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Retail Management
Defn of RetailingRetailing involves all activities in selling goods or services to the final customers
for personal, non business use.-Philip Kotler
Retaillier--French word“To cut a piece or To break bulk”
Retail means,‘First point of customer contact’
Functions of a retailer
• Utility as a form• Time utility• Place utility• Ownership utility
Evolution of Retail in India
Evolution of retail formats in India
Traditional formats
•Itinerant sales man•Haats•Melas•Mandis
• Established formats
•Kirana shops•Convenience/department stores•Fair price shops•Cooperative stores•Pan/bedi shops
• Emerging formats
•Exclusive Retail outlets•Hypermarkets•Malls/Specialty Malls•Multiplexes•Rural oriented formats•Fast food outlets
Major Retailers
• India’s top retailers are largely lifestyle, clothing and apparel stores
• This is followed by grocery stores • Retail giants such as Pantaloon,
Shoppers’ Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores
Recent Trends
• India is rated the fifth most attractive emerging retail market: a potential goldmine.
• Estimated to be US$ 332.8 billion(Rs.1,330,000 crore), of which organized retailing (i.e. modern trade) makes up 5.8 percent
• Currently(April 21st,’09) 5%• Ranked second in a Global Retail
Development Index of 30 developing countries drawn up by AT Kearney.
• India has the highest number of outlets in the world - widely spread retail network but with the lowest retail space (@ 2 sq. ft. per person)
• Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is nearing to the size of Indian retail industry.
• Wal-Mart - over 4,800 stores where as
none of India's large format store (Shoppers' Stop, Westside, Lifestyle) can compare.
• The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in Wal-Mart are about 1.3 million
• Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing (against 7 percent employed in India today).
• M&M –Mom & Me stores- motherhood and childhood (maternity wear)
• M&M tie-ups – Startrite of UK– Brainy baby of US– Mary Meyer of US– CAM of Italy– Avado of Australia etc.
• Spar(Dubai-based Landmark group and spencer’s retail)– Two in Bangalore one in Hyderabad
• Newu –Dabur’s retail- Beauty stores• Dabur’s Tie ups
– Moda of Turkey– QVS of Australia
Expansion plans:
• Spencer’s Retail:2000-3000 by 2011– 750 in two years
• Magamart: 30 large stores by 2010– 20-22 in the next three years
Zedds footware retail1500sqft10 outlets in 2010(Franchises)
Railway Budget2009
•Modernize 50 railway station•World class•Vadodara, pune, Bhuvaneshwar
CavinKare into resturant business
• Chennai Based• CK’s Foodstaurant• Indo-American
CINNABON INDIA
• Wadhawan hospitality with Us based Focus Brands• Cinnabon Bakeries• 150 outlets
Mothercare
•In collaboration with TATA•21 retail outlets
What’s wrong with
• Subhiksha• Globus• Pyramals
Can these retail brands still live?
• Hot spot destination for retail in Tamil Nadu as Coimbatore.– Fun Republic– Brookefield Plaza
Key Drivers of Retailing in India• Consumer pull –population• Young population• Rising Income• Generators of wealth• Explosion of media• Change in consumer behavior• The rural market wake up• Building chains around brand• Technological changes
• 890 million people below 45 years in India
• 300 million middle class-”Real” consumers
• Increasing population of women
Applicable areas
PROVISION STORES
SHOPPING MALLS
RETAIL STORES
Store Formats
• By location• By ownership• By Merchandise categories• By size• By price• By concessions
Store formats By Location
• Chain store format-multi locational
• High-street format- busy shopping place
• Destination format- particular area
• Convenience store format- wide array of pdts
Store Format by Ownership
• Franchise format• Independent store format• Corporate Chains
Independent retailers-one store ownership
Chain stores-many-one ownership
Franchises-many stores –many ownership
Basic forms of Franchising
Product and Trade Name Franchising
BusinessFormat
Franchising
Dealer agrees to sell certain products provided by a manufacturer, but can use any sales tactics
he chooses. Ex-Next,DAMRO
Dealer must sell the franchiser’s product in the exact way the franchiser prescribes.
