o emerging trends in retailing,

1. E-commerce and omni-channel retailing: The rise of e-commerce has

transformed the retail landscape, allowing consumers to shop conveniently online.
E-commerce continues to grow, with more retailers expanding their online
presence. Additionally, omni-channel retailing, which integrates online and
offline channels, is becoming increasingly important, providing seamless
shopping experiences across multiple touchpoints.
2. Personalization and customization: Retailers are leveraging data analytics and
technologies like artificial intelligence (AI) to understand individual preferences
and offer personalized recommendations, product suggestions, and tailored
promotions. Customization options, such as personalized products or services, are
also gaining popularity.
3. Mobile commerce: Mobile devices have become an integral part of consumers'
lives. Mobile commerce, or m-commerce, is on the rise, with more people using
smartphones and tablets for online shopping. Retailers are optimizing their
websites and creating mobile apps to provide a mobile-friendly shopping
experience and capture the growing mobile consumer market.
4. Experiential retail: Retailers are shifting from transactional models to
experiential retail concepts. They are focusing on creating immersive and
engaging in-store experiences that go beyond just selling products. This includes
interactive displays, pop-up stores, live demonstrations, events, and unique
ambiance to attract and retain customers.
5. Sustainability and conscious consumerism: Growing environmental awareness
has led to a rise in sustainable and ethical consumer behavior. Consumers are
increasingly seeking eco-friendly, ethically sourced, and socially responsible
products. Retailers are responding by adopting sustainable practices, offering eco-
friendly options, and transparently communicating their social and environmental
initiatives.
6. Augmented Reality (AR) and Virtual Reality (VR): AR and VR technologies
are being integrated into the retail experience. Retailers are using AR/VR to
provide virtual try-on experiences, allowing customers to visualize products
before purchasing, virtually tour stores, or create immersive shopping
environments that bridge the gap between physical and online retail.
7. Social commerce and influencer marketing: Social media platforms are playing
a significant role in retail, with the emergence of social commerce. Retailers are
leveraging social media networks for product discovery, customer engagement,
and direct sales. Influencer marketing is also gaining traction, with retailers
collaborating with social media influencers to promote their products and reach a
wider audience.

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Price Strategies (5P 2D 2) BYEVS)

1. Demand Oriented Pricing Strategy: A retailer sets prices based on consumer desires. It
determines the range of prices acceptable to the target market. Retailers use demand-
oriented pricing to estimate the quantities that customers would buy at various prices.
This approach studies customer interests and the psychological implications of pricing.

1. Price Skimming: Price skimming involves setting an initially high price for a
new or innovative product to target early adopters or customers who are willing to
pay a premium. As demand from this segment decreases, the price is gradually
lowered to attract a broader customer base.
2. Penetration Pricing: Penetration pricing is the opposite of price skimming. It
involves setting a low price initially to enter the market and gain market share.
This strategy aims to attract customers by offering a lower price than competitors,
and once a significant market share is achieved, the price may be increased.
3. Value-based Pricing: Value-based pricing focuses on the perceived value of the
product or service to the customer. It involves setting prices based on the benefits,
quality, and unique features of the product.
4. Premium Pricing: Premium pricing involves setting a higher price compared to
competitors to position the product or service as having superior quality, features,
or status. This strategy is often used for luxury or high-end products, where
customers are willing to pay more for exclusivity or perceived superiority.
5. Price Differentiation/Price Discrimination: Price differentiation refers to
setting different prices for different customer segments, regions, or channels. This
strategy recognizes that different customers have varying levels of willingness to
pay. For example, businesses may offer discounted prices for students, senior
citizens, or wholesale customers.
6. Bundle Pricing: Bundle pricing involves offering multiple products or services
together as a package at a discounted price compared to purchasing each item
individually. This strategy aims to increase the overall value perception for
customers and incentivize them to buy more.
7. Dynamic Pricing: Dynamic pricing involves adjusting prices in real-time based
on factors like demand, supply, seasonality, or competitor prices. Online retailers,
ride-sharing services, and airlines often use this strategy to optimize revenue and
respond to market fluctuations.
8. Promotional Pricing: Promotional pricing refers to offering temporary discounts
or special pricing for a limited period. This can include sales, coupons, buy-one-
get-one-free offers, or seasonal promotions. These strategies are designed to
stimulate immediate sales, attract new customers, or clear out excess inventory.
9. Prestige pricing—which assumes that consumers will not buy goods and services
at prices deemed too low—is based on the price–quality association. Its premise is
that consumers may feel too low a price means poor quality and status. Some
people look for prestige pricing when selecting retailers and do not patronize
those with prices viewed as too low.
 10. Everyday low pricing (EDLP) (Type of Customary Pricing - a retailer sets
prices for goods and services and seeks to maintain them for an extended
period)

• This strategy stresses the use of a pricing policy with the continuity of prices at a level
between the normal own-store price and the price of the deep discount
competitors. EDLP do not believe in markdown policies and sales but attempts to
generate all-year-round demand by setting the prices at the right level.

11. Yield management pricing: is a computerized, demand-based, variable pricing

technique, whereby a retailer (typically a service firm) determines the
combination of prices that yield the greatest total revenues for a given period. It is
widely used by airlines and hotels.
12. One Price: Under a one-price policy, a retailer charges the same price to all
customers buying an item under similar conditions
13. Odd Pricing: In odd pricing, retail prices are set at levels below even dollar
values, such as $0.49, $4.98, and $199. The assumption is that people feel these
prices represent discounts or that the amounts are beneath consumer price
ceilings. Odd pricing is a form of psychological pricing.
14. Price Lining: Rather than stock merchandise at all different price levels, retailers
often employ price lining and sell merchandise at a limited range of price points,
with each point representing a distinct level of quality.

2. Cost Oriented Pricing Strategy

With cost-oriented pricing, a retailer sets a price floor, the minimum price acceptable to the firm
so it can reach a specified profit goal. A retailer usually computes merchandise and operating
costs and adds a profit margin to these figures.

• a. Cost-Plus Pricing Strategy: This strategy involves determining the selling price by
adding a markup to the cost of acquiring or producing a product. The markup ensures the
retailer covers costs and generates a desired profit margin.

• b. Full Cost Pricing: Full cost pricing takes into account both the variable costs and the
fixed costs associated with producing a product or providing a service. This strategy
involves allocating a portion of the fixed costs to each unit of the product, along with the
variable costs, to determine the selling price. This ensures that all costs, both variable and
fixed, are covered.

• c. Break-even Pricing: Break-even pricing involves setting the price at a level that
covers all the costs associated with producing and delivering a product, resulting in zero
 profit or loss. The selling price is set to ensure that the total revenue generated will cover
both the fixed and variable costs, allowing the business to break even.

• d. Cost Leadership: Cost leadership is a pricing strategy where a business aims to

become the lowest-cost producer or provider in the industry. By minimizing costs
through efficient operations, economies of scale, and cost-saving measures, the business
can set prices lower than its competitors while maintaining profitability.

3. Competition Oriented Pricing Strategy

• Competitive pricing sets prices based on competitors' pricing. Retailers monitor

competitor prices and adjust their prices to match or undercut the competition.

• As the very name suggest, under this pricing policy, retailers set the prices of
merchandise after considering competitors’ prices rather than demand or supply
considerations. The company following this policy may not react to changes in demand
or an increase in cost of merchandise.

• The retailer can charge higher than the market price, when the location of their stores is
attractive and convenient to majority of its customers, offer wide assortments,
exceptional customer service, a well established image, long experience and an executive
brand. On the other hand, stores with inconvenient location and absence of value-added
characteristics can charge less than the market price.

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o Trading-Area analysis,

A trading area is a contiguous area from which a retailer gets customers for the merchandise he
is selling. A trade area may be a town, city, district, state, and country or even beyond the
country’s boundaries.
Retailers emphasize on trade area analysis because of the following reasons:
(i) A detailed analysis of trade area provides the retailer a picture about demographic and socio-
cultural aspects of consumers. For a new store, the analysis of trade area becomes necessary to
understand the prevailing opportunities and threats (if any) that may be a success path for new
entrant.
(ii) It helps in assessing in advance the effects of trade area overlapping.
(iii) It helps in highlighting geographic weaknesses. For example, trading area analysis reveals
that people from trans-river hesitate to come to city shopping areas due to pickpockets and
thieves in evening. Further, comprehensive study reveals the fact that this is because of improper
lighting arrangements and absence of police personnel. Therefore, shopping center could exert
political pressure to make the area well lit and crossing safer.
(iv) It provides opportunity to understand and review the media coverage patterns.
(v) It helps in locating better site location by understanding the existing trade areas around the
potential locations.

Size and Shape of Trading Areas:

Generally, a trading area may be divided into primary, secondary and tertiary zones.
The primary zone is the first layer of any trading area that provides 60-65% of its customers. It is
close to the store and includes nearby colonies and residential areas.
The secondary zone comes after primary zone but before the tertiary zone. It is the geographical
area that contains around 20% of the total customers of the respective store in terms of customer
sales and merchandise demanded.
The tertiary zone (fringe trading area) commonly known as outermost circle contains the
remaining 10- 15% customers, who occasionally visit the store and shop. These are the
customers who travel a long way to reach the store because their nearby stores are not able to
fulfill the local demand. Further, there are some forces of attraction that lure the customers from
tertiary zone such as wide merchandise assortment, lower pricing policy, payment options and
high-level customer service.

