Retail trade network. Network trade
Trade is an industry national economy, which performs the functions of circulation of goods, ensuring the movement of the latter from the sphere of production to the sphere of consumption.
Trade, as a form of exchange, is an intermediate link between production and the distribution determined by it, on the one hand, and consumption, on the other, and at the same time it represents a special phase of the reproduction process. This is the established idea of \u200b\u200btrade, which to an ever lesser extent reflects the role and place of this type of activity in economic processes, especially in its most modern forms.
It is enough to pay attention to the fact that both in terms of value added and in the number of employees, trade in the most developed countries is many times greater than agriculture, forestry and fishing, construction is several times greater and comparable to industry.
Fundamental changes have also occurred in relationships with manufacturers and consumers of products. Such forms of relationships with manufacturers as one-time contracts, acceptance for commission or sales, are replaced by long-term cooperation, providing quality guarantees, reliability of supplies and orientation not only to the current, but also to the future. No. 06-02-00199a. 355 promising demand.
In relation to the consumer, the study and formation of his preferences, as well as encouraging cooperation on an ongoing basis (various types of discount cards and gift systems for regular customers) come to the fore. As a result, there is a fundamental difference between the product that the manufacturer promotes to the market and the product that ends up in the modern retail chain.
The latter is measured, weighed, packaged, legitimate and declared fit for sale; accordingly, it has a different consumer value. In general, trade in its most developed form becomes not only an intermediary sphere between producers and consumers, but also a producing sphere, which, by analogy, could be called the sphere of final processing. Naturally, all traditional and historically established forms of trade are preserved, including illegal street trade.
At the same time, it is high-tech and information-rich forms of trade (trade networks and Internet trade) that determine not only the level of development of the trade industry, but also the country’s economy as a whole.
Trade as an industry is a set of enterprises, among which two main segments can be distinguished - wholesale and retail trade. Wholesalers are essentially intermediaries between manufacturers and the retail sector.
In almost all cases, counterparties for wholesale companies are legal entities - retail or wholesale companies, or private entrepreneurs.
Retail is essentially a consumer market. Buyers of retail goods are end consumers - individuals. In the classical definition, wholesale and retail trade are characterized by different volumes of sales to customers. Accordingly, wholesale trade represents the supply of large quantities of goods, retail trade represents the sale of smaller quantities or units of goods.
In addition to this property, which does not always indicate that an enterprise belongs to one or another sector of trade, one can distinguish such a feature of retail trade as sales to the end consumer through specialized retail outlets (point of sale). Such retail outlets can be shops and supermarkets, as well as markets, tents, and stalls.
Wholesale trade enterprises, on the contrary, usually do not have their own retail outlets and sell goods directly from their own or rented warehouse premises. 356 A number of existing retail formats can be organized within a retail chain. Thus, a retail network can include kiosks, specialized stores, stores operating under the manufacturer’s trademark, small wholesale stores, supermarkets, hypermarkets, car dealers, and gas stations.
Row shopping centers, such as MEGA, use a single brand and have a single management system and can also be organized as a network. This does not exclude the existence of individual shops, markets, as well as private entrepreneurs-hawkers. Currently, retail chains occupy a significant market share in the structure of trade turnover in Russia. Thus, it can be summarized that network trading is an integral integral part modern consumer market and the entire Russian economy. Retail trade networks (RTS) in the classical definition are a form of retail trade in which the main distinguishing feature is the presence of trade organization several points of sale. Each of them has its own retail space, inventory and personnel, but is a division of a retail chain.
In addition to brands and uniform formats, network trade is also characterized unified system management, financing and investment decisions. Many RTS have unified purchasing and sales services, logistics services and distribution centers that serve all stores in the network, unified information systems, as well as quality control systems and unified training centers. The development of the RTS format has a greater impact on the retail business and the economy as a whole than a simple increase in the number of stores or sales growth. One of the most significant features of the development of chain retail is the emphasis on low selling prices. As a result of the competitive advantage in the form of lower prices, not only customers of retail chains benefit, but also customers of other forms of retail trade.
Thus, competitors are also forced to reduce prices and increase efficiency operational activities, or provide other non-price benefits to its customers. The market must respond to lower prices or improved customer service, and although average price does not decrease to the maximum level, however, as a result, the spread between the minimum and maximum retail price is reduced.
To illustrate this effect, it can be noted that in 2003, the average growth rate of prices for goods in Metro Cash & Carry stores was about 357 7%, while the consumer price index increased by 10.2% for food and 9 .2% for non-food products. Independent stores are inextricably linked to the wholesale trade system, which is an intermediate link between manufacturers and retailers. The emergence of retail chains brings retail trade one step closer to ideal system distribution of goods that reduces the gap between producers and buyers of goods, increasing efficiency and reducing transaction costs to the lowest possible level. Factors in the development of retail trade networks.
Almost all the advantages of retail chains are based on the savings that arise from centralized management of more than one division and the increase in sales volume associated with the number of retail outlets. As sales volumes and the number of retail outlets increase, companies can to some extent reduce the proportion of semi-fixed costs such as advertising and administrative expenses, directly benefiting from economies of scale. At the same time, the main disadvantages inherent in retail chains are caused by problems of separate management of various retail outlets.
As turnover increases, the average costs of RTS decrease. These savings are inextricably linked to revenue growth through an increase in the number of points of sale. The inability to significantly increase sales without increasing the number of stores is one of the main reasons for the emergence of retail chains. Although large independent department stores, grocery stores, discounters and supermarkets can generate large revenues, maximum revenues can only be achieved through a networked distribution network.
