Retail Management

Dr. Anupamaa S. Chavan

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Introduction to the World of Retailing
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Dr. Anupamaa S. Chavan

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Retailing

The term ‘retailing’ is derived from the old French

word ‘retaillier’ meaning ‘to cut piece off’ or ‘to
break the bulk’.

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•Retailing – a set of business
activities that adds value to the
products and services sold to
consumers for their personal
or family use

•A Retailer is a
businessman/business unit
that sells products
and/services to consumers for
personal or family use.

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RETAILING
• Retailing includes all the activities in selling goods or services directly
to final consumers for personal / non business use.

• A retailer or retail store is any business enterprise whose sales volume

comes primarily from retailing.

• Any organisation selling to final consumers – whether it is a

manufacturer, wholesaler or retailer – is doing retailing.

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 Examples of Retailers
• Retailers:
Walmart,
Amazon
www.amazon.com,
Carrefour,
Dmart,
Big Basket,

• Firms that are retailers and wholesalers - sell to other

business as well as consumers:
Office Depot, The Home Depot, United Airlines,
Bank of America, Costco, Metro
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 How Retailers Add Value - Functions
• Provide Assortment
Buy other products at the same time

• Break Bulk
Sell it in quantities customers want

• Hold Inventory
Buy it at a convenient place

• Offer Services
See it before you buy; get credit; layaway

• Increasing the Value of Products and Services

By providing assortments, breaking bulk, holding inventory, and providing services, retailers
increase the value that consumers receive from their products and services.

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 The Retailer’s Role in a Supply Chain

• A Supply Chain is a set of firms that make and deliver a given

set of goods and services to the ultimate consumer.

• Retailers are the final business units within a supply chain which
links manufacturers to consumers.

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Distribution Channel

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• https://www.shopify.com/enterprise/omni-channel-vs-multi-channel

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 Manufacturing, Wholesaling
and Retailing
• Vertical Integration
the channel
• Ex: retailer invests in wholesaling or manufacturing

• Types:
• Backward Integration
• Forward Integration

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 Manufacturing, Wholesaling
and Retailing

• Backward Integration – Retailer performs some distribution and

manufacturing activities

• Ex: JCPenney sells Arizona jeans (Private Label)

• Big Bazaar coming up with FBB brand (Apparel)

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Manufacturing, Wholesaling,
and Retailing
• Forward Integration
• Ex: Ralph Lauren (New York )

• Pantaloons, Titan (India)

• Large retailers engage in both wholesaling and retailing

• Ex: Wal-Mart, Lowe’s, Safeway, Brown Shoe Company

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Retail Progression-

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Growth Drivers for Retail

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INDIAN SCENARIO
INDIAN RETAIL SCENARIO
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 MAJOR RETAIL PLAYERS IN INDIAN MARKET:
• Future Group: Big Bazaar, Food Bazaar, Ezone, Future Bazaar, Central;
Hypercity (Now taken over by Reliance Retail but still facing court case and
heading towards dissolution)
• K Raheja Group: Shopper’s Stop, In orbit, Crossword
• Tata Group: Star Bazaar,Tanishq, Titan, West Side, Titan Eye, West Land..
• Landmark Group: Lifestyle (Headquaters in Dubai, tapping tier2 cities)
• Reliance: Reliance fresh, Reliance Digital, Reliance Jewels, Reliance Retail
etc…
• AV Birla Group: Pantaloon, R Mall Thane, More Store
• Subhiksha – Shut down
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CHALLENGES TO RETAIL DEVELOPMENT IN INDIA

• Retail not being recognized

• The high costs of real estate
• Faces very high stamp duties on transfer of property
• Lack of adequate infrastructure
• Multiple and complex regulations/licenses/certifications/taxation
system

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Dr. Anupamaa S. Chavan
Source: Delliote
INDIAN RETAIL SET TO BENEFIT FROM FDI POLICY

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The top 10 richest people in India in 2023 by Forbes India PUBLISHED: Jul 26, 2023
08:59:23 AM IST
 Retail Mix/Strategy

◈ The performance of the retailer depends upon the

planning and implementation of retail mix or strategy

◈ The elements of retail mix /strategy depict the

characteristics of the retailer.

