The format of a retailer is the overall appearance and feel that it presents to customers, primarily its look and layout, the sort of range it stocks and the approach taken to pricing. Format is distinct from fascia which, strictly speaking, refers solely to external appearance. Retailers occasionally use it as as a synonym for format. The format, together with range, pricing and marketing, is one of the key determinants of a retailer’s success. Of these, the format is very often the hardest to get right. A good format will both draw in customers (generating footfall) and help present products well to generate sales.
Because the format is so important, growth investors can often benefit by identifying smaller retailers who have recently developed formats that are good enough to provide a platform for sustained growth.
The following are some of the retail formats available in Indian market.
1. CHAIN STORES:
• Chain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices.
• These characteristics also apply to chain restaurants and some service-oriented chain businesses.
• In retail, dining and many service categories, chain businesses have come to dominate the market in many parts of the world. Chain stores are a form of franchising.
• The world’s largest retail chain, Wal-Mart, became the world’s largest corporation based on gross sales.
2. DEPARTMENT STORE:
• These are the general merchandise retailers offering various kinds of quality products and services. These do not offer full service category products and some carry a selective product line.
• K Raheja’s Shoppers Stop is a good example of department stores. Other examples are Lifestyle and Westside. These stores have further categories, such as home and décor, clothing, groceries, toys, etc.
• They are very large stores offering a huge assortment of “soft” and “hard goods; often bear a resemblance to a collection of specialty stores.
• A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.
3. CATEGORY KILLERS:
• Small specialty stores have expanded to offer a range of categories. They have widened their vision in terms of the number of categories.
• They are called category killers as they specialize in their fields, such as electronics (Best Buy) and sporting goods (Sport Authority).
• By supplying wide assortment in a single category for lower prices a retailer can “kill” that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.
• For example: Pai Electronics™ store in Bangalore, Tata Croma
• A hypermarket is a superstore which combines a supermarket and a department store. The result is a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise.
• hypermarkets allow customers to satisfy all their routine weekly shopping needs in one trip. It provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.
• A classic example is the Metro™ in Bangalore.
5. EXCLUSIVE STORES: Franchise system of branded companies. A franchise can be exclusive, non-exclusive or ‘sole and exclusive’. The examples of exclusive stores are ADIDAS, REEBOK, BIBA,etc.
6. CONSUMER CO-OPERATIVES:
• A consumer cooperative is a cooperative business owned by its customers for their mutual benefit.
• It is a form of free enterprise that is oriented toward service rather than pecuniary profit.
• Consumers’ cooperatives often take the form of retail outlets owned and operated by their consumers. The customers or consumers of the goods and/or services the cooperative provides are often also the individuals who have provided the capital required to launch or purchase that enterprise.
• consumers’ cooperatives are known as cooperative retail societies or retail co-ops, though they should not be confused with retailers’ cooperatives, whose members are retailers rather than consumers.
• There are many types of consumers’ cooperative. There are health care, insurance, and housing cooperatives as well as credit unions, agricultural and utility cooperatives.
• A supermarket, also called a grocery store is a self-service store offering a wide variety of food and household merchandise, organized into departments.
• It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket or superstore.
• A supermarket, also called a grocery store is a self-service store offering a wide variety of food and household merchandise, organized into departments. It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket or superstore.
• Cash and carry is defined as wholesale depot operations from which retail customers purchase goods and provide their own transport.
• Credit terms are normally available, while a limited delivery service may be offered to larger customers.
• Cash and carry operators buy goods in large quantities from the manufacturer or buying group and then sell these goods to their retail customers at prices only slightly above what they paid for them.
• They accept low net profit margins, in return for high-volume sales, and thus are able to keep costs to a minimum.