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Introduction to retail


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Introduction to Retail

Introduction to Retail

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  • 1. Retailing -Rohita Dwivedi
  • 2. 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
  • 3. 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.
  • 4. WHY STUDY RETAIL?? •Impact of Retailing on economy •Retail Boom in India •Career Opportunities
  • 5. 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
  • 6. 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
  • 7. 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
  • 8. India – Retail Perspective Overview…  Affordability growth  Falling interest rates  Easier consumer credit  Non food expenditure – 59%
  • 9. 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%
  • 10. Indian Retail-An Overview…  GRDI index rates India 14th in 2013  2nd largest growing economy  3rd largest economy in terms of GDP  4th largest economy in PPP  Rated among top 10 FDI destinations
  • 11. 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
  • 12. 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
  • 13. The Indian Retail Sector Can Be Broadly Classified Into—
  • 14. 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
  • 15. Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive Brand Outlets Hyper/SuperMarkets 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
  • 16. 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
  • 17. 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
  • 18. 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
  • 19. 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
  • 20. 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
  • 21. 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
  • 22. 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
  • 23. 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
  • 24. 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%
  • 25. 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
  • 26. 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
  • 27. 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
  • 28. 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
  • 29. 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
  • 30. 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
  • 31. 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
  • 32. THANK YOU!!!!