VASAVI VIDYA TRUST GROUP OF INSTITUTIONS, SALEM – 103.

CLASS: II MBA UNIT: I TO V

SUBJECT : RETAIL MARKETING

INTRODUCTION
Retailing mangement is a very important part of the distribution process . It is the fast link in the chain and is
the direct ineterface of the process of the with the customer.
World of Retailing:
It is a global high tech industry that plays a major role in the global economy. About one in five workers are
employed by retailers. Increasingly retailsers are seeling their products and services through more than
one channel – such as stores , internet , and catalogs. Firm selling services to customers , such as dry
clenaing and automobile repairs are also retailers.
What is retailing?
 Most common form of doing business
 It consists of selling merchandise from a permanent location in a small quantities directly to the
customer.
 There consumers may be individual buyers or corporate
 Retailers purchases goods or merchandise in bulk from manufactures directly and then in smalll
quantities.
 Shops may located in residntal area , colony streets involved centres or in most shopping m,alls.
Meaning of Retailing
Retailing includes alll the activities involved in selling goods or services to the final consumers for
personal , non business uses. -KOTLER
A Process of promoting greater sales and customer satisfacition by gaining a better understanding of the
consumers of goods and services produced by a company.
Definition and Scope of Retailing.
Retail Industry, one of the fastest changing and vibrant industries in the world, has contributed to the
economic growth of many countries. 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.
Retailing can be defined as the buying and selling of goods and services. It can also be defined as the timely
delivery of goods and services demanded by consumers at prices that are competitive and affordable.
Retailing involves a direct interface with the customer and the coordination of business activities from end
to end- right from the concept or design stage of a product or offering, to its delivery and post-delivery
service to the customer. The industry has contributed to the economic growth
of many countries and is undoubtedly one of the fastest changing and dynamic industries in the world today.

What are the characteristics of Retailing?

1. Direct interaction with customer
2. Sales volume in quantities but less in monetary values.
3. Customers services plays a vital role.
4. Sales promotion are offered at the time point only.
5. Retail outlet are more than any other form of business.
6. Location and layout are critical factors in retail business.
7. It ofers employment opportunity to all age

Explain the types of Retailers.

Retail is usually classified by the typed of products as follows.
Departmetnal store: Very large stores offering a huge , assortmetn by Soft and hard goods often beat a
resemblance to a collection of speciality stores . A retailers of such store caries variety of categorie and has
Assortment at average price. They offer considerable customer service.
Discount store: tend to offer a wide array of products and services but ehy complete mainly on price offers
extensive assortment at average price .
Supermarket: Sell mostly food products
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Warehouse stores: That offers low cost , often high quality goods pilled on pallets or steel sleekers ,
warehouse clubs charge a member ship fee.
Demographic retailers: That aim at oe particular segment .
Variety stores: These offer extremely low cost goods with limited selection.
Mom &Pop : Is a retail outlet that is owned and operated by individuals . The range of products are very
selective and few in numbers. These stores are seen in local community often ar famuly less busiess . the
squre feet of the areas depend on sotre holder.
Speciality stores: A typically aspcecially store gives attention to a particular catelog and provides high level
of service to the customers .A pet store that specialised in setting food would be regarede as speciality store.
General store: usually a rural stor that supplies the main needs for the local community.
Convenience store: In essentially found in residental areas. They provide limited amount of merchandise at
more than average prices with speedy check out. This store is ideal for emergency and immediate purchase.
Hyper market: Provides varietie and huge volumer of exclusive merchanidse ar low margin . The opening
cost is comparatively less than othe retail shop.
Super market: IT is a selfservice store consisting mainly of grocery and limited products on non food
items. They may adopt an EDLP strategy for pricing . The super grocery can be anywhere between 20000 to
40000 square feet.
Malls: It has range of retail shops at single outlet. They endow with products , food and entertainment
under a roof.

OVERVIEW OF RETAIL SECTOR

All over the world, retailing is undergoing a process of evolution and is poised to undergo dramatic
transformation. With special reference to India, the retail sector employs over 10 percent of the national
work force but is characterised by a high degree of fragmentation with over 5 million outlets, 96 percent of
whom are very small with an area of less than 50 m2. The retail universe doubled between 1986 and 2006
and the number of outlets per 1000 people at an All India Level increased from 4.9 in 1988 to 14.8 in 2006.
Because of their small size, the Indian Retailers have very little bargaining power with manufacturers and
perform only a few of the flows in marketing channels unlike in the case of retailers in developed countries.
The corner grocer or the 'Kirana' Store is a key element in the retail in India due to the housewifes
unwillingness to go long distances for purchasing daily needs. Although convenience and merchandise were
the two most important reasons for choosing a store, the choice interia varied across product categories.
Convenience was indicated by consumers as the most important reason in the choice of groceries and fruit
outlets, chemists and life style items while merchandise was indicated as the most important in durables,
books and apparel.
In recent years, there has been a slow spread of retail chains in some formats like super markets, department
stores, malls and discount stores. Factors facilitating the spread of chains are the availability of quality
products at lower prices, improved shopping standards, convenient shopping and display and blending of
shopping with entertainment and the entry to industrial houses like Goenkas and Tatas into retailing.
Thailand is one of the countries whose economy has developed rapidly in recent years. There has been a
tradition of independently owned outlets called shop houses. These outlets are run by families, with the shop
located on the ground floor and the family's living quarters on upper floors. Thailand's first departmental
store opened in 1956 and the first shopping centre in (1967). Discounts and super stores were introduced in
1989. However, the presence of super market format has been low due to ingrained habit of buying fresh
produce. Speciality stores were just emerging in Thailand in mid 1990s.
Why Is Retailing Is Important?
Retailers are the final link in the supply chain between manufacturers and consumers. Retailing is important
because it allows manufacturers to focus on producing goods without having to be distracted by the
enormous amount of effort that it takes to interact with the end-user customers who want to purchase those
goods.

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Explain the challenges and opporunities in retail .
Challenges to Retailing

The retail sector faces lot of challenges in its operations in all most all parts of the world. To achieve and
maintain a foothold in an existing market for success, a prospective retail establishment must overcome the
following hurdles:

Regulatory barriers including

Restrictions on real estate purchases, especially as imposed by local governments and against “big-box”
chain retailers;

 Restrictions on foreign investment in retailers, in terms of both absolute amount of financing

provided and percentage share of voting stock (e.g., common stock) purchased;
 Restrictions imposed on scope of operations (e.g., multi-brand vs. single brand retailing);
 Unfavorable taxation structures, especially those designed to penalize or keep out “big box” retailers;
Absence of developed supply chain and integrated IT management system;

 High competitiveness among existing market participants and resulting low profit margins, caused in
part by
 Constant advances in product design resulting in constant threat of product obsolescence and price
declines for existing inventory; and
 Lack of properly educated and/or trained work force, often including management, caused in part by
 Lack of educational infrastructure enabling prospective market entrants to respond to the above
challenges.
Opporunities in Retail.
Retil markets show high growth potential if tapped with the right set of products and pricing. With
increasing investments in infrastructure, connectivity to such towns is now becoming easier. This helps the
retailer to increase reach in such high potential markets.

The private label space in the organized Indian retail industry has begun experiencing an increased level of
activity. The share of private label strategy in the US and the UK markets is 19 per cent and 39 per cent,
respectively, while its share in India is just 6 percent. Thus this gives a tremendous opportunity for the
homegrown label to expand its base.

India„s price competitiveness attracts large retail players to use it as a sourcing base.
Many international retailers are increasing their sourcing from India and are moving from third-party buying
offices to establishing their own wholly-owned/wholly-managed sourcing and buying offices

Explain the recent trends in retail management.

Here are the top five retail trends that will make a strong impact on the Indian retail industry in the
forthcoming year—

Online Retail Market Poised to Boom: The data gathered from a survey conducted by market research
firm RNCOS reveals that owing to the rapid expansion of e-commerce, the Indian online retail market is
expected to grow more than 4-fold to reach USD 14.5 billion by next year. According to the survey, this
growth is mainly driven by the need for shopping ease, growing number of smartphone users, higher
mobility, and time-saving factor.

Artificial Intelligence (AI) & Machine Learning (ML) to enhance Customer Experience: These
revolutionary technologies will dominate the retail supply chain in 2018. Since the tech-savvy Millennial

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consumer demands speed and a culture of retail convenience, retail stakeholders will increasingly invest in
intelligent tools to provide omni-channel service to their customers such as click-and-collect delivery service
or same-day shipping and delivery. Conversational Artificial Intelligence platforms will be significantly
utilized in 2018 for setting new standards of business intelligence and advanced analytics.

Inventory Optimization: In order to meet growing consumer expectation, delivery management will
become the topmost priority for retailers who will take more deliberate and meticulous actions pertaining to
delivery management. Retailers will embrace technology to lessen excessive inventory through artificial
intelligence (AI) planning and precision inventory planning.

Hyper-Personalization for Boosting Sales: In order to survive 2018, personalization will be the topmost
priority of the marketing strategy of Indian retailers. To enhance the shopping experience for consumers, the
best-performing Indian retailers will leverage hyper-personalization models based on behavioral data, brands
preference, demographic preference and pin codes of consumers.

Chatbots to Make Consumer Experience Interesting: Chatbots were at a nascent stage until now, but in
2018 they will be increasingly utilized by Indian retailers for interacting with customers via messaging apps.
Brands which utilize chatbots will tap customers easily by initiating conversations with the customers,
guiding them through the products or services, providing recommendations and updates, and processing
orders.

EXPLAIN THE FACTORS AFFECTING RETAIL MANAGEMENT.

FORCES IN THE RETAILERS MACRO ENVIRONMENT
Various elements such as demographic, legal, social, economic and technological variables affect an
organisation and its marketing efforts. It is now recognized by all that even a well concerned marketing plan
may fail if adversely influenced by uncontrollable factors (demographic, legal etc.). Therefore the external
macro environment must be continually monitored and its effects incorporated into Retailer's marketing
plans.
DEMOGRAPHIC ENVIRONMENT
The first environmental fact of interest to retailers is population because people make up markets. Retailers
are keenly interested in the size of the population,
its geographical distribution, density, mobility trends, age distribution and social ethnic and religious
structure.
Demographic structure is seldom static for long and changes in its composition often test the residency of a
marketing firm. Further, these changes influence the behaviour of consumers which, in turn, will have a
direct impact in the retailer's business. The ripples of these changes will reach the organisation forcing it to
alter or amend the existing marketing practices in vogue. In short, Retail firms, will have to continuously
measure the changes - qualitative as well as quantitative - that are taking place in the population structure.
To avoid negative consequences brought on by active consumer groups, a retailer must communicate with
consumers, anticipate problems, respond to complaints and make sure that the firm operates properly.
SOCIAL/ CULTURAL ENVIRONMENT
In recent years, the concept of social responsibility has entered into the marketing literature as an alternative
to the marketing concept. The implication of socially responsible marketing is that retail firms should take
the lead in eliminating socially harmful products such as cigarettes and other harmful drugs etc. There are
innumerable pressure groups such as consumer activists, social workers, mass media, professional groups
and others who impose restrictions on marketing process and its impact may be felt by retailers in doing
their business.
The society that people grow up in shapes their basic beliefs, values and norms. People live in different parts
of the country may have different cultural values - which has to be analysed by retail business
people/firmThis will help them to reorient their strategy to fulfill the demands of their consumers

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 Retail marketers have a keen interest in anticipating cultural shifts in order to spot new marketing
opportunities and threats. Several firms such as ORG, MARG etc. offer social / cultural forecasts in this
connection. For example, marketers of foods, exercise equipment and so on will want to cater to this trend
with appropriate products and communication appeals.
Legislation affecting retail business has steadily increased over the years. The legislation has a number of
purposes.

RETAIL MARKETING-INTRODUCTION
The second purpose of Government regulation is to protect consumers from unfair retail practices. Some
firms, if left alone, would adulterate their products, tell lies in their advertising, deceive through their
packages and bait through their prices. Unfair consumer practices have been defined and are enforced by
various agencies.
The third purpose of Government Regulation is to protect the larger interest of society against unbridled
business behaviour. The retail marketing executive needs a good working knowledge of the major laws
protecting competition consumers and the larger interests of society.
ECONOMIC ENVIRONMENT
Retail markets consist of purchasing power as well as people. Total purchasing power is a function of
current income, prices, savings and credit availability. Marketers should be cognizant of major trends in the
economic environment.
The changes in economic conditions can have destructive impacts on business plans of a firm. Economic
forecasters looking ahead through the next decade are likely to find their predictions clouded by the
recurrent themes of shortages, rising costs and up and down business cycles. These changes in economic
conditions provide marketers with new challenges and threats. How effectively these challenges could be
converted into opportunities depend on well-thought-out marketing programmes and strategies.
Further, no economy is free from the tendency of variation between boom and depression, whether it is a
free economy or controlled economy. In any event, economic swings affect marketing activity, because they
affect purchasing power.
Retail marketing firms are susceptible to economic conditions, both directly and through the medium of
market place. For example, the cost of all inputs positively respond to upward swing of economic condition
- which will affect the output price and consequently affect the sales. The effect on consumers also
influences the marketing through changes in consumer habits. This is an indirect influence.
For example, in the event of increase in prices, consumers often curtail or postpone their expenditures.
Conversely, during time of fall in prices, consumers are much less conscious of small price differences and
would buy luxury and shopping products.

