Retail

From Wikipedia, the free encyclopedia

"Retail stores" redirects here. For the comic strip by Norm Feuti, see Retail (comic strip).

Drawing of a self-service store.

Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mall, in small or individual lots for directconsumption by the purchaser.[1] Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power. Shops may be on residential streets, shopping streets with few or no houses or in ashopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type ofelectronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing. Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.
Contents
[hide]

1 Etymology 2 Types of retail outlets 3 Retail pricing 4 Transfer mechanism 5 Second-hand retail 6 Challenges 7 Sales techniques 8 Customer service 9 Statistics for national retail sales

o o

9.1 United States 9.2 Other countries

10 Consolidation 11 See also 12 Further reading 13 References 14 External links

[edit]Etymology

The Apple Store retail location on theMagnificent Mile in Chicago.

The world's only Garmin retail location is located on the Magnificent Mile in Chicago.

Retail comes from the Old French word tailer (compare modern French retailler), which means "to cut off, clip, pare, divide" in terms of tailoring (1365). It was first recorded as a noun with the meaning of a "sale in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap, paring").[2] Like the French, the word retail in both Dutch and German (detailhandeland Einzelhandel, respectively) also refers to the sale of small quantities of items.

[edit]Types

of retail outlets

San Juan de Dios Market in Guadalajara, Jalisco

Inside a supermarket in Russia

A marketplace is a location where goods and services are exchanged. The traditionalmarket square is a city square where traders set up stalls and buyers browse the merchandise. This kind of market is very old, and countless such markets are still in operation around the whole world. In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains. Retail is usually classified by type of products as follows:

Food products Hard goods ("hardline retailers") - appliances, electronics, furniture, sporting goods, etc. Soft goods - clothing, apparel, and other fabrics.

There are the following types of retailers by marketing strategy:

Department stores - very large stores offering a huge assortment of "soft" and "hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.

Discount stores - tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally retailers sell less fashion-oriented brands.

Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee;

Variety stores - these offer extremely low-cost goods, with limited selection; Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy individuals).

Mom-And-Pop : is a retail outlet that is owned and operated by individuals. The range of products are very selective and few in numbers. These stores are seen in local community often are family-run businesses. The square feet area of the store depends on the store holder.

Specialty stores: A typical speciality store gives attention to a particular category and provides high level of service to the customers. A pet store that specializes in selling dog food would be regarded as a specialty store. However, branded stores also come under this format. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores.

General store - a rural store that supplies the main needs for the local community; Convenience stores: is essentially found in residential areas. They provide limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases.

Hypermarkets: provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.

Supermarkets: is a self service store consisting mainly of grocery and limited products on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and 40,000 square feet (3,700 m2). Example: SPAR supermarket.

Malls: has a range of retail shops at a single outlet. They endow with products, food and entertainment under a roof.

Category killers or Category Specialist: By supplying wide assortment in a single category for lower prices a retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.

E-tailers: The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However it is important for the customer to be wary about defective products and non secure credit card transaction. Example: Amazon, Pennyful and Ebay.

Vending Machines: This is an automated piece of equipment wherein customers can drop in the money in machine and acquire the products.

Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target. Other types of retail store include:

Automated Retail stores are self service, robotic kiosks located in airports, malls and grocery stores. The stores accept credit cards and are usually open 24/7. Examples include ZoomShops and Redbox.

Big-box stores encompass larger department, discount, general merchandise, and warehouse stores. Convenience store - a small store often with extended hours, stocking everyday or roadside items; General store - a store which sells most goods needed, typically in a rural area;

Retailers can opt for a format as each provides different retail mix to its customers based on their customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to display products well and entice the target customers to spawn sales.

[edit]Retail

pricing

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer. In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent upon who the customer is. For example, a customer may

have to pay more if the seller determines that he or she is willing and/or able to. Another example would be the practice of discounting for youths, students, or senior citizens..

[edit]Transfer

mechanism

There are several ways in which consumers can receive goods from a retailer:

Counter service, where goods are out of reach of buyers and must be obtained from the seller. This type of retail is common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. It was common before the 1900s in the United States and is more common in certain countries like India.[which?]

Delivery, where goods are shipped directly to consumer's homes or workplaces. Mail order from a printed catalog was invented in 1744 and was common in the late 19th and early 20th centuries. Ordering by telephone is now common, either from a catalog, newspaper,television advertisement or a local restaurant menu, for immediate service (especially for pizza delivery). Direct marketing, includingtelemarketing and television shopping channels, are also used to generate telephone orders. started gaining significant market share in developed countries in the 2000s.

Door-to-door sales, where the salesperson sometimes travels with the goods for sale. Self-service, where goods may be handled and examined prior to purchase

[edit]Second-hand
See also: Charity shop

retail

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shopsgoods can be taken for free. Another form is the pawnshop, in which goods are sold that were used as collateral for loans. There are also "consignment" shops, which are where a person can place an item in a store and if it sells, the person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the established shop gives the item exposure to more potential buyers.

[edit]Challenges
To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:

Regulatory barriers including

Restrictions on real estate purchases, especially as imposed by local governments and against "bigbox" chain retailers;

Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and percentage share of voting stock (e.g., common stock) purchased;

Unfavorable taxation structures, especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above);

Absence of developed supply chain and integrated IT management; High competitiveness among existing market participants and resulting low profit margins, caused in part by

Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory; and

Lack of properly educated and/or trained work force, often including management, caused in part by

Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges.

[edit]Sales

techniques

Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing techniques to create the look of a perfectly stocked store, even when it is not. A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.

[edit]Customer

service

Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your retail establishment." It is important for a sales associate to greet the customer and make himself available to help the customer find whatever he needs. When a customer enters the store, it is important that the sales associate does everything in his power to make the customer feel welcomed, important, and make sure he leave the store satisfied. Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's satisfaction.[3]

[edit]Statistics [edit]United

for national retail sales

States

The United States retail sector features the largest number of large, lucrative retailers in the world. A 2012 Deloitte report published inSTORES magazine indicated that of the world's top 250 largest retailers by retail sales revenue in fiscal year 2010, 32% of those retailers were based in the United States, and those 32% accounted for 41% of the total retail sales revenue of the top 250.[4]

U.S. Retail Sales, 19922010

The Retail Sales report is published every month. It is a measure of consumer spending, an important indicator of the US GDP. Retail firms provide data on the dollar value of their retail sales and inventories. A sample of 12,000 firms is included in the final survey and 5,000 in the advanced one. The advanced estimated data is based on a subsample from the US CB complete retail &food services sample.[5] It has been published by the US Census Bureau since 1951.

[edit]Other

countries

[edit]Consolidation
Among retailers and retails chains a lot of consolidation has appeared over the last couple of decades. Between 1988 and 2010, worldwide 40'788 mergers & acquisitions with a total known value of 2'255 bil. USD have been announced.[6] The largest transactions with involvement of retailers in/from the United States have been: the acquisition of Albertson's Inc. for 17 bil. USD in 2006,[7] the merger between Federated Department Stores Inc with May Department Stores valued at 16.5 bil. USD in 2005[8] - now Macy's, and the merger between Kmart Holding Corp and Sears Roebuck & Co with a value of 10.9 bil. USD in 2004.[9]

THE ADVANTAGES AND DISADVANTAGES OF FRANCHISING by David E. Holmes Northern California Office Southern California Office 555 Chorro Street, Suite D-2 6621 Pacific Coast Hwy., Suite 250 San Luis Obispo, California 93405 Long Beach, California 90803 Phone: 805.547.0697 Phone: 562-596-0116 Fax: 805.547.0716 Fax: 562.596.0416 Please visit our website at www.HolmesLofstrom.com 2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 2 888.547.0697 THE ADVANTAGES AND DISADVANTAGES OF FRANCHI S ING

This memorandum, produced for a number of our clients considering franchising, brings together a bullet point list of the advantages and disadvantages (both business and legal) of moving to a franchised system of operation. Ive decided to list the disadvantages first, to in some way attempt to counterbalance my natural tendency to be an advocate for franchising, given my 25-plus years involvement in the field. Note that my comments relate primarily (but not entirely) to comparing franchising with a dealership program, and do not address the issues of moving entirely to a company-owned units approach, which is not what I understand youre considering. DISADVANTAGES OF FRANCHISING H IGHER L EGAL E XPENSE

The necessity of preparing agreements, Uniform Franchise Offering Circulars

(UFOCs) and related documents, and filing them in various states (with attached audited financials) represents a significant expense, although the year-to-year expenses are generally less than those initially incurred in setting up the structure and related documents. Basic documents, once prepared, can be filed in many states with generally minor changes. Additional legal (and possibly accounting) costs will be incurred if a separate legal entity is used for the franchising program. T RANCHISE A ECHNICAL L WARD P EGAL C R O C ESS ONSTRAINTS F

Franchise laws are particularly technical in their application (for example, if a Franchisor provides only 9 days of pre-sale disclosure rather than the required 10, the Franchisee has an automatic rescission right, even though the missing day was not the cause of any loss.) For these reasons, an education program for franchising personnel (which we provide) and the assistance of an in-house legal compliance person is highly useful. T ECHNICAL L R EGAL C ELA TI O N SH I P ONSTRAINTS R

EGULATION OF THE

Franchise laws in a number of states regulate the circumstances in which a Franchisor may terminate or refuse to renew a franchise. While generally not preventing Franchisors from achieving termination or non-renewal, these laws do present a number of technical requirements that must be complied with. These requirements make inclusion of provisions for objective standards (for both system compliance and financial performance) for termination (and/or recovery of exclusive territories) particularly important. 2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 3 888.547.0697 F RANCHISE M ARKETING C O N STR A I N TS

Advertisements, brochures, flip charts, video tapes, etc. offering the franchise

(but not retail advertisements) must be pre-cleared with state agencies and cannot contain earnings claims. Information regarding possible financial results for operating units can only be presented in a formal document attached to the UFOC. C ONTROL I SSUES

As with dealerships, there may be quality control and related issues, at least as compared to company-owned operations. B USINESS R ELATIONSHI P I SSUES

Perhaps more than with dealers, Franchisees typically view themselves as, to some degree, partners with the Franchisor in the development and possible success of the system. While most will agree that committee management doesnt work and that there needs to be one captain for the ship, a wise Franchisor will work with his Franchisees, probably with the help of a franchise advisory council, in charting strategic directions, implementing marketing plans, etc. A Franchisor must b e psychologically comfortable working with Franchisees who will understandably take the view that if were going to be in on the landing, wed like to be in on the takeoff too. N LI TY ) EED TO D OF C ELIVER P ONTINUED V ERCEPTION ( A LU E AND R EA

Franchisees (perhaps more than dealers and particularly if they are being asked to pay royalties and/or marketing fund contributions throughout a long-term contract) can be expected, after some period, to feel that they know as much about running the business (at least on the retail level) as the Franchisor and will ask what their continued payments are buying them (What have you done for me lately?) Wise Franchisors anticipate the question by building value in the brand (see below), updating systems and providing continued operational and marketing benefits that give the Franchisee a superior position vis a vis the competition, making his or her leaving the system obviously a poor business decision.

