RETAIL MANAGEMENT

Departmental stores may be a comparatively recent phenomenon in India, with a specially created ambience making shopping an experimental affair. Indeed, we are even beginning to demand places where we can avail the luxuries of spending the whole day in one place, taking advantage of a bouquet of services in which shopping is only a part. So we can browse, window shop, make purchases, break off for a meal, take in some entertainment, and listen to music. This concept of organized retail marketing, which has caught on like lightning, is really just the creation of a distribution network that cuts out various intermediary costs and creates a much smoother interface between manufacturer and customer. This organized network which bridges the distance between the manufacturer and the consumer has seen many of the world's leading entrepreneurs successfully walk down a particularly profitable road. With total sales going up to $6.6 trillion, the industry today is the world's largest private industry and accounts for over 8 per cent of the GDP in western countries. And now, it's India's turn. Today, we stand at the crossroads of a retail revolution. After 50 years of unorganized retailing and fragmented kirana stores with very basic offerings, fixed prices, zero usage of technology and little or no ambience the industry have finally begun to move towards modernization, systematization and consolidation. Retailing has now become a key growth area. There has been an attitude change in the way the Indian consumer thinks about shopping. What, were and how they buy is now the big question. Over the last decade, there has been a significant evolution in his psyche, a change that has been carefully recorded and documented by behavioral pundits. Although it is most noticeable in large metros, its impact is also seen in small towns. The change was kicked off by the economic liberalization of the 1900's and accelerated by the media (cable) boom following the Gulf War, when the radical explosion in media images exposed the Indian consumer to the lifestyle enjoyed in more affluent countries. And even within his own country. Earlier, it was the lack of consumer culture along with low incomes that prevented the development of such formats. But economic growth has now triggered off a spending spree, with India's middle and high-in-come population suddenly realizing that they have enough disposable income to go for the good times. As the low-income base shrinks, there is an ever- increasing expansion of the higher income groups, with a corresponding demand for consumer goods that

allows the deeper penetration of high quality and higher priced products. The early indicators of this revolution are the mushrooming of better quality retail outlets, a profusion of brands and various product options. The Indian consumer who can discern a clear value propositions and unbeatable ranges at unbeatable prices served to him on a platter. The retail industry is now beginning to evolve. Traditionally, most retailers have very localized operations but this nature of the industry is fast changing with the awareness that sources must

be developed and a proper merchandising system put in place. The pace of transformation has accelerated and today India has over 12 million retail outlets. As a phenomenon, retail marketing has a radical impact and can bring in new technologies, systems and mindsets. It can improve overall labour, productivity and employment, all in the name of providing the consumer with a better range of products at better prices in a better ambience. Retail, India's largest industry is driven by the markets' ability to provide better products in a comfortable ambience at affordable prices. The growth of large multi-brand apparel outlets is one result. These outlets are usually 20,000-50,000 sq ft in size, have their own parking space, and separate counters for perfumes, accessories, men's wear, women's clothing and children's clothing. Some stores also have toys, books, home wear, footwear and music. Some of these retailers have begun to develop a private label brand, to supplement their range and improve their margins. These have become significant brands in their own right. Similar departmental stores/multi brand outlets are likely to develop into a significant format in the Indian market over the next decade. The players who can make organized retailing an integral part of India will be the ones who reap the benefits at the end of the change process. The industry however will have to work in tandem with the government and manufactures to build a more positive environment for retail and cater to the demand for better products and retailing from India's first generation of demanding cash rich consumer.

CHAPTER 2 THE CONCEPT OF RETAILING

Retail means to cut into piece or break into bulk. Retailing consists of the business activities involved in selling goods and services to consumers for their personal, family, or household use. It includes every sale of goods and services to the final consumer. In a distribution channel, retailers play a key role as the contact between manufacturers, wholesalers, other suppliers and the final consumer. Many manufacturers would like to make one basic type of item and sell their entire inventory to as few buyers as possible. But final consumers usually want variety and a limited purchase. So, retailers collect an assortment of goods and services from various sources, buy them in large quantity and sell in small quantities to consumers. This is the sorting process. In fact, the word Retailing is actually based on this breaking-bulk function. It is derived from the French word retailer which means, to cut up". Retailer consists of the sole of goods or merchandise from at fixed location , such as a department store or Kiosk, or by post, in small or individual lots for direct consumption by the purchaser. Retailer buys goods or products in large quantities from manufacturer or importers, either directly or through a wholesaler, and then sells smaller quantities to the endusers. Retailer are the end of the supply chain. The term retailer is also applied where a serv ice provider services the needs of a large number of individuals, such as a public utility like electric power.

CHAPTER 3

DEFINITION OF RETAILING

1. It is the last commercial link in the marketing channel and the point where products finally reach their users.

2. Retailing includes al l activities directly related to the sale of goods or services to the ultimate customer for personal non-business use.

3. Dictionary Definition: The selling of goods to general public 4. Retailer is the sole of goods and services to ultimate consumers for personal, non business use. 5. Retailers serve as purchasing agents for consumer and as sales specialists for producers and wholesaling middleman. They perform many specific activities such as anticipating consumers wants developing product assortments and financing. 6. According to Philip Kotler Retailing includes all the activities involved in selling goods or services to the final consumers for personal , non business use; A retailer or retail store in any business enterprise whose sale volume comes primarily from retaililng. 7. The North American Industry classification system (NAICS ) specifies that the retail trade sector comprises establishments primarily engaged in retailing merchandise, generally in transformation and rendering services incidental to the sale of merchandise, Retailing thus may be understood as the final step in the distribution of merchandise, for consumption by the end consumers.

