MKT 425

MKT 9h Badeh
terail: Meaning

Tord retail has been derived from the French word 're-tailler which means to cut, trim or divide.This was
lw used inthe context of tailoring. Thus retailing neans,tosell goods in small quantities.A retailer buys goods
aroe quantities from a whoesaler,diviles the goods in the snallest quantities possible and sells it to final

Istomers.Typically a retailer is a person/link who lulils smallorders of a large number of people.These peonle
Pperily are the end users of the producs and therelore buy small quantitics of the goodsaccording to their needs.

shows the simplest distribution channel:

he diagram below

The dugran below shows t)e

CustomIers
Wholesalers/ Retailers
Manufacturer Distributors
Producer

Changing Concept of Retailing

The retailers' main motive then was to 'earn profits'.But, with the passage of time, the number of retailers as well as
e number of custonmers increased.With the use of internet the now have customers all over the world.The
retailers

tail business has become more globalised in nature. People have become more specific with regard to their
emands and the utilities of the products.The main motive of retailing now has changed from mere earning of profits
) 'retaining of customers'. It The retailers use so many sales promotion measures such as discounts,free
ifts.vouchers and coupons etc. to attract new customers and to retain old ones.

efinitions of Retailing

4 set of business activities carried on to accomplishing the exchange of goods and services for purposes of
ersonal, family, or household use,whether performed in a store or by some forn of non-store selling."-American
farketing Association
Retailing includes all the activities involved in selling goods or services to the final consumer for

ersonal,non-business use.,Philip Kotler

Retail,Retailer and Retailing/

The terms retail,retailer and retailing are often used simultaneously and it becomes difficult to differentiate
etween these terms.

Retail,is the process ofselling goodsand services in form ofpackages,suitable for use by the customers. c
A retailer is a person/business that sells the goods to the customers.Generally a retailer purchases items in bulk
om the wholesalers and sells them to the final customers in small packages.Someretailers such as WalMart are big
10ugh to purchase goodsdirectly from the manufacturers itself.

Ketailing 1s whole process of procuring goods from the

the
wholesalers/manufacturers as the case may be,
FACKing the goods in small packages and selling them to the
customers.Retailing also includes
ng iscOunts, coupons,vouchers, etc.. to the customers inorder
activities such as
to attract them and retain them in future.

In view of the abovediscussion the fo!lowing are the main features /characteristics of retailing

Retailing is essentially
an economic
activity
It includes sales ofgoodsaswell as
services.
It involves earning profits
through customer
satisfaction and retention.

1
 . Itainms at increasing the number of customers.

• It is very dynamicby nature.

• customer oriented.

.
..
lt

It
is

Itinvolves lesser

is the last link

quantity

in the
in

distribution
terms of the
channel.
goodssold.

such as discounts,vouchers, lucky draw

It attracts customers by using various methods

schemes,coupons,etc.
. It includes the customers who buy articles for non-business purposes i.e.the customers are the final

users of the products.

from the manufacturers.
Goods are purchased either from the wholesalers or directly

Retailers generally sell large varieties of goods.

Retailers usually establish personal contacts with the customers.

the customers.
The display ofgoodsat the shop plays a major role in attracting

important part of retailing.

The location of the store as well as the layout is

the sales
lower as compared toother forms.However,
The average amount of
is
sale per transaction

volume is larger.

to people at all ages. This means there is no restriction

Retailing provides employmentopportunity
age in which the retail business can be started.
as to the
an important part of retailing business.
Advertisepnent is

re off
Retailing
the nature of retailing/
The following diagram showsthe major points about

part of marketing activity, helps the product to reach the final customer. This is
1ofmarketing:Retailing is a It

e goal of marketing.Thus retailing facilitates marketing activities by targeting a wide variety of customers.

tomer centric:The whole concept of retailing revolves around the customer.Due to increased competition,allthe

TS want to attract the customers.Retailersuse various sales promotion methods such as discountS,ete,t0 t
mers.
 ing has many dinensions. They vary from local kirana shops and kiosks to super malls
Aoroduct.These days there is a anifold increase in the use of internet for buying and selling

aphical locations:The geogruphical area of reach of retailers varies widely.It may vary from a

het selling goods to local customers only to super malls who have a large variety of customers

the increased use of internet,the retailers bave

kt arcas und even dillerent citios.Thesedays due to

abroad.
hom all over the coUntry and even from

of as a full-fledged business,there have been huge transformations

Smational Since the start retailing
profit driven, now
hese transfomations generally are in the form of objectives of retailing (earlier

simple retail shops earlier to multi brand malls),the areas covered

ber locuse),methods of retailing(from
the customers (from simple local customers to
now whole country or even other countries),
r small arcas

Aomers trom all walks oflife) etc.

Modern Formats
Tadtiona!Fornats
serat
•Seuperarkets
Salasan
• Hypearkets
*Oepatrtal Sores

it is a complex
a simple process.But in reality
6.Complex management process: Retailing seems like goods
being located in convenient places,arranging
management process. Retailing involves retail stores
after sale
in the quantities convenient to the customers,proper
according to different price bands,selling goods
be
of sales promotion measures to attract the customers.Thereafter there should also
services and a wide range
the
maintain long healthy relationships with
CustomerRelationship Management(CRM) programmes
to
proper
customers.
It is not at all
involves a combination of goods and services.
7.Assortment of products and services:Retailing
by offering just a single product. In order to be successful,
a
possible for a retailer to survive in today's world
needs to offer an assortment of goodsand service
retailer
 study the current demand pattern of the products being offered
demand patterm:A retailer is required to

ascertain the quantity of goods he needs to buy in bulk

othe market. By studying the demand patlern he can
of goods witliout studying the
huge quantity demand pattern,he may have to

he wholesaler,In case he buys a

AIl these have to be
stocks need large areas for storage.
he risk of obsolescence of goods.Moreover,large

by the retailer,
is created when ooods
Aanged
and place utilities. Time utility
helps in crçation of time
oCreation of utilities:A retailer
the goods with bimself and
utility by storing
a particular time. The retailer creates time
are made available at
available at
Place utility means making the goods
customers as and when needed.
makes thcm available tothe the customers at
the goods available to
away from the place of manufacture. Retailers make
diferent places
locations.
away from their manufacturing
various locations
activity as resulted in creation of private
The spurt in the retailing
branding and labelling:
own
from the manufacturer and gíving them
10.Private
means buying products directly
brands.Private branding or labelling
retail stores
in the exclusive
there has been an increase
brand name by the retailer. With the increase in retailing

only.
selling products of particular brands
include:
other services.These services
Retailing also includes various
11.Various other services:
products by paying a lump
people cannot afford to buy
costly
()Providing finance to the customers:Many deprived of the use of such
these people have to keep themselves
sum amount.In the absence of finance to their
such as zero interest payment
solve this problem by providing easy finance terms
things. Retailers finance for
customer base.Example,providing
customers. By doing so, they increase their
etc.
refrigerators,cars,
mobile phones, furniture
such as free home
sale services: Retailers also provide various after sale services
(ii)Providing after

delivery ofthe goods, free gift wrapping,etc.

