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MMPM 09
RETAIL MANAGEMENT
 TABLE OF
CONTENTS

01 LONG IMP QUESTIONS

02 EXTRA LONG QUESTIONS

03 VERY IMP SHORT NOTES

04 EXTRA SHORT NOTES

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MMPM 09- : RETAIL MANAGEMENT

FIRST PRIORITY
Q1- EXPLAIN THE SIGNIFICANCE OF SOURCING IN RETAILING. , EXPLAIN THE PROCESS OF
SOURCING IN A STEP WISE MANNER. AND ELUCIDATE THE FACTORS INFLUENCING VENDOR
NEGOTIATIONS AND VENDOR RELATIONSHIP MANAGEMENT.? (V V V V V IMP).
ANS- SIGNIFICANCE OF SOURCING IN RETAILING –
In a retail store, one finds dozens of product categories, hundreds of brands and thousands of stock
keeping units (SKUs) placed on the shelf. These come from several suppliers/vendors and the number
could be in thousands for truly big hypermarket format stores like Walmart. A retailer buys from
suppliers/vendors of products after a lot of deliberation about quantity, quality and pricing
considerations. This means a lot of the retailer’s time and effort goes into negotiations for purchase
with many vendors. Thus, merchandise sourcing is a complex and tedious process. The golden rule of
sourcing is to buy quality merchandise at the most competitive price and then sell it to the customers
at a reasonable profit. Without thorough planning and strategy, a retailer cannot be successful in this
critical function of retailing. Therefore, it is essential to understand the significance of sourcing of
goods and its method. Today, the procurement function deals with more than regular set of annual
negotiations with large manufacturers of selected brands. Rather, the attention of retailers is focused
on procurement from medium and small manufacturers (primarily in the category of SMEs) and
buying raw materials for their own in-house production of private labels. These and other trends
have important impacts on procurement processes within retailer’s organization. Even new team,
procurement structures, skills, new approaches and tools are becoming relevant and essential.
Sourcing is a process involving several steps which are discussed below:
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FACTORS INFLUENCING VENDOR NEGOTIATIONS

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Q2- EXPLAIN THE PROCESS OF CHOOSING A STORE LOCATION AND TO EXPLAIN VARIOUS CRITERIA
FOR EVALUATING LOCATION ASPECTS WITHIN THEM AND APPRECIATE THE IMPORTANCE OF
STORE LOCATION. , IDENTIFY THE CHARACTERISTICS OF RETAIL LOCATIONS.? (V V V V V IMP).
ANS-IMPORTANCE OF LOCATIONAL DECISIONS IN RETAILING-
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ASPECTS OF LOCATIONAL DECISIONS AND INFLUENCING FACTORS

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The importance of store location in retailing cannot be overstated. It significantly impacts the
following aspects:

1. Visibility and Brand Image: A prime location with high visibility increases brand
exposure and attracts potential customers. The location itself becomes a marketing tool,
contributing to brand recognition and building a positive image.
2. Customer Convenience: A convenient and accessible location improves customer
convenience, making it easier for them to visit the store. Proximity to residential areas, public
transportation, and parking facilities enhances customer satisfaction.
3. Foot Traffic and Sales Potential: Locations with high foot traffic increase the potential
for sales. More people passing by the store increase the chances of attracting customers and
generating higher sales volumes.
4. Competitor Influence: The location can influence the level of competition faced by a
retailer. Being strategically located near complementary businesses can drive customer cross-
shopping and increase market share.
5. Cost Efficiency: Choosing a cost-effective

Q3- EXPLAIN IMPORTANCE OF RETAILING IN THE DISTRIBUTION CHANNEL AND CHALLENGES

FACED BY INDIAN RETAILERS ,FACTOR ESSENTIAL FOR SUCCESSFUL RETAILING.? (V V V V V IMP).
ANS- IMPORTANCE OF RETAILING IN THE DISTRIBUTION CHANNEL
Retailing encompasses sale of goods or services to the end customer for personal consumption or
household usage. Retailing can also be viewed as the last leg of the distribution system for consumer
goods or services. It includes range of products from small stitching needle to a luxury car. Retailers
collect assortment in bulk from various manufacturers or marketers and break down into small
quantities as per the demand from end customers. Retailers interface with the end customer
provides them with an opportunity to offer the exact quantity and quality of products / services at a
price acceptable to the end customer. Thus retailers convey the demand pattern of the customers in
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their geographical area of operation to the marketer or manufacturer who can accordingly plan their
production and marketing strategy. The characteristics which differentiates a retailer from a
marketer is their low average sales per customer, impulse purchasing by the customer and
customers’ inclination for satisfying experience during their shopping trip to the store. Therefore the
stores’ capability to provide an enhanced experience is the key factor for their success. Retail
business has been traditionally carried out by Kirana stores (also called “Mom and Pop “stores ) in
FMCG sector and Multi brand dealers or Exclusive Brand franchisee / company owned outlets in the
case of consumer durables. It is evident that over the years some retailers expanded their business
by opening their own chain of outlets and gradually retailing became an independent business
moving away from the influence and control of marketers. This category of retail businesses are
referred to as “organized retailers ‘compared to traditional retailers or any private enterprise who
are known as being part of “unorganized retailing” business. Thus they are known as organized
retailers as their business processes and systems are well defined and operate under the various
legislations related to business establishments. These new retail businesses require huge capital
investment, therefore large business houses or large investors entered this domain. -

OVERVIEW OF INDIAN RETAIL BUSINESS-

India, being a vast country with large population, has a huge retail sector. Its contribution to the GDP is
staggering 8-10% and it is the second largest employment generation activity after agriculture in India and
employs about 8% of the country's workforce. The retail market's anticipated size was 1.2 trillion dollars in
2022, with the majority of sales coming from the food and grocery segments. India's retail sector is growing
exponentially, with retail growth extending to tier II and III cities. The uorganized sector in India is accounting
for the 88% of retail business is constituted by an estimated 12 million small retailers and kirana stores (mom
and pop stores) and numerous vendors and hawkers. Though, no literature has been able to convincingly
claim these figures due to their sheer enormity and lack of systematic survey by any credible agency.
Predominantly, there are two types of traditional retail formats, namely
Predominantly, there are two types of traditional retail formats, namely
1. Kirana and Independent stores. 2. Cooperative and Government owned stores

RURAL RETAILING SCENARIO IN INDIA

Rural areas having a population of more than 1500 enjoy a strong parallel retail format set up such as
Periodic markets (Shanties, Haats, Jatras) and the allied. Periodic markets are traditional places
where rural customers congregate for their weekly or daily purchases. They are called by different
names i.e. Shanties/ Haats/ Jatras by people in different parts of the country. While shanties/Haats/
Jatras are held on a particular day of a week, periodic markets are normally tied with religious
festivals. These places attract a large number of itinerant merchants and temporary shops are set up
to sell variety of merchandise. The popularity of Haats can be gauged by the footfalls and turnover
which suggests that more than 80% of the buyers are regular visitors. 58% visit Haats to buy specific
products, although more than half of the shops have similar products in their villages.

CHALLENGES FACED BY INDIAN RETAILERS

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• Customer’s empowerment has increased the expectation of Indian customers. Retailers are putting
every effort to capture the consumer’s wallet share and are on an experimental spree, thereby
creating a situation where compromising with image and quality, heavy discounts, venturing into
new business models and vying new markets are becoming rampant. This is not letting them
consolidate the business in a competitive market. The industry needs to evolve in a way where every
player has a room to sustain and grow.

• Due to the high rental cost, a major component of the operating expenditure, the operating cost of
retail is still very high. The industry tried to counter this problem during the downturn by
renegotiating with the developers, but this was confined to mall retailing.

• Customer’s empowerment has increased the expectation of Indian customers. Retailers are putting
every effort to capture the consumer’s wallet share and are on an experimental spree, thereby
creating a situation where compromising with image and quality, heavy discounts, venturing into
new business models and vying new markets are becoming rampant. This is not letting them
consolidate the business in a competitive market. The industry needs to evolve in a way where every
player has a room to sustain and grow.