CHAPTER 4

EVOLUTION OF INDIAN RETAIL INDUSTRY

Indian Retail Industry is standing at its point of inflexion, waiting for the boom to take place. The inception of the retail industry dates back to times where retail stores were found in the village fairs , Melas or in the weekly markets. These stores were highly unorganized. The maturity of the retail sector took place with the establishment of retail stores in the locality for convenience. With the government intervention the retail industry in India took a new shape. Outlets for Public Distribution System, Cooperative stores and Khadi stores were set up. These retail Stores demanded low investments for its establishment. Retailing has been one of the fundamental building blocks of the Indian economy . It is estimated that by 2010. Retailing in India will comprise a $ 300 billion industry if the economy continues to register a growth of six percent of the GDP ( Gross Domestic Product ) annually . The retail industry is ever more attractive new, with scores of players leaping into the action and many more testing the waters. Over the past few years, industrial giants like Tatas (West side ) Eureka Forbes, RPG ( Food World ) Big Bazaar, Shopper.s stop and life style have made a foray into the Indian retail market.

CHAPTER 5

FACTS OF RETAILING IN INDIA

India has attracted increasing attention from multinational retailers in recent years. Alongside China, India is viewed as one of the top economic powerhouses of Asia, generating 19.8% of the Asia-Pacific region's food retail value. While India's organised retail market is still in its infancy it offers huge potential for expansion. Here are ten quick facts on Indian retail. 1. In 2007 India's food retail sector generated revenues of US$202.6bn. By 2013, just-food estimates that the Indian grocery retail market will reach a value of US$507.3bn. 2. The food retail industry in India has seen fluctuations in its growth rate over the past four years, with the growth rate reaching its peak of 10.1% in 2007. This trend is set to continue, with the growth rate expected to remain just below 6% until 2012. 3. Indian retailing is dominated by small independent retailers and kirana stores, which account for about 65.1% of sales. Food specialists command 28.80% of sales while modern retailers - discounters, supermarkets and hypermarkets - accounting for 4.1%, 1.4% and 0.7% respectively. 4. Sales through food retailers proved the most lucrative distribution method for the Indian food retail industry in 2007, generating total revenues of $131.8bn - 65.8% of the industry's overall value. 5. Current legislation has blocked the entry of foreign multi-brand retailers such as Wal-Mart, Carrefour and Tesco - into the consumer retail market. Multi-brand retailers are only allowed to operate wholesale businesses or work with an Indian partner through franchise and licensing agreements. Foreign single-brand retailers, such as the UK's Marks and Spencer, are allowed to operate in the market.

6. The largest modern retailers in the Indian market include: Trinethra Super Retail Ltd, Food Bazaar, Margin Free Market and Reliance Retail. The market leader is Pantaloon Retail. 7. The pace of expansion in the modern retail sector is increasing. In 2007 chain retailers added more than 10,000 new outlets. 8. Indian retailers are currently focusing their attention on smaller formats located in urban areas, with 380 convenience stores opened in 2007, compared to 58 hypermarkets and 30 discount outlets. However, Bharti Enterprises partnered with Wal-Mart, and Tata Group partnered with Tesco, have both signaled their intention to drive expansion through hypermarket openings in the coming years. 9. The cost of brand building and difficulty of obtaining retail space in high footfall areas has resulted in consolidation of the market, with regional brands being targeted by the larger corporate conglomerates. 10. Much of the focus of modern retailers has remained on urban areas. However, rural retailing is on the rise in India. Since 2003, Godrej Agrovet Ltd and ITC Ltd have opened town and rural outlets. These retailers are stepping up the pace of growth in rural areas, with ITC planning 100 stores by March 2010 and Godrej Aadhar planning 1,000 stores by 2010. Reliance is currently contemplating tapping into demand in towns by setting up 700 Reliance Town Centres to cater to towns with a population of less than 300,000.

CHAPTER 6

BENEFITS OF RETAILING

The implementation of such a retail marketing strategy yields benefits for consumers, manufacturers and wholesalers and creates economic utility. The first point under retailing benefits for customers, bulk breaking refers to the act of retailers of buying goods in large quantities and then breaking them into smaller sizes for their individual customers. As a result purchases become convenient for customers - in terms of quantity bought as well as expenditures made. The assorting function is nothing but evaluating all the different products available and offering to the target the optimum array of products from which to choose. The storing function performed by the retailers relieves customers of the task of anticipating their desires too far in advance of their needs as the retailers keep goods in inventory until customers are willing to buy and use them. Further, retailers help manufacturers smoothen the production cycle by placing orders for peak demands well in advance and by managing inventory even on behalf of the manufacturer. They create economic utility for consumers by providing the products in the form and at the place and time desired by the consumer

CHAPTER 7

RELEVANCE IN THE DISTRIBUTION PROCESS

Retailing is the final stage in a channel of distribution, which comprises all of the businesses and people involved in the physical movement and transfer of ownership of goods and services from producer to consumer. Another distribution function that retailers perform is to communicate with their customers and with their manufacturers and suppliers. Customers are informed about goods and services, special sales etc. via ads, sales personnel and store displays. Manufacturers and wholesalers are informed about sales forecasts, customer complaints, defective products etc. from retailers. For small manufacturers and wholesalers, retailers can provide assistance by transporting, storing, marking, advertising, and pre-paying for merchandise. Retailers also complete transactions with customers.

