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Published by Priyanka Bujugundla
chap 45
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RETAIL MANAGEMENT Chapter - 2 RETAIL ORGANIZATION

The changing structure of retailing

• All dynamic developments in retailing (department stores,


warehouse clubs, and hypermarkets) are responses to a changing environment Changing customer demand, new technologies, intense competition, and social change create new opportunities even as they shake up existing business The Internet and web technologies have itself created a myriad of opportunities for web based business model of retailing This has created competition for the retailer in order to maintain and grow its share of market and compete within its band of retailers For e.g.: Bharat Petroleum - Making A Difference through Innovative Retailing

Theories of structural change in retailing

They are: • The wheel of retailing • The dialectic process • Natural selection . There are certain theories of how firms evolve and change the industry in the process.Theories of structural change in retailing Retailing has always been a dynamic industry.

The wheel of retailing concept describes how retail institutions transform during their evolutionary life cycles. It is basically a theory of cyclical or circular development.The wheel of retailing It was proposed by Malcomb McNair at Harvard University. .

these businesses strive to broaden their customer base and increase sales.The wheel of retailing 1. . 2. Their operations and facilities increase and become more expensive. With the passage of time. and status. The low prices are usually the result of some innovative costcutting procedures and soon attract competitors. New retailers often enter the market place with low prices. margins.

.The wheel of retailing 3. start carrying higher quality products or add services and ultimately emerge as a high cost price service retailer. By this time newer competitors as low price. They may move to better up market locations. supermarkets. low margin. 5. low status emerge and these competitors too follow the same evolutionary process. and mass merchandise went through this cycles. The wheel keeps on turning and department stories. 4.

The wheel of retailing .

The wheel of retailing .

The wheel of retailing .

The wheel of retailing Example? .

For example.The dialectic process Another theory explaining the changes that take place in the retail institutions is the Dialectic process or ‘melting pot’ theory.the blending of two opposite store types into a superior form.Fabindia and Nalli offer both a wide array of customer services and a broad assortment of specialized merchandise. two institutional forms with different advantages modify their formats till they develop a format that combines the advantages of both formats This second theory holds that retailing evolves through a dialectic process. According to this theory. .

The dialectic process .

. retail stores evolve to meet changes in the micro-environment. and political changes are most likely to grow and prosper. economic.Natural selection According to this theory. demographic. The retailers that successfully adapt to technological. social.

Classification of retail units • Bases for classification of retail units • Nature of ownership • Operational structure • Length and depth of merchandise • Nature of service • Types of pricing policy • Types of retail location • Method of customer interaction .

Merchandise Offering Variety (breadth of merchandise): wide vs.The number of merchandise categories Assortment (depth of merchandise): deep vs. shallow -the number of items in a category (SKUs) . narrow .

Retailers classified on the basis of ownership • • • • Sole proprietorship Partnership Joint venture Limited liability company (public and private) .

Service sponsor-retailer • Leased departments  Co-operatives     .Retailer’s classification on the basis of operational structure Independent retail unit Retail Chain Franchise Size and structural arrangements in franchising: 1. Manufacturer-retailer 2. Wholesaler-retailer franchise 3.

New areas • • • • • • • Leased department or Shop-in-shop Co-operative outlets Largest consumer cooperative society Major initiatives Benefits To Consumers Target market Revised positioning .

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Types of retail location • • • • Retailers at freestanding locations Retailers in business-associated locations Retailers in specialized markets Retailers at airports .

No Frills • Specialty Stores For e. : Hyperstar.Specialty Store Khadder.g: Chen One Discount Stores For e.: Footware .Khadi Specialty Hypermarkets For e. 7th avenue. Target.g. Coscto . Cosmo.: Best Price.Variety of merchandise mix • Departmental stores For e.g.g. Walmart.

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• There are certain methods: • Non-store retailers • Electronic retailing like Internet and Mobile Association of India .Methods of customer interaction • Retail transactions are carried out through face-to-face interaction between retailers and customers in the case of retail stores.

Convenience: customers can shop when it is convenient for them in accordance to their schedule .Information: relevant product information is available in detail .Time saving: one save resources on account of time and travelling cost and parking problems .Catalogue and direct mail retailing  Factors for the success of catalogue retailing: .No time limits: no undue pressure to buy unlike as in retail store shopping .

Multilevel network .Party-plan or group presentations .Direct selling Person-to-person selling: .

and direct-response advertising shown on TV . e-mail or Internet  Three types of television shopping: cable channels meant for shopping.Television shopping  Television shopping is retail format where existing and prospective customers watch a TV programme demonstrating a product and then place an order for the same by telephone. infomercials.

and have replaced many services formally requiring a human interface .Vending machine retailing  A form of non-store retailing where products or services are placed in a machine and are dispensed to customers when they deposit cash or use plastic money (credit or debit card)  Vending machines vending machines offer consumers greater convenience 24 hours a day.

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