In this article, Rajesh Tandon pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, elaborates on Structuring ideas for starting a chain of retail shop in India.

Retail trade is a process through which the goods are transported to final consumers. In other words, retailing consist of the activities involved in selling directly to the ultimate consumer for personal, non-business use. The retailer is an intermediary in the market, in general, because he is both market and customer, who sells to the last man to consume.

Retailer is a specialist who maintains contact with the consumer and the producer. The producers can sell their products directly to the consumers but such method may be pretty expensive and time-consuming and that is how the manufacturers depend on the retailers to sell their products to the ultimate consumers. In retail, dining, and many service categories, chain businesses have come to dominate the market in many parts of the world.

Walmart has become the worlds largest corporation based on gross sales since 2004. Similarly, a chain of restaurants is yet another example of chain stores built on a standard format to provide a standard menu and services. Demographics show a continues spur in the retail growth. Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. Although the organized retailing in India is coming up in a big way, the competition from the conventional stores somehow cannot be ignored because of various factors like reach, extending credit facility and other intangible factors like the human touch which are provided only by the conventional stores.

What has happened today is the format has changed and malls are the trendsetters in the field of retailing. One can see the changing trend from Haat and Melas to the rural malls like Chaupal Sagar launched by ITC, DCM Shriram groups i.e one-stop shopping destination. What has changed is the needs and wants of the customers. There are a  number of reasons for a change for chain of retail shops/stores. Some of these are like growing number of nuclear families, working women, greater work pressure, changing values and lifestyle, increased commuting time and influence of Western way of life.

The concept of retail store

The retail sector employers 10% of the workforce in India and because of the small size, the Indian retailers have small bargaining power. The key element in the retail concept in India is the Kirana store since there is unwillingness on the part of the housewives in India to go for purchasing for their daily needs to long distances. Generally the convenience and merchandise are the two criteria for selecting a store by the customers, be it choice of groceries, fruit outlets, chemist and lifestyle items. In last decade or so there has been a spread of retail chains in some format like supermarkets, department store where there is amalgamation of display shopping and entertainment under one roof.

Major type of retail stores

The evolution has taken place from hawkers and peddlers who have got no permanent place to well organised, settle retail shops. Some of the formats of the retail stores are as under :-

• Departmental Stores.
• Discount houses.
• Chain stores
• Online Retailing
• Telemarketing
• Direct Marketing.

What services does a retailer provide

The services which a retailer provides can be something like what has been listed under this para:-

• Anticipating the requirements of the consumers and thereafter supplying the right kind of goods at the reasonable price.
• A retailer provides for a large variety of merchandise of following types:-
  • Suitable Size.
  • Design
  • Seasonal Items ranging from Domestic Utensils,    household requisites to specialty goods.
• Carrying out service of bulk breaking like dividing large quantities into small units, such as individual cans, bottles, boxes, wrappers, packages, appropriate for consumer use.
• A retailer adds to the convenience and ease of consumer purchasing by offering convenient shopping locations, market formations and other services such as free parking privileges.
• A retailer provides for revolving credit plans, long-term investment programs and instructions in the use of goods.
• The products are stored in off-season and goods are transported to the places where they can be readily available to the consumer. This kind of arrangement is provided by the retailer.

The chain stores

The concern basically comprises of four or more stores which carry out the same kind of merchandise and are centrally owned, managed and usually supplied from one or more central warehouses. In Europe, the system is called as multiple stores and the Americans call it as ‘chain stores’. The idea is to open a large number of shops in the same city at different places to approach the customers and not to draw the customers. The example of this kind of retail system in India can be seen in case of Bata shoes, Usha sewing machines. Some of the advantages and disadvantages noticed in this kind of system are as under:-

Advantages

• Lower Selling Prices. This is basically because of economy in buying.
• Flexibility in working.
• Economy and advertising. The modus operandi is common advertising covering all units whereby it reduces the advertising expenditure.
• The concept of spreading the risk. A unit which is sustaining losses is shifted to some other place or even dropped.

Disadvantages

• Standardised Products. Only standardized products and thereby there is an inflexibility in providing the wide varieties like what may be available in Kirana shop of cheaper rate.
• The consumer services such as credit facility, door delivery are absent like what may be available in the Kirana shop.

