1.

Retail
management-
An overview
 Manageme
nt
Management refers to the process of
bringing people together on a common
platform and make them work as a single
unit to achieve the goals and objectives of
an organization. Management is required
in all aspects of life and forms an integral
part of all businesses.
 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.
 Retail
Management
• The various processes which help the customers
to procure the desired merchandise from the
retail stores for their end use refer to retail
management.
• Retail management includes all the steps
required to bring the customers into the store
and fulfill their buying needs.
• Retail management makes shopping a
pleasurable experience and ensures the
customers leave the store with a smile. In
simpler words, retail management helps
customers shop without any difficulty.
 Examples of
Retailers

PPT 1-5 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Nature of Retail Industry is
Changing

To Today’s Retailer

Mom and Pop Store

 How Retailers Add
Value
• Breaking Bulk

• Holding Inventory

• Providing
Assortment

• Offering Services
 How Retailers Add
Value
The value of the product and service
increases as the retailer performs
functions.
Doll can be
bought on
credit or with
other payment
options
Doll is featured on
floor display
Doll is offered
in convenient
locations in
Doll is developed quantities of
in several one
Doll is styles
developed at
manufactur
er
 Functions of a
retailer
• Creates value (Assorting, breaking bulk, holding
inventory, providing services)
• Customer convenience
– Access to a broad variety
– Create place, time, and possession utilities
• Important link in the supply chain
• Supply of information
• Risk bearing (Spoilage, natural risks, change in
customer’s taste)
• Financing
• Introduction of new products
• Advertising
• Economic development
 Manufacturer’s
Perspective
The Four P’s of
Marketing
RReetaat ilieel rrssaarree

ppaarrtt ooff tthhee Product

ddiissttrriibbuuttiioon
Distribution Price
n cchhaannnneell

Promotion
 Distribution
P P T 1-4 Channel
Distribution
Channel

PPT 1-11 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Factors influencing retail
trade
• Increase in per capita income
• Demographical changes (young people, higher
savings, high standard of living, attracts big
retailers to India)
– Increase in number of working women
– Growth of middle class consumers
• Change in consumption pattern (number of
innovators or early adopters have increased)
• Availability of low cost credit to consumers
• Entry to various sources of financing (FDI, FII)
• Technological changes
• Media explosion
• Entry of corporate sector
 Scope of retail
management
• Buying and merchandising
• Marketing
• Store operation
• Human resources
• Sales
• Finance
• Technology and E-commerce
• Visual merchandising
• Supply chain management and
logistics
Retail
Formats
 Store Based Retailing
Form of ownership

Independent retailer
• Owns and operates only one retail
outlet. Such stores can be seen under
proprietorship.
• The individual retailer can easily enter
into a retail market. The owner is
assisted by local staff or his family
members. These kinds of shops are
passed from one generation to other
generation.
• For eg. grocery store, stationery
PPT 1-15 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Advantages
Independent retailer
• Flexibility
• Investment Costs
Down
• Ease in entry
• Strong Control
• Rapport with
customers
• Independence
• Entrepreneurial
Drive
 Advantages
Independent retailer
• Lack of Power
• No Economies of Scale
• Labor Intensive
• Limited Access to Advertising
• Over-dependence on Owner
• Limited Resources for Long-run
Planning
Chain retailer/ corporate retail
chain
• When two or more retail outlets are
under a common ownership it is called
a retail chain. Chain Stores are groups
of retail stores engaged in the same
general field of business that operate
under the same ownership or
management, chain stores are retail
outlets owned by one firm and spread
nationwide.
• For example, Big bazaar, Shopper’s
stop, Monginis, CCD etc.
 Advantag
es Chain
• retailwith the
Bargaining Power
suppliers
• Cost Efficiencies
• Operating Efficiencies
• Technical Abilities
• Advertising Availability
 Disadvantag
es Chain
• retail Spent on
Time and Resources
Long-run Planning
• Limited Flexibility
• Investments High
• Managerial Control is Difficult
• Limited Independence for
Personnel
 Franchisi
ng
• A franchise is a contractual agreement
between franchisor and a franchisee in
which the franchisor allows the
franchisee to conduct a business under
an established name as per the
business format.
• In return the franchisee has to pay a fee
to the franchiser.
• For example: Pizza hut, McDonalds, etc.
 Franchise
e
• Advantag
Small Capital Investment
• es
Brand Awareness
• Operation Procedures and Management
Skills
• Reduced Marketing Cost
• Exclusive Selling Rights
 Franchisee

Disadvantag
• Contract Provisions
es Clauses
• Cancellation
• Less authority in decision
making
 Franchiso
r
• Advantag
National or Global
Presence es
• Ownership Qualifications
Set
• Stringent Rules for
Franchisees
• Royalties Continue
• Smooth Operations
 Franchisor
Disadvantag
• es Competition
Intra-franchise
• Injured Profitability
• Franchisee Desire for
Independence
 Leased
Departments
• These are also known as Shop in Shops.
• When a section or a department in a
retail store is rented to the outside party
it is called leased department.
• The licensor permits the licensee to use
the property and in turn the licensee
pays a fee to the licensor for using his
property.
 Leased Department
Advantages
• Fills Merchandise
• Enlarged Market
• Reduces Store Costs
• Increased Percent of
Revenues
Leased
Department
Disadvantages
• Conflicts in Operating
Procedures
 Consumer co-
operatives
• A consumer co-operative is a retail
organisation owned by its member
customers. The objective is to provide
commodities at a reasonable price. For
example: Sahakari Bhandar, Apna
Bazaar etc.
Retail
Formats
 Store Based Retailing
On the Basis of Merchandise offered

