3: OPPORTUNITIES AND CHALLENGS IN

RETAILING

RETAIL AND SUPPLY CHAIN MANAGEMENT

Dr. Manish Bansal
Copyright 2012 Kalyani Publishers. All Rights Reserved.
 Learning Objectives

❑ Emergence of Organized Retail

❑ Challenges faced by Organized Retailers in India

❑ Challenges for Organized Retailers in Rural Areas

❑ Opportunities for Retail Sector in India

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
Beginning of Organized Retailing Globally

Source: Euromonitor, AT Kearney

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
CHALLENGES

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
CHALLENGES FACED BY RETAIL SECTOR IN
INDIA

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 TECHNOLOGY

➢The availability, feasibility and the adoption of the appropriate technology in a cost
effective manner is the biggest challenge
➢ It is not economically possible for all the emerging players to adopt the technology in the
first stage of their business
➢ Among those who adopt it, all of them cannot implement it every business domain such
as logistics, theft prevention, and front end billing, back end store management
➢ Hence the overall integration is not achieved

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
TRANSPORTATION

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
SKILLED WORKFORCE

Senior
Management
sent from the
country of
origin of
Retailer
Middle and
lower level
employees
sourced from Local retailers
the country of
operations have to pay
higher cost in
order to retain
their key
employees; which
ultimately affect
their finances

Workforce Friction Wheel in Retail

Copyright 2012 Kalyani Publishers. All
Rights Reserved.
 SKILLED WORKFORCE...
SKILL REQUIREMENTS AND SKILL GAPS IN RETAIL
At Junior Level (Associates and Executives)

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 SKILLED WORKFORCE...
SKILL REQUIREMENTS AND SKILL GAPS IN RETAIL
At Middle Management Level

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 STOCK SHRINKAGE

➢ Shoplifting is the theft of goods from retail establishment.

➢ Package Pilferage is theft of part of contents of a package.

➢ It may also include theft of contents but leaving the package, perhaps resealed
with dummy material.
➢ Small packages can be pilfered from larger package such as shipping container.

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 CHALLENGES...
➢Inventory Management
➢Inaccurate inventory records alone cost companies, on average, 10% of profits a year
➢Supplier frauds multiplication effect
➢The vendors generally have the tendency to supply material with a revised amount
of products than what was agreed to.
➢The quantity of the supplies is so high, that this amount multiplies and loss figure
also multiplies.
➢Customer retention
➢ Customers today have wide range of options
➢ Customers today are informed and evolved
➢ Need best quality product at most economical price

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 CHALLENGES...
➢ Consumer Perspective
➢Most consumers do not have access to transportation
➢ They tend to buy at proximity to homes
➢ Inefficient infrastructure

➢ Regular Supply of Electricity

➢ Cost of Rentals

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 CHALLENGES...
➢ Competition from unorganized sector
➢ Organized retail accounted for just 4% of the market
➢ Unorganized stores generally cater to the customers within their neighbourhood
and offer personalized services such as:
➢Direct credit to customers
➢ Free home delivery services
➢ Has huge Loyalty benefits
➢They are:
➢Open longer hours
➢ Stock most of the goods required by the residents in a given area
➢ Provide credit and home delivery
➢ Supply products that they do not stock without any extra cost

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 CHALLENGES...
➢ Competition from unorganized sector

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
 CHALLENGES...
➢ Multiple Taxation
➢Retail Sector yet to be recognized as an Industry
➢Stock Management

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
CHALLENGES WITH
RESPECT TO
RURAL AREAS

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
CHALLENGES WITH RESPECT TO
RURAL AREAS
Lack of
Physical
Communicati
on Facilities

Different Many
way of Languages
Thinking and Dialects

Spurious Low Income

Products and
Seasonal
and Literacy
Demand Level
Copyright 2012 Kalyani Publishers. All
Rights Reserved.
Spurious Brands in Rural Areas

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
OPPORTUNITIES FOR
RETAIL SECTOR

Copyright 2012 Kalyani Publishers. All

Rights Reserved.
OPPORTUNITIES FOR RETAIL SECTOR

Copyright 2012 Kalyani Publishers. All Rights Reserved.

OPPORTUNITIES...

Urbanization of the Population

Copyright 2012 Kalyani Publishers. All Rights Reserved.

OPPORTUNITIES...

Population Growth Rate

Copyright 2012 Kalyani Publishers. All Rights Reserved.
Copyright 2012 Kalyani Publishers. All
Rights Reserved.