RETAIL MANAGEMENT

Module 1: Introduction to Retailing-

• Introduction - Meaning and definition (2M)
• Characteristics of Retailing - (2M/5M)
• Functions of Retailing(15M)
• Types of Retailing- In Store retailing, Non store retailing,
franchising(2M/5M/15M)
• Forms of Retailing based on ownership - Independent Retailer,
Existing Retail Business, Franchise, Dealership, Network
Marketing(2M/15M)
• Wheel of Retailing - (2M/5M)
• Retail Life Cycle -(5M/15M)
• Present Indian Retail Scenario in India(Seminar/Assignment)
International Perspective in Retail Business -(Seminar/Assignment)
 Introduction to Retailing

Introduction
The consumer is king in today’s complex world, and retailers place a higher
priority on customer pleasure. Given the hectic lifestyles of today’s
consumers. Shops offer services in addition to products. Any nation’s
economic system places a high value on retailing. It is the last phase of
product or service distribution. By creating jobs, it not only boosts the GDP
of the nation but also gives a lot of individuals more power
The distribution of finished products begins with the producer and ends at
the ultimate consumer. Between the two of them, there is a middle person
the retailer. A distribution channel represents a chain of businesses or
intermediaries through which the final buyer purchases a good or service.
Distribution channels include wholesalers, retailers, distributors, and the
Internet

Meaning of Retailing
The term “retail” comes from the French word “re-tailer,” which means ‘to
cut a piece of’ or ‘to break mass’. Thus, retailing refers to “the sale of
modest quantities of products.” A retailer buys huge amounts of items
from a wholesaler, divides them into the lowest possible quantities, and
sells them to the final Customers:
In other words, Retailing means “the selling of merchandise and certain
services to consumers. It ordinarily involves the selling of individual units
or small lots to large numbers of customers by a business set up for that
specific purpose.”

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Definitions of Retailing
American Marketing Association defines the term retail is “A set of
business activities carried on to accomplishing the exchange of goods and
services for purposes of personal, family, or household use, whether
performed in a store or by some form of non-selling. ”
Philip Kotler defines, “Retailing includes all activities involved in selling
goods or services to the final consumer for personal, non-business use.”

Characteristics of Retailing
The following are the some of the major characteristics of the retailing
discussed as below:
1. Direct contact with the customer: Retailing involves direct contact
with the customer, so retailers need to understand customer needs and
preferences to provide them with an effective shopping experience.
2. Marketing orientation: Effective retailing involves understanding the
needs and preferences of customers, and developing strategies to meet
those needs.
3. Point-of-Purchase Display and Promotions: To enhance the shopping
experience for customers, retailers must focus on designing effective
point- of-purchase displays that make it easy for customers to locate the
products they desire.
4. Relationship with the customers: Retailers must prioritize developing
relationship with customers to foster loyalty and ensure repeat business.
5. Multi-channel Retailing: In the current market, it is crucial for retailers
to adopt a multi-channel approach to their business. This means providing
customers with the convenience of purchasing products both online and
in-store.

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6. Lower average Amount of Sales Transaction: Retail businesses often
have lower average sales transactions compared to other types of
businesses.
7. Larger number of Retail Business Units: Due to the variety of retail
outlets, retailers often have a higher number of business units than other
businesses.
8. Stock Small quantities of goods: To keep-up with the fast-paced
demands of the market, retailers usually maintain a smaller inventory of
items compared to other businesses.

Functions of Retailing
Following are the functions of retailing discussed below:
1. Sorting: One of the key functions in the retailing is sorting. In order to
cut costs, producers typically provide vast quantities of similar or different
products and anticipate that worried purchasers will purchase them in
bulk; however consumers need a range of products to choose from and
only purchase modest amounts Therefore, retailers conduct the sorting
function in order to satisfy the demands of both parties.
2. Breaking Bulk: Breaking bulk is another function of retailing. In order to
cut costs, producers and wholesalers carry large quantities of the goods,
which are then divided into smaller quantities by retailers so that they can
meet consumer consumption needs.
3. Holding Stock: For producers, holding stock is an important aspect of
selling. Retailers give producers access to stock holding facilities to assist in
inventory control and manufacturing. They do this by maintaining a huge
stock of products to be delivered right away to the final consumers when
they need it.
4. Providing Assortment: Retailers evaluate the products of various
manufactures and offer the best collection of products from which the
customer can select the product of his/her choice. Retailors select the