customers in installing the items they have purchased.For

(iii)lnstalling the products:Retailers help their
electric chimneys at
with them.Example,installing
this purpose they keep technicians and specialists

customers' place.

of the goods also affect the buyers'

display and demonstration
(iv)Display and demonstration:The
products according to, the cstomers.
Thus,retailers specially display and demonstrate their
decisions.
to attract the customers.
Example, decorating specially according to various festivals

Scope of Retailing

growing industries in India and is providing employment

Retailinghas a very wide scope.It is one of the fastest

many people.Retailing provides employment in two ways.Firstly, it provides entrepreneurship

pportunities to
provides employment to so many people
whocannot own the retail
Pportunities to the people and secondly,
it

reach of the retailers, the scope of

in the purchasing power of the people and the rural
lores. With the increase
two viewpoints.One from the
scope of retailing can be viewed from the
etailing has increased manifold.The
etailer's, i.e.,the entrepreneur's perspective and the other from the employee's perspective.

EE'Parspe
 Rotaireg
Factore Arfectino

storeocaticn

toro amtienCO

Varioty

Storo tayout

The
nlluence onhc success ofthe business
the retail store has a great degreeof isotel
of located io
IStoe iocation:The location of success than the ones
busy market has much more chances
be taken while
retil store located in a care must
decision,grecat
a kind of permanent and irreversible

places. Since selection ofthe store is

it. it
selecting be such thet

ofa place.The ambienceofthe retail store must

means the atmosphere irrespective of their
2Store ambience:Ambience chain stores have same ambience
them. Generally the
attrzctsthe customers and soothes

locations.
kept in the retail store.Every
by the variety of the articles
a large extent is attracted of
store having a large
to variety
3.Variety:The customer retailer. The retail
from the
a variety of goods of latest fashion
customer expects
customers.
is likely to attract
a large number of
articles
in the store by
the retailer. It includes
the management of the
articles
layout means with clean
4.Store layout:The store
at one place, keeping
the store neat and tidy
properly, keeping the same goods is an
arranging of the goods shelves, etc. The store layout
for proper display of
goods in show windows and impacts
surroundings, arranging to enter the store.
It also
the customers' decision
on the customer and it impacts
mpression of the store the articles and hence
clear about the location of
employees positively since they are very
of the customers.
the productivity a store which is properly managed
attracts

in showing them to the customers. Thus

find no difficulty
business.These are
factors which affect the retail
factors:There are a number of demographic
5.Demographic
customers must be
habits of the prospective
habits of the people: The consumption
(i)Consumption
the retail business.
studied properly before starting
structure may
the retail business. The family
(ii) Family structure:The
family structure also impacts

be joint or nuclear.
the retail business. If
of working women also affects
(iii) Number of working women: The number housewives and vice
more,they are likely to spend
more than the
the number of working women is
versa.

the buying decisions of the

habits:The consumption habits of the people affect
(Iv) Consumption a variety of branded
store selling
buying branded goods, then a retail
people. If peopleare in a habit of
products is more likely to succeed.

provided by the retailer to the customers n

O.Add on services: Add on services imply the extra services
may be in form of fnancng
addition to the normal goods being offered for sale.These extra services

6
 home delivery services, after sale services, free gift wrapping.
being purchased, free
Acilities on articles

loyalty programmes,etc.
with the customers also
affect
of the retailer and
his employees
customers:The behaviour to them is
7.Behavior with and is keen to listen
who is very courteous towards his customers
their sales volume.A
person

the customers than

others.
to attract
more likely business.The
environment of any area affects the retail
cultural
8.Socio cultural environment:The soció the area where it

and the moral values of the people in

needs to follow the socio

cultural
retail business

operates. business.
for the success of the retail
factors must be considered properly
Thus all these

Exercise

L.Short Answer Type Questions and give its

of retailing? 2.Define retailing
is the changing concept
1.What do you mean by retailing?What

important features.

of retail business.
3.Discuss the features

in nature. Explain.
transformational

a
4.Js retailing

5.Whatare the maior factors

6.Whatis retailin

Modeis in Retai!
Theories
and
A theory may be defined as a set of principles on
Every discipline has a theory on which it is based.
and principles which are generalised in real sense. 1 he
which an activity is based. It is a set of accepted beliefs
 or speculatior.
which means a contemplation
from Greek word theora' same
deory' bas been derived the facts about the
for longer periods and generalising
looking at something prove to be true
bre atheory means
on certain set
of assumptions.These theories

the theories are based

uterllowever,all
fcts.
Fier those assumed

knowledge
world.
is an organised system of accepted

It
the natural
tentative insights into
A heory gives a specific set
to explain
of circumstances
applies in a variety
that

retailino
theories on which
of phenomena. are three major
is also based on somesuch theories.There
of retailing
The practice

isbased.These are:

Retailing
Theories of

Confict Theory
Cyclical Theory
Eviornental Theory

is
Theory we depend upon. The environment
Environmental iseverything that
us. It the
that surrounded only that determines
is a set of activities is the cnvironment
The environment every living thing lives.lt
in which
conditions by an environment.
the surrounding is also surrounded
Likewise,business
ofanyone living.
It is the environmental
it at al times.
survival
of conditions that surround
business means
a set of a business depends
The environment of the o failure.The survival and sustainability
its success market
business that determine of finance,labour,proper
conditions of a sich as theavailability
model of retailing power
upon a variety
of factor theories and fashion trends,purchasing
natural resource endowments,
policies,
policies, taxation
conditions,government environment.
constitute
business
etc.All these
factors and
environmental factors
important that one studies the
it is extremely
running of a business, environment and externa!
For the successful
the busincss can be
divded into interüal
of
act accordingly.
The environment
environment.

Envíronment
Business

Exterat Enviyonment
Jntesnal Environment

A. Internal Environment
envIrOnDeNl
to the business. The
internal

includes the things which are internal he

The internal environment that are present in:
which is a set un of all those elements
of business environment
(hatcomponent
 on.A business has full control over them.These factors include the articles of association, vision,

objectives, goals,employer-employee relations, financial capability, the quality of human resources. The
environment encompasses all those elenments that influence the behavio and the dccisions of he
isations especially the human resources.Although th internal factors are within the control of the

oanisation, they significantly influence the business strategies and the business decisions,

The following are the internalenvironment factors:

·Articles of Association
-Vision

Mission

Core Values

Strategies

Goals

Objectives

-Action Plans

Employer-Employee Relations

-Human Resources/

Physical Resources and Technological Capabilities

Organisational Structure

Corporate Culture
 ASxternal Environment

all those clements are outside the business but have

The externalenvironment of a business comprises of that

affects its
the factors outside the busincss but significantly
abearing on the business operations. These are
response to changes in
working.To ensure the smooth flow of operations, the business act and react in

environmental factors.

