RETAILING

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retailing in india

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RETAILING:

RETAILING Vivek Tripathi Ast.Prof.

Retailing :

Retailing World’s largest private industry US$ 6.6 trillion sales annually Indian retailing Largest employer after agriculture - 8%* of population Highest outlet density in world Around 12 mn outlets Still evolving as an industry Long way to go

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Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperative Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls historic traditional Govt. support Modern formats Source of entertainment convenience Availability/low cost Shopping experience

Indian retail- facts:

Indian retail- facts India retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion . India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly . A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion.

Overview- global:

Overview- global The retail industry is responsible for the distribution of finished products to the public. The retail sector comprises of general retailers (managed by individuals/families), departmental stores, specialty stores and discount stores

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Emerged in US in 18 th century (restricted to general stores ) Specialty stores were developed only in those areas that had a population of above 5,000. Supermarkets flourished in the US and Canada with the growth of suburbs after World War II Revenues from retail sales in the US alone stood at $4.48 trillion in 2007, according to a report by the US Census Bureau .

Drivers :

Drivers Interest rates Population Employment Personal disposable income Individual debt The supply drivers include: Competitors in the industry Size of the market Cost of the factors of production

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Of the world’s top ten retail companies in terms of total sales, six are American. Combined sales of the top ten companies, computed by Delloite, were $978.5 billion in 2007. Major retail giants include Wal-Mart, Target, Home Depot and Tesco.

Retail Industry: Statistics :

Retail Industry: Statistics The total sales from store retailers stood at €108,449.8 million in 2007 and the sales value of non-store retailers was €469.9 million . The percent composition of store and non-store retailers in 2007 was: Store Retailers Non-Store Retailers Supermarkets 32.83 Vending 26.60 Small grocery retailers 24.46 Internet retailing 25.93 Hypermarkets 19.09 Home shopping 24.04 Food/beverage/tobacco specialists 15.68 Direct selling 23.43 Discounters 7.57     Others 0.36 Source: World Retail Data and Statistics 2008/2009

Retail - concepts:

Retail - concepts Brand? Elements of brand The Name: The name by which a Company or its products are known. The Logo: The symbol which represents a Brand. The Company: The corporate entity of a Brand The Image: What a Brand has come to represent. The Customers: Those whom a Brand serves. The Product and Services: What a Brand offers in a market place. The Promise: What a Brand stands for- its vision, mission, goals, and objectives.

Cash and carry:

Cash and carry Cash and carry wholesale represents a type of operation within the wholesale sector. There are significant differences between “classical” sales at the wholesale stage and the cash and carry wholesaler: These differences are based in particular on the fact that customers of the cash and carry wholesaler arrange the transport of the goods themselves and pay the goods in cash and not on credit. — EU Commission Decision 20/11/1996.

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Customer orientation Coordinated efforts Value driven Goal oriented Retailing concept Retail strategy

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Retailing is a convenient, convincing and comfortable method of selling goods and services. Retail marketing is not just buying and selling but also rendering all other personalized consumer services The term 'retail' is derived from the French word retailer which means 'to cut a piece off or to break bulk

Types of retail operations:

Types of retail operations Department store Specialty store Discount/Mass Merchandisers (merchandise-Goods bought and sold in business; commercial wares) Warehouse/Wholesale clubs Factory outlet

The Emerging Sectors in Retailing: :

The Emerging Sectors in Retailing: traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores and fast-food chains. non-food segment lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, MusicWorld, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo).

Theories of structural changes of retailing: :

Theories of structural changes of retailing: Traditional- melas, Fairs, weekly Bazaars, Rural fairs. Indegenous- mom and pop, kirana stores Neighbor stores. Contemporary- PDS, Khadi outlets, co-operative stores Modern Retailing- shopping malls, Bazaars, Super Bazaars, Special bazaars.

Retail store operations: :

Retail store operations: Store administration and management Inventory and stock management Managing of receipts Theft management Customer service Sales promotion Employee morale

Characteristics and trends in retailing :

Characteristics and trends in retailing Interaction with the end consumers It enhances the volume of sales but the monetary value is less Customer service plays a vital role There is a tendency for automatic sales promotion With more outlets retail marketing creates visibility Location and layout plays a vital role. Creates employment opportunities to all age groups, gender , irrespective of qualification and religion. Generates job opportunities in flexi timings. Retail marketing creates a place, time and possession utility for a product.

