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Retail Management

  1. 1. DISCLAIMER By Downloading these products I agree to the Copyright & Liability below: Products are electronically transferred upon your acceptance to abide by the terms and conditions when you register with www.managementstudyguide.com. Copyright Statement This material is for a single user and may be presented to others in form of Slide Show, provided the slide masters, copyright, Logo, and other proprietary notices must also be kept intact. This product may not be re-sold, distributed electronically, reproduced electronically, stored in a database or retrieval system, except by written permission from the publisher. Any infraction or infringement will be prosecuted to the full extent of the law. Image Credit All Images used in this presentation are from 123rf.com and are protected by the above mentioned copyright statement. Start Course Start Course by viewing the presentation in “Slide Show“ mode. Please click on “Slide Show” on the top and then click on “From Beginning”. © ManagementStudyGuide.com. All rights reserved.
  2. 2. Introduction to Retail
  3. 3. Course Objectives • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  4. 4. Introduction Look at the logos of some of the leading organizations across the world. What do you think is common among the companies shown? All the companies whose logos have been shown are ‘retailers’. © ManagementStudyGuide.com. All rights reserved.
  5. 5. Introduction All these retailers are establishments that are engaged in selling merchandise for personal or household consumption. They also render services that are incidental to the sale of such goods. Thus, each one of the companies shown sells directly to the final consumers. © ManagementStudyGuide.com. All rights reserved.
  6. 6. Introduction Hence, a retailer is any business establishment that directs its marketing efforts towards the end users for the purpose of selling goods and services. Thus, retailers comprise street vendors, local grocery stores, supermarkets, food joints, saloons, airlines, automobile showrooms, internet kiosks, home appliance showrooms, direct marketers, vending machine operators, etc. © ManagementStudyGuide.com. All rights reserved.
  7. 7. Introduction In fact, the retail industry is one of the fastest growing and biggest sources of employment across the globe. Therefore, like any business, it is very important to manage a retail business and its various components. Let us look at the various aspects of retail management in detail. © ManagementStudyGuide.com. All rights reserved.
  8. 8. Definition Now, let us look at a few definitions that will be useful while you study retail management. Retailing Retailer Wholesaling Wholesaler Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  9. 9. Definition Now, let us look at a few definitions that will be useful while you study retail management. Retailing Retailer Wholesaling Wholesaler The word ‘Retailing’ is derived from the French verb ‘retailer’, which means, "to cut a piece off.” Retailing is defined as all business activities that are involved in selling goods or services directly to the final consumers for their personal, family or household and non-business use. Whereas, from a marketers point of view, retailing is defined as a set of marketing activities that are designed to provide satisfaction to the end consumer and profitably maintain the customer base by continuous quality improvements across all areas concerned with selling goods and services. © ManagementStudyGuide.com. All rights reserved.
  10. 10. Definition Now, let us look at a few definitions that will be useful while you study retail management. Retailing Retailer Wholesaling Wholesaler A retailer is any business establishment that directs its marketing efforts in selling merchandise for personal or household consumption towards the end users for the purpose of selling goods and services. Hence, an organization qualifies to be a retailer only when it derives a major chunk of its revenues from its transactions with end users. Thus, a seller is said to have conducted a retail transaction when he sells goods to the end customer. © ManagementStudyGuide.com. All rights reserved.
  11. 11. Definition Now, let us look at a few definitions that will be useful while you study retail management. Retailing Retailer Wholesaling Wholesaler Wholesaling includes all activities that involve selling goods and services to those buying for resale or business use. Thus, a wholesale transaction is conducted when the seller sells goods to a business concern. © ManagementStudyGuide.com. All rights reserved.
  12. 12. Definition Now, let us look at a few definitions that will be useful while you study retail management. Retailing Retailer Wholesaling Wholesaler Wholesaler is a firm that is engaged primarily in wholesaling activity of selling goods and services to those buying for resale or business use. © ManagementStudyGuide.com. All rights reserved.
  13. 13. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  14. 14. What is Retail Management? © ManagementStudyGuide.com. All rights reserved.
  15. 15. Scope of Retailing So, what exactly does ‘retailing’ involve? Considering and understanding the needs of consumers Keeping a good assortment of merchandise Displaying the merchandise in an effective and attractive manner so that consumers find it easy and attractive to buy Retailing involves: © ManagementStudyGuide.com. All rights reserved.
  16. 16. Role of Retailer in Channel of Distribution Manufacturer Wholesaler Retailer Final Consumer © ManagementStudyGuide.com. All rights reserved.
  17. 17. MCQ Q. A retailer sells to _____________. Click on the radio button to select the correct answer! © ManagementStudyGuide.com. All rights reserved.
  18. 18. MCQ Q. A retailer sells to _____________. © ManagementStudyGuide.com. All rights reserved.
  19. 19. MCQ Q. A retailer sells to _____________. © ManagementStudyGuide.com. All rights reserved.
  20. 20. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  21. 21. Benefits of Retailing • Benefit to Manufacturers and Wholesalers • Benefits to Customers • Benefits to the Economy Now, let us look at a few key benefits of retailing. There are various ways in which retailers in the process of transfer of goods and services from the manufacturer to the end consumer benefit customers, manufacturers, wholesalers and the economy. The benefits of retailing can be studied considering the following aspects: Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  22. 22. • Benefits to Customers Benefits of Retailing Benefits of Retailing to Customers: For consumers or customers, the retailers act as buying agents. Retailers perform various activities that increase the value of goods and services that are then ultimately sold to the end consumer. The various activities performed by the retailers that ultimately benefit the customers are as follows: • Breaking Bulk • Providing Assortment • Holding Inventory • Providing Services • Providing Information Let us look at each activity in detail. © ManagementStudyGuide.com. All rights reserved.
  23. 23. • Benefits to Customers Benefits of Retailing Benefits of Retailing to Customers: For consumers or customers, the retailers act as buying agents. Retailers perform various activities that increase the value of goods and services that are then ultimately sold to the end consumer. The various activities performed by the retailers that ultimately benefit the customers are as follows: • Breaking Bulk • Providing Assortment • Holding Inventory • Providing Services • Providing Information Let us look at each activity in detail. Breaking Bulk : One of the major benefits that retailers pass on to their customers is through their activity of ‘breaking bulk’. This is because retailers buy goods in bulk from manufactures. They then divide the bulk goods into smaller saleable units as per the consumption patterns of the end consumer. © ManagementStudyGuide.com. All rights reserved.
  24. 24. Benefits of Retailing For consumers or customers, the retailers act as buying agents. Retailers perform various activities that increase the value of goods and services that are then ultimately sold to the end consumer. The various activities performed by the retailers that ultimately benefit the customers are as follows: • Breaking Bulk • Providing Assortment • Holding Inventory • Providing Services • Providing Information Let us look at each activity in detail. Breaking Bulk : One of the major benefits that retailers pass on to their customers is through their activity of ‘breaking bulk’. This is because retailers buy goods in bulk from manufactures. They then divide the bulk goods into smaller saleable units as per the consumption patterns of the end consumer. © ManagementStudyGuide.com. All rights reserved.
