Retailing functions of Kirana Stores,Exclusive fuel retail outlet,departmental grocery store,franchised food outlets

1. Milin Mohan K

2.  Retail is an old phenomenon in India.
 Retailing consists of all activities involved in selling
goods and services to consumers for their personal,
family, or household use.
 It covers sales of goods ranging from automobiles to
apparel and food products, and services ranging from
hair cutting to air travel and computer education.
 The Indian Retail Industry on the whole is divided into
organized and unorganized sectors.
Despite the emergence of organized food retail, the
traditional kirana stores accounts for about 90% of
the trade.

3.  The shoppers in India prefer the local kirana stores over malls.
The shoppers love to hangout and shop from their local traditional stores
because of
the familiarity with ambiance
ease of access,
emotional attachment,
early opening and
late closing times etc., which suits the local
residents
The three things that kiranas do better :
i. Customer Relationship Management
ii. Dynamic Merchandising and
iii. Efficient store operations

4.  Kirana stores are typically small in size as
they are located in the residential area zones.
 The size of the stores revealed that about half
of the stores were less than 200 sq. feet.
Some of them were relatively bigger

5.  Food, non-food and staples were the major
category of items stored by all the kirana
stores.
 Kirana stores food items in the range of 11- 60
items and some stores stored about 91-100
food items. They stores stored vegetables in
the range of 1-20, non-food in the range of
11-50, staples in the range of 1-50 and
beverages in the range of 11-20.
 In kirana stores, the food items were carried for
about 1-7 days. Vegetables were carried for 1-
4 days. The non-food items were carried for 4-
7 days. The staple items were carried for 4-9
days. The beverages were carried for 4-13 days

6.  Kirana store did not spend much on the inbound
transportation as the goods were delivered to their
stores by the suppliers.
 The suppliers were wholesalers, dealers and
salespersons. In case, when they went personally to
bring the merchandise, they used their own
vehicles such as motorbikes and sometimes the
auto rickshaws.

7.  Kirana stores used more than one source namely wholesalers,
dealers and salesmen to source their merchandise.
 Among them, procurement of merchandise by calling through
phone to the wholesalers was the most popular (62%) one followed
by placing orders with the salesmen who visited the stores (36%) at
regular intervals.
 As regards procurement of merchandise, kirana stores are
showered with numerous benefits by the suppliers based on the
order size, store relationship and image.
 Most of the kirana stores got the quantity discount and sometimes
gift vouchers as well.
 The kirana stores most often used the option of buying on cash as
well as through credit (54%). About 38% of the kirana stores paid the
cash whenever they bought the merchandise.
 Stores most often got a maximum of 2 weeks credit from the
suppliers

8.  Among the stores who had given discount on
purchases, about three-fourth of the stores
had given discount on total items purchased
and about 10% of the stores had given
discount on the individual items purchased.
 The discount did not exceed 10% and
majority of the stores gave a discount of 2%
or 5%

9.  It may be understood that computers have
not been used in kirana stores extensively.
 Less than quarter of the kirana stores (23%)
have only used the computers in
management of their stores.
 Of which, 41% of the kirana stores used
computers for managing inventory and 50%
of the stores used for accounting applications

10.  HP Retail Outlets
 HPCL retail outlets believe in maintenance, maintaining
not just the vehicle, but a steady relationship with the
consumer.
 They take care of not only our fuelling needs, but also
complete vehicle care.
 They stock related products like tires, batteries and
accessories, so you don't have to go shop - hopping.
 All other value - added services ensure that our vehicle
is well looked after.
 So they bring us conveniences that allow us to carry out
our banking activities, make important calls or send an e
- mail, and even shop for essential grocery items.

11.  Club HP as a brand was developed for Retail Outlets and
nurtured after an exhaustive research and auditing its
architecture which included collecting feedback from over
13,000 respondents in several key markets across the country.
 The "Club HP" concept aims to provide the assurance of
"Quick Fills",
"Expert, Personalized Service",
"Total Vehicle Management" and
"Consumer Conveniences".
While designing the bouquet of services for Club HP outlets,
HPCL has relied upon the feedback received directly from
consumers
.

12. Fuel is delivered to these outlets in tank trucks
fitted with tamper proof locks and a high degree
of control is kept by the HPCL staff to ensure that
quality standards are strictly enforced.
HPCL realize that consumers are highly conscious
of the fuel that goes into their vehicles -
each "Club HP" outlet carries the assurance of
HPCL’s ‘Good Fuel Promise’ and delivers the right
quality and quantity of the products on offer.

