Notes On Retail Mgmt. Mba21

UNIT-1
Evolution of the Indian Retail Sector- Retail comes from the Old French word tailler, which
means “to cut off, clip, pare, divide” in terms of tailoring (1365) and prefix with re and the verb
tailor meaning “to cut again”. It was first recorded as a noun with the meaning of a “sale in small
quantities” in 1433 (from the Middle French retail, “piece cut off, shred, scrap, paring”).[ Like in
French, the word retail in both Dutch and German also refers to the sale of small quantities of
items.. Evidently, retail trade is one that cuts off smaller portions from large lumps of goods. It is
also a process through which goods are transported to final consumers. In other words, retailing
consists of the activities involved in selling directly to the ultimate consumer for personal, non-
business use. It embraces the direct-to-customer sales activities of the producer, whether
through his own stores by house-to-house canvassing or by mail-order business.
The origins of retailing in India can be traced back to the emergence of Kirana stores and mom-
and-pop stores. These stores used to cater to the local people. Eventually the government
supported the rural retail and many indigenous franchise stores came up with the help of Khadi
& Village Industries Commission. The Khadi & Village Industries (KVIC) was also set up post
independence. Today, there are more than 7,050 KVIC stores across the country. The co-
operative movement was again championed by the government, which set up Kendriya
Bhandars in 1963. In Maharashtra, Bombay bazaar, which runs stores under the Sahakari
Bhandar and Apna Bazaars run a large chain of co-operative stores. The economy began to open
up in the 1980s resulting in the change of retailing. The first few companies to come up with
retail chains were in textile sector, for example, Bombay Dyeing, S Kumar’s, Raymond’s, etc.
Later Titan launched retail showrooms in the organized retail sector. With the passage of time
new entrants moved on from manufacturing to pure retailing. Retail outlets such as Food world
in FMCG, Planet M and Music world in Music, Crossword in books entered the market before
1995. Shopping malls emerged in the urban areas giving a world-class experience to the
customers. Eventually hypermarkets and supermarkets emerged. The evolution of the sector
includes the continuous improvement in the supply chain management, distribution channels,
technology, back-end operations, etc. this would finally lead to more of consolidation, mergers
and acquisitions and huge investments.
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 characterized 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 housewives 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 varied across product categories. Convenience was indicated by consumers as
Retail Management Notes- UNIT-1 BY DR Hemendra Sharma
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 Goenka’s and Tata’s 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. Specialty stores were just emerging in Thailand in mid
1990s. Another country where the development of the retail sector has also followed an
interesting path is Brazil. The concept of self service in shopping was introduced to Brazil in
1953 but until 1972, there was no foreign influence in the Brazilian retail sector. Food retailing
especially, contained to be Brazilian owned and managed although international innovations
were adopted. The number of intermediaries in marketing channels is decreasing as the
operation of wholesalers is under threat from the direct contact between retailers and
suppliers, although few specialized distributors have emerged who provide value added services
such as distribution of frozen and chilled food.
Meaning of Retailing: According to Kotler: ´Retailing includes all the activities involved in selling
goods or services to the final consumers for personal, non business uses. A process of
promoting greater sales and customer satisfaction by gaining a better understanding of the
consumers of goods and services produced by a company.
Characteristics of Retailing:
1. Direct interaction with customers/end customers.

2. Sale volume large in quantities but less in monetary value
3. Customer service plays a vital role
4. Sales promotions are offered at this point only
5. Retail outlets are more than any other form of business
6. Location and layout are critical factors in retail business.
7. It offers employment opportunity to all age
Phases in the evolution of retail sector
Weekly Markets, Village and Rural Melas

 Source of entertainment and commercial exchange
Convenience stores, Mom-and-pop / Kirana shops
 Neighborhood stores/convenience
 Traditional and pervasive reach
PDS outlets, Khadi stores, Cooperatives
 Government supported
 Availability/low costs/distribution
Exclusive brand outlets, hypermarkets and supermarkets, department stores and shopping
malls
 Shopping experience/ efficiency
 Modern formats/ international
Percentage of Organised Retail across the world
What is Retail? Retail involves the sale of goods from a single point (malls, markets, department
stores etc) directly to the consumer in small quantities for his end use. In a layman’s
language, retailing is nothing but transaction of goods between the seller and the end
user as a single unit (piece) or in small quantities to satisfy the needs of the individual
and for his direct consumption.
The Supply Chain
Manufacturers....................... Retailers............... End User

. . (Consumer)
Wholesalers
 Manufacturers - Manufacturers are the ones who are involved in production of goods
with the help of machines, labour and raw materials.
 Wholesaler - The wholesaler is the one who purchases the goods from the
manufacturers and sells to the retailers in large numbers but at a lower price. A
wholesaler never sells goods directly to the end users.

 Retailer - A retailer comes at the end of the supply chain who sells the products in small
quantities to the end users as per their requirement and need.
The end user goes to the retailer to buy the goods (products) in small quantities to
satisfy his needs and demands. The complete process is also called as Shopping.
 Shopping - The process of purchasing products by the consumer is called as shopping.

However there are certain cases where shopping does not always end in buying of
products. Sometimes individuals do go for shopping but return home empty handed.
Such a shopping is merely for fun and is called window shopping. In window shopping,
individuals generally go to the market, check out various options and their prices but do
not buy anything. This kind of shopping helps to break the monotony.
How does retail work? There are various ways a consumer can purchase goods from the
retailer-
 Counter service- As the name suggests, counter service refers to the process of
procuring the merchandise from the counter. The buyer does not have an easy access to
the merchandise of the store and he can’t pick up things on his own. In such a
mechanism the buyer has to walk up to the counter and ask for his requirements.
Example mentioned below-
1. Jewellery Store- Can you go to a jewellery store and pick up things on your own ? No
You need to ask the sales person to show you the sample designs for you to finalize
something as per your taste and pocket.
2. Chemist Shop- Chemist shop does not allow the buyers to simply walk into the store and
pick up medicines. One needs to walk up to the counter, show his prescription from the
doctor to get the medicines from the retailer.
 Delivery Service- The mechanism of shipping goods to the customer’s doorsteps is called
as delivery service. The end-user does not have to walk up to the store to procure his
merchandise; instead the goods are directly delivered to his house through various
means of transportation. Delivery service is a boon for the individuals who have an
extremely busy life style and do not have enough time to walk up to the store.
1. Online Shopping- Internet has helped end-users to shop from their homes only. Online
shopping sites like Amazon, eBay etc provide a wide range of options to the consumers
who can order the desired merchandise through internet. Once the payment is done
through debit or credit cards, the goods are delivered at the address the customer
requests for. The transportation charges however are borne by the consumer himself.
2. Order through telephone- Now a days several restaurants and eating joints provide an
option of ordering food while sitting at home. The food outlets upload their complete
menu in the website providing a wide range of options to the end-users. One can easily
place his order over the phone and the food is delivered at his doorstep within no time.
Pizza Hut, Dominos (Promise to deliver hot and crisp pizza within 30 minutes of placing
the order)
 Door To Door Sales: Door to door sales is a process where the sales person
travels from one house to the other and prompts the customers to buy the
product. He gives the demo of his product and strives hard to convince the
individual to buy the merchandise.
Examples- Eureka Forbes operates on this mechanism where experienced sales

professional visits the doorsteps of the potential customers, gives them
presentations and influences them to purchase the product.
Telephone companies also sometimes rely on this mechanism to sell their

connections.
 Self Service: In self service the individuals have the liberty to pick up
merchandise on their own and help themselves.
 Second Hand Retail: In second hand retail shops the retailer sells second hand
goods to the end-users. Such shops generally run for charity where people
donate their used merchandise to be resold to the poor and needy free of cost.
Types of Retailers: Store Retailing by Store based Strategy Food Retailers are as follows-
1. Departmental stores.
2. Convenience Store.
3. Full Line Discount.
4. Conventional Supermarket.
5. Specialty Stores
6. Food Based Superstore
7. Off Price Retailer.
8. Combination Store.
9. Variety Store.
10. Super Centres
11. Flea Market.
12. Hypermarket.
13. Factory Outlet.
14. Limited Line Stores.
15. Membership Club.
1. Department Store- Department stores are large retailers that carry wide
breadth and depth of products. They offer more customer service than
their general merchandise competitors. Department stores are named
because they are organized by departments such as juniors, men‘s wear,
female wear etc. Each department is act as ―mini store‖. Means the each
department is allocated the sales space, manager and sales personnel