  25. 25. Benefits of Retailing Providing Assortment: Another major benefit passed on to the end consumer by retailers is the activity of ‘providing assortment’. This is due to the fact that retailers always evaluate the products of various manufacturers. They then choose and offer the best assorted collection of products depending on the tastes and needs of their target customers. Hence, consumers get a wide range of products and prices to choose from as per his/her choice. Therefore, the offered variety in assortment makes the buying process easier for customers. © ManagementStudyGuide.com. All rights reserved.
  26. 26. Benefits of Retailing Holding Inventory: Retailers also benefit the customers because they make the products available to consumers at a convenient place and time due to the inventory held by the retailer. This makes it possible for consumers to make instant purchases without waiting to order and then receive the product at a later date or time. This greatly benefits the customer because it reduces the cost of storage and enables the consumer to invest his money profitably. Due to the fact that retailers hold an inventory of stock of goods, it becomes possible that customers can engage in spontaneous shopping. © ManagementStudyGuide.com. All rights reserved.
  27. 27. Benefits of Retailing Providing Services: Retailing and retailers also benefit the customer through the wide array of services that they offer to the end customer such as follows: • Free home delivery • Acceptance of Credit Cards/Debit Cards • Acceptance of payments on EMI (Equated Monthly Instalment) Basis • Providing and arranging of various consumer loans, etc. The various services offered by retailers make it easier for customers to buy and use products. © ManagementStudyGuide.com. All rights reserved.
  28. 28. Benefits of Retailing Providing Information: Another major benefit of retailing to customers is that the retailers provide vital product related information to their consumers. Retailers provide product information through in-store advertising and in-store salespersons which helps the consumer to make a wise, simple and quick purchasing decision. © ManagementStudyGuide.com. All rights reserved.
  29. 29. • Benefit to Manufacturers and Wholesalers Benefits of Retailing Benefits of Retailing to Manufacturers and Wholesalers: Retailing is primarily considered by manufacturers and wholesalers as a channel for delivering their products/services to the end customer. However, the role of retailing for manufacturers and wholesalers goes far beyond just making the product available to the end customer. © ManagementStudyGuide.com. All rights reserved.
  30. 30. Benefits of Retailing © ManagementStudyGuide.com. All rights reserved.
  31. 31. • Benefits to the Economy Benefits of Retailing Benefits of Retailing to the Economy: Retailing is a major contributor to the GDP of any country. It is also a major source of employment and hence a major influence on the economy of any country. Some of the benefits of retailing to the economy are as follows: • It generates a large number of employment opportunities • It contributes to the management of the economy • It contributes to the production cycle of the industries • It ensures the success of the economic enterprises © ManagementStudyGuide.com. All rights reserved.
  32. 32. Let us now look at a real life example to understand the benefits that retailing offers to customers. Real Life Example © ManagementStudyGuide.com. All rights reserved.
  33. 33. Real Life Example Look at the various images given below. Each represents one of the benefits that retailing offers to its customers. Look at each image carefully. © ManagementStudyGuide.com. All rights reserved.
  34. 34. Real Life Example Look at the various images given below. Each represents one of the benefits that retailing offers to its customers. Look at each image carefully. © ManagementStudyGuide.com. All rights reserved.
  35. 35. Real Life Example Breaking Bulk: The retailer divides the bulk goods into smaller saleable units as per the consumption patterns of the end consumer. Thus, customers can buy products in quantities which suit their consumption patterns due to the availability of products in smaller units. © ManagementStudyGuide.com. All rights reserved.
  36. 36. Real Life Example Providing Assortment: Retailers evaluate the products of various manufacturers; they then choose and offer the best assorted collection of products depending on the tastes and needs of their target customers. Hence, consumers get a wide range of products and prices to choose from as per his/her choice. Therefore, the offered variety in assortment makes the buying process easier for customers. © ManagementStudyGuide.com. All rights reserved.
  37. 37. Real Life Example Holding Inventory: Retailers make the products available to consumers at a convenient place and time due to the inventory held by the retailer. This makes it possible for consumers to make instant purchases without waiting to order and then receive the product at a later date or time. Due to the fact that retailers hold an inventory of stock of goods, it becomes possible that customers can engage in spontaneous shopping. © ManagementStudyGuide.com. All rights reserved.
  38. 38. Real Life Example Providing Services: Retailers also benefit the customer through the wide array of services that they offer to the end customer such as follows: • Free home delivery • Acceptance of Credit/Debit Cards • Acceptance of payments on EMI (Equated Monthly Instalment) Basis • Providing and arranging of various consumer loans, etc. The various services offered by retailers make it easier for customers to buy and use products. © ManagementStudyGuide.com. All rights reserved.
  39. 39. Real Life Example Providing Information: Retailers provide vital product related information to their consumers. Retailers provide product information through in- store advertising and in-store salespersons which helps the consumer to make a wise, simple and quick purchasing decision. © ManagementStudyGuide.com. All rights reserved.
  40. 40. MCQ Q. What is meant by ‘breaking bulk’? Click on the radio button to select the correct answer! © ManagementStudyGuide.com. All rights reserved.
  41. 41. MCQ Q. What is meant by ‘breaking bulk’? © ManagementStudyGuide.com. All rights reserved.
  42. 42. MCQ Q. What is meant by ‘breaking bulk’? © ManagementStudyGuide.com. All rights reserved.
  43. 43. External Environment Affecting Retailing The several components of the external environment that affect retailing are as follows: Let us look at each in detail. 1 2 3 4 © ManagementStudyGuide.com. All rights reserved.
  44. 44. External Environment Affecting Retailing 1 Economic Environment: The economic environment greatly affects the success and working of the retail industry. Several components of the economic environment affect retailing such as: • Nature of the Economic System (Capitalist/Socialist/Mixed Economy) • Gross Domestic Product (GDP) • Interest Rates • Inflation Rate • Tax Levels • Purchasing Power of People • Employment Growth and Others © ManagementStudyGuide.com. All rights reserved.
  45. 45. External Environment Affecting Retailing Legal Environment: Retailing is also affected by the various laws and regulations passed by the Government. The Government uses various laws and regulations to ensure that retailers do not indulge in unfair trade practices. Some of the laws and regulations that affect retailing are as follows: • Restrictions on Foreign Direct Investment (FDI) • Property Regulations • Lack of Industry Status • Labor Laws • Real Estate • Complex Taxation System 2 © ManagementStudyGuide.com. All rights reserved.
  46. 46. External Environment Affecting Retailing Technological Environment: One of the major factors that drive change in the retail industry is ‘Technology’. Across the globe, the manner in which retailing is carried out has changed drastically due to the computerization of various retail store operations through the advent of computers, MIS etc. Technology is now being used in the retail industry as a means to improve the shopping environment and to provide a pleasant shopping experience to the customer. 3 © ManagementStudyGuide.com. All rights reserved.
  47. 47. External Environment Affecting Retailing Competitive Environment: Each and every retailer faces tough competition from several others who co- exist alongside him in the retailing industry. The key factors that affect the competition among retailers are the way the retail operations are carried out and which entity of the distribution channel carries out these retail operations. 4 © ManagementStudyGuide.com. All rights reserved.