External Environment

Macro Environen
Micro Environment
CusORTNrs • Socio-Cuttsrai
•Conpettors - Tecrctogca
•Supporsnternediaries .Pothcai

Banks dFanal
Snsituos Iraternatiriss

Pc
Yhe following arethe micro environmentfactors: /
matters the most.For the
of the market. It is the customer only whose satisfaction
They are the kingpin
Customers: by
challenges the competitors
must have a variety of customers.The retailer
success of his business, a retailer
away
the customers,At this stage he takes customer
services such as specific merchandise
to
offering some real
advantages at low prices.
from the established competitors by offering
real

element of irnment. A retailer must always keep an eye on the

Competitors: The competitors are very important the
must toovercome competitive challenges by always considering
activities of the competitons The retailer try

buyers, viewpoint.
for the purpose of
the materials that are required by the recailer
Suppliers/Intermediaries: The suppliers provide This will
must have multiple suppliers of the commodities.
selling.To ensure uniformity in operations,a
retailer

increase the bargaining powerofthe retailer.

and the institutions provide the necessary finance to the

Banks and Financial Institutions:The banks financial

on the rates,banking policies and procedures, etc.

retailers.The retailer must keep a close watch interest

has an or potential interest in or impact on a

Public:ÀCCording to Philip Kotler,"A publicis any group that actual

environmentalists,Imedia, consumer protcction groups, locals, ctc.

company'sábility to achieve its objectives."Thc
impact the retailers' decisions.
constiyé public and they significantly

he macro environment consists of the following:

consists of the economic system,economic conditions and economic policies. No

Economic Environment: It

can work in isolation. He/she must consider the economic environment before taking any decisions.
retailer

of macro environment the society's

Socio-cultural Environment:This component governs

values,preferences,behaviour and attitudes.All these factors shape an individual's behaviour. When the retailer goes

global, studyingthis factor becomes more important.

Technological Environment: Thetechnological environment plays an important role in each one's life.To be
successful,a retailer must sell the latest technology products to the customers.He can gain a first mover advantage

by selling the products of latest technology before his competitors.

Demenaxi Models in Retal

The human resources are the people who actually work tor an
Human Resources:

who materialise all the visions,missions, objectives.

organisation. They are the people
plans the organisation. They ate the most valuable asset
strategies, goals and action of

of the organisation

Capabilities: The physical resources of

Physical Resources and Technological
that an organisation has.
These tangible
an organisation are the tangible resources
the organisation. The tcchnological
strengths and weaknesses of
resources determine the
that the organisation
possesses.
imply the technical know how
capabilities
structuredetermines the
way in
Organisational Structure: The organisational
its ultimate goal. These
which the activities are directed
in an
organisation to reach
ordination, supervision.
of authority, planning., co
activities are the dele gation
of directors etc. The organisationa!

professionalisation,
compos ition of the board
structure, matrix stru cture, etc.
structure, divisional
structure can be a functional
employees and
Corporate Culture: It refers
tothe beliefs and the behaviours of the
culture only. that determines
how the managernent
the management. It is the corporate in the dress
The culture develops over time and is reflected

and the employees interact.

benefits, turnover, client satisfaction,etc.
code, office set-up. employee

B. External Environment are

comprises of all those elements that
external environment of a business
The These are the factors
a bearing on the business operati ons.
Cutside the business but have
affects its working. To ensure the smooth flow of
outside the business but significantly factors.
environmental
operations,the business act
and react in response to changes in

Extern2l Environment

Macro Environment
Micro Environment •EcoIornic
•Customers Socio-Cultural

Compettors
• Technc!ogical

•Suppt:ersin:ormedianes • Political

•Banks and Finandal •legat

Irsttutons
• International

•Pubkic • Demographc

The following arethe micro environment factors:

Customers:They are the kingpin of the market. It is the customer only whose
satisfaction mattersthe most. For the success of his business, a retailer must have a
varietyof customers.The retailer challenges the competitors by offering some real
 nce 1:The Innovative Retailer(Entry Phase)

In the innovative phase,the retailer is new to the market as this is the time when he enters the market.The
retailer works as a low cost operator. The retailer offers smal range of products in the market. Since the
retailer maintains low profit margins,he provides minimum services to minimum
the customers as well as
facilities, The retaile Phallenge the competitors by offering some real services such as specitic
merchandive to the customers.At this stge he takes customers away from the established competion by
offering real advantages at low prices.

Stage 2:TheTraditional Retailer(Trading Phase)

This is the stage next to that of the entry phase wherein the retailer grows from innovative retailer to a
traditional retailer. Inthis stage,the retailer offers a greater range of products tothe customers,charges hign

profits,tries to acquire greater marke share.The trading locations are improved by paying higher rent. The
The facilities extended to the customers are increased. More
ambienceof the store is paid greater attention.

product assortment and more elaborate services are offered to the customers. Therefore,at this stage,the

retailer enjoys a good status.Butthe retailer looses his main focus.

Stage 3:The Mature Retailer(VulnerabilityPhase)

As the retailer becomes mature in the field of retailing,he becomes less adaptable to the changes in the

The rate of return on investment declines due to the high cost structure adopted in stage two.To
environment.
from the customers.This further gives an opportunity to the new
meet these costs,he charges high prices
enter the Thus again the process is repeated and thus the 'wheel of
entrants with low cost structure to market.

retailing' revolves.

Conflict Theory
formats.The one format the traditional format which
The conflict theory focuses on two types of retail is

the one which extremely innovative.This extremcly

maintains its status quo and the other format is is

innovative format challenges the traditional status quo format.This conflict gives rise to the new innovative

as a of the conflict between the two

forms of retailing.Many new forms of retailing have emerged result

existing forms.This is a dialectic process and it consists of action-reaction-synthesis stages.Due to the

limitations of these forms,new forms emerge. The two already existing forms are known as thesis and

respectively.Due to the conflict between these two forms,a new form is

anti-thesis(opposite to thesis)

blend or a fusion or a mixture of earlier two forms).

developed by synthesis iea

L.Thesis:The earliest forms of retailers. They may be the individual retailers operating the comer shops across

the country.They follow the traditional methods and practices. can be a discount store.

2.Anti-thesis:Anti-thesis is a position exactly opposite to the thesis situation. It develops over a period of time.
They are modern and innovative in their approach. They offer better products, at low prices or even seil

discounted products to the customers. The departmental stores are a challenge to the discount stores.

