Learning Objectives ® e Learning Objective I-1 Identify retailing activities. ‘Learning Objective I-2 Realize the importance of retailing in the U.S. and world economies. Learning Objective 1-3 Analyze the changing retail industry. Learning Objective 1-4 Recognize the opportunities for you in retailing. Learning Objective |-5 Understand the strategic retail management decision process.Retailers During CoronaInstitute of ‘Management Technology | -Haesig Kew Bosse ® Hyderabad What is Retailin oe) The Retailer's Role in a Supply Chain + Retailing — adds value to products and services sold to consumers * Not always in stores + May include lodging in a motel, home-delivered pizza + Or a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use + Retailer — sells products and services to consumers(Examples please) + Supply chainRetailers Create Value providing an assortment . breaking bulk . holding inventory providing services aah wn- Costs of Channel Activities + increase the costs of products and services + the costs in the supply chain can be almost as much as the cost to make the product . Channel of communication Institute of ‘Management Technolog —Haresig Kaw Buses Hyderabad $19.95 $14.00 Manufacturer Wholesaler Retailer Profit M Added value Mi CostRetail industry in India Delhi and Mumbai lead the rest of the country in terms of the highest concentration of shopping malls, accounting for 62 per cent of pan-India mall stock. Chennai and Bangalore together constitute around 20 per cent of built-up mall space in the country. Institute of ‘Management Technology | -Haessig Keowee Bosse Hyderabad Characteristics of retailing Direct end-user interaction Sole point in the value chain to provide platform for promotions Sales at the retail level is generally in smaller unit sizes Location is a critical factor for retail business Retail services are as important as core productsWhat is Retailing? J Vertical Integration- Firm performs more than one set of activities in the channel + Eg. Target/BigBazar -own store brands. It owns the manufacturing, controls the distribution, and is the retailer. + Footwear and apparel companies - flagship store -wider range of products than you can get from a regular retailer. + Outlet stores that sell last season's products at a discount. + Forward Integration — manufacturers undertake retailing activities + Ex: Ralph Lauren (New York Jones, Liz Claiborne) operates its own stores + Large retailers engage in both wholesaling and retailing. Ex:Wal-MartBackward Integration + Booksellers set the price at which Amazon.com can buy a book from them limiting company's profit. Hyderabad + IfAmazon.com publishes the book itself, it can acquire its books cheaper. + Additionally, Amazon can choose whether to sell its books to other bookstores or sell its books only through Amazon.com thereby controlling competition for its books and the price it can charge for them.Backward Integration wees * Booksellers set the price at which Amazon.com can buy a book from them limiting company's profit. + If Amazon.com publishes the book itself, it can acquire its books cheaper. + Additionally,, Amazon can choose whether to sell its books to other bookstores or sell its books only through Amazon.com thereby controlling competition for its books and the price it can charge for them. Starbucks * Chain of coffee shops- it has various suppliers and inputs - it buys coffee beans as well as customized mugs and products to sell in its stores. + It backward vertically integrated when it bought a coffee farm in China.What is Retailing? Differences in Distribution Channels around the World + U.S. retail industry has greatest retail density and concentration of large retail firms. + Have scale economies to operate their own warehouses, eliminating the need for wholesalers. + Result is an efficient distribution system. + Indian distribution system has small stores operated by relatively small firms and a large independent wholesale industry. + Infrastructure not well developed + Supply chain costs are highera . Institute of Categorizing retailers Management Technol nn Ka ecoee ‘Number of outlets - impact on competiiveness- Greater number R228 spread fixed cost( advertising etc.), economies of scale What Is Inventory Turnover? 2.Margin vs Turnover — 8) Gross margin= Net sales-COGS(e 9, 30% margin means 30s for every 100 rs sale) aE age = sales ) _ Inventory tumover- help businesses make better decisions on Pricing, manufacturing, marketing, and purchasing new inventory. 3.Location — accessibility, but technology is changing this variable a lot over Turnover cnet ped ‘erage inentry 4sie— rien solace ie big stores- prime location consistency in quality, imageValue proposition OILS Leo eens Seaaal a mn = n us a . === fy x . € ~~ ao - - _—— | Ss PT ee, Ses= Institute of = Management Technolog |-Smeig Ko Bos Hyderabad * Development of information systems ® Evolution of the Retail Industry + More than 90% of retail sales still made in stores + 50 years ago, retail was small, independent, local Now consists of large, national and scanning international firms of onions at the POS terminal at the checkout counter of the grocery store launches a chain of activities that ensures that the store will not run out before the next order arrives.Truth vs hype of big retailTruth vs hype of big retailetail strategy » Define the business of the firm in terms of orientation towards a particular sector e short-term and long-term - image and profitability e Identify the target market © Decide the broad direction the company must take in future elmplement an integrated plan that encompasses all aspects of retailing like pricing, location, and channel decisions e Evaluate and revise the plan depending on the nature of the internal and external environment Retailing concept covers four broad areas: & Customer orientation Goal orientation Value driven approach Coordinated effortRole of the Internet - Dogs the size of the retail organization play a big part in adapting easily to the |gternet? -Is the product/service offering also a prime determinant of cyber retailing? Branding through retailers How do retailers choose which brands to display? Why do many new products fail in the marketplace - How can manufacturers maximize the brand opportunity inva given retail outlet? - Whats future of Lifestyle Clustering? Consumption related mega trends. Ec. Suatainablittoreen products- Body shop, Fab India Institute of /Management Technology | _esig Kw Bs Drivers of success in the retail sector Customers are the driving force in change Re-evaluating the marketing plan Advanced education for retailers is critical for growth Strong visual recognition The workplace challenge Planning for successanes Kong Bese Some terminologies a Hyderabad Intratype competition: Competition between the same type of retailers E.g. Competition between Burger King and McDonalds is known as intra type competition as both the chains are ultimately offering the burgers. So they try to diversify their menus to give variety to their customers. Intertype competition: Competition between retailers that sell similar a jandise using different formats, such as discount and department stores. E.g. tires may be sold through automotive parts stores, discount stores, gas stations, or Specialized tire shops. — an offering of merchandise not typically Scrambled merchandisii pe, such as clothing in a drugstore associated with the stRural formats (Hariyali bazaar)Rart tog GISUCS — [eer stees fi nt iiiaj es ewan = *§ eee Piers en SO his | CramroninyPestonResinzoMaragement2022ourANIOMLNORMINIMINGIUORIOOAMIN A ve MD Go Se = comma 6 | 41s — + 2B Wrenn A pease Yow - YF hot ~ Cte BG BH Advantage India) > Cumuatve FO ifows ne preCOVID tales in February ‘eat eect ood 9 USE 344 > increasing purchasing power has ‘demand ADVANTAGE NDIA, es feo tone water ae ‘rating consume to 901 ‘rate praca wh easy Ca