13.  How the fuel price is calculated in India?
Suppose if the petrol price per litre in Chennai is Rs 51.90, here
the break-up of cost calculated by the government:
Basic Price = Rs 21.93
Excise duty = Rs 14.35
Education Tax = Rs 0.43
Dealer commission = Rs 1.05
VAT = Rs 5.5
Crude Oil Custom duty = Rs 1.1
Petrol Custom = Rs 1.54
Transportation Charge = Rs 6.00
Total price = Rs 51.90

So for a Rs 22 litre petrol at pumps, consumers in India pay Rs
28 extra so high degree of control is kept by the HPCL staff to
ensure that quality standards are strictly enforced.


14. IDENTIFICATION OF LOCATIONS
 Locations for setting up Petrol/Diesel retail outlets are identified by
HPCL after
carrying out required feasibility study and commercial viability.
Mode of selection of dealers
The locations identified, as above, are advertised under applicable category
in at least two newspapers, one English and one regional vernacular
newspaper having wide circulation in the State.
 Persons meeting the eligibility criterion can apply and the selection will
be made from amongst eligible applicants after the due process of
technical evaluation of
sites, interview and post selection scrutiny

15. 1. Company Owned:
In case the outlet is developed under company owned category, the land
only will be taken on lease for a period of 30 years. Rental will be paid
by HPCL, and will not be recovered from the dealership. The
superstructure will be provided by the company and SSLF as applicable
will be charged at a higher rate, which at present, is Rs.47/- per KL for
petrol and Rs.40/- per KL for diesel.
2. Dealer Leased:
In case the outlet is to be developed under this category, the land and
superstructure, will be taken from the selected candidate on lease for a
period of 30 years. The rental will be paid by HPCL and recovered from
the dealership as additional licence fee. The Service Station Licence Fees
(SSLF) as applicable will be charged at a lower rate which, at present, is
Rs.17/- per KL for petrol and Rs.15/- per KL for diesel.
3. Dealer Owned :
On strategic consideration, company may decide to develop certain retail
outlets on Dealer owned basis. In such cases, the land and
superstructure will not be taken on lease from the selected candidate.
The Service Station Licence Fees (SSLF) as applicable will be charged at a
lower rate which, at present, is Rs. 17/- per KL for petroland Rs.15/-
per KL for diesel.

16.  Following basic facilities has to be provided by each dealer-select at the
Retail Outlet :
Drinking Water,
Free Air ,
First Aid kit with medicines,
Toilet ,
Pollution under Control Equipment (PUC) ,
Telephone,
Adequate illumination,
Land & its development,
Driveway,
Compound wall,
Sales Office,
Store,
Generator ,
Compressor Room,
Fire Fighting Facilities etc.
 Additional Facilities (Site specific) :
All such facilities required for customer service such as Staff Room cum Change
Room, Canopy, Service Station, Rest Room, Restaurant, Telephone Facilities, PUC
facility (if mandatory) and/other .
Facilities as may be specified by HPCL from time to time.

17.  Types of Merchandise
a)Staple Goods – items that are constantly in demand by customers. Examples are toothpaste,
milk, or bread. Used consistently and replaced on a regular basis.
b)Convenience Goods – small, inexpensive items that customers purchase frequently.
Examples are gum, bottled water, or magazines.
c)Fashion Goods – items that are popular at a certain time.
An example is clothing.
Includes any item that comes in or out of style
Retailer will maximize sales by acquiring the product as it is gaining
popularity.
d) Seasonal Goods – products that are popular only at a certain time of
year.
Examples are caps, boxed chocolates, or snow skis.

18.  Businesses must pay close attention to their
target market and must obtain, develop,
maintain, and continually improve upon their
merchandise mix.
◦ Components of the Mix
 Merchandise Mix – made up of all the products that a
business sells
 Product Line – a group of closely related products that
a business sells
 Product Items – the products that make up a product
line. A specific model or brand

19.  The role of a buyer in a retail setting is to purchase goods for resale to
the customer.
 Their activities include planning, research, and
evaluation.
Merchandise planning – includes four elements – planned sales, a beginning-of-the-
month inventory, planned purchases, and planned deductions such as employee
discounts and markdowns.
Research – helps buyers choose the best vendor for the needed products. In choosing a
vendor for the products the following factors should be considered:
Production capabilities
Past experience
Product and buying arrangements
Special services
Discounts
Payment arrangements.
Evaluating – of both the products that were purchased and the vendor that supplied the
product.

