An Insight inti Retail Management

Title of the Project Report
An Insight into Retailing
Submitted in Partial Fulfillment for the
Award of the Degree of
MASTERS OF BUSINEESS ADMINISTRATION 2020-2021
Submitted By
Ruchika Chandna
University PRN.:
2028100201
BHARATI VIDYAPEETH DEEMED UNIVERSITY SCHOOL OF DISTANCE
EDUCATION
Academic Study Center - BVIMR, New Delhi An
ISO 9001 : 2008 Certified Institute
NAAC Accredited Grade “A” University

Student Undertaking Certificate of Originality
I Ms. Ruchika Chandna of Master of BusinessAdministration-
3rd Semester would like to declare that the project report entitle
“An Insight into Retailing” Submitted to Bharati Vidyapeeth
University Pune, School of Distance Education Pune, Academic
Study Centre BVIMR New Delhi in partial fulfillment of the
requirement for the award of the degree.
It is an original work carried out by me under the guidance of
Mr. Yashwant Kumar.
All respected guides, faculty member and other sources have been
properly acknowledged and the report contains no plagiarism.
To the best of my knowledge and belief the matter embodied in
this project is a genuine work done by me and it has been neither
submitted for assessment to the University nor to any other
University for the fulfillment of the requirement of the course of
study.
Student Name with Signature
Ms. Ruchika Chandna

EXECUTIVE SUMMARY
Small and boutique retailers have their work cut out for them when
it comes to staying in business. There's a lot they need to know, and
a lot that they need to take action on. Whether it's the latest trends in
omni-channel retail, engaging their most loyal customers over
social media, or understanding the way technology and mobile are
revolutionizing how they accept payments. but no one can deny that
the current trading environment is a lot tougher and the future less
predictable than in the recent past. So it is more important than
ever for retailers to ensure that their stores are performing
optimally, which means adopting practices and technologies
designed to achieve operational excellence.
Retail is the sale of goods and services to consumers, in contrast to
wholesaling, which is sale to business or institutional customers. A
retailer purchases goods in large quantities from manufacturers,
directly or through a wholesaler, and then sells in smaller quantities
to consumers for a profit whereas the Retail operations is the term
used to describe all the activities that keep the store functioning
well. It includes people management, supply chain, store layout,
cash operations, physical inventory, master data management,
promotions and pricing, and so on.
Operational excellence means achieving a sustainable competitive
advantage through the optimization of retail operations. Put simply,
operational excellence means being consistently better than the
competition in organizing, optimizing and integrating the various
tasks performed in a store.
There is no standard formula for achieving operational excellence,
but yes following some basic and thoughtful processes can bring
back the life to retail operation again in this online era.

Table of Content
An Insight into Retailing
1. Introduction 3
2. History of Retailing 4
3. Types of Retailing 18
4. Retail Pricing 23
5. Retail Merchandizing 32
6. Retail Store Operation 40
7. Store Design & layout 45
8. Michael Porters :Challenges to Retail Sector 54
9. Buying Behavior-Pattern of consumer 59
10.Conclusion 71

©2005/ILO/DIALOGUE/VE
1
Ruchika Chandna PRN No: 2028100201
MBA Sem: IV

ILO/ITC
Turin
October 2005
What is Retailing
2

Introduction
Retailing is the business when an organization
directly sell its products and services to the end
consumer for his personal use.
By definition
“Retail is the process of selling consumer
goods or services to customers through
multiple channels of distribution to earn a
profit.”
3

Retailing – History of Retailing
1. Mom and Pops: 1700s–1800
A “mom and pop” store is a colloquial phrase
for a small, family-owned, independent business.
Many of these stores were drug stores or general stores
selling everything from groceries and fabrics to toys and tools.
2. Department stores arrive: Mid 1800s – Early 1900s.
The pioneering spirit of people moving west and both opening and
shopping at local general stores evolved as the United States moved
into the 20th century. The stores didn’t just sell items. They also
provided demonstrations, lectures, and entertainment events that
appealed to newly wealthy customers looking for how best to use
their disposable income.
4

