Chapter 1 Introduct|on

roducts roducLs are lLems such as food cloLhes or any oLher lLem where consumer ls aLLracLed
Lowards Lhe physlcal quallLles of Lhe lLem
Serv|ces Servlces lnclude resLauranLs lnsurance and repalrs or anyLhlng where someLhlng ls done
for a person or Lhelr properLy
Consumers eople who buy producLs and servlces
Supp|y cha|n lL llnks raw maLerlal producers manufacLurers wholesalers and LransporL flrms wlLh
Lhe reLaller and Lhe flnal consumer lL has dlfferenL sLages
SLage 1 8aw maLerlal ls produced
SLage 2 roducL ls manufacLured
SLage 3 Wholesalers sell Lhe producL ln large quanLlLles Lo reLallers
SLage 4 1ransporL flrms LransporL producLs from one place Lo anoLher
SLage 3 8eLallers sell producLs Lo consumers

keta||ers 8eLallers are aL Lhe end of Lhe supply chaln 1hey buy producLs ln large quanLlLles from
manufacLures or wholesalers and sell Lhose producLs Lo consumers 8eLallers sell boLh producLs and
servlces 8eLallers can sell Lhrough a physlcal sLore Lelevlslon lnLerneL and caLalogue
Lxample of producL reLaller Shoppers SLop
Lxample of servlce reLaller Mc uonalds

keta|||ng 8eLalllng ls Lhe seL of acLlvlLles LhaL reLallers do Lo markeL and provlde Lhe producLs and
servlces Lo consumers Consumers use Lhese producLs for Lhelr personal use or household use
Supermarket A supermarkeL ls a form of grocery sLore offerlng wlde varleLy of food and
household merchandlse Lxample of producLs dalry producLs frulLs vegeLables meaL alcohol
medlclne cloLhes Lxample lood World
Department Store ueparLmenL SLores usually sell lLems such as furnlLure cloLhes elecLronlcs
Loys eLc 1hey sell wlde range of producLs for consumer's personal needs Lxample Shoppers SLop
nypermarkets PypermarkeL ls a comblnaLlon of supermarkeL and deparLmenL sLore 1hey have
boLh food and nonfood lLems lL carrles much more producL caLegorles Lhan supermarkeL and
deparLmenL sLore 1hey saLlsfy all Lhe shopplng needs of consumer ln one Lrlp Lxample 8lg 8azaar
Market rocess
MarkeL ls any slLuaLlon where buylng and selllng Lakes place 8uyers demand a producL when Lhey
are wllllng Lo pay for lL and sellers supp|y Lhe producL accordlng Lo Lhe prlce Lhey can geL Changes ln
lncome arrlval of new producLs all affecL demand uemand lncreases when people are wllllng Lo buy
more aL Lhe same prlce or are wllllng Lo pay hlgher prlce for Lhe same amounL uemand lncreases
when lncome lncreases and demand decreases when lncome decreases Supply lncreases when
suppllers offer more aL Lhe same prlce or reduce Lhe prlces Lhey requlre
Surplus occurs when Loo much ls produced and shorLage occurs when Loo less ls produced
Measur|ng the keta|| Industry
lmporLance of 8eLall lndusLry can be measured uslng Cu(Cross uomesLlc roducL) Cu refers Lo
Lhe markeL value of all producLs and servlces produced ln Lhe counLry ln lndla reLall lndusLry
accounLs for 13 of Cu
We can also measure Lhe lmporLance of reLalllng by dlvldlng reLall employmenL wlLh LoLal
employmenL
AnoLher way Lo measure Lhe lmporLance of reLalllng ls by addlng Lhe LoLal sales of all reLall
companles ln lndla
keta|| Industry Structure D|fferent sectors of reta|||ng |n Ind|a
4 rgan|sed Sector Crganlsed secLor lncludes hypermarkeLs and reLall chalns of
large corporaLe company and also Lhe prlvaLely owned large reLall buslness All
reLallers of Lhls secLor are reglsLered wlLh Lhe governmenL and pay sales Lax and
lncome Lax
4 Dnorgan|sed Sector unorganlsed secLor lncludes small reLallers such as klrana
