Retail Management

Block

5
RETAIL MARKETING

UNIT 16
Retail Marketing Mix 1-16

UNIT 17
Retail Pricing 17-35

UNIT 18
Retail Promotion Mix 36-71

UNIT 19
Application of IT in Retailing 72-94

UNIT 20
International Retailing 95-114

UNIT 21
The Future of Retailing 115-132
Editorial Team
Prof. R. Prasad Dr. Achyut Telang
IFHE (Deemed-to-be-University), Hyderabad IFHE (Deemed-to-be-University), Hyderabad
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IFHE (Deemed-to-be-University), Hyderabad IFHE (Deemed-to-be-University), Hyderabad

Content Development Team

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IFHE (Deemed-to-be-University), Hyderabad IFHE (Deemed-to-be-University), Hyderabad
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IFHE (Deemed-to-be-University), Hyderabad IFHE (Deemed-to-be-University), Hyderabad
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IFHE (Deemed-to-be-University), Hyderabad IFHE (Deemed-to-be-University), Hyderabad
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IFHE (Deemed-to-be-University), Hyderabad

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ii
BLOCK 5: RETAIL MARKETING
Retail marketing makes a significant contribution to the economy through employment,
facilitating consumption and by promoting economic growth. This block, Retail Marketing,
handles the crux of retail marketing management. It throws light on the balancing act of a
retailer on the 4 Ps – product, price, plan, and promotion and how a retailer should think
beyond that. The intervention of Information Technology helping retailers with online
stores and instantly connecting to customer needs is spelt out in this block with deeper
thoughts on the growth of global retailing and where it is heading to.

This block consists of 6 units that are divided as follows:

Unit 16 - Retail Marketing Mix: The way a retailer designs his marketing mix strategy
marks the value proposition of a store. Extending its spread beyond 4Ps which is termed as
7P marketing mix model, this unit goes deeper to describe how a retailer should identify
the target market. The different dimensions of retailing — service, quality, merchandise,
store brand, features and benefits, and atmospherics that help a retailer in taking appropriate
decisions on marketing mix of products and services — are enumerated in this Unit.

Unit 17 - Retail Pricing: Pricing strategies of a retailer have implications on host of factors
for a business like profit margins, sales volume, market share etc. It should be affordable
to the customers, yet yield profit to the business unit. This element is underlined in detail
in this unit that goes on to explain the factors that guide the pricing principles. The methods
of pricing and clarity in fixing the pricing policy depending on the category of retail store
are elucidated with examples. The laws and legal issues associated with retail industry in
general, and with special reference to India, are also examined.

Unit 18 - Retail Promotion Mix: A blend of promotion methods helps to communicate and
reach the target customers quickly and effectively. Various tools and techniques are used
by retailers to reach the customers in the form of ‘promotion’. Advertising, sales promotion
techniques, personal selling, and store atmosphere are some among many such factors that
contribute to retail promotion. How, combining many such factors, a retailer is positioning
the image of his/her store is detailed in this unit. The need, effect and evaluation of
promotional expenditure through methods like marginal analysis that should be within the
budget of the retailer are also effectively dealt in this unit.

Unit 19 - Application of IT in Retailing: IT capabilities enhance the efficiency of a retail

store’s functioning and are a tool for gaining competitive advantage. IT capabilities also
help a retailer in improving customer relationship. Retail Analytics, Market Basket
Analysis, Customer Lifetime Value Analysis, etc., which form the CRM in retailing, forms
the background for this unit. The unit further delves into e-retailing — the big advantage
given by IT to retailers.

Unit 20 - International Retailing: Spreading the tentacles of business beyond domestic

boundaries aids a retailer in capturing new markets and raise revenues. With an
introduction to International Retailing, this unit probes into the growth and development of

iii
international retailing in recent years — in other words, ‘internationalization’ of retailing.
Globalization, removal of tariff barriers and cross-border technology transfer have helped
internationalization and improved global markets for the retailer. Structuring and
classifying the global market and concentrating on market share vis-à-vis global
competition are the topics that are discussed in this unit.

Unit 21 - The Future of Retailing: The issues, challenges and capabilities of retailing should
be studied by a retailer to remain vibrant in this industry. Retail, which is a multi-faceted
industry, is augmented by technology no doubt, but is equally threatened as well, especially
when it comes to existence and sustenance of physical stores. The transformation that is
happening in the dynamic retail market, taking cognizance of image, branding and brand
positioning to sustain competition and how to meet the needs of tech-savvy Gen Y
customers are the topics framing this unit.

iv
 Unit 16
Retail Marketing Mix
Structure
16.1 Introduction
16.2 Objectives
16.3 Marketing Mix of Services: Beyond Four Ps
16.4 Target Market for Retail Products
16.5 The Retail Product
16.6 Breakdown of Retailing
16.7 Summary
16.8 Glossary
16.9 Self-Assessment Test
16.10 Suggested Readings/Reference Material
16.11 Answers to Check Your Progress Questions

“Too many businesses today are based on driving prices lower by screwing over
somebody: pounding suppliers or squeezing employees. We’re the opposite. We
put employees first, radically… If you take care of them, they will take care of
your customer better than anybody else.”
– Kip Tindell, CEO, Container Store

16.1 Introduction

Kip Tindell, co-founder and CEO of the Container Store, a leading retail store of
storage and organization products underlines the importance of ‘Employees’, as
an important element in the marketing mix of service organizations like retail
stores.
The retail marketing mix refers to the ways in which the retailer strategizes to
combine the marketing elements optimally to make his retail store the choice of
consumers. When a customer is deciding on a retail store to shop groceries, i.e.
Bazaar, Nilgiri’s or Reliance Fresh, he would evaluate these stores on the
following factors: The store format, assortment of merchandise, their quality level
and packaging (product), the price, discount offers (price), the location of the
shop, car park facilities (place), the advertisements of the shop that he recollects,
the loyalty schemes, promotion offers (promotion), the interiors of the shop, the
hygiene factor (physical evidence), the courteousness of the service people and
their level of efficiency (people) and the efficiency of the billing and the systems
Block 5: Retail Marketing

followed, technology used in system to save time (process). Marketing students

are familiar with the first four Ps, i.e., Product, Price, Place and Promotion, the
basic component of marketing mix. However, a typical retail marketer tries to tilt
the consumer’s choice in favor of his retail outlet, by judiciously using the other
three elements: People, Physical evidence and Process. The other three elements
become all that important in retail service as in the case of any other service
because of the high element of intangibility in the case of services.
In the previous block, we dealt with store management, store layout, design and
visual merchandising, customer service, retail selling, and information systems
and logistics.
In this unit, we will discuss the role of marketing mix of services in adding value
to marketing efforts and the right marketing mix for the right target customers.
We will also discuss service, quality, merchandise, store brand, features and
benefits, and atmospherics that help a retailer in taking appropriate decisions on
marketing mix of products and services.

16.2 Objectives
After reading through this unit, you should be able to:
 State the role of marketing mix of services in adding value to marketing
efforts
 Underline the necessity of segmenting the market for formulating customer-
centric marketing mix strategy
 Outline the right marketing mix that suit the needs of the target customers
 Craft the marketing mix strategies for making the store as customer’s choice

16.3 Marketing Mix of Services: Beyond Four Ps

In the absence of a tangible product, touchpoints play a key role while marketing
services. Kerala tourism industry can be cited as one of the best examples for
creating touchpoints and offering marketing mix of services. Based on the type
of market demand (holidays, festival days, vacation time etc.) this industry offers
a variety of packages that suits the season with differentiated pricing policy for
each package. Differentiation in services also exists between domestic and
international tourists. This spells the success of Kerala tourism industry.
A retail business focuses its marketing efforts on serving and satisfying the
ultimate end user. It adds value to the finished goods sold by: Buying in bulk from
producers or middlemen and retailing them in small quantities, stocking many
brands in accordance with the tastes and preferences of the customer, making the
goods and services available at convenient locations and in comfortable and
satisfying shopping environment, planning the merchandise in accordance with
historical demand patterns and displaying an assortment of goods for the
benefit of consumer, selling the goods at a suitable price and in credit or at

2
 Unit 16: Retail Marketing Mix

discount as required, creating awareness and communicating about the retail

service through advertisement and various promotion measures. The 4 Ps
expounded in marketing textbooks and given by McCarthy in 1978, is a
simplified version based on a more comprehensive set of 12 marketing
ingredients suggested by Borden in 1965. With the emergence of service
revolution, Booms and Bitner (1981), adapted the 4Ps framework to services by
including three additional elements, ‘People’, ‘Physical evidence’ and ‘Process’
and popularized the 7 Ps framework (Refer Figure 16.1).
Figure 16.1: Retail Marketing Mix

Product

Price Place

Retail
Marketing
Mix
Process Promotion

Physical
People
Evidence

Source: ICFAI Research Center

Booms and Bitner deemed that the 4 Ps framework was appropriate for
manufacturing. The authors reasoned that to address certain unique features of
services like intangibility, a more comprehensive framework such as the 7 Ps was
necessary. The various functions performed by a retailer have been elaborately
listed and it is important that the marketing mix of retail services incorporates an
elaborate framework, such as the 7 Ps, as suggested by Booms and Bitner for
services.
Product: A retailer must plan and figure out the product which he intends to offer
to his target consumers. Products in retail parlance could be categorized as:
Durable goods (furniture, appliances, electronic goods, etc.), food, groceries and
vegetables, soft goods (textiles, furnishings, cosmetics etc.). Product in retail
business is broad based and includes the total offer. Product here refers to the
products sold, the services provided, the store settings or servicescape, the
merchandise and the company brand name. Since, the product is the basis and
cornerstone of retail, it needs to be planned in great detail, keeping in mind the
target customers and other considerations: Quality level, design and technology

3
Block 5: Retail Marketing

of the products sold, packaging, convenience and perceived usefulness of the

product, warranty, guarantee and terms and conditions that go with it, accessories
that go with the product and after sales service.
Place: Place refers to the actual distribution function performed by the retailer
and includes aspects like: Logistics, inventory management, the location or the
place where the service is offered and territory coverage. Another way of looking
at the place would be how customers could access the retail service. From
customer accessibility perspective, retail service could be: Online (in the case of
E-commerce services, in neighborhood locations, in the roadside or at the
doorstep in the case of hawkers and pavement retailers. Location could be big
investment, especially if the retail store needs to be located in convenient
locations in the heart of the city.
Price: Any business would base their pricing decision on certain factors like:
Demand and supply, perceived value, affordability of the target customers, the
cost of sales and overhead, desired profits, competitiveness of the business,
quality of the products sold, etc. In retail business, certain other factors like the
retail format (high end or low end), store location and the image that the retail
store wishes to create in the minds of the consumer also play a role in price
determination. In addition to these, retail stores also employ certain other pricing
techniques ‘Everyday low pricing’, psychological pricing, competitive pricing,
skimming or penetration pricing (at the time of the launch of a new product), etc.,
to attract customers.
Promotion: Any business needs to plan the promotion budget to cover the
expenditure to be incurred on advertisements, sales promotion, public relations
to: Create awareness of the product, communicate the features, benefits of the
product or service and persuade target customers of the superior benefits of the
brand over that of the competitors. A retailer catering to a certain geographic area
may prefer to use his promotion money locally by: advertising and announcing
sales promotion schemes (discounts, offers, sweepstakes, competitions, etc.) in
the local newspaper, radio and TV channels. In addition, he may create a
Facebook page and Website to engage his customers. Public relation (PR)
activities like shoppers club, other programs to educate consumers about the use
of product through events and press conferences making announcements of
launch of new offers, produce range, etc. Retailers operating at national level
would standardize and localize their promotion scheme as required and use the
national and local media for communication as done by Big Bazaar.
People: Services are high on experience and credence qualities and hence
evaluation of the quality of service delivered is often based on perceptions of
people who receive the service and the physical settings where the service is
delivered. Employees in the front office and various other touch points could
make a huge difference in the quality of service rendered and hence retail
organizations need to invest time and money in HR functions like: Recruitment,

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 Unit 16: Retail Marketing Mix

induction and training. Employees are the representatives of an organization and

customers see, interact and pass judgments about the quality of service based on
their: efficiency in delivering service, behavior, interpersonal skills, appearance;
disciplined, commitment and professionalism.
Physical evidence: The tangible physical environment in which the service is
delivered and experienced is more important for retailers than for other services.
The cues that the customers pick up from the physical environment would
influence their rational, psychological and behavioral perceptions and responses
and hence retailers must focus on creating a suitable and favorable retail service
ambience. National and international retail chains like Starbucks, Titan, portray
a strong and consistent character through physical environment and use symbolic
cues to communicate the standard and quality of service. In this case by
standardization of service environment, a strong brand identity gets
communicated to various stakeholders.
The spatial layout, lighting, color, signage, style of upholstery and furnishings,
wall décor, temperature, signs, symbols, artefacts and a host of other aspects
could: draw the attention of the consumer to the assortment of products in display,
create pleasant feelings and fuel desire to spend more time on shopping, and
create the desired service experience in the mind of consumers.
Process: The systems and processes followed in service delivery would directly
influence the efficiency level of service. For instance, Domino pizza’s ‘30 minute
delivery promise’ shows their confidence in the delivery process. A retailer could
enhance the service experience through improvement in processes by:
Implementing time tested, standardized policies, processes and procedures across
all retail chains, using technology (mechanization of processes) to save time and
improve efficiency, putting into operation processes that involve customers (a
customer could choose the toppings in an ice cream or coffee shop) in service
delivery, getting feedback and improving processes to ensure smooth and
continuous flow of service and outsourcing processes to reduce cost and enhance
service.

Example: Walmart’s Alphabot would Streamline and Improve its

Ordering and Pick-Up Process
Walmart, which has been making enormous strides on the e-commerce front to
catch up with Amazon, unveiled a new technology called ‘Alphabot’, for its
grocery business in January 2020. Alphabot platform would expedite and make
efficient the processes of pick up, packaging and delivery of groceries
purchased online. This technology introduced in one of its superstores in the
Salem city of Massachusetts on a trial basis since 2019 would soon be
introduced in a few other pick-up centers.
Contd….

5
Block 5: Retail Marketing

Alphabot, operates in a mini warehouse like settings constructed on the back

side of Salem Walmart store. It uses autonomous carts to pick different
products (groceries, refrigerated and frozen goods) ordered by customers
online. Once the products are on the cart, the system sends them to the
designated workstations, where the items are checked manually to ensure that
the products match with the orders placed and they are then packed and sent
for delivery.
The pickup, packaging and delivery processes have become faster and more
efficient with the Alphabot technology as compared to the traditional system
where workers used to walk around the sales floor to find the items.
Walmart’s new technology has helped improve processes in Walmart, an
important element of the extended marketing mix of retail business.
Source: Lauren Thomas, “Wal-Mart unveiled a new technology that could help defend its
grocery business as America’s largest grocer”, CNBC, 8/01/2020
https://www.cnbc.com/2020/01/08/walmart-unveils-a-new-technology-for-its-grocery-business-
alphabot.html Accessed on 14/09/202

16.4 Target Market for Retail Products

Segmentation of markets and precise targeting is the starting point for formulation
of a suitable retail marketing mix strategy. All strategies relating to market mix
need to be consumer focused. For instance, while deciding on the store format,
the retailer needs answers to questions like: Should the store target upscale,
medium scale or downscale customers? Do consumers desire variety or depth in
assortment? Are consumers willing to pay a high price for convenience or are
they very price conscious? Markets thus need to be grouped into homogeneous
subgroups and retailers need to have absolute clarity on the segments that they
wish to target.
To tilt the consumer’s choice in favor of a given retail store, the sum total of value
(store value, value created by people, service value, brand value, value created by
loyalty schemes and promotions, value created by processes) must exceed the
various costs (which includes the price paid, time spent, perceived risk with
buying the product, etc.).

Example: Trusox’s Target Market in India

Global sports brand Trusox, the preferred socks brand for international
athletes, launched its performance enhancing grip socks in India in 2019.
Trusox is described more as a sports performance equipment than merely a
sock. The state-of-art apparel has been patented and is promoted through top
players of soccer, rugby, football, baseball, and cricket. In India, Trusox would
be sold out of 1000 stores and through Amazon and Trusox.in. Indian
International Cricketer, Rohit Sharma was roped in as the brand ambassador of
Trusox in India.
Contd….

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 Unit 16: Retail Marketing Mix

After Nike, Under Armour, and Adidas, Trusox, the Manchester-based sports
apparel company has succeeded by promoting its products through young
athletes.
Co-owner of Trusox in India said that the sports channels and live telecast of
sports events has created an awareness of sporting performance. A growing
section of amateur and semi-professional athletes have become keener on using
performance-improving gear. Apart from athletes, Trusox targets this section
of highly motivated, aspiring sportsmen and sportswomen and their fans who
are fitness freaks and are interested in sports and fitness activities.
Source: Dhara Vora Sabhnani, “It’s all in the socks”, Live Mint, 14/09/2022
https://www.livemint.com/mint-lounge/features/it-s-all-in-the-socks-11581072205815.html
Accessed on 14/09/2022

16.5 The Retail Product

A retailer has to select the right target market in the first step and then formulate
a suitable customer centric retail marketing mix based on the characteristics and
requirements of the target market. The retail product offered needs to satisfy the
needs of the target market in a better way as compared to that of competitors. The
marketing mix, created through the symbiotic amalgamation of the various
elements of the marketing mix should surpass the value offered by competitors.

Example: Uniqlo’s Lifewear Product Assortment

Japanese retail brand ‘Uniqlo’ launched its first Indian store in October 2019
in the Ambience Mall in Delhi. As of 2022, Uniqlo operates 6 stores in New
Delhi NCR (National Capital Region) and one in Lucknow.
Uniqlo’s ‘Lifewear’ range of products provide a new shopping experience to
Indian customers by offering clothing to meet daily lifestyle requirements.
Tadashi Yanai, Founder and CEO of Uniqlo who views the Indian market as
one with a lot of potential stated (October 2019) that the retail company
planned to enhance lifestyles in India by offering innovative localized lifestyle
apparel in sync with India’s distinct culture and traditions. All the Uniqlo store
interior designs integrate the Japanese and Indian aesthetic to convey a
contemporary mood and provide a memorable show.
Uniqlo’s product assortment showcases an entire range of high-quality clothes
for men, women, and children. Its innovative product assortment includes UV
protection, functional AIRism, DRY Ex and in addition premium fabrics,
including supima cotton, rayon, and linen, etc.
Contd….

7
Block 5: Retail Marketing

In the Lucknow store, Uniqlo launched its home and personal care brand ‘Mitti
Se’ which uses naturally derived and bio-degradable fabric made using non-
toxic and sustainable manufacturing processes. Uniqlo’s service settings and
innovative products resonate with its philosophy of ‘Lifewear’.

Source: Indian Retailer Bureau “UNIQLO Expands Retail Footprint in India; to Open New Store
in Lucknow”, Indianretailer.com, 1/7/2022
https://www.indianretailer.com/news/uniqlo-expands-retail-footprint-in-india-to-open-new-store-
in-lucknow.n13733/ Accessed on 15/09/2022

Activity 16.1

Visit a high-end fashion store of your choice in your city to observe and
evaluate the following aspects relating to physical evidence: Store layout, store
location, store design, visual merchandising, store ambience, hygiene level,
etc. Observe your ideas about the type of the store and the target market of the
store. Elaborate upon the discrepancies between the store type and the aspects
of physical evidence if any.

Check Your Progress - 1

1. Which of the following is under the control of the company and can be put
together by the company to differentiate its produce and position it to make
it appealing to the target market?
a. Marketing Concept
b. Societal Marketing Concept
c. Corporate Marketing Strategy
d. Marketing Mix
e. Promotion Mix
2. Issues such as waiting time and billing relate to which element of the retail
marketing mix?
a. Physical evidence
b. Product
c. Processes
d. Price
e. Efficiency of people

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 Unit 16: Retail Marketing Mix

3. Customers often judge the efficiency of the service based on the helpfulness,
skill and knowledge level of service staff. As a result, for which of the
following importance is assigned?
a. Payment of high salaries to employees
b. Careful, methodical, and proper recruitment, Induction, training of
employees
c. Dismissing employees who are not courteous and helpful
d. Campus recruitment at premier colleges only
e. Employing staff who has all necessary skills for the job
4. Which of the following prices are likely to be charged by a premier and top
notch fashion designer?
a. Premium prices
b. Moderate level prices
c. Penetration prices
d. Skimming prices
e. Competitive prices
5. Which of the following marketing goals is not a pricing goal?
a. To increase demand/sales
b. To differentiate based on low price and gain cost leadership’
c. To cover fixed and variable costs
d. To increase cash flow
e. To gain market share

16.6 Breakdown of Retailing

For the retail model to be successful, appropriate decisions relating to the
following aspects need to be taken: Service, quality, merchandise, store brand,
features and benefits, atmospherics.
Service: A retailer has to strategically think and settle on the level of service to
be offered to the customers. The five dimensions used to measure service quality
are: Tangibles (tangible cues such as uniformed service personnel, fitting rooms,
trolleys, etc.), reliability (perceived trust, dependability), responsiveness (timely
response, courtesy and knowledge level of staff), empathy (helpful and caring
service), assurance (guarantee, warrantee, exchange facility).
Quality: A retailer who is able to deliver quality to his customers on a consistent
basis becomes well known for quality. Over a period of time, the quality attribute
gets associated with his retail brand. The perceived risk associated with
purchasing products disappears in due course and is replaced with confidence and
credibility. Such a retailer is bound to have loyal customers. Moreover, a retailer
could also communicate quality as a differentiating attribute to his customers.

9
Block 5: Retail Marketing

Costco is an example of a retail store that has been consistently providing high
quality merchandise and service to their customers. The quality attribute has got
associated with brand Costco (a warehouse club and a low price, no frills format
stores, where consumers pay the membership fees) and this achievement has
given the brand, a competitive advantage.
Merchandise: Given the competitive environment, a retailer has to decide on the
merchandise offer to his customers to present a clear message of differentiated
offering to customers. The following decisions relating to merchandising needs
to be taken: range of products to be carried, the depth of the assortment, the width
and how the product lines carried fits into the overall merchandise offer, the price
range covered in terms of whether the store is catering to upscale, medium scale
or economy position. Eventually, the entire range of merchandise carried and
displayed need to complement each other and crystallize to communicate a clear
message to customers. Big retail organizations may decide to display their own
brands along with national brands. Initially private labels (retailer’s brands) were
positioned as a cheaper alternative to national brands. However, with time, these
brands are giving a tough competition to national brands.
Brand: Retailers may sell brands, but their own retail store brand images must
be carefully created, developed and maintained. Consumers may not be very price
conscious while shopping in a retail store whose brand name is well known. The
various attributes that a brand could be associated with are: High quality, narrow
range (specialization) or wide range (variety), value for money, high customer
satisfaction level, etc. As discussed earlier, big retail brands may promote their
own brands (private labels). These brands could be family brands or separate
brands. While retailers such as Spencer’s and More promote their own products
using their family brand, Big Bazaar has successfully promoted their range of
cleaning goods and food products under different brand names, Clean Mate, Tasty
treat and Sensei. The following other factors add dimensions to brand image:
Price (high priced or low priced, frequent discounts), store ambience and
atmosphere, quality of products sold, level of service, etc.
Product features and benefits: Unlike the traditional approach, wherein, the
product is viewed as a physical item, the severe competition faced has forced
modern retailers to offer and present the product at different levels: The core
product, augmented product, facilitating product and supporting product.
Consumers buy benefits and not mere products. Every product or service
therefore is packaged to offer: a set of benefits or solutions to problems faced by
consumers. In the case of a clothing store, advice from a fashion stylist could
augment the service, the trial room could be a facilitating accompaniment;
exchange policy could be a supporting service. Similarly, in the case of
automotive retailing the following would be the augmented, facilitating and
supporting benefits: Service packages, test drives and insurance packages. Apart
from the core product retailers offer the following augmented, facilitating and
supporting products and services: Gift wrapping service, juice bars, cafeteria,

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 Unit 16: Retail Marketing Mix

play space for children, free installation, online tutorials to use the product, free
demonstration and training, cookery classes, training programs, in-house music
and accompaniments, free delivery, free accessories etc.
Store Layout: The store layout and ambience is a tool that can be effectively
used by retailers to augment purchase decisions. The physical layout of a store
should facilitate free movement. The ambience of the store, the music, the
signage, hygiene factor, etc., could create the following store induced feelings in
customers: Cheerful and happy, comfortable and relaxed, sombre, cluttered and
claustrophobic, uneasy and sad etc. Apple Stores for instance are crafted to give
a space age and techie feel and impression. Apple customers are thus more likely
to perceive themselves as technical whizzes. Research has suggested that store
layout and intelligent and well planned merchandise display would definitely
influence: flow of customers to the store, customers’ shopping behavior,
perceptions and satisfaction levels. Utilizing floor space effectively by
improvising on unproductive areas and converting them into utility areas is
another aspect of store layout and design.
Atmospherics: According to Kotler (1974), people respond to a host of factors
apart from the core tangible product while purchasing goods and services and a
decisive factor among them is atmospherics. By atmospherics Kotler meant use
of lighting, colors, sound, music, pictures, and artifact to make the atmosphere
appealing to the sense organs. The various dimensions of atmospherics are: visual
dimension - color, brightness, size, shapes, aural dimension - sound, music, and
olfactory dimension - perfume, freshness, aroma and tactile dimension –
temperature etc.
 Retailers modify elements such as melody, rhythm, harmony and tempo to
evoke feelings and create a positive mood. When product information is
presented with music background, for instance, it can influence brand choice,
especially if the consumer is in a decision making mood. Retail purchases are
influenced by the psychological and emotional states of the consumer which
are in turn influenced by the following factors.
 The atmospherics and the physical aspects that influence mood and emotions.
 The social factors which include meaningful interactions which consumers
have with employees and other customers. Consumers may perceive a
crowded retail outlet as credible and dependable.
 The temporal aspects which in an Indian retail context would refer to the high
tempo built during festival occasions like: New Year, Diwali, Pongal,
Ramzaan etc. Jewelers like Kalyan Jewelers and Tanishq push their
promotional offers and build the tempo during wedding seasons.
 The objective of shopping is another influencing factor. Silk saree retailers
like Pothys, Chennai silks and Kumaran have exclusive wedding saree
collections.

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Block 5: Retail Marketing

Example: Retailers Discover the Potential of Private Labels During the

Covid Pandemic
During the Covid-19 crisis, many consumers opted for private label brands.
Due to panic buying and the tendency to hoard goods, many well-known
manufacturing brands disappeared from retail shelves. Retail stores
replenished them with retail store brands or private labels and the strategy
worked very well for them.
When shoppers did not find their favorite brand, they opted for affordable
private brand goods. Private labels, which are less priced became an option for
customers who faced financial constraints during the pandemic. Suddenly
retailers discovered that private brands became more appealing and attractive
to consumers.
For retailers the consumer shift towards private brands was a blessing in
disguise because these retailer’s brands are typically more profitable than
manufacturer’s brands. The future strategy for retailers to sustain this trend
should be to develop high-quality private brands that have a devoted following.
When customers are devoted to retail brands then this would drive customers
to become even more loyal to the retail store.
Source: Steven Begley and Angus McOuat “The potential for powerhouse private brands: An
updated view”, 17/6/2021
https://www.mckinsey.com/industries/retail/our-insights/the-potential-for-powerhouse-private-
brands-an-updated-view Accessed on 15/09/2022

Activity 16.2
Visit any two national retail chains (Big Bazaar, More, Reliance retail) located
in your city. Compare the following elements of the marketing mix: The range
of products offered in the two stores and the target market. Are the promotional
offers, store layout and ambience in congruence with the store image?
Answer:

Check Your Progress - 2

6. Decisions regarding channel coverage, location and transportation relate to
which of the following elements of the marketing mix?
a. Product
b. Place
c. Price
d. People
e. Physical Evidence

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 Unit 16: Retail Marketing Mix

7. What are the goals of loss leader pricing?

a. To show that the company charges low prices
b. To show concern for poor customers
c. To maximize revenue from slow moving products
d. To attract customers to buy other profitable products
e. All of the above
8. Which of the following is called as the process of creating and using name,
symbol, and design to give identity to a product?
a. Creating unique selling proposition or USP
b. Advertising
c. Promotion
d. Identity and distinctiveness
e. Branding
9. Which of the following is not a promotional goal?
a. Creating brand awareness
b. Educate consumers about the benefits of the product
c. Increasing the uses to which a product can be put
d. Explaining the pricing and promotional policy
e. Increasing sales
10. In order to better understand the target market and their needs, which of these
activities must be undertaken?
a. Conduct market research studies
b. Locate in shopping malls where your target market lies
c. Employ market consultants to give advice
d. Follow competitor’s marketing mix strategies
e. Study sales pattern

16.7 Summary
 A retail business performs a number of functions: Buying in bulk from
producers or middlemen, stocking and retailing them in small quantities in
convenient locations and in comfortable and satisfying shopping
environment, merchandising in accordance with historical demand patterns,
display of an assortment of goods at an appropriate price and selling on credit
or at discount as required.

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Block 5: Retail Marketing

 The 7 Ps marketing mix model, given by Booms and Bitner (for services) has
been deemed as an appropriate model for retail service, considering the
multitude of services offered by them to attract their target customers.
 A retailer needs to first identify his target market and then craft out the
marketing mix strategies to make his retail store the choice of consumers. The
various dimensions of the retail product are as given below:
‒ Service: Level of service, trust, reliability, responsiveness, helpfulness
and empathy, assurance by way of guarantee, warranty etc.
‒ Quality: Product and service quality, value for money.
‒ Merchandise: Range of products displayed, depth of assortment
‒ Store brand: The image of the brand, attributes associated with the
brand, brand loyalty.
‒ Features and benefits: Core, augmented, facilitating and supporting
products and service.
‒ Atmospherics: Use of lighting, colors, sound, music, pictures, and
artifacts, etc. to create favorable mood and increase purchase tempo.

16.8 Glossary
Ambient Conditions: Environmental characteristics of servicescape such as
lighting, color, temperature, music, scent and color.
Atmospherics: Coined by Philip Kotler, Atmospherics is a term used to refer to
the discipline of designing service settings (retail spaces).
Augmented Product: The value added to the actual product (which delivers the
core benefit) for which the consumer may or may not pay.
Merchandising: Planning that goes in displaying and marketing the right
merchandise or service at appropriate prices to cater to the target customers.
Olfactory: Pertaining to the sense of smell.
Private Labels: A brand or product owned by retailer and not manufacturer.
Product Depth: The number of items in a product line that are in display in
shelves.
Retail Marketing Mix: All the 7 Ps which are part of any service organization.
i.e., product, price, place, promotion, people, process and physical evidence.
Servicescape: The cues in a physical setting which shape the customer’s
perception and behavior.
Store Layout: layout refers to the way in which machinery, furniture and
equipment are arranged in a service setting.

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 Unit 16: Retail Marketing Mix

16.9 Self-Assessment Test

1. Write a note on Store layout and its significance in retail.
2. Write a note on: Merchandising, Product depth and breadth.
3. Why do certain retail organizations like IKEA have minimum employees?
Give an example of another organization which employs people to help and
serve customers. Compare their strategies.
4. How can technology be used to make processes efficient in retail
organizations? Explain with an example.
5. How are target markets and marketing mix elements related? Illustrate with
a real-life example.