Among the restrictions on the sale of high turnover by one store are the possibilities of expanding retail space, because... quantity and size land plots in the immediate vicinity of residential areas is limited; in addition, the reach of the store’s customers is limited to the nearest residential areas; there are other infrastructural frameworks.
There are factors that enable retail chains to reduce selling prices. Some of them are inherent in network trade and cannot arise in any other form of trade organization. Most of the factors that emerged as a result of the activities of retail chains can exist in other formats.
Retail chains are taking advantage of large formats more effectively. One of the reasons for this is that the format of online trading itself is associated with an increase in internal transaction costs, namely, control and management costs. The retail chain incurs additional costs for creating and monitoring the implementation of internal standards and procedures, training staff and introducing technology at all retail outlets of the chain. Such costs, which constitute a small percentage of sales for large retail chains, can be prohibitively high for individual independent stores. In addition, RTS can reduce the costs of training staff and implementing procedures in new stores. As sales volumes increase, companies receive additional benefit in negotiations with suppliers. Many retail chains organize centralized purchases from suppliers (or from large wholesale companies), which gives them the opportunity to receive significant discounts on purchased goods.
By selling products in large volumes, manufacturers gain economies of scale that they can share with retailers that supply large orders.
The retail chain system practically eliminates wholesale intermediaries from the goods distribution chain. Independent retail stores are forced to work through wholesale companies, since working directly with suppliers is often impossible for them due to high transaction costs. One retail outlet actually does not have the opportunity to conclude contracts with all suppliers, of which, with the assortment of an average modern supermarket, there may be several thousand, and will incur high costs for transporting goods from each supplier. Large suppliers also avoid working with small buyers due to the low volume of purchases and higher risk, which negatively affects the supplier's transaction costs.
In addition, intermediaries and manufacturers may force small independent retail outlets buy undemanded goods “on load”, since the capabilities of suppliers exceed the purchasing power of independent retailers.
Almost all large retail chains have their own warehouses and distribution centers, which allows them to reduce internal costs of distributing goods to various points of sale.
Thus, in addition to saving on price, RTS receive tangible savings on transportation and storage, as well as an additional degree of freedom when managing the assortment of goods in various stores of the network. For the end consumer, this means lower prices for similar products compared to regular stores. The overall economic effect of increasing the share of 359 retail chains in the structure of the economy is expressed in a more stable and sustainable structure of demand for manufacturers’ products, better information about the structure of consumer demand and lower prices, as well as lower transaction costs. Thus, manufacturers are forced to work with a lower margin, but receive benefits in the form of higher sales volumes, more stable demand and a transparent structure of the product range. The pricing policy of retail chains is a more complex function compared to the pricing policy of individual stores and private entrepreneurs.
Essentially trading network is a more flexible system compared to these types of trade. Pricing strategy individual stores and private entrepreneurs are limited by the volume of demand from buyers and the volume of supply from suppliers. Retailers can overcome these limitations and manage both sales and purchasing volumes, so the pricing process is much more efficient. complex process, which at the same time brings benefits compared to the strategy of individual stores and private entrepreneurs. Another factor underlying the rapid development of RTS is advertising. Independent stores rarely use advertising media. Retail chains, on the contrary, actively use advertising. This can be advertising in the press, on television, radio, on the Internet, billboard advertising, sponsorship and other types of advertising. Modern large retail chains use advertising to compete in the market for market share with other chains and retail stores, as well as to attract customers, which contributes to sales growth. This helps retail chains create their own recognizable brand and partially overcome information asymmetry for customers.
Standardization of stores also significantly reduces information asymmetry, which for the economy as a whole means more stable dynamics of commodity turnover and minimization of gaps between supply and demand, and also reduces the costs of buyers searching for goods. If the buyer knows that the chain maintains a single standard for all its stores, knowing the assortment of one of the stores, he will be confident that any other store in this chain will have a similar assortment.
The assortment of large RTS in terms of the number of items of goods presented can be tens of times greater than the assortment of ordinary stores due to the fact that retail chains have greater purchasing power, and, therefore, greater opportunities for purchasing goods from suppliers compared to ordinary retail stores.
Wholesale companies that purchase large quantities of goods from suppliers avoid buying those goods that are not in mass demand, since they cannot be sure that they will be able to sell these goods to retail companies, which, in turn, do not show demand for these goods, since We are not sure about the possibility of selling them to end consumers.
Retail chains that work directly with manufacturers can bridge this gap, improve assortment and optimize supplies. Modern RTS are able to monitor product sales in real time at all of their retail outlets and increase the supply of those goods that are in peak demand, while simultaneously reducing the supply of goods that are not in demand.
In addition, retail chains are subject to much stricter control by regulatory authorities, which, along with the chains' desire to increase customer loyalty, forces them to pay great attention to product quality control. Thus, in most large chains there are departments for quality control and product certification, internal control services over the implementation of operating procedures and planned disposal poor quality goods or expired products. Almost all RTS have logistics specialists, buyers and modern equipment for inventory management.
This allows chains to both increase inventory turnover, increase the share of new goods and fresh products, and reduce transport and customs costs, as well as improve the supply of stores in order to ensure the supply of those goods for which consumers have maximum demand. Many retail chains have their own analytical and control services that help determine the current demand for various types of goods, current balances, losses and shortages, and ensure timely ordering, delivery and placement of goods on the trading floor.
Wholesale firms are not able to quickly and adequately respond to changes in demand, since they do not have data on the sale of goods by retail operators and do not have control over retail sales.
Consequently, the wholesale trade system generates economic losses, firstly, through the inability to provide the required assortment, and secondly, through the timely supply of goods for which there is effective demand. Thirdly, wholesale trade, being an additional intermediary between the manufacturer and the final consumer, increases transaction costs. The law of diminishing returns to factors of production, which limits positive effects as the size of the organization grows, it also affects retail networks, but it is quite difficult to determine the limit at which network growth becomes ineffective.
