Retail Formats: An Indian perspective by Tuhin Chattopadhyay

Classification of Retail Formats

Store Based Retailing

Non-Store Retailing

Service Retailing

Form of Ownership Independent Retailer Chain Retailer Franchise Leased Departments Consumer cooperatives

Merchandise Offered Convenience Stores Supermarkets Hypermarkets Speciality stores Departmental Stores Off price retailers Factory outlets Catalogue showrooms

Direct Selling Mail order Tele marketing Automated Vending

Banks Car Rentals Service contracts Providers of various services

Classification on the basis of ownership

Independent Retailer
An independent retailer is one who owns and operates only one retail outlet. E.g. local baniya / kirana store & the panwala

A chain retailer or a corporate retail chain

Two or more outlets are under a common ownership Similarity in the merchandise offered, the ambience, advertising and promotions. Examples Wills Sports (ITC), Louis Phillippe, Van Heusen (Madura Garments), Arrow (Arvind mills) and department stores like Globus, West Side, Shoppers Stop, Food World, Music world, Planet M etc.

Franchising
A franchise is a contractual agreement between the franchiser and
the franchisee, which allows the franchisee to conduct business under an established name as per a particular business format. Franchising can be:

A product or trademark franchise where the franchisee sells the products of the franchiser and/or operates under the franchisers name. e.g. Archies stores
A business format franchise granting of a license for a predetermined financial return, by the franchiser to its franchisees entitling them to make use of a complete business package

including training, support and corporate name. e.g. Mc Donalds

Examples of Franchising in India

Pizza Hut, Marks and Spencer, Mc Donalds, Subway, Holiday Inn, Medicine Shoppe, Dominos, Golds Gym and Kentucky Fried Chicken (KFC). Franchise showrooms of various readymade garments manufacturers like Arvind, Madura Garments, Colour Plus etc. Titan, Shaahnaz Hussain parlours, Lakme NIIT, Eurokids & ZILS Shaadi Point of Shaadi.com

Advantages of Franchising Low risk Growth Ease of financing & Operational Support Advertising Disadvantages of franchising Royalty/Fees Lack of Control

Leased Departments
Shop-in-shops. E.g. perfume and cosmetic counter in a large department store.

Consumer cooperatives
Retail institution owned by its member customers. Limitation on their growth opportunities. E.g.s Sahakari Bhandars and Apna Bazzar shops in Mumbai Super Bazzar in Delhi Kendriya Bhandar

Classification on the Basis of The Merchandise Offered

Convenience Store
Usually located near residential areas & open long hours. Offers an assorted mix of products including milk, bread and eggs. Size in India : 500 1000 sq. ft. International Examples: 7-Eleven, Circle K, Albert Heijn, SPAR, Indian Examples: HP Speed mart, In & Out, retail stores that have started coming up in petrol pumps, our local baniya is similar to convenience store

Super Market
These stores offer food, laundry and household maintenance products. They are self service, low cost, low margin and high volume operators. Size in India: 800 5000 sq. ft. International Examples: ASDA, Kroger, Tesco, Safeway, Indian Examples: Foodworld, Foodland, Food Bazaar, Nilgiris, Subhiksha, Vitan

Hypermarket
A selling area between 5000 sq. m. and15000 sq. m. A wide range of products including food and non-food products. Discounted prices International Examples: Carrefour, Wal-Mart (the Wal-Mart Super centers), Meijer, Targets (Super Targets), Tesco (Tesco Extra Stores) and ASDA (ASDA Wal-Mart Super centers). Indian Examples: Giant, Big Bazzar, Star India Bazaar, Sabka Bazzar

Speciality Stores
Specializing in a particular type of merchandise or single product of durable goods (i.e. home furniture and household goods, consumer electronics and/or domestic electrical appliances) Narrow product line with deep assortments in that product line Level of service is high Usually concentrate on apparel, jewellary, fabrics, sporting goods, furniture etc. International examples: The Gap, Ikea, High & Mighty, Big & Tall, Walgreens, Boots. Indian examples: Proline fitness station & Gautier furniture

Department Stores
Large store selling several product lines, with each operating as a department. Product mix is largely non-food, like apparel, accessories, books, music, footwear, etc. Level of service is very high. Size in India: 5000 40000 sq. ft. International Examples: Marks & Spencer, Sears, J.C. Penny, Harrods, Selfridges, Macys, Bloomingdales etc. Indian examples: Shoppers Stop, Globus, Westside and Lifestyle Akbarallys, The Bombay Store and Benzer in Mumbai, Ebony in Delhi and Chermas and Meena Bazzar in Hyderabad

Off price retailers

Merchandise is sold at less than retail price. Buy manufacturers seconds, overruns and off seasons at a deep discount. Merchandise may be in odd sizes, unpopular colours or with minor defects. Indian Examples: Pantaloon Factory Outlets, Levis Factory Outlets.