OTENTIAL FOR L

OSS OF F

R EED O M

Unless carefully designed, awards of exclusive territories may generate legal and other problems when a Franchisor seeks to expand through alternative channels of distribution (Internet, mail order, etc.), special venues (units in Wal-Mart, K-Mart, etc.), access different markets (non-automotive), co-branding opportunities, mergers with existing competitive chains, etc. Appropriate franchise agreement provisions, and proper education of Franchisees, and management of their expectations, can largely avoid these issues. 2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 4 888.547.0697 F INDING Q UALIFIED F R A N C H I SEES

As may be true with dealerships, but more importantly where the franchise relationship is long term, finding and educating (not just training) good Franchisees is vital. The ideal Franchisee combines entrepreneurial energy with the willingness to follow systems and act as a team player. Psychological testing and a detailed interview and training process are tools which many Franchisors use to select the right individuals. The question to be asked should be Is this the best candidate in Rochester? rather than Can this man fog a mirror held under his nose and produce a warm checkbook? U NMANAGED G R O W TH

Given franchisings demonstrated potential for rapid expansion (financed primarily by Franchisees), the potential downside is too rapid expansion, with the needs of the Franchisees outstripping the support capabilities of the Franchisor. ADVANTAGES OF FRANCHISING O WNERSHIP M EN TA LI TY

Similar to a dealership, but with more emphasis in franchising, particularly where the franchise agreement is long-term, the Franchisee will have an attitude of being a business owner (not merely dealing with one product line among many) and

is more likely to devote time, attention and capital to growing the business, following the approved system and not walking away from occasional business challenges. As one observer put it: The best fertilizer for growing a business is the owners foot firmly planted on the premises. B UILDING THE V ALUE OF THE B RAND

Critical to retail success of each unit in a distribution scheme, as well as the overall competitive strength of the distribution system, is the presence of strong brand identification covering both the products offered and the retail businesses operated. Assuming that a significant brand recognition factor can be established and maintained in the minds of consumers and Franchisees, the following benefits will flow for the Franchisor and its Franchisees. [Note that realization of these advantages has two primary drivers: (1) prominent identification of each retail business (not just the product) with the trademark and (2) a strong retail marketing campaign building brand identity in the consumers mind.] 2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 5 888.547.0697 Easier franchise sales (both individual units and area development arrangements). Clustering units to achieve dominant local presence. Easier retail sales for franchised and company-owned units. Higher initial franchise fees. Higher royalty levels. Ability to leverage brand identity and require Franchisees to finance marketing campaigns. Higher wholesale and retail prices for product. Fewer breakaways from the system. Regional and national market penetration, with establishment of

dominant market share Greater value when the Franchisor goes public or otherwise realizes the value attached to the brand. Greater value for Franchisees when they resell their units or otherwise cash out. Greater value for franchised units irrespective of the owners personal involvement or skills (A McDonalds has a relatively constant value, due to the brand, independent of who the owner or manager of a particular unit is). Easier access to lenders and other financing sources. Easier access to desirable locations and favorable lease terms. Increased barriers to entry by competitive concepts. I MA G E

Both among prospective owners and with the consuming public, franchise systems generally have a superior image over other distribution approaches, particularly if there is uniformity as to retail presentation, marketing methodology, operational compliance, etc., precisely the things which are easier to achieve within a franchise framework. F RANCHISEE P ARTICIPATION AND S U PPO R T

2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 6 888.547.0697 Although not unique to franchising, the franchise model (when well managed) often incorporates valuable Franchisee input and creative participation b y Franchisees. Since all of the participants are part of a single system with a common identity, Franchisees are more likely to participate in initiatives for the expansion and proper operation of the entire enterprise, sometimes producing new ideas as well as alerting the Franchisor to operational non-compliance problems created by other

Franchisees in the systems. Allied to this advantage is a psychology that can develop among Franchisees, given many peoples need to belong to a group. If properly managed, a sense of team participation can benefit the entire system. S YSTEM WIDE M R A N C H I SEES ARKETING S UPPORT P

AID FOR BY F

Franchise systems typically include arrangements where Franchisees are required to contribute to a national marketing fund, and participate in local marketing co-operatives, supporting retail marketing, advertisements, promotions and public relations. This ability of the entire system to pool advertising dollars produces obvious competitive advantages (including raising barriers to entry by potential competitors and/or leveraging an already leading position in the industry) and is one of the primary reasons for many systems survival in down markets (e.g. Century 21) and/or ability to maintain market share in the face of competitive challenges irrespective of mediocre quality products (e.g. McDonalds). I AT THE R MPROVED C ETAIL L ONTROL O EVEL VER O PERATIONS

Franchising provides both a legal and institutional structure allowing detailed control over the individual units marketing and operational programs. If you believe that it is critical for each units success (as well as that of the system as a whole) that each unit follow recommended marketing and operational guidelines, franchising provides one of the strongest methods of achieving that objective. A VOIDANCE OF L EGAL E XPOSURE

To the extent that your system is currently a quasi-franchise, you face exposure to both state and/or federal enforcement activity, as well as claims for rescission, damages and attorneys fees (class action or otherwise) for noncompliance with franchise and/or business opportunity registration and disclosure

laws. This exposure exists not only as to current dealers, but also is present (and, in fact, increased) with every new dealership that is awarded. At some point it may b e appropriate to ask if a great company is being built on a foundation of sand. Moving to a franchise template, and complying with the relevant laws, eliminates this exposure (at least for future awards and possibly for past ones, depending on arrangements reached with existing dealers.) It also avoids challenges, not only by unsuccessful dealers (of whom there will always be at least 5% to 10% in any distribution system) but also by potential buyers of the 2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 7 888.547.0697 corporation, who may use the potential for exposure to franchise law claims as a basis for reducing the price paid for the company or entirely walking away from the deal. Registration as a franchise also removes the necessity, in at least some states, to register as a business opportunity. Business opportunity laws often require unfavorable provisions in contracts, allow rescission during a cooling off period and place the company in the same category as those offering vending machine deals and worm ranches, a group you may want to distance yourselves from. Additionally, compliance with disclosure requirements often acts as a type of insurance, on the basis that if a fact was disclosed to a prospective Franchisee (particularly where the disclosure document was reviewed by a state), it becomes far more difficult for the Franchisee to later claim he or she did not know of the unfavorable fact in question. Finally, franchising documents typically provide areas of special protection to the Franchisor, including the following (some of which we mentioned in our earlier letter):

 Franchisees are required to purchase designated products and equipment only from approved suppliers, which may be limited to the Franchisor and/or its affiliates. If Franchisees purchase items from unauthorized sources, or the above limitation on sources of supply is unenforceable, royalties are imposed, or (if royalties are already part of the system) adjusted upward substantially to make up for lost revenue at the Franchisor/affiliate level. If Franchisees do not meet sales/product purchase quotas, they can lose their territorial rights, be terminated and/or ineligible for renewal. If you are uncomfortable with the working relationship with a Franchisee you can, at any time, implement a friendly divorce by returning the initial franchise fee, the Franchisee returns all equipment and de-identifies, you waive any post-term non-compete (but not confidentiality or indemnity requirements) and you receive a release. Franchisees contribute to a national marketing fund and are required to join, and contribute to, local marketing co-ops. Releases by the Franchisee of all known and unknown claims against the Franchisor and/or any affiliates are mandatory on assignment, renewal, execution of an agreement for a second territory, etc., thereby periodically wiping the slate clean. Jury trial is waived and all disputes (with minor exceptions) are resolved by mediation/binding arbitration at the Franchisors headquarters, conducted by persons experienced in franchising. (Lets avoid having your 2003 Holmes & Lofstrom, LLP www.HolmesLofstrom.com 8 888.547.0697 business future decided by a jury of retired postal clerks and college students.)

 Limitations on damages payable to Franchisees, shortened statutes of limitation, etc. The law of the state of incorporation (preferably not a franchise registration/relationship law state - Nevada and Delaware often serve well) of the Franchisor, or the law of the state where the Franchisee is located, applies, avoiding application of Californias pro-franchisee laws in many instances

MERIT
29 May 2009

8.2.1 Supplying Goods Directly to Retailers Advantages:

Mainland retailers are developing in the direction of large-scale networks with multiple outlets. By supplying goods directly to these large retailers, especially retail chains, it is possible for the supplier to achieve the aim of expanding the coverage, increasing the exposure, capturing the market and boosting the brand-name of its merchandise within a relatively short time.

Disadvantages:

As retail outlets draw large numbers of consumers, retailers are in a leading and dominant position. Suppliers usually have to pay all kinds of charges of considerable amounts (e.g. advertising fee, promotion fee, entry fee and management fee etc) both before gaining market access and during the course of sale, which substantially raises their operating costs and squeezes their profit margins. Retailers (both foreign-invested and domestic) all sell on credit, with payments made at least 45-60 days, or even 90 days, after delivery. This increases the operating cost, tightens the cash flow and affects the fund control of suppliers. In the case of some enterprises which are burdened by cash and credit overdrafts, they stand great risks

8.2 Advantages and Disadvantages of Different Distribution Modes

supplying to retailers they do not know all that well.

8.2.2 Appointing Agents/Distributors

Entering the market by appointing agents/distributors, especially large agents and distributors with extensive distribution networks, is a good option for small Hong Kong companies without a sound knowledge of the mainland market. Since large agents/distributors generally have long-term cooperation relationship with retailers, it is easier for new products to find their way into the market through agents/distributors. Compared with supplying goods directly to retailers, distributing goods through agents/distributors usually takes less time and covers a wider market reach. Riding on the high volume of other goods handled by the large agents/distributors, the entry fees and logistics expenses can be reduced. Dealing with only a few regional agents/distributors can give the supplier better control over its funds.

Disadvantages:

Since the supplier must allow its agents/distributors some profit margins, the price competitiveness of its products will inevitably be undermined. Since agents/distributors have a lot of products to handle, they will not be able to give as much attention to individual products as suppliers do. This may affect sales as well as the collection and handling of consumer feedback. Mainland agents/distributors have a relatively poor sense of service and the quality of their staff is uneven. This may also affect sales. Some mainland enterprises do not always abide by contract terms,

which may bring about credit risk.

8.2.3 Setting Up Own Retail Stores Advantages:

Dealing with end users directly facilitates the provision of more professional and customised services to customers and helps promote sales. It is conducive to discovering and grasping real market demand. Direct recovery of cash helps steer clear of credit risks and improves the effectiveness of fund utilisation. It is good for building and promoting brand image (such as through specialty stores), which will add to the value of both brands and products. Profit margin is relatively big.

Disadvantages:

Suitable locations are hard to find as competition intensifies. Stores have to be opened one by one, making it difficult for market coverage to grow quickly within a short time, which means that it takes a long time to break even. Good public relations are essential.

8.2.4 Online Direct Sales Advantages:

As urban residents are busy at work and their lifestyle is becoming more westernised, coupled with rapid technological advancement, the trend for online shopping is increasing.

Not constrained by time and place, online shopping offers consumers in remote areas the convenience of ordering goods; this is particularly advantageous for suppliers without an extensive store network. Generally, prices of online goods are cheaper as operation cost is low due to the high degree of computerisation. Not constrained by shelf space, a wide range of goods (including some less popular goods and products not found in general retail stores) can be offered on the net. As websites can provide rich information on products and trends, a large community of online shoppers can be attracted.

Disadvantages:

Online sales cannot replace traditional sales channels as consumers still like to check out the physical product before making a purchase. For products offered on public B2C websites, since there are hundreds of choices for each kind of product, it is difficult for a product to stand out among the many similar products. As such, many B2C websites are not doing good business and their supporting logistics also have much room for improvement. To build one's own website, the inputs in logistics, technology, staff and advertising are substantial.

8.2.5 Franchise Operation Advantages:

The vast number of franchisees on the mainland facilitates the rapid opening of the market. Franchising facilitates the building of brand reputation within a relatively short time. The franchiser can make use of the social connections of mainland

legal and natural persons, especially in unfamiliar places, the knowledge of local franchisees can be of great help.

Small investment and quick returns.

Disadvantages:

High levels of management, brand popularity and reputation are required. Good logistics and services are required. Have to face the credit risks of franchisees; in the case where the conduct of the franchisees ruins the image of the franchiser, the franchiser may suffer damages.

8.2.6 Wholesale and Retail Marts Advantages:

Approval procedures for the registration of individually-owned businesses are simple. Suitable for small businesses as operating costs are low. Tax farming helps reduce tax burden. "Cash on delivery" facilitates quick capital returns.

