Retail Management

INTRODUCTION: Retailing Management
Where do you buy your requirements of grocery, garments, watches, etc. and your requirements
for services such as haircut, tailoring, dry-cleaning, etc.? You fulfil these requirements either by
going to a super-market, kirana shop for grocery, an apparel shop or a garment store for garments,
a showroom for watches, or a saloon for hair-cut, a tailor for tailoring, a dry-cleaner for drycleaning,
etc. What are these stores, shops or super-markets doing? They are providing you
either products or services. They are all engaged in retailing.

For people living in metros, large or small cities, retailing is a familiar phenomenon. Because,
there are number of markets, different types of shops and many shops competing among
themselves for selling similar goods. Even a vegetable market is a retail business. Retail business
is more unorganised in rural areas and isolated habitats because the shop or a few shops
available there may be selling most of requirements of the local people. But, still they are
doing retailing.
Retailing includes all the activities involved in selling goods or services directly to the final
consumer for personal or non-business use. (Philip Kotler).
In other words, retailing is the sale of goods and services to the ultimate consumer for
personal, family or household use. Thus, retailing involves more than selling tangible products. It
includes every sale of goods and services to the final consumer.
Retailing is the final leg in the distribution channel of goods and services.
Retailing involves:
• Identifying target markets (customers)
• Interpreting needs of the targeted customers
• Developing good assortments of merchandise
• Presenting them in an effective manner so that consumers find it easy and attractive to
buy.
 PLACE OF RETAILING IN A DISTRIBUTION CHANNEL

FUNCTIONS OF RETAILERS
Retailers have multiple functions. At one end they create market for consumption of the goods
and services and on the other hand generate employment for millions of people. Broadly speaking
retailers perform following functions:
• Understanding customer needs and wants

• Providing an assortment of product or services to consumers;
• Breaking bulk;
• Providing services to consumers;
• Holding inventory, and
• Providing information to suppliers

Overview of Retailing
The overall purpose of the retailing is to provide goods and services wanted by customers and
to do so profitably so that business can be sustained. This means if a retailer is to be successful
and customer satisfied the retailer must understand, the three core factors of retailing, namely,
customers, their needs, wants and buying behaviour; competition, their strategies; and above all
the environment of customers and competition.
CUSTOMERS
Customers are the most important element for the retailers. To be successful retailer must
know its customers. Why customers shop, how they select a shop and how they select among
that stores merchandise. These can be:
Convenience- of hours, of location, of shopping ease
• Assortment of merchandise- whether a wide variety or limited
• Quality and fashion level of goods
• Price - Generally important at the lower end
• Services- such as credit, delivery, courteous sales staff, assistance in selection, after
sales services, return-goods privileges.
• Excitement- Such as promotional efforts.
COMPETITION
A retailers competition does not only come from those competitors who are using the same
retail format but also from new competitors who are coming up from new formats.
The competition between retailers using the same type of retail format is known as intra-type
competition. Examples of this type of competition are: a department store competing with other
department stores; a discount store competing with other discount stores; a supermarket competing
with other supermarkets; etc.
ENVIRONMENTAL TRENDS
This is the third core element of retailing. The environmental factors surrounding the customers
and the competition is a major factor confronting retailers. These environmental factors are:
changing
customers needs, changes in demographic composition of customers, changes in technology,
changes in business environment, legal framework.
1) Economic factors
2) Demographic factors
3) Social factors
4) Psychological factors
5) Brand profusion
6) Psychographic change
7) Demographic Change
8) Political Change
9) Technological changes

RETAIL MIX
We will consider the various components of the retailing mix as subcategories of the four P’s,
which is a very common terminology, adopted in Marketing courses. These four ‘P’s are:
• Place • Promotion • Product • Price

PLACE
The categories from the point of view of retailing in ‘Place’ are:
• Convenience of shopping
• Store’s decor and interiors
• Store location
PRODUCT
Following factors of ‘Product’ are useful for retail mix.
• Breadth of merchandise
• Depth of merchandise
• Quality and fashion level of goods
PRICE
In the past, price was considered a direct indicator of quality. However, this trend is changing
now, as many good quality products are being priced low. Price has become a tool in the marketer’s
armour to increase market share without compromising quality.
PROMOTION
The retailer has to communicate with customers, initially to make them aware of his or her
offerings and then to stimulate interest and desire. This is based on the AIDA theory of promotion.
A: Awareness
I: Interest
D: Desire
A: Action
THE RETAIL LIFE-CYCLE THEORY
The retail life-cycle theory is based on the product life-cycle theory. The retail life-cycle
theory suggests that retail institutions also have a life-cycle which can be divided into four phases:
innovation, growth, maturity and decline just like product life-cycle theory.

Retailing : Definition and Concept
Retailing is a distribution channel function where one organization buys products from supplying firms or
manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller
(i.e., obtains product from one party in order to sell to another) from which a consumer purchases
products.
Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser.
Retail involves the sale of merchandise from a single point of purchase directly to a customer who intends
to use that product. The single point of purchase could be a brick-and-mortar retail store, an Internet
shopping website, a catalog, or even a mobile phone.
The retail transaction is at the end of the chain.
Manufacturers sell large quantities of products to retailers, and retailers attempt to sell those same
quantities of products to consumers.

Retailers: Sell the goods in small quantities to the end-user at a higher price, theoretically at the MSRP
(Manufacturers Suggested Retail Price).

What is management ?
Management refers to the process of bringing people together on a common platform and make them
work as a single unit to achieve the goals and objectives of an organization. Management is required in all
aspects of life and forms an integral part of all businesses.
Retail management
The various processes which help the customers to procure the desired merchandise from the retail stores
for their end use refer to retail management. Retail management includes all the steps required to bring
the customers into the store and fulfill their buying needs.
Retail management makes shopping a pleasurable experience and ensures the customers leave the store
with a smile. In simpler words, retail management helps customers shop without any difficulty.
Retailing Concept
Retailing is a convenient, convincing and comfortable method of selling goods and services. Retailing,
though as old as business, trade and commerce has now taken new forms and shapes. This is because
of new management techniques, marketing techniques and also due to ever changing and dynamic
consumer psychology.

What is retailing:
Retailing is one area of the broader term, e-commerce. Retailing is buying and selling both goods and
consumer services. With more number of educated and literate consumers entering the economy and
market, the need for reading the pulse of the consumers has become very essential.

Retail marketing is undergoing radical restructuring. This is because of increase in gross domestic
product, increase in per capita income, increase in purchasing power and also the ever changing tastes
and preferences of the people. The entry of plastic money, ATMs, credit cards and debit cards and all
other consumer finances, the taste for the branded goods also added for the evolution of retail marketing.

Retailing Dfinition
Retail Industry, one of the fastest changing and vibrant industries in the world, has contributed to the
economic growth of many countries. The term 'retail' is derived from the French word retailer which
means 'to cut a piece off or to break bulk'. In simple terms, it implies a first-hand transaction with the
customer.

Retailing can be defined as the buying and selling of goods and services. It can also be defined as the
timely delivery of goods and services demanded by consumers at prices that are competitive and
affordable.

Retailing involves a direct interface with the customer and the coordination of business activities from end
to end- right from the concept or design stage of a product or offering, to its delivery and post-delivery
service to the customer. The industry has contributed to the economic growth of many countries and is
undoubtedly one of the fastest changing and dynamic industries in the world today.

Driving Forces for Retailing

Porter's 5 Forces (Organized Retail)
Conclusion: (Attractive Industry)

1) Buyer's Power: Buyer's power is high as there are quite a few players in the market as well as there is a huge
unorganized retail sector.

2) Supplier's Power: Historically, retailers have tried to exploit the relationship with the suppliers.
Threat of new entrants: Given the large capital investment in setting up organized retail, the threat of new entry is low.
In addition to capital, a firm would also need to establish efficient supply chains and train labor to handle the complex
systems and the large number of customers. All this investment and effort makes the entry difficult.

3) Threat of Substitutes: Given the large number of stores in the unorganized sector, the threat of
substitutability is high as the small sundry stores sell the same items and have a better connect with the
customers who live nearby.
4) Rivalry: Retailers faces stiff competition, from other organized retail stores as well as from the unorganized
sector. Given that a majority of the items sold are commodity products, and the customers have a large
choice in front of them, it's easy for the customer to switch. Hence the retail store has to constantly
formulate strategies and promotions to attract and keep the customers.

Building and sustaining relationships

Sellers undertake a series of activities and processes to provide a given level of value for the consumer.
Consumers then perceive the value offered by sellers, based on the perceived benefits received versus the
prices paid. Perceived value varies by type of shopper.

A retail value chain represents the total bundle of benefits offered by a channel of distribution. It comprises
store location, ambience, customer service, the products/brands carried, product quality, the in-stock
position, shipping, prices, the retailer’s image, and so forth. Some elements of a retail value chain are visible
to shoppers. Others are not. An expected retail strategy represents the minimum value chain elements a
given customer segment expects from a given retailer type. An augmented retail strategy includes the extra
elements that differentiate retailers. A potential retail strategy includes value chain elements not yet
perfected in the retailer’s industry category.

Strategic Retail Planning
For the purpose of developing retail strategies, retailers are required to follow a step by step
procedure or planning process. The planning process discusses/involves the present stage of
business, the formulation, list of available strategic options, and the implementation of the
selected strategies. Considering the importance of strategic decisions for the future success of
the business, a systematic approach is essential.
The strategic planning process, which after considering the HR potential and USP
of a particular store takes proper shape, is normally divided into following steps:
1. Deciding the store’s philosophy, mission and objectives,
2. Situation analysis,
3. Formulation of retail strategy
4. Strategy implementation and control.

1. Deciding the store’s philosophy, mission and objectives,
The store’s objectives may be classified into two parts:
(i) External store objectives, and
(ii) Internal Store Objectives.

2. Situation analysis
(SWOT Analysis)
External Analysis:
The purpose of examining the store’s external environment is to study the opportunities and
threats in the retailing environment. The external analysis studies factors that affect the
macro-environment of retailing industry and the task environment.
Under external analysis, retailer studies these parameters:
(i) Economic environment of retailing,
(ii) Political environment of retailing,
(iii) Legal environment of retailing,
(iv) Socio-cultural environment of retailing,
(v) Technological environment of retailing, and
(vi) International environment of retailing.
The store’s task environment can be influenced directly by retailer’s own policies and
includes competitors, suppliers and customers.
Internal Analysis:
The objective of studying internal environment of its own store is to identify the store’s
strengths and weaknesses. The store will try to increase its capabilities, and overcome the

weaknesses that deter the business profit. While doing the internal analysis, store examines
the quality and quantity of its available resources and critically analyzes how effective these
resources are used.
These resources for the purpose of examining are normally grouped into human resources,
financial resources, physical resources (assets) and intangible resources (goodwill, image
etc).
The types of questions that are enquired under different resources are:
Human resource:
(a) Is present strength of employees at various levels is sufficient for future action?
(b) Are the employees trained and capable to perform the tasks assigned to them?
(c) Are the employees loyal to store?
(d) Are the employees punctual and regular?
(e) Are the employees skilled in their assigned tasks?
Financial resource:
(a) What is the total cash flow from store’s present activities?
(b) What is the ability of retail store to collect money at the time of requirement/
emergency?
(c) How much effective and stable financial policies are?
(d) What is the ratio between fixed and current assets?
(e) What are the contingency plans in case of negative cash flow?
Physical resources:
(a) What is the contribution of fixed assets?
(b) What is the position of abandoned/unused assets?
(c) How effective and update are the store’s information systems?
Intangible resources:
(a) What is the present capability of the company’s management?
(b) How effective is the R & D cell?
(c) How good is the competitor’s intelligence system?
(d) How effective store’s loyalty programmes are?
(e) What is the capability of retail store manager?
(f) Are customers loyal towards company’s products?

3. Formulation of retail strategy
Retail positioning is made possible under these circumstances:
(i) By differentiating the store’s merchandise from its competitors,
(ii) By offering high level of after sales services at nominal/no cost, and
(iii) By adopting low pricing policies.
The main elements a retail store manager has to face are:
i. Store’s location
ii. Merchandise assortment
iii. Pricing policy
iv. Customer service mechanism
v. Visual merchandising
vi. Personal selling efforts
vii. Advertising efforts and
viii. Store’s internal and external environments.

4. Strategy implementation and control.
The positive steps include the following:
(i) Inspection,
(ii) Detection, and
(iii) Correction.