Shopping Malls: 1950s.
The first shopping mall was technically an outdoor shopping plaza
that opened in 1922 in Kansas City. However, the first indoor
shopping mall that mirrored how we think of malls today was
opened in 1956 in Edina, Minnesota. Malls were often anchored by
a large department store with a cluster of other stores around it.
The mall was envisioned as a cultural and social center where people could
come together and not only do their shopping but also make an activity of it.
By 1960, there were more than 4,500 malls accounting for 14% of all retail
sales.
With ecommerce sales growing, the appeal of malls has gradually declined,
hitting a 20-year low in sales in 2019. That said, some digitally native brands
are still exploring in-person shopping at new mall-type environments.
5

Big Box is in: 1960s.
In 1962 the first Walmart opened its doors
in Rogers, Arkansas.
Target and Kmart also opened their first stores that
same year.
The efficiency and overall size of these
indoor giants made
them attractive to consumers looking for
convenience and friction-free, no frills service.
Unlike the department stores
of early in the century that provided personalized service and
attended to customers’ needs, these large retailers were more focused on self service and providing
efficiency.
6

Ecommerce looms on the horizon: 1990s.
Arguably one of the biggest flashpoints in retail
history is the dawn of widespread internet
shopping.
Amazon was established in 1995 as a simple
online bookseller.
Ecommerce provides convenience and efficiency
to the shopping experience and enables shoppers
to research, examine reviews, compare prices, and
make purchases at all hours of the day.
7

Important Retail Statistics
Rank eCommerce
Company
Revenue (USD
billions)
1 Amazon 280.5
2 JD.com 82.86
3 Alibaba Group 71.98
4 Suning.com 38.06
8

Social and Economic
Significance of Retailing
The retailer acts as a link between the customer and the marketer,
who is responsible for selling the ultimate products and services to
the customers.
Social Significance
Regulation and control from various pressure groups such as social
activists, social workers, and consumer activists compel the retailers
in implementing their marketing programmes restrictively and
communicating the true picture about the benefits or harms of using
a product.
9

Social Significance
The retail fraternity should give importance to the cultural differences
and also the differences in the values, beliefs, and faith of people
while formulating their marketing strategies and business
development plans.
This will be helpful in meeting the demands of the consumers by
understanding their expectations.
The marketing department of retail companies is engaged in
identifying the opportunities and threats to the business of the
company by analyzing the socio-cultural trends and the buying
preferences of the consumers.
10

Economic Significance
The retailers play the role of sales specialists and also as agents
of purchase for their customers and suppliers respectively.
Retailers handle the entire gamut of roles and functions aiming
at understanding customer requirements and anticipating the
demand, gathering information about the market trends through
strong market intelligence and making product related
assortments and discovering financing opportunities.
11

Economic Significance
The retail sector has opened newer job avenues for people
having different areas of specialization with diverse skills and
qualification backgrounds.
These opportunities could be in the areas of Finance &
Accounting,
Retail Operations,
Commercial Operations,
Inventory & Warehousing,
SCM & Logistics,
HRM, Distribution Systems,
12

Challenges Faced by the
Indian Retail Sector
Some of the major challenges which Indian retail industry is faced
with are:
Competing with the international standards
Indian retail industry is exposed to several systemic inefficiencies
and problems with the supply chain framework.
Growth in the retail industry has given rise to real estate related
problems with increasing requirements for setting up
hypermarkets and supermarkets across various locations in large
scale.
Problems related to the shortage or lack of availability of trained
or skilled manpower.
Frauds in the form of thefts, vendor frauds or administrative
loopholes in the retail industry, are a major cause of worry and
this has posed several challenges before the management. 13

Types of Retailing
Store Retailing:
Department store is the best form of store retailing, to attract a
number of customers. The other types of store retailing includes,
speciality store, supermarket, convenience store, catalogue
showroom, drug store, super store, discount store, extreme value
store. Different competitive and pricing strategy is adopted by
different store retailers.
14

Types of Retailing
Non-store Retailing: It is evident from the name
itself, that when the selling of merchandise takes
place outside the conventional shops or stores, it
is termed as non-store retailing. It is classfied as
under:
Direct marketing: In this process, consumer
direct channels are employed by the company to
reach and deliver products to the customers. It
includes direct mail marketing, catalog
marketing, telemarketing, online shopping etc.
15