Disadvantages:

Wholesale marts, especially those selling fast-moving consumer goods and mass merchandise, are facing tough times under the threat of warehouse-style stores and hypermarkets Mainland wholesale marts are a mixed bag selling goods of uneven quality. They strike people as being low end and low value. Thus, they are not suitable for mid- to high-end products or for building up brand names.

Small transaction volume makes it difficult to substantially increase market coverage within a short time.

Review Of Literature :
Concept testing:

From Wikipedia, the free encyclopedia Marketing Key concepts Product marketing Pricing Distribution Service Retail Brand management Account-based marketing Ethics Effectiveness Research Segmentation Strategy Activation Management Dominance Marketing operations Promotional contents Advertising Branding Underwriting Direct marketing Personal sales Product placement Publicity Sales promotion Sex in advertising Loyalty marketing SMS marketing Premiums Prizes Promotional media Printing Publication Broadcasting Out-of-home advertising Internet Point of sale Merchandise Digital marketing In-game advertising Product demonstration Word-of-mouth

Brand ambassador Drip marketing Visual merchandising vde Concept testing is the process of using quantitative methods and qualitative methods to evaluate consumer response to a product idea prior to the introduction of a product to the market. It can also be used to generate communication designed to alter consumer attitudes toward existing products. These methods involve the evaluation by consumers of product concepts having certain rational benefits, such as "a detergent that removes stains but is gentle on fabrics," or non-rational benefits, such as "a shampoo that lets you be yourself." Such methods are commonly referred to as concept testing and have been performed using field surveys, personal interviews and focus groups, in combination with various quantitative methods, to generate and evaluate product concepts. The concept generation portions of concept testing have been predominantly qualitative. advertising professionals have generally created concepts and communications of these concepts for evaluation by consumers, on the basis of consumer surveys and other market research, or on the basis of their own experience as to which concepts they believe represent product ideas that are worthwhile in the consumer market. The quantitative portions of concept testing procedures have generally been placed in three categories: (1) concept evaluations, where concepts representing product ideas are presented to consumers in verbal or visual form and then quantitatively evaluated by consumers by indicating degrees of purchase intent, likelihood of trial, etc., (2) positioning, which is concept evaluation wherein concepts positioned in the same functional product class are evaluated together, and (3) product/concept tests, where consumers first evaluate a concept, then the corresponding product, and the results are compared. [edit]Shortcomings of traditional concept testing

The traditional system of concept testing has been inadequate as a means to identify and quantify the criteria upon which consumer preference of one concept over another was based. These methods were insufficient to ascertain the relative importance of the factors responsible for or governing why consumers, markets and market segments reacted differently to concepts presented to them in the concept tests. Without such information, market researchers and

advertisers, with their expertise, could generalize, on the basis of a concept test, as to how consumers might react to the actual products or to variations of the tested concepts. Communication of the concept, as embodied in a new product, has generally been left to the creativity of the advertising agency. No systematic quantitative method was known, however, which could accurately identify the criteria on which the consumer choices were based and the contribution or importance of each criterion to the purchase decision. Therefore, previous concept testing methods have failed to provide market researchers with the complete information necessary for them to create products specifically tailored to satisfy a consumer group balance of purchase criteria. Moreover, traditional concept testing methods have failed to accurately quantify the relationships between consumer response to concepts and consumer choice of existing products which compete in the same consumer market. Thus, they were unable to provide a communication of the benefits of a consumer product, closely representing the tested concept, to a high degree of accuracy. These problems of concept testing have been identified in business and marketing journals. For example, Moore and William (1982) in a literature survey and review of concept testing methodology, point out that concept tests have failed to account for changes between the concept tested and the communication describing the benefits of the product which embodies the concept. The Moore article reports that "no amount of improvement in current concept testing practices can remedy these problems." This is reflective of the fact that none of the traditional methods provided a quantitative means for ascertaining the relative importance of the underlying criteria of concept choices as a means for identifying the visual and verbal expressions of the concepts which best communicate the benefits sought by the consumer. Nor did the traditional methods quantify the relationships between concepts and existing products offered in the same consumer market. The ability of a method to ameliorate or overcome the above shortcomings would provide substantial improvement in communication of the concepts identified in testing and offered to the market as a product. One such method is conjoint analysis and another is choice modelling. In addition, with online retailing become increasingly prominent, many online respondents are also online consumers. Thus, they are able to easily place themselves in the mindset of a consumer looking to buy goods or services. Since the arrival of these methods, market researchers have been able to make better, more accurate, suggestions to their clients regarding the decision to move forward, revise, or start over with a product concept. Online Choice Modelling for example can produce detailed econometric models of demand for various attributes of the new product such as feature, packaging and price.

Retail Methodology

Home About Us Retail Methodology Merchandise Financial Planning (MFP) MFP Download Gross Profit Calculator plus Range Planner MFP Methodology and Training MFP Successful Outcomes Clients Links News Contact Us

Understanding your retail business to manage future challenges.

In today's retail environment it is critical that retailers face the facts and start managing their business into the future with a particular focus on retail financial disciplines. Retailing is a fast changing industry in which you must be able to quantify important financial information. Both today and in the future this will help you build a sustainable winning product offer for your customer. The result business growth and the freedom to pursue new directions and innovations as your customers expectations change and as new competitors enter the market. These disciplines will result in a higher quality in visual offering and when planning the product range, it will force you to think about space management, hot spots, visual merchandising and traffic flows within the store. "Close enough" is not good enough and "gut feel retailing" will not work effectively for you to maximise the potential of your retail business and the return on your substantial investment. It is therefore important that you have the management "culture" required and have the people who are "bigger" than the job that will take ownership of the planning methodology required in retail financial disciplines.

What are the retail financial management steps that will enable you to manage this challenge? 1. Embrace category management: All retailers must ensure superb category management principles are present. This enables you

2.

3.

4.

5.

6.

7.

to micro manage the business across the categories and allows further "drill down" to sub categories. It will also focus you on category strategies to improve store traffic flow, increase transaction size, and increase gross profit. Product family trees/ product mix: Retailers must build their product range for their customer. The family tree is a method that allows the scope of the mix to be determined well in advance of the purchasing decision. This is often referred to as "building a buying plan not a spending plan". The facts are that "less is more" in retailing. This means that 80% of sales will come from 20% of the product range- therefore how to plan to ensure that the 20% is constantly on the shelves is an ongoing issue for many retailers. Implementation of Information Technology: In today's high tech world there is no excuse for not having up to date information on your business performance. Inventory is your biggest asset and not to understand best sellers, worst sellers, inventory values and importantly your future purchase orders will result in reactive management rather than proactive management. Understanding Key Performance Indicators (KPI's): There are many KPI's in retailing but quantifying your buying margin, sales , inventory levels, markdowns , stock turn, purchase orders, final GP, and shrinkage by category are basic requirements that must be understood by the your management team. To have a culture that talks about selling "heaps, lots and plenty" is not industry best practice. Merchandise Financial Planning (MFP): This is often referred to as Open to Buy (OTB) and without doubt is the single most important retail financial methodology that retailers must embrace. This involves planning your inventory levels (and therefore range) by category by future months using the retail KPI's. This provides a wonderful understanding of the direction of the business and allows you to go into the market with confidence to purchase to a predetermined budget. It will allow you to see "what if" scenarios well in advance. From this buying plan a "shopping list" of product is developed by month by category. Range planning - building the offer: on completion of the buying plan retailers must ensure that they build the range plan or "shopping list" of product. The family tree concept is a marvellous tool that will enable buyers to build a story board of product well in advance of the delivery. This will highlight any shortcomings or gaps within the range. The MFP program calculates the spend which is then allocated to the product family tree. Profit and loss outcomes: Retailers must put in place adequate monthly Profit and Loss controls that allow confirmation of the actual Net Profit of the business. This must include accurate stock on hand information (from the POS) so that confirmation of final GP and expenses are in a format that can be reviewed ongoing. Relying on your accountant's yearly accounts after the financial year closes may not be sufficient to allow you to react to trading trends during the year. The MFP is the methodology that allows the Profit and loss outcomes to be planned well in advance. Business owners need to ensure that the business builds retain earnings to fund growth and allow for possible passive investment activities to take place e.g. purchase of a building, superannuation and / or investment in shares. Putting in place adequate planning and management controls will provide an improved focus on the net assets of the business. This also allows you to quantify your return on the investment in the business.

Cash Flow management: A detailed understanding of your cash flow needs is part of the planning required in retailing. Once a detailed buying plan is in place and you understand the profit outcomes from this plan, a forward cash flow can be prepared to ensure adequate capital is available to fund the plan. 9. Management of the outcomes:a set of retail management reports needs to be generated to allow ongoing (monthly) review of your business KPI's across categories as they provide a wonderful focus for the management team. Taking a proactive approach in both under and over performance of categories and the business will mean you approach the market with much more information that results in improved decision making. Remember that "knowledge is power". 10. Negotiation with suppliers: This final step also must be ongoing. It is not good enough to allow your suppliers to dictate range, purchase orders and/or placement of product without your input. You must go to the supplier well briefed on your requirements and therefore build a partnership with the supplier. They must understand your requirements for stock turn, your requirements for margin growth and your requirements for product range. These 10 steps will allow owners to improve the wellbeing and direction of their business, they will lead to a sustainable winning product offer and will ensure that retailers have control of basic retail principles. Businesses will continue to get into trouble but by having a well thought through plan and monitoring the actual performance to the plan, risks will be minimised and opportunities capitalised on.

8.

ethodology retailin in india wiki

Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP.[1]The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail market in the world, with 1.2 billion people.[2][3] India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even singlebrand retail was limited to 51% ownership and a bureaucratic process. In November 2011, India's central government announced retail reforms for both multi-brand stores and singlebrand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple.[4] The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus.[5] In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India. Indian government continues the hold on retail reforms for multi-brand stores.[6] IKEA announced in January that it is putting on hold its plan to open stores in India because of the 30 percent requirement.[7] Fitch believes that the 30 percent requirement is likely to significantly delay if not prevent most single brand majors from Europe, USA and Japan from opening stores and creating associated jobs in India.
Contents
[hide]

1 Local terms 2 Background 3 Growth

o o

3.1 Growth over 1997-2010 3.2 Growth after 2011

4 The Indian Retail Market 5 Major Indian Retailers 6 Challenges

7 India retail reforms

o o

7.1 Indian retail reforms on hold 7.2 Single-brand retail reforms approved

8 Social impact and controversy with retail reforms

o o o

8.1 Controversy over Indian retail reforms 8.2 Opposition to retail reforms 8.3 Support for retail reforms

9 See also

8.3.1 Farmer groups 8.3.2 Economists and entrepreneurs 8.3.3 Chief Ministers of Indian states 8.3.4 Current supermarkets

10 External links 11 References

[edit]Local

terms

Organised retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly-traded supermarkets, corporatebacked hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local mom and pop store, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.[8] Organised retailing was absent in most rural and small towns of India in 2010. Supermarkets and similar organized retail accounted for just 4% of the market.[4]

[edit]Background

A vegetable retail market in Kerela, India on a sunny day; During monsoons, vendors experience more produce spoilage.