Structural Change
Deep reaching change that alters the way authority, capital, information, and
responsibility flows in an organization.
Structural Changes in Indian Retail Market: from Unorganised to Organised
In India during the time of beginning there were only kirana stores called Mom and Pop stores, the
friendly negihbourhood stores selling day needs. In the 1980s manufacturer's retail chains like DCM,
Gwalior Suitings, Bombay Dying, Titan etc started making its manifestation in metros and small
towns. Multi brands retailers came into the depiction in 1990s.India has the highest shop density in
the world and the present retail market in India is estimated to be US$200 billion of which only
3%(around US$64 billion) is in the organized sector. This organized retail sector is poised for a take
off. AT Kearney ranks India second in the global retail development index out of 30 nations. The
increasing purchase power of the great Indian middle class is the major reason for retail sprint that is
being witnessed. The percentage of young people in the country is increasing. It portends well for the
retail business, as it is the young people who buy more than the old. Again the percentage of women
in the population is showing an increasing trend. Organinsed retail market boom is expected to create
the much-needed mass employment. It will upgrade India's laye r second and third tier cities to
international standard. While this boom addresses India's basic infrastructure challenges to create
demand for the product of rural India and a more efficient agricultural sector. The organized retail
market boom is expected to bring positive outcomes in may of sectors like economic growth, exports,
education, IT industry, food processing, infrastructure, banking, tourism, management along with the
greater customer satisfaction. This paper focuses a clear picture of looming retail boom through the
form of organized retail format. It gives a glance of the progress organized retail format and its
positive and negative impact in Indian economy.
Types of Retail Outlets
Retailing refers to a process where the retailer sells the goods directly to the end-user for his
own consumption in small quantities.
Types of Retail outlets
 Department Stores
A department store is a set-up which offers wide range of products to the end-users
under one roof. In a department store, the consumers can get almost all the products
they aspire to shop at one place only. Department stores provide a wide range of
options to the consumers and thus fulfill all their shopping needs.
Merchandise:
Electronic Appliances
Apparels

Jewellery
Toiletries
Cosmetics
Footwear
Sportswear
Toys
Books
CDs, DVDs
Examples - Shoppers Stop, Pantaloon
 Discount Stores
Discount stores also offer a huge range of products to the end-users but at a discounted
rate. The discount stores generally offer a limited range and the quality in certain cases
might be a little inferior as compared to the department stores.
Wal-Mart currently operates more than 1300 discount stores in United States. In India
Vishal Mega Mart comes under discount store.
Merchandise:
Almost same as department store but at a cheaper price.
 Supermarket
A retail store which generally sells food products and household items, properly placed
and arranged in specific departments is called a supermarket. A supermarket is an
advanced form of the small grocery stores and caters to the household needs of the
consumer. The various food products (meat, vegetables, dairy products, juices etc) are all
properly displayed at their respective departments to catch the attention of the
customers and for them to pick any merchandise depending on their choice and need.
Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
Fruits
Soft drinks
Frozen Food
Canned Juices
 Warehouse Stores

A retail format which sells limited stock in bulk at a discounted rate is called as
warehouse store. Warehouse stores do not bother much about the interiors of the store
and the products are not properly displayed.
 Mom and Pop Store (also called Kirana Store in India)
Mom and Pop stores are the small stores run by individuals in the nearby locality to cater
to daily needs of the consumers staying in the vicinity. They offer selected items and are
not at all organized. The size of the store would not be very big and depends on the land
available to the owner. They wouldn’t offer high-end products.
Merchandise:
Eggs
Bread
Stationery
Toys
Cigarettes
Cereals
Pulses
Medicines
 Speciality Stores
As the name suggests, Speciality store would specialize in a particular product and would
not sell anything else apart from the specific range.Speciality stores sell only selective
items of one particular brand to the consumers and primarily focus on high customer
satisfaction.
Example -You will find only Reebok merchandise at Reebok store and nothing else, thus
making it a speciality store. You can never find Adidas shoes at a Reebok outlet.
 Malls
Many retail stores operating at one place form a mall. A mall would consist of several
retail outlets each selling their own merchandise but at a common platform.
 E Tailers
Now a days the customers have the option of shopping while sitting at their homes.
They can place their order through internet, pay with the help of debit or credit cards
and the products are delivered at their homes only. However, there are chances that the
products ordered might not reach in the same condition as they were ordered. This kind
of shopping is convenient for those who have a hectic schedule and are reluctant to go
to retail outlets. In this kind of shopping; the transportation charges are borne by the
consumer itself.

Example - EBAY, Rediff Shopping, Amazon
 Dollar Stores
Dollar stores offer selected products at extremely low rates but here the prices are fixed.
Example - 99 Store would offer all its merchandise at Rs 99 only. No further bargaining is
entertained. However the quality of the product is always in doubt at the discount stores.
The emergence of new sectors has been accompanied by changes in existing formats as
well as the beginning of new formats:

 Hypermarts
 Large supermarkets, typically 3,500-5,000 sq. ft.
 Mini supermarkets, typically 1,000-2,000 sq. ft.
 Convenience stores, typically 750-1,000sq. ft.
 Discount/shopping list grocer

Market Structure
Market structure refers to the nature and degree of competition in the market for goods
and services. The structures of market both for goods market and service (factor) market
are determined by the nature of competition prevailing in a particular market.
Meaning of Market:

Ordinarily, the term “market” refers to a particular place where goods are purchased and
sold. But, in economics, market is used in a wide perspective. In economics, the term
“market” does not mean a particular place but the whole area where the buyers and sellers
of a product are spread.

ADVERTISEMENTS:
This is because in the present age the sale and purchase of goods are with the help of agents
and samples. Hence, the sellers and buyers of a particular commodity are spread over a
large area. The transactions for commodities may be also through letters, telegrams,
telephones, internet, etc. Thus, market in economics does not refer to a particular market
place but the entire region in which goods are bought and sold. In these transactions, the
price of a commodity is the same in the whole market.
According to Prof. R. Chapman, “The term market refers not necessarily to a place but
always to a commodity and the buyers and sellers who are in direct competition with one
another.” In the words of A.A. Cournot, “Economists understand by the term ‘market’, not
any particular place in which things are bought and sold but the whole of any region in
which buyers and sellers are in such free intercourse with one another that the price of the
same goods tends to equality, easily and quickly.” Prof. Cournot’s definition is wider and
appropriate in which all the features of a market are found.
Contents :
1. Meaning of Market
2. Characteristics of Market
3. Market Structure
4. Forms of Market Structure

Characteristics of Market:
The essential features of a market are:
(1) An Area:
In economics, a market does not mean a particular place but the whole region where sellers
and buyers of a product ate spread. Modem modes of communication and transport have
made the market area for a product very wide.
(2) One Commodity:
In economics, a market is not related to a place but to a particular product.
Hence, there are separate markets for various commodities. For example, there are separate
markets for clothes, grains, jewellery, etc.

(3) Buyers and Sellers:
The presence of buyers and sellers is necessary for the sale and purchase of a product in the
market. In the modem age, the presence of buyers and sellers is not necessary in the market
because they can do transactions of goods through letters, telephones, business
representatives, internet, etc.
(4) Free Competition:
There should be free competition among buyers and sellers in the market. This competition
is in relation to the price determination of a product among buyers and sellers.
(5) One Price:
The price of a product is the same in the market because of free competition among buyers
and sellers.
On the basis of above elements of a market, its general definition may be as
follows:
The market for a product refers to the whole region where buyers and sellers of that product
are spread and there is such free competition that one price for the product prevails in the
entire region.
Market Structure:
Meaning:
Market structure refers to the nature and degree of competition in the market for goods and
services. The structures of market both for goods market and service (factor) market are
determined by the nature of competition prevailing in a particular market.
Determinants:
There are a number of determinants of market structure for a particular good.
They are:
(1) The number and nature of sellers.
(2) The number and nature of buyers.
(3) The nature of the product.
(4) The conditions of entry into and exit from the market.
(5) Economies of scale.
They are discussed as under:

1. Number and Nature of Sellers:
2. Number and Nature of Buyers:
3. Nature of Product:
4. Entry and Exit Conditions:
5. Economies of Scale:
Firms that achieve large economies of scale in production grow large in comparison to
others in an industry. They tend to weed out the other firms with the result that a few firms
are left to compete with each other. This leads to the emergency of oligopoly. If only one
firm attains economies of scale to such a large extent that it is able to meet the entire market
demand, there is monopoly.
Forms of Market Structure:
On the basis of competition, a market can be classified in the following ways:
1. Perfect Competition
2. Monopoly
3. Duopoly
4. Oligopoly
5. Monopolistic Competition
1. Perfect Competition Market:
A perfectly competitive market is one in which the number of buyers and sellers is very
large, all engaged in buying and selling a homogeneous product without any artificial
restrictions and possessing perfect knowledge of market at a time. In the words of A.
Koutsoyiannis, “Perfect competition is a market structure characterised by a complete
absence of rivalry among the individual firms
2. Monopoly Market:
Monopoly is a market situation in which there is only one seller of a product with barriers to
entry of others. The product has no close substitutes. The cross elasticity of demand with
every other product is very low. This means that no other firms produce a similar product.
According to D. Salvatore, “Monopoly is the form of market organisation in which there is a
single firm selling a commodity for which there are no close substitutes.” Thus the
monopoly firm is itself an industry and the monopolist faces the industry demand curve.
3. Duopoly:
Duopoly is a special case of the theory of oligopoly in which there are only two sellers. Both
the sellers are completely independent and no agreement exists between them. Even though

they are independent, a change in the price and output of one will affect the other, and may
set a chain of reactions. A seller may, however, assume that his rival is unaffected by what
he does, in that case he takes only his own direct influence on the price.
4. Oligopoly:
Oligopoly is a market situation in which there are a few firms selling homogeneous or
differentiated products. It is difficult to pinpoint the number of firms in ‘competition among
the few.’ With only a few firms in the market, the action of one firm is likely to affect the
others. An oligopoly industry produces either a homogeneous product or heterogeneous
products.
5. Monopolistic Competition:
Monopolistic competition refers to a market situation where there are many firms selling a
differentiated product. “There is competition which is keen, though not perfect, among
many firms making very similar products.” No firm can have any perceptible influence on
the price-output policies of the other sellers nor can it be influenced much by their actions.
Thus monopolistic competition refers to competition among a large number of sellers
producing close but not perfect substitutes for each other.
Traditionally, the most important features of market structure are:
1. The number of firms (including the scale and extent of foreign competition)
2. The market share of the largest firms (measured by the concentration ratio – see below)
3. The nature of costs (including the potential for firms to exploit economies of scale and also the presence of
sunk costs which affects market contestability in the long term)
4. The degree to which the industry is vertically integrated - vertical integration explains the process by
which different stages in production and distribution of a product are under the ownership and control of a
single enterprise. A good example of vertical integration is the oil industry, where the major oil companies
own the rights to extract from oilfields, they run a fleet of tankers, operate refineries and have control of
sales at their own filling stations.
5. The extent of product differentiation (which affects cross-price elasticity of demand)
6. The structure of buyers in the industry (including the possibility of monopsony power)
7. The turnover of customers (sometimes known as "market churn") – i.e. how many customers are prepared
to switch their supplier over a given time period when market conditions change. The rate of customer churn
is affected by the degree of consumer or brand loyalty and the influence of persuasive advertising and
marketing

Retail Development

The Retail Development team provides comprehensive development advice for all
sectors of the retail market, from major town centre redevelopments, out of town and
edge of centre schemes, food stores, high street ‘in-fill’ schemes and mixed-use

regeneration projects.

The team works closely with private sector developers/investors and their consultants
as well as public sector organisations and local authorities.

With in-depth knowledge of retailer requirements, together with extensive experience of
development appraisals and retail property transactions the team, with the support of
specialist retail market researchers, advises on retail market trends and drivers,
scheme design and retail solutions. Advice is also provided relating to development
agreements and other joint venture agreements, CPO issues, options analysis and
asset management initiatives.

Theories of Retail Development
Retail development can also be looked at from the theoretical perspective. No single theory can be
universally applicable or acceptable. The application of each theory varies from market to market,
depending on the level of maturity and the socio-economic conditions in that market.
The theories developed to explain the process of retail development revolve around the importance of
competitive pressures, the investments in organizational capabilities and the creation of a sustainable
competitive advantage, which requires the implementation of strategic planning by retail organizations
Growth in retail is a result of understand in market signals and responding, to the opportunities that
arise in a dynamic manner. Theories of retail development can broadly be classified as:
1. Environmental- where a change in retail is attributed to the change in the environment in which the
retailers operate.
2. Cyclical- where change follows a pattern and phases can have definite identifiable attributes
associated with them.
3 Conflictual- where the competition or conflict between two opposite types of retailers, leads to a new
format being developed
What is the retail control method?
The estimates of personal consumption expenditures (PCE) for most goods, the so-called "PCE control group," are
prepared using the "retail control method." This method ensures that the PCE control group has the same growth
rate as the "retail control" group, a measure based on the total sales for most kinds of business from the Census
Bureau's monthly and annual retail trade surveys.

How to Control Implementation of Retail Strategy Marketing and Planning
Retail marketing strategy and planning are the procedures a retail business undertakes to sell
products to its customers. In developing a marketing strategy, businesses focus on the four
factors of product, price, place and promotion to reach consumers. These are variable factors that
can be controlled so as to optimize the financial profits made by the business. Controlling the
implementation of a retail marketing strategy and planning entails continuous monitoring and
evaluation of the four variables in order to make changes to the main strategy when the need
arises.
1. Identify the four variables of the marketing mix that make up your retail marketing strategy

2. Carry out a periodic audit of the products you offer to guard against offering products and
services that are not needed by the target customers.
3. Monitor the prices of the product continuously.
4. Evaluate the placement of the product constantly and how accessible it is for the customer and
the business.
5. Position and reposition your product as part of controlling the promotional mix.

The Customer and Retail Business:
A retailer's relationship with their customer is key to repeat store visits, brand loyalty and ultimately sales
conversions. ... Customer Relationship Management (CRM) in retail isn't a new concept, but it's one that
could help retailers win the battle for sales in these competitive times.

Know Your Customers

“Customers are more demanding, the internet has sped everything up, customers want more newness, they have a
shorter attention span, one seasonal range isn’t going to excite them”Stella Hartley
If changing consumer behaviour is driving the move away from traditional seasons, it is even more important to be
able to understand data and trends. Retail marketing expert Stella Hartley sets out the key rules.
The customer has always been King (or Queen) to retailers, now with the growth of e-commerce and digital media it
seems we are sometimes overwhelmed with customer data, not only what customers have bought or spent but what
they are thinking and feeling and how they are living their lives.
The vital thing for retailers is to focus on what all this data actually means for them and to think about WHY
customers behave in the way they do and how retailers can influence this behaviour.
It’s about getting to what marketers call ‘insights’, key information about your customers that you can use to shape
your offer and gain competitive advantage whatever channels you sell through.
1 TALKING HELPS
2 SPEED
3 ADDED VALUE
4 SEGMENTATION
5 DISCOUNTING
6 EVENTS
7 HAVE A POINT OF VIEW
9 BE CULTURALLY AWARE
11 REMEMBER TO LOOK UP

Customer Focus

The orientation of an organization toward serving its clients' needs. Having a customer focus is usually a
strong contributor to the overall success of a business and involves ensuring that all aspects of the
company put its customers' satisfaction first. Also, having a customer focus usually includes maintaining
an effective customer relations and service program.
 The Retail Industry Is Focusing Customer Experience and Convenience to Win Customer.

1. Focus the portfolio.
2. Partner with winning retailers..
3. Innovate to grow the category.
4. Sharpen your marketing.
5. Master the art of pricing.

A Classification Method for Retail Institutions

A retail institution is the basic format or structure of a business.

