class 1_introduction to retailing

8/9/2019 Class 1_Introduction to Retailing

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What Is Retail?

Retail derived from the French wordretaillier, which means to break bulk

Retailing- last stage in the movement ofgoods and services to the consumer

Retail consists of- all activities involved inthe marketing of goods and services directly

to the consumers for their personal, family or

household use

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Functions Of A Retailer

Break Bulk or Form UtilityBuy it in quantities customers want

Hold Inventory or Place utility

Buy it at a convenient place when you want it

Provide Assortment

Buy other products at the same time

Offer Services

See it before you buy, get credit, layaway

Serves the manufacturer

by distributing the goods to the end consumer

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The Distribution Channel

PPT 1-4


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The Concept Of Organized Retail

Unorganized sector- units whose activity is

not regulated by any statute or legal

provision, and/or those which do not

maintain regular accounts

Unorganized form of retail - those forms oftrade which sell an assortment of products

and services ranging from fruits and

vegetables to shoe repairOrganized form of retail- typically a multi-

outlet chain of stores or distribution centres

run by professional management

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Nature of Retail Industry isChanging

Mom and Pop Store

To Todays Retailer


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Share of Organized Retail in Selected Countries,2006

Country Total Retail Sales(US$ bn)

Share of OrganizedRetail (%)

USA 2983 85

Japan 1,182 66

China 785 20

UK 475 80

France 436 80

Germany 421 80

India 322 4


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Categories of traditional retailers

Fruit and Vegetable Sellers - Sells fruit andvegetables.

Food Store - Reseller of bakery products. Alsosells dairy and processed food and beverages.

Non -Vegetable Store - Sells chicken and mutton(supplemented by fish), or predominantly fish.

Kirana I - Sells bakery products, dairy andprocessed food, home and personal care, and

beverages.Kirana II - Sells categories available at a Kirana I

store plus cereals, pulses, spices, and edible oils.


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Categories of traditional retailers

Modern Independent Stores - Sells categories available at aKirana II store and has self- service. Operates single or severalstores (but not an organized chain of stores).

Apparel Sells mens wear, womens wear, innerwear, kidsand infant wear.

Footwear Sells mens wear, womens wear, and kids wear. CDIT (Consumer Durables & IT) Sells electronics, small

appliances, durables, telecom, and IT products. Furnishing Sells home linen and upholstery. Hardware - Sells sanitary-ware, taps and faucets, door fittings,

and tiles. General Merchandize Includes lightning, stationery, toys, gifts,

utensils, and crockery stores.


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Modern Retail Formats in IndiaType of Format Examples Area (Sq. Ft.)

Hypermarket Spencers, and Pantaloon Retail's Big Bazaars. 50,000 - 1,00,000

Cash-and-carry Metro, the Germany-based C&C More than 75,000

Department Store

Shoppers' Stop, Pantaloons, Westside,

Ebony, Lifestyle, Globus 10,000 - 60,000

Supermarket

Apna Bazaar, Sabka Bazaar, Haiko, Nilgiri's,

Spencers, Food Bazaar 1,000

Shop-in-Shop Infinity

Speciality Store

footwear stores, music stores, electronic and

household stores, gift stores, 800

Category Killers

(Large SpecialityRetailers)

Sreeleathers, The Loft

20,000

Discount Store

Subhiksha, factory outlets of apparel and

footwear brands, namely, Levis factory outlet,

Nikes factory outlet, Koutons, etc. 1,000

Convenience Store In & Out, Safal 800


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Non-store Retail Formats

Electronic Retailing

Catalog and Direct Mail

Direct Selling

Television Home Shopping

Vending Machines

Royalty-Free/CORBISRyan McVay/Getty Images


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Business Models In Retail13


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Types of Nonstore Retailers


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Merchandise/Service Continuum


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Services vs. Merchandise Retailers

Intangibility-Problems in Evaluating Service Quality

-Performance of Service Provider

Simultaneous Production and Delivery

-Importance of Service Provider

Perishability

-No Inventory, Must Fill Capacity

Inconsistency of the Offering

-Importance of HR Management


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GROWTH MILESTONES

SUPER MARKETS -Apna Bazaar, Nine to Nine,Food World& margin free shops.

APPAREL RETAIL - Westside, Wills Lifestyle,Shoppers Stop, Pantaloons, Ebony& Globus.

