An introduction to Modern Retail
Guest lecture for the students of Govt. College of Engineering & Textile
Technology, Berh...
Retail ..defined in many ways..
• Retail comes from the French
word Retailer , which refers to
"cutting off, clip and divi...
Weekly Markets
Village Fairs
Melas
Convenience Stores
Mom and Pop/Kiranas
PDS Outlets
Khadi Stores
Cooperatives
Exclusive ...
Evolution of Retail
Organized retail calls for performance…
Organized retail
• Range of retail formats right from
neighbourhood to hypermarket...
Organized retail with larger scale of operation offers win-win-
win situation…
• Arranging Assortment: Manufacturers usual...
Retail Formats can be classified on the basis of following:
Wedding mall
Khadi Plaza
Village mall
Kisan Bazar ( Choupal Sa...
Each component will differ as per the store format…
Convenience Store : Petrol pump & Metro
stations, SPAR , Grocery
Hyper...
• Product Mix – In-house n
reputed brands from
Local/International market
• Pricing – value Pricing,
Promotional Pricing, ...
• Promotions –
Advertisements, Loyalty ,
Brand endorsement, POP,
Outdoor branding, PR, Live
demo
• People – training,
Appe...
Others
11%
Food &
Grocery
60%
Apparel
8%
Mobile
6%
Food Ser
5%
Jewellery
4%
Con Elect
3%
Pharma
3%
24%
11%
33%
11%
7%
6%
8...
Still a long way to go, enormous potential for Indian Retail
industry…
USA India
Contribution of
Retail to the GDP
27% 13%...
Evolution of Luxury in India is at a nascent stage as compared to other Asian countries
India’s emerging economic growth h...
Earlier Classification Current Classification
Tier 1
Tier 2
Tier 3
Based on Geography and
Population
MEGACITIES – Largest ...
Map of India’s income classes
In face of the evolving market characteristics, Retail
Industry need to work around three critical success factors
Develop...
Indianization of their offerings….
Embracing ‘Indianness’ brand’ will definitely help players connect with Indian consumer...
Brands will need to define localized growth strategies
on smart investments
It is imperative for foreign players to shift ...
 Consumer
handling at
entrance
 Consumer
identification
 Consumer
orientation
 Ambiance
(lighting, sounds,
design…)
 ...
… and creating brand awareness to capture the burgeoning
luxury consumption class in India
It is critical for luxury brand...
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Modern Retailing...scope for India

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  • Retail presentation v1.2

    1. 1. An introduction to Modern Retail Guest lecture for the students of Govt. College of Engineering & Textile Technology, Berhampur, West Bengal, India. By Sumanranjan Palit srpalit@gmail.com August 8,2013
    2. 2. Retail ..defined in many ways.. • Retail comes from the French word Retailer , which refers to "cutting off, clip and divide”. • According to Kotler: “Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non business use” • Modern Retailing is in its ability to provide easier access to variety of products, freedom of choice and many services to consumers. Manufacturer Wholesaler Retailer Consumer Feedback
    3. 3. Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Traditional/Pervasive Reach Government Supported Historic/Rural Reach Modern Formats/ International Evolution of Retail Source of Entertainment Neighbourhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency
    4. 4. Evolution of Retail
    5. 5. Organized retail calls for performance… Organized retail • Range of retail formats right from neighbourhood to hypermarkets • Professionally managed & technologically advanced - better service and shopping experience • High street location attracting large no of customer foot-falls in to stores. • Nationwide large retail chain offering similar assortment in most of the categories • Higher degree of awareness among the target group – offers great platoforms for the smaller brands Unorganized retail • Melas/Mandies /Bazar or Weekly Haat : selling different or similar merchandise • Small-store (kirana) : Mostly Family Run,. Located in neighbourhood. • Lack of standardization and professional approach • No infrustructure for sourcing
    6. 6. Organized retail with larger scale of operation offers win-win- win situation… • Arranging Assortment: Manufacturers usually make one or a variety of products and would like to sell their entire inventory to few buyers to reduce costs. Final consumers, in contrast prefer a large variety of goods and services to choose from and usually buy them in small units. • Retailers are able to balance the demands of both sides, by collecting an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units • Breaking Bulk: to reduce transportation costs, manufacturer and wholesalers typically ship large cartons of the products, which are then tailored by the retailers into smaller quantities to meet individual consumption needs • Holding stock: Retailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the manufacture to regulate production. • Promotional support: small manufacturers can use retailers to provide assistance with transport, storage, advertising, and pre- payment of merchandise. • Impulse Purchase : Need strong forecasting ability , also In store experience is the key to take a share