3. Synthesis: Synthesis is a situation that comes as a result of the conflict between thesis and anti-thesis

situation. It combines the properties of both thesis and anti-thesis situation. The discount departmental store is

an example of synthesis. It combines the features of both discount shops and departmental stores.At the

synthesis stage, the retailers continuously adapt to the innovations in the market. It is a continuous process of
action and reaction until a stage of synthesis is reached.
 consists of various laws, government agencies,stability in the
Political Environment:The political environment

can provide a conducive environment for the business.

oOvernment,etc.A stable government only
of a business. The
that govern the working
Legal Environment:It consistsof various laws,rules and legislations
do all the activities within the ambit of law.
his business and must
retailer must be awareof all such laws related to
who plans to operali
Environment: It consists of international laws,rules,regulations,
International
these must be sudied iatailer DemographicEnvironment:
relations between nations etc.All
to
related
internationally.political
family structure and other statistics
the size, age, gender, occupation,
It relates to the people. It includes when deciding what to sell, whom to
for a retailer
environment is necessary
population. A study of demographic
sell,how to sell,etc.

Cyclical Theory war

Developments in the Post
"Significant Trends and
was
first described by Mc Nair in
This theory that take place in retail
It explains in detail the changes
represented
is by 'Wheel of Retailing'. own specific
Period".This theory the phases have their
tha change follows a pattern.All
life.The theory states
when a retaile is
business during its that take place
three phases, which describes the changes
This theory is divided into
explains the 'wheel of
market. The following diagran
attributes.

and as he establishes himselfin the

new to the market

retailing':

ATRE NCVATE
RETALER (ENTRYPRASE})
RETALER
VULNERABLIIY PASE)
iiSrwc

TRADITKNA
RETAAR
TRAON FSE)
High Price

-Elaborated Services

·MoreFacilities

Extended Product Offers

 THESIS: ANTI-THESIS:
DISCOUNT STORES CONFLICT
DEPARTMENTAL STORES

SYNTHESIS:
DISCOUNT DEPÄRTMENT
STORES

Models of Retailing/Classification of Retail Institutiong

It is a representation
of a structu
is performed.
as a way in which an activity
A model may be defined
model means the way in which
retailir
to follow or imitate. The retail
or a thing which is used as an example the size ar
offered to the customers,
includes the type of products and services being
activity out.
is carried It
th
by the retailer to reach the customers,
strategy being adopted
location of the store,the communication

pricing policy of the retailers,etc.

Factors affecting retail models:

the best retail model.Thes
the decision about choosing
There are a number of factors that affect

include:

the decision about the model c

The level of competition in the market affects
1.Competition level:

does not need to offer greater variety of products

an
retailing. If there is less competition, the retailer

more the retaile

the customers.On the contrary,if there are competitors,
offer various schemes to attract

variety of products alongwit

also and therefore offer a greater
needs to keep an eye on their activities

promotional offers to attract the customers.

various

in which a operates afcas Lee level and kind o

2.Legal environment: The legal framework retailer

The aspects of legal environmentinclude the taxation structure,the

activity being chosen by the retailer.

and selling of property, the level of political interference,etc.

legalformalities involved in buying

positioning means the efforts that a business puts up to atract the

3.Market positioning:Market
about the produa in relation to the competitor's products.Market
customers.It is the customers perception

done by keeping the intended customer in mind. It includes various methods undertaken by
positioning is

the marketing department to create theimage of the product in the market. It is done by using four P's of

marketing- product,price,promotion and place.

4.Type of customers:Customer is the centre of each and every activity being performed by the

business.The format of retail is always chosen by keeping in mind the level of the customers, theirpaying

capacity,the family structure and the other demographics.

S.Place of operations:The place of operations also affects the retailing model. Ifa business is being carried
out in a big city, then a franchise,a chain store,etc. may be suitable for small businesses while a
departmental store,a super market or a specialty store may be suitable for a big business.

6.Use of technology:The use of technology also affects the retail model.If the people are more tech savvy,

then they prefer to buy the goodsand services online such as booking railway tickets and aeroplane tickets
 THESIS: ANTI-THESIS:

DISCOUNT STORES CONFLICT STORES

DEPARTMENTAL

SYNTHESIS:
DIScOUNT DEPARTMENTA
STORES

Retail Institution
Modelsof Retailing/Classification of of a structure
It is a representation
is performed.
way which an activity
be defined as a in
may way in which retailing
A model model means the
follow or imitate. The
retail
used as an example to the customers, the size arnd
or a thing which is services being offered
to

out. It includes the

type ofproducts and the
is carried to reach the customerS,
activity
strategy being adopted
by the retailer
location of the store, the communication
pricing policy of the retailers,etc.

Factors affecting retail models:

the best retail model.These
choosing
that affect the decision about
There are a number of factors

include:

the decision about the model of

the market affects
The level of competition in
and
1.Competition level:
greater variety of products
does not need to offer
If there is less competition, the retailer the retailer
retailing.
the contrary,ifthere are
more competitors,
attract the customers.On
offer various schemesto of products alongwith
a greater variety
also and therefore offer
needs to keep an eye on
their activities

offers to attract the customers.

various promotional
kind of
operates afcas Lee level and
framework in which a retailer
2.Legal environment: The legal
the taxation structure,the
being chosen by the retailer. Theaspects of legal environment include
activity
interference,etc.
of property, the level of political
legalformalities involved in buying and selling
the
that a business puts up to atract
positioning:Market positioning means
the efforts
3.Market
to the competitor's products.Market
about the produa in relation
customers.It is the customers perception
customer in mind. It includes various
methods undertaken by
positioning is done by keeping the intended of
It is done by using four P's
the image of the product in the market.
the marketing department to create
and place.
marketing- product,price,promotion

and every activity being performed by the

4.Type of customers:Customer is the centre of each
always chosen by keeping in mind the level of the customers, their paying
business.The format of retail is

capacity,the family structure and the other demographics.

model. If a business is being carried

5.Place of operations:The place of operations also affects the retailing

out in' a big city, then a franchise,a chain store,etc. may be suitable for small businesses while a

super market or a specialty store may be suitable for a big business.

departmental store,a

6.Use of technology:The use of technology also affects the retail model.If the people are more tech savvy,
then they prefer to buy the goods and services online such as booking railway tickets and aeroplane tickets
 online, or buying
clothes and shoes online. On the other hand, if
people are less prone to
technology, then they the use
prefer to go to the shopsthemselves o
and buy the products.
7.Level of organisation: The organisational level also impacts the decision
business. about choosing the retal
If the organisation has large financial capability, managerial capability, larger arca
operations,then it may choose a bigger level of business.But an organisation with lesser financial
capability has to choose the small level of business.

Thus,a business nceds to be very careful while selecting the business

yC model. On the basis of mode ol

operations, the retail business models are as fo!lows: Store based retailing

DuSinesS IIOdels are as

Models of
Retailing

Non-StIe Sed Retatn

A store based retail model meansthere is a pace where the retailing activity is ied out physically. It means
Store based retailing can be further divided into two
there is a proper place where retail activity is carried

parts:

(A)On the basis ofownership; and

(B)On the basis ofgoods offered.