Structuring the ideas for starting chain of retail shops in India.

Some of the ideas which may be useful for starting the chain of retail shops are as under :-

The success of the chain store depends on

Availability of the space.

• Special consideration should be there for showroom displaying the stores merchandise.
• The area.
• The community to be served.
• The ability to attract customers.

The basis of income groups.

• The chain shop should cater for middle and higher income groups.
• It implies the shop appearance, both interior and exterior over its competitor.
• It includes the allocation of space to various product lines, floor plan of the display tables and racks.

Competitors Strategies.    

Carrying out a comparative analysis and study of the past and current strategies of the competitors to achieve their objectives including target selection of customers and core strategy i.e the differential advantage on which the rival is competing.

Suppliers. A chain shop should obtain various products from suppliers so that as and when customers come and ask the products, the chain shop is in a position to sell these in time. Supply shortages prevent fulfilling the delivery promises. That is why it is preferable to buy from multiple stores to avoid depending on any one supplier who might raise prices arbitrarily or limits apply.

The role of intermediaries

Intermediaries are firms that aid the retail shop in promoting, selling and distributing its goods to final buyers. The role of intermediaries can not be negated in the retailing business. Some of these can be as under:-

Physical Distribution Firms.

These assist the retailer in a stocking and moving goods from their original locations to their destinations. Example warehouse firms.

Marketing services agencies.

These are agencies like advertising agencies, media firms and marketing consulting firms which assist the retailer in targeting and promoting its products to the right markets.

Financial Intermediaries.

These include banks, credit companies, insurance companies and other firms that help finance firm and ensure risks associated with the business.

Incorporating of an external macro environment into the market plan of the retail shops.

It’s extremely important to incorporate the external macro environment into the market plan of the retail shops. The macro external environment generally comprises of :-

Demographic Environment

It is the population which makes up the markets and demographic environment is never the same. The behaviour of consumers has a direct impact on the business. Therefore as far as retailing is concerned, what must be considered by the chain of retail shops is as under:-

• Size of the population.
• Geographical Distribution.
• Density.
• Mobility Trends.
• Social and Ethnic Religious Structure.

Political/Legal Environment.

It comprises of laws, government agencies and pressure groups which has got its impact on the businesses. The aim of such laws is to prevent the unfair retail practices. Therefore it is very important to have the knowledge of the laws affecting the business.

Technological Environment.

When we talk of technological environment in context of retailing it implies the aspects like Billing

• Billing
• Use of technology in backing of the products
• Use of technology in backing of the products

Economic Environment In this connection what is important is the purchasing power of the people. The economic conditions have got an impact on the business. For example, in the event of

In this connection what is important is the purchasing power of the people. The economic conditions have got an impact on the business. For example, in the event of increase in prices, consumers curtail or postpone their expenses. Conversely, when the prices are low consumers buy luxury products. When we talk of purchasing power of the people it implies:-

• urrent Income.
• Prices.
• Savings.
• Credit Availability.

Developing/acquiring the skills required for chain of retail shops . Certain essential skills which are required for chain of retail shops are as under :-

• Skills required determining the following :-
  • stock levels.
  • The product mix.
  • Brand mix.

Analysing the sales potential – Carrying out a due appraisal of the sales is extremely important because that that determines:-

• The Kind of Inventory to be purchased.
• The number of employees that are required.
• The money that can be expended on expenses.

Arriving at the right type of shopping outlet for establishing the chain of shops.

It is important to be clear about the kind of shopping outlet we want to establish for which the chain of shops should follow. What needs to be ascertained is whether the target market of retailing shop matches the profile of the shopping centre. The International Council of shopping centres (ICSC) has defined eight principal types of shopping centres as under :-

Neighbourhood Centre.

These are meant for creating the day-to-day needs of the consumers in the immediate neighborhood as per their convenience. It has got following features :-

• Configured in a straight line strip.
• The Gross Leasable  Area (GLA). It ranges between 30,000 to 1, 50,000 Sq ft on our site of 3 to 15 acres.
• Consist of stores offering drugs, sundries, snacks and personal services.