  48. 48. Risks Faced by Retailer There are three types of obsolescence risks that a retailer is exposed to: Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  49. 49. Risks Faced by Retailer There are three types of obsolescence risks that a retailer is exposed to: Physical Obsolescence: The risk of physical obsolescence arises from the damage or wear and tear of the products while they are stored in the retail outlet. Some of the most common products that face the risk of physical damage are handicrafts, books, greeting cards, gift items etc. Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  50. 50. Risks Faced by Retailer There are three types of obsolescence risks that a retailer is exposed to: Technological Obsolescence: The risk of technical obsolescence arises due to technology getting outdated which may result in severe losses for the retailer. Some of the most common products that face the risk of outdated technology are computers, mobile phones, etc. Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  51. 51. Risks Faced by Retailer There are three types of obsolescence risks that a retailer is exposed to: Let us look at each in detail. Fashion Obsolescence: The risk of fashion obsolescence arises mainly for apparel retailers who deal in merchandise of varying style, design or color. © ManagementStudyGuide.com. All rights reserved.
  52. 52. MCQ Q. United Colors of Benetton is an apparel retailer. Which of the following risks is United Colors of Benetton most likely to face? Click on the radio button to select the correct answer! © ManagementStudyGuide.com. All rights reserved.
  53. 53. MCQ Q. United Colors of Benetton is an apparel retailer. Which of the following risks is United Colors of Benetton most likely to face? © ManagementStudyGuide.com. All rights reserved.
  54. 54. MCQ Q. United Colors of Benetton is an apparel retailer. Which of the following risks is United Colors of Benetton most likely to face? © ManagementStudyGuide.com. All rights reserved.
  55. 55. Various Functions of a Retail Business There are various functions included in a retail business just like any other business. The following are a few of the vital functions included in any retail business: Operations MIS Human Resource Accounting Finance Marketing Roll your mouse over the icon, to learn more. © ManagementStudyGuide.com. All rights reserved.
  56. 56. Did You Know? An important fact to know about the retail industry is that it is not the typical ‘9 to 5 job’. This is mainly due to the fact that stores are meant to serve the public. Therefore, retail stores have to be open when the general public has the time to shop. So, retail shops remain open in the evenings or weekends. So, employees in a retail store have to work non-traditional hours to maximize their effectiveness. © ManagementStudyGuide.com. All rights reserved.
  57. 57. Decision Variables in Retailing There are various variables that retailers have to take into account while making decisions regarding the operation of their retail business. © ManagementStudyGuide.com. All rights reserved.
  58. 58. Decision Variables in Retailing Some of the variables that all retailers have to consider for decision making are: Store Design and Display Decision Variables in Retailing © ManagementStudyGuide.com. All rights reserved.
  59. 59. Retail Marketing Mix The following are the components that make up the ‘Retail Marketing Mix’: People Product Price Place Promotion Presentation Customer Service Retail Marketing Mix © ManagementStudyGuide.com. All rights reserved.
  60. 60. Retail Communication Mix The following are the components that make up the ‘Retail Communication Mix’: Sales Promotion Advertising Personal Selling Direct Marketing Public Relations Retail Communication Mix © ManagementStudyGuide.com. All rights reserved.
  61. 61. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  62. 62. Retail Selling Process The following are the steps involved in the ‘Retail Selling Process’: Acquiring Product/Merchandise Knowledge Studying the Customer Approaching the Customer Understanding the Need of Customer Presenting the Merchandise Overcoming Resistance Suggestive Selling Closing the Sale Roll your mouse over the icon, to learn more. © ManagementStudyGuide.com. All rights reserved.
  63. 63. Tip A key to always satisfy your customer and keep him happy is to under- promise and over-deliver. By doing this, you put yourself in a position where you stretch yourself beyond the practice of "don't promise what you can't deliver". Hence, when you under-promise and over-deliver, you always deliver more than you promise to your customers. This is a great way to keep your current customers happy and to attract more customers. © ManagementStudyGuide.com. All rights reserved.
  64. 64. Types of Retailers The following are some of the types of retailers: Specialty Stores Department Stores Supermarkets Discount Stores Convenience Stores Off-Price Retailers Superstores © ManagementStudyGuide.com. All rights reserved.
  65. 65. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  66. 66. Classification of Retailers • Relative Prices • Amount of Service • Product Lines • Organizational Approach Retailers are classified by: Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  67. 67. • Amount of Service Classification of Retailers Retailers can be classified based on the ‘amount of service’ they offer to their customers. Hence, based on the amount of service offered to customers, retailers can be such as follows: Limited-service Retailers Self-service Retailers Full-service Retailers Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  68. 68. • Amount of Service Classification of Retailers Retailers can be classified based on the ‘amount of service’ they offer to their customers. Hence, based on the amount of service offered to customers, retailers can be such as follows: Limited-service Retailers Self-service Retailers Full-service Retailers Self-service Retailers Self-service Retailers: In such retail stores, the customers have to self-serve themselves. In such stores, the customers are willing to self-serve to save money. © ManagementStudyGuide.com. All rights reserved.
  69. 69. • Amount of Service Classification of Retailers Retailers can be classified based on the ‘amount of service’ they offer to their customers. Hence, based on the amount of service offered to customers, retailers can be such as follows: Limited-service Retailers Self-service Retailers Full-service Retailers Limited-service Retailers Limited-service Retailers: In such retail stores, the customers are offered limited service rather than a completely self-serving mode. Such retail stores are such as discount stores, most department stores etc. © ManagementStudyGuide.com. All rights reserved.
  70. 70. • Amount of Service Classification of Retailers Retailers can be classified based on the ‘amount of service’ they offer to their customers. Hence, based on the amount of service offered to customers, retailers can be such as follows: Limited-service Retailers Self-service Retailers Full-service Retailers Full-service Retailers Full-service Retailers: In such retail stores, there are many salespeople available to assist and guide the customers in every aspect of shopping experience. Such retail stores are such as high-end department stores, specialty stores etc. © ManagementStudyGuide.com. All rights reserved.
  71. 71. • Product Lines Classification of Retailers Retailers can be classified based on the ‘product lines’ they offer to their customers. Hence, based on the type of product lines offered to customers, retailers can be such as follows: Let us look at each in detail. Department Stores Specialty Stores Limited Line Stores Superstores Category Killers © ManagementStudyGuide.com. All rights reserved.
  72. 72. • Product Lines Classification of Retailers Retailers can be classified based on the ‘product lines’ they offer to their customers. Hence, based on the type of product lines offered to customers, retailers can be such as follows: Department Stores Specialty Stores Limited Line Stores Superstores Category Killers Specialty Stores Specialty Stores: Such retail stores offer specialized product lines that include narrow product lines with deep assortments. © ManagementStudyGuide.com. All rights reserved.
  73. 73. • Product Lines Classification of Retailers Retailers can be classified based on the ‘product lines’ they offer to their customers. Hence, based on the type of product lines offered to customers, retailers can be such as follows: Department Stores Specialty Stores Limited Line Stores Superstores Category Killers Department Stores Department Stores: Such retail stores offer a wide variety of product lines across product categories. Such stores include supermarkets, convenience stores etc. © ManagementStudyGuide.com. All rights reserved.
