Post on 29-Nov-2014
CLASSIFICATION OF RETAILERS
CLASSIFICATION ON THE BASIS OF OPERATIONAL STRUCTURE To make key strategic decision Whether to hire employees and manage
the distributed sales function internally or to reach customers through franchised outlets owned and operated by local entrepreneurs
Various options in terms of investments, cost savings related to economics of scale, potential demand enhancing and reputation benefits
(1)INDEPENDENT RETAIL UNIT Owns one retail unit Highest number of outlets 2.20 million independent retailers 40% of total retail store sales Macro level – non-industry based
economic growth Micro level – low capital and licensing
requirements
Advantage Flexibility – location as preferred – product
assortments – workers – leases – niche goods/services – control over their strategies – decision making – one geographic market, so consistency – bargaining with suppliers – bypass suppliers
Disadvantage Maintaining inventory – transportation – no
bulk orders – handling costs – computerization expensive for small retailers – high cost of TV ads
(2)RETAIL CHAIN Multiple outlets 9000 retail chains in 65000 places in US Generate 75% sales from department
stores, discount department stores, grocery stores
Stationery , furniture, beauty salon less than 50% sales
Advantage Bargaining power (Volume purchase) – new
products as introduced – proper service – buying directly from manufacturers – bypass wholesalers – centralized purchasing – uniforms (employees) – price discount
Disadvantage Additional branch – consistent prices,
promotions – products difficult to maintain – investments high – lack of communication – time delays – problem with employees
(3)FRANCHISING Contractual Arrangement( Manufacturer,
wholesaler or service sponsor) which allows the franchise to conduct a given form of business under an establishment name and according to a given pattern of business
Franchisee pays initial fee and monthly percentage of gross sales
TWO TYPES OF FRANCHISINGProduct / Trademark based Franchisers identities – name They run autonomously from franchisor but
stick to rules like displays, working hours, location etc
Business format Interactive relationship Receive assistance on site location, quality
control, accounting systems, startup practices, management training and responding to problems
Example : McDonald
SIZE AND STRUCTURAL ARRANGEMENTS IN FRANCHISING Retail franchising began in 1851, singer
sewing machine first franchised dealers, popular in 1900s
Then auto & truck dealers still provide more than one-half of all US retail franchise sales
KEY ASPECTS OF RETAILING National or global presence can be
developed quickly money obtained when delivered – get
greater incentives Franchisers will receive royalties
POTENTIAL PROBLEMS IN RETAILING Firms reputation gets harm if they do
not adhere to company standards Ineffective franchised units directly
injure their franchisers profitability
LEASED DEPARTMENT OR SHOP –IN- SHOP It refers to department in retail store
that are rented to an outside party Small business Shopping centre food courts E-Zone (Home theatre system) for
different brands Merchandise displays, reordering of
items, inventory will be an advantage Conflict with using the operating
procedures with the leased departments and customer may blame the stores
COOPERATIVE OUTLETS Managed by cooperative societies It is called as Kendriya Bhandar Able to maintain competitive prices Margin kept low Better quality control, pre-testing of all
grocery items Both Govt. & private employed persons
CLASSIFICATION ON THE BASIS OF RETAIL LOCATION(1) Free standing retailers Which is not connected to other
retailers No competition, low-rent, better
visibility, low property costs Neighbourhood stores – serving small
locality Highway stores – roadside customers Attracting customers with good parking
facilities , multi-cuisine restaurants, fast food restaurants, clean washrooms
BUSINESS ASSOCIATED LOCATION Locates its store in a place where a group of
retail outlets offering a variety of merchandise work together to attract customers
Unplanned business districts – two or more retailers locate their stores together – all facilities with variety of goods, services and prices, but limitations like congestion, lack of space for large outlets, parking problems
Planned shopping centres – unified commercial establishments, centrally owned or managed, designed and operated as a unit surrounded by parking facilities
RETAILERS IN SPECIALIZED MARKETS Traditional independent retailers or
specialized chain stores Chennai Godown street is famous for
clothes, Bunder street for stationery products, Usman road for jewellery, T-nagar for ready-made garments, poo kadai for flowers
Limited infrastructure related costs
AIRPORT RETAILING Duty free shops and news-stands Parents who forgot to buy something for
kids Banks, currency exchange,
telecommunication, restaurants
VARIETY OF MERCHANDISE MIX
Departmental storesFor e.g: Ebony, Globus, Lifestyle, Pantaloon, Shoppers Stop, and
Westside
Discount StoresFor e.g.: S Kumar’s S-MART Discount Chain, Margin Free Market, and Subhiksha
Specialty StoresFor e.g.: Footware - Speciality Store
Khadder- Khadi Specialty and Titan Hypermarkets
For e.g. : Pantaloon’s Big Bazaar ,Giant, and
FoodWorld
METHOD OF CUSTOMER INTERACTIONStore retailers They operate from fixed point-of-sale
locations to attract a high volume of walk-in customers
Retail stores have extensive displays of merchandise and use mass-media advertising
They sell products or services to the customers for personal, household or official purposes
NON STORE RETAILERS These retailers approach their
customers and market their merchandise through electronic media – internet – direct selling – stalls in exhibitions, trade fairs, periodic markets – vending machines
CATALOGUE AND DIRECT MAIL RETAILINGFactors for the success of catalogue retailing:
- Convenience: customers can shop when it is convenient for them in accordance to their schedule
- Time saving: one save resources on account of time and travelling cost and parking problems
- Information: relevant product information is available in detail
- No time limits: no undue pressure to buy unlike as in retail store shopping
DIRECT SELLINGPerson-to-person selling:
- Party-plan or group presentations
- Multilevel network
TELEVISION SHOPPING Television shopping is retail format
where existing and prospective customers watch a TV programme demonstrating a product and then place an order for the same by telephone, e-mail or Internet
Three types of television shopping: cable channels meant for shopping, infomercials, and direct-response advertising shown on TV (For example: Asian Sky Shop, TSN, TVC, TSNM)
VENDING MACHINE RETAILING A form of non-store retailing where
products or services are placed in a machine and are dispensed to customers when they deposit cash or use plastic money (credit or debit card)
Vending machines vending machines offer consumers greater convenience 24 hours a day, and have replaced many services formally requiring a human interface