Most Indian shopping takes place in open markets or millions of small, independent grocery and retail shops. Shoppers typically stand outside the retail shop, ask for what they want, and can not pick or examine a product from the shelf. Access to the shelf or product storage area is limited. Once the shopper requests the food staple or household product they are looking for, the shopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it for sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is similar or equivalent to the product the consumer is asking for. The product typically has no price label in these small retail shops; although some products do have a manufactured suggested retail price (MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and household products arbitrarily, and two consumers may pay different prices for the same product on the same day. Price is sometimes negotiated between the shopper and shopkeeper. The shoppers do not have time to examine the product label, and do not have a choice to make an informed decision between competitive products. India's retail and logistics industry, organized and unorganized in combination, employs about 40 million Indians (3.3% of Indian population).[9]The typical Indian retail shops are very small. Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. India has about 11 shop outlets for every 1000 people. Vast majority of the unorganized retail shops in India employ family members, do not have the scale to procure or transport products at high volume wholesale level, have limited to no quality control or fake-versus-authentic product screening technology and have no training on safe and hygienic storage, packaging or logistics. The unorganized retail shops source their products from a chain of middlemen who mark up the product as it moves from farmer or producer to the consumer. The unorganized retail shops typically offer no after-sales support or service. Finally, most transactions at unorganized retail shops are done with cash, with all sales being final. Until the 1990s, regulations prevented innovation and entrepreneurship in Indian retailing. Some retails faced complying with over thirty regulations such as "signboard licences" and "anti-hoarding measures" before they could open doors. There are taxes for moving goods to states, from states, and even within states in some cases. Farmers and producers had to go through middlemen monopolies. The logistics and infrastructure was very poor, with losses exceeding 30 percent. Through the 1990s, India introduced widespread free market reforms, including some related to retail. Between 2000 to 2010, consumers in select Indian cities have gradually begun to experience the quality, choice, convenience and benefits of organized retail industry.

[edit]Growth

An organized retail store in Ahmedabad (ca. 2009)

Customers inside a retail store in Kolkata (ca. 2011)

[edit]Growth

over 1997-2010

India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, it required government approval. The approval requirement was relaxed, and automatic permission was granted in 2006. Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreign direct investment, representing a very small 1.5% of total investment flow into India.[10] Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were approved and implemented. For a country of 1.2 billion people, this is a very small number. Some claim one of the primary restraint inhibiting better participation was that India required single brand retailers to limit their ownership in Indian outlets to 51%. China in contrast allows 100% ownership by foreign companies in both single brand and multi-brand retail presence. Indian retail has experienced limited growth, and its spoilage of food harvest is amongst the highest in the world, because of very limited integrated cold-chain and other infrastructure. India has only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons. However, 80 percent of this storage is used only for potatoes. The remaining infrastructure capacity is less than 1% of the annual farm output of India, and grossly inadequate during peak harvest seasons. This leads to about 30% losses in certain perishable agricultural output in India, on average, every year.[10]

Indian laws already allow foreign direct investment in cold-chain infrastructure to the extent of 100 percent. There has been no interest in foreign direct investment in cold storage infrastructure build out. Experts claim that cold storage infrastructure will become economically viable only when there is strong and contractuallybinding demand from organized retail. The risk of cold storing perishable food, without an assured way to move and sell it, puts the economic viability of expensive cold storage in doubt. In the absence of organized retail competition and with a ban on foreign direct investment in multi-brand retailers, foreign direct investments are unlikely to begin in cold storage and farm logistics infrastructure. Until 2010, intermediaries and middlemen in India have dominated the value chain. Due to a number of intermediaries involved in the traditional Indian retail chain, norms are flouted and pricing lacks transparency. Small Indian farmers realize only 1/3rd of the total price paid by the final Indian consumer, as against 2/3rd by farmers in nations with a higher share of organized retail.[10] The 60%+ margins for middlemen and traditional retail shops have limited growth and prevented innovation in Indian retail industry. India has had years of debate and discussions on the risks and prudence of allowing innovation and competition within its retail industry.[11]Numerous economists repeatedly recommended to the Government of India that legal restrictions on organized retail must be removed, and the retail industry in India must be opened to competition. For example, in an invited address to the Indian parliament in December 2010,Jagdish Bhagwati, Professor of Economics and Law at the Columbia University analysed the relationship between growth and poverty reduction, then urged the Indian parliament to extend economic reforms by freeing up of the retail sector, further liberalisation of trade in all sectors, and introducing labor market reforms. Such reforms Professor Bhagwati argued will accelerate economic growth and make a sustainable difference in the life of India's poorest.,[12][13] A 2007 report noted that an increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent.[14] The Retail Business in India is currently at the point of inflection. As of 2008, rapid change with investments to the tune of US $ 25 billion were being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years. India has topped the A.T. Kearneys annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of 8% for 2007. The predictions for 2008 is 7.9%.[15] The enormous growth of the retail

industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country.[16]

[edit]Growth

after 2011

Before 2011, India had prevented innovation and organized competition in its consumer retail industry. Several studies claim that the lack of infrastructure and competitive retail industry is a key cause of India's persistently high inflation. Furthermore, because of unorganized retail, in a nation where malnutrition remains a serious problem, food waste is rife. Well over 30% of food staples and perishable goods produced in India spoils because poor infrastructure and small retail outlets prevent hygienic storage and movement of the goods from the farmer to the consumer.,,[17][18][19] One report estimates the 2011 Indian retail market as generating sales of about $470 billion a year, of which a miniscule $27 billion comes from organized retail such as supermarkets, chain stores with centralized operations and shops in malls. The opening of retail industry to free market competition, some claim will enable rapid growth in retail sector of Indian economy. Others believe the growth of Indian retail industry will take time, with organized retail possibly needing a decade to grow to a 25% share.[19] A 25% market share, given the expected growth of Indian retail industry through 2021, is estimated to be over $250 billion a year: a revenue equal to the 2009 revenue share from Japan for the world's 250 largest retailers.,[20][21] The Economist forecasts that Indian retail will nearly double in economic value, expanding by about $400 billion by 2020.[22] The projected increase alone is equivalent to the current retail market size of France. In 2011, food accounted for 70% of Indian retail, but was under-represented by organized retail. A.T. Kearney estimates India's organized retail had a 31% share in clothing and apparel, while the home supplies retail was growing between 20% to 30% per year.[23] These data correspond to retail prospects prior to November announcement of the retail reform.

[edit]The

Indian Retail Market

This section requires expansion.

Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world Indian retail density of 6 percent is highest in the world.[24] 1.8 million households in India have an annual income of over 45 lakh (US$99,000).[25]

While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through

independent local stores. Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods.[26]

[edit]Major

Indian Retailers

This section requires expansion.

[dated info]

Checkout lanes, organized retail in Malad, Mumbai

Indian apparel retailers are increasing their brand presence overseas, particularly in developed markets. While most have identified a gap in countries in West Asia and Africa, some majors are also looking at the US and Europe. Arvind Brands, Madura Garments, Spykar Lifestyle and Royal Classic Polo are busy chalking out foreign expansion plans through the distribution route and standalone stores as well. Another denim wear brand, Spykar, which is now moving towards becoming a casualwear lifestyle brand, has launched its store in Melbourne recently. It plans to open three stores in London by 2008-end.[27] The low-intensity entry of the diversified Mahindra Group into retail is unique because it plans to focus on lifestyle products. The Mahindra Group is the fourth largest Indian business group to enter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti EnterprisesLtd. The other three groups are focusing either on perishables and groceries, or a range of products, or both.

REI AGRO LTD Retail: 6TEN and 6TEN kirana stores Future Groups-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station, Brand Factory, Depot, aLL, E-Zone etc.

Raymond Ltd.: Textiles, The Raymond Shop, Park Avenue, Park Avenue Woman, Parx, Colourplus, Neck Ties & More, Shirts & More etc.

Fabindia: Textiles, Home furnishings, handloom apparel, jewellery RP-Sanjiv Goenka Group Retail-Formats: Spencers Hyper, Spencer's Daily, Music World, Au Bon Pain (Internaional bakery cafeteria), Beverly Hills Polo Club

The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan Industries with World of Titans showrooms, Tanishq outlets, Croma.

Reliance Retail-Formats: Reliance MART, Reliance SUPER, Reliance FRESH, Reliance Footprint, Reliance Living, Reliance Digital, Reliance Jewellery, Reliance Trends, Reliance Autozone, iStore

Reliance ADAG Retail-Format: Reliance World K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit Mall

Nilgiris-Formats: Nilgiris supermarket chain Marks & Spencer: Clothing, lifestyle products, etc. Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores.

Pyramid Retail-Formats: Pyramid Megastore, TruMart Next retail India Ltd (Consumer Electronics)(www.next.co.in) Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe Deposit Lockers

PGC Retail -T-Mart India [1], Switcher, Respect India, Grand India Bazaar,etc.,

Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain.

Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain

Vishal Retail Group-Formats: Vishal Mega Mart BPCL-Formats: In & Out German Metro Cash & Carry Shoprite Holdings-Formats: Shoprite Hyper Paritala stores bazar: honey shine stores

Aditya Birla Group - "More" Outlets Kapas- Cotton garment outlets Nmart Retails with 71 operating Stores till now and total 153 Stores in India and 1 to open in Dubai Shortly. (Expected to be 150 by the end of Aug2012)(www.nmart.co.in)

Entry of MNCs

A spice market

The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in north India by the end of 2008.[28] see also for more Detail Pick/Mller "[2]"</ref> Carrefour, the worlds second largest retailer by sales, is planning to set up two business entities in the country one for its cash-and-carry business and the other a master franchisee which will lend its banner, technical services and know how to an Indian company for direct-to-consumer retail.[29] The worlds fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its warehouse club model is also interested in coming to India and waiting for the right opportunity.[30] Opposition to the retailers' plans have argued that livelihoods of small scale and rural vendors would be threatened. However, studies have found that only a limited number of small vendors will be affected and that the benefits of market expansion far outweigh the impact of the new stores.[31] Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and will help Indian conglomerate Tata group to grow its hypermarket business.

[edit]Challenges
A McKinsey study claims retail productivity in India is very low compared to international peer measures. For example, the labor productivity in Indian retail was just 6% of the labor productivity in United States in 2010.

India's labor productivity in food retailing is about 5% compared to Brazil's 14%; while India's labor productivity in non-food retailing is about 8% compared to Poland's 25%.[32] Total retail employment in India, both organized and unorganized, account for about 6% of Indian labor work force currently - most of which is unorganized. This about a third of levels in United States and Europe; and about half of levels in other emerging economies. A complete expansion of retail sector to levels and productivity similar to other emerging economies and developed economies such as the United States would create over 50 million jobs in India. Training and development of labor and management for higher retail productivity is expected to be a challenge. To become a truly flourishing industry, retailing in India needs to cross the following hurdles: [33]

Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing rapid price changes, constant threat of product obsolescence and low margins.

In November 2011, the Indian government announced relaxation of some rules and the opening of retail market to competition.

[edit]India

retail reforms

Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand Indian retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets, to sell multiple products from different brands directly to Indian consumers. The government of Manmohan Singh, prime minister, announced on 24 November 2011 the following: [17][34]

India will allow foreign groups to own up to 51 per cent in "multi-brand retailers", as supermarkets are known in India, in the most radical proliberalisation reform passed by an Indian cabinet in years;

single brand retailers, such as Apple and Ikea, can own 100 percent of their Indian stores, up from the previous cap of 51 percent;

both multi-brand and single brand stores in India will have to source nearly a third of their goods from small and medium-sized Indian suppliers;

all multi-brand and single brand stores in India must confine their operations to 53-odd cities with a population over one million, out of some 7935 towns and cities in India. It is expected that these stores will now have full access to over 200 million urban consumers in India;

multi-brand retailers must have a minimum investment of US$100 million with at least half of the amount invested in back end infrastructure, including cold chains, refrigeration, transportation, packing, sorting and processing to considerably reduce the post harvest losses and bring remunerative prices to farmers;

the opening of retail competition will be within India's federal structure of government. In other words, the policy is an enabling legal framework for India. The states of India have the prerogative to accept it and implement it, or they can decide to not implement it if they so choose. Actual implementation of policy will be within the parameters of state laws and regulations.

