One of the key determinants of a retailer’s success is the format they use to present to their target customers. A retailer can choose a format based on the type of store design they want to present, the location they would like to establish, the various products and services they want to offer, and the approach taken to setting prices. The most important aspect is that the format should be ideal for your target demographics.
In the past, the Indian retail sector has been dominated by small independent players such as small and traditional grocery stores. It is in recent times that the concept of organized retail and multi-point of sale has gained acceptance and has since gained momentum. According to the study carried out by the Indian Council for Research on International Economic Relations (ICRIER), on the topic ‘Impact of organized retail on the unorganized sector’, it is estimated that the retail business will grow 13% annually from 322,000 million from US dollars in 2006-07 to US $ 590 billion in 2011-12.
An FICCI report on “Indian Retail: On the Fast Track” shows that a number of organized retailers are currently experimenting with different retail formats. It is difficult to predict which format will have an advantage over all the others in view of the fact that the Indian market has not yet matured.
The different types of retail formats that retailers could adopt are family or kirana stores, specialty stores, department stores, discount stores, convenience stores, hypermarkets, supermarkets, shopping malls, category killers. , electronic retailers and vending machines.
Mom-And-Pop or Kirana Stores: is a retail outlet that is owned and operated by individuals. The product range is very selective and few in number. These stores you see in the local community are often family businesses. The square footage of the store is dependent on the store owner.
Specialized stores: A typical specialty store pays attention to a particular category and provides a high level of service to customers. A pet store that specializes in selling dog food would be considered a specialty store. However, brand name stores also conform to this format. For example, if a customer visits a Reebok or Gap store, they will only find Reebok and Gap products in the respective stores.
Department store: they often look like a collection of specialty stores. A retailer of such a store has a variety of categories and has a wide variety at an average price. They offer considerable customer service. For example: Food World in Bangalore.
Discount stores: offers a wide variety of merchandise at affordable and reduced prices. Typically, retailers sell less fashion-oriented brands. However, the service is inadequate.
Convenience stores: it is found essentially in residential areas. They provide a limited amount of merchandise at above-average prices with quick payment. This store is ideal for immediate and emergency purchases.
Hypermarkets: provides variety and large volumes of exclusive merchandise at low margins. The operating cost is comparatively lower than other retail formats. A classic example is the Metro ™ in Bangalore.
Supermarkets: is a self-service store that consists mainly of groceries and products limited in non-food items. They can adopt a Hi-Lo or EDLP pricing strategy. Supermarkets can be between 20,000 and 40,000 square feet. Example: SPAR ™ supermarket.
Malls: has a variety of retail stores in a single outlet. They provide products, food and entertainment under one roof. Example: Sigma Mall and Garuda Mall in Bangalore.
Category Assassins or Category Specialist: By offering a wide variety in a single category at lower prices, a retailer can “kill” that category for other retailers. For some categories, such as electronics, the products are displayed in the center of the store and the seller will be available to answer customer inquiries and give suggestions when necessary. Other retail format stores are forced to cut prices if there is a specialty retail store in the immediate vicinity. For example: Pai Electronics ™ store in Bangalore.
Electronic retailers: The customer can buy and order via the Internet and the merchandise is left at the customer’s door. Here the retailers use the technique of drop shipping. They accept payment for the product but the customer receives the product directly from the manufacturer or wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in shopping from home. However, it is important that the customer beware of defective products and unsecured credit card transactions. Example: Amazon and Ebay.
Vending machines: It is an automated equipment in which customers can deposit money in the machine and purchase the products. Currently, this type of system is not widely used in India. For example: sale of soft drinks at the Bangalore airport.
Retailers can opt for one format, as each offers a different retail mix to their customers based on their customers’ demographics, lifestyle, and shopping behavior. A good format will help display products well and attract target customers to generate sales.