This document provides an overview of retail management concepts. It begins with the objectives and an introduction to retailing. It then discusses theories of institutional change in retailing and provides examples of the wheel of retailing, dialectic process, accordion, and natural selection theories. The document also classifies retailers based on ownership, operational structure, merchandise mix, pricing type, and consumer interaction. It describes various types of traditional and modern format retailers.

2. 2

3. Objectives of the Chapter
Introduction
Theories of Institutional Change
Classification of Retailers
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4. RETAIL MANAGEMENT
INTRODUCTION –
Business activities involve Selling Goods and Services
to Consumers for their Personal, Family or
Household use.
“Every sale of Goods and Services to final consumer”
e.g.-Food products, apparel, movie tickets;
services from hair cutting to e-ticketing.
 Retailing is the Last stage in Distribution Process-
Wholesale is an intermediate where Goods and
services are sold to Business customers.

5. RETAIL MANAGEMENT
Retailer is customer focused, not Product –
focused.
Manufacturer may reach customers
through:
Dealers
Company showrooms
Super / Hypermarkets
Manufacturers will decide on Retail
Distribution:
Intensive
Selective
Exclusive

6. Weekly Markets
Village Fairs
Melas
Convenience Stores
Mom and Pop/Kiranas
PDS Outlets
Khadi Stores
Cooperatives
Exclusive Brand Outlets
Hyper/SuperMarkets
Department Stores
Shopping Malls
Traditional/Pervasive
Reach
Government
Supported
Historic/Rural
Reach
Modern Formats/
International
Evolution of Indian retail
Source of
Entertainment
Neighborhood
Stores/Convenience
Availability/Low
Costs /Distribution
Shopping
Experience/Efficiency

7. RETAIL MANAGEMENT
ORGANISED RETAILING
In India organized retailing is 2%
Retail sector highly fragmented
Retail chains like Wal Mart,McDonalds
brought Rapid Growth and consolidation of
organized retail
Rapid rise of Income levels and
accompanying changes in lifestyles greatly
contributed to growth of organized retail

8. RETAIL MANAGEMENT
ORGANISED RETAILING
In India, increase in Disposable income,
Purchasing Power of growing Middle Class
conducive conditions for growth of organized
Retail
Indian Retail environment different from that
of western countries:
- Cities congested, large population in rural
areas
- Smaller purchases, limited household space

9. RETAIL MANAGEMENT
RETAILING CONCEPT
“Retaillier” French for breaking bulk
Retailer links producers to customers
Retailer is a person, agent, agency, company
or organization reaching the goods or
services to ultimate consumer
Retailers perform specific activities:
Anticipate customer wants
Stock product assortments
Acquire market information
Finance Retail business

10. RETAIL
MANAGEMENT ..1
Retailing may take place through:
Retail Store
Mail Direct
Internet Sales
Door-to-door
Retail services like Restaurants, Hotels, Parlour,
Health Services, car rentals, Travel

11. RETAIL EVOLUTION THEORIES
Four theories of evolution are:
1. Wheel of Retailing Cyclical
2. Accordion theory Theories
3. Dialectic Process Evolutionary
4. Natural selection Theories
Cyclical: Begin with one state and return
to that state at some time in future
Evolutionary: Changes similar to
biological evolution

12. Wheel of Retailing
Proposed by Malcomb. P. McNair
This theory states that in a retail institution changes
take place in a cyclical manner.
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13. The Wheel of Retailing

14. Wheel of Retailing
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15. Wheel of Retailing
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Retailers enter the business at fairly low status,
low prices and low cost operations.
Helps them compete with existing retailers
Then they succeed
Hence they acquire more sophisticated and
elaborate facilities
Finally they mature as high cost high price
retailers who become vulnerable to new entrants

16. Wheel of Retailing
Wheel represents phases through which
some types of Retailers pass:
Retailers attract customers – low price, low
service
Expand market – More expensive merchandise,
More services, open More convenient
locations. Trading up process increases costs
& price of their merchandise, creating
opportunities for new low price retailers to
enter e.g. Discount stores & category
specialists
Some Retailers don’t begin as low price, low
service entrants, e.g. Upscale fashion
specialty stores.

17. The Dialectic Process
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•High margin
•Low turnover
•High price
•Full service
•Downtown location
•Plush facilities
•Low margin
•High turnover
•Low price
•Self service
•Low Rent location
•Spartan facilities
•Average margin
•Average turnover
•Modest price
•Suburban Location
•Model facilities

18. Dialectic Process
An evolutionary theory based on premise that retail
institutions evolve.
The theory suggests that new Retail formats emerge
by adopting characteristics from other forms of
retailers in much the same way as the child is the
product of the pooled genes of the parents.
Specialty stores with high margins, low turnover
plush operations
Discount stores with low margins, high turnover low
operations
Both the above were synthesized to form category
specialist stores.

