Retailing : Concepts And Introduction

1.0 INTRODUCTION
Marketing is an important part of any business. Whatever fund comes to the business, it comes by performing the various
activities of marketing. Retailing is a part of marketing. Retailing is a very dynamic industry and it keeps on changing a very
second. The way of doing retailing in no manner remains the same as it was a decade ago. The concept of retailing is not
very old to the market. It can be said that the concept of retailing is very much been advocated and used by one of the biggest
player in the retail market i.e. Kishore Biyani. He was born to a very middle class family and started his business by selling
stonewash fabric to the small and normal shops in the Mumbai. The group formed by Kishore Biyani is now very well
known to all the person in the country known as future group. He was also titled as “Rajah of Retail” by some of the
authors and marketers. The group operates India’s most popular online shopping portal through futurebazar.com. The group
offers a verity of home solution stores along with a lot of furniture and electronics through collection I and Furniture Bazaar
and through e Zone and Electronics Bazaar. Retailing encompasses all the business activities which are involved while
selling the various goods and services to the different segment of consumers for their final consumption.
Experts believe that retail expansion in the coming five to seven years is expected to be stronger than our Indian GDP
growth, driven by changing lifestyles and by strong income growth, which in turn will be supported by favourable
demographic patterns and the extent to which organized retailers succeed in reaching lower down the income scale to reach
potential consumers towards the bottom of the consumer pyramid. Use of plastic money, easy availability of consumer credit
will also assist in boosting consumer demand.
Today, a vast majority of India’s young population favours branded goods. With the spread of satellite televisions and visual
media, urban life style trends have spread across the rural areas also. The shopping extravaganza of the Indian middle class
especially the young population for clothing, eating outside and lust for modern living styles has unleashed new possibilities
for retail growth even in the rural areas. Thus, 85% of the retail boom which was focused only in the metros has started to
infiltrate towards smaller cities and towns. Tier-II cities are already receiving focused attention of retailers and the other
smaller towns and even villages are likely to join in the coming years. This is a positive trend, and the contribution of these
tier-II cities to total organized retailing sales is expected to grow to 20-25%. One of the principal reasons behind the
explosion of retail and its fragmented nature in the country is the fact that retailing is probably the primary form of disguised
unemployment/underemployment in the country.
Given the already over-crowded agriculture sector, and the stagnating manufacturing sector, and the hard nature and
relatively low wages of jobs in both, many million Indians are virtually forced into the services sector.

1.1 RETAIL AND ITS CONCEPTS

Liberalized financial and political environment in India has prompted a wave of large number of
entrants into the country’s rapidly growing retail industry during the past few years, without doubt, the
retail industry in India is in the throes of radical restructuring. The fundamental drivers of change are
increasing per capita income, growing GDP, availability of consumer finance and therefore irreversible.
Retailing in general sense consists of business activities that are involved in buying and selling of goods
and services to ultimate consumers for their own use ranging from bread butter to automobiles to
apparels to airline tickets.
In India, after agriculture, the retail is the second largest sector that provides enough employment to
Indian workforce. But retailing in India is at cross roads on the one side, retail sales are making new
heights year after year and on the other side, traditional Indian retailers (Kirana stores) face numerous
challenges.
Retailing consists of selling merchandise from a permanent location (a retail store) in small quantities
directly to the consumers. These consumers may be individual buyers or corporate. In the world of
Trade and Commerce, a retailer purchases goods or merchandise in bulk from manufacturers directly
and then sells in small quantities are known as retail stores or shops.
Shops may be located in residential areas, colony streets, community centres or in modern shopping
arcades/ malls. In fact, any organization selling merchandise to final consumers -whether a producer,
wholesaler or a retailer -is doing retail business.

It does not take into account how the merchandise is being sold. While on the other hand, retail format
is a blend of product range, pricing, marketing and the way the items are displayed. A retail-format will
be suitable for a retailer does not depend upon market practice but upon retailer’s budget, merchandise
and the need of the locality. A good format draws more footfalls and helps retailer a platform to succeed
and earn name and fame.
The word retail is derived from the French word “retaillier”, which means to cut off a price or to break
bulk. So as per the meaning of the above word one can say that a retailer is one who sells in small
quantity or sells in repetition.
According to Philip Kotler: “Retailing includes all the activities involved in selling goods or services to
the final consumers for personal, non- business use.” So as per the definition it can be said that in case
of retailing the focus is on selling the various products to the final consumer for their own use or for the
use of any other person but for the non-business purpose. Retailing thus can be explained as the final
step of distribution of merchandise to be used for consumption by the end consumers. So one can say
that any firm which is selling the products to the consumer for their final consumption is doing the job
of retailing. So retailing includes all those activities of marketing of various goods and services that
facilitates the consumer to buy the product for their final consumption.
Retailing is a distribution process, in which all the activities involved in selling the merchandise directly
to the final consumer (i.e. the one who intends to use the product) 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. Retailer implies any organization, whose maximum part of revenue
comes from retailing. In the supply chain, retailers are the final link between the manufacturers and
ultimate consumer.
1.2.1 FUNCTIONS OF A RETAILER
Retailer is a person who performs the functions of retailing. Normally a retailer performs all the
functions which facilitates the consumer with all type of utilities such as form utility, time utility, place
utility and ownership utility. Retailer perform various functions like sorting, breaking bulk, holding
stock, as a channel of communication, storage, advertising and certain additional services.

The retailer also serves the manufacturer by performing the function of distributing the goods to the end
consumers and thus forming a channel of information leading to the consumers. He is the final link in
the distribution chain and very vital too.
(i) Merchandising:

Merchandising covers the activities of planning and supervising the marketing of goods at the right
places, times and prices and in right quantities to the right customers. It facilitates a proper coordination
of supply with demand. The marketing activities of assembling (buying) of goods from different
producers and wholesalers and preparing them for resale to con•sumers at a profit are called
merchandising activities. Retailers have to assemble and maintain enough stocks of a variety of goods
so that they can meet adequately consumer demand and fulfil consumer expectations.

(ii) Warehousing:

In order to meet consumer demand promptly, the retailer must keep goods in ready stock and avoid an
out-of-stock position as far as possible. Hence, he should have reasonable storage facilities.

(iii) Selling:

Successful buying must be combined with efficient methods of selling, advertising and sales promotion.
The retailer is the last point of sale in the machinery of distribution. Retail trade is an important branch
of commerce where goods are directly sold to the final consumer.
(iv) Risk-Bearing:
Goods are bought and stored in .anticipation of sales at a profit. Consumer demand is always changing,
prices are fluctuating, and therefore, the risk of loss due to changes in demand and changes in prices is
always present. Then, again, there is always the possibility of the loss of goods by fire, theft, riot,
deterioration in quality, etc. The risk of loss due to changes in demand, changes in style and fashions,
changes in prices are borne by retailers.

(v) Grading and Packing:

A retailer may have to perform the marketing functions of branding, grading and packaging when lie
deals with ungraded goods received from producers.

(vi) Grant of Credit:

Credit sales offer a lot of convenience to salaried and wage-earning people. A credit sale is a sales
promotion device, for it encourages permanent and regular customers to deal with one retailer. People
who “run an account” with the retailer go to one shop. For the sale of durable and costly goods to
consumers, a hire-purchase or an installment sale facility is offered. In its absence, the sale of costly
consumer durable goods may not be possible on a large scale. Many people buy goods on hire-purchase
or HP.

(vii) Guide to Wholesaler or Producer:

Manufacturers and wholesalers can secure first-hand information of the wants of consumers from
retailers, because retailers have personal contacts with their consumers. They can guide manufacturers
to produce those articles which are likely to be in great demand in the near future due to changes in the
tastes and habits of consumers. The retailer is the best source for the determination of the pulse of
demand, e.g., changing consumer preferences and tastes, and changes in fashions. Marketing plans are
based on probable consumer demand.
(viii) Last Outlet in the Chain of Distribution:
In relation to producers and wholesalers, retailers act as the last outlet for the distribution of goods
within the country. A retailer is the connecting link between the wholesaler and the consumers.
Individual sales in small quantities is the responsibility of the retailer. In the absence of retailers, it
would be impossible to distribute goods to ultimate consumers, and most of our wants will remain
unsatisfied. In short, the entire trade will be paralyzed.
(ix) Advertising, Salesmanship and Sales Promotion:

Manufactured goods are worthless unless they pass the acid test of retail distribution. The retailer must
employ efficient methods of promotion, i.e., salesmanship, advertising and sales promotion. Nothing
can be sold without the means of promotion or means of marketing communication.

(x) Variety of Products:

Even though retailers function in a limited area with a small number of customers, they always keep
themselves ready to meet all the requirements of their customers. For this, first of all they are required
to know the different kinds of goods likely to be demanded by them and, secondly to locate the sources
from where such goods could be obtained at competitive prices.

(xi) Transportation:

In many cases, retailers get the goods delivered at their shops. But in order to minimize delay, they
themselves carry the purchased goods from wholesalers.

(xii) Market Information:

As retailers are in direct personal touch with consumers, they are often helpful in providing useful
market information to the wholesalers and manufacturers regarding changes in consumer’s tastes and
preferences as well as the availability of competing goods. They provide knowledge regarding new
products and new uses of old products to the consumers. They act as an adviser and guide to the
customers.

(xiii) Financing:

Large number of retailers sell goods on credit and play an important role in providing finance for the
distribution of goods. They encourage consumption of goods and also provide after-sales service to their
customers.

(xiv) Sales Promotion:

Another very important function of retailers is sales promotion. This is done through an effective
display, shelf spacing, and various personal services like free home delivery, replacement etc., which
they provide to their customers.
1.2.2 CHARACTERISTICS OF RETAILING
A retail business endeavors to create a compelling concept against competitors. For the characteristics
of the vision to be effective, the concept must create an emotional bond with customers. For a customer
to see the value of the characteristics of the business' appeal, he looks at what the business gives him,
not what the business put in.
 Clear Vision

To connect to a core customer group, one of the characteristics a retail company must have is a clear
vision. What the company is offering, who their target market is and the value of the product or service
to the customer must be clear. For example, North American car rental company Enterprise Rent-A-Car
focused on customers who need a car during repairs as its target market rather than the standard airport
focused car rental. That focus helped Enterprise dominate a market and increase market share.

 Value

A retail business that sells products or services that appeal to customers' needs has the ability to stand
up against competition. Physical facilities, pricing, products and customer service differentiate a busy
retail store from an unnoticed one. If the characteristics appeal to a consumer, in her mind, the business
represents value. When a retailer makes the value of its business obvious, it prevents service levels from
dropping.

 Functional

Price, convenience and store experience are functional characteristics that make up a strong retail brand.
These functional characteristics are common to almost all retail stores. A brand may use its store
experience to create an emotional bond by matching its brand's characteristics with consumers' values.
The emotional connection could trigger sales. Combining functional characteristics of store experience
with price and convenience, a retailer strives to have returning customers.

 Concept

A retail business aims to conceive an idea and deliver consistency, profitability and integrity from
concept to execution. Ikea, an international furniture company, for example, developed a unique
presentation and customer assembly system difficult to copy. The unique concept created a barrier to
competitors. In order to be able to execute on its ideas, a company must have adequate resources and
capital.

 Small Quantity Enough

Sales of goods and services in a small enough quantity (small parties, in amounts sufficient for their
own consumption in a given time period). Although the retailer to get the goods from suppliers in the
form Kartonan (cases), but retailers displaying and selling it in a fraction per unit (piece (s)).

 Impulse Buying

Impulse buying is one of the most important element that one will find in retailing. Often the consumer
in the shopping process, the decision to purchase an item was not previously listed in the expenditure
items (out of purchase list). This decision comes out of nowhere but the sudden decision taken by the
consumer to buy a particular product.
 Store Condition
While finding out about the various characteristics one also have to look on the store condition. The
interior environmental conditions in the shops / stores that are influenced by the location of the store,
the effectiveness of lighting goods, open hours (store hours) and a competitive price.
 Effective relation with customers
Retailing is the last part in the distribution channel. It has direct interaction with customers: The retailer
acts as the final link between the organisation and its customer. The retailer knows his customer better
than anyone. He even suggests the customer what to purchase and allows him credit facilities to
encourage frequent buying behaviour in the customer.
 Frequent dealing with customers
The customer purchases goods in small lots from the retail stores. So in order to buy the items he
often visit to the store many a times. In this way the retailer has to meet the customers many a times.
 Effective way of marketing communication

Retailing is one of the best way of marketing communication. Most of the customers visit to the retail
shops many times. In this way they are very much connected with the retailer and retail outlet. So if a
brand wants to communicate some of its new product to the customers or want to get the customers
familiar with any of its existing product it can use the retail outlet as one of the communication channel.

 Some other characteristics of retail business

o It deals in a variety of goods of daily need and makes these goods available to the
customers at their convenience.
o It purchases goods in bulk directly from the producers thus avoiding middlemen in the
process of purchase of goods.
o It provides service to a large number of customers.
o The size of these shops/stores is comparatively bigger than the local retail shops/ stores.
o It requires huge capital investment to start and run the business.
o It generally sells goods to the customers on cash basis.

At last it can be said that retailing is one of the new concept of business and has been widely accepted
and used now a days. Though it needs a huge amount of capital and customer satisfaction and offers to
customers are to be met on regular basis. Still it is now a very growing sector and has shift the business
from small shops to the large outlets.

1.2.3 IMPORTANCE OF RETAILING

All goods go through a distribution channel to make the journey from the manufacturer to the final
consumer. One important cog in this machinery is the retail trade, the final step of the distribution
channel. Retail trade can take a lot of forms. It is not necessary that the goods are sold from a store,
retail trade can even happen over the phone, via post or mail service, door to door selling etc. So the
place of sale can also differ greatly, for example, a store, a supermarket, the customer’s house itself or
even a vending machine. But one thing which remains common in all of the above cases is that the
buyer of the goods is its final consumer. As far as this is true, it will be a retail trade. Effective retail
marketing is vitally important for today’s manufacturers. Without a presence in retail stores, businesses
rarely achieve the high level of exposure or widespread product distribution that retail stores offer.
The four benefits that make investing in multi-channel strategy worthwhile include:
i. Improved customer perception
ii. Increased sales Better data collection
iii. Enhanced productivity.
These benefits make investing in the strategy worthwhile. Retailers who recognize the importance of the
fundamental change in customer expectations and embrace the challenge of creating multi-channel
experience excellence will remain on the competitive edge. Multi-Channel Experience Management
can help you understand how each customer views his or her journey and ensure the best experiences
occur at each stage to build loyalty and foster advocacy. There are a large number of organizational and
customer related benefits to be gained from implementing a multi-channel strategy.
Here are a few:
a. Organizational Benefits:
i. Increased revenue and growth opportunities – more touch points with target market
ii. Better responsiveness and sensitivity to changing environments
iii. Competitive advantage over pure-plays, particularly around immediacy, education
opportunities for complex products and easy e-merchandise returns.
iv. Better data collection to know customer
v. Organizational efficiency and effectiveness opportunities through sharing of processes,
technology and information.
b. Customer Related Benefits:
i. Better and wider customer interaction with a greater variety of information available for
improved understanding of customers and identification of opportunities for increasing value per
customer (business intelligence)

ii. Increased customer loyalty through better understanding of customers

iii. Better customer experience reducing churn and increasing loyalty
iv. Opportunity to leverage and improve brand perception Customers themselves also benefit
from increased choice in interaction opportunities and the ability to switch channels as convenient.
1.2.4 CHALLENGES FACED BY RETAILING IN INDIA
India is the ninth largest retail market in the world with estimated annual retail sales of about
Rs.9,60,000 crores. Research done by the Tata Strategic Management Group indicates that over the next
ten years, the Indian retail market is likely to grow at a compounded annual growth rate of 5.5%. The
Indian retail industry is the largest among all the industry, accounting for over 10% of the country’s
GDP and around 8% of the employment.
i. Neglecting Store Operations
One of the biggest mistakes many retailers make is neglecting their store operations, which in-turn
causes them to neglect their customers. The worst thing about this problem is that many entrepreneurs
don’t even realize they do this. Too many retailers have their minds in the wrong place, and instead of
focusing on the success and growth of their business, they worry too much about personal
accomplishments with the company. They start off with a strong work ethic, but when they see small
successes, their motivation lessens, and they begin to coast. The best businesses strive for upward
growth and don’t stop, even when they receive praise and admiration. So if you feel like you’re starting
to coast as a business owner, it’s time to get back on track.
ii. Declining Quality Customer Service
The sad truth of the 21st Century is that if customers don’t have a positive experience at a storefront,
they can just purchase the product they want online. This is why poor customer service is such a serious
retail problem. It’s important that businesses make an effort to accommodate their customers’ needs
because if customers don’t feel appreciated, they will stop visiting physical stores.
iii. Forgetting About the Data
Numbers can sometimes be confusing or unappealing, but to a business owner, you have to be aware of
what numbers your business is driving and what they mean. You can’t just sit back and hope that you’re
generating a positive cash flow. You must be hands-on and know where your money is coming from
and where it goes. It’s good to be passionate about your business and start a company because you care
about it, but you also need to take the next step to help it succeed by being data driven. Many
entrepreneurs make decisions only based off emotion, but you also need to take trends and statistics into
account.
iv. Failing to Adapt the New Technology
You’ve probably had to adapt a lot within the past few years as new technology and trends have
emerged. But businesses have been adapting since the start of time, and positive change is a good thing
so don’t push it away. Being outdated can be the demise of a small business, so make sure to stay
current with the latest trends. Small businesses are already a big trend, so you’re already partly there.
i. Underestimating Commitment to the Store
Some small business owners forget that opening a retail store comes with many consuming tasks such
as a nonstop cycle of buying, marketing, displaying, and selling products. This process can sometimes
be very overwhelming and demanding for some entrepreneurs. It also means that business owners
endure long days or nights, nonstop ordering, and bill paying. Even though this can be tiresome, the
minute you put it on the back burner, your small business can start to fail. Of course, you can hire more
employees, but it’s not always that easy.
ii. Having an Undeveloped Brand
Sometimes I’ll walk into a store that clearly has an undeveloped brand. Maybe they’re selling too many
items and I’m not sure why there are so many random things, or it could be too niched, and I’ll be
turned off that I don’t fit the store’s targeted audience. It’s important that small businesses find a happy
medium between these two poles. Don’t have too large of an inventory and overwhelm customers, but
also don’t turn customers away by being too niched. A good rule of thumb is that each item in your
store should make sense and contribute to your store’s overall vibe.
iii. Being a Bad Employer
Being a business owner is a tremendous responsibility, but sometimes the recognition and power of
owning a business can get to the head of many entrepreneurs. This can create a negative power dynamic
and create tension among leaders and employees. The jobs of business owners are to help manage and
train people to be better. Thus, everyone should be working collectively for the betterment of the
company. If you’re experiencing problems with your team, it might be time for you to take a reality
check and see if it’s time to improve your employer-employee relations.
iv. Ignoring the Market
Many business owners can sometimes turn a blind eye to the market, which can ultimately damage their
company and decrease their revenue. Business owners make this mistake by selling items they want to
sell rather than selling items their consumer desire. However, it is important to keep updated with new
and developing trends and be aware of which items sell and which don’t.

