VENKATESH GANAPATHY MODERN DAY RETAIL MARKETING MANAGEMENT 2 Modern Day Retail Marketing Management 1st edition © 2017 Venkatesh Ganapathy & bookboon.com ISBN 978-87-403-1934-7 Peer review by Mr G Dharmarajan, Managing DirectorMIRA INDIA HYDRAULIC CYLINDERS, Mumbai 3 MODERN DAY RETAIL MARKETING MANAGEMENT CONTENTS Acknowledgements 6 1 Playing the retail game 7 2 Retailing in India 34 3 Retail marketing mix 52 4 Changes in the landscape of retail marketing 58 5 Retail marketing strategies – basis for sustainable competitive advantage 71 6 Catman strategies 90 7 Retail strategy for Gen X and Gen Y 95 8 Retail Store Formats 106 9 Store layout 132 �e Graduate Programme I joined MITAS because for Engineers and Geoscientists I wanted real responsibili� www.discovermitas.comMaersk.com/Mitas �e Graduate Programme I joined MITAS because for Engineers and Geoscientists I wanted real responsibili� Maersk.com/Mitas Month 16 I wwasas a construction Month 16 supervisorI wwasas in a construction the North Sea supervisor in advising and the North Sea Real work helpinghe foremen advising and IInternationalnternationaal opportunities ��reeree wworkoro placements solves Real work problems helpinghe foremen IInternationalnternationaal opportunities ��reeree wworkoro placements solves problems 4 MODERN DAY RETAIL MARKETING MANAGEMENT EPILOGUE 10 Store manager – CEO of the store 146 11 The essentials of store management 155 12 The enchanting world of merchandising 167 13 Merchandising management 177 14 Rolling out a new store 199 15 Visual merchandising – the window to retail business 206 16 Private labels 215 17 Retail security – preventing losses and dealing with thefts 224 18 CRM – winning and retaining loyal customers 228 19 Shopper – the new king in retailing 278 20 Shopping market dynamics 281 21 Experiential retailing – a strategy for the future 292 22 Religion based retail 301 23 Multi channel retailing 308 24 Green retailing to gain competitive advantage 314 25 Retail communication 319 26 The bullwhip effect in retail 335 27 Retail demand management 340 28 Online retail marketing 345 29 Retail pricing strategies 350 30 The epicurean miser 355 31 The future of retail – learning from global best practices in retail management 357 Epilogue 367 5 MODERN DAY RETAIL MARKETING MANAGEMENT EPILOGUE ACKNOWLEDGEMENTS At the outset I would like to thank Book Boon for giving me an opportunity to write a book on retailing management. I have been teaching the subject of retailing management since 2013 and every time I teach the subject to a new batch, I have been exposed to new facets of retailing. Retailing management is indeed an exciting field. Writing the book has been an enriching experience for me – something that I loved and thoroughly enjoyed. I am indebted to Ms Karin Jakobsen, Book Boon for her motivation, guidance and support. She has been very prompt in responding to queries sent to her and working with her has been a pleasure. I also owe thanks to my family members who have stood by me through thick and thin. Their sacrifices have made it possible for me to write this book over a period of six months with undivided attention. Special thanks are also due to my parents who spotted my writing talent in my childhood and encouraged me at every step. Today I am what I am because of their incessant shower of blessings. Thanks are also due to Dr Nissar Ahmad, Chairman, Presidency Group of Institutions, Bangalore without whose support this book would have been impossible. He is an inspiration and a true role model. I acknowledge the support of my students – Tanveer Ahmed, Mohammed Rahimuddin and Mrs. Gopika Gopan who supported me in my secondary research efforts. By the time this book releases they would have entered the corporate world. I would also like to thank Prof Sindhu Menon, Assistant Professor (Marketing), Presidency Business School who helped me select the title for the book. 6 MODERN DAY RETAIL MARKETING MANAGEMENT PLAYING THE RETAIL GAME 1 PLAYING THE RETAIL GAME Learning objectives: • To understand what retail marketing management entails • To learn about the economic value of retailing • To understand the functions of the retailer • To learn about retail store atmospherics • To review the theories of retail development • To identify the different phases of organized retail Retailing involves selling products and services to consumers for their personal or family use. Retailing is the sale of goods or commodities in small quantities directly to consumers. It is a commercial transaction in which a buyer intends to consume the good or service through personal, family, or household use. E-tailing is the selling of retail goods electronically over the Internet. Retailing – derived from the French word ‘Retaillier ‘that means ‘a piece of ‘or ‘to cut up’. Breaking of bulk means acquiring a large amount of products to be sold and dividing it into smaller amounts. Purchases for business or industrial use are not considered