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Suresh Chandra.Ch, Junior Research Fellow
Nature of Retail Industry is Changing
To Today s Retailer
Mom and Pop Store
From a personal perspective, how does retailing provides a potential career opportunities ?
Opportunities in Retailing Management Opportunities Entrepreneurial Opportunities .
as a dealer or trader who sells goods in small quantities. Retails includes all the activities involved in selling goods or services to the final consumers for personal. which means to cut of a piece or to break bulk. non business use. Therefore a retailer may be defined. A retailer or retail store is any business enterprise whose sale volume comes primarily from retailing. .The word retail is derived from the French word retaillier .
It does not matter how the goods or services are sold (by person. telephone. .Any organization selling to final consumers whether it is a manufacturer. wholesaler or retailer is doing retailing. vending machine or internet or whether they are selling in store or on the street or at the consumer s house) Retail may be redefined as the first point of customer contact. mail.
being available at a convenient location. form of a product that is acceptable to the customer. Providing service to the customer. . Holding inventory & providing information to suppliers..Functions of a Retailers : Providing Assortment i. Time utility by keeping the store open when the customers prefer to shop. Provides a place utility.e.
Retailing in the Channel of Distribution and Marketing Retailer is the last step in the Manufacturer to Consumer distribution link Retailer has the important product/consumer link Product Marketing by manufacturer can be enhanced by coordination with retailer .
friendly. knowledgeable service. free parking. convenient hours. guaranteed satisfaction with what you buy. . For my whole retail career. and customers want everything: a wide assortment of good quality merchandise.SAM WALTON FOUNDER OF WALMART . the lowest possible prices. I have stuck to one guiding principle give your customers what they want. a pleasant shopping experience.
what are the benefits and limitations of purchasing a pair of jeans directly from a manufacturer rather than from a retailer? . From your perspective.
among the top 30 emerging markets in the world . It accounts for an impressive part of GDP by contributing more than 10% to GDP. The global Retail development Index has ranked India first.Importance of retailing It is the final link in the chain of production It is the 2nd largest employer after agriculture in India.
Theories of structural changes in retailing Wheel of retailing (Malcolm. Mcnair s) Dialectic process Retail accordion Natural selection . P.
1. Wheel of Retailing Entry Phase (New entrant) Low prices & limited products Limited facilities and services Price-sensitive consumers Trading up phase (Traditional retailer) Moderate prices Improved facilities Broader base of valueMature Retailer and service-conscious (vulnerability phase) consumers High prices Excellent facilities and services Upscale consumers Declining ROI .
Walker) Discount Store Low margin High turnover Low price Self service Low rent location Spartan facilities Department Store High margin Low turnover High price Full service Downtown location Plush facilities Discount Department Store Average margin Average turnover Modest price Suburban location Model facilities . Maronick and Bruce J.J. Dialectic Process (Thomas.2.
LO 3 .The Retail Accordion It describes how retail institutions evolve from outlets that offer wide assortments to specialized stores and continue repeatedly through the pattern and these stores begin to offer a wide variety of merchandise. The accordion theory is vague about the competitive importance of providing wide assortments for various target customer groups.
. would stagnate and may even be forced to exit the market.Natural Selection This theory based on Darwin s theory of evolution A retail institution should be flexible enough to adapt to the changing environment and should adapt its behaviour to survive in the market. The retail institution that is flexible enough to adapt to changes in the economy will be the most successful and those which are not willing to change.
.Classification of retail formats Store Based Retailing Non-store Retailing Service Retailing Form of ownership : Indepen. . Retailers Chain Retailers Franchise Consumer cooperative Merchandise Offered : Convenience store Supermarkets Hypermarkets Specialty stores Departmental stores Factory outlets Electronic retailing Direct selling Catalog retailing Tele marketing TV Home shopping Automated Vending Banks Car rentals Tours & Travel Services Hotels etc.
Trinethra. Star India Bazaar. medicines 3. watches. apparel 20. 15.000 In&Out. Staples .000 Shopper s Stop. Reliance Retail Super markets A large self service outlet offering food and household goods Food.000-50. Lifestyle. Subshiksha. combining a supermarket and departmental store. fast check out experience and extended working hours Food. Pantaloon. Food baazar Convenience stores Small size. fashion accessories.Format Definition Formats Description A large superstore.000 Best Buy Circuit City. Hypercity. furnishings 10. furnishings. groceries.000 Example Hyper markets Food. traditional stores Departmental stores A large self service outlet offering a variety of merchandise Apparel. furniture. apparel. footwear.000-15.000-100. Subhiksha. groceries. Vishal Megamart. offering full lines of grocery and general merchandise all under one roof Key categories retailed Typical size Sq. easily accessible stores offering a quick shopping. Trinethra. Jewellery. groceries. Westside Category killers Large speciality stores focussed on one or a few categories of merchandise.000-100. medicines 500-2. consumer durables Big Bazaar. offering a wide selection at low prices Electronics.ft. Spencer.000 FoodWorld. office supplies.
