Retail Management

Module-1
1. Definition of Retailing
Retailing refers to the process of selling goods and services directly to consumers for their
personal use. It involves various business activities such as sourcing, stocking, marketing,
and selling products through different formats, including physical stores, online platforms,
and direct selling.

Retailing is a crucial link in the supply chain, bridging manufacturers and consumers. It
encompasses a wide range of activities, including merchandising, customer service, pricing,
and logistics.

According to Kotler: ´Retailing includes all the activities involved in selling goods or services to the
final consumers for personal, non business uses.

A process of promoting greater sales and customer satisfaction by gaining a better understanding of
the consumers of goods and services produced by a company.

Characteristics of Retailing:

1. Direct interaction with customers/end customers.

2. Sale volume large in quantities but less in monetary value
3. Customer service plays a vital role
4. Sales promotions are offered at this point only
5. Retail outlets are more than any other form of business
6. Location and layout are critical factors in retail business.
7. It offers employment opportunity to all age.
2. Concept and Scope of Retailing
Concept of Retailing

Retailing is more than just selling products; it is about providing value, convenience, and
customer experience. It includes various elements such as product assortment, visual
merchandising, store ambiance, customer relationship management, and personalized
services.

Scope of Retailing

The scope of retailing is vast, covering multiple sectors and industries. It includes:

 Consumer Goods Retailing: Clothing, electronics, groceries, etc.

 Service Retailing: Restaurants, salons, fitness centers.
 Omnichannel Retailing: Combining offline and online sales channels.
 Franchising: Chain stores, brand extensions.
 Specialty Retailing: Niche products like organic foods, designer wear.

3. Characteristics of Retailing
 Direct Interaction with Customers: Retailers directly engage with end consumers.
 Small Transaction Size: Retail sales typically involve individual purchases.
 Large Number of Customers: A vast customer base ensures sales volume.
 Location Importance: Store location impacts foot traffic and sales.
 Wide Product Assortment: Retailers stock a variety of goods.
 Marketing & Merchandising: Focus on promotions, display, and advertising.
 Customer Experience Focus: Personalized service and customer engagement.

4. Evolution of Retailing
Traditional Retailing

 Early markets involved barter systems.

 Small neighborhood stores and local markets dominated.
 Informal retail dominated most economies.

Modern Retailing

 Introduction of departmental stores and supermarkets.

 Shopping malls and hypermarkets gained popularity.
 The rise of e-commerce and digital retailing revolutionized the sector.
 Omnichannel retailing emerged, integrating online and offline sales.

5. Growth of Retailing in India and the Global Scenario

Growth of Retailing in India

 India is one of the fastest-growing retail markets.

 Growth driven by urbanization, rising income levels, and changing consumer
preferences.
 Expansion of organized retail sector (malls, supermarkets, hypermarkets).
 Growth of e-commerce giants like Amazon, Flipkart, and Reliance Digital.
 The entry of foreign brands due to favorable FDI policies.

Global Retail Growth

 E-commerce boom with giants like Amazon, Alibaba.

 Expansion of global retail chains (Walmart, Carrefour, Tesco).
 Increasing adoption of AI, automation, and digital payment systems.
 Focus on sustainability and ethical retailing.

6. Store-Based Retail Formats

Supermarket

 Large, self-service stores selling groceries, household items.

 Examples: Big Bazaar, Reliance Fresh.
Departmental Store

 Offers multiple categories under one roof (clothing, cosmetics, home decor).
 Examples: Shoppers Stop, Lifestyle.

Malls

 Large shopping complexes with multiple retailers, food courts, entertainment zones.
 Examples: Phoenix Mall, Select Citywalk.
 

Hypermarket

 Combination of supermarket and departmental store, offering groceries and general

merchandise.
 Examples: D-Mart, Walmart.

Discount Store

 Sells products at lower prices, often in bulk.

 Examples: Vishal Mega Mart, Costco.
Convenience Store

 Small stores offering essential products, open for extended hours.

 Examples: 7-Eleven, In & Out.

Specialty Store

 Focus on a specific product category (e.g., electronics, clothing, sports).

 Examples: Croma, Decathlon.

Kiosks
  Small booths for impulse buying (snacks, mobile accessories).
 Found in malls, metro stations, airports.

Neighborhood Store

 Small local shops serving a limited customer base.

 Examples: Kirana stores.

7. Non-Store Retail Formats

Direct Selling

 Products sold directly to consumers (door-to-door sales, network marketing).

 Examples: Amway, Tupperware.

