RETAIL

Growing Importance of
Retail Sector

Large and increasing contribution to GDP

Economic importance more visible
Major employer
Retailers diversifying their activities
Organisations growing on an international
scale
Blurring of areas of retail to include wider
areas of business activity
Size of operation allowing for supply chain
control.

Characteristics of Retailing
There is direct end-user interaction in
retailing.
Sales at the retail level is generally in smaller
unit sizes.
Location is a critical factor in retail business.
In most retail businesses services are as
important as core product.
It is the only point in the value chain to
provide a platform for promotions.

Modern Retail In Expansion

Phase
Initiation

Size of Industry

Conceptualization

II

Pure play Retailers,

realizing the
potential start to
test waters,

Manufacturers
opening their
own outlets

Expansion and Entry

of Global Retailers

Entry of large
global retailers

III

Consolidation

IV

Large Scale
Consolidation
Stiff
Competitio
n

Movement to
Smaller Cities
and Rural
Areas

More Aggression from

International Players

Expansion by leading
Product Brands

Large Investment
Commitments by large
Indian corporates

More than 5-6 Players

with Revenues in
excess of US $ 700
mn
Specialty Formats based
on finer segmentation of
the market
Private brands getting
established

Pre 1995

1995 to
2005

2005 to
2010

2010 Onwards

Types of Retail Formats

Mom and Pop Stores (e.g. kiryana stores)

Department stores ( Shoppers stop)

Specialty store ( Pizza Hut)

Supermarkets (Wal-Mart,Big Bazaar)

Convenience stores (In & Out)

E-tailors (e-bay,amazon.com)

Discount stores (Koutons)

Full-line discounters or mass
merchandisers
Specialty discount stores or category killers

FUNCTIONS OF RETAILERS
PROVIDING
ASSORTMENT
OF GOODS
SERVICES

UNDERSTANDING
CUSTOMER NEEDS
& WANTS

PROVIDING
SERVICES TO
CUSTOMERS

HOLDING
INVENTORY

FUNCTIONS OF
RETAILERS

BREAKING
BULK

PROVIDING
INFORMATION TO
SUPPLIERS

Retail Market Break-Up in

2008

Source: Technopak Analysis

India Retail Scenario

The Indian retail market is expected to be about US $ 535 Billion by 2013. With
an anticipated US$ 30 Billion in fresh investments over next 5 years, modern
retail will show impressive CAGR >40%

All Figs in US$

billion

Currently, Modern Retail Comprises a

Small Percentage of Total Retail in India

Breakup of Modern and Traditional

Retail

Breakup of categories within modern

retail

Spending Shifting From Basic To

Discretionary
Food & Grocery
Rent, Utilities &
Education

201
3

Fuel, Transport
&
Communication
Savings &
Investment
Discretionary
Expenditure

200
3

200
8
The share of food and grocery in the
consumers wallet continues to drop
releasing money for discretionary
expenditure
F&G share expected to decline from 36%
in 2008 to 32% in 2013

Source: India Consumer Trends 07, Technopak analysis

Despite Current Slowdown, Growth

Opportunity For Retail & Consumer
Products
Is
Still
Intact
Medium and long term prospects for the Indian economy

continue to be enthusing with strong domestic consumption

and reduction in commodity prices, inflation, and lowering
interest rates.
Sectors such as Consumer Products, Food & Grocery,
Consumer Appliances & Durables, QSRs, Healthcare,
Education, etc. are still showing high growth prospects as
reflected in their recent financial numbers.
Modern Indian retail is currently experiencing a steep
learning curve and the current turbulence is not entirely
unexpected or undesirable.
Retail will witness expansion, consolidation, acquisition and
further entry of international chains between 2009-2013
giving further fillip to the overall growth of modern retail.
Investment options will further increase as the Government
will finally open up international investment in the retail
sector during 2009-2013 period.

DEFINITION OF RETAILING
The term retailing is derived from the old French
word retailler meaning a piece of or to cut
up.
Retail is:
Any business that directs its marketing efforts
towards satisfying the final consumer based upon
the organisation of selling goods and services as
a means of distribution.

Classification of Retail
Units
Retail stores can be classified as per the following
Nature of ownership:
- Sole proprietorship, Partnership, Joint Venture
Limited Liability company.
On the basis of Operational Structure :
- Independent Unit, Retail Chain, Franchise, Leased (s-in-s)
departments, Co-operatives (Fair price)
On the basis of retail Location :
- Free Standing Retailers, In Business-associated location,
planned shopping centers
On the basis of Merchandise Mix.