    7. 7. Retail Formats can be classified on the basis of following: Wedding mall Khadi Plaza Village mall Kisan Bazar ( Choupal Sagar) India specific…
    8. 8. Each component will differ as per the store format… Convenience Store : Petrol pump & Metro stations, SPAR , Grocery Hyper market : Wall-Mart, Carrefour , Hyper city, Big Bazar Supermarket : Spinneys, Food Bazar, More Specialty Stores ( Multi brand) : Fab-India, Metro, Sleek Kitchen, Paris Gallery Departmental Stores : Lifestyle, Shopper Stop, @Home Discount Stores : Dollar Shop, Subhiksha, On Line Stores Factory outlet On Line Stores : Group-on, E bay
    9. 9. • Product Mix – In-house n reputed brands from Local/International market • Pricing – value Pricing, Promotional Pricing, Time pricing ( Weekend), Bundling • Place : Location of Stores and efficient Supply Chain 7 Ps of Modern Retail ( Example)
    10. 10. • Promotions – Advertisements, Loyalty , Brand endorsement, POP, Outdoor branding, PR, Live demo • People – training, Appearance, empowerment, reward, employee of the month • Process – Customer service, billing counter, Product • Physical Evidence 7 Ps of Modern Retail…
    11. 11. Others 11% Food & Grocery 60% Apparel 8% Mobile 6% Food Ser 5% Jewellery 4% Con Elect 3% Pharma 3% 24% 11% 33% 11% 7% 6% 8% The '8%' India’s $500 billion retail industry.. Source : Deloitte, jan’13 92% of the sector is unorganized, those that fall under `mom & pop’ store. Organized sector is dominated by retailers having multiple stores
    12. 12. Still a long way to go, enormous potential for Indian Retail industry… USA India Contribution of Retail to the GDP 27% 13% Per capita Retail Space in SQFT 16 2 % Population engaged in Retail 20% 8% % of Organized retail 80% 8% Wal-Mart/ Future Group 20% 0.3% Average store size High Low Role of wholesalers Limited Extensive Infrastructure Extensive Limited 5th largest Retail destination in the globe Only 4% of the 12 million Stores are bigger than 500 SQFT Only 8% of Indian Retail is `Organized’ Organized retail is poised to grow @ 35~40% compared to only 6% to that of `Unorganized’ retail Very young population. Ready to experiment & accept New Six million rich Indians looking for changing Shopping experience
    13. 13. Evolution of Luxury in India is at a nascent stage as compared to other Asian countries India’s emerging economic growth has sparked initial stages of luxury consumption  Locked into luxury habit  Confide nt discerni ng buyers Subjugation Start of money Show off Fit in Way of life  Authoritaria n rule  Poverty and deprivation  Economic growth  Masses buy white goods  Elites start consuming luxury  Acquire symbols of wealth  Display economic status  Large scale adoption of luxe  Fuelled by need to conform India China Taiwan, Korea Hong Kong, Singapore Japan Source: Chada and Husband’s evolution of luxe model) Stage I Stage II Stage III Stage IV Stage V
    14. 14. Earlier Classification Current Classification Tier 1 Tier 2 Tier 3 Based on Geography and Population MEGACITIES – Largest cities in terms of population and overall consumer markets BOOM TOWNS – Next set of big- population cities with high expenditure per household NICHE CITIES – Smaller in terms of overall population but still well above their weight in spending per household. These twenty cities together account for • 10% of Population, • 55% of total urban income • Boomtowns and niche cities today may be much smaller in terms of their income and spending weights, but they are growing rapidly. Megacities Boom Towns Niche Cities Mumbai Delhi Kolkata Chennai Bangalore Hyderabad Ahmedabad Pune Surat Kanpur Jaipur Lucknow Nagpur Bhopal Coimbatore Faridabad Amritsar Ludhiana Chandigarh Jalandhar 14 Evolved Urban Classification
    15. 15. Map of India’s income classes
    16. 16. In face of the evolving market characteristics, Retail Industry need to work around three critical success factors Developing a « product offering » catering to the Indian preferences…. Managing the mandatory sourcing and real estate is key to revenues/sq. ft in « Operations » Offering an exceptional « Customer Service Experience » will make for clear winners Evolving consumer tastes and preferences Tackling mandatory 30% sourcing- identifying right partners Offering much desired customer service experience and quality Embracing Indianization of products Managing real estate : revenues/sq.ft vs. rental costs Identifying and hiring talent and investing in training
