Retail organization and classification of retail units

Retail organization and classification of retail units

1. Retail Organization and Classification of Retail Units

2. Retail Organization The term retail organization refers to the basic format or structure of a retail business designed to cater to the needs of the end customer. Recently, some scholars have started referring to India as a nation of shopkeepers. This epithet has its roots in the huge number of retail enterprises in India, which were over 12 million in 2003. About 78% of these are small family businesses utilizing only household labour.

3. A retail unit could be owned by: Manufacturer (e.g., company owned retail outlets) Wholesaler (e.g., Vastra outlet in Rajouri in New Delhi) Independent retailer (Chanakya Sweet Shop near Hazratganj in Lucknow) Consumer (consumer owned grocery stores in man y residential societies) Co-operative society (e.g., Mother Dairy milk booths in Delhi) Government (e.g., Cottage Emporia) Ownership shared among franchiser and franchisee (e.g., Archies Gallery)

4. Classification of retail units Conceptual classification of a business unit provides the marketers with strategic guidelines, useful in the design of retailing strategy. Besides, retail businesses are extremely diverse and there are quite a few types of retail units. Therefore, retail units are classified on multiple of ownership, geographical locations, kind of customer interaction level of services provided etc.

5. 1. Retailers Classified on the Basis of Ownership

6. INDEPENDENT RETAILER An independent retailer owns only one retail unit. The management has direct contact with the customers and can quickly respond to their needs.

7. CHAIN STORES A chain retailer operates multiple outlets under common ownership. It usually engages in some level of centralized purchasing and decision making.

8. FRANCHISING It involves a contractual arrangement between a franchisor and a retail franchisee, which allows the franchisee to conduct a given business under established name and according to a given pattern of business. The franchisee pays an initial fee and a monthly share of gross sales in exchange for the exclusive rights to sell goods and services in a specified area. Franchising is a retail organizational form in which small businesses can benefit being a part of a large retail institution .

9. Store Based Retail Strategy Mixes

10. Food Oriented Retailers

11. Food Oriented Retailers Type of Retailer Size (000 sq. ft.) Location Merchandise Prices Services Promotion Convenience Store 2 - 3 Neighbourhood Medium width and low depth of assortment; average quality Average Average Moderate Supermarket 20 - 50 Neighbourhood Extensive width and depth of assortment; average quality; manufacturer, and generic brands Average Average Heavy use of newspaper, flyers and coupons, self-service

12. Contd.. Type of Retailer Size (000 sq. ft.) Location Merchandise Prices Services Promotion Hypermarket 100 - 300 Community shopping centre or isolated site Wide variety of food (60 – 70 %) and general merchandise (30-40%) Low Average Low Warehouse store 100 - 150 Secondary site, often in industrial area Moderate width and low depth; emphasis on manufacturer brands bought at discounts Very low Low Little or none

13. General Merchandise Retailers Type of Retailer Size (000 sq. ft.) Location Merchandise Prices Services Promotion Specialty Stores 4 - 12 Business district or shopping centers Very narrow width of assortment; extensive depth of assortment; average to good quality Competitive to above average Average to excellent Heavy use of displays, may have extensive sales force. Category Specialists 50 - 120 Stand alone, power strip centers Narrow variety but very deep assortment Low Low to high Low to Moderate Department Store 100 - 200 Regional Malls, Stand alone Broad variety, average to deep assortment Average to high Average to high Average to high, direct mail, catalog use

14. Contd.. Type of Retailer Size (000 sq. ft.) Location Merchandise Prices Services Promotion Discount Store 60 - 80 Stand alone, power strip centers Broad variety, Low to average assortment Low Low Heavy use of newspaper ads, price oriented messages Factory outlets 20 - 30 Outlet malls Average variety, deep but varying assortment Low Low Use of newspapers, brands not advertise, limited workforce Flea Market Street (market area) Average variety, average and varying assortment Low Low low Drug Stores 3 - 15 Stand alone, strip centers Narrow variety, average to deep assortment Average to high Average Low to average

15. Non Store-based Retail Strategy Mix

16. Direct Marketing It is a form of retailing in which a customer is first exposed to a good or service through a non-personnel medium (such as direct mail, broadcast or cable TV, radio, magazine, newspaper etc.) and then orders by mail, phone (usually a toll free number), fax or by computer. Direct marketing can be divided into two broad categories: General: General marketing firms offer a full line of products from clothing to house ware. Specialty: Specialty firms focus on narrow product lines.

17. Direct Selling It includes both personal contact with consumers in their homes (and other non-store locations such as offices) and phone solicitations initiated by a retailer. Examples: Carpet selling, vacuum cleaner, other household products, cosmetics, books, encyclopedia etc. It emphasizes convenience in shopping and a personal touch.

18. Vending Machine It is a retailing format involving the coin or card operated dispensing of hot and cold beverages and food or snacks items. It eliminates the use of sales personnel. It allows round the clock sales. Location of the machines can be done according customer’s convenience.

19. World Wide Web WWW in the field of retailing relates to online retailing. It enables retailer’s world wide presence. Enhances the retailer’s brand. Provides information to the consumers. Promotes new products. Furnish customer service. Cost efficient Can announce special offers and also employment opportunities.

20. Single and Multi Channel Retailing Single-Channel Retailing: If a firm sells to consumers through one format. Multi-Channel Retailing: If a firm sells to consumers by combining store and non-store retailing- as well as using multiple store formats.

21. Integrated Multi-Channel Strategy Integrated promotions across channels. Ensuring product consistency across channels. Having an effective information system that can share data across channels. Enacting a store pickup process for items purchased on the web or through a catalog. Searching for multi-channel opportunities with appropriate partners.

22. 2. Classification of Retailers on the basis of Operational Structure Independent retail unit: – The total number of retailers in India is estimated to be over 5 million in 2003. About 78% of these are small family businesses utilizing only household labour. An independent retailer owns one retail unit. Retail 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.

23. Franchising: – Franchising involves a contractual arrangement between a franchiser and a retail franchisee, which allows the franchisee to conduct a given form of business under and establishments name and according to a given pattern of business. Leased Department or Shop-in-shop:- It refers to department in a retail store that are rented to an outside party. Usually this is done in case of department and specialty stores and also at times, in discount stores. Co-operative Outlets: – Co-operative outlets are generally owned and managed by co-operative societies.

24. 3. Classification of Retailers on the basis or Retail Location Retailers in a free-standing location: – Retailers located at a site which is not connected to other retailers depend entirely on their sore’s drawing power and on the various promotional tools to attract customers. This type of location has several advantages including no competition, low rent, better visibility from the road, easy parking and lower property costs. Retailers in a Business-associated Location:- In this case, a retailer locates his store in a place where a group o retail outlets, offering a variety of merchandise, work together to attract customers to their retail area, and also compete against each other for the same customers.

25. Retailers in Specialized Markets: - Besides the above location-based classification, we also have in India-retailers who prefer specialized markets, particularly traditional independent retailers or chain stores. In India, most of the cities have specialized markets famous for a particular product category. For example, in Chennai, Godown Street is famous for clothes . Airport Retailing: – For quite some time, duty-free shops and newsstands dominated the small amount of commercial space provided at airports. Lately, serious efforts are being made to design new airport facilities in order to incorporate substantial amounts of retail space.

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