The retailing formats can be classified into following types as shown in the diagram −
Ownership Based Retailing
Let us see these retailers in detail −
- Independent Retailers− They own and run a single shop, and determine their policies independently. Their family members can help in business and the ownership of the unit can be passed from one generation to next. The biggest advantage is they can build personal rapport with consumers very easily. For example, stand-alone grocery shops, florists, stationery shops, book shops, etc.
- Chain Stores− When multiple outlets are under common ownership it is called a chain of stores. Chain stores offer and keep similar merchandise. They are spread over cities and regions. The advantage is, the stores can keep selected merchandise according to the consumers’ preferences in a particular area. For example, Westside Stores, Shopper’s Stop, etc.
- Franchises− These are stores that run business under an established brand name or a particular format by an agreement between franchiser and a franchisee. They can be of two types −
- Business format. For example, Pizza Hut.
- Product format. For example, Ice cream parlors of Amul.
- Consumers Co-Operative Stores− These are businesses owned and run by consumers with the aim of providing essentials at reasonable cost as compared to market rates. They have to be contemporary with the current business and political policies to keep the business healthy. For example, Sahakar Bhandar from India, Puget Consumers Food Co-Operative from north US, Dublin Food Co-Operative from Ireland.
Merchandise Based Retailing
Let us see these in detail −
- Convenience Stores− They are small stores generally located near residential premises, and are kept open till late night or 24×7. These stores offer basic essentials such as food, eggs, milk, toiletries, and groceries. They target consumers who want to make quick and easy purchases.
For example, mom-and-pop stores, stores located near petrol pumps, 7-Eleven from US, etc.
- Supermarkets− These are large stores with high volume and low profit margin. They target mass consumer and their selling area ranges from 8000 sq.ft. to 10,000 sq.ft. They offer fresh as well as preserved food items, toiletries, groceries and basic household items. Here, at least 70% selling space is reserved for food and grocery products.
For example, Food Bazar and Tesco.
- Hypermarkets− These are one-stop shopping retail stores with at least 3000 sq.ft. selling space, out of which 35% space is dedicated towards non-grocery products. They target consumers over large area, and often share space with restaurants and coffee shops. The hypermarket can spread over the space of 80,000 sq.ft. to 250,000 sq.ft. They offer exercise equipment, cycles, CD/DVDs, Books, Electronics equipment, etc.
For example, Big Bazar from India, Walmart from US.
- Specialty Stores− These retail stores offer a particular kind of merchandise such as home furnishing, domestic electronic appliances, computers and related products, etc. They also offer high level service and product information to consumers. They occupy at least 8000 sq.ft. selling space.
For example, Gautier Furniture and Croma from India, High & Mighty from UK.
- Departmental Stores− It is a multi-level, multi-product retail store spread across average size of 20,000 sq.ft. to 50,000 sq.ft. It offers selling space in the range of 10% to 70% for food, clothing, and household items.
For example, The Bombay Store, Ebony, Meena Bazar from India, Marks & Spencer from UK.
- Factory Outlets− These are retail stores which sell items that are produced in excess quantity at discounted price. These outlets are located in the close proximity of manufacturing units or in association with other factory outlets.
For example, Nike, Bombay Dyeing factory outlets.
- Catalogue Showrooms− These retail outlets keep catalogues of the products for the consumers to refer. The consumer needs to select the product, write its product code and handover it to the clerk who then manages to provide the selected product from the company’s warehouse.
For example, Argos from UK. India’s retail HyperCity has joined hands with Argos to provide a catalogue of over 4000 best quality products in the categories of computers, home furnishing, electronics, cookware, fitness, etc.
Non-Store Based (Direct) Retailing
It is the form of retailing where the retailer is in direct contact with the consumer at the workplace or at home. The consumer becomes aware of the product via email or phone call from the retailer, or through an ad on the television, or Internet. The seller hosts a party for interacting with people. Then introduces and demonstrates the products, their utility, and benefits. Buying and selling happens at the same place. The consumer itself is a distributor.
For example, Amway and Herbalife multi-level marketing.
Non-Store based retailing includes non-personal contact based retailing such as −
- Mail Orders/Postal Orders/E-Shopping− The consumer can refer a product catalogue on internet and place order for purchasing the product via email/post.
- Telemarketing− The products are advertised on the television. The price, warranty, return policies, buying schemes, contact number etc. are described at the end of the Ad. The consumers can place order by calling the retailer’s number. The retailer then delivers the product at the consumer’s doorstep. For example, Asian Skyshop.
- Automated Vending/Kiosks− It is most convenient to the consumers and offers frequently purchased items round the clock, such as drinks, candies, chips, newspapers, etc.
The success of non-store based retailing hugely lies in timely delivery of appropriate product.
Service Based Retailing
These retailers provide various services to the end consumer. The services include banking, car rentals, electricity, and cooking gas container delivery.
The success of service based retailer lies in service quality, customization, differentiation and timeliness of service, technological upgradation, and consumer-oriented pricing.