Factors to be considered while analyzing trade area:

o characteristics of trading areas,

1. Geographic Scope: Trading areas can range from local neighborhoods and towns
to regional, national, or even international markets. The geographic scope
determines the size and reach of the trading area.
2. Target Market: Each trading area typically has a specific target market or
customer base. This could be determined by demographics such as age, income,
occupation, or psychographics such as lifestyle, interests, and values.
 3. Competition: Trading areas are often characterized by competition among
businesses operating within the same market. The level of competition can vary
based on factors like the number of businesses, their size, product/service
offerings, and market positioning.
4. Accessibility: Trading areas should be easily accessible to customers and
businesses. This includes factors like transportation infrastructure, proximity to
major roads, highways, airports, or ports, and availability of public transportation.
5. Market Potential: The market potential within a trading area refers to the total
demand for goods or services from the target market. It considers factors such as
population size, income levels, consumer preferences, and trends that affect
market demand.
6. Economic Factors: The economic factors within a trading area, such as the overall
economic health, average income levels, employment rates, and disposable
income, can significantly impact the buying power and spending patterns of
consumers.
7. Cultural and Social Factors: The cultural and social characteristics of a trading
area can influence consumer behavior and preferences. Factors like language,
religion, ethnicity, and social norms can shape market demand and consumer
attitudes.
8. Regulatory Environment: Trading areas are subject to various regulations and
policies imposed by governments or industry-specific authorities. These
regulations may include zoning laws, licensing requirements, taxation policies,
and health and safety regulations that businesses must adhere to.
9. Infrastructure and Amenities: The availability of infrastructure and amenities,
such as shopping malls, commercial centers, entertainment venues, healthcare
facilities, educational institutions, and recreational spaces, can contribute to the
attractiveness and competitiveness of a trading area.
10. Market Dynamics: Trading areas are not static but rather dynamic, with market
conditions and consumer preferences constantly changing. Factors like
technological advancements, economic trends, social shifts, and industry
developments can all influence the characteristics and dynamics of a trading area.

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o Retail Image Mix,

The needs of customers who go to a local grocer differ from those who visit a specialty goods
retail outlet or a department store. Each retailer strategically plans a mix of elements to match the
needs of his customer. A mix of the following six elements meets the physical and emotional
needs of the customer:

1. Employee Type and Density: The retailer employs sales staff to match the selling and
image needs of his store. A specialty store like one selling saris will have a higher density
of staff at about one per 100 square feet and the salesperson would be one who caters to
the needs of the customer who speaks the local language and look more homely (as the
 customers are mostly women). In contrast, in a large department store the density of staff
would be one per 400 square feet. They will be well educated and suitably dressed (in
most cases in western clothes as these form a major chunk of the store offering).
2. Merchandise Type and Density: The type of merchandise determines its density in the
store. A supermarket is very dense whereas a large department store is relatively less
dense. A designer-wear exclusive store, a boutique or a furniture retailer would have low
density so as to make the merchandise appear exclusive. The density of the merchandise
also determines the margins planned on the merchandise. The lower the density the
higher will be the margins.
3. Fixture Type and Density: The fixtures have to complement the value of the
merchandise. A jeweller uses a lot of expensive woodwork and stones like marble and
granite to add value to his merchandise, while a sportswear goods store uses more of
metal and plastic.
4. Sound Type and Density: Sound can be pleasant or unpleasant and can have a direct
impact on the store atmosphere. The category of the merchandise determines the type and
density of sound. Soft instrumental music is usually used in jewellery and cosmetics
while the casuals and youth fashion wear segments are complemented by contemporary
sound tracks from new bands. Department stores play music based on the category of
merchandise.
5. Odour Type and Density: Like sound, odour too has a positive or negative effect on the
store atmosphere. Positive odours like that of fresh coffee beans or flowers add to the
shopping experience in the men’s wear and cosmetics departments in a store. Negative
odours like those of a musty carpet, cigarette smoke, etc. can drive the customer away.
The strength of the odour is also important and even the right odour if it’s too strong can
have a negative effect.
6. Visual Type and Factors: These are a result of the overall store presentation such as the
interior design, display and visual merchandising. Elements like lighting and colour can
be controlled to make customers buy more. Warm yellow shades of lights complement
gold jewellery as they add richness. Natural shades (daylight colours) are good for
garments as they bring out the true colour of the merchandise.

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o Retail Marketing Mix,

1. Product: The product is the item purchased by a customer. An effective product

must capably solve a customer need or perform a desired function. It involves
decisions related to product features, design, packaging, branding, and quality.
Retailers must understand their target customers' needs and preferences to
develop products that meet their expectations.
2. Price: Pricing strategies involve determining the value of products or services and
setting an appropriate price that customers are willing to pay. Retailers consider
factors such as production costs, competitor pricing, and customer perceptions of
value. Pricing decisions may involve strategies like penetration pricing, skimming
pricing, discounting, or bundling.
 3. Placement (Place):Also known as distribution, this element focuses on how
retailers make their products or services available to customers. It involves
decisions regarding the selection and management of distribution channels,
including physical stores, online platforms, or a combination of both. Retailers
must consider factors like accessibility, convenience, and customer preferences
when determining the placement of their offerings.
4. Promotion:Promotion refers to the activities retailers undertake to communicate
and persuade customers to purchase their products or services. Promotional tactics
include advertising, public relations, personal selling and sales promotion(for
example, discounts or special offers).
5. Process: The process element refers to the procedures, systems, and workflows
that retailers implement to deliver their products or services to customers. It
involves aspects such as inventory management, order fulfillment, payment
processing, and customer service processes. Retailers need to streamline their
processes to ensure efficiency and provide a seamless shopping experience.
6. People (Personnel): People are an essential aspect of the retail marketing mix,
representing the individuals who interact with customers. This includes sales
associates, customer service representatives, and any other personnel involved in
delivering a positive customer experience. Retailers must invest in training and
developing their employees to provide exceptional service and build customer
loyalty.
7. Presentation: Presentation refers to the experiential design of a retail setting. It
includes store ambience, store layout, signage, packaging, and other physical cues
that contribute to the overall perception of the brand and product quality.

• The Apple Store is known for its sleek aesthetic and design—an all-glass front side, with
long rows of tables featuring Apple products.

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o Store Manager – Responsibilities,

1. Overall Store Operations:

▪ Oversee the day-to-day operations of the store, ensuring smooth
functioning and efficient use of resources.
▪ Develop and implement store policies and procedures to maintain
consistency and compliance.
▪ Monitor and evaluate store performance, identifying areas for
improvement and implementing corrective actions.
2. Staff Management:
▪ Recruit, hire, and train store staff, ensuring they have the necessary skills
and knowledge to perform their roles effectively.
▪ Schedule employee shifts, manage time and attendance, and handle
staffing issues such as performance management, disciplinary actions, and
terminations.
 ▪Foster a positive work environment, promote teamwork, and motivate
staff to achieve store goals.
3. Customer Service:
▪ Ensure exceptional customer service by training and coaching staff in
providing a high level of customer satisfaction.
▪ Handle customer inquiries, complaints, and escalations, resolving issues
promptly and maintaining positive customer relationships.
▪ Implement strategies to enhance the overall customer experience and
increase customer loyalty.
4. Sales and Performance:
▪ Develop sales targets and strategies to drive revenue growth and meet or
exceed sales goals.
▪ Analyze sales data and trends, identifying opportunities for improvement
and implementing sales and promotional initiatives.
▪ Monitor inventory levels, manage stock replenishment, and ensure
accurate pricing and product availability.
5. Visual Merchandising and Store Presentation:
▪ Maintain an attractive and organized store layout and product displays that
align with the store's brand and target market.
▪ Implement visual merchandising strategies to maximize product visibility,
promote cross-selling, and enhance the overall shopping experience.
▪ Monitor inventory accuracy and participate in stock-taking activities to
minimize shrinkage and maintain proper stock levels.
6. Financial Management:
▪ Prepare and manage the store budget, including tracking expenses,
controlling costs, and optimizing profitability.
▪ Monitor sales performance and key financial metrics, such as gross
margin, inventory turnover, and payroll expenses.
▪ Ensure cash management procedures are followed, including accurate cash
handling, banking, and reconciliation.
7. Safety and Security:
▪ Maintain a safe and secure store environment for employees and
customers, adhering to health and safety regulations.
▪ Implement loss prevention strategies to minimize theft, shoplifting, and
shrinkage.
▪ Train staff on security procedures, emergency protocols, and incident
reporting.
8. Communication and Reporting:
▪ Communicate effectively with employees, senior management, and
stakeholders, providing updates on store performance, challenges, and
opportunities.
▪ Generate and analyze reports on key performance indicators, sales metrics,
inventory levels, and operational activities.

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 o Pricing Objectives,

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Store Layout : TRAFFIC FLOW for dept store, shopping

mall , supermarket
The arrangement of departments, aisles, and fixtures within the store, determining the flow of
customer traffic and guiding their journey through the space.

Types of Store Layout

(a) Grid Layout: The grid layout is a traditional form of store layout, in which the
counters and fixtures are placed in long rows. While one area of display is along the walls of the
store, the other merchandise is displayed in a
parallel manner. It allows for movement within the area and uses space effectively.
The most familiar examples of the grid layout are supermarkets, discount stores and drugs
stores, e.g., - Reliance Fresh.
Grid is a preferred layout in many retail stores that adopt self-service. It is best used in retail
environment in which the majority of customers wish to shop entire store.

Advantages of Grid Layout:

➢ It’s easy to categorize products.

➢ It’s easy to keep clean.
➢ Offers self-service
→ It requires low cost, and thus, it is economical.
→ Less spaces are wasted and all aisles are of same width.
➢ It also simplifies security.

Disadvantages of Grid Layout:

➢ It is boring, and it is difficult to use this layout to create a “shopping experience” for
the customer.
➢ Customers often cannot take shortcuts to what they need.
➢ Line of sight is limited, forcing a customer to look up and down aisles.
➢ Limited creativity in decor.
➢ It is plain and uninteresting

Store Layout Designs | Retail Management

b. The Racetrack Layout: The racetrack is also called the loop layout. In a racetrack layout, the
display is in the form of a racetrack or a loop with a major aisle running through the store.
The aisle provides access to various shop-in- shops or departments within the store.
If you are selling a product that people
want to browse, touch and look at, then the racetrack or loop layout is one consider.
Customers follow a prescribed path through the merchandise and experience it the way the
retailer wants it to be seen.
Racetrack or loop layout is popularly found in department stores. This layout works better than
the grid layout for designing a shopping experience because the retailer through this layout can
guide the customer past highlighted promotional items.
This type of layout is called the loop layout because your customers are directed in a so
called ‘closed loop’ around your store, taking you past all your products before arriving at your
check-out counter.

Advantages of Racetrack Layout:

➢ Facilitates the goal of getting customers to see the merchandise available in
multiple departments and facilitates impulse purchase.
→ The customers are exposed to more of your merchandise.
➢ It encourages the customers for browsing.
➢ Promotions are easier to execute, because the layout really controls what the shopper sees.
➢ It allows for a friendly and relaxed atmosphere.

Disadvantages of Racetrack Layout:

➢ This type of a layout needs much space and a considerable selling space is wasted.
➢ Customers who want to run in and pick up something quickly are often discouraged
when faced with this layout.
➢ Not a good layout for a high turnover store, like a pharmacy or a convenience store.
c. Free form Layout: This layout can be anything the retailer wants it to be, in any shape or
place. In a free-form, merchandise is arranged in an asymmetrical manner. It allows for free
movement and is often used in department stores to encourage people to browse and shop. This
is considered as the simplest type of store layout.

Advantages of Free-form Layout:

➢ This layout allows the customers to browse and wander freely.

➢ Ideal for a store offering smaller amounts of merchandise.
➢ There is an increase in impulse buying as the shoppers are exposed to merchandise
more thoroughly.
➢ The store is visually appealing as there is an opportunity to create unique and
exciting displays.

Disadvantages of Free-form Layout:

➢ This type of a layout may not allow for maximum utilization of retail space available.
➢ Stock control and handling are more complex than other layouts.
➢ As loitering is encouraged in this type of layout, therefore, it may confuse the customers.
➢ It is comparatively costly and there is a sort difficulty can be faced in keeping the store clean
 Choose One Of These 4 Store Layout Designs | SimpleConsign

Factors affecting Planning of Store Layout

1. Traffic Flow
Disorderly traffic messes the customer’s experience at your store. Uneven, twisted and narrow
aisles are standard features in retail stores with poor traffic flow. They don’t entice the customers
to explore the store and eventually make a purchase, which should be your ultimate goal.

2. Lighting
Good lighting is paramount in a well-designed retail store layout. Ensure your choice of lighting
in the store enhances the product line. Good light draws attention to your products and enhances
their appearance. It creates and invokes good moods from customers, which pre-dispose them to
purchasing your merchandise. Do not compromise through cost-cutting and settling for poor
quality lighting. This will negatively impact the customers’ experience.

3. Display Space
Make sure you organize plenty of space and room for your retail store layout. A cramped up
space is a top client complaint when it comes to retail space designs. It makes customers
uncomfortable, ruining their experience at your store. Make sure the layout of your retail store
takes into consideration the number of goods you want to display. Get a good designer to come
up with a design that optimizes the available store space.

4. Strong Displays
It’s essential to invest in a user-friendly, well-organized, and persuasive retail store display. This
is critical if you want to keep your merchandise moving and customers flowing. A good retail
store display attracts customers, while a bad one turns them off.
A good display entails clearly displayed products. It also features shelves that are not
overflowing with products. You don’t want unstable displays that keep toppling over from a
simple touch, which could result in product loss and potential injury. Avoid this pitfall by getting
a contractor to inspect the new retail space to ensure it meets the necessary threshold before
committing yourself to a long-term contract.

5. Store Design
It’s vital to hire a store designer before buying or renting a property you intend to use as a store.
A store designer will advise you on the appropriate size, type, location and other essential
features you should consider. This strategy saves you loads of time and cash in the long run.

6. Checkout Area
Some retail store owners don’t prioritize the checkout area. They don’t consider it as one of the
potential design drawbacks of the whole store. There’s an assumption that once the customer
gets to the checkout, they have bagged a sale, literally.
However, this is not always the case. Obstructed or over-cluttered exits are an impediment. They
deny the client a good last impression of the business premise. Good retail designers will give
the checkout area much-deserved attention. They understand that a customer’s experience must
be immersive for them to come back. Both the first impression when a customer enters your
store, and the last impression as they leave, are important.

7. Shelf and Rack Design

Choose a display scheme and stick to it. Avoid multiple varied shelving and rack systems. For
example, having shiny metal here, wood there, and mismatched glass displays over there creates
a cluttered look that heightens anxiety and discomfort among shoppers. This psychologically
affects the shoppers and detracts from the merchandise.
Contemporary designs and elements can tie together a compelling, awe-inspiring look for your
store. You could use sleek metal for high-tech equipment, warm wood for housewares and glass
cases for jewelry.

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o Markup & Markdown in merchandise management

1. Markup Pricing: In markup pricing, a retailer sets prices by adding per-unit merchandise costs,
retail operating expenses, and desired profit. The difference between merchandise costs and
selling price is the markup.

• If a retailer buys a desk for $200 and sells it for $300, the extra $100 covers operating costs and
profit. The markup is 33-1/3 percent at retail or 50 percent at cost. The markup level depends on
a product’s traditional markup, the supplier’s suggested list price, inventory turnover,
competition, rent and other overhead costs, the extent to which the product must be serviced,
and the selling effort.

• Markups can be computed on the basis of retail selling price or cost but are typically calculated
using the retail price. Why? (1) Retail expenses, markdowns, and profit are always stated as a
percentage of sales. Thus, markups expressed as a percentage of sales are more meaningful. (2)
 Manufacturers quote selling prices and discounts to retailers as percentage reductions from
retail list prices. (3) Retail price data are more readily available than cost data. (4) Profitability
seems smaller if expressed on the basis of price.

2. Markdown pricing: A markdown from an item’s original price is used to meet the lower price of
another retailer, adapt to inventory overstocking, clear out shopworn merchandise, reduce
assortments of odds and ends, and increase customer traffic.

• The markdown percentage is the total dollar markdown as a percentage of net sales.

• A complementary measure is the off-retail markdown percentage, which looks at the markdown
for each item or category of items as a percentage of original retail price. The markdown
percentage for every item can be computed, as well as the percentage of items marked down:

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o floor space management.

similar to retail space management (this is wider in scope) —

 1. Product Placement: The strategic placement of products within the sales area is crucial
for maximizing sales and creating an appealing shopping experience. Retailers need to
consider factors such as product visibility, accessibility, and complementary item
placement. Popular products or promotional items are often placed at eye level or in
prominent locations to attract customer attention and encourage purchases.
2. Shelving and Fixtures: The choice and arrangement of shelving units and fixtures
contribute to efficient floor space management. Retailers need to consider the size and
configuration of shelves, as well as their adjustability and flexibility. Adjustable shelving
allows for easy customization based on product sizes and variations. Effective utilization
of vertical space through wall shelving or gondola displays helps maximize the use of
floor space.
3. Aisle Width and Traffic Flow: Aisle width is a crucial aspect of floor space management.
Adequate aisle width ensures smooth customer movement and minimizes congestion.
Retailers need to find the right balance between maximizing the sales area and providing
a comfortable shopping experience. Analyzing customer traffic patterns and adjusting
aisle width accordingly helps optimize floor space utilization.
4. Seasonal and Promotional Displays: Floor space management includes planning for
seasonal displays and promotional areas. Temporary displays or dedicated sections for
seasonal products or limited-time promotions create a sense of urgency and encourage
impulse purchases. These displays can be strategically placed near store entrances,
checkout areas, or high-traffic zones to capture customer attention.
5. Hot Spot Analysis: Hot spots are areas where the off-take of merchandise is the highest.
Similarly, there are warm spots and cold spots, where merchandise sales are lower. An
analysis of these hot spots, warm spots and cold spots is made periodically and steps
taken to convert cold spots to warm spots and warm spots to hot spots while retaining the
best sales and the stock-turns of the hot spots. Such audits reveal non-treaded space,
where there is no customer traffic, and less treaded space which has low traffic. The
possible reasons for these are analysed and hurdles and bottlenecks identified and
removed to ensure that there are no non-treaded and black hole areas.
6. Efficiency of Selling Space to Non-selling Space: The utilization of selling and non-
selling spaces such as back area, facilities area, etc., is periodically monitored for their
efficiency in deliveries. A good retailer always aims to optimize selling space to improve
the bottom-line, while taking care not to compromise on the efficiency of deliveries of
the non-selling space.

