1. Part 2
Retail Management

2. Topics
 Place of Retailing in marketing mix
 Retail Environment
 Retail formats
 Evolution of Retail
 Theories of Retail Development
 Scalability and shop displays

3. Place of Retail in mkt mix
 Mix includes the 6”p”s: product,
price,place,promotion,presentation, people
 Place: includes the distribution and availability of
products in various locations.
 Customers introduced to the product at the store.
 “Point of Sale” or “Point of Purchase”
 Channel Power

4. Last channel in distribution
Manufacturer Wholesaler Retailer
Final
consumer
Typical channel

5. Retailers role in sorting process
Manufacturer
Brand F
Manufacturer
Brand B
Manufacturer
Brand A
Manufacturer
Brand C
Manufacturer
Brand D
Manufacturer
Brand E
Wholesaler
Wholesaler
Wholesaler
Retailer
Brand A
customers
Brand B
customers
Brand C
customers
Brand D
customers
Brand E
customers

6. Retail Environment
 Breaking bulk
 Assorting function: evaluates all the different
products available and offers to target the
optimum array of products to cvhoose from
 Storing function: stocking goods till customers are
willing to buy and use them

7. Contribution of Retailing to Indian
Economic Scenario
 Real estate
 Tourism/outbound shopping
 Higher GDP
 Outsourcing opportunities

8. Evolution of retail formats

9. Evolution
 Social developments and their impact: development of rail
road and telegraph-order placement
 Bon Marche- 1852 Paris.Relied on volume,money back
guarantee
 5 and 10 cent stores- needs of poor classes
 Montgomery Ward- mail order catalogue for rural market
 Atlantic & Pacific- first chain grocery store
 The Industrial Revolution: urnbanization,mass mfg
 Self service: Piggly Wiggly, reduce costs
 Supermarkets
 Speciality stores, malls and other formats- first
hypermarket:Carrefour:France, advent of
massmerchandisers, barcode, all consumer needs in a
single shopping area
 The World Wide Web

10. 3 principles of Modern Selling
 Fixed price before sale, customers purchased at
the set price
 Prices were determined on basis of stock turns
and the amount of profit that was generated from
the product
 Products were departmentalized

11. Considerations in planning a
retail strategy mix

12. Retail Strategy mix
 Store location: store/non store format,
geographic area, site
 Operating procedures: Personnel, management
style, store hours.
 Goods/Services offered: one or many product
categories (low/med/high)
 Pricing: prestige/competitive/penetration pricing
 Store atmosphere/customer services: physical
facilities, personal attention, return policies,
deliveries
 Promotion: Store displays, advt, personal selling
and sales promotion

13. Theories of retail development

14. Theories of Retailing
 Environmental theory
 Cyclical theory
 Scrambled merchandising
 The Wheel of Retailing

15. Environmental Theory
 Change in retail is attributed to change in
environment where the retailers operate
 “Survival of the fittest”
 Retail institutions are economic entities and
retailers confront an environment-
customers+competitors+technology
 Environmental change- alter the profitability
 Retailers which adapt to this change
successfully
(technological, economic,demographic ) will
grow and prosper

16. Cyclical Theory :Wheel of
Retailing
Trading up phase
Mature retailer
Top heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Trading up phase
Mature retailer
Top heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
 Many price sensitive shoppers who will trade
customer services, wide selections and
convenient locations for lower prices
 P.S. shoppers not loyal- will switch for lower
prices
 New outlets will have lower operating costs
 Moving up, retailers try to improve sales, image.
 need to decide- low,medium or high end
strategy
 Eg- traditional dept. stores- Walmart discount
retailer-prospered, low end- factory outlets,off
price chains etc.
 Discount web retailers
 Firms should be wary of strategy conversion-
loss of competitive advantage

17. High vs low end strategy
Low end Strategy High End strategy
 Low rental location-
side street
 No services or at addl
fees
 Spartan fixtures and
displays
 Price emphasis in
promotion
 Self service or reduced
staff
 Crowded interior
 Shopping centre or
business district-high
rental
 Elaborate services-
credit,decorating,wrappin
g,alterations etc
 Elaborate fixtures and
displays
 No Price emphasis in
promotion
 Product demo,more sales
staff
 Spacious interior

18. Scrambled Merchandising
 Retailer carries width of assortment- many
product lines
 Retailer adds goods and services which are
unrelated to each other and to the original
business
 Increase overall revenues- fast moving,profitable
goods are added
 One stop shopping,impulse shoppers.
 Eg Crossword

19. The Retail Life Cycle
Introduction Growth Maturity Decline
Sales Low/growing Rapid/acceleratin
g
High, levelling
off
Dropping
Profitability Negative /break
even
High yield High/declining Low to break
even
Positioning Concept
innovation
Special need Broad market Niche
Competition None Limited Extensive/satur
ated
Intensive/consoli
dated
Innovati
on
Growt
h
Maturity
Declin
e
Profit
TIME
SALES