TECHNOLOGICAL ENVIRONMENT
The most dramatic force shaping people's lives is technology. Advances in technology are an important
factor which affect detail marketers in two ways.
First, they are totally unpredictable and secondly, adoption of new technology often is prevented by
constraints imposed by internal and external resources. At the same time, it should be remembered that
technological progress creates new avenues of opportunity and also poses threat for individual firms.
Technology has helped retailers to measure the products with modern weighing machines. Earlier, they have
used balances which could not measure the merchandise correctly. With the help of weighing machine,
products can be measured with the result customer satisfaction can be enhanced. In the following areas
where technology have been extensively used.
1. Packing of the products
2. Printing the name of the shop on the product visibly
3. Modern refrigerators where merchandise can be used for a long time and
4. Billing.

Technological change faces opposition from one group of people-telling that it may lead to retrenchment of
employees. But in the long run, this argument may not sustain, retail marketers need to understand the
changing technological

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environment and how new technologies can serve human needs. They need to work closely with research
and development people to encourage more consumer oriented research. The retail marketers must be alert
to the negative aspects of any innovation that might harm the users and create consumer distrust and
opposition.
POLITICAL / LEGAL ENVIRONMENT
Retail marketing decisions are substantially impacted by developments in the political / legal environment.
This environment is composed of laws, government agencies and pressure groups that influence and
constrain various organisations and individuals in society.
Legislation affecting retail business has steadily increased over the years. The legislation has a number of
purposes.
FACTORS IS THE RETAILER'S MICRO ENVIRONMENT
Every retailers' primary goal is to profitably serve and satisfy specific needs of chosen target markets. To
carry out this task, the retailer links himself with a set of suppliers and a set of intermediaries to reach its
target customers. The suppliers /
SUPPLIERS
Suppliers are business firms and individuals who provide resources needed by the retailer. For example a
retail store must obtain various products from different suppliers so that as and when customers come and
ask the products, he will be in a position to sell them on time.
Developments in the 'suppliers' environment can have a substantial impact on the retailer's marketing
operations. Retail managers need to watch price trends of their key inputs. They are equally concerned with
supply availability. Supply shortages and other events can prevent fulfilling delivery promises and lose sales
in the short run and damage customer goodwill in the long run. Many shops prefer to
buy from multiple sources to avoid depending on any one supplier who might raise prices arbitrarily or limit
supply.
Retail purchasing agents try to build long-term trusting relationships with key suppliers. In times of
shortage, these agents find that they have to 'market' their shop to suppliers in order to get preferential
supplies.
INTERMEDIARIES
Intermediaries are firms that aid the retail shop in promoting selling and distributing its goods to final
buyers. Large business organizations might hire agents to find retailers in various South Indian cities and
pay commission to these agents based on their success. The agents do not buy the merchandise - they direct
retailers to buy and sell ultimately to the consumers.
Physical distribution firms assist the retailer in stocking and moving goods from their original locations to
their destinations. Warehousing firms store and protect goods before they more to the next destination.
Every retailer has to decide how much storage space to build for itself and how much storage space allotted
for different merchandise.
CUSTOMERS:
A retailer links himself with suppliers and middlemen, so that he can efficiently supply appropriate products
and services to its target market. Its target market may be individuals and households that buy goods and
services for personal consumption.
COMPETITIRORS:
A retailer rarely stands alone in its effort to serve a given customer market. His efforts to build an efficient
marketing system to serve the market are matched by similar efforts on the part of others. The retailer's
marketing system is surrounded and affected by a host of competitors. These competitors have to be
identified, monitored and outmaneuvered to capture and maintain customer loyalty.
EXPLAIN THE GOVERNMENT IMPLICATION MADE FOR RETAIL MANAGEMENT.

Government Implications on Retail

The recent announcement by the Indian government with Foreign Direct Investment (FDI) in retail,
especially allowing 100% FDI in single brands and multi-brand FDI has created positive sentiments in the
retail sector. There is a fear that allowing FDI in retail would result in lowering of prices, as FDI will bring
in good technology, reduces supply chain etc. If prices are lowered, then it will lower the margin of
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unorganized players also. As a result of this, the unorganised market will be affected. This in turn will have
an impact on the employment opportunities provided by the unorganised market. Moreover, FDI in retail
will drain out the country‟s share of revenue to foreign countries, which may cause negative impact on
India‟s economy. Fear also comes that domestic organised retail sector might not be competitive enough to
tackle international players resulting not only in loss of market share for them but in closure of their units.
There is a possibility of small business owners and workers from other functional areas, as lot of people are
involved in unorganised retail business, may lose their jobs. Small retailers and other „Kirana Stores‟ may
close down. Supermarkets will establish their monopoly in the Indian market. Due to supermarkets fine
tuning and higher accessibility, they will be able to buy goods at lower prices and therefore will be able to
sell at lower prices to consumers. This will result in closing of many small retailers. Though Government
has stipulated that 30% procurement should be from Indian sources, this may get diluted over the years. The
remaining 70% procurement from cheaper countries will make the people run towards that stuff and the 30%
supply from Indian small industries will have their own death, unable to compete with low price Chinese
goods. Also, the retail sector in India does not enjoy industry status in India, thereby making difficult for
retailers to raise funds.

FDI IN RETAIL SECTOR FDI in retail industry means that foreign companies in certain categories can sell
products through their own retail shop in the country. At present, foreign direct investment (FDI) in pure
retailing is not permitted under Indian law. Government of India has allowed FDI in retail of specific brand
of products. Following this, foreign companies in certain categories can sell products through their own
retail shops in the country. India‟s retail industry is estimated to be worth approximately US$411.28 billion
and is still growing, expected to reach US$804.06 billion in 2015. As part of the economic liberalization
process set in place by the Industrial Policy of 1991, the Indian government has opened the retail sector to
FDI slowly through a series of steps: 1995: World Trade Organization‟s General Agreement on Trade in
Services, which includes both wholesale and retailing services, came into effect. 1997: FDI in cash and carry
(wholesale) with 100% rights allowed under the government approval route. 2006: FDI in cash and carry
(wholesale) brought under the automatic route. Up to 51 percent investment in a single-brand retail outlet
permitted. 2011: 100% FDI in single brand retail permitted.

Any additional product categories to be sold under single-brand retail must first receive additional
government approval FDI in single-brand retail implies that a retail store with foreign investment can only
sell one brand. For example, if Adidas were to obtain permission to retail its flagship brand in India, those
retail outlets could only sell products under the Adidas brand. For Adidas to sell products under the Reebok
brand, which it owns, separate government permission is required and (if permission is granted) Reebok
products must then be sold in separate retail outlet. Single-brand products include only those identified
during manufacturing. FDI Single Brand Retail Only single-brand products are sold (i.e. sale of multi-
brand goods is not allowed, even if produced by the same manufacturer).Products are sold under the same
brand internationally.

FDI IN ―MULTI-BRAND‖ RETAIL While the government of India has also not clearly defined the term
“multi-brand retail,” FDI in multi-brand retail generally refers to selling multiple brands under one roof.
Currently, this sector is limited to a maximum of 49 percent foreign equity participation. These are positive
steps and it will encourage international brands to set up shop in India. On the other hand, this will also lead
to competition among Indian players. It will be the consumers who stand to gain,'' This would not change
the market dynamics immediately as it will take some time for these plans to fructify. The growing
dominance of multinational companies in the country's $200 billion retail business, had warned that any
move to increase FDI in the retail sector would ruin the business of small and medium traders scattered over
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the country. Organized retailers in India are opposing the entry of MNCs in retail trading because of their
predatory pricing strategy that wipes out competition, when the Government decides to allow foreign
players to enter the retail.
Government policy for Retail sector in India There has been vigorous opposition to foreign direct
investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away
their business, lead to the closure of many small trading businesses and result in considerable
[Link] has been vigorous opposition to foreign direct investment (FDI) in retailing from small
traders who fear that foreign retailing companies would take away their business, lead to the closure of many
small trading businesses and result in considerable unemployment. Given the political clout of the small
trading community, because of their enormous numbers, the government has barred FDI in retailing since
[Link] the political clout of the small trading community, because of their enormous numbers, the
government has barred FDI in retailing since 1997. Therefore till January 2006, foreign retailers can only
enter the retailing sector through franchising agreements. As a big move to liberalize Foreign Direct
Investment (FDI) regime, on January 24 the cabinet approved new FDI norms for retailing. It has allowed up
to 51 per cent FDI in single brand retailing. As of now, single brand retailers operate through the franchisee
route and there is a strong view that FDI in this segment would not displace jobs or impact the local industry
but help create employment. This most recent economic liberalization is good news for many of the world's
marketers of top labels, who currently sell their goods through the country's handful of homegrown,
domestically owned and operated retailers. Potentially, any single branded consumer product -- from apparel
and shoes to mobile phones and cameras -- would be permitted to put up money for a majority stake in retail
shops selling one brand.
OPPORTUNITIES Retail marketing gets various opportunities to grow up in the Indian market. Not only
retailing but Manufacturers as well as suppliers, and buyers have various opportunities

WHAT IS IN STORE
Organized retail provides brands much needed visibility and platform for customer interaction. It also helps
in launching of new product or product variant and in market penetration. It has wider product range and
more frequent, speedier deliveries
URBANIZATION Increased urbanization has shifted consumers to one place and thus a single retail can
catch more customers.

NUCLEAR FAMILY As the time passed away joint families came in a new form i.e. nuclear family. Again
the income level of these nuclear families increases because both members started earning. This results into
increased power of purchase and lack of time. Now they want everything under one roof. This brought the
concept of organized retailing.

PLASTIC REVOLUTION – Increased use of credit cards is in favour of retail marketing. It creates
requirement even when it is not necessary. Organized retail stores put stress on proper infrastructure like
well maintained building, air conditioning, trained employees, electronic machine, parking facilities and
proper display of goods category wise. Here customers feel comfort, joy and entertainment. Purchasing
becomes joy for him. Self-selection saves time and gives more opportunities and satisfaction. Fix cost
removes the threat of misleading. They avail various discounts and promotional schemes presented by the
manufacturers. They also get product of different varieties and of proper
EMPLOYMENT - Retail marketing is one of the largest employments generating industry. It provides
employment to skilled, semi-skilled as well as to unskilled persons. Thus it helps in the socio- economic
development of the society.
PRICE WAR – Increase in the no of retail outlets increases competition among these retailers. To attract
customers they give various promotional schemes as various discounts, buy one get one free, another
product with any particular product, festival special, etc
CONTRACT FARMING – The retail marketers directly purchase from farmers and reducing middlemen,
thus provide proper cost to farmers and also set proper price for consumers. They also make contract with
farmers to get proper amount of crops and vegetables.

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REDUCES SUPPLY CHAIN MANAGEMENT - The big players of retail marketing and the
manufacturing companies directly come in contact thus reducing many intermediary chains. Manufacturers
also give many promotional schemes for their product that is beneficial for consumers

UNIT-II
RETAIL FORMATS
Organized Vs. Unorganized Sectors
The Indian retail industry is divided into organized and unorganized sectors. The unorganized retail
comprises of the local baniya or kirana shop, paan and beedi shops and the other owner manned general
stores . These retailers bnormally do not pay taxes and most of them are not even registered for sales tax,
VAT, or income tax.
On the other hand, the organized retail comprises of the licensed retailers who are registered for sales tax,
income tax etc. and it comprises of the malls, supermarkets, hypermarkets etc.

MEANING OF UNORGANIZED RETAIL

A local kirana shop “Unorganized retailing” is defined as an outlet which is run locally by the owner or the
caretaker of a shop who lacks the technical and the accounting standardization. The supply chain and the
sourcing are also usually done locally to meet the local needs Unorganized merchandising, refers to the
normal formats of cheap retail, the native kirana retailers, the owner manned general stores, paan / beedi
retailers, the convenience stores, hardware stores at the corner of one‟s street, small medical shps etc.
Small-store (kirana) retailing has been one of the easiest ways to generate what is called self-employment as
it requires a very limited investment in land, capital and labour. It is generally a family run business; there is
lack of standardization and the retailers who run this store lack education, experience and exposure.