Departmental Stores
• A departmental store is a large scale retail
institution that offers several products from a
pin to plane such as clothing, grocery etc.
Retail establishment that sells a wide variety
of goods.
• Departmental stores are the largest form of
organized retailing today, located mainly in
metro cities, in proximity to urban outskirts.
• They lend an ideal shopping experience with an
amalgamation of product, service and
entertainment, all under a common roof.
Examples include Shoppers Stop, Pantaloon,
PPT 1-30
Dmart etc.
Consumer Behavior Ignacio J. Vázquez E. © 2007
 Convenience
stores
• These are relatively small stores located near the
residential area.
• They offer limited line of convenient products
• Sells items such as candy, ice-cream, soft drinks, lottery
tickets, cigarettes and other tobacco products,
newspapers and magazines, along with a selection of
processed food and perhaps some groceries, etc.
• Such stores enable the customers to make quick
purchase and offer them few services. They stock a
limited range of high-turnover convenience products and
are usually open for extended periods during the day;
Prices are slightly higher due to the convenience
premium.

PPT 1-31 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Super
Market
• These are retail organisations that provide low cost high
volume self-service operation to meet consumer
requirements. Most of the super market charge lower
price. Example: Subhiksha, Patel low price, Big Bazaar.
• They are the large self-service outlets, catering to varied
shopper needs. These are located in or near residential
high streets. A supermarket, also called a grocery
store, is a self-service store offering a wide variety of
food and household merchandise, organized into
department.
• It is larger in size and has a wider selection than a
traditional grocery store and it is smaller than a
hypermarket or superstore. Supermarkets usually offer
products at low prices by reducing their economic
margins.

PPT 1-32 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hyper
Market
• A hypermarket is a superstore which
combines a supermarket and a
department store.
• Hyper markets are huge retail stores
that offer various products such as
clothes, jeweler, stationery, electronic
goods at cheaper price
• Example: WalMart, Star Bazaar, Giant
Stores etc. They focus on high volume.

PPT 1-33 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Hyper
Market

PPT 1-34 Consumer Behavior Ignacio J. Vázquez E. © 2007

PPT 1-35 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Speciality
stores
• Specialty stores carry a narrow product
mix
with depth of assortment within the line.
• The emphasis is on a limited
number of complimentary products
and high level of customer service
• Specialty store often sell shopping goods
such as Jewelry, apparel, computers,
music systems, sporting goods.
• Like; Tanishq, Titan watches, Van
PPT 1-36 Heusen,
Consumer Behavior Raymond's. Ignacio J. Vázquez E. © 2007
 Specialty
stores
• A specialty store is a store, usually
retail, that offers specific and
specialized types of items. They offer a
narrow product line that concentrates
on specialised products such as
jeweler, fabrics, furniture etc.
• Customer service and satisfaction are
given due importance.
• For example, a store that exclusively
sells cell phones or video games would
be considered specialized. A specialty
PPT 1-37 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Speciality
Stores

PPT 1-39 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Off price
retailers
• Off-price retailers purchase
manufacturers seconds, outdated,
off seasons at a deep discount
• Odd size, unpopular colors or
defected units can be the
merchandise

Factory Outlet

Catalogue showrooms
PPT 1-39 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Retail
Formats

PPT 1-40 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Non-Store Based Retailing

1. Direct Selling:
• Direct selling is a retail channel for the distribution of goods and services.
There is no fixed retail location. In direct selling there is a direct contact of the
retailer with his ultimate customers.
• It is highly an interactive form of retailing. Products like cosmetics, jewellery,
food items are sold in such manner. The retailers visit home place or work
place of the customers to sell the products. It is also known as network
marketing where the products and services are sold face to face.
2. Mail order:
• It is a retail format in which offerings are communicated to the customers
through a catalogue, letters or broachers. Such retailing is suitable for
specialty products. The buyer places an order for the desired products with
the merchant through website. Internet and online payment options, has made
shop from home easier.
3. Tele Marketing:
• It is a form of retailing in which the products are advertised on television. Details
about the product in regard to its features, price, warranty, direction to use etc.
are mentioned and explained. Phone numbers are provided due to which
customers can make a call and place an order for the product.
PPT 1-41 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Non-Store Based Retailing

4. Automatic Vending:
• This is a form of non store retailing in which the products are
stored in a machine and dispensed to the customers when
they deposit cash. Vending machines are placed at
ports, shopping
convenient malls,
and busy working
locations place
like air etc. This primaril
machine contains products like chocolates, snacks y
and drinks etc.
5.
• Electronic retailing:
It is also called as e-tailing or internet retailing. It is a retail
format in which products are offered to the customers through
internet. The customers can evaluate and purchase the
products from their homes or office place. This kind of retail is
gaining importance in recent years.

