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RETAIL MANAGEMENT

PROF. R.MATHUR
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INTRODUCTION –
CONCEPTS, ROLE & ENVIRONMENT
RETAILING Business activities involve Selling
Goods and Services to Consumers for their
Personal, Family or Household use.
“Every sale of Goods and Services to final
consumer” – Food products, apparel,
movie tickets; services from hair cutting to
e-ticketing.
 Retailing is the Last stage in Distribution
Process- Wholesale is an intermediate
where Goods and services are sold to
Business customers.
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 Retailer is customer focused, not
Product –focused.
Manufacturer may reach customers
through:
 Dealers

 Company showrooms

 Super / Hypermarkets

Manufacturers will decide on Retail


Distribution:
 Intensive

 Selective

 Exclusive
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ORGANISED RETAILING
 In India Organised Retailing is 2%
 Retail sector highly fragmented
 Retail chains like Wal Mart, Sears,
McDonalds brought Rapid Growth
and consolidation of Organised
Retail
 Rapid rise of Income levels and
accompanying changes in lifestyles
greatly contributed to growth of
Organised Retail
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ORGANISED RETAILING
 In India, increase in Disposable income,
Purchasing Power of growing Middle
Class conducive conditions for growth of
Organised Retail
 Indian Retail environment different from
that of western countries:
- Cities congested, large population in
rural areas
- Smaller purchases, limited household
space
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RETAILING CONCEPT
“Retaillier” French for breaking bulk
Retailer links Producers to Customers
Retailer is a person, agent, agency,
company or organisation reaching the
Goods or Services to ultimate consumer
Retailers perform specific activities:
 Anticipate customer wants

 Stock product assortments

 Acquire market information

 Finance Retail business


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RETAILING CONCEPT
Retailing may take place through:
 Retail Store

 Mail Direct
 Internet Sales
 Door-to-door

Retail services like Restaurants, Hotels,


Parlour, Health Services, car rentals,
Travel
In USA Retail generates $3 trillion
through 23 mil. Employees. Wal Mart
generates $245 Bio. sales through 1
Mio.nationally and .3 Mio. Foreigners.
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 Strong economies have a strong
Retail sector
 Entry in retail sector is easy, hence
results in fierce competition
 Retail must perform its primary role
of catering to customer satisfaction
 Retail earns modest profits of 9-
10%
 Retail stores of different sizes face
distinct challenges. Their sales
volume influences:
- Merchandise purchase
- Promotion & - Expenses Control
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Last decade has seen tremendous
changes in Retail Business – from
made to order to ready to wear,
from counter sales to self service,
emphasis on value addition and cost
reduction.
Family run retail business giving way
to modern professional retail.
Retail improving inventory
management through systems –
faster turnover, better profitability,
fast changing customer preferences
for assortment of goods and
services. BETTER CUSTOMER CARE
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GLOBAL RETAIL INDUSTRY
1. Retail sales driven by Ability
(disposable income) and
willingness (consumer confidence)
2. Worldwide retail sales Est.$7 Trio.
3. Expenditure on Household
Consumption increased by 68%
between 1980 and 1998
4. Top 200 retailers account for 30%
worldwide demand
5. Over 50 of the Fotune 500 and 25
of Asian Top 200 are Retailers
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ORGANISED RETAIL FORMAT
1. By 2006 - 200 Shopping Malls – Up
from 25 in 2003
2. Expect by 2006, to develop 40
mio.sq.ft. quality Retail Space
3. 6 A Grade cities Delhi NCR, Mumbai,
Bangalore, Hyderabad, Chennai,
Kolkata will have 34 mio. and non
metros Pune, Ahemadabad Ludhiana,
Chandigarh, Jaipur, Lucknow, indore,
Cochin 6 mio.
4. Delhi NCR will have 26 mio., Mumbai
another 5 mio.
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RETAIL CHARACTERISTICS
1. Direct End-User Interaction
2. Platform for Promotions & POP
displays
3. Lower unit sales
4. Retail location critical
5. Services as important as Core
Products
6. Large number of Retailers to meet
geographical coverage and
population density
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RETAIL EVOLUTION THEORIES

Four theories of evolution are:


1. Wheel of Retailing Cyclical
2. Accordion theory Theories
3. Dialectic Process Evolutionary
4. Natural selection Theories
Cyclical: Begin with one state and
return to that state at some time
in future
Evolutionary: Changes similar to
biological evolution
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Wheel of Retailing
Wheel represents phases through which
some types of Retailers pass:
Retailers attract customers – low price, low
service
Expand market – More expensive
merchandise, More services, open More
convenient locations. Trading up process
increases costs & price of their
merchandise, creating opportunities for
new low price retailers to enter e.g.
Discount stores & category specialists
Some Retailers don’t begin as low price, low
service entrants, e.g. Upscale fashion
specialty stores.
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THE ACCORDION THEORY
Retailers fluctuate from strategy of
offering wide merchandise with shallow
assortment to offering limited
categories with deep assortment
In rural markets, Retailers sell many
categories under one roof: shoes,
cosmetics, foods, cloth, medicines.
However the assortment is shallow and
customers have limited choice.
Department stores have both width and
depth of merchandise
Speciality stores carry special categories
with deep selection
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DIALECTIC PROCESS
An evolutionary theory based on premise
that retail institutions evolve.
The theory suggests that new Retail
formats emerge by adopting
characteristics from other forms of
retailers in much the same way as the
child is the product of the pooled genes
of the parents.
Specialty stores with high margins, low
turnover plush operations
Discount stores with low margins, high
turnover low operations
Both the above were synthesized to form
category specialist stores.
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NATURAL SELECTION
Those Retail Institutions Succeed which
adapt to changes in customers,
Technology, competition and legal
environment.
Department stores have tried to
combat specialty stores by opening
specialty counters within the stores.
Interest in physical fitness and
increased number of women in
workforce have made salad bars in
grocery stores successful.
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RETAIL BUSINESS CLASSIFICATION
1. Ownership Business:
Proprietorship,
Partnership,
Limited liability company
2. Operational Structure:
Independent Trader,
Chain Of Stores, Franchising,
Consumer Cooperative
3. Width & Depth Of Merchandise:
Specific Product Category
Wide Range
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4. Type Of Pricing:
Low pricing, minimum Service
Premium Merchandise, High Service
Premium pricing, distinctive Image
5. Consumer Interaction:
Direct interaction
Mail Order
Tele-Selling
Vending machines
Door-to-door
Mobile Vending
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 GROCERS - Major business is grains,
provisions, spices, edible oils. Grocers
may be dealing in many other items.
 GENERAL STORES - Deal in items
Daily needs and stocking number of
categories, is identified as a general
store.
 CHEMIST- Deal in Ethical
Pharmaceutical Products. Require a
license and a Qualified Pharmacist.
Such outlets also deal in diverse FMCG
products.  
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 MODERN FORMAT STORE –
a) Part of a chain of stores with self-
service facilities
b) Part of a chain, but does not have
self-service Facilities
c) Stand-alone (not part of a chain)
with self-service facilities
FOOD STORE : Deal mainly in food
products - milk, beverages, tea,
coffee, squashes, ketchup, jams,
chocolates, biscuits, bakeries etc.
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 TOBACCO KIOSK : Deal in tobacco
products like Paan, Cigarettes, etc. are
called Pan Bidi shops. Many of them
also deal in packaged consumer
products like toilet soaps, toothpaste,
washing soaps, biscuits, confectionery,
batteries etc.
 COSMETIC STORE : Deal in Ladies
Personal care products / Cosmetics,
General toiletry products, Men’s
toiletry products, Baby Care Products.
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RETAIL CONCEPT
 Customer Orientation:

Attributes & Needs satisfaction


 Coordinated Efforts:

Maximize Business Efficiency


 Value driven:

Good Value for Money


 Goal Orientation

Achieve Goals
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RETAILING CONCEPT
 Communication with Customers

 Identify Customers Needs

 Provide Products and Services to

Satisfy Customers
 Elicit Feedback to Improve

Services – Word Of Mouth


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RETAILING CONCEPT
Customer Service approach:
 Create a conducive environment

 Listen to your Customers

 Direct mail

 Relationship Marketing – Long

Term
 Rewards for Regular Customers
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ROLE
 Consumer spend their money at

Retail which drives the economy.


Retailers realize Revenue when
Consumers buy products or
Services from them.
 The revenue passes up the

Consumer Goods distribution chain


viz. to Wholesalers, Distributors
and Manufacturers.
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 Retail Industry employs 17-20%
Workforce that drives the Economy.
 Retail trends often mirror trends in a
nation’s overall economy.
 Retailers add value by Providing the
Right Product at The Right Place at
the Right Time.
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 ENVIRONMENT
 Retailing is a Dynamic field with very
Competitive Environment.
 Retailers act as Filters – Strong lobby for
success or otherwise of a Product or
Services.
 Companies create Retailer Value and
Consumer Differential Advantage to
improve success rate of their Brands.
 Constraints – Multiple Brands and SKUs
for each category, Shelf Space, funds
available, Turnover of Merchandise.
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New Concepts & Trends
1. Vertical Retail Concept: Traditional stores
and Shop-in-Shop concepts – mixture of
system and individuality, e.g. Sale of Non-
food items like newspapers, magazines
with snacks, beverages
2. Consumption Related Trends: Increasing
Consumers with Purchasing Power & More
Migrant Consumers Demand for Broad
selection of Products Demand for Good
quality Products e.g. Honest, Original and
Green Products
Indian Economy – GDP Projections Through 2022 (2007
Prices)
US$ US$
Billion Billion
2007
Brazil 1,068 2012
Russia 979 Brazil 1,369
India 916 Russia 1,304
France 2,232 India 1,409
UK 2,374 France 2,470
UK 2,648
China 2,630 Germany 3,198
Germa 2,897 China 4,197
USA 13,245 USA 15,354

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 - 5,000 10,000 15,000 20,000

US$ US$
Billion Billion 2022
2017
Brazil 2,282
Brazil 1,789
Russia 2,103
Russia 1,688
India 3,128
India 2,119
France 3,085
France 2,761
UK 3,251
UK 2,953
Germany 3,513 Germany 3,766
China 6,341 China 9,229
USA 17,031 USA 19,751

- 5,000 10,000 15,000 20,000 - 5,000 10,000 15,000 20,000 25,000

*GDP figures are in real terms with base year as 2007

India is expected to be comparable with UK & France in GDP by 2022


Rapid Transformation
Anticipated
Current Size & Future Projections for Indian Retail Market
28% share
1200 1011
1000
US$ Billion

800 590
471 527
600 376 421
336
400
282
200
51 74 97
0 12 17 29
2007 2008 2009 2010 2011 2012 2017

Total Retail Organized Retail

Reach a share of 28% by 2017


HIGH GDP GROWTH

10% 9.0% 9.4%

9%

8% 6.4%
6.6% 6.0% 6.8%
7% 6.0%
5.4% 5.6%
6% 5.2%

5%

4%

3%

2%

1%

0%
1999

2000

2002

2004

2005

2006
1997

1998

2001

Projections of 8% sustainable real GDP growth rate till 2020 2003

promise high growth potential for Indian Retail


Radical Transformation
Anticipated In Indian Retail
Country Share of Years taken to
Organized reach the level
Retail from < 5%
China 20% 10
Poland 20% 8
Brazil 36% 15
Thailand 40% 18
US 85% 50
India 17% (estimated) 5
27% (estimated) 10

India looking at rapid GROWTH compared to other countries


Growth Of Indian Retail …

*Projected

Source: Technopak Analysis, CSO & Other Sources

Indian Retail expected to grow close to 12% p.a. in the next 10


years
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WITH HIGH PRIVATE CONSUMPTION
 Private Consumption US $568 Bn
(62%)
 Retail US $352 Bn (62%)

Urban US $158 Bn (45%)


Rural US $194 Bn (55%)
 Non-Retail US $358 Bn (38%)

• Public Spending +Gross Capital


Formation 38%
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 Rural India consists of 720 Million
consumers across 627,000 villages
 17% of these villages account for 50%
of the rural population and 60% of the
rural wealth implying reaching out to
almost 100,000+ villages to address
even 50% of this rural opportunity
WITH HIGH PRIVATE CONSUMPTION
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RAPID TRANSFORMATION
 Investments in the range of US$ 20+

Billion expected in the next 5years in


Retail & its Supply Chain alone
 Size of modern retail likely to touch US$

74+ Billion by 2011


 At least 2.5 Million additional direct jobs

likely to be created in the next 5 years


 Hyper-competition is expected to set in

by 2008-9.
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TRADITIONAL RETAILERS
 Retail market is growing from US$ 336
billion to US$ 590 in 2012
 That means an additional market of US$
254 billion
 Even if the modern retailing can go from
US$ 12 billion to US$ 74 billion in 2011
Still US$ 180 billion is left to be
addressed by traditional retailers
 The growth of modern retail will be more
in urban as compared to rural
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BOOKS FOR REFERENCE

1. Retail Management By Chetan Bajaj


2. Retail Management By Berman &
Evans
3. Retail Management By Levy & Weitz
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CASE STUDY:

 Facts Of the Case – No assumptions


 Key Issues
 List alternatives
 Evaluate alternatives
 Recommend Course Of Action
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TOTAL RETAIL EXPERIENCE
 Merchandising & Display

 Brands and Quality Of Goods

 Inventory Carried

 Customer Service

 Pricing

 Support Functions: Parking

 Create Customer Excitement


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TOTAL RETAIL EXPERIENCE
Possible Pitfalls:
Discount stores – Ample Stock
Neighborhood Store – Overly
Trendy Products
Full Service Store – Knowledgeable
Theme Restaurants – Novelty
wears off, food so-so, Prices high
MEET CUSTOMER NEEDS
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OPPORTUNITIES:
 Management –
Raise capital
Purchase
Use MIS to Control Operations
Employ for Sales Counters,
Stores and Cash Counters
Undertake Marketing Activities
 Entrepreneurial Opportunities
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RETAIL STRATEGY

OVERALL ACTION FRAMEWORK


 Mission

 Goals

 Consumer Market

 Overall Activities

 Feedback and Control Mechanism


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Forward Retail Planning – FOCUS
 Analysis Of Requirements Of Business
 Set realistic Goals
 Differentiate Itself for Target Customers
- Benchmarking
 Knowledge Of Business Environment –
Legal, Economic, Competitive
 Synergize efforts
 Reduce Business Risk – Feedback and
Control
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MISSION

 Commitment to A Business –
Business Decision
 Around Goods and Services sold or
around Consumer needs.
 Specific or Generic approach
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 Distinctive Role In Market –


A Leader or a Follower
Leader – Unique strategy
Follower – Emulate standard
Practices with better execution than
competitor.
 Market Scope – Customer Base
 Dynamic Decision In Sync. With
Retail Environment
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Ownership and Management:
 Sole Proprietorship –Individual

accrues Profits, Risks, Costs. Is


Liable for Legal Claims. Limited
Capital and Expertise.
 Partnership – Share Profits, Risks,

Costs. Owners Liable for Legal


Claims. Better Capital Investments
and Capabilities.
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 Corporation – Incorporated under


law. Funds through Sale of Stocks.
Ownership Transfer is easy. Private
Limited Company – Limited number
of Individuals with Limited Liability.
Public Limited Company – Open to
Public to Invest In Stocks. Profits and
Dividends attract Taxes. Managed
by professional managers.
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Business:
 Start A New Venture – Flexibility of

retailing Factors
 Buy an Existing Business – Balance

Of Advantages should be Positive –


weigh the negatives carefully
 Become A Franchisee – Combines

Enterprise with Known Brands.


