Retailing - Unit 1 BBA 5.docx

Retailing---- Unit 1 BBA SEM 5
By: Nisha Hariyani Page 1
Meaning of Retailing :
INTRODUCTION TO RETAILING
Retailing encompasses those business activities involved with the sale of goods and
services to the final consumer for personal, family, or household use.
Retailing is the final stage in a channel of distribution. Retailing functions are
performed by any firm selling merchandise or providing services to the final consumer.

According to Philip Kotler :
“Retailing includes al the activities involved in selling goods or services to the final
customers for personal, non – business use.”
Functions of Retailing - :
1. Understanding the Needs of Consumers –
Knowing and understanding customer needs is at the centre of every successful
business. Therefore, a retailer should clearly understand needs of his target customers.
Every retailer should know the reason for their customers to buy from them and not from
their competitors. This is called Unique Selling Proposition {USP}. USP can change as the
business or market changes. A retailer can have different USPs for different types of
customer.
2. Buying and Assembling –
A retailer deals in different variety of goods which he purchases from different
wholesalers for selling to the consumers. He tries to locate best and economical source of
the supply of goods.
3. Breaking the Bulk –
Manufacturers normally send their products in bulk (whole cases or cartons) to
retailers to minimize transportation cost. As the retailers sell goods in smaller
quantities, they should break large quantities into convenient smaller quantities. This
process is called breaking the bulk.
4. Warehousing or Storing –
After assembly of goods from different suppliers, the retailers preserve them in store and
supply these goods to the consumers as and when required by them. The goods are kept
as reserve stocks in order to ensure uninterrupted supply to the consumers.
5. Selling –
The end objective of the retailer is to sell the goods to consumers. He undertakes
various methods to sell goods to the ultimate consumers.
6. Credit Facilities –
He caters to the needs of the customers even by supplying them goods on credit. He
bears the risk of bad debts on account of non – payment of amount by the customers.
7. Risk Bearing –
A retailer has to bear different type of risks in relation to goods. While in stores,
goods are exposed to various risks like deterioration in quality, spoilage and perishability
etc.
The products are confronted to natural risks viz., fire, flood, earthquake and other
natural calamities. Other type of risks like change in customers tastes also adversely
affects the sales.
8. Grading and Packing –
The retailer grades the goods which are left ungraded by the manufacturers and the

wholesalers. He packs the goods in small packages and containers for the convenience of
the customers.
9. Collection and Supply of Market Information –
The retailers are in direct touch with the consumers. They gather invaluable
information with regard to likes dislikes tastes and demands of the consumers and pass on
this information to the wholesales and the producers which are very helpful to them.
10.Helps in Introducing New Products –
Without the services of retailers, new products cannot be introduced properly in
the market. This is so because a retailer has a direct link with consumer. He can explain
nicely about the utility and the characteristics of a new product to the customer.
11.Window Display and Advertising –
The retailer displays the products in show windows in order to attract the customers.
This leads to immense publicity for the product.
The Importance of Retailing
1. Sales to Ultimate consumers of the products
The products and services are sold to ultimate or final buyers in a retail sale. During this
sale, the goods are not resold. The goods and services sold here can be used for various
uses, including residential, household, and industrial use.
As a result, the producer will now engage with his customers through the store and
learn about their opinions.
2. A convenient form of selling quantity-wise
The term "retail" refers to breaking down items into small parts and reselling them. The
products are purchased in bulk from the middleman or producer by the merchant, and
the majority is separated into small amounts and sold to customers according to their
needs.
To do so, the retailer will repackage items in different quantities and types, making it
easier for customers to pick and take them along.
3. Convenient Place and Location
Retailer shops are often located in areas that are easier for customers to access. A retail
store can take several different types, such as a coffee shop, a small store, or a
multiplex. Consumers can buy and sell goods via the internet and smartphone apps at
their leisure.
Furthermore, due to advancements in technology and delivery systems, shopping online
is becoming a modern trend. As a result, a growing number of businesses are moving
their operations online, allowing consumers to access and purchase goods from the
convenience of their own homes.
4. The lifestyle of the people are shaped by retailing