1.2.5 TRENDS IN GLOBAL RETAIL MARKET

The Retail Industry is segmented by Products (Food and Beverages, Personal and Household Care,
Apparel, Footwear and Accessories, Furniture, Toys and Hobby, Electronic and Household Appliances,
and Other Products), Distribution Channel (Supermarkets/Hypermarkets, Convenience Stores, and
Department Stores, Specialty Stores, Online, and Other Distribution Channels), and Geography (North
America, Europe, Asia-Pacific, Latin America, and Middle-East and Africa).
The retail industry has witnessed several changes during the study period with changing economic
conditions across the world. The global economy, which slowed in 2019, crashed in 2020 due to the
COVID-19 outbreak, resulting in a challenging forecast period for the retail industry. As the majority of
products in the industry are sensitive to the economic cycles, the retail industry is expected to show
slow recovery during the initial forecast period, yet the customer necessity for the majority of products
is anticipated to drive the market once the situation settles down.

The global retail industry is mature and highly competitive in the developed economies of Europe and
North America. On the other hand, the developing economies of Asia-Pacific, the Middle East, and
Latin America have been instrumental in driving the market growth. Countries, such as Singapore,
Malaysia, and Thailand, are popular shopping destinations in the Asia-Pacific region, with visitors
contributing substantially to the retail sectors in the respective markets. Tourists are augmenting the
demand for products related to fashion, apparel, and electronics. Consumer spending, which typically
accounts for more than two-thirds of the GDP, has been a key indicator of the health of the retail
market. Moreover, the increasing strength of online shopping has been a major driver (especially during
the COVID-19 crisis). Apart from this, the growing smartphone penetration across countries is driving
the e-commerce channel. Also, IoT, augmented reality, and other disruptive technologies are reshaping
the retail industry. However, price variation between online and brick-and-mortar stores can challenge
the retail market growth.

Internet retailing is the modern way of shopping. With the growing penetration of smartphones and
mobile devices and internet services, e-commerce has emerged as a major shopping platform in the
world. The retail e-commerce market is driven by an increasing set of suppliers selling online and a
change in consumers' buying behavior, among others. The rise of online fresh groceries sales along with
growing numbers of prepared food delivery companies entering this space could propel category growth
by several-fold times in the next five years. Mobile-first sites, dedicated apps, emerging payment
methods, and other tools are making shopping on smartphones much easier. Many retailers operate an
omnichannel model, which aims to integrate offline and online channels. Asia has some of the biggest
retail markets in the world in China, Japan, and India. E-commerce sales in Q2 2020 accounted for
16.1% of total sales in the US market. Walmart, Amazon, Costco, Schwarz Group, Kroger are the major
companies operating in Retail Industry.
 THEORIES OF RETAILING

INTRODUCTION
Retailing may be defined as the selling of goods to the general public, rather than sales to
business. The word retail is derived from French words “re” and “tailer” whose meaning
is to “cut again”. Retail store works exactly as their name describes. Goods are sold in
small pieces to make a profit. Retailing involves various activities to sell to end
consumers for their non-business and personal use.
The meaning of retailing is to sell goods from a fixed location such as from kiosk,
departmental store, or by post. Goods are sold to consumers in small portions so that
consumers can consume them. A retailer purchase goods from an importer or
manufacturer directly or through a wholesaler to sell small portions of goods to final-
consumers. Retail stores are also referred to as stores or shops. Retailers are the last
element of the supply chain. The process of retailing is considered as one of the most
important parts of their complete distribution strategy. The process usually involves sales
of relatively small amounts of finished goods, with purchasers mainly motivated by their
own consumption needs and not for resale.
THEORIES OF RETAIL DEVELOPMENT
Every discipline must have some base on which the concept and other
fundamental of that disciplines are described. Those concepts on which the various
fundamentals of any subject is based are known as theory. So theory can be defined as a
set of principles on which an activity or any action is based. Retailing also has been
identified as a separate discipline and it is also based on some theories. Retail
development can also be looked at from the theoretical perspective. No single theory can
be universally applicable or acceptable. The application of each theory varies from market
to market, depending on the level of maturity and the socio-economic conditions in that
market. The theories developed to explain the process of retail development revolve
around the importance of competitive pressures, the investments in organizational
capabilities and the creation of a sustainable competitive advantage, which requires the
implementation of strategic planning by retail organizations Growth in retail is a result of
understand in market signals and responding to the opportunities that arise in a dynamic
manner. Theories of retail development can broadly be classified as:
1. Environmental Theory- where a change in retail is attributed to the change in the
environment in which the retailers operate.
2. Cyclical Theory- where change follows a pattern and phases can have definite
identifiable attributes associated with them.
3 Conflict Theory- where the competition or conflict between two opposite types of
retailers, leads to a new format being developed
2.2.2.1 ENVIRONMENTAL THEORY
The environment that a retailer competes in is sufficiently robust to squash any retail form
that does not adjust. Thus, the birth, success or decline of different forms of retail
enterprise is many a time attributed to the business environment. Darwin's the of natural
selection has been popularized by the phrase "survival of the fittest". Retail institutions
are economic entities and retailers confront an environment which is made up of
customers, competitors and changing technology. This environment can alter the
profitability of a single retail state as well as of clusters and centers. The environment
that a retailer competes in, is sufficiently robust to squash any retail form that does not
adjust. Thus, the birth, success or decline of different forms of retail enterprises is many a
times attributed to the business environment. For example, the decline of department
stores in the western markets is attributed to the general inability of those retailers to
react quickly and positively to environmental change. The environmental theory is very
much dependent on the various environmental factors. Businesses don’t operate in a
vacuum but in a dynamic environment that influences how they operate and achieve their
objectives. A business environment refers to a set of forces within and beyond an
organization that affects the way it functions. It’s the collection of stakeholders, entities
and other significant internal and external factors that impact the performance,
productivity, growth and even survival of a business. There are two key types of business
environments internal and external. Business owners and managers exert significant
influence over day-to-day decisions and internal situations. On the other hand, external
factors that are economic, social, technological, political and legal create unique
challenges and opportunities that influence the organization.
The main idea underpinning environmental evolution theory is that retail firms will
evolve and change in response to changes in the microenvironment. This theory states
that the firms which are best able to adapt and take advantage of changes in the
environment are those most likely to survive and thrive. For example, planning with the
use of tools such as a PEST analysis or a Porters Five Forces Analysis may provide
information to be used.
The environmental evolution theory can be used to explain the rise of discount
supermarket such as Aldi and Lidl who have become more popular following the
recession, and have leverage their low price advantages to gain more customers and
expand.
However, there are weaknesses with this model. While many firms do respond to external
stimuli, many retailers take a proactive approach, seeking to gain first mover advantages.
2.2.2.2 CYCLIC THEORY
The wheel of retailing theory is one of the most common cyclic retailing theory. This was
first proposed by McNair (1958) is one of the oldest retailing theories, and is frequently
cited. The idea is that retailers will enter the market and progress through a cycle of
strategies.

Initially, McNair believed that retailers would enter the market using a low-cost strategy,
and accepting low profit margins, as a method of acquiring customers. Costs are kept to a
minimum during this phase, with the retailer offering only limited service and product
range. This was referred to as the entry phase. As the retailer acquires customers and
profits, they move on to the trading up phase of the cycle. At this stage the retailer has
gained customers and is able to invest in the business in order to improve profits.
Strategies that this stage may include obtaining better facilities, for example moving to
higher locations, increasing the service level, expanding the product range, and investing
more in displays and advertising. Notably, when one retailer moves into this phase, they
may leave a gap in the retail sector for new discounters to enter.
The third stage is the vulnerability phase, where the retailer has become a mature business
and may now have high overhead costs. At this stage the organization may be facing a
declining return on investment, may need to renew their strategies in order to retain
existing customer, who may be tempted to competing organizations where there are lower
prices, high level of differentiation. Therefore, the mature retailer may move back to the
entry phase, with a need to attract new customers, often achieved through increased
discounting, and cutting costs to alleviate the heavy overheads.
This theory does explain many retailing trends in many countries. For example, Marks
and Spencer in the UK started out as a market stall before the High Street, and then facing
challenges and losses with high overhead in the 1990s. The weakness of this model is its
focus on costs, and inability to explain the continuing presence of profitable premium
market specialist firms.
2.2.2.3 CONFLICT THEORY
Conflict theory has its foundation in Dialectic theory, which is a recognized conflict
theory based on Marx’s Theory of Evolution. The basic idea is that for progress to be
made in any environment there must be conflict, with new ideas taking the place of the
older ideas and practices, which may then be emulated creating a hybrid or new format,
which itself will eventually be replaced.

In a retail environment, this means that one firm, or format, will be challenged by new or
competing firms and formats. As the nee form or format become more effective, the older
firms or formats will emulate the new ideas in a form of synthesis. For example, the
supermarkets have emulated the online shipping environment by offering online
grocery shopping. Recently, online firms have sought to compete with the
supermarkets, as seen with Amazon offering a ‘save and subscribe’ service, to deliver
regular items on a predetermined schedule, including some grocery items, and the recent
launch of the grocery store offering same day delivery in trial areas.
It is hypothesized the best features of the preceding models are likely to be retained and
combined with new competing ideas to create new retail models.
This model may explain how and why some trends appear to develop and are then
adopted and spread creating hybrid models. However, there are weaknesses with the
model; it does not explain why many traditional retail stores do not change and evolve,
and the argument that the blending of ideas is not always easily visible, and as such
means this model may be seen as ambiguous.
So all the above theories are very much important in case of retailing.
2.2.1 BUSINESS MODELS
Every business has its distinctive way of organizing the very many activities that are
involved in delivering its product or service to the end consumer. In retail parlance, one
would term it as the format adopted by the retailer to reach his end consumer. Over a
period of time, as business grows, changes occur in the environment, the customer and the
geographies in which business is conducted. Companies are confronted with new
information and communication technologies, shorter product life cycles, global markets
and tougher competition. Various retail models exist in the world of retail. To start with,
let us first understand what a business model in retail entails. A business model is the
manner in which a business chooses to serve its customers and stakeholders. In retail, a
business model would dictate the product and / or services offered by the retailer, the
pricing policy that he adopts. The communication that follows to reach out to customers
and the size looks at the location of retailer’s retail store. This is termed in retail as a
format in which the retailer operates. It has to be borne in mind that a retail model is
relevant with reference to a particular time frame and the critical factors, which affect the
retail model are:
1) Trends in market positioning
2) Competition and
3) The organizational capabilities.
These three factors jointly enable the understanding of the contexts and strategies adopted
by retailers over a period of time.

2.2.3.1 CLASSIFICATION ON THE BASIS OF OWNERSHIP

On the basis of ownership, a retail store can be an independent retailer, a chain retailer or
a corporate retail chain, a franchise or a consumer co-operative.
 Independent retailer: - An independent retailer is one who owns and operates
only one retail outlet. Such outlets essentially feature the owner & proprietor and a
few other local hands or family members working assistant in the shop. Many
independent stores tend to be passed on from generation to generation.
 Corporate retail chain:- When two or more outlets are under a common
ownership, it is called a retail chain. These stores are characterized by similarity
in merchandise offered to the consumer, ambience, advertising and promotions.
Examples in India include Wills sports (ITC), Louis Phillippe, Van Huesen,
 (Madura Garments), Arrow (Arvind Mills) and department stores like Globus,
Westside and Shopper’s Shop Food world, Music world, Planet M etc are also
examples of chain retailers. The biggest advantage is that a chain retailer has the
bargaining power that he can have with the suppliers. Cost effectiveness is also
possible in advertising and promotions. Since chains expand across cities and
regions, it may not always be possible to take into account regional, or rural and
urban preferences. The ability to give attention to each of the stores becomes
fairly restricted.
 Franchising: A franchise is a contractual agreement between the franchise and
the franchise, allowing the franchisee to conduct a business under an established
name as per a particular business format in return for a fee or compensation.
Franchising may be of the following types:
1) A product or trade mark franchise – where the franchisee sells the products of
the franchiser and / or operates under the franchiser’s name. Archie’s stores,
which come up across India, are an example of product franchising.
2) A business format franchise – McDonald’s is perhaps one of the best examples
of business format franchising.

Under both the mentioned methods of franchising, the franchise may be for a
single store, a multiple number of stores or for a region or country. While outlets
of Van Heusen, Louis Philippe, Arrow and Benetton are examples of
individual franchises in India, McDonald’s operates at the level of two regional
franchises, Pizza Hut, Domino’s and Subway are also franchises operating in
India.
 Leased departments: These are also termed as shop in shops. When a section
of a department in a retail store is leased / rented to an outside party, it is termed
as a leased department. A leased department within stores is a good method
available to the retailer for expanding his product offering to the customers. In
India, many large department stores operate their perfumes and cosmetics counters
in this manner. A new trend emerging in Indian retail is that of larger retail chains
setting up smaller retail outlets or counters in high traffic areas like malls,
department stores, multiplexes and public places like airports and railway stations.
 These stores display only fraction of the merchandise/products sold in the anchor
stores. Their main aim is making products available to the consumer near his place
of work or home.
 Consumer co-operatives: Consumer Co-operatives aim at providing essential
commodities at reasonable prices. As a national policy, consumer cooperatives
have been encouraged and developed as a democratic institution, owned, managed
and controlled by its members, for protection of the interest of the common
consumers. The presence of consumer cooperatives has been working as a force
of market for the common man. To some extent, it has been successful in
protecting the interest of the common man and in stabilizing the prices. Examples
of co- operatives in India are the Sahakari Bhandars and Apna Bazaar shops in
Mumbai and Super Bazaar in Delhi.
Over the years, consumer cooperatives have developed a creditable network of
four-tier structure with 25,750 primary stores, along with a number of branches
at the grass root level, 676 wholesale / central stores with 6,331 branches and 29
consumer federations, including some composite federations and the NCCF at the
National Apex.
2.2.3.2 CLASSIFICATION ON THE BASIS OF PRODUCTS OFFERED
On the basis of products offered the retailing models can be classified as follows:-
 Departmental stores: - A departmental store is a large-scale retail organisation
having a number of departments under one roof. Each department specializes in
one particular kind of trade. All these departments are centrally organized and are
under one united management and control.

 Off price retailers: - Off-price retailers are retailers who provide high quality
goods at cheap prices. They usually sell second-hand goods, off-the-season items
etc. Description: These retailers offer inconsistent assortment of brand name and
fashion-oriented soft goods at low prices.
 Catalogue stores: - A retail commercial establishment in which orders are
accepted for the purchase of goods listed in a catalogue provided by the
establishment and in which some or all of the goods so listed may also be
available within the establishment for sale at retail.
 Specialty stores: - A specialty store is a shop/store that carries a deep assortment
of brands, styles, or models within a relatively narrow category of goods.
Furniture stores, florists, sporting goods stores, and bookstores are all specialty
stores. Stores such as Athlete's Foot (sports shoes only) are considered super
specialty stores.
 Convenience stores: - A convenience store can be defined as a retail business
designed by keeping the convenience of its customers in the center. Therefore,
these stores are located at convenient locations where people can quickly purchase
a vast number of products such as grocery items, food, and gasoline, etc.
 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. In the words of M.M. ZIMMERMAN, “A super
market is a departmentalized retail establishment having four basic departments
viz. self-service grocery, meat produce, dairy products plus other household
departments, doing a maximum business. It may be entirely owner-operated or
have some of the departments leased out on a concession basis.”
 Hyper Market: - A hypermarket is a retail store that combines a department store
and a grocery supermarket. Often a very large establishment, hypermarkets offer a
wide variety of products such as appliances, clothing, and groceries.
Hypermarkets offer shoppers a one-stop shopping experience.
 Kiosk:- A small sometimes movable booth from which cigarettes, newspapers,
light refreshments, etc. are sold

Shopping Mall:- A shopping mall (or simply mall), shopping center,, or shopping
arcade is a building or set of buildings that contain retail stores, with
interconnecting walkways enabling visitors to easily walk from store to store. The
walkways may be enclosed. In the British Isles and Australia, "shopping malls"
are more usually referred to as "shopping centers" or sometimes, "shopping
arcades." In North America, the term "shopping mall" is usually applied to
enclosed retail structures, while "shopping center" or "shopping plaza" refers to
open-air retail complexes.
 Discount Stores: - A discount store, as the name suggests, is a category of retail
 business where a retailer sells products at greater discounts. Mostly, discount
stores operate on the same principles as a departmental store. That said, discount
stores also sell different types of products under one roof (all in one shop).
However, in comparison to departmental stores, the prices are lower at discount
stores.
2.3 LIFE CYCLE IN RETAIL
The concept of product life cycle is also applicable to retail organizations. This is because
retail organizations pass through identifiable stages of innovation, development, maturity
and decline. This is what is commonly termed as the retail life cycle.
Attributes and strategies change as institutions mature. The ‘Retail Life Cycle’ is a theory
about the change through time of the retailing outlets. It is claimed that the retail
institutions show an s-shaped development through their economic life. The s-shaped
development curve has been classified into four main phases:
1. Innovation:
A new organization is born, it improves the convenience or creates other advantages to
the final customers that differ sharply from those offered by other retailers. This is the
stage of innovation, where the organization has a few competitors. Since it is a new
concept, the rate of growth is fairly rapid and the management fine tunes its strategy
through experimentation. Levels of profitability are moderate and this stage can last up to
five years depending on the organization.
2. Accelerated Growth:
The retail organization faces rapid increases in sales. As the organization moves to stage
two of growth, which is the stage of development, a few competitors emerge. Since
the company has been in the market for a while, it is now in a position to pre-empt the
market by establishing a position of leadership. Since growth is imperative, the
investment level is also high, as is the profitability.