Types of Retailing
Direct selling: Otherwise called as multilevel selling
and network selling, that involves door to door selling
or at home sales parties. Here, in this process the
sales person of the company visit the home of the
host, who has invited acquaintances, the sales
person demonstrate the products and take orders.
Automatic vending: Vending machines are primarily
found in offices, factories, gasoline stations, large
retail stores, restaurants etc. which offer a variety of
products including impulse goods such as coffee,
candy, nnewspaper, soft drinks etc.
16

Types of Retailing
Buying service: The retail organization serves a
number of clients collectively, such as
employees of an organization, who are
authorized to purchase goods from specific
retailers that have contracted to give discount, in
exchange for membership.
17

Types of Retailing
Corporate Retailing: It includes retail organizations such as
corporate chain store, franchises, retailer and consumer
cooperatives and merchandising conglomerates. There are a
number of advantages that these organizations can achieve
jointly, such as economies of scale, better and qualified
employees, wider brand recognition, etc.
• Department Stores
A department store is a set-up which offers wide range of
products to the end-users under one roof. In a department store,
the consumers can get almost all the products they aspire to shop
at one place only. Department stores provide a wide range of
options to the consumers and thus fulfill all their shopping needs.
18

Types of Retailing
Discount Stores
Discount stores also offer a huge range of products to the end-users but at
a discounted rate. The discount stores generally offer a limited range and
the quality in certain cases might be a little inferior as compared to the
department stores.
Wal-Mart currently operates more than 1300 discount
stores in United States. In India Vishal Mega Mart comes under discount
store.
Supermarket
A retail store which generally sells food products and household items,
properly placed and arranged in specific departments is called a
supermarket. A supermarket is an advanced form of the small grocery stores
and caters to the household needs of the consumer. The various food
products (meat, vegetables, dairy products, juices etc) are all properly
displayed at their respective departments to catch the attention of the
customers and for them to pick any merchandise depending on their choice
and need. 19

Types of Retailing
Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
20

Types of Retailing
Warehouse Stores
A retail format which sells limited stock in bulk at a discounted rate is
called as warehouse store. Warehouse stores do not bother much
about the interiors of the store and the products are not properly
displayed.
Speciality Stores
Speciality store would specialize in a particular product and would
not sell anything else apart from the specific range.Speciality stores
sell only selective items of one particular brand to the consumers
and primarily focus on high customer satisfaction.
Example -You will find only Reebok merchandise at Reebok store
and nothing else, thus making it a speciality store
21

Retail Mechanism - How
does retail work ?
Retailing is defined as the process of selling
merchandise to the consumers for their end use in
small quantities. The retailer sells products to the
end-users either in single units or in small
quantities as per their need and capability.
Retailer.........................Consumer (End -
User) Retailing
22

Retail Pricing - Different Types
of Pricing Models
The sale of goods from fixed points (malls,
department stores, supermarkets and so on) to the
consumer in small quantities for his own
consumption is called as retail.
According to the concept of retailing, a retailer
doesn’t sell products in bulk; instead sells the
merchandise in small units to the end-users.
23

of Pricing Models
Cost Plus Pricing Mechanism
Every organization runs to earn profits and so is the retail industry.
Cost plus pricing works on the following principle:
Cost Price of the product + Profit (Decided by the retailer) = Final price of the
merchandise.
“According to cost plus pricing strategy the retailer adds some extra
amount to the actual cost price of the product to earn his share of profits. The final
price of the merchandise includes the profit as decided by the retailer.”
Cost Plus Pricing
Cost plus pricing strategy takes into account the profit of the retailer.
Cost plus pricing is an easy way to calculate the price of the merchandise.
The increase in the retailer price of the merchandise is directly proportional to
the increase in the cost price.
The customers however do not have a say in cost plus pricing.
Manufacturer Suggested Retail Price (Also called List Price or Recommended
retail price)
“According to manufacturer suggested retail pricing strategy the retailer
sets the final price of the merchandise as suggested by the manufacturer.”
24

