Managing Retailing

INSTITUTE OF INFORMATION TECHNOLOGY & MANAGEMENT

(IITM)

Submitted in partial fulfilment of the requirements for the

award of the degree of

Bachelor of Business Administration (BBA)

To

Guru Gobind Singh Indraprastha University, Delhi

Guide: Submitted by:

(Mr.Anmol Poddar ) (Aarushi Singh)

Roll No.01521101709

Institute of Information Technology & Management,

New Delhi – 110058

Batch (2008-2011)

ACKNOWLEDGEMENT

I am very grateful to my guide Mr. Anmol Poddar without whom this

project would not have been possible. My guide’s provisions of proper

guidelines helped me a lot. The help provided by various councils,

books, and internet cannot be expressed in words.

I wish my sincere gratitude to my parents n friends who supported me

in every little way they could, to complete the work.

I wish my sincere, whole-hearted thanks to all those who helped me in

making this project.

Institute of Information Technology and Management

Paper Title-Personality Development & Communication Skills-III

(Minor Project Report)

Paper Code-211 Assignment-MM: 18

Topic: Managing Retailing

The topic must cover the following aspects:-

Meaning and Definition

Concept and scope of Retailing

Position of Retailers in modern marketing

Functions of retailers

Types of wholesalers

Services rendered by retailers

Kinds of retailers

Marketing decisions by retailers

Types of Retail Distribution Outlets

Small scale retailers

Departmental stores

Multiple shops or chain stores

Mail order house

Consumer’s cooperative store

Supermarket

Include relevant examples and figures in your assignment.

DEFINITION AND MEANING

Retailing consists of those business activities involved in the sale of

goods and services to consumers for their personal, family, or

household use.

Retailing consists of the sale of goods or merchandise from a very

fixed location, such as a department store, boutique or kiosk, or by

mail, in small or individual lots for direct consumption by the

purchaser. Retailing may include subordinated services, such as

delivery.

In commerce, a "retailer" buys goods or products in large quantities

from manufacturers or importers, either directly or through a

wholesaler, and then sells smaller quantities to the end-user. Retail

establishments are often called shops or stores. Retailers are at the end

of the supply chain.

The term "retailer" is also applied where a service provider services the

needs of a large number of individuals, such as a public utility, like

electric power.

The process of bringing the ultimate user to the main producer, through

a series of stages, where retailing is the last one. It is not limited to

quantities, but limited to the exact requirement of the ultimate user.

Therefore, bringing about operational efficiency at this last stage, and

creating an environment so compelling that he looks nowhere else, is

"Retail Management"(RM).

RM- is an art, and necessitates employing several tools of logistics

management for a complete end user satisfaction. RM - is getting to

know the final user on behalf of the producer. RM - is a process of

facilitation.

What is retailing?

Retailing involves selling products and services to consumers for their

personal or family use.  Department stores, like Burdines and Macy's,

discount stores like Wal-Mart and K-Mart, and specialty stores like

The Gap, Zales Jewellers are all examples of retail stores.  Service

providers, like dentists, hotels and hair salons, and on-line stores, like

Amazon.com, is also retailers.

CONCEPT OF RETAILING

The distribution of consumer products begins with the producer and

ends at the ultimate consumer. Between the producer and the consumer

there is a middleman-the retailer, who links the producers and the

ultimate consumers. Retailing is defined as a conclusive set of

activities or steps used to sell a product or a service to consumers for

their personal or family use. The word ‘retail’ is derived from the

French work retailer, meaning ‘to cut a piece off’ or ‘to break bulk’.

Manufacturer Wholesalers Retailers Consumer

A retailer is a person, agent, agency, company, or organisation which is

instrumental in reaching the goods, merchandise, or services to the

ultimate consumer. Retailers perform specific activities such as

anticipating customer’s wants, developing assortments of products,

acquiring market information, and financing. A common assumption is

that retailing involves only the sale of products in stores. However, it

also includes the sale of services like those offered at a restaurant,

parlour, or by a car rental agencies. The selling need not necessarily

take place through a store. Retailing encompasses selling through the

mail, the internet, door-to-door visit s—any channel that could be used

to approach the consumer. Retailing has become such an intrinsic part

of our day today lives that it is often taken for granted. Why has

retailing become such a popular method of conducting business? The

answer lies in the benefits a vibrant retailing sector has to offer-an

easier access to a variety of products, freedom of choice and higher

levels of customer service.

As we all know, the ease of entry into retail business results in fierce

competition and better value for customer. To enter retailing, is easy

and to fail is even easier. Therefore, in order to survive in retailing, a

firm do a satisfactory job in its primary role i.e., catering to customers.

SCOPE OF RETAILING

Retail is clearly the sector that is poised to show the highest growth in

the next five years. The sector is set for a revolution, as both the

present players and new entrants are gearing up to explore the market.