    17. 17. Indianization of their offerings…. Embracing ‘Indianness’ brand’ will definitely help players connect with Indian consumers, however, it remains to be seen what the efforts will yield …. Indianizing offerings Saris by Hermes  Indianized offerings visible in the watches, jewelry and apparel segments – Ex-Keeping in mind the like for logos on luxury products by Indian consumers, Salvatore Ferragamo launched an exclusive ‘Gancino’ collection – Hermes offering Gold in its jewelry and accessories collection in India – Tod’s silk satin clutches with rhinestones as part of “only for India” collection  Indian inspired collections elsewhere create a connect in terms of brand image and perception – Ex-The Louis Vuitton Diwali collection Gandhii Montblanc pen Salvatore Ferragamo’s exclusive India collection of Gancino bagsNawab collection by Roberto Canali Product Offering Source: http://www.cpp-luxury.com/en/the-real-challenges-of-india-s-luxury-retail-market_1633.html http://in.reuters.com/article/2011/08/24/idINIndia-58939820110824 http://jllindia.wordpress.com/2011/02/14/india-luxury-retail-property/
    18. 18. Brands will need to define localized growth strategies on smart investments It is imperative for foreign players to shift focus to adding growth capital to gain scale, tackling the mandatory 30% sourcing rider and investing on hiring and training talent  Footfall versus rental cost a concern-Rentals varying from INR 450-550/sq.ft for high street vs. INR 350-450/sq.ft for luxury malls P&L Item Global India Revenue/sqft/day (INR) 110-170 60-80 Gross margin 70% 55-60% Rentals(% of revenue) 10-15% 25-30% Others costs (% of revenue) 20-25% 15-20% Talent  The luxury retail sector was estimated to face a shortage of 1,33,000 salesmen by 2010 Sourcing/production  With the rider of mandatory 30% sourcing from SMEs in India, vendor management, workmanship, quality of raw material and intellectual property issues need to tackled Operations Real Estate Source: http://www.cpp-luxury.com/en/the-real-challenges-of-india-s-luxury-retail-market_1633.html, http://in.reuters.com/article/2011/08/24/idINIndia-58939820110824, Joe Lang La Salle India, AT kearney CII report
    19. 19.  Consumer handling at entrance  Consumer identification  Consumer orientation  Ambiance (lighting, sounds, design…)  Shop/counter lay-out  Signage  Product…  Staging  Access  Information  Testing  Needs and habits inquiry  Main product choice  Link selling  Additional services  Customization  Payment  Delivery services  Consumer registering  Satisfaction check Shopvisit BeforeShopvisit AfterShopvisit Consumer welcome Atmosphere discovery Product touch & feel Advisory & services Check out  Purchase provoked by need for conformance, social status  After sales service missing or insufficient due to high import duties  Requests and claims take time Designing an exceptional “store-journey” is key to connecting with Indian consumers Indian consumers’ need for attention and respect is synonymous with the culture with class consciousness and status symbolization : It is imperative to focus on the experience and after shop visit Source: First Retail workshop with Lancôme, Armani and YSLB DGAs Shop journey Customer Experience
    20. 20. … and creating brand awareness to capture the burgeoning luxury consumption class in India It is critical for luxury brands to decode the aspirational DNA in order to connect with the Indian luxury consumer Communicating luxury  Newer affluent masses will need to be communicated the exclusivity and prestige driven by a distance- – Artistic and graphic visualisations – Using India on global advertising campaigns – Localized marketing material  Press dominates the marketing budget of luxury brands as of now – Social media to target young consumers through Face book, Twitter, internet and mobile communication will be the trend in near future – Over 300M users to have access to data-rich video through 3G and 4G capabilities on mobile by 2015 Role of digital media Brand awareness  Awareness is very high in rich class segment – However, newly affluent lack sufficient knowledge and awareness. Here bollywood can create the connect. As brand awareness is low, brand loyalty too is low Customer Experience Source: Communicating luxury to the masses, JWT http://sg.acnielsen.com/site/20080408.htm

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