retail-an overview 1

8/4/2019 Retail-An Overview 1

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RETAILING


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Retailing

Retailing is the set of business activities that adds value to the products and

services sold to consumers for their personal or family use

Retailing can be defined as a set of marketing activities designed to provide

satisfaction to the end consumer and profitably maintain the customer base

by continuous quality improvements across all areas of selling goods and

services

Retailing involves

- Understanding the needs of consumers

- Developing good assortment of merchandise- Display of merchandise in effective manner so that consumers find it easy

and attractive to buy


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Impacting Factors-Indian Retail

Rapid change in Indian consumer profile.Richer, Younger and more

aspirations

Consumer look forward Value for Money

Emergence of New, innovative retail formats

Modern organized Retail in Metros, A and few B grade cities

Huge investment by Corporate Players like Future Group, Tatas, Reliance,Birlas, RPG


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Indian Retail- Drivers for Growth

Spending Pattern Consumer spending is on the rise

- Rise in market opportunity in the region of 15000 Crore among A,B

cities

Customers Expectation Value expectations -dramatic changes

Consumer Lifestyle Two income households with higher disposable

incomes

Changing Attitudes Indian consumers are now global in their

consumption patterns- Indian young executives, Youth (BPO ,Part Time -Extra earnings),Teenager

Cool Attitude

Increased Spending by Rural consumers


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Indian Retail- Drivers for Growth

Economic Growth The gradual increase in GDP and purchasing power of

Indians provide excellent opportunity for organized retailer

Urbanization- The share of urban population in class I cities (Population

above 1 lakh)increased from 26% to 65% from 1981 to 2001.

-The rising concentration of urban population with higher purchasing

power

Consumerism- Changing lifestyle influenced spending on goods like

cars, consumer durables, mobiles, designer dresses, cosmetics and

luxury gadgets etc

Brand Profusion Increased brand consciousness-Multifold increase in numberof brands in almost every product range


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Comparative Penetration of Organized Retail

85 81

5540

3020

3

15 19

4560

70 8097

0

20

40

60

80

100

120

Organized Traditional Column1

Source -Ernst & Young,India Great RetailStory 2006


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Total Retail Sales Pie-2005

Food & Grocery

77%

lothi g

7%

Durables

4%

Jewellary &

Accessories

4%

Home Fur ishi g

2%

Health & Beauty

2%

Medical Services

2%

Footware

1%Books & Music

1%

Sales

Source-E & Y -Great India Retail Story,2006


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Retailers Role-in Distribution Channel

Retailer last entity in distribution channel. Plays the role of intermediary GatherInformation-Potential & current customers, competitors & other forces

Develop & Disseminate - persuasive Communication

Place -Orders with manufacturers

Provide -successive storage & movement of

physical goods

Negotiation- Final agreement on price & other terms

Risk taking assumption of risk taking

Title Actual transfer of ownership from one organization to other

rs


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Benefits of Retailing -Benefits to customers

Breaking bulk - Buy in bulk from manufacturers and divide in to smaller

parts according to consumption pattern

Providing assortment Evaluate t e products off various manufacturers and

offer t e best collection of products

Holding inventory T ey carry inventory and make t e products available to

consumers at a convenient place and time

Providing After Sales & Service

Proving Information


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Retailing -Benefits to Manufacturers & Distributors


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Benefits to Economy

The retailing business largest private sector in world with turnover of US $

6.6 trillion plus

Retailing constitute a tenth of the fortune 500 companies

In India,Retail accounts for more than 10% of GDP and around 8% of

employment


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Retailing Environment

Economic Environment Some of the economic factors that affect retailersare GDP, Rate of inflation, Purchasing Power, Interest rates etc

Legal Environment-Few legal aspects faced by Retailers in India

-FDI Restrictions- GOI planning to increase FDI in retail sector.Opening in

FDI would

- Bring in valuable foreign exchange

- Provide Huge employment opportunity

- Improve shopping experience

-Wider choice of Products at competitive rates


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Legal Environment

Property Regulations Hurdles such as sky rocketing rental & lease amounts

as well as good retail space at prime locations

- High retail space prices,hefty stamp duty for property transfer,Urban

ceiling act

Real Estate Mismatch between Demand & Supply.Lease rates PSFPM that is

Per Square Foot per Month very high

Variation in Sales tax across States was another problem.Eased due to VAT inmany states

Labor Laws Stringent Indian laws Another concern


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Technological Environment

Key driver of Change.IT provides competitive advantage

IT majors like SAP,CISCO,IBM Retail IT solution providers. Others includeGinesys, Gunnebo,Check point systems and many more

Retail IT solution areas

- Store integration framework

-Integrated multi-channel retail solution

-Digital video survelliance

-Store traffic system (includes foot fall measurement)

-POS,ERP,CRM,SCM


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Competitive Environment

Retailing in India Nascent stage Still severe competition between existing

players

Huge untapped potential Encouraging many new players

Current recessionary trend Bit slowdown on newcomers as well as major

expansion plans of existing players on hold

Reforms on retail sector Entry of Retail Giants like Wal-

Mart, Tesco, Carrefour, J C Penny

Competitive game plans - Mergers, Acquisition,JV,Consolidation

retail-an overview 1

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