Retail Institutions Characterized by Ownership
Retail firms may be independently owned, chain-owned, franchisee-operated, leased
departments, owned by manufacturers or wholesalers, or consumer-owned.
Although retailers are primarily small (three-quarters of all stores are

Each ownership format serves a marketplace niche, if the strategy is executed well:
_ Independent retailers capitalize on a very targeted customer base and please shoppers
in a friendly, informal way. Word-of-mouth communication is important.
These retailers should not try to serve too many customers or enter into price wars.
_ Chain retailers benefit from their widely known image and from economies of scale
and mass promotion possibilities. They should maintain their image chainwide and
not be inflexible in adapting to changes in the marketplace.
_ Franchisors have strong geographic coverage—due to franchisee investments—and
the motivation of franchisees as owner-operators. They should not get bogged down
in policy disputes with franchisees or charge excessive royalty fees.
_ Leased departments enable store operators and outside parties to join forces and
enhance the shopping experience, while sharing expertise and expenses. They should
not hurt the image of the store or place too much pressure on the lessee to bring in
store traffic.
_ A vertically integrated channel gives a firm greater control over sources of supply,
but it should not provide consumers with too little choice of products or too few
outlets.
_ Cooperatives provide members with price savings. They should not expect too much
involvement by members or add facilities that raise costs too much.

Independent
An independent retailer owns one retail unit.

Chain
A chain retailer operates multiple outlets (store units) under common ownership; it
usually engages in some level of centralized (or coordinated) purchasing and decision
making. In the United States, there are roughly 110,000 retail chains that operate about
900,000 establishments.

Franchising5
Franchising involves a contractual arrangement between a franchisor (a manufacturer,
wholesaler, or service sponsor) and a retail franchisee, which allows the franchisee to conduct
business under an established name and according to a given pattern of business. The
franchisee typically pays an initial fee and a monthly percentage of gross sales in exchange
for the exclusive rights to sell goods and services in an area. Small businesses benefit by
being part of a large, chain-type retail institution.

Leased Department
A leased department is a department in a retail store—usually a department, discount, or
specialty store—that is rented to an outside party. The leased department proprietor is
responsible for all aspects of its business (including fixtures) and normally pays a percentage
of sales as rent. The store sets operating restrictions for the leased department to
ensure overall consistency and coordination

Consumer Cooperative
A consumer cooperative is a retail firm owned by its customer members. A group of consumers
invests, elects officers, manages operations, and shares the profits or savings that
accrue.9 In the United States, there are several thousand such cooperatives, from small
buying clubs to Recreational Equipment Inc.

Fig. McDonald’s Qualifications for Potential Franchisees

Fig.Structural Arrangements in Retail Franchising

Fig.Vertical Marketing Systems: Functions and Ownership

INDEPENDENT
An independent retailer owns only one retail unit.

CHAIN
A chain retailer operates multiple outlets (store units) under common ownership; it usually engages in
some level of centralized (or coordinated) purchasing and decision-making.

FRANCHISING
It involves a contractual agreement between a franchisor and a retail franchisee, which allows the
franchisee to conduct a given form of business under an established name and according to a given
pattern of business. Typically, the franchisee pays an initial fee and a monthly percentage of gross
sales in exchange for the exclusive rights to sell goods and services in a specified area.

CONVENIENCE STORE
A convenience store is usually a retailer that is well located, open long hours, and carries a moderate
number of items. It’s a small store with average prices, goods and services.

DEPARTMENT STORE

A Department store is a large retail unit with an extensive assortment of goods and services that is
organized into separate departments for purposes of buying, promotion, customer service and control.

CONVENTIONAL SUPERMARKET
A conventional supermarket is a departmentalized food store with a wide range of food and related
products; sales of general merchandise are rather limited.

SPECIALTY STORE
A specialty store concentrates on selling goods or service line, such as apparel and accessories, toys,
furniture. In contrast to a mass marketing approach, specialty stores usually carry a narrow
assortment in their chosen category tailoring to selective market segments.

DISCOUNT STORE
It is a type of department store with following features:
 High-volume, low-cost, fast-turnover outlet.
 Centralized checkout service.
 Lower operating costs.
 Clear customer focus: shoppers looking for good value.

FACTORY OUTLET
A factory outlet is a manufacturer-owned store selling manufacturer closeouts, discontinued
merchandise, irregulars, cancelled orders, and, sometimes, in-season, first quality merchandise.
Factory outlets can be profitable despite prices up to 60 percent less than customary retail prices due
to low operating costs. At factory outlets, manufacturers can decide on store visibility, set promotion
policies, etc. E.g. .Levi’s Factory Outlet Store at Marine Lines, Mumbai. Reebok, Nike & Adidas Stores
on the Delhi-Haryana border.

DIRECT MARKETING
It is a form of retailing in which a customer is exposed to a good or service through a non-personal
medium (e.g. Direct mail, T.V., radio, magazines, or internet.). It has the following features:
 Low costs and inventories
 More geographical coverage.
 Convenience for customers.
 No prior to purchase examination of goods.

DIRECT SELLING
Direct selling includes both personal contacts with consumers in their homes as also phone
solicitations. The strategy mix for direct selling emphasizes convenience in shopping and a personal
touch. Besides, for the retailer, direct selling has lower overhead costs.

VENDING MACHINES
A vending machine is a retailing format involving the coin-or card-operated dispensing of goods and
services. It eliminates the use of sales personnel and allows for 24-hour sales.

WORLD WIDE WEB
Is another aspect of modern retailing. I shall touch upon this in our part on role of I.T. in retailing.

Targeting Customers and Gathering Information

Identifying and
Understanding
Consumers
Information
Gathering and
Processing in
Retailing

Identifying and Understanding Consumers

 Why it is important for a retailer to properly identify, understand and appeal to its
customers
 Enumeration and description of consumer demographics, lifestyle factors, and needs
and desires and to explain how these concepts can applied to retailing
 Examining consumer attitude towards shopping and consumer shopping behavior ,
including the consumer decision process and its stages
 Retailers actions based on target market planning
 Environmental factors affecting consumer shopping

Why it is Important for a Retailer to Properly Identify, Understand and
Appeal to its Customers
 The quality of a retail strategy depends on how well a firm identifies and understands its
customer and forms its strategy mix to appeal to them.
 This entails identifying consumer characteristics, needs and attitudes; recognizing how people
makes decisions, and devising the proper target market plan.
 It also means studying the environmental factors that affects purchase decisions.

Enumeration and Description of Consumer Demographics, Lifestyle Factors,
and Needs and Desires - and To Explain How these Concepts can Applied to
Retailing
 Consumer demographics
 Consumer lifestyles
 Retailing implications of consumer demographics and lifestyles
 Consumer profiles
 Consumer needs and desires

Consumer demographics
Consumer demographics is consumer data that is objective, quantifiable, easily identifiable,
and measurable.

Consumer Lifestyles
Consumer life styles are based on Social and Psychological factors, as given below:

Retailing implications of consumer demographics and lifestyles
• Demographic and lifestyle factors need to be considered from several perspectives, as given
below:
– Gender Roles
– Consumer Sophistication and Confidence
– Poverty of Time
– Component Life Style
Consumer profiles
• Considerable research has been aimed at describing consumer profiles in a way that is useful
for retailers.
– Shoppers at Wal-Mart and Kmart
– Shoppers at Target etc
Consumer needs and desires
• Needs are person’s basic shopping requirements
• Desires are discretionary shopping goals that have an impact on attitudes and behavior.

Information Gathering and Processing in Retailing
 How information flows in a retail distribution channel
 Why retailers should avoid strategies based on inadequate information
 Retail information system, its components, and the recent advances in such systems
 Description of Marketing research process

How Information Flows in a Retail Distribution Channel
 Information flows among
 Supplier
 Retailer and
 Consumer

 Consumer Attitude
 Consumer Decision Making Process
 Marketing Research Process
 Data Collection Methods

How Information Flows in a Retail Distribution Channel

A Retail Information System

Communicating With Customer

There are multiple ways for retailers to communicate with their customers, but which is the most
effective? In this lesson, we examine communication strategies for retailers and consider different types
of message delivery.
Customer Communication
Retailers have a wide variety of ways to communicate with you. Some of them are impersonal, like mass
advertising or publicity, but many are personalized because of technology. Think about all the ways your
favorite store keeps in touch with you: social media, emails, text messages, coupons in the mail, etc.
Most retailers have an integrated marketing plan that includes the following elements:
 Online marketing - web site, social media, email blasts, etc.
 Sales promotions - seasonal sales like Halloween, Valentine's Day, etc.
 Discount programs - Groupon, Mint Magazine, coupon books.
 Personal selling - the store sales staff can be a powerful tool in boosting marketing objectives.
 Public relations - press releases, newspaper stories, etc.
 Advertising - print, billboards, commercials, etc.
 Customer loyalty programs - offer frequent shoppers deals others don't get.

The Right Channel
The trick is to find the right media to reach the shopper. Why? Think about all of the ways a retailer might
interact with them. Some shoppers are on Twitter, some are on Facebook. Some come to your store,
some only shop online. Some shoppers might find your products through a third party or at an outlet mall.
You have a lot of customer touch points to consider and only so much marketing budget to spend. Here
are some considerations to keep in mind:
 Communication Potential - Look at the potential reach of the media and the level of interaction
available.
 Credibility - How is the media perceived by the intended audience?
 Cost - Think of the cost per contact and how much of the total budget is required.
 Control - Does the particular tool reach the target audience? Or is it just a general blast?
Retailers will obviously allocate marketing budget to the areas that show the greatest return,
and analytics(information gathered through statistical data) help greatly. The best scenario is one where
the marketing crosses as many customer touch points as possible.
Focus on the Customer
Building a customer-centric approach is important regardless of the marketing mix and regardless if the
customer buys online or in a store. Let's look at some ways to build a marketing program by putting the
customer first:
 Listen to the Customer
 Use the Data for Segmentation
 Map the Consumer Journey

Retail Communication
Mix

Retail Promotion Strategy
Retail Promotion Strategy: Push, Pull and Mixed Strategy
1. Push Strategy:
A retail push strategy includes offers that convince trade intermediaries channel members
to “push” the underline product through vigorous distribution channels to the ultimate
customer via some sales promotion schemes and personal selling efforts.
. Pull Strategy:
A retail pull strategy efforts to get customers to pull the product from the manufacturer
through its marketing channel. Under this strategy, company focuses its marketing
communication efforts directly to customers with the hope that it encourages curiosity and
requirement for the product at the end-consumer level.
3. Mixed Strategy:
As the very name implies, this strategy is the combination of above mentioned two
strategies. Electronic and car dealers often use such type of strategy. Most of the car dealers
near festival season advertise or offer cash discount or cash back offers to customers and
dealer incentives which is the combination of both the push and pull strategies.
– Mail Order Marketing

Retail Sales Promotion Program (Top 5 Objectives)
The main objective of any sales program is to increase the store’s sales. But today sales
promotion has various dimensions.
1. To create awareness about product:
2. To create interest among customers:
3. Source of Information:
4. To stimulate Customers’ demand:
5. Brand Building:

Promotional Objectives Planning a Retail
Promotional Strategy

STORE LOCATION
INTRODUCTION
The store location is one of the most important elements in retail mix. Location is specifically
important for the sale of products. When you want to buy fruits, the location comes to your mind is a
fruit market or a place usually cart-driven fruit vendors occupy, usually a junction place of main
market. In this unit, we will discuss various aspects of selection of a store location in more detail.
Store location is certainly of greater value for sale of products. A garment store located off the
market, in an isolated place would certainly be in disadvantageous position than the garment store
located in the main street of the central market. For a service retailer like photocopy operator, dry
cleaning, health club or a physician the location may not be of that importance because all of those
seeking service assistance would certainly locate them. Service retailers may have problem of
location, when there are more number of similar service providers at one place. The retailer has to
consider the following points while selecting a location for his/her store.
• Proximity of the target market
• Type of merchandise
• Proximity of generator stores

CLASSIFICATION OF CONSUMER GOODS
You may ask, which factors play an important role in choosing an appropriate location?"
The most important factor on which the locations decisions mostly based is, the type of
merchandise a store intends to sell.
These merchandise or consumer goods including services are broadly classified as:
• Convenience goods
• Shopping goods
• Specialty goods

TYPES OF RETAIL LOCATIONS
that location is one of the most important element for a retail mix.
You have seen earlier that location is directly proportional to the type of merchandise sold by the
retailer that means if your are selling consumer goods or a daily consumption item, you have to be
located near the target market and if your are selling shopping goods or specialty items, you have
to be located in a central market area.
In India, unorganised retailing is being done since more than a thousand years. Therefore, you
will find an old market in every city. Organized retailing is only w percent of the total retailing
business in India. In contrast the markets of US and European countries are well organized and
purposely planned. We cannot draw any comparison of the Indian market with that of Western or
US markets.
We can broadly categorize the Indian markets (as per location) as follows:
• Unplanned market area
• Planned market area
UNPLANNED MARKET AREA
Unplanned market area includes the main market area established since beginning of the habitat
in that region, secondary business area or a neighbourhood business area, strip cluster and isolated
shopping areas

Main Market Area
This is usually a major market of the city. Most of the business transactions take place from
the main market area. Most of the service institutions like banks, insurance, and domestic service
centers are also located in this area. Main market area is usually linked with public and private
transport.

The typical characteristics features of a main market area can be listed as follows
• Large shopping stores with selected assortment of merchandise.
• Variety of store types in the centralized location.
• High competition, price ranges, high quality of product and services.
• Convenience of transport and mobility.
• Provisions of parking and pedestrian spaces.
• Provision of variety of employment opportunities.
• Wide target market.
• Variety of Customer Services and Commercial and Social Facilities
• Higher Security requirements.
• High rentals.
• Problems of Pollution and traffic control.
• High maintenance cost.
• Higher incidences of shoplifting.

