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Retail Management

Notes uncommon phenomenon but can happen to any retailer. It has rightly been said that ‘think
positive but the prepared for the worst’. Considering retailers, who are sensitive to environmental
changes, they always prepare a set of alternative strategies, in case change in technology or
change in customer’s preferences make the present schemes ineffective.

5.3 Target Market and Retail Formats

The retailing concept emphasizes that retailers must consider both their customers and their
competitors when developing a retail strategy. Successful retailers satisfy the needs of customers
in their target market segment better than the competition does. The selection of a target market
focuses the retailer on a group of consumers whose needs it will attempt to satisfy. The selection
of a retail format outlines the retail mix to be used to satisfy needs of customers in the target
market.
The retail strategy determines the markets in which a retailer will compete. Traditional markets,
like a farmers’ market, are places where buyers and sellers meet and make transactions – say, a
consumer buys six ears of corn from a farmer. But in modern markets, potential buyers and
sellers aren’t located in one place. Transactions can occur without face-to-face interactions. For
example, many customers contact retailers and place orders over the Internet using a computer.
Vie define a retail market, not as a specific place where buyers and sellers meet, but as a group
of consumers with similar needs (a market segment) and a group of retailers using a similar
retail format to satisfy those consumer needs. A number of retail format offers a different retail
mix to its customers. Customer segments are listed in the exhibit’s top row. As these segments
can be defined in terms of the customer’s demographics, lifestyle, buying situation, or benefits
sought. In this illustration, we divide the market into three fashion-related segments:
conservatives who place little importance on fashion, traditional who ‘want classic styles, and
fashion-forwards who want the most fashionable merchandise. For example, Wal-Mart and
Kmart stores in the same geographic area compete with each other using a discount store format
targeting conservative customers, while Saks and Neiman Narcus compete against each other
with a department store format targeting the fashion-forward segment. Retail formats could be
expanded to include outlet stores and electronic retailing. Rather than being segmented by
fashion orientation.

One of the key determinants of a retailer’s success is the format that they use to present to their
target customers. A retailer can chose a format based on the kind of store design they want to
render, the locality they would like to establish, the various products and services they wish to
provide and the approach taken to pricing. The most important aspect is the format should be
ideal to their target demographics.
In the past, the Indian retail sector has been dominated by small independent players such as
traditional and small grocery stores. It is in the recent times that organized, multi-outlet retail
concept has gained acceptance and has since then gained momentum. As per the study conducted
by the Indian Council for Research on International Economic Relations (ICRIER), on the subject
‘Impact of Organized Retail on Unorganized Sector’, the retail business is estimated to grow at
13% per annum from US $ 322 billion in 2006-07 to US $ 590 billion in 2011-12.

A report by FICCI on the “Indian retail: on the fast track” shows that various organized retailers
are currently experimenting with different formats of retail trade. It is difficult to predict which
format will have a winning edge over all others in view of the fact that the Indian market is yet
to mature.

The different sorts of retail formats that retailers could adopt are mom-and-pop or kirana stores,
specialty stores, department stores, discount stores, convenience stores, hypermarkets,
supermarkets, malls, category killers, e-tailers and vending machines.

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