Q1 What are the factors responsible for the growth of the Indian retail

sector?
ANS 1 Factors responsible for the growth of the Indian retail sector
were:1. Demand-side Factors: These factors are driven by the robust
fundamentals of the Indian economy. The demand-side factors that are
responsible for increasing the demand for products in the retail sector
include:
increase in the level of disposable income and
rise in the standard of living of people
2. Supply-side Factors: These factors aim at fulfilling the demand for
products through collaboration among retailers, vendors and mall
developers.
Q2 Explain the different formats under multichannel retailing.
ANS 2 The following are the key retail formats under multichannel
retailing:Online Retailing: It is a process in which consumers can buy products in
real-time without any intermediary. Thus, it involves business-to-consumers
(B2C) transactions. Online retailing is not only confined to buying and selling
products, but also includes services like hotel reservation, electronic
ticketing, etc. It helps in saving consumers time and efforts to a large
extent. Moreover, online retailing provides 24/7 access to products and
services to consumers.
Catalogue/Direct Mailing: Catalogue provides a snapshot of productrelated
information such as design, price, colour and categories to
consumers.
On the other hand, direct mailing is another way to make consumers
aware about products and services. This method is used to attract
potential consumers and retain the existing ones by building cordial
relationships with them.
Vending Machine: It is a type of machine that dispenses products such as
beverages and snacks of one or more brands in exchange of money paid by
consumers through cards or cash. Such machines operate independently
like Automated Teller Machines (ATM) and are placed at some specific
locations such as airports, bus stops and commercial establishments like
malls. This type of format is used by retailers to attract consumers on the
move.
Kiosks: It is an important retail format that was introduced to the Indian
retail sector during the 1990s. Kiosks help in presenting products using very
limited space. They are used as a low-cost strategy by many marketers.
You can find kiosks at airports, shopping malls, exhibitions, etc. Mr. Orange,
Boosts, Yo! and Kaya Skin Clinic use kiosks for selling their products.
However, with the advent of advanced technology, kiosks now contain
digital screens with attractive animations and catchy contents

Q3 Retailing is also based on several strategies. Briefly explain the

various retail strategies.
ANS 3 Retailers need to develop strategies related to:
Store Location: It plays an important role in the success of any retail
business. Imagine a situation when you get less response from consumers
in spite of having the best assortment of merchandise. This can be due to
the location of your store being far away from the reach of consumers. The
store location strategy helps retailers to select the best place for their stores
in terms of accessibility by consumers. Previously in India, the organised
retail sector had its presence only in the metro cities. However, the
increasing purchasing power in smaller cities such as Ahmedabad, Jaipur,
Bhopal and Lucknow have created increased market opportunities for
retailers. This is the reason why mass market retailers such as Big Bazaar
has been opening more stores in the smaller cities.
Retailers also need to decide whether to locate the stores in shopping malls
or traditional shopping places or in suburban areas in a city.
Pricing: As you have studied earlier, consumers always prefer to purchase
quality products at a minimum price. Therefore, it is important for retailers to
formulate an effective pricing strategy. The prices of products should always
be reasonable because high prices may lead consumers to switch to other
retailers, while very low prices can create doubts among consumers about
the product quality. To formulate a sound pricing strategy, retailers should
consider the prevailing pricing strategies of other retailers.
Marketing: The marketing strategy focuses on communicating the right
message and as such helps a retailer in creating the interests of the target
customers towards its stores. Marketing strategy involves positioning,
advertising, publicity etc. The goal of the marketing strategy is to reach to
the right target audience and make them purchase from a retailer. For
example, Big Bazaar, which targets the mass market, publishes frequent
advertisements in the regional and national newspapers, TV channels and
radio to communicate the various promotional offers, discounts, range of
products etc. to reach to its target market.
Merchandise and Assortment Strategy: The merchandise strategy is all
about displaying merchandise in an organised manner at a store. An
effective assortment strategy helps retailers to gain maximum attention of
consumers and provide them one-stop shopping experience. It involves two
key components - depth and width.
Depth indicates a variety of similar products carried in a retail store
Width indicates different types of products available in a store
The assortment strategy depends on the overall strategy of the retailer. For
example, mass market retailers keep a wide range of products from different
brands, whereas retailers with a very specific target customer may keep
products of a few brands.
Q4 The final sale of products depends on the buying decisions of
consumers.
Comment on the statement in the light of consumer decision making
process.

