recent trends in retail, a project report
DESCRIPTION
a project report on recent trends in retail industry, especially Indian retail industryTRANSCRIPT
1)Introduction
Before understanding the concept of retail, let us first go through few
terminologies.
Market - Any system or place where parties are engaged in exchange of either
goods or services is called as market. The parties are often called as buyers
and sellers. The seller offers his goods or services to the buyer who in return
purchases it in exchange of money.
Goods - Tangible (things which can be seen and touched) physical products
which are transferred from a seller to the buyer (consumer) to fulfill the
latter’s need are called as goods.
Jack owned two laptops which he sold to Mike. In this case Jack is the seller
while Mike is the buyer. Laptops are the goods which were earlier in Jack’s
custody and now belong to Mike.
What is Retail?
Retail involves the sale of goods from a single point (malls, markets,
department stores etc) directly to the consumer in small quantities for his
end use. In a layman’s language, retailing is nothing but transaction of goods
between the seller and the end user as a single unit (piece) or in small
quantities to satisfy the needs of the individual and for his direct consumption.
Let us understand the concept with the help of an example.
Tim wanted to purchase a mobile handset. He went to the nearby store and
purchased one for himself.
In the above case, Tim is the buyer who went to a fixed location (in this case
the nearby store). He purchased a mobile handset (Quantity - One) to be used
by him.
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The store from where Tim purchased the handset must have shown him
several options for him to select one according to his budget and need.
From where do you think the store owner (also called the retailer) purchased
all the handsets?
Here the manufacturers and the wholesalers come into the picture.
The retailers purchase goods in bulk quantities (huge numbers) to be sold to
the end-users either directly from the manufacturers or through a wholesaler.
The Supply chain
Manufact
urers
................
........
Retail
ers
...........
.....
End
User
(Consu
mer)
Wholesal
ers
Manufacturers - Manufacturers are the ones who are involved in production
of goods with the help of machines, labour and raw materials.
Wholesaler - The wholesaler is the one who purchases the goods from the
manufacturers and sells to the retailers in large numbers but at a lower price. A
wholesaler never sells goods directly to the end users.
Retailer - A retailer comes at the end of the supply chain who sells the
products in small quantities to the end users as per their requirement and need.
The end user goes to the retailer to buy the goods (products) in small
quantities to satisfy his needs and demands. The complete process is also
called as Shopping.
Shopping - The process of purchasing products by the consumer is called as
shopping. However there are certain cases where shopping does not always
end in buying of products. Sometimes individuals do go for shopping but
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return home empty handed. Such a shopping is merely for fun and is called
window shopping. In window shopping, individuals generally go to the
market, check out various options and their prices but do not buy anything.
This kind of shopping helps to break the monotony.
2)OBJECTIVE OF THE STUDY
To analyse the changing nature of Indian retail industry
To view the current problems and prospects of Indian retail industry
To evaluate a performance of Inventory management and Operations of
current retail formats.
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3) TYPES OF RETAIL FORMATS IN INDIA
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 fulfil all their shopping needs.
Merchandise:
Electronic Appliances
Apparels
Jewellery
Toiletries
Cosmetics
Footwear
Sportswear
Toys
Books
CDs, DVDs
Examples - Shoppers Stop, Pantaloon
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.
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Merchandise:
Almost same as department store but at a cheaper price.
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.
Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
Fruits
Soft drinks
Frozen Food
Canned Juices
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.
Mom and Pop Store (also called Kirana Store in India)
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
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not be very big and depends on the land available to the owner. They wouldn’t
offer high-end products.
Merchandise:
Eggs
Bread
Stationery
Toys
Cigarettes
Cereals
Pulses
Medicines
Speciality Stores
As the name suggests, 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. You can never find Adidas
shoes at a Reebok outlet.
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 Tailors
Now 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
or credit cards and the products are delivered at their homes only. However,
there are chances that the products ordered might not reach in the same
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condition as they were ordered. This kind of shopping is convenient for those
who have a hectic schedule and are reluctant to go to retail outlets. In this kind
of shopping; the transportation charges are borne by the consumer itself.
Example - EBAY, Rediff Shopping, Amazon
Dollar Stores
Dollar stores offer selected products at extremely low rates but here the prices
are fixed.
Example - 99 Store would offer all its merchandise at Rs 99 only. No further
bargaining is entertained. However the quality of the product is always in
doubt at the discount stores.
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3.1 Retail Mechanism
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.
Retail
er
...........................
.......
Consu
mer
(End -
User)
Retailing
3.2 How does retail work ?
Let us now understand the various ways a consumer can purchase goods from
the retailer.
Counter service
As the name suggests, counter service refers to the process of procuring the
merchandise from the counter. The buyer does not have an easy access to the
merchandise of the store and he can’t pick up things on his own. In such a
mechanism the buyer has to walk up to the counter and ask for his
requirements.
Example
Jewellery Store
Can you go to a jewellery store and pick up things on your own ? No
You need to ask the sales person to show you the sample designs for you to
finalize something as per your taste and pocket.
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Chemist Shop
Chemist shop does not allow the buyers to simply walk into the store and pick
up medicines. One needs to walk up to the counter, show his prescription from
the doctor to get the medicines from the retailer.
Delivery Service
The mechanism of shipping goods to the customer’s doorsteps is called as
delivery service. The end-user does not have to walk up to the store to procure
his merchandise; instead the goods are directly delivered to his house through
various means of transportation. Delivery service is a boon for the individuals
who have an extremely busy life style and do not have enough time to walk up
to the store.
Online Shopping
Internet has helped end-users to shop from their homes only. Online shopping
sites like Amazon, eBay etc provide a wide range of options to the consumers
who can order the desired merchandise through internet. Once the payment is
done through debit or credit cards, the goods are delivered at the address the
customer requests for. The transportation charges however are borne by the
consumer himself.
Order through telephone
Now a days several restaurants and eating joints provide an option of ordering
food while sitting at home. The food outlets upload their complete menu in the
website providing a wide range of options to the end-users. One can easily
place his order over the phone and the food is delivered at his doorstep within
no time.
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Pizza Hut, Dominos (Promise to deliver hot and crisp pizza within 30 minutes
of placing the order)
Door To Door Sales: Door to door sales is a process where the sales person
travels from one house to the other and prompts the customers to buy the
product. He gives the demo of his product and strives hard to convince the
individual to buy the merchandise.
Examples
Eureka Forbes operates on this mechanism where experienced sales
professional visits the doorsteps of the potential customers, gives them
presentations and influences them to purchase the product.
Telephone companies also sometimes rely on this mechanism to sell their
connections.
Self Service: In self service the individuals have the liberty to pick up
merchandise on their own and help themselves.
Second Hand Retail: In second hand retail shops the retailer sells second
hand goods to the end-users. Such shops generally run for charity where
people donate their used merchandise to be resold to the poor and needy free
of cost.
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4) 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.
Retail Pricing
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.
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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.
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.
Pricing Below Competition
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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
Psychological Pricing
Certain price of a product at which the consumer willingly purchases it is
called psychological price.
The consumer perceives such prices to be correct.
A retailer sets a psychological price which he feels would meet the
expectations of the buyers and they would easily buy the merchandise.
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
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According to discount pricing, the retailer sells his merchandise at a
discounted price during off seasons or to clear out his stock.
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5) 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.
Promotional Merchandising
The ways the products are displayed and stocked on the shelves play an
important role in influencing the buying behaviour of the individuals.
A merchandiser maximizes the sale of the products by:
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.
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:
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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.
By mid of August and early September, the summer merchandise is generally
on a close out and stores begin stocking merchandise for the winter season.
Warm clothing, full sleeves apparels, jackets, pullovers start replacing cut
sleeves, capris, ankle length dresses, shorts and so on. Colourful clothes
dominate the shelves as compared to the subtle colours in summers.
The type of product sourced also depends on the climatic conditions of the
place.
A Reebok store in Central India or Southern India would stock summer
merchandise between April to September whereas a retail store under the same
brand somewhere in a cold area would source woollen merchandise along with
summer clothing as per the demand of the season.
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.
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.
Merchandise for children should be in line with cartoon characters (like
Barbie, Pokémon etc) to excite them.
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Creative Portico Pvt Ltd sources bed sheets, curtains specially inspired from
characters (Disney, Harry Porter, Hannah Montana) - a hit amongst kids.
Youngsters prefer funky clothes (colourful T Shirts, faded denims) as
compared to professionals who would go for subtle colours.
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 merchandiser ideally works on the “invariant right” principle.
Since most of us are right handed, it is a common tendency that customers
entering into retail store would first go towards the right side of the store. The
merchandiser should display the unique and expensive collections on the right
side of the store to entice the customers.
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.
The shelves should be stocked with the latest trends. The merchandise should
be well organized on the racks according to their size and pattern.
It is the key responsibility of the merchandiser to create an attractive display to
pull the customers into the store. Once the customer steps into the store, he
would definitely buy something or the other.
5.1) Cross Merchandising
Retailing refers to the concept of selling merchandise in small quantities to the
consumers for their end use. According to retailing, the individual can walk up
to any nearby retail store and purchase products as per his need and pocket in
small units for his own consumption.
The display of merchandise at the store plays an important role in
attracting the customers into the store. The display of the products at the
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retail store goes a long way in influencing the buying behaviour of the
consumers. The presentation of the products is essential to create that first
impression in the minds of the consumers.
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.
Cross Merchandising makes shopping a pleasurable experience as it saves
customer’s precious time.
