TYPES OF RETAILERS

Indian Context:

Conventional Retailers- Try to

avoid price competition.
General Stores- Carry anything
which can be sold in reasonable
volume.
Single line or limited line storespecialize in certain line of
related
products
(mens
clothing).

Expanded assortment and service

Specialty Shop- sells special

types of products (sporting
goods).
Department stores- Combine
many limited line stores and
specialty shops.

Mass merchandising retailers

SupermarketsLarge
stores
types of products (sporting
goods)
Catalogue Showroom Retailerssell several lines out out of
catalogue
and
display
showroom
with
back-up
inventories.
Discount houses- offer a wide
assortment at substantial price
cuts.
Mass merchandise- large selfservice
stores
with
many
departments that focus on low
margins but high turnover.
Hypermarkets- very large stores
that try to carry not only food
and drug items but all goods

and services that the consumer

purchase routinely.
Some retailers focus on added
convenience

Convenience
(food)
storeslimited line foods stores offering
convenience
and
not
assortment (milk, bread and
RTE snacks)
Automatic vending- selling and
delivering products through
machines.
Door to door selling directly at
the consumers home.
Telephone and direct mail
retailing.

Western Context:
Type of retailer

Chain store- Retail stores could

be in multiple locations but
easily recognizable by the store
design, brand name/ logo,
common merchandising plan
and the same customer service
and promotional strategies.
High Street (Western term)Stores located in busy shopping
areas. These necessarily have
to be small (not more than 2000
sq ft), limited assortment of
merchandise,
no
parking
facilities.
Destination
(Western
term)These stores have to attract the
customer with the large size,
good bargains, ample parking
space and wide variety to
choose from but located in a
particular part of the city which

takes some effort to reach.

Megamart may be a good
example,
Convenience Store- This is the
store around the corner that
meets all the daily needs of
consumer close to it, is open
almost 18 hours in a day. These
stores have the provision of
home delivery at short notice.
Also called provision or kirana
store.
Family Store- Is defined as an
apparel store which caters to
the entire family.
Specialty Store- Deals with a
large variety of a limited range
of goods
Supermarket- Similar to the
above but at times on a smaller
scale. Food world outlets in
some cases can be considered
as an example also.
Emporium (used by government
or
export
firms)usually
promoted for selling a particular
category of products. This is
very similar to specialty store.
Most
state
governments
operate these to promote their
handicrafts.
Superstore- is considered as
bigger than a supermarket but
operating on a single floor.
Experts say that a superstore is
more that 5000 sq ft and stocks
a wide variety of food and other
items. It may also have a
chemist, bakery or florist on its
premises.
Shopping
MallThese
are
growing rapidly in India. These
are a numver of different retail
store
organized
in
one

premises, which is several

stories high and with ample
parking facilities. It may even
include entertainment and food
stalls. Independent retailers pay
for the space in the malls which
are usually over 200,000 sq ft.
Shopping centre(any market)- Is
a collection of retail outlets of
typically the same size of round
800-1000 sq ft. Each of these
retailers have leased the store
premises from the same owner.
HypermarketIs
considered
more than 200,000 sq ft but one
retailer brand. It stocks almost
everything including groceries,
food,
non-food,textiles,
garments,
footwear
and
stationery.
Discount Store- These retail
outlets buy in bulk from
producers on low negotiated
prices and can offer discounts of
up to 20% on the listed
consumer
price
to
the
consumer.
Every day low price (EDLP)
these are discounted stores in
the western countries who
announce low prices everyday
on some select merchandise.
Category Killer (western term)This is specialty store with a
large assortment at very low
prices. They offer the best price
in the market and hence are a
threat to all other retailers.
Factory outlet- Most of the
garment
and
footwear
manufactures
have
these
outlets. They would be selling
either regular foods or in many
cases seconds or export

surplus materials. These used

to be earlier in the factory
premises but can now be seen
across cities.
WarehouseThis
store
is
temporary and is run by
individual parties for a limited
period sale. They normally
engage a huge space like a
marriage hall to conduct this
sale.
Single price denomination- This
is store within another like the
grocery and food stores seen in
petrol stations.
Kiosks- Is a small independent
unit which can be located in a
busy places like airports, and
bus stations and normally sells
soft
drinks,
cigarettes,
beverages and is open on three
sided to handle the rush of
customers. There could also be
kiosks to just give information.
One is reminded of may I help
you kiosks you see in major
railway stations.
Vending machines- Dispense
fixed quantities of products for
fixed prices. Sell operated by
the
customerbeverages,
magazines, chocolates.
Independent stores- Owned by a
single person or one or two
partners.
Franchise- The store brand is
common but operated by many
persons on behalf of the main
retailer.
HawkersVisit
residential
localities with their merchandise
and sell house to house with
almost fresh stocks every day.

THE ROLE OF THE RETAILER

The retailer is able to provide the
service to the customers by the
following:
I.
II.
III.
IV.

Merchandising
The service
The format used and
The
communication
process used.