Investment is largely in systems and processes. This stage can last from five to eight
years. However, towards the end of this phase, cost pressures tend to appear.
3. Maturity:
The organization still grows but competitive pressures are felt acutely from newer forms
of retailing that tend to arise. Thus, the growth rate tends to decrease. Gradually as
markets, become more competitive and direct competition increases, the rate of growth
slows down and profits also start declining. This is the time when the retail organization
needs to rethink its strategy and reposition itself in the market. A change may occur not
only in the format but also in the merchandise mix offered.
4. Decline:
The retail organization loses its competitive edge and there is a decline. In this stage, the
organization needs to decide if it is still going to continue in the market. The rate of
growth is negative, profitability declines further and overheads are high.
The retail business in India has only recently seen the emergence of organized, corporate
activity. Traditionally, most of the retail business in India has been small owner managed
business. It is difficult to put down a retail organization, which has passed through all the
four stages of the retail life cycle.
In the private sector, till a few years ago, most cities in India had a few independent
retailers. For example, Mumbai had stores like Akbarally’s., Premsons, Amarsons and
Benzer. Then Shopper’s Stop opened its first outlet in Mumbai in 1991.The store initially
offered apparel, imitation jewelry cosmetics and perfumes and home fashions. It also had
a customer loyalty program in place, which many stores at that time did not offer.
The store enjoyed an enviable position for a while. However, with the change in customer
expectations and increased competition in the form of other department stores like
Globus, Eastside, Lifestyle, etc and the rise of specialty stores, the company has been
forced to rethink its product offering. It now not only stocks apparel, jewelry, cosmetics
etc that it earlier stocked but has also acquired the book store chain Crosswords.

Cross words counters have been added to many of the existing stores. The store in
Andheri (Mumbai) also houses Planet M, music retail chain and a small coffee shop. In
May 2008, the company embarked upon a major exercise in terms of repositioning of the
store, which involved among other things, a change in the logo. It is necessary to keep in
mind that a retailer need not always move from maturity to decline. By reworking the
marketing strategy or by changing the product or service offering, a retailer may succeed
in moving back to the growth phase after reaching a stage of maturity with a certain
format and a certain mix of products.
 STRATEGIC PLANNING IN RETAILING

3.1 INTRODUCTION
Retailing is one of the world’s wide- ranging industries. It is in a permanent state of
change, and the pace of this change has been accelerating over the past decade. From a
marketing perspective, retailers are closer to consumers than manufacturers. Retailers are
the final stage in the marketing chain and the contact point between consumers and
manufactured products.
Planning might be defined as deciding in advance about the objectives to be pursued by
the enterprise; the selection of best alternative course of action to reach those objectives
and a specification of activities technical, financial, personnel etc. required for the
implementation of the pre-selected course of action.
IMPORTANCE OF PLANNING
(i) Planning helps management to face future with greater strength and
confidence:
The most certain thing about future is that it is uncertain; and it is uncertain because any
type of changes
– economic, social, technological, political etc. might take place – beyond the
contemplation of management. Planning cannot and does not rule out the phenomenon of
uncertainty associated with future conditions.
It can, however, help management to face future with greater strength and confidence, as
explained below:
During the process of planning, a manager develops alternative courses of action and
selects the best one out of such alternatives. Now, if in the face of future conditions, the
best selected course of action fails; the manager can take on to the next best alternative
and so on. Rarely will it be that all the alternatives developed by management fail.
Therefore, a manager who has done planning is in a better and stronger position to face
future; than a manager who has done no planning at all.

(ii) It helps to focus attention on objectives:

Many-a-times out of tension or pressure of work – one might forget the very objective for
which one is working. It is really a sign of danger, but such a danger can be avoided;
when one proceeds in a planned manner following the planned courses of action.

Since plans are object oriented; the danger on one’s part, of forgetting objectives, could
be done away with. Further, when objectives are in one’s mind all the time; these are sure
to be achieved a solid advantage of planning does it become.

(iii) It leads the operational life of the enterprise along the most efficient
lines:
This advantage of planning could be explained with reference to the fact that during the
planning process, the management selects and adopts the best alternative courses of action
best in terms of cost, efforts, time, resources, prestige etc. Now, when an enterprise
operates according to the ‘best’ alternatives’; there is no doubt that its functioning is at its
‘optimum performance level.’

(iv) It enables the exercise of controlling:

Planning provides the basis for exercising control over the actions of people, working in
an enterprise. This is so because the standards, with reference to which control is
exercised, are contained in plans. As a matter of fact, controlling is not possible, in the
absence of planning. By enabling the process of controlling, planning serves a useful
purpose of management by telling in what manner and to what extent – has the attainment
of objectives been possible in the organization.

(v) It acts as a spur to creativity and innovation:

Planning is an intellectual exercise. It forces a manager to constantly think of the best
objectives and the best alternative courses of action. Thus, the planning activity helps in
the development of creative faculties of managers. This creativity might lead to the
invention of certain innovations by managers; which might take the enterprise to the top
of excellence in the competitive commercial world. This, of course, is, but an indirect
advantage of planning.

(vi) It guides the decision-making process:

Though planning, in itself, amounts to decision-making; yet having formulated a plan
once, it acts as a guide to the further decision-making process undertaken by the
management. In fact, the evaluation of various alternatives, developed during the
decision-making process, can be done on the basis of the net contribution of each such
alternative to the planned objectives. Thus, planning helps in rational decision making
and distracts management from developing and implementing alternatives which would
merely involve a sheer wastage of the precious resources of the enterprise contributing
nothing or negligible to the objectives of the enterprise.

(vii) It provides a sense of direction to action:

Planned objectives and courses of action for attaining them as contained in the plans,
guide the actions of operators of the enterprise. Each operator can see for himself which
actions of his would contribute to the enterprise objectives; and which actions would
distract from them. Thus plans act as a torch, illuminating the performance-path of the
operators of an enterprise.

(viii) It facilitates co-ordination:

Planning is not a technique for ensuring co-ordination; it is rather a facilitating device, in
this regard. In fact, it is easier for management to co-ordinate the actions of individuals;
when they proceed according to planned courses of action than when each individual
adopts a unique line of action, according to his will and intelligence.

(ix) It fosters inter-departmental co-operation:

A major planning decision, usually involves a number of departments of the enterprise
like production, marketing, finance, personnel, accounting, etc. Many planning decisions,
in fact, cut across departmental boundaries; and foster inter-departmental co-operation
during the process of the implementation of such decisions.

LIMITATIONS OF PLANNING

Under this category of the limitations of planning, only one limitation of planning is
placed viz., the limitation of forecasting. This limitation of forecasting is considered as
the fundamental (or basic) limitation; in as much as, no amount of planning is possible
without involving some minimum element of forecasting; and till-do-date no hard and
fast system of forecasting future events and conditions is able to develop.
As a result, the fate of planning depends on the accuracy of forecasting; which is still a
matter of guess- work howsoever rational or scientific. In fact, some of the best laid down
plans might collapse in the face of unprecedented changes taking place in future
conditions only to the ill-luck of management.

This fundamental limitation of planning (based on forecasting) assumes paramount

significance; in cases where the socio-economic environment is changing quite fast.
Under such circumstances planning become a mere formality; just providing a
psychological satisfaction to management of having done planning.
It is, in fact, this limitation of planning which, among other factors, might have
induced scholars to come forward and recommends a situational (or contingency)
approach to managing – ruling out any need for advance planning.

Some of the other important limitations of planning might be as follows:

(i) Egoistic planning:
Many-a-times, there is observed a tendency on the part of the so-called big bosses of an
enterprise, to undertake planning of a type which would just add to their prestige or status
in the organization without, in any substantial manner, contributing to the enterprises
goals.

Such egoistic planning, this way, becomes a great limitation of planning, as despite the
expenditure of all efforts and resources incurred during the formulation process; such
planning only raises false hopes of realization but producing no significant results.

(ii) Organizational inflexibilities:

In many enterprises, the rigid (or tight) rules, policies or procedures of the organisation
might come in the way of the successful implementation of some progressive piece of
plan. To ensure the success of a good number of plans, it is necessary that the
management must frequently review its internal functioning process and modify the same
in view of the current planning requirements. Many-a-times, a re-orientation of
organisational functioning is not possible, due to technical, financial or certain other
problems. Under such conditions of rigidity, planning is only a half-hearted success.
(iii) Wastage of resources:
Planning involves an expenditure of time, money, efforts and resources of the enterprise;
during the stages of plan implementation and its execution. It is, in fact, a time-
consuming, a money- consuming and a mind-consuming process.

One would not mind the expenditure of the above resources; if the plan is a success.
However, whenever there is a plan-failure or only a limited success is generated by a
plan; expenditure of precious organizational resources really pinches as it amounts to a
sheer wastage.
(iv) Imparting a false sense of satisfaction:
Plans, quite often, impart a false sense of satisfaction to managers, subordinates and
operators of an enterprise; who might think that the planned objectives and the planned
courses of action are, perhaps, the ‘best’. They are reluctant to think in better terms.
Many-a-times, people in the organization behave like a fog in the well-unable to see
beyond the horizons of planning. In fact, they never try to rise above the plans.
(v) External constraints:
Some of the external constraints like governmental regulations in certain business matters
or the upper hand of labour unions over management on issues concerning workers and
their economic interests might become a severe limitation of planning. Management,
under the pressure of such constraints, might not be able to think freely and undertake
‘best conceived of planning for the enterprise.
(vi) Unreliable and inadequate background information:
Plans are as sound and fruitful as the data on which thee are based. Sometimes, the data
collected for the plan might not be very reliable. At some other times, background data
for planning might be too inadequate to provide a complete base for plan formulation.
These limitations of data might be due to financial problems or the pressure of time or
certain other causes; but there is no doubt that this unreliability or inadequacy of data is a
great hindrance, in the way of successful planning.
(vii) Unsuitability in emergency situations:
Planning is a useful management efficiency device; but only in the normal course of
functioning of the enterprise. Planning is not suitable in emergency situations as
occasioned by war, civil disturbances or other unusual economic or social disorders;
where ‘spot’ decisions are necessitated to take care of the environmental factors.
Planning, as is too common to understand, takes its own time in setting objectives and
selecting best alternatives; which renders itself wholly unsuitable for adoption in extra-
ordinary business situations.
Strategy is a plan of action to achieve short, middle and long term desired goals.
There are generally three types of strategies in business. The corporate strategy defines
the strategic goals of the overall company. The second type of strategy, the business
strategy, establishes the strategic goals for a business unit. The functional strategies are
about the strategic goals to achieve the business goals, and to keep developing the
functional area itself.
Goals are important for organizations to determine the future direction of a company. A
good strategy always stems from a thorough analysis of the company’s position in the
market. This is where a company’s strengths and weaknesses, as well as opportunities and
threats are incorporated.
3.1.1 MEANING OF STRATEGIC PLANNING IN RETAILING
Strategic planning is an organization’s process of defining its strategy, or direction, and
making decisions on allocating its resources to pursue this strategy, including its capital
and people. Various business analysis techniques can be used in strategic planning,
including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) and PEST
analysis (Political, Economic, Social, and Technological analysis) or STEER analysis
involving Socio-cultural, Technological, Economic, Ecological, and Regulatory factors
and EPISTELS (Environment, Political, Informatic, Social, Technological, Economic,
Legal and Spiritual). No discussion of strategic planning can ignore the controllable and
uncontrollable factors that are relevant in the success and possible failure of the retail
business.
Retail strategy is part of a strategic marketing plan that attracts or reaches consumers
directly. It includes product pricing/discounts, commission structure, promotional
schemes, product performance demonstration, and commission structure for retailers.
retail strategy is the overall plan or framework of action that guides a retailer. Ideally, it
will be at least one year in duration and outline the mission, goals, consumer market,
overall and specific activities, and control mechanisms of the retailer. One of the
examples of the retail strategy can be placement of the product at the retail channel. Many
times when we go to a retail store, just before the billing counter, we see products like
gums, chocolates and other products which can just be picked while the customer is
waiting at the billing counter.
This is a part of retail strategy and helps both the brands as well as the retail chain by
driving sales even at the end of the journey.
 Strategic Planning Process
The strategic planning process requires considerable thought and planning on the part of a
company’s upper-level management. Before settling on a plan of action and then
determining how to strategically implement it, executives may consider many possible
options. In the end, a company’s management will, hopefully, settle on a strategy that is
most likely to produce positive results (usually defined as improving the company’s
bottom line) and that can be executed in a cost-efficient manner with a high likelihood of
success, while avoiding undue financial risk.
The development and execution of strategic planning are typically viewed as consisting
of being performed in three critical steps:
1. Strategy Formulation
In the process of formulating a strategy, a company will first assess its current situation
by performing an internal and external audit. The purpose of this is to help identify the
organization’s strengths and weaknesses, as well as opportunities and threats (SWOT
Analysis). As a result of the analysis, managers decide on which plans or markets they
should focus on or abandon, how to best allocate the company’s resources, and whether to
take actions such as expanding operations through a joint venture or merger.
Business strategies have long-term effects on organizational success. Only upper
management executives are usually authorized to assign the resources necessary for their
implementation.

2. Strategy Implementation
After a strategy is formulated, the company needs to establish specific targets or goals
related to putting the strategy into action, and allocate resources for the strategy’s
execution. The success of the implementation stage is often determined by how good a
job upper management does in regard to clearly communicating the chosen strategy
throughout the company and getting all of its employees to “buy into” the desire to put
the strategy into action.
Effective strategy implementation involves developing a solid structure, or framework,
for implementing the strategy, maximizing the utilization of relevant resources, and
redirecting marketing efforts in line with the strategy’s goals and objectives.
1. Strategy Evaluation
Any savvy business person knows that success today does not guarantee success
tomorrow. As such, it is important for managers to evaluate the performance of a chosen
strategy after the implementation phase.
Strategy evaluation involves three crucial activities: reviewing the internal and external
factors affecting the implementation of the strategy, measuring performance, and taking
corrective steps to make the strategy more effective. For example, after implementing a
strategy to improve customer service, a company may discover that it needs to adopt a
new customer relationship management (CRM) software program in order to attain the
desired improvements in customer relations.
All three steps in strategic planning occur within three hierarchical levels: upper
management, middle management, and operational levels. Thus, it is imperative to foster
communication and interaction among employees and managers at all levels, so as to help
the firm to operate as a more functional and effective team.
 Benefits of Strategic Planning
The volatility of the business environment causes many firms to adopt reactive strategies
rather than proactive ones. However, reactive strategies are typically only viable for the
short-term, even though they may require spending a significant amount of resources and
time to execute. Strategic planning helps firms prepare proactively and address issues
with a more long-term view. They enable a company to initiate influence instead of just
responding to situations.
Among the primary benefits derived from strategic planning are the following:

1. Helps formulate better strategies using a logical, systematic approach

This is often the most important benefit. Some studies show that the strategic planning
process itself makes a significant contribution to improving a company’s overall
performance, regardless of the success of a specific strategy.
2. Enhanced communication between employers and employees
Communication is crucial to the success of the strategic planning process. It is initiated
through participation and dialogue among the managers and employees, which shows
their commitment to achieving organizational goals.
Strategic planning also helps managers and employees show commitment to the
organization’s goals. This is because they know what the company is doing and the
reasons behind it. Strategic planning makes organizational goals and objectives real, and
employees can more readily understand the relationship between their performance, the
company’s success, and compensation. As a result, both employees and managers tend to
become more innovative and creative, which fosters further growth of the company.
3. Empowers individuals working in the organization
The increased dialogue and communication across all stages of the process strengthens
employees’ sense of effectiveness and importance in the company’s overall success. For
this reason, it is important for companies to decentralize the strategic planning process by
involving lower-level managers and employees throughout the organization. A good
example is that of the Walt Disney Co., which dissolved its separate strategic planning
department, in favor of assigning the planning roles to individual Disney business
divisions.