Examples of Cross Merchandising
Mobile covers displayed next to mobile phones.
Recharge coupons with new sim cards
Batteries with electronic appliances
Neck ties or cuff links displayed with men’ shirt
Fashion jewellery, rings, anklets, hand bags with female dresses
Shoe laces, shoe shiners, shoe racks with shoes
Audio CDs with CD Players
Jenny went to a nearby retail store to purchase a shirt for herself. She picked
up a nice blue formal shirt displayed on the mannequin. The retailer was smart
enough to add matching trouser, scarf and a handbag to the mannequin (Cross
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Merchandising). Not only did Jenny purchase the shirt but also the trouser as
well as the office bag as she felt the products would complement her shirt.
The customer at the first instance can’t really decide what all he needs apart
from the products he has already purchased. Through cross merchandising,
the retailer smartly tries his level best to convince the customers to buy
additional products apart from his existing list.
Mike went to a nearby departmental store to purchase cigarettes. He spotted
chewing gums displayed along with the cigarettes. He immediately decided to
purchase the chewing gums along with his cigarettes which he might need
after smoking. Thus cross merchandising (display of cigarettes along with
chewing gum) made Mike realize the connection between the products and
eventually pick both of them.
Important 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.
Displaying neck ties with Laptops would make no sense and fail to excite the
customers. The customer would purchase either of the two (Either the Laptop
or the neck tie) depending on his need but would never purchase both.
However if laptop bags are kept with laptops, there are chances that the
customer might pick up both the products.
Use hangers, pegs, mannequins or suitable fixtures to intelligently display the
unrelated goods and prompt the customer to pick all of them.
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5.2) 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. In simpler words, visual merchandising is the art of
displaying the merchandise to influence the consumer’s buying behaviour.
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. Sensible display of the merchandise goes a long
way in influencing the buying decision of the individual.
The end-user will never notice something which is not well organized: instead
stacked or thrown in heaps.
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.
Lighting is one of the critical aspects of visual merchandising. Lighting
increases the visibility of the merchandise kept in the store. The store should
be adequately lit and well ventilated. Avoid harsh lighting as it blinds the
customers who walk into 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.
The retailer must be extremely cautious about the colour of the paint he
chooses for his store. The paint colour can actually set the mood of the
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customers. The wall colours must be well coordinated with the carpet, floor
tiles or the furnitures kept at the store. Dark colours make the room feel small
and congested as compared to light and subtle colours.
The store must always smell good. Foul smell irritates the consumers and he
would walk out of the store in no time. Use room fresheners ‘or aromatic
sticks for a pleasant environment.
The merchandise must be properly placed in display racks or shelves
according to size and gender. Put necessary labels (size labels) on the
shelves as it help the customers to locate the products easily. Make sure the
product do not falls off the shelves as it gives a messy look.
The dummies should be intelligently placed and must highlight the unique
collections, latest trends and new arrivals in order to catch the attention of the
individual. The dummies should not act as an obstacle and should never be
kept at the entrance of the store.
Don’t play blaring music at the store. It acts as a hindrance to effective
communication and the retailer can never understand what the buyer actually
intends to buy.
Select the theme of the store according to the season. Red should be the
dominating colour during Christmas or Valentines Day as the colour
symbolizes love, fun and frolic. A white theme would look out of place during
the season of love.
Don’t keep unnecessary furniture as it gives a cluttered look to the store.
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.
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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.
6) Retail Management - Meaning and its Need
What is management?
Management refers to the process of bringing people together on a common
platform and make them work as a single unit to achieve the goals and
objectives of an organization. Management is required in all aspects of life and
forms an integral part of all businesses.
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.
Retail management makes shopping a pleasurable experience and ensures the
customers leave the store with a smile. In simpler words, retail management
helps customers shop without any difficulty.
Need for Retail Management - Why retail management?
Peter wanted to gift his wife a nice watch on her birthday. He went to the
nearby store to check out few options. The retailer took almost an hour to find
the watches. This irritated Peter and he vowed not to visit the store again.-An
example of poor management.
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You just can’t afford to make the customer wait for long. The merchandise
needs to be well organized to avoid unnecessary searching. Such situations are
common in mom and pop stores (kirana stores). One can never enjoy shopping
at such stores.
Retail management saves time and ensures the customers easily locate
their desired merchandise and return home satisfied.
An effective management avoids unnecessary chaos at the store.
Effective Management controls shopliftings to a large extent.
The retailer must keep a record of all the products coming into the store.
The products must be well arranged on the assigned shelves according to size,
colour, gender, patterns etc.
Plan the store layout well.
The range of products available at the store must be divided into small groups
comprising of similar products. Such groups are called categories. A customer
can simply walk up to a particular category and look for products without
much assistance.
A unique SKU code must be assigned to each and every product for easy
tracking.
Necessary labels must be put on the shelves for the customers to locate the
merchandise on their own.
Don’t keep the customers waiting.
Make sure the sales representatives attend the customers well. Assist them in
their shopping. Greet them with a smile
The retailer must ensure enough stock is available at the store.
Make sure the store is kept clean. Don’t stock unnecessary furniture as it gives
a cluttered look to the store. The customers must be able to move freely.
The store manager, department managers, cashier and all other employees
should be trained from time to time to extract the best out of them. They
should be well aware of their roles and responsibilities and customer oriented.
They should be experts in their respective areas.
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The store manager must make daily sales reports to keep a track of the cash
flow. Use software or maintain registers for the same.
Remove the unsold merchandise from the shelves. Keep them somewhere else.
Create an attractive display.
Plan things well in advance to avoid confusions later on.
Ask the customers to produce bills in case of exchange. Assign fixed timings
for the same. Don’t entertain customers after a week.
6.1) Category Management
The mechanism of selling merchandise in small quantities from a fixed
location directly to the individuals for their end use is called as retailing. The
fixed location can be anything like super market, hyper market, department
stores and so on.
Merchandise - Merchandise refers to the various products available at the
store for sale to the end-users. It is the display of the merchandise which
actually attracts the customers into the store.
Let us suppose all the products available at the store are stocked at one place
only. Would such a display impress the customers ?
The answer is NO. Presentation of products is essential.
As a solution to the above problem, the retailers came out with the concept of
category management.
The concept of segregating similar products into separate groups is called
as category management. The complete range of merchandise available at
the retail store is divided into separate product categories consisting of related
products.
Categories in a retail store refer to the various groups which consist of
products belonging to a similar family. The retailer smartly displays all the
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related products together as distinct categories for his as well as the end-user’s
convenience.
Example
Toothpaste, Tooth Brush, Mouth wash, Tongue cleaner, soap, shampoo, body
wash, cosmetics etc, can be displayed together under a single category called
personal care section.
Vegetables, Fruits, Tinned Food, Juice, meat, dairy products form a single
category.
Certain retail stores also classify their merchandise into women, men as well
as kids category.
Department stores also have separate categories like:
Apparels, Footwear, Jewellery, Electronic appliances, Mobiles, Watches,
Home furnishings, house hold appliances and so on.
Category
The complete range of merchandise at the store is divided into separate groups
consisting of related products. Such groups are called as categories.
Each category is treated as a separate business entity.
The retailer calculates the profit and loss of each category separately.
Each category contributes in its own way to the profitability of the store.
The retailer does not promote a single brand but the complete category.
The concept of categories has gone a long way in developing a strong bond
between the retailer and the supplier.
Why Separate Categories ?
The classification of products into separate category benefits the customers
and makes their shopping a pleasurable experience.
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The customers as per their interest, pocket and need can walk up to the
respective categories, check out the various options and decide what to buy
and what not to buy.
Eight Step Process of category management
Define the Category
The retailer must sort out the similar products which can be included in a
single category. He must make sure that the products bear a strong connection
with each other.
Role of the Formed Category
Evaluate the current Performance of the category
Decide targets for the category.
Devise an overall Strategy to promote the category.
Formulate specific steps to increase the sales of the category.
Implementation of the above steps.
Review and feedback.
However some retailers find the above process cumbersome and only follow
the below five steps:
Form and Review the category.
Decide the target consumers of the particular category.
Planning and formulating strategies for the category.
Implementation of the above strategies
Results Evaluation
Category Captains
The retailer generally appoints one individual who supplies all the products of
a single category. This individual also called as supplier is known as a
category captain.
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The suppliers are equally responsible for the category and contribute their
level best to maximize the revenue of the particular category. He works in
close coordination with the retailer and is responsible for the profit and loss of
his assigned category.
6.2) Retail Marketing - Tips to Promote a Retail Brand
The mechanism of selling products in small quantities from fixed locations to
the customers for their end use is called as retailing.
In the current scenario where the end-user has several options to rely on, it is
essential that the retailer promotes his brand well amongst the masses.
Let us go through some tips to promote a retail brand well:
Signage
Signboards go a long way in creating brand awareness and promoting a
particular brand.
The signage must display the name as well as logo of the retail store.
It must be installed at the right place visible to all even from a distance.
It should not be very small. Small signages fail to attract the customers.
Choose the right paint colour.
Don’t add unnecessary information. Keep it simple but informative.
Make sure the signage attracts the customers into the store.
Choose the right theme.
Advertising
Advertising is a strong medium which influences the buying decision of the
customer and prompts him to shop. The retailer must ensure to communicate
the USPs of his brand to the target customers well through various modes of
advertising. The advertisement must be eye-catching for the end-users to click
on them.
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Various ways of Advertising
1. Billboards
Billboard is one of the best ways of out of home advertising.