• Due to the high rental cost, a major component of the operating expenditure, the operating cost of
retail is still very high. The industry tried to counter this problem during the downturn by
renegotiating with the developers, but this was confined to mall retailing.

Post covid, customers are frequently resorting to online space for comparing the offer in offline
space and this has further put pressure on the margins of retailers as well as marketers.

FACTORS ESSENTIAL FOR SUCCESSFUL RETAILING

 Identifying the most important factors of success and prioritizing them accordingly. This may vary
with the business model and the dynamics of the local market.

 Good understanding of competition, as competitive scenario is specific to location and business

model

 Regular updates about changing taste and preferences of customers in the catchment area. This
may be the consequence of changing demographics in the catchment area or evolution of the
broader consumer ecosystem

 Updating inventory on regular basis based on changing market dynamics and customer
preferences.

 Conduct third party audit once a year for an unbiased identification of the lacunae in the function
of the store.
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Examples of Successful retailers : Lifestyle, Dubai based fashion retailer, McDonald’s an American fast
food retail chain, Ikea, self-assembling modular furniture retailer are some examples of foreign
retailers who understood the Indian retail ecosystem and are viewed as success stories

Q4- BRIEFLY EXPLAIN, WITH EXAMPLES, THE FOUR STAGES OF THE RETAIL LIFE CYCLE.? (V V V V V
IMP).
ANS- THE FOUR STAGES OF THE RETAIL LIFE CYCLE

STAGES IN RETAIL LIFE CYCLE

A retail format goes through a series of recognizable stages known as the retail lifecycle throughout
its time. Figure 3 displays the retail life cycle and their stages. According to the retail life cycle theory,
retail establishment go through four distinct stages of development: introduction (early growth),
growth (rapid development), maturity, and decline. This idea can be used to determine the direction
and rate of institutional changes.
Development stage
The new format is released to the market while it is still in the development stage. As at least one
component of the marketing mix is transformed in the new format, it differs from the strategies of
existing retail institutions.
Introduction Stage
During the introduction phase, sales and profitability are initially low but gradually rising. As long -
term success is not yet secured, costs and risks are high. In the launch stage of the cycle, there is a
marked shift away from the strategy combinations of established retailers. The strategy mix of a
company in this stage is significantly different from that of traditional competitors in at least one
aspect. For the first companies in new industry, sales and earnings often experience a significant
increase.Long-term success is still uncertain at this point. There is a possibility that new businesses
may not be well-received by consumers and early investments could result in significant financial
losses. For example, a new retail concept, such as Amazon entering a new market, such as India.
Growth Stage
The rapid growth of sales and revenues is a characteristic of the growth period. Markets for existing
businesses are expanded, while new competitors using the same retail model enter the market. By
the end of this phase, growth has slowed, and costs have begun to rise. Both sales and profits expand
quickly during the growth stage. Existing businesses grow geographically, and new businesses of the
same kind enter the market. Cost pressures (to pay for a larger staff, a more complicated inventory
system, and stringent controls) may start to have an impact on profits at the conclusion of
accelerated development. For example, A rapidly expanding retail chain, like the Chinese e-
commerce giant Alibaba, as it expands its reach, customer base shows an accelerated growth.
Similarly, Japanese casual wear designer and fast fashion retailer Uniqlo becoming more popular is
an example for its growth phase.
Maturity Stage
The maturity stage of the retail life cycle is characterized by slow sales growth. While overall sales
may still increase, they are rising at a significantly slower rate than in earlier phases. To boost
purchases, it may be necessary to lower profit margins. The maturity stage is often caused by market
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saturation due to multiple businesses in an institutional setting, competition from newer businesses,
changing societal priorities, and a lack of management skills to lead established or larger
companies.When maturity is attained, the objective is to maintain it for as long as possible without
declining. For example, a well-established brand such as Walmart in US has a stable customer base,
market share and revenue. This brand is in its maturity phase of its retail lifecycle.
Decline Stage

In the final stage, there is a decline; characterized by decreasing prices, profitability, and sales
volumes. Businesses may try to reposition their retail structure to avoid decline, but many do so to
retain existing customers or attract new ones. During this phase, many businesses abandon their
format, and create a new format to attract customers who were previously loyal to that type of
retailer. In certain situations; a decline
may be difficult or nearly impossible to turn around. In other cases, it may be prevented or delayed
by repositioning the business. The life-cycle concept highlights the need for retailers to adapt as
formats evolve. The initial objective should be growth, followed by the building of management and
operational capabilities as the business matures and finally, flexibility at the end of the cycle. An
example of a decline stage in retail can be seen with the decrease in popularity of specialty stores
due to competition from online retailers. Another instance is traditional bookstores, which are
experiencing a decline as electronic books become more prevalent and meet consumers' needs.
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Q5- EXPLAIN, WHAT IS COMMUNICATION MIX? WHAT ARE THE CHARACTERISTICS OF RETAIL
MANAGEMENT THAT PLAYS A CRITICAL ROLE IN DESIGNING THE COMMUNICATION STRATEGY.? (V
V V V V IMP).
ANS- INTRODUCTION TO COMMUNICATION MIX IN RETAIL MANAGEMENT - we have studied the
concept of retail management and its types, strategies for location, product, and price mix etc. In this
unit, wewill study the concept of communication mix, its traditional elements and then would
explore the impact of modern information technology on communication mix. In the last section we
would also explore the integration of these elements along with the future of communication in
retail. Retail management can be defined as the processes which help the customers to procure the
desired products/ services from the retail stores for their consumption/use. Retail management is
one of the oldest as well as newest branch of sales management due to e commerce making strides
in business ecosystem.

Definition of Communication Mix/ Promotion Mix

Marketing is based on the four pillar of marketing mix, popularly called as 4Ps of marketing. Since
retail marketing is more towards the services on the product-service continuum, it also uses the
extended three Ps of marketing mix. Therefore before moving ahead, let’s recap of the basic
concepts of Communication Mix and Integrated Marketing Communication (IMC): Communication
mix is combination of not just the mix and match of communication platforms but also the
communication methods. Communication mix is a combination of all the tools, techniques, channels
and platforms. These involve advertising, sales promotion, public relations, publicity, direct
marketing, social media, events, exhibitions, websites and weblinks etc.
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Elements of Communication Mix

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The communication mix refers to the combination of various communication tools and
channels used by a company to convey its marketing messages and promote its products or
services to the target audience. It is an integral part of the overall marketing strategy and
includes both traditional and digital communication methods. The characteristics of retail
management that play a critical role in designing the communication strategy are as follows:

1. Target Market Understanding: Retailers need to have a clear understanding of their

target market, including their demographics, preferences, behavior, and communication
habits. This knowledge helps in determining the most effective communication channels and
messages to reach and resonate with the target audience.
2. Brand Positioning: Retailers must define their brand positioning, unique selling
proposition (USP), and brand image. These elements shape the communication strategy, as
the messages need to align with the brand identity and effectively communicate the brand's
value proposition to customers.
3. Integration with Marketing Objectives: The communication strategy should be closely
aligned with the overall marketing objectives of the retail business. Whether the goal is to
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increase brand awareness, drive sales, launch a new product, or build customer loyalty, the
communication mix should support and contribute to these objectives.
4. Consistency and Coherence: Consistency in messaging and brand identity across
different communication channels is crucial. The retail management team should ensure that
the communication strategy maintains a coherent and unified brand voice, visual identity,
and messaging across various touchpoints, including advertising, social media, in-store
promotions, and customer interactions.
5. Customer Engagement and Personalization: Effective retail communication involves
engaging customers and creating personalized experiences. Retailers should utilize
communication tools that allow for two-way interaction, such as social media, email
marketing, and customer feedback mechanisms. This helps in building relationships,
gathering insights, and tailoring communication to individual customer needs.
6. Omni-channel Approach: The retail industry has evolved to include multiple channels
for customer interaction, such as physical stores, e-commerce websites, mobile apps, social
media platforms, and more. Retail management needs to design a communication strategy
that leverages an omni-channel approach, ensuring a seamless and consistent experience for
customers across all touchpoints.
7. Measurement and Analysis: Retailers should establish metrics and tracking
mechanisms to evaluate the effectiveness of their communication efforts. This involves
monitoring key performance indicators (KPIs), such as reach, engagement, conversion rates,
customer feedback, and sales impact. The retail management team can then analyze the data
to make informed decisions and optimize the communication mix for better results.

