Retail Management Study Notes for BBA Exam

By BYJU'S Exam Prep

Updated on: September 11th, 2023

Retail Management Study Notes: Management refers to the method involved with uniting people on a common stage and making them fill in as a single unit to accomplish the objectives and targets of an association. Management is needed in all parts of life and structures a vital piece, all businesses. This topic is a very important topic of BBA & HM Exams.

The different cycles which assist the consumers with acquiring the desired product from the retail locations for their end-use allude to retail the executives. Retail management incorporates all the steps needed to carry the consumers into the store and satisfy their purchasing needs.

Retail management makes shopping a pleasurable experience and guarantees the clients leave the store happily. In easier words, retail the board assists clients with shopping with next to no trouble.

Retail Management is the way that assists the consumers with securing the desired product structure of the retail locations for their utilization. It incorporates all the steps required to bring the customers into the store and satisfy their purchasing needs. Retail management saves time and guarantees the consumers effectively find their desired product and get back fulfilled.

Need for Retail Management

Ram needed to present his wife with a decent watch on her birthday. He went to the close by store to look at a few choices. The retailer required nearly 60 minutes to find the watches. This annoyed Peter and he pledged not to visit the store anymore.- An illustration of helpless administration.

You can’t stand to make the consumer wait for long. The product should be well organized to stay away from unnecessary searching. Such circumstances are normal in Kirana stores. One can never appreciate shopping at such stores.

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The choice of location is the most vital aspect for any business that relies on customers, of which retailing is the classic example. Deciding on a location is the most complex of the decisions to be taken by a retailer. Firstly the costs are very high and once a location has been selected, there is very little flexibility. Choosing the wrong location can lead to losses and even closure of the store. This makes the selection of the appropriate location the most critical aspect of retailing. 

Importance of location decision in retailing: 

  • Location choice is a major cost factor.
  • It involves a large capital investment (the high cost of land or building if it is being purchased or the recurring cost of rent if it is leased).
  • It affects the transportation cost structure(Distance from the manufacturer, distributor, etc. affects the total cost of transportation).
  • It has a significant bearing on human resources cost(if the retail store is located away from central locations i.e. areas where public transport is weak the cost of employees will be higher as employees will have to be provided with transportation or paid for transport).
  • It is dependable on the quantum of customer traffic(depending on the number of consumers who are frequent the area).
  • It affects the volume of business (if the number of customers visiting the store is low then  the volume of business done by the retail store is affected)

Levels of competition have classified trade areas into:

  • The saturated trade area offers a wide variety of merchandise, also ensuring impressive profits for retailers. Customers tend to prefer these because of the variety of merchandise offered and competitive pricing. Eg. Pizza hut, McDonald’s’. Retailers here look for head-to-head competition. They believe locating in places with competition ensures high footfalls which can be converted into sales. 
  • Under stored trade area – Too few stores selling specific merchandise to meet the needs of the segment efficiently. 
  • Over-stored trade areas are characterized by the presence of multiple retailers in a specific product category. These areas possess a great challenge for new retailers. 

Levels of Location decision and its Determining Factors

Based on 3 aspects:

  1. Selection of a City
  2. Selection of an area or type of location within a city
  3. Identification of a Specific site

Selection of a City

  • Size of the city’s trading area – refers to the geographic area from which the customers come to the city for shopping. 
  • Population or Population growth in the trading area – Larger the population or Higher the population growth, better shopping location it is. 
  • Total purchasing power and its distribution – Purchasing power of the customers living in the city. Whether middle, upper or lower class. 
  • Total retail trade potential for different lines of trade – Certain cities may be specialized in certain lines of trade and attract customers from other cities as well. Eg Kancheepuram. 
  • Number, size, and quality of competition.
  • Development cost – Cost of land, rental value, other retail development costs, etc. 

Selection of an area or type of location within a city

  • Customer attraction power of shopping district or a particular store – Certain shopping centres attract customers from far-off places. 
  • Quantitative and Qualitative nature of competitive stores – Retailers would like to evaluate the product lines carried out by competitors, the number of stores in an area, etc. 
  • Availability of access routes – There should not be any traffic jams or congestions. There should be easy accessibility. 
  • Nature of Zoning regulations – Examine the plans and regulations of Municipal Corporation, etc regarding their plans. Eg. Flyovers 
  • The direction of spread of the city – The direction in which the city is developing. Eg. Mumbai’s suburbs are developing. 