19. The Retail Accordion Theory
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20. The Retail Accordion
Retail development is linked to human
habitation.
Expands with a geographical expansion of the
society.
Starting with general stores neighboring localities
To specialist stores…things like gifts, restaurants,
entertainment at a certain distance
Theses specialist retailers when mature start
adding variety and become general stores
Some become category killers

21. The Accordion Theory
Retailers fluctuate from strategy of offering
wide merchandise with shallow assortment
to offering limited categories with deep
assortment
In rural markets, Retailers sell many categories
under one roof: shoes, cosmetics, foods, cloth,
medicines. However the assortment is shallow
and customers have limited choice.
Department stores have both width and depth
of merchandise
Speciality stores carry special categories with
deep selection

22. Natural Selection
Based on Darwin's theory of evolution.
According to this theory, a firm or retail
institution should be flexible enough to
adapt to the changing environment and
should adapt its behavior.
Success depends on the degree of flexibility
enjoyed by the firm.
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23. Those Retail Institutions Succeed which
adapt to changes in customers,
Technology, competition and legal
environment.
Department stores have tried to combat
specialty stores by opening specialty
counters within the stores.
Interest in physical fitness and increased
number of women in workforce have
made salad bars in grocery stores
successful.
Natural Selection

24. Classification of Retail Business
1. Ownership Business:
 Proprietorship
 Partnership
 Limited liability company
2. Operational Structure:
 Independent Trader,
 Chain Of Stores,
 Franchising,
 Consumer Cooperative
3. Width & Depth Of Merchandise:
 Specific Product Category
 Wide Range

25. Contd..
4. Type Of Pricing:
 Low pricing, minimum Service
 Premium Merchandise, High Service
 Premium pricing, distinctive Image
5. Consumer Interaction:
 Direct interaction
 Mail Order
 Tele-Selling
 Vending machines
 Door-to-door
 Mobile Vending

26. GROCERS - Major business is grains,
provisions, spices, edible oils. Grocers may
be dealing in many other items.
GENERAL STORES - Deal in items of daily
needs and stocking number of categories, is
identified as a general store.
CHEMIST- Deal in Ethical Pharmaceutical
Products. Require a license and a Qualified
Pharmacist. Such outlets also deal in
diverse FMCG products.

27. MODERN FORMAT STORE –
a) Part of a chain of stores with self-
service facilities
b) Part of a chain, but does not have
self-service Facilities
c) Stand-alone (not part of a chain)
with self-service facilities
FOOD STORE : Deal mainly in food
products - milk, beverages, tea, coffee,
squashes, ketchup, jams, chocolates,
biscuits, bakeries etc.

28. TOBACCO KIOSK : Deal in tobacco
products like Paan, Cigarettes, etc. are
called Pan Bidi shops. Many of them
also deal in packaged consumer
products like toilet soaps, toothpaste,
washing soaps, biscuits, confectionery,
batteries etc.
COSMETIC STORE : Deal in Ladies
Personal care products / Cosmetics,
General toiletry products, Men’s toiletry
products, Baby Care Products.

29. Classification of Retailers
Store based retailers
Ownership
Strategy Mix
Service Vs Goods retail mix
Non – Store based retailer
Traditional
Non – traditional
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30. Types of Retailers
Retail Management 30