20. Growth of Retail Markets
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
African markets Indian markets South Asian markets Developed markets
INCEPTION (10 years)
GROWTH (15 -25 years)
MATURITY (5 -10 years)
STAGNATION (5 -10 years)
TIME
S
A
L
E
S
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
African markets Indian markets South Asian markets Developed markets
INCEPTION (10 years)
GROWTH (15 -25 years)
MATURITY (5 -10 years)
STAGNATION (5 -10 years)
TIME
S
A
L
E
S

21. RETAIL FORMATS

22. Conventional Retail formats
 Products available in shanties
 Small mobile retailers: products available on
handcarts, bicycles etc
 Small shops which got converted to bazaars

23. Contemporary Retail Formats by
Customer Mediation
Activity
Elements
In store Catalogu
e
Cable tV www Telephon
e
Means of
Mediation
Humans in
brick and
mortar
environmen
t
Paper
and
telephonic
Broadcast
and
telephonic
Computer
and Voip
Telephonic
Customer
interface
Face to
face sales
service
Remote,
print
,response
voice only
Remote,vo
ice only
Remote,
IVR
Remote,
voice only
Product
Presentati
on
3 D
displays
Photo and
text
Tv image
and demo
Image and
text
Telephonic
product
and
service
description

24. Store formats
 Create a distinct image of store amongst
customers.
- By location
- By ownership
- By layout
- By design
- By merchandise
- By service experience

25. Store formats by location
Chain Store format
• Multi locational
• Owned &operated by
single org with
signature store
design,
merchandising plan ,
cohesive promotional
and service strategy.
Eg Lifestyle
High Street format
• Busy shopping areas
• Less than 2000 sq ft,
no parking ,and
focused merchandise
• Eg
Amarsons,Premsons
Destination Format
• Only shopping
• Large in size,ample
parking,wide
merchandise
• Phoenix
Convenience store
format
• Area of target
customers
• Quick access and
wide range
• <5000
sqft,parking,extended
hours of operation
• D Mart

26. Store formats by merchandise
Family store
• Apparel for
whole family
• Eg Shoppers
Stop
Specialty Store
• Narrow
product line
with good
depth
• Attentive
customer
service
• Eg Park
Avenues by
Raymonds
Department
store
• More than
10000 sq
ft,more than
100000 SKU,
Several
departments,a
pparel,electron
ics,cosmetics
etc
• Each section
functions as a
separate SBU
• Eg Shoppers
Stop
Super Market
• Food,grocery
• Limited non
food items
• >3000 sq ft
and 30000
SKUs
• D Mart

27. Store formats by size
Super store
• Large, food
and non food
items. Twice
the size of
supermkt
,offers non
traditional
goods and
services such
as
pharmacy,flori
st,bakery
under one roof
• Eg Shoprite
Shopping mall
• Retail and
leisure
• More than
200000 sq ft
and runs as an
integrated
business by a
single owner
• Eg Park
Avenues by
Raymonds
Shopping
centre
• More than 5
shops each
approx 1000
sq ft
Hyper Market
• Food,grocery
• Pharmacy,flori
st,photo shop
cds etc
• >200000 sq ft
,large qtys in
each category
at low margins
• Shoprite

28. Store formats by price
Discount/baza
ar format
• Discounts at
25% below
or prices
below MRP.
• MFGS
overruns,irre
gulars,unsol
d from last
season
• Eg Parel
EDLP
• Every day
low pricing
• Found more
in Western
countries
Category
killer
• Large
specialty
store with
an
enormous
selection of
its product
category at
low prices
Warehouse
• large sale
of
discounted
merchandis
e by an
individual or
orgnaization
in free
access
ambience of
an
warehouse
• Both width
and depth of
retailed
merchandis
e
Single price
denomination
format
• Scrambled
merchandis
e at a single
low price
point
• Dollar
shops,
Rs49/99
shops

29. Store format by ownership
 Franchisee format: owned and operated by
individuals on behalf of and licensed by a large
organization
 Independent store: owned by a single person or a
partner

30. Store format by concessions
 Stopover format: piggybacks on other retail outlet
eg crosswords at petrol pumps, In and out at
BPCL
 Kiosks: placed in mall, airports, etc. used for
information, sales and promotion. Eg HT at
airports free copies

31. Impact of scalability
 Achieves profitability
 Ensures an efficient rollout
 Greatest shopping opportunity & highest
customer satisfaction
 Strategic mix of all formats to cater to all target
customers
 Achieves its positioning
 Core USP/value proposition for its customers