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Introduction to Retail

Introduction to Retail

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INTRODUCTION TO RETAIL

WHAT IS RETAIL
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Retail : Derived from the French word “retaillier” Means : To cut off a piece or to break bulk.

Retailer : Defined as a dealer or trader who sells goods in small quantities, or one who repeats or relates  Retailing : The last stage in movement of goods or services to the consumer.

Retailing can thus be defined as consisting of all such activities involved in the marketing of goods and services directly to the

INTRODUCTION TO RETAIL
RETAIL : THE INDUSTRY Largest private industry in the world, total sales of US$ 6.6 trillion  In Western economy it accounts for 8% of the GDP  Has generated an 19% return for the shareholders between 200406  In comparison banks generated 9% and insurance generated 15.2% return.  Largest corporation in the world – Wal-Mart is a retail chain  Almost 50 retail organizations in the world feature in the list of

INTRODUCTION TO RETAIL
FUNCTIONS OF A RETAILER

From customers point of view, retailer serves by providing goods that he needs in the required assortment and at the right place and time. From an economic standpoint the role of a retailer is to provide real added value or utility to the customer. This comes from five different perspectives

INTRODUCTION TO RETAIL
FUNCTIONS OF A RETAILER

First utility arises from the need of providing a finished goods and services in the form that is acceptable to the customer The retailer performs the function of storing the goods, and providing us with an assortment of products in various categories The retailer creates time utility by keeping the store open when the consumers prefer to shop By being available at a convenient location he creates place utility Finally when he products are sold ownership utility is

INTRODUCTION TO RETAIL
FUNCTIONS OF A RETAILER
All these are real benefits which the Retailer offers by

Being close to potential customers Fully understanding the motivating factors that drive their customers By serving the consumers by way of functioning as a marketing intermediary and creating time, place and ownership utility

INTRODUCTION TO RETAIL
FUNCTIONS OF A RETAILER
The Retailer also serves the manufacturers by

Performing the function of distributing the goods to the end users Creating a channel of information from manufacturer to the consumer By serving as a final link in the distribution chain Recommending products where brand loyalty is not strong or for unbranded products.

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THE CHANGING RETAIL LANDCSAPE
REASONS FOR THE CHANGING RETAIL LANDSCAPE

Proximity to customers : The emergence of large super markets, hypermarkets and various other formats like the department stores. The rise of consumerism : Retailer faces a knowledgeable and demanding consumers. This has forced retail organizations to change formats, product offerings and services. Introduction of the private label : Retailers now decide on products and brands they want to stock. Some have even developed their own in store brands/products that cater to the needs of target customers. Technology : Increasing use of technology vide point of sale scanning, use of bar code provides wealth of information to

RETAIL IN INDIA
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India boasts of the world’s largest retail network, 12 million outlets India being second largest consumer market in the world stands benefited 96% of total number of retail outlets have an area of les than 500 sq.ft. and the per capita retail space in India is a mere 2 sq.ft. Trade is highly fragmented and is known the world over as highly unorganized and in nascent form However, the reality is that apart from agricultural products even manufactured goods are available in the remotest corners of India As retail is not regarded as an industry in India it is difficult to get a correct picture of the size of this sector As per estimates given by the Central Statistical Organization the total private final consumption expenditure in India was Rs.15,000 billion in 2001-2002 Consumption patterns indicate how much has been sold

GROWTH OF RETAIL IN INDIA

India Government set up public distribution system faced with the task of providing basic grains to the mass populace – ration shops State run retail stores were set up such as Khadi & Village Industries Commission stores (KVIC). As on date there are more than 7,000 stores across the country. The co-operative movement was championed by the government, which set up Kendriya Bhandars in 1963. As on date they operate from a network of 112 stores and 42 fair price shops across the country. Mother diary another early starter controls as many as 250 stores selling foods and provisions at attractive prices In Maharashtra, Bombay Bazaar, which operates stores under the label Sahakari Bhandar and Apna Bazaar runs a large chain of co-operative stores

CLASIFICATION OF RETAIL SECTOR

In India, Retail Sector is classified into two broad categories Food Non Food Through this classification one can see a phenomenal change that has occurred in retail in India Key Players have emerged in various sectors over the past ten years

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ROADBLOCKS TO RETAIL DEVELOPMENT
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In India, organized retail is a little over a decade old It is largely an urban phenomenon However the pace of growth is still slow

Reasons for slow growth in retail 1. Retail not being recognized as an industry in India - Hampering the availability of finance to existing and new players - Hence affecting growth and expansion plans 2. High costs of real estate - Lease or rent of property is major area of expenditure - This eats into the profitability of a project

ROADBLOCKS TO RETAIL DEVELOPMENT
3. Lack of adequate infrastructure - Poor roads, lack of cold chain infrastructure - Existing supermarkets and food retailers have to invest substantially in building cold chain infrastructure 4. Multiple and complex taxation system - Sales tax rates vary from State to State - Organized players have to face multiple point control and tax system - Tax evasion by small stores - Hence it becomes expensive to transfer goods from one store to another 5. Foreign direct investment - FDI in pure retailing is not permitted - One of the prime reason for slow growth of retail in India - Global retailer can enter only by way of a franchise with Indian partner

FUTURE PROSPECTS
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Bright future ahead What one sees today is only the tip of the iceberg Expansion from urban to B Class towns will see the emergence of region specific formats which will be scaled down Large discount stores are bound to emerge as they will cater to mass market Thus penetration in the lower income groups This is the format that is most likely to meet the consumer’s demands for “increased value for money” offerings The new agreement on textiles and clothing (ATC) will see large number of international retailers setting shop in India Indian retailers would have to become consumer-centric in true sense Retailers will have to reinvent themselves and have to go beyond the traditional products and services

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