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o Shrinkage in retail merchandise management,

• Shrinkage, in the context of retail merchandise management, refers to the loss of

inventory due to various factors, such as theft, administrative errors, supplier fraud,
damage, or other operational issues. It is a significant concern for retailers as it directly
impacts profitability and inventory accuracy. Understanding and managing shrinkage is
crucial for effective merchandise management.

•
• Causes of Shrinkage:

o Theft: This includes both external theft, such as shoplifting by customers, and
internal theft, such as employee theft or collusion.
o Administrative Errors: Mistakes in inventory counting, data entry, pricing, or
paperwork can lead to discrepancies between the recorded inventory and actual
physical stock.
o Supplier Fraud: In some cases, suppliers may engage in fraudulent activities,
such as shipping fewer items than ordered or substituting lower-quality products.
o Damage and Spoilage: Merchandise can be damaged during transportation,
handling, or storage, leading to losses.
o Operational Issues: Inadequate security measures, ineffective loss prevention
strategies, poor inventory management practices, or process inefficiencies can
contribute to shrinkage.

• Impact on Retailers:

o Financial Loss: Retailers suffer direct financial losses due to the value of stolen
or damaged merchandise, resulting in reduced profit margins.
o Inventory Inaccuracy: Shrinkage distorts inventory accuracy, leading to
discrepancies between recorded and actual stock levels. This can result in poor
inventory planning, overstocking, understocking, and inefficient replenishment.
o Replenishment Issues: Inaccurate inventory records can lead to difficulties in
restocking products at the right time, impacting customer satisfaction and sales.
o Increased Costs: Retailers may incur additional costs for security measures, loss
prevention efforts, insurance, and investigations related to shrinkage.

• Shrinkage Prevention and Control:

o Security Measures: Retailers implement security systems, such as surveillance

cameras, alarms, electronic article surveillance (EAS) tags, and access controls, to
deter theft and unauthorized activities.
o Employee Training: Providing comprehensive training to employees on loss
prevention techniques, inventory management practices, and awareness of
shrinkage risks can help minimize internal theft and errors.
o Inventory Control: Implementing effective inventory management practices,
including regular cycle counts, stock audits, and inventory reconciliation, helps
identify and address shrinkage issues promptly.
o Loss Prevention Programs: Retailers establish loss prevention programs,
including policies, procedures, and guidelines, to deter theft, identify suspicious
activities, and take appropriate actions.
 o Supplier Relationships: Building strong relationships with reliable suppliers and
conducting due diligence in supplier selection helps mitigate the risk of supplier
fraud and inconsistencies.

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o Types of locations, adavantages of locating in uplanned business dist vs planned

shopping centre

1. The Isolated Store

• An isolated store is a freestanding retail outlet located on either a highway or a street.

There are no adjacent retailers with which this type of store shares traffic.

• Advantages

• → There is no competition in close proximity.

• → Rental costs are relatively low.

• → There is flexibility; no group rules must be followed in operations, and larger space
may be obtained.

• → Better road and traffic visibility is possible.

• → Easy parking can be arranged.

• Disadvantages:

• → Initial customers may be difficult to attract.

• → Many people will not travel very far to get to one store on a continuous basis.

• → Advertising expenses may be high.

 • → Costs such as outside lighting, security, grounds maintenance, and trash collection are
not shared.

• → A store must often be built rather than rented.

• Example: Large-store formats (such as Wal-Mart supercenters and Costco membership

clubs) and convenience-oriented retailers (such as 7-Eleven) are usually the retailers best
suited to isolated locations because of the challenge of attracting a target market.

2. The Unplanned Business District

An unplanned business district is a type of retail location where two or more stores situate
together (or in close proximity) in such a way that the total arrangement or mix of stores is not
due to prior long-range planning. Stores locate based on what is best for them, not the district.
Four shoe stores may exist in an area with no pharmacy.

4 kinds:

a. CENTRAL BUSINESS DISTRICT A central business district (CBD) is the hub of retailing
in a city. It is synonymous with the term downtown. The CBD exists where there is the greatest
density of office buildings and stores. Both vehicular and pedestrian traffic are very high. The
core of a CBD is often no more than a square mile, with cultural and entertainment facilities
surrounding it. Shoppers are drawn from the whole urban area and include all ethnic groups and
all classes of people. The CBD has at least one major department store and a number of
speciality and convenience stores. The arrangement of stores follows no pre-set format; it
depends on history (first come, first located), retail trends, and luck.

Advantages:
→ Excellent goods/service assortment.
→ Access to public transportation.
→ Wide range of prices.
→ Nearness to commercial and social facilities.

Disadvantages:
→ Inadequate parking, as well as traffic and delivery congestion.
→ Travel time for those living in the suburbs.
→ High rents and taxes for the most popular sites.

b. SECONDARY BUSINESS DISTRICT

A secondary business district (SBD) is an unplanned shopping area in a city or town that is
usually bounded by the intersection of two major streets. Cities—particularly larger ones—often
have multiple SBDs, each with at least a junior department store (a branch of a traditional
department store or a full-line discount store) and/or some larger specialty stores, besides many
smaller stores.

An SBD has smaller stores, less width and depth of merchandise assortment, and a smaller
trading area (consumers will not travel as far), and it sells a higher proportion of convenience-
oriented items.

Advantages:
→ Good product selection,
→ access to thoroughfares and public transportation,
→ less crowding and more personal service than a CBD, and
→ placement nearer to residential areas than a CBD.

Disadvantages:
→ Discontinuity of offerings,
→ the sometimes high rent and taxes (but not as high as in a CBD),
→ traffic and delivery congestion,
→ ageing facilities,
→ parking difficulties, and fewer chain outlets than in the CBD.

c. NEIGHBORHOOD BUSINESS DISTRICT

A neighborhood business district (NBD) is an unplanned shopping area that appeals to the
convenience shopping and service needs of a single residential area.

An NBD contains several small stores, such as a dry cleaner, a stationery store, a barber shop
and/or a beauty salon, a liquor store, and a restaurant.
This type of business district is situated on the major street(s) of its residential area.

Advantages:
→ Good location, long store hours, good parking, and a less hectic atmosphere than a CBD or
SBD.

Disadvanatges: limited selection of goods and services, and prices tend to be higher because
competition is less than in a CBD or SBD.

d. STRING

→ A string is an unplanned shopping area comprising a group of retail stores, often with similar
or compatible product lines, located along a street or highway. There is little extension of
shopping onto perpendicular streets.
→ Car dealers, antique stores, and apparel retailers often situate in strings.
Advantages:
→ (lower rent, more flexibility, better road visibility and parking, and lower operating costs),

Disadvantages: (less product variety, increased travel for many consumers, higher advertising
costs, zoning restrictions, and the need to build premises).

3. The Planned Shopping Center

A planned shopping center consists of a group of architecturally unified commercial

establishments on a site that is centrally owned or managed, designed and operated as a unit,
based on balanced tenancy, and accompanied by parking facilities.

Advantages:
→ Well-rounded assortments of goods and services based on long-range planning.
→ Strong suburban population.
→ Interest in one-stop, family shopping.
→ Cooperative planning and sharing of common costs.
→ Maximization of pedestrian traffic for individual stores.
→ Access to highways and availability of parking for consumers.
→ Generally lower rent and taxes than CBDs (except for enclosed regional malls).
→ Generally lower theft rates than CBDs.
→ Popularity of malls—both open (shopping area off-limits to vehicles) and closed (shopping
area off-limits to vehicles and all stores in a temperature-controlled facility).

Disadvantages:
→ Landlord regulations that reduce each retailer’s flexibility, such as required hours.
→ Generally higher rent than an isolated store.
→ Restrictions on the goods/services that can be sold by each store.
→ A competitive environment within the center.
→ Too many malls in a number of areas (“the malling of America”).
→ Rising consumer boredom with and disinterest in shopping as an activity.

a. Regional Shopping Centers:

Regional shopping centers are large-scale retail complexes designed to serve a wide geographic
area. They are typically located in major cities or suburban areas and offer a comprehensive
shopping experience. These centers have extensive sizes, diverse tenant mix, and amenities like
movie theaters, food courts, and entertainment venues.

b. Community Shopping Centers:

Community shopping centers are medium-sized retail centers that cater to the needs of a specific
community or neighborhood. They are usually anchored by one or two major retailers, such as a
grocery store or a discount department store. Community centers provide a range of goods and
services, including specialty shops, restaurants, and convenience stores.
c. Neighborhood Shopping Centers:
Neighborhood shopping centers are small-scale retail centers that primarily serve the immediate
surrounding residential area. They are often anchored by a convenience store or a drugstore and
consist of a few additional stores, such as a bakery, salon, or local services. Neighborhood
centers are designed for convenience, providing essential goods and services within a short
distance for local residents.

o Site selection,

• While planning conservatively and within a reasonable budget is always smart, retailers
need to include five other key components of site selection that are just as important”:

• 1. Know the customer. This is critical in site selection. Such retailers as Starbucks and
Target use specific location and shopper profiles that incorporate numerous data points.
New retailers can utilize free data. Firms can set up grading systems by rating factors like
visibility, access, population size, household income, and traffic. “A minimum acceptable
score can be applied as a guideline helping a retailer avoid choosing poor performing
locations.”

