RETAIL MANAGEMENT ASSIGNMENT

ANSWERS IN BLUE

Section – A
1. Which of the following statement about retail marketing is true;

 Sells products to other businesses

 Sells products to a company that resells them

 Sells products to final consumers

 Sells products for one's own use

2. The Retailer is a direct link between

 Consumer and retailer

 Manufacturer and wholesaler

 Manufacturer and consumer

 Middleman and the consumer

3. A multi-channel retailer sells merchandise

 Over telephone

 Through retail stores

 Over internet

 Over more than one channel

4. The word “retail” has been derived from which word?

 Latina

 French

 Greek

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Persian

5. E-Retailing refers to

 Sales of electronic items

 Catalog shopping

 Computerized store

 Retailing and shopping through internet

6. Which statement is NOT a benefit of formulating a retail strategy?

 A retailer is forced to study the legal, economic, and competitive market

 A retailer is shown how it can differentiate itself from competitors.

 Sales maximization is stressed.

 Crises are anticipated and often avoided.

7. Retailing creates-------.

 Time utility.

 Place utility.

 Ownership utility.

 All of these.

8. The purpose of retail business is to ….

 Go for partnership

 Make maximum promotion

 Extend to other localities

 Create employment.

 Offer products and services.

9. Under organized retailing, the most common feature is …..

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Number of brands and products are large

 Purchases are on credit basis

 Few employees exist

 Regular accounts are not maintained

 All the above

10. The breadth of merchandise a retailer offers is known as _________________.

 Variety

 Assortment

 Stock Keeping Unit

 None of the above

Section - B
 Explain the concept of retailing. Also state its importance with respect to Indian economy?

 Retailing is the set of business activities that adds value to the products and services sold to the final consumers for their

personal, family or household use.

 In other words, Retailing is a distribution process,

in which all the activities involved in selling the

merchandise directly to the final consumer.

 Any business entity which sells goods to the end

user and not for business use or for resale, whether

it is a manufacturer, wholesaler or retailer, are said

to be engaged in the process of retailing, irrespective

of the manner in which goods are sold.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 In retailing, the strategic plan is designed to set out the vision and provide guidance for retail decision-makers and

provide an outline of how the product and service mix will optimize customer satisfaction. As part of the strategic

planning process, it is customary for strategic planners to carry out a detailed environmental scan which seeks to identify

trends and opportunities in the competitive environment, market environment, economic environment and statutory-

political environment. The retail strategy is normally devised or reviewed every 3– 5 years by the chief executive officer.

 Retailers are the final link in the supply chain  between manufacturers and consumers. Retailing is important because it

allows manufacturers to focus on producing goods without having to be distracted by the enormous amount of effort

that it takes to interact with the end-user customers who want to purchase those goods.  Retailers should make the

purchase of goods easy for the consumer. That's why retail stores have salespeople. Retailing is about  displaying

products, describing the features and benefits of products, stocking products, processing payments and doing whatever

it takes to get the right products at the right price to the right customers at the right te.

 Types of retailing

 Importance with the Indian economy

 The Indian retail industry is the fifth largest industry in the world. It comprises organized and unorganized sectors, is one

of the fastest growing industries in India, especially over the last few years.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 With growing market demand, the industry is expected to have grown at a pace of 25-30% annually. The India retail

industry is valued around Rupees 35,000 crore in 2004-05. In the Indian retailing industry, food is the most dominating

sector and is growing at a rate of 9% annually.

 Also, more and more companies are willing to invest in India due to the fact that (first) two-thirds of the country’s

population is below 35 years of age and more than 50% of the country comprises middle class consumer which adds to

the willingness to consume. According to Business Monitor International middle and upper class consumer base has set

vast opportunities in India’s tier-II and tier-Ill cities. (Second)Indians natural tendency to experiment with modern

concepts without losing out on traditional behavior. (third) The creation of malls across the country and new high streets

has suddenly urged traditional retailers to modernize themselves or take risk, otherwise they will be outdated.

Development of retail is happening across tier 1, tier 2 and tier 3 towns and this makes chain store retail interesting.

 Permitting Foreign Direct Investment in the retailing sector can have immense benefits. It can generate huge

employment for the semi-skilled as well as illiterate population which otherwise can't be employed in the already

confined rural and organized sector. The retail sector is highly dependent on the rural sector. Thus it can facilitate the

improvement of the standard of living of farmers by purchasing commodities at a reasonable cost. It also stems out an

indirect employment generation channel by training and employing people in the transportation and distribution sectors

such as drivers, mechanics etc.

 What are the various retail pricing strategies? Discuss the influence of various external factors on the retail

price determination.