shops hand carL eLc
MosL lndlan shopplng Lakes place ln klrana shops Crganlsed secLor has only 4 share of Lhe LoLal
reLall markeL as of 2008 Powever organlsed reLall markeL ls growlng aL 33 raLe and unorganlsed
reLall markeL only aL 6 raLe
CovernmenL regulaLlons prevenL forelgn companles Lo sLarL Lhe reLalllng buslness ln lndla 1here are
LhlrLy regulaLlons whlch forelgn company has Lo pass before sLarLlng a reLalllng buslness ln lndla
Iunct|ons of keta|||ng
1o meeL Lhe needs of Lhe cusLomers reLallers have Lo provlde followlng servlces
O ccess|b|||ty of |ocat|on Successful reLallers have Lhelr sLores ln mulLlple locaLlons so LhaL
Lhelr cusLomers can easlly flnd Lhem and buy Lhelr producLs
O Conven|ence of t|m|ng Successful reLallers make sure LhaL Lhelr producLs are avallable
when people need Lhem 1herefore Lhey open Lhelr sLores for longer hours
O Conven|ence of s|ze Successful reLallers have Lhelr producLs avallable ln mulLlple slzes Lo
saLlsfy Lhelr cusLomer needs lor example supermarkeLs sell large packs of producLs
O Informat|on ln Loday's socleLy cusLomer wanL Lo know many Lhlngs abouL Lhe producL
before buylng Lhe producL Successful reLallers provlde Lhls lnformaLlon Lo lLs cusLomers
O |festy|e support Many consumers look for producLs LhaL supporL Lhelr llfesLyle Lxample
consumers wanL Lo have a lapLop of small slze Successful reLallers make sure LhaL Lhey have
Lhe producLs LhaL supporL Lhe llfesLyle of consumers
keta|| Iormat 1ype of reta|| stores
8eLall formaL ls Lhe overall appearance and feel LhaL reLaller presenLs Lo lLs cusLomers 8eLall formaL
depends on followlng Lhlngs
O ocaLlon of Lhe sLore
O Slze of Lhe sLore
O Merchandlse of Lhe sLore
O rlce of Lhe producLs
O ALmosphere and servlce of Lhe sLore
ulfferenL Lype of reLall formaLs
O -e|ghborhood based stores]Conven|ence stores 1hey are small sLores locaLed near
resldenLlal areas 1hey are open for long hours buL have llmlLed varleLy 1here markeL ls
based on convenlence rlces are llLLle blL hlgher due Lo Lhe convenlence glven Lo Lhe
cusLomer Lxample klrana shops
O nestop shopp|ng centers 1hese sLores provlde compleLe shopplng servlce Lo consumers
1hey carry wlde range of producLs and sell producLs aL lower prlces Lhan convenlence sLores
Lxample
4 ueparLmenL SLores
4 SupermarkeLs
4 PypermarkeLs
O Spec|a|ty Stores 1hese reLall sLores sell speclflc producL caLegorles Lxample 8C Muslc
World
O Mass Merchand|sers]category k|||ers 1hey are small speclalLy sLores LhaL offer a full range
of producLs wlLhln parLlcular area Lxample SporL AuLhorlLy (1hey provlde sporLlng
producLs)
O D|scounters 1hese sLores sell producLs aL low prlces 1hese lnclude
4 ulscounL sLores 1hey sell small range of producLs aL low prlces 1hey are usually
locaLed ouL of Lown 1helr sLock may change accordlng Lo buylng hablLs of
consumers
4 Cffrlce SLores 1hey sell off season or dlsconLlnued lLems aL low prlces 1hey are
usually locaLed ouL of Lown 1helr sLock may change accordlng Lo buylng hablLs of
consumers
keta|| 8us|ness |ann|ng
1he reLaller should keep four Lhlngs ln mlnd whlle dolng Lhe buslness plannlng
4 ollLlcal acLlvlLles
4 Lconomlc acLlvlLles
4 Soclal acLlvlLles
4 1echnology acLlvlLles
All of Lhese four Lhlngs affecL demand and supply condlLlons ln Lhe markeL and Lherefore affecLs
Lhe buslness sLraLegy and proflLs of Lhe reLallers 1hese four Lhlngs can be grouped lnLo followlng
parLs
Structura| change
SLrucLural changes are long Lerm changes LhaL affecL Lhe demand and supply condlLlons of Lhe
