Retail Industry


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Retail Industry

  1. 1. Retail Industry
  3. 3. Introduction Retailing consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the
  4. 4. Global Overview
  5. 5. Global Powers of Retailing 2006, Deloitte and Stores Magazine, Annual The list of the biggest retailers in the world is dominated by the grocers: Wal-Mart (USA); Carrefour (France); The Home Depot (USA); METRO Group (Germany); Tesco (UK); Kroger (USA); Costco (USA); Target Corp (USA); Koninklijke Ahold (Netherlands); Aldi GmbH & Co (Germany). • The state of retailing is dependent on consumer confidence and key economic factors, so retail practices vary between countries. • In the USA, for example, one third of all sales are through franchised stores • In Sweden, 20% of retail sales are through co-operatives. • Countries with the most developed online markets include the UK, the USA, Scandinavian countries, Germany, France and Japan.
  6. 6. India - Journey from Kiranas to Malls • Mom & Pop having a shop in backyard • More than 99% retailers function in less than 500Sq.Ft of area • Styles were on regional basis and purchases during some specific occasions • 1980s - Indigenous franchise model of store chains run by Khadi & Village Industries Commission • Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains • 1990s - Fresh wave of entrants with a shift from Manufactures to Pure retailers
  7. 7. And the Indian consumer is changing….
  8. 8. • Fastest growing economy • Nuclear families • Young customer assumes greater power • Increase in the number of working women to boost consumption • Luxury, no longer, carries a guilt factor • Easy bank credits • ‘Preference for value’ no longer a compromise • New generation of designers and branded manufacturers • ‘Shop till you drop’ syndrome
  9. 9. Consumption & Consumer trends • Private consumption has a direct bearing on the health and growth of retail • Total Private Consumer Spend – Rs.18,90,619 crore • Spend in the Domestic Retail Market – Rs.15,96,802 crore growing at 6% • Spend in the Organised Retail Market – Rs.48,500 crore growing at 36% • The Indian consumer is among the youngest in the world as compared to ageing population of USA, China, Japan, UK etc.
  10. 10. Key Retail Segments
  11. 11. SEGMENT MARKET SIZE ORGANISED % EXAMPLES Fashion Rs.113,500 crore 19% UCB, Marks & Spencer, John Players Footwear Rs.13,750 crore 37.8% (2nd most organised) Reebok, Adidas, Nike, Puma, Bata, Liberty Timewear & Eyewear Rs.3,950 crore 46% (most organised) Titan, Timex Jewellery Retail Rs.52,000 crore 3% Tanishq, Kiah, Orra, Ddamas Books, Music, Gift Rs.11,500 crore 12.6% Landmark, Crossword, Planet M, Hobby Ideas Home & Office Rs.35,100 crore 7% Portico, Pergo, Fab India Fitness & Personal Care Rs.3,300 crore 10.6% VLCC, Kaya, Lakme Health & Pharma Rs.38,500 crore 2.6% Apollo, Himalaya Drugs, Lifeken Food & Grocery Rs.744,000 crore 0.8% Food world, Subhiksha, Reliance Fresh
  12. 12. SEGMENT MARKET SIZE ORGANISED % EXAMPLES Entertainment Retail Rs.35,000 crore 4% Adlabs, PVR, Shringar, Zapak Telecom Retail Rs.18,700 crore 3% Airtel, Hutch, Idea,
  13. 13. Retail Formats
  14. 14. Format Description Example Super Markets Is one that is departmentalized into self-service stores and offers a range of food household articles situated in a convenient area, pref. near residential localities. Focuses on price positioning with products at lower prices Nilgiris was the first supermarket in Bangalore. Others are Apna Bazaar, Foodworld, Subhiksha Department Store represents a retail outlet that stocks a variety of merchandise ranging from apparel, tolietries, cosmetics, toys, jewellery, furniture, etc. Shoppers Stop, Pantaloon, Westside, Lifestyle Hypermarket represents a supermarket that has the features of both a supermarket and a department store and is mainly located in the outskirts of major towns and cities Big Bazaar of Pantaloon Retail, Star India Bazaar of Trent, HyperCity of K.Raheja, Choupal Sagar – India’s first rural hypermarket Convenience Store stores that are open 24x7 & stock most essential and FMCG such as food items, personal care, etc. Mostly located at fuel stations or areas where they may not be other stores offering day-to-day items My Mart, In & Out
