Retail Management PDF

CHAPTER I - INTRODUCTION AND customer satisfaction by gaining a better PERSPECTIVES ON RETAILING understanding of the consumers of goods and services produced by a company. World of Retailing...

CHAPTER I - INTRODUCTION AND customer satisfaction by gaining a better PERSPECTIVES ON RETAILING understanding of the consumers of goods and services produced by a company. World of Retailing Characteristics of Retailing Retailers are selling their products and services through more than one 1. Direct interaction with channel—such as stores, Internet, and customers/end customers. catalogs 2. Customer service plays a vital role 3. Sale volume large in quantities but Retailing is a global, high-tech industry that less in monetary value plays a major role in the global economy. 4. Sales promotions are offered at this About one in five U.S. workers is employed point only by retailers. 5. Retail outlets are more than any other form of business Firms selling services to consumers, such 6. Location and layout are critical as dry cleaning and automobile repairs, are factors in retail business. also retailers..” 7. It offers employment opportunity to all age Retail Management Retail management is the various Types of Retailers processes which help the customers to Store Retailing procure the desired merchandise from the 1. Departmental stores retail stores for their end use 2. Food Based Superstore 3. Factory Outlet Retail management includes all the steps 4. Convenience Store required to bring the customers into the 5. Flea Market store and fulfill their buying needs. 6. Hypermarket 7. Specialty Stores Retail management makes shopping 8. Limited Line Stores a pleasurable experience and ensures the 9. Combination Store customers leave the store with a smile. In 10. Membership Club simpler words, retail management helps 11. Food retailers customers shop without any difficulty. 12. Full Line Discount 13. Conventional Supermarket What is Retailing? 14. Off Price Retailer Most common form of doing 15. Super Centres business 16. Variety Store It consists of selling merchandise from a permanent location (a retail DEFINITIONS store) in small quantities directly to the 1. Department Store consumers. ➔ large retailers that carry wide These consumers may be individual breadth and depth of products. buyers or corporate. ➔ they offer more customer service Retailer purchases goods or than their general merchandise merchandise in bulk from manufacturers competitors. directly and then sells in small quantities ➔ they are organized by departments Shops may be located in residential such as juniors, men‘s wear, female areas, colony streets, community centers or wear etc. in modern shopping arcades/ malls. ➔ is allocated the sales space, manager and sales personnel that Meaning of Retailing they pay an attention to the According to Kotler: department. Retailing includes all the activities involved ➔ utilizes various sources for in selling goods or services to the final marketing communication. consumers for personal, non business uses. ➔ Due to overstoring most of the A process of promoting greater sales and budget are spending on advertising, couponing and discounts  ➔ Unfortunately the use of coupons ➔ retailers tend to specialize in diminishes profits and creates a apparel, shoes, toys, books, auto situation where consumer does not supplies, jewelry and sporting buy unless they receive some type goods.. of discount. ➔ Category killers (sometimes called power retailer or category specialty) 2. Convenience Store are generally discount specialty ➔ located in areas that are easily stores that offer a deep assortment accessible to customers. of merchandise in a particular ➔ carry limited assortment of products category. and are housed in small facilities. ➔ The major seller in convenience 5. Off-price Retailers stores is convenience goods and ➔ resemble discount retailers in that non alcoholic beverages. they sell brand name merchandise ➔ The strategy of convenience stores at everyday low prices. employ is fast shopping, consumer ➔ rarely offer many services to can go into a convenience stores customers. pick out what they want, and check ➔ The key strategy of off price retailers out relatively short time is to carry the same type of ➔ Due to the high sales, convenience merchandise as traditional store receives products almost department stores but offer prices daily.. that can be 40 to 60 percent lower. ➔ Because convenience store don‘t ➔ To able to offer the low prices, off have the luxury of high volume price retailers develop special purchase. relationship with their suppliers for large quantity of merchandise 3. Full line Discount Stores ➔ Inventory turnover is the key factor ➔ It conveys the image