The opening of retail industry to global competition is expected to spur a retail rush to India. It has the potential to transform not only the retailing landscape but also the nation's ailing infrastructure., [17][35] A Wall Street Journal article claims that fresh investments in Indian organized retail will generate 10 million new jobs between 20122014, and about five to six million of them in logistics alone; even though the retail market is being opened to just 53 cities out of about 8000 towns and cities in India. [35] It is expected to help tame stubbornly high inflation but is likely to be vehemently opposed by millions of small retailers, who see large foreign chains as a threat. The need to control food price inflationaveraging doubledigit rises over several yearsprompted the government to open the sector, analysts claim. Hitherto India's food supplies have been controlled by tens of millions of middlemen (less than 5% of Indian population). Traders add huge mark-ups to farm prices, while offering little by way of technical support to help farmers boost their productivity, packaging technology, pushing up retail prices significantly. Analysts said allowing in big foreign retailers would provide an impetus for them to set up modern supply chains, with refrigerated vans, cold storage and more efficient logistics. "I think foreign chains can also bring in humongous logistical benefits and capital," Chandrajit Banerjee, director-general, Confederation of Indian Industry, told Reuters. "The biggest beneficiary would be the small farmers who will be able to improve their productivity by selling directly to large organised players," Mr Banerjee said.

[edit]Indian

retail reforms on hold

According to Bloomberg, on 3 December 2011, the Chief Minister of the Indian state of West Bengal, Mamata Banerjee, who is against the policy and whose Trinamool Congress brings 19 votes to the ruling Congress party-led coalition, claimed that Indias government may put the FDI retail reforms on hold until it reaches consensus within the ruling coalition. Reuters reports that this risked a possible dilution of the policy rather than a change of heart.,,[36][37][38] India Today claimed that the resistance to Indian retail reforms is primarily because it has been badly sold, even though it can help fix the exploitation of Indian farmers by the decades-old "arhtiya" and "mandi" monopoly system. India Today claims the policy is good for the small Indian farmer and the Indian consumer.[39] Pratap Mehta, president of the Centre for Policy Research, claimed any U-turn or postponement of retail reforms will cause an immense loss of face to the Congress-led central government of Manmohan Singh. The mom-and-pop farmers of India support these reforms. The consumers of India want the reforms. The government has already annoyed those who oppose change and innovation in retail. By putting retail reforms on hold, the government will additionally alienate much larger segment of India's population supporting FDI. So they will now have the worst of both worlds, claims Mehta.[40] Deepak Parekh, Ashok Ganguly and other economic policy leaders of India, on 4 December 2011, called placing investment and innovation in retail on hold for the sake of vested interests as unfair and detrimental to vast majority in India. They urged farmers, consumers and the common people to raise their voice against this false drama of apprehension against investment and modernising trade in organised retailing. They called upon Indians to come out and strongly support progressive measures and reforms with the same spirit and gusto with which we take the liberties to criticize policies or issues we do not appreciate. [41] Several newspapers claimed on 6 December 2011 that India parliament is expected to shelve retail reforms while the ruling Congress party seeks consensus from the opposition and the Congress party's own coalition partners. Suspension of retail reforms on 7 December 2011 would be, the reports claimed, an embarrassing defeat for the Indian government, suggesting it is weak and ineffective in implementing its ideas. [42] Anand Sharma, India's Commerce and Industry Minister, after a meeting of all political parties on 7 December 2011 said, "The decision to allow foreign direct investment in retail is suspended till consensus is reached with all stakeholders."[5]

[edit]Single-brand

retail reforms approved

On January 11, 2012, India approved increased competition and innovation in single-brand retail.[43] The reform seeks to attract investments in production and marketing, improve the availability of goods for the consumer, encourage increased sourcing of goods from India, and enhance competitiveness of Indian enterprises through access to global designs, technologies and management practices. In this announcement,

India requires single-brand retailer, with greater than 51% foreign ownership, to source at least 30% of the value of products from Indian small industries, village and cottage industries, artisans and craftsmen. Mikael Ohlsson, chief executive of IKEA, announced IKEA is postponing its plan to open stores in India. He claimed that IKEA's decision reflects Indias requirements that single-brand retailers such as IKEA source 30 percent of their goods from local small and medium-sized companies. This was an obstacle to IKEA's investment in India, and that it will take IKEA some time to source goods and develop reliable supply chains inside India. Ikea announced that it plans to double what it sources from India already for its global product range, to over $1 billion a year, within three years. IKEA in the near term, plans to focus expansion instead in China and Russia, where such restrictions do not exist.[7]

[edit]Social

impact and controversy with retail reforms

The November 2011 retail reforms in India have sparked intense activism, both in opposition and in support of the reforms.

[edit]Controversy

over Indian retail reforms

A horticultural produce retail market in Kolkata, India; produce loss in these retail formats is very high for perishables

Critics of the Indian retail reforms announcement are making one or more of the following points:,[44][45]

Independent stores will close, leading to massive job losses. Walmart employs very few people in the United States. If allowed to expand in India as much as Walmart has expanded in the United States, few thousand jobs may be created but millions will be lost.

Walmart will lower prices to dump goods, get competition out of the way, become a monopoly, then raise prices. We have seen this in the case of the soft drinks industry. Pepsi and Coke came in and wiped out all the domestic brands.

India doesn't need foreign retailers, since homegrown companies and traditional markets may be able to do the job.

Work will be done by Indians, profits will go to foreigners. Remember East India Company. It entered India as a trader and then took over politically.

There will be sterile homogeneity and Indian cities will look like cities anywhere else.

The government hasn't built consensus.

Supporters claim none of these objections has merit. They claim:[45]

Organized retail will need workers. Walmart employs 1.4 million people in United States alone.[46] With United States population of about 300 million, and India's population of about 1200 million, if Walmart-like retail companies were to expand in India as much as their presence in the United States, and the staffing level in Indian stores kept at the same level as in the United States stores, Walmart alone would employ 5.6 million Indian citizens. Walmart has a 6.5% market share of the total United States retail. Adjusted for this market share, the expected jobs in future Indian organized retail would total over 85 million. In addition, millions of additional jobs will be created during the building of and the maintenance of retail stores, roads, cold storage centers, software industry, electronic cash registers and other retail supporting organizations. Instead of job losses, retail reforms are likely to be massive boost to Indian job availability.

KPMG - one of the world's largest audit companies - finds that in China, the employment in both retail and wholesale trade increased from 4% in 1992 to about 7% in 2001, post China opening its retail to foreign and domestic innovation and competition. In absolute terms, China experienced the creation of 26 million new jobs within 9 years, post China announcing FDI retail reforms. Additionally, contrary to some concerns in China, post retail reforms, the number of traditional small retailers also grew by 30% over 5 years.[10]

India needs trillions of dollar to build its infrastructure, hospitals, housing and schools for its growing population. Indian economy is small, with limited surplus capital. Indian government is already operating on budget deficits. It is simply not possible for Indian investors or Indian government to fund this expansion, job creation and growth at the rate India needs. Global investment capital through FDI is necessary. Beyond capital, Indian retail industry needs knowledge and global integration. Global retail leaders, some of which are

partly owned by people of Indian origin,[47] can bring this knowledge. Global integration can potentially open export markets for Indian farmers and producers. Walmart, for example, expects to source and export some $1 billion worth of goods from India every year, since it came into Indian wholesale retail market.[48]

Walmart, Carrefour, Tesco, Target, Metro, Coop are some of over 350 global retail companies with annual sales over $1 billion. These retail companies have operated for over 30 years in numerous countries. They have not become monopolies. Competition between Walmart-like retailers has kept food prices in check. Canada credits their very low inflation rates to Walmarteffect.[49] Anti-trust laws and state regulations, such as those in Indian legal code, have prevented food monopolies from forming anywhere in the world. Price inflation in these countries has been 5 to 10 times lower than price inflation in India. The current consumer price inflation in Europe and the United States is less than 2%, compared to India's double digit inflation.

The Pepsi and Coke example is meaningless in the context of Indian beverage market. More competition is lacking because of limited demand. Indian consumer has limited interest in soft drinks. Soft drinks represent less than 5% of Indian beverage market.[50] Indian consumer prefers milk-based, tea and coffee and these account for 90% of Indian beverage market. In these markets, Coca Cola and Pepsi have plenty of competition. The next most important market in India is bottled water, that outsells combined soft drink sales of the Pepsi and Coca Cola. Bottled water, milk, coffee and tea market in India are big markets, and have plenty of domestic brands, European brands like Nestle, as well as Pepsi and Coca Cola. Organized retail too will have numerous brands and strong competition.

Comparing 21st century to 18th century is inappropriate. Conditions today are not same as in the 18th century. India wasn't a democracy then, it is today. Global awareness and news media were not the same in 18th century as today. Consider China today. It has over 57 million square feet of retail space owned by foreigners, employing millions of Chinese citizens. Yet, China hasn't become a vassal of imperialists. It enjoys respect from all global powers. Other Asian countries like Malaysia, Taiwan, Thailand and Indonesia see foreign retailers as catalysts of new technology and price reduction; and they

have benefitted immensely by welcoming FDI in retail. India too will benefit by integrating with the world, rather than isolating itself.[51]

With 51% FDI limit in multi-brand retailers, nearly half of any profits will remain in India. Any profits will be subject to taxes, and such taxes will reduce Indian government budget deficit. Many years ago, China adopted the retail reform policy India has announced; China allowed FDI in its retail sector. It has taken FDI-financed retailers in China between 5 to 10 years to post profits, in large part because of huge investments they had to make initially. Like China, it is unlikely foreign retailers will earn any profits in India for the first 5 to 10 years.[22] Ultimately, retail companies must earn profits with hard work and by creating value.

States have a right to say no to retail FDI within their jurisdiction.[34] States have the right to add restrictions to the retail policy announced before they implement them. Thus, they can place limits on number, market share, style, diversity, homogeneity and other factors to suit their cultural preferences. Finally, in future, states can always introduce regulations and India can change the law to ensure the benefits of retail reforms reach the poorest and weakest segments of Indian society, free and fair retail competition does indeed lead to sharply lower inflation than current levels, small farmers get better prices, jobs created by organized retail pay well, and healthier food becomes available to more households.

Inbuilt inefficiencies and wastage in distribution and storage account for why, according to some estimates, as much as 40% of food production doesn't reach consumers. Fifty million children in India are malnourished.[45] Food often rots at farms, in transit, or in antiquated state-run warehouses. Costconscious organized retail companies will avoid waste and loss, making food available to the weakest and poorest segment of Indian society, while increasing the income of small farmers. Walmart, for example, since its arrival in Indian wholesale retail market, has successfully introduced "Direct Farm Project" at Haider Nagar near Malerkotla in Punjab, where 110 farmers have been connected with Bharti Walmart for sourcing fresh vegetables directly, thereby reducing waste and bringing fresher produce to Indian consumers.[48]

Indian small shops employ workers without proper contracts, making them work long hours. Many unorganized small shops depend on child labour. A well-regulated retail sector will help curtail some of these abuses.[45]

Organized retail has enabled a wide range of companies to start and flourish in other countries. For example, in the United States, an organized retailer named Whole Foods has rapidly grown to annual revenues of $9 billion by working closely with farmers, delighting customers and caring about the communities it has stores in.[52]

The claims that there is no consensus is without merit. About 10 years ago, when opposition formed the central government, they had proposed retail reforms and suggested India consider FDI in retail. Retail reforms discussions are not new. More recently, retail reforms announced evolved after a process of intense consultations and consensus building intiative. In 2010, the Indian government circulated a discussion paper on FDI retail reforms.[10] On July 6, 2011, another version of the discussion paper was circulated by the central government of India.[53] Comments from a wide cross-section of Indian society including farmers' associations, industry bodies, consumer forums, academics, traders' associations, investors, economists were analyzed in depth before the matter was discussed by the Committee of Secretaries. By early August 2011, the consensus from various segments of Indian society was overwhelming in favor of retail reforms.[54] The reform outline was presented in India's Rajya Sabha in August 2011. The announced reforms are the result of this consensus process. The current opposition is not helping the consensus process, since consensus is not built by threats and disruption. Those who oppose current retail reforms should help build consensus with ideas and proposals, if they have any. The opposition parties currently disrupting the Indian parliament on retail reforms have not offered even one idea or a single proposal on how India can eliminate food spoilage, reduce inflation, improve food security, feed the poor, improve the incomes of small farmers.

