introduction to retail

INTRODUCTION TO RETAIL INTRODUCTION TO RETAIL

WHAT IS RETAIL WHAT IS RETAIL

Retail : Derived from the French word “retaillier”Retail : Derived from the French word “retaillier” Means : To cut off a piece or to break bulk.Means : To cut off a piece or to break bulk.

Retailer : Defined as a dealer or trader who sells goods in Retailer : Defined as a dealer or trader who sells goods in small quantities, orsmall quantities, or one who repeats or relatesone who repeats or relates Retailing : The last stage in movement of goods or Retailing : The last stage in movement of goods or services to services to the consumer.the consumer.

Retailing can thus be defined as consisting of all such Retailing can thus be defined as consisting of all such activities activities involved in the marketing of goods and services directly to involved in the marketing of goods and services directly to the the consumers for their personal, family or household useconsumers for their personal, family or household use


RETAIL : THE INDUSTRYRETAIL : THE INDUSTRY

Largest private industry in the world, total sales of US$ 6.6 Largest private industry in the world, total sales of US$ 6.6 trilliontrillion In Western economy it accounts for 8% of the GDPIn Western economy it accounts for 8% of the GDP Has generated an 19% return for the shareholders Has generated an 19% return for the shareholders between 2004- between 2004-

06 06 In comparison banks generated 9% and insurance In comparison banks generated 9% and insurance generated generated

15.2% return.15.2% return. Largest corporation in the world – Wal-Mart is a retail chainLargest corporation in the world – Wal-Mart is a retail chain Almost 50 retail organizations in the world feature in the Almost 50 retail organizations in the world feature in the list of list of

Fortune 500 Fortune 500 companies.companies. The world over retail is not only the oldest but also one of The world over retail is not only the oldest but also one of the most the most

advanced user of technology.advanced user of technology.


FUNCTIONS OF A RETAILERFUNCTIONS OF A RETAILER

From customers point of view, retailer serves by From customers point of view, retailer serves by providing goods that he needs in the required providing goods that he needs in the required assortment and at the right place and time.assortment and at the right place and time.

From an economic standpoint the role of a retailer From an economic standpoint the role of a retailer is to provide real added value or utility to the is to provide real added value or utility to the customer.customer.

This comes from five different perspectivesThis comes from five different perspectives

INTRODUCTION TO RETAIL INTRODUCTION TO RETAIL FUNCTIONS OF A RETAILERFUNCTIONS OF A RETAILER

First utility arises from the need of providing a finished First utility arises from the need of providing a finished goods and services in the form that is acceptable to the goods and services in the form that is acceptable to the customercustomer

The retailer performs the function of storing the goods, The retailer performs the function of storing the goods, and providing us with an assortment of products in and providing us with an assortment of products in various categoriesvarious categories

The retailer creates time utility by keeping the store The retailer creates time utility by keeping the store open when the consumers prefer to shopopen when the consumers prefer to shop

By being available at a convenient location he creates By being available at a convenient location he creates place utilityplace utility

Finally when he products are sold ownership utility is Finally when he products are sold ownership utility is createdcreated



All these are real benefits which the Retailer offers by All these are real benefits which the Retailer offers by

Being close to potential customersBeing close to potential customers

Fully understanding the motivating factors that drive Fully understanding the motivating factors that drive their customers their customers

By serving the consumers by way of functioning as a By serving the consumers by way of functioning as a marketing intermediary and creating time, place and marketing intermediary and creating time, place and ownership utilityownership utility



The Retailer also serves the manufacturers by The Retailer also serves the manufacturers by

Performing the function of distributing the goods to the Performing the function of distributing the goods to the end usersend users

Creating a channel of information from manufacturer to Creating a channel of information from manufacturer to the consumerthe consumer

By serving as a final link in the distribution chainBy serving as a final link in the distribution chain

Recommending products where brand loyalty is not Recommending products where brand loyalty is not strong or for unbranded products. strong or for unbranded products.

