CHARACTERISTICS OF RETAILING

CHARACTERISTICS OF RETAILING

Retailing differs from other type of business on the basis of the following characteristic features;

Sales to Final Consumers

Retailing involves selling of goods/services to the final consumers. The final consumers are those who purchase the product/services for their own consumption and not for resale purpose. It comprises of families, individuals and /or households that plan to consume the products or services themselves. Selling the products to the final consumers can be done by the manufacturer themselves or by the retailers. In addition to selling to end users, some manufacturers/retailers sell products to other intermediaries, such as other businesses. These transactions are considered nonretail transactions.

Small Average Sales

The average amount of sales transaction for retailers is much less than for the manufacturers. This low amount of sales creates the need to tightly control the costs associated with each transaction such as the packaging/bagging, credit card transaction, sales personnel etc., Adding to this, the cost of advertisement and other promotional measures to increase the footfall are on the increasing trend. However the cost control is a tough task due to large number of transactions. Inventory management is also expensive due to many small transactions made to a large number of customers.

Impulse Purchases

An impulse purchase is an unplanned or otherwise spontaneous purchase. One who tends to make such purchases is referred to as an impulse buyer. A large percentage of the shoppers indulge in impulse buying. Impulse buying disrupts the normal decision making models in consumers’ brains. The logical sequence of the consumers’ actions is replaced with an irrational moment of self gratification. Impulse items appeal to the emotional side of consumers. The items bought on impulse need not be functional or necessary in the consumers’ life. Marketers and retailers tend to exploit these impulses which are tied to the basic need for instant gratification. For example, a shopper in a supermarket might not specifically be shopping for sweets, however; candy, gum, mints and chocolate are prominently displayed at the checkout aisles to trigger impulse buyers to buy what they might not have otherwise considered. Alternatively, impulse buying can occur when a potential consumer spots something related to a product that stirs a particular passion in them. Sale items are displayed in much the same fashion. Impulse buying can also extend to the “big ticket” items such as automobiles and home appliances.

Many survey results reveal that a large number of consumers do not look at advertisement before shopping, do not prepare shopping list and make fully unplanned purchases. This indicates the importance of in-store displays and well-organized stores. Due to the large of unplanned purchases, the retailers’ ability to forecast, budget, order merchandise and have sufficient personnel on the selling floor is more difficult.

Consumers Preference to Visit Stores

Though e-tailing and other non store retail formats are gaining popularity, the consumers make most of the transaction in the stores. People like to shop in person, enjoying the shopping experience, prefer to touch, hold and feel the products, visit many stores and browse before making a decision. They are more comfortable in making paying in person and taking the purchase home with them. These features has to be given adequate importance by the retailers while planning the store location, store hours, designing the stores , parking lots, advertisement and the like.

TRADITIONAL AND NON TRADITIONAL RETAILING

Traditional retailing involves the store based retailing. It includes the corner kirana store formats. Thanks to the development in the retail scenario, the new face of retailing is emerging taking the form of malls and non-store based retailing. A detailed discussion on the various formats of traditional and non traditional retailing is dealt in Unit 3. The difference between traditional retailing and non traditional retailing are listed below;

Size- Traditional store based retailing is run with a relatively lesser square feet compared to the malls which operates on a large scale. Often malls are set in multiple thousands of square feet. The modern retailing also takes place in virtual space or cyber space without any brick and mortar or in the form of multichannel retailing.

Location- The small kirana shops are often located near the consumers’ vicinity or household location. The modern retail stores may be located near the consumers’ location. Mostly due to the escalation in the cost of real estate, it may be situated a bit away from the densely populated area.

Ambience- The traditional stores do not bother about providing amenities and ambience to the shoppers as they spend the minimum time in the shops. The modern malls are focusing more on providing shopping experience and hence ambience plays a major role. The design, decorum and the environment is artistically decorated so as to hold the attention of the shoppers. The malls spend a lot of providing amenities right from parking lots to children play area so as to increase the footfall.

Assortment- Traditional retail shops may not have a large space to store a wide variety of products and brands. The modern malls offer depth and breadth in a range of products complete with unlimited choices and substitutes. Some specialized stores deal with a special product category but include variety in the same.

Knowledge of Consumer- Most of the Kirana shop owners know the customers by name and have a personal touch with the consumers and their family. Some times it may also lead to emotional bonding and loyalty. In modern retail formats, the customer may not come in touch with even a sales person. Thanks to automation, a customer can just walk in pick up the products and walk out without the need for any human intervention. Though database captures the shopping details and the personal profile of the customers, it lacks the human touch.

Home Delivery- The consumer can depend on home delivery of their purchases without much delay in case of traditional stores. In case of modern retailing though some stores offer home delivery, not all stores offer the same. In case of e-tailing the shoppers may have to wait for a longer time for the delivery of the products ordered.

Cost- Normally consumers hold the perception that the products sold in malls and big shopping complex are costlier than the one’s sold in the traditional store. They feel that the cost incurred in providing the ambience and shopping experience are loaded on the product, making them highly priced than the ones available in kirana stores. Sometimes the shoppers enjoy the ambience and do window shopping, gather information and go back to their corner stores for purchase of the product. This poses a serious threat to modern retailers leading to more foot fall but less revenue per square feet.

Apart from the above distinguishing features there are other aspects like the credit transaction, time spend in the stores, waiting time for billing , frequency of visits and the like.