Retail is an essential aspect of today's culture. People rely heavily on retail stores to live
comfortably. Previously, products and services were made available by the trade
mechanism.
However, nowadays, commerce has been replaced by the purchase and sale of
commodities, making retail shops an integral part of society.
5. Retail businesses contribute to the economy
The retail industry is a noteworthy contributor to the Gross Domestic Product (GDP) in
many countries. Its contribution has increased significantly in recent years and
continues to grow at a rapid pace. Retailing is a significant economic power to promote
long-term development.
6. Retail dominates the supply chain
Goods and services flow from a retailer or a distribution supplier to final customers in a
supply chain. Where there are many consumers spread globally, the position of retail
stores becomes even more critical. Retailers serve as a conduit between a producer and
the end customer.
The organization of retail stores has steadily changed over time due to their critical
importance in the supply chain. Vast numerous chains, not small scale local retail
outlets, define retailing in today's world. Retailing has become a dominant part of the
supply chain as its value and formalization have grown.
Furthermore, retailers are being compared to distributors, demonstrating retailers'
domination in the distribution chain. Again, the annual turnover of a few supermarkets,
such as Wal-Mart, is far higher than the annual turnover of businesses.
All of these factors indicate that retail is the essential component of the whole supply
chain.
7. Retail is interdisciplinary
Economics, geography, management, economics, and marketing have also played a role
in the development of retailing. Economics helps manage a store's finances. A strong
understanding of geography is essential for selecting the best location for a shop.
Management is crucial in handling your employees and inventory, and proper
promotion is equally vital in helping you get into the market.
8. Retailers provide maximum employment
The supermarket industry now hires the most workers. According to estimates, the retail
sector employs one out of every nine people. Furthermore, women make up two-thirds
of the overall retail population, and more than half of all retail staff work part-time,
giving jobs the freedom to respond to the demands of any employer.
In the past, employers were paying pitiful wages. As a result, workers in the
supermarket industry worked on a contract basis. However, as working conditions and
delivery in the retail industry improve, many people consider retail employment a long-

term occupation.
9. Retailing is a vital subject area of study
Because of the popularity of retailing, it is receiving an increasing amount of attention.
Retail is a distinct field of study from management and marketing. To help this industry
thrive, studies have been done, and experts have been recruited.
Furthermore, scholarly journals focusing on retailing are distributed all over the globe.
10. Retailing offers scope for development in other countries
Retail offers a fantastic chance to reach into new markets around the world. A merchant
who wishes to expand their market by distributing their items in other countries opens
shops in other countries to maximize the number of people who buy their merchandise.
However, expanding the company is problematic because it necessitates many
documentation and formalities to obtain permission to operate in other nations.
11. Retailers rule the channel of distribution
Retailers are taking control of a delivery system. Since the industry had a small range of
vendors in the past, suppliers held much power. Retailers have no choice but to buy
products from the retailer and sell them in their shops. In today's world, though, there
are many vendors for a single category of commodity.
As a result, a retailer can choose the brands to carry in their stores, and customers can
purchase items from the retailers' stock. As a result, retailers play an essential part in
influencing market demands.
12. Provides Comfort and facilities for shopping
Shopping has been a pleasurable activity thanks to the many amenities and
conveniences offered by department stores, shopping centres, multiplexes, and other
establishments. People no longer see shopping as a chore but rather as a stress-relieving
and family game.
The significant supermarkets provide a variety of amenities such as air conditioning,
parking, attractions, a children's play area, lifts, shopping trolleys, and grocery services,
among others, and mobile retailing means that all orders made via the platform or
mobile applications are delivered to the customer's doorstep.
13. Provide services to the manufacturer
The merchant is the last link in the supply chain and the person who deals with
consumers. As a result, he can learn about clients' opinions and their likes and dislikes.
This knowledge is gathered by the retailer and shared with the producer.
This enables the manufacturer to make the necessary adjustments to the product's
quality and expand its offerings to please its clients. As a result, a supplier is critical in
assisting the producer in increasing sales production.
14. Provision of warehousing and storage

For a retailer, warehousing is a significant issue. A supplier purchases products in bulk
from the producer, alleviating the manufacturer's warehousing and storage issues.
Furthermore, by showcasing products attractively in the department store, the retailer
aids in increasing product purchases.
15. Advantage of an expert and specialist
Retailers are veterans who have sold goods to consumers before. Because of his
frequent contact with clients, he has a great understanding of their preferences and
dislikes. He keeps merchandise on hand to meet the needs of consumers and sells them
in various sizes and shapes.
Furthermore, with their sales skills and product awareness, they support consumers in
selecting the best product for them.
16. Creates utilities and value
By providing a place, time, and utility in the delivery of products, the retailer raises the
value of the commodity. Retailers purchase goods in large amounts and split them down
into limited quantities to sell in small packets. He generates type utilities in this manner.
Products made in one part of the globe are consumed in other parts of the world. He
purchases goods from suppliers and resells them in the local market, thus generating
utility for the place.
The merchant purchases goods in advance, place them in his store and sell them to
customers as required. The utility value of commodities is improved by producing these
three items. The retailer ensures that things are produced and consumed daily.
Scope
Retailing has a very wide scope. It is one of the fastest growing industries in India and
is providing employment opportunities to many people. Retailing provides employment
in two ways. Firstly, it provides entrepreneurship opportunities to the people and
secondly, it provides employment to so many people who cannot own the retail stores.
With the increase in the purchasing power of the people and the rural reach of the
retailers, the scope of retailing has increased manifold. The scope of retailing can be
viewed from the two viewpoints. One from the retailer’s, i.e., the entrepreneur’s
perspective and the other from the employee’s perspective.
1. Retailer’s Perspective:
From the retailer’s perspective, retailing can include anything that the retailer wishes to
sell. It may be goods or services. These may include goods such as mobiles, computers,
electronics, readymade garments, textiles and clothing, jewellery, books, paintings,
medicines, stationery, watches, or may include services such as catering, hospitality,
hospitals etc.

