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BRL-001: Overview of Retailing

BRL-001: Overview of Retailing

IGNOU Solved Assignment Solution for 2021-22

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Assignment Code: BRL–001/TMA/2021-22

Course Code:BRL-001

Assignment Name: Overview of Retailing

Year: 2021-2022

Verification Status: Verified by Professor



Marks: 100

Short Type Questions


Q1) Explain the factors which are responsible for the growth of Retail in India with suitable examples.

Ans) Responsible factors for growth of Retail:


Consumer Focused Selling: The customer should be the centre of attention, as well as his evolving tastes and preferences. Because of the country's variety, no format standardisation is conceivable for the entire population.

Simple Over Complex: Simple things will be favoured over intricate, difficult to grasp products and services as life grows more complicated and stressful.

Time Saving: Every client wishes to save as much time as possible. As a result, the emphasis should be on improving service through properly trained personnel and giving consumer convenience.

Trust: The customer patronises the store who is able to build a trusting relationship with the end user.


Other considerations include:

  1. Maintaining low cost of operations

  2. Investment in appropriate and cost-effective technology

  3. Focusing on customer service and loyalty

  4. Building a reliable supply chain and logistics systems,

  5. Making and maintaining private brands

  6. Reduce shrinkage and pilferage


Some of the statistics on India's retail industry is fascinating to read. For example, according to the CII-AT Kearney retail report, retailing is the country's largest contributor to GDP. Furthermore, the retail industry provides roughly ten percent of GDP, compared to eight percent in China, six percent in Brazil, and ten percent in the United States.


India is believed to have over 15 million retail shops, making it the world's most densely packed retail market. It also ranks first among emerging markets for global retailers according to AT Kearney. According to the India Retail Report 2007, the retail market is currently valued at roughly $270 billion, with a 5.7 percent annual growth rate.


Furthermore, the unorganised sector accounts for 96% of the country's overall retail trade. In 2006, the organised retail industry was estimated to be around Rs.48500 crore, accounting for 4.7% of the total retail market. When it comes to career opportunities, the retail industry is the second-largest employer after agriculture, employing roughly 6-7% of the overall workforce.


Data clearly demonstrates that the retail sector is not only massive but also produces a substantial number of jobs in this country. The arrival of organised major retail chains into the marketplace may not have an immediate influence on the trading community. However, it is apparent that small traders and retailers will be impacted in the long run, and the government cannot ignore the problem.


Q2) Discuss the functions of retailer and challenges for Retail in India.

Ans) Functions of Retailer are:


Accessibility of Location: Consumers do not value products and services until they are purchased and used by them. Retailers get their goods and services from a variety of sources. Assort them at a single location according to the demands of clients, making access easier for them.

Convenience of Timing: Retailers keep things on hand and ensure that products and services are available when customers need them. Convenience stores are open 24 hours a day, seven days a week, and provide customers more flexibility and variety.


Convenience of Size: Retailers cut down bulk and serve things in the quantities and sizes that the customer desires. Shampoo, for example, comes in little sachets.


Information: Throughout the supply chain, the retailer delivers essential information. He teaches and informs customers about the features and benefits of the products. He also gives manufacturers and distributors input on consumer needs, which assists them in planning production and supply.

Lifestyle Support: Consumption of products and services has an impact on consumers' lifestyles and aids in the development of social identities. The store assists the customer by offering the right items, services, and advice..


Challenges for Retail in India are:

Expansion vs. Job Market

There is a scarcity of middle management experts in the sector. By giving better packages, major retailers are aggressively hiring from similar and smaller firms. They're putting together various tiers of management and hiring like crazy. Technology, supply chain, distribution, logistics, marketing, product development, and research are all becoming increasingly important for an organization's success. All of these would result in the hiring of highly qualified professionals with expertise in these disciplines. In the next three years, the sector is expected to generate 2 million employment. Once a large number of domestic and international competitors enter the retail sector, it is possible that it will become a poaching ground.


Supply Chain Management

Logistical issues, ongoing changes in consumer tastes, and the creation of new retail formats characterise the retail landscape. All of this adds to the industry's difficulties. Logistics, innovation, transparency, distribution and inventory management, and point-of-sale (POS) data management are among the tactics to be applied to improve fundamental business processes. Retailers are under intense pressure to improve their supply chain systems and distribution channels in order to meet consumer expectations for quality and service.


