Retail

From Wikipedia, the free encyclopedia "Retail stores" redirects here. For the comic strip by Norm Feuti, see Retail (comic strip).

Drawing of a self-service store. Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.[1] Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power. Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing. Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.

Etymology

The Apple Store retail location on the Magnificent Mile in Chicago.

The world's only Garmin retail location is located on the Magnificent Mile in Chicago. Retail comes from the Old French word tailer (compare modern French retailler), which means "to cut off, clip, pare, divide" in terms of tailoring (1365[citation needed]). It was first recorded as a noun with the meaning of a "sale in small quantities" in 1433[citation needed] (from the Middle French retail, "piece cut off, shred, scrap, paring").[2] Like the French, the word retail in both Dutch and German (detailhandel and Einzelhandel, respectively) also refers to the sale of small quantities of items.

[edit] Types of retail outlets

San Juan de Dios Market in Guadalajara, Jalisco

The traditional market square is a city square where traders set up stalls and buyers browse the merchandise.these offer extremely low-cost goods. These stores are seen in local community often are family-run businesses. . This kind of market is very old. Retail is usually classified by type of products as follows:    Food products Hard goods ("hardline retailers") . with limited selection. Variety stores . warehouse clubs charge a membership fee. electronics. Normally retailers sell less fashion-oriented brands. Demographic . They offer considerable customer service. and countless such markets are still in operation around the whole world. A retailer of such store carries variety of categories and has broad assortment at average price. This store is ideal for emergency and immediate purchases.Inside a supermarket in Russia A marketplace is a location where goods and services are exchanged. furniture. There are the following types of retailers by marketing strategy:            Department stores . The square feet area of the store depends on the store holder.a rural store that supplies the main needs for the local community.retailers that aim at one particular segment (e. but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. often high-quantity goods piled on pallets or steel shelves.sell mostly food products. General store . However.. Mom-And-Pop : is a retail outlet that is owned and operated by individuals. In some parts of the world. Discount stores .warehouses that offer low-cost.appliances. Hypermarkets: provides variety and huge volumes of exclusive merchandise at low margins. apparel.g. the retail business is still dominated by small family-run stores. often bear a resemblance to a collection of specialty stores. sporting goods. The operating cost is comparatively less than other retail formats. Convenience stores: is essentially found in residential areas. They provide limited amount of merchandise at more than average prices with a speedy checkout. etc. The range of products are very selective and few in numbers. A pet store that specializes in selling dog food would be regarded as a specialty store.tend to offer a wide array of products and services. high-end retailers focusing on wealthy individuals). Specialty stores: A typical speciality store gives attention to a particular category and provides high level of service to the customers. Supermarkets . For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores.very large stores offering a huge assortment of "soft" and "hard goods.clothing. branded stores also come under this format. Soft goods . and other fabrics. but this market is increasingly being taken over by large retail chains. Warehouse stores .

The supermarkets can be anywhere between 20. Example: SPAR supermarket. for example. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. Unorganised retailing. refers to the traditional formats of low-cost retailing.000 and 40. owner manned general stores. Organised retailing refers to trading activities undertaken by licensed retailers. These include the corporate-backed hypermarkets and retail chains. They may adopt a Hi-Lo or an EDLP strategy for pricing. Here the retailers use drop shipping technique. the free encyclopedia A spice market Retailing is one of the pillars of the economy in India and accounts for 13% of GDP. Category killers or Category Specialist: By supplying wide assortment in a single category for lower prices a retailer can "kill" that category for other retailers. They endow with products. Pennyful and Ebay. such as electronics. E-tailers: The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep.700 m2). etc. Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. For few categories.    Supermarkets: is a self service store consisting mainly of grocery and limited products on non food items. Retailing in India From Wikipedia. Malls: has a range of retail shops at a single outlet. hand cart and pavement vendors. paan/beedi shops.[1] The retail industry is divided into organised and unorganised sectors. and also the privately owned large retail businesses. that is.000 square feet (3. those who are registered for sales tax. on the other hand. food and entertainment under a roof. income tax. the local kirana shops. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity. the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Example: Amazon. etc.[2] . convenience stores. However it is important for the customer to be wary about defective products and non secure credit card transaction.

