Unit 5: Retailing (MPA)

A retailer is a person, agent, agency, company, or organization which is instrumental in reaching the
goods, merchandise, or services to the ultimate consumer. Retailers perform specific activities such as
anticipating customer's wants, developing assortments of products, acquiring market information, and
financing. A common assumption is that retailing involves only the sale of products in stores
However, it also includes the sale of services like those offered at a restaurant, parlour, or by car
rental agencies. The selling need not necessarily take place through a store. Retailing encompasses
selling through the mail, the Internet, door-to-door visits any channel that could be used to approach
the consumer. When manufacturers like Dell Computers sell directly to the consumer, they also
perform the retailing function.

Functions of Retailing:

Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers, and
consumers. In this context, they perform various functions like sorting, breaking bulk, holding stock,
as a channel of communication, storage, advertising, and certain additional services.

A. Sorting

Manufacturers usually make one of a variety of products and would like to sell their entire inventory
to a few buyers to reduce costs. Final consumers, in contrast, prefer a large variety of goods and
services to choose from and usually buy them in small quantities. Retailers are able to balance the
demands of both sides, by collecting an assortment of goods from different sources, buying them in
sufficiently large quantities, and selling them to consumers in small units. The above process is
referred to as the sorting process. Through this process, retailers undertake activities and perform
functions that add to the value of the products and services sold to the consumer. Supermarkets in the
US offer, on an average, 15,000 different items from 500 companies. Customers are able to choose
from a wide range of designs, sizes, and brands from just one location. If each manufacturer had a
separate store for its own products, customers would luave to visit several stores to complete their
shopping. While all retailers offer an assortment, they specialize in types of assortment offered and
the market to which the offering is made. Westside provides clothing and accessories, while a chain
like Nilgiris specializes in food and bakery items. Shoppers' Stop targets the elite urban class, while
Pantaloons is targeted at the middle class.

B. Breaking Bulk

Breaking bulk is another function performed by retailing. The word retailing is derived from the
French word retailer, meaning 'to cut a piece off. To reduce transportation costs, manufacturers and
wholesalers typically ship large cartons of the product, which are then tailored by the retailers into
smaller quantities to meet individual consumption needs.

C. Holding Stock

Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory
that allows for instant availability of the product to the consumers. It helps to keep prices stable and
enables the manufacturer to regulate production. Consumers can keep a small stock of products at
home as they know that this can be replenished by the retailer and can save on inventory carrying
costs.
 D. Additional Services

Retailers ease the change in ownership of merchandise by providingservices mat make it convenient
to buy and use products. Providingproduct guarantees, after-sales service, and dealing with
consumercomplaints are some of the services that add value to the actualproduct at the retailers' end.
Retailers also offer credit and hirepurchasefacilities to the customers to enable them to buy a
productnow and pay for it later. Retailers fill orders, promptly process, deliver and install products.
Salespeople are also employed by retailers toanswer queries and provide additional information about
the displayedproducts. The display itself allows the consumer to see and testproducts before actual
purchase. Retail essentially completestransactions with customers.

E. Channel of Communication

Retailers also act as the channel of communication and informationbetween the wholesalers or
suppliers and the consumers. Fromadvertisements, salespeople, and display, shoppers learn about
thecharacteristics and features of a product or services offered. Manufacturers, in their turn, learn of
sales forecasts, delivery delays, and customer complaints. The manufacturer can then modify
defectiveor unsatisfactory merchandise and services.

F. Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance with transport, storage, advertising. and
pre also works the other way round in case the number of retailers is small. The number of functions
performed by a particular retailer has a direct relation to the percentage and volume of sales needed to
cover both their costs and profits.

RETAIL PLANNING

Strategic planning is the process by which the guiding members of an organization envision its future
and develop the necessary procedures and operations to achieve that future. The planning process can
be viewed as a somewhat circular flow of topics and action steps, where the results from one step
initiate study and action in the next step. However, the process does not necessarily always flow in
one direction

Steps in Retail Planning

The planning process requires a thorough look into the company's motives to determine what
strategies to implement. While it may be time-consuming, drafting a detailed plan is essential for
successful execution. Retailers can begin by following seven general steps-

1. Set Goals

Businesses need to set specific short and long-term goals. Instead of setting a general objective to
increase sales, management should set benchmarks regarding which product performances need to
improve, specific revenue goals, and ideal profit margins for each item.

Companies can further break down their goals into two categories-

a. Internal Objectives

Retail management should pull reports and set practical sales and revenue goals based on product
performance. Organizations can set clear monthly, quarterly, and annual targets to motivate
employees and keep them focused on boosting sales.

b. External Objectives
Extemal goals refer to a retailer's overall performance according to customers and their experience.
This can include customer service, retention, loyalty, and product pricing. Companies should aim to
create a personalized experience that attracts and generates returning customers.

