Introduction to Different Services- Retail sector

Introduction to Retail Sector
Retailing is the final step in the distribution of merchandise-the last link in the supply chain connecting
the bulk producers of commodities to the final consumers. Retailing covers diverse products such as food
products, apparels, consumer goods, financial services, and leisure.
Retailing is the second largest industry in the world, one of the largest employers in the world, and an
index of economic growth. In India, there are about 5 million retail outlets varying in size and nomenclature.
India has the highest number of retail outlets per capita in the world but the lowest number of retail spaces per capita in the world (2 ft/person).
Out of these 5 million outlets, 96% are smaller than 500 square ft in area. There are about 3 million outlets in India’s 3700 designated towns and more than
6,00,000 villages.
With the advancement of the internet, the growth in the retail industry has been impressive due to the benefits of the economies of scale and also the
expansion of business across the geographical boundaries at B2B (Business to Business) and B2C (Business to Consumer) levels.
Food & Grocery is the major contributor in the entire retail market in India with a total contribution of almost around 60% of the total retail sector in 2012.
Clothing (8%) and Telecom & Mobile (6%) of the total retail sector in 2012 and many others.
Retail Sector 3132 Prajapati Pravin Shailesh

There are various ways a consumer can purchase goods from the retailer:
Counter Service
Delivery Service
Online Shopping
Retail Pricing
1. Every organization runs to earn profits and so is the retail industry.
2. Cost-plus pricing works on the following principle:
3. Cost Price of the product + Profit (Decided by the retailer) = Final price of the merchandise.
Merchandising
1. The display of the merchandise plays an important role in attracting the customers into the store and prompting them to purchase as well.
2. Merchandising helps in the sensible presentation of the products available for sale to entice the customers and make them brand loyalists.

The world of today has turned into a global village; consumerism is having a huge impact on the contemporary retail business, and technological
advancements have created opportunities as well as several challenges for the retail industry. With the advancement of the internet, the growth inthe retail
industry has been impressive due to the benefits of the economies of scale and also the expansion of business across the geographical boundaries at B2B
(Business to Business) and B2C (Business to Consumer) levels.

SWOC Analysis of Retail Sector
Strengths:
2. Benefits to Manufacturers: The Planning Commission has identified four sectors as the major employment generating sectors for the Eleventh Plan
period, 2007-12. They are (i) food processing industry; (ii) textiles and clothing; (iii) tourism; and (iv) construction. Of these sectors, all but tourism is
getting a boost with the growth of organized retail. Currently, both the food-processing and textile industries are lagging behind. It is particularly the
small and medium industry (SMI) sector which will gain advantages with the emergence of organized retailers by becoming their suppliers. Modern
retail will catalyse the development of the SMI sector in the country.
3130 Prajapat Gourav Roopchand
Retail Sector
S
C
O
W
Strengths
Weakness
Opportuniti
es
Challenges
1. Organized retailing for farmers: The study titled “Impact of big retail on
neighborhood stores,” which was submitted to the Department of Industrial
Policy and Promotion, says that the farmers are proceeding significantly from
direct sales to organized retailers. “Profit realization for farmers selling directly
to organized retailers is about 60 percent higher than that received from selling
in the mandi,” it adds.

3. Population Demographics: India’s employed population is expected to be 117 million over the next 10 years as compared to China’s four million. In the
following decade, from 2020, the former will add 98 million to its workforce, while China will contract 51 million. This is a large positive for India.
4. Low Retail Penetration: The penetration of organized retail in India is still very little at 6 to 8%, particularly when compared to developed nations such
as the US and the UK which have retail penetration of 85% and 80%, respectively. With new policy reforms, swelling purchasing power, and altering
expenditure patterns, the retail sector is guaranteed to see alteration in the approaching years. As per the Images Retail research, FY15 will witness a
jump in the share of organized retail.
5. Aspiring Middle Class: With a population of 100 million, the tier II and III cities in India are higher than countries such as Germany and the UK.
Besides, the untapped rural population holds huge potential for retailers. It is estimated that by 2021, approximately 67% of Indians will still live-in
rural areas.
Retail Sector