31. Based on Ownership
Independent Stores
Chain Stores
Franchise Stores
Leased Department Stores
Vertical Marketing System
Consumer Cooperatives
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32. Independent Store
A store, which is owned by a single retailer. This
retailer does not own any other store.
The entry barriers are low
Licensing procedures are simple
Low initial investment.
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33. Chain Stores
Chain stores have two or more retail outlets that are
commonly owned and controlled.
Have a centralized buying and merchandising system
and sell similar lines of merchandise.
Eg: Musicworld, Titan, Tanishq, etc
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34. Franchise Store
A store based on a contractual arrangement between
a franchiser (manufacturer) and a franchisee, which
allows the franchisee to conduct a given form of
business under an established name and according to
a given pattern of business. Eg: McDonalds
Franchising is of two types –
Product / Trademark franchising
Business format franchising
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35. Leased Department
A department in a retail store that is rented to an
outside party is called a leased department.
The volume of sale depends on the existing store's
customer base and store's reliability.
The lessee is accountable for all the activities of the
leased department.
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36. Vertical Marketing System
A vertical marketing system is a distribution system
in which the producers, wholesalers, and retailers act
in a unified manner to facilitate the smooth flow of
goods and services from producer to end-user. One
channel member owns the others or has contracts
with them, or has the power to control them.
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37. Consumer Cooperatives
Consumer cooperatives are retail operations owned
and managed by its customer members.
In many cases, consumer cooperatives are started by
the residents of an area.
These residents believe that the existing retailers in
that area are not serving them well (either charging
too much or providing poor-quality goods/services).
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38. Retailers based on Strategic Mix -- 1
Food Oriented Retailers
Convenience Stores
Conventional Supermarket
Food-based supermarket
Combination Store
Box (limited-line) store
Warehouse stores
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39. Convenience Store
Relatively small stores located near residential areas.
Open long hours, seven days a week and carry a
variety of products with limited assortment of
merchandise. They generally carry high-turnover
convenience products.
charge relatively high prices and operate in a 3000 to
8000 square foot area.
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40. Conventional Supermarket
Focus on food and household maintenance products.
Earn very limited revenues from the sale of non-food
or general merchandise goods.
Self-service operation
Self-service enhances impulse buying.
Every day low price (EDLP) policy may be followed.
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41. Food based supermarket
Larger and more diversified than a conventional
supermarket, but smaller and less diversified than a
combination store.
The size of the store ranges from 25,000 to 50,000
square feet and the store earns 20 to 25 percent of its
revenue from general merchandise goods
It provides the full range of grocery items.
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42. Combination Store
A blend of a super market and a general merchandise
store
Maintains the identity of both a food store and drug
store
Size of a combination store ranges from 30,000 to
100,000 square feet
Designed to allow customers to have a one-stop
shopping experience
Prices are less than those in a general merchandise
store
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43. Box (limited-line) Store
A food-based discount store that concentrates on a
small selection of goods.
Has limited shopping hours, limited services, and
limited stocks.
Offers a limited number of national brands.
Prices are displayed on the shelf or on overhead signs.
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44. Warehouse Stores
Warehouse stores are discount food retailers with an
average size of 100,000 square feet.
They cater to customers who look for low price deals.
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45. Types of Warehouse Stores
Depending on their functioning style
Warehouse showroom
Catalog showroom
Hypermarket
Warehouse club
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46. Warehouse Showroom
Owned by a single-line hard-good retailer.
Usually sell well-known brands of furniture and
appliances
As soon as a customer makes the selection and places
an order, the goods are shipped from the nearest
warehouse.
offers different services like credit, delivery and
installation for extra charge.
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47. Catalog Showrooms
Discount operations that offer merchandise through a
catalog or a showroom.
Catalog showrooms generally offer hard goods like
house ware, jewelry, consumer electronics etc.
Customer orders by mentioning the corresponding
number of product in the showroom or catalog.
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48. Hyper Market
A large retail store that offers products at a low price.
A combination of a discount store and a food based
supermarket.
Spread over 300,000 square feet and offers over
50,000 different items for sale.
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49. Warehouse Club
A general merchandise retailer who offers a limited
merchandise assortment with limited service at low
prices to consumers as well as small businesses.
Store is located in remote locations in an area of
100,000 sft.
Interiors are simple and services are limited.
Warehouse clubs operating on a membership basis
are known as membership clubs.
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50. Retailers based on Strategic Mix -- 2
General Merchandise Retailers
Classified based on location, merchandise, price, store
atmosphere, service and promotion mix:
Specialty Stores
Variety Stores
Department stores
Off price retailer
Membership Club
Flea Market
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51. Specialty Stores
A type of general merchandise store
Sells limited lines of closely related products or
services to a select group of customers.
Types - Single line specialty stores and Limited line
specialty stores.
Major variable in a specialty store's strategy is the
merchandise assortment.
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52. Specialty Store -- 2
The promotional activities emphasize the uniqueness
of the store and the deep assortment they provide to
customers.
Category killer: It offers enormous selection in a
product category at relatively low prices. A category
killer offers not only low price but also variety within
a narrow product line.
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53. Variety Stores
