Chap-1 Introduction

Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mall, in small or individual lots for direct consumption by the purchaser. 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.

Types of retail outlets
A marketplace is a location where goods and services are exchanged. The traditional market square is a city square where traders set up stalls and buyers browse the merchandise. This kind of market is very old, and countless such markets are still in operation around the whole world. In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains. Retail is usually classified by type of products as follows:
y y y

Food products Hard goods ("hard-line retailers") - appliances, electronics, furniture, sporting goods, etc. Soft goods - clothing, apparel, and other fabrics.

The square feet area of the store depends on the store holder.. 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. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.700 m2). The operating cost is comparatively less than other retail formats. high-end retailers focusing on wealthy individuals). Specialty stores: A typical specialty store gives attention to a particular category and provides high level of service to the customers. However. often high-quantity goods piled on pallets or steel shelves. Discount stores . This store is ideal for emergency and immediate purchases. For few categories. Warehouse stores . Supermarkets: is a self service store consisting mainly of grocery and limited products on non food items.warehouses that offer low-cost. Example: SPAR supermarket. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores. often bear a resemblance to a collection of specialty stores. General store .There are the following types of retailers by marketing strategy: y y y y y y y y y y y y y y Department stores .very large stores offering a huge assortment of "soft" and "hard goods. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. 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 provide limited amount of merchandise at more than average prices with a speedy checkout.g. but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. A retailer of such store carries variety of categories and has broad assortment at average price. Malls: has a range of retail shops at a single outlet. Hypermarkets: provides variety and huge volumes of exclusive merchandise at low margins. The range of products are very selective and few in numbers. The supermarkets can be anywhere between 20.retailers that aim at one particular segment (e. E-tailors: The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep. Variety stores . A pet store that specializes in selling dog food would be regarded as a specialty store.a rural store that supplies the main needs for the local community. They endow with products. They offer considerable customer service. Demographic . Here the retailers use drop shipping technique. with limited selection. food and entertainment under a roof. However it is important for the . Convenience stores: is essentially found in residential areas. branded stores also come under this format. such as electronics. warehouse clubs charge a membership fee. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. They may adopt a Hi-Lo or an EDLP strategy for pricing.these offer extremely low-cost goods. Mom-And-Pop : is a retail outlet that is owned and operated by individuals.000 square feet (3.000 and 40. Normally retailers sell less fashion-oriented brands. These stores are seen in local community often are family-run businesses.tend to offer a wide array of products and services.

Big-box stores encompass larger department. Vending Machines: This is an automated piece of equipment wherein customers can drop in the money in machine and acquire the products.y customer to be wary about defective products and non secure credit card transaction. Convenience store .a store which sells most goods needed.pdf 2:15pm 09/02/12 3) .a small store often with extended hours. Some stores take a no frills approach.com/pdf/ICRIERRetailReport22May08. Organized retailing Modern Organized Retail can be referred as the mall setup (Reliance Mart/Big Bazaar) and standalone format (Raymond's stores/ Koutons Stores) aligned centrally in respect to Merchandise/ Manpower/ Planning/Touch & Feel Display Alignment and Technology Integration.outlookindia. while others are "mid-range" or "high end". and warehouse stores. malls and grocery stores. lifestyle and purchase behavior.in/praxis/pr0301/03010380. Example: Amazon. discount. Retailers can opt for a format as each provides different retail mix to its customers based on their customer demographics. Other types of retail store include: y y y y Automated Retail stores are self service.thehindubusinessline. A good format will lend a hand to display products well and entice the target customers to spawn sales. The supply chain and sourcing are also done locally to meet local needs. typically in a rural area. The stores accept credit cards and are usually open 24/7. Unorganized retailing Unorganized retailing is defined as an outlet run locally by the owner or caretaker of a shop that lacks technical and accounting standardization. Pennyful and EBay. robotic kiosks located in airports. General store . general merchandise. stocking everyday or roadside items. Examples include Zoom Shops and Red box. Its organized counterpart may not obtain its supplies from local sources. depending on what income level they target.pdf 2:05pm 09/02/12 2) http://business. -----------------------------------------------------------------------------------------------------------------------------------------Reference: 1) http://www.