This sector contributes 10% of India's GDP and the current growth rate

is 8.5%. The present size of the organized retailing sector is

approximately 3% and is expected to grow to 25-30% by the year

2010. There are about 300 new malls, 1500 supermarkets and 325

departmental stores currently under construction. Many players are

coming up with huge investments, due to which the present 12 million

mom-and-pop shops and kirana stores fear losing their business. Most

predictions say that the sector might reach to US$ 400-600 billion by

the year 2010.

Global retail giants such as Wal-Mart, Tesco, Germany's Metro AG

and many others are ready to enter the retail markets. The rising

demand of branded products and increase in purchasing power have

lured these companies to enter the market.

The Future of Retailing

Advances in technology, like the Internet,

have helped make retailing an even more

challenging and exciting field in recent years. 

The nature of the business and the way

retailing is done are currently undergoing fundamental changes. 

However, retailing in some form will always be necessary.  For

example, even though the Internet is beginning to make it possible for

manufacturers to sell directly to consumers, the very vastness of

cyberspace will still make it very difficult for a consumer to purchase

every product he or she uses directly.  On-line retailers, like

Amazon.com, bring together assortments of products for consumers to

buy in the same way that bricks-and-mortar retailers do. 

In addition, traditional retailers with physical stores will continue to be

necessary.  Of course, retailers who offer personal services, like hair

styling, will need to have face-to-face interaction with the consumer. 

But even with products, consumers often want to see, touch and try

them before they buy.  Or, they may want products immediately and

won't want to wait for them to be shipped.  Also, and perhaps most

importantly, in many cases the experience of visiting the retailer is an

important part of the purchase.  Everything that the retailer can do to

make the shopping experience pleasurable and fun can help ensure that

customers come back.

With new boom in the retail industry, the country has identified new

scope for retail sector development. The already revolutionizing

urbanization and growing demand for finished products has

necessitated development of new space for retail outlets.

Retail is clearly the sector that is poised to show the highest growth in

the next five years. The sector is set for a revolution, as both the

present players and new entrants are gearing up to explore the market.

This sector contributes 10% of India’s GDP and the current growth rate

is 8.5%. The present size of the organized retailing sector is

approximately 3% and is expected to grow to 25-30% by the year

2010. There are about 300 new malls, 1500 supermarkets and 325

departmental stores currently under construction. Many players are

coming up with huge investments, due to which the present 12 million

mom-and-pop shops and kirana stores fear losing their business. Most

predictions say that the sector might reach to US$ 400-600 billion by

the year 2010.

Estimates and Predictions:

The industry is estimated to be more than US$ 400 billion by a study of

McKinsey. The Economist Intelligence Unit (EIU) estimates the retail

market in India to increase to US$608.9 billion in 2009 from US$394

billion in2005.

A KPMG report says that the organized retail would grow at a higher

rate than GDP in the next five years.

The retail sector would generate employment for more than 2.5 million

people by the year 2010, says an analysis by Ma Foi Management

Consultants Ltd.

Benefits of FDI in Retail Sector:

Higher competition would lead to higher quality in products and

services.

Better lifestyle as better products would be introduced.

Exports would increase due to greater sourcing of major players.

Investment in whole supply chain would increase.

Technology would be upgraded in terms of logistics, production, and

distribution channels.

The markets of the sector would flourish and develop.

Employment would increase and skills & manpower will develop.

A strong retailing sector would promote tourism.

Economies of scale would help lower consumer prices and increase the

purchasing power of the consumer.

In the long term it will be beneficial in the up-gradation of agriculture

and small scale & medium scale industries.

Indian Consumerism:

The Indian consumer behaviour is rapidly changing with a shift in new

generation’s preference towards luxury commodities.

A glimpse of the International Retail:

· One of the world’s largest industries exceeding US$ 9 trillion

· 47 global fortune companies & 25 of Asia’s top 200 companies are

retailers

· Dominated by developed countries

· US, EU & Japan constitute 80% of world retail sales.

· Biggest player in India is Pantaloon Retail India Limited.

Global retail giants such as Wal-Mart, Tesco, Germany’s Metro AG

and many others are ready to enter the retail markets. The rising

demand of branded products and increase in purchasing power has

lured these companies to enter the market.

Leading Indian Retailers:

Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd.,

Food Bazaar, Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World

Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop,

Subhiksha, Titan Industries, Trent and the new entrants penetrating the

market soon will include Reliance Retail Ltd, Wal-Mart Stores,

Carrefour, Tesco, Boots Group, etc.