Weakness:
1. Political Uncertainty and Regulatory Requirements: The declaration of FDI in retail has stimulated the political pool. The government looks at rigid
opposition with its allies threatening to remove support. In case, this policy is finally applied, there is another important aspect for the companies to
overcome. The way the policy is presently drafted, a retailer can set up stores only in those states which have agreed or will agree in the future to allow
FDI in multi-brand retail.
2. Poor Infrastructure and Supply Chain Management: Apart from the political and regulatory scenario, infrastructure will play a vital role in determining
how this sector will evolve and retailers will achieve the supply chain. While the FDI regulation states that the retailer will have to invest a substantial
amount in building the infrastructure, this will take time. Meanwhile, due to poor infrastructure, multiplicity of taxes, high cost of fuel, dependence
largely on the road transportation, etc. logistics still remains a high percentage of the cost of a product, in certain cases going beyond 15 to 20%.
3. Demographic differences between the regions require a regionally adjusted approach to business.
4. Competition: Presence of a significant number of strong and well-established players in the sector limits market entry potential.
5. Relatively small domestic market limits growth opportunities.
6. High real-estate and distribution costs are the obstacles for growth of retail in India.
Retail Sector

Opportunity:
1. Retailers in India have been trying to attain a successful formula, but there is no ‘one size fits all’ strategy. The market is still undergoing a lot of
changes, both from the regulatory as well as the demand side. Following are some of the winning factors that players could focus on:
2. Innovation: During PwC’s 15th Annual Global CEO Survey, one of the questions posed to the CEOs in the R&C sector was as follows: To what extent
do you anticipate changes at your company in any of the following areas over the next 12 months? Nearly 73% indicated that the following two areas
will change in the near term: • R&D and innovation capacity • Technology investments.
3. Digitization: Going digital is about e-commerce and the way communication will change in a few major areas including changing business models (e-
commerce, e-payments, and mobile transactions), employee and customer engagement, and investment in technology.
4. Customers are demanding an enhanced experience in terms of how to search, browse products and conduct trades online. Organizations need to engage
with customers differently, in terms of using a range of channels.
5. Social media is also becoming a prevalent tool for consumers to teach themselves about offerings, seek information about products, and compare
brands. For retail companies it is important to define how social media can back sales activities throughout the various channels, especially e-commerce.
Social media analytics is the focus area for retailers.
Retail Sector

6. Customer-centric Approach: The retailer is not looking at product revolution at the merchandising level only but the entire store today is a product that
needs to appeal to the customer. The following are factors that will make a difference: Experience design, Digital change, and Analytical insights.
7. Changing the Regulatory Scenario: Recently, the Indian government made the following two significant announcements that will go a long way in
developing the Indian retail sector: Permitting foreign investment in multi-brand retail trading and simplifying the rules for single-brand retail trading to
make it more business-friendly.
Challenges:
1. The retail sector is marred with many issues. The two most important threats are as follows:
2. Availability of land and real estate: Retail space and rentals are key deliberations in multi-brand retail and getting a feasible rate in the desired location
is important. There are retailers who have exited cities because of the high rentals that put more pressure on profitability.
3. Human Capital: With attrition still very high in the industry, human capital management continues to remain one of the top three agenda points for the
retailer. The attrition in the industry can be anywhere between 20 and 25% in non-food and grocery business to as high as 60% in the food and grocery
segment.
Retail Sector 3130 Prajapat Gourav Roopchand

Thus, the Indian retail sector has its own set of strengths and opportunities. However, the challenge lies in overcoming the weaknesses and providing an
environment that is conducive to the business, not only for the national players but also the foreign retailers.
1. Economic slowdown is having an adverse effect on consumer spending.
2. Rigid government policies and regulations restrict the entry of new players.
3. Price competition among retailers puts downward pressure on margins.
4. Entry of International players in Indian markets consumes the share of Indian retailers
Retail Sector