Out of home advertising refers to creating awareness amongst the individuals
when they are out of their homes.
Install hoardings, banners, bill boards at strategic locations such as heavy
traffic areas, major crossings, railway stations, bus stands etc to entice the
customers. The retailer must ensure that the banners get noticed and bring
results.
Newspapers, Television and radio are also effective ways to promote a brand.
Television reaches a wider audience and makes the store popular amongst all.
The advertisement should be a visual treat, appeal the customers and prompt
them to visit the store.
2. Coupons
Coupons are an effective way of promoting a brand as they offer some kind of
financial benefit to the customers in the form of discounts and rebates and thus
attracting them into the store.
Coupons help in furthering the brand image of the retail store without much
investment.
More and more people visit the stores to redeem the coupons, thus making the
brand popular.
Discounts, sale, rebates are good ways to promote a brand.
3. Private Label
Private label is an effective way to promote one’s brand at low costs.
Products manufactured by one company but sold under another company’s
brand name are called Private Label Products.
Create your own website.
Print your own calendars, diaries, planners, table tops with your store’s name,
address as well as logo. Such an activity creates awareness among individuals.
Always keep your visiting cards handy and distribute them to as many people
as you can.
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In the current scenario, social networking sites go a long way in promoting
brands. Create communities and invite people to join the same.
Customer loyalty programs help to retain customers and attract new
individuals to the store.
Create a positive ambience at the store. Nothing works better than customer
satisfaction in the retail industry. One satisfied customer brings ten new
customers along with him.
6.3) Role of Advertising in Retail
Promoting a brand is more important than opening a store. It is essential
to create brand awareness for the customers to know about the brand’s
existence. The retailer must strive hard to communicate the USPs (Unique
selling Proposition) of the brand to influence the buying behaviour of the
customers. In simpler words, advertisements help the end-users to know to
which brand a particular product belongs.
Advertisements play a crucial role in promoting a brand and creating its
awareness amongst the masses.
They help in creating an image of a particular product or brand in the minds of
the potential customers. Such a mechanism is also called Brand Positioning.
What is Advertising ?
Advertising is a medium through which an individual or organization
highlights the USPs and benefits of a product or service to influence the
buying behaviour of the individuals.
It helps to create a positive image of a particular brand in the minds of the
customers and prompts them to buy the same.
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Role of Advertising in Retail
The retailer through various ways of advertising strives hard to promote his
brand amongst the masses for them to visit the store more often.
Advertisements attract the customers into the store. They act as a catalyst in
bringing the customers to the stores.
The advertisement must effectively communicate the right message and click
on the customers. It should be a visual treat and appeal the end-users.
Advertisements have taglines to create awareness of a product or service
in the most effective way.
The tagline has to be crisp and impressive to create the desired impact.
The tagline should not be lengthy else the effect gets nullified.
It has to be catchy.
It should be simple to memorize.
The moment an individual hears “Just Do it”, he knows he has to visit a “Nike
Store”. That’s the importance of a tagline.
Modes of Advertising
1. Nothing works better than promoting a brand through signboards, billboards,
hoardings and banners intelligently placed at strategic locations like railway
stations, crowded areas, heavy traffic crossings, bus stands, near cinema halls,
residential areas and so on. Such advertising is also called as out of home
advertising.
Out of home advertising is a way to influence the individuals when they are
out of their homes. The hoarding must be installed at a height visible to all
even from a distance.
Make sure it catches the attention of the passing individuals and influences
them to visit the store.
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Keep it simple and make sure it doesn’t confuse the customers; instead it
should convey the information in its desired form.
2. Print media is also one of the most effective ways to promote a brand.
Newspapers, magazines, catalogues, journals make the brand popular amongst
the individuals. Retailers can buy a small space in any of the leading
newspapers or magazines; give their ads for the individuals to read and get
influenced.
3. Television also helps the brand reach a wider audience. Now a days retailers
also use celebrities to endorse their products for that extra zing. Celebrities are
shown using the particular brand and thus making it a hit amongst the masses.
Sachin Tendulkar - the famous Indian cricketer endorses Castrol India, MRF
tyres, Adidas, Boost etc.A child gets influenced to drink Boost because his
favourite cricketer drinks the same.
4. Radio Advertisements also help in creating brand awareness.
5. Social networking sites have also emerged as one of the easiest and
economical ways to promote a product or brand.
6.4) Role of Coupons in Retail Marketing
What is Retailing?
The sale of products to the customers from a fixed location (malls, department
stores, super markets and so on) in small quantities for their end use is called
as retailing.
Coupons play an important role in promoting the retail stores and making the
brand popular amongst the masses.
What are Coupons ?
Any document which can be presented to the retailer to gain some kind of
financial benefit in the form of discount on any product is called a coupon.
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Customers can get the coupons redeemed at the specific retail outlets to avail
relevant discounts and rebates in shopping.
Role of Coupons in Retail Marketing
Coupons play an important role in attracting the customers into the store.
Coupons help in furthering the brand image of the retail store without huge
investments. It makes the brand popular among the end-users. Individuals talk
more about the brand, thus making it a hit amongst the masses.
What is Guerrilla Marketing ?
The concept of promoting products and brands on an extremely low budget is
called as Guerrilla Marketing. Guerrilla marketing does not involve huge
investments and is one of the most effective ways of creating brand awareness
amongst the consumers.
Coupons are an effective tool for Guerrilla Marketing. The retailers can
actually create brand awareness amongst the end users without spending much
with the help of coupons.
How does Coupons help in Guerrilla Marketing ?
A Coupon is one of the most cost effective ways of promoting the brand with
little investment.
Coupons make the brand popular as more and more customers visit the store
to redeem their coupons.
Example - As a part of their marketing strategy, on every purchase of
Domino’s pizza, the company offers discount coupons to the buyers. These
discount coupons can be availed next time the customer places his order.
In such a situation, it is more likely that he would visit a Domino’s Outlet
again to redeem his coupons and avail the discounts on the pizza. He would
generally not prefer any other outlet as here in Domino’s he can get pizza at a
lesser price as compared to others.
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Dominos in this case used food coupons to attract the customers once again
into the store.
Coupons go a long way in influencing the buying behaviour of the customers.
Coupons also bring in new customers to the store. The individuals, who do not
even know about a particular brand, visit the store to use their coupons and
also check out other options as well.
Coupons also benefit the customers as they can now purchase their desired
merchandise at a lower cost.
Coupons increase the store traffic and also result in Impulse Buying.
What is Impulse Buying?
Any unplanned buying is called as Impulse Buying. An individual might not
require a particular product but picks it up out of mere emotions and feelings.
Such a buying is called impulse buying. Impulse buying prompts the customer
to purchase products which he might not even need that time.
Peter went to a retail store to redeem his discount coupons on shirts. The
retailer had smartly displayed perfumes near the cash counter. While paying
the bill, Peter could not resist purchasing two perfumes for himself along with
the shirts.
6.5) Factors Affecting Buying Decision of the Customers at the Store
here are several factors which affect the buying decision of the customers. Let
us go through them one by one:
Store Display and Presentation of Products
The store display plays an important role in influencing the buying
decision of the customers. It is the display of the store which attracts passing
individuals into the store. The store must have an attractive display to entice
the customers. Shopping may be the last priority for an individual but a
34
creative display encourages him to spend on shopping.
A retailer must intelligently display the latest trends on mannequins to prompt
the customers to buy the same.
Make sure the products are kept on their respective racks. The merchandise
should not fall off the shelves.
Since most of us are right handed; we tend to go towards the right side of the
store, the moment we step inside. The retailer must thus display expensive and
unique merchandise on the right side of the store.
Remove old stock from the shelves.
2. Ambience of the Store
The store ambience plays an important role in attracting new customers
and retaining existing ones.
A customer would never purchase anything from a store which is not clean.
Foul smell irritates individuals and thus they leave in no time.
Play soulful music for a positive effect on the customers.
The store should be well lit and ventilated for the customers to enjoy their
shopping.
3. Customer Treatment
Warm customer treatment is an effective way to pull the customers into the
store. It is essential for the retailers to treat the customers like kings to expect
loyalty from them.
Understand your customers well. Try to find out what they expect from the
store.
The sales representative must greet the customers with a warm smile. It makes
a difference.
Assist them in their shopping.
Never oversell.
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The retailer must never lie to the customers. If something is not looking good
on them, be honest and give them a correct feedback.
If a customer comes for an exchange, don’t be rude; instead help him with an
alternative.
4. Store Design and Layout
A customer would never prefer shopping from a store which gives a cluttered
look.
There should be ample space in the store for the customers to move and shop
freely.
Put stickers and labels (size, colour, FS (Full sleeves), HS (Half Sleeves) and
so on) on the shelves and racks.
Don’t stock unnecessary furniture and fixtures in the store.
Classify the complete range of merchandise into small groups (categories)
comprising of similar and related products. Categories help the customers to
locate the products easily.
A store must have a trial (change) room.
Individuals avoid places where there is a parking hassle. The store should have
an adequate parking space.
5. Other Factors
Discounts and rebates influence the customers to shop more. A customer
might not need a product, but a discount will encourage him to purchase the
same as he would now get it at a lower price.
Promotional schemes like free gifts also affect the buying decision of the
customers. A Free T Shirt with a pair of jeans would definitely prompt the
customers to shop more.
Customers also indulge in shopping to redeem their coupons and avail
discounts.