Ex – McDonalds, Wendy's
Store format by merchandise categories
• Family store - eg: Chennai silks• Specialty store- eg: Park avenue by raymonds-
Men’s speciality store• Departmental store - eg: Shopper’s Stop(>
10000sqft)• Supermarkets - eg: Spencers, More
etc.(>3000sqft)• Emporium
Store format by size
• Super store(>5000sqft)• Shopping Mall(>20,000sqft)• Shopping centre(>1000sqft)• Hypermarket(>20,000sqft)
Store format by Price
• Discount format• Every day low price format• Category killer format• Factory outlet format• Warehouse format• Single price denomination
format(1dollar shop)
Store formats by concessions
• Stopover store format• Kiosk
Non store –Based retailers
• Electronic Retailing• Catalog retailing• Catalog and direct –mail Retailing• Direct selling• Television home shopping• Vending machine retailing
Theories of Retailing
• Environmental Theory• Cyclical Theory• Conflict Theory
Environmental theory
• Darwin’s theory
“Survival of the fittest”
– Customers– Competitors– Changing technology
Cyclical Theories
• The Wheel of retailing• Accordion Effect
– Open accordions– Closed accordions
Cyclical theory
• Wheel of retailing(Mc Nair)
Wheel of Retailing
High End Strategy•High pricesExcellent facilities and servicesUpscale consumers
Low End Strategy• Low prices Limited facilities and services Price- sensitive consumers Limited product offerings
Medium StrategyModerate pricesImproved facilitiesBroad base of value and service conscious consumers
Retail Strategy Alternatives
Wheel of Retailing• Innovative retailer (Entry phase)• Traditional retailer (Trading up phase)• Mature retailer (Vulnerability phase)“Accordian Effect”- Closed and Open
accordian effects‘Wheel of retailing + Accordian theory = Cyclical Theories’
Conflict Theory
Conflicts between• Thesis• Antithesis• Synthesis
The Retail Life Cycle
• Innovation• Accelerated Development• Maturity• Decline
Retail Shoppers
RETAILSHOPPERSDemographics
Retailer Actions
Needs and DesiresLife-Styles
Shopping Attitudes and Behavior
Environmental Factors
Consumer Demographics
• Market size• Gender• Age• Household size• Marital and family status• Income
• Birth rates• Mobility• Where people live• Employment status• Occupation• Education• Ethnic / Racial background
Consumer Lifestyles-Social factors
• Culture• Social class• Reference groups• Family life cycle• Time Utilization
Consumer Lifestyle-Psychological factors
• Personality• Class conscious• Attitudes• Perceived risk
Impact of perceived risksTypes of perceived risk•Functional•Physical•Financial•Social•Psychological•Time
Factors affecting perceived risk•Retailer’s newness•Consumer’s budget•Consumer experience•Alternatives•Visibility•Information•price
Consumer
Outcome•Purchase new product•Stick with old brand•Talk to friends•Seek more information•Non-purchase
Retailing influence of consumer demographics:
• Gender Role• Consumer sophistication and confidence• Poverty of time• Component life-styles
Consumer profiles:
• Generation Y: 6-24• Generation X: 25-36• Baby Boomers: 37-55• Seniors: 56 and older
Generation Y Strategies
• Getting young people involved in the store• Being conscious of the rights• Being honest• Trying advertising with sports and music• Getting them involved in community service• Developing partners with schools• Creating “touchy-feely” departments
Generation X strategies
• Not rushing to buy• Presenting a lot of options and product
information• Using technology whenever and however
possible
Baby Boomers Strategy
• Selling Nostalgia• Selling Natural• Selling youth and fitness
Consumer Needs and Desires
• In-home shopping• Online shopping• Out shopping
Shopping Attitudes and Behavior
• Shopping enjoyment• Attitudes towards shopping time• Shift feelings about retailing• Why people buy or don’t buy in a shopping
trip• Attitudes by market segment• Attitudes towards private brands
Where people shop
“Cross shopping”
Types of consumer decision making
• Extended decision making• Limited decision making• Routine decision making• Impulse purchases
– Completely unplanned– Partially unplanned– Unplanned substitution
Retailers action
