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Sales & Retail Management 5


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Sales & Retail Management 5

  1. 1. RETAIL MANAGEMENT<br />Prof. Raghavendran.V<br />
  2. 2. Introduction<br />Retail management<br />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.<br />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.<br />By Prof. Raghavendran.V<br />
  3. 3. RM<br />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.<br />Thus retailing is final distribution of merchandise, for consumption by the end consumers.<br />By Prof. Raghavendran.V<br />
  4. 4. Functions of RM<br />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:<br />By Prof. Raghavendran.V<br />
  5. 5. Functions of RM ( Utility)<br />First utility is form of a product<br />Second in form of time utility<br />Third in form of place utility &<br />Last in form of ownership utility is created.<br />By Prof. Raghavendran.V<br />
  6. 6. Characteristics of RM<br />Direct End-User Interaction<br />Platform for Promotions & POP displays<br />Lower unit sales<br />Retail location critical<br />Services as important as Core Products<br />Large number of Retailers to meet geographical coverage and population density<br />By Prof. Raghavendran.V<br />
  7. 7. Retail industry in INDIA<br /><ul><li>In India Organized Retailing is 2%
  8. 8. Retail sector highly fragmented
  9. 9. Retail chains like Wal Mart, Sears, McDonalds brought Rapid Growth and consolidation of Organized Retail
  10. 10. Rapid rise of Income levels and accompanying changes in lifestyles greatly contributed to growth of Organised Retail</li></ul>By Prof. Raghavendran.V<br />
  11. 11. Retail Industry in INDIA<br /><ul><li>In India, increase in Disposable income, Purchasing Power of growing Middle Class conducive conditions for growth of Organised Retail
  12. 12. Indian Retail environment different from that of western countries:
  13. 13. - Cities congested, large population in rural areas
  14. 14. - Smaller purchases, limited household space</li></ul>By Prof. Raghavendran.V<br />
  15. 15. Drivers of retail change in INDIA<br />Socio- Economic factors<br />Changing Income profiles<br />The age factor<br />The changing role of women and evolving family structure<br />The changing consumption basket<br />Increased credit friendliness<br />Geographical dispersion of market potential<br />By Prof. Raghavendran.V<br />
  16. 16. The size of retail in INDIA<br />In the year 2006 the INDIAN retail market was estimated at Rs 12,00,000 crores and organized sector is about 55,000 crores<br />See chart from the text book, page number 37.<br />By Prof. Raghavendran.V<br />
  17. 17. Segment wise division<br />Food and Grocery<br />By Prof. Raghavendran.V<br />
  18. 18. Segment Wise Division<br />By Prof. Raghavendran.V<br />Clothing & Textiles<br />Consumer Durable<br />Footwear<br />Jewellery retail<br />Books, music & gift<br />Fuel/ Petro retail<br />Write sector classification for the above:<br />
  19. 19. Foreign Direct Investment in Retail<br />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%.<br />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.<br />By Prof. Raghavendran.V<br />
  20. 20. FDI in retail<br />In India FDI retail is not allowed. An international retailer can enter the Indian retail market through any of the following methods:<br /><ul><li>Hi-Tech Items
  21. 21. Social sector items
  22. 22. Medical & diagnostic items
  23. 23. Manufactured with technology provided by the foreign collaborator.
  24. 24. Two- year test marketing (Simultaneously commencement of manufacturing)</li></ul>By Prof. Raghavendran.V<br />
  25. 25. FDI<br />Foreign owned companies cannot own and run retail shops to sell other category of goods to consumers in INDIA.<br />Some popular entry options for foreign players are:<br /><ul><li>Franchising operations
  26. 26. Joint venture
  27. 27. Manufacturing facility in India
  28. 28. Distribution offices</li></ul>By Prof. Raghavendran.V<br />
  29. 29. Challenges to retail development in INDIA<br />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:<br /><ul><li>Retail not being recognized as an industry
  30. 30. The high costs of real estate
  31. 31. Very high stamp duties
  32. 32. Lack of adequate infrastructure
  33. 33. Multiple and complex taxation system</li></ul>By Prof. Raghavendran.V<br />
  34. 34. Analysis of INDIAN Retail<br />By using porter’s models, let us analyze the Indian retail segment.<br />By Prof. Raghavendran.V<br />Threat of new entrants<br />Bargaining powers of Suppliers<br />Bargaining powers of buyers<br />Threat of substitute products/ services<br />Porter’s Five Force of Competition<br />
  35. 35. RETAIL EVOLUTION THEORIES<br />Four theories of evolution are:<br />Wheel of Retailing Cyclical<br />Accordion theory Theories<br />Dialectic Process Evolutionary<br />Natural selection Theories<br />Cyclical: Begin with one state and return to that state at some time in future<br />Evolutionary: Changes similar to biological evolution<br />Prof. Raghavendran.V<br />
  36. 36. Wheel of Retailing/ (Cyclical Theory)<br />Wheel represents phases through which some types of Retailers pass:<br />Retailers attract customers – low price, low service<br />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<br />Some Retailers don’t begin as low price, low service entrants, e.g. Upscale fashion specialty stores.<br />Prof. Raghavendran.V<br />
  37. 37. Prof. Raghavendran.V<br />
  38. 38. THE ACCORDION THEORY<br />Retailers fluctuate from strategy of offering wide merchandise with shallow assortment to offering limited categories with deep assortment <br />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.<br />Department stores have both width and depth of merchandise<br />Specialty stores carry special categories with deep selection<br />Prof. Raghavendran.V<br />
  39. 39. DIALECTIC PROCESS/ CONFLICT THEORY<br />An evolutionary theory based on premise that retail institutions evolve.<br />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.<br />Specialty stores with high margins, low turnover plush operations <br />Discount stores with low margins, high turnover low operations<br />Both the above were synthesized to form category specialist stores.<br />Prof. Raghavendran.V<br />
  40. 40. DIALECTIC PROCESS/ CONFLICT THEORY<br />Prof. Raghavendran.V<br />Discount Store<br />Department Store<br />Discount Department Store<br />
  41. 41. NATURAL SELECTION/ ENVIRONMENTAL THEORY<br />Those Retail Institutions Succeed which adapt to changes in customers, Technology, competition and legal environment.<br />Department stores have tried to combat specialty stores by opening specialty counters within the stores. <br />Interest in physical fitness and increased number of women in workforce have made salad bars in grocery stores successful.<br />Prof. Raghavendran.V<br />
  42. 42. The concept of life cycle in RETAIL<br />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”<br />Prof. Raghavendran.V<br />Assignment: Explain the concept of Retail Life cycle?<br />
  43. 43. Business Models in Retail<br />Critical factors, which affect the retail model are<br /><ul><li>Trends in the market positioning
  44. 44. Competition, &
  45. 45. The organizational capabilities</li></ul>By Prof. Raghavendran.V<br />
  46. 46. Classification of retail formats<br />By Prof. Raghavendran.V<br />
  47. 47. Careers in Retailing<br />It is people centric industry, which can be exposed to multi-disciplinary and skills. It offers many choices in terms as career.<br />Buying and Merchandising<br />Marketing<br />Store operations<br />Sales<br />Finance<br />Human Resources<br />Technology and E-commerce<br />Visual Merchandising<br />Supply Chain Management & Logistics<br />By Prof. Raghavendran.V<br />
  48. 48. Assignment time: Sub on 20th Sept<br />Global Challenges in Retail Industry?<br />Brief out Traditional Business Models in Indian retail.<br />Brief out Classification of retail formats.<br />Classify & Differentiate b/w Super, Hyper markets & Departmental stores.<br />By Prof. Raghavendran.V<br />