• 2. Seek out locales with the highest sales potential. The rent charged for a site should
reflect the sales revenue that can be generated there. High rents may sometimes, but not
necessarily, be worth the investment.

• 3. Understand the current state of the retail leasing market to see whether a landlord’s
rent is fair (reasonable). “Having several qualified choices readily available as a backup
helps alleviate the frustration if negotiations break down on the first choice.”

• 4. Research the co-tenants in a shopping center or shopping district to see if they are
compatible and a customer attraction. Pedestrian and vehicular traffic counts indicate
whether co-tenants are good for the newly arriving retailer.

• 5. Be aware of the long-term commitment that must be made, because leases typically are
in force for at least five years—and many times, longer than that.
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o Store Positioning,

• Store positioning in retail marketing/management refers to the strategic process of

determining and establishing a distinct and favorable position for a retail store in the
minds of customers within the competitive marketplace. It involves defining the unique
value proposition and differentiation factors that set the store apart from competitors.
Store positioning is crucial as it influences how customers perceive the store, its
offerings, and the overall shopping experience. Here are key elements and considerations
related to store positioning:

1. Target Market: Store positioning starts with identifying and understanding the
target market. This includes demographics, psychographics, shopping
preferences, and buying behaviors of the target customers.
2. Unique Selling Proposition (USP): Retailers must determine their unique selling
proposition, which sets them apart from competitors. It can be based on various
factors, such as product assortment, pricing strategy, customer service, store
ambience, convenience, or a combination of these elements. The USP should
communicate a clear and compelling reason why customers should choose the
store over others.
3. Competitive Analysis: Conducting a thorough analysis of competitors is crucial
to position the store effectively. By understanding the strengths and weaknesses
of competing retailers, the store can identify market gaps and opportunities for
differentiation. This analysis helps in formulating a positioning strategy that
highlights the store's advantages and addresses customer needs that are not
adequately met by competitors.
4. Branding and Store Image: Store positioning is closely tied to branding and the
store's overall image. Retailers should develop a consistent and compelling brand
identity that aligns with the target market's expectations and preferences. This
includes factors such as store name, logo, visual merchandising, store layout,
signage, and store atmosphere.
5. Pricing and Product Assortment: Retailers can position themselves as offering
high-end, premium products, or as a value-oriented, budget-friendly store. The
product assortment should be aligned with the target market's needs and
preferences, and pricing should reflect the perceived value and positioning.
6. Customer Service and Experience: Providing exceptional customer service and
delivering a memorable shopping experience is instrumental in-store positioning.
Retailers should train and empower their staff to offer personalized assistance,
product knowledge, and a friendly atmosphere.
7. Communication and Marketing: Retailers should develop consistent messaging
across various marketing channels, including advertising, social media, website,
and in-store promotions. The messaging should emphasize the unique value
proposition and differentiate the store from competitors.
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 o Site selection,

• While planning conservatively and within a reasonable budget is always smart, retailers
need to include five other key components of site selection that are just as important”:

• 1. Know the customer. This is critical in site selection. Such retailers as Starbucks and
Target use specific location and shopper profiles that incorporate numerous data points.
New retailers can utilize free data. Firms can set up grading systems by rating factors like
visibility, access, population size, household income, and traffic. “A minimum acceptable
score can be applied as a guideline helping a retailer avoid choosing poor performing
locations.”

• 2. Seek out locales with the highest sales potential. The rent charged for a site should
reflect the sales revenue that can be generated there. High rents may sometimes, but not
necessarily, be worth the investment.

• 3. Understand the current state of the retail leasing market to see whether a landlord’s
rent is fair (reasonable). “Having several qualified choices readily available as a backup
helps alleviate the frustration if negotiations break down on the first choice.”

• 4. Research the co-tenants in a shopping center or shopping district to see if they are
compatible and a customer attraction. Pedestrian and vehicular traffic counts indicate
whether co-tenants are good for the newly arriving retailer.

• 5. Be aware of the long-term commitment that must be made, because leases typically are
in force for at least five years—and many times, longer than that.

o location and site evaluation.

•
1. Pedestrian Traffic: Pedestrian traffic refers to the number of people walking in a specific
area. Evaluating pedestrian traffic helps determine the potential customer base and the
visibility of a location. Higher pedestrian traffic can be beneficial for businesses that rely
on foot traffic and impulse purchases.
2. Vehicular Traffic: Vehicular traffic refers to the flow of vehicles near a site. Assessing
vehicular traffic helps understand the accessibility and visibility of a location. High
vehicular traffic can be advantageous for businesses that rely on drive-by or drive-
through customers.
3. Parking Facilities: Availability and convenience of parking facilities are essential for
attracting and retaining customers. Evaluating parking facilities involves considering
factors like the number of parking spaces, ease of access, proximity to the site, and any
associated costs. Sufficient parking capacity is crucial to accommodate customer
vehicles.
4. Transportation: Assessing transportation options is important for determining the ease of
reaching a location. Proximity to public transportation, such as bus stops or subway
stations, can increase accessibility and attract customers who rely on public transit.
Evaluating transportation also involves considering factors like road infrastructure,
proximity to highways, and ease of navigation.
5. Store Composition: Evaluating the composition of nearby stores and businesses is
important to understand the competitive landscape and potential synergies. Assessing the
 types of businesses nearby helps determine if they complement or compete with the
proposed store, and whether they attract a similar target market.
6. Specific Site: Factors related to the specific site itself include the size, layout, visibility,
and condition of the location. The suitability of the site for the intended business needs to
be evaluated, taking into account factors like available space for operations, layout
efficiency, visibility from key vantage points, and overall attractiveness to customers.
7. Terms of Occupancy: Assessing the terms of occupancy involves considering factors
such as lease or rental agreements, costs, restrictions, and duration of the lease.
Understanding the terms of occupancy is crucial for evaluating the financial viability and
long-term commitment to a specific location.
8. Overall Rating: After evaluating all the individual factors, an overall rating or assessment
is given to the location/site. This rating takes into account the relative strengths and
weaknesses of the site based on the factors mentioned above. It helps in making informed
decisions about the suitability and potential success of a location for the intended
business.

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• Introduction to Retailing:
o Definition,

• Retailing encompasses those business activities involved with the sale of goods and
services to the final consumer for personal, family, or household use.

o Characteristics,

1. Direct interface with customers: Retailing involves direct interaction with end
consumers. Retailers act as intermediaries between manufacturers or wholesalers and
consumers, providing a physical or online platform for customers to access products or
services.
2. Product assortment: Retailers offer a diverse range of products and services to cater to
the varying needs and preferences of customers. They curate their product assortment
based on market demand, consumer trends, and their target audience.
3. Location and accessibility: Retailers strategically position themselves in locations that
are convenient and easily accessible to their target customers.
4. Customer service: Retailers prioritize providing excellent customer service to enhance
the overall shopping experience. This includes knowledgeable staff, assistance in product
selection, addressing customer queries or concerns, and efficient after-sales support.
5. Pricing and promotions: Retailers employ pricing strategies to attract customers and
remain competitive. They may offer discounts, promotions, loyalty programs, or price
matching to entice consumers and differentiate themselves from competitors.
6. Inventory management: Effective inventory management is crucial for retailers to meet
customer demand while minimizing costs. This involves optimizing stock levels,
ensuring product availability, managing supply chains, and minimizing overstock or out-
of-stock situations.
 7. Visual merchandising: Retailers use visual merchandising techniques to create an
appealing shopping environment and influence customer behavior. This includes store
layout, product placement, attractive displays, signage, lighting, and overall aesthetics to
enhance the customer experience and encourage purchases.
8. Multi-channel presence: Many retailers now operate across multiple channels, including
physical stores, e-commerce websites, mobile apps, and social media platforms. This
allows customers to engage with the brand through their preferred channel and provides a
seamless shopping experience across different touchpoints.

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• Retail Formats:
o Retail institutions by ownership,

Retail institutions can be categorized based on their ownership structure, which refers to who
owns and operates the retail establishment.

a. Independent Retailers: Independent retailers are privately owned retail establishments

operated by individuals or small business owners. They have full control and ownership of their
businesses. Independent retailers often specialize in niche markets or specific product categories,
and they cater to the needs and preferences of local customers. Examples include small local
shops, neighborhood stores, and family-owned businesses.
b. Chain Retailers: Chain retailers are retail establishments that operate multiple outlets under
the same brand name and centralized management. They have a standardized business model,
consistent branding, and uniform store formats across their locations. Chain retailers benefit from
economies of scale, centralized buying and merchandising, and streamlined operations.
Examples include national or regional chains like Walmart, Target, and Starbucks.
c. Franchise Retailers: Franchise retailers operate under a contractual agreement with a
franchisor, who grants them the right to use their brand, business model, and support systems in
exchange for fees and royalties. Franchisees maintain a level of independence while benefiting
from the established brand recognition and operational support provided by the franchisor.
Examples include fast-food chains like McDonald's, Subway, and KFC, as well as retail brands
like The UPS Store and Anytime Fitness.
d. Leased Departments: Leased departments, also known as leased retail spaces, involve an
arrangement where a department or section within a larger retail store is operated by an
independent retailer or a brand. In this scenario, the department is owned and managed by a
separate entity while being housed within another retailer's premises. For example, a department
store may lease out sections to specialized brands like cosmetics, electronics, or jewelry. Leased
departments allow retailers to offer a diverse range of products and services without managing
all aspects of the business themselves.

