Retailing New

8/9/2019 Retailing New

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INTRODUCTION

TOTHE WORLD

OFRETAILING

By- SACHIN VERMA

MBA(FC)


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Definition of RetailingDefinition of Retailing

Retailing includes . . . .

Retailing includes . . . .

all activities involved in selling, renting, and providing

goods and services to ultimate customers for personal,

family or household use.

In the channel of distribution, retailing is where the

customer meets the product. It is through retailing that

exchange occurs.

all activities involved in selling, renting, and providinggoods and services to ultimate customers for personal,

family or household use.

In the channel of distribution, retailing is where the

customer meets the product. It is through retailing that

exchange occurs.


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RETAILERS

-Sears, Holiday Inn, McDonalds,

Amazon.com, Jiffy Lube, AMCTheaters,

American Eagle Outfitter, Big Bazaar


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Retailing Creates ValueRetailing Creates Value

Retailings economic value is representedby:

1.People employed in retailing, and

2.The total amount of money exchanged in

retail sales.

Utilities provided by retailers create valuefor customers. Time, place, possession, and

form utilities are offered by most retailers.


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Sales ($billions)

3.83.8

24.524.5

16.716.7

12.912.99.29.2

6.26.2

5.95.9

5.75.7

4.94.9

.9.9

9.69.6

Retail Sales By Type of BusinessRetail Sales By Type of Business

0 325 650


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Retailers are a Business Like Manufacturers


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Classifying RetailClassifying Retail

OutletsOutletsRetail outlets can be classified in severalways:-- Form of ownership. Who owns the

outlet.

-- Level of service. The degree of serviceprovided to the customer.

-- Merchandise line. How many different

types of products a store carries and in

what assortment.


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Form of ownership Independent retailer

Corporate chain

Contractual system

Retailer-sponsored cooperative

Wholesaler-sponsored voluntary chainFranchise

Level of service Self-service

Limited service

Full-service

Merchandise line Depth Single line

Limited line

Breadth

General merchandise

Scrambled merchandise

Classifying retail outletsClassifying retail outlets

METHOD OF CLASSIFICATION DESCRIPTION OF RETAIL OUTLET


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The possibilities and costs of franchisingThe possibilities and costs of franchising

FRANCHISE TYPE OFBUSINESS

TOTAL

START-UPCOSTS

NUMBER OFFRANCHISES

McDonalds Fast-food restaurant $385,000-$520,000 19,500

Merry Maids Cleaning Service $27,500-$40,500

700

Jiffy Lube Automobile fluid service $208,000-$229,000 667

Mail Boxes Etc. Postal Services $55,000-$75,000 2,953

Duds N Suds Laundry and snack bar $60,000 80

Radio Shack Electronic accessories $67,500 1,934

Barbizon School of Modeling $69,500-$124,000 65


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Depth and Breadth of ProductDepth and Breadth of Product

LineLine Depth of product line means that the store carries a large

assortment of each item, such as shoe stores that offer runningshoes, dress shoes, and childrens shoes.

Breadth of product line refers to the variety of different items astore carries.

-- scrambled merchandising refers to retailers that offerseveral unrelated product lines in a single store.

-- hypermarkets are very large retail outlets that have the

goal of offering customers everything at one outlet.

-- Supercenters are retailers that combine a typical

merchandise store with a grocery store.


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Breadth vs. Depth of MerchandiseBreadth vs. Depth of MerchandiseLinesLines

Depth:

Number of

items within

each productline

Breadth: Number of different product lines

Shoes Appliances CDs Mens Clothin


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Differences in StoreDifferences in Store

ConceptsConceptsDISCOUNT STORE SUPERCENTER HYPERMARKET

70,000

200-300

$10-$20

18%-19%

60,000-80,000

150,000

300-350

$20-$50

15%-16%

100,000

230,000

400-600

$75-$100

7%-8%

60,000-70,000


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Forms of Non-store RetailingForms of Non-store Retailing

Automatic

vending

Direct mail

andcatalogs

Television

home

shopping

On-line

retailing

Tele-

marketing

Direct

selling

High

Low

Activ

ecust

Active retailer involvementLow High


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Automatic VendingAutomatic Vending

Non-store retailing that makes itpossible to serve customers wherestores cannot.

Maintenance and operating costsare high.

Small convenience products are

available in vending machines. Of the 3 million vending machines

now in use, 1.8 million are soft

drink machines.


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Direct Mail & CatalogsDirect Mail & Catalogs

Marketing efficiency is improvedthrough segmentation andtargeting.

Customer value is enhance byproviding a fast and convenientmeans of making a purchase.

In 1998 Americans increased theircatalog spending to $87 billion.

A typical household receives 50

catalogs each year.


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Television Home ShoppingTelevision Home Shopping

TV home shopping is possible when consumers watcha shopping channel on which products are displayed;orders are placed over the telephone.

Two popular home shopping programs reach 60million homes and have combined sales of $2 billion.

TV home shopping programs traditionally attract 40-50 year old females.

Limitations of TV shopping have been the lack ofbuyer-seller interaction and the inability ofconsumers to control the items they see.