  74. 74. • Product Lines Classification of Retailers Retailers can be classified based on the ‘product lines’ they offer to their customers. Hence, based on the type of product lines offered to customers, retailers can be such as follows: Department Stores Specialty Stores Limited Line Stores Superstores Category Killers Limited Line Stores Limited Line Stores: These offer a limited line of products and categories. © ManagementStudyGuide.com. All rights reserved.
  75. 75. • Product Lines Classification of Retailers Retailers can be classified based on the ‘product lines’ they offer to their customers. Hence, based on the type of product lines offered to customers, retailers can be such as follows: Department Stores Specialty Stores Limited Line Stores Superstores Category Killers Superstores Superstores: These are retail stores that offer product lines across a wide range of categories such as food, non-food, and services. © ManagementStudyGuide.com. All rights reserved.
  76. 76. • Product Lines Classification of Retailers Retailers can be classified based on the ‘product lines’ they offer to their customers. Hence, based on the type of product lines offered to customers, retailers can be such as follows: Department Stores Specialty Stores Limited Line Stores Superstores Category Killers Category Killers Category Killers: These stores include the giant specialty stores which do not have a demarcated category of product lines but offer a range of products across several categories ranging from electronics, food, electrical items, home appliances, stationary, etc. © ManagementStudyGuide.com. All rights reserved.
  77. 77. • Relative Prices Classification of Retailers Retailers can be classified based on the ‘relative prices’ they offer to their customers. Hence, based on the relative prices offered to customers, retailers can be such as follows: Off-price Retailers Discount Stores Factory Outlets Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  78. 78. • Relative Prices Classification of Retailers Retailers can be classified based on the ‘relative prices’ they offer to their customers. Hence, based on the relative prices offered to customers, retailers can be such as follows: Off-price Retailers Discount Stores Factory Outlets Discount Stores Discount Stores: Such retail stores offer very low prices to customers and themselves operate on low margins which are offset by high volume of sales. © ManagementStudyGuide.com. All rights reserved.
  79. 79. • Relative Prices Classification of Retailers Retailers can be classified based on the ‘relative prices’ they offer to their customers. Hence, based on the relative prices offered to customers, retailers can be such as follows: Off-price Retailers Discount Stores Factory Outlets Off-price Retailers: These retailers offer independent off-price to customers apart from the manufacturer’s price. Off-price Retailers © ManagementStudyGuide.com. All rights reserved.
  80. 80. • Relative Prices Classification of Retailers Retailers can be classified based on the ‘relative prices’ they offer to their customers. Hence, based on the relative prices offered to customers, retailers can be such as follows: Off-price Retailers Discount Stores Factory Outlets Factory Outlets: Many manufacturers operate company owned retail outlets or factory outlets that offer discounts as well as factory rejects on sale to customers. Factory Outlets © ManagementStudyGuide.com. All rights reserved.
  81. 81. • Organizational Approach Classification of Retailers Retailers can be classified based on the ‘organizational approach’ they choose for their business. Hence, based on the organizational approach, retailers can be such as follows: Let us look at each in detail. Voluntary Chains Corporate Chain Stores Retailer Cooperatives Franchise Organizations Merchandising Conglomerates © ManagementStudyGuide.com. All rights reserved.
  82. 82. • Organizational Approach Classification of Retailers Retailers can be classified based on the ‘organizational approach’ they choose for their business. Hence, based on the organizational approach, retailers can be such as follows: Voluntary Chains Corporate Chain Stores Retailer Cooperatives Franchise Organizations Merchandising Conglomerates Corporate Chain Stores Corporate Chain Stores: These stores are commonly owned/controlled by the corporate or manufacturer. © ManagementStudyGuide.com. All rights reserved.
  83. 83. • Organizational Approach Classification of Retailers Retailers can be classified based on the ‘organizational approach’ they choose for their business. Hence, based on the organizational approach, retailers can be such as follows: Voluntary Chains Corporate Chain Stores Retailer Cooperatives Franchise Organizations Merchandising Conglomerates Voluntary Chains: These stores are wholesaler-sponsored groups of independent retailers. Voluntary Chains © ManagementStudyGuide.com. All rights reserved.
  84. 84. • Organizational Approach Classification of Retailers Retailers can be classified based on the ‘organizational approach’ they choose for their business. Hence, based on the organizational approach, retailers can be such as follows: Voluntary Chains Corporate Chain Stores Retailer Cooperatives Franchise Organizations Merchandising Conglomerates Retailer Cooperatives: These stores are operated by groups of independent retailers who buy in bulk. Retailer Cooperatives © ManagementStudyGuide.com. All rights reserved.
  85. 85. • Organizational Approach Classification of Retailers Retailers can be classified based on the ‘organizational approach’ they choose for their business. Hence, based on the organizational approach, retailers can be such as follows: Voluntary Chains Corporate Chain Stores Retailer Cooperatives Franchise Organizations Merchandising Conglomerates Franchise Organizations: These stores are based on selling something unique with a good brand name. Franchise Organizations © ManagementStudyGuide.com. All rights reserved.
  86. 86. • Organizational Approach Classification of Retailers Retailers can be classified based on the ‘organizational approach’ they choose for their business. Hence, based on the organizational approach, retailers can be such as follows: Voluntary Chains Corporate Chain Stores Retailer Cooperatives Franchise Organizations Merchandising Conglomerates Merchandising Conglomerates: These are diversified retailing lines and are formed under central ownership. Merchandising Conglomerates © ManagementStudyGuide.com. All rights reserved.
  87. 87. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  88. 88. Components of Retailing Concept The following are the key concepts involved in retailing: Customer Orientation Coordinated Effort Value-driven Goal Oriented Retailing Concept Retail Strategy © ManagementStudyGuide.com. All rights reserved.
  89. 89. Components of Retailing Concept Customer Orientation Coordinated Effort Value-driven Goal Oriented Retailing Concept One of the key components of the retailing concept is ‘customer orientation’. A retailer always determines the attributes and needs of its customers. He then endeavors to take action in order to satisfy these needs of his customers. A retailer must always make a coordinated effort to succeed. Hence, a retailer integrates all his plans and activities to maximize efficiency. One of the primary things that a retailer should aim to offer to his customers is a ‘good value proposition. Hence, a retailer must offer good value to the customers, through ‘appropriate pricing’ for goods and customer service. A retailer should always set goals and then use strategy to attain them. © ManagementStudyGuide.com. All rights reserved.
  90. 90. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  91. 91. Steps of Retail Strategy Planning The overall plan that guides the functioning and operation of a retail firm is known as the ‘Retail Strategy’. Hence, retail strategy influences the retail firm’s business activities and its response to market forces, such as competition and economy. © ManagementStudyGuide.com. All rights reserved.
  92. 92. 2 1 3 The following are the steps of retail strategy planning: • Define the type of business in terms of the goods or services as well as the company’s specific orientation. • Determine and set long-term and short-term objectives for sales and profit, market share, image etc. • Identify and determine the specific target customer group or market on the basis of customer characteristics such as gender, income level, age group etc. as well as based on their needs such as specific product and brand preferences. Steps of Retail Strategy Planning © ManagementStudyGuide.com. All rights reserved.
