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Retail Environment

retail environment
Population
Economics
Political
Technology
Social
Demographic
and

POPULATION
DEMOGRAPHIC
DETAILS

Demographic are objective, quantifiable, easily identifiable

and measurable population data .


Groups of consumers and individuals can be identified in
terms such demographics variables as ;
AGE
INCOME
EDUCATION
ETHNIC/RACIAL
GENDERS
BIRTH
HOUSEHOLD
MARITAL
EMPLOYMENT
OCCUPATION
RATE
ANDLEVEL
SIZE
FAMILY
STATUS
BACKGROUND
STATUS

POLITICAL
Include the laws, regulations and social pressure affecting
the retailers.
Many retailing decisions that depends on the political
development in a nations environment.
Reason for such rules is to protect the competition among
companies as well as depending customers from unruly
business activities .

ECONOMIC
Economics environment for retailing comprises the overall
economy including business cycles, consumer income and
spending patterns.
A retail cycle is pattern of the level of
business activity.
Business activity can be
move from prosperity to recession.
Consumer income refers to the amount of
household income .

individual or

Tax Impacts and Regulatory Environment


The retail sector has not been conferred an industry status till now.
Hence, there are no specific rules and regulations governing the
sector. However, there are certain laws pertaining to the
establishment of stores and conduct of activities, which retailers
need to follow:
The Shop and Establishments Act
The Standards of Weights and Measures Act
The Provisions of the Contract Labor(Regulations and
Abolition) Act
The Income Tax Act
The Customs Act
The Companies Act
In addition to the above law: Retail companies have to follow certain
regional rules and regulations on the basis of their stores location;
different states have different laws to regulate the7 retail trade.

Tax Impacts
Presently, there are multiple indirect taxes:
Customs duty
Central Value Added Tax (CENVAT)
Service tax
Central Sales Tax (CST)
State value added tax
Central value added tax
Entry tax

GST implementation :-In order to integrate all of these taxes into a


single unified tax system and bring about broad-based reforms in
the indirect tax regime, the government of India has envisaged The
introduction of a uniform Goods and Services Tax (GST) across the
country.
8

Regulatory Environment
FDI Policy with regard to Retailing in India:
FDI up to 100% for cash and carry wholesale trading and
export
trading allowed under the automatic route.
FDI up to 100 % with prior Government approval (i.e. FIPB)
for
retail trade of Single Brand products.
India allowed FDI of up to 51% in multi-brand sector.

Single brand retailers such as Apple and Ikea, can own


100% of
their Indian stores, up from previous cap of 51%.

The retailers (both single and multi-brand) will have to


source at
least 30% of their goods from small and medium sized
Indian

Regulatory Environment Contd..


Multi-brand retailers must bring minimum investment of
US$ 100 million.
Half of this must be invested in back-end infrastructure
facilities such as cold chains, refrigeration, transportation,
packaging etc. to reduce post-harvest with 3 years of setup.
Losses and provide remunerative prices to farmers.
The opening of retail competition (policy) will be within
parameters of state laws and regulations.
Overseas companies must put half of their investment in
infrastructure such as processing, manufacturing, storage,
warehouses and packaging

SOCIAL

Factors in retail environment that retailer need to


determine is societal changes in retail industry such
as ;
- Ageing of the population.
- rising proportion of one and two-person
household.
- rising proportion of single-parent
families .
- increased workforce participation by
women.

TECHNOLOGY
A) New consumerism movement in retailing .

THE RETAILERS RESPONSE TO


THE CHANGING CUSTOMERS
> Retailers should keep on changing due to the customers

changes .

THE EFFECTS OF CHANGING OF


SOCIAL TREND IN CUSTOMERS

Porters Five Force Model

Threat of New Entrants

Power of Suppliers

Historically, retailers have tried


95% of the market is made up to exploit relationships with
of
small,
uncomputerised supplier.
family run stores.
The
ability
to
establish In retail industry suppliers tend
favorable supply contracts, to have very little power.
leases and be competitive is
becoming virtually impossible.
Following examples explain the
The vertical structure and same.
centralized buying gives chain
stores
a
competitive Sears in 1970 set very high
advantage over independent standards for quality; suppliers
retailers.
that did not meet these
standards were dropped from
On the whole threat from new the Sears line.
entrants in retail industry is
high.
Walmart places strict control
on its suppliers.