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product assortment depending on the needs and tastes of their target
customers.
5. Providing Services: Retailers render services that make it easier for
customers to buy and use products. They provide credit facilities to their
customers. They display products, which attract customers. Retailers keep
ready information on hand to answer queries of the customers. They
provide services through which ownership can be transferred from the
manufacturer to the end consumer with convenience.
6. Channel of Communication: Retailing also serves as a channel of
communication between producers/wholesalers and customers.
Customers learn a lot about the qualities and characteristics of a product
or service from sales-people, advertisements, and displays.
7. Transport and Advertising Services: Retailers can also help small
producers with advertising, storage, transportation, and pre-payment of
goods. This activity can also be undertaken from the manufacturer’s side in
the case of significantly tiny shops.
8. Additional Services: Retailers ease the change in ownership of
merchandise by providing services that make it convenient to buy and use
products. Providing product guarantees, after-sales service and dealing
with consumer complaints are some of the services that add value to the
actual product at the retailers’ end.

Types of Retailing
Retailing is broadly classified into two types:
1. Store Retailing: This is the most popular version, in which customers go
to Stores or shops and buy the products they want. Retail stores appear in
a variety of shapes and sizes. Furthermore, new retail store forms are
emerging. Several characteristics can be used to categorize retail
establishments. For example, the amount of service, product line, relative
prices, outlet control, and store cluster type.

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2. Non-Store Retailing: Non-stores account for a significant share of retail
Sales of goods and services. Now a days non-store retailing is growing fast.
Traditional store retailers have to cope with increasing competition from
non-store retailers. Non-store retailers sell through catalogues, direct mail,
telephone, online computer shopping services, home, office parties, and
other natural retailing method.

Forms of Retailing
A. Store-based Retailing
The store-based retailing further classified into two types namely:
1) Ownership-based Retailing, and
2) Merchandise-based Retailing.

1) Ownership-based Retailing: A retail business like any other type of

business can be owned by a sole proprietor, partners or a
corporation. A majority of retail business in India are sole
proprietorships and partnerships. Based the ownership retailers are
as follows:
a) Independent Retailer: A retailer who owns and operates only
one retail location such establishments can be found under
ownership. Individual retailers can enter the retail market with
relative ease. Local employees or family members assist the
owner. These kinds of businesses are passed down from
generation to generation.
b) Chain Stores: A chain of stores is formed when two or more
retail outlets share common ownership. Chain retailing refers
to a group of retail establishments that are all owned by the
same person and sell the same products. In other words, chain
shops are groups of retail shops that operate in the same
general line of business and are owned or managed by the
same company.

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 c) Franchising: A franchise agreement is one in which the
franchisor (one party) grants or licenses certain rights and
powers to the franchisee (another party). In other words, a
franchise is an economic agreement between two businesses in
which one authorizes the other to sell its products and
intellectual property. A contract is formed between the
franchisor and the franchisee. The franchisor grants the
franchisee the ability to sell their products, goods, and
services, as well as the right to use their trademark and brand
name.
d) Dealership: A business established or operated under an
authorization to sell or distribute a company’s goods or
services in a particular area. A dealership is a business strategy
is similar to that of a franchise and an independent store. The
licensee has the right (often the sole right) to sell a brand’s
products. Unlike a franchise, the dealer can offer a range of
brands and often does not pay royalties to the licensor.
e) Existing Retail Business: When someone inherits or purchases
an existing retail firm, they are taking ownership and
responsibility for someone else’s hard work. The base has
already been built, and the responsibility has been transferred.
In a family business, this is often the case, with one generation
taking over from their retired parents

