Retail tutorial
- 2. RETAIL BASICS In India, retailing is one of the biggest sector witnessing tremendous growth. The Indian retail industry is the fifth largest industry and the second largest employer after agriculture offering bright and exciting career opportunities. Indian marketing system is transformed from an ancient market to modern market. In ancient market system trade was conducted through barter system for example, a farmer who grew 500 kg of wheat would keep 100 kg for his consumption and would keep 400kg to practice barter system, to buy clothes, utensils, pulses, salt, etc. Trade also took place in village markets or Haats where people exchanged goods with each other. Whereas in modern market system money is used to buy daily essentials. Now a days things that are required daily are available in nearby shops. This is because it is not possible for everyone to buy the goods directly from the manufacturer. Also with improvements in transport system, goods that are manufactured far away, even overseas, are available in our neighborhood.
- 3. WHAT IS RETAIL? “Retailing includes all activities involved in selling goods or services to the final consumers for personal, non-business use.” - Phillip Kotler Any organization that sells the products for consumption to the customers for their personal, family, or household use is in the occupation of retailing.
- 4. FUNCTIONS OF A RETAILOR Retailor provides the goods that customer needs, in a desired form, at a required time and place. A retailor does not sell raw material. He sells finished goods or services in the form that customer wants. A retailer buys a wide range of products from different wholesalers and offers the best products under one roof. Thus, the retailor performs the function of both buying and selling. A retailor keeps the products or services within easy reach of the customer by making them available at appropriate location.
- 5. THE RETAILER’S SERVICES TO THE CUSTOMERS •To supply the goods in small quantities to consumers at reasonable prices. • To practice personal relations, courtesy, attentiveness and honesty. • To anticipate the consumer demand and make available such stock. • To guide the consumer in buying and providing necessary information. • To provide replacement facility for the damages. • To display and demonstrate the goods to attract the
- 6. ESSENTIAL REQUIREMENTS OF RETAILERS • Establish the shop in a place where customers are attracted. • Stock the goods which are needed by the customers. • Compete in price and quality of goods to be sold. • Be financially sound and cautious of over-stocking or under- stocking. • Update with trends in the market and its position. • Ensure window display and counter display to promote sales. • Always be accessible to the customers.
- 7. IMPORTANCE OF RETAILING Retailing business is now not the same as in the past. Retail business is undergoing rapid transformation in its marketing practices. Earlier, we used to buy many items of daily use from small shops in our neighborhood or a market close by. These shops such as Kirana stores or general stores are owned by individuals, who usually sit in the shop and sell goods with the help of a few assistants. In the last few years, however, the concept of large departmental stores and malls has been introduced, which also provide us with the same products. Today, the traditional formats like hawkers, grocers and paan shops co-exist with modern formats like supermarkets, departmental stores, hypermarkets, shopping malls and non-store retailing units such as multi-level marketing and teleshopping. Retailer varies in sizes from small, independent and owner- operated shops to national and international giant categories. The increasing income levels, new products, standard of living, competition in the market and
- 8. On the other side, with the advancement of IT and communication, electronic retailing (E-retailing) became a reality to create a platform to the sellers to sell their products through television channels and internet for which payments can be made through online payments or e-banking. With changing needs and wants of consumer the growth in retail sector is inevitable and promising fast paced and exciting career options. This unit will focus on introduction to retail business, its significance and the emergence of various formats in retailing. The four sessions will cover an understanding of the concept of retail business and functions performed by a retailer, the basis of classifying retailing into store and non-store retailing. The typology of retail formats includes organized and unorganized retailing. The last session looks into the major Indian and Global retailers.
- 9. ORGANIZED AND UNORGANIZED RETAILING The Indian Retail Industry, which was traditionally dominated by small family run kirana stores is characterized by poor infrastructure, inefficient upstream processes, lack of modern technology, inadequate funding and absence of skilled manpower is known as unorganized retailing. In India unorganized retailing includes units whose activity is not registered by any statute or legal provision, and/or those, which do not maintain regular accounts. This sector is characterized by small and scattered units which sell products or services out of a fixed or mobile location. Mostly these traditional units include mandis, haats, melas, and the local baniya/ kiranas, paanwala, and others like cobbler, vegetable, fruit vendor etc., would be termed as the unorganized retailers.
- 10. Organized retailing refers to running a business in an organized and scientific manner. Organized retailing has brought in a remarkable advantage for the consumers and has a huge potential for growth that leads to a higher GDP contribution to the country and generate employment. Organized retail is nothing but a retail place where all the items are segregated and brought under one roof, unlike the unorganized retail where different goods are sold in different shops. Organized retailing provides large number of brands available and different types of products at one place. Organized retail deals with multiple formats, which is typically a multi-owner chain of stores or distribution centers run by professional management. Today, organized retailing has become an experience characterized by comfort, style and speed. It is something that offers a customer more control, convenience and choice along with an experience.
