Chapter 1
Introduction
1.1 Introduction
The importance of retailing of consumer goods is increasing in recent years, as volume of import and production in being increased. Manufactured and imported consumer goods must be marketed to the consumers through the retail shops and a substantial part of it is marketed in Rajshahi City
It is well known that the data relating to the characteristics and behavior of retail shops in Rajshahi City are very little.
The basic problem of undertaking a sample study of retail shops in Rajshihi City is that there is no up-to-date list of permanent retail shops that could help us to form a sound frame of sample. In this circumstance, we decided to make area sampling on the basis of map of Rajshahi City
We make a list of points on which information on retail shops was considered important and within our ability to obtain through the interview of the owners of these shops. The retail shops owners’ cooperation was considerably encouraging to carry out the entire study.
1.2 Importance of the study
Importance of this study is considerably significant to strengthen the shape of marketing knowledge that I have earned through intensive academic course of MBA and BBA program. As a student of marketing, I have been send to the internship program over evaluation of retailing in Rajshahi City
In the present business era, marketing is not only a business discipline, but also becomes a social discipline in developing society and it’s standard living.
As a partial requirement for MBA degree, it is very much needed to perform an internship program. Besides this activity will help me to use my academic knowledge towards research oriented in real business field.
In addition to the study will help to assess real structure, characteristics and behavior of retailers in Rajshahi City
1.3 Objectives of the study
The study was intended to attempt
a) To know the characteristics and behavior of retail shops in Rajshshi City
b) To analyze the structure of retailing in Rajshshi City
c) An assessment of the problems faced by retailers in their day-to-day business at Rajshahi City
d) To give a few suggestions for the improvement of retailing in Rajshahi City
Chapter 2
Methodology of the study
2.1 Methodology:
The study has used area sampling in the research. The study has divided the City into 4 sample areas, as retail shops are distributed through out the Rajshahi City
2.2 Data collection procedure:
a) Primary source: For this research a structure questionnaire has been used for collecting data from retailers.
b) Secondary source: On the other hand, the secondary data has been collected from the following sources:
Ø Rajshahi City Corporation trade in-charge.
Ø Previous reports.
Ø Different books and journals.
c) Sample Area: The study has divided Rajshahi City
Table 1
(Showing the allocation of the sampled shops in different centers around the four sample random points)
Location of sample area Number of sampled shops
Ø University Area 10
Ø Shaheb Bazar Area 15
Ø New market Area 10
Ø Court Bazar Area 10
Total 45
Table 2
(Showing the distribution of different categories of shops of sample.)
Type of retail shop | No. Of sampled shops |
Food products Book Shop Pan cigarette Stationary Ready made garments Medicine Grocery Shows Industrial Goods Total | 5 5 7 7 5 4 5 4 3 45 |
The ultimate sample size was 45 and its area wise distribution is given table-1. The distribution of different categories of shops is given table –2. The study has used judgment method in each area fixing the total number of samples in an area. The number of sample was not less than 10 or more than 15 of different sample areas. This was done only because we did not know the total number of shops in the entire sample area.
It would be better if the study had known the total number of retail shops in Rajshahi City
Table- 3
Statistics of retail shops in 2003 at Rajshahi City
Name of the shops category | Number | License fees (Tk) |
Department store | 50 | 600 |
Grocery | 1500 | 100 |
Workshop | 120 | 400 |
Welding | 50 | 200 |
Medicine shop | 1000 | 100 |
Tailor’s | 400 | 100 |
Ready made garments | 200 | 100 |
Cloth & wears | 150 | 100 |
Hardware | 200 | 100 |
Rod cements& hardware | 100 | 500 |
Pan-cigarette | 400 | 100 |
Confectionary and food products | 50 | 300 |
Stationary | 300 | 150 |
Restaurant | 400 | 300 |
Residential hotel A/C Non A/c | 3 56 | 3000 1000 |
Chinese hotel | 8 | 450 |
Fast food shop | 12 | 350 |
Electronic shop | 40 | 500 |
Book shop | 70 | 100 |
Shoes shop | 150 | 100 |
Jewelers | 200 | 300 |
Fruit shops | 100 | 100 |
Meat (Beef) seller | 90 | 100 |
Fertilizer and pesticides | 30 | 300 |
Vegetable seller | 300 | 100 |
Stationary | 150 | 100 |
Buy-cycle seller | 50 | 150 |
Industrial goods | 100 | 150 |
Telephone and mobile | 40 | 300 |
Vehicles shop | 15 | 500 |
Others (Hatchery, Bamboo seller, Type writer, Coaching center, Photocopier etc) | 200 | 150 |
Total | 6534 | - |
Source: Trade in charge Rajshahi City Corporation.
2.3 Limitations
To draft a resourceful report it has no alternatives of more information. That is why the study always have tried heart and soul to collect more and reliable data regarding the study. In spite of my extreme effort to collect more data, some limitations may have in the study for several reasons such as—
i) Although I have studied two subjects i.e. Research methodology and Marketing research etc. I have lack of practical experience about research, which could help to develop more techniques in collection of data.
ii) To make a good report, it is needed more time. That’s why for lack of sufficient time, I could not collect more data. Although the Department have informed me about the internship program one year ago, it is not possible to provide more time than the other courses separately as it is also treated as a course.
iii) As sometime, the retailers are not interested to provide more and actual information, so my analysis and recommendations may not absolutely correct in real situation.
iv) I have to be made the sample size in small due to short of time and huge cost of data collection. All types of research techniques are not to be used.
2.4 Literature review and concepts
There is no study and research work that has done over evaluation of retailing in Rajshahi City. But there are few study has been done on retailing in 1965 and 1987 under the Bureau of Economic research and Bureau of Business Research in Dhaka University
i) Retailing of consumer goods in East Pakistan : This research study was done by a research team that include FAROUK, A. and SAFIULLAH, M. in collaboration with ALI, M:, BOQUER, A.A.M. , KHALED, A. and TALUKDER, R.B. The report on the retailing of consumer goods in East Pakistan is the first in the country to study some of the consequences of the rapid development of Industries in Pakistan during the first and second five year plans. The object if the study was to identify some of the marketing problems of those domestic manufacturers in particular.
Some of the finding of this research may have policy implications. For instance, it appears that many of the elements of inefficiency in our evaluation of retailing are beyond the control of the numerous small retailers themselves.
ii) Evaluation of retailing in Dhaka City Dhaka University Bangladesh
Therefore, there is no study notably especially on evaluation Retailing in Rajshahi City now at yet so far as I know from various sources. That’s why I was interested and my honorable supervisor also encouraged me to carry out the study on Evaluation of retailing in Rajshahi city.
Chapter- 3
Some characteristics of the Retailers
3.1 Ownership of retail shop of Rajshahi City
Ownership of retail shop of Rajshahi City is mostly as sole proprietorship (About 88%). About 11% of the shops are owned as partnership like private limited company, cooperative etc. are negligible (Appendix -A.1)
3.2 Age of the retail shops:
Appendix A-2 shows that a large proportion of the retail shops i.e. 9 about 50%) are below 10 years of age. Our survey shows (Appendix A02) that 70% of shops are now aged 15 years. This shows that experienced retailers are increasing in the City.
3.3 Working hours of the retail shops:
Retail shops in the Rajshahi City
3.4 Variation of sale during the month:
Appendix A-4 shows the percentage of retailers telling the period of more intense sale during a month. It shows that about 84% of the shops sale more during the first half of the month and only about 5% of the shops does not notice any variation of sale during a month. As Rajshahi is an educational City which has a large number of student who are obtained money once in a month. This is the main reason that most of the sale would be completed during the first half of the month.
3.5 Other Business of the retailers
What proportion of the retailers has business other than the retail shops under survey? On this question the answer indicate (Appendix A 5) that about 82% of retailers do not have any other business, about 11% have shops in the same line elsewhere. Only a few others have different lines of business including manufacturing and whole selling etc.
