How to Turn Retail Failure Into Success: Prescription – Part One

I once worked as a store detective for one of the UK’s top ten retailers. Many of the incidents of shoplifting that took place during my time at this retailer were not the result of shoplifters outsmarting us, rather they were a result of the store design or the policies and procedures that the retailer had in place.

I remember working in stores where the toilets were located outside the store. This meant that a shoplifter could literally walk out of the store with a trolley full of merchandise and could not be legally arrested because he could claim he was going to the toilet. On many occasions I was the only security personnel assigned to the 30,000 sq. ft. store with multiple exits.

On Sundays, we opened the entrances at 10:30 to allow customers to start browsing. However, we were scheduled to start at 11:00. When we started at 11:00, we would notice people pushing trollies full of merchandise out of the store. Someone in the head office, in their infinite wisdom, decided it was more cost effective to leave the store at the mercy of shoplifters than make a half an hour payment for security. This retailer is one the top ten retailers in the UK, yet senior management were unable to devise a coherent strategy for profit protection.

I once consulted a $25 billion retailer. As I perused the company I noticed that not a single person in the company knew their shrinkage figure therefore not even the financial director knew the profit margin of the company.

According to Dunn and Bradstreet “Of the small businesses that fail, 90% do so because of a lack of skills and knowledge on the part of the owner”.

Based upon my experience in retail, I believe it would not be too much of a fat claim to make that 90% of retail failures are the result of a lack of skills and knowledge on the part of senior retail management.

There are circumstances beyond the control of the individual retailer that they can do nothing about. There are circumstances in which location and demographic changes affect the retail organisation. Yes it is true that people would rather go to Asda or Tesco to buy meat than to their local butcher because of price difference.

It would not be fair to suggest that all retail failures are the result of bad leadership or incompetency. However, what I have tried to point out is that in the majority of cases, especially in the case of High Street retailers, the failure can be directly linked to their inability to embrace change.

The problems of major book, DVD, music and electronic retailers do not rest solely on difficult trading conditions, rather they rest on their inability to grasp the concept of the “Long Tail”.

The “Long Tail”, a concept popularised by author Chris Anderson in his book, “The Long Tail: Why the Future of Business Is Selling Less of More”, examines the changing consumer behaviours based upon the changes in distribution curve.

The proliferation of niche markets brought about by the internet has completely altered the factors of distribution. Consumers are exposed to more choices than ever before in the history of mankind.

While writing this article, I decided to test the “Long Tail” theory. I keyed into Google: “how many types of breakfast cereals are there”. Result: thousands. They were arranged in alphabetical order and it was from A to Y. The average supermarket carries thousands of different product lines.

Furthermore, with the internet consumers are becoming more and more overwhelmed with choices. Amazon and its distributors carry more inventory than a lot of High Street retail organisations combined.

In the “Long Tail” century, how can retailers survive? They can survive by adapting to their environment.

In the “Evolution Theory” Charles Darwin introduced the concept of “Survival of the fittest”. The fittest in Mr. Darwin’s lexicon is not the strongest or the fastest but those who are better equipped for survival or those who are better adapted for their immediate, local environment.

We are already witnessing the “Evolution Theory” at play in the luxury market. Despite the downturn in the economy, luxury retailers are still raking in profit. Even in Spain where the country is on the brink of collapse, the luxury retail sector is booming.

Make a Booming Career in Retail Management

Retail is the fastest growing sector in India today. With many big players setting foot in the industry, the sector is bound to grow manifold. The growing number of shopping malls and departmental stores has thrown up endless job opportunities in India and abroad. Industry insiders estimate a growth rate of 30 to 40 percent in India in the retail sector and there will be a requirement for an estimated 80 lakh trained professionals.

Hence, it is an opportune time to join a course in Retail Management and bag a job in this promising field. Recognizing the demand for skilled professionals in this field, many institutes have started courses and training programmes at the undergraduate and post graduate level to create skilled manpower for this industry. Here’s all the information that you may require on courses in retail management.

The retail sector is now more organized and efficient. The retail revolution has changed not just the urban lifestyle but also the lifestyle in small towns. Thus, for a retail management graduate, there are opportunities galore across the country in the books and publishing industry, music stores, multiplexes, shopping malls, garment industry and also in the processed foods industry. Somebody opting for a graduation course in Retail Management should ideally have passed the Higher Secondary or 10+ 2 Examination.