that they pay an attention to the department. IMC programme for each
department is different and particular. Department store utilizes various
sources for marketing communication. Due to overstoring most of the
budget are spending on advertising, couponing and discounts.
Unfortunately the use of coupons diminishes profits and creates a
situation where consumer does not buy unless they receive some type of
discount.
2. Convenience stores: Convenience stores are located in areas that are
easily accessible to customers. Convenience store carry limited
assortment of products and are housed in small facilities. The major seller
in convenience stores is convenience goods and non alcoholic beverages.
The strategy of convenience stores employ is fast shopping, consumer can
go into a convenience stores pick out what they want, and check out
relatively short time. Due to the high sales, convenience store receives
products almost daily. Because convenience store don‘t have the luxury of
high volume purchase.
3. Full line Discount Stores: It conveys the image of a high volume, low cost,
fast turnover outlet selling a broad merchandise assortment for less than
conventional prices. It is more to carry the range of products line
expected at department stores, including consumer electronics, furniture
and appliances. There is also greater emphasis on such items as auto
accessories, gardening equipment, and house wares. Customer services
are not provided within stores but at centralized area. Products are sold
via self service. Less fashion sensitive merchandise is carried.
4. Specialty Store: Specialty store carry a limited number of product within
one or few lines of goods and services. They are named because they
specialize in one type of product. Such as apparel and complementary
merchandise. Specialty store utilizes a market segmentation strategy
rather than typical mass marketing strategy when trying to attract
customers. Specialty retailers tend to specialize in apparel, shoes, toys,
books, auto supplies, jewellery and sporting goods. In recent years,
specialty stores have seen the emergence of the category killer. Category
killers (sometimes called power retailer or category specialty) are
generally discount specialty stores that offer a deep assortment of
merchandise in a particular category.
5. Off-price Retailers: Off price retailers resemble discount retailers in that
they sell brand name merchandise at everyday low prices. Off price
retailers rarely offer many services to customers. The key strategy of off
price retailers is to carry the same type of merchandise as traditional
department stores but offer prices that can be 40 to 60 percent lower. To
able to offer the low prices, off price retailers develop special relationship
with their suppliers for large quantity of merchandise. Inventory turnover
is the key factor of successful off price retailing business. In addition to
purchasing close outs and cancel orders, off price retailers negotiate with
manufacturer to discount order off merchandise that is out of seasons or
to prepay for items to be manufactured thus reducing the price of buying
items. E.g. there are many types of off price retailers, including outlet
store, Manufacturers department store or even specialty store chains can
be an off-price retailer.
6. Variety Store: Variety store offer deep assortment of inexpensive and
popular goods like stationary, gift items, women‘s accessories, house
wares etc. They are also called 5 to 10 percent store because the
merchandise in such stores, used to cost much.
7. Flea Market: Flea market is a literal transaction of the French aux puces,
in outdoor bazaars in Paris. A flea market is the outdoor or indoor facility
that rent out space to vendors who offer merchandise, services and other
goods that satisfy the legitimate needs of customers. Flea market
provides opportunity for entrepreneur to start business at low price. A
flea market consists of many retail vendors offering a variety of products
at discount price at places where there is high concentration of people.
On specific market days they assemble for exchange of goods and
services.
8. Factory Outlets: Factory outlets are manufacturer owned stores selling
manufacturers closeouts, discontinued merchandise, irregulars, cancelled
orders, and sometimes in seasons, first quality merchandise.
9. Membership Clubs: A membership club appeals to price conscious
consumers, who must be a member of shop there. It breaks the line
between wholesale ling and retailing. Some members of typical club are
small business owners and employee who pay a nominal annual fee and
buy merchandise at wholesale prices; these customers make purchase for
use in operating their firm or for personal use. They yield 60% of total
club sale. The bulk members are final consumers who buy exclusively for
their own use; they represent 40 %of overall sales.
10. Conventional supermarket: Conventional supermarket is essentially large
departmental stores that specialize in food. According to the food
marketing institute, a conventional supermarket is a self service food
store that generates an annual sales volume of $2 million or more. These
stores generally carry groceries, meat and produce products. A
conventional food store carries very little general merchandise.
11. Food Based Superstore: One of the biggest trends over the past twenty
years in food retailing has been the development of superstore.
Superstores are food based retaliates that are larger than the traditional
supermarket and carry expanded service daily, bakery, seafood and non
food sections. Supermarket varies in size but can be as large as 150000 sq
ft. Like combination stores food based superstore are efficient, offer
people a degree of one stop shopping stimulate impulse purchase and
feature high profit general merchandise.

12. Combination Store: Because shoppers have been demanding more
convenience in their shopping experience, a new type of food retailers
has been emerging. This type of retailer combines food items and non
food items to create one stop experience for the customer. Combination
stores are popular for the following reasons. They are very large from the
30000 to 100000 or more sq ft. this leads to operating efficiencies and
cost savings. Consumer like one stop shopping and will travel further to
get to the store. Impulse sales are high.
13. Super Centres and Hypermarkets: Super centre is a combination of a
superstore and discount store. Supercenter developed based on the
European Hypermarkets, an extremely large retailing facility that offers
many types of product in addition to foods. In supercentre more than 40
percent of sales come from non food items. Super Centre is fastest
growing retail category and encompasses as much as sales. Wal-Mart is
category leader with 74 percent share of super centre retail share.
14. Warehouse Clubs and Stores: Warehouse clubs and stores were
developed to satisfy customers who want to low prices every day and are
willing to give up services needs. These retailers offer a limited
assortment of goods and services, both food and general merchandise, to
both end users and midsize businesses. The stores are very large and are
located in the lower rent areas of cities to keep their overhead low cost
low. Generally, warehouse clubs offer varying types of merchandise
because they purchase product that manufactures have discounted for
variety of reasons. Warehouse clubs rely on fast moving, high turnover
merchandise. One benefits of this arrangement is that the stores
purchase the merchandise from the manufacture and sell it prior to
actually having to pay the manufacturer.
15. Limited Line Stores: Limited line store also known as box stores or limited
assortment stores, represent a relatively small number of food retail
stores in the United States. Limited line store are food discounters that
offer a small selections of products at lows prices. They are no frills stores
that sell products out of boxes or shippers. Limited line stores rarely carry
any refrigerated items and are often cash and carry, accepting no checks
or purchase bags from the retailers. In limited line store, the strategy is to
price products at least 20 percent below similar products at conventional
supermarkets.
Non Store Retailing- Below mentioned are the points for non store retailing-
 Direct Marketing
 Electronic/Internet/E-Direct Selling
 Vending Machines
 Catalog Marketing
 Franchising
1. Direct Marketing- Direct marketing is defined as an interactive system of marketing,

which uses non personal media of communication to make a sale at any location or to
secure measurable response. Direct marketing is a method wherein the manufacturer or
producer sells directly to retailer, user or ultimate consumers without intervening
intermediaries. This offers flexibility with maximum controls of sales efforts and
marketing information feedback. Various forms of direct marketing are telemarketing,
direct mail marketing, television marketing, etc.
2. Electronic/Internet/E-Direct Selling- In contrast to direct marketing, which involves no
personal contact with consumers, direct selling entails some type of personal contact.
This contact can be at the consumer home or at an out of home location such as the
consumer office.
3. Vending Machines- Vending machines represents an additional class of retail
institutions. Essentially, vending is non store retailing in which the consumer purchase a
product through a machine. The machine itself takes care of the entire transaction, from
taking the money to providing the product. Vending machine offerings range from
typical products such as soft drinks and candy to insurance, cameras, phone calls, phone
cards, books, paper and pens.
4. Catalog Marketing- Mail Orders marketing/Catalog Marketing, also called as mail order
business, is one of the established methods of direct marketing. Since mail orders
marketers use catalogues for communication with the consumer, this form of marketing
is often referred to as catalogue marketing. In these methods the consumer become
aware of product through information furnished to them by the marketer through
catalogues dispatched by mail.
5. Franchising- Franchise in French means privilege or freedom. Franchising refers to the
methods of practicing and using another person‘s philosophy of business. The franchisor
grants the independent operators the right to distribute its products, techniques and
trademarks for a percentage of gross monthly sales and royalty fee. Various tangibles
and intangibles such as national or international advertising, training and other support
services are commonly made available by the franchisor. Agreements typically last five to
twenty years, with premature cancelation or termination of most contracts bearing
serious consequences for franchisees.
Multichannel Retailing: Multi channel retailers are defined as those who browse or purchase
through more than one channel (retail store, catalog, Internet) The emergence of multiple
channels, especially the internet as a strong channel for shopping, has been a real
empowerment for the customer today. The customer is option rich, time and attention poor and
fully aware of the choices that he or she has access to in the market. Multichannel retailing
helps deliver a superior shopping experience by synchronizing customer touch points and
leveraging channel capabilities. The broad trends that we have been seeing in the industry that
will have a positive impact on Multi channel retail are:
• Customers that use the online channel in addition to traditional 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
1. Store channel:
a. Store-Based Sellers – By far the predominant method consumers use to obtain products
is to acquire these by physically visiting retail outlets (a.k.a. brick-and-mortar). Store
outlets can be further divided into several categories. One key characteristic that
distinguishes categories is whether retail outlets are physically connected to one or
more others stores:
 Stand-Alone – These are retail outlets that do not have other retail outlets connected.
 Strip-Shopping Centre – A retail arrangement with two or more outlets physically
connected or that share physical resources (e.g., share parking lot)
 Shopping Area – A local centre of retail operations containing many retail outlets that
may or may not be physically connected but are in close proximity to each other such as
a city shopping district. Regional Shopping Mall – Consists of a large self-contained
shopping area with many connected outlets
2. Catalog channel: The consumer selects the goods he/she wants to purchase from an
online catalog. This catalog may be hosted either on the SAP Marketplace or on the
retailer's Web site. Once the order is complete, the customer confirms it and notes the
order number. The order is then transferred to the retailer's SAP System, the necessary
materials are reserved, the internal order is triggered, and the goods are sent off and
delivered by a service partner. 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.
3. 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 on line 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 purchaser’s an ultimate consumer.
Consumer Decision Making Process/Customer Buying Behavior