ANS 4 The final sale of products depends on the buying decisions of consumers.
Consumers usually take into consideration various aspects such as product price,
availability
1. Need Recognition: This is a stage where potential consumers determine
that they have an unfulfilled need, want or desire. This recognition may
result from internal (such as maintaining status) or external stimuli (such
as suggestion from someone).
2. Information Search: This stage takes place once the need is recognised
by consumers. As a consumer, you always prefer to collect information
about the required product before making your final purchase decision.
Consumers collect information from various sources such as visiting
stores, talking to friends, Internet, etc. Once the consumer collects the
necessary information regarding the availability of the product in a retail
store, price etc., the consumer moves on to the next stage.
3. Evaluation of Alternatives: After collecting information about a retailer,
a consumer moves on to compare that retailer with other retailers to make
a purchase decision.
4. Purchase: This stage takes place when the consumers expectations are
met by a retailers attributes.
5 Post-purchase Evaluation: This stage takes place when consumers
avail services provided by a retailer after making the purchase. These
services include after sales services, warranty, servicing, free installation,
feedback, etc. Different retailers of the same product may provide
different types of after sales services. Good post-purchase experience
stimulates consumers to re-purchase from the same retailer.
Q5 What are the steps involved in expansion strategy. Explain each step
in detail.
ANS 5 Let us discuss these steps in detail.
1. Identifying the need for expansion: This is the first and foremost step
of strategy formulation. Before developing any strategy, retailers should
identify why they want to expand. As you have studied earlier, usually,
retailers expand their businesses when they have gained a competitive
advantage in the domestic markets or they want to utilise their idle
resources for expansion purposes. However, many retailers expand
their businesses just to earn profits.
2. Setting achievable objectives: A strategy is said to be successful
when the desired objectives are accomplished by adopting that
strategy. These objectives can only be achieved if they are realistic. On
the contrary, unrealistic objectives may result in heavy losses.
Irrespective of domestic and international expansion, retailers should
align these objectives with their overall business goals and objectives.
3. Studying the market environment: Retailers can only expand their
businesses successfully if they undertake a deep study about the
market size, competitors, culture, political and financial factors, price,
threats, opportunities, etc. For example, if you are planning to expand
your food retail business in China, you should study about the culture,
tastes, values, lifestyles, perceptions and needs of the Chinese people.

4. Segmenting the market: It involves dividing the market into smaller

parts. Market segmentation helps retailers to increase their sales and
profitability by dividing consumers into different groups with similar
requirements, tastes, perceptions, etc. and targeting them accordingly.
For example, Zara, an apparel brand, targets the young audience of
different countries.
5. Developing an effective business network: A retail network is a
chain of manufacturers, suppliers, wholesalers and consumers. In order
to expand their businesses, retailers should maintain cordial
relationships with all the members of their retail network.
Q6 Explain the following in detail
(i) Data Warehousing
(ii) Electronic Data Interchange.
ANS 6 (1) Data Warehousing:-now, you are aware of the fact that retailers need to
collect and maintain a huge amount of internal and external data. Internal data
includes data
related to employees, different operations, the existing stock, etc. On the
other hand, external data includes data related to consumers, competitors,
manufacturers, suppliers, wholesalers and so on. Over a passage of time,
retail stores need to maintain a large amount of data. The excess load of
data may slow down the performance of the IT systems of stores. Now, the
question arises how can stores prevent such situations. These situations
can be prevented using a technique called data warehousing.
The concept of data warehousing was introduced in the late 1980s when
IBM researchers Barry Devlin and Paul Murphy developed a business data
warehouse. A data warehouse is a database that is developed for reporting
and analysis purposes. Data warehousing is a process of consolidating
data at a centralised location. According to Bill Inmon, A data warehouse is
a subject-oriented, integrated, time-variant and non-volatile collection of
data in support of managements decision-making process.
Data warehousing helps retailers to store data in such a manner that it can
be easily analysed and converted into meaningful information. This
information enables retailers to make effective business decisions.
Moreover, data warehousing protects data from risks such as damage,
destruction and theft. However, at retail stores, all staff members are not
allowed to access data from a data warehouse. Apart from the top
management of a retail store, the following people are authorised to access
the information stored in the data warehouse:
The merchandiser
Person involved in stock keeping units (SKUs)
Vendor
Operations staffs
IT people
(2) Electronic Data Interchange:- In your day-to-day life, you often transfer
a large amount of data from your computer to your friends computer and vice
versa. This process is called Electronic Data Interchange (EDI). In the retailing
context, Electronic Data
Interchange (EDI) is a method of computer-computer exchange of
information between a retailer and other parties such as vendors. This data
can be related to purchase orders, invoices, defective products, products

received, etc.
EDI can be grouped into two parts: proprietary EDI and Web-based EDI.
Proprietary EDI is primarily developed by large-scale retailers such as
Walmart. On the other hand, Web-based EDI is mostly used by small or
medium-sized retailers. Web-based EDI can further be categorised into
Intranet and Extranet. Intranet is a computer network used within an
organisation. Extranet, on the other hand, is a computer network that can
control the access of information from outside the organisation. In retailing,
extranet allows a retailer to get connected with customers and suppliers,
while Intranet helps employees to share data with each other within the
store.
The benefits of EDI involve the following: exchanges data between two computers rapidly
reduces the chances of errors while sharing data
enables users to trace the location of data with ease
restricts unauthorised access to keep the data secured