In summary, retail management plays a critical role in designing the communication strategy
by understanding the target market, aligning with brand positioning, integrating with
marketing objectives, maintaining consistency, engaging customers, embracing an omni-
channel approach, and measuring the impact of communication efforts.

Q6- DISCUSS THE ROLE AND IMPORTANCE OF FDI IN OPERATING RETAIL BUSINESS IN INDIA.? (V V
V V V IMP).
ANS- INTRODUCTION TO COMMUNICATION MIX IN RETAIL MANAGEMENT

Worldwide, the retail environment is exposed and influenced by the external factors and forces that
affect the retailer’s ability to build and sustain meaningful transactions and relationships with its
target customers. The environment in which retailers operate can be conveniently categorized as
micro and macro environment. While the micro environment confines itself to the main actors who
help enable to drive and achieve their goals and objectives of the business. These actors include the
suppliers, intermediaries, customers, competitors and publics at large. All these actors have been
touched upon and discussed in other the units of this course where ever they are deem fit and
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relevant As the macro environment constitutes the legal, social, economic and technological forces.
The major focus of this unit is only on all these constituents of macro environment which are inter
connected in different situations and their strategic importance in every retail business

Customers residing in a catchment area tend to shop in stores which fit well in the realm of their
social environment. This implies that different customers may shop in different stores even if the
product is same. It can also happen that customers may shop in different stores at different times
depending on their acquaintances during their different shopping trips. Even their interaction with
shopkeeper or store personnel would depend upon the sociocultural milieu of the city as well as their
own social network. Thus customers shopping in a modern format would be more formal in their
approach than when dealing with kirana walas. Even the shoppers visiting a high end store would
behave differently as compared to those visiting mass merchandisers. These phenomena are mere
reflections of the social framework in a particular area. Every store is an element of larger social
system in a given geography, known as markets. These markets are places of high traffic commercial
transactions. Yet, the nature of transactions differs in the form of emotional and behavioural
reactions of different customers or may same set of customers in different retail environment. A
crowded or heavy traffic environment generally encourages lower prices. The shopping objective is
largely driven by tendency to spend less time in shopping but buying lower priced products. Asian
shopper has been found to be more comfortable with shopping in crowded markets than majority of
their European counterparts. This phenomenon is reflective of the fact that Asian countries are more
populated than European countries and therefore, the tolerance to “crowded life ‘is high. The
concept of crowding is also observed in the formats and the stocking of merchandise, especially in
traditional stores. The stores are extended beyond the permissible limits as sanctioned by t he city’s
municipal corporation. These issues are not observed in modern stores in the same locality as one
section of the society which prefers avoiding the crowd in everyday life, popularise these stores.
These customers are more attuned towards the “shopping experience” and therefore, are provided
that opportunity to spend quality shopping time by getting more involved in their shopping exercise
and thus derive satisfaction. These set of customers are additionally looking forward to better store
ambience and more personalised attention from the retailers.

Foreign Direct Investment (FDI) plays a significant role in operating retail businesses in India.
The introduction of FDI in the Indian retail sector has brought several benefits and has had a
transformative impact on the industry. Here are the role and importance of FDI in operating
retail businesses in India:

1. Infusion of Capital: FDI allows foreign retailers to invest capital directly into the Indian
retail sector. This infusion of capital helps in the development of modern retail infrastructure,
such as shopping malls, hypermarkets, and distribution centers. It enables retailers to expand
their operations, invest in technology, and enhance supply chain management, thus
contributing to the growth and modernization of the retail industry.
2. Employment Generation: FDI in retail creates job opportunities across various
segments of the industry. With the entry of foreign retailers, there is an increased demand for
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skilled and unskilled workers in areas such as sales, logistics, supply chain management, store
operations, and customer service. This contributes to economic development by reducing
unemployment and poverty.
3. Improved Supply Chain Efficiency: Foreign retailers often bring advanced supply chain
management practices to the Indian market. They have expertise in efficient inventory
management, distribution networks, and logistics systems. By implementing these best
practices, FDI helps improve the overall supply chain efficiency in the retail sector. This leads
to better availability of products, reduced wastage, and improved customer satisfaction.
4. Enhanced Product Assortment and Quality: FDI in retail allows Indian consumers to
access a wider range of products and brands. Foreign retailers often introduce new and
innovative products to the market, bringing in global trends and catering to evolving
consumer preferences. This expands choices for consumers and raises the overall quality
standards of products and services available in the Indian retail market.
5. Technology Transfer and Knowledge Sharing: Foreign retailers bring with them
advanced technology, retail management practices, and industry expertise. This facilitates
technology transfer and knowledge sharing within the Indian retail industry. Local retailers
can learn from their international counterparts and adopt best practices in areas such as store
operations, inventory management, customer relationship management, and data analytics.
This contributes to the overall upgradation and professionalization of the retail sector in
India.
6. Boost to the Economy: FDI in retail has a positive impact on the Indian economy. It
attracts foreign investment, strengthens economic ties with other countries, and boosts
economic growth. The retail sector's expansion, driven by FDI, leads to increased tax revenues
for the government, stimulates demand for goods and services, and contributes to overall
economic development.
7. Development of Small and Medium Enterprises (SMEs): FDI in retail can benefit small
and medium enterprises (SMEs) in India. Foreign retailers often collaborate with local
suppliers and manufacturers, providing them with access to larger markets, technology, and
business expertise. This can help SMEs expand their operations, improve product quality, and
enhance competitiveness.

However, it is important to strike a balance between attracting FDI and protecting the
interests of local retailers and small traders. Policy frameworks and regulations should be in
place to ensure fair competition, promote local entrepreneurship, and safeguard the
livelihoods of small retailers.

In conclusion, FDI in operating retail businesses in India plays a crucial role in terms of capital
infusion, employment generation, supply chain efficiency, product assortment, technology
transfer, and overall economic development. It has brought positive changes to the retail
industry, benefitting consumers, the economy, and the growth of the sector.
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Q7- ANALYSE THE FORMS OF RETAILERS BASED ON OWNERSHIP AS SINGLE STORE, CHAIN STORES,
LEASED STORES AND CONSUMER COOPERATIVES..? (V V V V V IMP).
ANS-

Introduction and Overview: In the retail industry, different ownership structures exist, each
with its own characteristics and advantages. These ownership structures determine how a
retail business is owned, managed, and operated. This section provides an overview of the
various ownership structures, including independent single store ownership, corporate chain
stores, franchising, leased stores/departments, and cooperatives for consumers. The
management of these shops are independent. There may be a few small, locally managed branches.
They might also hire specific personnel to help. Most of the time, single ownership of retail
establishments involves limited retail businesses, although there are exceptions, such as in the
furniture or automobile industries, where single ownership involves relatively big establishments.

Independent, Single Store Ownership Structure: Independent, single store ownership refers
to retail businesses that are owned and operated by an individual or a family. These retailers
have full control over their business operations, decision-making, and store management.
Independent retailers often have a personal connection with their customers and provide a
unique shopping experience. They have the flexibility to adapt quickly to changing market
trends and customer preferences. However, they may face challenges in terms of limited
resources, economies of scale, and competition from larger retail chains.