PPT 1-42 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Organized Vs. Unorganized
Sectors
• The Indian retail industry is divided into organized and
unorganized sectors.
• The unorganized retail comprises of the local baniya or
kirana shop, paan and beedi shops and the other owner
manned general stores .
• These retailers normally do not pay taxes and most of
them are not even registered for sales tax, VAT, or income
tax.
• On the other hand, the organized retail comprises of the
licensed retailers who are registered for sales tax, income
tax etc. and it comprises of the malls, supermarkets,
hypermarkets etc.

PPT 1-43 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Organized
retail
• ‘Organized Retail refers to the set-up of any
retail chain supported by a well defined Supply
Chain which usually has a small number of
middlemen when compared to the unorganized
sector.
• Due to a number of factors like cutting down of
middlemen, removing of bottlenecks along the
supply chain, efficiency in the processes, etc.,
the end user is rewarded with a better product
at a cheaper price as against the unorganized
retail sector.
• As the consumer base is growing each minute,
the organized retail sector is believed to have a
PPT 1-44 huge
Consumer growth potential.’
Behavior Ignacio J. Vázquez E. © 2007
 Unorganized
retail
• Unorganized retailing refers to the traditional formats of
low cost retailing for example, the local kirana shops,
owner manned general stores, paan-bidi shops,
convenience store, hand cart and pavement vendors.
• Traditional or unorganised retailing contributing to
over 95% of total retail revenues.
• The unorganized retailing comprises of ‘mom and pop’
stores or ‘kirana’ stores.
• Trading hours are flexible and the retailer to
consumer ratio is very low due to the presence of
several kirana stores in the locality.
• More than 99% of retailers function in less than 500
Sq. Ft of area. The pricing was done on ad hock
basis or by seeing the face of customer.
PPT 1-45 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Significance of Organized
Retail
• Experience Shopping to Middle Class
• Employment generation
• Increasing efficiency in agriculture
• Rapid economic growth
• Potential untapped market
• Deep Assortment of product or broad
choice to customer

PPT 1-46 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Challenges to organized
retail
• Regulatory barriers
• Unfavorable taxation structure
• Lack of integrated IT usage
• High competition
• High training cost
• Constant changes in shopper
preferences

PPT 1-47 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Multichannel
retailing
• Multi-channel retailing is a marketing
strategy that offers your customers a choice
of ways to buy products.
• A true multi-channel strategy covers
purchases from
ordering,
a store, mail orders,
purchases interactive
from television,
a website,
catalog ordering and
telephone
sites. comparison shopping
• The aim of a multi-channel retailing
strategy is to maximize revenue and loyalty by
offering your customers choice and
convenience.
PPT 1-48 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Multichannel
retailing

PPT 1-49 Consumer Behavior Ignacio J. Vázquez E. © 2007

 The Multi-Channel
Retailer

Retailer Steve Cole/Getty Images

The McGraw-Hill Companies,

Inc./Andrew Resek, photographer

Digital Vision / Getty Images

A retailer that sells merchandise or service through more

than one channel. By using a combination of channels,
retailers can exploit the unique benefits provided by each
channel.
PPT 1-50 Consumer Behavior Ignacio
3-5 1
J . Vázquez E. ©
 Why are Retailers Using Multiple
Channels to Interact with
Customers?

■ Customer wants to interact in different

ways
■ Each channel offers a unique set of
benefits for Customers

PPT 1-51 Consumer Behavior 3-5 2

Ignacio J . Vázquez E. ©
 Multichannel
retailing

PPT 1-52 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Benefits Provided by Different
Channels

PPT 1-53 Consumer Behavior 3-5 4

Ignacio J . Vázquez E. ©
 Virtual
Communities
• People who seek information, products and
services communicate with each other
regarding specific issues
• Social shoppers: seek not just information but
also an enhanced emotional connection to
others participants in the shopping experience

Royalty-Free/CORBIS
PPT 1-54 Consumer Behavior 3-5 5
Ignacio J . Vázquez E. ©
How Can the Electronic Channel
Overcome The
Challenges??
Use technology to convert “touch and feel”
information into
“look and see” information
• 3-D Imaging
• Zoom Technology
Technology
• Live Chat increases
• 360 Degree conversion rates
Viewing
• Virtual rates:
Models
conversion % of consumers who buy the
product after viewing it
3-5 6
Ignacio J . Vázquez E. ©
 Benefits of Multi-Channel
Retailing
• Increased assortments
• Low cost in terms of investment
• Updated with current information
• Increasing customer satisfaction
• Gaining insights into consumer
shopping behaviour
• Expanding market presence
• Building a strategic or competitive
advantage
PPT 1-56 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Multichannel Vs.
Omnichannel

PPT 1-57 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Types of multichannel
retailing
E-
tailing

