PRESENTER: Hello, and welcome to Marketing91.com. In this video, we are going to cover the topic on retail formats. Let's start with the introduction. Retail formats are classified into two types-- store-based retailing and non-store retailing. Store-based retailing is further divided into form of ownership and merchandise offered, whereas non-store based retailing is divided further into four types. Let's start with store-based retailing.

Store-based retailing is when the customers purchase products after practically seeing it in stores. Tangibility plays a major role here. Customers often like to understand, feel, and touch the offering before procurement. Store-based retailing is additionally classified based on two parameters-- form of ownership and merchandise offered. Under form of ownership, there are three types-- independent retailer, chain retailer, and franchise stores. And under merchandise offered, we have convenience stores, supermarkets, departmental stores, hypermarkets, speciality stores, and factory outlets.

So under store-based retailing, let's look at form of ownership, under which we have independent retailer. An independent retailer possesses and administers only one retail outlet. The members of a family tends to operate such stores and are passed from one generation to the other. Retailers in this category have healthy relations with their customers and have restricted bargaining power with the supplier. Some of the advantages include easy market penetration, good customer relations, and individually determining the product mix and retail strategy. Example-- mom and pop stores.

The next under form of ownership is chain retailer. Chain retailers are people or companies who own and manage two or more outlets where they retail the same product or brands and typically have standardized business processes and practices. They have influential bargaining power with the supplier. Example-- Walmart, Metro and Carrefour.

The next under form of ownership are franchised stores. When one party grants permission to one other party to use its trademark or trade name to produce and market a commodity or service according to some stipulations, it's called franchising. In this arrangement, the party that grants permission is called a franchiser, and the other is called a franchisee. The franchisee normally gives a one-time payment including a percentage of sales income as royalty.

Franchiser here is the owner of the brand. Franchisee-- the one that pays royalty and operates the franchise. For example, McDonald's franchises and manages restaurants which offer a locally relevant menu of quality foods and beverages in 119 countries worldwide. Roughly 36,000 restaurants out of 38,695 were franchised by the end of 2019, which is about 93% of McDonald's restaurants.

Now, let's look at store-based retailing based on merchandise offered. The first, convenience stores. These are small stores generally found near residential areas. The Food Marketing Association defines them as small store selling mainly groceries open until late night or even 24 hours per day. The size of the convenience stores ranges from ballpark 500 square feet to 1,500 square feet and targets at customers who require to make a quick purchase. Examples-- 7-Eleven and stores at gas stations.

Next under merchandise offered is supermarkets. Supermarkets are huge, low-cost, low-margin, and large-volume stores. Having self-service processes, they are intended to meet the needs for groceries and items apart from food. Their store size ranges from 800 square feet to ballpark 5,000 square feet. 70% of the goods that are stocked are food related. Examples-- Tesco, Aldi, and Lidl.

Next up are departmental stores-- huge stores that sell several product lines with each serving as a separate department is called a department store. The product mix is mostly non-edible items, such as apparels, accessories, books, footwear, et cetera. They have a high service level. Sizes of such stores ranges from ballpark 5,000 square feet to 40,000 square feet. Example-- Marks & Spencer.

Next up under merchandise offered are hypermarkets, which are a combination of a supermarket and a departmental store. Size of such stores ranges from 40,000 square feet to ballpark 1,000,000 square feet. They provide with different types of food items and non-food related products. Products here are normally at discounted prices and can also be termed as one-stop shopping. Examples-- Walmart, Metro Carrefour, Asda.

Next up under merchandise offered are specialty stores. These types of stores concentrate on one particular brand or a specific category. Speciality stores provide a restricted product line but have good depth in the lines they provide. It has a high service level. Their store sizes range from 2,000 square feet to 5,000 square feet. Examples of this category are Nike, Victoria's Secret, Home Depot, Ikea, and Decathlon.

And the last under merchandise offered are factory outlets. In factory outlets, the products are invariably sold at a rate lesser than retail prices. Off-price retailers generally obtain manufacturer seconds, overruns, and offseasons at deep discounts. Manufacturers could also own such retail stores. Such outlets are normally seen by the parent company to improve business.

And now, let's move on to non-store based retailing. And under non-store based retailing, as I said earlier, there are four types. Let's start with the first one, direct selling. In direct selling, retailers make personal contact with customers either at home or place of work. Commodities such as cosmetics, accessories, food, nutritional products, and educational materials are some of the products sold in such a format. The salespeople or consultants require training for such type of selling. Examples include Tupperware, Eureka Forbes, and Amway.

Next up is television shopping. Specifications of the product are given through television. In this medium, health-related products, kitchen appliances, artificial jewelry, et cetera, are sold. After purchase, the products are delivered at the customer's doorstep. Examples-- HSN, QVC, and Shop Q.

The third model under no-store based retailing are the automated vending kiosks. Automated vending kiosks offer convenience to the customer due to its accessibility. The popular form of retailing is used to sell items like chocolate, soft drinks, tea, coffee, and cigarettes. Examples-- ATM by banks, gold ATMs commonly found in Dubai, and Coca-Cola vending machines.

And finally, e-tailing, also known as click-and-mortar model. E-tailing is when products are offered to the customer online with the use of internet. The model proves to be successful depending on the range of products offered and the retailer's ability to deliver them on time. Several retailers follow this model simultaneously with brick-and-mortar strategy. Example-- amazon.com, jd.com, alibaba.com.

So that's it, folks. This brings an end to the topic on retail format. These are some of the sources and links we referred to for the content in the video. If you've liked the video, do subscribe to our channel. If you want to view these videos in an organized manner, you can visit freecourses.net, where all our videos are arranged in the form of courses. Thank you, and see you in the next video.