Channel of distribution:

Channel of distribution Supplier Manufacturer Whole seller Distributor retailer

Distribution types:

Distribution types Exclusive ( suppliers make agreements with one/few retailers only that is designated as only ones in specifies geographic area ) Intensive ( suppliers sell through as many retailers as possible ) Selective ( suppliers sell through moderate number of retailers )

Functions of retailer:

Functions of retailer Retailers provide important functions that increase the value of the products and services they sell to consumers and facilitate the distribution of those products and services for those who produce them. These functions are..

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1) Providing an assortment of products and services – Most consumers are well aware of the product assortments retailers offer.

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2 ) Breaking Bulk – To reduce transportation costs, manufacturers and wholesalers ship cases / cartons to retailers. This is called breaking bulk. It is cost effective for both manufacturers and consumers.

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3) Holding inventory – A major function of retailers is to keep inventory that is already broken into user – friendly sizes so that products will be available when consumers want them

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4) Providing services – a) Retailers provide services that make it easier for customers to buy and use products. b) They offer credit so consumers can have a product now and pay for it later. c) They display products so consumers can see and test them before buying. d) Some retailers have salespeople on hand to answer questions and provide additional information about products

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5) Increasing the value of products and services – By providing assortments, breaking bulk, holding inventory, and providing services, retailers increase the value consumers receive from their products and services.

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CHARACTERISTICS It offers direct interaction Large sales volume Customer service Sales promotion is offered at PoP

Driving forces for retail development:

Driving forces for retail development 1) Consumer Pull a) high income segment b) Middle and lower income group 2) Rising Incomes 3) Explosion of Media 4) Change in Consumer Behavior

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5)Consumerism Cycle Over the time the distributor gains control over the market, at this stage the distributor becomes an important link between manufacturer and customer. 6) The rural Market waking up 7)Establishment of the Supply Chain •Entry restrictions for multinationals have been removed in nearly all sectors •This has enabled chain retailers to enjoy better range depth and sourcing options as well as improved margins. •According to a study, there are 18,000 stock keeping units (SKU), while most retailers have the space for at most 5,000- 7,000 units

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8) Emergence of Hubs of Retail Activity 9) Change in Scale of Operations •Subhiksha and Food World has many stores spread over many cities. •This growing scale enables the supermarkets to eliminate links in the purchasing chain and to make deals with food processors directly. •Because of huge purchases, HLL has dedicateda team to deal with these emerging power retailers.

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10) Entry to the Corporate Sector 11) Expansion of family owned businesses 12) New Entrepreneurs 13) Building chains around brands 14) Foreign retailers looking for entry options •Should have a tie up with some of the indian retailers because of FDI restrictions. •Tesco, Kingfisher, Metro, Carrefour and Ahold are exploring entry options.

Challenges :

Challenges 1) The Kirana •CRM practice •Known about the customer’s families •Credit and home delivery •Consumer familiarity runs from generation to generation •Open longer hours and stock most of the goods •Consequently, a large number of customers are not willing to pay a premium for theshopping experience promised by large format retailers.

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2) High costs for the organized sector •High expenses to organized sector . •The lease cost up to 6-10 percent of sales •Manpower cost is lower at 5-6 percent of sales •Capital costs are more in retail business due to major renovations needed every 5-7 years

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3) Specialization •The real boom in organized retailing will come once the supermarket start selling daily need goods at 90 percent of the regular price, as Carrefour is doing in China. •Build strong sourcing networks that connect the business directly with farms, and sell fresh food at attractive prices. •Ex. Subhiksha ( 7-8 percent markdown on the MRP) •Indian consumers are buying mainly from store – based retailers. Grocery still remains the mainpurchase from these stores.

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4) Correct Merchandise Mix (inventory planning and Management) •Getting the right product mix is critical to retailing •Every retailer wants to have high-value, high margin, and fast moving products. •The retailers use to check volumes is ‘sales density’, which shows the amount ofsales per sq ft of shop space.

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5) Strong IT support •The backbone of retailing is IT •It would require large investments that connect every aspect of the operations seamlessly, from suppliers to the cash counters. 6) Poor Infrastructure •Cold chains •Roads and rail infrastructure •Efficiency of Supply Chain •A strict quality control increases the prices of the merchandise

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7) Industry Status •The Indian Retail Council was formed in 2000. •Unified tax laws •The existing labour laws are difficult for shops to have flexible timings •The industry is expected to see further growth of organized retailing in both food and non-food segments in the coming years. •Indian retailing needs to adapt to change. Thechange can be in terms of modification and creation of new formats or new products for the same targeted customers.

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