Store Based Retalling

Cn the basis of goods offered

On the basts of owmership
)Conveniencestores
) fndependent Tradtional
retailer

(ti) Speciaity stores

6)Chan stores
(n) Deparimenlai stores
ü) Franchise
Off price
(iv) retailers
iú)Consumer co-operative
(v) Catalogue showrooms
Leased departmant
(v)Super market
(vi)Hyper market

(vii) Shopping matt

(ix) Kiosk

(x)DiscOunt stores

A)On the basis of ownership

SQCOnd hand goods,off season products at cheap prices. The goodssometimes have minor
detects or may
ofodd sizes (very big or very small in size). Example:Bata Factory Outlet, Monte Carlo Factory Outlet, Nike
Factory Outlet,etc.

0Catalogue showrooms:A catalogue showroom is one in which the goods are not displayed.1here are
various catalogues kept for products.The customer chooses the product from the catalcgue and then fills in

the order fom and deposits it at the sales counter.At thesales counter,the sales clerk arranges for the

product to be brought from the warehouse for inspection and purchase. It is very common practice tor

jewellery, electronie items(houseware items such as washing machine, televisions, air conditioners, etc).

These days many designer clothes are also sold through catalogue showrooms.

are big self-service stores providing a wide range of products such as

(vi)Super market:Super markets
as household goods,health and beauty related
groceries, food items and some non-food items such

cheap products to the customers.Examples:Easy

items,ete.Generally super markets provide

Day,Nilgiris, Reliance Fresh,etc.

a departmental store and a super market. Thus hyper

Hyper market: A hyper market is a combination of
(vin)
from kitchen
ranging from stationary items to groceries,
market offers a huge variety of goods and services
there fore provides a one stop shop to the
ware to electronic appliances,from furniture to jewellery,etc.It
huge discounts to the customers.The structure of
the hypermarket
customers.A hyper market usually offers
of parking space.Example: Big Bazaar,Best Price,
resembles that of a huge warehouse and has a lot

Savemax,Hyper City, Vishal Mega Mart, Wal-Mart,etc.

combination of branded
establishment whereby there is a
(vii) Shopping mall:A shopping mall is a retail is the
parking facilities.This
stores, food court,entertainment
zones including gaming zones, movies and
to the developers of ma!ls.
of the shops pay rent or lease
modern concept of retailing whereby the owners
as tenants. Examples of malls are Ambience Mall,Gurgaon,Elante
They occupy the place in the mall
Mall,Chandigarh, etc.

railway stations, bus stands,etc.They offer

a small shop generally seen at malls, airports,
(xi)Kiosk:A kiosk is
or two sides open. At some
customers. A kiosk can be one side
some specialised services or goods to the
beings. People have to just put
machines, which are not operated by human
places, there are automatic vending
out of the machine just like money
request the desired item.The comes
in the money in the machine and
provide limited services to the customen
They operate as low
comes out of the ATM. e arod ba tese stores

price retailers.

Non-Store Based Retailing

format that not confined to the walls d a particular
Non store based retaling means a retail is

are able to apand their customer base. The

to non-store based retailing the companies
area.Rather,due

non-store based retailing can be further divided important

two parts:
 slndependent Traditional retailer:This is the oldest form of retailing that existed in any economy.
orovided a base for all the other retail formats to develop.The traditional retailer owns a single retail outiet. ne
generally specialises in a single type of good.
ii) Chan stores:Chain stores are characterised by same brand namne and same management,i.e.,there S
common ownership of one or more retail outlets. These stores are same in terms of goods offered for sale, the

outlookof the store,the prices and the ambience. They enjoy the benefits of common sales promotion and
advertising campaigns. The chain stores are under on common ownership. They do not hve individual

owners.The display systen colour schemes and other arrangements are kept uniform.This ensures brand

identity retention.

(ii) Franchise: It is a contract berween two parties,the franchiser and the franchise hereby the franchisor

allows the franchisee to use his product,service brand name or trademark to carry on the business,in retum for
as defined by the agreement. The franchisee is given a specified geographical area
some fees or compensation
period of time. Dominos,KFC,Reliance fresh,Baskin Robbins, Subway etc.are popular
for a pre-defined
examples of franchise.Unlike chain stores they have individual owners.

by a group of customers generally who are dissatisfied

(1V)Consumerco-operatives:It is owned and managed
retail outlets
such consumer cooperatives is mutual benefit. These
with product offerings. The basic motive of
invested in it is very limited. A group of customers who
have limited capability of growth as the amount

manage this outlet contribute to its capital also.

carries on the business

departments:The leased department means, when one company or a retailer
(v)Leased
Very popularly this concept is known as shops within
within the premises of another company or retailer.

of his shop to another person for money. It is

or rents some portion
shops.The owner of the shop leases out
and
leased perfumes. The benefit of such
very practice for jewellery counters,opticals,cosmetics
common costly
to arrange very
wants to sell his products may do so
without having
departments is that the person who
Day(CCD)Outletin Shoppers' Stop.
shops on rent.Example:A Cafe Coffee

(B)On the basis of goods offered

items the customers such as groceries,
stores:These stores provide a range of everyday to
(i)Convenience
newspapers,etc.Generally the location
of convenience
ready to eat snacks, milk, eggs,bread,biscuits, operate for
convenience stores
are convenient for the customers to reach.Some
stores is such that they
is a famousexample
of convenience stores.
twenty four hours also.7-Eleven

a particulartype of product to the customer.

They are excusive
(ii)Specialty stores:Specialty stores otfer
but within the same product
stores that offer a particular type
of product within a particular product line
a suitable for the customers
being offered.Specialty stores
line there is a wide variety of goods focus on
stores
kind of brand preference.Specialty
havingsome
furniture,electronics,etc.
jewellery,apparels,
a retail establishment that providesa range of products
(i)Departmental stores:A departmental store is

departments such as personal care and

store is divided into various
to the customers.The
store provides a
and stationary, houseware goods, clectronics,etc.The departmental
cosmetics,books in size and
large
of goods to the customers under one roof. These stores are generally
wide range
owned by

large chains.Examples are Shoppers Stop,Ebony,etc.

prices. This type of goods when

provide high quality goods at cheap
(iv)Off price retailers:These retailers They sell
to customers is known as factory or seconds
outlets.
sold by the manufacturer himself
directly
 Services Retailing

Services retailing means such as

selling various kinds of services to the customers
banking,insurance,taxies,hospitality services,etc.The retailers of these services these days are increasingy
making use of internet toreach thecustomers and broaden their customer base. A customer in any part of the
country or even in any part of the world may book his taxi in advance. A person sitting at home can book
movie tickets and even select his seat by using internet.

Organised and Unorganised Retailing

In the recent years the debate of organised as well as unorganised retailing has gained ground in

India.This debate is in relation to the introduction of Foreign Direa Ravestment (FDI) in retailing. To

understand all this, it is important to understand the concept of organised as well as unorganised retailing.