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 Retail Mixes
◈ Retailers Use Different Retail Mixes
◈ – Merchandise: variety (breadth) / assortment (depth)
◈ – Location
◈ – Pricing
◈ - Communication Mix
◈ - Services
◈ – Store design, visual merchandising

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 Retailer Characteristics

◈ PRICE OF THE MERCHANDISE: Discount Pricing, Competitive

Pricing, Premium Pricing
◈ TYPES OF MERCHANDISE/SERVICES : Food items, Non
Food/General items, Consumer durables, Services
◈ VARIETY & ASSORTMENT: General Merchandising, Specialty
Merchandising
◈ CUSTOMER SERVICES: Self Service, Assorted Service, Full
Service
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 Merchandise Offering
Variety (breadth of merchandise): wide vs. narrow
– The number of merchandise categories

Assortment (depth of merchandise): deep vs. shallow

– The number of items in a category (SKUs)

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Types of Ownerships:

Independent/Single Store Establishments

Chain Stores
Franchising

Consumer Co-operative Stores

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 Exercise

Early in the morning when you get up and require a cup of coffee; what do
you do? Also mention the alternatives available for the same.

- Make the coffee at home

- Go to Starbucks

- Get an Automatic Coffee Maker with a timer so that the coffee is ready when you wake up

For all the above options you have to approach a retailer

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 Types of
Retailers

Store Non Store

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 Store Retailers

• Food Retailers

• Non Food/General Merchandise Retailers

• Service Retailers

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 Store Retailers

• 1. Convenience stores
Food Retailers •
•
2. Supermarkets
3. Supercentres
• 4. Warehouse Club

• 5. Departmental stores
• 6. Discount stores
Non Food/General • 7. Speciality stores
Merchandise • 8. Off-Price Retailers
• 9. Membership Club stores
Retailers • 10.Factory Outlets, Drug store
• 11. Cash and Carry

• 12.Personal care- Dry Cleaning, Beauty Salon, Health Centres

• 13. Entertainment/Recreation- Movie theatres, Golf Course, Clubs
Service Retailers
Dr. Anupamaa Chavan
Discotheques
• 14. Repair- Automobiles, Electronic goods/Appliances Repair 47
• Rented Goods services
 Direct Marketing

Direct Selling

E-Tailing

Catalogue/Mail order

Vending Machines

Kiosks

Tele-shopping

Direct Response retailing

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Airport retailing 48
 Services Retailing

• Intangibility

• Simultaneous Production and Delivery

• Perishability

• Inconsistency of the Offering

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 Services Offered
◈ Retailers differ in the services
they offer customers
□ EMS offers assistance in
selecting the appropriate kayak
and repairing them
□ Vs
□ Wal-Mart: doesn’t provide any
services

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 Prices and the cost of offering breadth and depth of
merchandise and services
• Stocking a deep and broad assortment (like EMS) is costly for
retailers.
Many SKUs

Because the retailer must have backup stock for each SKU in addition to
holding the inventory

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 Characteristics of Food Retailers

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 Conventional Supermarket
• Conventional supermarkets
• 30,000 SKU
• Emphasize Fresh Perishables
– Wegmans
• Target health conscious and ethnic
consumers
• Offer more private label brands
• Provide a better in-store experience

◈ Chef-crafted meals on the go at 54

EatZi’s
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 Supermarkets
• Limited Assortment
Supermarkets (extreme
value food retailers)
– 2000 SKU
– Offer one or two brands and sizes
– Designed to maximize efficiency
and reduce costs
– Offer merchandise at 40-60%
lower prices than conventional
supermarkets
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 Supercenters and Warehouse Clubs

Supercenters Warehouse Clubs

• Also known as Hypermarkets • Offer a limited and irregular assortment of
food and general merchandise with little
• The fastest growing retail service at low prices
category • Use low-locations, inexpensive store design,
• Large stores (185,000 square little customer service
feet) that combine a • Low inventory holding costs by carrying a
supermarket with a full-line limited assortment of fast selling items
discount store
• One-stop shopping experience

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 Convenience Store

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 Characteristics of
General Merchandise Retailers

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 Types of Competition
◈ Competition between same type of retailer is called Intratype Competition
□ Eg: One departmental store competes with another departmental store

◈ Competition between retailers having different formats is Intertype

Competition
□ Eg: Food items are now provided grocery store, discount store, supercenters and also a
drug store

When retailers offer merchandise not typically associated with their type of store such as
Apparel and Jewelry section added by Walgreens which is a drug store, this result in
Scrambled Merchandising.