The curriculum on retail management is a very comprehensive one and includes detailed information on supply chain, marketing information, finance management, accounting in retail, retail brands, business communication, psychology of retail shoppers, electronic retailing merchandise management, marketing and business communication, sales promotion with public relation ,inventory, customer relationship, business ethics, management and organizational behavior, quantitative methods in retailing.

In the retail industry, the biggest demand is for an efficient retail manager. After that, there are positions such as inventory manager, shopping operational manager, floor manager and personnel for customer service. The related options are in human resources, finance and system management.

There are many institutes that offer retail management courses. One such institute is Welingkar Institute of Management Development and Research, Maharashtra, which offers a two-year specialized course in retail. The other course offered by the institute is a postgraduate course. The institute promises campus placements at various retail stores like Pantaloon, Shopper’s Stop, Globus and Westside.

Birla Institute Of Management Technology based in New Delhi offers a two-year Post Graduate Diploma in Retailing and Merchandising Management (PGDRMM). The course offers training in retailing and merchandising management with a blend of industry interaction. One has to qualify the CAT, MAT entrance examination and then clear an interview round to get admission. The institute also provides hostel facility. There is an active campus placement programme.

The course syllabus includes Retail concepts & Environment, Marketing Management, Merchandising Management, Business Communication, Retail Store Management and Research Methodology

Down south, the Madurai Kamaraj University has come up with new courses in retail management to be offered through its Directorate of Distance Education. The new courses include Postgraduate Diploma in Retail Management, Master of Business Administration in Retail Management and Bachelor of Business Administration in the same specialisation.

In Mumbai, the K J Somaiya Institute of Management and Research offers a Post Graduate Diploma in Management- Retail. It is a full-time two year course and covers a wide range of topics relating to general management , Retail Management , operations and soft skills along with hands on experience in the offices/outlets of Pantaloon Retail (India) Limited.

Demise of Loyal Retail Customers in the Digital Age

Loyal retail customers have for long now given Bricks and Mortar (BM) retailers an advantage over their competitors. However, the advent of the internet and the subsequent development of the online shopping channel have changed the shopping behavior of retail customers.

Although BM retailers have invested millions of dollars in customer loyalty programs, the convenience, speed and assortment of products customers enjoy online lured many loyal customers away. This is apparent with the closure of thousands of retail stores, and the vanishing of well-known retail brands over the last couple of years.

The big challenge for BM retailers is to the get customers back to their stores. Thereafter, the retailers should have a strategy in place to keep them coming back. In other words, making their customers loyal again…

What are loyal retail customers?

Customer loyalty is according to PR Loyalty Marketing both an attitudinal and behavioral tendency to favor one brand over all others. This may be due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.

Loyalty is formed in four stages – cognitive, affective, conative, and action.

Cognitive loyalty – in the first loyalty stage, consumers develop value expectations and preference for one brand relative to other available alternatives.

Affective loyalty – here the consumers begins to develop a liking or attitude towards the brand based on an increasingly satisfying experience with the brand.

Connotative loyalty – the third stage, which is confined to consumer’s behavioral intention. The consumer has deeply held commitment to buy the brand.

Action loyalty – is where the desire and intention in the previous loyalty state has translated into realistic loyalty actions or behaviour.

It takes time, money and commitment from retailers to get loyal retail customers. This process, mostly took place at the BM retailer’s store in the local shopping center. However, retail customers in the digital age can shop anywhere, at any time, at the best price.

So, BM retailers need to rethink their customer loyalty programs. They need to find out what “delights” their customers. How has the internet and the online retail channel affected their shopping behavior in the retail stores?

Loyal retail customers in multi-channel retail

Retailers can nowadays rely only on more than one channel to do business with. As a result, most BM retailers adopted e-Commerce to become Bricks and Clicks retailers. Online retailers, on the other hand, started to open physical stores to serve as showrooms for their products. Indeed, loyal retail customers need to be found outside the traditional retail channels.

How to Find the Best Retail Space for Rent Abroad

E-commerce and mobile sales have come a long way, but traditional brick-and-mortar retail stores are still faring well. The success of these stores largely depends on two things: the product and location of the store. The truth is, no matter how great one’s products is, sales will be down if there are no customers trooping into the store.

Putting one’s business in the right location is a prime consideration not only for startups, but for established businesses looking for another retail outlet. Finding and choosing the best retail space for rent here or abroad entails the same considerations. The following are points of concern when renting a retail space abroad.