Frauds in Retail

It is one of the most significant difficulties that retail businesses will confront. Vendor frauds, thefts, shoplifting, and inaccuracies in monitoring and administration are some of the most challenging issues to overcome. Even after employing security measures such as CCTV and POS systems, this remains the case. As the sector grows in size, the number of thefts, frauds, and anomalies in the system will grow as well.


Challenges with Infrastructure and Logistics

Inefficient procedures are caused by a lack of sufficient infrastructure and distribution channels in the country. This is a significant impediment for retailers, as a poorly performing distribution route is difficult to manage and can result in significant losses. In India, infrastructure does not have a stable foundation. Companies are being compelled to construct infrastructural facilities as a result of urbanisation and globalisation. Transportation, notably train systems, needs to improve. Highways must fulfil international standards. The airport's capacity and power supply must be improved. Other areas of difficulty include warehouse facilities and timely shipment. The stakeholders involved in the retail industry must overcome three fundamental hurdles in order to fully use India's potential in the retail sector.


Q3) How would you distinguish modern retail formats from traditional formats? Substantiate your answer with suitable examples.

Ans)

Order Acquisition

Traditional Retail: The salesperson visits the store, counts the goods, explains any promotions (if any), and then makes a recommendation to the store owner. After that, the store owner accepts or rejects the order.

Modern Retail: The order would be suggested by the Modern Retail chain's IT system. This order would be sent through email or fax to the manufacturer/LSP (Logistics Service Provider).


Order Execution

Traditional Retail: The order would be delivered 1–2 days after it was placed with the distributor. If the operation is a ready stock unit [a salesperson who takes orders travels with a van that contains the stocks], the stocks are delivered as soon as the order is taken — the salesperson passes over the order to the merchandiser/delivery boy who travels with the van. They take the inventory out of the vehicle and transport it to the store.


Modern Retail: The manufacturer determines the delivery slots or delivery windows. Deliveries to the DC (Distribution Centre) or Stores must be performed during the designated delivery slots or delivery windows. Any failure to meet the delivery windows or slots will result in a penalty or relegation to the back of the line (your delivery will be scheduled after all other deliveries for the day have been finished) or delivery to the retailers directly.


Promotions

Traditional Retail: Standard company promotions are executed.

Modern Retail: Modern Retailers would be in charge of some promotions. These would be exclusive to the Modern Retailer. The maker or LSP will be responsible for any stickering, customisation, or manipulation that is required.


New Launch

Traditional Retail: To debut a new product to the market, a producer would have a sales launch for Traditional Retailers. The salesperson would collect orders for the new product on the day of the launch, and the new product would be on the shelves.

Modern Retail: In Modern Retail, launching a new product is more difficult. Modern Retail would have to be notified months in advance of the new product introduction. It would have to be included in the Modern Retail product master. To accommodate the new product, the planogram would need to be updated. In some situations, placement costs must be paid as well.


Payment

Traditional Retail: Payment is provided to the stockist or distributor right away or on the salesperson's next visit. As a result, the credit term is normally equal to the time between two salesman visits.

Modern Retail: Manufacturers and vendors are typically given an extended credit term by modern retailers. A Modern Retailer may occasionally request a unique invoice structure. They refused to accept the manufacturer's standard invoice format.


Conclusion

  1. Even though it is still early in the process, there are already multiple examples of significant corporations attempting this integration.

  2. One example is Amazon. Alibaba, the Chinese e-commerce behemoth, has also built its own physical store, where customers check in with their smartphones and scan QR codes for information on various products.

  3. A lot of supermarkets are going digital as well. Supermarket brands in Italy, such as Esselunga and Conad, are progressively offering online shopping delivery services.

  4. While some of these instances are still "rudimentary" in certain ways, they do show that retailers of all sizes are increasingly merging in-store and online sales.


Q4) Explain the merchandise mix and various factors affecting merchandise mix decision.

Ans) The whole set of all products provided for sale by a shop, including all product lines marketed to all customer groups, is known as the merchandise mix. The diversity of products that a retailer stocks and sells is referred to as product selection, or merchandising mix. It's made up of two main parts:


Product breadth, which refers to a store's product line diversity. The term "product breadth" refers to a collection's size and diversity. A big product breadth refers to a retailer's ability to sell a wide range of products. Walmart, for example, sells everything from toilet paper and diapers to pyjamas and outerwear.


Product depth refers to the number of different variations within a product line. This time, it's all about how large a category's assortment is. The majority of specialist merchants have a wide range of products. A store that specialises in office supplies, for example, might carry the same type of pen in a variety of colours.