MERCHANDISING- a set of activities

involved in acquiring goods and
services making them available at the
places, times and prices and the
quantity that enable a retailer
management.
Merchandising Policy of the store:

The aims and objectives of the

retailer.
The
demographic
characteristics of the population
the store is expected to serve.
The level of customer service
the retailer is willing to provide.
Presence of competition in the
location.
Width
and
depth
of
the
assortment the retailer wants to
provide.
Any other services (like home
delivery,
monthly
running
account) which the retailer
wants to provide.

MERCHANDISE
PLANNINGmerchandise planning and control
relates to merchandise variety and
assortments. Variety has been defined
as the different kinds of goods (men
apparel, ladies garments) to be carried

or
services
offered.
Assortment
decisions relate to range of choice
( brands, styles, clours, sizes).

MERCHANDISE
STRATEGY
retailer
following
a
merchandising strategy will
different categories.

A
wide
stock

Factors which impact the width and

depth of the goods store are:

The
companys
strategic
objectives in terms of its
prospects, the service levels it
wants to extend to them and
the profitability target has set
for itself.
Expectations of the customers
from the store. Local tastes and
income levels affect what and
how people buy.
The space availability.
Relationships with the suppliers.
Availability of trained personnel.
Type of product being sold. For
mass based consumer products
a wide merchandising strategy
is preferred. For sophisticated
item like cell phones, a deep
merchandising strategy would
be better.

WIDE STRATEGY
Loyal
customer
base easily built up
Attracts a lot impule
buyers
Depend on volume
sales
Size of each bill
generated
by
a
customer
to
be
maximized
Lower margines
Cross
merchandising
Requires
more
space
Suitable for mass
based
consumer
products

DEEP STRATEGY
Takes longer to
build a loyal base
but lasts longer
Depend
on
planned
buying
only
Depends on niche
business
opportunities
Sell more modern
and
upgraded
product versions
Higher Margins

Requires
less
space
Preffered for niche
product

Category Management This the

management of the retail business by
looking
at the performance
of
categories of products rather than the
brands or models comprising the
category.

The Merchandising Function in a

retailer takes care of the purchase,
storage, display and sales of the
goods.
Merchandising Manager has the
following functions to perform:

10.2 COMPARISON OF WIDE AND

DEEP STRATEGIES

Making the products available in

the store so that at no point a
customer goes back without

buying his requirement as there

was a stock-out.
Making the products available in
the variety and assortment that
the customer is accustomed to.
Taking the right decisions on
introduction of new products
and packs.
Getting the products at the right
prices and taking advantage of
all promotions that companies
are willing to offer. This part of
planning process.
Planning the shelf and other
space to be allocated for the
display of the goods in the
store.
Making sure that all the
products get the display they
desrve so the customer does
not miss any product he wants
to buy. Visibility of the products
in the store is the job of the
merchandising manager.

MERCHANDISE
PROCESS:

PLANNING

has

Products to be sold
Variety of each category
Packs size and SKUs
Price point of the products

to

Quantity of
each
product,
category, SKU to be carried at
any point of time and the
relevant price points.

Financial
Aspects
of
Merchandising Financial control of
merchandising monitors the financial
investment in merchandise over any
period of measurements.
Customer Service- Implications of
customer service can be as broad as
retailer chooses them to be. The basic
function of fretailer is to provide the
goods most likely to be bought by his
prospective customer at a place and
time when customer wants them.
Some factors
service are:

Start with the sales plan.

Estimate the write-offs (covered
by credit notes for losses) likely
for the period.
Develop an inventory holding
plan.
Plan the merchandised required.
Calculate
the
purchase
required.

Merchandising Manager
take a decision on:

affecting

customer

The location of store and its

working hours.
The assortment of the goods
The price at which the goods
are made available.
Help and assistance within the
store to support the selection of
the goods by the customer.

In addition:

Free demonstration of the

product, help in installation.
Within the store premises, there
could be additional facilities like
a coffee shop, ATM, and a
beauty parlor.
The store may even provide
services like accepting orders
on phone, home delivery, and a
credit account for the customer,
and transport to the stores, and
so on.

Customer Service Needs Every

customer who is a prospective buyer
in a retailer outlet has expectations of
the store in terms of basic needs to
fulfilled ( qualifying needs) and addons, which the particular store may
provide ( determining needs).
Planning Customer Convenience
determine the attractiveness of the
retailers target market.
Retailers participate:

The planning starts with the

store ambiance.
While manufactures make their
products in large batch lot sizes,
the consumer may want to buy
just one unit of the product.
The retailer has to be careful in
planning the layout of the
store in such a way that the
consumer can find the produce
of his choice wisely.
Customer
expects
their
products to be available in their
store of choice at all times.
Variety and assortment are
normally used in place of each
other but there is a sbtle
difference.
Focus on the customer starts
with the in-store sales personnel
who assist the customer in his
purchase.

THE ELEMENTS OF THE TRADE/

RETAIL FORMAT ARE:

The store ambiance

Importance of time for the
customer.

