Introduction to Retail Management

RETAIL MANAGEMENT
INTRODUCTION
-By
Er. VAIBHAV Agarwal
Asst. Prof.
BBD University

A perfect example of a dream come true is the story of Sam Walton, the founder
of Wal-Mart (www.walmart.com). From a single store, Wal-Mart has grown to
become the largest company in the United States in terms of revenues. And
today it dwarfs every other retailer. In 2005, Wal-Mart was rated as one of
America’s top five most admired corporations by Fortune magazine.
Wal-Mart is now the leading company in the world in terms of sales—ahead of
ExxonMobil, General Motors, and other manufacturing giants. New
technologies are improving retail productivity. There are lots of opportunities to
start a new retail business—or work for an existing one—and to become a
franchisee. Global retailing possibilities abound.
WALMART
Retail Mgmt by Er. Vaibhav

• Retailing encompasses the business activities involved in selling goods and services to
consumers for their personal, family, or household use.
• It includes every sale to the final consumer—ranging from cars to apparel to meals at
restaurants to movie tickets. Retailing is the last stage in the distribution process.
• Retailing is the activity of selling goods and services to the final consumers for their own
personal use.
• Retailing is concerned with getting goods in their finished state, handing them in the hands
of the final consumer/customer who are prepared to pay for the pleasure of eating, wearing
or experiencing a particular product items.
CONCEPT & DEFINITION OF RETAILING

• Retailers provide a collection of service benefits to their customers.
• Benefits like
• Located at a convenient/suitable place.
• Multiple product range.
• Selling goods in quantities suitable to the customers requirement.
• Ensuring a smooth running of the various retail process.
• There is a tendency to think of retailing as primarily involving the sale of tangible (physical) goods.
• Retailing also includes the sale of services. And this is a big part of retailing!
• A service may be the shopper’s primary purchase (such as a haircut) or it may be part of the shopper’s purchase of
a good (such as furniture delivery).
• Retailing does not have to involve a store always.
• Mail and phone orders, direct selling to consumers in their homes and offices, Web transactions, and vending
machine sales all fall within the scope of retailing.
• Retailing does not even have to include a “retailer.”
• Manufacturers, importers, nonprofit firms, and wholesalers act as retailers when they sell to final consumers.Retail Mgmt by Er. Vaibhav

• RETAILER comes from French word “retailler” which means “to cut-up”.
• Retailing includes the activities of buying in bulk quantity and selling in small quantity.
• It is the type of the customer which differentiates a retailer from a distributor.
• Baker(1998) define retailing as ‘any establishment which is engaged in selling
merchandise for personal and household consumption and rendering services required for
the sale of such goods’.
• Term Retailing applies to selling of tangible goods like bread, pair of shoes.
• Term retailing also applies to the selling of services products. Eg. Restaurants, haircuts,
aromatherapy. Retail Mgmt by Er. Vaibhav

CHOCOLATE
PRODUCER
VENDING MACHINE
AGENT
CONVENIENCE
STORE
CHOCOLATE
PRODUCER
WHOLESALER
SUPERMARKET
CHOCOLATE
PRODUCER
ALTERNATIVE CHANNELS OF DISTRIBUTION FOR CHOCOLATE PRODUCER

• Retailing is the last stage in distribution Process.
• Retailer is customer focused, not product focused.
• There are lots of opportunities to start a new retail business—or work for an existing
one—and to become a franchisee. Global retailing possibilities abound.
• On the other hand, retailers face numerous challenges. Many consumers are bored with
shopping or do not have much time for it.

KEY ISSUES IN FRONT OF THE RETAILERS
• “How can we best serve our customers while earning a fair profit?”
• “How can we stand out in a highly competitive environment where consumers have so
many choices?”
• “How can we grow our business while retaining a core of loyal customers?”
• Can retailers flourish in today’s tough marketplace?
Retail decision makers can best address these questions by fully understanding and applying
the basic principles of retailing in a well-structured, systematic, and focused retail strategy

SIGNIFICANCE OF RETAILING
• Retailing is an important field to study because of its impact on the economy, its functions in distribution, and its
relationship with firms selling goods and services to retailers for their resale or use.
• Retailing has tremendous impact on economy of any country.
• The following activities are associated with the retailing:
• Customer Convenience: Brings the goods to the doorstep of customer from the manufacturers.
• Accessibility: Make things valuable by making them acquired and used by the consumers.
• Convenience of Size: Retailers break bulk and serve products in quantities and sizes as desired by the
customers.
• Associated Services: provides customers a large no. of attached services like public utility, electric power,
living standard of the people.
• Supply Chain: Retailers are part of the supply chain. Retailers participate in the sorting process of the goods
and services from wide variety of goods.
• Value Chain: Customer purchasing and spending drives the wheel of economy.