  93. 93. Steps of Retail Strategy Planning 5 4 6 The following are the steps of retail strategy planning: • Form an overall, long-run plan that gives general direction to the retail firm and its employees. • Form and implement an integrated strategy to achieve objectives defining and including all factors such as store location, transportation, product variety, advertising, display and pricing. • Evaluate performance continuously and regularly. Also, make sure to rectify and correct any weaknesses or problems when observed. © ManagementStudyGuide.com. All rights reserved.
  94. 94. Retail Value Chain The following are the components that make up the ‘Retail Value Chain’: Third Party Logistics Retail Operations Customer Management Suppliers Customers Support Functions Systems © ManagementStudyGuide.com. All rights reserved.
  95. 95. Basic Supply Chain in Retailing Supplier Raw Material Packaging Warehouse Manufacturer Manufacturer Warehouse Retailer Warehouse Retailer End Customer Physical Flow of Goods Financial Flow of Goods © ManagementStudyGuide.com. All rights reserved.
  96. 96. Classification of Retail Institutions Ownership Store-based Retail Strategy Mix Non-store Based Retail Strategy Mix The given flowchart shows the classification of retail institutions: Ownership: • Independent • Chain • Franchise • Leased Department • Vertical Marketing System • Consumer Cooperative Store-based Retail Strategy Mix: • Convenience Store • Conventional & Food- based Supermarket • Box (limited line) Store • Warehouse Store • Specialty Store • Variety Store • Traditional & Full-line Department Store • Off-price Chain • Factory Outlet • Flea(louse) Market Non-store Based Retail Strategy Mix & Non- traditional Retailing: • Direct Marketing • Direct Selling • Vending Machine • World Wide Web (WWW) © ManagementStudyGuide.com. All rights reserved.
  97. 97. Vertical Marketing System Vertical Marketing System Corporate Vertical Marketing System Wholesaler- sponsored Voluntary Chains Contractual Vertical Marketing System Franchise Program Manufacturer- sponsored Retail Franchise System Manufacturer- sponsored Wholesale Franchise System Service- sponsored Retail Franchise System Service- sponsored Franchise System Administered Vertical Marketing System Retailer- sponsored Cooperative © ManagementStudyGuide.com. All rights reserved.
  98. 98. Vertical Marketing System In most of the cases, the traditional distribution channels are used to get the products to consumers. However, a large number of marketing approaches do not fit properly into this model. Many businesses use a large network of their own shops or outlets to sell their own merchandise. Thus, the concept of a vertical marketing system has emerged to reflect this type of a situation. © ManagementStudyGuide.com. All rights reserved.
  99. 99. Vertical Marketing System In developed economies, a more realistic and practical view of the retail industry is shown and can be understood through the vertical marketing system. In such a vertical marketing system, many large retailers such as Wal-Mart, IKEA, and Metro-AG are actively involved in marketing functions such as product development, branding and advertising that were at one time the sole responsibility of the manufacturers. On the other hand, many manufacturers such as Levi Strauss, Nike, and Arrow are involved in retailing activities. Such manufacturers either run their own retail outlets dedicated to selling their own merchandise or by perform functions that were at one time solely performed by the retailer, such as allocating shelf space. © ManagementStudyGuide.com. All rights reserved.
  100. 100. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  101. 101. What is Franchising? Franchising involves a contractual arrangement between a franchisor and a retail franchisee. The franchisor may be a manufacturer, wholesaler, or service sponsor. A franchise or the contractual agreement allows the franchisee to conduct business under a established name and according to a given pattern of business. © ManagementStudyGuide.com. All rights reserved.
  102. 102. What is Franchising? To get a franchise, a franchisee has to pay an initial fee to the franchisor. Thereafter, the franchisee pays a monthly percentage of the gross sales in exchange for the rights to sell goods and services of the franchisor in a particular area and location. © ManagementStudyGuide.com. All rights reserved.
  103. 103. Let us now look at a real life example to understand the concept of franchising. Real Life Example © ManagementStudyGuide.com. All rights reserved.
  104. 104. Real Life Example Let us now understand how the concept of franchising works through SUBWAY® Restaurants. SUBWAY® Restaurants were started way back in 1965 by a seventeen-year- old Fred DeLuca. Fred DeLuca had just completed his high school and he aspired to become a medical doctor. © ManagementStudyGuide.com. All rights reserved.
  105. 105. Real Life Example However, he did not have the necessary financial arrangements to pay for his education. He decided to ask Dr. Peter Buck, a family friend for advice and help. Dr. Peter Buck suggested Fred should open a submarine sandwich shop. © ManagementStudyGuide.com. All rights reserved.
  106. 106. Real Life Example Dr. Peter Buck also offered a loan of $1,000 to start Fred’s business venture and offered to become Fred’s business partner. Thus, the first store was opened in Bridgeport, Connecticut in August, 1965. Fred proved to be a great business man and made it his company’s mission to serve well-made, high quality product and provide excellent customer service. © ManagementStudyGuide.com. All rights reserved.
  107. 107. Real Life Example Fred and Dr. Buck aimed to have 32 stores opened in 10 years. Thus, very soon several SUBWAY® restaurants were successfully opened around the world. By 1974, the duo owned and operated 16 submarine sandwich shops throughout Connecticut. © ManagementStudyGuide.com. All rights reserved.
  108. 108. Real Life Example However, they both soon realized that they would not be able to reach their goal of ’32 stores’ in time on their own. Hence, they turned to ‘franchising’. Granting a ‘franchise’ to other people meant that a franchise business was established or operated under an authorization from SUBWAY® Restaurants to sell or distribute SUBWAY® Restaurants’ goods or services in a particular area. © ManagementStudyGuide.com. All rights reserved.
  109. 109. Real Life Example Franchising and authorizing other business owners to become their franchisees allowed the SUBWAY® brand to experience remarkable growth which continues to this day. Thus, any person who has the necessary entrepreneurial skills and capital can join the SUBWAY® team as a franchisee. The person gets a great opportunity to own their own business which is a proven successful venture with a low investment and simple operations. © ManagementStudyGuide.com. All rights reserved.
  110. 110. Real Life Example The following lists some of the support given by the SUBWAY® team to a franchisee: • Allowing flexible floor plans • National and local support • National and regional advertising • Two week training program • Ongoing learning for franchisee owners and their staff • Store development assistance • Design support • Store lease negotiations • Store construction guidance and much more © ManagementStudyGuide.com. All rights reserved.
  111. 111. Real Life Example Therefore, you can see that organizations can use the concept of ‘franchising’ for spreading their presence globally. At the same time, ‘franchising’ allows an organization to maintain its brand image. Franchising also allows an organization to maintain consistent quality of products and services to be offered all across the globe through its franchisees. © ManagementStudyGuide.com. All rights reserved.
  112. 112. What is Category Management? • A category is an assortment of items that is seen by a customer as reasonable substitutes of each other. • Category Management is defined as: o “The distributor/supplier process of managing categories as Strategic Business Units (SBUs), producing enhanced business results by focusing on delivering customer value” • Thus, the main aim of the concept of category management is to better understand the needs of consumers which serve as the basis for retailers’ and suppliers’ strategies, goal, and work processes. © ManagementStudyGuide.com. All rights reserved.