1. Need recognition / Problem recognition: The need recognition is the first and
most important step in the buying process. If there is no need, there is no
purchase. This recognition happens when there is a lag between the consumer‘s
actual situation and the ideal and desired one. However, not all the needs end up
as a buying behavior. It requires that the lag between the two situations is quite
important. But the ―way‖ (product price, ease of acquisition, etc.) to obtain this
ideal situation has to be perceived as ―acceptable‖ by the consumer based on
the level of importance he attributes to the need.
2. Information search: Once the need is identified, it‘s time for the consumer to
seek information about possible solutions to the problem. He will search more or
less information depending on the complexity of the choices to be made but also
his level of involvement. (Buying pasta requires little information and involves
fewer consumers than buying a car.) Then the consumer will seek to make his
opinion to guide his choice and his decision-making process with: Internal
information: this information is already present in the consumer‘s memory. It
comes from previous experiences he had with a product or brand and the
opinion he may have of the brand. Internal information is sufficient for the
purchasing of everyday products that the consumer knows – including Fast-
Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). But when
it comes to a major purchase with a level of uncertainty or stronger involvement
and the consumer does not have enough information, he must turns to another
retail outlet.
3. Alternative evaluation: Once the information collected, the consumer will be
able to evaluate the different alternatives that offer to him, evaluate the most
suitable to his needs and choose the one he think it‘s best for him. In order to do
so, he will evaluate their attributes on two aspects. The objective characteristics
(such as the features and functionality of the product) but also subjective
(perception and perceived value of the brand by the consumer or its reputation).
Each consumer does not attribute the same importance to each attribute for his
decision and his Consumer Buying Decision Process. And it varies from one
shopper to another. Mr. Smith may prefer a product for the reputation of the
brand X rather than a little more powerful but less known product. While Mrs.
Johnson has a very bad perception of that same brand. The consumer will then
use the information previously collected and his perception or image of a brand
to establish a set of evaluation criteria, desirable or wanted features, classify the
different products available and evaluate which alternative has the most chance
to satisfy him.
4. Purchase decision: Now that the consumer has evaluated the different solutions
and products available for respond to his need, he will be able to choose the
product or brand that seems most appropriate to his needs. Then proceed to the
actual purchase itself. His decision will depend on the information and the
selection made in the previous step based on the perceived value, product‘s
features and capabilities that are important to him.
5. Post-purchase behavior: Once the product is purchased and used, the consumer
will evaluate the adequacy with his original needs (those who caused the buying
behavior). And whether he has made the right choice in buying this product or
not. He will feel either a sense of satisfaction for the product (and the choice). Or,
on the contrary, a disappointment if the product has fallen far short of
expectations. An opinion that will influence his future decisions and buying
behavior. If the product has brought satisfaction to the consumer, he will then
minimize stages of information search and alternative evaluation for his next
purchases in order to buy the same brand. This will produce customer loyalty.
Types of Buying Decisions
1. Extended Problem Solving: Is a purchase decision process in which customers devote

considerable time and efforts to analyze the alternatives. Customers typically engage in
extended problem solving when purchase decision involves a lot of risk and uncertainty.
Financial risk arises when a customer purchases an expensive product or service.
Physical risks are important when customers feel that a product or service may affect
their health or safety. Social risks arise when customers believe a product will affect how
others view them. Consumers engage in extended problem solving when they are
making buying decision to satisfy an important need or when they have little knowledge
about the product or service.
2. Limited Problem Solving: Is a purchase decision process involving a moderate amount
of time and effort. Customers engage in this type of buying process when they have had
some prior experience with the product or service and their risk is moderate. In these
situations, customers tend to rely more on personal knowledge than on external
information. They usually choose a retailer they have shopped at before and select
merchandise they bought in the past. The majority of decisions involve limited problem
solving. One common type of limited problem solving is impulse buying, which is a
buying decision made by customers on the spot after seeing the merchandise.
3. Habitual Decision Making: Is a purchase decision process involving little or no conscious
effort. Today‘s customers have many demands on their time. One way they cope with
these time pressures is by simplifying their decision making process. When a need
arises, customers may automatically respond with, ―I‘ll buy the same thing i bought last
time from the same store.‖ typically, this habitual decision –making process is used
when decisions aren‘t very important to customers and involve familiar merchandise
they have bought in the past. When customers are loyal to a brand or a store, they are
involved in habitual decision making.
Factors Influencing The Buying Process:
1. Cultural Factors: Cultural factors are coming from the different components related to
culture or cultural environment from which the consumer belongs. Culture and societal
environment: Culture is crucial when it comes to understanding the needs and behaviors
of an individual. Throughout his existence, an individual will be influenced by his family,
his friends, his cultural environment or society that will ―teach‖ him values, preferences
as well as common behaviors to their own culture. For a brand, it is important to
understand and take into account the cultural factors inherent to each market or to each
situation in order to adapt its product and its marketing strategy. As these will play a role
in the perception, habits, behavior or expectations of consumers.
2. Social Factors: Social factors are among the factors influencing consumer behavior
significantly. They fall into three categories: reference groups, family and social roles and
status.
Role of Retailing
1. Destination: The retailer uses the destination category to take a leadership role in the
market. The destination category communicates the retailer‘s commitment to meet the specific
needs of consumers. It delivers consistent superior value to target shoppers and is used to
define the target consumer image of the retailer for the market. For example, a store might
want to be known as the preferred destination for ready-to-eat meal solutions. Their deli would
then be well stocked with a wide variety of prepared meals and side dishes. The destination
category draws shoppers to the store where they can do the rest of their shopping when they
come in for dinner.
2. Routine: The routine category is designed to assist in building the target consumers' image of
the retailer. A routine category serves as a link between the retailer and the consumer. This
would include most of the "routine" items consumers typically put on their shopping list.
3. Preferred Routine: The preferred routine role for a category is used to help define the retailer
as the preferred choice by delivering consistent superior value to the target consumer. This is
the trusted retailer that consumers go to when they try to fill specific needs—for instance, one
that's committed to having best-quality produce in the market. Produce is a routine purchase
for consumers, but produce selection can vary greatly by retailer. Natural stores can
differentiate themselves by offering the best local and regional produce in the market.
4. Seasonal/occasional: A seasonal/occasional role for a category is focused on specific events
—the floral department for Mother‘s Day. Retailers typically place a great deal of emphasis on
the floral department on Mother's Day by increasing their selection, inventory and gift ideas.
5. Convenience: The convenience role is geared toward filling impulse needs. This category
strategy typically plays an important role delivering profit and margin enhancement through
items like the ready-to-eat meals in the deli and the chilled single serve beverages at the
checkout lines.
Trends in Retailing: The Retail Industry is changing rapidly due to various reasons:
1. Spatial convenience: Number of working women has fuelled an intense demand for
convenience. The quest for convenience on the part of consumers is shown by
 Growth of convenience store fuelled by the entry of Petroleum marketers AM/PM store
 Exploding Popularity of online shopping operators
 Diversification of vending machine into food /clothing and videotapes.
2. Increased power of retailer: At one time, Colgate dominated retailers. Now the retailers
tend to dominate them. The reasons for this reversal are many. Retailers have many new
products from which to choose when deciding what to stock on their shelves. Further
the IT has diffused throughout retailing to such an extent that virtually all major retailer
can capture item-by-item data via scanning devices at that electronic point of sale
terminal. This knowledge of information has permitted retailers to calculate the (DPP)

Direct Portfolio of Individual Items, track what moves and what does not move well in
their stores. So the Manufacturers struggled to get space in the shelves of retailers. They
offer Pricing concession, slotting allowance etc., to promote products.
3. Growing Diversity of Retail formats: Consumers can now purchase same merchandise
from wide variety of retailers. They are Dept. store, specialty store, convenience store,
category killer, Mass merchandiser, Hypermarket.
 Mom and Pop Stores and Traditional Kirana stores: A small independent store across
product categories is very common retail format in India. Particularly in small townships
 E- commerce: The amount of retail business conducted on the Internet is growing every
year. Companies like Amazon. Com and First and second.com which helped pioneer the
retail e-commerce. Fabmart.com
 Department store with varied merchandising operations.
 Franchise: Territory rights are also sold to franchisees. Various distribution and other
services are provided by contract to franchisees for fee. Ex.
 McDonalds, Blockbuster Video
 Warehouse club- wholesale club: Appeal is to price conscious shopper. Size is 60000 sq.
ft. or more. Product selection is limited and products are usually sold in bulk size.
 Mail order catalog: Non-store selling through the use of literature sent to potential
customer. Usually has a central distribution centre for receiving and shipping direct to
the customer.
 Specialty Discounter –Category killer:
Offers merchandise in one line (e.g. sporting goods, office supplies; children merchandise) with
great depth of product selection at discounted prices. Stores usually range in size from 50,000
to 75000 square feet.
 Emergence of region specific formats: In departmental store format, while most A class
cites and metros have larger stores of 50000 sq ft sizes, stores in B Class towns have
stabilized in the 25000- 35,000 sq. feet range. Most players have started operating these
2 formats across various cities, which has helped them to standardize the merchandise
offering across the chain.
 Entry of International Players: A large no. of international players has evinced interest in
India despite the absence of favorable government policies.
 Mall Development: Modern malls made their entry into India in the late 1990s with the
establishment of cross roads in Mumbai and Ansal Plaza in Delhi. According to a market
estimates, close to 10mn sq. feet of mall space is being developed across several cities in
the country.
FDI in Retail: 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. The Indian government removed the 51
percent cap on FDI into single-brand retail outlets in December 2011,and opened the
market fully to foreign investors by permitting 100 percent foreign investment in this
area. Government has also made some, albeit limited, progress in allowing multi-brand
retailing, which has so far been prohibited in India. At present, this is restricted to 49
percent foreign equity participation. The spectre of large supermarket brands displacing
traditional Indian mom-and-pop stores is a hot political issue in India, and the progress
and development of the newly liberalized single-brand retail industry will be watched
with some keen eyes as concerns further possible liberalization in the multi-brand
sector.
FDI IN SINGLE-BRAND RETAIL: While the precise meaning of single-brand retail has not been
clearly defined in any Indian government circular or notification, single-brand retail generally
refers to the selling of goods under a single brand name. Up to 100 percent FDI is permissible in
single-brand retail, subject to the Foreign Investment Promotion Board (FIPB) sanctions and
conditions mentioned in press Note. These conditions stipulate that: 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. Single-brand products
include only those identified during manufacturing. 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.
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.