 Pricing has long been—and will continue to be—a core capability for retailers. Executives and merchants alike recognize

it as one of the key value levers, and, accordingly, retailers have worked to refine their pricing strategy, tactics, and tools

over the past several decades in hopes of optimizing their approach. Let’s first define what price strategy means. Simply

put, we believe price strategy can be articulated as purposeful pricing by channel and customer to maximize value

perception and business results (for example, traffic, basket, sales, and margin) and to increase customer engagement

and loyalty.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

  This statement of strategy can lend itself to an everyday-low-price or high/low approach, or a hybrid of the two. The

price strategy must answer the following questions: What is the target price position versus reference competitors by

category, channel, and geography? What is the optimal mix of price and promotion by category and channel? Which

customers and trip missions matter most? How do the most attractive customers shop? What drives value perception?

 There are various retail pricing strategies these are as follows

Before you can determine which retail pricing strategy to use in determining the right price  for your products, you must

consider the product's direct costs and other related expenses. These two key elements of overall product cost are

termed  cost  of goods and operating expense.

a) Markup Pricing: the markup on cost can be calculated by adding a preset, often industry standard, profit

margin  percentage to the cost of the merchandise. The percentage markup on retail is determined by dividing the dollar

markup by the retail price. For example, if your markup is $20 and your product retails for $40, your percentage markup

is: $20 / $40 = .50 or 50 percent. Remember to keep your markup high enough to allow price reductions and discounts,

cover shrinkage (theft,) and other anticipated expenses, in order to achieve a satisfactory profit. If you retain a varied

product selection, you can use different markups for each product line if needed.

b) Vendor Pricing: Manufacturer suggested retail price (MSRP) is a common strategy used by smaller retail shops to avoid

price wars and still maintain a decent profit. For any products you resell, you'll find some suppliers have minimum

advertised prices (MAP) and may not let you continue to sell their products if you try to price below their MAP.

c) Competitive Pricing: Consumers have many choices and are generally willing to shop around to get the best price.

Retailers considering a competitive pricing strategy need to provide outstanding customer service to stand above the

competition.

i. Pricing below competition simply means pricing products lower than the competitor's price. This strategy works well if

you as a retailer can negotiate the lowest buying prices from your suppliers, reduce other costs, and develop a marketing

strategy to focus on price specials.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

ii. Prestige pricing, or pricing above the competition, may be considered when your location, exclusivity, or unique

customer service can justify higher prices. Retailers that stock high-quality merchandise that isn't readily available at

other locations may be quite successful in pricing products above their competitors.

d) Psychological Pricing: Psychological pricing is a technique of setting prices at a certain level where the consumer

perceives the price to be fair, a bargain, or a sale price. The most common method is odd-pricing, which uses figures that

end in 5, 7 or 9, such as $15.97. It is believed that consumers tend to round down a price of $9.95 to $9, rather than $10.

e) Keystone Pricing: keystone  pricing involves doubling the cost paid for merchandise to set the retail price. Although this

was once the rule of pricing products, more intense competition and the continually changing retail landscape have

driven some retailers to use methods other than Keystone. However, stores selling higher-end goods with less sensitivity

to price may still use keystone.

f) Multiple Pricing: This  method  involves selling more than one product for one price, such as three items for $1. Not only

is this strategy great for markdowns or sales events, but retailers have noticed consumers tend to purchase in larger

amounts when they use multiple pricing strategies.

g) Pricing Strategies Based on Discounts Discount pricing  and price reductions are a natural part of retailing. Discounting

can include coupons, rebates, seasonal prices, and other promotional methods. Typically, price strategies based on

discounts are designed to bring in more traffic that might offer the potential of purchasing higher-priced items.

i. Discount Pricing:  This one is self-explanatory. Merchandise priced below cost is referred to as a  loss... Although retailers

make no profit on these discounted items, they hope the loss leader brings more consumers into the store who will

purchase other products at higher margins.

ii. Economy Pricing: Used by a wide range of businesses including generic food suppliers and discount retailers, economy

pricing aims to attract the most price-conscious of consumers. With this strategy, businesses minimize the costs

associated with marketing and production in order to keep product prices down.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

iii. Price Skimming: Designed to help businesses maximize sales on new products and services,  price skimming involves

setting rates high during the introductory phase. One of the benefits of price skimming is that it allows businesses to

maximize profits on early adopters before dropping prices to attract more price-sensitive consumers.

iv. Bundle Pricing: With bundle pricing, small businesses sell multiple products for a lower rate than consumers would face

if they purchased each item individually. Not only is bundling goods an effective way of moving unsold items that are

taking up space in your facility, but it can also increase the value perception in the eyes of your customers.

