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8/7/2019 Final Ashish RDM
http://slidepdf.com/reader/full/final-ashish-rdm 2/39
Retail consists of the sale of goods or merchandiseto small or individual lots for direct consumption bythe purchaser.
Retailing may include subordinated services, such asdelivery.
Retail establishments are often called shops orstores.
Retailers are at the end of the supply chain.
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Increasing
Industry
Concentration
Growing
Diversity of
Formats
Globalization
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The store-based retailers range from street vendors sellingvegetables to large corporations such as Reliance, TATA,Mahindra, Walmart, Tesco, Sears etc that have become anintegral part of global culture
The different types of retailers offer unique benefits Consumers patronize different retail types when they have
different needs like:
Type of Merchandise
Type of Merchandise
Variet y andAssortment
Variet y andAssortment
Services Offered
Services Offered
Prices and the Costof offering breadth
and de pth of Merchandise and
Services
Prices and the Costof offering breadth
and de pth of Merchandise and
Services
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Merchandise
Variety (breadth)
Assortment/SKUs (depth)
Services (check-out lines)
Store size, design and visual merchandising
Location
Pricing Targeted segments
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Mom and Pop Stores
Kirana Stores
Convenience Stores
Supermarkets
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Departmental Stores
Specialty Stores
Category Specialists
Drug Stores
Full-lineDiscount Stores
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Electronic Retailers
Catalog andD
irect Mail Retailers
Direct Selling
Television Home Shopping
Vending Machine Retailing
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Fast food outlets
Health clubs and clinics
Movie halls
Auto service
Beauty care
Hotels and resorts
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Independent, Single Store Establishment
Cooperatives
Corporate Retail Chains
Franchising
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These are small owned family business which sellsa small collection of goods to the customers.
They are individually run and cater to a smallsections of society.
These stores are known for their high standards ofservice.
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Food oriented retailers that appeal to busy consumers by reducing the time spent shopping.
Well-organised, logical store designs that speed out product selection & check-out are must.
Charge higher prices.
Shoppers must weigh costs & benefits of patronizing a convenience store.
Carry very narrow merchandise lines.
Snack foods, dairy products, gasoline accounted for 70% of sales volume.
Makes more convenient to shop.
Fast, casual restaurants.
Opening smaller stores closer to consumers (like airports).
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Large,self-service, low-price & low margin food retailers
Carry an extensive variety of merchandise & rely heavily on high inventoryturnover to turn a profit
Most items sold are low margin
Use bar code scanners to identify & record purchases
Major trend is the movement towards a combination store format(cosmetics &apparels)
Based on the concept of scrambled merchandising, in which goods & servicesthat are unrelated to one another are sold together
Larger than conventional supermarkets with 20-30000 sq. feet & some to100,000sq.feet
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combination store extends the concept to include complete business units, unrelatedto one another, operating within a single store( banks, dry-cleaners, parlors)
Goal : To reduce perceived scale of store from one giant entity to series ofsmall,independent shops
Superstores :
-operate in 120,000 or more sq. feet, stocks & display both broad &deep assortment
lower prices & vast array of hard & soft goods make for one stopshopping
Located in well-defined,easily accessible areas enhance shoppingconvenience
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30,000 SKUConventionalsupermarkets
2000 SKU
Offer one or two brands and sizes
Designed to maximize efficiencyand reduce costs
Offer merchandise at 40-60% lower prices than conventionalsupermarkets
Save-A-Lot, ALDI (German·s Wal-Mart)
Limitedassortment
supermarkets(extreme
value foodretailers)
2-17
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The fastest growing retail category
Large stores (150,000 ² 220,000 squarefeet) that combine a supermarket with
a full-line discount store
One-stop shopping experience
2-18
Supercenters
Offer a limited and irregular assortment of food and generalmerchandise with little service at
low prices
Use low-locations, inexpensivestore design, little customer
service
Low inventory holding costs by
carrying a limited assortment offast selling items
Warehouse Clubs
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S pecialt y stores
Referred as limited-line/single-line retailers.
Product mix is quite narrow with unusually deep assortments within product category.
Include fashion apparel, jewelry, fabrics, sporting goods ,computers.
Operate multiple locations within a single geographic market where market segments arehighly defined.
Leader in custom tailoring its operations to serve target market.
More customer driven than supplier driven.
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Strateg y : To analyze the market for latent demand in inadequately satisfied marketsegmentsStrateg y : To analyze the market for latent demand in inadequately satisfied marketsegments
Outcome : Greater reliance on private-label merchandiseOutcome : Greater reliance on private-label merchandise
It enables specialty stores to penetrate & nurture market segments that are not servedwell by conventional departmental storesIt enables specialty stores to penetrate & nurture market segments that are not servedwell by conventional departmental stores
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Discount stores
general merchandisers that offer brand name products at lower prices.