Brand also puts a number of rigid
Quality and Business Restrictions.
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Types Of Retail Goods & Services
 Durable Goods

Furniture, Electrical Appliances,


Hardware, Timber, Jewelry,
Automotive and Spare Parts
 Non-Durable

Apparel – Cloth, Garments, Food


Group – Green Grocers, Packaged
Foods, General Merchandise, Eating
Places, Petrol Stations, Chemists,
Stationery
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Service Establishments
 Personal Services

Dry Cleaning, Health Care,


Photographic Goods, Barber Shops,
Amusement Services, Movie Theatres,
Clubs, Amusement Parks, Game
Arcades
 Repair Services

Automobile, Electrical Gadgets, Watch


& Jewelry, Electronic Gadgets
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 Hotel Services
Hotels, Resorts
 Professional Services

Lawyers, Doctors & Surgeons,


Chartered Accounts, Stock
brokers, Real Estate Agents
Potential Retail Business Owners
Aptitude for a Particular Business
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 Personal Aptitude
Knowledge, Experience, Qualifications,
Inborn Skills and Acquired Skills
 Financial Resources
Land and Building, Fixtures, Equipment
 Time Demands
Owner’s Availability
 Personnel
Sales People, Inventory, Cashiers
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RETAIL OBJECTIVES – STRATEGY
 Sales – Growth, Market Share

 Profit – Level, ROI, Efficiency

 Satisfaction – Total Retail Experience

 Positioning – Up-market, Mid-Priced, Discount

Oriented, Mass Market, Niche


Value Scale-Quality, price
Fashion Scale-Fashion, Style, Assortment
Image Projected
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Target Market – Customer Group To
Be Attracted and Satisfied.
Mass – Broad Spectrum of Customers
Concentrated – Specific group
Differentiated – Two or more distinct
Groups with Different Retail
Approaches
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TARGET MARKET TECHNIQUES
STRATEGY MASS MARKET CONCENTRATED DIFFERENTIATED

LOCATION Near Large Near Small Near Large


Population Medium Pop. Population
RETAILMIX Wide Deep Distinct Goods
Assortment, Assortment, for Target
Medium Qual. High/ Low Market
Qual.
PROMOTION Mass Advtg. Direct mail Different
Media for
Target Groups
PRICING Popular High or Low High, Medium
and Low
STRATEGY Large Specific Strategies
Homogeneous Strat. directed at
Group Directed at Heterogeneous
Specific Gr. Groups
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CONTROLLABLE UNCONTROLLABLE
VARIABLES VARIABLES
Store Location Consumers
Managing a Competition
Business
Merchandise @ RETAIL Technology
Pricing STRATEGY
Communicating Economic Conditions

Seasonality
Legal Restrictions
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 Mission
 Situation Analysis Ownership
 Goods/Services category
 Sales
 ObjectivesProfit
 Customer satisfaction
 Image
 Mass
 Target Customer Concentrated
 Differentiated
 Controllable
 Overall strategy Uncontrollable
 Short Term
 Specific activities Competition
 Evaluation
 Control Adjustment
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 RETAILERS MARKETING DECISIONS:
-Target Market: Focus resources & Retail Mix
-Product Differentiation Strategy: Product
Assortment Breadth & Depth
-Services: Pre-purchase, Post-purchase,
Ancillary
-Price: Target market, Product Mix,
Competition
-Promotion: Promote & Reinforce Image
-Location: Vicinity of Target market
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 MARKET SEGMENTATION- TARGET MARKET
Sex, Age, Family Size -Type, Marital, Status, Socio-
economic Class, Occupation, Geographic: Metros,
large Towns
Psychographic: lifestyles, Personality, Values
 Services: Advertising, Displays, Special Offers;
Delivery, Gift Wrapping, Returns, Tailoring,
Installation; Cheque Cashing, Parking, Restaurants,
Rest rooms
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Pricing: High Profit %, Low Volume & Low
Profit %, High Volume
Loss Leader, Discounts -Clear Merchandise
EDLP Every Day Low pricing vs. Discounts
 Promotion: Frequent Shopper Rewards,

Coupons, Sampling, Ads.