RETAILING IN INDIA

ORIGIN IN INDIA

Although retailing does not enjoy the status of an industry, the sheer

size it will develop into, is grabbing attention. The origin of retail in

India dates back to ancient times when the melas and mandis made

their presence felt. The changing socio economic patterns coupled with

the consumption increase led to the emergence of the convenience

stores, which became a part of the civic planning. The next step was

the commercial plazas, which comprised merely shops offering a

variety of goods and services clubbed together. The inconveniences

caused by lack of parking place, toilets and maintenance, ushered in the

entry big international brands opening their exclusive showrooms. The

opening up of the economy only fuelled this globalization. There are,

however, certain bottlenecks as well; the scarcity of space, coupled

with the stringent provisions of the Rent Control Act, act as a

dissuasive factor for many players to initiate operations in the main

markets. This also explains why the Raheja’s forayed into their retail

venture-Shoppers’ Stop.

RETAILING IN INDIA

The retail industry in India is largely unorganized and predominately

consists of small, independent, owner-managed shops. Retailing is

India’s largest industry in terms of contribution to GDP (Gross

Domestic Product). There are around 5 million retail outlets in India.

There are also an unaccounted number of low cost Kiosks (tea stalls,

snack centres, barber shops) and pushcarts mobile vendors. Total retail

sales area in India was estimated at 328 million sq. mt. In 2001, with an

average selling space of 29.4 sq. mt. per outlet. In India, the per capita

retailing space is about 2 sq. ft., which is quite low in comparison to

the developed economies.

In 2000, the global management consultancy AT Kearney put retail

trade at Rs. 400,000 crore, which is expected to increase to Rs.800, 000

crore by the year 2005-an annual increase of 20%. According to a

survey by AT Kearney an overwhelming proportion of the Rs. 400, 000

crore retail markets are unorganized. In fact, only Rs. 20, 000 crore

segment of the market is organized. There is no integrated supply chain

management outlook in the Indian traditional retail industry.

Food sales constitute a high proportion of the total retail sales. The

share was 62.7% in 2001, worth approximately Rs. 7, 039.2 billion,

while non- food sales were worth Rs.4189.5 billion. However, the non-

food retailing sector registered faster year-on-year growth than the food

sales sector. The trend to market private labels by a specific retail store

is catching on in India as it helps to improve margins. The turnover

from private labels by major retail chains was estimated at around

Rs.1200 million in 2000.

COMPOSITION OF URBAN OUTLETS

RETAIL OUTLET COMPOSITION

Grocers 34.7%

Cosmetic stores 4.0%

Chemist 6.3%

Food stores 6.6%

General stores 14.4%

Tobacco, pan stores 17.0%

Others 17.0%

EMERGENCE OF ORGANISED RETAILING

Organized retailing in India represents a small fraction of the total

retail market. In 2001, organized retail trade in India was worth Rs.11,

228.7 billion. The modern retail formats are showing robust growth as

several retail chains have established a base in metropolitan cities,

especially in south India and are spreading all over India at a rapid

pace. However, space and rentals are providing to be the biggest

constraints to the development of large formats in metropolitan cities

since retailers are aiming at prime locations.

In urban India, families are experiencing growth in income but dearth

of time. Women are taking up corporate jobs, which is adding to the

family’s income and leading to better lifestyles rising incomes has led

to an increased demand for better quality products while lack of time

has led to a demand for better quality products while lack of time has

led to a demand for convenience and services.

The demand for frozen, instant, ready-to-eat food has been on the rise,

especially in the metropolitan and large cities in India. There is also a

strong trend in favour of one-stop shops like supermarkets and

department stores.

Rural India continues to be serviced by small retail outlets. Only 3.6

million outlets cater to more than 700 million inhabitants of rural India.

Here, provision stores, paan shops and ration shops are the most

popular vehicles of retailing. Apart from this, there are periodic or

temporary markets, such as haats, peeth and melas that come up at the

same location at regular time intervals.

The McKinsey report predicts that FDI will help the retail businesses to

grow to US $ 460-470 billion by 2010. There has been a strong

resistance to foreign direct investment (FDI) in retailing from small

traders who fears that foreign companies would take away their

business, lead to the closure of many small businesses and result in

large-scale unemployment. Therefore, government has discouraged

FDI in the retail sector. At present, foreign retailers can enter the

retailing sector only through restricted modes. Global players in the

retail segment have been entering the market for a while now. Players

that entered before the easing of restrictions on FDI in retail had to

come through different modes, such as joint ventures where Indian

partner is an export house (Total Health Care); franchising/local

manufacturing/sourcing from small-scale sector (McDonald’s, Pizza

Hut); cash and carry operations (Giant) and licensing (Marks &

Spencer’s).

The main condition for organised retailing is that the retailer should be

able to manage and influence the supply chain variables in a

commercially viable and sustainable manner. The organized retailer

should be able to, through diversified risks and volume sales command

huge concessions on prices from the manufacturers. He should then be

in a position to allow a trickle down of this advantage to consumers out

of his saved costs.

