1-Introduction & Format

8/7/2019 1-Introduction & Format

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Retailing

Indian

Retailing

Players

Consumers

Concepts

Government


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Why Retailing is Important?


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What is Retailing?

Retailing a set of business activities that

adds value to the products and services sold

to consumers for their personal or family use.

A retailer is a business that sells products

and/or services to consumers for personal or

family use.


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INDIA A country with diversity in all aspects

Area 3287263 Sq Km

Diversity in religion

There are more than 200 language, if dialectsincluded 1600

Many Indians do not understand their National

Anthem

Diversity in Clothing and dress patterns

Diversity in food habits

Diversity in culture and values


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Over view of Indian Retailing 12 million outlets Unorganized retailers 96% are less than 500 sq ft size

9 outlets per 1000 people, India has largest number in the

world.

Only 6% is organized - Organized retailing has enormouspotential

India the most attractive Retail Destination as per AT

Kearney Global Retail Development Index.

2007 Indian retailing was US $385 billion (15,40,000crores)likely to grow to US $1.52 trillion (Rs60,80,000 crores)

by 2025.

That make the share of organized retailing to 20%

The industry would require 2.2 million people by 2012


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Challenges and Opportunities in Indian

Retail

Challenges

Lack of retail space

Manpower

Political opposition for FDI in Retail

Huge investment required in the sector

Supply chain issues


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Challenges and Opportunities in

Indian Retail

Opportunities

Retail Sector contributes 10% of GDP and 8% ofemployment

Consumer want shopping, entertainment and food inthe same roof.

Demographic dividend Large population under age 25

Many women started earning

Emergence of many nuclear family leading to explosion ofpurchase

Industry is expected to grow at 25% annually


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Factors that Drive the modern

Retailing in India

Low share of organised retail stores

Increase in disposable income and customer

aspirations Increase spending on luxury items


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Retail Trends in India

The emergence of the neighborhood Kirana stores cateringto the convenience of the consumers

Era of government support for rural retail Indigenous franchise model of store chains run by Khadi & Village

Industries Commission

1980s experienced slow change as India began to open upeconomy.

Textiles sector with companies like Bombay Dyeing,Raymond's, S Kumar's and Grasim first saw the emergenceof retail chains

Titan successfully created an organized retailing concept andestablished a series of showrooms for its premium watches


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Late 1990s wave of new entrants with a shift fromManufactures to Pure Retailers. For e.g. FoodWorld and Trinethra (more) in food and FMCG;

Planet M and MusicWorld in music; Crossword, Landmark andFountainhead in books.

Post 1995 - Emergence of shopping centers Mainly inurban areas, with facilities like car parking

Targeted to provide a complete destination experience forall segments of society

Emergence of hyper and super markets trying to providecustomer with 3 Vs - Value, Variety and Volume

Expanding target consumer segment: The Sachetrevolution - example of reaching to the bottom of thepyramid


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General Trends in Retailing

New Types of Retailers

Globalization

Growth In Services Retailer

Increase Use of Technology to Reduce Cost, IncreaseValue Delivered


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Socio Economic and Technological

Influence

The Population Division of United Nations statesthat 53% of world population lives in Urbantowns.

In Indian more than 40% of the population areliving in Urban cities / towns

Almost 320 million people are living in cities 53 million people live in urban conglomerates (more

than 10 Million population each)

32 million live in cities with population of5-10 million

101 million people live in cities with5 lacs to 5 million

181 million people are living in cities with5 lacs.


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By purchasing power parity (PPP)of Indian Rupee,

Indians can buy more items compared to USdollar.

E.g.. A loaf ofBread in India cost Rs 16-20, in US itcosts Rs 50.

The Indian middle class is going to be 41% of thepopulation with583Million people by 2025.

People are changing in their attitude of purchase-branded costly shirts and apparels are accepted

today. More people are connected today( Mobile and

internet)


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Government Policy

Infrastructure Development

51 % FDI in Single Brand Retailing

Cap on Multi brand Retailing JV withmajority stake in Indian company

100% FDI in B2B retailing


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Retail Mix Strategies

Retail Strategy

Customer Service Location

Merchandise

Assortment

PricingCommunication Mix

Store Design

and Display


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Chennai Silks Retail Mix

Free-standing Stores

Customer Service

Merchandise

Assortment


Store Display

And Design

Location Strategy


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Merchandise

The items that are sold in a wholesale or retail

store are called as Merchandise.


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Merchandise Offering

Variety (breadth of merchandise)

The number of merchandise categories

Assortment (depth of merchandise)

The number of items in a category (SKUs)


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Location

Pricing

Communication Mix

Store Design

and Display

Customer Service

Few of Categories

Private Labels

More Items in Each Category

Assortment Strategy


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Location

Communication Mix

Store Design

and Display

Customer Service

Merchandise Assortment

Low to Modest

Pricing Strategy


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Communication Mix

TV and NewspaperInsert Ads


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Store Design and Display

Colorful, wide aisles displays

for products with a grid layout


Merchandise Assortments



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Customer Service

Limited

Location

Merchandise Assortment

Pricing

Communication Mix

Store Design and Display


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Career Opportunities in Retailing

Kishore Biyani

Mukesh Ambani

Kumar Mangalam Birla

Etc

List of Retail Entrepreneurs


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Misconceptions About Careers in

Retailing

Dont need college

Low pay

Long hours

Boring

Dead-end job

No benefits

Everyone is part-time Unstable environment


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Why it is worthwhile to Consider

Retailing

Entry level management positions

Department manager or assistant buyer/planner

Manage and have P&L responsibility on your firstjob

Starting pay average with great benefits

No two days are alike

Buying and planning -Financial and Analytical

oriented


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Types of Jobs in Retailing

Most entry level jobs are instore management or buying, but there is oppourtunity in

-accounting and finance

-real estate

-human resource management

-supply chain management

-advertising

-public affairs

-information systems

-loss prevention

-visual merchandising


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Ethical Situations for a Retail Manager

Should it advertise that its prices are lowest in area even

though some items are not?

Should a retailer accept an expensive gift from a vendor?

Should salespeople use high-pressure sales when theyknow the product is not the best for the customers

needs?

Should a retailer treat some customers better than

others?


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Store Formats

Store Formats create a distinct image in the

minds of customers.

Retailers creates t

he distinct image bypositioning and differentiation.

Formats are defined in terms of store

Location, Layout, Size, Design of Store,

Merchandise, Service Experience offered and

so on


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Some of the Store Formats

Store format by Location

Chain Store Format

Stores are multi locational, Linked by common store presentation

and signature design.

High street format

Chain store located in a busy shopping area(less than 2000sq ftand focused merchandise categories)

Destination format

Independent retail store located in a area with alluring

propositions(usually large in size, huge parking space, wide

merchandise categories)

Convenience store Format

Located in a catchment area where customers can quickly access

and choose from wide array of products(typically less than 5000 sq

ft, some parking, extended hrs of operation)


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Types of Retail Ownership

Independent, Single Store Establishments

Wholesaler Owned Cooperatives

Corporate Chains

Franchises


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Store format by Merchandise

Category Specialty store

Narrow merchandise category but with good depth

Department store

Store with several departments under one roof with eachfunctioning as a SBU (usually large size 10000 sq ft with

more than 100,000 SKU)

Super market

A departmental store with free access displays so thatcustomer easily pick products from shelves

Emporium

A retail store selling a variety of particular group of

merchandise E.g.. Sari Emporium


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Store format by Size

Super Store Single large store selling food and non food

goods usually more than 5000 sq ft. generally it is twice thesize of supermarket and offers non-traditional goods like

medicine, flowers, bakery under one roof.

Shopping Center- Also called as Plaza with5 or more

tenant spaces of around 1000 sq ft. used for retailing,developed under one building plan.