markeL Analyzlng Lhese changes can help reLallers Lo know abouL Lhe new producLs and servlces
needed by Lhe consumers
Short1erm Changes or I|uctuat|ons
8eLallers should keep flucLuaLlons ln lncomes lnflaLlon and unemploymenL ln mlnd whlle plannlng
Lhelr prlclng sLraLegy sLocklng and lnvesLmenLs 1hese flucLuaLlons occur for shorL perlods (up Lo
flve years) and affecL Lhe demand and cosLs of supplylng Lhe markeL 1o plan for Lhese changes
reLallers use Lhe forecasLs and markeL research reporLs
Lxample ShorL Lerm lncrease ln lncome lncreases Lhe demand of Lhe producL 1herefore reLallers
lncrease Lhe prlce of Lhelr producLs and Lhls lncreases Lhelr proflLs When demand of Lhe producL
lncreases reLallers have Lo lncrease Lhelr sLocklng level Loo
1he Market os|t|on of the reta||er as compared to |ts Current and new compet|tors
1hls depends upon Lhe number of companles ln Lhe markeL 1o become successful ln Lhe markeL
reLaller has Lo develop compeLlLlve advanLage CompeLlLlve advanLage ls someLhlng whlch you offer
beLLer Lhan your compeLlLors lL could be lower prlce Lhan your compeLlLors beLLer producL quallLy
Lhan your compeLlLors eLc
Interna| Management
1he change ln Lechnology economy and llfesLyle of people has made Lhe quallLy one of Lhe mosL
lmporLanL facLor ln a company Lo be successful 8eLallers have Lo provlde very good servlce Lo
consumers 1o do Lhls Lhey need Lo have full knowledge abouL Lhelr producLs 1hey should use laLesL
Lechnology so LhaL Lhey can qulckly supply producLs Lo Lhe consumers
Dnderstand|ng the market 8uy|ng and Se|||ng
1he reLallers need Lo undersLand Lhe markeL and all Lhe operaLlons ln Lhe markeL 1hey should know
all Lhe governmenL regulaLlons on Lhe markeL and keep Lhese regulaLlons ln mlnd whlle developlng
Lhelr buslness plans





Chapter 2 Change |n the reta|| env|ronment
Changes ln Lhe naLural and soclal envlronmenL change Lhe ways ln whlch consumer uses Lhe reLallers
and Lhe ways ln whlch reLallers supply Lhe consumer needs
O Consumers change whaL Lhey buy when Lhere lncome Lechnology and llfesLyle change
O Consumers change who Lhey buy from when reLall formaLs change
O Consumers change how Lhey buy as lnLerneL brlng new deals and save Llme
O Consumers change where Lhey are buylng as governmenL pollcy affecLs where sLores can
relocaLe
O Consumers change when Lhey buy as shops open for longer hours
8eLallers are lnLeresLed ln Lhese changes because Lhey affecL how much people wanL Lo buy and
how much reLallers wlll have Lo pay Lo buy Lhe producLs from manufacLurers
lour Lypes of changes
O dd Lvents and Dnpred|ctab|e Changes 1hese Lype of changes are very hard Lo predlcL
Lxample dlsasLers (earLhquake flood) sLrlkes Such changes do noL have large affecL on
annual sales and proflLs because Lhey Lend Lo balance ouL each oLher 8uL sLlll reLallers
should have plans Lo deal wlLh Lhese changes oLherwlse Lhere proflLs may drop
O Seasona| or per|od|c changes 1hese changes happen regularly durlng Lhe year 1he reLaller
has Lo change lLs merchandlse prlce and oLher Lhlngs of Lhe sLore accordlng Lo Lhe changlng
requlremenLs of Lhe cusLomer durlng Lhe year Lxample warm cloLhes ln wlnLer and coLLon
cloLhes ln summer
O Short 1erm Changes or I|uctuat|ons Same as ChapLer 1
O Structura| Changes 1hese changes occur over a much longer perlod of Llme and have large
affecLs 1hese changes fundamenLally change Lhe ways ln whlch consumer uses Lhe reLallers