MEANING OF ORGANIZED RETAIL

„Organized Retail refers to the set-up of any retail chain supported by a well defined Supply Chain which
usually has a small number of middlemen when compared to the unorganized sector. Due to a number of
factors like cutting down of middlemen, removing of bottlenecks along the supply chain, efficiency in the
processes, etc., the end user is rewarded with a better product at a cheaper price as against the unorganized
retail sector. As the consumer base is growing each minute, the organized retail sector is believed to have a
huge growth potential

STATE THE DRIVERS OF RETAIL CHANGE IN INDIA

There is a drastic change happening in retail in the country. The native bania has bit by bit reworked
himself and reformed into a little grocery store. This change is not confined only to the big cities but has
rapidly spread to smaller cities and towns as well. The person responsible for this change is the Indian
consumer. Following are the reasons that drive retail change in India:
• Socio- Economic Factors :„The socio-economic factors are indispensable to the development of a country
like India which has a large middle class and a large youth population. The increase in life expectancy from
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58 years to 66 years and also the easy availability of basic amenities like drinking water and electricity are
the prime indicators of socio economic change in the country and so it can be said that there is a definite
improvement inthe basic quality of life of an average Indian citizen because of organized retail in the scene.
• Changing Income Profiles:The economic growth in the country has lead to increase in the personal
income of the people, especially, the middle class which actually forms the backbone of the country . The
building up of the Indian middle class and the higher income echelons provides a demand for the niche and
the branded products
. • Foreign Retailers Looking For Entry Options: The increasing attractiveness of the sector is also
drawing the interest of foreign retailers who are entering the Indian market of retail through joint ventures,
franchisees etc. as they cannot start operations on their own. The very first MNC to get into the business was
Spencer‟s , a tie up between the RPG group and Dairy Farm International, a $10 billion Hong Kong- based
company , and a part of the Jardine Matheson group.‟
• More Of Working Women And The Evolving Family Structure: „The women of today have become
economically independent as compared to the past.. The purchasing habit of a working woman differs from
a housewife, since the former has lesser time to devotediffers from a housewife, since the former has lesser
time to devote to the household tasks and so, she would prefer a one-stop shop for purchasing the regular
products. Besides that, the propensity for spending is higher for a working women than that of a housewife.
Consumer Pull :„In today‟s demand led market, consumer is the king, and he is the one who calls the shots.
Over the past decade, a major evolution within the Indian shopper is seen, reason being the liberalization of
the buyer product business that initiated within the mid- eighties, accelerated through the nineties, combined
with growing consumerism driven by the media, new opportunities and increasing wealth.
• New Entrepreneurs : Since there is growing attractiveness of the retail trade, there are new entrants who
are coming up and want to join the industry with new ideas and funds which is obviously a growth driver for
the retail.‟
• The Age Factor ;„When you compare with the other advanced nations, the population in India is much
younger that creates a demand for leisure related
and impulse products. The increasing youth population starts earning early, and this also increases the
overall purchasing capacity in the country.
• Explosion Of Media :Now there are more of cable connections and a large no. of channels subscribed by
consumers and this media bombardment have raised the expectations of the consumers regarding the choice,
variety, value, service and experience of the goods and services offered which becomes a driver for the
growth of retail in India.
• Technological Impact :The most dynamic change agent today in the retailing industry is technology. With
the computerization of the various operations in theThe most dynamic change agent today in the retailing
industry is technology. With the computerization of the various operations in the retail store, things have
become much easier. Much valuable information is processed very easily and the chances of theft have also
gone down using the bar code systems, video cameras etc. Besides, the customer life has also become very
easy using technology as one can use the debit or the credit card. Also, the toll free numbers have brought
about a revolution in consumer ordering and feedback mechanisms.

Explain the Significance of Organized Retail.

• Employment Generation „Modern selling has the potential for generating employment to an oversized
range of individuals in varied retail operations that is very needed in a country like India.
• Increasing Efficiency In Agriculture The concept of middleman in the food supply chain is no longer in
use. Now the systems have become more and more technology driven. The farmers of today are cultivating
crops as per the demand of the retailers. Also, the customers are getting benefits of reduced pricing and visa
- versa the farmers are receiving higher returns for their produce. This has been made possible by organized
retail which provides mass marketing of processed and package foods.
• Entertainment Along with Shopping Today‘s time is of having fun with shopping as everyone is so
busy and people usually have only weekends when they can shop and enjoy also. An organized retail offers
this dual purpose of one stop shopping with many product baskets at a single location and also excellent
ambience and entertainment.

10
• Creating Positive Social Change- Organized retailing is leading to improvement in the local
infrastructure by providing various facilities like adequate parking, ATM along with a safe and secure
environment which has encouraged the setting up of 24 hrs. convenience stores. This has enabled a positive
social change in the industry.
• Economies Of Scale Organized retailing -eventually leads to economies of scale as they are going for
vertical integration from outlets to establishing the malls.‟
• Rapid Economic Growth- The Indian economy is growing at a fast and furious pace which has become a
driving force for Indian consumerism. Now the Indian consumers are confident about their earnings and they
spend a large portion of their high disposable incomes. The analysts project that India has the potential to be
labelled the fastest growing economy and outpace the developed economies by 2050.
• Potential Untapped Market- In India, the penetration of the organised retail is on the rise and it offers an
attractive proposition for both i.e. the entry of new players as well as expansion for the already existing
players. Also, the rise in the percentage of the rich and the super rich population with the impressive
disposable incomes has opened new avenues providing a spectrum of opportunities in various spheres. Also,
the impressive retail space availability and the growing trend of consumerism everywhere has added to the
market attractiveness.
• Low Cost Of Operation--Organized retail has lead to economies in the cost of operations as now the
target areas for retailestablishments and manpower sourcing are Tier II and Tier III cities which offer a cost
advantage by providing low cost skilled human resources.

Unorganized retail formats in India

• Mom and Pop Stores

• Peddlers and hawkers
• Market traders and street traders
Mom-and-pop Stores
These are small family-owned businesses, which sell a small collection of goods to the customers. They are
individually run and cater to small sections of the society. These stores are known for their high standards of
customer service
Explain the different forms of organised retail formats and their characteristics.
Classification On The Basis Of Ownership
• Independent retailer

An independent retailer is one who owns and operates only one retail outlet. Normally such outlets have an
owner or a proprietor and other working members in the outlet may be from the family. In India, there is a
11
huge number of independent retailers ranging from a paanwala to stores like Amarsons. An independent
retailer has certain advantages like an ease in an entry to the market, one to one rapport with customers etc.
but on the other hand, the advantages of economies of scale and the bargaining power with the suppliers is

limited.

• A chain retailer or a corporate retail chain A Chain retailer „ A corporate retail chain exists when two or
more outlets are under common ownership, and are usually having the same merchandise, ambience,
promotional schemes etc. Wills Sports (ITC), Louis Phillipe, Van Heusen, (Madura Garments), Arrow
(Arvind Mills),Planet M, etc. are a few examples. These retail chains enjoy the bargaining power and also,
cost effectiveness.‟
Features of Chain Stores
The chief features of chain stores are:
 One or more units may constitute a chain,
 They are centrally owned with some degree of centralised control of operation.
 They are horizontally „integrated‟ that is, they operate multiple stores.
 With addition of each new store, the system extends the reach to another group of customers
Advantages of Chain Stores or Multiple Shops
 Lower selling prices. This is mainly possible due to economy in buying operation.
 Economy and advertising. Common advertisements covering all the units are feasible and this
reduces advertisement expenditure
Ability to spread risks. Unlike the department store the principle here is not to “lay all the eggs in
one basket”. By trail and error, a unit sustaining losses may be shifted to some other place or even
dropped.
 There is flexibility in working.
 Since it works only on cash basis, bad debts as well as detailed accounting processes are avoided.
 Central and costly locations are not essential.
Limitations of Chain Stores or Multiple Shops
 Lower price is a false claim. According to Stanton “Price Comparison is not possible, as such stores
are handling only limited items”.
 Inflexible in practice. Multiple shops deal in standardised products only-which creates inflexibility
in offering wide varieties.
 Personnel Problems. Being a large organisation, it is always susceptible to problems associated
with large scale business.
 Poor public image. Various consumer services such as credit facility,door delivery etc. are
completely absent in chain store. The present day consumers prefer to have more services than
quality in addition to desiring low price
• Franchising

A franchise is a contractual agreement between the franchiser and the franchisee,

allowing the franchisee to conduct a business under an established name as per a particular business format
in return for a fee or compensation. „Franchising may be of the following types: While the outlets of Van
Heusen, Louis Philippe, Arrow and Benetton are examples of individual franchises in India, McDonald‟s
operates at the level of two regional franchises. Pizza Hut, Domino‟s and Subway are also franchises
operating in India.‟

12
The franchisee should also:
 Make reference check from the financial institutions.
 Make inquiries about the product, its quality, appeal, exclusiveness, competitiveness and
effectiveness in bringing in repeat customers. \
 Have enough capital to buy the franchise,
 Be capable of taking supervision work.
 Consult the professionals and seek their guidance in legal matters,
 Take risks and invest sufficient time
• Leased departments „
These are also termed as shop-in-shops. When a part of a department in a retail store is leased / rented to an
outside party, it is termed as a leased department and is a good way to expand the product offering and in
India it is specially done for perfumes and cosmetics. Nowadays it is seen that the high traffic areas like
malls, airports , multiplexes etc. are having the presence of small retail outlets or counters that are a part of
larger retail chains and they have on display a small part of the products sold at the anchor store.
• Consumer co-operatives
Consumer Cooperatives aim at providing essential commodities at cheap costs. As a national policy, shopper
cooperatives are inspired and developed as a democratic establishment, owned, managed and controlled by
its members, for cover of the interest of the common customers.‟
Classification On The Basis Of Merchandise Offered
• Convenience stores ‗These are relatively small stores located near residential areas, are open for long
hours, throughout the week offering a limited variety of convenience products. The size of the store is
between 3000-8000 [Link]. These kind of stores are still not very popular in India, but the stores at the petrol
pumps in major cities like HP Speed Mart and In & Out can be termed as convenience stores. An important
point to be thought of in Indian context is whether the local baniya is similar to a convenience store.
• Supermarkets- An inside view of a supermarket Supermarkets are usually characterized by large, low
cost, low margin, high volume self-service market designed to meet the food and nonfood items need of the
consumers. The most widely used definition of a supermarket is that of a store with a selling area of between
400 sqm and 2,500 sq.m, selling at least 70% of its merchandise comprising of foodstuffs and everyday

commodities.‟
Features of Super Markets
i. They are usually located in or near primary or secondary shopping areas but always in a place where
parking facilities are available.
ii. They use mass displays of merchandise.
iii. They normally operate as cash and carry store.
iv. They make their appeal on the basis of low price, wide selection of merchandise, nationally
advertised brands and convenient parking.
v. They operate largely on a self-service basis with a minimum number of customer services.
Advantages of Supermarkets
i. Super markets have the advantage of convenient shopping, permitting the buyer to purchase all his
requirements at one place.
ii. Super markets also stock a wide variety of items.
iii. These markets can sell at low prices because of their limited service feature, combined with large
buying power and the willingness to take low percent of profit margins.
iv. Shopping time is considerably reduced.
Limitations of Supermarkets
i. The large and extensive area required for a super market is not available cheaply in important places.
ii. The products which require explanation for their proper use can not be dealt in through the super
markets.

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 iii. Customer services are practically absen
• Hypermarket -The word hypermarket is derived from the French word hypermarche, which is a
combination of a supermarket and a department store and has a sales area of over 2,500 sq. m with minimum
35% selling space for non-grocery products.„Hypermarkets area unit these days are substitutable with one
stop looking. These stores sometimes have the most affordable costs. They nearly always have their own gas
station on the [Link] of hypermarkets in India include Giant, Big Bazaar and Star India ..

• Speciality stores- ‗A speciality store refers to a store that stores a particular type of merchandise or a
single product of durable goods like furniture, household goods, consumer electronics etc. Such a business
model is characterised by a high level of sendee or product information being made available to customers.
These are characterised by a narrow product line, with product depth concentrating mostly on jewellery,
apparels, furniture etc. Examples of speciality stores in India include retail chains like Proline fitness station
and Gautier furniture.
• Department stores- The typical departmental stores A department store is a large scale outlet often multi
levelled that offers clothing, accessories, cosmetics, household goods etc. from more or less separate
departments on different floors. While department stores have been around in India for a long time, this
format of retailing has been a fair amount of action over the past few years. In this category, the players are
Shopper‟s Stop, Globus, Westside, Lifestyle etc.‟
Features of Department Stores
(i) These are integrated stores performing operations in addition to other retail stores such as wholesaling.
(ii) Goods are divided into different classes with different locations and management within the store itself.
These stores are distinguished by the nature of goods they self and not by the varieties they keep for
example, drug and variety stores carry a wide variety of goods
Merits of Department Stores
Large department stores buy in large quantities and receive special concession or discount in their
purchases. Many of them purchase direct form manufactures and hence, middleman‟s charges are
eliminated.
Department stores are in a position to pay cash on all or most of their purchases and this gives them
an additional advantage of picking up quality goods at cheaper rates and at the same time stocking
the latest style and fads.
Customers can do all their purchases under one roof and it appeals to people of all walks of life.
Limitations of Department Stores
Department business organizations are not free from abuses. There are certain specific limitations
from which such institutions suffer such as:
 The cost of doing business is very high due to heavy overhead expenses.
 Because of their location in a central shopping area they are of not much advantage to the public
because goods required at short notice are always purchased from the nearest traders.
 There is lack of personal touch and personal supervision which is to be found in single line.
 When hired diligence is substituted for the diligence of ownership, loss and leaks are likely to occur
• Off price retailers- „ Here, the merchandise is sold at costs lower than that at retail stores. Off-price
retailers purchase manufacturers‟ seconds, overruns or off seasons at a deep [Link] merchandise that
is offered in these stores may be in odd sizes, colors may be unpopular or some minor defects may be there.
These kind of stores may be a part of some parent company or they may be a kind of speciality store. The
factory outlets in case the manufacturer owns them, may stock only company merchandise. Examples of
these include Pantaloon Factory Outlets, Levi's Factory Outlets, etc
• Catalogue showrooms -Catalogue retailers are those where the customer comes and places the order
through a catalogue of the product/s that he would like to buy and then arrangement is done to bring the
product from the warehouse for purchase by the customer. Some of the popular catalogue showroom

14
retailers in the world include Argos, Service Merchandise and Best Products.