of a high of successful off price retailing volume, low cost, fast turnover outlet business. selling a broad merchandise assortment for less than 6. Variety Store conventional prices. ➔ offer deep assortment of ➔ It is more to carry the range of inexpensive and popular goods like products line expected at stationary, gift items, women‘s department stores, including accessories, house wares etc. consumer electronics, furniture and ➔ They are also called 5 to 10 percent appliances. store because the merchandise in ➔ There is also greater emphasis on such stores, used to cost much. such items as auto accessories, gardening equipment, and house 7. Flea Market wares. ➔ literal transaction of the French aux ➔ Customer services are not provided puces, in outdoor bazaars in Paris. within stores but at centralized area. ➔ outdoor or indoor facility that rent out ➔ Products are sold via self service. space to vendors who offer Less fashion sensitive merchandise merchandise, services and other is carried. goods that satisfy the legitimate needs of customers. 4. Specialty Store ➔ provides opportunity for ➔ carry a limited number of product entrepreneur to start business at low within one or few lines of goods and price. services.. ➔ consist of many retail vendors ➔ They are named because they offering a variety of products at specialize in one type of product. discount price at places where there Such as apparel and complementary is high concentration of people. merchandise. ➔ on specific market days they ➔ utilizes a market segmentation assemble for exchange of goods strategy rather than typical mass and services. marketing strategy when trying to attract customers. 8. Factory Outlets  ➔ manufacturer owned stores selling ➔ This type of retailer combines food manufacturers closeouts, items and non food items to create discontinued merchandise, one stop experience for the irregulars, cancelled orders, and customer. sometimes in seasons, first quality ➔ They are very large from the 30000 merchandise. to 100000 or more sq ft. this leads to 9. Membership Clubs operating efficiencies and cost ➔ appeals to price conscious savings. consumers, who must be a member of shop there. 13. Super Centres and Hypermarkets ➔ it breaks the line between wholesale ➔ combination of a superstore and ling and retailing. discount store. Supercenter ➔ Some members of typical club are developed based on the European small business owners and Hypermarkets, an extremely large employee who pay a nominal annual retailing facility that offers many fee and buy merchandise at types of product in addition to foods wholesale prices; these customers ➔ in supercentre more than 40 percent make purchase for use in operating of sales come from non food items. their firm or for personal use. ➔ fastest growing retail category and encompasses as much as sales 10. Conventional supermarket ➔ Wal-Mart is category leader with 74 ➔ essentially large departmental stores percent share of super centre retail that specialize in food. share ➔ according to the food marketing institute, a conventional supermarket 14. Warehouse Clubs and Stores is a self service food store that ➔ developed to satisfy customers who generates an annual sales volume of want to low prices every day and are $2 million or more willing to give up services needs. ➔ these stores generally carry ➔ these retailers offer a limited groceries, meat and produce assortment of goods and services, products. both food and general merchandise, ➔ carries very little general to both end users and midsize merchandise. businesses ➔ the stores are very large and are 11. Food Based Superstore located in the lower rent areas of ➔ One of the biggest trends over the cities to keep their overhead low past twenty years in food retailing cost low. has been the development of ➔ generally, warehouse clubs offer superstore. varying types of merchandise ➔ food based retaliates that are larger because they purchase product that than the traditional supermarket and manufactures have discounted for carry expanded service daily, bakery, variety of reasons seafood and non food sections. ➔ varies in size but can be as large as 15. Limited Line Stores 150000 sq ft. ➔ known as box stores or limited ➔ like combination stores food based assortment stores, represent a superstore are efficient, offer people relatively small number of food retail a degree of one stop shopping stores in the United States stimulate impulse purchase and ➔ food discounters that offer a small feature high profit general selections of products at lows prices merchandise. ➔ they are no frills stores that sell products out of boxes or shippers 12. Combination Store ➔ the strategy is to price products at ➔ because shoppers have been least 20 percent