  113. 113. Importance of Category Management Category Management is crucial for the success of any retailing business as: It provides a systematic process to be followed for the management of a retail business. It helps to tackle competitive pressures and be competitive in a tough market. It ensures that decision-making is based on complex analysis of consumer data and market level syndicate data. It allows to take an objective view of brands available based solely on consumers’ desires and avoid brand bias based on suppliers’ interest. It helps to cater to the changes in consumer preferences, tastes and choice. It provides economical and efficient considerations for managing a retail outlet. It helps to take advantage of the latest advances in IT to ensure the success of the retail venture. © ManagementStudyGuide.com. All rights reserved.
  114. 114. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  115. 115. What is Merchandising? • Merchandising is defined by ‘The American Marketing Association’ as follows: o “The planning involved in marketing the right merchandise at the right place at the right time in the right quantity at the right price”. • Merchandising is analysis, planning, buying, handling & control and selling of merchandise or a product. © ManagementStudyGuide.com. All rights reserved.
  116. 116. Factors affecting the Merchandising Function The following are the various factors that affect the merchandising function: Merchandising Function Size of Organization Organizational Structure Types of Stores Inventory of Merchandising to be Carried © ManagementStudyGuide.com. All rights reserved.
  117. 117. What is Merchandise Planning? Merchandise Planning is defined as the planning and control of the merchandise inventory of the retail firm. The merchandise inventory should be planned in such a manner that it balances the expectations of the target customers and the strategy of the firm. © ManagementStudyGuide.com. All rights reserved.
  118. 118. Elements of Retail Design There are several elements that have to be taken into consideration for the design of a retail outlet such as follows: Store Design Store Theme Building Architecture Location Access Parking Target Customer Merchandise Mix Frontage & Entrance Safety Location Roll your mouse over the icon, to learn more. © ManagementStudyGuide.com. All rights reserved.
  119. 119. Tip In the retail industry, it’s all about ‘Appearance’. Hence, appearance matters in almost everything in the retail industry, whether it's packaging, merchandising or the retail employee’s dress. Maintaining a good appearance in everything helps a retailer to create a big impression on his customers and give a uniform and organized outlook to his business. © ManagementStudyGuide.com. All rights reserved.
  120. 120. What is SKU? • SKU is an acronym for Stock Keeping Unit. • SKU is a unique numerical identifying number. • This unique number refers to a specific stock item in a retailer's inventory or product catalog. © ManagementStudyGuide.com. All rights reserved.
  121. 121. What is SKU? Hence, the primary purpose of SKU is to help identify the product, product size or type, and the manufacturer. SKU is a part of the backend inventory control system in the retail industry. It is a unique number that allows a retailer to track a product in their inventory that may be in warehouses or in retail outlets. © ManagementStudyGuide.com. All rights reserved.
  122. 122. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  123. 123. What is Visual Merchandising? The term ‘Visual Merchandising’ means an orderly, systematic, logical and intelligent way of arranging and putting stock on the shop floor. Visual merchandising is crucial for the success of any retail business as it helps create the right atmosphere in the store and present the merchandise in the right manner. Visual merchandising should make sure that a selling space is neat, easy-to-see, follow and shop. © ManagementStudyGuide.com. All rights reserved.
  124. 124. What is Visual Merchandising? SKU (Stock Keeping Unit) Planning Store Windows Floor Displays Signs Space Design Fixtures & Hardware Props & Mannequins There are several aspects to be taken into consideration for visual merchandising such as: © ManagementStudyGuide.com. All rights reserved.
  125. 125. Retail Life Cycle The given image shows the ‘Retail Life Cycle’ of any retail establishment. © ManagementStudyGuide.com. All rights reserved.
  126. 126. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  127. 127. Importance of Location in Retailing • One of the most important aspects in Retailing is ‘location’. • It is one of the major factors that decides the success or failure of a retail business venture. • Location is crucial to the success of a retail store as it conveys a fair the image of a retail store. • Location is one of the important aspects to be considered in developing the retail strategy. © ManagementStudyGuide.com. All rights reserved.
  128. 128. Importance of Location in Retailing • Location decides and influences the merchandise mix and interior layout of the store based on the locality and neighbors surrounding the store. • Hence, vice versa, the choice of the location of the store also depends on the target audience and kind of merchandise to be sold. • It is important to keep in mind that once the store comes into existence, it is very difficult to change the location as changing the location of a store may result in loss of customer and employees. © ManagementStudyGuide.com. All rights reserved.
  129. 129. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  130. 130. Types of Retail Location Part of a Shopping Centre Part of a Business District Freestanding/Isolated Store The following are the major types of retail locations chosen for retail stores: Let us look at each in detail. © ManagementStudyGuide.com. All rights reserved.
  131. 131. Types of Retail Location Freestanding/Isolated Store • A freestanding or isolated store is usually located along major traffic arteries. • Such stores are located isolated from others such that they do not have any major competitive retailers around them. © ManagementStudyGuide.com. All rights reserved.
  132. 132. Freestanding/Isolated Store • A freestanding or isolated store is usually located along major traffic arteries. • Such stores are located isolated from others such that they do not have any major competitive retailers around them. Types of Retail Location © ManagementStudyGuide.com. All rights reserved.
  133. 133. Types of Retail Location Part of a Business District • Retail stores may also be located in a business district which is a place of commerce in the city. • The major advantage is that such locations have several means of transport and good accessibility in terms of public transport as well. • The number of customers is very high. © ManagementStudyGuide.com. All rights reserved.
  134. 134. Types of Retail Location Part of a Business District • Retail stores may also be located in a business district which is a place of commerce in the city. • The major advantage is that such locations have several means of transport and good accessibility in terms of public transport as well. • The number of customers is very high. © ManagementStudyGuide.com. All rights reserved.
  135. 135. Types of Retail Location Part of a Shopping Centre • Stores may be located inside a shopping centre. • A shopping centre is a group of retail and other commercial establishments that is planned, developed, owned and managed as single property. © ManagementStudyGuide.com. All rights reserved.
  136. 136. Types of Retail Location Part of a Shopping Centre • Stores may be located inside a shopping centre. • A shopping centre is a group of retail and other commercial establishments that is planned, developed, owned and managed as single property. © ManagementStudyGuide.com. All rights reserved.
  137. 137. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  138. 138. Private Label A retailer is said to be selling a ‘Private Label’ or ‘Selling Own Label/Brand’ when he decides to sell products or a line of merchandise which is owned, controlled, merchandised and sold by the retailer in his own store/chain of stores. Therefore, a Private Label is a brand name or label which can simply be the store’s name or a name created exclusively by that store. © ManagementStudyGuide.com. All rights reserved.
  139. 139. Private Label In certain cases, a store may belong to a wholesale buying group. This wholesale buying group may own labels, which are made available to the members of the group. Hence, this whole-sale owned labels are referred to as controlled labels. Controlled labels can be used by the retailer belonging to that wholesale group. © ManagementStudyGuide.com. All rights reserved.
  140. 140. Classification of Private Labels Let’s look at each in detail. A private label can be classified as: © ManagementStudyGuide.com. All rights reserved.
