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Introduction to Retail Management

 

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 also due to ever-changing and dynamic consumer psychology.

What is retailing:

Retailing is one area of the broader term, e-commerce. Retailing is buying and selling both goods and consumer services. With more number of educated and literate consumers entering the economy and market, the need for reading the pulse of the consumers has become very essential.

Retail marketing is undergoing radical restructuring. This is because of increase in gross domestic product, increase in per capita income, increase in purchasing power and also the ever changing tastes and preferences of the people. The entry of plastic money, ATMs, credit cards and debit cards and all other consumer finances, the taste for the branded goods also added for the evolution of retail marketing.

Retail marketing is not just buying and selling but also rendering all other personalized consumer services. With the RM picking up it has given a new look for various fast moving capital goods (FMCG) goods. This not only increased the demand for various goods in the market but also made retail marketing the second largest employment area, the first being agriculture.

Definition and Scope of Retailing:

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’. In simple terms, it implies a first-hand transaction with the customer.

Retailing can be defined as the buying and selling of goods and services. It can also be defined as the timely delivery of goods and services demanded by consumers at prices that are competitive and affordable.

Retailing involves a direct interface with the customer and the coordination of business activities from end to end- right from the concept or design stage of a product or offering, to its delivery and post-delivery service to the customer. The industry has contributed to the economic growth of many countries and is undoubtedly one of the fastest changing and dynamic industries in the world today.

Types of Retail Operations:

Retail operations enable a store to function smoothly without any hindrances. The significant types of retail operations consist of:

  • Department store
  • Speciality store
  • Discount/Mass Merchandisers
  • Warehouse/Wholesale clubs
  • Factory outlet

Retail Management System targets small and midsize retailers seeking to automate their stores. The package runs on personal computers to manage a range of store operations and customer marketing tasks, including point of sale; operations; inventory control and tracking; pricing; sales and promotions; customer management and marketing; employee management; customized reports; and information security.

The Emerging Sectors in Retailing:

Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains, convenience stores and fast-food chains.

The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats:

  • Hypermarts
  • Large supermarkets
  • Mini supermarkets
  • Convenience stores
  • Discount/shopping list grocer

The traditional grocers, by introducing self-service formats as well as value-added services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organised retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation’ effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles.

In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money’ image. The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire for to be part of this class. Hence, one can assume that the retailing revolution is emerging along the lines of the economic evolution of society

Retail store operations:

When retail-marketing space is a best shopping zone for the consumers, it is quite challenging to the businessman. It has to ensure not only product availability but also make the shopping more creative and pleasurable. Retail Management has to take care of various areas like:

  • Store administration and management
  • Inventory and stock management
  • Managing of receipts
  • Theft management
  • Customer service
  • Sales promotion
  • Employee morale

Retail Management is once again a wonderful economic activity that creates a win-win situation. It brings not only the success of the businessman but also the success of both consumer and the employees. This is possible only if there is product and price satisfaction.

Store administration and management- this involves cleanliness, discipline, proper documentation, no objection certification for various products and skilful management of products and personnel.

Inventory management: It becomes the duty of the retail manager to check day to day and time to time the stock so as to ensure the product is made available at the counters. Not only the expected product availability has to be maintained but also the quality and shelf life has to be guaranteed. Inventory has to be evaluated correctly and receipts have to be properly maintained. With retail marketing shopping has taken a trendy and pleasurable affair. With all these changes customer service has become the most important service to be rendered in the marketing field. The customer has to be given maximum possible choice with a blend of perfect sales promotion from the side of the retailer. So the overall picture of retail stores promotion has become a exclusive area of management.

All other 5 points to be detailed

  • Characteristics and trends in retailing
  • Interaction with the end consumers
  • It enhances the volume of sales but the monetary value is less
  • Customer service plays a vital role
  • There is a tendency for automatic sales promotion
  • With more outlets retail marketing creates visibility
  • Location and layout plays a vital role.
  • Creates employment opportunities to all age groups, gender, irrespective of qualification and religion.
  • Generates job opportunities in flexi timings.
  • Retail marketing creates a place, time and possession utility for a product.

Functions of a Retailer:

From the customer’s point of view, the retailer serves him by providing the goods that he needs in the required assortment, at the required place and time. From an economic standpoint, the role of a retailer is to provide real added value or utility to the customer. This comes from four different perspectives:

  • First is utility regarding the form of a product that is acceptable to the customer. The retailer does not supply raw materials, but rather offers finished goods and services in a form that the customers want. Retailer performs the function of storing the goods and providing us with an assortment of products in various categories.
  • He create; time utility.-by keeping the store open when the consumers prefer to shop.
  • By being available at a convenient location, he creates .place utility.
  • Finally, when the product is sold, ownership utility is created.