16.10 Suggested Readings/Reference Material

1. Giri Arunangshu and Chatterjee Satakshi, “Retail Management: Text &
Cases” Paperback, PHI Learning Pvt. Ltd., 2021.
2. Swapna Pradhan, “Retailing Management: Text and Cases”, McGraw Hill,
Sixth Edition, 2020.
3. Barry Berman, Joel R Evans, Patrali Chatterjee and Ritu Srivastava, “Retail
Management”, Thirteenth Edition Pearson Education, 2017.
4. Gibson G. Vedamani, “Retail Management”, 5th edition, Pearson Education,
2017.

16.11 Answers to Check Your Progress Questions

1. (d) Marketing mix
Marketing mix is a tool in the hands of the company that can be
effectively used to target customers.
2. (c) Processes
Issues like waiting time and billing relate to processes.
3. (b) Careful, methodical and proper recruitment, Induction, training of
employees
These will help companies to serve customers better through
knowledgeable, courteous service staff.
4. (a) Premium prices
A top notch fashion designer will charge premium prices because it
helps customers perceive premium quality and product.
5. (d) To increase cash flow
Generating cash flow is not a pricing goal. All other options represent
important pricing goals.

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Block 5: Retail Marketing

6. (b) Place
Decisions regarding channel coverage, location and transportation relate
to the marketing mix element ‘Place’.
7. (d) To attract customers to buy other profitable products
The objective of Loss leader pricing tactics is to attract customers to buy
other profitable products.
8. (e) Branding
The process of creating an identity for products through name, symbol
or signs is known as branding.
9. (d) Explaining the pricing and promotional policy
“Explaining the pricing and promotional policy” is not a promotional
goal.
10. (a) Conduct market research studies
Market Research Studies would help a retail company understand the
target market.

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 Unit 17
Retail Pricing
Structure
17.1 Introduction
17.2 Objectives
17.3 Price as a Concept
17.4 Price Sensitivity
17.5 Factors Influencing Retail Pricing
17.6 Approaches to Pricing Retail Merchandise
17.7 Pricing and Values
17.8 Markdown: A Pricing Policy for Retailers
17.9 Laws Governing Retail Pricing
17.10 Summary
17.11 Glossary
17.12 Self-Assessment Test
17.13 Suggested Readings/Reference Material
17.14 Answers to Check Your Progress Questions

“The single most important decision in evaluating a business is pricing power...

If you’ve got the power to raise prices without losing business to a competitor,
you’ve got a very good business. And if you have to have a prayer session before
raising the price by 10 percent, then you’ve got a terrible business.”

- Warren Buffett, American business magnate

17.1 Introduction
Warren Buffet conveys through the quote that the perceived value of the products
offered by a business is key to its success. When a product enjoys considerable
consumer surplus (perceived value is greater than price) then businesses are in
control as they have the power to raise prices without losing business to
competitors.
Right pricing has become imperative for the success and survival of today’s retail
businesses because of the increase in competition. Consumers too are better
informed about the alternative purchase options at various price levels available
to them. While pricing the merchandise, a retailer has to provide for reasonable
Block 5: Retail Marketing

profit margins because without sufficient margins, long term survival becomes
impossible. At the same time, to garner market share and increase sales revenue,
the retailer has to price the merchandise low to make them appealing to the
consumers. Thus, the pricing policy of a retailer is akin to walking on tight rope
balancing the various objectives of the company: coverage of costs, profitability,
sales revenue, market share, customer satisfaction.
A number of discount stores are emerging by the day, luring customers with
attractive price offers. Given this competitive environment, big retail chains are
facing low price challenge by: forging alliances with manufacturers to maintain
standards and procure merchandise at low costs, and leveraging on technology to
keep operating costs low. To sum up in the current scenario, consumers stand to
gain because they have greater choice and better quality products at low prices.
As for retailers, pricing is a weapon in their hands to fight competitors and hence
right pricing is absolutely important for long term survival and success in the
retail business.
The previous unit discussed the right retail marketing mix for right target market
and the role of marketing mix in adding value to the marketing efforts.
In this unit, we discuss pricing concept, the influencing factors of retail pricing,
various pricing methods and the laws that govern the retail pricing.

17.2 Objectives
After reading through this unit, you should be able to:

 Define the concept of price from a retailer’s perspective that forms the basis
of revenue generation
 Explain the significance of price sensitivity of a product to a retailer for aiding
customer segmentation
 Enumerate the factors influencing retail pricing in determining the
profitability of a business
 Discuss the various pricing methods adopted by a retailer for increasing sales
and maintaining market share
 State the laws governing retail pricing for unhindered business functioning

17.3 Price as a Concept

Price, from a buyer perspective, is the monetary value that needs to be paid while
purchasing a product. If the customer perceives value in exchange for the price
charged, the transaction materializes. Value here, refers to the perceived benefits
with reference to the price. From a retailer’s perspective, pricing generates
revenue.

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 Unit 17: Retail Pricing

Pricing a product determines (i) Profits after meeting costs for the firm (ii) Value
of the product as perceived by the customer and (iii) Retaining the market share
by meeting competitors’ price. A retailer can increase the value of the product,
by augmenting the perceived value or by decreasing the price. As an important
element of the retail marketing mix, pricing policies have to be integrated with
other elements of the marketing mix to communicate and appeal to the target
group. The following factors need to be considered while determining a suitable
pricing policy: target group (upscale, medium scale or downscale), overall
company objectives (expected profits, return on investment, sales and market
share), corporate strategy (growth, expansion, or other strategies) pursued by the
company, demand and demand pattern of the (seasonality) product, supply and
supply patterns (particularly in the case of agricultural products),
competitiveness, nature of consumers.
Pricing is the toughest decision to make because it becomes a benchmark for
consumers to compare. A retailer has discretion in setting prices and hence it is a
very important tool in the retailer’s hand to achieve the various marketing
objectives. A retailer needs to set prices to cover costs to ensure long run survival
and smooth functioning and simultaneously accord importance to the value the
product has in the consumer’s hand. To sum up, retail pricing has a cost and
revenue (financial) perspective, value (perceived value) perspective and
competition (supply) perspective. Retail marketers choose the target group and
take decisions, balancing the various considerations.

Example: Cost Perspective in the Pricing Concept

Fine-dining and quick service restaurants and bars and cafes of metro cities
like Chennai, Mumbai and Bengaluru increased prices up to 15% to make up
for rapid surge in the prices of edible oil, rice, pulses and other raw materials
and fuel that are used in food preparation. The price rise was triggered by
global supply chain disruptions on account of the Covid pandemic and Russia-
Ukraine war.
Building rent and salaries had also risen post Covid and this was also cited as
a reason for the increasing pressure on bottom lines. The hotel industry which
is yet to recover from the Covid losses thus decided to rethink their pricing
strategy. It was reported that most food chains and restaurants reduced
discounts and simultaneously increased prices to make up for the surge in the
food inflation which is anywhere between 7% and 30% since January 2022.
Mr.P.C.Rao, President of the Bengaluru Hotel Association said in a press
interview (5/04/2022) that the members of the association decided to hike
prices of all food items by 10%.
Contd….

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Block 5: Retail Marketing

The above example illustrates the cost perspective involved in the pricing.
When costs of raw materials and ingredients increase and rents and salaries
increase, firms increase product price to cover variable and fixed costs.
Sources: Ratna Bhushan, “Raw material costs on boil, restaurants and cafes put price hikes on
the menu”, CNBC, 8/01/2022
https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/raw-material-costs-
on-boil-restaurants-and-cafes-put-price-hikes-on-the-menu/articleshow/90946885.cms?utm_
source=contentofinterest&utm_medium=text&utm_campaign=cppst Accessed on 22/09/2022
and https://indianexpress.com/article/cities/bangalore/eating-out-to-become-costlier-in-
bengaluru-as-hotel-association-hikes-prices-7852868/ (April 5, 2022)

17.4 Price Sensitivity

A retailer, while understanding consumer demand and demand patterns, should
also give due consideration to price sensitivity of his target group. The lower and
middle class, middle aged and older customers, who are generally more thrift-
oriented, tend to be more price-sensitive and in contrast the higher income group
and the youth are likely to be less price-sensitive. While referring to price
sensitivity, a marketer is actually referring to the elasticity of demand for a given
product. Demand elasticity is defined as the degree of responsiveness of demand
to changes in price levels. For e.g. if the price rises by 10%, then in response,
demand may in turn decrease by: an equal measure of 10 (unitary elasticity) or
by more than 10% (highly elastic) or less than 10% (inelastic).
Demand elasticity varies depending on the nature of the product. For instance,
groceries are essential products and hence are relatively inelastic to changes in
price. Instant food brands are not necessities. They are purchased for convenience
and hence are found to be relatively elastic to changes in price. Price sensitivity
depends on a host of factors like: income of the target group, age of the target
group, purchase situations (urgency of purchase, emergency situation, etc.),
perceived importance of the purchase to the customer, availability of substitutes
and competitiveness of the product, brand equity and loyalty factor, perceived
quality of the product etc.
The demand elasticity (Ed) is measured by the formula:
Ed = Percentage change in Quantity Demanded / Percentage change in Price.
Based on the magnitude, price elasticity can be of different types: Perfectly elastic
(Ed = ∞), Relatively elastic (Ed> 1), Unitary elasticity (Ed = 1), Relatively inelastic
(Ed<1), Perfectly inelastic (Ed = 0). The perfectly elastic and inelastic types are
more theoretical than real.

Example: Covid Impact Forces Lifestyle Companies Offer Discounts

During the Covid pandemic, stores selling fashion and lifestyle brands (these
retail stores were forced to close due to lockdown), offered steep discounts to
push online sales.
Contd….

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 Unit 17: Retail Pricing

As the pandemic impact on businesses intensified, many fashion and lifestyle

brands witnessed a fall in sales to the tune of 70%. Even online sales that was
growing rapidly prior to the pandemic declined by 15% because consumers cut
down on discretionary spending.
Given the gloomy situation of piling inventory, leading brands such as Gap,
Adidas, Asics, Aeropostale and Hummel offered discounts ranging from 30%
to 60% on various products to cut down losses in March 2020. Shoppers Stop
offered 70% rebates on all fashion products and accessories that it showcased
in its website. Shoe companies like Liberty and Clarks that offer end-of-season
discounts in May-June, offered 70% discount on various products.
Customers are price sensitive in the case of high-priced products (like high-
end fashion and fashion accessories) because a significant portion of their
budget goes towards buying these products. Due to the Covid impact customers
faced financial constraints and prioritized purchase of essential products and
postponed purchase of price sensitive fashion products. Retail stores therefore
offered discounts to push online sales of these price sensitive products.

Source: Rasul Bailay “Coronavirus Impact: Lifestyle and Fashion Companies push discounts as
stores stay shut”, Economic Times, 24/03/2020
https://economictimes.indiatimes.com/industry/services/retail/lifestyle-fashion-cos-push-
discounts-as-stores-stay-shut/articleshow/74784370.cms?utm_
source=contentofinterest&utm_medium=text&utm_campaign=cppst Accessed on 20/09/2022

17.5 Factors Influencing Retail Pricing

There are many external components that can affect the profitability of a business.
Setting the right price is crucial among them. It directly influences the
profitability of the retailer. Hence it is essential to know the factors that influence
retail pricing. The following factors are considered by the retailer while fixing the
price of the product.
Price sensitivity: As pointed out earlier, price sensitivity or the price elasticity of
demand is an important factor that influences pricing decisions. A retailer is more
interested in the coefficient of Ed, which is usually negative because of the inverse
relationship between price and demand. A high co-efficient means high price
sensitivity and vice versa. A retailer would strategize on price by: Keeping
margins and prices low for products that have high price elasticity, fixing high
price and comfortable margins for prices that are relatively price inelastic. In the
first case (low margin-low price), the retailer hopes to make profits through
volumes and in the latter case (high price-high margin), the retailer may sell less
volume but may make profits because of the high margins.
Perishability of the product: Products like vegetables have a short shelf life
and hence the pricing decisions are market based (based on demand and supply).

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Block 5: Retail Marketing

Fads and fashions too have a short shelf life and therefore the pricing tactics aim
at quick disposal of stock.
Competitiveness of the market: Here, retailers need to fix the price
competitively to avoid loss of market share to competitors.
Volatile market conditions: Due to various reasons like fluctuating international
prices, seasonal production, supply uncertainty, hoarding by middlemen, etc., the
market price of certain products fluctuates. In case of such products, retailers need
to plan their stock and change pricing tactics in accordance with the market
situation.
Seasonal demand: Certain products have seasonal demand. The demand
conditions during periods of lean and peak demand need to be considered and the
pricing, purchase and warehousing decisions have to be made accordingly.
Legal considerations: Legal requirements like Minimum retail price (MRP) etc.,
need to be followed.

Example: How Covid-19 Lockdown Affected Mango Pricing

The nationwide lockdown during the Covid pandemic hurt mango sales due to
lack of transportation facilities and supply chain disruptions. Mango is
cultivated in Tamil Nadu, Andhra Pradesh, Uttar Pradesh, and Gujarat. From
the first week of May the season for mango begins.
In the year 2020, overcoming various challenges like infections to the crop,
farmers ensured that they received good flowering. The Covid lockdown came
as a big shock to farmers who were ready for an early harvest in the year 2020.
There was little scope for export of the fruit because of worldwide lockdown
and supply chain disruptions. Fruit dealers and retailers did not come forward
to buy the product and sell them in other Indian states as transportation of this
perishable fruit to other States within the country was either too difficult or
even impossible.
Mango producers were thus forced to sell their crop to consumers directly
through online channels and makeshift markets at throw away prices. The
agricultural marketing department helped farmers to sell mangoes to different
markets within the respective states.
As mangoes are seasonal and perishable, farmers were forced to sell their
produce in local markets at a much lower price.

Source: Venu Lanka, “Covid-19 lockdown dampens prospects of mango farmers in Andhra
Pradesh”, Times of India, 6/04/2020
http://timesofindia.indiatimes.com/articleshow/74999692.cms?utm_source=contentofinterest&ut
m_medium=text&utm_campaign=cppst Accessed on 19/09/2022

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 Unit 17: Retail Pricing

Activity 17.1
The price of a mobile phone while buying online is much lower than that of a
brick and mortar store. How do you account for the difference in the price?
Enumerate the factors contributing to the rise in purchase of such high-end
products.

Check Your Progress - 1

1. You are the marketing manager of a hotel and you have been informed that the
price elasticity of demand is greater than 1. What should you do to increase
total revenues?
a. Increase the room tariffs
b. Decrease the room tariffs
c. Hold room tariffs constant
d. Decrease the demand
e. Either increase the room tariffs or decreases the demand
2. The demand for Nike basketball shoes is more price-elastic than the demand
for basketball shoes. Which of the following explains the above context?
a. Nike basketball shoes are the best made and are widely advertised
b. Basketball shoes are a luxury good, and not a necessity
c. There are more complimentary products for Nike basketball shoes than
for basketball shoes
d. There are more substitutes for Nike basketball shoes than for basketball
shoes
e. ‘Basketball shoes are necessary.
3. The pricing strategy in which prices are adjusted for psychological effect is
classified as which of the following?
a. Psychological pricing
b. Odd even pricing
c. Product line pricing
d. High Low pricing
e. Loss leader pricing

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Block 5: Retail Marketing

4. Consumers’ Perceived value is made up of which of the following?

a. Customers’ support
b. The channel’s deliverables
c. The price paid regarding the benefits that are valued by the customer
d. Buyer’s image or idea of the product
e. Customers’ support and buyer’s image of the product only
5. Let us say as a retail store owner, you face severe price competition and
further undercutting would make your business unprofitable. Which of these
measures would be suitable for the problem you face in your business?
a. Develop an international website to solicit more customers from a wider
geographic region
b. Announce discount offers more frequently
c. A differentiated product with unique product and service offer and
repositioning
d. Change the package and label of the product
e. Target new group of customers

17.6 Approaches to Pricing Retail Merchandise

‘How customers perceive price is as important as the price itself” – HBR1.
Customers should notice and respond to the price quoted for the product in a
positive way. Otherwise, firms may not get the ‘pricing credit’ they deserve, i.e.,
their image might get distorted in customers’ perceptions. To manage price
perceptions, retailers adopt various approaches to pricing their retail merchandise
and the most popular of the approaches are given below.
 Cost plus pricing: Under this pricing approach, the retailer adds a certain
profit margin to the cost to arrive at the price. This pricing mechanism thus
provides for the cost and a reasonable profit margin as determined by the
retailer. Under this pricing method, the cost is calculated by adding the
purchase price, transportation, overheads etc. and a margin is added to it.
 Manufacturer Suggested Retail Price (MSRP): Under MSRP, the retailer
sets his price based on the price suggestions given by the manufacturer. Under
MSRP the retailer could follow one of the methods: Set the same price as
suggested by manufacturer or set a price lesser than what was suggested by
the manufacturer.
 Competitive Pricing Policy: In the present retail scenario, where
competition faced is cutthroat, it is common for retailers to set their prices

1 Sandeep Heda, Stephen Mewborn and Stephen Caine, “How Customers Perceive a Price Is as Important as
the Price Itself”, Harvard Business Review, January 3, 2017.

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 Unit 17: Retail Pricing

based on the prices charged by competitors. Accordingly, a retailer would set

his price: to match the price of competitors, higher than that of his competitors
(premium or prestige pricing), or lower than that of competitors (Economy
pricing).
 Pricing below competition: If the retailer is able to negotiate low prices with
suppliers and is able to keep costs low, he is in a position to set the prices of
his products below competition. Retail stores like Walmart, who are big in
size, are able to negotiate low price deals and also keep costs low (by
following a no frills, minimum service) and target the price sensitive segment.
New stores may charge a low penetration price to capture market share in the
initial stages.
 Pricing above competition: Under this pricing approach, the retailer charges
a price higher than the price charged by his competitors. A retailer can do so
only when his retail store or the merchandise in his store satisfy one of the
following conditions: retail store has been positioned as an exclusive one and
it sells premium merchandise or stocks the latest fashions (not available in
other stores), the brand equity of the retail store is very strong, the retail store
is situated in a prime locality, the retail store is known for its excellent
customer service etc. Since here the premium positioning of the retail outlet
based on price charged by competitors is done to target upscale customers,
this pricing approach is also called prestige pricing. In the retail industry,
skimming prices are charged when the retailer has reason to believe that the
target customer associates the store with high quality and upscale image and
hence is willing to pay a high price.
 Discounted pricing: Retailers like Big Bazaar, follow discounted pricing
method as a part of the retail price strategy. Coupons, rebates, seasonal prices,
markdowns are a part of their pricing policy to attract customers.
 Bundle pricing: The retailer bundles a group of products and offers them at
a reduced price. In India, most shops offer, ‘the buy one get two or get
two/three offer’, during festival seasons. Most retail stores, including big
retail brands like Globus, Life Style, Max, etc. have adopted bundled offers
as a regular pricing tactics.
 Everyday Low Pricing (ELP): Under ELP, retailers offer low prices in
comparison with that of competitors on a continuous basis. Walmart, a
pioneer in practicing this strategy successfully, keep their costs low through
bulk purchase and efficient supply chain logistics.
 Psychological pricing: Under this method the retailer bases the price
on psychological considerations. The various commonly practiced
psychological pricing tactics are: Using even/odd pricing, choosing numbers
with fewer syllables, highlight smaller instalment payments, offer rebates
from high price etc. Bata for instance prices their shoes INR 999 instead of

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Block 5: Retail Marketing

INR 1000. This gives the impression to the customer that the product they are
purchasing is under 1000 and thus gives them psychological satisfaction.
 Loss leader pricing: Under this approach, the retailer sells certain
merchandise below costs. Retailers may price certain products at such low
prices, hoping that customers who get attracted to the shop because of these
abysmally low prices would also buy other products where the margin for the
retailer is high.
To sum up, a retailer could approach pricing from different angles: A cost angle
(Cost plus pricing), customer angle (loss leader pricing, discounted pricing,
bundle pricing) and competition angle (Competitive pricing). There is no hard
and fast rule to suggest a particular pricing approach as the most suitable one for
a retailer. A retailer may base his pricing decisions to achieve the following goals:
adapt to changing market conditions, increase market share, prevent competitor
from gaining market share, revenue maximization, profit maximization, enhance
customer loyalty, take advantage of buying behavior of customers like purchase
during festivals etc.

Example: Competitive Pricing by E-Commerce Players During the

Festival Season in India
Flipkart’s ‘Big Billion Days Sale’ and Amazon’s ‘Great Indian Festival’ are
two mega events that Indian customers look forward to during the festival
season. As the month of September approaches, Indian customers get into a
festive mood and expect mega sale announcements and discount offers.
In 2022, a year of high inflation, customers wishing to buy quality products at
affordable prices eagerly await the Amazon and Flipkart’s sale
announcements. From smartphones to electronic and home appliances,
customers facing the wrath of high prices, hope that low prices would bring
relief.
According to Counterpoint, in 2021, 1.39 billion smartphones were sold during
Big Billion Day 2021 and Great Indian Festival-2021.
For the upcoming Big Billion Day-2022, Flipkart has created a webpage where
it is posting updated on probable and awaited deals and product offers across
categories. The website has given a list of smartphones that would be sold
under ₹ 20,000. Similar such offers are expected from Amazon.
Flipkart and Amazon’s pricing approach is getting bolder by the year. Both
these players who compete in a duopoly market use the deep discounting
pricing approach to maximize sales, retain customers, and increase customer
base during the festival season.
Source: Business Standard Web Team “Flipkart Big Billion Days sale 2022: List of smartphones
to be on discount”, Business Standard, 19/9/2022
https://www.business-standard.com/article/technology/flipkart-big-billion-days-sale-2022-list-of-
smartphones-to-be-on-discount-122091900780_1.html Accessed on 22/09/2022

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 Unit 17: Retail Pricing

17.7 Pricing and Values

Value based pricing, a strategy in which a retailer sets a price based on what his
customers are willing to pay for the product, has emerged as the most
recommended pricing technique in the highly competitive retail industry. The
strategy here is to capture a majority of the target customers by offering them a
compelling value for the money that they are paying. While value is what the
customer gets in return for the price he pays, to some customers value always
means getting a low price. Let us say a price sensitive customer is in Big Bazaar
comparing the price of Tasty Treat noodles and that of the leading brands like
Yippee, Knorr or Maggie. Since private labels like Tasty Treat, Ching’s, Smith
and Jones are perceived to provide good quality products for a lesser price, the
consumer may opt for Tasty Treat noodles because in his opinion the brand offers
value for money. The key to value pricing here is to make the price appear
reasonable for the product, i.e. a packet of noodles.
Retailers need to understand that while price has a huge impact on tilting purchase
decisions in favor of a brand, price is not just everything. What is more important
is to enhance the perceived value of purchase. The perceived value of the
merchandise can be enhanced by better customer service, timeliness in service,
holding a range of products, holding high quality products, providing better retail
ambience, etc. By increasing the price by 1%, the retailer can make a huge
difference to the margins and profitability. A retailer needs to do some marketing
research to understand what benefits and features translate into greater value to
the customers and incorporate the same into the service. Simultaneously, the
retailer also needs to invest in advertisement to communicate the value to appeal
to the target group.
Value based pricing is an effective pricing strategy for retailers from a revenue
perspective due to the following reasons.
 When a customer is considering the purchase of a product, the primary
concern that fills his mind is whether or not the product is worth the price.
 Customers do not consider aspects like the cost of production, for the simple
reason that those aspects are not their concern but the manufacturer’s and
retailer’s.
 Unlike cost plus or competition-based pricing, this method distinguishes the
retailer’s products from many other competing brands and options for the
reason that this approach is customer-centric.
 It is reasonable to assume that the consumer is right and to understand what
represents value from his perspective ought to be a good approach.
Consumers are different and they differ in their perceptions about what represents
value to them. It is important that the target customers value the unique features,
benefits and advantages that the retailer offers.

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Block 5: Retail Marketing

Example: High Prices Did Not Disrupt Sales of Luxury Products during
Covid Pandemic

The covid pandemic forced the lower-class and middle-class and upper middle-
class population to prioritize purchase of essentials and postpone purchase of
fashion products and accessories. However, it did not stop rich Indians from
buying highly expensive luxury products. Luxury brands like Hermes, Armani
and MF Hussain paintings witnessed double digit growth even during the
pandemic. The marketing strategies of these companies (like push
communication, customization, and relationship marketing) kept luxury
product sales buoyant during the pandemic.
Luxury Retailer, ‘The Collective’ (owned by Madura Fashion and Lifestyle)
which sells luxury brands like Prada, Paul Smith, Ralph Lauren, Karl
Lagerfeld, and Ted Baker witnessed a 3.5% revenue growth in 2020 in India
as compared to 2019.
The spending capacity of the buyers pushed the prices of these products and
high price in turn did not having a dampening effect on sales. Artiana, a click-
and-mortar hybrid auction house (focusing on artwork, watches and luxury
collectibles) sold two pieces of art for ₹ 2.5 crores and ₹ 4 crores to one buyer.
Factors like the ‘prestige associated with buying a product’, ‘the exclusivity of
the product’, ‘the brand name and label’ and related factors justify the high
price of a luxury product. The high price reiterates and confirms the high value
of the luxury products and thus super luxury products that are perceived as high
value products are exceptions to the law of demand.

Source: Tasmayee Laha Roy “Why the pandemic failed to deter sales of luxury brands in India”,
Fortune, 3/12/2021
https://www.forbesindia.com/blog/storyboard18/storyboard18-why-the-pandemic-failed-to-deter-
sales-of-luxury-brands-in-india/ Accessed on 20/09/2022

17.8 Markdown: A Pricing Policy for Retailers

Due to the increase in competition in the retail industry, retail chains are leaving
no stones unturned to attract customers to their retail shops. Consumers have
become very price sensitive and even leading national retail chains like ‘Reliance
Retail’ and ‘More’, view Markdown as an inevitable retail strategy to increase
sales and maintain market share. A few of the leading retail chains sell
merchandise at below the Manufacturer’s Suggested Retail Price (MSRP).
‘Markdown’ can be defined as a reduction of the original retail price. Markdowns
are feared because they are linked to lower profits and sometimes even losses.
Retailers use Markdown pricing policy, when faced with slow moving inventory
or to sell old stock whose value might deteriorate in future. Low priced inventory

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 Unit 17: Retail Pricing

is often promoted as a loss leader to increase footfalls to the store. Two types of
Markdowns are popular among retailers: Flat Markdown and Phased Markdown.
Flat Markdown, which could be temporary or permanent, is normally offered on
merchandise that may have the following shortcomings.
 Inventory leftovers at end of season: Unsold inventory that gets piled up
towards the end of the season could be disposed by the End of Season Sale
(EOSS). Textile showrooms selling winter clothes normally offer massive
discounts to get rid of unsold inventory
 Ill-fitting size: Retail stores selling readymade garments offer Size
Markdown for Non-selling sizes
 Defective products: This markdown is given on merchandise which has
defects like: Color mismatch, design defects, pockets in wrong place,
defective embroidery designs, patchwork etc. and irregular sizes.
 Perishables: Markdowns are also common for groceries nearing expiry
dates, perishables like vegetables and dairy products.
 Phased Markdown approach is adopted in the case of merchandise which
has a short life. There is a need to dispose and reduce the inventory of such
slow moving designs to provide shelf space to new designs that are likely to
sway the fashion conscious customers.

Phased Markdowns are normally permanent and the discount scheme continues
till the entire inventory gets disposed. Temporary markdown could be promoted
to increase footfalls and these markdowns are reversible, meaning that the retailer
can go back to the original price.

Example: Year End Steep Discounts on Old Model Cars

At the end of the year, generally during the month of December, car dealers
offer old model cars at steep discount to sell old model cars and make room for
new inventory. This pricing policy of car dealers attracts an influx of customers
to buy the old model cars at a steep discount.
Leading car manufacturers like Toyota, Subaru, Honda and even luxury brands
like BMW execute this policy of offering steep discounts on old models
through their dealers to clear old stock and minimize losses on old inventory.
From the customer’s perspective year end discounts which offer prices below
the cost, are attractive to beat the price hike expected in the following year.

Source: CNBC Team, “Buying car at year-end sale for discounts, exchange offers? Know pros
and cons” CNBC TV18, 9/12/2021
https://www.cnbctv18.com/auto/car-buying-guide-pros-and-cons-of-december-discounts-year-
end-sale-11759352.htm Accessed on 21/09/2022

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Block 5: Retail Marketing

17.9 Laws Governing Retail Pricing

Standard regulations govern the contractual relationship that exist between the
retailer and the customer. Any violation of law may lead to legal disciplinary
action by the concerned authority. This is true in India as well. The retail industry
in India accounts for over 10% of the Gross Domestic Product (GDP).The retail
market is estimated to be at USD 2 trillion in 20322. Notwithstanding the
unprecedented growth in organized retail during the last decade, unorganized
retail accounts for 97% of the total retail trade in India.
Multiple laws and regulations are in force to oversee the retail industry in India
at the central, state and local level and these laws directly or indirectly influence
retail pricing. The various laws that apply to retailers are: commercial laws,
corporate tax laws, trade and employment laws, laws relating to intellectual
properties, etc. The various aspects concerning retail that are regulated are: taxes,
pricing, weights and measures, shopping hours, marketing / advertising practices,
licensing, employment, etc.
A few provisions that apply to retailers are given in the following paragraphs.
 The various provisions relating to the Sale of Goods Act, 1930 that govern
the contract of sales of goods.
 The Corporate Tax Act that governs the payment of tax on profits.
 Consumer Goods (Mandatory Printing of Cost of Production and Maximum
Retail Price) Act, 2006, provides for the printing of Maximum Retail Price
(MRP) on the packages so that consumers cannot be overcharged. All packed
goods should carry labels that have essential information like: weight,
volume, date of manufacture and expiry date in the case of food packages,
name and address of manufacturer.
 The Shops and Establishments Act (SEA) 2008, a state legislation, regulates
employment of workers and their working conditions.
 The Consumer Protection Act to protect the interests of the consumers.
Retailers grudge the plethora of laws that regulate Retail Businesses such as: the
Essential commodities Act, the Cold Storage Order, the Weights & Measures Act,
Labor laws, the Shops Establishments Act and so on. Retail businesses are also
asking for the quick implementation of Goods and Services Tax (GST) which
they believe will help bring about market integration and boost overall growth.
GST, a comprehensive tax levy on manufacture, sale and consumption at the
national level, is considered as one of the biggest tax reforms that will boost
overall growth in the retail sector.

2 “Retail industry in India”, https://www.ibef.org/industry/retail-india, August 2022 (accessed on November

29, 2022).

