RETAILING CONCEPT•Distributer?•Wholesaler?•Retailing consists of the sale of goods or merchandise,from a fixed location such as a department store in smallor individual lots for direct consumption by thepurchaser.•In French, German and Dutch, Retailing means to sale insmall quantity.
Retailing typesThere are three major types of retailing.o The first is the market, a physical location where buyers and sellers converge. Usually this is done on town squares, sidewalks or designated streets and may involve the construction of temporary structures (market stalls).
The second form is shop or store trading•Some shops use counter-service, where goods are outof reach of buyers, and must be obtained from the seller.•This type of retail is common for small expensive items(e.g. jewellry) and controlled items like medicineand liquor.• Self-service, where goods may be handled andexamined prior to purchase, has become more commonsince the Twentieth Century.(OTC drugs in case ofmedicine)
oA third form of retail is virtualretailwhere products are ordered via mail, telephone oronline without having been examined physically butinstead in a catalog, on television or on a website.
INTRODUCTION OFRETAILING IN PHARMA SECTOR • In the current globalized retail era it is very tough task to fight and survive in the global as well as local market. • The Pharma sector is one among sectors which is facing hard competition. • By introduction of retail malls the customers are getting all the daily use commodities under a single roof. They are getting each and everything which are basic as well as secondary requirement for a high, middle and lower class segment of global society.
• Now the question arises what will be the future of small retailer in pharma industry?• The answer is considering that pharma retailing is clubbed with fast moving consumer goods retailing in most cases. The consumer is getting everything in air conditioned environment – fruits, garments, healthcare articles as well as fulfilling other essential requirements.• So we can say it is "starting end" of small pharma retailers.
MAIN ACTIVITIES INVOLVED INRETAILING1. Choosing store location : Three attributes are important to all retail locations a. Attractiveness b. Convenience c. Proximity2. Sourcing / Buying / Vendor Partnership / Supply Chain Management3. Achieving efficiencies in retail operations a. Margin-Turnover position b. Investment productivity c. Space Productivity d. Employee Productivity e. Average size of transactions
THE VALUE CHAIN ANALYSIS• The term Value Chain is used for adding some extra utilities in the product and then supply / sale it to the end user.• The value chain activity starts at the time of production and ends not after selling but continues till the consumption by the customer.• It includes different services provided by retailer / whole seller or manufacturer to the end-user customer.• The value chain of a pharmaceutical company also consists of all physical and technological distinct activities within the organization that add value to the consumers experience.
• India is now considered as a fastest developing economy in the world.• India is developing in every area of economy i.e in education, technology, agriculture, power generation, Information technology, space technology, development in roads, railways and airways etc.• We consider trade and commerce are the core areas of any country, here we consider retailing has to be given more emphasis as it is the subject of every common man in India today.
AN ILLUSTRATION OF SUBHIKSHADISCOUNT CHAIN• Subhiksha gets about 30 days credit from suppliers and uses about 7 days for its cycle, saving 23 days value. Subiksha has three models :- 1. Pharmacies only which are 150 square feet in area. 2. Departmental stores plus pharmacies, 1000- 1200 square feet, and 3. Supermarkets plus Pharmacies, 1600-2000 square feet.
• To include pharmaceuticals has been a particularly good strategic move for the store.• Medical expense is something that most middle-class people dread.• By offering pharmaceuticals at all its stores at 10 percent discount, Subhiksha has built customer loyalty.• Subhiksha had to face furious opposition at every stage from fellow retail traders as manufacturers and companies have tried refusing to supply Subhiksha.• The tactic of offering pharmaceuticals at a 10 percent discount in particular, caused a great deal of controversy.• Pharma companies, distributors and chemists have been up in arms against the discounting by Subhiksha.
