RETAIL SECTORS

Prof:- Prema B.

RETAIL SECTORS

Evolution of Retail Barter System was known as the first form of retail.

As time passed currency was exchanged with goods and services.

Hawkers carried out the first Retailing in Push Carts

Followed by Kirana Stores …….. Mom and Popup Stores

Finally Manufacturing era necessitated the small stores and Specialty stores

It was a seller market still than this point of time with the limited no of brands available

Barter chain Single brand franchise chain Standalone large store <_

Chain of large stores And Finally Malls

• Economist says that Boom Has Started of Retail due to more spending Capacity of Indians • Emerging of retail started in brief in

patterns like changing face of the Indian retail sector

• Provide customers with 3 V’s i.e. Value, Variety and Volume.

What is Retail? “A retail is one who stocks the producers goods and is

involved in the act of it to the individual consumer, at the Margin of Profit “.

As such retailing is the last link that connects the individual consumer with the manufacturing and distribution chain.

Selling Directly to consumer selling in smaller units / quantities the bulk.

Very high numbers near to neighborhood

Reorganized by the service levels

Retail Sector today is worth of 394 Billion Us $

Contd…

Food       

Books & Magazines

Fashion & Clothing  

Personal Care

Optical Consumer Electronics  

Sport & Leisure

Home Ware

Footwear & Leather 

Toys & Games

Jewellery & Watches

Furniture 

Petrol        

Manufacturers

Whole seller

Distributor

Retailer

Organized Sector

Types of Retail Sectors

Unorganized Retailing Hawkers (Kirana) Weekly Markets Organized retailing Convenient / Departmental stores Factory outlets and discounts

Market Supermarkets Wholesalers market Company and Franchises showroom

Importance Largest and fastest growing sector in India.

Modern retailing forms one point stop for all shopping.

Consumer gets a large product variety of brands to choose from one roof.

First it was a sellers market and now its changing to buyers market.

By 2010 Indian retail sector would be generating 10 million employment opportunities.

Retail Sector in India

Some of the Key Players in Organised Retail

Analysis of Growth by ASSOCHAM Organized retail growing at estimated 25%

It is expected that retail in India could be worth US$ 175-200 billion by 2016.

2007-08 Total retails contribution to GDP is between 8% which would further jump up to nearly 12% in next few years. By 2010, retails contribution to national GDP in totality is likely to be 22%.

2007 – Retail Growth rate – 25-28%, Unorganized and organized retail size – 300 billion US$

Opening 10 to 15 outlets by 2015, it plans to employ about 5,000 people selling groceries, consumer goods, fruits and vegetables. India's retail industry is worth $300bn (£148bn)

Eg: Bharti is expected to invest 60 Billion with the largest retail Walmart

Retail Sector contribution to GDP sector is 8%-10%.

Growth of Indian Retail Sector

Elasticity of Demand for Luxury and Necessities

0

0.5

1

1.5

2

2.5

3

3.5

0 0.5 1 1.5 2 2.5 3 3.5

Pri

ce

Demand

Government Policies

The retail industry in India is growing at a significant pace. However, there are several problems faced by the industry. The major challenges for the organized sector include:

Taxation laws that favor small retailers.

Multi-point octroi collection.

According to analysts, for this industry to thrive, Indian retailers need to emulate worldwide retail practices such as accuracy in financial reporting, increased levels of corporate governance and greater accountability among employees.

Foreign Equity does not go beyond 51 percent.

Additions to the product categories to be sold under ‘single brand’ require fresh govt. approval.

International Retail: At a Glance

38%

27%

13%

8%3% 2% 9%

USA EU Japan China

India Russia Others

Share of Organized Retail

Key Players

Highly evolved US market has WalMart taking only 8% market share UK market has Tesco with only 13.4% market share China market still does not have a clear leader

USA = US$ 2,350 Bn UK = US$ 406 Bn China = US$ 313 Bn

SWOT Analysis

Strength Increasing demand driven by the country’s

young working population

Increase in per capita income which in turn increases the household consumption

Create win-win situation for all links in value chain ( suppliers, producers, retailers and customers).

Improvement in the standard of living.

Technology intensive industry

Weakness Lack of expertise in Supply Chain Management

Inadequate Infrastructure

Stringent Labour Laws

Lack of specialized professionals in Industry

Lack of industry status.

Government Restrictions on FDI

Non-Availability of Government Land.

Opportunities Change in consumer behavior pattern and

increase in disposable income.

It is estimated that 15 million people would be engaged in Retail and Retail support activities by 2010

Indian rural markets offer a sea of an opportunity for the retail sector.

Upcoming international Players

Healthy prospect for the fashion industry.

Threats

Indian taxation system favors small retail business.

Competition from unorganized Sector to the organized Sector.

Middle class Psychology.

Increasing Real Estate prices

Conclusion

Huge Scope for Development

Competitive Market

Organized retail is fast growing at a rate of 30% YOY

Greater opportunity for employment

Suggestions

Need to explore PPP (Public Private Partnership) More exports bring more foreign direct

investments There would remain future scope for

improvements in agriculture, small, and medium scaled with the help of the Indian retail sector

More investment in supply-chain infrastructure.

Sole focus on front-end with minimal back-end linkages (Logistics, cold chain, vendor & farmer development, etc.)

Transactional approach, minimal focus on customer service over the life-cycle

Recession Strategy

Offering more & more special discounts.

The Great Indian Shopping Festival.

Case Study

Entry Point:August 2006

Entry Point:2002 -2003

Stores :857 across India

Stores:20 Stores in Maharashtra and Gujarat

Products:FMCG, Vegetables

Products:FMCG , Medicines and Vegetables

Consumer Segmentation:Targeting 2 tire and 3tire Market

Consumer Segmentation:Targeting 2 tire and 3 tire market

Marketing Strategy:News Papers, TV etc.

Marketing Strategy:Believe in mouth publicity

Marginal Profitability:The average ticket size is 30 0 RS

Marginal Profitability:The average ticket size is 550 Rs.

Recession effects and Strategy:

Recession effects and Strategy: