Module 1

THE WORLD OF RETAILING

What is retailing?
 Retailing is the set of business activities that
adds value to the products and services sold to
consumers for their personal or family use.
 All the activities directly related to the sale of
goods and services to the ultimate consumer for
personal, non-business use.
 Evolution of Indian retail Modern Formats/
Historic/Rural Traditional/Pervasive Government
Reach Reach Supported International

Exclusive Brand Outlets

Hyper/Super Markets
Department Stores
Shopping Malls

PDS Outlets
Khadi Stores
Cooperatives

Convenience Stores
Mom and Pop/Kiranas

Weekly Markets
Village Fairs
Melas

Source of Neighborhood Availability/ Low Shopping

Entertainment Stores/Convenience Costs / Distribution Experience/Efficiency
Journey of organized Retail in India
Emergence of Org. Retailing in
India
 Organization retailing in India represents a
small fraction of the total retail market
 modern retail formats are showing robust
growth as several retail chains have
established a base in metropolitan cities
and spread all over India in rapid pace.
 space & rentals are biggest constraints
Urban areas
 In urban areas most of the families
are experiencing growth in income
but dearth of time.
 More & more women are join up of
corporate jobs which adding family
income & leading a better lifestyle
made raise retails in India.
 For example the demand for frozen,
ready-to-cook, ready-to-eat products
Rural India

 In rural areas small retail outlets only

5-6 billion outlets enter to more than
700 million inhabitants of rural India
 provisions stores, paan-shop,& ration
shops are the most popular vehicles
of retailing.
 Apart from this temporary markets
which are in periodic like melas haats
come at the some locations
Key Players – Indian Retail
 Shopper’s Stop
 FoodWorld
 Vivek’s
 Nilgiris
 Future Group
 Subhiksha
 Ebony
 Crosswords
 Lifestyle
 Globus
 Barista
 Qwiky’s
 Café Coffee Day
 Wills Lifestyle
 Titan
 Raymond
 Bata
 Westside
International Players in Indian Retail
 McDonald’s
 Pizza Hut
 Dominos
 Gautier
 Levis
 Lee
 Nike
 Adidas,
 Bennetton
 Swarovski’s
 Sony
 Sharp
 Kodak
 The Medicine Shoppe
ORGANIZED RETAILING IN INDIA
 The retail industry in India is largely unorganized
predominantly consists of small independent,
owner-managed shops
 Retail industry contributes 13% of GDP
 5 million retail outlets are in India
 Total retail sales area in India was estimated at 328
million sqmt in 2001with an average selling space of
29.4 sqmt per outlet
Challenges of Indian Retailing
 Shortage of talents – Middle management
 Efficiency of Supply chain management
 Fraud and Theft in Indian retailing
 Infrastructural bottlenecks
 Low adoption and use of Technology
 Regulatory implications
 Rise in Fuel prices
 Supplier maturity and relations
 Disparities in culture and taste
 Real estate costs
Retailers Role in Distribution channel

 Retailers are the final business in the

distribution channel that links
manufacturers to consumers
 A distribution channel is a set of firms that
facilitates the moment of products from the
point of production to the point of sale to the
ultimate consumer
 Role of Retailer in Business cycle

Manufacturing Wholesaler Retailer Consumer

Mixed functions
 Vertical integration
The firm performs more than one set of activities in the
channel, such as investments in wholesaling and
manufacturing.
 Backward integration
When retailer performs some distribution and
manufacturing activities, such as operating
warehousing or designing private label merchandise.
 Forward integration
When the manufacturer undertakes retailing activities
such as operating its own retail stores.
Functions performed by retailers

 Providing an assortments
 Breaking the bulk
 Holding Inventory
 Providing Services
 Additional services
 Channel of Communication
 Transport and advertising function
Retailing sector offers
 An easier access to a variety of products.
 Freedom of choice.
 Higher level of customer service.
Major Retail segments
 Food and grocery
 Clothing, Textile & Fashion accessories
 Jewellery
 Watches
 Footwear
 Health & Beauty care services
 Consumer durables
 Mobile handsets & accessories
 Furniture & Furnishings
 Catering services
 Books, Music & Gifts
 Entertainment
Social &Economic Significance of Retailing
 Support for community
 Retail sales
 Employment
Characteristics of Retailing
 Direct interaction with customers.
 Lower average amount of sales transaction.
 Point-of-purchase display and promotions.
 Larger number of retail business units
 Direct interaction with customers
 Retail business have direct interaction with
end-users of goods or services in the value
chain.
 They act as intermediaries between end user and
suppliers such as wholesalers or manufactures..
 Many manufacturers have entered into retail
business by setting up their own exclusive stores
for their brands. E.g. MTR,SONY showrooms.
Lower Average Amount of Sales Transaction
 Due to lower disposable incomes ,some consumer
segments in India buy products in small quantities for
household consumption.
 Therefore for retailers Inventory management becomes
a challenge as a result of the many minor transactions
with a large number of customers.
 Hence ,retailers must take care of the average levels of
stock, order levels ,and the popularity of different
brands.
 Can be resolved by attracting the large number of
customers to retail outlets.
Point-of-Purchase Display and Promotions
 Shoppers often do not carry a fixed shopping
list and but pick up products based on
impulsive appeal.
 Display, point-of-purchase merchandise,
store layout, and catalogues become
important .
 Impulse goods like chocolates, snack foods
and magazines can sell much more quickly if
they are placed on a high visibility location
Larger Number of Retail Business Units
 Location of retail store plays an important
role compared to other business units..

 Retailers consider factors like potential

demand, supply of merchandise and store
image-related factors in locating the retail
outlet.
Factors for rating retailing and
distribution channel
 Concentration i.e. percentage of retail sales in
category.
 Number of retail outlets
 Retail density i.e. sq..ft. of retail space per
person.
 Store size i.e. percentage of retail sales made
in stores over 1,000 sq. ft.
 Role of wholesaling
 Distribution inefficiencies.
Opportunities in Retailing
 Management Opportunities
 Finance
 Accounting
 HRM
 Logistics
 Computers
 Marketing
 Entrepreneurial Opportunities
 Dave Thomas (KFC Franchises)
 Kishore Biyani (Future Groups)
 Jeff Bezox ([Link])
 The Retail management Decision Process
 Understanding the world of retailing
 Developing a retail strategy
 Implementing the retail strategy
Understanding the world of retailing
 Introduction to the world of retailing
 Types of retailers
 Multi-channel retailing
 Customer buying Behavior
DEVELOPING A RETAIL
STRATEGY
It identifies
 The target market toward which the

retailer will direct its efforts

 The nature of the merchandise and

services the retailer will offer to

satisfy needs of the target market
 How the retailer will build a long-term

advantage over competitors.

Retailing strategy
 Retaili marketing strategy
 Financial strategy
 Retail location
 Site location
 Organisation structure and HRM
 IS and SCM
 CRM
IMPLEMENTING THE RETAIL
STRATEGY
 To implement a retail strategy,
management develops a retail mix
that satisfies the needs of its target
market better than its competitors
 Merchandise management
 Store management
Merchandise management
 Managing merchandise asssrtments
 Merchandise planning system
 Buying merchandise
 Pricing
 Retail communication mix
Store management
 Managing the store
 Store layout, design and visual
merchandising
 Customer service