• Mobilizing Finance: Mobilize the investments and savings of people. Completion of transactions and
delivery of goods.
• Economic Development: It is intrinsic part of economy. It is one of the most important industry of the
world.
• Employment: Huge manpower is absorbed by the retail industry as both educated and uneducated, skilled
and unskilled labor.
• Social responsibility: Successful retailers also tries to identify what people want and how the general
retailing can be improved.

THEORIES OF RETAIL DEVELOPMENT
These theories revolve around:
• Importance of competitive pressures.
• The investments in organizational capabilities and
• Creation of a sustainable competitive advantage.
These are developed to explain the process of retail development:
1. Natural Selection in retailing or Environmental Theory.
2. The wheel of Retailing
3. General-Specific-General cycle or Accordion theory.
4. Conflict Theory
Cyclic Theory

THE EVOLUTION IF RETAILING
• Like the products sold in the retail shops has changed, Retailing has also evolved in all
these years.
• The retailers have constantly evolved their portfolios or retail formats to reflect the
changing requirements and aspirations of the shopping public.

1. NATURAL SELECTION THEORY IN RETAILING
• This theory is adapted from the Charles Darwin theory of natural selection.
• It says “Retail types (or units), which best adjust to their environment, are most likely to survive”
• So a departmental store which fails to adapt quickly to the changing external conditions are most likely to be rooted out
in the near future.
• The major environmental factors affecting retailing are:
a) Changes in the consumer character:
a) Demographic
b) Social
c) Economic
b) Changes in technology, e.g. Greater ownership, use of motor cars, food freezers, microwave ovens, mobile phones
and personal computers.
c) Changes in the competition i.e changes in the level of competition strength within the area of influence.
• These factors may react upon the environment in both friendly and unfriendly way depending on the type of the retail
organisation. Retail Mgmt by Er. Vaibhav

2. THE WHEEL OF RETAILING THEORY
• This theory is proposed by Prof. McNair of Harvard Business School.
• It says that ‘an efficient innovatory form of retailing enters in the market and attracts the public by its new
appeal.
• Growth and maturation occur, during which market shares are increased.
• But trading-up occurs and finally the firms become high costs, high price retailers and once again vulnerable
to the next innovator.
• The major factors affecting wheeling of retailing are:
a) Organisational Deterioration: When an innovator was young, he/she used the market to full potential,
but later on they become conservative in their approach. And so they become unable to extend life of
their innovation.
b) Economic Factors: The popularity of non-price competition produces higher gross margin
requirements as an institution matures.

Innovative Retailer
- Low Status
- Low Price
- Minimal Services
- Poor Facilities
- Limited Product offerings
Traditional Retailer
- Elaborate Facilities
- Additional Services
- High Rent Location
- Fashion Oriented
- High Prices
- Extended Prices
- Extended Product Offer
Mature Retailer
- Top Heaviness
- Conservatism
- Declining ROI
VULNERABLITY PHASE ENTRY PHASE
TRADE-UP PHASE
Wheel of Retailing- described by McNair

3. GENERAL-SPECIFIC-GENERAL CYCLE OR ACCORDIAN THEORY
• This describes the tendency for retail business to be dominated (alternatively) by generalists, then
specialists and then generalist again.
• The switch from generalist – specialist – generalist occurred because of:
• The greater variety of customer goods available could not be accommodated in the old
general store.
• Growth of cities gives profitable segmentation.
• The specialist store provided a social content to the sopping trip which was required by the
society.
• The tendencies helping to create a new ‘general’ store (superstore, hyperstore) include:
• Joining complementary lines e.g.: meat, groceries and produce.
• ‘Creaming’, i.e. choosing the most popular lines from other retail outlets ranges,
• Scrambling’ i.e. taking the risky merchandise from other outlets by buying high-margin,
lower stockturn lines.
• Adding complete ranges ‘borrowed’ from other institutions, e.g. Tesco selling non-food to
increase the physical density of shoppers in its stores.
• The growth of shoppers centres. Large modern air-conditioned stores that are now competing
successfully by staying open through long hours.Retail Mgmt by Er. Vaibhav

