Introduction to Retail

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Introduction to Retail, Evolution of Retail, Country Retail Life Cycle, Careers in Retail, FDI in Retail, Challenges of Retail Industry

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Retailing -Rohita Dwivedi:

Retailing -Rohita Dwivedi

What is Retail?:

What is Retail? The word retail is derived from a French word retaillier meaning to cut off a piece or to break bulk. Retailing can hence be considered as the last stage in the movement of goods/ & services to the consumer

Retail Philosophy — “By The People, For The People and Of The People”:

Retail Philosophy — “By The People, For The People and Of The People” Retailing involves selling products and services to consumers for their individual or family use. As the final link between consumers and manufacturers, retailers are a vital part of the business world.  Retailers add value to products by making it easier for manufactures to sell and consumers to buy. 

WHY STUDY RETAIL??:

WHY STUDY RETAIL?? Impact of Retailing on economy Retail Boom in India Career Opportunities

India – Retail Perspective Overview:

India – Retail Perspective Overview Population of 1.21 billion people India will rank no 1 in population by 2030 Domestic Private Consumption-60% of GDP growing at 7.7% Real per capita income rises from Rs.5089 in 2001-02 to Rs.10810 in 2011-12

India – Retail Perspective Overview…:

India – Retail Perspective Overview… Household Annual Income CAGR 1-5lakhs-9% 5-10 lakh- 12% Above 10 lakh- 15% 50% of population is below 24 years 62% population in working age group Household size reduced from 5.57-5.08 Urban household size reduced – from 4.79 – 4.77

India – Retail Perspective Overview…:

India – Retail Perspective Overview… Plastic money spend growing at CAGR 26% Rate of urbanization in last 10 years – 2.7% total 27.7% Rural consumption(3750 billion) outpaced urban(2994 billion) in 2011-12

India – Retail Perspective Overview…:

India – Retail Perspective Overview… Affordability growth Falling interest rates Easier consumer credit Non food expenditure – 59%

Indian Retail-An Overview:

Indian Retail-An Overview Second largest industry after agriculture- Rs.2,23,572 crore GDP contribution-10% Contribution to employment-8% Overall retail growth-16% Organized retail growth-26.8% Organized retail penetration -8%

Indian Retail-An Overview…:

Indian Retail-An Overview… GRDI index rates India 14 th in 2013 2 nd largest growing economy 3 rd largest economy in terms of GDP 4 th largest economy in PPP Rated among top 10 FDI destinations

The Changing Indian Consumer:

The Changing Indian Consumer The urban consumer Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever Internet Explosion No longer need-based shopping Shopping is a family experience Changing Mindset Increasing tendency to spend Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education

Retail Realities: Beyond Urban Boundaries:

Retail Realities: Beyond Urban Boundaries 638,691 villages 128 million households 3 times the urban population 41% of Indian middle class and 58% of the total disposable income ITC’s e-choupal, HUL’s project Shakti

The Indian Retail Sector Can Be Broadly Classified Into—:

The Indian Retail Sector Can Be Broadly Classified Into—

Unorganized Retail in India:

Unorganized Retail in India Currently captures 92% of total retail market Mainly a family owned business Mostly mom-pop stores Consumer familiarity-USP Low cost structure Very low real estate and labor cost Low taxes to pay

PowerPoint Presentation:

Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Traditional/Pervasive Reach Government Supported Historic/Rural Reach Modern Formats/ International Evolution of Indian retail Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency

Industry Evolution:

Industry Evolution Traditionally retailing in India can be traced to The emergence of the neighborhood ‘Kirana’ stores catering to 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 up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers

Industry Evolution…cont…:

Industry Evolution…cont… For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books. Post 1995 onwards saw an emergence of shopping centers, mainly in urban areas, with facilities like car parking targeted to provide a complete destination experience for all segments of society Emergence of hyper and super markets trying to provide customer with 3 V’s - Value, Variety and Volume Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid. At year end of 2000 the size of the Indian organized retail industry was estimated at Rs. 13,000 crore

Stages of Lifecycle of Industry:

Stages of Lifecycle of Industry Introduction: Country that has just entered GRDI Retailers plan their entry strategies India in 1990s Kazakhastan in 2007 Lasts for around 10 years depending on the market attractiveness Example: African markets Strategy suggested: A rapid penetration strategy: low price, high promotion, limited distribution, advertises for awareness

Stages of Lifecycle of Industry..:

Stages of Lifecycle of Industry.. Growth: Market is developing quickly and is also ready for modern retailing Retailers have a good chance of long term success Retailers should enter through local representation, sourcing offices and new stores Lasts for approx. 15-25 years Example: Indian market Strategy suggested: strength against competitor, stronger distribution channel, shift of advertising from product awareness to product preference

Stages of Lifecycle of Industry..:

Stages of Lifecycle of Industry.. Maturity: Market is still big and growing but the space for new entrant will become tighter Margins for error is thin Competition from international retailers Generally lasts for 5-10 years Example: South Asian markets Strategy suggested: enter new market segments and innovative products and offers

Stages of Lifecycle of Industry..:

Stages of Lifecycle of Industry.. Decline: Window of opportunity is closing fast and organised retail is at 40 to 60 percent Existing retailers can enter through discount formats or non food formats such as consumer goods and apparels Lasts for around 5 to 10 years before reaching saturation Example: Developed country markets Strategy suggested: identify weak segments, maintaining investment levels selectively, controlled advertising

Challenges In The Industry:

Challenges In The Industry Low domestic competition Because of fragmented nature of industry Lack of exposure to global best practices Low entry barriers for unorganized retailing Moderate entry barriers for organized retailing Wholesale system under-invested leading to 20-40% wastage Non level playing field issues Wide differences in treatment of small and large retailers

Challenges In The Industry…:

Challenges In The Industry… Real Estate low Availability and high cost Supply Chain Inconsistency Poor Infrastructure Lack of Skilled Manpower Complex tax Structure Heavy Stamp Duties

FDI in Indian retailing:

FDI in Indian retailing Current Indian FDI Regime FDI is now permitted in retail trade sector: Private labels – 100% Single Brand Retailers – 100% Multibrand Retailers – 51%

Why FDI?:

Why FDI? Improve competition Develop the market Greater level of exports due to increased sourcing by major players Sourcing by Wal-Mart from China improved multifold after FDI permitted in China Similar increase in sourcing observed for Metro in India Provides access to global markets for Indian producers

Why FDI?...:

Why FDI?... Investment in technology Cold storage chains solve the perennial problem of wastage Greater investment in the food processing sector technology Better operations in production cycle and distribution Better lifestyle Greater level of wages paid by international players usually More product variety Newer product categories Economies of scale to help lower consumer price Increased purchasing capacity of consumers

Careers In Retailing:

Careers In Retailing Career opportunities in Retailing is extremely dynamic, some idea can be gathered knowing: Pantaloons plans to hire 7000 people in the next 2 years Shopper’s Stop plans to take 3000 people in the next 3 years Reliance retail is expected to take 42,000 people in the next 2-3 years 500 people are required to man a single mall 250 malls expected to be functional in the next 5 years

Careers In Retailing….:

Careers In Retailing…. Retail organization can be divided into various functional departments, to understand this clearly let us look at a organization chart of a typical retailer: Aditya Birla Pantaloon Retail

Careers In Retailing….:

Careers In Retailing…. Operations: Zonal managers Area managers Store managers Asst. Store managers Floor managers Department managers Category management Category managers Buyers Asst category managers Asst. Buyers Information Technology Software development managers Hardware maintenance managers

Careers In Retailing….:

Careers In Retailing…. Business development: Online retail managers Project managers Asst. Manager- projects Corporate sales manager Asst. Manager- corporate sales Supply chain management: Manager- supply chain Asst. Manager- supply chain Warehouse managers Asst manager- warehouse Customer service: Customer relationship managers Customer facilitators

Careers In Retailing….:

Careers In Retailing…. Marketing and advertising: Retail marketing managers Pr manager Asst manager- pr Pr executives Human resource development: Manager training Manager recruitment Hr manager Commerce: Manager- finance Manager- audit Manager- collections CAs, CSs

THANK YOU!!!!:

THANK YOU!!!!

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