Meaning and Definition of Retailing PDF

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Meaning and Definition of Retailing: Retailing is a set of activities performed in selling the goods and services directly to the end users. The goods and services sold to the consumers are meant for their personal use and not for resale or business activity. Retailing is the last activity conducted in the chain of product distribution For understanding the types of retailers and their function, the retailing network may be classified into two broad categories- (i) store retailing, and (ii) non-store retailing. Like the growth cycle of business firms, the retailing activity also passes through four stages- embryonic, growth, maturity and decline. A retail store observes the period of accelerated growth, reaches the stage of maturity and then starts declining. It has been observed that the old-fashioned retail stores took more than five decades to reach the stage of maturity in terms of volume of sales, coverage of consumers and expansion of chain of retail stores. However, modern retail store types reach their maturity very fast due to organized retailing management. Definitions and Nature of Retailing: 1. According to W.J. Stanton, “Retailing includes all activities directly related to sales of goods or services to the ultimate consumer for personal a non-business use”. 2. According to Cundiff and still,” Retailing consist of those activities involved in selling directly to ultimate consumer.” 3. Retailing is an end part of distribution process. It involves selling products and services to customers for their non-commercial, individual or family use. Unlike whole-selling, retailing is aimed at the actual consumer and involve for personal consumption and not for institutional consumption. Nature of Retailing:

Retail business can be divided into certain categories on the basis of margin-turnover retail operations this framework is useful in planning and development of retailing strategy. Margin and turn over are the key parameters of retailing. The success of retail outlet depends on these two parameters. Margin is defined as the percentage mark-up at which the inventory in the retail store is sold and turnover is defined as the number of times the average inventory sold in a year. tia eR

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1. Low Margin High Turnover: Retailing may be low margin and high turnovers like in big bazaar, Vishal Mega mart, Wal-Mart, Pantaloon etc. they have wide variety of FMCG in several merchandise lines. These stores are located near to the consumers. 2. High Margin and Low Turnover: These stores are having distinctive merchandise and sales approach. The stores in this category price their products above the market price. These store provide many specific services and sell special category of products, these stores are located in prime place. Examples are Lifestyle Chain, Armani DLF, Omega, Ethos etc.

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3. High Margin-High Turnover: Stores are those which have narrow line of items that turn over these are located in a non-commercial location, overhead cost may be high, but high prices can ensure profitability, example are convenience food outlet. 4. Low Margin Low Turnover Retail: Stores are having competitive low price, at the same time sales volume is also low, their location is also poor, and they face difficulty to survive in market. Feature or characteristics: 1. Sale to Ultimate Customer: Goods or service in a retail transaction are sold to final customer for consumption. There is no further re-sale of the product or service. Goods and service sold for consumption may be for domestic or household use or industrial uses are classified as retail transaction. Even sale of spare parts, equipment, machineries etc., to industrial house or business is organized are classified under retail transaction. Once the goods are sold, there should not be further sale of the product or service. It is consumed by the customer or the person for whose benefit he has purchased. 2. Convenient Form (Quantity): The word retail means cut size ‘small piece’ or break the bulk. Retailers buy in large quantity from middleman or manufactures; he breaks the bulk and sells in small quantities to match the need of customers. Goods may be repacked or delivered in small packs in convenient form which an individual can carry to his home.

3. Convenient Place and Location: Retailers deliver goods from a location that is convenient to the customers. In case of physical location. It may be a small store, a shop and multiplex. It may also be over the internet, through mobile or mail order business. Goods/or service are offered to the convenience and comfort of the consumer. Online shopping through internet, mobile is becoming popular with the growth of I-T and courier service. (Ex- the advertisement of pizza, on the TV is shown delivering within half hour of its order) 4. Last Link in Chain of Distribution: A retailer is the last link in the chain of distribution. He sells goods to final customer. He connects between middlemen and consumer acting as link between them. He is described as merchandising arm or neck, in the bottle of distribution. He acts as communicator between manufacturer and consumer. Benefits both of them by sharing necessary information that gives profit to manufacturer by manufacturing goods that are liked by the people. 5. Organized Sale: Retail marketing is organised business of selling to the customer by application of principles and functions of marketing. Un-organised retail like street vendor a Paanwala may not be typically classified under retail marketing. 6. Marketing not Just Sale: Organised retailing or retailing is not an activity of just a sale. It is a marketing activity. Consumer is offered comfort and convenience and concession in buying goods of his choice. Marketing functions like transportation banking insurance, ware housing are undertaken to create and deliver goods to satisfaction of people. Goods are designed and delivered to match the taste of people and satisfy their desire and