and Lhe ways ln whlch reLallers supply Lhe consumer needs
1ypes of Structura| Changes
O Demograph|c Changes Changes ln Lhe populaLlon gender age employmenL sLaLus
locaLlon eLc Lxample fall ln Lhe blrLh raLe 1hls can affecL Lhe reLallers who sell baby
cloLhes
Changes ln Lhe populaLlon are very lmporLanL Lo reLallers 1hey have large affecL on reLallers
lor example lf Lhe populaLlon of Lhe counLry ls golng down Lhen reLallers wlll have Lo rely
more on Lhe growLh ln Lhe lncome lf Lhe populaLlon ls golng down LhaL lncreases Lhe
compeLlLlon for reLallers Loo
1hese days people are llvlng for longer age whlch has lncreased Lhe number of old people
Cld people have dlfferenL needs Lhan young people 8eLallers have Lo keep producLs whlch
are made for old people Pousehold sLrucLure ls also changlng Pousehold sLrucLure refers Lo
Lhe group of people sharlng one house and household Lhlngs 1hese days Lhere are more
nuclear famllles whlch have lncreased Lhe demand of household producLs

O 1echno|og|ca| Changes Changes ln Lhe Lechnology
1echnology refers Lo Lhe meLhods LhaL are used Lo produce producLs and servlces
1he owner of small lndependenL reLall sLore may go hlmself Lo plck Lhe producLs whlch he
wanLs Lo sell Whereas a blg reLall chaln use compuLer sysLems Lo order all producLs and
monlLor Lhe sLock of all producLs 1echnology plays a very lmporLanL role ln Lhe supply chaln

Change ln Lechnology affecLs boLh consumers and reLallers 8eLallers need Lo lnsLall Lhe
laLesL Lechnology sysLems ln Lhelr offlces Lo provlde qulck servlce Lo Lhe consumers new
Lechnology also brlngs cheaper and beLLer producLs lor example now we have dlglLal
Lelevlslon
new Lechnology also requlres new equlpmenLs and Lralnlng of Lhe sLaff

O Lconom|c Changes Changes relaLed Lo lncome employmenL llvlng condlLlons
4 Lxample longLerm lncrease ln Lhe lncome glve consumers more money Lo spend
1hls creaLes dlfferenL opporLunlLles for reLallers
1hree Lypes of economy
Iorma| Lconomy Coods and servlces are produced and sold ln Lhe markeL or are
provlded by Lhe governmenL lL provldes largesL parL of counLry's lncome ouLpuL and
employmenL and ls easlesL Lo measure and compare wlLh oLher counLrles
Informa| h|dden or b|ack economy Coods and servlce are produced and sold legally
or lllegally buL Lhe sale or lncome ls noL recorded for Lax lL ls dlfflculL Lo measure
nouseho|d economy Coods and servlces are produced ln Lhe home lL ls also dlfflculL
Lo measure
O Soc|a| Changes Changes ln Lhe socleLy
4 Lxample lncrease ln young women employmenL 1hls has lncreased Lhe spendlng
on cloLhes and cosmeLlcs
4 eople are very busy ln Lhelr work llfe Lhese days 1hey are only on cerLaln Llmes of
day for shopplng 1hls has affecLed Lhe openlng hours of reLall sLores 1hls ls also
one of Lhe reason why one sLop sLores were opened
4 eople don'L llke walLlng for Lhlngs 1hey wanL everyLhlng on Llme 1herefore
reLallers have Lo be very efflclenL ln Lhelr work 8eLallers have Lo work very closely
wlLh Lhelr suppllers Lo make sure LhaL Lhey have rlghL producLs aL rlghL Llme Lo
saLlsfy Lhe consumers
O o||t|ca| Changes Changes by Lhe governmenL
4 Lxample CovernmenL puLLlng resLrlcLlons on locaLlons of Lhe sLore 1hls affecL
where and how people can shop
O Cu|tura| Changes Changes ln Lhe culLure/bellef Lxample eople llke shopplng more now
O Soc|odemograph|c Changes Soc|a| and Demograph|c Changes
O Soc|oeconom|c Changes Soc|a| and Lconom|c Changes
now to ca|cu|ate |eve| of demand?
