Introduction to Retail

Industry
Retail Theories & Strategy

Theories of Retail Development

What is Retailing?
Retailing is the business where an
organization directly sells its products and
services to an end consumer and this is for
his personal use.
By definition whenever an organization be
it a manufacturing or a whole seller sells
directly to the end consumer it is actually
operating in the Retail space.

Industrial Definition
Retailis thesaleof goods and services from
individuals or businesses to theend-user. Retailers
are part of an integrated system called the
supply-chain. A retailer purchases goods orproductsin
large quantities frommanufacturersor directly
through awholesaler, and then sells smaller quantities
to theconsumerfor a profit. Retailing can be done in
either fixed locations or online. Retailing includes
subordinated services, such as delivery. The term
"retailer" is also applied where a service provider
services the needs of a large number of individuals,
such as apublic utility, likeelectric power.

Definition- Continued
Shops may be on residential streets,
shopping streets with few or no houses or in
ashopping mall. Shopping streets may be
forpedestriansonly. Sometimes a shopping
street has a partial or fullroofto protect
customers fromprecipitation. Online
retailing, a type ofelectronic commerce
used forbusiness-to-consumer(B2C)
transactions andmail order, are forms of
non-shop retailing.

Book Definition
Philip Kotler;
According to Kotler:
Retailing includes
all the activities
involved in selling
goods or services to
the final consumers
for personal, non
business use

Theories-Retailing
A better known theory of retailing wheel of retailing
proposed by Maclcomb McNair says,
1. New retailers often enter the market place with low
prices, margins, and status. The low prices are
usually the result of some innovative cost-cutting
procedures and soon attract competitors.
2. With the passage of time, these businesses strive to
broaden their customer base and increase sales.
Their operations and facilities increase and become
more expensive.

Theories-Retailing-Continued
3.

By this time newer competitors as low

price, low margin, low status emerge and
these competitors too follow the same
evolutionary process.

4. They may move to better up market

locations, start carrying higher quality
products or add services and ultimately
emerge as a high cost price service
retailer.
5. The wheel keeps on turning and

Presented by www.InfoFanz.com :
Preapred By Dr.Pooja Sharma

The retail accordion

Retail development is linked to human
habitation.
Expands with a geographical expansion of the
society.
Starting with general stores neighboring
localities
To specialist storesthings like gifts,
restaurants, entertainment at a certain distance
Theses specialist retailers when mature start
adding variety and become general stores
Some become category killers

The Melting Pot Theory or the

dialectic process
A new value proposition by one
retailer gives rise to two retailers
with same value.
E.g.Tesco always copied Sainsbury
In Malaysia too the grocery sector is
facing a price led dialectic process
some of them are sure to die

The Polarization theory

In long term the industry would have
mostly either large or small sized
retailers
The medium size becomes unviable.
Bermuda triangle
Act small and set up big firm practices.

Conflict Theory
Conflict always exists between
operators of similar formats or within
braid retail categories. It is believed
that retail innovation does not
necessarily reduce the number of
formats available to the consumer,
but leads to the development of
more formats. Retailing thus evolves
through a dialectic process, i.e. the
blending of two opposites to create a

Conflict Theory-Continued
1) Thesis: Individual retailers as
corner shops across the country
2) Antithesis: A position opposed to
the thesis develops over a period of
time. These are the department
stores. The antithesis is a
challenge to the thesis.
3) Synthesis: There is a blending of
the thesis and antithesis. The result
is a position etween the thesis and

Industry Driver
It is an Industry which is heavily
dependent on consumer spending .
In this ecosystem consumers play
the most important role.
Retail sales is generally driven by
peoples ability (disposable income)
and willingness (consumer
confidence) to buy goods and
services.

South East Asian Retail

IndustryIntroduction

Any consumer looks for good value.