CURRENT SCENARIO

The Indian population is whooping 1 billion with 75% of the people

living in villages and small towns. It is only natural that the agricultural

sector is the biggest employer with its contribution to GDP pegged at

26.7%. Retail in India’s largest industry after Agriculture with around

20% of the economically active population engaged in it and

generation 10% of India’s GDP. The growth of the efficient small store

culture can be attributed to the 6 million villages distributed across the

length and breadth of the country. The 12 million retail outlets in India

are the highest in the world. In interesting to note, that the Urban

Population although just 25% of the total, is an astounding 250 million

in size is growing at healthy rate of 7% per annum. The chief driver of

growth in the retail sector has been the consumer, with the spending

increasing at an average of 11% per annum. The core and the Lower

middle have increased their share in the Growth.

The Indian consumer’s shopping needs are and traditionally have been

fulfilled by Kirana sores, Kiosks, street vendors and high-street shops

for consumer durables and luxury goods. To cater to this, each city

developed its own identity and shopping cluster, for instance in Pune

there is MG Road, Bangalore has Brigade Road and Commercial

Street, Delhi has Connaught Place, Karol Bagh and South Extension.

India will have 358 malls by 2007. Droves of middle-class Indians

have broken off their love of traditional stand-alone shops that have

ACs, organized parking lots and other public amenities, according to a

study by a fashion magazine Image. At present (September 23, 2005).

In India we have 96 malls, covering an area of 21.6 million sq ft. And

by year end the count will shoot up to 158 malls. It will cover 34

million sq ft area.

DRIVERS OF CHANGE IN RETAILING

Changing demographics and industry structure

Expanding computer technology

Emphasis on lower costs and prices

Emphasis on convenience and service

Focus on products

Added experimentation

Continuing growth of non-store retailing

In today’s competitive environment retailers have redefined their role

in general, and in the value chain in particular. Retailers act as

gatekeepers who decide on which new products should find their way

to the shelves of their stores. As a result, they have a strong say in the

success of the product or service launched by a business firm. A

product manager of household appliances claimed, ‘Marketers have to

sell a new product several times, first within the company, then to

retailer and finally to the user of the product.’

It is a well-established fact that manufacturers need to sell their

products through retail formats that are compatible with their business

strategy, brand image, and market profile in order to ensure a

competitive edge. The role of retailers in the present competitive

environment has gained attention from manufacturers because external

parties such as market intermediaries and supplying partners are

becoming increasingly powerful. It is necessary for marketers of

consumer products to identify the need and motivations of their

partners in the marketing channel. This is especially true in the case or

new products.

The increasing numbers of product categories followed by multiple

brands in each category complicate decision-making for both

manufacturers and market intermediaries. Retailers want of optimize

sales within the limited shelf space, governed by their individual sales

philosophy. Retailers undertake risk in selection of goods to be sold

given the following major concerns:

Selling space available is relatively fixed and returns maximum profits.

If such space is occupied by merchandise that is not moving, it will not

result in profit. The retailer may have to resort to substantial price

reductions in order to get rid of the unsold stock.

Retailing is a dynamic industry-constantly changing due to shifts in the

needs of the consumers and the growth of technology. Retail formats

and companies that were unknown three decades ago are now major

forces in the economy. Therefore, the challenges for retail managers

the world over are increasing-they must take decisions ranging from

setting the price of a bag of rice to setting up multimillion dollar stores

in malls. Selecting target markets, determining what merchandise and

services to offer, negotiating with suppliers, training salespeople-these

are just a few of the many functions that a retail manager has to

perform on a perpetual basis.

The world over retail business is denominated by smaller family run

chain stores and regionally targeted stores but gradually more and more

markets in the western world are being taken over by billion dollar

multinational conglomerates, such as Wal-Mart, Sears, McDonald’s,

Marks and Spencer. The larger retailers have managed to set up huge

supply/distribution chains, inventory management systems, financing

pacts and wide-scale marketing plans. In the backdrop of globalization,

liberalization and highly aware customers, a retailer is required to make

a conscious effort to position himself distinctively to face the

competition. This is determined to a great extent by the retail mix

strategy followed by accompany to sell its products.

FUNCTIONS OF RETAILERS

As the final link between consumers and manufacturers, retailers are a

vital part of the business world.  Retailers add value to products by

making it easier for manufactures to sell and consumers to buy.  It

would be very costly and time consuming for you to locate, contact and

make a purchase from the manufacturer every time you wanted to buy

a candy bar, a sweater or a bar of soap. Similarly, it would be very

costly for the manufactures of these products to locate and distribute

them to consumers individually. 

By bringing multitudes of manufacturers and consumers together at a

single point, retailers make it possible for products to be sold, and,

consequently, business to be done. 

