Retail and Sales Management

 ‘Retailing includes activities of marketing

and selling products or services to end
consumers for their own household or
personal use’

 ‘Retailer is a Person or Agent or Company

or Organization who is instrumental in
reaching the Goods or Merchandise or
Services to the End User or Ultimate
Consumer’
“Retailing includes all the activities in selling goods or
services directly to final consumers for personal
,nonbusiness use”

“A Retailer or retail store is any business enterprise

whose sales volume comes primarily from retailing”

“A retailer is a business and can be an individual, chain

store, departmental store, supermarket, specialty
store, small locality shop, paan-bidi kiosk, or a service
retailer etc., who links the producers and the final
consumer.
Evolution of Indian Retail

Malls, Hyper
markets,
Departmental
stores etc
Cooperative
stores

Mom and Pop

‘ Kirana
Stores’

Weekly Bazaars
Rural Fairs
(Melas)
 Retailing is divided into two categories
 Store retailing

 Non store retailing

 Direct selling, Direct marketing, Automatic vending,

Telemarketing, TV Home Shopping, Electronic shipping

 Functions of Retailers
 Arranging assortment
 Breaking bulk
 Holding stock
 Channel of communication
 Promotional support
 Extending services
 Retail Formats
 Ownership Based- It refers to the basic system
or basic format of doing business. Under this format,
proprietor is responsible for the success and failure
of the store. It is a format, which legally has no
separate existence from its owner
 Independent Retailer
 Chain store
 Franchising
 Leased Departments
 Vertical Marketing System
 Consumer Cooperatives
 Chain store- A chain retailer operates
multiple outlets under a common ownership
and name.
 Merits:
 good bargaining power with suppliers
 cost effectiveness and ease of managing store
operations
 use of technology increases work efficiency
 Demerits:
 huge establishment cost
 difficulty to monitor the day to day activities of
all the retail chains
 Few examples of chain stores
 Mc Donald’s

 Big Bazaar

 Café Coffee Day

 Pizza Hut

 Archies

 Westside
 Franchising- It signifies a contractual
agreement that allows the Franchisee to
operate a retail outlet using the name and
format of the franchiser. The franchisee
pays a fee and royalty.
 Product or trademark franchising: Here the
franchiser allows the use of the identity but does
not always control the operations. The franchisee
may draw up certain operating rules in
consultation with the franchiser
 Archies and Hallmark
  Business Format Franchising: Here the franchiser
draws out the strategic plans and lays the procedures
for operations and assist the franchisee on the issue of
site location, building the store, quality control, training
the store employees etc
 Mc Donald’s
 Domino’s Pizza
 Few Key Franchisers
 Aptech
 Koutons
 Reliance Fresh
 NIIT
 Pizza Hut
 Merits of Franchising to Franchisee
 Individual franchisee can own and run a retail store
with relatively less investment
 Well established and successful brands can create
more customers
 Demerits of Franchising to Franchisee
 Due to presence of more than one outlet of the
same barnd, the problem of over saturation may
occur, resulting in low sales
 Under contractual agreement Franchisee may be
restricted to make purchases through Franchiser or
through some approved suppliers
 Leased Department Stores- A leased
department which is also known as shop-in
shop or store-in store is a section of a
department in a retail store given to any
outside party on monthly rental basis. The
person who provides the store space to
outside party is known as lessor and the
person who takes the store space is known as
lessee
 Vertical Marketing Systems- It refers to an arrangement
in which the whole channel focuses on the same target market
at the end of the channel. This includes producer,
distributors, wholesalers & retailers acting in an integrated
manner
Corporate VMS- It refers to the producer’s ownership of
the entire channel right from manufacturing to wholesaling
& retailing like Sherwin-Williams not only makes paint but
also owns & operates 3000 retail outlets, Titan, Vimal
fabrics, Bata, BPCL owns many petroleum refineries as well
as petrol pumps
Administered VMS- It is achieved when some members
because of their position, size and power are in a
commanding position to secure cooperation and support
from resellers at different levels like HUL, ITC, P&G
Contractual VMS- It consists of independent businesses
at different levels in the channel. Members agree to
cooperate with each other by entering into contract like
Jaipuria group bottler for Pepsi , Body shop
Conventional vs. Vertical Marketing System
 Consumer Cooperatives- These retail outlets are owned and
managed by its customers. A group of customers (members)
start retail operations by investing money and then elect
members to run day to day activities and share profits on the
basis of investment made. However because of limited members
and lack of marketing skills State Consumer Cooperative
Organizations have come up like:
 Karnataka Cooperative Consumers Federation Limited
 Maharashtra State Cooperative Consumers Federation Ltd
 Gujarat State Cooperative Consumers Federation Ltd
Few examples of Consumer Cooperatives
 Kendriya Bhandar
 Apna Bazaar
 Sahakari Bhandar