The advantages of large RTS are not limited solely to the price factor; in addition, they benefit from attracting more qualified labor, introducing new management methods, and installing new equipment. In chain trade there is a more effective division of labor, since with large turnover the company can hire qualified employees to perform individual operations, while in small retail stores such operations are performed by one employee or even the owner.
Accounting, control, warehouse operations, logistics, sales, construction, supply and other types of operational activities are performed by specialists, thereby increasing efficiency and reducing risks. Network retail trade generates not only positive but also negative effects. In addition to the diminishing returns to factors of production, it can be noted that all retail chain stores are managed by employees, unlike independent stores, which are often managed directly by the owner. The so-called owner-agent problem arises.
On the one hand, the owner is interested in increasing the value of the retail network, on the other hand, employees may exhibit opportunistic behavior, since their interests may not coincide with the interests of the owner. The percentage of losses of retail chains as a result of theft, damage to goods, and employee negligence can reach several percent of revenue. However, in general, retail chains are a more efficient type of building retail enterprises compared to individual stores and private entrepreneurs. History of the development of retail chains abroad and in Russia. Although retail chains now exist all over the world, the United States is considered the birthplace of modern retail chains. IN Western Europe RTS in the format we are familiar with today began to develop only in the 50s. twentieth century, although the first networks appeared in France in the second half of the 19th century. In the history of the development of retail chains, several main stages can be distinguished.
- - 1859-1900 - the period of the birth of the first RTS and their initial development (the first retail chain is considered to be the American company A&P, an importer of Indian tea, which opened the first stores in New York, now the Great Atlantic & Pacific Tea Company).
- - 1900-1930 - a period of rapid growth. The idea of retail chains has spread among retailers, and hundreds of new retail chains have emerged. American companies began to open branches abroad. In the field of network trade, processes of concentration, mergers and acquisitions begin.
- - since the 1930s - a period of stable growth in the RTS sector, an increase in the market share of retail chains.
- - Since the 50s, the active development of network trading formats in Western Europe began.
- - since the 60s, retail chains began to use new information technologies and actively introduce innovations.
- - active sales began in the 70s.
Trade is the most important sector of the country's economy, the state and efficiency of which directly affects both the standard of living of the population and the development of the production of consumer goods. In terms of tax revenues to the federal budget, trade ranks second among the main sectors of the economy.
Significant changes in the economic and political life of the country that have occurred in recent years have entailed significant changes in the nature and conditions of functioning of all sectors of the national economy, including retail trade. Currently, retail trade in the Russian Federation is undergoing dramatic changes. These changes are associated, first of all, with a sharp reduction in unorganized trade, the rapid and large-scale development of Russian retail chains, and the emergence of intense competition between large domestic and global international retail chains.
The development of retail networks is a necessity for Russia. We are still far behind many civilized states in this regard. For example, in cities such as Paris, London, Warsaw, more than 60 percent of goods are sold through trading networks. These are, as a rule, mobile, organized, modern sales technologies for trade enterprises. Our sales level is only 12 percent. As a result, spontaneous markets are formed; there are no conditions for trading quality goods. “The more supermarkets, hypermarkets, medium-sized stores we have, the better for the buyer. There will be healthy competition, therefore there will be a reduction in the price of the product"
Trade is currently, of course, one of the largest and most economically successful sectors of the Russian economy. Although not the most dynamic. Wholesale trade enterprises are developing at the fastest pace - with an annual increase of 34-36%. Retail shows from 23 to 29%.
The gross added value created by Russian trading enterprises amounts to more than 20% of GDP. At the end of 2005, the turnover of retail trade enterprises exceeded the mark of 2.5 trillion. rub., wholesale trade - the mark of 11 trillion. rub. IN restaurant business, which is often also considered as part of retail, and has similar development factors, turnover reached a level of 140 billion rubles. Here we mean the turnover of trading organizations (and not the turnover of trade in general), excluding for wholesale trade the turnover of foreign trade organizations and organizations providing intermediary services in the purchase and sale of consumer goods, and for retail trade - the turnover of sales in clothing, mixed and food markets.
In reality, there are limited groups and sectors in the trading industry that demonstrate dynamics that significantly exceed the industry average, or, conversely, develop less dynamically. Thus, growth is occurring at a particularly high rate in the segment of large enterprises. For example, in the wholesale trade of consumer goods, the growth rate of turnover remains steadily at the level of 40-45%, and in industrial and technical products - 22%. The turnover of large retail enterprises is growing by an average of 40%, in the restaurant business - by 30%
On the contrary, in the small business sector the rates are significantly lower - in retail - about 16% (i.e. almost purely inflationary growth), slightly higher in restaurants - 21%. The only area of small business that is not inferior in dynamics to large ones is wholesale trade, here the pace remains at the level of 30-35% - primarily in the trade of consumer goods. The higher dynamics of development of large businesses, compared to the industry average, also means good prospects for Information Technologies, since large enterprises are the main customers of high-budget IT projects. At the same time, in the largest enterprises - Western and Moscow retail chains - the pace is even more impressive. In the first half of 2006, according to INFOLine, they ranged from 40% (Magnit) to 52% (Kopeyka) for different networks.
Thus, the development of the trade industry in Russia is characterized by unevenness for various groups enterprises. The sector of large enterprises, and above all, its core - the largest retail chains that control significant financial and market resources, stand out sharply from the general development trend.