they principally seek growth in other markets. due to regulations. Although Europe continues to dominate. 92 percent of respondents from emerging markets are looking to expand beyond their home market. In addition. Asia is believed to represent the best growth prospects for retailers and consumer-product companies in 2010. Retail globalization ‡ Among developed countries. This trend affected almost every retail category and geographical area except Africa and the Middle East where retailers saw an increase in profitability. . Along with developed market players. In a similar survey.9 trillion USD1. Germany and Italy. retail spending is expected to decline. Europe maintains its ability to attract the world¶s top retailers in 2009. There are signs of improvement for US consumers. While sales for 2009 were low. with close to 30 percent of those saying a developed country is among their top three expansion targets. ‡ Along with sales growth. This is why the lion¶s share of global retailers is based in Europe. ‡ According to a recent survey of 60 retail executives from around the world3.1 percent during fiscal 2008-09 with more than 30 retailers reporting operating losses2. it is worthwhile to note that sales of the global retail industry have doubled since 2003 when worldwide retail sales were $7 trillion USD. but the recent destruction of wealth is expected to limit consumer spending. with 39% of international retailers. maturity and strength of its domestic market. This group now accounts for more than 30 percent of total retail sales of the top 250 retailers. retailers are looking for a shorter payback period of three years. The UK outperformed other major European economies such as Spain. at least in part. ranking first among the top 15 most international retail markets. compared to five to seven years in 2005. Wal-Mart remained the world¶s largest retailer. Russia and the UAE have gained significant ground in the past 12 months. European retailers are more prone to globalization than American retailers because they face restrictions on development in their home markets. with eight out of the top 15 most international retail locations. These emerging market retailers are using their unique insights into local business and culture to expand regionally in a trend that will impact the global retail landscape. the UK continues to lead the world as the most international retail market. US retailers tend to penetrate their vast national market extensively before considering international expansion. with nearly 80 percent of respondents citing one of these markets as part of their firm¶s plans for short-term international growth. Profit margins of the 200 largest retailers in the world fell to 2.4 percent from 4. ahead of Carrefour Group. ‡ The composition of the top 10 retailers in the world remained the same in 2009 compared to the previous year. emerging market-based local retailers have begun expanding outside their region. hypermarkets cannot open new stores in their home market easily. ‡ In major markets such as the US and UK. profitability for most retailers was also sharply affected. the BRIC4 region remains the highest priority markets for retail expansion. Consequently. emerging economies such as China. while emerging markets such as China and India should have strong growth in 2010. France. with 58% of the world¶s top 250 retailers having a presence in Europe.Global Retail Industry Global Overview of Retail Sector Global retail sales declined 3. This can be attributed.7 percent in 2009 to 13. to the size. In France. The US was 10th globally.

in May 2010.6 billion USD11. This will allow customers to conveniently browse and buy items by using their mobile devices.6 billion USD8. Kroger. ‡ Online retail sales still account for only 2. designed to be easily accessible from mobile devices.Tesco. Similarly.1 billion USD.‡ Despite the global economic slowdown. Marks & Spencer announced the launch of a new version of its Web site. Electronics is the largest segment in global online retail sales. 78 percent of respondents in the US used two or more retailing channels and 30 percent used three or more channels to research and then finally make their purchases. . Europe and Asia-Pacific is expected to increase by 10. most retailers have yet to make a strong online push through multi-channel retailing.6 per cent of total sales for the top 100 retailers in the world10. 7.For example. which will advise Tesco on its online clothing strategy. Rise of online retailing ‡ Global online retail sales grew by 14.5 percent in 2009 to reach 348. . in Europe. many retailers such as cash-rich private companies have continued their expansion plans throughout the past 12 months. ‡ To grab the benefits of multi-channel retailing. players are enhancing their capabilities.Similarly. increasing at a CAGR of 22. On an average. internet penetration in North America. global online retail sales are expected to be 778. ‡ The US is the biggest market for online retail sales with 37. whose total retail e-commerce spending reached 129. Multi-channel retailing ‡ According to a consumer survey6. This option lets customers use these coupons to get discounts on their product purchases without going through the trouble of clipping and collecting paper coupons while helping retailers increase their distribution.2 percent. However. television and computers.3 percent annually. Safeway and ShopRite are sending ³smart electronic shopping coupons´ to their customers through wireless devices. online sales account for 6. This was primarily in clothing. the population purchasing online increased from 32 percent in 2008 to 37 percent in 20097.5 percent of total retail sales on a global basis. Hence. marginally lower than the 2008 level of 130.8 billion USD in 20099. . To sustain this level of sales.6 percent. footwear and accessories. ‡ By 2014. whose online retail sales during the year ending February 2010 grew 7. it also creates rivalry in the market as a large number of players are active along with the absence of consumer switching costs.6 percent and 12.2 percent market share. contributing around 22.7 percent12 on a y-o-y basis respectively. has set up a consultancy named Task Retail. A survey of 280 retailers5 saw them expand their international presence by two more countries than in the previous year.6 percent. A high level of product differentiation together with low fixed costs and dynamic market revenue growth is seen in the US market. .

