Introduction to Retailing

BOOKS FOR REFERENCE

1. Retail Management-Functional Principles and
Practices-Gibson Vedamani
2. Retail Management By Berman & Evans
3. Retail Management By Swapna Pradhan

UNIT - 1
Retail
The word retail is derived from the French
word retaillier which means to cut a
piece off or to break bulk.

In simple terms , it implies forst hand
transaction with the customer.
Retail
Retailing involves a direct interface with
the customer and the coordination of
business activities.
INTRODUCTION TO RETAIL
Retailing is a distribution channel function
where one organization buys products
from supplying firms or manufactures the
product themselves, and then sells these
directly to consumers. A retailer is a
reseller (i.e., obtains product from one
party in order to sell to another) from
which a consumer purchases products.

RETAILING Business activities involve
Selling Goods and Services to Consumers
for their Personal, Family or Household
use.
Every sale of Goods and Services is to
final consumer Food products, apparel,
movie tickets; services from hair cutting to
e-ticketing.
Retailing is the Last stage in Distribution
Process- Wholesale is an intermediate
where Goods and services are sold to
Business customers.

MANUFACTURER

DISTRIBUTOR

WHOLESALER

RETAILER

END-CONSUMER
Who is a Retailer?


Retailer links Producers to Customers

Retailer is a person, agent, agency,
company or organization who delivers the
Goods or Services to ultimate consumer

Industry Evolution
Traditionally retailing in India can be traced to
The emergence of the neighborhood
Kirana stores catering to the convenience
of the consumers
Era of government support for rural retail:
Indigenous franchise model of store
chains run by Khadi & Village Industries
Commission


Textiles sector with companies like Bombay
Dyeing, Raymond's, S Kumar's and Grasim
first saw the emergence of retail chains
Later Titan successfully created an
organized retailing concept and established
a series of showrooms for its premium
watches
The latter half of the 1990s saw a fresh wave of
entrants with a shift from Manufactures to Pure
Retailers.
For e.g. Food World, Subhiksha and Nilgiris in food
and FMCG; Planet M and Music World in music;
Crossword and Fountainhead in books.
Post 1995 onwards saw an emergence of shopping
centers,
mainly in urban areas, with facilities like car
parking
targeted to provide a complete destination
experience for all segments of society
Emergence of hyper and super markets
trying to provide customer with 3 Vs -
Value, Variety and Volume
Expanding target consumer segment:
The Sachet revolution - example of
reaching to the bottom of the pyramid.
At year end of 2000 the size of the
Indian organized retail industry is
estimated at Rs. 13,000 crore



Retail trends often mirror trends in a
nations overall economy.

Retailers add value by Providing the Right
Product at The Right Place at the Right
Time.
Organized Retailing
Organised retailing refers to trading
activities undertaken by licensed retailers,
that is, those who are registered for sales
tax, income tax, etc. These include the
corporate-backed hypermarkets and retail
chains, and also the privately owned large
retail businesses.
ORGANISED RETAILING

Retail chains like Wal Mart, McDonalds
brought Rapid Growth and consolidation
of Organized Retail
Rapid rise of Income levels and
accompanying changes in lifestyles
greatly contributed to growth of
Organized Retail
Unorganized Retailing
Unorganised retailing, on the other hand,
refers to the traditional formats of low-cost
retailing, for example, the local kirana
shops, owner manned general stores,
paan/beedi shops, convenience stores,
hand cart and pavement vendors, etc
EMERGING TRENDS IN
RETAILING
Emerging Trends
Last decade has seen tremendous
changes in Retail Business from made
to order to ready to wear, emphasis on
value addition and cost reduction.
Family run retail business giving way to
modern professional retail.

Emerging Trends
Retail improving inventory management
through systems faster turnover,
better profitability, fast changing
customer preferences for goods and
services.
BETTER CUSTOMER CARE
Emerging Trends
Driven by changing lifestyles, strong
income growth and favorable demographic
patterns, Indian retail is expanding at a
rapid pace.
Mall space, from a one million square feet
in 2002, touched 40 million square feet by
end-2007 and an estimated 60 million
square feet by end-2008
Emerging Trends

With consumers for luxury goods growing
in numbers , the Indian retail market is
estimated to reach around US$ 3.5 billion
to US$ 30 billion by 2015