Recent decades have been characterized by the rapid development of new forms of commercial organizations that do not correspond to the traditional idea of building and managing companies. They are characterized by high flexibility, specialization and an emphasis on managing relationships and connections. The sphere of commodity circulation is especially characterized by elements of a network economy.
The network economy is defined in a European Commission report as “an environment in which any company or individual, located anywhere in an economic system, can communicate easily and at minimal cost with any other company or individual to work together, to trade, to exchange ideas and know-how or just for fun" 1 .
Despite the fact that the terminology appeared 25 years ago, the phenomenon of the network economy, network, network organization is quite new for the Russian market.
A network organization is an intermediate form between the market and hierarchy. Intercompany cooperation helps reduce transaction costs associated with obtaining information and exercising control.
Marketing classic F. Kotler speaks of a network organization as a coalition of interdependent specialized economic units with their own goals (independent firms or autonomous organizations), which operate without hierarchical control, but they are all involved in a system with common goals through numerous horizontal connections and mutual dependence and exchange.
A network of retail stores is characterized by the characteristics given in Table. 14.2. Network development
Table 14.2
Systematization of the main features of the trading network
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General characteristics of the network |
Specific features identified by various scientists |
|
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1 Status Report on European Telework: Telework 1997 // European Commission Report, 1997.
This form of trade management is carried out within a partnership at the horizontal level.
All partners in the retail system are bound by legal (contractual) obligations, where, according to their agreements, issues of profit distribution, responsibility, and sharing of resources are spelled out. The partner is interested in finding and attracting clients in his area, since he receives a percentage of the profit for this, but in addition to this, he also receives a stable income from participation in the partnership.
The development of a network form of trade management is carried out within the framework of partnership at the horizontal level.
Net retail stores represents organizational form intra-industry cooperation on a regular basis to achieve commercial goals. This form of network cooperation allows us to maintain incentives for development, combining intensive cooperation in those areas where it leads to joint benefits.
The specificity of retail chain trade lies in the integration of small enterprises specialized in a certain range of related and complementary goods and localized geographically. A multilateral agreement is concluded between the participants of a small cluster (group), which involves the creation of a legal entity or operates as part of the interaction of participants (the distribution of revenue is prescribed according to the contribution of each of them). The cluster pools the resources of its participants and controls the quality of customer service. A centralized supply, inventory and sales management system is being created to ensure that the needs of traditional customers and the market as a whole are met.
Therefore, uniting into such business clusters is the only way to preserve small firms in the conditions of globalization and increasing competition. Each participant receives benefits and the opportunity to operate sustainably and effectively in market conditions.
The pressure from foreign companies requires domestic retailers to use new trading methods and effective technologies.
The network form of cooperation in domestic retailing allows:
- increase adaptive flexibility to environmental factors;
- expand the range of services provided and improve their quality;
- increase material, financial and human resources by combining them;
- implement strategically important business projects that were inaccessible to individual participants;
- strengthen competitive positions relative to larger market entities.
Centralization of commercial activities allows chain trade to avoid many of the disadvantages that are typical for a separate store. It’s not “affordable” for an isolated store to create an attractive assortment at competitive prices.
The trading network is characterized modern forms service.
The main feature of the service form is the store format. Store format is a set of store characteristics that determines the assortment, size of retail space, forms and methods of customer service.
It should be noted that the basis of network trade is the franchising system.
Franchising is a form of long-term commercial cooperation between several companies, in which the franchisor company transfers the rights to sell its goods and services to another company - the franchisee - which simultaneously receives the rights to use the trademark, marketing technologies, service standards, corporate design and business reputation of the franchisor . The basis for interaction within franchising is the franchise.
A franchise is a set of exclusive rights, consisting of the right to operate under the trade name and (or) commercial designation of the franchisor, the right to trademarks, trademarks, etc., the right to use commercial information belonging to the franchisor.
One of the first examples of business franchising in Russia was the opening of the first fast food restaurant of the global franchising system McDonald's. Today one can observe the active development of this franchisee, the opening of new eateries throughout the country.
One more company involved in business franchising should be highlighted. This is the Russian-Venezuelan enterprise Rosinter. He manages such restaurants as Combis, Rostix, Patio Pizza, Artistico, Saita Fe, and American Bar & Grill.
A franchise network is a form of network cooperation between the franchisor (a large well-known trading company with an existing operational chain) and franchisees - little-known companies. The technology for creating a network involves the transfer by the first party on a commercial basis to the second party of a license for production and management, marketing technologies, know-how and trademarks. The franchisor provides services to partners in the form of the supply of unique equipment, in the organization of a distribution network, advertising, personnel training, standardization of the quality of products and services, receiving for this constant compensation specified in the contract, and payment for the corresponding goods and services.
The franchisee company is an independent business entity that, under the franchise agreement, is obliged to comply with product quality standards, production technology and service operations. At the same time, the franchisor reserves the right to control over the obligations assumed within the franchise. The franchising system brings benefits to all parties to the agreement. For franchisees, working under the brand of a well-known retail chain is a guarantee of business survival and a strong motivation for its development. According to statistics, among independent trading companies only 15% survive in the market, while among franchised small businesses, every seventh out of eight successfully develops.
The franchisor as the initiator of the creation of a corporate network in highest degree interested in increasing sales volumes without requiring large capital investments. The franchisor company must have proven, replicable trading technologies and management methods trading business with the inclusion of high quality management. The amount of revenue must be sufficient to return the invested capital and strengthen corporate influence in the sales segments. For the franchisor, when developing network trade, there is a risk of possible competition from new franchisees who have been trained and initiated into the secrets of corporate know-how.
In Russia, the franchising system has all the prerequisites for rapid development. Any company that is going to act as a franchisor must remember that when creating a distribution network it is important to take into account many factors.
