricing: Indicate Pricing at a unit,
e.g., per Kg – to enable quick
comparisons by customers.
Sharp Practices:
Bait...

Conflicts In Pricing:
Manufacturer Wholesaler
Retailer
Co. Price Distributor’s Price (a-b%)
Wholesale Price (a-w%)
Price...

Market Pricing: High Competition,
customers seek lowest pricing. Price
increase leads to brand switching.
Administered P...

PRICING OBJECTIVES:
Market Penetration – Achieve large
revenues by setting Low prices and sell
high unit volumes – an ag...
RETAIL
MANAGEMENT ..7Selling Pr. Demand Sales Av .Cost Op. Exp. Tot. Cost
9 114000 1026000 7.6 104000 970400
10 104000 104...

Prestige Pricing:
Premium pricing to convey exclusive
image for the product or Service. Evoke
perceptions of Quality and...

Bundled Pricing:
Offering two or more Products or Services
at one price.
Fixed & variable Pricing:
Variable pricing for ...

PLANNING & CONTROL
Retailer forms a New Strategy or Adjusts
an Existing one, gathering and
analyzing feedback reveals ef...

- Pricing
- Promotion
- Store image
Research efforts related to risk involved:
- Higher risk : Store Location
- Lower ri...

Non-systematic or Incomplete ways of
obtaining information due to constraints
of Time, Costs or Lack of Research
Skills:...

Example: Movie tickets cost –weekdays vs.
weekends and matinee vs. evenings
Toy store orders for holiday season basis
la...

Retailer’s Objectives direct Strategic
Planning – some Routine. Non-routine
require careful evaluation
Strategy outlined...

Retail Information System – RIS
Environment Mission, Objectives
Competitors, Economy
Strategic Plans
(a) DATA COLLECTION...

Performance results are fed to ICC and
compared with objectives set. Regular
and Exception reports ( Giving reasons
for ...

Internal or Out-sourced- Some Specific
Researches can be out-sourced.
Cost Of RIS – 0.5 to 1.5% of revenue
Quanta of Dat...

RETAIL PROMOTION
All communication that informs,
persuades and reminds the target
market about marketing mix of the
Reta...

- Increase sale of Specific product
or Product Category
- Develop Store Image
Communication Promotion Mix:
- Advertising...

Department or Large Stores manage
through Promotion department of the
store. Small Retailers pool resources
with manufac...

Cable TV is also used by small retailers.
Large retailers use a combination of
media.
Sales Promotion is a paid Imperson...

Publicity -Un-paid form of
Communication that provides
Information about the retail through
media.
A Powerful Business s...

ATMOSPHERICS & RETAIL SPACE
MANAGEMENT
REFERS TO THE PHYSICAL CHARACTERISTICS OF
THE RETAIL STORE LIKE EXTERIORS,
INTERI...

DIMENSIONS OF ATMOSPHERICS:
PRESENTATION LIGHTING
STYLING COLOUR
PLANNING
DESIGN USE OF WALLS/ MATERIALS
APPEAL TO CU...

ATMOSPHERICS PLANNING RELEVANT FOR
ALL RETAIL SET-UPS, ESPECIALLY:
- PLANNED SHOPPING CENTRES
- LIFESTYLE STORES
A TIDY ...

ATMOSPHERICS ROLE IN RETAIL STRATEGY
ATTRACTS NEW CUSTOMERS
CREATES A USP
FACILITATES EASY MOVEMENT INSIDE
THE STORE
...

CHOICE OF FIXTURES, DÉCOR,
SIGNAGE ENABLE CUSTOMERS
PERCEPTION. PROPER PLACEMENT OF
SIGNAGES INDICATING PRODUCTS
OFFERED...

SIGNAGE, LAYOUT AND FURNISHINGS
ADD TO AMBIENCE AND EFFECTS STORE-
BROWSING COMFORT OF CUSTOMERS.
IN STORE ELEMENTS SUCH...

MUSIC PLAYS AN IMPORTANT ROLE IN
ENHANCING CUSTOMER’S TIME SPENT
IN THE RETAIL OUTLET – ESPECIALLY
SOOTHING MUSIC, NOT T...

DOMINANCE: CUSTOMERS FEEL
DOMINANT ( IN CONTROL).
ENVIRONMENTAL ASPECTS - COLOUR OF
INTERIORS, HEIGHT OF CEILING
DETERMI...

KEY COMPONENTS OF RETAIL
ATMOSPHERICS
EXTERIOR ATMOSPHERICS
INTERIOR ATMOSPHERICS
STORE LAYOUT
VISUAL MERCHANDISING
...

EXTERIOR
ATMOSPHERICS
STOREFRONT
MARQUEE
ENTRANCES
DISPLAY WINDOWS
SIZE OF BUILDING
ACCESSIBILITY
VISIBILITY
RETAIL MANA...

INTERIOR ATMOSPHERICS
FLOORING
LIGHTING
ODOUR/ AROMA
FIXTURES
WALLS
TEMPERATURE
AISLES
CONVENIENCES/HYGIENE
RETAIL MANAG...

STORE LAYOUT
SHOPPING FLOOR SPACE
TRAFFIC FLOW
DEPARTMENTS LOCATION
SPACE / MERCHANDISE
CATEGORY
SIGNAGE
RETAIL MANAGEME...

VISUAL MERCHANDISING
ASSORTMENT
THEME
ENSEMBLE
RACKS AND SHELVES
CASH COUNTERS
RETAIL MANAGEMENT
..10

CONTROL RETAIL STRATEGY
Rules to stay Competitive:
Commitment – Enthusiasm in Business
Share – Staff Involvement in Deci...

INTEGRATING RETIAL STRATEGY
Situation Analysis Objectives
Strategy Target Market
Specific Activities
Control
RETAIL MANA...

OPPORTUNITY ANALYSIS
Overall Direction & Goals: Top Down
Middle Level: Inputs from Internal and
External Sources. Genera...

DEFINING PRODUCTIVITY
Efficiency with which a Retail Strategy is carried
out. Reach Sales and Profit Goals keeping
Opera...