  141. 141. Classification of Private Labels Store Brand • Such a private label carries the retailer’s name. • Examples are: Westside, Food World, Big Bazaar etc. © ManagementStudyGuide.com. All rights reserved.
  142. 142. Classification of Private Labels Umbrella Brand • Such a private label is a common brand name that is used across multiple categories. • Examples are: ‘Splash’ which is an Umbrella brand for Lifestyle Stores and ‘Bare’ which is an Umbrella brand for Pantaloons. © ManagementStudyGuide.com. All rights reserved.
  143. 143. Classification of Private Labels Individual Brands • Such a private label includes specific brand names that are created for specific market segments and/or categories. • Examples are: ‘Absolut’ brand that stand for a specific range of cosmetic products of Lakme. © ManagementStudyGuide.com. All rights reserved.
  144. 144. MCQ Q. Which of the following is a private label that includes specific brand names that are created for specific market segments and/or categories? Click on the radio button to select the correct answer! © ManagementStudyGuide.com. All rights reserved.
  145. 145. MCQ Q. Which of the following is a private label that includes specific brand names that are created for specific market segments and/or categories? © ManagementStudyGuide.com. All rights reserved.
  146. 146. MCQ Q. Which of the following is a private label that includes specific brand names that are created for specific market segments and/or categories? © ManagementStudyGuide.com. All rights reserved.
  147. 147. Need for Private Labels Initially, to start with ‘private labels’ were offered as generic product offerings as the lower priced alternative to the national brands. Hence, their main marketing strategy included driving it on the base of value proposition. However, private labels carried the stigma of inferior quality and hence were less preferred by customers against the national brands. © ManagementStudyGuide.com. All rights reserved.
  148. 148. Need for Private Labels Soon, private labels were offered in apparel, food and grocery sector due to the increase in retail stores, the need to earn higher profit and the desire to service the gaps in consumer requirements. In today’s modern world, private labels are offered by almost every large retail store which cater to a specific audience. Private labels rely on in-store advertisements. A private label allows a retailer to earn a higher margin than other brands he retails because the designing, merchandising, in- store advertisement, sourcing and distribution of the private label products is done by the retailer himself. © ManagementStudyGuide.com. All rights reserved.
  149. 149. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  150. 150. Identification of the Need for a Private Label Decision to Make or Buy the Product Placing the Order and Allocating the Goods Marketing Performance Measurement Let’s look at each in detail. The following are the key steps in the process of creation of a private label: Process of Creation of Private Label © ManagementStudyGuide.com. All rights reserved.
  151. 151. Process of Creation of Private Label Decision to Make or Buy the Product Placing the Order and Allocating the Goods Marketing Performance Measurement Identification of the Need for a Private Label Identification of the Need for a Private Label: The first step in the creation of a ‘private label’ is to identify the need for the ‘private label’. For this purpose, the retailer has to identify any gaps in the customer needs and their fulfilment. The retailer has to find if there are any products or services that his customers desire but do not get or get at a very high price. The retailer can then decide to identify this gap and fulfil it by offering a private label of his own. © ManagementStudyGuide.com. All rights reserved.
  152. 152. Process of Creation of Private Label Identification of the Need for a Private Label Placing the Order and Allocating the Goods Marketing Performance Measurement Decision to Make or Buy the Product Decision to Make or Buy the Product: Once a retailer decides that he wants to offer a private label to his customers, the next step is to decide whether he has to make the product or buy the product from another wholesaler or supplier. He should take a decision, after he should contemplates all the pros and cons of making the product himself or buying and then selling the product. © ManagementStudyGuide.com. All rights reserved.
  153. 153. Process of Creation of Private Label Identification of the Need for a Private Label Decision to Make or Buy the Product Marketing Performance Measurement Placing the Order and Allocating the Goods Placing the Order and Allocating the Goods: After he decides to either make the product or buy the product, the next step is to put that decision into action. If he has to make the product, he should get the necessary infrastructure, raw materials and labor to make the product. On the other hand, if he has to buy the product, he should place the required amount of order. Then after the products are acquired, he should carefully allocate and pack the goods in requisite quantities and make it available at his stores. © ManagementStudyGuide.com. All rights reserved.
  154. 154. Process of Creation of Private Label Identification of the Need for a Private Label Decision to Make or Buy the Product Placing the Order and Allocating the Goods Performance Measurement Marketing Marketing: This is an important step in the creation of the private label. Once the products are ready to be sold, it is very important to market them in the right way. One of the key requirements for the success of a private label is its strong and effective marketing strategy. A retailer can use in-store advertisement as well as offer discounts and various attractive offers on his private labels to attract customers. © ManagementStudyGuide.com. All rights reserved.
  155. 155. Process of Creation of Private Label Identification of the Need for a Private Label Decision to Make or Buy the Product Placing the Order and Allocating the Goods Marketing Performance Measurement Performance Measurement: The last step in the process of creation of a private label is the measuring of performance of the private label. Every retailer should continuously monitor and measure the performance of his private labels to find if it is doing well and is successful. A retailer should find out the opinions of his customers about the range, quality, pricing etc. of the products offered under private labels. © ManagementStudyGuide.com. All rights reserved.
  156. 156. Let us now look at a real life example to understand the concept of private label. Real Life Example © ManagementStudyGuide.com. All rights reserved.
  157. 157. Real Life Example Pantaloons has created its own private label named ‘Bare’. Under this private label ‘Bare’, Pantaloons sells products or a line of merchandise which is owned, controlled, merchandised and sold by the Pantaloons as a retailer in his own store/chain of stores. Hence, Pantaloons is said to be Selling Own Label/ Brand or Private Label merchandise. Let us now understand how the concept of private label is used by ‘Pantaloons’ in its retail stores. © ManagementStudyGuide.com. All rights reserved.
  158. 158. Real Life Example The private label ‘Bare’ in this case is an ‘Umbrella Brand’ where a common brand name is used across multiple categories. Pantaloons decided to use a private label of its own when it recognized the need to service the gaps in consumer requirements as well as to earn higher profit. Let us now understand how the concept of private label is used by ‘Pantaloons’ in its retail stores. © ManagementStudyGuide.com. All rights reserved.
  159. 159. Real Life Example Pantaloons relies on its in-store advertisements for promoting its private label ‘Bare’. Pantaloons needs to focus on ‘quality’ to keep its private label ahead of all other national brands. Let us now understand how the concept of private label is used by ‘Pantaloons’ in its retail stores. © ManagementStudyGuide.com. All rights reserved.
  160. 160. Real Life Example Pantaloons uses its private label ‘Bare’: To gain an advantage of offering the customer another option. Let us now understand how the concept of private label is used by ‘Pantaloons’ in its retail stores. © ManagementStudyGuide.com. All rights reserved.
  161. 161. Electronic Data Interchange (EDI) Radio Frequency Identification (RFID) Enterprise Resource Planning (ERP) Transaction Processing System (TPS) Customer Relationship Management (CRM) The following are some of the applications of IT in retailing: Application of IT in Retailing © ManagementStudyGuide.com. All rights reserved.
  162. 162. Decision Support System (DSS) Database Management Data Warehousing and Mining Intranet and Internet E-Commerce or E-Trailing The following are some of the applications of IT in retailing: Application of IT in Retailing © ManagementStudyGuide.com. All rights reserved.
