1. Introduction to Retailing
Retailing is the set of business activities that adds value to the
products and services sold to consumers for their personal or
family use
Retailing is not just sale of products in stores; it also involves the
sale of services
Not all retailing is done in stores

2. Retailer's role in a Distribution Channel
A distribution channel is a set of firms that facilitate the movement
of products from the point of production to the point of sale and
finally to the ulimate consumer / customer
Retailers are final business in a distribution channel and link the
manufacturers to the consumers
Manufacturers------->Wholesaler------->Retailer------->Consumer
There are manufacturing retailers (Levis, Polo Ralph Lauren) and
then there are manufacturers who sell products to wholesalers,
who then sell them to retailers (FMCG).
Some retailers also function as wholesalers (Cash 'n' Carry)

3. Retailer's role in a Distribution Channel
A distribution channel is a set of firms that facilitate the movement
of products from the point of production to the point of sale and
finally to the ulimate consumer / customer
Retailers are final business in a distribution channel and link the
manufacturers to the consumers
Manufacturers------->Wholesaler------->Retailer------->Consumer
There are manufacturing retailers (Levis, Polo Ralph Lauren) and
then there are manufacturers who sell products to wholesalers,
who then sell them to retailers (FMCG).
Some retailers also function as wholesalers (Cash 'n' Carry)

4. Functions performed by Retailers

Providing an assortment of products and
services
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Breaking bulk

Holding inventory

Providing services

5. Functions performed by Retailers
Providing Assortments
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Manufacturers specialise in producing specific types of
products
(Cadbury makes chocolates, Amul makes dairy products,
Kellogg makes breakfast cereals)
If each of these manufacturers had its own stores selling only
its own products, customers would be required to go to many
different stores
All retailers offer assortment of products, but they specialise
in the assortments they offer
Supermarkets (assortments of food, household products,
personal care etc. -----> 20,000 to 30,000 different items from
over 500 companies)
Department stores (assortments of clothing and accessories)

6. Functions performed by Retailers
Breaking Bulk
Manufacturers, to reduce transportation costs, ship large quantities of
merchandise to retailers, who then offer these products in smaller,
manageable quantities to customers
Holding Inventory
Retailers maintain requisite inventory of broken user friendly sizes so that
products will be available when consumers want them thereby
facilitating storage of small inventory of products at customers' homes
This is particularly beneficial for customers with limited storage space and
those who want to purchase perishable merchandise like meat and
dairy produce

7. Functions performed by Retailers
Providing Services
Retailers provide services that make it easier for customers to buy
and use products
Customer Service Associates are the most tangible representatives
of services provided by retailers
Home delivery and product trial are a few other services which
retailers provide

8. Functions performed by Retailers
Value to customers / consumers is provided by the execution of the
above mentioned functions performed by retailers

9. Changing Retail Landscape
Policy Landscape
Operational Landscape

10. Theories of Retail Development
Environmental – where a change in retail is attributed to the
change in the environment in which the retailers operate
Cyclical – where change follows a pattern and phases can
have definite identifiable attributes associated with them
Conflictual – the competition or conflict between two opposite
type of retailers leads to a new format being developed.

11. Theories of Retail Development
Environmental Theory of Retail Development
Charles Darwin's “Survival of the Fittest” - Natural Selection
Retail institutions are economic entities and are influenced by a
business environment comprising Government policies,
competitors, customers and fast changing technology
Thus the success or failure of a retail institution will depend upon
its capability to manoeuvre to the environmental changes

12. Theories of Retail Development
Cyclical Theory of Retail Development
Entry phase
Low status & price, minimum services, limited product offers, poor services
Trading up phase
Expensive facilities, higher rents, more locations, higher prices, more products
Vulnerability phase
Declining ROI, myopic by nature, scrambled merchandising

13. Theories of Retail Development
Conflictual Theory of Retail Development
Thesis
Antithesis
Synthesis

14. Evolution of Retail in India
Retail in India has evolved to support the unique needs of our country, given
its size and complexity Haats, Mandis and Melas have always been a part of
the Indian landscape. They still continue to be present in most parts of
the country and form an essential part of life and trade in Various areas.
The PDS (Public Distribution System) would easily qualify as the
single largest retail chain existing in the country. the evolution of the PDS
of Grains in India has its origin in the “rationing system” introduced by
the British during World War II

15. Evolution of Retail in India
The system was started in 1939 in Bombay and subsequently extended to
other cities and towns. The system was abolished post war but after
attaining independence, India was forced to reintroduce it in 1950.
There was rapid increase in the ration shops ( being increasingly called the
Fair Price Shop or FPSs)
The Canteen Stores Department (CSD) has also among the largest
network of outlets in the country reaching the defence personnel across
the country.

16. Evolution of Retail in India
The Khadi & Village industries (KVIC) was also set up post independence. The
cooperative movement was again championed by the government.

17. Types of Retailers
Food Retailers
Supercentres
Hypermarkets
Supermarkets
Convenience stores
General Merchandise Retailers
Department Stores
Discount stores
Speciality stores
Home Improvement Centres
Drug stores
Nonstore Retailers
Electronic Retailers
Catalog Retailers
Direct Selling
Vending Machines / Kiosks
Television Home Shopping

18. Variety and Assortment
Variety: represents the number of merchandise categories a retailer offers. It is
often referred to as the Breadth of Merchandise
Assortment: is the number of different items in a merchandise category. It is
often referred to as the Depth of Merchandise
SKU (Stock Keeping Unit): Each different item of merchandise is called an
SKU

19. Food Retailers – Specifications
Type
Variety
Assortment
Size ('000 sq.
ft.)
SKUs ('000)
Supercentre
Very Broad
Very deep
150 - 350
60 - 100
Hypermarket
Very Broad
Deep
100 - 300
40 - 60
Supemarket
Broad
Deep
60 - 100
30
Convenience
Store
Average
Shallow
2-3
1-3

20. General Merchandise Retailers – Specifications
Type
Variety
Assortment
Size ('000 sq.
ft.)
SKUs ('000)
Department
Store
Broad
Deep to
Average
100 - 200
100
Discount Store
Broad
Average to
Shallow
60 - 80
30
Specialty Store
Narrow
Deep
4 - 12
5
Home
Improvement
Centre
Narrow
Very Deep
80 - 120
20 - 40
Drugstore
Narrow
Very Deep
3 - 15
10 - 20

21. Types of Merchandise* – Retail Verticals
Automobile and spares
Furniture and home furnishing stores
Electronics and appliances stores (CDIT)
Building materials and garden equipment and suppliers
Food and beverage stores
Health and personal care stores
Gasoline stations
Clothing and clothing accessory stores
Sporting goods, hobby, books and music stores
General merchandise stores
Non-store retailers
*(North American Industry Classification System (NAICS))

22. Differences between Services and
Merchandise Retailers
Characterstics of a Service
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Intangibility

Simultaneous production and consumption
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Perishability
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Inconsistency of the offering to customers