Automate Catalogu
d e
selling channel

Multichann
el

TV Direc
home t
shoppin sellin
g g
Store

chann
el
PPT 1-58 Consumer Behavior Ignacio J. Vázquez E. © 2007
 E-
tailing
• Electronic retailingis the sale of goods
and services through the internet.
• Electronic retailing, or e-tailing, can
include business-to-business
(B2B)
consum (B2C)
and sales
business-to-
of
er products and through
services subscriptions
content, or to website
through advertising.
• ,E-tailing requires businesses to tailor
traditional business models to the rapidly
changing face of the internet and its
users.
PPT 1-59 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Advantages And Disadvantages
of E - tailing

Advantages Disadvantages
• Wider reach • Expensive
• Helps understand • No physical
consumer shopping
behaviour experience
• Convenience • Privacy Issues
• Efficiency • Unfamiliarity

PPT 1-60 Consumer Behavior Ignacio J. Vázquez E. © 2007

 I T in
retail

Advantages Disadvantages
• Collection of • Implementati
data on expenses
• Efficient stocking • Security
of merchandise breaches
• Efficiency • Unemployment
in and lack of job
operation security
s
PPT 1-61 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Electronic Data
Interchange
• Electronic Data Interchange (EDI) is the electronic interchange
of
business information using a standardized format;
• It’s a process which allows one company to send information to
another company electronically rather than with paper.
• Business entities conducting business electronically are called
trading partners.
• A key benefit of EDI to the retailer is the reduction, or
elimination, of manual processes.
• eliminating the data entry task EDI allows costly resources
(manpower) to be dedicated to other critical functions
increasing productivity and reducing costs.
• EDI can increase the accuracy of orders, invoices, and
shipping notices (on average) by 20 percent or more.

PPT 1-62 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Bar
coding
• A bar code is a series of narrow and
wide lines printed on a label or tag.
• Each bar on the label represents a
character for a "bar code reader" to
interpret.

PPT 1-63 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Radio Frequency Identification
(RFID)
• Radio-Frequency Identification (RFID) is the
use of radio waves to read and capture
information stored on a tag attached to an
object.
• A tag can be read from up to several feet
away and does not need to be within direct
line-of-sight of the reader to be tracked.

PPT 1-64 Consumer Behavior Ignacio J. Vázquez E. © 2007

 RFI
D
• RFID are used in many industries,
example,
tags an
for RFID tag attached to an
automobile during production can be used
to track its progress through the assembly
line; RFID-tagged pharmaceuticals can be
tracked through warehouses; and
implanting RFID microchips in livestock
and pets allows for positive identification.

PPT 1-65 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Electronic
surveillance
The technology to monitor unusual behavior in the outlet. CCTV is one
such example
to ensure security of merchandise in retail store.
 Green
Retailing
• Green Retailing (GR) refers to the management
approach that pursues environmental protection
to through
chain improve the
eliminating waste,
retail value
increasing
reducing
efficiency
costs. and
• It is a part of the larger obligation of business- C S R
that describes the voluntary actions taken by a
company to address the ethical, social, and
environmental impacts of its business operations.
• Eco friendly practices are;
– Less elaborate packaging
– Make bags and receipts optional
– Reuse packing material etc

PPT 1-67 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Airport
Retailing
• Airport is a high pedestrian area that has
become popular with national retail chains.
• The time spent by the passengers at airports
has increased due to early check in times
set by airlines following security and
operational concerns.
• This has increased the retail opportunities.
• The cost of operating are high as the rent
paid is also high.

PPT 1-68 Consumer Behavior Ignacio J. Vázquez E. © 2007

 2. Retail
Consumer and
Retail Strategy
PPT 1-69 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Retail
Shopper
• Consumers have need tha motivat
different
them to go s t e
• shopping.
The can be classified as utilitarian
needs or
hedonic. needs are associated with work
– hedonic needs are
whereas
associated
with fun.
Utilitarian

PPT 1-70 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Factors influencing retail
shoppers
• Range of merchandise
• Convenience of shopping/ Time to
travel
• Socio Economic background and
culture (Asians prefer more spices
in their food)
• The stage of family life cycle

PPT 1-71 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Changing profile of retail
shoppers
• The new age Indian shopper is
innovative, a risk taker.
younger,
• He is comfortable to adopt new technology,
has a higher disposable income but a
shorter attention span and he is less
• tolerant of service failures.
Consumers are ready to spend for
shopping experience.
• Not only utilitarian value but hedonistic
value also appease the customers.

PPT 1-72 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Changing profile of retail
shoppers
• Socially connected
• Style conscious (from impulse buying
to high involvement products)
• Low brand loyalty
• Informed purchases
• Spends on leisure
• Shortage of time (Speedy delivery,
availability of stock matters)
• Health conscious
PPT 1-73 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Technology adoption life
cycle

PPT 1-74 Consumer Behavior Ignacio J. Vázquez E. © 2007

Market research as a tool for
understanding retail markets
and shoppers
• Research prior to setting up a retail
store:
– Primary information required:
• Demographic data (Population, Age,
Purchasing power, Disposable income
etc.)
• Consumer data (Buying and spending
pattern)

PPT 1-75 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Significance of
research
• Evaluating the customer
satisfaction with the existing
range of products and service
• Generating ideas for developing new
products
• Evaluating the acceptability of the
products
• Pricing of new products
• Understanding the customer profiles

