RETAIL MANAGEMENT, 2/E

Chetan Bajaj,
Bajaj Director,
Sona School of Management, Salem, Tamil Nadu
Rajnish Tuli,
Tuli Director,
Millward Brown, South East Asia, Singapore
Nidhi Varma Srivastava,
Srivastava Director,
Millward Brown, India
 Chapter - 2
RETAIL ORGANIZATION
The changing structure of retailing
• All dynamic developments in retailing (department stores,
warehouse clubs, and hypermarkets) are responses to a
changing environment
• Changing customer demand, new technologies, intense
competition, and social change create new opportunities
even as they shake up existing business
• The Internet and web technologies have itself created a
myriad of opportunities for web based business model of
retailing
• This has created competition for the retailer in order to
maintain and grow its share of market and compete within
its band of retailers
• For e.g.: Bharat Petroleum - Making A Difference through
Innovative Retailing
Theories of structural change in
retailing
Retailing has always been a dynamic industry. There are
certain theories of how firms evolve and change the
industry in the process. They are:
The wheel of retailing
The dialectic process
Natural selection
The wheel of retailing
It was proposed by Malcomb McNair at Harvard
University. It is basically a theory of cyclical or circular
development. The wheel of retailing concept describes
how retail institutions transform during their
evolutionary life cycles.
The dialectic process
This second theory holds that retailing evolves through a
dialectic process- the blending of two opposite store
types into a superior form. For example- Fabindia and
Nalli offer both a wide array of customer services and a
broad assortment of specialized merchandise.
Natural selection
According to this theory, retail stores evolve to meet
changes in the micro-environment. The retailers that
successfully adapt to technological, social, demographic,
economic, and political changes are most likely to grow
and prosper.
Classification of retail units

Bases for classification of retail units

Nature of ownership
Operational structure
Length and depth of merchandise
Nature of service
Types of pricing policy
Types of retail location
Method of customer interaction
Retailers classified on the basis of
ownership
Sole proprietorship
Partnership
Joint venture
Limited liability company (public and private)
Retailer’s classification on the basis of
operational structure
Independent retail unit
Retail Chain
Franchise
Size and structural arrangements in franchising:
1. Manufacturer-retailer
2. Wholesaler-retailer franchise
3. Service sponsor-retailer
• Leased departments
Co-operatives
New areas
Leased department or Shop-in-shop
Co-operative outlets
Largest consumer cooperative society
Major initiatives
Benefits To Consumers
Target market
Revised positioning
Types of retail location
 Retailers at freestanding locations
 Retailers in business-associated locations
 Retailers in specialized markets
 Retailers at airports
 Variety of merchandise mix
Departmental stores
For e.g: Ebony, Globus, Lifestyle, Pantaloon, Shoppers
Stop, and
Westside
Discount Stores
For e.g.: S Kumar’s S-MART Discount Chain,
Margin Free Market, and Subhiksha
Specialty Stores
For e.g.: Footware - Speciality Store
Khadder- Khadi Specialty , Gautier , Vivek ,
and Titan
Hypermarkets
For e.g. : Pantaloon’s Big Bazaar ,Giant, and
FoodWorld
Methods of customer interaction
Retail transactions are carried out through face-to-
face interaction between retailers and customers in
the case of retail stores.
There are certain methods:
Store retailers like candles for sale during a Diwali
mela at Dilli Haat.
Non-store retailers
Electronic retailing like Internet and Mobile
Association of India (IAMAI)
Catalogue and direct mail retailing

Factors for the success of catalogue retailing:

- Convenience: customers can shop when it is convenient
for them in accordance to their schedule
- Time saving: one save resources on account of time and
travelling cost and parking problems
- Information: relevant product information is available in
detail
- No time limits: no undue pressure to buy unlike as in
retail store shopping

For example – FABMALL --- E-RETAILER

Direct selling
Person-to-person selling:

- Party-plan or group presentations

- Multilevel network
 Television shopping
Television shopping is retail format where existing and
prospective customers watch a TV programme
demonstrating a product and then place an order for the
same by telephone, e-mail or Internet
Three types of television shopping: cable channels meant
for shopping, infomercials, and direct-response
advertising shown on TV
(For example: Asian Sky Shop, TSN, TVC, TSNM)
 Vending machine retailing
A form of non-store retailing where products or services
are placed in a machine and are dispensed to customers
when they deposit cash or use plastic money (credit or
debit card)
Vending machines vending machines offer consumers
greater convenience 24 hours a day, and have replaced
many services formally requiring a human interface