 The external factors that affect retail pricing strategies are

a) Competition: While fixing the price of the product, the firm needs to study the degree of competition in the market. If

there is high competition, the prices may be kept low to effectively face the competition, and if competition is low, the

prices may be kept high.

b) Consumers: The marketer should consider various consumer factors while fixing the prices. The consumer factors that

must be considered includes the price sensitivity of the buyer, purchasing power, and so on.

c) Government control: Government rules and regulation must be considered while fixing the prices. In certain products,

government may announce administered prices, and therefore the marketer has to consider such regulation while fixing

the prices.

d) Economic conditions: The marketer may also have to consider the economic condition prevailing in the market while

fixing the prices. At the time of recession, the consumer may have less money to spend, so the marketer may reduce the

prices in order to influence the buying decision of the consumers.

e) Channel intermediaries: The marketer must consider a number of channel intermediaries and their expectations. The

longer the chain of intermediaries, the higher would be the prices of the goods.

 What is the retail promotion mix? Describe its components.

 Retailers usually employ a combination of various elements of promotion mix to achieve promotional and business

objectives. The degree and the nature of usage of each of the promotion methods depend on the objectives of the retail

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 firm, product, market profile and availability of resources. Small retailers generally depend on point-of-purchase material

provided by the companies which provide the merchandise.

 Promotion is one of the method of marketing mix, it is used to persuade, inform and remind people about the firm and its

product. Promotion is the strong technique to influence feelings, beliefs and behavior of the consumers.

 Promotion mix employed by the retailers should be compatible with the desired store image, provide scope for

modification if need arises and fit within the budget allocation. Therefore, various retail promotion methods can be

compared on the basis of degree of control, flexibility, credibility and cost associated with them.

 The promotional element of the marketing mix is also referred to as the marketing communication or promotional mix,

and includes various communication methods and activities aimed at the target consumer. The integration of the

promotional elements is called integrated marketing communications, or IMC.

 The retail promotion mix varies from retailer to retailer and nation to nation depending upon technological

advancement, nature of competition and availability of finance etc. Retailers design a promotional mix in compliance

with store’s objectives such as positioning of the organization, attracting customers, increasing sales turnover, clear out

seasonal merchandise, announcing special events and educating public about the organization and its offerings.

 Four important part of promotion mix are

a) Advertisement - Advertisement can be defined as the “paid form of non-personal presentation and promotion of idea,

goods or services by an identified sponsor”. It is an impersonal presentation where a standard or common message

regarding the merits, price and availability of product or service is given by the producer or marketer. The advertisement

builds pull effect as advertising tries to pull the product by directly appealing to customer to buy it.

 Advertisement are of following types

i. Paid form - The sponsor has to pay for advertising he has to bear a cost to communicate with customers

ii. Impersonality - There is no face to face contact between customers and advertiser. It creates a monologue and not a

dialogue.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Merits of advertisement (1) introduces a new product in the market, (2) expansion of the market, (3) increased sales, (4)

fights competition, (5) enhances good-will, (6) educates the consumers, (7) elimination of middlemen, (8) better quality

products, (9) supports the salesmanship, (10) more employment opportunities, (11) reduction in the prices of newspapers

and magazines, (12) higher standard of living!

 Demerits of advertisement (1) Adds to the Cost of Production and Product (2) Leads to Price War (3) Deceptive

Advertising (4) Leads to Unequal Competition (5) Creates a Monopolistic Market (6) Promotes Unnecessary Consumption

(7) Decline in Moral Values.

b) Sales promotion

 Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are

advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-

media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market

demand or improve product availability. Examples include contests, coupons and many more.

 Some consumer sales promotional techniques are

 Price deal: A temporary reduction in the price, such as 50% off.

 Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards.
 Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package.
 Price-pack/Bonus packs deal: The packaging offers a consumer a certain percentage more of the product for the same
price (for example, 25 percent extra). This is another type of deal “in which customers are offered more of the product for
the same price”.[2] For example, a sales company may offer their consumers a bonus pack in which they can receive two
products for the price of one. In these scenarios, this bonus pack is framed as a gain because buyers

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 believe that they are obtaining a free
product.[2] The purchase of a bonus pack, however, is not always beneficial for the consumer. Sometimes consumers will
end up spending money on an item they would not normally buy had it not been in a bonus pack. As a result, items
bought in a bonus pack are often wasted and is viewed as a “loss” for the consumer.
 Coupons: coupons have become a standard mechanism for sales promotions.
 Loss leader: the price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales.
 Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a
salesperson for redemption.
 Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product.
 Sampling: Consumers get one sample for free, after their trial and then could decide whether to buy or not.

 Advantages of sales promotion (1) it stimulates in the consumers an attitude towards the product. (2) It creates a better
incentive in the consumers to make a purchase. It is a demand creator. (3) It gives direct inducement to the consumers to
take immediate action. (4) It is flexible. It can be used at any stage of a new product introduction. (5) Sales promotion
leads to low unit-cost, due to large-scale production and large-scale selling. (6) It is an effective supporter of sales. It
helps the salesman and makes his effort more productive. (7) The promotional tools are the most effective to be used in
increasing the sales volume. Sales promotion is effective when: (a) A new brand is introduced. (b) We have to
communicate a major improvement or attraction in product. (c) Enlarging the result of advertising. (d) Increasing the
number of retail stores in order to sell out products. (e) Engaging or embarking upon aggressive sales campaign.