Catalogue showrooms
Usually specialize in hard goods such as house ware, jewellery & consumer electronics. Customers walk into retail showroom and goes through the catalogue of the product/s that he would like to purchase. International Examples: Argos, Service Merchandise and Best Products

Big-box Retailers
1. 2. 3. 4. Large, industrial-style buildings or stores Size: 20,000 sq. ft. to 200,000 sq. ft. Four majors subgroups: Discount department stores Category killers Outlet stores Warehouse clubs

Discount department stores

Size: 80,000 sq. ft. to 130,000 sq. ft. Offers a wide range of merchandise including automotive parts and services, housewares, home furnishings, apparel and beauty aids.

Category Killers
A speciality retailer who offers a very large selection in the chosen product category and economical prices. They focus on one category and stock deep. International e.g.: Toys R Us has 10,000 toy items in a store as compared to 3,000 in a departmental store, Staples

 Indian examples: Crossword, Planet M, Rhythm House, Music World. Nallis can be termed as a category killer in sarees. Toys Kemp in Bangalore. The Loft, a 15,000 sq. ft store catering to footwear alone in Mumbai.

Outlet Stores
Ranging from 20,000 sq. ft. to 80,000sq. ft. Typically the discount arms of major department stores. Examples: Nordstrom Rack and J.C. Penny Outlet

Warehouse clubs
Ranging from 104,000 sq. ft. to 170,000 sq. ft. Offer a variety of goods, in bulk, at wholesale prices. Provide a limited number of product items (5,000 or less). International e.g.: Costco Wholesale, Pace and Sams Club.

The Cash & Carry Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to business customers. "Cash & Carry" means that the customers pick the goods themselves, pay in cash and transport their goods with their own vehicles. The advantage as compared with conventional wholesale lies in the more competitive price, the scope of the food and nonfood assortment, the immediate availability of the merchandise and the customer-oriented working hours. It is a wholesale format that aids small retailers and businessman.

The Cash & Carry

It offers a wide assortment of goods, food and non-food items, thus providing for one stop shopping and allowing the customers to save time. Despite the principle of cash payment, cash & carry largely takes over the function of financing and stockholding on behalf of its customers. Longer business hours per week as provided, enabling the customers to do his shopping at a convenient time., seven days a week.

International Examples:
Metro AG, Germany and Shoprite of South Africa Metro Cash & Carry stores operate under the brand names of Metro and Makro. The group works with three primary customer groups: HoReCa hotels, restaurants and catering businesses which source food products and supplementary goods. Traders small retail outlets, neighbourhood stores, kiosks and private entrepreneurs who buy goods for resale. Other business users offices, service companies, government and other organizations that purchase anything from detergents to office equipment for professional use. An individual cannot walk into these stores and make a purchase.

Metro in India
METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash & Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO today is poised to extend its concept of Business to Business (B2B) Wholesale to other cities in the country.

10 Advantages to partner with METRO:

1. Best Prices With huge purchasing power & efficient operations, we make sure to provide you quality products at the best prices. It's your Warehouse With our computerized goods management system, you are assured about availability of the products, in quantities you need. Meaning you need not tie up your money in stock that does not sell quickly. Everything under One roof 18,000 different Food & Non-food items to meet all your different needs under one roof. This will save your time as compared to purchasing from a variety of sources..

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4. Extended business hours To make sure that you are always served, we are open 7 days a week, from 6 a.m. to 10 p.m. 5. Quality guaranteed Strict quality checks and modern storage technology including cold storage ensures that you get the best quality 6. Free parking Hassle free parking space for around 450 two wheelers & 270 four wheelers, to make sure that you are free of parking problems. 7. After sales Service We do not just make a sale, our Customer Service Team is available to you for resolving your queries, and problems, if any. 8. Offers at your fingertips Every two weeks you receive our catalogue, METRO Mail with over 300 offers for your business at the best wholesale prices. Also receive instant alerts through e-mail and SMS. 9. Clear and easy invoice Our detailed invoice makes it easy for you to monitor your purchases. All your purchase information is available on a single invoice, enabling you to manage your stocks better. 10. Great value for money A wide range of our own brand products offers high quality at the lowest price, which adds to your profits even more.

Non-Store Retailing
Direct Selling making a personal contact with the end customer at his home or place of work.

Direct Response marketing: Various non-personal form of communication.

Catalogue retailing or Mail Order Using customer databases to develop targeted catalogs that appeal to narrow target markets. Television retailing e.g. Asian Sky Shop E-tailing

Other Retail Models

Automated Vending/ Kiosks Airport Retailing Service Retail