PPT 1-76 Consumer Behavior Ignacio J. Vázquez E. © 2007

 CR
M
• Customer relationship management (CRM) is a
technology for managing all your company's
relationships and interactions with customers
and potential customers.
• The objective is to retain the customers for
life.
• CRM is a strategic approach that is
concerned with creating improved
shareholder value through the development
of appropriate relationships with key
customers
PPT 1-77 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Benefits of CRM in
retail
• Improved customer relations
• Maximize upselling and cross-selling
• Expand customer base
• Optimize marketing
• Improve retailer’s efficiency

PPT 1-78 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Customer retention
approaches
• Frequent shopper programs
– Rewards according to the volume of purchase
– Offer choices
– Incorporate charitable contributions (donate a part of
their sales revenue)
– Reward on all purchase (irrespective of the merchandise)

• Special customer services (Premium membership)

• Personalization
• Community (Blogs)

PPT 1-79 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Steps in developing retail
strategy
• Defining the mission of the
organization
• Setting objectives
• Conducting a situation analysis
• Identifying strategic alternatives
– Market penetration
– Market development
– Retail format development
– Diversification
• Obtain and allocate resources
• Develop the strategic plan
• Implement the strategy
• Evaluation and control of strategy
PPT 1-80 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Retail value
chain
• The retail value chain defines a series of actions that
enable businesses to sell their products to
customers. Each action in the chain brings a portion
of value to the entire process.
• “Reconfiguring” the value chain can provide
advantage
cost to the firm.
The four steps in the retail value
•chain are:
creating the product,
• storing the inventory,
• distributing the goods
• making the product available for
consumers.
PPT 1-81 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Composition of a value
chain
• Inbound logistics (transport, storage
and delivery of goods coming into
a business)
• Operations
• Outbound logistics
• Marketing and sales
• Service
• Procurement
• Technology development and HRM
PPT 1-82 Consumer Behavior Ignacio J. Vázquez E. © 2007
What Are the Three Most Important 7
8-
4
Things in
Retailing?

Location! Location!
Location! Eddie Tan/Life File/Getty Images
 Why is Store Location Important
for a Retailer?
• Location is typically prime consideration in
customer’s store choice.
• Location decisions have strategic
importance because they can help to
develop sustainable competitive
advantage.
• Location decisions are risky: invest or
lease?

PPT 1-84 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Selection of a store
location
• Accessibility, Visibility, and Traffic
• Signage, Zoning, and Planning
• Competition and Neighbors
• Location Costs
• Others:
– Is there adequate fire and police protection
for the area?
– Is there sanitation service available?
– What is the crime rate in the area?
PPT 1-85 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Types of retail
location
A. Freestanding sites: location for
individual store unconnected to
other retailer
Advantages:
• Convenience
• High traffic and visibility
• Modest occupancy cost
• Separation from competition
• Few restrictions
PPT 1-86 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Freestanding
sites

PPT 1-87 Consumer Behavior Ignacio J. Vázquez E. © 2007

 B. Part of a business
district
1. Central business district
– Ballard Estate, Bandra Kurla
Complex, CBD Belapur and Nariman Point

Advantages
• Draws people into areas during business hours
• Hub for public transportation
• Pedestrian traffic
• Residents

2. Main street
3. Inner city
PPT 1-88 Consumer Behavior Ignacio J. Vázquez E. © 2007
 9th position
Connaught Place
30th
position

19th
position

PPT 1-89 Consumer Behavior Ignacio J. Vázquez E. © 2007

 C. Shopping
center
• A shopping centeris a group of retail and
commerci
other establishments ar planned,
al that e
developed owned and managed as a single
,–
Security
property
– Parking lot lighting
– Outdoor signage
– Advertising
– Special events for
customers

PPT 1-90 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Types of Shopping
Centers
• Neighborhood and Community
Centers
• Power Centers
• Lifestyle Centers
• Outlet Centers
• Mixed use developments
• Theme centers

PPT 1-91 Consumer Behavior Ignacio J. Vázquez E. © 2007

 7
Neighborhood and Community -

Centers 93

Managed as a
unit

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Attached row of
stores

Onsite
parking
PPT 1-92 Consumer Behavior Ignacio J. Vázquez E. © 2007
 7
Power -
94

Centers
Big box Open air set
stores up

Available Many located

parking near enclosed
malls
Free-standing
stores Large trade
areas

PhotoLink/Getty Images
Low occupancy Convenie
costs nt

Limited small Desirable

specialty Modest vehicular
stores and pedestrian shopping
PPT 1-93 Consumer Behavior traffic Ignacio J. Vázquez E. © 2007
 Power
Centers

PPT 1-94 Consumer Behavior Ignacio J. Vázquez E. © 2007

 7
Lifestyle -
96

Centers
• Usually located in affluent residential
neighborhoods
• Includes 50K sq. ft. of upscale chain specialty
stores
• Open-air configuration
• Design ambience and amenities
• Upscale stores
• Restaurants and often a cinema or
other entertainment
PPT 1-95 Consumer Behavior Ignacio J. Vázquez E. © 2007
 7
Outlet -
97

Centers

These shopping centers contain mostly manufacturers and retail

outlet stores

Courtesy of Beall’s,
Inc.

