Retailing

Retailing is the second- largest industry in the

United States both in number of establishments
and number of employees. It is also one of the
largest industries worldwide. Simultaneously
the retail industry employs a large chunk of
world’s population. Wal-Mart is the world’s
largest retailer. It has become the most
successful retail brand in the world. Retail is
India’s largest industry, accounting for over 10
percent of the country’s GDP and around eight
percent of the employment.
DEFINITIONS
Retailing refers to all the activities directly related to
the sale of goods and services to the ultimate
consumer for personal, non-business use. A retailer is
a person, agent, agency, company or organization
which is instrumental in reaching the goods, or
services to the ultimate consumer.
Retailing is breaking the bulk and deals with end
customer.
NATURE OF RETAILING
1. Part of Marketing:
Retailing is a part of marketing activity. It helps the
product to reach the final customer. This is also the goal of
marketing. Thus retailing facilitates marketing activities
by targeting a wide variety of customers.
2. Customer Centric:
The whole concept of retailing revolves around the
customer. Due to increased competition, all the retailers
want to attract the customers. Retailers use various sales
promotion methods such as discounts, etc., to lure the
customers.
 3. Multi-Dimensional:
Retailing has many dimensions. They vary from local kirana shops and kiosks to
super malls selling multiple branded products. These days there is a manifold
increase in the use of internet for buying and selling the goods.
 4. Varying Geographical Locations:
The geographical area of reach of retailers varies widely. It may vary from a local
area market selling goods to local customers only to super malls who have a
large variety of customers from different areas and even different cities. These
days due to the increased use of internet, the retailers have customers from all
over the country and even from abroad.
 5. Complex Management Process:
Retailing seems like a simple process. But in reality it is a complex management
process. Retailing involves retail stores being located in convenient places,
arranging goods according to different price brands, selling goods in the
quantities convenient to the customers, proper after sale services and a wide
range of sales promotion measures to attract the customers. Thereafter, there
should also be proper Customer Relationship Management (CRM)
programmes to maintain long healthy relationships with the customers

6. Transformational:
Since the start of retailing as a full-fledged business, there have been huge
transformations in it. These transformations generally are in the form of objectives
of retailing (earlier profit driven, now customer focused), methods of retailing
(from simple retail shops earlier to multi brand malls), the areas covered (earlier
small areas now whole country or even other countries), the customers (from
simple local customers to customers from all walks of life) etc.


7. Creation of Utilities:
A retailer helps in creation of time and place utilities. Time utility is created
when goods are made available at a particular time. The retailer creates time utility
by storing the goods with himself and makes them available to the customers as
and when needed. Place utility means making the goods available at different
places away from the place of manufacture. Retailers make the goods available to
the customers at various locations away from their manufacturing locations.
IMPORTANCE OF RETAILING
Providing Assortments
Supermarkets typically carry 20,000 to 30,000 different items made by more than
500 companies. Offering an assortment enables their customers to choose from a
wide selection of products, brands, sizes, and prices at one location. Manufacturers
specialize in producing specific types of products. If each of these manufacturers
had its own stores that sold only its own products, consumers would have to go to
many different stores to buy the groceries needed to prepare a single meal.
Breaking Bulk
To reduce transportation costs, manufacturers and wholesalers typically ship
cases of frozen dinners or cartons of blouses to retailers. Retailers then offer the
products in smaller quantities tailored to individual consumers’ and households’
consumption patterns—an activity called breaking bulk. Breaking bulk is
important to both manufacturers and consumers. It enables manufacturers to
efficiently make and ship merchandise in larger quantities and enables consumers
to purchase merchandise in smaller, more useful quantities.
Holding Inventory
A major value-providing activity performed by retailers is
holding inventory so that the products will be available when
consumers want them. Thus, consumers can keep a smaller
inventory of products at home because they know local retailers
will have the products available when they need more. This
activity is particularly important to consumers with limited
storage space.
Providing Services
Retailers provide services that make it easier for customers to
buy and use products. For example, retailers offer credit so that
consumers can have a product now and pay for it later. They
display products so that consumers can see and test them before
buying. Some retailers employ salespeople in stores or maintain
Web sites to answer questions and provide additional
information about products.
Functions of Retailers
1. Function of breaking bulk
Retailers break up large quantities into smaller units such as
individual canes, bottles, packets, appropriate for consumer use.
2. Function of creating place utility
Retailers create place utility by transporting goods to the point
of consumption.
3. Stocking Varieties of goods
Retailers buy varieties of goods from various manufacturers or
wholesalers. Thus, a retailer provides a wide range of choice
enabling the consumers to select the products of their choice.
4. Providing credit facilities to customers
Retailers grant credit facilities to consumers and thus increase
their short-term purchasing power.
5. Providing information to customers and wholesalers
Retailers act as a link between the buyers and wholesalers /
manufacturers. In the distribution channel, retailers are in direct
contact with customers. Retailers supply market information to
manufacturers either directly or through wholesalers.
6. Estimating the demand and arranging the purchase of the
product
Retailers create demand for products by communicating with their
customers. This demand creation is quite helpful for
manufacturers and wholesalers.
7. Acting as consumer’s agent
The retailers anticipate the wants of the consumers and then
supply them the right kind of goods at a reasonable price. Their job
is to make the consumer’s buying as easy and convenient as
possible.
8. Marketing functions
Retailers perform several marketing functions such as 
sales promotion, advertising and point of purchase
display. They induce customers to buy products of
reputed companies.
9. Connecting link
The retailers are the connecting link between the
wholesaler and the ultimate consumer.
TYPES OF RETAILERS
Retailing is basically classified into:

A. Store, and
B. Non-Store based retailing.
A. Store-Based Retailing:
Store-based retailing is further classified on the basis of – Forms of ownership.

Classification on the basis of Form of Ownership:

i. Independent Retailer:
An independent retailer is one who owns and operates only one retail outlet.
ii. A Chain Retailer:
A chain retailer is also known as a corporate retail chain.
iii. Franchising:
A franchise is a contractual agreement between the franchiser and
the franchisee, which allows the franchisee to conduct business
under an established name based on a particular business format
for which the franchisee is compensated.
iv. Leased Department:
These are also termed as shop-in-shops. When a section of a
department in a retail store is leased/rented to an outside party, it
is termed as a leased department.

B. Non-Store Retailing:

This is further classified into:

1. Direct Selling, and
2. Direct Response Marketing.
1. Direct Selling:
It involves the making of a personal contact with the
end consumer at his home or place of work. Products
such as – cosmetics, food, nutritional products, etc.,
are often sold in this manner.
2. Direct Response Marketing:
This involves various non-personal methods of
communicating with the customer. These include:
i. Mail Order/Catalogue Retailing 
ii. Television Shopping
TYPES OF RETAIL STORES
Department Stores
A department store is a set-up which offers wide range of products to
the end-users under one roof. In a department store, the consumers
can get almost all the products they aspire to shop at one place only.
Department stores provide a wide range of options to the consumers
and thus fulfill all their shopping needs.
Discount Stores
Discount stores also offer a huge range of products to the end-users
but at a discounted rate. The discount stores generally offer a limited
range and the quality in certain cases might be a little inferior as
compared to the department stores. Wal-Mart currently operates
more than 1300 discount stores in United States. In India Vishal
Mega Mart comes under discount store.
Supermarket
A retail store which generally sells food products and household items, properly
placed and arranged in specific departments is called a supermarket. A
supermarket is an advanced form of the small grocery stores and caters to the
household needs of the consumer. The various food products (meat, vegetables,
dairy products, juices etc) are all properly displayed at their respective
departments to catch the attention of the customers and for them to pick any
merchandise depending on their choice and need.

Warehouse Stores
A retail format which sells limited stock in bulk at a discounted rate is called as
warehouse store. Warehouse stores do not bother much about the interiors of the
store and the products are not properly displayed.

Mom and Pop Store (also called Kirana Store in India)

Mom and Pop stores are the small stores run by individuals in the nearby
locality to cater to daily needs of the consumers staying in the vicinity. They offer
selected items and are not at all organized. The size of the store would not be very
big and depends on the land available to the owner. They wouldn’t offer high-end
products.
Speciality Stores
As the name suggests, Speciality store would specialize in a particular product and would
not sell anything else apart from the specific range. Speciality stores sell only selective
items of one particular brand to the consumers and primarily focus on high customer
satisfaction.
Example -You will find only Reebok merchandise at Reebok store and nothing else, thus
making it a speciality store. You can never find Adidas shoes at a Reebok outlet.

 Malls
Many retail stores operating at one place form a mall. A mall would consist of several
retail outlets each selling their own merchandise but at a common platform.

