ITR Module 1: Introduction to Retailing PDF

Introduction changes in the Over the past few years India has heen witnessing the significant growth and investment pattem along with increased sophistication in the...

Introduction changes in the Over the past few years India has heen witnessing the significant growth and investment pattem along with increased sophistication in the s are shopping pattern of the Indian customers. Customers taste and preference changing leading to a radical alteration in lifestyles and spending pattemns, creating new business opportunities to the local players as well as to the International players. This behavioural Change of the Indian customers in terms of "Choice and Preference", "Value for Money" and the emergence of organized retail formats have transformed the face of Retailing in India. Today retailing has been one of the largest private sectors in the world. It is not * only the oldest but also one of the most advance users of technology. Retailing is considered as an important sector- for any economy both in relation to GDP sontribution and share in total employment. With population of more than 1.1 billion, India is one of the world’s most attractive markets for retailing as it accounts for over 15% ‘of the country’s GDP and around 10% of the employment, leemllzahon of Indian economy has bro ught a good sense of optimism in various businesg sectors. Prominent-among them was retail business. Over the last few years the Indian retail sector has shown phenomenal growth. It has been growing with leaps and bounds. Increasing population ‘and change in the Customer lifestyle have given the necessary push to the Indian reta il sector to &row prodigiously. It has emerged as one of the most dynamic a.nd fast paced ¢ sector with several players entering the mar ket. But in India retail sector is highly fragmented in nature as on one side there are S ¥ traditional retailers also called as unorganised retailers existing in the eco nomy since ages and dominating the maximum share of retail business, but these unorganized sector of retailing is unable to tap the real potential of the Indian retail market which had emerged the new class of retailers called as “Organized retailers” who have developed the new concept of retail trade called as organized retail trade. The word retail is derived from the French word “retailer”, mea ning to cut a piece off or “to break bulk”. In simple terms it is the firsthand tra nsaction undertaken by the retailer with the customer. A rctafler is a company, organization or individual that purchases the product from md1 v1dual intermediaries or companies with the intention to rese]l the goods and servic es to the final customers. So from toothpaste which is used in the morning to the mosquito mats use at night, all are purchased from the retailer. As a concept retail is a customer centered marketing with the aimto resell the goods as pef the customer’s requirement. The retall concept covers four broad areas: it a) Customer orientation: The retailer makes careful study of the need: of the ' customer and attempt to satlsfy those needs. 5 d) Coordinated efforts: Every act1v1ty of the firm is aligned to the goal designed to maximize its fefficiency and deliver value to the customem,;-_, ,A 2.  1si not followed d by by many retailers The retailing : concept though simple ; to adopt. e. The retailers have to Wwho neglect one or more of the points menuoned;b;‘vese concepts can be balance these concepts in order to achieve SUCCesS h three parameters: the total used to measure the retailer’s performance t.hroug. Keting. The total retail retail experience, customer service and relationship mar o e experience refers to all the ingredients of the customer acking to billing. ide not to ff someg part of rftail experience is unsatisfactory, the shopper maz]::;gt in the visit that particular outlet. Therefore it is necessary tha.t SYETY; e experience must aim at customer’s satisfaction, while custon?er s_e - the tangible and intangible activities undertaken by the retailer in 001 o with the basic goods and services it provides. It is part of the value approach adopted by retailer in a bid to differentiate themsielves and occupy’a Strategic position. Among the factors that drive a firms’s cu#omer celerlc approach are store hours, parking access, sales personnel,. and amenities. Therefore retailers need to establish relationship with the existing custm.:ners ?o motivate them to visit regularly. This has generated the concept of relatlons axp marketing. The ongoing process of identifying and creating new value with individual customer over the life time is relationship marketing. Definitions of Retailing In order to understand retailing there is a need to know the definition on retailing. Following are the defini tions given by the eminent aut