Shopping Mall A place with retail stores and places forleisure activities. Mall will have an area more than 200,000 sq

ft.

Hyper Market Area of200,000 sq ft and more, retailinggroceries and general merchandise, with pharmacy, photo

shops etc. Has wide variety of merchandise in large quantities

in each category, volume based sales


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Store Format by Price

Discount format Retails merchandise at a discount of25% and more below MRP. Also called as Bazaar format

Discount specialty format

Every Day Low Price (EDLP) format

Category Killer Format - Large specialty store havinghuge collection of its category at a relatively low price.

Factory Outlet Format - Owned and operated by

manufacturers selling at a low price.

Ware House Format - Large sale of discountedmerchandises in the free access atmosphere

Single Price Denomination

F

ormat


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Others

Stop over store format / Leased Department

stores that piggy back on another retail outlet.

Kiosk


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Types of Retailers

Food Retailers

Mom and Pop Stores

Convenience Stores

Supermarkets

Supercenters

General Merchandise Retailers

Department Stores

Specialty StoresDiscount Stores

Category Specialists

Off-Price Retailers

Warehouse Clubs


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Supermarkets

Super Centers

Hypermarkets Warehouse clubs

Convenience stores

Supercenters ,hypermarkets and warehouseClubs are generally referred as Big Box

retailers

Food Retailing


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Characteristics ofFood Retailers


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Limited Assortment Supermarkets

Limited assortment format means that stores carry

the most frequently purchased grocery items in the

most popular size and variety

The store carries high quality exclusive brands

many produced by the same manufacturers of

leading name brands and an assortment of

nationally branded items.

This allows to offer savings of up to 40% compared

to conventional grocery stores without asking

shoppers to sacrifice quality.


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Convenience Stores Fight Competition

Stores are more convenient to shop

Offers fresh Vegetables

Fast, casual service Financial services available


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Issues in Food Retailing

Competition from Discount Stores

Changing Consumption Patterns

Efficient

DistributionLower

Costs

Lower Prices

Time Pressure Eating Out More Meal Solutions


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Types of General Merchandise Retailers

Department Stores

Specialty Stores


Home Improvement Centers

Discount Stores

Drugstores Off-Price retailers


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Characteristics of General Merchandise Retailers


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Issues in Department Store Retailing

Competition

-Discount Stores on Price

-Specialty Stores on Service, Depth of Assortment

Lower Cost by Reducing Services

Develop Private Labels and Exclusive Brands


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Three Tiers of Department Stores

First Tier: upscale, high fashion chains with exclusive

designer merchandise and excellent customer service.

Second Tier: Retailers sell more modestly

priced merchandise with less customer service:

Third Tier: Value oriented caters to more price conscious

customer


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Issues in Drug Store Retailing

Evolution to a New Format

Offering more frequent purchase food items

Improved systems provide personalized

service in th

e ph

armacy


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Deep and Narrow Assortments DestinationStores

Low Price and Service

Wholesaling to Business Customers andRetailing to Consumers

Better Growth Prospects in developing

Markets.


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Issues in Home Improvement

Centers

Retailer and Wholesaler

Consumer Business


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Home Improvement Centers

Displays are warehoused

Customer Service: How to select and how to

use merchandise

Competition focuses on price, effort to

differentiate and services provided


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Retail Mix Strategies

Retail Strategy


Merchandise

Assortment


Store Design

and Display


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Non-store Retail Formats

Electronic RetailingCatalog and Direct Mail

Direct Selling

Television Home ShoppingVending Machines


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Electronic Retailing

Primarily used by traditional retailers to

compliment store and catalog offerings

Exclusive e-tailers target small and dispersed

niche markets


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What are Amazon and eBay?

