Sarasvathi. V

epgp books









Today, a vast majority of India’s young population favours branded goods. With the spread of satellite televisions and visual media, urban life style trends have spread across the rural areas also. Thus, 85% of the retail boom which was focused only in the metros has started to infiltrate towards smaller cities and towns. Retailing is a convenient, convincing and comfortable method of selling goods and services. Retailing, though as old as business, trade and commerce has now taken new forms and shapes. This is because of new management techniques, marketing techniques and due to ever changing and dynamic consumer psychology.


Significance and characteristics, types, trends in Retailing and e tailing concepts in metros



Retail Industry, one of the fastest changing and vibrant industries in the world, has contributed to the economic growth of many countries. The term ‘retail’ is derived from the French word retailer, which means ‘to cut a piece off or to break bulk’, pare, divide” in terms of tailoring (1365). It was first recorded as a noun with the meaning of a “sale in small quantities” in 1433 (from the Middle French retail, “piece cut off, shred, scrap, paring”). Like in French, the word retail in both Dutch and German also refers to the sale of small quantities of items. In simple terms, it implies a first-hand transaction with the customer.


David Gilbert defines retailing as, -Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as means of distribution”.


Retailing involves all the activities related to direct selling of products or services to the ultimate consumers or users of the product for personal, non-business purpose. Any organization it may be a wholesaler, manufacturer etc. Retailing business if it sells products or services to the final customers or consumers through any method like direct, mail, telephone, vending machine etc.


Retailing provides a crucial link between producers and consumers in a modern economy the performance of this sector have a strong influence on consumer welfare.


Retailing not only provide a consumer with range of products, but also wide range of complementary services. They also provide producers with much needed information on consumers demand pattern.



Characteristics of organized retail formats


➢     Direct interaction with customers

➢     Employment generation

➢     Boosts to exports

➢     Improvement of government revenues

➢     Dominant in food, grocery & apparel.

➢     Provide ideal shopping

➢     Expose shoppers

➢     Expanded business opportunities.


Retail Formats: Retail format is the store ‘package’ that the retailer presents to the shopper. A format is defined, as a type of retail store that includes location, size, merchandise, display, service, price that are used by a set of retailers.


Classification is based on


1.  Stored based is further classified into Product Mix and Price.

2.  Non Stored Based

3.  Service retail



I. Store retailers: They are divided into Departmental Stores, Discount Stores, Specialty Stores, Convenience Stores, Off-Price Retailers, and Warehouse Clubs.


Classifications based of the product mix are as follows


Convenience stores: These are relatively small stores with an area of 400-2000 sqft, often located near residential areas. They stock a limited range of high-turnover of convenience products like eggs, bread, milk, etc.,.and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to convenience premium and offer a limited line of convenience products

✓ Supermarket: Largely self-service outlets, catering to varied shopper needs, are termed as markets. These are located in or near residential high streets. These contribute to 30% of all food and grocery organized retail sales. Supermarket classified further into mini supermarket typically 1,000 sqft to 2,000 sqft and large supermarket ranging from a size of 3.500 sqft to 5,000 sqft, having a strong focus on food and grocery and personal sales. The supermarkets offer relatively less assortments but focus on specific product categories.It is a large form of the traditional grocery store, offering a wide variety of food and household products structured into aisles. It is big in size and has a wider collection than a conventional grocery store, but is smaller and more limited in the variety of commodities than a hypermarket or big-box market.


✓  Hypermarkets: They are typically large, stating from 40,000 sq. Ft plus are usually located outside the city limits. Hypermarkets generally provide daily necessities and grocery like items. Pricing is competitive and they offer volume discounts. Hypermarkets not only offer consumers the most extensive merchandise mix, products and brand choices under one roof, but also create superior value for money advantage of hypermarket shopping. Pantaloons, big bazaar, spencers hypermarket and Trents star India fit this category



This is further categorised as


a. Specialty stores: These are single category, focusing on individuals and group clusters of the same class with high product loyalty. Examples- Archie’s, Woodland etc.

b. Category killers: A new concept imported from U.S, it is a kind of discount specialty store that offers less range, but profound variety of products. They offer a deep assortment in a category at comparative low price. These stores are capable of “killing’ that specific category of merchandize for other retailers.

c. Departmental stores : Large stores ranging from 20,000-50,000 sqft, catering to a variety of consumer needs further classified into localized departments such as clothing toys, home groceries etc. In India, the numbers of departments’ stores are fewer when compared to other retail formats such as supermarkets and discount stores. Shopper’s stop was the first one to open a department store in the early 1990.They have a large layout with a wide range of merchandise mix, usually in cohesive categories.