3.6 Salaried staff in a retail store:
It will appear from (Appendix A.6) that only about 20% of the retail stores are completely managed by the owner on his family members. The rest of the shops have salaried staff and in most cases the members of such employees varies between 1 and 3 persons about 29% of the shops have only one salaried employee, about 26% have 2 salaried employee and about 11% have 3 salaried employee. Only bigger shops employee more than these members. Table shows that about 3% of the shops keep employee over 5 in member.
3.7 Sales volume of retail shops and shops rent:
(Appendix A.8) shows the distribution of retailers according to their sales volume and their shop rent. Sales volume on a particular day depends upon the nature and size of the shop, but in Rajshahi City the ranges within which over 70% of the shops have their daily sales volume is from Tk. 1000 to 10000.
The average rent is around Tk. 1000 per month for a retail shop according to (Appendix – A.8). It shows that retailing as yet is a small business from the point of view of size of the shop rented, capital invested and the members of persons engaged in the shop.
3.8 Male and female customers in the retail shops:
Women generally did not come to purchase goods in the shops in the Bangladesh Muslim society, even 50 years back. There has been a substantial change in this respect in recent years. Compared to the past, greater numbers of women is now seeking employment, getting higher education and are even undertaking business activities alongside men. Further men and women are likely to have separate buying behavior. Appendix-A.7 shows on area wise distribution (on the basis of the report of retailers) of the percentage of customers that are male or female. Women are coming in large number to buy their requirements from retail stores, but the proportion of women as customers depend very much on the nature of the goods sold. Foe example, in a pan-cigarette shop or industrial shop, most of the customers is men and not women. On the other hand in Jeweler shops or readymade garment shops, majority of the customers are seemed to be women rather than men. The findings of the present survey are important for several reasons. First the retailers now known the pattern of their customers and they can train their sales persons to behave according to the needs of their customers. Now, retailers must be familiar with buying characteristics of women and be prepared to satisfy the needs of women buyers particularly in retailing of those commodities for which the female members go to the shop and make purchase decision.
3.9 Financing of retailers:
Retailer’s investment is usually divided into fixed and working capital. For a retail shop, fixed capital is relatively small and is generally provided by owner himself. On the other hand, working capital is supplied by various sources such as bank, suppliers etc. There are many retailers like pan-cigarette, medicine where a considerable part of working capital is provided by owners themselves.
3.10 Sources of supply of goods for the retailer shops:
Retailers are engaged in final stage of marketing of consumer goods and broadly speaking, manufacturers stand in the first stage and whole sellers in the middle retailers purchase goods from the whole sellers who in turn, purchase it from the manufacturers. But sometimes this chain is broken when the retailers buy directly from the manufacturers or from their sole agent.
Producers constitute an important source of supply for the readymade garments, medicine, shoes, industrial goods and stationary. Whole sellers are more important for food products, pan-cigarettes shops, stationary and grocery goods. Importers are an important source of supply only for industrial goods, electronics.
3.11 Importance of imported goods in the retail shops:
In the shops in which most of the supplies are of local origin are the shoes, grocery, pan-cigarettes and food products. The shops that depend mostly on imported goods are the industrial goods, electronics, stationary and readymade garments.
3.12 Size of the working capital:
We requested the respondents to give us an approximate size of their working capital including credit. On the whole the average size of capital in Rajshahi City
Chapter 4
Policies and Problems of the Retailers
4.1 Methods of attracting customers by retailers:
Owners of retail shops were asked, “Retailers have different policies to attract customers in their shop. Do you have any particular sales promotion method for your shop? (Please give details and states as many policies as you can). In response to this question the various answers obtained for each category of shops is presented in table at Appendix A-14. Retailing is as yet largely a local affair in the since that the retail customer for a particular shop are attracted from the area not very far from the shop, and therefore retailers do not go for costly advertisement through the media such as radio, television or newspaper etc. retailer’s techniques of attracting customers depend to a large extent on the nature of the product they deal in. most of the soaps however, have mentioned two major techniques, viz.- (a) good behavior with customer, entertainment and trying to understand the needs of the specific consumer. For example, about half of the shops dealing in industrial goods, electronics goods, pan-cigarettes and medicine use this particular method, (b) decoration, advertisement and offering a large variety of attractive another way of attracting customers, which is more popular in book shops, shoes shops and pan-cigarette shops. People in the grocery shops and stores selling food products also use the same techniques in the majority of cases. Good packaging and presents to customers are used by some as a policy to attract customers.