of Pricing Models
MSRP
The retailer sells his merchandise at a price suggested by the
manufacturer.
Condition 1
The retailer sells the product at the same price as suggested by
the manufacturer.
Condition 2
The retailer sells the merchandise at a price less than what was
suggested by the manufacturer - Such a condition arises when
the retailer offers “Sale” on his merchandise.
Condition 3
Retailers initially quote an unreasonably high price and then
reduce the price on the customer’s request to make him realize
that a favour has been done to him. A condition of Bargain -
where the customer negotiates with the retailer to reduce the
price of the merchandise.
25

of Pricing Models
Competitive Pricing
The cut throat competition in the current retail scenario has
prompted the retailers to guarantee excellent customer service to
the buyers for them to prefer them over their competitors.
The price of the merchandise is more or less similar to the
competitor’s but the retailers add on certain attractive benefits for
the customers. (Longer payment term, gifts etc.)
The retailers ensure that the customers leave their store with a
smile to have an edge over the competitors.
He tries his level best to offer better services to the customers for
a better business in future.
26

of Pricing Models
Pricing Below Competition
According to pricing below competition policy
The price of the merchandise is kept lesser than what is being
offered by the competitors.
Prestige Pricing (Pricing above competition)
According to prestige pricing mechanism, the price of the
merchandise is set slightly above the competitors.
The retailer can charge higher price than the competitors only
under the following circumstances:
Exclusive Brands at the store.
Brand image of the store
Prime location of the retail store
Excellent customer service
Merchandise not available at any other store
Latest Trends 27

of Pricing Models
Psychological Pricing
Certain price of a product at which the consumer willingly
purchases it is called psychological price.
A retailer sets a psychological price which he feels would meet
the expectations of the buyers and they would easily buy the
merchandise.
28

of Pricing Models
Multiple Pricing
According to multiple pricing, the retailer sells multiple
products (more than one) for a single price.
The retailers combine few products to be sold for a single
fixed price.
3 Shirts for $100/- or 3 Perfumes for $20/- and so on.
Discount Pricing
According to discount pricing, the retailer sells his
merchandise at a discounted price during off seasons or to
clear out his stock.
29

Retail Merchandising
Merchandising
Retail Merchandising refers to the various activities which
contribute to the sale of products to the consumers for their end
use. Every retail store has its own line of merchandise to offer to
the customers. The display of the merchandise plays an
important role in attracting the customers into the store and
prompting them to purchase as well.
Merchandising helps in the attractive display of the products at
the store in order to increase their sale and generate revenues
for the retail store.
Merchandising helps in the sensible presentation of the products
available for sale to entice the customers and make them a
brand loyalist.
30

Promotional Merchandising
The ways the products are displayed and stocked on the
shelves play an important role in influencing the buying
behavior of the individuals.
Attractive packaging
The packaging of the merchandise goes a long way in
improving the brand value of the product. A product kept in a
nice box would definitely catch the attention of the customers.
31

Impressive presentation of the Product
The display of the products at the retail store must
entice the customers. The merchandiser in
coordination with the store manager must ensure
that the products are according to the season as well
as latest trends.
The merchandiser must:
Source something which is unique and not available at
any other retail store.
Never compromise on quality of the merchandise.
Compromising on quality costs later.
Source merchandise as per the season and climate.
32

Unique Pricing (Discounts)
Attractive prices, discounts, rebates also bring customers to the
store.
Promotional schemes, gifts
Coupons and attractive gifts make shopping a pleasurable
experience for the customers.
33

Merchandising Tips
The merchandiser must source products according to the latest
trends and season.
The merchandise should be as per the age, sex and taste of the
target market.
The target market of Zodiac Clothing Company Limited mainly
comprises of office goers and professionals. The merchandise
(shirts, trousers, neck ties, belts) is as per the taste of the
professionals. Beach house shirts would have no takers in such
a store.
The set up of the store should be such that once a customer
enters into a store, he has to walk through each and every
department.
It is the key responsibility of the merchandiser to create an
attractive display to pull the customers into the store.
34

Cross Merchandising
“Cross merchandising refers to the display of opposite and
unrelated products together to earn additional revenues for the
store.”
Products from different categories are kept together at one place for
the customers to find a relation among them and pick up all.
According to cross merchandising:
Unrelated products are displayed together.
The retailer makes profits by linking products which are not
related in any sense and belong to different categories.
Cross Merchandising helps the customers to know about the
various options which would complement their product.
35