RETAIL INSTITUTION BY OWNERSHIP
Retail Institution refers to basic format or
structure of a Business.
RETAIL MANAGEMENT
...
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retail marketing

  1. 1. By Binoy john varghese
  2. 2.   Retail - Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as a means of distribution .  Retailer - A dealer or trader who sells goods in small quantities, or one who repeats or relates .  Retailing -All activities involved in the marketing of goods and services directly to the consumers for their personal, family or household use or Retailing includes all the activities involved in selling goods / services directly to final consumers for personal , non-business use.  Retailing derived from French word “retailler” means ‘a piece of’ or ‘to cut up’. INTRODUCTION
  3. 3.   From customers point of view, retailer serves by providing goods that he needs in the required assortment and at the right place and time.  From customers point of view, retailer serves by providing goods that he needs in the required assortment and at the right place and time.  From an economic standpoint the role of a retailer is to provide real added value or utility to the customer. FUNCTIONS OF A RETAILER
  4. 4.  Five different perspectives - By serving the consumers by way of functioning as a marketing intermediary and creating time, place and ownership utility. 1. First utility arises from the need of providing a finished goods and services in the form that is acceptable to the customer. 2. The retailer performs the function of storing the goods, and providing us with an assortment of products in various categories 3. The retailer creates time utility by keeping the store open when the consumers prefer to shop. 4. By being available at a convenient location, he creates place utility. 5. Finally when the products are sold ownership utility is created. FUNCTIONS OF A RETAILER
  5. 5.   The Retailer also serves the manufacturers by Performing the function of distributing the goods to the end users.  Creating a channel of information from manufacturer to the consumer.  By serving as a final link in the distribution chain.  Recommending products where brand loyalty is not strong or for unbranded products. FUNCTIONS OF A RETAILER
  6. 6.   Retailer is customer focused, not Product –focused.  Manufacturer may reach customers through: • Dealers • Company showrooms • Super / Hypermarkets  Manufacturers will decide on Retail Distribution: • Intensive • Selective • Exclusive INTRODUCTION – CONCEPTS, ROLE & ENVIRONMENT
  7. 7.   Four theories of evolution/ retailing are: 1. Environmental theory 2. Cyclical Theories a) Wheel of Retailing b) Accordion theory c) Retail lifecycle theory 3. Conflict theory 4. Evolutionary theories a) Dialectic Process b) Natural selection RETAIL EVOLUTION THEORIES
  8. 8.  Darwinian approach-Retailers with most appropriate structure and formats will survive.  If there are different environmental conditions, they need to adopt in order to succeed.  E.g.: Economy and culture.  They must also respond to the evolution of market conditions or else they will face extinction.  Major environmental factors 1. Changes related to customers-Demographic, attitude and preferences, life style and economic influences. 2. Changes in technology. 3. Changes in competition. 1.ENVIRONMENTAL THEORY
  9. 9.   Cyclical Theories : Begin with one state and return to that state at some time in future. Cyclical Theories a) Wheel of Retailing b) Accordion theory c) Retail lifecycle theory  Evolutionary: Changes similar to biological evolution 2.CYCLICAL THEORY
  10. 10.  10 a) WHEEL OF RETAILING Entry Phase -Low prices -Limited facilities -Limited service Vulnerability Phase -High prices -Excellent facilities -Excellent service -Declining ROI Trading-up Phase -Moderate to high prices -Elaborate facilities -Increase in skills
  11. 11.  Wheel represents phases through which some types of Retailers pass:  Retailers enter by attracting customers – low price, low service  Expand market – More expensive merchandise, More Trading up services, open more convenient locations. process increases costs & price of their merchandise, creating opportunities for new low price retailers to enter e.g. Discount stores & category specialists  Finally they mature as high cost high price retailers who become vulnerable to new entrants-inability to adapt.  Some Retailers don’t begin as low price, low service entrants, e.g. Upscale fashion specialty stores. a) WHEEL OF RETAILING
  12. 12.   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.  Starting with general stores - neighboring localities  Slowly switching to specialist stores - like gifts, restaurants, entertainment at a certain distance  These specialist retailers when mature start adding variety and become general stores.  Some become category killers – is a retailer that carries such a large amount of merchandise in a single category at such good prices that it makes it impossible for the customers to walk out without purchasing what they need, thus killing the competition.  Department stores have both width and depth of merchandise. b) THE ACCORDION THEORY
  13. 13.  Retail development pass through 4 stages-  Introduction stage – slow rate of growth due to limited resources and experiences.  Growth stage – Rapid growth as efficiency and experience increase.  Maturity stage – Level off due to increased cost and high competition and reduced efficiency.  Decline stage – Decrease in market share and profitability. May sometimes withdraw from market. c) RETAIL LIFE-CYCLE THEORY
  14. 14.  c) RETAIL LIFE-CYCLE THEORY Time Retail development Introduction Growth Maturity/Saturation Decline Level of sales Cash flow 0
  15. 15.  Competition between retailers causes changes in the nature of retail environment.  It is due to the imbalance caused by innovations (Brown, 1987) – Four stages of response.  Types of retailer response to innovation. 1. Shock. 2. Defensive retreat. 3. Acknowledgement and assessment. 4. Adaptation. 3. CONFLICT THEORY
  16. 16.   Evolutionary Theories : Changes similar to biological evolution Evolutionary theories a) Dialectic Process b) Natural selection 4. EVOLUTIONARY THEORY
  17. 17.   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. a) DIALECTIC PROCESS