Table - IV
(Showing the techniques adopted by retailers to attract customers)
Percentage of retailers
Techniques followed by the retailer’s responding that they do it
1. Good behavior, Entertainment and
trying to understand to consumer 36.28
2. Packaging in a paper bag and other
presentation to the customers 6.75
3. Provide credit, allow discount and
assure good quality 8.36
4. Decoration, advertisement and
keeping variety 30.86
5. Influencing reference group 0.25
6. Other, quick delivery, honesty
specialist service etc. 7.54
7. No partial technique is adopted 9.96
Total 100
4.2 Price policy in retailing:
Price policy followed by retailers in Rajshahi City can be classified into three major groups in order of importance.
a) A mark-up on purchase price.
b) Following the price suggested by producers.
c) Fixing the price according to convenience.
A mark-up on the purchase price is, however, the more widely followed price policy. On the whole about 90 percent of retailers seem to follow the practice of mark-up upon some variety of goods sold by them.
Price suggested by the producer is also quite common. But suggested price is followed only some popular brand manufacturers.
In big City like Rajshahi City
4.3 Major risks in the retail business in Rajshahi city:
Every business has various kinds of risks and if the system is able to reduce these risks, marketing cost becomes less and its efficiency increase. It is therefore, necessary for us to know which is the more important risk that bothers our retailer. The respondents were encouraged to mention, as many risks are they wanted to tell. Important risk reported by the retailers are discussed as follows:
i) Lack of security, risk of theft etc.
ii) Loss in transportation and natural hazards,
iii) Risk of price fluctuation,
iv) Bad debt,
v) Forcible collection of subscription by local mastens,
vi) Other minor risks.
4.4 Education of retailers:
Most of the retailers in Rajshahi city are literate. On the average, about half of the owners of the retail shops are with S. S. C. level of education. In some kinds of retail shops a large proportion of the owners can only read and write.
These are pan-cigarette shops, grocery shops and food products shop. On the other hand, there are certain kinds of retail shops where very population of the owners are with education above S.S.C level for example, medicine shops, and electrics goods shop owners.
4.5 Opinion on the present condition of the retail business:
“Is the present business condition good or bad compared to that a few years back according to retailers like you?” About this, most of the respondents said that the condition of retail business is not good to the last 2/3 years. The major reason for this are low purchasing power, high competition in their line of business and some personal problems of retailers, like shortage of capital, inexperience, lack of determination etc.
4.6 Problems of evaluation of retailing in Rajshahi City:
We were asked retailers about their problems from your experience. Some general problems faced by a retailer are stated below:
i) Lack of capital and credit facility:
This is the most important reply of the respondent. This is the great problem to especially small retailers.
ii) Irregular supply of goods:
This is second important reply mentioned by retailers. Supplies of goods are not regular to the retail shop.
iii) Price fluctuation:
Some retailer stated price fluctuation hampers their retail business. Within a year price of goods take several changes in the retail shop and it hamper the smooth retail operation.
iv) Lack of quality of the goods:
Some retailers also stated that quality of goods is not standard particularly domestic products. So, low qualities of goods undermine their business.
v) Lack of trained salesmen:
Some of the respondents mentioned that untrained salesman is a problem to them in sound retail business. It seems that increase of retail shops in the city there is a good demand of special training programs for salesman for short duration.
vi) Others problems:
A few retailers stated that they were bothered by the bargaining habit of the customers, problem of imitation of goods by take manufacturing firms, artificial crisis of goods and the preference of foreign brands by many consumers
Chapter 5
Cost Margin and Efficiency
5.1 The elements of cost:
Although marketing margin depends on the difference between purchase price and the ultimate sale price both of which fluctuate from time to time, there are elements of cost like transportation, rent, salary, storage, taxes and insurance et., which do not fluctuate so often.