Tips for Cross Merchandising
The opposite products should be sensibly displayed for the
customers to be able to relate them.
The merchandise should be neatly arranged without giving a
cluttered look to the store.
The merchandise must complement each other to create the
desired impact.
The retailer must make sure the products have some logical
connection with each other.
36

Visual Merchandising
The art of increasing the sale of products by
effectively and sensibly displaying them at the retail
outlet is called as visual merchandising.
“Visual merchandising refers to the aesthetic display of the
merchandise to attract the potential buyers, prompt them to
buy and eventually increase the sales of the store.”
The store must offer a positive ambience to the customers
for them to enjoy their shopping.
The location of the products in the store has an important
role in motivating the consumers to buy them.
Proper Space, lighting, placing of dummies, colour of the
walls, type of furniture,music, fragrance of the store all
help in increasing the sale of the products.
37

Lighting is one of the critical aspects of visual
merchandising. Lighting increases the visibility of the
merchandise kept in the store.
The signage displaying the name of the store or other
necessary information must be installed properly outside the
store at a place easily viewable to the customers even from a
distance.
Select the theme of the store according to the season.
Red should be the dominating colour during.
38

Why Visual Merchandising?
Visual Merchandising helps the customers to easily find out what
they are looking for.
It helps the customers to know about the latest trends in fashion.
The customer without any help can actually decide what he
intends to buy.
It increases the sales of the store and results in increased level
of customer satisfaction.
The customers can quickly decide what all they need and
thus visual merchandising makes shopping a pleasant
experience.
Visual merchandising gives the store its unique image and
makes it distinct from others.
39

Retail Store Operations
Store Atmosphere
The store must offer a positive ambience to the customers for
them to enjoy their shopping and leave with a smile.
The products should be properly arranged on the shelves
according to their sizes and patterns.
There should be no foul smell in the store as it irritates the
customers.
The floor, ceiling, carpet, walls and even the mannequins should
not have unwanted spots.
Never dump unnecessary packing boxes, hangers or clothes in
the dressing room. Keep it clean.
40

Cash Handling
One of the most important aspects of retailing is cash handling.
It is essential for the retailer to track the daily cash flow to calculate the profit and
loss of the store.
Cash Registers, electronic cash management system or an elaborate
computerized point of sale (POS) system help the retailer to manage the daily sales and
the revenue generated.
Make sure the sales representative handle the products carefully.
Clothes should not have unwanted stains or dust marks as they lose appeal and fail
to impress the customers.
Install a generator for power backup and to avoid unnecessary black outs.
Keep expensive products in closed cabinets.
Instruct the children not to touch fragile products.
The customers should feel safe inside the store.
41

Customer Service
Customers are assets of the retail business and the retailer can’t afford to
lose even a single customer.
Assist them in their shopping.
The sales representatives should help the individuals buy merchandise
as per their need and pocket.
The retailer must not oversell his products to the customers. Let them
decide on their own.
Never compromise on quality of products. Remember one satisfied
customer brings five more individuals to the store. Word of mouth plays
an important role in Brand Promotion.
42

Refunds and Returns
Formulate a concrete refund policy for store.
The store should have fixed timings for exchange of merchandise.
Never exchange products in lieu of cash.
Never be rude to the customer, instead help him to find something else.
The position of dummies should be changed frequently.
There should be adequate light in the store. Change the burned out lights
immediately.
Don’t stock unnecessary furniture at the store.
Choose light and subtle colours for the walls to set the mood of the walk-ins.
Make sure the signage displays all the necessary information about the store
and is installed at the right place visible to all.
The customers should be able to move and shop freely in the store.
The retail store should be well ventilated.
43

Training Program
The store manager must conduct frequent training programs for
the sales representatives, cashier and other team members to
motivate them from time to time.
It is the store manager’s responsibility to update his subordinates
with the latest softwares in retail or any other developments in
the industry.
Inventory and Stock Management
The retailer must ensure to manage inventory to avoid being “out
of stock”.
Every retail chain should have its own warehouse to stock the
merchandise.
Take adequate steps to prevent loss of inventory and stock.
44