 Disadvantages of sales promotion (1) Sales promotions are only supplementary devices to supplement selling efforts

of other promotion tools. (2) Sales promotion activities are having temporary and short life. The benefits are also short--

lived for three or four months. Then the demand will fall down. (3) They are non-recurring in their use. (4) Brand image is

affected by too many sales promotion activities. Consumers are of the opinion that due to the lack of popularity and

overstocking of products of a company, these sales promotional activities are conducted. (5) There is a feeling in the

minds of the customers that sales promotional activity tools are used to sell inadequate or second grade products. (6)

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Discounts or rebates are allowed by boosting the prices of the goods, with a view to sell at a gain, which is not real. (7)

Immediate increase in demand is stimulated by this. Hence it is a short-lived tool. (8) It is expensive and leads to a rise in

the price of products.

c) Personal selling

 Personal selling is also known as face-to-face selling in which one person who is the salesman tries to convince the

customer in buying a product. It is a promotional method by which the salesperson uses his or her skills and abilities in an

attempt to make a sale.

 Personal selling is a face-to-face selling technique by which a salesperson uses his or her interpersonal skills to

persuade a customer in buying a particular product. The salesperson tries to highlight various features of the

product to convince the customer that it will only add value. However, getting a customer to buy a product is

not the motive behind personal selling every time. Often companies try to follow this approach with customers

to make them aware of a new product.

 For example, salesmen go to different societies to sell the products. Another example  is found in department stores on the

perfume and cosmetic counters. A customer can get advice on how to apply the product and can try different products.

Products with relatively high prices, or with complex features, are often sold using personal selling. Great examples include

cars, office equipment (e.g. photocopiers) and many products that are sold by businesses to other industrial customers.

 Advantages of Personal Selling

1. It is a two-way communication. So the selling agent can get instant feedback from the prospective buyer. If it is
not according to plan he can even adjust his approach accordingly.

2. Since it is an interactive form of selling, it helps build trust with the customer. When you are selling high-value
products like cars, it is important that the customer trusts not only the product but the seller also. This is possible in
personal selling.

3. It also is a more persuasive  form of marketing. Since the customer is face to face with the salesperson it is not
easy to dismiss them. The customer at least makes an effort to listen.

4. Finally, direct selling helps reach the audience that we cannot reach in any other form. There are sometimes
customers that cannot be reached by any other method.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Disadvantages of personal selling

1. It is a relatively expensive method of selling. High capital costs are required.

2. Also, it is an extremely labor intensive method. A large sales force is required to carry out personal selling successfully.

3. The training of the salesperson is also a very time consuming and costly.

4. And the method can only reach a limited number of people. Unlike TV or Radio ads it does not cover s huge demographic.

 Features of personal selling

1. It is a face to face communication between buyer and seller.

2. It is a two way communication.
3. It is an oral communication.
4. It persuades the customers instead of pressurizing him.
5. It provides immediate feedback.
d) Public relations
 Public relations  (PR) is the practice of deliberately managing the release and spread of  information  between an
individual or an  organization  (such as a business, government agency, or a nonprofit organization) and the  public. Public
relations (PR) and publicity differ in that PR is controlled internally, whereas  publicity  is not controlled and contributed
by external parties.  [1]  Public relations may include an organization or  individual gaining  exposure  to their audiences
using topics of public interest and news items that do not require direct payment. Or  individual  gaining  exposure  to their
audiences using topics of public interest and news items that do not require direct payment.
 An example of good public relations would be generating an article featuring a client, rather than paying for the client to
be advertised next to the article.[4]  The aim of public relations is to inform the public, prospective customers, investors,
partners, employees, and other stakeholders, and ultimately persuade them to maintain a positive or favorable view
about the organization, its  leadership, products, or political decisions.
 Examples include newspaper and magazine articles, TVs and radio presentations, charitable contributions, speeches,
issue advertising, seminars.

