ChapterChapter-1 RetailingRetailing- Definition & Scope, Economic Significance & Opportunities in Retailing

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Evolution of Retailing in India

The emergence of retailing in India now has more to do with the increasing purchasing power of buyers, especially post-liberalization, postincrease in product variety, and the increasing economies of scale, with the aid of modern supply and distribution management solutions. solutions.

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INTRODUCTION
India is fifth most attractive emerging retail market: a potential goldmine. Indian retail is largest among all industries(200 billion $). 10% - Indias GDP. Growth rate 20-25% 208% - employment Potentiality to grow 637 billion $ by 2015.

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Definitions
Retailing is the set of business activities that adds value to the products or services sold to consumers for their personal or family use. use. Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser. purchaser. The retail transaction is at the end of the supply chain. Manufacturers sell large quantities of chain. products to retailers, and retailers sell small quantities of those products to consumers. consumers.

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Definitions Contd.
All activities involved in selling, renting, and providing goods and services to ultimate customers for personal, family or household use. use. In the channel of distribution, retailing is where the customer meets the product. It is through product. retailing that exchange occurs. occurs. Commercial Transaction in which a buyer intends to consume the good or service through personal, family, or household use. use.

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GROWTH OF RETAIL IN INDIA

INDUSTRY REVOLUTION Retailing in India can be traced to emergence of the neighborhood "Kirana " stores catering to the convenience of the consumers. consumers. 1980s 1980s experienced slow change as India began to open up economy. economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains

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GROWTH OF RETAIL IN INDIA

1990s 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers. Retailers. e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; FMCG; music; Crossword and Fountainhead in books. books. Post 1995 onwards saw an emergence of shopping centers. centers. Targeted to provide a complete destination experience for all segments of society Emergence of hyper and super markets trying to provide customer with 3 Vs - Value, Variety and Volume. Volume.

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Scope of Retailing
With new boom in the retail industry, the country has identified new scope for retail sector development. development. The already revolutionizing urbanization and growing demand for finished products has necessitated development of new space for retail outlets. outlets. Retail is clearly the sector that is poised to show the highest growth in the next five years. The sector is years. set for a revolution, as both the present players and new entrants are gearing up to explore the market. market. This sector contributes 10% of Indias GDP and the 10% current growth rate is 8.5
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Social & Economic Significance of Retailing

Support for community Retail Sales Employment

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Support for community Retailers provide value to their communities and society, as well as to their customers. Retailers are also responsible for developing many innovative products and services. Retail Sales Retailing affects every facets of our day to day life. Whatever we buy or consume, most of the time we need to interact with retailers only to get these products and services.
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Employment The Indian retail industry is divided into organized and unorganized sectors. Organized sectors. retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These etc. include the corporate-backed hypermarkets and corporateretail chains, and also the privately owned large retail businesses. businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for lowexample, the local kirana shops, owner manned general stores, convenience stores, hand cart and pavement vendors, etc. etc.
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Comparative Penetration of Organized Retail (in %)

100% 80% 60% 40% 20% 0%

15

19 45 60 70

80 97 Traditional

85

81 55 40 0

Organized 20

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Indian Retail Scenario At A Glance

The contribution of retail industry to Indias GDP is more than 13%. 13% Indian retail industry (organized as well as unorganized) spreads over more than 6 million outlets (2.4 million urban and 3.6 million in rural) rural). Even though India has well over 6 million retail outlets of all sizes and styles, the country sorely lacks anything that can resemble a retailing industry in the modern sense of the term. This term. presents organized retailing with a great opportunity. opportunity.

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Indian Retail Scenario At A Glance

It was only in the year 2000 that the global management consultancy AT Kearney put a figure to Indian retail Industry Rs. 400,000. Rs. 400,000. Retailing in India is still thoroughly unorganized. unorganized. There is no supply chain management perspective. perspective. As much as 96 per cent of the 6 million-plus millionoutlets are smaller than 500 square feet in area. area. This means that India per capita retailing space is about 2 square feet (compared to 16 square feet in the United States). Indias per capita retailing States). space is thus the lowest in the world. world.
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Indian Retail Scenario At A Glance

Just over 8 per cent of Indias population is engaged in retail (compared to 20 per cent in the United States). States). Indias per capita retailing space is thus the lowest in the world. world. Given the size, and the geographical, cultural and sociosocio-economic diversity of India, there is no role model for Indian suppliers and retails to adapt or expand in the Indian context. Hence Indian retailers context. have to find a suitable model and adopt it to the Indian context. context.

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Opportunities in Retailing
The high growth projected in domestic retail demand will be fuelled by: The migration of population to higher income segments with increasing per capita incomes An increase in urbanization Changing consumer attitudes especially the increasing use of credit cards The growth of the population in the 20 to 49 years age band

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Opportunities in Retailing
There is retail opportunity in most product categories and for all types of formats Food and Grocery: The largest category; largely unorganized today Home Improvement and Consumer Durables: Over 20 per cent p.a. CAGR estimated in the next 10 years Apparel and Eating Out: 13 per cent p.a. CAGR projected over 10 years Opportunities for investment in supply chain infrastructure: Cold chain and logistics

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