Store Design and Layout - Different Floor
Plans and Layouts
Opening a retail store is no joke and requires meticulous planning
and detailed knowledge.
Location
Make sure your store is in a prime location and is easily
accessibleto the end-users. Do not open a store at a secluded
place.
Floor Plan
The retailer must plan out each and everything well, the location
of the shelves or racks to display the merchandise, the position
of the mannequins or the cash counter and so on.
45

Store Design and Layout - Different
Floor Plans and Layouts
Straight Floor Plan
The straight floor plan makes optimum use of the walls, and
utilizes the space in the most judicious manner. The straight floor
plan creates spaces within the retail store for the customers to
move and shop freely. It is one of the commonly implemented
store designs.
46

Diagonal Floor Plan
According to the diagonal floor plan,
the shelves or racks are kept diagonal to
each other for the owner or the store
manager to have a watch on the
customers. Diagonal floor plan works
well in stores where customers have the
liberty to walk in and pick up merchandise
on their own.
47

Store Design and Layout - Different Floor
Plans and Layouts
Angular Floor Plan
The fixtures and walls are given a curved look to add to the style of
the store.
Angular floor plan gives a more sophisticated look to
the store. Such layouts are often seen in high end
stores.
48

Geometric Floor Plan
The racks and fixtures are given a geometric shape in such a floor
plan. The geometric floor plan gives a trendy and unique look to the
store.
49

Mixed Floor Plan
The mixed floor plan takes into consideration angular, diagonal and
straight layout to give rise to the most functional store lay out.
50

Tips for Store Design and
Layout
The signage displaying the name and logo of the store must be installed
at a place where it is visible to all, even from a distance. Don’t add too
much information.
The store must offer a positive ambience to the customers. The
customers must leave the store with a smile.
Make sure the mannequins are according to the target market and
display the latest trends. The clothes should look fitted on the dummies
without using unnecessary pins. The position of the dummies must be
changed from time to time to avoid monotony.
The trial rooms should have mirrors and must be kept clean. Do not
dump unnecessary boxes or hangers in the dressing room.
The retailer must choose the right colour for the walls to set the mood of
the customers. Prefer light and subtle shades.
51

Tips for Store Design and
Layout
Never play loud music at the store.
The store should be adequately lit so that the products are easily
visible to the customers. Replace burned out lights immediately.
The floor tiles, ceilings, carpet and the racks should be kept
clean and stain free.
There should be no bad odour at the store as it irritates the
customers.
The retailer must plan his store in a way which minimizes theft or
shop lifting.
Merchandise should never be displayed at the entrance or
exit of the store.
Expensive products like watches, jewellery, precious stones,
mobile handsets and so on must be kept in locked cabinets.
Install cameras, CCTVs to have a closed look on the customers.
52

Signage - Meaning and its Role
in Retail Industry
What is a Signage ?
Any visual representation which gives information to the customers about a
store, any office, building, street, park and so on is called a signage.
Signage helps the customers to easily reach their desired destination or
locate a building by simply following the instructions displayed on it.
A customer can easily locate the store with the help of a signage.
Signboard gives all necessary information about the store. The customer
can easily come to know about the products kept at the store without actually
bothering anyone. Visual Displays put inside the retail store can actually help
the customers to easily locate the merchandise.
It is the signboard which actually attracts the customers into the store.
The signage should be interesting enough to pull the customers into the store
as a retailer can’t afford to lose even a single customer.
53

Challenges to the Retail Sector
(As per Michael Porter’s Five Forces Model)
Michael Porter’s Five Forces Mo
Michael Porter’s Five Forces Model helps in the determination of the
industry attractiveness and in analyzing the prospects of growth and
opportunities by assessing the competitive trends and the intensity
of the rivalry amongst the existing competitors. It is a major strategic
tool used for determining the industry potential/prospects and the
possible threats which may limit the attractiveness of this industry
and prevent new entrants from joining the competitive battle. It
provides key insights to the organizations for crafting and
implementing both long-term and short-term strategic plans.
54

Threat from the Competitors
The competition in the retail industry is quite fierce and intense.
As a result of this, the existing players may impose barriers to
entry in the industry for the new players. These barriers can be
imposed by strengthening the distribution infrastructure and the
supply chain framework. Barriers for the new entrants can also
be imposed by gaining a cost advantage or low-cost leadership
and also in the form of economic regulations or trade barriers for
foreign players. Apart from this, the threat to the entry of new
players could be from the differentiation of the product, capital
investment strength and strong loyalty of the customers for the
existing players.
55

Threats from the Substitutes
The existence of substitutes will definitely affect the
attractiveness of the industry and lower the profitability. This is
because substitutes directly influence the prices of the products
and the demand for the products from the customers as well. In
the retail industry, the threat from the substitutes is very high.
With the availability of more substitute products, the buyers will
get more options to choose from the available alternatives for
satisfying their requirements. The willingness of the buyers to
buy the substitute products is directly dependent upon various
factors such as quality, prices and the performance of the
substitute products.
56

Michael Porter’s Five Forces Model
Bargaining Power of the Buyers
Buyers are the firms or the individuals who are the ultimate
purchasers of the industry products and services. Buyers
include the end consumers, distributors, retailers and the
industrial purchasers.
A buyer’s bargaining power is expected to be higher if the
scope for switching from one supplier to another exists.
Moreover, if concentrated numbers of buyers purchase a
large quantity of products, then the bargaining power of the
buyers is expected to be higher. Apart from this, the industry
bargaining power will be expected to be high for those
products for which quality is given utmost importance.
57

Bargaining Power of the Suppliers
Suppliers supply the required raw materials or the inputs to
the industry players. These inputs can be in the form of man,
material, finance or technology related support from the
suppliers. Various factors determine the bargaining power of
the suppliers. The suppliers bargaining power is expected to
be high if the quality of the raw material or the inputs are
unique. The factors which govern the strength of the
bargaining power of the suppliers are the uniqueness of the
inputs or the raw materials, the quality of the product which is
offered by the suppliers and more demand for the supplier’s
products will increase the bargaining power of the suppliers.
58

Michael Porter’s Five Forces Model
The intensity of the Competitive Rivalry
The higher the intensity of the competitive rivalry in the industry, the lesser will be the
profitability of the firms. In the retail industry, the intensity of competitive rivalry is affected
by a gamut of factors such as:
Stiff competitive rivalry amongst the established retail tycoons or major industry players.
Varieties offered in the product offerings for maximizing customer satisfaction and
strengthening customer loyalty.
To sum up, retail industry globally has been witnessing a paradigm shift since last few
years. The industry is faced with cut-throat competition and is still ruled by
unorganized players though the organized retail sector has shown an incredible
performance. Various factors such as entry barriers, bargaining power of the
buyers/suppliers, the intensity of competition and economies of scale should be taken into
consideration by the retailers and work towards them for enjoying economies in scale and
achieving a competitive edge in the industry.
59

Buying Behavior Patterns of
Customers
Analyzing and Identifying the Actual Customer
Analysis of the customer composition: This includes analysis of
the demographic factors like gender, age group, occupation, religion,
economic & social status and nationality.
Understanding the Origin of the Customers: This involves an
analysis of the place or location from where the customer reaches
the retail store, travel time spent by the customer for reaching the
retail store and the type of area in which the customer lives.
Assessment of the Customer Objective: An analysis of the
objective of the customer is very crucial whether a customer is
actually in the mood for buying a product or simply is engaged in a
shopping endeavor.
60

Customers
Customer Buying Behaviour and Patterns
A customer’s buying behaviour is largely governed by the needs,
preferences, and tastes of the consumers for whom the
product/service is ultimately purchased. Numerous patterns
influence the buying behaviour of the customers:
Place or the Location of Purchase:
A retail store should pay a lot of importance to the store location,
identifying a distributor in the closer vicinity and also the nature
of merchandise and the ready availability of stocks.
61

Customers
Type of Products to be Purchased and Quantity of Purchase.
This essentially implies an analysis of the type of product which
a customer will want to purchase and in how much quantity. This
will depend on the following factors like:
Buying capacity of the customer
Availability of the product choices
Frequency of Purchase and the Time During When a Product is
Purchased
The product type
Customer Lifestyle
Festivals, Rituals, and Customs
62

