RETAILING

1. RETAILING • Retailing encompasses the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes sale to the final consumer.Retailing is the last stage in the distribution process.

2. The Special Characteristics of Retailing • Three factors that distinguish retailing from other types of business • The average amount of a sales transaction for retailers is much less than for manufacturers. Final consumers make many unplanned or impulse purchases. Surveys show that a large percentage of consumers do not look at ads before shopping, do not prepare shopping lists (or deviate from the lists once in stores), and make fully unplanned purchases. This behavior indicates the value of in-store displays, attractive store layouts, and well-organized stores, catalogs, and Web sites. Candy, cosmetics, snack foods, magazines, and other items are sold as impulse goods when placed in visible, high-traffic areas in a store, catalog, or Web site. Because so many purchases are unplanned, the retailer’s ability to forecast, budget, order merchandise, and have sufficient personnel on the selling floor is more difficult.

3. Retail customers usually visit a store, even though mail, phone, and web sales have Increased. A retail strategy is the overall plan guiding a retail firm. It influences the firm’s business activities and its response to market forces, such as competition and the economy. Any retailer, regardless of size or type, should utilize these six steps in strategic planning: • 1. Define the type of business in terms of the goods or service category and the • company’s specific orientation . • 2. Set long-run and short-run objectives for sales and profit, market share, image, • and so on. • 3. Determine the customer market to target on the basis of its characteristics • (such as gender and income level) and needs (such as product and brand • preferences).

4. 4. Devise an overall, long-run plan that gives general direction to the firm and its employees. 5. Implement an integrated strategy that combines such factors as store location, product assortment, pricing, and advertising and displays to achieve objectives. 6. Regularly evaluate performance and correct weaknesses or problems when observed.

5. THE FOUR PRINCIPLES OF RETAILING CONCEPT • Customer orientation: The retailer determines the attributes and needs of its customers and endeavors to satisfy these needs. • Coordination effort : The retailer integrates all plans and activities to maximize efficiency

6. 3. Value Driven : The retailer offers good value to customers. This means prices appropriate for the level of products and customer service. • 4. Goal orientation : The retailer sets goals and then uses strategy to attain them

7. Relationships among retailers and suppliers can be complex. Because retailers are part of a distribution channel, manufacturers and wholesalers must be concerned about the caliber of displays, customer service, store hours, and retailers’ reliability as business partners. Retailers are also major customers of goods and servicesfor resale, store fixtures, computers, management consulting, and insurance.

8. Some issues over which retailers and suppliers have different priorities are : • control over the distribution channel, profit allocation, the number of competing • retailers handling suppliers’ products, product displays, promotion support, • payment terms, and operating flexibility. Due to the growth of chains, retailers have more power than ever. Unless suppliers know retailers’ needs, they cannot have good rapport with them; and as long as retailers have a choice of suppliers, they will pick those that offer more.

9. Channel relations tend to be smoothest with exclusive distribution wherebysuppliers make agreements with one or a few retailers that designate the latter as the only ones in specified geographic areas to carry certain brands or products.

10. Channel relations tend to be most volatile with intensive distribution, whereby suppliers sell through as many retailers as possible. This often maximizes • suppliers’ sales and lets retailers offer many brands and product versions.

11. With selective distribution, suppliers sell through a moderate number of retailers. This combines aspects of exclusive and intensive distribution. Suppliers have higher sales than in exclusive distribution, and retailers carry some competing brands. It encourages suppliers to provide some marketing support and retailers give adequate shelf space.

12. Retailers should follow these four steps in choosing store location : • 1. Evaluate alternate geographic areas in terms of the charecteristics of residents and existing retailers. • 2.Determine whether to locate as an isolated store in unplanned business district or planned shopping centre location

13. RETAIL STORE LOCATION • For retailers, the location decision is especially crucial. Retailers must consider the following when selecting store location : • size of the trade area, • the volume of customer traffic, • number of parking spots, • availability of room for expansion, • visibility of a site.

14. Population size and traits • The competition • Transportation access • The nature of nearby stores • Property costs • Legal restrictions

15. 3. Select the particular location based on the above decision • 4. Analyse alternate sites

16. STEPS IN FORMULATING A RETAIL STRATEGY • 1. Situation Analysis • Current organizational mission • Current ownership and management alternatives • Current goods/service category

17. 2. SWOT Analysis • Strengths: Current and long term • Weaknesses: Current and long term • Opportunities: Current and long term • Threats: Current and long term

18. 3. Objectives • Sales • Profit • Image Positioning • Satisfaction of publics

19. 4. Identification of Consumers • Choice of target market • - Mass marketing • - Concentrated marketing • - Differentiated marketing • 5. Overall Strategy • (Controllable variables) • Goods/services strategy • Location strategy • Pricing strategy • Promotion strategy

20. (Uncontrollable variables) • Consumer environment • Competitive environment • Legal environment • Economic environment • Technological environment