Non-Store Retailing
A large majority - about - 80% - of retail transactions are made in stores. However, a growing volume of
sales is taking place away from stores. Retailing activities resulting in transactions that occur away from a
physical store are called non-store retailing. It is estimated that non-store sales account for almost 20% of
total retail trade.
• Direct Selling
In the context of retailing, direct selling is defined as personal contact between a sales person and a
consumer away from a retail store. This type of retailing has also been called in home selling. Annual
volume of direct selling in India is growing fast from the beginning of the 21 st century.
Like other forms of non-store retailing, direct selling is utilized in most countries. It is particularly
widespread in Japan, which accounts for about 35% of the worldwide volume of direct selling.
Advantages of Direct Selling
i. Consumers have the opportunity to buy at home or at another convenient non-store location that
provides the opportunity for personal contact with a sales person.
ii. For the seller, direct selling offers the boldest method of trying to persuade ultimate consumers to
make a purchase.
iii. The seller takes the product to the shoppers home or work place and demonstrates them for the
consumer.
Limitations of Direct Selling
i. Sales commissions run as high as 40 to 50% of the retail price; of course, they are paid only
when a sale is made.
ii. Recruiting sales people - most of whom are part timers are difficult tasks,
iii. Some sales representatives use high pressure tactics or are fraudulent.
Direct commercialism- Direct commercialism is finished once a private contact with the tip client reception
or at the place of labor is created and is sometimes in hot water merchandise like cosmetics, jewellery, food
and nutrition merchandise, home appliances and academic materials. The girls comprise up to seventy per
cent of all sales individuals in India, couples account for twenty per cent and males account for ten per cent.
It is expected that the male magnitude relation can be high in the future as some corporations like Modicare
and Amway are encouraging men in their sales division

Parameter Organized Retail Unorganized Retail

Scale of Operations Large Small

Scope of Operations Nationwide, Worldwide Local

Employees Professional, skilled, and Unprofessional

trained

Number of Stores Chain of multiple stores Maximum 2-3 outlets of the

same owner within a city or

15
 across nearby cities •

Ambience of Store Pleasant, attractive Lack of good ambience

Range of Products Wide range of products Only a range of local

across the nations products

Shopping experience Excellent, memorable, Average

engaging

Bargaining Not possible. Pricing doesn‟t Possible. Pricing varies

depend on relationship according to personal rapport

Source of merchandise Directly from Mostly from wholesaler

manufacturer/producer

Convenience of choosing Very high. Customer can Very less

products walk around and choose the
product

Examples Walmart, HyperCity, Big Standalone shops

Bazar

Direct response promoting -„Direct response promoting inculcates the assorted non-personal types of
communication with the buyer and this includes: Mail Order selling / Catalogue selling Personal
commercialism and store operations area unit is eliminated during this sort of retailing and is sometimes
applicable for the speciality merchandise.

Tele-marketing- Asian Sky search was among the primary to introduce tv looking in Asian country. This
sort of selling needs the publicity of the merchandise on tv discussing its options, price, guarantee etc. An
inventory of phone numbers area unit provided for every town so that the customer can take decision and
place the order for the merchandise which can be delivered at home .

Automated vending/ kiosks- This is the foremost impersonal sort of selling, however, it provides associate
ease and access to customers 24- hrs on a daily basis. The foremost unremarkably seen examples in Asian
country area unit are tea and coffee machines at the airports. Not to forget the foremost roaring example in
Asian country is that the cash dispenser Machines operated by the banks. This type of selling is incredibly
fashionable abroad and is employed unremarkably for soft drinks, newspapers, cigarettes and candy.

DIFFERENT ORGANISED RETAIL FORMATS

State the difference between organised and unorganised Retail.

Parameter Organized Retail Unorganized Retail

Scale of Operations Large Small

Scope of Operations Nationwide, Worldwide Local

16
Employees Professional, skilled, and Unprofessional
trained

Number of Stores Chain of multiple stores Maximum 2-3 outlets of the

same owner within a city or
across nearby cities

Ambience of Store Pleasant, attractive Lack of good ambience

Range of Products Wide range of products Only a range of local

across the nations products

Shopping experience Excellent, memorable, Average

engaging

Bargaining Not possible. Pricing Possible. Pricing varies

doesn‟t depend on according to personal rapport
relationship

Source of merchandise Directly from Mostly from wholesaler

manufacturer/producer

Convenience of choosing Very high. Customer can Very less

products walk around and choose the
product

Examples Walmart, HyperCity, Big Standalone shops

Bazar

EXPLAIN THE CHARACTERSITICS OF EACH FORMATS.

• Metros – In – The - Making
„Many railroad retailers area unit expected to open shops in these cities to profit from the “First-Mover”
advantage, and gain an edge in these cities. These cities offer ample opportunities, particularly for the food
and grocery formats, with lower lease rentals and high accessibility ofretail area, access to farms and
agricultural manufacture.
• Innovative Formats
Formats like “Wedding Malls”, that are unparalleled within the waywest are found to be are terribly eminent
within the Indian market. Themarriage Malls as an example, stock the entire vary of wedding product
offerings from attire to jewelry. The retail trade players are with successmixing data from the experiences of
the world retail trade with thedistinctive needs and preferences of the Indian consumer
• Online Retailing
The „Click-to-buy‟ development is quick catching up in India, with increase in range of broadband and dial-
up web connections, restricted personal time for searching, augmented use of plastic cash and huge base of
young population that spends a substantial time on-line. The explicit factors are facilitating rapid climb of
on-line searching with the business players scaling up to satisfy the patron needs
Rural Retailing
Rural marketing constitutes quite ninety five per cent of total retail revenues, with quite seventy per cent of
India‟s population focused within the rural areas. Rural hypermarkets square measure growing at a blistering
pace meeting the distinctive necessities of the agricultural shopper.
• Leisure And Entertainment Market
Entertainment retail is redefining Indian lifestyles with the speed of growth within the variety of multiplexes
and recreation zones matching the expansion story of malls and retail area. Reliance Infotech‟s Adlabs,

17
Shopper‟s Stop‟s Timezone have aggressive enlargement plans within the pipeline, with retailers exploring
the venture possibility with international giants within the sector having a worldwide presence.
• Cashing In On The Transit Channels
Infrastructure sector in Asian nation is booming with many capability building measures being undertaken
sharply by the central and state governments. Construction of recent airports and development of railway rail
systems equalling premium international standards is a replacement realm of selling opportunities in these
transit points.
EXPLAIN EMERGING TRENDS IN RETAILING:
• Online Shopping
„In this era of cut throat competition, most of the companies are looking for unconventional ways of
marketing and the internet has been found to be the best among them. Internet is an “anytime anywhere”
medium that has given birth to entirely new business models and opened completely novel opportunities for
global marketing. Today, almost all business firms use internet to provide information about the firm, their
products and services as it offers a high degree of interaction and provides customers unprecedented
benefits, from convenience to bargain prices.
• RFID Adoption RFID, one of the promising technologies of recent years, is a major enabler for tracing &
tracking of goods and assets around the world. Several reports from books, journals, and studies have
revealed multiple benefits of this new technology to the prospective users. This technology is expected to
revolutionize the conventional supply chains, making them real-time and more efficient, with near-total
visible inventory across the material flow. Success of pilot projects and rollouts by retailing giants like Wal-
Mart, METRO has raised great expectations in this industry for improving their supply chains
• Virtual Shopping
This technology breakthrough took place recently in Korea and particularly Seoul where TESCO has opened
the world‟s first virtual shopping store. The shelves in the store are having the LCD screens and the buyers
are required to choose their desired items by just touching those items. At the checkout time, they get a bag
with the items they have chosen. This technology is greatly helpful to customers as they do not have to move
a lot in the store carrying the bulky items with them.

• ‘Instant’ Real-Time Engagement

„This system is really helpful for the retailers as it influences the customer‟s purchase decision while he is in
the store not when he is away from the store at his home. If the customer buys a particular apparel, and the
retailer is able to suggest some matching to it, or give him some small offer on the spot when the customer is
in the store, the person may land up buying it which would raise the sales of the [Link] way the retailer is
able to cross-sell and the customer can monetize his visit to the store.
• Gesture- Driven Technology
In this type of technology, the users movements and gestures are being added to traditional methods in new
layers of interaction. One of such technology that is popping up is virtual fashion mirror or the virtual fitting
room in which a customer can choose from a variety of apparels available and without putting his clothes off
can see how that particular apparel would look on him and this way can try a lot of them and mix match just
on the touch of a finger. Multi- bit surfaces in stores place the purchasers pictures into the ad, creating the
searching expertise a lot of personal .
• Location Based Shopping Technology
More or less nowadays everyone has a smartphone and the location – based shopping (LBS) technology
targets such customers. Shopkick, one of the leaders in location- based shopping helps retailers to be in
touch with their customers by inviting them to the store by a message, displays the latest and hottest
products on the customers phone screen and even awards points just for walking in the store if a customer is
in the vicinity of the store and is having shopkick application running even in the background.
• Clienteling
This is the method of providing a one to one personalized services to clients in a retail environment. In this
type, each time a customer has purchased something from the store is recorded in his personal data so that
the next time he visits the store the person at the floor can assist his buying by looking at the previous

18
preferences and purchases. Specially this practice is being followed in the restaurants where the staff sees
that what was ordered by a customer in the past and recommend dishes accordingly.
• Customer Lifecycle Management Tools
The customer lifecycle management tools help the retailers to classify their customers in small clusters on
the basis of their demographics, purchase data etc. and then make long term focussed campaigns for each of
them.
• Mobile Wallet
Mobile Wallet or M- Wallet is another technology that is making waves and in India we have NGPay, a
leading mobile wallet company with already 1.5 million users and the edge that it has over other
technologies is that it works not only on smartphones but on all feature mobile phones. Also, they allow
users to connect to their loyalty memberships and credit credits giving a hassle free and a different shopping
experience to them. With the popularity it is gaining , many loyalty service providers in India have ntegrated
their solutions with these applications.

Explain the role of MNC ‗s in Organized retail format.

Captial:
It is the means of production ,is basic need of any retiling format. Through FDI , MNC,s are able to diffuse
the much needed reaources into developing country.
Technology: The movement of technology to produce goods as well as for communication purpose . The
introduction of technology to the developing world can lead to cleaner and more efficient technologies.
Skill : The Skill level of the workers within the host country would aslo increase because many MNC;s can
and do educate them in the job skill
Export : their GDP and GNP will also reflect the growth of industry . these changes will potentially attract
more investors in the same industry.

FDI through MNC‘s is Far easier

To attain the national development aid or multilateral bank lending because there are so many firms looking
for opporunities for optimizing profits.
Reasons for growth of MNC‘s in Retailling:
 Factor mobility
 Economic reforms
 Management culture
 Growth urge
 Market potential
 Risk Minimizing
 Developing in communication technology

UNIT-III
RETAILING DECISIONS
Meaning:
A space you lease for the leasing of goods to consumers .When it comes to business , retailers have one
overall goal: to sell merchandise . that‟s why they focus on sales floor space , adequate parking for
customers , and an overall image that draws in customers.
Explain the importance of Location in Retail Business
Retail store location is also an important factor for the marketing team to consider while setting retail
marketing strategy. Here are some reasons −
 Business location is a unique factor which the competitors cannot imitate. Hence, it can give a
strong competitive advantage.
 Selection of retail location is a long-term decision.
 It requires long-term capital investment.
 Good location is the key element for attracting customers to the outlet.
 A well-located store makes supply and distribution easier.

19
  Locations can help to change customers‟ buying habits.

Explain the choice of Business/Retail Locations

Trade Area: Types of Business Locations
A trade area is an area where the retailer attracts customers. It is also called catchment area. There are
three basic types of trade areas −Solitary Sites
These are single, free standing shops/outlets, which are isolated from other retailers. They are positioned on
roads or near other retailers or shopping centers. They are mainly used for food and non-food retailing, or
as convenience shops. For example, kiosks, mom-andpop stores (similar to kirana stores in India).
Advantages − Less occupancy cost, away from competition, less operation restrictions.
Disadvantages − No pedestrian traffic, low visibility.

Unplanned Shopping Areas

These are retail locations that have evolved over time and have multiple outlets in close proximity. They
are further divided as −
 Central business districts such as traditional “downtown” areas in cities/towns.
 Secondary business districts in larger cities and main street or high street locations.
 Neighborhood districts.
 Locations along a street or motorway (Strip locations).

Advantages − High pedestrian traffic during business hours, high resident traffic, nearby transport hub.
Disadvantages − High security required, threat of shoplifting, Poor parking facilities.

RETAIL DECISION OF INTERNAL AND EXTERNAL ATMOSHPHERE

Planned Shopping Areas
These are retail locations that are architecturally well-planned to provide a number of outlets preferably
under a theme. These sites have large, key retail brand stores (also called ―anchor stores‖) and a few small
stores to add diversity and elevate customers‟ interest. There are various types of planned shopping centers
such as neighborhood or strip/community centers, malls, lifestyle centers, specialty centers, outlet centers.
Advantages − High visibility, high customer traffic, excellent parking facilities.
Disadvantages − High security required, high cost of occupancy.