Retail Formats

 Merchandise Based
 Food Oriented Retailers
 General Merchandise Retailers
 Food Oriented Retailer- They deal with food related
products and also sometimes deal with general
merchandise
 Convenience store- These are small retailers that
offer a limited variety of merchandise but at
convenient locations. These stores are modern
versions of the traditional ‘kirana’ store and are
relatively small stores 400-3000 sq ft located near
residential areas. They are usually small size easily
accessible stores offering a quick shopping and
extended hours.
 In & Out, Twenty Four Seven Retail Stores
 Conventional supermarket- It is a self service store
offering groceries, dairy products, shampoos, soaps,
clothes and household cleaning products etc. These
are located in or near residential high streets and
ranges till 50000 sq ft and carry around 10000 SKUs
 Apna bazaar, food world, super bazaar
 Food based superstore- Superstores are usually
large supermarkets that have space area till
50000 sq.ft. These stores sell grocery and many
other related products
 Food Mart Outlets

 More outlets

 Combination store/Super Center/Mega Store-

A super centre is a combination of supermarket
and a discount retail store. Its average size is
about 150000 sq.ft. and deal with grocery and
general merchandise
 Wal Mart
 Warehouse store/club- It is a retailer that
offers food and general merchandise at low
prices mainly to other retailers and also to final
consumers. Warehouse stores are membership
based retail outlets and are sometimes also known
as cash and carry wholesalers
 Big Bazaar Wholesale club
 Sam club
 Costco club
 Carrefour to operate in India through the
wholesale cash & carry route
 METRO cash & carry wholesale center
 General Merchandise Retailers
 Specialty store- The retail chains, which deal in specific

categories and provide deep assortment. They carry a

narrow product mix with depth of assortment within the
line.
 RPG's Music World, Mumbai's bookstore Crossword,

Music store Planet M, Park Avenue of Raymond's

 Category killer (Big Box Store): It is a large specialty

store featuring enormous selection of its product category

at relatively lower prices. Range 20000 to 100000 sq ft.
 Home Depot- Home Improvement
 Best Buy- In Electronics
 Staples- Office supplies
 Amazon.com- Books
 Hypermarket- It is a superstore which combines a
supermarket and a department store offering full lines of
grocery and general merchandise all under one roof. Ranges
from 15000 sq ft to 100000 sq ft and above.
 Reliance mart, Big bazaar, Giants
Future Group Big Bazaar

Reliance Retail Reliance Mart

Spencer's Spencer’s Hypes

Trent (Tata Group) Star India Bazaar

 Departmental stores- A store with several
departments like apparel, cosmetics, home-ware,
electronics etc under one roof with each section within
the store functioning as a strategic business unit.
Range more than 10000 sq ft. with usually more than
100000 SKU’S-(A number assigned to a product by a
retail store to identify the price, product options and
manufacturer of the merchandise)
 Shopper stop, Lifestyle, Pantaloons, Westside

 Malls- The largest form of organized retailing today.

Located mainly in metro cities. Ranges from 60,000 sq
ft to 7,00,000 sq ft and above. They lend an ideal
shopping experience with an amalgamation of product,
service and entertainment, all under a common roof
 Central, Huma mall, Iskon mall, Mall of India, Ansal Plaza,
Centre Plaza mall, Sahara mall
Departmental stores Promoter Group

Westside Trent Ltd

Shopper stop
Globus K Raheja Group

Pantaloons Pantaloon Retail

 Discount stores- Wal-Mart, Big Bazaar
 Factory outlets/Off-Price Stores
 Membership club/Warehouse Club
 Retail Formats
Group name
/ Retailer Existing Formats Brand Name
Pantaloon Department stores Pantaloons
Retail India ltd Hypermarkets Big bazaar
Supermarkets Food bazaar
Malls Central