6.6) Inventory Management in Retail Industry - Need and Important
Terminologies
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What is Inventory Management?
Inventory refers to the goods stocked for future use. Every retail chain has its
own warehouse to stock the merchandise to be used when the existing stock
replenishes.
Inventory management refers to the storage of products to be used at the
time of crisis.
The retailer keeps a track of the stocked goods and makes sure there is surplus
inventory to avoid being “out of stock”. Such a process is called as inventory
management.
Why Inventory Management?
Gone are the days when customers had limited options for shopping. In the
current scenario, if a customer does not find the desired merchandise at one
retail shop, he has a second brand to rely on. A retailer can’t afford to loose
even a single customer. It is really important for the retailer to retain his
existing customers as well as attract potential buyers. The retailer must ensure
that every customer leaves his store with a smile. Unavailability of
merchandise, empty shelves leave a negative impression on the customers and
they are reluctant to visit the store in near future. Inventory management
prevents such a situation.
One must understand that the products need some time to reach the store from
the supplier’s unit. The retailer must have sufficient stock to offer to the
customers during the “lead time”.
Managing inventory also helps the retailer during situations beyond control
like transport strikes, curfews etc. The retailer has ample stock as a result of
judicious inventory management even at the time of crisis.
Important Terminologies used in Inventory management
1. SKU (Stock Keeping Unit)
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Every product available at the store has a unique code. This code which helps
in the identification and tracking of the products at the retail store is called as
stock keeping unit or SKU.
The retailer feeds each and every SKU in the master computer and can easily
track the product in the stock just by entering the SKU Number.
Assigning a unique code to the products avoids unnecessary searching.
Example
Let us take the example of “Numero Uno” which stocks denims, shirts, T
Shirts and targets both men as well as women.
SKU for Shirts
NU – M–40-FL-W
NU - M-38-FL-B
Where:
NU stands for Numero Uno
M - Men
40 - Collar Size
FL - Full Sleeves
W - White (Colour of the shirt)
In the same way B in the second example would stand for Blue
Simply typing NU – M–40-FL-W would let the retailer know whether the
particular merchandise is available with him or not.
2. New Old Stock (Abbreviated as NOS)
The stock which is never been sold by the retailer and now not even being
manufactured comprises the new old stock. Such products do not have takers
and may not be produced anymore.
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3. Stock out
Stock out refers to a situation when the retailer fails to fulfill the customer’s
requirement due to lack of merchandise. The merchandise is not available in
the current inventory and thus the customer has to return home empty handed.
Preventing loss of inventory
Employees working at the store might get tempted to steal the merchandise.
Let us go through some tips which help to prevent loss of inventory:
Check the bags of the employees before they leave the store.
Raise an alarm whenever you find someone stealing something. Supporting a
wrong deed is also a crime.
Make sure that all the employees leave from one common door.
Avoid multiple exits.
Check garbage before dumping.
Keep proper record of the inventory(Stock coming in and going out)
6.7) Roles and Responsibilities of a Store Manager
Retail Store
A fixed set up or location offering merchandise in small quantities to the
consumers for their end-use is called a retail store.
Store Manager
An individual responsible for managing the overall functioning of the store is
called a store manager.
A store manager takes care of the day to day operations of the store and
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ensures maximum profitability for his store.
In simpler words a retail store is a store manager’s baby.
Hierarchy
General Manager
↑
Store Manager
↑
All employees of the store
(Floor manager, cashier, Department manager, Asst Store manager)
Gender Preference
Both Male/Female. However in certain cases the selection might depend on
the merchandise available in the store. A store specializing in female lingerie
would prefer a female store manager as she would be more comfortable with
the female buyers.
Responsibilities of the Store Manager
Recruiting employees for the store is the store manager’s prime
responsibility. He not only has to hire the right candidates for the store but
also train them for their overall development. He must ensure that all the
employees (floor manager, department manager, cashier and so on) contribute
to their level best for the effective functioning of the store. He must act as a
strong pillar of support and stand by his team at the hour of crisis. It is his duty
to acquaint his team members with the latest trends in fashion or any other
newly launched retail software. It is his responsibility to delegate
responsibilities to his subordinates according to their specializations and
extract the best out of them. The store manager must motivate his team
members from time to time.
The store manager must make sure his store is meeting the targets and
earning profits. He is responsible for the smooth and effective functioning of
the store.
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The store manager is responsible for maintaining the overall image of the
store. It is his duty to sensibly display the merchandise so that it immediately
catches the attention of the customers. The store manager must ensure that his
store meets the expectations of the customers and lives up to its predefined
brand image.
He must ensure:
i. The store is kept clean
ii. Shelves and racks are properly stocked and products do not fall off the
shelves.
iii. Mannequins are kept at the right place to attract the customers into the store
and rotated frequently.
iv. The merchandise should be according to the season as well as the latest trends.
v. The store is well lit, ventilated and offers a positive ambience to the
customers.
vi. The signage displaying the name and logo of the store is installed at the right
place and viewable to all.
One of the major responsibilities of the store manager is to make the
customers feel safe and comfortable in the store. It is his key responsibility to
make sure that the customer leaves the store with a pleasant smile.
He is responsible for managing the assets of the store. The security and
safety of the store is his responsibility. The store manager must ensure that
sufficient inventory is available at the store to avoid being “out of stock”.
He along with his subordinates are responsible for planning, managing profit
and loss, handling cash at the store as well as collating daily sales as well as
other necessary reports.
He must ensure that the store is free from pilferage.
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7) RETAIL STORE ARCHITECTURE
Store Atmosphere
The store must offer a positive ambience to the customers for them to enjoy
their shopping and leave with a smile.
The store should not give a cluttered look.
The products should be properly arranged on the shelves according to their
sizes and patterns. Make sure products do not fall off the shelves.
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.
Make sure the customers are well attended.
Don’t allow customers to carry eatables inside the store.
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.
Prevent Shoplifting/Safety and Security
The merchandise should not be displayed at the entry or exit of the store.
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Do not allow customers to carry more than three dresses at one time to the trial
room.
Install CCTVs and cameras to keep a close watch on the customers.
Each and every merchandise should have a security tag.
Ask the individuals to submit carry bags at the security.
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.
Customer Service
Customers are assets of the retail business and the retailer can’t afford to lose
even a single customer.
Greet customers with a smile.
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.
Give the individual an honest and correct feedback. If any particular outfit is
not looking good on anyone, tell him the truth and suggest him some better
options.
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.
Refunds and Returns
Formulate a concrete refund policy for your store.
The store should have fixed timings for exchange of merchandise.
Never exchange products in lieu of cash.
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Never be rude to the customer, instead help him to find something else.
Visual Merchandising
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.
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 software in retail or any other developments in the industry.
It is the store manager’s responsibility to collate necessary reports (sales as
well as inventory) and send to the head office on a daily basis.
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.
7.1) Store Design and Layout - Different Floor Plans and Layouts
Opening a retail store is no joke and requires meticulous planning and detailed
knowledge.
44
Location
Make sure your store is in a prime location and is easily accessible to 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.
1. 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.
2. 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.
45
3. 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.
4. 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.
5. 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.
Tips for Store Design and Layout
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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.
The fixtures or furniture should not act as an object of obstacle. Don’t
unnecessary add too many types of furniture at your store.
The merchandise should be well arranged and organized on the racks assigned
for them. The shelves must carry necessary labels for the customers to easily
locate the products they need. Make sure the products do not fall off the
shelves.
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.
Do not stock anything at the entrance or exit of the store to block the way of
the customers. The customers should be able to move freely in the store.
The retailer must plan his store in a way which minimizes theft or shop lifting.
i. Merchandise should never be displayed at the entrance or exit of the store.
ii. Expensive products like watches, jewellery, precious stones, mobile handsets
and so on must be kept in locked cabinets.
iii. Install cameras, CCTVs to have a closed look on the customers.
iv. Instruct the store manager or the sales representatives to try and assist all the
customers who come for shopping.
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v. Ask the customers to deposit their carry bags at the entrance itself.
vi. Do not allow the customers to carry more than three dresses at one time to the
trial room.
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 accessible to 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.
1. 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.
2. 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.
48
3. 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.
4. 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.
5. 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.
49
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.
The fixtures or furniture should not act as an object of obstacle. Don’t
unnecessary add too many types of furniture at your store.
The merchandise should be well arranged and organized on the racks assigned
for them. The shelves must carry necessary labels for the customers to easily
locate the products they need. Make sure the products do not fall off the
shelves.
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.
Do not stock anything at the entrance or exit of the store to block the way of
the customers. The customers should be able to move freely in the store.
The retailer must plan his store in a way which minimizes theft or shop lifting.
i. Merchandise should never be displayed at the entrance or exit of the store.
ii. Expensive products like watches, jewellery, precious stones, mobile handsets
and so on must be kept in locked cabinets.
iii. Install cameras, CCTVs to have a closed look on the customers.
50
iv. Instruct the store manager or the sales representatives to try and assist all the
customers who come for shopping.
v. Ask the customers to deposit their carry bags at the entrance itself.
vi. Do not allow the customers to carry more than three dresses at one time to the
trial room.
7.2) What are Mannequins? - Purpose and its Importance in Retail
Industry
Visual Merchandising plays an important role in increasing the sales of
any retail store. The presentation and display of the merchandise play an
important role in attracting the customers into the store and prompting them to
buy the products.
Mannequins in simpler words also called as dummies play an important role
in visual merchandising.
What are Mannequins ?
