Delivering Value Through Retail

Formats

Module 2
This module will cover the following topics:
Classification of retail by
Ownership
Merchandise offered
Non-store Retailing
Service Retailing
Emerging retail formats

Classifying on the Basis of Ownership

Independent Retailers
A Chain Retailer
Franchising
Leased Department
Cooperatives

Form of Ownership
A retail business like any other type of business,
can be owned by
A sole proprietor, partners or a corporation.
A majority of retail business in India are sole
proprietorships and partnerships.

Independent Retailer
Generally operates one outlet and offers
personalized service, a convenient location and close
customer contact.
Roughly 90% of all the retail businesses in India, are
managed and run by independents, including barber
shops, drycleaners, furniture stores, bookshops and
neighborhood stores.
Entry into retailing is easy and it requires low
investment and little technical knowledge.
Most independent retailers fail because of the poor
management skills and inadequate resources.

Retail Chain
When two or more outlets are under common
ownership is called a retail chain.
A chain retailer operates multiple outlets (store units)
under a common ownership and name.
Chains achieve efficiency due to the centralization of
purchasing and warehousing and computerization.
Serve a large dispersed target market
Take advantage of "economies of scale" in buying and
selling goods.
Have bargaining powers with suppliers
Take advantage of tools like computers and information
technology.

Retail Franchising
It is a contractual arrangement between a "franchiser"
and a "franchisee"
It is one of the most common modes of expansion in retailing

More than one-third of all retail sales are made by

franchisees.
They may be a manufacturer, wholesaler, or a service
sponsor
They allow to conduct a business under an established
name and according to a specific set of rules.
In exchange for fees, royalties and a share of the
profits, the franchiser offers assistance and very often
supplies as well.

Leased Departments
These are also termed as shop in shop
When a section of a department in a retail store is
leased/ rented to an outside party it is termed as
leased department
It helps to extend product offering to the customers
Many companies operate their perfumes and
cosmetics counters, salon, photo studio, food
court in this manners
These outlets are offered in malls, department
stores, multiplexes, airports, railways stations
Leased departments help the stores in generating
greater traffic and providing one-stop shopping.

Consumer Cooperatives
Consumers cooperatives aim to provide essential
commodities at reasonable price
These stores are owned , managed and controlled by it
members
A retail cooperative is a group of independent retailers.
They combine their financial resources and their expertise
in order to effectively control their wholesaling needs.
They share purchases, storage, shopping facilities,
advertising, planning and other functions.
The individual retailers retain their independence, but
agree on broad common policies.
Protect the interest of consumers
Stabilize prices

Classification on the basis of Merchandise

offered
Food based Stores

Convenience store
Supermarket
Box (Limited line) store
Ware house store

Non food based Stores

Specialty store
Departmental store
Full line discount store
Variety store
Off price chain
Factory outlet
Membership club
Flea market

Food Based Stores

Convenience Stores
They are usually well located, food-oriented
retailer
Open long hours and carries a moderate
number of items
This retailer is small.
It has average to above-average prices, and
average atmosphere and customer services.
Provide quick purchase to customers
The store size range from 3000 to 8000 sq. ft.
7-Eleven, Circle K, and Caseys General
Store, Speedway

Conventional Supermarket
A conventional supermarket is a departmentalized
food store with a wide range of food and everyday
commodities
These stores are efficient, offer a degree of one-stop
shopping, stimulate impulse purchases.
Offers limited range of non-food items such as health
and beauty and general merchandise
They are chosen for varieties, self-service (increase
volume), promotions and low prices.
Carry 5000 to 10000 SKUs
Area 30000 square feet to 50000 square feet
The leading chains are Kroger, Safeway, and Ahold, USA

A box (limited-line) Store

It is a food-based discounter that focuses on a
small selection of items, moderate hours of
operation, few services and limited manufacturer
brands.
They around 2,000 items, few refrigerated
perishables, and limited assortments.
Items are displayed in cut cases,
Customers carry items in their own bags
Private-label brands are stressed.
Prices are 20 to 30 percent below supermarkets.

A Warehouse Store
Warehouse stores are membership retail outlets
It is a food-based discounter offering a moderate
number of food items and general merchandise in a
no-frills setting.
These stores appeal to one-stop food shoppers, use
cut-case displays, offer low price, little service.
Attracts price conscious consumers , sale more private
labels
They are large in size , located in low rent areas
It also sells products to retailers
The largest store is known as a super warehouse. Cub
Foods is the leading chain.

Non-Food Based Stores

A Specialty Store
These are upscale stores for affluent customers
A specialty store deal in a specific product or
high level services
Carry a narrow but deep assortment in their chosen
category
Concentrates on , medicines, books, toys, , home
improvement products, apparel, jewellery, sporting
goods, furniture etc.
Operate in under 8000 square feet area
Examples:
Home Depot (home improvement), Best Buy
(consumer electronics), T.J. Maxx (apparel), Toys R
Us (toys), GameStop (video games), and Barnes &
Noble (books). Ikea furniture

Category killer
A category killer is a specialist discount store
It offers the lowest price and the largest
assortments
Category killers are known to kill brands by
making price the most important buying
consideration.
These retailers concentrate on reducing cost by
increasing operational efficiency
Expand into less competitive international market

Department Store
A department store is a large retail unit with an
extensive assortment of goods and services that is
organized into separate departments for purposes of
buying, promotion, customer service, and control.
Apparel, furniture, and appliances and home
furnishing, paint, hardware, toiletries, cosmetics, etc.
Merchandise quality ranges from average to quite
good, pricing is moderate to above average, and
customer service ranges from medium to high levels.
Average area 20000 to 40000 square feet
50K to 100K sku, Self service facility

A full-line Discount Store

A full-line discount store has a broad
merchandise assortment
Low prices
Focus on items as auto accessories, gardening
equipment, and house wares
Centralized checkout service and good customer
service
Self-service emphasis
Less fashion-sensitive merchandise and
inexpensive facilities and low operating costs.

