Definations According to William J Stantons, “ A Retailer or Retail store is a business enterprise which sells primarily to the ultimate consumers for non business use.” According to Cundiff and Still, “Retailing consist of those activities involved in the selling directly to ultimate consumers. ” According to Mc. Carthy. “ Retailing is selling to final consumer products to households.”
Retailing may be understood as the final step in the distribution of merchandise for consumption by the end consumers. Retailing is responsible for matching final consumer demand with supplies of different marketers. Retailing is high intensity competition industry, The reasons for its popularity lie in its ability to provide easier access to variety of products, freedom of choice and many services to consumers. The Indian retail is dotted by traditionally market place called bazaars or haats comprises of numerous small and large shops, selling different or similar merchandise
Characteristics of Retailing Direct Interaction with Customers. Lower Average Amount of Sale Transaction. Point of Purchase and Display and Promotion.
Importance of Retailing Services to Wholesalers and Producers.b) Advertisement of new products.c) Arrangement to sell the goods.d) Information about consumer habits, tastes and needs.e) Sharing of Risks. Services to consumers.g) Selection.h) Variety of goods.i) Demand creation.j) Distribution.k) Credit Facility.
Functions of Retailing. Sorting. Breaking Bulk. Holding Stock. Additional Services. Channel of Communication. Transport and Advertising Functions
Main Activities involved in retailing Choosing the Store Location. Sourcing/buying or partnership/supply chain management. Merchandising and category Management. Visual Merchandising (Display) Sales Promotion. Store Positioning and Building the store as a Brand. Store Operations. IT Task. Inventory Management. Shrinkage Loss Prevention. Real estate development. Achieving efficiencies in Retail Operations.
Retailing in India. Retail is the new buzzword in India. The global Retail development Index has ranked India first, among the top 30 emerging markets in the world. It is believed that India has the potential to deliver the fastest growth over the next 50 years. While barter would be considered to be oldest form of retail trade, since independence , retail in India has evolved to support the unique needs of country, given its size and complexity
Second largest sector after Agriculture. Contributes about 10 – 11 % of the GDP The estimated size of the organized retail industry in India is Rs. 16,000 crores. This is 2 % of the total estimated retail trade. Indian Retail trade increased from Rs. 2200 billion in 2000 to Rs 3300 billion by the year 2005 Indias first true shopping mall – complete with food courts, recreation facilities and large car parking space – was inaugurated as lately as in 1999 in Mumbai. (this mall is called "Crossroads").
The Evolution of Retail in India Retail in India has evolved to support the unique needs of our country, given its size and complexity Haats, Mandis and Melas have always been a part of the Indian landscape. They still continue to be present in most parts of the country and form an essential part of life and trade in Various areas. The PDS (Public Distribution System) would easily as the single largest retail chain existing in the country. the evolution of the PDS of Grains in India has its origin in the “rationing system” introduced by the British during world war II
The system was started in 1939 in Bombay and subsequently extended to other cities and towns. the system was abolished post war but however attaining independence India was forced to reintroduce it in 1950. There was rapid increase in the ration shops ( being increasingly called the Fair Price Shop or FPSs) The Canteen Stores Department and the Post Offices in India are also among the largest network of outlets in the country reaching population across the country.
The Khadi & Village industries (KVIC) was also set up post independence. The cooperative movement was again championed by the government.Indias Largest retail Chains: PDS: 463,000 Post offices: 160,000 KVIC: 7,000 CSD Stores:3,400(source business world marketing White book 2005)
In the past decade, the Indian marketplace has transformed dramatically. However from the 1950,s to the 80,s, investment in various industries was limited due to low purchasing power in the hands of the consumer and the government’s policies favoring the small scale sector. The first attempts at organized retailing were noticed in the textiles sector. One of the pioneers in this field was Raymond’s which set up stores to retail fabric.
Raymond’s distribution network today comprises 20,000 retailers and over 256 exclusive showrooms in over 120 cities of the country Other textile manufacturing who set up their own retail chains wee Reliance- which set up Vimal showrooms and Garden Silk Mills, which set up Garden Vareli showrooms.
