Retailing Overview Retail Management

Explain the overview of Retailing

In today’s highly competitive business world, the end-customer or the consumer is treated as the king and thus customer satisfaction turned out to be of high priority to all the businesses, especially retail business. To maintain and attract the customers, retailers tend to provide services apart from the products.

It is the general human tendency of the customers that when a store provides more than what was expected, customers tend to love and like that store and the stores that may not match up to the expectations of the customers and if the customers are not satisfied, then the stores are avoided by the customers.

Retailing involves the last stage of distribution of the product or service to the end-user. The activity of retailing provides employment opportunities for many of them and also contributed towards the GDP of a country.

What is Retail?

The activity that includes sale of the goods and services to the end-customers for personal use is known as Retailing. The business that is involved in this process is considered as retailing business.

Functions of a Retailer

As per the requirements of the customers, the goods are provided to them at desired time and desired place, by the retailer.

  • Only the finished goods and services are being sold by the retailers, and they are not involved in selling of the raw materials.
  • All the different kinds of products are being bought from different wholesalers are made available to the consumers at one place. The retailer is involved in both buying and selling.
  • The products and services are located in such a way that they are easily accessible to the consumers.

Retail in Marketing Channels

In accordance with all the developments, and with the introduction of the globalization and industrialization into the business world, more distance between the manufacturer and the end-consumer can be observed. Due to this globalization, some of the products that are being manufactured in a particular country are even sold in other countries. This leads to increase in the intermediaries. The following diagram depicts the intermediary channels.

Marketing Channels

Type A and B − Retailers. Examples of such type include Pantaloons, Walmart.

Type C − Service Providers. Examples of such type include Eureka Forbes.

What are the different types of Retailing Formats?

The following are the different types of retailing formats.

Retailing Formats

Ownership Based Retailing

Under Ownership based retailing, the retailers are as follows -

  • Independent Retailers – The retailers who do their business by maintaining a single shop are independent retailers. The business policies are taken by them independently. These retailers take the help from the family members and the business runs by the different generations of the family. It is very easy for these independent retailers to maintain rapport with the consumers. Some of the examples of such retailers are book shops, stationery shops, florists etc.
  • Chain Stores – Chain stores involves handling of multiple stores under a single ownership. The merchandise that is being offered by the chain stores is the same. The chain stores set up their business in different cities. The main advantage with the chain stores is that they can maintain the stock as per the requirement of the consumers. Examples of chain stores are Westside Stores, Shopper’s Stop, etc.
  • Franchises – By using the same brand or a specific format, the franchisee and the franchiser enter into an agreement and run the business. Franchise business is of two types -
  1. Business format. For example, Pizza Hut.
  2. Product format. For example, Ice cream parlours of Amul.
  • Consumers Co-Operative Stores – These stores facilitate all the basic essentials at low cost than the market price and they are mostly run by some of the licensed consumers. They can maintain healthy business by following and updating themselves about the policies of healthy business. Some of the examples of consumer co-operative stores are Sahakar Bhandar of India, Puget Consumers Food Co-Operative of north US, Dublin Food Co-Operative of Ireland

Merchandise Based Retailing

Under merchandise based retailing, the different types of retailers are as follows -

  • Convenience Stores – The convenient stores are usually located very close to the residential areas and which are usually made available till late nights. Some of the basic daily items such as milk, food items, and groceries are made available at these stores. Consumers who prefer convenient purchasing mainly use these stores.
  • Supermarkets – Comparatively larger stores which have a huge spread of items and which run with usually low profit margins are supermarkets. The supermarkets are usually large in size occupying the area of about 8000 sq.ft. to 10,000 sq.ft. They have all the facilities for preserving the food items, basic household items, groceries etc. Some of the examples of such super markets are Food Bazar and Tesco.
  • Hypermarkets – Hypermarkets which are similar to that of super markets but these hyper markets also provide non-grocery items also which constitute around 35% of the hypermarkets. They also restaurants and other small coffee and food joints inside the hypermarkets. The area occupied by these hypermarkets usually range from 80,000 sq.ft. to 250,000 sq.ft.. They also sell the products related to exercise equipment, cycles, CD/DVDs, Books, Electronics equipment, etc. Examples of such hypermarkets are Big Bazaar, Walmart etc.
  • Specialty Stores – The stores which do business with only a particular segment such as only home furnishing, or domestic electronic appliances are speciality stores. These stores are unique in a way that they offer service as well to the customers. Some of the examples of such stores are Croma Furnishes, High & Mighty etc.
  • Departmental Stores – The departmental stores are huge selling stores occupying the space of about 20,000 sq.ft. to 50,000 sq.ft. These stores mainly offer food, clothing and other household items. Some of the examples of such stores are The Bombay Store, Meens Bazar, Marks & Spencer etc.
  • Factory Outlets – The products that are being manufactured in excess are usually sold at an discounted prices by the factory outlets. They are usually sold at the stores that are close to the factory or the manufacturing units. Some of the examples of factory outlets are Nike, Bombay Dyeing outlets.
  • Catalogue Showrooms – These showrooms usually maintain some of the catalogues for the customers to go through. By viewing the catalogue the customer is enabled to select the product and provide all the required codes pertaining to that product so that the manager can pick that particular product from the warehouse and hand over to the customer.