Types of Retail
1. Department Stores: It can be compared to a collection of smaller retail
stores managed by one company.
2. Specialty Stores: Specialty stores are retail establishments that focus
on one or two specific categories of products.
3. Supermarkets: Supermarkets are large, departmentalized,
self-service stores that specialize in food and some non-food items.
4. Convenience Stores: Usually located in residential areas, convenience stores offer a limited range of products at premium prices
due to the added value of convenience.
Retail Sector 3154 Shah Ayush Mahendrakumar

5. Discount Stores: As the name clearly suggests, discount stores give considerable discounts on the products that they sell.
6. Hypermarkets or Super Stores: These stores are huge in size and have many different categories under their belt.
7. Warehouse Stores: A retail store that sells limited stock in bulk at discounted rates is called a warehouse store
8. E-Commerce Stores: A retail store that sells limited stock in bulk at discounted rates is called a warehouse store.
9. Dollar Stores: Dollar stores are a type of discount store. They offer products at meager rates. The only difference is that their prices are fixed.
10. Drug Stores: Drug stores are specialized stores that sell medicines.
3154 Shah Ayush Mahendrakumar
Retail Sector

Latest Developments in India
 New retail formats and combinations are emerging and have opened a new world of
opportunities for Indian youth
 Retailers are informing about new arrivals/fresh stock through e-mails, television, SMS and
telephones to which anyone can respond to through toll-free 16 digit numbers.
 Specialty stores like ‘Reliance Digital’, ‘Music World’ ‘Metal Junctions’, ‘Nokia World’ and
‘Pantaloons’ have their presence in most of the malls in the country.
 Departmental stores have given way to malls, having a mixture of large and small retailers offering varied brands for each and every section of the
society.
 Sales promotion channels are increasingly becoming professional and targeting differently to different lifestyle groups. Newer and newer promotional
techniques are emerging. Event managers are hired and visual merchandising professionals are consulted.
 Use of credit and debit cards for buying merchandise is relatively a new phenomenon but is gaining popularity immensely. Today, especially in metros,
retail spending is mainly done by plastic cards, accounting for over 45 percent and is likely to touch 65 percent over the next five years.
Retail Sector

 Partnerships and tie-ups among retailers, real estate developers, brands, franchisees, and financers have become the fashion of the day to spread risk
related to huge investments and uncertainty.
 The government infrastructure support, relaxation on foreign direct investments further has accelerated the growth of Indian organized retail sector.
Consequently, the shopping malls are coming up throughout the country in a big way.
 The gap between organized and unorganized (traditional ‘kirana’ shopping) retailing is coming close due to mall revolution and increasing Indian middle
class in terms of size and income. One of the four largest accounting firms in the world, Indian retailing is growing at a faster pace as was expected from
it and could constitute 25% of the total retail sector by 2011.
Retail Sector

Major Players in Retail
1. Reliance Retail Limited
Reliance Retail holds 94th position in Deloitte’s Global Powers of Retailing 2019 list. It is one of the largest retail
companies in India by revenue, sales growth, and the rising number of retail stores.
Reliance Retail, which was founded in 2006, is a big name when it comes to retailers, two operators, and more. If you have done trendy cloth purchasing
from online shopping sites, then you would have gone to the AJIO website. This platform also brings huge revenue to Reliance Retail Limited.
3108 Ozarkar Prashant Vipul
Retail Sector

