Jagan Institute of Management Studies

Sector-5, Rohini

Marketing Management- II
Group Project Report
On
Retailing

Submitted To: Dr. Yukti Ahuja

Submitted By: Abhigyan Pandey (FIB2200)

Sahejpreet Kaur (FIB2232)
Saurisht Rathi (FIB2236)
 Retailing
Retailing is a distribution process, in which all the activities involved in selling the
merchandise directly to the final consumer are included. It encompasses sale of
goods and services from a point of purchase to the end user, who is going to use that
product.

Any business entity which sells goods to the end user and not for business use or for
resale, whether it is a manufacturer, wholesaler or retailer, are said to be engaged in
the process of retailing, irrespective of the manner in which goods are sold.

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, Point of Purchase display, discounts, etc. have to be
offered at this point only.
5. Different forms:
Retailers have undergone a sea-change. Traditionally retailers were in the form of
Hats, Melas, and Mandie’s; then the forms changed to mom-and-Pop stores or
Kirana stores, super bazars etc.; and now the organized retail is before us. From
brick-and-mortar-stores now there are many forms of non-store-based retailers.
6. Location and Layout being Important:
Location is very important for the retailers, otherwise customer footfalls may be a
problem. Customers are time-poor and hence location is very important. 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.
It is because of this reason that most of the mom-and-pop stores are undergoing
interiors.

Retailer
A retailer is a company that buys products from a manufacturer or wholesaler and
sells them to end users or customers. In a sense, a retailer is an intermediary or
middleman that customers use to get products from the manufacturers.

A good example of a tradition retailer is Best Buy. It purchases goods from

manufacturers like Sony and Whirlpool at cost and sell them to consumers at a higher
price. For the most part, Best Buy doesn’t manufacture any of the products it carries.

Characteristics of Retailer
1. Expertise: Retailers must possess a deep knowledge of their product lines,
customer needs, industry trends, and market dynamics.

2. Flexibility: Retailers must be able to quickly adjust to changes in the market, such
as shifts in consumer preferences or the emergence of new competitors.

3. Relationship Building: Retailers must be able to develop strong relationships with

their customers and suppliers in order to ensure loyalty and repeat business.

4. Communication Skills: Retailers must be able to communicate effectively with

customers, employees, and vendors in order to ensure excellent customer service.

5. Organizational Skills: Retailers must be able to efficiently manage their inventory,

pricing, and scheduling in order to maximize profits and minimize costs.

6. Time Management: Retailers must be able to manage their time effectively in

order to keep up with the fast-paced nature of the industry.
7. Adaptability: Retailers must be able to adjust to changes in the marketplace and
customer needs in order to remain successful.

Key Functions Performed by a Retailer

A retailer performs the dual functions of buying and assembling of goods. The
responsibility of a retailer is to identify the most economical source for obtaining the
goods from the suppliers and passing on the advantages to the consumer.

The retailers perform the functions of warehousing and storing. They store the goods
in bulk and make them available as per the requirement of the consumer.
Warehousing and store keeping helps in ensuring uninterrupted availability of the
goods to the consumers.

The primary function of a retailer is selling the products to the customers for which
various techniques or business practices are being adopted by the retailer to achieve
the strategic goals.

The prime focus of a retailer is on maximizing customer satisfaction by delivering

quality products and services both on cash as well as credit basis. As a result of
which, retailer always runs the risk of accumulating bad debts on account of non-
payment of the amount from the consumer.

A retailer needs to have robust risk management capabilities. Various kinds of risks
can be involved in a retail business which a retailer should be well prepared with
like loss or damage of the products due to deterioration in quality, perishability or
spoilage. A change in customer’s buying preferences or tastes can also affect the
retail business to a great extent, or even the products may be damaged due to the
natural calamities or vagaries of nature.

A retailer performs the crucial function of grading for all those goods which at times
are either left ungraded by the wholesalers or manufacturers so that the customers
readily accept the goods. The retailer is responsible for the packing of goods in small
packages or small containers for the customer’s convenience.

The retailers are the direct point of contact or communication with the customers;
hence they gather information regarding the changing tastes and preferences of the
consumers, pass on the customer feedback to the manufacturers for continuous
improvement in service delivery.

Retailers act as a vital channel for the launch of new products in the market as they
are the direct interface with the consumers and can communicate directly with the
target’s consumers about the new product features and advantages.

The retailers are responsible for the product promotion and advertisement by
planning the product displays and visual merchandising for attracting the customers.

Services Provided by a Retailer

To Customers:

A Retailer ensures ready stock availability of goods for the customers in sufficient
quantities and sells the goods to the customers as per their quantity specifications.

A retailer ensures availability of a wide variety of choices of products for the

customers by keeping different varieties at various prices and also different brands
as well.