Emerging Trends
The increase in the PC and internet
penetration along with the growing
preference of Indian consumers to shop
online has given a tremendous boost to e-
tailing-the online version of retail shopping.
An estimated 10 per cent of the total e-
commerce market is accounted by e-
tailing.
Emerging Trends
Led by the rising purchasing power,
changing consumption patterns, increased
access to information and communication
technology and improving infrastructure,
rural retail market is estimated to cross
US$ 45.32 billion mark by 2010 and US$
60.43 billion by 2015
Emerging Trends
With international brands like Tommy, Esprit
and Puma (that have entered the country)
growing well over 100 per cent, many others are
also planning to foray into the Indian retail
market. India's vast middle class with its
expanding purchasing power and its almost
untapped retail industry are key attractions for
global retail giants wanting to enter newer
markets.
Emerging Trends
The world's largest retailer, Wal-Mart, has
tied-up with Sunil Mittal's Bharti Enterprises
to enter Indian retail market.
World's leading coffee chain, Starbucks'
enters India through a tie-up with the
country's leading multiplex operator PVR
Limited.
Emerging Trends
Apple Inc has entered into an exclusive
marketing and distribution deal with
Reliance Retail through "iStore by
Reliance Digital".
British retailer Marks & Spencer's has tied
with Reliance Retail and plans to open at
least 50 new stores in India over the next
five years, with an initial investment of up
to US$ 58 million
Emerging Trends
German sportswear and Apparel Company,
Adidas is going in for a major expansion
across India, and plans to have a total of
about 450 franchisee outlets in the country.
Emerging Trends
The growing attractiveness of retail
industry has begun to attract new
entrepreneurs with innovative ideas.
Global Retail scenario
In the other parts of the world, retailing is
better organized than what it is in India.

The US retail Industry is the world largest
retail industry and its still growing.

In USA most part of retailing is accounted
by organized sectors.
Global Retail scenario
The USA dominates the world retail
market and accounts for 32.3% of the
global retailing group.

Europe has 30.8 %, Asia Pacific has 25.6
%, and rest of the world has 11.20 %.
Global Retail scenario
The organized retailing has gained a great
deal of momentum in China in the past few
years.

The developing countries are also making
an effort in the industry but organized
retailing is mainly dominated by the
developed countries like USA.
Global Retail scenario
Retail is the significant contributor to the
overall economic activity around the world.

The employment opportunities offered by
the retail industry is huge.

Global Retail scenario
According to the US department of labor,
about 22 million Americans are employed
in the retailing industry in more than 2
million stores.

Globally, retailing is customer centric with
an emphasis on innovation in product,
process and services.


Global Retail scenario
Globally, Retail is a very fast changing
field and the customer not only has to
keep up with ever changing expectations
and demand of the consumers but also
has to keep a track on the competition and
changes in technology.
Indian Retail Scenario
Most of the retailing in India is unorganized.
Most of the organized retailing in the country has
just started recently, and has been concentrated
mainly in the metro cities.

Today convenience has become a priority for
the Indian consumers and they want everything
under one roof so that they have an easy
accessibility.
Indian Retail Scenario
So the organized retailing has a very big
opportunity to set itself in the Indian
markets.

The two main factors which drives
organized retailing in India are low prices
and the benefits that are offered by them.
Indian Retail Scenario
India is seen as a competitive marketplace
with the potential target consumers in the
niche and middle class segments.

Over the past few years. International
companies like Marks & spencer, Mc
Donalds, Dominos etc have entered the
Indian markets.
Indian Retail Scenario
Large Indian companies like Reliance
group, Future group, Essar telecom Retail,
Shopper stop are investing huge amount
of money in this sector.

The largest chain, Subhiksha, has 760
outlets in India while Big Apple aims to
have 100 stores very soon.
Indian Retail Scenario
The entry of companies like Big Bazaar have
created the concept of value for money for the
Indian consumers.

A McKinsey report on India says organized
retailing would increase the efficiency and
productivity of economic activities, and would
help in achieving higher GDP growth.
Indian Retail Scenario
Indias large rural population has also
attracted the big organizations to tap this
market.
Functions Of Retailer
1) Breaking bulk

2) Providing assortment

3) Holding inventory

4) Providing services
THE RETAIL ENVIRONMENT
UNIT - 2
The Legal Environment
The legal scenario of a country plays an
important role.
For eg.
- Restricting the days and hours during
which the retailers may operate.
- Limit the manner of business to ensure
consumer privacy.