Organized retail such supermarkets accounts for just 4% of the market as of 2008.000.000. The predictions for 2008 is 7.T. leaving a gap of 500.000 sq ft (19.Most Indian shopping takes place in open markets and millions of independent grocery shops called kirana. over thirty regulations such as "signboard licences" and "anti-hoarding measures" may have to be complied before a store can open doors. Current projections on construction point to a supply of just 200. India has topped the A. The Indian economy has registered a growth of 8% for 2007.000. it is valued at about US$ 395. Kearney‘s annual Global Retail Development Index (GRDI) for the third consecutive year. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent.000 supermarkets projected to come up by 2011. at a cost of US$15–18 billion.000 m2).000 m2) as compared to today.[3] Regulations prevent most foreign investment in retailing.000 sq ft (46. The unorganized retail sector is expected to grow at about 10% per annum with sales expected to rise from $ 309 billion in 2006-07 to $ 496 billion in 2011-12.96 billion. Rapid change with investments to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years.[7] According to the Icrier report. There are taxes for moving goods to states.000. the retail business in India is estimated to grow at 13% from $322 billion in 2006-07 to $590 billion in 2011-12.[6] With over 1. and even within states. Moreover. India has highest number of outlets per person (7 per thousand) Indian retail . from states.[3]  [edit] Growth An increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors.[8] [edit] The Indian Retail Market Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones.000. 300 malls are estimated to be operational in the country. It is a huge industry in terms of size and according to India Brand Equity Foundation (IBEF). maintaining its position as the most attractive market for retail investment.000 hypermarkets and 3.000.[5] The enormous growth of the retail industry has created a huge demand for real estate. India will need additional retail space of 700. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years.[4] The Retail Business in India is currently at the point of inflection.000 sq ft (65.9%.000 m2) that needs to be filled. Property developers are creating retail real estate at an aggressive pace and by 2010.

350).8 million households in India have an annual income of over 45 lakh (US$100. state-of-the-art home theatre systems. camcorders. Indulgence-oriented buying happens with those who want to enjoy life better with products that meet their requirements. washing machines. limitations of mass media and existence of counterfeit goods.by Ravi Bhatia * Previous Page . microwave ovens and DVD players fall in the status category. it is primarily the status-oriented segment that contributes largely to the retailer‘s cash register.[12] Big Bazaar: The Brand Building Challenge . there are significant challenges as well given that over 90% of trade is conducted through independent local stores.space per capita at 2 sq ft (0. Indulgence-oriented products include plasma TVs. iPods. and gaming consoles. complex distribution network. Challenges include: Geographically dispersed population. purchase decisions can be separated into two categories: status-oriented and indulgence-oriented.19 m2)/ person is lowest in the world Indian retail density of 6 percent is highest in the world. high-end digital cameras. Consumers in the status category buy because they need to maintain a position in their social group. When it comes to the festival shopping season. little use of IT systems.[9] 1. refrigerators.[10] Delving further into consumer buying habits.[11] While India presents a large market opportunity given the number and increasing purchasing power of consumers. CTVs/LCDs. small ticket sizes.14 Exhibit 10: Future Strategies of Big Bazaar . dishwashers.

Exhibit 11: Life Cycle of Big Bazaar .

0 .

Retailing has become such an intrinsic part of our everyday lives that it is often taken for granted. Almost all retail businesses have undergone a similar transition over the years. what was once a strictly made-to-order market for clothing has now changed into a ready-to-wear market. they also perform the retailing function. merchandise purchase policies. Retailing encompasses selling through the mail. freedom of choice and higher levels of customer service.e. agent. When manufacturers like Dell computers sell directly to the consumer. By the turn of the century some retailers set up a storefront where people could browse. The nations that have enjoyed the greatest economic and social progress have been those with a strong retail sector. However. and financing.5Share The distribution of consumer products begins with the producer and ends at the ultimate consumer. who links the producers and the ultimate consumers. while new pieces were being sewn or customized in the back rooms. Retail stores of different sizes face distinct challenges and their sales volume influences business opportunities. it also includes the sale of services like those offered at a restaurant. and type of clothing a person wanted to purchase and then waiting to have it sewn and shipped was the standard practice in the earlier days. merchandise. . Retailers‘ cost and profit vary depending on their type of operation and major product line. in order to survive in retailing. or organization which is instrumental in reaching the goods. Over the last decade there have been sweeping changes in the general retailing business. agency. The selling need not necessarily take place through a store. a firm must do a satisfactory job in its primary role i. As we all know. nature or promotion and expense control measures. Flipping through a catalogue. It is responsible for matching individual demands of the consumer with supplies of all the manufacturers. A common assumption is that retailing involves only the sale of products in stores. company. developing assortments of products. To enter retailing is easy and to fail is even easier. Therefore. A retailer is a person. Between the producer and the consumer there is a middleman—the retailer. The word ‗retail‘ is derived from the French work retailer. For instance. Retailing is defined as a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use.. size. catering to customers. parlour. Why has retailing become such a popular method of conducting business? The answer lies in the benefits a vibrant retailing sector has to offer—an easier access to a variety of products. the ease of entry into retail business results in fierce competition and better value for customer. the Internet. picking the right colour. meaning ‗to cut a piece off‘ or ‗to break bulk‘. Retailers perform specific activities such as anticipating customer‘s wants. or services to the ultimate consumer. or by car rental agencies. door-to-door visits—any channel that could be used to approach the consumer. Their profit is usually a small fraction of sales and is generally about 9-10%. acquiring market information.