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 Unit 17: Retail Pricing

Example: Small Online Retailers Would be Exempted from GST

Registration
The Government of India plans to exempt all small online sellers from GST
registration. As of May 2022, offline retailers with annual sales of less than
₹ 40 lakhs need not register for GST and only those offline retailers with an
annual turnover of more than ₹ 40 lakhs need GST registration.
GST registration is however compulsory for online sellers irrespective of the
size of their annual turnover. In order to rectify the inconsistency, the
Government of India plans to exempt all small online sellers from GST
registration. This move would not just bring small online and offline sellers on
par but would also boost the reach of small online sellers. Online sellers with
small annual turnover would be able to reach out to more customers and have
larger customer base.
This move has been initiated in response to the repeated representations from
the industry and trade.
Source: Business Desk of New18 “GST: Small Online Retailers May Soon Be Exempted From
Indirect Tax Registration”, 31/5/2022
https://www.news18.com/news/business/gst-small-online-retailers-may-soon-be-exempted-from-
indirect-tax-registration-5281027.html Accessed on 23/09/2022

Activity 17.2
Visit the following three stores in your neighborhood area: Big Bazaar, More
and Reliance Retail. Make a list of the various pricing strategies (Bundling,
loyalty schemes, discount offers, loss leader pricing, etc.). Study the
similarities and differences in the offers.

Check Your Progress – 2

6. Which of the following denotes Every Day Low Prices?

a. Consumers are charged low prices on a continuous basis
b. Low prices everyday for a certain period like a month or a year
c. Reducing the price every day
d. Every day price reduction for a product
e. Every day low price for a category

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Block 5: Retail Marketing

7. When retail stores charge very low prices on certain merchandise to attract
additional traffic it is known as which of the following?
a. Psychological discounting
b. Special event pricing
c. Economy pricing
d. Competitive pricing
e. Loss leader pricing
8. A retailer dealing with cosmetics sells the same products at different levels
using ordinary and premium packaging. This type of pricing is known as
which of the following?
a. Product differentiation
b. Image pricing
c. Price discrimination
d. Low Pricing
e. Skim pricing
9. Which of these factors should retailers take into account while pricing their
merchandise?
a. Competition
b. Target group customers
c. Elasticity of demand
d. Cost to the company
e. Competition, target group customers elasticity of demand, Cost to the
company.
10. Which of the following is not a valid reason for marking down the price of a
product?
a. Slow moving inventory
b. Robust demand for the product
c. Defective product
d. Inventory that is subject to wear and tear with the passage of time
e. Competitive pressure

17.10 Summary
 Pricing is the key to the success of retail businesses because it translates into
revenue and helps sustain and run the business smoothly, efficiently and
profitably. At the same time the price fixed should be affordable and
appealing to the target group.

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 Unit 17: Retail Pricing

 As a key component of the retail marketing mix, its role in achieving the
company objectives like growth, market share, profitability, customer
satisfaction etc. needs no further emphasis.
 In this unit on retail pricing the following topics were discussed: factors that
influence pricing policies like price sensitivity, various approaches to pricing,
and various pricing strategies.
 Pricing decisions become complex because of the challenges faced like:
Government regulations, changing retail scenario (competitiveness) that is
putting pressure on retailers to lower price, cost pressures, and highly
demanding consumers who have become price conscious and sensitive.
 To face these challenges, retailers use various pricing strategies like: Every-
day low pricing, high low pricing, discount offers, rebates, price bundling,
coupons, loss leader pricing, multiple unit pricing, price lining etc.
 Value based pricing is recommended and considered as an effective pricing
strategy by retail experts because of its customer-centric approach. Mark
down pricing which is used widely by today’s retail businesses is used to
dispose slow moving inventory and merchandise with short life cycles.

17.11 Glossary
Contribution Margin: Contribution margin (CM) is calculated by deducting
variable cost from total sales. CM is the surplus available to cover fixed costs and
profits.
Coupon: A document that can be presented by the customer at the time of
purchase and be redeemed to avail cash savings or discounts.
Discount Stores: These are stores that sell merchandise at very low prices. The
service offered is minimum to keep costs low.
Keystone Pricing: Under this method, the selling price is fixed very high. The
price is marked double that of wholesale of manufacturer’s price.
Loss Leader: The retailer offers steep discounts and communicates the same to
attract new customers to the shop. It is assumed that the new customers would
also be attracted to buy the other products in display in the shop.
Markup: A percentage (profit percentage) added to cost to arrive at the selling
price.
Odd Even Pricing: A psychological pricing scheme which assumes that
customers are sensitive to prices that end in certain digits. For instance, a price
tag, 999, gives the impression that the price is lesser than 1000.
Stock Keeping Unit (SKU): SKU is a number assigned by the retailer to a
product to identify the product, its price, product options etc.

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Block 5: Retail Marketing

17.12 Self-Assessment Test

1. Anna Theme Park charges ₹ 75 ticket as entry fee. The new marketing
manager, Tushar advises the President, Anna Park, Mr.Deeraj, to reduce the
entry fee to ₹ 50 to boost the sales amidst competition. Deeraj is upset that
his revenue would considerably be reduced. Tushar points out that Deeraj is
focusing only on price effect and not on quantity effect. What are Tushar’s
views on the price sensitivity of consumers? Illustrate with a graph, the type
of price elasticity of demand of the theme park.
2. What are the various pricing objectives that a retailer should keep in mind?
3. What pricing strategies are available to a company that is stuck with slow
moving inventory?
4. What is value-based pricing? What are the advantages of using this pricing
strategy?
5. What is Markdown pricing? Explain the concept of Flat and Phased
Markdowns with suitable examples.

17.13 Suggested Readings/Reference Material

1. Giri Arunangshu and Chatterjee Satakshi, “Retail Management: Text &
Cases” Paperback, PHI Learning Pvt. Ltd., 2021.
2. Swapna Pradhan, “Retailing Management: Text and Cases”, McGraw Hill,
Sixth Edition, 2020.
3. Barry Berman, Joel R Evans, Patrali Chatterjee and Ritu Srivastava, “Retail
Management”, Thirteenth Edition Pearson Education, 2017.
4. Gibson G. Vedamani, “Retail Management”, 5th edition, Pearson Education,
2017.

17.14 Answers to Check Your Progress Questions

1. (b) Decrease the room tariffs
The price elasticity Ed>1. This implies that a small decrease in price
could bring about a huge increase in demand. Hence, the hotelier would
decrease the room tariffs to benefit from high Ed.
2. (d) There are more substitutes for Nike basketball shoes than for
basketball shoes.
Nike basketball shoes have more substitutes and hence its demand is
more price elastic than the demand for basketball shoes.
3. (a) Psychological pricing.
Odd even pricing is one of the psychological pricing methods.

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4. (c) The price paid regarding the benefits that are valued by the
customer.
A consumer gauges the benefits derived from the product purchased or
to be purchased. This is termed as consumer’s perceived value.
5. (c) A differentiated product with unique product and service offer and
repositioning.
A feasible and effective solution to price competition would be to
reposition the product and service by differentiating the product and its
offerings as against that of competitors.
6. (a) Consumers are charged low prices on a continuous basis
EDLP is that pricing method where consumers are charged low prices
on a continuous basis.
7. (e) Loss leader pricing
Loss leader pricing is a pricing strategy wherein very low prices are
fixed on certain merchandise to attract new customers to shop.
8. (b) Image pricing
When a retailer sells the same product, say cosmetics at high price and
low price. The high price charged is known as image pricing.
9. (e) Competition, target group customers elasticity of demand, Cost to
the company
All factors given need to be considered while pricing a product:
Competition, cost to the company, price elasticity and target group.
10. (b) Robust demand for the product
All options except for option ‘b’ give a valid reason for resorting to a
price markdown policy. Robust demand for the product is not a reason.
On the other hand, when there is robust demand the retailer may increase
the price.

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 Unit 18
Retail Promotion Mix
Structure
18.1 Introduction
18.2 Objectives
18.3 Promotion
18.4 Role of Retail Promotion Program
18.5 Planning Retail Communication Program
18.6 Assigning the Promotional Budget
18.7 Implementing the Advertising Programs
18.8 Evaluating the Effectiveness of Advertisements
18.9 Implementing Sales Promotion Programs
18.10 Implementing Publicity Programs
18.11 Summary
18.12 Glossary
18.13 Self-Assessment Test
18.14 Suggested Readings/Reference Material
18.15 Answers to Check Your Progress Questions

“Make a customer, not a sale.”

- Katherine Barchetti, Founder,
K. Barchetti Shops

18.1 Introduction
Katherine Barchetti, the founder of a well-known retail store, through this quote
makes clear that the tone and content of promotion should aim at building a
consistent and clear brand identity. Retail promotion can result in a sale. Only
when a sale is followed by memorable and consistent customer experiences does
the sale result in a regular customer.
Unlike many businesses, retail organizations usually do not take their
merchandise to the marketplace. Their sales depend on the customers' initiatives
like visiting their store or placing an order through telephone or mail. The retailers
have to motivate the customers to visit their stores. A customer would visit a
particular store only when he knows about its presence, its location and the
merchandise they offer. The customer would also like to have information on the
prices, modes of payment (like cash and credit cards), availability of various
 Unit 18: Retail Promotion Mix

services (like free home delivery of the goods purchased), the store timings, and
so on. Retailers generate sales by making its target customers aware of the
merchandise they offer through promotional activities. There are five channels
through which retailers communicate with their target customers - advertising,
sales promotion, public relations, personal selling, and enhancement of the store
atmosphere and visual merchandising. (As the store atmosphere and visual
merchandising, and personal selling are discussed at length in separate unit, this
unit does not discuss those topics elaborately).
In the previous unit, we discussed the pricing and different approaches of pricing
and price sensitivity.
In this unit, we will discuss the role of the retail promotion program, planning
retail communication program, allocating the promotion budget, implementing
advertising, sales promotion and publicity programs and evaluating the
effectiveness of advertising.
18.2 Objectives
After reading through this unit, you should be able to:
 State the components of a promotional strategy in communicating with the
target customers
 Explain the role of retail promotion program for generating sales
 Illustrate the steps involved in developing a retail communication program to
create awareness about the store
 Allocate budget for promotional strategies for accomplishing communication
objectives
 Explain the process involved in implementing advertising programs for
attracting customers’ attention
 Evaluate the effectiveness of advertisements for generating positive results
for the store
 Describe the importance of sales promotion and publicity programs for
increasing sales and improving store’s image
18.3 Promotion
Promotion involves providing information to the consumer about the retailer's
store, its merchandise and services it offers, to influence the perceptions, attitude
and behavior of the consumers towards the retailer. Promotion consists of four
components - advertising, public relations, personal selling and sales promotion.
Though each of these components is an individual function, a good promotional
strategy usually integrates all these components, depending on the retailer's
overall strategy.
Retail promotion can be defined as any communication (initiated by the retailer)
between the retailer and his target customers that informs, persuades, and/or

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reminds the latter about anything related to the store. Retail promotion is a process
that has both informative and persuasive communication roles. Therefore, it can
be understood better by knowing the various steps involved in a typical
communication process. It is important for the retailer to observe that the process
of communication moves beyond the components of promotion mix mentioned
earlier here. The design, price, shape, color, packaging, the graphics on a product
and the ambiance of the store offering that product - all communicate something
or the other to the consumer.

Example: Reliance Brand’s “The Luxury Shopping Festival”

‘The Luxury Shopping Festival’, hosted by Reliance Brands Ltd. is an annual
online retail promotion event organized in the month of July or August. In
2020, the festival was organized between 7th and 23rd of August and customers
could purchase their favorite luxury, fashion, and lifestyle brands 24X7 on all
weekdays.
Customers got a chance to engage in conversations with well-known
personalities and veterans of the fashion and lifestyle and food industry.
Fashion enthusiasts were excited to take a virtual tour of the fashion museum
of Museo Ferragamo (where 10,000 shoe models created by Ferragamo were
showcased) with ‘Pernia Qureshi’, the designer’s granddaughter. Art lovers got
opportunities to attend sessions hosted by art enthusiast Feroze Gujral and
Vintage car lovers engaged with collectors Siddhraj Singh, Arihant Taleria and
Srinivas Krishnan.
Luxury brand patrons who participated in virtual walkthroughs got to know
about the legacies of their favorite brands and their collections.
Customers looking for deals had a chance to participate in ‘End of Season Sale
Period’ to avail of attractive discounts.
The virtual luxury shopping festival hosted by Reliance Brands Ltd. showcased
a spectrum of brands such as Canali, Tiffanys, Burberry, Jimmy Choo, Bottega
Veneta, Paul Smith and Diesel.
Reliance’s virtual shopping festival for 2022 was successfully organized
between 7th and 21st of August 2022. The shopping festival featured Neha
Dupia (Actor) chatting with Mitali Sagar (House of Misu) and virtual tour of
‘Museo Ferragamo’, fashion museum with Pernia Qureshi and panel
discussion with Vandana Mohan (India’s first woman event manager) and
many other interactive sessions with fashion experts and celebrities. As in the
past, the 2022 luxury shopping festival was a one-stop-shop for international
luxury and fashion brands and wedding related products.
Source: Garima Gupta, “Don’t miss this new virtual shopping festival for fashion weddings, food
and more”, Vogue, 6/08/2022
https://www.vogue.in/fashion/content/dont-miss-this-new-virtual-shopping-festival-for-fashion-
weddings-food-and-more Accessed on 26/09/2022

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 Unit 18: Retail Promotion Mix

18.4 Role of Retail Promotion Program

The goal of a retail promotion program is to generate sales. The retailers, in order
to achieve this goal, adopt various methods like informing, persuading and
reminding its target customers about their existence and their products and/or
services. Thus, informing, persuading and reminding are the key functions of a
retail promotion program.
Informing: This is the primary function of the retail promotion program. Retailers
provide information to the customers about themselves and the products and
services they offer. For instance, the most common tool for disseminating
information is the advertisements placed by supermarkets in the newspapers that
inform customers about the special discount prices on its groceries.
Persuading: This is an important function of the retail promotion program. It
involves a retailer asking people to visit the store and purchase its merchandise
and/or services. For instance, a supermarket might offer discount coupons to
customers through a newspaper and motivate them to buy its products.
Reminding: It involves reminding its customers frequently about its products and
its benefits, so that customers may purchase them again and develop customer
loyalty towards the store. Though a retailer may be liked by customers, it could
be very difficult for the former to retain its customers due to its competitors'
appeals. Hence, an increasing number of retailers, as a part of their reminding
task, are developing promotional strategies like loyalty programs or frequent
shopper programs for their customers. This may ensure the retention of most of
its customers.
18.4.1 Methods for Communicating with the Customers
The communication methods of a retailer can be classified as impersonal or
personal, and paid or unpaid, on the basis of the functions of the promotional
program, i.e. informing, persuading, and reminding. Thus, there are four types of
communication – paid impersonal, paid personal, unpaid impersonal and unpaid
personal.
As discussed earlier, promotion consists of four key elements: Advertising, Sales
promotion, Public relations and Personal selling. A good retail promotion mix
effectively combines all these components. The quality and status of the
merchandise and the store conveyed by advertisements must be equally reflected
in the other elements of the retail promotion. Else, the customers might receive
contradictory messages about the retail store, which might create confusion
among the customers and eventually loss of customer loyalty.
Advertising, sales promotion, and the store atmosphere are some forms of paid
impersonal communication. Advertising is a paid form of communication
through an impersonal mass media that encompasses newspapers, magazines,
broadcasting, and the Internet.

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Block 5: Retail Marketing

Sales promotion is a paid form of impersonal communication. It provides the

customers with an incentive for visiting the store and/or purchasing its
merchandise during a particular period. For instance, many departmental stores
offer discounts for a short period during their annual clearance sale or during
occasions of festivity. Though direct sale is the most prominent sales promotion
tool, retailers also use special tools like holding in-store demonstrations, offering
coupons and organizing contests. Usually, sales promotion tools are used to
influence the behavior of the consumer for a short duration.
Though sales promotion activities are effective tools for generating short-term
sales, they do not help establish long-term customer loyalty. Customers who are
influenced by sales promotion programs are generally interested in the
merchandise being promoted, not in the store selling them. However, there is a
possibility that the customers who are influenced by a retailer's sales promotion
program might revisit the store. Table 18.1 describes the various types of sales
promotion techniques.
Table 18.1: Sales Promotion Techniques

Sales Promotion Description

Technique
Point-of-Purchase(POP) Displays on the floor, counters and windows
remind the customers about products and
stimulate their buying impulse. Sometimes
displays are provided by the manufacturers.
Contests Customers compete for prizes by writing
slogans.
Sweepstakes The participants fill an application form and a
winner is chosen randomly.
Coupons Special discounts are advertised (mostly in
print), and customers can get discounts against
these advertisements.
Frequent shopper / Retailers offer points or discounts to customers,
Frequent flyer programs depending on the amount for which they have
bought goods. The customers can even
exchange points with goods or services.
Prizes Unlike the frequent shopper programs, the
customer receives the prizes immediately after
the purchase of goods of a certain value, for
example, glassware, casseroles etc.

Contd….

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 Unit 18: Retail Promotion Mix

Samples Free samples are offered to the customers. For

e.g., big departmental stores and supermarkets
have sample perfumes for testing.
Demonstrations One instance is the demonstration of the use of
vacuum cleaners.
Referral gifts Retailers offer gifts to their customers for
bringing in a new customer.
Pencils, calendars, diaries, Products carrying the retailer's name are given
wallets, etc. to the customers on purchasing their products.
Special events Retailers may organize many special events like
fashion shows, autograph sessions with
celebrities, or theme festivals.
Compiled from different sources by ICFAI Research Center.

Advertising
Advertising can be defined as any paid form of non-personal communication and
promotion of goods or services by an identified sponsor. Certain media used for
advertising are the print (newspapers and magazines), broadcasting (television,
radio and Internet), and displays (billboards, signs, posters, etc.). Advertising is
generally intended to present a consistent and enduring image of a product or
retailer in order to reinforce its positioning on a continuous basis.
Sales Promotion
Sales promotion can be defined as the technique of offering short-term incentives
to customers, so that they are motivated to purchase the retailer's products or
services. Sales promotions are generally communicated to consumers through the
in-store displays or packaging labels. Premiums, discounts, coupons, cash
rebates, free offers and demonstrations are sales promotion tools a retailer may
use. Though this is a non-personal form of communication, the objective of most
sales promotion programs is to arouse consumer interest in the product or service
being promoted. Sales promotions are not only targeted at the final consumers,
but also at the retailer's employees and the members of the distribution channel.
Public Relations
Public relations is a form of unpaid impersonal communication. It is the process
of reaching the target customers through an unpaid and impersonal channel, such
as an article about the store or its products in a leading newspaper. These tools
are aimed at establishing good relations with the consumers and other people
through publicity, a good corporate image, and management of unfavorable
rumors or issues. Public relations has many unique features. It is highly
credible -- news items and features appear more realistic to the consumers than

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advertisements. Public relations enable the store to reach out to many target
customers who cannot be accessed by salespersons or advertisements or those
potential consumers who avoid meeting sales personnel and looking at
advertisements. The message is conveyed to the target customers as news rather
than a sales-related communication.
The most effective unpaid personal communication tool is word-of-mouth.
Retailers can use this tool effectively only by providing high-quality service to
the customers. However, if the word-of mouth amounts to negative
communication, it can have a significant negative impact on the retailer.
Personal Selling
Personal selling is a form of paid personal communication, wherein the sales
personnel satisfy the customers' needs, by exchanging information through
personal interactions. It is a two-way communication process aimed at selling
products and/or services and building relationships with customers and other
people. This promotional tool is personal in nature and it thus enables the retailer
to modify its services as per the customer's needs. It also enables the retailer to
get customer feedback and ideas to improve customer service immediately. The
sales personnel can modify the product-related information according to the
customer's needs and present the same in a more effective manner. Sales
presentations, trade shows and incentive programs are all forms of personal
selling.

Example: D-Mart’s Retail Promotion Program to Increase Customer

Base and Increase Sales
D-Mart, ranked as one of the top retail brands is a pure food and grocery
retailer, founded and owned by Radhakrishnan Damani. The key to D-Mart’s
success is attributed to its focus on both quality and affordability. Targeting
middle income group customers, D-Mart’s promotion focuses on value pricing
and affordability. D-Mart buys products in bulk directly from manufacturers
(avoiding middlemen) for all its stores and it passes on the benefit to customers
by offering deep discounts on products. The interior of the store is simple. Most
D-Mart stores are located in the outskirts of the city which also helps reduce
real estate costs.
D-Mart’s Promotion activities play a major role in maximizing sales,
increasing customer base, and maintaining excellent customer connect and
relationships. Gift coupons are given to customers on purchase of a goods of
certain pre-determined value. Discounts are offered during festival seasons.
For instance, during Raksha Bandhan chocolates and certain other gift products
were offered at discounted rates.
Contd….

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 Unit 18: Retail Promotion Mix

D-Mart puts up hoardings in important locations in the city to enhance brand

visibility and awareness. The retail store’s discount schemes and sales
promotion events are notified to customers through newspaper advertisements.
To enhance customer experience during the sales promotion events, the retail
store has put in place a good queue management system that minimizes waiting
time and facilitates impulse purchases. Loyal customers are given reward
points, gift vouchers, scratch cards, etc. to encourage them to visit the store
again. Value retailing is the key to the strong customer base and the customer
loyalty that the store enjoys. D-Mart also engages in CSR activities to improve
brand image and goodwill.
Sources: D Mart: Strategies that make it a success”, The brands of India, 22/06/2021
i) https://thebrandsofindia.com/dmart-strategies-that-make-it-a-success/
ii) https://www.linkedin.com/pulse/success-story-dmart-retail-industry-po-hway-consultants-
co/?trk=pulse-article_more-articles_related-content-card Accessed on 26/09/2022

18.4.2 Store Atmosphere

Maintaining a good store atmosphere is a paid form of impersonal
communication. It involves all the attributes of the store like its architecture,
layout, design, displays, color scheme, lighting, temperature control, music and
fragrance. These elements are referred to as atmospherics.
The retailer must be careful while using any of these methods of communication,
which have their own advantages and disadvantages. Table 18.2 shows the
objectives, advantages and disadvantages of the different communication
methods. The advantages and disadvantages of these communication methods can
be analyzed on the basis of four factors – control, flexibility, credibility and costs.
Control: Retailers have a greater control over paid forms of communication than
over unpaid forms of communication. In case of advertising, sales promotion and
enhancing the store atmosphere, retailers can determine the content of the
message and the time of its delivery. But they have relatively less control over
the other forms of paid communication, because every salesperson might
communicate a different message. Further, the retailer can exercise very little
control on the content of the message sent through public relations and word of
mouth.
Flexibility: Personal selling is the most flexible method of communication
between the retailer and the customer. As it involves the interaction of the sales
personnel with each customer, identifying the specific needs of the customers and
tailoring the product or service as per the customer's needs becomes convenient.
The other methods of communication are not so flexible. For instance,
advertisements convey the same message to every target customer.
Credibility: Consumers consider the information that is conveyed through
publicity and word of mouth communication more credible when compared to

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the information conveyed through paid communication. For instance, the

information given by a friend on a newly opened food joint would influence an
individual more than the advertisements or the information given by its sales
personnel.
Costs: Though publicity and word of mouth are referred to as unpaid forms of
communication, retailers generally incur significant costs in organizing an event
that would make a good news item.
The effectiveness of the various communication methods in fulfilling their tasks
shows considerable variation because of differences in cost, credibility, flexibility
and control mentioned earlier here. Table 18.2 below gives the synopsis about the
different methods discussed above.

Table 18.2: Objectives, Advantages and Disadvantages of Various

Communication Methods

Advertising Objectives: Increase short term sales, increase customer traffic,

reinforce the retail image, inform the target customers about the
merchandise and services offered, ease the salesperson’s job
and create demand for its private labels.
Advantages: Ability to attract a large audience; low cost per
reader, listener or viewer; availability of a number of alternative
media vehicles; control over the content; timing and length of
the message.
Disadvantages: Inability to tailor the message according to the
tastes of the target customers, inability to emphasize the
individual customer’s needs, need for huge investments for
some types of advertisements, brevity of the advertisements
often limiting the information conveyed, direct mails and
pamphlets being discarded without even reading the message.

Sales Objectives: Increase short term sales volume, sustain the

Promotion loyalty of the customer, focus on novelty, support other
promotional tools
Advantages: Highly attractive, uniqueness of the themes and
tools used, ability to provide the customer with additional value
like free gifts/merchandise, attract customers and sustain
customer loyalty, increase impulse buying, customers can
participate in the contest and enjoy the demonstrations.
Disadvantages: Difficulty in pulling back certain promotions
without adverse reaction from customers. Using routine
promotional schemes may hamper the image of the store.
Contd….

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 Unit 18: Retail Promotion Mix

Sometimes retailers might emphasize on some trivial points

rather than the merchandise offered, additional services
provided, and the prices. Short term influence can be used only
along with other promotional tools.
Personal Objectives: Persuade the customers to buy the merchandise,
Selling complete transactions with customers, create awareness about
merchandise through in-store selling and telemarketing,
provide feedback to the top management of the retail
organization, provide required customer service and ensure
customer satisfaction.
Advantages: Ability to modify the message according to
customer needs, flexibility of the salespersons in addressing the
various customer needs, increased attention of the customer to
the message being conveyed, greater response of the customers
to personal selling than to advertisements, ability to provide
immediate feedback
Disadvantages: Reach is limited to a small number of target
customers at a particular time, high costs of interaction with
each customer, inability to attract customers to the store
initially, may not promote self-service (which may be preferred
by many customers). Some customers may regard sales
personnel to be aggressive.
Public Objectives: Increase awareness about the retailer and its
Relations strategy, improve the retailer’s image and project the retailer as
a contributor to the quality of people’s life. Show
innovativeness, convey a favorable message in a credible
manner, and minimize the promotional costs.
Advantages: Enhances the store image, establishes credibility
through an objective source. It comes free of cost, targets and
addresses mass audience, news coverage receives more public
attention than advertisements.
Disadvantages: Some retailers might not spend money on
building up their image; less control over the message, its
timing and its location, greater short term suitability, retailers
might have to bear the costs of public relations staff.

Compiled from different sources by ICFAI Research Center.

However, advertising and public relations have been found to be the most cost-
effective methods of communication between the customers and the retailer about
the merchandise or services offered by the retailer. In order to persuade the
customer to buy the merchandise, retailers use promotional tools like personal

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selling, sales promotion, store atmosphere and visual merchandising. Retailers

remind the customers about their products and incite them to repeat purchases, by
adopting the image advertising strategy.
The retailer should ideally make all these individual elements of communication
work together so that they reinforce each other, for accomplishing its overall
communication objectives. The guidelines for developing a promotional strategy
is as follows:
Retailers should -
1. Use only those promotional tools that are pertinent with, and enhance, the
image of the store.
2. In order to develop effective promotional strategies in the future, evaluate the
success and failure of every promotional tool, which they use.
3. Evaluate new promotional tools prior to making any big investments and
using them on a large scale.
4. Use tools that appeal to their target customers and are realistic to fulfill.
5. Ensure that their objectives are measurable and achievable.
6. Develop not just advertisements, but complete promotional campaign.
7. Note that new stores or outlets require higher promotional budgets than the
established ones.
8. Note that the stores or outlets located in isolated or standalone places require
more promotional activities than the stores in more noticeable locations.
Instead of developing separate programs for sales associates, advertising and
sales promotion, the retailers should combine all these activities into a single
communication program, usually referred to as an integrated marketing
communications program. The absence of an integrated marketing
communications program might lead to the individual communication methods
working at cross-purposes. Thus, an integrated marketing communication
program can be defined as the strategic integration of various methods of
communication to develop a comprehensive and consistent message.

18.5 Planning Retail Communication Program

A well planned retail communication program plays a pivotal role in the retailer's
effectiveness in communicating with the customers. Some of the common steps
in planning a retail communication program are:
 Establishing the communication objectives.
 Determining the promotional budgets.
 Assigning the promotional budgets to various communication activities.
 Implementing and evaluating the communication program.

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 Unit 18: Retail Promotion Mix

Figure 18.1 illustrates the steps for developing a retail communication program.
Figure 18.1: Steps for Developing a Retail Communication Program

Setting Objectives
(Positioning, Sales targets and Communication objectives)

Determining Budgets
(Marginal analysis, Objective and Task method, and Thumb rule method)

Budget Allocation

Implementation and Evaluation of the Communication Program

Source: ICFAI Research Center

Establishing Objectives
Establishing clearly defined communication objectives is the first step in
developing a successful promotional program. This gives proper direction to
people handling the implementation of the communication program. It forms a
basis for measuring the effectiveness of the program. While some of these
programs (aimed at developing an image of the retailer in the customer's view or
changing the consumer's perception of the retailer) have long term implications,
some other programs (for example, aimed at increasing the customer traffic in the
store during weekends) have short term implications. However, promotional
objectives, in a broad sense, include increasing sales, stimulating impulse buying,
increasing customer traffic, generating leads for the sales personnel, reinforcing
the store image, informing the customers about the products, increasing the
popularity of the new stores, strengthening the manufacturer's support, providing
quality customer service, strengthening customer relations, and building and
maintaining customer loyalty. While developing a promotional strategy, retailers
should decide upon their promotional objectives from the ones mentioned above.
Retailers should state their promotional objectives as precisely as possible.
Hence, aiming at increasing the store's sales is not enough. It is essential to set an
objective that is measurable in quantitative terms. For instance, the objective of a
retailer may be to increase its sales by 20 percent. With this kind of a promotional
objective, the retailer can then measure the effectiveness of its promotional plan.
The three main factors that a retailer should consider while setting objectives are
positioning, sales targets, and communication objectives.

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Positioning
Positioning can be defined as the process of developing and implementing a retail
communication program that creates an image of the retailer in the mind of the
consumers, against the backdrop of the images of its competitors. Positioning
gives the retail store long term competitive advantage. Generally, positioning
helps the customers associate a retailer with the particular merchandise category
or a benefit it offers. Retailers also set for themselves some specific positioning
objectives.
There are various positioning objectives. Some important ones are discussed
below:
1. Merchandise Category: Retailers usually try to become as unique as possible
in the merchandise category offered. For instance, Himalaya Book Depot is
associated with books and other stationary items.
2. Price and Quality: Some retailers position themselves as selling high fashion
goods at high prices. Some retailers may position themselves as selling good
merchandise, service and good value at low prices.
3. Retailers can associate their stores with some special attributes like service
or convenience, for example convenience stores.
4. Sometimes retailers can associate their stores with particular lifestyles,
activities or products. For instance, a retailer might offer computer books
only.
Example: Amazon’s ‘Make in India’ Connect with Indians
Indian Prime Minister’s Atmanirbhar Bharat’ (self-reliant/sufficient India) that
gathered momentum gave a boost to the Indian economy and created a sense
of pride and newfound confidence in Indian nationals.
In September 2020, E-Commerce giant, Amazon came out with a print-
advertisement whose ad-copy resonated with the national mood. The ad stated
that Amazon Market place facilitates lakhs and lakhs of Indian sellers, artisans,
and delivery partners to come together to bring smiles to the people of the
country. Amazon’s CEO ‘Jeff Bezos’ said that Amazon would facilitate export
of ‘Make in India’ products worth $10 billion by 2025. The full-page ad
released in ‘Economic Times’ also featured Amazon officials who stated that
the company had made a commitment to digitize 10 million MSMEs (Medium
and Small Enterprises) to provide 1 million incremental jobs and drive
$10 billion worth ‘Make in India’ exports.
Through this Corporate Ad, the world’s largest E-Commerce company has
positioned Amazon Marketplace as a platform that contributes its bit towards
the cause of strengthening the Indian economy. The Amazon platform provides
a level playing field to lakhs and lakhs of small producers and merchants to
sell their ‘Made in India’ products to people worldwide.
Contd….