The elements of cost discussed as below.
a) Transportation:
For bringing goods from the sources, the retailer has to incur certain expenses, which may very considering the distance of the source and the efficiency of the transport services available. The system, in which the manufacturers or their authorized agents supply the goods to the retail shops, minimizes the transport expenses of retails traders. But the retailers of Rajshahi city are in advantage.
b) Rent:
Rent and light charges comprise probably the most important variable and critical item in retail expenses. The variation in rent of store premises arises due to location factors. In addition to location factors rent for stores also varies from one area to another.
c) Salary:
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that with the general increase in standard of living, the costs of personnel’s engaged in retail stores are also increasing. For purposes of efficient and effective operation, it has also been found necessary that sufficient number of sales personnel are engaged in the store.
d) Taxes:
The taxes which are generally born by the retailers, including holding tax, trade license and income tax where the retailers, income in within the taxable limit. The holding tax is also termed as municipal tax because the municipal authority Levis this tax on a definite terms which may be yearly or half yearly basis. This holding tax is in certain cases in addition to the usual rent of the store premise. Where the stores premises are built the municipal authority. They also take the rent. The payment of trade license tax, which is also taken by municipal authority, is necessary for the retailers to obtain permission to carry on business. Those retailers whose income is within the taxable limits are to pay income tax accordingly. There are also to pay a tax, in addition to income tax, known as finance tax other than these taxes, the retailers may have to pay subscription to other agencies, which are not on definite terms. They are not included in tax assessment for the present purpose.
e) Storage:
Storage does not seem to be an important problem with the retailer’s thinks that in considering the quantity in which they buy, their storage space is more than sufficient. Even though only one-tenth of the total retailers have separate storage facilities outside the shop more than half of the retailers stated that their storage facility is inadequate.
5.2 Price spread and retailers margin:
In this question we did not seek separate data for every sale and purchase over a given period, rather we wanted the retailers to give us an idea about a typical commodity in this shop and the break-up of its price. The answer that was obtained from each retailer about a particular commodity in his shop was averaged for each kind of shop and the data is placed in Appendix-A.9. The table gives a good impression of the average price spread in retailing and the variation of price-spread between different kinds of retail shops. In appears that average, about 84% of the consumer’s price is now the purchase price of a commodity by a retailer. All other costs including the retailers margin therefore, constitute only about 16% in * areas perhaps the marketing margin would be more than this. The manufacturers do their own advertising and therefore, retailers do not have any cost on this item.
5.3 Retailing policies emphasized by the respondents:
There were many respondents replied that “no hard and fast rule is followed”. Intuition and experienced is used in operation of business. Many retailers stated that they stock in their shop any item that is considered as “hit” or “highly” in demand from the consumers. Some respondents stated that they followed the competitor’s price to fix their own prices. On the other hand few number of respondent stated that they followed the principle of adding a fixed mark-up on the purchase price.
Chapter 6
CONCLUSION
Importance of retailing in Bangladesh is increasing now-a-days. So, retailing practices and efficiencies of retail shops is important in developing countries like Bangladesh
RECOMMENDATIONS
We have asked retailers about some suggestion to improve the standard of retail marketing in Rajshahi city. They emphasized on the following issues:
1. Credit and other business facilities to solve their problems regarding capital. This is the great problem especially of small retailers.
2. Regular supply of goods will help them to built loyal customer groups through continuous supply and services.
3. The quality of goods now manufactured within the country should be improved to build and maintain image of retailers.
4. The producers should fix the sale price and resale price of the consumer goods. That will help to smooth retail operation.
5. Better application of law and order and providing more secure environment to the retailers will help in increasing the efficiency of retailing.
6. Improvement of transportation, communication and regularity of electric supply will ensure better customer service of retailing.
7. Reducing import of foreign goods and to establish more shopping complex and storage where the demand is great also would improve retailing efficiency in Rajshahi city.
8. Retailing of retailers and salesmen should be provided by the company for improvement of better retailing.