Demand and supply factors in Retail Industry

1. RETAIL SECTOR

2. RETAIL INDUSTRY
• The retail industry is a sector of the economy that is comprised of individuals and
companies engaged in the selling of finished products to end user consumers.
• It involves the sale of goods from a single point (malls, markets, department
stores etc) directly to the consumer in small quantities for his end use.
• Retailers form the last part of the distribution channel before products reach the
customer. Retailing of products is done through supermarkets, retail chains,
kirana stores, and online platforms. Thus, retailers satisfy demand identified
through a supply chain.
• Retailing support services may also include the provision of credit, delivery
services, advisory services, stylist services and a range of other supporting
services.

3. INDIAN RETAIL INDUSTRY
 Indian is one of the major retail players globally, specifically, the fifth largest
global destination in the retail space.
 It accounts for over 10 per cent of the country’s gross domestic product
(GDP) and around eight per cent of the employment.
 Investment Scenario - India’s retail sector attracted US$ 970 million from
various private equity funds in 2019.
 Government Initiatives -The Government of India has taken various
initiatives to improve the retail industry in India. Government of India has
allowed 100 per cent FDI in online retail of goods and services through the
automatic route, thereby providing clarity on the existing businesses of E-
commerce companies operating in India.

4. Retail industry faces Monopolistic Competition
• Large number of players
Retail industry has a large number of players in all sectors, which increases
competition among them. For eg. Shoppers Stop competes with other clothing
retailers like Big Bazaar, Reliance Trends, Max etc.
• Product Differentiation
As a result of high competition, retailers have to make sure their products deliver the
extra edge over the competitor. For eg. Starbucks have created a special place for
themselves.
• Entry and exit barriers
Retail industry has low entry and exit barriers.
• Price makers
Retail players have considerable power in fixing their prices. However, their power is
limited due to high price elasticity of retail products and competition.

5. Types of retail
Organized retail Unorganized retail
Food and
grocery
Clothing and
footwear
Entertainment
Sports
Books
Equipments
Other

6. Food and grocery Clothing and footwear
Entertainment, sports,
books
Other

7. Present forecasted figures

8.  Price of the commodity
 Price of related commodities i.e. substitutes or complementary
goods
 Level and distribution of income.
 Tastes and preferences of consumers
 Size and composition of population
 Easy access to credit
 Advertisements and Growing consumerism
 Environmental factors and Seasonal factors
 Demographics

9.  Cost of factors of production and commodity
 Price of related goods
 Price of competitor’s products
 Number of suppliers
 Goal of the firm
 Technology factor
 Business Expectations
 Government policy
 Organized and Unorganized retailers
 Environmental factors

10. • Consumer shift towards online shopping - In the wake
of COVID-19 crisis, social distancing norms and fear of
getting infected has triggerd a bigger consumer shift
towards online shopping. Brick and mortor retailers are
looking for an omnichannel proposition to reach their
customers.
• Technology Shift - Many bricks-and-mortar retailers are
adding or augmenting their online presence.
• Long term Effects - A weak economic environment, large
scale job losses, and lower household income will hurt
consumer sentiments and spending. Most of the retail
members of the Retailers Association of India (RAI), the
industry body representing the organised retail segment,
believe the impact of COVID-19 may last at least 9–12
months and revenue may be impacted by 30–50% over
nine months (Q2–Q4, FY 2020-21)