RETAILING MANAGEMENT - Unit - 1 -OSMANIA UNIVERSITY

RETAILING
MANAGEMENT
UNIT - 1
PRESENTED BY
K.BALASRI PRASAD
B.Sc(KU), M.B.A(OU), NET(UGC)
ASSOCIATE PROFESSOR IN MANAGEMENT

UNIT – I
INTRODUCTION TO RETAIL
MANAGEMENT :
Retailing: Role, Relevance and Trends -
Introduction to retailing - Types of Retailing,
Characteristics of Retailing, Functions and
activities of Retailing. Emergence and growth of
Retailing in India, FDI in Indian Retailing.

RETAILING:
 Retailing is defined as a set of activities or steps used to sell a
product or a service to consumers for their personal or family
use.
 It also includes the sale of services such as those offered at a
restaurant, parlour, or by car rental agencies.
 Retailing process involves buying in bulk quantities and selling
in small quantities.

Types of Retailers:
There are different types of retailers that specialize in various
sales techniques and cater to different consumer types.
1. Department Stores
Traditional department stores sell a wide range of merchandise
that is arranged by category into different sections in the
physical retail space. Some department store categories include
shoes, clothing, beauty products, jewelry, housewares, and
more.
2. Grocery Stores and Supermarkets
These retailers sell all types of food and beverage products,
and sometimes also home products and consumer electronics
as well.

3. Specialty/Outlet Retailers
These specialize in a specific category and brand-name products.
Victoria's Secret and Nike are examples of specialty retailers, generally
selling only merchandise that carries their brand name or is associated
with it.
4. Convenience Retailer
For on-the-go consumers, these are usually a retail location that
primarily sells gasoline—they sell a limited range of grocery
merchandise and auto care products at a premium "convenience" price.
5. Discount Retailer
Discounters sell a wide variety of products that are often privately
labeled or generic brands at below-retail prices. Discount retailers like
Brand Factory, Dollar General will often source closeout and
discontinued merchandise at lower-than-wholesale prices, which
passes savings onto consumers.

6. Internet/Mobile Retailer
Internet shopping websites ship the purchases directly to customers at
their homes or workplaces, without the expenses of traditional brick-
and-mortar retailers. They usually sell merchandise for a lower-than-
retail price, using warehouses for storage and developing relationships
with warehouses, vendors, and sometimes manufacturers to provide
goods at reduced prices.

Characteristics of Retailing
1. It offers direct interaction with the customers:
None else in the channel comes across the customers
as the retailer is the last point. It is he who gets the
feedback from the customers.
2. Small quantity makes large quantity:
A retailer is selling in small quantities through break bulk
function. However, the small quantities become large when
aggregated.
3. Customer service:
A retailer provides different services to the customers, like
home delivery and credit facility.
4. Point of sales promotion:
A manufacturer going in for sales promotion has to provide
it to the final point from where the customer buy. Sale,

5. Different forms:
Retailers have undergone a sea-change. Traditionally retailers were in
the form of Melas, and Mandies; then the forms changed to mom-and-
Pop stores or Kirana stores, super bazars etc; and now the organized
retail is before us.
6. Location and Layout being Important:
Location is very important for the retailers, otherwise customer
footfalls may be a problem.
Apart from location, layout is equally important especially in the new
retailing environment. Ambience, the part of extended marketing mix
is the necessity rather than a luxury.
7. Big Employment Provider:
Retail sector is the second largest employer in India.

Functions of Retailing:
Retail trade performs many valuable functions for the trade
and commerce as a whole. Some of them are as follows:
1) Delivery of the goods to the end consumer
This makes shopping for all requirements quite hassle-
free for the consumers. This also facilitates consumption
and maximizes consumer satisfaction. Because the
company cannot take responsibility of delivery to every
single customer, it appoints retailers. One of the functions
of retailing is immediate delivery.
2) Is an essential part of the distribution chain
Because the retailer takes over the cumbersome task of
distribution of goods manufactured to the target market, the
manufacturer is relieved of this responsibility and can divert
his resources to manufacturing activities.