- 11. DIFFERENCES BETWEEN ORGANIZED AND UNORGANIZED RETAIL 1. In organized sector, the retail units are offer large variety of items through its retail outlets. But in unorganized sector, very few items are offered for sale in the outlets. 2. In organized sector, the size of the retail outlet is very large and stores layout and design are very attractive and comfortable to the customers. But in unorganized sector, the size is very small and usually proper layout and design of the stores is not found. 3. The size of the employees is very large in organized sector. But in unorganized sector, the employees are very less in comparison with organized sector. 4. In organized retailing, the capital requirement is very high and does not enjoy perpetual succession. In unorganized retailing, the capital requirement is very low and the business enjoys perpetual succession.
- 12. 5. Organized sector cover those enterprises or places of work where the terms of employment are regular and people have assured work. Whereas, the unorganized sector is characterized by small and scattered units which are largely outside the control of government. 6. In organized sector, the business unit is run in corporate style. But, in unorganized sector, the business units are run as sole-trading or partnership units. 7. In organized sector, the network of the retailer is vast and operates number of branches at different places. But in unorganized sector, the business is confined to a particular locality and carries the business in a single unit.
- 13. STORE AND NON-STORE RETAILING Retailing can be broadly classified as store and non-store retailing. A. Store Retailing: Store based retailing can be classified on the basis of ownership and merchandised offered. a) On the basis of ownership i) Independent Retailer: He is one who owns and operates with a few locals or family members as assistants. He has direct rapport with the customers. Examples are local baniya/ kirana store, and the paanwala. He determines the retail strategy depending on the location and the product mix. ii) Chain Retailer or Corporate Retail Chain: When two or more outlets are under a common ownership, it is called a retail chain. These stores are characterized by similarity in the products offered the ambience, advertising and promotions. Examples are Bata, Arrow, Louis Philippe Food World etc.
- 14. iii) Franchising: A franchise is a contractual agreement between the franchiser and the franchisee, which allows the franchisee to conduct business under an established name as per as a particular business format, in return for a fee or compensation. Examples are Mc Donald, Pizza Hut, Van Heusen, etc. iv) Consumer co-operatives: A consumer co-operative is a retail institution owned by its member customers. This type arises largely because of dissatisfied consumers whose needs are not fulfilled by the existing retailers. Members run these co-operatives and there is no limitation on their growth opportunities. Examples are Apna Bazars in Mumbai, Kendriya Bhandars, Sahakari Bhandars, Super bazaars, etc.
- 15. b) On the basis of merchandise offered i) Convenience Stores: these are relatively small stores located near residential areas; they are open for long hours and offer a limited line of convenience products like eggs, bread, milk, vegetables etc. ii) Supermarkets: Supermarkets are large retailing stores selling a wide variety of consumer products, mostly food, household use and grocery items with a low marginal gain. It operates on self-service style but has high turnover. It offers minimum services and operates on cash and debit/credit card basis. iii) Hypermarkets: Hypermarkets combine the features of a supermarket and a general merchandise store. It is a very large store at typically destination locations. They are designed to attract customers from a significantly large area with their low price offers, unique range etc. It follows self-service style.
- 16. iv) Specialty Stores: A store specializing in a particular type of merchandise or single product of durable goods (furniture, household goods, consumer electronics, sports, domestic appliances, jewellery etc.) is termed as specialty store. They have a very clearly defined target market and their success lies in serving the needs of the customer. Examples are Gautier furniture, Sony electronics, Tata Gold, etc. v) Departmental Stores: Departmental stores are located in central places or busy locality offering a wide variety of goods under one roof. It requires more capital to maintain different departments and huge stock of goods. Profit or loss is calculated on the entire stock. It is a combination of decentralized buying and centralized selling. They also establish restaurants inside these stores. They also provide home delivery services. vi) Catalogue Showrooms: Catalogue retailers usually specialize in hard goods (house ware, jewelry, consumer electronics, etc.). A customer visits the showroom and makes his choice of the products using the catalogue mentioning the code number of the item. The retailer arranges it from the warehouse for inspection and purchase.
- 17. B. Non-Store Retailing: Non-store retailing adopts a direct relationship with the consumer. Non-store type retailing can be classified as direct personal contact and direct response marketing. i) Direct Personal Contact: Direct selling involves making a personal contact with the end consumer, at his home or place of work. Cosmetics, jewelry, home appliances, educational materials, nutritional products, etc. This type of retailing follows the party plan or the multi-level network. They display and demonstrate on inviting to a party or customers act like master distributors appointing their customers on commission basis. For example, Eureka Forbes, Amway, Tupperware are some well-known companies involved in direct selling. ii) Direct Response Marketing: Under this type, the customer becomes aware of the products/services offered through a non- personal medium like mail, catalogues, phones, television or the internet. It includes various forms of communication with the consumers like: a) Mail Order Retailing: this form of retailing eliminates personal selling and store operations. Appropriate for specific products, the key is using customer database to develop target catalogs that appeal
- 18. b) Television Shopping: In this form of retailing, the product is advertised on television and details about the product like its features, price, and guarantee/warranty are explained. Phone numbers are provided for different cities where the products can be ordered and to get them home delivered. For example, the Tele- brands programmer, which usually presents the fitness and health related products. c) E-Shopping: This format allows the customer to evaluate and purchase from the comfort of his home through the web sites using internet. The products are delivered after online payment/ to their homes with a strong supply chain and delivery mechanism. d) Telemarketing: Telemarketing is the process of communicating with customers through telephone, promoting products or services. The executive contacts customers at a time that is convenient to them. Most companies give their toll-free numbers for customers to respond. For example, South Element System, a Hyderabad–based company offers telemarketing services.