PPT 1-96 Consumer Behavior Ignacio J. Vázquez E. © 2007

 HRM in
retail
What is HRM??
• Human Resource Management (HRM) is the
term used to describe formal systems
devised for the management of people
within an organization.
• The responsibilities of a human resource
manager fall into three major areas:
staffing, employee compensation and
benefits, and defining/designing work

PPT 1-97 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Functions and significance of HRM in
retail
• Identifying the roles in the
organisation
– Buying and merchandising
– Store management and operations

• Recruiting and selecting

employees
• Training (induction, skill devt.)
• Motivating employees
• Compensation and benefits
•
PPT 1-98 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Organisation structure in
retail
• An organisation structure enables the
activities and tasks to be performed by
each employee.
• It determines the lines of authority
and responsibility in the firm

PPT 1-99 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Basis to designs of organisation
structure
• Organisational size
• Scale of operations (local, regional, national
international)
or
• Strategy (Differentiation strategy or cost
leadership)
• Environment
– – Stable environment(customer’s
Dynamic (customer’sdesires
desire are
are
mostly consistent)
environment continuously
changing)
• Departmentali
zation

PPT 1-100 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Porter’s Generic Competitive
Strategies

PPT 1-101 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Organization structure for small
scale retail

PPT 1-102 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Organization structure of a
chain/ department
store

PPT 1-103 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Merchandise
Management
and Pricing

PPT 1-104 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Types of
merchandise
• Staple/ Basic merchandise (Classics)
– Caters to basic needs: salt, pulses etc
– Always in demand

• Fashion merchandise (All about fashion

trend)
– High demand for short period

• Seasonal merchandise (Rain wear, sun

coat or sweaters etc)
• Fad merchandise (in contrast to fashion)
• Style (uniqueness in the merchandise)
PPT 1-105 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Principles of
merchandising
• Breadth of assortment (narrow or
wide)
• Depth of assortment (deep or
shallow)
• Quality of assortment (high to
low)
• local brands or national brands
• Pricing policies or offers

PPT 1-106 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Merchandise
planning
• "A systematic approach. It is aimed
at
maximising return on investment, through
planning sales and inventory in order to
increase profitability. It does this by
maximising sales potential and
minimising losses from mark - downs and
stock - outs."

PPT 1-107 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Merchandising
planning

PPT 1-108 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Process of merchandise
planning
Step 1.Planning sales forecast
 Identifying past sales
 Reviewing the changes in the Economic
conditions
 Analyzing the retail strategies of
competitors
 The creation of the merchandise
Step 2.Identifying
budget the requirements planne reduction
 planned
Thesalespurchase levels
plan, stock support d s,
plan,
Step 3. Merchandise control (Open
 Limits overbuying and under buying
to buy)
 Prevents loss of sale (unavailability)
 Maintains budget
Step 4. Assortment planning (Range plan, merchandise
category)
 Amount available to make the purchases
 Determination of the quantity
PPT 1-109 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Category
management
• A category is essentially any group of similar
items which the company wishes to buy under a
• single
The
deal.
management part is about
methodologies
applying to ensure
procurement
the firm maximizes
savings.
• It is also a way for companies to buy more
effectively and to save significant sums of money
in procurement.
better understanding of shopping behavior, creat
• assortments
Category thatis the
captain vendorwho
satisfy helps to e
consumer
developneeds a of that improve area
profitability etc ,

PPT 1-110 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Process of merchandise
procurement/
sourcing
• Identifying the sources of supply
– Country of origin
– Foreign currency fluctuations
– Tarriffs/ duties
– Foreign trade zones
– Transportation cost

• Evaluating the sources of supply

• Negotiating with the sources of
supply
• Establishing vendor relations
• Analyzing vendor performance
PPT 1-111 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Buying function-
OTB
• OTB refers to merchandise budgeted to be
purchased during a particular season for which
stocks have not as yet been ordered. OTB is a
planning tool for any retailer.
• In chain store the buying function may be
centralized or decentralized geographically
depending on the retail organization. (central
buying/ merchandising plan)

PPT 1-112 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Buying
cycle

After Awarene
sales ss

Purchas
Considerati
e
awarene on
ss

PPT 1-113 Consumer Behavior Ignacio J. Vázquez E. © 2007

Young and Rubicam’s Brand Asset
Valuator
• Based on research with almost 2 lacs consumers in
40 countries, BAV provides comparative measures
of the brand equity of thousands of brands across
hundreds of different categories.

