CHAPTER11

RETAILING IN INDIA AND AROUND THE WORLD
Presented By: Khushboo Bharati Lawi Anupam Mishal Kr. Jaiswal Pushpdev Rai
GITAM INSTITUTE OF INTERNATIONAK BUSINESS VISAKHAPATNAM

MAJOR RETAILING FORMATS
• Specialty store or niche stores – Music World, Barista, Coffee Day, Planet M • Department stores – Lifestyle, Pantaloons, Pyramids, Shoppers Stop, Trent • Food and grocery supermarkets – Food World, Trinetra, Subiksha • Convenience stores – Groceries, Fruits, Drug Store , Necessary stationery • Discount stores – Big Bazar, Wal-Mart • Chain stores – Bata shoe stores, Raymonds showrooms • Others – Hypermarkets, warehouse clubs, factory outlets, malls, MBO’S

SKILLS NEEDED FOR ORGANISED RETAILING
• Deciding on stock levels • Deciding on product mix • Deciding on brand mix • Human relations • Customer and employee management • Dealing with regulatory authorities and cost control • Merchandising and supply chain management • Customer service

RETAIL SECTOR IN INDIA
Source: IBFE Indian Retail Sector, April 2009.

• 5th largest retail destination • Ranked 2
n d

in a GRDI

Retail Sales in India

• Estimated to grow from US $ 511 billion in 2008 to US $ 833 billion in 2013 • Retail Industry - CAGR 10 % • Organized Retail - CAGR 40 % • Employs over 8% of workforce • Contributing to over 10% of the country's GDP • Thoroughly unorganized - 95 % • Organized Retail - 14 to 18 % by 2015 • Concept of discount stores catching on

EVOLUTION OF INDIAN RETAIL
Historic/Rural Reach Traditional Reach Government Supported Modern Formats/ International

Weekly Markets Village Fairs Melas
Source of Entertainmen t

Convenience Stores Mom and hawkers, grocers, Pop / Kiranas

PDS Outlets Khadi Stores Cooperatives

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls

Neighborhood Stores/Convenie nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie ncy

MODERNISATION IN INDIAN RETAILING
– Experimentation with formats – Store design – Emergence of discount stores – Unorganized retailing is getting organized

RETAIL DEVELOPMENT IN NICs
• THAILAND • GREECE • BRAZIL

Factors Underlying Modernization in Retailing

1. Economic development 2. Improvements in civic situation 3. Changes in consumer needs, attitudes and behaviour 4. Changes in government policies 5. Increased investment in retailing 6. Rise in power of organised retail

Small is Beautiful : The Case of the Bookstore that Shrank
 Crossword – Size – Decreased from 5000-10000 sq.ft to 300-1000 sq.ft.  Innovative strategies : • Introduced value-added services like home delivery, with Dial a-book, Fax-a-book and Email-a-book programmes. • Pioneered the concept of an in-house cafe. • Organises Innovative events • Offers a platform to literary-minded people. • First of the retail bookstores to invest in an ERP.

Barista Coffee Aims at Number 2 Slot in World
 Aims to be the no. 2 retail globally over the next decade.  Strategies implemented : • eDynamic - a Web Solutions partner & expert that had created a scalable Web Strategy for them. • Effective Supply Chain : - Use of strategic forecasting techniques. - Complete SCM in Barista is SAP enabled which helps in overcoming many complex challenges.

Perspectives on Retailing from Kishore Biyani, One of India’s Leading Retail Magnates
 Hypermarket concept.  Dirt cheap prices.  FDI in retail : - Allowed after sometime so that the local players can grow and be in a position to compete. - International players cannot offer better prices unless they adopt predatory pricing. ( short term advantage) - In the long run, customers will pay more.  North is a different and more difficult market than south.  Improve Inventory management.

Impulsive Buyers: The First 15 Seconds, and Other Tips for Retailers
• Position impulse products at the entrance. • Impulse buying decisions is taken in the first 15 seconds of entering a retail outlet. • Optimise the sales by the right placement of impulse products.

Differentiate or Die:The New Retail Mantra
• Retail Model must be different and difficult to replicate. • Speciality malls would make for a good differentiator. • General format in smaller towns as they are still at a young stage as far as organised retail is concerned. • Concept must be execution based.