20.  When determining the price of a product, it is important not only to maximize
profits but also to provide value to the customer.
 Steps for product pricing
◦ Determine Objectives – the business must determine what profit they want to earn and what
strategy suites their style.
◦ Study Costs – the business should understand all costs involved in offering a product.
◦ Estimate Demand – the business should determine the demand for the product and set
prices accordingly
◦ Study Competition – the business should know the competition and the competition’s prices
◦ Select Strategy – the business must choose the pricing strategy for the business
 Cost-oriented pricing – the difference between the cost of the product and its selling price
 Demand-oriented pricing – is based on demand for the product. When demand is high,
customers will be willing to pay more for the product.
 Competition-oriented pricing – setting prices based on the competition’s prices
◦ Set Price

21.  The steps in the receiving process are
Receiving merchandise – the process a business
uses to receive merchandise at their store.
 Receiving record – a form used to describe the goods received
Checking Merchandise – verifies that the correct
merchandise and quantities were delivered.
 Blind Check Method – one of the most accurate, yet time consuming,
methods for checking merchandise. Employees open boxes and make a
list of items sent. This list is then compared with the invoice.
 Direct Check Method – used the most frequent. Involves checking off
the merchandise on the invoice.
 Dummy Invoice Method – combines the best features of both the blind
check method and the direct check method. Employees take an invoice
without the quantities and records the amount of each item in the
shipment.
 Spot Check Method – takes the least amount of time, but is the least
accurate method.Involves spot checking a certain number of boxes.

22. Involves getting the merchandise ready to sell.
Steps include
◦ Unpacking Merchandise
◦ Ticketing Merchandise
◦ Security Tags to protect against theft
◦ Presentation

23.  Reasons for Returns
◦ An item may have been received that was not
ordered
◦ An order may have been cancelled after it already
shipped
◦ Too many items were shipped
◦ Merchandise arrived too late
◦ Unsold merchandise may be returned for credit

24.  Inventory – the amount of goods stored by a business.
◦ Perpetual Inventory – a method of tracking inventory on a
constant basis. The information required to maintain a perpetual
inventory system can be collected either manually or electronically
through a point-of-sale system – which is a computerized method
of collecting inventory data.
◦ Physical Inventory – system where stock is visually inspected or
counted to determine the quantity on hand. Is usually conducted
only periodically.
 Visual Inspection – involves placing a card in a bin of merchandise
stating what the product is and the quantity that should be on hand.
 Counting Stock – gives the business an accurate number of what is in
stock.
◦ Combined System – involves using both the perpetual and
physical inventory systems to insure an accurate count of the
inventory.

25.  Shrink – occurs when the physical count is less
than the perpetual count. Can be caused by
◦ Theft – by customers, employees, or vendors
◦ Errors – through miscounting or computer input
errors
 Shrink Prevention
◦ Education of employees
◦ Planning of the store layout to eliminate problem
areas for theft
◦ Security – can include security personnel, security
devices, or pre-employment testing

26.  McDonald's is an example of brand franchising.
 McDonald's, the franchisor, grants the right to sell McDonald's branded
goods to someone wishing to set up their own business, the franchisee.
 The license agreement allows McDonald's to insist on manufacturing or
operating methods and the quality of the product. This is an
arrangement that can suit both parties very well.
 Under a McDonald's franchise, McDonald's owns or leases the site and
the restaurant building. The franchisee buys the fittings, the equipment
and the right to operate the franchise for twenty years.
 To ensure uniformity throughout the world, all franchisees must use
standardized McDonald's branding, menus, design layouts and
administration systems.

27.  On the financial side, McDonald's has to be given a
monthly rent, which is calculated on a sliding scale
based on the restaurant's sales, i.e. the higher the
sales, the higher the percentage and visa versa.
 There is also a service fee of 5 percent of sales in
addition to the contribution to marketing.
 The purchase price of a restaurant is based on
cashflow and is generally about £150,000 upwards.
 The new franchisee is expected to fund a minimum
of 25 percent of this from their own funds.

28.  Legislation requires employers to provide a
healthy and safe workplace, Where a person has
management and control of a workplace, they
also have responsibility (in the areas in which
they have management and control) for the
health and safety of people at that workplace.
 Both franchisors and franchisees should be aware
of their respective health and safety
responsibilities.
 Franchisors should understand the management
and control they have over a workplace through
the franchise systems they require franchisees to
implement and follow.

29.  The food cooked is done so in bulk, in advance and is kept hot,
or is reheated upon order. This allows the food to be served
within five to ten minutes, ensuring rapid food delivery and
timely service.
 Fast food franchising stresses uniformity. Since many fast food
franchises are part of a restaurant chain, the food cooked is
standardized. The ingredients used and the method of cooking
are almost the same so the food also looks and tastes identical.
 The capital required to start a fast food franchise is relatively low
so fast food eateries can be found nearly everywhere in the
world.
 Fast food outlets also provide take-away or take-out food in
addition to a sit-down service. A drive-thru service is usually
quicker because it allows food to be ordered and delivered
without leaving your car.

30.  Fast food is food prepared and served quickly so it is
done at a lower cost.
 Fast food is usually classified as food that can be
eaten quickly and without forks, spoons or knives,
such as sandwiches, burgers, fried chicken, french
fries, chicken nuggets, tacos, pizza or ice cream
cones.
 The food prepared in fast food restaurants is often
highly processed and prepared on an industrial level
with standard ingredients and uniform cooking
methods. It is served usually in cartons or packets to
minimize costs.