RM Module 2
RM Module 2
MODULE II
Syllabus
Strategic planning in retailing—Retailing
environment and customers; Designing retailing
information system and research Location and
Organisational decisions – Trading area analysis;
Site selection; Organisational patterns in retailing.
CONTENTS
CONTENTS
02 04 06
Long-Term Sustainability
02 Nykaa
01
01 02 03
Porter’s Five Forces
Balanced Scorecard
PESTLE Analysis
Porter’s Five Forces framework
PESTLE analysis examines the analyzes competitive dynamics The Balanced Scorecard is a
Political, Economic, Social, in the retail sector, assessing strategic planning tool that
Technological, Legal, and the bargaining power of translates organizational vision
Environmental factors affecting buyers and suppliers, the into actionable objectives.
retail. threat of new entrants, the
threat of substitutes, and It balances financial and non-
This comprehensive framework existing rivalry. financial performance
aids retailers in identifying measures, promoting a
external influences and comprehensive view of strategic
crafting responsive This analysis aids in strategic success.
strategies. positioning.
02
Retailing Environment and Customers
Components of the Retailing Environment
Economic Factors Technological Factors
Economic factors, such as inflation rates, Technological advancements reshape the retail
disposable income, and employment rates, landscape, influencing how products are
significantly influence retail performance. Retailers marketed and sold. Retailers must leverage
must monitor these variables to adapt pricing emerging technologies like e-commerce and
strategies and inventory management accordingly. data analytics to enhance customer engagement
and operational efficiency.
03 Consumer Behavior
Analyzing consumer behavior in the Indian retail ecosystem
This segment is growing rapidly, driven by urbanization
involves understanding regional preferences, spending
and changing consumer lifestyles, necessitating
habits, and cultural influences.
strategic adaptations from competitors.
By centralizing
A strong Retail The effective use of an
operations and RIS can lead to improved
Information System
automating processes, customer experiences
(RIS) provides critical
an RIS enhances through personalized
data that empowers
operational services and faster
retailers to make
efficiency. response times.
informed decisions.
Streamlined data Understanding customer
Utilizing data preferences allows for
management supports
analytics helps tailored marketing
better resource
identify trends, efforts and enhanced
allocation and service delivery.
optimize inventory,
reduces operational
and enhance sales
costs.
strategies.
Components of a Retail Information System
Decision Support
0 Layer
Supporting strategic decisions,
0 this layer integrates
Data Input Layer 1
5 analytical models with real-
The data input layer captures time data.
transactional information,
customer interactions, and supply It aids retailers in forecasting
chain activities. trends, optimizing pricing
strategies, and enhancing
This foundational component ensures overall decision-making
accurate data collection for
0
capabilities.
0 4 Output and Reporting
0
subsequent processing and analysis.
3
Data Storage Layer2 Layer
Data Processing Layer The output and reporting layer
This layer processes raw data into presents processed
The data storage layer is responsible
meaningful information through information through
for securely storing vast amounts
analytics. dashboards and reports.
of data.
A retail industry with many small competitors instead of a few dominant players.
Market Fragmentation Fragmented New Age Marketing - YouTube
The North Face: Voice of Exploration
Tools and Technologies for RIS in India
01
Primary Retail Research Methods 02 Secondary Retail Research
Methods
Primary research methods involve
collecting firsthand data through
surveys, interviews, and
observations.
This approach offers customized Secondary research utilizes existing data from
Example: Amazon's operational success is driven by its advanced logistics, automation, and customer-centric approach,
ensuring fast deliveries and high customer satisfaction.
Types of Organizational Decisions in Retailing
01 02 03 02
Retailers must remain agile and responsive to these factors to maintain competitiveness.
Examples of Organizational Decisions in Retailing
Trading area analysis assesses the geographical area from which a retail
establishment draws its customers.
A Starbucks planning to open a new outlet in Mumbai conducts trading area analysis by assessing foot traffic,
local demographics, and competitor presence.
By analyzing nearby offices, residential areas, and spending patterns, the company determines the ideal location
with high customer potential and minimal direct competition, ensuring profitability and market success.
Importance of Trading Area Analysis
Walmart uses trading area analysis before opening new stores by studying population density, income levels, shopping
behavior, and competitor locations within a region.
For example, before opening a new store in a suburban area, Walmart analyzes customer traffic patterns, accessibility, and
potential demand to ensure the store location maximizes footfall and sales.
This strategy has helped Walmart optimize store locations, avoid market saturation, and successfully penetrate new regions
while maintaining operational efficiency.
Types of Trading Areas
Trading areas can be classified into primary, secondary, and tertiary zones based on
their proximity and customer significance.
Each area presents unique challenges and opportunities for retail operations.
Types of Trading Areas
Primary Trading Area:
The closest zone to the retail store, contributing the highest percentage of customers and sales.
Example: A McDonald's in a busy city center relies on office workers and nearby residents as its primary customer base.
A Big Bazaar store in Mumbai's High Street Phoenix Mall primarily serves residents and office-goers within a 3-5 km
radius.
Example: A Tata Croma store in Bangalore’s Koramangala attracts customers from nearby residential areas and IT hubs
who visit for high-value purchases.
Example: Tourists visiting an Apple flagship store in another city form part of its tertiary trading area.
A Fabindia store in Delhi’s Connaught Place may attract shoppers from other cities looking for premium ethnic wear
during their visits.
Methods of Trading Area Analysis
Operational Factors
Employing these methods helps retailers identify the most viable locations for their
stores.
Methods of Retail Site Selection
Demographic Analysis:
Evaluates population size, income levels, age groups, and consumer behavior to assess demand.
Example: Reliance Trends selects locations with high youth populations for fashion-focused stores.
Location Mapping:
Uses GIS (Geographic Information System) to analyze foot traffic, road accessibility, and nearby businesses.
Example: Starbucks India maps metro stations and business hubs to identify high-footfall areas.
Competitive Assessments:
Studies existing competitors in the area to determine market saturation and differentiation strategies.
Example: D-Mart avoids opening stores too close to strong competitors like Big Bazaar to maintain profitability.
Financial Modeling:
Estimates expected sales, operating costs, and return on investment to ensure financial viability.
Example: Tata Croma assesses rental costs versus projected revenue before opening a store in premium malls.
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09
Organizational Patterns in Retailing
Functional Organization
In a product-based organizational
structure, retail operations are divided
according to product lines.
Process-based organizations emphasize workflows and processes essential for delivering retail
services.
This structure supports efficiency and quality by streamlining operational procedures across different
functions.
Amazon Retail operations using Process-Based
Organization
Supply Chain & Inventory Management – Uses AI and predictive analytics to manage warehouse stock and optimize
order fulfillment.
Example: Amazon’s Just Walk Out technology in Amazon Go stores automates inventory tracking.
Order Processing & Fulfillment – Automated systems sort, pack, and dispatch orders through fulfillment centers.
Example: Amazon Prime ensures same-day or two-day delivery using streamlined logistics.
Customer Service & Support – Uses chatbots, AI-driven responses, and 24/7 customer service to enhance the
shopping experience.
Example: AI-powered chat assistant helps customers resolve return or refund issues.
Marketing & Personalization – Uses customer browsing history and AI algorithms for personalized product
recommendations.
Example: Amazon’s homepage suggests relevant products based on past purchases.
Financial Operations & Transactions – Implements secure payment gateways and fraud detection systems.
Example: Amazon Pay allows seamless transactions with cashback offers.
Hybrid Organization
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