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RETAILING

Prepared By,
Sagar Gadekar

Definations
According to William J Stantons,

A Retailer or Retail store is a business


enterprise which sells primarily to the
ultimate consumers for non business use.
According to Cundiff and Still,
Retailing consist of those activities
involved in the selling directly to ultimate
consumers.
According to Mc. Carthy.
Retailing is selling to final consumer
products to households.

Retailing may be understood as the final step in the

distribution of merchandise for consumption by the


end consumers.

Retailing

is responsible for matching final


consumer demand with supplies of different
marketers.

Retailing is high intensity competition industry, The

reasons for its popularity lie in its ability to provide


easier access to variety of products, freedom of
choice and many services to consumers.

The Indian retail is dotted by traditionally market

place called bazaars or haats comprises of


numerous small and large shops, selling different
or similar merchandise

Characteristics of
Retailing
Direct Interaction with Customers.
Lower Average Amount of Sale

Transaction.
Point of Purchase and Display and

Promotion.

Importance of Retailing
Services to Wholesalers and Producers.
a)Advertisement of new products.
b)Arrangement to sell the goods.
c) Information about consumer habits, tastes

and needs.
d)Sharing of Risks.
Services to consumers.
a)Selection.
b)Variety of goods.
c) Demand creation.
d)Distribution.
e)Credit Facility.

Functions of Retailing.
Sorting.
Breaking Bulk.
Holding Stock.
Additional Services.
Channel of Communication.
Transport and Advertising Functions

Main Activities involved in


Choosing the Store Location.
retailing
Sourcing/buying or partnership/supply chain
management.
Merchandising and category Management.
Visual Merchandising (Display)
Sales Promotion.
Store Positioning and Building the store as a
Brand.
Store Operations.
IT Task.
Inventory Management.
Shrinkage Loss Prevention.
Real estate development.
Achieving efficiencies in Retail Operations.

Retailing in India.
Retail is the new buzzword in India.
The global Retail development Index has ranked

India first, among the top 30 emerging markets in


the world.

It is believed that India has the potential to deliver

the fastest growth over the next 50 years.

While barter would be considered to be oldest form

of retail trade, since independence , retail in India


has evolved to support the unique needs of
country, given its size and complexity

Second largest sector after Agriculture.

Contributes about 10 11 % of the GDP


The estimated size of the organized retail

industry in India is Rs. 16,000 crores. This is 2


% of the total estimated retail trade.
Indian Retail trade increased from Rs. 2200
billion in 2000 to Rs 3300 billion by the year
2005
India's first true shopping mall complete with

food courts, recreation facilities and large car


parking space was inaugurated as lately as in
1999 in Mumbai. (this mall is called
"Crossroads").

The Evolution of Retail in India


Retail in India has evolved to support the unique

needs of our country, given its size and complexity


Haats, Mandis and Melas have always been a part
of the Indian landscape. They still continue to be
present in most parts of the country and form an
essential part of life and trade in Various areas.
The PDS (Public Distribution System) would easily as

the single largest retail chain existing in the


country. the evolution of the PDS of Grains in India
has its origin in the rationing system
introduced by the British during world war II

The system was started in 1939 in Bombay and

subsequently extended to other cities and towns.


the system was abolished post war but however
attaining independence India was forced to
reintroduce it in 1950.
There was rapid increase in the ration shops

( being increasingly called the Fair Price Shop or


FPSs)
The Canteen Stores Department and the Post Offices

in India are also among the largest network of


outlets in the country reaching population across
the country.

The Khadi & Village industries (KVIC) was also set up post
independence. The cooperative movement was again
championed by the government.

India's Largest retail Chains:


1.

PDS: 463,000

2.

Post offices: 160,000

3.

KVIC: 7,000

4.

CSD Stores:3,400

(source business world marketing White book 2005)

In the past decade, the Indian marketplace has

transformed dramatically. However from the


1950,s to the 80,s, investment in various
industries was limited due to low purchasing
power in the hands of the consumer and the
governments policies favoring the small scale
sector.
The first attempts at organized retailing were

noticed in the textiles sector. One of the


pioneers in this field was Raymonds which set
up stores to retail fabric.

Raymonds distribution network today

comprises 20,000 retailers and over 256


exclusive showrooms in over 120 cities of the
country
Other textile manufacturing who set up their

own retail chains wee Reliance- which set up


Vimal showrooms and Garden Silk Mills, which
set up Garden Vareli showrooms.