Scrambled Merchandising increases intertype competition

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 Theories of Retailing

Environmental Theory
Cyclical Theory – Wheel of Retailing

Retail Life Cycle

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 Environmental Theory
Darwin's Theory of Evolution states that groups of organisms will undergo genetic changes over
time due to the process of natural selection, changing the genetics of a species until that species
is well adapted for its environment. He further says that organisms which are most fit for their
environment survive while unfit organisms die
‘survival of the fittest’
Retail environment :
Economic, Social, Political, Regulatory, Cultural and Demographic

Environmental Theory has taken a “Darwinian” approach and suggest that only retailers with the
most appropriate organizational structure/formats & those who adopt and adapt to change will
survive (Gist, 1968; Davidson et al. 1983; Brown 1987)

The major Environmental Factors:

1. Consumers
2. Competition
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3. Changing Technology
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 Wheel of Retailing
by Professor Malcolm P. McNair in 1958

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 Retail Life Cycle

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 Multi Channel Retailing

A multi-channel retailer is a retailer that sells

merchandise and/or services through more than one
channel. By using a combination of channels, retailers
can exploit the unique benefits provided by each
channel to attract and satisfy more customers.

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 Multi-Channel
Format

Store Non Store

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 Multichannel Retailing

Store: Brick & Mortar

Non Store: Internet, Catalogs and Direct Mail, Direct Selling,

Television Home Shopping & Automated Retailing

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 Why are Retailers Using Multiple Channels
to Interact with Customers?
Consumers buy
What they want,
When they want,
Wherever they want

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Why are Retailers Using Multiple Channels
to Interact with Customers?
Consumers buy what they want,
When they want,
Custom
er Wherever they want

store kiosk catalog Call center Web/E-mail mobile

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Why are store-based retailers evolving into multi-channel
retailers?
◈ Sales through an electronic channel are growing rapidly
◈ Adding an electronic channel creates immediate possession utility
◈ Multi-channel retailers can attract more customers and satisfy
existing customers better
◈ The growth of sales in stores is declining

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 Today’s empowered consumers live in a multi-channel world –
research products online, buy offline, and demand service everywhere
Web & Email
Consumers buy • 24x7
what they want, • Visual
when they want,
Call Center
wherever they want
• Convenient
• Immediate
Brick & Mortar
• Touch/Feel
• Experience driven

Kiosks
• Visual
• Convenient
Customer
Handheld
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• Immediate
 Benefits Provided by Different Channels

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 Unique Benefits
Provided by Store Channel
◈Browse in the Store
◈Touch & Feel the products
◈Personal service
◈Cash and credit payment
◈Entertainment and social (c) Brand X Pictures/PunchStock

interaction
◈Immediate gratification

◈Risk Reduction
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 Benefits Provided by Catalog Channel

Convenience
Information

Safety

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Hoby Finn/Getty Images
 Internet Channel
▪ Broader Selection
▪ More and Better Information to Evaluate Merchandise
- Browse as Much as You Want
- Full motion Video
• Personalization
– Information is tailored to Individual consumers to help them make quicker and better
purchase decisions
– Customized Information -- Side By Side Comparisons, Full Motion Video
– Try It On Virtually

• Information for Solving Problems, Not Just Merchandise Characteristics

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– Virtual Communities
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 Benefits of Multichannel Retailing
◈Traditionalstore-based and catalog retailers are placing more
emphasis on their electronic channels and evolving into multichannel
retailers.
□ E-channel gives a way to overcome limitations of existing format
□ With electronic channel, retailers can reach out to new markets
□ Builds share of wallet
□ E-channel enables retailers to give insights into customers’ shopping behaviors

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 Benefits of Multichannel Retailing

◈Gaining Insights into Consumer Shopping Behavior

◈Expanding Market Presence

◈Building a Strategic Advantage

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 Benefits of Multichannel Retailing

Overcoming the
Limitations of an Existing
Format

Low-Cost, Consistent
Increased Assortments Current Information
Execution
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 Shopping in the Future

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 Decision Variables for Retailers
Customer
Service

Store Merchandis
Design e Type,
and Variety &
Display Assortment

Retail Mix

Pricing Location

Communication
Mix
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 Exercise

As a retailer critically evaluate each channel in

Multichannel retailing.

