Retailers and Retail Formats

Chapter 2

1 Retailers and Retail Formats

 Learning objectives

To understand:
• Organized retail marketing
• Classification of retail firms

2 Retailers and Retail Formats

 Categories of Retailers/ Retail Formats

1.Store Based 2. Non-Store Based 2. Service Retailer

Merchandise •Direct Selling • Banks

Ownership Based Based •Direct Marketing • Car Rentals
• Independent •Online Shopping • Service
• Super Markets Mall Contracts
Single
• Hyper Markets •Television Shopping • Providers of
ownership
• Specialty •Vending Machines various
Retailer
Stores services
• Chain • Departmental
Retailer/Corpor Stores
ate chains • Off Price
• Leased Retailers
Departments • Factory Outlets
• Consumer • Catalogue
Cooperatives Showrooms
• Franchising

5 Retailers and Retail Formats

 I] Ownership Forms

a) Independent Single ownership store Retailer: An independent Retailer

owns & operates only one retail outlet.
Eg. Any retailer who has monopoly in your locality.
Kirana store, panwala, Local Baniya
Benzer, Instyle, Premsons, Amarsons etc.

b) Chain Retailer or Corporate Chain: When two or more outlets are under
a common ownership, & control, centralized buying & merchandising
operations, & similar lines of merchandise. Strongest in the food, drug,
shoe, variety & women clothing Industries.
Eg. Louis Phillippe, Van Heusen, Arrow, Globus, Pantaloon, Westside,
Shopper’s Stop etc. Could operate in various formats like discount stores
(Subhiksha), hypermarket (Hypercity), Supermarket (Big Bazaar) etc.

6 Retailers and Retail Formats

 c) Leased Departments: Also termed as shop-in-shops.

d) Consumer Cooperatives: Retail institution owned by its member

customers. These are outlets that are owned & operated by consumers
for their mutual benefit. These are based on open consumer
membership, equal voting among members, limited customer services &
shared profits among members.
Eg. Sahakari Bhandar, Apna Bazar.

e) Franchising: A contractual agreement between a franchiser and a

retail franchisee.
Eg. Dominos Pizza, McDonalds, Subway, KFC, Monginis.

7 Retailers and Retail Formats

 Franchise Formats
Product/ Trademark Business Format
franchisee acquires the franchisee receives assistance:
identity of a franchisor by location, quality control,
agreeing to sell products accounting systems, start-up
and/or operate under the practices, management
franchisor name training
franchisee operates common for restaurants, real
autonomously estate
Dealer agrees to sell certain Dealer must sell the
products provided by a franchiser’s product in the
manufacturer, but can use exact way the franchiser
any sales tactics he chooses. prescribes.
Ex – McDonalds
Ex – Avon, Archies stores
8 Retailers and Retail Formats
 Competitive State of Franchising

Advantages Disadvantages

 small capital required  oversaturation could

 acquire well-known names occur
 operating/management  franchisors may overstate
skills taught potential
 cooperative marketing  locked into contracts
possible  agreements may be
 exclusive selling rights cancelled or voided
 less costly per unit  royalties are based on
sales, not profits

9 Retailers and Retail Formats

 From the Franchisor’s Perspective

Benefits Potential Problems

 national or global
presence possible
 qualifications for
franchisee/ operations are
set and enforced
 money obtained at
delivery
 royalties represent
revenue stream
 potential for harm to
reputation
 lack of uniformity may
affect customer loyalty
 ineffective franchised
units may damage resale
value, profitability
 potential limits to
franchisor rules

10 Retailers and Retail Formats

 II. Merchandise Based

Convenience Stores

Supermarkets

Hypermarket

Specialty Stores

Department Stores

Off-price Retailers

Factory Outlets

11 Retailers and Retail Formats

 Merchandise Based
1. Convenience stores: defined as a miniature supermarket, carrying only a limited line of convenience goods. 3,000- 8,000 sq.ft.
E.g. HP Speed mart, In & Out, 7-Eleven, Albert Heijn, SPAR.

2. Supermarkets: Large, low cost, low margin, high volume. Self-service operations, U.S. consumers spend about a tenth of
income in supermarkets. Trends: the growth of prepared foods and time-saving products, and the need for convenience.
8,000-20,000sq.ft. E.g. Safeway, Tesco, Subhiksha, Food Bazaar.

3. Hypermarket: Combination of Supermarket & a department store. 80,000-2,20,000sq.ft. offer variety of products. One stop
shopping. Eg. Wal-Mart, Tesco, Big Bazaar, Star India Bazaar.

4. Specialty stores: Store specializing in a particular type of merchandise, merchandise is tailored to specific target markets.
Narrow product line with deep assortment. Under 8,000sq.ft. e.g.. Ikea, Gap, Proline fitness Station, Gautier furniture.

5. Department stores: carries a wide variety of shopping and specialty goods. Purchases are made within each department.
Averaging 20,000-40,000sq.ft, stocks b/w 50,000-1,00,000 SKU’s. e.g.. Marks & Spencer, Globus, Westside, Lifestyle.

6. Off price Retailers: Merchandise is sold at less than retail prices. Odd sizes, unpopular colours, minor defects, off seasons. E.g.
Pantaloons Factory Outlets, Levis Factory Outlets, etc.

7. Catalogue showrooms: specialize in hard goods such as housewares, jewellery & consumer electronics. 20,000- 2,00,000sq.ft.

8. Discount stores: a retailer that competes on the basis of low prices, high turnover, and high volume.

9. Restaurants: straddle the line between retailing establishments and service establishments.

12 Retailers and Retail Formats

 2. Forms of Non-store Retailing
High
Active customer involvement

Direct
selling
Tele-
marketing
On-line
retailing
Television
home
shopping
Automatic
vending
Direct mail
and
catalogs
Low
Low Active retailer involvement High
13 Retailers and Retail Formats
 Direct Selling

• Direct selling involves direct sales of goods and

services to consumers through personal interactions
and demonstrations in their home or office, involves
one-to-one or one-to-many selling.
• E.g. AMWAY, Oriflame, Herbalife etc.

14 Retailers and Retail Formats

 ii) DIRECT MARKETING- Involves direct response
marketing.
Eg. Dell Computer

Direct Mail
Direct
Marketing needs
no personal Catalogs & Mail Order
interaction
Telemarketing

15 Retailers and Retail Formats

 Electronic/Online Shopping

• Online retailing allows consumers to search for,

evaluate, and order products through the Internet.
• The advantages of online retailing are:
– ability to compare
– privacy
– Variety
E.g. eBay, Homeshop, Rediff shopping etc.

16 Retailers and Retail Formats

 Television shopping

• Shopping takes place by watching a product on

television.
E.g. Home Shop 18, Asian Sky Shop.

17 Retailers and Retail Formats

 Automatic Vending

• Non-store retailing that makes it possible to serve

customers where stores cannot.
• Maintenance and operating costs are high.
• Small convenience products are available in
vending machines.

18 Retailers and Retail Formats

 Direct Mail & Catalogs

• Marketing efficiency is improved through

segmentation and targeting.
• Customer value is enhance by providing a
fast and convenient means of making a
purchase.

19 Retailers and Retail Formats

 3. Service Retailer

i)Banks

ii) Car Rentals

iii) Service Contracts

iv) Providers of various services

20 Retailers and Retail Formats