Method of Customer Interaction

Type of Retailers

Store Retailers

Non-Stores Retailers

- Electronic Retailing
- Catalogue & Direct Mail Retailing
- Direct Selling
Person to Person
Party Plan or Person Selling
Multilevel Network
-

Vending Machines

Retail Marketing
The Nature of Retail Marketing:

The key aspects of retail

marketing is an attitude of mind.
In making retail marketing
decisions, retailers must consider
the needs of the customers.
Retail marketing decisions are
driven by what the shoppers need
and want

Cont
Retail marketing is therefore a philosophy and
is all about satisfying the customers
What the customers regard as value and what
they buy is decisive.
What the customers buy determines the
nature of the retailers business
The essence of retail marketing is developing
merchandise and services that satisfy specific
needs of customers, and supplying them at
prices that will yield profits.
Retailers must take the customers needs into
consideration in retail operation.

The concept of Retail

Marketing
The retail marketing concept is the acceptance by
the retailer that it is the customer and not
demand that lie at the core of the retail
organisation.
The retail marketing concept is a philosophy, not
a system of retailing or retail structure.
It is founded on the belief that profitable retailing
and satisfactory returns on investment can only
be achieved by identifying, anticipating and
satisfying customer needs and desires.
It is an attitude of mind that places the customer
at the very centre of retailing activities.

Retail marketing is stimulating, quickpaced, and influential.

It encompasses a wide range of
activities including:

Environmental analysis
Market research
Consumer analysis
Product planning etc.

Importance Of Marketing In
Retailing
Marketing is a vital tool for every retailer, as it identifies
current, unfulfilled needs and wants, which it defines and
quantifies.
Marketing determines which target groups the retailer
should serve.
Marketing could be seen as delivering an acceptable
standard of living.
Marketing can ensure complete satisfaction and sustained
customer loyalty.
Marketing depends on the efficient co-ordination of
consumer prediction, product development, packaging
design and influencing demand through appropriate
communication medium.
From these, a suitable mix is achieved.

Retail marketing objectives

The retail marketing objective is a performance
parameter which has been explicitly stated.
It can be stated in quantifiable terms and time terms
so that results can be measured against it.
Three types of retail objectives include:
1. Basic objective those which defines retailers longterm purposes.
2. Goals those which the retailer must achieve to be
successful
3. Targets short-term goals that require immediate
achievement.

Retail marketing mix

Retail marketing mix is the term used to describe the
various elements and methods required to formulate and
execute retail marketing strategy.
Retail managers must determine the optimum mix of
retailing activities and co-ordinate the elements of the mix.
The aim of such coordination is for each store to have a
distinct retail image in consumers mind.
The mix may vary greatly according to the type of market
the retailer is in, and the type of product/services.

The 3 Ps of Marketing (Extended

Marketing mix)

Composition of key
elements
Place
Product
Price
Promotion
People
Process
Physical Environment

Retail Marketing Mix

While many elements may make up a firms retail
marketing mix, the essential elements may include:

Store location,
merchandise assortments
Store ambience,
customer service,
price,
Communication with customers

Mix
Personal selling
Store image
Store design
Sales incentives
People
Process
Physical evidence

Theories of Retail Development

Retail Development from the theoretical perspective:
No single theory can be universally applicable or acceptable.
The application of each theory varies from market to market ,
depending on the level of maturity and the socio-economic
conditions in that market.
The retail scenario keeps changing continuously. These
changes are brought by ever changing customer requirement,
economic development of the nation , falling borders, new
technologies and by entrepreneurs.

Growth in retail is a result of understanding market signals

and responding to opportunities that arise in a dynamic
manner.
Theories of retail development can broadly be classified as:

1.

Environmental: where a change in retail is attributed to the

change in the environment in which the retailers operate.

2.

Cyclical : where change follows a pattern and phase can

have definite identifiable attributes associated with them.

3.

Conflictual: where the competition or conflict between two

opposite types of retailers, leads to a new format being
developed.

abil
ity p

Mature retailer
Top heavy
Declining ROI

Innovative retailer
Low status and price
Minimum service
Poor facilities
Limited product offering

Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings

Trading up phase
T

se
pha

Vul
ner

ry
Ent

has

The Wheel Keeps On Turning And Department Stores,

Supermarkets, And Mass Merchandise Went Through
This Cycles

3. Conflict theory (dialectic Process)

Conflict always exit between operators of similar formats or
within broad retail categories.
Retail innovation does not necessarily reduce the number of
formats available to the consumer, instead , it leads to the
development of more formats.
Retailing involves through a dialectic process, i.e. blending of
two opposite to creates a new format. This can be applied to
development in retailing like;

A.

Thesis: Individual retailers as corner shops all across the

country.

B.

Antithesis: A position opposed to the thesis develops over a

period of time . (department store, discount store). The
antithesis is a challenge to the Thesis.

C.

Synthesis: There is a blending of the Thesis and antithesis.

The result position between the thesis and antithesis.
Supermarkets and hypermarkets flourish. This synthesis
for the next round of evolution.

Illustration
Antithesis

Thesis

Discount Store

Department Store

Discount
Department Store