Introduction to retail


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Introduction to Retail

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Introduction to retail

  1. 1. Retailing -Rohita Dwivedi
  2. 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. 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. 4. WHY STUDY RETAIL?? •Impact of Retailing on economy •Retail Boom in India •Career Opportunities
  5. 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. 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. 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. 8. India – Retail Perspective Overview…  Affordability growth  Falling interest rates  Easier consumer credit  Non food expenditure – 59%
  9. 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. 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. 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. 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. 13. The Indian Retail Sector Can Be Broadly Classified Into—
  14. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 32. THANK YOU!!!!