DISTRIBUTION PROCESS

MANUFACTURER

WHOLESELLER

RETAILER

DISTRIBUTION PROCESS

CHAPTER 8

CLASSIFICATION OF DIFFERENT RETAIL INSTITUTIONS

The term retail institution refers to the basic format or structure of a business. Given below is a classification. INDEPENDENT An independent retailer owns only one retail unit. CHAIN A chain retailer operates multiple outlets (store units) under common ownership; it usually engages in some level of centralized (or coordinated) purchasing and decision-making. FRANCHISING It involves a contractual agreement between a franchisor and a retail franchisee, which allows the franchisee to conduct a given form of business under an established name and according to a given pattern of business. Typically, the franchisee pays an initial fee and a monthly percentage of gross sales in exchange for the exclusive rights to sell goods and services in a specified area. CONVENIENCE STORE A convenience store is usually a retailer that is well located, open long hours, and carries a moderate number of items. Its a small store with average prices, goods and services. DEPARTMENT STORE A Department store is a large retail unit with an extensive assortment of goods and services that is organized into separate departments for purposes of buying, promotion, customer service and control.

CONVENTIONAL SUPERMARKET A conventional supermarket is a departmentalized food store with a wide range of food and related products; sales of general merchandise are rather limited. SPECIALTY STORE A specialty store concentrates on selling goods or service line, such as apparel and accessories, toys, furniture. In contrast to a mass marketing approach, specialty stores usually carry a narrow assortment in their chosen category tailoring to selective market segments. DISCOUNT STORE It is a type of department store with following features: 1 High-volume, low-cost, fast-turnover outlet. 2 Centralized checkout service. 3 Lower operating costs. 4 Clear customer focus: shoppers looking for good value. FACTORY OUTLET A factory outlet is a manufacturer-owned store selling manufacturer closeouts, discontinued merchandise, irregulars, cancelled orders, and, sometimes, in-season, first quality merchandise. Factory outlets can be profitable despite prices up to 60 percent less than customary retail prices due to low operating costs. At factory outlets, manufacturers can decide on store visibility, set promotion policies, etc. E.g. .Levis Factory Outlet Store at Marine Lines, Mumbai. Reebok, Nike & Adidas Stores on the Delhi-Haryana border. DIRECT MARKETING

It is a form of retailing in which a customer is exposed to a good or service through a non-personal medium (e.g. Direct mail, T.V., radio, magazines, or internet.). It has the following features: 1 Low costs and inventories 2 More geographical coverage. 3 Convenience for customers. 4 No prior to purchase examination of goods. DIRECT SELLING Direct selling includes both personal contacts with consumers in their homes as also phone solicitations. The strategy mix for direct selling emphasizes convenience in shopping and a personal touch. Besides, for the retailer, direct selling has lower overhead costs. VENDING MACHINES A vending machine is a retailing format involving the coin-or card-operated dispensing of goods and services. It eliminates the use of sales personnel and allows for 24-hour sales. WORLD WIDE WEB Is another aspect of modern retailing. I shall touch upon this in our part on role of I.T. in retailing.

CHAPTER 9

COMPARISON OF RETAIL FORMS

The forms in retailing industry structure are compared on the following parameters. 1. Control that the owners exercises over the retail unit 2. Flexibility that an individual retail outlet enjoys in terms of its target market, its location, store hours, product assortment and/or the prices it changes. 3. Economies of scale that the particular type of retailer enjoys, in terms of supply and purchase economies (achieving bargaining powers with suppliers gaining distribution rights for new items as they are introduced, getting service and selling support, getting reorders filled promptly, access to advertising media), operational economies (cost efficiencies), automation, managerial economies and/or risk-bearing economies. 4. Long run planning 5. Competition faced by each type of retailers. 6. Leading concerns for each type of retailers.

Comparison Across Types of Retailers

Sr. No. Characteristic Independent Retailers s 1. Control Corporate Retail Chains(CRC)

Direct control of *Reduced managerial control strategy, image and because of geographical consistency; centralized dispersion. decision-making *A level of centralized or coordinated purchasing & decision making is seen. * Lack of communication & time delays affect making & implementing decisions

2.

Flexibility

Enjoy flexibility in location & strategy

Limited flexibility as well established norms have to be followed Efficiency in multiple store operations through shared warehousing facilities, volume purchases, centralized decision-making as regards personnel, purchasing, pricing, advertising, sales training & financing policies Considerable time & resources are devoted; even specific personnel are there who assigned this task

3.

Economies of Few, even if & only if Scale operating on a large scale

4.

Long Run Planning

Owner intimately involved in daily operations, therefore responsiveness to new legislation, products & competitors suffers

5.

Competition

High because of * Ease of entry * Low capital requirements (as compared to CRC) * Simple licensing provisions

Lower because investment costs are high Individual outlets face competition from players offering similar assortment of goods/services

6.

Leading Concerns

* Identification of successors

In addition to maintaining consistent retail marketing strategies in all branches, * Roles & dependence adapting to local needs of the on no-family employees target market * Management training for family members

Comparison Across Types of Retailers

Sr. No 1. Characteristic Franchise Systems Leased Department

Control

High degree of control High degree of control exercised exercised by the by the leaser resulting into franchisers, esp. inflexibilities described further through the contractual agreements Contract provisions limit the franchisees' flexibility, e.g. by enforcing centralized purchases through franchisers or Limited in terms of hours for which the department is open and in terms of operating style & offering which are influenced by the parent store

2.

Flexibility

purchases from certain approved vendors 3. Economies of High, due to volume Scale purchases by the overall firms and due to cooperative marketing programs LDs are used by existing storebased retailers to broaden merchandise & service offerings into product categories requiring highly specialized skills or knowledge not possessed by retailers themselves LDs pay for inventory, personnel, security equipment & outside display window expenses

4.

Long run Planning

Limited involvement of Not at all influenced by the the franchisees in the interests of the LDs alone strategic planning process None from own firm as Care is taken that LDs do not they get exclusive live off the traffic generated by selling rights for other parts of the store specific geographical territories *Termination or non- *Raise in rent renewal of franchises * Renewal once leases expire * Franchises cannot be * In-store locations may not sold or passed on to generate expected sales heirs without approval from the franchiser

5.