The artificial dolls used by the retailers to display their merchandise (can be
anything) are called as mannequins. The mannequins help the customers to
know about the latest trend the store offers without sometimes even bothering
the sales representative. It is the attractive mannequin which pulls the
customer into the store.
Purpose of Mannequins
Mannequins are used to highlight the unique collections of the store.
Mannequins display the latest trends in fashion and influence the customers to
buy the particular merchandise.
Mannequins attract the customers into the store and thus increase the revenue
and profit.
Mannequins are also responsible for up selling at the retail store.
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What is Up Selling ?
Up selling is a sales mechanism where the sales representative strives hard to
convince the customers to buy extra items or expensive merchandise and thus
increases the revenue of the store. The entire credit goes to the sales
representative in case of up selling who influences the customers to take home
additional and expensive merchandise in addition to what they are already
buying.
Example
A customer goes to a retail store to buy a watch worth x rupees. The sales
representative through his unique presentation skills convinces the customer to
buy another model worth y rupees where y > x.
A customer might go to purchase a single pair of footwear. It is upselling
when the sales man influences the customer to buy two pairs instead of one.
How do Mannequins help in upselling ?
Mannequins help the customers to understand what would look good on
them. The customer might not understand how a particular bag would look
with a particular dress or for that matter which fashion jewellery would add
elegance to a particular outfit.
The retailer must smartly decide the entire look of the mannequin.
Sandra went to buy a nice dress for her office party. The mannequin wearing a
blue dress at a retail store immediately caught her attention and she decided to
buy it. The retailer had sensibly also added a blue neckpiece and a trendy
clutch to the mannequin for the complete look.
Sandra was not very sure what she wanted to wear along with the dress. The
moment she saw the mannequin she knew what would look good on her. Not
only did she purchase the dress but also the neckpiece along with the clutch.
An example of upselling.Sometimes you can’t decide what all would look
good on you; a mannequin helps you decide the same.
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Points to be considered while choosing a Mannequin
Make sure the mannequin is not too heavy.
The shape and size of the mannequin must be according to your target market.
The mannequins must not act as an object of obstacle.
It should never be kept at the entrance or the exit door as it blocks the way of
the potential buyers.
The clothes should look properly fitted on the mannequin. Avoid using
unnecessary pins.
Carefully select what you want your mannequin to wear.
Change the position of the mannequins frequently.
The mannequins should not be dirty or have unwanted stains.
The clothes on the mannequins should be according to the season and changed
at regular intervals to avoid monotony.
Types of Mannequins
Abstract Mannequins
Headless Mannequins
Realistic Mannequins
Tailors Dummies
Display Forms
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7.3) Plano grams - Meaning, its Need and Types of Product Placements
How do you think buildings are constructed ?
With the help of architectural drawings.
An architectural drawing creates a rough print of the building on paper which
gives an idea about the floor plans, location of rooms, lobby and so on.
In retail a planogram replaces architectural drawings.
Once a retailer opens a store, he needs to have a rough idea about the store
plan. A planogram helps in the same.
Planograms are similar to architectural drawings and help the retailer to
understand where the merchandise should be stocked in order to catch
the customer’s attention and make the maximum impact.
Planograms are nothing but diagrams which give the retailer an idea how and
where to place the merchandise to attract the customers into the store.
Need for Planograms - Why Planograms ?
Presentation of product plays an important role at the retail store. With the
help of Planograms; a retailer can actually know where to place the products
for the maximum effect.
Planogram enables the retailers to stock the products at the right place and at
the right time to attract the customers and prompt them to buy.
A retailer can make the best possible use of the available space with the help
of planograms.
The merchandiser can actually create an attractive display to entice the
customers with the help of planograms.
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Planograms indirectly also contribute in maximizing the sale of the
merchandise and thus generate revenues for the store. A cluttered store fails to
attract the customers. The planograms help the retailer to arrange the products
in the best possible way for the customers to pick up almost everything.
When is a Planogram Prepared ?
A Planogram ideally should be prepared before the merchandise reaches the
retail store. The retailer should be very clear where he wants to place his
products to impress the customers.
How is a Planogram Prepared ?
There are various softwares available which help to create planograms. These
softwares help the retailers to draw three dimensional diagrams of the store
and help them visualize the overall image of the store.
Types of Merchandise Placement
Visual Product Placement - Visual Product Placement refers to a technique
where the products are placed in a way to immediately catch the attention of
the customers walking into the store.
Types of Visual Product Placement
1. Horizontal Product Placement
According to horizontal product placement, products are placed side by side
on shelves to offer a wide range of options to the customers.
2. Vertical product placement
The vertical product placement displays the merchandise on more than one
shelf level.
3. Block Placement
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According to block placement of products, the related products or
merchandise belonging to a similar family are stocked at one place together
under one common umbrella.
4. Commercial Product Placement
Commercial product placement takes into account the brand value of the
merchandise. Every customer has a perceived image of the merchandise which
decides its placement in the store. A product which has several takers would
definitely get the best position as compared to something which does not
contribute much to the revenue of the store.
5. Market share product placement
Market share product placement plan works on a simple strategy:
A product which generates the maximum revenue for the store should ideally
be placed at a prime location for the customers to notice it and immediately
buy it.
6. Margin Product Placement
According to Margin product placement, the more a product earns profit for
the retailer, the better the location it is placed.
7.4) 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.
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Role of Signage in Retail Industry:
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.
The signboard should not be too small. End-users might miss a small signage
and hence the whole idea of attracting the customers into the store gets
nullified.
The signboards are an effective medium of communication between the
retailer and the customer.
The signboard gives the store its unique identity and helps in furthering its
brand image.
A signage goes a long way in influencing the customer’s buying decision. A
single glance at the signboard helps the customer to decide whether he has to
step into the store or not?
Important points to keep in mind while installing Signage
The signage should never block the entrance of the store. It should not hide the
interiors of the store.
Install the signage at a place which can be easily viewed by all even from a
distance.
The signboard must display all the necessary information like the name of the
store, its logo or any other required information.
Don’t put too much information on the signboard. Let the customers walk into
the store and find out on their own what the store is offering.
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A single word “Discount” written on the signboard outside the store can do the
trick. The customer would be inquisitive enough to find out what the store
offers. He would definitely step into the store to check out the various options.
There is actually no need to mention how much discount, what percentage and
so on.
The material and the fabric used for the signboard should be of premium
quality so that it lasts for a longer duration. The retailer must make sure the
signboard does not lose its lustre.
Choose the right paint for the signage. Make sure the information is clearly
visible to all. The customers should be able to easily read the signboard even
from a distance. Choose a light background colour and a dark text colour for
clear visibility. One can also highlight the important information. Don’t pick
any colour which might make your signboard look dull.
The name of the store should be written in bold or in a different font to create
the desired impact.
Design your signboard in the most unique and innovative way for the
customers to get attracted into the store.
The signboard should not mislead or confuse the customers.
Keep the signboard simple but informative.
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8) Tips to be a Successful Retailer
Opening a retail store is no joke. It demands dedication, detailed study and
meticulous planning. An individual must do his groundwork well. Plan things
well in advance to avoid problems later on.
It is important to do some kind of research work before taking the big leap.
Browse through related websites to gain an in-depth knowledge.
An individual must be well aware of the fundamentals of retail industry
to have an edge over others. Short term courses in retail make an individual
well versed with the basic concepts of retailing, store formats, visual
merchandising and so on which eventually help him in the long run.
Know what is happening around you. Keep yourself updated with the latest
trends in the retail industry. Check out various fashion magazines, brochures,
catalogues, newspapers for the latest developments.
Know your target market well. Find out more about the tastes and
preferences to meet their expectations.
It is important to choose the right location for the store to ensure maximum
walk-ins. Make sure the store is well connected by means of transportation.
Don’t open store at a secluded place.
Make sure there is adequate parking space near your store.
Promote your store well. It is essential to create awareness of your brand
amongst the customers for them to know about the brand’s existence. Devise
strategies to make your brand popular amongst the masses.
Create the company’s website and get your visiting cards printed.
Set a budget for everything.
The products stocked in the store and their display play an important role in
attracting the customers into the store. A retailer must never compromise on
quality of the merchandise. Visit various wholesalers to check out the latest
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trends. Pick up something which is unique and not available at any other store.
Don’t stock things which are out of fashion. The merchandise should be as per
the target market and location of the store.
Visit few other retail outlets to get an idea about store designs and layouts.
Hire trained employees for your store. The employees must be well aware of
their roles and responsibilities for them to deliver their best. Motivate them
from time to time through various training programmes, appraisals, incentives
and other monetary benefits.
Be patient and don’t rush into things.
Plan your store layout well. Make sure there is ample space inside the store
for the customers to move and shop freely.
Don’t dump products. Use shelves, cabinets and almirahs to stock your
merchandise.
Be disciplined. Open your store on time and assign fixed timings for lunch
and tea.
Treat your customers as kings. Advise all the store members to be courteous
with the customers. The sales representatives must assist the customers in their
shopping and make sure they leave the store with a smile.
Never oversell. Let the customers decide on their own what would look good
on them.
Manage your inventory well.
It is important for the retailer to track the cash flow.
Download various retail software to make your work easier and effective.
