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Types of Retail Outlet

Types of Retail Outlet. Independent(Kirana Store) Retailers owns one retail unit Are run by owners & their families India has the highest no. of independent stores - kirana stores There are 9 million independent stores in India accounting to 70% of retail outlet

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Types of Retail Outlet

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  1. Types of Retail Outlet • Independent(Kirana Store) • Retailers owns one retail unit • Are run by owners & their families • India has the highest no. of independent stores- kirana stores • There are 9 million independent stores in India accounting to 70% of retail outlet • Average size in India is app 25-30 sq. meter

  2. Even if goods in wide brands are limited • Allow customer to buy on credit ,after home delivery in neighborhood • Employ members of extended family • Takes order by Telephone • Ease of entry into the market so many independent

  3. Advantages • Flexibility in choosing retail formats and locations • Because only on e location is involved , detailed specification can be choked out • Small segment of Customers are catered to

  4. d.Investment cost for lease , fixture & workers can be hold down apartments, prices,Hrs& other factors are set according to this segment e. Personal relation is created f. Free from unions & seniority rules

  5. Disadvantages a. In bargaining with suppliers, independent don’t have much power as they often buy in small quantities. b. Reordering maybe difficult if min order requirement is not fulfilled. therefore Independents often form groups c. Lose on Economies of Scale d. High cost of transportation ,ordering ,handling cost

  6. e. High cost of transpiration ,ordering ,handling cost f. Labour intensive –everything is done manually g. No. of very less promotional strategy h. Overdependence on owners i. Little time for long run planning

  7. Chain Stores Multiple outlets, under a common ownership , so the decision making & purchasing is usually centralized Advantages • Have bargaining power due to the purchase volume • Can take advantages of media • Use technology

  8. d. They usually give time to long run planning & may assign the job to someone for it e. Warehousing maybe f. Less dependent on the owner & usually has trained management

  9. Disadvantages • Difficult to find new locations • Difficult to maintain consistency in terms of prices ,products, assortments firstly due to difference in manage & second due to difference in local market c. Investment is higher d. Managerial control is difficult

  10. Franchising A contractual agreement between a franchisor (a manufacturer, whole seller, service provider) & a retail franchise, which allows the franchise to conduct business under a established name & according to a given pattern of business The franchisee pays a intimal fee & a monthly percentage of gross sales in exchange of exclusive rates to sell goods & service in that area

  11. Trademark Franchising Acquires the identity of a franchisor by agreeing to sell the latters products & or operate under the latters name ,The franchise operates rather autonomously. There are certain operating risks but the franchisee set the store hrs. ,choose a location & determines facilities and displays Business Format Franchising

  12. Receive assistance on site location ,quality, control ,accounting system, startup produces, management training & responding to problems besides the right to sell goods & services, Prototype stores ,standardized product lines, cooperative advertising ,foster a level of coordination previously found only a chain

  13. Mc Donald's- min investment 300,000$ 12.5 % of sales 20 yrs. franchising Training in hamburger Unit Franchising – Arrow operate one unit Master- Grants large territories & sub franchising is allowed Eg Raymond's ,Titan

  14. Development Agreement- Has right to operate multiple units in a territory but no sub franchising If they operate one outlet ,they are independent & 2 or more they are chains

  15. Advantages to Franchisee • Acquire well known name • Relatively small capital investment • Standard operating procedure • Cooperative marketing efforts • Exclusive selling rates. • Purchases may be less costly

  16. Disadvantages to Franchisee • Oversaturation if too many in one area • Locked into contracts requiring to purchase from one franchisor • Cancellation clause • Royalty

  17. Franchisor • National global presence developed more quickly & will less franchisor • Franchisee have to abide by strict rules • As franchisee owner so they work hard

  18. Disadvantages • Harm the overall reputation if they do not adhere to co. standards • Lack of uniformity among outlets adversely affects customer loyalty • Intra franchise competition not desirable • The resale value of individual unit is injured if franchisee performs poor

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