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 Unit 18: Retail Promotion Mix

Amazon’s ‘Make in India’ theme targets government and policy makers and
policy influencers by showing its solidarity to the ‘Atmanirbhar’ policy. In
addition, it strikes an emotional connect by touching the heart of millions of
patriotic Indians by explaining how Amazon helps distribute ‘Made in India’
products to the world.
Source: Misbaah Mansuri, “Why Amazon talks about its India connect in latest print ad?”,
Exchange4Media e4m, 1/09/2020
https://www.exchange4media.com/advertising-news/why-amazon-talks-about-its-india-connect-
in-latest-print-ad-107235.html Accessed on 26/09/2022

Sales Targets
Increasing the sales for a specific period is the most common short term objective
of retailers. For instance, retailers generally offer a sale during which all or part
of the merchandise present in the store is sold at a discount price. Supermarkets
frequently advertise their money saver offers.
Communication Objectives
Though the final objective of retailers is to derive long term profits and short term
sales, they generally set communication linked objectives for planning
promotional programs and measuring their effectiveness, instead of sales
objectives or targets. Communication objectives usually relate to specific goals.
These goals are concerned with the effect of retail promotion mix on the consumer
decision-making process. In order to implement a communication program and
to measure its effectiveness, retailers should state their communication objectives
clearly in quantitative terms. The retailer should also clearly mention its target
customers for the promotion mix with the expected degree of change (in the sales
target percentages) and the time to realize this change. Once the communication,
positioning and sales objectives have been established, the next step is to
determine the promotional budget.
Determining the Promotional Budget
A retailer can determine the promotional budget through the marginal analysis
method, objective and task method or the thumb rule method. The marginal
analysis method is one of the most accurate methods. The problem is that retailers
generally do not have sufficient information to conduct a complete marginal
analysis. However, the marginal analysis method provides a direction to
managers in setting a promotional budget.
Marginal Analysis Method
Organizations may increase their promotional costs as long as the Return on
Investment is more than the investment. This economic principle forms the basis
of the marginal analysis method. Table 18.3 illustrates how a specialty men's suit
store determines its promotional budget for the coming months/seasons. For the
various levels of promotional expenditures (A), the retailer has to determine the

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sales of its stores (B), gross margin C), rental costs (D), and personnel costs
(E). The sales contribution prior to the promotional expenditure (F) is calculated.
The profits after deducting the promotional expenditure (G) are also calculated.
The retailer might have estimated the correlation between promotional
expenditure and sales either through judgment and experience, or by analyzing
the past trends in establishing a relationship between the promotional expenditure
and the sales generated. Analyzing existing data can help the retailer gather
information about the gross margin and other expenditure as a percentage of sales.
Table 18.3 shows that at low levels of promotional expenditure, an additional
promotional expenditure of ₹ 250,000 resulted in a more than ₹ 250,000 of
incremental contribution to sales.
Table 18.3: Illustration of Marginal Analysis (All units in Rupees Thousands)

Contribution prior
Personnel Costs

to promotional
Gross Margin

F = C  D E
Promotional

Rental costs
expenditure

expenditure

G=FA
Profit
Sales
A

D
B

E
0 12000 4800 2200 2610 10 10
250 14000 5600 2400 2670 530 280
500 16500 6600 2650 2745 1205 705
750 19000 7600 2900 2820 1880 1130
1000 21000 8400 3100 2880 2420 1420
1250 23000 9200 3300 2940 2960 1710
1500 25000 10000 3500 3000 3500 2000
1750 27000 10800 3700 3060 4040 2290
Last Season

2000 28500 11400 3850 3105 4445 2445

2250 30000 12000 4000 3150 4850 2600
2500 31250 12500 4125 3187 5188 2688
2750 32500 13000 4250 3225 5525 2775
3000 33500 13400 4350 3255 5795 2795
3250 34500 13800 4450 3285 6065 2815
3500 35250 14100 4525 3307 6268 2768
Best Profits

3750 35750 14300 4575 3322 6403 2653

4000 36250 14500 4625 3337 6538 2538
4250 36750 14700 4675 3352 6673 2423
4500 37250 14900 4725 3367 6808 2308
4750 37500 15000 4750 3375 6875 2125
Source: ICFAI Research Center.

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 Unit 18: Retail Promotion Mix

A ₹ 250,000 increase in the promotional expenditure of ₹ 750,000, has led to an

increase in sales worth ₹ 540,000 (` 2,420,000- ₹ 1,880,000). At the promotional
expenditure level of ₹ 3,250,000, an increase of ₹ 250,000 has been found to
generate less than ₹ 250,000 of the incremental contribution. For instance, an
increment of ₹ 250,000 in the promotional budget of ₹ 3,250,000 has led to an
incremental contribution of ₹ 202,500 only. In this example, a promotional
budget of ₹ 3,250,000, seems to have generated maximum profits. But, it is also
found that the promotional budget levels from ₹ 2,750,000 to ₹ 3,500,000, have
generated almost similar profits. Therefore, the retailer may adopt a conservative
approach and decide to allocate ₹ 2,750,000 to its promotional budget. In many
situations, it may be very difficult for managers to conduct a marginal analysis
because of the complexity of connecting the promotional budgets and the sales
generated. In some cases, retailers conduct experiments to get a clear picture of
the relationship between the promotional budgets and the sales generated.
The other methods that retailers use to determine promotional budgets are the
objective and task method, and thumb rule methods such as the affordable
method, percentage of sales method and competitive parity method. These
methods are less sophisticated than the marginal analysis method, and are simple
to use.
Objective and Task Method
Retailers use the objective and task method to determine their promotional
budget. It adopts this method with the twin aims of (i) taking up a particular task;
and (ii) achieving certain communication objectives. The retailer should first
establish its communication objectives in order to use the objective and task
method. Once the communication objectives are established, the required tasks
for achieving them and their costs should be determined. The sum of the costs of
all the tasks required to achieve the communication objectives is the promotional
budget.
Thumb Rule Method
While the marginal analysis method and the objective and task method help the
retailer determine its promotional budget by measuring the effect of the
promotional activities on its communication and sales objectives, the thumb rule
method uses historical data about the retailer's sales and promotional activities to
determine the current promotional expenditure. There are three types of thumb
rule methods:
 Affordable method
 Percentage of sales method
 Competitive parity method

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Block 5: Retail Marketing

Retailers using the affordable method should first determine their sales targets
and their expenditure for that budgeting period (without taking the promotional
expenditure into account). The difference between the sales targets and the other
expenditure is then added to the projected profits, which gives the promotional
budget. Thus, the affordable method helps determine what amount of money is
available for promotional activities after budgeting for profits and operational
expenditure. However, the major drawback of this method is that it is based on
the assumption that the promotional expenditure does not influence the sales and
profits generated. Though promotional expenditure is regarded as the cost of
running a business, retailers using the affordable method, generally cut the
unnecessary promotional costs if the expected sales are not generated.
In percentage of sales method, the promotional expenditure is a fixed percentage
of the predicted sales. In this method, the retailer decides on a promotion-to-sales
ratio, and then the value of the promotional budget is worked out on the basis of
the expected sales for the next year. Promotional budget can be calculated using
the following equation.
Promotional budget = Expected sales (in Rupees) x Promotion-to-sales ratio
(in %)

For instance, if a retailer has decided on a 10 percent promotion-to-sales ratio and

the expected sales for the next year is ₹ 5,000,000, then the promotional budget
according to the percentage of sales method would be the following:
Promotional budget = ₹ 5,000,000 x 10% = ₹ 5,00,000

The main drawback of this method is that the promotional budget is calculated on
the basis of the percentage that was used in the past or on the percentage that is
being used by its competitors. But, using the same percentages as their
competitors might not be appropriate for several reasons. The retailer's stores
might be situated in a better location than its competitors due to which customers
might be more aware of the retailer's presence. In this case there would be no need
to spend heavily on promotion, unlike the case of the competitors situated in
remote locations. The major advantage for a retailer, while determining the
promotional budget using percentage of sales method, is that its promotional
budget will not exceed its capacity. Since the promotional expenditure is
determined on the basis of its sales forecasts, promotional costs would increase
only when its sales increase. Though an increase in sales would permit the retailer
to communicate with its customers more aggressively, a slight decline in sales
will affect a proportional decrease in the promotional costs, which can speed up
the sales decline. Table 18.4 illustrates the percentage of sales method of
determining the promotional budget.

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 Unit 18: Retail Promotion Mix

Table 18.4: Illustration of Setting Promotional Budget as a

Percentage of Sales

Estimated Sales (in Rupees Lakhs) 50

Percentage of sales towards promotional budget 5%
Promotional expenditure in Rupees 250,000
Promotional Expenses in Rupees
Newspaper advertisements 75,000
Magazine advertisements 50,000
Brochures 25,000
Samples 35,000
Event sponsorships 40,000
Danglers and display material 25,000
Total Promotional costs 250,000
Source: ICFAI Research Center.

Retailers using the competitive parity method change their promotional budget,
depending on the actions taken by their competitors. For instance, if a leading
retailer located in a particular area reduces its promotional expenditure by 5%,
then all the other retailers in that area reduce their promotional expenditure by
5%. The major merits of this method are that it is based on comparison and it is
market driven and conservative. Its demerits are that it is a follower's strategy,
and that it is difficult to obtain detailed information about competitor’s strategies.
Above all, it is based on the assumption that the competitors are similar with
regard to many micro factors like the size of the business, the target customers,
the location, the merchandise and services offered, and the pricing strategies. As
no two retailers can be similar in all these aspects, they would require different
promotional strategies and hence, different promotional budgets.

Activity 18.1
Do a comparative study of the New Year Promotional Offers of two leading
consumer appliance stores, say Croma, Vivek, Sharptronics, etc. Are there
similarities and differences in the offer schemes? If so, list out and analyze the
similarities and differences and study how they would impact sales.

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Block 5: Retail Marketing

Check Your Progress - 1

1. Providing information to the consumer on the retailer's store, its merchandise
and services it offers, and influencing the perceptions, attitude and behavior
of the consumers towards the retailer is referred to as which of the following?
a. Publicity
b. Communication
c. Advertising
d. Promotion
e. Sales Promotion
2. The communication process involves the transmission of meaningful
messages to the target market by the retailers. Typically, a communication
process consists of which of the following elements in order?
a. Sender, Encoding, Message, Media, Decoding, Receiver, Response,
Feedback, Noise
b. Message, Media, Decoding, Response, Noise
c. Sender, Encoding, Receiver, Response, Feedback, Noise
d. Sender, Encoding, Media, Decoding, Legal factors
e. Sender, Encoding, Message, Media, Decoding, Legal factors
3. Which of the following are the key functions of a retail promotion program?
a. Informing, persisting and reminding
b. Insisting, persuading and reminding
c. Informing, persuading and reminding
d. Instructing, persuading and reminding
e. Informing, persuading and requesting
4. Which of the following sales promotion techniques is aimed at customer
retention?
a. Point of Purchase (POP)
b. Contest
c. Sweepstakes
d. Prizes
e. Membership cards that rewards regular customers
5. Which of the following is a paid form of non-personal communication, and
promotion of goods or services by an identified sponsor?
a. Public relation
b. Advertising
c. Promotion
d. Publicity
e. Testimonial

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 Unit 18: Retail Promotion Mix

18.6 Assigning the Promotional Budget

To decide the promotional strategy of a product to reach the intended and targeted
audience, it is important to decide on the promotional budget. Once the
promotional budget is determined, the next step in the process of promotional
planning is to assign the budget to specific communication elements, product
categories and geographic areas. Assigning the promotional budget effectively is
more important than determining this budget. Retailers can accomplish their
communication objectives even after reducing the promotional expenditure by
effectively assigning the promotional budget to different communication
elements. To do this, the retailers should distribute the promotional budgets
judiciously among all the geographic areas in which they are located and all the
merchandise categories. But this technique does not maximize the profits as it
does not consider the fact that promotional programs can be more effective for
some product categories, and in some geographic areas. Retailers can adopt
another approach for assigning the promotional budget – allocating the
promotional budget on the basis of estimated sales or the contribution of each
merchandise category to the overall sales. While taking budget allocation
decisions, retailers should apply the principles of marginal analysis. A major
portion of the budgets must be assigned to those geographical areas that give
maximum returns for every rupee spent. This approach is sometimes referred to
as the 'high assay principle'.

Example: Digital to Dominate the Promotion Budget in 2025

Zenith, an ROI agency (multichannel digital marketing agency that helps
maximize returns on clients’ marketing expenditure) has predicted that India
Inc whose ad-spends is predicted to increase by 21% in 2022 would be the
fastest growing market for advertisement spending in the years to come. The
global ad-spends is expected to grow by 8% in 2022. The growth in the global
ad-spends is accounted for by USA (9.1%), China (6.2%), Japan (6.2%) and
the UK (5.8%). India, ranked fifth after the UK, accounted for 4.6% of the
growth in ad-spends even though it was ranked the twelfth-largest ad-market.
FMCG, Fintech, Edutech and Food tech and new app-based startups drive the
ad-spend growth in India.
Zenith has further predicted that in 2024, 65% of ad-budgets would be spent
on the digital media as compared to 62% in 2022 and 59% in 2021. Among
various digital media channels, online video is expected to emerge as the fastest
growing channels. Its annual average growth rate between 2021 and 2024 is
expected to be about 15.4%.
Social media ad spend is expected to account for 25% of expenditure across all
media.
Contd….

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Block 5: Retail Marketing

Advertising in cinema and hoardings and other out-of-home channels which

were witnessing a healthy growth prior to Covid have taken a beating due to
the pandemic.
Source: Business Standard Web Team “India will be fastest-growing market with 21% growth in
ad spends in 2022: Zenith, Best of Media, 8/6/2022
https://bestmediainfo.com/2022/06/india-will-be-fastestgrowing-market-with-21-growth-in-ad-
spends-in-2022-zenith#:~:text=Zenith%20has%20forecast%20that%20social,on%
20advertising%20across%20all%20media. Accessed on 26/09/2022

18.7 Implementing the Advertising Programs

Retail advertising helps in creating an image of a retailer and reinforcing it. It
informs the target customers about the merchandise offered by the retailer and
their prices, and sale periods. Though some big retailers aim at image building
through advertising, most of the small-time and medium retailers take up
advertising for achieving short term objectives. But retailers, while using
advertisements, must keep in mind the legal issues that may arise. These may
include deceptive advertising tactics like bait-and-switch, advertising
substantiation, corrective advertising, price comparison and puffery. Retailers,
while implementing advertising programs, should decide upon the message they
intend to convey, identify a particular media to transmit the message, and then
determine the timing and frequency of the message.

18.7.1 Creating the Message

Many retailers often develop advertising messages that have an immediate
impact, although it is short-lived. The need for creating an immediate impact
requires an ad copy writing style that would catch the attention of the target
customers. Retailers seek help from various sources in developing an ad-
campaign - co-operative advertising, advertising agencies, and the local media.

Co-operative advertising
Co-operative advertising involves two or more parties sharing the costs and the
responsibilities of making decisions. In general, manufacturers support retailers
by sharing the costs of advertising their products. It is a form of incentive given
by the manufacturers to the retailers, to encourage them to promote and advertise
a particular product. This cooperative support is offered mostly by manufacturers
of consumer goods. Retailers in some places contribute collectively to each
other’s advertising programs. Based on this, co-operative advertising can be
categorized as vertical cooperative advertising and horizontal co-operative
advertising. Under vertical cooperative advertising, the advertising costs are
shared by the retailer and the manufacturer or the wholesaler. In a horizontal
cooperative advertising, the advertising costs are shared by a group of retailers.

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Manufacturers have many motives behind providing cooperative support to

retailers regarding advertising expenditure. This increases the manufacturers'
local exposure. Manufacturers may like to leverage the image of the retailer.
Retailers can derive significant promotional advantage through cooperative
advertising, as long as they are careful in selecting the opportunities. But, the
retailer has to accept some terms and conditions laid down by the manufacturers
or the wholesalers. Retailers can increase their advertising expenditure through
cooperative advertising. Apart from reducing costs (because advertising costs are
shared by vendors), co-operative advertising helps the retailer associate its name
with popular national brands.
However, co-operative advertising has some drawbacks. Conflicts may arise
between the manufacturers/vendors and the retailers while advertising their own
products. This conflict in goals may have a significant impact on the effectiveness
of cooperative advertising for a retailer. Further, the advertisements developed by
the manufacturer/ vendor are frequently used by various competing retailers as
the advertisement features a list of names and addresses of all the retailers that
sell the manufacturer’s brands. Thus, retailers cannot distinguish themselves from
their competitors if they use co-operative advertising.
Advertising Agencies
Large retailers generally have specialized departments that take care of their
advertising needs. These departments or agencies create advertisements aimed at
building the image of the store. Sometimes, small retailers too engage local
advertising agencies in planning and developing their advertisements. Such
advertising agencies are generally more proficient in planning and developing
their advertisements than the retailer's employees. Such agencies also help
retailers develop special promotional programs like contests.
Apart from selling space in newspapers and broadcast time on radio and
television, the advertising media/agencies offers various services to the local
retailers. The services offered might range from planning an advertising program
to designing the advertisement and copy-writing. As media organizations conduct
market research on their readership, they can provide retailers with information
about the shopping habits of people in a particular area.
Selecting Advertising Media
The advertising message of a retailer must be carried to its target customers
through a communication vehicle - the media. The most common media used for
retail advertising are newspapers, magazines, direct mail, radio, television,
hoarding and other outdoor media. From a managerial perspective, newspapers
and television are considered to be mass media that target the total market, while
other media like the radio, magazines, direct mail and the Internet are used for

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targeting specific markets. The following are the merits and demerits of the
various media.
Newspaper advertising is the most frequently used medium by a retailer for the
following reasons:

 Newspapers are locally based, and hence, they have a stronger influence on
people in the local trade areas of the retailer.
 Developing newspaper advertisements does not require excellent technical
skills.
 Newspaper advertising is advantageous, especially for the small retailers.
 There is very little lead time between the creation of the advertisement and
its publication.
The following are the disadvantages of newspaper advertising:
 The target consumer may read a newspaper in which the ad is published, but
may not notice the advertisement.
 The life span of an issue of a newspaper is very short and so is the case with
advertisements published in it.
 The poor print quality of newspapers makes the advertisements unappealing.
 As newspapers have a wider reach they do not target specific groups of
customers. This way, it actually does not do justice to the money spent by the
retailer on advertisements.
In spite of all these disadvantages, newspapers have been the primary choice of
advertising medium for many retailers.
Television Advertisements: Some retailers have been using television as their
advertising medium. It has been found through observations over time that visual
advertisements stay for a longer period in the consumer's memory, when
compared to the verbal messages conveyed by any other media. Although
advertising on the television is more effective than any other method, it has its
own limitations. Some of these are as follows:
 Television advertisements are so expensive that a few well-designed
advertisements can consume the entire advertising budget of a retailer.
 The reach of a television advertisement can be much beyond the trading area
of a small or a medium sized retailer.
 Nowadays, too many ads are telecast (very frequently) on television, due to
the heavy competition between companies to catch viewers' attention. The
target audience may leave the room or switch to another channel during the
commercial breaks in a program. Such behavior of viewers has become a
complex problem for the concerned retailers, with increased (and increasing)

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number of channels on cable and satellite television. Due to this increase in

the number of channels, television advertising may catch the attention of a
specific audience and not the mass.

In spite of its disadvantages, advertising through the television has been a

powerful tool for generating sales volumes. Also, the constantly expanding cable
television is becoming an attractive medium for many small retailers.
Radio Advertisements: Some of the retailers use radio as their advertising
medium because of its ability to transmit the retailer's messages to a selected
audience. Most regions generally have 5 to 10 radio channels, each of which is
targeted to customers in various demographic categories. As a communication
medium, radio allows retailers to use various tones and sounds in their messages.
This helps retailers develop messages that appeal highly to its target customers.
Although the radio is an efficient medium, many local radio stations do not have
the creativity required to cater to the advertisement needs of a retail store. Also,
the advertisements on the radio cannot be reused as print advertisements. Further,
the radio being a non-visual medium lacks the ability to display the merchandise
it is promoting. However, the increasing number of private FM channels in India
indicates strongly that radio will soon become a popular advertising medium.
Magazine Advertisements: Generally, it is the local retailers who advertise in
magazines that are popular with people in the retailer's local trade area. Only large
retailers can afford to allocate some of their advertising budget for magazine
advertising. And generally, such advertisements are institutional advertisements.
Advertisements through magazines can be highly effective, when compared to
newspaper ads. These advertisements have a longer exposure time, and are better
in terms of reproduction quality. However, magazine advertisements have long
lead times.
Direct marketing is regarded as the most powerful tool in a retailer's promotion
mix. Direct mail (a form of direct marketing), allows the retailer the flexibility to
tailor its message according to the requirements of its target customers. The
performance of direct mail can be measured easily, as it usually provides
feedback to the retailer. However, direct mailing is more expensive than media in
terms of the cost per contact. Also, it is the quality of the direct mail that
determines its ability to reach the target audience.
Internet Advertisements: With the number of Internet users increasing
phenomenally across the globe, the Internet is likely to emerge as a powerful
advertising medium in the near future. Internet advertisements help customers get
a better idea of the various types of products or services available with the retailer.
Also, the prices of the goods and services sold through the Internet may be lower
than those of goods or services sold traditionally at stores. However, online
advertising has some drawbacks, especially for retailers.

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Example: How Global Businesses use Social Media for Targeted Reach
and Engagement

Businesses leverage the social media network effectively to reach out to their
target customers. Different social media sites are patronized by customers from
different geographic regions and demographic characteristics.
Across different social media platforms, businesses can engage and connect
with their potential customers. For instance, luxury and fashion brands like
Burberry, Prada, Louis Vuitton, and Gap use WeChat to connect and sell their
products to high-end Chinese customers. On the other hand, Chipotle, Betty
Crocker’s Fruit Gushers effectively use TikTok to target the Chinese youth.
Global businesses can use social media platforms to reach out to specific
customer segments and gain visibility in specific geographic regions.
Norwegian Air uses Facebook and Instagram advertisements to increase
awareness of the specific flight routes it operates in certain geographic regions.
Customer segmentation happens within a social media site based on
geographic locations. For the same reasons many businesses have separate
accounts for different geographic regions and audiences. Netflix for instance,
has Twitter handles specific to different markets also for several of its shows.
There are many characteristics of social media that makes it a powerful tool
for business. However, social media enables businesses to reach out and target
customer segments and send out customized messages and offers and this
feature makes social media attractive to businesses.
Source: Katie Sehl, “Social Media for Big Companies: 10 + Inspiring Examples”, Hoot Suite,
10/5/2021
https://blog.hootsuite.com/social-media-for-big-companies/ Accessed on 27/09/2022

Characteristics of Media: When the retailer has understood the merits and
demerits of various media, he should select an appropriate medium depending on
characteristics of these media. The characteristics may be described as follows:
Communication Effectiveness: It is the ability of the media to create the desired
impact on the target audience. The print media use pictures and words for the
target customers to see and read. Radio advertising helps the target customers
'hear' the message. Television enables the target customers to watch and listen to
the retailer's message.
Geographic Selectivity: It is the ability of the media to appeal to a particular
geographic area. As the target customers of a majority of retailers come from a
particular trading area, the media should be able to create a significant impact on
the target customers in that particular area, depending on the characteristics of
their viewers or readers.

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Audience Selectivity: It is the ability of the media to convey the message to a

specific target audience within a larger population. Advertising in special
magazines targets a specific audience with special interests. (Examples are:
automobile and electronics magazines)
Flexibility: This pertains to the ability of the media to allow the advertiser to
perform several functions simultaneously. For instance, using direct mail will
allow the retailer to send coupons, gifts, postage paid envelopes, etc., to the
customer, along with the actual message.
Impact: The media can stimulate certain behavioral responses in its target
customers. For instance, television and magazines are the most preferred media
for building store image.
Prestige: Media advertisements help retailers establish themselves as prestigious
firms. Consumers generally perceive ads in the print media (certain magazines
and newspapers) as a high status symbol rather than the electronic media.
Immediacy: This is related to the ability of the media to convey messages on time.
For instance, advertisement messages can be prepared and aired within a day on
the radio. However, the lead time is generally higher in the case of magazine and
television advertisements.
Message Life: This is the duration that the message is available for the target
customers. The duration of television advertisements is generally 10 seconds and
hence, they should be repeated frequently for building a store recall. Newspaper
advertisements are alive for many hours, while magazine advertisements are
available for some days.
Coverage: This is the percentage of a specific target market that the media is able
to reach. For instance, the coverage of a particular magazine can be 55%.
Cost: This pertains to the ability of a particular media to reach a particular market
in the most cost-effective manner.
Retailers should measure the efficiency of all the media, before selecting one of
them. The efficiency of a medium can be determined by measuring the cost of
reaching a certain number of target customers, through 'cost per thousand
method'. The 'cost per thousand method' is a technique used to measure the
effectiveness of advertisements in various media, depending on their cost and
reach. Generally, the costs of advertisements in the media are represented in terms
of cost per 1000 readers/ viewers / listeners. Thus,
Cost per thousand = Cost per message / (Circulation/1000)
= (Cost per message  1000) ÷ Circulation
Frequency: This is the number of times that the media reaches the same target
customer with the same advertisement. In other words, this is a count of the
exposure of the same viewer to the same advertisement.

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Lead times are different for different media. For example, a retailer can place an
ad in a newspaper a little while before the publishing of the paper, but in order to
place an advertisement in a magazine, he would have to submit it weeks or months
in advance. Also, deciding on the content of the advertisement is extremely
important. Whether the message is written or spoken, or it is delivered personally
or otherwise, the message is the most important aspect of advertising. While
developing advertisements, retailers (or the agencies they hire) should think about
the most appropriate themes, words, headlines, captions, colors, size, layout and
position.
18.7.2 Determining the Frequency and Timing of the Advertisements
Retailers advertise their store and the merchandise offered throughout the year.
The frequency at which these advertisements appear varies, depending on the
purpose of the advertisements. But, retailers should understand that the timing
and the frequency of the advertisements would determine how frequently the
target customers notice their message. Therefore, the effectiveness of an
advertisement campaign in drawing the attention of a customer depends on the
frequency and timing of the advertisements. Frequency can be defined as the
number of times a target customer is exposed to the advertisement. Deciding the
appropriate frequency depends on what the retailer wants to achieve through the
advertisement. Generally, frequent exposure to ads influences the customer's
buying behavior. Thus, advertisements are intended to positively influence the
consumers' buying behavior, rather than building store awareness. Further, timing
the publication or broadcasting the advertisement properly is important for getting
a good return on an ad investment. Typically, an advertisement should be
published or broadcast immediately before the day on which consumers are most
likely to purchase the goods and/or services.

18.8 Evaluating the Effectiveness of Advertisements

Retailers need to assess whether advertisements are achieving their goals by
generating return on investment made on them. The ability of advertisements to
generate positive results depends on how well they are designed and how
appropriate are the decisions that were taken regarding these ads. A retailer can
make better advertising decisions only when it plans its advertising program
effectively. Some retailers have a systematic procedure for measuring the
effectiveness and efficiency of their advertisement programs.
Advertising effectiveness can be defined as the degree to which the
advertisements have produced the desired results or helped the retailer
accomplish its advertising goals. It can be also defined as the technique of
achieving the desired advertising results with the minimum possible expenditure.
The efficiency or effectiveness of retail advertising can be measured subjectively.

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Retailers should ask themselves whether they are satisfied with the returns from
their advertising programs and whether they believe that the returns were
generated with the minimum expenditure.
Retailers can measure the effectiveness of their advertising programs consistently
by:
 Publishing the same advertisement in two different media, with a mark on
each of them to distinguish one from the other. Customers should get a
discount or a free sample of a product on bringing the advertisement to the
retailer. The retailer will be able to understand which advertisement worked
better by looking at the distinguishing marks on the ads, or the mail addresses.
 Advertising a product at slightly different prices in different media or
publications. This test will prove whether the consumers will buy the product
at a higher price.
 Advertising a product only through one advertisement without promoting or
display the product in the store. The retailer should then count the number of
calls or solicitations for that product. The higher the number of calls or
solicitations for that product, the higher is the effectiveness of the
advertisement.
 Not publishing or broadcasting a regularly published or broadcast ad for some
time and checking for any effect on the sales.
 Measuring the sales volumes whenever the advertisement is placed for the
first time.
However, the retailer cannot expect immediate returns from an advertisement, as
consumers take some time to notice the advertisement and learn about the retailer.
It has been found that an individual becomes a customer after he has been exposed
nine times to an advertisement of a new company. Moreover, every three times a
prospective customer is exposed to the advertisements, he comes in contact with
the advertisement only once. This implies that a retailer has to expose the
advertisement to a prospect for an average of 27 times before he or she becomes
a customer.

Example: Key Metrics to Assess Effectiveness of Social Media Ads

A great benefit of advertising in the social media is that every single detail that
reflects effectiveness of the advertisement can be tracked down. Given below
are some important measurement metrics that helps businesses understand
whether or not the company’s social media strategy is working:
Reach is the number of people who view the content. If non-followers view
content, then the content is probably shared. Reach can be measured for each
individual video or story, or the average reach can be considered.
Contd….

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Audience growth rate, another measure points to the number of new followers
the brand gets in the platform within a stipulated time. When measured as a
percentage of new followers acquired against total audience, it reflects the
growing popularity of the brand.
Engagement rate measures the responses and engagement of the content by
way of shares, reactions (likes etc.) and comments.
Virality rate measures how much the content is shared and how much the
content is spreading exponentially.
Conversion rate measures the value of social content by pointing to the
number of subscriptions, sales or downloads that have occurred after viewing
the ad- content.
In addition to these several other measures such as social sentiment etc., need
to be tracked and compared with the costs paid for advertisements. Tracking
social metrics is easy for all companies and it helps them understand whether
or not their social media strategy is working.
Source: Christina Newberry, “16 Key Social Media Metrics to Track in 2022”, HootSuite,
Strategy, 23/6/2022.
https://blog.hootsuite.com/social-media-metrics/ Accessed on 27/09/2022

18.9 Implementing Sales Promotion Programs

Costco, one of the biggest membership-only retailers provides free sample lunch
every day. This habit of Costco’s has helped it reap the benefits of increased sales.
Starbuck’s loyalty program rewards its customers based on the number of stars
earned on every purchase. By doing so, it increased its sales by 11% purely
through this loyalty program. Generally, to stimulate consumer demand and
improve dealer effectiveness, retailers implement sales promotion programs.
Discount sales combined with advertising are the most common sales promotion
programs adopted by the retailers. Retailers may adopt other forms of sales
promotion programs like demonstrations, coupons, games, sweepstakes and
contests. Sale is the most common promotional tool used by a retailer to increase
the customer traffic and to clear the old merchandise. A sale can be promoted
either through advertisements or through displays within the store. Retailers may
also offer special end-of-the-season sale to clear the merchandise that is still in
the inventory.

Example: India earned Goodwill through “Vaccine Maitri” Program

India ranks third worldwide in production of pharmaceutical products by

volume and it exports pharma products to more than 200 countries in the world.
Contd….