RPG Retail Hypermarkets, Supermarkets Spencer’s

Music stores- speciality stores Music world

Shopper’s Department store Shopper’s stop

stop Ltd Books & music stores- hypermarket Crosswords
Home furnishings- speciality stores Home stop

Trent India Ltd Department stores Westside

Hypermarkets Star India bazaar

Viswapriya Discount stores Subhiksha

BPCL Convenience stores In & Out

FUTURE GROUP
Theories of Retail Development

 The Wheel of Retailing

 The Retail Accordion
 Melting Pot Theory (dialectic process)
The Wheel of Retailing (Malcomb McNair)

Entry phase
Vulnerability phase

Top heaviness
Conservatism Low price
Declining ROI Low margin
Low status
Becomes Limited products

Up-market location
Trading-up phase Fashion orientation
Becomes
Extended assortment
Higher prices
Elaborate facilities
Exotic services
 CONSUMER BEHAVIOUR

“Consumer behavior refers to the mental

and emotional process and the observable
behavior of consumers during searching,
purchasing and post consumption of a
product or service”
 Consumer decision making process

Need recognition

Information
search

Evaluation of
alternatives

Purchase
decision

Post purchase
behavior
 Consumer Buying process

Need recognition

Searching for
Retailers

Finalizing a
Retailer

Selecting
Merchandise

Purchasing
Merchandise
Level of Consumer Decisions
 Extensive decision making/Complex high-
involvement- This kind of decision making
usually happens for unfamiliar, expensive and
/or infrequently bought products. Like cars,
homes, computers etc
 Limited Decision Making- Here it happens
when an individual purchases a product
occasionally and is required to look for a
different brand or retailer for a product one is
used to because of non-performance or non-
availability
 Routine response/Programmed behaviour-
Here low involvement, frequently purchased
products are involved
 Impulse buying- It is those purchases that
do not involve any concious planning
Buying Roles

 Initiator- The initiator is the person who first

suggests or thinks of the idea of buying the
particular product or service.
 Influencer- Is a person whose views and advice
carry some weight in making the final decision
 Decider- The decider is a person who ultimately
determines any part of, or the entire buying decision-
whether to buy, what to buy, how to buy or where to
buy etc
 Buyer- Is the person who makes the actual purchase
 User- Is the person or persons who consume or use
the product or service
 Forms of Purchasing or Buying Behavior
 Complex
 This behavior occurs when customers get very
much involved in the purchase and acquaint
themselves with brands and quality differences
 Dissonance Reducing
 Sometimes in spite of high involvement, the buyer
may find it difficult to differentiate between
brands
 Habitual
 This behavior occurs on low involvement products
and on frequent purchases
 Variety Seeking
Private label Brands

“Private labels often referred to as in-house

brands or store brands, are those that are
owned by the retailers themselves”
Reasons for the development of Private
Label Brands
Identification of
need gap
Need to create
unique merchandise

Need for a Changing consumer

Private Label habits

Creating customer
Need to earn Loyalty
increased margins
The Process of Private Label Creation
 Defining the Objective

Defining the Gaps in the Market

Decision on make or buy and

sourcing

Determine the marketing and sales

strategy

Determine the measures of

performance
Steps involved in developing a Retail strategy
 Defining the Objective

Analyze situation

Identify options and allocate

resources

Develop the implementation plan

Monitor progress and control

The Retail Marketing Mix
Product
Price

Place

Retail Marketing
Mix
Promotion

Presentation

Customer
People
Service
Merchandising

 American Marketing Association ‘the

planning involved in marketing the right
merchandise at the right place at the right
time in the right quantities at the right
price’
 ‘planning, developing and presenting of
products for identified target markets
with regard to pricing, assorting, styling
and timing’
The Merchandiser: Role and Responsibilities
 Planning- Though the merchandisers may not be
directly involved in the actual purchase of
merchandise, they formulate the policies for the
areas in which they are responsible by forecasting
sales and analyzing consumer demand
 Directing- Guiding and training buyers in terms
product quantity and quality to be purchased
 Coordinating- Usually, merchandise managers
supervise the work of more than one buyer, hence
they need to coordinate the buying effort in terms of
how well it fits in with the store image and with the
other products being bought by other buyers
 Controlling
Visual Merchandising
It is largely associated with creating the
look of the store. Here the Visual
merchandisers are responsible for the
placement of design elements
Retail Pricing
Factors affecting Retail Pricing