It can also be defined as the timely delivery of goods and services demanded by consumers at prices that are competitive and affordable. including point of sale. This is slowly giving way to international formats of retailing. books/music/gifts (Archies. HP Speedmart) and fast-food chains. is going through a transition phase not only in India but the world over. operations. THE EMERGING SECTORS IN RETAILING: Retailing. one of the largest sectors in the global economy. Jainsons. inventory control and tracking. LifeStyle. the corner grocery store was the only choice available to the consumer. apparel/accessories (Pantaloon.). TYPES OF RETAIL OPERATIONS: Retail operations enable a store to function smoothly without any hindrances. one of the largest sectors in the global economy. The industry has contributed to the economic growth of many countries and is undoubtedly one of the fastest changing and dynamic industries in the world today. customer management and marketing. especially in the urban areas. Nilgiris. sales and promotions. Levis. pricing. Apna Bazaar). For a long time. to its delivery and post-delivery service to the customer. THE EMERGING SECTORS IN RETAILING: Retailing. Though this economic melt down affected the retail businesses the most. employee management. customized reports. The emergence of new sectors has been accompanied by changes in existing formats as well as the . is going through a transition phase not only in India but the world over. The package runs on personal computers to manage a range of store operations and customer marketing tasks. MusicWorld. Vasant & Co. and information security. HP Speedmart) and fast-food chains. convenience stores (Convenio. the corner grocery store was the only choice available to the consumer. It is the non-food segment. Retailing can be defined as the buying and selling of goods and services. convenience stores (Convenio. it implies a first-hand transaction with the customer. For a long time.right from the concept or design stage of a product or offering. Apna Bazaar). Reebok). This is slowly giving way to international formats of retailing. drugs and pharmacy (Health and Glow. Globus. Landmark). Westside). Apollo). The significant types of retail operations consist of: • Department store • Specialty store • Discount/Mass Merchandisers • Warehouse/Wholesale clubs • Factory outlet Retail Management System targets small and mid-size retailers seeking to automate their stores. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World. In simple terms. These include lifestyle/fashion segments (Shoppers' Stop. appliances and consumer durables (Viveks. Retailing involves a direct interface with the customer and the coordination of business activities from end to end.SCOPE OF RETAILING SCOPE OF RETAILING: The word ‘retail’ is derived from the French word ‘retailer’. meaning ‘to cut a piece off’ or ‘ to break bulk’. Crosswords. Nilgiris. however that foray has been made into a variety of new sectors. especially in the urban areas. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World.

It has emerged as one of the most dynamic and fast paced industries with several players entering the market. ft. along with increasing working-women population and emerging opportunities in . The Indian population is witnessing a significant change in its demographics. this trend is already visible with the emergence of stores with an essentially `value for money' image. Hence. probably not looked at the other markets as seriously. accounting for over 10 percent of the country’s GDP and around eight percent of employment. There are two primary reasons for this. almost one-third of India’s GDP. However. retailing is the world’s largest private industry.00 sq.beginning of new formats: • Hypermarts . According to a report published by McKinsey & Co. The whole concept of shopping has altered in terms of format and consumer buying behavior. have tried to redefine themselves. • Discount/shopping list grocer The traditional grocers.6 trillion. ft. one can assume that the retailing revolution is emerging along the lines of the economic evolution of society. processes and services. In order to appeal to all classes of the society. the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. entertainment and food all under one roof. • Convenience stores. The service sector accounts for a large share of GDP in most developed economies. the modern retailing trend. along with the Confederation of the Indian Industry(CII) the global retail business is a worth a staggering US$ 6. the boom in retailing has been confined primarily to the urban markets in the country. has a turnover of US$ 260 billion.ft or more • Large supermarkets. typically about 10.000 sq. has come to be identified with lifestyles. A large young working population with median age of 24 years. 500 companies and around 25 of the Asian Top 200 firms and retailers. the market is growing. by introducing selfservice formats as well as value-added services such as credit and home delivery. ft. the modern retailer is yet to feel the saturation' effect in the urban market and has. In the developed world. With total sales of US$ 6. large chunks are yet to feel the impact of organized retailing. typically 750-1.500-5. retail stores would have to identify with different lifestyles. ahead of finance and engineering. • Mini supermarkets. In short. Globally.6 trillion. RETAILING SCENARIO. Modern retail has entered India as seen in sprawling shopping centres. Retailing in India is gradually inching its way to becoming the next boom industry. nuclear families in urban areas. retailing is a customer-centric with a emphasis on innovation in products. the future is promising. the world’s second largest retailer. First. Wal-Mart. However.000sq. government policies are becoming more favourable and emerging technologies are facilitating operations.GLOBAL VIEW: Retailing in more developed countries is a big business and better organized than what in India. That said. therefore. RETAIL INDUSTRY IN INDIA: Retail is India’s largest industry. Second. Retail in India is at the crossroads. typically 3. Some of the world’s largest companies are in this sector: over 50 Fortune. And the retail sector forms a very strong component of the service sector. despite its cost-effectiveness. most of it is accounted for by the organized retail sector. typically 1. retail will generate employment. The Indian retailing sector is at an inflexion point where the growth of organized retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. multi-storeyed malls and huge complexes offer shopping.000 sq.000-2. Even there. In a sense. The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire for to be part of this class. as long as people need to buy. ushering in a revolution in shopping. Like we had seen in recent recession US Govt had spent USD 2 Billion to the people to promote their consumer market and bypass credit crunch and recession.