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9)EMERGING TRENDS
Likely Transformation of the Supply Chain:
To counter the unbeatable advantages of convenience of a hop, skip and a
jump access and home delivery, organized retailers seem to have just one
option - offer attractive prices to the consumer. A successful retailer's winning
edge will therefore come from sourcing - how best it can leverage its scale to
drive merchandise costs down, increase stock turns and get better credit terms
from its vendors. There are obvious and hidden areas where costs can be
pruned and the benefits of this lower cost of retailing can be passed on to
customers as lower prices, which in turn should fuel demand. One way of
trimming costs is if the pressure points in the long, often unnecessary, supply
chain for produce and staples can be identified and suitably dealt with. The
food supply chain in India is full of inefficiencies - a result of inadequate
infrastructure, too many middlemen, complicated laws and an indifferent
attitude.
Corporate and NGO interventions at the farm end in the form of Farm
Management Services are emerging to ensure quality and timely supply of
produce for the operations. The Farmer-Corporate relationship has helped both
the farmers and the corporates in bringing the high quality low cost product to
the retail shelf. To ease the burden of the corporate in setting up farm
management services, several leading NGO bodies have taken up this activity
essentially due to the fact that their operations are mostly at the farm end.
We feel that these farmer-corporate models would be replicated and extended
to all the farm end products. With the emergence of Private Label, we would
soon find even the retail chains to work with the farm community in
developing a efficient supply chain and to leverage on the cost advantage at
both ends.
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Supplier Retailer Relationships
Traditionally the supplier-retailer relation in India comprised several layers
such as the national distributor, the regional wholesaler and the end retailer.
However this scenario is fast changing with the organized retail increasing its
presence in the country where the relationship is directly with the
manufacturer. However this new model has been affecting the relationships
that the manufacturer enjoys with the traditional system which is still the most
dominant in the entire retail sector. The issue of differential pricing is being
taken up at several forums and the growing dissatisfaction among the
traditional retailers is being addressed by the manufacturers. However we see
that in the long term, the role of a national distributor would slowly fade away
or get restricted to the rural/ upcountry regions.
The supplier-retailer relationship would come under severe pressure as each
party would try to squeeze maximum margins out of the other.
Innovations in Transportation Logistics
The logistics service providers have been innovating several interesting
formats and models for the retail sector. As of now, organized retail chains in
India do not, by far, outsource logistical requirements, they develop their own
network. This was basically due to the fact that the supply-chain was still in its
infancy stage, which has begun to mature and the systems are being well
defined. As retail chains begin to focus more and more on the retail end, the
logistics support would begin to get outsourced. The logistics service
providers have begun to come out with innovative customized solutions for
the retail chains such as GATI’s model for distribution of Alphonso mangoes
throughout the country with the Information Technology support.
We see that the logistics service providers would continue to innovate and
develop effective distribution systems for the retail sector.
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Formats
Currently the retail sector in India is populated with the traditional mom-and-
pop stores and some 1000 odd supermarkets under organized retail chains. A
daring few ventured into the Hypermarket segment with successful results and
this format is being fast replicated by other players. This experience indicates
that the Indian consumer has matured to the next level of shopping experience.
Given the Indian conditions and the vast diversity a single format may not be
possible for the national presence, but region specific formats may evolve.
An interesting observation is that of lack of presence of organized retail chains
in the rural/semi-urban centers as over 60% of Indian population is still in
these parts. An ideal “no frills” model to start with, would be ideal for the
rural markets, this would help to take them to the next level of supermarket
experience.
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Social Trends:
Social trends of a country have impact on the scheme of growth of food retailing
in a country. India is country that is vast geographically and diverse culturally.
This has taken its toll on food retailing with retailers having to adapt to the local
cultures and palates of the area in which they have established or plan to establish.
This is a major reason for many or most retailing chains restricting their
operations to a certain part of the country. But the trends now are slowly moving
towards cultural integration where people of all states and diametrically opposite
cultures tend to try out foods and materials of other states and communities. This
movement towards social integration would make it very feasible in the near
future for retailing chains and erstwhile local chains to spread across the country.
Increased income levels and more women willing to make use of their education
by joining work has increasingly affected the shopping pattern that is moving
towards fulfilling the need of convenience shopping in the form of Supermarkets
(now graduating to Hyper format) home deliveries. Indian consumer is quality
and price conscious and this awareness would drive the retailers to rework their
supply chain relationships.
A recent analysis shows that countries go through a distinct food consumption
evolutionary pattern. In the first stage the focus is on obtaining basic dietary
inputs, the second stage focuses on improving and building basic foods, before
moving to the third stage of adding premium food to the diet. Most of urban India
has already moved to the third stage and it is a great avenue for food retailers, if
they could slowly introduce the rest of India to it. The future would witness
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creation of specific models/formats one for the upwardly mobile urbanite and the
other for the rural markets. Also since the taste habits change from place to place
in India, there would emerge a leading
Online Retailing
The single most important evolution that took place along with the retailing
revolution was the rise and fall of the dotcom companies. A sudden concept of
`non-store' shopping emerged, which threatened to take away the potential of the
store. More importantly, the very nature of the customer segment being addressed
was almost the same. The computer-savvy individual was also a subsegment of
the `store' frequenting traffic. Internationally, the concept of Net shopping is yet
to be proven. And the poor financial performance of most of the companies
offering virtual shopping has resulted in store-based retailing regaining the upper
hand. Other forms of nonstore shopping including various formats such as
catalogue/mail order shopping, direct selling, and so on are growing rapidly.
However, the size of the direct market industry is too limited to deter the retailers.
For all the convenience that it offers, electronic retailing does not suit products
where `look and see' attributes are of importance, as in apparel, or where the value
is very high, such as jewellery, or where the performance has to be tested, as of
consumer durables. The most critical issue in electronic retailing, especially in a
country such as ours, relates to payments and the various security issues involved.
However, using the internet to be able to source products and also check for
availability of stock among stores of retail chains has been proven to be effective
and cuts down on wastage by a vast amount. It makes logistical support very easy
and efficient. The trend in India is such that usage of the electronic medium for
business purposes and integrating it into the systems is increasing. This would
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slowly spread into the retailing sector as well. It has already started in the case of
some large retail houses where the affects are here to see. This again would result
in the supply chain getting leaner and vertically integrated. Though the initial
costs to implement these systems are high, in the long run it results in cost
reduction where this privilege can be passed on to the final consumer.
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Impact of Technology
The other important aspect of retailing relates to technology. It is widely felt that
the key differentiator between the successful and not so successful retailers is
primarily in the area of technology. Simultaneously, it will be technology that will
help the organized retailer score over the unorganized players, giving both cost
and service advantages.
Retailing is a `technology-intensive' industry. It is quoted that everyday at least
500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales
counters of JC Penney to its corporate headquarters. Successful retailers today
work closely with their vendors to predict consumer demand, shorten lead times,
reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept
of building a competitive advantage through distribution and information systems
in the retailing industry. They introduced two innovative logistics techniques -
cross-docking and electronic data interchange. Today, online systems link point-
of-sales terminals to the main office where detailed analyses on sales by item,
classification, stores or vendor are carried out online. Besides vendors, the focus
of the retailing sector is to develop the link with the consumer. `Data
Warehousing' is an established concept in the advanced nations. With the help of
`database retailing', information on existing and potential customers is tracked.
Besides knowing what was purchased and by whom, information on softer issues
such as demographics and psychographics is captured.
Retailing, as discussed before, is at a nascent stage in India. Most organized
players have managed to put the front ends in place, but these are relatively easy
to copy. The relatively complicated information systems and underlying
technologies are in the process of being established. Most grocery retailers such
as Food World have started tracking consumer purchases through CRM. The
lifestyle retailers through their `affinity clubs' and `reward clubs' are establishing
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their processes. The traditional retailers will always continue to exist but
organized retailers are working towards revamping their business to obtain
strategic advantages at various levels - market, cost, knowledge and customer.
With differentiating strategies - value for money, shopping experience, variety,
quality, discounts and advanced systems and technology in the back-end, change
in the equilibrium with manufacturers and a thorough understanding of the
consumer behaviour, the ground is all set for the organized retailers
Food Safety Issues:
As awareness grows about food safety issues, the need for countries to provide
greater assurance about the safety and quality of food also grows. The increase in
world food trade and the advent of the Sanitary and Phytosanitary (SPS)
Agreement under the World Trade Organization (WTO) have also raised interest
in food safety requirements. To ensure a strong presence in global markets, India
realizes the need to meet these challenges and keep pace with international
developments in India, it has come to the notice of general public of late that very
“popular” food companies could also go wayward as far as food-safety and public
health is concerned. This has triggered off a drive by the public and the
Government to put more stringent food safety and public health measures in place
while manufacturing, storing and packaging of foodstuffs takes place. Most
foodstuffs pass through the organized retail channels on their way to the purchase
baskets of consumers and therefore the retailers are beginning to realize the need
for food safety and security. Grading and standardization measures are being
taken at various stages of the manufacturing, processing, packaging and storing of
all kinds of food materials.
To ensure food safety and maintain product integrity from the source to the
customer (farm-to-plate) the Food Retailing Companies would have to establish a
totally integrated infrastructure and services package. This connects and maintains
the flow of food from the source (farmers/food growers, farm service centers,
market yards, processors, importers) to the customer (foodservice outlets, food
processing units, food retailers and food exporters). This package will help
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eliminate or prevent identified hazards or reduces them to acceptable levels. This
trend is slowly beginning to take shape with the efforts to integrate and
consolidate the supply chain in Indian Food Retailing.
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The Codex, HACCP (The Hazard Analysis Critical Control Point) and food-
hygiene standards have been adopted by the Bureau of Indian Standards, the
national standards body in India. Food processing units are being encouraged to
adopt these systems on a voluntary basis.