[edit]Opposition

to retail reforms

Within a week of retail reform announcement, Indian government has faced a political backlash against its decision to allow competition and 51% ownership of multi-brand organized retail in India. Despite the fact that Salman Khurshid, Indias law minister, claiming that many opposition parties, including the Bharatiya Janata Party, had privately encouraged the government to push through the retail reform, the intense criticism now targets Congress-led coalition government, and its decision to push through one of the biggest economic reforms in years for India. Opposition parties claim supermarket chains are ill-advised, unilateral and unwelcome.[55]

The opposition claims the entry of organized retailers would lead to their dominance that would decimate local retailers and force millions of people out of work. Mamata Banerjee, the chief minister of West Bengal and the leader of the Trinamool Congress, announced her opposition to retail reform, claiming Some people might support it, but I do not support it. You see America is America and India is India. One has to see what ones capacity is.[56] Other states whose Chief Ministers have either personally announced opposition or announced reluctance to implement the retail reforms: Tamil Nadu, Uttar Pradesh, Bihar and Madhya Pradesh. Chief Ministers of many states have not made a personal statement in opposition or support of India needing retail reforms. Gujarat, Kerala, Karnataka and Rajasthan are examples of these states. Both sides have made conflicting claims about the position of chief ministers from these states. A Wall Street Journal article reports that in Uttar Pradesh, Uma Bharti, a senior leader of the opposition Bharatiya Janata Party (BJP), threatened to "set fire to the first Wal-Mart store whenever it opens;" with her colleague Sushma Swaraj busy tweeting up a storm of misinformation about how Wal-Mart allegedly ruined the U.S. economy.[57] On 1 December 2011, an India-wide "bandh" (close all business in protest) was called by political parties opposing the retail reform. While many organizations responded, the reach of the protest was mixed.[58] The Times of India, a national newspaper of India, claimed people appeared divided over the bandh call and internal rivalry among trade associations led to a mixed response, leaving many stores open day-long and others opening for business as usual in the second half of the day. Even Purti Group, a network of stores owned and operated by Nitin Gadkari were open for business, ignoring the call for bandh. Gadkari is the president of BJP, the key party currently organizing opposition to retail reform.[59] The Hindu, another widely circulated newspaper in India, claimed the opposition's call for a nation wide shutdown on 1 December 2011, in protest of retail reform received a mixed response. Some states had strong support, while most did not. Even in states where opposition political parties are in power, many ignored the call for the shutdown. In Gujarat, Bihar, Delhi, Andhra Pradesh, Haryana, Punjab and Assam the call evoked a partial response. While a number of wholesale markets observed the shutdown, the newspaper claimed a majority of kirana stores and neighborhood small shops for whom apparently the trade bandh had been called remained open, ignoring the shutdown call. Conflicting claims were made by the organizers of the nation wide shutdown. Contrary to eyewitness reports, one Trader union's secretary general claimed traders across the country participated wholeheartedly in the strike.[60] The political parties opposing the retail reforms physically disrupted and forced India's parliament to adjourn again on Friday 2 December 2011. The Indian government refused to cave in, in its attempt to convince

through dialogue that retail reforms are necessary to protect the farmers and consumers. Indian parliament has been dysfunctional for the entire week of November 28, 2011 over the opposition to retail reforms.[61]

[edit]Support

for retail reforms

In a pan-Indian survey conducted over the weekend of 3 December 2011, overwhelming majority of consumers and farmers in and around ten major cities across the country support the retail reforms. Over 90 per cent of consumers said FDI in retail will bring down prices and offer a wider choice of goods. Nearly 78 per cent of farmers said they will get better prices for their produce from multi-format stores. Over 75 per cent of the traders claimed their marketing resources will continue to be needed to push sales through multiple channels, but they may have to accept lower margins for greater volumes.[62]

[edit]Farmer groups
Various farmer associations in India have announced their support for the retail reforms. For example:

Shriram Gadhve of All India Vegetable Growers Association (AIVGA) claims his organization supports retail reform. He claimed that currently, it is the middlemen commission agents who benefit at the cost of farmers. He urged that the retail reform must focus on rural areas and that farmers receive benefits. Gadhve claimed, "A better cold storage would help since this could help prevent the existing loss of 34% of fruits and vegetables due to inefficient systems in place." AIVGA operates in nine states including Maharashtra, Andhra Pradesh, West Bengal, Bihar, Chattisgarh, Punjab and Haryana with 2,200 farmer outfits as its members.[63]

Bharat Krishak Samaj, a farmer association with more than 75,000 members says it supports retail reform. Ajay Vir Jakhar, the chairman of Bharat Krishak Samaj, claimed a monopoly exists between the private guilds of middlemen, commission agents at the sabzi mandis (India's wholesale markets for vegetables and farm produce) and the small shopkeepers in the unorganized retail market. Given the perishable nature of food like fruit and vegetables, without the option of safe and reliable cold storage, the farmer is compelled to sell his crop at whatever price he can get. He cannot wait for a better price and is thus exploited by the current monopoly of middlemen. Jakhar asked that the government make it mandatory for organized retailers to buy 75% of their produce directly from farmers, bypassing the middlemen monopoly and India's sabzi mandi auction system.[63]

Consortium of Indian Farmers Associations (CIFA) announced its support for retail reform. Chengal Reddy, secretary general of CIFA claimed retail reform could do lots for Indian farmers. Reddy commented, India has 600 million farmers, 1,200 million consumers and 5 million traders. I fail to understand why political parties are taking an anti-farmer stand and worried about half a million brokers and small shopkeepers. CIFA mainly operates in Andhra Pradesh, Karnataka and Tamil Nadu; but has a growing members from rest of India, including Shetkari Sanghatana in Maharashtra, Rajasthan Kisan Union and Himachal Farmer Organisations.

Prakash Thakur, the chairman of the People for Environment Horticulture & Livelihood of Himachal Pradesh, announcing his support for retail reforms claimed FDI is expected to roll out produce storage centers that will increase market access, reduce the number of middlemen and enhance returns to farmers.[64] Highly perishable fruits like cherry, apricot, peaches and plums have a huge demand but are unable to tap the market fully because of lack of cold storage and transport infrastructure. Sales will boost with the opening up of retail. Even though India is the second-largest producer of fruits and vegetables in the world, its storage infrastructure is grossly inadequate, claimed Thakur.

Sharad Joshi, founder of Shetkari Sangathana (farmers association), has announced his support for retail reforms.[65] Joshi claims FDI will help the farm sector improve critical infrastructure and integrate farmer-consumer relationship. Today, the existing retail has not been able to supply fresh vegetables to the consumers because they have not invested in the backward integration. When the farmers' produce reaches the end consumer directly, the farmers will naturally be benefited. Joshi feels retail reform is just a first step of needed agricultural reforms in India, and that the government should pursue additional reforms.

Suryamurthy, in an article in The Telegraph, claims farmer groups across India do not support status quo and seek retail reforms, because with the current retail system the farmer is being exploited. For example, the article claims:[64]

Indian farmers get only one third of the price consumers pay for food staples, the rest is taken as commissions and markups by middlemen and shopkeepers

For perishable horticulture produce, average price farmers receive is barely 12 to 15% of the final price consumer pays

Indian potato farmers sell their crop for Rs. 2 to 3 a kilogram, while the Indian consumer buys the same potato for Rs. 12 to 20 a kilogram.[66]

[edit]Economists and entrepreneurs

Many business groups in India are welcoming the transformation of a long-protected sector that has left Indian shoppers bereft of the scale and variety of their counterparts in more developed markets.[55] B. Muthuraman, the president of the Confederation of Indian Industry, claimed the retail reform would open enormous opportunities and lead to much-needed investment in cold chain, warehousing and contract farming. Organized retailers will reduce waste by improving logistics, creating cold storage to prevent food spoilage, improve hygiene and product safety, reduce counterfeit trade and tax evasion on expensive item purchases, and create dependable supply chains for secure supply of food staples, fruits and vegetables. They will increase choice and reduce Indias rampant inflation by reducing waste, spoilage and cutting out middlemen. Fresh investment in organized retail, the supporters of retail reform claim will generate 10 million new jobs by 2014, about five to six million of them in logistics alone.[57] Organized retail will offer the small Indian farmer more competing venues to sell his or her products, and increase income from less spoilage and waste. A Food and Agricultural Organization report claims that currently, in India, the small farmer faces significant losses post-harvest at the farm and because of poor roads, inadequate storage technologies, inefficient supply chains and farmer's inability to bring the produce into retail markets dominated by small shopkeepers. These experts claim India's post-harvest losses to exceed 25%, on average, every year for each farmer.,[67][68] Unlike the current monopoly of middlemen buyer, retail reforms offer farmers access to more buyers from organized retail. More buyers will compete for farmers produce leading to better support for farmers and to better bids. With less spoilage of staples and agricultural produce, global retail companies can find and provide additional markets to Indian farmers. Walmart, since its arrival in India's wholesale retail market, already sources and exports about $1 billion worth of Indian goods for its global customers. Not only do these losses reduce food security in India, the study claims that poor farmers and others loose income because of the waste and inefficient retail. Over US$50 billion of additional income can become available to Indian farmers by preventing post-harvest farm losses, improving transport, proper storage and retail. Organized retail is also expected to initiate infrastructure development creating millions of rural and urban jobs for Indias growing population. One study claims that if these post-harvest food staple losses could be eliminated with better infrastructure and retail network in India, enough food would be saved every year to feed 70 to 100 million people over the year.[69]

Supporters of retail reform, The Economist claims, say it will increase competition and quality while reducing prices helping to reduce India's rampant inflation that is close to the double digits. These supporters claim that unorganized small shopkeepers will continue to exist alongside large organized supermarkets, because for many Indians they will remain the most accessible and most convenient place to shop. [70] Amartya Sen, the Indian born Nobel prize winning economist, in a December 2011 interview claims foreign direct investment in multi brand retail can be good thing or bad thing depending on the nature of the investment. Quite often, claims Professor Sen, FDI is a good thing for India.[71]

[edit]Chief Ministers of Indian states

Supporters of retail reform who have voiced the need to promote organized retail include Chief Ministers of several states of India, several belonging to political parties that have no affiliation with Congress-led central government of India. The list includes the Chief Ministers of Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat. In a report submitted earlier in 2011, these Chief Ministers urged the Prime Minister to prioritize reforms to help promote organized retail, shorten the retail path from farm to consumer, allow organized retail to buy direct from farmers at remunerative produce prices, and reduce farm to retail costs.[72] Similarly, the Chief Minister of Delhi has come out in support of the retail reform,[73] as have the Chief Ministers of the two farming states of Haryana and Punjab in north India.,[74][75] The Chief Ministers of Haryana and Punjab claim that the announced retail reforms will immensely benefit farmers in their states. The Chief Minister of the state of Maharashtra - the state with the highest GDP in India and home to its financial capital Mumbai - has also welcomed the retail reform.,[76][77] Tarun Gogoi, the Chief Minister of Assam, an eastern state in India, announcing his support to the retail reform, claimed "this will go a long way in bringing about a sea change in rural economy. The decision will boost agriculture and allied sectors, manufacturing, logistics, integrated cold chains, refrigerated transportation and food processing facilities in a big way." Criticising the BJP-organized opposition, Gogoi claimed that these parties who had just a few years ago dubbed opening up retail as good for India, are now singing a different tune.[78]

[edit]Current supermarkets
Existing Indian retail firms such as Spencer's, Foodworld Supermarkets Ltd, Nilgiri's and ShopRite support retail reform and consider international competition as a blessing in disguise. They expect a flurry of joint ventures with global majors for expansion capital and opportunity to gain expertise in supply chain management. Spencer's Retail with 200 stores in India, and with retail of fresh vegetables and fruits accounting for 55 per cent of its business claims retail reform to be a win-win situation, as they already procure the farm products directly from the growers without the involvement of middlemen or traders. Spencers claims that there is scope for it to expand its footprint in terms of store location as well as procuring farm products. Foodworld,

which operates over 60 stores, plans to ramp up its presence to more than 200 locations. It has already tied up with Hong Kong-based Dairy Farm International. With the relaxation in international investments in Indian retail, Indias Foodworld expects its global relationship will only get stronger. Competition and investment in retail will provide more benefits to consumers through lower prices, wider availability and significant improvement in supply chain logistics.[79]

[edit]See

also

Indian road network Agriculture in India Indian expressways Fishing in India

[edit]External

links

The Economist December 2011 issue - Reform in India: Let Walmart in The Financial Times: How to open up Indias economy (2 December 2011) Report on Indian Retail, KPMG 2009 The Great Indian Retail Story - An Ernst & Young Report, 2007 2011 Retail Reform Commentary: Expected impact of FDI in Retail Ernst & Young India Viewpoint

[edit]References

The Old Kings... And The New: Indian retail industry is evolving. A report that lists some of the evolution over last 20 years.