thereby ensuring customer delight. Every marketing effort is undertaken in the sale or delivery of goods. 7. Goods and also Service: Retail marketing is not only connected with delivery of physical goods or merchandise like Grocery Vegetable, Electronic goods etc., it is also engaged in providing services. Now a days marketing of services is becoming an important areas like Insurance, Tourism, Hotel, Investment etc. With Globalization process, entry of MNC’s, development in the field of I-T sector has made marketing of services more popular and developing. 8. Creation of Utility: Retail marketing creates Form, Place and Time, utility. It breaks the large bulk size into small size and changes the form of product. Place utility is created by bringing goods from place of manufacturer to the place of consumer. Goods are stored in advance and delivered when demanded by the customer. A retailer creates these utilities and their by increases value and utility of goods. 9. Customer Delight: Retail marketing not only satisfies customer’s wants, it ensures their delight. It provides more satisfaction than what is expected through its retail network. Retail marketing collects information regarding type of product decide by them, Communicates such information to manufacturer. Product is designed to match the changing taste of customer. Retailer stores and presents such product to the people in size, style, price and other services through his store that increases satisfaction levels of people. Some of the major retail stores are briefly described here: i. Departmental store. ii. Exclusive retail store or specialty store.

iii. Supermarket. iv. Supermarket, hyper-store. v. Convenience store. vi. Discount store. vii. Non-franchise or catalogue store. i. Departmental Stores: A departmental store offers a wide range of products in an organized fashion and is easily accessible by the consumer. The product line of departmental stores is substantially long. Departmental stores provide better amenities to consumers for shopping by virtue of having adequate infrastructure for parking, leisure activities and hobbies. Departmental stores face stiff competition from discount shops and downtown retailers of poor quality goods. Departmental stores provide the consumer services of honoring the product guarantee, warranty, post-sale services and the latest technical information. Departmental stores also organize educational programs for the benefit of the consumer on the various aspects of products use and other related matters ii. Exclusive Retail Stores: Exclusive or specialty retail stores are unlike departmental stores and do not have a long product line. These stores are narrow in their product lines and are largely confined to the product line of a specific company. They present a varied assortment within that product line. Examples can be drawn from many consumer goods companies promoting exclusive retail stores like Phillips for a range of electrical, audio and video household gadgets; Raymond’s for textiles; Bata for shoes and leather goods, and so on.

Exclusive stores can be further classified with a narrow distinction as stated below: a. Single line stores. b. Limited line stores. c. Super specialty stores. Single line stores may be identified as the retail stores selling only one product like textiles. Limited line stores may be defined as the shops having micro specialization based on goods and services, gender and age, like exclusive men’s wear retail stores, kids Shoppe for garments etc. The retail stores engaged in selling products scientifically designed for a particular purpose may be categorized as super specialty stores, e.g., surgical equipments stores, sports accessories; fashion garments stores and the like. iii. Supermarket: Supermarkets are a type of organized retail stores which handle a relatively large volume of goods and services at low cost – the high margin principle of relating. Consumers are provided franchise in the supermarkets and these are largely organized as self-service outlets. Supermarkets exhibit a long range of product line of various consumer needs like grocery, household appliances, entertainment, toys, garments, etc. It has been observed that supermarkets earn an operating profit of 12% on their sales and 10-15% of their net worth. Supermarkets also provide consumer conveniences like in-shop entertainment, pantry, home delivery service, opinion survey and consumer education. Supermarkets have chain retailing in many countries like Woolworths in the UK and Europe.

iv. Supermarket, hyper-store: There is a marginal difference between a supermarket and a hyperstore. The latter category of stores operates on a larger area (approximately 1-2 lakh square feet) with a wide range of products. These markets have a combination of all retail functions like credit services, discounts, finance and other related services. The basic approach of a hyper-store is exhibiting a wide range of assorted products for all types of consumers and displaying them in bulk. The product handling costs in such stores would be minimum and they also function as the sole distributors to the convenience stores. v. Convenience Stores: These stores are small retail outlets located near residential areas for the convenience of the consumers. They are open for long hours and all through the week. This category of stores carries a limited line of consumer products. Convenience store operate at a high turnover and a relatively higher profit basis as when compared to any of the other retail stores. The consumers seem to be willing to pay a higher price to the retailers for the convenience provided to them at their doorsteps. vi. Discount Stores: In principle, a discount store should sell all types of merchandise, offering largely reputed brands at lower prices but not inferior goods. Recently, some consumer products manufacturing companies have started owning discount retail stores to sell products earmarked as second grade by their quality control division. Hence, discount retail stores have moved from general stores down to speciality merchandise stores such as discount sporting goods stores, garments, shoes, electronic, book stores and the like.

vii. Catalog Showrooms: The catalog store is a new generation super store which deals with a variety of goods and services of a wide large. Such stores conduct retailing operation for all types of goods including interiors, construction material, mechanical gadgets, electronics, and many more. Consumers buying goods from catalog shops have to ask for or indent specific goods as per the inventory specification in the catalog. The consumer wait in the designated place for the delivery of the goods and at times the stores even arrange a home delivery for heavy products. Catalog stores provide a return facility to consumer within a stipulated period. The goods can be returned to the stores without any reasons if the consumers are not satisfied.