And everybody looks for a relatively
decent customer experience.
Consumers are homogeneous in terms
of how they identify themselves with
value.
ZARA is a significant example: there is
no significant price difference between
their products in ASEAN countries

Introduction to Malaysian Retail

Industry-Global/Regional-Retailers

Malaysia
Currently trading:
Daiso
Debenhams
Isetan
AEON- Previously named 'JUSCO'
Marks & Spencer- Branches in1 Utama,Queensbay Mall,Sunway Pyramid,The Gardens
andSuria KLCC.
Metrojaya
Milimewa
Parkson
Pacific
Robinsons- Flagship outlet inThe Gardens (Kuala Lumpur) .
Sogo
The Store
Tangs- Store inStarhillCenter, KL, closed down in 2004. Made their comeback debut at
Pavilion KL
Tesco
Giant

Overview of Sabahs Retail

Market-Retail-Members

Metrojaya
Parkson
Giant
Survey
Millimewa
Daiso
Aeon
Gardian

Overview of Sabahs Retail MarketRetail Members -Continued

KFC
McDonald's
Burger king
Station One
ShellPETRONAS
Esso

How Different is Retail

Industry in South East Asia?
The difference comes in the price
points, Some time what a
Singaporean can afford would be
slightly different from a Malaysian.
For example. Singaporean would
tend to buy the slightly higher range
of the product line in Comparison
with an Indonesian or Pilipino.
The rest of the region is rather more
or less homogeneous

South East Asia-Retail FormatDifferences

Infrastructure is slightly different between
Singapore and Thailand or Malaysia
For example, scopes of transportation are
different. Also the quality of real estate is
ahead in terms of planning and execution
compared to the other places.
In terms of way things are managed, in
Malaysia, Indonesia deal with more
entrepreneurs in Retail Segment.

South East Asia-Retail FormatDifferences-Continued

In Singapore, corporatization has
taken
place, Retailers deal with bigger
corporations.
Vietnam is still at an infant stage in
terms of infrastructure, and the retail
sector is still in its very infant stage.
Laos has not done yet enough to
market itself high in Retail

South East Asia-Retail FormatDifferences-Continued

There are talks about market
becoming to rise in Cambodia.
Indonesia has now very good in
political stability, and retail
consumption has started to shape
there.
For the Philippines, a very stable and
mature market, greater political
stability makes growth options
beyond Metro Manila.

Evolution of Retail Format

Retail comes from the Old French
wordtailer(compare modern French
retailler), which means "to cut off,
clip, pare, divide" in terms of tailoring
(1365).
It was first recorded as a noun with
the meaning of a "sale in small
quantities.

Evolution of Retail FormatContinued

Another Eg. in 1433 (from the Middle
Frenchretail, "piece cut off, shred,
scrap, paring").[1]
Like the French, the wordretailin
both Dutch and German
(detailhandelandEinzelhandel,
respectively) also refers to the sale of
small quantities of items.

Malaysian Retail market- Operational

Mix Format- Motorola Malaysia
PETALING JAYA: Motorola Solutions
Malaysia Sdn Bhd (Motorola
Solutions) sees the country as a key
market in the region as its retail
industry is at the mid-maturity stage,
says its retail vertical Asia Pacific
director Mr.Anand Mehta.
According to a forecast by Business
Monitor International, the total retail
sales locally would grow from RM200

Malaysian Retail market- Operational

Mix Format- Motorola Malaysia-Cont
We see our self-scanning solution,
catered for supermarkets and
hypermarkets, will make a big hit
among the technology-savvy
consumers in Asia, such as
Malaysia,Singapore and Indonesia,
within the next 12 to 18 months.
He said Motorola Solutions was
already in discussions with prominent
retailers to implement the

Malaysian Retail market- Operational

Mix Format- Motorola Malaysia-Cont
This particular solution is already
popular in Europe and growing
rapidly in the US, because it benefits
both retailers and customers by
increasing sales of the retailers and
enhancing the shopping experience
of the customers, he added.

Malaysian Retail market- Operational

Mix Format- Motorola Malaysia-Cont
Anand said companies should take
advantage of the developing
technology to achieve a seamless
business operation.
Our innovative solutions are
designed to enable business agility,
improve worker productivity,
increase sales as well as enhancing
customer experience.

Malaysian Retail market- Operational

Mix Format- Motorola Malaysia-Cont
Meanwhile, its Radio Frequency
Identification (RFID) solution, designed for
clothing retailers, can reduce receive time
for up to 91 per cent and increase sales
from between four per cent and 21 per
cent.
Motorola Solutions has a complete suite of
retail mobility solutions with a wide
portfolio of customers, including Mydin,
Tesco, Zara and Macys.