Organised Retailing

India. It is a sector
of organised retailing has also gained ground in
Inthe past few years the concept
the favourable business environnment and governmentpolicies.
which has tremendous growth potential due to
and
malls,big complexes offering huge variety of branded goods
The organised retail includes big shopping
a memorable
and try toprovide value for money and make shopping
services. They provide quality products
experience.
in this
retailing due to the fact that the trading activities

This type of retailing is known as organised

reason, the activities are guided by the provisions
some or the other act. Due to this
sector are registered under
of the act under which a particular business is registered.

retailing. It is more modern

wider as compared to unorganised
The scope of organised retailing is much for Management
Such type of retail uses advanced technology
as well as customer centric in its approach.
as Customer Relationship Management
Chain Management (SCM),aswell
Information System (MIS),Supply

(CRM).

Features of organised retailing:

main features of organised retailing:

The following are the

much better infrastructure as compared to that

retailing operates under a
l.Better Infrastructure:Organised the customers.
aims to provide better services to
retailing.It is more customer-oriented and
of unorganised

Also it provides better ambianceto the customers.

the customers along with the
retailing is more customer-centric.All the to
2.Customer Focused: Organised
It also provides ancillary services
products. activities are focused around the customers.

modern technology for

isa modern concept of retailing unlike uses
retailing
3.ModernApproach:Organised
in its approach.Organised retailing
which is traditional
SCM and CRM. unorganised retailing

focuses on providing better services to the customers

4.Technological Advancement:Organised retailing

keep a record of the transactions

various technologies in order
to
by using modern in The management uses
and customer records.

is subject various laws, rules and regulations

to
5.Contribution toCountry's GDP: Organised retailing
the Gross
has become a major sector contributing to
and grows at a faster rate. Over the years it

Domestic Product ofthe country.

 Non-Store Based Retailing

Crect seg
abso known as Oistance selfingwhere
the
of preneses seg where the setler sets the o0ds
to
Ustomes areaopronched the distant buyers by using
Srocty technology such as internet

which
suggests is a form of
selling
in which, as the name
Selling is a retail format
Direct selling:Direct sale away from the retal
with the customer. The goods and services are offered for
involves personal contact who are also known as
independent sales representatives
The and services are sold through an
location. products to earn money through
It provides a way
to these representatives
consultants, presenters,distributors,etc. into three types:
it can be divided
and a marketable product
line.Further
established business model
for a party
acquaintances to his home
invites his friends, neighbors and other
(OParty plan in which
the seller of the home party is to
and buy them.The purpose
see the displayed goods
and displays the goods
there.People
with friends.
shopping experience
create a fun,relaxing,home to work with
appoint other people
is a network of people who further
where there are largely
()Multi-level network
their products.
Many cosmetics selling firms
goods for a commission.
them for distribution of
networks to sell
using this multi-level this
sell the goods to
people Sometimes
are sent door to door to

(ii) Door to
door selling where the salesmen to sel! their products
and helps to train students
becomes a part of academic curriculum
form ofselling known as
commerce very popularly
involves use of electronic
selling:Distance selling form of retailing
Distance busy lives of people,this
to the customers.
These days due to the
the goods either through e-mail,
e-commerceto sell the product
people are informed about as sellers
ground.The The buyers as well
is increasingly gaining the buyers and sellers.
face contact among
telephones.There is
no direct face to
The main forms of
a deal using
internet sites or television.
and even then strike
may sit at remote locations
distance selling are:
or catalogues to the
personalised mails
involves selling
form of retailing
(i)Mail order: This on some appropriate
group of people selected by the firms
customers are a narrow or
customers.These customers and send themn a catalogue
list of the prospective
basis.These firms make a mailing

personalised e-mail.
advertised
selling,where the product
is
is another form of distance
Television Television selling
and
(ii) selling: the price
light,the ways of using are demonstrated,
its special features are brought into
where one,
on the and telephone numbers
television,
There is a list of cities
also the methodsof payment are communicated. On receipt of the
details regarding his name,
address, etc.
product by giving all the
can call and order the
the nearest location.
to the given address from
order,the product is shipped
internet.This format is the most
selling involves selling the goods through
(i)Electronic selling:Electronic is able to see and select the desired
the prospective customer
selling.Under this
popular format of distance the details, the mode of paynent,
categories provided on the website.A!!
items from among various
etc are provided by the customer.
shipping address

19
 balance.Their spending Theori
sand number habits are quite different from those
of working
of home-maken A
women prefer to buy goods from under roof.Thi has
contributed to the development of the organised retail in India.

Large Economies:The organised retailers operate on huge scales.They by e products

direclyfrom the manufactures. Since they buy products from he ranuficturers

directly, they have huge bargaining power. They reduce the costs by eliminating the
middlemen also.Therefore,they are able to provide quality products to the customers
atcheap prices.Customers also get value for their money spent.

sector India is fast emerging.Seeing the huge potential of the rural

5.Developing Rural Sector:The rural in

on their needs.Also,the retail industry in India is providing

sector in India,the retailers are focusing satisfying

employment to large number of people after agriculture which has the deepest penetration in India.

such as Reliance, Tatas, the Future Group etc.have

6.Entry of Corporate Sector:The big corporate in India

huge They are in a race against each other to revolutionise the

entered the retail sector seeing its potential.

retailing industry.

sector for FDI,the foreign retailers have

the Indian retail
7.Entry of Foreign Retailers: With the opening up of
in India.
started to enter the Indian retail market.They have given a boost to the organised retailing

are using advanced technologies for

in India is using latest technology.They
8.Technology:The organised retail

market information systems. The increased

relationship management and
supply chain management,customer
boost to the sector.
use of latest technology is giving
a

not
in Income:With the rise in the literacy levels, the income of the people in India has increased
9.Increase
small towns and remote areas. They now want to buy more products to

only in the urban areas but also in

the sector.
their demands.This has given a boost
to retail
satisfy

communication and the

Explosion: There has been an explosion in media due to the satellite
10.Media
foreign cultures and products.They are more
increasing use of internet. The people are now more exposed to

demand better quality products at cheap prices.This has

aware about the quality of the products and therefore

of organised retailing.
led to the development

contributed to the growth of retailing in India.

The abovefactors have significantly

Advantagesof Organised Retailing

The following are the main advantages of organised retailing:

provides better ambiance to the customers.It makes shopping a

1.Better Experience: Organized retailing

shop those places which are pleasing to their eyes.

delightful experience. Customers like to at

to the
shops usually follow a standard format. They provide better facilities
2.Better Facilities:Organised retail

rooms present in almost all the branded clothing stores.This

customers.For example:there are spacious try

try the clothes and select the clothes accordingly.

Also they provide some
makes it easy for the customers to
case
extra services to lure the custoner such as some extra discount coupon on next purchase or a warranty in

of electronic products etc.

22
 6.lmproved Productivity and Profitability: Organised retailino makes use of modern tools and technolo
to conductthe business. Hence, it can lower its costs and there by improve its productivity and e
profitability.