below similar demanding more convenience in products at conventional their shopping experience, a new supermarkets. type of food retailers has been emerging. Types of Retailers Non Store Retailing  1. Direct Marketing 2. Electronic/Internet/E-Direct Selling Franchising 3. Vending Machines ➔ Franchise in French means 4. Catalog Marketing “privilege or freedom” 5. Franchising ➔ refers to the methods of practicing and using another person‘s Direct Marketing philosophy of business. ➔ an interactive system of marketing, ➔ The franchisor grants the which uses non personal media of independent operators the right to communication to make a sale at distribute its products, techniques any location or to secure and trademarks for a percentage of measurable response gross monthly sales and royalty fee ➔ a method wherein the manufacturer ➔ Various tangibles and intangibles or producer sells directly to retailer, such as national or international user or ultimate consumers without advertising, training and other intervening intermediaries support services are commonly ➔ this offers flexibility with maximum made available by the franchisor controls of sales efforts and ➔ Agreements typically last five to marketing information feedback twenty years, with premature cancelation or termination of most Electronic/Internet/E-Direct Selling contracts bearing serious ➔ which involves no personal contact consequences for franchisees. with consumers, direct selling entails some type of personal contact Advantage of Franchising ➔ This contact can be at the consumer 1. Advantage to the Franchiser home or at an out of home location 2. Low Capital & Low Risk such as the consumer office. 3. Speeder Expansion 4. Extended Market Penetration Vending Machines ➔ represents an additional class of Disadvantages of Franchising retail institutions 1. Business Control ➔ Essentially, vending is non-store 2. Expenses Involved retailing in which the consumer 3. Lower profit Potential purchase a product through a machine Multichannel Retailing ➔ The machine itself takes care of the -those who browse or purchase through entire transaction, from taking the more than one channel (retail store, catalog, money to providing the product. Internet) ➔ offerings range from typical products ➔ The emergence of multiple such as soft drinks and candy to channels, especially the internet as insurance, cameras, phone calls, a strong channel for shopping, has phone cards, books, paper and been a real empowerment for the pens. customer today. ➔ The customer is option rich, time Catalog Marketing and attention poor and fully aware of ➔ Mail Orders marketing/Catalog the choices that he or she has Marketing, also called as mail order access to in the market. business, is one of the established ➔ Multichannel retailing helps deliver a methods of direct marketing superior shopping experience by ➔ Since mail orders marketers use synchronizing customer touch points catalogues for communication with and leveraging channel capabilities. the consumer, this form of marketing is often referred to as catalogue Multichannel Retailing marketing -The broad trends that we have been seeing ➔ In these methods the consumer in the industry that will have a positive become aware of product through impact on Multichannel retail are: information furnished to them by the ➔ Customers that use the online marketer through catalogues channel in addition to traditional dispatched by mail.  store based retailing has grown by 20-30% year over year ➔ Internet influenced offline spending has grown significantly over the past few years ➔ Cross-channel customers are younger and wealthier ➔ Customers spend more at the store (about $150) when buying a product after performing their research online; increasing ➔ the retailer‘s share of the customer wallet. b) Catalog channel ➔ The consumer selects the goods he/she wants to purchase from an online catalog. ➔ Once the order is complete, the customer confirms it and notes the order number. ➔ Using the confirmed order number, the customer can check the status of the shipment at any time on the Internet. ➔ Once the goods have been shipped and the customer has received them, the goods receipt is confirmed and based on this, billing then takes place c) Internet channel ➔ When a firm uses its website to offer products for sale and then individuals or organizations use their computers to make purchases from this company, the parties have engaged in electronic transactions (also called online selling or internet marketing).. ➔ Many electronic transactions involve two businesses which focus on sales by firms to ultimate consumers. ➔ Thus online retailing is one which consists of electronic transactions in which the purchasers‘ an ultimate consumer.