Organised Retail: (Modern Trade)

RETAILING Retailing is the set of business activities that adds value to goods and
DEFINED services sold to consumers for their personal, non-business use.
ORGANISED VS. UNORGANISED RETAIL

▪ Organised retail (modern trade) refers to trading activities undertaken by licensed retailers.
▪ supermarkets, hypermarkets, & other retail formats (corporate chains & strong independents).
▪ Unorganised retail (traditional trade) - small independents, ‘mom-and-pop stores’ (kirana stores),
push-cart- and pavement vendors (flea markets).
▪Total size: $950 billion (2018).

▪Projected to grow at a CAGR of 10% to $1.6 trillion by 2026 (grew at a CAGR of
7.82% from 2000 to 2016).
▪Share of organised retail (modern trade): 10% (2018).
▪Size of online retail: $32.7 billion i.e. 3.4 per cent (2018).
▪Of the 15 million retail outlets in India, 95% are less than 500 sq. ft. in size.
▪Food and grocery dominates with a 65% share of revenue.
RETAILING MANAGEMENT: DECISIONS
Understanding Merchandise
Customers & Retail Strategy Management &
Competition Store Management
UNDERSTANDING
COMPETITION DEVELOPING RETAIL STRATEGY
Competition in Retail:
Customer
▪ Intratype Competition Service
same format. Store

Design & Location
Eg: 2 kiranas competing Display
Retail
▪ Intertype Competition Mix
Communic
Scrambled Merchandising ation
Merchandise
Assortment
▪ Retail of 1 format competing with other.
▪ Eg: subhecha – food & grocery store. Competed Pricing
with pharmaceuticals as well.

RETAILER CLASSIFICATION
Retailers can be classified on the basis of:
a. Retail Mix
One of the key elements of retail mix used in classification is
merchandise assortment: breadth of assortment -> variety
& depth of assortment -> assortment
Classification basis retail mix:

1. Food Retailers
2. General Merchandise (non-food) Retailers
b. Nature of Ownership
Classification basis ownership:
I. Independent, Single-store Establishments
II. Corporate Retail Chains
FOOD RETAILERS
*Flipkart Wholesale, launched in Aug. 2020, is an online B2B marketplace dealing in apparel and footwear that offers a 15-day credit
(and thus, not truly “cash-and-carry”).
GENERAL MERCHANDISE RETAILERS (1/6)
THEORIES OF RETAIL DEVELOPMENT
▪ Retail life cycle ▪ Melting pot theory (dialectic process)

innovation → accelerated development → maturity → decline (low-price/service + high-price/service = mid-price/service)
As consumer income grows, they start going to mid price outlet (trading
up). Mid price thrives.
▪ Wheel of retailing
Low price, low service → high price, high service
In satellite cities/towns start expanding -> retailers also expands ▪ Polarization theory
from low to high price. And attract competition. Then again low
price. (shrinking ‘middle’ = expanding high-end & low-end)
Consumers started moving to the extremes (low or high price)
▪ Retail accordion theory

Evolution: broad → narrow → broad assortment ▪ Natural selection theory
(general → specific → general) (survival of the fittest: adapt ‘retail mix’ or perish)
Started with dozen categories, felt the heat, started competing
with the price killing each other, again expand with left(survived)
retailers.
NON-STORE RETAILING
▪Electronic Retailing
▪Catalogue & Direct-Mail Retailing – Eg: elvy (home furnishing)
only on catalogue, no websites, online , physical stores
Disadvantage – expensive, mass mail to million people
▪Direct Selling – Eg: Avon Cosmetics, oriflame, modi care
▪Television Home Shopping
▪Kiosk/Vending Machine Retailing
MULTICHANNEL & Omnichannel RETAILING
CHANNELS IN RETAILING MULTICHANNEL…
• Physical (brick-and-mortar) Stores

Showrooms (e.g. Bonobos, Warby Parker) Integrated
& in-store Kiosks (Omnichannel)
• eCommerce Interconnected
(including mCommerce & sCommerce) (Cross-channel)
• Catalogues & Direct Mail

Independent
(Multichannel)
• Direct Selling
• Television Home Shopping

Individual
• Kiosks/Vending Machines
The 4i Multichannel Maturity Model

(4iMMM): TCS
WHY GO OMNICHANNEL?
Consider the consumer decision journey (CDJ):
Search/ Receive/ Return/