Corporate Chain Store: Corporate chain stores are retail businesses that operate multiple
outlets under the ownership and management of a single organization. These outlets share a
common brand identity, store format, and centralized decision-making. Corporate chain
stores benefit from economies of scale, centralized purchasing, marketing, and supply chain
management. They have the advantage of wider geographic coverage, stronger brand
recognition, and better bargaining power with suppliers. However, maintaining consistent
customer experience across different locations and adapting to local market dynamics can be
a challenge for corporate chain stores. Essentially, it is the "corporatization of retail," although
there are a few instances of a single store operating as a firm. Retail businesses typically run several
stores. Retail chains are made up of numerous stores that are all owned and run by the same people.
Store operations and retail methods are standardized throughout stores; they typically offer the same
selection of goods and have centralized purchasing, so at least purchase regulations will be consistent.
Despite the lower number of retail chains, the relative strength of the industry is stronger. This is
because every chain store has at least a few outlets, and often, each chain store outlet is larger in size
as well. The average amount spent by a customer is similarly high. Chain stores can draw
proportionately more customers and produce significant amounts of revenue.Numerous chain stores
employ the same store organization. The overall control of the store is centralized. Numerous retail
chains in India are supported by big organizations such as Future Group, Reliance, Aditya Birla
Group, etc. Many of them have released their initial public offerings (IPOs) in the stock market,
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including Future Group. Independent single stores are not eligible for this kind of leverage. Store
chains can compete better as a result. When new products are introduced and manufacturers provide
promotional support, chain retailers typically receive preference. Due to their centralized operations
and ability to afford technology for customer databases, merchandise, category management, and
inventory management, these chain stores are more efficient than single stores.Bargaining power,
operational efficiency, multi-store operations, computerization, media access, clearly defined
management, and planning are benefits of chains of stores. They frequently have issues with rigidity,
large investments, diminished control, and limited staff independence.

Franchising: Franchising is an ownership structure where a franchisor grants the rights to an

individual or entity (franchisee) to operate a retail outlet under an established brand.
Franchisees benefit from the established brand image, proven business model, and ongoing
support from the franchisor. Franchising allows for rapid expansion of the brand through the
network of franchise outlets. Franchisors benefit from the expansion of their brand presence
and revenue generated through franchise fees and royalties. However, franchisees may have
limited control over business decisions and are required to adhere to the franchisor's
guidelines and standards. In a business arrangement recognised as franchising, a franchisor—who is
the owner of a company's brand name, product, or system—permits a franchisee to use such assets in
exchange for a predefined value of returns.The firm is not wholly owned by the retail shop. Because
the franchisees receive the remaining profit after paying the franchisor's fees, they have an incentive to
make the business venture successful. At a more fundamental level, franchising is a way of marketing
and distribution, and franchisors' organizations use it as a method of quick growth and expansion at a
minimal capital cost.In addition, franchising enables the franchisor to have greater access to capital,
reduce operating costs, and capitalize on the abilities of independent entrepreneurs. A franchisor's goal
is to replicate a consistent product offering and shopping experience across different locations through
franchisees.

When a franchisee agrees to sell a franchisor's goods and/or conduct business using the latter's name,
this is known as product/trademark franchising. The franchisee conducts business mostly on their own.
Although there are basic operational guidelines, the franchisee decides on the location, the hours, and
the facilities and displays. 60% of retail franchising sales are in the product/trademark sector. Auto
stores and gas stations are some examples. In business format franchising, the relationship between a
franchisor and a franchisee is more collaborative. The franchisee not only gets to offer goods and
services, but also receives assistance with site selection, quality control, accounting, start-up
procedures, management training, and troubleshooting. Prototype storefronts, consistent product
offerings, and joint advertising, previously only seen in chains, foster collaboration. This type of
franchising is commonly used in the restaurant and food service, real estate, and service retail
industries. For example, Barista Lavazza (Italian coffee chain), Baskin-Robbins (chain of ice cream
shops) has its significant presence in India through franchising. 7-Eleven (chain of convenience stores)
has its franchises all over the world. Similarly, McDonald's (fast food chain) is one of the largest
franchising businesses in the world.
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Leased Stores/Departments: Leased stores or departments refer to retail outlets that operate
within premises owned by a third party, such as a shopping mall or a commercial complex.
Retailers lease space from property owners and run their operations within those leased
premises. Leased stores benefit from the foot traffic and visibility provided by the shopping
center, as well as shared maintenance costs and security services. However, they may face
higher rental costs and have limited control over the physical store environment and
operations. Large department stores occasionally rent out space to other merchants who offer
complementary products. As part of their plan to control the tenant mix, the mall developers also lease
space to other retailers. Like a store, there may be many departments, such as those for clothing, toys,
beauty salons, jewellery, footwear, etc. The food courts are typically made available to outside parties.
The store-based retailer uses leased departments as one tactic to diversify their product offering. These
are also referred to as "stores within stores." They are frequently found in shopping centre food courts,
beauty salons, banks, photographic studios, jewellery, cosmetics, and other such departments.To have
greater control over how their products are marketed, many high-end companies, including Gucci and
Dior, are renting out departments. The store-within-a-store model provides extra opportunities for
lessees and host retailers to cross-promote their brands and attract a larger audience. Leasing spaces
can enhance the shopping experience for customers, add variety to the retailer's product offerings, and
encourage them to stay longer and make impulsive purchases. The success or failure of this strategy
for the retailer depends on selecting the right retail partners who complement the host store and can
attract new customers for the host retailer. The strategy must also be supported by adequate
advertising from both the host retailer and retail partners to raise awareness of the leased department
store locations.

Cooperatives for Consumers: Consumer cooperatives are retail organizations that are owned
and operated by the consumers themselves. These cooperatives are formed by a group of
individuals with a common interest in procuring goods or services directly from producers or
suppliers. Members pool their resources and collectively own the retail outlet(s). Consumer
cooperatives aim to provide members with high-quality products at affordable prices,
eliminating the need for intermediaries. Members often participate in the decision-making
process, and profits generated by the cooperative are reinvested or distributed among the
members. Consumer cooperatives promote community participation, social empowerment,
and economic benefits for their members.

In summary, different ownership structures exist in the retail industry, ranging from
independent single store ownership to corporate chain stores, franchising, leased
stores/departments, and consumer cooperatives. Each ownership structure has its own
advantages and challenges, and retailers choose the structure that aligns with their business
goals, resources, and target market.
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Q8- WHAT ELEMENTS MAKE ‘STORE OPERATIONS’ FOR RETAILERS. AND KNOW THE ROLE OF STORE
OPERATIONS IN RETAIL BUSINESS. ,GET A COMPLETE OVERVIEW OF ROLE AND COMPOSITION OF A STORE’S
INTERNAL AND EXTERNAL ATMOSPHERICS..? (V V V V V IMP).

ANS-
Elements of Store Operations for Retailers: Store operations for retailers involve various elements that
collectively contribute to the smooth functioning and success of a retail business. Some key elements
include:

1. Merchandising: Planning and managing the assortment, pricing, and presentation of products to
meet customer demands and maximize sales.
2. Inventory Management: Efficiently managing stock levels, tracking inventory, and
replenishing products to ensure availability while minimizing carrying costs and stockouts.
3. Store Layout and Design: Designing an optimal store layout that promotes easy navigation,
showcases products effectively, and enhances the overall shopping experience.
4. Staffing and Training: Hiring and training qualified staff to provide excellent customer service,
handle transactions, and assist customers with their inquiries and needs.
5. Sales and Promotion: Implementing sales strategies, promotional campaigns, and marketing
initiatives to attract customers, increase footfall, and drive sales.
6. Store Security and Safety: Ensuring the safety of customers, employees, and assets by
implementing security measures, surveillance systems, and emergency protocols.
7. Technology and Point-of-Sale Systems: Utilizing technology solutions, such as POS systems,
inventory management software, and customer relationship management tools, to streamline
operations, track sales, and enhance customer experience.

Role of Store Operations in Retail Business: Store operations play a crucial role in the success of a
retail business. Some key roles and importance include:

1. Customer Satisfaction: Effective store operations ensure a positive shopping experience,

prompt service, and availability of desired products, thereby enhancing customer satisfaction and
loyalty.
2. Sales and Revenue Generation: Efficient store operations, including merchandising, inventory
management, and promotions, directly impact sales and revenue generation.
3. Cost Control and Efficiency: Well-managed store operations help control costs related to
inventory, staffing, and processes, leading to improved profitability and operational efficiency.
4. Brand Image and Customer Perception: The overall store environment, including atmosphere,
cleanliness, and customer service, contributes to the brand image and perception in the eyes of
customers.