Classification based on the price of the merchandise offered to the end customer



Consumer co-operatives: It plans at providing necessary merchandise at reasonable prices. As a national policy, consumer cooperatives have been encouraged and developed as independent organization possessed, managed and controlled by its affiliate for protection of the interested consumers.


Off price retailers: They acquire producer seconds, overrun, off seasons at a profound discount. These outlets are usually seen by a parent company as a means of increasing the business.


Discount department stores: It range from 80,000 sqft to 130,000 ft, offers wide variety of products including automotive parts and services, house wares, home furnishing, apparels and beauty aids.


Outlet stores: It range from 20,000 sqft to 80,000 sqft are classically the discount arms of main department stores.


Warehouse clubs: It ranges from 104,000 sqft to 170,000 sqft, offer a assortment of goods in bulk, at wholesale prices. This type of retailer is usually situated in retail or Business Park and where premises rents are lower. This enables this type of retailer to stock, display and retail a large variety of good at very competitive prices.


✓ Super warehouse store: A hybrid warehouse/superstore with 50,000 plus objects and the full range of service departments, characteristics high quality perishables and reduced prices.

   ✓ Limited assortment store: A low price outlet with minimum service and fewer than 2,000 things. It features abundant private label merchandise and is trendy among stamp beneficiaries looking to widen their limited money.


✓    Supercenter


✓    Wholesale club


A retail /whole saler blend propose to its consumers and small business a restricted and economical collection of food and non-food products.


✓  Dollar stores: A traditional format that not sells 20-80% of groceries and other consumables products at discounted prices.


✓ Organised retailing: Organized retail is nothing but a retail place where all the items are segregated and brought under one roof, unlike the unorganized retail where diverse things are sold in different shops. It also intends to bring maximum of different brands making the same type of product together. Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses


II.Non-store retailers: These types of retailer use various methods, such as direct response advertising, etc. for selling their products. They are categorized as Direct Selling, Electronic Retailing, Direct Marketing, Automatic Vending and Buying Service.


a) Direct selling is done by contacting customers directly in a convenient location and demonstrating merchandise benefits and taking an order and delivering the merchandise or performing the service. Oriflame used this model quite successfully for many years.


b) Electronic Retailing (also called e-tailing, online retailing, and Internet retailing)This is a retail format in which the retailers communicate with customers and offer products and service for sale over the Internet.eg.-jabong.com


c) Television home shopping is a retail format in which customers watch a TV program that demonstrates merchandise and then place orders for the merchandise by telephone.


Other types of retailers defined by the size of their business and the way they in which they sell their products are as follows


1. E-tailer – This type of retailer enables customers to shop on-line via the internet and buy products which are then delivered. This type of retailer is highly convenient and is able to supply a wider geographic customer base. E-tailers often have lower rent and overheads so offer very competitive pricing.

2.Malls: This is the largest form of organized retailing today. Malls are located mainly in metro cities, in proximity to urban outskirts, this format ranges from approximately 60,000 sqft to 7, 00,000 sqft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Mall development is phenomenal in India. With huge quantum of new format retail space in the pipeline, innovation, striking the right tenant mix, effective mall management and provision of ample parking space are components that will decide the future success of mall developments.


3. MBO & EBO: Multi Brand Outlets offers several brands across a single product category. These usually do well in busy market places and metros. Exclusive Brand Outlets ranging from a size of 500sqft to 5000 sqft and above, and is owned/ managed by the company or through its franchise. These can offer single brand as well as multiple brands.

4. Corporate chain stores: These retail organizations own two or more outlets commonly owned and controlled by corporate. They are engaged in central buying and merchandising, and selling similar lines of merchandise. They generally store products in the warehouse before selling them at the retail store. They have greater purchasing power, wider brand recognition and better-trained employees.


Organization structure of a retail business


The organization structure of medium and large sized organizations includes the following departments:

  1. Merchandising: This department takes the responsibility for planning, buying and selling the merchandise.
  2. Sales Promotion: This department takes the responsibility of all sales promotion activities like display, advertising, publicity and public relations etc.
  3. Financial: The responsibilities of this department include matters regarding accounts payable and receivable, inventory and financial matters typical of all business from book keeping to accounting.
  4. Operations: The responsibilities of this department include all functions related to operating the store such as customer services, personnel department, merchandise security and building maintenance.