spent more on non-food items compared with food products. the bulk of them use less than three workers. So any product produced anywhere in the country can be easily accessed by the buyers from any location. • However. The number of companies with supermarket chains was less than 10. In a developing country like India. Big in size and turnover. most of these had only one outlet. Indians.the services sector are going to be the key growth drivers of the organized retail sector. in general. their sales grew much more rapidly (about 30% per year). makes management of the channel complicated. India's retail sector appears underdeveloped not only by the standards of industrialized countries but also in comparison with several other emerging markets in Asia and elsewhere. especially food related items. This weakness has been exploited by the manufacturers and the stronger partners of the marketing channel. Hence. Thus the spatial convenience of Indian retailers is vary high. This also makes the possibility of a direct feedback loop from the retailers almost remote. like consumers elsewhere. With the upturn in economic growth during 2003. their sales almost tripled during this time. down from 73% in 1999. Therefore. as such is very less. The second attribute gives rise to the following characteristics – • Power of the retailers. There are only 14 companies that run department stores and two with hypermarkets. This high acceleration in sales through modern retail formats is expected to continue during the next few years . Indian retailing industry is characterized by certain attributes. The share of food related items fell over the review period. with income growth. The network of retailers reaches every nook and corner of the country. • The manufacturers cannot directly reach all retailers in a particular geographical area. these characteristics are peculiar to the small retail outlets and may not be present at every kind of retail level. This makes the retailers more dependent on the other channel members. abide by the terms and conditions set by the manufacturers and other "big brothers" of the channel. in most of the cases. Retail Sales: Retail sales. it is not surprising that food. retail sales are also expected to expand at a higher pace of nearly 10%. • Therefore. While the number of businesses operating supermarkets is higher (385 in 2003).400 billion in 2002. • The financial strength of the Indian retailers. Retail Shopkeepers: India has sometimes been called a nation of shopkeepers. which amounted to about Rs7. Even among retail enterprises that employ hired workers. beverages and tobacco accounted for as much as 71% of retail sales in 2002. in general. So the dependence of retailers on other channel members increases to a high extent. in India the retailing industry is an unorganized lot consisting of. the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. a large chunk of consumer expenditure is on basic necessities. And the virtual omnipresence of the Indian retailer can be attributed to these small entrepreneurs only. expanded at an average annual rate of 7% during 1999-2002. Sales through supermarkets and department stores are small compared with overall retail sales. Secondly. This epithet has its roots in the huge number of retail enterprises in India. This is to be expected as. which totalled over 12 million in 2003. the manufacturers cannot maintain the desired relationship with the retailers. However. The retailers. About 78% of these are small family businesses utilising only household labour. As a result. The remaining 29% of retail sales are non-food items. is very low and hence the investment capabilities. small entrepreneurs. Thus the participation of retailers in the flows of marketing mix becomes lower than desired. which in turn. and in many cases it is negligible.

• Cultural and regional differences in India are the biggest challenges in front of retailers. With the help of `database retailing'. The lifestyle retailers through their `affinity clubs' and `reward clubs' are establishing their processes. Technology Impact: The other important aspect of retailing relates to technology. Organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of Indian retail sector.value for money. is at a nascent stage in our country. discounts and advanced systems and technology in the back-end. the focus of the retailing sector is to develop the link with the consumer. the government has barred FDI in retailing since 1997. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. as discussed before. • Hypermarket is emerging as the most favorable format for the time being in India. as it is the best way to compete with unorganized retailing in India. because of their enormous numbers. giving both cost and service advantages. knowledge and customer.cross-docking and electronic data interchange. the organized sector will grow at the CAGR of around 49. online systems link point-of-sales terminals to the main office where detailed analyses on sales by item.53% per annum. lead to the closure of many small trading businesses and result in considerable unemployment. at present. Most grocery retailers such as FoodWorld have started tracking consumer purchases through CRM. Besides knowing what was purchased and by whom. • The arrival of multinationals will further push the growth of hypermarket format. it will be technology that will help the organised retailer score over the unorganised players. change in the equilibrium with manufacturers and a thorough understanding of the consumer behaviour. Successful retailers today work closely with their vendors to predict consumer demand. variety. Growth of Retailing in India: Indian retailing industry has seen phenomenal growth in the last five years (2001-2006). Given the political clout of the small trading community. the ground . cost. save cost. • From 2006 to 2010. shorten lead times. quality. shopping experience. Hence. With differentiating strategies . `Data Warehousing' is an established concept in the advanced nations. This factor deters the retailers in India from adopting a single retail format. The traditional retailers will always continue to exist but organised retailers are working towards revamping their business to obtain strategic advantages at various levels . stores or vendor are carried out online. information on existing and potential customers is tracked. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry.200 point-of-sales counters of JC Penney to its corporate headquarters. but these are relatively easy to copy. The relatively complicated information systems and underlying technologies are in the process of being established.with the rapid growth in numbers of such outlets in response to consumer demand and business potential. foreign retailers can only enter the retailing sector through franchising agreements. classification. Retailing is a `technology-intensive' industry. Government Policy: There has been vigorous opposition to foreign direct investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away their business. They introduced two innovative logistics techniques . reduce inventory holding and thereby. RNCOS’ “India Retail Sector Analysis (2006-2007)” report helps clients to analyze the opportunities and factors critical to the success of retail industry in India. • Organized retail will form 10% of total retailing by the end of this decade (2010). Most organized players have managed to put the front ends in place. It is quoted that everyday at least 500 gigabytes of data are transmitted via satellite from the 1. information on softer issues such as demographics and psychographics is captured. Besides vendors.market. Today. Simultaneously. Retailing.