Accept lower prices in exchange for high sales volume.
Meet customer demands for hard goods (appliances, equipment, hardware),soft goods (fashion items, food products), services (automotive repairs,restaurants, personal care).
New store ² specialty discounter referred as category killers focus on singleproduct line as toys, electronics, books/ home improvements.
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Variet y stores
carry gifts, toileteries, toys, linens & fashion accessories in limitedassortment & at low prices.
Offer limited customer service, employ few sales people.
Because of its lowest growth it have been moving towards specialtystores format.
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Off- price retailers
Appeal to price conscious consumers.
Strateg y ² to secure mfrs returns & off merchandise below whole sale cost & offer themto consumers at deep discount.
Carry limited national brands & designer merchandise at 20 to 60 percent belowtraditional departmental store prices.
But, price cutting by department stores has been squeezing the profitability of off-priceretailing.
Go for re-organising the operations to meet out the competitive pressure.
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Catalog showrooms
These are discount operations that offer merchandise through either a showroom orcatalog.
As they compete on price operating cost must be held at minimum.
So they occupy low cost facilities &display a limited assortment of samples.
Customers write up their own orders, present then to clerks at centralized check outs &pick up the merchandise at in-store delivery stations.
Competitive strategy ² planning of merchandise mix, systematic monitoring & control
of inventory& long range pricing decisions.
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Factory outlets
manufacturer owned outlets to sell off goods that cannot
be sold through traditional retailers.
Offer medium-high quality goods at deep discounts.
Based on the concept of value positioning ² givingshoppers better value for their money.
Occupy large,low-overhead locations(suburban,rural)known as factory outlet malls.
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Warehouse stores
wholesale retail, cash &carry setups with limited sales personnel & display areas Referredas wholesale clubs sell groceries, office supplies, appliances at wholesale prices
Membership cards are required to gain entry.
Success is based on ability to attract small business customers & increase inventoryturnover.
60 ² 70 percent of sales in these stores are wholesale purchases by hotels, restaurants,small retailers & service firms.
Goal: zero ownership of inventory or sale of merchandise to customers before it is paid for.
Allows warehouse store to reduce spoilage, low operating expenses & make a profit atwholesale prices.
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Success of e-retailing depend on :
Quality of information to consumers
Types of merchandise & services itdelivers
Customer acceptance
Competitive response from storeretailers
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Direct res ponse retailers
Advertise products on radio/TV & take mail or telephone orders(toll free)
Take credit cards & operate 24 hrs
Television shopping programs ² home shopping n/w
Video logs ² shop at home video catalogs designed for use on VCRs
Infomercials ² paid TV ads,30 ² 60 min long,designed solely to promote &demonstrate merchandise or services
- product demo, testimonials from past users,& benefits are woven in the
entertainment.then consumers are asked to purchase by phone or mail
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Catalog retailers :
Offer goods through mail order catalogs
Save consumer time
Electronic retailers :
Allows consumer to evaluate & purchase goods & services in comfort of their homes.
Provide complete & up to date information on price, quality, assortment & styles through directinteraction with the retailers.
Computer ² h/w & s/w is required to link retailer & customer through phone lines/TV cables.
Home banking, hotels, airlines, book retailers, ready to wear fashion items.
Use is for general merchandise sales.
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Automatic vendors
Automatic vending m/c enhance customer service inside traditionalretail stores & provide convenient service where stores do not exist.
ATMs & Airline ticket m/c reduce long lines at service counters.
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Four unique characteristics :
Intangibility : Lack physical properties that consumers normally use inevaluation ² color, texture, design, materials, workmanship
- Cannot be possessed or consumed, but it can only be experienced
- Retailers can build tangibility into their services in 3 ways
Price can be used as a distinguishing feature(competitors)
Celebrity endorsement can lend tangibility to services.Idea is to identifyservice with celebrity who provide tangibility
A well chosen Logo can provide tangibility for a service offering
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Perishability - Services cannot be stored for later use.
Inseparability ² normally produced at the same time they are
consumed. customers active participation in the process is required ² weight loss clinics.
Heterogeneity ² degree of variation in the quality of service, as humanperformance varies day by day or from customer ² customer.
- it imposes special challenge on service retailers to provide an efficient,standard service at an acceptable level of quality.
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Restaurants
Health care services
Travel & lodging
Freight
Home improvements
Business services
Repair services
Education
Information services
Entertainment
Broadcasting
Financial services
Legal services
Insurance
Tangible
Actions
Intangible
Actions
People Things
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Four important differences in the nature of the offeringprovided by services and merchandise retailers are: