4 P's of RETAIL & Indian Retail Sector

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Hi Ujjwal, I went thru ur ppt.Its a very informative one. However I would suggest make it more ALIVE....The core essence of any presentation is how communicative. The difference between being Communicative & Informative is that Informative only informs but Communicative means it involves the other person also. Add some examples & some quality pictures of the formats you are speaking about and then see how wonderful this ppt will become. Excellent job! Abhishek Bhattacharjee Training Incharge-Bihar & Jharkhand-Tata Teleservices Ltd.

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Presentation Transcript

The Indian Retail Sector&The 4 P's of Retailing : 

Presented By:- Ujjwal Abhishek Roll No - 8051 The Indian Retail Sector&The 4 P's of Retailing

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. Retail in India is brought up by SHOPPER’S STOP when it established its first customer care associates in the year 1993 and was providing a salary of Rs. 900/- to an employee. Ujjwal Abhishek, ISMR/PUNE

Industry Evolution [Cont…] : 

Industry Evolution [Cont…] 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. Ujjwal Abhishek, ISMR/PUNE

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 Ujjwal Abhishek, ISMR/PUNE

Industry Evolution [Cont…] : 

Industry Evolution [Cont…] 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 is estimated at Rs. 13,000 crore Ujjwal Abhishek, ISMR/PUNE

4 P’s of retailing : 

4 P’s of retailing The four P’s of retailing that enhance the sell of a product are;- Passion Possession Place Pleasure Ujjwal Abhishek, ISMR/PUNE

Passion : 

Passion The term Passion may refer to feeling very strongly about a subject or product, usually referring to feelings of intense desire and attraction, is very passionate about something. It generally shows the attitude/eagerness of a customer towards a product that he/she buys. i.e. to what extent the customer is addicted to buy a product. E.g when BAJAJ launched Pulsar many of the youngsters have eagerness to buy it. Ujjwal Abhishek, ISMR/PUNE

Possession : 

Possession It is generally seen that whenever a firm/brand/company launches a new product for which the customers have been waiting for a long time, possess an eagerness to but/ avail the product or service as soon as possible. Ujjwal Abhishek, ISMR/PUNE

Place : 

Place The place refers to placement (usually managed by sales or OEM), such as having the product available where and when targeted customers want to buy it Ujjwal Abhishek, ISMR/PUNE

Pleasure : 

Pleasure Pleasure is commonly conceptualized as a positive experience, happiness, entertainment, enjoyment, ecstasy, and euphoria. However, is a difficult concept to define as the experience of pleasure differs from individual to individual. Ujjwal Abhishek, ISMR/PUNE

Retail formats in India : 

Retail formats in India 1. Malls: The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd, Pantaloon. Ujjwal Abhishek, ISMR/PUNE

Retail formats in India [cont…] : 

Retail formats in India [cont…] 2. Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors. Ujjwal Abhishek, ISMR/PUNE

Slide 13: 

3. Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non perishable goods Retail formats in India [cont…] Ujjwal Abhishek, ISMR/PUNE

Malls & Shopping Centers at Pune : 

Malls & Shopping Centers at Pune Ujjwal Abhishek, ISMR/PUNE

Malls & Shopping Centers at Pune : 

Malls & Shopping Centers at Pune Ujjwal Abhishek, ISMR/PUNE

Slide 16: 

4. Department Stores: Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc.  Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop!. Retail formats in India [cont…] Ujjwal Abhishek, ISMR/PUNE

Retail formats in India [cont…] : 

Retail formats in India [cont…] 5. Hypermarts/Supermarkets: Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales. Ujjwal Abhishek, ISMR/PUNE

Retail formats in India [cont…] : 

Retail formats in India [cont…] 6. Convenience Stores: These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium. Ujjwal Abhishek, ISMR/PUNE

Retail formats in India [cont…] : 

Retail formats in India [cont…] 7. MBO’s :     Multi Brand outlets, also known as Category Killers, offer several brands across a single product     category. These usually do well in busy market places and Metros. Ujjwal Abhishek, ISMR/PUNE

Multi –Format Retailing : 

Multi –Format Retailing About 40-50% of the organized Indian retail ventures are multi – format in nature. Additionally, Indian retail venture are mostly owned by holding organization with multiple business interest. Irrespective of the format and merchandise focus, the pressure to look for the way of constant cost optimizing in line with rapid growth is mounting. Given the rigorous expansion plan and industry wise generally thin margins. Ujjwal Abhishek, ISMR/PUNE

Premium Format of retailing? : 

Premium Format of retailing? Premium retailing deals with retailing of luxury items. It also deals with fulfilling the customer’s needs to an extent limit so that the customer can be fully satisfied by using the product/service for the first time. eg. CCD (Café Coffee Day) which is going to start this format and will be providing his customers with LIVE DJs, Discos and many more. Ujjwal Abhishek, ISMR/PUNE

Recent Trends : 

Recent Trends Retailing in India is witnessing a huge revamping exercise as can be seen in the graph India is rated the fifth most attractive emerging retail market: a potential goldmine. Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion As per a report by KPMG the annual growth of department stores is estimated at 24% Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. Ujjwal Abhishek, ISMR/PUNE

Retail Sales in India : 

Retail Sales in India Unorganized : Vast majority of the twelve million stores are small "father and son" outlets Fragmented : Mostly small individually owned businesses, average size of outlet equals 50 s.q. ft. Though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 s.q. ft per person is amongst the lowest. Rural bias: Nearly two thirds of the stores are located in rural areas. Rural retail industry has typically two forms: "Haats" and “Melas". Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs) Ujjwal Abhishek, ISMR/PUNE

Traditional factors that plagued the retail industry: : 