ft. in size.working women. Organizations ready to take on this challenge can leverage the opportunities offered by a population of more than a billion. international brands like Marks & Spencer.800. economies of scale drive down the cost of the supply chain. clothing and apparel stores. They want everything under one roof for easy access and multiplicity of choice.400.5%) of the estimated US $180 billion worth of goods that are retailed in India every year. RETAILING SCENARIOINDIA: The retail scenario in India is unique. This offers an excellent opportunity for organized retailers in the country who account for just 2% (and modern stores 0. McDonald‘s. . Most of them are independent and contribute as much as 96% to total retail sales. • Following the past trends and business models in the west retail giants such as Pantaloon.ft. namely. It is one of the few sectors which still has restrictions on FDI.ft. Swarovski. Lacoste. This will see a further segregation of the international retailing brands and the domestic retailers. It would be important to note. GROWTH OF RETAIL OUTLETS IN INDIA: India is rapidly evolving into a competitive marketplace with potential target consumers in the niche and middle class segments. Buying behaviour and lifestyles in India too are changing and the concept of ―Value for Money‖ is fast catching on in Indian retailing. • This is followed by grocery stores. Big Bazaar. The market trends indicate tremendous growth opportunities. According to experts. an annual increase of 20%. Almost 96% of these retail outlets are less than 500 sq. the per capita retail space in India being 2 sq. thereby injecting much greater dynamism into the market. greater work pressure and increased commuting time. it will not be long before the retailing sector is also thrown open to international competition. India’s per capita retailing space is thus the lowest in the world. that the retailing industry in India is still a `protected industry'. Because of the increasing number of nuclear families. Compared to the US figure of 16 sq.000 crore by the year 2005.000 crore and is estimated to go to Rs.20. This is evident from the expansion of the pantaloons chain into a large value format. however. convenience has become a priority for Indian consumers. Global majors too are showing a keen interest in the Indian retail market. Domino‘s among a host of others have come into India through the franchise route following the relaxation of FDI (foreign direct investment ) restrictions. Given the current trend in liberalisation.The contribution of the organized retail industry in the year 2000 was Rs. Samsonite. Large Indian companies – among them the Tata. The retail business in India in the year 2000 was Rs. Much of its is in the unorganized sector. • These Wal-Mart wannabes have the economy of scale to be low –medium cost retailers pocketing narrow margin. and the entry of new discount stores in food retailing in the South. India has the largest number in the world. with over 12 million retail outlets of various sizes and formats. Shoppers’ Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores. With more than 9 outlets per1. allowing retailers to offer more benefits offered to the customer. That will be when the real action will begin.is all set for the organised retailers. Subhiksha and Margin Free.000 crore by 2005.000 people . The growth and development of organized retailing in India is driven by two main factors – lower prices and benefits the consumers can‘t resist.160. Over the years. Goenka and the Piramal groups – are investing heavily in this industry. Major retailers in India: • India’s top retailers are largely lifestyle. The prospects are very encouraging.000 crore and is likely to increase to Rs.