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As a pharmaceutical powerhouse, India provides generic medicines globally

and produces nearly 60% of the world’s vaccines, including Tetanus (DPT),
Tuberculosis, Measles, Diphtheria and Pertussis.
The ‘Vaccine Maitri’ (Vaccine Friendship) initiative, launched in January
2021, under which India gave away its domestically produced vaccines to low-
income countries has been hailed as a major diplomatic move that has
enhanced India’s status in the world. By April 2021, India had already shipped
over 66 million doses of vaccines to other countries.
Many Caribbean countries and ACP (African Caribbean and Pacific Group)
countries praised India’s effort and demanded that other countries also follow
India’s footsteps and take measures to give free vaccines to low-income
countries. India’s ‘Vaccine Maitri’ initiative was praised by the ‘WTO’ (World
Trade Organization). Caribbean countries and other low-income countries who
are members of WTO expressed deep dissatisfaction and concern about the
inequitable access of vaccines (Vaccine Inequity). These countries also pointed
out that ‘Vaccine Nationalism’ during the covid-19 crisis period would not be
prudent, as the world would be safe only when people all over the world are
vaccinated.
India’s noble and benevolent gesture enabled India to gain the goodwill of
nations. This initiative also gave good publicity to India’s indigenous vaccine,
‘Covaxin’, Made in India vaccine, ‘Covishield’ and India’s credentials as the
world’s major producer of vaccines.
Source: Amiti Sen, “India’s ‘Vaccine Maitri’ initiative earns praise at WTO”, Business Line,
3/3/2021
https://www.thehindubusinessline.com/news/national/indias-vaccine-maitri-initiative-earns-
praise-at-wto/article33979754.ece Accessed on 27809/2022

18.10 Implementing Publicity Programs

Generally, publicity is aimed at creating awareness, improving the store image,
helping the community and improving the community members' goodwill for the
store. Retailers can generate publicity by organizing events within the store and/or
by sponsoring events outside the store or any other community related activities.
Retailers generally organize fund-raising programs for charitable purposes. There
are many publicity tools that retailers use, in order to get a favorable coverage for
the events they organize - press releases, press conferences, by-lined articles and
speeches.
A press release is a statement of facts that a retailer wants to publish in a reliable
medium. Special events like fashion shows, opening a new outlet, a festival sale,
or any modification in its routine operations are all events that can be published
as a press release. Typically, a press release is supposed to contain all the
information that a journalist would seek – who, what, when, where, why and how.

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Press releases are generally one or two pages of matter printed on the retailer's
letterhead. Big retailers have their own public relations departments that create
press releases for the news media.
A press conference is a meeting with the media representatives called by the
retailer. Press conferences are usually meant for advertising major news events
like the merger of two big retail organizations, or a tie-up with any retail chain
for overseas expansion. The news media gets more information through a press
conference than from a press release.
Bylined articles are the articles written by any of the most efficient employees of
the retailer on a particular issue of the retail industry. For example, the operations
head of a retailer can write an article on the category management practices of the
industry, with special reference to its own store. These articles are usually
published in trade magazines.
Speeches are publicity tools that help retailers express their opinion in a public
forum, conference, business gathering, or industry group. Most of the speeches
are usually covered by the press to generate more publicity.
As advertising is used to target most of the potential customers, publicity is used
to reach more people. Favorable publicity is said to boost employees' morale and
improve their performance. Though much of the publicity is generated by internal
newsletters, magazines, bulletin boards and handbooks, advertising through
newspapers, TV and the radio has a greater impact on the employees than internal
sources. Like customers, employees rely more on the external sources than on the
internal sources. Publicity also has a significant impact on many stakeholders.

Activity 18.2
Make a comparative study of Amazon and Flipkart on their annual mega
savings day sale based on five newspaper articles that have made observations
and given reviews about these mega events.

Check Your Progress - 2

6. Which of the following is a process of developing and implementing a retail

communication program that creates an image of the retailer in the mind of
the consumers, against the backdrop of the images of its competitors?
a. Targeting
b. Segmenting
c. Communicating

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d. Positioning
e. Promoting
7. Thumb rule method uses historical data about the retailer's sales and
promotional activities to determine the current promotional expenditure.
Which of the following are the three types of thumb rule methods?
a. Affordable method, Percentage of sales method, and Competitive parity
method
b. Affordable method, Percentage of profit method, and Competitive parity
method
c. Capable method, Percentage of sales method, and Competitive parity
method
d. Affordable method, Percentage of sales method, and Competitive
superiority method
e. Affordable method, Percentage of sales method, and Competitive parity
method
8. The various methods of communication used by retailers have their own
advantages and disadvantages. The advantages and disadvantages of these
communication methods can be analyzed on the basis of four factors. What
are they?
a. Control, flexibility, creativity and costs
b. Control, flexibility, credibility and costs
c. Control, flexibility, credibility and profit
d. Control, feasibility, credibility and costs
e. Control, flexibility, consistency and costs
9. Under vertical cooperative advertising, the advertising costs are shared by
which of the following?
a. Distributor and manufacturer.
b. Manufacturer and wholesaler
c. Retailer and distributor
d. Retailer and manufacturer or wholesaler
e. Retailer and supplier
10. Which of the following is price bundling?
a. Multiple price units
b. Price Lining
c. Price range
d. Price clubbing
e. Discounted price

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18.11 Summary
 Advertising, sales promotions, store atmosphere, public relations, personal
selling and the word of mouth are the tools used by retailers to communicate
with their target customers.
 All these components of the promotion mix must be combined properly to
develop an integrated marketing communication system, for customers to
have a clear and distinct image of the retailer.
 Retailers develop a promotional mix in order to accomplish several
objectives, such as positioning of the retailer, increasing the customer traffic,
increasing the sales, announcing special events and providing information
about the store location and the merchandise offered.
 Determining the promotional budget is a significant task of the retailer.
Retailers should use the marginal analysis method for determining the
promotional budget, as it is the most appropriate method for determining this
budget, which can accomplish the objectives of the retailer.
 The marginal analysis method helps to find out the level of promotional
expenditure that maximizes the profits generated by the promotional mix.
 Retailers spend the largest portion of their promotional budget on developing
advertisements and on sales promotion activities. The retailer has a wide
choice of media for advertising itself, its products and its services. While
every medium has its own merits and demerits, advertising through
newspapers is effective for announcing 'sales' and reaching a larger
population, and advertising through TV facilitates the building up of a
retailer's image.
 Generally, sales promotion activities are intended to meet short term
objectives, like increasing the customer traffic in the store during weekends.
Though promotional tools like publicity campaigns and word of mouth
provide the most reliable information to the target customers, these two are
very hard to control.
 Retailers usually follow a six-step process in developing their advertising
campaigns. It involves developing the advertising objectives, determining the
advertising budget, developing the message, selecting the media, scheduling
the advertisements and measuring the effectiveness of the advertisements.
 Most of the retailers generally adopt the Cost per Thousand Method for
measuring the effectiveness of advertising in the various media activities.
 However, the sales promotion activities and publicity campaign of a retailer
must be in complete agreement with his overall promotional objectives.

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18.12 Glossary
Advertising: Advertising can be defined as any paid form of non-personal
communication and promotion of goods or services by an identified sponsor.
Audience Selectivity: It is the ability of the media to convey the message to a
specific target audience within a larger population.
Encoding: The process of representing the message in the form of words,
illustrations and images.
Frequency: It can be defined as the number of times a target customer is exposed
to the advertisement. Deciding the appropriate frequency depends on what the
retailer wants to achieve through the advertisement.
Immediacy: This is related to the ability of the media to convey messages on
time. For instance, advertisement messages can be prepared and aired within a
day on the radio.
Lead Times: Are different for different media. For example, a retailer can place
an ad in a newspaper a little while before the publishing of the paper, but in order
to place an advertisement in a magazine, he would have to submit it weeks or
months in advance.
Message Life: This is the duration that the message is available for the target
customers.
Noise: The distortion during the process of communication, that leads to
customers receiving a different message than the one originally
transmitted. Noise can arise because of a number of reasons like poor TV
reception, distraction by someone, or the competitors' message.
Point of Purchase (POP): Displays on the floor, counters and windows remind
the customers about products and stimulate their buying impulse. Sometimes
displays are provided by the manufacturers.
Press Conference: It is a meeting with the media representatives called by the
retailer. Press conferences are usually meant for advertising major news events
like the merger of two big retail organizations, or a tie-up with any retail chain
for overseas expansion.
Press Release: It is a statement of facts that a retailer wants to publish in a reliable
medium.
Public Relations: Public relations are a form of unpaid impersonal
communication. It is the process of reaching the target customers through an
unpaid and impersonal manner.
Sweepstakes: The participants fill an application form and a winner is chosen
randomly.

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18.13 Self-Assessment Test

1. What do you mean by communication? Explain its various elements.
2. What are the various methods of communicating with customers?
3. Explain the various methods of fixing promotional budget.
4. Explain the process of evaluating the effectiveness of advertisements.
5. Elucidate the criteria of selecting an advertisement medium.

18.14 Suggested Readings/Reference Material

1. Giri Arunangshu and Chatterjee Satakshi, “Retail Management: Text &
Cases” Paperback, PHI Learning Pvt. Ltd., 2021.
2. Swapna Pradhan, “Retailing Management: Text and Cases”, McGraw Hill,
Sixth Edition, 2020.
3. Barry Berman, Joel R Evans, Patrali Chatterjee and Ritu Srivastava, “Retail
Management”, Thirteenth Edition Pearson Education, 2017.
4. Gibson G. Vedamani, “Retail Management”, 5th edition, Pearson Education,
2017.

18.15 Answers to Check Your Progress Questions

1. (d) Promotion
Promotion involves providing information to the consumer on the
retailer's store, its merchandise and services it offers, and influencing the
perceptions, attitude and behavior of the consumers towards the retailer.
2. (a) Sender, Encoding, Message, Media, Decoding, Receiver, Response,
Feedback, Noise
The communication process involves the transmission of meaningful
messages to the target market by the retailers. Typically, a
communication process consists of Sender, Encoding, Message, Media,
Decoding, Receiver, Response, and Feedback and Noise.
3. (c) Informing, persuading and reminding
Informing, persuading and reminding are the key functions of the retail
promotion program.
4. (e) Membership cards that rewards regular customers
The common sales promotion techniques used by retailers are contests,
sweepstakes, coupons, frequent shopper/frequent flyer programs, prizes,
samples, and membership cards. Out of these, membership cards and
rewarding of regular customers (option ‘e’) help in customer retention
to a greater extent.

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5. (c) Advertising
Any paid form of non-personal communication, and promotion of goods
or services by an identified sponsor is called advertising.
6. (d) Positioning
Positioning can be defined as the process of developing and
implementing a retail communication program that creates an image of
the retailer in the mind of the consumers, against the backdrop of the
images of its competitors.
7. (a) Affordable method, Percentage of sales method, and Competitive
parity method
Thumb rule method uses historical data about the retailer's sales and
promotional activities to determine the current promotional expenditure.
The three types of thumb rule methods are, Affordable method,
Percentage of sales method, and Competitive parity method.
8. (b) Control, flexibility, credibility and costs.
The various methods of communication used by retailers have their own
advantages and disadvantages. The advantages and disadvantages of
these communication methods can be analyzed on the basis of four
factors – control, flexibility, credibility and costs.
9. (d) Retailer and manufacturer or wholesaler
Under vertical cooperative advertising, the advertising costs are shared
by the retailer and the manufacturer or the wholesaler.
10. (d) Price clubbing
Price Bundling is clubbing of price to give an attractive offer to
customers.

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 Unit 19
Application of IT in Retailing
Structure
19.1 Introduction
19.2 Objectives
19.3 Information Technology: Concepts and Definitions
19.4 Growth of IT in Retailing
19.5 Capturing Point of Sale (PoS) Data
19.6 IT: A Tool for Competitive Advantage
19.7 Use of Database, Data Mining and Business Intelligence in Retail
Marketing
19.8 E-Commerce and E-Retailing
19.9 Future Trends
19.10 Customer Relationship Management in Retailing
19.11 Summary
19.12 Glossary
19.13 Self-Assessment Test
19.14 Suggested Readings/Reference Material
19.15 Answers to Check Your Progress Questions

“Take information technology. We have winners implementing CRM (Customer

Relationship Management systems) and losers implementing CRM. What matters
in technology is that the technology actually drives either cost reduction or
superior strategy execution.”
- Tahl Raz, Award Winning Journalist and Author

19.1 Introduction
Tahl Raz, who is a storyteller of big ideas in technology, business and social
sciences, clearly points out that investment in information technology pays when
it is directed towards cost reduction or superior strategy execution. Both cost
reduction and superior strategy execution gives a company a clear competitive
advantage.
Satisfactory customer service is the key to success in retail. Over years, retailers
have been using technology to gear up and support the increase in consumer
demand. With the advent of information age, consumers are getting technology
savvy. Their shopping behavior has visibly changed and more than anything else
their expectations have changed. Retail is all about getting the attention of the
 Unit 19: Application of IT in Retailing

buyer, increasing footfalls to the store, connecting to the customer and getting
customers to buy most of their purchases in the same shop. In this high volume
business, Information technology has a key role to play in enhancing customer
satisfaction. Retailers are getting technology savvy and are utilizing technology
to cut costs and improve customer service by deploying IT processes in the
following areas of operations of a retail enterprise: Supplies, stock control,
logistics and customer service.
The current retail business environment is fretted with the challenges posed to
profitability and survival. Competition is a major challenge that hurts profitability
and to counter this challenge, retailers need to understand consumer demand in
real time at the point of interaction. IT solutions that enable insights on customer
perceptions and demand in real time are the key to crafting retail strategies that
would win customers. Competition and regulation have also reduced the margins
in retail business. Margins have become so low that to ensure long term survival,
retail businesses have to get super-efficient. IT systems that monitor and control
business processes help retail businesses in: achieving the desired efficiency and
sustaining the business in the long run.
In the previous unit, we discussed the role of the retail promotion program,
planning retail communication program, allocating the promotion budget,
implementing advertising, sales promotion and publicity programs and evaluating
the effectiveness of advertising.
In this unit, we will discuss the role and growth of IT in retailing, e-commerce
and e-tailing.

19.2 Objectives
After reading through this unit, you should be able to:
 Define the various concepts of Information Technology for application in
retail business
 Capture PoS data for increasing sales and improving business functionality
 Explain the role and growth of IT in retailing for redefining customer
experience and achieving competitive advantage
 Analyze the large quantum of data generated for building business
intelligence
 Emphasize the role of e-commerce and e-tailing in retail to expand customer
base
 Predict the future trends in retailing to keep pace with the expected growth
potential
 Discuss the essential nature of customer relationship management in retailing
that drives business growth

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19.3 Information Technology: Concepts and Definitions

Advancements in Information and Technology have resulted in the creation of IT
based solutions to increase the effectiveness of a retail enterprise. IT solutions are
being applied in backroom operations like stock control, logistics, accounting and
financial management, HR management and in customer service operations like
billing, etc. The various hardware and software tools used by retailers could be
broadly classified into 3 broad areas based on their applications: Customer
interface systems, Operation support systems and Strategic decision support
systems.
Customer interface systems: A company’s objective is to help its customers and
the following IT solutions help enhance retailer customer interface.

 Bar coding and scanners: Point of sale (PoS) systems using scanners read the
bar code in products to identify the products. PoS systems use pre-stored data
to calculate the cost and generate the bill for the customer.
 Tunnel scanning system: Uses a battery of imaging scanners on all sides to
read bar codes and optical character recognition technology (to read letters
and numbers) is the latest innovation in PoS self-checkout systems. A
consumer can push his shopping cart through an electronic gate to the point
of sale and just pay the bill.
 Radio Frequency Identification (RFID): RFID, a technology that prevents
piracy, relies on a small chip (to store data such as serial number, price of
purchase record) that is implanted in a tag that can be attached to
merchandise.
 Payment: Customers are aware that they need not carry cash to shop, because
most retail stores accept payment through credit and debit cards.
 ECC (Electronic Cheque Conversion): It is a new innovation when installed
and utilized by a retailer, allows the retailer to process cheques rapidly at a
much lesser cost without paperwork. The system allows for the cheque to be
scanned through a cheque reader or imager which captures all relevant
information in the cheque after which the cheque is stamped and returned to
the customer. The service providers charge a nominal fee for verification and
guarantee of cheques to reduce the risks associated.
 Internet: Advancements in internet technologies and popularity of smart
phones have led to the growth of E-Commerce and mobile commerce. Brick
and mortar retail stores have responded to this challenge by integrating the
physical and electronic channels to create Omni channel. Thus, by delivering
a seamless customer experience, irrespective of the channel, retail stores are
using the powerful internet and social media to facilitate customer interface.

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Operation Support System: Retailers are under tremendous pressure to

optimize in-store operations by improving performance (increase revenue,
enhance customer service) without increasing operational costs. Retail store
operations involve the following functions: supply chain and logistics,
merchandise management, marketing and sales. The various IT based solutions
and systems that help improve performance in operations are given below.
 ERP system: An ERP system is a software package that imparts efficiency in
the retail organization by integrating all the data and the processes. It uses a
central database to store all data pertaining to the various system modules and
enables monitoring and dispatching of the necessary information as the
merchandise navigate from the supplier to the point of sale.
 Retail ERP systems: Provide components customized to cater to the specific
requirements of retail organizations, support for retail operations like
management of retail tasks, tracking of inventory, ordering and
replenishment, flexibility to operations, reliable information for quick
decision and planning, support for merchandise management, support for
supply chain management and execution.
 CRM: The following sources provide key customer data: Point of Sale billing,
customer loyalty programs, social media interactions with customers and
internet. Data warehousing and mining technologies enable retailers to
extract meaningful information out of the customer data collected and
integrated. The information collected through CRM system, coupled with
customer research enable retailers to formulate customized offers and loyalty
programs to valued customers, which in turn would keep these valued
customers loyal.

Example: Sathguru’s Retail ERP Software ‘Retail Viva’

Sathguru, a Hyderabad-based ERP Software company, designed its Retail

ERP, ‘Retail Viva’ in 2007. ‘Retail Viva’, one of the most innovative and
advanced retail software, was designed with a vision to digitize retail activities
in a controlled way and help retail firms navigate some of the most complex
merchandising challenges. The power of advanced analytics enables retailers
take well informed and intelligent strategic decisions. On 3rd January 2022,
Sathguru announced that it was moving its flagship retail ERP product ‘Retail
Viva’ to the cloud. The company also unveiled another variant of ‘Retail Viva’,
‘Retail Viva Lite’ (on cloud) for small and medium sized retail companies.
Both these products together cover all segments (large, medium and small
sized retail firms) of the retail industry.
Contd….

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Modern retailers of the digital era look for agile retail solutions that enable their
administrators to manage store operations from any place and at any time.
Sathguru’s multi-module architecture helps automate all retail activities. It
takes away the stress of retail administrators and in the process enables them
to focus on their core activity, which is serving customers.
Source: “Sathguru Soft announced the movement of its flagship Retail ERP product, Retail ViVA
to the cloud, Newswires, 3/01/2022
https://www.einnews.com/pr_news/559710031/sathguru-soft-announced-the-movement-of-its-
flagship-retail-erp-product-retail-viva-to-the-cloud Accessed on 1/10/2022

Strategic Decision Support System (DSS): Modern retailers have the option of
using sophisticated DSS that can give them a competitive advantage by
facilitating intelligent decision making and also identify inventory models that
reduce wastage and optimize operations. Retailers have benefited from DSS in
 DSS can perform a range of tasks like generating meaningful sales forecasts,
identifying customer buying trends, product lifecycle forecasts.
 DSS can rate various sales promotion schemes in terms of their effectiveness
in increasing footfalls and sales revenue.
 The buying patterns of residents of a geographic area can be studied and these
inputs can help in decisions like store site location, optimal store size, floor
space etc.
 Visual merchandising is an exercise undertaken to gain attention, engage and
motivate target customers to purchase goods displayed for sale. DSS allows
for analysis of costs, comparison with revenue generated and provides for
change of visual merchandising plan periodically to optimize results.

19.4 Growth of IT in Retailing

Technology is pervading the retail scape from the entry point to the point of exit
and redefining customer experience. The IT sector too is targeting the Indian
retail industry because: customers are getting technology savvy and expect big
retail stores to provide better customer service which is possible only by
deploying IT solutions; there is a greater need to cut costs by using IT solutions
than never before.
IT has become inevitable to the modern retailer for the primary reason that it
imparts efficiency to modern retail businesses by integrating data from different
sources and making it accessible and available to the right persons at the right
time. As a tool for the retailer, IT aids in decision making by generating
meaningful information out of data. At the point of sale for instance, IT helps in
billing. The billing clerk scans the products and prepares the bill very quickly and
efficiently. The customer is happy because his waiting period is minimal and the
service is very efficient. If the customer is a regular customer, the bill clerk scans
the customer id and all data relating to the purchase gets stored. This data when

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integrated with the data collected from other billing counters and other touch
points gets integrated and converted to provide a wealth of information. The
growth of IT in retail business is thus due to the following applications of IT in
retail business.
 IT helps in the collection of the following data relating to consumers: their
purchases, purchase behavior (frequency of purchase, size of purchase, the
demographic, psychographic details of customers, etc.), consumers’ reaction
to various schemes, promotion offers, their tastes and preferences, perceived
value of merchandise.
 IT facilitates keeping track of merchandise sold and the balance inventory. It
can give alerts for reorder, in the case of products whose inventory fall below
a minimum level and hence need replenishment. For instance, in the case of
fast moving, fashionable merchandise with short product life cycle, crucial
information on sales trends, forecasts, etc. would help in planning of:
minimum inventory levels, reorder and replenishment required and pricing of
products. IT systems, thus help in preventing stock out, facilitates in planning
timely markdowns and appropriate reorder and replenishment of stock sold.
 IT helps in integration of data collected from various touch operations. Since
the employees have access to crucial information, their efficiency in servicing
customers gets enhanced considerably. For instance: Billing gets done faster,
reordering of goods is done precisely, stock out situation is prevented by
transfer of products from one retail chain to another or timely reordering,
appropriate quantity is ordered.
 Fast and efficient communication between retail chains and warehouses gets
facilitated with the use of sophisticated software. Electronic data interchange
(EDI) facilitates communication with suppliers and vendors.

Example: Whole Foods Enhances IT Capabilities to Drive Online Sales

‘Whole Foods’, one of the world’s biggest and recognized grocery brand was
founded in 1980 and in 2017 was acquired by Amazon. In 2020, when the
world was facing the Covid pandemic, Whole Foods witnessed huge growth in
online sales, and this led to the company making large investments in areas like
online order fulfilment and shipping software systems. To strengthen its IT
capabilities the company hired entry-level software developers, software
development managers, technical product managers and technical program
managers. Whole Foods’ investment in Cloud technology and machine
learning in 2022 and the following years would provide insights for operations
and key decision making. These technologies would provide key insights that
constitute the foundation for leveraging optimizations in the retail industry.
Contd….

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In the post-covid pandemic era, online grocery sales are expected to increase
and hence it would be imperative to optimize the fulfilment of online orders.
Technology and IT would play a role in reducing the time spent on order
fulfilment and cost reduction.
Thus, investment in IT would improve efficiency, reduce costs and enable
speedy order fulfilment. Growth of IT in grocery retailing would directly and
indirectly improve customer satisfaction and drive online sales.
Source: Quinton Dol, “22 companies spearheading digital innovation in their industries in
2021”, 5/01/2021
https://builtin.com/corporate-innovation/corporate-digital-innovation-transformation-2021
Accessed on 5/10/2022

19.5 Capturing Point of Sale (PoS) Data

The shopping exercise of a customer often culminates in the purchase and the
time and place of this transaction is called Point of Sale or PoS. At the PoS, the
products purchased by the customer are scanned for details like product code,
price and billed and the customer in turn makes payment and collects his
purchases and departs. Beyond these routine occurrences, PoS is also a place,
where valuable data about consumers is collected. Most retail stores use PoS
systems to effectively perform the various PoS tasks and also capture customer
data. By not only automating their transaction processes, PoS also helps retailers
in increasing their functionality by installing a network of data-capturing devices.
The various equipments, gadgets, and systems used at this point are: Weighing
scale, scanners, touch screens, electronic cash registers and IT based retail
software systems.
Universal Product Code (UPC): Most retailers use the UPC. A product’s
identification code is represented by a series of vertical lines, numbers or both.
These lines read by scanners, facilitate instant recording of data like product’s
model, size, color and other details of products sold. The sales data entered are
sent to a computer which helps monitor and control of: inventory, sales level, etc.
The UPC, which has now become the dominant technology to process product
related data of goods sold also, provides the following benefits: Reduction of
errors, information gathering, better inventory management, reduction in waiting
time for customers etc.
Electronic data interchange (EDI) and Internet Electronic data interchange
(I-EDI): EDI and I-EDI facilitate exchange of information and even exchange of
documents like purchase orders, invoices, shipping orders, etc., between suppliers
and retailers. Both vendors and retailers enhance their decision making ability by
exchanging information on the following: inventory levels, delivery time, unit
sales of specific items, replenishment required etc. The UPC scanner forms the
basis of the exchange of product related information. Thanks to EDI, retailers are
able to maintain stock of all products that are in great demand and avoid stock out

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situation. The use of paper involved in placing orders is avoided and the entire
ordering and replenishment of merchandise happens on an ongoing basis, very
efficiently using standard format, cutting down costs significantly. Incorporating
internet communications with vendors, big retailers like Walmart have started
using I-EDI. To implement EDI and I-EDI successfully, vendors have to partner
with retailers and incorporate these systems to facilitate smooth communication
and delivery of supplies.
Capturing relevant customer data at PoS: In addition to making available
product related data through UPC, the PoS is also a place where valuable
customer data can be captured. Retailers capture customer data through the
following methods:
 Retail marketers could collect data at PoS or other counters depending on the
nature of the retail business. Often asking too many details at the PoS,
especially when there is a long queue may not be feasible and there is a
possibility that consumers may get irritated. Here, the cashier at the counter
could just ask for the phone number and name and link the customer records
to the phone number. A store associate could collect other details and get the
customer to sign up for a loyalty program. In the case of certain retail shops
like jewelry, clothes, etc., consumers spend a lot of time with the sales staff.
Hence sales staffs who get friendly with customers are perhaps the right
persons to request for consumer data and create customer records.
 Loyalty Programs: Creating a loyalty program has dual purposes: To reward
loyal customers, and to capture valuable customer data. Retailers need to
decide what information they would require and also what kind of customer
insights and analysis would be required for the retail store. Keeping these
considerations as the base, a customized PoS software system could be
designed for the retail store.
 Loyalty programs help trace demographic trends in retail sales. By
connecting sales transactions with customers, relationships between sales
trends and specific demographic factors could be traced. A regular customer
could be given some incentive to provide demographic details and other
details like telephone/mobile number etc. at the time of registration. The
customer gets a unique membership number that qualifies him to get SMS
alerts about sales offers, new arrival of merchandise, contests, sweepstakes,
special festival offers, etc. In addition loyalty card holders would qualify for
extra benefits on purchases. The PoS software provides for a process to scan
the loyalty card and categorize the transactions that follow under the loyal
customer’s account. A customer-centric, well designed program helps a
retailer obtain insights on sales trends, such as: top selling products according
to gender, age and pin code, revenue trends associated with specific
geographic locations or demographic groups, etc.

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 Define triggers to implore customers into action: If a customer purchases

a consumer durable, say, washing machine, a possible trigger could be to ask
him to sign up for a 5 year warranty. Similarly, a customer who purchases
goods worth INR 800 could be prompted with an offer of goods worth INR
1200, on purchase of goods worth INR1000. These triggers could provide a
wealth of information on the customer’s response to various offers and
triggers.

Example: How Zara Benefits through Customer Information Generated

by POS and PDA Systems

Zara, a fashion retail store that seldom invests in advertising, has achieved
unparalleled success in the fashion industry. A typical Zara customer visits the
store 17 times on an average in a year. Zara uses data analytics to disrupt the
fashion market. Its store managers use insights provided by data analytics to
decide what assortment of products each Zara store should carry.
Zara staff use Personal Digital Assistants (PDAs), which are computing
devices for mobile use outside office setting, to gather customer inputs, engage
with customers and get customer feedback. Chats with customers focus on
what clothes Zara should carry and related topics like the design preferences
of customers etc. The pile of clothes that customers tried buy did not buy give
clues on what designs customers avoid or don’t prefer.
The Point-of-Sale System (POS) captures customer purchase information. POS
provides specific purchase information like how garments got ranked in terms
of sales. PDAs are linked to POS and this helps store managers circulate
updates on customer preferences. Based on the valuable information captured,
Zara managers plan styles and issue rebuy orders. Thus, POS and PDAs
together provide valuable customer information and help improve the quality
of decisions and design of fashion clothes by the planning teams.

Source: Zara Case Study, Harvard Case Solution and Analysis

https://www.thecasesolutions.com/zara-case-study-
69729#:~:text=The%20company%20has%20the%20capacity,example%2C%20Linux%2C%20Wi
ndows%2C%20or Accessed on 5/10/2022

19.6 IT: A Tool for Competitive Advantage

Retailers have realized that to succeed they need to be close to customers and
markets and IT is an important tool that provides a competitive advantage because
it facilitates this closeness. Retail Information System (RIS) is a means of
collecting, categorizing, integrating, analyzing and storing data that is put to use
in strategic decision making to improve retail processes. IT driven high tech RIS
is a database warehouse that integrates smaller databases.

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As retail businesses grow in scale, the distance between customers and the people
making strategic business decisions increases. Store line management focuses on
managing the stores. There is very little time for people to discuss customer trends
before procuring merchandise. RIS gives a competitive advantage by integrating
data from various operations and providing a singular view of data collected from
diverse departments. The retailer must have a good understanding of the
performance of the business through analysis of the Key Performance Indicators
(KPI). In the present retail scenario that is highly competitive, strategic decision
making should be powered with perfect analysis and accurate predictions. The
following are a few of the benefits of RIS:

 RIS ensures that all areas are completely integrated into the system. Also
facilitates continuous updating of data.
 With UPC, PoS systems and EDI, retrieval of data or information pertaining
to price, inventory or sales could be retrieved in less than a second and
communicated to other departments and suppliers.
 Armed with accurate information about inventory and sales trends, optimal
level of reordering could be done with suppliers (Economic order quantity
(EOQ)).
 RIS facilitates analysis of sales trends of individual products, product lines,
monitor sales of new arrivals etc. Consumer responses to the promotion
schemes, offers could be understood. RIS also helps in creating effective
loyalty programs.

19.7 Use of Database, Data Mining and Business Intelligence in

Retail Marketing
Any retail organization generates large amounts of data in their day to day
business transactions and operations. With the help of this data, retail businesses
build business intelligence to gain greater insights on their consumers, their
buying trends and behavior. Further, with IT driven systems that analyze the data
collected, they also predict sales trends. Business Intelligence is in a way a
Decision Support System (DSS) that facilitates the following functions: spot and
mine data, analyze the data and make predictions on sales trends and make sales
forecasts etc.
The scale of business done by retail companies is increasing. Simultaneously
retailers are doing business through multiple channels (in-store and online). Retail
businesses are thus sitting on a warehouse of data and the scope for data mining
to identify consumer behavior, forecast sales, predict shopping patterns and trends
in retail businesses is enormous.

