RETAIL MANAGEMENT PART1

1
RETAIL MANAGEMENT PART-1

• Prepared by
• Dr. Pooja Sharma
• Presented by
• Education Information Network
• http//www.InfoFanz.com
• Info_at_InfoFanz.com

2
Introduction to Retail

• Unit I
• Introduction to Retail what is Retail, The
  functions of retail, retailing in India. The
  evolution of retail in India, retail Change in
  India

3
Introduction

• The word retail has its origin in French word
  retaillier and means to cut a piece or to
  break bulk.
• Retailing is the sale of goods and services to
  the ultimate consumer for personal, family or
  household use.
• According to Kotler Retailing includes all the
  activities involved in selling goods or services
  to the final consumers for personal, non business
  use

4

• Retailing may be understood as the final step in
  the distribution of merchandise for consumption
  by the end consumers.
• Retailing is responsible for matching final
  consumer demand with supplies of different
  marketers.
• Retailing is high intensity competition industry,
  The reasons for its popularity lie in its ability
  to provide easier access to variety of products,
  freedom of choice and many services to consumers.
• The Indian retail is dotted by traditionally
  market place called bazaars or haats comprises of
  numerous small and large shops, selling different
  or similar merchandise

5
Wheel of Retailing

• A better known theory of retailing wheel of
  retailing proposed by Maclcomb McNair says,
• 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.
• 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.

6

• 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.
• By this time newer competitors as low price, low
  margin, low status emerge and these competitors
  too follow the same evolutionary process.
• The wheel keeps on turning and department
  stories, supermarkets, and mass merchandise went
  through this cycles.

7
(No Transcript)
8
Functions of a retaillier

• From the customer point of view, the retailer
  serves him by providing the goods that he needs
  in the required assortment, at the required 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 four
  different perspectives

9

• Form First is utility regarding the form of a
  product that is acceptable to the customer.
• The retailer does not supply raw material, but
  rather offers finished goods and services in a
  form that the customers want.
• The retailer performs the function of sorting the
  goods and providing us with an assortment of
  product in various categories.
• Time He cerates Time utility by keeping the
  store open when the consumers prefer to shop.
• preferable shopping hours.

10

• Place By being available at a convenient
  location, he creates place utility.
• Ownership Finally, when the product is sold,
  ownership utility is created.
• Apart from these functions retailer also performs
  like
• Arranging Assortment manufacturers usually make
  one or a variety of products and would like to
  sell their entire inventory to few buyers to
  reduce costs. Final consumers, in contrast prefer
  a large variety of goods and services to choose
  from and usually buy them in small units.
• Retailers are able to balance the demands of both
  sides, by collecting an assortment of goods from
  different sources, buying them in sufficiently
  large quantities and selling them to consumers in
  small units

11

• Breaking Bulk to reduce transportation costs,
  manufacturer and wholesalers typically ship large
  cartons of the products, which are then tailored
  by the retailers into smaller quantities to meet
  individual consumption needs
• Holding stock Retailers maintain an inventory
  that allows for instant availability of the
  product to the consumers. It helps to keep prices
  stable and enables the manufacture to regulate
  production.
• Promotional support small manufacturers can use
  retailers to provide assistance with transport,
  storage, advertising, and pre- payment of
  merchandise.

12
Major type of retail stores

• There is no universally accepted method of
  classifying retailer. Various schemes have been
  proposed to categories retailers based on
• Number of outlets
• Margin vs. turnover
• Location
• Size.
• Because of overlap of classification criteria,
  some stores may qualify as under two different
  categories.

13

• General merchandise retailer general merchandise
  retailer carry a variety of product lines, with
  considerable depth. Some major types of these
  stores include supermarkets and hypermarkets ,
  discount stores and department stores.
• Super market A supermarket is a large self
  service retail store that carries a wide variety
  of consumer products under one roof , such as
  complete line of food products , laundry
  requirement, household maintenance items. In
  India cooperative have managed some supermarkets
  for quite sometime like super bazaar in Delhi,
  apna bazaar shakari bhandar etc.

14

• Discount store these stores are self service,
  standard general merchandise retailers regularly
  offering brand name and private brand items at
  low price, earn lower margins and push for high
  sales turnover. The characteristics of true
  discount stores include
• Selling products at discounted price
• Carry standard international , national, or store
  brand toi build image
• Self service stores to minimize operational costs
• Preferred store location are low rent areas.
• Like best known discount store is Wal-Mart. In
  India almost all retail stores offer discounts,
  subhiksha

15

• Department store a department store is larger
  retail store organized into several departments,
  offering a broad verity and depth of product
  lines. The product mix may include food products,
  appliances, clothing, furnishing and other
  household goods.
• Like Pantaloons, shoppers stop,
• department store only for kids is Kids Kemp.
• Fashion related department stores in India are
  Ebony, Globus, pantaloons, lifestyles.