 Discuss the current trends of retail industry in India. Also, explain the importance of information &
communication technology (ICT) in retail business?
 The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several
new players. Total consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824 billion
in 2017. It accounts for over 10 per cent of the country’s Gross Domestic Product (GDP) and around 8 per cent of the
employment.
 India is the world’s fifth largest global destination in the retail space. In FDI Confidence Index, India ranks 16th (after U.S.,
Canada, Germany, United Kingdom, China, Japan, France, Australia, Switzerland and Italy).
 Retail industry reached to US$ 950 billion in 2018 at CAGR of 13 per cent and expected to reach US$ 1.1 trillion by 2020.
Online retail sales are forecasted to grow at the rate of 31 per cent year-on-year to reach US$ 32.70 billion in 2018.
Revenue generated from online retail is projected to grow to US$ 60 billion by 2020.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Luxury market of India is expected to grow to US$ 30 billion by the end of 2018 from US$ 23.8 billion 2017 supported by
growing exposure of international brands amongst Indian youth and higher purchasing power of the upper class in tier 2
and 3 cities, according to Assocham.
 The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totaling US$ 1.85 billion during April
2000–June 2019, according to the Department for Promotion of Industry and Internal Trade (DPIIT). India’s retail sector
investments doubled to reach Rupees 1,300 crore (US$ 180.18 million) in 2018.
 The Government of India has taken various initiatives to improve the retail industry in India. Some of them are listed
below:
1. The Government of India may change the Foreign Direct Investment (FDI) rules in food processing, in a bid to permit e-
commerce companies and foreign retailers to sell Made in India consumer products
2. .Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online retail of goods and services
through the automatic route, thereby providing clarity on the existing businesses of e-commerce companies operating in
India.

Importance of information & communication technology (ICT) in retail business

 The increasing globalization of retailing, constant connectivity, contextual relevance, and a multi-screen world are
changing both online and offline shopping. As the in-store experiences blur, it is opening up exciting new possibilities for
forward-thinking retailers. Today’s retail business is highly dependent on information and if barriers are not met, a
thriving business will soon be doomed.
 Shopping once relied solely on human interaction in retail stores—with a little catalog shopping on the side. Those days
are approaching an end as companies like Apple allow paying for a purchase and walking out of a store without talking
to anyone. Meanwhile, robots are taking the place of the humans who check inventory on the shelves. Most of these
issues can be solved by the appropriate use of technology. Retailers need to transform their IT capabilities for a number
of reasons. These include: 1.To respond to rapidly emerging trends and deliver superior quality products and
services to customers with flexibility and speed. 2. To raise brand awareness among customers, increase sales,
retain existing customers and attract new ones. 3. To aggregate and analyze customer data to enhance
differentiation. 4. To operate the business more effectively retailers need to have systems working across
stores to ensure the effective use of products and to support optimized business process. 5. To integrate
different parts of a retail organization.
 Need of it in retailing
The retailing industry has been witnessing some exciting developments. The factors that lead to the need for Information
Technology in Retail Sector are:
1) Globalization of business operations: The increasing globalization has led to growing exposure to foreign markets
resulting in increasing demand for international shopping experience. As the industry become more global in its
procurement, manufacturing and marketing operations it requires a greater use of information technology to reduce the
time and space barriers.
2) Competition: Competition forces the retailer to become more efficient and effective. To gain the competitive advantage
by the use of information technology is to reduce operating costs through automation and to improve the product or
service quality by providing quality assurance with product differentiation.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 3) To meet the expectations of the Customers: With globalization, the world is brought closer and the world’s economy is
quickly becoming a single interdependent system. Information can be shared quickly and easily from all over the globe,
and barriers of linguistic and geographic boundaries can be torn down as people share ideas and information with each
other. To meet these requirements in a speedy way has necessitated the need for information technology.
4) Technological Revolutions: Information technology can speed up processes and deliver cost saving benefits to the
company. It is possible to transmit, store, process and distribute forms of information on a single integrated technology
and meet the needs of the customers.
5) Inventory management: To meet the expectations and challenges in the market, information technology is become the
need of the hour. Inventory management software is a computer-based system for tracking inventory levels, orders, sales
and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other
production-related documents. It helps to avoid product overstock and outages. An electronic inventory control system is
now a basic tool for retail management. Without this information, you cannot plan and execute a retail strategy.
6) Store Management: Information technology is beneficial for store management systems that give alerts to stock-out
items. Store systems are types marketing systems that use business process information systems to elevate and
transform the retail shopping experience of a shopper in both store-based and disinter-mediated retail shopping
environment.
7) Forecasting: Automated statistical forecasting systems create a far more calculated and accurate demand forecasting
as past sales data, forecasts, and future orders are all on one system. As a result, more accurate forecasts can be made
based on the totality of this information. Forecasting systems can reach the desktop of every line manager, bringing
chain wide input (if appropriate) into the process through interactive Web based applications. Thus forecasts can be
further adjusted, taking every aspect into account. The new approach to demand forecasting in retail will contribute to
the accuracy of future plans, the overall efficiency and profitability and profitability of retail operations.
 Information technologies in retail aim not only to increase the effectiveness of retail establishments in different areas of
their operations, but also to improve customer service – mainly due to the automation and customization of the offer.
Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved
rapidly to support this growth
 With changing customer demands and expectations rising rapidly, organizations need to be able to quickly respond in
order to capitalize on revenue opportunities.
 Write the short note on the following
a) Retail environment
i. The retail industry business has been around for centuries. It all started with a community general shop where people of
the community would shop for items of necessity. As societies advanced with population increase leading to expanded