• Mass marketing strategies• Concentrated marketing strategies• Differentiated marketing strategies
Environmental Factors
• Inflation• Economy• Price wars• Entry of new formats• Changing societal values and norms• More working people at home• Govt. regulations
Consumer Decision Process
Stimulus Problem Awareness
PurchaseEvaluation of Alternatives
Post-purchase Behavior
Information Search
Types of Needs
1. Psychological needs: • Social experience• Learning new trends• Status and power• Self reward2. Conflicting Needs
Sources of information :• External sources• Internal sources
Retail Planning ProcessEstablish Mission
Analyze Situation
Identify opportunities
Set Objectives
Develop Implementation
Plans
Obtain and Allocate
Resources
Monitor Progress &
Control
Wal-Mart: “To give ordinary folk the chance to buy the same thing as rich people”
McDonald’s: “Quality, Service, convenience, and value”
Café’ Coffee Day: “To be the best café’ chain in the country by offering world class coffee experience at affordable prices”
Situation Analysis
• SWOT analysis• PEST analysis: Political, Economic, Social
and Technological factors• BCG Matrix• Porter’s Competitive advantage framework
Elements in situation Analysis
• Market factors: size, growth, business cycles, seasonality
• Competitive factors: Barriers to entry, Scale economies, Bargaining power of vendors, Competitive rivalry
• Environmental Factors
Growth Strategies
Retail Format Development
Market Expansion
Diversification
Market Penetration
Existing
Target market Segment
New
Customer Service
A set of activities and programs undertaken by retailers to make the shopping experience more rewarding for their customers
Customer Service Strategies
• Customization Approach• Standardization Approach
Customer Evaluation of SQ
• Role of Expectations• Perceived Service
Cues Affecting Customer Perception of SQ
• Tangibles– Appearance of store or website– Display of Merchandise– Appearance of salesperson
• Access– Short waiting lines– Convenient operating hours– Convenient store locations– Providing information on order status
• Understanding and knowing customers– Providing individual attention– Personalization of website– Recognition of regular customers– Notes sent to customers on new merchandise
• Competence– Knowledge and skill of employees– Depth of information provided
• Security– Feeling safe in parking lot– Describing security on internet transactions
• Responsiveness– Returning customer call– Giving prompt service
• Trust worthiness– Reputation and honoring commitments– Guaranties and warranties– Return policies
• Reliability– Accuracy in billing– Delivering merchandise when promised
The Gaps Model
Service Gap
Customer Expectations for SQ
Management Perceptions of customer Expectation
Retailer communic
ations about SQ
Customer
perceptions of SQ
Actual service
delivered
Standards of service
to be delivered
Delivery GapStandards Gap
Knowledge Gap
Communication Gap
Knowing what the Customer Wants: Knowledge Gap
• Researching Customer Expectations and Perceptions– Comprehensive studies– Gauging satisfaction with individual
transactions– Customer panels and interviews– Interacting with customers– Customer complaints– Feedback from store employees
Setting Service Standards: The Standards Gap
• Commitment to service quality• Developing solutions to service problems• Defining the role of the service providers• Setting service goals• Measuring service performance
Meeting and exceeding service standards: The Delivery Gap
• Giving information and training• Providing emotional support• Improving internal communications and
reducing conflicts• Empowering store employees• Providing Incentives
Communicating the service promise: The Communications Gap
• Realistic Commitments• Managing customer expectations
Service Recovery
• Listening to the customer• Providing a fair solution
– Distributive Fairness– Procedural Fairness
• Resolving Problems Quickly– Giving clear instructions– Speaking the customer’s language
Loyalty Strategies
• Pull loyalty strategies• Pure loyalty strategies• Push loyalty strategies• Purchase loyalty strategies• Purge loyalty strategies