retailing. hors on’, Philip Kotler defines retailing as “All activities involved in sel services directly to final custom ling goods or ers for their personal, non-bu siness use”, According to Levy, Weitz and Pandit, “Retafling. is activities that adds value to the éet of business the Product and services sol their personal d to customers for and family use. B ‘ According to the David Gilbert” Retail is any business that direct it marketing efforts towards satisfying the final consumers basedupon the organisation of selling go ods and services as the me ans of distribution” : According to the Newman and Cullep « Retailing is the set of ‘markets products or activities tfiat services to final consumsers for. their own personal or ;  :musehold used.it does this by organising their availability on relatively arge scale and supplying them to consumers on relat ively small scale.” Evolution of Retail in In dia Since ages the Indian retail sector has been dominated by traditional retailers Which are also called as unorganized retailers. These are the unorgansied low structure usually administered by owner with little or no tax to pay.The y predominanlty consist of small, independent, owners, managed shops. There are around 14 million retail outlet in unorganised sector that comprised of small vendors like cloth stores, grocery stores, snacks centre etc..consumer familiarity that runs from generation to generation is one big advantage enjoyed by trditional retail sector. The evolution of retail started with barter trade which is considered as the oldest form of retail trade since independence.Haats, mandis and melas have always been a part of Indian landscape.Later public distribution system emerged as the single largest retail chain in the country.The system however continued to remain as essentially urban oriented activity. Infact towards the end of first five years plan the system started losing its relevance due to comfortable grain availability. The cooperative movement was again championed by the government that encouraged to set up more kendraiya bhandar in 1963. In maharashtra bombay bazaar which runs stores under the label of sahakari bhandar and apna bazaar. 5 Historic/ Rural Reach * In the past decades Indian market' place has been transformed dramatically.Globalisation, Privatisation and Liberlisation paved the way 4  in re ta il se ct or and many : n ey encouragin rivate compames to 1invest mo ing ind ep en de nt stores.Stores like ablish al business house started est individuo 1. plished the concept of Akbarallys, Nallis,Raymond were the one to e\s/inal showroom and many organised retailing. in india. Later Bombay dying, V1 in India. Therefore other were encourged to set up independent retail show r§°$ m[few concept of & : the chain stores was a successful beginning towar A retailing. ent of witsh the adv. The Concept of retail as the entertainment came:in 2000 ht the ::W ePt malls. The concept of mall fragmented the market and broug are the compac of retails called-as organised retailing. Organised retaling structures managed by professional with greater efficiency and commitment form of retail starte d grow ing in India by various format like super These s and SO on. * market, hypermarket , department stores dlscount store Unorganised and Organised retailing which 1: Meaning: Unorganised retallmg are mainly the traditional stores includes traditional retail stores , strect stores, kiosk and vendors where ownership and management rest mostly with one person. While organised retailing comprises of organised compact structure handled by professional that offers large variety of products in terms of quality, value for money, and makes shopping a memorable experience. 2. Operational cost: The unorganised retailing operates on low cost structure, with little labour cost, low or no maintaince and very limited expenses of visual merchandising. While organised retailing has to bear high operating cost, espec:al]y labour cost, maintainence cost and visual merchandising. 3. Product range: The local unorganised retail outlet dealé with limited range of products mostly unbranded items. On the other hand.the modern retailing prov1des a wide variety of product mostly bnmded % items. : 4. Promotion: The unorganised refailiné hardly undertakes any prbmotion There is no emphasis on advertising, sales promotion and so on. Whfle organised retailing undertakes heavy promotion.  