PPT 1-114 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Young and Rubicam’s Brand Asset
Valuator
A. Brand Vitality which refers to the current and future growth potential that a
brand holds in it.
B. Brand Stature which refers to the power of a brand.
1. Differentiation
• It is the ability of a brand to stand apart from its competitors. Differentiation
has three constituents to it.
2. Relevance
• This refers to how closely can the consumers relate to the brand’s offering
and is a significant driver for a brand’s penetration.
3. Esteem
• This refers to the consumer perception about the brand. Whether a brand is
popular or not, whether it delivers on its stated promises- all this contribute in
building up the esteem of the brand.
4. Knowledge
• This refers to the degree of awareness about a brand in the minds of its
consumers. This is very important in building a brand and making the
consumers understand of what the brand actually stands for and its implicit
PPT message to the
1-115 Consumer consumers.
Behavior Ignacio J. Vázquez E. © 2007
 Private
label
• Licensing your product to another company to sell under its
own name, rather than under yours .
• Inventors of just one product typically won't have
a lot of luck selling that product to mass
merchants,don't
merchants becausewantmass
to buy from small,
companies that could be unreliable suppliers.
unknown
• But rather than accept defeat, inventors often turn
to private labeling. They find another company that
does sell to mass merchants and offer their product
to that company to sell under its name.

PPT 1-116 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Categories of private label
brands
• Premium private
label
• Copycat brands
• Exclusive brands
• Generic brands

PPT 1-117 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Which
category?

PPT 1-118 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Significance of using private
label
• High Margin: The advertising and
promotional costs are done away.
• Customer Loyalty
• Differentiation
• Competitive advantage
• Better Bargaining Power
• Control: Private labeling gives you more
control over pricing, marketing, sales and
distribution.
PPT 1-119 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Retail Pricing
Considerations in setting retail
price
• Business model
• Target market
• Customer price sensitivity
• Store image and policies
• Competition (monopoly/
oligopoly)
• Economic condition
• Pricing strategies

PPT 1-120 Consumer Behavior Ignacio J. Vázquez E. © 2007

 The pricing
strategies
• High/ low pricing
• Everyday low pricing
• Market skimming
• Market penetration
• Leader pricing/ loss
leader
• Odd pricing
• Single pricing
• Multiple pricing
PPT 1-121 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Types of variable
pricing
• Individualized variable pricing/ first degree
price discrimination : charging each
individual customer a different price
based on their willingness to pay.
• Self selected variable pricing/ 2nd degree
price discrimination : promotional
markdowns, clearance markdowns,
price bundling etc
• Variable pricing by market segment/
3rd degree price discrimination

PPT 1-122 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Managing
and
sustaining
retail
PPT 1-123 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Responsibilities of a store
manager
• Recruiting and training employees
• Merchandising
• Compliance/ adherence to all legalities
• Improving sales by customer
satisfaction
• Monitoring stock levels
• Build and maintain store brand image
• Other responsibilities like, cleanliness,
proper order, signage, etc
PPT 1-124 Consumer Behavior Ignacio J. Vázquez E. © 2007
 The 5 S’s of retail operations

Systems Standards

Shopper’
s benefit

Stock Space Staff

PPT 1-126 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Elements of store
design

PPT 1-126 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Exterior store
design
• The store marquee : A marquee is a structure
that bears a signboard, projecting the
entrance of the retail store.
• The store front
Interior store design
• Space planning
• Atmosphere/ aroma
• Fixtures
• Flooring and ceilings
• Lightings
• Graphics (Theme, campaign and promotional
graphics)
PPT 1-127 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Types of Store
Layout

A. Grid layout
If you ever wondered why milk is at the far end of a
grocery store, it's because this design forces
customers to walk past an assortment of impulse
purchase items both on the way to and from the staple
item
PPT that they
1-128 Consumer Behaviorneed. Ignacio J. Vázquez E. © 2007
 Grid
layout
• Nearly every convenience store,
pharmacy, and grocery store utilizes this
layout.
• Merchandise are displayed on a
predictable pattern of long aisles where
• customers
The
weave
grid maximizes
up and down,
display
browsing as they go.
product
minimizes white space. and
This
about product, product, layout
product. is
all

PPT 1-129 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Pros of grid
layout
• Best stores with lots of
for
especially when products are
merchandise,
• varied
Lots of exposure to products, as the
layout
encourages customers to browse multiple
aisles
• Familiar for shoppers
• Predictable traffic flow means you can
put
promos where you know customers will see
them
• Lots of infrastructure suppliers, such as
shelving, are available as this layout is
used
PPT 1-130 Consumerso much
Behavior Ignacio J. Vázquez E. © 2007
 Cons of grid
layout
• Least likely to create an experiential retail
space; this layout is a dime a dozen
• Customers may be frustrated they can’t
shortcut their way to what they need
• Customers may not understand your
product groupings, leading to frustration
and questions (or worse, departure)
• Cramped aisles often lead to customers
bumping into one another

PPT 1-131 Consumer Behavior Ignacio J. Vázquez E. © 2007

 The aisle is not working
out!