Uniqueness of the
Product
Retail Business
Model

Pricing Strategy Competitors Pricing

Strategy

Economic Conditions
Target Market and
Demand
Retail Pricing Policies/Strategies

 Cost Oriented Pricing- A basic markup is

added to the cost of the merchandise to
arrive at the price. Here the retail price is
considered to be a function of cost and
markup
Retail Price= cost + markup
 Demand Oriented Pricing- Here the price is set
focusing on the quality and quantity that the
customer would prefer while purchasing
 Competition Oriented Pricing- Here the retailer
may set the price of the product at par with
competition, above competition or below the
competition
 Price Lining- It is a term used by retailers when
they sell their merchandise only at given prices
 Price Zone or Price Range- It is a range of

prices for a particular merchandise line

 Price Point- It is a specific price in that price

range
 Market skimming- This pricing strategy is also known as price
creaming. Market skimming pricing involves charging a high price for
new products because the customer is new and unique so (hopefully)
the consumers will be willing to pay higher prices for them.
 Market Penetration- Penetration pricing is used by firms who are
trying to establish themselves in a new market and gain instant
market share usually use this strategy. It is based around the idea
that a company will set their prices low to encourage customers to
buy their products instead of higher priced, more established brands.
 Value Pricing- Companies have adopted value pricing in which they win
loyal customers by charging a fairly low price for a high quality
offering. It is not simply setting lower prices it is a matter of
reengineering the company’s operations to become a low cost producer
without sacrificing quality.
 Everyday low pricing (EDLP), High-low pricing
 (Wal-Mart, Big Bazaar, Peter England)
 Psychological pricing/ Odd Pricing
 Price Bundling- This form of pricing is a variation
of multiple pricing where various products are
bundled together and sold as one unit
e.g. Happy price Menu, computer hardware,
printer and some software's sold together
 Multiunit Pricing- The retailer offers discounts
to customers who buy in quantity or who buy a
product bundle. E.g. one t-shirt at 255.99 and two
t-shirts for 355.99
Promotional Pricing
 Loss-leader pricing- Supermarkets and department
stores often drop the price on well-known brands to
increase additional store traffic
 Special event pricing- Sellers will establish special
prices in certain seasons to draw in more customers
 Psychological discounting- It involves setting an
artificial high price and then offering the product at
a less price. (Big Bazaar)

 Cash Rebates
 Longer Payment terms
 Low-interest financing
 Warranties & service contracts
Differentiated Pricing
 Price discrimination- It occurs when a company sells a
product or service at different prices
 Customer segment pricing- Different customer

groups pay different prices for the same product or

service. (Museums, Parks)
 Product form & Image Pricing- Many retail stores

may sell men’s shirts in many styles, fabrics and

levels of quality at different prices
 Channel Pricing- Coca-Cola, Pepsi, Nescafe etc

carries a different price depending on whether the

consumer purchases in a restaurant or a vending
machine
 Location Pricing, Geographic Pricing

 Time Pricing
Store Site Selection

 Types of Retail Locations

 Freestanding Store/Isolated Store
 Part of a Business District
 Part of a shopping center
Steps involved in choosing a Retail Location
 Market Identification
 Determining the Market Potential
 Demographic features of the population
 The Characteristics of the households in the
Area
 Competition and Compatibility
 Laws and Regulations
 Trade Area Analysis
 Identify alternative sites
Trade Area Analysis
Tertiary
TertiaryTrading
Trading
Area
Area
Secondary
Secondary
Trading
TradingArea
Area
Primary
Primary
Trading
TradingArea
Area

Retail Store
 Select the site
 Accessibility of the market
 The Total number of stores and type of stores
that exist in the area
 Amenities available
 To buy or to lease
 The product mix offered
 The Process of Merchandise Planning
and Management
 Merchandise Planning
 Product assortment