20
What are the Factors Determining Retail Locations?
The marketing team must analyze retail location with respect to the following issues −
 Size of Catchment Area − Primary (with 60 to 80% customers), Secondary (15 to 25% customers),
and Tertiary (with remaining customers who shop occasionally).
 Occupancy Costs − Costs of lease/owning are different in different areas, property taxes, location
maintenance costs.
 Customer Traffic − Number of customers visiting the location, number of private vehicles passing
through the location, number of pedestrians visiting the location.
 Restrictions Placed on Store Operations − Restrictions on working hours, noise intensity during
media promotion events.
 Location Convenience − Proximity to residential areas, proximity to public transport facility.
 Competitive positioning - Locate the facilities at strategically important sites. It may help to create
entry barriers and hence a preventive strategy to restrict the competition
 Focus- Catering to the needs and wants of some specific group of customers. Same, small and
specific menu of services provided at multiple sites. Example: KFC, McDonald‟

FACILITY LOCATION DECISION TO ACHIEVE COMPETITIVE ADVANTAGE

Any service organization first takes decision on locating a facility followed by the decisions on design of
the service and service delivery systems. Facility location decision is a strategic decision for service
organizations. To remain competitive service organizations consider the following points while deciding
about potential facility location.
 Create entry barriers
 Generate and manage demand
 Flexibility
 Competitive Positioning
 Focus

Explain the Steps to Choose the Right Retail Location or Choice of Retail Location.
A retail company needs to follow the given steps for choosing the right location −

Step 1 - Analyze the market in terms of industry, product, and competitors − How old is the company
in this business? How many similar businesses are there in this location? What the new location is
supposed to provide: new products or new market? How far is the competitor‟s location from the
company‟s prospective location?
Step 2 – Understand the Demographics − Literacy of customers in the prospective location, age groups,
profession, income groups, lifestyles, religion.
Step 3 – Evaluate the Market Potential − Density of population in the prospective location, anticipation
of competition impact, estimation of product demand, knowledge of laws and regulations in operations.

21
Step 4 - Identify Alternative Locations − Is there any other potential location? What is its cost of
occupancy? Which factors can be compromised if there is a better location around?
Step 5 – Finalize the best and most suitable Location for the retail outlet.

Explain about how to Measure and Positioning of Retail shops:

Once the retail outlet is opened at the selected location, it is important to keep track of how feasible was the
choice of the location. To understand this, the retail company carries out two types of location assessments
Macro Location Evaluation
It is conducted at a national level when the company wants to start a retail business internationally. Under
this assessment, the following steps are carried out −
 Detailed external audit of the market by analyzing locations as macro environment such as political,
social, economic, and technical.
 Most important factors are listed such as customer‟s level of spending, degree of competition,
Personal Disposable Income (PDI), availability of locations, etc., and minimum acceptable level for
each factor is defined and the countries are ranked.
 The same factors listed above are considered for local regions within the selected countries to find a
reliable location.
Micro Location Evaluation
At this level of evaluation, the location is assessed against four factors namely −
 Population − Desirable number of suitable customers who will shop.
 Infrastructure − The degree to which the store is accessible to the potential customers.
 Store Outlet − Identifying the level of competing stores (those which the decrease attractiveness of
a location) as well as complementary stores (which increase attractiveness of a location).
 Cost − Costs of development and operation. High startup and ongoing costs affect the performance
of retail business.
In the fierce competition of retail, it is very crucial to attract new customers and to keep the existing
customers happy by offering them excellent service. Merchandising helps in achieving far more than just
sales can achieve.
Merchandising is critical for a retail business. The retail managers must employ their skills and tools to
streamline the merchandising process as smooth as possible.

BUILDING A REAL STORE IMAGE

Store design is the architectural character or decorative style of a store that conveys to the customer ―what
the store is all about.‖ Stores vary so much in kind, size, and geographical location that it is difficult to
generalize about design. The architecture of the store„s exterior creates an initial impression. For example, if
a retailer chooses to remodel an older Victorian home, the customer will get a different impression from that
of a store in the mall. The reminder of the 1990s will likely see design continue to be less concerned with
aesthetics and more concerned
What are the General Requirements in store design ?
The first step of store design is the development of a comprehensive plan for the overall requirements of the
store. On the basis of market potential (the sales estimate and dollars received per square foot of selling
area), plans can be made to meet the need for storage and selling space. The plan must specify the ways to
achieve the best traffic circulation possible throughout the store and the types and sizes of fixtures necessary
to display the merchandise in an appealing manner. A careful study of these factors helps make stores
attractive, conducive to shopping, and as operationally efficient as possible.
1. Customer Focus
The focus of a store design should always be the customer. If the store design and layout are appealing the
customer will from an image that is also appealing. It is easy to get into the technical aspects of store design
and forget that the retailer„s reason for existence is the customer. The design should be focused on forming
and maintaining an image, while at the same time making the layout as accessible as possible for shoppers
2. Store Image
A comprehensive plan would include a process for community obtaining customer feedback regarding
improvements and for continuously updating the design to reflect changing customer needs wants. A store

22
design serves two, often opposing, functions. First, and foremost, the design serves the functional purposes
of protecting, enclosing, and displaying merchandise, while at the same time serving as a central location
where customers can find the merchandise that they seek during convenient times.
3. Holistic Approach
a store„s design should match the store„s character. This means that consideration should be given to the
type of store image the merchant hopes to project. It includes exterior design and interior arrangements for
selling and non selling activities. In addition, the design should match with that of other stores around it; it
should also enhance the salability of the merchandise within the store and be in good taste.
4. Technology and Planning
Store designs are becoming more complex as new formats evolve. For this and efficiency reasons, it is
becoming more common to rely on technology to assist in developing a store layout design. Computer-aided
design (CAD) helps plan stores that more space-efficient. Planning can be done quickly and changes are
easy to make. New construction design for a 200,00-squre-design software and hardware.

Explain the Exterior Design and interior atmosphere in detail.

The exterior design must protect the interior from the elements. Just as important, it also serves to convey
information to potential customers. The exterior is first part of the store that potential customers see. They
will determine from the outside whether or not they wish to enter and shop. It is critical that the outside of
the store gain the attention of customers and entice them to enter. If the outside does not reflect an image
appropriate to customers, they will not enter.
1. New Building versus Existing Facility
The decision to build a new facility or seek existing space is a critical element in exterior design planning.
Each option has its advantages. Building allows the retailer to design all aspects of the exterior and interior.
However, this option may be limited by location availability, time, or cost
2. Restrictions

Recognizing the importance of the exterior, retailers have become very competitive in their designs.
Unfortunately, this has often led to many areas looking like a war zone of competing colors, signs, shapes,
and sounds. Both property owners and governments alike have taken steps to ensure that consumers are not
assaulted by on overwhelming amount of stimuli.
(a) Lease requirements. Many property owners require retailers that lease their space to adhere to certain
rules regarding store design. These rules serve two purposes. First, they assure the owner that property will
be maintained good condition; and second, they ensure that the surrounding property does not lose value.
For example, most malls require that signs be certain sizes and often limit the use of intense light.
(b) Building codes. Most cities have building codes for businesses; often many are directed at retailers.
These serve several purposes. First, they protect the public. Fire codes and safety regulations are examples.
Some codes include sign ordinances that try to create some kind of visual harmony. Second, they ensure
equal access to shopping for those with disabilities; and third, they reflect the community„s attitude with
regard to appearance
(c) Theme areas. Theme areas are those in which buildings must meet structural requirements that fit a
certain theme. Many downtown areas are implementing very strict building codes that allow businesses to
stay only if they fit with the atmosphere the area is trying to create. For example, the building codes in
downtown Santa Fe require the exterior of the buildings to be adobe, among many structural requirements.
This adds to the enjoyment of shopping and increases tourism.

d) Colour and Material

The exterior colour texture of a store give a lasting first impression to the consumer. Often, this will be the
first and sometimes the only thing a customer sees of a store. It is important that the exterior look and
―Feel‖ right to the shopper. The colours and material should express the image of the store.
4. Signs
Effective use of signs identifies the nature of the business, build a corporate identity, communicates an
image, ties the company to its advertising through the use of a logo, and attracts to the store.

23
 (a) Exterior walls and signs.
Many retailers use the exterior wall space to promote their store. Painting the name and logo of a business
on the exterior is often less expensive than having a custom-made sign. Examples of this vary from a simple,
elegant script indicating the name of the store to more exotic art that includes not only the name but also
pictures. It artwork is used on the exterior of the building, it must conform to the principles of design, appeal
to the customer base, and be integrated with the rest of the architecture.
5. Windows
The main purpose of windows is to attract attention and create an image to potential customers standing
outside. Humor, theatrical flair, color, motion, or sound playing outside the windows work well to increase
the effectiveness of the display. One of the biggest advantages of display windows is the ability to
dramatically affect the exterior of the store.
a) Awnings.
The use of awnings is a subset of the window and exterior design issue and often poses a particular problem
for retailers. Most awnings are made of fabric and are of the old scissors or outrigger style. In recent years,
fabric awnings that can be fastened into a recessed box at the end of the building have been developed.
Other ways of awnings are structural part of the building.
6. The Store entrance
One of the first and most striking impressions customers get of a store is the one they receive as they go
through the front door. An entrance should be more than a device to keep people out of the store, to
encourage them to come in, or to protect against the elements. An entrance should have character, and it
should say to prospective customer, ―lease come through the door where you will be treated with courtesy
and friendliness and served to the best of our ability
7. Store Name
Although not strictly related to external design, the choice of a store name does have an effect on the overall
store image. The favourable or unfavourable image generated by the use of a name can enhance or negate
the style set by store design.
At first glance, choosing a name for the business may seem to be a rather easy task. Unfortunately, this is
not the case. The retailer who thought of the name
8. Theft Prevention
Another area of concern with exterior design is employee and customer theft. The design must consider the
flow of people in and out of the store and how they may be observed or pass through technology-based theft
prevention. Exterior doors and docks for receiving goods or trash disposal should also be designed and
arranged to minimize opportunities for unauthorized entrance and exit.
9. Multilevel Stores
Because of the need for increased parking space in relation to shopping area in suburban stores and shopping
centers, the multiple-level store is especially appealing to retailers. Even super markets have experimented
with this type of design. Properly carried out, a multilevel facility offers the merchant a means of both
expanding the selling area separating areas from one another

INTERIOR STORE DESIGN AND LAYOUT

The interior design of the store determines the way the merchandise is stored and offered for sale. The
design should allow easy access to merchandise for customer. There are several layout patterns that enhance
the customer„s access to goods. The interior also projects an image to the shopper that should be consistent
with that conveyed by the store„s promotion, price, and merchandise and with the exterior design. The store
interior must make the customer comfortable and encourage shopping.
The objective of layout management is to obtain the maximum benefits from the space available. There are
issues that retail managers should consider when they make layout decision:
1) Value of space,
2) Space utilization and allocation,
3) customer traffic flow,
4) the types of goods,
5) complementary merchandise proximity,and
6) the desired store image.

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Value of Space
The value of space, depending on the location within the store, is expressed in sales per square foot of floor
space, and sales per cubic foot of cubic space. Sales per square foot is the typical measure for a store,
department, or freestanding display. A display, for example, may generate sales of $1,500 per square foot,15
where as a retailer like Sam„s will generate sales of $500 across entire store
2. Space Utilization and Allocation
The available space in the store is divided into selling and nonselling areas. The nonselling space includes
administrative offices, storage, and customer amenities, such as rest rooms. These are all critical
requirements for a store. The desire to minimize nonselling space has led to several innovative operating
procedures. Among them is the restocking of inventory.
a) Allocation by historical sales.
The amount space that a department or product is allocated is sometimes based on the proportional sales of
the product. For example, if apparel traditionally accounts for half of the store sales, it would receive half of
the space. A minor problem with this method is that it can lead to under or over allocation of space over
time. For example, if space is allocated each year and a department has decreasing sales, the space of that
department is decreased.
b) Allocation by gross margin.
One way around the problem of allocating space by sales is to allocate it by gross margin. You remember
that gross margin is sales less cost of goods sold. The same method as sales is used except that space
allocation is based on the proportion
c) Allocation by industry averages.
Stores sometimes allocate space based on competitive pressures. They allocate the same proportion of space
to a particular item as the competition or a similar store. Trade associations provide these kinds of data. This
allows the retailer not to appear weak in a particular department. However, it also creates a ‗me too‖
atmosphere that may not differentiate the store from competitors.
d) Allocation by strategic objective.
Often a store will wish to build up sales in a particular product line. The manager will allocate the product
more space that is justified by its previous sales. For instance, if shoes are not selling well but they are
important to the image of the retailer, a manager may give more space to the shoe department so that more
varieties in types and styles and a greater assortment of colours and sizes are available for sale. Store
managers may also use this method for short term promotion to build up sales of new product line.
3. Storage of Stock
There are three accepted ways to handle storage in designing a retail store. The first way is to use direct
selling storage – either exposed in show cases, counters, and drawers, or concealed behind cabinet doors.
The second way to provide for storage is through stockrooms directly behind the selling area and in
4. Customer Traffic flow
Merchants use three basic types of layout patterns to control traffic flow in a store. The first type is known
as the grid pattern. This arrangement his main, secondary, and tertiary aisles. The layout often maximizes
the amount of selling space. It has an advantage in lower costs because of the possibility of standardizing
construction and fixture requirements.
The second major type of layout design is the free flow pattern. The free flow arrangement provides for
flexibility in a layout. It reduces to a minimum the structural elements that from the fixed shell of building,
such as columns and fixed partitions. Counters are arranged to give maximum visual interest and customer

INTERIOR DESIGN ELEMENTS

1) Fixtures
A major consideration in developing an appropriate store design involves the use of fixtures. They are used
to display merchandise, to help sell it, to guard it, and to provide a storage space for it. They should be
attractive and focus customer„s attention and interest on the merchandise.
2. Displays
Display an important role in a retail store. An attractive and informative display can help sell gods. Poorly
designed displays can ruin the store„s atmosphere and centre an uncomfortable setting. Since displays often
take up premium space with in the store, they carry a heavy burden of productivity in terms of creating sales.