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 cities, and new advanced technologies gave rise to interconnectivity as well easy communication between distanced
cities or societies, opportunity for specialty stores was formed.
ii. Retailers today are under pressure to control costs as a way to improve profit margins. Labor costs are often a
retailer’s largest controllable expense and therefore the most obvious choice for cut back, since retailers don’t want to
cut corners on product quality.
iii. INTERNAL ENVIRONMENT • Store location-it refers to the factors like competitors, transportation, population density
and nearness to suppliers. • Merchandise- it involves decision regarding general quality of goods and services offered.
Width assortment and depth assortment. • Store layout-it involves those factors that contribute to the uniqueness of
the store the interior and exterior like-entrance doors, windows ,height and size of store, colour etc. • Cost –it consists
of the pricing strategies to follow for the product. • Handling customers-handling large crowd at the same time
basically at discount or festive seasons • Human element-managing the human resources of the organization i.e.
satisfying their needs and wants, job satisfaction etc.
iv. EXTERNAL ENVIRONMENT
I. An  external environment  is composed of all the outside factors or influences that impact the operation of business. The
business must act or react to keep up its flow of operations. The external environment can be broken down into two
types: the micro environment and the macro environment.

II. Micro environment- There are five factors that affect the micro environment: suppliers, customers, marketing
intermediaries, financiers, and public perceptions. Suppliers: At your gas station, what happens if your suppliers don't
show up with food, beverages, gas and other products? You'll have nothing to sell, which will have a direct impact on
your operation. Customers: Customers are a requirement to run a business. If no one is buying, your gas station will have
to close its doors. Marketing Intermediaries: Middlemen have a direct impact on your business operation. They could be
your distributors, wholesalers, and other related people. Financiers: Typically, business owners take out a loan to get
started, and the growth of the business depends upon their ability to obtain additional loans. Let's say you've decided to
add a large kitchen to your gas station and offer fresh foods to your customers. This is a big investment. If the bank tells
you no, it may directly impact the way you want your business to operate in the future. Public Perceptions: Does your
gas station have a good reputation with the general public? You may have to work on this as you revitalize the business.
III. Macro environment – here are six factors that affect the macro environment, and these include economic, sociocultural,
political, legal, technical, and environmental considerations. Economic: Economic factors include supply and demand,
exchange and interest rates, taxes, and government spending. The way your retailer reacts to economic changes is key,
and this is where creativity comes into play. Sociocultural: This includes how consumers behave. For example, are
consumers choosing to improve their health by walking or biking to work, which could impact the sale of gas of a retail
gas station? Political: Changes in government policies and spending can affect your business. For instance, does your gas
station accept electronic benefits transfer (EBT)? Are there government projects in your area that will increase traffic? If
so, the projects might have a positive effect on your business . Legal: the retailer should be aware of the legal restrictions.
There are various acts that were designed to protect the interest of consumer. The retailer should be aware of the
ongoing changes in the government policies. Technical: in today’s world the IT has a very profound impact on the
trading retailers should employ effective technologies for their business as per the requirement and also taking budget
into consideration.
b) Ethical issues in retailing
I. Ethics is a branch of philosophy that deals with values relating to human conduct, with respect to right or good and
wrong or bad actions. Here ethics relates to retailers moral principles and values.
II. The retail industry is the first link in the distribution chain, from the customer’s point of view. It is therefore vital for
retailers to act in an ethical manner because they affect the lives of many people.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 III. Managing ethical values in retail store help legitimize managerial actions, strengthen the coherence and balance of the
organization’s culture, and improve trust relations.

IV. The unethical practices used by the retailers towards consumers are:

i. They charge full price for a sale item without the customers’ knowledge.

ii. Don’t tell the complete truth to a customer about the characteristics of a product.

V. Ethical practice towards consumers: The retailers should charge fair price for the products offered to them. The
consumers have the right to get correct and precise knowledge about the products sold to them in respect of warranty,
guaranty, price, usage, ingredients etc. Ethics is essential for the long run of the business. Ethical business is essential in
today’s competitive and dynamic environment.

VI. Ethical practice towards investors/shareholders: The shareholders are the owners of the business. Shareholders must be
given fair returns on their investment at regular intervals. The shareholders should be disclosed with correct information
about the financial status of the business organization. The business organization must act in the interest of the
shareholders.