Competition

6.

Leading Concerns

CHAPTER 10

THE RETAIL STRATEGY MIX

A retailers ability to devise & apply a sound retail strategy depends on how well that firm identifies & understands its customers, & forms its retail strategy mix to appeal to them. Thus, in this section, I shall briefly look at 1. Retail Target Markets 2. The Retail Strategy Mix.

RETAIL TARGET MARKETS

A retail firm must identify the characteristics, needs and attitudes of consumers and then devise an appropriate target market plan. It must consider the demographics, lifestyles, consumer profiles, shopping attitudes, decision making process of its target market.

THE RETAIL STRATEGY MIX:

Comprises of 4 aspects: 1 2 3 4 Merchandise management Business location Retail Pricing Promotional strategy.

MERCHANDISE MANAGEMENT Merchandising consists of the activities involved in a retailers buying goods & services and making them available for sale. Process for implementing merchandise plans: 1 Information is gathered about target market needs and prospective suppliers. 2 The retailer chooses firm-owned, outside, regularly used and/or new supply sources of merchandise. 3 The merchandise under consideration is evaluated through inspection, sampling and/or description. 4 Purchase terms are set. They may have to be negotiated in their entirety or through uniform contracts. 5 The purchase conclusion is made-manually or automatically. 6 Merchandise handling decisions are taken relating to receiving & storing, price & inventory marking, displays, pilferage control etc. 7 Reordering decisions are made. 8 Re-evaluation of merchandising plans takes place.

BUSINESS LOCATION: The choice of location is crucial because of the complex decision making involved, high costs, immobility after site selection and its possible impact on the retailer strategy. The selection of store location consists of 4 steps: a) Trading area analysis: A Trading area is a geographical area from which a retailer draws customers. Trading areas may be delineated by using trend analysis, consumer surveys, Reillys law of retail gravitation and Huffs law of shopper attraction b) Determining desirable location: There are 3 basic location types to choose from:

1 The isolated store 2 The unplanned business district 3 The planned shopping center

c) General site for the business: First, the specific form of isolated store is decided. Then , the general location is picked say a particular street, colony or shopping center. d) Specific site selection: For this purpose, factors like traffic, parking facilities, transport, attributes of the site, terms of occupancy should be considered. An overall rating is then computed for each location and site, and the best is picked.

RETAIL PRICING: Pricing is a crucial strategic variable due to its direct relation with a firms goals and its interaction with other retailing elements. A pricing strategy must be consistent with the retailers overall image, sales, profit and ROI goals. Pricing strategy: A retail price strategy has 5 steps: objectives, policy, strategy, implementation and adjustments.

RETAIL PROMOTION: It is broadly defined as any communication by a retailer that informs, persuades, and/or reminds the target market about any aspect of that firm. Advertising, P.R., personal selling and sales promotion are the 4 elements of promotion. Steps in planning a promotion strategy: 1 Goals are stated in specific and measurable terms. Positive word of mouth (WOM) is an important long-term goal. 2 An overall promotion budget is set on the basis of one of these techniques: all you can afford incremental, competitive parity, etc. 3 The promotional mix is outlined, based on the firms budget, the type of retailing involved, the coverage of the media, and the hierarchy of effects. 4 The promotional mix is enacted. Included are decisions involving specific media, promotional timing, message content, sales force composition, particular sales-promotion tools, and the responsibility for coordination.

CHAPTER 11

INFORMATION TECHNOLOGY & RETAILING

The advent of information technology has significantly impacted the way retailers do their business. In this part, we shall briefly look at these aspects of IT with respect to retailing: RETAIL INFORMATION SYSTEMS For any retail strategy, gathering and reviewing information is valuable. For this, retailers use the RIS (Retail information systems) which anticipates the information needs of retail managers; collects, organizes, and stores relevant data on a continuous basis; and directs flow of information to the proper decision makers. As computer technology has become more sophisticated and less expensive, more retailers are developing comprehensive information systems. 2 very popular systems are: 1. UPC- Universal product code, and 2. EDI-Electronic Data Interchange. Also, to improve inventory planning and forecasting, a new program is now in place. It is called CPFR- collaborative planning, forecasting and replenishment. Also gaining importance is the concept of Database Management, which is used to gather, integrate and apply information related to specific areas. DATABASE MANAGEMENT CONSISTS OF Data warehousing: Here, the copies of all databases in the company are stored in 1 location and are accessible to any employee anywhere. Data Mining & Micromarketing: Data Mining involves the in-depth analysis of information to gain specific insights about customers, products, vendors etc. Micromarketing is an emerging application of data mining whereby the retailer

uses differentiated marketing and develops focused retail strategy mixes for specific customer segments. NON-TRADITIONAL RETAILING The various new forms of non-traditional retailing are as follows: THE WORLD WIDE WEB: The Web is a useful tool for retailers as it projects a retail presence, helps to generate sales, and most importantly, provides information to customers. E-TAILING The retailing community has accepted and realized the fact that the consumers want to choose between the variety of brand and value for money is their topmost priority. The big retailers have to deliver a consistent branded experience. Technology has made a difference in retailing also. E-tailing (through internet) is considered to be eroding the store retailing slowly. Is it the real picture? With the concept of B2C (Business to Consumer Transactions over internet) coming up at a fast pace, an intimate two-way access is emerging between the retailer and the customers. Customized products are offered to the customers. For instance while one buys a book through Amazon.com, a synopsis of the book, its reviews, its prominent readers and other books of the same author are some of the information provided to the customers. Within minutes of placing an order, one gets a confirmation thus saving time and satisfying the customer. The penetration level of the internet is increasing at a pace that the reach would be equivalent to what television took about 40 years and that cable about 15 years. In online services and the web, the retailers seek out the customers unlike the traditional model where the customer goes to the store and locates the product. The busy life-style of the consumers in this hectic era, tilts the preference needle towards the online retail model. However, B2C success depends on the behavioural and attitudinal changes in customers. First, the customers have to be familiar with Internet and have to be informed about buying on the net. Then, the customers have to build the mentality to trust the e-sellers and be convinced on the products quality. One survey in 2008 showed that only 4% have ever used net shopping though 40% are aware of it. But 10% of the representatives do not trust the quality