25
There are several principals of rules of displays that help ensure their effectiveness :
a)They should achieve balance,
b) provide a dominant point,
c) create eye movement
d)low gradation,
c) just merchandise to proper height,
d) group the merchandise in the display,
e)generate sales appeal ,
3) Colour
The psychological effect of colour continues to be important to retailers. Colour is also important in ware
house type stores because of the vast open area of the interior. Bold colours are frequently used to highlight
merchandise sections or departments and to reduce attention to what is typically an open –girder ceiling.
Clearly, intelligent use of colour is important in store design.
4) Lighting
Proper lighting is one of the most important considerations in retail design. At one point in time the function
of lighting was to provide customers with a meansof finding their way through the store. Today, lighting has
become a display medium. It is an integral part of the store„s interior and exterior design.
5) Ceilings
Ceilings represent a potentially important element interior design. In older stores, ceilings of twelve to
sixteen feet are still common, but most department store ceilings are now in the nine – to- ten foot range.
Remember, the higher the ceiling, the more space to heat and cool at increasing energy rates.
6) Flooring
Retailers are taking a sophisticated ―return investment‖ approach to flooring decisions. Firms are willing to
pay higher-up-front installation costs for more expensive materials if they see a return in greater durability
and reduced maintenance expenses.
7) Shelving
The material used for shelving as well as its design must be compatible with the merchandising strategy and
the over all image desired. Stainless steel shelving creates an entirely different effect than the painted wood
cubes in the Country Seat or the typical metal shaving seen in a general merchandise store, Glass shelving,
framed in the woods, creates an element of elegance difficult to achieve otherwise
8) Plano grams and Shelf Layout Design
One of the key tools of modern shelf and layout planning is the Plano gram. This is a graphical
representation that visually shows the space to be allocated by describing where every stock keeping
unit(SKU) within a space is physically located.
POSITIONING OF RETAIL SHOPS:
Explain positioning of retail shop with example?
Store positioning strategy:
Retail positioning is the fight for a place in the consumer mind different retailers work to secure a place in
the mind of the target consumer.
Retailers need to create an image in the consumers mind relative to their competitors so that consumer shop
at their retail shop.
Positioning has to be more specific to create an impression on the consumers mind. the strategy followed
needs to be well defined whether a retail store is a specialised store or a general store.
For example consider three stores:
 A supermarket which dedicated to food wear department
 A store specially dedicated to footwear
 A store specially dedicated to women food wear

This situation the positioning of retailer in consumers mind drives them to the store women/men looking for
footwear along with their monthly general household needs will the supermarket.
If retailers follow strategies which are defined clearly in positioning the store then it would improve in
driving traffic more towards the store

26
Much strategy on quality cost and shopping experience of customer can be designed specifically to create an
image and position it self in target customers mind.
Why start with store Image?
Image can be described as the overall look of a store and the series of mental pictures and felling evokes
within the beholder.
As a rule image is the foundation of all retailing efforts.
While store layout presentation,signing,displays and events can all change to reflect newness an excitement
from week season to season they must always remain true to the underlying store image.
The image makers;
 An identifiable store name
 A powerful visual trademark
 An un mistakeful store front
 An inviting entrance
 Visual look
An identifiable store name:
An effective store name sets the tone and provides a store identification by conjuring up an image and the
customer mind.
A store name should be easy to Say and remember, indicative of the images and felling you want the
customer to retain few years.
Powerful visual trademarks:
On your mark an identifiable trade mark adds a visual image to the memory recall of store name, by
combining words and pictures, colour, shape, type face, style to make it stand out.
Unmistakable store fronts:
Customer simply don‟t have the time to read in to the store so just as your store name and trade mark the
title of your book must provide instant recognition and recall your exterior store front.
The store entrance:
The entrance to the store is the division between the outside and inside environments. Mall retailers have an
easier change of customers into the store with a wide open entrance creating a seamless entry from the mall
to the store.
Visual look:
An inviting entrance is crucial in stopping the customer and establishing a positive first impression but if
the inside store messages create feelings of inconsistency or confusion all is lot. Truly impressive stores are
consistent in all efforts from the store front right through to the stock room.

Explain retail service quality management?

Introduction retail service:
Service quality measures development internationally are often accepted as adequate in [Link] study
evaluates the retail service quality scale(RSQS)developed in the US and considered valid across a variety of
formats and cultural contexts.
Retail service quality management:
The service quality management factor analysis of the components structures the RSQS dimensions are not
valid in india.
Service quality is being increasingly perceived as a tool increase value for the consumer as a means of
positioning in a competitive environment to ensure consumer satisfaction.
This study examined the retail service quality scale(RSQS) developed in the US for applicability of Indian
retail. Consequently retailers may find the RSQS a poor instrument to help them identify strategic area
requiring focus to improve overall service levels. Investment in further research to modify the RSQS for
application in India recommended.

27
Explain retail service quality management?
Introduction retail service:
Service quality measures development internationally are often accepted as adequate in [Link] study
evaluates the retail service quality scale(RSQS)developed in the US and considered valid across a variety of
formats and cultural contexts.
Retail service quality management:
The service quality management factor analysis of the components structures the RSQS dimensions are not
valid in india.
Service quality is being increasingly perceived as a tool increase value for the consumer as a means of
positioning in a competitive environment to ensure consumer satisfaction.
This study examined the retail service quality scale(RSQS) developed in the US for applicability of Indian
retail. Consequently retailers may find the RSQS a poor instrument to help them identify strategic area
requiring focus to improve overall service levels. Investment in further research to modify the RSQS for
application in India recommended.
INTRODUCTION OF RETAIL SUPPLY CHAIN MANAGEMENT:
Management of material and information flow in a supply chain to provide the highest degree of customer
satisfaction at the lowest possible cost.
Meaning:
Supply chain management over sight of material information and finances as they move in a process from
supplier to manufacturer to whole sale to retailer to consumer.
Define:
Supply chain management involves co-ordinating and integrating these flow both within among Companies-
Process of retail supply chain management?
[Link] planning process:
Strategic supply chain design process evaluation and optimization of the supply chain model used in the
planning applications. Every part of the supply chain such as locations transportation resources and product
to execute planning based on this network strategic planning process helps to identify a minimized set of
core suppliers.
[Link] planning process:
Dement planning process involves forecasting, life cycle planning, promoting [Link] process
future demand based on historical and judgemental data forecasts can be created in using different methods
such as statistical method causal analysis human judgment or combination of all the above.
3. Supply planning process:
Supply planning process involves safety stock planning supply network planning outsourcing distribution
planning customer collaboration and Supplier Corporation.
4. Procurement process:
Procurement process involves purchase order processing receipt confirmation and invoice verification.
Receipt confirmation processing informs other department about the received and confirmed quantity of
ordered goods.
5. Manufacturing process:
Manufacturing process involves production planning detailed scheduling manufacturing execution supports
the process of assigning production orders to resources in a specific sequence and time frame.
6. Warehousing process:
Warehousing process involves storages process warehouse internal movements and storage of material.
7. Orderfulfillment process:
Orderfulfillment process involves the sales order processing and billing business process. sales order
processing allows the order entry, pricing, and scheduling order for fulfilment.
8. Transportation process:
Transportation process involves the transportation planning execution and freight costing process.
Transportation process creates an optimized executable transportation plan for the enterprise.

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 RETAIL PRICING DECISIONS
Retail Pricing

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount
(or percentage) to the retailer‟s cost. Another common technique is suggested retail pricing is simply charging
the amount suggested by the manufacturer and usually printed on the product by the manufacturer. In Western
countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on
signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the
sale price is dependent upon the customer. For example, a customer may have to pay more if the seller
determines that he or she is willing and/or able to. Another example would be the practice of discounting for
youths, students, or senior citizens.
The various factors affecting retail pricing are illustrated in the fig. shown below:

Approaches to a Pricing Strategy

Price lining is a term used by the retailers, when they sell their merchandise only at the given prices.
A price zone or price range is a range of prices for a particular merchandise line. A price point is a specific
price in that price range.
The pricing strategies that can be followed include:
 Market skimming The strategy here is to charge high prices initially and then to reduce them
gradually, if at all. A skimming price policy is a form of price discrimination over time and for it to
be effective, several conditions must be met.
 Market Penetration: This strategy is the opposite of market skimming and aims at capturing a large
market share by charging low prices. The low prices charged stimulate purchases sand can
discourage competitors from entering the market, as the profit margins per time are low.
 Leader pricing: Here, the retailer bundles a few products together and offers them at a deep
discount so as to increase traffic and sales on complementary items. The key to successful leader
pricing strategy is that the product must appeal to a large number of people and should appear as a
bargain. Items best suited for this type of pricing are those frequently purchased by shoppers, e.g.,
bread, eggs, milk, etc.
 Price Bundling: Here, the retailer bundles a few products together and offers them at a particular
price. For example, a company may sell a PC at a fixed price and the package may include a printer
and a web camera. Another example is that of the Value Meal offered by McDonald‟s. Price
bundling may increase the sales of related items.
 Multi-unit Pricing: In multi-unit pricing, the retails offer discounts to customers who buy in large
quantities or who buy a product bundle. This involves value pricing for more than one of the same
item. For example, a retailer may offer one T-shirt for ` 255.99 and two T- shirts for ` 355.99. Multi-
unit pricing usually helps move products that are slow moving.
 Discount pricing: It is used as a strategy by outlet stores who offer merchandise at the lowest
market prices.
 Every Day Low Pricing Every Day Low Pricing or EDLP, as it is popularly known, is a strategy
adopted by retailers who continually price their products lower than the other retailers in the area.
Two famous examples of EDLP are Wal- Mart and Toys “R” Us, who regularly follow this strategy.
 Odd Pricing Retail prices are set in such a manner that the prices end in odd numbers, such as `
99.99 or ` 199, ` 299etc.

29
 o The buyer may adopt either the cost-oriented or a demand-oriented approach for setting
prices.
Merchandise and Category Management
Meaning: Merchandising is the sequence of various activities performed by the retailer such as planning,
buying, and selling of products to the customers for their use. It is an integral part of handling store
operations and e-commerce of retailing. Merchandising presents the products in retail environment to
influence the customer‟s buying decision.

What are the Factors Influencing Merchandising?

The following factors influence retail merchandising:
Size of the Retail Operations
This includes issues such as how large is the retail business? What is the demographic scope of business:
local, national, or international? What is the scope of operations: direct, online with multilingual option,
television, telephonic? How large is the storage space? What is the daily number of customers the business
is required to serve?
Shopping Options
Today‟s customers have various shopping channels such as in-store, via electronic media such as Internet,
television, or telephone, catalogue reference, to name a few. Every option demands different sets of
merchandising tasks and experts.
Separation of Portfolios
Depending on the size of retail business, there are workforces for handling each stage of merchandising
from planning, buying, and selling the product or service. The small retailers might employ a couple of
persons to execute all duties of merchandising.

Explain the Functions of a Merchandising Manager

A merchandising manager is typically responsible to −
• Lead the merchandising team.
• Ensure the merchandising process is smooth and timely.
• Coordinate and communicate with suppliers.
• Participate in budgeting, setting and meeting sales goals.
• Train the employees in the team.

MERCHANDISE BUYING
MEANING
The basic role of a buyer is to find, evaluate and select merchandise for the retail store. In this
process, he needs cultivate sources for which suitable merchandise can be secured for the retail organization.
To do this effectively, he needs to answer the following questions:
 What to buy?
 When to buy?
 How much to buy?
 Where and from whom to buy?
Merchandise buying is a four – step process, which involves:
1. Finding Supply Sources,
2. Identifying Potential Supplier,
3. Negotiating with the Supply Sources, and
4. Finalizing terms with the Supply Sources

Merchandise Buying
This activity includes the following
• Step 1 - Collect Information − Gather information on consumer demand, current trends, and market
requirements. It can be received internally from employees, feedback/complaint boxes, demand slips, or
externally by vendors, suppliers, competitors, or via the Internet.

30
• Step 2 - Determine Merchandise Sources − Know who all can satisfy the demand: vendors, suppliers,
and producers. Compare them on the basis of prices, timeliness, guarantee/warranty offerings, payment
terms, and performance and selecting the best feasible resource(s).
• Step 3 - Evaluate the Merchandise Items − By going through sample products, or the complete lot of
products, assess the products for quality.
• Step 4 - Negotiate the Prices − Realize a good deal of purchase by negotiating prices for bulk purchase.
• Step 5 - Finalize the Purchase − Finalizing the product prices and buying the merchandise by executing
buying transaction.
• Step 6 - Handle and Store the Merchandise − Deciding on how the vendor will deliver the products,
examining product packing, acquiring the product, and stocking a part of products in the storehouse.
Step 7 - Record the Buying Figures − Recording details of transactions, number of unit pieces of products
according to product categories and sub-classes, and respective unit prices in the inventory management
system of the retail business.

CATEGORY MANAGEMENT
Category Management can be defined as “the distributors‟ / suppliers‟ process of managing categories as
strategic business units, producing enhanced business results by focusing on delivering consumer value.
Thus, a category is a basic unit of analysis for making merchandising decision.
Components of Category Management :There are six components, which are key to the functioning of
category management. Two of these are considered essential, without which category management cannot
be started and they are therefore, called the core components.