 Location: Sales effectiveness –

Number of people pass by - % Enter –


% Buy- Average Amount per Sale
CASE STUDY – CONVENIENCE STORE
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MERCHANDISE MANAGEMENT:
 A Key Strategy: Develop & Implement

Merchandising - Plans Of Proper Assortment Of


Goods & Services As In Demand, make them
Available at Places, Times, Prices & Quantity to
Satisfy Target Customers
 Merchandising Decisions dramatically affect

Performance.
 Investments in Merchandising Skills & Talent

produce Better results than Investments in


Technology or other Skill Specialties. 70 -80 %
Results Depend on Merchandisers.
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MERCHANDISING PLAN:
 All Merchandising Decisions Based on

Plans-
1. Needs Of Target Market
2. Type Of Retail Business
3. Marketplace Positioning
: Mass - Wide & Deep Assortment – Broad
Customer Market
:Niche –Specific Market Segment – High
Customer Loyalty – Shields against
Conventional Competitors
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4. Defined Value Chain – (Trends )
- Expected: Hygiene, Timely Service,
Knowledgeable, Stock Popular
Products, Returns/ Redressal
-Augmented: Special Services,
Differentiated Brands, Loyalty Prog.
-Potential: Elements not yet Perfected
or Opportunities not yet exploited.
5. Product Trends
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Merchandising Plans will drive Decisions:
Product Lines to Carry
Shelf Space to Allot to Different Products
Inventory Turnover
Pricing – Across Categories & Within
Promotions
Assortment – Breadth: Narrow or Wide
Depth: Deep Or Shallow
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Scope Of Responsibility for Personnel:
Full Merchandising Functions – Buying &
Selling: Selection Of Merchandise, Pricing
Displays, Customer Transactions.
Separate Buying & Selling Functions.
Micro Merchandising – Shelf space Basis
Demand Pattern
Cross Merchandising – Carry Complimentary
Goods & Services
Water, Soda, Soft Drinks, Juices, Ethnic
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Merchandise Plan - Forecasting :
 Staple Merchandise – Regular Daily Need
Products, Stable Sales – List Of products,
Inventory Level, Colours, Brands, Style Size
 Assortment Merchandise – Apparel,
Furniture, Autos. Variety Of products to
enable Customers a Selection. Demand
Varies, Forecast difficult. Decision On
Product Lines, Styles Designs & Colours.
Model Stock Plan - Colour, Size, Qty.
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 Fashion Merchandise – Cyclical sales due to
Changing tastes and Life Styles
 Seasonal Merchandise – Seasonality In Sales –

Summers Cottons, Winters Woolens –


Forecasting for Season
 Fad Merchandise – High Level Of Sales In a

Short Time. Toys, Games are short lived Fads.


Extended fads – Residual sales Continue for
longer Periods. Never Out List – Always in stock
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PRICING STRATEGY IN RETAILING:
Retailer Prices Goods & Services to:
- Achieve Profitability
- Satisfy Customers
- Be Consistent with Overall Image, Sales,
Profits, ROI
Pricing Options:
- Discount Orientation
- At-the-market Orientation- Average Pricing
- Upscale Orientation
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 Discount Orientation:
- Low pricing as competitive advantage
- Low status Image, Fewer shopping frills,
Price based customers, Low operating
costs, High Inventory T/O.
 At-the-market Orientation:

Middle Class shoppers


- Offers excellent service, Good
atmosphere
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- Profit margins > = Moderate
- Quality > = Average
- Price Range Difficult to Expand as
Competition from Discount Stores or
Prestige Stores Squeezes the Range
 Upscale Orientation:

- Prestige Major Competitive Edge


- Smaller Target Market, Higher Operating
Costs, lower Inventory T/O
Means Customer Loyalty,
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Distinctive Services & Product
Offerings, High unit Profit margins
PROVIDE A GOOD VALUE IN
CUSTOMERS’ MIND FOR THE
CHOSEN PRICE ORIENTATION.
CUSTOMER NOT NECESSARILY
LOOKING FOR THE BEST PRICE BUT
FOR GOOD VALUE – REAL &
PERCEIVED -FOR MONEY.
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MANAGEMENT ..7
Research on price In Buying Decisions
reveals Different Motivations for
Different market Segments.
CONSUMER PURCHASE & PRICING:
Price Elasticity Of Demand – Sensitivity
to Price Changes. Small % Change in
Price Substantial % Change in Demand
– High Price Elasticity. Urgency to
purchase is low or acceptable
substitutes exist.
RETAIL
MANAGEMENT ..7
Large % Change in Price Small %
Change in Demand – Demand In-
Elastic. Urgency to purchase is high
or there are no acceptable
substitutes. Occurs with Brand or
Retailer Loyalty.
Unitary Elasticity - % Change in Price
directly off-set by % Changes in
Quantity Demand
RETAIL
MANAGEMENT ..7
In Retailing computing Price Elasticity is
Difficult due to other factors of Product Mix
also interplay. Demand hard to predict.
Price Sensitivity varies by Market Segment
based on Shopping Orientation:-Economy:
Shop around for Lowest Price. Segment
Growing rapidly.
- Status: Perceive Retailers as different,
Look for Prestige Brands and customer
Service.
RETAIL
MANAGEMENT ..7
- Assortment oriented: Seek Retailers with
Strong Assortment in Product Categories and
look for Fair Pricing
- Convenience Oriented: Shop only when they
Must at nearby locations with long hours.
Prepared to pay higher Prices.
- - Loss Leaders: Price below cost to attract more