Secondary Business Area or Neighbourhood Area
Secondary business area or a neighbourhood business area is located close to residential localities.
These markets can be major markets of the suburb. These markets usually serve the adjacent
neighbourhood and their catchment area is within two to three kilometres. These are connected
well with transport facility of the main city.
Strip Clusters
Strip clusters are also called ribbon centers. These are small convenience shops located near
the residential areas. These are usually isolated stores and do not form a big market place. In old
cities like Banaras, Allahabad, you would find these strip clusters running to a long distance,
usually housed by small shops providing variety of items, which are specialty of the town.
Isolated Shopping Areas
These are 'free standing stores' away from any nearby stores. Such an isolated site may be
just around corner or across the streets. Generally, these stores meet the specific customer
requirement of the locality in which they are situated and hence catchment area served by these
stores is very small. Early discount stores were used to be at isolated place because of the fear of
the others shoppers for their price competition.

PLANNED CONTROLLED SHOPPING CENTRES
The trend toward organized retailing started in our major metros since last few
years, as store began spreading out along main streets and fanning over into suburban
residential areas.
This has resulted mainly due to:
• Retailers started following the population shift.
• Research and development in Retail provided new dimension to business.
• Planned growth opportunities encouraged networked business.
• A planned shopping centre, of whatever size has following major features:
• Essentially planned as a unit with the objective of having a
• balanced assortment of products and services in different stores.
• Complement overall merchandising efforts.
• Have the potential for integrated promotional efforts.
• Provide ample and free parking for all customers.
A planned shopping centre seeks to have one or more "anchor or generator
stores", that is, stores (such as department stores, fast food store, music parlour,
etc.) that will draw customers to the market area so that all merchants can benefit
from the customer traffic.

FACTORS FOR CHOOSNG A LOCATION
In this section, we will examine factors that are important to retailers when choosing a region/
market area and trade area. Issues regarding selecting a particular site are examined in more detail
later in the unit.
REGION/MARKET AREA SELECTION
Certain regions or market areas may be more attractive to some retailers than to others. Some
retailers focus on certain geographic regions. There may be reasons for such choices.
They may have a more loyal customer base by remaining a regional chain.
• They may have excellent visibility
• They are well known throughout the region.
• Their merchandising, pricing and promotional strategies may more easily target the needs
of a regional market than a national market.
• Their management can have greater control over a regional market.
• Managers can easily visit the stores and assess competition.
• They can operate with more efficient distributes merchandise to its stores.
TRADE AREA SELECTION
A trade area is geographic sectors that hold potential customers for a particular retailer or
shopping centre. Retailers often use the following rules of thumb, "The primary zone is the
geographic area from which the store or shopping centre derives 60 to 65 percent of its customers.
This zone is usually two to three kilometres or less than a 10-minute drive from the site".
THE 100 PERCENT LOCATION
Retailers speak of the "HUNDRED PERCENT" location. This means the best location for a
particular kind of store.
It depends upon the following factors;
 Customer traffic
 Specialty Goods.
 Generators Stores.
 Sides of the Street
 Corner location
 Transportation Facilities
 The Adequacy of Parking
 The Growth of Business and Facilities in the Area
 The Intercepting Qualities of a Site
 The Customer Interchange Potential & Compatibility of existing business
 Possible Negative Features in a Site

ISSUES TO BE THOUGHT OF WHILE CHOOSING A RETAIL SITE
Type of Site
• Is site near the target market?
• Is the type of site appropriate for the store?
• What are the age and condition of the site?
• What is the trade area?
Accessibility
• What are the roads patterns and conditions surrounding the site?
• Do any natural or artificial barriers impede access to the site?
• Does the site have good visibility from the street?
• Is there a good balance between to much and too little traffic flow?
• Is there a good balance between too much and too little parking?
• Is there a good balance between too much and too little congestion of traffic and people?
• Is it easy to enter /exit the parking lot?
Location Advantages within a center
• Is the site adjacent to important tenants?
• Will adjacent tenants complement /compete with the store?
Terms of Occupancy
• Are the terms of the lease slated in favour of the landlord or retailer?
• Is the type of lease favourable to the retailer?
• What are the various options of occupancy of the location?
Legal Considerations
• Does the site meet requirements of the Local Statutory Requirement?
SAQ: What do you understand by a 100% location? How you would convert the
footfalls into the shop to real purchases, if you are located in a 100% location and do
a business in kid’s garments?
Store Location
• Does the site meet environmental standards?
• Is the site zoning compatible with the store?
• Does the store's architectural design meet building codes?
• Are the store's external signs compatible with zoning ordinances, building
• codes, and shopping centre management?
Power, Water and Maintenance Facilities
• Does the sources and type of power available required for the purpose?
• Is there an independent sources of water available?
• Is drinking and usable water available during peak consumption?
• Does the mechanism of mechanical and electrical maintenance exist?
• What is the condition of sewage and drainage system in that locality?
• What is the life of the drainage system?

STORE LAYOUT & DESIGN
After selecting an appropriate location the next important task, which lie ahead of the retailer is to
decide on the exterior and interior appearance of the store. You would agree that the physical
appearance of the retail store should present the entire retailing strategy. "How you show it is as
important as what you have on display". The retail organizations that really need to succeed have to
concentrate more to selling than locations, merchandise and customer service and develop detailed
strategic and procedural codes. Pac Underhill, who has studied `in store shopping' behaviour for
more than two decades believes, " the science of shopping is a hybrid discipline part of it is a
physical science, and part is social science and only part science at all, for it is also partly an art.

STORE'S IMAGE
The store's image can be defined as the customer's perception of the store and its attributes.
As such, it is a mixed of the following dimensions: merchandise, store location, promotion, pricing
policy, service, store clientele and store atmosphere and layout.
What sets one store apart?
There are two major factors which sets the store apart:
• store layout ( the design or interiors and space management), and
• visual merchandising (store design incorporates the col ours, textures, materials,
decorations and lighting, that help create the ambience in a venue).

Store layout is an arrangement of the store that include space
management, product display, network of passages, arrangement for
amenities and customer convenience and other facilities required.
Visual merchandising is an attention drawing technique employed by
the store to attract customers and achieve the ultimate aim of the store, in
most sophisticated and exciting manner. It draws attention to upkeep of the
store, cleanliness, nicely arrange products, convenience of searching and
presentation, and most importantly, it generates a unique image of the store
in the customer's mind.

What are the principles around which any modern store is designed?
The three principles around which any modern store is designed is as
follows:
• Consistency
• Attraction and
• Productivity.
Consistency entails building a store attributes constantly and repeatedly around the image that
the store wants to project to its core customer.
Attraction stands for the store's ability to seek customers' attention and influence them to
make a purchase through promotion, pricing policy and service.
Productivity directs the retailer to charge the store's atmosphere to attract the target market in
addition to identify and manage various costs associated with the store design and layout and to
identify how each of them reflect into higher productivity for the store.
Thus, the three design objectives are:
• To develop consistency of projection of a unique image.
• To attract and influence customers to buy products.
• To charge the stores atmosphere such to provide better productivity, efficiency and
effectiveness.

STORE LAYOUT - KEY CONSIDERATIONS
There are a few optimising factors that the prototype design team must keep in mind. Ideally,
a store design should:
• Enhance sales
• Maximize returns per square foot or per square meter
• March the merchandise and format
• Allow flexibility in store design
• Provide assistance for disabled /women/children and safety of customers.

FACTORS OF DESIGN DECISIONS
Exterior and interior design decisions are crucial to any retailers. Such decisions are based on
the target group and the product of the store. A store positioned such that it is clearly visible from

the major routes (pedestrian or vehicular) passing the site has ultimate advantage of exterior design.
Architectural style used for design indicates the size and prestige of the retailer's operation. Retailer
may be required to take help of experts in store planning and building; architects; lighting engineers;
interior designers; and other specialists for such design interventions.

EXTERIOR DESIGN DECISIONS
The decision to build a new store or remodel an existing one is influenced by the cost and by
the amount of investment money available for the physical appearance of the store. Undoubtedly
the front of a store is of major importance: it should always be inviting, for it conveys the store's
image and helps to attract customers. It is also the most visible aspect of the entrepreneur's status.
Careful design and purposeful investment helps in making exterior much attractive.
Store Layout & Design 131
Shop Front
It is the general appearance of the shop from the front. As we have seen
that the first impression a potential customer has of the store is generated by
the storefront. It should therefore be designed to project and be consistent
with the desired store image.
There are three basic shop-front configurations:
The straight front
Here the shop front runs parallel to the street or pavement with possibly a
small recess for the entrance.
The angled front
This creates a more attractive and interesting front and funnels or directs consumers
into the store. It also helps provide a better viewing angle and can reduce glare.
The arcade front
Basically, this is a straight front configuration but with several recessed windows or
entrances thus providing the shopper with several protected areas for window shopping
and creating an attractive and relaxing atmosphere.
Windows
The window, whether it is arcaded or a ' picturesque', is important in
helping to persuade the customer to enter the store initially. Many retailers
have dispensed with normal window displays and use the window to allow
the customer to view the entire store and its contents.
Apart from the overriding aim of image-building the conventional window,
have functions such as:
• to show a representative sample of merchandise sold in the store
• to display promotional or seasonal lines
• a mix of (a) and (b) above..
Entrances
Customer entrances should permit easy access. Recessed fronts are sometimes
used to draw people off the sidewalk and to offer protection from the weather.
Signs
A sign identifies the store, provides information about the types of goods carried,
and helps create an image. It can also give a distinctive touch. Sometimes the sign
is so prominent it dominates all other aspects of the building exterior. For example,
the large Holiday Inn signs identify the units from a distance. The signs within the
store should prominently display the products identity and location in bright lustre
colours so that customers can locate products from distance. Similarly, the Yellow
sign of STD/PCO have long been a distinguishing symbol.
Parking
Adequate, convenient parking facilities should be part of exterior planning for many retailers
who are not located in a shopping centre, where the developer provides for parking. But parking
is not important for some retailers located where pedestrian traffic is serviced by adequate public

transportation.

INTERIOR DESIGN DECISIONS
The retailer with a creative flair has almost endless possibilities for the store interior. For
example,
• More than fifty finishes may be selected for floors, ranging from wood
and cork to rubber and marble.
• There are endless varieties and patterns of carpeting.
• Colours, wall materials, and ceilings create an atmosphere that will enhance
the appeal of the store.
• Store fixtures and equipment also afford many possibilities. Whether a
store is to be self-service or to use sales people will determine the kind of
fixture need. Retailers must carefully select and utilize fixtures that facilitate
traffic movement and are consistent with the store's overall image, adaptable
to many types of merchandise, and economically useful for several years.
• The matter of lighting is more complex than it may seem at first. The
trend has shifted to more sophisticated lighting using a low level of fluorescent
lighting for basic illumination and highlighting features merchandise and displays with
brighter light.
Most interior design decisions require some technical expertise. For example, Lighting experts
can provide help in determining the type and extent of lighting needed to enhance the stability of
merchandise. Interior designers can create a completely new ambience.
Provision of air conditioning and vertical transportation in large stores is essential requirements
these days. For larger stores in West, escalators have gained wide acceptance.

STORE LAYOUT
A good store layout must balance many objectives that often conflict. The first objective is
that the store layout should entice customers to move around the store to purchase more
merchandise
than they may have originally planned.
• One method is to expose the customer to a layout that facilitates a specific traffic pattern.
For instance, Supermarket "X" uses a layout that almost forces customers to move through
sections of inexpensive impulse purchase products to get to larger, more expensive goods.
• Another method of helping customers move through the store is to provide variety. Flat
spaces filled with long rows of racks and shelves create monotony. Multilevel and ramps add variety.
If the floor must be flat to facilitate the use of shopping carts, at least display
heights can be varied.

When designing stores, the designers consider 1) alternative designs, (2) allocating space to
feature and bulk of stock selling areas, and (3) making efficient use of walls.

THE IMPORTANCE OF LAYOUT
Layout is important for the following reasons:
• It can guide the flow of customer traffic to all parts of the store, thereby giving the best
exposure of merchandise.
• It can provide stooping power for impulse buying.
• It permits the store to maximize the amount of sales space in relation to non-selling space.
• It aids the customer in selecting and comparing merchandise.
• Departments and merchandise categories can be placed and emphasizes according to sales
potential for maximum effect.
• It provides scope for studies of customer traffic patterns and the 'stopping power' of

various types of displays and thereby suggesting alternatives.

STEPS FOR DESIGNING STORE LAYOUT
Planning a store layout involved the following steps:
• Determining the availability of space in the facility,
• Determining 'space needs' for the selling and non-selling area,
• Fitting 'space needs' to available space to achieve a good traffic flow and maximum sales
per square foot
The first step in planning the layout is easy. If there are no blue prints, the dimensions of the
building can be measured.
The last two steps require study. The following should be considered in determining space
needs:
• Kind and extent of departmentalization, if any,. If yes, then
a. Spaced requirements of departments
b. Locations of departments
• Type of traffic flow
• Types of displays to be used and their space requirements
• Types of Merchandise Presentation Techniques
• Types of non-selling activities
a. Space requirements
b. Location requirements
• Special provisions for self-service.