Retail merchandising process


The process that are invloved in retail merchandising are:


1)      Analyzing the local customers: A retailer must consider these factors


●     The geographical locations of the store

●     The population content of the area

●     The social activities that the area offers

●     The economic conditions and level of the local population

●     The fashion influences of the particular population


2)      Selecting a fashion image: Every retail store has a public image in the minds of its customers irrelevant of the store, want to have it or not. A good retailer should make use of this fact by creating his own store’s image that would attract its customers.


Target customers are middle class people then the image should be somewhat conservative and stocking the apparel products which are suitable to typical middle class and also having the price range matching the purchasing power of the middle class customer.


3) Buying the merchandise: Purchasing the trendy products is a herculean task. It requires lot of planning for budget, selection of merchandise, selection of suppliers etc.


4) Planning the stock level:

The buyer must plan to purchase his merchandise that would be delivered at the right time. Proper delivery time will maintain the normal level of inventory is a very important factor. Delayed delivery will lead to the business loss as well as sometimes the customer loss also. In addition, it is important to decide on the quantity of the goods that has to be ordered.


▪      Determining the basic stock

▪      Depth assortment planning

▪      Breadth assortment planning

▪      Model stock


Open-to-buy (OTB): For a new purchase at a given time, the amount a store can spend is open-to-buy. The store should stay within those limits. The level of OTB is calculated after careful planning of the basic stock, estimated sales, and planned inventory sales.


5)  Receiving and stocking the merchandise


●     Received date of the item

●     Supplier or manufacturer

●     Department number

●     Class of merchandise

●     Wholesale cost of the item

●     Retail price of the item


6) Display: The way in which the merchandise is displayed is very important for sales. Good displays always enhance the sales of the store and a poor display may slow the sale of good merchandise.


7)  Sales Promotion


●     To introduce a new product

●     To inform the public of special prices or conditions of sales

●     To attract new customers

●     To establish the store’s authority or image

8)  Customer Services


In order to retain customers, the retailer has to offer more than the right merchandise that is customer service. This includes offering membership cards, free delivery, good parking facilities, customer credit, credit card facilities, free alteration services etc. Customers service can be classified in to three categories, depends upon the nature of industry or goods.


✓ Pre sales customer services, which is offered when the customer enters the stores before making the purchase like free welcome drinks, chocolates, trial or test samples etc.

   ✓  Point-of-sale customer services, which is offered when the customer makes the actual purchase like free delivery, gift wrapping, discounts, free gifts etc.


✓   After sales customer services, which is offered after the sales is over like free services, warranty and guarantee for spare parts etc.


Importance of organized retailing


➢     Price advantage

➢     Merchandise

➢     Dearth of time

➢     Employment opportunities

➢     Better social infrastructure

➢     Benefit to tourism

➢     Better realization of taxes




The main goal of retailing is to fulfill the consumer’s needs .A success of a marketing strategy can be known from the consumer s response. The definition of the target market and the identification of threats and opportunities that would affect consumer’s interest to the product can be done with the help of the data of consumers. They influence the consumers very much like what to wear, what to buy, when to buy, how to buy, etc.




It consists of:


●     Point of sale (POS) advertising

●     Sales promotion

●     Publicity


POS ADVERTISING: It is in the form of materials and activities. POS activities consist of display, visual merchandising, display contest; shelf on hire (SOH) for brands etc, POS advertising is very cost effective and addresses the right target customers.


Sales promotion is done with special communication and displays. It uses copy similar to those used in media advertising and other props and materials so that it immediately attracts the customers attention. Sales promotion need not necessarily involve price offs every time. The theme is extended even to the uniforms that store sales personnel wear.


Publicity is the nonpaid advertising mileage that the retail organization gets through free write ups in media about the stores latest arrivals, sales promotion or any event that the store or brand has organized to achieve its sales objectives. New store launches get a great deal of publicity by the way of television interviews of the CEO, interviews on radio and interviews and what ups in the press. Innovations and exclusive programmers are generally accorded the greatest media hype by public relation.




With the tremendous growth in the economy, retail management has become one of the fastest growing careers in the industry. India is one of the fastest growing economies in the world. It is witnessing a change in several areas which has enabled the people to spend more and thus gives an opportunity for retail business to flourish in India.




Web links


  • https://dictionary.cambridge.org/dictionary/english/ballistic
  • www.dictionary.com/browse/extravaganza
  • https://dictionary.cambridge.org/dictionary/english/overrun
  • https://dictionary.cambridge.org/dictionary/english/perishable
  • https://www.macmillandictionary.com/dictionary/british/overrun
  • https://dictionary.cambridge.org/dictionary/english/vending