  18. 18.   A new value proposition by one retailer gives rise to two retailers with same value.  E.g. Tesco always copied Sainsbury  In India too the grocery sector is facing a price led dialectic process…some of them are sure to die a) DIALECTIC PROCESS Thesis Antithesis Department Store Discount Store Discount Dept. Store Synthesis
  19. 19.   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 specialty outlets within grocery stores. b) NATURAL SELECTION
  20. 20.  Two different approaches to quality management. a) Product-attribute approach –  match the product conformance to standardized requirements.  Controls companies output by using internal standard setting prospective.  Training -led management style. b) Consumer-oriented approach –  Holistic process of service delivery to be controlled by considering expectation and attitude of customers.  Marketing-led approach.  E.g. Perceived service quality Gronroos model and Parasuraman, Zeithaml & Berry model. Management of service and quality in retailing
  21. 21.  Gronroos, 1982 – focus on IMAGE, a gap between expected and perceived service.  Aggregation of functional and technical variables.  Functional quality– How technical elements are transferred to customers.  Technical quality– What the customer is actually receiving. PERCEIVED SERVICE QUALITY GRONROOS MODEL
  22. 22.  Traditional marketing activities Expected service Perceived service Perceived service quality Image Technical quality Functional quality Technical solutions Knowhow Computerized systems Machines Attitudes Internal relation Customer contacts MANAGING PERCEIVED SERVICE QUALITY GRONROOS MODEL What? How?
  23. 23.  Parasuraman et.al., 1985, customer evaluate quality as difference between expected and perceived service.  Five service-quality gaps are identified.  Realization of these gaps and reducing and closing the gaps led to improved satisfaction.  Gap 1: ignorance of customer expectations  Gap 2 : requirement for service design stds  Gap 3 : not delivering to service stds  Gap 4 : inconsistency between performances & promises(service delivery & external commn.)  Gap 5 : the service shortfalls PARASURAMAN, ZEITHAML & BERRY MODEL
  24. 24.  Word of mouth Personal needs Past experience Expected service Perceived service Service delivery Translation of perceptions into service- quality specifications Mgmt perceptions of consumer expectations External com To consumers CONSUMER MARKETER Gap 1 Gap 2 Gap 3 Gap 4 Gap 5 SERVICE DELIVERY QUALITY PARASURAMAN, ZEITHAML & BERRY MODEL
  25. 25.  QUALITY CHARACTERISTICS Merchandise  Performance  Features  Reliability  Conformance to stds  Durability  Serviceability  Aesthetics  Image Services  Tangibles  Reliability of staff  Responsiveness of staff  Assurance / Competence  Empathy
  26. 26.   Retail sales driven by Ability (disposable income) and willingness (consumer confidence)  Worldwide retail sales Est.$7 Trillion.  Expenditure on Household Consumption increased by 68% between 1980 and 1998  Top 200 retailers account for 30% worldwide demand  Over 50 of the Fortune 500 and 25 of Asian Top 200 are Retailers GLOBAL RETAIL INDUSTRY
  27. 27.  Top 7 Global Retailers Rank Name of Retailer Sales (USD Bn) Grocery Sales (%) 1 Walmart - USA 235 44% 2 Tesco- UK 63 75% 3 Carrefour-France 58 84% 4 Home Depot -USA 55 51% 5 Kroger - USA 55 70% 6 WalGreens -USA 52 75% 7 Aldi Group- Germany 48 18%
  28. 28.   Retailer links Producers to Customers  Retailer is a person, agent, agency, company or organization reaching the Goods or Services to ultimate consumer  Retailer in close contact with the customers  Sell small quantities of items on a frequent basis  Convenience in terms of location , payment and credit facilities , range of merchandise , after sales service, etc.  Offer selection – merchandise assortment  Retailers perform specific activities: • Anticipate customer wants • Stock product assortments • Acquire market information • Finance Retail business Why retailing so important?
  29. 29.  Retailing is Big Part of Economy Services (50%) Government (15%) Manufacturing (18%) Retail (17%) Employment Projections for 2010 by BLS (Bureau of Labour Statistics, US)
  30. 30.   FDI in Retail in India; Chinese lesson  A.T. Kearney‘s Global Retail Development Index ranks India first  Retailing in India - unorganized sector  Organized retail at 2 % , 85% in US, 20% in China  At 270 million, one of the largest consumer base  GDP growth, increased literacy, increase in media penetration  60% of India is under the age of 30 - propensity to shop is higher Retail in India
  31. 31.  Corporate No of Outlet Remarks Reliance Retail 700+ Biggest Retail Chain & fast Expanding, operating in 14 States. Big Bazaar 164 Fast Expanding, Big Size Stores Bharti - Walmart 105 03 Retail Stores in NCR, Punjab, UP & Rajasthan, Expanding quickly to South Cash & carry Stores Aditya Birla 500+ Concentration in South(acquired Trinethra and Fab Malls) Spencers 210 Oldest Retailer in India, operates in 27 Cities Metro-AG- Germany 4 Cash and carry stores located at Mumbai, Hyderabad & Kolkatta, Expanding Slowly Corporate- Indian Retail
  32. 32.  336 376 421 471 527 590 1011 12 17 29 51 74 97 282 0 200 400 600 800 1000 1200 2007 2008 2009 2010 2011 2012 2017 US$Billion Current Size & Future Projections for Indian Retail Market Total Retail Organized Retail Rapid Transformation Anticipated 28% share Reach a share of 28% by 2017
  33. 33.  Anticipated Indian Retail Country Share of Organized Retail Years taken to reach the level from < 5% China 20% 10 Poland 20% 8 Brazil 36% 15 Thailand 40% 18 US 85% 50 India 17% (estimated) 27% (estimated) 5 10 India looking at rapid GROWTH compared to other countries
  34. 34.  Growth Of Indian Retail 336 590 1011 0 200 400 600 800 1000 1200 2007 2012* 2017* US$Bn Size of Indian Retail Indian Retail expected to grow close to 12% p.a. in the next 10 years *Projected Source: Technopak Analysis, CSO & Other Sources
  35. 35.   Private Consumption US $568 Bn (62%)  Rural India consists of 720 Million consumers across 627,000 villages  17% of these villages account for 50% of the rural population HIGH PRIVATE CONSUMPTION
  36. 36.  Organized Vs Unorganized Retail Sector Organized Retail Sector Unorganized Retail Sector