Power of Buyers

Availability of Substitutes

The tendency in retail is not to


Customers
have specialize in one good or
comparatively high bargaining service, but to deal in wide
power in unorganized sector range
of
products
and
than in organized sector.
services.
As the customer will demand What one store offers is likely
products from organized units to be same as that offered by
he will be more focused another store.
towards quality aspect
The threat from substitutes is
high.

Competitive Rivalry
Retailers always face stiff competition and must fight with
each other for market share and also with unorganized
sector.
They have tried to reduce cut throat pricing competition by
offering frequent flier points, memberships and other
special services to try and gain the customers loyalty.
Thus retailers give each other stiff but healthy competition
which is evident from their aggressive marketing strategies
and segment policies.

SWOT Analysis
Strengths
Major contribution to GDP: the retail sector in India is hovering
around 33-35% of GDP as compared to around 20% in USA.
High Growth Rate: High Potential: since the organized portion
of retail sector is only 2-3%, thereby creating lot of potential for
future players.
High Employment Generator
Low Labor Cost
Technology intensive industry
Rising disposable income
Urbanization
Shopping convenience
Changing consumer habits and lifestyles
High availability of quality retail space

Weakness

Policy related issues


Lack of industry status for retail.
Numerous license, permits and registration requirement.
Limited consumer insight
Lack of detailed region specific customer data.
Lack of Skilled Labor
Taxation hurdle
Inconsistent octori, entry tax structure, vat and multiple taxation
issues.
large grey market presence.
Underdeveloped supply chain
Underdeveloped logistics infrastructure &absence of national
cold
chain networks.
Lack of adequate utilities

Opportunities

Potential for investment.


Locational advantage.
Sectors with high growth potential.
Fastest growing formats.
Rural retail.
Create transparency in the system
Healthy Competition will be boosted and there will be a
check on the prices (inflation)
Intermediaries and mandi system will be evicted, hence
directly benefiting the farmers and producers
Quality Control and Control over Leakage and Wastage
Heavy flow of capital will help in building up the
infrastructure for the growing population

Threats
Political issues.
Social issues.
Inflation.
Nostalgia
Lack of differentiation among the malls that are coming.
Poor inventory turns and stock availability measures.
Big players can knock-out competition
Current Independent Stores will be compelled to close
India does not need foreign retailers
Remember East India Company it entered India as trader and
then took over politically.
The government hasnt able to build consensus.

Company Name

Net Sales(Billion
$)

Country

Walmart

$421,849.00

USA

Carrefour

$120,297

French

Tesco

$94,185

UK

Metro AG

$89,081

German

The Kroger Company


Schwarz
Unternehmens
Treuhand KG

$82,189

USA

$77,220.00

German

Costco Wholesale

$77,946

USA

Home Depot

$67,997

USA

Target
Aldi GmbH & Company
oHG

$67,390

USA

$58,000

German

Major retail brands

Name of holding company

Prime Banners

Pantaloon Retail

Pantaloons
Central
Brand Factory
Ezone
Hometown
Planet sports
Bigbazar
Foodbazar
KBs Fair Price Shop

K Raheja Group

Shoppers stop
Crossword,
Inorbit
Hyper city

Tata Group

Croma
Landmark
Poltrona Frau Group Design Center
Star Bazaar
Tashi
Westside

Centrepoint
Babyshop
Splash
Shoe Mart
Lifestyle
Beautybay
Iconic
Q Home Dcor
Candelite
Max

Parimal Group

Piramyd Megastore
Piramyd Supermarket
Jamin

Reliance

Reliance
Reliance
Reliance
Reliance

AV Birla Group

More

RPG Group

Spencers
Books and Beyond
MusicWorld

Landmark Group

Fresh
Trends
FootPrint
Digital

Shoexpress
Emax
Lifestyle
Department
Stores
SPAR
hypermarkets
Landmark
International
Footwear
Division

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