Prepared By,Sagar Gadekar

RETAILING

DefinationsAccording to William J Stantons, “ A Retailer or Retail store is a business

enterprise which sells primarily to the ultimate consumers for non business use.”

According to Cundiff and Still, “Retailing consist of those activities

involved in the selling directly to ultimate consumers. ”

According to Mc. Carthy. “ Retailing is selling to final consumer

products to households.”

Retailing may be understood as the final step in the distribution of merchandise for consumption by the end consumers.

Retailing is responsible for matching final consumer demand with supplies of different marketers.

Retailing is high intensity competition industry, The reasons for its popularity lie in its ability to provide easier access to variety of products, freedom of choice and many services to consumers.

The Indian retail is dotted by traditionally market place called bazaars or haats comprises of numerous small and large shops, selling different or similar merchandise

Characteristics of Retailing

Direct Interaction with Customers.

Lower Average Amount of Sale

Transaction.

Point of Purchase and Display and

Promotion.

Importance of Retailing Services to Wholesalers and Producers.a)Advertisement of new products.b)Arrangement to sell the goods.c)Information about consumer habits, tastes

and needs.d)Sharing of Risks.Services to consumers.a)Selection.b)Variety of goods.c)Demand creation.d)Distribution.e)Credit Facility.

Functions of Retailing.

Sorting.

Breaking Bulk.

Holding Stock.

Additional Services.

Channel of Communication.

Transport and Advertising Functions

Main Activities involved in retailing

Choosing the Store Location.Sourcing/buying or partnership/supply chain

management.Merchandising and category Management.Visual Merchandising (Display) Sales Promotion.Store Positioning and Building the store as a

Brand.Store Operations.IT Task.Inventory Management.Shrinkage Loss Prevention.Real estate development.Achieving efficiencies in Retail Operations.

Retailing in India.

Retail is the new buzzword in India.

The global Retail development Index has ranked India first, among the top 30 emerging markets in the world.

It is believed that India has the potential to deliver the fastest growth over the next 50 years.

While barter would be considered to be oldest form of retail trade, since independence , retail in India has evolved to support the unique needs of country, given its size and complexity

Second largest sector after Agriculture. Contributes about 10 – 11 % of the GDP

The estimated size of the organized retail industry in India is Rs. 16,000 crores. This is 2 % of the total estimated retail trade.

Indian Retail trade increased from Rs. 2200 billion in 2000 to Rs 3300 billion by the year 2005

India's first true shopping mall – complete with food courts, recreation facilities and large car parking space – was inaugurated as lately as in 1999 in Mumbai. (this mall is called "Crossroads").

The Evolution of Retail in India

Retail in India has evolved to support the unique needs of our country, given its size and complexity Haats, Mandis and Melas have always been a part of the Indian landscape. They still continue to be present in most parts of the country and form an essential part of life and trade in Various areas.

The PDS (Public Distribution System) would easily as the single largest retail chain existing in the country. the evolution of the PDS of Grains in India has its origin in the “rationing system” introduced by the British during world war II

The system was started in 1939 in Bombay and subsequently extended to other cities and towns. the system was abolished post war but however attaining independence India was forced to reintroduce it in 1950.

There was rapid increase in the ration shops ( being increasingly called the Fair Price Shop or FPSs)

The Canteen Stores Department and the Post Offices in India are also among the largest network of outlets in the country reaching population across the country.

The Khadi & Village industries (KVIC) was also set up post independence. The cooperative movement was again championed by the government.

India's Largest retail Chains:

1. PDS: 463,000

2. Post offices: 160,000

3. KVIC: 7,000

4. CSD Stores:3,400

(source business world marketing White book 2005)

In the past decade, the Indian marketplace has transformed dramatically. However from the 1950,s to the 80,s, investment in various industries was limited due to low purchasing power in the hands of the consumer and the government’s policies favoring the small scale sector.

The first attempts at organized retailing were noticed in the textiles sector. One of the pioneers in this field was Raymond’s which set up stores to retail fabric.

Raymond’s distribution network today comprises 20,000 retailers and over 256 exclusive showrooms in over 120 cities of the country

Other textile manufacturing who set up their own retail chains wee Reliance- which set up Vimal showrooms and Garden Silk Mills, which set up Garden Vareli showrooms.

Traditional Formats

Itinerant SalesmanHaatsMelas

Mandis etc.