1. Category Definition
Category Definition is the first step in the process. The definition of the category has a significant impact on
the subsequent steps. A category definition should be based on how the customer buys, and not on how the
retailer buys
2. Defining the Category Role
The category role determines the priority and the importance of the various categories in the overall
business. This aids in resource allocation. Traditionally, four categories have been identified. They are:
 Destination Category
o This is the main product offering of the retail store. Examples include fresh groceries at a
supermarket and apparel in a department store.
 Routine Category
o These are products that a customer buys from the retailer as a matter of routine or habit.
Examples include toothpaste, soaps, etc.,
 Seasonal Category
This includes products, which are not purchased very often or are purchased when available
and needed. Examples would
 Convenience Category
These are products that a consumer finds convenient to buy at a neighborhood retailer. Examples include
products like bread, eggs and even routine stationery include mangoes sold in summer, in a super market,
and umbrellas and raincoats, in a department store.

31
3. Category Assessment
In this step, the current performance of the category is evaluated with respect to the turnover, profits and
return on assets in the category. It involves an assessment of the consumers, the market, the retailer and the
suppliers.
4. Category Performance Measures
The development of category performance measures involves the setting of measurable targets in terms of
sales, margins and Gross Margin Returns on Investment

[Link] Strategies
At this point in the process, the retailers and the supplier know the category‟s role; they have assessed the
current performance of the category and have set preliminary targets for the category‟s performance. The
purpose of this step is to help the retailer and supplier to develop strategies that capitalize on category
opportunities through creative and efficient use of the resources that are available to the category

6. Category Tactics
At this stage, category tactics are developed in the areas of assortment, pricing, promotions and the
presentation of the merchandise in the store.

[Link] Plan implementation

A Specific implementation schedule is developed and responsibilities are assigned. Accurate implementation
is the key to the success of the Category Management.

8. Category Review
The final step in the business process is the review of the progress and of the actual achievements as against
the targets set for the category. Review aids in taking decisions at the right point of time. Category
management is considered to be a “scientific” approach to relating in the mature markets, largely because it
is date driven and fact based.

UNIT-IV
RETAIL SHOP MANAGEMENT

Visual merchandising
Today‟s successful retailers make the most profitable use of every square foot of space in the store
and in the warehouse. Since this space is so costly, you must take a strategic approach to its use. Floor
patterns, location of merchandise, levels of inventory and appropriate displays are all key factors in the
proper use of space. Misuse of space can be as detrimental to your success as poor buying or careless hiring.
It is very important for every store to create a suitable atmosphere and appealing presentations in order to
trigger the consumer‟s buying decision. In a world where you can find identical merchandise in more than
one store, layout and presentation become key differentiating factors.

What are the 5 Most Important Elements of Visual Merchandising?

When people hear visual merchandising the typically get nervous and uneasy. They know its an important
retail term, but not sure exactly what i is or how to do it well.
1. Remember that color is king. Color is powerful, and it can make or break your visual displays. A
retailer might create an erratic display, but if the colors coordinate well, the display can still be a success.
This the same principle. Remember: wherever the eyes go, the feet will follow. So use color to catch the
eyes of your customers and draw them to your displays.
2. Create a focal point. Where does the viewer‟s eye focus on your display? Do their eyes move toward a
specific location on the display?
Or are they confused about where to look? Create a hotspot--or focal point. Why? Because hotspots can
increase sales by 229 percent. Examine your display from the customer‟s point of view: the top, the floor,
both sides. Often the focal point is positioned too high for the customer to see. Always check your displays

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to ensure customers can easily view the hotspots and merchandise. Remember, the hotspot is the product,
not a visual element you use to add to the story.
3. Tell a story.
What‟s in it for customers? Tell them. Use powerful, sales-enabling signage to display the advantages of
buying the product. Present three bullet points that tell customers why they need the product or how their
life will become easier because of the product. Remember, you‟re not writing an essay but rather a headline,
powerful bullet points,and possibly a price proposition
4. Expose customers to the maximum amount of merchandise. A well-designed, impactful display
exposes the customer to as much merchandise as possible while avoiding a sloppy mess. The more products
customers see, the more they buy.
5. Use empty space wisely. There‟s a space in all retail stores that is the most underutilized. It‟s the section
between the displayed merchandise and the ceiling. If this space in your store is empty, you need to start
using it. You can use this space for many different things, like signage providing information about products
or brands. You could display customer testimonials with the customer‟s name and picture. You could profile
a designer or supplier.

What is Space Management?

It is the process of managing the floor space adequately to facilitate the customers and to increase the sale.
Since store space is a limited resource, it needs to be used wisely.
Space management is very crucial in retail as the sales volume and gross profitability depends on the amount
of space used to generate those sales.
Optimum Space Use
While allocating the space to various products, the managers need to consider the following points −
Product Category −
o Profit builders − High profit margins-low sales products. Allocate quality space rather than
quantity.
o Star performers − Products exceeding sales and profit margins. Allocate large amount of
quality space.
o Space wasters − Low sales-low profit margins products. Put them at the top or bottom of
shelves.
o Traffic builders − High sales-low profit margins products. These products need to be
displayed close to impulse products.
 Size, shape, and weight of the product.
 Product adjacencies − It means which products can coexist on display?
 Product life on the shelf.

Retail Floor Space

Here are the steps to take into consideration for using floor space effectively −
 Measure the total area of space available.
 Divide this area into selling and non-selling areas such as aisle, storage, promotional displays,
customer support cell, (trial rooms in case of clothing retail) and billing counters.
 Create a Planogram, a pictorial diagram that depicts how and where to place specific retail products
on shelves or displays in order to increase customer purchases.
 Allocate the selling space to each product category. Determine the amount of space for a particular
category by considering historical and forecasted sales data. Determine the space for billing counter
by referring historical customer volume data. In case of clothing retail, allocate a separate space for
trial rooms that is near the product display but away from the billing area.
 Determine the location of the product categories within the space. This helps the customers to locate
the required product easily.
 Decide product adjacencies logically. This facilitates multiple product purchase. For example, pasta
sauces and spices are kept near raw pasta packets.
 Make use of irregular shaped corner space wisely. Some products such as domestic cleaning devices
or garden furniture can stand in a corner.

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  Allocate space for promotional displays and schemes facing towards road to notify and attract the
customers. Use glass walls or doors wisely for promotion.
Store Layout and Design
Customer buying behavior is an important point of consideration while designing store layout. The
objectives of store layout and design are −
 It should attract customers.
 It should help the customers to locate the products effortlessly.
 It should help the customers spend longer time in the store.
 It should motivate customers to make unplanned, impulsive purchases.
 It should influence the customers‟ buying behavior.

What are the Store Layout Formats?

The retail store layouts are designed in way to use the space efficiently. There are broadly three popular
layouts for retail stores −
Grid Layout − Mainly used in grocery stores.

Loop Layout − Used in malls and departmental stores.

Free Layout − Followed mainly in luxury retail or fashion stores.

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 Retail Inventory Management
Meaning
Inventory management is the management of inventory and stock. As an element of supply chain
management, inventory management includes aspects such as controlling and overseeing ordering inventory,
storage of inventory, and controlling the amount of product for sale.
Definition
The definition of Inventory Management is easy to understand. Simply put, inventory management is all
about having the right inventory at the right quantity, in the right place, at the right time, and at the right
cost. But how do you implement the best inventory management techniques to ensure the best results? Read
on to find out our insights for inventory management best practices.

What are the Inventory management techniques?

Inventory management uses several methodologies to keep the right amount of goods on hand to fulfill
customer demand and operate profitably. This task is particularly complex when organizations need to deal
with thousands of stockkeeping units (SKUs) that can span multiple warehouses. The methodologies
include:
• Stock review, which is the simplest inventory management methodology and is generally more appealing
to smaller businesses. Stock review involves a regular analysis of stock on hand versus projected future
needs. It primarily uses manual effort, although there can be automated stock review to define a minimum
stock level that then enables regular inventory inspections and reordering of supplies to meet the minimum
levels. Stock review can provide a measure of control over the inventory management process, but it can be
labor-intensive and prone to errors.
• Just-in-time (JIT) methodology, in which products
arrive as they are ordered by customers, and which is based on analyzing customer behavior. This approach
involves researching buying patterns, seasonal demand and location-based factors that present an accurate
picture of what goods are needed at certain times and places. The advantage of JIT is that customer demand
can be met without needing to keep quantities of products on hand, but the risks include misreading the
market demand or having distribution problems with suppliers, which can lead to out-of-stock issues.
• ABC analysis methodology, which classifies inventory into three categories that represent the inventory
values and cost significance of the goods. Category A represents high-value and low-quantity goods,
category B represents moderate-value and moderate-quantity goods, and category C represents low-value
and high-quantity goods.

What do you mean by retail accounting?

It is a form of accounting that lists all stock at its final retail price, rather than the actual price paid for stock .
It can be useful tool for detecting loss, damage or theft of stock . However , it only provides limited details
and is not a substitute for traditional accounts.

35
What is retail audit?
Retail audits are studies of selected retail outlts performed by brand representatives or retail store employees
for the purpose of collecting data about the health of the brand‟s products .
Types of information that brand reps gather include,
 Sales volume
 Stock levels
 Description of instore displays and promotional activity
 Planogram compliance
 Pricing
 In-Store location of products.
 Product damage

State the importance of Audit.

The benefits of conducting retail audits are twofold. On the one hand they serve as a tool for suppliers to
ensure that retailers are complying with pre-established agreeements on product placement , pricing and
promotion. On the other hand , they allow brands to accurately measure their success in the retail
environment.

What are the different types of Retail Audit?

 Retail Market Questionnaire
 Merchandising Report
 Promotional Report
 Competitor Survey
Explain the steps involved in Audit Process.
• Articulate the Goals.- Determine the main objectives of your retail audit. Are you primarily concered
with monitoring competitor activity.
• Design Audit criteria
• Select the exact questions you willl be asking in the audit and the acceptable answer types. Will you use
Yes/no questions, have reps write in response , or use a scale such as 1-5
• Schedule appointments- once you know what you are trying to gain from the retail audit ,it‟s time to
make it happen . Aim for consistency interms of who you send to which accounts .
• Gather Data and photos
• Evaluate results
• Implement changes
• Repeat the process
RETAIL STORE BRANDS
Retail postioning
This is where a retailer is situated itself in the final market. This positioning aims to provide a competitive
advantage to the retailer by differentiating itself from the rest of competitors. For this reason, it should
guide the rest of decisions about how the retailer satisfies its target consumers. This process involves a mix
of the marketing mix variables (i.e., product, price, place and promotion) into an overall strategy with the
intention to succeed. Furthermore, it requires to observe potential customers by means of an accurate market
segmentation process that permits the retailer to identify a group of customers and match them as precisely
as possible to the retailoffering .

Retail branding:
It does not only focus only on cretion of private label. In mltibrnd retailers the task becomme more difficult
as the retailer needs to create a store identity which is different from that of brands ne sold within store.
It is a combination of company‟s jertiage, merchandise mix, store ambience, service strategy , advertising
and promotion . threee major questions
 Can brand idnentified with lifestyle of customers?
 Is there perceptible difference between retailers
 Can a story be woven around the brand?

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 RETAIL ADVERTISING AND PROMOTORS:
The retailers who wish to launch a large scale campaign may of course result resort to advertising via radio,
television, newspaper.
Channel of advertising:
 In house flayers indicating product and bargains
 Sign both internal and external to the store
 Informative in house displays of merchandise
 Direct mail advertising
 Local newspaper
 Distribution of flayers

The retailers who wish to launch a large scale campaign may of course resort to advertising it is very
important to remember that for and kind of advertising single brings very sparse order to make an
advertising campaign successful it is usually necessary to advertise repeatedly time during service or product
and most important with your store.
It is also necessary to maintain a regular program of advertisings though out the year in order to bringing
customers into the store.
Explain the retail promotion? And Its Importance.
Promoting merchandising may often be achieved by special arrangements with a manufacturer or a
wholesaler often new merchandise will be offered at low introductory the manufacturer or wholesaler will
provide the retailer rewards to the consumer.
Many times a manufacturer will not offer displays but you will want to promote certain merchandise own
store promotions are;

 Window display
 Special in store displays
 Signs and posters
 Personal selling effects

Give same tips of advertising to attract customers:

The goal advertising is to cost effectively reach audience and attract customers. if done correctly advertising
can enhance the success of your business.
 Go after your target audience
 Highlight your competitive advantage
 Establish an image
 You have to spent money
 Advertise in the right places
Importance of Promotional Activities
1. Sale of the goods in Imperfect markets – Every market is imperfect market. In the imperfect market
conditions, the product cannot be sold easily only on the basis of price differentiation. It is the
promotional activity that provides information about the differences, characteristics and the multiuse
of the products of various competitors in the market. The customer is attracted to purchase the goods
on the basis of such information. Thus promotional activities are necessary for selling the product
successfully.
2. Filling the Gap Between producers and Consumers – Due to prevalent market condition, mass
selling is quite impossible without promotional activities. The distance between producers and
consumers has so widened in present days that to get them acquainted with the product, promotional
activities are necessary.
3. Facing Intense Competition – The present intense competition necessitated the sales promotion
activities. When a manufacturer increases his promotional spending and adapts aggressive strategy in
creating a brand image, others are also forced to follow the suit. This leads to promotion –war.

