This chapter provides an overview about the research problem back ground. The study objectives and a brief about research outline and structure.
Few years back retail was and still the most profitable business
Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser.
Retail involves the sale of merchandise from a single point of purchase directly to a customer who intends to use that product. The single point of purchase could be a brick-and-mortar retail store, an Internet shopping website, a catalog, or even a mobile phone.
The retail transaction is at the end of the chain. Manufacturers sell large quantities of products to retailers, and retailers attempt to sell those same quantities of products to consumers.
Why Is Retailing Important?
Retailers are the final link in the supply chain between manufacturers and consumers. Retailing is important because it allows manufacturers to focus on producing goods without having to be distracted by the enormous amount of effort that it takes to interact with the end-user customers who want to purchase those goods.
Retailers should make the purchase of goods easy for the consumer. That’s why retail stores have salespeople, why Internet shopping websites have customer service instant chat popups, and why catalogs have descriptions, photos, and toll-free phone numbers.
Retailing is about displaying products, describing the features and benefits of products, stocking products, processing payments and doing whatever it takes to get the right products at the right price to the right customers at the right time. Some retailers offer additional services to the retail transaction like personal shopping consultations, and gift wrapping to add something extra to the retail customer experience and exceed the retail customer experience.
What’s the Difference Between Retail and Wholesale?
Wholesalers sell in large bulk quantities, without worrying about many of the aspects of retailing that consumers expect like visual merchandising. Wholesalers do not want to deal with a large number of end-user customers. Rather, their goal is to sell large quantities to a small number of retailing companies.
It is rare for a wholesaler to sell goods directly to consumers. The exception to that would be membership warehouse clubs like Costco, Sam’s and Bj’s Wholesale. These members-only retail stores are a hybrid of wholesaling and retailing in that they sell directly to consumers, but they sell in large quantities, which often allows them to sell at prices that are lower than other retailers that sell in small quantities from impeccably merchandised stores in high-rent shopping districts.
The big difference between wholesale and retail is in the price. The retail price is always more than the wholesale price. The reason for this is because the added cost of selling merchandise to end-user customers – labor, rent, advertising, etc. – is factored into the pricing of the merchandise. The wholesaler doesn’t have to deal with such expenses, which allows him to sell goods at a lower cost.
How Does The Retail Supply Chain Work?
The retail supply chain consists of manufacturers, wholesalers, retailers and the consumer (end user). The wholesaler is directly connected to the manufacturer, while the retailer is connected to the wholesaler, and not to the manufacturer.
Here are the roles of the key players in a typical retail supply chain:
Manufacturers: Produce the goods, using machines, raw materials, and labor.
Wholesalers: Purchase finished goods from the manufacturers and sell those goods to retailers in large bulk quantities.
Retailers: Sell the goods in small quantities to the end-user at a higher price, theoretically at the MSRP (Manufacturers Suggested Retail Price).
Consumer: End-user who buys the goods (or “shops”) from the retailer for personal use.
There are exceptions to this traditional supply chain, however. Some of the world’s largest retail companies like Wal-Mart, and Amazon.com, for example, are large enough to deal directly with manufacturers, without the need for a wholesaler in the middle of the transaction.
What Are Different Types of Retail Stores?
Here are some examples of the different types of brick-and-mortar retail stores where consumers can purchase products for immediate use or consumption.
Department Stores: Sell a wide range of merchandise that is arranged by category into different sections of the physical retail space. Some department store categories include shoes, clothing, beauty products, jewelry, housewares, etc. Examples of department store retailers include Macy’s, Nordstrom, and JCPenney, to name just a few.
Grocery Stores and Supermarkets: Sell all types of food and beverage products, and sometimes also home products, clothing, and consumer electronics as well.
Warehouse Retailers: Large no-frills warehouse-type facilities stocked with a large variety of products packaged in large quantities and sold at lower-than-retail prices.
Specialty Retailers: Specialize in a specific category of products. Toys ‘R’ Us, Victoria’s Secret, and Nike are examples of specialty retailers.
Convenience Retailer: Usually part of a retail location which sells gasoline primarily, but also sells a limited range of grocery merchandise and auto care products at a premium “convenience” price from a brick-and-mortar store.
Discount Retailer: Sell a wide variety of products are often private labeled or generic brands at below-retail prices. Discount retailers like Family Dollar, Dollar General, and Big Lots will often source closeout and discontinued merchandise at lower-than-wholesale prices and pass the savings onto their customers.
Mobile Retailer: Uses a smartphone platform to process retail transactions and then ships the products that were purchased directly to the customer.
