Retail marketing management - Introduction Unit 1

Retail Marketing Management
Unit: 1
Introduction
By
Mr. Navin Raj Saroj
M.B.A. (Marketing)

Concept of Retailing
The distribution of products begins with the producer and
ends at the ultimate consumer. Between the producer and
consumer there is a middle man – who is retailer.
Retail is the medium who sales goods and services from
Individuals or business to the end-user. Retailers are the part
of an integrated system called the supply chain.
The term 'retail' is derived from the French word retailer
which means 'to cut a piece off or to break bulk'. In simple
terms, it implies a first-hand transaction with the customer. It
can also be defined as the timely delivery of goods and
services demanded by consumers at prices that are
competitive and affordable.

Retail Definition
Any Business that directs its marketing efforts
towards satisfying the final consumer based
upon the organization of selling goods and
services as a means of distribution

Distribution Channels
• MANUFACTURER
• DISTRIBUTOR
• WHOLESALER
• RETAILER
• END USER CONSUMER)

Retail Industry
The Retail Industry is the sector of economy
which is consisted of individuals, stores,
commercial complexes, agencies, companies,
and organizations, etc., involved in the business
of selling or merchandizing diverse finished
products or goods to the end-user consumers
directly and indirectly. Goods and products of
the retail industry or sector are the finished final
objects/products of all sectors of commerce and
economy of a country.

Characteristics of Retail
• Considered as last link in the chain of distribution,
• Purchases goods in large quantities from
wholesaler and sell in small quantity to the
consumer,
• Retailer offer – selection and provide the choice,
• Set up business trade with general public,
• Retailer normally charge higher unit price (MRP).
• Develops personal contact with consumer,

Retail Industry
The Retail Industry is the sector of economy which is
consisted of individuals, stores, commercial complexes,
agencies, companies, and organizations, etc., involved in the
business of selling or merchandizing diverse finished
products or goods to the end-user consumers directly and
indirectly. Goods and products of the retail industry or sector
are the finished final objects/products of all sectors of
commerce and economy of a country.

Factors Involve for Growing Importance of
Retail Sector
 Large and increasing contribution to GDP
 Economic importance more visible
 Major Employer
 Retailers as Gatekeepers
 Retailers diversifying their activities
 Organization growing on an international scale
 Size of Operations allowing for supply chain control
 Blurring of areas of retail to include wider area of
business activity

Division of Retail Industry – Organised and
Unorganised Retailing
Organised Retailing
• Organised retailing refers to
trading activities undertaken
by licensed retailers, that is,
those who are registered for
sales tax, income tax, etc.
These include the corporate-
backed hypermarkets and
retail chains, and also the
privately owned large retail
businesses.
Unorganised Retailing
• Unorganised retailing, on the
other hand, refers to the
traditional formats of low-
cost retailing, for example,
the local kirana shops, owner
manned general
stores, paan/beedi shops,
convenience stores, Nanglo,
hand cart and pavement
vendors, etc.

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.

International Retailers
IKEA Swedish Furniture

Types of Retailers
• Over time, different
types of retailers
have emerged and
prospered because
they have attracted
and maintained a
significant customer
base.

Retailers In Nepal
• Mom-and-pop stores (Kirana
Pasal/General store):
They are family
owned business
catering to small
sections; they are
individually handled
retail outlets and have
a personal touch.

Retailers In Nepal
• Departmental stores:
These are general
retail
merchandisers
offering quality
products and
services.

Retailers in Nepal
• Shopping malls: • The biggest form of
retail in Nepal,
malls offers
customers a mix of
all types of
products and
services including
entertainment and
food under a single
roof.

Retailers in Nepal
• E-traders/ Retailers:
• Are retailers
providing online
buying and selling
of products and
services.

Retailers in Nepal
• Discount stores: • These are factory
outlets that give
discount on the
MRP.

Retailers in Nepal
• Vending: • It is a relatively new
entry, in the retail
sector. Here
beverages, snacks
and other small
items can be
bought via vending
machine.

Retailers in Nepal
• Category killers: • Small specialty stores that
offer a variety of
categories. They are
known as category killers
as they focus on specific
categories, such as
electronics and sporting
goods. E.g. Selection
Centre Sports, Book Store

Retailers in Nepal
• Specialty stores:
• These are retail
chains dealing in
specific categories
and provide deep
assortment. Nepal
Book Depot and
Ekta Books are a
couple of
examples.

The Importance of Retail Industry
Retailing is not only an integral part of our economic
structure but also shapes and is shaped by our way of
life. The power of individual retail organization is
growing; they are now comparable with and even
bigger than, many manufacturers, which is an
indication of the growing dominance of retailers with
in the supply chain.

Retailers are often referred to as middleman or
intermediaries. The key objective for any
successful channels is to ensure availability of
the right product in the right quantity, at the
right time via the right channel.