2. Future Retail Limited
Future retail is in the list of retail chain stores in India that is spread across the country in more than 400 stores. It is the second-largest retail company in
India with more than 1500 stores.
You have used this retailer for sure if you ever walked in Big Bazaar hypermarkets. This is a store that is a major one-roof marketplace. Hometown is also a
retail division of Future retail limited group where you can get the best furniture, sofas, home décor, and many more products.
3. Avenue Supermarts Ltd (DMart)
DMart or Avenue Supermarts is among the popular retail companies in India; you can also count it among the Indian chain of hypermarkets. It was founded
in 2002 and it presently has more than 170 retail stores with high revenue. That’s the reason the company has placed it at third if you see the top 10 retail
companies stores in India.
It is a one-roof marketplace where you can get a wide range of personal products, garments, and many more things. You can get toiletries, kitchenware, bath
linen; you can find the best products in the store. Not only these, but they also have home appliances, gadgets, tools, and other related products. Avenue
Supermart has a market capital of 144,023 Cr. and records a sales growth of 32%. Thus, it is rightly placed in the list of best retail store chains in India.
Retail Sector

4. Aditya Birla Fashion & Retail Ltd.
Aditya Birla Fashion & Retail Ltd (ABFRL) is one of India’s major players in the retail industry. This is also counted among the Leading Multinational
Companies in India.
ABFRL has a huge retail division called Pantaloons; you might be familiar with it. You will find its outlet in big malls in India and across the globe.
Presently it has more than 3000 retail stores spread across 800 and more cities. So, the company has included it in the list of retail stores in India.
People buy Pantaloon gift cards to present to friends and family. With the addition of trendy clothing and fashion essentials, this retail chain has
accumulated huge sales growth and secured the place in top retail companies in India.
5. Shoppers Stop Limited
Shoppers Stop is such a retail store in India that has 86 stores in more than 40 cities in the country. Its retailing business covers a wide range of consumer
products, including clothing, jewellery, accessories, footwear, and more.
It is less known that Shoppers Stop also deals with non-apparel products like cosmetics, food, books, household, gaming, and related businesses. This
Indian retailer chain has been growing in the gaming segment, which holds a lot of potentials.
Shoppers Stop runs its business under three segments, including retail, property, and others making it one of the largest retail groups in India.
Retail Sector

6. Trent Limited
Trent limited is a hypermarket chain that has more than 250 stores in India. This Indian retailer is in the hands of Tata Groups. It is primarily known for
Westside, Star Bazaar, Landmark, and Fashion Yatra.
Westside is one of the best retailer chains that offer fashion accessories, clothing, footwear, and other artifacts. It is ideal for men, women, and children as
there are wide ranges of products. Therefore, this has qualified in the list of retail companies in India.
Star Bazaar is one stop for all household products like essential kitchen staples, vegetables, fruits, health, and beauty products. It also has frozen and fresh
non-vegetarian food items. Along with these, Landmark is another retail division for books and magazines. Recently, Tata’s Trent has also launched Fashion
Yatra for a new format of fashion and clothing.
7. V2 Retail Ltd
V2 Retail offers an unparalleled retail mix combined with value and variety to its shoppers. This fashion avenue gives an extraordinary experience with an
embracing portfolio of product offerings. V2 retail believes in offering complete Value for money to the shoppers through its large Variety of Smart, Trendy,
Fashionable apparels across categories under one roof.
Retail Sector 3108 Ozarkar Prashant Vipul

8. Infiniti Retail Ltd
If you have ever visited the Croma outlet then you have been a customer of Infiniti retail limited. Infiniti is a subsidiary of Tata sons with more than 170
stores in the country. As a fact, it is India’s leading exclusive electronics retailer where you can get a range of products inducing kitchen appliances, home
appeals, smartphones, gadgets, electronic grooming products and more.
There are multiple Croma stores along with an online store and mobile app. Retail stores in India allow you to get all products with ease. Croma is also
counted in the list of hypermarkets in India with its electronic products.
9. Arvind Fashions Ltd.
The Company was originally incorporated as Arvind J&M Limited on January 05, 2016 at Ahmedabad. Further, the name of the Company was changed to
Arvind Fashions Limited via the necessary resolution dated September 26, 2016 and a fresh certificate of incorporation was obtained on October 14, 2016
from Ahmedabad ROC.
In 2016, Arvind Fashions Ltd acquired the wholesale business of Arrow, Izod and Flying Machine from Arvind Lifestyle Brands Limited on a slump sale
basis. Purchase of 100% stake in Arvind Lifestyle Brands Limited and Arvind Beauty Brands Retail Private Limited, 50% Stake in Tommy Hilfiger Arvind
Fashion Private Limited and 49% stake in Calvin Klein Arvind Fashion Private Limited.