Internet e-retailer: Sells from an Internet shopping website and ship the purchases directly to customers at their homes or workplaces and without all the expenses of a traditional brick-and-mortar retailer, usually sell merchandise for a lower-than-retail price
Duty free & travel retail is a global industry selling goods to international travellers. Sales in duty free shops are exempt from the payment of certain local or national taxes and excise duties, normally with the requirement that the goods are only sold to travellers who will take them out of the country.
Products that can be sold duty free vary by jurisdiction and different rules apply based on excise duty calculations, import allowance restrictions and other factors. Airports represent the majority of such sales globally but duty free & travel retail is also available at border shops (under certain conditions, usually requiring the purchaser to spend a minimum amount of time outside the country), onboard cruise & ferry vessels in international waters, onboard aircraft during international flights, at some international railway stations and in some countries in downtown stores where proof of travel is required in order to purchase.
Some jurisdictions (for example in non-EU Europe, Australasia, the Middle East and Latin America) offer travellers the opportunity to buy duty free goods on their arrival at their destination airport within the territory concerned. In such places, arrivals duty free has become an important source of revenue for airports. In some territories, the term “travel retail” was coined to define the sale of products in a travel environment on which taxes and duties remain payable even though the customer may be travelling internationally. This is notably the case within the European Union, where the sale of duty free goods to customers travelling within the EU was abolished in 1999. “Travel retail” is a term that commonly refers to sales made in travel environments where customers require proof of travel to access the commercial area, but which are subject to taxes and duties. Duty free & travel retail generates vital revenues for the aviation, travel, tourism and maritime industries.
Airports in particular increasingly rely on commercial revenues to fund the development of their infrastructure, and to help them keep the landing fees payable by airlines as low as possible. At airports across the world, retail is now the largest contributor to non-aeronautical income. Shopping is a key element of the travel experience for many passengers, and as such, the provision of duty free and travel retail goods is a service as well as an important generator of revenue.
the primary aim of this project is to develop a synchronized and practical frame work for driving sales in duty0free spaces of international transit. The following core project objectives are necessary to reach this ultimate goal of helping firms improve their duty-free business model and increase sales revenue
Determine the differentiating factors associated with duty –free operations.
Research and elucidate managerial, staff ,and consumer motivators and logic.
Employee BI and strategic planning tools to render core strategic consideration.
Operationalize in finding in practical framework for driving sales in duty-free.
The unique political, cross-culture, and socio-economic context of international commerce in duty free zones suggest that duty-free shops exist on somewhat different playing field than non-duty-free business :thusly ,many naturally-assumed tenets of business logic may not apply .the project hopes to render anew analysis of duty-free commerce with immediate functional implications many factors in order to drive the keys to drive the sales and improving the bottom line while meeting customer needs more directly.
In crafting this analysis, it is necessary to not rely on one established theoretical paradigm but rather draws from many relevant areas of interdisciplinary inquiry. Business intelligence and strategic planning tools such as porter’s five forces analysis and SWOT analysis will be used to help develop this framework considering current standard industry practices. The moving assumption is that current approaches employed by duty-free operators can be improved upon, specifically with a greater understanding of their own assumption and buyer behavior in those dynamic commercial spaces .the ethnographic and survey research is invaluable for this portion of project. Using the body of primary and secondary data, the paper answers, the question of what exactly businesses may be overlooking given their current methods and performance, and how they can could use better insight to improve upon current practices-and in doing so increase sales revenue.
challenges and structure
one challenge is limitations of accessing current primary quantitative data. given the global focus of investigation .broad survey research of sufficient magnitude and scope is outside the possibilities for this project, although such global survey-including earnings and business metrics-are regularly conducted and compiled by retail research association and international business analytics firms, some specializing in duty- free quantitative data specifically .however, much of this data is member-exclusive to duty
-free operators as well cost prohibitive. For this purpose smaller localized research studies and summery data and statistics of industry publications with global sample groups are relied upon. this type of information is crucial is considering blind spots, as well as assessing differences in duty –free shopping relating to product categories and regional trends .as a frequent international traveler and senior manger in DFS (duty free shopper )with experience in the middle east .
Another challenge is to fairly asses the wide range of sources in reflexive manner that does not unfairly bias the analysis .finally ,the paradigms articulated in some of the research may in some ways appear incongruous with other relevant concepts from different disciplines .this especially true for more abstract theories that while applicable .neglect concrete technological and microeconomic considerations.
In terms of structure. The project introduces the topic with a review of relevant literature. This assessment of the existing body of knowledge will help guide the new model for elucidating and acting upon underlying consumer behavior factors in duty –free zones . specific methodology of the research project is then discussed, followed by an articulation of what drives duty-free consumption from many different intersecting angles. This researched is finally synthesized into an overall analysis of the findings on consumer behavior and industry performance, including the identified blind spots .finally, the implication of the project are discussed including the derived framework for driving sales in duty-free spaces.