Overview of Role and Composition of a Store's Internal and External Atmospherics: Store
atmospherics refer to the elements that create a specific atmosphere or ambiance within a retail store,
influencing customers' perceptions and behaviors. There are two components to store atmospherics:
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1. Internal Atmospherics: Internal atmospherics encompass the elements within the store that
contribute to the overall atmosphere, including:
 Store Layout and Design: The physical arrangement of the store, including fixtures, displays,
aisles, and signage.
 Lighting: The use of lighting techniques to create a desired mood, highlight products, and
enhance the shopping experience.
 Music and Sound: The selection of background music or sounds that align with the brand
image and create a pleasant shopping environment.
 Scent: The use of specific scents or fragrances to create a sensory experience and evoke
emotions.
 Visual Merchandising: The visual presentation of products, displays, and promotional
materials to engage and attract customers.
2. External Atmospherics: External atmospherics refer to the elements outside the store that
contribute to the overall atmosphere, including:
 Store Façade and Exterior Design: The appearance, architecture, and signage of the store's
exterior, attracting customers and reflecting the brand image.
 Surrounding Environment: The neighborhood, landscape, and overall surroundings of the store,
which can impact customers' perception and decision to visit.
 Parking and Accessibility: The availability of parking facilities and ease of access to the store,
influencing convenience and customer satisfaction.

Overall, a well-designed and managed store atmosphere, both internally and externally, creates a
welcoming and engaging environment, influences customer behavior, and helps build a strong brand
image and customer loyalty.
STORE OPERATIONS: OVERVIEW

1. Customer's Angle: Store operations from the customer's angle focus on delivering a positive
and satisfying shopping experience. This includes aspects such as:
 Customer Service: Ensuring friendly, knowledgeable, and efficient service to assist customers
with their inquiries, product selection, and purchases.
 Product Availability: Maintaining adequate stock levels and properly managing inventory to
meet customer demands.
 Visual Merchandising: Presenting products in an attractive and organized manner to enhance
the shopping experience and facilitate easy navigation.
 Checkout Process: Streamlining the checkout process to minimize wait times, offer various
payment options, and provide hassle-free transactions.
2. Store Design Overview: Store design refers to the layout and arrangement of physical elements
within a retail space. It involves considering factors such as:
 Store Layout: Determining the placement of aisles, shelves, counters, and displays to optimize
traffic flow and promote customer exploration.
 Visual Presentation: Utilizing visual merchandising techniques to create eye-catching displays,
highlight products, and create a visually appealing store environment.
 Signage and Graphics: Using clear and informative signage to guide customers, provide
product information, and enhance the overall store experience.
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3. Store Atmospherics: Store atmospherics focus on creating a pleasant and engaging ambiance
within the store. This includes:
 Lighting: Choosing appropriate lighting that sets the desired mood, highlights products, and
enhances the overall shopping experience.
 Music and Sound: Selecting background music or sounds that align with the store's brand
image and target customer preferences.
 Scent: Incorporating pleasant scents that can evoke positive emotions and reinforce the store's
brand identity.
 Temperature and Ventilation: Maintaining a comfortable temperature and proper ventilation to
ensure customer comfort.
4. Store Space Management: Store space management involves optimizing the utilization of the
physical space available. This includes:
 Planogram Implementation: Designing and implementing planograms to ensure efficient
product placement, maximize shelf space, and improve visual appeal.
 Inventory Management: Strategically organizing and replenishing inventory to avoid stockouts,
minimize holding costs, and make the most of available space.
 Space Allocation: Allocating different areas of the store for specific purposes, such a s sales
floor, storage, fitting rooms, and administrative areas, to ensure smooth operations.
5. Internet Retailing Atmospherics: With the rise of internet retailing, creating a positive online
shopping experience is crucial. Key aspects include:
 Website Design: Designing a user-friendly website with easy navigation, clear product
information, and a secure checkout process.
 Visuals and Imagery: Utilizing high-quality product images, videos, and virtual tours to give
customers a realistic view of the products.
 Customer Reviews and Ratings: Incorporating customer reviews and ratings to build trust,
provide social proof, and guide purchase decisions.
 Personalization: Offering personalized recommendations, targeted promotions, and a seamless
online shopping experience tailored to each customer.

In summary, store operations from the customer's angle involve providing excellent customer service,
ensuring product availability, implementing effective visual merchandising, and streamlining the
checkout process. Store design overview focuses on layout, visual presentation, and signage. Store
atmospherics encompass lighting, music, scent, and temperature. Store space management involves
planogram implementation, inventory management, and space allocation. For internet retailing,
creating a positive online experience includes website design, visuals, customer reviews, and
personalization.

Q9- WHAT IS THE CONCEPT AND THE ESSENCE OF THE THEORY OF “WHEEL OF RETAILING AND
NEW/EMERGING CUSTOMER AND THEIR BEHAVIOR.? (V V V V V IMP).

ANS- NEW/EMERGING CUSTOMER AND THEIR BEHAVIOR-

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Indian consumers behavior is changing at a very fast pace with the advent of broad band connectivity,
infrastructural improvements, more disposable incomes, offer of personal loans and EMI’s on
purchases, door delivery of goods and services. The complexities arising out of these changes are
further catalyzed by the experiences of lockdown during COVID and visiting the store after the end of
pandemic. Indian society is largely depicted as a trapezium with a burgeoning middle class. The
middle class can itself be characterized as upper, middle and lower middle class who vary in terms of
their disposable income and expectations. The attitude and lifestyle of an average Indian has changed
considerably in the last two decades impacting their purchase behavior. The phenomena of sharing
accommodation in metros and large urban cities, during college days and initial career phase, hectic
lifestyle focused on building career with new acquired skills in unconventional domains, increased
social engagements on social media and less personal interactions, warding of many social taboos and
embracing new social engagements, late marriages and working actively till 70 years of age, aged
parents living away from their children, increased longevity of average Indian have all contributed to
change in the demand pattern of Indians. Indians have become more aspirational in a world connected
through digital networks.

The earlier generations including people born till 1990s had been exposed to shopping at traditional
kirana stores, but the generations born post 90s have been gradually exposed to shopping in modern
retail outlets. The traditional shoppers, still prefer shopping at kiranas which was characterized by
offering few but relevant options related to product, brand and SKUs, were present in proximity,
offering credit as per their level of comfort, providing options of buying in loose and being friendly
and trustworthy due to familiarity over generations. They are attracted by their acquaintance and
personalized behavior of the kiranawala, expect easy credit facility, are comfortable with close
proximity of the retail outlet and have a tendency to buy loose/unpacked products and commodities as
per their immediate requirements. On the contrary the modern shoppers have different priorities. They
view shopping as leisure and entertaining activity, but also may settle for convenience if that seems to
be more desirable in a specific situation. They are attracted by ‘brands’, expect fresh and quality

stock, that too in huge variety. They prefer to indulge in credit/ debit card payment Therefore the
modern retailers are characterized by offering fun and leisure, providing all avenues of online
transactions as well as credit facility, providing large number of merchandise options with attractive
promotional offers and discounts on multiple issues and occasions. The starting point for crafting retail
strategy is an in depth understanding of the new and modern customer. Thus the pressing need of the
hour is a detailed understanding of the consumer behavior in every region, be it city, state or region or
country, helps the retailer in customizing their services. Accordingly, retailers can plan their
positioning in the concerned market which leads to designing their merchandise, communication and
add-on services. McDonalds offering soup, potato or paneer burger or salads and other vegetarian
dishes as part of its menu in Asian countries, whereas McDonalds selling beer and meat pies in
European countries are a classic example of the same.