SPECIALIST
INDEPENDENTS
DEPARTMENTAL
STORES, VARIETY
STORES
SPECIALIST
MULTIPLES
LARGE
SUPERMARKETS
LIFESTYLE RETAILERS
ACCORDIAN THEORY

4. CONFLICT THEORY
• Conflict always exists between operators of similar formats or within broad retail categories.
• It is believed that retail innovation does not necessarily reduce the number of retail formats.
• But is leads to the development of more formats.
• So Retailing evolves through a dialectic process i.e. blending of two different formats to create a new
format.
• Thesis: Individual Retailers
• Antithesis: A department store.
• Synthesis: A blend of ‘Thesis’ and ‘Antithesis’. The result is the position between the ‘thesis’ and
‘antithesis’.
• Supermarkets and hypermarkets are example of synthesis.

THE RETAIL LIFE-CYCLE
• The retail organisation also pass through identifiable stages of innovation, development, maturity and
decline.
• This is termed as ‘RETAIL LIFE CYCLE’.
• The retail life cycle is a theory about the change through time of retailing outlets.
• The retail institutions show an ‘s-shaped’ development through their economic life.
• The ‘s-shaped’ development curve has been classified into 4 stages:
a. Innovation
b. Accelerated Growth
c. Maturity
d. Decline

a. INNOVATION:
a. A new organisation is born.
b. It improves the convenience or creates other advantages to the final consumer.
c. It differs sharply from the existing other retailers.
d. In this stage, there are very few competitors.
e. The firm fine tunes its strategy through experimentation.
f. Levels of profitability are moderate and this stage can last up to five years depending
on the organisation.

b. ACCELERATED GROWTH:
a. Raid increase in sales.
b. This is stage of development. Few competitors emerge
c. Company being in the market for a while, has established a position of leadership.
d. Growth is continuing, so the investments also keeps on growing, profitability also incr.
e. This stage can last from 5 to 8 years depending on the organisation.
f. At the end of this stage cost pressure occurs on the organisation.

c. MATURITY:
a. The organisation still grows.
b. Competitive pressures are very high now.
c. New retail formats keep on rising.
d. Growth rate tends to decrease because market becomes more competitive, and direct
competition decreases profit margin.
e. The retail organisation need to rethink its strategy and reposition itself in the market.
f. A change can be done in the merchandise mix, if change in retail format is not
possible.

d. DECLINE:
a. The retail organisation looses its competitive advantages and there is a decline.
b. The organisation needs to decide, if is still going to continue in the market.
c. The rate of growth is negative.
d. Profitability declines further and overheads are high.
e. There is a dire need of
f. The retail organisation need to rethink its strategy and reposition itself in the market.
g. A change can be done in the merchandise mix, if change in retail format is not
possible.

RETAIL LIFE CYCLE

CLASSIFICATION OF RETAIL STORES

Classification of retail stores
Store-Based Retailing Non-Store Retailing
Form of Ownership
• Independent retailer
• Chain Retailer
• Franchise
• Leased Departments
• Vertical Marketing System
• Consumer Cooperatives
Merchandise Offered
• Convenience Store
• Supermarkets
• Hypermarkets
• Specialty Stores
• Department Stores
• Off Price Retailers
• Full line discount store
• Warehouse store
• Variety Store
• Factory Outlets
• Catalogue Showrooms
• Membership Club
• Flea Market
• Direct Selling
• Direct Marketing
• Automated Vending
• World Wide Web
• Other Emerging Retail
• formats
Based on Location
•High Street
•Destination
•Convenience

STORE FORMAT BY LOCATION
1. HIGH STREET FORMAT
• It is Located in busy shopping area.
• Area is less than 2000 square feet.
• No parking facility
• Focused Merchandised Category
• Example: M. G. Road in Bangalore

