Retail

Management
By Shubham Sharma
 • Retailing refers to the process by which
goods or services are sold to consumers
through multiple channels of distribution to
earn a profit. Retailers satisfy the demand
identified through a supply chain and are

Retailing
the final step in the distribution of these
goods or services. The concept of retailing is
not just confined to the sale of goods, but
also includes the services aspect. It
encompasses all activities involved in the
marketing and selling of goods or services
directly to the final consumer for personal,
non-business use.
Retailing

• Retailing can be conducted in a variety of

settings, from brick-and-mortar
establishments like shops and stores to non-
store formats such as online, mail order, and
vending machines. The essence of retailing is
to provide products and services that
consumers want, when they want them, and
at a value.
Functions of Retailing
1. Sorting: Retailers purchase large quantities of goods from
producers or wholesalers and sell them in smaller
quantities to consumers. This process is known as sorting,
where retailers sort out a vast range of goods into smaller,
manageable, and desirable quantities and varieties.
2. Breaking Bulk: To reduce transportation costs,
manufacturers and wholesalers typically ship large
quantities of goods. Retailers then break these bulk
shipments into smaller quantities that are more suitable for
individual consumption.
3. Holding Inventory: Retailers maintain an inventory that
allows customers to have access to a wide variety of
products at their convenience. By holding inventory,
retailers provide immediate gratification to their customers
who can purchase goods when they want them.
Functions of Retailing
4. Adding Value: Retailers add value through
various services such as displaying products,
providing sales assistance, offering credit
facilities, and ensuring product delivery. They
enhance the product's value with services and
experiences that make the shopping process
more convenient or enjoyable.
5. Providing Services: Retailers often provide
services that enhance the customer's shopping
experience. These services may include personal
shopping assistance, easy return policies, and
loyalty programs.
Functions of Retailing

6. Market Information: Retailers provide

information to customers about products and
services, including price, quality, and usage. They
also gather information about consumer needs and
preferences, which can be passed back up the
supply chain to manufacturers and wholesalers.
7. Channel of Communication: Retailers act as a
channel of communication between the consumer
and the manufacturer. They provide feedback on
consumer buying patterns and preferences, which
helps producers to tailor their production and
marketing accordingly.
Concept of Retailing
1. Consumer Orientation: Retailing is primarily focused on meeting
the needs and desires of the consumer. It involves understanding
consumer behavior, preferences, and purchasing patterns to offer
products and services that satisfy their demands.
2. Final Transaction: Retailing represents the end point of the supply
chain where the final transaction with the consumer takes place.
This is the moment where the product is transferred from the seller
to the buyer, typically in exchange for money.
3. Value Delivery: Retailers strive to deliver value through a
combination of products, services, and experiences. This value is
not just in the form of the goods themselves but also in the
convenience, service, and environment offered.
4. Assortment: Retailers offer an assortment of products and services
from various suppliers, enabling consumers to choose from a wide
range of options within a single location or platform.
Concept of Retailing
5. Micro-Marketing: Retailing involves micro-marketing activities
where retailers tailor their offerings to specific local markets or
demographic groups, often personalizing the shopping experience to
individual consumer needs.
6. Accessibility and Convenience: Retailers provide accessible locations
or platforms for consumers to browse and purchase goods and
services. This includes physical stores that are conveniently located, as
well as online shopping options that are available around the clock.
7. Sales and Promotion: The concept of retailing also involves
promotional activities aimed at attracting customers and encouraging
purchases. This includes advertising, sales promotions, displays, and
other marketing efforts.
8. Service and Support: Post-purchase services such as customer
support, warranties, and easy return policies are integral to retailing,
as they ensure customer satisfaction and loyalty.
Driving Forces for
Retailing
• The driving forces for retailing are
factors that propel the growth and
transformation of the retail industry.
They include technological advances,
consumer behavior changes, economic
factors, and competitive strategies.
Driving Forces for Retailing

1. Technological Advancement:
1. E-commerce and Mobile Commerce: The rise of online
shopping through websites and mobile apps. For example,
Amazon's use of technology has revolutionized how people
shop, offering convenience and a vast selection.
2. Payment Systems: Contactless payments and mobile wallets
like Apple Pay and Google Wallet have made transactions
faster and more secure.
2. Consumer Behavior Changes:
1. Demand for Convenience: Consumers want shopping to be
easy and quick, leading to services like curbside pickup from
retailers like Target and Walmart.
2. Personalization: Shoppers look for personalized experiences.
Companies like Stitch Fix use algorithms to tailor fashion
selections to individual customer preferences.
Driving Forces for Retailing