What Does Relationship Retailing Mean? Relationship Retailing is a strategy that businesses
implement to build loyalty and forge long-term relationships with customers. Relationship
Retailing can come in the form of loyalty programs, personalized experiences, or superb
customer service.
Relationship Retailing Definition mentioned below-
6. The increased engagement through social media enables the e-Retailing brand to
nurture relationships and build deeper relationships with its consumers. In fact, a
deeper relationship with the e-Retailer is expected by the customer (Falkow,
2010).
7. Brand loyalty fosters trust between the brand and the consumer with the deeper
relationship (Capozzi & Zipfel, 2012).
8. Since social media develops community networks, e-Retailing brands should
capitalize on the information dissemination of the consumer to their community
about the e-Retailer, creating brand advocates (Booth & Matic, 2011). As a result,
brands should determine the loyalty of their customers to their e-Retailing brand
to leverage the brand advocates.
The relationship between manufacturers and retailers is already shifting with the rise of private-
label brands and the increasing marketing sophistication of retailers. In an October 2008 article
in Advertising Age, Jack Neff reported how retailers are hiring talent away from consumer goods
companies, measuring shoppers, and building their own brands—“raising big questions about
the balance of power in the industry.” Retailers are increasingly focused on building their own
brands rather than turning over their stores to manufacturers. This is neither good nor news to
the brands. However, the role of brands is often not well understood or represented at retail. It
helps to consider that when shoppers purchase branded items, they are acquiring three distinct
values:
Intrinsic value: A carbonated beverage will quench your thirst and meet your physiologic need
for water.
Added value: Packaging the beverage and delivering it to you in a convenient, and possibly
chilled, form adds value to the intrinsic value of the water.
Creative value: This third value is in the mind of the shopper and is the essence of brand
value.
Essentials of Relationship Retailing

1. Customer base (target market): As customers habits, liking, disliking tend to change
frequently with the passage of time, retailers must regularly analyze their customer
base/target market in terms of changing trends, attitude of loyal customers towards the
store. In India, teenage population is more, death rate is declining due to efficient
medical facilities, joint families are breaking up into nuclear families, middle class is fast
growing, people from rural areas are migrating to towns and cities, and middle class
income is increasing year after year. Thus, market structure is on change, per capita
income is higher and market segments are enlarging. People instead of buying from local
‘Kirana’ stores, prefer visiting to a mall or super bazaar where they can get variety of
goods under one roof in varied brands. Therefore, retailers besides attracting and
concentrating on new customers must take care of existing ones and loyal customers
due to less acquisition cost. Further, a retailer’s desire mix of old versus new customers
depends on the firm’s position in its lifecycle, amount of resources, objectives and its
policy towards meeting competition. If a retail firm has growth as its main objective,
then besides concentrating on existing and loyal customers, a retailer must focus on new
customers too.
2. Customer service: It is the sum totals of all the retail activities those enhance the value,
customers receive when they shop and buy merchandise. For relationship retailing to
work, retailers must build and maintain a distinctive image among consumers. This
image is created and sustained by efficient customer service that strongly affects the
total retail experience. Customer service is the level of service that customers expect to
receive from any retailer against their payments. Therefore, a retailer should develop a
comprehensive customer level strategy that answers what all services are expected and
what all services are significant for him. The philosophy behind developing a customer
service strategy is that the expected customer service is an essential part of a retail
strategy and therefore, it must be provided without any question.
3. Customer satisfaction: Successful retailers believe that customer satisfaction should be
the main motive of each retail business. Customer satisfaction persists when the value
offered and customer service provided meets each other or exceeds customers’
expectations. In case the expectations and level of customer satisfaction do not move
hand in hand, there are chances of consumer’s complaints or dissatisfaction. Customers
want proper value for their money and if their expectations are not met, by human
nature, they share their unhappy experience/s with everyone they could. Dissatisfied
customer spoils three to five customers but hardly make any customer in case he is
satisfied. Therefore, retailers should consider following things in their mind:
(i) Customers’ expectations continuously move upward with passage of time,
(ii) What ‘customer satisfaction’ actually means for a retailer?
(iii) Usually customers change their place of shopping in case they are dissatisfied rather than
informing and complaining,
(iv) Review of customer satisfaction programs are must for building long term relationships with
them
(v) Don’t buy merchandise for your store what you like most, but put yourself in customer’s
shoes and look from his/her eyes.

4. Customer loyalty: The objective of consumer loyalty program is to reward the best
consumers in terms of their purchases, faith and in terms of existence. It is the base for
developing long-term relationships with the customers. Customer loyalty programs not
only reward loyal and best customers but also tend to find defection (the point of
dissatisfaction). By studying and analyzing such defections, a retailer can have best
picture towards his strength and shortcomings of loyalty programs.
Retailers Classified By Marketing Strategies: Whatever its form of ownership, a retailer

must develop marketing mix strategies to succeed in its chosen target markets. In
retailing, the marketing mix emphasizes product assortment, price, location, promotion
and customer services designed to aid in the sale of a product. They include credit,
delivery, gift wrapping, product installation, merchandise returns, store hours, parking
and- very important personal service. Following are the three elements of marketing
mixes:
• Breadth and Depth of Product assortment
• Price Level
• Amount of customer services.
Type Of Store Breadth And Depth Price Level Amount Of

