CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Retailing is the set of activities that markets products or services to the final consumers for their personal or household use. Businesses used retailing strategies to increase market share and profit and thus enhance firm’s performance. Vertical retailing is very common among larger businesses interested in growing their event further. Vertical strategy occur when business expand into new areas connected with its business processes.

Various strategies exist for each types of retailing designed to increase profits for the company. Market expansion occurs when businesses attempt to expand into area that increase their market share but not necessarily in different areas or even the same products.

Retailing strategy is a vertical strategy where businesses either enter industries in the supply chain ahead of them. In otherword, vertical retailing strategy is a means of guaranting distribution channels for products and services by building relationship with or taking control of distribution.

The intense competition in the market and changing customer preferences has made the retailers’ job difficult and challenging. It was observed that many retail outlets were opened and some of them were closed. This scenario has attracted the attention of many researchers to find solution for the same. During interaction with the organized NLR the need was identified to understand the retail challenges, and organizational performance.

In this paper an attempt has been made to identify the retail challenges and their effect on organizational performance. The remainder of the paper focuses on these issues. The first section focuses on literature survey on retail challenges. The second section focuses on the organizational performance. The third section focuses on research methodology to design and execute research for the same. In the last section the paper ends with discussion, limitation and space for future research. The technique of factor analysis has been applied to classify factors for retail challenges and technique of structural equation modeling has been applied to test hypotheses.

Businesses save money by selling products they creates and free the supplier from the threat or influence of major buyer. Firms tend to add new product to their portfolio as they acquire new knowledge and integrate it with their existing knowledge base particularly in highly dynamic industries. The new knowledge often builds upon the existing knowledge, allowing for improvement in existing products such as high quality and ability to safety consumer’s needs. As a result, this process of knowledge creation and retailing  often improves the success of related products in the portfolio. The mix of different knowledge stocks enriches the firm’s capability to offer a greater variety of related products. In so doing, the firm can better satisfy customers’ needs in a manner superior to competitor’s product offerings.

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