Location is very important

factor in developing the trade
format of retailer.
The physical characteristics of
the retail store are also factors
to be considered as part of the
trade format.

10.3 INFLUENCE OF TYPE

SHOPPER ON TRADE FORMAT.
Task
focused
shopper
Convenient
location
Proximity to other
similar store
Correct
merchandise
selection
High availability
FaCompetitive
prices
Fast
customer
check out
Good
product
visibility
Customer advise
support

Example: grocery
shopping

OF

Leisure shopper
Exclusive goods
Wide choice
High-end image

Good ambiance
High
level
of
visual
merchandising
Additional
facilities
Theme displays
Department focus
Customer advise
support
Example: apparel
shopping

Categorisation in three ways:

Low value goods.

High value goods.
Specialty goods.

Trading Area defined as catchment

area from which most of the

customers of a retail
expected to come from.

store

are

Grocery or general store

Discount stores.

Specialty Stores-trading areas can

be very large.
Planning the retail format
format denotes the kind of store it is.
The format is again the choice of the
retailers based on his long term
strategy. Once the format is decided, it
is quite difficult to change as to
customers then start recognising the
store by its format.

Costumer Communication
-

Communication refers to the

matter in which retailer makes
himself
known
to
his
prospective customers.

Communication basically is used by

the retailer to:

Announce the opening of the

retail store.
Tell customers about the
promotion running.
Inform customers about any
additional
facilities
introduced in the store.

Communication:
-

create a preferred image of

the store in the minds of the
customer.
supposed
to
create
the
perception of the store in the
eyes of the customers.

can have a long term objective

of brand building of the store
or a short term objective could
be announce a promotion.
Both of the objectives converge
around creating store traffic.

RETAIL STRATEGIES
The markets and customers he
is targeting.
The location of the store/s.
The store image to be created
in the minds of the prospects.
The store design aspects.
The merchandise to be offered.
The type of personnel to be
recruited and what is expected
of them.
The promotions to be run to
build footfalls initially and
stickiness later on.
The supplier handling systems
including credit and other
terms.
The term offered to prospects
and customers.
Before we look at the possible
strategies in retail, it is necessary to
understand the key to drivers of retail
business. These are;
-

The number of footfalls each

day into the store the number
of people visiting the store.
The
number
of
footfalls
converted into purchase.
Increase the depth of purchases
of each customer.
Retention of the customer.
The modern store format.

The retail strategy is therefore to

be based on effectively achieving

these objective. Some of the broad

strategies which are possible relate
to;
(a) Having a range of products but
with some differentiation which
can be the signature of the
particular retailer.
(b) Having an efficient operation
which gives the customer what
they want with the least effort
on their part.
(c) Building long term relationships
with the customers.
Positioning Strategy
This is to identify that the store
develops for itself in terms of what it
has to offer the customer. The
positioning, once defined, cannot be
easily changed. The positioning is
defined only by two things the
product range being offered and the
value add of the store itself.

Product Differentiation Strategy

The strategy is built around the
products that the store or chain deals
in. In the case of the product
differentiation strategy, there could be
some scope for change over a period
of time:

Feature
exclusive
national
brands that are not available at
competing retailers.
Feature mostly private labels.
Feature big specially planned
merchandising events.
Specialty stores follow the
principle of exclusivity in the
product they offer.

Operational Superiority
It is another strategy which the retailer
can follow to provide long lasting
value to the customer. This requires
the retailer to clearly define his
processes and streamline them to
deliver value to the customer. There
should not be any waste of effort or
resources.
The operational efficiency is reflected
in the clock like manner in which the
retail outlets operate and this become
noticeable by the customers.
The customer service strategy has to
be developed so that it creates the
stickiness in the customers.
Store Location
The location of the stores could be
used as an effective strategy to get
the competitive advantage. A good
location
is
obviously
a
major
competitive advantage as the higher
costs could be easily made up by
larger footfalls.
Factors
Strategy

in

Development

of

Background and experience of

the promoter.
The product and merchandise to
be sold in the stores.
The profile of the potential
customers.
The location depends to a large
extent on the availability of real
state to suit the size of the
proposed outlets.
Availability of good suppliers is
not an issue as most branded
product companies would be

delighted to do business with a

retailer who can create large
footfalls.
Profitability in organized retail is
estimated at low levels.

RETAIL
PERFORMANCE
MEASURES
Gross margin return on
inventory
investment
(GMROI)
-Gross margin percentage
multiplied by the ratio of
sales to inventory.
Gross margin per full
time
equivalent
employee (GMROL)
-Retailers
plan
to
optimize this ratio.
Gross margin per square
foot (GMROS) This is a
measurement of how well
the floor and other space
in the store are being
utilized.

ASPECTS OF STORE DESIGN

Two important consideration in store

design:
Functional aspect relate to
convenience to the shopper.
Social aspect consideration
the ambience, the image and
attractiveness.
Together the two aspects define the
character of the store.
The product could be grouped in many
ways depending on:
-

functional products
impulse
purchase
considerations
by customer segments
based on storage consideration