Of Assortment Customer Services
Department store Very broad, deep Avoids price Wide array
competition
Discount store Broad, Shallow Emphasizes low Relatively Few
prices
Limited-line store Narrow, Deep Traditional type Vary by Type
avoid price
competition
Specialty store Very Narrow, Deep Avoids price Standard
competition
Off-price retailer Narrow, Deep Emphasizes low Few
prices
Super Market Broad, Deep Low prices Few
Convenience Store Narrow High Prices Few
Warehouse Club Very broad Low prices Few
Indian Retail Scenario & Its Future Prospects: Retailing in India has traditionally been
fragmented, while in the western countries, big retailers usually dominate the
landscape. In recent times, India has seen the emergence of several organized retailing
formats, from departmental stores like Shopper's Stop to discount stores like Big Bazaar.
We also have niche (exclusive) stores like Music World, Coffee Day and Planet M and
Grocery Stores like Spencer's, Subhiksha, Easy Day, Metro Retail, Best Price by Wal-Mart,
etc.
SKILLS NEEDED FOR ORGANIZED RETAILING: The skills needed for organized retailing
encompass many activities, like deciding on stock levels, the product mix, brand mix and
human relations, customer and employee management skills dealing with regulatory
authorities and cost control. Merchandising and supply chain management, in addition
to customer service is how we could summarize the range of activities performed at an
average retails store. As the retailing scenario evolves in India we will see many changes
in the types of retail stores their sizes and competitive strategies. For example, the major
retail chains in India are up market and the concept of discount stores is just catching on.
Also, the food stores seem to be the major growth area, followed by garment -based
retailing.
RECENT TRENDS IN THE INDIAN RETAIL SECTOR: Indian retailing is undergoing a process
of evolution and is poised to undergo dramatic transformation. The traditional formats
like hawkers, grocers and pan shops co-exist with modern formats like Super- markets
and Non-store retailing channels such as multi level marketing and teleshopping.
Modern stores trend to be large, carry more stock keeping units, have a self-service
format and an experiential ambience. The modernization in retail formats is likely to
happen quicker in categories like dry groceries, electronics, men’s apparel and books.
Some reshaping and adaptation may also happen in fresh groceries, fast food and
personal care products. In recent years there has been a slow spread of retail chains in
some formats like super markets, 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 of Tata’s into retailing. Foreign direct investment in the
retail sector in India, although not yet permitted by the Government is desirable, as it
would improve productivity and increase competitiveness. New stores will introduce
efficiency. The customers would also gain as prices in the new stores tend to be lover.
The consequences of recent modernization in India may be somewhat different due to
lower purchasing power and the new stores may cater to only branded products aimed
at upper income segments. The Indian retail environment has been witnessing several
changes on the demand side due to increased per capital income, changing lifestyle and
increased product availability. In developed markets, there has been a power shift with
power moving from manufactures towards the retailers. The strategies used by retailers
to wrest power include the development of retailers own brands and the introduction of
slotting allowances which necessitate payments by manufactures to retailers for
providing shelf space for new products. The recent increased power of retailers has led
to the introduction of new tactics by manufactures such as everyday low pricing,
partnership with retailers and increased use of direct marketing methods.
FACTORS UNDERLYING TRENDS OF MODERN RETAIL IN INDIA: The earlier part of this
lesson has provided some information that enables the construction and analysis of
recent trends in the Indian Retail Industry. The driving forces towards that trend can be
broadly classified into the following categories. i) Economic development ii)
Improvements in civic situation iii) Changes in government polices iv) Changes in
consumer needs, attitudes and behavior v) Increased investment in retailing vi) Rise in
power of organized retail.
The development of the Indian economy is a necessary condition for the development of
the Indian retail sector. The growth of the economy can provide gainful employment to
those who would otherwise enter retailing in areas like roadside vending and other
similar low cost entries into the retail sector. The growth of modern retail is linked to
consumer needs, attitudes and behavior. Marketing channels including retailing emerge
because they receive impetus from both the supply side and the demand side. On the
demand side, the marketing channel provides service outputs that consumer's value. In
Indian retailing, convenience and merchandise appear to be the most important factors
influencing store choice, although ambience and service are also becoming important in
some contexts. Store ambiance includes such as lighting, cleanliness, store layout and
space for movement. The government of India has clarified on a number of occasions
that foreign dried investment will not be permitted in India in the retailing sector. Major
international retailer organizations are waiting for signals of policy change especially in
the wake of Chinese permission for foreign investment in its retail. In opening up the
retail sector, the government may consider various approaches such as insisting joint
ventures, limiting the foreign stake, or specifying the cities where investment is
permitted. Although FDI is not yet permitted in retailing, a number of global retailers are
testing the waters by signing technical agreements and franchises with Indian firms. Fast
food chains like McDonald's and Pizza Hut are already operating in the metros. A Marks
and Spencer Store is already operational in Mumbai & other parts of the country. Recent
trends show that industrial groups such as Reliance and Raymond’s have been active in
encouraging development of well appointed exclusive showrooms for their textile
brands. Industrial houses like Rahejas, Tata’s have entered retailing. Several Indian and
foreign brands have used franchising to establish exclusive outlet for their brands.
Problems of Indian Retailing
1. Global economic slowdown impacting consumer demand: The current contraction in overall
growth has not been so severe ever since the one witnessed during World War II. The subprime-
triggered crisis in the US during end of 2007 gradually spread across other parts of the world; as
a the fallout of this crisis, credit availability dropped sharply in advanced economies and their
GDP growth contracted incessantly during the last quarter of 2008. The financial crisis
continued to trouble advanced and developing economies in spite of policy maker’s attempts to
replenish liquidity in these markets. Many financial institutions collapsed and filed for
bankruptcy, as the situation got from bad to worse. Many banks/institutions made massive
write-downs following this turn of events. During 2007-10, the write-downs on global exposures
are expected to be worth US$ 4 trillion while the write downs on the US-originated assets alone
are likely to be worth US$ 2.7 trillion11. Such massive write-down will affect the financial
system to a grave extent, as it is likely to further strain banks funding capabilities. Already these
write-downs are turning into a major challenge for banks/financial institutions because of
solvency issues, and deepening risk of failure of banks/ financial institutions. Failure of the US

investment bank Lehman Brothers, for instance, has had an enormous impact on the overall
global financial system, and has consequently shaken the confidence of banks, investors,
households etc.
2. Consumption declines in the advanced economies: Private consumption expenditure is an
important indicator of overall economic growth. In the last couple of quarters, the decline in
consumption has further affected the global economic downturn. Moreover, widespread
financial crisis severely hit credit availability and household disposable income. For instance, US
households lost 20% (US$ 13 trillion) 14 of their net worth as a percentage of disposable income
from the second quarter of 2007 to the fourth quarter of 2008. The stock prices across the
world started falling during the second quarter of 2007 and continued its losses throughout
2008; the global stock market lost between 40-60% in dollar terms that translated to a huge loss
of global wealth in 2008. The personal disposable income (at current prices) in the US registered
negative growth (3.9% and 2.1%) during the last two quarters of 2008, respectively. The
consumer demand situation was aggravated further by reduced capital availability and
consequent fall in investments.
3. Competition from the unorganized sector: Organized retailers face immense competition
from the unorganized retailers or Kirana stores (mom-and-pop stores) that generally cater to the
customers within their neighborhood. The unorganized retail sector constitutes over 94% of
India‘s total retail sector and thus, poses a serious hurdle for organized retailers. If put
numerically, the organized retailers are facing stiff competition from over 13 million Kirana
stores that offer personalized services such as direct credit to customers, free home delivery
services, APART from the loyalty benefits. During the current economic slowdown, the
traditional Kirana stores adopted various measures to retain their customers, which directly
affected organized retailers. Generally, it has been observed that customers shop impulsively
and end up spending more than what they need at organized retail outlets; however, in Kirana
stores, they stick to their needs because of the limited variety. During a downturn, many
customers may not like to spend more as is evident from the past few months‘trend that
shoppers are increasingly switching from organized retail stores to Kirana.
4. Retail sector yet to be recognized as an industry: The retail sector is not recognized as an
industry by the government even though it is the second-largest employer after agriculture.
Lack of recognition as an industry affects the retail sector in the following ways:
 Due to the lack of established lending norms and consequent delay in financing activity,
the existing and new players have lesser access to credit, which affects their growth and
expansion plans
 The absence of a single nodal agency leads to chaos, as retailers have to oblige to
multiple authorities to get clearances and for regular operations
5. High real-estate costs: Even though the real estate prices have subsided recently due to the
slowdown in economies and the financial crises, these prices are expected to go up again in the
near future. Presently the sector faces high stamp duties, pro-tenancy acts, the rigid Urban Land
Ceiling Act and the Rent Control Act and time-consuming legal processes, which causes delays in
opening stores. Earlier on the lease or rents on properties were very high (among the highest in
the world) at some prominent locations in major cities. The profitability of retail companies
were affected severely because real costs constituted a major part of their operating expenses.
Now companies are moving out from prominent malls of tier I cities and are re-negotiating the
rental agreements with landlords to reduce costs. Some are even focusing on setting up shops in
tier II and tier III cities.
6. Lack of basic infrastructure: Poor roads and lack of cold chain infrastructure hampers the
development of food retail in India. The existing players have to invest substantial amounts of
money and time in building a cold-chain network.
7. Supply-chain inefficiencies: Supply chain needs to be efficiently-managed because it has a
direct impact on the company‘s bottom lines. Presently the Indian organized retail has an
efficient supply chain but it appears efficient only when compared with the unorganized sector.
On an international level the Indian organized retailers fall short of international retailers like
Wal-Mart and Carrefour in terms of efficiencies in supply chain. In the following paragraphs
some key challenges that the retailers face during procuring goods from suppliers to delivering
the same to end-customers are discussed.
8. Challenges with respect to human resources: The Indian organized retail players shell out
more than 7% of sales towards personnel costs. The high HR costs are essentially the costs
incurred on training employees as there is a severe scarcity for skilled labor in India. The retail
industry faces attrition rates as high as 50%, which is high when compared to other sectors also.
Changes in career path, employee benefits offered by competitors of similar industries, flexible
and better working hours and conditions contribute to the high attrition.
9. Shrinkage: Retail shrinkage is the difference between the book value of stock and the actual
stock or the unaccounted loss of retail goods. These losses include theft by employees,
administrative errors, shoplifting by customers or vendor fraud. According to industry estimates,
nearly 3- 4% of the Indian chain‘s turnover is lost on account of shrinkage. The organized
industry players have invested IT, CCTV and antennas to overcome the problem of shrinkage.
Retail Life Cycle- The concept of product life cycle is also applicable to retail organizations. This
is because retail organizations pass through identifiable stages of innovation, development,
maturity and decline. This is what is commonly termed as the retail life cycle. Attributes and
strategies change as institutions mature. The ‘Retail Life Cycle’ is a theory about the change
through time of the retailing outlets. It is claimed that the retail institutions show an s-shaped
development through their economic life. The s-shaped development curve has been classified
into four main phases:
1. Innovation/Introduction: A new organization is born, it improves the convenience or

creates other advantages to the final customers that differ sharply from those offered by
other retailers. This is the stage of innovation, where the organization has a few
competitors. Since it is a new concept, the rate of growth is fairly rapid and the
management fine tunes its strategy through experimentation. Levels of profitability are
moderate and this stage can last up to five years depending on the organization.

2. Accelerated Growth: The retail organization faces rapid increases in sales. As the
organization moves to stage two of growth, which is the stage of development, a few
competitors emerge. Since the company has been in the market for a while, it is now in a
position to pre-empt the market by establishing a position of leadership. Since growth is
imperative, the investment level is also high, as is the profitability. Investment is largely
in systems and processes. This stage can last from five to eight years. However, towards
the end of this phase, cost pressures tend to appear.
3. Maturity: The organization still grows but competitive pressures are felt acutely from
newer forms of retailing that tend to arise. Thus, the growth rate tends to decrease.
Gradually as markets, become more competitive and direct competition increases, the
rate of growth slows down and profits also start declining. This is the time when the
retail organization needs to rethink its strategy and reposition itself in the market. A
change may occur not only in the format but also in the merchandise mix offered.
4. Decline: The retail organization loses its competitive edge and there is a decline. In this
stage, the organization needs to decide if it is still going to continue in the market. The
rate of growth is negative, profitability declines further and overheads are high. The
retail business in India has only recently seen the emergence of organized, corporate
activity. Traditionally, most of the retail business in India has been small owner managed
business. It is difficult to put down a retail organization, which has passed through all the
four stages of the retail life cycle. In the private sector, till a few years ago, most cities in
India had a few independent retailers. For example, Mumbai had stores like Akbarally’s.,
Premsons, Amarsons and Benzer. Then Shopper’s Stop opened its first outlet in Mumbai
in 1991.The store initially offered apparel, imitation jewelry cosmetics and perfumes and
home fashions. It also had a customer loyalty program in place, which many stores at
that time did not offer. The store enjoyed an enviable position for a while. However, with
the change in customer expectations and increased competition in the form of other
department stores like Globus, Eastside, Lifestyle, etc and the rise of specialty stores, the
company has been forced to rethink its product offering. It now not only stocks apparel,
jewelry, cosmetics etc that it earlier stocked but has also acquired the book store chain –
Crosswords. Cross words counters have been added to many of the existing stores. The
store in Andheri (Mumbai) also houses Planet M, music retail chain and a small coffee
shop. In May 2008, the company embarked upon a major exercise in terms of
repositioning of the store, which involved among other things, a change in the logo. It is
necessary to keep in mind that a retailer need not always move from maturity to decline.
By reworking the marketing strategy or by changing the product or service offering, a
retailer may succeed in moving back to the growth phase after reaching a stage of
maturity with a certain format and a certain mix of products.
Role of Franchising in Retail India: Below mentioned are the varied industries where the same
has been introduced and till date running successfully:-

1. Food & Beverages: Some of the well-known brands in this sector that have received an
overwhelming response in India include Baskin Robbins, Subway, McDonald's, TGI Friday's, Taco
Bell, Pizza Hut, Dominos Pizza, Ruby Tuesdays, Barista, Costa, Wetzel Pretzel, Papa John's and
KFC. A study has revealed that more than one third of new food outlets are operated through
the franchise system. The rapid development of mall culture has also encouraged the growth of
food and beverage franchises. Fine dining restaurants, quick service restaurants, cafes and juice
bars are among the leading franchised food segments in India.
2. Beauty & Health Care Fitness Clubs such as VLCC and Talwalkers have established chains while
hair and beauty salons offering domestic branded products including Shahnaz Hussein, Biotique
and Habibs, and international brands, for example, L'Oreal and Tony & Guy, have marked their
presence through the franchise model. A rise in the standard of living in India has increased
demand for quality health services and has resulted in health-care service providers, spas,
beauty salons and clinics opening new businesses in the cities through franchises. Apollo
Hospitals has set up large chain of state-of-the-art health-care clinics in India and abroad,
offering comprehensive health-care services.
3. Education: The increased acceptance of the importance of education by the Indian population
and the proven success of education franchising in India has led to a boom in the amount of
business owners wanting to expand their education brands using the franchise route. According
to a recent survey, India is one of the largest markets for education in the world in terms of the
number of students, offering vast franchising opportunities. Currently, out of the 1,200
franchises in the country, 32 per cent are in the education sector. Professional and vocational
courses in the fields of aviation, hospitality, retail, financial services and insurance capture
almost a third of the total share of education provided through franchises, followed by training
in the IT sector. Franchising in the pre-school sector has grown particularly in the past decade.
Advantages of Franchising in India: India, with its huge market and growing demand in all
sectors of the economy, is an extremely attractive proposition for entry of foreign brands
through the franchising route. The key attractions for this are:
1. Lower Capital Requirements: Franchising provides a favorable model both for U.S. and
Indian business interests to expand and establish their brands without having to risk
large sums of money because there are many potential franchisees in India who have
the capacity to finance the business or to expand the current business.
2. Huge Market: The size and geography of India is ideally-suited for business through the
franchising model, particularly in the services’ sector of the economy. Combining with
people with local market knowledge can be an enormous help in dealing with meeting
the market needs of the diverse country that India is.
3. Cultural Empathy: Franchising is an eminently-suited business model for the
entrepreneurial psyche of an average Indian businessman who loves to have ownership
and control of operations and, being family-oriented, finds it an attractive proposition to
pass on the business to future generations.
4. Laws and Language: With English as the commonly-spoken language, the ongoing
relationship between the franchisor and the franchisee becomes much easier to
manage. This helps to build the spirit of partnership through easy
communication. The current law of Contracts and the Trade Marks Act provides
sufficient protection for a foreign franchisor in the event of emergence of any legal
issues.
5. Some Challenges: Doing business in a foreign land always has challenges and India is no
exception. These challenges include:
6. Understanding the Market: The first and fundamental need in any business is to
understand the market for its product or service offering and one of the common
mistakes in this context is to expect too much too soon. A detailed and thorough study
of the market for a specific product or a service is definitely advisable. It is only through
this study that will help to determine the choice between going in for a single master
franchisee for the whole country or a master franchisee for each of the four major
regions or even the need for a joint- venture model if required.
7. Choice of Partner: This is one of the crucial requirements in the franchising business and
a good deal of thought and care is needed in identifying a proper franchisee who wants
to enter the business for the right reasons and has the required capital support
available. Some businesses have chosen to go in for two joint venture arrangements
(one for north and east and the other for west and south) and the partners in turn have
appointed a large number of franchisees around the country and their network is
expanding rapidly. The choice of a partner will clearly depend upon the type and profile
of business.
8. Franchise/License Fee: While there is no embargo on remittance of profits out of the
country, the current government regulations allow a liberal one-time payment of a
franchise fee by the franchisee of up to US$2 million under a technical collaboration
arrangement and an ongoing franchise fee payment of up to 5 percent of the revenue.
The regulations, however, allow consideration of requests for payment of more than a 5
percent franchise fee by the Reserve Bank of India on a case-by-case basis.
Drawbacks of Franchising: From the below mentioned points it can be clearly stated the
disadvantages of franchising:-
 royalty fee;
 selling only imposed products and offering indicated services;
 limitations of franchisees with regard to sale of a company;
 wrong policy of a franchisor;
 a good image of franchising network and particular brand may lose reputation because
of event or reasons not attributable to franchisee.
Franchising Association of India: The Franchising Association of India was set up about five
years ago as a membership association of franchisors, franchisees and other related interests.
This is a recognized association and by virtue of being a member of the World Franchising
Council is closely linked with other WFC-member associations in countries around the world
including the International Franchise Association. The basic objective of FAI is to promote the
concept of franchising and the related best practices. The major activities include:
• Education Provides a variety of media and forums, such as seminars,
workshops, conferences, a magazine and newsletter.

• Marketing Creates opportunities to showcase and help market franchising systems
through events such as exhibitions.
• Networking Brings in and promote best practices through international and
local networking within the franchising community.
• Support Services Connects interested parties with specialist to provide advice and help.
• Advocacy By being the voice of the franchising sector in India, such as lobbying with the
government on related issues as required.
The Scope of Franchising: There are a multiple types of business organized in a form of
franchising, among others, recreation clubs, tourist offices, tourist centre’s, motels, restaurants,
fast food bars, sport shops, camping, and also points which deduct taxes from their income, car
rental companies, DVD and video rental shop, branches of real estate agencies, beauty centre’s,
hairdressers and professional offices, and even oil refinery. Franchising is used in selling cars,
trucks and agricultural equipment. Usually dealer has a guarantee of territorial exclusiveness,
consultancy and training of new employees. Franchising develops very fast. Retailers prefer to
invest money under a brand of well known intermediary of producer. Risk associated with
franchising is connected with incompetent and inadequate use of verified procedures and
organization of product sale, and a passive attitude of retailer towards volatile and changing
situation on the market.
Market Research: Market Research is the systematic, objective collection and analysis of data
about a particular target market, competition, and/or environment. It always incorporates some
form of data collection which is collected directly from a respondent whether secondary
research (often referred to as desk research) or primary research. Market research uses
scientifically-led studies to collect necessary market information, enabling entrepreneurs to
make the right commercial decisions. The purpose of any market research project is to increase
understanding of this subject. With markets throughout the world turning highly competitive,
market research has never been more important for all organizations, large or small. Market
research determines the feasibility of a project and it is an essential tool in adapting a business
strategy (communication, pricing policy, products, range…) for the best results. Therefore,
without proper market research, the projected targets are not very valuable. In concrete terms,
it is important to carry out market research in order to:
 Adapt one’s strategy, that is to say adapting the product range, the communications
strategy, the pricing policy and the choice of the site in relation to the market research results.
 Professionalize the setting-up approach and convince financial partners and others to
get involved.
 Estimate the turnover of the future organization.
 And finally to be able to decide whether or not to launch your business.
Steps in Market Research: Marketing research will include the following steps, and in each step,
I have listed common questions that are typically asked:
1. Problem Definition: The problem is the focus of your research. Example: Why are sales
soaring in the Midwest, but dismal in other parts of the country?

