MBA 3rd SEMESTER 1st MID IMPORTANT QUESTIONS

MARKETING SPECIALISATION
RETAIL MANAGEMENT
1. Define retail management. Explain the types and functions of retailers.
2. Describe the process of strategic retail planning.
3. Explain the types of retail location in briefly.

1. Define retail management. Explain the types and functions of retailers.

What is Retail Management?
Retail Management is the process which helps the customers to procure the desired merchandise
form the retail stores for their personal use. It includes all the steps required to bring the
customers into the store and fulfill their buying needs. Retail management saves time and
ensures the customers easily locate their desired merchandise and return home satisfied. Fashion
Retail Management gives insight into the principles of fashion marketing, retail buying and
merchandising and imparts basic fabric knowledge - from fiber to fabric and fabric to garment. It
gives an overview of the concept of visual merchandising and lays emphasis on customer
relationship management, brand management and sales management.
Functions of retailers
Generally, retailers are involved in the following functions:
1. Function of breaking bulk
Retailers break up large quantities into smaller units such as individual canes, bottles, packets,
appropriate for consumer use.
2. Function of creating place utility
Retailers create place utility by transporting goods to the point of consumption.
3. Stocking Varieties of goods
Retailers buy varieties of goods from various manufacturers or wholesalers. Thus, a retailer
provides a wide range of choice enabling the consumers to select the products of their choice.
4. Providing credit facilities to customers
Retailers grant credit facilities to consumers and thus increase their short-term purchasing power.
5. Providing information to customers and wholesalers
Retailers act as a link between the buyers and wholesalers / manufacturers. In the distribution
channel, retailers are in direct contact with customers. Retailers supply market information to
manufacturers either directly or through wholesalers.
6. Estimating the demand and arranging the purchase of the product
Retailers create demand for products by communicating with their customers. This demand
creation is quite helpful for manufacturers and wholesalers.
7. Acting as consumer’s agent
The retailers anticipate the wants of the consumers and then supply them the right kind of goods
at a reasonable price. Their job is to make the consumer’s buying as easy and convenient as
possible.
8. Marketing functions
Retailers perform several marketing functions such as sales promotion, advertising and point of
purchase display. They induce customers to buy products of reputed companies.
9. Connecting link
The retailers are the connecting link between the wholesaler and the ultimate consumer.
Types of Retailers
Here are some examples of the different types of retail stores where consumers can purchase
products for immediate use or consumption.
 Department Stores: Sell a wide range of merchandise that is arranged by category into
different sections of the physical retail space. Some department store categories include
shoes, clothing, beauty products, jewelry, housewares, etc. Examples of department store
retailers include Macy's, Nordstrom, and JCPenney, to name just a few.
 Grocery Stores and Supermarkets: Sell all types of food and beverage products, and
sometimes also home products, clothing, and consumer electronics as well.
 Warehouse Retailers: Large no-frills warehouse-type facilities stocked with a large variety
of products packaged in large quantities and sold at lower-than-retail prices.
 Specialty Retailers: Specialize in a specific category of products. Toys ‘R’ Us, Victoria's
Secret, and Nike are examples of specialty retailers.
 Convenience Retailer: Usually part of a retail location which sells gasoline primarily, but
also sells a limited range of grocery merchandise and auto care products at a premium
"convenience" price from a brick-and-mortar store.
 Discount Retailer: Sell a wide variety of products are often private labeled or generic brands
at below-retail prices. Discount retailers like Family Dollar, Dollar General, and Big Lots
will often source closeout and discontinued merchandise at lower-than-wholesale prices and
pass the savings onto their customers.
 Mobile Retailer: Uses a smartphone platform to process retail transactions and then ships
the products that were purchased directly to the customer.
 Internet Retailer: Sells from an Internet shopping website and ship the purchases directly to
customers at their homes or workplaces and without all the expenses of a traditional brick-
and-mortar retailer, usually sell merchandise for a lower-than-retail price
2. Describe the process of strategic retail planning.
For the purpose of developing retail strategies, retailers are required to follow a step by step
procedure or planning process. The planning process discusses/involves the present stage of
business, the formulation, list of available strategic options, and the implementation of the
selected strategies. Considering the importance of strategic decisions for the future success of the
business, a systematic approach is essential.
The strategic planning process, which after considering the HR potential and USP of a
particular store takes proper shape, is normally divided into following steps:
1. Deciding the store’s philosophy, mission and objectives,
2. Situation analysis,
3. Formulation of retail strategy
4. Strategy implementation and control.
1. Deciding the store’s philosophy, mission and objectives:
The retail strategic planning process starts with the identification of store’s mission for its
existence and hence the scope of the retail store. The mission of a store entails identifying the
goods and services that will be offered to customers. It also deals with the issue that how the
resources and capabilities of a store will be used to provide satisfaction to customers and how the
store can compete in the target market vis-a-vis its competitors.
