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Retail Structure, Types and Role

STRUCTURE

# 1. Independent, Single Store Establishments:

These are generally located in localities where population is higher. They can be a specialized apparel store to MBO or a grocery store. Owned by a family or individual with operations limited lo the area where store is located with direct personal relationship with customers.

The essence is that they have better understanding of their customers and supported by long standing patronage as they can revert to their needs within short span of time.

Unlike others they pay less attention to Store Design, Merchandise Mix, Employee Trainings, Book Keeping etc. This category of course re­quires very less capital to start, thus are major drivers to entrepreneurship in the retail category.

They also have very low credit rating in the market or almost nil past records to prove their goodwill or financial health; thus working with them or engaging with them, as supplier or tenant would require other party to be careful and safeguard all their interest.

# 2. Corporate Retail Chains:

As the name suggests, these well-known brands may specialize in a form of retailing (like super market, hypermarket, apparel store) with multiple stores across the state, country or even in the world. They have centralized decision-making body that may take decision for all its stores and then executed by respective city heads or unit heads.

The number of stores may vary from 10 to over 300 (such as Safeway, Wal-Mart, Target). They can be part of large corporation also like Target Corporation owns Target, Dayton’s and Hudson’s. Thus they may have multiple stores for multiple brands and multiple categories.

These stores employ large number of people and also sometimes become bureaucratic due to complex and multi-level decision-making process but sell product at lower price due to economies of scales attained through wide distribution channel and mass buying of products. They have same merchandise mix and merchandise across all stores.

In India, Shopper’s Stop, Big Bazar, Pyramid, Shubiksha, Music World, Planet Sports, etc., are examples of this kind of stores.

# 3. Franchise Stores:

Franchising is an agreement between a franchiser and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchiser. These stores can be restau­rants, fast food outlets, apparel outlets, sports goods outlets, hypermarkets etc.

In this kind of an arrangement generally franchiser charges franchisee a lump sum fees towards usage of brand names, retailing expertise plus a royalty and franchisee has to bear all operation cost along with above and has to earn profit.

Though in recent times franchiser also underwrites the losses if it occurs to avoid high attrition and motivate franchisee to invest as these kinds of arrangement require high investment. Franchisers support franchisee with merchandise planning, store management, training, man­power sourcing, IT support, interiors and advertising at national and re­gional level.

This format fuels growth faster as franchiser does not need to block huge capital, employ more people and hold huge stock. This model has helped people with adequate capital but without any technical knowledge to enter into retail trade. In India, UCB, Reebok, Adidas, Lee are examples for this kind of retailing.

TYPES

Retailing refers to a process where the retailer sells the goods directly to the end-user for his own consumption in small quantities.

Types of Retail outlets

  • Department Stores

A department store is a set-up which offers wide range of products to the end-users under one roof. In a department store, the consumers can get almost all the products they aspire to shop at one place only. Department stores provide a wide range of options to the consumers and thus fulfill all their shopping needs.

  • Merchandise:
    Electronic Appliances
    Apparels
    Jewellery
    Toiletries
    Cosmetics
    Footwear
    Sportswear
    Toys
    Books
    CDs, DVDs

Examples – Shoppers Stop, Pantaloon

  • Discount Stores

Discount stores also offer a huge range of products to the end-users but at a discounted rate. The discount stores generally offer a limited range and the quality in certain cases might be a little inferior as compared to the department stores.

Wal-Mart currently operates more than 1300 discount stores in United States. In India Vishal Mega Mart comes under discount store.

Merchandise:
Almost same as department store but at a cheaper price.

  • Supermarket

A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket. A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer. The various food products (meat, vegetables, dairy products, juices etc) are all properly displayed at their respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.

Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
Fruits
Soft drinks
Frozen Food
Canned Juices

  • Warehouse Stores

A retail format which sells limited stock in bulk at a discounted rate is called as warehouse store. Warehouse stores do not bother much about the interiors of the store and the products are not properly displayed.

  • Mom and Pop Store (also called Kirana Store in India)

Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity. They offer selected items and are not at all organized. The size of the store would not be very big and depends on the land available to the owner. They wouldn’t offer high-end products.