in net shopping. This shows e-tailing (stand alone) has a long way to go in India. The major advantage of the retailers in India is that, most of the products operate on the push factor than pull factor. In order to popularise their products the manufacturers have to attract the customers to feel the products, physical existence and this is enabled by the retailers. Instead of viewing e-commerce as a threat for retailing the big retailers can embrace technology and provide value added and personalised services to the customers. In the recent times, companies like ARCHIES have used technology to their advertisement and increased their sales. By promoting, Fathers day, mothers, sisters, friendship, valentines, and even egg and Love at first sight days, Archies has been successful in pulling crowd in their galleries all over India.

The big retailers can learn the lesson from Archies. A recent Technopark survey finding showed that Apparels and Consumer durables occupy the top slot in priority for shopping in India. Apparels and Consumer durables and for that matter even footwear are those products which gives satisfaction when you feel it. How can the big retailers use technology in this? Technology is so flexible that it can coexist with business anywhere. The big retailers have to have their websites to combat the competition from e-tailing. For instance for clothing, the big retailers can show the variety and design offered by them through the net. A virtual experience can be provided and the customer can have n option whether to visit the shop or shop from home. If the virtual round through the shop is irresistible, the customer will definitely come to the shop for an experience at least. Thus, in this era of Information Technology store and retailers have to become technology savvy to satisfy customer preferences. The consumer mercantile activities grouped into three phases, pre-purchase preparation, purchase consummation and postpurchase interaction have to be properly incorporated with technology.

FOLLOWING ARE EXAMPLES OF E-TAILING: 1 Shopping robots, called bots are computerized comparison programs that enable online shoppers to search 100s of sites and obtain the best price. They have resulted in a shift of power to the consumer. 2 Electronic banking is the hottest thing in service retailing. It helps customers to transact 24 hours a day, 7 days a week at a variety of locations. It includes modern facilities like ATMs, electronic debit payments and smart cards. 3 Besides, things like electronic gift certificates and interactive electronic kiosks are modernizing the shopping experience of customers. 4 Retailers like Amazon.com, Wal-mart & Fabmart.com are leaders in web-based retailing.

OTHER EMERGING, FAST-GROWING NONTRADITIONAL RETAIL INSTITUTIONS ARE: VIDEO KIOSKS: The video kiosk is a freestanding, interactive, electronic terminal that displays product related information on a video screen. Although some video kiosks are located in stores to enhance customer service, others enable customers to place orders, complete transactions and arrange for products to be ship AIRPORT RETAILING: Is one of the fastest growing sectors in retailing. Today, at virtually every airport, there are full blown shopping areas. Some of its features are as follows: 1 The group of prospective shoppers is rather large. 2 Air travelers are a temporarily captive audience, looking for a way to fill their time. 3 Sales per square foot of retail space at airports are usually 3-4 times higher than at regional malls.

CHAPTER 12

RETAILING SCENARIO - INDIA

India considered by many as the country of shopkeepers is true to a large extent because India has 5.5 outlets per 1000 people, which puts India in a unique position of having the maximum number of outlets in comparison to any other country in the world. Small independent outlets currently are dominating Indian scenario, in fact they contribute as much as 96% of the total retail sales. But with increasing number of nuclear families, working women, greater work pressure and increased commuting time; consumers are looking for convenience. And, convenience is defined as having everything under one roof and multiplicity of choice. This offers an excellent opportunity for organised retailers in the country. Growth & development of organised retailing in India will be mainly influenced by two factors: Price & benefits the consumers can't resist. Economies of Scale will drive down the cost of the supply chain and increases benefits offered to the customer interface. The Retail Sector of Indian Economy is going through the phase of tremendous transformation. The retail sector of Indian economy is categorized into two segments such as organized retail sector and unorganized retail sector with the latter holding the larger share of the retail market. At present the organized retail sector is catching up very fast. The impact of the alterations in the format of the retail sector changed the lifestyle of the Indian consumers drastically. The evident increase in consumerist activity is colossal which has already chipped out a money making recess for the retail sector of Indian economy. With the onset of a globalized economy in India, the Indian consumer's psyche has been changed. People have become aware of the value of money. Nowadays the Indian consumers are well versed with the concepts about quality of products and services. These demands are the visible impacts of the Retail Sector of Indian Economy. Since the liberalization policy of 1990, the Indian economy, and its consumers are getting whiff of the latest national & international products, the with help of print and electronic media. The social changes with the rapid economic growth due to trained personnels, fast modernization, enhanced availableness of retail space is the positive effects of liberalization.