PPT 1-132 Consumer Behavior Ignacio J. Vázquez E. © 2007

 B. Race track/ loop
layout

• The loop, or racetrack layout takes the grid’s fairly

predictable traffic flows a step further and creates a
deliberate closed loop that leads customers from the
front of the store, past every bit of merchandise, and
then to the check-out. Customers are exposed to the
most merchandise this way, but the path they take is
PPT 1-134 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Pros and cons of a loop
layout
• Maximum product exposure
• Most predictable traffic pattern; easiest to
place
promotions and have highest assurance they’ll be
seen
• Can be experiential — may work with retail where a
journey makes sense
• CONS are:
• Customers don’t get to browse at will
• May waste customer’s time who knows what
they’ve come for; they may avoid this shop in the
future when buying intent is specific

PPT 1-134 Consumer Behavior Ignacio J. Vázquez E. © 2007

 C. Freeform
layout
• The free-flow layout is almost
philosophy rejection of the a
others.
• Merchandise is arranged in asymmetri
• an manner. cal
With free-flow, there is no
force
deliberate
customers
attempt
through
to predictable
traffic
patterns; wandering is encouraged.
• There are far fewer rules.
• This layout doesn’tuse the retail space to
its maximum.
PPT 1-135 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Freeform layout: Pros and
cons???

PPT 1-136 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Signage and
graphics

PPT 1-137 Consumer Behavior Ignacio J. Vázquez E. © 2007

 What is a Signage ?

• Any visual representation which gives

information to the customers about a store,
any office, building, street, park and so on is
called a signage.
• Signage helps the customers to easily
reach their desired destination or locate
a building by simply following the
instructions displayed on it.

PPT 1-138 Consumer Behavior Ignacio J. Vázquez E. © 2007

PPT 1-139 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Role of Signage and Graphics in
Retail Industry
• A customer can easily locate the store with
the help of a signage. It is the signboard
which actually attracts the customers into the
store.
• Signboard gives all necessary information
• about
The
the store.
are an medium of
signboards effective the retailer the
communication between and
• Acustomer.
signage goes a long way in influencing
the customer’s buying decision.
PPT 1-140 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Types of
signage
A. Category
signage

PPT 1-141 Consumer Behavior Ignacio J. Vázquez E. © 2007

 B. Promotional
Signage

PPT 1-142 Consumer Behavior Ignacio J. Vázquez E. © 2007

 C. Point of sale
signage

PPT 1-143 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Digital
Signage

PPT 1-144 Consumer Behavior Ignacio J. Vázquez E. © 2007

 What can an effective
signage do?
• Be a cost effective marketing
tool
• Promote products and
services
• Communicate essential
information
• Create a positive first
impression
• Create goodwill
• Commands attention
PPT 1-145 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Signage can be placed
at?
• Windows
• Entrances
• Freestanding
displays
• End caps
• Promotional aisle
• Walls
• Dressing rooms
• Cash wraps
PPT 1-146 Consumer Behavior Ignacio J. Vázquez E. © 2007
PPT 1-147 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Visual
merchandising
• Visual merchandising is a retail strategy
that maximizes the aesthetics of a product
with the intent to increase sales.
• Visual merchandising can also play a role
in the look, feel and culture of a brand.
• Done well, it can create awareness while
simultaneously increasing brand loyalty.

PPT 1-148 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Elements of visual
merchandising
• Lighting
• Signage and packaging
• Uniform and presentation
• Point of sale material
• Colours, shapes and various
textures
• Mannequins
• The planogram
• Display (color dominance,
coordinated
PPT 1-149 Consumer Behavior presentation, Ignacio J. Vázquez E. © 2007
 Display
Methods

PPT 1-150 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Errors in creating
display
• Clutter
• Too many props
• Lack of understanding
theme
• Dirty floors
• Poor lighting

PPT 1-151 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Concerns of an Indian retail
market
A sense of concern was expressed over
the following challenges to the Indian
retail market:
• lack of quality locations
• shortage of trained staff
• rising rental values
• mall management

PPT 1-152 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Mall
Management
• Positioning
• Zoning – formulating the right tenant mix
and its placement in a mall
• Promotions and marketing
(exhibitions, concerts etc)
• Facility management – infrastructure,
traffic and ambience management
• Finance management

PPT 1-153 Consumer Behavior Ignacio J. Vázquez E. © 2007

 Positionin
g
On the basis of offerings
• Prestige goods
• Value for money
• Economy
On the basis of anchors
• Entertainment based
• Presence of hyper
market
• Specialty based
PPT 1-154 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Facility
Management

Infrastructur Ambience Traffic

e
• Powe • Music • parking
r • Cleanliness • Events
suppl
y
• Air
condi
tionin
g
PPT 1-155 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Ethical aspects of
retailing
1. Designing compensation plan:
• Internal equity refers to employees’
perception of their pay in comparison to
their co-workers.
• External equity refers to employees’
perception of your company’s pay in
comparison to the pay of similar positions
at other companies.
2. Safety and security
3. Employee privacy and employment
PPT 1-156 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Issue
s
Buying merchandise Internet
• Terms of
conditions of • Online privacy
purchase • Privacy
• Bribery protection
(Federal Trade
• Counterfeit
Commission
for online
merchandi marketing
se practices)
• Exclusive • Licenses
PPT 1-157 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Career options in
retailing
• Buying and
merchandising
• Marketing
• Store operations
• Finance
• HR
• Technology
• Visual merchandising
• SCM
PPT 1-158 Consumer Behavior Ignacio J. Vázquez E. © 2007
 Thank
you!!

PPT 1-159 Consumer Behavior Ignacio J. Vázquez E. © 2007