Emerging pattern of consumer behavior in era of Omni channel retailing:

Shoppers are involved in the utilitarian shopping for any high involvement category like Air
Conditioner or experimenting with a new category or product as they have easy access to all relevant
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information online which they may supplement by store visit, but may end up buying online due to
better price based offers. While customers purchasing offline prioritize hedonic benefits over
utilitarian or may be both benefits. They value the services being offered in the store and the overall
experience of relaxed and satisfied shopping. Yet, the cultural, psychological and demographic
diversity impacts the purchase behavior and therefore retail chains have to be sensitive to these issues
while operating across different cities or countries. A classic example would be that of famous
designer jewelry retailer ‘Sarwosky’. The retailer had introduced special earrings for Indian women
which could be worn on pierced ears as per the tradition in India. This was entirely different from the
earrings being sold by them in western world where earrings are worn with clips, as ladies do not
pierce their ears. The ability to ‘try out’ or experience the product at modern retail has in turn impacted
consumer behavior. The ‘situation’ created by the retailers in store provides an overwhelming
environment for availing that experience. This is relevant to categories like apparels, shoes and
jewelry where hedonic benefits are the more important. The ambience of the store further acts as an
influencer in swaying customers’ decision. Some retailers provide an additional space for children in
store to play, thus providing a stress free shopping to young parents. This turns out to be an outing for
the whole family. The trial room with full size mirror for trying out apparels, footwear, jewelry,
spectacles frames and personal care products like cosmetics are examples of ‘experiences’. The shop
floor salesperson’s role cannot be underestimated as they are able to get full attention of the customers
without any distractions from any competitor’s message. The experience is not limited to brick and
mortar stores but are being attempted by online retailers through augmented reality / virtual reality
(AR/VR). Once these technologies mature it will be easy for online retailers to imitate offline retailers
to a great extent. The future trend would be more customers only buying online, that too across more
number of categories. For instance, a customer can gauge at a virtual magic mirror at the retailer’s site
and decide on the type of facial care product to be used, based upon the feedback of this magical
mirror on the skin texture of the individual. Similarly a customer looking to buy a matching pair of
trousers for his upperwear which may be most appealing for his personality may use the services of
virtual mirror which would offer the best match through artificial intelligence (AI) based programme.
It is to be appreciated that retailing is inherently a service. Therefore the retailer offering the best level
of service in all forms i.e. touch and feel, social interaction, personal attention, no wastage of time
while shopping, convenience of looking for the right product, support for making fa st purchase
decision, ease of payment, fast resolution of customer complaints and sundry services like parking
space, availability of children’s playing arena and shopping trolley or escorts till vehicle parking
would be the key success factors for any retailer in the offline format. Similar factors would be
applicable in the case of online retailing excluding barring some of the services mentioned above.

THE WHEEL OF RETAILING

Wheel of retailing is a concept which proposes that a retail business by and large will go through four
phases of transformation starting from being a small and micro player based on price discounts to a
big well-known and prominent store. These four phases - Entry, Growth, Stabilization, and Compete
happen in a circular fashion for a retail player. Most of the retail 5 businesses start on low cost, low
price and low margins but as their sales start increasing they quickly shift to a high cost, high revenue
model. It is to be noted that that, wheel of retailing is more of a business trend/development which
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happens usually but it is not a rule. It may not happen to many players but it is more of a concept
which is observed in the market.

Q10- WHAT ARE THE ELEMENTS OF A STRATEGIC PLANNING PROCESS? EXPLAIN IN DETAIL THEIR
SIGNIFICANCE?? (V V V V V IMP).

ANS- WHAT ARE THE ELEMENTS OF A STRATEGIC PLANNING PROCESS -

Strategic planning is the process by which an organization foresees its future and develops the
necessary procedures and operations to achieve its objectives. The planning process can be viewed as
an iterative flow of topics and action points, wherein the results from one step serve as input to the
next step. However, the process is not necessarily always flow in one direction. Issues that arise in a
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particular step may cause the planning team to go back to an earlier step to do some additional work. If
desired, the order of the steps may be altered to suit the particular needs of the planning team. The
implementation step also does not culminate in the planning process. Analysis of results could lead to
additional analysis or a change in strategic direction. Also, it is recommended that the plan be
reviewed on a periodic basis to verify that all the underlying assumptions are valid and that the
implementation is progressing as per plan.

STEPS OF THE STRATEGIC PLANNING PROCESS

It is important to understand that the process of strategic planning is time consuming. The following
are some of the issues that need to be addressed before starting a strategic planning exercise:
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The strategic planning process involves a series of steps and elements that organizations
undertake to define their long-term goals, assess their current situation, and develop
strategies to achieve those goals. The elements of a strategic planning process typically
include the following:

1. Mission Statement: The mission statement defines the purpose and fundamental
reason for an organization's existence. It answers the question of why the organization exists
and provides a guiding framework for decision-making. A clear and concise mission
statement helps align the organization's activities and sets the direction for strategic
planning.

Significance: The mission statement provides a sense of purpose and identity to the
organization. It helps stakeholders understand the organization's core values and goals, and
it serves as a basis for developing strategies that are aligned with the organization's mission.

2. Vision Statement: The vision statement describes the desired future state or the
aspirational goals that the organization aims to achieve. It outlines the organization's long-
term objectives and provides a sense of direction and inspiration.

Significance: The vision statement creates a shared understanding of the organization's future
aspirations among stakeholders. It serves as a motivational tool for employees and guides
decision-making by aligning actions with the desired future state.

3. Environmental Analysis: Environmental analysis involves assessing the external and

internal factors that can impact the organization's performance and success. External factors
include market trends, competition, technological advancements, economic conditions, and
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regulatory changes. Internal factors include the organization's strengths, weaknesses,

resources, capabilities, and culture.

Significance: Environmental analysis helps organizations understand the opportunities and

threats in their external environment and identify their internal strengths and weaknesses.
This analysis provides valuable insights for developing strategies that leverage opportunities,
mitigate threats, and build upon organizational strengths.

4. Setting Objectives: Setting objectives involves defining specific, measurable,

achievable, relevant, and time-bound (SMART) goals that are aligned with the organization's
mission and vision. Objectives provide clarity and focus to strategic planning efforts.

Significance: Clear objectives provide a framework for evaluating the organization's progress
and success. They help prioritize initiatives, allocate resources effectively, and guide decision-
making throughout the strategic planning process.

5. Strategy Development: Strategy development involves identifying and formulating a

set of actions and initiatives to achieve the organization's objectives. This includes
determining the competitive positioning, target markets, value proposition, and core
strategies that will guide the organization's activities.

Significance: Strategy development ensures that the organization has a roadmap for
achieving its objectives. It helps align the organization's resources and activities in a coherent
and coordinated manner, increasing the likelihood of success.

6. Action Plans and Implementation: Action plans detail the specific steps, tasks,
timelines, and responsibilities required to execute the strategies. Implementation involves
putting the plans into action, monitoring progress, and making necessary adjustments.

Significance: Action plans provide a structured approach for executing the strategies
effectively. Implementation ensures that the strategies are translated into tangible actions,
fostering accountability, and driving progress towards the organization's objectives.

7. Evaluation and Control: Evaluation and control involve monitoring and assessing the
progress and outcomes of the strategic initiatives. It includes tracking key performance
indicators, analyzing results, identifying deviations from plans, and making necessary
adjustments.
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Significance: Evaluation and control help organizations track their performance, identify areas
of improvement, and make informed decisions based on real-time data. It ensures that the
organization remains on track and enables continuous improvement.

Q11- EXPLAIN THE DIFFERENT TYPES OF RETAIL FORMATS. AND EXAMINE THE CHARACTERISTICS
OF RETAILERS.? (V V V V V IMP).

ANS- - CHARACTERISTICS OF RETAILERS-

The retail industry has grown increasingly difficult and competitive over time. The market has already
developed because of growing demographic and cultural variations as well as evolving lifestyles over
time. Every market has a unique set of requirements. Like any marketer, a store must choose the type
of market it will successfully serve. The retailer must therefore consider a wide range of possibilities
to stand out in the market and entice its target audience. Retailers now place a higher priority on their
consumers' interests, make interaction with them, and gather data on their behavior to better
understand their preferences, rather than just concentrating on the distribution of goods or services.
Companies that focus on retail involve buying goods from other businesses to sell directly to
consumers and may also provide services related to product sales. The act of selling goods or services
directly to end customers for personal use is referred to as retailing and it represents the final stage in
the distribution of products. Retailers are closer to consumers than producers are from a marketing
standpoint. Retailers serve as both the consumer's point of contact with manufactured goods and the
last link in the marketing chain.