Evolution of B2C Retail Format

Through Shopping Malls
The resurgence of international
interest in Malaysian malls can be
attributed to growing foreign tourist
receipts amounted to RM56.5 billion,
of which shopping accounted for
almost 30% in 2010.

Evolution of B2C Retail Format

Through Shopping Malls-Continued
Currently, there are 300 retail
centers in Malaysia offering a total of
114 million sq ft of space and
enjoying
a
healthy
average
occupancy of 80.2%.
Of these, more than 40% consisting
of 50.6 million sq ft of available
space are located in the Greater
Kuala Lumpur(GKL) area. Most of
these are located within the city

Social Development and its Impact

on Retail Industry

Globalization
Open Market policy in retail industry
Online business expansion
Localization for price advantage.
Free movement of Capital, labor and
Resources
Multi language and Global Hubs for
Retailing

Industrial Revolution-World
India, Poland, Brazil, and South Korea provide interesting case
studies of markets evolving rapidly. No
doubt, government regulation has played a significant role in
promoting domestic retailers. But will
this trend continue? If foreign direct investment (FDI)
restrictions are loosened or consumer purchasing power and
shopping patterns change, which market evolution pattern will
take hold and why?
Lastly, we will discuss the core capabilities successful retailers
will need in developing markets. The
growth of modern trade operatorswhether global or local
will depend on their ability to leverage
relevant capabilities while adapting to market conditions and
changing consumer tastes.

Industrial Revolution-Asia and

South East Asia
Part I:
How Markets Modernize?
According to a recent in-depth study,
MVI research shows that retail
markets tend to modernize from
largely traditional trade to modern
trade dominated along a predictable
continuum.

Industrial Revolution-Asia and

South East Asia-Continued
As markets modernize, the share of
traditional trade as a percent of total
trade declines slowly; suppliers,
however, will continually need to
adjust the amount of resources
allocated to manage the traditional
trade versus the modern trade

Industrial Revolution and Effects on

Malaysian Retail Industry
DISCUSS GLOBALIZTION EFFECT
LARGE OR SMALL SIZE
SURVIVAL OF MEDIUM SIZE RETAIL
INDUSTRY
MERGERS
EXPANSION
FUTURE

Emergence of Self Service

A leading Technological advancement
Whether for retail POS systems,
includingself check outandself
service kiosks, bill payment or gift
registry, depend on technology
Advancement
For eg. NCR self-service kiosk
solutions raise the bar for speed,
convenience and control in your
retail operations. Retail POS systems

Self Service Models-eg.

NCR SelfServ Bill Payment
Self service kiosks allow customers to make payments quickly with no
staff assistance.
zoomNCR SelfServ Checkout
NCR's self checkout systems feature intuitive interfaces and animated
instructions so the customer always knows what to do next.
zoomNCR SelfServ Order and Pay
Kiosk solution that revolutionizes traditional ordering and payment
transactions.
zoomNCR SelfServ 60
A flexible, advanced retail kiosk with powerful, next-generation
architecture.
zoomNCR SelfServ 70
Retail kiosk allows customers to complete payment transactions
quickly, simply.

Development of Supermarkets &

Convenient Stores
Amarketplaceis a location where
goods and services are exchanged.
The traditionalmarket squareis a
city squarewhere 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.

Development of Supermarkets &

Convenient Stores-Continued
Retail is usually classified by type of products as
follows:
Food products
Hard goods or durable goods ("hardline
retailers") - appliances, electronics, furniture,
sporting goods, etc. Goods that do not quickly
wear out and provide utility over time.
Soft goods or consumables - clothing, apparel,
and other fabrics. Goods that are consumed
after one use or have a limited period (typically
under three years) in which you may use them

Development of Supermarkets &

Convenient Stores-Continued
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
largeretail chains.

Types of retailers by marketing strategy:

Department stores- very large stores

offering a huge assortment of "soft"
and "hard goods; often bear a
resemblance to a collection of
specialty stores.
A retailer of such store carries
variety of categories and has broad
assortment at average price. They
offer considerable customer service.

Types of retailers by marketing strategy:-Continued

Discount stores- tend to offer a wide

array of products and services, but
they compete mainly on price offers
extensive assortment of merchandise
at affordable and cut-rate prices.
Normally retailers sell less fashionoriented brands.