2. Data Collection Method and Needs: How will you collect the data that you will need to
solve the problem? Will you use surveys, telephone calls or focus groups on the
internet?
3. Determine Sample Method: What sampling method will you use? Sampling represents
those you will collect information from. Will it be a random sampling, a sampling that
contains a similar element or a natural sampling?
4. Data Analysis: How will you analyze the data? Will you use software or do it by hand?
How accurate do the results need to be?
5. Determine Budget and Timeframe: How much are you willing to spend on the research
and how soon must the research be complete?
6. Data Collection: Proceed in data collection based on answers in Steps 1- 5.
7. Analysis of the Data: Conduct the analysis of the data that has been collected in the
previous Step.
8. Error Check: Check for errors in data. It is not uncommon for errors to be found in data
collected. Errors can be in the sampling method, data collections as well as just
analytical mistakes.
9. Create Your Report: The final step of marketing research is to draft a report on your
findings. Your report should contain tables, charts, and or diagrams. It's important that
your report clearly communicates the results that you found in your research. Your
findings should lead to a solution to the problem you identified in Step 1.
The market research characteristics could be:
 The geographical location: local, regional, national, European or international market

 The type of product/service: a product group (i.e. cosmetics), a type of product (i.e.
perfume), a branch of the product type (women’s perfume) or a specified product (a
particular brand of perfume)
 Chronological/time-oriented: past, present or future market
 The buyers’ profile: sex, age, socio-economical classification, level of education, etc.
 The intermediates or the end user profiles: stockists, retailers, wholesalers,
manufacturers, mothers, children, etc.
Market Research as a Tool for Understanding Customer’s:- Customer understanding is required

because of the following reasons mentioned below:-
 How do you define which customers to talk to?
 How do you decide on a format for your research?
 How do you know what type of questions to ask to get to know your customers?
 What attributes or demographics are important in getting to know your customers?
 How do you use the data once it is collected?
Methods to get it resolved:

Surveys: Surveys are the staple of market research, however you have to know how and when
to use the three types of questions: Opened-Ended, Closed-Ended and Strategic.
1. Opened-ended questions can provide a lot of information, but often they do not provide
all the detail you need.
2. The short answers you get from Closed-Ended questions can often grind a conversation
to a halt.
3. Strategic questions tend to treat the customer as the expert and lead to a deeper
conversation which in turn helps you really know how you can help that customer. Giving
the customer more freedom in answering your question lets them provide you with their
agenda (not yours).
All three types of questions serve a purpose and are helpful. An experienced researcher knows
how to use them all to help you gather the best information about your customer. Some things
to avoid in surveys are leading questions. This type of question drives customers to answer in a
very specific or biased way which doesn’t actually allow them to tell you how they really feel.
Also keep in mind that surveys are really good at gathering data such as how much or how
often, but they fail to convey your customer’s feelings and emotions. Of course you don’t want
to ask the wrong questions on your survey either. Figuring out the right questions may require
some research of its own.
Focus Groups: Focus Groups are also an essential part of market research and here too it is
important to use researchers that are well skilled in moderating and interpreting conversations.
You will find that experienced focus group facilitators have developed a sort of sixth sense about
what’s up when watching or talking to a participant. Focus groups are great because they can
really help you understand how your customer interacts with your product. Look out for
dominators in a focus group. You really don’t want the most talkative person to mask the voices
of the others in the group. A skilled moderator will be able to hear all the voices in the group
and prevent the most extroverted participants from forcing the less talkative to feel like they
have to agree with them. Just like with surveys, be careful not to lead members of the group to
an answer. You want their unbiased opinions.
Ethnographic Studies: Ethnographic Studies are in depth interviews with your customers. They
have some major advantages over surveys and focus groups in terms of understanding
consumers for the simple reason that they allow liberal variations and follow up questions. With
this type of research the company actually observes the participant, which gives you 1st hand
knowledge about your customer. This type of data gathering is tricky as it takes someone with
great skill to correctly interpret the ethnographic data. If the analysis is incorrect, you’ll find you
haven’t learned much about your customer or even worse what do you learn may be
misleading?

Market Research as a Tool for Understanding Business/Firm:- Here is why your company
should conduct business market research:
 Identify the problem areas in your business
 Understand the needs of existing customers and why they chose your service over
competitors
 Identify new business opportunities and changing market trends
 Recognize new areas for expansion, and increase your customer base
 Discover potential customers and their needs, which can be incorporated into your
services
 Set achievable targets for business growth, sales, and latest product developments
 Make well-informed market decisions about your services and develop effective
strategies
Market research can guarantee the success of your marketing

campaigns, and in-turn sales
Market research not only helps in identifying new business opportunities, but also helps in
designing marketing campaigns that will directly target the interest of your potential
consumers and help in increasing sales. Marketing research provides valuable information
about the potential of a particular market segment, during a specific time, and within a
particular age group.
Market research can help you keep a tab on your competitors
Marketing research is a good evaluation tool that can be of great use in comparative studies.
You can track your company's progress as well as the growth of your competitors, by
keeping an eye on your competitors. You can devise business strategies that would keep you
ahead of your business rivals.
Market research can help you minimize loss in your

business
With market research, you can reduce the chances of loss to a large extent. Before launching
a product, you can identify potential problems and even determine the solutions. The
research carried out after the launch of a new product can help you find loopholes and
devise plans to counter that loss and increase the profits.

Factors affecting/influencing Retail Consumer/Shopper:- Understanding consumer behavior is
critical for a retail business in order to create and develop effective marketing strategies
and employ four Ps of marketing mix (Product, Price, Place, and Promotion) to generate
high revenue in the long run. Here are some factors which directly
influence Retail Consumer buying behavior:
1. Market Conditions/Recession: In a well-performing market, customers don’t mind

spending on comfort and luxuries. In contrast, during an economic crisis they tend to
prioritize their requirements from basic needs to luxuries, in that order and focus only
on what is absolutely essential to survive.
2. Cultural Background: Every child (a would-be customer) acquires a personality, thought
process, and attitude while growing up by learning, observing, and forming opinions,
likes, and dislikes from its surrounding. Buying behavior differs in people depending on
the various cultures they are brought up in and different demographics they come from.
3. Social Status: Social status is nothing but a position of the customer in the society.
Generally, people form groups while interacting with each other for the satisfaction of
their social needs. These groups have prominent effects on the buying behavior. When
customers buy with family members or friends, the chances are more that their choice is
altered or biased under peer pressure for the purpose of trying something new.
Dominating people in the family can alter the choice or decision making of a submissive
customer.
4. Income Levels: Consumers with high income has high self-respect and expects
everything best when it comes to buying products or availing services. Consumers of this
class don’t generally think twice on cost if he is buying a good quality product.
On the other hand, low-income group consumers would prefer a low-cost substitute of
the same product. For example, a professional earning handsome pay package would
not hesitate to buy an iPhone6 but a taxi driver in India would buy a low-cost mobile.
5. Personal Elements: Here is how the personal elements change buying behavior:
Gender: Men and women differ in their perspective, objective, and habits while
deciding what to buy and actually buying it. Researchers at Wharton’s Jay H. Baker
Retail Initiative and the Verde Group, studied men and women on shopping and found
that men buy, while women shop. Women have an emotional attachment to shopping
and for men it is a mission. Hence, men shop fast and women stay in the shop for a
longer time. Men make faster decisions, women prefer to look for better deals even if
they have decided on buying a particular product.

• Age: People belonging to different ages or stages of life cycles make different purchase
decisions.
• Occupation: The occupational status changes the requirement of the products or
services. For example, a person working as a small-scale farmer may not require a high-
priced electronic gadget but an IT professional would need it.
• Lifestyle: Customers of different lifestyles choose different products within the same
culture.
• Nature: Customers with high personal awareness, confidence, adaptability, and
dominance are too choosy and take time while selecting a product but are quick in
making a buying decision.
Psychological Elements: Psychological factors are a major influence in customer’s buying

behavior. Some of them are:
• Motivation: Customers often make purchase decisions by particular motives such as

natural force of hunger, thirst, need of safety, to name a few.
• Perception: Customers form different perceptions about various products or services of the
same category after using it. Hence perceptions of customer leads to biased buying
decisions.
• Learning: Customers learn about new products or services in the market from various
resources such as peers, advertisements, and Internet. Hence, learning largely affects
their buying decisions. For example, today’s IT-age customer finds out the difference
between two products’ specifications, costs, durability, expected life, looks, etc., and
then decides which one to buy.
• Beliefs and Attitudes: Beliefs and attitudes are important drivers of customer’s buying
decision.
Retail Institutions Categorized by Store Based Strategy Mix:
Type of Retailer Location Merchandise Prices Atmosphere & Promotion