Advantages:

→ The market is enlarged by providing one-stop customer shopping.

→ Personnel management, merchandise displays, and reordering items are undertaken by
lessees. → Regular store personnel do not have to be involved.
→ Leased department operators pay for some expenses, thus reducing store costs.
→ A percentage of revenues is received regularly.

Disadvantages:

→ Leased department operating procedures may conflict with store procedures.

→ Lessees may adversely affect stores’ images.
→ Customers may blame problems on the stores rather than on the lessees.

o Retail institutions by Store-Based Strategy Mix,

Store-based strategy mix refers to the combination of strategies employed by retail institutions to
create a unique value proposition and competitive advantage.

2 basis:

A. Food oriented strategic retail format

1. Convenience Store:
o Description: Small-scale retail stores that offer a limited range of products with a
focus on convenience and quick purchases.
o Characteristics: Extended operating hours, limited product assortment, high
markups, impulse purchases.
o Examples: 7-Eleven,
2. Conventional Supermarket:
o Description: Standard-sized grocery stores that offer a wide range of food
products, including fresh produce, packaged goods, and household items.
o Characteristics: Large product assortment, competitive pricing, weekly
promotions, self-service format.
o Examples: Reliance Fresh

3. Food-Based Superstore:

o Description: Large-format retail stores that specialize in selling food products,

often including non-food items like household goods.
o Characteristics: Extensive food selection, bulk purchasing options, discounted
prices, one-stop shopping.
o Examples: Rajmandir, Krishnamart

4. Combination Store:
o Description: Retail stores that combine a supermarket with other departments,
such as a pharmacy, apparel, electronics, or home goods.
o Characteristics: Diverse product offerings, multiple categories, convenience,
cross-selling opportunities.
o Examples: BigBazaar
5. Box Store:
o Description: Large discount stores that focus on offering a broad range of
products at low prices, including food and non-food items. Items are displayed in
cut cases, and prices are shown on shelves or overhead signs. Customers bag their
own purchases. Box stores rely on low-priced, private-label brands.
o Characteristics: Warehouse-like layout, bulk packaging, discounted pricing,
limited service.
o Examples: Costco, Sam's Club, BJ's Wholesale Club.
 6. Warehouse Store:
o Description: Membership-based stores that primarily sell food and other goods in
bulk, targeting both individual customers and businesses. High ceilings
accommodate pallet loads of groceries. Shipments are made directly to the store.
o Characteristics: High-volume sales, deep discounts, large package sizes, limited
service.
o Examples: Costco, Sam's Club, BJ's Wholesale Club.

B. General Merchandise Retailers

1. Specialty Store:
o Description: Retail stores that focus on selling a narrow range of products within
a specific niche or category.
o Characteristics: Expert staff, specialized product selection, unique shopping
experience, higher prices.
o Examples: Apple Store, Sephora, GameStop.
2. Traditional Department Store:
o Description: Large-scale retail stores that offer a wide variety of products across
multiple categories, including apparel, cosmetics, home goods, and more.
o Characteristics: Extensive product assortment, multiple departments, customer
service, higher price points.
o Examples: Macy's, Nordstrom, Bloomingdale's.
3. Full-Line Discount Store:
o Description: Retail stores that offer a wide range of products across various
categories at discounted prices. It conveys the image of a high-volume, low-cost
outlet selling a broad product assortment for less than conventional prices.
o Characteristics: Lower prices, large product assortment, self-service format,
limited customer service.
o Examples: Walmart, Target, Kmart.
4. Variety Store:
o Description: Retail stores that sell a broad range of inexpensive products across
various categories, often targeting budget-conscious customers.
o Characteristics: Low prices, small store format, basic product assortment, self-
service model, There are open displays and few salespeople. The stores do not
carry full product lines, may not be departmentalized, and do not deliver products
o Examples: Dollar Tree, Dollar General, Family Dollar.
5. Off-Price Chain:
▪ Description: Retail chains that offer branded merchandise at discounted
prices by purchasing excess inventory, closeouts, or irregular items from
manufacturers or other retailers.
▪ Characteristics: Deep discounts, constantly changing inventory, limited
product availability, value-focused shopping experience.
 ▪ Examples: TJ Maxx, Marshalls, Ross Dress for Less.
6. Factory Outlet:
▪ Description: Stores that sell products directly from manufacturers or their
authorized distributors, offering discounted prices on items from previous
seasons, overstock, or factory seconds.
▪ Characteristics: Brand-name merchandise, discounted prices, often located
in outlet malls or designated outlet centers.
▪ Examples: Nike Factory Store, Coach Outlet, Gap Outlet.
7. Membership Club:
▪ Description: Retail establishments that require customers to become
members in order to access bulk buying opportunities, discounted prices,
and a variety of products.
▪ Characteristics: Membership-based access, bulk packaging, discounted
pricing, limited service, exclusive benefits.
▪ Examples: Costco (mentioned earlier), Sam's Club (mentioned earlier),
BJs Wholesale Club (mentioned earlier).
8. Flea Market:
▪ Description: Open-air markets or indoor venues where multiple vendors
gather to sell a variety of new and second-hand merchandise, often at
bargain prices.
▪ Characteristics: Individual vendor stalls, diverse product offerings,
bargaining/negotiation opportunities, casual and lively atmosphere.
▪ Examples: Rose Bowl Flea Market (California, USA), Chatuchak Market
(Bangkok, Thailand), Portobello Road Market (London, UK).

o Web, Non-store based, and other forms of Non-traditional Retailing.

Non store based

Retailing strategy that is not store based.

1. Direct Marketing: Customer is initially exposed to a good or service through a non-

personal medium and then orders by mail, phone, fax, or computer.

Advantages:

• Reduced costs
• Lower prices
• Large geographic coverage
• Convenient to customers
 • Ability to pinpoint customer segments
• Ability to eliminate sales tax for some
• Ability to supplement regular business without additional outlets

Limitations:

• Products often cannot be examined prior to purchase

• Clutter exists
• Long lead time required
• Industry reputation sometimes negative

Selection Factors by Customers for a direct marketer

• Company reputation and image

• Ability to shop whenever consumer wants
• Types of goods and services as well as the assortment and brand names carried.
• Availability of toll-free phone number or Web site for ordering
• Credit card acceptance
• Speed of promised delivery time
• Competitive prices
• Satisfaction with past purchases and good return policy

2. Direct Selling

Direct selling includes personal contact with consumers in their homes (and other nonstore
locations such as offices) and phone solicitations initiated by retailer.

3. Vending Machines

Vending machines are a cash- or card-operated retailing format that sells goods and services.
Eliminates the use of sales personnel and allows 24-hour sales.
Machines placed wherever convenient for consumers.

Electronic Retailing (WWW)

The Role of the Web:

→ Project a retail presence and enhance the retailer’s image.

→ Generate sales as the major source of revenue for an online retailer or as a complementary
source of revenue for a store-based retailer.
→ Reach geographically dispersed consumers, including foreign ones.
→ Provide information to consumers about products carried, store locations, usage information,
answers to common questions, customer loyalty programs, and so on.
→ Promote new products and fully explain and demonstrate their features.
→ Furnish customer service in the form of E-mail, “hot links,” and other communications.
→ Be more “personal” with consumers by letting them point and click on topics they choose.
→ Conduct a retail business in a cost-efficient manner.
→ Obtain customer feedback and reviews, and encourage “conversations” via social media.
→ Promote special offers and send coupons to Web customers.
→ Describe employment opportunities.
→ Present information to potential investors, potential franchisees, and the media

OTHER NONTRADITIONAL FORMS OF RETAILING

1. Video Kiosks

The video kiosk is a freestanding, interactive, electronic computer terminal that displays products
and related information on a video screen; it often has a touch screen for consumers to make
selections. Some kiosks are located in stores to enhance customer service; others let consumers
place orders, complete transactions (typically with a credit card), and arrange for shipping.
Kiosks can be linked to retailers’ computer networks or to the Web.

Video kiosks can be placed almost anywhere (from a store aisle to the lobby of a college
dormitory to a hotel lobby), require few employees, and are an entertaining and easy way to
shop. Many shopping centers and individual stores are putting their space to better, more
profitable use by setting up video kiosks in previously underutilized areas. These kiosks carry
everything from gift certificates to concert tickets to airline tickets

2. Airport Retailing

→ There is a large group of prospective shoppers. In an average year, a big airport may have 20
million or more people passing through its concourses.
→ Air travelers are a temporarily captive audience at the airport and looking to fill their waiting
time, which could be up to several hours. They tend to have above-average incomes.
→ Sales per square foot of retail space are much higher than at regional malls. Rent is about 20
to 30 percent higher per square foot for airport retailers.
→ Airport stores are smaller, carry fewer items, and have higher prices than traditional stores.
→ Replenishing merchandise and stocking shelves may be difficult at airport stores because they
are physically removed from delivery areas and space is limited.
→ Passengers are at airports at all times of the day. Thus, longer store hours are possible.
→ International travelers are often interested in duty-free shopping.
→ There is much tighter security at airports than before, which has had a dampening effect on
some shopping.