Traditional factors that plagued the retail industry: Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc. Store design : Biggest challenge for organised retailing to create a “customer-pull” environment that increases the amount of impulse shopping. Research shows that the chances of senses dictating sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying major emphasis & investing heavily in store design. Ujjwal Abhishek, ISMR/PUNE

Traditional factors that plagued the retail industry: [cont…] : 

Traditional factors that plagued the retail industry: [cont…] Emergence of discount stores: They are expected to spearhead the organised retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, RPGs. Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large cineplexes, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and foodmart formed which are aggregations of Kiranas. Ujjwal Abhishek, ISMR/PUNE

Recent changes: : 

Recent changes: Multiple drivers leading to a consumption boom: Favorable demographics Growth in income Increasing population of women Raising aspirations : Value added goods sales Food and apparel retailing key drivers of growth Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households. Ujjwal Abhishek, ISMR/PUNE

Recent changes: [cont…] : 

Recent changes: [cont…] More successful in cities in the south and west of India. Reasons range from differences in consumer buying behavior to cost of real estate and taxation laws. Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption…. ITC is experimenting with retailing through its Ujjwal Abhishek, ISMR/PUNE

Recent changes: [cont…] : 

Recent changes: [cont…] e-Choupal and Choupal Sagar – rural hypermarkets. HLL is using its Project Shakti initiative – leveraging women self-help groups – to explore the rural market. Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve the rural markets. Ujjwal Abhishek, ISMR/PUNE

Recent changes: [cont…] : 

Recent changes: [cont…] IT is a tool that has been used by retailers ranging from www.amazon.com to www.ebay.com to radically change buying behavior across the globe. ‘e-retailing’  slowly making its presence felt. Companies using their own web portal or tie-ups with horizontal players like www.rediff.com and www.indiatimes.com to offer products on the web. Ujjwal Abhishek, ISMR/PUNE

Major Retailers : 

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 Ujjwal Abhishek, ISMR/PUNE

Leading Retailers : 

Leading Retailers India vs. World Indian retail is fragmented with over 12 million outlets operating in the country. This is in comparison to 0.9 million outlets in USA, catering to more than 13 times of the total retail market size as compared to India India has the highest number of outlets per capita in the world - widely spread retail network but with the lowest per capita retail space (@ 2 sq. ft. per person) Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retail industry. Almost 100 times more than the turnover of HLL (India's largest FMCG company). Ujjwal Abhishek, ISMR/PUNE

Leading Retailers [cont…] : 

Leading Retailers [cont…] Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large format store (Shoppers' Stop, Westside, Lifestyle) can compare. The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in Wal-Mart are about 1.3 million where as the entire Indian retail industry employs about three million people. One-day sales record at Wal-Mart (11/23/01) $1.25 billion  - roughly two third of HLL's annual turnover. Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing (against 7 percent employed in India today). Ujjwal Abhishek, ISMR/PUNE

Leading Retailers [cont…] : 

Leading Retailers [cont…] 60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34 of the fastest-growing 50 retailers have just one format Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an average inventory turns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and 10. Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail shelves (translating into a stock-out level of less than 5 %).The stock-out levels among Indian retailers surveyed ranged from 5 to 15 percent. Ujjwal Abhishek, ISMR/PUNE

Future direction: Positives : 

Future direction: Positives AT Kearney has estimated India’s total retail market at US$ 202.6 billion which is expected to grow at a compounded 30 per cent over the next five years. With the organised retail segment growing at the rate of 25-30 per cent per annum, revenues from the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010. The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next decade. Ujjwal Abhishek, ISMR/PUNE

Future direction: Positives [cont…] : 

Future direction: Positives [cont…] Over next two years India will see several Indian retail businesses attaining a critical mass as growth in the industry picks up momentum driven by two key factors: Availability of quality real estate and mall management practices Consumer preference for shopping in new environments Wal-Mart : huge plans for India. Moving a senior official from its headquarters in Bentonville, Arkansas, to head its market research and business development functions pertaining to its retail plans in India. Ujjwal Abhishek, ISMR/PUNE

Future direction: Positives [cont…] : 

Future direction: Positives [cont…] New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty major DLF Properties to set up shop in a mall in New Delhi. Tommy Hilfiger, retailer of apparels, expects to open one store each in Delhi, Ahmedabad, Lucknow and Bangalore in the next four months. Ujjwal Abhishek, ISMR/PUNE

Future direction: Concerns : 

Future direction: Concerns 68 million square feet of mall space is expected to be available by end of 2007, which might lead to over-capacity of malls Lack of differentiation among the malls that are coming up. One option may be to look at specialization. Poor inventory turns and stock availability measures - retailers clearly need to augment their operations. Operations of retailers and suppliers are not integrated. Efficient replenishment practices practiced in the Indian auto and auto-component industry can be leveraged to implement efficient supply chain management techniques. Ujjwal Abhishek, ISMR/PUNE

Future direction: Concerns [cont…] : 

Future direction: Concerns [cont…] Supplier maturity, in terms of adherence to delivery schedules and delivering the quantity ordered, is an issue Sales tax laws - lead to retailers having state-level procurement and storage leads to Indian retailers having higher inventories. VAT has helped alleviate this a bit. Increased adoption of IT and shrinkage management will be a critical area. Ujjwal Abhishek, ISMR/PUNE

Future direction: Concerns [cont…] : 

Future direction: Concerns [cont…] Supply chain and customer relations followed by merchandising, facilities management and vendor development are areas which have significant gaps and proactive training is a key imperative for overcoming these. Ujjwal Abhishek, ISMR/PUNE

Slide 40: 

Ujjwal Abhishek, ISMR/PUNE Thanks For Paying Attention

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