  15. 15. Format Description Example Speciality Store are the ones that sell specific merchandise with focus on a single category Planet M, Crossword, Kids Kemp Kiosks/ Food Counter Retail outlet structures which are open on all sides and mostly engage in selling consumer goods like edible snacks, newspapers, etc. They are mostly located at high streets, malls, multiplexes Corn Man, Brownie Cottage, Shiv Sagar, Kailash Parbat Discount Store a type of department store selling products at prices lower than that in other retail outlet and appealing to the middle-class segment in India The Loot, My Dollar Store, Max Retail
  16. 16. Retail Marketing Strategy
  17. 17. • Retailers must develop marketing strategies based on overall goals and strategic plans • Retailing goals might include more traffic, high sales of a specific item, a more upscale image or heightened public awareness of the retail operation. The key tasks in strategic retailing are defining & selecting a target market and developing the retailing mix to successfully meet the needs of the chosen target market The Target Market Retail Marketing Mix Retailing Strategy
  18. 18. Defining a Target Market • Successful retailing has always been based on knowing the customer • The first and foremost task in developing a retail marketing strategy is to define the target market. This process begins with Market Segmentation • Target markets in retailing are often defined by demographics, geographics and psychographics Check List for Effective Segmentation • Is the Segment Identifiable & Measurable? • Is the Segment Accessible ? • Is the Segment Substantial ? • Is the Segment Actionable ? • Is the Segment Defendable ?
  19. 19. Retail Marketing Mix Product Price Promotion Place Presentation (Layout) 4 Ps of Marketing + 3 Ps (specific to Retail) Retail Mix People Process
  20. 20. PRODUCT • Width • Depth • Branding • Inventory Management PROMOTION • Advertising • Sales Promotion • Public Relations & PR • Personal Selling PLACE • Store Location • Accessibility • Distribution Coverage • Shopping Amenities PRICE • Price Sensitivity of Segment • Pricing Approach to be Adopted • Level of Competition • Profitability of Operations
  21. 21. PRESENTATION • Product Display • Fixture Type & Density • Sound (Music) • Odors • Visual Factors (Colors) PEOPLE • Appearance • Customer Service • Selling Techniques Used (Trading up & Suggestion Selling) • Incentives PROCESS • Policies • Procedure • Mechanisation • Flow of Activities
  22. 22. The Way Forward
  23. 23. Organized retail will form 10% of total retailing by the end of this decade (2010). From 2006 to 2010, the organized sector will grow at the CAGR of around 49.53% per annum
  24. 24. Innovative marketing and selling required Retail consolidation and increasing centralization of purchasing activities • National and international sourcing decisions • Traditional regional sales approach • Government policy Changes in consumer shopping habits • Growing importance of non – traditional grocery channels • Out of home consumption growing • Channel partners demanding sophisticated price and category management capabilities from manufacturers • Erosion of consumer loyalty by emerging internet shopping sites and extended retailer programmes (eg. shopper cards, high quality label products)
  25. 25. Case study
  26. 26. Background • Wal-Mart Stores, Inc. is an American public corporation, currently one of the world's largest corporations (by revenues) and ‘the most admired retailer’ according to the 2007 Fortune 500 • It was founded by Sam Walton in 1962 • It is the largest private employer in the world (1.9 million) and the world's 4th largest utility or commercial employer, only trailing the People's Liberation Army of China, the National Health Service of the United Kingdom and the Indian Railways. If Wal-Mart were a country, it would be the 20th largest in the world If Wal-Mart were a city, it would be the fifth largest in America
  27. 27. Insight "The secret of successful retailing is to give your customers what they want. And really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience’’ -Sam Walton, founder, Wal-Mart Inc.