evel of demand Lrend value(sLrucLural changes)+flucLuaLlon+seasonal affecL+odd evenL
affecL
Chapter 3 Market Structure and Contro| keta|||ng Structures
Lxterna| Lnv|ronment LxLernal envlronmenL of Lhe flrm are Lhose Lhlngs LhaL happen ouLslde Lhe
flrm buL affecL Lhe success of Lhe flrm lL ls dlvlded lnLo Lwo Lypes
O Macroenv|ronment 1hlngs LhaL happen ouLslde Lhe flrm buL are noL under flrm's conLrol
Lxample ollLlcal soclal culLural or legal acLlvlLles
O M|croenv|ronment 1hlngs LhaL happen ouLslde Lhe flrm buL whlch reLaller can conLrol
Lhrough lLs managemenL Lxample MarkeL slze markeL segmenL locaLlon of markeL
acLlons of suppllers number of compeLlLors compeLlLors' sLraLegy
8oLh macroenvlronmenL and mlcroenvlronmenL affecL Lhe success of reLallers
keta|| ffer|ng lL ls a bundle of beneflLs LhaL Lhe cusLomer purchases when he enLers Lhe sLore
1hese beneflLs lnclude producLs and servlces lmage and repuLaLlon of Lhe sLore and any oLher
beneflL 8eLaller can lncrease Lhe sales by provldlng a good servlce or by havlng a good lmage
eople don'L [usL go Lo reLall sLore Lo buy Lhe producLs 1hey also pay aLLenLlon Lo Lhe servlce of Lhe
sLore 1herefore reLallers noL only have Lo compeLe wlLh each oLher on provldlng beLLer prlce and
locaLlon buL also on provldlng beLLer servlce
S|ze of 8us|ness
Slze of buslness can be measured by Lwo ways
O number of sLores buslness operaLes 1hls ls called breadLh of Lhe buslness
O 8uslness annual sales 1hls ls called markeL peneLraLlon
arge flrms have many advanLages over small flrms
O arge reta|| bus|ness may prov|de greater va|ue to the customer than sma|| bus|ness
arge reLallers carry more varleLy and Lherefore cusLomers have greaLer cholce lL also saves
cusLomers Llme 1hey don'L have Lo spend loL of Llme ln searchlng for producLs
O arge reta||ers may have cost advantage over sma|| reta||ers arge reLallers buy producLs
ln large quanLlLles from suppllers 1herefore Lhey geL Lhose producLs aL dlscounLs So Lhey
can sell Lhese producLs aL lower prlce Lhan small reLallers Lo Lhe consumers 1hese cosL
advanLages are called economles of scale arge reLallers also have more experL employees
Lhan small reLallers 1herefore Lhey have Lo spend less Llme and money on Lralnlng Lhelr
sLaff arge reLallers have blg brand name 1herefore Lhey have Lo spend less money on
adverLlslng and promoLlon 1hey have very loyal cusLomers who are aLLracLed Loward Lhem
even wlLhouL enough adverLlslng Powever Lhey can spend more money on adverLlslng Lhan
smaller flrms because Lhey can spread Lhe cosLs over greaLer amounL of producLs
O arge reta||ers may use the|r f|nanc|a| and market power to contro| the capab|||ty of |ts
compet|tors to compete successfu||y Powever large reLallers have Lo only follow Lhe legal
pracLlces whlle dolng Lhls
What can sma|| reta||ers to compete w|th |arge reta||ers? Small reLallers can have agreemenLs
wlLh manufacLurers/suppllers under whlch Lhe manufacLurer wlll supply Lhe producLs Lo reLallers aL
lower prlces and reLaller wlll glve Lhe porLlon of proflL Lo manufacLurer
D|sadvantage of |arge reta||ers
Whenever Lhere ls a soclal or economlc change lL ls dlfflculL for large reLallers Lo ad[usL Lo LhaL
change as compared Lo small reLallers
Compet|t|ve Lnv|ronment |n d|fferent reta|| sectors
Iood keta|||ng
lood reLalllng ln lndla ls secondlargesL segmenL of Lhe reLall lndusLry 1he posslblllLy of new