3.1.2 CORE OF A RETAIL STRATEGY

STORE LOCATION
MERCHANDISING
PRICING
 MARKETING

 Store Location
First of all, the Store location is very important; the frequency of your sale depends on
the store location, especially when your business focuses on offline sales.
Your store location also increases the connectivity and network if your store is in the
primary place, you can convert sales through reference and other sources as well.
 Merchandising
If you are selling a product then you have to have all the options for your customer. A
customer can come for anything you can help them for the needs of the products.
In these ways you can easily manipulate the market. The merchandising strategy should
match the sales strategy.
Many times, the business strategy is more based on long-term salesperson relationships or
competitive delivery issues than thinking about an organization’s good strategy, which is
written and communicated throughout the organization.
 Pricing
Pricing is one of the important factors in retail. It depends more on your advertising,
promotion, communication, sales, and anything else. The retailer has to provide the right
price to the customers
 Marketing
There is also a big factor in the marketing retail strategy. The market in which the retail
organization chooses to compete is determined.
In the end, the result should be evaluated to measure and evaluate that the strategy is
working and any necessary changes should be effective.
The retail strategy is to determine the retailer’s performance as per the consumer
requirement. If we understand the concept of retail strategy, then we can establish a
business strategy in a small shop.

3.1.3 CRUCIAL ELEMENTS FOR PLANNING A RETAIL

STRATEGY
1) Target Market: - The segment of the market towards which the retailer
 proposes to focus its resources and retail mix.
2) Retail Format: - The nature of the operations of the retailers.
3) Sustainable Competitive Advantage:- An edge over the competition.
3.2 STRATEGIC RETAIL MODEL

PRODUCT SERVICE

TECHNOLOGY POSITIONING

4
5 Product:- The first constituent, product, originates from the necessity of having a
product as a central role of the business, as the product is the ingredient in which
the entire company should operate around However, by taking a strategic
perspective of the product constituent there is no need to have a specific chosen
product in order to adapt the strategic retail model. Instead, the product
constituent is anchored in the understanding of creating experiences around the
product. By including product in the strategic retail model, a discussion regarding
the understanding of creating a store environment that can contribute to a higher
level of consumer satisfaction and purchase tendency.
6 Service:- The second constituent service originates from the criticism of the
marketing mix where the service perspective as a differentiation factor for
businesses was not included. Some marketers argues that as a retailer, providing
services is of equal importance as providing products. Similarly to the product
constituent is the importance of understanding the creation of experiences and
expectations through service solutions This further addresses two interesting
 aspects. The first one is loyalty and whether that should be a driving force for
retailers in todays environment Secondly, by including the service constituent in
the strategic retail model, the importance of creating excellent service experiences
for online and offline retailers can be taken into consideration.

Positioning:- The third constituent, positioning, has been redefined from the element
place in the marketing mix. It could be questioned whether it is a necessity to have a
multichannel perspective in the company activities while having specific knowledge of
the chosen target group The positioning constituent also addresses online and offline
positioning how clusters emerge and how the future store platform will appear. By
including positioning in the strategic retail model, the understanding of choosing
appropriate sales channels in relation to the target group can be discussed.
Technology :-The fourth constituent technology, originates from the digital revolution
and the understanding of new technologies and devices for today´s consumers The
technology constituent is important in order to understand the development of technology
in retail. The constituent also consists of understanding the practical implementation of
technology and the possibilities and limitations regarding online and offline retailing. By
including technology in the strategic retail model, the understanding of how technological
solutions can contribute to create excellent consumer experiences can be discussed.
6.1 STRATEGIC RETAILING AND ITS ELEMENTS
6.1.1 CHARACTERSTICS OF STRATEGIC PLANNING IN
RETAILING
1. Process of Questioning:
It answers questions of a retailers like where we are and where we want to go, what we
are and what we should be so that threats and opportunities of environment can be
exploited, given the organization strengths and weakness.
2. Time Horizon:
It aims at long-term planning, keeping in view the present and future environmental
opportunities. It aids the organizations analyze their strengths and weaknesses and adapt
to the environment. Managers should be farsighted to make strategic planning
meaningful.
3. Pervasive Process:
It is done for all organizations, at all levels; nevertheless, it involves top executives more
than middle or lower-level managers since top executives envision the future better than
others.
4. Focus of Attention:
It focuses organization’s strengths and resources on important and high-priority activities
rather than routine and day-to-day activities. It reallocates resources from non-priority to
priority sectors.

Continuous Process: Strategic planning is a continuous process that enables

organizations to adapt to the ever-changing, dynamic environment.
5. Co-Ordination:
It coordinates organizations internal environment with the external environment,
financial resources with non- financial resources and short-term plans with long- term
plans.
6.1.2 STRATEGIC PLANNING IN RETAILING PROCESS:-
The planning process requires a thorough look into the company's motives to determine
what strategies to implement. While it may be time-consuming, drafting a detailed plan is
essential for successful execution. Retailers can begin by following seven general steps-
1. Set goals:-Businesses need to set specific short and long-term goals. Instead of setting
a general objective to increase sales, management should set benchmarks regarding which
product performances need to improve, specific revenue goals, and ideal profit
margins for each item. Companies can further break down their goals into two
categories-
 Internal Objectives
Retail management should pull reports and set practical sales and revenue goals based on
product performance. Organizations can set clear monthly, quarterly, and annual targets
to motivate employees and keep them focused on boosting sales.
 External Objectives
External goals refer to a retailer's overall performance according to customers and their
experience. This can include customer service, retention, loyalty, and product pricing.
Companies should aim to create a personalized experience that attracts and generates
returning customers.
2. Analyze the Market:-Once the company's objectives are clearly defined, it is time to
analyze the current market. Research can expose competitors' strategies, performance,
and weaknesses, as well as consumer expectations. This allows companies to develop a
plan of action that fulfills customer needs and stands apart from the competition.
Research can also define any risks and opportunities the company may be exposed to and
how to respond. Retailers can anticipate upcoming events through risk management and
planning, so they are not caught off-guard. Through this process, businesses can analyze
their own strengths and weaknesses,

allowing them to improve the necessary areas. This may include financial planning,
resource allocation, and staffing.
6. Analyze Customer Behavior
If a company does not understand their target audience, they cannot correctly launch and
promote products to attract customers. Therefore, retailers need to understand what
consumers expect from products and brands.
First, companies must understand what types of demographics are in the market for their
products. Then they can innovate customized experiences and brand images to attract
audiences. However, retailers should continuously monitor customer feedback and
preference to avoid becoming irrelevant or stagnant.
7. Outline Retail Strategies
After determining target demographics, marketing teams can begin developing effective
promotions for their products and company identity. The retailer must establish a positive
image that not only attracts customers but accurately illustrates what
they can expect as well. Another main objective of implementing a retail
strategy is to remain competitive. Businesses can achieve this through several methods,
such as product pricing, variety, and quality. Providing a unique experience that
customers cannot receive anywhere else is a significant advantage. However,
businesses must stay up to date with current market trends as they are ever-evolving.
Without access to current metrics, marketing strategies can become ineffective.
8. Make Short-Term Plans
Based on the company's short-term goals, management needs to outline a step-by-step
plan to achieve key metrics. For example, if an organization wants to improve its sales
during the Christmas season, it can focus on targeted marketing tactics and floor design to
increase traffic flow. This can include running digital campaigns, commercials, and
exclusive deals. Management can also redesign the storefront to attract shoppers passing
by.
However, retailers should begin the planning process months in advance to ensure all
resources are properly allocated. Otherwise, businesses may lack sufficient funds to
supplement plans due to poor organization.
9. Implement Strategies
Once the market and customers have been analyzed, goals have been set, and plans are
outlined, companies can begin implementing their strategies.
Management should understand that some methods might require additional changes to
the business model, staffing, accounting, or supply chain. These alterations may be met
with employee reluctance, as they may have to handle more responsibilities.
However, with successful planning, staff can ease into their new roles to avoid
overwhelming team members. Companies should consider offering incentives and
bonuses if the employees adapt well and the strategies improve work performance.
3. Analyze the Strategy Performance
Once the methods are implemented, organizations must continuously monitor
performance to ensure improvements are consistent. The regulation also helps identify
any errors within a process so management can quickly reconcile any damages.
Companies can also take note of the strengths and weaknesses to streamline future
planning.
6.1.3 IMPORTANCE OF STRATEGIC RETAIL PLANNING
1. Financial Benefits
Retailing Firms that make strategic plans have better sales, lower costs, higher EPS
(earnings per share) and higher profits. Firms have financial benefits if they make
strategic plans.
2. Guide to Organizational Activities:
Strategic planning guides members towards organizational goals. It unifies organizational
activities and efforts towards the long-terms goals. It guides members to become what
they want to become and do what they want to do.
3. Competitive Advantage: Competitive advantage can help the retailing firms in forming
their retail- mix.
In the world of globalization, firms which have competitive advantage (capacity to deal
with competitive forces) capture the market and excel in financial performance. This is
possible if they foresee the future; future can be predicted through strategic planning. It
enables managers to anticipate problems before they arise and solve them before they
become worse.
4. Minimizes Risk:
Strategic planning provides information to assess risk and frame strategies to minimise
risk and invest in safe business opportunities. Chances of making mistakes and choosing
wrong objectives and strategies, thus, get reduced.
5. Beneficial for Companies with Long Gestation Gap:
The time gap between investment decisions and income generation from those
investments is called gestation period. During this period, changes in technological or
political forces can disrupt implementation of decisions and plans may, therefore, fail.
Strategic planning discounts future and enables managers to face threats and
opportunities.
6. Promotes Motivation and Innovation:
Strategic planning involves managers at top levels. They are not only committed to
objectives and strategies but also think of new ideas for implementation of strategies. This
promotes motivation and innovation.
7. Optimum Utilization of Resources:
Strategic planning makes best use of resources to achieve maximum output.
Strategic Planning in management is essential but there are practical limitations to its use.
The reasons why people fall in strategic planning emphasize the practical difficulties
encountered in planning. A number of limits within which planning has to operate make
this undertaking difficult.

6.1.4 CONSTRAINTS IN STRATEGIC RETAIL PLANNING

(1) Problems of Change:
The factor works more as limiting factor in the light of changes in future conditions. In a
complex and rapidly changing environment, the succession of new problems is often
magnified by implications that make planning most difficult. The problem of change is
more complex in long-range planning.
Present conditions tend to weigh heavily in planning, and by overshadowing future needs,
may sometimes results in error of judgment. Such factors as changing technology,
consumer tastes and desires, business conditions, and many others change rapidly and
often unpredictably. In such conditions, planning activities taken in one period may not be
relevant for another period because the conditions in two periods are quite different.
(2) Failure of People:
There are many reasons why people fail in planning, both at the formulation level as well
as implementation level. Some of the major failures are lack of commitment to planning,
failure to develop, sound strategies, lack of clear and meaningful objectives, tendency to
overlook planning premises, failure to see the scope of the plan, failure to see planning as
a rational approach, excessive reliance on the past experience, failure to use the principles
of limiting factors, lack of top management support lack of delegation of authority, lack
of adequate control techniques, and resistance to change.
These factors are responsible for either inadequate planning or wrong planning in the
organisations concerned.
(3) Lack of Accurate Information:
The first basic limitation of strategic planning is the lack of accurate information and facts
relating to future. Planning concerns future activity and its quality will be determined by
the quality of forecast of future events. As no manager can predict completely and
accurately the events of future, the planning may pose problems in operation.

This problem is further, increased by lack of formulating accurate premises. Many times,
managers may not be aware about the various conditions within which they have to
formulate their planning activities.
(4) Inflexibilities:
Manager while going through the strategic planning process have to work in a set of given
variables. These variables may be more in terms of organisational or external. These often
provide considerably less flexibility in planning action.
(a) Internal:
Major internal inflexibilities that may limit planning are related to the psychology.
Organizational policies and procedures, and long-term capital investment. The first
internal inflexibility is in the form of human psychology in that most of the people have
regard for the present rather than for future. The present is not only more certain than
future, it is also more desirable, and more real.
Thus, resistance to change is a basic factor which works against planning because
planning often depends on the changes. People may have feelings that if planning is soft-
pedalled, the changes and the possible danger of future will be minimised. For them,
planning tends to accelerate change and unrest.
Second type of internal inflexibility emerges because of organizational policies and
procedures once these are established, they are difficult to change. Though these policies,
procedures, and, rules are meant to facilitate managerial functions by, providing
guidelines, they often are too numerous and exacting that they leave very little scope for
managerial initiative and flexibility.
Since managers have to plan for future which is not static but changing, they often find
themselves in great constraints. Such problems are more common in bureaucratic
organizations where rules and procedures are the matters of prime concerns.
Third type of internal inflexibility comes because of long- term capital investment. Long-
term planning is not a process of making future decisions, but a means of reflecting the
future in today’s decisions. If the organization has taken a long-term investment, it is
committed by that and future actions have to be taking in the light of the investment. Thus
managerial planning is limited to that extent.
(b) External:
Beside the internal inflexibilities, managers are confronted with many external
inflexibilities and they do not have control over these. These factors may be social,
technological, legal, labour union, geographically and economic. The managers have to
formulate their plans keeping in view the demand of these factors. Thus their scope of
action is limited making planning in effective in many cases.
(5) Time and Cost:
While going through the strategic planning process managers should also take into
account both time and cost factors. The various steps of planning may go as far as
possible because there is no limit of precision in planning tools. But planning suffers
because of time and cost factors.
Time is a limiting factor for every manager in the organization on, and if they are busy in
preparing elaborate reports and instructions beyond certain level, they are risking their
effectiveness. Excessive time spent on securing information and trying to fit all of it into a
compact plans is dysfunctional in the organization.
(6) Rigidity:
Often people feel that planning provides rigidity in managerial action. Many types of
internal inflexibilities, may be results of planning itself. The planning stifles employee
initiative and forces managers into rigid or straitjacket mode of executing their work. In
fact, rigidity may make managerial work more difficult than it need be. This may result in
it delay in work performance, lack of initiative, and lack of adjustment with changing
environment.
Many people feel that planning is limited in value because best results can be obtained by
a muddling through types of operation in which each situation is tackled when and if it
appears pertinent to the immediate problem. Though this factor of rigidity of planning is
limiting factor but without planning, it is really difficult to operate particularly in large
organizations.
The planning also involves cost on the part of the organization. The various factors
analysed above contribute to the limitations of strategic planning, either making planning
ineffective or making lesser degree of planned work.
STORE LOCATION
1.1 INTRODUCTION
“Location, location, location” is a mantra for retail success. Store location is a
retailer’s most costly and long-term marketing-mix decision. Unlike a bad pricing or
promotional decision, a poor store location adversely affects retailer performance for
several years. We know that retailers prefer to locate close to consumers, but doing so
exposes them to competition from other retailers that also want to be close to
consumers. From the retailer’s point-of-view, proximity to consumers means
proximity to other stores. Location is the most important ingredient for any business that
relies on customers. It is also one of the most difficult to plan for completely. Location
decisions can be complex, costs can be quite high, there is often little flexibility once a
location has been chosen and the attributes of location have a strong impact on a
retailer’s overall strategy. In India, most retailers prefer to own the property rather than
avail of the desired property through lease or rental. This makes the location decision
even more critical. Choosing the wrong site can lead to poor results and in some cases
insolvency and closure. Retail store location is also an important factor for the marketing
team to consider while setting retail marketing strategy. Here are some rationale −

 Business location is a unique factor which the competitors cannot imitate. Hence,
it can give a strong competitive advantage.

 Selection of retail location is a long-term decision.

 It requires long-term capital investment.

 Good location is the key element for attracting customers to the outlet.

 A well-located store makes supply and distribution easier.

 Locations can help to change customers’ buying habits.

Location decisions are complex. Costs can be quite high, there is little flexibility once a
site is chosen, and location attributes have a big impact on a strategy. One of the oldest
retailing adages is that “location, location, location” is the major factor leading to a
firm’s success or failure. A good location may be substantial enough to allow a retailer
to succeed even if its strategy mix is mediocre. A hospital gift shop may do well,
although its assortment is limited, its prices are high, and it does not advertise. On the
other hand, a poor location may be such a liability that even superior retailers cannot
overcome it. A mom-and-pop store may do poorly if it is across the street from a
category-killer store; although the small firm features personal service, it cannot match
the selection and prices. At a different site, however, it might prosper.

One of the most notable characteristics of the retail sector is that it is highly location
sensitive. Due to the nature of the economic activities carried out in retail
establishments, they are likely to be found in or close to regional centers. The
transactions within the retail sector often require face-to-face interactions between buyers
and sellers. In most cases, consumption and production of retail services take place in
very close proximity. The choice of a location requires extensive decision making due to
the number of criteria considered, including population size and traits, the competition,
transportation access, parking The choice of a location requires extensive decision
making due to the number of criteria considered, including population size and traits, the
competition, transportation access, parking availability, the nature of nearby stores,
 property costs, the length of the agreement, legal restrictions, and other factors. A store
location typically necessitates a sizable investment and a long-term commitment. Even a
retailer that minimizes its investment by leasing (rather than owning a building and
land) can incur large costs. Besides lease payments, the firm must spend money on
lighting, fixtures, a storefront, and so on. Although leases of less than 5 years are
common in less desirable retailing locations, leases in good shopping centers or shopping
districts are often 5 to 10 years or more. Store location affects long- and short-run
planning. In the long run, the choice of location influences the overall strategy. A retailer
must be at a site that is consistent with its mission, goals, and target market for an
extended time. It also must regularly study and monitor the status of the location as to
population trends, the distances people travel to the store, and competitors’ entry and exit
—and adapt accordingly. In the short run, a location has an impact on specific elements
of a strategy mix. A retailer in a downtown area with many office buildings may have
little pedestrian traffic on weekends.

