Retail - The booming Sector Vishal V. Wadekar

Overview The size of retail market in India was about US$ 180 billion in 2003. This sector accounts for about 13% of country’s GDP and provides employment to about 6% of workfoce. The share of organized retail in the total retail sales is abut 3-5% and is expected to grow to 10-15% by 2010. The current organized sector retailers use systematic marketing concepts and tools.

The size of retail market in India was about US$ 180 billion in 2003.

This sector accounts for about 13% of country’s GDP and provides employment to about 6% of workfoce.

The share of organized retail in the total retail sales is abut 3-5% and is expected to grow to 10-15% by 2010.

The current organized sector retailers use systematic marketing concepts and tools.

Retailing Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, nonbusiness use. A retailer or retail store is any business enterprises whose sales volume comes primarily from retailing.

Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, nonbusiness use.

A retailer or retail store is any business enterprises whose sales volume comes primarily from retailing.

Industry Evolution in India 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. For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books. Emergence of hyper and super markets trying to provide customer with 3 V’s - Value, Variety and Volume

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.

For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books.

Emergence of hyper and super markets trying to provide customer with 3 V’s - Value, Variety and Volume

General Retail Strategy

Types of retailers Specialty Store. Department Store. Supermarket. Convenience Store. Discount Store. Off Price Retailer. Superstore. Catalog Showroom.

Specialty Store.

Department Store.

Supermarket.

Convenience Store.

Discount Store.

Off Price Retailer.

Superstore.

Catalog Showroom.

Size of the Economy Sources 2006 GDP :Central Statistical Organization (CS0) Growth Rates :Goldman Sach’s BRIC report (For details please refer to the appendix of this presentation) Fiscal Year GDP at current prices (US$ Billion) 2005-6 804 2009-10 1133 2014-15 1721

Sources

2006 GDP :Central Statistical Organization (CS0)

Growth Rates :Goldman Sach’s BRIC report

(For details please refer to the appendix of this presentation)

Growing Retail Market in the world 2006 2010 2015 Source :Technopak Analysis

Key Trends Impacting The Market… Urbanization? How rapid is it going to be? What is the likely impact on consumption and its growth/trends? Changing family structures? What is the future family structure? How is it going to impact shopping behavior? How is it going to impact the spending power and hence consumption? Demographic Changes? What would be the demographic structure of India in next 5, 10, 15 years? How is it going to impact shopping behavior? How is it going to impact the spending power and hence consumption?

Urbanization?

How rapid is it going to be?

What is the likely impact on consumption and its growth/trends?

Changing family structures?

What is the future family structure?

How is it going to impact shopping behavior?

How is it going to impact the spending power and hence consumption?

Demographic Changes?

What would be the demographic structure of India in next 5, 10, 15 years?

How is it going to impact shopping behavior?

How is it going to impact the spending power and hence consumption?

The share of organized retail is less than 3% of the total retail market The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in last five years Current Channels : Organized Retail

The share of organized retail is less than 3% of the total retail market

The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in last five years

Revolution in “Demand”

Fortune 100 Ranking

Organized Retail – Country wise

Organized Retail – Product Wise

Penetration

Perception – Personal Finances Source:AC Nielsen-ORG

Source:AC Nielsen-ORG

Retailers Position Retailers can position themselves as offering one of the four levels of service. Self Service. Self Selection. Limited Service. Full Service.

Retailers can position themselves as offering one of the four levels of service.

Self Service.

Self Selection.

Limited Service.

Full Service.

Nonstore retailing category Nonstore retailing falls into four major categories: Direct Selling: (Multilevel selling) Eg: Amway E,ureka Forbes Direct Marketing: (Telemarketing and Internet Selling) Eg: Amazon.com, Indiatimes.com Automatic Vending: (ATMs) Eg: Pepsi dispenser Machine. Buying Service: (Servicing specific clientel)

Nonstore retailing falls into four major categories:

Direct Selling: (Multilevel selling)

Eg: Amway E,ureka Forbes

Direct Marketing: (Telemarketing and Internet Selling)

Eg: Amazon.com, Indiatimes.com

Automatic Vending: (ATMs)

Eg: Pepsi dispenser Machine.

Buying Service: (Servicing specific clientel)

Tips for stores to sell Attract shoppers and keep them in the store. Honor the “transition zone”. Don’t make them hunt. Make Merchandize available to the reach and touch. Men do not ask questions. Women need space. Make checkout easy. Source: Paco Underhill, Why people Buy

Attract shoppers and keep them in the store.

Honor the “transition zone”.

Don’t make them hunt.

Make Merchandize available to the reach and touch.

Men do not ask questions.

Women need space.

Make checkout easy.

Source: Paco Underhill, Why people Buy

Service Mix Purchase Service Eg: Accepting telephone bills (Easy bills) PostPurchase Service Eg: Gift Wrapping (Gift Counter “Big Bazar”) Ancillary Service Eg: Baby attendant service

Purchase Service

Eg: Accepting telephone bills (Easy bills)

PostPurchase Service

Eg: Gift Wrapping (Gift Counter “Big Bazar”)

Ancillary Service

Eg: Baby attendant service

Trends in Retailing Selling an experience, not just goods. Presence of major global retailers. Growth of organized retail. Growth of Intertype competition. New Retail Forms and Combination.

Selling an experience, not just goods.

Presence of major global retailers.

Growth of organized retail.

Growth of Intertype competition.

New Retail Forms and Combination.

Source Techno pak Economic Times Philip Kotler (Marketing Managent)

Techno pak

Economic Times

Philip Kotler (Marketing Managent)