as retail transactions. A retailer is a dealer or trader who sells goods in small quantities. Retailers interact with the final customer in a supply network. The main purpose of retail is to meet the needs, wants and desires of a specific group of customers. Economic Value of Retailing Retailing provides real added value of utility to customer. Retail offers finished goods and services in a form that customers want. Offerings are available at a peace appropriate to where a customer wants to purchase. Retailers make offerings to customers at a time suitable to their customers. There is a utility from possession in that retailers facilitate the transfer of ownership to customer. Retailers have to get close to their potential customers to provide these real benefits. Retailers have to understand the motivations that drive their customers and different types of utility that a particular retailer can offer. 7 MODERN DAY RETAIL MARKETING MANAGEMENT PLAYING THE RETAIL GAME In retailing, you have to consider: • Moment of consumption • Purchase Experience Both these have to be controlled by the Retailer. Moment of consumption is the point at which the purchased item is first used and this can be immediate or delayed. Controlling the experience means how the retailer can manipulate the environment in which the customer makes a purchase decision. Retail marketing is the range of activities undertaken by a retailer to promote awareness and sales of the company’s products. This is different from other types of marketing because of the components of the retail trade, such as selling finished goods in small quantities to the consumer or end user, usually from a fixed location. Functions of Retailer 1. Buying: A retailer buys a wide variety of goods from different wholesalers after estimat ing customer demand. He selects the best merchandise from each wholesaler and brings all the goods under one roof. In this way, he performs the twin functions of buying and assembling of goods. 2. Storage: A retailer maintains a ready stock of goods and displays them in his shop. 3. Selling: The retailer sells goods in small quantities according to the demand and choice of consumers. He employs efficient methods of selling to increase his sales turnover. 4. Grading and Packing: The retailer grades the goods which are not graded by manufacturers and wholesalers. He packs goods in small lots for the convenience of consumers. 5. Risk-bearing: A retailer always keeps stock of goods in anticipation of demand. He bears the risk of loss due to fire, theft, spoilage, price fluctuations, etc. 8 MODERN DAY RETAIL MARKETING MANAGEMENT PLAYING THE RETAIL GAME 6. Transportation: Retailers often carry goods from wholesalers and manufacturers to their shops. 7. Financing: Some retailers grant credit to customers and provide the facility of return or exchange of goods. In some cases, home delivery and after sale service are provided by retailers. 8. Sales promotion: A retailer displays goods. He carries out publicity through shop decoration, window display, etc. He maintains direct and personal contacts with consumers. He persuades consumers to buy goods through personal selling. 9. Information: Retailers provide knowledge to consumers about new products and uses of old products. They advise and guide consumers in better choice of goods. They also provide market information to wholesalers and manufacturers. Retailing is not simply selling. Even when there is a face-to-face contact there are many marketing activities necessary before, during and after a sale in order to ensure that the customer is fully satisfied. Marketing is simply managing the exchange with customers in the best possible way. The ability of retailers to increase the availability of merchandise is fundamental to success. The objective of marketing in retailing is to ensure that the best possible exchange actually takes place between a supplier and a customer while making a profit for the retailer. The employees in retail are the front-line customer contact points. If they are low paid, with a feeling of being in a dead-end job, it can be difficult to achieve the real enthusiasm and customer orientation necessary to achieve retail success in an interactive environment. This is a great challenge for the retail marketer, as all the attention to the other aspects of the retail marketing mix can be nullified by a poor experience at the point of sale. The utilization of self-selection retailing and other initiatives aimed at reducing the dependence on staff, illustrates that marketing thinking rather than selling techniques are crucial. The new marketing activities focus on the dynamic link between a specific supplier and their immediate customer. It is here that the needs of retailing coincide with the domain of marketing. There are two specific dimensions to retail marketing. 1. How to attract the customers in the retail environment – shop, restaurant, pub, or virtual internet store.