3. Economic Factors:
Disposable Income: Increases in disposable income can
lead to more spending on retail goods and services, as
seen in luxury retail sectors.
Globalization: Retailers like H&M and Zara have expanded
globally, taking advantage of new markets and economic
conditions in different countries.
4. Demographic Shifts:
Aging Population: Retailers like Walgreens have adjusted
their product offerings to cater to an older demographic
that requires more healthcare products.
Urbanization: Urban centers with high foot traffic can
drive the success of small-format stores like those
operated by Starbucks.
Driving Forces for Retailing

5. Regulatory Environment:
Trade Policies: Tariffs and trade agreements can affect retail by changing the cost of
goods sold. For example, tariffs on imported goods might prompt retailers like Best
Buy to adjust pricing or sourcing strategies.
Data Protection Regulations: GDPR in Europe has forced retailers to change how
they handle customer data.
6. Competition and Market Saturation:
Differentiation: Retailers need to differentiate themselves to stand out. For
instance, Whole Foods Market differentiates itself through a focus on organic and
natural products.
Market Saturation: In some areas, the market is saturated with similar retail
offerings, driving retailers to innovate or specialize to capture consumer interest.
7. Sustainability and Ethical Practices:
Sustainable Practices: Retailers like Patagonia are driven by sustainability,
influencing product sourcing and consumer engagement.
Ethical Sourcing: Consumers increasingly prefer products that are ethically sourced,
driving retailers to be more transparent about their supply chains.
Driving Forces for Retailing

8. Supply Chain Innovation:

Just-In-Time Inventory: Toyota's just-in-time inventory
strategy has been adopted by many retailers to reduce
holding costs and increase efficiency.
Supply Chain Visibility: Retailers like Nike use advanced
supply chain management tools to provide visibility and
ensure timely product delivery.
9. Changing Retail Formats and Concepts:
Experiential Retail: The Apple Store offers an experiential
retail environment where consumers can try products
before they buy.
Pop-Up Shops: Temporary pop-up shops are used by
brands like Adidas to create a buzz and test new markets.
Building and Sustaining
Relationships
• Customer Relationships: Retailers must build strong relationships
with customers to foster loyalty and repeat business. Personalization,
customer service, and loyalty programs are key strategies. For
example, Sephora’s Beauty Insider program provides rewards and
personalizes recommendations, encouraging repeat purchases.
• Supplier Relationships: Strong relationships with suppliers can lead
to better pricing, exclusive products, or more favorable terms.
Walmart, for example, works closely with suppliers to manage
inventory and reduce costs through its Vendor Managed Inventory
(VMI) system.
• Employee Relationships: Retailers like Costco are known for their
excellent employee relations, offering higher wages and benefits,
which can result in better customer service and lower turnover rates.
Strategic Planning

• Defining Vision and Goals: Retailers must have a clear vision and set of goals that
guide their long-term strategy. For instance, Nike’s strategic planning involves
leadership in innovation and design to inspire athletes.
• Market Analysis: Retailers analyze the market to understand trends, customer
needs, and competitive landscapes. Home Depot might use market analysis to
decide on store locations and the mix of products to offer.
• Resource Allocation: Deciding how to allocate resources effectively is a key part of
strategic planning. This could involve Starbucks deciding how much to invest in new
store openings versus digital app development.
• Performance Monitoring: Retailers must establish key performance indicators
(KPIs) to monitor their strategic plan's success. Amazon uses metrics like customer
satisfaction and delivery times to gauge performance.
Structural Change

• Organizational Structure: The way a retail business is organized can undergo structural
change to improve efficiency or adapt to market conditions. For example, a large
department store like Macy’s might restructure to consolidate departments and improve
cross-functional collaboration.
• Adaptation to Changing Markets: Retailers must adapt their structures to changing
consumer behaviors and market demands. With the rise of online shopping, Best Buy
has shifted its structure to integrate online and offline sales channels.
• Technology Integration: Implementing new technologies can lead to structural changes
within a retail organization. For example, the introduction of RFID technology for
inventory management can streamline operations and affect roles and responsibilities
within a retail company.
• Mergers and Acquisitions: Structural change can also come from mergers and
acquisitions, like when Amazon acquired Whole Foods, significantly changing the
structure and strategy of the grocery retailer.
Conclusion
• Each of these areas is critical for the success of a retail business.
Building and sustaining relationships is about creating lasting
connections with all stakeholders; strategic planning involves setting a
long-term vision and making informed decisions to achieve business
goals; and structural change is about adjusting the organization's
setup to adapt to internal and external pressures, ensuring the
business remains competitive and efficient.
Classification of retail outlets