offering goods in bulk at discount prices to members Key categories retailed Typical size Sq.000-20. tyres. Gucci. furniture 1. electronics. 100. Colourplus. Adidas. books 1. apparel. Sam s Club Food.ft. McDonalds.000 Planet Sports.000 Nike.000 + Example Metro cash and carry.000-5.Format Definition (Contd. Crosswords . Planet Fashion. TBZ Retail outlet offering multiple branded products belonging to a single category class Footwear.) Formats Description Warehouse style large stores. Gautier. footwear. Costco. food services. groceries Warehouse clubs Single brand outlets Multibrand speciality stores Retail outlet offering products of a single brand Apparel.
etc. income tax. . Unorganized retail sector Organized retail sector: It refers to trading activities undertaken by licensed retailers.Sectors in Retail Industry The retail industry is divided into: 1. Organized retail sector 2. that is. and also the privately owned large retail businesses. These include the corporate-backed hypermarkets and retail chains. those who are registered for sales tax.
VAT.Sectors in Retail Industry Unorganized retail sector: It refers to performing trading activities by traditional formats of low-cost retailing. paan /beedi shops. owner manned general stores. hand cart and pavement vendors. the local kirana shops. or income tax. convenience stores. . for example. etc The unorganized retailers normally do not pay taxes and most of them are not even registered for sales tax.
Modern Retail Organized Channels The share of organized retail is less than 7% of the total retail market in India. .
. but Rapid Transformation is Anticipated Current Size & Future Projections for Indian Retail Market 900 800 700 600 500 400 300 200 100 0 800 US$ Billion 342 373 408 445 486 530 200 12 2007 18 2008 26 2009 Total Retail 39 2010 59 2011 Organized Retail 87 2012 2017 And may reach a share of 25% by 2017 ..
FDI restrictions.Retail Environment External environment factors include: Economic environment (Nature of economic system. unorganized sector) . property regulations. real estate) Legal environment (labour laws) Technological environment (use of IT& online system) Competitive environment (Entry of MNCs.
Retailing in India .
The Evolution of retail in India Traditional Formats Itinerant Salesman Haats Melas Mandis etc. Established formats Kirana shops Convenience/ department stores PDS/ fair price shops Pan/ Beedi shops Emerging Formats Exclusive retail outlets Hypermarket Internal retail Malls / Specialty Malls Multiplexes Fast food outlets Service galleries .
Evolution of Indian retail Historic/Rural Reach Traditional/Pervasive Reach Government Supported Modern Formats/ International Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency .
in single brand retail trading. stood at US$197. Indian retail industry is the 5th largest in the world. It is contributing 13% to INDIA s GDP.04 million. FDI inflows between April 2000 and October 2010.63 billion in 2011 to US $674.In a joint study recently conducted by Associated Chambers of Commerce and Industry of India (ASSOCHAM)and KPMG. the following findings were revealed: * Over the coming 4-5 years is expected to be around US$ 25-30 billion. .37 billion by 2014. retail sales will grow from US%392. According to BMI India retail report.
High Income Opportunities Changing role of women in family Drivers of Indian Retail International Exposure Changing Consumption Attitude Market & Government .
Trends in Retailing Rapid development of infrastructure in retailing (mushrooming hypermarkets in metros in coming season) Increasing GDP and changing lifestyles of people. growth in income Increasing penetration into the lower income strata Arrival of Transnational companies (TNCs) Better inventory and ordering through electronic sources. .
Problems &Challenges for Indian retailing The tax structure in India favors small retail business (Kerala) Lack of adequate infrastructure facilities High cost of real estate Dissimilarity in consumer groups Restrictions in Foreign Direct Investment Shortage of retail study options Shortage of trained manpower Low retail management skill (Subhiksha) Intrinsic complexity of retailing rapid price changes .
Growth drives for Indian retailing Demography dynamics Double incomes Plastic revolution Urbanization Covering distances has become easier .
Why Consumers Buy Fashions???? .
Why Consumers Buy Fashions Communicate with Others Manage Appearance Express Self-Image Impress Others .
subject to Press Note 3 (2006 Series).e. b) FDI up to 51 % with prior Government approval (i. c) FDI is not permitted in Multi Brand Retailing in India. a) FDI up to 100% for cash and carry wholesale trading and export trading allowed under the automatic route. FIPB) for retail trade of Single Brand products. .FDI Policy with Regard to Retailing in India It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDI Policy issued in October 2010 which provide the sector specific guidelines for FDI with regard to the conduct of trading activities.
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