In brief they provide us with following functions:

Provides personal services to all.

Provides two-way information - The retailer buys a variety of products

from the wholesaler or a number of wholesalers. He thus performs two

functions like buying of goods and assembling of goods.

Facilitate standardisation and grading - He resorts to standardization

and grading of goods in such a way that these are accepted by the

customers.

Undertake physical movement and storage of goods - The retailer

performs storing function by stocking the goods for a consumer.

Assembles goods from various sources.

Stock goods for ready supply to buyers- He makes arrangement for

delivery of goods and supply valuable market information to both

wholesaler and the consumer.

Extend credit facility - He develops personal contact with the

consumers and gives them goods on credit.

Create demand by window display etc.

He bears the risks in connection with Physical Spoilage of goods and

fall in price. Besides he bears risks on account of fire, theft,

deterioration in the quality and spoilage of goods.

TYPES OF WHOLESALERS

1. Merchant wholesalers:  These wholesalers own the products they

sell.  For example, a wholesale lumber yard that buys plywood from

the producer is a merchant wholesaler.  It actually owns - takes title to -

the plywood for some period of time before selling to its customers. 

About four out of five wholesaling establishments in the United States

are merchant wholesalers - and they handle about 59 percent of

wholesale sales.  Merchant wholesalers often specialize by certain

types of products or customers and they service relatively small

geographic areas.  And several wholesalers may be competing for the

same customers.  For example, about 3,000 specialized food

wholesalers compete for the business of restaurants, hotels, and

cafeterias across the United States.

2. General merchandise wholesalers:  These are service wholesalers

who carry a wide variety of non-perishable items such as hardware,

electrical supplies, plumbing supplies, furniture, drugs, cosmetics, and

automobile equipment.  These wholesalers originally developed to

serve the early retailers - the general stores.  Now, with their broad line

of convenience and shopping products, they serve hardware stores,

drugstores, electric appliance shops, and small department stores.

3. Single-line (or general-line) wholesalers:  These are service

wholesalers who carry a narrower line of merchandise than general

merchandise wholesalers.  For example, they might carry only food,

wearing apparel, or certain types of industrial tools or supplies.  In

consumer products, they serve the single- and limited-line stores.  In

business products, they cover a wide geographic area and offer more

specialized service.

4. Specialty wholesalers:  These are service wholesalers who carry a

very narrow range of products - and offer more information and service

than other service wholesalers.  A consumer products specialty

wholesaler might carry only health foods or oriental foods instead of a

full line of groceries.  Or a specialty wholesaler might carry only

automotive items and sell exclusively to mass-merchandisers. 

Specialty wholesalers often know a great deal about the final target

markets in their channel.  For example, Advanced Marketing is the

leading wholesale supplier of books to membership warehouse clubs. 

The company offers hardcover best sellers; popular paperbacks, basic

reference books, cookbooks, and travel books.  Consumers in different

geographic areas are interested in different kinds of books and that

affects what books will sell in a particular store.

5. Cash-and-carry wholesalers:  These wholesalers operate like

service wholesalers - except that the customer must pay cash.  Some

retailers, such as small auto repair shops, are too small to be served

profitably by a service wholesaler.  So service wholesalers set a

minimum charge - or just refuse to grant credit to a small business that

may have trouble paying its bills.  Or the wholesaler may set up a cash-

and-carry department to supply the small retailer for cash on the

counter.  The wholesaler can operate at lower cost because the retailers

take over many wholesaling functions.  And using cash-and-carry

outlets may enable the small retailer to stay in business.  These cash-

and-carry operators are especially common in less-developed nations

where very small retailers handle the bulk of retail transactions.

6. Drop-shippers:  These wholesalers own (take title to) the products

they sell - but they do not actually handle, stock, or deliver them. 

These wholesalers are mainly involved in selling.  They get orders -

from wholesalers, retailers, or other business users - and pass these

orders on to producers.  Then the producer ships the order directly to

the customers.  Because drop-shippers do not have to handle the

products, their operating costs are lower.  Drop-shippers commonly sell

products so bulky that additional handling would be expensive and

possibly damaging.

7. Truck wholesalers:  These wholesalers specialize in delivering

products that they stock in their own trucks.  By handling perishable

products in general demand - tobacco, candy, potato chips, and salad

dressings - truck wholesalers may provide almost the same functions as

full-service wholesalers.  Their big advantage is that they deliver

perishable products that regular wholesalers prefer not to carry.  Some

truck wholesalers operate 24 hours a day, every day - and deliver an

order within hours.  A 7-Eleven store that runs out of potato chips on a

busy Friday night doesn't want to be out of stock all weekend!