However, in certain cases permission in form of license is required to be obtained from
the government. In such cases the retailer will have to comply with all the legal
formalities before starting a business. For example, a license is required to operate a
chemist’s shop. Hence, the retailer must possess the required qualifications and hence
may apply for the license.
2. Employee’s Perspective:
Retailing has provided tremendous opportunities of employment. The retailers
operating at a small level required small number of employees to help them in business.
These employees were appointed as salesmen, cleaners, cashiers, etc. by the retailers.
But with the increase in the scope of operations and the growth of retailing, there has
been tremendous change in the industry.
Now the retailers operate at bigger levels having separate departments for everything
such as finance, marketing, advertising and sales, human resource development, etc.
Hence, the retailers provide enormous opportunities to the employees.
The following are the areas where the scope of retailing can be seen from the point
of view of the employee:
i. Purchase Department:
The purchase department is responsible for making all the purchases for the business. It
includes the selection of the merchandise to be sold to the customers, their price range,
the selection of the vendor from whom the purchases are to be made, etc.
This department requires vast amount of efforts and includes a lot of paper work,
telephonic conversation and travelling. The employees working with this department
should be well conversed having good amount of knowledge about the industry as well
as the vendors. They must be able to take quick decisions.
ii.Finance Department:
The finance is the life blood of any organization. The finance department performs the
functions such as making and compiling the financial records, allocation of finance to
various departments, management of finance, arrangement of finance, controlling the
cash flow, managing the banking as well as investments, deciding the credit allocation,
etc. Sometimes a retail audit may also be conducted by the finance department.
iii.Marketing and Sales:
The marketing department includes various activities such as sales promotion,
advertising, public relations, etc. These activities are extremely important from the view
point of reaching the customers. The marketing department is responsible for
conducting extensive market research and understanding customer requirements.
The people required in marketing department should be well conversant, having proper
knowledge about the product, any they must be able to convince the customer to buy

the products. They should also be capable of understanding the customer’s requirements
and act accordingly.
iv.Stores:
The stores department is responsible for storing the goods. The store’s manager should
ensure that at every time the inventory is maintained at proper levels so that there is no
shortage of goods. At the same time the department should ensure that too much
inventory may cause problems of storage, obsolescence, wear and tear, etc. So the
store’s manager must always keep an up to date record of the inventory and ensure
uninterrupted supply of materials.
v.Human Resource:
The human resource department is responsible for the recruitment, selection, training,
induction etc. of the employees. Human resource is a human centric industry. The
people required in this department must be able enough to understand the requirements
of the people in the organization and must be able to stop the efficient employees from
leaving the organization.
vi.Technology in Retailing
Retail industry in India is in a mature stage and is a very confident user or information
technology. The industry is using technologies such as Electronic Data Interchange
(EDI) which is used to electronically transfer the information through computers.
Database Management, Data Warehousing and Data Mining are the techniques that are
used to gather information about the customers and store them for future use.
Data Mining helps in customer relationship management. Radio Frequency
Identification System (RFID) is used for supply chain management. The concept of e-
tailing is continuously gaining ground in retailing. It includes the use of internet for
selling the goods.
vii.Supply Chain Management:
Supply Chain Management means managing the supply of materials, services and
information along the supply chain. Managing the resources efficiently and effectively
increases profitability of the business. Supply chain is managed by using information
systems.
Thus there are many areas where retailing can provide employment to the people.
Therefore it can be concluded that the scope of retailing is very wide. One can engage
himself as an entrepreneur or can join the sector as an employee depending upon his
skills and finance, etc.
NATURE