Share of retail market. The share of unorganised retailing is about 90 percent which can come down to 80% in 2020. While the share of organised retailing is about 8 to 10% which is likely to go up by 20% by 2020. Shopping comforts: The unorganised retail -outlets hardly offer comforts to the shoppers.At times there is hardly any space to stand confortably and buy in traditional shops. While the organised retailing offers comforts to the shoppers.The shoppers can shop in air-conditioned environment.There is good drinking water, clean toilets and even good food.: - Investment. Small Traditional outlets can be set up with limited investment even in thousand of rupees. While setting up of organised - retail outlet require a huge investment running into several crores of rupees. ; - Incentive to shoppers. Generally the unorganised retailers do not- provide incentives to the customers and most of them sell at a maximum retail price which printed in the package of the product.while organised - retailers provide a number of incentives to Suoppers to develop and maintain customer loyalty. 9. Technology: The 'unorganised retail outlet hardly make use of technology. This is mainlydue to the fact of low turnover of business. The organised retail outlet make use of technology for billing, 1nventory » management, accounting and other activities. 10.Training to the staff: The unorganised retailers hardly place empbhasis on training. They consider experience as the most effective way of dealing with the customers. On the other hand the organised retailers provide training to the staff to improve knowledge, attitude, skills and : social behaviour. Training helps to improve the efficiency of the " _‘ employees. * ‘ Structure of organised retail Structure of Organized Retail Secior As per CRISIL “Organised retailing may be said to refer to a form of retailing whereby consumers can buy goods in a similar purchase environment across more than one physical location”. After 50 years of unorganized retailing and fragmented Kiranas stores, the Indian retail industry has finally begun to move towards modernization, Systematization and consolidation. Today, modernization is the catch phrase and the key to understanding retail in the next decade. o ®linapganizzd Retail There has been a boom in retail trade in India owingto a gradual increase in the disposable incomes of the middle class households, as a result of good players performance of IT, Service and Infrastructure sectors. More and more s like malls, are entering the retail business in India to introduce new format supermarkets, discount stores, department stores and even hanging the looks of bookstores, ‘chemist shops, and furnishing stores. The traditional the Indian growth pattern in organized retailing and in the consumption made by to enter population may follow a rising graph helping the newer businessmen the India Retail Industry. The country's fraditional retail industry is expected to grow at an average ananal rate of 5% over the next year, while the organised retail is estimated to register a growth rate of around 25% during this period. Importance of retail to the economy. L Contubutlon to the GDP: The growth of retail sector encourage the flow of capital in the economy.Consumer spending increased with the entry of organised retail. The increasing in spending encourage the invester to float -the money back to the economy which will again be recycled for the benefit of consumers. Therefore increase in per capita income and impact the GDP of the nation. g Employnient opportunities: Retail is the second largest sector. after agriculture in term of providing employment opportunitics. The rising retail sector can bring ample Job opportunities for young India population.By providing direct employment to people in various sectors - like small manufacturing sector especially food processing, textiles & " apparel the unemployment rate will be reduced besides this construction packing, IT, transfer & other infrastructure sectors will also offer employment opportunities. ® Higher standard of living: Favorable demographic and psychographic changes in India’s consumer class and the rising affluence of young India population is an important attraction that is attracting the global players to enter in Indian. market.These global players has developed the brand consciousness... among - the Indian consumer which has been the factor responsible to change the standard of living of India consumers. Upgradation of agricultural sector and other small scale sector: Since ages agriculture sector and small scale sector had been following | the traditional approach of production with minimum capital intensive - technology. With the growth of retail sector and entry of forelgn investment the farmers and small scale manufacturers will upgrade their'. technology to -create qu ahty knowledge ,skills, and adopt the required products for survial in the market.  * Revenue to the government: ; - Anotheér significant advantage of organized retal, s its contribution to 8 ally pay taxes and government revenue unorganized retailers doesn’t noTMm - most of them are not even registered for sales tax, Organized retailers by contrast, are corporate 'entmes vatalll,b ;nhence fill tax W0 steady returns regularly.The growth of organized retail has contribu rise in tax receipts for the central , state and local government. * Promotes tourism: ; The growth is retail sector will attract more foreign P?ayers to establish their branded outlets across India. This will create positive atmos.ph_e_re for foreign tourist to have frequent visit to india * due to esay availbility of well known brands.Thus retail sector will encourge more tourism in the economy. ¢ Entry of various source of financing; It will help global players by providing them with the avenues for investments: Organized retail is attracting inward both at domestic level and global level and several support industri es like IT industries, cold chain infrastructure and logistics and warehouse distribution services in order:to strengthen the supply chain. thus over all investment in-retail sector is increasing and it helps in economic growth of the cou ntry. Growth prospect of organised ret ail. 15% of the country’s GDP. Indian retail industry is one According to the Global Retail ally over the last few years. Development In rowth uld definitely benefit e s retailers. ] : ; e 2.High disposable income: India’s middle class Sis likely to :‘::zzlr-[:l?n:tos, China and Europe in terms of consumpti on in the years to com. E sghinaate the study by 2020 India is likely to get third ran k for conmptlon i and china and by 2030 India is likely to be number one m temtl: sk consumption followed by china and US. According to Mckinsey class of India was 250 million in 2007 and expect l' the m'll ed to increase to 600 million by 2030. The sheer size of its middle class market make India a happening market place for retail players. 3.Foreign Direct Investment: The recent announcement b)'r the Indf'an government with Foreign Direct Investment (FDI) in retail, especially allowing 100% FDI in single brands and 51% in multi-brand retail. FDI has create positive sentim d ents in the retail sector. Organized retail, which constitutes 8 per cent of the total ret ail-marke t, will gro w much faster than tradition_al retail: e This - 5 foreign retail giants may enter indian foreign capital would lead retail space. The inflow of to expansion of organised reta il sector., Mmanagement. The profession ail management, family bu al education would enable siness competent manp ower which in turn lead the Tetail sector to have to its growth. 5.Urbanisation: There is growing. urbansiation was on urbanisation in india. ly 17% of total population. Tn 1951 the 35%.The growth of ur In 2013 it has incr ban eased over Challenges for Organised retail trade Development of organised retail in India is a marathon task. The indian retaile r have to undergo through number of challenges. 1.Problem of infrastuructue: There is a problem of infrastructure especi ally road, transport, warehousing, power supply and so on; The infras tructure facilities are lacking not only in rural areas but also in urban areas. Lack of infrastructure faciltiies create problem of logistics which may affect the growt h of retail sector. Urbanization and globalization are compelling compa nies to develop infrastructure facilities. Transportation, including railwa y systems, has to be more efficient. Highways have to meet global standards. Airpor t capacities and power supply have to be enhanced. Warehouse facilities and timely distribution are other areas of challenge.. ¥ 2. International Standards: Even though India has well over 15 million retail outlets of different sizes and styles, it still has a long way to go befor e it can _ truly have a retail indusiry at par with International standards. This is where Indian companies and International brands have a huge role to play. 3. Inefficient supply chain management: Indian retailing is still domin ated by the unorganized sector and there is still a lack of efficient supply chain management. India must concentrate on improving the supply chain management, which in turn would bring down inventory cost, which can then be passed on to the consumer in the form of low pricing, 4. Lack of Retail space: The enormous growth of the retail ‘industry has created a huge demand for real estate.Most of the organised retail outlets in India are smaller in size as compared to International Standards. This is due to lack of availability of real estate space in'big and small cities of India. India will need additional retail space of 700,000,000 sq ft (65,000,000 m2 ) as compared to today. g 5.Cultural Diversity: India's huge size and socio economic and cultural diversity means there is no established ‘model or ‘consumption -pattern throughout the country. Manufacturers. and retailers will have to devise strategies for different sectors and segments which by itself ‘would be challenging. : 3 : 6.Lack of trained workforce: There is lack of trained workforce to manage the