A retailer has to take the location decision, basing on three aspects:

1.2 CONCEPTS OF STORE LOCATION

4.2.1 ASPECTS OF RETAIL STORE LOCATION

The aspects which influence these decisions are discussed below:

1. Selection of a City

The following factors play a significant role in the selection of a particular city for
starting or relocating an existing retail business:

 Size of the city’s trading area: A city’s trading area is the geographic region from which
customers come to the city for shopping. A city’s trading area would comprise its suburbs
as well as neighboring cities and towns. Cities like Mumbai and Delhi have a large
trading area as they draw customers from far off cities and towns.
 Population of population growth in the trading area: The larger the population of the
 trading area, the greater the potential of the city as a shopping location. A high growth n
population in the trading area can also increase the retail potential.
 Total purchasing power and its distribution: The retail potential of a city also depends on
the purchasing power of the customers and its distribution networks in its trading area.
Cities with a large population of affluent and upper middle-class customers, can be an
attractive location for stores, selling high-priced products such as designer men’s wear.
The fast growth in purchasing power and its distribution among a large base of middle
class is contribution to a retailing boom around major cities in India.
 Total retail trade potential for different lines of trade: A city may become specialized in
certain lines of trade and attract customers from other cities e.g. Moradabad has become
an important retail location for brassware products while Mysore is famous for silk saris.
 Number, size and quality of competition: The retailer also considers the number, size and
quality of competition before selecting a city.

 Development cost: The cost of land, rental value and other related cost.

2. Selection of an Area or Type of Location within a City

In the selection of a particular area or type of location within a city, evaluation of the
following factors is required.

 Customer attraction power of a shopping district or a particular store: Major shopping

centres like Chandni Chowk in Delhi, Colaba in Mumbai and Commercial Street in
Bangalore attract customers from far off, while small shopping centres located in colonies
attract customers from immediate neighborhood.
 Quantitative and qualitative nature of competitive stores: Retailers would like to evaluate
the product lines carried by other sores, number of stores in the area, etc. before selecting
the area.
 Availability of access routes: The area or shopping centre should provide easy access
routes.
 Nature of zoning regulations: The retailer should also consider the zoning regulations in the
city.
 Direction of spread of the city: The retailer should consider the direction in which the city
is developing while selection the location.

3. Selection of a Specific Site

The choice of a specific site is particularly important. In central and secondary shopping
centre, non- anchor sores depend on customers coming to the market and the traffic
generated by anchor stores. The large stores in turn depend on attracting customers from
the existing flow of traffic. Where sales depend on nearby settlements, selecting the
trading area is even more important than picking the specific site.

4.2.2 TYPES OF RETAIL STORE LOCATION

There are primary three types of retail locations that can be considered depending on the
nature of the business.
1) Isolated Store
An isolated store is a stand-alone retail outlet, which is either located on a highway or
a street. It being a stand-alone store naturally it has no competition from adjacent
stores selling same products or any other types of products which can share customer
traffic.

The advantages can be listed as follows for such type of stores:

● There is no competition from any type of stores in its close proximity.

● Being the only store in an isolated area it has relatively low rental costs.

● The store has the flexibility in organizing interiors of the store as there is lesser space
constraint.

● Isolated stores are good for selling one-stop shopping items like grocery and food
items or convenience items. The retailer is able to make the most of the available
space by keeping all the items that can go in a single purchase basket.

● The store due to its isolated location is able to attract the attention of road traffic
due to higher visibility on account of its roadside location.
 ● The facilities can be modified to suit the need of the target consumers as well as
that of the store due to lower space constraint issues.

● Parking is not a problem, as this was one of the main reasons for putting up the
store in an isolated location.

● Cost reductions are possible due to low rentals thereby leading to lower prices.

2) Unplanned shopping areas

These are the locations of retail stores which have evolved over a long period of time and
have multiple outlets in nearby proximities. These are further divided into:

a. Central business district (CBD) such as the downtown areas in major cities
b. Secondary business districts (SBD) on main or High Street
c. District neighborhood
Location which is on the street or on the motorway known as strip locations.
The advantages of having unplanned shopping areas are that there is very high pedestrian
traffic during working hours and also because of my residential areas. This ensures a
constant pull of customers.
Some of the strengths of are as follows:
● Easy access to public transport facilities;

● There are variety of stores in different formats and offering different positioning
base for the same product category, like high price end to lower price end or highly
fashionable to regular collection;

● There is usually good variety and range available;

● Wide range of prices are available within a given product category;

● Even wide range of services are available right from air travel booking to agencies
offering tour packages, transport, hotel bookings, insurance and so on;
● There is a high concentration of pedestrian traffic – which is true for central locations
like Dadar and Connaught Place.

The disadvantage of having unplanned shopping area is that there is a threat of shoplifting
because of which high security is required. Also, it may cause inconvenience to other
customers, and there are high chances of traffic blocking because of the unavailability of
parking facilitiesew Cannought Place.

3) Planned shopping areas

The retail locations which are well planned according to the architecture and provide
multiple out that are under the same roof are called as planned shopping areas. They have
huge land spaces and the collection of major retail brands. Malls, Speciality, and Lifestyle
centers are classified under planned shopping areas.
High visibility to customers and harmful of customers is a major advantage of planned
shopping areas. But the disadvantages are that why security is required, and the cost of
occupancy is also high.

The planned shopping centers have much important strength; some of them are as follows:
● Based on the long range plan the assortment offered by stores is almost complete
covering all aspects of the range.
● It serves one stop family shopping experience.
● Supported by a strong suburban population.
● Stores have a very good co-operative attitude and there is sharing of common costs.
● The shopping centre has a unified and distinct image because of its well-co-ordinated
look and feel.
● Due to complementary nature of the product range presented by the stores, each store is
able to attract good walk-in traffic of consumers.
● There is good provision for parking due to proper planning.
● Access to highways and other main roads is made easy.
● Due to complete assortment of goods being available and other facilities such centres
being preferred over city shopping.
4.2.3 ESSENTIAL OF GOOD STORE LOCATION:
Choosing the right education is crucial in terms of business, as stated above. As such,
there are different rules which govern choosing of location for retail store depending
on the nature of the business and the target audience.
However, the following are a few of the steps which can be applied by almost all the
retailers in order to find the right retail location.
1) Market analysis:
The company has to analyze the market in terms of their product and industry along with
the nature of competition and the presence of competition. The company also has to
consider how old are there in the market and how many some other businesses are there
in the current location.
They have to check and analyze the market to know how far is the competition been
successful in satisfying the customers. The company also has to analyze how convenient
is the location in terms of supply chain management and warehousing in order to make
the products available on a daily basis.
2) Demographics of the market:
The demographics of locality is essential to be considered in order to choose the retail
location. The age group of the customer, profession, Lifestyle, profession, religion
income groups, etc.

3) Market potential evaluation:

The paying capacity of the population plays an important role in the evaluation of the
potential of the market, along with the impact of the competition and the product
estimation and demand. The retailer should also have the knowledge of regulations and
laws of the country in which the store is being operated.
Other things such as communal festivals which have an impact on the demand should
also be considered by the business such as Christmas.
4) Identification of alternatives:
Most of the times it so happens that the retailers in hurry of starting the business finalize a
location which costs them a fortune within fact a similar location with similar business
potential would’ve been available somewhere very close which was neglected or
overlooked.
In such cases, the retailer should not carry on finalizing the retail location and should also
go out for alternatives and evaluate that location with similar parameters as stated above.
5) Allocation of marketing budget:
A retail store should have a marketing budget depending on the cost of the location,
which is in the third to build the brick and mortar place. The store which is occupying a
prime location and has a good inflow of customers has indeed cost a fortune for the
retailer.
In such cases, the marketing budget will be very less since the story is visible to most of
the customers and passers-by. On the contrary, a store which is located away from the
main street should use more marketing campaigns and spend on marketing collaterals in
order to attract more customers to the store. With the advent of social media marketing,
the store has become even cheaper. People can advertise about their Store on Google
with a very small budget and can ensure every I reach to potential customers not only
across the neighborhood but also across other neighborhoods as well.
4.2.4 MEASUREMENT OF STORE LOCATION
Once the rigorous process of selecting the location is followed, and the retail outlet is
opened on a selected location. It is very important to keep track of how good the location
has turned out to be the business. Apart from this, the retailer should carry out a few
assessments of locations:
1) Macro location evaluation
As the name suggests, this is the type of evaluation which is carried out to measure the
success of retail location at National level and is conducted by the company when it wants
to start the spelling of its product and open a retail business internationally.
Following are the few steps which are carried out to conduct the retail location assessment:
Detailed auditing of the market is carried out by analyzing the locations and the macro
environment, which is abbreviated as PEST, which is Political, Economic, Social, and
Technical and is also known as PEST analysis.
Other important factors such as the spending capacity of the custom nature of the
competition and the location availability are defined at a minimum acceptable level, and
the countries are right against each other.
2) Micro-location Evaluation
Many of the factors are analyzed and assessed at this level, such as:
Population – approximate number of people from the locality is taken into consideration.
This number represents the people who shop at that particular retail store.
Store outlet – competing stores in the nearby vicinity are identified and the stores
which reduce the attractiveness of the location and the stores which increase the
attractiveness of the location.
Infrastructure – the accessibility of the story is energized with respect to potential
customers.
Cost – the most important factor in the case of a retail store is the cost of development
and operation. The performance of the retail business depends on the cost required to set up
the retail store.
4.2.5 FACTORS AFFECTING STRATEGIC LOCATION:- These can be
divided into 2 parts

MACRO MICRO FACTORS

MACRO FACTORS: - These can be as follows:-

1. Demographic Characteristics
Demography is the study of population characteristics that are used to describe consumers.
Retailers can obtain information about the consumer’s age, gender, income, education,
family characteristics,

occupation, and many other items. These demographic variables may be used to select
market segments, which become the target markets for the retailer. Demographics aid
retailers in identifying and targeting potential customers in certain geographic locations.
Retailers are able to track many consumer trends by analyzing changes in demographics.
Demographics provide retailers with information to help locate and describe customers.
Linking demographics to behavioral and lifestyle characteristics helps retailers find out
exactly who their consumers are. Retailers who target certain specific demographics
characteristics exist in enough abundance to justify locations in new countries or regions
should make sure that those characteristics exist in enough abundance to justify locations
in new countries or regions.

2. Economic Characteristics
Businesses operate in an economic environment and base many decisions on economic
analysis. Economic factors such as a country’s gross domestic product, current interest
rates, employment rates, and general economic conditions affect how retailers in general
perform financially. For example, employment rates can affect the quantity and quality of
the labor pool available for retailers as well as influence the ability of customers to buy.
Normally, growth in a country’s gross domestic product indicates growth in retail sales
and disposable income. Retailers want to locate in countries or regions that have steadily
growing gross national products. As interest rate rise, the cost of carrying inventory on
credit rises for retailers and the cost of purchasing durable goods rises for consumers.
Countries that have projected significant increases in interest rates should be evaluated
very carefully by retailers. Retailers will also be affected by a rise in employment rates;
this lowers the supply of available workers to staff and support retail locations.

3. Cultural Characteristics
Cultural characteristics impact how consumers shop and what goods they purchased. The
values, standards, and language that a person is exposed to while growing up are indicates
of future consumption behavior. Consumers want to feel comfortable in the environment
in which they shop. To accomplish this, retailers must understand the culture and
language of their customers. In a bilingual area, a retailer may need to hire employees
who are capable of speaking both of the languages spoken by the customers. Some
retailers have found it useful to market to the cultural heritage of their consumers,
while other retailers seek to market cross-culturally. Normally larger cultures are made of
many distinct subcultures. Retailers need to be aware of the different aspects of culture
that will affect the location decision. For example, greeting cards sold in the United States
normally have verses on the inside, while greeting cards sold in Europe normally do not.

4. Demand
The demand for a retailer’s goods and services will influence where the retailer will
locate its stores. Not only must consumers want to purchase the goods, but they must have
the ability or money to do so as well. Demand characteristics are a function of the
population and the buying power of the population that the retailer is targeting.
Population and income statistics are available for most countries and regions with
developed economics. In developing countries the income data may be little more than an
informed guess. These statistics allow the comparisons of population and a basic
determination of who will be able to purchase the goods carried in the store. This is of
utmost importance for retailers, whether they carry higher-priced goods such as durables,
furniture, jewellery, and electronics or lower- priced goods-such as basic apparels or toys.

5. Competition
Levels of competitions vary by nation and region. In some areas, retailer will face much
stiffer competition than in other areas. Normally, the more industrialized a nation is, the
higher the level of competition that exists between its borders. One of the environmental
influences on the success or failure of a retail establishment is how the retailer is able to
handle the competitive advantages of its competition. A retailer must be knowledgeable
concerning both direct and indirect competitors in the marketplace, what goods and
services they provide, and their image in the mind of the consumer population.
Sometimes a retailer may decide to go head to head with a competitor when the reasons
are not entirely clear.

6. Infrastructure
Infrastructure characteristics deal with the basic framework that allows business to
operate. Retailers require some form of channel to deliver the goods and services to their
door. Depending on what type of transportation is involved, distribution relies heavily on
the existing infrastructure of highways, roads, bridges, river ways, and railways. Legal
infrastructures such as laws, regulations and court rulings and technical infrastructures
such as level of computerization, communication systems, and electrical power
availability also influence store location decisions. Distributions play a key role in the
location decision especially for countries and regions. There is a significant variance in
quantity and quality of infrastructures across countries. A retailer whose operation
depends on reliable computerization and communications would not need to even
consider a country or a region that did not meet those criteria. The legal environment
is a part of the overall infrastructure a firm must consider. For example, many countries
require non-native businesses to have a native partner before establishing retail locations.
The legal requirements a retailer operates under in one country will not be the same for
another country or region and may be different from state to state within the United
States.

MICRO FACTORS

1. Economic Factors
Economic characteristics have a significant impact on country and region
selection. The impact on trade area is even greater. The local unemployment rate
will affect the local labor pool and the amount of money that consumers have to
purchase products. The most important economic characteristics for the retailer
are per capita income and employment rates.

2. Subculture
Subculture have more of an impact on market and trade area selection than on country
or region selection. One must normally be at the market or trade level in order to
accurately gauge the location and characteristics of a subculture. An ethnic subculture
creates market segments for goods ranging from food and cosmetics to clothing and
entertainment. At the same time religion, language, and family structure create both
opportunities and problems.

3. Demand
The economy of an area under consideration for location should provide a general
indicator of the long —range retail opportunities present within an area. The number,
type, trends, and stability of industries that might affect business in the market area
need to consider. Employment rates, total retail sales, segment retail sales, household
 income, and household expenditures all provide information from which the economic
stability of the area can be ascertained. The buying power index (BPI) indicates the
relative ability of consumers to make purchases. The BPI for most metropolitan
statistical areas (MSAs) in U.S. is published yearly by Sales and Marketing
Management in their survey of buying power. The BPI for potential markets can be
directly compared to help make a choice of market area.

4. Market Potential
Once the retail trade area has been identified and the relative segmenting variables
applied, certain quantitative factors must be considered to decide if the area is suitable.
These factors include the retail market potential of a retail trade area and the retails
potential. Retail market potential is the total dollar sale that can be obtained by all stores
selling a particular retail product, product line, or group of services within the retail trade
area if everything was maximized. Therefore, retail sales potential is a part of retail
market potential. A retail sales forecast is the specific estimate of sales volume that a
retailer expects. Because the retailer is new in the area or because of the entry of a new
competitor, the sales forecast may be less than the estimate of retail sales potential.
There are two major determinants of the market potential for a trade area: the number of
potential customers within the area and the amount of money consumers spend for the
product or product line in question.

5. Sales Potential
An accurate appraisal of sales is important, because it will dictate the amount of inventory
that will be purchased, the number of employees that will be needed, the dollars that can
be spent for expenses, and the amount to debt capital the business can comfortably afford.
To arrive at such a figure, one must consider.

 The competitive strengths in the market

 The amount of business that can be drawn from substitute products
 Management’s own expertise
To assess the competitive strengths in the market, the retailer can start with an assessment
of the total market potential. If the retailer assumes that the business will obtain at least
average amount of sales being realized by the competitive business in the trade area, an
estimate of the sales potential can be made. If there are five business (the new retail
establishment makes six), each business might be expected to have one-sixth of the
business available in the trade area. Although this approach may not seem as sound as
that used in measuring market potential, it does provide an analysis of competitive
strength, and the figure derived is usually conservative. This approach can be useful in
particular situations.

6. Infrastructure
Infrastructure including roads and highways, distribution warehouses, communications
facilities, and labour pool must be adequate for a country or region. The same is even
truer for trade area analysis. The legal infrastructure can also impact the trade area
selected for your store. State and local laws vary concerning advertising, zoning, and sign
restrictions for retailers.