2. DESTINATION FORMAT
• Huge Parking space
• Wide merchandise category
• They are Independent retail store with alluring proposition for the
customer to visit the store with the primary intention of shopping there

3. CONVENIENCE STORE
• Located in the catchment area of target customers
• Extended hours of operation
• Less than 5000 square feet
• 24X7 convenience stores situated close to homes to generate high footprints
• snacks, grocery type items & confectionary Merchandise include: beverages, ready to
eat
• These store carry a limited stock of daily use goods with a special focus on food
products e.g.. In & Out petrol pump outlets.

CLASSIFICATION BASED ON OWNERSHIP
1. INDEPENDENT RETAILER
ADVANTAGES:
• Flexibility in choosing retail formats and locations
• Decision making is centralized
• Low investment cost
• Independents have independence
• Easily sustain consistency
DISADVANTAGES:
• Less bargain power with suppliers
• Cannot gain economies of scale
• Very little computerization
• Relatively high cost of advertising
• Over dependence on owner
• Limited amount of time and resources allotted to long-run planning

2. CHAIN RETAILER
ADVANTAGES:
• Bargaining power with suppliers
• Achieve cost efficiencies by being wholesales themselves
• Computerized
• Can take advantage of variety of media options
• Defined management philosophies
• Long term planning, opportunities and threats are carefully monitored
DISADVANTAGES
• Lesser flexibility
• Investments may be high
• Managerial control can be hard
• Limited independence in jobs

3. FRANCHISING
• Franchising is a retail organization form in which small businesses can benefit by being a part of a large,
multiunit chain-type retail institution .
• Two types of franchising:
• Product/Trademark: E.g. Archie's/Gasoline stations
• Business format franchising: Eg. McDonalds
• Three structural arrangements dominate franchising:
• Manufacturer-retailer: E.g. Gasoline stations/Exxon, Mobil, Ford
• Wholesaler-retailer
1.Voluntary Auto accessory store
2.Cooperatives
• Service sponsor retailer: KFC, McDonalds, Holiday Inn

4. LEASED DEPARTMENT
From the stores perspective:
• ADVANTAGES:
• Skilled manpower to handle merchandise
• Market can be enlarged by providing one stop customer shopping % of revenues is received regularly Stock
servicing, display etc. is the responsibility of the licensee.
• DISADVANTAGES:
• Operating procedures may be conflicting
• Store’s image may get adversely affected
• Customers tend to blame the store for any pitfall

LEASED DEPARTMENT..CONT
For leased operator’s :
• ADVANTAGES:
• Immediate sales because of store’s established image
• Some costs are reduced through shared facility.
• Volume saving in print/ media ads
• DISADVANTAGES:
• Inflexibility since working style may differ
• Goods/services line are restricted
• Store may raise the rent or may not renew lease
• In-store location may not generate expected sales.

5.VERTICAL MARKETING SYSTEM
CHANNEL TYPE CANNEL FUNCTIONS OWNERSHIPS
1. Independent Manufacturing Independent
Systems Partners
2. Partially
Integrated Two channel members
Systems Wholesaling own all facilities and
perform all functions
3. Fully All functions are
Integrated performed by a single
Systems Retailing channel member

6. CONSUMER CO-OPERATIVES
Consumer co-operatives exist for three basic reasons:
• They feel that they can operate a store as well or
may be better than any other retailer
• They believe that existing retailers are inadequately
fulfilling customers need for healthful,
environmentally safe products
• They assume that existing retailers make excessive
profits and they can sell merchandise for lower
prices

CLASSIFICATION BASED ON MERCHANDISE OFFERED
1. FOOD ORIENTED RETAILERS
CONVENIENCE STORES:
• It is usually a food-oriented retailer that is well located, is open for long hours and carries a moderate
number of items.
• This type of retailer is small, has average to above average prices and average services and average
atmosphere.
• Milk, eggs, bread, newspaper, tobacco products, soft drinks, magazines, video rentals, etc. are the
major category occupants.
• Store size ranges from 3000 to 8000 sq. ft.
• Ex. Mom n Pop stores.