VII. Ethical practices towards employees: Ethical practices must also be followed towards the employees. The retail industry
employs large volume of retail staff. Therefore proper policies and procedures must be framed for the employees
regarding recruitment, selection, training, promotion, welfare etc. Negative issues relating employment relations in the
work place can lead to loss of reputation and customers, it leads to poor staff morale, low productivity, and high labor
turnover. To avoid these confrontations the retail manager should follow ethical practices towards employees.

c) Service quality gap model

The five gaps that organizations should measure, manage and minimize:

I. Gap 1 is the distance between what customers expect and what managers think they expect - Clearly  survey research  is
a key way to narrow this gap.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 II. Gap 2 is between management perception and the actual specification of the  customer experience - Managers need to
make sure the organization is defining the level of service they believe is needed.
III. Gap 3 is from the experience specification to the delivery of the experience - Managers need to audit the customer
experience that their organization currently delivers in order to make sure it lives up to the spec.
IV. Gap 4 is the gap between the delivery of the customer experience and what is communicated to customers - All too often
organizations exaggerate what will be provided to customers, or discuss the best case rather than the likely case, raising
customer expectations and harming customer perceptions.
V. Finally, Gap 5 is the gap between a customer's perception of the experience and the customer's expectation of the
service - Customers' expectations have been shaped by word of mouth, their personal needs and their own past
experiences. Routine  transactional surveys  after delivering the customer experience are important for an organization to
measure customer perceptions of service.

VI. Each gap in the customer experience can be closed through diligent attention from management.  Survey software  can
be key to assisting management with this crucial task.

d) SWOT analysis for retailing

The Indian retail sector is growing rapidly. The relaxation in FDI norms is bound to generate even more interest in the
Indian retail market. To provide a bird’s-eye view of the market dynamics, we have given below the SWOT  analysis  of
the sector. This will help investors approach the market with a well-formed  strategy.

Strength

The inherent strength of the Indian economy provides a boost to retail. Following are some of the factors that strengthen
the economy:

Purchasing Power An increasing number of Indian consumers are ascending the economic pyramid to form an emerging
middle class. Though they still earn modest income between 1.70 and 5 USD per capita, per day, in the coming decade,
these consumers will collectively have around 6 trillion USD worth of purchasing power annually. In 2010, there were
about 470 million people in the emerging middle class. As per PwC estimate, this segment will grow to 570 million by
2021. This segment, existing between the lowest-income group and the middle class, will constitute about 42% of India’s
total population. Population Demographics India’s working population is expected to be 117 million over the next
decade as compared to China’s four million. In the following decade, from 2020, the former will add 98 million to its
workforce, while China will contract 51 million. This is a big positive for India. Low Retail Penetration The penetration of
organized retail in India is still very low at 6 to 8%, especially when compared to developed nations such as the US and
the UK which have retail penetration of 85% and 80%, respectively. With new policy reforms, increasing purchasing
power, and changing spending pattern, we are bound to see a difference in the coming years. As per the Images Retail
research, FY15 will witness a jump in the share of organized retail. Aspiring Middle Class With a population of 100
million, the tier II and III cities in India are larger than countries such as Germany and the UK. Besides, the untapped rural

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

population holds immense potential for retailers. It is estimated that by 2021, approximately 67% of Indians will still live
in rural areas.

Weakness

Despite the positives, there are certain facets of the sector that may dampen growth. Following are the key areas to
consider:

Political Uncertainty and Regulatory Requirements The announcement of FDI in retail has stirred the political pot. The
government faces stiff opposition with its allies threatening to withdraw support. In case, this policy is finally
implemented, there is another important aspect for the companies to overcome. The way the policy is currently drafted,
a retailer can set up stores only in those states which have agreed or will agree in the future to allow FDI in multi-brand
retail. Poor Infrastructure and Supply Chain Management Apart from the political and regulatory scenario,
infrastructure will play an important role in deciding how this sector will evolve and retailers will manage the supply
chain. While the FDI regulation states that the retailer will have to invest a substantial amount in building the
infrastructure, this will take time. Meanwhile, due to poor infrastructure, multiplicity of taxes, high cost of fuel,
dependence largely on the road transportation, etc. logistics still remains a high percentage of the cost of a product, in
certain cases going beyond 15 to 20%.

Opportunity

Retailers in India have been experimenting to arrive at a successful formula, but there is no ‘one size fits all’ strategy. The
market is still undergoing a lot of changes, both from the regulatory as well as demand side. Following are some of the
winning factors that players could focus on:

Innovation during PwC’s 15th Annual Global CEO Survey, one of the questions posed to the CEOs in the R&C sector was
as follows: To what extent do you anticipate changes at your company in any of the following areas over the next 12
months?  Nearly 73% indicated that the following two areas will change in the near-term:• R&D and innovation
capacity• Technology investments Digital Strategy Going digital is not only about e-commerce but the way interaction
will change in a few major areas including changing business models (e-commerce, e-payments and mobile
transactions), employee and customer engagement and investment in technology. Customers are demanding an
improved experience in terms of how to search, browse products and conduct transactions online. R&C organizations
need to engage with customers differently, in terms of using a range of channels. However, the overall customer
experience should be the same-smooth and seamless. Social media is also becoming a popular tool for consumers to
educate themselves about offerings, seek advice about products and compare brands. For retail companies it is

