Introduction of Retailing

Objectives of the Session

What is retailing? What do retailers do? Why is retailing important in our society? What career and entrepreneurial opportunities does retailing offer? What types of decisions do retail managers make?
1-2

1-3

The World of Retailing

Introduction to Retailing Types of Retailers Multi-Channel Retailing Customer Buying Behavior

1-4

What is Retailing?
Retailing a set of business activities that adds value to the products and services sold to consumers for their personal or family use A retailer is a businessmen that sells products and/or services to consumers for personal or family use.
1-5

Examples of Retailers Retailers:

1. 2. 3. 4. 5. Pantaloon Retail Tata Group - operates Westside K Raheja Group - Shoppers Stop Piramal Group - 18 TruMart stores Reliance Fresh stores & Reliance Mart Hypermart Ahmedabad 6. Aditya Birla Nuvo Ltd. They own brands like Louis Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town.
1-6

Manufacturers Perspective The Four Ps of Marketing

Retailers are part of the Retailers are part of the distributionchannel distribution channel Product

Distribution Promotion

Price

1-7

Distribution Channel

1-8

Typical Supply Chain Network

Customers

Suppliers

Plants Distribution Centers retailers

1-9

A Retailers Role in a Supply Chain

Retailers are the final businessmen within a supply chain which links manufacturers to consumers. A Supply Chain is a set of firms that make and deliver a given set of goods and services to the ultimate consumer.

1-10

Manufacturing, Wholesaling and Retailing

Vertical Integration firm performs more than one set of activities in the channel Ex: retailer invests in wholesaling or manufacturing Backward Integration retailer performs some distribution and manufacturing activities Forward Integration manufacturers undertake retailing activities Large retailers engage in both wholesaling and retailing
1-11

Do Retailers Add Cost or Value or both?

a box of crackers at a grocery store costs Rs. 10 to manufacturer sells at a price of Rs. 20

Example

Retailers add significantly to the prices consumers face Why not buy directly from the manufacturer? Does that mean that grocery stores are very profitable?

1-12

Why Not Get Rid of the Middlemen?

Price to Distributor Rs. 10 Manufacturer Vendor

Price to Retailer Rs. 15 Distributor Wholesaler

Price to Consumer Rs. 20 Retailer

Consumer
1-13

Why Not Get Rid of the Middlemen?

Better services to customers More efficient

1-14

How Retailers Add Value?

Bridges the gap between companies and customers Provide Assortment Buy other products at the same time Break Bulk Buy it in quantities customers want Hold Inventory Buy it at a convenient place when you want it Pushes the products in Market and helps in increasing sales Provide maximum coverage in short time in market Offer Services See it before you buy; get credit; layaway

1-15

How Retailers Add Value?

The value of the product and service increases as the retailer performs functions.
Product can be bought on credit Product is featured on floor display Product is offered in convenient locations in Product is quantities or one developed in several styles Product is developed at manufacturer

1-16

Social Significance of Retailing Retail Sales:

The India Brand Equity Forums Indian Retail Report for the thirdquarter of 2010, forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities. The greater availability of personal credit and a growing vehicle population to improve mobility also contribute to a trend towards annual retail sales growth of 11.4 per cent. This is a consequence of India's dramatic, rapid shift from small independent retailers to large, modern outlets.
1-17

Economic Significance of Retailing

Employment: The unorganized retailers takes the lion's share in the Indian retail sector, but the organized retailers are growing at a good pace, and promises an increase of proportion of 9 - 10% by 2010. This is to be the largest sector after the agricultural sector. Benefits to the economic growth: Better quality products and services would lead to better competition More exports bring more foreign direct investments Organized Indian retail sector would encourage tourism Along with the employment boom there would be a vast development in the expertise of the human resource There would remain future scope for improvements in agriculture, small, and medium scaled with the help of the Indian retail sector One of the largest sectors for job growth in India Social Responsibility Global Player
1-18

Social Responsibility
Corporate Social Responsibility The voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations, in addition to the concerns of its stakeholders. Retail companies give away 1.7% of their profits, compared with about 0.9% for companies in other industries.
Sources: India Brand Equity Forums Indian Retail Report for the thirdquarter of 2010
1-19

Opportunities in Retailing: Management opportunities

People with a wide range of skills and interests needed because retailers functions include:

Finance Purchase Accounting Management information system (MIS) Supply management including warehouse and distribution management Design and new product development
1-20

Nature of Retail Industry is Changing

To Todays Retailer

Mom and Pop Store

1-21

Retailing is a High Tech Industry

Selling Merchandise through the Internet Using Internet to manage supply chains Computer systems for merchandise planning and tracking

1-22

Opportunities in Retailing: Entrepreneurial opportunities

Retailing provides opportunities for people who want to start their own business Some of the worlds richest people are retailing entrepreneurs Examples of retailing entrepreneurs Kishore Biyani (K B Fair Price) Sam Walton (Wal-Mart) Jeff Bezos (Amazon.com) Ingvar Kamprad (IKEA) Anita Roddick (the Body Shop)
1-23

Retail Management Decision Process

Type of Retailing
Store-Based Non-Store Based Multichannel Retailing Single-channel Retailing, etc. Multi-Brand Retailing Single-Brand Retailing

Merchandise Management Merchandise Planning Buying Merchandise Pricing Managing Merchandise Assortments Store Management Managing the Store Store Layout, Design & Visual Merchandising Customer Services Retail Communication Mix
1-24

Type of Products / Services Site Location Retail Location Decisions Retail Marketing Strategies Financial Strategies Organization Structure & HR Management Decisions Information Systems & Supply Chain Management Customer Relationship Management

Strategic Vs Tactical Decisions

Doing the Right Thing (direction) vs. Doing Things Right (execution) Strategic Decisions Are: Made Infrequently Long-term Require significant investment Not easily reversed Location, Organization Design, Information and Distribution Systems, Customer Service
1-25

Retail Strategy
Need to identify the competition first

Intratype competition Intertype competition Vertical Competition

1-26

Retail Strategy
Forms of Competitions
Intratype Competition -- Similar stores selling the same product. e.g., Reliance Fresh vs. Big Apple. Intertype Competition -- Different type stores selling the same product. e.g., Big Bazaar and K B Fair Price. Vertical Competition -- Retailer competing with wholesaler or manufacturer. e.g., Reebok Shoe store and Reebok factory outlet.

Retail Strategy
Identifying customers

What are the significant demographic and lifestyle trends Who are the target customers

Retail Strategy
A retail strategy should identify

the target market the product and service mix a long-term comparative advantage

1-29

Decision Variables for Retailers

Customer Service Store Design and Display Merchandise Assortment

Retail Strategy

Pricing

Location

Communication Mix
1-30

Thank You, All!

1-31