Affecting Factors/Constraining Factors

Manufacturers must produce new items as consumer needs change, either by modifying or abandoning existing products, and in accordance with client requests. As a result, the best mix is determined by the trading area, the retail store in operation, the retail format it uses, the size of the operation, and the market segment it serves. The store should consider the following four constraints:


Budgetary Constraint: On the basis of the resources available, a shopkeeper must determine the best inventory mix for his customers. In many circumstances, the financial resources available will not allow for all three characteristics of diversity, breadth, and depth to be included. These fiscal limitations are ubiquitous, although the degree to which they are enforced varies. However, in the organised sector, retail outlets now have effective bargaining leverage over suppliers and receive generous help in making stock payments, and in some cases, the retailer may make payments when they sell the products.


Selling Space Constraints: Because the amount of space available to a merchant is limited, it must make a profit. If a shop prioritises depth or width, the amount of space required will rise. If the variety of merchandise is to be emphasised, there must be adequate vacant space to separate the various merchandise lines. When deciding on a merchandise order, a store must consider warehouse space as well as shelf space. It is well acknowledged that Indian retailers do not recognise shelf management in the unorganised sector in the same way that western countries do.


Turn Over Constraint: When it comes to buying and selling items profitably, turnover is critical. Because turnover is the outcome of intelligent procurement based on sound assortment planning and realistic estimation, a high turnover rate indicates good management. As the depth of merchandise grows, more and more product versions must be stocked to meet the needs of a growing number of market sectors. Customer demand is becoming more competitive, and expenses are rising, putting pressure on earnings. One of the most important ways to increase profitability is to increase turnover.


Market Environment Constraints: It refers to a restriction imposed by the target market's residence region on the number of people who can walk or drive to the store in a short amount of time.


Q5) Why do you think that store atmosphere plays a vital role in setting up a Retail Unit? Explain with suitable illustrations.

Ans) In today's world, the store atmosphere is critical for projecting a pleasant and happy image to customers. A pleasant store environment encourages customers to return to the same tale again after time. If a consumer is dissatisfied with the store's atmosphere, he will not return.

The atmosphere established within the retail business has a significant impact on the customer. The customer first examines the merchandise before making a buying decision. The customer's buying decision and general attitude are influenced by the store atmosphere and seeing of items through abstract communication.


Atmospheric planning is gaining traction in a variety of retail settings, including planned shopping malls and lifestyle retailers. Exterior atmospherics refers to aspects such as store fronts, display windows, surrounding businesses, the look of the shopping centre, and so on, whereas interior atmospherics refers to aspects such as lighting, colour, product, and trial room facilities that enhance the display and provide information to customers. As a result, atmosphere is becoming increasingly crucial in establishing a brand identity for the outlet, attracting new customers, facilitating better shop and merchandise management, and enriching the overall experience.


Approach behaviours should be encouraged or discouraged by the environment. Three immediate effects of retail unit environment stimuli have been identified to support this statement, which are:


Pleasure-Displeasure: This stimulus determines whether shoppers found the surroundings to be entertaining. For example, playing classical music in Hindi in a specific type of service setting in North India should boost consumer enjoyment, whereas the same music in Punjab retail stores may detract from it.


Arousal: The degree to which the environment motivates the shoppers in a certain location is measured by arousal. Slow instrumental music, as opposed to no music or fast music, may result in a lower degree of activity from clients in a service context such as a restaurant. As a result, the nature of music in a particular retail setting might either lessen or boost arousal. Quick food restaurants are frequently connected with fast music, while leisurely food joints are associated with traditional meals, according to studies.


Dominance: In the service environment, this stimulus determines whether the consumer feels dominant (in charge) or submissive (under control). This is a sensation that may be caused by environmental factors such as the height of the ceiling, which makes one feel small (under control). Red is associated with aggressive, assertive, and rebellious attitudes, whereas blue is associated with placid tranquilly and emotional suppression. The appropriate choice of colour can convey the nature of the mood that has to be conveyed.


Q6) Describe the factors which should be kept in mind while deciding about the choice of store locations and how government can evaluate these factors.

Ans) The following factors play a significant role in the choice of the store location in particular city:

  1. Size of the City's Trading Area: Customers come to the city to shop from the city's trading region. The trading area of a city could encompass its suburbs as well as other cities and villages. With its numerous trading centres, Mumbai, for example, attracts clients from all around India.

  2. The Population of the Trading Area: The potential for retail in a given location might be boosted by rapid population expansion.

  3. The Purchasing Power of the Customers: Cities with a substantial high-income population might be an appealing location for retailers selling high-priced services and lifestyle products such as designer garments or even high-value automobiles with few retail outlets.