The growth factors of the retail sector of Indian economy:

Increase in per capita income which in turn increases the household consumption Demographical changes and improvements in the standard of living Change in patterns of consumption and availability of low-cost consumer credit Improvements in infrastructure and enhanced availability of retail space Entry to various sources of financing

The infrastructure of the retail sector will evolve radically. The emergence of shopping malls are going steady in the metros and there are further plans of expansion which would lead to 150 new ones coming up by the year 2010. As the count of super markets is going up much faster than rate of growth in retail sector, it is taking the lions share in food trade. The non-food sector, segments comprising apparel, accessories, fashion, lifestyle felt the significant change with the emergence of new stores formats like convenience stores, mini marts, mini supermarkets, large supermarkets, and hyper marts. Even food retailing has became an important retail business in the national arena, with large format retail stores, establishing stores all over India. With the entry of packaged foods like MTR, ITC Ashirbad, fast foods chains like McDonald's, KFC, beverage parlors like Nescafe, Tata Tea, Caf Coffee and Barista, the Indian food habits has been altered. This stores have earned the reputation of being 'super saver locations'. With the arrival of the Transnational Companies(TNC), the Indian retail sector will confront the following round of alterations. At present the Foreign Direct Investments(FDI) is not encouraged in the Indian organized retail sector but once the TNC'S get in they would try to muscle out their Indian counterparts. This would be challenging to the retail sector in India. The future trends of the retail sector of Indian economy:

The retail sector of Indian economy will grow up to 10% of total retailing by the year 2010. No one single format can be assumed as there is a huge difference in

cultures regionally. The most encouraging format now would be the hypermarts THE ROAD AHEAD

Successful retailers of the future will be those, who invest in predicting consumer wants and needs, who develop innovative solutions to address those needs and who create organizations poised to capitalize on changes as when it occ WHAT RETAIL MIGHT LOOK LIKE IN INDIA? Thanks to a massive population and indications of better levels of disposable incomes side by side with awareness emerging, retail is being seen as a massive emerging opportunity in India. Naturally, since retail revolutions took place in the more developed markets much earlier, the feeling is that India can draw from their experiences. Although, given India's own unique characteristics, expectations are that as the retail scenario evolves (surely rapidly now), the country will emerge with its own retail models as well. Yet, consultants say that there are enough models out there in the developed part of the world that will find acceptance here, even though they may find some modifications to suit local needs better. The challenge, really, is in the re-invention. There are certain formats these consultants feel can work in India: 1 Small stores, with complex but efficient supply chains 2 Small supermarkets that run on brand variety and tight inventory control 3 A mix of food and general merchandise stores 4 Out-of-town shoppatainment complexes 5 Mid-sized retail propositions within town limits 6 Small corner outlets with integrated home delivery Effectively, then, leaving out hypermalls of the US kind, other retail models are possible in India, though a model cannot really be moved across borders piecemeal. What can come in piecemeal, however, is the supply chain management model attached to a broad model that is being transferred. Again, consultants say that you have to build on what's already there -- you can't just wipe the slate clean

and start afresh. And so the likes of catalogue or mail order buying will not necessarily lose significance. Make it more efficient and it can work. However, since in a lot of product categories, the consumer may prefer a touch-and-feel before taking a decision, display outlets sans on-premise stocking can support these kinds of formats. Take your pick, order and get it all delivered at home. E retailing could also adopt something like this combination. There are no strict rules anywhere, anymore. And rural India? Maybe that's where a modified multi-product hypermart could work, is the opinion. And the best model? No, there are no ideal models - adopt/adapt/develop the best fit from what's out there in the West. And here in India. The bottom-line: there are basic commonalities in retail evolution in any market. As incomes rise, value additions go up. As value adds go up, retail models gain significance. And then come shakeouts and consolidations. That's the ground reality. You just can't shake that.

CHAPTER 13

PROSPECT OF RETAIL IN INDIA

Retailing, today, provides jobs to roughly 15 % of employable Indian adults, & is perhaps the largest contributor to India's GDP. But the flip side of the coin is that today practically there are no institutes offering retailing as a vocational / professional education. Whereas the growth of the industry clearly indicates that in the next ten years nearly one million new jobs will be created in the organized retail sector alone. The first steps towards sophisticated retailing are being taken, but today the biggest task before organized retail organization is to locate and recruit knowledgeable, skilled and trained staff to handle their operations. So to stay ahead of the pack in today's competitive and challenging retail world, one must be equipped and trained to get into this industry.

PROSPECT FOR ORGANIZED RETAILING IN INDIA

Is there a future for organized retailing in India, and if so, in what form? Firstly, some facts must be kept in perspective. Indian private consumption in the year 2000-01 is estimated at about Rs 1,250,000 Crores. Simplistically put, this is therefore the size of total retail business in India. The present retail business is largely accounted for by over 12 Million retail outlets of all shapes and formats, and supported by street vendors, hawkers, food service outlets as well as periodic street Bazaars and Haats. Organized retailing accounts for a mere Rs 14,000 Crore or so (about 1.25%). India has amongst the lowest per capita retail space availability in the world. As per a recent study, India needs to create at least 110 Million square foot of additional retail space per year for several years just to meet the demand created on account of a sustained GDP growth rate of about 6%. So far, the government of India as well as State and local municipal bodies have failed to fully understand the drag on the economy of an inefficient retail (and retail space development) sector. This space crunch is leading to a situation where in prime retail space commands

exceptionally high rates. Thirdly, Indian manufacturing sector has been kept on all kinds of leash including reservations under small scale. Over the decades, the sector has become highly fragmented and it will take years of effort to rejuvenate the same to deliver high quality products at competitive prices and under reliable delivery conditions.