The mission also involves the way of store’s functioning. How a store will work and accomplish
its day to day operations? What is the emergency planning? All are answered in the store’s
mission statement. For example, Vishal Mega Marts, they have philosophy of customer
satisfaction through “manufacturing to retailing”.
This reflects not only the way it tends to treat its customers, but discusses the secret of its
competitive advantage, i.e. the profit saved from absence of intermediaries like agents and
brokers, commission saved is distributed to customers by way of low priced items.
Once the organization mission has been determined, its objectives, desired future positions that it
wishes to reach, should be identified. Stores’ objectives are defined as ends which the store seeks
to achieve by its USP (Unique Selling Preposition) and operations.
The store’s objectives may be classified into two parts:
(i) External store objectives, and
(ii) Internal Store Objectives.
External store objectives are those that define the impact of store on its environment, e.g., to
develop high degree of customer confidence by providing quality goods at lowers prices. Internal
store objectives, on the other hand, are those that define how much is expected to be achieved
with the available resources, e.g. to raise the store turnover by 15% in the coming year.
2. Situational Analysis (SWOT Analysis):
The objective of doing store’s situation analysis is to determine where the store is at present and
to forecast where it will be if formulated strategies are implemented. The difference between
current and future position (forecasted) is known as planning or strategic gap. Under
organisational analysis, normally stores study their external (environmental) and internal
environments.
External Analysis:
The purpose of examining the store’s external environment is to study the opportunities and
threats in the retailing environment. The external analysis studies factors that affect the macro-
environment of retailing industry and the task environment.
Under external analysis, retailer studies these parameters:
(i) Economic environment of retailing,
(ii) Political environment of retailing,
(iii) Legal environment of retailing,
(iv) Socio-cultural environment of retailing,
(v) Technological environment of retailing, and
(vi) International environment of retailing.
The store’s task environment can be influenced directly by retailer’s own policies and includes
competitors, suppliers and customers.
Internal Analysis:
The objective of studying internal environment of its own store is to identify the store’s strengths
and weaknesses. The store will try to increase its capabilities, and overcome the weaknesses that
deter the business profit. While doing the internal analysis, store examines the quality and
quantity of its available resources and critically analyzes how effective these resources are used.
These resources for the purpose of examining are normally grouped into human resources,
financial resources, physical resources (assets) and intangible resources (goodwill, image etc).
The types of questions that are enquired under different resources are:
Human resource:
(a) Is present strength of employees at various levels is sufficient for future action?
(b) Are the employees trained and capable to perform the tasks assigned to them?
(c) Are the employees loyal to store?
(d) Are the employees punctual and regular?
(e) Are the employees skilled in their assigned tasks?
Financial resource:
(a) What is the total cash flow from store’s present activities?
(b) What is the ability of retail store to collect money at the time of requirement/ emergency?
(c) How much effective and stable financial policies are?
(d) What is the ratio between fixed and current assets?
(e) What are the contingency plans in case of negative cash flow?
Physical resources:
(a) What is the contribution of fixed assets?
(b) What is the position of abandoned/unused assets?
(c) How effective and update are the store’s information systems?
Intangible resources:
(a) What is the present capability of the company’s management?
(b) How effective is the R & D cell?
(c) How good is the competitor’s intelligence system?
(d) How effective store’s loyalty programmes are?
(e) What is the capability of retail store manager?
(f) Are customers loyal towards company’s products?
3. Formulation of Retail Strategy:
In this stage, after analyzing the store’s capabilities in terms of HR, finance, physical and
intangible resources, a store manager formulates retail strategy with regard to marketing, retail
positioning and retail mix. Marketing is the way to achieve the set objectives. Therefore,
marketing strategy should be devised according to store’s primary and secondary objectives.
Generally, marketing strategy is developed on the basis of product and/or market segmentation
instead of the market as a whole.
Retail Positioning is a plan of store’s action for how the retailer will enter the target market and
will compete with its main competitors. Retail positioning from a retail store’s point of view, is a
step by step plan to create and maintain a unique and everlasting image of the store in the
consumers’ mind.
This process reveals the fact that understanding ‘what customer wants?’ is the success key to
retail positioning in the market. Under retail positioning, a retailer conveys the message that its
products are totally different and as per customers’ requirement. The reason here is that
customers are attracted towards items that are new for them with the perception that if it is new,
it will have some extra/added features.
