Retail Management

Module 1: Introduction to Retailing

Retailing
Let’s start

• When is the last time you went to your favorite retailer? 

• Have you ever shopped online?
• Have you wondered about the journey those products take before making it out to the
shelves? 
• What is your definition the word “retail.”
Understanding Retailing

Definition of Retail: sale of goods and services to the public for consumption, covering a huge
range of customer needs

Retailers design to create contact efficiency

They identify target buyer segments, identify service outputs, and match offerings to provide value to each
target

Size and structures differences among retailers influence strategies and actions

95% of retail shops have only one location, and work with 5-9 employees
Types of Retail
The retail industry covers an enormous range of consumer needs.
Below are major shop segments in the retailing industry.
1. Apparel
2. Auto parts
3. Department stores
4. Pharmacy
5. Electronics
6. Footwear
7. Home improvement and Hardware
8. Jewellery
9. Sports goods
10. Grocery stores

This diversity in size and earnings is reflected in the range of different ownership and
management structures,
Types of Grocery Retail Outlets
There are various forms of segmentation done from industry to industry, following is FMCG
segments in Pakistan retail industry:
1. Chain stores
2. Department stores
3. Super markets
4. Top-up stores
5. Hypermarkets
6. Pharmacy
7. Min-markets
8. Khokha/cabin
9. Online Retailers
Supply Chains

A supply chain is system of organizations, people, activities, information, and resources that
involve transformation in an efficient, nimble, and seamless way

Supplier: person providing service (domestic or international)

Factory: supplier has raw materials made into products
Distribution Center: finished product goes here after leaving factory
Regional Distribution Center: local to area with many advantages
Challenges in Retailing

1. Inventory: having too much or too little can affect reputation of retailer and
perception of consumer

2. Mobile Experience and Engagement: 90% of customers use smartphones while

shopping

3. Digital Disruption: 5 stages (need recognition, information search, evaluating

alternatives, purchase decision, post-purchase evaluation)
Information Systems in Retail

Frequently utilized information systems in retail:

• Inventory management software: tracks inventory levels, orders, sales, and deliveries
• Customer Relationship Management: looks at data about current and future customers in
hopes of retaining and building relationships (personal profile/details, sales history,
communication, feedback)
• Accounting Information Systems: system of collecting, storing, and processing data used by
decision makers
Why Working Retail Is Tough
Inventory levels and assortment: must have right amount of product available at right times
in right places

Mobile engagement and experience: 90% of consumers use smartphones while shopping,
mobile revenue is expected to grow multifold

Digital disruption: need recognition, information search, evaluating alternatives, decision to

purchase, post-purchase evaluation

Socially conscious consumer: eco-friendly or “green” products among millennials and

younger
The Retail Mix

Price: What is strategy for marketing?

Promotion: What tools will you use to influence consumers purchase decision
Place: What are hours of operation, how many employees are needed?
Product: What type do you intend to carry, what is depth that you will carry in assortment?
Presentation: Will there be a free-standing location?
Store Image: What is layout, graphics?
Retailer Classification
Five Primary Ownership Types:
1. Corporate chain: multiple stores, central ownership, and consistent standards
operating on a large scale
2. Independent store: buy products through wholesalers which apply an upcharge
for warehousing and handling product
3. Wholesaler: product distributors focused on supply chain and logistics
4. Franchise: owned by individual business owners who have contracted with
larger company
5. Co-op: when several independent retailers join together to consolidate
purchases, increasing buying power
Retailer Types:

Club and Warehouse Stores: offer value, require memberships

Mass Merchandisers: low prices, busy
Convenience and Drug Stores: limited selection
Dollar Stores: low prices, lesser: known brands
Natural and Organic Stores: array of unique items at high price
Specialty Retailers: offers alternative to mass merchandisers
Online Retailers: home delivery
Traditional Grocers: wide assortment, local
Grocery Retailers
Changes in Grocery Retailing

Retailers aren’t just competing with one another through the items they offer and the pricing
they set. Instead, they’re competing on a whole host of other criteria, such as convenience and
customer service.