- 19. RETAIL TERMINOLOGY Here are some commonly used terms in Retail Management: Consumerism The organized-efforts by individuals, groups, and governments to protect consumers from policies and practices that infringe consumer rights. Consumption Using a product or a service for one’s benefit in particular time; not for resale. Customer Satisfaction It is the degree at which the customer is pleased after purchasing and using a product or availing a service, and going to the same retailer
- 20. Distribution It is movement of products or services from manufacturer to end consumer through a channel. Empowered Consumers The consumers with access and knowledge of Internet, exploiting the power of digital technologies, and demanding products and services matching their personal preferences. Inventory Shrinkage Reduction of inventory due to theft by employees, customers, or by error from merchandise management at the time of receiving merchandise.
- 21. Logistics It is planning, executing and controlling of the procurement and movement of material and resources on some beneficial purpose. Markdown Reduction in price. Planogram Predetermined layout of display to promote merchandise sale. Procurement It is the process of buying a product or a service. It involves various stages such as planning, researching supplier or service provider, negotiating price, placing order, making payment and availing the product or service.
- 22. Retail Sale of products or services to end customer for consumption rather than resale. Supply-Chain Management It is the management of material and information flow in a chain from manufacturer to consumer for providing highest level of customer satisfaction at lowest possible price. Switching Costs The costs incurred by a consumer for switching from one supplier or marketplace to another. Wholesale The business of selling products of large quantity at lesser price to retailers or consumers.
- 23. RETAIL SECTORS Food It comprises of food and grocery, and food services. The consumers buy packaged food, ready-to-eat food, and avail food services at workplaces. Visiting a restaurant is no more a luxury in today’s busy life. The retail food industry is growing rapidly with the pace of lifestyles around the world. Key Players: Food and Grocery retail: Food Bazar by Pantaloons, More by Aditya Birla, Haldiram’s (India), Tesco (UK), Walmart (US), Carrefour (France). In food services retail: KFC, McDonalds, Pizza Hut, Barista, Café Coffee Day.
- 24. CLOTHING & TEXTILE Similar to food, clothing is one of the basic needs of humans. The textile industry includes manufacturing of fabrics such as natural fibers, synthetic fibers, looms, and various blends. Clothing is mainly seen as ready-to-wear apparels such as shirts, T-shirts, trousers, jeans, ladies wear, kids wear, baby clothes and hosiery garments such as socks, gloves, and inner wear. Key Players: Arrow by Arvind Mills, Park Avenue by Raymond, Century Textiles (India), Lee, Wrangler, Nautica, and Kipling, all by VF Corp (US), Bonito Deco Inc. (Taiwan).
- 25. CONSUMER DURABLES The consumer durables are expected to have long life after purchase and are not purchased frequently. It comprises retailing cars, motorcycles, and home appliances. Key Players: Vijay Sales, Croma by Tata, Maruti-Suzuki (India), Honda Motors (US), Samsung Electronics (Korea).
- 26. FOOTWEAR Footwear is categorized according to the consumer’s gender, raw material of product, and design. Key Players: Bata, Liberty Footwear, Metro Shoes Ltd. (India), Reebok International Ltd. (UK)
- 27. JEWELRY Two major segments in this retail sector are precious metal jewelry and gemstones. Out of the precious metals, Indian jewelry market forms 80% of gold jewelry, 15% of gemstone studded jewelry, and 5% of other metal jewelry. Regional festivals, special days, and customs drive the demand in this retail sector. Key Players: Tanishq by Tata, Gili by Gitanjali Group.
- 28. BOOKS-MUSIC-GIFT ARTICLES This includes assorted books, movie or audio CDs, gift articles, and souvenirs. These retail shops are often found near residential areas, tourist places, and historical monuments. Festivals and celebrations are main driving factors for sale in this sector. These items are not very frequently purchased and consumer’s emotional factor is attached to the products than its benefit. Key players: Landmark bookstore by Tata enterprise (India), Paperchase (UK).
- 29. FUEL The highest five fuel consuming countries in the world are the US, China, Japan, India, and Russia. This retail involves activities such as production, refining, and distribution. Fuel companies tie up with other retailers such as pharmacies, food & food service, gift article retails to enter into petrol pump convenience business. Key Players: Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation Ltd., Oil & Natural Gas Commission Ltd. (India), Siemens Oil & Gas Co. (US), Caltex Australia Petroleum Pty Ltd. (Australia).