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o Factors behind the change of Indian retail industry.

1. Economic Growth: India's steady economic growth over the years has had a
positive impact on the retail sector. Rising incomes, expanding middle-class
population, and increased consumer spending power have fueled the demand for
organized retail formats and a wider range of products and services.
2. Changing Consumer Behavior: Indian consumers have experienced a shift in
their preferences and shopping habits. They are increasingly seeking convenience,
a wider product assortment, better quality, and enhanced shopping experiences.
This change in consumer behavior has driven retailers to adapt and offer more
diverse and customer-centric offerings.
3. Explosion of Media: TV, Cable services etc. This media bombardment has
exposed the Indian consumer to the lifestyles of more affluent countries and
raised their aspirations and expectations from the shopping experience—they
want more choice, value, service, experience and convenience.
4. Urbanization: Rapid urbanization in India has led to the emergence of large
cities and urban centers. Urban areas have witnessed a higher concentration of
modern retail formats and organized retail chains. The growing urban population
has contributed to the demand for organized retail, creating opportunities for retail
expansion and investment.
5. Technological Advancements: The proliferation of technology, particularly the
internet and mobile devices, has revolutionized the retail landscape in India. The
growth of e-commerce, digital payments, and mobile applications has provided
consumers with new avenues for shopping and has forced traditional retailers to
adapt to changing consumer preferences.
6. Policy Reforms: The Indian government's policy reforms, such as allowing
foreign direct investment (FDI) in retail and the introduction of Goods and
Services Tax (GST), have had a significant impact on the retail industry. FDI
reforms have attracted global retail players, leading to increased competition and
the infusion of investment and expertise. GST has streamlined the tax structure,
simplifying operations for retailers and enabling better supply chain management.
 7. Infrastructure Development: Infrastructure development, including the
construction of shopping malls, improved logistics networks, and better
transportation facilities, has played a crucial role in the growth of the retail sector.
These developments have facilitated the expansion of organized retail formats and
improved connectivity for both retailers and consumers.
8. Rise of Entrepreneurship: The entrepreneurial spirit in India has led to the
emergence of several innovative and niche retail players. Start-ups and small
businesses have leveraged technology, e-commerce platforms, and unique
business models to address specific consumer needs and capture market share.
9. Global Influence and Exposure: Increased globalization and exposure to
international brands and retail concepts have influenced Indian consumer
preferences. Consumers now seek international brands, quality standards, and
shopping experiences similar to those found in developed markets. Retailers have
responded by introducing international brands, collaborations, and adopting
global retail practices.

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o Retail Image Mix,

The needs of customers who go to a local grocer differ from those who visit a specialty goods
retail outlet or a department store. Each retailer strategically plans a mix of elements to match the
needs of his customer. A mix of the following six elements meets the physical and emotional
needs of the customer:

1. Employee Type and Density: The retailer employs sales staff to match the selling and
image needs of his store. A specialty store like one selling saris will have a higher density
of staff at about one per 100 square feet and the salesperson would be one who caters to
the needs of the customer who speaks the local language and look more homely (as the
customers are mostly women). In contrast, in a large department store the density of staff
would be one per 400 square feet. They will be well educated and suitably dressed (in
most cases in western clothes as these form a major chunk of the store offering).
2. Merchandise Type and Density: The type of merchandise determines its density in the
store. A supermarket is very dense whereas a large department store is relatively less
dense. A designer-wear exclusive store, a boutique or a furniture retailer would have low
density so as to make the merchandise appear exclusive. The density of the merchandise
also determines the margins planned on the merchandise. The lower the density the
higher will be the margins.
3. Fixture Type and Density: The fixtures have to complement the value of the
merchandise. A jeweller uses a lot of expensive woodwork and stones like marble and
 granite to add value to his merchandise, while a sportswear goods store uses more of
metal and plastic.
4. Sound Type and Density: Sound can be pleasant or unpleasant and can have a direct
impact on the store atmosphere. The category of the merchandise determines the type and
density of sound. Soft instrumental music is usually used in jewellery and cosmetics
while the casuals and youth fashion wear segments are complemented by contemporary
sound tracks from new bands. Department stores play music based on the category of
merchandise.
5. Odour Type and Density: Like sound, odour too has a positive or negative effect on the
store atmosphere. Positive odours like that of fresh coffee beans or flowers add to the
shopping experience in the men’s wear and cosmetics departments in a store. Negative
odours like those of a musty carpet, cigarette smoke, etc. can drive the customer away.
The strength of the odour is also important and even the right odour if it’s too strong can
have a negative effect.
6. Visual Type and Factors: These are a result of the overall store presentation such as the
interior design, display and visual merchandising. Elements like lighting and colour can
be controlled to make customers buy more. Warm yellow shades of lights complement
gold jewellery as they add richness. Natural shades (daylight colours) are good for
garments as they bring out the true colour of the merchandise.

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Advertising in Retail : retails promotion mix

1. Point of Sale Advertising

POS activities consist of displays, visual merchandising, display contests, shelfon-hire (SOH) for
brands, etc. POS advertising is very cost-effective and addresses the right target customers as
they come into the store itself. There are separate places within the store earmarked for in-store
branding and signage effectively used for advertising within the store. This is commonplace in
convenience stores and food supermarkets.

2. Sales Promotion: Discount, Qty off, Price off, Contest, Sweepstakes, Rebate,
Gifts/Premium
3. Publicity

Publicity is the non-paid advertising mileage that the retail organization gets through free write-
ups in media about the store’s latest arrivals, sales promotions or any event that the store or
brand has organized to achieve its sales objectives. New store launches get a great deal of
publicity by way of television interviews of the CEO, interviews on FM radio channels, and
interviews and write-ups in the press. Most organized retailers employ PR agencies as retainers.
Innovations and exclusive programmes are generally accorded the greatest media hype by public
relations.

4. Personal Selling

Sales and service personnel in the retail organization are its ambassadors, and communicate the
value proposition of the entire store. Well-trained sales and service associates who advertise the
store by their extraordinary selling and service skills are assets to the retail organization.
Personal selling helps in cross-selling complementary items to the customers, up-selling to
achieve higher volumes and selling add-ons to increase average ticket size. Sales associates can
do personal selling by making suggestions to customers on what they need to buy for specific
needs.
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b. Sales Promotion:
Sales promotion refers to short-term promotional activities that retailers use to stimulate
immediate sales and encourage customer engagement. Unlike advertising, sales promotion
tactics are typically time-bound and create a sense of urgency for customers to make a purchase.
Key aspects of sales promotion in retail marketing include:

• Discounts and Special Offers

• Loyalty Programs
• Contests and Giveaways
• In-store Promotions: Retailers use in-store promotions such as product demonstrations,
free samples, displays, or interactive experiences to engage customers and increase
product visibility. These tactics help create a memorable and immersive shopping
experience.
• Cross-Selling and Upselling: Sales promotion strategies may involve cross-selling and
upselling techniques where retailers promote complementary products or encourage
customers to upgrade to higher-value offerings. This helps increase the average
transaction value and maximize sales revenue.
• Price -off
• Quantity off
• Rebate

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Why managing a retail store is difficult -

• Retail Operation:
 o Elements/Components of Retail Store Operation,

1. Operations Blueprint: An operations blueprint systematically lists all operating

functions to be performed, their characteristics, and their timing. When developing a
blueprint, the retailer specifies, in detail, every operating function from the store’s
opening to closing—and those responsible for them. For example, who opens the store?
When? What are the steps (turning off the alarm, turning on the power, setting up the
computer, and so forth)?
2. Store Format, Size, and Space Allocation

1. Store Format:

o The store format should align with the target market, product assortment, and
overall business strategy. For example, a specialty store may focus on a specific
product category, while a department store offers a wide range of products.

• b. Store Size:

o Store size refers to the physical dimensions and square footage of the retail space.
It can vary greatly depending on the type of store, location, and available
resources.
o Store size should be determined based on factors such as the target market,
product assortment, sales volume, and projected foot traffic.

• c. Space Allocation:

o Space allocation involves the strategic distribution and allocation of floor space
within the retail store.
o High-demand and high-margin products are often given more prominent display
areas and allocated more floor space to attract customer attention and maximize
sales potential.

3. Personnel Utilization

Why imp?
→ Labor costs are high. For various retailers, wages and benefits may account for up to one-half
of operating costs.
→ High employee turnover means increased recruitment, training, and supervision costs.
→ Poor personnel may have weak sales skills, mistreat shoppers, mis-ring transactions, and
make other errors.
→ Productivity gains in technology have exceeded those in labor; yet, some retailers are labor
intensive.
→ Labor scheduling is often subject to unanticipated demand. Although retailers know they must
increase staff in peak periods and reduce it in slow ones, they may still be over- or understaffed
if weather changes, competitors run specials, or suppliers increase promotions.

4. Store Maintenance
5. Inventory Management
6. Store Security
7. Insurance

Among the types of insurance that retailers buy are workers’ compensation, product liability,
fire, accident, property, and officers’ liability.
Insurance decisions can have a big impact on a retailer:
(1) In recent years, premiums have risen dramatically.
(2) Several insurers have reduced the scope of their coverage; they now require higher
deductibles or do not provide coverage on all aspects of operations
(3) There are fewer insurers servicing retailers today than a decade ago; this limits the choice of
carrier.
(4) Insurance against environmental risks (such as leaking oil tanks) is more important due to
government rules.