Wheels of Retailing
This “Wheel of retailing theory’ is widely accepted theory, which is
introduced by Malcolm P. McNair. This theory explains importance of
institutional developments in retailing. According to this, Changes in retail
institutions occur in a cyclical manner. As a result, the wheel of retailing is
also known as the Cyclical theory.
The new retailer frequently enters the market with low status, a poor
profit margin, and low-priced shop formats. Later, they migrate to higher-

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end locations and stock premium products to distinguish themselves from
competitors. They eventually grow into high-cost, high-price retailers,
vulnerable to other retailers who develop a fresh retail format or concept.
This same retailer will go through the same retail development cycle.
The cycle can be broadly classified into three phases:
a) Entry Phase,
b) Trading-up phase, and
c) Vulnerability Phase.

a) Entry Phase: The With a low-status and low-price store format, the
new, innovative retailer joins the market. Begin with a tiny store that
sells inexpensive products or products that are in high demand. This
would attract customers away from more established competitors.
Attempts to keep costs low by providing minimal customer service,
maintaining a modest shopping ambience, situating the business in a
low-rent region, and offering a limited product mix.
b) Trading up phase: A new retailer tries to make extensive changes to
the store’s external structure by upgrading it. The retailer will now
reinvent itself by providing excellent customer service, a fancy
shopping environment, and relocating to a high-cost region (for the
convenience of customers). As a result, the new entrant will evolve
into a higher status and higher-priced business during this
procedure.
c) Vulnerability Phase: The creative store will face high costs,
conservatism, and a drop in ROI. As a result, the inventive retailer
evolves into an established corporation and becomes exposed to the
market’s new innovator. The arrival of a new innovator signals the
end of the cycle and the start of a new one in the sector.
Example of this theory, Kirana stores were replaced by the Chain stores
like Apna Bazar and Food World (new entrant) which in turn faced
severe competition from supermarkets and hypermarkets like Spar and
Giant etc.

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Retail Life Cycle
Retailers have often faced the challenge of understanding the stages of the
retail life cycle and how to utilize it best. The retail life cycle is an essential
concept in business. It helps retailers develop strategies to maximize sales,
optimize profits, and gain a competitive advantage. By understanding
what
Stages a product or service goes through in its lifespan, retailers can
ensure they take appropriate action to remain profitable and successful.
A theory of retail competition that states that retailing institutions, like the
products they distribute, pass through an identifiable cycle. This cycle can
be partitioned into four distinct stages:
1) Innovation,
2) Accelerated Development,
3) Maturity, and
4) Decline.

1. Innovation: A new organisation is born; it improves

convenience or creates other advantages to the final customers
that differ sharply from those offered by other retailers. This is
the stage of innovation where the organisation has a few
competitors. Since it is a new concept, the rate of growth is
fairly rapid, and the management fine-tunes its strategy
through experimentation. Introductory stage stores should be
prepared for low profits due to high development costs, and
this stage can last up to five years, depending on the
organisation.
2. Growth: The retail organisation faces rapid increases in sales.
As an organisation moves to stage two of growth, which is the
stage of development, a few competitors emerge. Since the
company has been in the market for a while, it is now in

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 position to pre-empt the market by establishing a position of
leadership. Since growth is imperative; the investment level is
also high, as is the profitability. Investment is largely In
systems and processors this stage can last from 5 to 8 years
3. Maturity: The organisation still grows, but competitive
pressures are felt acutely from newer forms of retailing that
tend to arise. Thus, the growth rate tends to decrease.
Gradually, as markets become more competitive and direct
competition increases, the rate of growth slows down, and
profits also start declining. This is the time when the retail
organisation needs to rethink its strategy and reposition itself
in the market.
4. Decline: The retail organisation loses its competitive edge, and
there is a decline. In this stage, the organisation needs to
decide if it is still going to continue in the market. The rate of
growth is negative, profitability declines further, and
overheads are high.
From the above, it can be observed that the retail life cycle is varied for
different organizations in different industries after doing an in-depth
examination of retail life cycle theory, its four key stages, and instances.
Businesses and corporations can expand their growth and maturity stages
by enhancing their forms and adjusting to market changes.

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