RETAIL MANAGEMENT

Prof. V.Jha

INTRODUCTION – CONCEPTS, ROLE & ENVIRONMENT RETAILING Business activities involve Selling Goods

and Services to Consumers for their Personal, Family or Household use.

“Every sale of Goods and Services to final consumer” – Food products, apparel, movie tickets; services from hair cutting to e-ticketing.

• Retailing is the Last stage in Distribution Process- Wholesale is an intermediate where Goods and services are sold to Business customers.

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• Retailer is customer focused, not Product –focused.

Manufacturer may reach customers through:

• Dealers• Company showrooms• Malls

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RETAIL MANAGEMENT ..1ORGANISED RETAILING• In India Organised Retailing is 5%• Retail sector highly fragmented• Retail chains like Wal Mart, Sears, McDonalds

brought Rapid Growth and consolidation of Organised Retail

• Rapid rise of Income levels and accompanying changes in lifestyles greatly contributed to growth of Organised Retail

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ORGANISED RETAILING• In India, increase in Disposable income, Purchasing

Power of growing Middle Class conducive conditions for growth of Organised Retail

• Indian Retail environment different from that of western countries:- Cities congested, large population rural areas- Smaller purchases, limited household space

RETAIL MANAGEMENT ..1RETAILING CONCEPT“Retaillier” French for breaking bulkRetailer links Producers to CustomersRetailer is a person, agent, company or organisation

reaching the Goods or Services to ultimate consumer Retailers perform specific activities:• Anticipate customer wants• Stock product assortments• Acquire market information• Finance Retail business

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RETAIL MANAGEMENT ..1Last decade has seen tremendous changes in

Retail Business – from made to order to ready to wear, from counter sales to self service, emphasis on value addition and cost reduction.

Family run retail business giving way to modern professional retail.

Retail improving inventory management through systems – faster turnover, better profitability, fast changing customer preferences for assortment of goods and services. BETTER CUSTOMER CARE

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RETAIL MANAGEMENT ..1ORGANISED RETAIL FORMAT

1. By 2006 - 200 Shopping Malls – Up from 25 in 2003

2. 6 A Grade cities Delhi NCR, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata will have 34 mio. and non metros Pune, Ahemadabad Ludhiana, Chandigarh, Jaipur, Lucknow, indore, Cochin 6 mio.

3. Delhi NCR will have 26 mio., Mumbai another 5 mio.

RETAIL MANAGEMENT ..1RETAIL CHARACTERISTICS

1. Direct End-User Interaction2. Platform for Promotions & POP displays3. Lower unit sales4. Retail location critical5. Services as important as Core Products6. Large number of Retailers to meet

geographical coverage and population density

RETAIL MANAGEMENT ..2RETAIL CONCEPT

• Customer Orientation:Attributes & Needs satisfaction• Coordinated Efforts:Maximize Business Efficiency IT: POS, QR.• Value driven:Good Value for Money sabse sasta din Big

Bazaar, EDLP Wal Mart• Goal OrientationAchieve Goals

RETAIL MANAGEMENT ..2RETAILING CONCEPT• Communication with Customers• Identify Customers Needs• Provide Products and Services to

Satisfy Customers• Elicit Feedback to Improve Services – Word Of

Mouth

RETAIL MANAGEMENT ..2RETAILING CONCEPTCustomer Service approach: • Create a conducive environment• Listen to your Customers• Direct mail• Relationship Marketing – Long Term CRM• Rewards for Regular Customers Inc switching cost

ROLE• Consumer spend their money at Retail which drives the

economy. Retailers realize Revenue when Consumers buy products or Services from them.

• The revenue passes up the Consumer Goods distribution chain viz. to Wholesalers, Distributors and Manufacturers.

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• Retail Industry employs 17-20% Workforce that drives the Economy.

• Retail trends often mirror trends in a nation’s overall economy.

• Retailers add value by Providing the Right Product at The Right Place at the Right Time.

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Retail in India

• ENVIRONMENT• Retailing is a Dynamic field with very Competitive

Environment. • Retailers act as Filters – Strong lobby for success or

otherwise of a Product or Services. • Companies create Retailer Value and Consumer

Differential Advantage to improve success rate of their Brands.

• Constraints – Multiple Brands and SKUs for each category, Shelf Space, funds available, Turnover of Merchandise.

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RETAIL MANAGEMENT ..2New Concepts & Trends

1. Vertical Retail Concept: Traditional stores and Shop-in-Shop concepts – mixture of system and individuality, e.g. Sale of Non-food items like newspapers, magazines with snacks, beverages

2. Consumption Related Trends: Increasing Consumers with Purchasing Power & More Migrant Consumers Demand for Broad selection of Products Demand for Good quality Products e.g. Honest, Original and Green Products

Indian Economy – GDP Projections Through 2022 (2007 Prices)

2007

13,2452,897

2,6302,374

2,2329169791,068

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

US AG erma

C hinaUK

F ranceIndia

R us s iaB raz il 2012

15,3544,197

3,1982,648

2,4701,4091,3041,369

- 5,000 10,000 15,000 20,000

US AC hina

G ermanyUK

F ranc eIndia

R us s iaB raz il

2017

17,0316,341

3,5132,953

2,7612,119

1,6881,789

- 5,000 10,000 15,000 20,000

US AC hina

G ermanyUK

F ranc eIndia

R us s iaB raz il

2022

19,7519,229

3,7663,2513,0853,128

2,1032,282

- 5,000 10,000 15,000 20,000 25,000

US AC hina

G ermanyUK

F ranc eIndia

R us s iaB raz il

US$ Billion

US$ Billion

US$ Billion

US$ Billion

India is expected to be comparable with UK & France in GDP by 2022

*GDP figures are in real terms with base year as 2007

Retail in India

Current Size & Future Projections for Indian Retail Market

336 376 421 471 527 590

1011

12 17 29 51 74 97

282

0

200

400

600

800

1000

1200

2007 2008 2009 2010 2011 2012 2017

US

$ B

illion

Total Retail Organized Retail

Rapid Transformation Anticipated

28% share

Reach a share of 28% by 2017

9.0%

6.8%6.0%6.0%

5.6%5.2%

6.4%6.6%

5.4%

9.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%19

97

1998

1999

2000

2001

2002

2003

2004

2005

2006

Projections of 8% sustainable real GDP growth rate till 2020 promise high growth potential for Indian Retail

HIGH GDP GROWTH

Retail in India

Radical Transformation Anticipated In Indian Retail

Country Share of Organized

Retail

Years taken to reach the level

from < 5%

China 20% 10

Poland 20% 8

Brazil 36% 15

Thailand 40% 18

US 85% 50

India 17% (estimated)27% (estimated)

510

India looking at rapid GROWTH compared to other countries

Growth Of Indian Retail …

Indian Retail expected to grow close to 12% p.a. in the next 10 years

*Projected

Source: Technopak Analysis, CSO & Other Sources