10. Spencer’s Retail Ltd.
Since 1863, Spencer’s has been a part of the Indian retail landscape. At one time, the Spencer’s Empire stretched from Peshawar to Cochin, from Karachi to
Chittagong, spanning the length and width of undivided India. Originally owned by a British gentleman – yes, there was a Mr. Spencer (John William
Spencer, to be precise) – it acquired Indian ownership in the 1960s, and became part of the RPG Group in 1989.
Spencer’s was the first grocery chain in India. In 1980, they became the first supermarket chain, and in 2001, the company introduced India to the joys of
hypermarket shopping.
What has remained unchanged for 150 years is the trust that the Spencer’s brand evokes. To the consumer, it carries the promise of innovation, quality, and
service; the confidence that they will always be able to find a Spencer’s store at a convenient location; that it will have a pleasant ambience; and that it will
offer a wide range of products at affordable prices.

7Ps of Retail Sector
1. Product
Product is the basic element of any and every organization. Some people go to the extent to comment that an organization is nothing but a collection
of products. The product line is defined as the varieties of the products that are produced by a company, or that is stocked by a retailer. Collection of all the
products and offering the company is known as product mix
Multiple strategies used in case of retail product mix such as
1. New product launches
2. Modification of existing product lines
3. Trading town or trading up
4. Assortment reduction or line elimination
5. Management of PLC
3129 Pradhan Mukesh Basantkumar
Retail Sector

2. Price
The pricing strategy in the case of the retail marketing mix should be consistent and consider the overall positioning of retailers sales, profits, and rate of
return on investment. Cash flow, overall growth, and profitability are sort out by the retailers in order to survive the retail business.
3. Place
The retailer has to and sure the availability of the product so that the customers can buy it whenever they require — the major components of place, in the
retail marketing mix: physical distribution and marketing channels.
4. Promotion
Retailers are known to spend the promotional budget on the development of advertising and advertising campaigns along with other promotional activities.
The retailer is also known to have various methods of promotion in order to promote his goods. The methodology of promotion that is used by the retailer
should be compatible with the stored image and the budget that is allocated for promotion by the retailer. The primary objective behind the
promotional strategy is to influence the decision of purchasing. Hence the retailer has to ensure that proper budgets and time is allocated in order to make
the promotional activity more effective.
Retail Sector 3129 Pradhan Mukesh Basantkumar

5. Process
The process is perhaps one of the most crucial P in the retail marketing mix. The retail industry is based entirely on processes such as order processing and
management of the database.
It is a process that will help him find the price of the product along with other products and their prices, which help them to make a buying decision. Then
the customer approaches the billing counter, which has an order processing system and a database management software which processes the order and
generates a bill to the customer and processes the payment.
6. People
People in the retail store are the ones that help the customers to find their product to help them with a particular product. Is also includes the capacity of the
staff and the efficiency and availability.
If a particular product needs internal marketing it is the people who make sure that the internal marketing is done in accordance to the marketing rules and
also ensures that the message reaches the right people or right customers.
7. Physical Evidence
The layout of the shop and the reception and check out are part of physical evidence. Answering questions such as what will be the location of the store, or
the location of the store in the mall, etc. cockroaches in case of physical evidence.
Interaction of customer and the staff is also included in physical evidence along with people. The testimonials of the customer the cash receipts and after-
sale service are also part of physical evidence of retail Marketing Mix.
3129 Pradhan Mukesh Basantkumar
Retail Sector