8. Mail-order wholesalers.  These wholesalers sell out of catalogs that

may be distributed widely to smaller industrial customers or retailers

who might not be called on by other middlemen.  These wholesalers

operate in the hardware, jewellery, sporting goods, and general

merchandise lines.  For example, Inmac uses a catalog to sell a

complete line of 3,000 different computer accessories and supplies. 

Inmac's catalogs are printed in six languages and distributed to

business customers in the United States, Canada, the United Kingdom,

Germany, Sweden, the Netherlands, and France.  Many of these

customers - especially those in smaller towns - don't have a local

wholesaler.

9. Producers' cooperatives.  These wholesalers operate almost as full-

service wholesalers - with the "profits" going to the cooperative's

customer-members.  Cooperatives develop in agricultural markets

where there are many small producers.  Examples of such

organizations are Sunkist (citrus fruits), Sunmaid Raisin Growers

Association, and Land O' Lakes Creameries, Inc.  Successful

producers' cooperatives emphasize sorting - to improve the quality of

farm products offered to the market.  Some also brand these improved

products - and then promote the brands.  For example, the California

Almond Growers Exchange has captured most of the retail market with

its Blue Diamond brand.

10. Rack jobbers:  These wholesalers specialize in nonfood products

sold through grocery stores and supermarkets - and they often display

them on their own wire racks.  Most grocers don't want to bother with

reordering and maintaining displays of nonfood items (housewares,

hardware items, and books and magazines) because they sell small

quantities of so many different kinds of products.  Rack jobbers are

almost service wholesalers - except that they usually are paid cash for

what is sold or delivered.

SERVICES RENDERED BY RETAILERS

Services provided by the retailers to the wholesalers and

manufacturers:-

They provide selling outlets to wholesalers and manufacturers.

They save the manufacturers from the inconvenience and expenses of

selling the goods in small lots to a large number of consumers.

They communicate the needs and desires of consumers to the

manufacturers.

They may also arrange for transportation of goods from the

wholesalers' godowns to the ultimate consumers.

They may also perform storage function by keeping stocks of goods.

Services provided by the retailers to the consumers:-

They anticipate the needs of consumers and accordingly assemble

goods of different varieties. Thus they satisfy their demands and

provide them a wide choice of goods.

They sort out goods supplied by the wholesalers and keep them in

convenient packages for the benefit of the consumers.

They even act as an advisor and guide to the consumers by bringing

new products to their notice and educating them about its diverse uses.

They keep the consumers informed about the changing trends in the

market about the different varieties of products.

They also provide other services to the consumers such as free home

delivery, after sale services, credit facility, etc.

KINDS OF RETAILERS

On the basis of ownership-

There are four basic legal forms of ownership for retailers:

1. Sole proprietorship: - The vast majority of small businesses start out

as sole proprietorships. These firms are owned by one person, usually

the individual who has the day-to-day responsibility for running the

business.

2. Partnership: - A partnership is a common format in India for carrying

out business activities (particularly trading) on a small or medium

scale. In a partnership, two or more people share ownership of a single

business.

3. Joint venture: - A joint venture is not well defined in the law. Unless

incorporated or established as a firm as evidenced by a deed, joint

ventures may be taxed like association of persons, sometimes at

maximum marginal rates. It acts like a general partnership, but is

clearly for a limited period of time or a single project.

4. Limited liability Company (public and private): - The Limited

Liability Company (LLC) is a relatively new type of hybrid business

structure that is now permissible in most states. The owners are

members, and the duration of the LLC is usually determined when the

organization papers are filed.

Classification of Retailers on the basis of Operational Structure

Retail businesses are classified on the basis of their operational and

organizational structure. Operational structure defines the key strategic

decision of retail entity, whether to hire employees and manage the

distributed sales function internally or to reach customers though

franchised outlets owned and operated by the local entrepreneurs.

Retail firms can be classified into five heads on the basis of their

respective operational structures:

1. Independent retail unit: - The total number of retailers in India is

estimated to be over 5 million in 2003. About 78% of these are small

family businesses utilizing only household labour. An independent

retailer owns one retail unit.

2. Retail Chain: - A chain retailer operates multiple outlets (store units)

under common ownership; it usually engages in some level of

centralized (or coordinated) purchasing and decision making.

3. Franchising: - Franchising involves a contractual arrangement

between a franchiser (which may be a manufacturer, a wholesaler, or a

service sponsor) and a retail franchisee, which allows the franchisee to

conduct a given form of business under and establishments name and

according to a given pattern of business.

4. Leased Department or Shop – in – Shop: - It refers to department in

a retail store that are rented to an outside party. Usually this is done in

case of department and specially stores and also at times, in discount

stores.

5. Co-operative Outlets: - Co-operative outlets are generally owned and

managed by co-operative societies. In this context the detailed example

of Kendriya Bhandar in India.

Classification of Retailers on the basis or Retail Location

Retailers have also been classified according to their store location.