Variety Store
A variety store handles an assortment of inexpensive
and popular goods and services,
Such as stationary, gift items, women accessories, health
and beauty products, toys, artificial jewelery, greeting
cards
They do not carry full product lines
Transaction are often on cash basis
There are open displays, few salespeople
Dollar discount stores offer the same merchandise as
traditional variety stores, but at lower prices.
Example: Dollar General and Family Dollar are the two
leading chains.

Off-price Chain
Merchandise sold at less than retail price
Offers a range of out of season designs, seconds
and order rejected
An off-price chain features apparel and accessories,
footwear (primarily womens and family) fabrics,
cosmetics, and house wares and sells them at
everyday low prices in an efficient, limited-service
environment.
The four leading off-price chains are T.J. Maxx,
Marshalls, Ross Stores, and Burlington Coat Factory.
Factory outlet and single price outlets are the
examples

A Factory Outlet
A factory outlet is a manufacturer-owned store
selling closeouts, discontinued merchandise,
canceled orders, and, sometimes, in-season, firstquality merchandise.
Manufacturers interest in factory outlets has
increased for four basic reasons:
They can control where their discounted
merchandise is sold.
They are able to achieve supplemental profits.
They can decide upon store visibility, set
promotion policies etc.
They may need revenue from outlet stores to
sustain their growth.

A Membership Club
A membership (warehouse) club appeals to priceconscious consumers, who must be members to shop
there.
Offer variety of goods in bulk at whole sale price
Provide limited number of products , 5000 or less
Use of large store facilities (up to 100,000 or more square
feet)
Select isolated locations, little advertising, wide aisles,
concrete floors, limited credit options, and very low prices.
General merchandise and apparel, food, pharmacy, photo
developing, a car-buying service, a gasoline service
station etc.

Flea Market
Retail vendors sell a range of products at discount
prices
Sites normally associated with retailing (such as
racetracks, stadiums, and sites abandoned by
other retailers.
Individual retailers rent space on a daily, weekly,
or seasonal basis.
The consumer interest in bargaining, the broader
product mix, the availability of some brand-name
merchandise, and low prices.
The Rose Bowl Flea Market has 2,500 vendors and
attracts 20,000 shoppers daily.

Hypermarket
It is combination of supermarket and department
store
A retail store with a sales area of over 5000 sqm
Offer a variety of food and non foods products
Provide one stop shopping experience
Provide cheapest price
It has cafeteria, petrol pumps, banks, pharmacy
Carrefour, Wal-Mart, Meijer, Target, Tesco, Asda

Non Store Retailing

Customers do not go to a store to buy
This type of retailing is growing very fast
Consumers buy merchandise not available in local
stores
Ideal for working people
Convenience of buying 24/7 and delivery at a
location and time of their choice
Non- store retailing growing at the higher rate
than sales in the retail store

Non Store retailing

In Home Retailing: door-door selling.

Opportunity to demonstrate products in personal manner
Get prospect's attention and there are fewer distractions
Examples: Eureka Forbes vacuum cleaners and water
filters.
Telesales/Telephone Retailing:
Contact prospect over the phone, for the purpose of
making a sale or purchase.
Example: mobile phone service providers, private
insurance companies, and credit companies etc.
Network Marketing

Non Store Retailing

Catalog Retailing:
The retailers offers the merchandise in a
catalogue,
It includes ordering instructions and customer
orders by mail.
The basic attraction for shoppers is convenience.
The advantages to the retailers include lower
operating costs, lower rents, smaller sales staff
and absence of shop lifting.
Argos offers over 4000 quality products
Burlington's catalogue shopping was quite
popular

Non Store retailing

Direct Response Retailing:
Use magazines, newspapers, radio and television
Offering an address or telephone number so that
consumers can write or call to place an order.
It is also called as "Direct response advertising.
The availability of credit cards and toll free
numbers stimulate direct response by telephone.
The goal is to induce the customer to make an
immediate purchase.

Non Store Retailing

Automatic Vending:
It is the ultimate non personal, non store retailing
Products are sold directly to customers/buyers from
machines
These machines dispense products which enable customers
to buy after closing hours.
Electronic Retailing/E-Tailing:
Retailers offer products and services for sale, over the
internet.
No queues, geographic barriers, low price, unlimited
selection
Touch and feel factors are hindrance for growth

CLASSIFICATION BY LEVEL OF
SERVICE

Self Service

Factory
Factory outlets
outlets
Warehouse
Warehouse clubs
clubs

Full Service
Discount
Discount stores
stores
Exclusive
Exclusive stores
stores

Service Retailing

Retail Banking
Car rentals
Utility services like gas, electricity
Maintenance services for water filters, computer
systems

Challenges to Retail Development in

India

Lacks International Standards

Inefficient supply chain management
Real estate issues, lack of retail space, high price
Shortage of skilled human resource
Vendor frauds, thefts, shoplifting
Lack of industry status
Lack of adequate infrastructure
Multiple and complex taxation system
Currency fluctuation
Red tape, various governments approval
Cultural diversity and different purchasing pattern
Political risk