2. CONVENTIONAL SUPERMARKET
• These are large, low cost, low margin, high volume, self service retailers designed to meet the needs for food,
groceries and other non-food items.
• They rely on high inventory turnover. Their profit margins are low.
• The size of the store ranges from 8000 to 20000 sq. ft.
• Ex. Kroger, Safeway, Foodworld, Adani supermarket, Subhiska, Nilgiri’s, Reliance Fresh.

3. FOOD BASED SUPERSTORE
• A food based superstore is a larger and more diversified than a conventional supermarket but usually less
diversified and smaller than a combination store.
• Some supermarkets merged with general merchandise store or drug store.
• They are typically 25000 to 50000 sq. feet of total space.
• 20-25 % revenues comes from garden supplies, small household appliances, flowers, etc.
• They stimulate impulse purchases.

4. COMBINATON STORE
• A combination store combines supermarket and general merchandise sales in one facility.
• 25-40% revenues from general merchandise.
• They are from 30000 to 100000 sq feet.
• the combination of economy supermarket with discount department store is called super center.
• Examples: Wal-Mart, K-mart.

5. HYPERMARKET
• Also called as super-centre, this format is a blend of economy supermarket with discount department store.
• They offer both food and non-food items like grocery, clothes, Jewellery, cycles, sports items, books, CDs,
furniture, etc.
This format was pioneered by Carrefour in France.
• This ranges from 80,000 to 2,20,000 sq. ft.
• The cheapest price will normally be found in these stores.
• Across the world hypermarkets are a part of retail park with other shops, cafeteria and restaurants.
• Other facilities include photo processing shop, pharmacy shops.
• They are usually located in the outskirts of major towns and cities.
• Ex. SIB, Big Bazaar, Adani Hypermarket.

6. BOX STORE
• This is a food based discounter that focuses on a a small section of items, moderate working hours, few
services and limited manufacturer’s brands.
• They have less than 1500 SKUs.
• Items are displayed in cut cases.
• Customers do their own bagging.
• They aim to price at 20-30% below supermarkets.
• Example: Aldi.

7. WAREHOUSE STORE
• A warehouse store is a food-based discounter offering a moderate number of food items in a no frill setting.
• They appeal to one stop shoppers.
• These stores concentrate on special discount purchases from manufacturer brands. They use cut-case displays,
provide little service, post prices on shelves and are located in industrial districts.
• Potential problem is lack of brand continuity.
• They temporarily or permanently run out of brands.
• Here customers pack their own goods.
• They work on volumes and their gross margins are far lower than supermarkets or hypermarkets.
• Largest stores are called super warehouse.
• Their sizes can be 15000 to 50000 square feet.
• Ex. Cub Foods

GENERAL MERCHANDISE RETAILERS
1. SPECIALITY STORE
• A specialty store concentrates on selling one product/ service line such as apparel and accessories, toys,
furniture. They have a deep assortment in their chosen category and tailor their strategy to selective market
segment.
• Personal attention, store ambience and customer service are the prime importance to the retailer.
• They operate in an area which is under 8000 sq. ft.
• Ex. The Gap, Mango, Levis, Wills Lifestyle, Big & Tall, Adidas, Nike, Style Spa, Proline fitness station.

2. CATEGORY KILLERS
• Also called as Power Retailer.
• This is a new type of specialty retailer which offers a very large selection of chosen category .
• They stock deep and dominate the chosen category.
• Ex. Planet Sports, Crossword, Nalli-Sarees, Sales India, Croma, E-planet.

3. DEPARTMENT STORE
• TRADITIONAL DEPARTMENT STORE:
• A traditional department store is a large retail unit with an extensive assortment of goods and services that is
organized into separate departments for buying, promotion, customer service and control.
• They generally serve as anchor stores in malls and is usually part of a chain.
• Apparel and home furnishing are the two most common product categories.
• Size varies from 20,000 to 40,000 sq. ft.

DEPARTMENT STORE…
• Merchandise quality is moderate to quite good. Pricing is moderate to above average. Customer service is medium to high
level.
• Ex. Marks & Spencer, Sears, J.C. Penny, Westside, Globus, Pyramid, Pantaloons, Shopper’s Stop, Lifestyle.