1. Part of Marketing:
Retailing is a part of marketing activity. It helps the product to reach the final customer.
This is also the goal of marketing. Thus retailing facilitates marketing activities by
targeting a wide variety of customers.
2. Customer Centric:
The whole concept of retailing revolves around the customer. Due to increased
competition, all the retailers want to attract the customers. Retailers use various sales
promotion methods such as discounts, etc., to lure the customers.
3. Multi-Dimensional:
Retailing has many dimensions. They vary from local kirana shops and kiosks to super
malls selling multiple branded products. These days there is a manifold increase in the
use of internet for buying and selling the goods.
4. Varying Geographical Locations:
The geographical area of reach of retailers varies widely. It may vary from a local area
market selling goods to local customers only to super malls who have a large variety of
customers from different areas and even different cities. These days due to the increased
use of internet, the retailers have customers from all over the country and even from
abroad.
5. Transformational:
Since the start of retailing as a full-fledged business, there have been huge
transformations in it. These transformations generally are in the form of objectives of
retailing (earlier profit driven, now customer focused), methods of retailing (from
simple retail shops earlier to multi brand malls), the areas covered (earlier small areas
now whole country or even other countries), the customers (from simple local
customers to customers from all walks of life) etc.
6. Complex Management Process:
Retailing seems like a simple process. But in reality it is a complex management
process. Retailing involves retail stores being located in convenient places, arranging
goods according to different price bands, selling goods in the quantities convenient to
the customers, proper after sale services and a wide range of sales promotion measures
to attract the customers. Thereafter,there should also be proper Customer Relationship
Management (CRM) programmes to maintain long healthy relationships with the
customers.
7. Assortment of Products and Services:
Retailing involves a combination of goods and services. It is not at all possible for a

retailer to survive in today’s world by offering just a single product. In order to be
successful, a retailer needs to offer an assortment of goods and services. For example, a
baker cannot survive just by selling a few cakes and biscuits. In order to survive in the
competitive market, firstly, a baker needs a proper environment called ambience which
is pleasing to the eyes of the customer.
Secondly, he needs a variety of cakes and biscuits and other products. Along with that
he also needs to keep some confectionery items which people are likely to buy along
with the main products such as chocolates, cookies, chips, cold drinks, patties, burgers,
hot dogs, etc.
Apart from these items people may expect him to keep a few items such as birthday and
anniversary candles, party poppers, decoration items etc. After these products, people
may also expect him to take the orders on phone and home-deliver the items purchased.
Thus it can be easily said that retailing is an assortment of various goods and services.
8. Studying Demand Pattern:
A retailer is required to study the current demand pattern of the products being offered
by him in the market. By studying the demand pattern he can ascertain the quantity of
goods he needs to buy in bulk from the wholesaler. In case he buys a huge quantity of
goods without studying the demand pattern, he may have to face the risk of
obsolescence of goods. Moreover, large stocks need large areas for storage. All these
have to be arranged by the retailer.
9. Creation of Utilities:
A retailer helps in creation of time and place utilities. Time utility is created when
goods are made available at a particular time. The retailer creates time utility by storing
the goods with himself and makes them available to the customers as and when needed.
Place utility means making the goods available at different places away from the place
of manufacture. Retailers make the goods available to the customers at various locations
away from their manufacturing locations.
10. Private Branding and Labeling:
The spurt in the retailing activity as resulted in creation of private brands. Private
branding or labeling means buying products directly from the manufacturer and giving
them own brand name by the retailer. With the increase in retailing there has been an
increase in the exclusive retail stores selling products of particular brands only.
For example, Big Bazaar, Food Bazaar of Future Group; Reliance Trends, Reliance
Footprints, Reliance Fresh, etc., are some of the divisions of Reliance Retail Ltd. which
is a subsidiary of Reliance Industries. According to a Neilson study food continues to
dominate the private label market at 76 per cent of total sales. Packaged grocery
dominates this market with about 53 per cent share of total sales.
Types of Retailing - :
I. Store Based Retailing