A retailer can provide credit facilities and heavy cash discounts on the purchase of
different products to the customers.

Retailers can provide customized services and pay personalized attention to the
customers for achieving a higher level of satisfaction with the delivery of product or
service.

Retailers introduce new products to the customers and also guide them with the
usage of the products.

Retailers can provide additional services like free home delivery or after sales
services.

Retailers purchase and maintain a stock of those products which are mostly
demanded by the customers. They aim at catering to the requirements of all kinds of
customers with varied buying capacities.

To Wholesalers:
Retailers are a valuable source of information and feedback for the wholesalers who
in turn pass on the same information to the producers of the products. Crucial
information related to the changes in the buying preferences of the customers, their
experience with the usage of the products, feedback on the prices and quality of the
products is passed on to the wholesalers. This helps in improving the existing
services and in customizing the product solutions as per the requirements of the
customers.

A retailer absorbs most of the burden of the wholesaler and also of the manufacturer
by selling the goods in small quantities to the customers. The wholesalers are
relieved from the burden of maintaining direct touch with the customers and
managing the entire gamut of activities involved in convincing the customers for
purchasing their products.

Retailer supports the wholesaler by acting as a channel for distributing the goods to
the customers.

Retailer acts as the point of contact between the customer and the wholesaler.
Retailers are responsible for creating and improving the demand for various products
by taking care of the display and merchandising activities.

Retailers act as a major source of funding for the wholesale trade by placing the
orders and making payments in advance to the wholesalers for those goods.

Functions of Retailing
A retailer attempts to bridge the time, place and possession gaps that separate a
product from its consumer. A retailer uses various resources which automatically
contributes to the increase in the price. Thus, in such a scenario a retailer must justify
its existence in the market by efficiently carrying out the retailing functions.

1. Sorting
The sorting process is defined as collection of goods from various sources in
large quantities and selling it to the end users in smaller units. On one hand
the manufacturers produce large quantities of products whereas the consumer
requires small quantities of products from a large number of product
categories.
 2. Bulk Breaking The manufacturer supplies the product to the retailer in bulk to
reduce the overall ordering cost. However, to meet the needs of the individual
customer, the retailer breaks this bulk into smaller units of product. Thus, the
customer is satisfied since his consumption needs are appropriately met at an
optimum expense owing to smaller size available at a lesser price.
3. Stocking The retailer displays the product in stores and shelves as an
additional inventory to meet any change in demand over a period of time. This
takes the burden off the manufacturer towards warehousing and frequent
transporting. The customer is also benefited since he does not have to stock
the product but is assured of its availability with the retailer whenever
required.
4. Communicating The retailer being an intermediary offers two-way
communication between the manufacturer and customer. The manufacturer
learns through the retailer regarding customer feedback, product performance,
sales forecast etc. On the other hand, customer learn from the retailer about
the product availability, product characteristics, company credibility.
5. Customer Services An important differentiating factor between different
retailers is the level of customer service being provided. Attaining customer
satisfaction through fulfilment of expectation is no longer enough to spread a
positive word of mouth. This has made retailers provide additional customer
services such as greetings at the entrance, free gift, home delivery at nominal
charges or free of cost within a certain radius.
6. Advertising The impulsive nature of customer demands while taking purchase
decisions inside the retail outlet, they should be reminded about the product.
The point-of-purchase display acts as a reminder and as piece of information
for the customers. It helps in generating greater sales for the retailer and
manufacturer.
7. Transporting In case of scarcity of resources at the disposal of manufacturer,
retailers take care of the transportation of products. For the manufactures, this
results in lesser investment in physical distribution while the retailer is
benefited due to timely and assured delivery at its outlet.

Online and Offline Retailing

Online Retailing
Online retailing is an electronic form of shopping goods from online stores where
buyers and sellers meet virtually and create a marketplace. Online retailing is
growing in demand and many offline traders & retailers are shifting to online
mode of business. Moreover, almost every website provides cash on delivery
option in its payment method which, again builds a level of satisfaction and trust
towards delivery amongst buyers who are making a purchase order for the first
time.

Advantages of Online Retailing

• Better Customer Reach

Whenever customers click on “Agree and continue”, they get notifications about
new product launches, new discounts, offers, and sales which they can update
themselves with. Customers can anytime visit these stores as they have 24/7
openings and availability and order products anytime from anywhere.

• Personalized Service

Unlike big stores where customers are made to stand in queue for orders or face
trouble in the crowd, Online stores provide personalized service to customers
where they can select, surf, visit or revisit, buy, cancel and exit the sites anytime.

•Quick Grievance

Address Whenever customers come up with complaints regarding default in

products, late delivery, payment gateway crash, etc.; there is a ready chatbot to
deal with these queries and if the query of the customers remains unsolved, the
problem is directed to a senior manager who then deals it. All these procedures
sort customer grievances in no time.

