Prerequisites for success of a retailer

Hard work: Time management and planning skills. Analytical skills:

Numerical analysis of facts and data in order to plan, manage, control. Past and present performance data of the store, merchandise lines and departments is necessary. Quantitative and qualitative analysis of customers, competitors, suppliers, etc, help to identify emerging trends and innovations.

Contd: Creativity:
Ability to generate and recognize novel ideas and solutions is known as creativity. Cannot operate a store by a set of preprogrammed equations and formulas. Success in retailing is the result of sensitive, perceptive decisions that require imaginative and innovation techniques.

Decisiveness:
Decisiveness is the ability to make rapid decisions, render judgments, take action and commit oneself to a course of action.

Contd:
Must make decisions quickly, confidently, and correctly in order to be successful even if perfect information is not available.

Flexibility:
Ability to adjust the ever-changing needs of the situation calls for flexibility. Willingness and enthusiasm to do whatever is necessary to get the job completed. Plans must be altered quickly to accommodate changes in trends, styles, and attitudes, successful retailer must be flexible.

Initiative:
Retail manager are doers, ability to originate action rather then wait to be told what to do.

Contd:
Monitor the numbers of business(sales volumes, profits, inventory levels) and seize opportunities for action.

Leadership:
Ability to inspire team members to trust and respect your judgment and delegating, guiding, and persuading the team calls for leadership. Retail operation depending on the team to get the work done.

Organization:
Ability to establish priorities and plans and follow to achieve the results. Forced to deal with many issues, functions and projects at the same time. Must be good time manager and set priorities when organizing personnel and resources.

Contd:
Risk taking:
Willing to take calculated risks on thorough analysis and sound judgment to accept responsibility for the results. Confidence to try something new before someone else does.

Enthusiasm:
Must have a strong feeling of warmth for their job, otherwise convey the wrong image to their customers and department associate. Training sales forces to smile, when taking to customers on the telephone.

Retail trends in India

The four important types of trends are : Population Trend: Population Growth:
Domestic population growth will mean an increased demand for goods and services, even minimal growth in the total population will mean opportunities for retailers. Retailers will focus on market share from competitors, managing gross margin by controlling selling price and cost, and increasing productivity of existing stores. Growth opportunity for retailers will be international expansion, this may be only a limited time opportunity.

Age distribution: Older citizens are aggressively saving for retirement, concern
over long term viability of social security and uncertainty about corporate downsize, many mature adults unemployed. Young consumers do not appreciate conspicuous consumption.

Geographic trends: Shifting geographic centers:

Consumer as they get older will not travel great distance to make retail purchases. Consumers want convenience and will patronize local retail outlets. Overall differences in the behavior of consumer based on the region where they live.

Urban centers:
Every shift in consumer population patterns has major implications for retailers, regarding expenditure made for household products. Urban to metropolitan population varies by state.

Mobility:
Retailer serve local markets and tend to cater to well-defined demographic groups. Population moves, the retailers may find its target market no longer resides in its immediate area. Retailers in area undergoing rapid population growth will want to be prepared to serve new consumers quickly. Consumers must locate new sources for food, clothing, household goods and recreation.

 Social trends: Education:

Educational attainment is the reliable indicator of a persons income potential, attitudes, and spending habits. Retailers can expect consumers to become increasingly sophisticated, discriminating, and independent in their search for consumer products. Education is a key determinant of the use of the internet for shopping.

State of marriage:
Married couples are one of the slowest growing household types not only in India but also worldwide. Retailer need to adjust its store hours to accommodate the needs of this market.

Divorce:
Divorce occurs, requires many retail purchases New households need certain items such as furniture and kitchen appliances, televisions, etc. Make specific adjustment for divorced, working women with children by adjusting store hours, providing more consumer information, and changing the product assortment.

Changing nature of work:

Work was the way people identified themselves and obtained a meaningful life. Deterioration in institutional confidence , the overall prosperity of our economy and our way of life are identifying less with our employment. Individuals are holding multiple jobs, retailers can pool individuals for part-time workers.

Economic trends:
Income growth:
Imbalance in income growth across households has increased demand for value-oriented retailers. Retailers selling luxury goods want to see disposable income increase and the cost of necessities either decline or increase at a slower rate than income increase.

Personal savings:
Spending rather than saving has been the focus of the consumer. Plan for retirement by reducing their spending and increasing savings. People stopped saving and began to invest in the stock market.

Women in the labor force:

Working women has protected many households from inflation and recession. Working women has been the nations secret weapon against economic hardships. Time pressed shoppers that price is less important than convenience, availability, and service.

Widespread use of credit:

Growth in credit outstrip the growth in personal income, it is evident that as income growth slows or becomes negative, households will face a liquidity crisis. Department stores and selling big ticket items, have long offered their own credit to customers.

Factors influencing the changes in retail environment

What they buy as income, technology and lifestyles change. Who they buy from as retail format change and supermarkets move into fashion. How they buy as the internet brings new and better deals and to save time.

Where they are buying as government policy affects where stores can relocate. When they buy as shops open longer and new convenience formats spread.

Sociodemographic change:
Retailer have to rely more on the growth in income than in population for new opportunities.(population changes) Increased standard of living and greater awareness of health issues, increasing average age of the population.(population structure) A house hold is a group of people sharing certain domestic arrangements in common.(house hold structure)

Technology and economic change:

Formal economy: --goods and services are produced and sold in the market. Largest part of a country income , output and employment and is the easiest to measure and compare with other country.

 Informal, hidden or black economy:-- goods and services are bought and sold, legally or illegally, income earned is not recorded or declared for tax purposes. Household economy:-- goods and services are produced in the home for domestic consumption or traded within a group of neighbors.

Retail technology:
Technology consists of the resources and methods used to produce products and services. Labour intensive: --use small amount of equipment, but large amount of labour. Technology is simple but cot of the product is high. Capital intensive:-- --use large amount of equipment, but small amount of labour. Technology is complex, but cost of the product is low.

Socio-economic change:
A main division of consumer group is that of socio-economic or class division. Group listed are based on type of employment of the head of household. AUpper middle class---higher managerial/administrative or professional, eg. Doctor, engineer. Middle classintermediate manager/administrative(22.8% of the population). Lower middle classsupervisory/clerical(27.2% of the population). Skilled working classskilled manual worker(22% of the population). Working class semi-skilled or unskilled worker(17.6% of the population). Lowest level of subsistence----pensioners, casual worker widows(10.5% of the population).

 Class positions of buying power has increased in disposable and discretionary income. Class is treated as being relatively permanent whereas peoples careers and jobs may change. Class group are treated as homogeneous and individual are expected to behave like each other.

Retailing at a Global view

Internationalization encompass only the operation of stores outside the domestic market or does international sourcing count as international activity. The process of a retailer transferring its retail operations, concept, management expertise, technology and or buying function across national borders.Eg. Harrods-operated store in Argentina. Larger retail companies have successfully developed their market strategy. Smaller player that have a powerful brand and a strong retail concept also have the ability to internationalize successfully.

Challenges facing Global retailer

Emergence of market: Technology, transportation and industrial revolutions of the past decades have changed much. Increasing urbanization in both the markets , has fast emerged as an important factor in the rise of these nation as important emerging markets. Empowered consumer: Consumer lifestyle and demographics are changing rapidly. Spending power is increasing and technology is aiding consumer in sound shopping decisions.

Technology enabled efficiencies: Retail-supplier partnership will depend on technology, substituting information for inventory in the pipeline to reduce cost while improving productivity. Technology will not only enhance inventory management but will encourage smart shopping. Information has become critical for achieving efficiencies in all aspects of retailing. Rise of the e-age: Internet retailing or e-tailing as it is a key driver of change in retail. Online shopping facilitated by auction sites are the new realities of retail. Internet both enhances and competes with the stores. Comparison-shopping is a new reality of the e-age.

Reasons for internationalization

Inadvertent internationalization: Refers to political instability changes in the demarcation of national borders may mean a retail company is operating in a different market although its stores have not physically moved. Non-commercial motives: Business have to increase their profits. Some retailer move into new markets not to make money but for non-commercial reasons of political, personal, ethical, or social responsibility. Commercial objective: Entering a market in order to establish a presence before a competitor to given market knowledge before moving in a large scale. Learn about innovation to transfer else.

Government regulations: Influencing the choice of market rather then be a prerequisite to internationalization. Retailer likes to enter market with fewer restrictions on their growth. Retailers are businesses seeking the best growth potential, if they perceive significant opportunities in overseas market they are likely to capitalize on them despite the risk involved. COMMON WORDS: Retailer will need to not grasp customer trends, but also their relevance and then respond. Retailer need to invent not only in terms of design but also in terms of richness and reach. Environmental changes occurring will force the retailer to reexamine and rethink their competitive strategies.

Organized (or) Stored Based Format

Department stores: Oldest form of large store. Emerged in early nineteenth century. Offering a collection of personal and home furnishing goods under one roof to increasing discriminating and affluent Victorian middle class customer. It is a multi-level store split into area or department according to product category. In principal cities ,act as tourist attractions and sources of entertainment. Eg in London Harrods, Selfridges, in New York Bloomingdales. Suffering from outdated shop-fits and ineffective operations and system ,gave old-fashioned image. In 1990s, leisure shopping and fashion favored designer branded goods helped department store sector back onto its feet.