organised retail outlets. This problem may adversely affect the éfficiency of the outlets. Though several retail management institutes are providipg the training  to the young workforce but the outflow of trained man power is very low as compared to the demand. - 7.High taxes rates: The organised reta il rates. The high corporate tax rate red sector is subject to high corporate tax. uce problem may be difficult to resolve. Hows conseiderably the net margin.This come together and appeal the ever the corporate retail store can court to reduce the tax rates. ' 8.Changing Pperception of the consumer: Retailing is perceived more and more as shopping experienceand not merely buying of goods and servic has brought additional challenge of enhancing shopping expe es.This customers.Also rience for the retainin, g the customer is more of a challex.lge to retaj]. unit. Store loyalty is declining everywhere in the world and India is no exception to it.Customers are shifting store loyalties to get a feel of shopping at different stores. 9Frauds in Retail: It is one of the primary challeng have to face. Frauds, includin es the companies would g vendor frauds, thefts, shoplifting and in in supervision and administration are the chal lenges that are difficult to handle. This is so even after the use of security techniques, such as CCTVs systems. and POS As the size of the sector would increase, this would increase the number of thefts, frauds and discrepancies in the system. ; Retail Players In India Pantaleon Retail (India) Pantaloon’s managing director Kishore Biyani believes in changing the rules. When Pantaloon star ted the Big Bazaar discount stores in 2002 - part of the shopping culture. Big Baza , malls were not ar became a hit, as it combined the look and feel of Indian bazaars with aspe cts of modem retail like choice, convenience and quality. Headquartere d in Mumbai, the Rs 3,500-crore company now operate s over 5 million sq ft across 40 cities. : Shopper’s Stop A menswear store owned by K Rah eja in the Mumbai suburb of Andher 1991 has now transformed into” Sho i in pper’s Stop, with 27 departmental The company entered airport retail -stores, ing in a joint venture with the Nuan It also launched India’s largest ce Group. hypermarket, Hypercity. In 2005, Crossword boo kstore chain. it bought the v i in 1999. Now it has 325,000 sq Gurgao n and Mumbai. Its first  hypermarket, branded as ‘Max’, has spread across India and is one of the popular outlet among Indian consumers. Reliance Retail Reliance Fresh is the convenience store format which forms a part of Reliance retail Itd (RRL) of its parent company-Reliance Industries Ltd (RIL). RRL was set up in the year 2006 to lead Reliance Group's ,foray(int‘q organised retail. Presently, it has grown into an organisation that caters to millions of customers, thousands of farmers and vendors. Based on its core growth. strategy of backward integration, RRL has made rapid progress towards building an entire " value chain starting from the farmers to the end consumers. Reliance Fresh now operates 1,691 stores across the eountry. These stores sell fresh fruits and vegetables, staples, groceries, fresh juice, bars and dairy products. In addition, - RRL has also ventured into the retail optics business and has opened about 100 stores in India in a partnership with GrandVision and it also owns the iStore, which is a one-siop-shop forall products and services.. Aditya Birla : Aditya Birla Retail ltd is the retail arm of Aditya Birla group a USS 41 b11110n corporation. The company ventured into food and grocery retail sector in 2007 with acquisition of a south-based supermarket chain.Sunsequently Adity Birla Retail Ltd expanded its presence across, the country under the brand”~ “More™ with two format Supermarket and Hypermarket.more. caters to the daily, weekly and monthly shopping needs of consumers. The product offerings include a wide range of fresh fruits and vegetables, groceries, personal care, home care, general merchandise and a basic range of apparels. Currently, there are over 485 more. supermarkets. across the country. MORE MEGASTORE is a one-stop shopping destination for the entire family. Besides a wide range of products across fruits and vegetables, groceries, FMCG products, MORE.MEGASTORE also has a strong emphasis on general merchandise, apparels. Currently there are 16 hypermarket operates under brand name More Megastore Bharti Retail Bharti Retail Ltd is a wholly owned sub51d1ary of Cedar Support Services Ltd which belongs to the Bharti group of companies. It owns and operates: neighbourhood stores called Easyday and compact hypermarket stores called Easy day Market. These stores provide consumer immence value and wide choice with product of great quality.at affordable price.. The neighbourhood " format stores offer more than 3,000 products