5th Edition

Chapter 1

Introduction to the
World of Retailing

McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 What is Retailing?

• Retailing – a set of business activities that

adds value to the products and services sold
to consumers for their personal or family use.

• A retailer is a business that sells products

and/or services to consumers for personal or
family use.
 Examples of Retailers
• Retailers:

- Holiday Inn, McDonalds,

Amazon.com, D mart, Future group.
 Who is a retailer?
A retailer is a person who has set up a
commercial establishment to sell goods and
services in smaller quantities to the end
consumers for their personal use.
 Characteristics of Retail

• The retailer is the last link in the supply chain

connecting the manufacturer and wholesaler to
the end consumer.

• The retailer is the first to identify shifts in

trends and consumer preferences because of
close connection with ultimate consumers.
 Functions of Retailing

1. Delivery of the goods to the end consumer

2. Is an essential part of the distribution chain
3. Finances the wholesaler
4. Stores the goods according to market
requirement.
5. Assumes storage and credit risks
6. Offers wide variety of customers and enticing
price range
7. Generating employment for masses
 Manufacturer’s Perspective
The Four P’s of Marketing

Retailers
Retailersare
arepart
partofofthe
the
distribution channel
distribution channel
Product

Distribution Price

Promotion
 Distribution Channel
PPT 1-4
Distribution Channel
 Retail format
• The retail format is the store 'package'
that the retailer presents to the shopper. A
format is defined as a type of retail.
 Retail format types
• Convenience store - Close to residential areas
• Chain of stores - Single retailer establishing
chain of stores.
• Franchise - Retails owned and operated by
Individuals
• Departmental stores - Several departments
• Supermarket – Self services
• Hypermarket – Large in size
• Shopping mall – Arrangement of retail stores
• Discount stores - Services at low prices
 Market Profile of Various Formats

• Department Stores: Shopper Stop, Lifestyle, Pantaloons

• Hypermarkets: Big Bazaar, Spencer
• Supermarkets and Conv. Stores: Subhiksha, Trinethra
 Retail channel
• Retail is at the end of the supply chain. The
supply chain begins with raw materials and
ends with finished goods being sold to people
like our guy that needs a shirt. There are
variety of places and methods for buying
finished goods.
 Types of channels
• Personal Selling
• Sales Outsourcing
• Ecommerce
• White label
 Retail channels
• Personal Selling
Using a sales force to establish a network
of customers and sell to them. Common in areas
such as business-to-business sales.

• Sales Outsourcing
Using a third party as a sales force
 Retail channels
• Automated Retail - Automated retail such as
self-service kiosks.
• Ecommerce - Selling through digital channels
such as a website, app or game.
• Resellers - Firms that purchase your products
and services to resell them such as sellers on
an ecommerce platform.
 Retail channels
• White label - Allowing your products and
services to be branded by resellers.

• Direct Marketing - Directly reaching out to

prospective customers by telephone, mail,
door-to-door or digital communication tools
such as email.
 Non-store retailing
• Non-store retailing is the selling of goods and
services outside the confines of
a retail facility. It is a generic term
describing retailing taking place outside
of shops and stores
 Direct retailing is the portion of direct
Direct marketing in which ultimate
Retailing consumers, not business customers,
do the buying.
Direct selling: the sale of a
Direct consumer product or service, person-
Selling to-person, away from a fixed retail
location.

Vending Vending machines allow customers to

Machine purchase and receive merchandise
Sales from a machine.
Advantages of online retail
• Easy access to market
• Reduced overheads
• Potential for rapid growth
• Widen your market / export
• Customer intelligence
Disadvantages of online retail
• Website costs
• Security and fraud
• Legal issues
• Advertising costs
• Customer trust
Ethical and Legal Issues
Consumer
Fraud
Supplier
Ecological Labor
Considerations
• Ethical and Practices

Legal
Use of • Issues in Retail
Customer Theft
Information • Retailing

Slotting
Allowances
 Online Sales
• Online shopping is a form of electronic commerce
which allows consumers to directly buy goods or
services from a seller over the Internet using a web
browser. When an online store is set up to enable
businesses to buy from another businesses, the
process is called business-to-business
(B2B) online shopping.
THE GREAT INDIAN RETAIL STORY
 Indian retail industry
• 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.
 Importance of Retailing

• Retailing shapes the lifestyle of people.

• Retailing contributes to the economy
• Retailing dominates the supply chain
• Retailing offers itself as an academic course.
• Retailers have status as employers.
• Retailers are gatekeepers within the channel of
distribution.
• Retailers have scope for expanding internationally.
https://accountlearning.com/importance-of-
retail- marketing/
 Economic importance
• Retailing is a major force in the economy.
Three million U.S. retailers employ 14 million
people and generate an astonishing $2.5
trillion in annual revenues. This translates into
a $9,100 retail expenditure for every man,
woman, and child in the United States.
 Changing trends in retailing
• Simplifying Shopping
• Customisation
• Social Media
• Brick and Mortar (The Customer Experience)
• Data
Simplifying Shopping
• Players like Amazon will make it easier to buy
through offering auto-renewals, one-tap
purchases, and same-day delivery. Products
like Alexa and Google Home could help with
need to buy by removing the chore involved in
shopping. Now, you can just tell the artificial
intelligence.
Customisation
• Customisation will be detailed and allow
shoppers to build their own products from
scratch. This allows retailers to fit a unique
experience into their store.
• Nike will be opening its new store in Times
Square in New York with one of the main selling
points being customisable shoes instore. You can
already do this online with Nike ID.
Personalisation is becoming a huge part of the
Nike brand.
Social Media
Social media is having a strong influence on
retail trends now. With the likes of Instagram
stories, Facebook live, and messenger apps,
retail strategies have to adapt to meet their
audiences
Brick and Mortar (The Customer Experience)
• People still go to physical stores because they
want to get - often at a traditional storefront.
Data
Walmart is now using machine learning and Big
Data in various aspects of their business.
- They use machine learning to optimise delivery
routes. They also use facial recognition to spot
unhappy or frustrated shoppers.
FDI in Indian retail and its importance
• The unorganized retail sector as has been
mentioned earlier occupies 98% of the retail
sector and the rest 2% is contributed by the
organized sector.
• FDI provides a win-win situation both to the
host as well as home country.
• Initially FDI was not allowed in India in the
retail sector because of the fear of the job
losses, procurement from international
market, competition and loss of entrepre

http://www.legalservicesindia.com/article/1473
/FDI-in-Retail-Sector.htmlneurial opportunities
 FDI in “single-brand” retail

While the precise meaning of single-brand retail

has not been clearly defined in any Indian
government circular or notification, single-brand
retail generally refers to the selling of goods
under a single brand name
 FDI in “multi-brand” retail

While the government of India has also not

clearly defined the term “multi-brand retail,” FDI
in multi-brand retail generally refers to selling
multiple brands under one roof. Currently, this
sector is limited to a maximum of 49 percent
foreign equity participation.
• Ø Benefits to consumers: Consumer will get
variety of products at low prices compared to
market rates, and will have more choice to get
international brands at one place.
Ø Lack of infrastructure in the retailing chain
has been one of the common issues in India
for years which have led the process to an
incompetent market mechanism
USA - Retail
 The organized players
Indian companies
Future Group
Reliance Retail
Bharti
Shoppers'Stop
Pyramid
Aditya Birla Group
Subhiksha
Spencer Group
Tata – Westside,
Tata – Chroma
Foreign Players
 Nike (Single brand)
 Levis (Single brand)
 Wal-mart (JV)
 Metro (Cash&Carry)