II. Non – Store based Retailing
I. Store Based Retailing
1. Form of ownership
2. Merchandise Offered
1. Form of ownership –
i. (Mom-and-pop stores) Stores –
There are generally family – owned businesses catering to small sections of
society. They are small, individually run and handled retail outlets. The “shop” could be
any type of business, such as an auto repair garage, bookstore or restaurant. These stores
operate in the local locality. Therefore, there are in the near vicinity of a particular
locality.
ii. Chain Stores
A chain store or retail chain is a retail outlet in which several locations share a brand,
central management, and standardized business practices. They have come to dominate the
retail and dining markets, and many service categories, in many parts of the world.
iii. Franchise stores
A franchise store is a deal in which an entrepreneur buys a license to use another
business' products, brand, proprietary knowledge, and trade secrets.
iv. Leased Departments
Leased departments are broadly defined as operations of one company conducted
within the establishment of another company. Typical examples may include jewelry
counters or optical centers within department stores.
v. Consumer Co-operative
A consumer cooperative is a cooperative business owned by its customers for their
mutual benefit. It is a form of free enterprise that is oriented toward service rather than
pecuniary profit.
2. Merchandise Offered - :
i} Convenience Stores -
Convenience store is a small store that stocks a range of everydate items such as
groceries, snack foods, candy, milk, eggs, toiletries, soft drinks, tobacco products and
newspapers.
They are comparatively smaller stores located near residential areas. They are opened
for long hours for the convenience of customers, and have a limited variety of stock and
convenience products.
Prices are slightly higher due to the convenience given to the customers. These shops
are open seven days a week and offer a limited line of convenience products.
ii}Super Market –

The super market is a large – scale retail institution specializing in necessaries and
convenience goods.
They have huge premises and generally deal in food and non – food articles.
Super markets are large, low cost, low margin, high volume, self service operations
designed to meet the needs for food groceries and other non food items like health and
beauty care products.
Thus, the super markets are also known as self – service stores since the
customers are to do all the purchasing by themselves without the aid of salesmen or selling
assistants.
Advantages –
 Large turnover because of the large variety of merchandise which is offered to the
customers.
 Low prices and high profits because of quick turnover.
 Situated at convenient places and within reach of buyers.
 The buyer is perfectly free as to what he should buy.
iii} Hypermarket –
Hypermarket is very large store that carries products found in a supermarket as
well as merchandise commonly found in departmental stores.
Hypermarket is a superstore combining a supermarket and a department store. The
result is an expensive retail facility carrying a wide range of products under one roof,
including full groceries lines and general merchandise. In theory, hypermarkets allow
customers to satisfy all their routine shopping needs in one trip.
Advantages –
 Customers can get everything at one place. Hence saving time, energy and money in
searching.
 Cost reductions from bulk buying in hypermarket are transferred to customers.
iv} Speciality Stores –
Specialty store is a small retail outlet that focuses on selling a particular product range and
associated items. Most specialty store business operators will maintain considerable depth in
the type of product that they specialize in selling, usually at premium prices, in addition to
providing higher service quality and expert guidance to shoppers.
The specialty stores specialize in a particular category or sub – category of goods
such as footwear, sarees, dress material and jewellery. These are smaller size compared to
bigger formats and focus on quality and variety of the chose category.
v}Category Killers –
A category killer is a product, service, brand, or company that has such a distinct
sustainable competitive advantage that competing firms find it almost impossible to operate
profitably in that industry (or in the same local area).
The existence of a category killer eliminates almost all market entities. Example, as
one of the most famous search engine, Google does not have real competitors.

vi} Departmental Stores –
A departmental store is a large retail trading organization. It has several departments,
which are classified and organized accordingly. Departments are made as per different
types of goods to be sold.
For example, individual departments are established for selling packed food goods,
groceries, garments, stationery, cutlery, cosmetics, medicines, computers, sports, furniture
etc., so that consumers can purchase all basic household requirements under one roof. It
provides them maximum shopping convenience and therefore, also called as “Universal
Providers” or “One Spot Shopping”.
Characteristics –
 Departmental stores are large – scale retail establishments.
 They have a number of departments organized under one roof.
 Each department specializes in a particular kind of trade.
 They are located in the important central places of the big cities.
 A huge amount of capital is required to establish a departmental store.
 Their control and management are centralized.
vii} Off Price Retailer –
Off – price retailers are retailers who provide high quality goods at cheap prices. They
usually sell second
– hand goods, off – the – season items etc., these retailers offer inconsistent assortment of
brand name and fashion
– oriented soft goods at low prices. They buy manufacturer irregulars, seconds,
closeouts, canceled orders, overruns, goods returned by other retailers and end – of –
season closeout merchandise.
viii} Factory Outlet –
A factory outlet is a manufacturer – owned store selling that firm’s stock directly to the
public. The stock
can either be first – quality merchandise or discontinued, irregulars, canceled orders at a very
low price.
ix} Catalogue Showrooms –
Catalogue retailers usually specialize in hard goods such as house ware,
jewellery, and consumer electronics. There are retailers whose showrooms are adjacent
to the warehouse. These showrooms have a low price, as they minimize the cost of
displaying merchandise, focus on a narrow range of goods and are located in low cost
areas.
x}Full Line Discount Stores –
A discount store is a retail store which sells products at prices lower than the typical market
value. A “full
– line discount store” or “mass merchandiser” may offer a wide assortment of goods with a
focus on price rather than service, display, or wide choice. Discount store may specialize
in specific merchandise such as jewelry, electronic equipment, or electrical appliances,
relying on bulk purchase and efficient distribution to keep down cost.