1.

^ "The Bird of Gold - The Rise of India's Consumer Market". McKinsey and Company. May 2007.

2. 3.

^ "Winning the Indian consumer". McKinsey & Company. 2005. ^ Majumder, Sanjoy (25 November 2011). "Changing the way Indians shop". BBC News.

4.

a b

"Retailing in India Unshackling the chain stores". The Economist. 29 May

2008. 5. ^
a b

"India puts retails reforms on hold". The Wall Street Journal. 7 December

2011. 6. ^ "India Lifts Some Limits on Foreign Retailers". The Wall Street Journal. 11 January 2012.

7.

a b

"Ikea shelves Indian retail market move". The Financial Times. 22

January 2012. 8. 9. ^ "ICRIER Begins Survey of Indian Retail Sector." 19 March 2007. ^ "Global Economy: China, India confront WalMarts". Asia Times. 31 January 2004. 10. ^
a b c d e

"FDI IN MULTI-BRAND RETAIL TRADING". KPMG. 2010.

11. ^ Mukherjee et al., Arpita (2006). FDI in Retail Sector: INDIA, A Report by ICRIER. Academic Foundation. ISBN 978-8171884803. 12. ^ Mehta and Chatterjee (June 2011). "Growth and Poverty - the great debate". CUTS International. 13. ^ Jagdish Bhagwati (14 December 2010). "Hiren Mukerjee Memorial Parliamentary Lecture: Parliament of India". Columbia University, Parliament of India. 14. ^ "India again tops global retail index." 22 /6/ 2007. 15. ^ "Economic and financial indicators" 3 July 2008. 16. ^ "Indian Retail story from Myths to Mall." 11 August 2007. 17. ^
a b c

"India Unlocks Door for Global Retailers". The Wall Street Journal.

November 25, 2011. 18. ^ "Wal-Mart Waits With Carrefour as India Wins Instant Gain: Retail". Bloomberg BusinessWeek. 30 November 2011. 19. ^
a b

"Indian retail: The supermarkets last frontier". The Economist. 3

December 2011. 20. ^ "INDIAN RETAIL INDUSTRY: A Report". CARE Research. March 2011. 21. ^ "Global Powers of Retailing 2011". Deloitte. 2011. 22. ^
a b

"India's retail reform: No massive rush". The Economist. 2 December

2011. 23. ^ "Retail Global Expansion: A Portfolio of Opportunities". AT Kearney. 2011. 24. ^ "Fashion meets tech as handsets get sleek expensive" 25. ^ "LCD televisions, laptops are flying off the shelves." 26. ^ "Traditional Retail Trade in India." 28 June 2009. 27. ^ "Mahindra joins the retail bandwagon, to sell lifestyle products" 28. ^ "Bharti & Wal-Mart joint venture" 29. ^ "Carrerfour readies plan to enter Indias retail industry" 30. ^ "Costco, USs fifth biggest, eying India?"

31. ^ "India's Retail Revolution - CNN Money" 32. ^ "Retail - India". McKinsey & Co.. 33. ^ "Retail Scenario in India" 34. ^
a b

"FDI POLICY IN MULTI BRAND RETAIL". Ministry of Commerce,

Government of India. 28 November 2011. 35. ^

a b

"India Goes Wild Over Wal-Mart". The Wall Street Journal. November

29, 2011. 36. ^ "India government puts foreign supermarkets "on pause"". Reuters. 4 December 2011. 37. ^ "India to put foreign supermarket plan on hold". The Financial Times. 3 December 2011. 38. ^ "FDI in retail: Is it another nuclear deal moment?". The Economic Times. 4 December 2011. 39. ^ "A good retail decision badly sold". India Today. 3 December 2011. 40. ^ "Singh criticism mounts after retail U-turn". The Financial Times. 4 December 2011. 41. ^ "FDI in retail: Corporate honchos call protests on false drama". The Economic Times. 4 December 2011. 42. ^ "India Parliament Expected to Suspend Key Retail Proposal". The Wall Street Journal. 6 December 2011. 43. ^ "Government of India, Ministry of Commerce & Industry, Department of Industrial Policy & Promotion, Press Note No.1 (2012 Series)". 11 January 2012. 44. ^ "MIND THE GAP". The Telegraph. 1 December 2011. 45. ^
a b c d

"India needs Supermarkets". The Guardian. 29 December 2011.

46. ^ "Walmart Fact Sheets". Walmart. November 2011. 47. ^ "Indian retail kings around the world". Rediff. 6 December 2011. 48. ^
a b

"Walmart Asia to make India an export hub". Business Standard. April

14, 2010. 49. ^ "The Wal-Mart effect: food inflation tame in Canada". The Globe and Mail. January 25, 2011. 50. ^ "For India's Consumers, Pepsi Is the Real Thing". Bloomberg BusinessWeek. 16 September 2010.

51. ^ "Aam bania is more powerful than the aam aadmi". The Times of India. 4 December 2011. 52. ^ "Whole Foods annual report, FY 2010". Whole Foods. 2011. 53. ^ "Commerce Minister Anand Sharma speaks to NDTV on FDI". NDTV. 2 December 2011. 54. ^ "Discussion Paper on Foreign Direct Investment (FDI) in Multi-Brand Trading". Indian Venture Capital and Private Equity Association. 2 August 2011. 55. ^
a b

"Backlash grows over reform of Indian retail". The Financial Express. 27

November 2011. 56. ^ "Revolt escalates against Indian retail reform". The Financial Express. 27 November 2011. 57. ^
a b

"India goes wild over Wal-Mart". The Wall Street Journal. 29 November

2011. 58. ^ "FDI: Bandh call gets mixed response". Indian Express. 2 December 2011. 59. ^ "Gadkaris own chain remains open for biz". The Times of India. 2 December 2011. 60. ^ "Wholesale markets remain closed, kirana stores ignore bandh call". The Hindu. 1 December 2011. 61. ^ "India: A parliament in limbo". BBC News. 2 December 2011. 62. ^ "Farmers and consumers favour FDI in retail". ASSOCHAM. 4 December 2011. 63. ^
a b

"Farmer Organisations back retail FDI". The Financial Express. 2

December 2011. 64. ^

a b

"Enter, farmer with an FDI in retail query". The Telegraph. 2 December

2011. 65. ^ "FDI in retail is first major step towards reforms in agriculture, feels Sharad Joshi". The Economic Times. 2 December 2011. 66. ^ "Major Benefits of FDI in Retail". The Reformist India. 30 November 2011. 67. ^ "Sustainable rice production for food security". Food and Agriculture Organization of the United Nations. 2003. 68. ^ Shah and Venkatesh (2009). "Opportunities for Food Industry in India". Indian Institute of Technology Bombay.

69. ^ H. Basavaraja et al.. "Economic Analysis of Post-harvest Losses in Food Grains in India: A Case Study of Karnataka". Agricultural Economics Research Review 20: 117126. 70. ^ "India: Wholesale Reform". The Economist. 25 November 2011. 71. ^ "Full Transcript: Your call with Professor Amartya Sen and Professor Jean Dreze". NDTV. 18 December 2011. 72. ^ "Modi-led panel of CMs had suggested organized retail in report to PM". The Times of India. 1 December 2011. 73. ^ "Sheila Dikshit Backs FDI in Retail". Outlook India. 30 November 2011. 74. ^ "Haryana CM Hooda hails FDI in retail". Newstrack India. 30 November 2011. 75. ^ "Government defends FDI in retail Industry, Shiromani Akali Dal hails reform". The Tribune. 30 November 2011. 76. ^ "5 States are game for FDI in retail, says Sharma". The Hindu Business Line. 26 November 2011. 77. ^ "After support from five states, govt's hopes high". Business Standard. 27 November 2011. 78. ^ "Gogoi supports Centre on FDI issue". Zee News. 1 December 2011. 79. ^ "Retailers upbeat on Centres FDI move". India Today. 30 November 2011.

View page ratings

Rate this page

What's this? Trustworthy Objective Complete Well-written I am highly knowledgeable about this topic (optional) Submit ratings Categories:

Log in / create account

Retailing in India

Article Talk

Read Edit View history

Main page Contents Featured content Current events Random article Donate to Wikipedia

Interaction Help

About Wikipedia Community portal Recent changes Contact Wikipedia

Toolbox Print/export Languages Portugus

This page was last modified on 26 January 2012 at 21:54. Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. See Terms of use for details. Wikipedia is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.

Contact us Privacy policy About Wikipedia Disclaimers Mobile view

Scope

The Current Retail Context

As differentiation between retail chains decrease and the need for convenience and value-added services increases, customers have become more discerning and demanding but less loyal than before. One retailer's customer today is a potential customer for all other chains, formats and channels tomorrow.
To create sustainable advantage over competition, retailers are trying to enhance their product offerings, service levels and pricing models. To prevent value erosion and to protect margins, retailers are trying to reduce their cost-toserve per customer and thereby ensure that the total cost of ownership of a customer over time is reduced. Managing promotional spends is another critical area for retailers to focus and target customers more effectively and efficiently.

Paradigm Shift for Retail Focus

Over the last decade or so, retailers world over have focused their resources to create efficiencies in their sourcing, supply chains and store operations with the purpose of reducing the operating costs and maintaining a hold on their thin margins.

Figure 1: Customer Satisfaction However, today these process improvement efforts have become par for the course. There is an urgent need for retailers to revisit the core aspect of their business, which has been out of the center of their attention: customers. The task ahead is to reorient the organization to shift the paradigm from customer relationship management (CRM) to customer relationship building. Customer satisfaction is no more a logical conclusion of management of the selling process; it requires in-depth understanding of customers and products (see Figure 1). Development of strategies with thorough knowledge of customer needs, behaviors and motivations along with product trends and associations clubbed with execution is the

only approach that will lead to service levels significantly superior to competition. Technology acts as an enabler to provide insights into customer behavior, product interrelationships, and successful promotion types for different channels. The wealth of data available to retailers presents the opportunity for competitive advantage, but the gains only accrue to those who exploit it the best. Though CRM, data warehouse (DW) and business intelligence (BI) tools implemented by retailers are useful to a great extent, retailers are still seeking decision-enabling insights. The objective of data analysis has evolved from knowing a customer to predicting his behavior. The objective of this article is to look at the applicability and benefits of analytics in retail, with special emphasis on predictive analytics. Some of the key challenges in implementing analytics program are also examined, and suggestions to overcome these trials have been outlined.

Introducing Analytics
Without utilizing the powers of analytics, the ROIon the large amounts of data collected will always be suboptimal. Analytics goes beyond the preformatted logic in BI tools by analyzing the problem in a given context and then using as large an element of domain knowledge as the statistical techniques. Analytic techniques, such as design of experiments, cross tabulations, statistical analysis and data mining, help in uncovering patterns and trends within large databases. When used for creating forward-looking suggestions, they provide the edge to decision-making. While descriptive analyses help to identify issues and examine causes, predictive analytics enhances the accuracy and effectiveness of decisions that directly impact your bottom line.