The Legal Environment
Laws on non discriminatory hiring and
promotion of people.
Trademarks agreement which provides
retailers with exclusive rights to brand
names.
Licensing agreements which allows the
retailers to sell goods created by others in
return for a royalty.
The Legal Environment
Price marking laws which specify the
discounted items must be marked
properly.
Product safety laws that prohibits retailers
to sell goods that have not been tested
properly.
The Technological Environment

These changes can bring about a lot of other
changes as they affect the range of choices
available to both the consumer and the retailer.
New technology can lead to better products and
services for the consumer and at the same time
it can help the retailer as well like keeping
control over the inventory level.


The Importance of
Technology in Retail
The Importance of Technology in
Retail
1) Collection of data

The use of technology aids data collection. The data
can be collected regarding the consumers, their
purchases and the frequency of buying. This
information helps the retailer to distinguish the
customer who shops frequently.

The Importance of Technology in
Retail
2) Efficiency in Operations

The use of technology serves the basis of
integrating the functioning of various
departments. As the process gets automated ,
the time involved in the task is reduced
The Importance of Technology in
Retail
3) Helps communication

Communication can be faster with the help
of technology and it can be a 24 x 7
process. EDI can be used for
communication with the suppliers and
vendors
The Importance of Technology in
Retail
Universal product code or UPC is one of
the most important technology that is
being used in the retail sector.
The Importance of Technology in
Retail
EDI is defined as the exchange of
business information with the help of
computers. It helps in saving time,
reducing cost and serves as a tool for
strengthening the relationship between the
retailer and the supplier.
The Importance of Technology in
Retail
The use of systems to organize, search
and manage the data is termed as
DATABASE MANAGEMENT. A simple
purchase at any retail store enable the
stores to gather a vast amount of
information about the customer and
products.
The Importance of Technology in
Retail
E- tailing
The rise of internet has led to phenomenal
changes in the world of retailing. In
retailing, it has opened a new way for the
retailers to reach out to the customers and
the suppliers where they dont have any
physical presence
The Economic Environment

The economy is a term which is used to
denote the patterns of economic activity in
a country which includes the production
and environment, income, consumption
and the living standards.
The Competitive Environment

Competitors are offering choices to customers and
value added products
Competitors come in different sizes (small organizations
to international companies) and serve different market
segments (specialized industry segments to mass
markets)
In the process of serving customers, many are making
profits; thus they have an incentive to increase their
market share and are promoters of retail competition
FDI in Retail
What is FDI?

Foreign direct investment (FDI) is a
method of allowing the external finance
into an economy. India is the second most
preferred FDI destination after China.
Reasons for not allowing FDI in
retailing in India
1. Affects unorganized players (kirana shops)

The critics argue that opening the retail sector would
affect the sales in the unorganized sector. As a result the
employment it provides would be affected.
2) Kind of employment

They say that it cannot provide
employment opportunities to semi-illiterate
people . This argument gets more
attention because in India semi-illiterate
people in quiet large in number
3) Lowering of prices

If FDI is allowed in retailing then it would result in
lowering of prices because FDI will result in good
technology, supply chain, etc. If prices were lowered
then it would lower the margin of unorganized players.
As a result the unorganized market will be affected. This
in turn will affect the employment opportunities provided
by the unorganized market
FDI in Retail in India
In India , FDI in Retail, is restricted.

51 % of FDI is allowed in Single brand
retailing
and
100 % in cash and carry format.
FDI in Retail in India
An international retailer can enter the Indian
Retail market in any of the following-
- High tech items/items that require
specialized after sales service.
- Social sector items.
- Medical and diagnostic items.
Ways of entering in Indian Retail
Franchising is one way by which the
foreign investor can enter into the Indian
Retail market. In case the master
franchise is appointed at the national or
regional level, the parent company gets
the right to appoint local franchisee.
Eg. Nike, Marks and spencer
Ways of entering in Indian Retail
Joint venture is another form whereby the
international partner provides equity and
support to the Indian investor. The Indian
partner provides the relevant local
knowledge which is needed for success of
a venture.
Eg. Reebok
Ways of entering in Indian Retail
Companies can also set up
DISTRIBUTION OFFICES in India and
thereby trade through the local Indian
retailers.
Eg. Hugo boss operates in Indiathrough
the distribution offices.