Convenience: is the store nearby? Is there ample parking? Will they have what I need?

Customer Service: is this a place I like to shop? Is the store clean? Are the staff
available/helpful, can I get in and out quickly
Variety and Assortment of Goods in Food Retail

Categories are divided into several segments & sub-segments, which can be further divided into
brands and into Stock Keeping Units (SKU)
• Segments and sub-segments: Shampoo, Coconut Oil
• Leading brands: Dove

Retailers make assortment decisions at category, segment, brand, & SKU level
• L’Oreal Hair Protect 360ML vs. Dove Fall Repair 360ML
Retailing Channels
Retail Channels

1. Direct Selling
2. Catalog Channel
3. Television Home Shopping
4. Automated Retailing – Vending Options
5. Internet – E-commerce
6. Store Channel
Internet Retailing

Advantages:
• Consumers can be reached out of immediate market area
• Retailer is more convenient
• Maximizes retailers ability to fulfill orders
• Provides a lot of information for the retailer
Disadvantages:
• Maintaining e-commerce infrastructure is very expensive
• E-tailing does not provide the same social or emotional experience as in-store
shopping does for the consumer
• Shoppers are responsible for the return of incorrect purchases
• Data breaches are always something to be wary of!
Retail Channels – Physical Store

1. Touch & Feel Products

2. Personal Service
3. Risk Reduction
4. Immediate Gratification
5. Social Experience
6. Browsing Assortment
Single Channel, Multi-Channel, and Omni-Channel
Retailing
Understanding Single Channel, Multi-Channel, and
Omni-Channel Retailing
Single channel: Refers to a producer or retailer’s effort to reach customers
through only one distribution option, regardless of whether it’s online, face-to-face
selling or traditional retail.

Multi-channel: Refers to a producers or retailer’s effort to combine and blend

different distribution channels to accommodate where and how consumers shop,
ensuring that the producers and retailers will be present when the purchase
decision is made.

Omni-channel: Marketing that is an expansion of the multi-channel concept by

incorporating all the communication and interactions between customer, brand,
and retailer, regardless of whether it’s at a point of purchase or not.
Multi-Channel Retailing

Benefits:
1. Overcoming the limitations of an existing channel
2. Increases customer satisfaction and option to transact
3. Customer information is gathered for planning
4. Through low cost channels, retailers can enter in new markets economically
5. Building a Strategic advantage
Multi-Channel Retailing

Organization of Running Multi-channel:

1. Centralized customer database
2. Brand Image of the Store
3. Product Assortment
4. Pricing
5. Channel Switching
Omni-Channel Retailing
Omni-channel retail is a multichannel approach to sales that focus on providing seamless
customer experience whether the client is shopping online (website, application, social media,
3P website) from a mobile device, a laptop or in a brick-and-mortar store. 

It includes an emphasis on optimizing your business through channel diversification and

comprehensive integration of your data and systems and satisfy your customer.

Meet customers where they are.

Stand out in the crowd
Optimize your business with data and analytics
Omni-Channel Retailing
Pillars:

1. Sales Channels – Multiple

2. Marketing and Advertising
3. Operations
4. Shipping and fulfillment
Store-Based Strategy Mixes
Wheel of Retailing
Entry: retailer penetrates a new market, ex: low prices, low retailer margins, low customer
awareness
• focus on streamlining operations to support new venture
Growth: retailer has foothold in new market and seeks to expand
• higher prices and retailer margins, improved customer awareness
Maturity: retailer operates at full capacity
• robust infrastructure, capabilities, and service
Decline: retailer is vulnerable to lower cost operations
• doesn’t mean retailer will fail
Retail Tactic:
Scrambled Merchandising
broadens assortment to include items that are generally outside their focus

Adds to shopping experience rather than distracting

Risk comes when unexpected items are included in assortment that confuse shoppers.

Can detract from experience and tarnish retailer’s brand image