customers.
- - Predatory Pricing: Seek to Reduce Competition

by selling at very low Pricing


RETAIL
MANAGEMENT ..7
Unit Pricing: Indicate Pricing at a unit,
e.g., per Kg – to enable quick
comparisons by customers.
Sharp Practices:
Bait and Switch Advertising:
Lures customer with exceptionally low
prices. On contact customer informed
of stock-out and offer another
product.
RETAIL
MANAGEMENT ..7
Conflicts In Pricing:
ManufacturerWholesaler
Retailer
Co. PriceDistributor’s Price (a-b%)
Wholesale Price (a-w%)
Price To Retailer (a)
Price To Consumer (a+ c%)
Gray Market Goods: Imported Goods
at Lower Prices.
RETAIL
MANAGEMENT ..7
Market Pricing: High Competition,
customers seek lowest pricing. Price
increase leads to brand switching.
Administered Pricing: Strong product
Differentiation, Control by retailer on Price
charged. For customers Image, Assortment,
Personal service more important than Price,
e.g. Fashion apparel stores, upscale
restaurants.
RETAIL
MANAGEMENT ..7
PRICING OBJECTIVES:
Market Penetration – Achieve large revenues
by setting Low prices and sell high unit
volumes – an aggressive strategy to
discourage competition
Market Skimming – Profit is Objective.
Charge Premium Prices and attract
Customers seeking Service, Assortment &
Status. Does not maximize Sales. ROI or
early Cash Recovery Objectives met.
RETAIL
MANAGEMENT ..7
Selling Pr. Demand Sales Av .Cost Op. Exp. Tot. Cost

9 114000 1026000 7.6 104000 970400


10 104000 1040000 7.85 94000 910400
11 80000 880000 8.25 88000 748000
12 60000 720000 8.75 80000 605000
Selling Pr. Tot. Profits Markup % Av. Inv. Hold Inv. T/O R O Inv.%
9 55600 16 12000 9.5 61
10 129600 22 13000 8 127
11 132000 25 14000 5.7 114
12 115000 27 16000 3.8 82
Unit Sales Sales Goal ROInv. %

Profit Profit/Unit
RETAIL
MANAGEMENT ..7
Prestige Pricing:
Premium pricing to convey exclusive image for
the product or Service. Evoke perceptions of
Quality and Prestige. Habeebs Parlour, Delhi
Golf Club, Luxury hotels.
Odd – Even Pricing:
Odd Pricing to indicate lower “Good” deal.
Even Pricing to indicate higher quality.
RETAIL
MANAGEMENT ..7
Bundled Pricing:
Offering two or more Products or
Services at one price.
Fixed & variable Pricing:
Variable pricing for highly
differentiated or unbranded
products. Fixed pricing for Branded
products.
RETAIL
MANAGEMENT ..8
PLANNING & CONTROL
Retailer forms a New Strategy or
Adjusts an Existing one, gathering
and analyzing feedback reveals
effectiveness of Operation.
Feedback can be obtained for:
- Attributes, Buying Behaviour
- Alternative Store location
- Inventory Planning
- Product Mix Offering
RETAIL
MANAGEMENT ..8
- Pricing
- Promotion
- Store image
Research efforts related to risk involved:
- Higher risk : Store Location
- Lower risk: Introduction of New Product
Line
Information Gathering and Processing is
ongoing for Feedback & Control
RETAIL
MANAGEMENT ..8
Non-systematic or Incomplete ways
of obtaining information due to
constraints of Time, Costs or Lack
of Research Skills:
- Using Intuition: Gut feel
- Assuming Past Trends to Continue
and follow past practices
- Copy Competition
- Devising a Strategy based on few
individuals perceptions
RETAIL
MANAGEMENT ..8
Example: Movie tickets cost –weekdays vs.
weekends and matinee vs. evenings
Toy store orders for holiday season basis last
year’s demand +. Research indicated higher
optimism and desire to gift. Stock-out before
peak, unable to get delivery of extra stocks.
Chain Store in new Location – doing 40% of
expected business. Research shows Store
name and Image unknown, ad media choice
incorrect
RETAIL
MANAGEMENT ..8
Retailer’s Objectives direct Strategic
Planning – some Routine. Non-routine
require careful evaluation
Strategy outlined, new data required for
its operation acquired and files updated
or retrieved from storage, analyzed and
interpreted. All this at Information
Control Centre. Decisions made and put
into operation.
RETAIL
MANAGEMENT ..8
Retail Information System – RIS
Environment Mission, Objectives
Competitors, Economy

Strategic Plans
(a) DATA COLLECTION INFORMATION (b) DATA STORAGE+
ANALYSIS CONTROL RETREIVAL
INTERPRETATION CENTRE © UPDATING DATA
FILES