Initially, the franchisor company must have popular brand. But in our market, not all companies have a really well-promoted brand. It is the brand that is an intangible asset, the rental of which brings income to its owner in the form of “brand equity.”
When creating a franchising system, the franchisor performs the following functions:
- market research and selection of the location of a future retail outlet in various regions of the country, taking into account the prospects for the development of network trade for the next five years;
- development and planning of retail premises taking into account the basic standards of the franchisor company using corporate technologies, working drawings for the repair and redevelopment of retail space with the flexible use of leasing elements;
- providing franchisee companies with business advice in the field of business planning, developing sections of a standard franchise contract;
- development of instructions for the algorithm of actions and execution of operations, as well as trading standards for the franchisee company. Forms of reporting, directions of policy for hiring performers, and their motivation are proposed;
- Creation comprehensive program training and retraining of managers, as well as training of franchisee company performers in order to successfully replicate technologies and know-how of corporate business.
For successful work of the franchise network, each franchisee is assigned a central office manager, who in turn advises, controls and provides operational assistance. At the same time, marketing plans for trade development and recommendations for advertising, display of samples in the sales area and effective promotions for trade promotion are proposed.
As a result of studying Chapter 6, the student should
- theoretical foundations for the development of marketing in retail trade;
- theory and practice of retail system management;
- structure, mechanism and content of franchising technology.
- conduct modern classification retail spheres in the context of market globalization;
- analyze the real state of marketing in various segments of retail chain trade;
- develop a concept for interaction between retailing, partners and consumers in the marketing system.
The specifics of the organizational structure of the retail chain management system.
Network trade and retail technologies. Franchising
Network forms of trade organization based on modern communications and information technology, allowing for the rapid incorporation of knowledge and its use in the most profitable market segments, are beginning to displace traditional forms of economic relations in society. Already now, network forms of organizing retail trade are characteristic of almost all levels of economic systems, and their influence is increasing. However, the emerging system of network relations between economic entities is not yet in to the fullest takes into account the interests and expectations of society and the state. It is poorly focused on innovative development real sector of the economy and does not ensure the effective implementation of the social interests of the population. Its goals are largely aimed at extracting maximum benefits for business entities.
Network forms of trade organization (currently called retailing) are a product of the information age.
They are characterized by simultaneous transformation of the economy, labor, employment, corporate culture, politics and state institutions. The network society is largely based on a new, virtual economy in which innovative knowledge and information become key factors in quality, productivity and competitiveness. They are the most important components that shape the quality of human resources, their ability to use modern technologies and manage the latest information and economic systems.
Here are some definitions of retail trade.
Retail trade is social process aimed at meeting people's needs through the free exchange of goods and services of value to the buyer.
Retailing is any business that focuses its marketing efforts on satisfying the end consumer through a distribution medium such as the organization of sales of goods and services.
Retail trade is the business activity associated with the sale of goods and services to final consumers for personal, household and family use. The final part of the sales channel.
Term retailing - comes from an old French word retailer(hence the pronunciation in Russian "retailer"), meaning "part of something", "cut something into pieces." In other words, the retailer performs the functions of separating large quantity of the goods he trades in small portions for the purpose of sale to individual consumers.
The concept of “retail trade” is more capacious than the concept of “sale of material products”, since it is also accompanied by financing services, pre-sale and post-sale, information, delivery, support, etc.
Retail functions:
- Due to the large number of retail trade enterprises, the needs of the final buyer are satisfied at the place of his residence or work. At the same time, large volumes of supplies from the supplier are divided into small portions of goods that correspond to the desires and needs of the end buyer;
- through retail trade, the manufacturer receives information about the demand for the product, being the most sensitive indicator of regulation of production volumes;
- through retail trade, new markets are developed and new products are promoted;
- Retail trade performs advertising functions for the goods of the manufacturer and seller.
Retail (retail) - the totality of all retail trade enterprises in a specific market in a specific industry, selling goods to the end consumer through a network of their own stores (retail).
Retailer is a specific retail trading network of an enterprise under a single brand, as well as a trading unit in the network.
Retailing is the process of selling goods through the distribution network of a single brand of one enterprise to the end consumer [ibid.].
Thus, retail networks are created in the interests of both sellers and, above all, in the interests of manufacturers seeking to occupy their share of the sales market and ensure guaranteed sales of their products. The main criterion for efficiency is the volume of products sold through a particular retail chain. Important role Two additional criteria play a role: market share and brand recognition. They provide and most directly influence sales volumes.
Network retailers can be classified according to various criteria: price category, specialization, scale and scope of activity, origin, format, etc.
Depending on the price category, food retail chains can be divided into premium class, middle class, mass markets and the lower segment.
Based on their specialization, chain retailers are divided into department stores and professional stores.
Based on the scale of activity, regional (local), national (federal) and international retail chains are distinguished.
The main difference between federal retail chains and regional ones is the planning of all-Russian expansion in federal districts countries. The federal network assumes large sales volumes, sufficient quantity stores, presence in several cities of Russia, as well as a certain level of work standards.
Depending on their origin, retail chains can be foreign or domestic.
As a rule, for segmentation purposes, the classification of retail networks is most often used based on such criteria as format. The format is an integral characteristic of retail outlets, combining various signs: sales area, location, assortment, price, services offered, physical attributes of the store, internal atmosphere of the store, after-sales service, etc.
When creating a retail network, you should correctly combine various forms of trade, assigning each its own place depending on its specifics. All goods are ultimately sold through retail (or online stores with delivery to the client), which is the basis of trade. The retail network should be considered as a single channel of product distribution with all its attributes - a certain type of product, its advertising support and channel participants promoting the product to the end consumer market.
