Retail Management.ppt

Concept of Retailing
Dr. Gopal Thapa
Associate Professor
Tribhuvan University

Retailers
 Retailers are middlemen
 They deal with ultimate customers
 They link producers and customers
 Their transactions are small in volume
 They take title of the goods
 They buy from wholesalers for reselling
 Products can be sold in person, by internet, or at
home
2/5/2023 Copy right reserved: Dr. Gopal Thapa 2

Retailers
 Retailers are merchants whose main business is
selling directly to ultimate customers.
 Peter D. Bennett
 Retailer is a merchant middleman who is engaged
primarily in selling to ultimate consumers
 Dictionary of Marketing

Retail Definition
 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.
 David Gilbert

Retailing
 Retailing encompasses the business activities
involved in selling goods and services to
consumers for their personal, family or household
use.
 Barry Berman & Joel R. Evans
 Retailing is the set of business activities that adds
value to the products and services sold to
consumers for their personal or family use
 Michael Levy, Barton A. Weitz & Ajaya Pandit

Retail Management
 The various processes which help the customers to
procure the desired merchandise from the retail
stores for their end use refer to retail management.
 Retail management includes all the steps required
to bring the customers into the store and fulfill
their buying needs.

Characteristics of Retailing
 Links wholesaler and customers
 Sells to ultimate customers
 Sells in small quantity
 Deals in large varieties of products
 Requires less amount of capital
 Profit margin is higher in retailing compared to
wholesaling
 Last link

Types of Retailers
 On the basis of ownership
 Independent store
 Chain store
 Contract store
 Consumer store
 On the basis of product line
 General store
 Single line store
 Specialty store

Types of Retailers
 On the basis of sales volume
 Small scale retailers
 Large scale retailers
 On the basis of method of operation
 In-store retailing
 Non-store retiling

Malls
 Many retail stores operating at one place form a
mall.
 A mall would consist of several retail outlets each
selling their own merchandise but at a common
platform.

E-Tailers
 Now a days the customers have the option of
shopping while sitting at their homes
 They can place their order through internet, pay
with the help of debit/ credit cards or Cash on
delivery
 This kind of shopping is convenient for those who
have a hectic schedule and are reluctant to go to
retail outlets.

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.

Super market
 A low price, self service retail store which
generally sells food products and household items,
properly placed and arranged in specific
departments is called a supermarket.


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.

Mom and Pop Store ( Kirana Store )
 Mom and Pop stores are the small stores run by
individuals in the nearby locality to cater to daily
needs of the consumers staying in the vicinity.
 They offer selected items and are not at all
organized.
 The size of the store would not be very big and
depends on the land available to the owner.
 They wouldn’t offer high-end products.

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.

Superstores and Hypermarkets
 Very large retail establishments
 Started in the early 1960s in the UK
 Applying the basic principles of discount stores
 Superstores: sales area of 25000-50000 sq. ft.
 Hypermarket: over 50000 sq. ft. of selling area

Franchising
 It is the granting of sole selling rights within a
given geographical area
 Franchising company supplies equipment for a
licensee who either pays a franchise fee or a
percentage of turnover
 Or contracts to buy supplies from the franchisor

Cooperative store
 a retail store owned and managed by consumer-
customers who supply the capital and share in the
profits by patronage dividends.
 Consumers establish cooperative store in order to
get quality goods at minimum price by eliminating
wholesalers and retailers.

Mail order business
 Mail-order business is a non-store retailing in
which goods are sold through mail.
 Customers send written order to sellers asking to
send goods as demanded.
 Then the seller sends the goods to the customers
through mail or post offices.
 The customers cannot see the goods until they
reach at their shops or homes.

Independent Store
 Independent stores are businesses that operate
with a single retail outlet, or are structured as a
small chain with no more than three locations.
 Generally, stores of this type are individually
owned, owned by a family, or owned by two
partners.

Others
 Mobile shops
 Automatic vending
 Door to door trading
 Party selling
 Club trading etc.

Factors illustrating the growing
importance of the retail sector
 large and increasing contribution to GDP
 economic importance more visible
 major employer
 retailers as gatekeepers
 retailers diversifying their activities
 organizations growing on an international scale
 size of operations allowing for supply chain control
 blurring of areas of retail to include wider area of business
activity

Retail Dynamism
 Environmental theory
 Cyclical theories
 Wheel of retailing
 Retail accordion
 Retail life cycle
 Conflict theory.

Environmental theory
 A whole array of factors shape the nature of retail
environments
 factors of an economic, social, political,
regulatory, cultural and demographic nature all
impinge upon the environment in which retailers
operate.
 It is easy to see direct links between some
environmental conditions and retail change

Changes related to the consumer
 demographic changes – increases or decreases in
population numbers, age groups, racial groups, socio-
economic groups, etc.;
 attitudes and preferences to purchasing, brands and
products;
 changes in lifestyle, whereby time is more important and
therefore fast food, telephone banking, credit card
payments and suchlike are becoming important;
 economic influences based upon real incomes, confidence,
numbers of women working, etc.