Variety stores: Emerged in twentieth century, when Woolworths, an American store chain, opened first in UK. Large variety of goods ,include food and non-food items. Socioeconomic(financial viable) group family shoppers make up the majority of the company customer base. Cost in order to support their price-led offers. High proportion of goods on offer are brought on an opportunity basis from the parallel( equivalent) import market. Offering permanently low prices coupled (joined) with ongoing promotional events convey an impression of bargains and offers.

Specialist stores: Specialist stores are smaller in the size of product range offered. Found in shopping centers or central retail due to the distinguishing feature of one product area dominating the retail offer. Specialist retailers are not restricted(limited) to the selling of products, offer services products to consumers. Example fast food outlets, cafes and restaurants, banks and building, repair centre's, dry cleaner, hair saloons, beauty saloons. Category killers: Originated in the USA, large specialist retailer is typically found in an out-of-town or edge-of-town retail park or site. Product range is geared to a restricted merchandise area, allows very extensive selection with that classification.

 Example , comet, PC World, pet smart and staples. One-level format and the economies of scale and inexpensive locations allow a value-driven price offer. Convenience stores(c-stores): No official definition following criteria apply to this format:self service, parking facilities, open 7days a week for long hours, a wide range of goods, but limited brand choice, including groceries, CTN( confectionary, tobacco, and news paper) product,toiletries,OTC medicines, alcohol and stationery. It include a local corner shop, petrol forecourt, a shop at a travel terminal, on a major route out of city. Provide an emergency, impulse(desire) purchase and top-up service.

Supermarkets, superstores and hypermarkets: Imported from USA in the middle of the twentieth century, a highly successful retail format. Offers the customers a self service and fast method of shopping . Space and labour -saving factors allowed to offer a wider choice of product at lower prices. Located in town centre or neighborhood location, concentrates on food and household consumables. Superstores: Located in an edge or out-of-town location, have an extended(complete) product range , such as clothing, home furnishing and home entertainment goods.

Hypermarket: A huge retail outlet in an out-of-town , offers extensive range of product with the proportion of non-food items greater then a superstore. Example, Carrefour sell car tyres and bicycles in the hypermarkets in France and Spain. Catalogue shops: Little product is displayed in comparison to the catalogues for customers to browse as they wish to. Specified product and a payment, customer waits a short time the product is retrieved from stock room attached to showroom or store front. Problems in terms of product interaction and display, the reliance on catalogue for representation rather than real products.

Discount stores:

Key characteristic is the price of the merchandise, subject to individual customer perception.
A retailer sells merchandise at a price level lower than typical high-street stores. Discount stores run by the products range gear by opportunistic buys by the retailer or planned ranges sold with an unusually low profit margin. Discount stores can be extremely minimal in terms of store environment and service.

Factory outlets:

Offer customers a range of seconds-quality and or previous seasons stock.

An opportunity to sell off merchandise without damaging the image of the main product or retail brand Allows accessibility to customers who might not able to afford the brands, motivated by bargains.

Non-organized(or)Non-Stored Based Format

Mail order: Rely on printed media-based advertisements for their format. Catalogues are sent to customers , order from the catalogue by telephone, by post or online. Agency mail order -- customer is offered a chance to order on behalf of friends and family and obtain a commission on these sales. Direct selling: Describe one-to-one proactive offers from producers to consumers, take the form of direct mailing, telesales, and personal retailing. Approach individual consumer via the internet. Build one-to-one relationships between goods and service sellers and their data base captured customers.

Personal retailing: Oldest form of retailing, activity of peddler(supplier) travel from house to house with their wares. Door-to-door selling is rare (unusual) but more organized approach to direst selling have emerged.

An example Pyramid selling , Amway cleaning products, sellers not only earn commission, but they persuade(influence) to join the organization.

Merits and demerits of organized (or) store shopping

Merits: Goods can be touched and tried out. A leisure activity or diversion. Store environment are interesting and stimulating. A social activity, a day out, combined with eating(intake) out perhaps. (possibly) Demerits: Can be crowded and time spent queuing. Lack of privacy, for example in changing room. Parking charges. Physically demanding.

Merits and demerits of Non- organized (or) Home shopping

Merits: Can be performed at any time of day. Comfort factor is great, no crowds or queues. Increased privacy for personal purchases. Less physically demanding. Demerits: Relies on representation rather than actual product. No opportunity to get away from home/ family. Unsatisfactory products have to be repackaged and posted. Postage and packaging charges. Formats do not allow interaction with sales personnel for additional information.