KIND AND EXTENT OF DEPARTMENTALISATION
Apportioning of space in a department depends mainly on its sales potential, which may be
measured in relation to other departments within the store. Generally, the sales potential a
department
Space Productivity Ratio
The space productivity ratio is the sales per square foot of selling area of a department or
section. This ratio is commonly used in appropriating space among departments. For existing
stores, such a comparison helps the retail executive spot and correct problems. For new or
planned stores, space productivity ratios can serve as a guide for allotting space to departments.
The Model Stock Approach
Another guide used for space allocation is the model stock approach.
The ideal assortment of sizes, styles, colours, price lines, and so on is
determined. Then the amount of space needed to stock such an
assortment is estimated. However, this is an arbitrary approach, which
does not always help. For example, it is not unusual to find that the
ideal assortment would require far more space than the store has. Then
the ideal must be compromised.
Relative Location Advantages
The best locations within the store depend on the floor, the position
within a floor, and location relative to traffic aisles, entrances, escalators,
and so on. In general, in a multilevel store, a space's value decreases
the further it is from the entry-level floor. It has been observed that men are not generally avid
shoppers for clothing. Thus, many large stores locate the men's department on the entry-level
floor to make shopping as easy as possible. Multilevel stores often place escalators so that
customers
must walk around the sales floor to get to the next level.
Demand/Destination Areas
These departments are known as demand/destination areas because demand for the products
or services exist before customers get to their destination. Children's expensive specialty goods,

and furniture departments as well as customer service areas like beauty salons, credit offices,
ATM counters and photography studios are usually located off the beaten path - in corners and on
upper floors. Besides, customers looking for these items will find them no matter where they are
located in the store. Thus, they do not need prime locations.
Adjacent Departments
Retailers often cluster complementary products together to facilitate multiple purchases. Some
stores are now combining traditionally separate departments to facilitate multiple purchases. For
instance, Kmart has combined its toy and sporting goods departments. Kmart's children's apparel
is now grouped together, with infant and boy's wear across the aisle from girl's wear. Active wear
for both children and adults is now found in an exercise department.
Guiding factors to optimise the use of space
• Devote as much space to selling activities as compared to storage or non-selling functions.
• In prime shopping locations, consider assigning non-selling activities to other areas where
rental costs are much lower.
• In the designated selling space, eliminate all non-selling functions, e.g. clerical work areas.
• Use vertical as well as horizontal space (but keeping the store image intact).
• Replace inefficient fixtures with modern, open, volume-selling fittings.
• Analyse sales and profit per square foot of selling space and re-locate departments taking
into account:

TYPES OF TRAFFIC-FLOWS
Today's modern retailers use three types of traffic-flows; grid, racetrack, and free form.
Grid Pattern of Traffic Flow
The grid layout is best illustrated by most grocery and drugstore operations as shown in the
diagram. It contains long gondolas (A gondola is an island type of self-service counter with tiers
of shelves, bins, or pegs) of merchandise and aisles in a repetitive pattern.
The grid is not the most aesthetically pleasing arrangement, but it is much cost efficient and
good for shopping trips in which the customer plans to move throughout the entire store. Because
SAQ: On which factors kind and extent of departmentalisation depends?
they know where everything is, they can minimize the time spent on a task that many do not
especially enjoy.
There is a less wasted space with this design than with others because the aisles are all the
same width and are designed to be just wide enough to accommodate shoppers and their carts.
Finally, because the fixtures are generally standardizes and repetitive, the fixturing cost is reduced.

Racetrack Pattern of Traffic Flow
One characteristic feature of the grid design is that customers are naturally drawn into the
store as most customers have a good notion of what they are going to purchase before they enter
the store.
The racetrack layout (also known as loop or a boutique layout) facilitates the goal of getting
customers to visit multiple departments by providing a major aisle that has access to the store's
multiple entrance. This aisle " loops" through the store providing access to boutiques (departments
designed to resemble smaller self-contained stores). This design encourages impulse purchasing.
As customers go around the racetrack, their eyes are forced to take different viewing angels,
rather than looking down one aisle as in the grid design. It is shown in diagram below.

Free Form Pattern of Traffic Flow
In a free form layout fixtures and aisles are arranged asymmetrically. It is successfully used
primarily in small specialty stores or within the boutiques of large stores. Customers feel at home
in this relaxed environment, which facilitates shopping and browsing. "D" are departments shown
in diagram.

In general, this layout is not expensive, except the fixtures are likely to be expensive units.
Because the customers are not naturally drawn around the store as they are in the grid and
racetrack
layouts, personal selling becomes more important. In addition, theft is higher here than with the
grid layout. Finally, the store sacrifices some storage and display space to create the more spacious
environment. If the free form layout is carefully designed, however, the retailers can offset
increased costs with increased sales and profit margins because the customer feels at home.

TYPE OF DISPLAY AREAS
The manner in which merchandise is exhibited or presented to the customer is a vital element
of the selling process. Display areas include feature areas, bulk of stock, walls and fixtures.
Feature Areas
Feature areas are designed to get the customer's attention. They include end caps promotional
aisles or areas, free-stranding fixtures and mannequins that introduce a soft goods department,
windows, and point of sale areas.
End cap is shown in the picture:
• Located at the end of an aisle/rack.
• Due to their high visibility, end caps can be used to feature special
promotional items, like candies, cold drinks and potato chips.
A promotional aisle or area is used similarly to an end cap.
• Freestanding fixtures and mannequins located on aisles are designed
primarily to get customer's attention and bring them into a department.
• These fixtures often display and store the newest, most exciting
merchandise in the department.
• Properly used, windows provide a visual message about the type of
merchandise for sale in the store and the type of image the store wishes to portray.
• Windows can be used to send the shopping mood for a season or holiday like Diwali, Holi,
Id or Christmas.
Window displays should be tied to the merchandise and other displays in the store. For

instance, if Mrs.Talwar notices a display of bath towels in a Store's window, which draws her into
the store, the bath towels should then be prominently displayed in the bath department. Otherwise
the drawing power of the window display is lost.

Point of Sale
Point of sale (POS) is one of the most important points of the store. Customer
is held captive here for a long time until she/he clears the bill. The customers
want to get free from this area as soon as possible because she/he has almost
finished the purchasing. Most of the stores provide networked mechanism to
enter and clear the bills. POS must provide convenience to customers from the
point of view of waiting at the counter.
Bulk of Stock
The bulk of stock area contains the total assortment of merchandise. It usually has gondolas
in grocery and discount stores, and has freestanding fixtures for soft goods. A feature area
usually introduces this merchandise.
Walls
Retail space is often scarce and expensive, many retailers have successfully increased their
ability to store extra stock, display merchandise, and creatively present a message by utilizing wall
space. Retailers can store merchandise on shelving and racks. They can coordinate merchandise
with display, photographs, or graphics featuring the merchandise.
Fixtures
The primary purpose of fixtures is to hold and display merchandise. At the
same time, fixtures must be in consonance with the other physical aspects of
the store, such as floor coverings and lighting, as well as the overall image of the
store. For instance, in stores designed to convey a sense of tradition or history,
customers automatically expect to see lots of wood rather than plastic or metal
fixtures.

Visual Merchandising
The art of increasing the sale of products by effectively and sensibly displaying them at the retail outlet is
called as visual merchandising. Visual merchandising refers to the aesthetic display of the merchandise
to attract the potential buyers, prompt them to buy and eventually increase the sales of the store. In
simpler words, visual merchandising is the art of displaying the merchandise to influence the consumer’s
buying behaviour.
The store must offer a positive ambience to the customers for them to enjoy their shopping.
The location of the products in the store has an important role in motivating the consumers to buy them.
Sensible display of the merchandise goes a long way in influencing the buying decision of the individual.
The end-user will never notice something which is not well organized: instead stacked or thrown in heaps.
Proper Space, lighting, placing of dummies, colour of the walls, type of furniture,music, fragrance of the
store all help in increasing the sale of the products.
 Lighting is one of the critical aspects of visual merchandising. Lighting increases the
visibility of the merchandise kept in the store. The store should be adequately lit and well
ventilated. Avoid harsh lighting as it blinds the customers who walk into the store.
 The signage displaying the name of the store or other necessary information must be
installed properly outside the store at a place easily viewable to the customers even from
a distance.
 The retailer must be extremely cautious about the colour of the paint he chooses for his
store. The paint colour can actually set the mood of the customers. The wall colours must be well

coordinated with the carpet, floor tiles or the furnitures kept at the store. Dark colours make the
room feel small and congested as compared to light and subtle colours.
 The store must always smell good. Foul smell irritates the consumers and he would walk out of
the store in no time. Use room fresheners ‘or aromatic sticks for a pleasant environment.
 The merchandise must be properly placed in display racks or shelves according to size
and gender. Put necessary labels (size labels) on the shelves as it help the customers to locate
the products easily. Make sure the product do not falls off the shelves as it gives a messy look.
 The dummies should be intelligently placed and must highlight the unique collections, latest
trends and new arrivals in order to catch the attention of the individual. The dummies should not
act as an obstacle and should never be kept at the entrance of the store.
 Don’t play blaring music at the store. It acts as a hindrance to effective communication and the
retailer can never understand what the buyer actually intends to buy.
 Select the theme of the store according to the season. Red should be the dominating colour
during Christmas or Valentines Day as the colour symbolizes love, fun and frolic. A white theme
would look out of place during the season of love.
Why Visual Merchandising?
 Visual Merchandising helps the customers to easily find out what they are looking for.
 It helps the customers to know about the latest trends in fashion.
 The customer without any help can actually decide what he intends to buy.
 It increases the sales of the store and results in increased level of customer satisfaction.
 The customers can quickly decide what all they need and thus visual merchandising makes
shopping a pleasant experience.
 Visual merchandising gives the store its unique image and makes it distinct from others.

Types and Roles of Visual Merchandiser in the Fashion
Industry

Visual merchandiser:
Visual merchandiser is a person who applies his or her design skills that helps to promote the image,
create eye-catching product displays and store layouts, and design to attract customers and encourage
them to buy. Visual merchandisers connected with current and future trends, and follow up business
competitor’s activities, and also training the sales staff to getmerchandising skills.
Visual merchandiser assemble marketing principles, get combine the knowledge about retail
merchandising, and creativity to use the space and layout of the store to represent the store’s catalog in
a right way. They are need to professional training to do the following task successfully.
 In-store displays
 Interactive displays
 Mannequin styling
 Point-of-sale displays
 Posters
 Price tickets

 Promotional / seasonal displays
 Shelving
 Window installations
Types of visual merchandiser and their roles:
A visual merchandiser is a key person in the fashion industry who determines how a product is displayed
to the public. Today in the fashion industry, there are three main types of visual merchandising roles are
included. Every role is slightly different from other. Here the types are:
1. In-store visual merchandiser
2. Field visual merchandiser and
3. Head office display team.
1. In-store visual merchandiser:
In-store visual merchandisers are needed to have a real fair for layout and composition, consciousness
about the retailers brand image, products and display techniques are combined with knowledge.

In-store visual merchandiser play some essential roles, these are following below:

 They maintain all the in store visual displays
 By analyzing the reports they maximizing commerciality
 They will always do change monthly floor makeovers
 Always maintaining product standards
 Using space planning information
2. Field visual merchandiser:
Field visual merchandisers are to help and give guidance the retail stores of the fashion brands on all
perspectives of visual merchandising like set guidelines, ensuring consistency and visual excellence
across the brand. To move forward the fashion brand, the field visual merchandiser always inform to the
district visual merchandising manager and area manager to discuss any identified chance, issues/ needs,
put forward advice and agree actions.

Some roles of a field visual merchandiser are:
 In retail store design area, they will drive and develop visual merchandising standards.
 For the retail store, they highlight commercial visual merchandising opportunities.
 Always maintain the fashion retailer’s brand strategy.
 Some visual merchandising experience must be needed.
3. Head office display team:
Head office Creative/visual merchandiser starts their career as a creative assistant, moving to creative
manager, and then moving to head of creative or visual merchandiser. Some store retailers do not have
a head office display team, that’s why, marketing team maintain this responsibilities. But they are not
enough creative as a display team. So, brand marketing manager try to recruit more creative candidate
for this post.

Some roles of head office display team are:
 Actually they are support and communicate between the buying and merchandising teams
 Update knowledge about fashion trends, latest key trends, styles.
 They should be able to put visual display packs together.
 They will reserve latest visual display packs and old packs are leave from the store.
 Get more knowledge about creativity.
Liaison between visual merchandisers and other roles:

Techniques of Visual Merchandising in Fashion Retailing

Visual merchandising:
Visual merchandising is responsible for enticing as many target customers as possible into the store
through effective ideas of window displays and encouraging them to buy through the skillful layout of
product in store. Awareness of the company’s brand image is essential, combined with knowledge of
products display techniques. According to Pegler (1998)- Visual merchandising is displaying merchandise
with the aim of maximizing the volume of product sales.

Fig: Visual merchandising
Fashion retailing:
Fashion retailing is the front-of-house function. Fashion retail includes from the manufacturing and
supply chain to managing, marketing, visual merchandising and selling fashion clothing, apparel, fashion
accessories, footwear and different offers are display in store to attract the customer for increasing
sales.
Techniques of visual merchandising in fashion and apparel
retailing:
Visual merchandising always supports retailers to get advantage from the marketplace and it is the
workable way of adding value to their company. To promote fashion retailing, visual merchandising is
the way of communication with consumer through different elements like window display, lighting,
store layout, image, color & style and the presentation of merchandise. To complete this visual
merchandising two types of techniques are used. These are:
A. Exterior displays
B. Interior displays
A. EXTERIOR DISPLAY:
It is the front view of a retail store. Innovative exterior visual merchandising techniques are attracts
attention, creates interest and invites the customer into purchase. It is the perfect way to promote
latest fashion trends and sending useful information to the target customer. For the exterior display
presentation use eye catching banner, attractive window display, digital display, brand image, sufficient
offer, progressive or discount image etc.

Some exterior display techniques are below:

1. Store front:
Storefront contain of the total exterior presentation of the retail business. Store front mainly includes:

 Exterior signs
 Marquee
 Entrances
 Window display
Exterior signs:
Exterior sign is the first impression of a fashion retail store. In less than 10sec the sign must attract the
customers attention, it explain the business types, and what it desire to sell. Only one or two keywords
with well design and easy to read signs are used to express the business or product. A clean and clear
message will be more preferable for customer.

Fig: Exterior sign of fashion retail store
There are four types of signs. They are:
1. Promotional signs
2. Location signs
3. Institutional signs
4. Informational signs
Marquee:
Marquee is an architectural permanent canopy that place over the shops entrance. It provides specials
events, occasion, offers, display promotional banners. Ex: Broard way.
Entrances:
The entrance of the store, otherwise it is also known as the transition zone, is an important area in the
store. This is an area where all shoppers pass on entry into store, and is significant as this zone is where
consumers can observe the stimuli and sense the general vibe of the store.

Window display (Based on season, occasion, special event):
Window display is essential communication tools that can attract the customer attention, to generate
interest for purchase, sending merchandise, promotional and fashion product information, by creating
an innovative or attractive display for increasing sales, which meet the customer needs. It helps to
convince the customer to buy something in a few seconds. Budgets for window display vary from
retailer to retailer, but concepts are based on season, occasion and special events.

