Slide 1: RETAILING PRIYANKA Slide 2: OBJECTIVES To understand,
Types of retailers
Strategic issues in retailing
Global trend in retailing
Trends in retailing in India Slide 3: Retailing - meaning Retailing includes all activities involved in
Selling and providing goods and
services to ultimate consumers for personal,
or household use. Slide 4: French word –‘retailer’
Understanding customer needs
Assortment of merchandise
Manufacturer----- wholesaler------Retailer----Customer Slide 5: TYPES OF RETAILERS Generally retailers are classified into four categories:
Retailing based on ownership
Retailing based on the extent of product lines handled
Retailing based on the services vs. goods retail strategy mix
Non-store based retailing Slide 6: A. Ownership
Vertical market system
Consumer cooperative Slide 7: B. The Extent of Product Lines Handled
Specialty stores ex: Health&Glow stores that have been set up in recent times by the Goenka Group and offer solutions for better health in the form of Ayurvedic products.
Department stores ex: Westside, Pantaloons, Shoppers’ Stop and Lifestyle are examples of department stores in India. Slide 8: Discount Stores ex: Big Bazaar and Giant Hypermarket are examples of discount stores.
Supermarkets ex: Food World and Trinetra are examples of supermarkets in India.
Hypermarkets ex: Giant Hypermarket set up by the RPG Group in Hyderabad was the first of its kind in India with two more to come up in Mumbai and Kolkata in the future. Slide 9: C. Retailing Based on the Service vs. Goods Retail Strategy Mix
Goods - goods retailing, physical products are sold such as groceries.
Services - services retailing, the consumer does not get ownership of a product.
Rented goods services ex: Car rental
Owned goods services ex: Annual maintenance contracts for PCs and printers
Non-goods services, No physical goods are involved; only the time and expertise of the person who is going to provide the service is bought for a fee. ex: Stockbrokers, tutors, personal trainers, real-estate brokers Slide 10: D. Non-Store based Retailing Traditional non store retailer
Person to person
TV home shopping Non traditional non store retailer
Video catalog Slide 11: FRANCHISING Franchising is a contractual and legally binding agreement between a franchiser and a franchisee.
This agreement is also known as a franchise or license agreement.
Owner of a trademark or a trade name, a producer of goods or a service
gives the franchisee the right to do business using his trademark, trade name, product, or service Slide 12: FRANCHISEE
Abides by the specifications laid down by the franchiser
Obtains the license to do business by paying the franchiser an initial amount and setting aside a definite portion of his monthly sales for the franchiser.
Factors considers before franchising are,
Establish their brands in the market before venturing into franchising
Companies that have high brand value are likely to be more successful as it is difficult for others to imitate the company’s product or service offerings Slide 13: Franchisees should be chosen on the basis of
Their prior experience and local knowledge, so that they can serve the market efficiently.
Securing the confidence of the franchisees is very important for the franchiser Slide 14: Major Types of Franchising
Product distribution franchise
Business format franchise and
Trade name franchise. Slide 15: 1.Product distribution franchise
The franchisee is allowed to distribute, the manufacturer’s product in a wholesale or retail form.
The terms of the franchising agreement do not allow the franchisee to make any changes in the product format and the product has to be sold in a specified geographical area.
The franchisee utilizes the franchiser’s product, service and trademark for selling.
Ex : Automobile dealers and dealers of petrol, gas and diesel are examples of product distribution franchises. Slide 16: 2.Business format franchise
The franchisee has the freedom to modify or make changes to the franchiser’s product or produce a new product under the license of the franchiser.
The franchisee uses the trademark of the franchiser along with his methods of production, quality control mechanisms, marketing plans, operational standards and so on.
In this type of franchising too, the franchisees operate in a designated market area.
Ex: Fast food outlets such as McDonald’s, and ice cream parlors such as Baskin Robbin’s are examples of business format franchises. Slide 17: 3.Trade name franchise
The franchiser allows the franchisee to use his trade name or license for the products manufactured at the franchisee’s plant.
The franchisee after producing the products has considerable freedom to sell them in a predetermined market area.
Ex: Soft drink bottlers are examples of this type of franchises. Slide 18: Advantages to the franchiser
Low capital and low risk
Extended Market Penetration
Motivation of the Franchisee
Controlling the quality Disadvantages to a franchiser
Lower Profit Potential Slide 19: Advantages to the franchisee
Reduced Business Risk
Easy Financing of the Business
Resale of the Business Disadvantages to a franchisee
Nonperformance of the Franchiser Slide 20: Retail Franchising within India Grew initially in the apparel & footwear sectors
Has gradually grown to cover a wide variety of sectors including food, consumer durables, jewelry, books, home décor etc
Two varieties of Retailers:
The manufacturer-retailers – typically Product Distribution Franchises – have been around for a while
The aggregators – typically Business Format Franchises – only now beginning to show up Slide 21: Existent & likely to be successful only in smaller formats
Substantial action also happening in non metro locations
Thereby spreading organized retailing over a larger footprint
Has had to contend with the peculiarities of the Indian real estate markets
Result – MG (Minimum Guarantee) has become the key driver Slide 22: STRATEGIC ISSUES IN RETAILING Situation analysis
Identification of target markets and consumers
Developing an overall strategy considering the controllable and uncontrollable variables
Developing specific activities on the basis of the day-to-day operations and also the business environment.
Finally, suitable control strategies for control have to be devised by evaluating the deviations and correcting them to attain the retail organization’s objectives. Slide 23: Location
Store Image Decisions Slide 24: MARKET DECISIONS Product Assortment and Procurement
Service Mix and Retailing Environment
promotion Slide 25: GLOBAL TREND IN RETAILING Significant global changes over the past two decades
Present global state that involves e-tailing (e-tailing is a term for retailing on the Internet)
Disruption (unexpected break in activity) in retailing,
Origin of catalogue retailing, discount department stores, and Internet retailing
Discounted departmental stores
Online retailing Slide 27: TRENDS IN RETAILING IN INDIA Indian retail industry remained a largely unorganized sector till the eighties
Corporate houses like Raymond’s, Bombay Dyeing, and Titan stepped into retailing after recognizing the vast potential of this sector
The growth of the retailing industry in India are,
Growth in the demand for newer and varied products by consumers,
Branded goods penetrating the market on a large scale and
A fall in the cost of real estate. Slide 28: Retailing provides the highest employment after agriculture in India.
These retail outlets contribute over Rs.14,000 crore to the GDP (Gross Domestic Product) of the country.
The major segments of retailing are,
followed by furniture, healthcare, garments, food and services.
Retailing of personal care products, apparel, music, and books is on the rise too. Slide 30: Clothing and Textiles Jewelry and Watches Footwear Food and Grocery Slide 31: Home Décor and Furnishings Electronics Beauty Care Books and Music Slide 32: Major Retailers India’s top retailers are largely lifestyle, clothing and apparel stores
This is followed by grocery stores
Following the past trends and business models in the west retail giants such as Pantaloon, Shoppers’ Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores
These Walmart wannabes have the economy of scale to be low –medium cost retailers pocketing narrow margin Leading Retailers Slide 33: SUMMARY Types of retailers
Strategic issues in retailing
Global trend in retailing
Trends in retailing in India