Fourthly, the urban as well as suburban infrastructure development has not kept pace with growth of population. As a result, there is more pressure on time due to increase in traffic and commute. This has led to an actual reduction of distance that consumers travel from their home for non-work related activity. And finally, consumers expectations in terms of product and services have undergone a sea change in the last 10 years and still undergoing major changes. Value was earlier having a single determinant: Price. Today, for the middle class and upward customers, Value is a complex equation having Quality, Comfort, Image and Convenience on one side and Price, Time taken, and Hassle to shop on the other. Under these operating conditions, new Retail start -ups must have a very well thought out Unique Selling Proposition which on one hand enables them to attract consumers away from the traditional shopping options to come to their own retail outlets (and once they are in, to seduce them into purchasing) and on the other hand, offer additional Value to the consumers while generating the required additional operating profit margin to pay for the higher cost of operation (as compared to the traditional retail outlet that typically has practically no rental or real estate costs thanks largely to archaic real estate / rent control laws, and has practically negligible operating expenses due to a bare bone infrastructure and manpower). Traditionally, the four major variables that retailers can play with when trying to create a USP include:

PRODUCT This refers to the category mix, and within each category the width and depth of merchandise on offer, and its quality related selection. It can also refer to

the choice of merchandise if it is on the leading edge or trailing edge of innovation or fashion. SERVICE This refers not only to the commonly assumed parameter of how many sales people are there to serve or if tea or a cola is served to customers but to operational parameters such as availability of the promised merchandise at all times in expected sizes, shapes, colors, assortment et al. Service can also refer to policies such as returns or exchanges, warranties and guarantees, availability of qualified personnel to assist customer queries or request for information. EXPERIENCE This is a crucial intangible and can be a function of several factors e.g. overall store ambience; ease of shopping in terms of layout of merchandise, labeling, check-out convenience and speed, access to the store itself including parking, customer relationship effort from the store management etc. PRICE Finally, this is the fourth major variable for creating the USP. Low price itself can be the most important parameter in some instances, but more importantly, it can also imply the appropriate price as perceived by the consumer after subjectively assessing the impact of the other three variables mentioned above. As far as India is concerned, there have been relatively few start-ups with a clearly defined USP. Most have, so far, tried to offer all of product, service, experience and price without realizing that compromises have to be made on one or more if the business itself has to be financially and operationally viable. From a consumers perspective, she would obviously like the maximum choice with exceptional service and a wonderful experience all at the lowest price! Consumers demand for new format shall be driving the growth for organized retailing. However, it must also be kept in mind that consumer expectations are also evolving and changing rapidly over time. Thus, for example, Department Stores per se were a novelty for the Indian consumer at the beginning

of the 90s. The ability to look at and shop for major national brands under one roof was a major USP and therefore Shoppers Stop had an excellent run in its first 5-6 years of existence. However, as more and more retailers upgraded the space and size of their own outlets and more apparel companies opened exclusive outlets offering a larger width and depth of product, this USP seems to have lost its sheen. With the advent of Shopping Malls that offer multiple brand choices, department stores such as Shoppers Stop have to reinvent their USP or else they are likely to lose business to exclusive stores of the same brands operating in the same Malls (or others in the close vicinity). Another example can be in the Durables sector. The opportunity is ripe for start-ups of national or large regional chains offering a wide range of consumer durables (white and brown goods, entertainment electronics, office / home computing and accessories, and small gadgets and home appliances). The USP can be built-up on the line indicated as under. Thus, to summarize, the emerging organized retail sector offers unparalleled opportunities to entrepreneurs and existing businesses seeking an entry in Retailing. The consumers are open to change, and several USP platforms can be occupied since at present, the canvas is more or less blank. However, the new entrants should carefully strike a balance between what the perceived need of the consumer is and what is financially prudent and operationally feasible from the business perspective. Having taken a decision for a particular format and its USP, the business managers must periodically review the external developments to assess if the original USP is still relevant and in case the external environment has changed, then reinvent the format and its USP so as to continue to have relevance in the Indian context.

CHAPTER 14

RETAIL IN THE NEXT DECADE

Apparel manufacturers of the future respond to consumer needs at the speed of light. Through the 1990s, manufacturers struggled to meet the demands of larger retailers, adding more services, and being more responsive. But it was not fun, and it was not always pretty. Much focus was placed on costs, inventory, stock outs and lead times. QR as an industry had been shoved aside by supply chain management (SCM), and everyone learned new terminology and figured out what else had to be done to be a "player." Manufacturers, if they were still actually manufacturing, were moving more of their operations offshore, taking advantage of multiple trade agreements and favorable cost structures in Mexico, the Caribbean, Central and South America, China, and elsewhere in the Far East and Asia. Pressures continued to compress lead times, blurring roles between manufacturing, garment sourcing and retail space management.

WHAT DOES THE FUTURE LOOK LIKE?

TOTAL CONNECTIVITY By the next decade or so, total connectivity between supplier partners has been achieved. Costs would have been reduced to bare minimum and sourcing options would be cheap and plentiful. The implication, therefore, is that competition would be based on product (style/quality), service and convenience all three of which would be key drivers for the consumer. The focus would be on the consumer. THE SUPPLY CHAIN WOULD BECOME BOTH CIRCULAR AND VIRTUAL In the next decade, the supply chain is no longer a chain at all, evolving from a linear model - that constrains flow of information and products - to one that is both circular (centered around a consumer and market) and has fewer links (and is

more virtual). By the time there is total connectivity and therefore visibility, the natural evolution will involve the elimination or merging of some chain links. Clearly, those that add little or no value will be the first to go. Others traditional will form strategic partnerships or develop new services to differentiate themselves.