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 Exercise

Enumerate the economic and social significance

of retailing.

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 Retail Shopping Behavior

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 A: Need Recognition: Types of needs
• Associated with work
• Shopping is deliberate and efficient
Utilitarian Needs • Retailers can satisfy these needs by providing information
and making shopping easy and effortless

• Associated with recreation, emotions and entertainment

• Desire for excitement,
Hedonic Needs • Retailers can satisfy these needs by including stimulation,
social experience, adventure, power and status, self-reward,
learning new trends

Conflicting Needs (Hedonic/Utilitarian)

Cross shopping (pattern of buying both premium and low priced merchandise) 84

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 B. Information Search
• the nature anFactors influencing the amount of information searched for include:
• (1) the use of the product being purchased,
1. Amount of • (2) characteristics of the individual customer, and
Information • (3) aspects of the market and buying situation in which the purchase is made.
Searched

• Internal sources are information in a customer’s memory such as the names, images, and past
experiences with different stores.
• External sources are information provided by ads and other people. When customers feel that
2. Sources their internal information is inadequate, they turn to external information sources.
of
Information • The Internet

• A good selection of merchandise

• Services provided by retailers can also limit the search.
3. Reducing • Everyday low pricing (EDLP)
the • Credit
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Information
Search
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 C. Evaluation of Alternatives:
The Multi-Attribute Attitude Model

•The multi-attribute attitude model provides a

useful way for summarizing how customers
use the information they have about alternative
products, evaluate the alternatives, and select
the one that best satisfies their needs.
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 C. Evaluation of Alternatives:
The Multi-Attribute Attitude Model

Customers see a retailer, product, or service as a

collection of attributes or characteristics

Customer’s evaluation of a retailer, product, or service is

based on
- Its performance on relevant attributes
- The importance of those attributes to the customer
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Information about Retailers Selling Groceries

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Information about Retailers Selling Groceries

10 8 6

3 5 10

9 7 5

4 4 8

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Information about Retailers Selling Groceries

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 Weightage given for every parameter by different
consumers
◈ 1. Young Single Women
◈ 2. Parents with 4 children
Characteristics Young Single Women Parents with 4 Children

4 10

10 4

5 8

9 2

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 Information Used in Evaluating Retailers

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Information Needed to Use Multi-Attribute Model

Alternative Consumer Considering

Characteristic/Benefits Sought in Making Store and

Merchandise Choices

Ratings of Alternative Performance on Criteria

Importance of Criteria to Consumer 93

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 Getting into the Consideration Set

• Consideration set: the set of alternatives the

customer evaluates when making a selection
• Retailers develop programs influencing top-of-mind
awareness
– Get exposure on search engines like Google
– Try to be the top of the page
– More stores in the same area (e.g., Starbucks)
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Methods for increasing the chance of store visit after getting
into the Consideration Set

• Increase Performance Beliefs of Your Store

• Decrease Performance Beliefs About Competitor

• Increase the Importance of Weight of Attributes on which You Have

an Advantage

• Add a New Benefit on which You Excel

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 Purchasing Merchandise or Services

Post purchase Evaluation

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 Types of Buying Decisions

Extended Problem Solving

High financial or Social Risk

Limited Problem Solving

Some Prior Buying Experience

Habitual Decision Making

Store Brand, Loyalty 97

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 Social Factors
Influencing the Buying Decision Process

Family

Reference Groups

Culture

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Criteria for Evaluating Market

Segments
Actionable
Retailer should
know what to do to
satisfy needs of the
customers in the
segment

Identifiable
Retailer is able to determine
which customers are in the
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segment
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Criteria for Evaluating Market

Segments
Substantial
Market segment must be larger
enough or its buying power
significant to generate sufficient

Reachable
Retailer can target promotions
and other elements of the retail
mix to customers in the segment

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Approaches for Segmenting

Markets

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Thank you
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