2. Analyse the Market:

Once the company's objectives are clearly defined, it is time to analyze the current market. Research
can expose competitors' strategies, performance, and weaknesses, as well as consumer expectations.
This allows companies to develop a plan of action that fulfils customer needs and stands apart from
the competition.

Research can also define any risks and opportunities the company may be exposed to and how to
respond. Retailers can anticipate upcoming events through risk management and planning, so they are
not caught off-guard. Through this process, businesses can analyze their own strengths and
weaknesses, allowing them to improve the necessary areas. This may include financial planning,
resource allocation, and staffing.

3. Analyse Customer Behaviour

If a company does not understand their target audience, they cannot correctly launch and promote
products to attract customers. Therefore, retailers need to understand what consumers expect from
products and brands. First, companies must understand what types of demographics are in the market
for their products. Then products can be customized as per experiences and brand images to attract
audiences. However, retailers should continuously monitor customer feedback and preference to avoid
becoming irrelevant or stagnant.

4. Outline Retail Strategies

After determining target demographics, marketing teams can begin developing effective promotions
for their products and company identity. The retailer must establish a positive image that not only
attracts customers but accurately illustrates what they can expect as well. Another main objective of
implementing a retail strategy is to remain competitive. Businesses can achieve this through several
methods, such as product pricing, variety, and quality. Providing a unique experience that customers
cannot receive anywhere else is a significant advantage.

However, businesses must stay up to date with current market trends as they are ever- evolving.
Without access to current metrics, marketing strategies can become ineffective.

5. Make Short-Term Plans

Based on the company's short-term goals, management needs to outline a step-by-step plan to achieve
key metrics. For example, if an organization wants to improve its sales during the Christmas season, it
can focus on targeted marketing tactics and floor design to increase traffic flow. This can include
running digital campaigns, commercials, and exclusive deals. Management can also redesign the
storefront to attract shoppers passing by. However, retailers should begin the planning process months
in advance to ensure all resources are properly allocated. Otherwise, businesses may lack suflicient
funds to supplement plans due to poor organization.

6. Implement Strategies

Once the market and customers have been analyzed, goals have been set, and plans are outlined,
companies can begin implementing their strategies Management should understand that some
methods might require additional changes to the business model, staffing, accounting, or supply chain.
These alterations may be met with employee reluctance, as they may have to handle more
responsibilities. However, with successful planning, staff can ease into their new roles to avoid
overwhelming team members. Companies should consider offering incentives and bonuses if the
employees adapt well and the strategies improve work performance.

7. Analyze the Strategy Performance

Once the methods are implemented, organizations must continuously monitor performance to ensure
improvements are consistent. The regulation also helps identify any errors within a process so
management can quickly reconcile any damages. Companies can also take note of the strengths and
weaknesses to streamline future planning.

Retail planning is vital for defining business objectives and maintaining a foothold in a competitive
market. Without a detailed plan, retailers can exhaust time and resources on ineffective marketing
tactics. A comprehensive retail plan ensures that employees are working in unisen to provide the best
service, products, and experience, boosting company revenue.

Types/Forms of Retailing

Store Retailing Non-Store

Retailing

One Store Retailing

Direct Retailing Automated

Vending
Franchise Retailing

Direct Selling
Departmental
Store Retailing
Direct
Marketing

NON-STORE RETAILING

Non-store retailing refers to retailing that takes place outside traditional brick-and-morter (physical)
locations Any sale happening to the end customer which is not happening through a traditional retail
channel or through a physical retail space is known as Non-store retailing Amazon is a perfect
example of Non-store retailing. Amazon does not have its own retail space from where it sells the
goods to customers. It directly sells from its website and does not sell via a retail space. Hence, it is
known as a Non-Store Retailer.

There are different types of Non-store retailers in the market. Some of the non-store retailers are very
popular even today whereas others have died down.
 1. Direct selling

Direct selling is one of the oldest forms of non-store retailing. It involves retailing goods and services
directly to the consumers (at their house or at their workplace),

According to the FTC "Direct selling is a blanket term that encompasses a variety of business forms
premised on person-to-person selling in locations other than a retail establishment, such as social
media platforms or the home of the salesperson or prospective customer

2. Direct Marketing

Unlike Direct selling, Direct marketing is on the rise especially since the adoption of the internet. It
was initially used in the form of direct mail services where letters and coupons were sent to the end
customer. Later on, once internet started, Email marketing was very successfully used where
companies spent a huge amount of designing and sending emails to a large number of customers After
emails, it went to websites and we could see Amazon, eBay, Alibaba and other websites grow and sell
products by the truckloads None of these sellers had a single store. All of it was online. Finally today,
we can see that even small businessmen have their online store and a website and they sell their
products not only through a physical presence but regularly take part in non-store retailing via social
media or via their own websites.