At the core network marketing- a franchising system that has almost two hundred years of history. Its appearance dates back to the beginning of the 19th century. Initially, franchising was carried out under the so-called linked house system used by British brewers. Companies have been operating under the franchising system for many years. Singer (1860), Coca-Cola (1886), General Motors (1911), Spar (9Ъ2).
Network trade marketing management is a holistic system of management decisions on the company’s market participation through a separate network of independent traders under the sign of a single brand. Network marketing management is shown schematically in Fig. 6.1. The merger of stores is carried out in order to create maximum convenience for consumers when purchasing everything they need in one place.
Discounters,
supermarkets
Integration Strategies
Communication policy
Branded trade: boutiques
Trading
technologies
Pricing policy ~F-
Senior management of the parent network marketing company
marketing
Distribution centers
Market Penetration Strategies
Commodity
policy
Point of sale marketing team: regulation market positions network trade
Rice. 6.1 . Network trade marketing management scheme
Managing network marketing from a single center allows you to increase revenue as a result of reducing the total costs of marketing communications, optimizing traffic routes and economical use of mobile transport, organizing PR campaigns for successful positioning and strengthening your reputation. Uniform standards of prices and quality service create a circle regular customers and attract new ones. As a result, the network grows and develops. The main thing in a network marketing management system is the consistency of the goals of the main business partners, understanding of mutual interests and the desire to strengthen competitive positions.
The concept of network marketing is aimed at increasing the effectiveness of commercial activities of retail participants using the principles of market participation, advanced forms and methods of logistics in order to maximum meet the needs of society.
The goal of network trade marketing is to maximize customer satisfaction and achieve strong positions in sales markets and, as a result, coordinated work corporate chain of stores.
The concept of network trade marketing is aimed at attracting buyers with different incomes through flexible pricing policy, convenience of territorial location, effective communications, corporate service standards.
The main risks of the network trading format are expansion when seizing profitable territory to open new retail outlets, negligence of trading technologies, erosion of target audiences of buyers as a result of the desire to simultaneously satisfy the needs of the middle class and low-income buyers. As part of network trade marketing, all market participants have obvious advantages.
The target task of network marketing management is focused on distribution strategies, successful promotion and positioning of goods and services. The solution to this problem largely depends on the solvency of the population, the competitiveness of goods and services, the breadth and attractiveness of the assortment, the affordable price threshold and the competence of the marketing team, which is responsible for the quality and service of customer service.
IN lately Franchising is of increasing interest among manufacturers and trading companies as a way to create a stable and flexible network of retail stores. Particularly attractive Russian companies the opportunity to open new stores as part of franchising without diverting your own funds. The first results of franchising projects in the retail market indicate that the most successful companies have gone part of the way in this direction, while the attempts of many others have not yet been crowned with success.
Network marketing is based on the franchising system, which has a history of almost two centuries. Its appearance dates back to the beginning of the 19th century. Initially, franchising was carried out according to the so-called si-
a system of linked houses used by British brewers. Companies have been operating under the franchising system for many years. Singer, Coca-Cola, General Motors, Spar. IN modern conditions A franchise agreement is an independent object of legal regulation in more than 80 countries around the world.
The word “franchising” is translated from English as a benefit, a privilege granted by a company to any person to sell its product. Franchising is a form of long-term commercial cooperation between firms, in which the franchisor transfers the rights to sell its goods and services to the franchisee, who simultaneously receives the rights to use the trademark, marketing technologies, service standards, corporate design and business reputation of the franchisor.
In general, a favorable situation has developed for the development of franchising in the country, conducive to the improvement of civilized forms of trade, as well as a clear focus on customer needs.
Franchising is one of the forms of network trade and business entry into the international market.
The general principles of organizing enterprises within a network are relatively simple. Two legally independent partners enter into a contract containing a certain number of mutual obligations.
A franchisor (or any legal entity using a similar close connection scheme) is, as a rule, an entrepreneur who has successfully tested the effect of a certain formula for organizing production or trade and concluded that success can be reproduced in the future.
The franchisor brings to the business its business concept, know-how and experience, organizational structure, provides regular assistance, and can also supply exclusive goods or services. The franchisor can be a manufacturer, developer, wholesaler, owner of a company centralized purchasing goods, importer, inventor, owner of unique technology. He offers to sell his franchisee (or partner) the right to train, use his trademark(s), use his technology, and distribute his products. This right may (or may not) be associated with full or partial exclusivity. In exchange, the franchisor requires a monetary reward, the size and shape of which may change when moving from one network to another, depend on compliance with certain rules, and on the method of protecting the brand image. All this must be enshrined in the agreement.
The essence of franchising is that a large parent company (franchisor) grants a small enterprise (franchisee) the right to conduct business activities for a certain period of time and in a certain place using its trademark, production technologies, and know-how in a form determined by the terms of the contract.
The purpose of franchising is for large firms to carry out expansion while developing new markets with minimal risks.
Franchising is most widespread in retail and wholesale trade, the service sector, and beverage production. Restaurants and snack bars, construction companies, car service and delivery services, grocery stores, gas stations, and consulting firms providing auditing, legal and other services are being created.
Franchising can be used in almost all types of business - from small eateries to mini-bakeries, from the production of goods to service enterprises, from mobile trade from vans to a huge network of stationary branded supermarkets.
Not every company has all the necessary prerequisites for successful development based on franchising. There are already examples of this in the domestic practice of creating retail distribution networks.
The main criteria that allow us to give a preliminary assessment of the success of a franchise project are the following:
- 1. The network company must have a brand in one form or another (trademark, trade names, trade symbols, logo, etc.). A brand is an intangible asset that this company valued most of all.