What is Your Budget?

There are two things that have to be defined before looking for a retail space to lease: budget for the rent and size of the store. Paying more than one can afford based on the store’s sales, and committing to the wrong-sized space are common mistakes tenants make when renting. Having a clear idea on the budget will certainly help narrow down options and avoid renting an unaffordable space.

The affordability of a commercial space is traditionally based on the rent-to-sales ratio. As a whole the average rent-to-sales ratio of small, sole proprietorship business is 2.98%, with 1.24% applied to retailers of building materials, while retailers of clothes and accessories allocating 8.93% of their total sales to rent.

Rent of retail spaces depends on the location of the property to be leased, its location among other retail stores in the same area, condition of the space to be rented, length of the lease, and its availability. Regarding availability, renting a shop in a new mall is cheaper than renting a space in an established mall.

Other costs to consider when renting are: property taxes; insurance; utilities and maintenance. It is important to note who will shoulder the expenses for maintaining the building and parking facilities. Who will pay for security services, repair and maintenance of air-conditioning units? If the location is far from the main commercial hub, how much additional marketing is required? All these items add up to the cost of the retail store rent.

It may be difficult to project sales on a new business to determine how much rent one can pay; but one can always research on similar retail businesses in the area to find out how much their lease costs. In some cases, the services of a local broker may prove very helpful.

How Much Space Do You Need?

The required space varies for each type of retail store. However, common areas for consideration in a traditional store include the main sales floor, dressing rooms (if needed), stockroom, offices and bathroom. Opting for a functional kiosk, cart, or booth requires a smaller, less detailed space. A basic formula in estimating the size of a sales floor is: Sales Volume divide it by Sales per Square Foot. Of course, this formula may not work for all types of retail store, so it is still best to determine what equipment, display cabinets, shelves, tables and more are to be incorporated on the sales floor. A too large sales floor may seem like an empty store, while a too small store may seem cluttered and chaotic. The local trend in store display is also a consideration.

Indian Retail Sector and Scope of Overseas Jobs for Indians

Of all the commercial segments in India, the retail sector is biggest both in terms of revenue generation and employment contributing to more than 10% of the national GDP and employing nearly 9% of the entire workforce. The retail industry has indeed come of age in India as it has witnessed an extraordinary growth in the past ten years.

Indian conglomerates specializing in apparels, beverages, healthcare, footwear, food processing, watches, and digital gadgets etc have buttressed their presence in the country by opening up more outlets in the Tier-I cities and setting up shops in Tier-II and Tier-III cities and towns. Foreign retail companies like Metro, Tesco Plc, IKEA, and Bosch, and numerous other world famous retail brands have heavily invested in the country.

The Indian retailing industry is expected to be worth over US$ 500 billion making it one of the top notch retail hubs in the world. The sector is growing exponentially with a CAGR (compounded annual growth rate) of 25%. The food and food processing segments are the key players in the retail industry in India.

The shopping modes and patterns have also underwent a sea-change with more and more Indians preferring to shop in plush supermarkets and multi-level shopping malls that offer almost everything under a single roof. India’s burgeoning middle class with most of the shoppers in the age bracket of 24-36 having large disposable incomes is looked upon as a potential commercial market that every retail giant wants to tap. Online shopping has caught on in a big way as well.

The mushrooming of online retail outlets and shops in India amply testifies to the fact that online retailing and shopping is growing in popularity with every passing day. Statistically speaking, online retail infiltration or incursion is about 60%. The retail industry is anticipated to expand rapidly in the coming years with the Indian government implementing favourable policies with a view to removing the roadblocks and accelerating the pace of development.

Market Volume

The ‘Ministry of Food and Consumer Affairs’ reports that the retailing sector will be approximately worth US$ 1.3 trillion by the turn of this decade (2020). The foods segment will continue to dominate the retail scene. The retail section comprising smartphones, tablets and other e-gadgets is expected to chart a 20% growth in the next 10 years. FDI inflow in the last 13 years was about US$ 98 billion in single-brand retail business.


India’s urban population has taken hugely to online shopping. India is poised to become of the key nations where approximately 40% of the entire retail trade in all the major cities and towns will be executed online in the subsequent 8-10 years. Of all the products sold online, consumer durables will occupy the top slot accounting for almost 34% of total sales. Of the total online sales across all product categories, non-metro towns will account for more than 50% of the same.