Changes in technology
 microwave cookers, food freezers, motor cars, the
Internet, computer applications to business, just-
in-time delivery systems, and so on.

Changes in competition
 The competitive strength or otherwise of actual or
alternative channels of distribution, depending
upon the nature and type of the retail organization.
 The impact of the Internet is a fundamental
example of new types of competition that can
appear.

The wheel of retailing
 Proposed by McNair, 1931,
 This concept proposes ‘a more or less definite
cycle’,
 When retailers enter a market they compete by
offering goods at the lowest possible price or ‘the
bold new concept, the innovation’, in order to
attract customers.

 As retailers develop their experience and gain
capital, they tend to increase their level of service
and quality – and therefore their price.
 This success allows mature retailers to move
steadily into an up market position.
 However, retailers in this position may become
vulnerable due to high costs, declining efficiency
and, perhaps, stagnating management strategies
which culminate in a downturn in sales.

 If this is the case the retailer may plunge into
decline and even be forced to withdraw from the
market.
 The consequence of this move around the wheel of
retailing is that a gap is left at the bottom end of
the market – an opportunity for a new retailer to
enter.

The retail accordion theory
 The retail accordion theory suggests that retailers
initially enter a market as a general retailer;
 with experience they focus down on particular
product sectors and/or consumer groups.
 Over time they begin to diversify their offer in
order to grow, but again will revert to
specialization

The retail life-cycle theory
 Retail developments pass through stages.
 At birth there are slow rates of growth due to
limited resources and experience.
 This is followed by a time of rapid growth as
efficiency and experience increase.
 Eventually growth will level off into the mature
stage due to increased costs and competition and
reduced efficiencies.
 In a mature market the competition remains
intense, growth slows and profits begin to fall.

The retail life-cycle theory

Conflict theory
 Competition between retailers causes changes in
the nature of the retail environment.
 However, it is not so much the day-to-day
competition between companies that causes
institutional change, but rather the imbalance
caused by innovations.
 Brown (1987) states that a response to innovation
follows a process of four stages.

Conflict theory
 Initially, retailers are in shock at the innovation;
 secondly, they deny the threat by means of
defensive retreat;
 thirdly, they then move into a stage of
acknowledgement and assessment;
 finally, they develop a strategy of adaptation

Types of retailer response to
innovation
 shock
 defensive retreat
 acknowledgement and assessment
 adaptation

Retailing and Marketing
 Retailing comprises all the activities involved in
the marketing and distribution of goods and
services.
 Therefore, marketing is a core area for any retail
operation as the success or failure of retailers is
based upon how well they understand and serve
the needs of their customers.

 Change in consumer behaviour is constantly
occurring
 Any change that occurs has to be underpinned by
an appropriate marketing strategy if it is to be
successful
 As part of the development of retail marketing
there is a need to ensure that both the positioning
of any offer, and the image of that offer, are sound
and logically linked.

 Positioning as a marketing concept is based upon
a market position of image, price and quality
rather than geographical position.
 This position should be perceived clearly by the
consumer so that the retailer gains some
advantage, either through being different from
others in the mind of the consumer or more clearly
identified as offering a particular type of retail
offer by the choice of that position.

 The maturation of the retail marketplace has led to
the development of schemes which allow
improved relationship building with the customer.
 There is a recognition that relationship marketing
schemes will reduce the long-term costs of
attracting customers owing to the retention
benefits they provide.
 Therefore, recent developments in retail
marketing have been associated with building
customer loyalty

Possible loyalty states:
 No loyalty: Low relative attitude and low repeat
patronage signal an absence of loyalty
 Spurious loyalty: Describes a low relative attitude
and high repeat patronage and is characterized by
non-attitudinal influences on behaviour
 Latent loyalty: A high relative attitude and a low
repeat patronage is a sign of latent loyalty
 Loyalty: both relative attitude and relative
patronage

Target marketing and marketing
mix
 The ability of a retailer to enhance and build
customer loyalty is highly dependent on
identifying and understanding the target market,
and offering the right type of reward or scheme to
ensure the retention of the bulk of their custom
over the long term.

Relationship Marketing
 Transactional marketing
VS
 Relationship marketing

Six different kinds of loyalty:
Sopanen (1996)
 monopoly loyalty – where no choice is available;
 inertia loyalty – where customers do not seek alternatives;
 convenience loyalty – attributed solely to the location of a
retail outlet;
 price loyalty – where customers believe in seeking out low
prices, but will shift if lower prices are identified
elsewhere;
 incentivized loyalty – based upon loyalty reward schemes
for accumulating benefits;
 emotional loyalty – found in brand loyalty: this is the most
elusive to create.

Retail Management.ppt

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Retail Management.ppt