 Price Range

 space

 Sourcing
 Make or buy

 Vendor identification

 Negotiations

 Placing the order

 Allocation of Merchandise to stores

 Performance monitoring and evaluation
Store Design and Visual Merchandising
Elements of Store Design
 Exterior Store Design
 The Store Marquee- The store marquee is the

first ‘mark’ of identification of the retailer or the

retail store. It helps the retailer in identifying and
attracting customers
 The Storefront

 Interior Store Design

 Space Planning- It helps a retailer determine the
amount of space available for selling and for
storage. Space planning also includes
 The location of various departments

 The location of various products within the

department (the creation of planograms) etc

  Atmospherics and Aesthetics
 Fixtures are used for storing and displaying

products. They may be floor fixtures or wall

fixtures and are manufactured in various
materials like wood, glass,steel etc
 Flooring and ceilings

 Lighting
 Graphics and Signages
 The Layout- The layout of the store is the manner
in which merchandise or products have been arranged
in a retail store. It helps the movement of the
customer within the store
 Grid Layout

 Race Track/Loop Layout

 Freeform Layout
Grid Layout

The Grid Layout is the one most commonly

used in supermarkets and discount stores.
While one area of display is along the walls
of the store, the other merchandise is
displayed in a parallel manner. It allows for
movement within the area and uses space
effectively. It is therefore a preferred
layout in many retail stores that adopt
self-service
The Grid Layout
The Race Track/Loop Layout
As the name suggests, the display is in the
form of a racetrack or a loop. It provides
access to various shop-in-shops or
departments within the store
The Race Track/Loop Layout
The Freeform Layout
This type of layout allows free movement
and is often used in retail stores to
encourage people to browse and shop
The Freeform Layout
Types of Technologies used in Retailing
 In-store Technologies
 Interactive Kiosks- These are computers with

touch screen displays that provide shoppers with

information about products in the store. With the
help of these kiosks, customers can identify and
select products without moving around the store
 Virtual Display Case- A ‘virtual display case’ is a

large screen projection video display and computer

graphics system which shows images of shelves and
the merchandise on them. It allows customers to
scan and purchase items without going around the
store. Here it is done with the help of 3D glasses
and joystick
Interactive Kiosk
  Electronic Point-of-Sale Signage- Electronic
POS signs are LCDs that show the names and
prices of merchandise
 Hand-held Shopping Assistant- It consists of
a touch screen and barcode reader. As soon as
the customer scan the barcode of the chosen
product , the device provides them product
information, usage suggestions and warranty
information
 Body Scanning
 Electronic Retailing
 Self-scanning and Self-checkout system- It is
a hand-held bar code reader used by shoppers to
scan and tally their purchases while shopping. The
scanner displays the price of the chosen item.
After shopping, the scanner prints out a ticket
that the shopper can take to an express checkout
counter.
Self-scanning and Self-checkout system
Virtual grocery store
 HRM in Retail

 The Human Resource Function in retail

involves
 Identifying various roles in the organization
 Recruiting and selecting the persons with the
right attitude to fit the jobs
 Training
 Motivation of employees
 Evaluation of employee performance
Tasks to be performed in a Retail Organization

Buying and
Merchandising
Store Operations

Management Administration and

Legal

Finance and
Marketing and Accounts
Promotion mix
Category Management

 Category- ‘A category is a distinct,

manageable group of products or services
that consumers perceive to be inter-
related and /or substitutable’
The Reasons for the emergence of Category
Management

Consumer
Changes
Information Technology

Economic and
Competitive
Efficiency
Pressures
considerations
The Components of Category
Management
 Core Components
 Strategy
 Business Processes
 Enabling Components
 Organizational capabilities
 Information Technology
 Performance measurement
 Trading partner relationships
The Category Management Business Process
 Category Definition

Category Role

Category Assessment

Category strategy and Tactics

Category Plan Implementation

Category Review
 Category Role- It determines the priority
and the importance of various categories in
the overall business
 Four Consumer Based Category Roles
 Destination Categories- Here the retailer is
the customer’s first choice for specific
products. Destination categories are those
that the retailer uses to help itself as the
store of choice to the consumers by simply
offering better value to the customer
 Preferred/Routine Category- Here the
retailer deals with products that consumers
purchase as a matter of routine
 Occasional / Seasonal Category
 Convenience Category- These categories are
those that the consumer finds convenient to
pick up at a neighbourhood retailer, rather
than visiting another retailer who may offer a
wider selection