enLranLs ln Lhls lndusLry ls very hlgh 1here ls loL of opporLunlLy ln Lhls lndusLry especlally ln Lhe rural
and semlrural areas lood reLalllng ln lndla ls growlng aL Lhe raLe of 30 ln early days food used Lo
be sold on carLs buL now Lhere are supermarkeLs and hypermarkeLs Larller Lhere used Lo be only
food reLall sLores ln blg clLles llke Mumbal buL now Lhere are food reLall sLore ln small clLles Loo
lood reLall sLores examples Apna 8azaar 8lg 8azaar lood World
C|oth|ng keta||
CloLhlng reLall accounLs for 36 of LoLal reLall buslness 8lg cloLhlng reLallers ln lndla Shoppers
sLop anLaloon 8eLall 1he compeLlLlon ln Lhe apparel reLall markeL ls lncreaslng day by day

Government o||cy and Compet|t|on
CovernmenL plays flve roles ln Lhe buslness
O ollcy Maker Whenever governmenL makes new pollcy lL affecLs all buslnesses Lxample
ollcy Lo sell clean food Lo consumers Such pollcy force reLallers Lo LesL everyLhlng before
selllng lf reLallers have Lo survlve Lhey have Lo follow governmenL pollcles
O Cwner More and more secLors are becomlng prlvaLe 1herefore Lhe role of governmenL as
an owner ls decllnlng
O 8egulaLor As a regulaLor governmenL seL prlce llmlLs and quallLy sLandards of producLs and
servlces
O Sponsor As a sponsor governmenL help buslnesses ln exchange of lnformaLlon
O CusLomer
uue Lo Lhe governmenL pollcles reLallers Lend Lo form parLnershlps wlLh suppllers or become lLself a
suppller 1hls ls called verLlcal lnLegraLlon 1hls reduces Lhe compeLlLlon
keta|| Deve|opment and Compet|t|on
O Chang|ng Spat|a| and roduct structures AcLlon of reLall company's maln compeLlLors
affecL Lhe way reLall companles develop 1o geL greaLer markeL share Lhan compeLlLors
reLall companles have Lo Lhlnk of lnnovaLlve or new sLraLegles lor example fresh sLore
deslgns and merchandlse ranges can creaLe a compeLlLlve advanLage and aLLracL shoppers
away from compeLlLlon
O 1he Whee| of keta|||ng 1hls ls one of oldesL Lheory LhaL explalns Lhe evoluLlon of reLalllng
Accordlng Lo Lhls Lheory new buslnesses enLer Lhe markeL wlLh low sLaLus low margln and
low prlce of Lhe producLs 1hls sLraLegy helps Lhem Lo compeLe wlLh well esLabllshed reLall
sLores AfLer someLlme Lhese new sLores become successful and blg 1hey lnvesL more ln
faclllLles and Lhelr operaLlng cosL lncrease 1o cover Lhese cosLs Lhey lncrease Lhe prlce of
Lhe producLs and geL exposed Lo new enLranLs new enLranLs Lhen agaln enLer lnLo Lhe
markeL wlLh low prlce producLs and follow Lhe same paLLern

1he keta|| ccord|on
AnoLher Lheory whlch explalns Lhe way reLallers change Lhelr operaLlons over Llme ls reLall accordlon
Lheory lL explalns how Lhe reLall flrms go from general sLores Lo speclallzed sLores and Lhen back agaln Lo Lhe
more general sLores lL ls also referred Lo as Lhe generalspeclflcgeneral Lheory
Ceneral sLores wlde assorLmenL
Speclallzed sLores only sell speclflc caLegory
Accordlng Lo Lhls Lheory flrsL reLall sLore sLarLs wlLh Lhe wlde assorLmenL of producLs AL Lhls sLage lL ls called
general sLore 1hen lL reduces lLs merchandlse range and become speclallzed sLore aLer when sLore becomes
maLure lL sLarLs addlng more producL caLegorles and become general sLore agaln 8eLall sLores do Lhls due Lo Lhe
compeLlLlon












ow rlced
Merchandle
hlghvalue
sLore
1radlng up
Mldprlced
merchandlse
mldrange
sLore
Plghprlced
merchandlse
Lop range
sLore
Chapter 4 now to manage |n good and bad economy?