- 2. The business of a network company must have significant distinctive features, image, method, system that allow consumers to unmistakably distinguish it from analogues and give it uniqueness and value in their eyes. “Newly created” franchisors often forget about this.
- 3. Another condition for successful business development in the form of franchising is a well-calculated economic model of the franchisee enterprise. The amount of his income must be sufficient to return the initial and current costs of both the network company and the franchisee, ensure acceptable earnings for the latter, compensating for the work of its employees, and also cover all types of payments received from the franchisee to the parent company. Having a brand and a well-honed business system is the basis of franchising.
- 4. The last of the considered criteria for readiness to implement franchising is the testing of replicated technologies and business methods. Their success must be demonstrated in practice.
In the field of trade, two variants of franchising networks that differ in organizational principles are used: product franchising and business format franchising. The division between them is not always obvious, but some characteristic features each of them.
In accordance with the terms of product franchising, the franchisee becomes the only seller of this product in the assigned territory and the exclusive representative of the franchisor’s trademark. The main condition of this transaction is that the franchisee undertakes to purchase products only from his franchisor and completely refuses to sell similar products from other companies that may compete. This type of franchising is actively used by manufacturers and wholesale companies. Among Russian retail chains one can name the following chains: Monarch, Econika Obuv, Red Cube, Dlya Dusha i Souli. As a rule, there are no other strict conditions regulating the organization of business, except for the requirement of a network company to work only with the range of its products. Franchisees receive general recommendations on store design, outdoor advertising and product display. Product franchising is characterized by a relatively low degree of regulation of responsibilities due to the uniformity of activities.
More costly and complex in terms of organizing a network structure, the time required to launch the system, as well as monetary investments and human resources, is business format franchising, which is used for the development of food retail chains. The Pyaterochka, Kopeika, and Seventh Continent networks are developing according to this type. Distinctive feature This type of franchising relationship is the standardization and regulation of all operations, starting with the search for a place for a store and ending with descriptions of work processes, such as opening a retail outlet, actions of personnel in the event of problems (broken glass, power outage, etc.), the process of moving goods from the warehouse to the sales area, etc.
Note that the division of retail chain franchising into two types is often conditional. In practice, product franchising systems have powerful business formats that ensure reproducibility not only of the product range, but also of the basic rules of the organization trading floor, zoning, placement and placement of equipment, automation, distribution patterns, warehousing, staff motivation and the formation of a recognizable appearance of the store.
To replicate technologies and the way a network company does business, effective training programs are needed. Most franchise networks have their own training centers, which provide various courses and programs. Training for a sales consultant is usually carried out over three to five days and includes display rules, the basics of customer service, and mastery of the product accounting program. Training is most often provided free of charge, since its cost is included in the franchise package.
In a number of cases, network forms of trade organization are superior to traditional forms in terms of potential and management efficiency trading systems. The latter is based on a formal institution, while a network organization is based on personality. Previous institutions were based on a formal hierarchy, staffing, stable role functions, and stereotyping of procedures. Network forms of organizing trading activities are based on conceptual unity, autonomy of parts, maximum and personal sharing of risks, and expressed creativity.
Retail trade network structures perform the following logistics functions:
1. Provide economies of scale, allowing all retailers in the chain to carry more low level unit costs.
Successful retail technologies developed for individual retail enterprises are replicated, thus leading to an increase in the efficiency of the entire network as a whole.
3. Thanks to the creation of distribution center systems, they reduce the length of the supply chain from the manufacturer to the end consumer and thus make it more efficient.
4. They have the ability to build more advanced logistics systems than individual retail outlets.
5. Constantly struggling to reduce the level of retail prices, and, accordingly, to reduce the level of purchase prices, retail chains initiate the process of reducing the overall level of logistics costs in the supply chain.
An example of the implementation of one of the most important logistics functions of retail trade is given in the sidebar.
THE SHOULDER BECOMES SHORTER
The problem is that retailers today are trying to remove distributors and wholesalers from the chain from production to store shelves. Today, many manufacturers work with retailers through intermediaries who take care of the delivery of products. Traders cutting out intermediaries means that manufacturers will have to solve logistics problems differently.
Almost all chain retailers say that the time of intermediaries is becoming a thing of the past. “We are very actively working to reduce the “leverage” of food delivery,” says Dmitry Voznesensky, commercial director of the Victoria group of companies (chains of stores and supermarkets “Deshevo”, “Kvartal”, “Victoria”). “Today we have a fifty-fifty ratio of direct supplies from manufacturers and supplies through distributors, but we are constantly working to change this proportion in favor of direct supplies, since for us this is one of the opportunities to reduce the cost of the product.” In the Kopeyka supermarket chain, 80% of goods are already purchased directly from manufacturers and, according to Andrey Nikolaev, director of the chain’s marketing department,
Sky, the company strives to bring this figure to 100%: “We do not want and will not pay the intermediary 5-10% of the cost of the goods just for rewriting invoices and creating an extra burden on our buyer’s wallet.”
In this regard, the problem of logistics arises, the delivery of goods to the store. Today's logistics relationships between manufacturers and traders are far from ideal. The first ones complain about the poor work of receptionists in stores, the period of passage of goods from the store warehouse to the shelf is too long. The latter believe that manufacturers in general are not ready to establish effective logistics, and for the same reason as production as a whole: they live too richly and do not know how to count money. Oleg Vysotsky from Pyaterochka says: “We are faced with the fact that 90% of our suppliers simply do not know the cost of their own logistics. The decision to develop logistics independently or outsource often depends on the manufacturer’s inclination towards one or another type of activity, but not knowing the cost of logistics is a crime against one’s own business.”
