Notes

1-- What do you understand by the term Retailing? Briefly explain the recent evolving trends in Indian and global retailing.
Answer: -
Retailing is the process of selling goods or services to the final consumers for personal or household use. It involves various activities such as buying, merchandising, pricing, displaying, promoting and delivering the products to the customers. Retailing can be done through different channels, such as physical stores, online platforms, vending machines, direct selling, etc.

The retail industry is undergoing rapid changes due to various factors such as globalization, technology, competition, consumer preferences and government policies. Some of the recent trends in Indian and global retailing are:

- E-commerce: Online retailing has grown significantly in the past few years, especially during the COVID-19 pandemic, as more consumers prefer to shop from the convenience and safety of their homes. E-commerce platforms offer a wide range of products, competitive prices, easy payment options and fast delivery services. Some of the leading e-commerce players in India are Flipkart, Amazon, Reliance JioMart, etc. Globally, e-commerce giants like Alibaba, Amazon, Walmart, etc. are expanding their presence and market share.

- Omnichannel retailing: Omnichannel retailing is the integration of multiple channels of retailing to provide a seamless and consistent shopping experience to the customers across different touchpoints. It involves using digital technologies such as mobile apps, social media, artificial intelligence, augmented reality, etc. to connect with the customers and offer them personalized and convenient services. For example, customers can browse products online, order them through an app, pick them up from a nearby store or get them delivered at home.

- Sustainability: Sustainability is becoming a key factor in influencing the consumer behavior and preferences in retailing. Consumers are becoming more aware and conscious of the environmental and social impacts of their consumption choices and are demanding more ethical and eco-friendly products and practices from the retailers. Retailers are also adopting various measures to reduce their carbon footprint, waste generation and resource consumption and to increase their social responsibility and transparency. For example, retailers are using biodegradable packaging materials, sourcing products from local and organic suppliers, donating surplus food to charities, etc.

- Experiential retailing: Experiential retailing is the concept of creating unique and memorable shopping experiences for the customers that go beyond the transactional aspects of retailing. It involves engaging the customers through various sensory, emotional and interactive elements that enhance their satisfaction and loyalty. For example, retailers are creating immersive and themed environments, offering personalized recommendations and consultations, organizing events and workshops, providing entertainment and gamification features, etc.

2-- Why is it essential to understand consumer behavior? Explain
the factors that influence the consumer behavior in retailing
with examples.
Answer: -

Consumer behavior is the study of how people buy, use and dispose of goods and services. It is essential to understand consumer behavior because it helps marketers to design effective marketing strategies that match the needs and preferences of their target customers. Consumer behavior in retailing is influenced by various factors, such as:

- Personal factors: These include demographic characteristics (such as age, gender, income, education, etc.), personality traits, lifestyle, values, attitudes, etc. For example, a young and trendy customer may prefer to shop at a fashionable store that offers the latest styles and brands, while an older and conservative customer may prefer a traditional store that offers quality and value.

- Psychological factors: These include motivation, perception, learning, memory, beliefs, etc. For example, a customer may be motivated to buy a product because of a need (such as hunger or thirst), a want (such as desire or aspiration) or a goal (such as achievement or recognition). A customer may perceive a product differently based on how it is presented, such as its packaging, price, promotion, etc. A customer may learn about a product from various sources, such as advertising, word-of-mouth, reviews, etc. A customer may remember a product based on its distinctive features, such as its name, logo, slogan, etc.

- Social factors: These include cultural norms, values and beliefs; social class; reference groups; family; roles and status; etc. For example, a customer may be influenced by the culture they belong to, such as their religion, ethnicity, nationality, etc. A customer may be influenced by the social class they belong to, such as their income level, occupation, education, etc. A customer may be influenced by the reference groups they associate with, such as their friends, peers, celebrities, experts, etc. A customer may be influenced by the family they belong to, such as their parents, siblings, spouse, children, etc. A customer may be influenced by the roles and status they have in society, such as their profession, position, authority, etc.

By understanding these factors that influence consumer behavior in retailing, marketers can segment their customers into different groups based on their similarities and differences; target the most attractive and profitable segments; and position their products or services in a way that appeals to the chosen segments.

3---- Distinguish between modern retail formats from traditional
retail formats with suitable examples.
Answer: -

Retail formats are the ways in which retailers sell their products and services to customers. Modern retail formats are those that use advanced technology, innovation, and customer-oriented strategies to create a convenient and satisfying shopping experience. Traditional retail formats are those that rely on conventional methods, such as personal selling, word-of-mouth, and local presence, to attract and retain customers.

Some examples of modern retail formats are:

- E-commerce: This is the online selling of goods and services through websites, apps, or social media platforms. Customers can browse, compare, and order products from anywhere and anytime, and receive them at their doorstep or collect them from designated locations. E-commerce retailers can offer a wide range of products, lower prices, personalized recommendations, and easy returns. Examples of e-commerce retailers are Amazon, Flipkart, Alibaba, etc.

- Hypermarkets: These are large-scale stores that combine a supermarket and a department store under one roof. They offer a variety of products, such as groceries, clothing, electronics, furniture, etc., at low prices and in bulk quantities. Customers can enjoy a one-stop shopping experience and benefit from economies of scale. Examples of hypermarkets are Walmart, Carrefour, Tesco, etc.

- Specialty stores: These are stores that focus on a specific product category or segment and offer a high level of expertise, quality, and service. They cater to the needs and preferences of niche customers who are looking for specialized or premium products. Examples of specialty stores are Apple, Starbucks, Sephora, etc.

Some examples of traditional retail formats are:

- Kirana stores: These are small-scale neighborhood shops that sell daily essentials, such as groceries, snacks, beverages, etc. They have a loyal customer base who value their convenience, familiarity, credit facility, and home delivery. They also provide personalized service and advice to customers. Examples of kirana stores are the mom-and-pop stores or corner shops found in India.

- Street vendors: These are mobile sellers who operate on the streets or in public places. They sell low-cost products, such as fruits, vegetables, flowers, snacks, etc., that are fresh and locally sourced. They attract customers with their visibility, accessibility, and bargaining power. They also create a lively and colorful atmosphere in the market. Examples of street vendors are the hawkers or peddlers found in many countries.

- Department stores: These are large-scale stores that sell a wide range of products, such as clothing, accessories, cosmetics, household items, etc., in separate departments or sections. They offer a high level of service, quality, and variety to customers who are looking for a pleasant and comfortable shopping experience. They also provide amenities such as restaurants, cafes, salons, etc., to enhance customer loyalty. Examples of department stores are Macy's, Nordstrom, Harrods, etc.

- Haats: These are periodic markets that are held once or twice a week in rural or semi-urban areas. Haats sells a range of products, such as agricultural produce, livestock, clothing, utensils, etc., to the local population. Haats also serves as a social gathering place where people exchange information and news.

The main differences between modern and traditional retail formats are:

- Scale: Modern retail formats are usually large-scale operations that have multiple outlets across different locations. Traditional retail formats are usually small-scale operations that have one or few outlets in a specific area.
- Technology: Modern retail formats use advanced technology to manage their inventory, supply chain, marketing, sales, and customer service. Traditional retail formats use minimal or no technology and rely on manual processes and human interactions.
- Customer experience: Modern retail formats offer a standardized, convenient, and efficient customer experience with a wide range of products and services at competitive prices. Traditional retail formats offer a personalized, friendly, and flexible customer experience with limited but trusted products and services at negotiable prices.

4--- What do you understand by sourcing? Describe steps would you intend to adopt in identifying suppliers in a retail unit?
Answer----

Sourcing is the process of finding, evaluating, and engaging suppliers who can provide the goods or services that a business need. Sourcing is an essential part of procurement and supply chain management, as it helps to ensure quality, cost, and delivery performance. ¹²

Some steps that I would intend to adopt in identifying suppliers in a retail unit are:

- Assess my business requirements. I would start by understanding what kind of products or services I need, what are the specifications, quality standards, quantities, and delivery times. I would also consider my budget, goals, and expectations from the suppliers.

- Identify my supplier base. I would then look for potential suppliers who can meet my requirements. I would use various sources, such as online platforms like Thomasnet.com ⁸, trade shows, industry associations, referrals, etc. I would also consider the geographical location, industry sector, and size of the suppliers.

- Conduct market research. I would then do some market research to compare the prices, quality, reputation, and capabilities of the potential suppliers. I would also look for any feedback, reviews, or testimonials from other customers who have worked with them.

- Analyze financials and policies. I would then examine the financial stability and viability of the potential suppliers. I would look for any indicators of risk, such as bankruptcy, debt, lawsuits, etc. I would also check their policies on labour, environment, ethics, compliance, etc.

- Evaluate the potential suppliers. I would then evaluate the potential suppliers based on a set of criteria that are relevant to my business needs. Some of the criteria could be quality, price, delivery time, reliability, flexibility, innovation, customer service, etc. I would use various methods to evaluate them, such as requesting quotations, samples, references, site visits, audits, etc.

- Negotiate terms and conditions. I would then negotiate with the selected suppliers on the terms and conditions of the contract. I would try to achieve the best value for money and establish a mutually beneficial relationship. Some of the terms and conditions could be payment terms, delivery terms, warranty terms, dispute resolution terms, etc.

- Establish a contract and monitor performance. I would then finalize the contract with the selected suppliers and sign it. I would also monitor their performance regularly and provide feedback. I would also measure their performance against the agreed criteria and take corrective actions if needed.

These are some of the steps that I would intend to adopt in identifying suppliers in a retail unit. However, sourcing is not a one-time activity but a continuous process that requires constant improvement and adaptation to changing market conditions and customer needs. Therefore, I would also review and update my sourcing strategy periodically and look for new opportunities to optimize my supplier base.

5--- Why do you think visual merchandising is necessary in the
design of a store? Suggest components to be displayed in a
particular retailing unit with examples.
Answer

Visual merchandising is the practice of displaying products and services in a way that attracts customers and increases sales. It involves the use of various elements such as color, lighting, layout, signage, props, and themes to create a cohesive and appealing presentation of the store's offerings. Visual merchandising is necessary in the design of a store because it can:

- Enhance the store's image and brand identity
- Communicate the store's value proposition and differentiation
- Stimulate customer interest and curiosity
- Showcase the features and benefits of the products and services
- Create a positive and memorable shopping experience
- Influence customer behavior and purchase decisions

Some components that can be displayed in a particular retailing unit with examples are:

- Interior displays: Interior displays are the arrangements of products and decor inside the store. They can include shelves, racks, tables, cabinets, baskets, etc. They can also use props, signs, banners, posters, etc. to create themes or stories around the products. For example, a bookstore can display books by genre, author, or popularity, and use props like bookmarks, glasses, or lamps to create a cozy reading atmosphere.

- Window displays: Window displays are the displays that are visible from outside the store. They can include mannequins, lights, colors, graphics, etc. They can also use seasonal or promotional themes to attract customers' attention and curiosity. For example, a clothing store can display its latest collection on mannequins with matching accessories and backgrounds and use catchy slogans or offers to entice customers to enter the store.

- Mannequins: Mannequins are human-like figures that are used to display clothing and accessories. They can be styled and positioned in various ways to show how the products look on real people. They can also be used to create scenes or scenarios that relate to the products or the brand's identity. For example, a sports store can display its athletic wear on mannequins that are posed in different sports activities, such as running, cycling, or yoga.

- Point of purchase display: Point of purchase display is the display that is located near the checkout area or the point of sale. It can include products that are impulse buys, such as snacks, magazines, or small accessories. It can also include signage, coupons, or flyers that provide information or incentives for customers to make a purchase. For example, a grocery store can display its fresh fruits and vegetables near the checkout area and use signs that highlight their health benefits or discounts.

- Bundling: Bundling is the display of products that are complementary or related to each other. It can help customers to see how they can use multiple products together or create a complete look or solution. It can also encourage customers to buy more than one product at a time. For example, a cosmetics store can display its makeup products along with brushes, mirrors, or cases that match them.

- Store environment: Store environment is the overall atmosphere and mood of the store. It can include elements such as lighting, color, sound, smell, and technology. It can also reflect the brand's personality and values. For example, a coffee shop can use warm lighting, brown color scheme, soft music, and coffee aroma to create a cozy and inviting environment for its customers.


6--- What are the different pricing techniques? Discuss the different
pricing techniques followed in supermarket, discount store and
hypermarkets.
Answer

Pricing techniques are methods of setting the price of goods and services based on various factors, such as cost, demand, competition, and value. Some of the common pricing techniques are:

- Cost-based pricing: This technique sets the price based on the cost of production, distribution, and marketing, plus a desired profit margin. For example, if a product costs $10 to make and sell, and the company wants a 20% profit margin, the price will be $12. This technique is simple and ensures that the company covers its costs and earns a profit. However, it does not consider the customer's willingness to pay or the competitor's prices.

- Value-based pricing: This technique sets the price based on the perceived value of the product or service to the customer. For example, if a product offers a unique benefit or solves a problem for the customer, the company can charge a higher price than the cost or the competitor's prices. This technique can increase customer satisfaction and loyalty, as well as profitability. However, it requires a good understanding of the customer's needs and preferences, and the ability to communicate the value proposition effectively.

