FOR THE SUBJECT OF:

PRESENTED BY:

Retail Marketing mba-904

Harshul Nagpal 9th Semester Roll No. 50

Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations or online. Retailing includes subordinated services, such as delivery.

Manufacturers usually make one or a small variety of products and would like to sell their entire inventory to a few buyers to reduce costs. Final Consumers, in contrast, prefer a large variety of goods and services to choose from and usually buy them in small quantities.

Retailers are able to balance the demands of both sides, by collection and assortment of goods from different sources, buying them in sufficiently large quantities and selling them in small units.

To help reduce transportation costs, manufacturers and wholesalers typically ship large cartons of the product, which are then retailers tailor them into smaller quantities to meet individual consumption needs.

Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of products at home as they know that this can be replenished by the retailer and can save on inventory carrying costs.

Retailers ease the change in ownership of merchandise by providing services that make it convenient to buy and use products. Providing product guarantees, after-sales service and dealing with consumer complaints are some of the services that add value to the actual product at the retailers end. Retailers also offer credit and hire-purchase facilities to the customers to enable them to buy a product now and pay for it later. Retailers fill orders, promptly process, deliver and install products. Salespeople are also employed by retailers to answer queries and provide additional information about the displayed products. The display itself allows the consumer to see and test products before actual purchase.

Retailers also act as the channel of communication and information between suppliers and consumers. From advertisements, salespeople and display:
Shoppers learn about the characteristics and features of a

product or services offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays, and customer complaints.

Supplier

Retailer

Consumer

Small manufacturers can use retailers to provide assistance with transport, storage, advertising and prepayment of merchandise. This also works the other way round in case the number of retailers is small. The number of functions performed by a retailer has a direct relation to the percentage and volume of sales needed to cover both their costs and profits.

By providing all the above mentioned services of sorting, breaking bulk, holding inventory and many more, retailers increase the value of products and services for the consumers. Here, the value of the product or service is related to the additional benefits provided by the retailer through which a customer feels more connected, satisfied and value the product or service being received.

Franchising is a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchisor.

In a franchise contract, the franchisee pays a lump sum plus a royalty on all sales for the right to operate a store in a specific location. The franchisee also agrees to operate the outlet in accordance with procedures prescribed by the franchisor. The franchisor provides assistance in locating and building the store, developing the products or services sold, training managers, and advertising. To maintain each franchisees reputation, the franchisor also makes sure that all outlets provide the same quality of services and products.

Retailers Using Franchise Business Model

Food Retailers Haldiram Baskin Robbins Dominos Pizza Subway India Vadilal KFC Merchandise Retailers Good Things Maspar Ddmas The Ceat Shoppe Koutons Reynolds Ebony Lilliput Services Retailers Air Hostess Academy Lakme Beauty Salon Shahnaz Herbal Wind Shield Experts Aptech Computer Education VLCC Healthcare Reliance World Sharekhan Ferns N Petals Big Flix Reliance AutoZone ADLABS Blue Dart GATI

Franchising is one of the fastest growing and ever changing industry in India. Though at a nascent stage, the industry has witnessed 30 to 35 % growth in the last 4-5 years. India is a multi ethnic country with the second largest population in the world. There are approximately 1150 national and international business format franchise systems in India in 2007. Around 8-10 % Indian franchise systems have entered international markets.

There are an estimated 70, 000 units operating in business format franchises. The growth rate in franchised units from 2005-06 to 2006-07 was 30 to 35 per cent. Some 5,00,000 persons are employed in business format franchise organizations. Franchising contributed less than 4% to Indias Gross Domestic Product (GDP) in 2007. Annual turnover is approximately US$ 4 billion. In a franchised business in India, over 90 per cent succeed. This success rate usually lures entrepreneurs with no experience but with a surplus capital and a will to succeed towards franchising.

Franchise India Holding Ltd, a counselling and partnering firm for the franchise industry, estimates a rise in the adoption of franchise model by smallformat retail players in the country since the slowdown last year. As per its estimates, 85% of all small-format retail business in India now operates on the franchise model. Brands such as Koutons, Levis, Reebok and Adidas, which were traditionally not franchising, have lately started looking at the model.

Videocon India, which runs two retail formats (Next and Planet M), is now starting to franchise Planet M, which was earlier being expanded through companyrun stores. So much so, the retail format ratio for most brands now stands at 80% dedicated to franchising and 20% for company run at strategic locations. Bata India, the largest retailer and manufacturer of footwear in the country with 1,200 stores, is starting its own franchise network to expand its retail presence.

Cookie Man, the retail chain store owned by Australian Foods Ltd, which runs over 50 stores across India, is looking at reaching a total of 250 stores through franchising. Not only does the franchisee bring in the capital, but also, the retailers save 4-8% on the point of sales. Currently, 45% of organised retail sales in India are through franchised outlets. This is in line with the developed world countries like US and Europe, where these models are well incepted in the business world.

As per Franchise India estimates, the fashion retail industry in the country is pegged at $29 billion and growing at 12% per annum. India is now opening up as a competitive apparel retail market. The market potential for footwear is 1.1 billion pairs and it is estimated to be a $2 billion sector. The jewellery market is estimated at $9.7 billion, with gold contributing 98% to retailing.