  37. 37.  Factor Organized Retail Sector Unorganized Retail Sector Definition Modern form of retailing Traditional form of retailing Examples Hypermarket, Retail chain etc. Mom n Pop stores, hand cart, pavement vendors etc Market Share 2% 98% Market Growth 35% 6% Challenges Poor supply chain management, aggressive expansion etc. Use of labour intensive technology, lack of government support etc. Organized Vs Unorganized Retail Sector
  38. 38.  Comparative Penetration of Organized Retail USA Taiwan Malaysia Indonesia China India 85% 81% 55% 30% 20% 3% 15% 19% 45% 70% 80% 97% Organized Traditional
  39. 39.   Organized Retail is 2 % of the total Retail Industry and expected to Grow by 10% by 2012. • Increasing Consumer aspiration • Growing no of Nuclear families • Growing Size of working women segment • Demand from tier II and III cities and rural markets. • Large young working Population Growth of organized Retail in India
  40. 40.   In India Organized Retailing is 2%  Retail sector highly fragmented  Retail chains like Wal-Mart, Sears, McDonalds brought Rapid Growth and consolidation of Organized Retail  Rapid rise of Income levels and accompanying changes in lifestyles greatly contributed to growth of Organized Retail ORGANISED RETAILING
  41. 41.   In India, increase in Disposable income, Purchasing Power of growing Middle Class conducive conditions for growth of Organized Retail  Indian Retail environment different from that of western countries: • Cities congested, large population in rural areas • Smaller purchases, limited household space ORGANISED RETAILING
  42. 42.   Self-service : Self service is the corner-stone of all discount operations. Customers carry out their own locate- compare-select process to save money.  Self-selection: customers can find their own goods , although they can ask for assistance.  Limited service : retailers in this category carry more shopping goods , and customers need more information and assistance. The store also offer services such as credit and merchandise return privileges  Full service : salespeople are ready to assist in every phase of locate-compare-select process . High cost of retailing Need for Retailer’s service
  43. 43.   Store retailers : specialty store , supermarket , department store , convenience store , discount store, etc  Non-store retailers : direct selling (multi- level/network marketing) , telemarketing , automatic vending , buying service .  Combination Types of Retail Formats
  44. 44.   Store-based Retailers operate from a fixed location that requires consumers to travel to the store to view and select merchandise and/or services.  Store-based Retailers • Department stores • Specialty stores • Supermarkets • Supercenters • Category killers • Convenience stores 44 Types of Retail Formats
  45. 45.   Non-store based Retailers attempt to reach the consumer at home, work, or any place other than a store where they might be susceptible to purchasing.  Non-store based Retailers • Street peddling • Direct selling • Mail-order • Automatic-merchandising machine • Electronic shopping 45 Types of Retail Formats
  46. 46.   Retailing may take place through: • Retail Store • Mail Direct • Internet Sales • Door-to-door  Retail services like Restaurants, Hotels, Parlour, Health Services, Car rentals, Travel  In USA Retail generates $3 trillion through 23 Mn. Employees. Wal-Mart generates $245 Bn. sales through 1 Mn. nationally and 0.3 Mn. Foreigners. RETAILING CONCEPT
  47. 47.   Strong economies have a strong Retail sector  Entry in retail sector is easy, hence results in fierce competition  Retail must perform its primary role of catering to customer satisfaction  Retail earns modest profits of 9-10%  Retail stores of different sizes face distinct challenges. Their sales volume influences: • Merchandise purchase • Promotion & - Expenses Control RETAIL
  48. 48.   Last decade has seen tremendous changes in Retail Business – from made to order to ready to wear, from counter sales to self service, emphasis on value addition and cost reduction.  Family run retail business giving way to modern professional retail.  Retail improving inventory management through systems – faster turnover, better profitability, fast changing customer preferences for assortment of goods and services. BETTER CUSTOMER CARE RETAIL
  49. 49.   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 RETAIL CHARACTERISTICS
  50. 50.  1. Ownership Business: • Proprietorship, • Partnership, • Limited liability company 2. Operational Structure: • Independent Trader, • Chain Of Stores, • Franchising, • Consumer Cooperative 3. Width & Depth Of Merchandise: • Specific Product Category • Wide Range RETAIL BUSINESS CLASSIFICATION
  51. 51.  4. Type Of Pricing: • Low pricing, minimum Service • Premium Merchandise, High Service • Premium pricing, distinctive Image 5. Consumer Interaction: • Direct interaction • Mail Order • Tele-Selling • Vending machines • Door-to-door • Mobile Vending RETAIL BUSINESS CLASSIFICATION
  52. 52.   GROCERS - Major business is grains, provisions, spices, edible oils. Grocers may be dealing in many other items.  GENERAL STORES - Deal in items Daily needs and stocking number of categories, is identified as a general store.  CHEMIST- Deal in Ethical Pharmaceutical Products. Require a license and a Qualified Pharmacist. Such outlets also deal in diverse FMCG products. RETAIL MANAGEMENT ..2
  53. 53.   MODERN FORMAT STORE –  a) Part of a chain of stores with self-service facilities  b) Part of a chain, but does not have self-service Facilities c) Stand-alone (not part of a chain) with self-service facilities  FOOD STORE : Deal mainly in food products - milk, beverages, tea, coffee, squashes, ketchup, jams, chocolates, biscuits, bakeries etc. RETAIL MANAGEMENT ..2
  54. 54.   TOBACCO KIOSK : Deal in tobacco products like Paan, Cigarettes, etc. are called Pan Bidi shops. Many of them also deal in packaged consumer products like toilet soaps, toothpaste, washing soaps, biscuits, confectionery, batteries etc.  COSMETIC STORE : Deal in Ladies Personal care products / Cosmetics, General toiletry products, Men’s toiletry products, Baby Care Products. RETAIL MANAGEMENT ..2
  55. 55.   Customer Orientation: • Attributes & Needs satisfaction  Coordinated Efforts: • Maximize Business Efficiency  Value driven: • Good Value for Money • Goal Orientation • Achieve Goals RETAIL CONCEPT