xi} Warehouse Store –
It is a mass retailing of merchandise such as groceries, hardware, home furnishing,
over the counter drugs, toiletries, etc., through a super store that offers very low prices and
little or not customer service.
xii} Variety Store –
A variety store is a retail store that sells a wide range of inexpensive household goods.
Variety stores often have product lines including food and drink, personal hygiene
products, small home and garden tools, office supplies, decorations, electronics, garden
plants, toys, pet supplies, remaindered books, recorded media and motor and bike
consumables.
xiii} Membership Club –
This format is also known as cash and carry and is open to members only and not the
general public. The current definition of a warehouse club is that it is a no frill, no – thrill, large
– format store selling only to its members at wholesale rate.
Xiv} Flea Market-
A flea market is a type of street market that provides space for vendors to sell
previously-owned merchandise. This type of market is often seasonal.
II.Non – Store based Retailing i} Direct Selling –
Direct selling is the marketing & selling of products directly to consumers away from a fixed
retail location.
Peddling is the oldest form of direct selling.
Modern direct selling includes sales made through the party plan, one-on-one
demonstrations, and other personal contract arrangements as well internet sales. Directing
selling is a dynamic, vibrant, rapidly expanding channel of distribution for the marketing of
products and services directly to consumers.
ii}Mail Order –
Mail order is the buying of goods or services by mail delivery. The buyer places an
order for the desired products with the merchant through some remote method such as
telephone call or web site.
Then, the products are delivered to the customers. The goods are supplied on the
system of P.O.D (i.e., payment on delivery) or V.P.P. (i.e., value payable through the
post).
iii} Telemarketing
Telemarketing is a form of direct marketing. Here, marketer goes direct to the
customer using telecom / IT facilities.
How does Telemarketing work?
Telemarketing is usually done through specific campaigns. Contract is
established with hundreds of prospects in a campaign that normally runs through a few
days. Several tele-callers are hired for the tele-call operation.
Advantages of Telemarketing –

 Telemarketing facilitates personalized contact though not fact-to-face contact with
prospective customers.
 Compared to mass marketing programmes, it gives the marker a better change to influence
the prospects.
 It enhances marketing productivity by providing a screening and selection facility through
preparatory conversations with prospects.
 Telemarketing is less expensive compared to most other forms of selling.
 It can be used in respect of different types of products. It is suitable for both industrial goods
and consumer durables.
iv} The Call Centre –
The call centre is the real operation theatre in telemarketing. The call centre
usually has a manager in overall charge, a few supervisors and the required number of tele-
callers.
The tele-caller opens the call by greeting the prospect appropriately. Then she politely
seeks the customer’s permission to have brief conversation. She generates adequate interest
in the product on the part of the consumer and tries to clinch an order.
v}Automated Vending –
A vending machine is a machine that dispenses product when a customer deposits a
sufficient amount of money into a money slot. The money is accepted by a current
validator. It is a machine that provides various snacks, drinks and other products to
customers. The idea of having vending machine is to vend product without a cashier.
vi} World Wide Web –
Internet marketing, or online marketing, refers to advertising and marketing efforts
that use the Web and e-mail to drive direct sales via electronic commerce, in addition to
sales leads from web sites or e-mails.
Forms of Retail Business Ownership
On the basis of ownership pattern, retail format can be classified as –
1. Sole Proprietary Concern –
A sole proprietorship, also known as the sole trader or simply a proprietorship, is a
type of business entity that is owned and run by one individual or one legal person and in
which there is no legal distinction between the owner and the business. The owner is in
direct control of all elements and is legally accountable for the finances of such business
and this may include debts, loans, loss etc.
They sell only limited variety of goods. Sole traders will be unable to take advantage
of economies of scale in the same way as limited companies and larger corporations, who
can afford to buy in bulk. This might mean that they have to charge higher prices for their
products or services in order to cover the costs.
At the same time, all decision must be made by the sole trader. Therefore, the
success or failure of the business rests on one person.
2. Partnership Firm –