THE CHANGING RETAIL THE CHANGING RETAIL LANDCSAPELANDCSAPE

REASONS FOR THE CHANGING RETAIL REASONS FOR THE CHANGING RETAIL LANDSCAPELANDSCAPE

Proximity to customers : Proximity to customers : The emergence of large super The emergence of large super markets, hypermarkets and various other formats like the markets, hypermarkets and various other formats like the department stores.department stores.

The rise of consumerism : The rise of consumerism : Retailer faces a knowledgeable and Retailer faces a knowledgeable and demanding consumers. This has forced retail organizations to demanding consumers. This has forced retail organizations to change formats, product offerings and services.change formats, product offerings and services.

Introduction of the private label : Introduction of the private label : Retailers now decide on Retailers now decide on products and brands they want to stock. Some have even products and brands they want to stock. Some have even developed their own in store brands/products that cater to the developed their own in store brands/products that cater to the needs of target customers. needs of target customers.

Technology : Technology : Increasing use of technology vide point of sale Increasing use of technology vide point of sale scanning, use of bar code provides wealth of information to scanning, use of bar code provides wealth of information to retailer. Consumer profile, products purchased, price ranges, retailer. Consumer profile, products purchased, price ranges, promotional offers, customer cards, internet etc.promotional offers, customer cards, internet etc.

RETAIL IN INDIARETAIL IN INDIA India boasts of the world’s largest retail network, 12 million India boasts of the world’s largest retail network, 12 million

outletsoutlets India being second largest consumer market in the world India being second largest consumer market in the world

stands benefitedstands benefited 96% of total number of retail outlets have an area of les than 96% of total number of retail outlets have an area of les than

500 sq.ft. and the per capita retail space in India is a mere 2 500 sq.ft. and the per capita retail space in India is a mere 2 sq.ft.sq.ft.

Trade is highly fragmented and is known the world over as Trade is highly fragmented and is known the world over as highly unorganized and in nascent formhighly unorganized and in nascent form

However, the reality is that apart from agricultural products However, the reality is that apart from agricultural products even manufactured goods are available in the remotest corners even manufactured goods are available in the remotest corners of India of India

As retail is not regarded as an industry in India it is difficult to As retail is not regarded as an industry in India it is difficult to get a correct picture of the size of this sectorget a correct picture of the size of this sector

As per estimates given by the Central Statistical Organization As per estimates given by the Central Statistical Organization the total private final consumption expenditure in India was the total private final consumption expenditure in India was Rs.15,000 billion in 2001-2002Rs.15,000 billion in 2001-2002

Consumption patterns indicate how much has been soldConsumption patterns indicate how much has been sold In retail context it would indicate the kind of retail outlets that In retail context it would indicate the kind of retail outlets that

are likely to groware likely to grow

GROWTH OF RETAIL IN INDIAGROWTH OF RETAIL IN INDIA India Government set up public distribution system faced with India Government set up public distribution system faced with

the task of providing basic grains to the mass populace – ration the task of providing basic grains to the mass populace – ration shopsshops

State run retail stores were set up such as Khadi & Village State run retail stores were set up such as Khadi & Village Industries Commission stores (KVIC). As on date there are more Industries Commission stores (KVIC). As on date there are more than 7,000 stores across the country.than 7,000 stores across the country.

The co-operative movement was championed by the The co-operative movement was championed by the government, which set up Kendriya Bhandars in 1963. As on government, which set up Kendriya Bhandars in 1963. As on date they operate from a network of 112 stores and 42 fair date they operate from a network of 112 stores and 42 fair price shops across the country.price shops across the country.