  56. 56.  1. Communication with Customers 2. Identify Customers Needs 3. Provide Products and Services to 4. Satisfy Customers 5. Elicit Feedback to Improve Services – Word Of Mouth RETAILING CONCEPT
  57. 57.   Customer Service approach: 1. Create a conducive environment 2. Listen to your Customers 3. Direct mail 4. Relationship Marketing – Long Term 5. Rewards for Regular Customers RETAILING CONCEPT
  58. 58.   Consumer spend their money at Retail which drives the economy. Retailers realize Revenue when Consumers buy products or Services from them.  The revenue passes up the Consumer Goods distribution chain viz. to Wholesalers, Distributors and Manufacturers.  Retail Industry employs 17-20% Workforce that drives the Economy.  Retail trends often mirror trends in a nation’s overall economy.  Retailers add value by Providing the Right Product at The Right Place at the Right Time. ROLE
  59. 59.   Vertical Retail Concept: Traditional stores and Shop-in-Shop concepts – mixture of system and individuality, e.g. Sale of Non-food items like newspapers, magazines with snacks, beverages  Consumption Related Trends: Increasing Consumers with Purchasing Power & More Migrant Consumers Demand for Broad selection of Products Demand for Good quality Products e.g. Honest, Original and Green Products New Concepts & Trends
  60. 60.   Retail Management By Chetan Bajaj  Retail Management By Berman & Evans  Retail Management By Levy & Weitz BOOKS FOR REFERENCE
  61. 61. RETAIL MANAGEMENT ..3CASE STUDY:  Facts Of the Case – No assumptions  Key Issues  List alternatives  Evaluate alternatives  Recommend Course Of Action
  62. 62. RETAIL MANAGEMENT ..2TOTAL RETAIL EXPERIENCE  Merchandising & Display  Brands and Quality Of Goods  Inventory Carried  Customer Service  Pricing  Support Functions: Parking  Create Customer Excitement
  63. 63. RETAIL MANAGEMENT ..2TOTAL RETAIL EXPERIENCE Possible Pitfalls: Discount stores – Ample Stock Neighborhood Store – Overly Trendy Products Full Service Store – Knowledgeable Theme Restaurants – Novelty wears off, food so-so, Prices high MEET CUSTOMER NEEDS
  64. 64. RETAIL MANAGEMENT ..2OPPORTUNITIES:  Management – Raise capital Purchase Use MIS to Control Operations Employ for Sales Counters, Stores and Cash Counters Undertake Marketing Activities  Entrepreneurial Opportunities
  65. 65.  RETAIL STRATEGY OVERALL ACTION FRAMEWORK  Mission  Goals  Consumer Market  Overall Activities  Feedback and Control Mechanism RETAIL MANAGEMENT ..3
  66. 66.  Forward Retail Planning – FOCUS  Analysis Of Requirements Of Business  Set realistic Goals  Differentiate Itself for Target Customers - Benchmarking  Knowledge Of Business Environment – Legal, Economic, Competitive  Synergize efforts  Reduce Business Risk – Feedback and Control RETAIL MANAGEMENT ..3
  67. 67.  MISSION  Commitment to A Business – Business Decision  Around Goods and Services sold or around Consumer needs.  Specific or Generic approach RETAIL MANAGEMENT ..3
  68. 68.  Distinctive Role In Market – A Leader or a Follower Leader – Unique strategy Follower – Emulate standard Practices with better execution than competitor.  Market Scope – Customer Base  Dynamic Decision In Sync. With Retail Environment RETAIL MANAGEMENT ..3
  69. 69.  Ownership and Management:  Sole Proprietorship –Individual accrues Profits, Risks, Costs. Is Liable for Legal Claims. Limited Capital and Expertise.  Partnership – Share Profits, Risks, Costs. Owners Liable for Legal Claims. Better Capital Investments and Capabilities. RETAIL MANAGEMENT ..3
  70. 70.  Corporation – Incorporated under law. Funds through Sale of Stocks. Ownership Transfer is easy. Private Limited Company – Limited number of Individuals with Limited Liability. Public Limited Company – Open to Public to Invest In Stocks. Profits and Dividends attract Taxes. Managed by professional managers. RETAIL MANAGEMENT ..3
  71. 71.  Business:  Start A New Venture – Flexibility of retailing Factors  Buy an Existing Business – Balance Of Advantages should be Positive – weigh the negatives carefully  Become A Franchisee – Combines Enterprise with Known Brands. Brand also puts a number of rigid Quality and Business Restrictions. RETAIL MANAGEMENT ..3
  72. 72.  Types Of Retail Goods & Services  Durable Goods Furniture, Electrical Appliances, Hardware, Timber, Jewelry, Automotive and Spare Parts  Non-Durable Apparel – Cloth, Garments, Food Group – Green Grocers, Packaged Foods, General Merchandise, Eating Places, Petrol Stations, Chemists, Stationery RETAIL MANAGEMENT ..3
  73. 73.  Service Establishments  Personal Services Dry Cleaning, Health Care, Photographic Goods, Barber Shops, Amusement Services, Movie Theatres, Clubs, Amusement Parks, Game Arcades  Repair Services Automobile, Electrical Gadgets, Watch & Jewelry, Electronic Gadgets RETAIL MANAGEMENT ..3
  74. 74.   Hotel Services Hotels, Resorts Professional Services Lawyers, Doctors & Surgeons, Chartered Accounts, Stock brokers, Real Estate Agents Potential Retail Business Owners Aptitude for a Particular Business RETAIL MANAGEMENT ..3
  75. 75.   Personal Aptitude Knowledge, Experience, Qualifications, Inborn Skills and Acquired Skills  Financial Resources Land and Building, Fixtures, Equipment  Time Demands Owner’s Availability  Personnel Sales People, Inventory, Cashiers RETAIL MANAGEMENT ..3
  76. 76.  RETAIL OBJECTIVES – STRATEGY  Sales – Growth, Market Share  Profit – Level, ROI, Efficiency  Satisfaction – Total Retail Experience  Positioning – Up-market, Mid-Priced, Discount Oriented, Mass Market, Niche Value Scale-Quality, price Fashion Scale-Fashion, Style, Assortment Image Projected RETAIL MANAGEMENT ..3
  77. 77.  Target Market – Customer Group To Be Attracted and Satisfied. Mass – Broad Spectrum of Customers Concentrated – Specific group Differentiated – Two or more distinct Groups with Different Retail Approaches RETAIL MANAGEMENT ..3
  78. 78. RETAIL MANAGEMENT ..3TARGET MARKET TECHNIQUES STRATEGY MASS MARKET CONCENTRATED DIFFERENTIATED LOCATION Near Large Population Near Small Medium Pop. Near Large Population RETAILMIX Wide Assortment, Medium Qual. Deep Assortment, High/ Low Qual. Distinct Goods for Target Market PROMOTION Mass Advtg. Direct mail Different Media for Target Groups PRICING Popular High or Low High, Medium and Low STRATEGY Large Homogeneous Group Specific Strat. Directed at Specific Gr. Strategies directed at Heterogeneous Groups