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Example: How Zulily uses Data Analytics and Machine Learning to

Experiment and Predict Consumer Behaviour
Zulily LLC, an e-commerce company based in Seattle, launches thousands of
new deals and products every day, from apparel to footwear to home décor,
sourcing discounts for customers on all products. For customers using their
mobile phones or other gadgets to shop, shopping is fun as it helps them find
unique products at incredibly low prices. Zulily, an online intermediary
connects customers with the ecosystem of vendors.
Zulily’s marketing, merchandising and technology teams operate efficiently
based on insights and data solutions provided by its team of data analysts and
data scientists. For instance, in 2020, Zulily’s marketing and merchandising
team focused on product categories like bakeware, arts and crafts, toys and
outdoor playsets based on the insights provided by its team of data analysts and
increased sales and profits. In 2021, Zulily focused on pairing business analysts
with machine learning engineers to assess the quality of site experiences and
test the results of new marketing initiatives and other data-driven projects.
The company strongly believes that machine learning, data analytics and data
science have converged. In the past, business analysts helped review past
business performance. In 2021, as business analysts work along with machine
learning engineers, they are able to create new and better ways to measure, test
and forecast customer behavior as they respond to company advertisements
and engage with content messaged to them. As e-commerce grows, machine
learning and data analytics together can help measure the lifetime customer
value.
Source: Quinton Dol, “22 companies spearheading digital innovation in their industries in
2021”, 5/01/2021
https://builtin.com/corporate-innovation/corporate-digital-innovation-transformation-2021
Accessed on 6/10/2022

19.8 E-Commerce and E-Retailing

The internet is an excellent medium to communicate, promote and distribute
goods and services to customers. E-Commerce is a retail medium that facilitates
buying and selling of goods and has its application in: ‘Consumer to Business,
Business to Business and Intra-organizational’.
Valery Zwass (1992) defined e-Commerce as:
 “The sharing of business information, maintaining business relationships, and
the conducting business transactions by means of telecommunications
networks”
 E-Commerce facilitates the following functions: Electronic presentation of
information about company and goods and services offered, electronic

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publishing of advertisements, electronic posting of product information and

service offerings. Customers, in turn, can make inquiries and complaints and
in return receive e-mails as replies to their queries. e-commerce sites support
customer service. Further, e-commerce sites enable complete handling of the
transaction by facilitating order taking, bill presentation and online payment.
Internet Commerce is about businesses using the network to achieve business
goals. Many retail businesses are using online channels to support and also
compete with e-commerce players like Amazon and Flipkart.
 The following are the advantages of E-Com: Facilitates easy buying and
selling of products and better servicing of products; enables buying and
selling of products and services 24/7; customers can compare price and
product features and make informed choice; a low cost set up because it does
not require extensive floor space or parking facilities.
The internet helps the retailer in ‘fulfilling’ customer needs by delivering
customer orders quickly and accurately. Electronic retailing (e-retailing) is one
such technology which is used by the retailer for meeting customer demands. It
has evolved as a subsection of e-commerce.
E-retailing: Amazon.com uses the internet and sells physical goods to the end
users. We can say that Amazon.com is an e-commerce company and an e-retailer.
E-retailing (which includes B2B and B2C) is an electronic delivery system
connecting the retailer to the consumer. Also called e-tailing, online retailing and
internet retailing, it is defined as ‘a retail format in which the retailers
communicate with customers and offer products and services for sale over the
internet’. One specific benefit in this system is that it does not warrant direct
human interaction for transactions to take place. Through technological
convergence, e-retailing compensates the paucity of time faced by consumers to
visit the physical store and make purchases. E-retailing has been showing positive
growth signals due to its increasing usage by many retailers across the globe.
If electronic retailing is done through a mobile device, then it is termed as m-
commerce. Thus, e-retailing is expected to shape the future of retail industry
which is now facing Gen Z consumers.

Example: Walmart Leverages on its E-Commerce Capabilities to

Launch New Delivery Service for Local Online Retailers

In August 2021, Walmart launched ‘Walmart GoLocal’, a new delivery service

business which was expected to be a big boon for other local retailers. The
service would enable other merchants to use Walmart’s delivery platform to
get purchase orders and ensure efficient delivery of the same.
Contd….

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Local retailers can opt to use a range of services which includes same-day
delivery or scheduled and unscheduled deliveries. Merchants can also opt to
increase their delivery coverage and capacity as their business demands.
Walmart initially developed the ‘GoLocal’ service capabilities by
incorporating new technologies, self-driving cars, and delivery drones for its
own delivery needs. Since 2019, Walmart has been working to improve its in-
house Express Delivery Service to compete effectively with E-Com major
Amazon. With ‘GoLocal’ Service, Walmart has developed the capabilities to
deliver purchase orders in two-hours or less. More than 16,000 Walmart store
products are delivered to 70% of the US population using these services.
From August 2021 onwards, other merchants too would be able to tap into
Walmart’s delivery platform and get products delivered to their customers.
Amazon developed similar services called ‘Amazon Shipping’ to compete with
FedEx and UPS and later dropped the idea. Industry experts feel that ‘GoLocal’
would not directly compete with FedEx or UPS as was the case with Amazon.
Source: Frank Holland, “Walmart launches delivery business to connect other local retailers with
consumers”, CNBC, Retail News, 24/08/2021.
https://www.cnbc.com/2021/08/24/walmart-launches-delivery-business-to-connect-other-local-
retailers-with-consumers.html Accessed on 02/10/2022

Activity 19.1
Visit a retail store in your locality and interview the manager to understand
how the bar code works after you pay for the products purchased. Make a flow
chart to illustrate the flow of information to various departments and how it is
used. Also, pose queries on possible disadvantages of the bar code system.

Check Your Progress - 1

1. E-purchasing has its drawbacks and problems. Which of these is the most
important barrier to expanding electronic links with customers and partners?
a. Security
b. Privacy
c. Cost
d. Lack of correct technology
e. Poverty

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2. The term e-commerce includes which of the following?

a. Electronic trading of Physical goods and intangibles such as information.
b. The electronic provision of services such as after sales support or online
legal advice.
c. All the steps involved in trade, such as on-line marketing, ordering,
payment, and support for delivery of all kinds of transactions.
d. Business to Customer (B2C) transactions.
e. Customer to Customer (C2C) transactions.
3. Which of these systems facilitates communication and transmission of sales
data, purchase orders, invoices, and data about returned merchandise which
are transmitted from retailer to vendor or within the various departments of a
retail organization?
a. Data Warehouse Exchange
b. iPad and iPod
c. Electronic Data Interchange (EDI)
d. Data Exchange Software
e. None of the above
4. Which of the following is a huge database in which purchase data collected
at the sales counter goes into?
a. Database warehouse system
b. Cloud
c. EDI
d. PoS system
e. PDA
5. Which of these about RFID is not true?
a. RFID helps reduce theft and shrinkage.
b. RFID technology could facilitate faster checkout.
c. RFID technology is less expensive compared to other technologies.
d. RFID technology could be used to check inventory.
e. RFID relies on a tag and the tag could be attached to merchandise,
inventory or even pet animals.

19.9 Future Trends

With millennials giving way to Generation Z3, the latter have taken the digital
charge, who have also become the drivers of retail boom. It is high time that
retailers should respond to the demands and needs of consumers if they have to

3 People born between mid-1990s and early 2000s are termed as Generation Z.

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survive and thrive in the coming years. Some points of consideration regarding
the future of retail sector are:
 In the future, more brick and mortar retailers are likely to venture into
omnichannel retailing. In-store retailers would give a range of options to their
customers like: buying online and picking up the products in-store; facility to
return in-store, products purchased online. Emerging technologies offer
omnichannel solutions to provide e-commerce features in brick and mortar
retail stores. Customers can view merchandise that is not on the shelf (but
perhaps in the stock room) and place orders on the spot.
 Beacons, invented by Nokia (iBeacon- Apple) are devices that communicate
with a smart phone in an in-store environment through a Bluetooth signal.
Brick and Mortar retailers would leverage the low cost beacon technology to
enhance in-store shopping experience by connecting online behavior with
offline sales.
 Most branded stores are equipping their outlets with iPod, iPhone or other
devices to allow for credit or debit payments in-store.
 Digital signage, virtual mirrors (that overlays the digital image on top of the
normal mirror to help customers take a look at how costumes fit them), virtual
mannequins and other digital technologies would be used in retail stores to
enhance in-store customer experiences.
 Retailers are likely to leverage social media to: engage customers, collect
valuable insights on customer preferences for merchandising decisions and
even sell products.
 Big retail chains may introduce mobile apps to facilitate convenient buying
of goods and services.

Example: Augmented Reality, a Future Retail Trend

Well-known retail brands like Tanishq, Bhima Jewelers, Kalyan Jewelers,
Forevermark and many others have embraced ‘Augmented Reality ‘to create
an immersive and interacting shopping experience and enhance their brand
image amongst customers. Using AR technology, a customer can walk through
the physical store and have interactive experiences of digital version of real-
life products from any location using gadgets such as laptops, mobile phones
and tabs.
During the pandemic, retail stores swiftly moved into action and adopted AR
so that customers could choose products from the given layout, try them
virtually and using the same interactive AR tool, confirm the suitability of the
product for their needs and requirements.
Contd….

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The boost that AR received during the covid pandemic lockdown period was
so encouraging and hence industry experts expect the AR industry to be worth
$614 billion by 2023. According to Wikitude, an Austria based mobile AR
technology provider, 32% of customers worldwide used AR technology (as of
2022) and 73% of smartphone users reported that they were very satisfied with
the interactive experiences that AR technology provided.
Retailers who adopted AR reported that digitized versions of SKUs (Stock
Keeping Unit) saved inventory space, supported better customer management,
and also enabled other cost reductions. Customers too expressed satisfaction
because they could choose from a variety of options to which they did not have
access in the physical store.
Leading retail brands that adopted AR also reported that after adopting AR
tools their sales increased by up to 30%. The increase in sales was possible
because of efficient customer engagement.
The increase in adoption rate of AR augurs well and AR would be a prominent
future trend that would dominate the retail industry.
Source: Meghna Saraogi, “Augmented Reality with Omnichannel Changing Retail Business”,
Times of India, 11/9/2022
https://timesofindia.indiatimes.com/blogs/voices/augmented-reality-with-omnichannel-changing-
retail-business/ Accessed on 2/10/2022

19.10 Customer Relationship Management in Retailing

“A sound and well-rounded customer relationship management system is an
important element in maintaining one’s business in the retail marketing industry.
Not only is customer relationship management a business strategy but it is also a
powerful tool to connect retail companies with their consumers. Developing this
bond is essential in driving the business to the next levels of success”– Microsoft
Dynamics CRM. According to Levy, Weitz and Pundit (2012), customer
relationship management refers to the business philosophy and strategies adopted
by retailers aimed at identifying and building long term relationship with
customers. One way to develop a strong customer relationship is the use of
customer loyalty programs. Customer loyalty programs provide incentives to
customers to ensure that they are committed to buying merchandise & services
from their retailers and resist the activities from competitors attempting to attract
their patronage. CRM is an iterative process that helps retailers effectively use
customer data to develop customer loyalty programs. It involves three activities
(i) collecting customer data; (ii) retail analytics; and (iii) developing CRM
programs for implementation.
i. Collecting Customer Data: The first step towards developing effective
loyalty programs is to gather customer information related to transaction,
customer contacts, customer preferences, descriptive information and their
responses to marketing activities in the past.

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ii. Retail Analytics: Retailers then analyze the data collected through
application of statistical techniques and mathematical models. Some common
techniques employed are as follows:
Market Basket Analysis: It is a statistical technique used to examine the
composition of the basket or bundle of merchandise purchased by customers
during their shopping trip. Using the transaction data, retailers are able to
identify the combination of merchandise purchased by the consumers. It is
used by retailers to get better insights on designing the store layout in a way
that maximizes the cross selling opportunities.
Similarly Customer Lifetime Value (CLV) Analysis is used by retailer to
understand the expected contribution which a customer or a segment of
customers make towards retailer’s profitability over their relationship with
their retailers. CLV is estimated by taking into account the gross margin
provided by customers from purchases, cost of customer acquisition (e.g.
advertisement), the probability that a customer will continue doing business
with the retailer, rate at which the value of rupee depreciates/appreciates in a
given period, and the expected number of years for which a customer is likely
to stay with the retailer.
RFM Analysis is often employed by retailers (especially catalogue retailers)
to determine their target customers based on their recent time of purchase,
frequency of purchase and monetary value of purchase in a specified time
period. Based on the above data, retailers segment their customers into
various groups following which they select the most profitable customer
segment, i.e., customers who have made a recent purchase, frequently
purchase merchandise from the retailer and make a substantial value of
purchase.
The above techniques are used to observe patterns in customer purchase
behavior and make recommendation for improving the effectiveness of
customer loyalty programs.
iii. Developing CRM programs for implementation: Having identified the
most loyal customers, the retailers then develop CRM programs using
following four approaches viz.
i. Frequent shoppers program
ii. Excellent customer service
iii. Personalized offerings
iv. Building brand community
Frequent shopper programs are used by retailers to not only build customer
database but also to encourage customers’ revisit and repurchase behavior.
However, the success of such programs is subjected to following conditions: (a)
the extent to which customers value the rewards given by the retailers and whether
the rewards are tiered based on the volume of purchase made by customers or not;

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(b) the extent to which they offer alternatives to customers with respect to rewards
given by the retailers; (c) the linkage between frequent shoppers program and
charitable contributions made by the retailers; (d) whether the retailer encourages
repurchase behavior by rewarding all the customer transactions; and (e) the level
of customer understanding about the underlying process of frequent shoppers
program.
Retailers may also foster long term customer relationship by focusing on
providing excellent customer service to their most loyal customers.
Availability of customer level data has enabled retailers to offer unique
merchandise and personalized messages to individual customers (termed as One
to One marketing). The examples include greeting the customers by their name
and recommending the merchandise to them which the customers prefer to buy.
The online channel has provided retailers with the opportunity to automate the
process of One to One marketing. Many e-tailors use site registration as a means
to personalize their offering based on customer characteristics such as
demographic characteristics and their expressed interests.
A retail brand community refers to “a group of customers who are bound together
by their loyalty towards a particular retailer and the activities in which their
retailers engage.” Members of the brand community share common interest and
actively participate in activities concerned with their retailer. They share positive
word of mouth about their retailer and refer it to others including their friends,
relatives and family members. They feel obligated to help other customers who
are members of the community by sharing their experience and merchandise
related information.
CRM also deals with identifying the underlying reasons behind customers
becoming unprofitable (e.g. switching to competitors due to high level of
dissatisfaction with retailer`s products & services or make excessive returns). In
such cases, retailers need to provide less costly service to such customers and
charge them for any abuse of service.

Example: How Publix Earns Customer Loyalty Through High-Quality

Customer Support
Publix, a leading supermarket chain with over 1,253 stores in the US was
placed in the top position in Newsweek’s (2021) America’s Best Customer
Service list in the supermarket category. Newsweek’s ranking was based on a
survey of more than 25,000 respondents who had either purchased or used
retail products in the last three years. The final ranking was based on the
likelihood of customers recommending the retail store to friends and family
and their assessment of various retail stores on professional competence,
quality of communication, range of service, customer focus and accessibility.
Contd….

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Publix’s dedication to superior quality is rated as the highest in the grocery

business and the store had earned a reputation of playing to the community.
Inputs from local customers on various aspects like stock items requested and
other aspects of retail service were obtained for immediate implementation.
The retail store stood for affordable pricing, quality and excellent customer
service. The ‘Customer Satisfaction Policy’ of the company stated that certain
customer service principles were meticulously followed, and this has helped
the store to earn the goodwill of customers.
Publixs Supermarket uses Chatbots, a live chat interface that uses Artificial
Intelligence to perform customer-oriented tasks. They use Microsoft Azure
CDN for efficient delivery of web content to consumers. Further the store uses
Optimizely Intelligence Cloud for Marketing Analytics. The retail store whose
revenue was $38.10 billion in 2021, is expected to make huge investments in
IT applications to improve customer service.
Thousands of customer service stories have been posted by happy and satisfied
Publix customers. The high level of customer loyalty proves the point that the
retail store’s CRM strategies provided high quality customer support.
Source: “Publix Ranked No. 1 Supermarket in America for Customer Service by Newsweek”,
Business Wire, 14/10/2020
https://www.businesswire.com/news/home/20201014005979/en/Publix-Ranked-No.-1-
Supermarket-in-America-for-Customer-Service-by-Newsweek Accessed on 2/10/2022

Activity 19.2
Go to two well-known E-Com websites and shop for a product, say a digital
camera. What features of these sites were helpful? How do you rate and
compare the shopping experiences facilitated by the two E-Com players.

Check Your Progress - 2

6. Individual customer accounts primarily help leading online retailers to

increase sales by which of the following?
a. Seasonal promotion schemes
b. Diwali or festival offers
c. Implementing different pricing strategy like high, moderate or low
d. Providing value for money pricing
e. Customized and personalized recommendations and offers

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7. Loyalty schemes have dual purposes. What are they?

a. Cut cost and increase customer loyalty
b. Build customer data and customer loyalty
c. Increase sales and enable cost cutting
d. Increase loyalty and word of mouth recommendation
e. Improve cross selling and increase customer loyalty
8. RIS collects data about consumer purchase and behavior trends from which
of the following sources?
a. Historical data
b. Competitors data
c. Employee data
d. Absenteeism
e. Inventory data
9. Which of the following helps blending the ease and convenience of online
shopping with the reassuring comfort and tactile experience of in-store
shopping?
a. E-Com
b. M-Com
c. Mobile First
d. Omni channel retailing
e. Smartphone
10. Which of these is not true of a digital economy?
a. Extensive use of digital technology
b. Extensive use of customer data
c. Extensive use of automated systems for order processing, billing, and
delivery to increase the speed of transactions.
d. More retail store focused than customer focused.
e. Online selling facilitates access to global customers.

19.11 Summary
 In the present scenario, retailers need to improve their IT capabilities for
various reasons. IT systems and solutions help in collecting, aggregating,
analyzing and interpreting data for retail decision making in areas like
merchandising, pricing, and inventory management.
 IT applications support customer interface (CRM, bar coding, internet
enabled messages and alerts to customers, loyalty schemes, etc.), Operating

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systems (inventory and supply chain logistics, ERP for efficiency in

managing operations, EDI to facilitate better communications), Decision
making (ERP to help take decisions on merchandising, inventory
management, pricing etc.).
 Retail Information System (RIS) enables collection of historic data and
provides understanding of sales trends with reference to various demographic
and geographic segments. They also help predict sales of various product
lines and categories.
 E-Commerce players are able to sell merchandise at much lower prices and
they are also able to offer convenience as a core benefit to retailers.
 To counter the challenge posed by E-Commerce players, in-store retailers are
getting digital and offering a number of in-store digital features like: digital
signages, beacon technology to send alerts about discount offers to smart
phone holders in in-store environment, virtual mannequins and retail apps.

19.12 Glossary
Bar Coding and Scanners: Bar codes are unique product codes (using vertical
lines and numbers) to identify products. Scanners are used to read the bar code in
products and are used in billing in PoS.
Digital Signage: Improvements in digital technology have enabled electronic
signs that can display content, messages, pictures, price offers in an interactive
way. These have replaced traditional bill boards and static print signs.
Electronic Cheque Conversion (ECC): ECC is a new innovation, which (when
installed and utilized by a retailer) allows a retailer to process cheques rapidly at
a much lesser cost without paperwork.
Electronic data interchange (EDI): EDI facilitates exchange of information and
even exchange of documents like purchase orders, invoices, shipping orders, etc.,
between suppliers and retailers.
E-Retailers: Retailers who use the E-Commerce platform alone to sell their
products and services.
PoS: PoS is the point of sale counter in retail shops, where products purchased
by the customer are scanned for details like product code and price. Further
invoice is prepared and the customer in turn makes payment and collects his
purchases and departs.
RFID: It is a small chip tagged to the product which stores product related
information. It prevents piracy.
Vendor Performance Analysis: The performance of suppliers on a host of
parameters like timely delivery, quality of product, reliability, etc. could be
analyzed.

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19.13 Self-Assessment Test

1. How does EDI facilitate communication between retailers and vendors?
2. What is a loyalty program? What are the twin objectives of a loyalty scheme?
Illustrate with a real life example.
3. How can PoS solutions such as scanners, cash registers and integrated
computer systems enhance customer experiences and also help capture
customer data.
4. What are the factors that have contributed to the growth of IT in retail?
5. What is RIS? How does it help retailers in decision making?

19.14 Suggested Readings/Reference Material

1. Giri Arunangshu and Chatterjee Satakshi, “Retail Management: Text &
Cases” Paperback, PHI Learning Pvt. Ltd., 2021.
2. Swapna Pradhan, “Retailing Management: Text and Cases”, McGraw Hill,
Sixth Edition, 2020.
3. Barry Berman, Joel R Evans, Patrali Chatterjee and Ritu Srivastava, “Retail
Management”, Thirteenth Edition Pearson Education, 2017.
4. Gibson G. Vedamani, “Retail Management”, 5th edition, Pearson Education,
2017.

19.15 Answers to Check Your Progress Questions

1. (a) Security
Security is the leading barrier to expanding electronic links with
customers and partners.
2. (c) All the steps involved in trade, such as on-line marketing, ordering,
payment, and support for delivery for all kinds of transactions.
All the steps involved in trade, such as on-line marketing, ordering,
payment and support for delivery are a part of E-Com. All other options
only explain a part of E-Com’s functions
3. (c) Electronic Data Interchange (EDI)
It facilitates communication and transmission of sales data, purchase
orders and invoices,
4. (d) PoS or Point of Sale system
Purchase data collected at the point of billing goes into PoS System.
5. (c) RFID
RFID technology is less expensive compared to other technologies.

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All options given about RFID are valid except for option ‘c’ which is
false because RFID technology is expensive. One of the reasons why
companies are slow in adopting the technology is its high cost.
6. (e) Customized and personalized recommendations and offers
Data collected from individual customer accounts carry information
about the buying behavior of individual customers. Hence, they help
increase sales by helping the retailer to make customized and
personalized recommendations and offers.
7. (b) Customer data and customer loyalty
Customer data and customer loyalty are the twin purposes of loyalty
programs
8. (a) Historical data
RIS collects historical data about consumers.
9. (a) Omni channel retailing
Omni channel retailing blends online and in-store benefits to enhance
customer experiences.
10. (d) More retail store focused than customer focused
All options relating to the digital economy except for option ‘d’ are
valid. In the modern digital economy, retailers are highly customer
focused as big data analytics provides all relevant information about
individual customers and customer groups.

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 Unit 20
International Retailing
Structure
20.1 Introduction
20.2 Objectives
20.3 Introduction to International Retailing
20.4 Growth and Development of International Retailing
20.5 Retail Structure in the International Market
20.6 Internationalization of Retail Market
20.7 Direction and Typologies of International Expansion
20.8 Market Entry Methods in International Retailing
20.9 Summary
20.10 Glossary
20.11 Self-Assessment Test
20.12 Suggested Readings/Reference Material
20.13 Answers to Check Your Progress Questions

“The biggest sources of opportunity are collaboration and partnership. And

today, with digital communication, there is more of that everywhere. We need to
expose ourselves to that as a matter of doing business.”
- Mark Parker CEO, Nike

20.1 Introduction
Mark Parker, CEO of Nike states that to stay competitive in the international
market, retailers need to consider collaboration. To fulfil customer’s growing
expectations, retailers need to identify their areas of weaknesses and enter into
strategic collaborations to implement initiatives that are beyond the company’s
strengths.
Internationalization of modern retail started after the Second World War, but, this
concept has received greater importance in recent times because it is happening
at a very rapid pace. Better transportation facilities, improved infrastructure,
lower tariffs and lesser barriers to trade and greater affluence of the people of
emerging economies; appear to be the primary reasons for this ‘Going global’
phenomenon. Many developed nations are facing stagnation in growth rates and
many countries in Europe and Japan are under the grip of severe recession. This
economic trend in developed nations has compelled some of the leading retailers
of those countries to move to Asian countries to pursue their expansion strategies.
Block 5: Retail Marketing

In the Indian context, global retailers have made an impact by changing the
consumption behavior, shopping trends and patterns, aspirations and expectations
of the Indian consumer. The younger generation in India has greater cross border
connectivity and their lifestyles are far more cosmopolitan than ever before.
Global retailing has also changed the way in which goods are sourced,
warehoused and distributed. Rapid developments in technology have disrupted
existing players and forced them to change their retail models. Given this
backdrop, this unit discusses the growth of international marketing and its
expansion at a global level while entering them through different modes.

20.2 Objectives
After reading through this unit, you should be able to:
 State what international retailing means for boosting the stagnating domestic
market share
 Explain the growth and development of international retailing for analyzing
overseas market
 Analyze the overseas market structure to avoid failure and loss
 Appraise internationalization of retail marketing to chalk out the process of
retail operations in the foreign market
 Point out the typologies of international expansion to gain better
understanding of the overseas market before commencing expansion process
 Judge and select the market entry mode for being successful

20.3 Introduction to International Retailing

Retail growth saturation in the domestic market opens the gate of ‘survival’ in the
international market. The borderless world coupled with technological
advancements gives fillip and scope to expand the market boundaries. In this
connection, international marketing is not a new concept. Since the late 1980s,
many countries in the world which had erstwhile adopted a socialistic structure,
initiated changes in economic policies to bring about liberalization, privatization
and globalization of their industries. These countries that were left behind in the
race of economic growth started witnessing high growth rates and increase in
employment, per-capita income and consumption. In the 1990’s, a set of elite
retail firms (mainly food and general retail) started expanding overseas to take
advantage of the growth potential that prevailed in emerging economies.
Walmart’s extensive expansion led to its becoming the world’s largest
corporation in the world. Other retail giants like Carrefour and Tesco began to
expand overseas and soon fashion and apparel retailers, and leading retailers in
other specific categories went global to take advantage of the growth prospects in
developing economies.

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Internationalization of retailing in a layman’s perspective is considered as setting

up of overseas retail establishments. Internationalization was spurred by necessity
due to reasons like stagnation in the domestic economy and better growth
prospects in other countries. Advancements in technology, transportation
and communication have facilitated and expedited the growth. Retail
internationalization as a concept is much more than increase in the number of
overseas retail units and constitutes the following other subjects:

 The various forces that drive retail internalization.

 Trends in internationalization like, in which geographic regions is
internationalization taking place and in what retail formats and what
categories, internationalization is occurring.
 The flow of FDI and FII and the resultant impact on employment is an aspect
that would be of interest to the host country.
 The extent, to which the support functions of retail are internalized, is an
aspect that would have implications on the economy of the host country.
 The transfer of retail management expertise as a result of the retail
internalization process in the following areas: Management tools, store
formats, design concepts (in-store design and layout, merchandising), retail
technologies like EPoS (Electronic Point of Sale), RIS (Retail Information
System) and EDI (Electronic Data Interchange), marketing and promotion
initiatives like loyalty programs, relationship marketing etc.
 The integration of retail processes and alignment of trading partners at a
global level.
 The implication of internationalization on host countries’ retail industry like:
change in retail models, increase in the level of competition and disruption of
traditional local retail models.
 The impact of internationalization on the customers: Change in buying
patterns, levels of cross border shopping, increase in consumption level etc.
 The implications of internationalization on global supply chain management
and logistics. For instance, the elimination of middlemen, where global
retailers have established direct links with producers, as in the case of food
retail (Global retail giants have established direct links with agriculturists).

To sum up the concept of Retail Internationalization could be defined as the

course of increasing involvement in cross national retail operations by
committing resources and also taking strategic decisions on retail models,
technologies, level of internalization and related aspects to emerge successfully
in the host countries and in the global market.

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Example: Walmart Ranked No.1 Global Retailers in Annual Revenue

Walmart was ranked No.1 amongst top 25 global retailers of 2021 in terms of
annual revenue compiled by ‘Global Data’, a data and analytics company.
Walmart trailed by Amazon was ranked the top retailer in a similar ranking of
top 50 global retailers (2020, 2021 and 2022) by Kantar Group, a data analytics
and brand consulting company.
Stalwart leader, ‘Walmart’, continued to reign supreme by adopting new
strategies to survive the global covid-19 pandemic and related supply chain
issues. For instance, Walmart procured supplies much early through charter
vessels to keep its stock ready for the holiday season to navigate the supply
chain challenges.
Walmart restructured its international portfolio by divesting from Brazil (2018)
and recession-hit Argentina (2020) and the United Kingdom. These
divestments minimized losses. The retail giant also pursued a robust and
vigorous omnichannel strategy to serve its customers. With over 10,500 retail
stores worldwide, it was able to provide excellent in-store and online services.
Leveraging on its logistics advantage, Walmart was able to provide a broad
assortment of goods to customers across all platforms. The omnichannel
service has attracted high-income shoppers and the value-priced internet access
and attractive shopping deals attracted low-income shoppers.
Source: David Marcotte, Senior Vice President, Global Insights and Technology, Kantar, “A look
at the 2022 Top 50 Global Retailers, NRF Feature, National Retail Federation,23/3/2022
https://nrf.com/blog/look-2022-top-50-global-retailers Accessed on 7/10/2022

20.4 Growth and Development of International Retailing

Saturation and decline in economic growth have forced leading companies of the
West to reconsider their investments in the domestic country. Out of necessity or
spurred by ambitions to expand, top retailers have entered emerging markets like
India, China, Indonesia, Philippines and a host of African countries to name a
few. It has given them an opportunity to generate revenue. This spurt of new
avenues has triggered the growth and development of international retailing.
The following observations give an idea of the extent of growth in
internationalization of retail.
 A report of Deloitte4 on retail trends (2022), states that 250 retailers have
expanded globally. The aggregate retail revenue generated by top 250 global
retailers was US$1,769 billion in 2020.
 The year-on-year retail revenue growth was significant for the following
retailers (2020): Amazon.com Inc. (34.8%), The Home Depot. (19.9%),
Schwarz Group (10%), JD.com (27.6%) and Target Corporation (19.8%).

4 Deloitte, “Global Powers of Retailing 2022”,

https://www2.deloitte.com/content/dam/Deloitte/at/Documents/consumer-business/at-global-powers-
retailing-2022.pdf, retrieved in November 2022.

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Exhibit 20.1: Growth of International Retailers

Source: Deloitte, “Global Powers of Retailing 2022”,

https://www2.deloitte.com/content/dam/Deloitte/at/Documents/consumer-business/at-global-
powers-retailing-2022.pdf, retrieved in November 2022.

 Exhibit 20.1 gives an idea of the international growth rate of retail in various
regions in 2020 (by top 250 global retailers). It is evident from the growth
trends that international stores have witnessed significant growth all over the
world.
Retail markets in developed economies have become even more competitive
because of the disruption caused by E-Commerce. Thus, it is evident that, spurred
by a host of factors (stagnation in developed economies, retail boom in
developing economies, removal of barriers to globalization, etc.), retail
internationalization is taking place at a very fast pace.

Example: Amazon’s Growth from an Online Bookstore to World’s Most

Dominant E-Commerce Company

Very few would have predicted that Amazon, which started off as an online
bookstore would go on to become the world’s most dominant E-Commerce
company offering a range of products starting from books to groceries to high-
end-fashion products. As of February 2022, Amazon offered over 350 million
product items (12 million Amazon products and 338 million offered by
Amazon marketplace merchants).
Amazon’s growth and expansion as a dominant global E-Commerce player
transpired as the world witnessed an unprecedented surge in the number of
internet users.