  4. The retail boom has been fuelled by rapid development in purchasing power and its spread across a broad middle-class population, such as the Bentley dealership at the Ashoka Hotel.

  5. Distribution Networks: Customers from different cities may be drawn to a city that has become specialised in certain fields of trade.

  6. Cost of Land, Rent and Other Retail Development Costs: This is one of the most important variables determining a city's stability as a desirable retail destination. It would be difficult for a shopkeeper to break even if the rental or land costs were extremely expensive, especially if he dealt in products with poor margins. After you've figured out what factors influence store location decisions, you'll need to assess some of them. Let's take a look at the evolution of store location considerations.


Evaluation

The following are some of the factors to consider while determining the best location for a store:

  1. Competitive shop qualitative and quantitative dynamics

  2. Before deciding on a location, prospective retailers should consider the product lines carried by existing stores, the number of stores in the neighbourhood, and other factors.

  3. Whether or whether the neighbourhood or shopping centre has convenient access routes

  4. If there are any traffic jams or congestion on the roads to the desired site, please let us know.

  5. Is there any zoning restriction in the city governing the development of shopping malls, residential areas, flyovers, and other structures, as per the plans of the zoning commission and municipal corporations?

  6. Aspects of nearby stores that are complementary

  7. Parking is plentiful.

  8. The site's vulnerability to an unpleasant location


Q7) Write notes on the following:

a) Factors affecting the global sourcing decisions.

b) Issues relating to the security and pilferages

Ans)

a) Depending on the retailer's selection after evaluating many aspects, sourcing might be national or international. It is obvious that the shop can obtain different types of products from either a national or foreign source. When choosing an international supplier for branded products, the retailer must consider a number of criteria that influence the sourcing decision.


Country of Origin: When sourcing international products, retailers must consider the reputation of the country of origin, as well as the costs involved and the consumer's expected perception. Electronic goods sourced from China, for example, are thought to be of higher quality and technology. Customers love Swiss watches because they are a symbol of both technology and style.


Foreign Currency Fluctuations: The exchange rate of a currency fluctuates from time to time. As a result, a merchant must be wary of foreign currency changes while making global sourcing decisions. This is one factor that determines whether a product is expensive or inexpensive, based on market swings. Furthermore, it will be in the retailer's best interests to engage into a contract that requires him to pay at a fixed rate of currency exchange.


Taxes: One of the most crucial aspects in deciding whether or not to source items from other countries is tax legislation. A variety of taxes are paid on export and import, making the goods either expensive or affordable, depending on the laws of the land. There is an attempt to avoid double taxation with the introduction of VAT. However, depending on the legal requirements of the relevant countries, this exists in varied forms in different countries.


b) Shrink and Theft at the Point of Sale

Since the beginning of time, one of the key issues – if not the primary worry – for retail security has been preventing stealing. Theft and shoplifting are issues that business owners are used to dealing with, whether it's swiping cash from the register, making too many invalid or cancelled transactions, or having items slip through the front or back doors.


Theft after Hours

Even if you have cameras in place, some people consider it an invitation when the store is closed and no one is present to watch your merchandise or back room. After hours, when the lights are turned off and no one is around, your store becomes a prime target for crime and theft.


Theft from the back Door during Business Hours

Your back door is constantly at jeopardy, even during business hours — especially during business hours. Your back door is normally a huge danger, whether it's staff taking breaks and leaving the door open, thinking it's a simple and unmonitored way to sneak some stuff out, or simply the idea that the back entrance is unlocked if the business is open. A picture of the occurrence can be sent to a mobile device when video is integrated, alerting you to the situation.


Slip and Fall Lawsuits

Slip and fall lawsuits are still one of the most common causes of liability claims in the retail industry.



Essay Type Questions



Q8) What are the stages that a consumer goes through the buying decision process? Explain with examples.

Ans) If you want to buy a car or a colour television, you consider a variety of factors such as the need, finances, product information, product image, repair and spare parts costs, after-sales service, and so on. You go through numerous stages when making a purchasing choice, which is referred to as the decision-making process for buying a product/service, whether you realise it or not. As a result, the consumer passes through the five stages when making a purchasing choice.