21. 6. Specific Activities • Daily and short-term operations 7. Control • Evaluation • Adjustments • Responses to environment

22. RETAILING ENVIRONMENT • STORE LOCATION LAWS • Zoning laws restrict the potential choices for a location and the type of facilities constructed. • Blue laws restrict the days and hours during which retailers may operate. • Environmental laws limit the retail uses of certain sites. • Door-to-door (direct) selling laws protect consumer privacy. • Local ordinances involve fire, smoking, outside lighting, capacity, and other rules. • Leases and mortgages require parties to abide by stipulations in tenancy documents

23. MANAGING THE BUSINESS LAWS • Licensing provisions mandate minimum education and/or experience for certain personnel. • Personnel laws involve nondiscriminatory hiring, promoting, and firing of employees. • Antitrust laws limit large firm mergers and expansion. • Franchise agreements require parties to abide by various legal provisions. • Business taxes include real-estate and income taxes. • Recycling laws mandate that retailers participate in a recycling process for various materials.

24. MERCHANDISE MANAGEMENT AND PRICING LAWS • Trademarks provide retailers with exclusive rights to the brand names they develop. • and Pricing Merchandise restrictions forbid some retailers from selling specified goods or services. • Product liability laws allow retailers to be sued if they sell defective products. • Lemon laws specify consumer rights if products, such as autos, require continuing repairs. • Sales taxes are required in most states, although tax-free days have been introduced in some locales to encourage consumer shopping.

25. Unit-pricing laws require price per unit to be displayed (most often applied to supermarkets). • Collusion laws prohibit retailers from discussing selling prices with competitors. • Sales prices must be a reduction from the retailer’s normal selling prices. • Price discrimination laws prohibit suppliers from offering unjustified discounts to large retailers that are unavailable to smaller ones.

26. COMMUNICATION WITH CUSTOMERS LAWS • Truth-in-advertising and -selling laws require retailers to be honest and not omit key facts. • Truth-in-credit laws require that shoppers be informed of all terms when buying on credit. • Telemarketing laws protect the privacy and rights of consumers regarding telephone sales.

27. Bait-and-switch laws make it illegal to lure shoppers into a store to buy low-priced items and then to aggressively try to switch them to higher-priced ones. • Inventory laws mandate that retailers must have sufficient stock when running sales. • Labeling laws require merchandise to be correctly labeled and displayed. • Cooling-off laws let customers cancel completed orders, often made by in-home sales, within three days of a contract date.

28. LAYOUT • Layout for retail stores and service businesses depends on the owner’s understanding of the customers’ buying habits. Retailers have three basic layout options from which to choose: grid, free form, and boutique. Some areas of a retail store generate more sales per square foot and therefore are more valuable.

29. The goal of a manufacturer’s layout is to create a smooth, efficient work flow. Three basic options exist: • product layout, process layout, and fixed-position layout. Two key considerations are worker productivity and materials handling costs.

30. Categorizing Retailers • Convenience Store • Conventional Supermarket • Food-Based Superstore • Combination Store/Supercenter (Hypermarket) Specialty Store/Category Killer Traditional Department Store Full-line Discount Store Membership Warehouse Club Other Discounters Independent Chain Franchising Leased Department Direct Marketing (including the Web) Vending Machine Direct Selling Method of Ownership Store Strategy Mix Nonstore Operations

31. FACTORS TO BE CONSIDERED WHILE PLANNING A BASIC STORE FRONT OF A RETAIL OUTLET • Storefront • Marquee • Store entrances • Display windows • Exterior building height • Surrounding stores and area • Parking facilities

32. A shopper should be able to determine a store’s • Name • Line of trade • Claim to fame • Price position • Personality

33. PLANNING A BASIC STORE FRONT • Modular structure • Prefabricated structure • Prototype store • Recessed storefront • Unique building design

34. FACTORS TO BE CONSIDERED WHILE PLANNING INTERIORS • Flooring • Colors • Lighting • Scents • Sounds • Store fixtures • Wall textures • Temperature • Aisle space

35. Dressing facilities • In-store transportation (elevator, escalator, stairs) • Dead areas • Personnel • Merchandise • Price levels • Displays • Technology • Store cleanliness

36. ALLOCATION OF FLOOR SPACE • Selling space • Merchandise space • Personnel space • Customer space

37. DIFFERENT TYPES OF PRODUCT GROUPINGS IN A RETAIL OUTLET • Functional product groupings • Purchase motivation product groupings • Market segment product groupings • Storability product groupings

38. PATTERNS OF GROUPINGS • Straight Traffic Pattern • Curving Traffic Pattern • APPROACHES FOR DETERMINING SPACE NEEDS • Model Stock Approach • Determines floor space necessary to carry and display a proper merchandise assortment • Sales-Productivity Ratio • Assigns floor space on the basis of sales or profit per foot

39. INTERIOR (POINT OF PURCHASE) DISPLAYS • Assortment display • Theme-setting display • Ensemble display • Rack display • Case display • Cut case • Dump bin