Ethical issues in E-Marketing

Ethics is the branch of philosophy that deals with questions about what is morally right and wrong, as
well as what is good and bad in human behaviour. It provides guidelines for how individuals and
groups should act, focusing on principles such as fairness, justice, respect, and integrity. In e-retailing,
ethics refers to the principles and standards guiding the conduct of online retailers in ways that are
fair, transparent, and responsible toward consumers, employees, and the environment. Ethical
practices in e-retailing encompasses:

• Data privacy: Businesses collect and store customer data for marketing, but mishandling it
can lead to data breaches. A transparent data policy can help build trust between businesses
and customers.
• Misleading marketing: Exaggerated claims, hidden fees, or fake reviews can break trust with
customers.
• Predatory pricing: Exploiting vulnerabilities, like targeting low-income communities with
inflated prices, can be unethical.
• Counterfeit products: Selling knock-offs is illegal and hurts consumers and creators.
• Unclear return policies: Surprise returns can be a negative experience for customers.
• Shady shipping practices: Speedy deliveries shouldn't come at the cost of the environment
or unfair labor practices.
• Ignoring customer concerns: Communication is key to addressing customer concerns.
• Neglecting social responsibility: Businesses should consider the larger community they exist
within.
• Algorithmic bias: AI applications can be biased if the database they are trained on doesn't
represent diverse groups. Other ethical issues include occupational safety and health,
unethical accounting
 • Difficult Return Processes: E-retailers may impose strict or confusing return policies,
making it hard for consumers to return defective or unwanted items.
• Lack of Accountability: If there’s a problem with an order, resolving it can be challenging,
especially on larger e-retail platforms. Ethically, companies should strive to support
consumers and ensure they have accessible service.
• Encouraging Overspending: E-retailers use tactics such as “limited-time offers” or “related
items” suggestions to prompt impulse purchases, which can lead to consumer debt and regret.

These ethical challenges call for responsible and transparent practices in e-retailing, often requiring
self-regulation, better legal frameworks, and consumer awareness to ensure a fair and respectful
online shopping environment.

Market logistics

In retailing it refers to the systems and processes involved in efficiently moving goods from the point
of production to the point of sale, ensuring that the right products are available to consumers when
and where they need them. It plays a critical role in maintaining a smooth supply chain, optimizing
costs, and improving customer satisfaction. Key components of market logistics in retailing include:

1. Transportation Management
• Modes of Transport: Retailers decide the best modes of transportation (e.g., trucks, trains,
air freight) based on factors like cost, speed, and distance.
• Route Optimization: Efficiently planning routes to minimize transit time and fuel costs,
balancing the need for fast deliveries with cost-effectiveness.
• Last-Mile Delivery: The final step in logistics, last-mile delivery is critical in e-retailing,
where timely and convenient delivery directly impacts customer satisfaction.

2. Warehousing and Distribution Centers

• Inventory Storage: Warehouses and distribution centers store products until they are
shipped to stores or directly to consumers.
• Fulfillment Centers: Dedicated facilities handle order processing and packaging for e-
retailers, focusing on speed and accuracy to meet customer expectations.
• Cross-Docking: Involves transferring products directly from inbound to outbound trucks
with minimal storage time, often reducing costs and improving efficiency.

3. Inventory Management
• Stock Levels: Balancing stock to prevent both overstocking (which can lead to storage
costs) and understocking (which can result in missed sales).
• Demand Forecasting: Using historical data, trends, and predictive analytics to anticipate
demand and ensure appropriate inventory levels.
• Just-in-Time (JIT): A strategy where inventory is restocked as needed to reduce storage
costs and minimize waste.
 4. Order Processing
• Order Fulfillment: The process of picking, packing, and shipping orders accurately and
efficiently to meet consumer expectations.
• Reverse Logistics: Handling returns, repairs, and exchanges, which are critical in e-retailing
and customer satisfaction.

5. Technology and Automation

• Automation: Automated systems, such as robotics in warehouses, streamline picking and
packing, reducing labor costs and speeding up operations.
• Real-Time Tracking: GPS and RFID technology help monitor shipments, providing retailers
and consumers with real-time updates on delivery status.
• Inventory Management Software: Systems like ERP and WMS (Warehouse Management
Systems) help manage inventory levels, track product movement, and forecast demand.

6. Sustainability in Logistics
• Eco-Friendly Packaging: Minimizing packaging waste by using recyclable materials or
optimizing packaging sizes.
• Energy-Efficient Transportation: Adopting electric vehicles, optimizing routes, and
consolidating shipments to reduce emissions.
• Reverse Logistics for Recycling: Managing the return of goods for recycling or disposal,
especially with e-waste or other environmentally sensitive products.

7. Vendor and Supplier Management

• Supplier Coordination: Working closely with suppliers to ensure timely delivery of raw
materials or finished products, reducing lead times and improving quality.
• Strategic Partnerships: Building partnerships with reliable logistics providers to optimize
transportation and warehousing.

Effective market logistics in retailing helps reduce operational costs, meet customer expectations, and
stay competitive in a fast-paced market by ensuring timely and accurate delivery of products to
consumers.