Department Stores: Specialty Stores: Supermarkets:

Offer a wide range of products Focus on a specific product Large stores offering a wide variety
organized into different category and offer a deep selection of food and grocery items, usually
departments within the same within that category. at lower price points.
building. Examples are Sephora for beauty Examples include Kroger and
Examples include Macy's and products, Foot Locker for athletic Safeway, which focus on food
Nordstrom, which provide footwear, and Best Buy for products along with some non-food
extensive merchandise including consumer electronics. household items.
clothing, home appliances,
electronics, and cosmetics.
 Classification of retail outlets

4. Convenience Stores: 5. Discount Stores: 6. Warehouse Stores:

Small outlets that offer a limited Sell goods at lower prices by Offer products in bulk quantities at
range of high-turnover convenience accepting lower margins and selling discounted rates in a warehouse-
goods, open for extended hours. higher volumes. like environment where customers
Examples are 7-Eleven and Circle K, Walmart and Target are prime often buy membership.
often located near residential areas examples, offering a wide Costco and Sam’s Club are
for easy access. assortment of goods at discounted examples of warehouse clubs
prices. emphasizing value for money and
bulk purchasing.
 7. Hypermarkets/Supercenters:
Combine supermarket and department store facilities in
Classification of one location, offering a vast assortment of goods.
retail outlets Examples include Walmart Supercenter and Carrefour,
providing a one-stop shopping experience.
8. E-Tailers:
Online retailers that operate through electronic
transactions without a physical retail space.
Amazon is the most prominent example, selling a wide
range of products online.
9. Category Killers:
Large stores that specialize in a particular category and
offer an extensive selection in that category, often
dominating the competition.
Examples include Home Depot for home improvement
and Staples for office supplies.
 10. Outlet Stores:
Offer products from one or several manufacturers at reduced prices,
Classification of often selling overstocked, out-of-season, or slightly imperfect goods.
Examples are Nike Outlet and Coach Outlet, which sell their brand’s
retail outlets products at discounted prices.
11. Malls:
Enclosed spaces with a variety of stores and brands, offering a mix of
shopping, entertainment, and dining options.
Examples are the Mall of America and Dubai Mall, providing an all-in-one
environment for a diverse shopping experience.
12. Boutiques:
Small and stylish shops offering specialized and high-end products, often
with a focus on personalized service.
Examples include local fashion boutiques that may carry unique or
designer label clothing.
13. Pop-Up Shops:
Temporary retail spaces that sell merchandise of any kind for a short
period of time.
Examples are seasonal Halloween costume shops or a brand launching a
new product with a temporary storefront.
 1. Types of Market Structures:
• Monopolistic Competition: This is a common market structure in
Market structure retail, characterized by many competitors offering differentiated
products. Here, retailers have some control over pricing because
of brand differentiation. Examples include clothing stores and
restaurants.
• Oligopoly: A few large retailers dominate the market, often seen
in grocery or pharmacy chains. These companies may set prices
based on the competition, leading to non-price competition
(services, loyalty programs). Walmart, CVS, and Walgreens are
typical examples.
• Monopoly: Rare in retail, but can occur at a local level where one
retailer has exclusive control over a market or product category. A
small town might have only one hardware store, effectively giving
it a monopoly.
• Perfect Competition: Many retailers sell virtually identical
products, and no single retailer can influence market prices. This
is rare in retail but can be approximated in markets with
numerous small vendors like farmers' markets.
Market structure

2. Degree of Competition:
• Intensity of Rivalry: This varies depending on
the market structure, with intense
competition in monopolistic markets and less
in oligopolies. The intensity affects pricing,
promotions, and customer service levels.
• Barriers to Entry: These can define market
structure by determining how easy it is for
new retailers to enter the market. High
barriers to entry can lead to oligopolies, while
low barriers may result in a competitive
marketplace.
Market structure