This can be contemplated as a result of the changing attitude of Indian consumers and their overwhelming acceptance to modern retail formats. India has entered a stage of positive economic development which requires liberalization of the retail market to gain a significant enhancement. In developed countries organized retailing is the established way of selling consumer products. Despite the low percentage. Domestic consumption market in India is estimated to grow approximately 7 to 8% with retail accounting for 60% of the overall segment.Organized retailing in India The recent years have witnessed rapid transformation and vigorous profits in Indian retail stores across various categories. The negative phase in exports may have compelled the Indian textile retailers to explore the opportunities in the domestic market substantially causing the outstanding growth in . Of this 60%. in China there was a drastic structural development after FDI was permitted in retailing. For example. Indian textile industry has grown noticeably in organized retailing of textile products. Asian markets witness a shift in trend from traditional retailing to organized retailing driven by the liberalizations on Foreign Direct Investments. organized retail is just 5% which is comparatively lesser than other countries with emerging economies.

and taxes to meet. With the influence of visual media. Liberalizing policy guidelines for FDI needs focus as well. social security to employees. It is expected to grow 25-30 per cent annually and would triple in size from Rs35. increasing population of young people joining the workforce with considerably higher disposable income. The shopping spree of the young Indians for clothing. has unleashed new possibilities for retail growth even in the rural areas. and the contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. India is on the radar screen in the retail world and global retailers and at their wings seeking entry into the Indian retail market. .the concerned segment. The market is growing at a steady rate of 11-12 percent and accounts for around 10 percent of the countrys GDP. urban consumer trends have spread across the rural areas also. India is now on the radar of global retailers. Traditional retailing has been deep rooted in India for the past few centuries and enjoys the benefits of low cost structure. especially during the phase of accelerated growth of the retail industry. Taking care of supply chain management. and over Rs 200 billion by end of 2010. but also for the development of our own retailing industry. A vast majority of India's young population favors branded garments. Consumer familiarity with the traditional formats for generations is the greatest advantage to the unorganized sector. mass procurement arrangements and inventory management are areas that need the focus of entrepreneurs. Accelerated development of retailing industry in the country and building brand value of domestic products is essential not only for marketing our consumer products more efficiently. Competition for experienced personnel would lead to belligerence between retailers and higher rates of attrition. therein resulting in less labor costs and little or no taxes to pay. The process of avoiding middlemen and providing increased income to farmers through direct procurement by retail chains need the attention of policy makers. The major constraint of the organized retail market in India is the competition from the un-organized sector. On the contrary. Thus.000 crore ($24 billion) by 2010.000 crore in 2004-05 to Rs109. favorable income demographics. organized sector have big expenses like higher labor costs. The inherent attractiveness of this segment lures retail giants and investments are likely to sky rocket with an estimate of Rs 20-25 billion in the next 2-3 years. This is a positive trend. Challenges facing the Organized Retail Industry: Despite the rosy hopes. Tier-II cities are already receiving focused attention of retailers and the other smaller towns and even villages are likely to join in the coming years. Proper training facilities for meeting the increasing requirements of workers in the sector would need the attention of both Government and the industry. bigger premises. mostly owner-operated. some facts have to be considered to positively initiate the retail momentum and ensure its sustained growth. Indian retail market is considered to be the second largest in the world in terms of growth potential. Availability and cost of retail space is one major area where Government intervention is necessary. 85% of the retail boom which was focused only in the metros has started to infiltrate towards smaller cities and towns. These indications give a positive notion that organized retailing has arrived in the Indian market and is here to stay.

pdf 2:40pm 07/02/12 .Reference: 1) http://www.fibre2fashion.com/pdf/ICRIERRetailReport22May08.com/industry-article/7/697/organized-retailing-in-india1.outlookindia.asp 2:35pm 09/02/12 2) http://business.