INTRODUCTION TO RETAIL

WHAT IS RETAIL

 Retail : Derived from the French word “retaillier”

 Means : To cut off a piece or to break bulk.

 Retailer : Defined as a dealer or trader who sells goods in

small quantities, or
one who repeats or relates
 Retailing : The last stage in movement of goods or
services to
the consumer.

 Retailing can thus be defined as consisting of all such

activities
involved in the marketing of goods and services directly to
the
 INTRODUCTION TO RETAIL

RETAIL : THE INDUSTRY

 Largest private industry in the world, total sales of US$ 6.6

trillion
 In Western economy it accounts for 8% of the GDP

 Has generated an 19% return for the shareholders

between 2004-
06
 In comparison banks generated 9% and insurance
generated
15.2% return.
 Largest corporation in the world – Wal-Mart is a retail chain

 Almost 50 retail organizations in the world feature in the

list of
 INTRODUCTION TO RETAIL

FUNCTIONS OF A RETAILER

 From customers point of view, retailer serves by

providing goods that he needs in the required
assortment and at the right place and time.

 From an economic standpoint the role of a retailer

is to provide real added value or utility to the
customer.

 This comes from five different perspectives

 INTRODUCTION TO RETAIL
FUNCTIONS OF A RETAILER

 First utility arises from the need of providing a finished

goods and services in the form that is acceptable to the
customer

 The retailer performs the function of storing the goods,

and providing us with an assortment of products in
various categories

 The retailer creates time utility by keeping the store

open when the consumers prefer to shop

 By being available at a convenient location he creates

place utility

 Finally when he products are sold ownership utility is

 INTRODUCTION TO RETAIL

FUNCTIONS OF A RETAILER

All these are real benefits which the Retailer offers by

 Being close to potential customers

 Fully understanding the motivating factors that drive

their customers

 By serving the consumers by way of functioning as a

marketing intermediary and creating time, place and
ownership utility
 INTRODUCTION TO RETAIL

FUNCTIONS OF A RETAILER

The Retailer also serves the manufacturers by

 Performing the function of distributing the goods to the

end users

 Creating a channel of information from manufacturer to

the consumer

 By serving as a final link in the distribution chain

 Recommending products where brand loyalty is not

strong or for unbranded products.
 THE CHANGING RETAIL
LANDCSAPE
REASONS FOR THE CHANGING RETAIL
LANDSCAPE
 Proximity to customers : The emergence of large super
markets, hypermarkets and various other formats like the
department stores.

 The rise of consumerism : Retailer faces a knowledgeable and

demanding consumers. This has forced retail organizations to
change formats, product offerings and services.

 Introduction of the private label : Retailers now decide on

products and brands they want to stock. Some have even
developed their own in store brands/products that cater to the
needs of target customers.

 Technology : Increasing use of technology vide point of sale

scanning, use of bar code provides wealth of information to
 RETAIL IN INDIA
 India boasts of the world’s largest retail network, 12 million
outlets
 India being second largest consumer market in the world
stands benefited
 96% of total number of retail outlets have an area of les than
500 sq.ft. and the per capita retail space in India is a mere 2
sq.ft.
 Trade is highly fragmented and is known the world over as
highly unorganized and in nascent form
 However, the reality is that apart from agricultural products
even manufactured goods are available in the remotest corners
of India
 As retail is not regarded as an industry in India it is difficult to
get a correct picture of the size of this sector
 As per estimates given by the Central Statistical Organization
the total private final consumption expenditure in India was
Rs.15,000 billion in 2001-2002
 Consumption patterns indicate how much has been sold
 GROWTH OF RETAIL IN INDIA
 India Government set up public distribution system faced with
the task of providing basic grains to the mass populace – ration
shops
 State run retail stores were set up such as Khadi & Village
Industries Commission stores (KVIC). As on date there are more
than 7,000 stores across the country.
 The co-operative movement was championed by the
government, which set up Kendriya Bhandars in 1963. As on
date they operate from a network of 112 stores and 42 fair
price shops across the country.
 Mother diary another early starter controls as many as 250
stores selling foods and provisions at attractive prices
 In Maharashtra, Bombay Bazaar, which operates stores under
the label Sahakari Bhandar and Apna Bazaar runs a large chain
of co-operative stores
 CLASIFICATION OF RETAIL SECTOR

 In India, Retail Sector is classified into two broad

categories

4. Food
5. Non Food

 Through this classification one can see a

phenomenal change that has occurred in retail in
India

 Key Players have emerged in various sectors over

the past ten years
 ROADBLOCKS TO RETAIL
DEVELOPMENT
 In India, organized retail is a little over a decade old
 It is largely an urban phenomenon
 However the pace of growth is still slow

Reasons for slow growth in retail

1. Retail not being recognized as an industry in India

- Hampering the availability of finance to existing
and new players
- Hence affecting growth and expansion plans

2. High costs of real estate

- Lease or rent of property is major area of
expenditure
- This eats into the profitability of a project
 ROADBLOCKS TO RETAIL
DEVELOPMENT
3. Lack of adequate infrastructure
- Poor roads, lack of cold chain infrastructure
- Existing supermarkets and food retailers have to invest
substantially in building cold chain infrastructure

4. Multiple and complex taxation system

- Sales tax rates vary from State to State
- Organized players have to face multiple point control and tax
system
- Tax evasion by small stores
- Hence it becomes expensive to transfer goods from one store
to another

5. Foreign direct investment

- FDI in pure retailing is not permitted
- One of the prime reason for slow growth of retail in India
- Global retailer can enter only by way of a franchise with Indian
partner
 FUTURE PROSPECTS

 Bright future ahead

 What one sees today is only the tip of the iceberg
 Expansion from urban to B Class towns will see the
emergence of region specific formats which will be scaled
down
 Large discount stores are bound to emerge as they will cater
to mass market
 Thus penetration in the lower income groups
 This is the format that is most likely to meet the consumer’s
demands for “increased value for money” offerings
 The new agreement on textiles and clothing (ATC) will see
large number of international retailers setting shop in India
 Indian retailers would have to become consumer-centric in
true sense
 Retailers will have to reinvent themselves and have to go
beyond the traditional products and services