000 crore in January 2001. direct selling.. which threatened to take away the potential of the store. TRENDS IN RETAILING: The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. 2. investments in organized retailing – which include shopping malls.4 billion. However. . • Estimated to be US$ 200 billion.doubled from Rs. The computer-savvy individual was also a sub-segment of the `store' frequenting traffic. electronic retailing does not suit products where `look and see' attributes are of importance. For all the convenience that it offers. More importantly.000 crore in January 2000 to Rs. and so on are growing rapidly. the very nature of the customer segment being addressed was almost the same. • Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. as in apparel.1. of which organized retailing (i. • India is rated the fifth most attractive emerging retail market: a potential goldmine. Internationally.e. or where the value is very high. such as jewellery. The most critical issue in electronic retailing. And the poor financial performance of most of the companies offering virtual shopping has resulted in store-based retailing regaining the upper hand. especially in a country such as ours. relates to payments and the various security issues involved. or where the performance has to be tested. A sudden concept of `non-store' shopping emerged. retail chains etc. modern trade) makes up 3 percent or US$ 6.ccording to a report by the Centre for Monitoring Indian Economy (CMIE). Recent trends include: • Retailing in India is witnessing a huge revamping exercise. Other forms of non-store shopping including various formats such as catalogue/mail order shopping. the size of the direct market industry is too limited to deter the retailers. • As per a report by KPMG the annual growth of department stores is estimated at 24%. as of consumer durables. the concept of Net shopping is yet to be proven.

greater proportion of working women etc can unarguably be linked to the growth of the Indian retailing industry. further aggravating the fear of job losses during the recession.11. In case of overall retailing revenues. The unemployment situation. the contribution of ‘food & grocery’ remained the highest at 58% of the total retail sales during FY10.49 lakh crore during FY10. the retailers especially in the organised segment suffered a set-back in the form of declining revenues and halt in their capex plans. during the economic recession since the latter half of FY09. However. with the ‘clothing & footwear’ segment remaining the second largest contributor occupying 10% of the total retail pie during the same period. The Indian retail industry has witnessed rampant growth over the last decade. the ‘entertainment. The growth in the Indian economy since the last decade and the change in consumption pattern of the Indian populace in terms of higher proportion of middle class population. In the organised retailing. However in terms of growth figures. However. entertainment & books and furniture & furnishing surpassed that of the food & grocery segment. the industry remains largely fragmented with the organized retailing still at a nascent stage. resulted in muted consumer spending with the consumers choosing to spend . Of all the segments in retail. the food & grocery segment accounted for the highest share at 58% of the total retailing pie aggregating Rs.3% for the period FY06-10.273 crore during the same period. the food & grocery segment stood as the second largest contributor with revenues aggregating Rs.The Indian retail industry has grown at a Compounded Annual Growth Rate (CAGR) of 13.5% during the period FY06-10. In spite of the growth. books & sports goods equipment' segment outperformed the other retail segments registering a CAGR of 22. the organised retail penetration of other segments such as clothing & footwear.24.

which was especially apparent in the decline of same store sales. cornering the conventional unorganised family-owned businesses. Additionally.3 times during FY09 from 4. CARE Research expects the Indian retail industry to grow on the backdrop of expectant rise in the country' s Gross Domestic Product (GDP) during the period FY11-FY13. . A T Kearney. most recently Lulu. inefficiencies in supply chain management and higher rate of shrinkage. higher store rentals as compared to retailers globally. In spite of the said challenges. According to the report. it is met by a few stumbling blocks that constitute the challenges ahead for the Indian retail industry viz. Importantly. he Indian retail industry has scaled impeccable growth over the last decade with an amiable acceptance to organised retailing formats. registering a decline to 4. Before the onset of recession. the retailers were faced with a liquidity crunch owing to difficulties in raising funds both from the equity as well as debt markets. is expected to fuel the domestic consumption ultimately resulting in higher revenues for the Indian retailers. given the gigantic size of the Indian retail market. post recession. in its Global Retail Development Index (GRDI) 2011. CARE Research expects the retailers would restore to adapting measures such as increasing the share of private labels in the total store sales. However with the economic recession in effect. AT Kearney has also conducted a different study which says that organised retailers should follow hypermarket concept to penetrate through India’s US$ 435 billion industry. in an attempt to increase margins. Also. The rise in income level of the Indian populace. the funds raised during the economic boom attracted higher interest rates thereby affecting the retailers' ability to service the interest as well as principal repayments during the downturn. taxation & other policy regulations. CARE Research expects the penetration of organised retail in the total retail pie to increase by FY13 owing to the expanding reach of the retailers to tier-II & III cities accompanied by higher consumer spend on discretionary items. India has been ranked as the fourth most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm. the industry thus witnessed decline in footfalls. The total interest outgo of the retailers as tracked by CARE Research registered a y-o-y growth of 78. the large scale expansion plans of the Indian retailers warranted an increase in inventory and greater store operating expenses in the form of rentals and staff expenses thus increasing the working capital requirement. it is no surprise that many Middle East retailers.on necessities rather than discretionary items. The report on the Indian retail industry provides a comprehensive overview of all the above mentioned parameters with detailed forecasts. have announced their interests to extend their retail operations to India. The slowdown in consumer spending led to the inventory being stacked up resulting in a low inventory turnaround ratio.8 times during FY08. conversion rate.6% during FY09. in turn. the industry is witnessing a gradual turnaround. The industry is maturing towards modern concept of retailing. Even though. reducing store level operating expenses etc.

currently this industry employs 8% of the working population. for organized retail in India.43 million was the amount of Foreign Direct Investment (FDI) inflow as on September 2009. Unorganized retailing consists of small and medium grocery store.000 crore (US$45 billion) and could yield 10 to 15 million retail jobs in the coming five years. the organized sector is largely concentrated in big cities. 000 crore in 2004-05 to` 109. According to Government of India estimate the retail sector is likely to grow to a value of ` 2. subzi mandi. medicine stores. subzi mandi. the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. The top five companies in retail hold a combined market share of less than 2%. It is also expected to reach 22% by 2010. According to the Department of Industrial Policy and Promotion. The retail scenario is one of the fastest growing industries in India over the last couple of years. More than 80% of the retail sector in the country is concentrated in the large cities. India retail sector comprises of organized retail and unorganized retail sector. the India retail industry is expected to grow to US$ 700 billion by 2010. Growth of Indian Retail According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney. Traditionally the retail market in India was largely unorganized.00. Mumbai was found to be the most preferred location followed closely by Bengaluru in the second position. in single-brand retail trading. India retail industry is the most promising emerging market for investment. approximately US$ 47. 000 crore in 2004-05 to` 109.The retail scenario is one of the fastest growing industries in India over the last couple of years. By . A study reveals that among the more than 20 locations. Traditionally the retail market in India was largely unorganized. Currently the share of retail trade in India's GDP is around 12 per cent. paan shops etc. Organized retail in India is expected to grow 25-30 per cent yearly and is expected to increase from ` 35. More than 90% of retailing in India fall into the unorganized sector. Quick facts on Indian Retail sector      Indian Retail sector is the fifth largest global retail destination. in 2009 as the most attractive emerging market for investment in the retail sector. In 2009. paan shops etc. According to a report by Northbride Capita. The Indian retail market has been ranked by AT Kearney's eighth annual Global Retail Development Index (GRDI). organized retail is gradually becoming popular. Unorganized retailing consists of small and medium grocery store. In 2007. however with changing consumer preferences. Organized retail in India is expected to grow 25-30 per cent yearly and is expected to increase from ` 35. the organized sector is largely concentrated in big cities.   India continues to be among the most attractive countries for global retailers. kirana stores. More than 90% of retailing in India fall into the unorganized sector. organized retail is gradually becoming popular. and is estimated to reach 22 per cent by 2010. however with changing consumer preferences. India retail market is dominated by the unorganized sector. India retail sector comprises of organized retail and unorganized retail sector. 000 crore ($24 billion) by 2010. 000 crore ($24 billion) by 2010. kirana stores. medicine stores. it rose to 12%.

These stores are generally called “Mom and Pop” stores and they offer limited merchandise to the consumer. Retail is the second largest industry in US. In fact 2/3 of US GDP is coming from Retail business. This is a major characteristic prevailing worldwide.For example. They are repositioning their product lines to survive in this highly competitive market. Characteristics of Retail Industry Retail Industry: Small to huge store The spectrum of Retail Industry is quite wide in nature. They also provide floor help and easy access to the merchandise to facilitate the consumer. Retail serves consumers through a small grocery store to a huge departmental store. Repositioning of Departmental Stores The appeal of big departmental store is in the wane and they are trying to reposition themselves. Decline in Small Stores It is observed that small independently owned stores are gradually loosing their foothold in the market place. Wal-Mart the worlds largest Retailer comes under this category of Retail store. Discount stores offer money back guarantee. Category Killers . It has employed 23 Million people. It has offered an opportunity to the consumers to shop from the home. These store are facing stiff competition from the large departmental stores or superstores and in this process they are closing down their shutters. A departmental stores which is supplying general merchandise to the consumer is changing themselves to a giant apparel store. In the book selling business Barnes & Noble superstore or Borders Books and music usually puts smaller bookstores out of business. Amazon. to lure customers.com is successful in this E-commerce domain. It can be mentioned here that. Retail Industry is heavily dependent on consumer spending. But it is also true that many small independent outlets still thrive by knowing their customers better and providing them with more personalized service. Internet and E-Commerce Internet. the organized sector will be 20% of the total market share. the share of organized sector in 2007 was 7. In many locations the arrival of a superstore has forced nearby independents out of business.5% of the total retail market. Consumers confidence is one of the key drivers of the industry. the ubiquitous medium has opened a new avenue in front of the Retailers. every day low price etc. As it stands today overall Retail sales through internet may not be that significant but gradually it is gaining popularity amongst consumers. During economic slow down consumer spending decreases and it poses threat to the Retail industry. Rise in Discount stores Supremacy of Discount store is also one of the distinct characteristics of Retail Industry today.the same time.