  79. 79. RETAIL MANAGEMENT ..3CONTROLLABLE VARIABLES RETAIL STRATEGY UNCONTROLLABLE VARIABLES Store Location Consumers Managing a Business Competition Merchandise @ Pricing Technology Communicating Economic Conditions Seasonality Legal Restrictions
  80. 80.   Mission  Situation Analysis Ownership  Goods/Services category  Sales  Objectives Profit  Customer satisfaction  Image  Mass  Target Customer Concentrated  Differentiated  Controllable  Overall strategy Uncontrollable  Short Term  Specific activities Competition  Evaluation  Control Adjustment RETAIL MANAGEMENT ..3
  81. 81.   RETAILERS MARKETING DECISIONS: -Target Market: Focus resources & Retail Mix -Product Differentiation Strategy: Product Assortment Breadth & Depth -Services: Pre-purchase, Post-purchase, Ancillary -Price: Target market, Product Mix, Competition -Promotion: Promote & Reinforce Image -Location: Vicinity of Target market RETAIL MANAGEMENT ..4
  82. 82.   MARKET SEGMENTATION- TARGET MARKET Sex, Age, Family Size -Type, Marital, Status, Socio-economic Class, Occupation, Geographic: Metros, large Towns Psychographic: lifestyles, Personality, Values  Services: Advertising, Displays, Special Offers; Delivery, Gift Wrapping, Returns, Tailoring, Installation; Cheque Cashing, Parking, Restaurants, Rest rooms RETAIL MANAGEMENT ..4
  83. 83.  Pricing: High Profit %, Low Volume & Low Profit %, High Volume Loss Leader, Discounts -Clear Merchandise EDLP Every Day Low pricing vs. Discounts Promotion: Frequent Shopper Rewards, Coupons, Sampling, Ads. Location: Sales effectiveness – Number of people pass by - % Enter – % Buy- Average Amount per Sale CASE STUDY – CONVENIENCE STORE RETAIL MANAGEMENT ..4
  84. 84.  MERCHANDISE MANAGEMENT: A Key Strategy: Develop & Implement Merchandising - Plans Of Proper Assortment Of Goods & Services As In Demand, make them Available at Places, Times, Prices & Quantity to Satisfy Target Customers Merchandising Decisions dramatically affect Performance. Investments in Merchandising Skills & Talent produce Better results than Investments in Technology or other Skill Specialties. 70 -80 % Results Depend on Merchandisers. RETAIL MANAGEMENT ..5
  85. 85.  MERCHANDISING PLAN:  All Merchandising Decisions Based on Plans- 1. Needs Of Target Market 2. Type Of Retail Business 3. Marketplace Positioning : Mass - Wide & Deep Assortment – Broad Customer Market :Niche –Specific Market Segment – High Customer Loyalty – Shields against Conventional Competitors RETAIL MANAGEMENT ..5
  86. 86.  4. Defined Value Chain – (Trends ) - Expected: Hygiene, Timely Service, Knowledgeable, Stock Popular Products, Returns/ Redressal -Augmented: Special Services, Differentiated Brands, Loyalty Prog. -Potential: Elements not yet Perfected or Opportunities not yet exploited. 5. Product Trends RETAIL MANAGEMENT ..5
  87. 87.  Merchandising Plans will drive Decisions: Product Lines to Carry Shelf Space to Allot to Different Products Inventory Turnover Pricing – Across Categories & Within Promotions Assortment – Breadth: Narrow or Wide Depth: Deep Or Shallow RETAIL MANAGEMENT ..5
  88. 88.  Scope Of Responsibility for Personnel: Full Merchandising Functions – Buying & Selling: Selection Of Merchandise, Pricing Displays, Customer Transactions. Separate Buying & Selling Functions. Micro Merchandising – Shelf space Basis Demand Pattern Cross Merchandising – Carry Complimentary Goods & Services Water, Soda, Soft Drinks, Juices, Ethnic RETAIL MANAGEMENT ..5
  89. 89.  Merchandise Plan - Forecasting :  Staple Merchandise – Regular Daily Need Products, Stable Sales – List Of products, Inventory Level, Colours, Brands, Style Size  Assortment Merchandise – Apparel, Furniture, Autos. Variety Of products to enable Customers a Selection. Demand Varies, Forecast difficult. Decision On Product Lines, Styles Designs & Colours. Model Stock Plan - Colour, Size, Qty. RETAIL MANAGEMENT ..5
  90. 90.  Fashion Merchandise – Cyclical sales due to Changing tastes and Life Styles Seasonal Merchandise – Seasonality In Sales – Summers Cottons, Winters Woolens – Forecasting for Season Fad Merchandise – High Level Of Sales In a Short Time. Toys, Games are short lived Fads. Extended fads – Residual sales Continue for longer Periods. Never Out List – Always in stock RETAIL MANAGEMENT ..5
  91. 91.  PRICING STRATEGY IN RETAILING: Retailer Prices Goods & Services to: - Achieve Profitability - Satisfy Customers - Be Consistent with Overall Image, Sales, Profits, ROI Pricing Options: - Discount Orientation - At-the-market Orientation- Average Pricing - Upscale Orientation RETAIL MANAGEMENT ..6
  92. 92.  Discount Orientation: - Low pricing as competitive advantage - Low status Image, Fewer shopping frills, Price based customers, Low operating costs, High Inventory T/O. At-the-market Orientation: Middle Class shoppers - Offers excellent service, Good atmosphere RETAIL MANAGEMENT ..6
  93. 93.  - Profit margins > = Moderate - Quality > = Average - Price Range Difficult to Expand as Competition from Discount Stores or Prestige Stores Squeezes the Range Upscale Orientation: - Prestige Major Competitive Edge - Smaller Target Market, Higher Operating Costs, lower Inventory T/O Means Customer Loyalty, RETAIL MANAGEMENT ..6
  94. 94.  Distinctive Services & Product Offerings, High unit Profit margins PROVIDE A GOOD VALUE IN CUSTOMERS’ MIND FOR THE CHOSEN PRICE ORIENTATION. CUSTOMER NOT NECESSARILY LOOKING FOR THE BEST PRICE BUT FOR GOOD VALUE – REAL & PERCEIVED -FOR MONEY. RETAIL MANAGEMENT ..6
  95. 95.  Research on price In Buying Decisions reveals Different Motivations for Different market Segments. CONSUMER PURCHASE & PRICING: Price Elasticity Of Demand – Sensitivity to Price Changes. Small % Change in Price Substantial % Change in Demand – High Price Elasticity. Urgency to purchase is low or acceptable substitutes exist. RETAIL MANAGEMENT ..7
  96. 96.  Large % Change in Price Small % Change in Demand – Demand In-Elastic. Urgency to purchase is high or there are no acceptable substitutes. Occurs with Brand or Retailer Loyalty. Unitary Elasticity - % Change in Price directly off-set by % Changes in Quantity Demand RETAIL MANAGEMENT ..7