The formulation and execution of a retail mix or strategy affect the retailer's performance. Each
retailer offers the market distinctive services based on their characteristics and business strategy.
Based on the retail mix elements, the retailer's characteristics are discussed below.
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TYPES OF RETAIL FORMATS

The type of retail format used today plays an important role in consumer decisions and how it meets
their expectations. A retail format consists of a simple marketplace or a location where sales happen.
The retail format, commonly referred to as the retail formula, influences the customer's choice of store
and fulfils their demands. A retail format is essentially a simple marketplace, or a place where
products and services are offered. In some parts of the world, small family run businesses still
dominate the retail sector, but large retail chains are increasingly dislodging them due to their capacity
to exercise enormous purchasing power and transfer the savings on to customers in the form of lower
prices. These massive retail chains compete. with manufacturer brands in addition to producing a
significant portion of their own private labels. The retail climate has changed because of significant
store consolidation, with major retailers now having more influence on wholesalers. Retail activities
are carried out by a variety of organizations, including manufacturers, wholesalers, and retailers, with
the majority of retail sales handled by retailers. Although the majority of purchases still occur in
physical stores, online and non-store retail channels such as e-commerce, mail orders, door-to-door
sales, phone orders, vending machines, and other online purchasing methods have seen significant
growth in recent years and are collectively refered to as "non-store retailing."
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Q11- EXPLAIN MEANING AND SCOPE OF CONCEPT OF MERCHANDISING. , DESCRIBE

MERCHANDISING. AND DISCUSS THE FACTORS AFFECTING MERCHANDISING.? (V V V V V IMP).

ANS- -—
Meaning and Scope of the Concept of Merchandising: Merchandising refers to the activities
and strategies involved in promoting and selling products to customers. It encompasses a
wide range of activities, including product selection, pricing, presentation, promotion, and
inventory management, all aimed at maximizing sales and profitability. Merchandising plays a
critical role in retail businesses as it directly impacts customer experience, product visibility,
and overall business performance. Merchandising comprises of planning as to what to purchase
for the outlet (to resell), how much to purchase and at what price to purchase thus, maintaining
proper stocks and finally pricing them for selling purpose. Merchandising is a critical function. The
neighborhood grocery shop has to keep an eye on hundreds of items from a large number of
suppliers, both small and large. The owner has not only to order what is going to be out of stock but
also products whose prices are likely to rise in the near future due to seasonal effects. He has not
only to make payments but also claim various purchase discounts which ultimately will ensure the
bottom line of his Profit and Loss account. Similarly, when one goes to a cloth shop what does one
do? For the same print of cloth, one may ask many colors. While purchasing a shirt customer would
like to look at all the designs and colors available for a given size before taking the final purchase
decision. A retailer should therefore maintain a proper depth in his merchandise which in the present
example would mean that he should be stocking maximum possible range of colors and prints in
different sizes of shirts.
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Like in any other business activity, in merchandising one must first set objectives. All further activities
can flow from the objectives. Some authors have also termed this as merchandising philosophy. The
core of merchandising activity is to make whatever is demanded by the target market. While setting
up merchandising objectives a retailer must keep in mind the following factors:

1. Diversity in requirements of the customers

2. Fashions/Market trends

3. Supplier’s capacity to supply

4. Competitors merchandising strategy

5. Warehousing capacity and warehousing costs

Customers have various requirements. Thus, a chain of store catering to the same type of target
segment has a different set of assortments of products kept in its separate stores depending upon
the geographic location and demographics of the place. Fashions and Market trends are big time
indicators of sales trends in the present as well as near future. Especially in the apparels a retailer
can, on the basis of last couple of years and the current trend, can predict the type of demand which
expected during the year and in the future to come. Each retailer is depending on a set of suppliers
for the supply of finished products to be resold to the customers. Suppliers are critical participants of
the total supply chain of the retailer. It is very essential that the retailer has complete information
about the ability and limitations of each of his supplier. This would help him to plan his purchase of
merchandise better from each of them. Major players in the market have their individual strategies
regarding merchandise management. It is worth knowing their strategies (although difficult to do so
but not impossible). Merchandising strategy of any top player can throw ample light on the strategic
use of merchandising. It can also help you to know the economies of scale which the retailer must be
enjoying. Finally it helps you 4 to know as to what is the calculation on the part of the particular
retailer regarding latest fashion trends and consumer requirements. Storage is an important aspect
of merchandising. All the merchandise procured should be adequately stored in a proper manner
before the sale. Some retailers prefer to showcase the total material in the store itself. Their
intention is to impress the customer with the range of the products which they have. However, if not
displayed properly it may add to the clutter in the outlet and give a very confused look. This may
adversely affect the store atmosphere and ultimately the sales. Again, even if some part of the stocks
is kept in the warehouse it should be the endeavor of the retailer to put it in the outlet at the
opportune time. This is besides the general precautions against pilferage, loss due to various hazards
etc.

Merchandising involves various aspects of managing products within a retail environment. It

includes:
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1. Product Selection: Merchandising starts with carefully selecting the right mix of
products to offer to customers. This involves analyzing market trends, understanding
customer preferences, and considering factors like product quality, brand reputation, and
pricing.
2. Pricing Strategy: Merchandising includes determining the optimal pricing strategy for
products. This involves considering factors such as production costs, competition, market
demand, and pricing objectives. The pricing strategy should align with the target customer's
perception of value and the retailer's positioning in the market.
3. Product Presentation: Effective product presentation is crucial in merchandising. It
involves organizing and displaying products in a visually appealing and logical manner to
attract customers and facilitate their shopping experience. Techniques such as visual
merchandising, product placement, signage, and packaging play a key role in product
presentation.
4. Promotions and Marketing: Merchandising includes planning and executing
promotional activities to drive sales and create awareness. This can include advertising, sales
promotions, discounts, loyalty programs, and other marketing initiatives to attract customers
and generate interest in the products.
5. Inventory Management: Merchandising involves managing inventory levels to ensure
products are available when customers demand them. This includes forecasting demand,
monitoring stock levels, replenishing inventory, and implementing inventory control
measures to minimize stockouts and excess inventory.

Factors Affecting Merchandising: Several factors influence the effectiveness of merchandising

strategies. These include:

1. Consumer Behavior: Understanding customer preferences, shopping habits, and

buying patterns is crucial in merchandising. Factors like changing consumer trends,
demographics, and psychographics impact product selection, pricing, and presentation
decisions.
2. Market Trends and Competition: Monitoring market trends and staying informed
about competitors' strategies is essential in merchandising. Market trends influence product
selection and presentation, while competitive analysis helps identify unique selling points and
differentiate from competitors.
3. Seasonality and Trends: Merchandising needs to adapt to seasonal variations and
emerging trends. Seasonal products, holidays, and special events require strategic planning
and timely adjustments in product assortment, promotions, and visual presentation.
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4. Supply Chain and Logistics: Efficient supply chain management is vital for successful
merchandising. Factors like sourcing, supplier relationships, transportation, and warehousing
impact product availability, quality, and cost, influencing merchandising decisions.
5. Economic Factors: Economic conditions, including inflation, consumer spending power,
and market stability, can influence pricing strategies, promotions, and customers' willingness
to purchase.
6. Technological Advancements: Advancements in technology, such as e-commerce,
mobile shopping, and data analytics, have a significant impact on merchandising. Retailers
need to leverage technology to enhance the customer experience, personalize offerings, and
optimize operations.
7. Internal Factors: Internal factors within a retail organization, such as budget
constraints, brand image, operational capabilities, and staff expertise, can affect the execution
of merchandising strategies.

By considering these factors and implementing effective merchandising strategies, retailers

can optimize their product offerings, attract customers, and drive sales, leading to business
growth and profitability.

Q12- EXPLAIN IMPORTANCE OF ATMOSPHERICS PLANNING AND KEY COMPONENTS OF RETAIL

ATMOSPHERICS ?(V V V V V IMP).