Other Contemporary Issues in Retail
1. Lack of Technology Adoption:
Indian retail outlets need to adopt technology and use different high-end software for managing the functioning of retail outlets.
2. Lack of Infrastructure and Logistics:
Warehouse facilities and timely distribution are other areas of challenge. To fully utilize India's potential in the retail sector, these major
obstacles have to be removed.
3. Inefficient Supply Chain Management:
In India, supply chain management should be improved and more technology needed to be used to make the supply chain management
effective and reduce the inventory cost.
4. Price War:
There is a price war between different retail organizations. Every organizationis trying to provide goods at a low cost and offers various
lucrative promotional schemes. In such a situation, it is difficult to attain customer loyalty and companies keep marginal profit to provide the goods at
competitive prices.
5. Cultural Diversity:
India's huge size and socio-economic and cultural diversity means there is no established mode or consumption pattern throughout the
country. The manufacturers and retailers will have to devise strategies for different sectors and segments which by itself would be challenging.
3136 Rajpurohit Bharatsingh Jabbarsingh
Retail Sector

6. Scarcity of Skilled Workforce:
Unfortunately, there are very few specific courses for the retail industry. Graduates and Postgraduates from the other streams are hired and
are trained in the retail sector.
7. Complexity in Tax Structure:
The sales tax varies from state to state while organized players have to face multiple point controls and systems. In many locations, retailers
have to face a multi-point octroi with the introduction of Value Added Tax (VAT) in 2005. Certain anomalies in the existing sales tax system causing
disruption in the supply chain are, however, likely to get corrected over a period of time.
8. Escalating land and rental prices:
huge growth of the retail industry has created a huge demand for real estate. This is leading to an increase in property prices. Starting a new
store needs a huge investment in purchasing land. This huge investment is also a challenge for the retail outlets. Rental pri ces are also increasing, leading to
an increase in the overall.
9. Frauds in Retail:
Frauds, including vendor frauds, theft, shoplifting, and inaccuracy in supervision and administration are the challenges that are difficult to
handle.
10. Competition from Unorganized Retail:
The unorganized retail sector includes mom-and-pop Kirana stores. These are low-cost structures normally operated by the owners and have
almost negligible real estate cost, Laboure cost and they have to pay no or very few taxes and are very near to the residential area or generally in the
residential areas.
Retail Sector 3136 Rajpurohit Bharatsingh Jabbarsingh

11. Online selling companies:
These days so many online marketing companies are coming up. These companies are providing goods to the customer at their doorstep and
at lesser prices when compared with retail outlets. Online companies are providing so many lucrative offers to customers. So, this is also a major challenge
for the retail outlets.
12. Ever-increasing customer demand:
These days because of Globalization awareness among the customers is increasing. Customer psychology is changing and becoming more
demanding. They want to pay less for more and more. Because of high operating costs it is very difficult to meet the customer demand. So this is also a
great challenge for the retail outlets of India.
13. Power Supply Problem in India :
There is a huge problem with electricity in India. Long power cuts are very common in India. Because of inadequate power supply, retail
outlets need to invest huge money in generators for power backups.
14. High Cost of Operation:
Retail outlets have to incur a very high cost of operation. This is on account of high labor cost, training cost of human resources, social
security to employees, high real estate cost and rentals, air conditioning, power backups cost, high maintenance cost, high electricity tariffs, high taxes,
investment in the supply chain, and logistics, investment in technology, high investment in equipment and fixtures to give mo dern look to the store, CCTV's
cost, etc.

15. Government Opposition to FDI:
In the era of globalization and liberalization, the time is not far when the retail sector has to face competition from international retailers. FDI in
retail will allow the foreign retailers to operate in India which will lead to high competition and resulting in low prices of goods in the Indian market.
16. Understanding customers:
So many factors play an important role in affecting customer behavior and loyalty such as product quality, service quality, customer
satisfaction, promotions, offers provided by other players in the market.

Introduction to Different Services- Retail sector

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