Contd….

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While brick and mortar stores struggled to internationalize because of the huge
investment requirements, Amazon was able to enter a number of countries with
its selling propositions of ‘low prices’, shopping convenience and product
variety. Amazon has effectively used advanced data analytics and artificial
intelligence to understand buyer behavior and demand. Amazon has put in
place an excellent logistics system to deliver goods in less than two days. With
its massive warehouses and self-owned fleet of delivery vehicles and drones,
it seems impossible for competitors to challenge Amazon when it comes to
logistics.
As the number of internet users increase, Amazon would make its onward
march and continue to grow and expand worldwide.
Sources: Ethan McAfee, “3 Reasons why Amazon will continue to gain E-Commerce
marketshare”, Forbes, 31/03/2021
i) https://www.forbes.com/sites/forbesbusinesscouncil/2021/03/31/3-reasons-why-amazon-will-
likely-continue-to-gain-e-commerce-market-share/?sh=5a17fc303ab8
ii) https://www.bigcommerce.com/blog/amazon-timeline-infographic/#the-amazon-timeline
Accessed on 7/10/2022

20.5 Retail Structure in the International Market

‘Lifting and shifting’ domestic operations to international operations without
understanding the challenges posed by each unique market could be fatal for the
organization. Hence it is inevitable for a retailer to understand the prevailing
market structure in the entry nation before trying to expand their operations.
Some of the important elements that should be identified by the retailer as
discussed below.
Retail Market Structure: The economic theory of firm defines the market
structure in terms of the degree of competitiveness which in turn is determined
by factors like: Entry barriers, the extent of product differentiation and buyer
concentration. In the retail internationalization context, the erstwhile barriers to
enter into foreign markets like high tariffs and rigid non-tariff barriers for
protection of domestic industries are crumbling. Barriers like distance are getting
insignificant due to the advancements in transportation and communication. In
the international market, competition between retail businesses prevails at various
levels: Competition between international retailers (Walmart vs. Tesco),
competition between international and domestic retailers (Marks & Spencers vs.
Fab India), and competition between organized and unorganized retail.
Density of Retail Markets: Casual observation of any retail market would
suggest that the unorganized retail market tends towards Monopolistic
Competition (relatively large number of buyers and sellers) and the organized
retail market, which has few large players tends towards Oligopolistic
Competition (few retail players in the market). While this observation may be
true to a greater extent in the case of Indian retail markets, the same is true in the
case of the retail markets in most countries.

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Dominance by Big Retail Firms: In developed economies, big retail giants

dominate the retail scenario, holding a big share of the retail market. These firms
leverage on their size and financial strength and invest in technology and premises
to better service their customers. They are also able to strike better bargains for
lower prices on purchases from vendors. Their cost leadership, financial strength
and size create strong barriers to free entry and have implications on density of
the markets (concentration of retail outlets).
Market Concentration: This phenomenon refers to the share of the market held
by one big retail firm or retail group. As big retailers become more competitive
they are able to garner more market share and impact retail densities. The market
structure gravitates towards less competitive market structures like Oligopoly or
Monopoly.
The way in which retail is practiced has undergone significant changes because
of internationalization in retail.

Example: Retail Structure in India

The Indian retail industry has a monopolistic competition like economic

structure with several small-sized kirana stores catering to their retail
requirements of small localities. As of 2019, the unorganized sector dominated
the retail sector by accounting for 88% of all retail stores. With the organized
retail and e-commerce sectors witnessing a surge in growth, by 2021, their
share of the retail sector increased to 25% and that of unorganized retail
reduced to 75% in 2021.
The organized sector consists of licensed retailers who have registered
themselves to sales as well as income tax. The corporate hypermarkets,
supermarket and other retail chains are the primary players in the organized
retail category.
Foreign Direct Investment in the organized retail sector increased employment
opportunities in organized retail and simultaneously lead to shrinking of
employment in unorganized retail.
The e-commerce industry in India is dominated by a few players like Flipkart,
Amazon, Letsbuy, etc. Customers trust reputed e-com brands due to security
issues and the high possibilities of getting cheated while purchasing online.
Heavy investments in logistics and the huge capital investment to build strong
brands have created strong entry barriers. These factors have created an
oligopolistic market structure in the E-Commerce industry.

Sources: ‘Structure of the Retail Industry in India”, Economy Watch, 18/05/2021

i) https://www.economywatch.com/structure-of-the-retail-industry-in-india
ii) https://www.statista.com/statistics/719359/india-retail-industry-distribution-by-structure/
Accessed on 5/10/2022

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Activity 20.1
A number of global retail groups have entered India during the last two
decades. List out the various political, legal, economic, social and cultural
factors that have encouraged the entry of global retailers into the Indian
markets.

Check Your Progress - 1

1. Which of the following represents the first step in internationalization?

a. Joint Venture
b. Green field investment
c. Mergers and Acquisitions
d. Exports through distributors
e. Licensing
2. Out of the various options given below, which of the following is an example
of FDI?
a. A US company purchasing shares worth USD 20,000 of an Indian steel
company.
b. Ram depositing money in a foreign bank.
c. A leading US based fashion and apparel retailer setting up a joint venture
with an Indian company to establish a new company.
d. A US company exporting goods worth USD 10,000 to India.
e. A US company lending money to an Indian company.
3. Which of the following is called as moving a part of the operations of a firm
outside the home country to foreign markets?
a. Internationalization
b. Localization
c. Multi National Company
d. Global organization
e. None of the above

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4. Which of the following is called as permitting foreign firms to use the firm’s
brand name and run the operations?
a. Globalization
b. Licensing
c. Franchising
d. Joint Venture
e. None of the above
5. An Indian retail group with little experience in foreign markets wishes to
enter the US market. Which of the following entry modes would be best
suited for the retail group?
a. Franchising
b. Green field investments. Buying property and making investments in
setting up stores in top cities in the USA.
c. Entering into a strategic alliance with a local partner.
d. Reaching out to the global customers through E-Com.
e. Acquisition of a retail store in the foreign territory.

20.6 Internationalization of Retail Market

Expanding beyond domestic country’s boundaries helps a retailer in knowledge-
gaining and knowledge sharing. Knowledge gaining helps in extending the
benefits in the domestic market. Knowledge sharing helps in expanding the
market overseas. Retail internationalization is gathering momentum and retailing
is fast becoming a global industry. Retail expansion strategies need to be crafted
keeping in mind a host of considerations for sustained and meaningful growth in
the host countries. Recent history of retail internationalization cites many stories
of failure and also errors in decision making that proved to be expensive. Thus, a
retail group that wishes to expand overseas, needs to clearly chalk out the retail
internationalization process which is a strategic and operational roadmap for
setting up retail operations in another country.
The steps involved in the retail internationalization process are discussed below:
Understanding local market: Knowledge of the local retail market environment
with reference to the competition levels, consumer expectations and behavior is
a first step in the retail internationalization process. People belonging to different
countries are radically different because of varied social and cultural background.
It is important that a retail store desiring to internationalize must consider a few
options and make the right choice. It is natural for retail groups to choose the
neighbor countries because in terms of social and cultural similarity, they would
be a good choice.

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Adapt the model: Adjustment of retail model, narrowing down on the most
suitable format to suit local market conditions is the next logical step in the
internationalization process. This calls for learning new skills to execute the plan.
Plan for sourcing and supply chain: Any retail business will be successful only
if the sourcing and supply chain logistics is cost effective and efficient. Hence, a
suitable plan to suit the model needs to be charted out.
Test market: The retail model and plan could be test marketed in a smaller scale
in one location to study its acceptance, smooth functioning and possible initial
hitches that went unidentified earlier.
Invest and commence operations: Once the project comes through successfully
in the test market, the retail model is ready for full-fledged commercial launch.
At this stage transfer of expertise and technology would be necessary.

Example: Kalyan Jewelers: Internationalization Strategy and Plans

Kalyan Jewelers, founded in 1993, set up its first showroom in Thrissur,
Kerala. Kalyan introduced several fair practices such as BIS Hallmarking,
transparent old gold exchange, rate tag, etc., at a time when the jewelry retail
industry in India was plagued with quality and pricing issues. Kalyan
successfully expanded in India through its localization strategy. As of 2021, it
operated more than 120 stores across 21 Indian States and Union Territories.
Having established its brand in India, in 2013, Kalyan Jewelers internalized its
retail business by opening six showrooms in UAE on the same day. As of 2021,
the retail company operates 32 showrooms in the Middle East countries of
UAE, Kuwait, Qatar and Oman. In 2019, Kalyan announced that it had
earmarked ₹ 500 crores for opening 10 stores in the US market. The retail
jeweler planned to raise money for US stores through internal accruals. T.S.
Kalyanaraman, Chairman and Managing Director of Kalyan Jewelers also
announced that all the US stores would be owned by the company. Outside
India, Kalyan would go for large-format stores and would target the Indian
diaspora.

Sources: Anto.T.Joseph, “Can a hyperlocal strategy push Kalyan Jewellers ahead?”, Fortune
India, 22/03/2021
i) https://www.fortuneindia.com/enterprise/can-hyperlocal-strategy-push-kalyan-jewellers-
ahead/105322
ii) https://www.thehindu.com/business/kalyan-jewellers-will-expand-to-the-
us/article24781630.ece Accessed on 10/10/2022

20.7 Direction and Typologies of International Expansion

A retailer must make sure that a market exists with potential customer base before
attempting to globalize his business. Firms like Alibaba.com (ecommerce
platform), Xonitek (Business Consulting Firm) and Cellairis (wireless accessories

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retailer) had done a thorough research on language and cultural barriers, trade
barriers, proximity to headquarters, and currency (exchange rate differences)
before expanding overseas. In this line, retail internationalization theories have
attempted to: Identify the factors that have caused internationalization, analyze
the internationalization process and classify and categorize the expansion
activities and also studied the modes of entry. Some important theories in these
lines are as follows:
Uppasala School Model: The Uppasala School model states that
internationalization should be in incremental steps. The theory that explains the
internationalization process argues that retail expansion is initially directed to
those countries where there are less psychic barriers. Physical distance and strong
social and cultural differences create psychic barriers. A retail group intending to
expand overseas is more comfortable with the idea of setting up shop in the
neighbor country. This is because the perceived risks on account of distance and
differences in culture are likely to be low. Geographic spread refers to the number
of countries in which the retail group is present and operates. This theory argues
that in the initial stages retail groups move into geographically and culturally
close markets and as they learn and gain experience and acquire strengths and
capabilities, they move to geographically and culturally distant markets.
Dunning’s Eclectic Theory: John Dunning argues that a retail firm needs to have
the following advantages in the target country:
 Ownership advantage: These are firm-specific advantages that refer to the
knowledge the firm has acquired on: Local market conditions, local culture,
local laws, understanding of the cost structure, brand image and managerial
skills
 Location advantage: They refer to country-specific advantages (i.e. the
advantage of operating from a certain home country), say USA and the
advantages gained in operating from multiple locations. (Advantages in
sourcing, expertise gained in understanding political and economic
conditions etc.)
 Internationalization advantage: This advantage emanates from the diverse
operations of the firm in various countries. A retail group would have a good
understanding of various retail models and would be able to choose the
appropriate retail model that has low risks and high profitability.
Treadgold’s Three Stage Model: Treadgold classifies retailers based on
geographic presence and the level of control desired. The theory argues that in
the initial stages of expansion, a company may wish to have greater control at the
expense of incurring high costs. As they get emboldened with learning and
experience, they are willing to give up control and reduce costs. Simultaneously,

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based on geographic presence (stages: concentrated, dispersed, multi-national

and global), a company may play it safe in the initial stages by having its
operations concentrated in one geographic region. However, as it gets
experienced in the process of expansion, it gets emboldened and invests in diverse
countries and with further learning, becomes more aggressive and emerges as a
Multinational Retail Company. Thus, this theory explains that retail companies
traverse the stages of reluctance, caution and ambition in their process of
transformation into world powers with extensively diversified operations.
Salmon and Tordjman’s Model: The authors’ typology is based on three
dimensions of internationalization: Investment, Multinational and Global.
 Investment: The retail company here makes investment in an overseas retail
company through the acquisition route. The acquired company has no link
with the domestic company with respect to the day to day operations or
communications. This strategy is less risky and the acquired company
continues as an isolated from the domestic market as a standalone business.
 Multinational: Under this classification, the retailer, who operates in many
countries, operates them as a part and continuation of his retail activities.
While some adaptations in the retail model and retail format are made to suit
local conditions, there are considerable similarities across various retail
businesses that the retail group operates world over.
 Global: Under this classification, the retail group which develops a
successful model replicates the same model worldwide. Thus, leveraging on
the learning and experience, it standardizes retail models and formats across
the various retail businesses to achieve economies of scale.
The increase in retail internationalization has attracted the attention of academics
and various attempts have been made to classify and categorize the expansion
activities. The classifications and typologies proposed are based on: Market entry,
managerial outlook, managerial flexibility and geographic spread. Based on
motives, retail expansion and internationalization could be classified into those
triggered by Push and Pull factors.
Push Factors: These factors could be retail-firm specific or they could relate to
the domestic compulsions prevailing in the home market like economic
stagnation, declining economic growth, etc.
Pull Factors: Favorable aspects prevailing in foreign markets might appeal to
retail firms. For instance, big retail firms from the developed nations are attracted
to India and China due to the following pull factors: The high economic growth
rate, high growth potential in the retail market, the speed of growth, the reforms
initiated, the retail structure characterized by low concentration etc.

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Example: Fashion Brands Internationalize at Faster Pace through the

Digital Route
Sweden-based multinational clothing company, ‘H&M’ has effectively used
the internet as a tool for internationalizing its operations. H&M, a fast fashion
brand has expanded its footprints to various new markets through the E-
Commerce route.
H&M’s localization strategy has contributed in no small measure to the success
of its internationalization. H&M customizes its homepage content to the
requirements of the local markets. Product details and website information are
presented in local language. The content is adapted to suit local culture, fashion
preferences and traditions. Words used by people in their shopping
conversations are included in the content to strike a favorable chord with
customers. Celebrities who have an influence on the local audience are used to
promote content. For instance, H&M’s UK site provides and promotes links of
interview with fashion icon ‘Linda Tol’, while its French site promotes an
interview with Alexandra Golovanoff, France’s leading journalist and fashion
and style icon.
The widespread use of internet and smartphones have created new channels for
communication and fashion retailers like H&M have used the digital channel
for internationalization.
Sources: Leandro Ferriera Perriera et.al,, “Internationalization Business Strategy via e-
commerce”, International Journal of Business and Systems Research, November 2021
i) https://www.researchgate.net/publication/356284618_Internationalisation_business_strategy_
via_e-commerce
ii) https://www.researchgate.net/publication/276801908_Internationalization_Process_of_Fast_
Fashion_Retailers_Evidence_of_HM_and_Zara Accessed on 10/10/2022

20.8 Market Entry Methods in International Retailing

Market entry mode is an important strategic decision in international business.
Due to strong association to cultural aspects in China which was not that easy to
understand, food retailers like McDonald’s Corp. and KFC initially entered China
on joint venture while Burger King Corp. granted a regional license to a Chinese
company. While McDonald’s joint venture in China turned out to be successful,
, it miserably failed in Jamaica and retracted completely since it did not assess the
market properly. Retail groups desirous of entering into overseas markets; choose
the market entry mode based on their strategic growth plans for the future and the
retail marketing environment in the foreign country. The company’s strategic
growth plans depend on a host of factors like: Level of risk the firm is willing to
take, the financial investment the given firm is willing to make, the experience
and learning of the firm in retail internalization, core competencies and
competitive advantages of the retail firm over that of competitors and related

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factors. The retail firm needs to consider the following factors while analyzing
the marketing conditions of the host country: Macro environmental factors like
economic, political, legal, social and cultural factors and factors that influence the
retail industry like competitive environment, supply sources, etc. The firm’s
willingness to invest, availability of strategic alliances or partners, the desired
level of control and the present market position of the firm are related factors that
would influence the choice of a suitable market entry mode.
Based on the position of the firm in the market, the level of risk, the level of
control and flexibility desired, the following basic options are available to any
firm that desires to go global: Exporting, licensing, franchising, joint venture,
wholly owned subsidiaries, acquisition and mergers.
 Exporting: This option is considered low-risk and it also requires little
financial commitment on the part of the retail firms. Adopting this mode is
not feasible in the case of retail. However, mail order companies and E-Retail
can be cited as examples.
 Licensing: Under this entry strategy, the retail firm gives licenses to a foreign
company to use its brand name, label and patented technology or technical
know-how. This entry mode is also risk free and also involves very little
financial commitment on the part of the retail firm.
The advantages of this entry mode are:
‒ Facilitates speedy entry into foreign markets
‒ Suitable for firms which do not wish to make financial commitment
‒ Avail local partner’s expertise
‒ Knowledge and commitment help the firm to expand very fast.
The following risks are associated with this entry mode:
‒ The licensee may become a potential competitor in the future
‒ The licensees may not market the firm’s goods or may not adhere to strict
quality norms
‒ There is a possibility of the licensee failing to enforce the contract of
license or fail to make payments as per the agreement.

Example: German furniture retailers, GarantMobel, entered into more than 3,000
license agreements with partners in Europe to popularize their furniture brand in
Europe.
 Franchising: Under this entry mode, a retail firm (franchiser) gets into an
agreement with the franchisee (overseas partner) to use the former’s brand
name, retail format and other concepts. This popular co-operative entry
mode, allows retail firms to have greater control over foreign operations.

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The greatest advantage is that the levels of capital expenditure and risk are
low. This method is very popular amongst specialty shops and fast food
retailers. Body Shop, Benetton, Subway, McDonalds, Mary Brown could be
cited as examples of retail firms who have very successfully established a
franchising network to expedite entry into many foreign markets within a
short period of time.
 Joint Venture (JV): Under this entry mode, a new company is set up in
which both the retail firm and its overseas partner have ownership. Joint
ventures could be a win-win arrangement, if the competencies of both the
firms turn synergic. For the internationalizing retail firm, JV, reduces the time
and cost and at the same time also provides either of the firm opportunities to
learn from each other. The incoming firm could learn more about the social
and cultural and competitive environment in the local market, while the
overseas firm could benefit from the transfer of technology and management
expertise. Tesco, for instance, entered into a joint venture agreement with
Samsung’s distribution division, while entering into the South Korean.
Carrefour, a French company adopted JV strategy to enter the Middle East
markets.
 Merger & Acquisition: A merger involves combining of two companies to
establish a new company. This strategy could be a costly one, but it ensures
quick entry into foreign markets. This strategy has its own limitations. First
of all, suitable target companies must be available for acquisition. Costs could
escalate also because the companies which are being acquired could have
faced financial difficulties.
 Greenfield investment: This entry strategy involves building a store network
from the scratch. This strategy may not be feasible where regulatory hurdles
exist. Typically incoming retail firms with strong competencies (technology,
supply chain, corporate culture) may opt for this strategy because these skills
would give them a clear competitive advantage in the host country’s market.

Example: Tesco Adopted Acquisition Entry Mode to Expand its

Operations in Ireland
On 30th November 2021, Tesco Ireland said that it had acquired ten of Joyce
Supermarkets’ retail stores, based in Galway, Ireland. The acquisition would
be approved by CCPC (Competition and Consumer Protection Commission).
Tesco, Ireland would rebrand Joyce’s stores as Tesco stores and continue to
offer all services offered by existing stores and Tesco stores would employ all
Joyce’s store employees and it would continue to engage with their business
partners. Joyce’s stores’ acquisition would provide Tesco opportunities to
serve a larger customer base and increase market share.
Contd….

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Tesco, UK’s leading food retailer expanded its operations to Europe in 1978
by acquiring leading Irish retail brands like ‘Quinnsworth’, ‘Stewart’s stores’
and ‘Crazy Prices’. Even though the acquisition mode of entry was costly,
Tesco preferred this entry mode as it facilitated the use of local Irish suppliers.
Irish customers were sensitive to change and showed greater store loyalty.
Tesco also wanted to have complete control over its operations. Keeping these
points in mind Tesco preferred the acquisition entry mode. The acquisition of
Joyce’s retail shows that Tesco continued to follow acquisition strategy in
Ireland.

Sources: “Tesco Ireland announces acquisition of Joyce’s Supermarkets retail stores in Galway”,
Tesco Ireland/ News, 30/11/2021.
i) https://tescoireland.ie/news/2021/tesco-ireland-announces-acquisition-of-joyce-s-
supermarkets-retail-stores-in-galway/
ii) https://www.researchgate.net/publication/241953017_Tesco's_adaptation_to_the_Irish_
market Accessed on 07/10/2022

Activity 20.2
You may recollect that there was a lot of objection from farmers and
unorganized retailers in India to the UPA government’s decision to allow 51%
FDI in multi-brand retail. What were the main objections of these groups? In
your opinion, are there valid reasons for them to fear this step of
internationalization of retail?
Answer:

Check Your Progress - 2

6. Duncan’s Eclectic Paradigm advocates that a retail firm needs to have the
following three advantages to successfully internationalize their operations.
What are they?
a. Ownership, cost benefits, competitive advantage
b. Ownership, locational and internationalization advantages
c. Locational, marketing and management advantages
d. Marketing, management and cost benefit advantage
e. Cost benefits and competitive advantages

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7. Which of the following is called as the theory which states that

internationalization needs to happen in incremental stages to minimize
psychic differences?
a. Ricardo’s model
b. Uppasala model
c. Psychic differences model
d. Treadgold’s three stage model
e. Linder model
8. What strategies did Salmon and Trodjman advocate?
a. Global, investment, transnational
b. Global, local and transnational
c. Domestic, incremental and multinational
d. Incremental, multinational and transnational
e. Investment, Multinational and Global
9. Under what retail format would you classify IKEA and Toy R Us?
a. Discount stores
b. Specialty stores
c. Category killers
d. Departmental stores
e. Retail Mall
10. Which of the following about indirect exporting is not true?
a. Indirect export is less risky as compared to direct export
b. Manufacturer can focus on production and relieve himself from the risk
of selling in unknown territories
c. Indirect export gives little control over operations
d. Indirect export does not give direct contact with customers
e. Indirect export results in more sales

20.9 Summary
 Retails firms all over the world are motivated to internationalize by various
factors like: Stagnation in certain geographic regions, High growth in certain
other geographic regions (Asian region) leading to rising incomes and
increase in consumer spending.
 The lure of high growth potential, better infrastructural facilities and removal
of tariff barriers and other favorable factors prevailing in target countries is
an added stimulant.

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 Retail Internationalization is defined as the course of increasing involvement

in cross national retail operations by committing resources and also taking
strategic decisions on retail models, technologies, level of internalization and
related aspects to emerge successfully in the host countries and in the global
market.
 The growth of internationalization can be confirmed by the increase in the
number of retail firms that are internationalizing. The visible change in the
domestic to international revenue ratio (showing higher international
revenue) of the top few retail firms in the world, highlight the level of
internationalization.
 With more retail firms going global, academics have researched and studied
the following aspects relating to internationalization: The retail structure, the
process of internationalization, the typologies and classification of
internationalization and the modes of entry into foreign markets.
 Any firm targeting a foreign market needs to understand the retail structure
which constitutes the competitive market structure, concentration of market
share and related aspects.
 Likewise, firms also need to follow a certain step by step process of
internationalization. Based on the internationalization that has occurred,
academics have further classified the expansion activities and also researched
the entry strategies.

20.10 Glossary
Greenfield Investment: This entry strategy involves building a store network
from the scratch.
Joint Venture: An equity partnership between two firms to create another
company.
Market Concentration: This phenomenon refers to the share of the market held
by one big retail firm or retail group.
Psychic Distance: Differences in language, culture, political and social systems,
that could stand in the way of internationalization.
Retail Format: Retail types like super market, departmental stores, discount
stores, convenience stores etc.
Retail Internationalization: Understanding and management of retail operations
in foreign markets. As compared to home markets, foreign markets may have
different retail structures, market environment and hence the retail models, retail
formats and strategies need to be formulated keeping these in mind.
Tariffs: Duties like import or customs duty that is to be paid when goods get
imported into a country. Tariffs are a tool in the hands of the host government to
protect domestic companies.

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Uppasala School Model: The Uppasala School model states that

internationalization should be in incremental steps. Initially a retail firm enters
geographic areas where social and cultural differences are the least.

20.11 Self-Assessment Test

1. What are the driving factors for retail internationalization?
2. Write a note on the various market entry strategies.
3. What challenges do international retailers face when they enter into overseas
markets?
4. Do you think internationalization of retail is a huge threat to the unorganized
retail in India? Substantiate your points with suitable examples.
5. Explain Treadgold’s three stage model relating the stages of caution,
reluctance and ambition with various levels of learning and experience.

20.12 Suggested Readings/Reference Material

1. Giri Arunangshu and Chatterjee Satakshi, “Retail Management: Text &
Cases” Paperback, PHI Learning Pvt. Ltd., 2021.
2. Swapna Pradhan, “Retailing Management: Text and Cases”, McGraw Hill,
Sixth Edition, 2020.
3. Barry Berman, Joel R Evans, Patrali Chatterjee and Ritu Srivastava, “Retail
Management”, Thirteenth Edition Pearson Education, 2017.
4. Gibson G. Vedamani, “Retail Management”, 5th edition, Pearson Education,
2017.

20.13 Answers to Check Your Progress Questions

1. (d) Exports through distributors
This is the first step in internationalization.
2. (c) A leading US based fashion and apparel retailer setting up a joint
venture with an Indian company to establish a new company.
In a joint venture, the US company also pumps in funds to form a new
company. This results in FDI.
3. (a) Internalization
The movement of the operations of a firm outside the home country to
foreign markets is called Internationalization.
4. (c) Franchising
Under Franchising, a firm allows a foreign firm to use their brand name
and run the company under certain given conditions.

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5. (c) Entering into a strategic alliance with a local partner

Since the retail group has little experience in working overseas, it is
advisable for it to enter into a strategic alliance with a foreign partner.
6. (b) Ownership, locational and internationalization advantages
Duncan’s Eclectic Paradigm advocates that a retail firm needs to have
the above mentioned advantages.
7. (b) Uppasala model
This model states that internationalization needs to happen in
incremental stages to minimize psychic differences.
8. (e) Investment, Multinational and Global
Investment, Multinational and Global are the three strategies advocated
by Salmon and Trodjmon.
9. (c) Category killers
Retailers that dominate in a particular category are category killers.
Hence, IKEA and Toy R Us are examples of category killers.
10. (e) Indirect export results in more sales.
Indirect export leads to more sales. Statement in option ‘e’ is not true
because high or low sales depend on a host of factors and not just on
whether the mode of entry is direct or indirect.

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 Unit 21
The Future of Retailing
Structure
21.1 Introduction
21.2 Objectives
21.3 Key Changes in Retail Market
21.4 Importance of Brands, Brand Positioning and Image
21.5 Emerging Trends in Information Technology
21.6 New Age Retailing: The Physical Aspect
21.7 Summary
21.8 Glossary
21.9 Self-Assessment Test
20.10 Suggested Readings/Reference Material
21.11 Answers to Check Your Progress Questions\

“The store is moving closer and closer to technology. You can’t be effective on
the business side if you don’t understand technology.”
- Srinivasan Rajamanickam, Senior Director-Head of Global
Architecture, Digital and Omnichannel Solutions, Tapestry

21.1 Introduction
Rajamanickam of Tapestry underlines the importance of technology by stating
that retailers of any size cannot be successful without understanding technology.
Retailers need to know how technology works and how it can enable the retail
business.
The retail world is going through a lot of transformation and the key drivers of
these changes are technology, internationalization, E-Commerce and changing
profile of consumers. The changing needs of the modern customer due to
various global influences, their insistence of shopping experiences across online
and in-store channels have forced retailers to change retail models and formats.
Technology has simplified business operations in certain areas and at the same
time complicated business operations in certain other areas. Online retailers are
using data analytics to provide the benefits of personalization and convenience to
their customers. The low prices with which they entice customers are also posing
a huge challenge to in-store retailers. It is no easy time for in-store retailers
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who are still figuring out on retail strategies to overcome the challenges posed by
online retailers. At the same time the continued patronage received by many
traditional and modern brick and store formats, including the huge malls indicates
that the future for the brick and mortar stores would continue to be good.
This unit focuses on the key changes in the retail market with special reference to
brands and brand positioning. The role and growing importance of e-retailing
finds a place as part of the discussion of this unit.

21.2 Objectives
After reading through this unit, you should be able to:
 Describe the key changes in retail to understand the trends and patterns
occurring in this sector
 Explain the importance of brands, brand positioning and brand image for
establishing a retailer’s connect with the customers
 Explain the emerging trends in information technology to synchronize with
its advancements
 Examine the strategies to be adopted by physical stores to race alongside with
their online competitors

21.3 Key Changes in Retail Market

The global retail landscape is changing in significant ways. In the present retail
scenario, life has not been easy for the brick and mortar retailers who are facing
multiple challenges. These retailers in turn have adapted their business models to
overcome the challenges faced and this has caused key changes in the global retail
scenario. The following are the key changes witnessed in the global retail
landscape:
Increase in competition: While overall retail sales are still increasing,
competition for retailers has increased tremendously. New retail formats are
emerging and these are posing challenges to existing retail stores. There was a
time when category dominant stores and specialty retailers were popular amongst
customers in Western countries. But the scenario has changed with retail chains
like Walmart, Tesco, Carrefour, etc., selling all product categories from food to
toys to jewelry. These multi-brand retail stores have managed considerable cost
reductions due to their innovative supply chain management. Hence, specialty
stores are finding it difficult to face the challenge posed by these giant retail
chains.
Emergence of E-Commerce: Since, 2008, E-Commerce retailers have emerged
in a big way and are posing a serious challenge to brick and mortar retailers.
While many of the brick and mortar retail stores report stagnating sales.