1.3 THE IMPORTANCE OF LOCATION TO RETAIL COMPANIES

The selection of retail store locations is one of the most significant decisions in retail
marketing because in store-based retailing, good locations are key elements for attracting
customers to the outlets and sometimes they can even compensate for an otherwise
mediocre retail strategy mix. A good location, therefore, can lead to strong competitive
advantages, because location is considered one of the elements of the retail marketing mix
that is “unique” and thus cannot be imitated by competitors. Location decisions are highly
complex because of the large number of factors that have to be considered, and the costs
associated with, for example, opening new stores can be very high. Site selection is,
therefore, a long-term decision that implies a long-term capital commitment. Once a retail
site has been chosen, either for a retailer to build its own store or to sign a long-term retail
contract, there is little flexibility, because this decision usually cannot be changed easily
without high losses. Because of its fixed nature, location cannot be changed in the short-
term contrary to other elements of the retail marketing mix such as price, customer
service, product assortment or advertising. These latter factors can be altered if the
environment (e.g. consumer behaviour, competition) changes The main attention in the
context of retail location strategies usually focuses on the opening of new stores.
However, location decisions relate to the entire physical structure of retail outlets and are
thus more comprehensive. The main types of decisions are (1) the opening of new stores,
(2) the extension of floor space of existing stores, (3) the relocation or movement of a
store from one place to another within a particular town or area where a better site is
available, (4) rationalisation decisions, e.g. the closure of individual stores, (5)
repositioning of locations, e.g. altering store image by changing the name or appearance,
(6) refurbishment such as improving or updating the physical environment of an existing
outlet and (7) altering the product range and assortment (“remerchandising”) to tailor the
offer more closely to local customers. The opening of new stores comprises the most
complex type of decision, because it is usually the starting point of activities in a specific
geographic area.
STORE MANAGEMENT

8.0 INTRODUCTION

Store is an important component of material management since it is a place that keeps the
materials in a way by which the materials are well accounted for, are maintained safe, and
are available at time of requirement. Storage is an essential and most vital part of the
economic cycle and store management is a specialized function, which can contribute
significantly to the overall efficiency and effectiveness of the materials function. Literally
store refers to the place where materials are kept under custody.

Typically a store has a few processes and a space for storage. The main processes of store
to receive the incoming materials (receiving), to keep the materials as long as they are
required for use (keeping in custody), and to move them out of store for use (issuing). The
auxiliary process of store is the stock control also known as inventory control. In a
manufacturing organization, this process of receiving, keeping in custody, and issuing
forms a cyclic process which runs on a continuous basis. The organizational set up of the
store depends upon the requirements of the organization and is to be tailor made to meet
the specific needs of the organization.

Fig 1 Main processes of a store

Store is to follow certain activities which are managed through use of various resources.
Store management is concerned with ensuring that all the activities involved in
storekeeping and stock control are carried out efficiently and economically by the store
personnel. In many cases this also encompasses the recruitment, selection, induction and
the training of store personnel, and much more.

The basic responsibilities of store are to act as custodian and controlling agent for the
materials to be stored, and to provide service to users of these materials. Proper
management of store systems provide flexibility to absorb the shock variation in demand,
and enable purchasing to plan ahead.

Since the materials have a cost, the organization is to manage the materials in store in
such a way so that the total cost of maintaining materials remains optimum.

Store needs a secured space for storage. It needs a proper layout along with handling and
material movement facilities such as cranes, forklifts etc, for safe and systematic handling
as well as stocking of the materials in the store with an easy traceability and access. It is
to maintain all documents of materials that are able to trace an item, show all its details
and preserve it up to its shelf life in the manner prescribed or till it is issued for use. Store
is to preserve the stored materials and carry out their conservation as needed to prevent
deterioration in their qualities. Also store is to ensure the safety of all items and materials
with in the store which means protecting them from pilferage, theft, damage,
deterioration, and fire.
The task of storekeeping relates to safe custody and preservation of the materials stocked,
to their receipts, issue and accounting. The objective is to efficiently and economically
provide the right materials at the time when it is required and in the condition in which it
is required. The basic job of the store is to receive the materials and act as a caretaker of
the materials and issue them as and when they are needed for the activity of the
organization.

8.0 CONTENTS DISCUSSED UNDER STORE

MANAGEMENT

8.2.1 MEANING OF STORE MANAGEMENT

Store Management refers to the efficient management of materials. Store management is
concerned with ensuring that all the activities involved in storekeeping are carried out
efficiently and economically by those employed in the store.

Stores form the basis of material management. Stores play a vital role in the operations
of a company. In an organization, stores are mainly intended to provide staff activity in
the production of goods or services. No industrial unit or public undertaking of any size
can be managed efficiently without it. The basic objective of storekeeping is to provide
services to the operating functions in the most economical manner.

According to Afford and Beatty,” Store management is that aspect of material control
concerned with the physical storage of goods”.

According to Maynard,” Store management is to receive materials, to protect them while

in storage from damage and unauthorized removal, to issue the materials in the right
quantities, at the right time to the right place and to provide these services promptly and
at least cost”.

Stores Management deals with undertaking the right type of materials in sufficient
quantity, in a prompt manner whenever needed, to keep it safe against any sort of
damage, pilferage, or theft. It is a part of material management. It involves actual material
handling which is received held and issued.

8.2.2 TYPES OF STORES FOR STORE MANAGEMENT

Stores may be centralized, decentralized and centralized stores with sub stores

1. Centralized storage means a single store for the whole organization, whereas
decentralized storage means independent small stores attached to various departments.
Centralized storekeeping ensures better layout and control of stores, economical use of
storage space, lesser staff, saving in storage costs and appointment of experts for handling
storage problems. It further ensures continuous stock checking.

Advantages

Centralized stores offer the following benefits:

1. Economy in space, storage cost, and labor.

2. Better supervision and effective control over materials and stores.

3. Minimization of capital investment in stock.

4. Significant reduction of obsolete items in stores.

5. Enables the appointment of experts who can handle the intricacies of inventory control.

6. Enables effective forecasting of material requirements.

7. Better layout and effective inventory checks on stores.

It suffers from certain drawbacks also. It leads to higher cost of materials handling, delay
in issue of materials to respective departments, exposure of materials to risks of fire and
accident losses are practical difficulties in managing big stores.

Disadvantages

Centralized stores also suffer from limitations, including:

1. Increased material handling and transportation costs.

2. Greater risk of loss by fire due to the concentration of all materials in one location.

3. Inconveniences and delays are caused in supplying materials to departments

situated at a distance from the central stores.
4. Accumulation of materials in one place creates storage space problems, meaning that
effective control may not be exercised over materials and stores.

5. Any breakdown in internal transportation systems (i.e., those used to carry materials
from the stores to different departments) can significantly disrupt production.

On the other hand, decentralized stores involve lesser costs and time in moving bulky
materials to distant departments and are helpful in avoiding overcrowding in central store.
However, it too suffers from certain drawbacks viz., uniformity in storage policy of goods
cannot be achieved under decentralized storekeeping, more staff is needed and experts
may not be appointed.

Advantages

Decentralized stores offer the following advantages:

1. Lower internal transportation costs.

2. Avoidance of undue delays associated with receiving materials issued from

centralized stores.
3. Minimization of interruptions in work due to failures of the internal transportation
system.

Disadvantages

Along with the advantages mentioned above, decentralized stores suffer from the
following limitations:
1. Lack of specialization in initiating proper stores control and material handling
operations is the most serious drawback of decentralized stores.

2. Setting up a separate store for each department leads to increased labor costs and
the occupation of more space for storage purposes.

3. Establishment of decentralized stores usually leads to duplication of clerical

work, stores recording, and establishment expenses.

4. Centralized Stores Management with Sub-Stores

In practice, a combination of the above two types of stores management is usually

followed, which is known as centralized stores management with sub-stores. This
system functions on the principle of the imprest system.

Under the imprest system, all materials are held in bulk in a centralized store, while sub-
stores (or decentralized stores) are set up inside each production department. The sub-
stores draw their requirements from the centralized or main stores for a specific period
(e.g., one month).

The sub-store then issues materials to the department with which it is attached in
accordance with the department’s requirements.

At the end of the period (e.g., one month), the quantity actually consumed is replenished
from the main or centralized stores to bring the stock up to the imprest (i.e., pre-
determined quantity).

As such, the imprest system of stores operates exactly like the imprest system of petty cash.

Advantages

Centralized stores management with sub-stores is associated with the following

advantages:
1. Easy accessibility to the consuming departments or the department for which such
stores are established.
2. Interruptions in production are unlikely because any material items that are
immediately required for production are kept in the sub-stores.

2. Specialized control and supervision can be undertaken because a limited number

of activities are carried out by the storekeeper in charge of the sub-stores.
3. Risks of fire and accidents are minimized due to diversified storage locations.

Disadvantages

At the same time, stores of this kind suffer from the following
disadvantages:
1. Establishment costs are high due to the need for more storage equipment, more
storage spaces, and personnel to control the
 centralized storehouse and sub-stores.
2. The system lacks uniformity in terms of organizing and maintaining stores

8.2.3 MANAGING THE STORE

A store manager is an individual who is charged with the day-to-day operations or

management of the retail store. He/She has a multifaceted role to play. The entire store
staff reports to the store manager.

His primary duty is to reach sales target, which is predetermined by the company’s
management. Reaching sales targets is also important for the effective operation of the
stores and they are commonly set in motion as financial targets on the basis of the store’s
turnover or profitability ratio. As the store size increases, so does the responsibilities of
the store manager. Depending on the size of the store, complexities regarding the number
of floor staff, range of products also varies.

8.2.4 DUTIES AND RESPONSIBILITIES OF STORE MANAGER

Management of Employees: Management of employees is one of the most important
functions performed by the store manager. It ensures the management of the store’s
employees, who work at different levels like sales staff, store staff, cleaning staff, and
clerical staff.

Maintenance of sales environment: It encompasses store layout plan implementation,

display of merchandise, store replenishment, sales record maintenance, etc.

Minimization of cost: It takes into account the controlling expenses which are necessary
for running a store. So as to apply cost-effective policies, expenses can be minimized
leading to increased profitability. This is possible by waste elimination, errors, and
accidents. Cost reduction is essential when the operation of the store is done at a low
price policy.

Recruitment, Training, and Development: The primary duty of the retail store manager is
to handle the job of recruitment of the right persons for the right job. Thereafter proper
training is provided to them to adjust them as per the policies of the store and working
environment. New entrants can make or break the whole business. Hence, they should be
hired after verifying their minimum qualification and experience. Budgeting and
Forecasting: The store manager can aptly predict the future of the store, estimating the
expenses that may occur in the future and establishing budgets. Then the store manager
explains the targets and availability of funds to the head of the departments.

Implementation of marketing plans: With an aim of pursuing the store’s strategic

marketing objectives, marketing policies devised in this regard are implemented.

Team Leadership: The store manager is also given the task of encouraging the staff and
also minimizing any resistance to change in the methods of work that are needed at the
time of defining new strategic directions.

8.2.5 WHAT MAKES THE PERFECT RETAL STORES MANAGER?

There are a few things which the perfect retail store manager will embody. One positive
trait which makes a wonderful retail store manager is an individual who has exceptional
conversational skills. Since a main component of a retail store manager’s daily duties is to
interact with customers and employees, it is very important that they know how to
converse in such a manner which is courteous yet effective. Looking for individuals with
this trait will help interviewers to find the best type of retail store manager. Past
experience is another important aspect which all retail store managers should have.
Although past employment may not be the only contributing factor to obtaining the best
possible candidate for the job, it still is a highly desirable one. Choosing a retail store
manager who has some past managerial experience will equate with less training that is
needed and perhaps a more established and useful manager overall. Another trait to look
for in a potential retail store manager is professionalism. A professional store manager not
only will benefit the customers who enter the store on a daily basis but will be a good
morale booster for other employees as well. A professional retail store manager does not
have to be stuffy yet must know when it is the right time for serious behaviour and
when he/she can take a lighter attitude with both the customers and employees. A great
retail store manager should also have excellent mathematical skills which may benefit the
store the most. Since efficient math skills are an important thing for retail store managers
to have since they will be working with money on a daily basis, it is good to have this
particular quality. To sum up, these are just some of the many duties and
responsibilities which retail store managers must undertake on a daily basis. By
understanding these roles one may be better able to tell if the position of retail store
manager is right for them.

8.2.6 TIPS THAT CAN HELP STORE MANAGER BECOME

SUCCESSFUL

Following are some of the strategies for store manager to become successful

The customer is always right: Yes, that age-old saying holds true even today. The
customer is the most important facet of any business. Hence, as a retail store manager you
need to ensure that the whole team comprehends that, and behaves as if they do.

Make the customer feel special: Everybody likes feeling special. So, when you are with a
customer, give him or her exclusive attention, listening closely to whatever they may be
saying to you. During that time don’t let anything else interrupt you.
Please the customer: Although this is touted often, it is seldom practiced. As a retail store
manager, see to it that the sales staff does that extra bit to make the customer feel 18
pleased, especially as a measure of calming their displeasure about something. For
instance, some special store giveaways can be packed with their purchases.

Promise less and deliver more: You have heard of the old saying ‘Don’t promise what
you cannot deliver.’ Well, by giving more than whatever you may have promised, you
can build a strong customer rapport, both inside as well as outside the retail store.

Appearances do matter: Although you may dismiss it as a superficial aspect of a

superficial consumerist society, however, there is no escaping the fact, that the first
impressions of the store, including the staff
– how they are dressed and how they behave do matter. People do care about the
ambience of where they shop.

Display merchandise attractively: A vital part of retail store management is seeing to it

that the merchandise is displayed properly. If the items are not displayed or seen properly,
they won’t be sold in the numbers that they ought to be. Merchandise should look crisp
and new at all times. If the items are shop-worn, they should be put in the bargain section.
Items that are usually bought on impulse should be placed on display close to the cash
out area. Also, appropriate sections should be made for merchandise, and the items
should be placed in the correct sections. Items that are similar in nature should be placed
in the same area.

Items should be shown to advantage: Apart from displaying merchandise attractively, as

a retail store manager, you should also make sure that the items are placed in such a way
that they draw the customer’s attention. Hiding or stacking merchandise will not attract
the attention of the customer. When thinking about how to display items, try to imagine
what the customers will view with the display. Placing merchandise at eye level, or a
little lower than that, is the best way to display specials. Placards and signs are also
another method of grabbing the eye of the customer.

Get rid of unsold merchandise: The bottom 10 to 20 percent of the product lines should
be gotten rid of every year to be replaced by new products. The product lines that are not
selling well should be marked down to half their price in order to sell them off fast.

Clear up shopping areas: While making racks and other display areas full, clear up other
areas. According to studies it has been shown that having easy shopping areas results in
more sales rather than having more racks and tables cluttering up the store.

Timely ordering of inventory: This is another important aspect of a retail store manager’s
duties. The levels of inventory should be monitored and kept in adequate amounts at all
times. If customers do not find what they are looking for, they will just go to another
store. Hence, the store manager must keep track of the inventory constantly.

Hire the right people: A retail manager’s success is largely dependent on the kind of
people he/she helps to hire. The staff that is hired has to have the ability of making a
quantifiable and meaningful contribution to the store’s performance. In order to be able to
rise in the organization, the store manager has to draw the attention as well as the
recognition of the top management. The correct people will help in showcasing their 19
talents while they achieve their objectives. In order to get the best out of the rest of the
team, the store manager has to be able to keep them motivated.

Training the staff: However, hiring the right kind of people and keeping them motivated
is just a part of a retail store manager’s path to success. Part of a retail store manager’s
job is to train the staff so that they are aware of what is expected of them. This will
ensure that all the people involved in the success of the store move in the same direction.

Incorporating time management skills: After hiring the right people, training them fully,
and getting them ready to achieve success, the next thing a retail store manager has to
take care of is managing their time along with the changing priorities they have to deal
with each day.

Long range planning: Therefore, a retail store management job involves long range
planning so that every hour of every day in a week is managed effectively. The skill of
long range planning is what will be appreciated by the top management, for they look for
people who have the ability of looking forward, and creating concrete plans, in order to
increase the business. A retail manager who can accomplish this will rise in the
organization.
8.2.7 COMPONENTS OF STORE MANAGEMENT

The 3 core components of productive store management include-

1. Supporting and Encouraging Staff

According to reports by the National Retail Federation, the retail industry's average
turnover rate is above 60 percent. Store managers have an important role in supporting
and motivating staff to enhance employee retention. For example, providing incentives or
communicating with retail employees can promote a positive environment.

Managers can further reduce employee turnover by effectively administering

these employment processes:

 Recruiting and Hiring

One way to minimize employee turnover is by hiring dependable candidates whose skill
sets align with the job description and who will fit in well with the company's culture.

During the recruitment process, managers should indicate clear expectations for the role
and ask candidates questions that provide insight into how they work under
pressure. Onboarding Managers should conduct thorough training to ensure their new
hire's transition into the position is seamless. Comprehensive on boarding should include
training on how to use the point-of-sale (POS) system and tips on increasing sales. To
monitor an employee's on boarding progress, managers should set performance goals and
milestones for new hires to meet.

 Managing

Although a new employee may be fully on boarded, managers should still interact with
them to make sure they are meeting their goals and making progress. It is also important
that management teams listen to their store staff, encourage new ideas, and address any
challenges that may arise. This is important because managers must keep store employees
motivated to ensure that they work hard and productively.

2. Proactively Controlling Inventory (PCA)

For a retail business to flourish and operate smoothly, inventory must be kept at optimal
levels at all times. By properly controlling stock levels, businesses will minimize their
risk of profit deficit.

For instance, stock-outs can lead to loss of potential sales and customer loyalty, as
shoppers seek competitors to purchase the products they need. On the other hand,
overstocking store inventory causes carrying costs to rise since unsold
products will take up storage space. Inventory shrinkage, which is when
retailers have fewer items in their actual inventory than what was recorded, is also a
concern for store management. Shrinkage is generally caused by theft, product damage,
or errors in counting.

To control inventory and mitigate stock-related risks to profits, store

management should-
Conduct Physical Inventory Counts

Retail managers should implement regular cycle counts to track inventory on a routine
basis. Cycle counting is an inventory auditing technique where a small portion of the
inventory is counted on a specific day.