Descriptive Analytics: Developing Insights from Data

As the term suggests, descriptive or causal analytics enable the uncovering the reasons behind any event or trend and brings critical marketing issues to the forefront. The techniques used answer queries of what is happening, where and amongst whom. Some analyses applicable for retail are:

Out-of-stock analysis, Category and brand dynamics, Promotion-effectiveness analysis, and Benchmarking analysis.

Predictive Analytics: Going Beyond "What and Why"

Data warehousing tools feed data into descriptive analytic techniques to answer the questions of "who/what/where/when/how." However, all these answers help in interpretation of past events. The critical question of how a customer will respond or how an event will unfold in the future remains unanswered by descriptive techniques

or BI reports. Predictive analytics play a decisive role in a similar way as diagnostic checks do in a medical treatment scenario as opposed to symptom-based treatments. It allows the retail organization to enhance its decision-making powers by looking at the future with analytical rigor. Predictive analytics enables:

Targeting customers more effectively for campaigns, Improving response time to market changes, Increasing employee productivity, and Improving customer service at stores.

Power of Analytics in the Retail Domain

A customer-focused industry with several channels of engagement with the customer, the retail industry has great potential for application of analytics, which can help it to serve its customers better. As data from the point-of-sales, terminals and credit cards/store cards are synchronized and mapped along with data flowing in from other sources, analysis of this integrated data has the power to impact the retailers' bottom line positively (see Figure 2). Predictive analytics hold the key to taking advantage of these opportunities such that retailers can increase their ability to forecast their customers' behaviors and plan accordingly.

Figure 2: Power of Analytics

The Analytics Complexity Model

An organization trying to implement analytics should plan for the natural evolution of the analytics process. For an entrant into analytics space, the need is to establish credibility for data analysis using simple techniques rather than advanced models (see Figure 3). Similarly organizations with a mature DW/BI foundation and a culture of data analysis should progress to the advanced stages and create analytical models, which enable improved decisionmaking. Thus, in the beginning, the level of analytics is dependent on the current familiarity and sophistication of the data analysis process in the organization.

Design
Retail design is a creative and commercial discipline that combines several different areas of expertise together in the design and construction of retail space. Retail design is primarily a specialized practice of architecture and interior design, however it also incorporates elements of interior decoration, industrial [1][2][3] design, graphic design, ergonomics, and advertising. Retail design is a very specialized discipline due to the heavy demands placed on retail space. Because the primary purpose of retail space is to stock and sell product to consumers, the spaces must be designed in a way that promotes an enjoyable and hassle-free shopping experience for the consumer. The space must be specially-tailored to the kind of product being sold in that space; for example, a bookstorerequires many large shelving units to accommodate small products that can be arranged [4][5][6] categorically while a clothing store requires more open space to fully display product. Retail spaces, especially when they form part of a retail chain, must also be designed to draw people into the space to shop. The storefront must act as a billboard for the store, often employing large display windows that allow shoppers to see into the space and the product inside. In the case of a retail chain, [4][7] the individual spaces must be unified in their design.
Contents
[hide]

1 History 2 Usage

o o o

2.1 Role 2.2 Design elements 2.3 Perspective

3 See also 4 References

5 References 6 Further reading

[edit]History Retail design first began to grow in the middle of the 19th century, with stores such as Bon Marche and Printemps in Paris, "followed by Marshall Fields in Chicago, Selfridges in London and Macy's in New York." These early retail design stores were swiftly continued with an innovation called the chain store. The first chain store was opened in the early 20th century by Frank Winfield Woolworth, which quickly became a franchise across the US. Other chain stores began growing in places like the UK a decade or so later, with stores like Boots. AfterWorld War II, a new type of retail design building known as the shopping centre came into being. This type of building took two different paths in comparison between the US and Europe. Shopping centres began being built out of town within the United States to benefit the suburbanfamily, while Europe began putting shopping centres in the middle of town. The first [8] shopping centre in the Netherlands was built in the 1950s, as retail design ideas began spreading east. The next evolution of retail design was the creation of the boutique in the 1960s, which emphasized retail design run by individuals. Some of the earliest examples of boutiques are the Biba boutique created by Barbara Hulanicki and the Habitat line of stores made by Terence Conran. The rise of the boutique was followed, in the next two decades, with an overall increase in consumer spending across the developed world. This rise made retail design shift to compensate for increased customers and alternative focuses. Many retail design stores redesigned themselves over the period to keep up with changing consumer tastes. These changes resulted on one side with the creation of multiple "expensive, [8] one-off designer shops" catering to specific fashion designers and retailers. The rise of the internet and internet retailing in the latter part of the 20th century and into the 21st century saw another change in retail design to compensate. Many different sectors not related to the internet reached out to retail design and its practices to lure online shoppers back to physical shops, where retail [8] design can be properly utilized. [edit]Usage [edit]Role A retail designer must create a thematic experience for the consumer, by using spatial cues to entertain [9][10] as well as entice the consumer to purchase goods and interact with the space. The success of their designs are not measured by design critics but rather the records of the store which compare amount of foot traffic against the overall productivity. Retail designers have an acute awareness that the store and their designs are the background to the merchandise and are only there to represent and create the best [11] possible environment in which to reflect the merchandise to the target consumer group. [edit]Design

elements

Since the evolution of retail design and its impact on productivity have become clear, a series of standardisations in the techniques and design qualities has been determined. These standardisations range from alterations to the perspective of the structure of the space, entrances, circulation systems, atmospheric qualities (light and sound) and materiality. By exploring these standardisations in retail design the consumer will be given a thematic experience that entices them to purchase the merchandise.

It is also important to acknowledge that a retail space must combine both permanent and non permanent features, that allow it to change as the needs of the consumer and merchandise change (e.g. per [12][13] season). The structure of retail space creates the constraints of the overall design; often the spaces already exist, and have had many prior uses. It is at this stage that logistics must be determined, structural features like columns, stairways, ceiling height, windows and emergency exists all must be factored into the final [14] design. In retail one hundred percent of the space must be utilised and have a purpose. The floor plan creates the circulation which then directly controls the direction of the traffic flow based on the studied psychology of consumer movement pattern within a retail space. Circulation is important because it ensures that the consumer moves through the store from front to back, guiding them to important displays [15] and in the end to the cashier. There are six basic store layouts and circulation plans that all provide a different experience: 1. Straight plan: this plan divides transitional areas from one part of the store to the other by using walls to display merchandise. It also leads the consumer to the back of the store. This design [16] can be used for a variety of stores ranging from pharmacies to apparel. 2. Pathway Plan: is most suitable for large stores that are single level. In this plan there is a path that is unobstructed by shop fixtures, this smoothly guides the consumer through to the back of the store. This is well suited for apparel department stores, as the clothes will be easily [16] accessible. 3. Diagonal Plan: uses perimeter design which cause angular traffic flow. The cashier is in a central [16] location and easily accessible. This plan is most suited for self service retail. 4. Curved Plan: aims to create an intimate environment that is inviting. In this plan there is an emphasis on the structure of the space including the walls, corners and ceiling this is achieved by making the structure curved and is enhance by circular floor fixtures. Although this is a more [17] expensive layout it is more suited to smaller spaces like salons and boutiques. 5. Varied Plan: in this plan attention is drawn to special focus areas, as well as having storage [17] areas that line the wall. This is best suited footwear and jewellery retail stores. 6. Geometric Plan: uses the racks and the retail floor fixtures to create a geometric floor plan and circulation movement. By lowering parts of the ceiling certain areas can create defined retail [17] spaces. This is well suited for appeal stores. Once the overall structure and circulation of the space has been determined, the atmosphere and thematics of the space must be created through lighting, sound, materials and visual branding. These design elements will cohesively have the greatest impact on the consumer and thus the level of [citation needed] productivity that could be achieved. Lighting can have a dramatic impact on the space it needs to be functional, but also complement the merchandise, as well as emphasising key point throughout the store. The lighting should be layered and of a variety intensities and fixtures. Firstly examine the natural light and what impact it has in the space. Natural light adds interest and clarity to the space; also consumers also prefer to examine the quality of [18] merchandise in natural light. If no natural light exists a sky light can be used to introduce it in to the retail space. The lighting of the ceiling and roof is next thing to consider. This lighting should wash the structural features, while creating vectors that direct the consumer to key merchandise selling areas. The next layer is emphasising the selling areas, these lights should be direct but no to bright and harsh. Poor

lighting can cause eye straining and an uncomfortable experience for the consumer. To minimise the possibility of eye strain the ratio of luminance should decrease between merchandise selling areas. The next layer will complement and bring focus onto the merchandise; this lighting should be flattering for the merchandise and consumer. The final layer is to install functional lighting this includes clear exist [19][20] signs. Ambiance can then be developed within the atmosphere through sound and audio, the music played within the store should reflect what your target market would be drawn to, this would also be developed through the merchandise that is being marketed. In a lingerie store the music should be soft, feminine and [21] romanticised; where in a technology department the music would be more upbeat and more masculine. Materiality (architecture) is another key selling tool, the choices made must not only be aesthetically [22] pleasing and persuasive but also functional with a minimal need for maintenance. Retail spaces are high traffic area and are thus exposed to a lot of wear this means that possible finishes of the materials should be durable. The warmth of a material will make the space more inviting, a floor that is firm and somewhat buoyant will be more comfortable for that consumer to walk on and thus this will allow them to [23][24] take longer when exploring the store. By switching materials throughout the store zones/ areas can be defined, for example by making the path one material and contrast it against another for the selling areas this help to guide the consumer through the store. Colour is also important to consider it must not over power or clash against the merchandise but rather create a complementary background for the merchandise. As merchandise will change seasonally the interior colours should not be trend based but [23][24] rather have timeless appeal like neutral based colours. Visual branding of the store will ensure a memorable experience for the consumer to take with them once they leave the store ensuring that they will want to return. The key factor is consistency exterior branding and signage should continue into the interior, they should attract, stimulate and [25] dramatise the store. To ensure consistency the font should be consistent with the font size altering. The interior branding should allow the consumer to easily self direct themselves through the store, proper placement of sales signs that will draw consumer in and show exactly where the cashier is located. The [26][27] branding should reflect what the merchandise is and what the target market would be drawn to. [edit]Perspective The final element to a well-executed retail space is the staging of the perspective(visual) of the consumer. It is the role of the retail design to have total control of the perspective and view that the consumer will have in retail space. From the exterior of retail store the consumer should have a clear unobstructed view [28] into the interior of the store.

Retail design

Retail design

[edit]See

also

Problem
Problems In Store The perception problem is not being helped by what appears, at least to this longtime Gome customer, to be a decline in the company's operations. This is even more worrying. If the company is going to survive, much less thrive and beat local rivals Dazhong and Suning and interloper BestBuy, it needs to respond immediately to the dismal state of its shopping experience. Stores are neither consistently sized, consistently laid out, or consistently merchandised. I went to three different Gome stores, and except for the logo on the front of the building they could have been from three separate chains. What this means is that a trip to a new Gome is like a box of chocolates: you never know what you're going to get. That inconsistency of experience undermines the value of Gome's brand.

Despite the chain's "Shanzhai Rebranding" (i.e., "Look, guys, we have a new logo - now we're re-branded"), the stores I go into in Beijing seem more dismal and rundown each time I visit. Leave aside the tiredlooking fixtures, the display cabinets with the logos of one manufacturer and the products of three or four others inside, and the well-worn decor. On the third floor of the store we went into - the floor with the highest value merchandise - the smell of cigarette smoke was so choking it drove us away from even looking at the selection of home theater setups. The excuse given: "Oh, our break room is on this floor."

Having started my own career as a retail associate, I understand the need to get away from customers for a few moments and relax. But never were the needs of the worker allowed to cause inconvenience to the customer, much less physical discomfort and, potentially, harm.