321 33 Powerpoint Slides Chapter 2 Retail Organization

© Oxford University Press 2010

RETAIL MANAGEMENT, 2/ERETAIL MANAGEMENT, 2/E

Chetan BajajChetan Bajaj, Director, Sona School of Management, Salem, Tamil Nadu

Rajnish TuliRajnish Tuli, Director, Millward Brown, South East Asia, Singapore

Nidhi Varma SrivastavaNidhi Varma Srivastava, Director, Millward Brown, India


Chapter - 2Chapter - 2RETAIL ORGANIZATIONRETAIL ORGANIZATION


The changing structure of retailing• All dynamic developments in retailing (department stores,

warehouse clubs, and hypermarkets) are responses to a changing environment

• Changing customer demand, new technologies, intense competition, and social change create new opportunities even as they shake up existing business

• The Internet and web technologies have itself created a myriad of opportunities for web based business model of retailing

• This has created competition for the retailer in order to maintain and grow its share of market and compete within its band of retailers

• For e.g.: Bharat Petroleum - Making A Difference through Innovative Retailing


Theories of structural change in retailing

Retailing has always been a dynamic industry. There are certain theories of how firms evolve and change the industry in the process. They are:

The wheel of retailingThe dialectic processNatural selection


The wheel of retailingIt was proposed by Malcomb McNair at Harvard University. It is basically a theory of cyclical or circular development. The wheel of retailing concept describes how retail institutions transform during their evolutionary life cycles.


The dialectic process

This second theory holds that retailing evolves through a dialectic process- the blending of two opposite store types into a superior form. For example- Fabindia and Nalli offer both a wide array of customer services and a broad assortment of specialized merchandise.


Natural selection

According to this theory, retail stores evolve to meet changes in the micro-environment. The retailers that successfully adapt to technological, social, demographic, economic, and political changes are most likely to grow and prosper.


Classification of retail units

Bases for classification of retail unitsNature of ownershipOperational structureLength and depth of merchandiseNature of serviceTypes of pricing policyTypes of retail locationMethod of customer interaction


Retailers classified on the basis of ownership

Sole proprietorshipPartnershipJoint ventureLimited liability company (public and private)


Retailer’s classification on the basis of operational structure

Independent retail unitRetail ChainFranchiseSize and structural arrangements in franchising:

1. Manufacturer-retailer2. Wholesaler-retailer franchise3. Service sponsor-retailer

• Leased departmentsCo-operatives


New areasLeased department or Shop-in-shopCo-operative outletsLargest consumer cooperative societyMajor initiatives Benefits To ConsumersTarget market Revised positioning


Types of retail location

Retailers at freestanding locationsRetailers in business-associated locationsRetailers in specialized marketsRetailers at airports


Variety of merchandise mixDepartmental stores

For e.g: Ebony, Globus, Lifestyle, Pantaloon, Shoppers Stop, and

Westside Discount Stores

For e.g.: S Kumar’s S-MART Discount Chain, Margin Free Market, and Subhiksha

Specialty StoresFor e.g.: Footware - Speciality Store

Khadder- Khadi Specialty , Gautier , Vivek , and Titan Hypermarkets

For e.g. : Pantaloon’s Big Bazaar ,Giant, and FoodWorld


Methods of customer interaction

Retail transactions are carried out through face-to-face interaction between retailers and customers in the case of retail stores.

There are certain methods:Store retailers like candles for sale during a Diwali

mela at Dilli Haat.Non-store retailersElectronic retailing like Internet and Mobile

Association of India (IAMAI)


Catalogue and direct mail retailing

Factors 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

For example – FABMALL --- E-RETAILER


Direct selling

Person-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

321 33 Powerpoint Slides Chapter 2 Retail Organization

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