Partnership is a combination of two or more persons, some having capital, other
having skill and experience to conduct any lawful business, forming a business firm and
sharing the profits of such a business. Hence the persons who form the partnership are
called ‘partners’ individually and a “Firm” collectively.
These types of retail organizations can little more varieties compared to sole
proprietary format of retail organizations. This is mainly because of the availability of
decent amount of capital and improved managerial abilities.
3. Company –
A limited company is a company in which the liability of members or subscribers of
the company is limited to what they have invested or guaranteed to the company. Limited
companies may be limited by shares or guarantee. Examples for limited company
format of retailing are Aditya Birla Retail Limited, Pantaloon Retail India Ltd., Future
Group etc.,
These form retail organizations can offer vide range of quality products to large group
of consumers at an affordable price. They can afford to operate in large buildings, keeping in
mind the consumer convenience.
Factors Affecting / Influencing Indian Retail Industry - :
1. Increase in per capita Income –
Per Capita Income means how much an individual earns, of the yearly income that
is generated in the country through productive activities. India has marked growth in per
capita income by 10.5% which shows tremendous increase in GNP (Gross National
Product) of the country.
Increase in per capita income reflects hike in income of Households which in turn
will consume more, thus leading to growth of retail sector. Household prefer to shop from
big giants as compare to their Kirana Store.
2. Demographical Changes –
India is having huge young age working population which is generating huge
income and high savings. For any developing country young age group, income, savings
are key factors for its growth. Presence of these key factors has helped in attracting big
retail giants to India.
3. High Standard of Living –
Standard of living in India has improved. Earlier Shopping in India always had an
emotional tag attached to it, along with that people use to have myth that shopping from
shopping complexes or Malls is costlier and it suits only to rich class. But now things have
changed people have changed their misconception and have adopted Mall culture. This
shows that standard of living has increased.
4. Change in Consumption Pattern –
Consumption patterns among various classes have changed over the years. Earlier
customers were brand loyal due to which they were allowing new brands to enter the
market. But now customers are showing good

response to new product entering the market because they have realized that they are paying
for quality. This drastic
change in customer’s perception has opened ways for many new entrants.
5. Availability of Low – Cost Consumer Credit –
It is rightly said that sales generated on credit are more as compare to cash sales. With
the change in credit policies, many new customers have entered the market. Purchasing on
credit basis with good credit worthiness gives both seller and buyer flexibility to
transact. Earlier due to lack of cash many buyers use to postpone their purchases, but
now with modernization they are carrying it on credit basis as it is cheaper to repay.
6. Improvements in Infrastructure –
With many infrastructural changes taking place right from metro rails to road
connectivity in the country, retail is also expanding its wings. With huge infrastructure
spending which has entered the country in form of FDI (Foreign Direct Investment), more
retail giants have proposed to enter Indian Market.
7. Corporate Sector Entry –
Large business tycoon such as Tata’s, Birla’s, & Reliance etc., have entered the retail
sector. They are in a
position to provide quality products and entertainment.
8. Entry to various sources of Financing –
An economy gets finance from two routes either in form of FDI or as FII
(Foreign Institutional Investment). Now both the ways are opened up for retail sector. Now
both the ways are opened up for retail sector. Previously so as to protect small kirana stores
route for FDI in retail was difficult but later on when it was found that retailing is
generating employment of around 8% in economy FDI route was also simplified.
Present Indian Retail Scenario - :
01. Rapid Growth –
The retail movement in India has acquired the critical mass that is required for rapid
acceleration in terms of industry growth as well as geographical spread. The Indian retail
industry can no longer be called nascent. The spread of super stores to the northern cities
such as Delhi, Chandigarh, Jaipur and Kolkata is evidence of the fact that organized retailing
in India has emerged from its southern bastion.
The retailing boom is being driven by increased expectations as well as changing
shopping behavior of the urban Indian consumer. With the increasing number of nuclear
families, working women, greater work pressure and increased commuting time,
consumers are looking for convenience.
02. Emergence of Region – Specific Formats –
For the first time in 10 years, the industry is witnessing the development of region –
specific formats. With organized retail penetrating in B class towns, retailers have started
differentiating in the sizes and formats of stores.
For example, in departmental store format, while most A class cities and metros