4. FULL-LINE DISCOUNT STORE
• It conveys the image of high volume, low cost, fast turnover outlet selling a broad merchandise for less than
conventional prices.
• Products are sold via self service.
• Non durable goods feature from private brands and durable goods are from well known national brands.
• Less fashion sensitive merchandise are carried.
• Ex. Wal-Mart.

5. VARIETY STORE
• US based My Dollar Store started operation in Mumbai through franchise arrangement with Sankalp Retail
Value.
• Floor Space: 4000 Sq. Feet
• Merchandise: Cleaning, Health & Beauty, Hardware,
• Plastic ware, Kitchen ware & confectionary etc.

6. OFF-PRICE CHAIN
• An off-price chain features brand name, sometime designer labels of women wear, cosmetics, accessories,
footwear, etc. and sell them at every day low prices in an efficient, limited service environment.
• They have centralized check-outs, no gift wrapping and charge separately for alterations.
• Ex. T.J. Maxx

7. FACTORY OUTLET
• A factory outlet is a manufacturer-owned store selling manufacturer closeouts, discontinued merchandise,
irregulars, cancelled orders and sometime in season fresh merchandise at lower rate.
• They sell merchandise at up to 60% less than MRP due to low operating cost, low rent, limited display and
cheap fixtures.
• Also sell in cartons.
• Ex. Levis factory outlet, Pantaloons factory outlet, etc.

8. MEMBERSHIP CLUB
• A membership club is a retail format where consumers have to be members to be able to buy merchandise at a
wholesale price.
• Here the members pay a certain amount of annual fee.
• Their operating strategy includes inexpensive isolated locations, opportunistic buying, little or no advertising,
plain fixtures, wide aisles, very low prices.
• Ex. Sam’s and Costco

9. FLEA MARKET
• A flea market has many retail vendors offering a range of products at discount prices in plain surroundings.
• They are located in non-traditional sites like stadiums, race-tracks, etc.
• Here, individual retailers rent space on a daily or weekly basis.
• At any flea market, price haggling are encouraged.
• Ex. Rose Bowl

10. CATALOGUE SHOWROOMS
• A catalogue retailer specializes in hard goods such as house-ware, Jewellery, consumer electronics.
• The customer walks into this retail showroom and goes through the catalogue of the product that would like to
purchase.
• The product is then arranged to be bought from the warehouse for inspection and purchase.
• Ex. Argos, Service Merchandise and Best Products.

1. DIRECT MARKETING:
• Is a form of retailing in which a customer is first exposed to goods or service through a non personal medium
such as direct mail, newspaper, broadcast or television and then orders are placed by mail, phone or computer.
• There are three forms:
• Mail order retailing/ catalogue retailing.
• Television retailing.
• E- tailing
CLASSIFICATION BASED ON NON-STORE RETAILING

2. DIRECT SELLING
• Direct selling includes both personal contact with consumers in their homes and offices and phone
solicitations initiated by a retailer.
• 1500 crore market in India growing @ 28% p.a.
• Profile of products purchased from Direct Selling: (IN %)
• HOUSEHOLD GOODS 68.9
• PERSONAL CARE PRODUCTS 12.4
• FAMILY PRODUCTS 14.4
• BUSINESS AIDS 3.59
• FOOD PRODUCTS 0.71
• Ex. Oriflame, Amway, Avon, Herbalife, Tupperware, Eureka Forbes
• Controlled by IDSA.

3. AUTOMATED VENDING
Ex. Tata Coffee, Jiffy, ATMs.
AIRPORT RETAILING
Ex. Travel Requisition Shop

4. E-Retailers

5. VIDEO KIOSKS
• The video kiosk is a free standing, interactive, electronic computer
• That displays products and related information on a video screen.
• It often uses a touch screen for consumers to make selection.
• Example: McDonald, Wills Lifestyle.

