Page 228 - DMGT408DMGT203_Marketing Management

Unit 9: Managing Marketing Channels

9.6 Retailing Notes

The word ‘retail’ has its origin in French word retaillier and means ‘to cut a piece’ or ‘to break
bulk’. Retailing covers all the activities involved in the sales of products to final consumers for
personal, family, household use and not for business. These activities include anticipating what
consumers’ want, developing assortments of products, acquiring market information, and
financing. A retailer is a business and can be an individual, chain store, departmental store,
supermarket, speciality store, small locality shop, paan-bidi kiosk, or a service retailer etc., who
links the producers and the final consumer. Retailing is responsible for matching final consumer
demand with supplies of different marketers. Manufacturers who sell directly to ultimate
consumers are performing retailing activity. In case of service retailing, the retailer is also the
producer of service, such as dry cleaner, beauty parlour, or a fast food joint.

Retailers primarily get their sales volume from retailing. The value added by retailers is
important both for final consumers and marketers. Retailers add value, provide service and
help consumers in making product selections. The image of a retailer can enhance product value
though, contributing to consumers’ experience, availability, or convenience. Retailers provide
technical advice, demonstrate, deliver, extend credit, and provide after-sales repair services etc.
Retailing is not confined to stores only but it also takes place door-to-door, through mail,
Internet etc.
Retailing is a high-intensity competition industry and second largest globally. The reason for its
popularity lies in its ability to provide easier access to a variety of products, freedom of choice,
and many services to consumers. The size of an average retail store varies across countries
depending largely on the level of a particular country’s economic development.

Did u know? The largest retail store in the world is Wall-Mart of USA and the second
largest is Carrefour of France.

The Indian market is dotted by traditional market places called bazaars or haats comprising of
numerous small and large shops, selling different or similar merchandise. A bazaar in India is
a long street in a city or town and a central place of commercial activities. In Indian rural areas,
these bazaars also occur on fixed week-days where buyers and sellers converge from other
nearby villages and often seem like festive events. Traditionally, the small retailers in India
have played a major role in all sectors and unorganised retailers outnumber organised ones.
Within the last 10-12 years there have been major changes in the general retailing scenario. For
example, now ready-to-wear garments market has seriously affected what used to be strictly a
made-to-order market for clothing. Almost all other retail businesses are undergoing changes
with the passage of time.
According to a better-known theory of retailing—wheel of retailing proposed by Malcomb
McNair (Figure 9.6), new retailers often enter the marketplace with low prices, margins, and
status. The low prices are usually the result of some innovative cost-cutting procedures and soon
attract competitors. With the passage of time, these businesses strive to broaden their customer
base and increase sales. Their operations and facilities increase and become more expensive.
They may move to better up-market locations, start carrying higher-quality products, or add
services and ultimately emerge as a high cost-price-service retailer. By this time newer
competitors as low-price, low-margin, low-status emerge and these competitors to follow the
same evolutionary process. The wheel keeps on turning and department stores, supermarkets,
and mass merchandisers went through this cycle.

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