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Introduction to retailing
 

Introduction to retailing

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    Introduction to retailing Introduction to retailing Presentation Transcript

    • Introduction to Retailing
      • BOOKS FOR REFERENCE
      • Retail Management-Functional Principles and Practices-Gibson Vedamani
      • Retail Management By Berman & Evans
      • Retail Management By Swapna Pradhan
    • UNIT - 1
    • Retail
      • The word retail is derived from the French word “retaillier” which means “to cut a piece off” or “ to break bulk”.
      • In simple terms , it implies forst hand transaction with the customer.
    • Retail
      • Retailing involves a direct interface with the customer and the coordination of business activities.
    • INTRODUCTION TO RETAIL
      • Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers.  A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products. 
      • RETAILING Business activities involve Selling Goods and Services to Consumers for their Personal, Family or Household use.
      • “ Every sale of Goods and Services is to final consumer” – Food products, apparel, movie tickets; services from hair cutting to e-ticketing.
      • Retailing is the Last stage in Distribution Process- Wholesale is an intermediate where Goods and services are sold to Business customers.
      • MANUFACTURER
      • DISTRIBUTOR
      • WHOLESALER
      • RETAILER
      • END-CONSUMER
    • Who is a Retailer?
      • Retailer links Producers to Customers
      • Retailer is a person, agent, agency, company or organization who delivers the Goods or Services to ultimate consumer
    • 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
      • 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.
      • 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 is estimated at Rs. 13,000 crore
      • Retail trends often mirror trends in a nation’s overall economy.
      • Retailers add value by Providing the Right Product at The Right Place at the Right Time.
    • Organized Retailing
      • Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses.
    • ORGANISED RETAILING
      • Retail chains like Wal Mart, McDonalds brought Rapid Growth and consolidation of Organized Retail
      • Rapid rise of Income levels and accompanying changes in lifestyles greatly contributed to growth of Organized Retail
    • Unorganized Retailing
      • Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc
    • EMERGING TRENDS IN RETAILING
    • Emerging Trends
      • Last decade has seen tremendous changes in Retail Business – from made to order to ready to wear, emphasis on value addition and cost reduction.
      • Family run retail business giving way to modern professional retail.
    • Emerging Trends
      • Retail improving inventory management through systems – faster turnover, better profitability, fast changing customer preferences for goods and services.
      • “ BETTER CUSTOMER CARE”
    • Emerging Trends
      • Driven by changing lifestyles, strong income growth and favorable demographic patterns, Indian retail is expanding at a rapid pace.
      • Mall space, from a one million square feet in 2002, touched 40 million square feet by end-2007 and an estimated 60 million square feet by end-2008
    • Emerging Trends
      • With consumers for luxury goods growing in numbers , the Indian retail market is estimated to reach around US$ 3.5 billion to US$ 30 billion by 2015
    • Emerging Trends
      • The increase in the PC and internet penetration along with the growing preference of Indian consumers to shop online has given a tremendous boost to e-tailing-the online version of retail shopping. An estimated 10 per cent of the total e-commerce market is accounted by e-tailing.
    • Emerging Trends
      • Led by the rising purchasing power, changing consumption patterns, increased access to information and communication technology and improving infrastructure, rural retail market is estimated to cross US$ 45.32 billion mark by 2010 and US$ 60.43 billion by 2015
    • Emerging Trends
      • With international brands like Tommy, Esprit and Puma (that have entered the country) growing well over 100 per cent, many others are also planning to foray into the Indian retail market. India's vast middle class with its expanding purchasing power and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets.
    • Emerging Trends
      • The world's largest retailer, Wal-Mart, has tied-up with Sunil Mittal's Bharti Enterprises to enter Indian retail market.
      • World's leading coffee chain, Starbucks' enters India through a tie-up with the country's leading multiplex operator PVR Limited.
    • Emerging Trends
      • Apple Inc has entered into an exclusive marketing and distribution deal with Reliance Retail through "iStore by Reliance Digital".