1. Employment:Organisedretailing provides employment toa large number of people.Since there are e

number of departments in an organised retail store, a number of
people get employed.

8.Proper accounting:Organised retailers need to comply with various laws, rules and regulations.Hence
they prepare extensive accounts and other records.It is necessary to maintain proper accouns becaus

organised retailers have tocomply with various tax requirements.

store are branded. Gradually the people

9.Branded products: The products offered by an organised retail

why the organised retail stores are able to

are getting attracted towards the branded products. This is

attract the customers.

India
Factors Contributing to the Growth of Organised Retailing in

here are a number of factors

of organised retailing in India has increased manifold.
Over the year the share
customers, increasing working
women etc. that have
the growth ofmiddle lass
Such as emerging rural markets, india:
are the main reasons of growth
oforganised retailing in

contributed to this growth. he following

There has been an
middle class customers in India have increased.
Growth of Middle Class Customers:The pay
1. They are even ready to

incomes.They now want to buy the quality products. value

increase in their disposable the customers are providing
retailers in order to lure
amount for the same.Also,the organised
decent
added services at cheaper prices.
retail in India.
of consumerism is the key driver for growth of organised
2.Growing Consumerism:Thegrowth The
business practices and
business injustices.
of consumers against unfair
is a protest
no longer at the mercy of
unorganized
Consumerism disposal.They, are
have many options at their consumer expectation has
consumers these days customers. The growing
The have to face more knowledgeable
retailers.
retailers
format of retail trade.
Consumer demand, convenience,
to change their
forced the retail organizations retailing in India.
for the growth of organized
the important factors
etc.are
comfort,time,location more
especially the urban woman is literate
of today
3. Increase in Number
of Working Women: The woman
work-home
and qualified. They have to maintain
 6 Bargaining:Bargaining is not possible at an organized retail store. Hence some customers may think that the
products are costly and hence the concept of organized retailing may not appeal to them.

Although there are some disadvantages of the organized retailing yet it is emerging as the major seetor n
Indian retail landscape and has huge potential in it. The disadvantages of the organized retailing are Sucn at
today's money rich and time poor customer is not affected by them.

Unorganised Retailing
was traditionally prevalent in India.
the kind of retailing that
As the name suggests the unorganised retailing is

or legal provisions and hence is not under the

the kind of retailing which does not follow any statute
It is
in unorganised retailing are small business operators who lack
compulsion to maintain proper acouns The
retailers
are unbranded and the materials
the products sold by these retailes
nial and accounting standardisation.Generally
sector are local
by using personal contacts.
The types of retailers operating in unorganised
are acquired locally
Therefore the products and services
may be sold at fixed
vendors,etc.
kirana shops. pavement vendors,
mobile
unorganised sector are the local
The examples ofthe retailers operating in an
locations or the vendor may be
mobile.
clothes, toys at the
pavements,etc.The
vendors, the grocers, the vendors
selling
cloth merchants, the vegetable Presently also the
business in India traditionally
came from unorganised sector.
maximum of the retailing
in India primarily in the
small cities and towns.
dominate the retail landscape
unorganised sector continues to
But as
in the form of salesmen,helpers,etc.
employmentto many people
The unorganised retailing provides the unorganised sector is much
employment generation capacity of
compared to the organised retailing,the to international products
may not be comparable
products and the services being sold by them
less.Moreover, the
and services.

retailing:
Features of unorganised

ofunorganised retailing:
The following are the main features
format in India. It is a form of low cost
retailing is a very traditional
1.Traditional Format:The unorganised
can be local kirana shops,general
such unorganised retailing
retailing.The examples of
grocers,etc.
stores,paanwalas,beediwalas,
is very limited.Though the
retailing
of the unorganised
2.Employment Potential: The employmentpotential
a small number of people.
one but employs
sector isalabour
it
intensive

tech technology.Also the

sector lacks the use of high
cost Operations:The unorganised
retailing
3.Low to the lack of specialisation the
hi tech services to its customers.Due
unorganised retailers do not provide

unorganised retailing operates at low costs.

or
sector of retailing does not compulsorily comply with any legal
4.No Legal Provisions:The unorganised the radar of any
also.Since they do not come under
accounting provisions. They lack technical
specialisation

to determine the contribution

made by them to the economy.
statute, it is difficult

can operate at varied locations. There

may be some fixed
unorganised retailers
5.Place of Operations:The
(the
shops,general stores,etc.),pavement vendors
locations such as shops (cloth merchants,grocers, kirana
at the pavements) or they may be mobile vendors selling
toys, artificial chains,etc.,
balloons,
vendors selling
another.
and vegetables by roaming from one place
to
fruits

an area for a longer period of time,they personally

know the
6.Personal Touch:The retailers since operate in

there is always a personaltouch in the dealings with the customers.

customers.Hence
 3.Modern Technology: Organized retailing uses modern technology to keep a track ofthe supply
as to keep the records chain as we
of the customers. Also it uses technology to keep the management iniormee
various aspects ofthe business and helps in taking various decisions.

4.CustomerCentric: The approach of organized retailing js essentially customer centric.AIl the activities are
carried out keeping the customer in mind,Organized retailers tend to provide better services to the customers.

5. Employment Opportunities: There is a huge enployment the organised retail

potential in sector.Organized
retail sector provides huge employment opportunities to the people.

6.Contribution to the GDP: It is one of the fastest growing sectors and makes a considerable contribution to
the GDPof India.

7.Profitability:As compared to unorganized retail, organized retail is more profitable as it makes use of

modem technology.The use of modern technology increases the efficiency which in turn increases

productiviy and hence profitability.

8. Economies of Scale: Due to the large scale of operations, organized retail provides economies of scale to

retailers and helps them to operate at low costs. The organized retailers buy the products in bulk and
the
eliminating the
huge discounts. Also they buy goods directly from the manufacturers,thereby
therefore avail
middlemen and hence take the advantage ofeconomies of large scale operations.

sector one of the fastest growing sectors in India. It has huge potential for
9.Growth:Theorganized retail is

organized retailers for their development.

growth.The governmentis also providing conducive environment
to

also pays the taxes to the

the transactions are accounted for.The retailer
10.Revenue:In organised retail,all

governmenton every item sold. This in turn increases the revenue of the government.

that organized retailing is a sector that has huge growth potential and thus
Consequently it can be concluded
it.The wait is just to unwind this hidden potential.
has so many opportunities hidden in

Disadvantages of Organised Retailing

.Thefollowing are the main disadvantages of organised retailing:

requires huse amount of investmen is not possible for everybody to

.Euge Investment:The onganized retail

resources at disposal can think of entering this sector.

enter the sector.A big business house with
its

comply with various laws,rule and

have to
regulations.These
2.Legal Compliances:The organized retailers
due these
sometimesbecome too troublesome.Therefore some retailers avoid organized
retail to
formalities

compliance hassles.