Fig: Window display in visual merchandising
2. Eye catching banner:
To attract the customer concentration, fashion or apparel retailers use eye catching banners in the
outside of the store for exterior display. It is built up in creatively, inexpensive but colorful, eye catching
means of promotion. Banners can be hung up from flagpoles, projected from the building or flat against
the exterior. Always get a new look retailers are changing the banners continuously.

3. Landscaping:
Landscaping is the powerful concept and interesting composition of visual merchandising. IT can
increase consumer interest by creating the focal point using color and texture to supply contrast and
harmony. The focal point is the business sign and it helps the building itself. To highlight the product
display and store arrangement retailers use of simple and attractive landscape design and they also
ensure that customers can easily view the focal point and merchandise. Different equipments like
plants, flower, small beds, and other required materials that are used to improve the overall look of the
fashion retail store.

4. Colour:
Colour is a one of the most powerful tool in exterior visual displays. Color can express creativity for
exterior window displays and it can create emotions and feelings among consumers that activate and
stimulate specific memories and it can also create atmosphere, catch the attention of by-passers, and
attract them to the retail store for purchasing goods.

5. Graphics, photography or brand image and signage:
Graphics and photography and signage is mainly used in window display for sending information about
sale or special offer, discount, brand image, marketing product by model, reinforce the brand's
advertising campaigns etc . To do is display colorful, bold text, easy to read, short and clear message and
graphics are used to attract the attention of the consumers.

6. Lighting:
Without proper lighting, visual merchandising in apparel retailing is not possible. Today fashion retailers
using computer software for adjusting the brightness and color of the window display lightning. If it is
day or night display lighting depends on the outside light level.

Fig: Visual merchandising with lighting
There are three types of lighting used in fashion retailing:
 Primary lighting
 Store illumination
 Atmosphere lighting
Here I have mention some importance of lighting in visual merchandising.

 To develop inside and outside decoration proper lighting is essential
 It can express helpful impression about the merchandise offers and window display,
 To highlight products, it separate one location to another in retail shop, to identify spaces, to
create mood or feeling, occasion, seasonal effects lighting can enlarge the retail stores over all looks.
 All the color of decoration totally depends on lighting.
 Lighting can attracts and captures the customer’s interest and helps to set the mind for
purchase the product
7. Eyesight: Eyesight is the visual elements that help to create impressing atmosphere by the use
of colours, lighting, shades and shapes, elements of arts and principles of design.
8. Fashion trends:
Visual merchandiser or window display designers must follow the latest fashion and predict future
fashion movements. Clothing, fashion accessories and other merchandise must be styled on
mannequins perfectly to draw customer’s attention to the retail shop.
9. A Plano gram: It is a diagram or model that indicates the placement of retail merchandise
on shelf in order to increase sales.
10. Floor map:
It also called floor plan. A floor map helps visual merchandisers to discover the best place for garments,
accessories, men, women, and children items, footwear, and other home decor items according to the
color stories of clothes in the apparel or fashion shop.

B. INTERIOR DISPLAY:
Interior displays or in-store visual merchandising is the most essential part for fashion retailing and to
utilize each square foot for decorating fashion products that will help to maximize sales. For this interior
display, visual merchandisers want to get customers attention that essential in the purchase decision
making process. When planning interior displays, remember that the theme and image presented on the
exterior must be carried throughout the interior of the store to provide consistency for the customer.
Interior display presentation mainly includes the store layout, store design, point of purchases displays,
item display, assortment display, and signage.
Some interior display techniques are below:
1. Store layout and design: A store layout and design is the actual key ways to try to influence the
movement of customers in the retail store. It helps to give guideline them to more merchandise as well
as providing communication cues to the consumer. The ideal store layout and design will helps to give
guideline to increase merchandise and to create interest in the product from the customer’s
perspective.
2. Mannequins: Apparel retailer are commonly used mannequins to display their latest fashionable
products in-store and in the window display. It can create a more wished shopping environment for the
customers.
3. Point of purchase display: It is the display arrangement of merchandise in the apparel retail store that
help the customer to purchase the product. All the types of products should be visible, limited amount
of merchandise are show in the shop floor and easy to access but not overcrowded.

4. Atmospherics: Atmospheric means to design the empty space in the shop that can be attached to
create a desired purchasing environment for increasing the levels of sales. It can give good impression of
fashion retail store or boutiques to the customer and also attracting customers into a store.

5. Music: In the fashion retailing business, retailers and visual merchandisers play slow tempo music for
consumer relaxation. Music’s are selected by the style of the shop and it helps to promote brands,
making purchasing decision and customer also spend enjoyable & longer time in the shop.

6. Signage: See the above point.

7. Colour: See the above point.

8. Lighting: See the above point.

9. Smell: Smell in a shop is the most effective elements to differentiate the brand from others. Some
general responses to different types of smells are in below:

Fig: Different types of smell and their responses
10. Props and Fixtures: A prop is the elements that use to prepare a window display for telling a story
about product. When the props are use to present saleable merchandise, make sure the props are
appropriate for the theme of the display and also ensure that it can be increase the customers demand
from the display in the shop. The examples of some props are floor coverings, wall treatments,
backgrounds, mannequins, shelves steps and season or occasion wise different display elements.
Atmospheric: Your retail atmosphere is the general aura or impression your store
makes on customers based on a combination of factors, including layout and design,
lighting, fixtures, sounds and smells. Retail atmospherics is the manipulation or
intentional use of these elements to attract customers and induce buying activity.

Retail Organisation
Retailers are the last and vital members in the channel of distribution. The retailer serves
the manufacturer by providing his goods and services to the consumers and creates a
channel of information where customers’ feedback, their expectations and points of
dissatisfaction (if any) are shared with the manufacturer. From customer’s point of view, the
retailer’s main function is to provide merchandise in the right quality, quantity, price, time,
and at the right place.
This objective is achieved through following perspectives:
1. Identifying Consumer Demands:
2. Management of Merchandise:
3. Convenience of timing:
Retail Sales Goals:
The goals of retail sales irrespective of a country’s profile are:
(i) To serve a link between the manufacturer and end consumers
(ii) To improve communication with retail customers
(iii) To improve sales target
(iv) To provide efficient customer service knowing the power of mouth advertisement
(v) To build image among general public
(vi) To improve social responsibility
(vii) To serve different markets
(viii) To get quick feedback about the merchandise sold and consumer services offered
(ix) To convert visitors to buyers
(x) Optimum utilization of fixed cost related expenses.
CONCEPT OF ORGANISATION STRUCTURE
The next important content element deals with organizing the business. More specifically we will
study organization structures for different types of retail businesses, roles and responsibilities of
various functionaries, accountability and reporting mechanism, control and decision-making
processes, and the process of information flow within a firm.
In 1927, Paul Mazur, an investment banker, was appointed by the National Retail Dry
Goods Association (Now National Retail Federation, USA) to study the retail business
and suggest a model organizational structure. Mazur suggested on organizational structure
with four functions i.e. merchandising, publicity, control and store management. The structure
suggested by Mazur still remains the core structure for any retail organization, small or big, single
or chain, except for a few minor changes.

Types of retail organization structures
Retail organizations most commonly choose to centralize key strategic processes like
merchandising, marketing and IT to exercise consistent control and to gain scale
economies. They also usually centralize back office processes like HR and accounting to
make them efficient and consistent, while they may choose to decentralize certain
decision-making within Store Operations to allow flexibility to respond to local market
conditions.

In addition, over the past ten years retailers have increasingly chosen to outsource –
contract with an external service provider -- to perform certain functions and processes,
in order to take advantage of even greater economies of scale and the lower costs
available through offshore labor resources. It can be attractive for a Retailer to
outsource relatively standardized processes that do not involve issues of competitive
advantage; these typically include processes within the accounting, HR and IT
functions, among others.

The structural elements of a retail organization?
Most retail organizations (centralized or decentralized) consist of 8 departments:
1. Merchandising/Buying
2. Distribution and Logistics
3. Finance and Accounting
4. Human Resources
5. Information Technology (IT)
6. Marketing
7. Merchandise Planning
8. Store Operations

Retail organization structure: Terminology
Managing distribution centers
The distribution center consists of 5 steps:
1. Store Ordering:
2. Order Processing:
3. Let Downs: the pallets from the storage spaces into the selection slots
4. Selection:
5. Loading:

various organizational patterns are given as under:

Human Resource Management (HRM)
Human Resource Management (HRM) activities include managing and coordinating the human
resources in an organization. Human resources are vital and high investment resources in any
organization. Efficient Managing and coordinating the human resource enhances the quality of
output, efficiency and profitability of an organization, and is hence a very important function.
A business house occupied 5000 sq.ft in a first floor of an isolated constructed five floor
building and opened up a supermarket there. The locality was dominated by office goers, mainly
middle class employees. There were only a few grocery shops in that area.
Within a year, the supermarket proved to be a very successful venture. Encouraged by the
success, the business house thought of expansion and occupied 25000 sq. ft area in the same
building i.e. all the five floors.

FUNCTIONS OF HRM
Human Resource Planning, Recruitment and Selection
• Job profiling/analysis to determine the precise activities to be performed by employees at
different levels, also known as job or role descriptions.
• Forecasting human resource requirements of a firm to help achieve its objectives and
targets.
• Planning to meet human resource requirements.
• Recruiting, selecting and hiring human resources to perform specific jobs.
Human Resource Development
• Orienting new employees.
• Training employees on the basis of Training Needs Assessment (TNA).
• Providing life skills training for effective performance of employees.
• Building effective teams in the organization.
• Appraising the performance of employees as per a designed system
• Assisting employees in career planning and development
Compensation and Benefits
• Designing and implementing compensation and benefit system for employees, ensuring
that the system is fair and consistent.
Employee and Labour Relations
• Acting as an intermediary between the management and employee unions.
• Designing and implementing grievance handling and discipline systems.
Safety and Health
• Designing programmes and implementing them to ensure employee health and safety.
• Assisting employees with personal difficulties (to a reasonable extent) so that these problems
do not influence their work performance.
Personnel Information System
• Providing human resource information database.
• Designing and administering employee communication systems.

THE HUMAN RESOURCE MANAGEMENT WHEEL
The HRM wheel shows the cycle of HRM functions that the HR manager usually operates
which include training and development, organizational development, organizational job design,
human resource planning, selection and staffing, personnel information system, compensation
benefits and employee and labour relations.

THE HUMAN RESOURCE MANAGER
Most of the managers in retailing have to perform one or more of the HRM function mentioned
above. For example, Shop Floor Supervisor will have to supervise day-today activities, guide sales
persons, monitor merchandise flow, train and orient new employees, build teams among the
workforce, arrange substitute for absentees when necessary. He will also allocate human resources
to specific jobs. In matters of conflict he will act as an intermediary between them and the
management, as well as try to handle grievances at his level.

THE HUMAN RESOURCE DEPARTMENT
Many medium and large size firm have a Human Resource Manager, heading a human resource
department. The department almost functions all those listed above, except a few as mentioned in
the unit about human resource management.
The main functions of a HR department are to provide support to operating managers (Shop
Floor, Accounts, Buyers, Supplies, Marketing, Packaging, etc.). The support could be advice,
help an organization and recruitment, coordinate between department, special training and
maintaining employee information.
Given below is a table outlining the functions of a HR department.

CHALLENGES IN HUMAN RESOURCE MANAGEMENT
Traditional approaches to recruitment, labour relations, compensation and handling grievances
have become redundant and out-of-date in modern retail management. Current work forces are
diverse (in a metropolitan city like Mumbai or Chennai, the workforce would be from different
communities and possessing different interests), and contain many more females then in earlier
days. In fact, in certain retail stores, the females dominate, and are preferred by management.
 Diversity
 Regulations
 Structural changes
 Multi Skilling
 Downsizing
 Outsourcing
 Right sizing
 Technological and Managerial changes

 JOB DESIGN
 JOB ANALYSIS
 JOB DESCRIPTION
 JOB SPECIFICATION

HUMAN RESOURCE PLANNING

EMPLOYEE RECRUITMENT AND SELECTION

TRAINING OF EMPLOYEES

Finance

INTRODUCTION
In a large firm the financial planning and accounting specialists prepare financial plans and
other financial reports. Your interest lies in how to understand these plans and reports and figure
out vital information contained in them. Profitability of your operation and your own success will
depend on the performance depicted by these reports.

NEED OF FINANCIAL RECORDS
Inadequate and under controlled financial records have been a prime contributor in demise of
small businesses. More often than not following factors have been ignored
until too late:
• Diminishing cash
• Declining sales
• Excessive inventory
• Poor and delayed cost recovery
• Mounting debt accumulation

PROFIT PLANNING
PROFIT
Profit is essential for the survival of any business entity. In many cases, the profit generated is
effectively the salary of the owner of a small retail store.
SALES REVENUE AND COSTS
Profits = sales revenue - cost of goods sold - expenses
IMPROVING PROFIT
Measures for improving profit essentially fall into two categories: increasing sales and reducing
costs.
Increasing Sales Revenue
• By increasing promotional activity such as advertising or personal selling.
• By improving customer service.
• Adding other products or services.
• Changing prices.
In brief, the approach is to keep and sustain present customers and add new customers.
Reducing Costs
• Reducing expenses on wages and
• Reducing cost on customer service, etc.

BUDGETING
WHAT IS A BUDGET?
Budget is an attempt to forecast income and expenses of the firm (the activity of the firm). In
other words, budget is a statement of likely income and estimated expenses. Budgeting shows
what is happening in the firm. The management’s task is to discover why it is happening and to
take remedial measures, if any there is some thing, which is not happening as per plan.

