2. Topics
Place of Retailing in marketing mix
Retail Environment
Retail formats
Evolution of Retail
Theories of Retail Development
Scalability and shop displays
3. Place of Retail in mkt mix
Mix includes the 6”p”s: product,
price,place,promotion,presentation, people
Place: includes the distribution and availability of
products in various locations.
Customers introduced to the product at the store.
“Point of Sale” or “Point of Purchase”
Channel Power
4. Last channel in distribution
Manufacturer Wholesaler Retailer
Final
consumer
Typical channel
5. Retailers role in sorting process
Manufacturer
Brand F
Manufacturer
Brand B
Manufacturer
Brand A
Manufacturer
Brand C
Manufacturer
Brand D
Manufacturer
Brand E
Wholesaler
Wholesaler
Wholesaler
Retailer
Brand A
customers
Brand B
customers
Brand C
customers
Brand D
customers
Brand E
customers
6. Retail Environment
Breaking bulk
Assorting function: evaluates all the different
products available and offers to target the
optimum array of products to cvhoose from
Storing function: stocking goods till customers are
willing to buy and use them
7. Contribution of Retailing to Indian
Economic Scenario
Real estate
Tourism/outbound shopping
Higher GDP
Outsourcing opportunities
9. Evolution
Social developments and their impact: development of rail
road and telegraph-order placement
Bon Marche- 1852 Paris.Relied on volume,money back
guarantee
5 and 10 cent stores- needs of poor classes
Montgomery Ward- mail order catalogue for rural market
Atlantic & Pacific- first chain grocery store
The Industrial Revolution: urnbanization,mass mfg
Self service: Piggly Wiggly, reduce costs
Supermarkets
Speciality stores, malls and other formats- first
hypermarket:Carrefour:France, advent of
massmerchandisers, barcode, all consumer needs in a
single shopping area
The World Wide Web
10. 3 principles of Modern Selling
Fixed price before sale, customers purchased at
the set price
Prices were determined on basis of stock turns
and the amount of profit that was generated from
the product
Products were departmentalized
12. Retail Strategy mix
Store location: store/non store format,
geographic area, site
Operating procedures: Personnel, management
style, store hours.
Goods/Services offered: one or many product
categories (low/med/high)
Pricing: prestige/competitive/penetration pricing
Store atmosphere/customer services: physical
facilities, personal attention, return policies,
deliveries
Promotion: Store displays, advt, personal selling
and sales promotion
14. Theories of Retailing
Environmental theory
Cyclical theory
Scrambled merchandising
The Wheel of Retailing
15. Environmental Theory
Change in retail is attributed to change in
environment where the retailers operate
“Survival of the fittest”
Retail institutions are economic entities and
retailers confront an environment-
customers+competitors+technology
Environmental change- alter the profitability
Retailers which adapt to this change
successfully
(technological, economic,demographic ) will
grow and prosper
16. Cyclical Theory :Wheel of
Retailing
Trading up phase
Mature retailer
Top heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Trading up phase
Mature retailer
Top heavy
Conservative
Declining ROI
Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
Many price sensitive shoppers who will trade
customer services, wide selections and
convenient locations for lower prices
P.S. shoppers not loyal- will switch for lower
prices
New outlets will have lower operating costs
Moving up, retailers try to improve sales, image.
need to decide- low,medium or high end
strategy
Eg- traditional dept. stores- Walmart discount
retailer-prospered, low end- factory outlets,off
price chains etc.
Discount web retailers
Firms should be wary of strategy conversion-
loss of competitive advantage
17. High vs low end strategy
Low end Strategy High End strategy
Low rental location-
side street
No services or at addl
fees
Spartan fixtures and
displays
Price emphasis in
promotion
Self service or reduced
staff
Crowded interior
Shopping centre or
business district-high
rental
Elaborate services-
credit,decorating,wrappin
g,alterations etc
Elaborate fixtures and
displays
No Price emphasis in
promotion
Product demo,more sales
staff
Spacious interior
18. Scrambled Merchandising
Retailer carries width of assortment- many
product lines
Retailer adds goods and services which are
unrelated to each other and to the original
business
Increase overall revenues- fast moving,profitable
goods are added
One stop shopping,impulse shoppers.