3. Market Dynamics:
• Consumer Preferences: Changes in consumer tastes
can reshape market structure, as seen with the rise
of e-commerce changing the landscape for
traditional brick-and-mortar retailers.
• Technological Advances: Technology can lower
entry barriers (e.g., through e-commerce platforms)
or create monopolistic conditions (e.g., through
patents).
• Regulatory Environment: Government policies can
influence market structure by either encouraging
competition (through antitrust laws) or creating
barriers (through regulations).
Market structure

4. Retail Formats and Market Structure:

Diversity of Formats: The presence of various
retail formats like department stores,
specialty stores, and online retailers
contributes to the market structure, offering
consumers choices and influencing
competitive dynamics.
5. Pricing Strategies:
Pricing Power: In a monopolistic
competition, retailers may have some
flexibility to set prices above marginal cost. In
a perfect competition, retailers are price
takers.
Market structure

6. Location and Geographic Reach:

Local vs. Global: Retailers can have a local, regional,
national, or international footprint, which affects
market structure and competitive strategies. Local
retailers may have deep community ties, while global
retailers leverage scale and brand recognition.
7. Mergers and Acquisitions:
Consolidation: The consolidation of retail businesses
through mergers and acquisitions can significantly alter
market structure, often leading to an oligopolistic
market.
8. Non-Price Competition:
Differentiation: Retailers compete on factors other
than price, like customer service, product assortment,
store environment, and brand image, which can lead to
a differentiated market structure.
Retail planning,
development, and
control

• Retail planning, development, and

control are critical components in the
overall management of retail operations.
These processes ensure that retail
businesses are well-positioned to meet
market demands, achieve their financial
goals, and provide customer satisfaction.
Retail Planning
Strategic Planning: Involves setting long-term goals and deciding on the actions and resources necessary to achieve
them. This might include expanding the product range, entering new markets, or implementing new technologies.

Financial Planning: Retailers need to plan their financial strategies meticulously, which includes budgeting,
forecasting sales, and managing cash flow to ensure profitability.

Store Layout and Design Planning: This encompasses the strategic placement of products and the design of the
store environment to optimize customer flow and sales.

Merchandise Planning: Retailers must plan what products to buy, in what quantities, and when to place them on
the sales floor. This involves understanding customer preferences and managing inventory levels.

Marketing and Promotions Planning: Involves creating advertising campaigns, loyalty programs, and promotional
events to attract and retain customers.
 Location Decisions: Selecting the right location is crucial for
retail success. This includes analysis of foot traffic,
accessibility, customer demographics, and competition.

Store Concept Development: Retailers develop store

concepts that align with their brand and customer
expectations, such as luxury, discount, or experiential
retailing.

Retail Building and Remoadeling Stores: The development phase

includes the construction or remodeling of stores to enhance
the shopping experience or to adapt to changing retail
Development trends.
Technology Implementation: Retailers need to develop their
technological capabilities, such as implementing eCommerce
platforms, customer relationship management (CRM)
systems, and point-of-sale (POS) systems.
Supply Chain Development: Creating efficient supply chains
to reduce costs, improve stock turnover, and increase
customer satisfaction is a significant aspect of retail
development.
Retail Control
Performance Monitoring: Retailers need to continuously monitor various aspects of their operations,
such as sales performance, inventory levels, and customer satisfaction.

Financial Controls: Includes managing expenses, reducing shrinkage, and ensuring the accuracy of
financial reporting.

Inventory Control: Maintaining the right balance of stock – not too much or too little – is critical to
minimize costs and maximize sales.

Quality Control: Ensuring that the products and services offered meet certain quality standards to
maintain brand reputation and customer loyalty.

Employee Management: Involves recruiting, training, and monitoring staff to ensure they are
providing the level of service required.
Retail planning,
development, and control

• Retail Planning: A retailer like IKEA plans its store

layouts to create a natural flow that exposes
customers to their wide range of products,
encouraging them to make additional purchases.
• Retail Development: When Starbucks expands into a
new market, they carefully select locations that are
high traffic and easily accessible to their target
demographic.
• Retail Control: A fashion retailer such as Zara uses
sophisticated inventory control systems to ensure that
popular items are restocked quickly, while also
avoiding overstock of less popular items.
Knowing your customer and
focusing on the consumer
• Knowing your customer and focusing on the
consumer are central to the success of any retail
business. This approach involves understanding
customer needs, preferences, behaviors, and
expectations, and then aligning your business
strategies to meet these needs effectively.
1. Customer Profiling
and Segmentation