Mother diary another early starter controls as many as 250 Mother diary another early starter controls as many as 250 stores selling foods and provisions at attractive prices stores selling foods and provisions at attractive prices

In Maharashtra, Bombay Bazaar, which operates stores under In Maharashtra, Bombay Bazaar, which operates stores under the label Sahakari Bhandar and Apna Bazaar runs a large chain the label Sahakari Bhandar and Apna Bazaar runs a large chain of co-operative storesof co-operative stores

First attempts at organized retailing were noticed in the textile First attempts at organized retailing were noticed in the textile sectorsector

CLASIFICATION OF RETAIL SECTORCLASIFICATION OF RETAIL SECTOR

In India, Retail Sector is classified into two broad In India, Retail Sector is classified into two broad categoriescategories

1.1. FoodFood

2.2. Non FoodNon Food

Through this classification one can see a Through this classification one can see a phenomenal change that has occurred in retail in phenomenal change that has occurred in retail in IndiaIndia

Key Players have emerged in various sectors over Key Players have emerged in various sectors over the past ten yearsthe past ten years

ROADBLOCKS TO RETAIL ROADBLOCKS TO RETAIL DEVELOPMENTDEVELOPMENT

In India, organized retail is a little over a decade oldIn India, organized retail is a little over a decade old It is largely an urban phenomenon It is largely an urban phenomenon However the pace of growth is still slowHowever the pace of growth is still slow

Reasons for slow growth in retailReasons for slow growth in retail

1. Retail not being recognized as an industry in India1. Retail not being recognized as an industry in India - Hampering the availability of finance to existing - Hampering the availability of finance to existing

and new playersand new players - Hence affecting growth and expansion plans- Hence affecting growth and expansion plans

2. High costs of real estate2. High costs of real estate - Lease or rent of property is major area of - Lease or rent of property is major area of

expenditureexpenditure - This eats into the profitability of a project- This eats into the profitability of a project

ROADBLOCKS TO RETAIL ROADBLOCKS TO RETAIL DEVELOPMENTDEVELOPMENT

3. Lack of adequate infrastructure3. Lack of adequate infrastructure - Poor roads, lack of cold chain infrastructure- Poor roads, lack of cold chain infrastructure - Existing supermarkets and food retailers have to invest - Existing supermarkets and food retailers have to invest

substantially in building cold chain infrastructure substantially in building cold chain infrastructure

4. Multiple and complex taxation system4. Multiple and complex taxation system - Sales tax rates vary from State to State- Sales tax rates vary from State to State - Organized players have to face multiple point control and tax - Organized players have to face multiple point control and tax

systemsystem - Tax evasion by small stores - Tax evasion by small stores - Hence it becomes expensive to transfer goods from one store - Hence it becomes expensive to transfer goods from one store

to anotherto another

5. Foreign direct investment5. Foreign direct investment - FDI in pure retailing is not permitted- FDI in pure retailing is not permitted - One of the prime reason for slow growth of retail in India- One of the prime reason for slow growth of retail in India - Global retailer can enter only by way of a franchise with Indian - Global retailer can enter only by way of a franchise with Indian

partner partner or through technological alliancesor through technological alliances

FUTURE PROSPECTS FUTURE PROSPECTS

Bright future aheadBright future ahead What one sees today is only the tip of the icebergWhat one sees today is only the tip of the iceberg Expansion from urban to B Class towns will see the Expansion from urban to B Class towns will see the

emergence of region specific formats which will be scaled emergence of region specific formats which will be scaled downdown

Large discount stores are bound to emerge as they will cater Large discount stores are bound to emerge as they will cater to mass marketto mass market

Thus penetration in the lower income groupsThus penetration in the lower income groups This is the format that is most likely to meet the consumer’s This is the format that is most likely to meet the consumer’s

demands for “increased value for money” offeringsdemands for “increased value for money” offerings The new agreement on textiles and clothing (ATC) will see The new agreement on textiles and clothing (ATC) will see

large number of international retailers setting shop in Indialarge number of international retailers setting shop in India Indian retailers would have to become consumer-centric in Indian retailers would have to become consumer-centric in

true sensetrue sense Retailers will have to reinvent themselves and have to go Retailers will have to reinvent themselves and have to go

beyond the traditional products and servicesbeyond the traditional products and services

introduction to retail

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