How retailers protect themselves financially to lessen their vulnerability to employee and
customer insurance claims?

These programs include no-slip carpeting, flooring, and rubber entrance mats; more frequently
mopping and inspecting wet floors; doing more elevator and escalator checks; having regular fire
drills; building more fire-resistant facilities; setting up separate storage areas for dangerous
items; discussing safety in employee training; and keeping records showing proper maintenance
activity.

8. Credit Management

→ What form of payment is acceptable? A retailer may accept cash only, cash and personal
checks, cash and credit card(s), cash and debit cards, or all of these.
→ Who administers the credit plan? The firm can have its own credit system and/or accept major
credit cards (such as Visa, MasterCard, American Express, and Discover). It may also work with
PayPal and Google Checkout for online payments.
→ What are customer eligibility requirements for a check or credit purchase? With a check
purchase, a photo ID might be sufficient.
→ What credit terms will be used? A retailer with its own plan must determine when interest
charges begin to accrue, the rate of interest, and minimum monthly payments.
→ How are late payments or non payments to be handled? Some retailers with their own credit
plans rely on outside collection agencies to follow up on past-due accounts.
 9. Computerization

→ Software provides computerized inventory control and customer order tracking

→ Computerized check-out is used by both large and small retailers so they can efficiently
process transactions and monitor inventory
→ Computerized registers instantly record and display sales, provide detailed receipts and store
inventory data
→ Wireless scanners let workers scan heavy items without lifting them, radio-frequency
identification tags (RFID) and emit a radio frequency code when placed near a receiver (faster
than UPC codes and better for harsh climates) and speech recognition ( that can tally an order on
verbal command)
→ Electronic point-of-sale system performs all the tasks of a computerized checkout and verifies
check and charge transactions
→ Today's scanners are faster and more versatile, more durable and more accurate
→ Hand-held scanners, hands free scanners and miniaturized data transceivers
→ Self-scanning where consumers himself scans the items

10. Outsourcing:

A retailer pays an outside party to undertake one or more of its operating functions.

11. Crisis Management:

→ There should be contingency plans for as many different types of crisis situations as possible.
That is why retailers buy insurance, install backup generators, and prepare management
succession plans. A firm can have a checklist to follow if there is an incident such as a store fire
or a parking-lot accident.
→ Essential information should be communicated to all affected parties, such as the fire or
police department, employees, customers, and the media, as soon as a crisis occurs.
→ Cooperation—not conflict—among the involved parties is essential.
→ Responses should be as swift as feasible; indecisiveness may worsen the situation.
→ The chain of command should be clear and decision makers given adequate authority

o Store Administration,

• Store administration refers to the management and coordination of administrative tasks

and processes within a retail store.

1. Staff Management:
▪ Recruitment and Hiring
▪ Employee records management
 ▪ Scheduling
▪ Payroll administration
2. Financial Administration:
▪ Cash management
▪ Financial record keeping
▪ Budget management
3. Administrative Processes:
▪ Coordination of administrative tasks
▪ Policy and procedure implementation
▪ Compliance with regulations and guidelines
4. Communication and Documentation:
▪ Internal communication with staff
▪ Documentation of important information and procedures
▪ Record keeping and filing
5. Training and Development:
▪ Employee training coordination
▪ Professional development initiatives
▪ Performance evaluation and feedback

o Store Manager – Responsibilities,

1. Overall Store Operations:

▪ Oversee the day-to-day operations of the store, ensuring smooth
functioning and efficient use of resources.
▪ Develop and implement store policies and procedures to maintain
consistency and compliance.
▪ Monitor and evaluate store performance, identifying areas for
improvement and implementing corrective actions.
2. Staff Management:
▪ Recruit, hire, and train store staff, ensuring they have the necessary skills
and knowledge to perform their roles effectively.
▪ Schedule employee shifts, manage time and attendance, and handle
staffing issues such as performance management, disciplinary actions, and
terminations.
▪ Foster a positive work environment, promote teamwork, and motivate
staff to achieve store goals.
3. Customer Service:
▪ Ensure exceptional customer service by training and coaching staff in
providing a high level of customer satisfaction.
▪ Handle customer inquiries, complaints, and escalations, resolving issues
promptly and maintaining positive customer relationships.
▪ Implement strategies to enhance the overall customer experience and
increase customer loyalty.
4. Sales and Performance:
 ▪ Develop sales targets and strategies to drive revenue growth and meet or
exceed sales goals.
▪ Analyze sales data and trends, identifying opportunities for improvement
and implementing sales and promotional initiatives.
▪ Monitor inventory levels, manage stock replenishment, and ensure
accurate pricing and product availability.
5. Visual Merchandising and Store Presentation:
▪ Maintain an attractive and organized store layout and product displays that
align with the store's brand and target market.
▪ Implement visual merchandising strategies to maximize product visibility,
promote cross-selling, and enhance the overall shopping experience.
▪ Monitor inventory accuracy and participate in stock-taking activities to
minimize shrinkage and maintain proper stock levels.
6. Financial Management:
▪ Prepare and manage the store budget, including tracking expenses,
controlling costs, and optimizing profitability.
▪ Monitor sales performance and key financial metrics, such as gross
margin, inventory turnover, and payroll expenses.
▪ Ensure cash management procedures are followed, including accurate cash
handling, banking, and reconciliation.
7. Safety and Security:
▪ Maintain a safe and secure store environment for employees and
customers, adhering to health and safety regulations.
▪ Implement loss prevention strategies to minimize theft, shoplifting, and
shrinkage.
▪ Train staff on security procedures, emergency protocols, and incident
reporting.
8. Communication and Reporting:
▪ Communicate effectively with employees, senior management, and
stakeholders, providing updates on store performance, challenges, and
opportunities.
▪ Generate and analyze reports on key performance indicators, sales metrics,
inventory levels, and operational activities.

o Inventory Management,

A retailer uses inventory management to maintain a proper merchandise assortment while

ensuring that operations are efficient and effective.
Some operational issues to consider:
→ How can the handling of merchandise from different suppliers be coordinated?
→ How much inventory should be on the sales floor versus in a warehouse or storeroom?
→ How often should inventory be moved from nonselling to selling areas of a store?
→ What inventory functions can be done during nonstore hours?
→ What are the trade-offs between faster supplier delivery and higher shipping costs?
→ What supplier support is expected in storing merchandise or setting up displays?
→ What level of in-store merchandise breakage is acceptable?
→ Which items require customer delivery? When? By whom?

o Customer Service,

1. Product Knowledge: Customer service representatives should have in-depth

knowledge of the products or services offered by the retail store. This allows them
to answer customer inquiries, make recommendations, and provide accurate
information about the merchandise.
2. Approachability and Friendliness: Creating a welcoming and friendly atmosphere
is essential. Customer service representatives should greet customers with a smile,
offer assistance, and make them feel valued and comfortable.
3. Active Listening: Customer service representatives should actively listen to
customer needs and concerns. By attentively listening, they can better understand
customer requirements and provide appropriate solutions or recommendations.
4. Problem Resolution: Effective customer service involves promptly addressing and
resolving customer issues or complaints. Retail staff should have the skills and
authority to handle customer concerns professionally and find satisfactory
resolutions.
5. Personalized Assistance: Going the extra mile to provide personalized assistance
can significantly enhance the customer experience. This can include offering
product demonstrations, suggesting complementary items, or providing tailored
recommendations based on the customer's preferences.
6. Efficient Checkout Process: Ensuring a smooth and efficient checkout process is
crucial for customer satisfaction. Staff should be trained to process transactions
quickly, handle payment methods accurately, and provide clear and concise
receipts.
7. Post-Sale Support: Customer service doesn't end at the point of sale. Following up
with customers after their purchase to ensure satisfaction, addressing any post-
sale concerns, and offering assistance with returns or exchanges contributes to a
positive customer experience.
8. Problem-Solving and Adaptability: Customer service representatives should be
equipped with problem-solving skills to handle unexpected situations or
challenging customers. They should adapt their approach and communication
style based on the customer's needs and temperament.
9. Training and Development: Regular training sessions should be conducted to
enhance the customer service skills of retail staff. This can include product
training, customer interaction techniques, conflict resolution, and empathy-
building exercises.
10. Feedback and Continuous Improvement: Gathering customer feedback through
surveys, reviews, or in-person interactions helps identify areas for improvement.
Retail operations should use this feedback to make necessary adjustments and
continually enhance the customer service experience.

o Management of Retail Outlet/Store,

• → Include everything under 2nd half of unit 4

 o Store Maintenance,

o Store Security.

Store security relates to two basic issues: personal security and merchandise security.

→ Uniformed security guards provide a visible presence that reassures customers and
employees, and it is a warning to potential thieves and muggers.
→ Undercover personnel are used to complement uniformed guards.
→ Brighter lighting is used in parking lots, which are also patrolled more frequently by guards.
These guards more often work in teams.
→ TV cameras and other devices scan the areas frequented by shoppers and employees.
→ Access to store backroom facilities (such as storage rooms) has been tightened.
→ Bank deposits are made more frequently—often by armed security guards.
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