Chapter 1

Introduction to Retailing

What is Retailing?

- Retailing is the business activity of selling goods and services to the final consumer.
- According to Kotler, “Retailing includes all the activities involved in selling goods or services to the final
consumers for personal, non business use”.
- Companies who provide meals out, haircuts and aromatherapy sessions are all essentially retailers, as they sell to
the final consumer, and yet customers do not take goods away from these retailers in a carrier bag. The
consumption of the service product coincides with the retailing activity itself.
- From a traditional marketing viewpoint, the retailer is one of a number possible organization through which
goods produced by manufacture flow on their way to their consumer destiny. These organizations perform
various roles by being a member of a distribution channel.
- Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing
marketers see the process of retailing as a necessary part of their overall distribution strategy. The term “retailer”
is also applied where a service provider services the needs of a large number of individuals, such as a public
utility like electric power

FUNCTIONS OF RETAILING

Following are the functions of a retailer/retailing:

1. Providing assortments:
Offering an assortment enables customers to choose from a wide selection of brands, designs, sizes, colors, and
prices in one location. Manufacturers specialize in producing specific types of products.
2. Sorting
Manufacturers make one single line or multiple product lines and will always prefer to sell their entire output to
few buyers to reduce their costs. Final consumers will prefer to choose from a large variety of goods and services
and then usually buy in smaller quantities.
3. Breaking Bulk:
Retailers offer the products in smaller quantities tailored to individual consumers and household consumption
patterns. This reduces transportation costs, warehouse costs and inventory costs.
4. Rendering Services:
Retailers render services that make it easier for customers to buy and use products. They provide credit facilities
to the customers. They display products, which attract the customers. Retailers keep ready information on hand
to answer queries of the customers.
5. Risk Bearing:
Retailers bear a different kind of risk to the manufacturers and wholesalers. Even the customers can come back
to the retail point and return the product.
6. Holding Inventory:
A major function of retailers is to keep inventory so that products will be available for consumers. Thus,
consumers can keep a much smaller inventory of products at home because they can easily access more from the
nearby retailers.
7. Channel of Communication
Retailers are the bridge between the manufacturer or his representative and the end customers. They serve as a
two-way channel of communication
8. Transportation:
Offering an assortment enables customers to choose from a wide selection of brands, designs, sizes, colors, and
prices in one location. Manufacturers specialize in producing specific types of products.
Social and Economic Significance of Retailing

Social Responsibility

- Retailers are socially responsible businesses. Corporate social responsibility describes the voluntary actions taken
by a company to address the ethical, social, and environmental impacts of its business operations and the
concerns of its stakeholders.

Retail Sales

- Retailing affects every facet of life. Just think of how many daily contacts you have with retailers when you eat
meals, furnish your apartment, have your car fixed, and buy clothing for a party or job interview.

Employment

- Retailing also is one of the nation’s largest industries in terms of employment.

Global Retailers

- Retailing is becoming a global industry, as more and more retailers pursue growth by expanding their operations
to other countries. The large retail firms are becoming increasingly international in the geographical scope of
their operations.

GDP

- Gross domestic product (GDP) is the standard measure of the value added created through the production of
goods and services in a country during a certain period. As such, it also measures the income earned from that
production, or the total amount spent on final goods and services (less imports)

Opportunities in Retailing

Management Opportunities

- To cope with a highly competitive and challenging environment, retailers hire and promote people with a wide
range of skills and interests. Students often view retailing as part of marketing, because managing supply chains
is part of a manufacturer’s marketing function.

Entrepreneurial Opportunities

- Retailing also provides opportunities for people who wish to start their own business. Some of the world’s richest
people are retailing entrepreneurs. Many are well known because their names appear over the stores’ door;
others you may not recognize.

Global Retail Market

- Retailing is increasingly a global business. A more structured retail industry with more multiple retailers (those
with more than one outlet) is a sign that an economy is developing, as organizations specialize and gain
economies of scale. Additionally, when disposable incomes rise, retailers play an active part in distributing
increasingly discretionary goods to centres of population.

Carrier In Retail

- Today, the retail industry is considered amongst the largest in Philippines, and is ever-growing. This is because as
long as there are buyers, this industry will prosper. In the last couple of years, the buying capacity of an average
Philippine citizen has increased. This is because of various factors; prime amongst them is the large pay packets.

When hiring retail staff, some of the vital pointers to keep in mind

1. Communication skills
2. Good English speaking skills
3. Friendly personality
4. Well groomed
5. Ability to tackle tricky situations
6. A good team member
7. Respect for the seniors
8. Knowledge of the product
9. Family background
10. Educational background

Retail Manager

- A retail manager is hired to supervise the entire team of salespersons, preferably regarded as sales executives.
The manager is placed higher in hierarchy and is responsible for the sales being made. The manager is also
responsible for hiring and firing staff, as per requirement.

Chapter 1 Summary

 Retailing in simple term can be defined as “Retailing is the business activity of selling goods and services to the
final consumer”. Retailing can be defined as the business products and services to consumers for their own use.
It has its origin in the French word, retailer meaning ‘to cut a piece off’.
 The term retailing applies not only to the selling of tangible products like loaves of bread or pairs of shoes, but
also to the selling of service products.
 Retailing, one of the largest sectors in the global economy, has become the most active and attractive sector of
the last decade.
 Retailers perform various functions like providing assortments, sorting, breaking the bulk, rendering services,
bearing risk, serve as a channel of communication, transportation, advertising and holding inventory. They
significantly contribute towards increasing the product value and satisfying the consumers.
 This unit also addresses the question of how the Marketing Mix framework can be used to analyse the
competitive standing of a retail business organization and how the outcome of this analysis can then be
translated into practical tactics which capitalize on the organization's strengths.
 To build a competitive advantage that can be sustained, retailers need to pay special attention to aspects like
price, location, merchandise, service and communications.
 There are a number of retail marketing jobs out there, wherein one is not a sales executive, but one who creates
and supervises sales strategies in the retail market.
 Breaking Bulk: Offering the products in smaller quantities tailored to individual consumers and household
consumption patterns and thereby reducing transportation and inventory costs.
 Department Stores: It is a retail establishment which specializes in satisfying a wide range of the consumer's
personal and residential durable goods product needs.
 Gatekeeper: Member of a decision-making unit or social group who acts to prevent or discourage a purchase by
controlling the flow of information and/or access to people in the buying center.
 Kiosk: A small open-fronted hut or cubicle from which newspapers, refreshments, tickets, etc., are sold.
 Marketing: The process by which individuals and groups obtain what they want and need through creating,
offering and freely exchanging products and services of value with others.
 Merchandise: Goods to be bought and sold.
 Retailing: Business activity of selling goods and services to final consumers.