Retailers can locate their stores in an isolated place and attract the

customers to the store on their own strength-such as a small grocery

store or paan shop in a colony, which attracts the customers staying

close by.

Classification of retailers on the basis of location

1. Retailers in a free-standing location: - Retailers located at a site

which is not connected to other retailers depend entirely on their

sore’s drawing power and on the various promotional tools to attract

customers. This type of location has several advantages including no

competition, low rent, and better visibility from the road, easy parking

and lower property costs. For example the Haldiram’s outlet on the

Delhi-Jaipur highway and the McDonald’s outlet on Delhi Ludhiana

highway.

2. Retailers in a Business- associated Locations:- In this case, a retailer

locates his store in a place where a group o retail outlets, offering a

variety of merchandise, work together to attract customers to their

retail area, and also compete against each other for the same customers.

3. Retailers in Specialized Markets: - Besides the above location-based

classification, we also have in India-retailers who prefer specialized

markets, particularly traditional independent retailers or chain stores. In

India, most of the cities have specialized markets famous for a

particular product category. For example, in Chennai, Godown Street is

famous for clothes, Bunder treet for stationary products, Usman Street

for jewellery, T Nagar for ready-made garments, Govindappan

naicleen street for grocery, Poo Kadia for food and vegetables.

4. Airport Retailing: - For quite some time, duty-free shops and

newsstands dominated the small amount of commercial space provided

at airports. Lately, serious efforts are being made to design new

airports facilities in order to incorporate substantial amounts of retail

space.

MARKETING DECISIONS BY RETAILERS

Today, retailers are looking for new marketing strategies to attract and

retain customers. Previously, it suffices was to offer people the

convenience of location, special or unique assortment good, better than

the competitor, service, and Internet presentations credit cards that

buyers can make purchases on credit. Now everything is different. At

many stores you will find quite the same range - trying to reach

maximum volume of sales, the manufacturers sell their products

wherever possible. Many stores cut its own set of services and shops

reduced prices, on the contrary, increased their number. People are not

going to pay for the same or similar mark more, especially if the

amount provided in this service is reduced. Not they need a credit card

of a shop, because bank cards now accepted almost universally.

All this leads to the fact that many retailers trade today are rethinking

their marketing strategies. Example, department stores, faced with

competition from specialized and trading at a discount store, started a

real war, trying to regain former popularity. Many of them have

historically located in the centre of cities, opening their offices in the

suburbs, where there is always space on the Parking, and higher

income families. Others are increasingly satisfied with the sale; rebuild

their stores, experimenting with trading by mail and tele marketing.

Superstores compete with supermarkets, and so have to open offices

with a large range and variety of goods, upgrade their facilities.

Supermarkets more money spent on activities sales promotion, moving

to “small” private brands, to reduce its dependence on marks on a

national scale.

One of the most important and most responsible decisions that have to

take a retailer associated with the target market. What customer

oriented shop: high, medium, low-income? Do buyers diversity, depth

of assortment, convenience? Yet will identify and describe the target

market, the retailer will not make informed decisions on assortment,

store environment, means and content of advertising, the price level.

Many companies do not have a specific target market. Trying meeting

the needs of a large number of different segments, they are not

satisfying either one of them. Some retailers target market determined

fairly accurately.

Retailers should periodically conduct market studies to monitor the

achievement and satisfaction targets consumers.

TYPES OF RETAIL DISTRIBUTION OUTLETS

Small-scale retailers: - are those retailers whose scale of operation is

restricted to a small segment of the market and to a narrow range of

products. They generally hold small stocks of the products of regular

use. Such retailers are very large in number but account for a small

portion of the total retail business. But, small-scale retailing is a very

common, simple and flexible way of distributing the products to the

final consumers. It incurs low operating costs and is usually owned and

operated by a proprietor. The most important feature is that the small-

scale retailers have a direct and personal contact with their customers.

This form of retailing faces the problems of small capital, lack of

professionalism and low purchasing power.

The two prevalent forms of small scale retailing in India are:-

Itinerants or Mobile traders: - are those retailers who carry

on their business by moving from place to place for selling the

products and have no fixed business premises. They change their place

of business according to their convenience and sales prospects. They

serve either at the consumer's doorsteps or on busy places frequently

visited by the customers. They do not have any particular line of

business and carry very little stock of those goods. They save time and

efforts of customers in buying articles of ordinary use. The hawkers

and pedlars; cheap jacks; market traders and street sellers fall under

this category.