Selection of a specific site

  • Adequacy and potential traffic passing the site – Volume of vehicular traffic and pedestrians passing by.
  • The ability of the site to intercept the traffic flowing past the site 
  • Complementary nature of adjacent stores – Eg stores selling school uniforms will have greater potential if adjacent stores sell school books, stationery, etc. 
  • Adequacy of Parking
  • Vulnerability of the site to unfriendly competition – Eg. Many small stores in the USA had to close or relocate when Wal-Mart set up its stores in the neighbourhood. 


  1. Free Standing Locations – No other retail outlets in the vicinity. Depends on its pulling power and promotion to attract customers. No competition, Low Rent, Better visibility. Disadvantages like lack of variety for shoppers, difficulty in attracting customers, etc.
    1. Neighbourhood Stores – Located in residential locations and serve a small locality. Sell convenience products like groceries.
    2. Highway Stores – Intersection of two highways and attract customers passing through the highways. 
  1. Business associated Location – Locations where a group of retail outlets offering a variety of merchandise, work together to attract customers to their retail area, but also compete against each other for the same customers.
    1. Unplanned Business districts
    2. Planned Shopping centres

Unplanned Business Districts – Two or more retail stores located together on an individual basis and not on any long-term collective planning. Provides advantages like the variety of goods, services, and prices, access to public transport, pedestrians traffic, etc. Disadvantages like congestion, older facilities, lack of space, parking problems, high rents, etc. These reasons led to the growth of planned shopping centers.

4 Kinds of Unplanned business districts :

  • Downtown or Central Business District(CBD) – CBD is the hub of retailing activity in a city. Draws customers from across the city and suburbs. Eg Chandni Chowk.
  • Secondary Business District – Unplanned cluster of stores located on a major intersection of the city. Attract customers from a large part of the city.
  • Neighborhood Business District – Small cluster and serves the neighbourhood area.
  • Suburban Business District – Stores located on the town’s periphery. They have lower rent and rely on traffic generated by downtown and may sometimes offer parking facilities.

Planned Shopping Centres – A group of architecturally owned or managed stores, designed and operated as a unit and surrounded by parking facilities. 

  • Regional Shopping Centres / Malls – Largest Planned shopping centres. Serve a large trading area and have high rents. Attract customers from cities and suburbs.
  • Neighbourhood / Community Shopping Centres – Have a balanced mix of stores including a few grocery stores, a chemist, a variety store, a few other convenience stores, etc. serving the needs of the residents of the neighbourhood.
  • Specialized Markets – Famous for a particular product category. A wide variety of merchandise is available within those product categories in such markets. Provide an established retail area to the prospective retailers to start, where they have to make little effort to attract customers.
  • Periodic Markets – Established at a particular place on a particular day in a week. Retailers operating here have mobile setups which they keep moving from one marketplace to another depending on the day of the week. Most of these operate during evening hours. Serve lower and middle-income class customers.


  • Convenience Goods :
    • Products that carry a low unit price
    • Purchased Frequently
    • Little selling effort
    • Eg Candy Bars, Cigarettes.
    • Quantity of traffic is important.
    • Corner of Intersection and large window display.
    • Purchased at easily accessible stores in the neighbourhood.
  • Shopping Goods:
    • High unit price
    • Purchased infrequently
    • Involves intensive selling efforts.
    • Automobiles, Furniture.
    • Quality of traffic is important.
    • Prefer locations like suburbs or malls with parking facilities.
    • Next to a department store with the huge traffic flow of customers
    • Easy accessibility from the residential area is important.
  • Speciality Goods
    • High unit price
    • Bought infrequently
    • Require huge sales effort
    • Exclusively franchised outlets
    • Precious jewellery, branded perfumes.
    • May use isolated locations as they can generate their traffic.
    • Locate in the type of neighbourhood where the adjacent stores and other establishments are compatible with the Speciality store’s operations.
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