Eg Crossword
19. The Retail Life Cycle
Introduction Growth Maturity Decline
Sales Low/growing Rapid/acceleratin
g
High, levelling
off
Dropping
Profitability Negative /break
even
High yield High/declining Low to break
even
Positioning Concept
innovation
Special need Broad market Niche
Competition None Limited Extensive/satur
ated
Intensive/consoli
dated
Innovati
on
Growt
h
Maturity
Declin
e
Profit
TIME
SALES
20. Growth of Retail Markets
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
African markets Indian markets South Asian markets Developed markets
INCEPTION (10 years)
GROWTH (15 -25 years)
MATURITY (5 -10 years)
STAGNATION (5 -10 years)
TIME
S
A
L
E
S
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Evolving, diffused formats
• Regional presence
• Conjectural presence in each market
• Lower market share per market
• Lack of availability of retail real estate
space at reasonable cost
• High degree of competition from
unorganised players
• Investment stage with high incremental
investments
• Mainly promoter and angel investor
financing
• Presence in few merchandise
categories
• Lack of scientific merchandise planning
process
• High bargaining power of vendors
• High logistivs and merchandise
acquisition costs
• High degree of resistance from
consumers towards organised formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Established format characteristics
• Development of speciality formats
• Movement towards national presence
• Rapid expansion phase
• Availability of retail space at reasonable
costs
• Growth in internal and external
competition
• Larger penetration into individual
markets
• Accelerated investments in new
projects with lower incremental
investments
• Private equity, venture capital, debt and
equity market financing accessible
• High cost of financing
• Increase in breadth and depth of
merchandise categories
• Introduction of scientific merchandise
planning process
• Focus on private label development
• Bargaining power with vendor
increases
• Consumers start accepting new formats
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics:
• Increasing specialisation in formats
• National and international presence
• New store expansion tapers
• Oversupply of retail space
• Significant competition from other
organised players and overlapping
formats
• Increasing focus on differentiation
strategies
• Peak penetration into individual
markets
• Market share stagnates
• Low incremental investments required
• Investments funded through internal
accruals
• Cost of financing declines
• Customer acquisition costs increase
• Substantially large breadth and depth
of merchandise categories
• Private labels assume strategic
significance for improving profitability
• Vendors enjoy low bargaining power
• Increasing collaboration with vendors to
drive supply chain efficiencies
• Consumers demand higher service
levels as awareness increases
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
Characteristics :
• Consolidation of formats
• National and international presence
• New store expansion stagnates or falls
• Retail space supply tapers, leading to
higher acquisition costs/lease rentals
• Significant competition from other
organised players and alternative
formats
• Over penetration into individual markets
• Growth decelerates
• Market shares of individual players
decline
• Dependence on external finance to
fund investments increases
• High cost of financing
• Customer retention costs increase
• Consolidation of merchandise
categories
• Revamp in private label strategy
• Low bargaining power of vendors –
vendors start losing out as competitive
pressures lead to squeezing of vendors
• Consumers demand higher service
levels as awareness increases
• Consumers shift to alternative formats
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Availability of finance
• Low fixed cost coverage leading to
high operating leverage
• High individual property risk
• Format risk due to lack of stability
• Market risk in terms of acceptability of
format by customers
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Finance availability
• Highly geared financial structure
• Private label establishment
• IT integration
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Market risk due to increase in
competition
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
• Risks:
• Business risk increases and payback
periods from new projects increase
• Increasing finance risk
• New project risks in international
markets
• Competition from alternative formats
• Consumer retention risks
African markets Indian markets South Asian markets Developed markets
INCEPTION (10 years)
GROWTH (15 -25 years)
MATURITY (5 -10 years)
STAGNATION (5 -10 years)
TIME
S
A
L
E
S
22. Conventional Retail formats
Products available in shanties
Small mobile retailers: products available on
handcarts, bicycles etc
Small shops which got converted to bazaars
23. Contemporary Retail Formats by
Customer Mediation
Activity
Elements
In store Catalogu
e
Cable tV www Telephon
e
Means of
Mediation
Humans in
brick and
mortar
environmen
t
Paper
and
telephonic
Broadcast
and
telephonic
Computer
and Voip
Telephonic
Customer
interface
Face to
face sales
service
Remote,
print
,response
voice only
Remote,vo
ice only
Remote,
IVR
Remote,
voice only
Product
Presentati
on
3 D
displays
Photo and
text
Tv image
and demo
Image and
text
Telephonic
product
and
service
description
24. Store formats
Create a distinct image of store amongst
customers.