Fixed Shop Retailers: - are those retailers which have fixed

business premises and operate through unit stores or small shops

located in residential areas or markets. They mainly include: - (i) street

stalls: - are the small shops on the roadside, street-crossing, bus stops,

etc. They sell a limited variety of products of regular use like

stationery, grocery, etc; (ii) dealers of second hand goods: - are

engaged in purchase and sale of used goods like books, clothes, etc;

(iii) general stores or variety stores: - are the shops which deal in all

types of general consumer goods of regular use like bread, butter, paper

and pencils, etc.They are set up in residential areas or busy markets.

They provide services like goods on credit and home delivery to their

customers; (iv) speciality shops: - are the shops which deal in only one

or two special types of goods. They are generally located in shopping

centres. For example, chemist shops, grocery shops, readymade

garments shop, sweets shop, etc.

Large-scale Retailers: - are those retailers whose scale of operation

extends to a large segment of the market and to a wide range of

products. They have a fixed line of business in which they have

invested huge capital. Such retailers are not very large in number. This

form of retailing involves high operating costs and lacks personal

contact with the customers. But it involves more of professionalism in

selling the products through the use of various promotional techniques

like advertising, publicity, sales promotion, etc. The various forms of

large scale retailers are:-

Departmental stores: - are large scale retail establishments

comprising of a number of departments in the same building. All its

departments are centrally controlled but each forms a complete sales

unit in itself and specialises in a particular line of product. They offer a

wide choice of products to the customers under one roof. They also

provide many amenities for customer's convenience such as

restaurants, car parking, recreation rooms, and post and telegraph

offices and so on. Such stores are generally located in central places of

big cities so that they can be easily accessible to the customers.

Supermarkets: - are large scale retail shops operating at lower costs.

They sell a wide variety of consumer goods of regular use such as food

items, groceries,etc at one place. They sell goods at lower prices than

the departmental stores. Customers select the goods themselves without

salesman's assistance. It is also called self-service stores. But, they do

not provide additional facilities to their customers.

Multiple Shops or chain stores:- are a group of retail stores of

the same type under one common ownership and centralised

management but are located at various locations. All of them deal in

similar range of products and sell the same standardised products at the

same terms and conditions. The goods dealt are generally meant for

everyday use and are readily acceptable to all kinds of customers. They

offer goods at lower prices as they enjoy economies of bulk buying.

Mail order houses: - are those retail trading establishments

which receive their orders by mail and deliver the goods by parcel or

post express. The post office is their main channel of distribution.

Orders from customers may be secured by advertising in newspapers or

journals or through telephone contacts. But this type of retailing is non-

personal and without any face-to-face contact between buyers and

sellers. However, it helps the consumers to get their requirements at

their own place and thus saves their time and expenses.

Consumer cooperative stores: - are the cooperative stores

which are owned and operated by the consumers themselves. They are

incorporated as an association under the cooperative societies act. The

membership of such stores is voluntary and capital is subscribed by the

members themselves by purchasing shares of a small denomination.

They purchase their requirements of goods in bulk from manufacturers

and wholesalers and sell them to its members at lower prices. The aim

of such cooperative stores is to render service to its members and not to

maximise profits.

Automatic vending machines: - is a new and complementary

form of retailing operated by inserting coins or tokens into the machine

by the buyers. In return, buyers receive a specified quantity of the

product from the machine. These are used to sell prepacked and low

cost products of mass consumptions like beverages, tickets, etc. This

form of retailing can sell goods at places and at times where other types

of retailing are not convenient or economical. For example, mother

dairy sells milk through such vending machines.

RELEVANT EXAMPLE

Big Bazaar: the Indian wall-mart (organised retailer)

Pantaloon retail (India) limited is today organised as one of the

pioneers in the business of organised retailing in the country with a

turnover of Rs 400 crores. The company is headquartered in Mumbai

with zonal offices at Kolkata, Bangalore and Gurgaon (delhi). It has 4

kinds of stores: 14 pantaloon family stores, 7 big bazaar discount

hypermarkets, 6 food bazaar stores with over 6.5 lakh sq.ft retail space

across Kolkata, Mumbai, Pune, Hyderabad, Bangalore, Bagpur,

Ahmadabad, Kanpur, Chennai, and Delhi.

Pantaloon retail India limited is the flagship company of the pantaloon

group promoted bt Mr. Kishore Biyani. It has been one of the pioneers

in organized retailing in India.

Pantaloon has come up with an excellent revenue model, focussing on

‘value for money’ segment. Pantaloon plans to target the upper middle

and the middle class segment, which forms the large chunk of Indian

population. This segment is very price conscious and always looks out

for value for money.

Pantaloon successfully launched its discount store chain, which targets

the large and growing upper-middle and middle class of Indian society.

Big Bazaar has strong own brand names in its portfolio across product

categories. The brands include Pantaloon, John Miller and Bare.

BIBLIOGRAPHY

BOOKS:

Retailing Management by Swapna Pradhan

Retailing Managemnet by Barton A Weitz

SITES:

www.google.com

www.msn.com