• To be able to offer such a high level of discount and still be profitable, Subhiksha needed two things, 1. Command large volumes to enable volume discounts from Manufacturers. 2. Slash overheads and inventory costs.• The Subhiksha Stores have none of the frills of the large outlets.• They are simple, functional outlets, directly operated, not franchised and comparatively small.
• The Subhiksha format rests on two main planks 1. Lower prices 2. Neighbourhood stores• Subhiksha believes that the MRP is just a cap on prices and prefers to sell everything at less then MRP.• It manages to provide discounts in the range of 10 percent on nearly all products.• Subhikshas appeal to the average middle class household is considerable, the price savings mean a lot for them.
Types of Retail Market• Organized sector:• Unorganized sector:
In Pharma Retailing there are twotypes of sectors :1. Organised Pharma Sector : Pharma chains like Apollo Pharmacy ,Med plus, Subhiksha, Hetero Etc.2. Unorganised Pharma Sector : Unknown and Small retail outlets.
Organized sector:• The organized pharma chains are generally owned by large and Established business houses which have decades of experience in handling large Industries, organized businesses etc.• They have expertise in Trading various Drugs, Manufacturing Drugs, Processing , Packaging , Logistics Handling , Inventory Management, cold storages etc.
• These players are high end and deal in bulk quantities of raw-materials, Processing of raw materials to finished drug formulations. Branding the finished products then packaging and labeling the drugs and they have expertise in using all tools of marketing mix- i.e• 1. Product 2. Price 3. Place 4. Promotion 5. Service etc.
Advantages to Organized PharmaSectors/ Pharma chains• 1. Economies of scale :• 2. Technology driven :
• 3. Retailing their own pharma brands/generic brands along with competitors brands :• 4. Passing advantages to patients and consumers
• 5. Increase in market share and profits :• 6. Discount parameter :
Unorganized sector:• The second type of pharma retailers are the individual outlets i.e small retail medical shops
DISADVANTAGES TO SMALL RETAILERS• 1. No economies of scale to small medical stores : These small stores buy in small quantities from drug distributors with higher prices with no schemes thereby it reduces profit margins• 2. Small geographic area : These small retail medical shops operate from small lanes and by- lanes where it could cater to limited range of patients who belong to that surroundings only. This results in lower turnover of sales resulting in lower profits.
• 3. No home delivery services : These small medical shops generally run on low man power or some times run as a family business and therefore cannot effort to hire persons for home delivery of medicines.• 4. Winding up of medical shops : Not withstanding the business threats from large pharma chain stores most of these stores close their stores by sustaining huge loses.
• 5. Losses from expiry of medicines : New formulas are frequently launched into the market and doctors always want to try new formulas on patients thereby sales of old formulas are slowed down which causes huge quantity of expires of medicines which in turn result in heavy loses.• 6. Discounts can not be offered : Small medical shops buy in smaller quantities and cannot avail the advantage of various schemes on quantity purchases, there by their unit purchase prices are higher and can not offer discount to patients/ customers.
MarketDrivers &Challenges TrendsCompetition
The market is highly fragmented and dominated by the unorganized sector
THE APOLLO HOSPITAL ENTERPRISE• In the field of pharma retail the Apollo Hospital enterprise is doing its business with more than 642 pharmacies across the country with an aim to reach 1000 units at the end of profit year 2008.• Last year Apollo added 262 pharmacies and gained the profit of Rs.8.8 crore.• In 2009, they have aim to reach Rs.16 crore for the year 2008-09.
The following Chart Shows the Growth of ApolloPharmacy’s YoY Growth in Store Adittion
• The share of organized retail in the total market is likely to grow many fold from 2% in the starting years.• The latest Indian retail review shows that in the year 2010 this rate was 20% because growth is attracting new players in the market.• So in conclusion we can say that though there is hike in retail market and specially in organized retail. Then we have what will be future of unorganized small retailers.• I am using the sentence for small retailers of famous Hindi Novelist - Premchand "Kisaan ab apni hi zameen par mazdoor bankar reh jayega.