Amazon.com Merchandise to consumers.

eBay Acts as a mall or other shopping center

providing a place for buyers and sellers to meet


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Issues in Catalog Retailing

Hard to compete with large well established firms

IncreasingMail Costs

Clutter from other Catalogs

Two types of Catalog Retailing

General merchandise catalogs

Specialty Catalogs


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Issues in Direct Selling

Providing information and demonstrations is

costly

Party plan system: merchandise is

demonstrated in a party atmosphere

Multi-level network: Master distributors sell to

distributors who sell merchandise


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Television Home Shopping

Three forms

Through cable channels dedicated to television

shopping

Infomercials

Direct response advertising


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Issues in Television Home Shopping

Few consumers watch regularly

Most purchases made by small proportion of viewers

Customers cant examine merchandise

Customers must wait for merchandise to come on

Sells mostly jewelry, cosmetics, kitchenware, exercise

equipment


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Vending Machine Retailing

Merchandise or service is stored in a machine

and dispensed to customers.


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Issues in Vending Machine

Retailing Sales growthhas been

declining due to higher pricesand healthier eating habits

Trend of placing machines incaptive consumer locations


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Services vs. Merchandise Retailers

Intangibility-Problems in Evaluating Service Quality

-Performance of Service Provider

Simultaneous Production and Delivery-Importance of Service Provider

Perishability

-NoInventory, Must

Fill Capacity

Inconsistency of the Offering-Importance of HR Management


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Merchandise/Service Continuum


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Multi Channel Retailers

Those Retailers who sell their merchandises

throughmore than one channel are called as

Multi channel Retailers

73% of US Consumers shop both online and

stores.

Wh R t il U i M lti l


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Why are Retailers Using Multiple

Channels to Interact with Customers?

CustomerWant to interact in different ways

Each channel offers a unique set of benefitsfor Customers


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Benefits offered by Stores

Browsing

Touching and feeling

Personal Service

Cash Payment

Entertainment and Social experience

Immediate Gratification Risk Reduction


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Benefits Provided by Catalog Channel

Convenience Portability, easily accessible

Visual presentation


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Unique Benefits Provided by Internet Channel

Convenience Broad selection

Detailed information

Personalization

Virtual communities

Problem-solving information

More information to evaluate merchandise


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Virtual Communities

People who seek information, products and

services communicate with each other

regarding specific issues

What Merchandise Will Be Sold


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What Merchandise Will Be SoldSuccessfully Through Electronic Channel?

Look and See attributes vs. Touch and Feelattributes

Degree to which information can be used to

predict satisfaction prior to purchase

Gifts

Services

Might not need to Touch and Feel

Branding


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Types ofAttributes

Search: Can be determined prior to purchase,

consumption.

Experience: Cannot determine prior to

purchase, consumption.

Credence: Cannot be directly determined by

the average consumer.


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Theories of Retail Development

Theories are developed to explain the process

of retail development around the premises of

competitive pressure, and creation of

competitive advantage by retailers

Growth in retail is a result of understanding

market signals and responding to the

oppourtunities .


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Theories of Retail Development

Environmental Theory

Cyclical Theory

Conflict T

heory


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Cyclical Theory

Retail innovators enter as low cost structures,low price operators, low profit margin

operators

The develop their operations by offering

greater range or expensive facility as they

develop.

ScrambledMerchandising offering goods and

services that are unrelated to the original formatfor increasing the sales.

This allows others to differentiate from the

established player at low cost format.


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Wheel of Retailing

Passage

of time

As time passes,

outlet adds

services

As more time passes,outlet adds still more

services

4. New form of outlet

enters retailing

environment with

characteristics of

outlet in Box 1

1. Outlet starts

with:

Low prices

Low margins

Low status

3. Outlet now has:

Still higher prices

Still higher

margins

Still higher status

2. Outlet now has:

Higher prices

Higher margins

Higher status


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Conflict Theory

Retail innovation does not reduce the number

of players in a market.

It leads to the development of new formats

by blending the advantages of competing

formats to form new formats.


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Retail Life Cycle

1. Innovation

2. Growth

3

.M

aturation4. Decline

Documents

1-Introduction & Format