• Demographics: Age, gender, income level,

education, and family status help in
understanding who the customers are.
• Psychographics: Interests, lifestyles, values, and
attitudes give insights into why customers buy.
• Behavioral Analysis: Purchase history, brand
loyalty, usage rates, and shopping patterns help
predict future buying behaviors.
• Geographics: Location-based data can inform
about local preferences and buying habits.
2. Customer Research
and Feedback

• Surveys and Questionnaires: Collecting

feedback directly from customers.
• Focus Groups: Gathering detailed insights
through discussions with small groups of
customers.
• Social Media Monitoring: Understanding
customer opinions and trends through
social media platforms.
• Sales Data Analysis: Analyzing what
products are selling well and identifying
patterns.
 • Tailored Marketing: Using customer data to create
targeted marketing campaigns.
• Product Recommendations: Offering personalized product
Personalization and recommendations based on previous purchases.

Customization • Customized Experiences: Tailoring the shopping

experience to individual customer preferences, like in-
store personal shoppers or online chat support.
Building Customer Relationships

Loyalty Programs: Encouraging repeat business through rewards

and incentives.

Customer Service Excellence: Providing high-quality, responsive

customer service.

Community Building: Creating a sense of community around the

brand through events, forums, or social media groups.
Consumer-Centric Merchandising

Product Assortment: Aligning product offerings with customer

preferences and demands.

Store Layout: Designing the store layout to enhance the shopping

experience for your target customer.

Visual Merchandising: Using displays and signage to attract and

engage customers.
Leveraging Technology

• CRM Systems: Using Customer Relationship

Management systems to store and analyze
customer data.
• AI and Machine Learning: Employing advanced
technologies for personalized marketing,
inventory management, and customer service.
• E-commerce Platforms: Providing seamless
online shopping experiences.
Responsive Strategy

• Adaptability: Being able to quickly respond to

changing customer needs and market trends.
• Continuous Improvement: Regularly updating
strategies based on customer feedback and
market research.
 • Mapping out society in the context of
retail business refers to the process of
Mapping out society understanding the societal factors that
influence consumer behavior and
market dynamics. This approach
involves analyzing social trends,
demographics, cultural norms, and
other societal elements that can impact
retail strategies.
Mapping out society

• Understanding the composition of the population in terms of age,

Demographic gender, income, education, and family structure.
• Retailers use this information to tailor their products, marketing, and
store formats to different demographic segments. For example, a
Analysis: retailer might focus on eco-friendly products for a younger,
environmentally conscious demographic.

• Identifying prevailing cultural trends that influence consumer

Cultural preferences and buying behaviors.
• For instance, a rise in health consciousness can lead to an increase in
Trends: demand for organic products, impacting supermarkets and health food
stores.
Mapping out society

3. Socioeconomic Factors: 4. Lifestyle and Attitudes:

Analyzing the economic environment and its Understanding the lifestyles, values, and
impact on consumer spending patterns. attitudes of different societal groups.
During economic downturns, discount and value- A retailer could cater to a lifestyle trend like
oriented retailers may see an increase in home gardening by offering related products and
business, while luxury retailers might experience workshops.
a decline.
Mapping out society

5. Urbanization and Geographic 6. Technology Adoption:

Shifts:
Monitoring urbanization trends and geographic Keeping pace with how society adopts and uses
population shifts. technology, impacting how consumers shop and
Retailers may respond to urbanization by interact with retailers.
opening more city-center locations with smaller The rise in smartphone usage has led many
footprints and targeted product selections. retailers to develop mobile shopping apps and
offer mobile payment options.
Mapping out society

7. Social Media Influence: 8. Environmental and Ethical

Concerns:
Analyzing the impact of social media on Recognizing the growing consumer demand for
consumer behavior, including how people sustainable and ethically produced products.
discover products and share reviews. Retailers may introduce sustainable product lines
Retailers might leverage influencer marketing on or highlight ethical business practices to attract
platforms like Instagram to reach target environmentally conscious consumers.
audiences.
Mapping out society

9. Legal and Regulatory 10. Community Engagement:

Environment:
Understanding the legal framework and Building relationships with the local community
regulatory conditions that impact retail to enhance brand loyalty and reputation.
operations. Retailers might participate in local events,
This includes compliance with consumer support community projects, or engage in
protection laws, labor laws, and environmental charitable activities.
regulations.
Thank you