By conducting cycle counts, management can quickly monitor their inventory and identify
popular items that may need to be restocked. Also, since managers would be focusing on a
subset of inventory, they can finish promptly and spend more time helping
customers in their store.
Prevent Theft

Theft can occur externally by customers or internally by employees. Implementing loss

prevention practices can help businesses detect any shrinkage and allow them to have
more visibility into their day- to-day inventory.

Work with Staff

Store managers should delegate tasks and work with staff to control stock. By
communicating the importance of inventory and providing related training, businesses
will have extra help with making sure stock is properly maintained.

3. Implementing Management Tools

Store management can be streamlined with the latest digital tools and software. For
example, retailers can implement cloud POS systems that have advanced features, such as
real-time reporting. These solutions can also be integrated with other software, such as
inventory management and forecasting. This is important because executive teams will be
able to produce data reports, track their inventory, and oversee their financial
performance.

Management can take advantage of these tools to maximize their productivity, make data-
driven decisions, and promote sales.

Store management comprises a myriad of responsibilities and with effective

implementation, retail operations can be productive and customer experience will be
enhanced.

8.1 RETAIL STORE OPERATION MANAGEMENT

With hundreds of tasks to perform daily, retailers need insight into day-to-day operations
at the store level. Unfortunately, many retailers rely on paper-based systems and word-of-
mouth communication, which can result in incomplete tasks, strained management, and
increased costs. Retail operations management solutions built using the 2007 Microsoft
Office system can provide corporate managers with the tools they need to collaborate
with their stores and focus on high-value tasks, enabling better insight into operations.
Situation Retailers struggle with corporate oversight and compliance requirements in the
day-today operational tasks at the store level. Many current systems are paper-based and
heavily dependent on store and department managers for tactical execution, with little
feedback to corporate management. This inefficiency can result in overworked managers
and staff, low customer satisfaction, and confusion at the store level-all of which can
increase operating costs. It can even generate high profile class-action law suits. A retail
operations management solution provides a collaboration portal to the store level that
allows the assignment and tracking of day-to-day operations in real-time, and can allow
for task management to the associate level through the use of point-of-sales (POS)
terminals and/or kiosks. Retail operations management teams typically face the following
challenges: Insufficient visibility and insight into marketing, merchandising, and
operational tasks poor communication and accountability between corporate offices and
retail stores delayed task execution and under utilization of employee resources Reduced
floor visibility of store, departmental managers solution retail operations management
solutions built using the 2007 Microsoft Office system can improve operational efficiency
and enable collaboration between corporate offices, retail stores, and associates, resulting
in increased business insight, improved governance, and better focus on high-value tasks.
A solution based on the 2007 Microsoft Office system can help deliver:

Effective Communication Channels

Key information and tasks are communicated electronically real-time voice and data
communication enhances collaboration between corporate offices, district locations, and
retail stores managers can receive alerts and notifications on their mobile devices.

Benefits

By adopting a retail operations management solution based on the 2007 Microsoft Office
system, companies can attain the following benefits: reduced learning curve and training
costs with simple and familiar interfaces, efficient task management at the associate level.
Easy customization of roles-based dashboards. Data aggregation for effective business
reporting.
SECURITY ISSUES IN RETAILING
9.0 INTRODUCTION TO INFORMATION TECHNOLOGY
IT or information technology refers to the development, maintenance, and use of
computer software, systems, and networks. It includes their use for the processing and
distribution of data. Data means information, facts, statistics, etc., gathered together for
reference, storage, or analysis.
The word technology on its own refers to the application of scientific know how for
practical purposes. According to Information Technology Trends in 2019:

“Information technology refers to anything related to computing technology. The Internet,

for example, comes under the umbrella term IT. So does computer hardware, software,
and networking.”
Software includes all the computer programs, codes and instructions, within a computer.
Computers do not work without software. Hardware, in this context, refers to the physical
components of a computer system. The screen (monitor), mouse, and motherboard, for
example, are hardware items. IT involves installing, organizing, and maintaining
computer systems. It also involves designing and operating databases and networks. The
branch of technology dealing with the practical, especially the business and industrial,
uses of computer and telecommunication systems.
Information technology (IT) refers to everything that businesses use computers for.
Information technology is building communications networks for a company,
safeguarding data and information, creating and administering databases, helping
employees troubleshoot problems with their computers or mobile devices, or doing a
range of other work to ensure the efficiency and security of business information systems.
The phrase “information technology” goes back to a 1958 article published in the Harvard
Business Review. Authors Harold J. Leavitt and Thomas L. Whisler defined several types
of information technology:
 Techniques for the fast processing of information
 The use of statistical and mathematical models for decision-making
 The “simulation of higher-order thinking through computer programs.”
“While many aspects of this technology are uncertain, it seems clear that it will move
into the managerial scene rapidly, with definite and far-reaching impact on managerial
organization,”
9.1 CONTENTS UNDER INFORMATION TECHNOLOGY IN
RETAILING
 NEED OF INFORAMTION TECHNOLOGY IN RETAIL
Speed, agility and efficiency are expected of today’s retail businesses. To achieve this,
retailers should invest in an electronic inventory control system, a central database, a
point of sales system and an automated statistical forecasting system. These tools don’t
simply reduce your overhead and improve your planning. They’ve become essential tools
that can provide you with a competitive edge to thrive and grow in the market. So one
must have a proper IT set up in order to have a better control on the business and have a
much more efficiency in the business. The need of IT in retailing can be better understood
with the following points:-
• It helps in reducing inventory costs
An inventory control system is now a basic tool for retail management. It allows you to
know what merchandise you have on hand and on order, and how many of each item you
have received and sold. Once setup, these systems automatically update your database
when products sell or move from one location to another—from a warehouse to a store,
for example. They also provide a variety of instantaneous data analysis tools to keep track
of your business.
Once online, every aspect of your stores’ performance is at your fingertips. Select and
view products by cost, price, margin, first or last date sold, date received or UPC codes.
In minutes you can create new categories with hundreds of subcategories of style, size or
color.
• To improve customer satisfaction
Customers expect you to be able to tell them if you have a product in stock or on order.
They don't want to wait while you wander through the storeroom or phone the warehouse.
Having an electronic inventory system allows you to answer customer questions with just
a few keystrokes. You can also check the inventory held by different stores if you have
multiple locations.
• To automate your inventory control
Electronic inventory control can eliminate over-ordering and under-buying by referring to
each store's sales history to calculate the optimum stock levels for each item. You tell the
system how many days of supply you prefer—which you can modify, for example,
according to the season—and the system will look at past sales patterns to determine
when you need to re-order.

Your system can also perform "open to buy" calculations that tell you how much to spend
on particular store categories for maximum return. The system takes past sales cycles,
such as seasonal variations, into account. You may also query the system to determine
what the order should be if sales rise or fall. This information tells you:
 how much you should invest in inventory from month to month;
 how much inventory you need to order to keep up with expected sales without
going overboard and tying up excess capital;
  how merchandise to keep flowing into the store throughout the season;
 which items are 'hot' and which are not, and their respective manufacturers; and
 what are your best-selling stores and who are your best individual sales staff.
1. To facilitate inventory control
Internal theft and pricing errors can eat up about 4% of retail inventory. A portable
terminal offers much greater speed and accuracy than manual counts.
The system immediately flags discrepancies with recorded inventory levels and verifies
pricing, making it easier to detect pricing errors and missing merchandise on the spot.
2. To Keep track of your margins
Your inventory control system can suggest pricing and markdowns within your pre-set
parameters, and/or track your margins based on the prices you enter. It will also ensure
you are always aware of gross margins.
Even with special pricing offers, you never lose track of your margins. You can establish
different pricing for different stores across geographic regions, for instance, and for
preferred customers such as employees or major buyers. You can also pre-set markdowns
for end-of-season or other sales. The system continues to track gross margin, including
the effects of markdowns and preferred pricing.
3. To Improve your forecasting
Automated statistical forecasting systems create far more calculated and accurate demand
forecasting. Past sales data, forecasts, and future orders are all on one system. As a
result, more accurate forecasts can be made based on the totality of this information.
Forecasting systems can reach the desktop of every line manager, bringing chain-wide
input (if appropriate) into the process through interactive Web-based applications.
Forecasts can then be further adjusted, taking every aspect into account. Automation
facilitates fast projections and scenario planning.

To adopt a just-in-time relationship with suppliers Forecasting tools work in tandem with
a central database, inventory control and sales systems to tie purchasing more closely to
actual customer demand. The result is an opportunity to reduce inventory and adopt a
just-in-time relationship with suppliers.
9.2.2 METHODS/ TECHNIQUES OF INFORMATION
TECHNOLOGY USED BY RETAILERS
In order to set up a complete system of IT in retail business one need to use some
instruments/techniques in the business. Some of the techniques/instruments are as under:-
1. Computers
In retailing, therefore, where computers are used, they are usually applied to clerical
activities, such as wages and salaries, recording physical movements of goods into stores,
warehouses and, in transit, monitoring progress on purchase orders, doing accounts, etc.
The department store's twin characteristics of a wide range of merchandise and a high
level of customer service compel it to react quickly to a constantly changing and a more
sophisticated customer base. The customer also looks for service ‐ credit, delivery, and
after sales. Originally computers were used in department stores only for payroll and
purchase ledger. Now the objective is to run the entire trading operation round an
integrated computer system. It is primarily in the area of conveying timely and accurate
information to executives responsible for taking decisions, that computers are making the
greatest impact on the department store trade.
2. Wireless technology
Retailers face serious challenges and opportunities as consumer shopping behavior and
expectations evolve. To overcome today’s challenges and remain relevant in the digital era,
smart retailers are turning to technology to provide a more personalized, convenient, and
immersive experience, one that moves seamlessly between the online and offline worlds. One of
the simple example is walkie taikei that is used by various retailers in order to have better
management of the store.
3. Biometric System
The retail industry is one of the most dynamic sectors employing a large number of
people. From customer representatives to order fulfilment executives, retail stores require
employees to be distributed over a large area. This requirement poses challenges such as
attendance maintenance of all employees & several other compliance issues. Most retail
brands have their store’s distributed over a large geographical network, employing a
varying number of people. While the traditional attendance system like card punching
machines offer a solution that is not efficient at protecting against problems like buddy
punching.
To overcome these challenges, the retail market is embracing modern-day biometric
attendance systems. As these attendance systems allow for faster, secure and efficient
business operations, they can benefit any retail store. If you still haven’t adopted a
biometric attendance system for retail, you must have your questions and doubts about
their effectiveness.
1. Bar Code Technology
Barcodes are applied to products as a means of quick identification. They are used in
retail stores as part of the purchase process, in warehouses to track inventory, and on
invoices to assist in accounting, among many other uses. The concept behind barcodes is
that they encode information about a specific product and even a batch of products. So,
for example, if you have a box of shoes, the package itself will have a different barcode
to the ones on the individual pairs of shoes.
The reason for this is that the two different items share entirely different pieces of
information. For the shoes, the barcode will contain information about the country it was
issued, the manufacturer, and the product itself. However, for the box, the data will most
likely consist of where the shoes were packaged, where they are going, and a tracking
number so that the distribution line can quickly identify them. When looking at barcodes
for retail products, the two most common forms of barcodes used are UPC, or a
Universal Product Code, barcode and a Code 128 barcode. The two are incredibly similar,
but their uses are entirely different.
2. Database management system
A database management system (or DBMS) is essentially nothing more than a
computerized data- keeping system. Users of the system are given facilities to perform
several kinds of operations on such a system for either manipulation of the data in the
database or the management of the database structure itself. Database is a collection of
inter-related data which helps in efficient retrieval, insertion and deletion of data from
database and organizes the data in the form of tables, views, schemas, reports etc. For
Example, university database organizes the data about students, faculty, and admin staff
etc. which helps in efficient retrieval, insertion and deletion of data from it.

Electronic security system

Electronic Security refers to any electronic equipment that could perform security
operations like surveillance, access control, alarming or an intrusion control to a facility
or an area which uses a power from mains and also a power backup like battery etc. The
followings are some types of electronic security system:-
 Closed-circuit television (CCTV) is the use of video cameras to transmit a signal
to a specific place, on a limited set of monitors. It differs from broadcast television
in that the signal is not openly transmitted, though it may employ point to point
(P2P), point to multipoint (P2MP), or mesh wired or wireless links. Though
almost all video cameras fit this definition, the term is most often applied to those
used for surveillance in areas that may need monitoring such as banks, stores, and
other areas where security is needed.
 Automated Access Control Systems (AACS) regulate access to areas by
interfacing with locking mechanisms. The system will only allow entry after the
credentials of the prospective visitor are verified; examples of such a system
would be doors that require pins or biometric information to allow entry. These
systems are not only capable of allowing or denying access but can also keep a log
of all attempts to enter the secure area they may even alert authorities of
unauthorized attempts to gain entry. it provides detection and audit to limit who
can go where. They can be combined with assured physical barriers to provide
delay into a secure site or can be used with demarcation barriers i.e. half height
gates, to provide the only detection.
 Intrusion Detection Systems (ID) is a device or software application that monitors
a network or systems for malicious activity or policy violations. These are systems
that, use sensors to detect any breaches to the secured area, if any breaches are
detected then they trigger an alarm of some sort. This system consists of two
components, the sensor and Premise Control Unit (PCU) which monitors the
status of the alarm system and transmits the information to a remote monitoring
station. The PCU also allows authorized personnel to activate or deactivate the
system. Sounds familiar? It might as this is the type of system used in Home
Security Systems, with the keypad being the PCU.
4. Electronic Article Surveillance
Electronic article surveillance (EAS) is a type of system used to prevent shoplifting. If
you've ever been to a store and heard an alarm when somebody was exiting you've seen
the EAS system in action. The system is designed to detect unpaid items in people's
pockets or bags as they are leaving the store. It typically consists of two components: the
EAS antennas and EAS tags or labels.
EAS antennas, sometimes called pedestals, are commonly installed at store entrances.
EAS tags and labels, on the other hand, are attached to the merchandise to be protected.
EAS antennas send and listen to signals at a specific frequency, usually within a range of
six to eight feet. When an EAS tag or label passes between the antennas, it is detected and
the store alarm is activated. To prevent unnecessary alarms, store cashiers remove or
deactivate EAS tags and labels at the point of purchase.
9.2.3 ADVANTAGES OF INFORMATION TECHNOLOGY
There are numerous advantages of IT in retail sectors. Some of the advantages
are as under:- 1 - It Improves Production Facilities
Fast fashion and affordable products are cool. The prices enable shoppers to get what they
want whenever they want it. The quality is acceptable for the price, and they always get to
look fashionable. However, consumers are increasingly worried about the working
conditions in manufacturing facilities. Thanks to technology that gives real-time
information about the conditions in work facilities, manufacturers can invest in constant
improvement of labor standards. This is something that consumers care about, but it's also
the right thing to do.
2 - Social Media Makes Marketing Easy
It's not as easy as sharing a post and expecting an avalanche of customers in your store.
Social media marketing requires careful planning. You'll need to share high-quality
content that sets your business apart from the competition. But thanks to the best essay
writing service on the web, you can get that part covered without any effort. Through
social media, you can share promo codes, information about special events, and great
photographs that will draw people towards your business.
3 - You Can Go Paperless
Many consumers prefer to get a digital receipt instead of a printed one. They care about
the environment and they will support any eco-friendly choice you make. If your business
goes paperless, you'll save money and you'll organize your files much more effectively.
4 - Technology Makes Your Store Energy Efficient
Smart thermostats, sensors, and LED lights require a significant investment. However,
they will also save you hundreds of dollars on a monthly basis. A report by
McKinsey & Company showed that utilities consume around 10 percent of the total
operating costs for retail stores. That's a significant expense you can reduce thanks to
technology.
2 - Virtual Reality Shopping Is the Future
Maybe this is not something that the majority of retail stores can afford, but VR is
definitely making progress in the industry. Shoppers are always looking for new, more
unique ways to shop. Trying on items virtually saves them time and makes the experience
more fun.
3 - You Can Offer Mobile Coupons While People Shop
The Target App is a nice example of how this works. Loyal customers are often unaware
of all promos and sales a brand offers. If they have an app that informs them about special
offers while they are in the store, they will be aware of the best deals. Target customers
can use their app to scan a code on an endcap; then, the account code is shown at the
checkout and they get their discounts.
4 - Technology Makes Forecasting Possible
Retail businesses can't work well without proper forecasting. You have to figure out what
your shoppers want and what the future trends will be. That's how you'll effectively plan
the supply chain.
Forecasting systems analyze big data for you and deliver a readable report. If you only get
big data and you don't have time to analyze it, you can get a business report from UK-
Dissertation.com. Either way, technology and online services facilitate the forecasting and
supplying processes.
5 - Tablet Enclosures Are Great for Getting Direct Feedback
If you feature tablet enclosures at the exit, it will be easy for you to collect feedback from
real shoppers. It's great to catch them right after their shopping experience. If you save the
feedback request for email, most customers won't even open the message. Even so, most
of the ones who open it won't bother answering the questions. iPad and other tablet
enclosures make it easy for people to tap an answer on the exit. You'll collect plenty of
comparable data, so you can evaluate and improve the performance of your business.
6 - Omnichannel Shopping Boosts Your Sales
 5 Does your business have retail, wholesale and manufacturing operations? If that's the
case, an online platform that gives access to all products will be highly beneficial. A
single store doesn't have all the products in every single size. You can offer shoppers
pick up in store or ship to home options online, and they will get the purchases the
same or next day. - Technology Speeds Up the Shopping Experience
You can also offer "shop and collect" options, buy online pick up in store (BOPIS) and
buy online ship to store (BOSS), to your shoppers. They can go through your website,
choose and reserve their items. You'll prepare them, and the package will be waiting at
the store when they come to collect it. Some shoppers don't like waiting for delivery
services. They would rather pick up the package, since they are more confident they will
safely transport it. Maybe they are never at home, so the delivery cannot be arranged. If
they can come by your store on their way home and collect the package, they will be
grateful for the convenient service.