Types of retailers by marketing strategy:-Continued

Warehouse stores- warehouses that offer

low-cost, often high-quantity goods piled
on pallets or steel shelves;
warehouse clubscharge a membership
fee;
Variety stores- these offer extremely lowcost goods, with limited selection;
Demographic - retailers that aim at one
particular segment (e.g., high-end retailers
focusing on wealthy individuals).

Types of retailers by marketing strategy:-Continued

Mom-And-Pop: is a retail outlet that

is owned and operated by
individuals. The range of products
are very selective and few in
numbers. These stores are seen in
local community often are family-run
businesses. The square feet area of
the store depends on the store
holder.

Specialty Stores, Malls & Convenient

stores
Specialty stores: A typical speciality
store gives attention to a particular
category and provides high level of
service to the customers. A pet store
that specializes in selling dog food
would be regarded as a specialty
store. However, branded stores also
come under this format. For example
if a customer visits a Reebok or Gap
store then they find just Reebok and

Specialty Stores, Malls & Convenient

stores-Continued
Convenience stores: is essentially found in
residential areas. They provide limited
amount of merchandise at more than
average prices with a speedy checkout. This
store is ideal for emergency and immediate
purchases.
Hypermarkets: provides variety and huge
volumes of exclusive merchandise at low
margins. The operating cost is comparatively
less than other retail formats.

Specialty Stores, Malls & Convenient

stores-Continued
Supermarkets: is a self service store
consisting mainly of grocery and
limited products on non food items.
They may adopt a Hi-Lo or an EDLP
strategy for pricing. The
supermarkets can be anywhere
between 20,000 and 40,000 square
feet (3,700m2). Example: SPAR
supermarket.
Malls: has a range of retail shops at a

Specialty Stores, Malls & Convenient

stores-Continued
Category killersor Category Specialist: By
supplying wide assortment in a single
category for lower prices a retailer can "kill"
that category for other retailers. For few
categories, such as electronics, 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.

Specialty Stores, Malls & Convenient

stores-Continued
E-tailers: The customer can shop and order
through internet and the merchandise are
dropped at the customer's doorstep. Here
the retailers use drop shipping technique.
They accept the payment for the product
but the customer receives the product
directly from the manufacturer or a
wholesaler. This format is ideal for
customers who do not want to travel to
retail stores and are interested in home
shopping. However it is important for the
customer to be wary about defective

Specialty Stores, Malls & Convenient

stores-Continued
Vending Machines: This is an
automated piece of equipment
wherein customers can drop in the
money in machine and acquire the
products.
Some stores take ano frillsapproach,
while others are "mid-range" or "high
end", depending on what income
level they target.
Other types of retail store include:

Specialty Stores, Malls & Convenient

stores-Continued
Automated Retailstores are self service,
robotic kiosks located in airports, malls
and grocery stores. The stores accept
credit cards and are usually open 24/7.
Examples includeZoomShopsandRedbox.
Big-box storesencompass larger
department, discount, general
merchandise, and warehouse stores.
Convenience store- a small store often
with extended hours, stocking everyday or
roadside items;

An Examination on Malaysian Model

of Retail Industry
Retailing is a commercial transaction
in which a buyer intends to consume
the good or services through
personal, family or household use.
Retailers are business firms engaged
in offering goods and services
directly to consumers.

An Examination on Malaysian Model

of Retail Industry-Continued
In Malaysia, the supervision of the
wholesale and retail sector falls
under the supervision of theMinistry
of Domestic Trade and Consumer
Affairs(MDTCA) through the
Committee on Wholesale and Retail
Trade. The Committee was set up in
1995 to regulate and supervise the
industry, including foreign
participation in the sector. Approval

An Examination on Malaysian Model

of Retail Industry-Continued
FIC and MDTCA show flexibility on the
shareholder structure. But exceptions are
examined on a case by case basis. The
other conditions on foreign investment in
the industry include:
Incorporation of their wholesale and retail
operations locally
Minimum capital requirements of
Malaysian Ringgit (MYR) 1 million for
specialty outlets, MYR5 million for
supermarkets and MYR50 million for
hypermarkets and FIC guidelines on