Customers
Purchase Methods
This involves an analysis of the following factors such as:
Whether the customer is buying the product alone or is
accompanied by someone else.
Customers Response towards the Sales Promotional
Techniques
Various sales promotion methods increase the impulsive buying
behaviour of a customer as and when a customer enters the
shop.
Product Displays: Product display create an aesthetic appeal
and hence influence the buying behaviour of the customer.
63

Customers
Demonstration: Product demonstrations help a lot in motivating
the customer for buying the product by making them aware of the
usage of the products and or by distributing a product sample.
Special Schemes and Pricing: Various product schemes,
offers, special prices during festive seasons or off season,
coupons, special offers, contests, etc. play a crucial role in
moulding the customer buying behaviour.
Sales talks delivered verbally by the sales reps at the store or
printed advertisements also influence the buying behaviour of the
customers.
64

Self-Checkout Apps
Self-Checkout Apps
Amazon-Go, Flikart, Myntra are the few names
with the latest and the most refined version of
self-checkouts apps.
Now, specialized third-party companies have
come into existence. These companies develop
apps provide self-checkout experiences.
65

Advantages of Self Checkout Apps
Some of the advantages of using self-checkouts apps have
been listed below.
No More Long Queues: The most obvious advantage of
using a self-checkout app is that customers do not have to
wait in queue for buying the products that they need.
Supersizing: Retail stores are not the only ones that have
been experimenting with self-checkout technology. Big
players in the restaurant industry, like McDonald’s, have also
been experimenting with this technology.
Lower Costs: There are obvious cost advantages that are
associated with self-checkout technology. This technology
eliminates the need for human cashiers.
66

Advantages of Self Checkout
Apps
Personalized Offers: Lastly, when all purchases are routed via
an app, the company has all the purchase data in an electronic
format. This means that they can analyze the purchasing
patterns of every individual and create personalized offers for
them.
To sum it up, self-checkout technology is growing by leaps
and bounds. Big companies are transforming the retail
sector by implementing newer versions of this technology.
67

Pricing Challenges in Multi-Channel
Retail
Pricing Challenges in Multi-Channel Retail
Online retailing has now become a part of our
everyday lives. Companies like Amazon have
swooped in from nowhere and have suddenly
grown into one of the largest companies in the
world today. The online companies took the
world by storm. Their growth has been sudden
and astronomical. Hence, many big businesses
did not get time to react.
68

Multi Channel Retail
What is Multi-Channel Retail?
Multi-channel retail is a marketing strategy
designed to offer consumers several
mechanisms to purchase a product. The idea is
to enable customers to use online channels as
well as brick and mortar channels. This helps to
maximize revenue as well as increase customer
service..
69

Challenges Faced in Multi-
Channel Pricing
Different Cost Structures: The first and foremost challenge
which is faced in multi-channel pricing is that the cost structures
of different channels are totally different.
Different Competitors: Another problem with multi-channel
retail is that the company is simultaneously competing with many
different types of entities.
In the case of online retailers, the breadth of merchandise is not
really a constraint at all. Hence, competition happens mostly on
price. Companies which have multi-channel retail strategies are
forced to cut costs by their online competition.. Unfortunately,
multi-channel retail dilutes the focus of the firm.
70

Conclusion
Retailing is very important part of any country’s economic growth as it only provide
employment to billions of people all over the world but also contribute towards
world’s economy. Retailing over a period has changed from a nearby grocery shop
to the purely to online shopping. Ecommerce has seen a upward trend in last few
years .Covid-19 has changed the way people shop, current pandemic situation
might be getting better in the city, but the apprehension to shop out, or at packed
places persist. Many consumers these days avoid closed and crowded places,
entailing a preference to shop at high street retail, as it also brings back the sense
of the old charm of shopping with the store’s proximity to the community. At High
Street, convenience, easy access and open spaces are some of the significant
aspects attracting more consumers’ interest nowadays. The drive-through and open
shopping experience in uncertain times of pandemic is driving more footfalls as
consumers feel safe in open areas compared to closed spaces with centralized AC.
With the thoughtful pricing and marketing strategies, Retailing will substantially add
to the country’s economy.
71

An Insight inti Retail Management

Recommended

Recommended

More Related Content

What's hot

What's hot (18)

Similar to An Insight inti Retail Management

Similar to An Insight inti Retail Management (20)

An Insight inti Retail Management