- By location
- By ownership
- By layout
- By design
- By merchandise
- By service experience
25. Store formats by location
Chain Store format
• Multi locational
• Owned &operated by
single org with
signature store
design,
merchandising plan ,
cohesive promotional
and service strategy.
Eg Lifestyle
High Street format
• Busy shopping areas
• Less than 2000 sq ft,
no parking ,and
focused merchandise
• Eg
Amarsons,Premsons
Destination Format
• Only shopping
• Large in size,ample
parking,wide
merchandise
• Phoenix
Convenience store
format
• Area of target
customers
• Quick access and
wide range
• <5000
sqft,parking,extended
hours of operation
• D Mart
26. Store formats by merchandise
Family store
• Apparel for
whole family
• Eg Shoppers
Stop
Specialty Store
• Narrow
product line
with good
depth
• Attentive
customer
service
• Eg Park
Avenues by
Raymonds
Department
store
• More than
10000 sq
ft,more than
100000 SKU,
Several
departments,a
pparel,electron
ics,cosmetics
etc
• Each section
functions as a
separate SBU
• Eg Shoppers
Stop
Super Market
• Food,grocery
• Limited non
food items
• >3000 sq ft
and 30000
SKUs
• D Mart
27. Store formats by size
Super store
• Large, food
and non food
items. Twice
the size of
supermkt
,offers non
traditional
goods and
services such
as
pharmacy,flori
st,bakery
under one roof
• Eg Shoprite
Shopping mall
• Retail and
leisure
• More than
200000 sq ft
and runs as an
integrated
business by a
single owner
• Eg Park
Avenues by
Raymonds
Shopping
centre
• More than 5
shops each
approx 1000
sq ft
Hyper Market
• Food,grocery
• Pharmacy,flori
st,photo shop
cds etc
• >200000 sq ft
,large qtys in
each category
at low margins
• Shoprite
28. Store formats by price
Discount/baza
ar format
• Discounts at
25% below
or prices
below MRP.
• MFGS
overruns,irre
gulars,unsol
d from last
season
• Eg Parel
EDLP
• Every day
low pricing
• Found more
in Western
countries
Category
killer
• Large
specialty
store with
an
enormous
selection of
its product
category at
low prices
Warehouse
• large sale
of
discounted
merchandis
e by an
individual or
orgnaization
in free
access
ambience of
an
warehouse
• Both width
and depth of
retailed
merchandis
e
Single price
denomination
format
• Scrambled
merchandis
e at a single
low price
point
• Dollar
shops,
Rs49/99
shops
29. Store format by ownership
Franchisee format: owned and operated by
individuals on behalf of and licensed by a large
organization
Independent store: owned by a single person or a
partner
30. Store format by concessions
Stopover format: piggybacks on other retail outlet
eg crosswords at petrol pumps, In and out at
BPCL
Kiosks: placed in mall, airports, etc. used for
information, sales and promotion. Eg HT at
airports free copies
31. Impact of scalability
Achieves profitability
Ensures an efficient rollout
Greatest shopping opportunity & highest
customer satisfaction
Strategic mix of all formats to cater to all target
customers
Achieves its positioning
Core USP/value proposition for its customers