      • British retailer Marks & Spencer's has tied with Reliance Retail and plans to open at least 50 new stores in India over the next five years, with an initial investment of up to US$ 58 million
    • Emerging Trends
      • German sportswear and Apparel Company, Adidas is going in for a major expansion across India, and plans to have a total of about 450 franchisee outlets in the country.
    • Emerging Trends
      • The growing attractiveness of retail industry has begun to attract new entrepreneurs with innovative ideas.
    • Global Retail scenario
      • In the other parts of the world, retailing is better organized than what it is in India.
      • The US retail Industry is the world largest retail industry and its still growing.
      • In USA most part of retailing is accounted by organized sectors.
    • Global Retail scenario
      • The USA dominates the world retail market and accounts for 32.3% of the global retailing group.
      • Europe has 30.8 %, Asia Pacific has 25.6 %, and rest of the world has 11.20 %.
    • Global Retail scenario
      • The organized retailing has gained a great deal of momentum in China in the past few years.
      • The developing countries are also making an effort in the industry but organized retailing is mainly dominated by the developed countries like USA.
    • Global Retail scenario
      • Retail is the significant contributor to the overall economic activity around the world.
      • The employment opportunities offered by the retail industry is huge.
    • Global Retail scenario
      • According to the US department of labor, about 22 million Americans are employed in the retailing industry in more than 2 million stores.
      • Globally, retailing is customer centric with an emphasis on innovation in product, process and services.
    • Global Retail scenario
      • Globally, Retail is a very fast changing field and the customer not only has to keep up with ever changing expectations and demand of the consumers but also has to keep a track on the competition and changes in technology.
    • Indian Retail Scenario
      • Most of the retailing in India is unorganized. Most of the organized retailing in the country has just started recently, and has been concentrated mainly in the metro cities.
      • Today convenience has become a priority for the Indian consumers and they want everything under one roof so that they have an easy accessibility.
    • Indian Retail Scenario
      • So the organized retailing has a very big opportunity to set itself in the Indian markets.
      • The two main factors which drives organized retailing in India are low prices and the benefits that are offered by them.
    • Indian Retail Scenario
      • India is seen as a competitive marketplace with the potential target consumers in the niche and middle class segments.
      • Over the past few years. International companies like Marks & spencer, Mc Donald’s, Dominos etc have entered the Indian markets.
    • Indian Retail Scenario
      • Large Indian companies like Reliance group, Future group, Essar telecom Retail, Shopper stop are investing huge amount of money in this sector.
      • The largest chain, Subhiksha, has 760 outlets in India while Big Apple aims to have 100 stores very soon.
    • Indian Retail Scenario
      • The entry of companies like Big Bazaar have created the concept of value for money for the Indian consumers.
      • A McKinsey report on India says organized retailing would increase the efficiency and productivity of economic activities, and would help in achieving higher GDP growth.
    • Indian Retail Scenario
      • India’s large rural population has also attracted the big organizations to tap this market.
    • Functions Of Retailer
      • 1) Breaking bulk
      • 2) Providing assortment
      • 3) Holding inventory
      • 4) Providing services
    • THE RETAIL ENVIRONMENT UNIT - 2
    • The Legal Environment
      • The legal scenario of a country plays an important role.
      • For eg.
      • Restricting the days and hours during which the retailers may operate.
      • Limit the manner of business to ensure consumer privacy.
    • The Legal Environment
      • Laws on non discriminatory hiring and promotion of people.
      • Trademarks agreement which provides retailers with exclusive rights to brand names.
      • Licensing agreements which allows the retailers to sell goods created by others in return for a royalty.
    • The Legal Environment
      • Price marking laws which specify the discounted items must be marked properly.
      • Product safety laws that prohibits retailers to sell goods that have not been tested properly.
