Table of Contents:
- What is Retail Management?
- Retail Management Meaning
- Functions of Retail Management
- Importance of Retail Management
- Importance of Retail Management in the Global Economy
What is Retail Management?
Retail management encompasses the diverse procedures that help customers acquire the desired merchandise from the retail stores for their personal use. Retail management includes all essential steps to attract customers to the store and effectively meet their buying needs. Effective retail management enhances the shopping experience and ensures that customers leave the store with a smile. In simpler words, retail management facilitates a seamless shopping experience for customers, ensuring their needs are met effortlessly.
Retail Management Meaning
Retail management is the process of supervising and coordinating the operations of a retail business to ensure efficient and profitable functioning. It encompasses various aspects involved in running a retail establishment, including strategic planning, organising, staffing, directing and controlling the activities within the store to meet the objectives of the business.
Retail management encompasses the various procedures that facilitate customers in acquiring the products they want from retail stores for their personal use. It is an important part of the retail industry, it ensures smooth operations and customer satisfaction.
Retail management is a strategic process aimed at enhancing sales and customer satisfaction by gaining a better understanding of the consumers of goods and services produced by a company. In the context of a manufacturing business, an effective retail management strategy for a manufacturing business involves researching the entire retail process that facilitates the channel of distribution of finished products to consumers. This research enables businesses to identify and fulfil the wants and needs of customers, thereby ensuring their satisfaction.
Functions of Retail Management
The major functions of Retail Management are given as follows:-
1) Transport and Advertising Functions
Small manufacturers can use retailers to facilitate storage, transportation, advertisement, and pre-payment of their merchandise. This also works the other way around in cases when the number of retailers is limited. The number of functions performed by a particular retailer has a dinner relation to the percentage and volume of sales needed to cover both their costs and profits.
2) Holding Stock
Retailers also provide manufacturers with the valuable service of stock storage and management. Retailers maintain an inventory to ensure the prompt availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of pro at home as they know that the ship can be replenished by the retailer which allows them to save on carrying costs.
In the sorting process, manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to reduce costs. In contrast, final consumers prefer a wide range of goods and services to choose from and usually buy them in small quantities. Retailers can balance the demands of both sides, by collecting an assortment of goods from different sources, buying them in sufficiently large quantities, and selling them to consumers in small units.
4) Channel of Communication
Retailers also act as channels of communication and information flow between wholesalers or suppliers and consumers. Through advertisement, salespeople, and displays, shoppers learn about the characteristics and features of a product or service being offered. Manufacturers, in their turn learn of sales forecasts, delivery delays, and customer grievances. The manufacturer can then modify defective or satisfactory merchandise and services.
5) Breaking Bulk
Breaking bulk is another function carried out by the retail industry. The term “retailing” originates from the French word “retailer,” which means “to cut a piece off”. To minimize transportation expenses, manufacturers and wholesalers commonly opt for shipping large cartons of the product, which are then tailored by the retailers into smaller quantities to meet individual consumption needs.
6) Additional Services
Retailers case the change in the tip of merchandise by providing services that make it convenient to buy and use products. Priding product guarantees, after-sales service, and dealing with consumer complaints are some of the services that enhance the overall product experience for customers at the retail level. Retailers also provide customers with credit and hire-purchase options, enabling them to buy a product now and pay for it later. Retailers fulfil orders and efficiently handle the processing, delivery, and installation of products. Salespeople are also employed by retailers to answer queries and offer supplementary information regarding the products showcased on the shelves.
Importance of Retail Management
The importance of Retail Management in providing various services to consumer and channel member are as follows:
1) Importance for Consumers
Retailers serve consumers in innumerable ways as follows:
i) Variety of Goods
The retailer keeps a good assortment of various varieties of a product manufactured by different firms.
ii) Personal Services
The retailer provides many personal services to the customer such as home delivery, after-sales service, liberal exchange of goods, etc.
iii) Demand Creation
Most of the demand-creation methods are undertaken by retailers for manufacturers and wholesalers. They arrange for the display of goods, supply the necessary information to the customers and provide various similar services.
The retailer is a highly proficient expert in the distribution of consumer goods. Out of their experience, training and intimate knowledge of the goods, they are in a position to guide customers in making the right selection.
v) Sale on Approval
As the retailers are very close to the consumers, they sell the goods on an approval basis. In this particular selling model, consumers are given the facility of returning goods within a specified time limit if they do not meet their preferences or gain approval from their family members.
vi) Credit Facility
The retailer frequently offers credit facilities to consumers. These alone account for a larger sales volume.
The retailer maintains a diverse inventory of various goods. An average consumer faces financial constraints that prevent them from stocking up on the necessary everyday items.
2) Importance for Wholesalers and Producers
Retailers serve the wholesalers and producers in the following ways:
i) Arrangement to Sell the Goods
Retailers and only retailers sell the product to innumerable small consumers and thus relieve the wholesalers from selling the goods to ultimate consumers in small quantities.
ii) Information about Consumers’ Habits, Tastes and Needs
The retailers are in close touch with the consumers and have full knowledge of their habits, tastes, needs and preferences. They also know the change in their tastes, habits etc.
iii) Advertisement of New Products
The retailers are in direct touch with the consumers and they know the needs and wants of the consumers. They possess the ability to sway consumer decisions towards purchasing a new product. Consumers consult retailers to know the characteristics and utilities of the new product.
The Importance of Retail Management in the Global Economy
Retail Management is the world’s largest private sector contributing to 8% of the GDP and it employs one-sixth of the labor force. The estimated retail trade is expected to reach 7 trillion US dollars. Retailing has played an important role in the development of many countries and presently, the international business environment is witnessing a remarkable transformation within the retail industry. As far as India is concerned it contributes to 14% of our GDP and it is the second largest sector next to agriculture which employs more number of persons. According to a survey, India is classified as the fifth most attractive retail destination and second among the countries in Asia. Worldwide it is ranked as the fifth most attractive retail destination.