Today, manufacturers spend a lot of money on creating their own transport divisions and logistics centers. According to Nikolai Agurbash, the Mortadel company has its own vehicles and delivery service. Evgeny Sidorov from the Moskovsky agricultural complex said that the company was forced to create a large transport workshop, purchase imported vehicles with a climate control system necessary for fresh greens, organize round-the-clock operation of this department, etc. And this, according to Mr. Sidorov , “big costs and big headaches.”
According to Dmitry Voznesensky from Victoria, developing your own logistics is not the right decision for manufacturers: it diverts human and financial resources, it is difficult to achieve effective use of transport without special knowledge, so the bet should still be placed on outsourcing. Although retail operators admit that the logistics services market lags behind the development of retail, and quite significantly.
However, according to Mr. Voznesensky, the situation will change: “The number of logistics companies will increase - I know examples when distribution companies change the direction of their activities, turning into logistics companies, which is very important in light of the actions of retail operators to exclude distributors from the chain " For many wholesalers, this will be practically the only chance to stay on the market.
Source: Expert magazine. 03/13/2006. No. 10 (504).
As we have already shown in the introduction, logistics in a broad sense is understood by us not only as a chain management methodology
supplies, but also as a tool for increasing business efficiency by improving the supply chain management process and combating costs.
Thus, the formation and development of network structures in retail trade is the implementation of logistics methodology - retail chains optimize the supply chain and reduce the overall level of logistics costs along the entire chain.
In the West, and in particular in the USA, large retail corporations have long absorbed individual retail outlets, and even small retail chains of 20-30 stores by Western standards.
Recently, the networking of retail trade has been taking place in the Russian Federation. Although initially the growth rate of the market share of chains did not allow us to hope that they would quickly capture the retail trade market, the events of recent years show that the growth of the share of chain structures is far from linear. This is due to the fact that the construction of network structures in the Russian Federation occurs not in an evolutionary way, as in the West, but in a revolutionary way. Once retailers realize the need to create retail networks (otherwise they will not survive), they will use everything possible ways integration of their enterprises in order to create retail networks. In Russia, new types of retail chains are emerging, and will not appear gradually, as happened in the West, but almost simultaneously.
Network retail trade in the Russian Federation has passed the following main stages:
1. The emergence of non-state retail trade after the beginning of the development of market relations in the USSR. At this stage of development, the first commercial stores appeared - “lumps”. Since the main initial capital was formed during this period in the field of import-export operations, financial sector and in the field of wholesale trade, retail trade was a collection of disparate outlets, each of the outlets owned by different owners. A number of experts consider 1992 a milestone, after which the real development of modern retail trade in the Russian Federation began.
2. The emergence of store conglomerates. After several years of successful operation of modern retail enterprises, groups of enterprises belonging to the same owner began to appear on the market. On the one hand, these quasi-networks were formed by the acquisition by owners of successful
Chapter 3, Retail Networks
of those stores that were not very successful (example: a group of stores operating under the Cosmos-Market brand in St. Petersburg in 1995-1997, or a group of Ajax retail enterprises that existed during the same period of time ). On the other hand, some large business structures made a decision (as we now understand, a very far-sighted one) to enter the retail market. An example is Alfa Bank, which invested in the creation of the Perekrestok company (translation of the French word carrefour - copywriters of Russian advertising agencies at all times were not so much creative as inventive). These conglomerates of stores (we call them that because they were not chains in the modern interpretation of this term) were of various formats - these groups of retail enterprises, numbering no more than 8-10 retail outlets, included stores with an area of 100 to 2000 square meters. m. Also, these retail entities were characterized by disorganized purchasing and management (often each of the trading enterprises that were part of the conglomerate carried out these operations without completely coordinating their actions with the management of the “brothers” in the association), different standards of customer service, etc. 3. The emergence of the first chains of stores created using Western technologies. The initiators of this process were specialists who understood the basic principles of the functioning of networks - standardization, unified management and centralized distribution of goods. Some impetus to the development of effective network trading was given by the Ramenka company, the operator of the Ramstore supermarket chain - the first Western retail company to deploy a full-scale network in Russia1 in St. Petersburg on the street. Savushkina in 1991. Unfortunately, the company continued further expansion only in 2005, opening a second store in one of the shopping centers in St. Petersburg. How can we not remember the phrase from the advertising video: “We are Finns, we are in no hurry...”.
1 Few people know that the very first Western retailer on the market of post-Soviet Russia was the Finnish company Tradeka, which opened the SuperSiva store (one of the largest retail chains in Finland). - Note. auto
Logistics in retail trade: how to build an effective network
4. The first leaders of network trade were the Moscow trio - Ramstore, Seventh Continent and Perekrestok. In St. Petersburg, the first network was the large-format Mega-Mart network, which was developed by the large wholesaler Uniland. (Currently, the company’s focus has shifted towards the development of the Dixie discount chain. The number of Megamart chain stores has not changed since 2000.) Naturally, on initial stage development, each of these networks lacked some features (presence of a distribution center, relatively clear “format” of retail outlets, etc.) of modern retail networks.
5. Creation of fully functional networks on Russian market. This process took place in two ways - “from top to bottom” (the accumulation of significant financial resources by a group of investors and the implementation of a large-scale investment program in the retail trade market, the most shining example- “Pyaterochka”) and evolutionary (by expanding the activities of retail operators who began their operations with a local presence in one of the regions and gradually increased their presence in the market, examples are “Lenta”, “Seventh Continent”, “Perekrestok”). Of course, only with the beginning of this process did Russian retail trade enter into modern stage development.