FEEDBACK Retail Operation


IMPLEMENTATION
RETAIL
MANAGEMENT ..8
Performance results are fed to ICC
and compared with objectives set.
Regular and Exception reports
( Giving reasons for deviation)
generated and sent to Operational
Managers for necessary action.
Building RIS
How active RIS role – Reports in
routine or as-and-when
RETAIL
MANAGEMENT ..8
Internal or Out-sourced- Some Specific
Researches can be out-sourced.
Cost Of RIS – 0.5 to 1.5% of revenue
Quanta of Data – Edit raw data and share
interpretation
Frequency of Data dissemination – who
receives which report
Data Storage – Easy retrieival, adequate
Longitudinal analysis (Period to Period)
RETAIL
MANAGEMENT ..9
RETAIL PROMOTION
All communication that informs, persuades
and reminds the target market about
marketing mix of the Retail business.
Objectives of Communication:
- Increase customer Flow
- Increase Purchase BY Target Market
RETAIL
MANAGEMENT ..9
- Increase sale of Specific product
or Product Category
- Develop Store Image
Communication Promotion Mix:
- Advertising
- Sales Promotion
- Publicity
- Personal Selling
RETAIL
MANAGEMENT ..9
Department or Large Stores manage
through Promotion department of the
store. Small Retailers pool resources
with manufacturers for Promotions.
Advertising – Paid Communication using
Impersonal mass media: Print – news
papers, magazines, direct mail and AV
media like TV, radio.
Local, vernacular language Print media
used by small retailers.
RETAIL
MANAGEMENT ..9
Cable TV is also used by small retailers.
Large retailers use a combination of media.
Sales Promotion is a paid Impersonal
communication offering additional value to
customer. Encourages customer visits and
Promotes trial and repeat Purchase of focus
Products or Services
Special events, In-store Demonstration,
Contests
RETAIL
MANAGEMENT ..9
Publicity -Un-paid form of Communication
that provides Information about the retail
through media.
A Powerful Business strategy evolves through
knowledge of Target Customers, Clarity of
Business Objectives. Effective selection of
media for Promotion Strategy.
Major shift to Nuclear families in ’90’ s have
shifted focus on to kids in Promotional
strategies
RETAIL
MANAGEMENT ..10
ATMOSPHERICS & RETAIL SPACE MANAGEMENT
REFERS TO THE PHYSICAL CHARACTERISTICS OF THE RETAIL
STORE LIKE EXTERIORS, INTERIORS, LAYOUT PLANNING
AND VISUAL MERCHANDISING.
PLAY A SIGNIFICANT ROLE IN
 ATTRACTING CUSTOMERS AND RETAINING THEM

 IMPROVING QUALITY OF SERVICE EXPERIENCE

 POSITIONING THE RETAIL OUTLET

 OPTIMUM RETAIL SPACE UTILIZATION


RETAIL
MANAGEMENT ..10
DIMENSIONS OF ATMOSPHERICS:
 PRESENTATION LIGHTING
 STYLING COLOUR PLANNING
 DESIGN USE OF WALLS/ MATERIALS
APPEAL TO CUSTOMERS
EXTERIORS – STORE FRONT, DISPLAY WINDOWS
INTERIORS – LIGHTING, COLOUR, FACILITIES
ENHANCES DISPLAY & PROVIDES RELEVANT
INFORMATION
RETAIL
MANAGEMENT ..10
ATMOSPHERICS PLANNING RELEVANT FOR ALL
RETAIL SET-UPS, ESPECIALLY:
- PLANNED SHOPPING CENTRES
- LIFESTYLE STORES
A TIDY WORK ENVIRONMENT ATTRACTS A HIGH
STORE PATRONAGE
ATMOSPHERICS PLAY AN IMPORTANT ROLE:
- CREATE POSITIONING FOR RETAIL OUTLET
- ATTRACT NEW CUSTOMERS
- ORGANIZE STORE AND MERCHANDIZE
- ENRICH SHOPPING EXPERIENCE
RETAIL
MANAGEMENT ..10
ATMOSPHERICS ROLE IN RETAIL STRATEGY
 ATTRACTS NEW CUSTOMERS