Offline Retailing

Offline retailing remains the most popular shopping channel for consumers and
can’t currently be matched by online when it comes to customer experience. With
a traditional bricks-and-mortar store, you can craft a unique experience for your
customers and express your brand in a creative way. The advantage of offline
retailing is the ability to touch and feel products and then immediately purchase
 them ranks as the highest reason most shoppers prefer shopping in the real world
rather than online. Another advantage of offline retailing is he trust that the
customer develops with the retailer as the customer gets the in-hand feel of the
product which ultimately helps in increase of the level of customer satisfaction,
thus strengthening the relationship with the customer for a long period of time.
Just as the pros of offline retail are well known, the disadvantages of offline
retailing include higher setup and running costs are very likely. Traditional stores
generally have higher running costs than online retailers, with electricity, water,
rent and more to pay for every month. This allows less room for error when it
comes to your initial financial investment. With an offline store, you can see
funding dry up very quickly if you’re not careful.

Types of Retailers
1. Supermarkets: Supermarkets are large format retail stores that offer a wide
selection of food and household items.

2. Convenience Stores: Convenience stores are small retail outlets that offer a
limited selection of items such as snacks, beverages, and other convenience
items.

3. Department Stores: Department stores are large retail stores that offer a wide
selection of merchandise in multiple departments such as clothing, toys,
electronics, and more.

4. Discount Stores: Discount stores are retail stores that offer merchandise at
discounted prices.

5. Specialty Stores: Specialty stores are retail stores that focus on one specific
product category through a website or app.

Retail Mix
The retailer endeavors to deliver value to its target market in a profitable manner. In
the process, he has to take decisions on several key aspects related to its interaction
with its target customers. These decisions, known as retail mix decisions, are meant
to provide the target customer with information about appropriate products &
optimum service at affordable prices in a suitable environment at an approachable
location.

The retail mix may be defined as the entire range of activities associated with the
offering meant to provide value to the customer.

It depends upon the target market selection. Once the target market’s expectations
have been outlined, the retailer must take decisions regarding the six components of
retail mix.

The retailer should make sure that each component of the retail mix must reinforce
and reflect the other components. For example, a retail outlet for high end customers
& charging premium price cannot afford to have low- or poor-quality products. A
mismatch between the retail mix components results in confused and dissatisfied
consumers.

Retail Mix consists of the six elements:

1. Product assortment and procurement

2. Service
3. Price
4. Promotion
5. Atmosphere
6. Location
Product assortment and procurement

Product assortment, also known as product or merchandise mix, is the variety of

merchandise that a business offers to customers. It is expressed in terms of breadth-
The number of different product categories carried by the store, and depth- the
variety of the products carried within each category. Breadth can be narrow or broad
and depth can be shallow or deep. In the eyes of a customer, this assortment defines
a retailer’s image and why they shop there.
 Deep Speciality Department
Store Store
Depth Category Discount
killer Store
Shallow

Narrow Broad

Breadth

Fig. 1 Product Assortment

Speciality Store

A specialty store is a shop, that offers specific and specialized types of items. These
stores focus on selling a particular brand or a particular type of product. For example,
Bombay Selection is a clothing store for women which sells a large variety of fabrics
such as suits, sarees, lehengas etc.

Category Killer
A large store, typically one of a chain, which specializes in a particular type of
discounted merchandise and becomes the dominant retailer in that category. Wal-
Mart is a classic example of a category killer. By being cheaper, bigger, more
convenient, and more well-known, it has an advantage over smaller stores and
specialty stores. A wide selection of merchandise is a common characteristic of a
category killer.
Department Store
Retail establishment that sells a wide variety of goods. These usually include ready-
to-wear apparel and accessories for adults and children, yard goods and household
textiles, small household wares, furniture, electrical appliances and accessories, and,
often, food. For example, Lifestyle.
Discount Store
a retail format in which products are sold at prices that are in principle lower than an
actual or supposed "full retail price". Discounters rely on bulk purchasing and
efficient distribution to keep down costs.
A high product mix- or a wide range of merchandise- can reduce the risk of
dependence on limited items, but selling unnecessary products that don’t connect to
your brand’s image can be harmful. For example, if Apple began offering
refrigerators, it could confuse customers and hurt the brand’s image.