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The benefits of personalization and convenience that online retailers offer are too
compelling to reject and hence brick and mortar companies have been forced to
come up with many retail strategies and tactics to avoid being disrupted.
Internationalization: The global economy is witnessing a situation where a
majority of the developed economies are stagnating, while certain other
economies, particularly the countries in the Asian region are witnessing greater
economic growth. This has triggered the process of internationalization in retail.
While the previous decade witnessed big retail giants expanding to neighboring
countries, they are moving to countries like India and China in the present decade.
Leveraging on technology: Retailers are utilizing technology to cut costs and
improve customer service by deploying IT processes in the following areas of
operations of a retail enterprise: Supplies, backroom operations like stock control,
logistics, accounting and financial management, HR management and in
customer service operations like billing, etc. IT solutions that enable insights on
customer perceptions and demand in real time are the key to crafting retail
strategies that would win customers.
Social Media: Retailers are not just gathering data from the social media, but
they are also engaging their customers and selling products in the social media.
Omni Channel solutions: In-store retailers are deploying omni-channel
solutions to provide e-commerce features in brick and mortar retail stores.
Combining online and in-store channel features provide seamless customer
experiences by facilitating the following benefits: Buying online and picking up
the products in-store, facility to return in-store the products purchased online, etc.
Retail consolidation: Big retail giants have been attempting to consolidate their
position in the market through various measures like: Acquisition of other retail
companies, internationalization, and backward integration by retailers to cut
down costs.
21.3.1 Key Changes in the Indian Retail Market
According to Kearney Research, India’s retail industry was estimated to grow at
9% over 2019-2030, from US$ 779 billion in 2019 to US$ 1,407 billion by 2026
and more than US$ 1.8 trillion by 20305. The Indian retail market contribution to
the national economy is growing. At present the retail industry contributes 20%
to the GDP and also provides employment to about 8% of the population. Various
reports predict that the propensity to consume of an average Indian is likely to
increase in the future. This prediction is made based on: The predicted economic
growth rate, rising incomes and standards of living and the confidence that
consumers have in the strength of the economy, consumers’ own personal
finances and their career growth. Retailers see a huge opportunity to target India’s

5
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rural population, which is estimated at 700 million. The following trends are
apparent in the retail market in India.
 Greater affluence is driving people to buy both essential and non-essential
products.
 Increasing incomes and rising aspirations of the rural population is an
opportunity for retailers. Retailers are presently targeting this segment.
 There is a lot of development in tier I, II and III cities and hence big retail
giants are setting up modern retail formats in these geographic regions to cash
in on the growing affluence in these emerging cities.
 The relaxing of entry norms for global retailers and the surge in
internationalization of retail world- wide has led to the entry of MNC retailers
into the Indian retail market. These retailers have partnered with Indian
companies. Notable amongst these entrants are: German retail firm, Metro
Cash and Carry, US firms Walmart and Carrefour and British firm, Tesco.
 Customers are becoming technology savvy. The mobile revolution is
sweeping India. Hence, retailers are using technology to enhance user
experiences. Retailers are sending messages to smart phones to inform them
about discount offers and also creating apps to enhance shopping experiences.
 Shopping malls are being set up in metros and tier I, II and III cities.
 Consumption culture in India is changing. Replacement demand is
increasing, particularly in the case of electronic products, because consumers
want to keep pace with changing technologies.
 New buying trends are evolving. Customers shop in supermarkets and are
also buying products online.

Example: Retail Consolidation in India After the Onset of Covid

Pandemic
Since the onset of Covid-19 pandemic, lifestyle and apparel retailers suffered
revenue losses. Overall consumption decreased due to fall in discretionary
spending, closure of malls, wage cuts, loss of jobs and other related causes and
these factors led to retail consolidation in India.
Flipkart was acquired by Wal-Mart in 2018. In September 2020, it was reported
Amazon entered into talks to buy a 9.9% stake in Reliance Retail, the retail
arm of Indian conglomerate, Reliance Industries Ltd. Reliance Retail entered
into an agreement with Future Retail to acquire Big Bazaar. The pharma sector
too witnessed consolidation. In August 2020, Reliance Industries acquired a
majority stake in Vitalic Health, which represented 60% holding in the equity
share of ‘Vitalic Health’, and 100% direct equity ownership of the subsidiaries
of Vitalic Health, which were collectively known as Netmeds.
Contd….

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Post Covid, retail companies that were not agile lost out and had to collaborate
with bigger retailers for survival. For retail giants looking to expand,
consolidate and increase market share, the covid pandemic provided an
opportunity.
Sources: Himadri Buch, Deloitte India sees consolidation in retail space, says non-essential retail
growth will revive only after December, Money Control, 14/9/2020.
i) https://www.moneycontrol.com/news/business/deloitte-india-sees-consolidation-in-retail-space-
says-non-essential-retail-growth-will-revive-only-after-december-5835471.html
ii) https://www.indiaretailing.com/2020/09/03/retail/battle-of-mergers-and-consolidation-
intensify-in-indias-retail-market/ Accessed on 11/10/2022

21.4 Importance of Brands, Brand Positioning and Image

The importance of branding is being felt in retail and retailers are cognizant of
the reality that branding strengthens, reinforces and helps connect with customers
and other stakeholders. A brand is much more than just a name, symbol or logo.
A retail brand like ‘IKEA’ or ‘Carrefour’ stimulates one’s perceptions and
invokes associated memories of consumer experience. Brand experience to the
consumer can occur as a result of multiplicity of service attributes and factors
like: Store design, store location, hundreds of retail outlets located wherever the
customer goes (a consumer may prefer a Starbucks coffee experience, wherever
he travels), standardized service in all retail outlets, the courtesy and friendly
attitude of the service staff, the flexibility offered by combining online and in-
store features (omni-channel), innovative sales promotion schemes, pricing,
merchandising, loyalty schemes, etc. A strong brand brings to retailers the
following long term benefits:
Differentiation: By incorporating distinct attributes and service features, a
retailer makes his store appealing to the customers, giving them valid reasons to
buy from the given retailer’s shop rather than just any shop. The retailer needs to
communicate the differentiating features of his brand very clearly so that
consumers too perceive the difference. The effectiveness of the communication
would get the consumers to talk about the uniqueness.
Halo effect: Consumers tend to attribute additional positive features and
attributes to a strong brand.
Simplifies purchase process: Consumers respect well established brands,
because of their high service standards and consistency in delivery of service
quality. This credibility reduces the need for information search and the risk
associated with purchase is considerably reduced.
Status symbol: Shopping in certain retail outlets could help consumers project a
certain image because of the characteristics, traits and values associated with the
retail brand. Shopping in Fab India or Provogue would help consumers project a
certain self-image for themselves and the society.

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Facilitate expansion: A strong brand lays the foundation for future expansion.
Established brands like McDonalds, Burger King have reaped the benefits of a
strong brand and rapidly expanded by opening new outlets through franchise
route. Consumers tend to transfer the same attributes, values and traits to all the
new outlets opened under the same brand name.
Diversification: A strong brand enables diversification into new categories and
related product ranges.
To sum up, it needs no emphasis that only retail stores with a strong brand identity
can succeed and sustain in the future in the retail industry. Consumers are
overloaded with a number of marketing and communication messages and the
highly competitive retail market environment offers them a plethora of choices.
Strong brands serve as orientation points for the customer and simplifies the
decision making process.

21.4.1 Brand Positioning

Brand Positioning involves creating a compelling brand offer that is distinct and
unique as compared to what is offered by competition and enable consumers to
understand what the brand means for them. If target customers are interested in
the differentiating features and the remarkable products that a retail brand offers
then the brand becomes a talking point amidst customers. Tanishq’s successful
positioning strategy could be cited as a relevant example in the Indian context.
Tanishq, India’s largest and fastest growing jewelery brand has positioned ‘brand
Tanishq’ to mean the following to their customers: National retail store with
uniform and transparent retail practices and standards across all its retail
showrooms, specialized design collections created by their international award
winning team, certification (in writing) and guarantee of purity of gold, quality
of diamond and exclusive retail showrooms that provide a unique buying
experience. A carefully planned differentiation and positioning strategy and well
defined personality form the foundation of strong brand. Brand Tanishq stands
tall in the retail world because it has successfully integrated all the three aspects.
When purchase of gold was considered risky because of the rampant cheating of
customers on purity of gold and quality of diamonds, the transparent retail
practices of Tanishq instilled confidence in the minds of customers. For the
modern Indian women, the range of gold, platinum jewelery and innovative
designs of Tanishq are aspirational and a medium of self-expression that
exemplifies her personality.
The concrete service attributes and benefits that the store offers to customers
defines the positioning of the retail brand. The range of product categories and
depth and variety of products offered, the prices, the retail format, store ambience,
convenience and flexibility in purchase and store experience are the functional

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attributes based on which a brand can be different from the competition.

Functional attributes may not sustain as positioning attributes in the long run
because they are relatively easy to imitate. The purchase decisions of consumers
are motivated by rational and emotional factors. Retailers often communicate
rational reasons and this may result in sales transactions, but may lack the
substance to sustain a relationship with the customer in the long run. An
emotional connect that creates a bonding could lead to strong brand loyalty.
People choose to buy apparel, shoes and other accessories from Zappos as against
other online stores because of the excellent service and the efforts that go in to
convert functional positioning attributes into emotional benefits. In the future the
emphasis is likely to shift from functional to emotional aspects. At a higher level
retailers would develop retail brands with distinct personality and consumers may
choose the retail brands whose image and personality matches with their desired
self-image.

Example: Flipkart’s Brand Positioning Strategy Helps it Retain the No.1

Position in the Indian E-Commerce Industry

Judith McKenna, President and CEO of Walmart (which acquired Flipkart in

2018) appreciated Flipkart’s resilience after the initial setback it faced in 2020
due to the pandemic and reposed confidence in the brand’s future performance.
Flipkart’s GMV (Gross Merchandise Value) declined in 2020 due to covid-19
lockdown. However, it more than made up for the lost sales and its resilience
speaks volumes of the customer goodwill that it enjoyed. Flipkart’s market-
leading position in categories like electronics, appliances and fashion products
gave the company an edge over its formidable and powerful rival ‘Amazon’.
Flipkart strategically positioned itself as an online retailer for the mass market.
By focusing on value products and low-priced products, it reached out to
customers in tier 2 and tier 3 markets. Flipkart entered into partnerships with
manufacturing brands to increase the portfolio of its low-priced products and
it also tied up with manufacturers to jointly develop private labels at affordable
prices. The e-com player’s marketing campaigns featured local celebrities and
the ads were presented in regional languages.
To sum up aggressive pricing, brand positioning, and market campaigns have
helped Flipkart retain its top position.

Sources: Peerzada Abrar, “Flipkart is positioned to win India’s E-commerce Future: Wal-Mart’s
McKenna”, Business Standard 191/02/2021
i) https://www.business-standard.com/article/companies/flipkart-is-positioned-to-win-india-s-e-
commerce-future-walmart-s-mckenna-121021801566_1.html
ii) https://kr-asia.com/decoding-flipkarts-strategy-that-gives-it-an-edge-over-amazon Accessed on
12/10/2122

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21.5 Emerging Trends in Information Technology

Retailers today are facing the challenges of disruption created by technologies
like social media and smart phones. The modern digitally equipped, savvy and
demanding consumer wants to purchase products through multiple channels. He
prefers the flexibility and convenience of ordering online and at the same time
also likes to visit the traditional in-store retail channel for certain purchases. He
demands efficient service and enhanced shopping experiences at multiple touch
points. Under these difficult circumstances, retail firms are leveraging on
advancements in Information and Technology applications to cope with
challenges. Modern retail firms have deployed IT based ERP, CRM and CEM
solutions to enhance efficiency in operations and improve retail service. With a
strong focus on innovation, retail firms are using multiple selling channels like:
In-store, online, kiosks, call center, mail catalogues, etc. The following IT based
trends are apparent and these IT based trends are expected to gather momentum
and make paradigm changes in retail industry.
Point of Sale (PoS) technologies: PoS technologies have replaced the cash
register in many retail firms. Retail firms have fully understood the efficiency,
performance and functionality of Cloud-based Point of Sale Systems and
Solutions. In the future, PoS is expected to replace cash registers in a majority of
the retail firms.
Omni channel customer experience: Brick and mortar stores now have to
compete with E-Commerce websites. The Generation Y (Gen Y) customers are
digitally savvy and use multiple digital equipment like smart phones, laptops,
tablets etc. The word ‘omni’ means universal. Omni channel is all about providing
continuous and memorable retail experiences. Emerging technologies offer Omni
channel solutions to provide e-commerce features in brick and mortar retail
stores. In-store retailer gives a range of options to their customers like: buying
online and picking up the products in-store, facility to return in-store, products
purchased online. This trend is likely to gain momentum in the future to provide
continuous shopping experiences across brands, using various devices and
accessing various retail channels.
Mobile Services: The key point that needs to be remembered is that Gen Y
consumers are using smart phones for research about products. For these
customers, smart phones have become a shopping assistant even while inside the
store as they traverse in their purchase journey across various touch points. That
is the reason why most retail firms have made their website mobile compatible
and have also incorporated features like mobile ordering and payment through
mobile wallets, etc. Thanks to IT solutions like Mobi2Go, even small and medium
sized businesses could incorporate these convenient mobile features and services.
In the future, more businesses are expected to use the mobile wallet solutions of
Google, Soft card, Current C and Apple.

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Retailers would gain greater control over value chain: In order to win and
compete successfully over competitors in providing compelling and memorable
shopping experiences, retail firms are trying to gain greater control of their value
chain. Greater control over manufacturing, supply chain, marketing and
distribution, would enable retailers to reduce costs, provide better quality, manage
customer loyalty by providing customized products and services. The private
label initiatives of leading retail chains has been well received by customers. The
other competitive advantages that retailers would gain by having greater control
over value chain are: Greater creativity and personalization in fulfilling customer
orders, speedy execution of consumer orders and adoption of practices like same-
day-delivery, click-and-collect, etc.
Augmented Reality (AR): Retail firms have successfully found ways to use
augmented reality to gain attention and improve consumer experiences. By
downloading an app, consumers can view product reviews, watch videos and
order online. In addition virtual fitting rooms, interactive window displays, etc.
are the other AR features that are used by well-known apparel retailers.
Cashless Payment: The Gen Y consumers prefer not to carry cash and hence
retail firms who do not provide the convenience of cashless payment face the
grave danger of losing business to competitors. In India, big retail firms accept
both cash and cashless payment. With all the reassurance that technology has
made cashless payments faster, safe, secure and convenient, Indian customers too
are shifting to credit, debit cards and mobile wallets. Retail firms in the Western
countries are investing in technology and other initiatives that make cashless
payments more secure. For instance, Apple Pay assigns a unique Device Account
Number (DAN) to every mobile phone. The DAN and transaction-specific
security codes are used to ensure that cashless payments are secure and risk free.
In the future more of these initiatives may be introduced so that even risk averse
consumers don’t perceive any risk in shifting to cash free payment.
Beacon technologies will gain momentum: Beacons are devices that
communicate with a smart phone in an in-store environment through a Bluetooth
signal. Beacon sensors embedded in various digital touch points in a retail store
could interact with smart phones and send messages about discount offers,
competitions, sweepstakes, etc., to customers, while they are shopping in-store.
The use of beacon technologies, which is low cost, will gather momentum in the
future.
Advanced data analytics: Advanced data mining and analytics will play a key
role in all aspects of the retail: Pricing, merchandise planning, design and
development of new products, demand forecasting, etc. Retailers will go for
advanced solutions to collect data from various sources and mine out information
to cut costs and take optimal decisions. Most retail firms are perhaps already using
the PoS data and web analytics data for decision making. But the data that is
available to retail firms would get bigger exponentially when social media is

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integrated. Since the bulk of the data available is unstructured, retailers face a
major challenge in understanding and interpreting the data. More retail firms are
expected to leverage on the available data for various retail applications in the
future.
Loyalty programs: Loyalty programs have become so commonplace that
earning points on purchases is not attractive to customers anymore. In the future,
in addition to points on purchases, retail firms may reward customers for their
actions and engagements like: Exercising, walking, holidaying with family, etc.
Similarly, retail firms also understand the hardships faced by consumers in
carrying the loyalty cards every time they visit the shop. Loyalty schemes may in
the future be monitored and traced using the smart phones of loyal consumers
using mobile apps.
The impact of Information Technology on buyers is evident from the following
changes that can be observed in their behavior: Consumers are well informed,
digitally savvy and socially connected; they browse research and purchase products
at any place and at any time, consumers demand continuous and seamless
experiences across multiple channels. For retail firms these are challenging times.
Disruptive technologies have impacted consumer behavior and have forced retail
firms to change. Retail firms are leveraging on technology to analyze big data and
use it for the following applications: Understand consumer behavior, predict sales,
manage demand, enable swift movement and management of inventory to cater to
demand and integrate in-store, online and mobile channels to provide seamless and
continuous retail experiences.

Example: Kroger Leverages on Technology to Improve Efficiency and

Customer Experiences
Kroger, ranked as one of world’s largest retailers installed 2,200 smart shelves
in its supermarkets in USA. These smart shelves equipped with RFID (Radio
Frequency Identification, a wireless system with tags and readers) appear to be
like normal shelves to customers. These product-packed shelves display digital
prices, product details like nutritional content and allergy details, deals of the
hour and much more. Shoppers can access all the information by touching the
shelf below the chosen product item. Kroger can use the system to gather
information about products that need to be refilled. This data can be stored,
formatted, and analyzed by the retailer to gain insights on product performance.
Kroger’s smart shelves can be integrated with customers’ mobile grocery lists.
When a product in the customers’ digital grocery lists is nearby, the shelves
light up. Kroger dumped printed price tags, cardboard promotions and even
opted for dim lighting to make the customers shopping experience convenient.
Customers perceived the new shelves as cleaner and environmentally efficient.
Contd….

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Kroger’s investment in technology has enabled the company to provide

personalized digital shopping experiences to gain customer loyalty and reduce
energy consumption.
Sources:”Kroger’s smart shelves ditch the paper, drop the lights and delight the shoppers”,
Login Systems, 17/04/2021
i) https://www.loginsystems.biz/en/post/kroger-s-smart-shelves-ditch-the-paper-drop-the-lights-
and-delight-the-shoppers-1
ii) https://news.microsoft.com/transform/kroger-smart-shelves-ditch-paper-drop-lights-delight-
shoppers/
iii) https://www.business-standard.com/article/companies/flipkart-witnesses-over-1-billion-
customer-visits-during-festive-sale-tbbd-
122093001146_1.html#:~:text=E%2Dcommerce%20firm%20Flipkart's,visits%2C%20according
%20to%20the%20sources. Accessed on 11/10/2122

Activity 21.1
Referring to various reliable sources, list out top two countries in Asia those
are attractive for retailers for the purpose of internationalization. State reasons
as to why retailers may find them attractive from the following perspectives:
Size of the market, economic, political, social, and cultural environment.

Check Your Progress - 1

1. There are many factors that have witnessed a key change in global retail
market. Which among the following does not belong to this category?
a. Retail Consolidation
b. Increase in Competition
c. Emergence of E-Commerce
d. Social Media
e. Retail Fragmentation
2. Multi-channel retailing provides greater scope for a firm to promote and build
its brand because of which of the following?
a. Better positioning of the brand is possible.
b. Better segmenting of customers is possible.
c. Better differentiation of brand is possible.
d. Exposure to brand through different channels increases brand awareness.
Even before the consumer enters the store, he is familiar with the brand.
e. Consumers would become loyal to the brand when a brand promotes its
products through multiple channels.

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3. Which of the following is not true or does not relate to augmented reality
(AR)?
a. AR can put life and liven up an image, product label or website window.
b. AR deceives the customer by creating an illusion.
c. AR designs are generally creative and innovative and attract attention.
d. Virtual fitting room is an example of AR.
e. A consumer buying jewelery can through a camera find out how different
gems would look in certain lights and color background.
4. Which of the following are Generation Y customers?
a. The millennials who grew up using modern gadgets and hence are
digitally savvy. They expect to be served through multiple channels.
b. Highly demanding customers.
c. Highly challenging for retailers because they are troublesome.
d. The group of customers whose consumer behavior is likely to change in
the future.
e. The group of customers who patronize online retail because they think
online is trendy.
5. Which of these is a suitable reason because of which small retail firms may
not encourage cashless transactions?
a. Enhancing the security environment to prevent frauds would require
investment in technology.
b. Majority of the consumers are still averse to using credit or debit cards.
c. Small firms sell low value goods and consumers prefer to pay cash.
d. Consumers do not expect small retail firms to provide this facility.
e. Only rich consumers opt for cashless transactions and such persons don’t
patronize small retail firms.

21.6 New Age Retailing: The Physical Aspects

The emergence of E-Commerce is considered disruptive for brick and mortar
retail stores. It is reported that many physical stores have closed down in various
parts of the country on account of dwindling sales and losses. Retail experts opine
that physical stores that still dominates the retail scenarioforms the foundation of
retailing. Physical stores still continue to be the favorite of retail consumers with
a little more than 90% of the sales still being transacted through this channel.
However, online retailers are able to sell at a lower price and the convenience and
flexibility that they offer could pose a serious threat to physical stores. New age
physical retail firms need to adapt and reinvent new strategies to overcome this

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threat and stay relevant to their customers. Given below is a snapshot of the new
age retail store and the strategies that they are likely to adopt to reaffirm the
enthusiasm and loyalty that consumers had reposed in physical stores in the past.

 The Gen Y customers are digitally savvy. In India, for instance, the bulk of
the population would fall under the 14-45 age group and these customers with
a high propensity to consume, would be the focus of retail firms. Physical
stores need to incorporate new age technology and offer virtual in-store
experiences to these customers who have grown up using mobile, internet
tools.
 The millennials or new gen customers are well connected in the social media
and it is important that retail firms engage with their customers in various
social media channels.
 The following advantages of physical stores would give them an advantage
over online stores: People can feel, touch, see and try a product or
merchandise in a physical store. Big retail stores are further experimenting
with digital tablet kiosks, mobile apps and other self service solutions to
enhance the shopping experience of customers. With the added advantage of
virtual trial rooms and other augmented realities, physical stores may
continue to be the preferred channel of purchase.
 Big retailers would try and engage with customers in creative ways rather
than just depending on sales promotion offers that are detrimental to the
financial health of retail firms. Omni channel engagement enables retail firms
to stay connected and engaged with customers in both the physical and digital
space. The modern customer wants seamless customer experience across
multiple channels. He wants access to products 24 hours, at any place and at
his preferred channel.
 Big retail firms are also vertically integrating and trying to gain control over
manufacturing, marketing, distribution and other activities in the value chain.
This would help them compete with online retailers in terms of price.
 Certain retail formats where high quality goods are delivered straight from
the warehouse to the customer’s door step (significantly lower prices), have
also captured the imagination of the consumers. Such formats have been
successful in food retailing because of the freshness factor. Thus, physical
stores could stay relevant by experimenting to evolve and cater to the
changing interests, requirements and expectations of customers. To provide
this kind of flexibility and convenience, retail firms must integrate the various
processes by deploying state of art IT solutions and retail technologies.
 The following physical and online retail formats may co-exist to serve the
customers in the future: Brand stores that promote brand values and beliefs,
product showrooms, specialty stores,

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 Big retail stores may prefer to open smaller format stores to remain relevant,
cost effective and flexible.
 Big malls would have restaurants, cafeterias, coffee shops, ice cream parlors
and fast food chains in them to attract customers and present their retail outlet
as a fun place to hang out.
 Big retail chains may close down stores in certain locations and optimize
performance in other locations where sales is high.

While retail firms may adapt, restructure and embrace technology to face the
threat posed by online retailers, certain core elements of their corporate strategy
would constitute the following: a clear vision as to what experience they plan to
deliver to their customers across various channels, a nimble retail model with in-
built flexibility to adapt.

Example: Lenskart’s Omnichannel Strategy to Enhance Customer

Experiences in the Digital Era

Lenskart, an optical prescription eyewear chain, operates over 750 physical

stores (2021) in 40 cities across India. Executing an omnichannel strategy, the
retail company provides customers the option to purchase from offline
(physical stores) or online channels without friction.
Lenskart’s omnichannel strategy provides the option of purchasing and
returning the products from any channel of their choice. Customers can check
stock availability of a particular lens or frame in real-time from any channel.
Lenskart effectively uses technology to provide integrated solutions.
Consumers discover products on digital platforms such as mobile apps, mobile
or desktop website, assisted channels or marketplaces. Once the customer
places the purchase order, the order is registered in the company’s order
management system. The order processing stages of picking the frames and
lenses from warehouses, lens cutting and fitting, quality check, packing and
dispatch are done efficiently.
Lenskart’s brick and mortar stores play a critical role in execution of the
omnichannel strategy and the technology’s role in integrating all customer
touchpoints is key to providing a memorable customer experience. Using the
omnichannel strategy, the company has also successfully expanded to
Singapore, the USA and Middle East.

Sources: Riya Pahuja, “How Lenskart is trying to solve the Omnichannel Connundrum?”,
ETCIO.com, Economic Times, 15/11/2021
i) https://cio.economictimes.indiatimes.com/news/big-data/how-lenskart-is-trying-to-solve-the-
omnichannel-conundrum/84366060
ii) https://blog.lenskart.com/the-building-blocks-of-lenskart-omnichannel-part-1-aa59c1ec66cf
Accessed on 12/10/2122

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Activity 21.2
Let us say, you want to buy cosmetics. You have the option of buying the same
from a drug store, departmental store or a specialty store like health and glow
or even just buy the product online. Which channel would you choose to
purchase and why? In the future, which of these store formats may be the
preferred for purchase of cosmetics?
Answer:

Check Your Progress - 2

6. Big retail firms are trying to gain control over the various activities of the
value chain. Which of these may not be a suitable reason?
a. To reduce cost
b. To increase efficiency and enable speedy delivery of products to
consumers
c. To better service the customers
d. To improve the quality of products sold and service rendered
e. To become powerful
7. Mobi2go is an online service that can be embedded into a retail or hospitality
firm’s website. Which of the following is enabled by it?
a. Customer experiences
b. Online ordering
c. Digital experiences
d. Augmented reality
e. Flexible ordering
8. A strong brand lays the foundation for future expansion. Which of the
following aspects that the consumers tend to transfer to all the new outlets
opened under the same brand name?
a. Qualities and values
b. Attributes and traits
c. Attributes and values
d. Qualities and attributes
e. Qualities and traits

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9. Which of the following is not an advantage to the customers of Ocado

supermarket, which enjoys a high level of customer satisfaction?
a. Personalized service
b. Speedy delivery of food products
c. Freshness of food delivered
d. Appealing ambience of their physical stores
e. Low price
10. Which of the following about multi-channel shoppers is true?
a. Multichannel shoppers may browse in one channel and shop in another
channel
b. Multichannel shoppers are very rich
c. Multichannel shoppers are generally very young
d. Multichannel shoppers are spend-thrifts
e. Multichannel shoppers love shopping

21.7 Summary
 Retail is a multi-faceted industry, which consists of varied business
processes. In the dynamic retail world, the key drivers of change are
technology, internationalization, E-Commerce and changing profile of
consumers.
 The disruptive technologies (social media, mobile, analytics and cloud) and
changing profile of the new generation of customers (who are digitally savvy)
have emerged as a serious threat to physical stores which are re-inventing
strategies and adapting to remain relevant.
 Their strategies to combat the disruption of online retailers include the
following: Deploying IT solutions to integrate various processes to monitor
and control performance, cut costs, use analytics to predict and understand
customer behavior for decision making, use beacon technologies to
communicate and engage with smart phone users, use technologies that
enable augmented realities like virtual fitting rooms, engage customers
through multiple channels (physical, online, social) to provide seamless omni
channel experiences, gain greater control over activities (like production,
marketing, distribution) in the value chain to enhance efficiency and enable
cost reduction.
 While online retail sales are witnessing faster growth in terms of sales,
physical stores are still dominant in the retail scenario by facilitating 90% of
the total retail sales.

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 Physical retail stores will continue to be the back bone of the retail industry.
Retail experts foresee that brick and mortar retail stores with a clear vision
and a nimble retail model with in-built flexibility to adapt would continue to
remain relevant and successful in the future.
21.8 Glossary
Beacons: Beacons are devices that communicate with a smart phone in an in-
store environment through a Bluetooth signal
Brick and Mortar Stores: Retail firms that operate from a physical store as
against an online retail store
Digital Signage: Electronic signs that give instructions or display marketing
communication to target consumers in an appealing and interactive way.
Kiosk: A free standing structure erected on a short term basis to interact with
customers and also designed to support selling activities
Omni Channel: Using both physical and online channel to provide seamless and
continuous service to consumers
Point of Sale (PoS): The retail space where sales transactions takes place. Most
retail firms use it to refer to the technology used at the point of sale for billing
purposes. Sophisticated integrated computer systems have replaced the manual
and electronic cash registers.
Specialty Store: Retailers that focus on a limited range of merchandise category
and provide a very high level of service in those areas and categories.
Visual Merchandising: An artistic design of presenting the merchandise in a
visually appealing way to increase sales.
21.9 Self-Assessment Test
1. What is omnichannel retailing? How will going omni channel help brick and
mortar retail firms overcome the threat posed by online retailers?
2. How has IT changed the face of retails? What are the future IT trends in
retail?
3. What in your opinion would be the future of brick and mortar retail?
4. What is the role of business analytics in retail decision making?
21.10 Suggested Readings/Reference Material
1. Giri Arunangshu and Chatterjee Satakshi, “Retail Management: Text &
Cases” Paperback, PHI Learning Pvt. Ltd., 2021.
2. Swapna Pradhan, “Retailing Management: Text and Cases”, McGraw Hill,
Sixth Edition, 2020.
3. Barry Berman, Joel R Evans, Patrali Chatterjee and Ritu Srivastava, “Retail
Management”, Thirteenth Edition Pearson Education, 2017.
4. Gibson G. Vedamani, “Retail Management”, 5th edition, Pearson Education,
2017.

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20.11 Answers to Check Your Progress Questions

1. (e) Retail Fragmentation
All options except option ‘e’ have witnessed sea change in the retail
landscape.
2. (d) Exposure to brand through different channels increases brand
awareness. Even before the consumer enters the store, he is familiar
with the brand
Through multiple channels consumers get exposure to the brand. This
brand awareness works positively for the firm.0.
3. (b) AR deceives the customer by creating an illusion
The option ‘AR deceives the customer by creating an illusion’ is not
correct. Since all other options are either examples of AR or elaborate
on the functionality of AR, option b, the odd one is the correct answer.
4. (a) The millennial who grew up using modern gadgets and hence are
digitally savvy
They expect to be served through multiple channels.
5. (a) Enhancing security environment to prevent frauds would require
investment in technology.
Small firms need to invest a lot to enable safe and secure cashless
payments.
6. (e) To become powerful
The option ‘To become powerful’ is not a suitable reason that could
drive retail firms.
7. (b) Online ordering
The online service ‘Mobi2go' when embedded into a retail or hospitality
firm’s website, enables online ordering of the firm’s products or
services.
8. (c) Attributes and values
A strong brand is the foundation for all future expansions made by the
retail store. This is because all new retail branches that are opened in the
future would benefit by acquiring the attributes and values and image of
the store brand.
9. (d) Ocado
Ocado is an online supermarket that delivers straight from their
warehouses. They do not have physical stores.
10. (a) Multi channel shoppers may browse in one channel and shop in
another channel
All other options relating to multichannel shoppers are not true.

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Course Structure

Block 1: Introduction to Retailing

Unit 1 Retailing: An Overview
Unit 2 Retail Institutions
Unit 3 Understanding the Retail Customer
Block 2: Retail Strategy
Unit 4 Retail Market Strategy
Unit 5 Financial Strategy
Unit 6 Store Location and Site Evaluation
Unit 7 Retail Organization and Management
Block 3: Merchandise Management
Unit 8 Merchandise Assortment Planning
Unit 9 Purchasing Systems
Unit 10 Merchandise Planning
Block 4: Managing the Retail Store
Unit 11 Store Management
Unit 12 Store Layout, Design and Visual Merchandizing
Unit 13 Customer Service
Unit 14 Retail Selling
Unit 15 Information Systems and Logistics
Block 5: Retail Marketing
Unit 16 Retail Marketing Mix
Unit 17 Retail Pricing
Unit 18 Retail Promotion Mix
Unit 19 Application of IT in Retailing
Unit 20 International Retailing
Unit 21 The Future of Retailing
Block 6: Contemporary Issues in Retailing
Unit 22 Ethical and Legal Issues in Retailing
Unit 23 Careers in Retailing