The Evolution of retail in India

Emerging
Established
Formats
Traditional
formats
Exclusive retail outlets
Formats
Kirana shops
Hypermarket
Itinerant Salesman
Convenience/
Internal retail
Haats
department stores
Malls / Specialty Malls
Melas
PDS/
Multiplexes
Mandis etc.
fair price shops
Fast food outlets
Pan/ Beedi shops
Service galleries

Drivers of Retail change in India


major drivers :
1.

2.

Changing Income Profiles:

Steady economic growth


fuelled the increase in disposable income in
India. The average middle class family's
disposable income rose by more than 20%
between 1999-2003.
Diminishing difference between Rural and urban India: Rural
India accounts for over 75% of India population
and this in itself offers a tremendous
opportunity for generating volume driven
growth. Tax benefit. In year 2002-03 LIC sold
50% of its policies in rural India. Same BSNL
also sold its 50% connection in small towns .

3.

Changes in Consumption patterns: Occupational changes

and expansion of media have caused a


significant change in the way the consumer lives
and spends his money.
The changes in income brought about changes
in the aspirations and the spending patterns of
the consumers. the buying basket of the
consumer changed

4.

The emergence of a young Earning India : Nearly 70% of

the Indian population is below the age of 34.


taking advantages of employment opportunity in
the booming service sector these young Indians
are redefining service and consumption patterns

Prominent sector in Indian retail


Clothing, textiles and fashion Accessories:
2. Food & food Services:
3. Consumer Durables:
4. Books & Music:
Other emerging sectors
5. Jewellery retail
6. Footwear retail
7. Time Wear Retail
8. Fuel Retail/ petro retail
1.

Challenges to retail Development in India


Retail not being recognized as an industry in

India.
The high costs of real estate.
Lack of Adequate infrastructure.
Multiple and complex taxation system.

Size of the organized retail market (Rs Cr)


2001-02

2007

CAGR (%)
(compound Annual
growth rate)

TOTAL

16,000

37,216

18

Food

1,800

7,473

33

Clothing

4,950

10,423

16

Cons.Durables

1,650

3,787

18

Books & Music

450

1,426

26

Share of organized & unorganized retail with comparison


source: Ernst &Young, The Great Indian Retail Story, 2006

21

Indian versus Global Retailing


Scenario.

Basis Indian Retailing

Global Retailing

Nature of Retailing
India
is
mostly
Operatio Unorganized. At present only 2%
n
to 4% accounts for organized
sectors.

Retail World globally is


well organized and in most
developed countries is
control by major.

Scope of Package
good
manufacturer
Influence control all retail business to a
large extent. But the scenario is
changing, even with the limited
growth of organized retail in
India.

In organized retail industry


retailer have an upper
hand in negotiating deals
with manufacturers.

Technolo
gy

Indians retailers lag behind global


retailers in use of technology.
Though, retailers like shopper
stop, Pantaloons are employing
technology in their operations.

Global retailers resorts


employ
technology
in
larger scope than Indian
retailers.

Formats

Indian
retail
industry
is A large no. of retail
concentrated around few formats. formats are available.
Only 2% of retail industry has
adopted modern retail formats of
department
stores
and
supermarkets.

Basis

Indian Retailing

Global Retailing

Infrastruct
ure

Maximum
infrastructure Minimum
infrastructure
problems faced by retailers in problems faced by retailers
International market.
in International market.

Manpower

A lack of trained manpower Trained manpower available


hampers
development
in aiding retail boom.
industry.

Products/B
rands
Assortmen
t

Indian retail industry usually


has brands of well known
Indian and foreign companies.
Private label brands are
negligent or absent.

Global retailers resort to


keep their own brands. This
leads to increase competition
with better known company
brands.

Difference between Wholesaler and Retailer.


Criteria
Buyers

Wholesaler
Business customers, i.e.
Retailers

Retailer
Final Customers, i.e. End users

Buying Motive For reselling/trading.


of Buyers

Wholesaler or producer in case


large retailers.

Business
Volume

High.

Low.

Risk Involved

High.

Less.

Investment
requirement

High.

Moderate.

Promotional
Activities

Less Important.

Very important.

Store
Atmosphere,
Layout &
Location

Less attention.

Very Important Hence


maximum attention.

Area covered

Large area covered many Relatively small- mostly


areas territories can be
retailers operate in small area.
handle by single

Thank You

Drivers of Success in Retail


Sector
Customers are driving force in change.
Re-evaluating the Marketing Plan.
Advanced Education for Retailers is

critical for growth.


Strong visual recognition.
Work place challenge.
Planning for Success.

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