Community Centre

This basically provides for a wide range of apparel and soft goods. It has got following features:-

• Configured in a straight line strip or ‘L’ or ‘U’ Shape.
• The Gross Leasable  Area (GLA). It ranges between 1lakh to 3,50000 sq ft.

Regional center.

The regional centre basically caters for large merchandise. It has got following features :-

• The Gross Leasable  Area (GLA). It ranges between three lakh to 10 lakh square feet.
• It provides for a variety of :-
  • Apparel Stores.
  • Shoe stores.
  • Household stores.
  • Furniture stores.
  • Drug stores.
  • Supermarkets.

Super Regional center.   

Similar to regional centre but has got larger mechanise. It has got following features :-

• The Gross Leasable  Area (GLA). It ranges between eight lakh to 10 lakh square feet.
• May consist of four or more departmental store in the 10 lakh square ft or more.

Fashion/ specialty Centre.

The physical design of the Centre is very sophisticated, with the ditch décor and landscaping. This kind of fashion/specialty Centre is ideal for location with high income levels. Its characteristic features are :-

• Upscale Apparel Shops.
• Boutique Shops.
• Craft Shops.
• A Set of restaurants and entertainment.

Power Centre.

These are generally constructed as long strip centres with three fourths of the Gross leasable area devoted to three or more high volume discount oriented tenants.

Theme Festival Centre

The biggest appeal for this centre is for tourists. This kind of centre rather than having departmental stores and supermarkets comprises of the shops having a unifying theme in the architectural design and offers an unusual merchandise. It may cover an area of 5 to 20 acres.

Factory Outlet centre

Factory Outlet malls generally cater for middle and lower class social economic customers. It provides manufacturers to sell their products which were overproduced. The characteristic features of this kind of centre are :-

• Caters for :-
  • -specialty clothing.
  • -Sporting goods.
  • -Leather goods.
  • -Houseware items.
• Generally 30 to 40 miles away from the city.

Miscellaneous aspects

While creating the chain of shops, certain miscellaneous aspects which can be considered are

• Access Route to the shops. There has to be an easy access to the shop from the road, street and lane. This includes the pedestrian access, automobile and public transportation access
• Space and lightning for the signage.
• Space for Housing the business.
• Contiguous population that can connect with the shop and the merchandise.
• Attractive designs/display to enticing the location for a memorable shopping experience.
• Leasing and occupancy terms.
• Parking lot space.
• Visibility from the street.
• Shop design.
• Layout
• Advertising and Promotion.
• Theft prevention measures.

Breakdown of merchandise.

Following type of goods can be considered to be kept in these shopping outlets/chain of  shops

• Impulse Goods. The goods that the customers buying as unplanned measures such as
  • -candy sold at checkout counter.
  • -Videotape in the electronics section.
  • -Cork screw  kept in the wine section.
• Convenience Goods. Such goods will the minimum amount of thought is put in while purchasing like brand variety or whatever comes your way.
• Shopping goods.  These are those goods for which the customer is searching and ready to compare. These are those goods for which shopping may be for the best price or service.
• Speciality Goods. These are those goods for which the customers come all the way to purchase and will not accept a substitute for a particular specialty.
• Concept of complementary merchandise.

It would suffice to say that for locating the chain of shops it is important to take into consideration the type of population/customers which are available, the type of product, buying and sale potential, type of industry and associated market factors. The success of any retail operation depends upon selling the right goods at the right time and a right place to the consumers. What must not be forgotten in retailing is providing a value which is a combination of price and quality service and personalization.

Bibliography/ References.

https://www.vendhq.com/university/how-to-start-a-retail-business/decide-what-to-sell#content-top

https://www.entrepreneur.com/article/75912

https://www.quora.com/What-are-some-tips-for-starting-a-retail-chain-store-in-India

http://www.ehow.com/how_5654194_start-retail-chain.html

http://www.pondiuni.edu.in/storage/dde/downloads/markiii_rm.pdf

http://www.slideshare.net/sssatpathi/project-reportonoperationsretail

http://www.slideshare.net/hemanthcrpatna/a-project-report-on-retail-industry-in-india

http://www.slideshare.net/ranayogesh/rana-project-report-on-retail