Compare Buy
Discover Collect Exchange
Now, what channels do consumers use at each stage?
CONSUMERS & CHANNELS

Some ‘interesting’ trends:
Starts in 1 channel and ends in another
▪ Showrooming - checking the shops and buying online
▪ Webrooming - researching online and buying in shops
Starts and ends in same channel
▪ Boomerooming – start online – go to store – buy online
start physical store-> go online for review-> buy from store
Now, when consumers are channel-agnostic, how can retailers not be?
Omnichannel retailing is about offering consumers a seamless experience that’s bespoke ̶ across
brands*, channels, and devices.
NOW, THE ‘HOW’ OF OMNICHANNEL…
Make sure you:
▪ Let your customers click-and-collect(-and-return)
at pick-up-and-drop-off points
such as stores (own/other), Lockers
▪ Have a single view of the customer…
... and of your inventory.
▪ Develop an omnichannel mindset that informs your every action.

CONSUMER BEHAVIOUR/
Stimulation
Shopper Marketing
Social Experience
TYPES OF NEEDS
Learning new trends
Hedon(ist)ic Needs
Customer Needs Status & Power
Utilitarian Needs
Self-reward
Adventure
STORE CHOICE: Multiattribute Attitude Model
‘Performance Rating’ (of a store/retailer)
= Performance Beliefs* x Importance Weights
*Shopper’s belief in a retailer having a certain attribute
A quick exercise: choose two retailers in your town and apply MAM.
What are your learnings?
“WHY WE BUY”*
 Transition Zone
 Boomerang Rate
 Interception Rate
 Time Spent in the Store
 Signage
 Waiting Time
 Men v. Women
 Conversion Rate
*WHY WE BUY: The Science of Shopping | PACO UNDERHILL

RETAIL (MARKET) STRATEGY
SUSTAINABLE
COMPETITIVE ADVANTAGE
 Location
Sustainable  Unique Merchandise
Competitive
Advantage  Customer Service
 Customer Loyalty
 Distribution & Information Systems
 Vendor Relations
 Human Resources Management
Retail
Strategy
Retail Target
Format Market
GROWTH STRATEGIES
Target Market
Existing New
Existing
Market Market
Penetration Development
Retail Format
Format
New
Diversification
Development
STRATEGIC RETAIL PLANNING
 Define Business Mission
 Conduct Situation Audit
 Identify Strategic Opportunities
 Evaluate Strategic Opportunities
 Establish Objectives & Allocate Resources
 Develop Retail Mix to Implement Strategy
 Evaluate Performance and Make Adjustments

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RETAILING Retailing is the set of business activities that adds value to goods and

DEFINED services sold to consumers for their personal, non-business use.

ORGANISED VS. UNORGANISED RETAIL

▪Total size: $950 billion (2018).

same format. Store

with pharmaceuticals as well.

Retailers can be classified on the basis of:

Classification basis retail mix:

▪ Retail life cycle ▪ Melting pot theory (dialectic process)

▪ Retail accordion theory

CHANNELS IN RETAILING MULTICHANNEL…

• Physical (brick-and-mortar) Stores

• Catalogues & Direct Mail

• Television Home Shopping

The 4i Multichannel Maturity Model

Consider the consumer decision journey (CDJ):

Search/ Receive/ Return/

Now, what channels do consumers use at each stage?

CONSUMERS & CHANNELS

Make sure you:

▪ Let your customers click-and-collect(-and-return)

▪ Have a single view of the customer…

... and of your inventory.

▪ Develop an omnichannel mindset that informs your every action.

Learning new trends

Customer Needs Status & Power

‘Performance Rating’ (of a store/retailer)

= Performance Beliefs* x Importance Weights

*Shopper’s belief in a retailer having a certain attribute

*WHY WE BUY: The Science of Shopping | PACO UNDERHILL

 Define Business Mission

 Conduct Situation Audit

 Identify Strategic Opportunities

 Evaluate Strategic Opportunities

 Establish Objectives & Allocate Resources

 Develop Retail Mix to Implement Strategy

 Evaluate Performance and Make Adjustments

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