 CREATES A USP

 FACILITATES EASY MOVEMENT INSIDE THE

STORE
 FACILITATES ACCESS TO MERCHANDISE

INSIDE THE STORE


 ENSURES OPTIMUM SPACE UTILIZATION

 ENSURES EFFECTIVE & DESIRED

PRESENTATION INSIDE THE STORE


 REDUCES PRODUCT SEARCH TIME INSIDE

THE STORE
RETAIL
MANAGEMENT ..10
CHOICE OF FIXTURES, DÉCOR, SIGNAGE
ENABLE CUSTOMERS PERCEPTION. PROPER
PLACEMENT OF SIGNAGES INDICATING
PRODUCTS OFFERED INCREASE EFFECTIVENESS.
CUSTOMERS NECESSITY TO ASK QUESTIONS
INCREASE STRESS LEVELS. UNIFORMS WORN BY
STORE EMOLOYEES ALSO REDUCE CUSTOMER
STRESS AND ANXIETY TO ASK QUESTIONS.
QUALITY OF STORE FIXTURES SIGNIFY A
RETAILER CUTTING CORNERS OR MAKING
LARGE PROFITS.
RETAIL
MANAGEMENT ..10
SIGNAGE, LAYOUT AND FURNISHINGS ADD
TO AMBIENCE AND EFFECTS STORE-
BROWSING COMFORT OF CUSTOMERS.
IN STORE ELEMENTS SUCH AS COLOUR,
LIGHTING AND MUSIC MAY AFFECT
PURCHASE DECISIONS MORE THAN POP
AND DISPLAYS. TO IMPROVE IN STORE
ATMOSPHERE, PERFUMES GET DESIRED
EFFECT – ESPECIALLY TO GET RID OF
CERTAIN ODOURS. IF THESE ARE
COMPLEMETARY TO THE STORE, THE
SERVICE QUALITY EXPERIENCE IMPROVES.
RETAIL
MANAGEMENT ..10
MUSIC PLAYS AN IMPORTANT ROLE IN
ENHANCING CUSTOMER’S TIME SPENT IN THE
RETAIL OUTLET – ESPECIALLY SOOTHING MUSIC,
NOT THE FAST PACED.
STIMULATE RETAIL ENVIRONMENT
PLEASURE EFFECT: CLASSICAL HINDI MUSIC
ENHANCES SHOPPERS’ ENJOYMENT
AROUSAL EFFECT: SLOW INSTRUEMENTAL MUSIC
RESULTS IN SUBDUED ACTIVITY IN SERVICE
SETTINGS LIKE RESTAURANTS.
RETAIL
MANAGEMENT ..10
DOMINANCE: CUSTOMERS FEEL DOMINANT ( IN
CONTROL). ENVIRONMENTAL ASPECTS -
COLOUR OF INTERIORS, HEIGHT OF CEILING
DETERMINE CUSTOMER DOMINANCE.
FURNITURE AND FIXTURES MAY IMPACT THE
DURATION OF TIME SPENT IN-STORE.
PHYSICAL ENVIRONMENT
STORE LAYOUT/DESIGN EMOTIONS SHOPPING
MERCHANDISE DISPLAY BEHAVIOUR
MUSIC
AROMA CUSTOMER’S
SENSES
RETAIL
MANAGEMENT ..10
KEY COMPONENTS OF RETAIL
ATMOSPHERICS

 EXTERIOR ATMOSPHERICS

INTERIOR ATMOSPHERICS
 STORE LAYOUT

 VISUAL MERCHANDISING
RETAIL
MANAGEMENT ..10
EXTERIOR
ATMOSPHERICS
STOREFRONT
MARQUEE
ENTRANCES
DISPLAY WINDOWS
SIZE OF BUILDING
ACCESSIBILITY
VISIBILITY
RETAIL
MANAGEMENT ..10
INTERIOR ATMOSPHERICS
FLOORING
LIGHTING
ODOUR/ AROMA
FIXTURES
WALLS
TEMPERATURE
AISLES
CONVENIENCES/HYGIENE
RETAIL
MANAGEMENT ..10
STORE LAYOUT
SHOPPING FLOOR SPACE
TRAFFIC FLOW
DEPARTMENTS LOCATION
SPACE / MERCHANDISE
CATEGORY
SIGNAGE
RETAIL
MANAGEMENT ..10
VISUAL MERCHANDISING
ASSORTMENT
THEME
ENSEMBLE
RACKS AND SHELVES
CASH COUNTERS
RETAIL
MANAGEMENT ..11
CONTROL RETAIL STRATEGY
Rules to stay Competitive:
Commitment – Enthusiasm in Business
Share – Staff Involvement in Decision making
Listen & Communicate – Customers and Staff
Appreciate – Good efforts
Celebrate – Good Achievements
Motivate – Challenging goals and rewards for
High performers
Exceed – Deliver more than promises
Control – Operating Costs
Swim Upstream – Evaluate Competition and
do something Different.
RETAIL
MANAGEMENT ..11
INTEGRATING RETIAL STRATEGY
Situation Analysis Objectives

Strategy Target Market

Specific Activities

Control
RETAIL
MANAGEMENT ..10
OPPORTUNITY ANALYSIS
Overall Direction & Goals: Top Down
Middle Level: Inputs from Internal and External
Sources. Generate Ideas early.
Generate Specific Plans with Deadlines.
S ALES OPPORTUNITY GRID
Rates the promise of New and Established
Goods, Services, Store outlets
RETAIL PRICE, FLOOR SPACE, DISPLAY
COSTS, OPERATING COSTS, MARKUP;
SALES ESTIMATES, GROSS AND NET
PROFITS IN Rs. AT FIRST, SIX AND 12
MONTHS.
RETAIL
MANAGEMENT ..11
DEFINING PRODUCTIVITY
Efficiency with which a Retail Strategy is
carried out. Reach Sales and Profit Goals
keeping Operating Costs under control.
PERFORMANCE MEASURES
Criteria used to assess effectiveness and
setting standards for each performance.
Measures used: Total Sales Turnover,
Average Sales per store, Sales by Goods/
Service Category, Gross Margin/ ROInvst.,
Op.Income, Inventory T/O, Financial ratios,
Profitability
RETAIL
MANAGEMENT ..11
RETAIL INSTITUTION BY OWNERSHIP
Retail Institution refers to basic format or
structure of a Business.