Tele Shopping

 Retailing via television channels (Home Shopping Network, Naaptol).

E-Marketing

 Online platforms selling goods (Amazon, Flipkart, Myntra).

Vending Machine Retailing

 Automated machines for quick purchases (snacks, beverages, SIM cards).

8. Retail Environment in India

Key Factors Shaping Indian Retail

 Changing Consumer Preferences: Demand for premium, organic, and branded

goods.
 Technology Adoption: AI, AR/VR, and digital payments.
 Government Policies: GST, FDI regulations impacting retail structure.
 Rising Urbanization: Increasing demand for organized retail.
 Omnichannel Retailing: Integration of physical and digital sales channels.

9. Foreign Direct Investment (FDI) in Retail

 100% FDI allowed in single-brand retail.
 51% FDI permitted in multi-brand retail with government approval.
  Boosts infrastructure, supply chain, and job creation.
 Challenges: Opposition from small retailers, compliance regulations.

Impact of FDI

 Entry of global players (IKEA, Walmart, H&M).

 Increased competition for local retailers.
 Better supply chain management and logistics.
 Job creation and improved consumer choices.

10. Changing Scenario of Retail Business in India

Key Trends in Indian Retail

 Rise of E-Commerce: More consumers shopping online.

 Omni channel Retailing: Retailers blending physical and digital sales.
 Artificial Intelligence in Retail: AI-driven personalization and chatbots.
 Quick Commerce: 10-30-minute delivery models (Zepto, Blinkit).
 Sustainability in Retail: Eco-friendly packaging, ethical sourcing.
 Digital Payment Growth: UPI, mobile wallets, and contactless payments.
 Hyperlocal Retail: Local stores collaborating with delivery platforms

Organized Retailing vs. Non-organized:

Module-2

1. Retail Consumer Behavior

Retail consumer behavior refers to the decision-making process of shoppers, including how
they select, purchase, and use goods and services. Understanding consumer behavior is
critical for retailers to develop effective marketing strategies.

Factors Influencing Retail Consumer Behavior

1. Personal Factors – Age, income, lifestyle, personality, occupation.

2. Social Factors – Family influence, peer pressure, culture, societal trends.
3. Psychological Factors – Motivation, perception, attitude, beliefs.
4. Economic Factors – Purchasing power, price sensitivity, inflation.
5. Technological Factors – Online shopping, digital payment preferences.

Types of Retail Consumers

1. Impulse Buyers – Make unplanned purchases based on promotions or emotions.

2. Bargain Hunters – Look for discounts and best deals.
3. Brand-Loyal Consumers – Stick to specific brands regardless of price.
4. Variety Seekers – Constantly try new products and brands.

Stages of Consumer Buying Process

1. Need Recognition – Identifying a requirement for a product or service.

2. Information Search – Researching options through advertisements, reviews, or
online sources.
3. Evaluation of Alternatives – Comparing brands based on price, quality, and features.
4. Purchase Decision – Choosing and buying the product.
5. Post-Purchase Behavior – Satisfaction or dissatisfaction, leading to repeat purchases
or complaints.

2. Retail Marketing Mix

Retail marketing mix refers to the combination of strategies used by retailers to attract and
retain customers. It includes the 7 Ps of Retail Marketing:
1. Product

 Retailers must offer a diverse product range to meet consumer demand.

 Includes private labels, branded products, exclusive collections.

2. Price

 Pricing strategies must be competitive and aligned with customer expectations.

 Includes penetration pricing, premium pricing, discount pricing.

3. Place (Store & Non-Store)

 Store location, layout, and online presence play a crucial role in retail success.
 Includes physical stores, e-commerce, and mobile commerce.

4. Promotion

 Advertising, sales promotions, loyalty programs, and digital marketing.

 Includes discounts, buy-one-get-one offers, festive promotions.

5. People

 Customer service, employee training, and staff interactions.

 Includes sales representatives, customer care teams.

6. Process
  The operational processes ensuring smooth shopping experiences.
 Includes inventory management, checkout speed, home delivery.

7. Physical Evidence

 Store ambiance, packaging, and online store design.

 Includes store layout, branding, product packaging.

3. Retail Market Strategy

A retail market strategy is a long-term plan that retailers use to attract, engage, and retain
customers.

Steps in Retail Market Strategy Development

1. Market Research – Understanding target customers, competition, and industry

trends.
2. Segmentation & Targeting – Identifying and focusing on key customer groups.
3. Positioning – Creating a unique retail identity in the market.
4. Product Assortment & Pricing Strategy – Deciding the product mix and
competitive pricing.
5. Marketing & Promotion Plan – Choosing advertising and sales strategies.
6. Technology & Operations Strategy – Implementing e-commerce, AI, CRM, and
automation.
7. Monitoring & Adaptation – Adjusting strategies based on market changes.