have larger stores of 50,000 plus sq. ft. sizes, stores in B class town have stabilized in the
25,000 – 35,000 sq. ft. range. Most players have started operating these two formats
across various cities, which has helped them to standardize the merchandise offering
across the chain.
03. Emergence of Discount Formats –
Larger discount formats, popularly known as hypermarkets, are now emerging as
major competitors to both unorganized and organized retailers. Penetration of organized
retail into the lower strata of income groups and consumer demand for increased value–for–
money has improved the prospects of these formats. These formats span across the entire
range of merchandise categories for example – Big Bazaar.
04. Unorganized Retail –
Indian retail is dominated by a larger number of small retailers consisting of the local kirana
shops, owner
– manned general stores, chemists, footwear shops, apparel shops, paan and beedi shops,
hand – cart hawkers, pavement vendors, etc., which together make up the so called
unorganized retail or traditional retail. The last 4 –5 years have witnessed the entry of a
number of organized retailers opening stores in various modern formats in metros and other
important cities. Still, the overall share of organized retailing in total retail business has
remained low.
The major factors responsible for the growth of organized retailing in India are
as follows –
1. Enhanced Working Women –
Today the urban women are literate and qualified. They have to maintain a balance
between home and work. The purchasing habit of the working women is different from the
home maker. They do not have sufficient time for leisure and they expect everything under
one roof. They prefer one – stop shopping. Modern retail outlets therefore offer one store
retailing.
2. Value for Money –
Organized retail deals in high volume and are able to enjoy economies of large
scale production and distribution. They eliminate intermediaries in distribution channel.
Organised retailers offer quality products at reasonable prices. Example : big bazaar and
Subhiksha. Opportunity for profit attracts more and more new business groups for entering
into this sector.
3. Rural Market –
Today the rural market in India is facing stiff competition in retail sector also. The
rural market in India is fast emerging as the rural consumers are becoming quality conscious.
Huge potential in rural retailing organized retailers are developing new products and
strategies to satisfy and serve rural customers. In India, Retail industry is proving the
country’s largest source of employment after agriculture, which has the deepest penetration
into rural India.
4. Enhanced Middle Class Consumers –

In India the number of middle class consumer is growing rapidly. With rising
consumer demand and greater disposable income has given opportunity of retail
industry to grow and prosper. They expect quality products at decent prices. Modern
retailers offer a wide range of products and value added services to the customers.
5. Growth of Consumerism –
With the emergence of consumerism, the retailer faces a more knowledgeable and
demanding consumer. As the business exist to satisfy consumer needs, the growing
consumer expectation has forced the retail organizations to change their format of retail
trade.
6. Technological Impact –
Technology is one of the dynamic factors responsible for the growth of organized
retailing. Introduction of computerization, electronic media and marketing information
system have changed the face of retailing. Organized retailing in India has a huge scope
because of the vast market and the growing consciousness of the consumer about
product quality and services.
One of the major technological innovations in organized retailing has been the
introduction of Bar Codes. With the increasing use of technology and innovation retailers
are selling their products online with the help of Internet.
7. Enhanced Income –
Increase in the literacy level has resulted into growth of income among the
population. Such growth has taken place not only in the cities but also in towns and remote
areas. As a result the increase in income has led to increase in demand for better quality
consumer goods. Rising income levels and education have contributed to the evolution of
new retail structure.
Today people are willing to try new things and look different, which has increased
spending habits among consumer.
8. Media Explosion –
There has been an explosion in media due to satellite television and internet. Indian
consumers are exposed to the lifestyle of countries. Their expectations for quality products
have risen and they are demanding more choice and money value services and
conveniences.
Current Indian Retail Statistics
 Retailing in India is one of the pillars of its economy and accounts for about 10 percent
of its GDP.
 The Indian retail market is estimated to be US$ 600 billion and one of the top five retail
markets in the world by economic value. India is one of the fastest growing retail markets
in the world, with 1.2 billion people.
 India's retailing industry was essentially owner manned small shops.
 In 2010, larger format convenience stores and supermarkets accounted for about 4
percent of the industry, and these were present only in large urban centers.
 India's retail and logistics industry employs about 40 million Indians (3.3% of Indian

population).
 India has highest number of outlets per person (7 per thousand) which is mostly unorganized.
 India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI)
for the third consecutive year, maintaining its position as the most attractive market for
retail investment.
 On 7 December 2012, the Federal Until 2011, Indian central government denied foreign
direct investment (FDI) in multi-brand retail, forbidding foreign groups from any
ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail
was limited to 51% ownership and a bureaucratic process.
 In January 2012, India approved reforms for single-brand stores welcoming anyone in the
world to innovate in Indian retail market with 100% ownership, but imposed the requirement
that the single brand retailer source 30 percent of its goods from India.
 Government of India allowed 51% FDI in multi-brand retail in India. All multi-brand
and single brand stores in India must confine their operations to 53-odd cities with a
population over one million, out of some 7935 towns and cities in India. It is expected
that these stores will now have full access to over 200 million urban consumers in India.

Retailing - Unit 1 BBA 5.docx

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