Services
Food Oriented
Convenience Neighborhood Medium width & Average to Average Moderate
Store low depth of above average
assortment,
average quality
Conventional Neighborhood Extensive width & Competitive Average Heavy use of
Store depth of newspapers,
assortment, flyers, coupons
average quality, & self service
manufacturer,
private & generic
brands
Food Based Community Full assortment of Competitive Average Heavy use of
Super Store shopping super market newspapers,
centre or items plus health flyers & self
isolated site & beauty aids & service
general
merchandise
Combination Community Full selection of Competitive Average Heavy use of
Store shopping super market & newspapers,
centre or drug store items flyers & self
isolated site or super market & service
general
merchandise,
average quality
Box (limited Neighborhood Low width & Very low Low Little or none
line) store depth of
assortment, few
perishables, few
national brands
Ware house Secondary site Moderate width Very low Low Little or none
Store often in & low depth,
industrial area emphasis on
manufacturer
brands bought at
discounts
General Merchandise
Speciality store Business Very narrow Competitive to Average to Heavy use of
district or width & extensive above average excellent displays,
shopping depth of extensive sales
centre assortment, force
average to good
quality
Traditional Business Extensive width & Average to Good to Heavy ad &
department district, depth of above average excellent catalog use,
store shopping assortment, direct mail,
centre or average to good personal selling
isolated store quality
Full line Business Extensive width & Competitive Slightly below Heavy use of
discount store district, depth of average to newspapers,
shopping assortment, average price oriented,
centre or average to good moderate sales
isolated store quality force
Variety store Business Good width & Average Below average Heavy use of
district, some depth of newspapers,
shopping assortment, self service
centre or average to good
isolated store quality
Off price chain Business Moderate width Low Below average Use of
district, but poor depth of newspapers,
suburban assortment, brands not
shopping strip average to good advertised,
or isolated quality, lower limited sales
store continuity force
Factory outlet Out of the way Moderate width Very Low Very Low Little, self
site or discount but poor depth of service
mall assortment, some
irregular
merchandise,
lower continuity
Membership Isolated store Moderate width Very Low Very Low Little, some
club or secondary but poor depth of direct mail,
site (industrial assortment, limited sales
park) lower continuity force
Flea market Isolated site, Extensive width Very Low Very Low Limited self
race track or but poor depth of service
arena assortment,
variable quality,
lower continuity
Theories on Retail Development
Introduction: As the needs the consumers grew and changed, one saw the emergence of
commodity specialized mass merchandisers in the 1970s. The seventies were also witness to the
use of technology entering retail sector with the introduction of the barcode. Specialty chains
developed in the 80s as did the large shopping malls. Shopping malls, a late 20th century
development were created to provide for the consumer’s need in single, self contained
shopping area. Although they were first created for the convenience of suburban populations,
they are now found in many main city thoroughfares. A large branch of a well known retail chain
usually serves as a mall’s retail flagship, which is the primary attraction for customers. In Asian
countries, many malls house swimming pools, arcades and amusement parks. Hong Kong’s City
Plaza shopping mall includes one of the territory’s two ice rinks.
The rise of the Web: The world of retail changed yet again, when in 1995, Amazon.com opened
its doors to a worldwide market on the web. With the growth of the worldwide web, both
retailers and consumers can find suppliers and products from anywhere in the world. Thus, the
evolution of retail formats worldwide has been largely influenced by a constantly changing
social and economic landscape. One of the main reasons for new formats emerging is the
consumer himself. Today’s consumer when compared to the consumer of the earliest
generation is definitely more demanding and is focused on what he wants. Consumer demand is
the prime reason for the emergence of various formats. The retailer on the other hand, has
been influenced by factors like the availability of real estate and the increase in its prices. He is
faced with the challenge of adding on new services and the need for differentiation. This has led
to specialization and the emergence of specialists. Supply chain complexities and the increasing
pressure on margins have also forced retailers to look at new formats. Retail development can
be looked at from the theoretical perspective. No single theory can be universally applicable or
acceptable. The application of each theory varies from market to market, depending on the
level of maturity and the socio-economic conditions in that market.
The theories developed to explain the process of retail development revolve around the
importance of competitive pressure, the investments in organizational capabilities and the
creation of a sustainable competitive advantage .this requires the implementation of strategic
planning by retail organizations. Growth in retail is a result of understanding market signals and
responding to the opportunities that arise in a dynamic manner. Theories of retail of retail
development can broadly be classified as:
 Environmental – where a change in retail is attributed to the change in the environment

in which the retailers operate.
 Cyclical – where change follows a pattern ad phases can have definite identifiable
attributes associated with them.
 Conflict – the competition or conflict between two opposite type of retailers leads to a
new format being developed.
1. Environmental Theory: Darwin’s theory of natural selection has been popularized by the
phrase survival of the fittest. Retail institutions are economic entities and retailers
confront an environment, which is made up of customers, competitors and changing
technology. This environment can alter the profitability of a single retail store as well as
of clusters and centers. The environment that a retailer competes in is sufficiently robust
to squash any retail form that does not adjust. Thus, the birth, success or decline of
different forms of retail enterprise is many a time attributed to the business
environment. For example the decline of department stores in the western markets is
attributed to the general inability of those retailers to react quickly and positively to
environmental change. Those retail institutions which are keenly aware of their
operating environment and which react without delay, again from the changes. Thus,
following the Darwinian approach of survival of the fittest, those retailers that
successfully adapt technological, economic, demographic and legal changes are the ones
that are most likely to grow and prosper. The ability to adapt to change, successfully, is at
the core of this theory.
2. Cyclical Theory- The most well known theory of retail evolution is The Wheel of Retailing
theory. This theory helps us understand retail changes. This theory suggests that retail
innovators often first appear as low price operators with a low cost structure and low
profit margin requirements, offering some real advantages such as specific merchandise
which enables them to take customers away from more established competitors. As they
prosper, they develop their business, offering a greater range or acquiring more
expensive facilities, but this can mean that they lose the focus that was so important
when they entered the market. Such trading up occurs as the retailer becomes
established in his own right. This in turn, leaves room for others to enter and repeat the
process. They then become vulnerable to new discounters and lower cost structures that
take their place along the wheel. Scrambled merchandising occurs as the retailer adds
goods and services that are unrelated to each other and the firm’s original business to
increase overall sales and profit margins. This is termed as the wheel of retailing .This is
depicted in, The Wheel of Retailing described by Mc Nair II.

The theory of the wheel of retailing can be understood by taking the example of department
stores, which started as low cost competitors to the small retailers; they developed and
prospered; then they were severely undercut by supermarkets and discount warehouses. This
theory does not explain the development of retail in all markets. In less developed markets,
introduction may not necessarily occur at a low price – here introduction may occur at a high
price. Hollander was a key observer of retail evolution and he used the analogy of an orchestra
comprised exclusively of accordion players to describe the dynamically shifting retail structure.
This so called accordion effect describes how general stores moved to specialize, but the
widened their range of merchandise again as new classes of products were added. Hollander
suggested that the players either have open accordions representing general retailers with
broad product ranges or closed accordions thus indicating a narrowing of the range, focusing on
specific merchandise. He suggested that at any point in time, one type of retailer would
outnumber the other, but that the situation would continually change through the arrival and
departure of different stores. This analogy illustrates the complexity of the retail scene, and the
way different attitudes to successful retailing will come in and go out of fashion at different
times. The Accordion theory and the Wheel of retailing are known as the cyclical theories.

3. Conflict Theory: Conflict always exists between operators of similar formats or within
braid retail categories. It is believed that retail innovation does not necessarily reduce
the number of formats available to the consumer, but leads to the development of more
formats. Retailing thus evolves through a dialectic process, i.e. the blending of two
opposites to create a new format. This can be applied to developments in retailing as
follows:
 Thesis: Individual retailers as corner shops across the country

 Antithesis: A position opposed to the thesis develops over a period of time. These are
the department stores. The antithesis is a “challenge” to the thesis.
 Synthesis: There is a blending of the thesis and antithesis. The result is a position
between the thesis and antithesis. Supermarkets and hypermarkets thrive. This synthesis
becomes the thesis for the next round of evolution.

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UNIT-1

1. Direct interaction with customers/end customers.

Phases in the evolution of retail sector

Weekly Markets, Village and Rural Melas

Percentage of Organised Retail across the world

Manufacturers....................... Retailers............... End User

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

 Shopping - The process of purchasing products by the consumer is called as shopping.

Examples- Eureka Forbes operates on this mechanism where experienced sales

Telephone companies also sometimes rely on this mechanism to sell their

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

1. Direct Marketing- Direct marketing is defined as an interactive system of marketing,

Consumer Decision Making Process/Customer Buying Behavior

Types of Buying Decisions

1. Extended Problem Solving: Is a purchase decision process in which customers devote

Factors Influencing The Buying Process:

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Essentials of Relationship Retailing

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retailers Classified By Marketing Strategies: Whatever its form of ownership, a retailer

Type Of Store Breadth And Depth Price Level Amount Of

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

1. Innovation/Introduction: A new organization is born, it improves the convenience or

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

The market research characteristics could be:

 The geographical location: local, regional, national, European or international market

Market Research as a Tool for Understanding Customer’s:- Customer understanding is required

 What attributes or demographics are important in getting to know your customers?

 How do you use the data once it is collected?

Methods to get it resolved:

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Market research can guarantee the success of your marketing

Market research can help you minimize loss in your

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

1. Market Conditions/Recession: In a well-performing market, customers don’t mind

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Psychological Elements: Psychological factors are a major influence in customer’s buying

• Motivation: Customers often make purchase decisions by particular motives such as

Type of Retailer Location Merchandise Prices Atmosphere & Promotion

Theories on Retail Development

 Environmental – where a change in retail is attributed to the change in the environment

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

 Thesis: Individual retailers as corner shops across the country

Retail Management Notes- UNIT-1 BY DR Hemendra Sharma

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