at the lowest prices.The first  Easyday store wa, s launched in Ludhiana and Easyday Market in Jalandha 2008. Currently, there are r, in over 210 stores across Punjab, Haryana, Uttar Pradesh, Utta rakh and, Madhya Pradesh, Rajasthan, Himachal Pradesh, Chhattisgarh, NCR Delhi, Jammu and Kashmir; Maharashtra and Karnataka. The world’s largest retailer Wal-Mart, which prefers to go it alone outside the US, chose Sunii Mittal’s Bharti Enterpris es as its partner in India. The venture started with the cash & carry (wholesale) format, whi ch could b'e extended.to retail operations once foreign direct investmen t is allowed in multi-brand retail, as is expected. The entity is yet to start operations as the formal agreement has not been inked. ; International Pplayers in Retail sector Home Depot Target Aldi GmbH & Company oHG  ; Understanding Retail terminology used in retail sector: Assortment. - A number of stock keeping units within the merchandise A Category. Barcode - Ana Haats = Ay Independent Retailer A % its Impulse buying - Th Merchandise - The SKUs e Vendor Management - % Characteristics of Retailing /. _— Retailing mt( be distinguished in various ways from other businesses (]{‘Q\W E such as manufacturing. Retallmgdxfl'etsfiommnnnfachmgmd]e following ways: - o There is direct end-user mteracmm in retailing. o Itis theonlypomtmthevaluedmntoprovndeaplatfmmfm promotions. Sales at the retail level are generally in smaller unit sizes. o Location is a critical factor in retail business. o In most retail businesses services are as importantas core products. 0o There are ‘a larger number of retail units compared to other @ members of the value chain. This occuss primarily to meet the requirements of geographical coverage and population density. O Direct InteractlonW|th Customers = B Retail businesses have a direct interaction with-end-users of goods or __services in the value chain. They act as intermediaries between end-.users and-suppliers such as wholesalers or manufacturers. Therefore, they are in a position to effectively communicate the response and changing preferences of the consumers to the suppliers or sales persons of the company: This helps the manufacturers and marketers to redefine their product and change the components of its marketing strategy accordingly. Manufacturers require a strong retail network both for reach of the product and to obtain a powerful platform for and point-of-purchase advertising. Realizing the importance of in the entire value chain, many manufacturers have entered into business by setting up exclusive stores for their brands. This  as only provided direct contact with customers, but has also acted advertisement for the companies and has provided the manufacturefs with bargaining power with respect to other retailers who stocked their product. Retailing provides extensive sales people support for producis which are information-intensive, such as in the case of consumer durables. Lower Average Amount of Sales Transaction The average amount of sales transaction at retail point is much less in comparison to the other partners in the value chain. Many consumers buy products in small quantities for household consumption. Due to - lower. disposable incomes, some consumer segments in India even buy grocery items on a daily basis rather than a weekly or a monthly basis. Inventory management becomes a challenge for retailers as a result of the many minor transactions with a Iarge number of customers. Hence, retailers must take care of the average levels of stock, order levels, and the popularity of different brands. The small amount also means that the retailer has to keep a tight control on costs associated with each transaction in the selling process. Credit verification, employment of personnel, value-added activities like bagging, gift- wrapping, and promotional incentives all add up to the coss. One way to resolve this is for the retail outlets to be able to atiract the maximum possible number of shoppers. ; Point-of-purchase Display and Promotions A significant relevant chunk of retail sales comes from unplanne d or impulse purchases. Studies have shown: that shoppers often 'do not carry a fixed shopping listand pick upmerchandise based on impulsive or situational appeal. Many-do not look at ads before shopp ing. Since alot of retail productsare low.involvementin nature, impulse purchases of the shopper s a vital area that every retailer must tap into. There fore display, point-of-purchase merchandise; store layout, and caizlogue; become:impoztant..Impulse goods:like chocolates, snack foods, and magazines can-sell much-more quickly if they are placedin a high - visibilithigh y-atraffi ndc location. Larger Number of.;Retail.,Buéipes_s Units &5 Loca; tion of retail store plays-an fimpcirlm:nfrole ¥ : S an 4 compared: to oth V bus.mess units; Manufactirers