37
 4. Large Scale Selling – Sales promotion is the result of large scale production. It can be achieved only
appropriate methods of large scale selling. Large scale selling is possible with the help of
promotional activities.
5. Higher Standard of Living – Thus promotional activities increase the standard of living by providing
the better goods at a lower rate due to large scale production and selling.
6. More Employment – As the promotional activities cannot be performed without the help of an
effective sales force and the specialists in the field, employment opportunities are opened for a large
number of people.
7. Increased Trade Pressures – The growth of large scale retailer, such as super markets, chain stores, etc.,
has brought greater pressure on manufacturers for support and allowance. In order to aid the retailers and
also to ensure their share of shelf space many manufacturers have taken to sales promotion activities .

RETAIL MANGEMENET INFORMATION SYSTEM:

In any industry there are two methods available to an organisation for making the business productive.
The first method focuses on improving the organisation impact on the market place.
The second method on improving the internal operations, lowering costs or improving services.
Process of retail management information system?
The whole retail management information system is based on e-marketing mix.
 Cost
 Connectivity
 Customer interface
 Speed of delivery
 Convenience
The use of information technology in retail includes software, hardware and wire line and wireless
communication. Typically a users of it in retail uses a number of technology such as terminals, software for
managing inventory and for interaction at various levels.

ONLINE RETAIL:
Explain online retail (or)explain internet retail:
The raise of the internet has to some phenomenal changes in the way business is conducted in various
industries.
According to the data monitor global internet retail report the global internet retail sector by 28.1%[Link]
reach a value 544.6 billion representing a compound annual growth rate 46.3% 2012-2013.
Internet is the biggest revolution that our generation has witnessed and like every other the retail industry is
also not left untouched by it.
In times where an increasing number of consumers are getting to the convenience of e-shopping medium
and go digital full.
The need for a knowledge sharing platform through which the industry can learn from experiences
practically staring in the eye.
The very reason why online retail has kicked off in India is the lack of information and awareness between
the user retailers a like internet retail visions an attempt relevant and quality online retail and provides
access to the desired industry information and knowledge.

EMERGING TRENDS:
Explain the emerging trends in retail management?
The business of retailing primarily involves the creation of exciting presentation of product and idea for our
customer. This accomplished by the combined efforts of many executives and support of staff with in retail
organization.
 Today retailers do their own marketing and decide their own logistics.

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  Technologies like smart cards ratio frequency identification and biometric identification are making
present payment method obsolete retailers today are brand names tat not just sell product complete
solution.
 Internet shopping has emerged as an associate of traditional retailers individual customers
relationship is now a necessity.
 This paper focuses on the changing face of retailing marketing in the global economy during the
buying phase it is primarily in store marketing that is used to make customers feel at their sales
outlets.
 Grocery sector companies are showing more interest in remote ordering this is to certain extent
attributable to increasingly market competition between companies.
 Another factor is that regular items purchase as part of weekly grocery shopping e.g
tomatoes(or)toothpaste.

UNIT-V

RETAIL SHOPPER BEHAVIOUR

Meaning:
Consumer needs drive shopper behaviour because shoppers shop to full fill their consumption needs.
However although the shopper and the consumer may be the same person their needs are two different get
complementary element of the overall path to purchase.
Understanding of retail shopper behaviour:
 Commerce internet shopping and cyber malls are some of the topical strategies which have appealed
to academicians marketing recent items.
 [Link] which deals in books and music software is accessible to consumers around the world.
 Amul product are sold to 50,000 strong customer base
 B2B marketing is already experimenting the impact of the internet
 Web based washing machine abroad.
 Hul plans e-commerce inventory worth 1,400 it has 14 manufacturing location.
There are five basic types of convenience which may be perceived by internet shoppers:
Reduction in the time spent on shopping: for instance nuclear families in urban cities with both spouses
having a busy schedule may want to reduce shopping time.
Flexibility in shopping time:
Apart from the segment mentioned in the earlier point senior level corporate executives may be interested in
this type of convenience.
Saving the physical efforts of visiting stores:
The aspect has to be analysis with great care as a cross section of the upper economic such house wives may
perceive shopping as a recreational activity.
Search efforts:
Research indicates that internet shoppers are likely to be fewer prices or brand conscious as they are exposed
to a lot of information on the net.
Shopper profile analysis:
Vision:
To be global retailer in india and maintain no1 it is required to position in the Indian market in the
department store category.
Positioning:
Shoppers stop is positioned as a family store delivering a complete shopping experience defined by its
mission, vision and values.
Customer profile:
This fall between the age group of 16 years the majority of them being families and young couples with a
monthly house with a monthly house hold income above RS 20,000 and annual spend of Rs 15,000.

39
Range of merchandise:
The stores offer a complete range of apparel and life style accessories for the entire family from apparel
brands like color plus.
Supply chain management:
Understanding the importance of distribution and logistics in ensuring that merchandise is available on the
shop floors has let shoppers stop to stream line its supply chain. the company has developed process
manuals for each part of the logistics chain.
Shopper decision process:
Introduction:
The shopper decision making consumer in regard to a potential market transaction before during and after
the purchase of product or service.

Explain shopper decision process.

This means that although we can never see a decision we can inter from observable behaviour that a decision
has been made.
Therefore we conclude a psychological event that we call decision making has occurred it is a construction
that imputes commitment to action.
There are three ways analysis consumer buying decision.
Economic models:
These models are largely quantitative and are based on the assumptions rationality and near perfect
knowledge.
Psychological models:
These models concentrate on psychological and motivation and need recognition.
Explain the Shoppers Buying Decision Process.
The buying decision process is the decision-making process used by consumers regarding market
transactions before, during, and after the purchase of a good or service. It can be seen as a particular form of
a cost–benefit analysis in the presence of multiple alternatives.
Common examples include shopping and deciding what to eat. Decision-making is a psychological
construct. This means that although a decision can not be "seen", we can infer from observable behaviour
that a decision has been made. Therefore, we conclude that a psychological "decision-making" event has
occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we
assume that people have made a commitment to effect the action. There are six stages to the consumer
buying process, and as a marketer,
[Link] Recognition
Put simply, before a purchase can ever take place, the customer must have a reason to believe that what they
want, where they want to be or how they perceive themselves or a situation is different from where they
actually are. The desire is different from the reality – this presents a problem for the customer. 2.
[Link] Search
Once a problem is recognized, the customer search process begins. They know there is an issue and they‟re
looking for a solution. If it‟s a new makeup foundation, they look for foundation; if it‟s a new refrigerator
with all the newest technology thrown in, they start looking at refrigerators – it‟s fairly straight forward.
3. Evaluation of Alternatives
Just because you stand out among the competition doesn‟t mean a customer will absolutely purchase your
product or service. In fact, now more than ever, customers want to be sure they‟ve done thorough research
prior to making a purchase. Because of this, even though they may be sure of what they want, they‟ll still
want to compare other options to ensure their decision is the right one.
Marketing to this couldn‟t be easier. Keep them on your site for the evaluation of alternatives stage
4. Purchase Decision
Somewhat surprisingly, the purchase decision falls near the middle of the six stages of the consumer buying
process. At this point, the customer has explored multiple options, they understand pricing and payment
options and they are deciding whether to move forward with the purchase or not. That‟s right, at this point
they could still decide to walk away.

40
 5. Purchase
A need has been created, research has been completed and the customer has decided to make a purchase. All
the stages that lead to a conversion have been finished. However, this doesn‟t mean it‟s a sure thing. A
consumer could still be lost. Marketing is just as important during this stage as during the previous.
Marketing to this stage is straightforward: keep it simple. Test your brand‟s purchase process online. Is it
complicated? Are there too many steps? Is the load time too slow? Can a purchase be completed just as
simply on a mobile device as on a desktop computer? Ask these critical questions and make adjustments. If
the purchase process is too difficult, customers, and therefore revenue, can be easily lost.
6. Post-Purchase Evaluation Just because a purchase has been made, the process has not ended. In fact,
revenues and customer loyalty can be easily lost. After a purchase is made, it‟s inevitable that the customer
must decide whether they are satisfied with the decision that was made or not. They evaluate. If a customer
feels as though an incorrect decision was made, a return could take place.

Explain the factors influencing retail shopper behaviour.

Important Factors That Influence The Buying Decision
1. Economic Factor : The most important and first on this list is the Economic Factor. This one is the main
foundation of any purchasing decision. The reason is simple people can‟t buy what they can‟t afford. The
need of a product also doesn‟t play a role here, but the most important thing is affordability.
2. Functional Factor:The factor is totally about needs, backed by a logic that what makes sense and also
fits in the best interest of the customer. This one factor also plays a very important role in the buying
decision.
3. Marketing Mix Factors: There are 4 components in the marketing mix, i.e. product, pricing, promotion
and place of distribution and each of these components have a direct or indirect impact on the buying
process of the consumers. The consumers consider various things like the characteristics of the product,
price charged, availability of the product at the required location and much more.
4. Personal Factors: The personal factors include age, occupation, lifestyle, social and economic status and
the gender of the consumer. These factors can individually or collectively affect the buying decisions of the
consumers.
5. Psychological Factor: When it comes to the psychological factors there are 4 important things affecting
the consumer buying behaviour, i.e. perception, motivation, learning, beliefs and attitudes.
6. Social Factors :Social factors include reference groups, family, and social status. These factors too affect
the buying behaviour of the consumer. These factors in turn reflect an endless and vigorous inflow through
which people learn different values of consumption.
7. Cultural Factors Cultural factors have a subtle influence on a consumer‟s purchasing decision process.
Since each individual lives in a complex social and cultural environment, the kinds of products or services
they intend to use can be directly or indirectly be influenced by the overall cultural context in which they
live and grow. These Cultural factors include race and religion, tradition, caste and moral values.

Consumer Buying Behavior Defined:

Consumer buying behavior is the sum total of a consumer's attitudes, preferences, intentions, and decisions
regarding the consumer's behavior in the marketplace when purchasing a product or service. The study of
consumer behavior draws upon social science disciplines of anthropology, psychology, sociology, and
economics. Definition of Buying Behavior: Buying Behavior is the decision processes and acts of people
involved in buying and using products.

Complaint management
“An Expression of dissatisfaction made to an organisation, related to its product or services or the
complaints handling process itself , whrer a response or resolution is explicityly or implicityly expected”

How to manage the customer complaint?

 Listen
 Repeat
 Apologize

41
  Acknowledge
 Thank
 Follow up
 Reember not to take personally
 Remain calm
 Focus on the problem
 Turn unhappy customers into happy customers.

Explain retail sales force management:

1. All professionals prepare properly and routine is no exception preparation is an in depth endeavour one
has to be mentally prepared.
2. Always know your business inside and out make it your business to know stock status availed delivery
times advertising schedules and promotional.
3. Create an atmosphere that your store is having the biggest sale of the year.
4. Remain upbeat and be in a positive state of mind. let your customers know that you have atmosphere.
[Link] be prepared with the proper sales ads price sheets cost and product information all looking and
acting organised makes differences to the customers.
6. Learn and be careful to use urgency words such as now and today in your presentation
7. Always use proper and friendly body language. How you look stand and act are windows to the soul make
sure you let your customers knows that you are not hiding anything‟s or lying to them.
What are the challenges in Retailing in India?
„To achieve associated maintain a position in an existing market, a prospective retail institution should
overcome the subsequent hurdles
• Regulatory barriers including:
a) Restrictions on land purchases, particularly as obligatory by native governments and against "big-box"
chain retailers;
b) Restrictions on foreign investment in retailers, in terms of each absolute quantity of finance provided and
proportion share of stock
(e.g., common stock) purchased;
• Unfavorable taxation structures, particularly those designed to punish or exclude "big box" retailers ;
• Absence of developed provide chain and integrated IT management;
• High aggressiveness among existing market participants and ensuing low profit margins, caused partly
by constant advances in product style leading to the constant threat of product devolution and value declines
for existing inventory; and
• Lack of properly educated and/or trained men, typically together with management, caused partly by lack
of instructional infrastructure sanctioning prospective market entrants to retort to the higher than challenges.
The trade is facing a shortage of middle management level professionals. Major retailers square measure
hiring sharply from the similar and smaller organizations by giving higher packages. They are making varied
levels of management and hiring on a spree. Some of the areas like technology, provide chain, distribution,
logistics, marketing, development and analysis have become terribly vital for the success of the
organizations. All of those would result in the accomplishment of extremely skilled folks that concentrate on
these fields.
• Supply Chain Management
The retail situation is characterised by supplying challenges, constant changes in shopper preferences and
evolution of recent retail formats. All this will increase the challenges long-faced by the trade. Varied
ways square measure to be enforced to enhance core business processes, like supplying, innovation,
transparency etc. Retail majors square measure below serious pressure to enhance their provide chain
systems and distribution channels and reach the amount of quality and repair desired by the shoppers.
• Frauds in retail
It is one of the first challenges the businesses would got to face. Frauds, together with vendor frauds, thefts
and quality in superintendence and administration measure the challenges that are tough to handle. This can
be there even when the security techniques, like CCTVs and POS systems are there.
• Challenges with Infrastructure and supplying

42
The lack of correct infrastructure and distribution channels within the country ends up in inefficient
processes. This can be a serious hindrance for retailers as a non-efficient marketing is extremely tough to
handle and may lead to vast losses. Infrastructure doesn't have a robust base in India. Urbanization and
globalisation compels firms to develop infrastructure facilities. Transportation, together with railway
systems, should be economical. Highways got to meet international standards.

UNIT-V (COMPLETED)

Reference books:
[Link] bajaj-retail management
[Link] piadham-retail management

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