9.2.4 DISADVANTAGES OF INFORMATION TECHNOLOGY

Though information technology possess a lot of advantages to the retailers but it also has
some disadvantages which are as follows:-
1. Online socializing:
In most offices, using online social websites like Facebook, Twitter, and Instagram is
restricted. This is because these are types of addiction websites that waste your time.
2. Expensive machines:
If you want to use the latest technology for your business then buying latest tools is
expensive for startup businesses. For example using cameras, high-speed internet and
computers, printers, scanners are expensive.
3. Reduce the talent of employees:
If your employees are using software for completing daily tasks then their mind will not
grow and they stick with the daily routine. Employees will not get a challenge in their
work and their talent will not grow. If employees do email replies and communication
online on daily basis then they feel trouble in having face to face communication. This is
because for face to face communication you need extra communication skills.
4. Business dependent on online:
Some type of businesses is mostly dependent on internet connection. So if there occurs
any problem on the internet then their work stops working. Also if you store most of
your data on computer and your computer gets any problem then daily work is stopped.
So you have to train your employees to work also if internet disconnects or computer gets
any problem.
1. Data can be stolen:
If your business is online there are chances that some hackers can steal your data. There is
also chance that any of your employees leak your company important information like
emails of clients.
2. Spyware and Personal Information
The most common issue is spyware that steals personal and private information from
customers or employees. The information is then stored and used at will by hackers for
fraudulent purchases or identity theft. A security risk is something as simple as an
employee smartphone that is lost or stolen, which contains access to company programs
and information.
3. Increasing Data Regulations
Information is big business in the modern world. As a result, protecting data and using it
ethically are of top priorities to lawmakers and regulatory authorities. Business owners
can't be naive to what is involved in protecting client data. Some industries are more
heavily regulated than others, such as the healthcare and financial services industries,
because in their everyday business activities, these industries collect sensitive and private
information from clients and patients.
However, just because you run a toy store doesn't mean you aren't subject to regulations.
How you handle email lists; how you confirm the age of the people you collect
information on; and how you handle credit card information, is all regulated. Being
prepared and having standard protocol is essential for protecting your clients and your
business.

9.2.2 PROBLEMS FACED BY RETAILERS IN RELATION TO

SECURITY Security is one of the major concern now a days in case of retail industry.
Various types of losses are to be faced by the retail industry because of lack of
security. Some of the major security issues that normally a retail industry faces are as
under:-
1. Shop Lifting
One of the major concerns of retail malls is "Shoplifting". Shoplifters use different
shoplifting techniques for the theft. It is done deliberately with the intention of robbing
the possessor for that particular piece of property that has been stolen from the retail
establishment. Another term used for shoplifting is-Retail Theft. It is considered as
crime and could lead to even jail term and legal action for the shoplifter. Police and courts
consider it as one the most common crimes. Shoplifters by and large are categorized in
two categories- professional and non-professional. Professional shoplifters even make
their living from shoplifting, they operate either individually or in groups, some do it only
for pleasure. Malls are easy targets and favourite destination for shoplifters.
 Preventive Steps for Shoplifting
Retailers now-a-days use different technologies to prevent shoplifting. In larger malls
video cameras are spread across the whole mall also undercover sales person posing as
customers are employed to keep out a watch on suspected customers. Also computer
chips are fixed on the items which is not visible to customers and if somebody steals
leaves the store without billing it raises alarms at the exit doors. Some of the preventive
measures which are used in order to curb shoplifting are as
a) Closed Circuit Television
It is the one of the most common method of preventing shoplifting. Here closed circuit
television is installed for the security officer where he can observe the happenings inside
the store.
b) Covert Closed Circuit TV Cameras
Covert cameras are the latest invention to prevent loss or theft. These cameras are very
small in size, could be easily removed from one place to another. Generally they cannot
be spotted by an average customer or sales staff also.
c) S.R. NO.
To give serial numbers to items is done by large retailers. This method makes easy to
keep record of what items have been stolen and track down the merchandise if brought
back by the police.
d) Electronic Screening of the item
In this method security tags are attached to the garment and when the customer leaves the
store without screening of the garment it raises alarm at the exit. This is also one of the
most popular method to prevent shoplifting.
e) Electronic Journals
This method is used generally by most of the big retailers and malls. Electronic journal
keeps the record of all transactions of the store. It keeps the track record of
information such as refunds, credit card details, billing details, numbers of the gift card,
etc. This measure also helps in keeping a check over the shoplifting also.
a) Dual- way radio sets
It is the one of the most common devices used by department of loss prevention. It
helps two- man teams to follow the suspected customer and call for help in case a
shoplifter is caught.
b) Ink filled Tags
It is one of the oldest preventive measure used by garment retailers. Specialized
equipment is required to remove the ink tags from the garment .If they are removed
forcibly would spill permanent ink on the garment thus spoiling it. Thus makes easy to
spot that the garment was being stolen by the customer.
c) Dual Resonator Electronic Stickers
These stickers are generally attached to small items like medicines, toothbrushes, etc. The
stickers are printed on a thin piece of paper and are not easy to remove. The sticker
contain company's logo.
d)Money Back Cheques
This method keeps a check on the suspected customers who come for refund for an item
purchased without the receipt. If the customer returns back the item he/she will not get
cash in return but would receive the cheque in the mail. If the customer is a fraud he/she
will not ring up the store to enquire about the not receiving their cheque through the mail.
e)Other Methods
The store should be designed such that the shopkeeper could see the various activities
going on in the store. The counters should be constructed low uptil waist height. Place
mirrors in corners. The expensive items should be placed in the center area of the store
and far from the exit. Smaller items should be displayed in patterns and neatly. The
retailers should announce their policy for prosecution for shoplifters.
2. Theft by Employees
A global study of retail theft found that employees who steal from retailers average
$1,890.00 in theft, while the average shoplifter will only take about $438. That's pretty
shocking. Of course, it should be emphasised that it is only a small minority of your
employees who will actively steal from you
Types of employee theft in retail
There are numerous ways an employee can actively steal from a retailer these days, but
here are few main ones:
 Stealing products
Employees might steal products from you, whether to keep for themselves or to sell
somewhere on the internet. One classic method for stealing products is to hide something
in the trash when they take it out, which they will retrieve from the dumpster later.
Employees may also hide small items on their person or in their bags.
 Gift card theft
Gift card theft is very popular these days, largely because it’s difficult to detect. There are
various methods to pull off this scam, but typically, employees will issue fake refunds to
gift cards they will keep. They may also give a customer purchasing a gift card a blank
gift card while keeping the loaded one. This form of fraud is dangerous.
 “Sweet hearting”
“Sweet hearting” is when a cashier will opt to not ring up goods that a friend or family
member wishes to take from the store. It can also be when a cashier falsely gives their
store discount to their friends or family members.
 Identity theft
This final method of internal theft may not be directed against the store, but is within the
same grouping of activities and could cost your store its reputation. Retail employees
have ample opportunities to steal customers’ identities. An employee may have hundreds
of opportunities a year to keep a customer’s SSN and credit card information.
 Skimming
Employees have been skimming off the top of the cash drawer for years. Employees who
know that you won’t care about a discrepancy of a few dollars in the cash drawer may
take advantage of you by slowly skimming quite a large amount of cash over time.
Why do employees steal?
There are likely as many reasons as there are thieves but often, it’s a disgruntled
employee. Perhaps they’re stealing for revenge on the store for some reason. Perhaps it’s
because they think they deserve a raise that they haven’t gotten. Perhaps it’s because
they are in a bad way financially and really need help. But not all employees steal for
these reasons either. Some, like those who participate in “sweet hearting,” may believe
that they’re just helping out a friend with their employment perks. Some, may not even
realise that they’re actually stealing from the store.
How to prevent internal theft?
The first thing to know is that it’s best to simply prevent these situations from happening.
Once an employee is actually stealing, it can be a tricky situation to handle. It can even be
a dangerous situation for the person who confronts the thief.
 Run background checks on all new employees.
Running a background check is a fairly standard process that will help you weed out any
clear bad eggs up front. Mikal E. Belicove from Forbes has some good tips: He suggests
that while you do use background checks, don’t use “the box.” That means, don’t ask
someone if they have a criminal background on their paper application just to weed
people out. Conduct interviews first and get to know someone first to avoid unnecessary
discrimination.
 Be consistent and run the same process on each applicant.
 Look for patterns, rather than a single good or bad act.
 Use a professional agency.
 Ensure that all employees are well-trained on policy to prevent accidental loss.
As previously mentioned, employees might make mistakes on the job. Whether it’s
entering the wrong number of inventory or giving the wrong discount, mistakes happen and
they can really add up.
 Work with your employees so that they know your policies and check their work.
 Institute modern inventory management and POS software to make it easier to
monitor for discrepancies.
 You certainly could audit receipts every day or week or month to try to discover
 patterns of loss in your store. But you could also just implement a modern
inventory management and POS system that will pull reports for you every day.
These reports will make it easy for you to notice patterns (like if the cash register
has been consistently down a few dollars) and will make it noticeable when you
do inventory checks what exactly is missing.

Count your cash drawers every day

You do want to count your cash drawers every day to keep full tabs on how much cash is
in them at all times. Running these counts will deter skimming and help you detect it, as
well.
 Use a buddy system for the trash.
Given that the trash is a popular method for employee stealing, have your employees take
the trash out together. Thieves are less likely to try to stuff something in the trash bag
when someone is there watching them.
This tip is a doubly good, too, because having two people take out the trash is
typically safer than having one person take out the trash.
 Have employees check each other’s bags before they leave for the day.
This tip is a bit awkward, I know. Whenever an employee left the store, the manager on
duty would check their bag before they left. At closing, the employee left with the
manager would also check the manager’s bag. It was always a bit awkward to hold your
purse out and let someone else go through it, and it was always plenty awkward to be the
person going through the bag, but it certainly made it more difficult for anyone wishing to
walk out with an item in their bag.
 Implement surveillance software.
Surveillance software isn’t just video cameras anymore. Now the cameras are equipped
with software that can help them detect such activities as “sweethearting” and alert you to
the problem. It’s pretty incredible. These systems are especially good for documenting
instances of employee theft.
 Keep your employees happy.
Happy employees are just better for a business. They’re more productive and less likely to
steal from you. The retail industry as a whole has not been the best about seeing to it that
their employees are happy, but both Starbucks and Costco stand out. Starbucks, for
instance, has eliminated the gender pay gap at their US stores and helps pay for their
employees’ college educations. Costco starts their employees at $11.50 an hour and hires
almost exclusively from within. As a small business, you owe it to your employees to
provide fair pay (even if you cannot provide Costco-level pay) and to do what you can to
provide them with a happy work environment.
5. Inventory Shrinkages
Inventory shrinkage is the difference between a product’s recorded stock count and the
amount physically on hand. The difference between these two amounts is referred to
as “shrink.” In a retail setting, this is sometimes called retail shrink. Either way, it means
the same thing you’re missing inventory you thought you had. Shrink or lost stock can be
caused by theft, inventory control issues like receiving errors, unrecorded damages,
cashier mistakes, and misplaced items. Some level of shrink is an unavoidable part of
retail. It is important, however, that you prevent shrinkage whenever possible to avoid
losing money and time.
Shoplifters take advantage of vulnerable and unobserved areas in your store. The spaces
between aisles and racks and dressing rooms are a few ideal places to do their dirty work.
Businesses that sell high- value, high-demand products are also often targeted by
shoplifters. For example, when I managed retail spas, aestheticians had to put away
products after finishing treatments and before leaving the room. Before we started that
practice, it was common for customers to slip skincare products into their purses or
pockets when redressing after a treatment.
Tag swapping is another pervasive form of retail shrink that directly affects inventory
numbers and profits. Tag-swappers place a lower-priced item’s tag on a higher-priced
product and then complete the purchase. This strategy hides the theft initially, but it
throws inventory numbers off for both goods. Unfortunately, most retailers detect this
during stock counts, long after the fact.
Other types of customer theft, like coupon scams or online fraud, also affect your profits
and bottom line but aren’t necessarily revealed as missing units. You can spot this type of
loss by examining sales figures and discount reports this is where using a robust POS
system really comes in handy.
1. Cash Shrinkages
Cash shrinkages is one of the security issue in case of retailing. Normally cash shrinkages
occurs when there is a loss of cash or actual cash balance does not match with the cash
balance that has to be as per sale of the stores. It is normally done by those persons who
have easy access to the cash balance. The main cause of cash shrinkages is because of
embezzlement by employees, casualness on the part of cashier while taking the money
from customers, low security locks on the cash drawers etc. In order to reduce the cash
shrinkages one needs to check the cash balance by himself and whereas he founds any
of the deficiency in the security it should be taken seriously and proper mechanism should
be employed for that.

WAYS TO OVERCOME THE PROBLEMS WITH THE HELP OF IT

Security issues in retailing can also be resolved by using some techniques of information
technology which are as follows:-
1. Wireless technology
Retailers face serious challenges and opportunities as consumer shopping behavior and
expectations evolve. To overcome today’s challenges and remain relevant in the digital era,
smart retailers are turning to technology to provide a more personalized, convenient, and
immersive experience, one that moves seamlessly between the online and offline worlds. One of
the simple example is walkie taikei that is used by various retailers in order to have better
management of the store.
2. Biometric System
The retail industry is one of the most dynamic sectors employing a large number of
people. From customer representatives to order fulfilment executives, retail stores require
employees to be distributed over a large area. This requirement poses challenges such as
attendance maintenance of all employees & several other compliance issues. Most retail
brands have their store’s distributed over a large geographical network, employing a
varying number of people. While the traditional attendance system like card punching
machines offer a solution that is not efficient at protecting against problems like buddy
punching.
To overcome these challenges, the retail market is embracing modern-day biometric
attendance systems. As these attendance systems allow for faster, secure and efficient
business operations, they can benefit any retail store. If you still haven’t adopted a
biometric attendance system for retail, you must have your questions and doubts about
their effectiveness.
3. Bar Code Technology
Barcodes are applied to products as a means of quick identification. They are used in
retail stores as part of the purchase process, in warehouses to track inventory, and on
invoices to assist in accounting, among many other uses. The concept behind barcodes is
that they encode information about a specific product and even a batch of products. So,
for example, if you have a box of shoes, the package itself will have a different barcode
to the ones on the individual pairs of shoes.

The reason for this is that the two different items share entirely different pieces of
information. For the shoes, the barcode will contain information about the country it was
issued, the manufacturer, and the product itself. However, for the box, the data will most
likely consist of where the shoes were packaged, where they are going, and a tracking
number so that the distribution line can quickly identify them.

When looking at barcodes for retail products, the two most common forms of barcodes
used are UPC, or a Universal Product Code, barcode and a Code 128 barcode. The two
are incredibly similar, but their uses are entirely different.
6. Electronic security system
Electronic Security refers to any electronic equipment that could perform security
operations like surveillance, access control, alarming or an intrusion control to a facility
or an area which uses a power from mains and also a power backup like battery etc. The
followings are some types of electronic security system:-
 Closed-circuit television (CCTV) is the use of video cameras to transmit a signal
to a specific place, on a limited set of monitors. It differs from broadcast television
in that the signal is not openly transmitted, though it may employ point to point
(P2P), point to multipoint (P2MP), or mesh wired or wireless links. Though
almost all video cameras fit this definition, the term is most often applied to those
used for surveillance in areas that may need monitoring such as banks, stores, and
other areas where security is needed.
 Automated Access Control Systems (AACS) regulate access to areas by
interfacing with locking mechanisms. The system will only allow entry after the
 credentials of the prospective visitor are verified; examples of such a system
would be doors that require pins or biometric information to allow entry. These
systems are not only capable of allowing or denying access but can also keep a log
of all attempts to enter the secure area they may even alert authorities of
unauthorized attempts to gain entry. it provides detection and audit to limit who
can go where. They can be combined with assured physical barriers to provide
delay into a secure site or can be used with demarcation barriers i.e. half height
gates, to provide the only detection.
 Intrusion Detection Systems (ID) is a device or software application that monitors
a network or systems for malicious activity or policy violations. These are systems
that, use sensors to detect any breaches to the secured area, if any breaches are
detected then they trigger an alarm of some sort. This system consists of two
components, the sensor and Premise Control Unit (PCU) which monitors the
status of the alarm system and transmits the information to a remote monitoring
station. The PCU also allows authorized personnel to activate or deactivate the
system. Sounds

familiar? It might as this is the type of system used in home security systems, with the
keypad being the PCU.
1. Electronic Article Surveillance
Electronic article surveillance (EAS) is a type of system used to prevent shoplifting. If
you've ever been to a store and heard an alarm when somebody was exiting you've seen
the EAS system in action. The system is designed to detect unpaid items in people's
pockets or bags as they are leaving the store. It typically consists of two components: the
EAS antennas and EAS tags or labels.
EAS antennas, sometimes called pedestals, are commonly installed at store entrances.
EAS tags and labels, on the other hand, are attached to the merchandise to be protected.
EAS antennas send and listen to signals at a specific frequency, usually within a range of
six to eight feet. When an EAS tag or label passes between the antennas, it is detected and
the store alarm is activated. To prevent unnecessary alarms, store cashiers remove or
deactivate EAS tags and labels at the point of purchase.