RETAILING IN INDIA.
Retail is the new buzzword in India.
The global Retail development Index has ranked India first, among the top 30 emerging markets in the world.
It is believed that India has the potential to deliver the fastest growth over the next 50 years.
While barter would be considered to be oldest form of retail trade, since independence , retail in India has evolved to
support the unique needs of country, given its size and complexity.
Second largest sector after Agriculture. Contributes about 10 – 11 % of the GDP
The estimated size of the organized retail industry in India is Rs. 16,000 crores. This is 2 % of the total estimated retail
trade.
Indian Retail trade increased from Rs. 2200 billion in 2000 to Rs 3300 billion by the year 2005
India's first true shopping mall – complete with food courts, recreation facilities and large car parking space – was
inaugurated as lately as in 1999 in Mumbai. (this mall is called "Crossroads").

Retail in India has evolved to support the unique needs of our country, given its size and complexity Haats, Mandis and
Melas have always been a part of the Indian landscape. They still continue to be present in most parts of the country and
form an essential part of life and trade in Various areas.
The PDS (Public Distribution System) would easily as the single largest retail chain existing in the country. the evolution of
the PDS of Grains in India has its origin in the “rationing system” introduced by the British during world war II.
The system was started in 1939 in Bombay and subsequently extended to other cities and towns. the system was abolished
post war but however attaining independence India was forced to reintroduce it in 1950.
There was rapid increase in the ration shops ( being increasingly called the Fair Price Shop or FPSs)
The Canteen Stores Department and the Post Offices in India are also among the largest network of outlets in the country
reaching population across the country.
RETAILING IN INDIA.

 The Khadi & Village industries (KVIC) was also set up post independence. The cooperative movement was again
championed by the government.
India's Largest retail Chains:
1. PDS: 463,000
2. Post offices: 160,000
3. KVIC: 7,000
4. CSD Stores:3,400
(source business world marketing White book 2005)
RETAILING IN INDIA.

In the past decade, the Indian marketplace has transformed dramatically. However from the 1950,s to the 80,s, investment
in various industries was limited due to low purchasing power in the hands of the consumer and the government’s policies
favoring the small scale sector.
The first attempts at organized retailing were noticed in the textiles sector. One of the pioneers in this field was Raymond’s
which set up stores to retail fabric.
Raymond’s distribution network today comprises 20,000 retailers and over 256 exclusive showrooms in over 120 cities of
the country
Other textile manufacturing who set up their own retail chains wee Reliance- which set up Vimal showrooms and Garden
Silk Mills, which set up Garden Vareli showrooms.
RETAILING IN INDIA.

Traditional
Formats
Itinerant Salesman
Haats
Melas
Mandis etc.
Established
formats
Kirana shops
Convenience/
department stores
PDS/
fair price shops
Pan/ Beedi shops
Emerging
Formats
Exclusive retail outlets
Hypermarket
Internal retail
Malls / Specialty Malls
Multiplexes
Fast food outlets
Service galleries
The Evolution of retail in India

DRIVERS OF RETAIL CHANGE IN INDIA
major drivers :
1. Changing Income Profiles: Steady economic growth fuelled the increase in disposable income in India.
The average middle class family's disposable income rose by more than 20% between 1999-2003.
2. Diminishing difference between Rural and urban India: Rural India accounts for over 75% of India
population and this in itself offers a tremendous opportunity for generating volume driven growth. Tax
benefit. In year 2002-03 LIC sold 50% of its policies in rural India. Same BSNL also sold its 50%
connection in small towns .

3. Changes in Consumption patterns: Occupational changes and expansion of media have caused a
significant change in the way the consumer lives and spends his money. The changes in income brought
about changes in the aspirations and the spending patterns of the consumers. the buying basket of the
consumer changed
4. The emergence of a young Earning India : Nearly 70% of the Indian population is below the age of 34.
taking advantages of employment opportunity in the booming service sector these young Indians are
redefining service and consumption patterns

PROMINENT SECTOR IN INDIAN RETAIL
1. Clothing, textiles and fashion Accessories:
2. Food & food Services:
3. Consumer Durables:
4. Books & Music:
Other emerging sectors
5. Jewellery retail
6. Footwear retail
7. Time Wear Retail
8. Fuel Retail/ petro retail

CHALLENGES TO RETAIL DEVELOPMENT IN INDIA
• Retail not being recognized as an industry in India.
• The high costs of real estate.
• Lack of Adequate infrastructure.
• Multiple and complex taxation system.

Introduction to Retail Management

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Introduction to Retail Management