TRADE BARRIERS WOULD BECOME OBSOLETE All tariffs and trade barriers would become obsolete by the end of the next decade. Free trade would prevail, at least in those countries that are worth doing business with and in. Manufacturing would still find a home based on cost, assuming adequate labor and convenient logistics. In addition to low cost, manufacturers would also take into account speed and responsiveness, especially for more basic replenishment-oriented apparel. Regardless of origin, more focus will be placed on worker conditions and labor issues - driven first from the consumer and then to retailers and manufacturers. With proliferation of satellite constellations and digital infrastructure, telecommunications will cease to be a constraint. TECHNOLOGY AND ELECTRONIC COMMERCE WILL BE THE KEY DRIVERS By 2008, computer-integrated manufacturing will be fully in use and will span access to key information across multiple supply chain partners. Additionally, as partners work more collaboratively within their value chains, they will depend upon tight integration and communication via GroupWare-type applications. This will apply to all areas, including product design and development, forecasting, order fulfillment, manufacturing, etc. Mass customization through body scanning and sculptured machines will be common among progressive manufacturers and retailers. Advances in fibers and fabrics and equipment sophistication will enhance manufacturing speed, flexibility and automation. Technology will facilitate consumer customization, allowing the consumer (via home computer or store kiosk) to review upcoming product lines, styles, and review color palettes, enter custom specifications, and order a garment for shipment to her or his home within a three- to seven-day timeframe. From a

fulfillment standpoint, a manufacturers order management system would not care whether an electronic order comes from a retail customer for 200 dozen, or from a consumer for one garment. RETAIL WOULD EXIST IN DIFFERENT FORMATS AND MARKETS Retailing as we know would be dead. Large retailers would exist, but they would exist in completely different formats and markets. Consumers would have moved away from anything associated with traffic, unsecured parking etc. Malls, on the other hand, will still exist, as consumers will continue to be attracted by new "experiences" in safe, secure environments that offer a variety of entertaining options - shopping, restaurants, theaters, theme parks, etc. Leading retailers will give consumers easy access to custom apparel at many price points with differentiated products. They will do anything to give shoppers a reason to leave their homes. The implication for manufacturers is that, to survive, it is essential to give retailers custom products tailored for the door level - no two stores will be alike. Virtual (internet) malls will be huge, giving consumers access to infinite product lines and brands, without having to drive to dozens of different individual brand "stores". Logic dictates that, at least initially, only certain uncommon, hard-to-find retailers with non commodity products win have any kind of profitable presence online. Increasing flexibility - if it is not in the store, it will be shipped directly to the consumer within 24 hours. Channel will continue to be a myriad of options, from various store alternatives (department, chain, mass, specialty, etc.) to non store direct-to-consumer offerings. And finally, product, brand and differentiation will be more important than ever.

CONSUMER EXPECTATIONS IN THE NEXT DECADE Consumer needs and demands drive the value chain. What will the consumer want 10 years from now, and how will that evolve over the next decade? The answer lies in realizing what today consumer wants is: 1. Selection: Selection means the retailer has what the consumer wants when he or she wants it. 2. Value: Value is a perception of quality for price and is often a factor of brand image. 3. Convenience: Convenience says that finding a comfortably fitting branded style at the right price will not take more than one short trip if, in fact, a trip is necessary. What does this imply? One possible hypothesis is that if the consumer knows the desired brand and style, why shop? Leading retailers will offer Direct Consumer Distribution, based on customer specifications from the consumer (particular style garment, but with pattern/color change and customer sizing). This points to direct marketing and personal electronic services, which are already developing today.

CHAPTER 15

CHALLENGES AHEAD FOR RETAILING

Organized retailing is not a bed of roses for the big players also. In addition to the advent of Internet, various issues glare at retailing. Some of them are HUMAN RESOURCE: Big retail shops do not confine their target segments for employees to undergraduates. Shoppers Stop broke the myth of MBAs not wanting to go into the retailing career. Cross Roads and Spencer also hire MBAs to manage their chains. However there still exists a gap between the supply and demand of professionals. Mr. Goenka, chairman RPG Group, hopes that one of the greatest challenges facing modern retailing in India is the availability of trained personnel. In order to address the problem RPG Group has set up a national retail Institute in Chennai, which, offers a variety of courses in retail management for frontline, supervisory and managerial post. Retaining the human resources is also a major challenge for these big retailers. The bigwigs like Crossroads offer high compensation and create a cohesive environment that makes an employee proud to be a part of such big retail chains. SPACE AND INFRASTRUCTURE To establish a retail shop/ Mall, the real estate and the infrastructure are very vital. The expenditure and availability on both the accounts do hinder the growth of the retail chain. The land ceiling restrictions and other state restrictions on land use have prevented the growth of efficient retailing in the cities. An average investment of about Rs. 5 crore is required to establish a mall and that explains the rush of big companies into this business. Small and individual retailers find it difficult to pour in that much of investment. In addition to the initial investment, to combat e-tailing, expenditure has to be incurred on technological side. This makes the retail projects less attractive for the individual players.

CONSUMER MINDSET TOWARDS DISCOUNT STORES In India the concept of discount stores like Wall-Mart, at which genuine, defect free international brands are available at 50% discount, is yet to catch on. Still, the major section of customers is conservative and choosy and prefers to go to a known retail shop than opt for a discount store. Very few discount stores like SM2, Mumbai are at present operational. Its reach is confined to major cities. Breaking the conventional mindset of the Indian consumers that discount stores do not sell inferior goods will take some time. RURAL MARKET- HOW TO PENETRATE? Penetration into the rural market is what big retailers have to concentrate on for growth. Attracting rural markets will be different from that of the urban market. For example detergent cakes are preferred to powder and coconut oil in bottle to sachets in the rural areas. The rural consumer are different from the urban consumers as they are more price sensitive and their quantity of consumption would be less as their share of wallet for shopping along with entertainment is delineated. Food and agricultural inputs dominate the rural consumers list and whatever is left would be used to fulfill aspirational needs. Customers in the rural area are not urbanites without money. He has a distinct identity and value system. One more challenge in the rural market is that shopping habits vary according to seasons. During harvest time, the spending of a rural consumer increases compares to other times. However, penetration of television, increasing literacy levels, mobility between rural and urban areas and telecommunication (STD Services) have increased their awareness towards branded products and entertainment. Customized retail shops would be a big success in the rural areas too if the right strategies are adopted.