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Online RetailingOnline Retailing

Online retailing allows consumers tosearch for, evaluate, and orderproducts through the Internet.

The advantages of online retailingare:

ability to comparison shop

privacyvariety Forecasts suggest that current annual sales of $10

billion could reach $100 billion in just a few years.


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TelemarketingTelemarketing

Telemarketing involves using the telephoneto interact with and sell directly toconsumers.

According to the American TelemarketingAssociation, telemarketing sales exceed$500 billion.

As the use of telemarketing grows,

consumer privacy has become a topic ofdiscussion among consumers, Congress, theFederal Trade Commission, and businesses.


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Direct SellingDirect Selling Direct selling involves direct sales of goods

and services to consumers through personalinteractions and demonstrations in theirhome or office.

Industry sales are more than $16 billion, butare declining in the U.S. as retail chains beginto carry similar products at discount prices,and the increasing number of dual-careerhouseholds reduces the number of potential

buyers at home. Many direct selling retailers are expanding

into international markets to offset thedecline in domestic sales.


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THE 7 Ps

Product

Prices

Promotion

Place


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THE ADDITIONAL Ps

Physical Evidence

Process People


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IMPORTANCE

The 7 Ps allows a retailer to analyze andstrategize his business keeping in mindthe most critical part of marketing inoperating his business.

Many retailers do not do this and this isthe difference from those who becomesuccessful and those who do not.

As products, markets, customers and

needs change rapidly, a retailer mustcontinually revisit these seven Ps tomake sure he is on track and achievingthe maximum results possible in today'smarketplace.


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PRODUCT

To find out what customers want & need &then develop a product to meet the need ofthe potential customers.

To keep analysing if the current mix ofproducts and services are appropriate andsuitable for the market and the customers oftoday .


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PRICE

A product is only worth what acustomer is prepared to pay for it.

The price needs to be competitive,but not necessarily the cheapest.


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PLACE

This can be Direct selling, mail order, telemarketing or in retail stores.

This is where the customers can buy the product, and is the means toget the product to the customer.


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PROMOTION

This is the way in which you communicateto your potential customers about yourproduct.

This can be done in a number of ways,which includes your brand image,advertising, special offers.


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PHYSICAL EVIDENCE

This is the intangible part of the business mostlyconcerned with services as they cannot be seen.

Intangible is often used to describe services as theycannot be touched like a product can be.

This important because, fundamentally you are sellinga product, but in order for you to be able to price yourgoods at the right the level, you will also be selling theservice the buyer will receive.


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PEOPLE

The reputation of the brand rests in the peopleshands. You must therefore ensure that all yourpeople are appropriately trained, well motivated

and have the right attitude. People does not only include the people in your

business , but also the people that you use for yourbusiness.


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PROCESS

The process that you go through and thebehavior of those who deliver the productsare crucial to customer satisfaction.

Issues such as waiting times , the informationpassed onto customers are vital factors whentrying to maintain 100% satisfaction.


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A comparative Analysis

of

WAL MART

ANDBIG BAZAAR


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CULTURE,VALUES as key forces in shaping STRATEGY anddeveloping

COMPETENCIES Paras Deshpande


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WALMART

Sam Walton started as aspecialty store owner ofBen Franklin franchisestores.

He was fortyfour whenwe opened first WalMart in 1962.


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EarlyTimes In the early days of WalMart the emphasis

on item promotion helped us to make upfor a lot of shortcomings we hadan

unsophisticated buying program, a lessthan ideal merchandise assortment, andpractically no backoffice support.

Early periods were marked by extensive

benchmarking to such a level thatmanagers lived half of the time incompetitors stores.


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CreatingCulture WalMart is not a big success merely because

we grew up out here in the country, wherepeople are just naturally friendly and

therefore make great retail employees. It'strue that we have many fine associates fromthe country, but they have had to enter ourculture and learn retailing just like anybodyelse, and we have spent a good deal of time

teaching many of them to overcome theirnatural shyness and learn to speak up andhelp our customers.


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NEXT THE INDIAN CONTEXT


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Born in a middle class trading

family, Kishore Biyani startedhis career selling stone washfabric as trader.

His objective is to capture everyrupee in the wallet of Indian

consumer. He is concentrating not just on

retail but his ambitions spanover full consumer space.

With the launch of Pantaloons,Big Bazaar, Food Bazaar,

Central he has redefined theretailing business in India

Raja of Indian Retail

i h i i KB


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There are three kinds of entrepreneurs - Creators,preservers and destroyers.

He considers himself as both creator and destroyer atthe same time. Preserving the status-quo has never

been the cup of his tea. He strongly believes none of his business will ever

cater to the elitist class.

In the current era of knowledge economy Ideas will bethe greatest assets of a company. Organizations that

allow insights and information to flow freely will bethe ones to come out as winners.

Kishore Biyani KBViews, Value and Vision.

Ki h Bi i KB


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There are three kinds of entrepreneurs - Creators,preservers and destroyers.

He considers himself as both creator and destroyer atthe same time. Preserving the status-quo has never

been the cup of his tea. He strongly believes none of his business will ever

cater to the elitist class.