  97. 97.  In Retailing computing Price Elasticity is Difficult due to other factors of Product Mix also interplay. Demand hard to predict. Price Sensitivity varies by Market Segment based on Shopping Orientation:-Economy: Shop around for Lowest Price. Segment Growing rapidly. - Status: Perceive Retailers as different, Look for Prestige Brands and customer Service. RETAIL MANAGEMENT ..7
  98. 98.  - Assortment oriented: Seek Retailers with Strong Assortment in Product Categories and look for Fair Pricing - Convenience Oriented: Shop only when they Must at nearby locations with long hours. Prepared to pay higher Prices. - - Loss Leaders: Price below cost to attract more customers. - - Predatory Pricing: Seek to Reduce Competition by selling at very low Pricing RETAIL MANAGEMENT ..7
  99. 99.  Unit Pricing: Indicate Pricing at a unit, e.g., per Kg – to enable quick comparisons by customers. Sharp Practices: Bait and Switch Advertising: Lures customer with exceptionally low prices. On contact customer informed of stock-out and offer another product. RETAIL MANAGEMENT ..7
  100. 100.  Conflicts In Pricing: Manufacturer Wholesaler Retailer Co. Price Distributor’s Price (a-b%) Wholesale Price (a-w%) Price To Retailer (a) Price To Consumer (a+ c%) Gray Market Goods: Imported Goods at Lower Prices. RETAIL MANAGEMENT ..7
  101. 101.  Market Pricing: High Competition, customers seek lowest pricing. Price increase leads to brand switching. Administered Pricing: Strong product Differentiation, Control by retailer on Price charged. For customers Image, Assortment, Personal service more important than Price, e.g. Fashion apparel stores, upscale restaurants. RETAIL MANAGEMENT ..7
  102. 102.  PRICING OBJECTIVES: Market Penetration – Achieve large revenues by setting Low prices and sell high unit volumes – an aggressive strategy to discourage competition Market Skimming – Profit is Objective. Charge Premium Prices and attract Customers seeking Service, Assortment & Status. Does not maximize Sales. ROI or early Cash Recovery Objectives met. RETAIL MANAGEMENT ..7
  103. 103. RETAIL MANAGEMENT ..7Selling Pr. Demand Sales Av .Cost Op. Exp. Tot. Cost 9 114000 1026000 7.6 104000 970400 10 104000 1040000 7.85 94000 910400 11 80000 880000 8.25 88000 748000 12 60000 720000 8.75 80000 605000 Selling Pr. Tot. Profits Markup % Av. Inv. Hold Inv. T/O R O Inv.% 9 55600 16 12000 9.5 61 10 129600 22 13000 8 127 11 132000 25 14000 5.7 114 12 115000 27 16000 3.8 82 Unit Sales Sales Goal ROInv. % Profit Profit/Unit
  104. 104.  Prestige Pricing: Premium pricing to convey exclusive image for the product or Service. Evoke perceptions of Quality and Prestige. Habeebs Parlour, Delhi Golf Club, Luxury hotels. Odd – Even Pricing: Odd Pricing to indicate lower “Good” deal. Even Pricing to indicate higher quality. RETAIL MANAGEMENT ..7
  105. 105.  Bundled Pricing: Offering two or more Products or Services at one price. Fixed & variable Pricing: Variable pricing for highly differentiated or unbranded products. Fixed pricing for Branded products. RETAIL MANAGEMENT ..7
  106. 106.  PLANNING & CONTROL Retailer forms a New Strategy or Adjusts an Existing one, gathering and analyzing feedback reveals effectiveness of Operation. Feedback can be obtained for: - Attributes, Buying Behaviour - Alternative Store location - Inventory Planning - Product Mix Offering RETAIL MANAGEMENT ..8
  107. 107.  - Pricing - Promotion - Store image Research efforts related to risk involved: - Higher risk : Store Location - Lower risk: Introduction of New Product Line Information Gathering and Processing is ongoing for Feedback & Control RETAIL MANAGEMENT ..8
  108. 108.  Non-systematic or Incomplete ways of obtaining information due to constraints of Time, Costs or Lack of Research Skills: - Using Intuition: Gut feel - Assuming Past Trends to Continue and follow past practices - Copy Competition - Devising a Strategy based on few individuals perceptions RETAIL MANAGEMENT ..8
  109. 109.  Example: Movie tickets cost –weekdays vs. weekends and matinee vs. evenings Toy store orders for holiday season basis last year’s demand +. Research indicated higher optimism and desire to gift. Stock-out before peak, unable to get delivery of extra stocks. Chain Store in new Location – doing 40% of expected business. Research shows Store name and Image unknown, ad media choice incorrect RETAIL MANAGEMENT ..8
  110. 110.  Retailer’s Objectives direct Strategic Planning – some Routine. Non-routine require careful evaluation Strategy outlined, new data required for its operation acquired and files updated or retrieved from storage, analyzed and interpreted. All this at Information Control Centre. Decisions made and put into operation. RETAIL MANAGEMENT ..8
  111. 111.  Retail Information System – RIS Environment Mission, Objectives Competitors, Economy Strategic Plans (a) DATA COLLECTIONINFORMATION (b) DATA STORAGE+ ANALYSIS CONTROL RETREIVAL INTERPRETATION CENTRE © UPDATING DATA FILES FEEDBACK Retail Operation IMPLEMENTATION RETAIL MANAGEMENT ..8
  112. 112.  Performance results are fed to ICC and compared with objectives set. Regular and Exception reports ( Giving reasons for deviation) generated and sent to Operational Managers for necessary action. Building RIS How active RIS role – Reports in routine or as-and-when RETAIL MANAGEMENT ..8
  113. 113.  Internal or Out-sourced- Some Specific Researches can be out-sourced. Cost Of RIS – 0.5 to 1.5% of revenue Quanta of Data – Edit raw data and share interpretation Frequency of Data dissemination – who receives which report Data Storage – Easy retrieival, adequate Longitudinal analysis (Period to Period) RETAIL MANAGEMENT ..8
  114. 114.  RETAIL PROMOTION All communication that informs, persuades and reminds the target market about marketing mix of the Retail business. Objectives of Communication: - Increase customer Flow - Increase Purchase BY Target Market RETAIL MANAGEMENT ..9
  115. 115.  - Increase sale of Specific product or Product Category - Develop Store Image Communication Promotion Mix: - Advertising - Sales Promotion - Publicity - Personal Selling RETAIL MANAGEMENT ..9
  116. 116.  Department or Large Stores manage through Promotion department of the store. Small Retailers pool resources with manufacturers for Promotions. Advertising – Paid Communication using Impersonal mass media: Print – news papers, magazines, direct mail and AV media like TV, radio. Local, vernacular language Print media used by small retailers. RETAIL MANAGEMENT ..9
  117. 117.  Cable TV is also used by small retailers. Large retailers use a combination of media. Sales Promotion is a paid Impersonal communication offering additional value to customer. Encourages customer visits and Promotes trial and repeat Purchase of focus Products or Services Special events, In-store Demonstration, Contests RETAIL MANAGEMENT ..9
  118. 118.  Publicity -Un-paid form of Communication that provides Information about the retail through media. A Powerful Business strategy evolves through knowledge of Target Customers, Clarity of Business Objectives. Effective selection of media for Promotion Strategy. Major shift to Nuclear families in ’90’ s have shifted focus on to kids in Promotional strategies RETAIL MANAGEMENT ..9
  119. 119.  ATMOSPHERICS & RETAIL SPACE MANAGEMENT REFERS TO THE PHYSICAL CHARACTERISTICS OF THE RETAIL STORE LIKE EXTERIORS, INTERIORS, LAYOUT PLANNING AND VISUAL MERCHANDISING. PLAY A SIGNIFICANT ROLE IN ATTRACTING CUSTOMERS AND RETAINING THEM IMPROVING QUALITY OF SERVICE EXPERIENCE POSITIONING THE RETAIL OUTLET OPTIMUM RETAIL SPACE UTILIZATION RETAIL MANAGEMENT ..10
  120. 120.  DIMENSIONS OF ATMOSPHERICS: PRESENTATION LIGHTING STYLING COLOUR PLANNING DESIGN USE OF WALLS/ MATERIALS APPEAL TO CUSTOMERS EXTERIORS – STORE FRONT, DISPLAY WINDOWS INTERIORS – LIGHTING, COLOUR, FACILITIES ENHANCES DISPLAY & PROVIDES RELEVANT INFORMATION RETAIL MANAGEMENT ..10
  121. 121.  ATMOSPHERICS PLANNING RELEVANT FOR ALL RETAIL SET-UPS, ESPECIALLY: - PLANNED SHOPPING CENTRES - LIFESTYLE STORES A TIDY WORK ENVIRONMENT ATTRACTS A HIGH STORE PATRONAGE ATMOSPHERICS PLAY AN IMPORTANT ROLE: - CREATE POSITIONING FOR RETAIL OUTLET - ATTRACT NEW CUSTOMERS - ORGANIZE STORE AND MERCHANDIZE - ENRICH SHOPPING EXPERIENCE RETAIL MANAGEMENT ..10
  122. 122.  ATMOSPHERICS ROLE IN RETAIL STRATEGY ATTRACTS NEW CUSTOMERS CREATES A USP FACILITATES EASY MOVEMENT INSIDE THE STORE FACILITATES ACCESS TO MERCHANDISE INSIDE THE STORE ENSURES OPTIMUM SPACE UTILIZATION ENSURES EFFECTIVE & DESIRED PRESENTATION INSIDE THE STORE REDUCES PRODUCT SEARCH TIME INSIDE THE STORE RETAIL MANAGEMENT ..10
  123. 123.  CHOICE OF FIXTURES, DÉCOR, SIGNAGE ENABLE CUSTOMERS PERCEPTION. PROPER PLACEMENT OF SIGNAGES INDICATING PRODUCTS OFFERED INCREASE EFFECTIVENESS. CUSTOMERS NECESSITY TO ASK QUESTIONS INCREASE STRESS LEVELS. UNIFORMS WORN BY STORE EMOLOYEES ALSO REDUCE CUSTOMER STRESS AND ANXIETY TO ASK QUESTIONS. QUALITY OF STORE FIXTURES SIGNIFY A RETAILER CUTTING CORNERS OR MAKING LARGE PROFITS. RETAIL MANAGEMENT ..10
  124. 124.  SIGNAGE, LAYOUT AND FURNISHINGS ADD TO AMBIENCE AND EFFECTS STORE- BROWSING COMFORT OF CUSTOMERS. IN STORE ELEMENTS SUCH AS COLOUR, LIGHTING AND MUSIC MAY AFFECT PURCHASE DECISIONS MORE THAN POP AND DISPLAYS. TO IMPROVE IN STORE ATMOSPHERE, PERFUMES GET DESIRED EFFECT – ESPECIALLY TO GET RID OF CERTAIN ODOURS. IF THESE ARE COMPLEMETARY TO THE STORE, THE SERVICE QUALITY EXPERIENCE IMPROVES. RETAIL MANAGEMENT ..10
  125. 125.  MUSIC PLAYS AN IMPORTANT ROLE IN ENHANCING CUSTOMER’S TIME SPENT IN THE RETAIL OUTLET – ESPECIALLY SOOTHING MUSIC, NOT THE FAST PACED. STIMULATE RETAIL ENVIRONMENT PLEASURE EFFECT: CLASSICAL HINDI MUSIC ENHANCES SHOPPERS’ ENJOYMENT AROUSAL EFFECT: SLOW INSTRUEMENTAL MUSIC RESULTS IN SUBDUED ACTIVITY IN SERVICE SETTINGS LIKE RESTAURANTS. RETAIL MANAGEMENT ..10
  126. 126.  DOMINANCE: CUSTOMERS FEEL DOMINANT ( IN CONTROL). ENVIRONMENTAL ASPECTS - COLOUR OF INTERIORS, HEIGHT OF CEILING DETERMINE CUSTOMER DOMINANCE. FURNITURE AND FIXTURES MAY IMPACT THE DURATION OF TIME SPENT IN-STORE. PHYSICAL ENVIRONMENT STORE LAYOUT/DESIGN EMOTIONS SHOPPING MERCHANDISE DISPLAY BEHAVIOUR MUSIC AROMA CUSTOMER’S SENSES RETAIL MANAGEMENT ..10
  127. 127.  KEY COMPONENTS OF RETAIL ATMOSPHERICS EXTERIOR ATMOSPHERICS INTERIOR ATMOSPHERICS STORE LAYOUT VISUAL MERCHANDISING RETAIL MANAGEMENT ..10
  128. 128.  EXTERIOR ATMOSPHERICS STOREFRONT MARQUEE ENTRANCES DISPLAY WINDOWS SIZE OF BUILDING ACCESSIBILITY VISIBILITY RETAIL MANAGEMENT ..10
  129. 129.  INTERIOR ATMOSPHERICS FLOORING LIGHTING ODOUR/ AROMA FIXTURES WALLS TEMPERATURE AISLES CONVENIENCES/HYGIENE RETAIL MANAGEMENT ..10
  130. 130.  STORE LAYOUT SHOPPING FLOOR SPACE TRAFFIC FLOW DEPARTMENTS LOCATION SPACE / MERCHANDISE CATEGORY SIGNAGE RETAIL MANAGEMENT ..10
  131. 131.  VISUAL MERCHANDISING ASSORTMENT THEME ENSEMBLE RACKS AND SHELVES CASH COUNTERS RETAIL MANAGEMENT ..10
  132. 132.  CONTROL RETAIL STRATEGY Rules to stay Competitive: Commitment – Enthusiasm in Business Share – Staff Involvement in Decision making Listen & Communicate – Customers and Staff Appreciate – Good efforts Celebrate – Good Achievements Motivate – Challenging goals and rewards for High performers Exceed – Deliver more than promises Control – Operating Costs Swim Upstream – Evaluate Competition and do something Different. RETAIL MANAGEMENT ..11
  133. 133.  INTEGRATING RETIAL STRATEGY Situation Analysis Objectives Strategy Target Market Specific Activities Control RETAIL MANAGEMENT ..11
  134. 134.  OPPORTUNITY ANALYSIS Overall Direction & Goals: Top Down Middle Level: Inputs from Internal and External Sources. Generate Ideas early. Generate Specific Plans with Deadlines. S ALES OPPORTUNITY GRID Rates the promise of New and Established Goods, Services, Store outlets RETAIL PRICE, FLOOR SPACE, DISPLAY COSTS, OPERATING COSTS, MARKUP; SALES ESTIMATES, GROSS AND NET PROFITS IN Rs. AT FIRST, SIX AND 12 MONTHS. RETAIL MANAGEMENT ..10
  135. 135.  DEFINING PRODUCTIVITY Efficiency with which a Retail Strategy is carried out. Reach Sales and Profit Goals keeping Operating Costs under control. PERFORMANCE MEASURES Criteria used to assess effectiveness and setting standards for each performance. Measures used: Total Sales Turnover, Average Sales per store, Sales by Goods/ Service Category, Gross Margin/ ROInvst., Op.Income, Inventory T/O, Financial ratios, Profitability RETAIL MANAGEMENT ..11
  136. 136.  RETAIL INSTITUTION BY OWNERSHIP Retail Institution refers to basic format or structure of a Business. RETAIL MANAGEMENT ..11

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