Notes chapter 1

Retail Management, 2/E Bajaj, Tuli & Srivastava

CHAPTER 1
RETAILING: ROLE, RELEVANCE AND TRENDS

Hints to Concept Review Question:

1. What is retailing? Enlist the retail activities carried by retailers.
Retailing is defined as the conclusive set of activities or steps used to sell a product or a
service to consumers for their personal or family use. It is responsible for matching
individual demands of the consumer with supplies of all the manufacturers. The word
“retail” is derived from the French word retailer, meaning to cut a piece off or to break.
The retail activities carried by retailer are:
1. Arrange for assortment of offerings
2. Breaking Quantity
3. Holding Stock
4. Extending Services

2. Discuss briefly various types of retail formats.
The various forms of retail formats are:
i. Mom and Pop Stores and Traditional Kirana Stores:
Mom and pop stores and traditional Kirana stores are very small stores in the city where
they buy in few numbers from whole sellers and sell it to the consumers. These stores
offer few products that are necessarily required for daily life. These are so small stores,
where you cannot go inside and select what ever you want. There will be an owner and
a few workers appointed to help owner, owner will be sitting on the cash counter to
take money and order.
Customer orders by standing out side the counter. Owner takes the order and tells the
workers to give the required products to the consumers and he checks the workers for
the correct delivery of the products. Consumers give cash to the owner who is sitting on
the counter. This is how the activity is being done in mom-pop or Kirana stores. These
stores will not give discounts and offers until and unless the company or wholesalers
provide it.
ii. E-retailing:
E-retailing or e-commerce means retail business being conducted on the Internet. E-
commerce is growing every year. Indeed, Forrester Research projects e-commerce
revenue to rise to $123 billion in 2004, an increase of some 28 percent over the previous
year—and for e-tailing to comprise a bigger slice of the overall retail pie (5.6 percent, up
from 4.5 percent in 2003). Many major retail organizations and manufacturers have
online retail stores.
Example: Amazon.com, First and second.com
iii. Department stores:
Over the last decade or so, however, department stores have suffered. In part this is a
result of changing shopping patterns and increased competition from discount stores. It
has also come from financial burdens incurred by companies that acquired competitors

Copyright © Oxford University Press, 2010


and grew too fast. It's unlikely that these players will disappear from the market.
However, expect more bumps as the strong get stronger and the weak get absorb
iv. Discount Stores:
Discount stores along with category Killers have changed the landscape of retail
industry. Where once mom-and-pop and department stores dominated retail, now the
discount retailers and category killers are at the top of the heap. And where once
shopping malls, anchored by at least one major department store, used to be the
dominant retail presence lining the nation’s roads.
Example: Wal-Mart (the largest retailer in the world, with more than a million
employees), Target, and Kmart, as well as membership warehouses such as Costco.
v. Category Killers:
These are the giant retailers that dominate one area of merchandise (e.g., Office Depot,
Tower Records, and The Sports Authority). They are able to buy bathroom tiles, file
cabinets, electronic goods, or pet food in such huge volumes that they can then sell
them at prices even fairly large competitors can't match.
vi. Specialty Stores:
These stores concentrate on one type of merchandise and offer it in some manner that
makes it special. Some are very high-end (Louis Vuitton); others cater to the price-
conscious masses (Old Navy).
Example: Crate & Barrel, the Body Shop, and Victoria's Secret
vii. E-tailers:
While most retailers have online storefronts, strictly online purveyors with no bricks-
and-mortar counterparts are hoping to snare a percentage of the retail profit. And
major players, such as Amazon.com, have generated enough business to cause top
brick-and-mortar competitors to follow up with their own Internet sites. Traditional
retailers like Wal-Mart and Starbucks, hugely successful in their own right, have also set
up online stores so as not to miss out on the revenue opportunities that the Internet
offers.

3. What are the drivers of changing face of retail structures in the developing world
particularly in context of India?
The drivers of changing face of retail structures in the developing world particularly in
India are:

Customers are the driving force in Change:
Customers are king in the market. The day of Caveat emptor is gone now manufacturers
has to identify the needs and wants of consumers and has to manufacture according to
it. Anything offered to consumers is not acceptable. But consumers needs and wants
will not always be same. It goes on changing based on the income level and based on
needs of hierarchy. Therefore consumers are driving force in change of products are
facilities offered by the retailers.
Example:
The family in which both mother and father is earning, they are in short of time.
Therefore they want prepared products and examples for prepared products are tomato



Puree, prepared flour, instant dishes etc. Like this consumers are the driving forces in
change.

Re-evaluating the Marketing Plan:
Every year marketing plan will be done; the planes are often evaluated for the
deviations. The evaluation focus can be done on the advertising prices because through
advertising products are placed in the minds of the customers, which requires attractive
place and much space is consumed to advertise in retail outlet. As mass advertising is
becoming generic and less effective, building a strong public relation campaign has
become a more effective way to get attention for many retailers.

Strong Visual Recognition:
Retailing is the end process for selling; retailing is the process where goods are sold to
the consumers. But during the process of buying product from retail shop a consumer
should visualize the products to buy. Which products should be bought is recognized
and the image of the product is drawn in the mind. Therefore strong visual recognition
means recognizing the need and recalling the product to buy from the pool of products
advertised.
The Workplace Challenge:
The work place challenge means over coming the difficulty in running a retail outlet. The
difficulty lies in understanding or identifying the needs of consumers and placing such
products on the shelf attractively. For this employees are educated through training.

Planning for success
It means that understanding how best a retail out let traffic is increased or how to
attract the customers or how to create loyalty by consumers for the particular outlet.
After understanding, a strategy should be drawn to execute. Planning for the success is
nothing but drawing blue print for achieving the goals and objectives set during the
strategy. Through this focus on marketing approach can be increased and a strong team
of supporting employees can be built.

4. What is the role of Internet technology in redefining the retail industry in entire
value chain?
The role of Internet technology is to support existing marketing activity. The Internet
has opened a new world of opportunities for retailers. It offers a way to grow an existing
retail business and increase exposure to that marketplace. Retailers of any size can
appear even more successful on the Internet with an effective service and sell site.
The Internet has been used in three main ways to facilitate retail marketing. In the most
basic respect it is a means of merely communicating information about the retail
organization, its products and services. At the next level, it is used as a more proactive
marketing tool, inviting consumers interactively to access the Web site to gain more
product information to facilitate their buying decision-making process. At the same time
it provides valuable consumer data for retailers to enable greater targeting



Internet retailing offers a retail experience that is totally different from fixed location
retailing Comparison and price shopping across a greater number of sites will be easier
and could be achieved within minutes. More and more consumers are beginning to use
the Internet for research in the early part of the buying decision-making process.


Notes chapter 1

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Notes chapter 1