Technology-based retailing
Telesales: Offering are made by a personal telephone call from a seller to a consumer. Usefulness in product categories is extremely limited. Telephone is a common method of consumer response to nonstore retail offering. Call centers plays major part in retail transactions. TV shopping: Product presentation is a major draw back. Useful for services retailing (travel, entertainment, insurance ) product is intangible, information based and price offer is variable. Need to provide consumer with the opportunity to skip unwanted product categories.

Contd:
Conversion to digital TV and broadband internet services will facilitate the adoption of interactive TV shopping. Internet retailing: Internet accessed by personal computer is a sign , accepted a mainstream shopping mode by computer-literate society. Process of shopping is useful to customers by accumulating information about product and services in a fast and convenient. Provide a channel of discovery for consumer, the home shopping services for wider target market for the retailer. An efficient home-shopping device, enabling time-poor or less mobile consumers order and take delivery routinely purchased items. Encourage customers to remain loyal to a favored retail brand as lifestyles change.

Theories of retail development

No single theory is universally applicable and acceptable, vary from market to market depending on level of maturity and socio-economic condition of the market. Process of development revolve the importance of competitive pressures, investment in organizational capabilities and creation of sustainable competitive advantage, which require implementation of strategic planning by retail organization. Theories of retail development are three type Environmental theory: Darwins theories has been popularized by phrase survival of the fittest. Retail institutions are economic entities and confront an environment made up of customers, competitors, and changing technology.

Contd: Environment can alter profitability of retail store as well cluster (come together) and center(core). Birth, success, or decline of different forms of enterprises, attributed to the business environment. Approach of Survival of fittest, that successfully adapt technology, economic, demographic, and legal changes, are most likely to grow and prosper. Ability to change, successfully is the core of this theory. Cyclical theory: Well known theory of retail evolution is The Wheel of Retailing theory, described by McNairy help us understand retail changes. Suggest innovators appear as low-price operators with low-cost structure and low-profit-margin requirement, offering real advantages, as specific merchandise, enable to take customer away from established competitors.

Contd: Scrambled (knotted, twisted) merchandising occurs as retailer adds goods and services are unrelated to other and the firms original business to increase overall sales and profit margins., this is termed as wheel of retailing. Example : department stores started as low-cost competitors to the small retailer, they developed and prospered, they were severely undercut (challenge) by super market and discount stores. Conflict theory: Conflict exists between operators of similar formats or within broad retail categories. Retail innovation does not necessarily reduce number of formats available to consumer, instead, it leads to development of more format.

 Retailing evolves through dialectic process i.e blending (coming together, merger) of two opposites to create a new formats. (a) Thesis: (opinion, idea)----As corner shop all across country. (b)Antithesis: position opposed to the thesis develops over a period of time. Antithesis is a challenge to the thesis. (c) Synthesis: blending of the thesis and antithesis. Synthesis become the thesis for the next round of evolution.

Concept of life cycle in retail

Product life cycle explained by Philip kolter , also application to retail organization. Retail organization passes identifiable stages of innovation, development, maturity and decline. It is termed as Retail Life Cycle. Innovation: New organization born, improves convenience and creates advantages for final customer, differ sharply by other retailers., this stage is known as innovation. Organization has few competitors ,new concept, rate of growth is fairly rapid and management fine-tunes its strategy through experimentation. Profitability are moderate,this stage can last up to five years, depending on the organization.

 accelerated growth: Retail organization faces rapid increases in sales, at the stage of development , a few competitors emerge. It is a position to pre-empt(block) market by establishing a position of leadership. Growth is imperative, investment is also high, as is the profitability. Stage can last from five to eight years. End of this phase cost pressure tend to appear. Maturity: Still grows, competitive pressures are felt acutely, (deeply, highly) newer forms of retailing end to arise. Growth rate tends to decrease, market become competitive and competition increase, growth slows down and profit also start declining.

Contd: Need to rethink its strategy and reposition itself. Changes not only in the format but also in the merchandise mix offered. Decline: Retail organization looses its competitive edge and decline. Organization needs to decide ,it is going to continue in the market. Growth is negative, profitability declines further and overheads are high. Retail business in India recently emergence of organized, corporate activity. Traditionally it was constituted as small owner-managed businesses.

Role of MNCs in India

Profit maximisation International network marketing. Diversification policy Concentration in consumer goods Location of central control offices Techniques to achieve public acceptability Existence of modern and sophisticated technology Business, But not social justice Unconcern Towards Social Responsibilities and business ethics MNCs and process of planned economics development in India Cultural Erosion Unconcern for environmental pollution and ecological balance.