3) Finances the wholesaler
While booking his order of goods with the wholesaler, the
retailer pays some percentage or the whole of the order
price in advance. This helps the wholesaler to carry on with
his operations seamlessly. In some industries, it is the
retailer who pays cash to maintain stock and in others the
wholesaler has to carry the stock as paid capital.
Nonetheless, financing is one of the major functions of
retailing. A retailer who does not contribute to financing will
bring down the effectiveness of the supply chain.
4) Stores the goods according to market requirement
The retailer invests his working capital in building a gamut
of inventory reflecting market requirements. He also sells
the requisite quantity, however small or big, to the final
consumers satisfying their needs. The retailers know the
complete demand and supply potential due to their years of

5) Lends a hand in manufacturer’s marketing initiative
Retailer plans and executes many advertising and promotion
activities at the point of purchase i.e. right in his store. This
leads to gain in popularity of and favorable market conditions
for the product of the manufacturer.
6) Assumes storage and credit risks
When the retailer orders and stores a large quantity of goods
from the manufacturer, he makes sufficient provisions to store
it safely for some days. This involves costs. Also, there is also
a risk of loss of these goods on account of destruction, theft,
spoilage etc. The retailer assumes these risks while storing
goods.
7) Extends credit facilities to the consumers and
assumes credit risk
The retailer does so to encourage shopping. This adds to the
vigor of commercial activities in the economy. But there is
also a risk that the customers won’t pay for the goods bought

8) Offers wide variety of customers and enticing price
range in a product line
In order to attract more customers, a retailer offers a wide
range of merchandise at attractive prices. This results in
higher consumer satisfaction and higher standards of living
in any economy.
9) Provides convenience in shopping
Retailers try to set up their shops nearby housing areas or
near parks, schools – the areas where the customer finds it
very convenient to shop. This enhances the consumer
welfare.
10) Offers after sale services, differentiated packaging,
giving more information about the use of the product
All these activities add value to the retail transaction and
cater to various requirements of the consumers suitably.

11) Hears the voice of the market
The retailer measures the pulse of the market by listening
to the consumer feedback, expectations, complaints, and
by observing a shift in the tastes and preferences of the
consumers. This arms him with very critical market
intelligence enabling the entire commercial fraternity to
gear up for the changing economic scenario.
12) Generating employment for masses
Retail trade, especially the brick-and-mortar models, are
human resource-centric establishments. They require
many employees for numerous functions such as stock
taking, over the counter selling, packaging, after sales
services, floor management etc. Thus, retail sector thrives
with lots of lucrative employment opportunities for all the
talented job aspirants.

Emergence and growth of Retailing in
India
Retailing is one of the oldest professions in the
world, and India’s retail space is becoming
exceedingly interesting.
India embraced the policy of globalization in 1991,
but no Foreign Direct Investment (FDI) was allowed
in retail till 1997.
However, for the first time in 1997, 51 percent
ownership was allowed in single brand retail by FDI
route.
But this did not result in a significant inflow of
investments because government approvals were a
mandatory precedent.

In 2012, the country finally opened up the competition
for Indian retailers by allowing 100 percent brand
ownership in single brand retail (51 percent in multi
brand retail).
Growth of retail sector
The size of Indian retail has tripled over the last ten
years to $1.1 trillion (from $354 billion in 2010).
Since the relaxing of FDI norms, organized brick and
mortar retailing has been growing at more than 20
percent Y-o-Y. Contribution of organized B&M retailing
in the overall retail sector has also shot up to 12
percent from 4 percent in 2009.
However, this is still very less compared to developed
economies, where the overall organized retailing is

 India has now become a hotcake of retailing
destination for local and foreign brands.
 A $21 billion retailing opportunity around transit touch
points, i.e. airports, stations, bus-stops, etc., is to be
realized in the next 10 years.
 The country is set to receive 65 million sq. ft of retail
space in the next three years.
Modern retail story in India is getting written down in
Tier-I cities where consumers are going out in the
market not just for the necessity to dine and shop, but
for the experience of it.
The sector is expected to grow at a rate between 20
percent to 25 percent in the years to come, and there
is a need for innovative solutions to maintain the pace.

FDI in Indian Retailing
 FDI in retail industry means that foreign companies in
certain categories can sell products through their
own retail shop in the country.
 At present, foreign direct investment (FDI) in
pure retailing is not permitted under Indian law.
Government of India has allowed FDI in retail of specific
brand of products.
 If the percentage in FDI in retail sector (multi-brand) is
increased then the investment in India’s retail market will
be from foreign investors and the profits are also drained to
the investors.

Advantages of FDI in Retail in India
 Growth in Economy
 Job Opportunities
 Benefits to Farmers
 Benefits to consumers
 Lack of Infrastructure
 Cheaper Production facilities
 Availability of new technology
 Long term cash liquidity
 Conducive for the country’s economic
growth

Disadvantages of FDI in Retail in India
Impact on Local Markets ( Kirana Shops)
Limited Employment Generation
Fear of Lowering Prices
Negative Impact on Indian Economy
Negative Impact on Indian Domestic
Market

RETAILING MANAGEMENT - Unit - 1 -OSMANIA UNIVERSITY

RETAILING MANAGEMENT - Unit - 1 -OSMANIA UNIVERSITY

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