E Tailers
Now a days the customers have the option of shopping while sitting at their homes. They
can place their order through internet, pay with the help of debit or credit cards and the
products are delivered at their homes only. However, there are chances that the products
ordered might not reach in the same condition as they were ordered. This kind of
shopping is convenient for those who have a hectic schedule and are reluctant to go to
retail outlets. In this kind of shopping; the transportation charges are borne by the
consumer itself.
FUNCTIONS OF RETAILING
1. Assembly and Sorting of Merchandise:
Retailer has to meet every need of merchandise(Goods) of common man. He has
to keep wide variety of goods and service that may be demanded by the customer.
Retailer collects and assembles the goods from different manufacturers or
middleman. He undertakes sorting or classifying of the goods to meet the specific
need of each customer.
2. Breaking the Bulk:
Retailer buys in large quantity “RETAILS’ or cuts into small bulk or pack to match
the need of each individual customer. The large bundle or bag or bulk is broken
into small units of packs that is convenient for a retailer to buy and carry.
3. Holding Stocks:
Merchandise of adequate quantity is always kept in stores so that it is delivered
whenever demanded. By holding ready stock, He creates Time Utility, and
increases value of goods. This is an important service that a retailer is offering both
to manufacturer and also to customer.
4. Collect Market Information:
Customers come into direct and personal contact with the
retailer. They share their opinion and ideas regarding the utility
and value of goods and what they further expect from the goods.
The retailer will share this information with the manufactures so
that manufacturer can design, price and deliver the product to
match the expectation of people, Common man may not be
having the idea of variety of goods available
5. Marketing Functions:
Retailer will perform marketing functions like transportation,
warehousing, promotion and in some cases also grading, packing
and labeling etc. In absence of retailer these activities have to be
carried out by manufacture themselves. Retailer undertakes the
task of transporting goods that are manufactured, keeps them in
his warehouse until they are demanded.
ORGANIZED RETAILING
The organized sector is registered with the
government. Therefore, it is called an organized sector.
In this sector, the work of people is assured, and they
get regular and fixed salaries. Organizations like
schools, enterprises, and hospitals fall under the
organized sector. People working in the organized
sector get some benefits such as they get the advantage
of regular salary as well as job security. In addition to
this, they are also provided with additional benefits
such as perquisites and allowances.
UNORGANIZED RETAILING
This sector is not registered with the government, and
terms of employment are not regular and fixed in this
sector. No government rules and regulations are
followed in the unorganized sector.
It is easy to establish an unorganized retail business as
there is no need for registration and affiliation in
entering this sector. Therefore, no taxes are levied on
this type of businesses.
TRENDS AND ISSUES IN ORGANIZED
RETAILING IN INDIA
1. Shift from Unorganized to Organized Retailing:
Retailing in India is thoroughly unorganized. There is no
supply chain management perspective. The key factors that
drive the growth of organized retailing in India are higher
disposable incomes, ris­ing urbanization, growing
consumerism, nuclear family structure, growing number of
educated and employed women population.
2. Store Design:
Irrespective of the format, the biggest challenge for organized
retailing is to create an environment that pulls in people and
makes them spend more time in shopping and also increases
the amount of impulse shopping.
 3. Competition:
Competition is increasing between different types of retailers.
Discount stores, departmental stores, supermarkets, etc. all compete for
the same customers. The small independent retailers survive by pro­
viding personal services to the customers.
4. New Form of Retailing:
Modern malls made their entry into India in the late 1990s, with the
establishment of Crossroads in Mumbai and Ansal Plaza in Delhi.
India’s first true shopping mall, ‘Crossroads’—complete with food
courts, recreation facilities and large car parking space—was
inaugurated as late as 1999 in Mumbai. Malls have given a new
dimension to shopping experience.
5. Technology:
Technology today has become a competitive tool. It is the technology
that helps the organized retailer to score over the unorganized players,
giving both cost and service advantages. Technology has also made
possible the growth of non-store retailing.
6. Consumer Buying Behaviour:
In India, there are no uniform trends with respect to consumer
buying behaviour. There are visible differences in the shopping
pattern of consumers across income segments. Organized
retailing has definitely made headway in the upper class.

7. Entertainment:
Modern retail formats provide a place for people to assemble,
and a means of entertainment, by provid­ing facilities such as
food courts, mini theatre, children’s play spaces and coffee
shops. These facilities help the customers enjoy shopping.
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