In the current era of knowledge economy Ideas will bethe greatest assets of a company. Organizations that

allow insights and information to flow freely will bethe ones to come out as winners.

Kishore Biyani KBViews, Value and Vision.


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Allied ventures


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Retail PricingRetail Pricing

TerminologyTerminology

Markup refers to how much should beadded to the cost the retailer paid forthe product to reach a final selling price.

Original markup is the differencebetween the retailers original cost andinitial selling price.

The maintained markup is the differencebetween the final selling price andretailer cost and is also the grossmargin.


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Retail PricingRetail Pricing

TerminologyTerminology Markdown occurs when the product

does not sell at the original price andan adjustment is necessary.

Shrinkage is theft of merchandise by

customers and employees. Off-price retailing involves selling

brand name merchandise at lower thanregular prices. The difference betweenthe off-price retailer and a discountstore is that off-price merchandise isbought by the retailer frommanufacturers excess inventory at

prices below wholesale prices.


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Store LocationStore Location

Central business district

regional shopping centers

community shopping centers

strip location

power center

Types of Store Locations


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Passage

of timeAs time passes,

outlet adds services

As more time passes, outletadds still more services

4. New form of outletenters retailing

environment with

characteristics of

outlet in Box 1

4. New form of outletenters retailing

environment with

characteristics of

outlet in Box 1

1. Outlet starts with:

Low prices

Low margins

Low status

1. Outlet starts with:

Low prices

Low margins

Low status

3. Outlet now has:

Still higher prices

Still higher margins

Still higher status

3. Outlet now has:

Still higher prices

Still higher margins

Still higher status

2. Outlet now has:

Higher prices

Higher margins

Higher status

2. Outlet now has:

Higher prices

Higher margins

Higher status

The Wheel of RetailingThe Wheel of Retailing


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The Retail Life CycleThe Retail Life Cycle

Ma

rketsha

reor

profit

Early

growth

Accelerated

development

Maturity Decline

Va

lue-r e

tailsto

res

On-lineretailer

s

Single-pricesto

res

Warehouseclu

bs

Fast

foodoutlet

s

Conven

iencestores

Supermarkets

D

epartmentsto re

s

Catalog

Retaile r

s

Malls(?)

General

store

Factor

youtletstores

Profit

Market share

Single-b

randstores


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Future Changes in RetailingFuture Changes in Retailing

Impact of Technology

Changing Shopping Behavior

Importance of Brands


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Courtesy CyberShop International, Inc.

egift Advertisementegift Advertisement


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Courtesy ebay.com

ebay.com Web Pageebay.com Web Page


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Recent Trends in

Retailing

Retailing in India is

witnessing a hugerevamping exercise as canbe seen in the graph

India is rated the fifthmost attractive emergingretail market: a potentialgoldmine.

Estimated to be US$ 200billion, of which organizedretailing (i.e. moderntrade) makes up 3 percentor US$ 6.4 billion

As per a report by KPMGthe annual growth of

department stores isestimated at 24%

Ranked second in a GlobalRetail Development Indexof 30 developing countriesdrawn up by AT Kearney.

Retail Sales in India


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Recent Trends contd. Multiple drivers leading to a consumption boom:

Favorable demographics

Growth in income

Increasing population of women Raising aspirations : Value added goods sales

Food and apparel retailing key drivers of growth

Organized retailing in India has been largely an urban phenomenon with affluent classes and growing numberof double-income households.

More successful in cities in the south and west of India. Reasons range from differences in consumer buyingbehavior to cost of real estate and taxation laws.

Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market acrossmost categories of consumption

ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural hypermarkets.

HLL is using its Project Shakti initiative leveraging women self-help groups to explore the rural market. Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve

the rural markets.

IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change buyingbehavior across the globe.

e-tailing slowly making its presence felt.

Companies using their own web portal or tie-sups with horizontal players like Rediff.com and Indiatimes.comto offer products on the web.


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Conclusion The India Retail Report 2009 compiled by research

group Images Research is again optimistic about

Indian Retail Industry. As per the report, spirallingincome and rising economic growth will fuel thegrowth of industry and it will touch Rs. 18,10,000crore by 2010. Organized Retail is expected toconstitute 13% of it i.e. Rs. 2,30,000 crore. Thereport says that though people are perceiving thatorganized retail will hit mom & pop format hard,but modernizing retail will generate employmentfor 15 million people in different activities.

.

Conclusion


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Conclusion

The report is based on rising economic

growth rate of 8-9 per cent and a hike inaverage salaries by about 15 per cent whichmay trigger the rate of consumption. Butwith subprime crisis in US, Indian

companies are also affected in big way, andeven stock market is suffering. We hearnews of cost cutting and layoffs daily. So, Idont know how far it is right to believe

growth rate of 8-9% and hike of 15%.


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Conclusion

Food and grocery dominated the retail

segment with 59.5 per cent share valued at Rs

7,92,000 crore, followed by clothing and

accessories with a 9.9 per cent share at Rs

1,31,300 crore


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Documents

Retailing New