This has helped Nike to enter in to a new market segment. Avon. QVC). Home Depot (Home Improvement). individually run and handled retail outlets.There are Retailers who actually concentrate on one particular product category and grab a lion’s share of that market and outperform their competitors. Southwestern company. Department stores: These are the general merchandise retailers offering various kinds of quality products and . They are small. Direct selling worth about $9 Billion industry with around 600 companies selling door to door. such as electronics (Best Buy) and sporting goods (Sport Authority). Staples (Office Supplies) are the examples of such Retailers who have grabbed a major market share in that product category and they have forced a reduction in the number of players in that product segment. size. Ten years back there were number of players in the toy market and no one was controlling more than 5% of market share but now the number of players has come down to six and Toys R Us is enjoying 20% market share. Retail Formats The following kinds of retail formats are found in India:    Mom-and-pop stores: These are generally family-owned businesses catering to small sections of society. It includes telemarketing. World wide Retailers are keeping a close watch on this change and they are trying to realign themselves with this change. Sears and Land’s End merger is one of the significant mergers which has happened in recent times. Demographic Changes Retail industry is impacted by the demographic changes. They are called Category Killers. Another important example would be Nikes acquisition of Hurley. Direct marketing has their root in direct mail and catalog marketing (Land’s End and LL Bean). Direct Marketing With the advancement of technology. Although an overwhelming majority of goods and services is sold through stores and non store which indicates Retailing is growing at a faster rate. Electrolux. They are called category killers as they specialize in their fields. television direct response marketing (Home shopping network. As a result of this change taste of the consumer is undergoing a change and it creates a demand for certain products. Mergers and Acquisitions Retailers who want to dominate the market place have adopted the strategy of mergers and acquisitions. a well known surfing brand. Instead of achieving an organic growth Retailers can grow significantly with the help of mergers and acquisitions. They have widened their vision in terms of the number of categories. Category killers: Small specialty stores have expanded to offer a range of categories. Retailers have found another sales channel through which they can reach the consumer and this is known as direct marketing. Tupperware and Mary key cosmetics are the examples who have adopted this strategy successfully. Toys R Us (Toy market). This is driven by the economic growth factors. As the volume increases they are establishing better control over their suppliers and they are reducing the procurement cost and in that way they are boosting their profitability. revenue pattern and the customer demand. This is also one of the distinct trends in Global Retail Industry today. This is also a distinct trend observed in the current Retail market. This helps them to occupy more shelf space in the market place.

But it does not provide a feel of the product and is sometimes not authentic. Mumbai's bookstore Crossword. They are open for an extended period of the day and have a limited variety of stock and convenience products. which deal in specific categories and provide deep assortment in them are specialty stores. This is where Indian companies and International brands have a huge role to play. etc. clothing. This is very small by International Standards. Discount stores: These are the stores or factory outlets that provide discount on the MRP items. A lot of such retailers are booming in the industry. TDI Mall in Delhi. At present. Examples are Sahara Mall. Convenience stores: They are comparatively smaller stores located near residential areas. such as home and décor. Manufacturers and retailers will have to devise strategies for different sectors and segments which by itself would be challenging. etc. Hypermarkets/ Supermarkets: These are generally large self-service outlets. India must concentrate on improving the supply chain management. Vending: This kind of retailing is making incursions into the industry.com.services. offering a variety of categories with deep assortments. groceries. India's huge size and socio economic and cultural diversity means there is no established model or consumption pattern throughout the country. it still has a long way to go before it can truly have a retail industry at par with International standards. K Raheja's Shoppers Stop is a good example of department stores. toys. Specialty Stores: The retail chains. which in turn would bring down inventory cost. Smaller products such as beverages. Examples are RPG's Music World. . E-tailers: These are retailers that provide online facility of buying and selling products and services via Internet. Ebay. snacks are some the items that can be bought through vending machines. etc. Prices are slightly higher due to the convenience given to the customers. which can then be passed on to the consumer in the form of low pricing.  Challenges Faced By The Industry  Even though India has well over 5 million retail outlets of different sizes and styles. These do not offer full service category products and some carry a selective product line. Examples are Amazon.com.  Indian retailing is still dominated by the unorganized sector and there is still a lack of efficient supply chain management.   Most of the retail outlets in India have outlets that are less than 500 square feet in area. These stores contribute 30% of all food and grocery organized retail sales.       Malls: These are the largest form of retail formats. They provide an ideal shopping experience by providing a mix of all kinds of products and services. Dairy Farm and Levis underline the opportunity for the industry in India.  The drawbacks provide a huge opportunity for the retail industry. They focus on mass selling and reaching economies of scale or selling the stock left after the season is over. food and entertainment under one roof. it is not very common in India. The entry of foreign majors like Benetton. as this method provides convenience and a wide variety for customer. Other examples are Lifestyle and Westside. Example: Big Bazaar. These stores have further categories. They provide a picture and description of the product.

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