Retail positioning is made possible under these circumstances:
(i) By differentiating the store’s merchandise from its competitors,
(ii) By offering high level of after sales services at nominal/no cost, and
(iii) By adopting low pricing policies.
Retail Mix is the blend of various retail activities which in total present the whole concept of
retailing. The retail marketing and retail positioning strategies are put into effect by this retail
mix – the set of controllable elements that a retailer can use to satisfy customers’ needs and to
influence their buying behavior and compete effectively in the target market. Utmost care is
required on the part of retail manager to select the various elements for a perfect retail mix.
The main elements a retail store manager has to face are:
i. Store’s location
ii. Merchandise assortment
iii. Pricing policy
iv. Customer service mechanism
v. Visual merchandising
vi. Personal selling efforts
vii. Advertising efforts and
viii. Store’s internal and external environments.
4. Strategy Implementation and Control:
It is concerned with the designing and management of retail systems to achieve the best possible
combination of human, financial, physical and intangible resources of a retail store to achieve the
formulated objectives, without timely and effective implementation also requires scheduling and
coordination of various retail activities. For example, the coordination between the marketing
and sales promotion department is a must for sales promotion to make success.
Further, the spirit of team work is an essential part for the success of strategy implementation. If
the retail store’s strategies are competitive, marketing efforts are as per demand but the sales
promotion employees are not taking it seriously or are ineffective, result will not be up to the
mark.
The implementation of new retailing strategies sometimes require changes in the way of
functioning and duties that can lead to resistance from employees. Therefore, stores should take
positive steps to reduce this resistance to change and to convince the employees that it in a long
term will be beneficial for both the store and employees.
The positive steps include the following:
(i) Inspection,
(ii) Detection, and
(iii) Correction.
It means after implementing the retail strategies, retailer should assess how effectively strategies
are being implemented, how far the strategic objectives are being achieved and what has been
left to be achieved in the store’s objectives list. Therefore, retailers inspect the implemented
strategies from time to time and detect the fault (if any) in the implementation of various retail
elements. If any deficiency is found during inspection process, that has to be corrected with
immediate effect without any further loss to store.
3. Explain the types of retail location in briefly.
Commercial retail locations are available in many different forms. Stop and think about the
businesses in your town. Like most communities, there are probably older shopping areas, new
bustling retail locations and some tucked away shops. Retailers have many store location factors
to consider when choosing a place for their business. Here are a few of the more common types
of retail locations.
Mall Space
From kiosks to large anchor stores, a mall has many retailers competing with each other under
one roof. There are generally 3 to 5 anchor stores or large chain stores, and then dozens of
smaller retail shops. Typically the rent in a mall location is much higher than other retail
locations.
This is due to the high amount of customer traffic a mall generates. Before selecting this type of
store location, be sure the shopper demographic matches the description of your customers. Mall
retailers will have to make some sacrifices in independence and adhere to a set of rules supplied
by mall management.
Shopping Center
Strip malls and other attached, adjoining retail locations will also have guidelines or rules for
how they prefer their tenants to do business. These rules are probably more lenient than a mall,
but make sure you can live with them before signing a lease. Your community probably has
many shopping centers of various sizes.
Some shopping centers may have as few as 3 units or as many as 20 stores. The types of
retailers and the goods or services they offer in the strip mall will also vary. One area to
investigate before choosing this type of store location is parking. Smaller shopping centers and
strip malls may have a limited parking area for your customers.
Downtown Area
Like the mall, this type of store location may be another premium choice. However, there may be
more freedom and fewer rules for the business owner. Many communities are hard at work to
revitalize their downtown areas and retailers can greatly benefit from this effort. However, the
lack of parking is generally a big issue for downtown retailers. You'll find many older, well-
established specialty stores in a downtown area.
Free Standing Locations
This type of retail location is basically any stand-alone building. It can be tucked away in a
neighborhood location or right off a busy highway. Depending on the landlord, there are
generally no restrictions on how a retailer should operate his business.
It will probably have ample parking and the cost per square foot will be reasonable. The price for
all that freedom may be traffic. Unlike the attached retail locations where customers may wander
in because they were shopping nearby, the retailer of a free-standing location has to work at
marketing to get the customer inside.
Office Building
The business park or office building may be another option for a retailer, especially when they
cater to other businesses. Tenants share maintenance costs and the image of the building is
usually upscale and professional.
Home-based
More and more retail businesses are getting a start at home. Some may eventually move to a
commercial store location, while many remain in the business owner's spare room. This type of
location is an inexpensive option, but growth may be limited. It is harder to separate business and
personal life in this setup and the retailer may run into problems if there isn't a different address
and/or phone number for the business.