The Evolution of retail in India Established Emerging Traditional formats Formats Formats Kirana shops Exclusive retail outletsItinerant Salesman Convenience/ Hypermarket Haats department stores Internal retail Melas PDS/ Malls / Specialty Malls Mandis etc. fair price shops Multiplexes Pan/ Beedi shops Fast food outlets Service galleries
Drivers of Retail change in Indiamajor drivers : Changing Income Profiles: Steady economic growth fuelled the increase in disposable income in India. The average middle class familys disposable income rose by more than 20% between 1999-2003. Diminishing difference between Rural and urban India: Rural India accounts for over 75% of India population and this in itself offers a tremendous opportunity for generating volume driven growth. Tax benefit. In year 2002-03 LIC sold 50% of its policies in rural India. Same BSNL also sold its 50% connection in small towns .
Changes in Consumption patterns: Occupational changes and expansion of media have caused a significant change in the way the consumer lives and spends his money.o The changes in income brought about changes in the aspirations and the spending patterns of the consumers. the buying basket of the consumer changedt The emergence of a young Earning India : Nearly 70% of the Indian population is below the age of 34. taking advantages of employment opportunity in the booming service sector these young Indians are redefining service and consumption patterns
Prominent sector in Indian retail 1. Clothing, textiles and fashion Accessories: 2. Food & food Services: 3. Consumer Durables: 4. Books & Music: Other emerging sectors Jewellery retail Footwear retail Time Wear Retail Fuel Retail/ petro retail
Challenges to retail Development in India Retail not being recognized as an industry in India. The high costs of real estate. Lack of Adequate infrastructure. Multiple and complex taxation system.
Share of organized & unorganized retail with comparison source: Ernst &Young, The Great Indian Retail Story, 2006 PAKISTAN 1 99 INDIA 3 97 CHINA 20 80INDONESIA 30 70 BRAZIL 36 64 ORGANISED 40 60 UNORGANISEDTHAILAND MALASIA 55 45 TAIWAN 81 19 USA 85 15 0% 20% 40% 60% 80% 100% 21
Indian versus Global Retailing Scenario.
Basis Indian Retailing Global RetailingNature of Retailing India is mostly Unorganized. At Retail World globally is wellOperation present only 2% to 4% accounts for organized organized and in most developed sectors. countries is control by major. Scope of Package good manufacturer control all retail In organized retail industry retailer Influence business to a large extent. But the scenario is have an upper hand in negotiating changing, even with the limited growth of deals with manufacturers. organized retail in India.Technology Indians retailers lag behind global retailers in Global retailers resorts employ use of technology. Though, retailers like technology in larger scope than shopper stop, Pantaloons are employing Indian retailers. technology in their operations. Formats Indian retail industry is concentrated around A large no. of retail formats are few formats. Only 2% of retail industry has available. adopted modern retail formats of department stores and supermarkets.Retail Space Real estate space available for organized retail In west large store formats are is getting saturated in Metros and in tier 1 located in outskirts of cities or the cities in India & is now looking at tier 2 cities. suburbs. The enables them to have large space.
Basis Indian Retailing Global RetailingInfrastructure Maximum infrastructure problems faced Minimum infrastructure problems faced by retailers in International market. by retailers in International market.Manpower A lack of trained manpower hampers Trained manpower available aiding retail development in industry. boom.Products/Bran Indian retail industry usually has brands of Global retailers resort to keep their ownds Assortment well known Indian and foreign brands. This leads to increase companies. Private label brands are competition with better known negligent or absent. company brands.
Difference between Wholesaler and Retailer.Criteria Wholesaler RetailerBuyers Business customers, i.e. Retailers Final Customers, i.e. End usersBuying Motive of For reselling/trading. Wholesaler or producer in case largeBuyers retailers.Business Volume High. Low.Risk Involved High. Less.Investment High. Moderate.requirementPromotional Less Important. Very important.ActivitiesStore Atmosphere, Less attention. Very Important Hence maximumLayout & Location attention.Area covered Large area covered many areas Relatively small- mostly retailers operate in territories can be handle by single small area. wholesaler.Upper link Producer Wholesaler or producer in case of large retailers.
Drivers of Success in Retail Sector Customers are driving force in change. Re-evaluating the Marketing Plan. Advanced Education for Retailers is critical for growth. Strong visual recognition. Work place challenge.