Variety stores offer a deep assortment of inexpensive
and popular goods like stationery, gift items, women's
accessories, house wares etc.
Also called 5 and 10-cent stores
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54. Department Stores
Department stores are large retail units that offer
wide variety and a deep assortment of goods and
services.
Organized into separate departments
Provide a one-stop shopping experience to
customers.
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55. Types of Department Stores
A traditional department store offers merchandise of
average quality priced above average, with minimum
customer service.
A full-line discount department store offers a broad
merchandise assortment at less than prevailing prices.
Full-line discount department stores are popular
because they offer well-known brands at competitive
prices.
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56. Features of a Full – Line Department Store
High volume, low cost, fast turnover outlet with a
wide merchandise assortment.
Centralized checkout service
Self-service store
A low cost model
Offers private brands for non-durables and well-
known brands for durables.
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57. Off-price Retailer
Offer an inconsistent assortment of branded fashion-
oriented goods at low prices.
Purchases from manufacturers who have excess inventory
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58. Membership Club
Cater to price conscious customers.
Customers pay an annual fee to become members
Very large and located in isolated areas.
Get merchandise directly from manufacturers.
Also known as wholesale clubs, warehouse clubs and
wholesale centers.
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59. Flea Market
A flea market is an outdoor or indoor facility that
rents out space to vendors
Entrepreneurs can start business with low
investment.
Consists of many retail vendors offering a variety of
products at discount prices.
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60. Service Vs Goods retail mix
As competition increased, service organizations
started providing services at a convenient time and
location.
Service retailing consists of the sale or rental of an
intangible activity, which usually cannot be stored or
transported, but satisfies the need of the user/
customer.
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61. Types of Services
Two types:
Services along with goods,
 Rental Goods Service
 Owned Goods Service
 Non goods Service
Services without any goods (pure service).
 Services that are provided without any physical product or
good are called pure services.
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62. Non – Store Retailer
Differ in the retailing methods from store retailers.
Reach customers and market merchandise using
various methods like "infomercials," direct-response
advertising, paper and electronic catalogs, door-to-door
selling, in-home demonstrations, portable stalls (street
vendors), and vending machines.
Non store retailing takes place in two ways:
Traditional
Non traditional
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63. Traditional non store retailers
Direct Marketing
Direct Selling
Vending Machines
Catalog marketing
Telemarketing
TV Home shopping
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64. Direct Marketing
"Interactive marketing system that uses one or more
advertising media to yield a measurable response and/or
transaction at any location".
-- Direct Marketing Association (DMA)
Customer is informed about the product through non
personal media and the customer places an order through
the mail or phone.
In direct marketing, responses can be measured.
Company can concentrate its promotional activities on
potential customers.
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65. Direct Selling
"Marketing and retailing consumer goods directly to
the consumer that relies neither on direct mail,
product advertising nor fixed retail outlets".
-- Direct Selling Association
Encourages convenience shopping as well as personal
touch or feel of a product.
Can also be called door- to- door selling
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66. Types of Direct Selling
Person to Person
Multilevel (network) marketing
Party plan
Direct selling benefits both consumers and sellers.
From the consumers' point of view goods are available
at their convenience.
Direct selling is advantageous for retailers as it is an
effective, low cost channel.
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67. Vending Machines
Involves coin or card-operated dispensing of
products.
Eliminates the use of sales personnel and facilitates
round-the- clock sales.
Vending machines help customers avoid the
inconvenience of shopping in a store.
High Installation costs
Also called Automatic Merchandising.
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68. Catalog Marketing
Catalog marketing refers to sales made through
catalogs mailed to a select list of customers or made
available in a store.
Basic product and pricing information is given along
with instructions for placing an order.
The kind of delivery (mail, express service, parcel
post) that the customer wants can be mentioned in
the order
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69. Telemarketing
Provide more convenience and service satisfaction to
customers,
Useful for customers who want to avoid traffic
congestion and parking problems.
Allows retailers to provide customers information on
new merchandise and upcoming sales events.
Deliver merchandise to the customers' residence or
hold it till it is picked up by the customer at a later
date.
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70. TV Home Shopping
TV home shopping works in the following manner:
The merchandise items are displayed,
described and demonstrated on television.
Using the toll-free number provided, customers
can place orders.
Payments are done through credit cards.
The goods are delivered by courier service
along with a guarantee.
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71. Non-traditional non store based
retailers
World Wide Web
Retailers' websites allow customers to order with a
click of the mouse.
To attract potential customers, retailers also send
details of new products through email to customers.
Use of Internet as a medium for promoting their
goods and services all over the globe at minimum
cost.
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72. Video Kiosk
The term kiosk is derived from a Turkish word
which means open summer house or pavilion.
Kiosks are often placed near the entrances of
shopping malls.
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73. Video Catalog
A video catalog is a retail catalog on a CD-ROM
disk to be viewed on a computer monitor.
After viewing the catalog, the consumer can call
up the retailer to order the goods.
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74. Summary
Theories of Institutional Change
Wheel of Retailing
Dialectic Process
Retail Accordion
Natural Selection
Classification of Retailers
Store-Based Retailer
Non Store Retailer
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