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 200406
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 Rise of the

Retailer

Till a few years ago, manufacturers

created a product, advertised it and sold
it through the distribution channel. The
manufacturing
companies
enjoyed
economic
power
as
they
were
significantly bigger in size in comparison
to the distributor and the retailer. Much
has changed since then and retail has
emerged as a separate discipline.

Reasons for the rise of

the retailer

Proximity to the customer

The rise of consumerism
The introduction of private label
Technology
Globalisation

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 worlds 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

1.

Food
Non Food

2.

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 consumers
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