  163. 163. Advantages of FDI in Retail The following are some of the advantages of opening up of Foreign Direct Investment (FDI) in the retail sector: It would help to bring in valuable foreign exchange. It would help to bring about better organization of the retail sector. It would help provide large numbers of employment opportunities to several people. It would help to provide a greater range of products at reduced prices to the customer. It would help to improve the shopping experience. © ManagementStudyGuide.com. All rights reserved.
  164. 164. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  165. 165. Myths about Careers in Retailing There are several myths that have been passed on for several decades about the careers in the retail industry. Some of the following are the myths about careers in retailing, which are not true: To get into the retail industry, an individual does not need any kind of college education All jobs in the retail industry are usually low paying jobs. The work in the retail industry entails long working hours in every job profile. All the people working in a retail business are part-time workers. © ManagementStudyGuide.com. All rights reserved.
  166. 166. Myths about Careers in Retailing There are several myths that have been passed on for several decades about the careers in the retail industry. Some of the following are the myths about careers in retailing, which are not true: The jobs in a retail industry are all dead-end jobs with no scope of promotions or career growth. Retail industry offers an unstable environment that is unsuitable for developing a steady and sound career. Jobs in the retail industry do not entail any benefits for the individual. The job profiles in the retail industry are all boring and mundane. © ManagementStudyGuide.com. All rights reserved.
  167. 167. Objective • Explain What is Retail Management • Describe the Benefits of Retailing • Explain the Retail Selling Process • Explain the Classification of Retailers • Explain the Components of Retailing Concept • Explain the Steps of Retail Strategy Planning • Explain What is Franchising • Explain What is Merchandising • Explain What is Visual Merchandising • Describe the Importance of Location in Retailing • Explain the Types of Retail Location • Explain What is a Private Label • Explain the Process of Creation of Private Label • List the Myths about Careers in Retailing • List the Tips for Success in Retailing © ManagementStudyGuide.com. All rights reserved.
  168. 168. Tips for Success in Retailing Always aim for growth- oriented objectives Your strategy should aim to appeal to prime market Always develop and maintain distinctive company image Always work with great focus and effort targeted towards success Maintain a strong and excellent customer service Keep multiple points of contact in a retail store whom customer can reach easily The following are a few tips for success in retailing: © ManagementStudyGuide.com. All rights reserved.
  169. 169. Tips for Success in Retailing Develop and maintain good inter-employee relations Maintain a strict commitment to technology Continuously monitor performance and improve on your own set standards Always have community involvement and contribute to society Aim at innovating new products, ideas and concepts to please customers Roll your mouse over the icon, to learn more. © ManagementStudyGuide.com. All rights reserved.
  170. 170. Did You Know? Careers in retailing are not just limited to ‘sales’ and ‘customer service’. There are many specializations available in the retail industry from which you can choose as you move up in your career. Hence, you can choose to specialize in areas like: • Buying • Pricing • Merchandising • Marketing • Customer Service • Personnel • Training • Operations and so on © ManagementStudyGuide.com. All rights reserved.
  171. 171. Video Look at the video given below to understand the 5Ps of Retailing. Click on the video link to play it! © ManagementStudyGuide.com. All rights reserved. http://www.youtube.com/watch?v=MIeQFHnZSHU
  172. 172. Practice Let us now practice all that you have learned about Retail Management. © ManagementStudyGuide.com. All rights reserved.
  173. 173. Practice Visit any of your favorite retailers. Observe and make a note of the following things: • What are various product categories offered by retailer? • What are various sizes in which packaging has been done? • How is the merchandise visually displayed? • Does the retailer offer any private labels? • What is the difference in price between same product of a national brand and of a private label offered by retailer? • What is one thing that stands out or makes this retailer special for you? © ManagementStudyGuide.com. All rights reserved.
  174. 174. Case Study Howard Thompson has applied for a position of a manager in one of the retail stores of Globus Stores, a reputed chain of retail stores. 1. What are the qualities that Howard needs to portray to the interviewer to get the job? 2. What are the main elements of the functioning of a retail business that Howard should be aware of to succeed in the retail industry? © ManagementStudyGuide.com. All rights reserved.
  175. 175. Summary Introduction to Retail Management Let’s look at each in detail. Classification of Retailers Retail Marketing Mix Retail Communication Mix Retail Selling Process Process of Creation of Private Label © ManagementStudyGuide.com. All rights reserved.
  176. 176. Summary Introduction to Retail Management Classification of Retailers Product Lines Amount of Service Relative Prices Organizational Approach © ManagementStudyGuide.com. All rights reserved.
  177. 177. Summary Retail Marketing Mix Product People Introduction to Retail Management Promotion Presentation Price Place Customer Service © ManagementStudyGuide.com. All rights reserved.
  178. 178. Summary Retail Communication Mix Introduction to Retail Management Sales Promotion Advertising Direct Marketing Public Relations Personal Selling © ManagementStudyGuide.com. All rights reserved.
  179. 179. Summary Process of Creation of Private Label Introduction to Retail Management Identification of the Need for a Private Label Decision to Make or Buy the Product Resources/ staff required Placing the Order and Allocating the Goods Marketing Performance Measurement © ManagementStudyGuide.com. All rights reserved.
  180. 180. Summary Retail Selling Process Introduction to Retail Management Acquiring Merchandise Knowledge Studying the Customer Approaching the Customer Overcoming Resistance Suggestive Selling Closing the Sale Understanding the Need of Customer Presenting the Merchandise © ManagementStudyGuide.com. All rights reserved.
  181. 181. Glossary C G M O W Click each alphabet to learn more. © ManagementStudyGuide.com. All rights reserved.
  182. 182. C G M O W Glossary Click each alphabet to learn more. • Customer - Customer is someone who pays for goods or services • Credit Card - Credit Card is a card (usually plastic) that assures a seller that the person using it has a satisfactory credit rating and that the issuer will see to it that the seller receives payment for the merchandise delivered © ManagementStudyGuide.com. All rights reserved.
  183. 183. C G M O W Glossary Click each alphabet to learn more. • Gross Domestic Product (GDP) - Gross Domestic Product (GDP) is the total market values of goods and services produced by workers and capital within a nation's borders during a given period (usually 1 year) • Goods - Goods is a raw material or product that is bought and sold commercially in large quantities
  184. 184. C G M O W Glossary Click each alphabet to learn more. • Merchandise - Merchandise is a commodity offered for sale • Management - Management is the act of managing something © ManagementStudyGuide.com. All rights reserved.
  185. 185. C G M O W Glossary Click each alphabet to learn more. • Obsolescence - Obsolescence is the process of becoming obsolete; falling into disuse or becoming out of date • Operations - Operations include all the activities involved in the running of a business © ManagementStudyGuide.com. All rights reserved.
  186. 186. C G M O W Glossary Click each alphabet to learn more. • Wholesaler - Wholesaler is someone who buys large quantities of goods and resells to merchants rather than to the ultimate customers • Warehouse - Warehouse is a storehouse for goods and merchandise © ManagementStudyGuide.com. All rights reserved.

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