Established formats

Kirana shopsConvenience/

department storesPDS/

fair price shopsPan/ Beedi shops

Emerging Formats

Exclusive retail outletsHypermarketInternal retail

Malls / Specialty MallsMultiplexes

Fast food outletsService galleries

The Evolution of retail in India

Drivers of Retail change in India

major drivers :1. Changing Income Profiles: Steady economic growth

fuelled the increase in disposable income in India. The average middle class family's disposable income rose by more than 20% between 1999-2003.

2. Diminishing difference between Rural and urban India: Rural India accounts for over 75% of India population and this in itself offers a tremendous opportunity for generating volume driven growth. Tax benefit. In year 2002-03 LIC sold 50% of its policies in rural India. Same BSNL also sold its 50% connection in small towns .

3. Changes in Consumption patterns: Occupational changes and expansion of media have caused a significant change in the way the consumer lives and spends his money.

o The changes in income brought about changes in the aspirations and the spending patterns of the consumers. the buying basket of the consumer changed

4. The emergence of a young Earning India : Nearly 70% of the Indian population is below the age of 34. taking advantages of employment opportunity in the booming service sector these young Indians are redefining service and consumption patterns

Prominent sector in Indian retail

1. Clothing, textiles and fashion Accessories:2. Food & food Services:3. Consumer Durables:4. Books & Music:Other emerging sectors5. Jewellery retail 6. Footwear retail7. Time Wear Retail8. Fuel Retail/ petro retail

Challenges to retail Development in India

Retail not being recognized as an industry in India.

The high costs of real estate.

Lack of Adequate infrastructure.

Multiple and complex taxation system.

Size of the organized retail market (Rs Cr)

2001-02 2007 CAGR (%)(compound Annual

growth rate)

TOTAL 16,000 37,216 18

Food 1,800 7,473 33

Clothing 4,950 10,423 16

Cons.Durables

1,650 3,787 18

Books & Music

450 1,426 26

21

Share of organized & unorganized retail with comparison

source: Ernst &Young, The Great Indian Retail Story, 2006

85 15

81 19

55 45

40 60

36 64

30 70

20 80

3 97

1 99

0% 20% 40% 60% 80% 100%

USA

TAIWAN

MALASIA

THAILAND

BRAZIL

INDONESIA

CHINA

INDIA

PAKISTAN

ORGANISED

UNORGANISED

Indian versus Global Retailing Scenario.

Basis Indian Retailing Global Retailing

Nature of Operatio

n

Retailing India is mostly Unorganized. At present only 2% to 4% accounts for organized sectors.

Retail World globally is well organized and in most developed countries is control by major.

Scope of Influence

Package good manufacturer control all retail business to a large extent. But the scenario is changing, even with the limited growth of organized retail in India.

In organized retail industry retailer have an upper hand in negotiating deals with manufacturers.

Technology

Indians retailers lag behind global retailers in use of technology. Though, retailers like shopper stop, Pantaloons are employing technology in their operations.

Global retailers resorts employ technology in larger scope than Indian retailers.

Formats Indian retail industry is concentrated around few formats. Only 2% of retail industry has adopted modern retail formats of department stores and supermarkets.

A large no. of retail formats are available.

Retail Space

Real estate space available for organized retail is getting saturated in Metros and in tier 1 cities in India & is now looking at tier 2 cities.

In west large store formats are located in outskirts of cities or the suburbs. The enables them to have large space.

Basis Indian Retailing Global Retailing

Infrastructure

Maximum infrastructure problems faced by retailers in International market.

Minimum infrastructure problems faced by retailers in International market.

Manpower A lack of trained manpower hampers development in industry.

Trained manpower available aiding retail boom.

Products/Brands Assortment

Indian retail industry usually has brands of well known Indian and foreign companies. Private label brands are negligent or absent.

Global retailers resort to keep their own brands. This leads to increase competition with better known company brands.

Difference between Wholesaler and Retailer.Criteria Wholesaler Retailer

Buyers Business customers, i.e. Retailers

Final Customers, i.e. End users

Buying Motive of Buyers

For reselling/trading. Wholesaler or producer in case large retailers.

Business Volume

High. Low.

Risk Involved High. Less.

Investment requirement

High. Moderate.

Promotional Activities

Less Important. Very important.

Store Atmosphere, Layout & Location

Less attention. Very Important Hence maximum attention.

Area covered Large area covered many areas territories can be handle by single wholesaler.

Relatively small- mostly retailers operate in small area.

Upper link Producer Wholesaler or producer in case of large retailers.

Thank You

Drivers of Success in Retail Sector

Customers are driving force in

change.

Re-evaluating the Marketing Plan.

Advanced Education for Retailers is

critical for growth.

Strong visual recognition.

Work place challenge.

Planning for Success.