Need Recognition: In most cases, the need for a product begins when you become aware of the need for that thing. It occurs when you are conscious of your need for a product or service, such as Mr. Rohith's discomfort lugging his papers, files, and lunch box to his office in a plastic bag. To carry the items, he feels the need for a briefcase. Psychosomatically and functionally, a need might be characterised. When you owe the merchandise, psychological demands are linked to personal fulfilment. Functional need, on the other hand, is directly tied to the product's function. Consumers may recognise the need in a variety of situations, such as when the product they are using does not meet their expectations, when a new model with more functions is introduced to the market, when the product is about to expire or when they are stimulated by an advertisement and feel the need to own it.


Information Search: Following the recognition of a need for a certain product or service, the following stage is to gather information on various aspects of that product, such as models, pricing, functionalities, brands, sizes, performance, and after-sale support. This information can be gleaned from the consumer's post-purchase experiences with the product, as well as from marketing sources such as advertisements and salespeople, as well as nonmarketing sources such as friends, colleagues, neighbours, consumer agencies, and so on. The customer moves on to the next step of the process based on the information gathered, when he or she evaluates the information in light of the many alternatives. Mr. Rohith, for example, has accumulated sufficient information about the many types of briefcases accessible in retail outlets.


Evaluation of Alternatives: Mr. Rao's ultimate choice will be based on a set of evaluation criteria. Product attribute, relative relevance of each characteristic to the consumer, brand image, and attitudes toward the many brands or alternatives under evaluation are the most typically utilised criteria. For example, the indestructible, lightweight, spaciousness, locking system dependability, colour, and pricing are all product qualities of moulded plastic briefcases. In comparison to other criteria, Mr. Rao places the greatest emphasis on the product attributes of light weight and spaciousness. He already has an opinion about the various brands, which he formed throughout the information gathering step and which will influence his final decision.


Purchase Decision: Mr. Rao has evaluated the various brands in terms of his first, second, and third preferences during the evaluation stage. In other words, he has decided which brand he wants to purchase. Mr. Rao, on the other hand, may end up purchasing a brand that he does not prefer. When Mr. Rao goes to the store to make a purchase, for example, the shopkeeper's critical remarks about his (Mr. Rao's) chosen brand may cause him to reconsider.


Post Purchase Behaviour: If Mr. Rao discovers that the briefcase's performance or utility meets his expectations after purchasing it, he will be pleased with his purchase. The satisfaction will strengthen his positive impression of the brand, which he is likely to apply to the complete range of items manufactured by the company, and he may also enthusiastically recommend the brand to his friends when they ask for his opinion. Mr. Rao may take the other approach if he believes that client contentment or discontent has a significant impact on new customers.


Problems if Any: If you discover any flaws in the product while using it, you will learn about them after the purchase. At this point, you should re-evaluate the situation to see if your need has been met. If it is not met, you return to the problem identification stage and repeat the buying cycle until you are completely satisfied.


Q9) What are the precautions that can be taken before adopting a new technology in a Retail Store? How do these precautions help in the adoption of a new technology in Retail Stores?

Ans) Precautions while handling technology in retailing:


Before adopting any new technology, a retail business should research the application's utility and effectiveness. It's a good idea to talk to stores that have already successfully implemented such technologies. When making such decisions, having complete prior information is quite beneficial.

Any technology transfer that does not include adequate training, support, and updates is pointless. A retail firm must be extremely clear about these challenges while transitioning to a new technology. Furthermore, training is an ongoing process. Training on new technologies or for newly hired staff may be required at any moment in the future. In the contract for technology transfer, there should be room for this.


It is always in the retail organization's best interests to have its own data processing or technology-using personnel. Depending on the technology provider, such services could be quite costly and ineffective from a strategic standpoint. At no time should a retail organisation entrust the management of technology-oriented activities to just one or two people. The indispensability of those employees can put the company in a bind. In such crucial regions, a second line of command should always be available.


Copyrights and technology titles are extremely important in the post-WTO period. When buying from international sellers, it's very important to read the contract thoroughly and seek legal counsel before signing. A crisis management strategy should be in place as part of a disaster plan to deal with scenarios originating from system failure or software glitches. Such events are common and should be anticipated.


One of the most significant factors to consider when purchasing technology is the cost. This is also an important consideration in the acquisition process. As a result, it has been observed that in order to keep the product price low, some hidden expenses in the contract exist in different forms. Such hidden costs raise the product's cost to the corporation, and when making such judgments, all monetary considerations, including recurrent costs, must be carefully considered.


Older people resist the deployment and launch of any technological items in conventional companies that have been around for a long time. Rather than replacing them with younger individuals, it is necessary to focus on motivating, persuading, teaching, and incentivizing such behaviour. This will be in the organization's best interests.

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