EMERGING TRENDS IN RETAIL
 Retail improving through Management Systems – faster turnover,
better profitability, fast changing customer preferences for goods
and services.
“BETTER CUSTOMER CARE”
 Driven by changing lifestyles, strong income growth and favorable
demographic patterns, Nepalese retail is expanding at a rapid pace.
 Led by the rising purchasing power, changing consumption patterns,
increased access to information and communication technology and
improving infrastructure, rural retail market is also growing up.

Global Retail scenario
• In the other parts of the world, retailing is
better organized than what it is in Nepal.
• The US retail Industry is the world largest retail
industry and its still growing.
• In USA most part of retailing is accounted by
organized sectors.

Global Retail scenario
• The USA dominates the world retail market and
accounts for Higher % of the global retailing group.
• The organized retailing has gained a great deal of
momentum in China in the past few years.
• The developing countries are also making an effort
in the industry but organized retailing is mainly
dominated by the developed countries like USA.

Nepal’s Retail
Scenario
• Most of the retailing in Nepal is unorganized. Most of
the organized retailing in the country has just started
recently, and has been concentrated mainly in the
cities.
• Today convenience has become a priority for the Nepali
consumers and they want everything under one roof so
that they have an easy accessibility.

Nepal’s Retail Scenario
• So the organized retailing has a very big
opportunity to set itself in the Nepali markets.
• The two main factors which drives organized
retailing in Nepal are low prices and the benefits
that are offered by them.

THE DYNAMIC NATURE OF RETAIL CHANGE
• Retailing, however judged, is dynamic. Retail
Environment is changing, changing means
breaking with past:
Rewriting the Rules (Factors of Change):
Schumpeter’s theory: how to dethroning the
industry leader
1. Be Aggressive,
2. Use a Complex repertoire of actions,
3. Be Unpredictable, and
4. Delay the leader’s reaction time

THE DYNAMIC NATURE OF
RETAIL CHANGE
• Theories of Retail Institutional Change classified
into three groups:-
1. Environmental Theory
2. Cyclical Theory and
3. Conflict Theory

Environmental Theory
A whole array of factors shape the nature of retail environments:
Factors of Economic, Social, Political, Regulatory, cultural and
demographic nature all imping upon the environment in which
retailers operate.
Environmental Theories have taken a “Darwinian” approach and
suggest that only retailers with the most appropriate organizational
structure and formats will survive (Gist, 1968; Davidson et al. 1983;
Brown 1987)
The major Environmental Factors
1. Changes related to the consumer,
2. Changes in technology,
3. Changes in Competition

Cyclical Theory Cont.
The Wheel of Retailing
Wheel represents three phases through which some types of
Retailers pass :
1. Entry: trading up and vulnerability; Retailers attract customers –
low price, low service, low rent location, limited product mix
2. Expand market – More expensive merchandise, More services,
open More convenient locations. Trading up process increases
costs & price of their merchandise, creating opportunities for new
low price retailers to enter e.g. Discount stores & category
specialists
3. Some Retailers don’t begin as low price, low service entrants, e.g.
Upscale fashion specialty stores.

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

The Retail Life Cycle Theory
The theory suggests that retail developments pass
through stages. At birth (termed the embryonic stages in
the context of industry life cycles), This is followed by a
time of rapid growth as efficiency and experience
increase. Eventually growth will level off into the mature
stage due to increased costs and competition and reduced
efficiencies. In a mature market the competition remains
intense, growth slows and profits begin to fall. A
continued decreased in market share and profitability will
eventually cause the development to decline.

Conflict Theory
Competition between retailers causes changes in the
nature of the retail environment. The causes are driven
by innovations. Brown (1987) states that a response to
innovation follows a process of four stages:
• Retailers are in shock at the innovation,
• Retailers deny the threat by means of defensive
retreat;
• Retailers then move into a stage of
acknowledgement and assessment;
• Finally they (Retailers) develop a strategy of
adaptation

The structure of retailing in the UK and Europe
• The balance of power has shifted from
Manufacturers to the retailers,
• Traditional independent retailers and co-
operatives has lost market share to multiple
chain organizations,
• Markets have become increasingly consolidated
and concentrated.

The strategic approach to retail
marketing
Strategy to enter in retail business:
Cost Oriented :-
Demand Oriented :-

Nepal’s Retail Future Cont.
• Nepalese retail business is getting more and
more organized to capture the potential of the
markets.
• Mega Malls
• Multiplexes
• Large and Small super markets
• Hypermarkets
• Departmental stores are a few formats which
flourishing in the both big and small regional
markets

As the major cities have made the present retail scenario pleasant,
the future of the Nepalese Retailing Industry lies in the rural regions.
Catering to these consumers will bring tremendous business to
brands from every sector. However as the market expands many
organization entering Nepal will have to be more cautious with their
strategic plans. To tap into the psyche of consumers with different
like and dislikes and differing budgets a company has to be well
prepared and highly flexible with their product and services.
Nepal’s Retail Future

Retail marketing management - Introduction Unit 1

Retail marketing management - Introduction Unit 1

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Retail marketing management - Introduction Unit 1