HOME IMPROVEMENT RETAIL STORES -Gautier,Wonder Living, Bombay Bazaar.

REGIONAL RETAILERS - Vishal Megamart, Adani,Crossword, Nilgiris, Kemps Chain, & Landmark.


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Food Retailers

Haldirams

Baskin Robins

Dominos PizzaSubway India

Vadilal

KFCRuby Tuesday


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GROWTH MILESTONES

BUSINESS HOUSES - Wadia, Godrej, Tata,Hero.

SHOPPING MALLS - food & apparel chains,consumer durables & multiplex operators.

SHOPPING MALL DEVELOPMENT TDI,Parsavnath etc.


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Organized Retail ModelsRetailer Segment Business Strategy

Subhiksha Value Low-price high-volume strategy: by keepingno fancy frills front-end and by becomingan intermediary at the back end,Subhiksha leverages on discountedprices on bulk purchases and cashpayments.

Trent Limited Lifestyle &Value

Single- brand strategy: leverages onhigh margins in private labels, andtargets consumers in socio-economicclass B and C.

Future Group:PRIL

Lifestyle &Value

Strategic JVs and subsidiaries aroundretail has enabled PRIL to developretailing across age groups, allproduct categories, the entirecustomer segments under multipleretail formats.


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Organized Retail ModelsRetailer Segment Business Strategy

ITC ChoupalSagar & ChoupalFresh

Value

Backward integration through IT-basedbusiness model: leverages by buildingdirect relationship with the supplysource, the farmers, to sell as well aspurchase products and services.

Spencers Retail Value

The duck and the duckling model: byhaving two- or three- value segmentstores, backed by a cluster of small-sized Fresh, Daily, and Express stores,to leverage on economies of scale atback-end value chain.

NDDB: MotherDairy

Value

Operates on a co-operative model with theobjective of increasing farmers welfare.Has a strong presence in Delhis NCRregion. Strategically located inresidential areas and follows a low-pricestrategy for fruit and Vegetables


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Key Growth Drivers of Retail in India

Changing Demographics: Working Population: Younger workforce Rising Income

Changing Role of Women: Usage of plastic money

Outsourcing Consumer Expectations Consumer Lifestyle

Changing Attitudes Increasing spending of Rural

Consumers

Explosion of Media Establishment of Supply

Chain Entry of foreign brands in

India Entry of India big business

houses Change in Scale of

Operations

New Entrepreneurs Technological Impact


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Regulatory Framework

There had been no specific restrictions on the entry of

foreign retailers into the Indian market till 1996. A

few foreign players were granted permission for

retailing under this earlier regime. In January 2006, however, a partial liberalization

took place in policy in which foreign companies are

allowed to own up to 51 per cent in single-brandretail JVs as approved by the Foreign Investment

Promotion Board (FIPB).


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Besides this, foreign companies are allowed in

wholesale cash-and-carry business and export trading

with 100 per cent equity through the automatic route.

Foreign companies with 100 per cent equity can alsocarry out trading of items sourced from the small-

scale sector and do test marketing of products for

which the company has a manufacturing approval

under the FIPB route.


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With regard to domestic regulation, the organized retailerhas to secure a number of licenses and clearances fromvarious central, state, and local authorities before it starts itsoperations.

The number of licenses varies from state to state and it also depends onthe type of store format.

First, a retailer has to obtain a trade license from the local authority(municipal corporation, municipality, or panchayat) which grantspermission to carry on the retail business.

It has also to obtain licenses from the Agricultural Produce MarketingCommittees (APMCs) of each state for procurement and sale of fruit,vegetables, and staples within the respective market areas (mandis) ofeach APMC.


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In addition, in case a new building or mall is to be

constructed for use in retailing, the organized retailer

has to obtain no objection certificates (NOCs)

from the different state authorities in charge oftraffic, electricity, water, fire and pollution control.

Zoning restrictions are also applicable to the

organized retail outlets which can be set up only on

land earmarked for the local authority forcommercial establishments.


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Entrepreneurial Opportunities

Sam Walton - Founder of Walmart

Kishore Biyani - CEO, Future Group

Jeff Bezos - Founder, Amazon.com

Donald Fisher - The Gap

Dave Thomas - Wendys

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