The rise of retailer

In the not so distant past, manufacturers created a product, advertised it slickly and sold it through their distribution channel. The manufacturing companies enjoyed economic power, as they were significantly bigger in size as compared to the distributors or the retailers. They determined prices, the products that the retailer could stock and also the dealer and distributor margins. They would also independently advertise for their products. In case of a dispute with the distributor or retailer, it would not be rare for the manufacturer to discontinue supplies. However, much has changed.

Today, retail has emerged as a separate function by itself. The environment in a large organized retail store is significantly different from that of a traditional or a mom and pop store. In this section, we examine the reasons behind this change.

Proximity to the Customer

Today, with the emergence of large supermarkets, hypermarkets and various other formats like the department stores, the retailer is the closest to the consumer. Most stores have their own policies and decide how to inf1uen~hoppers. In an age of global manufacturing and selling, the organization may be based in one part of the world and may actually retail its products in various other regions. The retailer is the first contact point that the consumer has with the product, and this fact has given the retailer tremendous power.

Technology

With the increasing use of technology and the use of the Point of Sale scanning systems at barcode, a wealth of information is now available to the retailer

Retail involves the sale of goods from a single point (malls, markets, department stores etc) directly to the consumer in small quantities for his end use. In a layman’s language, retailing is nothing but transaction of goods between the seller and the end user as a single unit (piece) or in small quantities to satisfy the needs of the individual and for his direct consumption.

The retailers purchase goods in bulk quantities (huge numbers) to be sold to the end-users either directly from the manufacturers or through a wholesaler.

The Supply chain

Manufacturers ………….          Wholesalers……….     Retailers……………. End User (Consumer)

Manufacturers: Manufacturers are the ones who are involved in production of goods with the help of machines, labour and raw materials.

Wholesaler: The wholesaler is the one who purchases the goods from the manufacturers and sells to the retailers in large numbers but at a lower price. A wholesaler never sells goods directly to the end users.

Retailer:  A retailer comes at the end of the supply chain who sells the products in small quantities to the end users as per their requirement and need.

The end user goes to the retailer to buy the goods (products) in small quantities to satisfy his needs and demands. The complete process is also called as Shopping.

Shopping: The process of purchasing products by the consumer is called as shopping. However there are certain cases where shopping does not always end in buying of products. Sometimes individuals do go for shopping but return home empty handed. Such a shopping is merely for fun and is called window shopping. In window shopping, individuals generally go to the market, check out various options and their prices but do not buy anything. This kind of shopping helps to break the monotony.

Types of Retail outlets

Department Stores

A department store is a set-up which offers wide range of products to the end-users under one roof. In a department store, the consumers can get almost all the products they aspire to shop at one place only. Department stores provide a wide range of options to the consumers and thus fulfill all their shopping needs.

Merchandise:

 

  • Electronic Appliances
  • Apparels
  • Jewellery
  • Toiletries
  • Cosmetics
  • Footwear
  • Sportswear
  • Toys
  • Books
  • CDs, DVDs

 

Discount Stores

Discount stores also offer a huge range of products to the end-users but at a discounted rate. The discount stores generally offer a limited range and the quality in certain cases might be a little inferior as compared to the department stores.

Wal-Mart currently operates more than 1300 discount stores in United States. In India Vishal Mega Mart comes under discount store.

Merchandise:

Almost same as department store but at a cheaper price.

Supermarket

A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket. A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer. The various food products (meat, vegetables, dairy products, juices etc) are all properly displayed at their respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.

Merchandise:

  • Bakery products
  • Cereals
  • Meat Products, Fish products
  • Breads
  • Medicines
  • Vegetables
  • Fruits
  • Soft drinks
  • Frozen Food
  • Canned Juices

Warehouse Stores

A retail format which sells limited stock in bulk at a discounted rate is called as warehouse store. Warehouse stores do not bother much about the interiors of the store and the products are not properly displayed.

Speciality Stores

As the name suggests, Speciality store would specialize in a particular product and would not sell anything else apart from the specific range. Speciality stores sell only selective items of one particular brand to the consumers and primarily focus on high customer satisfaction.

Malls

Many retail stores operating at one place form a mall. A mall would consist of several retail outlets each selling their own merchandise but at a common platform.

E-Tailers

Now a days the customers have the option of shopping while sitting at their homes. They can place their order through internet, pay with the help of debit or credit cards and the products are delivered at their homes only. However, there are chances that the products ordered might not reach in the same condition as they were ordered. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In this kind of shopping; the transportation charges are borne by the consumer itself.

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