  28. 28. Vision • Sam wanted to help the people living in small towns and rural America enjoy a similar quality of life as those who lived in the big cities. • While retailers were rushing to the suburbs, Sam Walton built a business serving these overlooked and under- appreciated customers. • Sam Walton’s dream to serve the under-served changed the world. • His method was to go where other businesses feared to go.
  29. 29. An ideal point for entry into India??? Core Philosophy "Respect for the Individual", "Service to the Customer" and "Strive for Excellence"
  30. 30. Presence • Nearly 6,500 (2700 internationally & 3800 in the US) stores and wholesale clubs across 13 countries • More than 1.9 million Wal-Mart associates, serving 100 million customers a day. Country Retail Units Mexico 919 Puerto Rico 54 Canada 290 Argentina 15 Brazil 298 China 184 United Kingdom 337 Japan 392 Costa Rica 140 El Salvador 63 Guatemala 137 Honduras 44 Nicaragua 40 Retail formats * Supercenters * Food and drugs * General merchandise stores * Bodegas (small markets) *Cash and carry stores * Membership warehouse clubs *Apparel stores *Soft discount stores * Restaurants.
  31. 31. Financials Wal-Mart generated more than $312.4 billion in global revenue in the fiscal year ended January 31, 2006, establishing a new record and an increase of 9.5 percent operating at a profit of 3.5%
  32. 32. Global Marketing Strategy PRICE When it comes to marketing strategies, Wal-Mart sticks to its knitting. The basis of the discounting philosophy is that by cutting price, sales can be boosted to a point where the earning is more because of the increased volume of merchandise sold. Every Day Low Price Rollback Special Buy By unwaveringly maintaining its policy throughout its history, the retailer imparts a consistent message to consumers "low prices save you money.“ PLACE – SUPPLIER MANAGEMENT Supplier base of nearly 3,000 suppliers. Deliberately ensured it did not become too dependent on any one supplier No single vendor constituted more than 4 percent of its overall purchase volume.
  33. 33. PLACE – DISTRIBUTION SYSTEM “Saturation” distribution strategy Satellite network system PROMOTION - ADVERTISING The ads project homey images and use real associates and customers (not actors) to relate all the reasons why it's nice to shop at Wal-Mart. Global Marketing Strategy
  34. 34. Global Marketing Strategy Wal-Mart’s International Division: Global Strategy, Local Focus • Wal-Mart’s International stores, just like those in the U.S., provide excellent customer service and convenience and they offer working families the things they need at prices they can afford • This approach is the reason Wal-Mart is being welcomed into country after country around the globe, and it’s also why we have tremendous potential to continue our rapid growth internationally. • The beauty of Wal-Mart's marketing program is it's simplicity. Wal- Mart has engendered a trust with customers that they will always find that low price.
  35. 35. Accolades & Achievements • In 2006, Wal-Mart was named “Employer of the Year” • Wal-Mart Brazil is expected to create 6,500 new jobs 2007 • Five times in the past six years, Wal-Mart was ranked among the best places to work in Canada • ASDA was the only British supermarket to be featured in “Britain’s Top Employers 2007.” • Seiyu Japan received the “Minister of Environment Award”
  36. 36. • In 2007, Wal-Mart International plans to open 320 to 330 units in existing markets. • In November 2006, Wal-Mart signed a Memorandum of Understanding with Bharti Enterprises to jointly explore retail opportunities in India. • Wal-Mart is trying very hard these days to reinvent themselves as something cool and hip. They're creating different kinds of stores and, like many other retailers, developing consumer-centric stores
  37. 37. India Gets ready for Wal Mart India Gets ready for RETAIL!