Retail Organization

The term retail organization refers to the basic format or structure of a retail business
designed to cater to the needs of the end customer. Recently, some scholars have
started referring to India as a nation of shopkeepers. This epithet has its roots in the
huge number of retail enterprises in India, which were over 12 million in 2003. About
78% of these are small family businesses utilizing only household labour.

Retail firms may be independently owned, parts of a retail chain, operated as a

franchisee, leased departments, owned by manufacturers or wholesalers, consumers
owned or co-operative society.

A retail unit could be owned by:

Manufacturer (e.g., company owned retail outlets)
Wholesaler (e.g., Vastra outlet in Rajouri in New Delhi)
Independent retailer (Chanakya Sweet Shop near Hazratganj in Lucknow)
Consumer (consumer owned grocery stores in man y residential societies)
Co-operative society (e.g., Mother Dairy milk booths in Delhi)
Government (e.g., Cottage Emporia)
Ownership shared among franchiser and franchisee (e.g., Archies Gallery)
Although most Indian retailers fall in the category of small-scale units, there are also
some very big retailers. Organized retail stores are generally characterized by large,
professionally managed store formats providing goods and services that appeal to
customers, in an ambience that is conducive for shopping and provides a memorable
experience to customers.

From positioning and operating perspectives, each ownership format serves a

marketplace niche and presents certain advantages and disadvantages. Retail
executives must not lose sight of this in playing up their strengths and working around
their weaknesses.
Classification of Retail Units
Conceptual classification of a business unit provides the marketers with strategic
guidelines, useful in the design of retailing strategy. Besides, retail businesses are
extremely diverse and there are quite a few types of retail units. Therefore, retail units
are classified on multiple of ownership, geographical locations, kind of customer
interaction level of services provided etc.
1. Retailers Classified on the Basis of Ownership
One of the first decisions that the retailer has to make as a business owner is how the
company should be structured. This decision is likely to have long-term implications, so
it is important to consult with an accountant and attorney to help one select preferred
ownership structure.

There are four basic legal forms of ownership for retailers:

Sole proprietorship: The vast majority of small businesses start out as sole
proprietorships. These firms are owned by one person, usually the individual who
has the day-to-day responsibility for running the business.
Partnership: - A partnership is a common format in India for carrying out
business activities (particularly trading) on a small or medium scale. In a partnership,
two or more people share ownership of a single business.
Joint venture: A joint venture is not well defined in the law. Unless
incorporated or established as a firm as evidenced by a deed, joint ventures may be
taxed like association of persons, sometimes at maximum marginal rates. It acts like
a general partnership, but is clearly for a limited period of time or a single project.
Limited liability Company (public and private):- The Limited Liability Company
(LLC) is a relatively new type of hybrid business structure that is now permissible in
most states. The owners are members, and the duration of the LLC is usually
determined when the organization papers are filed.
2. Classification of Retailers on the basis of Operational Structure
Retail businesses are classified on the basis of their operational and organizational
structure. Operational structure defines the key strategic decision of retail entity,
whether to hire employees and manage the distributed sales function internally or to
reach customers though franchised outlets owned and operated by local
entrepreneurs.

Retail firms can be classified into five heads on the basis of their respective operational
structures:

Independent retail unit: The total number of retailers in India is estimated to

be over 5 million in 2003. About 78% of these are small family businesses utilizing
only household labour. An independent retailer owns one retail unit.
 Retail Chain: A chain retailer operates multiple outlets (store units) under
common ownership; it usually engages in some level of centralized (or coordinated)
purchasing and decision making.
Franchising: Franchising involves a contractual arrangement between a
franchiser (which may be a manufacturer, a wholesaler, or a service sponsor) and a
retail franchisee, which allows the franchisee to conduct a given form of business
under and establishments name and according to a given pattern of business.
Leased Department or Shop-in-shop:- It refers to department in a retail store
that are rented to an outside party. Usually this is done in case of department and
specialty stores and also at times, in discount stores.
Co-operative Outlets: Co-operative outlets are generally owned and managed
by co-operative societies. In this context the detailed example of Kendriya Bhandar
in India.
3. Classification of Retailers on the basis or Retail Location
Retailers have also been also been classified according to their store location. Retailers
can locate their stores in an isolated place and attract the customers to the store on
their own strengthsuch as a small grocery store or paan shop in a colony, which
attracts the customers staying close by.

Classification of retailers on the basis of location is discussed below:

Retailers in a free-standing location: Retailers located at a site which is not

connected to other retailers depend entirely on their stores drawing power and on
the various promotional tools to attract customers. This type of location has several
advantages including no competition, low rent, better visibility from the road, easy
parking and lower property costs. For example the Haldirams outlet on the Delhi-
Jaipur highway and the McDonalds outlet on Delhi-Ludhiana highway.
Retailers in a Business-associated Location:- In this case, a retailer locates his
store in a place where a group of retail outlets, offering a variety of merchandise,
work together to attract customers to their retail area, and also compete against
each other for the same customers.
Retailers in Specialized Markets: - Besides the above location-based
classification, we also have in India-retailers who prefer specialized markets,
particularly traditional independent retailers or chain stores. In India, most of the
cities have specialized markets famous for a particular product category. For
 example, in Chennai, Godown Street is famous for clothes, Bunder treet for
stationery products, Usman street for jewellery, T Nagar for ready-made garments,
Govindappan naicleen street for grocery, Poo Kadia for food and vegetables.
Airport Retailing: For quite some time, duty-free shops and newsstands
dominated the small amount of commercial space provided at airports. Lately,
serious efforts are being made to design new airport facilities in order to
incorporate substantial amounts of retail space.
The key features of airport retailing are:

Large groups of prospective shoppers

Captive audience
Strong sales per square foot of retail space
Strong sales of gift and travel items
Difficulty in replenishment
Longer operating hours
Duty-free shopping possible.