Advantages of the MNCs to the home country

Create the demand for the home country products. Boost up the industrial activity of the home country. Create employment for home country people. Earns foreign exchange for the home country and contributes for the balance of payment. Get the benefit of foreign culture. Produce the products required by the domestic consumers in foreign countries with foreign resources. Saves the domestic country from environmental pollution. Get the customers/users for the countrys outdated technology. Optimum utilisation of natural resources and conservation the countrys scarce resources like petroleum resources in the USA. Generates and accumulate capital for home country by earning profits through business operations in host countries.

Disadvantages of the MNCs to the home country

Transfer capital to other countries and causes unfavourable balance of payments. May neglect the industrial development of the home country as the translational companies follow the secular approach. May cause erosion of the domestic culture. May exploit the natural resources resulting in excessive exploitation of natural resources. May not create employment opportunities to domestic people by following geocentric approach or outsourcing business operations in various countries like USA software companies outsourcing business operations in India.

Factors contributed for the growth of MNCs

(A) Expansion of market territory The growth of various economics along with the growth of GDP, and per capita income resulted in the rise in the living standards. These factors contributed towards the expansion of market territory. (B)Market superiorities Availability of more reliable and up-to-date data and information. They enjoy market reputation. They face less difficulties in marketing the products. They adopt more affective advertise and sales promotion techniques. They enjoy quick transportation and warehousing facilities. (C)Product Innovation MNCs, by virtue of their widespread operations in many countries, collect information regarding customers, tastes and preferences.

D)Technological superiorities Industrialisation is in a backward state in developing countries and the resources available in developing countries are insufficient to develop the technology and thereby industrialisation. Developing countries are rich in mineral and natural resources. Local manpower, materials, capital etc. MNCs are invited by the developing countries to help them in exploiting the resources. Developing countries would be required to import raw materials, capital equipment, technology etc. (E) Financial superiorities Huge financial resources at the disposal of the MNCs. They have easy access to external capital markets. They can mobilise different types of resources of high quality easily. They can have access to international banks and financial institutions

Control over MNCs

Some industries were not allowed to import technology where the products are not essential and where domestic capacity was adequate. The maximum rate of royalty was imposed on technology, imports for those industries which were allowed to import technology. Import of foreign capital was allowed but sometimes they were based on administrative decisions. Permissible period of agreement was reduced from 10 years to 5

years.
Exports and other marketing restrictions were imposed.

Definition of Multilevel Marketing (MLM)

Multilevel Marketing is selling products by using independent distributors and allowing these distributors to build and manage their own sales force by recruiting, motivating, supplying, and training others to sell products. The distributors' compensation includes their own sales and a percentage of the sales of their sales group (down line). (behind) Another description is any business where payouts occur at two or more levels; i.e., if you make a sale, both you and the person above you will get a portion of the proceeds.

Other term used for MLM: Network Marketing: Network Marketing means a distributor network is needed to build the business. The term Network Marketing is sometimes also incorrectly used to indicate that the business uses a network of product suppliers in order to offer a broader selection of products. Businesses that describe themselves this way are usually trying to differentiate themselves, suggesting that their program is superior to other programs. Consumer Direct Marketing Consumer Direct Marketing is a deceptive term that labels the distribution chain as consumers rather than distributors. In such businesses the distributor must also buy the product for their personal use.

Contd: Seller Assisted Marketing: Seller Assisted Marketing Plans is a term used by California law to describe a variety of business forms which include MLM. A minimum $500 investment must be involved to qualify as a Seller Assisted Marketing Plan.

The Legality of Multilevel Marketing (MLM)

The company brings a product or service to the marketplace that is (a) retail able and (b) being retailed; The product or service reaches the end user through direct sales representatives (independent contractors), rather than through traditional retail establishments; The company's compensation plan (a) is designed to reward representatives for the sales of the product or service they make, (b) includes a feature that additionally rewards a representative who introduces an additional representative to the company, based on the sales volume of the second representative. Recent court decisions have ruled that at least 70% of all goods sold by the MLM company must be purchased by nondistributors.

How to Succeed in Multi-Level Marketing.

To succeed in direct selling requires passion for the product and the ability to build a strong sales team. The top multi-level marketers achieve success because they are passionate, enthusiastic and driven. Find a product that you believe in Join a multi-level marketing organization that supports your vision for success Learn how to recruit great salespeople Teach your team members how to build relationships with their customer base. Use the Internet to expand your network marketing reach Aim for the top spot in your multi-level marketing organization. Ambition drives most entrepreneurs and salespeople.