16

• Specialty Stores specialty stores carry a narrow
  product mix with depth of assortment within the
  line.
• The emphasis is on a limited number of
  complimentary products and high level of customer
  service
• Specialty store often sell shopping goods such as
  Jewelry, apparel, computers, music systems,
  sporting goods.
• Like Tanishq, Titan watches, Van Heusen,
  Raymond's.
• Shopping Malls shopping malls typically deal
  with several bases and product categories and
  provide a large variety of merchandise abs
  service. There are 96 operational malls in India
  and expected to grow 158 by this current year.
• Ansal plaza (Delhi), Garuda mall (Bangalore)
  Sahara plaza Gurgaon Spenser Plaza Chennai

17

• Retail chains a retail chain operates multiple
  retail outlets under common ownership in
  different cities and towns.
• To some extent the purchasing function and
  decision making are coordinated or centralized.
• Like Westside, Globus, Food world, McDonald's
  retail petrol outlets. Etc.

18
The Marketing Retail Equation
19
Retailing in India.

• Retail is the new buzzword in India.
• The global Retail development Index has ranked
  India first, among the top 30 emerging markets in
  the world.
• It is believed that India has the potential to
  deliver the fastest growth over the next 50
  years.
• While barter would be considered to be oldest
  form of retail trade, since independence , retail
  in India has evolved to support the unique needs
  of country, given its size and complexity

20

• Second largest sector after Agriculture.
  Contributes about 10 11 of the GDP
• The estimated size of the organized retail
  industry in India is Rs. 16,000 crores. This is
  2 of the total estimated retail trade.
• Indian Retail trade increased from Rs. 2200
  billion in 2000 to Rs 3300 billion by the year
  2005
• India's first true shopping mall complete with
  food courts, recreation facilities and large car
  parking space was inaugurated as lately as in
  1999 in Mumbai. (this mall is called
  "Crossroads").

21
The Evolution of Retail in India

• Retail in India has evolved to support the unique
  needs of our country, given its size and
  complexity Haats, Mandis and Melas have always
  been a part of the Indian landscape. They still
  continue to be present in most parts of the
  country and form an essential part of life and
  trade in Various areas.
• The PDS (Public Distribution System) would easily
  as the single largest retail chain existing in
  the country. the evolution of the PDS of Grains
  in India has its origin in the rationing system
  introduced by the British during world war II

22

• The system was started in 1939 in Bombay and
  subsequently extended to other cities and towns.
  the system was abolished post war but however
  attaining independence India was forced to
  reintroduce it in 1950.
• There was rapid increase in the ration shops (
  being increasingly called the Fair Price Shop or
  FPSs)
• The Canteen Stores Department and the Post
  Offices in India are also among the largest
  network of outlets in the country reaching
  population across the country.

23

• The Khadi Village industries (KVIC) was also
  set up post independence. The cooperative
  movement was again championed by the government.
• India's Largest retail Chains
• PDS 463,000
• Post offices 160,000
• KVIC 7,000
• CSD Stores3,400
• (source business world marketing White book 2005)

24

• In the past decade, the Indian marketplace has
  transformed dramatically. However from the 1950,s
  to the 80,s, investment in various industries was
  limited due to low purchasing power in the hands
  of the consumer and the governments policies
  favoring the small scale sector.
• The first attempts at organized retailing were
  noticed in the textiles sector. One of the
  pioneers in this field was Raymonds which set up
  stores to retail fabric.

25

• Raymonds distribution network today comprises
  20,000 retailers and over 256 exclusive showrooms
  in over 120 cities of the country
• Other textile manufacturing who set up their own
  retail chains wee Reliance- which set up Vimal
  showrooms and Garden Silk Mills, which set up
  Garden Vareli showrooms.

26
The Evolution of retail in India
Emerging Formats Exclusive retail
outlets Hypermarket Internal retail Malls /
Specialty Malls Multiplexes Fast food
outlets Service galleries
Established formats Kirana shops Convenience/ dep
artment stores PDS/ fair price shops Pan/ Beedi
shops
Traditional Formats Itinerant Salesman Haats Mela
s Mandis etc.
27
Drivers of Retail change in India

• major drivers
• Changing Income Profiles Steady economic growth
  fuelled the increase in disposable income in
  India. The average middle class family's
  disposable income rose by more than 20 between
  1999-2003.
• Diminishing difference between Rural and urban
  India Rural India accounts for over 75 of India
  population and this in itself offers a tremendous
  opportunity for generating volume driven growth.
  Tax benefit. In year 2002-03 LIC sold 50 of its
  policies in rural India. Same BSNL also sold its
  50 connection in small towns .

28

• Changes in Consumption patterns Occupational
  changes and expansion of media have caused a
  significant change in the way the consumer lives
  and spends his money.
• The changes in income brought about changes in
  the aspirations and the spending patterns of the
  consumers. the buying basket of the consumer
  changed
• The emergence of a young Earning India Nearly
  70 of the Indian population is below the age of
  34. taking advantages of employment opportunity
  in the booming service sector these young Indians
  are redefining service and consumption patterns

29
Prominent sector in Indian retail

• Clothing, textiles and fashion Accessories
• Food food Services
• Consumer Durables
• Books Music
• Other emerging sectors
• Jewellery retail
• Footwear retail
• Time Wear Retail
• Fuel Retail/ petro retail

30
Challenges to retail Development in India

• Retail not being recognized as an industry in
  India.
• The high costs of real estate.
• Lack of Adequate infrastructure.
• Multiple and complex taxation system.

31
Size of the organized retail market (Rs Cr)

32
Share of organized unorganized retail with
comparison source Ernst Young, The Great
Indian Retail Story, 2006
33
Retail Trade- India, US and China