- Competition-based pricing: This technique sets the price based on the prices of similar products or services offered by competitors. For example, if a product has many substitutes in the market, the company may have to match or undercut the competitor's prices to attract customers. This technique can help the company to stay competitive and gain market share. However, it may also lead to price wars and lower profits, and it does not reflect the company's costs or value.

- Skimming pricing: This technique sets a high initial price for a new or innovative product or service, and then gradually lowers it over time. For example, a company may launch a new technology product at a premium price to attract early adopters and recover its research and development costs. Then, as the demand decreases or competition increases, the company may lower the price to appeal to more price-sensitive customers. This technique can help the company to maximize its profits in different market segments and create a high-quality image for its product or service. However, it may also attract competitors who can offer lower prices or better features, and it may alienate some potential customers who cannot afford the high initial price.

- Penetration pricing: This technique sets a low initial price for a new or existing product or service, and then increases it over time. For example, a company may introduce a new product or service at a low price to attract customers and gain market share quickly. Then, as the customer base grows and loyalty increases, the company may raise the price to reflect its value and quality. This technique can help the company to create a large customer base and discourage competitors from entering the market. However, it may also reduce profitability in the short term and create a low-quality image for its product or service. ²

Different types of retail stores may use different pricing techniques depending on their target market, product mix, positioning strategy, and competitive environment. Some examples of pricing techniques followed in supermarket, discount store and hypermarkets are:

- Supermarket: A supermarket is a large retail store that sells a wide range of food and household products. Supermarkets typically use one of two pricing techniques: everyday low pricing (EDLP) or promotional pricing (PROMO). EDLP is a technique that offers consistent low prices across all products without frequent discounts or sales. PROMO is a technique that offers temporary price reductions on selected products to attract customers and stimulate sales. Supermarkets may choose between these two techniques based on their cost structure, customer preferences, competitive intensity, and brand image. For example, Walmart uses EDLP to position itself as a low-cost leader that offers value for money to its customers. Kroger uses PROMO to differentiate itself from other supermarkets by offering variety and excitement to its customers through frequent deals and offers.

- Discount store: A discount store is a retail store that sells general merchandise at lower prices than other stores. Discount stores typically use economy pricing as their main pricing technique. Economy pricing is a technique that offers basic products or services at very low prices with minimal marketing or service support. Discount stores may use this technique to target price-conscious customers who are looking for bargains and are willing to compromise on quality or variety. For example, Dollar Tree uses economy pricing to sell everything for $1 or less, appealing to customers who are looking for cheap items for everyday use.

- Hypermarket: A hypermarket is a retail store that combines a supermarket and a department store in one location. Hypermarkets sell a wide range of food and non-food products at low prices with high volume sales. Hypermarkets typically use bundle pricing as one of their pricing techniques. Bundle pricing is a technique that offers two or more products or services together at a lower price than if they were sold separately. Hypermarkets may use this technique to encourage customers to buy more products or services in one visit, increasing their average spending and loyalty. For example, Costco uses bundle pricing to offer its customers discounts on various products or services when they buy a membership card, which also gives them access to other benefits such as gas stations, pharmacies, or optical centers.


7--- Explain what you do mean by GST? Do you think it benefits the
retail industry?
Answer

GST stands for Goods and Services Tax, which is an indirect tax imposed on the supply of goods and services in India. GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition to the goods and services. GST has replaced many indirect taxes that were previously charged by the central and state governments, such as excise duty, VAT, service tax, etc.

GST benefits the retail industry in many ways, such as:

- It reduces the tax burden on retailers by eliminating the cascading effect of tax, which means tax on tax. For example, under the previous regime, a retailer had to pay VAT on both the cost of the goods and the excise duty paid by the manufacturer. Under GST, the retailer only pays GST on the value addition to the goods and can claim input tax credit for the GST paid by the manufacturer.

- It increases the efficiency of the supply chain by removing the barriers between states, such as entry tax, octroi, check posts, etc. This reduces the transportation time and cost for retailers and enables them to operate across states with a single registration.

- It simplifies the compliance process for retailers by reducing the number of returns and forms to be filed and providing a common online portal for registration, payment, and filing of returns. GST also eliminates the need for multiple audits and assessments by different authorities.

- It enhances the competitiveness of the retail sector by creating a level playing field for all retailers, whether they are online or offline, large or small, domestic or foreign. GST also encourages transparency and accountability in the retail sector by reducing tax evasion and corruption.

Therefore, GST is a beneficial reform for the retail industry in India as it creates a unified market with a simplified tax structure and improves the ease of doing business.