  • Merchandise:
    Eggs
    Bread
    Stationery
    Toys
    Cigarettes
    Cereals
    Pulses
    Medicines
  • Speciality Stores

As the name suggests, Speciality store would specialize in a particular product and would not sell anything else apart from the specific range.Speciality stores sell only selective items of one particular brand to the consumers and primarily focus on high customer satisfaction.

Example -You will find only Reebok merchandise at Reebok store and nothing else, thus making it a speciality store. You can never find Adidas shoes at a Reebok outlet.

  • Malls

Many retail stores operating at one place form a mall. A mall would consist of several retail outlets each selling their own merchandise but at a common platform.

  • E Tailers

Now a days the customers have the option of shopping while sitting at their homes. They can place their order through internet, pay with the help of debit or credit cards and the products are delivered at their homes only. However, there are chances that the products ordered might not reach in the same condition as they were ordered. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In this kind of shopping; the transportation charges are borne by the consumer itself.

Example – EBAY, Rediff Shopping, Amazon

  • Dollar Stores

Dollar stores offer selected products at extremely low rates but here the prices are fixed.

ROLE

The retailer acts as a link between the customer and the marketer, who is responsible for selling the ultimate products and services to the customers. In the entire complicated process of marketing, retailer acts an intermediary in the complex marketing & distribution channel. Though manufacturers can directly sell their products and services to the end customers ultimately, it may result in high expenses, inconvenience and time-consuming process.

Social Significance

In the present business scenario, social responsibility and increasing importance are being given to driving the functions of marketing functions with a sense of social responsibility. This has resulted in retail organizations paying a great deal of attention towards the social responsibilities which they have towards their customers.

Regulation and control from various pressure groups such as social activists, social workers, and consumer activists compel the retailers in implementing their marketing programmes restrictively and communicating the true picture about the benefits or harms of using a product.

The retail fraternity should give importance to the cultural differences and also the differences in the values, beliefs, and faith of people while formulating their marketing strategies and business development plans. This will be helpful in meeting the demands of the consumers by understanding their expectations. The marketing department of retail companies is engaged in identifying the opportunities and threats to the business of the company by analyzing the socio-cultural trends and the buying preferences of the consumers.

Economic Significance

The retailers play the role of sales specialists and also as agents of purchase for their customers and suppliers respectively. Retailers handle the entire gamut of roles and functions aiming at understanding customer requirements and anticipating the demand, gathering information about the market trends through strong market intelligence and making product related assortments and discovering financing opportunities.

It is relatively easier to become a retailer, as large investment is not required, procurement of production equipment is not required, and a retailer can procure merchandise on the basis of credit.

,p>The retail sector in the present scenario is witnessing a fierce competition as a large number of retail players have entered in the same market segment with similar product offerings. The only differentiating factor which may provide a winning edge in the competitive race is by providing better value to the consumers and satisfying the consumers with their offerings. Besides this, a retailer should also be providing justice to the producers and also to the wholesalers by ensuring that their products are sold to the ultimate consumers.

For expansion of business opportunities globally and tapping larger business prospects, large retailers have been diversifying their business formats by way of mergers or acquisitions to cater to the growing needs of a diverse and a larger customer segment. Moreover, the retail industry has been impressive regarding generating large-scale employment opportunities worldwide which is expected to grow at a much faster rate in comparison with the other sectors performance in future as well.

The retail sector has opened newer job avenues for people having different areas of specialization with diverse skills and qualification backgrounds. These opportunities could be in the areas of Finance & Accounting, Retail Operations, Commercial Operations, Inventory & Warehousing, SCM & Logistics, HRM, Distribution Systems, Marketing & Brand Management, IT, New Products Development & Market Research/Business Analysis.

Retailing career can be quite rewarding right from the start of the career for a person as it may require bearing a handling a lot of challenges and responsibilities right from the beginning. Moreover, retailing has given rise to entrepreneurial opportunities, and few of the wealthiest entrepreneurs are involved in the retail business.

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