Some of the examples of catalogue showrooms ate Argos which is a UK based showroom. This showroom facilitates catalogues of about 400 best quality products related to furnishing, computers, electronics etc.

Non-Store Based (Direct) Retailing

In direct retailing, the customer is directly contacted by the retailer. The products are made available through emails or by phone calls or internet or televisions advertisements, and then the customer contacts the retailer. The products along with the description of the benefits and the operations of the products are demonstrated by the retailer to a group of customers. At the same time and same place, the product is being bought and sold.

Some of the examples include multi-level marketing such as Amway and Herbalife.

The different types of direct retailing are as follows -

  • Mail Orders/Postal Orders/E-Shopping – The orders for purchasing of the product can be placed through internet by referring to the product catalogue which is made available on internet.
  • Telemarketing – Television media is used for advertisement of the products which is known as telemarketing. The advertisements provide all the related information with respect to the guarantee and the policies etc. The retailers can be contacted through telephone and orders with respect to the desired products can be placed. Then accordingly the products are delivered to the customer. One of such examples is Asian Skyshop.
  • Automated Vending/Kiosks – The automated vendors provide the customers with the products as and when required round the clock. Some of such products include milk, newspapers etc.

The direct retailing business can be successful only when the correct products are sent to the customers and when they are sent at appropriate time.

Service Based Retailing

The service based retailing provides different types of services to the customers. Some of such services include banking services, electricity services, gas delivery services, car rental services etc.

The service based retailing should mainly concentrate on providing the better quality of the service, with desired customization, differentiation and at correct time without any delays. These retailers have to regularly adopt all the technological updation.

Differentiate Product Retailing with Service Retailing

The differences between the product retailing and service retailing can be tabulated as follows-

Product Retailing
Service Retailing
The main success factors of product retailing are quality and cost.
The main success factors of service retailing are timeliness and nature of the service providers.
For developing the retailer and the customer relationship, the customer has to visit the store.
Right from the initial stages of product selection by the customer, the retailer and customer relation is established without the customer visiting the stores.
Outlets are being used for storing the tangible products.
Services cannot be stored as they are intangible.
There is a possibility of standardizing the activity of product retailing.
It is not possible to standardize the activity of service retailing as services mainly depend on the human entities.
The ownership is transferred from the owner to the customer once the transaction is completed.
The ownership cannot be transferred but the customer can only access and service.

Differentiate Retail business with Wholesale business

Retail
Wholesale
Retail businesses sell the products directly to the customers.
Wholesale businesses sell the products either to the retailers for further selling or sometimes directly to the customers.
The price of the products is comparatively high as the retailers include their profits.
The price of the products offered by the wholesalers is less compared to that of the retailers.
Retailers do not directly contact the manufacturers.
Whereas wholesalers directly contact the manufacturers.
The product is brought from the wholesalers in fewer quantities. There are more chances of replacement of the products that are damaged.
The products are brought from the manufacturers in large quantities. There is no possibility of replacement of the damaged products.
Retail business mostly concentrate on the activities such as attracting the customers, providing the salaries to the employees etc.
All these activities does not constitute a part of the wholesale business.
Profits earned are very less by the retail business.
Huge profits are earned by the wholesale business.

What are the different terminologies used in Retail Business?

Some of the common terms used in Retail Management are as follows -

Consumerism
The customers and the consumers are being protected from different policies and practices which lead to breaching of the consumer rights. The consumers are protected by different groups, government bodies and individuals as well.
Consumption
When a product or a service is being used for the personal benefit and which is not meant for resale.
Customer Satisfaction
After the purchase of the product of access a service, the degree at which the customer is being pleased is known as customer satisfaction.
Distribution
Moving of all the products or services from the manufacturer to the end customer is known as distribution.
Empowered Consumers
The customers who have access and knowledge about the internet, exploiting the digital technologies and services which match the preferences of the people.
Inventory Shrinkage
The inventory tends to reduce due to theft being done by the employees, or customers or due to occurrence of errors from the merchandise management.
Logistics
The process by which the procurement and the movement of the material is being planned, executed and controlled is known as logistics.
Markdown
Reduction in price.
Planogram
The merchandise sale is being promoted and which is being displayed by a predetermined layout known as planogram.
Procurement
When a product is being bought or sold, it is known as procurement. Procurement involves different aspects such as planning, placing orders, making payments and finally procuring the product or the service.
Retail
The products and services that are being sold to the end customers in order to consume and not for resale is known as retail.
Supply-Chain Management
All the material and the flow of information from the manufacturer to the customer is known as supply-chain management. Supply chain management tends to provide maximum customer satisfaction at lowest price.
Switching Costs
When a customer switches from one supplier to another, the related costs are known as switching costs.
Wholesale
Wholesale is the sale of products at large quantities to the retailers at fewer prices.

Describe in detail about the evolution of the retail business.

One of the oldest and ancient forms of the retail business is the barter system. Some other traditional forms of the retail business include main-street stores, neighbourhood stores, and laid-back town fairs. Many changes have been occurred over a period of time with respect to retail business.

The different stages of evolution of the retail business are as follows -

  • Conventional
  • Established
  • Emerging

Retail Evolution

All rights reserved © 2018 Wisdom IT Services India Pvt. Ltd DMCA.com Protection Status

Retail Management Topics