TYPES OF BUDGET
In retailing, there are normally three main types of budget produced:

• The operating budget
• The cash budget
• The capital budget

EXPENSES AND THEIR CONTROL

Expenses are a necessary part of any business as shown in formula;
[Profits = sales revenue - cost of goods sold - expenses]

Expenses are deducted from gross margin to yield net profit. Of the three factors, management
has less control on sales revenue and cost of goods sold. Expenses are more directly under the
control of management. This does not mean that expenses can be eliminated or even reduced; but
they can be planned and controlled.
Expenses can be classified into fixed, variable and semi-fixed categories:
• Fixed expenses are those that do not vary with the volume of the business, e.g. rent, etc.
• Variable expenses are those that are proportional to sales volume, e.g. wrapping materials,
commission payments, etc.
• Semi-fixed costs are those that contain a fixed element and do not change proportionately
to the volume of business, e.g. head office salaries, telephone and power bills, etc.
FINANCIAL STATEMENTS
NEED FOR FINANCIAL STATEMENTS
Any business, retailing or otherwise, needs accounting records for these reasons:
i. Records have to be maintained if bills and taxes are to be paid on time, pay rolls met, and
customers billed correctly.
ii. Evaluating performance of the firm, the department, and the executives responsible depends
on record and statements that summarize the results of current operations and permit a
comparison with previous periods and with plans.
iii. Certain outsiders require complete and up to date financial statements: (a) creditors, especially
before granting loans, (b) various local government agencies, requiring reports on taxable
income, sales taxes collected, etc. and (c) stockholders, if the firm is publicity owned.

OTHER RETAIL PERFORMANCE MEASURES

SALES PER SQUARE FOOT OR METER
This is one of the basic measures of retail performance and is expressed as follows (taking
random figures):
Sale for a particular period/ Floor area = Rs 60,00,000/ 5000 Sq ft. = Rs 1200 per square ft.
The resulting figure is sometimes called the sales conversion factor
SALES PER LINEAR FOOT
Many stores also measure their sales and profits in relation to the length of ‘wall runs’ in their
stores. This gives a much better indication of the success of in-store display and merchandising in
particular sections and brings out the existence of ‘hot-spots’ (areas of high volume) and ‘dead
areas’.
SALES PER ASSISTANT
This is a key measurement in financial analysis of all kinds and forms a useful comparison
between the labour productivity of different branches. It may also assist in working out branch
establishments, e.g. sales of Rs 75 Lakhs and the number of staff being 25 gives sales per assistant
or sales person of Rs 3 lakh..
SALES PER CHECKOUT
By dividing the period’s sales in a supermarket by the number of checkouts the operator can

find out whether he or she is ‘under’ or ‘over-tilled’ and make adjustments.
RATE OF STOCKTURN
We have discussed this measure in an earlier unit in detail.
The unit has given you an overview of financial and accounting concepts used in retailing. In
particular, expense elements, which can be controlled for enhancing the performance of the firm
have been elaborated. You have also studied various tools of analysis for the firm’s performance.

Service Retailing
INTRODUCTION
We needs service retailers all the time, for laundry, mending shoes, utensils cleaning, cable,
Internet, movies, car hire, air-travel, ticket reservations, scooter/car maintenance, and repair etc.
We encounter them at every junction of life. Imagine life without services like these. In fact they
have become an internal part of our life.
Most service retailers place varying degrees of importance on service versus merchandise in
their offering. For instance, food retailers offer a high degree of service but they may also sell
sweets etc. The health club or cable TV operator is probably close to a pure service retailer.
Customers receive services from the service provider in two forms, one which is led by the
customers such as phone services in home, using internet, cable TV, ATM and internet purchases
provided the customer has valid access to these services. Customers can use these services as per
his convenience. The service providers offer the customers full control of operation and flexibility
to take advantage of the service.

IMPORTANCE OF SERVICE RETAILING
Instead of describing importance of services, a list of services is given here. Consider the
variety and depth of service offered by these retailers, and how essentially are in end lives. The list
given below is not exhaustive, but only a sample.
• Airlines and their reservation agents
• ATMs (Automatic Teller Machines)
• Architects and interior decorators
• Banks
• Cable TV Operator
• Coaching classes
• Computer education providers such as NIIT and Aptech
• Communication services, such as phones, fax, e-mail.
• Consultants
• Courier services
• Credit Card companies
• Decorators for wedding
• Dentist
• Dry cleaners, even the normal washman.
• Entertainment parks
• Financial Services
• Fire Fighting Services
• Hair saloon and beauticians.
• Health clinics such as Personal Point
• Hospitals
• Hotels
• Insurance
• ISP (Internet Service Provider)
• Lawyers

• Marriage Bureau
• Motels
• Maintenance personnel (electrician, plumber, carpenter etc.)
• Movie Theatres
• Pathological laboratories
• Plumbers/Carpenters/Electricians
• Railway Reservation Agents
• Real estate agents
• Restaurants
• STD/ISD Public Call Offices
• Tailor, shoe menders, etc.
• Tent house suppliers and caterers.
• Weight Loss specialists.
• Video cassette/ VCD/DVDs rentals
INDICATORS OF QUALITY OF SERVICE
You have seen that there are enumerable services provided under the service continuum. They
range from customer-controlled to supplier-controlled services. These services cannot be compared
directly one to one, unless you have a comparison indicators. There are eleven indicators on
which these services can be compared or rated.
i. Customer Satisfaction
ii. Variety and depth of service
iii. Saving in time, efforts and money
iv. Safety, maintenance
v. Personalised service
vi. Value added benefits
vii. Learning Opportunities
viii. Entertainment
ix. Emergency support
x. Care and convenience
xi. Guidance and counseling
CHARACTERISTICS OF SERVICES
Services typically have several distinctive characteristics or features from goods retailing.
These are intangibility, perishability, inconsistency, fluctuation and consumer dependent. These
features are detailed below.
INTANGIBILITY
They are generally intangible, i.e., they cannot be sampled, tasted, touched, seen, or felt
before being purchased. You can normally touch and feel goods you want to purchase. But
assistance
provided or maintenance of car is difficult to touch and feel. Evaluation of quality is also difficult.
Some efforts may be done for evaluation of services using the scale given in 24.3 but it may be
highsubjective, and vary from person to person, unless the instrument is administered under expert
guidance.
PERISHABILITY
They are perishable, i.e., they cannot be stored for future sale. For example vacant hotel
accommodation, vacant seats of a flight, not rendered hair cut, etc. cannot be stored for future
consumption. Perishability creates a problem for service retailers; they cannot stock pile services,
like they do with goods. Goods retailers stockpile goods for peak demand. The same cannot be
the case with services. You can see long queues in a hair-cutting saloon on Sunday mornings,
waiting for haircuts.
INCONSISTENCY
They are usually not standardised and inconsistent, though many service retailers have tried to

standardize their offerings. It is difficult to standardize services. For example how can we
standardize the fitting/ stitching of two different tailors or the hair cutting of barbers cut provided
by two different salons. Even within a saloon, two different barber will provide different level/
quality of services. The same is true for coaching and training classes, counselling, and other
services.
PERISHABILITY
They are perishable, i.e., they cannot be stored for future sale. For example vacant hotel
accommodation, vacant seats of a flight, not rendered hair cut, etc. cannot be stored for future
consumption. Perishability creates a problem for service retailers; they cannot stock pile services,
like they do with goods. Goods retailers stockpile goods for peak demand. The same cannot be
the case with services. You can see long queues in a hair-cutting saloon on Sunday mornings,
waiting for haircuts.
INCONSISTENCY
They are usually not standardised and inconsistent, though many service retailers have tried to
standardize their offerings. It is difficult to standardize services. For example how can we
standardize the fitting/ stitching of two different tailors or the hair cutting of barbers cut provided
by two different salons. Even within a saloon, two different barber will provide different level/
quality of services. The same is true for coaching and training classes, counselling, and other
services.
FLUCTUATION
They usually have fluctuating demand, e.g., rush in summer for train reservations, or crowds
at restaurants on Sunday evening, etc. Fluctuating demand creates problems for service retailers,
like non-stockpiling of services. This leaves many customers unsatisfied. You must have
experienced
this dissatisfaction when you do not get train reservations in Summer.
CONSUMER DEPENDENT
They are consumer dependent, i.e., people offering them have a much crucial role to play in
customer satisfaction than goods retailing. This unique feature of services creates challenges for
retailers. While customers can return damaged merchandise to retailers, service providers who
fail to satisfy their customers often do not get a second chance. A dissatisfied customer NEVER
comes back. How many times did you visit a restaurant after you received a bad meal or poor
service?
SERVICE RETAILING STRATEGY
A service retail strategy is a statement that identifies
• the retailers target markets.
• the format that the retailer plans to use to satisfy the target market’s needs, and
• the basis upon which the retailer plans to build a sustainable competitive advantage.
TARGET MARKET
FORMAT
LOCATION
ASSORTMENT DECISIONS
RELATIONSHIPS WITH CUSTOMERS
PRICING
PERSONAL FACTORS

Retail Store Operations
Store Atmosphere

The store must offer a positive ambience to the customers for them to enjoy their shopping and leave with
a smile.
 The store should not give a cluttered look.
 The products should be properly arranged on the shelves according to their sizes and patterns.
Make sure products do not fall off the shelves.
 There should be no foul smell in the store as it irritates the customers.
 The floor, ceiling, carpet, walls and even the mannequins should not have unwanted spots.
 Never dump unnecessary packing boxes, hangers or clothes in the dressing room. Keep it clean.
 Make sure the customers are well attended.
 Don’t allow customers to carry eatables inside the store.
Cash Handling
 One of the most important aspects of retailing is cash handling.
 It is essential for the retailer to track the daily cash flow to calculate the profit and loss of the
store.
 Cash Registers, electronic cash management system or an elaborate computerized point of sale
(POS) system help the retailer to manage the daily sales and the revenue generated.
Prevent Shoplifting/Safety and Security
 The merchandise should not be displayed at the entry or exit of the store.
 Do not allow customers to carry more than three dresses at one time to the trial room.
 Install CCTVs and cameras to keep a close watch on the customers.
 Each and every merchandise should have a security tag.
 Ask the individuals to submit carry bags at the security.
 Make sure the sales representative handle the products carefully.
 Clothes should not have unwanted stains or dust marks as they lose appeal and fail to impress
the customers.
 Install a generator for power backup and to avoid unnecessary black outs.
 Keep expensive products in closed cabinets.
 Instruct the children not to touch fragile products.
 The customers should feel safe inside the store.
Customer Service
 Customers are assets of the retail business and the retailer can’t afford to lose even a single
customer.
 Greet customers with a smile.
 Assist them in their shopping.
 The sales representatives should help the individuals buy merchandise as per their need and
pocket.
 The retailer must not oversell his products to the customers. Let them decide on their own.
 Give the individual an honest and correct feedback. If any particular outfit is not looking good on
anyone, tell him the truth and suggest him some better options.
 Never compromise on quality of products. Remember one satisfied customer brings five more
individuals to the store. Word of mouth plays an important role in Brand Promotion.
Refunds and Returns
 Formulate a concrete refund policy for your store.

 The store should have fixed timings for exchange of merchandise.
 Never exchange products in lieu of cash.
 Never be rude to the customer, instead help him to find something else.
Visual Merchandising
 The position of dummies should be changed frequently.
 There should be adequate light in the store. Change the burned out lights immediately.
 Don’t stock unnecessary furniture at the store.
 Choose light and subtle colours for the walls to set the mood of the walk-ins.
 Make sure the signage displays all the necessary information about the store and is installed at
the right place visible to all.
 The customers should be able to move and shop freely in the store.
 The retail store should be well ventilated.
Training Program
 The store manager must conduct frequent training programs for the sales representatives,
cashier and other team members to motivate them from time to time.
 It is the store manager’s responsibility to update his subordinates with the latest softwares in retail
or any other developments in the industry.
 It is the store manager’s responsibility to collate necessary reports (sales as well as inventory)
and send to the head office on a daily basis.
Inventory and Stock Management
 The retailer must ensure to manage inventory to avoid being “out of stock”.
 Every retail chain should have its own warehouse to stock the merchandise.
 Take adequate steps to prevent loss of inventory and stock.

Definition: Branding
Branding is a process of creating a unique image or name or logo or symbol or combination of any of these for a specific product in
consumer’s mind which differentiates it from competitor’s products. It is the perceived emotional image of a company and is effective
way for communication between two parties-buyers and sellers. Branding is a bit complicated and represents the corporate image.
:

Types of Branding
Corporate branding: This type of branding involves using company’s name as product brand name. Here, several products of the
company are marketed under the single brand name and such practice is referred as family branding or umbrella branding.

Personal Branding: In this type of branding, individuals and their careers are considered as brands. Athletes, musicians, political leaders
etc. promote the products under their name.

Ingredient Branding: This type of branding involves branding a component of certain product in order to project high performance and
quality of that particular component.

Community Branding: Here, a company looks for taking care of an entire community by helping the needy, supporting the elderly,
contributing to public education, or providing emergency relief and jobs for the unemployed. Thus company keeps a promise in the
community that it will take care of them and stands as beneficiary.

Rebranding: This type of branding involves designing new symbol or logo or sort of, to already existing brand in order to create a
differentiation among the customers. Aimed at repositioning the brand or company’s name, it is applied to new products or products still
under development.

Co-Branding: In this type of branding, two or more brands of different products are promoted at a time. This can give consumer a
choice of one-stop shopping of his/her favorite brands.

Cultural Branding:This type of branding involves making promises to workers about improvement in their work environment and
relationships with higher management officials.