decide’ the: location on the basis :i-' availability of factors of productions and market. Simil arly, retailers consider factors like potential demand ,,suppl}; of mercha:;’d:se, and - store image-related factors in locating the retail outlet. The number of operating units in refail is the highest compared to other constituents  14 Retall Management of the value chain, primarily to meet the needs for geographic reach and customer accessibility.. @,/._/Funchons of Retanllng -Retailers playa sr.gm.ficantmle as conduit betvveenmanufacm:ers, wholesalers, suppliers, and consumers. In this context; they perform various functions like sorting, breaking bulk, holding stock, as a channel »ofcémnnmicafion,stomge,adverfisin'g,andceflahaddifionalsewiw& @ Sorting Manufacturers usually make-one or a variety. of pr.oduds and would liketo sell their entire inventtoory a few buyers to reduce costs. Final consumers, in contrast, prefer a large variety of goods and services to choose from-and usually buy them in small quanlities. Retailers are able to balance the demands of both sides, by colleanciing assortment = of goods from different sources, buying them in sufficiently large quantities, and sellthem ingto consumers in small units. Theabavepmcesslsrefcuedtoasthesomngpmeess.'fhm@ this process, retailers undertake activities and perform functions that.addtoflmvulueoffimprodndsmdsewmessoldtoflwmm 'Supermarket.smflerSofler onanaverage, l5000dlflemm. b  e comp anie s. Cust omer s-ar ¢ ab le to.c hoose from a wide rang from 500 zufcj:te: Jocation. If each m‘; of designs; sizes, and brands from just one sep ara te sto re for 'it s own pro duc ts, customers wo - a; - ha d a sev era l sto res to com ple te the ir sho ppi ng. ‘While all retailers ; t};er visi t e an assortment, they specialize in types of aasorhnenfit offered an de provides clothing and market to which the offeringis made. Westsi cializes in food and baker? accessories, while.a chain like Nilgiris spe le Pantaloons is items. Shoppers’ Stop tazgets the elite urban class, whi targeted at the middle class. ‘Breaking Bulk Breaking bulk is another function performed by retailing. The word retailing is derived from the French word retailler, meaning ‘to cut a and piece off’. To reduce transportation.costs, manufacturers wholesalers typically ship large cartons of the product, which are then tailored by the retailers into smaller quantities to meet individual consumption needs. Holding Stock : : Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of products at home as they know that this can be replenished by the retailer and can $ave on inventory carrying costs. Additional Services Retailers ease the change in owneréhip of merchandise by providing services that make it convenient to buy and use products. Providing product guarantees; after-sales service; and dealing with consumer complaints are some of the services that add value to the actnal product atthe retailers’ end, Retailers also offer credit and hire-purchase facilities to the customers to enable them to buya product now and pay for it iater. Retailers fill orders, prompily process, deliver and install products. Salespeople are also.employed by retailers to answer queries and provide additional information abonut the displayed products. The display itself allows the consumerto see and test products before actual * purchase. Retail essentially completes transactions with customers.  16 Retail Management : @ Channel-of Communication on ail ers also act as the cha nne l of communication and informati Ret wee n the who les ale rs or sup pli ers and the consumezs. From " pet play, shoppers learn about the advertisements, salespeople, and dis product or services offered. characteristics ‘and features of a sales forecasts, delivery delays, Manufacturers, in their turn, learn of achlrercanthenmodflydefecfive andcustoma'complaints.Themanuf o es. or unsatisfactory merchandise and servic Transport and Advertising Functions provide assistance with -/ Small manufacturers can use retailers to ndise. This yment of mercha transport, storage, advertising, and pre-pa r roun also works the otheway case the mumber of retailersissmall. in d s performedby a partreta ic ilerul a direct - has ar The number of function ded to-cover both relation to the percentage and volume of sales nee their costs and profits. g ) edthe perform to ir * As a result of these functions, Tetailers are requ following activities.. - g2 - ctivities Performed byRetailers Retailers mdertake various business-activities and perform functions that add valueto the offerings they maketo their target segments. Retailers provide convenient location, stock, and appmpnate mix of merchandise in suitable packages in accordance with the needs of © ; customers. The four major activities, as shown in Figure 1.1, carried - out by retailers are: 5