Organizations like VOICE (Voluntary Organization in the Interest of Consumer
Education) have undertaken the responsibility to document the existing level of
implementation of National Laws concerning labeling and packaging of imported
food products, to analyze and compare with the Indian made food products and
similar imported food products in terms of adherence of the National Laws, to
prepare a well-documented campaign kit for the consumer groups in India on the
study to sensitize and build awareness among consumers on seeking and
demanding mandatory information on all packaged food products.
Food Labeling In India With Special Reference To Codex Guidelines:
Food retailers have realized that they should have a fairly good understanding of
the general concepts, role and functions of labeling of food products in view of
the various kinds of foods available in the market. Consumers in Indian markets
are now only buying products that are labeled and the labels should contain true
information about the product, safety and its quality having the required standard
that may not threaten the health or safety of any single individual. Knowledge of
food standards for labeling as prepared by national (PFA) and international
authorities (Codex) is essential for food retailers.
The Codex Alimentarius Commission body implements the joint FAO-WHO food
standards program, the purpose of which is to protect the health of consumers and
to ensure fair practices in the food trade. In view of this, it is pertinent to follow
its rules and regulations in matters of food safety and labeling. The decisions
made by Codex have profound effects on economics and the health and well
beings of citizens around the world. The fact that 165 nations are members of
Codex and this membership represents 98 percent of the world’s population
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further illustrates the great influence Codex has most retailers in the organized
food retailing industry in India have begun to insist on labeling that has to be
standardized as awareness among consumers has increased considerably.
Standards on labeling have become mandatory with a specific mention of the
name of the food item, and date of manufacture and storage instructions. Where
the scope of Codex Standard is not limited to pre-packaged foods, a provision for
labeling of non-retail containers may be included. In such cases, the provision
may specify that information on provisions shall be given either on the container
or in the accompanying documents, except that the name of the product, lot
identification, and the name and address of the manufacturer or packer shall
appear on the container.
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Annexure:
1. India’s Top Food Retailers
Food World
FoodWorld has become India’s largest and fastest growing supermarket chain.
Today, over 89 stores offer customers a variety of brands at a very reasonable
price. FoodWorld in India, is an alliance between the RPG Group in India with
Dairy Farm International of the Jardine Matheson Group. Food World aims at
establishing 100 stores all over Tamil Nadu, Andhra Pradesh, Karnataka and
Maharashtra by mid-2004 with a turnover of Rs.500 crores.
Trinethra is a supermarket chain that has predominant presence in the southern
state of Andhra Pradesh with 66 stores spread over 8 districts of the state. Their
turnover was Rs. 78.8 crores for the year 2002-03. This figure is expected to
touch the Rs.100 crores mark by 2003-04. The Trinethra group came into being as
a single store in the year 1986. They plan to saturate their presence through out
the state of Andhra Pradesh before venturing into two more southern states of the
country. The group plans to venture into the lower level regions like smaller
towns and mandals by using the franchisee-model. They are also very clear that
they would be setting up three hypermarkets in the state soon.
Apna Bazaar, the Rs 140-crore consumer cooperative society with a customer
base of over 12 lakh, plans to cater to an upwardly mobile urban population – a
first for the 55-year-old chain that has mostly been identified with the ‘middle
class’. The plans include trimming and training the workforce, opening new
outlets and focusing on the FMCG sector. Now, the cooperative has 80 outlets in
Mumbai, Thane and the neighbouring Konkan region. It has recently opened its
first shop outside the state in Goa . The revenue target for 2003-04 is Rs 150
crore. The chain plans to remain open all days of the week and this itself is
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expected to fetch about Rs 10 crore a year.
Big Bazaar – Pantaloons
After Bangalore, Hyderabad and Kolkata, BIG Bazaar, a division of Pantaloon
Retail (India) Ltd has stretched its brand to Mumbai by opening three hyper
markets in the city. Offering discounts ranging from 5 per cent to 60 per cent,
discount stores is still a nascent concept in India. Big Bazaar launched its stores in
Bangalore, Hyderabad and Kolkata in 2001. Marking an investment of Rs 10
crore into this new division, Pantaloon is expects to record the highest turnover
from its Mumbai stores to the tune of almost Rs 80 crore from Mumbai alone
within the first year of operations. But the turnover from its other Big Bazaar
stores in Bangalore, Hyderabad and Kolkata is Rs 50 crore this year. Big Bazaar
claims to be India's first chain of hypermarket discount stores.
Margin Free
The Kerala-based Margin Free discount stores, the `pure retail' chain with
arguably the largest presence in the country. The retail store chain is uniformly
spread across the 240-odd Margin Free franchisees in Kerala, Tamil Nadu and
Karnataka. Margin Free draws inspiration from the undying loyalty of its
customers who have wholeheartedly welcomed all its growth plans in the past.
Margin Free plans to open huge hypermarkets (50.000sq.ft each) in Ernakulam,
Thiruvananthapuram and Kozhikode in the immediate future.
Subhiksha
The Chennai-based retail food and pharmacy chain Subhiksha supermarket and
pharmacy is in expansion mode. it plans to go national and have 400 stores in the
next two years. Currently, Subhiskha has a strong presence only in Tamil Nadu
and Pondicherry with over 150 stores. The decision to expand outside Tamil
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Nadu, is because the city has reached saturation and also, the purchasing power is
high in larger metros. Subhiksha stores sell household items and medicines at
significant discount to normal prices. The retail chain earned a total revenue of Rs
235 crore in 2002-03. The first Subhiksha store was opened in Tiruvanmiyur in
Chennai in March 1997. Today, the chain has about 164 outlets in Tamil Nadu
and Pondicherry. In 1997-98 Subhiksha was making a turnover of Rs 12 crores
and a profit of Rs 10 lakhs. In 2003 it has grown to Rs 224 crores turnover and Rs
3 crores profit. Major plans are on in Karnataka to open 40 stores in Bangalore in
the next nine months and another seven stores in Mysore in the same period. In
all, it is intended to open at least 250 stores by 2005. The group is looking at
extending operations in Karnataka and also venturing into the Maharashtra,
Andhra Pradesh and Gujarat markets.
Nilgiris
Muthusamy Mudaliar opened a small bunk shop in Ooty. That was in 1905 and
the beginning of a long story in procurement and customer satisfaction. In 1936,
the shop moved to Bangalore with its registered office on Brigade Road, a small
shop exactly where the huge mother store is now located. The first expansion
happened when Muthusamy Mudaliar's son Chenniappan, also the chairman,
established Nilgiris as a modest store carrying Nilgiris' own products, mostly
dairy and bakery. Eventually, it evolved into a supermarket when Mr
Chenniappan visited the U.S. and Europe and was influenced by the old
supermarket concept in the west. This chain has now blossomed to cover a vast
region in South India with 26 outlets and annual sales of about Rs.2300 Millions.
They plan to open an additional 30 outlets in their next phase of expansion.
MTR
The MTR Group of Companies promoted by the family of MAIYAS took birth in
the year 1924 with the commencement of a Restaurant in Bangalore. Later in
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1976, MTR ventured into the business of retailing of Groceries and other
household general items by opening a Department Store. MTR first brought out a
packaged, processed food product. Subsequently, efforts were made to extend the
distribution of the above products to few other prominent Retail Stores in
Bangalore, such as Nilgiris, Vijaya Bakery, Shivananda Stores, Home Needs etc.
The response was found to be very encouraging in terms of sales of the above
products. Consequently, a major step with respect to marketing was taken by the
Group in the year 1983. It was during 1983 that MTR appointed Distributors in
Bangalore, Madras, Hyderabad and Vijayawada with a view to capture business
opportunities in the said markets.
Janatha Bazars & HOPCOMS
Cooperative Departmental stores were started with Government patronage in the
early 1960's at a time when shortage of basic goods was the order of the day. Poor
marketing strategies hindered their progress in the field. Total membership -
11,680 farmers, with 100 tonnes of horticultural produce being traded per day in
eight districts. In 1998, each cooperative society was made independent, sixteen
of which were subsequently federated at the state level, as members of the
Karnataka Horticulture Federation.
Presence of MNC chains
Metro AG
Opened its first Indian outlet in Yeshwanthpur, Bangalore on a sprawling 6,500
square metres area. Proposed to open one more centre in Bangalore during
November 2003. Capital expenditure for these two centres is Rs.176 crores (35
million euros). Employ 300 local people and head quarter will employ 750 local
people.
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10)Challenges of Retailing in India
Retailing as an industry in India has still a long way to go. To become a truly
flourishing industry, retailing needs to cross the following hurdles:
• Automatic approval is not allowed for foreign investment in retail.
• Regulations restricting real estate purchases, and cumbersome local laws.
• Taxation, which favours small retail businesses.
• Absence of developed supply chain and integrated IT management.
• Lack of trained work force.
• Low skill level for retailing management.
• Intrinsic complexity of retailing – rapid price changes, constant threat of
product obsolescence and low margins.
The retailers in India have to learn both the art and science of retailing by closely
following how retailers in other parts of the world are organizing, managing, and
coping up with new challenges in an ever-changing marketplace. Indian retailers
must use innovative retail formats to enhance shopping experience, and try to
understand the regional variations in consumer attitudes to retailing. Retail
marketing efforts have to improve in the country - advertising, promotions, and
campaigns to attract customers; building loyalty by identifying regular shoppers
and offering benefits to them; efficiently managing high-value customers; and
monitoring customer needs constantly, are some of the aspects which Indian
retailers need to focus upon on a more pro-active basis.
