Site Selection Analysis in Retail

With the advent of new retail formats in India such as planned shopping centers and malls, emergence of free-standing department stores, hypermarkets, etc., and further development of traditional business districts and other unplanned shopping locations, a retailer is presented with a wider choice of locations. Consideration of all the options keeping in view the product mix, customer profile and overall business model presents an enormous challenge. A retailer has to consider the following factors while selecting a site:

  1. Kind of products sold
  2. Cost factor
  3. Competitor’s location
  4. Ease of traffic flow and accessibility
  5. Parking and major thoroughfares
  6. Market trends
  7. Visibility

1. Kind of Products Sold

For stores dealing in convenience goods, the quantity of traffic is most important.… Read the rest

Trends in Retail Formats

Retail industry is continuously going through changes on account of liberalization, globalization and consumer preferences. While multinational retail chains are looking for new markets, manufacturers are identifying, redefining, or evolving new retail formats. The existing retail houses are also gearing up to face the emerging competition from the organized sector and the changing outlook of the consumers. For example, consumer spending is shifting from goods to services. Accordingly the retailers too are fast adjusting to the changing consumer preferences.

Consumers are not only looking for the core products or functional benefits from the retailers but also the non-functional benefits, which need to be compatible with their lifestyles.… Read the rest

Retail Organization and Classification of Retail Units

Retail Organization

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

Retail firms may be independently owned, parts of a retail chain, operated as a franchisee, leased departments, owned by manufacturers or wholesalers, consumers owned or co-operative society.

A retail unit could be owned by:

  • Manufacturer (e.g.,
Read the rest

Categorizing Retailers

Categorizing retailers helps in understanding the competition and the frequent changes that occur in retailing. There is no universally accepted method of classifying a retail outlet, although many categorization schemes have been proposed. Some of these include classifying on the basis of

  • Number of outlets
  • Margin Vs Turnover
  • Location
  • Size.

The number of outlets operated by a retailer can have a significant impact on the competitiveness of a retail firm. Generally, a greater number of outlets add strength to the firm because it is able to spread fixed costs, such as advertising and managers’ salaries, over a greater number of stores in addition to acquiring economies of purchase.… Read the rest

Activities Performed by Retailers

Retailers undertake various business activities and perform functions that add value to the offerings they make to their target segments. Retailers provide convenient location, stock and appropriate mix of merchandise in suitable packages in accordance with the needs of customers. The four major activities carried out by retailers are:

  1. Arrange for assortment of offerings
  2. Breaking quantity
  3. Holding stock
  4. Extending services
Arranging Assortment

An assortment is a retailer’s selection of merchandise. It includes both the depth and breadth of products carried. Retailers have to select the combination of assortments from various categories. The assortments must include substitutable items of multiple brands and price points.… Read the rest

Functions of Retailing

Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers and consumers. In this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of communication, storage, advertising and certain additional services.

Sorting

Manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to reduce costs. Final consumers, in contrast, prefer a large variety of goods and services to choose from and usually buy them in small quantities. Retailers are able to balance the demands of both sides, by collection an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units.… Read the rest