4. Technology in Retail
Technology plays a crucial role in modern retail, enhancing efficiency and customer
experience.

Key Technologies Transforming Retail

1. Artificial Intelligence (AI) – Personalized recommendations, chatbots, demand

forecasting.
2. Augmented Reality (AR) & Virtual Reality (VR) – Virtual try-ons, immersive
shopping experiences.
3. Internet of Things (IoT) – Smart shelves, automated inventory management.
4. Big Data & Analytics – Customer insights, predictive analytics, targeted marketing.
5. Mobile Commerce (M-Commerce) – Shopping apps, mobile wallets, QR-based
transactions.
6. Cloud Computing – Secure data storage, omnichannel integration.
7. Blockchain – Enhancing supply chain transparency and security.
 6. Retail Store Location

Selecting the right store location is critical to a retailer's success.

A retail store location is the physical space where a business sells goods or services directly
to consumers, and choosing the right location is crucial for retail success, requiring
consideration of factors like target audience, traffic, accessibility, and competition.

Factors to Consider When Choosing a Retail Location:

 Target Audience:
Understanding your target customers' demographics, shopping habits, and preferences is crucial.
 Foot Traffic and Accessibility:
Choose a location with high foot traffic and easy access via public transport, major roads, and
parking.
 Competition:
Analyze the existing competition in the area and identify opportunities to differentiate your store.
 Visibility:
Ensure your store is easily visible and recognizable to potential customers.
 Cost:
Consider the rent, utilities, and other operational costs associated with the location.
 Demographics:
Consider the age, income levels, and lifestyles of people who live and work in the area.
 Economic Conditions:
Analyze the overall economic health of the area and its potential for growth.
 Supply Chain and Distribution:
Consider the ease of accessing suppliers and distributing goods to the store.
 Parking Availability:
 Ample parking is essential for attracting customers, especially in areas with limited public transport.
 Atmosphere:
The overall atmosphere of the area, including its cleanliness, safety, and appeal, can impact
customer behavior.
 Customer Behavior:
Observe how customers behave in the area, including their shopping patterns and preferences.

Importance of Store Location

 Affects foot traffic and customer convenience.

 Impacts sales revenue and profitability.
 Determines accessibility and brand visibility.

Location Selection Decision Process

1. Market Analysis – Studying customer demographics, competition, and demand.

2. Traffic Assessment – Evaluating foot traffic and vehicle movement.
3. Site Selection – Comparing different location options.
4. Cost Analysis – Estimating rental, operational, and infrastructure costs.
5. Final Decision – Choosing the optimal site based on research.

6. Analysis of Location Decision

Retailers analyze several factors before finalizing a store location.

Key Analysis Factors

1. Demographics – Target market's age, income, lifestyle.

2. Competitor Presence – Assessing competition in the area.
3. Customer Accessibility – Proximity to transportation, parking availability.
4. Cost Factors – Rent, operational costs, maintenance expenses.
5. Visibility & Footfall – The number of potential customers passing by.

7. Factors Affecting Site Selection and Location Decision

Several factors influence the final decision of a retail location.

Key Factors

1. Customer Convenience – Proximity to target customers.

2. Economic Conditions – Affordability, tax implications, government policies.
3. Legal & Regulatory Factors – Zoning laws, retail permits.
 4. Competitor Influence – Availability of complementary or competing stores.
5. Technological Infrastructure – Internet connectivity for digital retail.

8. Retail Purchasing and Pricing

Retail purchasing involves selecting and acquiring products to sell in stores.

Retail Purchasing Process

1. Identifying Supplier Needs – Analyzing product demand.

2. Supplier Selection – Choosing reliable suppliers.
3. Negotiation & Contracting – Finalizing pricing and terms.
4. Order Placement – Purchasing required inventory.
5. Receiving & Stocking – Quality checking and inventory management.

Retail Pricing Strategies

Pricing strategies help retailers maintain competitiveness and profitability.

1. Cost-Plus Pricing – Markup added to product cost.

2. Competitive Pricing – Pricing based on market competition.
3. Value-Based Pricing – Pricing based on perceived customer value.
4. Penetration Pricing – Low initial pricing to attract customers.
5. Premium Pricing – High pricing for luxury or exclusive products.
6. Discount Pricing – Seasonal sales, flash sales, and clearance pricing.