ANS- IMPORTANCE OF ATMOSPHERICS PLANNING-

As a regular shopper we visit a number of shopping malls and shopping complexes and understand the
strategic importance of atmospherics and Retail Space Management which is vital to any form of retail
business. Its significance emerges from the link between shopping behavior and physical
environmental factors. These physical environmental factors influence the perception of shopping time
spent and the evaluation of merchandise and hence it becomes important for the retailer to effectively
plan and organize all aspects related to atmospherics and retail space to be able to optimize scarce
resources and improve profitability.

Atmospherics refers to the physical characteristics associated with the store that includes interior and
exterior elements, as well as layout planning and display. Atmospherics play a major role in attracting
customers to the store, improving the quality of service, experience, creating a brand positioning for
the outlet, and improving customer retention rates. An equally important and related concept is retail
space management. Effective space management attempts to ensure optimum utilization of retail space
and convenience to customers and employees. There are also emerging critical issues related to
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atmospherics in the context of internet retailing. The effective use of technology and design element is
the key to higher clicks, browsing time and sales.

Atmospherics planning is increasingly gaining importance for all kinds of retail setups like planned
shopping centers and life style stores. The exterior atmospherics refers to the aspects like store front,
display windows, surrounding businesses, look of the shopping center etc., while interior atmospherics
refer to aspects like lighting, color and dressing room facilities that enhance the display and provides
customer with relevant information. Therefore, Atmospherics plays an important role in creating a
brand positioning for the outlet, attracting new customers, facilitating better organization of the store
and its merchandise and enriching the shopping experience. The role of atmospherics in Retail
Strategy is mainly to:
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KEY COMPONENTS OF RETAIL ATMOSPHERICS

The essential inputs of atmospheric design like the use of lighting, color, and signage play a valuable
role in both internal and external atmospherics and in visual merchandising. Likewise, the nature of
physical materials used and wall painting etc. also play an important role in the following key four
components of retail atmospherics i.e.:
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SELF GYAN YOUTUBE 9699784305 SOLVED ASSIGNMENT AND CLASSES
SELF GYAN YOUTUBE 9699784305 SOLVED ASSIGNMENT AND CLASSES
SELF GYAN YOUTUBE 9699784305 SOLVED ASSIGNMENT AND CLASSES
SELF GYAN YOUTUBE 9699784305 SOLVED ASSIGNMENT AND CLASSES

Q13- WHAT IS RETAIL MARKETING MIX? EXPLAIN THE ELEMENTS OF RETAIL

MARKETING MIX? JUSTIFY THE EXISTENCE OF EXTENDED MARKETING MIX ELEMENTS
FOR RETAIL SECTOR??(V V V V V IMP).
ANS- Indian retail sector is fifth largest in the world, projected to grow at 9% over 2019-2030, and is
expected to reach US $ 1.8 trillion by 20301 . Despite covid’19 pandemic and other challenges, the
Indian consumption story is robust, driven by affluence, accessibility, awareness, attitudes and
behaviour, the household consumption has multiplied to US $ 1.63- 1.75 (Rs. 130-140 trillion) trillion
in 2022. Indian retail sector alsoinclude third- highest number of e-tail shoppers, following the giants
China and the US. Retail sector is one of the pillars of India’s economy and accounts for
approximately 10% of its GDP. The spectacular growth of Indian economy in last few decades is on
the backbone of the retail sector – its employees and people working in retail sector. Today Indian
retail sector employees over 43 million people making it second largest employer. Since retail is more
of a service sector, the concept of marketing mix involves the combination of 4Ps (Product, Price,
Place and Promotion) along with the extended 3Ps (People, Process and Physical Evidence). The
primary 4Ps are covered in the block 1 and 2 of this course. Among the extended Ps,physical evidence
is already covered in Unit 12 of block 3, and some parts of process management are covered in Unit
13 and 14 of block 4. In this unit we would focus on the people management and also throw some light
on process management in successful retail business.

Retail Mix –

Elements of Service Mix Retail marketing mix is defined as the mix of various elements and methods
required to identify, formulate, and execute retail marketing strategy. Retail managers, target to create
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an optimum mix of retail-mix and coordinate all the Ps to create a distinct image of the store,
variousproducts, and services in the consumer’s mind. The mix may vary on basis of the types of
market, target customers, nature of retailer, and the type of product/ service along with product line-
length and width. It can also be considered as the mix of retailing activities and coordination of all
plans and actions, in order to boost sales and earn optimum profits. As we can see in figure 15.1, with
multiple elements for each P, it is called the mix of mixes. All these sub-elements are the various
marketing decisions and act as the guiding force for business processes. All the retail mix decisions if
performed and executed properly, must add up to the firm’s marketing mix and led to attainment of
marketing objectives.

The retail marketing mix refers to a set of tactical elements that retailers use to influence
customer behavior and achieve their marketing objectives. It consists of various components
that retailers can control and manipulate to create a compelling value proposition for their
target customers. The elements of the retail marketing mix are commonly known as the 7Ps,
which include Product, Price, Place, Promotion, People, Process, and Physical Evidence.

1. Product: In the retail marketing mix, product refers to the assortment of goods or
services offered by a retailer. It involves decisions related to product variety, quality, features,
packaging, branding, and innovation. Retailers must carefully select and curate their product
offerings to meet customer needs and preferences.
2. Price: Price refers to the amount customers pay in exchange for the products or
services offered by a retailer. Pricing decisions involve determining the right pricing strategy,
considering factors such as cost, competition, market demand, and perceived value. Retailers
can use pricing tactics such as discounts, promotions, and bundling to influence customer
buying behavior.
3. Place: Place refers to the location and distribution channels through which retailers
make their products available to customers. It involves decisions related to store location,
store layout, online presence, logistics, and supply chain management. Retailers must ensure
their products are conveniently accessible to target customers.
4. Promotion: Promotion encompasses the various marketing activities used by retailers
to communicate and promote their products to the target audience. It includes advertising,
sales promotions, public relations, personal selling, direct marketing, and digital marketing
efforts. Promotion aims to create awareness, generate interest, and persuade customers to
make a purchase.
5. People: People refers to the employees and staff who interact with customers in a
retail environment. They play a crucial role in delivering excellent customer service, building
relationships, and enhancing the overall customer experience. Retailers must train and
empower their employees to provide exceptional service and represent the brand effectively.
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6. Process: Process refers to the procedures, systems, and operations involved in

delivering products and services to customers. It includes aspects such as ordering processes,
payment methods, returns and exchanges, customer support, and post-purchase services.
Efficient and customer-centric processes contribute to a positive shopping experience.
7. Physical Evidence: Physical evidence refers to the tangible and intangible elements
that shape the retail environment and influence customer perceptions. It includes store
design, layout, signage, packaging, displays, and other sensory cues. Physical evidence
contributes to the overall ambiance, atmosphere, and visual appeal of the retail space.

Justification for Extended Marketing Mix Elements for the Retail Sector: In addition to the
traditional 4Ps (Product, Price, Place, and Promotion) of the marketing mix, the extended
marketing mix elements (People, Process, and Physical Evidence) are particularly relevant to
the retail sector due to the nature of retail business operations. Here's the justification for
their inclusion:

1. People: In the retail sector, customer interactions and customer service play a critical
role. Retailers heavily rely on their employees to provide personalized assistance, answer
queries, and build relationships with customers. The behavior, knowledge, and skills of retail
staff significantly impact customer satisfaction and loyalty.
2. Process: Retailers need to manage various processes effectively to ensure a seamless
and efficient customer experience. This includes processes such as ordering, payment,
returns, and customer support. Streamlining these processes enhances customer
convenience, reduces friction, and improves overall satisfaction.
3. Physical Evidence: The retail environment and physical elements greatly influence
customer perceptions and create a lasting impression. The store layout, design, and visual
merchandising contribute to the overall ambiance and brand image. Effective use of physical
evidence can help retailers differentiate themselves, evoke emotions, and enhance the
customer experience.

The inclusion of these extended marketing mix elements recognizes the importance of
service quality, customer experience,