The smaller retailers take assortment decision on the basis of experience or analysis
of recent trends. While bigger retailer organizations carry out future projections of
the past trends. The decision should be compatible with organizational objectives.
Example market share or profit maximization, and organizational resources. The
product assortment decision requires two crucial sub decisions.
i. Quality- the quality needs to be managed in terms of the product and
adjoining services. A good quality reputation reduces the received risk of the
customers. However, providing consistently good quality also costs resources.
Therefore, a decision should be taken regarding the standard to be maintained,
taking into consideration the target market expectations, and availability of
organizational resources.
ii. Brands- While deciding on the product assortment, the retailer has to consider
inclusion of national brands, private label, brands, licensed merchandise and
generics. The national brands are the manufacturers brands such as Colorplus
by Raymonds. These brands have a high level of consumers awareness due to
heavy promotional backup. The private label brands and manufactured are
marketed by retailers such as John Miller by future group. The level of
awareness is lower but due to the retailers’ control over these brands, the gross
margin is more. The growing attachment to film or television characters has
led to addition of licensed images and symbols on a wide range of
merchandise, such as the superhero character, Krish on children’s school bags.
This has enhanced the desirability of such products known as licensed
merchandise. Generics are the non-branded, plainly packed and less costly
version of a product. In the commodities market such as groceries, generics
are more in demand compared to the branded products.

Service
The services mix offered by the retailer is a major differentiating factor that
contributes towards word-of-mouth communication. The services mix comprises of:

i. Prepurchase services- It includes accepting orders by telephone or email,

advertising, merchandise, display, trial rooms.
ii. Post purchase services- It includes packing, gift wrapping delivery,
installation, alteration.
iii. Ancillary services- It means providing necessary support to the primary
activities or operation of an organization, system, etc. It includes parking,
elevator or escalator, restaurant.
The emergence of new retail formats, has put greater pressure on retailers to
differentiate themselves through service. The store-based retailers are developing
new services and promotions to attract internet savvy customers. For example, retail
chain Bloomingdale users in store, intelligent mirrors that can send photos and
videos of shoppers in outfit options to their family or friends, emails and mobile
phones for real-time feedback. At the same time, web-based retailers attempt to
service their customers for the fear that any deficiency may drive the customer to the
nearest store-based retailer.

Price
The retailer should decide on price in relation to the target market chosen, the
product assortment offered and the services mix provided. A balance has to be
maintained between desire to achieve high volume and gross margin on products
offered. The retailer has two realistic options to choose from:

High Speciality
Store
Mark-up Discount
Store
Low

Low High

Volume

Fig. 2 Price options

i. High mark-up and low volume

ii. Low mark-up and high volume
Most retailers operate in these two extremes.

Promotion
Retailer must choose appropriate means of communication compatible with other
elements of retail mix. The communication may be aimed at informing, persuading
or reminding the target customers about any aspect of the retail outlet. Advertising,
public relation, personal selling and sales promotion may be used exclusively or in
combination with each other to ensure greater exposure, reach and impact. The
retailer must use communication such that it reinforces its positioning and
supplements the brand image among its target market. For example, clever use of
the punch line “Sabse Accha, Sabse Sasta” has conveyed to the target market what
Big Bazaar promises to provide in an unforgettable manner.

Atmosphere
Atmosphere is defined as the store's physical and non-physical ambience that suits
the target market and draws customers. Research has shown that varying the tempo
of music influences the average time spent as well as expenditure incurred by
customers in a retail outlet. The store atmosphere is generated through four
important elements exterior (e.g., storefront, marquee), general interior (e.g.,
flooring, aisles, elevator/escalator), store layout (e.g., traffic flow pattern), interior
display (e.g., mannequins, dumpbin).

Exteriors

Atmospherics
Interior Display General Interior

Store Layout

Fig. 3 Store Atmosphere

The store atmosphere is an external manifestation of the personality of the store. It

should be compatible with the target market so that the target customer can identify
with the retail outlet. The greater the compatibility between store atmosphere and
target customer expectation, the better is the resulting total retail experience of the
customers.

Location
There are three factors that contribute to the success of a retail outlet-location,
location, and location. Even as this age-old belief amongst retailers is changing, it
does underscore the importance of location as a retail-mix decision. On one hand, a
location decision involves large capital investment while on the other hand, it is a
major revenue generating factor since it influences the amount of customer traffic.
A retailer may choose from amongst independent outlet, unplanned shopping centers
and planned shopping centers.
The success of a retail outlet depends not only on the individual brilliance of each
component of retail-mix but also upon the level of integration achieved among the
components. A retail outlet targeting high end customers should carry an assortment
of good perceived quality, back it up with courteous and knowledgeable salespeople,
price it to indicate quality and snob appeal, inform customers through lifestyle TV
channels and magazines, make sure that the outlet has high visibility and
sophisticated ambience, and finally should be located in upmarket business
destination.

Whatever may be the choice of retail mix components and their combination, the
ultimate objective for a retailer should be to attain the destination retailer status. A
destination retailer is a retail outlet such that it is so positively distinctive in the
perception of the consumers that they would make every effort to shop there.