Developing Profitable Shopping Mall
1. Consumer Needs 2. Site Development 3. Positioning 4. Mall Economics

Understanding Customer Needs
• Defining Target Customer
– Very specific & Homogeneous – Taking Demographic & Psychographic Factors

• Product/s they Buy & Why • Volume & Value of Products • Which Places they visit for buying & When • Mall & Product Selection and Buying Process Perfect alignment of Mall Concept with Target Segment

Site Development
Market Potential
– Per capita consumption of each product category – Consumer Spends on product categories
Catchment Area (Driving Time) Population of Section A & B Primary (0 – 10 min) Secondary (10 – 30 min) Tertiary (> 30 min) Location A Market Potential (1) Existing Malls (2) Proposed Mall (3) Expected Sales [1 / (2+3)] Rs. 260 mn 1,00,000 sq. ft. 50,000 sq. ft. Rs. 1733 / sq. ft. 50,000 1,50,000 5,00,000 Location B Rs. 220 mn 75,000 sq. ft. 50,000 sq. ft. Rs. 1760 / sq. ft. % of Population willing to travel 90 60 25 Location c Rs. 200 mn 50,000 sq. ft. 50,000 sq. ft. Rs. 2000 / sq. ft.

Site Development (contd.)
Consumer Perspective
– Lifestyle, Convenience, – Merchandise needs, Ambience – Parking, Accessibility & Timings – Level of service & security etc.

Classification of consumers
• The Price / Value Seeker • The Affinity Consumer • The Quality / Service Consumer

Site Development (contd.)
The Role of Competition
• Co-Opetition: A Synergistic effect of Coming Together
– Stores that build High Customer Traffic – Stores that deal in High Margin Products – Stores that deal in wide range of Products, normally Bought Together – Stores having Newest and Latest Products / Categories – Stores dealing in FMCG which bring Cash Flows

• Category Management:
Category Location Brand

Positioning
The mall is a collection of stores that have a highly focused product / consumer profile satisfying a narrowly defined need of the consumer.

The positioning of the mall should focus upon: 1. what the mall thinks about its customers. 2. value proposition that it offers. 3. what kind of promise it holds for the customer involved. 4. how to go about achieving what it professes.

Mall identity and image
A clear and concise identity and image of the mall is to be built in the minds of the consumer.
The mall developer should focus upon : 1. The mall cannot attend to all the needs of all the consumers. 2. Site development of the mall. 3. Tenant and trade mix. 4. Anchor store.

Change is the only constant in the world…. Customer is the most unpredictable entity in the business.

A Successful Mall
1. High level of occupancy. 2. The appropriate market positioning- its about unique identity and image. 3. Good retail planning and design. 4. Ideal merchandise and tenant mix. 5. Quality tenants and low risk. 6. High rental income and strong growth.

Mall Economics(2.5 lakh sq.ft)
• Cost per Sq. Ft. = Rs. 4,000 (land + construction + int.) • Total Investment = Rs. 100 crores • Selling cost = Rs. 6,500 / sq.ft. • Revenues = Rs. 24 cr p.a. (monthly rental @ 1.25% of SC) • Break Even in 6.5 years • At 80 % occupancy with 30% goes to Anchor Stores • ½ rent from Anchor Stores • Annual revenues = 15.6 crores • Break Even = 13 to 14 years

Q1. With organized retailing posed to touch 15% - 18% of Indian Retail Industry in the next decade, what would be the scope for supply chain in retailing ? Ans: Fierce competition is forcing retailers to respond to changes in the market quickly. This
highlights the growing importance of SCM in managing stock availability. Class products and brand power no longer guarantee success in the aggressive battles for market share. Thus, it is important to get closer to customers by understanding what it is they want, when they want it, where they want it and at what price they want it. However, SCM in India continues to be perceived as a low value added activity of managing transportation and warehousing. It is time Indian corporates started thinking about SCM from a strategic perspective rather than just as an operational issue. We are now moving into an era where supply chains will compete with each other, rather than there being competition between products and marketing techniques alone, to ensure that the right goods are available at the right place at the right time, in the right quantities and at the right cost.

Q2. growth rate of malls in India is 20 % & with 600+ malls already operating, how the future malls would position themselves? Ans. The fast growing and nascent retail industry in India has been a witness to the
introduction of a surfeit of malls across the country in recent years. However, only a few of them have been a runaway successes; because positioning is the one issue which has not been given much attention to, which has turned out to be one of the biggest mistakes of the mall developers. The positioning of the mall should aim at fulfilling the needs and aspirations of the target consumers in a way that is superiors to the competitors. A mall should view itself not as a physical alternative to the regular channels of retail outlets but an experience that goes much beyond the simple joys of shopping. An overall unified and enriching experience at a price which the customer is willing to pay should be the objective of the mall. It must strive to gain the ‘mindshare’ and the ‘heartshare’ of the customer.

Thank You

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