    • The Technological Environment
      • These changes can bring about a lot of other changes as they affect the range of choices available to both the consumer and the retailer. New technology can lead to better products and services for the consumer and at the same time it can help the retailer as well like keeping control over the inventory level.
    • The Importance of Technology in Retail
    • The Importance of Technology in Retail
        • Collection of data
        • The use of technology aids data collection. The data can be collected regarding the consumers, their purchases and the frequency of buying. This information helps the retailer to distinguish the customer who shops frequently.
    • The Importance of Technology in Retail
      • 2) Efficiency in Operations
      • The use of technology serves the basis of integrating the functioning of various departments. As the process gets automated , the time involved in the task is reduced
    • The Importance of Technology in Retail
      • 3) Helps communication
      • Communication can be faster with the help of technology and it can be a 24 x 7 process. EDI can be used for communication with the suppliers and vendors
    • The Importance of Technology in Retail
      • Universal product code or UPC is one of the most important technology that is being used in the retail sector.
    • The Importance of Technology in Retail
      • EDI is defined as the exchange of business information with the help of computers. It helps in saving time, reducing cost and serves as a tool for strengthening the relationship between the retailer and the supplier.
    • The Importance of Technology in Retail
      • The use of systems to organize, search and manage the data is termed as DATABASE MANAGEMENT. A simple purchase at any retail store enable the stores to gather a vast amount of information about the customer and products.
    • The Importance of Technology in Retail
      • E- tailing
      • The rise of internet has led to phenomenal changes in the world of retailing. In retailing, it has opened a new way for the retailers to reach out to the customers and the suppliers where they don’t have any physical presence
    • The Economic Environment
      • The economy is a term which is used to denote the patterns of economic activity in a country which includes the production and environment, income, consumption and the living standards.
    • The Competitive Environment
      • Competitors are offering choices to customers and “value added” products
      • Competitors come in different sizes (small organizations to international companies) and serve different market segments (specialized industry segments to mass markets)
      • In the process of serving customers, many are making profits; thus they have an incentive to increase their market share and are promoters of retail competition
    • FDI in Retail
      • What is FDI?
      • Foreign direct investment (FDI) is a method of allowing the external finance into an economy. India is the second most preferred FDI destination after China.
    • Reasons for not allowing FDI in retailing in India
      • 1. Affects unorganized players (kirana shops) –
      • The critics argue that opening the retail sector would affect the sales in the unorganized sector. As a result the employment it provides would be affected.
      • 2) Kind of employment
      • They say that it cannot provide employment opportunities to semi-illiterate people . This argument gets more attention because in India semi-illiterate people in quiet large in number
      • 3) Lowering of prices
      • If FDI is allowed in retailing then it would result in lowering of prices because FDI will result in good technology, supply chain, etc. If prices were lowered then it would lower the margin of unorganized players. As a result the unorganized market will be affected. This in turn will affect the employment opportunities provided by the unorganized market
    • FDI in Retail in India
      • In India , FDI in Retail, is restricted.
      • 51 % of FDI is allowed in Single brand retailing
      • and
      • 100 % in cash and carry format.
    • FDI in Retail in India
      • An international retailer can enter the Indian Retail market in any of the following-
      • High tech items/items that require specialized after sales service.
      • Social sector items.
      • Medical and diagnostic items.
    • Ways of entering in Indian Retail
      • Franchising is one way by which the foreign investor can enter into the Indian Retail market. In case the master franchise is appointed at the national or regional level, the parent company gets the right to appoint local franchisee.
      • Eg. Nike, Marks and spencer
    • Ways of entering in Indian Retail
      • Joint venture is another form whereby the international partner provides equity and support to the Indian investor. The Indian partner provides the relevant local knowledge which is needed for success of a venture.
      • Eg. Reebok
    • Ways of entering in Indian Retail
      • Companies can also set up DISTRIBUTION OFFICES in India and thereby trade through the local Indian retailers.
      • Eg. Hugo boss operates in Indiathrough the distribution offices.