3.Lack of Personal Touch: There is a lack of personal touch in the offerings made by the organized retailer.
due the that organized retailers usualy operate on large scale. It becomes difficult for the retailer
This is to fact

to know each and every customer personally.

area for the operations required by an organized retail stores is much more as
4.Locational Disadvantage:The
store.This area is usually provided at a place far from the main city.
compared to that of unorganized retail

Hence there is 2 locational disadvantage.

the organized store does not provide credit facilities to the customers in the
5.Credit Facilities:Commonly, retail

do.In unorganized retailing sometimes people even buy goods on daily basis
way that unorganized retailers

from the local shops and setle the bill after a month or so. This system is not available in organized retailing.

Therefore less number of customers are attracted towards organized retail.

 facilities: the retailers sell the goods on credit .This one
tothe customers." of the main reasons that people
eredit

refer to buy goods from unorganised sector.

8.familly business: Generally the business under unorganised sector passes On from one generation
retail

to another. However,there may be some changes in trotor derns as wellas the oulook ofthe retail store
with the change

in time.

The customers find it very

the retail stores are located ao a very convenien Leation
9.Locational Ease: Usually
dueto this reason they are very popular among the customers.
easy to reach the store and
it
in small qurantities.They find
people prefer to purchase goods
10.Small Purchases:in the usual
practice,the
organised retail
retail store and buy
the products instead of visiting an
very convenient to visit the nearby
store.

Advantagesof unorganised sector:

retailing:
The following are the major advantages of the unorganized
many people.
The unorganized retail provides employment opportunities to
1.Employment Opportunities: as employees.
as a result of inheritance of the shop while others work in the shops
Some people are empioyed
case of unorganized retail shopsand these
get locational convenience in
Location:The customers
2.Convenient near to the residential areas. People
at a place which is
They are set up traditionally
shops are easy to access. lo
find it very easy to access these
shops.
provide them
of deferring their payments as the retailers
The customers get the benefit
3.Credit Facilities:
at many kirana shops that people buy
a general practice
credit facilities which they do not get elsewhere. It is
a month or so.
day to day basis but settle the payment
after
the items on
a local person
the retailofferings. The retailer is
always a personal touch present
in
4.Personal Touch:There is
in the area for longer
had been operating
knows his customers personally. Since the retailer
who usually
relations with most of his customers.
durations,he develops personal
unorganized sector has to comply with are
provisions with which a retailer in
5.Less Legal Provisions:The legal
retailing. retailers.This is one of the main reasons
much less as compared to those of organized unorganized

people are attracted towards

that

of bargaining which they cannot do at the

6.Bargaining Power: The people also have an added advantage

pay prices a less than the ones asked for by the retailer
stores.Usually people bargain and
little
organized retail

mindset of the people that the local kirana stores offer good quality products at
7.Mindset:There is a traditional

cheaper prices.

throw light on the reasons of preference of unorganized retailing by the

All the above stated factors

retailers as well as the customers over organized retailing.

Disadvantages of unorganised sector:

are some major disadvantages that are prevalent

Despite of the advantages of the unorganized retail,there

in the unorganized sector of retail:

1.Lack of Standardization:There is a lack of standardization in the unorganized retail sector. The goods

offered by the retailer usually difer in terms ofquality, size etc.

25
 2.Competition:The unorganized retail sector is facing stif competition from the organized retait

by the the unorganized retailers la8

SeCtor:Osually in terms of the services provided organized retailers,

behind.

the organized sector,the unorganized retail sector lacks the best

J.Advanced Technology:Unlike retail

practices such as Supply Chain Management and Inventory Control.

have huge amount of resources at their disposal. Also they

4.Huge Costs:The unorganized retailers' do not
Therefore,the unorganized retailers
small scale than the organized
sector.
operate on a comparatively of
Due to the lack of autonation,the cost of operations
cannot incur huge costs on automation.

retail is much moreas compared to that oforganized retail.

unorganized

retailers can hire professionals to do various tasks.The

5.Knowledge and Skills:The organized
the sector due
other best practices available for
retail

unorganized retailers lack the knowledge,skills and

to cost and place constraints.

a lack of governmentpolicies in the favor of unorganized

is also
6.Lack of Government Policies:There unorganized
there no specific statute or taxation law governing
sector. This is due to the fact that is
retail

retail.

retailers is not at all attractive. They are

7.Less Attractive:The ambiance provided by the unorganized
the ambience.However, with the passage of time there has
traditional shops which do not spend much on
been a lot ofimprovement in this particular aspect.

the unorganized retail

lack of new products and specializations in
8.Lack of Specialization:There is a

goods that are easily saleable.

the traditional
sector. They usually prefer
to sell

it still continues to dominate the retail

sector,
of so many limitations of the unorganized retail
Despite of visiting the far
the nearby stores instead
in smaller towns prefer to visit
landscape of India.People,especially
away branded showrooms.

betveen organised retail and unorganised retail:

Differences

Sr. Points of Retailing

Unorganised
Organised Retailing

No. Difference
It is traditionalinappr
1. Approach It is modern in approach.

ach.
It is high.Employs people with
2. Employment
It is usually low because
different capacities.
generation
generallythe family members

perform various jobs.

number of strict There are no strict legal rules to

3 Compliance There are a

which it is subjected.
rules and regulations to which it
with legal

subjected to.
provisions is

located atconvenient
Located far from the city and Generally
4. |Location and

requires more space. locations near tothe city.Also

space
 The iaigeliy nvs

Slo bergning is
psitle Geterailh fhe cuimes in

tagaining antane ihenefitet

ie tit faies

le f szle

Canot be tracei

The ztce is generzly

4ppeainyto the eyes fthe urattractiveznd uneppealing

12 Customesfocsis preEnt. There is a lack ofcIstomer

Everything is done keeping the focus.

CustoTIE in mind,

13 Prodtiity Makes use ofspecialised Sincethere is lack ofspecialised

tetnoloy and herce more technology,hence lesser

produetivity. |productivity.

14,
Prgofnabiliny More ascomparedto Lesser ascompared to

|unorganised retailing organised retailing.

organised retailing.
 39

Points of
Sr.
Difference Organised Retailing Unorganised Retailing
No.

15.
Branded Sellers sell more branded Scllers sellless.branded

products products under the name of their products.

private brands.

Accounting and More accounting and tax No accounting and tax

16.

tax compliances compliances are there. compliances are there.

Investiment More amount of investmentis Lesser amount of investment in

17.
involved. involved.

Growth Grows at a faster pace and There is less growth potential.

18.

|potential hence there is more growth

potential.

19.
Services The services provided are The services provided are

more customer focused and personalised in nature.Nature

standardised. of servicesvaries from person to

person.

20. Types Departmental stores Local kirana shops

-Discount stores Paanwala and beediwala

Supermarkets General stores

Factory outlets Haats and melas,etc.

Specialty stores,etc.