3. The Retailer within the Distribution Channel: From a traditional marketing point of view, the retailer is one of many possible organizations through which goods produced by the manufacturer flow on their way to their final consumers. These organizations/firms perform various roles by being a member of a distribution channel. For example, a soft drink producer will use a number of distribution channels for its confectionery, which involve members such as agents, wholesalers, convenience stores, supermarkets and vending machine operators. Hence, these channel members, or marketing intermediaries as they are sometimes referred to, typically perform the functions that a manufacturer does not have the resources to perform. A distribution channel is a set of chain of firms/intermediaries that facilitate the movement of products from the point of production (POP) to the POS to the end consumer, and retailers are the final contact to business transaction in a distribution channel that links

manufacturers to consumers. In this flow or chain, wholesalers come before the retailers, and it is also essential to understand the term “wholesaler” as both wholesalers and retailers are intermediaries in distribution channels. Wholesalers are typically involved in selling to individuals or organizations for their business use or for resale purpose. In other words, wholesalers buy and resell merchandise to retailers and other merchants and not to the end consumers. Generally, wholesalers sell in large quantities/volumes. They take the title of the goods and also provide credit facility to the retailers. Hence, a wholesaler acts as an intermediary between the manufacturer and the retailer. Retailing thus may be understood as the final step in the distribution of merchandise, for consumption by the end users. In easy terms, any individual or firm or organization that sells products to the final consumers is performing the function of retailing. They endeavor to satisfy customer needs by having the right merchandise, at the right price, at the right place, in a convenient way when the customer wants it. This creates real added value or utility value for the end consumers. This comes from four perspectives, and they are as follows: 1. The form utility of the merchandise that is acceptable to the customer. 2. The time utility by keeping the store open when the consumers prefer to shop. 3. The place utility being available at a convenient location. 4. The ownership utility when the merchandise is sold. In this way, retailers provide a platform for manufactures to sell their merchandise. This also includes activities/functions such as displaying the merchandise in the most attractive way, alongside related or

alternative items at a geographic location and at a place that is convenient for a consumer to access during shopping. These intermediaries facilitate the distribution process by providing points where deliveries of merchandise are altered in their physical state (such as being broken down into smaller quantities, or being repackaged) and are made available to customers in convenient and/or cost-effective locations. Over the period of time, using price as a competitive weapon—by introducing ranges of own branded goods (private labels, PLs) and developing attractive persuasive shopping environments and experience— retailer brands have been successful in achieving the consumer loyalty toward their retail stores/outlets. This shift of power to the retailer has been further enhanced by IT that has enabled them to gain a deep understanding of their customers’ purchasing behavior, patterns, and preferences. For instance, Amazon (dot) com maintains a data warehouse with information about what each customer has bought. By using this pool of data and information, customers returning to its portal are immediately recognized and suggestions based on their past purchases are made. Also, e-mails are sent to the customers when new books in the subject area of their interest are published. Hence to gain loyalty, retailers focus on customer service, which is defined as the summation of acts, elements, and value that enables and allows consumers to receive/gain what they desire or need from the respective retail establishment. The brick-and-mortar stores leverage their customer base by making it convenient and engaging to buy at stores, over the Internet. To take on the non-store retailers, these physical retailers are becoming more than just stores to buy products by offering entertaining and educational experiences to their target customers. These features improve customers’ visual experiences, provide them with a unique shopping experience, and enhance the loyalty behavior

and hence sales potential by enabling them to “touch, feel, and try before they buy.” Although in some distribution channels, the manufacturing, wholesaling, and retailing activities are performed by independent firms, most distribution channels have some vertical integration. Classification of Retailers: The retail sector can be primarily classified as: 1. Unorganized and 2. Organized retailing 1. Unorganized Retail: The Indian retail industry was traditionally dominated by small family- run kirana stores or neighborhood mom-and-pop store. These shops are characterized by very small area and limited assortment and varieties stacked in a small place, inefficient upstream processes, poor infrastructure and lack of modern technology, inadequate funding, and absence of skilled manpower. This traditional way of retailing is known as unorganized retailing. In India, unorganized retailing includes units whose activity is not registered by any statute or legal provision, and/or those that do not maintain regular accounts. Hence, this sector is characterized by small and scattered units that sell products or services out of a fixed or mobile location. It consists of unauthorized small shops—conventional kirana shops, general stores, corner shops, among various other small retail outlets —but these small shops remain as the radiating force of Indian retail industry. These traditional units generally include haats, mandis, melas, and the local baniyas/kiranas, paanwalas, and others like cobblers and vegetable/fruit vendors and are termed as the unorganized retailers.

2. Organized Retail: Organized retailers are those who are licensed for trading activities and registered to pay taxes to the government. Organized retail is nothing but a retail place where all the items are classified and segregated according to their utility, form, and nature and brought under one roof. They are placed in different departments and displayed very systematically with their price points. These items are then selected by the customer and billed at point of sale (POS) with a computerized receipt of payment. Meanwhile, the customer is assisted by the sales staff with a professional approach. Organized retailing thus provides ...