Presence of Successful Retail

Formats in the World

Types of store or shop:

Anchor store
Big-box store
Chain store
Confectionery store
Convenience store
Department store
Discount store
General store
Grocery store
Hardware store
Health food store
Hobby store

Continued

Hypermarket
Liquor store
Newsagent
Online shopping
Outlet store
Pet store
Pop-up retail
Specialty store
State store
Store-within-a-store
Supermarket
Surplus store

Continued

Survival store
Toy store
Variety store
Warehouse club
Warehouse store

Guidelines for Changing Retail

Format Hypermarkets in Malaysia
Effective from April 2002, the
government has approved a new set
of guidelines for applications to open
new hypermarkets in Malaysia:
The minimum capital requirement has
increased from MYR10 million to
MYR50 million.
Applications to build outlets should be
submitted two years in advance.

Guidelines for Changing Retail Format

Hypermarkets in Malaysia-Continued
New hypermarkets cannot be built within a 3.5
kilometer radius of a housing area or a city center.
Operations should be free-standing, which means
hypermarkets must operate in their own buildings
and not as part of any other complexes.
A socio-economic impact study has to be
conducted by the local authorities in the proposed
area before any application is considered. The
cost of the study would be borne by the
applicants.

Guidelines for Changing Retail Format

Hypermarkets in Malaysia-Continued
Applications will only be considered
for locations with a population of
350,000 or higher.
Floor space should not be less than
8,000 square meters and a counter
must be set up in every 1,000 square
meters.

Malaysia @ Retail Industry

Nevertheless, the projected retail sales
growth for 2012 will remain at six per cent
translating into RM88.2 billion in value as
the European debt crisis and job
uncertainties linger and credit card
spending reduces.
Retail Group Malaysia (RGM) tabulated
retail sales numbers on behalf of the
Malaysia Retailers Association (MRA).
The data did not take into account big
ticket items like houses and cars.

Statistics On Malaysian Retail

Market
MALAYSIAN retailers sold RM83.2
billion worth of items ranging from
clothing to jewellery and food to
souvenirs in 2011,
As retail sales grew higher than the
anticipated 8.1 per cent growth.

Trust/Loyalty and other beliefs in

Retail Industry

Multinational Vs Local
Regional Vs Local
Asian vs Europian(continenatal)
Chinese product line Vs Japanese
Productline
Brand Loyalty
Trusted Brand for Decades
Discuss the above

21st Century- Challenges on

Retail Industry - Malaysia
Challenges Ahead in the Retail Industry
Globalization
Most Malaysian retailers are not geared up to meet
the challenges of the effects of globalization in
Asian countries. They have inadequate resources
and insufficient knowledge to compete with
International powerhouses. The meager financial
resources and the inability to withstand the
deflationary pressure of the market have put the
local retail operators in a fix, whether to downsize,
merge or exit the industry.

21st Century- Challenges on Retail

Industry Malaysia-Continued
Trade Liberalization
ASEAN Free Trade Area (AFTA) allows
local retailers to source for merchandises
from countries such as Thailand and
Indonesia.
They do not have to rely on local
distributors who have been imposing
strict credit terms and trading conditions
on them since the Asian financial crisis.

21st Century- Challenges on Retail

Industry Malaysia-Continued
On the other hand, regional trade
liberalization poses great threats to small
and medium-size retailers in Malaysia.
They include provision shops, sundry shops
and mini-markets. Without the resources
and bargaining power to source for cheaper
food products in the region.
These retailers will not be able to withstand
the full impact of AFTA. They may be forced
to close down eventually.

Future of Malaysian Retail

Industry
The Malaysia Retail Industry Report
this year showed that retailers
remained optimistic of businesses for
the first quarter of 2012 after
chalking 11.5 per cent growth in the
fourth quarter of 2011.

Estimated Data- Retail Industry First

Quarter
For the January to March 2012
period, retailers see sales rising by
12.1 per cent while RGM remains a
little conservative and expects that
retail sales will grow by a tenth.

SWOT Analysis on Retail IndustrySabah

Metrojaya
Parkson
Giant
Survey
Cks
Gardian
Cosway
Mcdonald
KFC

Q&A
Retail Industry Introduction
World
Asia
South east Asia
Malaysia
Sabah

Thank You