Example: Consider Apple Company. As a well-known brand, Apple projects a humanistic corporate culture and a strong corporate ethic
that supports for good causes. These values are evident from their innovative products and best customer service. An emotional
attachment between customer and company do exist which boosts up its brand value.
Objectives of Brand Marketing
 Conjure your message instantly
 Enhance credibility
 Prompt an emotional affirmation
 Motivate the buyer
 Augment customer loyalty

Potential Barrier to Brand Development
If a brand campaign fails to achieve results, consider
the following factors that could require specific
attention:
 Product/service quality
 Competition
 Bad timing
 Poor location
 Lack of demand
 Poor resonance with target market’s values

8 Steps for brand creation / brand
development strategy
Here are some simple steps to follow in formulating your brand creation / brand development
strategy.
1. Understand what is branding
2. Understand the process of brand creation
3. Identify and know your target buyers
4. Develop your brand position
5. Create Your Brand Promise
6. Emotional branding
7. Develop your website
8. Develop your brand personality (traits) and story

Retail Branding Theory

Industry giants use retail branding to make product sales outpace the competition. They spend fortunes to
create distinctive brand images that persuade consumers to choose their brand over others. But creating a
brand image does not have to be a complex and high-priced venture, says marketing expert Maria Ross.
Entrepreneurs on any size budget should take a closer look at retail branding theory because it can
multiply their bottom lines.
 Retail Brands Drive Profits
 Branding Requires Strategy
 Differentiation Is Indispensable
 The Goal Is Brand Equity
Perception of Service Quality

Retail Marketing Mix and Its Types (With Diagram)
The various communication devices are used to educate, inform and generate
awareness about the merchandise and the services offered by the retailer. These
efforts also aim at building store image. The most common modes used for
promotion are advertising, sales promotion, personal selling, public relations and
publicity.
Retailers usually employ a combination of various elements of promotion mix to
achieve promotional and business objectives. The degree and the nature of usage of
each of the promotion methods depend on the objectives of the retail firm, product,
market profile and availability of resources. Small retailers generally depend on
point-of-purchase material provided by the companies which provide the
merchandise.
The four important types of retail marketing mix are discussed below:
1. The ‘Product’ Mix:
Every organization has a product mix that is made up of product lines. The variety of
products that a company produces, or that a retailer stocks is known as ‘product
line’. It is a broad group of products, intended for similar uses and having similar
characteristics. The product mix is the set of all the products offered for sale by a
company.
It refers to the length (the number of products in the product line), breadth (the
number of product lines that a company offers), depth (the different varieties of
product in the product line), and consistency (the relationship between products in
their final destination) of product lines. Product mix is sometimes called ‘product
assortment’.

The basic components of product mix are:
(i) Services
(ii) Packaging
(iii) Brand
(iv) Product Item and
(v) Product line
The various product mix strategies are:
(i) Launching new products from time to time
(ii) Alteration of Existing Products
(iii) Eliminate an entire line or reduce assortment within it
(iv) Trading Up
(v) Trading Down
(vi) Product life cycle management

2. The ‘Price’ Mix:
Price has always been one of the most important variables in retail buying decision.
It is the factor which makes or mars a retail organization. It is also the easiest and
quickest element to change. Pricing helps an organization to achieve its objective.
This is particularly significant for new market entrants who need to first establish a
brand and then enjoy increasing profits as the brand gets market acceptability. For a
customer, price is the main reason to visit a particular store.
The components of price mix are:
(i) Organizational objectives
(ii) Competition
(iii) Cost and profit
(iv) Credit terms
(v) Discount etc.
(vi) Fixed and variable costs
(vii) Pricing options
(viii) Pricing policies
(ix) Proposed positioning strategies
(x) Target group and willingness to pay
3. The ‘Place’ Mix:
The retailer should keep in mind the fact that his ‘product’ should be available near
the place of consumption so that the consumers can easily buy it. If the brand
preferred by the consumer is not easily available at a convenient location, he may
buy some other brand in the same product category.
Following are the components of a retail price mix:
(i) Distribution channels
(ii) Intermediary
(iii) Distance Factor
(iv) Inventory Level
(v) Transportation
(vi) Warehousing and Storage
4. The ‘Promotion’ Mix:
After deciding upon the budget, retailer should determine the appropriate
promotional mix – a combination of advertising, public relations, personal selling
and sales promotion. Small retailers having limited funds may use store displays,
hoardings, direct mail, flyers and publicity methods to attract customer traffic, while
on the other hand, retailers having no bar on finance, may use print or television
media for their sales promotion activities.

These various promotional vehicles may by compared on the basis of
following issues:
(i) Cost of the method
(ii) Its reach
(iii) Degree of flexibility
(iv) Credibility
(v) Control over media

Information System in Retail Sector
Introduction
An important element of the supply chain is the retail. Retail is the place where the products and goods are sold to
the end users. Retailer purchases goods and products from producers in large quantities and in turn sells them to
consumers in smaller quantities.
Information Flow
It is very important for the retailer to communicate with the supplier as well as the consumer. From the producer, the
retail should know the following:
 Retailer should know when a new product is getting launched or whether the producer is introducing a new
variant for the existing product.
 Retailers should get a regular training from the manufacturer about brand new products and fresh
technology.
 Retailer should have information well in advance about any impending pricing change.
 Retailer should also know about sales forecast from producer for given line of product.
Consumer is also as important for the retailer as the producer. From the consumer, the retailer should know the
following:
 What attract the consumer to a particular retailer?
 What are good and bad points about a particular retailer?
 How did they hear about a particular retailer?
Retail Management Information System
If the retailer is on top of above information, then he would be able manage his business efficiently. In the current
scenario, large retailers have their shop across physical geographies. For them, it becomes very important to
centrally manage all shops. Retail management information system precisely does this with help of hardware,
software, database and various modules.
Objective
The objective of the retail information systems is as follows:
 An information system should provide relevant information to retail manager regularly.
 An information system should anticipate needs and requirement of the retail manager.
 An information system should be flexible enough to incorporate constant evolving needs of the consumer
market.
 An information system should be able to capture, store and organize all the relevant data on a regular and
continuous basis.

 The retail Information systems should be aligned with strategic and business plans of the organization.
Therefore, it should be able to provide information, which supports and drives this objective.
Characteristics of Retail Information System
The retail information system should have following characteristics:
 Retail Information systems Information systemsRetail Information systems should connect all the stores
under the company's
 Retail information system should allow instant information exchange between stores and management.
 Retail information system should handle the various aspect of product management.
 Retail information system should handle customer analysis.
 Retail information system should allow the store manager flexible pricing over a financial year.
Role of Retail Information System
Retail information system should support basic retail function like material procurement, storage, dispatch, etc. It
should allow the manager to monitor sales of product mix and daily sales volume. An information system should
help in inventory management.
Variety of Retail Information System
Retail information system is applicable to different types industry within retail management. An information system
can be developed to manage fashion store, pharmacy, a grocery store as well as a toy store.
Indian Retail Sector
Indian retail sector has been growing by leaps and bounds in last decade or so. One research suggests that it will
grow to $ 785 billion by 2015.
Technology is and will play an important role in the Indian retail sector. Various groups in organized as well as the
unorganized sector has taken to IT for supporting this growth.

What is Merchandise Management?
Merchandise management is the process through which each retailer decides what items to carry, how much to have on hand to
meet the needs of customers, where they should be displayed in the store to maximize sales, and how they should be priced to sell
the best and maximize profits.
The goal of every retailer isn't just to make sure that what they carry meets the needs of their customers. Retailers also need to
have the ability to organize and manage their inventory. Retailers need to be able to track their inventories from the time they are
ordered from a manufacturer to the time a consumer buys an item. They must ensure that all merchandise is handled and stored
correctly, that it is organized in the store so that consumers can easily find what they want, and that it is easy to determine when it
is time to re-order.
 Merchandise Category
 The Merchandise Hierarchy
 Groups
 Departments
Retail Merchandising
Merchandising
 Retail Merchandising refers to the various activities which contribute to the sale of products to the
consumers for their end use. Every retail store has its own line of merchandise to offer to the customers.

The display of the merchandise plays an important role in attracting the customers into the store and
prompting them to purchase as well.
 Merchandising helps in the attractive display of the products at the store in order to increase their sale and
generate revenues for the retail store.
 Merchandising helps in the sensible presentation of the products available for sale to entice the customers
and make them a brand loyalist.
Promotional Merchandising
 The ways the products are displayed and stocked on the shelves play an important role in influencing the
buying behavior of the individuals.
A merchandiser maximizes the sale of the products by:
Attractive packaging
The packaging of the merchandise goes a long way in improving the brand value of the product. A product kept in a
nice box would definitely catch the attention of the customers.
Impressive presentation of the Product
The display of the products at the retail store must entice the customers. The merchandiser in coordination with the
store manager must ensure that the products are according to the season as well as latest trends.
The merchandiser must:
 Source something which is unique and not available at any other retail store.
 Never compromise on quality of the merchandise. Compromising on quality costs later.
 Source merchandise as per the season and climate..
Unique Pricing (Discounts)
Attractive prices, discounts, rebates also bring customers to the store.
Promotional schemes, gifts
Coupons and attractive gifts make shopping a pleasurable experience for the customers.
People in Retailing
People
Store People are the soul of any retail business. They are responsible for both culture of
service and flawless execution. Any retail manager can tell you that it is very hard to find and
retain the best retail people, and to make sure they can balance optimized customer service
with labor expenditure. So how can SAP help?
There are two solution areas I see having a major impact here – employee and manager self
service for SAP Human Capital Management (ESS/MSS), and SAP Workforce Management
(WFM).
The Importance of People within the Marketing Mix
One of the essential elements of the marketing mix is people. This includes everyone who is involved
in the product or service whether directly or indirectly. Not all of these people get in touch with the

customers. But all these people have their own roles to play in the production, marketing, distribution,
and delivery of the products and services to the customers.
1. People Who Make the Products.
2. People Who Bring the Products to the Customers
3. People Who Talk to the Customers
4. The Overall Customer Experience

Definition of International Retailing
Ever since International Retailing started getting recognition in the industry, several academicians as well as
Industry experts have tried to come up with exact definition.
The attempt to define International Retailing raised a legitimate question as to what exactly the retailers were
internationalizing. Unless the correct fact was established, there could be no right definition. Some asked if the
Companies internationalised their management systems, management expertise or the brands.
When one refers to International Retailing, there are several dimensions of the trade that needs to be considered
before attempting to come up with an apt description of the business. First and foremost is the invisible aspect of
financial investments. Companies get into joint ventures and invest in the foreign retail company with or without
management control. Secondly we must look at the areas where the retail company is transferring knowledge or
processes to the new set up.
International Retailing - Meaning and Important
Concepts
International trade and commerce has existed for centuries and played a very important part in the World History.
However International Retailing has been in existence and has gained ground in the past two to three decades. The
economic boom in several countries, coupled with globalization have given way to Organisations looking at setting
up retailing across borders. The advent of internet and multimedia has further changed the dimensions as far as
International Retailing is concerned.
Who are the International Retailers
When you think of International Retailers the names that come to one’s mind would be the Wal-Mart, Gucci, Ralph
Lauren, Mango, GAP etc. All of these are International Retailers. However we can broadly classify the International
Retailers under two categories. The first category would be the global grocery retailers and the second category
belongs to the International fashion Brands.
International Grocery Retailers
The Companies namely Wal-Mart, Carrefour, Metro, Tesco and Ahold etc are the leading international grocery
retailers who have multi country presence. Major portion of their total revenue comes from foreign sales. Wal-Mart
operates in over 8,500 stores in 15 countries with foreign sales contributing to 18% of its $405,046 billion net sales
(2000). Carrefour, a French international retailer has presence in 32 countries with foreign sales amounting to over
48% of its net sales.
These international grocery retailers follow a multi brand and multi product business format which includes all
products like food encompassing all types of fresh vegetables, fruits, juices, chocolates etc, fashion and clothing
including bed linen etc, grocery, all types of branded consumables, as well as liquor and many more household
goods under one roof. They generally follow a format that allows for selling to whole sellers, retailers as well as
general public at the mega stores.

International Fashion Retailing
Names like Ralph Lauren, Gucci, Zara, Hugo Boss, JC Penny, Benetton, Jimmy Choo, Swarovski, Dolce &
Gabbana etc belong to the second category of International Fashion Retailers. Originally these Companies catered to
domestic markets in the countries of their origin. Fashion and Luxury brands have always been known by their label
and brand value across countries, through word of mouth and sought after by the rich and famous from all over.
Over the years, these companies have realised the opportunity in expanding their product mix and promoting their
brands internationally. Thus we see the emergence of international fashion brands, luxury product brands dealing
exclusively with branded clothing including sportswear, casual and formal wear, party wear, foot ware and
accessories, luxury items including watches, perfumes, jewellery and many more items of personal use..
International Retailing Buying Process - Overview
The job of a Merchandiser in International Retail Company is one of the most challenging and rewarding career
options for one to consider. The job of a Merchandiser entails strategizing and executing the strategies for
procurement and supplier management on behalf of the Company. An experienced Merchandiser brings a lot of
value and contributes to the profits of the Company by way of managing the Product development, Supplier
Management and Procurement functions.
Apart from managing and overseeing the ongoing procurement or repeat purchases, the Merchandiser’s major
responsibility is to develop new products and suppliers. The process of identifying Suppliers and developing reliable
Supplier networks takes considerable time and effort on the part of the Merchandiser.
To get an idea of the activities and tasks involved in developing new Supplier Network, we shall discuss briefly the process of Vendor
development.
Identify Supplier
Assess the Supplier Capability
Visit to Supplier Site & Assessment
Sample Submission
Commercial Negotiations.
Trial Procurement & Normal Procurement

International Retail - Buying Structures
Generally we see three different types of structures of Buying Departments as followed in the Industry. Centralised
Buying is often the strategy followed by medium and large size retailers with a sizable network of outlets. De-
centralised buying structure is adapted by smaller retail Organisations that are family owned or local in nature. My
professional Organisations as well as MNC companies tend to follow the third structure which is the combination of
Centralised as well as Localised procurement function.
Centralised Buying
Most large size retailers who own sizable number of outlets prefer to follow Centralised Buying strategy with the
Buying department being located at the Head Office. This gives the chance for decision makers to be closely
associated with buying function. Secondly centralisation allows for consolidation of orders from the entire network
and benefit from economies of scale.
De-Centralised Buying
Decentralised Merchandising is effective when the number of outlet stores is limited and the volumes are negligible
making it unviable to have centralised buying department. In such cases the local store managers often take on the
function of buying locally. When they do not have huge volumes to procure items directly, they can approach
buying groups like Spar, UniChem and others to benefit from consolidated buying as well as access to leading
brands and varied product range.

Combined Buying Policy.
Combination buying strategy works best in most cases for it gives economies of scale for centralised buying and at
the same time provides opportunity to the local outlets to be tuned into the market, understand and anticipate
customer needs and develop products locally to meet the demand.
“Internationalization refers to the increasing importance of international trade, international relations,
treaties, alliances, etc. International, of course, means between or among nations. The basic unit
remains the nation, even as relations among nations become increasingly necessary and important.
Globalization refers to global economic integration of many formerly national economies into one
global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled
migration. It is the effective erasure of national boundaries for economic purposes.”

Retail Management

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