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 important to define how social media can support sales activities throughout the various channels, especially e-
commerce. Social media analytics is the focus area for retailers. Customer-centric Approach The retailer is no longer
looking at product innovation at the merchandising level only but the entire store today is a product that needs to appeal
to the customer. The following are factors that will make a difference: • Experience design• Digital change• Analytical
insights Changing the Regulatory Scenario Recently, the Indian government made the following two significant
announcements that will go a long way in developing the Indian retail sector: • Permitting foreign investment in multi-
brand retail trading• Simplifying the rules for single brand retail trading to make it more business-friendly

Threat

The retail sector is marred with many issues. The two most important threats are as follows:

Availability of land and real estate Retail space and rentals are key considerations in multi-brand retail and getting a
feasible rate in the desired location is important. There are retailers who have exited cities because of the high rentals
that put more pressure on profitability. Human Capital With attrition still very high in the industry, human capital
management continues to remain one of the top three agenda points for the retailer. The attrition in the industry can be
anywhere between 20 and 25% in non-food and grocery business to as high as 60% in the food and grocery segment.

Section C
SHER-BAGH
Pratap Kapoor’s wild dinning format is unique and one of its kind in Mumbai. Advertised as a jungle theme
restaurant, it is named as “Sher Bagh”. Wild dinning is more of an amusement park then dining space with all the
facilities, which can delight a family. It delivers its promises through robotic animals and a simulated thunderstorm,
features that would delight children. It gives the feeling of living in the wild for the urbanites and gives them a break
from the typical fancy restaurants.

Mr. Pratap was planning to convert his venture into a franchise format with opening of outlet in all the metro cities in
India. However, he is not sure of the sale ability of this kind of retail format in the Indian context. This critic of his venture
says that for adults who put the food over the experience of eating in an artificial jungle the wild dining restaurant is not
all that fun. In addition, the cost incurred in setting up the format is a point of concern.

o What is wild dining offering and who is its target market? Justify with reason .

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 This case is about an artificial jungle themed restaurant named –SHER BAGH, it provides its customers with a dining
experience that made them feel like they are in the wild, which would give them a different opinion about dinning out.
The restraint has robotic animals and some thunderstorm simulation which would provide them an experience out of
their norms hectic life. The target market of Mr. Pratap Kapoor are the urbanites as the restaurant gives them better
experience and also provides break from the typical fancy restaurants in nearby area.

o According to you, will this kind of theme based dining format succeed in the Indian context? Why? Explain
with relevant examples (can also quote a real life example).

 According to me, this kind of restraints have mild future. The reason for stating this is that, in India 70% of the population
still lives in rural areas and in that localities people still have orthodox mindset that urges them not to move to fancy
places like this. They still believe that their habits are still the best and also their community does not allow them to go in
the all fancy restaurants.

 But on the other side of the coin, the urbanities have started evolving themselves and allowing this type of new and fancy
ideas in their community to develop. The urban or high earning society started going to this kind of restraints to get
themselves out of their normal hectic routine, also mindsets of people are evolving and they are enjoying going to that
atmosphere.

 One real life restaurant example is KONEKO RESTAURANT

Felines (cat) and food? Yes, you can pet a cat and eat a snack at  KONEKO  in Manhattan. Touted as America’s first cat
cafe and sake bar, this eatery was inspired by one of the most unique restaurant themes in Japan…dining with cats
(koneko means “kitten” in Japanese).At Koneko, you can enjoy traditional Japanese fare with a glass of wine, beer, or
sake. About 20 cats roam freely at your feet. Unique restaurant themes can also be aligned with a strong mission. Guests
can adopt any of the furry friends that join them for a meal at KONEKO.
o Perform SWOT analysis for the case.
 Strength
The strength of this restaurant is that it has come up with a unique idea that can attract people around the city and also
from outside the city to experience the new and refreshing environment and if the restraint has good food then it is like
glitter on gold.
 Weakness
Although, the restaurant has come up with unique and refreshing idea, still it is unable to influence the mindset of rural
and orthodox people and also money is one of the major setbacks as the restaurant has to put higher prices on the menu
to cover up the expense cost.
 Opportunities
The opportunities are unlimited for the restaurant. One may be, if the restaurant can bring happiness on the faces of
their customers it may attract big players, helping them in generating more funding for the place and expand it to some
big multicity.
And also there are enormous opportunities to be climbed on.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)

 Threats
Since there are opportunities there comes threats as well. There are various threats but the main is the change in current
taste of the people, may be the organization (here restaurant) cannot upgrade with and hence loss its customers to
competitors.

BY NAMAN MEHTA, BBA 6TH SEMESTER SECTION (B)