Despite the presence of the basic ingredients required for growth of the
retail industry in India, it still faces substantial hurdles that will retard and
inhibit its growth in the future. One of the key impediments is the lack of
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FDI status. This has largely limited capital investments in supply chain
infrastructure, which is a key for development and growth of food retailing
and has also constrained access to world- class retail practices. Multiplicity
and complexity of taxes, lack of proper infrastructure and relatively high
cost of real estate are the other impediments to the growth of retailing.
While the industry and the government are trying to remove many of these
hurdles, some of the roadblocks will remain and will continue to affect the
smooth growth of this industry. Fitch believes that while the market share of
organised retail will grow and become significant in the next decade, this
growth would, however, not be at the same rapid pace as in other emerging
markets. Organised retailing in India is gaining wider acceptance. The
development of the organised retail sector, during the last decade, has begun
to change the face of retailing, especially, in the major metros of the
country. Experiences in the developed and developing countries prove that
performance of organised retail is strongly linked to the performance of the
economy as a whole. This is mainly on account of the reach and penetration
of this business and its scientific approach in dealing with customers and
their needs. In spite of the positive prospects of this industry, Indian
retailing faces some major hurdles (see Table 1), which have stymied its
growth. Early signs of organized retail were visible even in the 1970s when
Nilgiris (food), Viveks (consumer durables) and Nallis (sarees) started their
operations. However, as a result of the roadblocks (mentioned in Table 1),
the industry remained in a rudimentary stage. While these retailers gave the
necessary ambience to customers, little effort was made to introduce world-
class customer care practices and improve operating efficiencies. Moreover,
most of these modern developments were restricted to south India, which is
still regarded as a ‘Mecca of Indian Retail’.
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CHALLENGES:
Factors Description Implications
Barriers to
FDI not permitted
in pure retailing Absence of global players
FDI
Franchisee
arrangement
allowed Limited exposure to best practices
Lack of
Government does
not recognize the Restricted availability of finance
Industry Industry Restricts growth and scaling up
Status
Structural
Lack of
urbanization Lack of awareness of Indian consumers
Impedime
nts
Poor
transportation
infrastructure Restricted retail growth
Consumer habit
of buying fresh
foods Growth of small, one-store formats, with
Administered
pricing unmatchable cost structure
Wastage of almost 20%-25% of farm produce
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High Cost
of
Pro-tenant rent
laws Difficult to find good real estate in terms of
Real
Non-availability
of government
land, location and size
Estate
zoning
restrictions High land cost owing to constrained supply
Lack of clear
ownership titles,
high stamp Disorganized nature of transactions duty 10%
Supply
Chain
Several segments
like food and
apparel Limited product range
Bottleneck
s
reserved for
SSIs Makes scaling up difficult
Distribution,
logistics
constraints –
High cost and complexity of sourcing &
planning
restrictions of
purchase and
movement of Lack of value addition and increase in costs by
food grains,
absence of cold
chain almost 15%
Infrastructure
Long
intermediation
chain
Complex Differential sales
tax rates across
Added cost and complexity of distribution
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states
Taxation
Multi-point
octroi Cost advantage for smaller stores through tax
System
Sales tax
avoidance by
smaller stores evasion
Multiple
Stringent labor
laws governing
hours of Limits flexibility in operations
Legislation
s
work, minimum
wage payments Irritant value in establishing chain operations;
Multiple
licenses/clearanc
es required adds to overall costs
Customer
Local
consumption
habits Leads to product proliferation
Preferences Need for variety Need to stock larger number of SKUs at store
Cultural issues level
Increases complexity in sourcing & planning
Increases the cost of store management
Availabilit
y of
Highly educated
class does not
consider Lack of trained personnel
Talent
retailing a
profession of
choice Higher trial and error in managing retail
Lack of proper operations
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training
Increase in personnel costs
Manufactur
ers
No increase in
margins Manufacturers refuse to dis-intermediate and
Backlash pass on intermediary margins to retailers
Source: Market Participants, Fitch
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11)Future Prospects of Organized Retail Sector in India:
India has been ranked as the third most attractive nation for retail investment
among 30 emerging markets by the US-based global management consulting
firm.
AT Kearney’s study on Global Retailing Trends Found that India is the least
competitive as well as least saturated of all major Global markets. This implies
that there are significantly low entry barriers for players trying to setup base in
India, in terms of competitive landscape. The report further stated that Global
Retailer such as Wal-Mart, Carrefour, Tesco and Casino would take advantage
of more favorable FDI rules that are likely to be introduced in India. A good
talent pool, unlimited opportunities, huge markets and availability of quality
raw material at cheaper cost is expected to make India overtake the world best
retail economies by 2042.
The sector is expected to see an investment of over $30billion within next 5
years and putting modern retail in the country to $175-200 billion, according
to Techno park estimates. International retailers see India as the last retailing
frontier left as the Chinas retail sector is becoming as saturated. Domestic
players are selectively growing in India-postponing aggressive expansion
plans, adding stores judiciously and shifting gears to tier 2 and 3 cities. While
India is a difficult market to enter, the potential payoff is huge. India’s
population of nearly 1.2 billion forecast eventually to overtake China’s –also
is an attractive target.
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Carrefour, the world’s second-largest retailer, has opened its first cash-
and-carry store in India in New Delhi. Germany-based wholesale
company Metro Cash & Carry (MCC) opened its second wholesale
centre at Uppal in Hyderabad, taking to its number to six in the
country.
Jewellery retail store chain Tanishq plans to open 15 new retail stores
in various parts of the country in the 2011-12 fiscal.
V Mart Retail Ltd, a medium-sized hypermarket format retail chain, is
set to open 40 outlets over the next three years, starting with 13 stores
in 2011, in Tier-II and Tier-III cities.
Reliance Retail, the wholly owned subsidiary of Mukesh Ambani's
Reliance Industries, is set to open 150 stores by the end of Dec. 2011
and double the number of stores across the country in all formats
within five years.
Future Value Retail, a Future Group venture, will take its hypermarket
chain Big Bazaar to smaller cities of Andhra Pradesh, with an
investment of around US$ 1.54 million to US$ 4.41 million depending
on the size and format.
RPG-owned Spencer's Retail plans to set up 25 Hyper Markets
Through 2012 in the country. Spar Hypermarkets, the global food
retailing chain of the Dubai-based Landmark Group, expects to start
funding its India expansion beyond 2013 out of its local cash flow in
the country. So far, the Landmark Group has invested US$ 51.31
million in setting up five hypermarkets and plans to pump in another
US$ 51.31 million into the next phase of expansion.
Leading watchmaker Titan Industries Limited plans to invest about
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US$ 21.83 million for opening 50 premiums watch outlets Helios in
next five years to attain a sales target of US$ 87.31 million. British
high street retailer, Marks and Spencer (M&S) plans to significantly
increase its retail presence in India, targeting 50 stores in the next three
years.
Indian market has huge potential.
Spain's Inditex, Europe's largest clothing retailer opened the first store
of its flagship Zara brand in India in June 2010. It further plans to open
a total of five Zara outlets in India.
Bharti Retail, owner of Easy Day store—supermarkets and hyper marts
—plans to invest about US$ 2.5 billion over the next five years to add
about 10 million sq ft of retail space in the country by then, according
to a company spokesperson.
India's retail industry is the second largest sector, after agriculture,
which provides employment opportunities. According to Associated
Chambers of Commerce and Industry of India (ASSOCHAM), the
retail sector will create 50,000 jobs in next few years.
Retail companies are starting retail management courses in partnership
with management institutes, roping in talent from other sectors and
developing comprehensive career growth and loyalty plans for existing
employees. Top players like Pantaloon Retail India Limited, Trent,
Shopper's Stop, RPG Group and ebony are virtually on their toes.
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12) Suggestions for retail sector in India:
Many agencies have estimated differently about the size of organized
retail market in 2011. The one thing that is common amongst these
estimates is that Indian organized retail market will be very big in 2011.
The status of the retail industry will depend mostly on external factors like
Government regulations and policies and real estate prices, besides the
activities of retailers and demands of the customers also show impact on
retail industry. As the retail market place changes shape and competition
increases, the potential for improving retail productivity and cutting costs
is likely to decrease. Therefore it is important for retailers to secure a
distinctive position in the market place based on values relationships or
experience.
Finally, it is important to note that these strategies are not strictly
independent of each other; value is function of not just price quality and
service but can also be enhanced by personalization and offering a
memorable experience.
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13)CONCLUSION
The retail sector has played a phenomenal role throughout the world in
increasing productivity of consumer goods and services. It is also the second
largest industry in US in terms of numbers of employees and establishments.
There is no denying the fact that most of the developed economies are very
much relying on their retail sector as a locomotive of growth. The India Retail
Industry is the largest among all the industries, accounting for over 10 per cent
of the country GDP and around 8 per cent of the employment. The Retail
Industry in India has come forth as one of the most dynamic and fast paced
industries with several players entering the market. But all of them have not
yet tasted success because of the heavy initial investments that are required to
break even with other companies and compete with them. The India Retail
Industry is gradually inching its way towards becoming the next boom
industry.
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BIBLIOGRAPHY:
BOOKS
1) RETAIL MANAGEMENT - GIBSON G. VEDAMANI
2) RETAILING MANAGEMENT,TEXT AND CASES-
SWAPNA PRADHAN
INTERNET
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