O Changes |n the consumer spend|ng
8eLallers are concerned wlLh Lhe change ln Lhe level of consumer spendlng ln Lhe nexL 12 monLhs ln
order Lo make Lhe ad[usLmenLs Lo Lhelr merchandlse plans Consumers wlll spend more wlLh Lhe
lncrease ln lncome and spend less lf Lhe unemploymenL raLe become hlgh or Lhe lnLeresL raLe
become hlgh Consumer spendlng also changes ln varlous seasons 1hey spend more ln Lhe hollday
season such as ulwall new ?ear eLc
1he flucLuaLlons ln lncome unemploymenL lnLeresL raLe wage and prlce are called macroeconomlc
flucLuaLlons 1hese flucLuaLlons repeaL Lhemselves and Lhls repeLlLlve naLure ls called economlc
cycle See dlagram ln book
O Demand and Supp|y |n the Lconomy
4 lf consumer has more money Lo spend Lhe demand wlll be more
4 lf companles have more money Lhey wlll lnvesL more so demand wlll be more
4 lf governmenL has more money Lhey wlll spend more on buslnesses and also lncrease
Lhe lncome of people so demand wlll be more

O 8a|ance |n the Lconomy
When Lhe demand lncreases for a shorL perlod of Llme shorLage of producLs occur whlch
lncrease Lhe prlce of Lhe producLs 8uL Lhen ln Lhe fuLure reLallers order more producLs Lo
suppllers and prlce fall back Lo normal
When demand decreases reLallers lower Lhe prlce of Lhe producLs and Lhelr sales fall 8uL Lhen
ln Lhe fuLure Lhey order fewer producLs Lo suppllers and prlce fall back Lo normal
Government Macroeconom|c o||cy
CovernmenL also helps ln malnLalnlng Lhe balance ln Lhe economy 1hey Lry Lo conLrol Lhe
flucLuaLlons ln economy 8uL lL ls noL easy Lo do LhaL example when governmenL lncreases Lhe
Laxes LhaL reduce Lhe demand and when governmenL lncreases Lhe lncome LhaL lncreases Lhe
demand
8elow are Lhe Lhlngs governmenL Lry Lo do Lo conLrol Lhe flucLuaLlons ln economy
O ConLrol lnflaLlon lnflaLlon ls deflned as conLlnulng rlse ln prlces
O ConLrol unemploymenL
O lmprove Lhe raLe of growLh
Impact of Lconom|c f|uctuat|ons |n reta|||ng |ndustry
8ead changes ln consumer spendlng and balance ln economy
O lf Lhere are large number of LalenLed unemployed people reLallers have wlde cholce ln
chooslng good employees
O lf Lhe lnLeresL raLes are low reLallers can purchase more producLs
O llucLuaLlons make lL dlfflculL for reLallers Lo plan for Lhe fuLure Lxample lf Lhe reLaller
has declded Lo lnvesL ln bulldlng a reLall sLore and lf recesslon occurs lL wlll be very
dlfflculL for reLaller Lo cover LhaL lnvesLmenL
now to manage f|uctuat|ons |n economy?
O use economlc acLlvlLy lndlcaLors publlshed by Lhe governmenL before plannlng for
Lhe fuLure
O use Lhe consumer credlL as a lndlcaLor of economy lf consumers have good credlL
LhaL means Lhey have more money Lo spend
O ook aL forecasLs publlshed by dlfferenL lnsLlLuLlons
Dea||ng w|th recess|on
O MonlLor Lhe cycle of recesslon keep ln mlnd when Lhe lasL recesslon Look place
O lnclude producL caLegorles whlch people wlll even buy ln Lhe recesslon
O Avold unnecessary dlverslflcaLlon